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Zero Hedge
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22 ноября, 19:20

The World's Ultra-Rich Scramble To Find Safe-Deposit Boxes Ahead Of The Next Crash

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The World's Ultra-Rich Scramble To Find Safe-Deposit Boxes Ahead Of The Next Crash Last week we reported that according to a new analysis by UBS Wealth Management, the wealthiest investors around the world are preparing for a "significant" market crash by the end of next year. And while that may be fine and good - after all, virtually no finance professional thinks the current, longest bull market on record, will continue beyond next year's election - one question quickly emerged: if the world's 0.001% are indeed liquidating in anticipation of a generational crash, just what are they converting their assets into? After all, if the crash is great enough, not a single risk asset will retain its value, while a DM sovereign collapse could promptly render paper money is worthless, as for gold retaining its value, yes maybe, but only if one owns far more lead to defend it. The answer is to be found at 46 Park Lane, a few blocks from Grosvenor Square in Mayfair, which initially resembles a private club with wood-paneled walls and an ornate fireplace dating back to Britain’s Victorian era. But down a flight of stairs is one of the most secure rooms in London. Safe-deposit boxes at 46 Park Lane; photo: Bloomberg Built by IBV International Vaults, the steel-walled vault is scheduled to open next month and will cater almost exclusively to those billionaires looking for a place to stash their most prized possessions now that they have liquidated most of their assets. “We’re getting calls every week about a room available for 2.5 million pounds ($3.2 million) a year,” Sean Hoey, managing director of IBV London, told Bloomberg referring to an apartment-size vault space. Ironically, the firm which also has 550 safe-deposit boxes on site and room for about 450 more, is betting on London’s reputation as a “safe haven,” even with Brexit... even if London turns into a socialist paradise under Labour's Corbyn. Socialist UK or not, there is an unprecedented scramble by the ultra-rich to park their hard assets in a safe room in a safe city somewhere in the world. From London to Switzerland to the U.S., the rich are looking to store precious metals, cash and cryptocurrency. It has allowed IBV to open 6 locations already, with many more likely coming. For some, it’s the threat of a global recession. Others are avoiding bank deposits as negative interest rates force lenders to charge for holding cash. Many are concerned about natural disasters. “We’ve seen extraordinary demand for safe-deposit boxes ever since we started offering them in 2015, and that demand has really gone up since the late summer,” said Ludwig Karl, a spokesman for Swiss Gold Safe Ltd., which operates high-security alpine vaults. “Most people say they are planning for difficult economic circumstances.” The common denominator? Nobody wants to be connected to the system - or have their "net worth" represented by 1s and 0s in some cloud server - when the financial system comes crashing down at some point in the not too distant future; instead billionaires want to store their hard assets in a some place that nobody else can reach. Sure enough, as we noted last week, a majority of wealthy investors are stockpiling cash in anticipation of a sharp market drop before the end of next year, with the founder of the world's biggest hedge fund, Ray Dalio, not helping the global mood when he captured the prevailing anxiety last month after he warned the global economy is under threat from an explosive mix of ineffective monetary policy, a widening wealth gap and climate change. There is a similar scramble for the services offered by Sincona Trading AG, a precious-metals dealer with more than 1,000 safe-deposit boxes for rent in central Zurich. Three years ago, it had scores of empty boxes but now it’s renting about five a day, said Benoit Schoeni, a managing director. "There has been an extreme demand,” he said. “It won’t take too long until we’re full up." While it is hardly a surprise that the ultra rich are seeking places they can park their hard assets, what is bizarre is that the continued demand for providers of the service suggest that much of the existing safe-base is already taken. Consider that there are more than 25 million safe-deposit boxes by some estimates in the U.S. alone, and while they can be used for the mundane to the exotic, it is safe to assume that most hold some combination of cash and precious metals. A private collector held the Crown of the Andes, made with 5.3 pounds of gold and more than 400 emeralds, in a Citibank box before its sale four years ago to the Metropolitan Museum of Art. Even more curiously, for many banks  - the same banks who complain they can't turn a profit any more - safes are no longer a core offering. One deterrent is the amount of space they require. That’s especially the case in London, home to the world’s largest population of wealthy individuals, according to real estate broker Knight Frank. In the city center, few places have secure storage facilities as large as IBV’s on Park Lane, where customers can also purchase gold coins from across the globe. In the U.S., safe-deposit boxes had also fallen out of favor in recent years as banks closed off branches and opt not to install them in new ones; coupled with collapsing faith in banks by ordinary individuals. Demand has waned in recent years, according to JPMorgan Chase and Bank of America the nation’s two largest lenders. "Much of the decline can be attributed to clients opting to store documents online, especially younger clients," said Bank of America spokesman Don Vecchiarello. But as the system teeters on the edge of collapse, and even a 5% drop in the S&P is now sufficient for the Fed to cuts rates and/or launch QE, there’s revived interest for people to secure their valuables, said Jerry Pluard, founder of Safe Deposit Box Insurance Coverage. Last but not least, a big source of demand for safes and vaults are central banks themselves, and nowhere more so thatn in Switzerland, where firms have seen a surge in demand driven by central bank policy. Negative interest rates have left Switzerland’s banks caught between the prospect of losing money to hold client deposits and imposing fees that could chase customers away. Most clients pick the safe options, no pun intended. “The storage cost for cash is cheaper than negative interest rates,” said Swiss Gold Safe’s Karl. The firm offers six box sizes, with the largest renting for 4,039 Swiss francs ($4,079) a year. "Cash storage has become a strong business for us." Central banks may be putting commercial banks out of business, but they are certainly a boon for safe box providers. They are also a present for law enforcement and regulators who enjoy asking safe users just what it is they have to hide from the banking system. Indeed, as Bloomberg notes, the proliferation of nonbanks providing safe-deposit boxes has prompted some Swiss lawmakers to question whether they’re providing a safe haven for wrongdoing such as money laundering, noting they don’t face the same level of scrutiny and regulatory oversight as traditional banks. Storing large sums of cash in safe-deposit boxes demands a checklist of tasks. Those include arranging transport of the money and keeping detailed records of its location to avoid raising suspicions over money laundering if the cash ever returns to a bank account. Moreover, failing to strictly adhere to a safe-deposit firm’s protocols may result in being rejected as a customer. “The even bigger issue is getting the cash back into your account,” said Felix Brill, chief investment officer of Liechtenstein-based VP Bank, which manages about $50 billion of assets and offers some safe-deposit boxes. Still, “no one likes to pay negative interest rates. Everyone looks for alternatives.” There is another risk, perhaps the oldest risk in the book: safes aren’t always a fail-safe. In 2015, burglars drilled through the wall of an underground vault in London’s Hatton Garden diamond district, making off with $20 million of jewelry. A year earlier, a customer of a Wells Fargo & Co. branch in Highland Park, New Jersey, lost millions of dollars of rare watches that had been stored in a safe-deposit box, the New York Times reported in July. The irony is that high-profile heists and scandals tend to boost other firms offering safe-deposit boxes as the rich hunt even more secure places to stash their prized possessions. Christopher Barrow, chief executive officer of London-based Metropolitan Safe Deposits, said his company spent more than $3 million to build a facility that opened this year in southwest London. “Hatton Garden was a classic case,” said Barrow, whose firm has more than 15,000 safe-deposit boxes in central London alone. “There was a flight to quality on the back of it.” There is a simpler reason why demand for safe deposit boxes will only grow: we now live in a world in which assets only have value because of constant central bank intervention. If one day an apparatchik forgets to push the correct button, or if we have another Lehman moment and faith in the monetary system evaporates, the value of hundreds of trillions in assets could evaporate in an instant. It's a risk the world's ultra rich no longer want to live with. Tyler Durden Fri, 11/22/2019 - 11:20 Tags Business Finance

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22 ноября, 19:00

Ukraine: 10 Talking Points For Rational People

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Ukraine: 10 Talking Points For Rational People Authored by Gary Leupp via Counterpunch.org, 1. Ukraine is the largest nation in Europe, with a 1400 mile land border with Russia. The U.S. government under administrations since Bill Clinton’s has sought to integrate Ukraine into the anti-Russian NATO military alliance. 2. NATO is an artifact of the early Cold War and the Truman Doctrine, vowing any means necessary to stop the spread of Communism. Founded in 1949, when the U.S. ruled most of the world, it included most of the countries of Europe except for those liberated from Nazism by the Soviets, including Poland, Czechoslovakia, Hungary, Bulgaria and Romania, and Yugoslavia and Albania where anti-fascist partisans seized power. 3. After the dissolution of the USSR and the Warsaw Pact (a defense alliance formed in 1956 after West Germany was included in NATO) in 1990, and the full restoration of capitalism to the countries of the former Soviet Union, there was no ideological east-west conflict or another rationale to maintain the NATO alliance. It gradually redefined its mission as “maintaining stability” in the post-Soviet era, in the wake of ethnic conflicts across Eurasia, and “counter-terrorism.” Later “humanitarian” missions were added. 4. In 1989 President George W. Bush promised Soviet General Secretary Mikhail Gorbachev that, following the reunification of Germany with Moscow’s assent, NATO would not “move one inch” eastwards. But while Bill Clinton was president in 1999, Poland, Hungary and Czechoslovakia joined the alliance. Under Bush’s son, in 2004, the list grew: Estonia, Lithuania, Latvia, Bulgaria, Romania, Slovakia, Slovenia all joined. NATO now bordered Russia itself. Obama added Albania and Croatia. Under Trump, Montenegro joined and North Macedonian entry is in the cards. The U.S. is obviously trying to incorporate every European nation possible into an anti-Russian coalition for future deployment. 5. NATO forces were never deployed against Soviet or Warsaw Pact forces during the Cold War. But Clinton (prompted by bellicose Hillary) used them to pound Serbian positions in Bosnia in the 1990s and to bomb Belgrade during the 1999 war to sever Kosovo from Serbia and convert it into a NATO base. (In both instances Clinton claimed “humanitarian” motives.) They were used too in Afghanistan and Libya, far away from the North Atlantic, at U.S. direction to topple the Taliban, thereby producing an ongoing insurgency, and to destroy Gadhafi’s modern state of Libya. They are not a force of good in the world. 6. Russia has responded, angrily but cautiously, to NATO’s incessant, inexplicable expansion. The three crucial moments have been in 1999, when Russian troops rushed to Pristina Airport in Kosovo to preserve some national pride following the expansion of NATO and the U.S. humiliation of the Serbs; in 2008 when Russia briefly invaded Georgia to punish it for attacks on South Ossetia (and its just announced pursuit of NATO membership); and in 2014 when in response to the U.S.-backed Kiev putsch Moscow moved to secure ongoing control of the Crimean Peninsula. These were obviously moves to discourage NATO expansion. 7. For NATO strategists and supporters, Ukraine is the ultimate prize. (Thereafter only Belarus and Georgia need absorption.) It is still slated for NATO membership; this year its Secretary General Jens Soltenberg reiterated this commitment in Kiev. It remains the position of the U.S. that both Ukraine and Georgia should join NATO. The German government on the other hand, far more sensitive to the historical issues involved, notes that Ukrainian or Georgian membership would “cross a red line” with Russia. The Ukrainian people are divided on the issue. It is good if the Germans and others can block bloc expansion. 8. From February 2010 to February 2014, Ukraine was headed by a democratically elected president, Viktor Yanukovych, who opposed NATO membership. He had been elected despite routine U.S. election meddling. He has been depicted in the U.S. press as “pro-Russian” and opposed to Ukraine’s membership in the European Union. In fact, he sought entry into the EU, using his U.S. aide Paul Manafort towards that end, and backed out of an agreement after realizing the political costs of the austerity program required. He was “pro-Russian” in that he is ethnic Russian in a multi-ethnic country, and was while in power inclined to maintain good relations with the northern neighbor. He was targeted by Hillary Clinton appointee Victoria Nuland (wife of neocon warmonger Robert Kagan) for removal. He was charged with denying the Ukrainian people’s “European aspirations”—meaning, he was resisting an association with the EU (and NATO). He was indeed overthrown, succeeded by an new regime that provoked revolt among the ethnic Russians in the east from the outset. The U.S. attempt to install a regime that could quickly align with the west, joining the EU and NATO as the usual package, resulted in civil conflict and the Russian re-annexation of Crimea. Finally, the NATO effort to dominate Eurasia met a snag when the Russians said: No way we’ll concede to you the base port of the Black Sea Fleet since Empress Catherine’s time, in 1785. 9. After the coup of February 18-21, 2014, Aseniy Yatsenyuk, handpicked by Nuland, became prime minister. Russia refused to recognize the government he headed, stacked with NATO supporters. Only when Ukraine held a presidential election, and a candidate acceptable to Moscow, Petro Poroshenko, was elected, did the Russians actively engage in diplomacy with Kiev. The result is the Minsk Accords and an ongoing process of negotiations between Kiev, the Donbas separatists, Moscow, Germany and France. The key issue of Donbas autonomy as a precondition for peace has met with opposition in the parliament but since the election of Volodomir Zelensky, there have been concrete moves towards peace. Not that there has been much heavy fighting since 2015. Russia and Ukraine are working with Europe to find a solution. It would be good for the U.S. to avoid interfering. 10. After the February 2014 coup (depicted in the western press as a “revolution” toppling a “pro-Russian” leader), Ukraine informally joined the U.S. imperialist camp. There is, in fact, no formal alliance, but Ukraine is now depicted as an ally, indeed one in desperate need of U.S. arms to resist the Russian invasion. But there has been no real Russian invasion, just lots of hype; nowadays the talking heads refer to “Russian-backed” forces in Ukraine, referring to ethnic Russian-Ukrainians; they exploit the general ignorance of people in this country about history and geography and fudge Russians with Russian-Ukrainians (or sometimes any Slavs). And the annexation of Crimea was bloodless and popularly supported. The provision of $ 380 million in Javelin anti-tank missiles and other weaponry to the Kiev government is unlikely to contribute to a settlement of the Donbas problem. *** Amidst all the attention to detail, to phone calls and transcripts and secret visits, those pressing for Trump’s impeachment (on bribery grounds) never discuss the context of this little scandal. The fact that Ukraine has been hopelessly corrupt since it became independent with the dissolution of the USSR in 1991; the fact that the U.S. underwrote the 2014 coup; the fact that Hunter Biden was hired by Burisma Holdings two months after the coup (while his father was the Obama team’s point man on Ukrainian corruption) and served to April 2019; and most of all, the fact that the U.S. wants to get Ukraine into NATO, surrounding European Russia and grabbing Crimea for itself. Trying to acquire dirt on the Bidens by strong-arming a foreign leader, threatening an arms supply cut-off, is bad I suppose, by definition. But providing arms to stoke a conflict ignited by U.S. interference in Ukraine is worse. Had the U.S. not spent $ 5 billion (Nuland’s figure) to “support the Ukrainian people’s European aspirations;” had John McCain and Lesley Graham not passed out cookies with Nuland in Maidan; had NATO not declared its intention to include Kiev in the alliance, the east would be quiet as usual. The coup and immediate rescinding of the law respecting Russian speakers’ linguistic rights provoked rebellion. The Ukraine scandal could be a teaching opportunity: this is where U.S. aggression leads. You provoke Russia again and again, with each new admission into NATO. At some point, Russia has to take action. It cannot let a Texas-size country on its southern flank join a military alliance directed at itself. Especially it cannot accept loss of control of the Crimean Peninsula. That Nuland in the days before the planned coup did not anticipate this Russian reaction is puzzling. Did she really think the conquest of Ukraine would be so easy? Or did she expect the Russian counter-moves, thinking that once Ukraine was in NATO Russia would have to back off? Is that still the dominant assumption in the State Department? Now a president with zero concern about Ukraine and its people is accused of a shocking reluctance to deliver weapons to a country invaded by Russia, “our greatest adversary” according to cable anchors. May he be impeached, of course! But if he falls, replaced by leadership more bent on provoking Russia by NATO expansion, the world will be more dangerous than it is now under Trump. Tyler Durden Fri, 11/22/2019 - 11:00 Tags Politics War Conflict

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22 ноября, 18:40

Bring It On! Trump Wants Senate Trial 'Of Some Length' If House Impeaches

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Bring It On! Trump Wants Senate Trial 'Of Some Length' If House Impeaches After two weeks of public testimony revealed that Democrats' impeachment case against President Donald Trump is largely made up of hurt feelings and foreign policy disagreements, the White House and allies say Trump is looking forward to a 'trial of some length' in the Senate if the House votes to impeach so he can expose what a flimsy case has been built against him. Donald Trump says he wants an impeachment trial in the Senate, despite saying that "they should never, ever impeach." pic.twitter.com/ZAENby2hcA — Bobby Lewis (@revrrlewis) November 22, 2019 "He wants to be able to bring up witnesses like Adam Schiff, like the whistleblower, like Hunter Biden, like Joe Biden," said Hogan Gidley, principal deputy press secretary for the White House. Trump spent much of Thursday and Friday tweeting highlights from recent impeachment testimony: SCHIFF'S "FACT" WITNESSES! pic.twitter.com/Pab2y1BVoN — Donald J. Trump (@realDonaldTrump) November 22, 2019 pic.twitter.com/osezECwPO1 — Donald J. Trump (@realDonaldTrump) November 21, 2019 On Thursday morning, a group of Republican senators met with White House counsel Pat Cipollone, Kellyanne Conway, Jared Kushner and acting chief of staff Mick Mulvaney to discuss strategy for a potential Senate trial which would likely take place in January, according to Politico. Two attendees said that the White House wants the Senate to hold a trial of some length and not immediately dismiss any articles of impeachment with the GOP's majority, as some Republicans have suggested. The White House and Trump's GOP allies decided instead “they want some kind of factual affirmative defense on the merits," said one attendee. One attendee noted that the White House wants to show a commitment to due process, particularly since Republicans have criticized House Democrats for how they've conducted their impeachment proceedings. ... A White House official said the meeting "wasn't so much about the details, it was about the Democrats' weak case and we want to show just how weak it is." -Politico President Trump, meanwhile, has been tweeting and retweeting highlights from the last week - and spent nearly an hour with Fox and Friends on Friday where he said he knows "exactly" who the Ukraine whistleblower is. Trump also said that he wants Schiff to testify more than Hunter Biden, and repeated his claim that former Ukraine Ambassador Marie Yovanovitch was "not an angel" and that she was speaking poorly of him to others. Trump repeated the claim that the hacked DNC server was given to Crowdstrike, "a company owned by a very wealthy Ukrainian." Trump also praised Rep. Elise Stefanik (R-NY) for her performance during the public impeachment hearings (23:40 in video above), as well as Rep. Jim Jordan (R-OH) - tweeting and retweeting clips related to Schiff's hearings. Thank you @EliseStefanik and @SteveScalise, GREAT JOB! pic.twitter.com/K8qQbCAXbj — Donald J. Trump (@realDonaldTrump) November 22, 2019 Today we heard from Amb. Sondland that @realdonaldtrump told him: “No quid pro quo. I want nothing.” No evidence of impeachable offenses, but the partisan process continues. And Adam Schiff still won’t let us call the whistleblower or Hunter Biden to testify. pic.twitter.com/LAfwofDMQ3 — Elise Stefanik (@EliseStefanik) November 21, 2019 Tyler Durden Fri, 11/22/2019 - 10:40 Tags Politics

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22 ноября, 18:20

NYTimes Pans "Cult Leader" Gabbard's White Pant Suit After Praising Hillary For Same Outfit

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NYTimes Pans "Cult Leader" Gabbard's White Pant Suit After Praising Hillary For Same Outfit Authored by Paul Joseph Watson via Summit News, A New York Times writer who praised Hillary Clinton for wearing a white pantsuit called Tulsi Gabbard a “cult leader” for wearing exactly the same thing. Style writer Vanessa Friedman had drooled over Hillary’s clothing back in 2016, calling her white pantsuit “presidential.” However, when Gabbard, a fierce critic of Clinton, wore virtually the exact same outfit, Friedman said it made her look like a “cult leader” full of “combative righteousness” and that the white fabric has “connotations of the fringe, rather than the center” and even undermines “community building.” Same author, same newspaper, completely different claim: pic.twitter.com/nXgnjOQUNr — Glenn Greenwald (@ggreenwald) November 22, 2019 Journalist Glenn Greenwald highlighted the fact that it’s normally considered sexist to judge women on their clothing, but that an exception had been made for Gabbard. Yes, usually it’s misogynistic to attack a female politician for the clothes she wears but an exception will be made (for obvious reasons) in this case. I’m just grateful the NYT didn’t claim white pants suits were Russian. I was waiting for a Kremlin or Putin link. https://t.co/GAO5e2cbvS — Glenn Greenwald (@ggreenwald) November 21, 2019 Another Twitter user pointed out that Friedman had also previously praised Democratic Congresswomen at Trump’s State of the Union for wearing white but lambasted Melania Trump for wearing the same color. All four of these are from @VVFriedman. Imagine choosing something as patently stupid as white pantsuits to expose your rank hypocrisy and blind hatred over. pic.twitter.com/Zj94LQhDIp — ᴾᴿᴬᴳ 🦖 (@pragmatometer) November 22, 2019 “Imagine choosing something as patently stupid as white pantsuits to expose your rank hypocrisy and blind hatred over,” remarked the Twitter user. “Only neoliberals and war hawks can wear white suites apparently,” added another. Only neoliberals and war hawks can wear white suites apparently pic.twitter.com/DHvDQaV3fN — K!LLA CAM 🌺 (@killa_cam214) November 21, 2019 Apparently, wearing white is a brave expression of purity and leadership, unless you challenge the Democratic establishment or the deep state, at which point it suddenly makes you a “cult leader.” And people wonder why mainstream journalism is dying. *  *  * My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Tyler Durden Fri, 11/22/2019 - 10:20 Tags Politics Entertainment Culture

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22 ноября, 18:09

UMich Consumer Confidence Rebound Continues, Led By Richest Americans & Democrats

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UMich Consumer Confidence Rebound Continues, Led By Richest Americans & Democrats The final November data from University of Michigan shows that the American consumer's confidence rebound has continued, but it is mainly attributable to the richest Americans. The final consumer sentiment index for Nov. rose to 96.8. It was 95.7 in the preliminary reading. The index was 95.5 last month. Current conditions actually dipped, but hope remains high... Expectations index rose to 87.3 vs. 84.2 last month. Current economic conditions index fell to 111.6 vs. 113.2 last month. Source: Bloomberg UMich's Richard Curtin writes that personal spending will be energized by record favorable evaluations by consumers of their personal financial situation, with gains expected across the entire income distribution, net increases in household wealth, the renewed appeal of price discounting, and reduced mortgage rates. The highest earners saw confidence surge in November, but low income Americans declined... Source: Bloomberg The divide between Democrats and Republicans is narrowing as amid the impeachment debacle, Democrats confidence rose and Republicans fell... Source: Bloomberg Buying Conditions improved for houses but slipped lower for both autos and large durables... Source: Bloomberg Consumers negatively mentioning tariffs 24% in Nov. vs 36% two months ago. Finally, we note that inflections in UMich buying conditions have historically led unemployment... Source: Bloomberg Will this time be different (until Nov 2020?) Tyler Durden Fri, 11/22/2019 - 10:09 Tags Politics Business Finance

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22 ноября, 18:00

Buchanan: Let The People Decide Trump's Fate

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Buchanan: Let The People Decide Trump's Fate Authored by Patrick Buchanan via Buchanan.org, Was there linkage between the withholding of U.S. military aid and the U.S. demand for a Ukrainian state investigation of the Bidens? “Was there a quid pro quo?” This question has bedeviled this city for months now. “The answer is yes,” said U.S. Ambassador to the EU Gordon Sondland in sworn testimony on Wednesday. Sondland added that President Donald Trump, Secretary of State Mike Pompeo, White House Chief of Staff Mick Mulvaney, national security adviser John Bolton and Vice President Mike Pence were all wired in to what was up: “They knew what we were doing and why. … Everyone was in the loop. It was no secret.” And so where are we headed now? The House intel and judiciary committees will advance one or more articles of impeachment against Donald Trump to the House floor, where they will be agreed upon in party-line votes and sent to the Senate for trial. Impeachment appears as inevitable as anything in politics today. Some are pressing the House, after Sondland, to slow down, cast a wider net, and demand the sworn testimony of Pompeo, Mulvaney, Pence, Bolton and Giuliani. Others are urging the House to strike while the iron is hot, move impeachment swiftly, and get it all done before the Iowa caucuses and the New Hampshire primary. As the goal of the more rabid anti-Trumpers is to impeach, convict and remove the president, and then proceed with civil and criminal charges, this looks to be a fight to the death. Mulvaney may have shown the White House the way to fight a month ago. Asked whether the withholding of aid to Ukraine until an investigation of the Bidens had been announced was not the definition of a “quid pro quo,” Mulvaney blurted out: “We do that all the time. … No question about it… That’s why we held up the money. I have news for everybody. Get over it. There’s going to be political influence in foreign policy.” Welcome to the real world. In return for meeting with President Volodymyr Zelensky, Trump had a right to demand that Ukraine initiate an investigation into its most corrupt company, Burisma. Especially since the ne’er-do-well son of Vice President Joe Biden had been given a $50,000-a-month seat on Burisma’s board just days after Joe demanded and got the resignation of the state prosecutor and signed off on a billion-dollar loan guarantee for this third-most corrupt regime on earth. We read often that allegations of corruption in the smelly deal that put Hunter Biden on Burisma’s board are “unfounded.” Who did the investigating? And what are we to make of the crocodile tears of Democrats that Ukrainian soldiers battling secessionists and Russians in the Donbass have died for lack of U.S. weapons held up by Trump? Is this not manifest hypocrisy? Most Ukrainian government officials were not even aware that the military aid for which Congress voted was being held up. And from 2014, when Vladimir Putin’s Russia seized Crimea and backed the secessionists in the Donbass, to 2017, President Barack Obama confined military aid to the Ukrainians to “sending blankets and meals,” as said the late Sen. John McCain. If Trump imperiled “national security” by withholding for two months this latest tranche of military aid, did not Obama more gravely imperil our national security by denying Ukraine lethal aid for years? Among the foreign service professionals who testified to Adam Schiff’s intel committee this week, none chose to associate himself with charges of “crimes” or “bribery” having been committed during that controversial phone call of July 25. Indeed, the weakness of the Democratic case may be found in the endless escalation of the charges. First, Trump was guilty of a quid pro quo, and then an abuse of power, and then throwing fighting Ukrainian allies to the wolves. Next, it was bribery. But how is it bribery for a president, responsible for seeing that the laws are faithfully executed, to insist that a regime dependent on U.S. aid investigate a conflict of interest and potential corruption when the enriched beneficiary is the son of the vice president of the USA? Even before his first day in office, President Trump was in the gun sights of the “deep state” and its media auxiliaries. And the origins of that “Get Trump!” conspiracy inside the “deep state” are now under investigation by the Inspector General of the Justice Department and the U.S. Attorney for Connecticut John Durham. The issue at hand: Criminal misconduct inside the U.S. government to determine the outcome of an election, and, failing that, to remove a president our government elite cannot abide. Bottom line: If this country is not to be torn apart for a decade, the decision to retain or remove President Trump should be made by those who put him in the White House and not by rabid partisans like Adam Schiff. Let the people decide the fate and future of the president of the United States. After all, they were the ones who hired him. Tyler Durden Fri, 11/22/2019 - 10:00 Tags Politics

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22 ноября, 17:53

US PMIs Surge In November But "Business Conditions Remain Subdued"

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US PMIs Surge In November But "Business Conditions Remain Subdued" After a mixed picture in Germany this morning, which followed the mixed picture in US PMIs in October, analysts expected a small bounce in today's flash November PMIs but both Services and Manufacturing data surged. Markit Services PMI 51.6 vs 50.6 prior (51.0 exp) Markit Manufacturing PMI 52.2 vs 51.3 prior (51.4 exp) Both PMIs rising despite hard data declining rapidly after the end of the fiscal year... Source: Bloomberg Standouts from the surveys include the following. Services PMI: Prices charged rises to 50.6 vs 50.1 in Oct. - Highest reading since June 2019 Employment rises vs prior month - Highest reading since Aug. 2019 Mfg PMI: Employment rises to 52.3 vs 51.3 in Oct. - Highest reading since March 2019; Fourth consecutive month of expansion New orders rise vs prior month - Highest reading since April 2019 Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said: “A welcome upturn in the headline index from the flash PMI adds to evidence that the worst of the economy’s recent soft patch may be behind us. Output of the combined manufacturing and service sectors rose in November at the fastest rate since July, spurred by improved inflows of new business. Encouragingly, firms took on staff again after two months of headcount reductions, primarily to help deal with rising backlogs of work. “A recovery of manufacturing production growth to a ten-month high is especially welcome news, helping to lift service sector activity growth from recent lows. “However, although improving, the picture of current business conditions remains subdued by standards seen over the past decade and the business mood sombre in relation to prospects for the year ahead. The latest survey results are indicative of GDP rising at a modest annualised rate of just 1.5%, with payrolls rising at a monthly clip of approximately 100,000. “Although up on lows seen in the summer, business expectations for the future are still well below levels seen earlier in the year, reflecting heightened anxiety regarding trade wars and geopolitical uncertainty, as well as recent low customer enquiry numbers and the weakness of new sales volumes.” We also note that after Japan and Germany showed modest rebounds on their Composite PMIs, US data surged to their highest since July... Source: Bloomberg Meanwhile, US leading economic indicators are in their worst slump in over three years... Source: Bloomberg And finally, if you think you should  buy stocks on this rebound, forget it - it's already more than priced in... Tyler Durden Fri, 11/22/2019 - 09:53

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22 ноября, 17:35

Dudley 'Do-Wrong' Strikes Again: "This BBB-Bulge Will Be A Problem"

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Dudley 'Do-Wrong' Strikes Again: "This BBB-Bulge Will Be A Problem" Authored by Kevin Muir via TheMacroTourist.com, I rarely follow former FOMC Board Members as too often their "private-sector-personas" are way tougher than their "sitting-on-the-board-guises".  However, this morning's Bill Dudley's Bloomberg Opinion piece caught my attention - "Two Risks to Stability Build Amid Short-Term Calm". Sure, his economic orthodoxy shines through with his "chronic budget deficits require large increases in the supply of Treasury debt" rhetoric.  I have little interest in discussing the first risk Bill highlights in his article.  Most readers know I am a huge fixed-income grizzly, not because we will have trouble selling debt, rather due to what I believe will be an increase in inflation in the coming years.  However, you don't need another bearish bond diatribe from me. But the other risk Dudley singles out is interesting.  From the article: The second long-term risk is the buildup of corporate debt — especially in the BBB rated and high-yield areas. In recent years, U.S. corporations have taken advantage of low interest rates and narrow corporate credit spreads to increase their leverage and move down the credit-quality curve. For many chief executive officers, the calculus has been simple — more leverage facilitates greater share buybacks. That shrinks the number of shares outstanding, boosting earnings per share and the company’s stock price. This is all incredibly pleasant during a period of sustained economic expansion. But as Ed McKelvey and I wrote two decades ago, there is a dark side to the brave (i.e., longer) business cycle. When recessions become less frequent, the shock of recession becomes greater when they do ultimately occur; this leads, inevitably, to greater turmoil in financial markets.  Recent recessions, such as the 2000-01 bursting of the technology stock bubble or the 2007-09 financial crisis, have a greater financial instability component compared with earlier economic downturns. This pattern is unlikely to be broken next time. After all, the growth in corporate debt has been concentrated in the BBB rated sector. Dudley is correct in his analysis that corporate debt growth has been concentrated in the BBB-rated sector. In fact, BBB-rated issuance has never been a higher portion of the Investment Grade (IG) universe.   Why is this a big deal? BBB is the last credit rating before an issuer is kicked out of the Investment Grade bond index.  Ok, so what?  Well, being removed from IG and getting delegated to the High-Yield (HY) index is like getting sent down to the minors.  Your debt costs rise and the available pool of buyers shrinks. [As an aside, not being from the bond world, I was curious how this demotion to high-yield works, so I reached out to my favourite credit fund.  They explained the following: "BBB- is the lowest IG rating.  A company needs 2 rating agencies to downgrade to HY (BB+ and below), once this happens, index-based investors that can’t own HY by mandate typically have to dispose of the bonds.  If only 2 rating agencies rate the security and one of them downgrades to HY, then some mandates may also have to sell." ] The preponderance of BBB issuers was first brought to my attention at a client dinner where the famous Canadian bear David Rosenberg was the guest speaker [The Triple B Problem].  At the time David argued the huge amount of BBB issuers would be more bearish for the economy and the equity market as CFOs would do everything in their power to maintain their Investment Grade status.  That might mean slashing CapEx.  Heck, they might even cut back on their stock buybacks.  Anything (and everything) to make sure their credit rating didn't slip to high-yield. Over the past year, triple BBB issuers have done a remarkable job of dealing with market participants' concerns.  In fact, Rosie's prediction that shorting credit on this worry would not yield fruitful results was spot on. Even though BBB is the largest part of the IG universe, year-to-date, it has outperformed higher quality paper. Here is the return of the Bloomberg Barclays Index of A's vs BBB's: Another way to think about this is to examine the option-adjusted-spread of the different sections of the IG universe.  For example, here is the extra yield that a BBB issuer pays versus that of an AAA issuer: Notice how for the entire 2019 this spread has been narrowing.  This means that investors are demanding less extra yield to compensate for the lower credit quality of the BBB issuers. But wait!  Aren't BBB issuers becoming a larger and larger portion of the IG universe?  Surely that extra supply should cause spreads to widen, not tighten.   And this is exactly what Dudley is worried about.   The longer this BBB bid lingers, the bigger will be the ultimate problem.  Again, from Dudley's op-ed: When the next recession occurs, a significant portion of this debt will be downgraded to junk. Credit spreads for this debt will rise because of the deterioration in quality. But the story isn’t likely to end there. Forced selling will generate significant congestion within the corporate debt market. After all, many investors with mandates that restrict holdings to investment-grade debt will have to unload their newly junk-rated bonds. This selling will push securities prices below their underlying value. Prices will have to become overly cheap to provoke opportunistic buying. I used to think this worry about BBB debt was overblown.  It seemed to me that too many investors were looking for a repeat of 2008 and hedging against a credit collapse.   Remember Carl Icahn's Danger Ahead?  It was 15 minutes of Carl warning about the coming disaster in corporate credit. The problem is that this was released in September... of 2015.  Now, I have probably incorrectly been calling for inflation to return for at least that long, so I will retreat to my glasshouse and not throw any stones at Carl.   But I want to illustrate how long many within the hedge fund community have been warning about a coming credit crisis. For the longest time, calling for a repeat of the 2008 crash was simply "too easy".  It sounded smart.  In fact, you got to keep company with some shrewd (and rich) hedge fund managers.  In short, it required little fighting against the crowd. Therefore, it seemed clear to me that if it was so obvious, it was obviously wrong.  Rosie's argument that companies would find a way to stickhandle through the high-yield zone at all cost resonated with me. Dudley joins the crowd What's interesting now is that Dudley is making the same forecast that hedge fund managers have been arguing for the past five years. Although I have no idea of the timing, as this cycle continues, I am getting more sympathetic to the idea credit is a time bomb waiting to happen. And let me tell you why.  The other day, I was out for drinks with a smart seasoned distressed debt investor.  I was so out of my league, I felt like Samwise Gamgee at the council of Elrond.  This guy just knew that much more than me.  I floated the idea that BBB credit was not that scary because companies would do whatever it took to stay out of the high-yield penalty box.   Like Gandalf schooling a young foolish Hobbit, he told me, "Yeah, that works fine when the economy is chugging along.  No doubt that companies will take extraordinary measures to maintain their IG rating.  However, when the next recession - actually scratch that - when the next decent economic slowdown hits, these companies will have zero ability to cut anywhere near enough CapEx to stop downgrades.  They are skating that close to the edge.  And the BBB guys are not the ones doing big stock buybacks, so that will not be an option to stop the slide either.  These over-levered companies will have zero ability to arrest the descent to high-yield.  And when it starts, it will feed on itself." My wise elder is way too smart to predict when this will happen.  Instead, he is sitting around, biding his time, waiting to buy distressed bargains from the overzealous traditional portfolio managers when the crisis hits. However, it struck me that he was right.  When the economy turns, this BBB bulge will be a problem.   And to make matters worse, Dudley brings up another fact that I was not aware of: Moreover, some of the changes made in the 2017 Tax Cuts and Jobs Act will increase the stress on highly leveraged companies.  In particular, the law eliminated companies’ ability to offset losses during an economic downturn with refunds of federal corporate income taxes paid in earlier years. Also, the law limits the deductibility of interest relative to earnings before interest, tax, depreciation and amortization. As Ebitda falls in recession, those constraints will become more binding, further restricting the cash flow of highly leveraged companies.  The increase in corporate debt leverage should not make a recession significantly more likely. However, when a recession does occur, the debt burden and the tax law will make the economic downturn worse. Gee... great. Now, this isn't a call to load the boat up on CDS protection like Icahn is advocating.  We might still be another year or two away from the credit market rolling over.  I have no clue regarding the timing. But it is a warning that the longer we continue this game of stuffing more and more leverage into increasingly worsening credits, the bigger the ultimate correction will prove.  BBB-rated companies were some of the best performing bond issuers this year.  I doubt they will be next year. Tyler Durden Fri, 11/22/2019 - 09:35 Tags Business Finance

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22 ноября, 17:15

Victoria's Secret Caves To SJW Critics, Cancels Fashion Show

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Victoria's Secret Caves To SJW Critics, Cancels Fashion Show To all of those pro-inclusivity activists who accused Victoria's Secret of being the paragon of "outdated" sensibilities when it comes to female beauty, congratulations: You won. The New York Times reports that the lingerie company's annual fashion show has been cancelled as the brand struggles with its longtime CEO's association with Jeffrey Epstein, the convicted pedophile who allegedly killed himself (or was murdered) in his prison cell in a Manhattan jail. But after years of waning viewership and criticism that VS isn't an "all-inclusive" brand, L Brands, Victoria Secret's parent company, has decided that the fashion show is a relic from a bygone era, and that it's time for Victoria's Secret's marketing to evolve. "We think it’s important to evolve the marketing of Victoria’s Secret," Stuart Burgdoerfer, the chief financial officer of L Brands, said on an earnings call on Thursday. "We’ll be communicating to customers, but nothing that I would say is similar in magnitude to the fashion show," he added later. The company announced in May that it would stop airing the event on network television, but its comments late Thursday were the first official confirmation that the show has been cancelled. Victoria's Secret sales have cratered in recent years. While SJWs have pointed to this as proof that the company has an image problem that's alienating customers, it's more likely that the twin trends of e-commerce and fast fashion have chipped away at the company's profits. And let's not forget: Last year, Edward Razek, then the CMO of L Brands, provoked a controversy for saying transgender women should not star in the show. Razek apologized for the remarks and ended up retiring in August, soon after the company hired its first openly transgender model. The show was once known for its opulent costumes, including jewel-encrusted lingerie sets, and performances from pop's biggest stars. But the audience has dwindled in recent years, reflecting a broader trend in live, non-sport television, down from 12 million in 2001 when the show firs launched to roughly 3.3 million last year. Tyler Durden Fri, 11/22/2019 - 09:15 Tags Business Finance

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22 ноября, 17:00

Stocks Pop, Drop, & Pop Again On Trump China Comments

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Stocks Pop, Drop, & Pop Again On Trump China Comments The algos got a good working over early this morning as President Trump dropped some tape-bombs during his interview on Fox News. He started with the 'classic' "buy" signal: *TRUMP SAYS DEAL WITH CHINA IS VERY CLOSE But then made the mistake of admitting that: *TRUMP SAYS HE WARNED XI NOT TO SEND SOLDIERS TO HONG KONG But recovered strongly: *TRUMP DECLINES TO SAY IF HE'LL SIGN HONG KONG BILL And so here we are... Efficiant Market? Tyler Durden Fri, 11/22/2019 - 09:00

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22 ноября, 16:55

Durham Probe Expands To Pentagon Office That Contracted FBI Spy Stephan Halper

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Durham Probe Expands To Pentagon Office That Contracted FBI Spy Stephan Halper Authored by Sara Carter via SaraACarter.com, Justice Department prosecutor U.S. Attorney John Durham is questioning personnel connected to the Pentagon’s Office of Net Assessment, which awarded multiple contracts to FBI informant Stephan Halper. Halper, who was informing the bureau on Trump campaign advisors, is a central figure in the FBI’s original investigation into President Donald Trump’s 2016 campaign, SaraACarter.com has learned. These latest developments reveal the expansive nature of what is now a Justice Department criminal probe into the FBI’s investigation into the Trump campaign. The revelation also comes on the heels of DOJ Inspector General Michael Horowitz’s report regarding the bureau’s investigation into the Trump campaign and Russia. Sen. Lindsey Graham, R-SC, announced to Fox News’ Sean Hannity Wednesday night the lengthy investigative report will be released to the public on Dec., 9. DOJ Attorney General William Barr, who appointed Durham, is conducting a separate investigation alongside Horowitz’s probe. Both investigations are examining how U.S. intelligence agencies began investigating now debunked ties between Russia and Trump campaign personnel in the 2016 presidential election. Multiple sources confirmed to this news site that Durham has spoken extensively with sources working in the Office of Net Assessment, as well as outside contractors, that were paid through Pentagon office. Department of Justice officials declined to comment on Durham’s probe. In 2016, Halper was an integral part of the FBI’s investigation into short-term Trump campaign volunteer, Carter Page and George Papadopolous. Halper first made contact with Page at his seminar in July 2016. Page, who was already on the FBI’s radar, was accused at the time of being sympathetic to Russia. Halper stayed in contact with Page until September 2017. During that time, the FBI sought and obtained a warrant from the Foreign Intelligence Surveillance Court (FISC) to spy on Page and used Halper to collect information on him, according to sources. It is further alleged that Halper may have secretly recorded his conversations with Page and Papadopolous. Some congressional officials believe that if recordings exist they were kept from the Foreign Intelligence Surveillance Court, and would be exculpatory evidence that would’ve exonerated Page from the FISA warrant and allegations that Papadopolous was attempting to seek any help from the Russians with regard to Hillary Clinton’s emails. In an interview with Papadopolous earlier this year, he told this reporter that he was shocked when Halper insinuated to him that Russia was helping the Trump campaign. Papadopolous said that he told him, “he didn’t have any idea what the hell he was talking about…that would be treason and I have nothing to do with that.” Grassley’s Office Gets Pentagon Docs Moreover, this news site has learned that the Pentagon has finally sent Finance Committee Chairman Chuck Grassley’s committee the information it requested in July, regarding Halper’s contracts and the Office of Net Assessment. Grassley sent the request in a letter to Department of Defense Acting Secretary Mark Esper, after a Pentagon Inspector General investigation discovered that the office failed to conduct appropriate oversight of the contracts. Grassley urged Esper for the information. According to the DoD Inspector General’s report the Office of Net Assessment (ONA) Contracting Officer’s Representatives (CORs) “did not maintain documentation of the work performed by Professor Halper or any communication that ONA personnel had with Professor Halper; therefore, ONA CORs could not provide sufficient documentation that Professor Halper conducted all of his work in accordance with applicable laws and regulations. We determined that while the ONA CORs established a file to maintain documents, they did not maintain sufficient documentation to comply with all the FAR requirements related to having a complete COR.” Although, Grassley stated that he wanted the information no later than July 25, the Pentagon delivered the information only last week. Grassley’s office didn’t elaborate on what information was given to the committee but confirmed that it was in the process of reviewing hundreds of pages of documents. “The committee is currently reviewing information received recently from the Pentagon, in response to Grassley’s request,” said Taylor Foy, a spokesman for the committee. Foy confirmed Grassley is continuing to investigate the matter. Pentagon officials did not immediately respond to calls and emails. (SaraACarter.com will update this story if they so chose to respond.) The Pentagon Audit Grassley’s July letter stated that “shockingly, the audit found that these types of discrepancies were not unique to contracts with Professor Halper, which indicates ONA must take immediate steps to shore up its management and oversight of the contracting process.” “Accordingly, no later than July 25, 2019, please explain to the Committee the steps DoD has taken to address the recommendations that DoD IG made with respect to ONA’s contracting procedures and produce to the Committee all records related to Professor Halper’s contracts with DoD,” Grassley’s letter stated. “In addition, I request that ONA provide a briefing to my Committee staff regarding the Halper contracts.” The 74-year old professor, has rarely spoken out publicly since being outed by The Washington Post, and other news organizations, as one of the informants for the bureau who spied on the Trump campaign. He spent a career developing top-level government connections–not just through academia, as he did in Great Britain through the Cambridge Security Initiative, but through his connections in both the CIA and British MI-6. He is expected to be speaking this month at the seminar, he helped found, according to The Daily Caller. “The results of this audit are disappointing and illustrate a systemic failure to manage and oversee the contracting process,” stated the Senator in the letter sent July, 12 to the DOD. “Time and again, DoD’s challenges with contract management and oversight are put on display. It is far past time the largest, most critical agency in this country steps up and takes immediate action to increase its efforts to stop waste, fraud and abuse of taxpayer dollars.” The Office of Net Assessment came under fire in 2016, when Bill Gertz, a columnist for The Washington Times, revealed that it failed to produce the top-secret net assessments the office was established to do for more than a decade, despite its then nearly $20 million annual budget. In August, a Pentagon Inspector General report revealed that the office failed to document the research Halper had conducted for the Pentagon in four separate studies worth roughly $1 million. The inspector general’s report revealed that loose contracting practices at the office and failed oversight was to blame. Tyler Durden Fri, 11/22/2019 - 08:55 Tags Politics

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22 ноября, 16:35

World's Biggest Hedge Fund Bets $1.5 Billion That Market Will Crash By March

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World's Biggest Hedge Fund Bets $1.5 Billion That Market Will Crash By March At the beginning of 2018, Ray Dalio said during one of his annual speeches at Davos that investors would feel "pretty stupid" if they were holding cash. Over the following 11 months, one of the biggest market blowups since the crisis left US stocks in the red for the year. But somehow, Bridgewater emerged as one of the best-performing firms of 2018, with one of its funds up double digits. Almost two years later, Dalio has made it clear that he's increasingly worried about the state of the global economy, and he's willing to risk losing 1% of his firm's assets to make sure Bridgewater is protected. Ray Dalio A few months back, the world's biggest hedge fund enlisted Goldman Sachs and Morgan Stanley to help structure a massive bet that will pay off if, between now and the end of the first quarter, global stocks retreat. According to WSJ, Bridgewater has amassed a giant $1 billion bet using put options. If the S&P 500, Stoxx 50 or both decline before Bridgewater's put options expire, the firm will make money from the bet. If stocks rise, then those options will likely expire worthless. The firm paid $1.5 billion - or roughly 1% of its $150 billion net worth - for the options, which have a notional value of $100 billion. WSJ broke the story, but its reporters couldn't say for sure what Bridgewater's motives are. The options could constitute a directional bet in their own right, or simply a hedge against Bridgewater's sizable long exposure to equities. According to WSJ, Bridgewater's buying up of put options had become the subject of Wall Street gossip. But as far as we can tell, Bridgewater's buying might have been spurred by the firm's appreciation for a bargain. Because as far as we can tell, with stocks climbing to fresh highs, traders haven't been as interested in hedging their positions, for whatever reason. Some speculate that Dalio, who has espoused increasingly progressive political opinions in recent months, might have concocted a bet that will pay off if progressive Dems like Elizabeth Warren notch victories in the earliest primaries, though a Bridgewater spokesperson denied that the firm is making big bets on politics. As WSJ points out, George Soros lost $1 billion when his firm bet on a big market drawdown in the wake of President Trump's surprise electoral victory. So far this year, Bridgewater's performance has been mixed: the firm's macro fund has lost 2.7% through October, while its All Weather fund is up 14.5% for the period. But with the S&P 500 having achieved is longest bull run in its 90-plus-year history, it's hardly surprising that traders suspect it might have finally run out of steam, especially given the Democrats' unsettling shift to the left. Tyler Durden Fri, 11/22/2019 - 08:35 Tags Business Finance Politics