Hungarian Foreign Minister Accuses Soros Of Seeking To Bring Down His Government

A climactic showdown between Hungary and George Soros is rapidly approaching.

Three weeks after Hungary announced it would launch a crackdown on all George Soros-funded non-governmental organizations, the country’s foreign minister doubled down, and told RT that the activities of NGOs funded by George Soros in Hungary are “anti-democratic,” as they want to undermine the government in Budapest.

Soros “would like this government to fail, he would like to kind of fire this government because he doesn’t like our approach, doesn’t like our policies,” Foreign Minister Peter Szijjarto told RT’s Sophie Shevardnadze. “We find it very anti-democratic if someone from abroad would like to influence Hungarian voters on whom to vote for,” he asserted. Several days before the interview, the Hungarian parliament began to discuss a bill allowing authorities to audit NGO executives and request detailed reports on their foreign donations.

As reported earlier in January, the chairman of the ruling Fidesz party Szilard Nemeth said that “these organizations must be pushed back with all available tools, and I think they must be swept out, and now I believe the international conditions are right for this with the election of the new president [Donald Trump].” Last September, Nemeth, who is also the deputy chairman of Hungary’s National Security Committee, submitted a list of 22 NGOs “connected to the Soros network for the purpose of having these organizations screened.” 

Foreign Minister Szijjarto said it is obviously the right of his country to be protected from foreign influence. “This is what we have heard a lot from the US for the last months – that external influence is so dangerous… So, it’s a good reason – if this is the American position, it can be our position as well.”

As a result of Germany’s open door policy toward migrants, Hungary last year became a main passageway for hundreds of thousands of migrants and refugees eager to reach northern European countries. The government, led by outspoken anti-establishment President Viktor Orban, responded by erecting fences along Hungary’s borders and introducing strict border controls. Budapest has consistently refused EU-backed mandatory resettlement quotas, calling them a blow to member states’ sovereignty. Szijjarto cited intelligence reports alleging that “there were organizations which helped illegal migrants find ways to Hungary, to find where they could violate our border, to find out how to apply for asylum status, and these reports have said that George Soros was in the background of these organizations.”

Countries to Hungary’s east and south are concerned about Soros’ operations, too. In Macedonia, an organization called Stop Operation Soros (SOS) has been launched. Its founder, Nikola Srbov, accused Soros of hijacking civil society, calling upon followers to “fight against one-mindedness in the civil sector, which is devised and led by Soros,” according to Vecer newspaper. 

In 2015, Russian prosecutors branded the Soros Open Society Foundation (OSF) and Open Society Institute’s Assistance Foundation threats to the country’s constitutional order and national security, and banned them from providing grants to Russian partners. Groups run by Soros have also been accused of interfering in Ukrainian affairs and supporting the 2013 Euromaidan protests that led to the ouster of President Viktor Yanukovich with the assistance of the US state department.

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In Major Intel Overhaul, Trump Adds CIA Director Back To National Security Council

On Monday afternoon President Donald Trump amended the Saturday memo which established a National Security Council which originally did not list the CIA director as a “regular attendee” of NSC meetings (it did, however, elevate Steve Bannon to that position), and announced that the administration has decided to add the director of the CIA back to the National Security Council.

“The president has such respect for [CIA] Director [Mike] Pompeo and the men and women of the CIA that today the president is announcing that he will amend the memo to add the CIA back into the NSC,” White House press secretary Sean Spicer told reporters on Monday.

CIA Director Mike Pompeo

According to Politico, “the elevation could create friction between the CIA and the Office of the Director of National Intelligence”, which is the likely reason why Trump is proceeding with the power shift. The power grab among the US spy agencies started in 2005, when the DNI replaced the CIA director on the NSC after Congress created the Department of National Intelligence to oversee the entire intelligence apparatus.

The move is likely predicated by the ongoing fallout between Trump and the various US intel agencies, which some have suggested have been quietly engaged in a “soft coup” against the new president.

The CIA is considered the most powerful member of the intelligence community, and prior to the creation of the DNI, the CIA director coordinated the other agencies’ activities.

Obama’s CIA director and his DNI clashed early in his first term over participation in the meetings. It is unclear if Trump also plans on changing the overall org chart of US intel agencies as a result, and pushing the CIA back into its former leadership role.

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Google Fires Podesta Lobbying Group Shortly After Hiring Eric Braverman; Coincidence?

In the wake of her staggering defeat last November, several historically large contributors to the Clinton Foundation slashed their donations (see here and here), presumably because they either realized their pay-for-play scam was ruined or they suddenly lost interest in the Foundation’s various charitable efforts…we’ll let you decide which is more likely. 

But, the Clinton Foundation isn’t the only “influence peddler” taking a hit as a result of Hillary’s loss.  According to Bloomberg, The Podesta Group, the lobbying firm run by the brother of Hillary’s former campaign manager, John Podesta, has just lost a lucrative contract with Google, a key Hillary ally throughout the 2016 campaign. 

After at least 12 years together, Alphabet Inc., the parent of Google, won’t be represented by one of Washington’s most prominent lobbying groups, a firm with long-standing ties to the Democratic party and Hillary Clinton.


The Podesta Group — whose chairman, Tony Podesta, is a major Democratic fundraiser and the brother of Clinton’s former campaign manager — is no longer lobbying on behalf of Google, public disclosures show. The change coincided with Google’s bid to hire someone for “conservative outreach,” according to a December job advertisement.

Per Bloomberg, The Podesta Group collected $80,000 in fees from Google in the last 3 months of 2016 alone.

But, the story doesn’t end there. Ironically, the firing of The Podesta Group seems to coincide with an exclusive report from the Silicon Valley Business Journal that Eric Braverman, the former Clinton Foundation CEO, had been hired to “oversee the non-investment side of the family office of Alphabet Inc. Executive Chairman Eric Schmidt and his wife, Wendy.”



Of course, as many of our readers will remember, Braverman is the Clinton Foundation CEO who abruptly resigned after a short period in office and was speculated, at least by John Podesta and Neera Tanden, to be the insider who told NBC to “follow the money and find the real HRC scandal” (see “Meet The Man Who Can Expose ‘The Real Hillary Clinton Scandal’“).  Here is an excerpt of what we previously wrote:

Now, new WikiLeaks emails reveal additional details behind the the man, Eric Braverman, who was brought in as CEO by Chelsea to change the controversial practices of the Foundation but abruptly resigned a short time later after being pushed out by long-time Clinton loyalists who had apparently grown very comfortable with the status quo.


Below is the new email exchange which begins when Neera Tanden warns John Podesta to “keep tabs on Doug Band” who she assumed was the insider who told NBC to “follow the money and find the real HRC scandal.”  Interestingly, John Podesta writes back quickly to identify the real source as former Clinton Foundation CEO Eric Braverman which seems to be shocking to Tanden who replies simply, “Holy Moses.”


Eric Braverman


That said, the announcement also follows a recent Google job listing looking for a new “Conservative Outreach Manager” that would act as a “liaison to conservative, libertarian and free market groups” (see “Google Searches For “Conservative Outreach Manager” After Failing To Elect Hillary“).

As a member of Google’s Public Policy team, you help shape various product and issue agendas with policy makers inside and outside government. In addition, you will help advise our internal teams on the public policy implications of their products, working with a closely coordinated and cross-functional global team. The role requires significant experience either working with or in government, politics or a regulatory agency as well as an ability to grasp complex technical and policy issues.


As a member of Google’s Public Policy outreach team, you will act as Google’s liaison to conservative, libertarian and free market groups. You are part organizer, part advocate and part policy wonk as you understand the world of third-party non-governmental advocacy organizations. You are eager to represent Google among those organizations. You can work a room, tell Google’s story in an elevator or from a podium and work with partner organizations on shared projects to advance Google’s public policy goals.

So, what say you…innocent shift in Google’s lobbying effort to target a new Republican administration or sweet retribution for Eric Braverman?  Bit of both?

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Trump Slump Begins? Dow Loses 20k As Stocks Suffer Biggest Drop Of 2017

Probably nothing…


Gold leads 2017…


US equities had their worst day of the year…


Pushing Small Caps back into the red for 2017…


Energy still 2017’s worst performer (down 2.3% today!) but banks and tech were hard-hit today…


Energy stocks were today’s worst…


Did stocks just wake up to the lack of Trumpflation trade…?


And financial conditions remain considerably tighter than stocks believe…


The last 3 days have been the biggest plunge in “Most Shorted” stocks since the election…






VIX spiked above its 50DMA intraday…


Dow dived back below 20k…


VIX Vol spiked


Interestingly while the cost of protecting against downside risk on the S&P 500 (lower panel) has been declining (lowest since Sept 2014), the cost of protecting against a spike in risk (upper panel) has soared to one-year highs…


And bear in mind VIX specs just broke to a new record short…


SMART money – as defined by Bloomberg’s market flow index – has been fading the rally since The Fed hiked rates…


A lot was made about why bonds did not rally more today amid the plunge in stocks…

The answer is simple – A MASSIVE MSFT BOND ISSUANCE meant rate-locks and rotations.


The USD Index slipped lower on the day (Yen strength trumping cable weakness)…



Copper and crude slipped today despite USD weakness… (gold briefly tested above $1200)


Will the Trump gap of hope be filled…

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Washington State Attorney General Sues Trump To Block Immigration Executive Order Nationwide

One day after 16 democratic attorneys general across the United States condemned President Trump’s order to restrict people from seven Muslim-majority countries from entering the country, on Monday one of them – the Attorney General of Washington state – said he is filing a lawsuit against President Donald Trump over his immigration executive order. 

Bob Ferguson announced Monday that he is filing a federal lawsuit against President Donald Trump, some high-ranking administration officials and the Department of Homeland Security. The attorney general’s office says the complaint asks U.S. District Court to declare unconstitutional key provisions of Trump’s executive order on immigration.

“No one is above the law — not even the President,” Ferguson said. “And in the courtroom, it is not the loudest voice that prevails. It’s the Constitution.”

No one is above the law, including @POTUS.

— WA Attorney General (@AGOWA) January 30, 2017

The lawsuit seeks to overturn and invalidate Trump’s new immigration policy nationwide, extending on similar partial rulings announced over the weekend by various Federal courts.

Ferguson’s office says the complaint claims that the president’s actions are “separating Washington families, harming thousands of Washington residents, damaging Washington’s economy, hurting Washington-based companies, and undermining Washington’s sovereign interest in remaining a welcoming place for immigrants and refugees.”

Ferguson argues that the Executive Order violates the U.S. Constitution’s guarantee of Equal Protection and the First Amendment’s Establishment Clause, infringes individuals’ constitutional right to Due Process and contravenes the federal Immigration and Nationality Act.


“Major Washington state institutions supported the Attorney General’s lawsuit through declarations filed alongside the complaint. In their declarations, Amazon and Expedia set forth the detrimental ways the Executive Order impacts their operations and their employees.

As we reported on Saturday night, Brooklyn federal judge Ann Donnelly (who is a Trump appointee and Clinton donor) was was the first to issue an order preventing the Trump Administration from enforcing the executive order from restricting certain people from traveling to the United States. Ferguson was one of 16 state attorneys general who released a statement Sunday calling Trump’s immigration action “un-American and unlawful.”

Ferguson is likely just the first of many AG lawsuits to come forth: Ferguson was one of 16 state attorneys general who released a statement Sunday calling Trump’s immigration action “un-American and unlawful.”

“Never has our system of checks and balances been more important. Washington is filing the first suit of its kind in the nation, thanks to the good work of Attorney General Ferguson and his team,” said Gov. Jay Inslee at a Monday news conference. “I would not be surprised to see more. Until Congress takes this Administration to task for the obvious moral and legal injuries suffered by innocent, law-abiding people entering our country, it is up to states to protect and promote the rights of the people who reside in our borders.”

.@GovInslee on immigration ban:
“This is un-American. It is wrong. And it will not stand.” #Q13FOX

— Matt Lorch (@MattLorchQ13Fox) January 30, 2017

Ferguson said Washington is the first state to sue Trump’s administration over the immigration executive order. He is asking the court to schedule a hearing within 14 days. Officials said a copy of the complaint would be available on the attorney general’s website later in the day. Expect a flood of more lawsuits to hit court dockets in the coming days, bogging down the Trump administration with legal fights for months to come.

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February’s FOMC Meeting: A Powder Keg In Search Of A Match

Authored by Mark St.Cyr,

On February 1st the Federal Reserve will conclude its scheduled two-day meeting. No one expects any change in policy to be announced, especially since the Fed has since hiked rates at the preceding meeting. And with there being no press conference scheduled, that’s been a pretty reliable indicator for all to assume it’s steady-as-she-goes.

Although I agree, what I also believe is there’s a wildcard in this one that could send everything into a tizzy. That “wildcard” is: The minutes.

The minutes (e.g., transcripts of the meeting) are released three weeks after the date of the policy decision. More often than not these are looked upon by the “markets” as “already known, knowns.” In other words, a non-market moving event.

However, I believe this meeting followed by its minutes may set up the “markets” as well as the economy for an “Ides of March” we may all soon not want to remember, let alone – never forget.

So why is it I imply these minutes might have more onerous implications than prior? Two words: China, Yuan.

Let’s lay out a few other “known, knowns”, as well as a possible “what if” and what they might portend after this upcoming Fed. meeting shall we?

As we sit here today it’s hard to overstate what is now coined the “Trumpflation” trade happening across the U.S. “markets.” All the major indexes are trading at never-before-seen-in-human-history-highs.

Even the President himself took to social media to put his stamp (or brand) of approval on Dow 20K. And with that action implied credit for it. Something prior presidents usually kept at arm’s length, accepting credit via osmosis. So to say, think, or believe this president isn’t going to insert himself into the dialogue of the “markets” in the future, for whatever the reason, is naive at best, willfully blind as worst. Because now – you have precedent. This is an important point to remember.

Now on the other hand we have China, and the Yuan. And I believe it’s here where things begin to go awry in very short order.

I will argue both the “markets,” and currencies are about to be caught off guard and left flat-footed in much the same fashion as politicians everywhere have been with the U.S. president. i.e., Completely shocked and stupefied as to the reality of what he’s doing – as compared with what they thought (or believed) he’d do. And he’s only been in office a week.

It is a known fact that China is currently throwing everything (including the kitchen sink) trying to stem capital flight from not only within its borders, but also, a depreciating Yuan exacerbated by a rising $Dollar. And it’s not getting better.

The real problem? It may go from worsening condition to catastrophic at any moment. No hyperbole intended.

China’s latest efforts to halt an ever falling Yuan seems to be waning, along with the ever watched USD/CNH cross rate once again inching back toward prior intervention attempts. Or to say it differently: Without constant, unrelenting, massive intervention – the path is down, and maybe, waaay down.

China’s dilemma is not merely worsened by the ramifications of a “hawkish toned” Fed. That’s an understatement. What I want to make clear from my perspective is this:

In its (China’s) current position, I’m of the opinion they’re one rate hike (U.S. hike to be specific) away from the Yuan becoming completely unglued from any sought level by the politburo, regardless of further intervention – and- goes into an uncontrolled free-fall, exacerbated by capital flight which only may be halted or quelled by some form of monetary martial law.

I’m also of the opinion – it’ll be too little, too late, and the global “markets” will go into a near instantaneous heaving with gyrations possibly worse, if not on par, with the beginning chaos seen in early 2008. And that can all happen (“can” because nobody knows) in the coming weeks. Here’s why:

A lot has changed over the last few weeks. First and foremost: president-elect is now Mr. President. And with that has come sweeping changes to the global stage as to how once thought sacrosanct “trade deals” or “trading partners” have been relegated to “it’s different this time” status. Make that – much, much different.

One of the most stunning developments I personally took notice of was the president’s very public cancelling of a scheduled meeting with Mexico’s president. What I found absolutely comical was the reporting of it by the media through the political lens. Every word I continue to hear, or read, is either in the form of unhinged apoplectic, or utterly confused.

I’m here to tell you the way the president treated that circumstance is absolute “Business 101.” To think this president isn’t more concerned with “business optics first” as opposed to “political optics” is journalistic, as well as political malfeasance.

Any person who is, or has, been in business viewed his response (e.g., Mr. Trump’s) as a textbook business negotiation tactic. i.e., “If we can’t agree that it has to be good for the both of us? Fair enough, thanks for letting us know, all the best: ‘click.’” I personally have used that exact negotiating start point countless times throughout my own career.

I’m going to make this point for it is the key to understanding what truly took place. Not from the political, but rather, from the business perspective:

“Click” means just that: Click, the conversation is over.

If you aren’t already prepared, or at the least cognizant of the consequences – whatever they may be – you don’t use it. It’s not something, or a tactic, to be used flippantly. That’s why it can be one of the most forceful negotiating start-points in business for it implies nothing, rather – it states clearly: “If my phone doesn’t ring, I know it’s you – and don’t care.”

This is for those who aren’t interested in “talking” about a deal. It’s only used by those interested in doing a deal. If not? They’re moving on to someone else who either might or does.

It’s not for the faint-of-heart politician, and that’s why most are already seeking oxygen masks. But serious business people? It’s the only way. Period.

China’s politburo has to now assume that this president is far more serious and willing to accept consequences as to renegotiate prior deals or hash out new ones going forward. Calls of “currency manipulator” or for “tariffs” and more are now squarely on the table going forward. China must now look at any and all possibilities through the lens of having actual follow-through. Why?

By all appearances Mr. Trump is showing when it comes to business – he’s deadly serious. But what may be more important is this: He appears personally prepared and willing to accept or deal with any fallout.  And, once again – that’s Business 101.

It is there dear reader, where the rubber-hits-the-road far differently than ever before when it comes to China. For it might be that the next person Mr. Trump decides to “cancel a meeting” or “tell them I’ll get back to them” is none other than China. A position the China of today has never been in.

This must be causing quite the stir, as well as consternation for China’s leaders behind the scenes as they’re enjoying (or at least trying) their New Year. Why? Because you now have provable actions as to compare or postulate by. i.e., The current “Mexican standoff” must be taken as entirely plausible to happen to them. Regardless of how many (enter your “think” tank of choice here) might argue it as “crazy talk.”

And speaking of “crazy talk.” Let’s get to the Fed. and its upcoming meeting shall we?

As convoluted as the current narrative is to follow of whether or not the Fed. will in-fact begin raising rates in earnest this year. One thing is clear: The Fed. appears to now be by openly hostile to the current administration. Why do I make such a claim? Just look to their own public words for clues.

At the last meeting I made the observation for opinion that if you watched, and listened to the retorts given by Ms Yellen. One couldn’t come away with any other conclusion than what appeared to my eye. i.e., A complete reversal for upcoming policy based purely on the current administration. Data be damned. Not only an I still standing by that claim, I feel more confident in it than ever. Here’s why:

As I stated then: About 60 days prior to that meeting and subsequent rate hike Ms. Yellen gave a speech on how the residual effects from the financial crisis of ’08 had yet to be vanquished and were still present adding to much of the malaise still apparent in the economy. Here thoughts on what to do about it? Maybe a “high-pressure” policy stance would be suitable. What’s that in layman’s terms you ask? Basically it’s this: Keep rates low even while the economy shows improvement and inflation rises, even if it’s above any once “mandated” benchmark.

That was when Mrs. Clinton appeared to be the presumptive winner. When it was president-elect Trump? Raise rates, and vociferously imply not only is an increase of rate hike gone from a well-assumed 2 to 3 in 2017. But what was far more instructive was Ms. Yellen’s responses as to imply more are on the table should they see fit. Don’t take my word for it as I like to point out. Watch the press conference for yourself and come to your own conclusions with what you know now. Including the timing for her purple attire. But I digress.

So here we are today a little more than 30 hence that meeting, and what has now been added into the discussion? Hint: The unwinding of The Fed’s balance sheet.

What’s even more incredible about this story is what the main-stream media and financial media missed, or conveniently glossed over, take your pick. e.g., The inferred revelation that Fed. members are thinking of soon. As in real soon. To wit:

Fed. president Mr. Harker (paraphrasing): “When rates are at 1%, we need to look at unwinding the balance sheet.”

Fed. president Mr. Bullard (paraphrasing): “Balance sheet roll off may be better than aggressive hiking.”

Some will say I’m trying to make an argument that really doesn’t exist, because it’ll be implied as “it’s not like they mean it.” This will be the go-to argument or rationalization by most policy wonk talking heads. However, I use as evidence to back up my assertion with none other than “Mr. Courage To Print, and Print more” former Fed. chairman Ben Bernanke’s own “Wait…what?” response with his own near immediate rebuttal, to wit:

“Has the Fed’s approach to balance sheet normalization actually changed? At least until I hear otherwise from the FOMC’s leadership or the Committee as a whole, my guess (and hope) is that it hasn’t.”

If we’ve learned aything over the last few years “hope” is not a strategy. Especially when it comes to serious matters. So let’s take this all at their word, for that’s why they tell us their “communication strategy for forward guidance” is there for, no? Even if the former chairman is as confused to their intent as the rest of us.

First: “When rates are at 1%, we need to look at unwinding the balance sheet.”

Rates are currently at .5% which implies we are either 1 rate (or Fed. meeting where the old norm of raising .5 or 1/2% begins in earnest once again) away from possibly beginning the once unmentionable (let alone inconceivable) unwinding of the balance sheet. If they decide to do 1/4 points (e.g. .25) raises as has been the norm, then we’re possibly just two meetings away. That’s March 15th aka the Ides of March. (Gotta love the coincidence of history, yes?)

Some will say. “That’s crazy talk.” I’ll contend, as well as argue: The open discussion calling for even a hinting of unwinding the “balance sheet” by the Fed. was also once considered crazy. And yet? There it is.

Second: “Balance sheet roll off may be better than aggressive hiking.”

So let’s put this into perspective: If one rate hike a year has been seen as “the norm.” And if we add to that even 1 has been seen as foreboding dependent on the timing. Is it not fair to conclude the possibility of 3 in a year, added with the Fed. Chair herself arguing maybe even more might be forthcoming should the FOMC decide as – “aggressively hiking?” Notwithstanding being in concert this argument began with someone who made financial heads scratch everywhere when he himself aggressively switched just last year from a “hawkish” perspective to near “uber-dove?”

Again, taken at face value the only prudent consideration is for one to position (or at least calculate in earnest) for the possibility that the Fed. may in fact decide to push much, much faster, and in ways once considered unimaginable, not in years to come – but starting as early as February.

Think that through once again, for if that’s not implying “it’s different this time?” Nothing is.

So with the above for context here’s the real issue: China has to be looking at all the above from behind closed doors – and be absolutely freaking out!

And yes, I mean that precisely, consider it a new “technical term” in response to the current state of affairs and messaging which they can only try to understand, let alone formulate contingency plans for. Remember, they are truly a command and control economy and government. e.g., Communist regime. They don’t have the business savvy for nuance and theatre as we have here.

This is a very dangerous point for the global economy and “markets, let alone for the Chinese politburo. Remember: For all intents and purposes they (the Chinese politburo) view everything via the lens of “a hammer in want of a nail.” And while looking at the above through that prism, they may feel the only thing for them to do is “pound, and pound now.” Remember the line I liked to quote from the movie Margin Call, “It’s not panicking if you’re first.”

Since July of 2016 things have not gotten better for China.

As of today the only thing that has worked as to stem the tide of the Yuan falling ever fast and further into oblivion is utilizing the proceeds via the aggressive selling of currently held U.S. debt. (So far the latest best guess has been well over $1TRILLION)

And here you have multiple Fed. members openly stating it may, in concert, with an aggressive (there’s that word again) raising of rates be looking to, or advising for, purging some of its balance sheet (and by how much is anyones guess although one has to assume it may be more than anyone thinks let alone believes).

All of which if it were to happen (and you have to assume, as well as position that it is a possibility) would be vying for the same buyers for debt as you (e.g., China), and would cause a flooding of the “markets” with purchasable debt into too few buyers with the resources to consume it all, exacerbating what would already be problematic to begin with.

If China feels that it is in a no-win situation (and it’s easily conceivable using the Fed’s latest words, speeches, shift in policy signaling and a whole lot more) They might decide after coming back from their New Year holiday and – act first – question later.

Once the February 1st FOMC meeting concludes – if – the chatter now apparent and public by Fed. members continues during the interlude before the releasing of the minutes, I feel another of the “first to act” will be Mr. Trump in a calling out of epic proportions for hypocrisy using, and pointing to, a very defendable position using the Fed’s own prior testimony, signaling, and more to publicly make his case. Especially if the “markets” begin roiling.

During that time I believe China will wait for the minutes to be released, and if it is made apparent that there was indeed further discussion as to bolster the inferences that the Fed. may be actively considering a path as to embark on a march towards higher rates, along with the thinning of its balance sheet, which would inevitably send the $Dollar rocketing skywards?

They’ll act first and ask (or maybe not) questions later. Sending everything that is now taken for granted in the “markets” (e.g., “It’s good to be long!) into total chaos. All before March 15th’s next meeting. Again, which just so happens to be the exact date originating the “Ides of March” warning.

As I implied in the headline: This “powder keg” may not wait until then. For “then” (March) may be a moment too late. (Just ask Caesar)

Circumstances are now showing this “powder keg” could in fact become – self-combusting. All courtesy of The Fed’s own words whether, stated, implied, written, or imagined.

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RBC: “It Is Crazy What Is Going On ‘Under The Hood’ When On The Surface It’s So Optically Calm”

Having cautioned that the economic macro surprise rally of the past three months…

… has been mostly based on the back of “soft data” surprises, in other words, hope and moistly animal spirits, which “are driving the bulk of the US data surprises”…


… today, RBC’s head of cross-asset strategy Charlie McElligott looks at the first sharp selloff, coupled by a vol spike and observes that one week after the first Trumpflation jitters, the Trump trade on Monday appears to be losing policy momentum, and as a result “profit-taking of longs ensues.”

As McElligott notes, it has been an agitated market to start the week, with VIX seeing its largest intraday move so far in 2017 as we see thematic winners of the past three months being unwound.

It’s not a puke just yet, as we are “still not getting that ‘FTQ’ bid we’d come to expect in the old “risk-OFF” regime, with USTs (and Dollar) essentially unch.  This says to me that it is STOCKS which have discounted the most +++ inputs of potential Trump policy (see last Wednesday’s price-action), and is thus the most ripe for a re-pricing of his ability to ‘steady the ship’ with suddenly-waning policy momentum.

The good news for bulls hoping that BTFD will quickly reemerge, is that much of this move is long overdue, and is likely not the precursor of a sharp move lower:

today’s story feels much like that overdue selloff with nervy profit-taking and some recent risk “renters” tapping quickly on tight-stops.  From a ‘sustainability of the drawdown’ perspective, this quick blast of volatility off of a historically low-base isn’t enough to trigger much if any mechanical deleveraging from the mechanical ‘vol control’ community in-and-of itself, with 20 day S&P historical vol still sitting (laughably) with a 7-handle.”

Unless, of course, it is.

So what does the RBC strategist say to expect from markets in the coming days? The following 4 points summarize his views:

1) Stocks—much more so than FX or rates—are the asset-class bearing the majority brunt of this weekend’s chief geopolitical consternation.  It ‘seems’ that the discombobulated implementation of Trump’s immigration orders has ‘furthered’ the market concerns on protectionism and the potential for Trump’s usage of “executive orders”  to have “jumped the shark” just a few weeks into his tenure.  The growing list of fellow-Republicans lashing-out at the immigration order—as well as the obvious lack of cohesion with the messaging even with the Trump administration–are raising concerns on ‘lost momentum’ with regards to what the stock market really wants from POTUS: tax policy clarity.  As stocks have been the area “quickest” to discount expectations of lower corp tax rates, they “wear it” when markets now begin to reprice Trump’s ability to “get deals done.”

As has been stated over the past week in “RBC Big Picture” there is now growing speculation that the tax plan won’t be clarified until well through the Summer (Reuters this weekend, especially as the ‘funding’ side of a BAT remains yet to be seen—which means it currently isn’t ‘revenue neutral’ which is a demand from many GOP lawmakers.  As forward earnings estimates are increasingly-contingent upon the ‘corp tax rate cut’ and ‘dereg’ components of his policy, there is thus mounting nervousness about recent buyers at all-time highs in US stocks turning tail (note: Asset Managers are now notionally long $80B of US equity futures <S&P, Nasdaq, Russell and Dow>, making year-and-a-half cumulative highs) if ‘reality’ weren’t to meet the heavy ‘expectation’ on policy which has been incorporated into current pricing.

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2) Today’s particulars show something interesting: both the thematic “reflation” and “Trump winners” (most clearly expressed in 4Q16—border tax beneficiaries, dereg beneficiaries, infrastructure beneficiaries, security beneficiaries, domestic-gearing beneficiaries) and 1Q17’s “mean-reversion” leaders are under pressure.  This means that today we see both the “‘cyclical beta’ / ‘small cap’ (large IWM downside trades today) / ‘value’ / ‘high beta’” cohort is trading-off IN CONJUNCTION WITH “‘secular growers’ / ‘momentum’” Q1 leadership selling-off as well (tech sector specific concerns on H1-B impact for workers).  What is working should of course not surprise: ‘low vol’ / ‘quality’ / ‘defensives’ / ‘anti-beta.’  Basically, longs are being sold while shorts are added / pressed—thus, today is NOT a ‘gross-down’ or ‘wholesale de-risking’ day.  

Less tactically / away from the ‘now’ of today’s ugly tape…

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3) As has been discussed since mid-December—when anticipation of a “January Effect” saw funds putting on “reversal strategies” in equities factors earlier than usual—“Growth” and “Momentum” factors have been significant outperformers, with both leading all factor market-neutral strategies YTD.  The interesting thing here is that this comes following 2016 where “Growth” and “Momentum” were the two worst-performing factor m/n strategies YTD…confirming another victory for the January mean-reversion strategy.

More granularly, the performance of “Growth” has helped drive the large YTD gains in Tech and Consumer Discretionary sectors against lagging (former high-flyer) “Value” and “Anti-Beta” factor m/n (representing cyclicals and defensives, respectively).  The performance of 1m “Momentum” factor m/n would reasonably reflect this same “Growth vs Value” reversal, as ‘momentum longs’ are led by Tech, Materials (S&P’s best performing sector YTD), Consumer Disc and Industrials, while ‘momentum shorts’ are heavily represented by Cons Disc as well as Healthcare, Tech and Energy (S&P’s worst performing sector YTD, after being last year’s “value” darling). 

This also highlights the significant move higher in dispersion (or correlation breakdown) as we see sectors representing across both momentum leaders and laggards.

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4) On that note, an interesting anecdote picked-up from an astute client and friend this weekend regarding the extreme nature of increasing single-stock dispersion currently being experienced in the market-place, which I will paraphrase: For over the last month plus, watching our portfolio grind higher it feels like 10- to 20- some basis points on the majority of days, which seems kinda sleepy…but when I look at the individual names in our long and short books, I am seeing HUGE moves daily.  Both books at times are riddled with many stocks seeing 2 and 3 standard deviation moves….it is CRAZY what is going on “under the hood,” when on the index level, it’s so optically calm.” 

Idiosyncratic stock-risk is returning, and that is a sign of a market normalizing from years of central bank volatility suppression = score one for active management.

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While that would be great news for hedge funds if true, we look forward to learning from bulge bracket prime brokers in a few days time if hedge funds finally managed to outperform the S&P, or if 2017 has started off in familiar fashion, with the “smart money” once again nothing but heavily levered beta.

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Flashback 2006: Senators Clinton & Obama Vote For Secure Fence Act, Bush Signs Bill

Submitted by Michael Shedlock via,
Inquiring minds are taking a flashback look at the Secure Fence Act of 2006, signed by president Bush.
The Secure Fence Act of 2006’s goal is to help secure America’s borders to decrease illeg…

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