06/22/17

Life Is Stranger Than Fiction

By: Kent Engelke | Capitol Securities

Life is stranger than fiction. Bloomberg recently published an article written by an algorithmic trader. While I did not learn anything new, the author’s comments validated many beliefs. For example, the author stated inputted variables reflect only the perpetuation of the status quo. There is no macroeconomic or geopolitical foresight, security analysis, only the extension of the current.

The author further stated that the predominate “algo” models have created considerable volatility beneath the surface, a point discussed and validated last week by several indices. Volatility on the surface however is virtually nonexistent.

Moreover the author indicated the potential of large imbalances, signaling the outsized influence technology shares have upon such models and the probability of sharp volatility in very under owned sectors such as energy and finance.

In my view, Tuesday evening, an event occurred that may have a profound impact. Media outlets used words such as “stunning,” “unexpected,” “surprising,” “abrupt,” to describe the events. Saudi Arabia elevated the 31 year-old prince to Heir. His rival’s power was reduced to nothing.

The statement the 31 year-old made I think is economically significant. He retroactively reinstated all allowances and bonuses that were cancelled or suspended to civil servants and military personal. In other words the 18-month austerity program was entirely shelved and repaid.

Regarding Iran, the newly crowned leader increased the rhetoric, vowing to “take the battle” to the Shiite-ruled country.

Monday, Bank America wrote the kingdom would face “severe fiscal distress” if oil prices remained at $45/barrel for the next 12 months. This pronouncement was made before the return of yesterday’s status quo of transfer payments.

Yesterday, Iran commented and recommended deeper production cuts are required to boost oil. Currently, OPEC’s compliance to production cuts is 108% and non-OPEC countries are at 100%.

Both of the events are not factored into algorithmic models. Oil yesterday traded off inventory data, which on the surface was bullish, but was later interpreted as negative. For informational purposes, inventories fell for the 10th time in 11 weeks and are now down to the lowest level in four months according to the EIA.

If yesterday’s events occurred five years ago, oil would have surged.

Oil represents the lowest percentage of the S & P 500’s capitalization since 2004… 6% and down from 16% in 2008. Oil the commodity is down about 22% from its February peak, the vast majority of the drop has occurred since May 25, or the date OEPC extended its production cuts.

I rhetorically ask is there an imbalance in the ownership of oil shares, an imbalance that may cause an outsized advance as the result of algorithmic trading if any positive event unfolds, a scenario discussed by the algo trader?

I think the odds of such are over 50%.

Commenting about market action, yesterday was the inverse of two days ago….the NASDAQ advanced about 0.70% while the Dow fell about 0.25%.

Last night the foreign markets were down. London was down 0.36%, Paris was down 0.28% and Frankfurt was down 0.01%. China was down 0.28%, Japan was down 0.14% and Hang Sang was down 0.08%.

The Dow should open quietly lower. The 10-year is unchanged at a 2.16% yield.

06/22/17

Can the GOP Pass a Healthcare Bill in the Current Environment?

By: Roger Aronoff | Accuracy in Media

While the media are enjoying what they say is Republican hypocrisy over their process to pass a Senate version of a bill to repeal and replace Obamacare, there is little attention being paid to the substance of the debate. President Donald Trump didn’t help matters when he muddied the waters, first saying that the House version of the bill, which he had enthusiastically supported, was too “mean,” and now saying he wants the Senate version to have “more heart.” Senate Majority Leader Mitch McConnell has promised reporters a “discussion draft” of the bill later this week. In the meantime, Sen. Bernie Sanders (I-VT) and many Democrats are blasting the bill as heartless and cruel. The toxic political atmosphere is not making matters any easier.

When former President Barack Obama spoke before a Berlin audience last month, he defended his signature legislative achievement, Obamacare, as having helped to insure 20 million people previously uninsured, and allegedly bettering the lives of millions of Americans. The media continue to portray such progress, of course, as imperiled by Congressional Republicans in league with an uncaring Trump who are currently locked in a debate over the merits of—and possible reforms for—a law that progressives believe must be protected.

“Certainly, I have some regrets that we weren’t able to get everyone healthcare, and obviously some of the progress that we made is now imperiled because there’s still a significant debate taking place in the United States,” said Obama in Berlin. “But the point, though, is that for those 20 million people their lives have been better and we’ve set a standard of what’s possible that people can then build on.”

How many lives have been made worse? The standard set by Obamacare has been one of skyrocketing premiums, high deductibles, and undercutting business owners’ willingness to hire full-time workers. As we have previously noted, Mort Zuckerman, the chairman and editor of U.S. News and World Report, writing for The Wall Street Journal, argued that “Many employers cut workers’ hours to avoid the Affordable Care Act’s mandate to provide health insurance to anyone working 30 hours a week or more.”

We have reported on how the mainstream media sought to protect Obamacare and influence the Supreme Court’s decision regarding health care subsidies—a decision which could potentially have gutted Obamacare. Soon there will be a new Congressional Budget Office (CBO) score of the Senate version which will, as with the House version, be held up as proof that the bill will lead to higher costs and less health care.

“Republicans have often knocked Obamacare for having such high deductibles that enrollees don’t really have coverage even though they have an insurance card,” reported CNN. “The CBO notes that under the GOP bill, many older Americans and those who use services that were no longer covered would find themselves in the same boat.”

Of course, CNN is casting past complaints about Obamacare as Republican propaganda rather than fact. But even The New York Times published an article about how Americans couldn’t afford their deductibles under Obamacare.

Guy Benson of Townhall called the media and CBO out for the false numbers and fake news. “In short, the large bulk of those who are said to be ‘losing’ coverage do not currently have coverage,” he writes (emphasis in original). “You cannot ‘lose’ something that you don’t have.”

It all comes down to how the CBO counts the insured. “So when you take away the people who already don’t have coverage under Obamacare but who CBO has decided would hypothetically do so in the years ahead, and substitute actual enrollment numbers for CBO’s outdated and disproven projections, only a few million of the ‘23 million’ would actually lose existing coverage—and these people would receive tax credits to purchase new plans, many of which would cost less under the AHCA,” writes Benson (emphasis in original). He adds, “We should also point out that millions who’d ‘lose’ coverage would do so voluntarily, affirmatively choosing not to buy a product that the government is no longer forcing them to purchase.”

Doug Badger and Grace-Marie Turner made a similar observation in a Forbes article discussing the findings of their recent paper. “Although CBO itself acknowledges that this latest prediction is ‘especially uncertain,’ one thing is especially certain: CBO is wrong,” they write. The former is a senior fellow at the Galen Institute, and Turner is the president of that institute. The CBO report on the health care bill states that “the estimates discussed in this document are uncertain.”

According to Turner and Badger, the CBO has repeatedly made errors when predicting the number of people who would enroll in Obamacare: “No matter, CBO forecasts that this year, 15 million people will sign up for Obamacare policies. The actual number as of March 31: 10.4 million, little changed from December. But there’s always next year when, CBO assures us, enrollment will abruptly skyrocket to 18 million.”

They write that the CBO report measures the health care bill against this erroneous and “imaginary baseline.” In other words, CBO is scoring the House bill against fictional predictions in order to cast the bill as wanting.

“The presumed 8 million reduction in the number of people with individual insurance looks more like an artifact of inflated coverage estimates than the consequence of Obamacare repeal,” write Badger and Turner.

Nonetheless, the media have used these numbers to bludgeon the Trump administration for imperiling and potentially harming Americans. Slate ran with the headline, “CBO Confirms That the Republican Health Care Bill Is Still a Garbage Dump of Bad Ideas.”

“Republicans have mostly just rearranged the rusted cans and busted tires in their garbage dump of a law,” comments Jordan Weissmann for Slate.

One reason the CBO “gets it so wrong so consistently,” according to Badger and Galen, “is its fervent belief that the individual mandate has motivated millions to enroll in coverage.” But, they report, “…4.2 million people simply ignored the penalty. They left line 61 on their form 1040 blank, refusing to tell the government whether or not they had insurance.”

There is confusion among the senators at this late date as to who is actually writing the bill. A lot of conservatives in Congress will likely hold their noses and vote for the new legislation, to try to give the Republicans a needed win. They don’t believe it is the role of the federal government to guarantee that everyone has health insurance, and to then try to redistribute wealth to help pay for it. But we’re well past that discussion.

Those in the media claiming that 23 million Americans will lose health care coverage under the House bill are simply trying to protect Obama’s legacy, regardless of how flawed or ineffective Obamacare has been since it became law. Once again, the media publish fake news in support of the Democratic Party and its agenda. Remember this when the new CBO figures come out next week.


Roger Aronoff is the Editor of Accuracy in Media, and a member of the Citizens’ Commission on Benghazi. He can be contacted at [email protected]. View the complete archives from Roger Aronoff.

06/22/17

Why the Russians Conceived the Global Warming Scam

By: Cliff Kincaid | Accuracy in Media

One of my duties at Accuracy in Media (AIM) has been to expose left-wingers in the media and Congress who were soft on the old Soviet Union and are now acting like hard-liners on Vladimir Putin’s Russia. It is a fascinating topic which exposes the duplicity of the left-wing obsession with Russia.

These people, who were soft on the Soviet Union and now hard on Russia, are the worst kind of hypocrites. Their hypocrisy is further demonstrated by the abundant evidence that the global warming or climate change theory, which they now embrace, was conceived by Soviet communists as a means by which to destroy the industrial base in the United States. This disinformation theme has been embraced by the liberals now claiming to be tough on Russia.

Don’t take my word for it. When Natalie Grant Wraga died in 2002 at the age of 101, The Washington Post recognized her expertise as a Soviet expert, noting that she was “born in czarist Russia, saw great upheaval in her native land and became an expert in unmasking Soviet deception methods for the State Department…”

But the Post would not admit that fact in today’s political climate.

The liberal Economist magazine wrote, “She was perhaps the only person alive in the West who could claim such an intimate knowledge of Russian political thinking, from tsarist times to the collapse of the Soviet Union.” She commented, “Many people are studying the past, but very few are studying the present. Keep your eyes open and your ears open.”

This is good advice. One of the great Soviet/Russian deceptions, Wraga wrote, was the idea that humans were changing the climate and that humans could save the earth through socialism. She said, “…protection of the environment has become the principal tool for attack against the West.”

In her 1998 article, “Green Cross: Gorbachev and Enviro-Communism,” Wraga, who dropped her last name and wrote under the byline Natalie Grant, explains in detail how the Soviet deception campaign, using the climate as an organizing tool, was developed. It was launched after the so-called collapse of the Soviet state, when Mikhail Gorbachev, the last Soviet president, embarked on an environmental crusade, using the United Nations and other international organizations.

The veteran journalist Wes Vernon wrote about Grant’s research in this area, in an article entitled, “The Marxist Roots of the Global Warming Scare.”

The big event, as Grant called it, was a Moscow conference in January, 1990. As Time magazine described it, “At a meeting of the Global Forum in Moscow in 1990, when he was still Soviet President, Gorbachev proposed an organization roughly analogous to the International Red Cross to contend with environmental problems that cross national boundaries.” Among the guests and speakers was then-U.S. senator and future vice president Al Gore.

Talk about “collusion” with the Russians! Where was the FBI investigation?

The collusion took place through the Global Forum and various United Nations conferences, including the Earth Summit of 1992, giving rise to the concept of “sustainable development,” another way to describe socialism.

Grant wrote, “Protection of the environment may be used as a pretext to adopt a series of measures designed to undermine the industrial base of developed nations. It may also serve to introduce malaise by lowering their standard of living and implanting communist values.”

Grant predicted how this campaign would proceed, using “nightmarish” pictures of floods, scorched earth, disease and death, unless drastic action was taken at the international level to curb industrial activity in the capitalist West.

She said the campaign would be driven by Moscow’s sympathizers or dupes in “science,” academia, “and the slavishly obedient Establishment media,” all for the purpose of forcing the United States and other Western countries “to accept measures and regulations harmful to the Western world.”

In short, for communism to succeed, capitalism would have to be portrayed as based on exploitation—but not of man, as the old Marxist theory held. Rather, capitalism was now exploiting the earth! The whole purpose of this dogma has been to inhibit global capitalism, the only system that has proven capable of meeting the growing needs of expanding populations. But this time the claim was that human economic progress threatened the environment because of the capitalist model on which it was based.

Hence, President Obama’s Paris climate change agreement was designed to curtail U.S. industrial expansion while sending foreign aid to the rest of the world. It was a Marxist plan that benefited Russia, a major oil and gas producer.

On June 1, when he announced pulling out of the climate change agreement, President Donald Trump put his finger on the key problem, which was deliberately part of the plan. He attacked “the draconian financial and economic burdens the agreement imposes on our country” while creating a so-called Green Climate Fund which would cost the United States “a vast fortune” to be sent to the other nations of the world.

In other words, Trump’s pull-out from the agreement works AGAINST Russian interests and those of the global socialists.

Nevertheless, the propaganda campaign continues. In July, Netflix releases the film “Chasing Coral,” which attempts to blame man for “dramatically changing” and losing coral reefs in the world’s oceans on a global scale. With carbon emissions said to be “warming the seas,” the audience will be told of the “catastrophe” that is “silently raging underwater” unless we wake up and dramatically restrict our lifestyles.

Meanwhile, Ohio State University has released a “study” in the Journal of Peace Research suggesting that climate change could lead to “food violence.” One of the authors is quoted in an Ohio State University press release as saying, “Development aid is important now and it is likely to be even more important in the future as we look for ways to increase climate resilience.”

In other words, the United States must pay more to the other nations of the world. This is global socialism.

It looks like the “nightmarish” scenarios predicted by Natalie Grant are not yet at an end.

But when will the liberals wake up? Answer: they won’t. Like James Hodgkinson, a true believer in the global warming theory, they want to “tax the rich” in their own country and will shoot to kill those who stand in the way of this global redistribution scheme.


Cliff Kincaid is the Director of the AIM Center for Investigative Journalism and can be contacted at [email protected] View the complete archives from Cliff Kincaid.

06/22/17

Global Blackouts, Anywhere in the World, Courtesy Russia

By: Denise Simon | Founders Code

Fitful sleep last night after reading a very long detailed piece on Russian hackers versus Ukraine. Why, well the same tools and language they use have been found on American infrastructure and systems. Last thoughts before sleep were those of life before the internet and how people get emails with attachments that should never be opened. The short summary is just below. The more detailed and terrifying truth follows. It is a long summary, must be read…it is something like a cyber Hitchcock Twilight Zone disaster thriller, but it happened and happened often.

Further, during a hearing in the House with former DHS Secretary, Jeh Johnson revealed a couple of key facts. One is told that during the election cycle, when the DNC hack, officials on numerous requests refused assistance, cooperation and discussions with DHS and FBI about foreign cyber intrusions. What was the DNC hiding? The other fact is Obama had the full details in intelligence briefings daily leading into November and December and refused to tell the country about Russian interference. He waited until after the elections and into December to take action. Why?

Okay, read on….

Russia’s New Cyber Weapon Can Cause Blackouts Anywhere in the World

Hackers working with the Russian government have developed a cyber weapon that can disrupt power grids, U.S researchers claim. The cyber weapon has the potential to be absolutely disruptive if used on electronic systems necessary for the daily functioning of American cities.

The malicious software was used to shut down one-fifth of the electric power generated in Kiev, Ukraine last December. Called ‘CrashOverride’ the malware only briefly disrupted the power system but its potential was made clear.

With development, the cyber weapon could easily be used against U.S with devastating effects on transmission and distribution systems.

Sergio Caltagirone, director of threat intelligence for Dragos, a cybersecurity firm that examined the malware said, “It’s the culmination of over a decade of theory and attack scenarios, it’s a game changer.”

Dragos has dubbed the group of hackers who created the bug and used it in Ukraine, Electrum. The group and the virus have also been under scrutiny by cyber intelligence firm, FireEye, headed by John Hultquist. Hultquist’s company has nicknamed the group Sandworm and are keeping watch for clues of another attack.

The news of the malware comes in the middle of the ongoing investigation into Russia’s influence on the recent Presidential election. The Russian government is accused of trying to influence the outcome of the election by hacking hundreds of political organizations and leveraging social media.

While there is no hard evidence yet, U.S. officials believe the disruptive power hackers are closely connected to the Russian Government. U.S. based energy sector experts agree the malware is a huge concern and concede they are seeking ways to combat potential attacks.

“U.S utilities have been enhancing their cybersecurity, but attacker tools like this one pose a very real risk to reliable operation of power systems,”said Michael Assante, who worked at Idaho National Labs and is former chief security officer of the North American Electric Reliability Corporation.

CrashOverride

CrashOverride is only the second known instance of malware specifically designed to destroy or disrupt industrial control systems. The U.S. and Israel worked together to create Stuxnet, a bug designed to disrupt Iran’s nuclear enrichment program.

Robert M. Lee, chief executive of Dragos believes CrashOverride could be manipulated to attack other types of industrial control such as gas or water, though there has been no demonstration of that yet. But the sophistication of the entire operation is undeniable. The hackers had the resources to only develop the malware but to test it too.

The malware works by scanning for critical components that operate circuit breakers, then opening these breakers, which stops the flow of electricity. It continues to keep the circuit breakers open, even if a grid operator tries to close them. CrashOverride also cleverly comes with a “wiper” component that erases the existing software on the computer system that controls the circuit breakers. This forces the grid operator to revert to manual operations, which means a longer and more sustained power outage.

Potential outages could last a few hours and probably not more than a couple of days as U.S. power systems are designed to have high manual override capabilities necessary in extreme weather.

As mentioned above, you need to read the full detailed version here and just how the FBI, global cyber experts at the request of Ukraine worked diligently for accurate attribution to a Russian cyber force intruding on power systems. Hat tip to these experts and the story needs to go mainstream, as we are in a cyber war, the depths impossible to fully comprehend. Ukraine is the target and cyber incubation center for Russian cyber terrorists where they test, review, adapts and keep going without consequence.

Okay, read it all here. Hat tip for the detailed summary and the people doing quiet investigative cyber work.