CMR is the leading provider of funding and management support for small to medium-sized businesses and entrepreneurs 

After soaring to new record highs near $6000 last week (as China returned to work following its Golden Week holiday), the start of the National Congress last night, combined with CFTC comments on ICO crackdowns has spooked cryptocurrencies with Bitcoin down 8% - its biggest drop in a month..

Crytpos are down across the board...

Read more.....

After soaring to new record highs near $6000 last week (as China returned to work following its Golden Week holiday), the start of the National Congress last night, combined with CFTC comments on ICO crackdowns has spooked cryptocurrencies with Bitcoin down 8% - its biggest drop in a month..

Crytpos are down across the board...

With Bitcon back to a $5100 handle...

Some have suggested the weakness is due to US CFTC comments, as Bloomberg reports, in a primer on the asset class published Tuesday, the agency said virtual “tokens” used in initial coin offerings can come under CFTC oversight, a message that a market averse to scrutiny did not take well. But this seems old news since the U.S. Securities and Exchange Commission has already said tokens from some ICOs can be securities under its oversight. “There is no inconsistency between the SEC’s analysis and the CFTC’s determination” from 2015 that virtual currencies are commodities, the CFTC said.

Another possibloe catalyst is news, via Coinivore, that South Korea is preparing to tax Bitcoin use...

The South Korean government is preparing to tax Bitcoin use after the cryptocurrency’s trading volume largely increased past the country’s stock exchange Kosdaq. Han Seung-hee, the commissioner of the country’s National Tax Service, told lawmakers this weekend that the issue of how to best tax cryptocurrencies is being discussed, including the areas of capital gains tax, the VAT, and gift tax, Bitcoin.com reported.

South Korea’s lawmakers held a National Tax Service (NTS) hearing in Sejong last week on October 13th. The NTS Commissioner Han Seung-hee answered several questions about the taxation of cryptocurrencies.

Seung-hee was asked, “as the daily transaction value of virtual money grows beyond the Kosdaq, we must actively cope with the shift away from the conventional reservations. What is the taxation plan?” Business Post reported.

“I am still taxing business income, and I am discussing whether to tax the value-added tax or capital gains tax with regard to virtual currencies such as Bitcoin,”Seung-hee said.

According to Seung-hee, his department is currently discussing the VAT and capital gains tax issues with the Ministry of Strategy and Finance. Additionally, he stated that “the gift tax will be reviewed as it needs to be supplemented,” the publication wrote. The Commissioner further pointed out that the use of Bitcoin may lead to “gift tax evasion,” therefore valuations methods need to be implemented with respect to the taxation of cryptocurrency gifts.

In the meantime, he confirmed that “we are currently monitoring the status of the cryptocurrency transactions and will move forward quickly.”

And additionally, as CoinTelegraph reports, a group of Latin American Bitcoin businesses and entities has issued a joint letter expressing “deepest concerns” over SegWit2x.

The letter, signed by around 50 supporters from the Brazilian and Argentinian Bitcoin space, went live on Medium Wednesday.

The collective “opposition” to the forthcoming Bitcoin hard fork is the the latest to come from the industry, which has already seen exchanges and others signal public condemnation.

Last week, South Korea’s largest Bitcoin meetup released a similar open statement denouncing SegWit2x.

“We do believe the NYA signatories have the best of intentions in attempting to improve Bitcoin’s protocol, and we also recognize the invaluable service historically provided by the companies and the talented individuals associated with S2X,” the Brazilian-Argentinian letter reads.

 

“We profoundly disagree, however, with the means chosen to carry out such a plan. And therein lie all the discord, controversy, feverish debates, and even resentment for some actors.”

The group provided what it calls a “non-exhaustive” list of eleven factors influencing its decision, many of which match with reasons given by both South Korea and exchanges confirming they will not support any Bitcoin chain split.

Earlier this morning we learned that the Senate Judiciary Committee has finally decided they're going to take a look into a shady deal that handed Russia 20% of America's uranium reserves, was approved by the Obama administration during an ongoing FBI investigation into charges of bribery, extortion and money laundering by the Russian buyer and netted the Read more.....

Earlier this morning we learned that the Senate Judiciary Committee has finally decided they're going to take a look into a shady deal that handed Russia 20% of America's uranium reserves, was approved by the Obama administration during an ongoing FBI investigation into charges of bribery, extortion and money laundering by the Russian buyer and netted the Clintons millions of dollars in donations and 'speaking fees."  Per The Hill:

The Senate Judiciary Committee has launched a full-scale probe into a Russian nuclear bribery case, demanding several federal agencies disclose whether they knew the FBI had uncovered the corruption before the Obama administration in 2010 approved a controversial uranium deal with Moscow.

 

"It has recently come to the Committee’s attention that employees of Rosatom were involved in a criminal enterprise involving a conspiracy to commit extortion and money laundering during the time of the CFIUS transaction," Grassley wrote in one such letter addressed to Sessions.

 

"The fact that Rosatom subsidiaries in the United States were under criminal investigation as a result of a U.S. intelligence operation apparently around the time CFIUS approved the Uranium One/Rosatom transaction raises questions about whether that information factored into CFIUS’ decision to approve the transaction," the chairman added.

As it turns out, all these new revelations surfaced just ahead of Jeff Sessions' previously scheduled appearance before the Senate Judiciary Committee.  All of which provides the perfect opportunity for some Wednesday fireworks on The Hill.

Live feed:

Authored by Lance Roberts via RealInvestmentAdvice.com,

The market is downright bullish. There is little reason to argue the point given the bullish trends of markets globally which are strongly trending, positively correlated, and simultaneously breaking out to all-time highs. Of course, such is not surprising given the massive levels of Central Bank in Read more.....

Authored by Lance Roberts via RealInvestmentAdvice.com,

The market is downright bullish. There is little reason to argue the point given the bullish trends of markets globally which are strongly trending, positively correlated, and simultaneously breaking out to all-time highs. Of course, such is not surprising given the massive levels of Central Bank interventions, suppressed interest rates, and global coordination between Government’s and major asset managers (banks) over the last eight years.

Importantly, as bullishness has reached historically high levels, the fear of a market crash, or another crisis, has faded into the abyss. As Mark DeCambre noted:

“By at least one measure, the S&P 500 index is on pace to register its lengthiest period of quiescence in more than two decades—and perhaps ever.

 

The broad-market benchmark hasn’t experienced a decline of at least 3% since Nov. 7, 2016. That 236-day span registers as the second-longest period without a single-session drop of that magnitude since the 241 days from Jan. 26, 1995 to Jan. 9, 1996, according to Pension Partners’ Charles Bilello (see table below):“

This lack of volatility, flood of liquidity from Central Banks, and a seemingly “bullet-proof” rise in the market has boosted investor confidence to exuberant levels. That consistent push higher, without a correctionary process along the way, has pushed the market into “extremely overbought, extended, and bullish territory.” As shown visually in last weekend’s newsletter:

When I discuss this, I am often asked exactly what is meant by such a statement. This week, I am going provide a basic course in technical analysis as the “overbought, bullish and extended” theme is likely to remain intact for several months to come.

Clarifying Over Bought, Extended & Bullish

What exactly is meant by the markets being overbought, overextended and overly bullish? These are concepts, which once understood, will hopefully lead you to managing your money more successfully over the long term.

What Do You Mean By Overbought?

I am often asked that since there is “always a buyer for every seller,” then how can a market become overbought?

Before we get into the raw technical analysis of showing the “overbought” condition let’s rationalize what one is and how it occurs.

First, while it is true that there is always a buyer and seller in every transaction it is the “supply and demand” of those buyers and sellers at a particular price point that affects the overall price. Let me explain.

Imagine two rooms of 100 individuals each that want to buy shares of ABC stock. Room A has 100 individuals that currently own ABC stock and Room B has 100 individuals with cash wanting to buy shares of ABC. The table below shows a very simplified model of this process.

At $10 a share, there are numerous buyers but sellers are few. The demand for the shares drives the price higher which entices more sellers. As long as the demand for shares outpaces the supply of sellers – the price is pushed higher. However, at some point, the price reaches a level that exhausts the supply of buyers.  The next price decline occurs as sellers have to begin lowering prices to find buyers.

So, while there is always a buyer and seller for every transaction it is the relative supply and demand for those shares at current prices that determine the “overbought” and “oversold” conditions.

The chart below shows several methods I look at to try and determine if buyers are potentially reaching a point of “exhaustion” which might lead to a price reversal in the short-term. The top of the chart looks at the historic deviation between the price of the market as compared to the 200-dma. The bottom 4-indicators are measures of price movement and participation (The bottom two panels are the number of stocks above the 50 and 200-dma.)

Don’t get too hung-up on trying to understand all the nuances of the chart. The important point, from a money management standpoint, is the determination of the potential risk/reward opportunity for allocating capital to the markets at any given time.

As a portfolio manager, clients tend “not to like” having their capital invested in the markets only to almost immediately suffer a principal loss. By using some measures to determine the current risk/reward outcome, the deployment of capital can be more effectively timed.

While the chart is suggesting the market has reached levels where buyers have typically been turned into sellers, it is important to understand that just because the indicator has reached an extreme level – the market will not necessarily fall apart immediately. It is a warning sign that suggests further upside in the market is relatively limited compared to the downside risk that currently exists.

The average correction that resolved the overbought condition, since the end of the last financial crisis, has been as little as -3% but as much as -19%. It is for this reason that I continue to suggest NOT chasing the markets at the current time. There will be a correction of some magnitude in the near future that will allow for a safer entry of new capital into the markets. Patience, however, will likely be tested before that opportunity presents itself.

How Can A Market Get Over Extended?

Now that we have defined what overbought means – I can explain what I mean by overextended. As I discussed in “Visualizing Bob Farrell’s 10 Investing Rules”:

“Like a rubber band that has been stretched too far – it must be relaxed in order to be stretched again. This is exactly the same for stock prices that are anchored to their moving averages. Trends that get overextended in one direction, or another, always return to their long-term average. Even during a strong uptrend or strong downtrend, prices often move back (revert) to a long-term moving average.

 

The chart below shows the S&P 500 with a 52-week simple moving average. The bottom chart shows the percentage deviation of the current price of the market from the 52-week moving average.  During bullish trending markets, there are regular reversions to the mean that create buying opportunities.  However, what is often not stated is that in order to take advantage of such buying opportunities profits should have been taken out of portfolios as deviations from the mean reached historical extremes.  Conversely, in bearish trending markets, such reversions from extreme deviations should be used to sell stocks, raise cash and reduce portfolio risk rather than ‘panic sell’ at market bottoms.”

The dashed blue lines denoted when the markets changed trends from positive to negative. This is the very essence of portfolio “risk” management.

The idea of “stretching the rubber band” can be measured in several ways, but I will limit our discussion this week to two: Standard Deviation and Distance.

As I noted in this past weekend’s newsletter, “Standard Deviation” is defined as:

“A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of the variance.”

In plain English this means, and as shown in the chart below, is that the further away from the average that an event occurs the more unlikely it becomes. As shown below, out of 1000 occurrences, only three will fall outside of the area of 3 standard deviations. 95.4% of the time events will occur within two standard deviations.

For the stock market, and as shown in both charts above, the standard deviation is measured is with Bollinger Bands.  John Bollinger, a famous technical trader, applied the theory of standard deviation to the financial markets.

Because standard deviation is a measure of volatility, Bollinger created a set of bands that would adjust themselves to the current market conditions. When the markets become more volatile, the bands widen (move further away from the average), and during less volatile periods, the bands contract (move closer to the average).

The closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.

The dashed purple line is the 50-week moving average (or mean) with shaded area representing 2-standard deviations. As shown in the chart above, 2-standard deviations encompass 95.4% of all probable price movement.Even during the 2012-15, QE3 driven, stock advance, there were several corrections back to the 50-week moving average which allowed for increases in equity risk.

The chart on the next page shows this more clearly. The blue colored vertical bars represent when the price of the index has risen 5%, or more, above the 50-week moving average. The orange-ish bars represent a move of 5%, or more, below the moving average.

Currently, with the index more than 7% above its 50-week moving average, there is little questioning that the markets are extended to the upside. From this point, there are two things that could occur. If this is only an intermediate-term top, and the markets are going to remain in a bullish trend, then any correction should remain confined to a retracement back to the 50-week moving average.

However, if the markets are building a longer term top then a reversion past the 50-week moving average will denote a possible change into a bear market. Bull and bear markets are denoted below by how they trade either above or below the 50-week moving average.

Measuring Extreme Optimism

“It is a bad sign for the market when all the bears give up. If no-one is left to be converted, it usually means no-one is left to buy.” – Pater Tenebrarum

That quote got me thinking about the dearth of bearish views that are currently prevalent in the market. The chart below shows the monthly level of bullish outlooks according to our composite indicator of both individual and professional investors.

The extraordinarily low level of “bearish” outlooks combined with extreme levels of complacency within the financial markets has historically been a “poor cocktail” for future investment success.

Much like measuring overbought and overextended conditions – overly bullish optimism, or a “lack of fear” of a market correction, are historically seen at intermediate and longer-term market peaks. This is also the case with consumer “sentiment” which also just registered the highest level on record of individuals expecting the markets to rise over the next 12-months.

As I wrote previously, “records are records for a reason.” 

With bullish sentiment and complacency at extreme levels, it only further supports the idea that the current risk of investing new capital in the markets outweighs the potential reward. It is very likely that sometime within the next couple of weeks, to a couple of months, the markets will experience at least an intermediate-term correction.

Could it turn into a more serious correction? Sure. However, we won’t know that until we get there.

I hope this helps clarify things.

For now, holding a little extra cash certainly won’t detract significantly from portfolio performance but will provide an opportunity to take advantage of panicked sellers later. It’s not a question of “if,” only of “when.”

The spread between German and US sovereign bond yields is the widest since the start of the EU in 1999...

But EURUSD appears to have decoupled (just as it did in 2009 and 2013)...

Read more.....

The spread between German and US sovereign bond yields is the widest since the start of the EU in 1999...

But EURUSD appears to have decoupled (just as it did in 2009 and 2013)...

So which market is 'wrong' - Bonds signaling EURUSD below par... or FX markets signaling a Bund crash is imminent?

As Treasury yields continue to rise, now just shy of 2.34%, tracking the move higher in the USDJPY, or perhaps vice versa, which is approaching 113 once again, NY Fed head, and the second most important person at the Federal Reserve, made some comments this morning, which hardly groundbreaking, were notable for their warning against stimulus-oriented changes to the tax code which Dudley said would be "ill timed." He echoed a similar comment from another former Goldmanite, Dal Read more.....

As Treasury yields continue to rise, now just shy of 2.34%, tracking the move higher in the USDJPY, or perhaps vice versa, which is approaching 113 once again, NY Fed head, and the second most important person at the Federal Reserve, made some comments this morning, which hardly groundbreaking, were notable for their warning against stimulus-oriented changes to the tax code which Dudley said would be "ill timed." He echoed a similar comment from another former Goldmanite, Dallas Fed's Kaplan, who said that stimulus-oriented tax reform "could harm the economy."

While Dudley said that a simpler, more efficient tax system would benefit the US, he said that tax reform has not been incorporate into his economic forecast, which in turn suggests that if Trump does succeed in passing tax reform in the next few months, the Fed will find itself even more behind the curve, forcing it to hike even more aggressively, sending risk assets into a tailspin. Hence the warning.

What is even more ironic, is that in the very same speech, Dudley said that the Fed is very interested in making "sure prosperity is shared" which is odd for two reasons: the Fed's own recent triennial survey showed that the only wealth creation has gone to the top 10%, and second, any attempts to create a stimulus for "everyone else" via tax-reform, is precisely what will crush the Fed's capital-markets driven wealth effect by sending inflation higher and breaking the current market goldilocksian "metastability."

The good news, according to Dudley, is that the economy is not "particularly vulnerable" to a recession now and "things are quite good right now." He also laid out the usual arguments about how rising wage inflation is just around the corner.

The bottom line: the Fed is hiking in December, and more in 2018, especially if Trump tax cuts pass -  which as of this moment are not even part of the Fed's optimistic forecast - and which have the potential to send inflation spiking, further accelerating the Fed's future rate hikes and inverting the yield curve. Meanwhile, as Citi notes, "Between Trump's bipartisan deal on healthcare and McCain's endorsement of the budget resolution vote this Thursday/Friday, the market (at the moment) is feeling good enough about tax reform prospects."

Here are the Kaplan comments via Dow Jones:

• KAPLAN: ECONOMY IS AT OR CLOSE TO FULL EMPLOYMENT
• KAPLAN: TECH-ENABLED DISRUPTION BIG ISSUE FOR WORKFORCE
• KAPLAN: U.S. 'WAY BEHIND' ON WORKFORCE DEVELOPMENT
• KAPLAN: TECH CAUSING MORE JOB DISRUPTION NOW RELATIVE TO GLOBALIZATION
• KAPLAN: WARNS STIMULUS-ORIENTED TAX REFORM COULD HARM ECONOMY
• KAPLAN SAYS HE'S WARY OF PUSHING FED RATES UP TO 10-YR YIELDS

And Dudley:

• DUDLEY: SIMPLER, MORE EFFICIENT TAX SYSTEM WOULD BENEFIT U.S. 
• DUDLEY: NOT INCORPORATED TAX REFORM INTO HIS ECONOMIC FORECAST
• DUDLEY: ANY TAX OVERHAUL IS STILL WELL OFF IN FUTURE
• DUDLEY: STIMULUS-ORIENTED TAX CHANGES WOULD BE 'ILL TIMED'
• DUDLEY: BIGGEST UNCERTAINTIES FOR ECONOMY ARE WASHINGTON POLICY MAKING
• DUDLEY: ECONOMY NOT 'PARTICULARLY VULNERABLE' TO RECESSION NOW
• DUDLEY: FOR ECONOMY, 'THINGS ARE QUITE GOOD' RIGHT NOW
• DUDLEY: FED VERY INTERESTED IN MAKING SURE PROSPERITY IS SHARED
• DUDLEY: TIGHT LABOR MARKET GIVES INCENTIVE FOR WORKFORCE DEVELOPMENT
• DUDLEY: A LESS COMPLEX TAX SYSTEM WOULD BENEFIT ECONOMY
• DUDLEY: RUNNING ECONOMY AT FULL EMPLOYMENT WILL BOOST WAGES
• DUDLEY: 'WE ARE OPERATING AT A PRETTY TIGHT LABOR MARKET'
• DUDLEY: STILL BELIEVES MARKET BASED ECONOMY IS BEST WAY FORWARD

And the punchline:

• DUDLEY: INVESTORS AREN'T PAYING ENOUGH ATTENTION TO GOVERNMENT DEBT SERVICE

With the assistance of South Front

It looks that the Israeli “demonstration of power” during the recent visit of Russian Defense Minister Sergey Shoigu may have turned into a total failure. On October 16, Shoigu arrived in Israel for meetings with Defense Minister Avigdor Lieberman and Israeli Prime Minister Benjamin Netanyahu. The two were reportedly s Read more.....

With the assistance of South Front

It looks that the Israeli “demonstration of power” during the recent visit of Russian Defense Minister Sergey Shoigu may have turned into a total failure. On October 16, Shoigu arrived in Israel for meetings with Defense Minister Avigdor Lieberman and Israeli Prime Minister Benjamin Netanyahu. The two were reportedly set to discuss the situation in the region, including Syria, the fight against terrorism, as well as military and technical cooperation.

On the same day, the Israeli Defense Forces (IDF) claimed that its warplanes targeted an anti-aircraft battery of the Syrian Air Defense Forces that had launched a missile at Israeli aircraft flying over Lebanon.

Earlier today,an anti-aircraft missile was launched from Syria towards IDF aircraft during a routine flight over Lebanon. No hits confirmed

— IDF (@IDFSpokesperson) October 16, 2017

“The army targeted the battery with four bombs and, according to the IDF, the battery was damaged to the extent it was no longer operational. The army said the battery targeted was the same that fired at Israeli jets last March, prompting Israel make use of its Arrow anti-missile system for the first time,” the Israeli newspaper Haaretz reported.

The Syrian military confirmed the Israeli strikes and said that they caused “material damage.” But it’s interesting to note that, according to the Syrian Defense Ministry statement, Israeli warplanes violated Syria’s airspace on the border with Lebanon in Baalbek area. The incident took place at 8:51 am local time.

Did the Israeli Air Force intentionally provoke the reaction from the Syrian military in order to justify the strike on the Syrian air defense battery? It wouldn't be the first time.

Furthermore, some pro-Israeli experts and media activists clearly linked the incident with the visit of the Russian defense minister to Tel Aviv saying that it was a nice demonstration of power to the Russian-Iranian-Syrian alliance.

However, something went wrong. According to the available information, the Syrian Defense Forces used its S-200 missile against the Israeli warplane. This Soviet-made missile is the most advanced long range anti-aircraft system operated by the Syrian military. But even in this case, it’s old-fashioned in terms of modern warfare and advances in stealth technology.

Despite this, the Syrian Defense Ministry said in its statement that government forces responded to the violation of the airspace and “directly hit one of the jets, forcing [Israeli aircraft] to retreat” - in contradiction to the Israeli claim that “no hit” was confirmed.

A mere few hours after the missile incident with Syria, Israeli media reported that the Israeli Air Force’s F-35 stealth multirole fighter went unserviceable as a result of an alleged bird collision during a training flight. According to the Times of Israel:

Two storks hit an F-35 fighter jet during a training flight on Tuesday, requiring the plane to undergo maintenance work, the army said.

 

The birds hit the F-35, called the “Adir” in Hebrew, just before it was due to return to the Nevatim air base in the central Negev desert.

However, Israeli sources were not able to show a photo of the F-35 warplane after the “bird collision”. Furthermore, it is not clear if the F-35 can become operational again "in the next few days" - as the Israeli Army's statement claims - because its stealth coating was likely damaged. 

Thus, according to the Israeli version, the warplane reportedly became no longer operational after the bird collision, despite the fact that the F-35 earlier passed the bird strike certification with outstanding results (official info here). The F-35 is the world’s most expensive warplane with its price of development now at about $406.5 billion.

Israel is actively buying the world’s supposedly most advanced fighter, paying about $100 million for each plane.

So what really hit the F-35?

Following last month's bounce in permits (later revised lower), September expectations were for a decline of 2.1% (presumably analysts knew of the storms' potential impact when they guessed) but it utterly collapsed - down 4.5%. Worse still Housing Starts were supposed to drop just 0.4% in September but crashed 4.7%.

These are 2 to 3 standard deviation misses of expectations... so don't simply blame the storms as analysts were well Read more.....

Following last month's bounce in permits (later revised lower), September expectations were for a decline of 2.1% (presumably analysts knew of the storms' potential impact when they guessed) but it utterly collapsed - down 4.5%. Worse still Housing Starts were supposed to drop just 0.4% in September but crashed 4.7%.

These are 2 to 3 standard deviation misses of expectations... so don't simply blame the storms as analysts were well aware that they occurred when they made their forecasts...

Notably, muiltifamily starts tumbled to 286K, lowest since Sept 2016...

And it was clearly not just the hurricanes - starts dropped in every region except The West:

• Northeast: -9.2%
• Midwest: -20.2%
• South -9.3%
• West: +15.7%

Some context...

But buy homebuilders...

As the media continues to lose their collective minds over $100,000 worth of Facebook ads allegedly purchased by Russians during the 2016 election, the Senate Judiciary Committee has finally decided they're going to take a look into a shady Russian deal that handed Putin 20% of America's uranium reserves, was approved by the Obama administration during an ongoing FBI investigation into charges of bribery, extortion and money laundering by the Russian buyer and netted the Clintons millions of Read more.....

As the media continues to lose their collective minds over $100,000 worth of Facebook ads allegedly purchased by Russians during the 2016 election, the Senate Judiciary Committee has finally decided they're going to take a look into a shady Russian deal that handed Putin 20% of America's uranium reserves, was approved by the Obama administration during an ongoing FBI investigation into charges of bribery, extortion and money laundering by the Russian buyer and netted the Clintons millions of dollars in donations and 'speaking fees."  Here's more from The Hill:

The Senate Judiciary Committee has launched a full-scale probe into a Russian nuclear bribery case, demanding several federal agencies disclose whether they knew the FBI had uncovered the corruption before the Obama administration in 2010 approved a controversial uranium deal with Moscow.

 

Sen. Chuck Grassley (R-Iowa), the committee chairman, gets his first chance to raise the issue in public on Wednesday when he questions Attorney General Jeff Sessions during an oversight hearing.

 

Though the hearing was scheduled for other purposes, aides said they expected Grassley to ask Sessions questions about a story published in The Hill on Tuesday that disclosed the FBI had uncovered evidence showing Russian nuclear officials were engaged in a racketeering scheme involving bribes, kickbacks and money laundering designed to expand Russian President Vladimir Putin's atomic energy business on U.S. soil.

 

"It has recently come to the Committee’s attention that employees of Rosatom were involved in a criminal enterprise involving a conspiracy to commit extortion and money laundering during the time of the CFIUS transaction," Grassley wrote in one such letter addressed to Sessions.

 

"The fact that Rosatom subsidiaries in the United States were under criminal investigation as a result of a U.S. intelligence operation apparently around the time CFIUS approved the Uranium One/Rosatom transaction raises questions about whether that information factored into CFIUS’ decision to approve the transaction," the chairman added.

As we pointed out last summer when Peter Schweizer first released his feature documentary Clinton Cash, the Uranium One deal, as approved by the Obama Administration, netted the Clintons and their Clinton Foundation nearly $150 million in donations and 'speaking fees' from Uranium One shareholders and other Russian entities.

Russian Purchase of US Uranium Assets in Return for $145mm in Contributions to the Clinton Foundation - Bill and Hillary Clinton assisted a Canadian financier, Frank Giustra, and his company, Uranium One, in the acquisition of uranium mining concessions in Kazakhstan and the United States.  Subsequently, the Russian government sought to purchase Uranium One but required approval from the Obama administration given the strategic importance of the uranium assets.  In the run-up to the approval of the deal by the State Department, nine shareholders of Uranium One just happened to make $145mm in donations to the Clinton Foundation.  Moreover, the New Yorker confirmed that Bill Clinton received $500,000 in speaking fees from a Russian investment bank, with ties to the Kremlin, around the same time.  Needless to say, the State Department approved the deal giving Russia ownership of 20% of U.S. uranium assets 

Now, thanks to newly released affidavits from a case that landed one of the Russian co-conspirators, Vadim Mikerin, in jail, we learned just yesterday that not only was the Obama administration aware the Russians' illegal acts in the U.S. but it may have also been fully aware that "Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow."  Per The Hill:

Before the Obama administration approved a controversial deal in 2010 giving Moscow control of a large swath of American uranium, the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States, according to government documents and interviews.

 

Federal agents used a confidential U.S. witness working inside the Russian nuclear industry to gather extensive financial records, make secret recordings and intercept emails as early as 2009 that showed Moscow had compromised an American uranium trucking firm with bribes and kickbacks in violation of the Foreign Corrupt Practices Act, FBI and court documents show.

 

They also obtained an eyewitness account — backed by documents — indicating Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow, sources told The Hill.

And guess who ran the FBI's investigation into this particular Russian plot?  As The Hill noted, the Mikerin probe began in 2009 under Robert Mueller, now the special counsel in charge of the Trump case, and ended in late 2015 under the controversial, former FBI Director James Comey who was relieved of his duties by President Trump.

Ironically, when the DOJ finally arrested Mikerin in 2014, following 5 years of investigations in a massive international bribery and money-laundering scheme, rather than publicly celebrate, they seemingly swept it under the rug.  In fact, there was no public release concerning the case at all until a full year later when the DOJ announced a plea deal with Mikerin right before labor day.

Bringing down a major Russian nuclear corruption scheme that had both compromised a sensitive uranium transportation asset inside the U.S. and facilitated international money laundering would seem a major feather in any law enforcement agency’s cap.

 

But the Justice Department and FBI took little credit in 2014 when Mikerin, the Russian financier and the trucking firm executives were arrested and charged.

 

The only public statement occurred an entire year later when the Justice Department put out a little-noticed press release in August 2015, just days before Labor Day. The release noted that the various defendants had reached plea deals.

 

By that time, the criminal cases against Mikerin had been narrowed to a single charge of money laundering for a scheme that officials admitted stretched from 2004 to 2014. And though agents had evidence of criminal wrongdoing they collected since at least 2009, federal prosecutors only cited in the plea agreement a handful of transactions that occurred in 2011 and 2012, well after the Committee on Foreign Investment in the United States’s approval.

 

The final court case also made no mention of any connection to the influence peddling conversations the FBI undercover informant witnessed about the Russian nuclear officials trying to ingratiate themselves with the Clintons even though agents had gathered documents showing the transmission of millions of dollars from Russia’s nuclear industry to an American entity that had provided assistance to Bill Clinton’s foundation, sources confirmed to The Hill.

So, what if James Comey really was looking out for Hillary all along?

As it has turned out, James Comey lied and leaked and totally protected Hillary Clinton. He was the best thing that ever happened to her!

— Donald J. Trump (@realDonaldTrump) October 18, 2017

For the last month we have been noting a dramatic divergence between Small Cap stock prices and their implied risk...

We can only remember one such lengthy decoupling in recent history, and that did not end well... Read more.....

For the last month we have been noting a dramatic divergence between Small Cap stock prices and their implied risk...

We can only remember one such lengthy decoupling in recent history, and that did not end well...

And of course this is all occurring as Small Cap earnings expectations plunge...

But now, as Dana Lyons' Tumblr details, there has only been one trading range in the history of the Russell 2000 tighter than the current one – and it immediately preceded a crash.

As U.S. large-cap stocks continue to make new highs seemingly every day, the small-caps are doing something remarkable. Or, more accurately, it is what they aren’t doing that is remarkable. They aren’t moving at all – almost literally. In the past 2 weeks, the Russell 2000 Small-Cap Index (RUT) has amazingly traded within a range of just 1% (actually 1.01%…but close enough). This is just the 2nd time in its history (along with July 15, 1998) that it has traded for 10 straight days within an overall range of just 1%.

What, if anything, can we reasonably expect from the RUT following the culmination of this historic lack of movement? Well, tight ranges like this are often a precursor to a spike in volatility, at least in the near-term, as the range break releases the considerable coiled-up potential energy. But which way will it break – up or down?

Unfortunately, we don’t have a crystal ball. Both outcomes are plausible and explainable (often after the fact in the case of the latter). These tight ranges can constitute a continuation pattern in which prices digest the prior move before “continuing” in that same direction, e.g., up, in this case. However, the lack of movement within these tight ranges can also signify indecision – and can precede direction changes.

The July 1998 event, which, at 0.99%, is the only 2-week range in the RUT’s history tighter than the current one, occurred on the heels of a bounce as well. That event would mark a direction change – and immediately precede a 3-month crash of nearly 35%.

That is but one precedent, however, which is certainly inadequate in forming statistically sound expectations for our present case. If we loosen the parameters a bit, perhaps we can find a little more instruction. In this case, if we broaden the 10-day range parameters to 1.25%, we come up with 7 more unique occurrences over the past 27 years. Perhaps that’s a little more helpful.

Here are the dates we came up with:

• 5/19/1993
• 6/22/1993
• 7/30/1993
• 9/13/1994
• 3/24/1995
• 5/10/1995
• 2/20/1996
• 7/15/1998
• 10/16/2017

As you can see, most of the occurrences happened during the low-volatility era of the mid-1990s. In fact, that 1998 event was the last one prior to the current one. That makes the RUT’s current trading range seem even more remarkable. But what will it lead to?

Let’s take a look at what transpired following the 8 prior events.

Without zeroing in on whether these incidents signified continuation patterns or reversals, the first thing that stands out is that the aggregate performance following these precedents is significantly positive. Of course, a sample size of 8 is hardly robust; however, we can at least dismiss fears that the pattern is necessarily bearish.

There is still the matter of the 1998 occurrence which led to an immediate loss of a third of the Russell 2000′s value, not to mention whatever other incident led to losses in the 2 and 3-month time frame. Looking at the 1998 incident a bit closer, we see that, while the RUT had bounced for about a month prior to the 10-day range, the bounce came on the heels of a multi-month decline from 52-week highs. Thus, unlike today’s range, the 1998 version occurred with the RUT well off of its highs, by 6% to be exact. In reality, the appearance of the 1998 range resembled more of a bear-flag, i.e., a continuation pattern downward, than today’s bull-flag looking formation.

That got us thinking about what the other 7 occurrences looked like. Thus, as we like to do, we measured the RUT’s distance from its 52-week high at the time of each incident. As it turns out, one of the other 7 events saw the RUT over 5% below its 52-week high at the time of the 2-week range – the September 1994 occurrence. As it turns out, the RUT was lower following that event from 1 week to 3 months, with a 3-month drawdown of -8.5%.

The other 6 events occurred with the RUT closer to its 52-week high, i.e., within roughly 3%. Of course, those 6 saw the RUT perform almost flawlessly going forward. Here is the aggregate performance following all of the events, delineated by the RUT’s distance from its 52-week high.

We want to be careful not to make too much of this study containing just 8 samples, especially as none of them even took place in the past 19 years. However, to the extent that we can draw any conclusions from reasonably similar extremely tight ranges in the past, the bulls certainly should feel good about the evidence.

*  *  *

This is a free look at the “all-access” versions of our charts and research that we post daily (among much more) on our new site, The Lyons Share. TLS is currently running a 30th anniversary 1987 Crash Commemoration SALE, offering a discount of 22.6%, or the equivalent of the Dow’s 1-day drop 30 years ago. The SALE ends October 22 so considering the discounted cost and a potentially frothy market climate, there has never been a better time to reap the benefits of our risk-managed approach. Thanks for reading!

In an early Wednesday tweetstorm, Trump blasted fired FBI Director James Comey and questioned the DOJ, following the FBI's confirmation that Comey began drafting his statement about Hillary Clinton's private email server use long before the investigation was complete.

"Wow, FBI confirms report that James Comey drafted letter exonerating Crooked Hillary Clinton long before investigation was complete. Many people not interviewed, including Clinton herself."

Trump Read more.....

In an early Wednesday tweetstorm, Trump blasted fired FBI Director James Comey and questioned the DOJ, following the FBI's confirmation that Comey began drafting his statement about Hillary Clinton's private email server use long before the investigation was complete.

"Wow, FBI confirms report that James Comey drafted letter exonerating Crooked Hillary Clinton long before investigation was complete. Many people not interviewed, including Clinton herself."

Trump then accused Comey of perjury, and asked why the DOJ has not addressed this yet: "Comey stated under oath that he didn't do this-obviously a fix? Where is Justice Dept?"

Wow, FBI confirms report that James Comey drafted letter exonerating Crooked Hillary Clinton long before investigation was complete. Many..

— Donald J. Trump (@realDonaldTrump) October 18, 2017

...people not interviewed, including Clinton herself. Comey stated under oath that he didn't do this-obviously a fix? Where is Justice Dept?

— Donald J. Trump (@realDonaldTrump) October 18, 2017

Trump also accused Comey of lying and leaking to protect Clinton. "He was the best thing that ever happened to her!"

As it has turned out, James Comey lied and leaked and totally protected Hillary Clinton. He was the best thing that ever happened to her!

— Donald J. Trump (@realDonaldTrump) October 18, 2017

On Monday, the FBI posted a document revealing Comey began drafting a letter in July of 2016 in which he did not recommend charges against Clinton.  FBI official James Rybicki in mid-May requested in an unclassified email that officials "send any comments on this statement so we may roll it into a master doc for discussion with the Director at a future date." Comey would make his announcement roughly two months later, criticizing Clinton for being "extremely careless in their handling of very sensitive, highly classified information."

Trump also took aim at Senate Democrats, and Republicans, urging "all Senate Republicans" to vote for "the largest Tax Cuts in U.S. history."

The Democrats will only vote for Tax Increases. Hopefully, all Senate Republicans will vote for the largest Tax Cuts in U.S. history.

— Donald J. Trump (@realDonaldTrump) October 18, 2017

Speaking on Monday at the White House Rose Garden, Trump said “If we get it done, that’s a great achievement,” while standing next to Senate Majority Leader Mitch McConnell. “But don’t forget it took years for the Reagan administration to get taxes done. I’ve been here for nine months, a little more than nine months.” Despite the president's efforts, the only 52 percent of Americans in a new CNN poll say they oppose the president's tax reform plan, while only 34 percent say they support it.  Trump is set to meet with the Senate Finance Committee on Wednesday to discuss tax reform efforts.

Trump then moved on to the NFL, which he ripped for its decision to allow players to kneel during the national anthem, saying it shows "total disrespect for our great country!"

"The NFL has decided that it will not force players to stand for the playing of our National Anthem. Total disrespect for our great country!" the president said in a tweet.

The NFL has decided that it will not force players to stand for the playing of our National Anthem. Total disrespect for our great country!

— Donald J. Trump (@realDonaldTrump) October 18, 2017

Trump's anger was prompted by the NFL decision on Tuesday not to implement a rule that would require players to stand during the national anthem.  The NFL Network's Ian Rapaport was the first to report the decision. Trump has taken aim at players who kneel during the anthem to protest racial and social injustice in the U.S.

Finally, Trump ripped Rep. Frederica Wilson, saying the Florida Democrat's claim that he made an insensitive comment about a fallen soldier's wife was "totally fabricated."

"Democrat Congresswoman totally fabricated what I said to the wife of a soldier who died in action (and I have proof). Sad!"

Democrat Congresswoman totally fabricated what I said to the wife of a soldier who died in action (and I have proof). Sad!

— Donald J. Trump (@realDonaldTrump) October 18, 2017

Wilson said on Tuesday that she overheard Trump tell the widow of Army Sgt. La David Johnson, who was killed in an ambush in Niger nearly two weeks ago, that Johnson “knew what he signed up for..but when it happens it hurts anyway.” 

Wilson told CNN that she was in a car with Johnson’s widow, Myeshia, during a trip to meet her husband's casket when Trump called, and that Myeshia was "very distraught after the call."

“She has just lost her husband, she was just told that he cannot have an open casket funeral which gives her all kinds of nightmares about what his body must look, what his face must look, and this is what the president of the United States says to her,” Wilson told CNN. Trump launched a fresh round of controversy on Monday when at a press conference he made the claim that his predecessors did not call the families of fallen soldiers. He then attempted to walk back the claim at the same press conference.