Dec 202018
 
 December 20, 2018  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , , , ,  


Giovanni Bellini Madonna and Child with St. John the Baptist and Female Saint 1500-04

 

It’s 100 days to Brexit (Ind.)
Powell Breaks The Market (ZH)
A Major Technical Breakdown Just Occurred In Stocks (Colombo)
Peter Schiff : Not A Bear Market But ‘A House Of Cards The Fed Built’ (MW)
Asian Shares Battered After Fed Raises Rates For Fourth Time (G.)
Short-Term Funding Bill Announced To Stop Trump’s Government Shutdown (Ind.)
Trump Plans Full Withdrawal Of US Troops From Syria (AFP)
Don’t Hold Your Breath on US Troop Withdrawal from Syria (CN)
US Occupation of Middle East Doesn’t Suppress Terrorism, It Causes It (Murray)
Big Pharma Returning To US Price Hikes In January After Pause (R.)
Italy Avoids EU Sanctions After Reaching 2019 Budget Agreement (G.)
French Police Threaten To Join Protesters (NW)
London’s Gatwick Airport Shut Down After Drones Spotted Overhead (AP)
Der Spiegel Says Top Journalist Faked Stories For Years (G.)
Finless Porpoise, China’s Smiling Angel, Fights To Survive (AFP)

 

 

Yes it is. And so of course the UK talked about one thing only. Did Corbyn call Theresa May a ‘stupid woman’ or did he say ‘stupid people’ about a group of Tories, as a whole contingent of lipreaders claimed?

They sure know what’s important, and what not.

It’s 100 days to Brexit (Ind.)

The vote of the House of Commons on the Brexit deal will now be in the week beginning 14 January, the prime minister confirmed on Monday. She hopes that her MPs are slowly coming round to the deal as the least worst option. She may also hope that Jeremy Corbyn gives his MPs a free vote, in which case enough of them may vote for her deal as a way of avoiding another referendum. It still seems more likely that Theresa May will lose, in which case the Brexit timetable will slip further. She would probably then ask the Commons to vote again after it had rejected the other options.

The one that is easiest to eliminate would be that of leaving the EU without a deal, even if it were dressed up as a “managed no deal” – at least, it ought to be easy to eliminate this option, but, until all the hoops have been jumped through, a no-deal Brexit remains the default, which is why there was such a fuss about no-deal planning at yesterday’s cabinet. The more difficult course for parliament to rule out is that of postponing Brexit and holding a referendum. If Corbyn backs a final say referendum, a Commons vote could be close, but, if May can defeat that option, she could then ask MPs to vote again on her deal. That seems to be her plan: to wear parliament down. That way she might finally win the vote at a second attempt a week later, in the week beginning 21 January – or even after that.

By then, the country would be running out of time to complete Brexit by 29 March. The problem is that a vote to approve the deal, important though it is, is only one of the things that need to be done to take us out of the EU. Once the deal has been approved, parliament also has to pass legislation to give effect to the withdrawal agreement in UK law. This will be called the EU (Withdrawal Agreement) Bill – yet another bill that sounds similar to all the others. It will be a complex and contentious bill that will be tricky to get through a hung parliament. In particular, it will contain a mechanism to entrench parts of the withdrawal agreement in UK law and make it hard for future parliaments to change them.

Read more …

Well, not really. Powell and his predecessors built such a huge zombie that it can’t be called a market. So he’s not breaking a market but a zombie, and how exactly can that be a bad thing?

Powell Breaks The Market (ZH)

“Everything was awesome” and then Jay Powell said… Some years ago, we took away the lesson that the markets were very sensitive to news about the balance sheet, so we thought carefully about how to normalize it and thought to have it on automatic pilot, and use rates to adjust to incoming data. That has been a good decision, I think, I don’t see us changing that…. we don’t see balance sheet runoff as creating problems” And everything broke…

Overnight futures show hopeful buying – “surely The Fed will deliver and capitulate… for goodness sake, someone has to rescue my FANG portfolio!!??” – But The Fed did not – cutting their rate outlook by a mere one hike, with plenty still seeing 3 hikes ahead in 2019…

The market now expects 18bps of RATE CUTS in 2020!!!

And Futures collapsed…

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Same here with my buddie Jesse: comparing what happens with today’s zombie, with functioning markets of the past, is dangerous and of limited value.

A Major Technical Breakdown Just Occurred In Stocks (Colombo)

The much-anticipated December Fed meeting has finally come and gone, and the stock market did not like what it heard. The Fed raised rates by 0.25% and cut its expectation for 2019 rate hikes from three to two. Because the Fed didn’t sound as dovish as many investors would have liked, the S&P 500 promptly fell 1.54% to a fresh 2018 low. From a technical perspective, today’s action is extremely concerning because the S&P 500 broke the key 2,550 to 2,600 support zone that I’ve been showing for the past couple months. Today’s breakdown increases the probability of further bearish action unless the index somehow manages to close back above that zone.

The longer-term S&P 500 chart shows how critical today’s breakdown is. Today’s breakdown is the second important technical breakdown in recent months (the first one being the break below the trendline that formed in early-2016, which I said was a bad omen). Assuming today’s breakdown remains intact, 2,100 (the 2015 and 2016 highs) is the next price target and support level to watch.

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Peter Schiff appears to agree with me, only he calls it a house of cards, not a zombie.

Peter Schiff : Not A Bear Market But ‘A House Of Cards The Fed Built’ (MW)

Where in the world is Peter Schiff, as the stock market entered an apparent unraveling phase? Find the chief executive of Euro Pacific Capital, a longtime gold bug and market pundit, on a beach in Puerto Rico, where he’s taken up residence as he watches the equity market get rocked. “I’m watching the U.S. economy implode from the beach,” Schiff told MarketWatch during a recent phone interview. “We’re in a lot of trouble,” he said. “This isn’t a bear market, we’re in a house of cards that the Fed built,” he said. Indeed, despite recent attempts to rebound, the Dow Jones is on track for its worst year since 2008 — down by about 3.5% — when the financial crisis brought global markets to their knees, according to Dow Jones Market Data.

The same goes for the S&P 500 which would also notch its worst year in a decade, if its roughly 4% decline thus far this year hold. Schiff is a polarizing figure on Wall Street, a man that critics say has harbored a persistent and unrealized post-crisis narrative for the Fed’s monetary policy, with predictions of soaring inflation and a dollar collapse. However, the prominent investor should be worthy of investors’ attention, on the back of his prescient calls ahead of the 2008 financial crisis, which earned him plaudits as one of the few able to spot a global economic crisis emanating from the housing market.

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“The Fed’s been a huge friend of the stock market and they are now a little bit of an enemy and will probably become worse of an enemy..”

Asian Shares Battered After Fed Raises Rates For Fourth Time (G.)

Asian stock markets have taken a battering after the US Federal Reserve voted to raise borrowing costs for the fourth time this year, signalling a further squeeze on liquidity around the world. In Tokyo, the Nikkei closed down nearly 3% to its lowest point for 14 months as the Fed’s pledge to continue with “gradual” rate hikes next year sent shivers through financial markets. Shares in Hong Kong and Seoul were both down more than 1% while stocks in Sydney finished at a two-year low. Futures trading pointed to a drop of 2% in the FTSE100 index in London and the Dax in Frankfurt when when the markets open on Thursday morning.

Investors’ confidence that the global economy is headed for a significant slowdown was further weakened when China’s central bank introduced a new lending facility for small private businesses, which was seen as a targeted rate cut designed to kickstart the spluttering economy. The move by the People’s Bank of China shows the two biggest economies are out of step with Beijing responding to a rate hike in the US with a de facto cut. The Shanghai Composite share index was down nearly 1% in afternoon trade while the yuan wad fixed 0.22% lower against the US dollar. [..] “The Fed’s been a huge friend of the stock market and they are now a little bit of an enemy and will probably become worse of an enemy before this is all over,” Bob Doll, Nuveen chief equity strategist and senior portfolio manager, told Bloomberg.

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McConnell saves the day…

Short-Term Funding Bill Announced To Stop Trump’s Government Shutdown (Ind.)

Senate Majority Leader Mitch McConnell has introduced a short-term spending bill to finance the US government and avoid a shutdown at the end of the week Mr McConnell, the leading Republican in the Senate, said that the funding bill known as a continuing resolution “will ensure continuous funding for the federal government” until 8 February. The short-term bill needs to be approved by both the Senate and the House of Representatives before it can proceed to President Donald Trump’s desk to be signed into law. Mr McConnell’s bill comes as Congress races against time before funding for the government runs out on Friday at midnight, amid a contentious push by Mr Trump to make $5bn worth in funding for his controversial border wall a requirement for any spending agreement.

But, while Mr Trump had indicated that he would take responsibility for a shutdown in order to make a point about the wall, the White House has since stepped back from that threat. We have other ways that we can get to that $5 billion”, White House Press Secretary Sarah Huckabee Sanders said on Tuesday. On the Senate floor, Mr McConnell lashed out at Democrats, who will reclaim their House majority in January, for failing to give Mr Trump any of the $5bn he has asked for. “This seems to be the reality of our political moment,” Mr McConnell said. “It seems like political spite for the president may be winning out over sensible policy.”

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We’re going to see endless and contradictory ‘analyses’ of this. It’s already drawn out the likes of Lindsey Graham and Mario Rubio and exposed them as deep state soldiers.

Trump Plans Full Withdrawal Of US Troops From Syria (AFP)

The United States will withdraw its troops from Syria, a US official told AFP on Wednesday, after President Donald Trump said America has “defeated ISIS” in the war-ravaged country. The stunning move will have extraordinary geopolitical ramifications and throws into question the fate of US-backed Kurdish fighters who have been tackling Islamic State jihadists. “We have defeated ISIS in Syria, my only reason for being there during the Trump Presidency,” the Republican president tweeted. The US official told AFP that Trump’s decision was finalized Tuesday. “Full withdrawal, all means all,” the official said when asked if the troops would be pulled from all of Syria.

Currently, about 2,000 US forces are in Syria, most of them on a train-and-advise mission to support local forces fighting IS. The official would not provide a timeline for a withdrawal, saying only: “We will ensure force protection is adequately maintained, but as quickly as possible.” Echoing Trump, White House spokeswoman Sarah Sanders said IS has been defeated territorially, noting the US-led coalition that includes dozens of nations would continue fighting IS. “These victories over ISIS in Syria do not signal the end of the Global Coalition or its campaign,” Sanders said in a statement. “We have started returning United States troops home as we transition to the next phase of this campaign.”

[..] Republican Senator Lindsey Graham, a Trump ally, said the president’s decision was shortsighted. “President @realDonaldTrump is right to want to contain Iranian expansion,” Graham said on Twitter. “However, withdrawal of our forces in Syria mightily undercuts that effort and put our allies, the Kurds at risk.” Charles Lister, a senior fellow at the Middle East Institute, called the decision “extraordinarily short-sighted and naive.” “This move will look like a ‘withdrawal,’ not a ‘victory,’ and yet more evidence of the dangerous unpredictability of the US president,” Lister said. “This is not just a dream scenario for ISIS, but also for Russia, Iran and the Assad regime, all of whom stand to benefit substantially from a US withdrawal.”

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It is quite possible that the deep state will eventually swallow Trump’s announcement whole. However, if he had gone through the usual channels to make his announcement, they would have caught it before it became public. That’s why he has Twitter.

Don’t Hold Your Breath on US Troop Withdrawal from Syria (CN)

The announcement on Wednesday that the U.S. will withdraw all remaining troops from Syria within the next month looked at first like a rare victory for Donald Trump in his admittedly erratic opposition to senseless wars of adventure. “We have defeated ISIS in Syria, my only reason for being there,” the president tweeted with an unmistakable air of triumph. Don’t get your hopes up. Just about everything in these initial reports is either wrong or misleading. One, the U.S. did not defeat the Islamic State: The Syrian Arab Army, aided by Russia, Iran, and Hezbollah militias did. Two, hardly was ISIS the only reason the U.S. has maintained a presence in Syria. The intent for years was to support a coup against the Assad government in Damascus—in part by training and equipping jihadists often allied with ISIS.

For at least the past six months, the U.S. military’s intent in Syria has been to counter Iranian influence. Last and hardly least, the U.S. is not closing down its military presence in Syria. It is digging in for an indefinite period, making Raqqa the equivalent of the Green Zone in Baghdad. By the official count, there are 503 U.S. troops stationed in the Islamic State’s former capital. Unofficially, according to The Washington Post and other press reports, the figure is closer to 4,000—twice the number that is supposed to represent a “full withdrawal” from Syrian soil. It would be nice to think Washington has at last accepted defeat in Syria, given it is preposterous to pretend otherwise any longer.

Damascus is now well into its consolidation phase. Russia, Iran, and Turkey are currently working with Staffan de Mistura, the UN’s special envoy for Syria, to form a committee in January to begin drafting a new Syrian constitution. It would also be nice to think the president and commander-in-chief has the final say in his administration’s policies overseas, given the constitution by which we are supposed to be governed. But the misleading announcement on the withdrawal of troops, followed by Trump’s boastful tweet, suggest something close to exactly the opposite. As Trump finishes his second year in office, the pattern is plain: This president can have all the foreign policy ideas he wants, but the Pentagon, State, the intelligence apparatus, and the rest of what some call “the deep state” will either reverse, delay, or never implement any policy not to its liking.

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The Grand Coalition includes the media.

US Occupation of Middle East Doesn’t Suppress Terrorism, It Causes It (Murray)

Even the neo-con warmongers’ house journal The Guardian, furious at Trump’s attempts to pull US troops out of Syria, in producing a map to illustrate its point, could only produce one single, uncertain, very short pen stroke to describe the minute strip of territory it claims ISIS still control on the Iraqi border. Of course, the Guardian produces the argument that continued US military presence is necessary to ensure that ISIS does not spring back to life in Syria. The fallacy of that argument can be easily demonstrated. In Afghanistan, the USA has managed to drag out the long process of humiliating defeat in war even further than it did in Vietnam.

It is plain as a pikestaff that the presence of US occupation troops is itself the best recruiting sergeant for resistance. In Sikunder Burnes I trace how the battle lines of tribal alliances there today are precisely the same ones the British faced in 1841. We just attach labels like Taliban to hide the fact that invaders face national resistance. The secret to ending the strength of ISIS in Syria is not the continued presence of American troops. It is for America’s ever closer allies in Saudi Arabia and the Gulf to cut off the major artery of money and arms, which we should never forget in origin and for a long time had a strong US component. The US/Saudi/Israeli alliance against Iran is the most important geo-political factor in the region today.

It is high time this alliance stopped both funding ISIS and pretending to fight it; schizophrenia is not a foreign policy stance. There has been no significant Shia Islamic terrorist or other threat against the West in recent years. 9/11 was carried out by Saudi Sunni militants. Al Qaida, ISIS, Al Nusra, Boko Haram, these are all Sunni groups, and all Saudi sponsored. It is a matter of lunacy that the West has adopted the posture that it is Iran – which has sponsored not one attack on the West in recent memory – which is the threat in the Middle East.

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Trump will have to act, or risk looking like a fool.

Big Pharma Returning To US Price Hikes In January After Pause (R.)

Novartis and Bayer are among nearly 30 drugmakers that have taken steps to raise the U.S. prices of their medicines in January, ending a self-declared halt to increases made by a pharma industry under pressure from the Trump administration, according to documents seen by Reuters.The hikes will pose a new challenge to President Donald Trump’s pledge to lower the costs of prescription medications in the world’s most expensive pharmaceutical market. The U.S. Department of Health and Human Services (HHS) has proposed a slew of policies aimed at lowering prices and passing more of the discounts negotiated by health insurers on to patients.

Those measures are not expected to provide relief to consumers in the short-term, however, and fall short of giving government health agencies direct authority to negotiate or regulate drug prices. 28 drugmakers filed notifications with California agencies in early November disclosing that they planned to raise prices in 60 days or longer. Under a state law passed last year, companies are required to notify payers in California if they intend to raise the U.S. list price on any drug by more than 16 percent over a two-year period. [..] “Requests and public shaming haven’t worked” to lower drug prices, said Michael Rea, chief executive of RX Savings Solutions, which helps health plans and employers seek lower cost prescription medicines. “We expect the number of 2019 increases to be even greater than in past years.”

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I think Salvini will get away with presenting this as a victory. But I may be wrong. How far removed is it from what Tsipras pulled in summer 2015? And how much is it like Macron and the yellow vests?

Italy Avoids EU Sanctions After Reaching 2019 Budget Agreement (G.)

Italy has managed to avert EU sanctions after reaching a compromise with the European commission over its 2019 budget. The Italian prime minister, Giuseppe Conte, said the government had managed to reach an agreement to reduce the deficit target to 2.04% of GDP from 2.4%. This has been achieved without making drastic changes to key budget proposals such as the promise of a universal basic income and lowering the pension age. “Over the last few weeks we worked to bring the positions closer without ever moving backwards with respect to the objectives the Italian people set us in the 4 March election,” Conte said.

“The economic-financial estimates about the measures that attracted the most attention of our European partners revealed that the resources [needed] were less than forecast.” The yield, or effective interest rate, on Italian 10-year government bonds fell to 2.79%, the lowest level since September. Less than two months ago the yield, the price the Italian government has to pay to borrow, rose to 3.8%. However, Valdis Dombrovskis, a European commission vice-president, described the agreement with Italy as a “borderline compromise” that fails to provide long-term solutions to the country’s economic problems. “But it enables us, for now, to avoid opening a debt procedure, as long as the negotiated measures are fully applied,” he said at a press conference in Brussels.

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Hilarious: “Police have accumulated some 23 million hours of overtime that is yet to be paid.”

French Police Threaten To Join Protesters (NW)

The French government is desperately trying to keep its exhausted police force onside following weeks of violent protests demanding economic reforms, improved living standards and the resignation of President Emmanuel Macron. On Wednesday, French officials met with police trade union leaders to work out a deal to soothe anger in law enforcement ranks regarding overwork, unpaid overtime and difficult working conditions, Le Monde reported. But some activists are calling on police to walk out on government negotiations, close down police stations and join the “gilets jaunes”—or yellow vest—protesters with whom they have been facing off since November 17. Negotiations between three unions—Alliance, UNSA-Police and Unity-SGP-FO—and Interior Minister Christophe Castaner on Tuesday failed to reach a settlement.

As talks resumed on Wednesday, France 24 reported that activists were calling on forces across the country to commit to a “slowdown” and only respond to emergencies until the dispute had been settled. Police have accumulated some 23 million hours of overtime that is yet to be paid. According to The Local France, police union leader Frédéric Lagache explained, “Faced with this irresponsibility [of the government], we are forced to be irresponsible in our actions.” The Alliance and Unity-SGP-FO unions called for a “black day for the police” on Wednesday. The Alliance is using Twitter and Facebook to rally support for what it calls “Act 1” of the police protests, using the name given to the ongoing demonstrations held by the gilets jaunes. The group has also threatened to hold “Act II” and “Act III” if required.

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I’m thinking one word here: copycats. Too easy not to try at home.

London’s Gatwick Airport Shut Down After Drones Spotted Overhead (AP)

London’s Gatwick Airport shut down late Wednesday while officials urgently investigated reports that two drones were flying above the airfield. The airport suspended all flights, causing severe disruptions just days before Christmas during one of the heaviest travel times of the year. Police and aviation authorities were still investigating early Thursday as incoming flights were diverted to other locations in Britain and nearby countries. Passengers complained on Twitter that their flights had landed at London Heathrow, Manchester, Birmingham and other cities. Other flights were sent to France and the Netherlands. One traveler whose flight was diverted tweeted that passengers were not being told when they could continue to their destination.

Gatwick advised travelers via Twitter to check flights scheduled for Thursday before heading to the airport. It also advised anyone planning to pick up arriving passengers to check first. Any problem at Gatwick causes a ripple effect throughout Britain and continental Europe, particularly during a holiday period when the air traffic control system is under strain. It is a busy airport 27 miles south of London, hosting a variety of short- and long-haul flights and serving as a major hub for the budget carrier easyJet. Gatwick normally operates throughout the night but the number of flights is restricted because of noise limitations. The airport website says it usually handles 18 to 20 flights overnight during the winter months.

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Yes, it’s priceless to read the Guardian on fake news.

Craig Murray tweets: ..The Guardian today published a story about a German journalist who invented stories, but still has never apologised for its own 100% fabricated Luke Harding piece about Manafort’s “visits to Assange in the Embassy”, and Harding and Viner are still employed..

Der Spiegel Says Top Journalist Faked Stories For Years (G.)

The German news magazine Der Spiegel has been plunged into chaos after revealing that one of its top reporters had falsified stories over several years. The media world was stunned by the revelations that the award-winning journalist Claas Relotius had, according to the weekly, “made up stories and invented protagonists” in at least 14 out of 60 articles that appeared in its print and online editions, warning that other outlets could also be affected. Relotius, 33, resigned after admitting to the scam. He had written for the magazine for seven years and won numerous awards for his investigative journalism, including CNN Journalist of the Year in 2014.

Earlier this month, he won Germany’s Reporterpreis (Reporter of the Year) for his story about a young Syrian boy, which the jurors praised for its “lightness, poetry and relevance”. It has since emerged that all the sources for his reportage were at best hazy, and much of what he wrote was made up. The falsification came to light after a colleague who worked with him on a story along the US-Mexican border raised suspicions about some of the details in Relotius’s reporting, having harboured doubts about him for some time.

The colleague, Juan Moreno, eventually tracked down two alleged sources quoted extensively by Relotius in the article, which was published in November. Both said they had never met Relotius. Relotius had also lied about seeing a hand-painted sign that read “Mexicans keep out”, a subsequent investigation found. Other fraudulent stories included one about a Yemeni prisoner in Guantanamo Bay, and one about the American football star Colin Kaepernick.

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Sometimes I think that if all my friends are leaving, why would I stay behind?

Finless Porpoise, China’s Smiling Angel, Fights To Survive (AFP)

In an oxbow lake along the middle reaches of the Yangtze River, a breathy sigh pierces the surface stillness as one of China’s most endangered animals comes up for a gulp of hazy air. A slick black back with no dorsal fin arches briefly above the water line before plunging back down. Such glimpses of the shy Yangtze finless porpoise, the only aquatic mammal left in China’s longest river and known in Chinese as the “smiling angel” for its perma-grin, are increasingly rare. Pollution, overfishing, hydroelectric dams and shipping traffic have rendered them critically endangered, worse off even than China’s best-known symbol of animal conservation, the panda.


AFP Photo/Johannes EISELE

China’s government estimates there were 1,012 wild Yangtze finless porpoises in 2017, compared to more than 1,800 giant pandas, which is no longer endangered. But researchers see signs of hope. Porpoise numbers fell by nearly half from 2006-2012 to an estimated 1,040. But the rate of decline has slowed markedly since then, suggesting that conservation may be making a dent. A central component of the rescue effort is the introduction of porpoises to several conservation areas off the busy river, where researchers say numbers have been actually increasing. [..] Chinese officials are keen to avoid a repeat of the “baiji”, or Yangtze dolphin, the river’s only other aquatic mammal, which since 2006 has been considered extinct in a huge conservation setback for China. Losing the “smiling angel” would be a further tragedy, conservationists say.

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Dec 102018
 


Jerry Bywaters Oil Field Girls 1940

 

Investors Managing $32 Trillion In Assets Call For Climate Change Action (R.)
BP, Chevron, ExxonMobil Face Shareholder Challenge Over Carbon Targets (G.)
Bear Market Is Here, Stocks To Plunge At Least 20% – Ned Davis Research (CNBC)
Everyone Is Bearish But No-One Is Short (ZH)
Senior Tory Vultures Circle With May On Brink (Ind.)
EU’s Top Court Says UK Can Unilaterally Stop Brexit (R.)
UK Government Funds Secret Anti-Corbyn, Labour Unit (DR)
Comey: FBI Never Verified Steele Dossier Used To Justify Special Counsel (ZH)
Russian Stealth Jets To Be Armed With New Hypersonic Missiles (ZH)
Medical Researchers Still Routinely Hiding Funding From Big Pharma (RT)
Italian Priests Vow To Open Church Doors To Evicted Immigrants (G.)
Why Greeks Traditionally Decorate a Boat Instead of a Christmas Tree (GR)
The Antidote To Civilisational Collapse (Adam Curtis)

 

 

Right. Questions: How much of the $32 trillion was made doing things that increased emissions? How much of it is presently invested in polluting companies? And how much are the investors prepared to lose in order to comply with whatever it takes to lower emissions?

To put it simply: these people are talking their books. They got rich by polluting. They intend to get even richer by going green.

If you’re serious about the topic, don’t join them.

Investors Managing $32 Trillion In Assets Call For Climate Change Action (R.)

Global investors managing $32 trillion in assets have called on governments to accelerate steps to combat climate change, as policymakers meet for talks at a United Nations conference in Poland. A total of 415 investors from across the world including UBS Asset Management and Aberdeen Standard Investments signed the 2018 Global Investor Statement to Governments on Climate Change demanding urgent action. “The global shift to clean energy is underway, but much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society and the financial system to climate risks,” the statement said.

The intervention is the single largest on the topic to date, the Institutional Investors Group on Climate Change said, as talks continue in the Polish city of Katowice to agree how to slow global warming to below 2ºC. That goal was agreed at a 2015 meeting in Paris, but investors said national governments were being too slow in enacting the policies needed to help the world transition to a low-carbon economy. Failure to act could lead to permanent economic damage three or four times the scale of the impact of the financial crisis, British asset manager Schroders said.

As well as ramping up the involvement of the private sector, governments needed to commit to improving climate-related financial reporting, a move that would help investors better assess the risk and allocate capital to the right companies. “The reality is that the long-term nature of the challenge has, in our view, met a zombie-like response by many,” said Chris Newton, Executive Director Responsible Investment, IFM Investors. “This is a recipe for disaster as the impacts of climate change can be sudden, severe and catastrophic.”

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If these activist shareholders succeed, the value of their shares will plunge. That’s why in an earlier vote at Shell, 94% of shareholders votied against and 5% abstained. That reduces this to window dressing.

BP, Chevron, ExxonMobil Face Shareholder Challenge Over Carbon Targets (G.)

BP, Chevron and ExxonMobil face a shareholder challenge to set carbon targets in line with the Paris climate agreement, as a green group seeks to repeat its success in pressuring Shell to set environmental benchmarks. When Shell’s chief executive, Ben van Beurden, laid out an ambitious long-term carbon target last year, he acknowledged the role played by a resolution on carbon targets submitted by Dutch activist shareholders Follow This. Follow This is hoping to use investor power to push other major oil and gas firms into setting similar goals. The organisation has bought shares in several major fossil fuel groups and has submitted two resolutions to the European firms BP and Shell. It will file identical resolutions with the US companies Chevron and ExxonMobil later this week if other parties do not submit a similar demand.

Investors at the firms’ annual general meetings next year will be asked to vote in favour of them publishing climate change targets in alignment with the international goal of keeping the rise in global temperatures well below 2C. Mark van Baal, the founder of Follow This, said: “Targets should be on the agenda of every oil company, given that the oil industry can make or break the Paris climate agreement.” The group has little chance of winning by persuading a majority of the four companies’ shareholders to back the resolution but it believes the tactic can put public and investor pressure on firms. Although backed by the Church of England and major pension funds, the resolution filed for Shell’s AGM on carbon targets failed in 2017, with 94% of shareholders voting against and 5% abstaining.

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New Davis have no idea how big the fall will be, no more than you or I. And besides, they think that by spring, “the pain will be largely behind the Street”.

Bear Market Is Here, Stocks To Plunge At Least 20% – Ned Davis Research (CNBC)

The wild trading that’s gripped Wall Street may be no ordinary correction. According to Ned Davis Research’s Ed Clissold, a bear market is officially here. “If you take this as a typical bear market, not associated with a recession, it’s going to take you down around 20% — maybe a little bit more,” the firm’s chief U.S. market strategist told CNBC’s “Futures Now” last week. “That’s what we need to be thinking about over the next several months.” A bear market is defined as an environment when overwhelming pessimism sparks a 20% drop or more from recent highs. In this case, it would wipe out 588 points from the S&P 500’s all-time high of 2940.91 hit on Sept. 21. The index closed Friday in correction territory at 2,633.08. That’s down 10% from the high and 4.6% for the week.

Originally, Clissold called for a bear market to hit Wall Street in 2019, due to jitters over interest rate hike risks, U.S.-China trade tensions and slowing growth in earnings and the economy. However, he decided to move up his forecast due to “severe” technical damage from the October correction. Now, it appears the market may soon get hit with another batch of discouraging news. “Earnings growth is becoming a front-burner issue. Everybody expected it to slow down next year because we don’t have the benefit of tax cuts. But the slowdown is probably going to be more than expected,” said Clissold. [..] He may be predicting a deep pullback, but he does not see any signs of a recession. By spring, Clissold said, the pain will be largely behind the Street.

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Everyone still relies on central banks.

Everyone Is Bearish But No-One Is Short (ZH)

In the past two months we have written extensively on how most market participants got caught offside by the dramatic reversion in risk assets, and which after several attempts at bottom-fishing – attempts which have failed because as Morgan Stanley first noted two months ago the Buy The Dip trade no longer works…

… increasingly more traders have thrown in the towel, resulting in YTD returns which are truly “historic” with not one single asset generating positive returns for the first time since the Nixon presidency.

Well, that’s not exactly right: one asset is outperforming – the one which usually does best just as the economy slides into a recession or worse: cash. As Bank of America notes, the YTD score for the top global assets is the following: • equities -4.2%, • bonds -2.3%, • commodities -6.2%, • cash 1.7%, • US$ 4.9%.

Drilling down reveals an even uglier picture: the 2018 bear market has spared nobody with US Treasuries down -4.9%, the 5th largest loss since 1970, US IG bonds -3.3%, their 4th largest loss since 1970, meanwhile 1881 of 2767 global stocks are in a bear market, down more than 20%, 86 of 94 equity indices underwater, and the cherry on top – the FAANG bull market “leader” is down -26% from highs, which according to BofA’s Michael Hartnett is “a big nasty bear market.” The result, per Bank of America, is that “capitulation to lower credit & equity allocations begins but from high allocations to risk assets.” That’s the good news: the bad news is that even as investors are bailing out of risk assets, they are also dumping safe havens like treasuries, and in the last week we saw broad based risk-off flows, including $5.2BN outflow from equities, and $8.1BN outflow from bonds this week

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By the day, it becomes more like one of those Shakespeare plays with gossiping and backstabbing and all that. Love it.

Senior Tory Vultures Circle With May On Brink (Ind.)

Theresa May is set for the bleakest week of her time in power after leadership rivals publicly positioned themselves to grab the Tory crown if her Brexit plans collapse. Ex-cabinet ministers Boris Johnson, Dominic Raab and Esther McVey all signalled a willingness to bid for the leadership amid speculation that Ms May faces a heavy defeat in the crunch Commons vote on her proposed Brexit deal. More resignations were expected from the front bench in the run-up to the vote, with government insiders indicating it could still be delayed. If she survives the first half of the week, Ms May is expected to head to Brussels where she will implore the EU to offer a concession on the hated “Irish backstop” so that she can try to sell the deal to Tory rebels one last time.

The prime minister spoke to president of the European Council Donald Tusk on Sunday, who said afterwards that it would be “an important week for the fate of Brexit”. In London thousands of protestors waving union jacks joined a “Brexit betrayal” march sponsored by Ukip and addressed by far-right activist Tommy Robinson, while even more were said to have turned up to an anti-fascist counter-march. The febrile atmosphere as the week starts is only set to intensify as MPs return to Westminster on Monday, with talk of Conservative plots and leadership challenges filling the air. One Tory backbencher told The Independent: “No one knows if the prime minister is still going to be in Downing Street at the end of the week.

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Ha ha! Don’t forget to say thank you to the EU for your freedoms, Brits! Rumor has it May’s Plan B will include a second vote that does not have a Remain option.

EU’s Top Court Says UK Can Unilaterally Stop Brexit (R.)

The European Union’s top court ruled on Monday that the United Kingdom can unilaterally revoke its divorce notice, raising the hopes of pro-Europeans ahead of a crucial vote in the British parliament on Prime Minister Theresa May’s divorce deal. Just 36 hours before British lawmakers vote on May’s deal, the Court of Justice said in an emergency judgement that London could revoke its Article 50 formal divorce notice with no penalty. May’s government says the ruling means nothing because it has no intention of reversing its decision to leave the EU on March 29. But critics of her deal say it provides options — either to delay Brexit and renegotiate terms of withdrawal, or cancel it altogether if British voters change their minds. “The United Kingdom is free to revoke unilaterally the notification of its intention to withdraw from the EU,” the court said.

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Surprised? Don’t be.

UK Government Funds Secret Anti-Corbyn, Labour Unit (DR)

A secret UK Government-funded infowars unit based in Scotland sent out social media posts attacking Jeremy Corbyn and the Labour Party. On the surface, the cryptically named Institute for Statecraft is a small charity operating from an old Victorian mill in Fife. But explosive leaked documents passed to the Sunday Mail reveal the organisation’s Integrity Initiative is funded with £2million of Foreign Office cash and run by military intelligence specialists. The “think tank” is supposed to counter Russian online propaganda by forming “clusters” of friendly journalists and “key influencers” throughout Europe who use social media to hit back against disinformation.

But our investigation has found worrying evidence the shadowy programme’s official Twitter account has been used to attack Corbyn, the Labour Party and their officials. [..] David Miller, a professor of political sociology in the School for Policy Studies at the University of Bristol, added: “It’s extraordinary that the Foreign Office would be funding a Scottish charity to counter Russian propaganda which ends up attacking Her Majesty’s opposition and soft-pedalling far-right politicians in the Ukraine. “People have a right to know how the Government are spending their money, and the views being promoted in their name.”

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That’s not legal, is it?

Comey: FBI Never Verified Steele Dossier Used To Justify Special Counsel (ZH)

Former FBI Director James Comey didn’t know a lot during Friday’s congressional testimony – claiming hundreds of times (245 according to Trump) that he simply couldn’t remember various things. What Comey did remember, however, confirms that the FBI could not verify the dossier submitted by former UK spy Christopher Steele – which the agency used as the foundation of a spy warrant application to surveil the Trump campaign. While Comey said the dossier came from “a reliable source with a track record, and it’s an important thing when you’re seeking a PC warrant,” he also admitted that the FBI was unable to corroborate the document’s claims.

“But what I understand by verified is we then try to replicate the source information so that it becomes FBI investigation and our conclusions rather than a reliable source’s,” Comey said, adding “That’s what I understand it, the difference to be. And that work wasn’t completed by the time I left in May of 2017, to my knowledge.” The FBI is required to fully vet information they submit to FISA courts, which they of course did not do in their haste to deploy a counterintelligence dragnet on the Trump campaign during the final months of the 2016 US election. Steele, meanwhile, was fired by the FBI for leaking information to the press while the agency was using him as a source. To get around this, the FBI went through former #4 DOJ official Bruce Ohr – who was demoted twice for lying about his contacts with Steele.

Ohr’s wife, Nellie Ohr, worked for the embattled research firm Fusion GPS on the Trump dossier. Fusion GPS hired Steele as part of their ongoing effort to investigate the Trump campaign and any ties with Russia. It was discovered in 2017 that Fusion GPS was being paid by the Hillary Clinton campaign and the Democratic National Committee through the campaign’s law firm Perkins Coie to investigate any alleged ties between Trump and Russia. More importantly, the FBI used information from Steele, a foreign source who was openly antagonistic about Trump. In fact, Ohr told FBI officials that he “was desperate that Donald Trump not get elected and was passionate about him not being president,” as stated in the House Intelligence Committee investigation memo. -Sara Carter

Comey’s confirmation echoes comments made in a string of emails quietly requested by House Republicans for declassification – as reported last week by The Hill’s John Solomon. The emails – kept from Congressional investigators for over two years, “included then-FBI Director James Comey, key FBI investigators in the Russia probe and lawyers in the DOJ’s national security division,” according to the report – and took place in early to mid-October of 2016, prior to the FBI successfully securing a FISA warrant to spy on Trump campaign adviser Carter Page.

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In a worst case scenario, the US will use this as a reason to attack now, before Americans figure out they can’t win.

Russian Stealth Jets To Be Armed With New Hypersonic Missiles (ZH)

The advanced Sukhoi Su-57 multipurpose jet, Russia’s first domestically produced fifth-generation stealth fighter, will be armed with new hypersonic missiles, according to a Russian military source. “In accordance with Russia’s State Armament Program for 2018-2027, Su-57 jet fighters will be equipped with hypersonic missiles,” a Russian defense industry source toldTASS news agency on December 06. “The jet fighters will receive missiles with characteristics similar to that of the Kinzhal missiles, but with inter-body placement and smaller size,” the source added. Moscow said the new Kinzhal (“Dagger”), a nuclear-capable air-launched ballistic missile, can hit speeds of up to Mach 10 and can perform evasive maneuvers that can render NATO’s US-led missile defense system completely “useless.”

The missile can carry both conventional and nuclear warheads with a range of about 1,200 miles. The new hypersonic missile will be much smaller than the current Kinzhal; this is due to size constraints of fitting the weapon inside the stealth aircraft’s weapons bay. The alternative would be mounting the missile on the outside of the plane, but that would increase the jet’s radar signature. No details within the report explain about a timetable for the development or the planned specifications for the new missiles. The Defense Ministry would neither confirm nor deny the information. The Kinzhal missile is currently being tested in field training exercises.

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The US needs to clean up its pharma, along with the entire healthcare system.

Medical Researchers Still Routinely Hiding Funding From Big Pharma (RT)

A huge proportion of scientists and doctors publishing in major medical magazines continue to conceal ties to corporations relevant to their research, while punishment for not declaring interests remains weak, says a new report. “The system is broken,” Mehraneh Dorna Jafari, assistant professor of surgery at the University of California, Irvine, told the New York Times and ProPublica, an investigative journalism non-profit. Jafari was one of the authors of a landmark study published back in August that took the names of the 100 doctors receiving the most funding from medical equipment and drug manufacturers, and then studied whether they declared a potential conflict of interest in their published research. Only 37 did.

For example, Dr. Howard A. Burris III, has been elected as the president of the American Society of Clinical Oncology (ASCO) that includes 40,000 members, and can make influential recommendations on cancer drugs worth tens of billions of dollars. Companies where Burris is an employee have been paid $114,000 in speaking fees, and $8 million in research funding by private corporations. Yet in none of his last 50 articles did the man, whose bio boasts that he “was selected by his peers as a ‘Giant of Cancer Care’ for his achievements in drug development,” think it was necessary to declare any potential biases resulting from corporate involvement.

In the latest investigation, the Times and ProPublica revealed that Dr. Robert J. Alpern, the dean of the Yale School of Medicine, writing about an experimental kidney disease drug failed to state that he was on the board of the company producing it. When journalists approached the publisher of the article, the Clinical Journal of the American Society of Nephrology, its editor discovered that all 12 authors of the article in question had interests they failed to declare.

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Really? Salvini is about to take on the Pope?

Italian Priests Vow To Open Church Doors To Evicted Immigrants (G.)

Italian priests have declared their willingness to “open the church doors of every single parish” to people expelled from reception centres as an anti-immigration law from Italy’s rightwing government threatens to make thousands homeless. The so-called “Salvini decree” – named after Matteo Salvini, the interior minister and leader of the far-right League – left hundreds in legal limbo when its removal of humanitarian protection for those not eligible for refugee status but otherwise unable to return home was applied by several Italian cities soon after its approval by parliament earlier this month. The Catholic church expressed its profound disapproval immediately after the vote.

The Vatican’s position is “very clear”, its secretary of state, Cardinal Pietro Parolin, said last week. “You don’t leave migrants in the street … A profound sense of solidarity must prevail. You cannot put people in this position. You must always focus on people and their rights.” According to Italy’s ministry of the interior, between 2016 and 2017 Italy provided humanitarian protection to 39,145 asylum seekers, who under the Salvini decree risk being made homeless within weeks. In early December, a letter announcing the expulsion of 50 people was sent to the reception centre in Mineo, Sicily: the largest in Europe after the Moria camp in Greece.

The bishop of Caltagirone, Monsignor Calogero Peri, said he was prepared to provide 40 beds in nearby facilities owned by the church to welcome people who risk expulsion. “And if there are not enough beds? I have already spoken with other bishops: we will open the church doors of every single parish under our control,” he said. “It’s not a question of politics. It’s a matter of protecting individuals. Imagine this: in Italy now it is a crime to abandon dogs, but it is not a crime to abandon people. Even worse, abandoning men, women and children is now the law.”

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A little nothing news. But cute.

Why Greeks Traditionally Decorate a Boat Instead of a Christmas Tree (GR)

The most traditional symbol you will find in Greece during the holidays is a small boat decorated with lights, usually placed in the main square of a town and close to the more international Christmas tree. To karavaki, or small boat is rooted in the traditions of a country with a symbiotic relationship with the sea. In fact on the many Greek islands the Christmas boats remain the most popular ornament of the holiday season. Different legends explain the tradition of the Christmas Greek boat. One of them is related to Saint Nicholas (Agios Nikolaos), the Patron Saint of Sailors. This saint is celebrated on December 6, the day when many households start decorating their houses for Christmas. Some agree that this is why boats are decorated, in order to honor the saint.

It’s also true that Greece is proud of the large amount of sailors, fishermen and intrepid captains the country has, which makes them as a symbol of local identity. Men would often be away for months at a time, and those back home would be anxiously waiting for their return. On the islands, the wives, mothers, and daughters of seaman used to spend the cold and dark winter months with their heart and mind at sea. There, their men were battling the stormy seas during the holiday season. These were months of expectation, hope, and prayer for their safe return. The joy of seeing the boats coming back, approaching the shores, made the women celebrate in relief. The boat is a symbol to honor those brave men coming back home.

The tradition wanted the small wooden boats placed inside close to the fireplace and pointing towards the center of the house, never towards the door. They were also lovingly decorated to give a warm welcome to the men of the household. Even kids prepared their own boats with paper and chips of wood, and on Christmas Eve, they used these little boats to collect the treats they had received when singing the carols (kalanda) from house to house.

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Don’t miss the fantastic Adam Curtis. He knows more about what makes our world go round than just about anyone. Watch his docs, all of them.

The Antidote To Civilisational Collapse (Adam Curtis)

Adam Curtis: “HyperNormalisation” is a word that was coined by a brilliant Russian historian who was writing about what it was like to live in the last years of the Soviet Union. What he said, which I thought was absolutely fascinating, was that in the 80s everyone from the top to the bottom of Soviet society knew that it wasn’t working, knew that it was corrupt, knew that the bosses were looting the system, knew that the politicians had no alternative vision. And they knew that the bosses knew they knew that. Everyone knew it was fake, but because no one had any alternative vision for a different kind of society, they just accepted this sense of total fakeness as normal. And this historian, Alexei Yurchak, coined the phrase “HyperNormalisation” to describe that feeling.

I thought “that’s a brilliant title” because, although we are not in any way really like the Soviet Union, there is a similar feeling in our present day. Everyone in my country and in America and throughout Europe knows that the system that they are living under isn’t working as it is supposed to; that there is a lot of corruption at the top. But whenever the journalists point it out, everyone goes “Wow that’s terrible!” and then nothing happens and the system remains the same. There is a sense of everything being slightly unreal; that you fight a war that seems to cost you nothing and it has no consequences at home; that money seems to grow on trees; that goods come from China and don’t seem to cost you anything; that phones make you feel liberated but that maybe they’re manipulating you but you’re not quite sure. It’s all slightly odd and slightly corrupt.

[..] No one is really sure what Trump represents. My working theory is that he’s part of the pantomime-isation of politics. Every morning Donald Trump wakes up in the White House, he tweets something absolutely outrageous which he knows the liberals will get upset by, the liberals read his tweets and go “This is terrible, this is outrageous,” and then tell each other via social media how terrible it all is. It becomes a feedback loop in which they are locked together. In my mind, it’s like they’re together in a theatre watching a pantomime villain. The pantomime villain comes forward into the light, looks at them and says something terrible, and they go “Boo!!”. Meanwhile, outside the theatre, real power is carrying on but no one is really analysing it.

This is the problem with a lot of journalism, especially liberal journalism at the moment. It’s locked together with those people in the theatre. If you look at the New York Times, for example, it’s continually about that feedback loop between what Trump has said and the reaction of liberal elements in the society. It’s led to a great narrowing of journalism. So in a way, he is part of the hypernormal situation because it’s a politics of pantomime locked together with its critics. [..] ..It’s not a conspiracy. It’s a distraction from what’s really happening in the world. I would argue that there is a sense—in a lot of liberal journalism—of unreality. They’re locked into describing the pantomime politics and they’re not looking to what Mr Michael Pence is really up to, and what’s really happening outside the theatre.

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Aug 082017
 
 August 8, 2017  Posted by at 9:06 am Finance Tagged with: , , , , , , , , , , ,  Comments Off on Debt Rattle August 8 2017


Vincent van Gogh Tree Roots 1890 (painted July 28, the day before he died)

 

That Whoosh You Heard? It’s The Great Chinese Property Pullback (BBG)
Has China’s Rise Topped Out? (BBG)
Credit Card Debt; Student, Auto Loans All Set New Record Highs (ZH)
Asking Prices Slashed At High End of the House Price Bubble (WS)
Is Trump Winning? (Robert Gore)
Jeff Sessions Endorses Theft (Ron Paul)
Just Wait a Little While (Jim Kunstler)
Fossil Fuel Subsidies Are A Staggering $5 Trillion Per Year (G.)
Bernie Sanders Tells Big Pharma: Stop Making Americans Pay Twice
Call For ‘Military Schengen’ To Get NATO Troops Moving (Pol.)
Erdogan Says Turkey To Tackle – US-Supported – Kurds In Syria (R.)
Greece Accepts Resettlement of Refugees from Germany (GR)

 

 

China needs foreign reserves. It needs to stop bleeding them.

That Whoosh You Heard? It’s The Great Chinese Property Pullback (BBG)

That whoosh you just heard? It’s Chinese money pulling back from property in London to Sydney to New York. Capital centres globally should brace for tumbling real-estate prices as Beijing manages to do what Brexit and higher interest rates haven’t. Reflecting tighter regulations, China overseas direct property investment could drop 84% to $US1.7 billion ($2.15 billion) this year and about another 15% to $US1.4 billion in 2018, according to Morgan Stanley. Mainland money began piling into offshore commercial property in 2013. Land prices were expensive at home, and investors wanted to find a hedge against a weakening yuan. Another draw was the prospect of higher returns in cities such as Sydney where yield spreads – the difference between rental yields and what government bonds pay – are higher.

A slumping British pound post June 2016’s Brexit vote helped, too. While some marquee transactions are still being inked – think the purchase earlier this year of London’s “Cheesegrater” tower by Chongqing-based, Hong Kong-listed CC Land Holdings – their numbers are dwindling. A strengthening yuan, along with China’s One Belt One Road initiative that needs funding, will see many property deals dry up. Over the past few months, Beijing has made it tougher to get money out, clamped down on more fanciful transactions such as the buying of football clubs and luxury hotels, and is now going after some of the country’s most prolific acquirers. Dalian Wanda Group, Anbang Insurance Group, HNA Group and Fosun International have all included real estate in their global buying binges.

Against that backdrop, and with increasing foreign-government scrutiny thrown into the mix, it’s hard to see how Chinese offshore real estate acquisitions can continue at such a pace. Domestic developers are already finding it harder to tap international debt markets, and have been resorting to short-term securities instead. This matters because Chinese capital accounted for one-quarter of commercial property transactions in central London last year, up from 1% a decade ago. China is now the second-largest foreign investor in the US after Canada, and is responsible for between 12 and 25% of all office transactions by value in Australia over the past two to three years.

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Again, China needs foreign reserves: “Nowhere is the disconnect between China’s global ambitions and actual policy greater than with the government’s interference in overseas direct investment.”

Has China’s Rise Topped Out? (BBG)

Most people around the world still seem to believe China’s ascent is relentless and inevitable. A recent survey by the Pew Research Center showed that while more of those polled still see the U.S. as the world’s leading economy, China is quickly narrowing the gap. Chinese President Xi Jinping has been feeding that positive image by presenting his country as a champion of globalization, trade and economic progress. Statistics tell a different story. The common perception is that China is swamping the world with exports of everything from mobile phones to steel to sneakers. In fact, the entire Chinese export machine is sputtering. Between 2006 and 2011, China’s total merchandise exports nearly doubled, powering the country through the Great Recession. Since then, they’ve increased less than 11%, according to World Trade Organization data.

The same trend holds for China’s currency. In late 2014, the renminbi broke into the top five most-used currencies for global payments, reaching an almost 2.2% share. China seemed well on the way to achieving its long-stated goal of turning the yuan into a true rival to the dollar. But that progress has reversed. In June, the renminbi chalked up only a 2% share, according to Swift, slipping behind the Canadian dollar. The situation isn’t very different in China’s capital markets. While the government has cracked open its stock and bond markets to foreign investors, they still prefer buying Chinese shares listed in Hong Kong or New York to those in Shanghai or Shenzhen. For instance, domestically traded A-shares in a China equities fund managed by Zurich-based GAM account for less than 10% of its holdings.

In part, China is simply running into the difficult transition every country faces when losing its low-cost advantage. Facing stiff competition from countries like India and Vietnam, where wages are lower, China is losing ground in apparel and textile exports to the United States. Meanwhile, the Chinese economy isn’t replacing these traditional exports with new, high-value ones quickly enough. For example, in 2016, China exported 708,000 passenger and commercial vehicles, a sharp deterioration from the more than 910,000 shipped abroad in 2014. Rather than boosting China’s global expansion, government policy is holding it back. The renminbi remains a sideshow in currency markets because the state can’t stop fussing with its value. In May, the central bank actually reversed its stated policy to liberalize the renminbi’s trading and imposed more control.

[..] Nowhere is the disconnect between China’s global ambitions and actual policy greater than with the government’s interference in overseas direct investment. For a while, officials were encouraging big companies to shop abroad, resulting in a surge of deal-making by firms like Anbang. That led to a debt-crazed buying binge. Having created the problem, the government then stepped in to “fix” it, by suddenly changing course and clamping down on foreign deals. According to the American Enterprise Institute, China’s offshore investment still grew by 9% in the first half of 2017, but only because of one giant deal – state-owned China National Chemical Corp.’s acquisition of Syngenta AG. Take that one out, and overseas investment would have fallen by about a third.

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Masters and debt slaves.

Credit Card Debt; Student, Auto Loans All Set New Record Highs (ZH)

Who would have expected that today’s otherwise boring monthly consumer credit report would be the day’s most exciting event. Well, moments ago the monthly update from the Federal Reserve confirmed that as of the end of June, total revolving (i.e. credit card) credit rose to $1,021.7 billion, an increase of $4.1 billion on the month, and a new all time high, taking out the previous record high set during the summer of 2008.

Coupled with the monthly $8.3 billion increase in non-revolving credit, which also rose to an all time high of $2,834.1 billion…

… means that total consumer credit in June increased by $12.4 billion, slightly less than the $13.9 billion expected and modestly less than the $18.4 billion increase in May, to $3,855.8 billion, also a record high.

Taking a closer look at the quarterly update in non-revolving debt, we find that for another consecutive quarter, both student and auto loans hit record highs, of $1.450 trillion and $1.131 trillion respectively, although there does appears to be a modest slowdown in credit issuance for these two largest categories.

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“Aspirational pricing”: pumping the market.

Asking Prices Slashed At High End of the House Price Bubble (WS)

No, Cantor Fitzgerald CEO Howard Lutnick didn’t “save” $81 million when he bought the most expensive listing in New York City, the 12,000-square-foot, 16-room triplex penthouse on the 41st, 42nd, and 43rd floors of The Pierre, a co-op tower on Fifth Avenue dating from 1930s. By the way, the owner also pays monthly maintenance charges for the apartment of $51,840). Asking price was $125 million when it was first listed in March 2013. In December that year, the price was slashed to $95 million. In 2015, it was cut to $63 million. That’s half of the original asking price. But it still didn’t sell. So it was taken off the market. After it underwent a modern redesign, it was re-listed in April 2016 for $57 million. It still didn’t sell. But on August 2, Page Six reported that Lutnick bought it for $44 million. At 65% below asking.

“Cantor Fitzgerald CEO buys iconic triplex at $81M discount,” said the Page Six headline. “Best Real Estate Headline Ever,” said Jonathan Miller, real-estate appraiser and author of the Elliman Report series, in his Housing Notes. Miller has a word for this phenomenon of enormous blue-sky asking prices that trigger subsequent massive and serial price reductions until finally someone bites: “Aspirational pricing.” “The very idea that a home seller would discount their home by $81 million to make the sale is an insane thought. This speaks to the concept I call “aspirational pricing.” The asking price was set to a price so ridiculous that it would literally sit on the market for years and the market would unlikely catch up in a lifetime. More importantly, it serves as misdirection for other high-end properties coming to the market by influencing them to also wildly over price as well.”

The 6,800-square-foot fully furnished penthouse occupying the top floor of the beachfront condo tower at 321 Ocean in South Beach, Miami Beach, was listed for sale in December 2015 for $53 million. The sellers had bought it when the building was completed six months earlier, for $20 million. “Financier Aims for Ambitious $53 Million Miami Penthouse Flip,” The Wall Street Journal said at the time. The hopeful flippers are Boris Jordan and Elizabeth Jordan: Founder of the private-equity and advisory firm the Sputnik Group, Mr. Jordan previously served as chief executive of the state-controlled Russian media conglomerate Gazprom-Media, and as head of the Russian television network NTV. But the hot air has come out of the condo market in Miami Beach. In the second quarter, after years of soaring, the median sale price for non-distressed condos dropped 7.5%, and the average price plunged 15.2%, according to the Elliman Report.

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A different look.

Is Trump Winning? (Robert Gore)

We’ve asserted that President Trump is far smarter and the powers that be far stupider and weaker than current consensus estimates. Trump’s primary motivation is power. The nonstop vilification campaign against him has little to do with policy differences and instead reflects establishment fears that Trump will investigate, expose, and punish its criminality. The upshot of these hypotheses: Trump is winning and has consolidated his power. [..] Even the Washington Post has admitted the Russia probe is “crumbling.” Trump and Sessions know Special Prosecutor Robert Mueller won’t find much because there’s nothing there, although there may be a sacrificial offering or two to propitiate the investigatory gods.

Trump read Sessions the riot act via Twitter and a Wall Street Journal interview about not investigating Hillary Clinton, intelligence community leaks to the press, and Ukrainian efforts to sabotage his presidential campaign. He’s been roundly condemned for publicly criticizing Sessions, but here’s a speculative leap: perhaps publicly criticizing Sessions was not really what Trump was doing. Perhaps Trump was giving his attorney general political cover to pursue investigations against high-profile Democrats who cannot help Trump, sub rosa or otherwise. Investigations of Hillary Clinton, former Attorney General Loretta Lynch, Susan Rice, Samantha Power, Fusion GPS, and Debbie Wasserman Schultz would demoralize the Democrats, preoccupy and harass key players, expose criminality, and electrify Trump’s base.

Providing Sessions further cover, twenty Republican representatives have sent a letter to the Attorney General and Deputy Attorney General Rod Rosenstein demanding the appointment of a second Special Counsel to look into potentially illegal acts by Clinton, Lynch, and former FBI director James Comey. After recusing himself from the Russiagate investigation, which he knows is pointless, and being “scolded” by Trump, Sessions is now a sympathetic, squeaky-clean figure; even Democrats have expressed support. He has far more latitude to pursue the investigations his boss wants him to pursue. Most of the ensuing criticism will be directed at Trump, which will bother Trump not at all (although there will undoubtedly be answering Twitter blasts).

Trump has quietly (when Trump does anything quietly, take note) made two sea changes in US policy in Syria. At the G20 summit, he negotiated a cease fire with Vladimir Putin for southwest Syria. Last week he ended a CIA program that armed Syrian jihadists fighting Bashar al-Assad’s regime. Both changes are anathema to the US Deep State, the mainstream media, and US allies Saudi Arabia, the Gulf States, Israel, and Turkey, yet other than “rote denunciation,” they have been surprisingly docile. The latter change could presage abandonment of a pillar of US foreign and military policy since President Carter supplied arms and other aid to the mujahideen in Afghanistan during their successful fight against the Soviet Union. The US may be out of the business of arming Islamic insurgents against regimes it seeks to change.

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Another look, different from the last one.

Jeff Sessions Endorses Theft (Ron Paul)

Attorney General Jeff Sessions recently ordered the Justice Department to increase the use of civil asset forfeiture, thus once again endorsing an unconstitutional, authoritarian, and increasingly unpopular policy. Civil asset forfeiture, which should be called civil asset theft, is the practice of seizing property believed to be involved in a crime. The government keeps the property even if it never convicts, or even charges, the owner of the property. Police can even use civil asset theft to steal from people whose property was used in criminal activity without the owners’ knowledge. Some have even lost their homes because a renter or houseguest was dealing drugs on the premises behind the owners’ backs. Civil asset theft is a multi-billion dollar a year moneymaker for all levels of government.

Police and prosecutors receive more than their “fair share” of the loot. According to a 2016 study by the Institute for Justice, 43 states allow police and prosecutors to keep at least half of the loot they got from civil asset theft. Obviously, this gives police an incentive to aggressively use civil asset theft, even against those who are not even tangentially involved in a crime. For example, police in Tenaha, Texas literally engaged in highway robbery — seizing cash and other items from innocent motorists — while police in Detroit once seized every car in an art institute’s parking lot. The official justification for that seizure was that the cars belonged to attendees at an event for which the institute had failed to get a liquor license. The Tenaha police are not the only ones targeting those carrying large sums of cash.

Anyone traveling with “too much” cash runs the risk of having it stolen by a police officer, since carrying large amounts of cash is treated as evidence of involvement in criminal activity. Civil asset theft also provides an easy way for the IRS to squeeze more money from the American taxpayer. As the growing federal debt increases the pressure to increase tax collections without raising tax rates, the IRS will likely ramp up its use of civil asset forfeiture. Growing opposition to the legalized theft called civil asset forfeiture has led 24 states to pass laws limiting its use. Sadly, but not surprisingly, Attorney General Jeff Sessions is out of step with this growing consensus. After all, Sessions is a cheerleader for the drug war, and civil asset theft came into common usage as a tool in the drug war. President Trump could do the American people a favor by naming a new attorney general who opposes police state policies like the drug war and police state tactics like civil asset theft.

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“We’ll use every kind of duct tape and baling wire we can find to keep the current systems operating, and we have..”

Just Wait a Little While (Jim Kunstler)

The authorities in this nation, including government, business, and academia, routinely lie about our national financial operations for a couple of reasons. One is that they know the situation is hopeless but the consequences are so awful to contemplate that resorting to accounting fraud and pretense is preferable to facing reality. Secondarily, they do it to protect their jobs and reputations — which they will lose anyway as collapse proceeds and their record of feckless dishonesty reveals itself naturally.

The underlying issue is the scale of human activity in our time. It has exceeded its limits and we have to tune back a lot of what we do. Anything organized at the giant scale is headed for failure, so it comes down to a choice between outright collapse or severe re-scaling, which you might think of as managed contraction. That goes for government programs, military adventures, corporate enterprise, education, transportation, health care, agriculture, urban design, basically everything.

There is an unfortunate human inclination to not reform, revise, or re-scale familiar activities. We’ll use every kind of duct tape and baling wire we can find to keep the current systems operating, and we have, but we’re close to the point where that sort of cob-job maintenance won’t work anymore, especially where money is concerned. Why this is so has been attributed to intrinsic human brain programming that supposedly evolved optimally for short-term planning. But obviously many people and institutions dedicate themselves to long-term thinking. So there must be a big emotional over-ride represented by the fear of letting go of what used to work that tends to disable long-term thinking.

It’s hard to accept that our set-up is about to stop working — especially something as marvelous as techno-industrial society. But that’s exactly what’s happening. If you want a chance at keeping on keeping on, you’ll have to get with reality’s program. Start by choosing a place to live that has some prospect of remaining civilized. This probably doesn’t include our big cities. But there are plenty of small cities and small towns out in America that are scaled for the resource realities of the future, waiting to be reinhabited and reactivated. A lot of these lie along the country’s inland waterways — the Ohio, Mississippi, Missouri river system, the Great Lakes, the Hudson and St. Lawrence corridors — and they also exist in regions of the country were food can be grown.

You’ll have to shift your energies into a trade or vocation that makes you useful to other people. This probably precludes jobs like developing phone apps, day-trading, and teaching gender studies. Think: carpentry, blacksmithing, basic medicine, mule-breeding, simplified small retail, and especially farming, along with the value-added activities entailed in farm production. The entire digital economy is going to fade away like a drug-induced hallucination, so beware the current narcissistic blandishments of computer technology. Keep in mind that being in this world actually entitles you to nothing. One way or another, you’ll have to earn everything worth having, including self-respect and your next meal. Now, just wait a little while.

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Political power.

Fossil Fuel Subsidies Are A Staggering $5 Trillion Per Year (G.)

Fossil fuels have two major problems that paint a dim picture for their future energy dominance. These problems are inter-related but still should be discussed separately. First, they cause climate change. We know that, we’ve known it for decades, and we know that continued use of fossil fuels will cause enormous worldwide economic and social consequences. Second, fossil fuels are expensive. Much of their costs are hidden, however, as subsidies. If people knew how large their subsidies were, there would be a backlash against them from so-called financial conservatives. A study was just published in the journal World Development that quantifies the amount of subsidies directed toward fossil fuels globally, and the results are shocking. The authors work at the IMF and are well-skilled to quantify the subsidies discussed in the paper.

Let’s give the final numbers and then back up to dig into the details. The subsidies were $4.9 tn in 2013 and they rose to $5.3 tn just two years later. According to the authors, these subsidies are important because first, they promote fossil fuel use which damages the environment. Second, these are fiscally costly. Third, the subsidies discourage investments in energy efficiency and renewable energy that compete with the subsidized fossil fuels. Finally, subsidies are very inefficient means to support low-income households. With these truths made plain, why haven’t subsidies been eliminated? The answer to that is a bit complicated. Part of the answer to this question is that people do not fully appreciate the costs of fossil fuels to the rest of us. Often we think of them as all gain with no pain.

So what is a subsidy anyway? Well, that too isn’t black and white. Typically, people on the street think of a subsidy as a direct financial cost that result in consumers paying a price that is below the opportunity cost of the product (fossil fuel in this case). However, as pointed out by the authors, a more correct view of the costs would encompass: “..not only supply costs but also (most importantly) environmental costs like global warming and deaths from air pollution and taxes applied to consumer goods in general.” The authors argue, persuasively, that this broader view of subsidies is the correct view because they “reflect the gap between consumer prices and economically efficient prices.”

Without getting too deep into the weeds, the authors discuss both consumer subsidies (when the price paid by a consumer is below a benchmark price) and producer subsidies (when producers receive direct or indirect support which increases their profitability). The authors then quantify what benefits would be achieved if the fossil fuel subsidies were reformed. Interested readers are directed to the paper for further details, but the results are what surprised me. Pre-tax (the narrow view of subsidies) subsidies amount to 0.7% of global GDP in 2011 and 2013. But the more appropriate definition of subsidies is much larger (8 times larger than the pre-tax subsidies). We are talking enormous values of 5.8% of global GDP in 2011, rising to 6.5% in 2013.

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Just how simple it really is. If you can’t stop this, forget about it.

Bernie Sanders Tells Big Pharma: Stop Making Americans Pay Twice

While both political parties have denounced the rising cost of prescription drugs, neither Democrats nor Republicans have done much to address the problem. But this summer, a new tool to restrict the rising prices of drugs developed with taxpayer dollars has been introduced by the two U.S. senators who don’t belong to either party. The mechanism works like this: Drug manufacturers who take federal money to develop drugs must keep their U.S. prices in line with the prices they charge in other economically advanced nations — typically much lower than drug prices in the U.S. The system would prevent pharmaceutical companies from effectively double-charging U.S. consumers by using their tax money for research and then charging them some of the steepest prices in the world at the pharmacy.

Pharmaceutical companies, who pour millions of dollars into both the Democratic and Republican parties, are against the idea, which is perhaps why the fix is being pushed by Bernie Sanders of Vermont and Angus King of Maine, the only independents in congress. The U.S. has the highest level of per capita pharmaceutical spending of any nation on Earth, according to the OECD. And while Americans spend more than any other country to buy their drugs, they also spend more than any other country to develop those same drugs. In June, King successfully added an amendment to the 2018 military spending bill (still working its way through congress) that would allow the Department of Defense to take away exclusive patents from drug companies that benefitted from DoD funding if their drug price in the U.S. rises above the median price in seven foreign countries with similar economies.

Then last week, Sanders introduced legislation that would tie the prices of drugs made with government funding to costs in other countries. Unlike King’s amendment, Sanders’ bill would expand the concept beyond the DoD. The bill requires companies taking federal funds to develop drugs to enter into “reasonable pricing” agreements with the Secretary of Health and Human Services. “Under this insane system, Americans pay twice. First we pay to create these lifesaving drugs, then we pay high prices to buy those drugs,” wrote Sanders in a New York Times op-ed. “Our government must stop being pushovers for the pharmaceutical industry and its 1,400 lobbyists.”

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Soon to come: US soldiers parading in your streets. Will German and Estonian batallions appear in Kansas and Texas as well?

Call For ‘Military Schengen’ To Get NATO Troops Moving (Pol.)

European leaders have made a priority of greater military cooperation, yet the ability of NATO forces to operate in Europe is still hindered by border restrictions and mismatched infrastructure, according to uniformed commanders and EU defense ministers. While NATO has made substantial progress in surmounting legal hurdles to cross-border operations, lingering bureaucratic requirements — such as passport checks at some border crossings and infrastructure problems, like roads and bridges that can’t accommodate large military vehicles — could slow or even cripple any allied response to an emerging threat, officials warned. To lift the roadblocks, and speed coordinated military action, the Dutch defense minister, Jeanine Hennis-Plasschaert, called on EU officials to create a so-called military Schengen zone.

The idea, loosely modeled on the open-border travel zone that has covered most of Europe since 1996, has also been a long-time goal of the senior United States Army commander in Europe, Lieutenant General Ben Hodges. “We must be able to move quickly to any place where there is a threat,” Hennis-Plasschaert said in a statement announcing her proposal at a meeting of NATO defense ministers in June. NATO leaders insist they have addressed the most problematic obstacles to cross-border operations, but nonetheless welcomed the Dutch proposal as a way to raise political pressure and create a sense of urgency around further improving the “interoperability” of allied countries. Officials say the obstacles are only apparent during peacetime exercises and planning, and that during a real military emergency, NATO’s supreme allied commander for Europe — based in Mons, Belgium — would simply warn allies and deploy as needed.

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“Turkey, which has the second largest army in NATO after the United States..”

Erdogan Says Turkey To Tackle – US-Supported – Kurds In Syria (R.)

Days after a reshuffle of Turkey’s top military commanders, President Tayyip Erdogan has revived warnings of military action against Kurdish fighters in Syria that could set back the U.S.-led battle against Islamic State. Kurdish militia are spearheading an assault against the hardline militants in their Syrian stronghold Raqqa, from where Islamic State has planned attacks around the world for the past three years. But U.S. backing for the Kurdish YPG fighters in Syria has infuriated Turkey, which views their growing battlefield strength as a security threat due to a decades-old insurgency by the Kurdish PKK within in its borders. There have been regular exchanges of rocket and artillery fire in recent weeks between Turkish forces and YPG fighters who control part of Syria’s northwestern border.

Turkey, which has the second largest army in NATO after the United States, reinforced that section of the border at the weekend with artillery and tanks and Erdogan said Turkey was ready to take action. “We will not leave the separatist organization in peace in both Iraq and Syria,” Erdogan said in a speech on Saturday in the eastern town of Malatya, referring to the YPG in Syria and PKK bases in Iraq. “We know that if we do not drain the swamp, we cannot get rid of flies.” The YPG denies Turkish allegations of links with Kurdish militants inside Turkey, saying it is only interested in self-rule in Syria and warning that any Turkish assault will draw its fighters away from the battle against Islamic State which they are waging in an alliance with local Arab forces.

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Bend over. We have something for you.

Greece Accepts Resettlement of Refugees from Germany (GR)

For the first time since 2011, Germany will again begin the resettlement of refugees to Greece under the EU Dublin Regulation. Migration Policy Minister Yiannis Mouzalas confirmed on German television that Greece will accept refugees who are currently in Germany and whose first entry into the EU was from Greece. The regulation applies to all refugees entering the EU since March 2017. The Dublin Regulation determines the EU Member State responsible to examine an application for asylum seekers seeking international protection. Usually, the responsible Member State will be the state through which the asylum seeker first entered the EU.

In an interview with the German TV to be aired on Monday evening, Mouzalas says: “A few days ago, we approved a small number of refugee returns related to the Dublin Regulation, by Germany and some other EU member states. Greek asylum authorities have undertaken the implementation of the procedure. “There was pressure from EU countries to start accepting resettlements. I understand that governments want to convince their citizens that they are doing something [about the refugee crisis]. That’s why I want to help them.” Deutsche Welle reports that according to the German Ministry of Interior, up to July 31, a total of 392 applications for resettlement were filed with the Greek authorities. The German ministry adds that “the specific dates for their return to Greece depends on the Greek authorities.”

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