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Authored by EconomicPrism's MN Gordon, annotated by Acting-Man's Pater Tenebrarum,

Learning From Other People’s Mistakes is Cheaper

One benefit of hindsight is that it imparts a cheap superiority over the past blunders of others.  We certainly make more mistakes than we’d care to admit.  Why not look down our nose and acquire some lessons learned from the mistakes Read more.....

Authored by EconomicPrism's MN Gordon, annotated by Acting-Man's Pater Tenebrarum,

Learning From Other People’s Mistakes is Cheaper

One benefit of hindsight is that it imparts a cheap superiority over the past blunders of others.  We certainly make more mistakes than we’d care to admit.  Why not look down our nose and acquire some lessons learned from the mistakes of others?

Bitcoin, weekly. The late 2017 peak is completely obvious in hindsight… [PT]

A simple record of the collective delusions from the past can be quickly garnered from a price chart over time.  Market peaks appear so obvious, after the fact.  Perhaps with a little examination we can prevent some of our hard earned capital from being returned to dust.

Take bitcoin, for instance.  What were those morons thinking who bought bitcoin at over $17,000 in late-2017?  Why couldn’t they tell that a severe price collapse was imminent?  Now, over 16 months later, their bitcoins are about $5,230 – or roughly 69 percent less than what they paid for them.

What’s more, if bitcoin doesn’t hit $1 million by the end of 2020, John McAfee – the cybersecurity guy – will have to eat his most private part on national television.  Apparently, McAfee consulted his proprietary pricing model before making this outrageous claim.  Maybe he should have back tested it a bit more before going public with his findings.

A few years ago in some or other jungle: John McAfee, tech entrepreneur and crypto maverick (here reportedly seen on the lam from authorities in Belize). Should he still be in possession of his private parts by 2021, you will know that you should have bought Bitcoin. [PT]

Still, we won’t count McAfee out just yet.  He has 20 months left before his trade expires; anything can happen between now and then.  And while it’s unlikely that bitcoin will hit $1 million anytime soon, with a little luck, bitcoin buyers from late-2017 will break even much sooner than the new era dot com believers of the new millennium did.

Down Beyond Measure

The savvy fellows who bought the Nasdaq in early-2000 at over 5,000 were in full agreement over one very seemingly obvious point. They all knew they were getting rich.  But that was before the Nasdaq crashed over 75 percent and crushed their new era delusions into millions of tiny pieces.  Yet things could have been much worse…

Sometime around early-2015 the Nasdaq eclipsed its early-2000 high, and it hasn’t looked back.  After traversing a Grand Canyon sized bear market, the Nasdaq is about 60 percent higher than at the peak of the early-2000 dot com bubble.  In fact, just this week the Nasdaq spiked back up above 8,000.

NASDAQ Index, monthly – the tech-heavy NASDAQ market is home to serial bubbles. [PT]

Wouldn’t it be nice if markets were always this forgiving?

Certainly, the erstwhile investors who bought the Nikkei in October 1989 at over 38,000 would like a do-over.  They’re still down about 40 percent – nearly 30 years later.  Factor in the opportunity cost of what these Nikkei investors missed out on over this time, and they’re down beyond measure.

Indeed, the significant wealth building years of several generations of Japanese investors have been lost.  They’ll never get their investment potential or time back.  There are some mistakes that there are no recovering from.

Many of the people who were long Japanese stocks in the late 1980s in the belief that they would “never fall” (this was indeed a popular notion at the time, based on the keiretsu system of cross-shareholdings) are long dead. Even those who are still alive have yet to see the Nikkei recover and regain its former bubble heights. Evidently, equities are not always a good long term investment. Note in this context that the Europe-wide secular bear market that followed in the wake of the South Seas and Mississippi bubbles only bottomed after 68 years (i.e., 68 years after the peak, the markets actually still made new lows). It is no wonder there is no equity culture in Europe. In fact, in many European countries retail investors still prefer savings books to stocks, even today when savings essentially yield nothing thanks to the unprecedented loose monetary policy of the ECB. [PT]

Should we feel sorry for them?  Shouldn’t they have known that the market was grossly overvalued in the fall of 1989?  Why did they lose their collective minds?

The rise and fall of the South Sea Company – even Isaac Newton lost a fortune speculating in the stock. [PT]

What Were They Thinking? 

Yet the real “my name is mud” award goes to the enlightened speculators who bought tulip bulbs in the Dutch Republic in January 1637.  At the time, a single tulip was trading for the price of an entire estate.  One month later, the price of a tulip had collapsed to the price of a common onion.

By our rough calculation, tulip bulbs have remained at par with common onions for the past 382 years.  It’s likely they’ll remain there for all eternity.  But for a brief moment, roughly November 1636 to February 1637, people lost their minds in unison.

80 years before the South Seas Bubble, the Dutch tried their hand at a once-in-a-lifetime financial mania. They actually traded futures contracts on tulip bulbs over the counter. This bubble never came back and never will – a century after it had ended, tulip bulb prices were still down more than 99% from the peak. [PT]

Charles Mackay, in his 1841 book Extraordinary Popular Delusions and the Madness of Crowds, described the mania:

“Many individuals grew suddenly rich.  A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honey-pot.  Every one imagined that the passion for tulips would last forever, and that the wealthy from every part of the world would send to Holland, and pay whatever prices were asked for them.  The riches of Europe would be concentrated on the shores of the Zuyder Zee, and poverty banished from the favoured clime of Holland.  Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants, even chimney sweeps and old clotheswomen, dabbled in tulips.”

What in the world were these tulip bulb speculators thinking?  Certainly, they didn’t read the fine print in their prospectus; the part that reads past performance is not indicative of future results.  But would it have even mattered?

The current cyclically adjusted price to earnings ratio for the S&P 500 is at 30.62.  That’s nearly double its average going back to the late-19th century.  And for the first time in three years, corporate quarterly earnings for the S&P 500 are forecast to fall.  Hence, the gap between price and earnings will be stretched out even further.

What can possibly go wrong when stocks are at a higher valuation than at the 1929 peak? [PT]

Clearly, U.S. stock markets have been rigged by the Federal Reserve.  But the popular delusion of many of today’s stock buyers is that risk has been eliminated, and that the Fed can propel stocks higher forever.  Thus you should buy stocks, and buy even more stocks… so you don’t miss out.

No doubt, future generations will smirk at our imbecility, and rhetorically ask: What were they thinking?

A former US Marine was arrested in connection with an "especially violent" raid on the North Korean embassy in Madrid, Spain. 

Christopher Ahn - a member of a group which seeks the overthrow of North Korean leader Kim Jong Un, was expected to be arraigned on Friday in a Los Angeles federal court, according to Reuters, citing a law enforcement official and a source close to the Read more.....

A former US Marine was arrested in connection with an "especially violent" raid on the North Korean embassy in Madrid, Spain. 

Christopher Ahn - a member of a group which seeks the overthrow of North Korean leader Kim Jong Un, was expected to be arraigned on Friday in a Los Angeles federal court, according to Reuters, citing a law enforcement official and a source close to the group. 

On February 22 at approximately 3pm, at least 10 masked men carrying fake weapons broke into the embassy, tied up eight people, put bags over their heads, proceeded to beat and interrogate them for two hours, and stole electronics. One woman was able to escape through a second-floor window, and police were called after a neighbor heard her screaming. 

According to a detailed document made public on March 26 by the Spanish court, three of the intruders took an embassy official into the basement during the raid and tried to get him to defect from North Korea. 

When officers arrived at the embassy, a man opened the door and told them that nothing was going on. "Minutes later, two luxury vehicles sped out of the embassy," according to the report. The getaway cars - belonging to the diplomatic mission, were abandoned in a nearby street. 

The anti-Kim group, which calls itself Cheollima Civil Defense, said the raid was not an attack and that it had been invited into the embassy.

...

The document included the names of the leaders of the group, some of whom are believed to be in the United States, while others could have left for other countries. The court is seeking their extradition. -Reuters

Of note, the Cheolima Civil Defense - now known as Free Joseon - has been noted for supporting North Korean defectors. On March 15, the Washington Post reported that Free Joseon was involved in the embassy raid. 

According to El Pais and El Confidencial, the group is tied to the CIA - however there has been no corroboration of this outside of their reporting. The CIA has denied any involvement, however Spanish government sources say their response was "unconvincing." 

El Pais called the attack "especially violent." 

If it is proven that the CIA was behind the attack, it could lead to a diplomatic spat between Madrid and Washington. Government sources say that it would be “unacceptable” for an ally to take such action. Not only would it mean that the US agency had operated on Spanish soil without asking for authorization or informing the authorities, it would also be a violation of the international conventions that protect diplomatic delegations. -El Pais

According to the report in El Pais, the intended goal of the attack was to obtain information on former North Korean ambassador, Kim Hyok Chol - who was expelled from Spain on September 19, 2017 over ongoing North Korean nuclear tests, by then-Spanish Foreign Minister Alfonso Dastis.

Kim Hyok Chol, who was declared persona non grata by Spain and was invited to leave the country before the end of the month, is currently one of Kim Jong-un’s highly trusted diplomats, and one of the architects of the failed nuclear summit between US President Donald Trump and Kim Jon[g]-un in Vietnam. The meeting, aimed at securing North Korea’s nuclear disarmament, ended in failure without any agreement on a timetable for disarmament or on future negotiations. -El Pais

Kim Hyok Chol also led the North Korean delegation which negotiated a nuclear disarmament plan with US special envoy Stephen Biegun in exchange for easing sanctions.  

Russian scholar of Asia and specialist in Korean studies Andrei Lankov noted in NK News last month that he suspects either the CIA or NIS of South Korea - as "both watch the North Korean opposition carefully and have multiple informers and willing collaborators within North Korean refugee groups, and both have a great deal of interest in Pyongyang’s secrets."

Of these two, the CIA seems to be a far more likely candidate. The South Korean government has valid reasons to be nice to Pyongyang, and to do everything possible to keep negotiations between U.S. and North Korea going.

One cannot imagine how President Moon, who is working hard to project an optimistic vision of North Korea’s intentions, would authorize anything even remotely like this.

On the other hand, the North Korean opposition in the current political climate would likely not trust the NIS either, and would perhaps prefer to interact with the CIA.

There are some other indicators of possible CIA (or, at least, some ‘English-speaking forces’) involvement with “Cheollima Civil Defense.”

Does anything scream 'CIA' to you, dear reader, about an ex-Marine suspected of an "especially violent" hostage taking incident at the North Korean embassy in Madrid? If so, perhaps it was one of the intelligence community's "six ways from Sunday" of getting back at Trump for attempting to broker a nuclear deal with North Korea. 

Authored by Mac Slavo via SHTFplan.com,

Americans have become numb to financial intelligence. This is no more evident than a recent Sallie Mae survey, which indicated that college graduates can’t even answer simple questions about financial concepts, such as interest.

Read more.....

Authored by Mac Slavo via SHTFplan.com,

Americans have become numb to financial intelligence. This is no more evident than a recent Sallie Mae survey, which indicated that college graduates can’t even answer simple questions about financial concepts, such as interest.

The statistics are not looking good for the United States, a nation deeply indebted, addicted to consumerism, and woefully ignorant about it all.  Not long ago, SHTFPlanreported that a mere 1 in 10 Americans is actually capable of getting an A on a basic financial security test.

And even college graduates, who are likely tens of thousands (if not more) dollars in debt because of school, learned little to nothing about handling their personal finances. The big red flag comes from consumer banking firm Sallie Mae. The firm released its new “Majoring in Money” study which asked hundreds of current and recently graduated college students up to age 29 about basic financial concepts. The results are worrisome.

Sallie Mae asked these individuals four questions related to credit and interest, and fewer than one in four got all four of these correct.

1. Interest accumulation: 
Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
a. More than $102
b. Exactly $102
c. Less than $102
d. Not sure

2. Effects of payment behavior on credit cost: 
Assuming the following individuals have the same credit card with the same interest rate and balance, which will pay the most in interest on their credit card purchases over time?
a. Joe, who makes the minimum payment on his credit card bill every month
b. Jane, who pays the balance on her credit card in full every month
c. Joyce, who sometimes pays the minimum, sometimes pays less than the minimum and missed one payment on her credit card bill
d. All of them will pay the same amount in interest over time
e. Not sure

3. Impact of repayment term on cost of credit: 
Imagine that there are two options when it comes to paying back a loan and both come with the same interest rate. Provided you have the needed funds, which option would you select to minimize your total costs over the life of the loan (i.e., all of your payments combined until the loan is completely paid off)?
a. Option 1 allows you to take 10 years to pay back the loan
b. Option 2 allows you to take 20 years to pay back the loan
c. Both options have the same out-of-pocket cost over the life of the loan
d. Not sure

4. Interest terminology: 
Which of the following best defines the term “interest capitalization”?
a. The type of interest charged on high-balance loans
b. The addition of unpaid interest to the principal balance of a loan
c. Interest that is charged when you postpone payments on your loan

The fact that we have an entire generation, largely college educated, who cannot answer these questions does not bode well for our future as a society.  Not knowing the answers to these could end up costing people a lot of money down the road. According to Market Watch, 83% of college grads carry a credit card as revealed by Sallie Mae, but only about six in 10 say they pay the balance(s) in full and on time each month. Coupled with the fact that nearly seven in 10 college students take out student loans, graduating with an average of nearly $30,000 in debt, the decline in financial intelligence is evident.

There are ways to learn the basics of personal finance. Dave Ramsey’s Total Money Makeover book was of the most help to many people, and Ramsey is perhaps the most well-known personal finance guru out there.  He takes a strick “no debt” approach that has worked not only for himself, buy countless others. He also offers an easy to follow guide which he’s dubbed “the baby steps” that will get people on the path to financial freedom.

Other resources are those such as Robert Kiyosaki’s Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Both books are excellent resources that teach the very basics about money and personal finance that no one is learning about in their public school educations.

*  *  *

The answers are 1: A, 2: C, 3: A, and 4: B

To honor the fact that most of the Washington Press corps probably hasn't finished reading the 448-page redacted Mueller report in full, President Trump is partaking in what has become an extended Twitter victory lap on Saturday, again lashing out at the 13 (18) angry Democrats who were in charge of the Mueller investigation, and the mainstream press, which has continued to cling to the collusion and obstruction narratives, ignoring Mueller's and Barr's conclusions.

Even though the re Read more.....

To honor the fact that most of the Washington Press corps probably hasn't finished reading the 448-page redacted Mueller report in full, President Trump is partaking in what has become an extended Twitter victory lap on Saturday, again lashing out at the 13 (18) angry Democrats who were in charge of the Mueller investigation, and the mainstream press, which has continued to cling to the collusion and obstruction narratives, ignoring Mueller's and Barr's conclusions.

Even though the report probably shouldn't have been written in the first place (because, as the report revealed, the Mueller probe was literally based on a drunken conversation between George Papadopoulos and an Australian diplomat that left open many questions about foreign intelligence interference), Trump tweeted that ultimately, he didn't care, because the final outcome was "no collusion, no obstruction."

One again, Trump declared that "the Russia hoax is dead", but the media is continuing to stir up the pols, as the Dems battle with Barr over their demands to obtain the unredacted report and its underlying evidence.

Despite the fact that the Mueller Report should not have been authorized in the first place & was written as nastily as possible by 13 (18) Angry Democrats who were true Trump Haters, including highly conflicted Bob Mueller himself, the end result is No Collusion, No Obstruction!

— Donald J. Trump (@realDonaldTrump) April 20, 2019

The Fake News Media is doing everything possible to stir up and anger the pols and as many people as possible seldom mentioning the fact that the Mueller Report had as its principle conclusion the fact that there was NO COLLUSION WITH RUSSIA. The Russia Hoax is dead!

— Donald J. Trump (@realDonaldTrump) April 20, 2019

The end result of the greatest Witch Hunt in U.S. political history is No Collusion with Russia (and No Obstruction). Pretty Amazing!

— Donald J. Trump (@realDonaldTrump) April 20, 2019

On another note, Trump applauded Thursday's jobless claims data, which again showed applications for government unemployment benefits at a 50-year low.

United States weekly jobless claims just hit a 50 year low. The economy is doing GREAT!

— Donald J. Trump (@realDonaldTrump) April 20, 2019

The Mueller probe continued for nearly two years. We imagine the president will take his time to gloat about the outcome.

United States weekly jobless claims just hit a 50 year low. The economy is doing GREAT!

— Donald J. Trump (@realDonaldTrump) April 20, 2019

It has been a while since George Zimmerman, the half-Hispanic, half-white, former neighborhood watch volunteer who infamously shot and killed black Florida teen Trayvon Martin, did something dumb enough to land his name back in the headlines. But that drought couldn't last forever.

Apparently, Zimmerman, who has been having trouble dating since being acquitted of murdering Martin in 2012, has been banned from Tinder after creating a profile under a fake name. According to Read more.....

It has been a while since George Zimmerman, the half-Hispanic, half-white, former neighborhood watch volunteer who infamously shot and killed black Florida teen Trayvon Martin, did something dumb enough to land his name back in the headlines. But that drought couldn't last forever.

Apparently, Zimmerman, who has been having trouble dating since being acquitted of murdering Martin in 2012, has been banned from Tinder after creating a profile under a fake name. According to Fox News, he used the name "Carter" instead of "Zimmerman" on his profile, which was uncovered by local daters who apparently outed him to the media.

According to his profile, "Carter" was a "self-employed" Liberty University graduate "looking for carefree fun" who enjoyed being outdoors and fishing.

He also noted that he loved adventure, but didn't enjoy "huge crowds" (understandable). He is also "down for a quiet night with Longhorn take out."

Tinder wasn't amused by the deception, and said in a statement that it takes the safety of its users very seriously.

"At Tinder, we take our users' safety very seriously and our team has removed this profile from our platform," the company said.

"We utilize a network of industry-leading automated and manual moderation and review tools, systems and processes – and spend millions of dollars annually to prevent, monitor and remove bad actors who have violated our Community terms and guidelines."

Zimmerman's ban from Tinder comes just months after he was banned from Bumble for similar reasons.

"George Zimmerman was blocked and banned in December 2018 when we first discovered his profile and we have blocked and banned him again after we were informed by our users that he had created a new unverified profile," a Bumble spokesperson said.

In his Bumble profile, Zimmerman said "let's get coffee and cake pops. I'm looking for a mature and fun woman that's ready to be loved and respected the way she deserves...and is able to reciprocate." We suppose it's time to give Hinge or Plenty of Fish a try.

A robot named "Colossus" played a key role in helping save the lives of firefighters at the recent Notre Dame blaze, according to The Independent. When the commander of the Paris fire brigade told his firefighters to retreat because the building's temperatures had grown too high, he instead enlisted the help of a 1,100 pound tank-like robot with the ability to venture into places Read more.....

A robot named "Colossus" played a key role in helping save the lives of firefighters at the recent Notre Dame blaze, according to The Independent. When the commander of the Paris fire brigade told his firefighters to retreat because the building's temperatures had grown too high, he instead enlisted the help of a 1,100 pound tank-like robot with the ability to venture into places and conditions that would quickly kill a human being.

The robot utilizes a water cannon capable of firing more than 660 gallons per minute, which it sprayed at the walls of the cathedral in the midst of the blaze.

Gabriel Plus, a spokesman for the Paris fire brigade said: “Time was against us, the wind was against us and we had to get the upper hand. The priority we set was to save the two belfries. Imagine if the timber of the belfries had been weakened and the bells had collapsed. That was really our fear. In the beginning, it was not impossible to imagine that the cathedral structure could collapse.”

And the machine's role in fighting the fire may be the cornerstone of welcoming in an era of robotic firefighting. Over the last 10 years, different countries and organizations have started to develop similar types of machines that can fight fires. They aim to not only help gather information using cameras and various sensors, but to keep firefighters safe.

The "Colossus" robot is deployed with the Paris Firefighter Brigade and other with many other French or foreign Regional Services of Fires & Rescues. And the robot in Paris isn’t the only of its kind in action. China has also utilized firefighting robots in drills and Howe and Howe Technologies, a company that specializes in military robots, has developed several additional firefighting robots that are designed for industrial environments using foam or water.

Lockheed Martin also has a robotic fire truck called "Fire Ox" that can be controlled using something similar to a video game controller. It was first designed to fight structure fires or wildfires. On top of that, the Navy has also begun experimenting with a nearly 6 foot humanoid robot that can help it fight fires. The machine, described as "terminator-like" is designed to throw propelled extinguishing agent grenades and handle a firehose.

The company that manufactures the robot did not reveal its price tag. "Colossus" is 2.5 feet wide, 5.25 feet long, can carry 1200 pounds and be operated from almost 1000 feet away. It is controlled using a joystick and the machine is waterproof, fireproof and can withstand thermal radiation. It can even go up stairs. The machine is powered with lithium ion batteries that can last up to eight hours and robots can also be equipped to use cameras, sensors and fans.

Brian Lattimer, the vice president of research and development at the safety engineering and consulting firm Jensen Hughes, said that the appeal of these robots goes beyond just operating in dangerous environments. He commented: “The goal will be for firefighters to be in the loop with these robots to assist and evaluate the hazards so they can plan an effective response. Eventually, we’ll have collaborative teams of robots – in the air and on the ground – that will work closely with people and reduce the risk to human life.”

And speaking of saving human life, "Colossus" sure would come in handy the next time a Tesla catches fire, especially if it is eventually put out, only to reignite or "spontaneously combust" a second and then third time.

Readers can see additional footage of firefighters battling the blaze at Notre Dame here. 

Authored by Daniel Lacalle,

One of the most repeated messages among European financial analysts this week is this: “we are in a global slowdown”.

However, the sentence hides important nuances and very relevant differences. The European Union suffers a severe slowdown. The rest of the world only a moderate reduction in the pace of gro Read more.....

Authored by Daniel Lacalle,

One of the most repeated messages among European financial analysts this week is this: “we are in a global slowdown”.

However, the sentence hides important nuances and very relevant differences. The European Union suffers a severe slowdown. The rest of the world only a moderate reduction in the pace of growth.

Data from the United States tell us something very different from what we get from the Eurozone.

Retail sales rose 1.6% in March in the US and the implied annualized growth rate for the first quarter remains above 2.1%. If we look at the employment data, the United States only sees a slight moderation in employment growth … But we are talking about the creation of 196,000 jobs, a figure that indicates much better growth. than other similar economies. The same applies to the latest manufacturing and service indices: They remain above 50 (in expansion). The Markit service index was 56.3 compared with an expectation of 54.8 and the compound showed a figure of 54.6 compared to the previous 54.3.

The economic surprise index of emerging markets also indicates an improvement. A strong but stable dollar (DXY Index) has not damaged the macroeconomic figures of the main emerging economies. It is true that the “usual suspects”, Argentina and Turkey, have seen their currencies plummet against the dollar, as they continue to implement counterproductive monetary policies of financing public spending with direct printing of currency. However, the macro data of most emerging countries as a whole is better than expected, and that must be acknowledged. Brazil was the latest to show a  marked improvement in the Economic Activity Index in February. The prices of commodities have helped, but that tailwind is not the main driver. We cannot be complacent, but the recent capital outflows seen in March are modest compared to the inflows into February.

China has shown slightly better data in the recent manufacturing index as well. Their huge imbalances remain, and we should not indulge in complacency or optimism, as the Asian giant shows macroeconomic indicators improving within a long-term trend that has been signaling a clear deceleration since 2016. We must remain concerned about China’s indebted model, but it is still a trend of relatively weaker growth, not of stagnation.

So, where is there evidence of stagnation? In Europe and Japan.

Japan’s manufacturing PMI  came at 49.5 and Output at 47.9. Both in 3rd-month of contraction.

The Japanese slowdown does not surprise anyone anymore, because it is in its third decade of stagnation repeating the same mistakes of disguising the demographic and productive model challenges with misguided Keynesian government spending policies and more debt.

The most concerning problem is Europe. A European Union that completely abandoned its reform agenda to bet it all on the mirage of monetary policy, while economic, demographic, state and political risks rise. The data from Germany remains poor, but the country enjoys enviable unemployment, trade balance and fiscal strength. However, in the rest of the Eurozone, the fragility of the economies is linked to both fiscal imbalances and excessive interventionism that make them more vulnerable to a change in the cycle. At least in France, from where I write this article, the debate on television and media is constant. The entire country is aware that the slowdown is severe and tax reductions and measures to strengthen economic performance are announced. The word “crisis” appears on the front page of newspapers and economic programs as a real possibility. In the periphery, countries must be aware that they have exhausted their fiscal space and acknowledge their vulnerability to a modest change of cycle. Spain is not immune to these risks. The OECD index of leading indicators already shows a negative figure and the leading indicators published by the Ministry of Economy also reflect more than ten in negative territory. That’s why the Eurozone should be more prepared. Because most countries do not have the capacity that others have to confront a slowdown.

The United States or the United Kingdom have buffers to face a slowdown. Most  Eurozone countries are dangerously ignoring it and, even worse, proposing large government spending and high taxes as the “solution”.

All of you have read that the slowdown was due to temporary factors. It is not. The fall in the flash Composite PMI, from 51.6 in March to 51.3 in April was worse than the consensus estimate of 51.8.

Some demand a massive stimulus from Germany to address the problems of the Eurozone. Making the same mistakes as other countries is not a growth policy, it is a suicide action. It would not work. There is no evidence that Germany is importing less than it needs, quite the opposite. Its industrial utilization has risen from 71% in 2009 to 86% today. Meanwhile, private investment is at pre-crisis highs. We cannot ask Germany to make the mistakes of others to disguise the imbalances of its Eurozone partners.

The problem of the Eurozone is threefold: demographic, high state- and fiscal-interventionism, and lack of technological leadership.

If we add the political risk of some governments who want to penalize high productivity sectors while subsidizing those of low productivity, we have an economic challenge that will not be solved with liquidity injections and low rates. 

With rates at zero and almost 1.8 trillion euros of excessive liquidity, the problem of the European Union is not the moderate global slowdown. It is perpetuating a rigid, intervened and extractive model.

Via AlMasdarNews.com

The President of Crimea, Sergey Aksyonov, vowed to help the Syrian Arab Republic amid their ongoing fuel crisis that is a result of the sanctions imposed on the country by western nations.

Aksyonov told Russia’s Sputnik News that there are plans to export wheat, petroleum derivatives and power tools to Syria as well as rebuilding r Read more.....

Via VoltaireNet.org,

Germany’s armed forces are currently studying the possibility of acquiring nuclear bombers capable of using the new American B61-12 atomic bombs.

Meanwhile, the Pentagon itself plans to deploy these new atomic bombs in the German region of Eifel, in violation of the Nuclear Non-Proliferation Treaty.

The German air force already has multi-tasking Tornado warplanes, which are already capable of deploying American atomic bombs. But those aircraft are going to be replaced, possibly, by European-developed Eurofighters, or by United States manufactured F/A-18 Super Hornets.

Either way, the warplane that Germany selects will have to be equipped with the AMAC (Aircraft Monitoring and Control) system, which allows the use of the new American atomic bombs and enables the regulation of the power of the explosion as well as at what height the bombs explode after they are launched.

Germany does not manufacture atomic weapons but has come to consider itself as a nuclear power because it has vectors to use them, and believes that this gives it the right to sit on the UN Security Council sharing the permanent member position occupied by France.

Both countries would thus represent the European Union, under the auspices of NATO.

Submitted by Grant's Almost Daily,

Amazon.com, Inc.’s Web Services (AWS) unit has been the engine behind the company’s spectacular recent performance, with operating income of $7.2 billion last year, up 68% year-over-year and accounting for 59% of Amazon’s total operating income. The near-consensus cadre of bullish analysts (48 out of 50 tracked by Bloomberg have a “buy” rating on Amazon) call for more of the same.  But will an ongoing Read more.....

Submitted by Grant's Almost Daily,

Amazon.com, Inc.’s Web Services (AWS) unit has been the engine behind the company’s spectacular recent performance, with operating income of $7.2 billion last year, up 68% year-over-year and accounting for 59% of Amazon’s total operating income. The near-consensus cadre of bullish analysts (48 out of 50 tracked by Bloomberg have a “buy” rating on Amazon) call for more of the same.  But will an ongoing government kerfuffle derail the AWS miracle?  

Last Wednesday, the Department of Defense (DoD) cleared itself of wrongdoing following an internal investigation into the forthcoming award of the $10 billion cloud computing Joint Enterprise Defense Initiative (JEDI) program. Yet the Pentagon’s self-exoneration was not comprehensive, as Bloomberg noted that: “The investigation uncovered evidence of unethical conduct that will be referred to the DoD inspector general for a separate review.”

The JEDI contract has been hotly contested among some of the largest cloud-computing companies in the U.S., and for good reason. The winner-take-all award has been narrowed to two contenders, AWS and Microsoft Corp. According to an updated timeline issued by a Federal judge Tuesday, the JEDI mandate will be awarded sometime after mid-July. 

With the stakes high, Uncle Sam’s corporate suitors are pulling no punches. In December, recently-eliminated Oracle Corp. filed suit with U.S. Court of Federal Claims asserting that the JEDI process has been marred by conflicts of interest.  The suit alleges that a pair of Amazon-connected former DoD staffers unduly influenced the proceedings in favor of AWS. One of whom, Deap Ubhi, worked in business development at AWS from 2014 to 2016 before joining the DoD, during which period he continued to praise Amazon from his Twitter account (including tweeting “once an Amazonian, always an Amazonian” in January 2017) while criticizing Oracle, Alphabet, Inc.’s Google and other Silicon Valley firms. 

According to an April 5 report by The Capitol Forum, in January 2017 Ubhi lamented missing a conference call between Defense Department officials and AWS personnel, writing via email: “I am ex-AWS, and would have liked to have been on the call.” Eight months later, when acting as the DoD’s lead JEDI project manager, Ubhi asked DoD higher-ups to name him “the point of contact for all industry conversations.” After reportedly recusing himself from the JEDI procurement process in late October, Ubhi left the DoD, returning to AWS in November 2017.

In March, the Federal News Network reported that the FBI is involved in the DoD inspector general investigation, potentially signaling “some sort of wrongdoing involving DoD civilian personnel and/or DoD procurement procedures.”

In addition to Ubhi, other former DoD officials have seen their actions around JEDI come under scrutiny. In August, Vanity Fair reported that Sally Donnelly, a former senior advisor to Secretary of Defense James Mattis from January 2017 to March 2018, “sold her stake in [consulting firm] SBD Advisors, LLC for $1.17 million two days before she went to work for Mattis.”  But Donnelly continued to receive payments from the company, which counted Amazon as an active client. Two weeks after Donnelly left the Pentagon, SBD was purchased by C5 Capital, “a private equity firm with direct ties to Amazon.”

Anthony DeMartino, Donnelly’s colleague at SBD, who was also named in the Oracle lawsuit, likewise consulted for Amazon before moving to the DoD to serve as Mattis’ deputy chief of staff. 

The close proximity of Donnelly and DeMartino to the Secretary of Defense was a favorable development for AWS, as The Capitol Forum reported on March 15 that Mattis “expressed interest in meeting with Amazon CEO Jeff Bezos at a dinner” with Donnelly in early 2017, according to emails received via a Freedom of Information Act request. Mattis and Bezos met in Seattle in August 2017. 

As controversy over JEDI continues to swirl, another government agency pivots away from the winner-take-all format. On March 22, the CIA unveiled a new Commercial Cloud Enterprise (C2E) initiative, in which the agency disclosed plans to use “multiple commercial cloud vendors that can provide” necessary services. 

An anonymity-seeking, D.C.-based source believes that the CIA’s move might suggest wider government dissatisfaction with AWS, which commanded 46% of worldwide public cloud infrastructure market share as of year-end 2017 according to the International Data Corporation:

The AWS story, as sold to enterprise customers and the Street, is built upon the intelligence community (IC) reference case and the cash that has come in from that deal. The IC’s movement toward a multi-cloud environment is an admission that use of AWS has not been successful as claimed, increasing the likelihood of massive IC contracts for the other hyperscale cloud providers. 

Continued cloud dominance is crucial to sustaining Amazon’s success. Analyst consensus calls for Amazon’s net income margin to jump to 6.4% in 2019 from 4.3% a year ago, thanks to expected growth in AWS.  But at the same time, the core e-commerce business is showing signs of a slowdown, as Bloomberg estimated last week that gross merchandise volume growth fell to 19% last year from 24% and 27% in 2017 and 2016, respectively. 

While the C.I.A.’s move toward multiple cloud vendors highlights the difficulty in growing AWS’ commanding public cloud market share, legal risks surrounding JEDI represent a potentially underappreciated pitfall to the AMZN bull case. Our D.C.-based observer concludes:

If AWS is found to have committed wrongdoing related to DoD’s JEDI contract, it could be debarred as a government contractor. My prediction: Amazon bulls expecting continued blistering growth from AWS will be in for disappointment. 

Asked for comment on Thursday afternoon, Amazon had not responded by press time.