Thursday, May 16, 2019

BABA:...an "Earnings Call" without discussing "Earnings"

Today's call was a truly historic moment in the evolution of alleged global financial fraud, both perpetrated by the CPC on US investors and fully supported, through their absurd "analyst" questions, by our industry experts: JP Morgan, Morgan Stanley, Goldman, Merrill, Bank of America, Barclays, Citi, HSBC, RBC Capital, Deutsche Bank, etc.  Here are the materials:

Webcast:
https://edge.media-server.com/m6/p/8zqz2d4o
Presentation:
https://www.alibabagroup.com/en/ir/presentations/pre190515.pdf
Press Release:
https://www.alibabagroup.com/en/news/press_pdf/p190515.pdf
Filing:
https://www.sec.gov/Archives/edgar/data/1577552/000110465919029738/a19-10031_1ex99d1.htm


Alibaba management (Joe, Daniel, Maggie and Robert) and their "analysts" spent much of the hour collectively congratulating themselves on the greatness of their fake 51% revenue growth and their unverifiable, fake, GMV, which has now ballooned to US$853 Billion.  This "ecosystem" GMV, due to these phenomenal, dubious growth rates, is now roughly the same size as the Global GMV of both Amazon ($277 Billion) and Walmart ($625 Billion including estimated Third Party GMV) combined.  Alibaba GMV has increased roughly ten fold since 2012.  They are on pace to Reach $1 Trillion by next year.  Alibaba's GMV sold, according to management, has quickly grown to roughly the same as Switzerland's GDP, with about the same level of opacity.  Miraculous.....perhaps even unbelievable, to say the least.

I don't want to belabor the absurdity of the analyst discussion by repeating the irrelevant, odd, focus-less Q&A (feel free to listen to it on your own if you have the stomach for it.)  To illustrate the madness, it would be easier to discuss what was NOT covered in the presentation....so...here goes:

The Appropriate Earnings Call Questions, which I might expect a real analyst to ask, are highlighted in RED below.

What the "Analysts" didn't ask about....

1.) First, Joe gave a 10 minute dissertation, on the "elephant in the room".  When I first heard that I thought "Finally...Joe is gong to come clean and admit that Alibaba is actually ground zero on the CPC's full frontal assault on the Western Financial System!", but I was wrong, he went into some silliness about how Alibaba was perfectly positioned to survive a trade war, a global recession, a currency war and, like the financial cockroach it is, anything up to and probably including a nuclear winter.  I'm sure specifics will be forthcoming in future "earnings" calls.

2.) Speaking of "earnings" there was not one question, comment or slide in the deck that mentioned earnings.  NOT ONE....an entire hour of fluff..... and "earnings" wasn't discussed, described, commented on or mentioned.   This is odd for an "earnings" call....don't you think?  When we look at the press release, we can understand why.  On page 40 there is a $2.974 Billion accounting "Gain on the revaluation of assets" which was roughly equal to net income for the quarter.  i.e.) If we exclude this gain, the business had no earnings from operations.  I guess that would explain the lack of discussion of same.  Why talk about something that doesn't exist?  Am I right?

There's limited discussion in the documentation (including the 6-K) as to what this gigantic gain was attributable to....here's the language:

Interest and investment income, net in the quarter ended March 31, 2019 was RMB18,665 million (US$2,781 million), which mainly included net gains arising from the change in fair value of listed equity investments and a non-cash gain of RMB5,825 million (US$868 million) arising from the revaluation of our previously held equity interest in Alibaba Pictures when we obtained control in March 2019. The above-mentioned gains were excluded from our non-GAAP net income. 

Note: Alibaba pictures was actually written down by US$2.888 Billion on last years 20-F, so now that they have obtained a whopping 51% control they are writing it back up and booking the gain. There was also no calculation as to the basis and the gain presented.  

Moreover, per the above, there's another $1.913 Billion in valuation gains not described or identified in the filings.  These gains are in addition to the $2.4 Billion write-up they took last quarter (ended 12/31/18).  The total valuation/accounting gains booked for the year amounted to $7.031 Billion, which was included in their Net Income of $11.955 Billion.  i.e.) Most of Alibaba's "income" is generated by unidentified Accounting/Asset write-ups, not from actual "business".

Appropriate Earnings Call Question:  "Could you please provide a detailed schedule of the $7.031 Billion "Revaluation Gain" as well as basis and current carrying value calculations for the related assets?"


3.) "Questionable Assets" (Investment Securities, Investees, Intangibles and Goodwill) increased to $85 Billion or 60% of the Balance Sheet, up from $59 Billion or 51% of the Balance Sheet in FY2018. (...and most importantly, up from 0% in FY2015).  To be blunt, most of this valuation has come from improper use and interpretation of accounting conventions which allow unscrupulous managers to write up the value of money-losing-dog-shit businesses without regard to economic reality.

Appropriate Earnings Call Question:  "I see that your balance has evolved over the years, primarily comprised of intangibles and 'investees'.  Could you provide a schedule, by acquisition date, of these assets, carrying value and associated write ups?"


4.) Property and Equipment continues to increase with no explanation.  Property & Equipment (net of depreciation of $2.227 Billion) purchases were $5.342 Billion during the year.  (There was no mention of what it might be comprised of.)  That would make property acquisitions during the year the rough equivalent of the cost to build four (4) Burj Khalifas. (i.e. the tallest building in the world) during the year.  That's right, not one (1), not two (2)....etc.  But four (4) of them.  If I were a BABA investor or analyst, I might have to ask, what exactly is all of this Real Estate and equipment?   I'd like a few street addresses and perhaps a valuation and description, or two or three, of the biggest property acquisitions.  Perhaps they bought 300,000 company cars instead of the four Burj Khalifas? 














....or maybe they bought 800 buildings like their Caymans Corporate Headquarters? (below)....anyway....it would be nice to know...



Appropriate Earnings Call Question:  "Could you please provide a detailed schedule of the $5 Billion spent on 'property' this year?"

5.) At least there was some improvement with the Ant Financial business.  As of the 12/31/18 6-K Ant Financial was actually losing money (There was no "profit-sharing" money accrued).  Here's the language in the Press Release for the 3/31/19 Quarter:

Ant Financial Alipay - Royalty fees and software technology service fees under our profit sharing arrangement with Ant Financial amounted to RMB517 million (US$77 million) in the quarter ended March 31, 2019. In the current quarter, Ant Financial continued its strategic investments to acquire new users and capture growth opportunities in the offline payment market. Currently, Alipay and its local ewallet partners have over 1 billion annual active users globally.

I think that's great!  A gigantic monopoly, with a self described market value of $150 Billion has finally made a little bit of money in a quarter!...after years of apparently undercharging its 1 billion+ customers.  Even though Alipay/Ant is joined at the hip with Alibaba (and US Shareholders by default) there has never been any meaningful, verifiable financial information disclosed for this beast.  Could it be that payment systems are indeed a "state secret" as the CPC would have us believe, or is it more likely that this business is simply yet another cesspool of CPC money, stolen from Chinese citizens, soon to be used to facilitate the destruction of US Dollar hegemony.....but I digress. 

Appropriate Earnings Call Question:  "Could you please provide full audited financial statements for Ant/Alipay?"

6.) Employees - "As of March 31, 2019, we had a total of 101,958 employees, compared to 101,550 as of December 31, 2018."  (pg 18.)  Interestingly, in their 20-F last year they had only 66,421 employees (pg. 121).

Here's the language: As of March 31, 2016, 2017 and 2018, we had a total of 36,446, 50,097 and 66,421 full-time employees, respectively.

They've gained 36,000 employees since  last year, a 55% growth rate.  Perhaps they are getting away from that "asset/people light" business model.   

Appropriate Earnings Call Question:  "Could you please provide a detailed head count by business unit/location?"

7.) Alibaba settled a class action lawsuit for $250 million during the quarter (pg. 1).  The only thing shocking about this figure is that they actually settled it.  Most Chinese ADRs just ignore the suits and eventually "go dark" with no penalty, since US Law enforcement would be hard pressed to actually get on a plane to Beijing and put anyone in handcuffs.  CPC backed "entrepreneurs" understand this all too well.

Appropriate Earnings Call Question:  "Could you please provide and discuss a summary of the settlement, agreements, concessions and terms?" 

8.)Revenue is up 51% YOY, GMV up 19% (GMV is up $137 Billion from FY2018) all with only 36,000 more employees (according to this years filing/presser) (pg 18). Again, when you do the math BABA GMV of $853 Billion is about the same as global GMV (store sales + third party) for Walmart and Amazon combined, and up 10x from the fake $80 Billion in FY2012.   The other ratio I find fascinating is GMV per employee.  Walmart's GMV per employee is $284,000.  Amazon's is $428,000.  Alibaba's is $8,366,000 per employee.  They are truly masters at doing more with less.

Appropriate Earnings Call Question:  "Could you please provide a schedule of GMV by NBS category?  You report these figures to the NBS on a monthly basis, correct?"

9.) Alibaba continues to be the most benevolent employer in history with regard to Share-Based-Compensation.  This year they gave share awards and kickbacks to employees, cronies, friends, family and apparently just about anyone with a pulse, to the tune of $5.586 Billion (10% of Revenue) of US Shareholder money.  This expense was up 87% from the last year.  Again, the generosity of US Shareholders can never be underestimated, but I'm sure it's greatly appreciated by the Communist Party Officials in charge of this project.

Appropriate Earnings Call Question:  "Could you provide a schedule of the recipients of SBC in excess of US$25,000 for the current year as well as the metrics used by the incentive plan to determine who is entitled to receive SBC?" 

Going Forward....

Let me be absolutely crystal clear here.  I've listened to this particular "earnings call" twice now.  Although I have to admit I found myself dozing off occasionally, none of the really questionable, odd,  disconcerting, accounting nightmares described above were even brought up, mentioned or apparently considered by any analyst during the Q&A on the call.

Something I mentioned in my prior post "Our Inevitable Monetary Journey" comes to mind again.  I've been thinking about my Dad a lot lately.  Don't know why.  My late father, a tough-old-crotchety lawyer once told me that, and I'm paraphrasing here:

"Sometimes my clients get involved in things where it could look like they are criminals.... 
...alternatively, it could be that they were just really incompetent and stupid.  

It's my job to convince a jury that they were just really incompetent and stupid." 


My crystal clear message to the analysts who were on the call is, when this eventually blows up, and there's no question that it will, you have to understand that the "Sorry I'm just a dumb-ass" defense won't work anymore.  The times, they are a changin'.  

You analysts (yes I'm speaking directly to you now) are all highly educated, smart, professional people.  You  are experts, or at least you are supposed to be, and you, and your respective employers are held to a much higher standard than the rest of the investing world and blogosphere.  It's assumed by naive American Investors that you know exactly what you are doing.  Your endorsement means everything.  Unfortunately, in this particular case, and many others, it looks like you are accepting a nice paycheck to do exactly what you are told by the Chinese Communist Party.  You are also committing, aiding and abetting securities fraud.  When you see the accounting travesties and inconsistencies described above, your job is to investigate them, ask tough questions, and if you find the explanations provided by management to be unsatisfactory, you must resign from the account.  Your inaction, congratulatory "we" tone and your tacit endorsement of this charade makes you an accessory, not an unwitting pawn.  You and your employers have significant legal and political liability for what's about to happen.  There will be no escaping it this time.  

To your probable surprise and eventual chagrin, once this implodes, the political environment in America will be such that you will be hunted down, like the sweet, smiling, CPC controlled puppy-dogs you are and brought to justice for your complicity.  This time, no expense will be spared and no stones will be left un-turned.  This time it is indeed different.  Bankers, analysts and anyone perceived to have been responsible for this destruction will be figuratively hung in the public square.  Your nice, sweet, friendly, cheery dispositions and professional demeanor, popularity and Facebook friends won't save you this time.  You won't be passing go.  You won't be collecting $200. You will be going to jail, directly to jail.  Your families and friends will  miss you, but yours is the price that must be paid to put an end to this madness.

You and your employers are indeed responsible and culpable:

Alex Yao – J.P. Morgan
Grace Chen – Morgan Stanley
Piyush Mubayi – Goldman Sachs
Eddie Leung – Bank of America Merrill Lynch
Gregory Zhao – Barclays
Alicia Yap – Citigroup
Binnie Wong – HSBC
Zachary Schwartzman – RBC Capital Markets
Han Joon Kim – Deutsche Bank

Also, I forgot to ask, have you met my good friend RICO?  He's fair, honest and bipartisan, but he can get a little cranky, so you might want to be careful around him. 

My advice would be, if you'd like to avoid getting into a full blown fist-fight with RICO, make sure you keep detailed, careful notes (recordings are better) on exactly who is giving you instructions, telling you what to say, who to say it to and/or when to say it.  As a matter of principle, you never want to have the chain of evidence terminate on your desk.  


Feel free to call the NYC office of the FBI to get some advice.  (212) 384-1000  They should be very helpful.  Ask for the Agent in Charge/White Collar Crime.  They can take your statements and set you up with a wire. 

Best of luck to you wherever your life takes you....



Tuesday, May 7, 2019

Our Inevitable Monetary Journey....

I've received much feedback from my readers on my last post... and for that, I'm grateful.

Thank you.

That said, it's clear that many of you folks, for myriad reasons, either disagree, don't care for my style or have significant doubts about both the concepts discussed and/or my presentation thereof.  I understand that.  There are no mainstream economists, financial folks, Central Bankers or think tanks that endorse or subscribe to what I'm describing.  My work is an outlier.  I get it.

I've also had lots of feedback that my "writing style is too wordy, not very funny, time consuming and really hard to read".   That said, here is a slightly modified, bullet-point summary of my prior post "conspiracy theory" from one of my readers.  He nailed it:

We're going to be conversing primarily in bullet points and charts today.

It would help if you were more straightforward in describing a cause & effect scenario. i.e.
1. Xi pushes the "sell button" on US$25T of Western Assets. 2. Western & USD-based markets melt down on the "Dump". 3. Massive QE is required to rescue & support Asset Values & save the system. 4. Flight from USD & Western Assets results in the silent, relative collapse of all Western currencies with the RMB achieving "real" parity".
5. Stabilizing USD requires large increase in domestic revenue and/or liquidity support. 6. Capital controls must be implemented by the West to stop capital flight.
7.) If Capital Controls are ineffective the CPC will have replaced the USD with the RMB as an alternate reserve currency.

So here are the Bullet Points for Today's Post:

1.) My forecast of the USD Money Supply and US Macro-Asset Categories over the next five years using Great Financial Crisis data as a base.  These changes/flows could take place over the next six months (ouch) or the next decade (we won't even know what happened).  Five years is represented. 

2.) China (and the World) is running out of "available" dollars (and why I think that), as well as two supporting, simple calculations.

3.)  Two Anonymous Case Studies (and  a not-so-anonymous case study - Yangtze River & Interactive Brokers)

4.) The FED's May 1st Press Conference and why most of what we've heard is problematic.

5.) Our Financial Pearl Harbor..... I hope we're sending out "Scout Planes" behind the scenes rather than continue along as "data dependent".

All of this is related....

Per my reader's request I took some time to put some thought into the numbers.  The following is a pro-forma model of what might happen to Asset values, in "big round trillions" if the CPC liquidates the estimated $US 25 Trillion of Western Assets (of which roughly US$15 Trillion are US Dollar denominated/domiciled Financial Assets).  Again, keep in mind that this adjustment could happen over six months (Ouch!) or gradually over five years as depicted by my table, or a decade or longer.  We compare key forecast asset values (M3, FED Balance Sheet, US Stocks, Credit and Residential Real Estate) to valuation behavior from 2007 to 2011. 

Keep in mind that some variation of this is inevitable now.  Here are the numbers.

Well, that doesn't look too bad....it's just a spreadsheet.  Right?.....

Let's take a look at a graphic representation of the financial assets.  Again, not too bad....total financial assets increase modestly, mostly from M3 and FED "Tarp-like" acquisitions, offset by valuation decreases in stocks.  Un-payable debt continues to be created despite defaults.
































Now let's take a look at the % change of the composition during the projected period.....which closely mirrors what happened during the Great Financial Crisis in direction, but is, of course, much greater in magnitude.






































A nasty side effect of this "Chinese Dump" is that after five years, and some ugly gyrations, the relative value of our retirement plans and homes will be worth roughly 23% and 25% less respectively.  The FED will also have enacted (probably several versions) of TARP, buying up, or strategically supporting systemically important businesses.  GE, Ford, Boeing, most of the big Banks, Amazon, Walmart, AT&T and the phone companies, etc. all come to mind as candidates for some form of SOE (State Owned Enterprise) status or bailouts. Like during the Great Financial Crisis, if you are running a "non-systemically important" business...unfortunately, you are on your own.  Good luck.  The FED Balance Sheet will have ballooned to $16.4 Trillion, up from today's $3.9 Trillion.  The Chinese will have effectively exported their state-sponsored economic model to the West. 

The Dollar vs. The RMB

So now let's take a look at a chart that describes the relative behavior of US M3 compared to Chinese M3, based on the CPC forcing the West to print money in support of Asset Values, as the CPC now fully understands what the FED & ECB will do after that little test run in Q4 2018.  Here's what's going to happen:





























Again, the chart above compares US/China actual M3 thru 2018 and forecast M3 thru 2023.  Note that as the US is forced to provide liquidity, which will be redeployed to financial asset price support, the Chinese will be theoretically able to manage/reduce SAFE controls, gradually release RMB for global "use" and keep the exchange rate relatively stable.  Total RMB (On-Shore plus Offshore) will approach US$50 Trillion and actually represent global financial assets denominated in RMB (we have no way to determine what these assets will be comprised of).  US M3 will be sucked back into US Financial Assets as described above.   

Here are the numbers:

























Again, all of the above could happen gradually, stealthily, over a decade, with our financial leadership scratching their heads over all of the odd, unexpected, liquidity hiccups happening sporadically, like Q4 2018...."Hey...why are the stocks dropping again?  Why are credit markets seizing up?"

We could be getting quarterly "Mnuchin-grams" continually reminding us that everything is just fine. This is happening because we are on an accelerating treadmill.  We have tens of trillions of US dollar assets/loans out there, of dubious origin and quality, created by the world's bankers (for a substantial fee) that will continually need to be rolled over, closed-out or replaced on a forever revolving basis.




Like World Wars, at some point we'll have to start numbering these financial crises.  As I recall, we referred to WWI as the "Great War" before we had the second one....and realized that we'd have to start numbering them....so the  upcoming "Great Financial Crisis II" seems fitting.

Taking a walk down memory lane, here's one of my favorite video clips from the relatively recent "Great Financial Crisis I" describing the above phenomenon better than any bullet-point narrative or chart could:

Grayson: "Ben....where did the half trillion dollars go?..."
Bernanke: "I don't know...."




China's Running out of Dollars!

I've heard this often......for roughly the last half decade.  China watchers continue to opine that China is either defaulting or close to defaulting on dollar obligations.  They cite that the Chinese economy is stumbling and the PBOC only has US$1T of dollar assets on their fake, misreported, balance sheet and a grand total of roughly US$3T of aggregate FOREX reserves.  China watchers cite anecdotal evidence of bond defaults, ghost cities, planted SCMP articles on how the Chinese economy is struggling under the weight of the ferocious trade war and how the CCP is struggling to complete the OBOR money grabs.  The Chinese are running out of FOREX!  It's only a  matter of time.

These China watchers and Investors are brilliant, smart, talented, capable people....and they are absolutely right.

I absolutely agree with them, with a slight augmentation/expansion of this thesis.  It's not just China that's running out of dollars.  The "world" is actually running out of dollars, primarily because of the incredible amount of dollar asset/obligations created, sucked up and covertly managed by the CPC over the last decade.  The FED can't keep up.  The giant sucking sound we all hear in the background is the CPC exchanging whatever wampum/deal/promise they think they can pawn off on gullible Westerners (for significant fees) in order to perpetuate the dollar/euro/yen grab.  As I've described in detail and examples in prior posts, the CPC is snarfing up "boomerang" dollars as quickly as possible and investing them in Western Assets held directly and/or indirectly in disguised,  CPC controlled accounts.

We see anecdotal evidence of China's "inability to pay" everywhere.  Increased SAFE restrictions,  OBOR and developer defaults or payment delays and Dollar Bond and deal restructurings.  If you just search Bloomberg over the last six months, you'll see a slough of such articles.  It looks like China's teetering on the brink.  Interestingly, it's looked like it for five years.  We see what we want to see and believe what we want to believe.....because we absolutely know it to be true.  It makes perfect sense.  Until it doesn't.

"Data Dependent" Western Central Bankers continue to look at the numbers and conclude, in perpetuity, that they need to print more money.  There never seems to be enough Western Currency in circulation, no matter how much liquidity is created.  All of this stimulus, more than a decade's worth in all, and despite what the "data" says, global economic growth remains relatively anemic while financial asset values skyrocket.  The West prints more money so the CPC can scarf it up and put it in their gigantic communist currency/asset warehouses (Western Money Managers, Banks & Off-Shore LLCs), effectively removing it from circulation in the real economy. 

The point is, as any good credit manager knows, there's a significant difference between a refusal to pay and the inability to pay.  Believe it or not, the CPC absolutely has the ability to pay, but they are refusing to do so.

They are starving the world of Dollars, Euros and Yen.

To support the above statements I'd suggest two very simple calculations.

Calculation #1

First, let's focus on Net-Exports and assume that net FDI is fully manageable/controlled by the CPC.  China's Net-Exports provide the currency needed to buy Western Assets.  Net-FDI is simply the deployment of same. Let's look at the Net-Exports from China through data provided by every other trading partner.  (i.e. We ignore the CPC data since...well.... it's probably bullshit anyway)

Through recorded Net-Exports, over the last 20 years, the CCP has collected net FOREX of $12 Trillion ($29.4T Exports less $17.4T Imports).  I say "recorded" because Chinese dollar sales/revenue through devices like Amazon & Walmart storefronts, Illegal Drugs, Casinos and money laundering probably accounted for another trillion or two during the same period.  These transactions result in the delivery of FOREX to the CPC, but look like Western transactions to Western Bankers.  See the OED Chart below as well as the link to the interactive chart.

If this surplus had been invested at 5% compounded (Of course they would have done better if they would have bought US tech stocks on margin....which they probably did) in Western Assets, the FOREX would have grown to US$17.4 Trillion.  Quite a tidy sum indeed.

We know with certainty that this Western FOREX hasn't been exchanged for overseas RMB.  If it had, there would be large RMB deposits in Western Financial Institutions or offshore RMB Assets on the Western Central Bank balance sheets.  There aren't.  The CPC still "owns" this Western money somewhere.  Moreover, the explosive growth in Anonymous, Off-Shore, Tax Haven Assets (Caymans, Luxembourg, Netherlands, Hong Kong, etc.), home for this CPC controlled Western money, has increased at a corresponding rate as discussed throughout previous blog posts.

Yet the PBOC only reports US$ 3 Trillion of FOREX Assets (US$ 1 Trillion of which are dollar assets) on their balance sheet.  Simply put....Like Alan Grayson's question to Ben Bernanke...

"Where's the money?" 

https://atlas.media.mit.edu/en/visualize/line/hs92/show/chn/all/all/1995.2017/   




Calculation #2

Second, along the same line of thinking, the notional value of FOREX Swaps and Contracts has skyrocketed in the last few years.   (See the BIS Table and link below)

FOREX swaps/forwards, simply put, are financing.  e.g.) I give you dollars today (in exchange for acceptable collateral and a fee) and you agree to give the dollars back to me in a day, a month, a year or longer.  Banks borrow the dollars and "swap 'em".  According to the BIS, the most recent published data (June 2018) OTC FOREX derivative contracts notional value increased by US$17 Trillion ($95,798B - $78,780B), a 23% increase, in just eighteen months.  At this rate of growth, these outstanding FOREX obligations are likely well in excess of US$100 Trillion today.   

Moreover, all of these Swaps/Forwards/Commitments are OBS (Off-Balance Sheet) and require no disclosure other than in footnote form on entity financial statements.  The FED has no/little idea what the underlying collateral of these Swaps/Forwards/Commitments might be.  Again, all of these contracts will have to be offset/closed/rolled at some point, or the collateral will need to be cashed in to cover the default.  Reminds me of our old friend the Credit Default Swap.  What could possibly go wrong?

























https://www.bis.org/statistics/d5_1.pdf

I don't know how any economist or Central Banker can look at these macro-metrics (and growth rate) in this relatively flat global economic environment and remain unconcerned with what the underlying driver of this acceleration might be.

My simple question, similar to Alan Grayson's line of questioning back in the good old days of the Great Financial Crisis I is:

Why is this happening?  What is all of this financing being used for?

"Where's all the F%$@ing Money Lebowski?"



My fear is that the answer is similar to Ben's "I'don't know"...

...but we're about to find out.


Two Anonymous Case Studies (CIC & FATRAT) 
....and a Not-So-Anonymous One - Yangtze River (YRIV:NASDAQ)

Now let's talk about two anonymous case studies which may (only time will tell) illustrate a small part of the big picture.  First, let me say that I have no evidence or suspicion that anyone at these two firms have done anything improper, illegal or immoral.  In fact, I'd go on to say that the people running these businesses seem like nice, smart hard working folks, just like you and me.  They are using their knowledge, skills and access to capital to maximize the value of their businesses, again, much like you and I would do if the opportunity presented itself.

I'm not going to mention the names of these businesses, but I suppose if you chose to spend time searching through filings and/or have access to Capital-IQ or similar tools you could probably narrow it down and figure out who these folks are.  I simply don't want to cause any undue scrutiny to these good people, again, because they've done nothing illegal or wrong and they are only two examples of the many, many firms that have fortuitously found themselves to be the benefactors of massive, foreign capital infusion windfalls over the last decade.

Case Study #1 "China Inc Capital"

I was reviewing some filings and stumbled upon this particular money manager.  Which I'll refer to as: China Inc Capital (fake name).  CIC has Assets Under Management (AUM) of US$35.4 Billion, chump change in the grand scheme of things....on the other hand, that figure is roughly the equivalent of all of the residential real estate in the Cleveland, Ohio metro area.  i.e.) My house and the roughly 400,000 houses of my neighbor's and friend's are worth about $35 Billion.  (Cleveland home pricing is very reasonable)

I've listed their "Top 10" 13F Securities as of 12/31/2018 and compared the holdings to what they had in June of 2014 (prior to the Alibaba IPO).  Here's what we have:









































Here's what we know:

1.) In 2018 CIC owned 71 securities that were required to be listed on their 13F totaling $28 Billion.
2.) Half (52.5%) of that value was concentrated in the above 10 tech stocks.
3.) Of the total AUM of $35.4 Billion they owned "Non-13F" assets of roughly $7.4 Billion.
4.) Six of the stocks in the "Top 10" turned over since June of 2014.  Alibaba, Netfilx, ServiceNow, Edwards, Illumina and Workday are in, replacing, Baidu, Facebook, Schlumberger, Monsanto, Biogen & Priceline.
5.) Foreign Investors or "Non-US" Pooled Funds (China & Russia) comprise 36% of the capital now.  There was no mention of foreign funds being managed in 2014.  Perhaps an oversight, but I couldn't find a reference to it in any of their investor materials.

In any case, even though China Capital Inc is a private money manager, so we can't tell how well they are doing, I'm sure, based on their portfolio holdings over the last few years must have done really well.  Anyone who put half their portfolio in Big-US-Tech had a good run.  Although their AUM has shrunk a bit since 2014, as I had mentioned, it also looks like they've been able to capture a significant piece of global capital which hadn't been on the books before.  Apparently just as US Investors were leaving CIC, presumably more profitable, foreign money started coming in.  Perhaps this new foreign (Russian & Chinese) money was also providing input as to which "non-13F" investments ($7.4 Billion) might prove to be lucrative, and covertly directing investor money into these boondoggles...uh...I mean Investments....for hefty compensation?  Alas, we'll probably never know.

Case Study #2 "Financial Alternative Trust & Real Asset Trust" (FATRAT)

FATRAT (fake name) had operated as a family owned mall/apartment building developer in North America for many years.  After a few decades of good, hard, honest, risk averse work, they had managed to accumulate AUM (mostly real estate) of just over US$27 Billion per their 2004 Financial Statements.  At that time FATRAT was a profitable, steady, well run business. Somewhere around that time the family leadership decided to step away from daily operations and brought in a few, energetic, hired guns to ostensibly take the business to the next level.  The new, enthusiastic and highly motivated management team embarked on a global shopping spree, raising capital and buying up Real Estate, projects, partnership interests and distressed (turn-around) businesses and opportunities in every corner of the globe.  Looking back, it seems that they were hard pressed to find a deal they couldn't do or didn't like, fearlessly jumping into brand new adventures in exotic locales where others dared not tread.   Again, like CIC, fueled by this never ending supply of capital that had to be deployed, by hook or by crook, they were becoming infallible (even after that little hiccup they had during the GFC I), relentlessly-fearless and even more confident than ever in their own abilities to raise cash.

Fast forward to today and they have roughly US$490 Billion in Assets and Capital under management, up a whopping US$200 Billion (Six times the value of all Cleveland Residential Real Estate) from just 2014.  They have been able to grow AUM at a roughly 23% CAGR since 2004 even through the Great Financial Crisis I hiccup.  They've been able to raise nearly limitless "pooled" private and public capital, unabated, under any conditions or in virtually any economic environment, from "the world’s largest institutional investors, sovereign wealth funds and individuals".

Case Study #3 Yangtze River Port & Logistics, Ltd. (NASDAQ:YRIV)

You can read all about this mess now that lawsuits have been filed, but suffice it to say that a few folks saw this one coming from a mile away.  I believe Anne Stevenson-Yang @doumenzi was one of the first to spot it and I'm sure I commented on is somewhere along the line.   YRIV is a "Reverse Merger" which skyrocketed to a Market Cap of near $4 Billion a couple of years ago.  The stock is still worth about $160 million as I type.  Here's the link and the text from the "updated" Prospectus filed on April 16th.  (feel free to skip through their painful dissertation, I included the snippet for authenticity sake, so you wouldn't think I was just making this up.)

Overview

Yangtze River Port and Logistics Limited is a Nevada holding corporation. We operate through our wholly-owned subsidiary, Energetic Mind Limited, a British Virgin Islands corporation, which in turn operates through its wholly-owned subsidiary, Ricofeliz Capital (HK) Limited, or Ricofeliz Capital, a Hong Kong corporation. Ricofeliz Capital which operates through its wholly-owned subsidiary, Wuhan Yangtze River Newport Logistics Co., Ltd. or Wuhan Newport, a wholly foreign-owned enterprise incorporated in the People’s Republic of China that primarily engages in the business of real estate and infrastructural development and operating a port logistics center, or Logistics Center, located in Wuhan, Hubei Province in the People’s Republic of China, or PRC.

Situated in the middle reaches of the Yangtze River, Wuhan Newport is involved in a large infrastructure development project implemented under China’s latest “One Belt One Road” initiative. We believe that the project is strategically positioned in the anticipated “Pilot Free Trade Zone” of the Wuhan port, an important trading locale for the PRC, the Middle East and Europe. To be fully developed upon completion, the Logistics Center will comprise six operating zones: port operation area, warehouse and distribution area, cold chain logistics area, rail cargo loading area, exhibition area and business-related area. The Logistics Center is also expected to provide a number of shipping berths for cargo ships of various sizes. Wuhan Newport expects to provide domestic and foreign businesses direct access to the anticipated Pilot Free Trade Zone in Wuhan. The project will include commercial buildings, professional logistic supply chain centers, direct access to the Yangtze River, Wuhan-Xinjiang-Europe Railway and ground transportation, storage and processing centers, and IT supporting services, among others.

We anticipate that income generated from the use of the warehouses, cargo loading and unloading, railway and highway transportation and logistics services and other logistics supporting services will comprise the main source of our income. It is also expected that income from the sales and leasing of commercial space will be a relatively minor portion of our expected income since we are planning to sell or lease only a small portion of our commercial properties . We will begin construction on the Logistics Center once we are able to raise funds for it.

That's correct, we have a Chinese Corp. (Wuhan) wholly owned by a Hong Kong Corp. (Ricofeliz), which is wholly owned by a BVI Corp. (Energetic Mind), which is owned by a Nevada Corp. (Yangtze River), operated out of its U.S. headquarters at 41 John St., Suite 2A.,  a two-bedroom Manhattan apartment.  Yangtze River recently hired Alliance Global Partners (AGP ) to sell another $100 million worth of shares to widows, retirees and pension funds.  Commissions & fees were disclosed (sort of).

https://www.sec.gov/Archives/edgar/data/1487843/000121390019006523/f424b5041619_yangtzeriver.htm

One other interesting part of the prospectus, as described in Section S-8, is that Yangtze has agreed to reimburse AGP for any liability for Securities Fraud that they might incur in association with the offering.  Peachy....it's always good to get a "fraud indemnification" clause in these sales agreements.

The auditors, according to the Prospectus Update, are Centurion ZD CPA & Co.  I wonder if they took the time to visit the 2 Bedroom Apartment Corporate Headquarters?  Perhaps they all got on planes and visited the offices of the wholly owned subs in the BVI, Hong Kong and the PRC, just to verify the existence of any of this silliness.  Perhaps they didn't want to spend the money on airfare just to keep the audit fees down?

In the interim, apparently Interactive Brokers (IBKR) had actually been accepting YRIV shares as collateral for margin loans to their highly sophisticated, day-trader customers, and hence recently disclosed a $59 million loss from the collapse of same.   As an aside, I'm beginning to think our entire economy is based on fees generated by the delivery of various vehicles, documents and undecipherable waivers of liability, which are engineered to destroy the financial future of people that don't know any better. 

Here's the chart for YRIV.  Not so good right now, but somebody did an amazing job of marketing this mess over the past few years.  





Here's the chart for Interactive Brokers.  They've done really well over the years too.  But like YRIV, their Market Value had ticked down over the last few months.  The stock is worth about $11 Billion less than it was last fall.

   
Perhaps investors, based on the freshly disclosed, less than rigorous underwriting scrutiny that IBKR has applied to the Yangtze River margin loan collateral, are wondering how solid the remaining US$25 billion of Interactive's Margin Collateral really is?  

You just can't make this stuff up.


The Common Thread Connecting CIC, FATRAT, YRIV & IBKR

Before we understand the commonality in these seemingly unrelated events, we need to fully understand the methods of the CPC "long game" and the faith and ideals of its 90 million members. (The number of CCP Party members is roughly the equivalent of 2/3rds of the entire US Workforce)  To familiarize ourselves with the methods and philosophy of the CPC....."our enemies can take our lives but they can't take our faith" as described by Xi Jinping in his keynote address at the 95th Anniversary Communist Party gala, lets take a look at the video, shall we?

 
Now, let's also assume that, because of the party's ability to establish an unparalleled zealotry, partly dogmatic and partly because the members fully understand that if they don't toe the party line, either they or their loved ones will go missing and/or end up in one of those Xinjiang-like re-education camps.  Nothing happens in China without explicit party approval.  Party loyalty is indeed a matter of survival.  

We know that CPC Members, over the years have fanned out, all over the globe, attending Western Universities, buying Western luxury homes and condos, and most importantly settling into the Western financial system with their newly acquired "boomerang dollars".  They have been given "party money" and instructed to go forth and invest in the West, with the tacit understanding that at some point, the music will stop.  At some point, they'll get a call from the CPC, and an order to start selling off what they own.  Non-liquid Real Estate will go first (This is already underway in NYC, Vancouver, the Bay Area, Sydney, etc.) followed by more liquid financial assets (stocks & bonds).  These vagabond party members will have done their patriotic duty and will be going back home immediately after they've completed their mission.  

When you think about it, this really is brilliant.  These individual party members did nothing illegal or "wrong" by Western standards.  They simply took advantage of the weaknesses in unregulated, anonymous, free market capitalism causing it to collapse under its own weight.  As a bonus, they've probably had a pretty good time on the "party dime" and have some great selfies and t-shirts to commemorate their role in the overthrow and destruction of the Western financial system.  When you further think about it, for young Chinese folks, this CPC master plan beats the hell out of landing on a beach with a rifle.  The resulting economic and psychological devastation caused to the American middle class (or what's left of it) will be as great, if not greater than any conceivable military conflict.  Americans have always known how to fight, and can deal with war.  We've done so for decades, but we're apparently not very good at math.  Working class disperation, disfunction, disenchantment and discontent will continue to mount.....in the words of one of my displaced GM friends on disability...."dis is bad".  

We Americans will have lost a war we didn't even know we were in.  The CPC will have won without firing a shot.

Of course, if the Chinese "investors", for some reason, have developed a fondness for the West, and their newfound democratic freedoms, choose to abandon the CPC, deciding not to follow the rules, perhaps keeping some of the CPC capital for their own use, I'd guess that they'll be looking over their shoulder and switching identities for the rest of their lives, fully knowing that their friends and family will most likely suffer the brunt of the consequences.  It's a heavy burden to bear, but such is the way of the CPC.      

So, getting back to our three case studies......

Let's say one beautiful, sunny day later on this year, that the phones start ringing and emails start coming in at CIC and FATRAT.  Suddenly, "the world’s largest institutional investors, sovereign wealth funds and individuals"  decide to treat CIC and FATRAT like "the Dude" and they want their F&%ing money back.  Without knowing anything about their respective investor capital lockup/handcuff expiration, or whether these investors have the legal right to pull their money out (I suspect that the terms are favorable to them, since, generally, when an "investor" shows up with a big check, he/she tends to get the royal treatment and "special" terms), these former good CPC friends, investors and benefactors will make a couple of formal "head in the toilet" style requests for a return of their capital.  Perhaps CIC and FATRAT will be able to find alternative financing, temporarily funding the withdrawal/run.  Perhaps not.

Let's say that the market's hiccup goes a bit farther and portions of the $25 Billion of Margin Loans at Interactive Brokers are called.  Shockingly, the day-traders might not be able to cover these loans, since the collateral quality is more "Yangtze River-like" than initially suspected... and Interactive Brokers has to start liquidating positions.  Let's also imagine that Interactive Brokers is not the outlier, but rather the norm, and has been underwriting collateral in a "competitive manner" up to the typical, industry standards, designed specifically to keep that commission revenue coming in.  i.e.) there are probably lots of Interactive Broker-like shops out there.

My late father, a tough-old-crotchety lawyer once told me that, and I'm paraphrasing here:

"Sometimes my clients get involved in things where it could look like they are criminals.... ...alternatively, it could be that they were just really incompetent and stupid.  It's my job to convince a jury that they were just really incompetent and stupid."

....and the destruction the US Dollar as the world's reserve currency will commence.   


How Can This Happen?

We need look no further than Jay's FED presser a few days ago so see how this can happen.  It can happen because nobody is looking for it.  The FOMC is a group of highly intelligent, classically trained, economic technocrats.  They are trained to look at the same, traditional, data, dot-plot it with precision, and make tiny, almost insignificant adjustments, while patiently contemplating and telegraphing the next quarter's possible adjustments accordingly.  They are brilliant.  They are the best in the world.  But they are not trained to look for anything like this.  They are "data dependent", but they are not looking at how the data is evolving and what it's really reflecting.  To the FOMC, it's just "data".   So they will either refuse to believe what I'm describing can happen, or they won't bother looking into it at all, even though all of the signs are there.  Today, in finance, doing your job the way you've always done it isn't enough.  Although, doing things the same old way will provide cover and plausible deniability when this eventually blows up, unfortunately, in this case, it's also giving aid and comfort to the enemy by allowing it to happen in the first place. To paraphrase my late father....Central Bankers will look incompetent and stupid....but they are not crooks.

Here's the video of the FED Presser from May 1st, 2019 along with the FED Financial Statements for your reference.  There's no need to wade through the entire painful clip/docs unless you have an interest, it's not necessary for our discussion here today, but I thought I'd include it for reference.


FED Audited Financial Statements - 2018
https://www.federalreserve.gov/aboutthefed/files/combinedfinstmt2018.pdf


As with most FED Press Conferences, the general theme is that "the economy is in a good place".  Everything is fine and dandy.  The headlines are GDP is up, inflation is under control, equity markets are at all time highs and unemployment is at an all time low.  If this were any other time in history we'd be referring to this as an American "golden age".  We should all feel like we're living the American dream.  Indeed, a few of us are.

Conversely, if the economy is indeed firing on all cylinders I find it strangely curious that we're seeing a parade of politicians forever fighting and giving speeches to save jobs from leaving their districts.  Here's one of our local Congressman giving a forceful soliloquy to an empty house chamber, after just losing a GM Plant in his district, along with all of the ancillary business and income multipliers that go with it.  His district has been effectively, economically eviscerated.  He's opining about the "broken economic  system".

 

I hope you took a few minutes to watch the clip if you've not seen it.  Tim spent 8 minutes delivering  a wonderful, heartfelt, but apparently ineffective plea to change our "data driven" course.  We can only assume, that since he's not a classically trained economist, that he has no idea what he's talking about.  After all, he (and his constituents) perceptions are completely at odds with Jay's "everything is peachy keen....steady as she goes" plan.

For those of you who don't know him, Tim is a great guy.  Again, although he doesn't have a PhD in economics and has no background in Central Banking or Foreign Exchange, at least that I'm aware of, he understands that something has been going horribly off the rails for quite some time......as he says...."we've been doing this for 40 years!"

So my rhetorical question is: Why is 1.) Work Force Participation declining and Real Wage Growth been flat over the last decade?  2.) Why is it that Drug Addiction (2.3 Million addicts) & Drug Deaths (75,000 & rapidly increasing - CDC 2017), Suicides (45,000 - CDC 2017), Gun Violence and Deaths (44,000 - CDC 2017), Incarcerations (2.3 Million) and Parolees (4.5 Million) are all on a historic rise and, per Ray Dalio's favorite statistic, that 60% of Americans can't scrape $400 together in an emergency?

Generally, given all of the above, Congressmen don't make impassioned speeches like this, people don't fall out of the workforce and give up, people don't turn to drugs, commit crimes or choose to end their lives in a strong vibrant economy, where everything is going along just fine.  I don't see this data on the FED's website.  Perhaps we should?

Wages

Let's talk about wages.  Since GFC I, the Real, Full-Time, Median, Weekly, Wage, per the FED's own data, has risen from $345/week. dipped down to $334/week in 2014 and now has inched back up to $353/week. (Wages in 1984 dollars.  Based on the CPI adjustment of 2.41 this equates to current wages of $850/week or $44,200/yr.)  This is the equivalent of a 2.3% wage increase in the 10 years since the GFC I.

Does anyone at the FED understand how difficult it is in America to raise a family, send kids to school and live on a full time wage roughly the equivalent of what it was 10 years ago?  (and that's if everyone in the household is in perfect health.....don't get me started on the cost of healthcare) 





Next, we note that despite all of the "New Job Creation" going on, it looks like workforce participation has declined rather abruptly by 700,000 people in the last two months.  Could it be that these people have all hit the lottery? or got rich trading Forex Futures or flipping houses? and retired early?  I'd suggest that perhaps it's more likely that they've simply given up.



Next, I like to track the proportion of people working as compared to the total population.  It makes sense to me to compare the number people working full time (earning wages, and benefits and paying taxes) to the number of people not working (those who are too young, too old, incarcerated, chronically unemployable and/or living on some sort of private or public assistance)



We see that this ratio, since GFC I has crept back up to 39.5% .  So roughly thirty-nine American's are working full time to support sixty-one Americans who don't.  Note that this little decrease from the 40.8% high back in 2000 represents 1.7 million fewer people working at the current population level than 10 years ago.  As described, the remaining employed are earning roughly the same wage as 2008.

GDP

If I didn't know better, when reviewing the US BEA (advance Estimate) of 1st Quarter GDP, I'd think I was reviewing a PBOC report, the headline was "GDP is up 3.2%"  Awesome!!... see below:

Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the first quarter of 2019 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2018, real GDP increased 2.2 percent. 



https://www.bea.gov/index.php/news/2019/gross-domestic-product-1st-quarter-2019-advance-estimate

Now let's parse some of the summary language using our patented Dick Fuld Banker-Speak Translator (BST).  The  parts in "Blue" are clipped from the report.


The acceleration in real GDP growth in the first quarter reflected an upturn in state and local government spending, accelerations in private inventory investment and in exports, and a smaller decrease in residential investment. These movements were partly offset by decelerations in PCE and nonresidential fixed investment, and a downturn in federal government spending. Imports, which are a subtraction in the calculation of GDP, turned down.
BST Translation: Personal Consumption Expenditures (PCE) is declining, inventories went up  because American's aren't "buying stuff".  Home purchases are still declining, but they declined a little less in this quarter than the last.  State & Local Government spending (mostly social services) picked up.  Exports remained about the same but because we are consuming less, and most of our consumer stuff comes from China, we are also importing less.  Generally, Americans don't "buy stuff" unless they can get credit and/or think they can afford it.  That's the way most regular people, who aren't Central Bankers think.   
Current dollar GDP increased 3.8 percent, or $197.6 billion, in the first quarter to a level of $21.06 trillion. In the fourth quarter, current-dollar GDP increased 4.1 percent, or $206.9 billion (table 1 and table 3).
BST Translation: Math is really cool.  Current Dollar GDP, which was goosed last year because of the biggest tax cut since Reagan, somehow, decreased in a quarter where everyone should have been getting all of their tax refunds.  Maybe they used the money to try to catch up on their delinquent car payments, mortgages and credit cards?  Maybe that government shutdown had something to do with the decline, but the report was silent on that, and in fact Federal Government spending actually increased slightly during the period.  Most American Taxpayers, of course, think it's an awesome idea to keep paying for government services without actually getting the services.  
The price index for gross domestic purchases increased 0.8 percent in the first quarter, compared with an increase of 1.7 percent in the fourth quarter (table 4). The PCE price index increased 0.6 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 1.8 percent.
BST Translation: Since people aren't consuming, and inventories are building up, prices are not rising as fast as they did last quarter.  We can expect some BOGOS, discounts and sales!   This is how inflation "remains under control".
Current-dollar personal income increased $147.2 billion in the first quarter, compared with an increase of $229.0 billion in the fourth quarter. The deceleration reflected downturns in personal interest income, personal dividend income, and proprietors’ income that were partly offset by an acceleration in personal current transfer receipts.
BST Translation: This is really interesting.  The expected increase in Personal Income actually decreased by about a third from the prior quarter.  This reduction was due to a decline in interest, dividends and passive business income....but wages apparently remained constant?  The "1%" must have really taken a hit.  I wouldn't want to take a big/passive/investment income pay-cut if I were in their shoes.   
Disposable personal income increased $116.0 billion, or 3.0 percent, in the first quarter, compared with an increase of $222.9 billion, or 5.8 percent, in the fourth quarter. Real disposable personal income increased 2.4 percent, compared with an increase of 4.3 percent.
BST Translation: This is even more interesting.  In a healthy, robust economy, why did the rate of Disposable Personal Income (DPI) growth decline by about half from the last quarter? Ouch!
Personal saving was $1.11 trillion in the first quarter, compared with $1.07 trillion in the fourth quarter. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 7.0 percent in the first quarter, compared with 6.8 percent in the fourth quarter.
BST Translation: Finally, so the personal savings rate remained flat?  The "1%" continued to save at the same pace even though their PI & DPI decelerated?  (btw - I keep referring to the 1% when I discuss savings since 60% of Americans don't have any meaningful savings)    

So what do all of these numbers really mean?  Economists spend their careers debating and interpreting the cause and effect of policy decisions.  Their biases influence their interpretation of what's really happening, just like Congressman Ryan, without even looking at the numbers, has formed an opinion about how our monetary policy is working based on the resulting devastation it's caused in his particular district.  He doesn't like it.   

The Sneak Attack


When I think about what's happening today, one of the most dramatic and disturbing movie scenes I can recall, comes to mind.  (Pearl Harbor Video Below).  When I saw the movie the first time my reaction was, how could this possibly happen?  How could this be possible?  Who was asleep at the switch?  If America only had the technology, foresight and vision to see the weaknesses in their systems/defenses or be more vigilant.  Were we blinded by hubris?  Was FDR confident that America's juxtaposition between two vast oceans would protect us?  Like our monetary policy today, could our leadership have thought through the war games scenarios and made a better effort to locate and track that fleet of Japanese aircraft carriers steaming toward Hawaii for weeks?  But this was not to be....and America entered the most brutal conflict, in terms of casualties (roughly 80 million dead) in the history of the planet.  Like today's economic/currency war....America never saw it coming.



Please don't get me wrong here......to my knowledge, no country ever started a war because of money and/or a failure to pay the bills.  (Some might argue otherwise....but there's usually a way out of economic problems if you choose the right policies....I'm also well aware of all of the FDR conspiracy theories so please don't email me on that topic....that's not the point of this closing paragraph.)  My point is that all of the data, technology and information we need, although difficult to parse through and connect the dots, is sitting right in front of us.  It's just not on the radar, so to speak.  Our Bankers are more than capable of preventing the upcoming financial Armageddon if they choose to do it, rather than continuing to blindly sell liquidity for hefty fees.

My fear, like in the movie clip above, is that our Bankers are far too busy doing their jobs and making a buck.  They will be metaphorically peeling potatoes, painting the hull of their battle ships or hung-over, sleeping it off in the back seat of their convertibles when the Chinese financial bombs start to drop.

So much for being "data-dependent".



Additional Reading/Viewing

FED Press Conference May 1st, 2019
https://www.youtube.com/watch?v=nEVZJQob_5w

FED Fin Statements
https://www.federalreserve.gov/aboutthefed/files/combinedfinstmt2018.pdf

Kyle Bass & Keith McCullough
https://app.hedgeye.com/insights/74383-webcast-why-kyle-bass-sees-recession-risk-rising?utm_campaign=Kyle+Bass+Blast+2+Activesemail+submitters+482019&utm_content=Kyle+Bass+Blast+2+Activesemail+submitters+482019+CID_62ebf8d63e574e6ca2e2b39da4893ae1&utm_medium=email&utm_source=campaignmonitor+email

Below: CPC Propaganda Video - intended to drum up support for CPC Member "ambassadors" around the globe.  Sadly, they feel as though they are treated as outcasts.  Perhaps if everything they did, said, ans filed with the SEC wasn't a flaming crock of shit, their argument would be a little less unbelievable.





This image has nothing to do with what we're talking about today, I just thought it was a hoot.  Note, that the person starting this "grass roots" campaign has the same right to vote as you and I do....God Bless America!.