Fed Heads Eric Rosengren and Robert Kaplan resigned their posts yesterday. When bigwigs âresign,â that means colloquially, they were fired. Were you forwarded this email? [Sign-up to Rude Awakening here.]( [Unsubscribe]( [The Rude Awakening] Dodgy As Hell - Fed Heads Eric Rosengren and Robert Kaplan resigned their posts yesterday.
- When bigwigs âresign,â that means colloquially, they were fired. But they werenât really fired; they just walked before they were pushed. Get it?
- This reminds me of another prominent member of the USG. But she ainât getting fired, is she? Recommended Link [Have you heard George Gilderâs latest extraordinary prediction yet?]( [Click here for more...]( He was dubbed the âTech Prophetâ by Forbes⦠once won the White House Award for Entrepreneurial Excellence⦠and his work is respected by tech insiders like Bill Gates and former Google CEO Eric Schmidt⦠And recently, Gilder went on camera to explain how a new tech revolution is about to hit America⦠one that could unleash up to $15.1 trillion in new wealth. According to Gilder, if you donât understand this new tech you could miss out on one of the greatest moneymaking opportunities for thirty five years. [Get More Details Here]( Sean Ring Editor, Rude Awakening Itâs a fine Tuesday morning here at the Far Eastern Colonial Office of Paradigm Press. I hope youâre well and thriving. Before I get to todayâs debacle, let me apologize for my slow replies to the mailbag. Iâve read all that youâve sent, but I havenât had a chance to write back. I will do so this week. Thank you for your patience. One last thing, after yesterdayâs rather positive message, I feel Iâve let you stick out your chin for me. Iâll try to be gentle. This one is a doozy. Fed Up With the BS Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan have resigned their positions following allegations of insider trading. Okay, there was no mention of insider trading, nor any impropriety, for that matter. But it's dodgy as hell that two men who help control the economy by manipulating interest rates are trading single stocks. The counterargument is that theyâre too high up to influence, or be affected by, single stocks. Maybe those people are right. Nevertheless, itâs not a good look. I don't mind if they own broad market mutual funds. Broad market mutual funds and ETFs (exchange-traded funds) are fully diversified. Their investors can't possibly benefit from insider trading, and they'll make a return in line with the market. What these guys can do when they're trading single stocks is to make abnormal returns trading on information⦠well, we donât know what information theyâre trading on. Thatâs the problem. We canât prove theyâre cheating, and they wonât prove to us theyâre not. This is just fine for private individuals. But itâs not acceptable when youâre in a position thatâs supposed to be âpure as the driven snow.â Sound familiar? Is Paul âThe Profitâ Pelosi a Prophet? Hung-Wah WhatsApped me yesterday about Nancy â$15,000 Fridgeâ Pelosi. He told me about an app that allows you to âpiggybackâ her trades once theyâre entered into the Congressional record. The trades are entered 45 days after theyâre executed. âWhy?â you ask. Because Nancy Pelosi's dodgy-as-hell husband, Paul, is currently nine of nine this year with his trading picks. Thatâs a trading record thatâd make Peter Lynch of Fidelity Magellan fame blush. Interestingly, a Villanova alumnus named Chris Joseph built the app. Itâs called [Iris](. Hereâs a screenshot of the group created to follow her - sorry, her husbandâs - trades: According to [Investopedia]( âMany people may be surprised to learn that until recently, trading based on material nonpublic informationâotherwise known as insider tradingâwas both legal and commonplace among members of Congress.â This allegedly ended with the STOCK Act of 2012. STOCK stands for Stop Trading on Congressional Knowledge. But clearly, the STOCK Act hasn't stopped insiders like Pelosi from making boatloads of money. Nancy Pelosi's salary is about $225,000, while Paul Pelosi plays with millions of dollars in stock options and wins all the time. To remind you, stock options are highly levered bets with time decay. That means you control a load of assets with little down, have to pick the right stocks, and get the timing right. This is extremely difficult for most investors. But not for Paul Pelosi. Nine out of nine this year. And we're not supposed to assume that there's some sort of insider trading going on here. What district does Nancy Pelosi represent? The 12th District of California. San Francisco. The financial center of Silicon Valley. Wall Street West. Recommended Link [Amazonâs Richest CEO Snubs Congress]( [Click here for more...]( After stepping down as CEO of Amazon, the worldâs richest man refused to testify at a senate hearing on wealth inequality. It could be because his latest project has the potential to make him â and thousands of Americanâs â even more wealthy. Billions of Dollars are at stake in this project. Donât miss out... [Click Here Now]( Of course, many people who live far from San Fran trade tech stocks. But their wives donât have those kinds of political connections. From a [Forbes article]( published last year: Insider trading by a member of Congress is a crime. To bring a case here, however, federal authorities must overcome two obstacles: the Speech and Debate Clause, and proving âmaterialityâ in novel circumstances. Indeed, the announcement that the authorities have closed their investigations into three senators [for potential COVID-related trading - Ed.] may show these obstacles already have proven too steep. Federal law prohibits securities trades while possessing material, non-public information in violation of a duty to a third party. In the STOCK Act of 2012, Congress clarified that insider trading laws bind members of Congress (as well as the President and members of the executive branch). Federal authorities, however, never have prosecuted a member of Congress under the STOCK Act, although they have prosecuted members (including former Representative Chris Collins) for insider trading on information acquired outside Congressional duties. I encourage you to click on the link to read the Forbes article for a full legal explanation of the situation. Mrs. Pelosi is the speaker of the House of Representatives in the United States Congress. There is no reason for her not to know what's happening inside these companies should she choose to see what's happening. The Pelosis are not short of a dollar. They've done very well over the years. Nancy Pelosi has been in Congress for a very long time - since 1987, actually. To me, itâs obvious why public trust has broken down. There are numerous reasons, but perhaps none more so than elected officials and appointed officials like Rosengren, Kaplan, and Pelosi benefiting from their knowledge with outsized returns. It is an absolute disgrace and makes a mockery of the system. Now, I do not doubt that Speaker Pelosi is following the STOCK Act to the letter. But I have many a doubt that she's following the STOCK Act to the spirit. I hasten to add that she made a bundle via her husband this year, whoâs also covered under the STOCK Act. Of course, this raises questions. It's high time that we have another look at the STOCK Act. Funnily enough, recent attempts to strengthen the STOCK Act, indeed directed squarely at Speaker Pelosi, have failed. Of course, she's going to mobilize her troops inside Congress to make sure that never happens because no matter how much you've made, you want to make more. Just like Uncle Artie reminded us yesterday, "Wealth is like seawater. The more you drink, the thirstier you get." And boy, is Nancy Pelosi one thirsty woman! STOCK Act? Phooey. How about a spell in the stocks instead? Have a great day ahead! All the best, Sean Ring
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