Monday, December 12, 2016

Will Italy kill the European Union?

The only real impact of Italy's referendum was the resignation of Italy's Prime Minister -- The Democratic party was the ONLY pro-European party left in parliament and with the departure of Renzi, it too may decide that Europe is not worth the trouble.

Europe could easily live without Greece, the Greek rescue plan really was the European banks and insurance company rescue plan, over the past 60 months, virtually all the debt that was owned to European banks, pension funds and insurance companies have been repaid at par with new loans from the European Central Bank -- quietly, the Europeans have nationalize a private debt burden at par, considering the health of Europe's bank this was the least the could do.

Italy is another problem entirely, nearly 12% of Europe's GDP, the second largest bond market it is a large economy that sits at the heart of Europe.

The Prime Minister's resignation means that elections will soon follow, and the topic of "interference in Italy's domestic affaires" is certain to be a topic during such elections, while the country tries to save its crumbling banking system.  Therefore the result of Italy's referendum pauses a grave threat to Europe survival as a political and economic entity;  The only solutions for Europe/Italy are the following 5 points (directly from the FT'sWolfgang Münchau)

He lists five ways the Eurozone can stay intact. However, none of them stands up to close scrutiny.

  1. Italy and Germany could converge. To do this, Italy would need to undertake economic reforms to clean up the justice system and the public administration, cut taxes and invest in productivity-increasing technologies. Germany would need to run a higher fiscal deficit.
  2. The northern European states accept large fiscal transfers to the south.
  3. The EU creates a federal political authority with powers to raise taxes in order to transfer income from high to low-income earners.
  4. The ECB finds a way to bankroll Italian public and private debt indefinitely.
  5. Italy’s government will forever continue to support euro membership.

Only one of those five conditions may be sufficient for Italy to remain a member of the euro. The problem is that each one is extremely improbable. And I cannot think of a sixth one,” says Münchau.

Mike Shedolck (He thought that Trump was going to win for months -- he was right and his comments are usually very good) said the following about "Point 5" [...] the consensus opinion is that Italy will not leave the Eurozone because the deck is stacked against that event.

The Italy won’t leave rationale looks like this:

  1. The Five Star Movement (M5S) would have to get into power, but the new technocrat government’s first mission is to rig the rules so that does not happen.
  2. Even if M5S wins the lower parliament, it still may not control the senate.
  3. Even if M5S takes complete control of parliament, it would have to change the constitution.
  4. Changing the constitution without a super majority would require a vote.
  5. The problem with the above thesis is there is only one party that wants to keep the Euro and coalitions will form if for no other reason than people are fed up.
According to Münchau:

"The next Italian prime minister will need to explain to the next German chancellor, presumably Angela Merkel, that her choice will not be between a political union or no political union, but between a political union or Italy’s withdrawal from the euro."
I am relatively certain that Germany is not ready for such a loss of power -- however, stranger things have happened in the past, the implication would be to make Europe's national parliaments subordinate the Brussel's will!  I find that hard to believe that ALL of Europe's members would agree to such a situation (something similar to what happened to Greece BTW)

As Shedlock once said:

"Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the “bail out” debt foisted on their country to be null and void. That person will be elected."

I've been told off a number of times for being too gloomy on Europe, Shedlock's last statement was written in 2011 -- he's still not right, but more an more of the problems surrounding the survival of the EU are becoming too large to simply ignore -- the death of Italy's banking system is a perfect example of this situation.  The solution require the approval of 27 National governments -- in some case (such as Canada's trade treaty with Europe) a small contingent within a nation can derail the agreement for completely unrelated reasons -- there are 27 countries here, each with their electorate, their politicians and their objectives.  Compare to this, hearding a 100 cats would be easy

Anyway, this is the last commentary until after the Christmas break -- so to all a Merry Christmas and a Happy New Year.

India's crazy solution to graft & Trump's cabinet picks

A few weeks ago, the Indian government decided that it would withdrawn all Rs500 and Rs 1,000 (respectively $7 and $15) as a means of combating graft in the country -- it turns out that that Modis' government had neither consulted the Ministry of Finance or the Central bBank of India.  The plan was to remove cash from society, the impact has been brutal.  There is simply no cash available in India!  Business are failing because nobody can pay, the idea would be that everyone would use electronic transfer for payment ensuring that graft cannot occur (as if!).  However, India's problem is somewhat different; nearly 600 million Indians don't have a bank account -- their entire life is cash based with little savings (a cow here and there).

BTW its the kind of crazy off the cuff solution I expect from Trump.  Last week he blasted the replacement of Air Force One -- already at 17 year old aircraft, getting on in age -- because its built of the frame of a B747-200 parts are increasingly hard to find.  This morning Trump discovered the F35 -- again this is a man who thinks the ultimate weapon is a $200 riffle (no don't think about it, riffles are a lot more expensive than that).  Modi's government was run by professional but still politicians who like to shoot from the hip.

Trump loves to shoot from the hip, this could be a problem.  He's manage the scare Europe and Germany in particular, piss of the Chinese, scare the Japanese and Korean that America will no longer be there for them to stop any madness from North Korea.

The new head of the NSA strongly believes in conspiracy theory -- including one where Clinton was running a pedofile ring out of DC pizzeria... the kind of guy who will se conspiracy everywhere and with a trigger fingered President.  Dr Strangelove is among us!

So far Congress is having a ball (wet dream actually) about their ability to repeal every social program that exists so that their paymaster can reduce federal taxes.  its already worked well at state level where some universities have seen their budget cut by 70% (Nevada).  America was already mean now its about to get dangerous, because people with no way out will strike out!

Congress' priority after January 20th:

1) Repeal Obamacare
2) Terminate Medicare Part D
3)  Replace Medicare with voucher system pegged to inflation
4)  Privatize Social Security
5)  Eliminate EPA/HUD and Department of Labour & Education
6)  Increase pressure on illegals to get out -- either through coercion of their employers or via stricter implementation of "crime" laws

The on reason "5" is there is that the guys who have been nominated run these departments have long said they should be eliminated -- they will see it as their mission to seem them all gone.

The one area where Trump will find conflict with Congress will be free trade -- The GOP's paymasters are not about to get that changed, they gain too much.  The other is the military that the GOP wants strengthen -- Trump bulks at the cost of F35s -- yet he wants to boost the navy back to 500 vessels (how much does he think these suckers cost?

The New New Economy -- Where theory goes to die!

Increasingly we are hearing stories about using big data into comprehensive working tools especially with the idea of AI (granted its more intelligent systems that the AI of Scify) will contribute to the world economy.

Already big data and intelligent systems are crowding out trading rooms at an unprecedented rates; why have expensive traders when a computer can do the job 24/7 at little cost. Bond desk have been decimated over the past decade, the same for F/x desk, and virtually all trading that is trough ETF is done via computer systems.

That's the easy part, now come the doctors and the lawyers -- already we are seeing the medical profession being overwhelmed with data, diagnosis was easier when the doctor had only 10/20 data points, but medical technology has come a long way, already the number of data points has increased by nearly an order of magnitude than what was available 10 years ago, lets assume you suddenly have 400 data-points, the human mind is unequipped to deal with so many variables. Suddenly the doctors are only used to write prescription and follow the computer's advise.

Lawyers are already in trouble drafting offering memorandums can be largely done by computer -- if you've ever tried to read these documents you know that 95% of these things are boilerplate -- with a few page of data.  How easy would it be to replace such high cost producers, the same for investment bankers.  Its not like these guys re-invent the wheel every day, they use tried and tested ideas.

Already, we have seen, via robotization, that blue collar jobs are disappearing at an alarming rate, new jobs are being created but at much lower salary points -- they require next to no skills because it has proven valuable for company to automatize the "skilled" portion of their production process.  Don't believe me, what do you think Carrier will be using the US$ 7 million windfall from the Indiana?  You got it, they will automatize process!

The world Western economic model is built on wealth creation, ideally where there's not too much disparity between all segments of the population (very rich people don't consume very much of their income), but now as the AI take over the world, lawyers and doctors and engineers will also face employment issues -- after-all designing a bridge is a simple process for a computer.  what happens as more and more of these profession disappear?

As an example the displacement of taxi drivers and of truck drivers that will certainly occur with the arrival of self driving cars, what about the car industry?  Currently the US consumes about 14 million new cars per annum, and most of these vehicle spend 90% of their life parked, you have self driving cars and the number of cars sold will fall, increasing car utilization from 10% to 40% should lead to a reduction in the sale of new cars by 75% -- its math!  Taxi will no longer require drivers and truckers will no longer be needed.

These all speak of major labor displacement and massive change in the economic system, because since the US system is based on consumption (70% of GDP) what will be left once people's income disappear?  All these doctors, lawyers, taxi and truck drivers will have no employment prospects -- obviously those at the top of the system will reap the benefit of the labor cost cuts, but for how long?

Some would say that the economy will adapt, probably true but for every new economic activity there will be an AI available that will doit better and more cheaply than a human.

The world's economy is simply not ready for this!  This is also true of economic theory...

Friday, December 2, 2016

Trump, Carrier and Tax breaks!

And so it has started!

Those in the know, now have a blueprint for getting government tax breaks -- with a bit of publicity added to the mix!

Of the 1,300 jobs that were saved the real number apparently is far lower.  The official number is now in the region of 600 -- once you remove the jobs that were never going to leave anyway.  Now I am very happy for the 600 who actually kept their job, the cost to Indiana's tax payers is at least $7 million -- and I understand that there are further goodies such as lower corporate taxes.

The blueprint is now for a company that wants to shift 5,000 jobs to Mexico/Vietnam (you get the picture) to announce 10,000 jobs being cut, and then wait for the government to give you your goodies bag, and then cut the 5,000 jobs you were going to eliminate anyway.  If you do it right you can even get a undertaking from Trump that he will not impose tariffs on your imported production.  The only looser is the tax payer, and considering Trump's objective of cutting off ACA, medicare and privatizing Social Security -- the blue collar guy who just kept his job just got a tax increase in his income, while taxes on dividends are slashed...

What a great country!

Wednesday, November 30, 2016

OPEC agrees to cut production -- Futures go wild!

Three pieces of news this morning:

1) The US dollar keeps on rising
2) OPEC agreed to cut 1.2 MM/BBL per day
3) Cushing inventory at an all time high

All three of these news are about the same thing; first the agreement to cut oil production (yeah sure) by 1.2mm/bbl day should improve the over capacity issue that is in the market today.  Of course with higher prices there will be a HUGE incentive to cheat (that's always been OPECs problem -- and non-OPEC players can do what they want).  The rise in the US dollar follows from a sense that the problem of OPEC (and of most countries in the middle east) are solving themselves and we can get back to making money...not.

The rise of the US dollar is driven by a fear of world event; the world is very worried about Europe and its banking system -- hence its currency.  In reality, with inventories at all time high (in the US and in Europe) there cut of 1.2mm/bbl per day is probably not enough to change the situation.

The rise of the dollar is a "fear indicator" and not a positive development; the same way that a drop in the Mexican Peso is an indication that things in LatAm are in poor shape -- the MXN is the only readily traded currency in LatAm; it acts as a fear proxy for the region.

Demand for crude is simply not large enough to meet the producer's production requirements; since storing oil is expensive -- worldwide oil reserves is counted in weeks (not in years), this lack of demand is a function of a slowing global economy (or in the case of most of Europe a growth less environment).  China is slowing down, rumors of slowdown in the US abound (demand for cars seems to be off), and recent rise in interest rates is certain to dampen demand for new cars and houses (Consumption drives the US economy).  The world is simply not turning fast enough for oil producers, the market knowns that this latest agreement will last a few weeks/months until the cheats (by all the players) push back excess supply to depressed prices.

The sure thing of oil at $90 is some ways off, especially since both the US and Mexico have just found mega sources of light sweet crude.  it seems the dinosaurs are not done with providing us with cheap oil...

NOTE:  I don't know why that is but each time I write about the airline industry the numbers of reader multiplies by a factor of two...

Tuesday, November 29, 2016

The meaning of a new republican administation

There is no doubt now that the GOP's goal will be to demolish what is left of Obama's meager contribution to America's wellbeing -- his most ambitious achievement the ACA (aka Obamacare).  In a sense, the new Republican administration is confident that they will hold Congress and the White house for the next four years, and that within the next 100 days some rather aggressive changes will be implemented:

1)  Keep the good stuff from Obamacare and dump the stuff they don't like.  They like pre-existing conditions and that children can stay on their parent's insurance until they are 26.  Of course its unclear who will pay for all this -- pre-existing conditions were covered because of a larger insurance pool.

2)  Tax reform:  It is a certainty that massive corporate and personal tax reform will take place with the vast majority of tax reduction for the wealthy and corporation.  This will lead to a massive repatriation of offshore revenues, that will result in massive dividend (to the benefits of stockholders and pension funds).  This will lead to no additional investments

3)  Security:  This is a catch all and may include stuff that Trump wants -- such as eroding the first amendment and border walls -- re-introduction of private prisons and continuation of Obama's massive repatriation of illegals (2.9 million during Obama's term -- its hard to go faster since the problem are the court system that is already overwhelmed)

4) Reduction of regulation:  You can expect that consumer protection rules will be reduced, that the already small fangs of the EPA will be further eroded.  That permission to drill wherever and whenever they want will be granted.  Banking rules will be made easier -- some are good ideas others may lead to more problem in the future -- especially if certain disclosure rules are relaxed...  At any rate expect a bank bailout in the next 5/6 years.

What will get in the way of Congress and the White House?  Aside from the real world very little.  Trump will continue to call Apple and Carrier to keep 2,000 jobs in the US, which is not something a president should spent any time...

On other issues that will cause problems will be trade; that is one area where the WH and Congress do not agree.  The last thing the GOP wants is a curtailment of trade, and there the WH may find much more help from the Democrats that have been against NAFTA for years.

P.S.  Bad luck for me, wrote this on the 27th of November -- and saw today that Paul Ryan said exactly the same thing...

Monday, November 28, 2016


The names and place of these events have been changed...

A friend of mine had married an older man, who had a previous family in Europe.  This man, had children and an ex-wife, but these people ceased to exist when he moved to North America. He was a dreamer, he was an explorer, he had in his previous life worn black ties but now would only wear jeans and t-shirts.

I think that by now you suspect that this man had issues, but he was fun, he was interesting and he was, it would appear, a loving husband.

For some reason this friends decided to sell their downtown apartment and buy a house in the country.  My friend still had a job in the city, she was earning wages and he husband was planning some trip, exploration of the far North...

In reality he was a dreamer; he dreamed of a better chicken coop -- and so he demolished the chicken coop to build a new one, but his musing and the weather got in the way of his building a new chicken coop, the sheep needed more pasture, but again the weather, his music or his trip planning got in the way!

During all this time he decided that the house needed to be remodeled, starting with the stairs that went from the ground floor to the first floor, where the main bedroom was located.  His solution, before designing a new staircase was to demolish the current stair case and replace it with a ladder... that ladder was there for more than a year.

By then the chicken were dead, the sheep's wool was so dirty that it was unsellable.  The staircase was a ladder, and my friend's father arrived for a weekend!  He was an amazing wood worker and already in his late 60s, within 12 hours he had built a staircase for the house so that although not perfect it made getting up and down easier.

On Monday of the following week my friend's husband demolished the staircase and the ladder was re-installed!  Needless to say that the marriage ended soon thereafter when my friend discover that her husband was "diddling" a neighbor (who eventually became his wife).

The house was sold -- as is, without a staircase!

The moral of the story, a ladder is always better than a staircase, because "someday" you will build the most amazing staircase.

Tuesday, November 22, 2016

DJI hit 19,000 -- historical all time high!

Is this the last hurray is this for real (sounds like a song from Queen).  Nevertheless last night the DJI hit an new all time high of 19,000 (its a bit off today).  Market sentiments are hard to judge and understand.  It is still unclear if Trump will be full of hot wind, will be a game changer or a complete and utter disaster.

From his meeting, and lambasting of the US new network one would suspect that Trump will be looking at Congress to reduce the strength of the first amendment; because apparently they've been mean to Trump and his friend (what they did to Obama was far worse), and also that the actors in a play would sound their discontent -- that and his for ever fight with SNL.

His "A Team" looks like a bunch of crazy right wingers from Jeff Session as attorney general who see's nothing wrong with the KKK, to Mike Pompano (CIA) -- one of the most aggressive Benghazi attackers of Clinton with numerous investigation -- that showed no wrong doing to Michael Flynn ex-military with very close ties to Putin.  Others being considered for the EPA are well know anti climate change proponents.  One aspect that links them all is that they were early supporters of Trump and are very hawkish in their world view.

Interestingly enough Netanyahu (Prime minister of Israel) has forbidden any cabinet members from contacting Trump or his team (bizarre).

In terms of economic impact on the US:

On one side is the risk of trade protectionism (rumors of calling China a currency manipulator) would bring immediate tariffs to Chinese goods and would generate inflation in America.  However, a trade war would certainly lead to a slowing economy.  Therefore the other side is weakening economic growth and the risk of deflation.

Moreover, the idea that Europe should play a larger role in its defense is a valid statement on the part of Trump.  However, its not like Europe is going to pay America, what would happen is that European economies would have to increase military spending, which would lead to a more multi-polar world.

I suspect that Trump is now getting daily briefings on the problems of America and of the world, and is finding out that the world is complex and that his choices are gray rather than than black and white.

Health Care in America is about to change:

1)  In an amusing but not unforeseen turn of events, the residents of Kentucky are now very worried to be losing Medicare -- one of the most important changes proposed by the GOP -- something that doesn't seem to phase Trump very much.  Kentucky voted massively for Trump and is very dependent on Medicare.  So now Residents of Kentucky are about to find out (they voted 83:13 for Trump) that the GOP's platform has a direct impact on their lives.

2)  GOP is also working on a phase out of the ACA over the next 36 months.  Unbeknown to the GOP certain aspects relating to the state markets for healthcare will be immediately affected -- therefore the ACA is more than likely to die a premature death in 2017 with no replacement in sight.

3)  Finally, the Democrats will not get revenge in the mid term election; most marginal seats in 2018 are already Democrats while the GOP seats up for grabs are some of the safest in the country -- it would seem that the GOP will be in power at least until 2020.  Four years to effect massive change to the country.

Tuesday, November 15, 2016

Warren Buffet: Investing in US airline industry

There's an old joke: How do you make a small fortune in the airline industry -- start with a large one!
Granted its not particularly funny, but in view of WB's $1.3 billion investment into Delta, United and Southwest, it would seem that WB has gotten over his fear of investing in the airline business.  Part of the problem of making money in the business has always been the low barriers to entry, and the generally identical (if unpleasant) experience of flying commercial.

Any guy/gall could start up an airline with leased (grounded) aircraft and "steal" the business from the established carriers.  People's Express was the first in the late 1970s but a string of players have made the airline business largely unprofitable -- for most of the last 20 years the industry generated net losses.  What has changed?

In the US, the three above airline now account for 3/4 of the country's total traffic -- the US airline industry is back at the oligopoly it had many decades ago.  This means that pricing power is up!  The fact of the matter are that operating an airline is expensive and complex, regulation and excess capacity are both the cause of the industry's poor financial performance.

As for regulations, it seems that an important factor is the safety of passengers -- this role taken by the FAA insures "higher barriers to entry" especially in the US domestic market where most prime airports are now operating near or at full capacity (and building new airports or runways these days can be a nightmare).

Now, WB has not been perfect on this score, in fact he purchased a large stake in US airways in the early part of the '00 and saw a good chunk disappear in 2007, leading him to quip that the world would have been a better place had Orville Wright had been shot down at Kitty Hawk...

Now I am not suggesting following WB's investment strategy, rather its an interesting train of though that the US airline market has reached a place where it oligopoly power now exist, and with the arrival of Trump -- there is almost no likelihood of antitrust action against the airline (should they collude).  Although these days with very simple search engine its easy for an operator to know what the competition is doing, no need for coordination -- especially since they have independent markets. It is possible that WB has found a good investment, after all his investment into SantaFee railway was a stroke of genius -- when everyone thought he was wrong -- transporting fuel via rail instead of pipeline.

No position in any of the companies mentioned here

Monday, November 14, 2016

Market reaction to Trump's nomination

So far not much!

Everyone predicted that the market would drop 100 to 200 points (the S&P 500) and in fact nothing has happened.  So far Trump has made unsurprising nomination -- his real chef of staff will be Steve Bannon, whilst Reince Piebus will be the nominal chief of staff.  For starts RP is a good friend of the GOP, whiles Bannon is a sworn enemy of Paul Ryan.

Its not clear what Trump will do on Obamacare, while the GOP wants to abolish the thing, Trump has said that he will abolish Obamacare when Congress sends him a replacement could take a while since the GOP has never moved beyond a white paper that was very short on details (it had none).

The big moves now afoot are to pass Trump's agenda as fast as possible -- there are some ways it can be done, it seems that the GOP in Congress is keen to privatize Social Security and replace Medicare with vouchers (that would increase in value at the rate of inflation while medical costs are rising at three or four times the rate of inflation.

If they also abolish the EPA, the Education Department the government could be left with basically running the military and have, overall, very few roles.

I am almost certain that Americans are not too keen on seeing Social Security privatized -- after all, it would put the money in the hands of Wall Street, that has not covered itself in glory.  They like Medicare and don't want the project terminated.  Yet the agenda of the 1% is back in business with the abolition of most of the US Federal government.

Now there is a big difference between Congress' plans and the White Houses plans -- we know that Trump has some unfinished business with many GOP senators and congressmen/women and that Trump likes his revenge!  If Trump forces the GOP to produce a new ACA law to replace the current is possible that this would be a good thing.  I am far from certain that Trump has the intellect to do the work, but time will tell.

In the meantime, the Democrats got exactly what they deserves, for while Trump was hated by a large segment of the population she was despised by many democrats who decided that they had better things to do than for vote for Clinton.  The next four years should be educational for Democrats and for America's population as a whole.

Thursday, November 10, 2016

America's democracy is being tested!

I’ve been thinking about the election of Trump for the past 48 hours.  Its hard to judge, but its clear that after today’s meeting between Obama and Trump that most of Obama’s achievements will be canned by Trump.  He may even have an agenda; although its hard to figure out what it is from his comments over the past 12 months — has it really been that long.

My fear is that with the assistance of Congress, Trump may make some major changes to the “America of our forefathers”  I suspect that any issues that were on the GOP agenda (EPA clean energy etc etc) is on the block.  There is no doubt that he is pro- “clean coal” and fracking and against alternative energy.  Although the latter probably requires less help than the first two (its not only federal regulations here).  I think that within the next four years we will see some major shift in the American legal framework — this is the GOP’s chance to full the numerous vacancies on the bench, starting with the top (Supreme Court) all the way down.  He has an anti-democratic streak, that the US system seems ready to adopt (or at least is willing to give up in the name of greater "security").  Too many of our friends take the attitude “I don’t care about the invasion of privacy, I’ve not done anything wrong”  As the French revolution (and the Russian) have showed today’s friends may be tomorrow’s enemy.

On race I don’t think he cares that much, sure he’s happy to let the alt-right do its thing, but I don’t think he cares that much.  He’s a 70 year old real estate guy who thinks that white people pay their rent on time and that black people smoke crack and are on welfare (sure its racist), but he probably doesn’t see it that way. This could be a problem (especially if the Police get additional powers).

The fourth estate is in real trouble, they don’t like him and he’s probably looking for some payback — Trump is a guy who likes to have his revenge!  He’s said so on many many occasions.  He’s always hated the first amendment and would love to be able to sue newspapers for real and perceived wrongs.  He’s already said that he’s got a long list of targets.

On making America great again his plan to bring back coal (the economics are simply not there) and the get more manufacturing in the country — is a clear indication that he doesn’t know what he’s talking about.  Manufacturing in the US is higher today than it was 30 years ago, but productivity (and robots) have changed the narrative.  I wish him luck with NATO, OECD, IMF, World Bank and NAFTA.  There are a lot of players that have many different interests.  

There is no doubt that Trump admires “strong leaders” such as Putin and Kim Jung Un, his instincts seem to be anti-democratic and the US pump is primed for such a shift.  Snowden and Wikileaks showed how much data the American government has on its own people.  In fact, its not really a mystery; if Wal-Mart can figure out that you are pregnant from your shipping habits (at Wal-Mart) what do you think the US government can figure out when it has access to ALL your information.  They don’t need to know the details; they can have an educated guess.  The militarisation of the National Guards and of the Police across the country over the past 16 years has been dramatic — if you think that even Stanford University’s police department was offered anti-riot trucks… The implication for civil rights being “high jacked for the greater good” is ominous.

Now Trump’s way ahead is not all a bed of roses, granted he probably wants to get the ACA out of the way, and reverse most of Obama’s executive orders.  However, the question that Trump (and Congress) will have will be what to do about healthcare in America.  Right now the Freedom Caucus is gunning for repeal and do nothing, it is a very expensive solution that will increase the deficit — prevention is much cheaper than curing!  Trump’s relationship with the GOP and Congress will be difficult.  Very few in Congress supported Trump, and some opposed him!  In the last few weeks of the election the GOP stopped supporting Trump entirely — damage limitation.  That is a big problem for Trump and for Congress — Paul Ryan has the worse of both worlds.  Also Trump is very keen on re-building America’s infrastructure (from roads, viaducts, power distribution etc ) but Republican congress are not there for him.  It brings all kinds of conflicts between the executive and the legislative (we assume that Trump’s judicial appointments will “work his way”).

If we take the wider view of the election of Trump and the Brexit vote are something very serious could be afoot.  One way to look at the Trump’s win could be a serious lack of enthusiasm for Democrats only 48 million voted for Clinton, whereas in 2008 almost 58 million voted for Obama.  In truth, Clinton lost Michigan that has been Democrat for a long time.  Therefore the other way of looking at the two votes would be to take the view that the middle class doesn’t trust the elite. The people don’t believe the elite, and possibly with good reasons, they were lied to as they saw no benefits from the trade liberalization – instead they saw wage stagnation and job insecurity.  

For the majority of the working class “proles”  the past 40 years have been a disaster.  Trade was supposed to bring wealth — it did, but only to the elite.  The changes to the financial systems was suppose to bring benefits to the people — it didn’t, instead it was costly bailout and the financial deregulation has been a great way for players to tilt the field in their advantage (virtually every market in existence has been rigged by its participants).  The opening of the market to all investors has reduced (dramatically) the number of public companies — now only rich people have access to these opportunities (via the private markets).   THE PEOPLE HAVE SPOKEN, and they are ready to punt down the field — they believe that the status quo was against them (not entirely incorrect) that by electing Trump and Brexit they opened a new door (could be worse, but the current system is not working for them).  Sure the economy may get fried and relationship between races in America could be inflamed, but its worth a try, because what they have now is not working for them!

I don’t know Trump and have no real opinion on the man; my only interaction with him has been via his TV show, and his habit to name every building he owns after himself.  Stories during the election of his intellectual laziness were too numerous to entirely discount; his obvious lack of understanding of the START treaty, of the invasion of the Ukraine by the Russian and his complete lack of understanding of the reasons for alliances is breathtaking, but not unusual among American businessmen (surprisingly).  This is probably the most important aspect of his failures as a leader.  You have to go a long way back to find a candidate to the presidency displaying such level of ignorance about world affaires.  

Finally, this election like many election has shown that if you are not promoting a positive message (Clinton) and only have the “at least I am not him” as a mantra, then “your people” will not be excited and will not take the trouble to vote.  Clinton got nearly 10 million votes less than Obama did in 2008, and about 8 million less than he did in 2012.  Finally, I guess that the pollsters missed a significant ingredient in the polls they conducted.  Its not clear what it was, maybe people said they would vote for Clinton and in fact voted for Trump, but the more believable outcome seems to be that people (read Democrats) were not excited by Clinton, and on the day decided that they had better things to do.

The future is unknown, but I suspect that it’s not good for the Republic as a bastion of democracy

Wednesday, November 9, 2016

What the Fu$k

Talk about getting it wrong...again

What happened last night was a repeat of the Brexit vote a few months ago, hundreds of polls showed that Clinton was winning, and then she lost.  America and the world face the great unknown now.  What will Trump do how will he behave.

I guess he's lost his twitter privileges for ever!

The establishment candidate was rejected by the electorate, and Trump's winning was crushing.  We can talk about vote suppression but Trump won, handily the popular vote.  The electorate decided "this is not working for me, it has not worked for a long time, lets try something new...I will probably not be worse off and I could be better off too!"

One thing for sure, all these judges that needed to be nominated will now have a strong conservative flavor, Roe Vs Wade will be re-opened.  The markets will freak-out and but will eventually stabilize. Matt Taibbi wrote a funny (not so funny now) article about Trump moving into the White House.

Tuesday, November 8, 2016

Vote early, vote often!

A very very old joke when ballot stuffing was still a thing...

Anyway, today is the day where America chooses between a women and a crazy guy (I make no bones of disliking Trump).  Again a historic event whereby for the first time in American history a women will hold the highest office.  It will be interesting to see how she deals with Congress?

My guts tells me that she will not work the same way as Obama -- she's got a whole lot of stuff to take care of, first of which is dealing with the problems around the ACA.

As for the electoral process although Trump talks the talk I am relatively certain that he doesn't walk the walk.  Of course if the races are very close, there will be legal challenges -- I would hope that the winner is crowned by 9:05 tonight -- that Clinton wins enough from the east coast to make victory a sure thing.  We shall see. There is a strong likelihood that this will be a long drawn out affaire, that we will not know the result before the morning and it could go on for even longer (the 2000 election took 30 days).  However, this will only occur if its close.  Over the past few days Trump has said that the polls are fixed (sure thousands of polls have been fixed...)

I hope there is little or no poll violence, Trumps' supporters, some appear to be unhinged, gun carrying KKK members that will see it as their right to stop all minorities from voting.  Again, democracy could surprise us -- as it does from time to time.  One thing for sure, its that the media certainly enabled Trump more than any other GOP candidate.  He had that train reck quality -- even if you don't want to watch you feel a need to watch.

The damage to the GOP is certain "am I with this guy?" is certain to ring loud and clear over the next few weeks.  Clearly, there dog whistle of the past 40 years cannot be silenced and that's a problem for the GOP.  How do you deal with this "new" wing of the GOP.  The question is really how much of the old GOP remains?

Part of the GOP's problem is its toxic relationship with the Alt-right and talk radio/cable -- which espouses increasingly extreme views to improve viewership.  I see no easy solution here.  In fact, there is a lot of pressure (read money) that is already screaming that the problem is that Trump was too far to the left...its actually hard to believe but some people..

Anyway, I will probably not watch the elections tonight since either it will be over very quick or it will be an endless affaire.  There's got to be something better of the TV (oops I don't even own a TV) ok so a good book it is!

Friday, November 4, 2016

Oil at $43 Trading implications

Two weeks ago a friends were telling me that they were thinking in investing in the oil market -- either via derivatives or investing in service companies -- because "Oil is going up".  That's when oil prices were around US$50/bbl for WTI.  Today oil prices have crashed -- they've been on a downward spiral for a few days now, there was a miss read of the market and draw downs of strategic reserves -- which were not that much anyway.

Still oil is now down to $43 which is nearly 15% lower than its recent high of 10 days ago!

The problem is OPEC and those outside of OPEC agreeing to production quotas.  As you may suspect there are very good reason why these types of agreement tend to breakdown -- the incentive for cheater is just too great.  If everyone agrees to certain production levels prices should increase, but these higher prices are incentive enough to exceed the quotas -- a vicious circle.  Now many have faced lower oil prices and wish to rebuild their reserves.  The proposed quotas will make it difficult to reach those revenue targets -- hence the disagreement on each country's reserves.  It remains that Saudi Arabia, on of the largest producer of sweet light crude, can no longer force the OPEC meeting participants, because in the past for every cut the others took, SA took almost twice the cut.  Thereby incentivizing the market.  However, SA's position is no longer very comfortable, they have been drawing on international reserves and the Kingdom even borrowed on the international debt market -- its cheaper and easier than liquidating assets.

It remains that the game has changed, the North America market is largely self sufficient -- with the addition of Canada's production the US is about 90% self sufficient in oil & gas production, reducing its incentive in being involved in the proceedings.

Moreover, the American's oil independence position makes them less certain of what is good for the country:  low or high prices.  nevertheless the lower oil prices are seen as a stimulant to the economy.  For Europe the lower oil prices has also resulted in stronger Europe (from 1.09 to 1.12 to the US dollar).

MY point is the following:  Playing the energy complex is very very hard, and most will lose money since its a zero sum game, and there are substantial transaction costs.  When I talk of ETF or other financial product one of the key ingredient are the transaction cost, and the information costs.  They can be horrible and can destroy the economics of a transaction.

In case of the E&P sector (energy that is) the information costs are high because it takes a multidisciplinary understanding of the drivers of the energy sector; not only variation in consumption but to understand the complexity around distribution, production and political aspect of the segment.  Moreover, these "known" aspect change and the very high price elasticity (and small change in the demand or supply will have a disproportionate impact on prices) then bets are difficult.

That's not to say that you should stay out of the energy complex, rather you need to understand your potential for earnings, your timeframe and take into account information costs and transaction costs.  If a week ago you had bought some  3 month dated out of the money options on the oil price (WTI) then the value of these option is today very low -- actually lower than what you paid (although not zero) because if the price of oil dropped by 15% in 10 days it can go up by that amount in 10 days too.  The high volatility makes the investment risky and very poor TODAY, but it doesn't mean its a terrible investment (it would have been cheaper to buy such option today).

Instead if you had bough shares in a service company the impact would be lower, or even better if you had bought an oil ETF (even lower transaction costs), these are all option when today the value of your investment would have fallen, because oil prices are volatile -- it may be that at 15% drop in oil price you liquidate your ETF or your service company investment -- because the mark of a good trader is the ability to see when a position is simply bad and must be terminated.  An excellent trader will have maybe 50/60% of his trade make money.  His ability to cut his losses early is what makes him and his institution money (in the pre-HFT environment).

Anyway these are my thoughts

Wednesday, November 2, 2016

Energy cost, energy usage and price trends

1. Change in markets:

One of the more interesting aspect of the energy complex is how things change over time.  If I had written two years ago that solar energy would be cheaper to operate than a natural gas power plant, most would have found this comment as crazy; when in fact the cost of operating (including building and decommissioning) a gas fired power plant is about 3 cents per Watt per hour.  A few months ago, in Dubai, a new solar power plant was build and it sells its power at 2.99 cents per Watt per hour. Now the two are NOT equivalent; gas power station work 24/7, whereas solar plants only work during day time -- so the cost/benefit analysis is somewhat false.  Still this is a huge milestone.

The aggressive installation of solar panels in Australia and in certain other parts of the world has had a massive impact on energy prices.  In certain cities in Australia (where the power market is deregulated) power prices durning the summer at 2 pm in the afternoon (5 years ago that was peak price) went negative for weeks on end.  Homes were net sellers of power and even industry was incentives to build solar farms so that demand for "classic" power infrastructure was negative.  You actually had to pay people to buy your power...Today, even without subsidies the payoff for installing solar panels is in the order of 48 to 60 months.  A simple calculation for both households and industry.  They have begun to change the power map across the world.

2. Consumption timing

Consumption has always been the biggest issue, the variation on consumption by time of day and overall consumption and where that consumption takes place is even more interesting.

The vast majority of energy (electricity) is now being used by industry.  Certainly, during a commercial break during the hockey playoff  (use whatever televised national sport fits) there may be a spike in demand, but these figures are always used to give a sense of how energy demand changes over very brief periods of time.  The fact is that for most utilization 98% of the electricity used is produced immediately, and not stored -- only 2% of energy is stored (hydro mostly).  It gives a sense to the size of the challenge faced by the green energy movement, because in reality its not at 2 pm that we have a problem its at 11 pm -- when the sun is not shinning.

In the very near future, the arrival if the electric car as a consumer product (not yet) is certain to change demand loads -- right now you get home plug your car into the wall -- maybe even your new Powerwall 2, and you recharge your car batterie.  But what happens when 20,000 of your fellow electric car owners -- who count on the grid instead of their powerwall do the same thing?  In fact, the issue for electric cars is that they may actually not be that green, if the power that is used comes from a gas/oil or coal power station -- you have only shifted demand to the electric grid -- you have not reduced overall pollution.

What happens when the average American decides to buy a battery system because the price that the utilities offer for his electricity is simply not worth it anymore.  The impact of wider installation of household solar systems will be to reduce the price utilities pay for that electricity -- which is available at times when the utility may have surplus capacity!  The utilities dilemma is not that they don't want the household generated power, its that they may not need it when its available!  The installation of battery system opens the door

3. Peak load and demand

Never mentioned by green energy proponents is this time shift problem; years ago discussing wind generation in a meeting a guy from GE said:  "You know when wind generation works the worse its when its really really cold or really really hot", and he's right.  Very often green energy is simply not available when its most needed.   Therefore, energy providers need to increase dramatically the availability of gas power stations for when green energy cannot provide -- thereby increasing system costs. Time shifting is the solution; it has two issues -- energy density and costs.

There are three types of power plants that can vary their production level quickly:  Gas, Hydro and Nuclear.  That's it!  Coal power station are becoming less interesting to utilities because they either produce at their full capacity or they are off.  Gas can be increased and decreased in increments over a short period of time, hydro can be turned on or off in instant, the same for nuclear power plants.

4.  Pie in the sky:  The arrival of storage

The fourth solution is dramatically increasing storage availability, and green energy providers need to address this problem head-on and immediately.  Whereas the Chinese have been leading the field in the production of solar panels (they own 95% of global production), the battery technology (storage) is driven by Americans (Tesla) and German (Schwerin and others) companies.  This is where the biggest innovation (and where all the money will be made) will occur and insure that costs, density and availability (when need) milestones are reached.  The efforts of Tesla and its founder are going in the right direction.  The size of the market makes it that Tesla (and now solar city) don't have to worry about competition -- the market is simply too large to worry about that.

The first step was to create storage technology that was built for the average consumer at heart -- the iPhone solution; its plug and play.  The new Tesla batteries come with a pre-installed inverter, the system can be monitored from your cell phone, and all the software is on the web.  It means a simple solution that is affordable for the average consumer.  The cost is still not really there; at US$ 5,000 for 14kw its still pricey -- what I mean is that if you compare the cost of a Gas fired power plant and then consider the equivalent number of batteries the gas fired power plant still wins!

However, one battery in one house is not worth much to a utility, but 1 million batteries will help in meeting peak load demands.  By the way, this will bring interesting change on the power market, because once you consider selling at peak load then the universe of power producers changes... the policy impact (and regulatory impact) are certain to create debate.

5.  Solution & Outcome

In reality, for solar to be really considered a replacement for most standard power plant the cost per Watt/h will have to drop by an order of magnitude.  Already its amazing that solar power that 10 years ago was 20/30 times more expensive than gas is now on par in terms of installed operating costs.

Utilities have for years in the US and elsewhere been forced to buy Green energy from domestic solar installation, but this offering could not be time shifted.  Granted a huge chunk of overall electricity demand comes from industry, but that provides no help to power companies that have to supply for peak load.  The trick is to shift this supply to different times.

Although Dubai bought power at 2.99 cents per Watt/hr its not as valuable to the utility as the nearby gas power station because of this 24/7 availability.  This is the reason that solar has to become cheaper; only when its priced at 0.50 cents per Watt/hrs will the cost be low enough to justify (on a large scale) the implementation of battery technology in a way that provides the grid with sufficient excess reserves to meet its peak demands 24/7.

The green revolution is here to stay, assuming that most will not change their way of life -- they will go home at 6 pm will have dinner (of sort) and will watch TV, then any new solution has to adapt to how people live.  The strength of apple is that you didn't have to bend to technology, the technology worked so that it made your life easier.  If you purchase a Television the remote has dozens of buttons that you cannot figure out what use they have.  You may use them only once when you first install the equipment (and then even less).  The idea for the green energy sector to take over the world is for it to adapt to our needs, or at the very least give us the signal to change our behavior.

The first issue is that equipment cost and efficiency has to rise further -- solar panels are already operating at 15% efficiency -- and there are new panels that are near 21% efficiency (its very good).  Battery system have to be easy to install and require minimal maintenance (and not catch fire).  Solar (and wind) will take over the world once their installed costs is lower than 1 cents Watt/hour -- a third of today's price

Economic signals have to normalize, and the subsidies that solar producer have must disappear (granted they also have to go in the oil& gas sector).  The information age is upon us, and the incentive and date to optimize our energy consumptions are available right now!  However, they are rarely used.  Most utility who have installed smart meters have the data available -- and yet it is neither used or shared.  This metadata is unused.

Certain countries have made an objective that 35% of their energy production has to be green -- that's high, on the other hand it also includes nuclear... gas powered stations are here to stay.  Ideally, already well depreciated they can become the peak providers that the system requires.

Anyway these are a few of my thoughts

Note:  Oil prices are on the slide again, apparently the excess draw of last week was not only a misunderstanding but bad calculation all around.  The world is awash with cheap oil...

P.S.  No position on Telsa or Swering

Tuesday, November 1, 2016

One more week and it will be all over...maybe

It certainly looks like the presidential election will be over in a week (joke), although the fight for highest office is certain to continue.  Already the "impeachment" phase against Clinton has started -- it will be Benghazi, it will be the selection of supreme court justice, it will be the emails it will be a continued civil war between the White House and Congress.

The GOP's "decision" to select Trump as the candidate for the presidency remains one of the most mystifying outcome of the GOP's primary season; Trump is not really a Republican -- DJT is for DJT, and very little else, has a limited grasp of reality and zero understanding of foreign affaires -- some with say that he has zero understanding of domestic policy too!  In fact, Trump is the kind of guy the Democrats were praying to have as an opponent.  Reasonably, it was the GOP's turn to hold the highest office, but the 12 that ran for the GOP few had the "mettle" required for higher office.  Possible Rubio, maybe one or two others, but by and large the GOP's "deep bench" was largely unelectable because they could not or would not be appealing to the country's swing voters.

DJT represented the worse of the party, driving down to the lowest common denominator.  DJT was unbeatable (in the primaries) because he spoke frankly of the GOP's dog whistles that has been the party's mantra for the past 40 years.  The GOP was further damaged by both its swing to the far right, and by its own decision to required absolutism by all its members.  In government you rarely get what you want, because others wants something different.  For the past 8 years (at least) the GOP has been governed by absolutist principles -- it's my way or I shoot everybody".

So the first 100 days of Clinton's presidency will be marked by absolute non-cooperation from Congress, because the GOP has (probably) decided that the only strategy worth following is non-cooperation and sabotage.  They will block all of Clinton's governing moves, whatever her and her administration are for they will be against.  They will salt the earth to make sure that no one can achieve anything.

At the same time, within the GOP civil war is certain to emerge.  First, DJT is not done, even after the election!  He's certain to extract his revenge from the GOP and its members.  Fox News is now the enemy, as is half of talk radio.  Independently of how hard Clinton's job will be that of Paul Ryan will be almost impossible -- unfortunately for the Freedom Caucus he also irreplaceable because no one in his right mind will want that job!  This may sound ridiculous, but think back two years ago when he first took the job!  No one else was up to do it, no one else wanted it.  it will probably kill any chance of Ryan bidding (and winning) the primaries for the 2020 presidential elections, that should give pause to any contender.

The impact of this on the global economy cannot be underestimated.  The immobilism of the US administration, its inability to reach the minimum of coordination -- think of Congress' action after the Zika epidemic started in Florida -- with its impact on pregnancy... yes that's right absolutely nothing was done.  The number of pregnancy at risk keep on rising, and with the Republican administration in Florida -- the abortion solution is at times impossible.  The US government is unable to address problems of public health, instead we were treated to more votes to cancel or terminated Obamacare...because the first 39 votes didn't work, the next one will be the winner!

The one good thing is that the transition between the Obama administration and that of Clinton should be easy and seamless.  I would not be surprised if Congress tried (in the dead duck season) to start impeachment proceedings before Clinton can take over the office of President.  There are voters to convince for the midterms in 2018 that will require that red meat, after all, all of the GOP has said over and over that Clinton should either be in Jail or before a firing squad!

For investor the winning of the White House by the Democrats is a good thing -- usually the stock market improves during a Democrat administration and collapses under a Republican one.  Cause and effect here are not in question -- It is possible that the GOP President in the past inherited a moribund economy -- although the signs are not pointing that direction (there continues to be warning of US dollar devaluation [its never been as high], or of run away inflation [ditto], but these are the usual scare tactics of the GOP supporters).

Yes the US economy has gone through eight years of economic growth -- maybe not the most robust but still positive.  It gives some hope for the future of a Clinton administration -- but the US system seems to indicated systemic long term decline!  Who knows, maybe we will have Secession from the red states -- maybe there will be rebellion from some of the crazier elements...who knows, but one thing for sure, the antagonism exhibited by the GOP towards a Clinton administration is nothing short of a disaster for the republic (and not in a good way), because it makes the whole government apparatus ineffectual and will force decisions to be taken in other ways -- that fall short of the democratic process (presidential decree etc etc).

Wednesday, October 26, 2016

Pssst! -- the best trade in the world; an insider's track

First off the title is a bit of a lie (ok one huge lie).

Yesterday the oil market was at a flutter because draws against reserve where higher than anticipated.  Guess what happened today, oil prices crashed right back down to the $48.99 level -- when they had been as high as $50 yesterday.

You ask:  What's going on?
The answer:  No body knows!

The oil markets are nearly fungible; there is a bit of a spread between Brent and WTI but the difference in price is more cause by technical issues (when the spread is substantive) than anything else.  In fact, as reserves rise the cost of adding to reserves rises exponentially, hence the prices of crude drops (its a zero sum game).

Now look at the price of oil -- yesterday there was a panic because the draw from reserves was about 2MM bbl higher than anticipated.  Today, well today the market took stock and realized that it meant nothing.  Because it was the same issue that I mentioned above about Brent Vs. WTI -- oil was at the wrong place; it was a location blip that cause the market to overreact.

Some would say that this overreaction is how brokers make money, but in fact its not how brokers make money, because you cannot time or analyze these movements, you may be lucky as you may be unlucky.  The draw occurred because although there TOTAL amount of reserves is unchanged, the location of these reserves gave a false signal -- that took traders and analysts a few hours to figure out.

So there you go, a bit more market mystery revealed.  Because of the elections and the possible move by the Feds to raise interest rates the market is somewhat jittery and looking for reason to "go the other way"  yesterday's announcements that specific reserves were below a certain level that would show renewed economic activity (beyond what was expected) led to yesterday's price spike.

Now you know a 4% price movement in the WTI was caused by incorrect information!

No position in Brent, WTI or S&P500

Monday, October 24, 2016

November 9th: The state of America's democracy!

It seems increasingly clear that Clinton will be elected president on November 8th and as soon as the partying has stopped some hard questions will need to be asked by both parties.  The Republican will probably face the hardest review:  How can the GOP continue when its policy seem to be aimed at uneducated white males?  The rejection of all others and the spectacle that was DJT is certain to force the party to have another difficult review.

Another aspect of the review is the marriage that the GOP made with talk radio and groups such as Fox.  This has led the party to more and more extreme positions, not based on any specific drive but as a rating driver for talk radio and FOX.  On the other hand the shine seems to have come off FOX over this election cycle -- it may save the network!

We can already see some important changes:

The monolithic Christian right is no longer a sure thing for the GOP.  Granted the the break could be temporary should Cruz come back in 2020 (or Paul Ryan) then they may go back into the fold. Although its far from certain...once other options have been examined and considered!

Freedom Caucus could breakaway from the GOP, this ultra conservative group is becoming unmanageable within the GOP caucus, where a group of 42 Congressmen (out of 435) seem to block all legislation that doesn't meet their exacting standards.  Should the Senate return to the Democrats (something that is increasingly possible -- probability in the 65% range) then their position would become untenable, without a majority (GOP) the power of the Freedom Caucus is seriously eroded. Other Republicans can vote with the Democrats to get things done (since they will not be blocked in the Senate).  Anyway, the FC represent the kernel of a new political entity within the framework of the American electoral system.  it would also follow a pattern of more extreme right wing views as mainstream in other countries.

Dichotomy between party members and the beltway intelligencia: In both parties there is a breach between Beltway and "Core" party members; the strength of Bernie Sanders' vote (still substantially behind Clinton, but this is a Senator from Vermont -- and a socialist to boot and until two weeks prior to the primary was an independent -- not a Democrat).  This dichotomy between "core"  and "beltway" party members is troublesome for both parties -- more so for the GOP that has been playing dog whistle with nativist (or plainly racists) policies for decades. The Southern strategy was driven by a desire to turn back the clock of desegregation -- The South that had been Democrat for nearly a century became republican.  

The soul searching will be more immediate for the Republicans; first in 2012 they tried (driven by Beltway Republicans) to draft a new way forward, just to have Trump go the exact opposite direction. For both the establishment was attacked successfully by outsiders; Clinton was forced more to the left, and the GOP went to the far right (anti-Semitic, racist and xenophobic positions).  This was never the intention of beltway Republicans -- and yet the base (which I call the Core) saw things differently -- they saw a different way driven in large part by more than 8 years of aggressive anti-democratic (and anti Democrat) statement.  It is truly difficult to change the mind of people that believe that UFO exist (nearly 20% of Trump's supporters believe in UFOs).

Finally, there is WWDJTD (what will Donald J Trump Do?).  The end game has to be something else than winning the elections, his behavior in the third debate was that of a man who was trying to reassure his base -- not of a candidate that was trying to expand his appeal.  Considering his ratings its strange behavior if winning elections is the objective.  One has to wonder if the stories of new Trump network are true o just more BS.  Trump is running a strange champagne, declaring that if he is not the winner then the results were fabricated, that people are out to get him (although that may be true…).  He sounds more unhinged the closer we get to Election Day.  Very strange behavior, unless winning the election was only a byproduct of his real strategy.