No Picture

A Word To The Wise – “You’re A Mercenary If…”

September 3, 2017 Tyler Durden 0

The Burning Platform’s Jim Quinn notes that:

I have no idea if Major General Higginbotham actually penned this or not but it is a stark warning, one that I have maintained for years, that a civil war in North America (if it happens in the USA it will take Mexico and Canada along for the ride) will not be as cut and dry and as some folks would like.

 

There are no definable sides to our current predicament, no political organization to speak of, and as such a wide spread conflict would become chaos in short order. The continent would get very tribal very quickly. Political ideologues proceed with caution.

 

You won’t like what you are about to read.

Via Kunckledraggin.com,

“If you are paid $25.00 an hour to show up to a rally to “counter” the other party using physical force and violence, you are not a “counter protestor.” You are a mercenary.

There is no need for further debate on this. You were paid to attack someone you don’t know for reasons that you couldn’t care enough about to go there for free. You did your “job” and collected your check and your reimbursement of expenses. You’re a mercenary.

Not a Patriot. Not a Social Justice Warrior. Not a Defender of Freedom or Liberty. Not an upholder of Truth or Justice. None of those things you claim to be. You are a mercenary.

And mercenaries are not lawful combatants and deserve whatever comes their way at the hands of the people they are attacking.

You have no 1st Amendment rights when you’re a mercenary.

Doesn’t matter what side you’re on. Doesn’t matter what cause you’re showing up to disrupt. If you can’t express yourself peacefully through diplomatic means, then you better be prepared to meet your maker at the hands of someone who is only barely keeping their own violent tendencies at bay through a massive exercise of self-control.

I know it sounds romantic to attend these rallies and get shit started with the other side. And when you’re young and passionate, it’s really easy to get whipped up into a frenzy of raw emotions. There is a reason why young people are preferred when it comes to warfare. They are easy to manipulate and control and set off.

But I’m telling you all this right now. You’ve got no idea what road you are starting down. Romance and idealism wears off really fast when you’re laying in a pool of your own blood trying to stuff your intestines back into your torn abdomen.

I’ve been lucky enough to go forty-two years without having to put the skills I learned in the Marines to use. I continue to train and keep those skills up to date because I see the madness that is happening all across this country. I don’t train to attack others like you do. I train to defend others FROM you. I’m not alone either.

There are thousands of men and women in this country who have seen war and death and don’t want any more to do with it. They want to live in peace. They want to forget the things they’ve had to do in the service of their country. They want to raise their kids and have family BBQs and build tree houses and soap box derby cars and have tea parties.

They don’t want this shit that you’re selling.

You have the extremist left and the extremist right that are doing their best to get something started. To force us into a Civil War. Even in the 1860’s, the violence between the North and South was nowhere near what we see today. Nowhere. Even. Close.

And yet we still had a war of ideology that consumed hundreds of thousands of lives.

All you young and naive kids on both sides of this equation who think that having a Civil War will advance your agenda or restore your vision of what you think is America, just remember this… Those of us older generations aren’t having any of this shit. And if you jump off, you better be prepared to deal with US. We don’t care what color you’re wearing or what sign you’re holding if you come after us, our friends, our family, our co-workers, our neighbors, etc., WE will kill you.

So remember that when you’re thinking that it’s just Left vs Right, or Liberal vs Conservative, or Commie vs. Fascist. We are the variable you’re not considering.

That “Silent Majority” that you pretend does not exist is getting really sick and tired of your bullshit.

Geoffrey B. Higginbotham
Major General, USMC (Ret.)
-SS

 

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No Picture

A “Super-Powerful” EMP Attack: North Korea’s Newest Weapon Against The U.S.

September 3, 2017 Tyler Durden 0

The dynamics of the standoff between the US and North Korea have shifted dramatically in the past week.

First, the North started with an unexpectedly sharp provocation – launching a missile over the Japanese island of Hokkaido – before following that up with its sixth nuclear test. Also, judging by the size the earthquake detected in the country’s mountainous North on Sunday morning, North Korea may have been telling the truth when it said it conducted what it described as its first hydrogen bomb test.

And while the North bragged about the weapon’s “great destructive power” in a TV broadcast, what caught analysts’ attention was a mention of a different tactic: detonating  an H-bomb at high altitude to create an electromagnetic pulse that could knock out parts of the US electrical grid.

Here’s WSJ:

“North Korea’s threats against the U.S. now include a tactic long discussed by some experts: an electromagnetic pulse, or EMP, triggered by a nuclear weapon that would aim to shut down the U.S. electricity grid.

 

North Korea’s state news agency made a rare reference to the tactic in a Sunday morning release in which the country said it was able to load a hydrogen bomb onto a long-range missile. The bomb, North Korea said, ‘is a multifunctional thermonuclear nuke with great destructive power which can be detonated even at high altitudes for super-powerful EMP attack.’”

Unlike a conventional nuke, an EMP blast – think Oceans’ 11 – is not directly lethal, and serves mostly to knock out key infrastructure (useful when robbing a casino).

However, it would probably lead to an unknown number of indirect deaths as hospitals and essential infrastructure lose power.

“The idea of an EMP attack is to detonate a nuclear weapon tens or hundreds of miles above the earth with the aim of knocking out power in much of the U.S. Unlike the U.S. atomic bombs dropped over Hiroshima and Nagasaki in 1945, such a weapon wouldn’t directly destroy buildings or kill people. Instead, electromagnetic waves from the nuclear explosion would generate pulses to overwhelm the electric grid and electronic devices in the same way a lightning surge can destroy equipment.”

In the worst possible scenario, regional power grids could be offline for months, potentially costing many deaths as people would eventually start running out of necessities like food and medicine. Lawmakers and the US military have been aware of the EMP threat for many years, according to WSJ. IN a 2008 report commissioned by Congress, the authors warned that an EMP attack would lead to “widespread and long-lasting disruption and damage to the critical infrastructures that underpin the fabric of US society.”

In a report published last month, the Hill noted that the North could choose to carry out an EMP attack on Japan or South Korea as a more politically acceptable act of aggression. Such an attack could help the North accomplish its three most-important political goals, the Hill said.

“North Korea has nuclear-armed missiles and satellites potentially capable of electromagnetic pulse (EMP) attack. EMP is considered by many the most politically acceptable use of a nuclear weapon, because the high-altitude detonation (above 30 kilometers) produces no blast, thermal, or radioactive fallout effects harmful to people.

 

EMP itself is harmless to people, destroying only electronics. But by destroying electric grids and other life-sustaining critical infrastructures, the indirect effects of EMP can kill far more people in the long-run than nuclear blasting a city. In this scenario, North Korea makes an EMP attack on Japan and South Korea to achieve its three most important foreign policy goals: reunification with South Korea, revenge upon Japan for World War II, and recognition of North Korea as a world power.”

Scientists first discovered a hydrogen bomb’s ancillary EMP capabilities after testing one in the Pacific in the early 1960s.

“When the U.S. tested a hydrogen bomb in the Pacific in 1962, it resulted in lights burning out in Honolulu, nearly 1,000 miles from the test site. Naturally occurring electromagnetic events on the sun can also disrupt power systems.

 

A 1989 blackout in Quebec that came days after powerful explosions on the sun expelled a cloud of charged particles that struck earth’s magnetic field.”

Some experts who spoke with WSJ said it would be impossible to guarantee success during an EMP attack, since the weapon would need to detonate with near perfect accuracy.

“Skeptics generally acknowledge that an EMP attack would be possible in theory, but they say the danger is exaggerated because it would be difficult for an enemy such as North Korea to calibrate the attack to deliver maximum damage to the U.S. electrical grid. If it a North Korean bomb exploded away from its target location, it might knock out only a few devices or parts of the grid.”

The North Korea said its hydrogen bomb had explosive power of tens of kilotons to hundreds of kilotons – so of course if it landed to close, or the attack was mishandled in other ways, what was meant to be an EMP attack would result in a nuclear strike. At least one expert said using an EMP attack would make little sense when the North could cause much more destruction with a nuclear ground attack.

“Others say that even if North Korea had the technical capability to deliver a damaging electromagnetic pulse, it wouldn’t make strategic sense to use it because Pyongyang could wreak more destruction with a traditional nuclear attack directed at a large city.

 

A rogue state would prefer a “spectacular and direct ground burst in preference to a unreliable and uncertain EMP strike. A weapon of mass destruction is preferable to a weapon of mass disruption,” wrote physicist Yousaf M. Butt in a 2010 analysis.”

Luckily, if US military authorities truly fear an attack, there are some long-term steps the US could take to minimize the effectiveness of an electromagnetic pulse attack. Defenses could be bolstered inexpensively by designing electrical-grid components to withstand sudden pulses, just as the grid already is protected against lightning strikes. The US could also build backup systems that could step in for the principal electrical grids in an emergency.

If the North’s latest nuclear test, conducted early Sunday, didn’t involve a hydrogen bomb, the weapon used was at least close to it according to US officials. It was the North’s first nuclear test since late last year, and also the first since tensions between Kim Jong Un and President Donald Trump began escalating shortly after his inauguration. China, Japan, South Korea and the US have already condemned the attack, with China and South Korea threatening to work with the Security Council to bring more onerous sanctions against the defiant North.

Meanwhile, President Donald Trump in a series of tweets hinted that he was frustrated with diplomatic measures, which he referred to as “appeasement.” We imagine there are more than a few generals whispering in his ear about the potential success rate of a surgical strike.

* * *

Finally, here is a repost from July 2014, in which hedge fund legend Paul Singer, head of Elliott Management, said that “there is one risk that stands way above the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence” – an electromagnetic pulse (EMP).  Three years he may be proven correct.

From: “The “Most Significant Danger” According To Elliott’s Paul Singer

EMP: THE MOST SIGNIFICANT DANGER

 

While these pages are typically overflowing with scary or depressing scenarios, there is one risk that stands way above the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence. Even nuclear war is a relatively localized issue, except in its most extreme form. And the threat from asteroids can (possibly) be mitigated.

 

The risks associated with electromagnetic pulse, or EMP, represent another story entirely. It can occur naturally, from solar storms that send “coronal mass ejections,” which are massive energetic bursts of solar wind, tens of millions of miles in a mere few hours. Or it can be artificial, produced by a high-altitude (at least 15 miles) explosion of relatively low-yield (even Hiroshima-strength) nuclear weapons.

 

Different initiators of EMP have different pulses and different effects. But the bottom line is that EMP fries electronic devices, including parts of electric grids. In 1859, a particularly strong solar disturbance (the “Carrington Event”) caused disruption to the nascent telegraph network. It happened again with similar disruptions in 1921, before our modern power grid came into existence. A NASA study concluded these events have typically occurred around once per century. A repeat of the Carrington Event today would cause a massive disruption to the electric grid, possibly shutting it down entirely for months or longer, with unimaginable consequences.

 

Only two years ago, the sun let loose with a Carrington-magnitude burst, but the position of the earth at the time prevented the burst from hitting it. The chances of additional events of such magnitude may be far greater than most people think.

 

The artificial version of EMP, a kind of nuclear attack, would require between one and three high-altitude nuclear explosions to create its effect across all of North America. It would not cause any blast or radiation damage, but such an attack would have consequences even more catastrophic than a severe solar storm. It could not only bring down the grid, but also lay down a very intense, very fast pulse across the continent, damaging or destroying electronic switches, devices, computers and transformers across America.

 

There is no way to stop a naturally occurring EMP, and nuclear proliferation, combined with advances in weapons delivery systems, make the artificial version a distinct possibility, so the dangers are very real.

 

What can be done about this risk? Critical elements of the power grid and essential electronic devices can be hardened. Spare parts can be stockpiled for other, less critical hardware. Procedures can be developed as part of emergency preparedness so that the relevant government agencies and emergency response NGOs are ready to respond quickly and effectively to an episode large or small.

 

Why are we writing about EMP? Because in any analysis of societal risk, EMP stands all by itself. Congressional committees are studying this problem, and federal legislation is laboriously working its way through the process. We think that raising people’s consciousness about what should be an effort by both parties to make the country (and the world) safer from this kind of event is a good thing to do.

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No Picture

Hedge Fund CIO: “Want To Make A Grown Nerd Cry? Run A 500% Rate Increase Through His Risk Model”

September 3, 2017 Tyler Durden 0

August is over, which means that Eric Peters, the CIO of One River Asset Management, is back to doing what he is so very good at: distilling the week’s events and latest financial and economic trends into pithy, one-paragraph aphorisms.  Without further ado, here is an anecdotal excerpt from his latest weekend notes.

* * *

Scary Movie

I love movies. Scary ones especially. Keep your happy endings, give me chainsaws. Meat hooks.

I’ll never forget ERM in 1992. That was my first real snuff flick as a Lehman prop trader. The Italians never stood a chance in the film, they never do. Show me an Italian who can resist a dark woodshed and I’ll show you a hero in a hockey mask.

At least the Swedes put up a fight in the flick. Their central bankers raised overnight rates to 500%. Want to make a grown nerd cry? Run that interest rate through his risk model. But of course, not a single propeller-head imagined such a monster.

Anyhow, my next scary movie was Orange County, 1994. The great bond massacre brought terrified traders to tears.

Mexico devalued too; Tequila Slammer. So many strings inextricably woven into that tangled tale.

These intricate plots build over years, unravel in months. Asian Flu was released in 1997, classic zombie apocalypse genre. Just when the virus seemed contained, along came a sequel; Russian Flu in 1998. A month later they released LTCM, a documentary about the dangers of mixing academics and money.

Wall Street is remaking that classic as we speak; a big budget Black Monday II. Revenge of the Sock Puppet was released in 2001, followed quickly by 9-11.

Then things went quiet for what seemed like forever. But 7yrs later Haunted House came out – scared the crap out of everyone, even hardened criminals flipping cribs from cellblocks.

European Debt Crisis was released in 2011, a real nail biter, until some Italian saved mankind with a printing press. It’s been happy endings ever since.

Chick flicks, corsets, period pieces. Utterly boring. But in my three decades of watching scary movies, on average there’s been a blockbuster surprise every three to four years. And it’s been six since 2011.

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No Picture

Three Dangerous Delusions About Korea

September 3, 2017 Tyler Durden 0

Authored by James George Jatras via The Strategic Culture Foundation,

They say that most of the world’s real dangers arise not because of what people don’t know but because of what they do ‘know’ that just ain’t so.

As a case in point, consider three things about Korea that the bipartisan Washington establishment seems quite sure of but are far removed from reality:

Delusion 1: All options, including U.S. military force, are «on the table.»

– Everyone knows there are no military «options» the U.S. could use against North Korea that don’t result in disaster. The prospect that a «surgical strike» could «take out» (a muscular-sounding term much loved by laptop bombardiers) Pyongyang’s nuclear and missile capabilities is a fiction. Already impractical when considered against a country like Iran, no one believes a limited attack could eliminate North Korea’s ability to strike back, hard. At risk would be not only almost 30,000 U.S. troops in Korea but 25 million people in the Seoul metropolitan area, not to mention many more lives at risk in the rest of South Korea and perhaps Japan.

 

– Hence, any contemplated U.S. preemptive strike would have to be massive from the start, imposing a ghastly cost on North Koreans (do their lives count?) but still running the risk that anything less than total success would mean a devastating retaliation. That’s not even taking into account possible actions of other countries, notably China’s response to an American attack on their detestable buffer state.

Delusion 2: North Korea must be denuclearized.

– Whether anyone likes it or not, North Korea is a nuclear weapons state outside the Nuclear Non-Proliferation Treaty and will remain so. Kim Jong-un learned the lessons of Saddam Hussein and Muammar Gaddafi. Because Kim has weapons of mass destruction, especially nukes, he gets to stay alive and in power. If he gives them up, he can look forward to dancing the Tyburn jig or getting sodomized with a bayonet, then shot. That’s not a difficult choice.

Delusion 3: If the U.S. presses China hard enough, Beijing will solve the problem for us.

– There is no combination of U.S. sanctions, threats, or pressures that will make Beijing take steps that are fundamentally contrary to China’s vital national security interests. (Here, the «vital national security» of China means just that, not the way U.S. policymakers routinely abuse the term to mean anything they don’t like even if it has nothing to do with American security, much less with America’s survival.) Aside from speculation (which is all it is) that China could seek to engineer an internal coup to overthrow Kim in favor of a puppet administration, maintaining the current odious regime is Beijing’s only option if they don’t want to face the prospect of having on their border a reunited Korean peninsula under a government allied with Washington.

 

– After Moscow’s experience with the expansion of NATO following the 1990 reunification of Germany, why would Beijing take credibly any assurances from Washington (of which there is no indication anyway) not to expand into a vacuum created by a collapse of North Korea? Quite to the contrary, it has been suggested that if China refuses to deal with the North Korea problem on Washington’s behalf, then the U.S. would do it on its terms, presenting Beijing (in the description of former U.S. ambassador to the United Nations John Bolton) with «regime collapse, huge refugee flows and U.S. flags flying along the Yalu River.» Adds Bolton, «China can do it the easier way or the harder way: It’s their choice. Time is growing short.» If under such a scenario U.S. forces end up on China’s border, suggests Bolton, they wouldn’t be leaving anytime soon. Don’t be so sure. In 1950, the last time American forces were on the Yalu River, they weren’t there very long when hundreds of thousands of Chinese soldiers crossed into Korea. Keep in mind that happened when China didn’t have nuclear weapons but the U.S. did.

The seemingly weekly rise and fall of the decibel level of bellicose rhetoric coming out of Washington and Pyongyang obscures the realities behind these three delusions. Little change can be expected from Pyongyang, whose policy at least has the virtue of simplicity: «if you do anything bad to us, we’ll do something really, really bad to you.»

So then, what are the prospects Washington could jump off the hamster wheel and come up with something besides threats and sanctions? The omens are not auspicious. Just before he left the White House, Steve Bannon violated the taboo surrounding Delusion 1: «Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.» Then he was gone.

But let’s be optimistic. There have been reports of direct «back channel» contacts between North Korea and the U.S. at the United Nations in New York. Even Bolton suggests that some kind of accommodation could be made to China in the form of a pullback of U.S. forces down to the south, near Pusan, so as to be still «available for rapid deployment across Asia.» (Certainly, that’s one idea. Here’s a better one: how about getting us out of Korea entirely and not having Americans available for deployment across Asia?)

The definitive clarification should have been the Beijing-based Global Times editorial of August 10, 2017 («Reckless game over the Korean Peninsula runs risk of real war»), universally seen as reflecting the position of the Chinese government:

«China should also make clear that if North Korea launches missiles that threaten U.S. soil first and the U.S. retaliates, China will stay neutral. If the U.S. and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so».

That means that if Kim attacks the U.S., he’s on his own. If we attack Kim, we’re at war with China. In the latter case, while Russia would not likely directly join the fray we can be sure Moscow would provide China total support short of belligerency. Put mildly, this would not be in the American interest.

There is one, and only one overriding priority that should now guide U.S. policy on Korea. It’s not regime change in North Korea – despite that regime’s loathsomeness – or even the wellbeing of South Korea or Japan. It’s avoiding Kim’s developing a missile system capable of delivering a nuclear weapon to the United States. How close North Korea might be to such a capability is the subject of wildly conflicting estimations. (Regarding the American lives hung out on the DMZ, there’s a simple solution to ensuring their safety – get them the hell out of there.)

But what about South Korea and Japan? Our «alliances» with them are a fiction. The U.S. guarantees their security but other than cooperating on the defense of their own territory they do nothing to safeguard ours, nor can they. The U.S. derives no benefit in continuing to make ourselves a target on account of a place that’s more than five thousand miles from the American mainland.

It’s time that «America First!» meant something. As a start, Washington could take seriously Beijing’s proposal for a double-freeze. On the one hand, Pyongyang would suspend its nuclear and missile programs, in particular halting tests of weapons with potential intercontinental range. Washington and Seoul would suspend joint military exercises, including practicing so-called «decapitation strikes« aimed at North Korea’s leadership.

If protecting our own territory and people is American officials’ top priority, and not, as they implausibly claim, «regime change» in North Korea, it’s hard to see why a double-freeze would not be a sensible first step. It would be largely up to China to see that the North Koreans complied with their part of the deal. If they did, perhaps it could lead towards a long-overdue settlement of this Cold War-era standoff and, in time, a reunited, neutral Korea. If not, all bets are off – but we’d be hardly worse off than we are now.

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No Picture

Modi’s Demonetization Called “Colossal Failure That Ruined Economy” As India GDP Growth Slumps To 2-Year Lows

September 3, 2017 Tyler Durden 0

India’s embattled Prime Minister Narendra Modi faced a double whammy of abuse this week as his nation’s economic growth collapsed to its weakest since Q1 2014 and India’s Central Bank released a report on Modi’s extraordinary “demonitization” plan last year showing that 99 per cent of the high denomination banknotes cancelled last year were deposited or exchanged for new currency, crushing Modi’s lie that his contentious ‘war on cash’ would wipe out huge amounts of so-called ‘black money’.

When Modi announced in November that Rs1,000 ($16) and Rs500 notes would no longer be legal tender, he suggested that corrupt officials, businessmen and criminals — popularly believed to hoard large amounts of illicit cash — would be stuck with “worthless pieces of paper”. At the time, government officials had suggested that as much as one-third of India’s outstanding currency would be purged from the economy – as the wealthy abandoned or destroyed it, rather than admit to their hoardings – reducing central bank liabilities and creating a government windfall.

Since he unleashed his cunning plan, India’s GDP growth has slowed dramatically.

After India’s Composite PMI collapsed, India’s Q2 GDP growth slowed to 5.7% – its weakest since Q2 2014…

 

And now, as The FT reports, the Reserve Bank of India’s annual report on Wednesday suggested that most holders of the old currency managed to dispose of it, estimating that banned notes worth Rs15.28tn ($239bn) were returned to the bank. That amounts to 99 per cent of the Rs15.44tn of the old high-value notes that were in circulation when Mr Modi made his announcement, according to the finance ministry.

The government’s critics were quick to seize on the RBI’s announcement as evidence of the policy’s failure.

“99 per cent notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” former finance minister P Chidambaram tweeted.

 

Rahul Gandhi, de facto leader of the opposition Congress party, tweeted: “A colossal failure which cost innocent lives and ruined the economy. Will the PM own up?”

The bank’s figures are a political embarrassment to Mr Modi, who had appealed to the nation to endure the disruption and hardship to punish the rich and corrupt, and deprive them of their ill-gotten gains.

Many lower income Indians hard hit hard by cash shortages supported the demonetisation policy because they believed the rich were suffering more.

It appears they were suckered!

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No Picture

Van Halen, M&Ms, And The Next Market Downturn

September 3, 2017 Tyler Durden 0

Authored by Adam Taggart via PeakProsperity.com,

The planet-sized egos of rock & roll performers are legendary.

Few things symbolize this better than the outrageous requests they often make when on tour.

These requests are referred to as “riders”, and appear in the contract a tour venue receives in advance of the artist’s arrival. These contract riders specify the physical conditions that the singer/band requires to be in place before arriving to perform. Stage lighting settings, sound equipment, furnishings, etc — that kind of stuff.

And these rider requests can get pretty funky – often extremely so — when it comes to backstage perks the performers want.

For example: A wooden pond filled with koi carp (Eminem). A driver who will not speak or make eye contact (Katy Perry). 20 white kittens and 100 doves (Mariah Carey). Seven dwarves (Iggy Pop). 50,000 bees (Slayer). A sub-machine gun (Mötley Crüe). And, yes, even a great white shark (Hank III).

The practice of making these kind of outrageous demands stems from a rider Van Halen inserted into the contract for its 1982 world tour, which insisted on a bowl of M&Ms to be provided backstage, but with all of the brown M&Ms removed.

As this image below of the actual rider shows, the band was very explicit in its seriousness about this:

Once the media got whiff of this, it had a field day roasting the band’s narcissistic chutzpah. A new high-water mark of diva capriciousness had been established, which quickly became legend. A feat of prima donna pampering that subsequent performers have been trying to top ever since.

But as crazy as it sounds, Van Halen’s “no brown M&Ms” rider had nothing to do with caprice. There was a solid rationale behind it.

In fact, it was quite brilliant.

The Importance Of Effective Indicators

Van Halen’s 1982 world tour was a massive production, involving a tremendous amount of gear and technical complexity. The contract the band sent in advance to venues was so thick due to all the details within, it was referred to as the “Chinese Yellow Pages”.

Non-compliance with the requirements in the contract could have serious consequences that could ruin the show, or even jeopardize lives.

So when the band rolled up to its next venue, it needed a quick way to determine if the stage crew there had complied with all of the specifications within its contract.

And that’s why the “no brown M&Ms” rider was inserted. The band could simply hop off the bus and check the candy bowl. If they found brown M&Ms, they knew the contract hadn’t been carefully read. And then they’d immediately call for a full-line check of the entire set.

As lead singer David Lee Roth detailed in his autobiography:

Van Halen was the first band to take huge productions into tertiary, third-level markets. We’d pull up with nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors — whether it was the girders couldn’t support the weight, or the flooring would sink in, or the doors weren’t big enough to move the gear through.

 

The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes …” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”

 

So, when I would walk backstage, if I saw a brown M&M in that bowl … well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.

Genius.

Through its rider, the band had created a easy-to-monitor and trustworthy indicator. No brown M&Ms, and the show was likely set up to go smoothly. But if otherwise, don’t perform until the entire venue is scrutinized for other missed requirements.

The lesson to take from Van Halen’s wisdom is that having good indicators is key to achieving success.

This is also extremely true for the world of investing, where you are deploying capital based upon an expected future return. How do you determine when it’s a good time to enter into an investment? Once in it, how do you monitor the conditions supporting your rationale for holding it — are those changing? And if so, are they getting better or worse? When should you exit the position?

For all of these questions, the better the indicators you use, the more accurate and informed your decision-making will be. And the better your returns as an investor will be.

When The Indicators Are Giving A Signal, Pay Attention

Over the years, we’ve compiled a large number of indicators that we monitor closely on an ongoing basis here at PeakProsperity.com. They most definitely inform our economic outlook and forecasting.

We’ll dedicate an upcoming report to laying out the sources and metrics we place the greatest weighting on. But several that we’re watching closely right now come from two market analysts that we highly respect.

The first set comes from Lance Roberts, chief strategist/economist for Clarity Financial. Lance is renowned for his excellent charts and ability to highlight key changes in data trends. Below are several indicators he’s recently featured, suggesting weariness in the US financial markets and growing likelihood of economic recession.

First, the S&P 500 is showing signs of topping out, having broken below the trading range of its latest 8-month bullish trend, and its MACD momentum indicator displaying two recent sell signals:

Lance warns that such signals suggest that further price gains will be “volatile and limited” unless the S&P returns into its bullish channel. If it indeed does not and drops below the key resistance level of 2390, he sees a swift price correction of 12% as a real possibility.

But he then combines this near-term technical analysis with more far-sighted data to make the point that the financial markets are not just overbought, but dangerously overvalued at this point. Similar to John Hussman (another producer of market indicators we value highly), Lance shows that, because today’s prices are the result of pulling so much of tomorrow’s valuation into today (e.g., via the suppression of interest rates and overexuberant speculation), we are living at a rare time in history where the average market return for the next 20 years may well be negative:

And he recently caught our attention by surfacing this chart of the change in annual Real Value Added to the US economy, a metric that hadn’t been on our radar beforehand. This has been a reliable indicator of recession in the US for nearly 70 years, and is now signaling that we’ve likely already entered one:

Couple Lance’s indicators with those of our other expert, Grant Williams, portfolio advisor at Vulpes Investment Management and co-founder of Real Vision TV. Grant and the team at Real Vision recently issued their latest Killer Charts series, which adds validation and additional weight to Lance’s warnings.

First off, Grant and his team see similar technical signs of “exhaustion” in the S&P 500 and predict lower prices ahead:

Note that they don’t just expect the S&P to correct slightly and then continuing powering higher. Other indicators they track, like the equities-vs-commodities ratio, strongly suggests a bubble peak for the S&P. From here they predict a secular bear trend for stocks (possibly paired with a new bull trend in commodities):

And like Lance, Grant sees signs that the US economy is poised to slow further…

.. and is likely, as Lance also concludes, tipping into recession:

When smart analysts independently find the same patterns in the data, it’s time to take notice.

The charts above are only a few of the indicators Lance and Grant monitor that are now sending strong cautionary warnings about the near-term prospects for the financial markets and the underlying economy. What other key metrics should we also be tracing closely right now?

To dig much deeper into this, Lance and Grant will be presenting their latest indicators, analysis and forecasts at the Dangerous Markets webinar on September 13th — where they will take ample questions live from the audience. For more information on the webinar, click here.

 

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North Korea Claims It Has Developed Advanced Hydrogen Bomb, EMP

September 3, 2017 Tyler Durden 0

A day after Russian President Vladimir warned that the US and North Korea are “balancing on the verge of a large-scale conflict,” North Korean leader Kim Jong Un is doing everything in his power to validate Putin’s words.

To wit, in a segment broadcasted Saturday by the Korean Central Broadcasting Network, the North’s state-run television-news network, the North claimed to have developed a functional hydrogen bomb. In the broadcast, Kim can be seen looking on as what’s purportedly a hydrogen bomb is loaded onto an intercontinental ballistic missile. In the report, KCNA claimed that the North has developed a weapon with “great destructive powers” adding that since all hydrogen bomb components are homemade, it can “produce as many as it wants.” The report also claimed that the North have developed a powerful electromagnetic pulse weapon.

More details from Dow Jones:

  • North Korea Says It Has ‘Succeeded in Making a More Developed’ Nuclear Weapon
  • Kim Jong Un Witnesses Hydrogen Bomb Being Loaded onto a ‘New ICBM’ —North Korea State Media
  • New Hydrogen Bomb’s Explosive Power Goes Up to Hundreds of Kilotons —North Korea State Media
  • North Korea Threatens ‘Super-Powerful’ EMP, or Electromagnetic Pulse, Attack
  • North Korea Claims All Hydrogen Bomb Components Are ‘Homemade,’ Can Produce ‘As Many As It Wants’

As a reminder, in July, the North launched two ICBMs capable of reaching the US mainland, and after a monthlong break, Kim resumed his provocative missile tests last Friday by launching three short-range missiles into the Sea of Japan – and then on Monday, in another unprecedented provocation, the North fired an intermediate-range missile over the northern Japanese island of Hokkaido.

Of course, there is no way of knowing whether the warhead is authentic, though we’re sure the intelligence community’s army of analysts will promptly opine one way or the other. Here’s Reuters with a more detailed account of the broadcast…

“Kim visited the country’s Nuclear Weapons Institute and “watched an H-bomb to be loaded into new ICBM,” KCNA said. “All components of the H-bomb were homemade and all the processes … were put on the Juche basis, thus enabling the country to produce powerful nuclear weapons as many as it wants, he said.”

 

Juche is North Korea’s homegrown ruling go-it-alone ideology that is a mix of Marxism and extreme nationalism preached by state founder Kim Il Sung, the current leader’s grandfather.

 

Kim Jong Un “set forth tasks to be fulfilled in the research into nukes,” KCNA said, but it made no mention of plans for a sixth nuclear test.”

Whether or not the claim of having an H-bomb is a fabrication, professional observers of the Kim regime warn that the report is a signal that the North Korean leader is preparing to carry out what would be the North’s sixth nuclear test. North Korea last year conducted its fourth and fifth nuclear tests, claiming that the fourth in January 2016 was a successful hydrogen bomb test, though outside observers raised doubts about this claim. The North conducted a fifth nuclear test in September 2016, which was measured to be possibly North Korea’s biggest detonation ever, but the earthquake it caused was still not believed to be big enough to demonstrate a thermonuclear test, according to Reuters.

And at least one observer who weighed in on Twitter said that the bomb appears to be authentic, which would confirm that the North is preparing for its most provocative action yet: its sixth nuclear test, which would directly force Trump to respond having vowed never to allow North Korea to be a nuclear power with offensive capabilities .

Ok, hot takes on #DPRK photos of purported thermonuclear weapon. 1/ pic.twitter.com/ACG9vHuw8H

— Melissa Hanham (@mhanham) September 2, 2017

First, as with the fission weapon they showed us in March 2016, we can’t prove it’s real without an expert or a test. 2/

— Melissa Hanham (@mhanham) September 2, 2017

 

3D models by @nateisgood @grace_c_liu, @ArmsControlWonk thought seismic signature revealed larger explosion https://t.co/yppOlTpOVZ 4/

— Melissa Hanham (@mhanham) September 2, 2017

But maybe more like boosted than thermo nuclear… we’ve been expecting a 6 nuclear test, possibly thermonuclear for some time 5/

— Melissa Hanham (@mhanham) September 2, 2017

They’ve even dug out a whole new tunnel at Punggye-ri… 6/

— Melissa Hanham (@mhanham) September 2, 2017

Back to the photos, again, we don’t know if this thing is full of styrofoam, but yes, it is shaped like it has two devices. 7/ pic.twitter.com/Rzr7Di3qrM

— Melissa Hanham (@mhanham) September 2, 2017

It doesn’t NEED to be shaped like that on the outside, but they threw in a diagram, just so we would get the message. 8/ pic.twitter.com/z06zdeZDAB

— Melissa Hanham (@mhanham) September 2, 2017

They also showed off the physics package for good measure. 9: pic.twitter.com/iAX5X0pAbW

— Melissa Hanham (@mhanham) September 2, 2017

They also showed a nosecone, looks like HS-12 paint job, but I’ll need to look for more photos. 10/ pic.twitter.com/4E5iZegwOT

— Melissa Hanham (@mhanham) September 2, 2017

This WILL help @DaveSchmerler and me measure though. 11/

— Melissa Hanham (@mhanham) September 2, 2017

The bottom line is that they probably are going to do a thermonuclear test in the future, we won’t know if it’s this object though. /12

— Melissa Hanham (@mhanham) September 2, 2017

Meanwhile, China and Russia have repeatedly urged the US and North Korea to engage in talks – even going so far as to offer a “roadmap” to de-escalation that would ask the North to halt progress on its missile program while the US and South Korea end military exercises.  As always, we await a response from President Donald Trump, who spent Saturday visiting disaster victims of Hurricane Harvey in Texas.

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Red Cross Admits It Doesn’t Know How Hurricane Harvey Donation Money Is Spent

September 3, 2017 Tyler Durden 0

Authored by Carey Wedler via TheAntiMedia.org,
Though the Red Cross has a historical reputation for providing relief to victims of natural disasters and other emergencies, the organization’s practices have tarnished its name over the last few yea…

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“Don’t Mess With Yellowstone Supervolcano” Geologists Warn NASA

September 3, 2017 Tyler Durden 0

Two weeks ago, we reported that Brian Wilcox, a former member of the NASA Advisory Council on Planetary Defense, had shared a report on what the Space Agency considered one of the greatest natural threats to human civilization: the Yellowstone “supervolcano.”

Following an article published by BBC about super volcanoes last month, a group of NASA researchers got in touch with the media to share a report previously unseen outside the space agency about the threat Yellowstone poses, and what they hypothesize could possibly be done about it. 

“I was a member of the NASA Advisory Council on Planetary Defense which studied ways for NASA to defend the planet from asteroids and comets,” explains Brian Wilcox of Nasa’s Jet Propulsion Laboratory (JPL) at the California Institute of Technology. 

“I came to the conclusion during that study that the supervolcano threat is substantially greater than the asteroid or comet threat.”

Yellowstone currently leaks about 60 to 70% of its heat into the atmosphere through stream water which seeps into the magma chamber through cracks, while the rest of the heat builds up as magma and dissolves into volatile gasses. The heat and pressure will reach the threshold, meaning an explosion is inevitable. When NASA scientists considered the fact that a super volcano’s eruption would plunge the earth into a volcanic winter, destroying most sources of food, starvation would then become a real possibility.  Food reserves would only last about 74 days, according to the UN, after an eruption of a super volcano, like that under Yellowstone.  And they have devised a risky plan that could end up blowing up in their faces.  Literally.

Wilcox hypothesized that if enough heat was removed, and the temperature of the super volcano dropped, it would never erupt. But he wants to see a 35% decrease in temperature, and how to achieve that, is incredibly risky. One possibility is to simply increase the amount of water in the supervolcano. As it turns to steam. the water would release the heat into the atmosphere, making global warming alarmists tremble.

“Building a big aqueduct uphill into a mountainous region would be both costly and difficult, and people don’t want their water spent that way,” Wilcox says. “People are desperate for water all over the world and so a major infrastructure project, where the only way the water is used is to cool down a supervolcano, would be very controversial.”

So, NASA came up with an alternative plan: the smartest people on earth believe the most viable solution could be to drill up to 10km down into the super volcano and pump down water at high pressure. The circulating water would return at a temperature of around 350C (662F), thus slowly day by day extracting heat from the volcano. And while such a project would come at an estimated cost of around $3.46 billion, it comes with an enticing catch which could convince politicians (taxpayers) to make the investment.

“Yellowstone currently leaks around 6GW in heat,” Wilcox says. “Through drilling in this way, it could be used to create a geothermal plant, which generates electric power at extremely competitive prices of around $0.10/kWh. You would have to give the geothermal companies incentives to drill somewhat deeper and use hotter water than they usually would, but you would pay back your initial investment, and get electricity which can power the surrounding area for a period of potentially tens of thousands of years. And the long-term benefit is that you prevent a future supervolcano eruption which would devastate humanity.”

To be sure, NASA itself admitted that drilling into a super volcano comes with its own risks, like the eruption that scientists are desperate to prevent. Triggering an eruption by drilling would be disastrous.

“The most important thing with this is to do no harm,” Wilcox says. “If you drill into the top of the magma chamber and try and cool it from there, this would be very risky. This could make the cap over the magma chamber more brittle and prone to fracture. And you might trigger the release of harmful volatile gases in the magma at the top of the chamber which would otherwise not be released.”

Now, it is others’ turn to slam the NASA plan: according to a geologist at Yellowstone national park, the proposal could have dire consequences, including killing countless animals.

According to the Star, Dr Jefferson Hungerford, who works at Yellowstone, has warned NASA scientists to stay away from the volcano. He said that: “messing with a mass that sits underneath our dynamic Yellowstone would potentially be harmful to life around us.

“It would potentially be a dangerous thing to play around with.” And he questioned whether the drilling could even work, saying “we’re not there scientifically”.

More importantly, Dr Hungerford said there is no need for anything to be done proactively at Yellowstone, adding: “We won’t see [an eruption]. Very likely we will never see it.

Perhaps he is correct: the Earth has 20 known supervolcanoes, which if they erupt, would trigger planet-changing effects. Major eruptions are incredibly rare, with the last one approximately 26,500 years ago in New Zealand. But if a similar event occurred today, it would cause a nuclear winter with humans wiped out in just a few months from starvation.

For now, what some of the smartest people in the world disagreeing on what to do next, the increasingly more precarious status quo is the most likely outcome.

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Are Grocery Chains About To Join The Retail-Bankruptcy Bloodbath?

September 3, 2017 Tyler Durden 0

Amazon officially assumed control of Whole Foods Market on Monday and by noon, channel checks at WFM stores revealed that its new tech overlords had already slashed prices by nearly 50%, sending bonds of its grocery-chain rivals reeling as grocers confronted a new dilemma: either slash prices to the point of unprofitability, or hold the line and risk seeing sales evaporate.

And as bonds of even highly rated grocery chains have underperformed this week, Bloomberg is questioning whether the WFM acquisition has fundamentally changed market dynamics in what was previously an island of stability in a retail sector beset by bankruptcies.

Even before the WFM acquisition, the industry experienced the first signs of strain as Amazon launched its Amazon Fresh grocery service and Wal-Mart started stocking up on reasonably priced organics – factors that contributed to the massive drop in WFM’s market cap, allowing Amazon to scoop it up for less than $14 billion.

Prior to this, the conventional wisdom dictated that grocers were impervious to the onslaught of e-commerce that was decimating industries such as clothing and electronics. Investors reasoned that consumers would probably balk at buying perishable goods like food online.

But Amazon, with its seemingly infinite capacity to slash prices and brook losses, has created new risks for Whole Foods’ rivals.

Apollo Global thought buying North Carolina-based Fresh Market for the “every day low price” of $1.4 billion would be a turnaround slam dunk after its success with Sprouts Farmers Markets. One year later, the future profitability of that deal is in doubt, and that uncertainty is being reflected in the price.

“The bonds that financed Apollo Global Management’s purchase last year of upscale grocer Fresh Market plunged to new lows this week. The cost of buying contracts to protect against a default in Albertsons Cos.’s debt has jumped. Bonds of Bi-Lo Holdings have lost almost half their value this year.”

 

When Apollo Global bought Greensboro, North Carolina-based Fresh Market for $1.4 billion last year, the grocery world seemed quite different. The chain, known for its fresh produce, had seen sales slow. To lure customers back to Fresh Market’s roughly 170 stores, the private-equity titan was betting it could rely on its experience with previous – and profitable – investments in companies such as organic grocer Sprouts Farmers Markets.

 

But Fresh Market is struggling for some of the same reasons that sent Whole Foods into the arms of Amazon. Mainstream competitors including Kroger Co. and Wal-Mart Stores Inc. have pushed deeper into sales of fresh produce and organic products. Supermarkets have opened so many stores that many analysts expect a shakeout. Before the Amazon deal, Fresh Market bonds traded as high as 91 cents on the dollar. Now they fetch less than 76 cents.”

The reason is simple: Amazon, which is insulated not only by its e-commerce hegemony but also by investors who don’t expect the company to turn a profit. One analyst aptly referred to this as the Amazon-Whole Foods “fear factor.”

“It’s the fear factor of Amazon,” said Mickey Chadha, an analyst at Moody’s Investors Service. “No retailer can under-price as long as Amazon can, make no money and get away with it. That’s why people are scared.”

* * *

News of the Amazon deal obliterated billions of dollars of grocers’ valuations, slicing $2 billion off Kroger’s market cap in one day. The grocer’s stock is down 35% this year. Yet its bonds have held steady.

Meanwhile, nearly $3 billion in Albertsons bonds due in 2021 have tumbled..

“Kroger’s bonds, which are investment grade, haven’t been hit. But about $3 billion of Albertsons debt coming due in 2021 has felt a chill. The loans have been trading at 97.6 cents on the dollar. Large, liquid, secured loans of that size typically command par, or 100 cents. A public stock offering for the Cerberus Capital Management-backed grocer was again put on hold after Amazon announced its purchase of Whole Foods.”

…causing the cost of insuring them to skyrocket.

As one might expect, analysts now believe that large chains with relatively low debt burdens will somehow manage to survive.

But smaller chains like Bi-Lo Holdings may soon find that their debt burdens are untenable:

“For example, Bi-Lo Holdings has borrowed hundreds of millions to make cash payouts to private-equity owner Lone Star Global Acquisitions. One of the bonds the company sold to pay the dividends now trades at levels indicating investors expect to recoup only a third of what they loaned the company.”

Tops Friendly Markets, another troubled grocer, is being choked by its $720 million debt pile.

“Tops Friendly Markets, which is reporting millions in losses, is straining under $720 million in debt. Using a maneuver typical of distressed companies, it put off repayments due in 2018 while it grapples with price deflation and traditional rivals in its western New York home turf. If earnings and the balance sheet don’t improve, investors holding the rest of Tops’ bonds could find they’re stuck with spoiled goods.”

However, there’s at least one factor that may insulate the market’s weaker hands, at least for a little while. There are 40,000 grocery stores in the US, only 400 of which are WFMs…

So, should investors be bracing for a wave of grocery bankruptcies resembling this year’s record run of failures among department stores, apparel sellers and electronics retailers? Maybe not right away. But once Amazon’s had a few years to expand its footprint, a massive shakeout seems inevitable.
 

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