Apr 112018
 
 April 11, 2018  Posted by at 8:50 am Finance Tagged with: , , , , , , , , , , , ,  


Jan van Eyck The Last Judgement (detail) 1430

 

Hussman’s Script For A 60% Tumble In The Stock Market (MW)
World Trade System In Danger Of Being Torn Apart – Lagarde (G.)
Eurocontrol Warns Airlines Of Possible Missile Strikes Into Syria (R.)
Russian Envoy: Any US Missiles Fired At Syria Will Be Shot Down (R.)
We All Need To Unite Against War In Syria (CJ)
Zuckerberg Deflects Senators’ Questions, Gets $3 Billion For The Effort (MW)
Ban Targeted Advertising (Dayen)
EU Top Court Backs France Ban Of Uber (AFP)
Barclays Says Bitcoin Behaves Like An Infectious Disease (BBG)
The Failures of Anti-Trumpism (NYT)
Save the Children Faces Formal Investigation Over Staff Misconduct (G.)
Greece at Bottom of Eurozone Growth Rate (GR)
More Than Half Your Body Is Not Human (BBC)

 

 

“Investment is about valuation. Speculation is about psychology,” Hussman said. “Both factors are unfavorable here.”

Hussman’s Script For A 60% Tumble In The Stock Market (MW)

Enjoy days like this while they last, warns longtime bear John Hussman, because the volatility we’re seeing on the Dow and the S&P 500 only serves to reinforce his pessimistic view that the stock market is careening toward a painful drop of at least 60% and a decade or more of zero to negative returns. “We’re observing the very early effects of risk-aversion in a hypervalued market,” the Hussman Trust president wrote in his latest missive. “To some extent, the actual news events are irrelevant. I certainly wouldn’t gauge market risk by monitoring the day-to-day news on potential tariffs or even prospects for rate changes by the Fed.”

For those of you feeling a bit queasy because of what Hussman describes as the “rather minimal level of volatility” we’ve seen lately, it’s time to make some changes and rebalance your portfolio with some hedges, or at least lighten up by adding cash. “But do so knowing one thing in advance: you will experience regret,” he says. “If the market advances after you rebalance, you’ll regret having sold anything. If the market declines after you rebalance, you’ll regret not having sold more.”

The driving factor he frequently cites for the top-heavy market is that the Fed’s quantitative easing has inflated valuations to unsustainable levels, and as the free money goes away, the bottom will fall out, leaving a trail of blown-up investors in its wake. “Investment is about valuation. Speculation is about psychology,” Hussman said. “Both factors are unfavorable here.” He used this chart or the median price/revenue ratio of S&P components to show just how overvalued stocks are at this point, even after the recent tumble:

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Because the trade system benefits everyone, right?

World Trade System In Danger Of Being Torn Apart – Lagarde (G.)

The head of the IMF has warned of “darker clouds looming” for the global economy amid simmering trade tensions between the US and China, urging governments around the world to steer clear of protectionism or face negative consequences. Christine Lagarde said the current system for world trade was “in danger of being torn apart”, with the potential to upset the present global economic upswing and make consumers poorer. Speaking in Hong Kong amid signs the standoff could be abating, Lagarde said it would be an “inexcusable, collective policy failure” for world trade to break down with nations erecting punitive tariff systems against their rivals. “Let us redouble our efforts to reduce trade barriers and resolve disagreements without using exceptional measures,” she said.

[..] Using language that could be interpreted as a veiled attack on Trump in the speech ahead of the meeting, Lagarde said nations could make domestic policy changes to address trade imbalances and use international forums to settle disputes. “We can all do more – but we cannot do it alone,” she said. “Unfair trade practices have little impact on a country’s overall trade deficit with the rest of the world. That imbalance is driven by the fact that a country spends above its income.” Identifying the US as an example of a nation that could benefit from reforms, she said Washington could help tackle its trade imbalances by gradually curbing public spending and by increasing revenue, which she said would help reduce future fiscal deficits.

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Jamming.

Eurocontrol Warns Airlines Of Possible Missile Strikes Into Syria (R.)

Pan-European air traffic control agency Eurocontrol on Tuesday warned airlines to exercise caution in the eastern Mediterranean due to the possible launch of air strikes into Syria in next 72 hours. Eurocontrol said that air-to-ground and/or cruise missiles could be used within that period and there was a possibility of intermittent disruption of radio navigation equipment. U.S. President Donald Trump and Western allies are discussing possible military action to punish Syria’s President Bashar Assad for a suspected poison gas attack on Saturday on a rebel-held town that long had held out against government forces.

Trump on Tuesday canceled a planned trip to Latin America later this week to focus instead on responding to the Syria incident, the White House said. Trump had on Monday warned of a quick, forceful response once responsibility for the Syria attack was established. The Eurocontrol warning on its website did not specify the origin of any potential missile threat. “Due to the possible launch of air strikes into Syria with air-to-ground and/or cruise missiles within the next 72 hours, and the possibility of intermittent disruption of radio navigation equipment, due consideration needs to be taken when planning flight operations in the Eastern Mediterranean/Nicosia FIR area,” it said, referring to the designated airspace.

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Clear as that.

Russian Envoy: Any US Missiles Fired At Syria Will Be Shot Down (R.)

Russia’s ambassador to Lebanon said any U.S. missiles fired at Syria would be shot down and the launch sites targeted, a step that could trigger a major escalation in the Syrian war. Russian Ambassador Alexander Zasypkin, in comments broadcast on Tuesday evening, said he was referring to a statement by Russian President Vladimir Putin and the Russian armed forces chief of staff. The Russian military said on March 13 that it would respond to any U.S. strike on Syria, targeting any missiles and launchers involved in such an attack. Russia is Syrian President Bashar al-Assad’s most powerful ally.

The United States and its allies are considering whether to hit Syria over a suspected poison gas attack that medical relief organizations say killed dozens of people in the rebel-held town of Douma near Damascus on Saturday. “If there is a strike by the Americans, then…the missiles will be downed and even the sources from which the missiles were fired,” Zasypkin told Hezbollah’s al-Manar TV, speaking in Arabic. He also said a clash “should be ruled out and therefore we are ready to hold negotiations”.

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Yes, we do. But it’s very late in the game.

We All Need To Unite Against War In Syria (CJ)

Last night Fox’s Tucker Carlson did what may have been the most amazing thing that has ever happened on American television. As the drums of war beat louder than they have in years, Carlson stared right into the camera and did the exact opposite of what every mainstream US pundit is doing right now: he told the truth. He told the truth about Syria. He told the truth about Yemen. He told the truth about the alleged chemical weapons attack in Douma. He told the truth about the bipartisan war machine which drops all pretense of opposition the instant it’s time for bloodshed. He told the truth about what war is, what it costs, and what it does to our world.

He stood in stark, unequivocal opposition to the trajectory the Trump administration appears to be moving along. And he did it on Fox News. I have a deep and abiding hatred in my heart for Fox News and all things Murdoch. I will never forget nor forgive the key role the Murdoch press played in deceiving our world into the unimaginable evil that was the Iraq invasion. But if I’d held a reflexive rejection of anything with the Fox News logo in the corner, I never would have seen Carlson’s epic monologue, never would have shared it with my social media following, never would have embedded it in this article, and this bright flash of truth would have been diminished by that much in the impact it was able to have on public consciousness.

And I know that there are many leftists who declined to help spread awareness of that Carlson monologue based solely on the fact that he’s a conservative pundit on a conservative network who has said things they disagree with in the past. This is stupid. We should be able to throw any weapon at all at the war machine, not fight with one hand tied behind our backs just because we don’t like conservatives.

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It was even worse than imagined.

Zuckerberg Deflects Senators’ Questions, Gets $3 Billion For The Effort (MW)

Mark Zuckerberg has come far since the early days of Facebook, and that growth was extremely apparent in how deftly the chief executive dealt with several hours of inscrutable questioning by U.S. senators Tuesday over the social network’s role in presidential election-meddling and the Cambridge Analytica data scandal. Wearing a conservative suit and light blue tie, an outfit he would rarely wear in Silicon Valley, Zuckerberg sat ramrod straight in his witness chair for most of the many hours of questions. He responded to each questioner by first addressing them as senator or chair. He looked earnest and serious for almost every question, even during some of the laughable questions from some of the less tech-savvy members of the Senate, such as the one by Sen. Orrin Hatch, who asked how Facebook makes money if it doesn’t charge users anything.

“Senator, we run ads,” Zuckerberg said with a smile. That calm response was in marked contrast to when Zuckerberg faced another type of grilling, at the All Things D conference in 2010, when he gave vague and rambling answers about Facebook’s changes to its privacy controls at the time, and had to take off his famous hoodie while wiping sweat from his face under the lights on stage. Part of his preparedness for the Senate hearing, where he managed to repeat several core phrases that the company has been perpetuating in the media, came as a result of Facebook’s information bombardment over the past month.

Some of the company’s obvious talking points have been repeated throughout the past weeks, such as how sorry Zuckerberg is, how much control Facebook users actually do have over their own data, how Facebook is trying to build a positive community and constant reminders of how the company started in a Harvard University dorm when he was 19. According to the New York Times, Facebook hired a team of experts to give Zuckerberg — who can be combative and defensive — a crash course in humility and charm ahead of the hearing in sessions that included mock hearings with its communications team and outside advisers. That preparation paid off: After the first two hours of questions were nearing an end and there was a call for a potential break, Zuckerberg took a sip of water and said he could keep going for a bit longer.

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Exactly. Stop that and all the Facebok nonsense stops. But those in power don’t want it to stop.

Ban Targeted Advertising (Dayen)

For the first 35 years of my life, like most Americans, I was exposed to lots of advertising. I absorbed billboards and print ads and direct mailers and television commercials and radio jingles. I learned about available products and services, and chose which ones I wanted. Some businesses I patronized survived and others didn’t. The economy mostly proceeded apace. Then, over the last decade, this form of marketing became seen as insufficient—or rather, the rise of digital media made a more invasive form of marketing too irresistible. Instead of having to cast a wide net in searching for potential customers, advertisers now could know every intimate detail about those customers beforehand.

They began targeting people geographically and behaviorally, based on common interests or things they liked in social media or what they wrote in emails to friends. The surveillance economy was born. The surveillance economy should die. This manner of advertising doesn’t serve the public and it’s not even clear it serves advertisers. It facilitates monopoly, as those with the biggest data troves receive all the ad dollars. That centralizes the potential for and magnitude of abuse, with Big Data used to discriminate against groups, steer vulnerable people to financial scams, and meddle in U.S. elections.

Cambridge Analytica’s scraping of 87 million user profiles through a simple personality quiz, and then weaponizing that information on behalf of Donald Trump’s presidential campaign, revealed how information on social media is inherently insecure. Now Facebook CEO Mark Zuckerberg is appearing before Congress on Tuesday to explain how this won’t happen again. But instead of leaving regulation to Facebook, or devising one Rube Goldberg scenario after another to try to protect consumer data, the U.S. can take one simple, legal step to roll back this dystopian nightmare: ban targeted advertising.

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App or transport?

EU Top Court Backs France Ban Of Uber (AFP)

The EU’s top court on Tuesday backed the right of member states like France to ban a service by ridesharing firm Uber without notifying Brussels, in a fresh setback to the US giant. The European Court of Justice ruled in favour of France’s ban of the UberPop service, which links amateur drivers with customers, comparing it to a December decision backing traditional taxi firms in the Spanish city of Barcelona. “Member States may prohibit and punish, as a matter of criminal law, the illegal exercise of transport activities in the context of the UberPop service, without notifying the Commission in advance,” the European Court of Justice ruled. [..]

Uber France is facing criminal proceedings in a court in the northern French city of Lille for its UberPop service. It argues that member states like France were required to notify the European Commission about the criminal legislation under which the case was brought because it concerned a technical regulation of an information society service. But the court of justice said the French case resembled one it ruled on in December when it classified Uber as an ordinary transportation company instead of an app and should be regulated as such. “In the Court’s view, the UberPop service offered in France is essentially identical to the service provided in Spain,” the court of justice statement said.

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True or not, a nice angle.

Barclays Says Bitcoin Behaves Like An Infectious Disease (BBG)

Is the rise of Bitcoin analogous to the spread of an infectious disease? Analysts at Barclays saw enough similarities to develop a pricing model for the cryptocurrency that takes its cues from the world of epidemiology. Their diagnosis: Bitcoin has probably peaked. The Barclays model divides the pool of potential Bitcoin investors into three groups: susceptible, infected and immune. It assumes that as prices rise, “infections” spread by word-of-mouth (nobody likes missing out when their friends and colleagues are getting rich). Barclays analysts led by Joseph Abate in New York explained the rest in a note to clients on Tuesday:

“As more of the population become asset holders, the share of the population available to become new buyers – the potential ‘host’ population – falls, while the share of the population that are potential sellers (‘recoveries’) increases. Eventually, this leads to a plateauing of prices, and progressively, as random shocks to the larger supply population push up the ratio of sellers to buyers, prices begin to fall. That induces speculative selling pressure as price declines are projected forward exponentially.” A similar dynamic plays out with infectious diseases when the so-called immunity threshold is reached, “the point at which a sufficient portion of the population becomes immune such that there are no more secondary infections,” the analysts wrote.

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Does David Brooks realize that anti-Trumpism, of which he’s a proud supporter, is what won Da Doland da election?

The Failures of Anti-Trumpism (NYT)

Over the past year, those of us in the anti-Trump camp have churned out billions of words critiquing the president. The point of this work is to expose the harm President Trump is doing, weaken his support and prevent him from doing worse. And by that standard, the anti-Trump movement is a failure. We have persuaded no one. Trump’s approval rating is around 40%, which is basically unchanged from where it’s been all along. We have not hindered him. Trump has more power than he did a year ago, not less. With more mainstream figures like H. R. McMaster, Rex Tillerson and Gary Cohn gone, the administration is growing more nationalist, not less. We have not dislodged him.

For all the hype, the Mueller investigation looks less and less likely to fundamentally alter the course of the administration. We have not contained him. Trump’s takeover of the Republican Party is complete. 89% of Republicans now have a positive impression of the man. According to an NBC News/Wall Street Journal poll, 59% of Republicans consider themselves more a supporter of Trump than of the Republican Party. On trade, immigration, entitlement reform, spending, foreign policy, race relations and personal morality, this is Trump’s party, not Reagan’s or anyone else’s. A lot of us never-Trumpers assumed momentum would be on our side as his scandals and incompetences mounted. It hasn’t turned out that way.

I almost never meet a Trump supporter who has become disillusioned. I often meet Republicans who were once ambivalent but who have now joined the Trump train. National Review was once staunchly anti-Trump, and many of its writers remain so, but, tellingly, N.R. editor Rich Lowry just had a column in Politico called “The Never Trump Delusion” arguing that Trump is not that big a departure from the Republican mainstream. The surest evidence of Trump’s dominance is on the campaign trail. As The Times’s Jonathan Martin reported, many Republicans, including Ted Cruz, are making the argument that if Democrats take over Congress, they will impeach the president. In other words, far from ignoring Trump, these Republicans are making defending him the center of their campaigns.

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Et tu, Brute?

Save the Children Faces Formal Investigation Over Staff Misconduct (G.)

Save the Children, the global charity mired in allegations that it failed to investigate sexual abuse and inappropriate behaviour by staff, is to be formally investigated by the Charity Commission. In a statement announcing a statutory inquiry, the commission said it had been prompted by “concerns about the charity’s handling, reporting and response to serious allegations of misconduct and harassment against senior staff members in 2012 and 2015”. The commission describes a statutory inquiry as its “most serious form of engagement” with a charity.

The news, announced on Tuesday night, will be another blow for the charity two months after it emerged that both Justin Forsyth, its former chief executive, and Brendan Cox, the former policy director and widower of the MP Jo Cox, left the charity in 2015 following allegations of misconduct. The two men knew each other from their years working for Gordon Brown and the Labour party. After he left Save the Children, Forsyth went on to a senior role at Unicef. He resigned in February after the reports of inappropriate behaviour emerged. Cox also resigned from the charities More in Common and the Jo Cox Foundation, set up in the aftermath of his wife’s murder.

The commission, which itself has been criticised for failing to follow up allegations involving the charities it polices, has been working with Save the Children since the facts about Forsyth and Cox emerged in the wake of the scandal involving Oxfam workers in Haiti. Save the Children is already reviewing its workplace culture and the implementation of recommendations made by a previous review. But the Charity Commission said its recent work with it, and new information from other sources that has recently come into the regulator’s possession, meant that the commission wanted to make further inquiries.

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It’s crazy to think the Greek economy is growing.

Greece at Bottom of Eurozone Growth Rate (GR)

Greece’s growth was the lowest among eurozone countries for 2017, with a GDP rise of just 1.4% while the eurozone average was 2.3%, according to European Central Bank figures. The ECB annual report released on Monday showed Ireland at the top of the growth chart among eurozone member states with a 5% GDP increase. Overall, 2017 was a year of growth for the whole of the single-currency bloc. According to the report, the main reason Greece fared so low in 2017 was that it showed only 0.1% growth in private consumption, compared to an average 1.6% increase in the rest of eurozone states.

At the same time, Greece showed a 1.1% decline in government spending, while the average in the euro area was a 1.2% increase. In terms of per capita GDP at current prices and adjusted for the cost of living, Greeks have an average annual income of €19,900 ($24,527) compared to €54,600 for each Irish citizen. In Portugal, average income amounted to €23,100, compared to €18,100 before the economic crisis. In Cyprus, the average income was €24,600 compared to €29,900 before the crisis. The “before the economic crisis” figures refer to the 1999-2008 period. On average in the euro area, per capita GDP stood at €31,700 according to the latest figures (2016), compared to €24,400 before the crisis.

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Bugs as drugs. “Originally it was thought our cells were outnumbered 10 to one.”

Well, our genes are outnumbered 1000 to 1.

More Than Half Your Body Is Not Human (BBC)

More than half of your body is not human, say scientists. Human cells make up only 43% of the body’s total cell count. The rest are microscopic colonists. Understanding this hidden half of ourselves – our microbiome – is rapidly transforming understanding of diseases from allergy to Parkinson’s. The field is even asking questions of what it means to be “human” and is leading to new innovative treatments as a result. “They are essential to your health,” says Prof Ruth Ley, the director of the department of microbiome science at the Max Planck Institute, “your body isn’t just you”. No matter how well you wash, nearly every nook and cranny of your body is covered in microscopic creatures.

This includes bacteria, viruses, fungi and archaea (organisms originally misclassified as bacteria). The greatest concentration of this microscopic life is in the dark murky depths of our oxygen-deprived bowels. Prof Rob Knight, from University of California San Diego, told the BBC: “You’re more microbe than you are human.” Originally it was thought our cells were outnumbered 10 to one. “That’s been refined much closer to one-to-one, so the current estimate is you’re about 43% human if you’re counting up all the cells,” he says. But genetically we’re even more outgunned. The human genome – the full set of genetic instructions for a human being – is made up of 20,000 instructions called genes. But add all the genes in our microbiome together and the figure comes out between two and 20 million microbial genes.

[..] Antibiotics and vaccines have been the weapons unleashed against the likes of smallpox, Mycobacterium tuberculosis or MRSA. That’s been a good thing and has saved large numbers of lives. But some researchers are concerned that our assault on the bad guys has done untold damage to our “good bacteria”. Prof Ley told me: “We have over the past 50 years done a terrific job of eliminating infectious disease. “But we have seen an enormous and terrifying increase in autoimmune disease and in allergy. “Where work on the microbiome comes in is seeing how changes in the microbiome, that happened as a result of the success we’ve had fighting pathogens, have now contributed to a whole new set of diseases that we have to deal with.”

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Jan 102018
 
 January 10, 2018  Posted by at 10:19 am Finance Tagged with: , , , , , , , , , , , ,  


Ansel Adams The Tetons and the Snake River 1942

 

Is Bank of Japan The Latest To Take The Punch Bowl Away? (CNBC)
Fed Officials Are Scrambling To Figure Out How To Fight Next Recession (BI)
Market Could Be Headed For A ‘Melt-Up’ Of 30% – Bill Miller (CNBC)
People Have A Hard Time Even Imagining How The Market Could Decline (ZH)
World Bank Issues Warnings On Interest Rates And Inflation (G.)
South Korea’s Moon Says Trump Deserves ‘Big’ Credit For North Korea Talks (R.)
Apple’s Privacy Feature Costs Ad Companies Millions (G.)
Antivirus Tools Caught With Their Hands In The Windows Cookie Jar (Reg.)
Julian Assange’s Stay In London Embassy Untenable, Says Ecuador (G.)
Australia Must Rescue Assange From The Establishment That Tortured Manning (CJ)
The Fog of War: Global Airstrike Deaths Up At Least 82% In 2017 (RT)
Scores Feared Dead And Up To 100 Missing After Boat Sinks Off Libya Coast (G.)

 

 

The Last of the Mohicans. But does Japan really want to, and can it, carry the global financial system on its shoulders now the Fed and ECB no longer want to do their share?

Is Bank of Japan The Latest To Take The Punch Bowl Away? (CNBC)

The Bank of Japan is seen as the last grown-up in the room actively filling the global liquidity punch bowl with both hands. That’s why a slight tweak to its bond-buying program caused a flurry across financial markets Tuesday, sparking speculation it was joining the Fed and ECB in cutting back on asset purchases, a move that could ultimately help drive up global interest rates. On Tuesday, the BOJ modestly trimmed its purchases of Japanese government bonds by about $10 billion in the 10- to 25-year maturities and another $10 billion in maturities of more than 25 years. The yen jumped about 0.5% to about 112.60 to the dollar, and bond yields rose. The U.S. 10-year yield also moved higher, breaking above the key 2.50% to as high as 2.55%. Meanwhile, the 10-year JGB yield moved in a range of about 0.16 and saw a high of 0.074%.

But some strategists say while the BOJ may have sent a powerful signal, it is just acting on a technicality that comes with changes it made to its bond purchase program back in 2016. Unlike the U.S. and Europe, where central banks have targeted the balance sheet size, the Japanese central bank is targeting interest rates and its purchases are based on prices. “I think it’s too early to proclaim the easy conditions in Japan are over. That said, I do think it’s constructive and it shows how sensitive the markets are to any potential change,” said Greg Peters, senior portfolio manager at PGIM Fixed Income. The Bank of Japan has been a poster child for central bank easing, taking its rates to negative levels and buying all types of assets, including stocks.

“They’re still buying ETFs, J-REITs, corporate paper. They changed how they’re easing, but they’re still easing,” said Marc Chandler, head of fixed-income strategy at Brown Brothers Harriman. “I think the market is overinterpreting this, partly because of their positions. They’re short yen. They’re long euros. They’re being squeezed on both legs today.” [..] While it’s last to leave the party, a change in BOJ policies would be the most symbolic move yet that the extreme policies adopted in the global financial crisis are finally coming to an end, and the juice that helped push risk assets higher is being slowly withdrawn. Chandler said the BOJ has made a point of saying it will continue to ease. “The BOJ says, ‘We’re going to be patient. We’re going to be the last one out.’ … [Prime Minister Shinzo] Abe told the Bank of Japan..

“If long rates continue to move higher, and the BOJ follows this with a continued reduction in the pace of the purchases, then we know we’re on to something. We’re on to a potential change in monetary policy in Japan,” said Peter Boockvar, chief investment officer at Bleakley Financial Group. “I think that is likely in 2018,” Boockvar said. “Whether this is the beginning of it, we’ll have to see. They have some cover too. They know what the Fed is going to do, and they know what the ECB is doing. Does the BOJ want to be the outlier of temporary insanity when every other central bank is pulling back? They are the epitome of extremity in terms of monetary policy.”

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Fed interference will go down in history as the uttermost of stupidities. Not yet though, the narrative of saving the economy can still be kept alive. But wait till things go south.

Fed Officials Are Scrambling To Figure Out How To Fight Next Recession (BI)

Federal Reserve officials puzzled by chronically-low US inflation seem to agree on at least one thing: They worry, almost universally, that they will lack the tools to fight the next recession, whenever it comes. Yet instead of focusing on tried and true policy measures like low interest rates and possibly bond buys, Fed officials current and former appear focused instead on broad shifts in the policy framework, including moving away from the current inflation targeting regime toward a potentially more aggressive approach. More importantly, the string of discordant ideas being offered up at a Brookings Institution conference by such high profile figures as former Fed Chairman Ben Bernanke, former White House economic advisor Lawrence Summers, and two current Fed members, does more to confuse the already muddled outlook for monetary policy than clarify it.

Boston Fed President Eric Rosengren suggested the Fed follow the model of the Bank of Canada, which periodically reviews its approach to maintaining price stability. He also called for the Fed to move toward an inflation target range, which he hinted might be from 1.5% to 3%, rather than the current 2% goal. John Williams, president of the San Francisco Fed, called for a system where the Fed would target the price level, meaning that it would compensate periods of undershooting the 2% inflation goal with periods of overshooting. US inflation has remained stubbornly below the Fed’s 2% target for much of the economic recovery, suggesting the labor market is not as healthy as the 17-year low unemployment rate of 4.1% suggests.

Shifting to a price-level target is “not nearly as scary as you might think” Williams told the audience of monetary economists, academics, and market participants. He worried about the “issue of credibility” that has resulted from persistently below-target inflation, which makes it look ” like the central bank is not committed to its goals.” Prolonged low inflation, which also reflects soft wage growth, can make monetary policy less effective because “it gets into inflation expectations and makes it harder to achieve 2% objective in good times.”

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Possible in theory, but with CB tightening not in practice.

Market Could Be Headed For A ‘Melt-Up’ Of 30% – Bill Miller (CNBC)

Worried about higher interest rates putting a dent on the stock market’s rip-roaring rally? Fear not, a rise in rates will actually help stocks, according to legendary investor Bill Miller. “Those 10-year yields go through 2.6% and head towards 3%, I think we could have the kind of melt-up we had in 2013, where we had the market go up 30%,” Miller, the founder of Miller Value Partners, told CNBC’s “Closing Bell” on Tuesday. “If we can get the 10-year towards that 3% level, you’ll see the same thing.” “In 2013, people finally began to lose money in bonds. They took money out of bond funds and put it into equity funds,” Miller said. Miller is considered one of the best investors ever, after beating the market for 15 years in a row while working at Legg Mason. Stocks have been on a rip-roaring rally for more than a year, as economic data and corporate earnings have improved.

On Tuesday, they closed at fresh record highs. But some experts fear the improvements in the economy could force the Federal Reserve to tighten monetary policy faster than they forecast, thus pushing interest rates higher. The 10-year U.S. Treasury yield rose to 2.55% on Tuesday and hit its highest level since March.The yield has not traded above 3% since early 2014. It last traded above 2.6% last March. But Miller thinks the stock market could get another boost from lower corporate tax rates. President Donald Trump signed a bill in December that slashed the corporate tax rate to 21% from 35%. “The tax cuts are probably partly in the market, but maybe not wholly in the market because we’re seeing things like companies raising the minimum wage, giving bonuses,” he said. “The people that are getting those $1,000 bonuses probably have a marginal propensity to consume of 99%.”

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It’s high time for that decline then.

People Have A Hard Time Even Imagining How The Market Could Decline (ZH)

A calm complacency never before seen has fallen blanket-like over US equity markets. “The behavior of volatility has entirely changed since 2014,” noted BAML in a a recent note thanks to major central banks keeping interest rates near historic lows (and printed more money than ever before). As The Wall Street Journal points out, One sign of that: VIX closed below 10 more times last year than any others year in its history, and until today, closed below 10 for the first 5 days of 2018… And while correlation is not causation, there is a clear causal link between the conditioning now deeply embedded within investors’ minds and the endless expansion of central bank balance sheets…

As JPMorgan’s infamous quant guru Marko Kolanovic wrote, “the first four Fed hikes in a decade have failed to generate the revival of volatilities that many had expected at the end of last year,” and a wave of political uncertainty linked to U.S. tensions with North Korea and the new presidential administration also raised the prospect that market tumults could occur with greater frequency… but no… In fact worse still for The Fed, financial conditions eased as they tightened and vol collapsed to levels never seen before…

All of which has led, as The Wall Street Journal reports, to a number of investors abandoning defensive positions taken to protect against a market downturn, in the latest sign that many doubters are shedding caution as the long rally rolls on. “I haven’t seen hedging activity this light since the end of the financial crisis,” said Peter Cecchini, a New York-based chief market strategist at Cantor Fitzgerald. “It started in late 2016 and accelerated in the second half of the year.” But as Morgan Stanley warns in a recent note, what goes up (this fast) typically comes down… “Our team has observed a dramatic shift in sentiment since we initiated coverage in April. In April, it felt as if people were looking for a reason for the market to fail. Now, we have seen a total reversal with people having a hard time even imagining how the market could decline.”

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Recovery is just a story. Unless it has become viable to fight debt with more debt.

World Bank Issues Warnings On Interest Rates And Inflation (G.)

Financial markets are complacent about the risks of sharply higher interest rates that could be triggered by better than expected growth in the global economy this year, the World Bank has warned. The Washington-based organisation said that much of the rich west was running at full capacity as a result of a broad-based upswing in activity, but were now vulnerable to a period of rising inflation that would prompt action from central banks. Launching the Bank’s global economic prospects, the lead author Franziska Ohnsorge said: “There could be faster than expected inflation that would mean faster than expected interest rate hikes.” Ohnsorge added that stock markets were at levels similar to those seen before the Wall Street Crash of 1929, while bond markets were assuming that low inflation would keep official borrowing costs down.

“Financial markets are vulnerable to unforeseen negative news. They appear to be complacent,” she said, while announcing that the Bank has revised up its 2018 forecast for the global economy following a better than expected performance in the US, China, the eurozone and Japan in 2017. In its half-yearly assessment, the Bank said a recovery in manufacturing, investment and trade would mean global growth of 3.1% this year, up from the 2.9% pencilled in last June. But it warned the acceleration in growth would be temporary unless governments implemented structural reforms to raise long-term growth potential. “The broad-based recovery in global growth is encouraging, but this is no time for complacency,” said Jim Yong Kim, the World Bank’s president.

“This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity.”

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They’re even planning to march in the Olympics opening ceremony together.

South Korea’s Moon Says Trump Deserves ‘Big’ Credit For North Korea Talks (R.)

South Korean President Moon Jae-in credited U.S. President Donald Trump on Wednesday for helping to spark the first inter-Korean talks in more than two years, and warned that Pyongyang would face stronger sanctions if provocations continued. The talks were held on Tuesday on the South Korean side of the demilitarized zone, which has divided the two Koreas since 1953, after a prolonged period of tension on the Korean peninsula over the North’s missile and nuclear programs. North Korea ramped up its missile launches last year and also conducted its sixth and most powerful nuclear test, resulting in some of the strongest international sanctions yet. The latest sanctions sought to drastically cut the North’s access to refined petroleum imports and earnings from workers abroad. Pyongyang called the steps an “act of war”.

Seoul and Pyongyang agreed at Tuesday’s talks, the first since December 2015, to resolve all problems between them through dialogue and also to revive military consultations so that accidental conflict could be averted. “I think President Trump deserves big credit for bringing about the inter-Korean talks, I want to show my gratitude,” Moon told reporters at his New Year’s news conference. “It could be a resulting work of the U.S.-led sanctions and pressure.” Trump and North Korean leader Kim Jong Un exchanged threats and insults over the past year, raising fears of a new war on the peninsula. South Korea and the United States are technically still at war with the North after the 1950-53 Korean conflict ended with a truce, not a peace treaty.

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Ads are killing the experience. Most people by now have ad blockers. That whole industry needs drastic change.

Apple’s Privacy Feature Costs Ad Companies Millions (G.)

Internet advertising firms are losing hundreds of millions of dollars following the introduction of a new privacy feature from Apple that prevents users from being tracked around the web. Advertising technology firm Criteo, one of the largest in the industry, says that the Intelligent Tracking Prevention (ITP) feature for Safari, which holds 15% of the global browser market, is likely to cut its 2018 revenue by more than a fifth compared to projections made before ITP was announced. With annual revenue in 2016 topping $730m, the overall cost of the privacy feature on just one company is likely to be in the hundreds of millions of dollars. Dennis Buchheim, general manager of the Interactive Advertising Bureau’s Tech Lab, said that the feature would impact the industry widely.

“We expect a range of companies are facing similar negative impacts from Apple’s Safari tracking changes. Moreover, we anticipate that Apple will retain ITP and evolve it over time as they see fit,” Buchheim told the Guardian. “There will surely be some continued efforts to ‘outwit’ ITP, but we recommend more sustainable, responsible approaches in the short-term,” Buchheim added. “We also want to work across the industry (ideally including Apple) longer-term to address more robust, cross-device advertising targeting and measurement capabilities that are also consumer friendly.” ITP was announced in June 2017 and released for iPhones, iPads and Macs in September. The feature prevents Apple users from being tracked around the internet through careful management of “cookies”, small pieces of code that allow an advertising technology company to continually identify users as they browse.

Its launch sparked complaints from the advertising industry, which called ITP “sabotage”. An open letter signed by six advertising trade bodies called on Apple “to rethink its plan … [that risks] disrupting the valuable digital advertising ecosystem that funds much of today’s digital content and services.” It also accused the company of ignoring internet standards, which say that a cookie should remain on a computer until it expires naturally or is manually removed by a user. Instead, the industry said, Apple is replacing those standards “with an amorphous set of shifting rules that will hurt the user experience and sabotage the economic model for the internet”.

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We haven’t heard the last of this flaw which is actually a feature.

Antivirus Tools Caught With Their Hands In The Windows Cookie Jar (Reg.)

Microsoft’s workaround to protect Windows computers from the Intel processor security flaw dubbed Meltdown has revealed the rootkit-like nature of modern security tools. Some anti-malware packages are incompatible with Redmond’s Meltdown patch, released last week, because the tools make, according to Microsoft, “unsupported calls into Windows kernel memory,” crashing the system with a blue screen of death. In extreme cases, systems fail to boot up when antivirus packages clash with the patch. The problem arises because the Meltdown patch involves moving the kernel into its own private virtual memory address space. Usually, operating systems such as Windows and Linux map the kernel into the top region of every user process’s virtual memory space.

The kernel is marked invisible to the running programs, although due to the Meltdown design oversight in Intel’s modern chips, its memory can still be read by applications. This is bad because it means programs can siphon off passwords and other secrets held in protected kernel memory. Certain antivirus products drill deep into the kernel’s internals in order to keep tabs on the system and detect the presence of malware. These tools turn out to trash the computer if the kernel is moved out the way into a separate context. In other words, Microsoft went to shift its cookies out of its jar, and caught antivirus makers with their hands stuck in the pot. Thus, Microsoft asked anti-malware vendors to test whether or not their software is compatible with the security update, and set a specific Windows registry key to confirm all is well.

Only when the key is set will the operating system allow the Meltdown workaround to be installed and activated. Therefore, if an antivirus tool does not set the key, or the user does not set the key manually for some reason, the security fix is not applied. In fact, until this registry key is set, the user won’t be able to apply any Windows security updates – not just this month’s patches, but any of them in the future.

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UK and US will not give in any time soon.

Julian Assange’s Stay In London Embassy Untenable, Says Ecuador (G.)

Ecuador’s foreign minister has said Julian Assange’s five-and-a-half-year stay in her country’s London embassy is “untenable” and should be ended through international mediation. The WikiLeaks founder has been holed up in Knightsbridge since the summer of 2012, when he faced the prospect of extradition to Sweden over claims that he sexually assaulted two women. He denies the accusations. Swedish prosecutors last year unexpectedly dropped their investigation into the allegations, which included a claim of rape. But Assange still faces arrest for breaching bail conditions if he steps outside the embassy and WikiLeaks has voiced fears that the US will seek his extradition and that there is a sealed indictment ordering his arrest. [..] Jeff Sessions, said last May that Assange’s arrest was now a “priority”.

Ecuador’s foreign minister, María Fernanda Espinosa, said her country was now seeking a “third country or a personality” to mediate a final settlement with the UK to resolve the impasse and said it was “considering and exploring the possibility of mediation”. “No solution will be achieved without international cooperation and the cooperation of the United Kingdom, which has also shown interest in seeking a way out,” she told foreign correspondents in Quito, according to Agence France-Presse. Assange, who has received numerous visitors to his modest quarters in the embassy, ranging from Nigel Farage to Lady Gaga, has described the period since his initial arrest as a “terrible injustice”. Not being able to see his children grow up was “not something I can forgive”, he said.

[..] On Tuesday evening, a lawyer for Assange appeared to welcome Ecuador’s proposal. He said his client had a right to asylum and argued that the risk of him being persecuted in the US had “escalated further in recent months under the Trump administration’s war on WikiLeaks” and that the investigation in Sweden had twice been discontinued. “If the UK wishes to show that it is a nation that respects its human rights obligations and commitments to the United Nations, it is time for Mr Assange to be allowed to enjoy his right to liberty, and fundamental right to protection against persecution in the United States,” he said. A spokesperson for the UK government said: “The government of Ecuador knows that the way to resolve this issue is for Julian Assange to leave the embassy to face justice.”

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“Julian Assange isn’t hiding from justice, he’s hiding from injustice.”

Australia Must Rescue Assange From The Establishment That Tortured Manning (CJ)

Private Manning was tortured. As sure as if they’d strapped her down and set upon her flesh with fire and steel, she was tortured. United Nations special rapporteur on torture Juan E. Mendez stated unequivocally in 2012 that Manning’s treatment at the hands of the US government during her imprisonment was “cruel, inhuman and degrading,” after 295 legal scholars had already signed a letter in 2011 declaring that she was being “detained under degrading and inhumane conditions that are illegal and immoral.” Humans, like all primates, are evolutionarily programmed to be social animals, which is why solitary confinement causes our systems to become saturated in distress signals as real as pain or fear. Studies have shown that fifteen days of this draconian practice causes permanent psychological damage. Manning was in solitary confinement for nearly a year.

Manning attempted suicide in July of 2016. To punish her for her attempt to end her misery, they tortured her some more. She attempted suicide again three months later. The same sadistic regime which inflicted these horrors upon Manning has during the current administration prioritized the arrest of WikiLeaks editor-in-chief Julian Assange, and the international arms of the US power establishment have been working to facilitate that aim. The Guardian reports that Ecuador’s foreign minister is now saying Assange’s continued stay in the nation’s London embassy has become “untenable” and is seeking international mediation, to which a spokesman for the UK government has responded that “The government of Ecuador knows that the way to resolve this issue is for Julian Assange to leave the embassy to face justice.”

Justice. A government whose international operations are uniformly indistinct from America’s wants Assange to leave political asylum and trust his life to an international power establishment that tortures whistleblowers in the name of “justice”. Julian Assange isn’t hiding from justice, he’s hiding from injustice. What sane human being wouldn’t? Time after time after time we are shown that whistleblowers, leakers, and those who facilitate them are not shown anything remotely resembling justice by this depraved Orwellian establishment. Which is why Australia must intervene and protect him.

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The value of your life plunges along with that of others.

The Fog of War: Global Airstrike Deaths Up At Least 82% In 2017 (RT)

More than 15,000 civilians were killed by explosive weapons in 2017, a 42 percent increase on last year, while deaths by airstrikes increased by 82 percent, a new study by Action on Armed Violence has found. The research shows that, while official stats on civilian casualties are on the rise, they’re still modest in comparison to the “true figures.” “The US has a habit of assuming all fighting-aged men are, in fact, fighters…This is the hammer that the US uses to establish the truth in war,” the organization’s Executive Director Iain Overton told RT. Much of the increase is due to the battles to retake Islamic State strongholds in Mosul, Iraq and Raqqa, Syria. The Syrian conflict and the Saudi-led coalition bombing Yemen also accounted for a large proportion of civilian deaths.

The survey, found 8,932 civilians were killed by air-launched explosives in the first 11 months of 2017, compared to 4,902 during the same period in 2016. “At least 60 countries around the world saw explosive weapons being used last year,” Action on Armed Violence’s Executive Director Iain Overton told RT. “We have always acknowledged that our data would likely represent a lower figure of total civilians killed or injured than might actually be the case,” Overton said. “This is particularly true when there is a single fatality or wounding, and particularly in under-reporting of those injured by a bomb blast.” “When the fog of war descends casualty figures often fall short – both because they become highly politicized and because accurate reporting is often a casualty of war itself,” he added.

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Europe has no morals left.

Scores Feared Dead And Up To 100 Missing After Boat Sinks Off Libya Coast (G.)

Survivors from a boat that foundered off Libya’s coast on Tuesday said about 50 people who had embarked with them were feared dead, while the coastguard said the number of missing might be as high as 100. Libyan coastguard vessels picked up nearly 300 migrants from three boats off the coast of the North African country on Tuesday, but one rubber boat was punctured and the coastguard only found 16 survivors clinging to its wreckage. “We found the migrant boat at about 10 o’clock this morning. It had sunk and we found 16 migrants. The rest were all missing and, unfortunately, we didn’t find any bodies or [other] survivors,” said Nasr al-Qamoudi, a coastguard commander.

Several of the survivors, who were brought back to a naval base in Tripoli, said there were originally about 70 people on board the boat when it set off near the town of Khoms, east of the capital. A coastguard statement later said that “at least 90-100” migrants were missing. The two other migrant boats were found off Zawiya, west of Tripoli. [..] Libya is the most common departure point for migrants trying to reach Europe from Africa by sea. More than 600,000 have crossed the central Mediterranean in the past four years, generally travelling in flimsy inflatable craft provided by smugglers that often break down or puncture. Under heavy pressure from Italy, some Libyan armed factions have blocked smuggling since last summer. Libya’s Italian-backed coastguard has also stepped up interceptions, returning migrants to Libya, where they are detained and often re-enter smuggling networks.

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