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Monthly Archives: May 2014

Former New York Lieutenant Gov. Richard Ravitch: Expect to See More Detroits


“The finances of many states and cities are in dire straits, meaning many of them may join Detroit in bankruptcy, says former New York Lieutenant Gov. Richard Ravitch, an adviser to the bankruptcy judge in Detroit.

“The crisis is deepening,” he writes in The Wall Street Journal.

One major problem is that contributions to employee pension funds frequently fall short of the amounts necessary to make sure that benefits that are contractually or constitutionally guaranteed end up getting paid, Ravitch says.

Government officials want to keep contributions low to avoid raising taxes, and public unions want to avoid layoffs and benefit reductions, he writes.

“The most critical piece of the states’ fiscal dilemma is that they are borrowing to cover their operating deficits,” Ravitch argues.

As a result of state and municipal fiscal crises, investment in physical and human infrastructure is inadequate, which are “the necessary underpinning of future growth,” he maintains….”

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Q1 Earnings are Done, Markets Left With Lackluster Prospects

“Behind the stock market’s anxious ups and downs of late lies the fear that a weakening U.S. and global economy could dash hopes for an uptick in corporate earnings.

For the first quarter, earnings season is nearly done. More than 90% of big companies have reported results and they were lackluster.

Most beat analyst estimates, but only because expectations were rock bottom.

Profit gains for S&P 500 companies were just 2.1% overall compared with a year earlier, well below the previous quarter’s 8.5% rise, FactSet said.

Now investors are seeing soft reports on industrial production, housing starts, consumer sentiment and European economic growth, and they are growing anxious.

Investors had expected results to improve in the second quarter. Analysts are forecasting a 6% profit gain.

Yet of companies offering guidance, 72% have warned that second-quarter results could fall short of Wall Street expectations, which isn’t great but is better than the 80% level of the past three quarters.

Now, investors are worrying they may have been too hopeful.

“People have been expecting better earnings forecasts, but I’m a little more concerned that earnings estimates are going to be ticking down,” said Robert Pavlik, chief market strategist at Banyan Partners, which oversees $4.5 billion.

In the portfolios he manages, he has boosted cash holdings and shifted toward more defensive investments. He said he sold out of biotechnology several weeks ago and now prefers bigger, safer companies…..”

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Art Cashin: Equity Markets Will Take Their Cue From Yields to Surmise Deflation

“Stocks are likely to take their cue from the bond market in the coming week, as traders worry low yields are a warning that the economy is not springing back.

Even with the choppy trading of the past week, the Nasdaq eked out a small gain while the DowS&P 500 and Russell 2000 were all lower. The 10-yearyield, a lightning rod for stocks, rose to 2.519 percent after better-than-expected housing starts Friday.

The week ahead is light on economic data, but much of what is available will have to do with housing—an area of concern. Existing home sales are Thursday and new home sales are reported Friday. There is also the release of minutes from the last Federal Reserve meeting on Wednesday afternoon, and about a half dozen Fed speakers will be discussing the economy throughout the week.

“The key indicator will be the yield on the 10-year,” said Art Cashin, director of floor operations at UBS. “Unless the saloon full of Fed speakers says something to move the market, you’ve got to watch the 10-year.”

Earnings from home improvement retailers Home Depot and Lowe’s are also expected, as are reports from Campbell Soup and Hewlett-Packard.

The 10-year yield, along with the entire Treasury curve, has been moving lower, reaching 2.47 percent Thursday, the lowest level since July. Some of the decline was due to short covering by investors. Yields, which move lower as bond prices rise, were also moving in lockstep with a global rate move, triggered by expectations the European Central Bank will announce a stimulus plan in June.

Cashin said a big concern for the market is deflation….”

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Hedge Funds Sell Momo in Q1

“(Reuters) – Top hedge funds shed their stakes in high-profile Internet names such as Netflix Inc and Groupon Inc in the first quarter, moving to peers viewed as more mature and less volatile.

High-growth Internet software and biotech companies were the darlings of 2013, but their shares started to fall sharply in early March. Netflix, last year’s biggest S&P 500 gainer and an important hedge fund holding, is down more than 24 percent from its closing high this year.

Hedge funds invested in technology and healthcare fell 3.65 percent in April, the biggest monthly decline since October 2008 and extending March’s 1.8 percent decline, according to data from Hedge Fund Research.

Among prominent hedge fund managers, Carl Icahn cut his holding in Netflix by 15.8 percent in the first quarter, reducing it to about 2.2 million shares. Tiger Global Management sold its entire stake of 663,000 shares during the quarter.

Netflix was up on the year for most of the first quarter, so the fund is likely to have sold at the right time.

Tiger also dumped its stake of 11.46 million shares in ….”

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Can You Hang Hope on Better Than Expected Housing Starts ?

“U.S. housing starts jumped in April and building permits hit their highest level in nearly six years, offering hope that the troubled housing market could be stabilizing.

The Commerce Department said on Friday groundbreaking increased 13.2 percent to a seasonally adjusted annual pace of 1.07 million units, the highest level since November 2013.

Starts rose by a revised 2.0 percent in March. They had previously been reported to have gained 2.8 percent.

Economists polled by Reuters had forecast starts rising to a 980,000-unit rate last month.

The housing market recovery has stalled as a combination of higher mortgage rates and rising property prices, against the backdrop of stagnant wage growth, makes housing less affordable for many Americans. A cold winter also weighed on activity.

The residential sector contracted in the first three months of 2014, declining for a second consecutive quarter….”

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Cyclical Phenomenon: K Waves and Your Money

So this article is a bit old, but interesting none the less. Enjoy!

“There are very few heroes in economics but for me one of the patron saints of that profession should be Nikolai Kondratiev who was shot by firing squad on the orders of Stalin in 1938. He died for what he believed was the truth. His execution was ordered because his academic work propounded that the capitalist system would not collapse as a result of the great depression of 1929. This truth Stalin did not want to hear, thus Nikolai was exterminated and his work suppressed for over two decades.

four kondratieff waves in the u.s.

Kondratiev’s analysis described how international capitalism had gone through many such “great depressions” and as such were a normal part of the international mercantile credit system. The long term business cycles that he identified through meticulous research are now called “Kondratieff” cycles or “K” waves.

The K wave is a 60 year cycle (+/- a year or so) with internal phases that are sometimes characterized as seasons: spring, summer, autumn and winter:

  • Spring phase: a new factor of production, good economic times, rising inflation
  • Summer: hubristic ‘peak’ war followed by societal doubts and double digit inflation
  • Autumn: the financial fix of inflation leads to a credit boom which creates a false plateau of prosperity that ends in a speculative bubble
  • Winter: excess capacity worked off by massive debt repudiation, commodity deflation & economic depression. A ‘trough’ war breaks psychology of doom.

Increasingly economic academia has come to realize the brilliant insight of Nikolai Kondratiev and accordingly there have been many reports, articles, theses and books written on the subject of this “cyclical” phenomenon. An influential essay, written by Professor W. Thompson of Indiana University, has indicated that K waves have influenced world technological development since the 900’s. His thesis states that “modern” economic development commenced in 930AD in the Sung province of China and he propounds that since this date there have been 18 K waves lasting on average 60 years.

William R. Thompson:

“Most people are quite familiar with business cycles that tend to be denominated in terms of months. Sales are good, people are confident about the future, and unemployment is reduced. Then sales fall off, the immediate future seems gloomier, and unemployment increases. The Kondratieff wave is a longer version of economic fluctuation, albeit with the added traits of initial spatial concentration of technological innovation and subsequent diffusion at the world level. It also has some rather major implications for war, peace, and order in the world system that conventional, short-term business cycles lack. Therefore, the k-wave is a core component part of the most significant processes of the world system. Precisely what drives k-waves has been the subject of considerable analytical dispute. Arguments have been advanced that bestow main driver status on investment, profits, population growth, war, agricultural-industrial tradeoffs, prices, and technological innovations. This debate has by no means been settled but at this time the emphasis on technological changes appears to be the best bet…

In the case of the Kondratieff, the argument is that the first appearance of a paired K-wave pattern in economic innovations is found in the 10th century in Sung China which is sometimes credited with developing the first modern economy. The expansion of maritime trade in the South China Sea and the Indian Ocean, as well as the revived use of the Silk Roads on land, facilitated the transmission of long wave, paired growth impulses to the other end of Eurasia. Thus Modelski and Thompson analyze 18 k-waves encompassing some one thousand years between 930 and 1973…

In sum, the Kondratieff wave appears to be a highly pervasive and hence a critical process in the functioning of the world system. As such, it deserves more recognition than it currently receives. When more attention is paid to its influences, we will no doubt discover that it is even more central to world system development than we suspect currently.”

In addition to technology being a major factor in K cycles, credit and banking also play a crucial role. This is due to the fact that new technology spurs growth, initiative and risk taking. This mindset encourages investment and lending, thus, when the multiplier effect kicks in, economies expand rapidly. Thus, as we focus our analysis on more modern times we find that periods of “K” expansion and contraction bring with them phases of bigger booms and busts. The picture is doubly exacerbated by increasingly more integrated world funding mechanisms which means these booms and busts are global rather than local and increasingly more political than economic.

Implications for 2012 and Beyond….”

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State of the Union: Homeownership is Not an American Dream Anymore

“The number of middle-class Americans who can afford home ownership is falling in more cities, according to a new industry study.

The report from real estate research firm Trulia concludes that in 20 of the top 100 largest metro area, the middle class are now frozen out of the home buying market.

Trulia considers a home affordable for a median income buyer in a given market if total monthly costs — including mortgage, insurance and property taxes — after a 20 percent down payment are less than 31 percent of a region’s median household income.

Editor’s Note:
 18.79% Annual Returns … for Life?

Trulia Chief Economist Jed Kolko noted monthly payments for an average home now cost 20 percent more than a year ago, according to USA Today.

“Even having a college degree is no guarantee that homeownership is within reach in the priciest markets. There’s no easy way to make housing more affordable, though new construction can help,” Kolko said.

The trouble with that last point, though, is that new construction is more rare in the most expensive markets because fewer people can afford to buy there — a simple case of supply and demand, according to Kolko.

“For America’s most expensive housing markets to become significantly more affordable, they would need either a spectacular drop in demand — a local economic collapse, for example — or a dramatic increase in housing supply.”

The least affordable U.S. markets, and the percentage of homes for sale in each where median-income Americans can afford to buy, are:

  1. San Francisco, 14 percent
  2. Los Angeles, 23 percent
  3. Orange County, Calif., 24 percent
  4. New York/New Jersey Metro, 25 percent
  5. San Diego, 28 percent
  6. Ventura County, Calif., 29 percent
  7. San Jose, Calif., 34 percent
  8. Fairfield County, Conn., 37 percent
  9. Honolulu, 39 percent
  10. Oakland, Calif., 40 percent.

In addition, some popular metro areas had particularly steep drops in affordability…”

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Greenspan: Taxpayers on the Hook to Rescue JPMorgan in Crisis

“Former Federal Reserve Chairman Alan Greenspan said JPMorgan Chase & Co. is akin to Fannie Mae and Freddie Mac because taxpayers would shoulder the burden of its rescue in an emergency, rather than let it collapse.

JPMorgan, the nation’s largest bank, is an example of implicit government guarantees not measured in the nation’s official public-debt statistics, Greenspan, 88, said Wednesday at a forum in Washington organized by the Peter G. Peterson Foundation. The reality is that the government would prop up many financial firms and other companies if needed, he said.

“JPMorgan is a Fannie Mae-, Freddie Mac-type of institution, because they are indeed too big to fail, and taxpayer monies will come in behind them to hold them up if necessary,” said Greenspan. He sat on New York-based JPMorgan’s board before his appointment to Fed chairman in 1987.

Housing financiers Fannie Mae and Freddie Mac, which buy loans and package them into securities, were taken into government conservatorship during the financial crisis and received $187.5 billion in taxpayer funds to stay afloat before a market turnaround propelled them to record profits. The pair now back about two-thirds of new U.S. home-loan originations.

U.S. debt statistics should include a “very significant part of the financial institutions,” Greenspan said. Because the government also bailed out automakers and insurer American International Group Inc., the public debt includes “a lot of the nonbanking as well,” he said…..”

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David Tepper: Don’t Be to Fricken Long

“David Tepper, who made the most money of any hedge fund manager in 2013 at $3.5 billion, believes investors better approach the market with more caution now.

“I’m not saying go short, I’m just saying don’t be too fricking long right now,” the head of Appaloosa Management told a few thousand of his colleagues Wednesday at SkyBridge Capital’s SALT 2014 conference in Las Vegas.

Among his concerns are a deflationary environment, weaker-than-expected U.S. growth and a European Central Bank (ECB) that badly needs to ease monetary policy.

The result is a market that not that long ago was fairly easy to play but which is now getting trickier.

“Now I have a position (where) I’m long enough with exposure where I can bring it up or I can take it down,” Tepper said. “I am nervous. I think it’s nervous time.”

He is especially concerned about the ECB, which targets inflation at a lower rate than the U.S. Federal Reserve, which is looking to keep inflation below 2.5 percent.

Recent reports have indicated …”

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If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States

“Does the economy move in predictable waves, cycles or patterns?  There are many economists that believe that it does, and if their projections are correct, the rest of this decade is going to be pure hell for the United States.  Many mainstream economists want nothing to do with economic cycle theorists, but it should be noted that economic cycle theories have enabled some analysts to correctly predict the timing of recessions, stock market peaks and stock market crashes over the past couple of decades.  Of course none of the theories discussed below is perfect, but it is very interesting to note that all of them seem to indicate that the U.S. economy is about to enter a major downturn.  So will the period of 2015 to 2020 turn out to be pure hell for the United States?  We will just have to wait and see.

One of the most prominent economic cycle theories is known as “the Kondratieff wave”.  It was developed by a Russian economist named Nikolai Kondratiev, and as Wikipedia has noted, his economic theories got him into so much trouble with the Russian government that he was eventually executed because of them…

The Soviet economist Nikolai Kondratiev (also written Kondratieff) was the first to bring these observations to international attention in his book The Major Economic Cycles (1925) alongside other works written in the same decade. Two Dutch economists, Jacob van Gelderen and Samuel de Wolff, had previously argued for the existence of 50 to 60 year cycles in 1913. However, the work of de Wolff and van Gelderen has only recently been translated from Dutch to reach a wider audience.

Kondratiev’s ideas were not supported by the Soviet government. Subsequently he was sent to the gulag and was executed in 1938.

In 1939, Joseph Schumpeter suggested naming the cycles “Kondratieff waves” in his honor.

In recent years, there has been a resurgence of interest in the Kondratieff wave.  The following is an excerpt from an article by Christopher Quigley that discussed how this theory works…

Kondratiev’s analysis described how international capitalism had gone through many such “great depressions” and as such were a normal part of the international mercantile credit system. The long term business cycles that he identified through meticulous research are now called “Kondratieff” cycles or “K” waves.

The K wave is a 60 year cycle (+/- a year or so) with internal phases that are sometimes characterized as seasons: spring, summer, autumn and winter:

  • Spring phase: a new factor of production, good economic times, rising inflation
  • Summer: hubristic ‘peak’ war followed by societal doubts and double digit inflation
  • Autumn: the financial fix of inflation leads to a credit boom which creates a false plateau of prosperity that ends in a speculative bubble
  • Winter: excess capacity worked off by massive debt repudiation, commodity deflation & economic depression. A ‘trough’ war breaks psychology of doom.

Increasingly economic academia has come to realize the brilliant insight of Nikolai Kondratiev and accordingly there have been many reports, articles, theses and books written on the subject of this “cyclical” phenomenon. An influential essay, written by Professor W. Thompson of Indiana University, has indicated that K waves have influenced world technological development since the 900’s. His thesis states that “modern” economic development commenced in 930AD in the Sung province of China and he propounds that since this date there have been 18 K waves lasting on average 60 years.

So what does the Kondratieff wave theory suggest is coming next for us?

Well, according to work done by Professor W. Thompson of Indiana University, we are heading into an economic depression that should lastuntil about the year 2020

Based on Professor Thompson’s analysis long K cycles have nearly a thousand years of supporting evidence. If we accept the fact that most winters in K cycles last 20 years (as outlined in the chart above) this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000. Thus in all probability we will be moving from a “recession” to a “depression” phase in the cycle about the year 2013 and it should last until approximately 2017-2020.

But of course the Kondratieff wave is far from the only economic cycle theory that indicates that we are heading for an economic depression.

The economic cycle theories of author Harry Dent also predict that we are on the verge of massive economic problems.  He mainly focuses on demographics, and the fact that our population is rapidly getting older is a major issue for him.  The following is an excerpt from a Business Insider article that summarizes the major points that Dent makes in his new book…

  • Young people cause inflation because they “cost everything and produce nothing.” But young people eventually “begin to pay off when they enter the workforce and become productive new workers (supply) and higher-spending consumers (demand).”
  • Unfortunately, the U.S. reached its demographic “peak spending” from 2003-2007 and is headed for the “demographic cliff.” Germany, England, Switzerland are all headed there too. Then China will be the first emerging market to fall off the cliff, albeit in a few decades. The world is getting older.
  • The U.S. stock market will crash. “Our best long-term and intermediate cycles suggest another slowdown and stock crash accelerating between very early 2014 and early 2015, and possibly lasting well into 2015 or even 2016. The worst economic trends due to demographics will hit between 2014 and 2019. The U.S. economy is likely to suffer a minor or major crash by early 2015 and another between late 2017 and late 2019 or early 2020 at the latest.”
  • “The everyday consumer never came out of the last recession.” The rich are the ones feeling great and spending money, as asset prices (not wages) are aided by monetary stimulus.
  • The U.S. and Europe are headed in the same direction as Japan, a country still in a “coma economy precisely because it never let its debt bubble deleverage,” Dent argues. “The only way we will not follow in Japan’s footsteps is if the Federal Reserve stops printing new money.”
  • “The reality is stark, when dyers start to outweigh buyers, the market changes.” It all comes down to an aging population, Dent writes. “Fewer spenders, borrowers, and investors will be around to participate in the next boom.”
  • The U.S. has a crazy amount of debt and “economists and politicians have acted like we can just wave a magic wand of endless monetary injections and bailouts and get over what they see as a short-term crisis.” But the problem, Dent says, is long-term and structural — demographics.
  • Businesses can “dominate the years to come” by focusing on cash and cash flow, being “lean and mean,” deferring major capital expenditures, selling nonstrategic real estate, and firing weak employees now.
  • The big four challenges in the years ahead will be 1) private and public debt 2) health care and retirement entitlements 3) authoritarian governance around the globe and 4) environmental pollution that threatens the global economy.

According to Dent, “You need to prepare for that crisis, which will occur between 2014 and 2023, with the worst likely starting in 2014 and continuing off and on into late 2019.”

So just like the Kondratieff wave, Dent’s work indicates that we are going to experience a major economic crisis by the end of this decade.

Another economic cycle theory that people are paying more attention to these days is the relationship between sun spot cycles and the stock market.  It turns out that market peaks often line up very closely with peaks in sun spot activity.  This is a theory that was first popularized by an English economist named William Stanley Jevons.

Sun spot activity appears to have peaked in early 2014 and is projected to decline for the rest of the decade.  If historical trends hold up, that is a very troubling sign for the stock market.

And of course there are many, many other economic cycle theories that seem to indicate that trouble is ahead for the United States as well.  The following is a summary of some of them from an article by GE Christenson and Taki Tsaklanos…”

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Bob Doll: My Crystal Ball Says 4% GDP Growth, But You Must Be Cautious of….

“Bob Doll, chief equity strategist at Nuveen Asset Management, says it’s finally full steam ahead for the U.S. economy — he is looking for 4 percent GDP growth in the second quarter, as the restraints from a harsh winter melt away.

In his weekly market commentary, Doll sees a host of reasons why he thinks the U.S. economy is gaining momentum.

Among them, he mentioned “significantly less fiscal drag” from the federal government, higher state and local government spending and an improving trade picture.

“A lagged impact of Fed stimulus is lifting the money supply and bank loans,” Doll said. “Consumer deleveraging headwinds and severe weather are behind us. The impacts of both the manufacturing and energy renaissances are broadening.”

Doll is heartened by the fact that first-quarter earnings marked the third consecutive quarter of higher corporate revenue and earnings per share growth.

“Several reasons support our view that second-quarter GDP growth will exceed 4 percent — decline in initial unemployment claims, increases in service sector activity, higher weekly mortgage applications and a solid rise in home prices.”

Doll mentioned two potential areas of concern, however.

First, he noted, U.S. corporate taxes are the highest in the developed world. “As the only industrialized country to double tax foreign sources of profits, U.S. companies may re-incorporate businesses outside the country to reduce the tax burden,” he warned.

Second, while he likes the fundamentals in the U.S. economy, Doll said the technical picture of the United States might not be as healthy at the moment….”

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Petrodollar Monopoly About to be Shattered

“Is the petrodollar monopoly about to be shattered?  When U.S. politicians started slapping economic sanctions on Russia, they probably never even imagined that there might be serious consequences for the United States.  But now the Russian media is reporting that the Russian Ministry of Finance is getting ready to pull the trigger on a “de-dollarization” plan.  For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars.  As I will explain below, this has been a massive advantage for the U.S. economy.  In recent years, there have been rumblings by nations such as Russia and China about the need to change to a new system, but nobody has really had a big reason to upset the status quo.  However, that has now changed.  The struggle over Ukraine has caused Russia to completely reevaluate the financial relationship that it has with the United States.  If it starts trading a lot of oil and natural gas for currencies other than the U.S. dollar, that will be a massive blow for the petrodollar, and it could end up dramatically changing the global economic landscape.

The fact that the Russian government has held a meeting to discuss “getting rid of the US dollar in Russian export operations” should be front page news on every mainstream news website in the United States.  That is how big this is.  But instead, we have heard nothing from the big mainstream news networks about this so far.  Instead, we have only heard about this from Russian news sources such as the Voice of Russia

Russian press reports that the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is “ready to handle the increased number of ruble-denominated transactions”.

According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

The “de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar.

So will Russia go through with this?….”

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$GS: If You Beleieve in Global Growth, The U.S. is Still the Gorilla

“Despite some investors becoming increasingly wary of asset valuations, Sheila Patel, the CEO of Goldman Sachs Asset Management International, has told CNBC that the current bull market has longer to run and the search for yield will continue.

“I do think that there are places you can find value,” she told CNBC Wednesday.

“If you start to believe in the U.S. recovery there is certainly a school of thought that that’s the gorilla still in global growth. And if that is coming then emerging markets is a real place to take a second look.”

Following the financial crash of 2008, investment companies around the globe were restricted as stock prices plunged to historic lows. Investors fled for safe havens, shunning riskier assets, and central banks made government bond purchases to try to inject liquidity into economies.

The following five years – a typical duration of a bull market, according to some analysts – led to a search for yield across emerging markets, flickering signs of a housing recovery in the U.S. and interest rates on fixed income falling to record lows. Last year this culminated in a stellar rally for equity markets which saw both the Dow Jones and the S&P 500 break into fresh highs. Meanwhile, bond prices have shown signs of peaking and emerging markets have fallen out of favor as investors have returned to the U.S. dollar in the anticipation of rate hikes…..”

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DHS Secretly Allowed Suspects with Terror Ties Into Country

“The Department of Homeland Security (DHS) secretly assembled a terrorist “hands off” list that permitted individuals with terrorist ties unfettered entrance into the United States, according to document released by Sen. Chuck Grassley (R., Iowa).

The existence of a “hands off” list that permitted easy entrance for suspect individuals into the United States has drawn concern from Grassley, who released a cache of internal DHS emails detailing the list’s existence and discussion about permitting an alleged member of the Muslim Brotherhood to enter the United States.

The emails—sent between U.S. Immigration and Customs Enforcement (ICE) and U.S. Customs and Border Protection (CBP)—reveal a row over the admittance of one alleged Muslim Brotherhood official tied to Hamas, Hezbollah, and other terror groups.

While the individual in question is not named in the heavily redacted emails, the Washington Free Beacon has learned that the person referenced is Jamal Badawi, a Canadian Islamist leader who has praised suicide bombing and is close to Hamas and Hezbollah.

Additionally, the emails reveal a larger campaign by DHS and its former head Janet Napolitano to purge internal records of hundreds of terror suspects, including Badawi, who had his records purged in December 2010.

Sources who spoke to the Free Beacon and had reviewed unredacted versions of the emails indicated that many files pertaining to foreign terror suspects may have been purged by DHS….”

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David Cameron: Taxes Will Rise Unless We Can Raid Bank Accounts

“David Cameron claims he will “have to put up taxes” unless tax officials are given draconian powers to raid people’s bank accounts.

Taxes will have to rise unless officials are given new powers to raid people’s bank accounts, David Cameron has said.

The Treasury select committee warned that allowing HM Revenue and Customs to remove cash from bank accounts without court orders is “very concerning” because of its history of mistakes.

The committee said that taxpayers could suffer “serious detriment” if officials are able, either by mistake or through an “abuse” of power, to take money from people who have done no wrong…..”

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