• Full FOMC Preview: What Wall Street Will Focus On
    by Tyler Durden on 26/09/2018 at 02:25

    On Wednesday at 2PM, the FOMC will publish its September rate decision and economic projections, followed at 2:30PM ET by Chair Powell’s press conference. With a 25bps rate hike priced in, attention will be the on December 2018 meeting, as well as the 2019 “dots”, where the risk is that the median dot may fall given several new dovish participants making projections. This will also be the first FOMC forecast that includes 2021. While there will hardly be any bombshells tomorrow, here’s what to expect, courtesy of RanSquawk: RATES: The FOMC is expected to lift rates by 25bps to 2.00-2.25% at its September meeting, which would be the third rate rise in 2018, of the four rises forecast in its June dots. Money markets are pricing the hike with a very high degree of certainty, and prices two more rate hikes this year with around 80% certainty. In recent commentary, policymakers have generally said that they are comfortable with pursuing a gradual course of rate rises, and accordingly, Citi’s analysts say that the focus is on whether the FOMC will lift rates again in December, and if the Fed will push policy rates into “restrictive” territory (above around 3.0%) in 2019. (The Fed’s current rate forecast configuration is for four hikes in 2018, three hikes in 2019, and a single hike in 2020). NEUTRAL RATES: The FOMC recent projections pencil in rates between 2.75-3.00% in the long-run. The range of policymaker estimates of the neutral rate is between 2.50-3.50%. The debate about what the Fed should do when it gets to neutral is gaining traction, with some participants looking for a pause giving it time to evaluate the situation, while others suggested that lifting rates above neutral. RISKS TO THE OUTLOOK: Officials seemed generally comfortable in the inflation outlook, with the likes of Powell, Brainard, and Williams seeing little signs of runaway inflation. Barclays notes that the August meeting minutes made 32 references to a “strong” economy, more references than any minutes in recent years. “Although downside risks appear to have risen, none of these seem to unduly occupy the Fed’s attention,” Barclays writes. “Some on the committee see upside risks from fiscal stimulus, while others have concerns that fiscal stimulus may fade quicker than expected. Protectionism, housing, oil prices, and an abrupt slowing in emerging market economies are also on the Fed’s radar as potential downside risks.” Accordingly, the bank believes that the FOMC will continue to categorise risks as “roughly balanced.” YIELD CURVE: Fed officials are broadly in two camps, Goldman Sachs notes: those who have downplayed the signal from a potential yield curve inversion (Brainard, Evans, Mester, Williams), and those who will place a significant amount of emphasis of the yield curve on their policymaking (Bostic, Bullard, Kaplan). TD Securities expects Chair Powell “to remain cautious and data dependent here, noting that the yield curve is but one of a number of indicators the Fed is watching. He also is likely to suggest that the Fed does not necessarily see a flat or inverted yield curve as a reason to halt rate hikes.” TRADE: Zerohedge has noted that mentions of trade tensions has been rising in the Fed’s recent Beige Books. There were 41 instances of the word “tariff” in the September Beige Book, rising from 31 in the July. And the impact is negative: “Tariffs were reported to be contributing to rising input costs, mainly for manufacturers,” the Beige Book stated. Fed’s Brainard this month said that trade tensions have introduced uncertainty, while Rosengren has stated that tariffs and higher oil prices causes stresses on China and a lot of other emerging economies, and that could foster the conditions where global growth takes a hit, which could be a problem for US growth. TONE: Citi expects a dovish hike, arguing that the median 2019 ‘dot’ may fall; it explains that as the SF Fed will make a forecast (despite newly appointed Mary Daly taking her position on 1 October), and therefore the total number of dots will increase from 15 to 16 with the addition of Vice-Chair Clarida. “The median thus will be split between the 8th and 9th dot,” Citi says, “Vice-Chair Clarida may be more dovish than former NY Fed President Dudley (who will no longer place a dot, instead replaced by Williams).” “ACCOMMODATIVE”: Some have argued that the FOMC could signal its intention to continue hiking rates gradually by tweaking the description that “the stance of monetary policy remains accommodative”. Former FOMC policymaker Dennis Lockhart stated that there is no need for the Fed to tweak its current description, arguing that it remains accurate given that the current federal funds rate target remains below neutral. However, Morgan Stanley points out that the minutes of the Fed’s August meeting hints that “many participants” wanted to revise it in the “not-too-distant future”, and the bank says this leaves the Fed with three options: 1) change “accommodative” to “modestly accommodative”; 2) replace the sentence with one that describes the target rate as having moved “closer to the range of estimates of its neutral level”; 3) remove the sentence altogether; “whichever option it chooses, the Committee’s desire will be to alter the language without signalling a change in policy stance,” MS writes. FED INDEPENDENCE: US President Trump’s recent remarks on interest rates and the Fed chair Powell have been taken as an affront on the central bank’s independence, CNBC reported. And some have now noticed that Chair Powell has been ramping up meetings with lawmakers on Capitol Hill as he seeks to protect the Fed’s independence. CNBC notes that Powell has met or called lawmakers 48 times in his first six months in office, while his predecessor Janet Yellen by comparison had only 17 contacts with lawmakers. Powell will inevitably face questions about what he has spoken to lawmakers about, though if his recent performances are anything to go by, he will likely reveal little and reiterate the FOMC conducts policy in an independent manner. Finally, from TD Securities, this is what the potential changes to the September statement may look like: […]

  • Sex Crimes Prosecutor Emerges As GOP Pick To Question Kavanaugh, Ford
    by Tyler Durden on 26/09/2018 at 02:16

    The fact that all 11 Republican members on the Senate Judiciary Committee are men, it was somewhat inevitable they would bring in outside female assistance to question Supreme Court nominee Brett Kavanaugh and his accuser Christine Blasey Ford about her allegation of sexual assault. According to multiple reports tonight, Arizona prosecutor Rachel Mitchell has emerged as Senate Republicans’ choice. The Washington Post reports that Mitchell, the sex crimes bureau chief for the Maricopa County Attorney’s office in Phoenix, is the likely candidate, according to two people familiar with the decision. A registered Republican, picture above – back row left, Mitchell has worked for the Maricopa County Attorney’s Office for 26 years. Senate Judiciary Committee Chairman Charles E. Grassley (R-Iowa) has just confirmed that it will be Mitchell, noting that she “has experience prosecuting sex crimes.” Grassley said he appointed a woman from the outside in order to “depoliticize” the process and prevent a rerun of Anita Hill’s testimony at Justice Clarence Thomas’s 1991 confirmation hearing. “The whole point is to create an environment where it’s what Doctor Ford has asked for, to be professional and to not be a circus,” said Grassley. Grassley Hires Experienced Prosecutor to Question Witnesses During Thursday’s Session of Kavanaugh Confirmation Hearing WASHINGTON — Senate Judiciary Committee Chairman Chuck Grassley said he has asked Rachel Mitchell: a career prosecutor with decades of experience prosecuting sex crimes, to question the witnesses scheduled to testify on Thursday at the committee’s continuation of its hearing to consider the nomination of Aidge. Brett Kavanaugh to serve on the United States Supreme Court. Mitchell’s serving as nomination investigative counsel for the majority members on the committee for consideration of this nomination. “As l have said, I’m committed to providing a forum to both Dr. Ford and Judge Kavanaugh on Thursday that is safe, comfortable and dignified. The majority members have followed the bipartisan recommendation to hire as staff counsel for the committee an experienced career sex-crimes prosecutor to question the witnesses at Thursday’s hearing_ The goal is to de-politicize the process and get to the truth, instead of grandstanding and giving senators an opportunity to launch their presidential campaigns. I’m very appreciative that Rachel Mitchell has stepped forward to serve in this important and serious role. Ms. Mitchell has been recognized in the legal community for her experience and objectivity,” Grassley said. “I’ve worked to give Dr. Ford an opportunity to share serious allegations with committee members in any format she’d like after learning of the allegations. I promised Dr. Ford that I would do everything in my power to avoid a repeat of the ‘circus’ atmosphere in the hearing room that we saw the week of September 4. I’ve taken this additional step to have questions asked by expert staff counsel to establish the most fair and respectful treatment of the witnesses possible.” Mitchell came to the committee staff from Arizona, where she is on leave as Deputy County Attorney in the Maricopa County Attorney’s Office in Phoenix and the Division Chief of the Special Victims Division, which consists of sex-crimes and family-violence bureaus. She had served as a prosecutor since 1993. She previously spent 12 years running the bureau in the Division responsible for the prosecution of sex-related felonies, including child molestation, adult sexual assault, cold cases, child prostitution and computer-related sexual offenses. She also supervised a satellite bureau responsible for the prosecution of felonies including child molestation, adult sexual assault, child physical abuse and neglect, elder abuse, stalking, and domestic violence. She is a widely recognized expert on the investigation and prosecution of sex crimes, and has frequently served as a speaker and instructor on the subject. In particular, Mitchell has for many years instructed detectives, prosecutors, child-protection workers and social workers on the best practices for forensic interviews detectives, prosecutors, child-protection workers and social workers on the best practices for forensic interviews of victims of sex crimes. In 2013, Mitchell received the David R. White Excellence in Victim Advocacy Award from the Arizona Prosecuting Attorneys’ Advisory Council. In 2006, she was named Prosecutor of the Year by the Maricopa County Attorney’s Office, and she received the Outstanding Child Abuse Legal Professional Award for Excellence from the Arizona Children’s Justice Task Force. And in 2003, she was recognized by Governor Janet Napolitano and Attorney General Terry Goddard as the Outstanding Arizona Sexual Assault Prosecutor of the Year. WaPo  offers this color as background on Mitchell: In a 2011 interview, Mitchell said she was drawn to sex crimes work after she was paired with a senior lawyer prosecuting a youth choir director after joining the office as a law clerk awaiting the results of her bar exam. “It was different than anything that I would have ever imagined it being,” she said. “It struck me how innocent and vulnerable the victims of these cases really were.” And here’s what Rachel Mitchell said in a 2012 interview. “False accusations are very rare… do not keep these things internal and circle the wagons… the authorities and the criminal justice system can weed out false accusations” No matter what, it will be a circus. […]

  • M230: Could This Gun Be The U.S. Military’s Ultimate Weapon?
    by Tyler Durden on 26/09/2018 at 02:05

    Authored by Charlie Gao via NationalInterest.org, The M230 is probably one of the definitive weapons of the Global War on Terror. Mounted on the belly of Apache gunship helicopters, the M230 has provided critical fire support to U.S. troops in almost every theatre they’ve engaged in combat in. But now as the military considers ways to enhance the firepower of ground vehicles, the M230 is attracting attention again as a lightweight solution to add heavy firepower to a ground vehicle. But can it be easily adapted to the ground role? How does it compare to the larger 30mm Bushmaster cannons? The M230 from its outset was designed for use in an aerial role. For instance, it uses the 30×113 rounds originally designed for DEFA and ADEN cannons for fighter jets. Moreover, it also uses a linkless feed as it’s assumed to be mounted in a way in which this will always be possible (e.g., Upside down on the belly of a helicopter). Its ammunition is notable as it has a relatively low muzzle velocity compared to other cannons. As it made for air to air combat, velocity was a secondary concern as most planes have light to no armor. The explosive effect of the round was expected to produce the results desired on target. To compare, the muzzle velocity of the 30x113mm the M230 is around 810 m/s. Comparatively, the 30x173mm cartridge used in the A-10’s GAU-8 rotary cannon and the 30mm Bushmaster II has a muzzle velocity of 1020 m/s (for a High-explosive incendiary cartridge, armor-piercing rounds go even faster). As such, the M230 is reliant on an high-explosive, dual-purpose (HEDP) round with a small shaped charge in its nose to defeat armor. This potentially lessens the explosive filler of the round, as there must be hollow space for the copper jet to form with the shaped charge. However, due to safety concerns with the HEI round for the M230, the HEDP round is the primary combat round for the Apache throughout the war on terror. It has proven effective for fire support. In a ground role, the HEDP would likely be effective against soft targets and light unarmored vehicles as it has proven in Afghanistan and Iraq. However, the penetration performance of the round could prove lacking. Northrop Grumman cites the performance as 25mm of RHA at 50 degrees at 500 meters. While this is probably good enough for most infantry fighting vehicles (IFVs) and armored personnel carriers (APCs) of the current generation, it would fail to perform against heavy IFVs. The reliance on a shaped charge also means that slat or spaced armor might easily defeat it, compared to pure anti-personnel (AP) rounds, which would simply pass right through slat armor. The M230LF, the variant of the M230 for ground purposes does feature a slightly longer barrel for enhanced muzzle velocity. But the lack of a true AP round in that caliber ( in U.S. inventory ) means that enhanced muzzle velocity is to make the cannon shoot flatter and faster, not to increase armor penetration. The round technology used in the M230 does have benefits. The individual round’s smaller round and lightweight characteristics (as it was designed for helicopters) mean more can be carried, and the additional weight of the weapon system is minimized. In the transition to a ground mount, a linked feed was introduced into the M230, and a delinker was attached to the cannon. This makes the ground version heavier than the air version, but the system was expected to be slightly heavier overall due to the additional barrel length. The linked feed is also more complex but necessary for the flexible overhead mounts in which the M230LF had been tested. The primary platform on which the M230LF is planned to be mounted on are the military’s new series of armored cars: the MATV and the JLTV. Putting an M230 LF on these platforms would prove to be a significant upgrade from existing CROWS systems, which only mount a .50 caliber machine gun. However, the ammo for the system is likely to take up a lot of space, so as per the military’s plan, the cannon system will likely not be deployed on every vehicle. On those that it is, they would likely prove to be effective fire support platforms, delivering more effective high explosive shells out to a few kilometers. The system wouldn’t have the advanced features (such as airbursting rounds and real armor piercing rounds) found on the 30mm Bushmaster II that’s planned to be mounted on the Stryker. However, the turret is far lighter and represents an interesting middle ground between a full-fledged 30mm cannon system and lighter heavy machine gun and automatic grenade launcher systems. […]

  • Ex-Bankrate CFO Sentenced To 10 Years, $21 Million In Restitution For Accounting Fraud
    by Tyler Durden on 26/09/2018 at 01:45

    The former chief financial officer of Bankrate Inc. was sentenced to 10 years in prison for accounting and securities fraud that cost shareholders $25 million in losses, the US Justice Department announced Tuesday.  53-year-old Edward DiMaria was also ordered to pay $21.2 million in restitution to Bankrate’s shareholders. DiMaria pleaded guilty in late June to one count of conspiracy to make false statements to the company’s accountants, falsifying a public company’s books, records and accounts, and securities fraud; as well as one count of making materially false statements to the Securities and Exchange Commission (SEC).  DiMaria orchestrated a scheme to artificially inflate Bankrate’s earnings through a so-called “cookie jar” or “cushion” accounting “whereby millions of dollars in unsupported expense accruals were purposefully left on Bankrate’s books and then selectively reversed in later quarters to boost earnings,” according to the DOJ. Additionally, DiMaria admitted to conspiring with other Bankrate employees to misrepresent certain expenses as “deal costs” in order to artificially inflate earnings.  Bankrate’s former VP of finance, Hyunjin Lerner, previously pleaded guilty for his part in the scheme, and is currently serving out a five year prison term handed down earlier this year.  “While serving as Bankrate’s CFO, Edward DiMaria blatantly manipulated the company’s publicly reported financial statements by repeatedly lying and directing others to lie to auditors, regulators, and shareholders,” said Assistant Attorney General Benczkowski. “The significant sentence handed down today underscores the serious nature of corporate fraud and the damage it causes to shareholders and to the public’s trust in our financial markets. The sentence also demonstrates the Department’s commitment to prosecuting corporate misconduct to the fullest extent of the law.” Not too big to jail! […]

  • Retired Green Beret: From Inception To Control, The Transition To Totalitarianism Is Happening Now
    by Tyler Durden on 26/09/2018 at 01:25

    Authored by Jeremiah Johnson (Nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com, Over the past year and a half, I’ve written many pieces on the surveillance state and how we are one step away from the inculcation of technological “omniscience” pertaining to control. The objective is not simply “control,” as they have already obtained that for the most part: limiting cash withdrawals from the bank, restricting your movements and business outside of the country, and new laws being created by the day. This latter part is akin to a “tag team” event of WWF: what the feds can’t or won’t do, they “tag” off for the states to accomplish, with local governments following suit. The objective is total control: over everything you read, hear, and watch in the (so-called) media, and an eyeball on you in every facet of your life. Mac Slavo released an article on SHTFplan entitled Apple is now giving people trust scores based on their calls and emails on 9/21/18. This is an example of how tech firms in the U.S., in conjunction with one another and other American business entities are instituting social engineering by controlling our communications via social media. The big picture is much more frightening, as this article comes on the heels of another, more insidious occurrence: a nationwide “scoring system” instituted in the largest surveillance state in the world…communist China. On 9/20/18, an article written by Peter Dockrill was released that will really open your eyes when you read it.  The piece is entitled China’s Chilling ‘Social Credit System’ is straight out of Dystopian Sci-Fi, and it’s Already Switched On. Here is an excerpt: “China’s Social Credit System – which is expected to be fully operational by 2020 – doesn’t just monitor the nation’s almost 1.4 billion citizens.  It’s also designed to control and coerce them, in a gigantic social engineering experiment that some have called the “gamification of trust…assigning an individual trust score to each and every citizen, and to businesses too.  According to China’s Communist Party, the system will “allow the trustworthy to roam freely under heaven while making it hard for the discredited to take a single step.” To pull this off, the unprecedented scheme will harness the immense reach of China’s technological infrastructure: some 200 million CCTV cameras… The idea is these ever-watchful eyes will be hooked up to facial recognition systems, and cross-checked with financial, medical records, and legal records – with the whole apparatus regulated and interpreted by advanced, big-data-crunching AI networks.” The article goes on to tell of how it is already in place: it is just not completely finished. The piece also presents the case of a Chinese journalist who was sidelined and marginalized for criticizing the government. In brief, the system will allow a privileged few to do what they want, and the rest restricted in every portion of their lives, even more than today. Three Phases are evident within this progression of surveillance to totalitarianism. Here they are: Inception and Initial Emplacement: The “new measure” is put into place, eventually becoming widespread and taking root. CCTV cameras started out as simple video cameras in the convenience store, liquor store, bank, and the parking lot to workplaces. Now they sprout up in the intersections, the shopping malls, the cafes, and the bus terminals.  This is the beginning of surveillance. Fostered Dependence and Regulation: The ever-present “bogeyman” in our society is the invisible malcontent, labeled as a terrorist, and this creates the “need” for more security and greater surveillance. The sacred goal: to keep everyone “safe,” is a boldfaced lie. The paradigm is shifted, and the senses of the populace are dulled (not very much work in that department) to not even pay the increased surveillance any mind. Over the past two decades, the corporations, the government (federal, state, and local), and the moneyed interests (oligarchs and politicians) have quietly inculcated a cross-linked and cross-functioning surveillance “net” or network…all cameras accessible and tied in to the information systems of the authorities. Authorities: those who are backed by the State and enforce the State’s edicts with firearms. Bio-scanning facial recognition, complete body scanners, and fingerprint recognition are now just a “matter of fact” in airports.  Just five years ago, the mobs were ready to storm the TSA with torches and pitchforks for the “affront at having their bodies exposed,” blah, blah, blah, yada, yada. The torches burned out and the pitchforks are back in the garden sheds. Now surveillance is the norm, and it’s backed by regulation. “Phase 2” is the transition from surveillance being present to the creation of the SurveillanceState. Total Surveillance: Control, and beyond. We have not reached this phase yet in the United States, but we’re well on our way there. Look to China. China is the model, the template, the “guinea pig” for the totalitarian road map of one world government…in reality, a world of slavery. Kissinger, Bill Gates, Soros, and a plethora of others all laud Communist China as the blueprint for the world state. Remember: Gates has scheduled (with his team of investors) to place 500 satellites in orbit to map the entire globe in real time, by late Spring of next year. When that “omniscient” surveillance is in place, what do you think they’ll do then? What they will do is follow their Malthusian leanings, toward Thomas Malthus’s recommendations for global population reduction in the interests of “saving the planet and its resources.” In reality, to cull the herd, reducing it to a more “manageable” population of masters and slaves, the latter category making up the majority in a world not much different from that of Orwell’s “1984.” The article by Mac Slavo shows what they’re doing in this country at the “micro” level: the efforts being put forth to limit people in their communications via “social media,” and socially engineer the consciousness and actions of the people passively before the active engineering (first by rule of law and then by force) occurs. When that is complete? Look to the past to see what will happen in the future, and the answer is right there. The solution is not that simple, and the more the system emplaces the control, the more difficult it will be to exercise that solution. […]

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