John Collier Lady Godiva c1897
Why own stocks?
If anything, the stock market is being extraordinarily critical of what it’s being served, notably earnings that are exceeding already high expectations. Take Caterpillar, which initially rallied Tuesday after reporting better-than-expected results. But on the post-earnings conference call, its chief financial officer called the first quarter the farm- and construction-equipment maker’s “high-water mark for the year.” So, if it doesn’t get any better than that, the stock market’s response isn’t to savor the moment, but to sell it. CAT ended up losing 6.2% in reaction to that comment, leading a massive retreat in industrial and material names that helped the Dow industrials shed over 400 points in the trading session.
That isn’t an entirely irrational response, given data that show growth is slowing, while inflation is picking up. To those late-cycle symptoms add rising rates, both the ones administered by the Federal Reserve and those set by the bond market. On the latter score, the benchmark Treasury 10-year note briefly peaked just over 3%, a psychologically significant but otherwise not terribly meaningful number. Arguably far more significant is that investors and savers can get 2% on six-month Treasury bills and almost 2.5% on a two-year note. Two years ago, dividend stocks provided investors a one-percentage point advantage over risk-free rates, says Danielle DiMartino Booth in her Money Strong missive. Now those places have been swapped.
Adds David Rosenberg, chief economist and strategist for Gluskin Sheff, this ability to get a “safe yield” for the first time in a decade, with no risk from falling stock or bond prices, represents a “seminal shift and a huge source of competition for the dividend allure of the stock market.” The prospect of higher rates may cheer savers, but poses greater risk to an economy never more dependent on debt, DiMartino Booth says. But that’s the direction the Fed is headed, given the rise in inflation and signs of slowing growth, an unpleasant combination that suggests stagflation; if not 1970s-style double-digit inflation and unemployment, then an economy expanding more slowly than prices are rising.
He claims it’s all still intact.
North Korea leader Kim Jong Un has promised to close his main nuclear weapons test site in May and said he will invite South Korean and American media to witness the shutdown. Ahead of an historic meeting with U.S. President Donald Trump expected within the next three to four weeks, Kim told South Korea’s president that two tunnels at the nuclear test site are still in good condition, playing down international speculation that the site was so badly damaged by nuclear explosions that it can no longer be used. Kim’s pledges to Moon at their historic summit on Friday were detailed in Seoul on Sunday by Moon’s chief communication official.
Kim told President Moon Jae-in on the disputed Korean border that Trump will learn at their meeting that North Korea has no intention of using its nuclear arsenal toward South or the Pacific or to target the U.S. The North had no reason to own nuclear weapons if it and the U.S. promise non-aggression against each other, he said, according the the Seoul briefing. Trump said Saturday night that he expects his historic meeting with Kim will take place “over the next three or four weeks.” “Strength is going to keep us out of nuclear war, not get us in,” Trump told a rally in Washington, Michigan. Earlier, he said details of the summit are being ironed out, and that he’d spoken with the leaders of South Korea and Japan about preparations for the meeting.
Symbols are important.
North Korea has decided to wind its clock forward half an hour to match its time with the South’s, two years and eight months after it decided to adopt its own standard time, News 1 reported. Seoul’s presidential official Yoon Young-chan told reporters Sunday that in talks between President Moon Jae-in and North Korean dictator Kim Jong Un, Kim said he would shift time in Pyongyang to Korea Standard Time (UTC+9:00) Accompanied by his wife Ri Sol-ju, Kim is said to have pointed to the two clocks hanging inside the Peace House, located on the South’s side of Panmunjom truce village, and said that this “pained his heart,” before suggesting to Moon that the South and North “first unify the time.”
Until 2015, Pyongyang used the same time (135 degrees East) as Seoul but adopted its own standard time which was thirty minutes behind KST. The North Korean leader said, as Pyongyang was the one that changed the time, it should be the one to make the adjustment again, JoongAng Ilbo reported. Yoon said this indicates Kim’s willingness to actively coordinate with the international community.
A continent full of zombies.
[..] there are signs that the ECB has quietly begun to taper its corporate-bond buying program. The rate of purchases under the Corporate Sector Purchase Programme dropped 50% in April to about €700 million per week, down from €1.4 billion during the first quarter, analysts at Deutsche Bank pointed out. That could mean the ECB is starting a “stealth taper” in order to wean the European bond market off the corporate debt purchases it began in June 2016, Deutsche Bank said. But are the companies that benefited from the ECB’s largesse ready for life without Draghi? There’s no doubting the ECB’s bond buying has exacerbated distortions in the corporate bond market — distortions that were first engendered by the central bank’s low interest rate policy. Yields came crashing down and spreads narrowed.
At the peak of ECB’s bond buying binge, the average yield of the Iboxx non-financials index fell as low as 0.69%. For German blue-chip companies such as BASF, Continental, Linde, SAP and Siemens, yields fell to less than 0.5%. France’s pharmaceutical company Sanofi and German consumer goods manufacturer Henkel even managed to issue bonds at slightly negative yields, effectively helping pay off their debts. But that was then. Now, the average yield of the Iboxx non-financials index is back above 1.10%. As Reuters reports, some of Europe’s biggest money managers are reducing their exposure to corporate bonds. Some are even shorting them, betting that stress is building in a market that was buoyed by years of rock-bottom borrowing costs. Some new bond issues have even struggled to find buyers, when not so long ago they were flying off shelves.
Bank of America guesstimated last year that as many as 50 of the euro zone’s 600 biggest companies deserve to be classified as “zombies,” as they pay far too much interest in relation to their profits. For these companies the ECB’s bond-buying program was a godsend, allowing them to continue refinancing their debt and stave off default. But interest rates are beginning to rise again. Whether or not the ECB has already begun to taper its corporate bond buying on the quiet, the program will likely be phased out later this year. And yields have already been rising ever so gradually in anticipation. That means that the companies that have benefited from the central bank’s monetary support are going to soon find themselves facing a whole new, more challenging reality. For some it’s unlikely to be a pleasant one.
That’s what happens when you try and run an economy on a housing bubble.
Home ownership among young families has plummeted across every corner of Britain over the past 35 years, according to a devastating inquiry into the housing crisis facing millennials. The proportion of families headed by a 25- to 34-year-old that own their own home has more than halved in some regions, showing that the crisis goes far beyond London. Analysis conducted as part of a two-year investigation into intergenerational fairness in Britain, chaired by a former Tory minister, found that millennials are being forced into increasingly cramped and expensive rented properties that leave them with a longer commute and little chance of saving for a home. It also finds an increasing proportion of the young living in overcrowded housing.
The commission, which has been overseen by the Resolution Foundation thinktank and includes the former universities minister David Willetts, is expected to conclude that new taxes on property wealth may be the only way to restore fairness and prepare the country to pay the care and support costs of an ageing population. Ownership among 25- to 34-year-olds has plummeted in Greater Manchester from 53% in 1984 to 26% last year. It has fallen from 54% to 25% in south Yorkshire, from 45% to 20% in the West Midlands, from 50% to 28% in Wales and from 55% to 27% in the south-east. In outer London, the proportion has collapsed from 53% to just 16%. Out of 22 regions analysed by the commission, in only one – Strathclyde in Scotland – has home ownership among the young remained stable. It stood at 32% in 1984 and 33% last year, having peaked at 45% in 2002.
Ownership in London has fallen consistently over the past 30 years, whereas rates in some other parts of the country declined more slowly before the early 2000s, but very rapidly thereafter. Even favourable economic conditions are likely to result in millennials catching up with the home ownership levels of the previous cohort only by the age of 45. Fast-growing inheritances will help some, but nearly half of young non-homeowners have parents who do not own either.
We need an overall ban on data harvesting for profit.
Twitter has now also become embroiled in the Facebook data harvesting scandal – as the Sunday Telegraph reveals that the social media giant sold user data to Aleksandr Kogan, the Cambridge University researcher and director of Global Science Research (GSR), who created an app which harvested the data of millions of Facebook users’ without their consent before selling it to political data firm Cambridge Analytica. “Aleksandr Kogan, who created tools for Cambridge Analytica that allowed the political consultancy to psychologically profile and target voters, bought the data from the microblogging website in 2015, before the recent scandal came to light. -Sunday Telegraph”
Kogan says that the data was only used to generate “brand reports” and “survey extender tools” which were not in violation of Twitter’s data policies. While most tweets are public information and easy for anyone to access, Twitter charges companies and organizations for access to information in bulk – though Twitter bans companies which use the data for political purposes or to match with personal user information found elsewhere. A Twitter spokesman confirmed the ban and said: “Twitter has also made the policy decision to off-board advertising from all accounts owned and operated by Cambridge Analytica. This decision is based on our determination that Cambridge Analytica operates using a business model that inherently conflicts with acceptable Twitter Ads business practices.
The company said it does not allow “inferring or deriving sensitive information like race or political affiliation, or attempts to match a user’s Twitter information with other personal identifiers” and that it had staff in place to police this “rigorously”.-Sunday Telegraph Data licensing made up 13% of Twitter’s 2017 revenue at $333 million. In a March blog post, Citron Research said that Twitter’s 2018 data-licensing business will generate $400 million (analysts polled by FactSet say $387 million) and that it represents the fastest-growing segment of the company’s operations (which it is, according to FactSet).
“..I feel like my baby has turned out to be something horrible, and these people I trusted and helped along have forgotten where they came from..”
Even if Facebook’s stellar Q1 earnings report hadn’t helped erase some of the losses that Facebook shares incurred in the aftermath of the Cambridge Analytica scandal, Facebook executives Mark Zuckerberg and Sheryl Sanderberg would still believe that the company’s troubles are largely behind them and that the company had essentially repaired the damage done to its reputation. That was the assessment delivered by early Facebook investor and one-time Zuckerberg mentor Roger McNamee, who warned during an appearance at an event organized by Quartz in Washington DC last week that the company’s leaders are deeply complacent and still haven’t accepted the fact that Facebook has badly mislead its users about how the company profits off their data.
Despite Zuckerberg’s warning, embedded in his opening statement to Congress earlier this month, that the company planned to make changes that could “significantly impact” profitability, McNamee believes it’s likely Facebook is “going to get away” with the bad things that it has done, which is “particularly dangerous” considering the 2018 midterm elections are only months away. McNamee said he’s deeply disappointed in how Zuckerberg and Sandberg have responded to the crisis by refusing to accept responsibility. During their post-crisis media tour, both executives insisted on blaming Cambridge Analytica for “misleading” Facebook, even though Facebook never bothered to alert users whose data had been affected. “They’ve done bupkis to protect us,” McNamee said.
The whole affair has left McNamee – who considers his involvement with Facebook during its early days to be the “highlight of a long career” – deeply saddened. “Every part of this has made me sadder and sadder and sadder. I feel like my baby has turned out to be something horrible, and these people I trusted and helped along have forgotten where they came from,” he said in a conversation with Kevin Delaney, Quartz’s editor-in-chief. McNamee has become an outspoken critic of the company, comparing its role in the 2016 US election to “the plot of a sci-fi novel” while at the same time admitting that he has “profited enormously” by backing Facebook early on. The organization he helped found, the Center for Humane Technology, has made it a mission to expose Facebook’s multiple flaws, and to try to fix them.
Facebook facilitates ethnic cleansing. But profits are more important.
[..] Facebook is a new kind of monopoly. We’re accustomed to the idea of companies becoming dominant in some jurisdictions. But we have never before encountered a corporation that has a global monopoly. Because wherever you go on the planet these days, Facebook is the only social-networking game in town. It has no serious competitors – anywhere. The implications of this are only now beginning to dawn on us. In the past two years, we have woken up to Facebook’s pernicious role in western democratic politics and are beginning to think about ways of addressing that problem in our bailiwicks. To date, the ideas about regulation that have surfaced seem ineffectual and so the damage continues.
But at least liberal democracies have some degree of immunity to the untruths disseminated by bad actors who exploit Facebook’s automated targeting systems – provided by a free press, parliamentary inquiries, independent judiciaries, public-service broadcasters, universities, professional bodies and so on. Other societies, particularly the developing countries now most assiduously targeted by Facebook, have few such institutions and it is there that the company has the capacity to wreak the most havoc. We’ve had intimations of this for a while, notably after it became clear that Facebook was a medium for anti-Muslim hysteria in Myanmar, hysteria that was subsequently translated into full-blown ethnic cleansing.
One of the key figures in all this was the ultra-nationalist Buddhist monk, Ashin Wirathu, who used Facebook to broadcast his views about the Rohingya after he was banned from preaching by the government. Wirathu compared Muslims to mad dogs and posted gruesome pictures of dead bodies that he claimed were killed by Muslims – with predictable consequences. United Nations officials now say that social media has had a “determining role” in anti-Rohingya Muslim violence in Myanmar, which the UN itself has called “ethnic cleansing”. For “social media”, read Facebook, because there’s no competition to it in Myanmar.
Late yesterday, Telesur reported that Ecuador had signed a “security deal” with the United States, which is expected to result in a US military presence in that country. Telesur wrote: “Ecuador signed Wednesday a cooperation agreement with the United States to fight transnational organized crime and drug trafficking…. Moreno’s move is a further shift away from the policies of his left-wing predecessor and former ally, Rafael Correa, who has criticized and refused to participate in the U.S.-sponsored Plan Colombia, arguing peace is not obtained with helicopters and weapons but rather by promoting economic and social development.”
The news comes as a new blow to hopes that Ecuador’s President Lenin Moreno would heed calls from around the globe to end the solitary confinement of Julian Assange. Tomorrow, the arbitrarily confined journalist will have been totally isolated for one month. The latest news of a military agreement struck between Moreno’s government and the US comes as yet another major shift away from the policies of Ecuador’s prior administration. It is also a distinct pivot away from Ecuador’s decision, made just a few months prior, to confer citizenship and diplomatic status on the Wikileaks Editor-In-Chief.
This writer previously expressed the opinion that the ongoing solitary confinement of Assange by his own government constitutes torture. Disobedient Media has also reported consistently on the numerous online and physical vigils, petitions and other efforts to encourage Ecuador to return the Ecuadorian embassy in London to a place of refuge, as intended when the previous administration bravely granted Assange political asylum from the threats to his life and work emanating from the United States.
In our previous report, Disobedient Media noted that enforced isolation is not only torture in the opinions of those who have experienced it, but has also been labeled as such by the UN. Rick Raemisch wrote in an opinion piece published by The New York Times that, according to the Nelson Mandela rules, solitary confinement lasting more than 15 days constitutes torture. This means that the length of time for which Julian Assange has been cut off from the outside world would now have almost doubled the official benchmark for being considered torture.
if the US would simply clean ita back yard, and stop stoking tensions there, it wouldn’t have these problems.
Hondurans, Guatemalans and Salvadorans who drew the wrath of President Donald Trump in a month-long caravan to the U.S. border will make hard decisions on Sunday whether to risk being deported all the way home by trying to cross, or to build a life in Mexico. After angry tweets from Trump, U.S. border authorities said some people associated with the caravan had been caught trying to slip through the fence, and encouraged the rest to hand themselves in to authorities. “We are a very welcoming country but just like your own house, we expect everyone to enter through our front door, and answer questions honestly,” San Diego Chief Patrol Agent Rodney S. Scott said in a statement.
Most of the group of about 400 travelers who arrived in border city Tijuana on buses over the past couple of days said they intended to legally seek asylum in San Diego later on Sunday, but lawyers advising the group gave them stark advice – not everyone will be successful. After the grueling journey, a somber mood took hold as the reality sank in that many of them would be separated from their families. Lovers and parents with slightly older sons and daughters could be forced to split up. At venues around the city, U.S. immigration lawyers working on a pro bono basis on Saturday listened to harrowing tales of life in the immigrants’ home countries.
Death threats from local gangs, the murder of family members, retaliatory rape, and political persecution back home prompted them to flee, the migrants and lawyers say. Many of the immigrants who spoke at length with Reuters at various points during their trip through Mexico had been short on knowledge of their legal rights, but at least 24 recounted detailed stories of facing death threats.
My cursor is hovering over the “unfriend” button, but I haven’t clicked it. Today, my relationship-severing finger is poised to get rid of Matt. Matt is a friend with whom I spent a lot of time about six years ago. We were close in rehab, but I haven’t seen him since. I entered Greenbriar treatment center in Washington, Pennsylvania, just a few days after he’d arrived, and he showed me the ropes. For the next few weeks, we were virtually inseparable. Rehab can be a frightening place when you first arrive. With any luck, you’ve already had some sort of “come to Jesus” moment with yourself and you’ve realized that you need to be there or else you’re going to die. I had had no such moment and was fully convinced that this was all a big mistake.
Once I got through the door into the facility, I heard it lock electronically with a loud buzz and a finality that shook my bones. I immediately regretted it. There is no lonelier feeling on this Earth than sitting there, abandoned and broken. You’ve burned all your bridges on the outside and your life feels as though it’s half a world away. This is the moment when you really need a guy like Matt to walk up to you, thrust out his hand and say: “Hi! I’m Matt! What’s your name?” Over the next few weeks, he and I attended group therapy sessions together and stayed up late talking about our problems, our addictions and our families. We ugly-cried in front of each other as we shared our darkest secrets, what we had done for drugs and how deeply unhappy we were.
Matt is a man who, in many ways, helped me to take my recovery seriously in rehab and, in the first few weeks after my release, he helped me to remain sober on the outside. And, today, I sit in front of my monitor poised to cancel him forever because whiteness is apparently more addictive than any drug could ever be. We sobered up in the same facility, but he was a victim. I was an addict. Matt is a Christian. I am not. Matt is a Republican. I am not. And, most significantly, Matt is white. I am not. And these facts make all the difference in America.
First you destroy it, then you spend taxpayers’ money to restore it. It’s called a profit model.
Australia pledged half a billion dollars to restore and protect the Great Barrier Reef Sunday in what it said would be a game-changer for the embattled natural wonder, but conservationists were not convinced. The World Heritage-listed site, which attracts millions of tourists, is reeling from significant bouts of coral bleaching due to warming sea temperatures linked to climate change.It is also under threat from the coral-eating crown-of-thorns starfish, which has proliferated due to pollution and agricultural runoff.Prime Minister Malcolm Turnbull said more than Aus$500 million ($400 million) would go towards improving water quality, tackling predators, and expanding restoration efforts.
Turnbull said it was the “largest ever single investment — to protect the reef, secure its viability and the 64,000 jobs that rely on the reef”.”We want to ensure the reef’s future for the benefit of all Australians, particularly those whose livelihood depends on the reef,” he added.The reef is a critical national asset, contributing Aus$6.4 billion a year to the Australian economy.Canberra has previously committed more than Aus$2.0 billion to protect the site over the next decade, but has been criticised for backing a huge coal project by Indian mining giant Adani nearby.With its heavy use of coal-fired power and relatively small population, Australia is considered one of the world’s worst per-capita greenhouse gas polluters.
Canberra insists it is taking strong action to address the global threat of climate change, having set an ambitious target to reduce emissions by 26 to 28% from 2005 levels by 2030.