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Reckless Economists

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Reckless Economists

By: Bob Hoye | Fri, Dec 9, 2016

The following is part of Pivotal Events that was published for our subscribers December 1, 2016.

Signs of The Times

“Dallas Mayor Admits Police Pension Pushing City Toward ‘Fan Blades Of Municipal Bankruptcy'”

“Shady real estate investments, marked down.”

– Zero Hedge, November 21.

“Investors are ditching bonds at the fastest rate in 3 years.”

– Business Insider, November 22.

“Gallup: Percent Republicans that believe that the US economy is ‘getting better’ jumped from 16% just prior to the election to 49% after the election.”

– Zero Hedge, November 24.

“Trump is meeting with an ex-bank CEO who wants to abolish the Federal Reserve and to return to the gold standard.”

– Business Insider, November 29.

“Krugman: Trump is the ‘worst man we could have made president’.”

– Business Insider, November 29.


It is uncertain if Krugman knew about the discussion of a gold standard. Possibly not, as he would have become apoplectic and unable to comment. The “ex-bank CEO” is John Allison who recently retired as president of the Cato Institute. Our comment on a convertible dollar has been that it “manages” the ambition of government. This contrasts with the long-running promotion that a committee of experts must have a fiat currency so they can “manage” the economy. In so many words, a convertible currency disciplines predatory bureaucracy.

The Republican platform in the 1980 election included the constraint and honesty of a gold standard. A serious attempt was made, but was derailed by the serious recession that began in 1981. Also, Democrats had the majority in both houses.

With their strongest position since 1928, the Republicans have a mandate for reform. That would be towards a civil service and administration bound by constitutional norms. It is almost startling to think that immigration agencies would obey their own regulations.

Other interesting news is the sharp decline in the November post on the satellite global temperature. This set a big high with the 2015-2016 El Nino and the drop is steeper than the one following the last strong El Nino in 1989. It is now plunging at the fastest pace on the 28-year record.

A few months ago, climatologist Roy Spencer updated the chart. This showed the decline needed a significant plunge to resume the 18-year flat trend. It looked a long way, but it is almost there now.

The main forces acting to restore the flat-lining trend are that the El Nino weather-event is over and the Solar Minimum, which is a climate event, continues. November 22nd and 23rd set two “zero” days, making 25 for the year. The last cyclical minimum clocked 260 “spotless” days in 2009 and 51 days in 2010.

Inspired by experts, the overbearing state needs to maintain the front of omniscience as well as the endless funding. More and more people are becoming indifferent to its climate propaganda. A cool winter could spread skepticism.

And we all know that state funding relies upon the perpetual financial bubble. The plunge in long-dated Treasuries since July is serious. The crash in Municipal bonds is worse. The bond bubble is in the early stages of a profound deflation.


We have had two reasons for the firming dollar. One is the chart pattern and the other will be debt service into New York payable in US dollars. Now, there is another reason. The Republican majority will redirect the Federal Reserve from reckless speculation to prudence. This could be disquieting to interventionist economists. They could eventually be reduced from rent-seekers to real job seekers. How many reckless economists can The New York Times hire a columnists?

On the chart, the DX needed to rise through the 20-Week ema, which was accomplished on October 1st at 95.5. At the 101 level now, there is resistance at the 102 level. Our longer-term target has been 112.

With firming commodities, the Canadian dollar has recovered from 73.59 in early November to 74.50. Getting above the 20-Week ema at 75.35 would be constructive.

Precious Metals

There are some cross-currents, which can be fun if you are a white-water kayaker. In the financial markets, it can be an intellectual challenge.

With the intent of making financial speculation perpetual, central bank recklessness became unlimited. Market distortions are without precedent and we all know about reversion to the mean. As in central bank practices. The most distorted market is that for interest rates.

Politics and finance can never be separated and history is working on a profound change. People are taking political power from the “experts” into their own hands, which is constructive. This will also involve the equivalent in finance. The confection of a national currency has been to serve the state, not the markets. On the Great Reformation, the public will “privatize” national currencies by forcing convertibility. Gold has always provided the best choice.

A complete reformation will include making the senior currency convertible into gold.

In anticipation of this, one would not buy gold or Treasuries. It will take a few years.

As part of the last Great Reformation, in 1717 Isaac Newton put England on to a bi-metallic standard. This became a simple gold standard.

In the meantime, the prospect of a firming dollar prevents us from getting excited about a possible outstanding rally for gold in US dollars. The same holds for silver, making this another ideal time to avoid fundamental studies that “prove” there is a “concerning” shortage of silver.

As noted last week, gold stocks relative to the bullion price will need to end the decline that began in early August.

Using HUI/Gold, the worst was 142 in early November. The next low was 144 and at 150 now, breaking above 155 would be constructive. Getting above the 50-Day at 163 would set the uptrend. With some technical improvement in this indicator, one could begin to accumulate gold stocks. Lightening up on the hot coal and base metal stocks would also be timely.

We had this cartoon drawn in December 2008. Emotions were so high that a newspaper editor suggested leaving our names off.

International Socialism Establishes a Puppet Government

“[Obama] issued executive orders, and his administrative state issued tens of thousands of pages of new regulations that took on the force of law. He called it ‘rule by pen and phone’.”

– Wall Street Journal, November 15, 2016.

The Forgotten Man

Obama stomping on the Constitution

The image of Obama stomping on the Constitution is compelling and was painted by Jon McNaughton in 2010.

Link to December 2, 2016 Bob Hoye interview on
Listen to the Bob Hoye Podcast every Friday afternoon at

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Bob Hoye

Bob Hoye
Institutional Advisors

Bob Hoye

The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance.

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Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.

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Published at Fri, 09 Dec 2016 10:55:08 +0000

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Exxon CEO is now Trump’s secretary of state favorite -transition official


ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer/File Photo



ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer/File Photo

Exxon CEO is now Trump’s secretary of state favorite -transition official

By Steve Holland | GRAND RAPIDS, MICH.

Exxon Mobil Corp Chief Executive Officer Rex Tillerson emerged on Friday as President-elect Donald Trump’s leading candidate for U.S. secretary of state, a senior transition official said.

Trump met Tillerson on Tuesday and may talk to him again over the weekend, the official said. Trump appears to be in the final days of deliberations over his top diplomat with an announcement possible next week.

Tillerson’s favored status was revealed as former New York Mayor Rudy Giuliani formally withdrew from consideration for secretary of state.

The transition official, who spoke on condition of anonymity, said Tillerson, 64, had moved ahead in Trump’s deliberations over 2012 Republican presidential nominee Mitt Romney, who has met Trump twice, including at a dinner in New York.

But the official said Romney was still under consideration for the job, along with John Bolton, a former U.S. ambassador to the United Nations; U.S. Senator Bob Corker of Tennessee, and retired Navy Admiral James Stavridis.

Giuliani’s withdrawal came after he was fully vetted by the Trump transition team for his overseas business ties in what was described by the Trump official as an “intense” effort by lawyers and accountants.

Giuliani, who runs a global consulting firm, was given a clean bill of health, with Trump’s aides concluding his business interests would not pose a risk to his confirmation.

Should Tillerson be nominated, his business ties, too, will come under scrutiny. Exxon Mobil has operations in more than 50 countries and boasts that it explores for oil and natural gas on six continents.

In 2011, Exxon Mobil signed a deal with Rosneft, Russia’s largest state-owned oil company, for joint oil exploration and production. Since then, the companies have formed 10 joint ventures for projects in Russia.

In 2013, Russian President Vladimir Putin awarded Tillerson his nation’s Order of Friendship.

But U.S. sanctions against Russia for its incursion into Crimea cost Exxon Mobil dearly, forcing it to scrap some projects and costing it at least $1 billion in losses. Tillerson has been a vocal critic of the sanctions.

Trump has spoken of wanting warmer relations with Moscow, which has sparked concerns in Congress that he could lift or loosen some of the sanctions on Russia.

Tillerson has been chairman and CEO of Exxon Mobil since 2006. He is expected to retire from the company next year.

Should Tillerson be nominated, climate change could be another divisive issue. The company is under investigation by the New York Attorney General’s Office for allegedly misleading investors, regulators and the public on what it knew about global warming.

(Reporting by Steve Holland and James Oliphant; Editing by Leslie Adler and Lisa Shumaker)



Published at Sat, 10 Dec 2016 01:34:14 +0000

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Trump sold stocks, but what about his hedge fund millions?


Donald Trump is Time’s Person of the Year

Trump sold stocks, but what about his hedge fund millions?


Donald Trump no longer owns any stocks.

He sold all of them in June, he says, because he was worried about conflicts of interest.

“I don’t think for me to be owning stocks when I’m making deals for this country that maybe will affect one company positively and one company negatively — I just felt it was a conflict,” Trump said Wednesday on NBC’s “Today” show.

But here’s the catch: Trump wasn’t just invested in stocks. He also had his millions invested in hedge funds. The same conflict of interest concerns apply to hedge funds as well.

The Trump transition team did not respond to CNNMoney’s repeated requests for clarification on whether Trump also sold his hedge funds.

Trump’s potential hedge fund problem

If he hasn’t sold, Trump’s decisions as president will almost certainly affect the performance of his hedge fund holdings too.

In fact, they already have. Here’s one example: According to his latest financial disclosure in May, Trump is invested in three hedge funds run by John Paulson, a major donor to his campaign and the Republican Party this year.

Paulson is famous for making a lot of money during the financial crisis. He was one of the few investors who recognized the U.S. housing market was in a major bubble. He bet that a lot of Americans wouldn’t be able to pay their mortgages — and he was right. He made billions when the rest of Wall Street and Main Street suffered huge losses, or were wiped out, in the 2008-09 crash.

But Paulson has struggled in recent years. Bloomberg reported that the Paulson Partners Fund, which Trump was invested in (and may still be), was down 22% between January through September.

However, Paulson’s fortunes may be looking up again since Trump was elected. Some of his funds have had a major uptick and he can thank Trump for that.

Two of his big investments, Fannie and Freddie stocks, are up 150% since Trump appointed Steve Mnuchin as his Treasury Secretary. One of the first things Mnuchin did after his nomination was to go on Fox Business and say, “We’ve got to get them out of government control.”

The stocks jumped. Paulson made money. So did Trump, if he still owns those hedge funds.

Paulson had bet big on Fannie (FNMA) and Freddie (FMCC)(known officially as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation). The government took control of Fannie and Freddie during the crisis. Most of the profits Fannie and Freddie receive go directly to the U.S. Treasury. But Trump’s nominee for Treasury Secretary wants to change that so that profits would flow to shareholders instead of the government.

Stocks soar 150% thanks to Trump

“Mnuchin was a business partner of Paulson’s. The connections seem really close,” says Jeff Hauser, executive director of the Revolving Door Project, a watchdog group.

Trump is planing a major announcement December 15 on what he will do with his business empire when he is sworn in as president. Whether he will discuss his hedge fund holdings isn’t clear. Typically, presidents put their investments into a blind trust that someone else controls. Or they do what President Obama did and invest only in “plain vanilla” government bonds and index funds like the S&P 500.

“Trump just needs to liquidate everything. There’s just no way to balance these things out,” says Hauser.

Verifying that Trump really did sell all his stocks is difficult. His last financial disclosure came in May 2016 — a month before Trump says he sold his stocks.

Trump isn’t required to submit another disclosure to the Office of Government Ethics until May 2018.

Back in May, Trump disclosed that he owned 100 individual company stocks, including Apple(AAPL, Tech30), Microsoft (MSFT, Tech30), Pepsi (PEP)and GE (GE). It sounds like a lot, but his stock holdings added up to a mere $10 million — a small fraction of his overall business empire that he says is worth billions.

Trump reported up to $85 million invested in hedge funds in his May disclosure, according to a CNNMoney analysis.

Here are Trump’s hedge fund holdings and the amount in each (according to his May 2016 disclosure):

1. BlackRock Obsidian Fund: $25 million to $50 million.

(BlackRock (BLK) CEO Larry Fink is one of 16 CEOs on a new economic advisory team for Trump.)

2. Paulson Credit Opportunities: $1 million to $5 million.

(John Paulson was a major campaign donor to Trump and the Republican Party in 2016.)

3. Paulson Advantage Plus: $1 million to $5 million.

4. Paulson Partners: $1 million to $5 million.

5. AG Diversified Strategies: $1 million to $5 million.

6. AG Eleven Partners: $1 million to $5 million.

7. Midocean Credit Opportunities Fund: $1 million to $5 million.

8. Advantage Advisers Xanthus Fund: $1 million to $5 million.

Trump’s total hedge fund holdings: $32 million to $85 million.

 CNNMoney (New York)First published December 8, 2016: 4:24 PM ET

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Published at Thu, 08 Dec 2016 21:24:27 +0000

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Trump’s top oilman: Dakota tribes being used by ‘fringe’


Protesters stand strong despite blizzard

Trump’s top oilman: Dakota tribes being used by ‘fringe’


Thousands of Native Americans and activists have braved blizzard conditions to protest against the building of the Dakota Access Pipeline near tribal lands.

Harold Hamm, a billionaire oilman and President-elect Donald Trump’s top energy adviser, doesn’t seem to believe the protests were authentic. He even questioned the motivations behind the efforts to stop the construction of the controversial pipeline.

“Let me tell you, they are being used, they are being taken advantage of,” Hamm said of the tribes. “I hate to see it,” he said on Thursday at the Platts Global Energy Outlook Forum in Lower Manhattan.

Hamm, a shale oil pioneer and CEO of Continental Resources (CLR), insists he doesn’t “have a dog in this hunt.” He notes that Continental “has no oil” on the Dakota Access Pipeline.

However, Continental could benefit indirectly from the pipeline because the company mainly pumps oil from the Bakken, where the Dakota Access Pipeline originates. Continental even made this point to investors in a recent presentation, noting that the price gap between its Bakken crude and more expensive forms of oil should decrease due to “increased pipeline capacity.”

Hamm didn’t shy away from expressing his support for the pipeline.

“My goodness, that’s a pipeline that is certainly needed. It brings the best, highest quality crude oil from the Bakken to the population centers,” said Hamm.

Since the summer, the Standing Rock Sioux tribe members and their allies have fought against the building of the $3.7 billion Dakota Access Pipeline.

The 1,172-mile pipeline from Energy Transfer Partners hopes to reshape the landscape of U.S. crude oil supply by transporting crude from the oil-rich Bakken Formation in North Dakota through the Midwest.

But tribal leaders argue that the pipeline, which would carry 470,000 barrels of oil a day, threatens the Standing Rock Sioux tribe’s environmental well-being and would destroy sacred tribal sites.

The Standing Rock Sioux tribe won a victory on Sunday when the U.S. Army Corps of Engineers said it would seek alternative routes for the pipeline. But the victory is tentative as Energy Transfer Partners (ETP)said it would fight to continue to build the pipeline.

North Dakota Sen. John Hoeven said in a recent statement that Trump has expressed his support for the Dakota Access Pipeline.

dakota pipeline protests

Hamm, who on Thursday shot down talk that he could be Trump’s energy secretary, said he’s been in contact with Standing Rock Sioux Tribal Chairman Dave Archambault.

“I think he sees it coming to an end,” Hamm said. “I think they realize there’s been some fringe aspects that have come to be involved that are not serving them well. That needs to come to an end.”

CNNMoney (New York)First published December 8, 2016: 5:48 PM ET

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Published at Thu, 08 Dec 2016 22:48:30 +0000

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Trump win creates ‘considerable’ uncertainty, Fed’s Dudley says


William Dudley, President of the New York Federal Reserve Bank, speaks at Brooklyn College in the Brooklyn borough of New York, March 7, 2014.REUTERS/Keith Bedford/File Photo

Trump win creates ‘considerable’ uncertainty, Fed’s Dudley says

By Jonathan Spicer | NEW YORK

The U.S. election of Donald Trump has created “considerable” uncertainty over the policies he will pursue so it is too soon for the Federal Reserve to judge whether its plan for gradual interest rate hikes needs adjusting, one of the most influential Fed policymakers said on Monday.

In a speech that stepped well into fiscal policy, including a nod to rising debt levels and a prescription for more predictable actions from Washington, New York Fed President William Dudley painted a fairly benign picture of the current U.S. economy.

He cited firming wage growth and said he expects further improvement in both the labor market and in pushing inflation a bit higher toward a Fed target of 2 percent.

“Assuming the economy stays on this trajectory, I would favor making monetary policy somewhat less accommodative over time by gradually pushing up the level of short-term interest rates,” said Dudley, a permanent voter on monetary policy and a close ally of Fed Chair Janet Yellen.

“There is still considerable uncertainty about how fiscal policy will evolve over the next few years. At this juncture, it is premature to reach firm conclusions,” he told a breakfast of the nonprofit Association for a Better New York, without mentioning the president-elect by name.

Since last month’s election of the Republican Trump as president, stocks, bond yields and the dollar have all risen. Dudley called this a “tightening” in market conditions, but not one that concerns him since it appears to be driven by expectations of more government spending that should boost the economy.

If that happens, and if the U.S. central bank, in response, raises rates more than currently expected, he said the investor reaction is “appropriate,” though he would wait to adjust monetary policy expectations as the fiscal picture becomes clearer, he added.

Trump was elected on a platform of infrastructure spending, tax cuts, cuts to government regulations, and the renegotiation or halting of international trade agreements. The election, which shocked pollsters, has only hardened already high expectations that the Fed will raise rates a quarter-percentage point to 0.5-0.75 percent on Dec. 14.

Less clear is how aggressively the central bank will continue to tighten policy next year.

Wading into the debate over what policies the Republican-controlled White House and Congress should pursue, Dudley said “monetary policy could use an assist from fiscal policy,” given low rates are unlikely to get too much higher before the next economic downturn.

It is “important that the United States retains sufficient fiscal capacity so that fiscal policy can support the economy when the next cyclical downturn does occur,” said Dudley, noting that debt service costs will nearly double over the next decade.

The Fed policymaker repeated that he backs “automatic” fiscal stabilizers like higher unemployment compensation when the jobless rate rises. It has fallen to 4.6 percent.

Dudley, a dovish member of the core Fed policymakers, said the economy is now “in reasonably good shape” and that he expects it to grow at a 1.8 percent rate or slightly more in 2017.

(Editing by Jeffrey Benkoe)

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Published at Mon, 05 Dec 2016 18:19:11 +0000

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WRAP UP 1-Trump should not spend like economy in crisis -Fed officials


St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015.REUTERS/Lucas Jackson/File Photo – RTX2TY27

WRAP UP 1-Trump should not spend like economy in crisis -Fed officials

By Howard Schneider | PHOENIX

Federal Reserve officials cautioned on Monday that the incoming Trump administration’s economic plans should not be cast as if the economy is in crisis, but instead be designed to help the economy’s long-run prospects.

The comments reflected a developing debate within the Fed over the impact of president-elect Donald Trump’s leadership of a Republican-controlled government.

Fed officials worry there is risk that overly aggressive fiscal, tax and other changes could become inflationary given the economy’s current strength.

That could force the Fed into more rapid interest rate increases and possibly raise the risk of recession. Yet there is also potential, officials feel, for well-designed tax, regulatory and infrastructure spending to boost the country’s lagging productivity.

Properly designed and executed policies to boost infrastructure, modify regulations for some industries and overhaul the tax code “may have some impact … if they are directed towards improving medium-term U.S. productivity growth,” St. Louis Fed President James Bullard said in remarks in Phoenix at a luncheon sponsored by Arizona State University.

But “these policies should not be viewed as countercyclical measures,” Bullard said. “The economy is not in recession today.”

“An infrastructure plan would be terrific, that would be good,” Chicago Federal Reserve bank president Charles Evans said in Chicago. “I think corporate tax rationalization would be a huge improvement.”

Yet he agreed: “you don’t need explicit stimulus” with the jobless rate already so low.


Fed officials are typically reluctant to give specific advice to the elected officials who set government spending and debt levels, in part to preserve their own political independence.

But in recent months they have become more voluble on the subject. They feel fiscal policy in the critical early years after the 2007-09 financial crisis was out of sync with what the country required, set too tight at a time when the country needed, and the Fed was pushing to achieve, higher growth.

Trump’s victory, coupled with the election of a Republican-controlled House and Senate, has turned that debate on its head: elected officials may be pushing to stimulate the economy at a time when the Fed is beginning to raise interest rates and sees the economy approaching full employment.

The dilemma would be resolved, Fed officials suggested, if the new administration’s policies focus on efforts that revive productivity growth, and do not amount to spending for spending’s sake.

“If you put the right public capital in place it could improve productivity and you would have a higher trend growth rate,” Bullard said in comments that have been echoed across the Fed.

In remarks in New York, Fed vice chair and New York Fed President William Dudley recommended Congress and the administration set rules that could help in the next crisis with programs that automatically boost spending in a downturn.

Such automatic stabilizers “would kick in to support incomes,” Dudley said, which “should lead workers to be less fearful about losing their jobs, and businesses to be less concerned that demand for their products might fall precipitously.”

(Additional reporting by Ann Saphir in Chicago and Jon Spicer in New York; Editing by David Chance, Paul Simao and Meredith Mazzilli)

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Published at Mon, 05 Dec 2016 20:44:49 +0000

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Donald Trump doubles down on 35% tax for businesses that ship jobs out of U.S.


Trump: Companies won’t leave U.S. ‘without consequences’

 Donald Trump doubles down on 35% tax for businesses that ship jobs out of U.S.


Fresh off saving 800 Carrier factory jobs from being off-shored to Mexico, President-elect Donald Trump is renewing his threat against companies that move their operations to foreign countries.

In a series of tweets Sunday morning, Trump pledged to lower corporate taxes across the board. But he also said he would charge a hefty 35% tax for “any business that leaves our country for another country, fires its employees, [or] builds a new factory or plant in the other country, and … sell[s] its product back into the U.S.”

Trump argued that those companies deserve “retribution.” He said businesses that want to offshore jobs have been “forewarned.”

It’s a carrot-and-stick promise that Trump has made before. But after scoring a big political victory with Carrier, the debate about how — and whether — politicians should stop U.S. companies from shifting operations across the border has kicked into high gear.

Many economists and investors optimistic about Trump’s plan focus on the “carrot” part: the potential for big tax cuts and a roll back in regulations on businesses.

Businesses have for years been urging Washington to lower its 35% corporate tax rate. Trump wants to make that rate 15%. He has also pledged to reduce regulations on several industries, most notably Wall Street and coal power.

On the other hand, some economists have expressed concern about the “stick”: Trump’s protectionist trade policies, which could hurt economic growth.

Many of the opponents of the 35% tax include conservatives, who argue that Trump is picking winners and losers.

For example, the Wall Street Journal editorial page last week railed against Trump’s tax proposal for offshorers, arguing that politicians shouldn’t interfere with companies’ business decisions to maximize their profits. When companies make good business decisions, sometimes the pain of laying off American workers is outweighed by the benefits of increasing profits, paying more in taxes and hiring more Americans in other parts of the (growing) business.

Additionally, the 35% tax would raise prices for Americans. Even if Trump imposes his promised tariff on foreign goods, the 35% tax could make foreign items more attractive.

Others have said Trump is incentivizing other companies to play a game of offshoring chicken.

To stay in the United States, Carrier received $7 million in tax breaks. Other businesses looking for similar deals might threaten to ship their jobs overseas too.

It’s also unclear how such a tax would be enforced. Carrier parent company United Technologies(UTX), for example, went forward with its plans to shift 1,300 jobs to Mexico even as it struck the deal to keep the 800 Indiana factory workers’ jobs at home.

 CNNMoney (New York)First published December 4, 2016: 9:05 AM ET
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Published at Sun, 04 Dec 2016 14:06:10 +0000

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Obama’s gift to Trump: A ‘pretty solid’ economy


Jobless rate hits lowest level since 2007

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Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S. October 7, 2014. REUTERS/Shannon Stapleton/File Photo

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S. October 7, 2014. REUTERS/Shannon Stapleton/File Photo

Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

by Bill McBride on 12/02/2016 01:00:00 PM

 By request, here is another update of an earlier post through the November 2016 employment report including all revisions.  And, yes, I will post these graphs during the next Presidential term.
NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I’ll just stick to the beginning of each term.

Note: We frequently use Presidential terms as time markers – we could use Speaker of the House, or any other marker.

Important: There are many differences between these periods. Overall employment was smaller in the ’80s, however the participation rate was increasing in the ’80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

First, here is a table for private sector jobs. The top two private sector terms were both under President Clinton.

The third best growth for the private sector is Obama’s 2nd term.

Reagan’s 2nd term saw about the same job growth as during Carter’s term.  Note: There was a severe recession at the beginning of Reagan’s first term (when Volcker raised rates to slow inflation) and a recession near the end of Carter’s term (gas prices increased sharply and there was an oil embargo).

Term Private Sector
Jobs Added (000s)
Carter 9,041
Reagan 1 5,360
Reagan 2 9,357
GHW Bush 1,510
Clinton 1 10,884
Clinton 2 10,082
GW Bush 1 -811
GW Bush 2 415
Obama 1 1,921
Obama 2 9,4881
146 months into 2nd term: 9,901 pace.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one term, and President Obama is in the final months of his second term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early ’80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Private Sector PayrollsClick on graph for larger image.

The first graph is for private employment only.

The employment recovery during Mr. G.W. Bush’s (red) first term was sluggish, and private employment was down 811,000 jobs at the end of his first term.   At the end of Mr. Bush’s second term, private employment was collapsing, and there were net 396,000 private sector jobs lost during Mr. Bush’s two terms.

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,966,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).

There were only 1,921,000 more private sector jobs at the end of Mr. Obama’s first term.  Forty six months into Mr. Obama’s second term, there are now 11,409,000 more private sector jobs than when he initially took office.

Public Sector Payrolls A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010.

The public sector grew during Mr. Carter’s term (up 1,304,000), during Mr. Reagan’s terms (up 1,414,000), during Mr. G.H.W. Bush’s term (up 1,127,000), during Mr. Clinton’s terms (up 1,934,000), and during Mr. G.W. Bush’s terms (up 1,744,000 jobs).

However the public sector has declined significantly since Mr. Obama took office (down 334,000 jobs). This has been a significant drag on overall employment.

And a table for public sector jobs. Public sector jobs declined the most during Obama’s first term, and increased the most during Reagan’s 2nd term.

Term Public Sector
Jobs Added (000s)
Carter 1,304
Reagan 1 -24
Reagan 2 1,438
GHW Bush 1,127
Clinton 1 692
Clinton 2 1,242
GW Bush 1 900
GW Bush 2 844
Obama 1 -708
Obama 2 3741
146 months into 2nd term, 390 pace

Looking forward, I expect the economy to continue to expand through the two months of Mr. Obama’s presidency, so I don’t expect a sharp decline in private employment as happened at the end of Mr. Bush’s 2nd term (In 2005 and 2006 I was warning of a coming down turn due to the bursting of the housing bubble – and I predicted a recession in 2007).

For the public sector, the cutbacks are over.  Right now I’m expecting some further increase in public employment during the last months of Obama’s 2nd term, but obviously nothing like what happened during Reagan’s second term.

Below is a table of the top four presidential terms for total non-farm job creation.

Currently Obama’s 2nd term is on pace to be the 3rd best ever for private job creation.  However, with very few public sector jobs added, Obama’s 2nd term is only on pace to be the fifth best for total job creation.

Note: Only 374 thousand public sector jobs have been added during the forty six months of Obama’s 2nd term (following a record loss of 708 thousand public sector jobs during Obama’s 1st term).  This is about 25% of the public sector jobs added during Reagan’s 2nd term!

Top Employment Gains per Presidential Terms (000s)
Rank Term Private Public Total Non-Farm
1 Clinton 1 10,884 692 11,576
2 Clinton 2 10,082 1,242 11,312
3 Reagan 2 9,357 1,438 10,795
4 Carter 9,041 1,304 10,345
5 Obama 21 9,488 374 9,862
Pace2 9,901 390 10,291
146 Months into 2nd Term
2Current Pace for Obama’s 2nd Term

The last table shows the jobs needed per month for Obama’s 2nd term to be in the top four presidential terms. Right now it looks like Obama’s 2nd term will be the 3rd best for private employment (behind Clinton’s two terms, and ahead of Reagan) and probably 5th for total employment.

Average Jobs needed per month (000s)
for remainder of Obama’s 2nd Term
to Rank Private Total
#1 698 857
#2 297 731
#3 -66 467
#4 -224 242


by Bill McBride on 12/02/2016 01:00:00 PM

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Published at Fri, 02 Dec 2016 18:00:00 +0000

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Exclusive: How Putin, Khamenei and Saudi prince got OPEC deal done

Russian President Vladimir Putin delivers a speech during his annual state of the nation address at the Kremlin in Moscow, Russia, December 1, 2016. REUTERS/Maxim Shemetov

Russian President Vladimir Putin delivers a speech during his annual state of the nation address at the Kremlin in Moscow, Russia, December 1, 2016. REUTERS/Maxim Shemetov

Exclusive: How Putin, Khamenei and Saudi prince got OPEC deal done

By Rania El Gamal, Parisa Hafezi and Dmitry Zhdannikov | VIENNA

Russian President Vladimir Putin played a crucial role in helping OPEC rivals Iran and Saudi Arabia set aside differences to forge the cartel’s first deal with non-OPEC Russia in 15 years.

Interventions ahead of Wednesday’s OPEC meeting came at key moments from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran’s Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani, OPEC and non-OPEC sources said.

Putin’s role as intermediary between Riyadh and Tehran was pivotal, testament to the rising influence of Russia in the Middle East since its military intervention in the Syrian civil war just over a year ago.

It started when Putin met Saudi Prince Mohammed in September on the sidelines of a G20 gathering in China.

The two agreed to cooperate to help world oil markets clear a glut that had more than halved oil prices since 2014, pummeling Russian and Saudi government revenues. Oil prices are up 10 pct this week topping $53 a barrel.

The financial pain made a deal possible despite the huge political differences between Russia and Saudi over the civil war in Syria.

“Putin wants the deal. Full stop. Russian companies will have to cut production,” said a Russian energy source briefed on the discussions.

In September, OPEC agreed in principle at a meeting in Algiers to reduce output for the first time since the 2008 financial crisis.

But the individual country commitments required to finalize a deal at Wednesday’s Vienna meeting still required much diplomacy.

Recent OPEC meetings have failed because of arguments between de facto leader Saudi Arabia and third-largest producer Iran. Tehran has long argued OPEC should not prevent it restoring output lost during years of Western sanctions.

Proxy wars in Syria and Yemen have exacerbated decades of tensions between the Saudi Sunni kingdom and the Iranian Shi’ite Islamic republic.


Heading into the meeting, the signs were not good. Oil markets went into reverse. Saudi Prince Mohammed had repeatedly demanded Iran participate in supply cuts. Saudi and Iranian OPEC negotiators had argued in circles in the run-up to the meeting.

And, then, just a few days beforehand, Riyadh appeared back away from a deal, threatening to boost production if Iran failed to contribute cuts.

But Putin established that the Saudis would shoulder the lion’s share of cuts, as long as Riyadh wasn’t seen to be making too large a concession to Iran. A deal was possible if Iran didn’t celebrate victory over the Saudis.

A phone call between Putin and Iranian President Rouhani smoothed the way. After the call, Rouhani and oil minister Bijan Zanganeh went to their supreme leader for approval, a source close to the Ayatollah said.

“During the meeting, the leader Khamenei underlined the importance of sticking to Iran’s red line, which was not yielding to political pressures and not to accept any cut in Vienna,” the source said.

“Zanganeh thoroughly explained his strategy … and got the leader’s approval. Also it was agreed that political lobbying was important, especially with Mr. Putin, and again the Leader approved it,” said the source.

On Wednesday, the Saudis agreed to cut production heavily, taking “a big hit” in the words of energy minister Khalid al-Falih – while Iran was allowed to slightly boost output.

Iran’s Zanganeh kept a low profile during the meeting, OPEC delegates said. Zanganeh had already agreed the deal the night before, with Algeria helping mediate, and he was careful not to make a fuss about it.

After the meeting, the usually combative Zanganeh avoided any comment that might be read as claiming victory over Riyadh.

“We were firm,” he told state television. “The call between Rouhani and Putin played a major role … After the call, Russia backed the cut.”


But OPEC would not be OPEC without a last-minute quarrel threatening to derail the deal. Iraq became a problem.

As ministerial talks got underway, OPEC’s second-largest producer insisted it could not afford to cut output, given the cost of its war against Islamic State.

But, facing pressure from the rest of OPEC to contribute a cut, Iraqi Oil Minister Jabar Ali al-Luaibi picked up the phone in front of his peers to call his prime minister, Haider al-Abadi.

“Abadi said: ‘Get the deal done’. And that was it,” one OPEC source said.

(additional reporting Alex Lawler and Ahmad Ghaddar; editing by Dmitry Zhdannikov and Richard Mably)

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Published at Thu, 01 Dec 2016 15:31:49 +0000

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A 6 Step Plan for Trump to Make Our Money Great Again

A 6 Step Plan for Trump to Make Our Money Great Again

By: Jp Cortez & Stefan Gleason | Tue, Nov 29, 2016
 Donald Trump will be sworn in as the 45th president of the United States in January. Americans will then find out then if “Make America Great Again” is more than a campaign slogan.

It isn’t going to be easy. On day one, he will inherit a $20 trillion federal deficit and a moribund economy increasingly reliant on low interest rates and central bank stimulus.

There are plenty of economic problems to address, but the lack of sound money lies at the heart of them all. The Federal Reserve Note — a privately issued, un-backed debt instrument that supplanted our gold and silver backed U.S. dollar — has lost more than 90% of its purchasing power since Nixon severed the final link to gold in 1971. Politicians and central bankers have since been borrowing and printing currency without restraint to bankroll today’s bloated and insolvent federal government.

Trump and Pence Have Voiced Support for Gold as Money

Gold Bars

There is some reason to believe that Trump will take meaningful steps to Make Our Money Great Again. During the campaign, Trump criticized the Federal Reserve’s loose money, low interest rate policies as a problem that must be addressed. Trump has also said “We used to have a very, very solid country because it was based on the gold standard… bringing back the gold standard would be very hard to do, but boy would it be wonderful. We’d have a standard on which to base our money.”

Vice President Elect Mike Pence has also suggested that policymakers should strive to restore sound money. He said, “Robert Zoellick, the president of the World Bank, encouraged that we rethink the international currency including the role of gold, and I agree. I think the time has come to have a debate over gold, and the proper role it should play in our nation’s monetary affairs.”

So, first and foremost, the Trump administration should form a commission to study and map out how best to reintroduce gold and silver as a formal part of our monetary system. In the meantime, there are several other steps the Trump administration should take to move us toward sound money in America:

Turn the Tables by Auditing the Money Masters

From Ron Paul to Bernie Sanders and many people in between, there has been plenty of support for “Audit the Fed” legislation. Politicians and constituents alike agree that the Federal Reserve lacks even the most basic oversight a government-sponsored institution should have — particularly when its officials can make decisions which can bring the American economy to its knees.

But Trump shouldn’t stop there; we need to audit the gold.

The last time there was a reasonably credible audit of America’s gold reserves was in the 1950s. Since then, there has been little more than peek-a-boo glances at the gold. The most recent status report done by the Department of the Treasury, claims that Fort Knox holds 147,341,858.382 fine troy ounces of gold.

However, many question the accuracy of that report and whether it tells the whole story. There is evidence the U.S. Treasury has engaged in gold leasing and other financial alchemy. Even if all the gold is still held in U.S. vaults, it may have been leased, sold, pledged as collateral, or could be encumbered in other ways. A full and independent audit is critical.

Remove Federal Taxation on Precious Metals

Another necessary step in freeing gold and silver to be used once again as money is to eliminate capital gains taxation on monetary metals. At the federal level, IRS bureaucrats insist that gold and silver be taxed when exchanged for Federal Reserve Notes — or when used in barter transactions.

When our government’s inflationary policies lower the purchasing power of the Federal Reserve Note, precious metals’ nominal dollar value generally rises, triggering a “gain.” The gain may be purely fictional in real terms. But these “gains” are still taxed — thus unfairly punishing people for owning precious metals as money.

Appoint Proponents of Sound Money to the Fed, CEA, and CFTC

President-elect Trump’s rhetoric is loaded with getting people back to work. He’ll play a hand in that directly when he makes appointments throughout his presidency. Among the most impactful will be his appointments to the Federal Reserve.

The Federal Reserve, the privately held central bank of the United States, has an unrivaled ability to manipulate and distort the economy. For much of the past 30 years, starting with Alan Greenspan, the Fed has loosened the money supply with low interest rates and quantitative easing. And it’s created moral hazards by bailing out irresponsible market players.

Tommy Behnke writes, “There are currently two vacant positions on the Federal Reserve Board of Governors, the main governing body of the central bank. Chairwoman Janet Yellen and Vice-Chair Stanley Fischer’s terms will expire by 2018. This means that… Trump will have the opportunity to replace four of the Fed’s seven leading officials with conservative figures during his presidency.”

The Council of Economic Advisors (CEA) advises the President on economic policy and prepares the Economic Report of the President. The council is comprised of 3 members nominated by the President and approved by the Senate, and its members are typically professors on a short-term leave of absence from their universities.

Trump has the opportunity to appoint new members to this advisory body. He should look to economists who ascribe to the Austrian school rather than selecting yet more Keynesian school economists who have been cheerleaders for central government planning and an inflationary monetary policy for decades.

The people Trump appoints to the U.S. Commodity Futures Trading Commission (CFTC) will also have substantial impact on the markets. In the recent past, the CFTC received complaints about concentrated short selling done intentionally to push silver and gold prices down. For example, there is strong evidence that unscrupulous banks and traders often attack during periods of low liquidity in the markets such as the middle of the night.

Former CFTC member Bart Chilton and others expressed alarm at the CFTC’s unwillingness to prosecute the manipulators who may be responsible for artificially low prices (and significant investment losses) in gold and silver. Lower gold and silver prices appeal to government and central bank officials who get uncomfortable when the shortcomings of their unbacked fiat currency system are exposed.

The largest contributor to inflation and financial turmoil is dishonest money — enabling bureaucrats to run perpetual government deficits and pile up the federal debt. If Trump takes the steps outlined above, he can indeed make our money great again.

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Trumponomics suddenly gets big Wall Street thumbs up


Trumponomics suddenly gets big Wall Street thumbs up


Donald Trump’s economic plans are suddenly getting gold stars on Wall Street.

Big banks such as Bank of America (BAC), UBS (UBS) and HSBC (HSBC) are bumping up their predictions for U.S. growth and stock market gains. The reason? Trumponomics.

 “Following Donald Trump’s election victory, we have altered our GDP forecasts as we are now expecting a modest fiscal stimulus from lower tax rates and higher government spending,” wrote HSBC chief U.S. economist Kevin Logan in a recent report.

It’s a stunning reversal from the days before the election when economists and market experts at many Wall Street banks were forecasting dire consequences — a recession and a swift market drop — if Trump were elected president.

Now many are saying the opposite: Trump is good for growth.

“Well-executed U.S. fiscal policy could boost growth substantially,” says Don Rissmiller of investment firm Strategas. Rissmiller predicts GDP growth could be a full 1% higher in 2017 and 2018.

The U.S. has been expanding at a pace of about 2% a year. Trump vows to get America to 4%.

The Trump market rally

The stock market has surged to record levels after Trump’s election. Investors cheered his promises of massive tax cuts for individuals and businesses, a rollback on onerous regulations and up to $1 trillion of new government spending on roads, bridges and other infrastructure.

The Dow is up over 5% this month, and comes after three months of losses.

“The market has sailed through some of this year’s biggest shocks (U.K. Referendum, U.S. election),” wrote the Bank of America Merrill Lynch team in a recent report. The team raised its forecast for the S&P 500 index to end the year at 2,100, up from 2,000.

On top of the tax cuts, investors also like the idea of giving big businesses like Apple (AAPL, Tech30) a tax discount to bring the cash they have stashed overseas back to the United States. That money coming back could be spent on companies buying up more stock, which would further boost prices.

The big asterisk on Trumponomics

But Wall Steet’s newfound love for Trumponomics comes with a big asterisk: Trump can’t get too protectionist on trade and immigration.

Wells Fargo (WFC) put it this way: “Tax cuts and additional federal spending could stimulate economic growth, but tariffs and restricting immigration may slow the economy. These policy prospects create potentially offsetting effects.” Due to the trade concerns, Wells Fargo hasn’t hiked its GDP forecast. However it does expect higher inflation.

Mitt Romney — now under consideration to be Trump’s Secretary of State pick — was one of many business leaders who slammed Trump for his plans to place hefty taxes on Mexican and Chinese goods coming into the U.S. Romney even said Trump’s trade ideas would send the nation careening into a recession.

Trump’s plan for his first 100 days in office includes “renegotiating” or “withdrawing” from NAFTA and labeling China a “currency manipulator.” It’s unclear how far he will go.

A rundown of experts lifting their forecasts

Here’s a rundown of who’s lifted forecasts and what they’re saying:

Bank of America Merrill Lynch: “Our 2016 year-end target shifts to 2,100 from 2,000 previously.”

HSBC: We are raising our GDP forecast for 2017 to 2.3% from 2.1% in anticipation of a boost to consumption spending. The stimulus effect should be larger in 2018 as the full impact of tax cuts affects household finances. We forecast GDP growth in 2018 to average 2.7%, up from our previous forecast of 2.2%.”

UBS: “U.S. GDP is likely to accelerate next year…A new fiscal policy regime — corporate and household income tax cuts — may further contribute to broader GDP growth although there’s obviously uncertainty around new policy as well as an important drag from uncertainty around trade policy.”

Capital Economics: “We now expect GDP growth to accelerate to 2.75% next year (up from 2%), with CPI inflation climbing toward 3%.”

Yardeni Research: “In Trump World, pressure on profits could be very bullish for stocks thanks to over $2 trillion in repatriated cash and a significant cut in the corporate tax rate! That’s a new reality for sure.”

Strategas: “A key message of the market recently has been: Something is going to get done. Single-party government matters. It is possible that well-executed U.S. fiscal policy could boost growth substantially (1%+ on GDP) in 2017-18. Corporate earnings should benefit.”

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Published at Tue, 29 Nov 2016 17:10:08 +0000

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Will Landlord-in-Chief Trump be good for real estate?


Does Trump go far enough to eliminate conflicts?

Will Landlord-in-Chief Trump be good for real estate?

How’s this for irony? Donald Trump made his name and fortune from real estate. You can argue that he will soon be the nation’s first Landlord-in-Chief. But real estate stocks have tumbled since Trump was elected president.

The Real Estate Select Sector SPDR (XLRE), an ETF that owns big real estate firms like mall operator Simon (SPG) and apartment complex companies Equity Residential (EQR) and AvalonBay (AVB), has fallen 3% since Trump defeated Hillary Clinton.

The declines stand in sharp contrast to the rest of the market, which has enjoyed a Trump rally, led by financial and healthcare stocks, construction companies and retailers.

So why are real estate investment trusts, or REITs as they are commonly known, struggling?

REITs pay big dividends. And with bond yields surging since the election, partly due to expectations that Trump will need to rack up debt to make his $1 trillion infrastructure spending plans a reality, high yielding stocks like REITs are no longer attractive.

Investors are betting REITs and other big dividend payers will be less attractive in an environment where bond rates are going up. That’s why other big dividend payers, most notably utilities and consumer staples companies, have also lagged the market lately.

But is the market getting this wrong?

Yes, many investors have flocked to REITs solely for their dividends. But the market may be underestimating the possibility that Trump will look to take care of his own, so to speak.

Of course, Trump will need to be extra careful to avoid the appearance of any conflicts of interest. It doesn’t help that his daughter Ivanka is married to real estate developer Jared Kushner. And both are on his transition team.

Trump has already faced criticism about what he plans to do with his massive real estate holdings. Some think Trump should sell his investments outright, but he is planning to place them in a trust to be controlled by his adult children.

These issues aside, REITs should benefit from Trump stimulus.

Karin Ford, senior real estate analyst for MUFG Securities Americas, met with several REIT executives at an industry conference in Phoenix just after the election. In a report to clients, she noted that real estate leaders were upbeat.

“REIT managements believe that a Trump presidency will be positive for fundamentals. They expect commercial real estate to benefit from rising business confidence, lower tax rates, and fiscal stimulus,” Ford wrote.

Ford noted that executives at Camden Property Trus (CPT)were hopeful that Trump’s plans will lead to more job growth, which should lead to higher demand for apartments.

And executives at Alexandria Real Estate (ARE), a REIT that owns research labs used by drug and biotech companies, told Ford that their tenants should thrive under Trump since they believe that “drug pricing restrictions are not high on his agenda.”

Managers at another healthcare REIT, Healthcare Trust of America (HTA), also told Ford they weren’t worried about Trump unwinding the Affordable Care Act, or Obamacare.

“We even heard cautious optimism from a few healthcare REITs, the managements of which believe that changes to Obamacare may not be that harmful to their business,” she wrote.

Ford noted that the Healthcare Trust of America executives said “lower-cost, outpatient trends are here to stay and that accelerating economic activity could boost medical office rent growth.”

But what about other potential headwinds for REITs? Won’t inflation hurt the sector? Not necessarily.

Mitch Wasterlain, founder of CAPFUNDR, an investment firm focusing on real estate funds, said in a report after the election that inflation could lead to more pricing power for real estate companies. They’ll be able to demand higher rents.

“Historically, real estate has done well in high interest rate, inflationary environments,” Wasterlain wrote.

But the worst may be over given that REITs have been beaten up so much in the past few months due to fears that stimulus by either Trump or Clinton would drive up interest rates.

The Real Estate Select SPDR ETF has tumbled more than 10% since it was separated from S&P’s financial sector and became its own sector in September.

“With the pullback in REITs, valuations are now attractive, as fundamentals remain solid and balance sheets are as strong as they have ever been,” said William Lynch, director of investments at Hinsdale Associates, in a report.

So real estate may still wind up being a good investment during Trump’s tenure.

Now Trump just needs to figure out what he’ll do with all his real estate holdings to avoid any conflicts of interest.

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Published at Wed, 23 Nov 2016 17:41:39 +0000

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U.S. tax refund delays may surprise low-income filers


by stevepb from Pixabay

U.S. tax refund delays may surprise low-income filers

By Beth Pinsker

Deep within the recesses of recent tax policy is a provision that will delay refunds for millions of taxpayers who file for two popular credits aimed at helping low-income workers.

The Internal Revenue Service last week reminded filers that no refunds would be available before Feb. 15 for returns claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). The changes stem from the Protecting Americans From Tax Hikes Act of 2015, known as PATH.

The IRS will open up e-filing for 2016 returns around Jan. 23, three days after the inauguration of Donald Trump as president.

Many of those who claim these credits tend to file their taxes early and count on the money coming well within the IRS’s traditional 21-day refund period.

“It’s not highly publicized, but it will impact a lot of the hardest working and will hit them early and the most difficult period,” said Mark Steber, chief tax office at preparer Jackson Hewitt.

The reason for the delays is to prevent fraud and theft, which was particularly rampant among about 26 million returns claiming $65.6 billion of Earned Income Tax Credits for 2015.

The credits go to qualifying people whose deductions exceed their income. The average 2015 refund was $2,482, according to IRS data. The maximum allowed by law is $6,318 for a return claiming three or more children. The Additional Child Tax Credit can add up to an additional $3,000.

The IRS has said that it would process returns normally after Feb. 15, but tax preparers still have a lot of questions.

“Will all direct deposit returns go on Feb. 15? I don’t know,” said Jeffrey Schneider, an enrolled agent with SFS Tax & Accounting Services in Port St. Lucie, Florida. “I’m just making a presumption, but most of these filers don’t have bank accounts, so they don’t get direct deposit.”

A dozen or so clients of Schneider’s clients affected by these delays will be notified via his email newsletter, he said.

“If they get their W-2 early, and they’re expecting $8,000 – they’ll go nuts, I’ll guarantee you,” Schneider said.

Schneider and other tax preparers said they were worried that filers might seek advances from refund advance outfits, which charge high interest rates and fees.

Tax preparer Jackson Hewitt has an alternative, the Express Refund Advance, with no interest or fees, that will start early this year – on Dec. 15, with the option to pre-qualify before the end of November.

Jackson Hewitt arranges loans for qualifying clients through partner MetaBank for $200 to $1,300, and also helps them open a temporary deposit account with another partner bank for the refund. When the IRS direct-deposits the funds, the client repays the loan. If the refund falls short, Jackson Hewitt will take the loss.

“The client has told us that they don’t want to go into debt, but they already earned this money and we’re just getting it to them,” Jackson Hewitt President David Prokupek said.

If taxpayers can just hold out a few weeks, however, they can get their checks directly and not deal with any middlemen.

“What people need to know is, first of all, it’s industry-wide and the IRS says still to file. As soon as Feb. 15 hits, they will release the refund,” Lisa Greene-Lewis, a CPA and TurboTax blog editor, said.

(Editing by Lauren Young and Richard Chang)

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Published at Tue, 22 Nov 2016 20:35:10 +0000

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Market euphoria forgets Trump’s scary promises


NAFTA explained

Market euphoria forgets Trump’s scary promises

Wall Street is in heaven these days. Donald Trump’s surprise election has led to a rally, carrying the Dow above 19,000 for the first time ever.

The Trump rally has been sparked by hopes that the president-elect will follow through on promises to slash taxes, roll back regulation and ramp up infrastructure spending. Many are betting a focus on these strategies will finally unleash the American economy after years of sluggish growth.

But lost in the post-election euphoria is the fact that this rally has been almost exclusively built on Trump’s pro-business campaign promises — not the ones that frighten many investors.

Trump has also promised to tear up NAFTA, slap big tariffs on China, break up big banks and audit the Federal Reserve — all events that make the markets very nervous. That’s not even counting Trump’s unpredictable nature, which suggests years of precisely the uncertainty that investors hate.

“The market seems to be grabbing on to all the prospective good things and ignoring the negative issues lurking out there,” said Mark Luschini, chief investment strategist at Janney Capital.

Luschini said he’s most concerned about Trump’s promises to “terminate” NAFTA and the risk that imposing big tariffs on goods from China and Mexico will ricochet back to the American economy.

“Trade is the big one. I’m worried about retaliatory practices by trade partners that could harm multinational revenues,” he said.

Peter Boockvar, chief market analyst at The Lindsey Group, shares those worries. “We just have to hope Trump doesn’t follow through with his trade stuff.”

Here’s a sampling of the Trump campaign rhetoric that investors seem to be forgetting, or at least hoping won’t turn into actual action:

Killing NAFTA: Trump’s promise this week to withdraw the U.S. from the Trans-Pacific Partnership (TPP) is a fresh reminder of the anti-trade stance he ran on. Once TPP is officially dead, Trump has pledged to renegotiate or “terminate” NAFTA, the North American Free Trade Agreement that he has called the “worst trade deal in history.”

Trump has the power to unilaterally withdraw from this trade deal with Mexico and Canada without the approval of Congress. Economists have warned that doing so would likely cost many U.S. jobs, millions of which depend on free trade with Mexico.

Tariffs could spark trade war: Trump didn’t just pledge to end NAFTA, he wants to slap big tariffs on China and Mexico. Again, Trump does have the authority to do this without Congress.

But what would happen if Trump installed 35% tariffs on Mexico and 45% on China, as he’s said? Many fear it would spark a tit-for-tat response from trading partners that devolves into a trade war. That is a scary outcome for the market, especially given that about half of S&P 500 revenues are from overseas.

Break up the big banks? Don’t let the rally for stocks — including big banks — fool you, Trump is no friend to Wall Street. In fact, Trump has advocated for breaking up America’s big banks. The GOP platform at this summer’s convention called for bringing back the Glass-Steagall Act, the Great Depression-era law that bans banks from serving both Wall Street and Main Street. A return of Glass-Steagall would force mega banks like JPMorgan Chase (JPM) and Citigroup (C)to shrink themselves.

Trump’s chief strategist, ex-Goldman Sachs banker Steve Bannon, would love this. Bannon told Buzzfeed in 2014 that the Wall Street meltdown was driven by bankers’ “greed” and took issue with the fact that bank execs didn’t face criminal charges.

Attacking the Federal Reserve: During the campaign, Trump broke from tradition by taking repeated shots at Fed chair Janet Yellen. He claimed Yellen was keeping rates low to help President Obama and “being more political than Secretary Clinton.” Trump also backs a GOP push called “Audit the Fed” that would allow the General Accountability Office to review the central bank’s monetary policy decisions.

Any legislation that threatens the Fed’s independence makes investors uneasy. The worry is the Fed would take orders from politicians, instead of basing interest rate decisions on the goal of a strong job market along with steady inflation. Yellen recently warned that this independence is “critically important” and noted that countries where central banks are “subject to political pressure” have suffered “terrible outcomes.”

Deporting 11 million undocumented immigrants: Trump has promised to take a much tougher stance on immigration and even pledged to deport up to 11 million illegal immigrants. But many warn that mass deportations would be extremely divisive and costly for both the government and businesses that rely on these workers. Research at the Wharton School estimates that the plan to deport undocumented workers would result in four million lost jobs by 2030. Luschini, the Janney strategist, worries that Trump’s immigration policies could hurt consumer spending, spark mass protests and fuel “undercurrents about inequality.”

Even Trump’s more moderate immigration ideas could hurt some companies. Specifically, Trump has threatened to crack down on the practice of hiring foreign workers through H-1B visas and Jeff Sessions, his proposed Attorney General, is a vocal critic of this program. Silicon Valley has long relied on the H-1B program to find talented workers that help fuel innovation.

— CNNMoney’s Patrick Gillespie and Heather Long contributed to this report.


Published at Tue, 22 Nov 2016 17:33:52 +0000

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Election Rejection: Liberal Hatred and Hypocrisy Rage in Violence Due to Biased Media



Election Rejection: Liberal Hatred and Hypocrisy Rage in Violence Due to Biased Media

When Donald Trump would not state with certainty that he would accept the election results before even knowing what the results were or how they might come about, liberals wrung their hands all over the media in grief over the loss of democracy as we know it. Hillary, herself, decried that she had never heard anything so anti-democratic and unAmerican in her life.

Now hundreds of thousands of liberals around the nation join in protests and even riots to proclaim, “Not my president” and “Dump Trump.” A few have created petitions for their liberal states to secede from the union. Still others are petitioning the electoral college with over 4,000,000 signatures to overthrow the election. They were fine with the electoral college when they were certain that Hillary would win due to the electoral vote outweighing the broad sweep of populist votes that Trump might get, but now that the candidates’ roles are reversed, they say the centuries-old electoral college needs to be abolished.

Of course the snowflakes are also all melting down because they were brought up in a sheltered existence where everyone gets a prize just for participating. Because there were no losers in snowflake schools, this is their first experience of what real-world losing feels like. In the stark world they are just entering outside the educational womb, losing just means you get nothing of what you wanted. Naturally, they’re balling about that. For those who have continued on to college, the womb is trying to wrap itself around them one last time by giving them puppies, coloring books, hot chocolate and therapy.

Liberals organize for anarchy because of biased media coverage about Trump

Says one group that hated Trump for refusing to say he would accept the election results before knowing why and how the results came out…

#DisruptJ20 call[s] for a bold mobilization against the inauguration of Donald Trump on January 20, 2017: On Friday, January 20, 2017, Donald Trump will be inaugurated as President of the United States. We call on all people of good conscience to join in disrupting the ceremonies. If Trump is to be inaugurated at all, let it happen behind closed doors, showing the true face of the security state Trump will preside over. It must be made clear to the whole world that the vast majority of people in the United States do not support his presidency or consent to his rule…. We must take to the streets and protest, blockade, disrupt, intervene, sit in, walk out, rise up, and make more noise and good trouble than the establishment can bear. The parade must be stopped. ~ Zero Hedge

In their video, this group even goes as far as to say,

Trump’s success proves the bankruptcy of representative democracy. Rather than using the democratic process as an alibi for inaction, we must show that no election could legitimize his agenda.

This is beyond hypocrisy. It’s a blatant call for anarchy. As the video title says, it is a call to make sure there is “no peaceful transition” of power. This group appears to be hoping the National Guard will be called out in order to create the appearance that Trump can only “rule,” as they put it, through a police state. Hypercritically, they are the ones doing their best already to make sure that is how it plays out.

I lay the blame for this organized chaos on the liberal mainstream media. It is the outcome to their constant distorted replays of Trump’s words. Yes, Trump’s huge mouth lends itself to easy trouble because he says things as boisterously and provocatively as possible in order to get free media coverage, but the media readily bought into all of that because it sells, and they even hyped what he said every time they replayed it to make sure it sold even more and that it suited their goal of saving the liberal establishment. The cost of that is now peace itself because of the fear factor that the irresponsible media sought to create in hopes of preventing Trump from being elected (and to make bigger headlines).

For example, when Trump said we should send Mexican rapists home, the media constantly replayed that with commentary that turned it into “all Mexicans are rapists,” creating fear in the Mexican-American community that Trump hates Mexicans. What he really said was that a handful of specific Mexicans who were known by the Obama Administration to be convicted criminal rapists and who had been allowed to remain in the US and who subsequently raped American women, should have been sent home before that could ever happen. He was highlighting the shear stupidity of a government that is so extreme in its refusal to deport illegal aliens that it even insists on keeping rapists here. But media bias created a flurry of fear out of Trump’s boisterous words.

Likewise, Trump NEVER said that he has grabbed women inappropriately, though that is what the liberal media kept saying he said. In the now infamous video Trump switches from saying how he tried to seduce a woman and failed (hardly bragging) to saying he was surprised he failed because celebrities can usually get away with outrageous actions, and then he states the most outrageous thing that comes to his mind. He notably switches from saying “I did” to saying “you can” at exactly that point. In other words, “It was amazing I couldn’t seduce her with my offer of a buying spree for her apartment when celebrities can usually get away with doing any outrageous thing they want.”

The fact is that celebrities like rock stars often DO get anything they want sexually. There are always gold diggers and fanatics who throw themselves at celebrities. These are women who would wrap their legs around a celebrity who did what Trump talked about and say, “Bring it on, Big Boy.” This was far from the mea culpa that the media made it into.

The video above takes off with these media misrepresentations as if all of them were fact. So, the media is more culpable than simply being a biased bystander. It has created the narrative that has fueled this fear and rage across the country. As if Trump’s mouth was not provocative enough, the biased media distorted his words at every turn.

Says one person in a comment section that caught my eye…

Students’ reaction is NOT about losing an election. It’s because these people watch media, and the (Clinton-controlled) media spent the last four months working overtime to program everyone in the country that Trump is a soulless monster come to eat them and their families, roasting their babies on a spit while laughing, and so on.

This emotional programming has been extremely effective. That’s why people are rioting now. Not because they aren’t good losers, but because they’ve been successfully emotionally programmed by the Clinton Campaign’s media arm (CNN, CNBC, and millions of scary social media posts), who are very good at what they do.

What’s more, the “bad element” (the real scumbag racist nazis out there) have also been convinced by this same Clinton emotional-programming campaign that Trump is on their side, so they are emboldened to act badly! A win-win, from HRC’s standpoint, but a lose-lose from civil society’s view. ~ Peak Prosperity

I’d say it is both. Because the snowflakes were raised to melt at room temperature, they are highly subject to the fear-mongering of the mass media, which has whipped them up into mass hysteria.

Trump might not have accepted the election results if he saw irregularities that looked like evidence of rigging. If so, he might have gone to court — all within his legal rights — just as the Democrats did when Al Gore refused to accept the election results based on irregularities. These people, however, are doing their best to set up blockades to make sure the president-elect can’t even be inaugurated. They’re not just going to protest the election results; they’re organizing to try to prevent the results from playing out!

Media bias continues unabated distortions this past week

Above the pandemonium, the most egregious thing amid all of this hypocrisy that I have witnessed is the disingenuous coverage by the “progressive” press about the liberal riots and violence against Trump supporters.

ABC News mentioned in one report that Trump had not done much to ask his supporters to stop violence, though in fact, he had asked it directly twice on 60-Minutes, which got a lot of replays. Noticeably absent was any statement by ABC News about how neither Hillary nor Obama have done anything to ask their supporters to stop acts of hatred and violence, even though it appears to be their supporters who are creating the lion’s share of violence. Obama, while in Berlin this past week, actually encouraged protestors to keep up their protests without saying a word about ending their violence. He spoke only of the nobility of their protests:

One of the great things about our democracy is that it expresses itself in all sorts of ways…. I would not advise people who feel strongly or who are concerned about some of the issues that have been raised during the course of the campaign … I wouldn’t advise them to be silent. What I would advise is that … organizing matters…. Do not take for granted our systems of government and our way of life. ~ Fox News

President Obama was practically a pep-rally speaker for the protests, even though some have been quite violent. He has refused to ask protestors to stop their violence even after being asked to help quell the storm:

Protests have broken out in cities across the country since Trump’s upset victory last Tuesday. Some have been peaceful, but there have been incidents of violence — and a demonstration last Thursday in Portland escalated into a destructive riot. Trump’s campaign manager Kellyanne Conway repeatedly has called for Obama to speak out on the unrest. “I am calling for responsibility and decency. I hope President Obama says, ‘Cut it out,'” she told “Fox News Sunday.” Obama, though, so far has not done so, speaking mostly in generalities. ~ Fox News

Not just in generalities but in praise of the protests with no hint whatsoever that the primary perpetrators of violence need to stop it. Yet Trump — who said specifically to his own supporters, if any were engaged in such acts, “stop it” — was portrayed by the press as solely being the one who has not said enough to curb violence. The bias in the coverage is the worst I’ve ever witnessed.

Lying through statistics about hate crimes

Toward the end of the week, news stories decried the uptick in hate crimes since Trump was elected, often sounding as if the crimes were Trump’s fault. ABC reported, for example, that “many of the incidents made reference to Donald Trump.” What they didn’t say is that much of the violent uptick has been against Trump and his supporters. The highest reported increase, for example, was in the liberal state of California.

The media has also hugely exaggerated the significance of the increase:

Overall, the total number of hate crimes against all groups reported by law enforcement agencies to the FBI increased from 5,479 in 2014 to 5,850 last year. That remains far lower than the numbers seen in the early 2000s, but the FBI release comes amid numerous reports of attacks nationwide based on race and religion following last week’s presidential election. ~ ABC News

Yeah, mostly attacks based on race or religion made against Trump supporters by people who feel afraid that all Trump supporters are bigots because of how the media has played Trump’s comments. The increase the FBI reported includes all the crimes being committed by people of color against White Trump supporters, and still it was only a 7% increase in 2015 (before the presidential campaigns kicked into high gear). It does not include any increase that may have happened in 2016, so there is no justification in attaching the report to the recent violence.

The increase has been presented as if it proves the rhetoric of the Trump campaign during 2015 may have caused a surge of violence. What isn’t said is that in 2013 hate crimes dropped from 6,573 to 5,928 and then dropped again in 2014 to 5,479. So, a rise of less than 400 in 2015 against a drop of about 500 or more in each of the two preceding years is a change that is within the level of normal ups and downs.

No one got all excited about any “huge improvements” in hate crimes in 2013 and 2014; so there is even less reason to be alarmed about a “huge increase” in 2015, given that the change is less than either of the two preceding years. In fact, in 1995, the FBI reported 7,947 hate-crime incidents, and the annual average since then has been 7,573. So, what the media should have reported was that the campaign year of 2015 was 1700 incidents lower than the annual average for hate crimes during the years that the FBI has collected hate-crime statistics (23% lower than the average year)! Moreover, the years have ranged from about 5,000 to 11,500. So, last year wasn’t just well below average but only about half of the peak year.

And that’s how you LIE with statistics! All to make it look as if Trump’s candidacy caused the upsurge.

Some of the liberal commentators this week particularly spoke out against what they said was a huge rise in hate crimes against Muslims — a 67% increase over the previous year! However, a look at the numbers colors the story a little differently there, too: Last year, there were 257 reported incidents of anti-Muslim crimes compared to 154 the year before. That’s a rise of 103 incidents — two more incidents per state for the entire year. When numbers are as small to begin with as 154 (out of about 6,000 hate crimes), its easy to see a 67% increase.

While even an increase of two per state is certainly not good, it is not the outbreak of hatred by Trump supporters that the media kept presenting this week. For a nation with over 320,000,000 people, I think a total of 257 hateful incidents against Muslims is an extraordinarily small number. Incidences against Jews were much higher, and Trump has never said anything against Jews and is more pro-Israel than Obama. You’ll also find far higher incidents of one Muslim sect against another in nearly any Muslim country of your choosing. Any number is too big in that there should be none whatsoever, but that would be only in a perfect world.

Hate crimes against Muslims accounted for 12% of all hate crimes on average between 2001 and 2012), while hate crimes against Christians counted for 8%; but hate crimes against Jews accounted for 66%. The percentage of hate crimes that are directed against each religious group, however, has decreased between 2001 and 2012 compared to the average from 1995-2000, except for Muslims, where it has increased from 2% to 12%.

So, yes, hatred toward Muslims has taken an increasing portion of all hate crimes as hate crimes to other groups has dropped, but it has been increasing for years since 9/11 in 2001, not because of anything Donald Trump has said. For example, hate crimes against Muslims rose 14% in 2014 over 2013 when Donald Trump wasn’t even campaigning. I would suggest it is quite likely that the increase in hatred toward Muslims has far more to do with 9/11 and more recently with the atrocities of ISIS, such as ISIS beheadings, that have happened all over the world, particularly in Paris, in the last couple of years than it has to do with Donald Trump’s rhetoric.

Yet, the media kept trumping up the “surge” of hate crimes this past week because FBI statistics just came out. (These are all FBI statistics, which is charged with compiling statistics for all hate crimes in the US.) The liberal-biased media has attributed the rise in FBI statistics to Trump just because of the reports coincidence with Donald Trump’s victory in the presidential election.

How media bias slanted stories of violence against Trump

Quotes like the following were provided by the liberally biased media as the explanation for the latest FBI statistics:

“We’ve seen how words from public figures like Donald Trump translate into violence,” said Mark Potok with the Southern Poverty Law Center, which tracks hate groups in the U.S. ~ ABC News

Actually, however, the FBI’s report stated that the number of hate groups went down in 2015, and it showed that liberal California has the highest number of hate groups of all states.

Sure last week, not included in any of the statistics that were all about 2015 was much more violent than most weeks, but most of the violence was perpetrated by those who don’t like Trump. Some of it was directly against Trump supporters, and some was simply against anyone or any business in the vicinity of an anti-Trump protest/riot. The media said very little about who last week’s increase in violence was against.

Look, too, at the kinds of incidents the liberal media is reporting as acts of hate:

Two students at a vocational school in York County, Pennsylvania, held a Donald Trump sign in a hallway as someone shouted “white power.” ~ ABC News

While I don’t like that statement because there is undoubtedly racial prejudice behind it, can you imagine that the press would call it an act of hatred if two students were holding a Hillary Clinton sign in a hallway as someone shouted “Black power?” Never in a million years would the hypocritical left with all of its double standards call that an act of racism or hatred. Thus, the press perennially creates the illusion that all racism is one-sided.

It should also be noted that much of the increase in hate crimes was not in response to Donald Trump’s incendiary rhetoric but was backlash to Barrack Obama’s changes on gay/gender issues and his support of Muslims. Not that that makes the crimes OK or justified in any sense, but just that those crimes have nothing to do with Donald Trump; but that was never mentioned in the several stories out this past week about the rise in hate crimes over the past two years.

Portland under seige, liberals attack Trump supporters across the nation

So-called protests against Trump’s election in Portland are really all-out riots that have included, setting buildings on fire, blocking off trains and roadways with physical barricades, breaking windows, other acts of vandalism, and assaults, even a shooting. Naturally, the nation’s most liberal cities have been the most violent. ~ ABC News

[Portland] Trail Blazers All-Star guard Damian Lillard is questioning the damage and violence taking place in Portland, Oregon, during anti-Donald Trump protests, saying that isn’t the proper way to go about implementing change. “I think it’s very unfortunate that people have done some of the things they have done during the protest. A lot of harm and damage has been done,” Lillard told ESPN on Saturday. “I do understand their frustration, and I commend people wanting to come together for some kind of change. Tearing apart your own city just isn’t the place to begin, and also making your own city less of a safe place isn’t the answer.” ~ ABC News

And these people — some of whom attacked police with fire and projectiles and attacked a TV crew — are the ones who are claiming they don’t feel safe because Trump was elected. I think the real truth is that people should not feel safe because of how these people are violently rejecting the election results.

One of the biggest reasons people have protested Trump is because they thought his rhetoric was making them less safe. They were certain Trump’s supporters would become violent if Trump lost and his supporters believed him that the election was rigged. Now, liberals claim the election was rigged because the electoral college didn’t match the popular vote (something they’ve had their entire lifetimes to change if they think it is rigged against them but were fine with when they were certain it would tip the balances in Hillary’s favor).

Earlier this week I reported on two school kids in different schools who were beat up because they supported Donald Trump and about a White guy pulled out of his car and viciously attacked by a group of laughing black people, solely because he was a Trump supporter. Those videos got no play in the mainstream media that I saw. This was covered only by the alternative media that liberals revile.

Activist who claimed that “Trump cannot divide us with his racism,” divided Washington by cutting off all access to the Lincoln Memorial and Pennsylvania Avenue to anyone but themselves. ~ ABC News

In Indianapolis, protestors threw rocks at police officers, injuring two.

Not all that Twitters is gold

On the other hand, numerous alternative media sites in the past week carried stories that were nothing more than unsubstantiated rumors. They did so because they were too quick to follow their own biases. These rumors, often based on just some individual’s tweet with a photo, claimed that organizations sponsored by George Soros took out out ads on Craigslist, offering to pay people to protest and that they bussed these hired protestors into cities. These kinds of rumors flew around a lot during the campaign and especially last week, but says they are all untrue, and that does appear to be the case as the support for each rumor is in each case speculation about what was behind the ad or what was behind the photo:

Photographs showing long lines of buses were shared with the untrue claim that they were used to ship paid anti-Trump protesters to various cities. ~

Craigslist ads for legitimate canvassing jobs were mistaken by some conspiracists as seeking to recruit paid protesters to swarm Donald Trump rallies. ~ gave the same analysis:

It’s been rumored that George Soros and pro-Clinton groups funded protests and paid professional protesters after Donald Trump was elected president. The Truth: We haven’t found any proof that George Soros or pro-Clinton groups have funded anti-Trump protests…. A man named Eric Tucker created a stir on social media when he posted multiple photos of charter buses with the caption “Anti-Trump protestors in Austin today are not as organic as they seem. Here are the busses they came in.” #fakeprotests… A FOX affiliate in Austin found that the charter buses were actually being used to shuttle people from hotels to the Tableau Conference being held at the Austin Convention Center. The buses had nothing to do with protests….

Before Eric Tucker took the tweet down Friday, it had nearly 17,000 retweets and became part of a national controversy. “I thought going on Twitter was not a big deal, I thought, I have 40 followers, I post twice a year on Twitter, I’m not a professional blogger at all,” Tucker said.

Tucker said seeing a bunch of charter buses lined up on 5th Street near Waller on Wednesday, coincidentally around the same time an anti-Trump rally was being held in downtown Austin he said was unusual. So he took to Twitter with the claims the buses were being used to ship in protesters. “I hadn’t really fact checked at all, it was just all kind of circumstantial and then before I know it, it’s a story, I am over 10,000 tweets by the next day. ~

Wikileaks emails, however, did show that Democratic Party campaigners bussed illegal aliens from poll to poll to vote over and over. One commentator, Alan Colmes said last week that never happened, but the DNC’s own emails say it did. I guess those working for the DNC were just lying to each other about their activities.

Why were there no interviews in the mainstream media with those who wrote the emails, asking why they wrote such things? Why was there no investigation into how many emails there are that show these illegal actions? This is why we need the “fifth estate,” but we also need it to be careful and honest.

The Fifth Estate is a socio-cultural reference to groupings of outlier viewpoints in contemporary society, and is most associated with bloggers, journalists publishing in non-mainstream media outlets, and the social media. The “Fifth” Estate extends the sequence of the three classical Estates of the Realm and the preceding Fourth Estate, essentially the mainstream press. The use of “fifth estate” dates to the 1960s counterculture, and in particular the influential The Fifth Estate, an underground newspaper first published in Detroit in 1965. ~ Wikipedia

As often happens in human affairs, the radical journalists who made up the fifth estate of the 1960s have become the fourth estate of the new establishment. And that’s why a new alternative media is rising to fill the intellectual vacuum and right the balance; but such sites often jump to publish rumors as news because the rumor suits their own cause. We need to be careful and honest about our facts and not jump to conclusions if we want to build credibility.

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David Haggith

David Haggith
The Great Recession Blog

David Haggith

My path to writing this blog began as a personal journey. Prior to the start of this so-called “Great Recession,” my ex-wife had a family home that was an inheritance from her mother. I worked as a property manger at the time, and near the end of 2007, I could tell from rumblings in the industry that the U.S. housing market was on the verge of catastrophic collapse. I urged her to press her brothers to sell the family home before prices dropped. The house went on the market and sold right away — and just three months before Bear-Stearns and others crashed, taking the U.S. housing market down for the tumble. Her family sold at the peak of the market.

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Published at Sun, 20 Nov 2016 18:24:56 +0000

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Investors bet Trump stimulus will boost U.S. stocks

U.S. President elect Donald Trump arrives to address supporters with his son Barron and wife Melania  at election night rally in Manhattan, New York, U.S., November 9, 2016. REUTERS/Brendan McDermid

U.S. President elect Donald Trump arrives to address supporters with his son Barron and wife Melania at election night rally in Manhattan, New York, U.S., November 9, 2016. REUTERS/Brendan McDermid

Investors bet Trump stimulus will boost U.S. stocks

By David Randall and Jonathan Stempel

U.S. voters’ decision to install Donald Trump in the White House may extend the life of the aging, seven-year bull market in U.S. stocks.

That is the consensus of prominent investors attending this week’s Reuters Global Investment Outlook Summit.

Expectations that Trump will successfully engineer massive new infrastructure spending, slash corporate and some personal income taxes, and wipe out a slew of regulations may boost prospects for U.S. stocks, and end what some investors call a three-decade bull market in bonds.

“The earnings impact of President-elect Trump will outweigh whatever increase in bond interest rates comes about,” said Steven Einhorn, vice chairman of hedge fund Omega Advisors Inc, which invests about $4 billion.

Einhorn expects U.S. stocks to return as much as 8 percent in 2017, including dividends. “The risks are to the upside for the (Standard & Poor’s 500) rather than the downside,” he said.

As the post-election, double-digit percentage surge in bank stock prices suggests, investors expect Trump to bolster that sector by reducing its regulatory burdens.

They also said infrastructure spending could boost old-line sectors such as coal and steel.

“I do think that Donald will do an excellent job,” said Carl Icahn, the billionaire activist investor and one of Trump’s earliest Wall Street supporters.

But even Icahn, who left what became Trump’s victory party in the early morning on Nov. 9 to make a nearly $1 billion stock bet, expressed near-term caution about stock markets, citing concern about the overall economy.

“It has run ahead of itself,” he said. “There are going to be bumps along the road. You know, this is a big ship that you’ve got to really turn around. You’ve got to get this economy back on track, and I don’t think it is.”



Investors are betting that will change and poured a net $23.6 billion into U.S. stock funds in the latest week, according to Lipper data.

Such enthusiasm may in part reflect investors’ bad habit of chasing recent performance.

Or, it may reflect their desire for a longer-term commitment to stocks.

“The first question is whether they’ve actually fallen in love, or whether it’s sort of a one-night stand,” said Richard Bernstein, chief executive of Richard Bernstein Advisors LLC in New York. “Right now it’s more of a one-night stand… You haven’t seen the lasting shifts in asset allocation.”

Bruce Richards, chief executive of hedge fund Marathon Asset Management, which invests $13 billion, said Trump’s victory could boost gross domestic product growth by 1 percentage point, and has made him bullish on “the whole steel complex.”

The Republican sweep of Congress may also bode well.

“I don’t think the market would have done this with a split Congress,” said Jason Karp, who runs the $3.8 billion hedge fund Tourbillon Capital Partners LP in New York. He said financial stocks could rise 50 percent more, despite their recent gains.

But Dawn Fitzpatrick, global head of equities, multi-asset and the O’Connor hedge fund businesses at UBS Asset Management, said there could be a near-term pullback, especially if more regulations survive than some hope.

Several guests also questioned how thoroughly Trump would, or would want to, follow through on his tough-on-trade rhetoric.

“You’re going to hurt 70 percent of the economy” with big new trade barriers, Bernstein said. “Do you really want to pay $1,000 for your big screen TV instead of $250? I don’t think you’re going to find too many people who want to do that.”



Many summit attendees said investors need to take a fresh look at how bonds fit into their portfolios, and to steel themselves for possible losses in 2017.

“We have a set of investors that has been trained to buy bonds for capital appreciation, and buy equities based on yield,” Fitzpatrick said. “That behavior is going to have to be unlearned.”

Higher yields, and lower prices, are likely for many bond classes, ranging from U.S. Treasuries to junk bonds.

Some of that has already occurred, with the yield on the benchmark 10-year U.S. Treasury note surging above 2.3 percent from 1.86 percent on Nov. 8, and below 1.4 percent in July.

Kathleen Gaffney, who helps run investment-grade fixed income at Eaton Vance Management in Boston, which oversees $343 billion, said she is holding an above-average 11 percent cash stake to guard against volatility.

Josh Brown, chief executive of Ritholtz Wealth Management in New York, said investors should focus on building “durable” portfolios to ride out whatever happens.

“Behavior is going to be more determinative of our clients’ returns,” he said. “We can’t control the markets, we can’t control what the Fed’s going to do, we can’t control who’s elected, but we can control our responses.”

(Additional reporting by Lawrence Delevingne, Sam Forgione, Svea Herbst-Bayliss and Trevor Hunnicutt; Editing by Jennifer Ablan, Bernard Orr)

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Published at Fri, 18 Nov 2016 21:05:03 +0000

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Goldman: “Market expectations of quick fiscal expansion may be running ahead of political and legislative realities”


by PredragKezic from pixabay

Goldman: “Market expectations of quick fiscal expansion may be running ahead of political and legislative realities”

by Bill McBride on 11/17/2016 04:41:00 PM

 A few brief excerpts from analysis by Goldman Sachs economist Alec Phillips: A Fiscal Boost in 2017: How Much, How Fast?

Tax reform has political momentum, which is likely to increase the budget deficit... In light of the election result, we assume that the deficit will increase by more than previously expected. Specifically, we assume that fiscal policy choices under the next Congress will increase the budget deficit by around 0.75% of GDP, or around $150bn, in 2018, and similar amounts over the next few years.

but the market is more focused on fiscal “stimulus” than Congress is. There are risks in both directions to our fiscal assumptions, but we note that financial markets appear to be more focused on fiscal “stimulus” than lawmakers are. …

Both sides support some type of infrastructure program, but neither side seems enthusiastic. Although President-elect Trump has highlighted infrastructure among the priorities he hopes to address, the reaction from Congressional Republicans has been tepid. While some believe the inclusion of an infrastructure plan in the tax legislation that Congress is expected to consider in 2017 could increase Democratic support for the combined package, others are wary of proposals to use the proceeds from taxing the unrepatriated profits of US multinationals to pay for it. Instead, Republican lawmakers appear more inclined to use the bulk of the proceeds from taxing those overseas earnings to offset the budgetary effects of reducing statutory tax rates.

Obamacare “repeal” seems unlikely to change the fiscal picture for 2017 or even 2018. Congress will face a number of challenges in reforming the ACA in 2017, and we would expect that the process to devise a replacement plan will take until late 2017, if not 2018. We would also expect whatever replaces the current system to take effect after the midterm congressional elections, in 2019. This could lead to uncertainty regarding the changes that might be made, but we expect that whatever changes to the ACA might ultimately occur, they would probably not take effect until 2018 at the earliest and more likely 2019.

CR Note: The “infrastructure” proposal that many investors are focusing on is really a proposal for about $100+ billion in tax credits to spur private investment in infrastructure (I’ve seen some people talking about $1 trillion in infrastructure investment – but that is the projected size of the private investment, not the proposed government spending).  This proposal is actually very modest in terms of a fiscal boost.   More analysis to come when we see the actual proposals, but I think analysts might be overestimating the boost from government spending in 2017.


by Bill McBride on 11/17/2016 04:41:00 PM

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Published at Thu, 17 Nov 2016 21:41:00 +0000

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Trump victory pushing U.S. fund managers into small-cap shares


U.S. President-elect Donald Trump in Manchester, New Hampshire, U.S., October 28, 2016.REUTERS/Carlo Allegri/File Photo

Trump victory pushing U.S. fund managers into small-cap shares

By David Randall | NEW YORK

President-elect Donald Trump’s victory last week is pushing U.S. fund managers into the shares of small, domestic-oriented companies that they expect to benefit should Trump cut back on regulations and renegotiate free trade agreements as promised.

Already, the Russell 2000, the benchmark for small companies in the United States, is up nearly 12 percent over the past five trading days, a performance nearly triple the 4.4 percent gain of the large-cap S&P 500 over the same time. Fund managers say they expect the small-cap rally to continue into 2017 as the incoming Trump administration begins to put policies in place.

“Right now this is the hope rally, but it will be a while before you have any real changes out there that flow through to earnings,” said Barry James, president of Dayton, Ohio-based James Advantage Funds.

James is moving approximately 40 percent of his multi-cap fund into small-cap shares, up from 10 percent earlier this year, by buying companies such as Neenah Paper Inc, which manufacturers filtration and specialty paper in plants in Wisconsin and Ohio, and outsourcing company Convergys Corp, which has its primary call centers in Florida and Ohio.

The move into small-caps comes at a time when the category had underperformed larger-caps over the past one and three years, leaving valuations more attractive regardless of the outcome of the election, said Martin Jarzebowski, a portfolio manager at Federated Investors in New York.

Trump’s administration is expected to cut back on regulations across industries, leading to more mergers and acquisition activity, Jarzebowski said.

“We’re looking at adding acquisition targets” in sectors such as industrials and materials, Jarzebowski said.

Yet Trump’s administration will also likely bring higher market volatility, which would hurt small-caps, which often are thought of as riskier than larger companies, said Steven DeSanctis, an equity strategist at Jefferies in New York.

At the same time, small-cap exchange traded funds brought in $4.2 billion in the week since Trump’s victory, DeSanctis added, which was the biggest inflow since May 2008 and suggests that markets already have priced in any benefits to the category.

Tim Cunningham, a portfolio manager at Santa Fe, New Mexico-based Thornburg Investments, said he was moving away from dividend-stocks like Molson Coors Brewing Corp and adding to his positions in regional banks such as Silicon Valley Bank-parent SVB Financial Group that should benefit from higher interest rates.

“Even with a small increase in rates, it will immediately see a big increase in its earnings. That’s basically pure margin,” Cunningham said.

Cunningham has also been adding to his position in energy-drink company Monster Beverage Corp thanks to its international growth. The company’s shares are down 6.7 percent over the past five days after voters in Boulder, Colorado, Cook County, Illinois and the San Francisco Bay Area passed new taxes on sugar-sweetened beverages.

He is also looking to add to large-cap technology shares such as Inc, Facebook Inc and Google-parent Alphabet Inc that have been hurt by concerns that the incoming Trump administration could dampen their foreign sales and make it harder to recruit and retain talented engineers.

“These are dominant businesses with huge barriers to entry, and we could be getting an opportunity if they continue to pull back,” Cunningham said.

(Reporting by David Randall; Editing by Will Dunham)

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Published at Wed, 16 Nov 2016 21:47:14 +0000

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A post-Trump SEC could shake up current policy


A general exterior view of the U.S. Securities and Exchange Commission (SEC) headquarters in Washington, June 24, 2011.REUTERS/Jonathan Ernst

A post-Trump SEC could shake up current policy

By Sarah N. Lynch | WASHINGTON

It will be a new day at the U.S. Securities and Exchange Commission after President-elect Donald Trump installs his choice to run the agency.

With Trump’s transition team already in regulatory-relief mode and promising to revamp the Dodd-Frank financial reform legislation, some rules already are marked for death or dialback.

Expected on the chopping block soon after Trump takes the oath of office is a proposal that would require companies to disclose pay ratios between their CEOs and employees. Another would require companies to disclose whether their products contain conflict minerals — minerals that were mined in a war-torn region of Africa.

Dead for now is any prospect of the SEC approving a tough fiduciary rule for financial advisers, say policy experts.

Trump’s decision to tap former Republican SEC Commissioner Paul Atkins to help manage the Trump team’s transition efforts at the SEC and other financial agencies offers a window into some other changes that could be in store. Atkins, the founder of the regulatory consulting firm Patomak Global Partners, is viewed by some to be a top contender for the position of SEC chairman itself, though as the transition head he could also recommend someone else for that job.

Atkins’ well-known conservative views on everything from enforcement penalties to corporate governance are likely to be reflected in the SEC’s agenda.

Here are five policy areas likely to change.


Paul Atkins was a staunch critic of the Public Company Accounting Oversight Board (PCAOB), a body created after the Enron accounting scandal to police and write new rules for corporate auditors.

Atkins raised concerns about the board’s budget and high salaries, and advocated against prescriptive accounting rules that he felt constrained auditors from making professional judgments.

Recently, Republicans have criticized the PCAOB for taking on more progressive causes, such as proposing companies rotate auditors to reduce conflicts or requiring accounting firms to disclose the name of individual partners working on company audits.

The PCAOB’s chairman Jim Doty, who advocated for the controversial reform measures, will almost certainly not be re-appointed by the incoming SEC chair.

“I expect that a new Chair will refocus the Board’s standard-setting agenda on the core audit function,” said Hunton & Williams Partner Scott Kimpel. “I would expect a return to the basics.”


The topic of whether to impose corporate penalties against a company would come under scrutiny.

During his time at the SEC, Atkins advocated for an enforcement approach that he said did not unduly punish corporate shareholders that had already suffered from the misconduct. He called for the SEC to carefully weigh who had profited from the bad behavior, and urged the SEC to hold individuals accountable for their actions.


Atkins has long opined that the SEC’s rules requiring “best price” execution of stock trades actually skews the market by causing fragmentation and harming price discovery by directing orders away from traditional stock exchanges into “dark pool” trading platforms.

As a commissioner, Paul Atkins was critical of the rule called Regulation National Market System (NMS), saying it could impede true price discovery and encourage gaming of the system.

In January 2016 he wrote an opinion piece in the Wall Street Journal calling for the SEC to do major surgery on the rule, allowing considerations beyond ‘best price’ and speed to determine order flow.


The Dodd-Frank law gave the SEC newfound powers to reward whistleblowers who come forward with tips of corporate malfeasance.

From August 2011 through fiscal year 2015, the SEC has received more than 14,000 tips, and by August of 2016, the program had given out more than $100 million in rewards.

But corporate America has long disliked the part of the rule that protects whistleblowers from having to report wrongdoing to their own companies before they tip off the government.

In 2011, Atkins urged the SEC to require whistleblowers to report internally first, saying a failure to do so could undermine compliance programs.

Whether this will change remains to be seen, especially in the wake of the Wells Fargo & Co scandal, where employees who reported internally about the opening of unauthorized accounts were fired.

Atkins “cares deeply about the commission and its enforcement program,” said Jordan Thomas, a whistleblower attorney at Labaton Sucharow who previously worked in the SEC’s enforcement division during Atkins’ tenure.

“I find it very hard to believe that he would support undermining such a successful program.”


Atkins was a strong proponent of the 2012 Jump Start Our Business Startups Act, which scaled back some SEC rules to help smaller companies raise capital.

In testimony on Capitol Hill, Atkins advocated for additional steps to be taken to help smaller companies, including rules to help create venture exchanges for mid-cap stocks and broadening efforts to exempt private capital-raising rules from regulation by states.

(Reporting by Sarah N. Lynch; editing by Linda Stern and Diane Craft)

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Published at Wed, 16 Nov 2016 09:35:06 +0000

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