Are Journalists An Enemy Of The American People?

As usual, it depends who you ask…

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Statista's Niall McCarthy notes that according to the Cato 2017 Free Speech and Tolerance Survey, 63 percent of Republicans agree with President Trump that journalists today "are an enemy of the American people".

During his presidency, Trump has taken to Twitter to call the national media "fake news" and in mid-February, he tweeted "The FAKE NEWS media is not my enemy, it is the enemy of the American people. SICK!"

Generally, 35 percent of Americans agree with Trump's view while nearly two-thirds disagree.

Unsurprisingly, the share of Democrats considering the media an enemy of the people is very low at just 11 percent.

Among Independents, it rises to 38 percent.

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Satellite Images Reveal Saudis May Be Lying How Much Oil They Have In Storage

A little over a year ago, specialized satellite imaging company Orbital Insight which uses its proprietary imaging and algorithms to track above-ground oil storage, confirmed something we had alleged earlier in the year: that China was vastly under-representing the amount of oil it had stored in its Strategic Petroleum Reserve (with significant implications for prices). As we said last September “according to Orbital Insight, China had not only misrepresented how much oil it has stored, it has done so at a massive scale, with the real number dwarfing even JPM own estimate: the real amount of Chinese oil in storage, according to Orbital, was a whopping 600 million barrels as of May” an amount nearly 3 times greater than the official, at the time, number of 234 million barrels.

The resultant doubt about China’s true purchasing capacity was one of the several factors that led to the subsequent swoon in oil prices which OPEC was unable to overcome until nearly a year later, when the market became increasingly confident that the OPEC strategy of eliminating excess inventory, was working and pushed the price of WTI and Brent to two year highs, above $57 and $63 respectively.

That confidence may not last, however, and the reason may be the same one as last year: Orbital Insights.

As the FT’s David Sheppard writes, “while the oil market’s attention has been gripped this week by the corruption purge in Saudi Arabia and its tensions with Iran, from miles above the earth’s crust one company is highlighting a different kind of intrigue.”  He is, of course, referring to Orbital Insight, whose analysis of Saudi crude inventories in recent months has thrown up an “interesting anomaly.’

One can call it an “anomaly”, but a better explanation of what the company has done is to catch the Saudi kingdom in lying about its inventories. Here is the official narrative:

The kingdom, which has led Opec and Russia in co-ordinated output cuts since January, has for months been reporting to official agencies that its oil held in storage has been falling, which alongside lower production has been one factor that has helped propel Brent crude oil back above $60 a barrel.

There is just one problem: it’s a lie: “Orbital’s analysis of satellite imagery suggests that Saudi Arabia’s above-ground tanks — whose floating roofs allow them to see when oil inventories are rising or falling by measuring shadows cast across the top of the tanks — have seen no real change in the past 18 months.

This, Orbital says, is interesting because before early 2016, movements in above-ground storage closely tracked the trend in Saudi’s official numbers submitted to the Joint Organisations Data Initiative that are crucial for traders and analysts trying to get a grip of the near 100m barrel-a-day oil market.

In other words, the Saudis did not always lie about their inventory – it’s only recently that the nation decided to “pull a China” and misrepresent its true crude inventories… in fact, it only started as OPEC began aggressively jawboning the market to send the price of oil higher in the buildup to the Nov 2016 Vienna production cut agreement. In the process, OPEC’s most important member would do anything to give the fake impression there is more demand, and thus less oil in storage, than there really was.

How much? Here’s the FT’s punchline: “While Saudi Arabia has reported to Jodi that its oil stocks have declined by about 70m barrels since early 2016, the Orbital analysis suggests the above-ground tanks have actually seen inventories rise marginally over the same period.

If confirmed, Orbital’s startling allegation would imply that for much of the past two years, OPEC has been actively engaged in doing what it does best: cheating, not only the market, but also other cartel members, because if Saudi peers found out that Saudi Arabia was quietly warehousing tens of millions of barrels in excess oil to give the false impression of high demand, then everyone else would start doing it. Come to think of it, maybe they are…

Still, as the FT and Orbital point out, there are a few caveats.  For one, Saudi Arabia’s official storage numbers include oil held overseas, in key regional hubs. It also covers line-fill for pipelines and underground tanks that cannot be monitored by eyes in the sky.  These factors may account for why the numbers no longer seem to match up — though they do raise other questions. Orbital says that changes in inventory levels in above-ground domestic storage tanks are normally noticeable normally first as they are easiest to access. Saudi’s Jodi numbers and what Orbital can see through its algorithmic analysis of the satellite imagery had previously tracked each other closely.

“The floating tank data is the part that we think is most indicative of short-term changes in storage,” said James Crawford, chief executive of Orbital Insight. “The big question is why that no longer jives with the government data that shows a pretty big drop.”

There may be another explanation and it has to do with keeping higher oil storage levels at home than abroad. As the FT explains, “the most intriguing suggestion for the shift is more strategic: Riyadh’s own concerns about rising tensions with its neighbours.”

“[The] reason for no real deep stock draw in [the] kingdom will be mainly security related,” said Cyril Widdershoven, who runs the Verocy consultancy.


That suggests, he said, that Saudi Arabia is concerned enough about its deteriorating relationship with Iran, and to a lesser degree Qatar, to keep higher oil stocks at home in case of any disruption.

To be sure, with Crown Prince Mohammed bin Salman saying this week that Iran’s support for Houthi fighters in Yemen, and the provision to them of missiles capable of striking deep into the kingdom, constitutes an act of war, “it is certainly an intriguing theory”, one which Shepperd writes that “at times of heightened tension between two of Opec’s biggest producers it is one the market may start tracking closely.”

And while there is no definitive explanation for the inventory discrepnacy observed by Orbital, what makes this mystery especially intriguing is how polar opposite the two most likely explanation are in terms of oil prices: either Saudi Arabia is covering up the lack of demand and warehousing excess oil, which will eventually send oil prices sliding, or if the “security-related” explanation is accurate, then Saudi Arabia is indeed preparing for war with Iran, which once the shooting begins will send the price of oil into the stratosphere.

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Foreclosed $51 Million “Billionaire’s Row” Penthouse Sells At A 30% Discount

Kola Aluko’s posh penthouse apartment in One57, one of Manhattan’s most expensive luxury towers, has finally sold after months of delays in what New York realtors agree is the most expensive residential foreclosure in city history.

The sale price – a paltry $36 million – suggests that the stress seen in the ultra-high-end real estate market in New York City has only worsened as buyers brace for a glut of new luxury buildings coming online in the coming years.

The buyer of unit 97, one of five bidders aside from the bank, wouldn’t answer questions, and his name wasn’t immediately available. Aluko purchased the building through shell companies. Recently, his assets have been seized by authorities in several countries as he’s wanted for bribing officials to receive lucrative contracts with his country’s state-owned oil company, Bloomberg reported.

Aluko bought the 6,240-square-foot (580-square-meter) residence in December 2014 for $50.9 million, according to New York City records. The sale yielded a compound annual return of about minus 11%.

And in September 2015, he took out an unusually large mortgage with an unusually short term: one year. The $35.3 million mortgage was obtained from Luxembourg-based lender Banque Havilland SA. The full payment of the loan was due one year later, according to court documents filed in connection with the foreclosure. The borrower failed to repay, and now Banque Havilland has forced a sale to recoup its funds.

“It’s probably the most-expensive foreclosure we’ve ever seen in luxury development,” said Donna Olshan, president of high-end Manhattan brokerage Olshan Realty Inc. “I don’t know of a foreclosure that’s larger than that."

WSJ reported in August that luxury condos in Billionaires’ Row have faced steep discounts as building owners have struggled to find buyers.

An analysis of condominium records shows the average discount on nine contracts signed at the Baccarat in 2016 was 22% below the peak asking prices of 2014, when the market was red hot. These include the sprawling 7,300-square-foot penthouse plus terrace that sold in June 2016 for $42.6 million, soon after the asking price was from $60 million to $54 million. Overall that amounted to a 29% price reduction.

One57 went on the market in 2011, and as of August there were still five units for sale. As we’ve previously reported, foreclosure proceedings were started in January. An auction scheduled for July was delayed after a creditor claimed Aluko owed it about $83 million for gasoline and jet fuel.

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The Republican Tax Plan Will Crush These Housing Markets

For the past few weeks, Chuck Schumer and Nancy Pelosi have screamed to anyone who would listen that the GOP tax plan is nothing more than a tax break for millionaires and an attack on middle class working families.  But, as the Wall Street Journal points out this morning, America’s millionaire, billionaire, private jet owners living in expensive urban areas are set to lose ‘bigly’ if Trump’s $500,000 cap on the mortgage interest deduction survives.

But in the priciest markets, concentrated in some of the nation’s largest coastal cities, the impact could be significant. In the San Jose, Calif., metropolitan area, 75% of new mortgage loans thus far in 2017 were for more than $500,000, according to an analysis by CoreLogic Inc., a housing data provider. The median home price there is more than $1 million, and even small starter homes can climb well above the proposed cap.


In the San Francisco metro area, 60% of new loans were for more than $500,000, while in Los Angeles and San Diego, the figures were 44% and 37%, respectively.


The impact wouldn’t be limited to California. In Honolulu, 48% of loans were greater than $500,000, while the figures for the New York area and Seattle were 22% and 25%, respectively.


An analysis by ATTOM Data Solutions yielded similar results. In the Washington, D.C., area, 35% of purchase and refinance loans in 2017 thus far were for more than $500,000. In Hawaii, 15% of loans fell into that category, while in California 12% did.

In addition to capping the mortgage interest deduction, the current GOP bill also limits the amount of property taxes that households can deduct to $10,000 annually.

Not surprisingly, the assault on McMansions has angered the realtor lobby which we’re certain will fight tooth and nail to preserve the status quo.

Jeff Barnett, a California realtor and vice chairman of the National Association of Realtors’ large-firm real-estate services committee, said his area will be hit “very, very hard” if the tax bill passes. Even if corporate tax cuts help boost the economy, he doesn’t think that will be enough to compensate.


“You’ve taken away so many incentives for housing, they can’t spend” the money from any extra economic growth, he said.

Of course, as we pointed out earlier this week (see: Trump Is About To Crush Home Prices In Counties That Voted For Hillary: Here’s Why), Clinton won the vote in the top 45 counties in the country with the highest median home prices which has resulted in rampant speculation that the mortgage cap is nothing more than a clever punishment levied on Democratic voters.

As Dennis Lee calculated, “assuming that all of these homeowners are taxed at a marginal rate of 39.6%, we find that the increase in tax burden during the first 12 months of homeownership driven solely by the mortgage interest and property tax deduction caps varies from $0 for the county with the 20th highest median home price (San Miguel County, Colorado) to approximately $7,200 for the highest-priced county (San Francisco County, California).” Barclays’ conclusion: these counties – all of which are largely pro-Clinton – would need a 0-11% decline in their median home prices to keep the after-tax monthly mortgage and property tax payments the same for would-be buyers.

Of course, only time will tell whether the swamp (a.k.a. “The National Association of Realtors” in this case) will allow this particular component of the GOP tax bill to survive…

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Fourth Turning’s Neil Howe: Why Millennials Aren’t So Unique

Authored by Marianne Brunet via,

The conventional wisdom is that Millennials are a generation with unique needs and buying habits, but Neil Howe says that they are very similar to the Greatest Generation.

Howe, who coined the term “Millennial,” says that both generations are highly risk-averse, a characteristic brought on by their shared parenting environment.

In a talk last week, Howe explained how we can use generational patterns and historical economic trends to better understand the future of the global economy.

He also cautioned investors about the impact global aging trends will have on future economic development and financial market conditions.

Howe spoke on November 2 at a National Association for Business Economics luncheon in Boston.

He is an authority on social change in America, and an acclaimed bestselling author. He is also a leading researcher at Hedgeye Risk Management and a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C.

How aging populations will impact the fiscal future

Howe has spent his career researching demography within the context of economic history. But in his talk last week, he revealed that he recently shifted his focus to a new area of study.

“Political demography is a whole new budding field,” Howe said. “And it will never go away, not for the rest of our lifetimes.”

According to Howe, “Political demography is premised on the fact that in the next century, we are going to see a greater divergence of demographic trajectories, more than we’ve ever seen before in human history.”

This divergence is based on two global aging trends.

On the one hand, “there are places in the world today whose demographics are essentially the same as in pre-modern times,” Howe said. “These are high-mortality, high-fertility societies – I’m talking about a lot of South Asia and Sub-Saharan Africa.”

“And then you have other areas of the world with extreme low-fertility and low morality societies,” Howe explained.

“Look at South Korea,” Howe said. “According to the United Nations constant-fertility scenario, by the year 2035 there will be more people turning age 90 every year than being born every year.”

“We’ve never in human history seen this situation amongst different societies around the world,” according to Howe.

This divergence will undoubtedly drive significant changes in the future global economic landscape. “What are the implications for the direction of capital flows? What are the implications for labor productivity and competitiveness?” Howe asked.

He urged economists to consider societies whose working-age population is shrinking. “Every year their normal growth is declining faster than their normal productivity is growing,” he said. “Which means that even in a ‘normal’ non-recession year, they have negative GDP growth.”

“What’s the impact on investment, savings and competitiveness?” Howe asked rhetorically.

Howe theorized that one possible response to a decline in economic growth driven by shrinking population is for nations to become much more anti-competitive.

He predicted that nations “will actually move towards cartelizing market and carving them up, rather than competing.”

As a historical example of this sociological response to a loss in competitiveness, Howe pointed to the 1930s, “a decade of cartels and measures to keep productive institutions going.”

Howe highlighted one concern in particular – the future global standing of developed nations with demographic concerns.

“There’s a lot there, not just in terms of its impact on the economy, but demography’s impact on geopolitics,” Howe said.


“What happens to societies whose populations are declining every year versus those that are rising? Does this impact geopolitics and does it have to do with the rise and fall of empires?”

Circling back to the example of the 1930s, Howe highlighted that declines in the competitiveness of certain nations has marked historic global shifts. He explained that Britain, which had been a super-power on the international stage, experienced a dramatic shift in its economic and geopolitical standing culminating in World War II.

Part of Howe’s research has focused on measuring risk and publishing aging vulnerability indices. This tool can be used to consider “the affordability and sustainability of pension funds around the world,” according to Howe.

“In the late 1990s, one of our big stories was on Australia,” he said. “Australia always got ‘first place’ because it has the mandatory superannuation fund,” he explained, “a required defined-contribution plan, which is fueling tremendous savings in Australia.”

“Perhaps not coincidentally, Australia is the only country that has had no recession over the last 25 years,” Howe said with a smirk.

How generations impact economic development

Howe focused his presentation on how population growth rates will drive change in the global economy. However, he also spoke about another demographic factor that will significantly impact the future of international markets – generational shifts.

According to Howe, to consider the future of the global economy, we also need to understand “differences in how generations think and the strengths they bring to political power.”

Howe’s research has focused on the archetypal differences between generations, and what they bring to the table.

“What we found was that each generation looks at the world differently even though they experience many of the same events, because of course they had a different location in history.”

Howe used Boomers and their parents to explain this in a real-world context. “We had Woodstock, they had D-day,” Howe said.

Boomers prided themselves on how different they were from than parents. “They were building battleships, while we were discovering ourselves,” he added comically.

They prided themselves on having differing perspectives, but Boomers eventually went on to occupy the same societal roles as their parents, just at different points in history and with different views.

“Looking generationally at social change allows you to see into the future in a way that a lot of people don’t appreciate,” according to Howe.

“No one applies this perspective,” according to Howe.

“For instance, if I go into a consumer retail company that sells cosmetics to people in their forties and ask them about their future market,” Howe said, “They will tell me: ‘I know everything about 40-year olds, we know everything about them, we studied 40-year olds throughout history and we just extrapolate that forward’.”

But Howe argues this is the wrong approach. “I would look at today’s 20- and 30-year olds instead,” Howe said.

With this approach as a basis for his analysis, Howe went on to discuss the future of the American economy.

Howe explained that we can use the traits of generations to understand how they will lead when they occupy influential societal roles. According to Howe, we can understand the traits of Millennials as a generation by examining the impact their parents had on them during their formative years.

For instance, according to Howe, because Millennials were sheltered by their parents they are now very risk-averse.

Are Millennials like the G.I. Generation?

In his research, Howe found that there are predictable cycles when generational personalities oppose their immediate predecessors, but share significant traits with groups they may never meet.

That is, although both Millennials and Boomers don’t share traits with their parents, they do resemble other previous generations.

“When people ask me to draw parallels like ‘what decade does this last decade most resemble?’” Howe said, “I tell them the 30s.”

According to Howe, we can predict trends about the future of the Millennial generation by examining the G.I. generation (also known as The Greatest Generation), which is made up of people born between 1900 and the mid-1920s.

Both the Millennial and G.I. generations grew up with similar parenting and similar historical conditions, according to Howe.

In terms of social and cultural similarities, “One of the trends we saw in the 1930s was declining fertility, a rise in multi-generational households, a decline in home ownership and a decline in youth violence,” according to Howe.

He urged economists to compare that to today’s environment and Millennial behavior.

“I would argue that in the last 10 years we have seen a personal turning away in risk-taking,” Howe said. “If you look at 200 youth-risk indicators the CDC keeps, almost all of them are hugely down.”

According to Howe, this is because “their parents assured them from the time they were born they were special, that they’re precious to the world, and that they should take care of themselves.”

“This is why this generation does not take risks,” Howe argued, “Why they’re not starting business, why they think stocks are really dangerous things.”

He went on to explain how this risk-averse mentality emerged for both the G.I. and Millennial generations from an economic perspective.

“Both the current generation and the G.I. generation grew in the shadow of a massive financial crisis,” Howe explained.


“Both have been characterized by a disappointing employment of labor and capital, low standard of living gains, low productivity growth, negative real interest rates, the failure of monetary policy and competitive devaluation.”

Looking forward, Howe inferred, much like the G.I.’s, Millennials will have to deal with a great conflict, but theirs will be a culture war.

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NSA Whistleblower Says Trump Pushed Meeting With Pompeo

As we reported yesterday, President Donald Trump is receiving flack from hysterical liberals for reportedly advising CIA Director Mike Pompeo to meet with former senior NSA official Bill Binney, whom the media has labeled a conspiracy theorist for his belief that Russia wasn’t responsible for hacking the DNC – or at least, if it was, it was the work of a deep-cover agent – because the files, according to Binney, were manually loaded onto a thumb drive, meaning the theft was likely the work of a disgruntled insider.

Binney discussed the meeting during an appearance on NBC, where he confirmed that Trump was probably made aware of his theory by watching one of his appearances on Fox News.

"He's trying to find some factual evidence," said Bill Binney, a former code-breaker at the National Security Agency.

Binney, a widely respected NSA whistleblower, left the agency in 2000 and has made claims that the NSA is capturing and storing nearly every US communication.

Binney told NBC News that Pompeo informed him that the CIA director took the meeting at the urging of the president.

Mike Pompeo

In a statement, a CIA spokeswoman did not dispute that, but declined to comment.

“The Director stands by and has always stood by the January 2017 intelligence community assessment," on Russian election interference, spokeswoman Nicole de Haay said.

She added, “The director has been adamant that CIA officers have the time, space and resources to make sound and unbiased assessments that are delivered to policy makers without fear or favor."

The intelligence community released a multilateral report in January 2017 concluding that Russia had sought to interfere in the 2016 election, which was won by Trump in a historic upset. One of the tactics, the intelligence community alleged, was the hack of the DNC, which was a massive public relations embarrassment for Clinton and eventually led to the resignation of former DNC Chairwoman Debbie Wasserman Schultz.

Trump has repeatedly criticized the intelligence community and claimed its conclusion is unfounded. And Pompeo, a former Army officer and Harvard Law School graduate who gives Trump his intelligence briefing nearly every day, is suspected of kowtowing to Trump in his tepid approach to the issue.

Last month, the CIA had to correct Pompeo's erroneous statement that the intelligence assessment found that the Russian interference campaign did not alter the outcome of the election. No such conclusion was made.

NBC pointed out that it is extremely unusual for a CIA director to meet with someone like Binney, who for years has accused US intelligence agencies of subverting the constitution and violating the civil rights of Americans. However, Binney – while a controversial figure in the US – has been praised abroad as a whistle blower and truth teller.

However, the meeting to discuss the narrative that directly contravenes the findings of the US intelligence community was so productive that Pompeo is already arranging further meetings between NSA and FBI officials and Binney to discuss his analysis. Binney said two unnamed CIA analysts accompanied Pompeo during the meeting at CIA headquarters.

Binney reportedly also raised the death of DNC staffer Seth Rich as a suspicious, given its proximity to the release of the hacked documents. There has been speculation that Rich was the one who leaked the emails.

Binney said he did not discuss with Pompeo his longstanding allegations that U.S. intelligence agencies have been acting illegally. Binney said he voted for Trump, because he considered Democrat Hillary Clinton "a war monger.

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Michael Lewis Reveals His Shocking New “Big Short”

When the award-winning author of “The Big Short,” “The Blind Side” and “Moneyball,” stopped by Yahoo Finance yesterday to discuss his latest book, “The Undoing Project,” he was predictably asked for his next “Big Short” idea.  And, after downplaying the value of his opinion, and those of everyone else for that matter, Lewis offered up a rather surprising answer: “The NFL.”

On our afternoon live show The Final Round, we asked Lewis what part of the market might become the next “big short.” He was hesitant to answer, saying, “You’re asking the wrong person. Everybody will be a little stupider, if I answer that question. Can I answer this way: When people roll in with some big prediction, and they actually seem really certain about it, be very suspicious of them… When people come at you and say, ‘Oh, this is the short,’ it’s an interesting exercise, but the more serious they are about their prediction, the less seriously you should take them.”


But after the live show, Lewis thought of the NFL: “The NFL has real business problems. The CTE issues… I’ll give you the next short: the NFL.”


As we’ve noted multiple times over the past several weeks, as of the halfway point of the current NFL season, television ratings are down an average 5% compared to the same point last year, and nearly 20% from 2015.

Meanwhile, NFL sponsors are reportedly “nervous” amidst the ratings dip and the ongoing political controversy, and at least one, Papa John’s, has publicly said it will pull back on its NFL advertising.

Of course, Lewis noted that his answer was given in jest and admitted that “he’s not sure how a person would go about shorting the NFL just yet”…

Lewis, an influential thinker on sports leagues and their finances, may be on to something. On the other hand, he added that practically speaking, he’s not sure how a person would go about shorting the NFL just yet.

...but, we have an idea…how about all of the media companies that have sold billions of dollars worth of NFL advertisements and are about to get crushed by ‘make goods’ when they don’t deliver the eyeballs they promised ad agencies? 

Yes, we’re looking at your ESPN…perhaps the next ‘Big Short’ has already begun?

Here is the full interview with Lewis:

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One Year After The Election; Where Does The Trump Rally Rank?


It’s hard to believe, but the U.S. Presidential Election was a year ago today. Per Ryan Detrick, Senior Market Strategist,

Although no one at the time would have believed it, the 12 months since Election Day have been among the least volatile ever for equity markets; not to mention the solid 21% gain the S&P 500 Index racked up along the way that has the bulls smiling.”

So where does the rally over the past 12 months rank?

We looked at S&P 500 returns for each year after every U.S. election since 1950* and found that the current 21.1% rally ranks fifth on the list.

The best return came at the start of President Clinton’s second term during the late ‘90s bull market, while the worst ever was the first year of President W. Bush’s first term amid the tech bubble.

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Will Xi Offer Trump A Small Victory On Trade As Cover For His Longer-Term Ambitions

On Monday, Trump pressed Japan’s Prime Minister and business leaders to reduce the $69 billion trade deficit. A couple of badly made jokes, awkward moments and an unfair singling out of the auto industry later, we expressed our scepticism that the Japanese would do anything after he left (see “Trump Says Trade With Japan Is Not Fair And Not Open – Awkward Moments Ensue” here).  Today Trump touched down in Beijing for two days of meetings, including eagerly awaited talks with China’s greatest leader since Mao, Xi Jinping. The schedule includes a visit to the Forbidden City and a state dinner. During the press conference in Tokyo on Monday, Trump assured reporters that he has an “excellent” relationship with Xi (they all are), while expressing his determination to reduce the $327 billion trade deficit with the Middle Kingdom. Vowing to take “very, very strong action”, Trump stated.

“It has to come down…And that has to do really with free trade, fair trade, or reciprocal trade. And frankly I like reciprocal the best of the group.”


As the moment of truth approaches, the rhetoric on the Chinese side suggests that progress is a possibility. As Bloomberg notes.

When Donald Trump lands in Beijing…intent on tacling one of his biggest irritations – the trade deficit – he could get help from an unlikely source: his hosts. In contrast to Japan, China is raising expectations that there is a way forward. Its ambassador told reporters in Washington late last month to expect “significant outcomes.”


Xi told a group of U.S. executives in Beijing – including Apple Inc. Chief Executive Officer Tim Cook and Facebook Inc. founder Mark Zuckerberg – that he was looking forward to Trump’s visit and that his nation is embarking on reform with "unprecedented determination and vigor." This is encouraging after the US Commerce Department angered China last month by labelling it a non-market economy with “fundamental distortions” due to the interventions of the state. This allows the US to charge higher, anti-dumping duties under WTO rules on Chinese products sold below fair market value. Even more encouraging, China has detailed the actions it will take to reduce the $327 billion trade gap.

In response to questions from Bloomberg about how China will reduce the trade gap, Commerce Minister Zhong Shan replied with a list of measures. In summary, Zhong denies that China seeks to maintain a trade surplus and states that China will open its markets to increased imports using fiscal and other initiatives. One initiative is the launch of the China International Import expo (CIIE) on 5-10 November 2018.

Below is the section “How will China address the trade surplus with its partners?” from Zhong’s reply (see here for the full text).

In recent years, China has sped up the implementation of active and effective import policies and introduced a number of policy documents to boost imports. It has effectively adopted a host of substantial measures to expand imports with fiscal and taxation policies, finance, streamlined management and an enhanced level of liberalization.

Such measures will be continued as follows: First, gradually reducing import tariffs. The general tariff level of China has decreased from 15.3 percent before its WTO accession to 9.8 percent at present, much lower than the average tariff of 46.6 percent for developing countries. China has signed 15 free trade agreements, covering 23 countries and regions. More than 90 percent of product varieties enjoy zero tariff, involving over one-fourth of China’s total imports and exports.

Second, improving fiscal, taxation and financial policies to expand imports. We will reduce tariffs on some daily consumer goods and import more consumer goods to optimize the import structure. We will also adjust the Catalog of Technologies and Products Encouraged for Import and encourage banking institutions to offer more support in import credit to expand the import of advanced technologies, equipment and key components.

Third, balancing supply and demand and promoting trade facilitation. We will step up customs clearance integration and improve inspection and quarantine systems to increase the level of trade facilitation.

Fourth, reforming and optimizing the management of imports. We will streamline administration, delegate power, strengthen regulations and innovate administration models to better manage and serve imports.

Fifth, improving the import promotion system. We will come up with new import models and advance parallel import of automobiles.

US and European leaders have become more and more frustrated with the glacial pace at which China has been opening up its markets. In “Trump and Xi Joust For World Economy Crown” here, Bloomberg believes that “progress” will likely benefit US investment banks more than the US manufacturing sector which Trump championed in his China rhetoric before the election.

Trump, who’ll be accompanied by business leaders eager for deals…That gels with his campaign pledges to return manufacturing jobs to the U.S., including reviving industries like coal mining and steelmaking. “Xi’s model is to build an economy that looks more like America’s, and Trump’s is to build an American economy that looks more like China’s has been,” said Hugh White, a professor of strategic studies at the Australian National University in Canberra and a former intelligence analyst and senior defense official. “Xi’s increasingly focused on China’s economy expanding into high-tech and high value-added jobs and letting other people mine the coal and make the steel. Trump’s model of course is just the opposite.”

So far, the Trump presidency has been a positive for China’s economy as low U.S. unemployment and slow-to-no progress on tariffs has supported a return to growth for China’s exports, while a weak dollar for the first three quarters of the year was a boon for the yuan, said Bloomberg Intelligence Chief Asia Economist Tom Orlik. "In an optimistic scenario, Trump’s appetite for tweetable wins and China’s longer-term focus could coalesce around financial market opening — a boon for the U.S. investment banks, and a support for China as it attempts to tame its credit boom," Orlik said.

Orlik might have a point, but our suspicion is that Xi’s plan is to offer a “victory” to Trump with regard to reducing the trade gap, but only a small one.

Meanwhile, China will continue with its longer-term “Mackinder-esque” plan to integrate the Eurasian continent via its “One Belt, One Road Plan” and undermine the dollar by accumulating gold and steadily increasing non-dollar trade. If it wasn’t for the small matter of China’s horrendous credit bubble, the US would have an even weaker hand.

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Donna Brazile Exposes “The Cult Of Clinton” – She Lost Due To “Arrogance”

Former Chair of The DNC, Donna Brazile, continues on her 12-step program to Clinton-sobriety today telling MSNBC's Joe Scarborough that the "arrogant" Clinton campaign was more like "cult" than a political campaign.

As Grabien reports, Brazile said of the Clinton campaign…

"It was a cult," 


"I felt like it was a cult."

Brazile further said that the main reason Clinton lost was due to her "arrogance."

Brazile pulls no punches…

SCARBOROUGH: “Bottom line it for us. Why did they lose? Was it, at the end of the day, arrogance?”

BRAZILE: “Yes, Joe. It was a cult, I felt like it was a cult. You could not penetrate them. I mean, I — look, you can — I’m a grassroot organizer. I know street politics better than I know sweet politics. I know how to touch people where they live, work, pray, and play. But I cannot help a candidate, Joe, if I don’t have the resources, if I cannot spend the resources that the party is raising because there’s a blind agreement between…“

BRZEZINSKI: “…Exactly…"

BRAZILE: "…A campaign…"

BRZEZINSKI: "…Unspoken even"

BRAZILE: "…And, again, I want my party to come back from this stronger. I like what Tom Perez is doing. I know he said this is not about my book. Baby, I know it’s not about my book. But it’s about making much-needed changes and reform inside the party. I’ve sat at the table. I want to make room for others to sit at the table, but you have to come into the room knowing you have to change the recipe. Yesterday was a wake-up call for the Democrats, too. Because you know what? It’s coming from the bottom up. It’s not top-down anymore. It’s bottom-up politics now.

Read more here…

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