Dec 132018
 
 December 13, 2018  Posted by at 10:36 am Finance Tagged with: , , , , , , , , , , , , , ,  


René Magritte After the water, the clouds 1926

 

‘Her Goose Is Cooked’ (G.)
Tory Resentment Of Irish Power Within EU (BBC)
Cohen Gets 3 Years, Says He Will Reveal All He Knows About Trump (Ind.)
Yellen, Fed Fear Corporate Debt Bubble, Investors Don’t (CNBC)
US Bank Stocks Spiral Down (WS)
ECB Worries Multiply Even As Money-Printing Presses Stop (R.)
ECB Caught Between Economic Risks And QE Exit (CNBC)
French Government To Face A No-Confidence Vote (CNBC)
Japan Picks The Character For ‘Disaster’ To Define 2018 (Tel.)
Wikileaks’ Assange Undergoes Medical Tests At Ecuador’s Urging (R.)
Assange Complains Of ‘More Subtle’ Silencing Than Khashoggi (RT)
Fentanyl Surpasses Heroin As Deadliest Drug In US (AFP)
Time Magazine Says The US ‘Remains A Free And Fair Press’ (CNBC)

 

 

Might as well do it this way. May survives confidence vote and can now prepare to defend the deal whose certain defeat made her delay Tuesday’s Parliament vote, a delay which led to the confidence vote in the first place. She still can’t win that one. It’s not so much May who is cooked, it’s the country.

‘Her Goose Is Cooked’ (G.)

No 10 will not be happy with today’s front pages, which are all about Theresa May’s survival in the no-confidence vote, but paint the win as less of a triumph for May than a pyrrhic victory. Let’s start with the good news for the prime minister. Two papers have come out in support of the her, with the Express featuring a picture of a smiling May and the headline: “Now just let her get on with it”.


Neil Henderson
(@hendopolis)

EXPRESS: Now just let her get on with it #tomorrowspaperstoday pic.twitter.com/jBhPRSqbAc

The Mail is similarly supportive: “Now let her get on with the job!”, saying that “despite two months of sabre-rattling by her hardline opponents, and deadlock over Brexit, almost two-thirds of Tory MPs backed her”.


Neil Henderson
(@hendopolis)

DAILY MAIL: Now let her get on with the job! #tomorrowspaperstoday pic.twitter.com/oaEihTtsOv

Others were less sympathetic. “Time to call it a May”, says the Sun, never one to miss the chance of putting a pun in a headline. The Sun says the prime minister was “left wounded last night after a battering by Tory Brexit rebels”.

The Sun
(@TheSun)

Tomorrow’s front page: Theresa May was left wounded after a battering by Tory Brexit rebels in a make-or-break confidence vote https://t.co/SZTSNZoCZq pic.twitter.com/3OO11Qrm85

The Mirror has: “It’s lame duck for Christmas”, saying May’s “goose is cooked”. The paper describes her as “wounded” and “battered” and says she only managed to survive the no-confidence vote “by promising not to fight the next election”.


Daily Mirror
(@DailyMirror)

Tomorrow’s front page: It’s lame duck for Christmas#tomorrowspaperstoday https://t.co/fFIeHwiekz pic.twitter.com/xL0ijW0Qzv

Read more …

Britain’s -Tory- elites still see Ireland as some backward place way beneath them. “The Irish really should know their place.”

Tory Resentment Of Irish Power Within EU (BBC)

A Tory grandee recently sidled up to me to express grave reservations about the Brexit process. “We simply cannot allow the Irish to treat us like this,” the former minister said about the negotiating tactics of the Taoiseach, Leo Varadkar. The Conservative MP was exasperated that the Republic of Ireland (population: 4.8m) has been able to shape the EU negotiating stance that has put such pressure on the UK (population: 66m). “This simply cannot stand,” the one-time moderniser told me. “The Irish really should know their place.” The remarks explained why Conservatives from both sides of the Brexit divide are so troubled by the negotiations. They also explain why Theresa May might find that any concessions from the EU over the Northern Ireland backstop may fall short of the demands of Tory MPs.

Over the last few months Tory MPs have asked in private how the Irish Republic can believe its relationship with the EU trumps its relationship with the UK. They cite economic reasons (the Irish Republic’s strong trading links with the UK) and the historical relationship. The MPs do of course acknowledge that left a troubled legacy. One minister familiar with Anglo-Irish relations points out that these Tories should bear in mind one date and one word to explain both the Irish and the EU’s approach. The date is 1973: when the Irish Republic joined the EEC at the same time as the UK and Denmark. That was the moment when Ireland took a giant political leap at the same time as the UK.

But it turned out to be arguably the biggest unilateral strategic move since Partition in the 1920s – a move that defined the modern Irish Republic as an independent state within Europe, with a wholly different approach to its larger neighbour.

Read more …

I’m afraid I missed something along the way. If you run for office in the US and someone tries to blackmail you, you can’t get rid of them, you need to have lawsuits, court cases etc., interfere with your campaign. Not doing so is illegal. But, as Candace Owens said today,

“Congress has a slush fund, made up of tax dollars, that is used to pay off & silence their alleged sexual assaults and affairs. To date, over 200 million dollars in 200 settlements have been paid since 1998. But tell us more about Trump’s possible campaign finance violations…”

Moreover, a US judge just sentenced Stormy Daniels to paying Trump’s legal costs. But he was still in the wrong? How is that possible?

Cohen Gets 3 Years, Says He Will Reveal All He Knows About Trump (Ind.)

Michael Cohen has warned that he has more to say about what he called the ”dirty deeds” of Donald Trump as the president’s former lawyer and fixer was sentenced to three years in prison for facilitating payments to two women who have had alleged affairs with Mr Trump. Cohen was sentenced to 36 months for tax fraud and for his role in the payment of hush money to porn star Stormy Daniels and the former Playboy model Karen McDougal. Both say they had affairs with Mr Trump before the 2016 presidential election. The judge in a district court in New York also handed Cohen an extra two months for lying to Congress about a proposed Trump Tower project in Russia.

The payments have implicated Mr Trump directly in criminal conduct according to a court filing from prosecutors last week, which said that Cohen was working in coordination with the president. Cohen’s adviser Lanny Davis, who was his attorney for the case, said after the sentencing that Cohen will disclose more information concerning Mr Trump, once Robert Mueller wraps up his investigation into Russian interference in the 2016 US presidential election and possible collusion with Trump campaign officials. “At the appropriate time, after Mr Mueller completes his investigation and issues his final report, I look forward to assisting Michael to state publicly all he knows about Mr Trump – and that includes any appropriate congressional committee interested in the search for truth and the difference between facts and lies,” Mr Davis said in a statement.

Read more …

Why is anyone still listening to Yellen?

Yellen, Fed Fear Corporate Debt Bubble, Investors Don’t (CNBC)

The corporate debt scaring policy experts like former Fed Chair Janet Yellen isn’t throwing too much of a fright into market participants. In fact, some of them are continuing to load up on lower-grade corporate debt because it’s managed to be a better performer than some of the investments considered to be safer. “Offense is the best defense,” Hans Mikkelsen, credit strategist at Bank of America Merrill Lynch, told clients in a note pointing out that BBB-rated companies are outperforming their A-rated counterparts. BBB is the last rung before junk, and the increasing level of company bonds going to that level is causing concern.

Some investors worry that the companies whose debt is in danger of slipping into high-yield territory will have trouble meeting their obligations during the next economic downturn. But Mikkelsen thinks those concerns are misplaced. The S&P 500 Triple-B investment-grade corporate bond index is down 2.9 percent year to date, which is not good. However, the group is outperforming the broader S&P 500/MarketAxess Investment Grade Corporate Bond Index, which is off 3.5 percent in 2018. The outperformance grows when isolating for risk-adjusted excess returns and runs counter to history when credit spreads are widening. Higher-quality bonds usually outperform in those cases, Mikkelsen noted.

“This outperformance of BBBs is noteworthy as one of [the] key investor concerns this year remains the possibility that large BBB-rated capital structures get downgraded to high yield during the next downturn,” Mikkelsen wrote. “We think this outperformance reflects in part a low recession probability being priced into credit spreads, as well as the fact that most large BBBs are unlikely to get downgraded to [high-yield] anytime soon as they tend to have stable cash flows and significant financial flexibility.”

Read more …

When do we start talking bailouts?

US Bank Stocks Spiral Down (WS)

On Tuesday, the US KBW Bank index, which tracks the largest 24 US banks and serves as a benchmark for the banking sector, dropped 1.2%, the fifth day in a row of declines, to the lowest close since September 7, 2017. The index is now back where it had been on December 1, 2016. Two years of big gains gone up in smoke. [..] But no, the index doesn’t include Goldman Sachs – which is big in other ways but not as a bank, and which has skidded 35% from its all-time peak in February. The index has now dropped 22.5% since the post-financial crisis peak on January 26:

So far in Q4, the index has dropped 14%. Unless a miraculous banking-Santa-Claus rally pulls banks out of their dive by the end of the quarter, a 14% decline would make it the worst quarterly decline since Q3 2011. If tax selling kicks in, given the losses bank-stock investors have taken so far this year, it could get worse in the coming days. Not even in Q3 2015, during the oil bust, when investors were fearing that banks would take steep losses on their loans to the oil industry, did shares drop this much.

The index is now back where it had first been a couple of years before its crazy peak in February 2007. Said peak occurred about a year before Bear Stearns toppled. During the subsequent collapse of banks stocks, it looked like the index would hit zero. After the bottom in March 2009, the Fed’s strategies to benefit the banks and those that owned them took hold, at the expense of depositors and other classes of US stake holders, such as renters or future home buyers. And it worked. But that era is now over. And the tax cut too has been baked in, and banks are left to fend for themselves:

Read more …

Those negative rates will come back to haunt Draghi. But when their damage becomes obvious, he’ll be living quietly in some splendid villa on Lake Como.

ECB Worries Multiply Even As Money-Printing Presses Stop (R.)

The European Central Bank is all but certain to formally end its lavish bond purchase scheme on Thursday but will take an increasingly dim view on growth, raising the odds that its next step in removing stimulus will be delayed. The long-flagged end of bond buys must be irreversible for the sake of credibility, but with France and Italy in political turmoil, a global trade war still looming large and growth slowing, ECB chief Mario Draghi will be keen to emphasize that other forms of support will remain. This leaves Draghi with yet another delicate balancing act: appear confident enough to justify the end of the 2.6 trillion euro ($2.95 trillion), four-year-long bond buying program, but also sound sufficiently concerned to keep investors expectations about further policy tightening relatively cool.

“Ending quantitative easing now looks more like the ammunition is running out rather than (being) based on a convincing economic outlook,” Societe Generale economist Anatoli Annenkov said. The ECB’s problem is that growth is weaker than policymakers thought even just weeks ago while the predicted rise in underlying inflation has failed to materialize, putting in doubt some of the bank’s assumptions about the broader economy. Overall inflation, the ECB’s primary objective, may be near the target now but falling oil prices suggest a dip in the months ahead and a solid rise in wages is not feeding through to prices, leaving the bank with an unexplained disconnect.

Highlighting this complication, the ECB is likely to cut growth and underlying inflation projections and may take a dimmer view on risks, all while Draghi argues that growth is merely falling back to normal after a recent run.

Read more …

What a failure Draghi has been. Same goes for all central bank heads in the past decades. They make sure banks are fine at the expense of citizens.

ECB Caught Between Economic Risks And QE Exit (CNBC)

ECB President Mario Draghi has to tread a fine line once again as he gives his latest update on euro area monetary policy on Thursday. While steering the bank out of its QE program and stressing interest rates and reinvestments going forward, Draghi is faced with an economy that may be slowing and a dreary inflation outlook. “We expect the ECB to announce at its meeting next Thursday an end to net-purchases under the APP programme,” said Natixis’ Dirk Schumacher in a note. “While there has been a clear weakening in the economic environment, the ECB will argue that the reinvestment of the stock of bond holdings will ensure a continuing accommodative policy stance justifying an end of the program,” he added.

On Thursday, the ECB also will publish its newest staff projections for economic growth and inflation for the next three years. While it is expected that the central bank will lower its outlook for growth for the next two years, the numbers are also expected to remain just punchy enough to underline the case to exit their purchase program. Another big topic for Thursday will be the design of the ECB’s reinvestments. “The ECB will likely maintain its guidance that it will fully reinvest the proceeds and thus keep its bond holdings constant ‘for an extended period of time’ and ‘for as long as necessary’ to put inflation on track towards its target,” said Florian Hense, Economist with Berenberg.

Read more …

Might work if Le Pen joins the left.

French Government To Face A No-Confidence Vote (CNBC)

Left-of-center lawmakers in France have tabled a motion of no confidence in the French government following repeated protests and scenes of violence. The “gilets jaunes” (“yellow vests”) crisis started as a demonstration against a carbon tax policy and planned fuel tax increases, but have morphed into wider discontent at the leadership of President Emmanuel Macron. Now representatives from the French Communist Party, the Socialist Party and the far-left populist movement France Unbowed (La France Insoumise) have come together to table the motion against Macron’s government.

The government of Georges Pompidou in 1962 was successfully toppled by such a motion but few believe this one will pass as Macron’s centrist La République En Marche! party enjoys a strong majority in the 577-seat house. “The French political system makes it extremely difficult to remove a President from office,” said the Deputy Director of Research at Teneo Intelligence in a note Wednesday. “The only political tool available to the opposition to expel Macron is the constitution’s impeachment procedure, which no one is currently considering,” he added.

Read more …

Seems appropriate, but what symbols are left for the much worse years to come?

Japan Picks The Character For ‘Disaster’ To Define 2018 (Tel.)

Japan has chosen the character for ‘disaster’ to symbolise 2018. The public chose the symbol following a series of natural disasters. In July, 200 people died in floods and millions were evacuated from their homes, and mere days later 65 people died in a heatwave that hospitalised more than 20,000 people. The country was also hit by an earthquake with a magnitude of 6.7 and was rocked by its strongest typhoon for 25 years. These numerous natural disasters have had an adverse effect on the Japanese economy, and the country’s GDP has gradually shrunk over the last three months, by 1.2 per cent.

The country also experienced societal problems this year, as stories of sexual harassment in the workplace and suicide rates came to light. The master of the ancient temple in Kyoto, Seihan Mori, wrote the symbol for ‘disaster’ in dark ink on traditional white washi paper to mark the vote. The competition has been run by the Kanji Aptitude Testing Foundation since 1995. In the annual poll, 21,000 of the 190,000 people who voted picked the character to summarise the years events, but the symbol for peace was a close runner-up.

Read more …

What kind of headline is this, Reuters? The UK has refused Assange medical care for years, and now you make it look like Ecuador, not Assange himself. makes it happen?

Wikileaks’ Assange Undergoes Medical Tests At Ecuador’s Urging (R.)

Wikileaks founder Julian Assange received a series of medical exams, Ecuador’s top attorney said on Wednesday, in line with a new set of rules for his asylum at the Andean country’s London embassy that prompted him to sue the government. Assange first took asylum in the embassy in 2012, but his relationship with Ecuador has grown increasingly tense, with President Lenin Moreno saying he does not like his presence in the embassy. The government in October imposed new rules requiring him to receive routine medical exams, following concerns he was not getting the medical attention he needed. The rules also ordered Assange to pay his medical and phone bills and clean up after his pet cat.

Inigo Salvador told reporters Ecuador did not have access to results of the tests, which were conducted by doctors Assange trusted, out of respect for his privacy. But he said Assange, who has sued Ecuador arguing that the new rules violate his rights, appeared coherent and lucid to him. On Wednesday, Assange appeared via videoconference in an Ecuadorean court to appeal a previous ruling that had upheld the new rules. Assange is concerned that Ecuador is seeking to end his asylum and extradite him to the United States, but Ecuador has said the United Kingdom told it he would not be extradited.

U.S. officials have acknowledged that federal prosecutors have been conducting a lengthy criminal probe into Assange and Wikileaks. Wikileaks published U.S. diplomatic and military secrets when Assange ran the operation. A lawyer for Assange said he did not know the results of the medical tests, and called on Ecuador to produce documentation proving that the UK would not extradite him to any country where his life was at risk.

Read more …

“..accused his Ecuadorean hosts of spying and feeding information to US authorities..”

Assange Complains Of ‘More Subtle’ Silencing Than Khashoggi (RT)

Julian Assange has accused his Ecuadorean hosts of spying and feeding information to US authorities, and slammed attempts to block his journalistic work as a more subtle way of silencing than the murder of Jamal Khashoggi. Suggesting there were “facts of espionage” inside the embassy, the WikiLeaks co-founder expressed concern during a hearing in Quito on Wednesday that Ecuadorean intelligence is not only spying on him, but sharing the data it has harvested with the FBI. Ecuadorean intelligence clearly spent a sizable amount of money equipping the embassy for surveillance, Assange added.

He accused Ecuadorean authorities of “comments of a threatening nature” relating to his journalistic work and compared attempts to silence him to the murder of Washington Post columnist Jamal Khashoggi, who was tortured and cut up in the Saudi embassy in Istanbul in October, but “more subtle.” The comparison elicited a harsh reaction from Ecuadorean Prosecutor General Inigo Salvador, who accused Assange of biting the hand that feeds him. Assange told the Ecuadorean court that the living conditions in the embassy were so detrimental to his health that they may put him in the hospital – and suggested that may be the point, because once he leaves the building, he’s fair game for UK and US authorities.

[..] Assange was in court appealing a strict set of rules handed down in October governing his conduct, which he has called a violation of human rights. He submitted 15 “facts of evidence” along with letters from individuals and groups barred from visiting him at the embassy. An earlier attempt to sue his hosts over the restrictive measures was ultimately dismissed by a judge last month, while Assange rejected E

Read more …

That stuff is very bad news.

Fentanyl Surpasses Heroin As Deadliest Drug In US (AFP)

The synthetic drug, fentanyl, has surpassed heroin as the deadliest drug in the United States, taking more than 18,000 lives in 2016, federal health officials said Wednesday. In 2016, the latest year for which full data is available, “29 percent of all drug overdose deaths mentioned involvement of fentanyl,” said the report from the National Center for Health Statistics, part of the US Centers for Disease Control and Prevention. Fentanyl is a powerful, synthetic narcotic that has been blamed for the deaths of rock stars including Prince and Tom Petty. It works on the brain like morphine or heroin, but is 50 to 100 times more potent, and can easily lead to overdose.

The rate of drug overdose deaths in the United States has tripled from 1999 through 2016, as the nation grapples with a persistent opioid epidemic. Fentanyl-related drug overdose deaths have doubled each year from 2013 through 2016, “from 0.6 per 100,000 in 2013 to 1.3 in 2014, 2.6 in 2015, and 5.9 in 2016,” said the report. Meanwhile, deaths from heroin and methamphetamine more than tripled from 2011 to 2016. Heroin was the top cause of drug overdose death from 2012 to 2015, said the report. The prescription painkiller Oxycodone ranked highest in 2011.

Read more …

Every word of this is broken. Time defends the MSM against Trump, but he didn’t create fake news. I like the term ‘abuse of truth’, that verges on doublespeak, as does ‘..the willingness to dismiss anything including credible news reporting as fake news”. And c’mon, free and fair press? Who believes that?

Time Magazine Says The US ‘Remains A Free And Fair Press’ (CNBC)

Despite the White House ramping up its rhetoric, the United States remains a free and fair press, Ben Goldberger the assistant managing editor of Time magazine told CNBC on Wednesday. The year 2018 has been marked by manipulation, abuse of truth, along with efforts by governments to instigate mistrust of the facts, the magazine said in an essay when it named killed and imprisoned journalists as Person of the Year for 2018 on Tuesday. “There’s no doubt that the rhetoric from the White House about the demonization of the media as ‘the enemy of the people,’ or the willingness to dismiss anything including credible news reporting as fake news, is incredibly worrisome and chilling,” Goldberger said. “But that said, I return to what I said about the United States — this remains a free and fair press.” “Journalists here enjoy legal protections that are the envy of those in virtually every other country,” he added.

Read more …

Dec 072018
 
 December 7, 2018  Posted by at 10:10 am Finance Tagged with: , , , , , , , , , , , , ,  


Claude Monet Camille on the Beach at Trouville 1870

 

Russia Seeks To ‘Feed The Whole Planet’ – PM (RT)
Markets Are Going Haywire, Sudden Moves Are Here To Stay (CNBC)
Did The Market Miss Powell’s Real Message? (Roberts)
Fed’s QE Unwind Reaches $374 Billion (WS)
The Fed Finally Broke Something (Muir)
Oil Drops As OPEC Makes Supply Cut Dependent On Russia (CNBC)
Bitcoin Plunges 10% As December Rout Continues (CNBC)
France To Deploy 90,000 Police Over Weekend Riot Fears (Ind.)
Chinese Giant Huawei Faces Catastrophe (G.)
White House, Trudeau Seek To Distance Themselves From Huawei Move (R.)
Lyft Races To Leave Uber Behind In IPO Chase (R.)
Mueller To Give Details On Russia Probe With Filings On Former Trump Aides (R.)
Mueller’s Gift to Obama (Kim Strassel)
Julian Assange Rejects UK-Ecuador Deal For Him To Leave The Embassy (Tel.)

 

 

Medvedev is funny, with a serious twist. Note that this has all happened because of US sanctions. Russian grain exports have surged more than 54% this year. Funny that Ukraine fed much of Europe not that long ago (100 years?!) because of its highly fertile back earth.

Russia Seeks To ‘Feed The Whole Planet’ – PM (RT)

Russia seeks to expand its agricultural exports, ultimately seeking to feed the whole planet, Prime Minister Dmitry Medvedev said. The PM’s statement comes as the country enjoys a record surge in grain exports. “Our country is, as they say, destined by the heavens to feed the whole planet. And we’ll try and do that,” Medvedev told journalists of Russian TV channels in a major interview aired on Thursday. Apart from being the country’s “destiny,” the foods plainly make “nice export goods,” the prime minister added. Russia’s agriculture has expanded greatly over the past few years, becoming a solid and profitable industry, unlike the way it was a couple decades ago.

“Back in 1990s, the agriculture was called a ‘black hole’, where one should not invest, we were told we should not feed ourselves since we can purchase everything elsewhere,” Medvedev said. “Now, it feeds our whole country. We’ve reached the main goals regarding food security and we’re exporting grains, other goods to the world market.” This year, Russia has enjoyed vast growth of its agricultural exports, becoming the world’s top exporter of wheat. From January through September of 2018, exports of Russia’s wheat and meslin flour expanded by 54.3% compared to the previous year. The amount of food which the county imports, in its turn, continued to shrink. Imports of grains to Russia dropped by 11.1% during the same period. Imports of barley have suffered an enormous decline, dropping a whopping 94%.

Read more …

The logical consequences of central banks strangling price discovery.

Markets Are Going Haywire, Sudden Moves Are Here To Stay (CNBC)

Wherever Mark Connors looks at markets, from stocks to currencies to oil, he sees signs of the unknown. Equity investors got whipsawed this week during two rough and volatile sessions, but Connors, global head of risk advisory at Credit Suisse, had seen worrying signs long before that. A key technical measure he tracks, the correlation between the price of stocks and currencies, had broken down starting in April. That, along with sharp drops in the price of oil, point to one thing, he says: Uncertainty about the future as central banks around the world unwind programs that bought trillions of dollars of assets.

“We’re seeing two of the biggest asset classes, stocks and currencies, exhibit a degree of uncertainty in their relationship in 2018 that we’ve never seen before,” Connors said. “Crude just exhibited something very unusual in the context of the last 40 years.” The unwinding of central banks’ programs a decade after the financial crisis brought economies to the brink is known as quantitative tightening. J.P. Morgan Chase CEO Jamie Dimon said in July that one of his biggest fears is around how markets would behave as central banks removed their unprecedented stimulus. “If quantitative tightening continues, guess what’s going to happen? More of this,” Connor said, referring to unusually violent moves across markets.

Another factor in the speed of recent declines is the result of several important changes that have happened since the last financial crisis. Automated trading strategies from quant hedge funds and the massive shift to passive investing have helped to remove liquidity from the system in times of panic, according to Marko Kolanovic, J.P. Morgan’s global head of macro quantitative and derivatives research. He said in a September note that index and quant funds made up two-thirds of assets under management globally and the majority of daily trading. So when investors begin to sell, as they did on Tuesday amid concerns over the state of U.S. trade talks with China, the moves were probably amplified by computerized trading strategies.

Read more …

You’d have to have a -functioning- market for it to miss anything.

Did The Market Miss Powell’s Real Message? (Roberts)

[..] With the Fed Funds rate running at near 2%, if the Fed now believes such is close to a ‘neutral rate,’ it would suggest that expectations of economic growth will slow in the quarters ahead from nearly 6.0% in Q2 of 2018 to roughly 2.5% in 2019.” [..] the bond market has picked up on that realization as the yield has flattened considerably over the last few days as the 10-year interest rate broke back below the 3% mark. The chart below shows the difference between the 2-year and the 10-year interest rate.

Now, there are many who continue to suggest “this time is different” and an inverted yield curve is not signaling a recession, and Jerome Powell’s recent comments are “in line” with a “Goldilocks economy.” Maybe. But historically speaking, while an inversion of the yield curve may not “immediately” coincide with a recessionary onset, given its relationship to economic activity it is likely a “foolish bet” to suggest it won’t. A quick trip though the Fed’s rate hiking history and “soft landing” scenarios give you some clue as to their success.

Read more …

Useful to remember that this is -mostly- an irreversible process.

Fed’s QE Unwind Reaches $374 Billion (WS)

The Federal Reserve shed $54 billion in assets over the five weekly balance sheet periods that encompass the calendar month of November. This reduced the assets on its balance sheet to $4,086 billion, the lowest since January 15, 2014, according to the Fed’s balance sheet for the week ended December 5, released this afternoon. Since the beginning of the QE unwind — or “balance sheet normalization,” as the Fed calls it — in October 2017, the Fed has now shed $374 billion. The Fed holds a variety of assets, including the Treasury securities and mortgage-backed securities (MBS) that it had acquired as part of QE. Between the end of QE in late 2014 and the beginning of the QE unwind in October 2017, the Fed replaced maturing securities with new securities to keep their levels roughly the same. Starting in October 2017, the Fed has been shedding Treasury securities and MBS.

[..] Treasury Securities Until October, the QE unwind had been in ramp-up mode. In October, it reached cruising speed, according to the Fed’s plan. In the cruising-speed phase, the Fed is scheduled to shed “up to” $30 billion in Treasuries and “up to” $20 billion in MBS a month, for a total of “up to” $50 billion a month. So how did it go in November? From November 1 through December 5, the Fed’s holdings of Treasury Securities fell by $30 billion to $2,241 billion, the lowest since January 22, 2014. Since the beginning of the QE-Unwind, the Fed has shed $225 billion in Treasuries:

Mortgage-Backed Securities (MBS) Under QE, the Fed also acquired residential MBS that were issued and guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Holders of residential MBS receive principal payments as the underlying mortgages are paid down or are paid off. At maturity, the remaining principal is paid off. To keep the balance of MBS from declining after QE ended, the New York Fed’s Open Market Operations kept buying MBS in the market. The Fed books the trades at settlement, which lags the trade by two to three months. Due to this lag, the amount of MBS on today’s balance sheet reflects trades in August and September when the cap for shedding MBS was $16 billion a month. And this is how it panned out. From November 1 through today’s balance sheet, the balance of MBS fell by $16 billion, to $1,653 billion, the lowest since May 7, 2014.

Read more …

There’s a lot of -often contradictory- talk about yield conversion. Kevin Muir picks out a nice detail: “..we will not see the same degree of yield curve inversion that we have in past cycles. There is simply too much debt out there..

The Fed Finally Broke Something (Muir)

[..] an inversion of the yield curve has traditionally been one of the best indicators presaging a recession. There has been tons of studies and even more conclusions drawn from the data, so you probably don’t need me to rehash them all. Yet I think it’s amusing to hear all the yield-curve-apologists (a term coined by my colourful pal, Janney’s Guy LeBas in this article) once again claiming that yield curve inversions don’t matter. Whether it’s the fact that we need to wait for the 3-month / 5-year to invert, or whether it is the long lead time between the 2-10-year spread inverting and the actual recession, there are plenty of excuses being offered up about why the yield curve inversion doesn’t matter.

Yeah, let me get this straight. The largest, most liquid market in the world is sending a signal that has consistently been one of the most reliable indicators that a recession is near and somehow it makes sense to fade it? As a trader who cut his eye-teeth in the equity market, I can tell you unequivocally, bond traders are smarter. They just are. Denying it is like trying to argue that people in Malibu are no better looking than any other big U.S. suburb. So when the yield curve starts inverting, you better believe I am paying attention. However, as usual, there is a catch. Market cycles are similar, but never exactly the same.

In the post-GFC era we will not see the same degree of yield curve inversion that we have in past cycles. There is simply too much debt out there. The global economy cannot handle the same amount of tightening as in past cycles. I know the crowd who believes that “Powell is different than all the other Fed Chairs” will cry out in anguish at this proclamation, but last week’s dovish shift shows his stomach to handle any sort of market disruption is way lower than previously believed. Powell will be no different than all the other Fed Chairs. At the end of the day, he will be loose.

Read more …

How about US shale? Won’t they cut production to help MbS?

Oil Drops As OPEC Makes Supply Cut Dependent On Russia (CNBC)

Oil prices fell on Friday, pulled down by OPEC’s decision to delay a final decision on output cuts, awaiting support from non-OPEC heavyweight Russia. International Brent crude oil futures fell below $60 per barrel early in the session, trading at $59.50 per barrel at 0144 GMT, down 56 cents, or 0.9% from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $51.24 per barrel, down 25 cents, or 0.5%. The declines came after crude slumped by almost 3% the previous day, with OPEC ending a meeting at its headquarters in Vienna, Austria, on Thursday without announcing a decision to cut crude supply, instead preparing to debate the matter on Friday.

“OPEC has decided to meet Friday again…(as) Russia remains the sticking point,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore. Analysts still expect some form of supply reduction to be decided. “We are beginning to witness the outline of the next iteration of production cuts, with OPEC conforming to cut its own production by around 1 million barrels per day, with the cartel lobbying non-OPEC members to contribute more,” Japanese bank MUFG said in a note.

Read more …

Relentless.

Bitcoin Plunges 10% As December Rout Continues (CNBC)

As of Asia’s Friday afternoon trade, bitcoin had fallen nearly 10% against the U.S. dollar in 24 hours, marking another recent plunge for the world’s largest cryptocurrency. It’s been a rough December for the digital token: Its price dropped 8% on the first day of the month. Bitcoin traded at $3,337.32 as of 12:28 p.m. HK/SIN (11:28 p.m. ET on Thursday), falling 9.88% over the last 24 hours, according to data from industry site Coindesk. Meanwhile, prices for the second and third largest cryptocurrencies by market value, XRP and Ether, also saw sharp declines in the 24 hour period. XRP fell by 10.62% and Ether dropped 15.90%, according to Coindesk.

This calendar year has generally been unkind to cryptocurrency prices, with the industry seeing its entire market cap falling almost 87.09% from its highs in January, according to data from Coinmarketcap. 24-hour trading volumes have also plunged about 61.65% since then. In recent industry related news, the U.S. Securities and Exchange Commission (SEC) posted an update on Thursday regarding the approval process for a rule change proposal for the allowance of a bitcoin exchange traded fund (ETF).

Read more …

The worst thing Macron could have done: “In a move questioned by both critics and supporters, the president has recently disappeared from public view.” And now his police are going to fire on protesters tomorrow?

France To Deploy 90,000 Police Over Weekend Riot Fears (Ind.)

French authorities are bracing for the possibility of more riots and violence at planned anti-government protests this weekend. The government is deploying tens of thousands of police and security forces across the country, while in Paris, museums, theatres and shops announced they would close on Saturday as a precaution – including the iconic Eiffel Tower. Police unions and city authorities held emergency meetings to decide how to handle the protests, which are being held despite Emmanuel Macron’s surrender to marchers demanding the scrapping of a planned fuel tax hike. Prime minister Edouard Philippe told senators on Thursday the government would deploy “exceptional” security measures for the protests in Paris and elsewhere.

Speaking on TF1 television, Mr Philippe said 89,000 police officers will be deployed on Saturday across France – up from 65,000 last weekend. In Paris alone, 8,000 police officers will be mobilised. They will be equipped with a dozen armoured vehicles – a first in a French urban area since 2005. Some “yellow vest” protesters, French union officials and prominent politicians across the political spectrum called for calm on Thursday after the worst rioting in Paris in decades last weekend. Mr Macron agreed to abandon the fuel tax hike, part of his plans to combat global warming, but protesters’ demands have now expanded to other issues hurting French workers, retirees and students. In a move questioned by both critics and supporters, the president has recently disappeared from public view.

Read more …

If this is true, US Big Tech will face the same.

Chinese Giant Huawei Faces Catastrophe (G.)

The arrest in Canada of the chief financial officer of the Chinese mobile network and handset tech firm Huawei marks a new stage in a technological cold war between western spy agencies and Beijing. This development could be catastrophic for Huawei: according to reports, the US suspects it broke sanctions by selling telecoms equipment to Iran. If that is proven, the response could exclude Huawei from many of the world’s most valuable markets. That quiet war of words had already begun to ramp up this week when first the head of the UK’s secret service, Alex Younger, said in a speech that “we need to have a conversation” about Huawei’s involvement in the UK’s telecoms network.

Then on Wednesday, BT revealed it is stripping out Huawei’s networking kit from parts of the EE mobile network. Huawei has been the world’s largest telecoms network equipment company since 2015, ahead of European rivals Ericsson and Nokia, and far above domestic competitor ZTE and South Korea’s Samsung. But the company has for years struggled against suspicions that it has bowed to pressure from the Chinese government to tap or disrupt telecoms systems in foreign countries. That has seen it banned from selling its profitable network equipment to the US, Australia and New Zealand – three of the “Five Eyes” group of intelligence-sharing countries (the other two being the UK and Canada).

But Meng Wanzhou’s arrest on a federal warrant in Canada is a dramatic escalation. As well as being the CFO and deputy chairwoman of one of the world’s largest makers of telecoms networking equipment that is essential to phone, smartphone and internet traffic, she is also the daughter of Huawei’s 74-year-old founder Ren Zhengfei. Ren attracted suspicion from western agencies because of his role working in IT for the Red Army before he set up the firm in 1987.

Read more …

Even Bolton has -belatedly- denied involvement.

White House, Trudeau Seek To Distance Themselves From Huawei Move (R.)

President Donald Trump did not know about plans to arrest a top executive at Chinese telecoms giant Huawei in Canada, two U.S. officials said on Thursday, in an apparent attempt to stop the incident from impeding crucial trade talks with Beijing. Huawei’s CFO, Meng Wanzhou, the 46-year-old daughter of the company’s founder, was detained in Canada on Dec. 1, the same day Trump and Chinese President Xi Jinping dined together at the G20 summit in Buenos Aires. A White House official told Reuters Trump did not know about a U.S. request for her extradition from Canada before he met Xi and agreed to a 90-day truce in the brewing trade war.

Meng’s arrest during a stopover in Vancouver, announced by the Canadian authorities on Wednesday, pummeled stock markets already nervous about tensions between the world’s two largest economies on fears the move could derail the planned trade talks. [..] Meng’s detention also raised concerns about potential retaliation from Beijing in Canada, where Prime Minister Justin Trudeau sought to distance himself from the arrest. “The appropriate authorities took the decisions in this case without any political involvement or interference … we were advised by them with a few days’ notice that this was in the works,” Trudeau told reporters in Montreal in televised remarks.

Read more …

Top of the Bubble to you!

Lyft Races To Leave Uber Behind In IPO Chase (R.)

Ride-hailing company Lyft Inc beat bigger rival Uber Technologies Inc in filing for an initial public offering (IPO) on Thursday, defying the recent market jitters and taking the lead on a string of billion-dollar-plus tech companies expected to join Wall Street next year. Lyft’s IPO will test investors’ appetite for the most highly valued Silicon Valley companies and for the ride-hailing business, which has become a wildly popular service but remains unprofitable and has an uncertain future with the advance of self-driving cars. San Francisco-based Lyft, last valued at about $15 billion in a private fundraising round, did not specify the number of shares it was selling or the price range in a confidential filing with the SEC.

Lyft could go public as early as the first quarter of 2019, based on how quickly the SEC reviews its filing, people familiar with the matter said. Lyft’s valuation is likely to end up between $20 billion and $30 billion, one source added. The ride service was set up in 2012 by entrepreneurs John Zimmer and Logan Green and has raised close to $5 billion from investors. While it continues to grow faster than its larger competitor, Uber, it is also losing money. Lyft would follow a string of high-profile IPOs of technology companies valued at more than $1 billion this year, such as Dropbox and Spotify.

However, market turmoil fueled by the escalating trade tensions between the United States and China could dampen enthusiasm for the debuts of other 2019 hopefuls like apartment-rental service Airbnb, analytics firm Palantir. and Stripe Inc, a digital payment company. Including Lyft, these round out four of the top-10 most highly valued, venture-backed tech companies. “Market declines mean that the offer price will be lower than otherwise. But there’s a danger of waiting to go public as well. Markets could go even lower, and the companies could raise less money if they waited longer,” said Jay Ritter, an IPO expert and professor at the University of Florida.

Read more …

Later today. But forget about collusion. Not going to happen.

Mueller To Give Details On Russia Probe With Filings On Former Trump Aides (R.)

U.S. Special Counsel Robert Mueller will provide new details on Friday on how two of President Donald Trump’s closest former aides have helped or hindered his investigation into possible collusion between Russia and Trump’s 2016 election campaign. Mueller last month accused Trump’s former campaign chairman Paul Manafort of breaching a plea bargain deal by lying to prosecutors, and he will submit information on those alleged lies in a filing to a federal court in Washington. That could include shedding new light on Manafort’s business dealings or his consulting for pro-Kremlin interests in Ukraine.

Manafort, who maintains he has been truthful with Mueller, managed Trump’s campaign for three months in 2016. Also on Friday, Mueller’s office and the Southern District of New York are to file sentencing memos on Michael Cohen, Trump’s former private lawyer. Cohen pleaded guilty to financial crimes in a New York court in August, and last week to lying to Congress in a Mueller case. Sentencing for both of those cases will be handled by one judge. Attention will focus on whether Mueller discloses new information to supplement Cohen’s admission last week that he sought help from the Kremlin for a Trump skyscraper in Moscow late into the 2016 campaign.

Read more …

Kimberley Strassel is still a lone(ly) in the US mainstream.

Mueller’s Gift to Obama (Kim Strassel)

[..] what about the potential crimes that put Mr. Flynn in Mr. Mueller’s crosshairs to begin with? On Jan. 2, 2017, the Obama White House learned about Mr. Flynn’s conversations with Mr. Kislyak. The U.S. monitors phone calls of foreign officials, but under law they are supposed to “minimize” the names of any Americans caught up in such eavesdropping. In the Flynn case, someone in the prior administration either failed to minimize or purposely “unmasked” Mr. Flynn. The latter could itself be a felony. Ten days later someone in that administration leaked to the Washington Post that Mr. Flynn had called Mr. Kislyak on Dec. 29, 2016. On Feb. 9, 2017, someone leaked to the Post and the New York Times highly detailed and classified information about the Flynn-Kislyak conversation.

House Intelligence Committee Chairman Devin Nunes has called this leak the most destructive to national security that he seen in his time in Washington. Disclosing classified information is a felony punishable by up to 10 years in federal prison. The Post has bragged that its story was sourced by nine separate officials. The Mueller team has justified its legal wanderings into money laundering (Paul Manafort) and campaign contributions (Michael Cohen) on grounds that it has an obligation to follow up on any evidence of crimes, no matter how disconnected from its Russia mandate. Mr. Flynn’s being caught up in the probe is related to a glaring potential crime of disclosing classified material, yet Mr. Mueller appears to have undertaken no investigation of that. Is this selective justice, or something worse?

Don’t forget Mr. Mueller stacked his team with Democrats, some of whom worked at the highest levels of the Obama administration, including at the time of the possible Flynn unmasking and the first leak. The Flynn sentencing document, meanwhile, contained yet another outrageous gift to Obama alumni. In laying out the “serious” nature of Mr. Flynn’s crimes, the document asserts that one of the questions about the Flynn-Kislyak discussion was whether “the defendant’s actions violated the Logan Act,” a 1799 statute that criminalizes negotiation by unauthorized persons with foreign governments that are in dispute with the U.S. Only two defendants have ever been charged under the Logan Act, the more recent one in 1852, and neither was convicted.

Read more …

We have to turn to the Telegraph of all sources, since we -obviously- can’t trust info from the Guardian, which does run a piece on this. That piece was written by Dan Collyns in Quito. Thought for all those who’ve been feeding on the Guardian smear piece for well over a week: investigate instead the link between the paper and the Ecuador government., especially how it changes and intensified around teh time Moreno became president. But don’t forget that the Guardian already had people in the country in at least 2014.

Julian Assange Rejects UK-Ecuador Deal For Him To Leave The Embassy (Tel.)

Julian Assange’s lawyer has rejected an agreement announced by Ecuador’s president to see him leave the Ecuadorean embassy in London, after six years inside. Lenin Moreno, the president of Ecuador, has made no secret of his wish to be rid of the WikiLeaks founder, who sought asylum inside the embassy in June 2012 and has not left since. On Thursday Mr Moreno announced that a deal had been reached between London and Quito to allow Mr Assange, 47, to be released. “The way has been cleared for Mr Assange to take the decision to leave in near-liberty,” said Mr Moreno. He did not specify what “near liberty” meant.

[..] Mr Moreno added that Britain had guaranteed that the Australian would not be extradited to any country where his life is in danger. But Mr Assange’s lawyer, Barry Pollack, told The Telegraph that the deal was not acceptable. The legal team have long argued that they will not accept any agreement which risks his being extradited to the United States. In November a filing error revealed that Mr Assange faced charges in the US – although it was not clear what those charges were. Many speculate they would be connected to the release of classified information, and Mr Assange fears a long prison sentence in the US for what his supporters say is publishing information in the public interest.

“The suggestion that as long as the death penalty is off the table, Mr Assange need not fear persecution is obviously wrong,” said Mr Pollack. “No one should have to face criminal charges for publishing truthful information. “Since such charges appear to have been brought against Mr Assange in the United States, Ecuador should continue to provide him asylum.”

Read more …

Dec 042018
 
 December 4, 2018  Posted by at 10:11 am Finance Tagged with: , , , , , , , , , , , ,  


Sirkka-Liisa Konttinen Kendal Street, Byker, Newcastle 1969

 

Yield Curve: What Bond Market Most Feared Is Starting To Happen (CNBC)
UK Government Accused Of Holding Parliament In Contempt On Legal Advice (G.)
Four Million British Workers Live In Poverty (G.)
1.5 Million Demands For Second Referendum Handed To Downing Street (Ind.)
Europe’s Top Court To Rule On Whether The UK Can Cancel Brexit (CNBC)
‘Death Threats’ Halt France Protest Summit (BBC)
Mueller Withheld “Details That Would Exonerate Trump” (ZH)
Jerome Corsi Legal Ethics Complaint Against Robert Mueller (Klayman)
Manafort Tried to Broker Deal With Ecuador to Hand Assange Over to US (NYT)
Ford’s Restructuring Could Slash More Jobs Than GM’s – Morgan Stanley (MW)
Future Of Auto Industry Lies In Car Sharing – Chinese Execs (CNBC)
US-China Trade Talks: Forced Tech Transfers, Intellectual Property Theft (CNBC)
Bitcoin Drops 8% To Kick Off December (CNBC)
David Attenborough: Collapse Of Civilisation Is On The Horizon (G.)

 

 

Powell, Draghi and Kuroda to the rescue!

Yield Curve: What Bond Market Most Feared Is Starting To Happen (CNBC)

The bond market sees storm clouds on the horizon, despite the trade ceasefire between President Donald Trump and China. But not all strategists agree with the dire warnings, though they do note some unusual behavior. On Monday, the difference between the 10-year Treasury yield, at 2.97 percent, and the 2-year yield, at 2.82 percent, dramatically narrowed by 5 basis points, the biggest one day move since late March. Traders have been watching the difference between the yields on various Treasurys for months, along what is called the yield curve between the longer and shorter-term bonds.

And in this time, the longer duration 10-year yield has gotten closer and closer to the yield on the 2-year. If the two should flip, and the 2 -year yield actually rises above the benchmark 10-year, that inversion would be a signal of a recession. The two yields are currently just under 15 basis points apart, the narrowest since around the time they last inverted in June 2007. What’s worrisome for some is that on Monday, the difference between the yields on the 3-year and 5-year, and those of the 2-year and 5-year, inverted.

Read more …

Final warning.

UK Government Accused Of Holding Parliament In Contempt On Legal Advice (G.)

A senior minister is at risk of being suspended from the House of Commons after Labour and the Democratic Unionist party were allowed to submit an emergency motion accusing the government of holding parliament in contempt for failing to publish the full Brexit legal advice. John Bercow, the Speaker, allowed Labour, the DUP and four other opposition parties to lay down a motion that will be voted on Tuesday, immediately before before the start of the five-day debate on the Brexit deal. The motion, submitted late on Monday, calls on MPs to find “ministers in contempt for their failure to comply” and is signed by the shadow Brexit secretary, Sir Keir Starmer; the DUP’s Westminster leader, Nigel Dodds; and the Scottish National party, Liberal Democrats, Plaid Cymru and the Green party.

No penalty is spelled out in the motion, which is intended to act as a final warning, but Labour said that if it was passed on Tuesday and not still complied with then the party would seek further sanctions. The party indicated it would then seek to hold a senior minister – likely to be either the Cabinet Office minister, David Lidington, or the attorney general, Geoffrey Cox – in contempt and seek their suspension from the Commons. Bercow ruled in the evening that he would accept a contempt motion after the six parties wrote to him jointly complaining that the summary Brexit legal advice released on Monday did not comply with a Commons resolution agreed on 13 November.

Read more …

Holding Parliament in contempt is one thing, holding your people in contempt is another one altogether.

Four Million British Workers Live In Poverty (G.)

More than 500,000 British workers have been swept into working poverty over the past five years, according to a report that shows the number of people with a job but living below the breadline has risen faster than employment. In the latest sign that the link between entering work and making ends meet has become increasingly frayed in 21st-century Britain, the Joseph Rowntree Foundation (JRF) said that the number of workers in poverty hit 4 million last year, meaning about one in eight in the economy are now classified as working poor. Nearly all of the increase comes as growing numbers of working parents find it harder to earn enough money to pay for food, clothing and accommodation due to weak wage growth, an erosion of welfare support and tax credits and the rising cost of living.

Half a million more children have become trapped in poverty over the past five years as a direct consequence, reaching 4.1 million last year, the charity’s report added. It means that in a typical classroom of 30 children, nine would come from a household in poverty. Campbell Robb, chief executive of the JRF, said: “We are seeing a rising tide of child poverty as more parents are unable to make ends meet, despite working. This is unacceptable.” In the findings of JRF’s report, UK Poverty 2018, the number of children who slipped into poverty from a working family rose more steeply than at any time for 20 years.

Read more …

There is no time for a second round of talks even if the people demand it.

1.5 Million Demands For Second Referendum Handed To Downing Street (Ind.)

Campaigners for a new referendum have handed in petitions carrying almost 1.5 million names to Downing Street, demanding the British public be given a final say on the outcome of Brexit. The group representing The Independent’s Final Say campaign and the People’s Vote initiative handed over the petitions as Theresa May prepared for what is set to be a bruising five-day Commons debate on her Brexit deal. Pressure for a new referendum is increasing ahead of the vote that will come at the end of that debate next week, with the prime minister looking at a heavy personal defeat if MPs reject the deal she agreed with the EU. Anger over her deal increased on Monday, when the government published a legal paper confirming that under Ms May’s plan, the UK will be indefinitely locked in to the controversial ‘backstop’ arrangement.

Campaigners carrying EU flags and placards chanted calls for a new referendum as they met outside the Churchill War Rooms in Westminster, before marching to No10 to deliver the petitions on Monday morning. Conservative ex-cabinet minister Justine Greening said: “Britain has choices ahead of it. The key issue that we’re saying today, and that’s why we’re delivering a petition signed by a million people in this country, is that those choices are ones that should be made by the British people. “Parliament is gridlocked … This is no way to decide the most fundamental question facing Britain for the next 10, 20, 30, 40, 50 years.”

Read more …

Again dependent on Europe. Reuters headline just now: “Britain can revoke Brexit unilaterally, EU court adviser says”. Court decision expected to take a few more weeks.

Europe’s Top Court To Rule On Whether The UK Can Cancel Brexit (CNBC)

The legal advisor for the European Union’s top court will publish his opinion Tuesday on whether the U.K. can cancel Brexit without asking anybody else for permission. A group of Scottish lawmakers have sought a legal ruling on if and how the U.K.’s request under Article 50 to leave the European Union could be unilaterally revoked before the Brexit deadline of March 29, 2019. Article 50 allows a country to trigger the process that takes them out of Europe’s political and economic union. U.K. Prime Minister Theresa May invoked the exit clause in March 2017. Backed by a crowdfunding appeal, the case has been put together by a cross-party group of Scottish politicians, along with the high-profile barrister Jolyon Maugham QC.

The final ruling on whether Article 50 could be canceled without input from the EU’s other 27 countries will be granted by the Court of Justice of the European Union (CJEU). [..] The EU is worried that allowing a country to trigger Article 50 and then reverse the decision with no additional input could become a tool for those unsatisfied with the policies of Brussels. For the U.K. government and pro-Brexit politicians, there are likely concerns it could pave the way for a second referendum, giving the public an option of remaining in the EU.

Read more …

Macron is cornered. Many in France say he’s done.

‘Death Threats’ Halt France Protest Summit (BBC)

Protesters from France’s “gilet jaunes” (yellow vests) movement have pulled out of a meeting with PM Edouard Philippe scheduled for Tuesday. Some members of the group said they had received death threats from hardline protesters warning them not to enter into negotiations with the government. The PM is due to make a major statement possibly as early as Tuesday. The yellow vests oppose a controversial fuel tax but now reflect more widespread anger at the government. A spokeswoman for the movement, Jacline Mouraud, said: “The meeting today at Matignon [the prime minister’s office] has been cancelled in the face of threats.

“There are calls to prevent us from going. If I were to get on a train, I would run the risk of being recognised.” Three people have died since the unrest began and the resulting violence and vandalism – notably when statues were smashed at the Arc de Triomphe last Saturday – have been widely condemned. [..] The French president held an urgent security meeting on Monday. Ministers said that while no options had been ruled out, imposing a state of emergency had not been discussed during the talks. Mr Macron has also cancelled a planned trip to Serbia to concentrate on the crisis. Culture Minister Franck Riester told reporters that Mr Philippe would announce “a strong conciliatory gesture in the coming days”, without giving details. AFP news agency reports that the prime minister will announce a moratorium on fuel tax.

Read more …

Color me unsurprised.

Mueller Withheld “Details That Would Exonerate Trump” (ZH)

It appears that special counsel Robert Mueller withheld key information in its plea deal with Trump’s former attorney, Michael Cohen, which would exonerate Trump and undermine the entire purpose of the special counsel, according to Paul Sperry of RealClearInvestigations. Cohen pleaded guilty last week to lying to the Senate intelligence committee in 2017 about the Trump Organization’s plans to build a Trump Tower in Moscow – telling them under oath that negotiations he was conducting ended five months sooner than they actually did. Mueller, however, in his nine-page charging document filed with the court seen by Capitol Hill sources, failed to include the fact that Cohen had no direct contacts at the Kremlin – which undercuts any notion that the Trump campaign had a “backchannel” to Putin.

“On page 7 of the statement of criminal information filed against Cohen, which is separate from but related to the plea agreement, Mueller mentions that Cohen tried to email Russian President Vladimir Putin’s office on Jan. 14, 2016, and again on Jan. 16, 2016. But Mueller, who personally signed the document, omitted the fact that Cohen did not have any direct points of contact at the Kremlin, and had resorted to sending the emails to a general press mailbox. Sources who have seen these additional emails point out that this omitted information undercuts the idea of a “back channel” and thus the special counsel’s collusion case.” -RCI

Page 2 of the same charging document offers further evidence that there was no connection between the Trump campaign and the Kremlin; an August 2017 letter from Cohn to the Senate intelligence committee states that Trump “was never in contact with anyone about this [Moscow Project] proposal other than me,” an assertion which Mueller does not contest as false – which means that “prosecutors have tested its veracity through corroborating sources” and found it to be truthful, according to Sperry’s sources. Also unchallenged by Mueller is Cohen’s statement that he “ultimately determined that the proposal was not feasible and never agreed to make a trip to Russia.”

“Though Cohen may have lied to Congress about the dates,” one Hill investigator said, “it’s clear from personal messages he sent in 2015 and 2016 that the Trump Organization did not have formal lines of communication set up with Putin’s office or the Kremlin during the campaign. There was no secret ‘back channel.’” “So as far as collusion goes,” the source added, “the project is actually more exculpatory than incriminating for Trump and his campaign.” -RCI”

Read more …

Court document (PDF). For one thing, the Mueller team demands that Corsi keep any plea agreement secret and under seal, which would ‘criminally and civilly violate’ Corsi’s obligations as a securities dealer.

Jerome Corsi Legal Ethics Complaint Against Robert Mueller (Klayman)

On or about May 17, 2017, Robert Swan Mueller III (“Special Counsel Mueller”) was appointed as a Special Counsel for a limited purpose investigation as defined by the order of Deputy Attorney General Rod Rosenstein. A copy of Robert Mueller’s appointment as Special Counsel is attached as Exhibit A. Dr. Corsi has been investigated by Special Prosecutor Mueller and the attorneys whom he hired to serve as prosecutors under him [..] This Complaint concerns the politically-motivated criminal investigation of Dr. Corsi, an investigative journalist, whose activities are protected by the First Amendment to the U.S. Constitution.

Dr. Corsi has been threatened with immediate indictment by Mueller’s prosecutorial staff unless he testifies falsely against Roger Stone and/or President Donald Trump and his presidential campaign, among other false testimony. Dr. Corsi is placed in an impossible, no-win scenario and is in immediate legal jeopardy. If he were to lie under oath to testify as the Special Prosecutor and his prosecutorial staff demand, some later prosecutor could accuse Dr. Corsi of perjury and/or violating any plea deal. The Special Prosecutor and his prosecutorial staff have already accused Dr. Corsi of lying when Dr. Corsi is in fact telling the truth and told the truth. Either way, Dr. Corsi remains at risk of a perjury prosecution without the relief demanded. Dr. Corsi is being investigated for the “crime” of doing his job as a foreign policy and national security journalist.

Read more …

WikiLeaks: “Ecuador’s president Lenin Moreno tried to sell Assange to U.S. in exchange for cash loans as early as May 2017..”

Manafort Tried to Broker Deal With Ecuador to Hand Assange Over to US (NYT)

In mid-May 2017, Paul Manafort, facing intensifying pressure to settle debts and pay mounting legal bills, flew to Ecuador to offer his services to a potentially lucrative new client — the country’s incoming president, Lenín Moreno. Mr. Manafort made the trip mainly to see if he could broker a deal under which China would invest in Ecuador’s power system, possibly yielding a fat commission for Mr. Manafort. But the talks turned to a diplomatic sticking point between the United States and Ecuador: the fate of the WikiLeaks founder Julian Assange. In at least two meetings with Mr. Manafort, Mr. Moreno and his aides discussed their desire to rid themselves of Mr. Assange, who has been holed up in the Ecuadorean Embassy in London since 2012, in exchange for concessions like debt relief from the United States, according to three people familiar with the talks, the details of which have not been previously reported.

They said Mr. Manafort suggested he could help negotiate a deal for the handover of Mr. Assange to the United States, which has long investigated Mr. Assange for the disclosure of secret documents and which later filed charges against him that have not yet been made public. Within a couple of days of Mr. Manafort’s final meeting in Quito, Robert S. Mueller III was appointed as the special counsel to investigate Russian interference in the 2016 election and related matters, and it quickly became clear that Mr. Manafort was a primary target. His talks with Ecuador ended without any deals. Mr. Moreno’s team increasingly looked to resolve their Assange problem by turning to Russia.

In the months after Mr. Moreno took office, the Ecuadorean government granted citizenship to Mr. Assange and secretly pursued a plan to provide him a diplomatic post in Russia as a way to free him from confinement in the embassy in London. (That plan was ultimately dropped in the face of opposition from British authorities, who have said they will arrest Mr. Assange if he leaves the embassy.)

Read more …

10 years after Detroit bailouts, Ford too is in trouble. It’s industry wide.

Ford’s Restructuring Could Slash More Jobs Than GM’s – Morgan Stanley (MW)

Ford Motor Co.’s restructuring would be “more extensive” than GM’s and could involve laying off tens of thousands of employees around the world, analysts at Morgan Stanley said in a note Monday. The analysts used Ford’s planned expenses as part of their calculations and compared them to General Motors’s expenses in the latter’s planned restructuring announced last week. Regardless, Ford is likely “next in line” in announcing layoffs as GM’s move “reflects an industrywide phenomenon” with potentially larger cuts, the analysts said. Ford last October announced an $11 billion restructuring plan, with a cash cost around $7 billion, but has not provided any details yet.

GM is spending as much as $ 2 billion of cash (up to $3.8 billion of total charges) to close seven plants and lay off about 14,000 workers. “Extrapolated to Ford’s planned expenditure, this could imply 20 plants and up to (50,000) employees,” the Morgan Stanley analysts said. “Our estimate of Ford’s restructuring plan involves as many as (25,000) head count reductions globally.” “A large portion” of Ford’s restructuring actions will likely be focused on Ford Europe, they said.

Read more …

Might as well move to public transit then?! The Chinese don’t have a car dependent society like the US, they can take a wider view.

Future Of Auto Industry Lies In Car Sharing – Chinese Execs (CNBC)

Several Chinese auto and transportation industry leaders are preparing for a future in which people share cars, rather than own them individually. “(The new generation), they’re not interested in the ownership. They’re probably more interested in accessibility,” Freeman Shen, founder and CEO of Chinese electric car company WM Motor, said last week at CNBC’s East Tech West conference in the Nansha district of Guangzhou, China. Technological advances in the last several years have aided the rise of multibillion-dollar ride-hailing giants such as Uber and Didi. They, in turn, have challenged the traditional taxi driver system and cultivated a habit of on-demand car services for tens of millions of users globally despite ongoing safety concerns.

Traditional automakers, many already trying to navigate rising interest in the electric vehicle market, are paying close attention to the ride sharing trend. Notably, General Motors is testing the waters with its own rental program. In China, Feng Xing Ya, general manager of Guangzhou-based automaker GAC, also said the future of the auto industry lies in car sharing. “(It’s) a challenge for the auto industry because people may buy fewer cars,” Feng said in Mandarin, according to a CNBC translation, during a Nov. 27 conference session. Without giving much detail on a plan, Feng said he favored a strategy of entering — rather than avoiding — the car sharing economy, which he said can still generate a lot of income for a company.

However, such a rapid change in consumer tastes could give start-ups an advantage. Shen, formerly a director at Fiat Chrysler and Chinese automaker Geely, said traditional automakers are too focused on selling cars rather than improving user experiences. He said his company’s focus on software and newness to the market means he has everything to gain and little to lose from a shift to ride sharing.

Read more …

It’s about much more than tariffs.

US-China Trade Talks: Forced Tech Transfers, Intellectual Property Theft (CNBC)

Two contentious issues were notably downplayed in the deal between Donald Trump and Xi Jinping at the G-20 summit over the weekend: China’s alleged practice of forcing technology transfers and apparent theft of intellectual property from American companies. U.S. concerns over forced technology transfers in China, intellectual property violations and cyber-crime issues will likely become a central focus going forward, as trade negotiations between both countries continue, experts told CNBC on Monday. However, they added, a resolution may not be immediately forthcoming. “It is interesting to note that IP/cyber was only mentioned in paragraph four of the White House statement, reflecting Trump’s focus on trade deficits,” Steven Okun at McLarty Associates told CNBC on Monday.

“Still, this does not mean this is not core to the U.S. tariffs.” [..] One expert, however, said that downplaying those issues could reflect the reality of what to expect from ongoing negotiations — that there are no quick fixes to the complexities of forced technology transfers and intellectual property violations. “I have argued for some time that there is no quick resolution to these issues, so there is no simple win for the Trump Administration here,” Adam Posen, president of the Peterson Institute of International Economics said. “The downplaying could therefore be a welcome dose of realism from the Trump Administration about what to expect from negotiations.” Or, it could represent a desire to calm things down with China, he added. “Either way, this issue is not going to go away,” Posen told CNBC by email.

Read more …

Try the brave face.

Bitcoin Drops 8% To Kick Off December (CNBC)

Bitcoin is kicking off the last month of 2018 with another downward drop. After ending November deeply in the red, the world’s largest cryptocurrency fell as much as 8 percent on Monday to a low of $3,790.96, according to data from CoinDesk. At this time last year, bitcoin was beginning its climb to almost $20,000 and ended last December up 40 percent. It entered its hot streak just after Thanksgiving last year, surging in price largely because retail investors were buying in. But the tail end of this year has been a different story: Bitcoin is now down 73 percent since the beginning of January. Twenty-four-hour trading volumes are down 56 percent since Jan. 1, while the entire cryptocurrency market capitalization has fallen 80 percent.

Read more …

World ‘leaders’, no matter how much lip service they pay, are the very last people you should trust to bring about change. The statement by UN secretary general António Guterres says all you need to know on that. You can’t buy your way out of this one, but that’s the only trick they’ve learned. And their power depends on that. They’ll announce trillions in investment, and matters will only get worse. This is all about the production side of things, aimed at keeping consumption levels the same. But those have to come down drastically.

David Attenborough: Collapse Of Civilisation Is On The Horizon (G.)

The collapse of civilisation and the natural world is on the horizon, Sir David Attenborough has told the UN climate change summit in Poland. The naturalist was chosen to represent the world’s people in addressing delegates of almost 200 nations who are in Katowice to negotiate how to turn pledges made in the 2015 Paris climate deal into reality. As part of the UN’s people’s seat initiative, messages were gathered from all over the world to inform Attenborough’s address on Monday. “Right now we are facing a manmade disaster of global scale, our greatest threat in thousands of years: climate change,” he said. “If we don’t take action, the collapse of our civilisations and the extinction of much of the natural world is on the horizon.”

“Do you not see what is going on around you?” asks one young man in a video message played as part of a montage to the delegates. “We are already seeing increased impacts of climate change in China,” says a young woman. Another woman, standing outside a building burned down by a wildfire, says: “This used to be my home.” Attenborough said: “The world’s people have spoken. Time is running out. They want you, the decision-makers, to act now. Leaders of the world, you must lead. The continuation of civilisations and the natural world upon which we depend is in your hands.”

[..] António Guterres, the UN secretary general: “Climate change is running faster than we are and we must catch up sooner rather than later before it is too late,” he said. “For many, people, regions and even countries this is already a matter of life or death.” Guterres said the two-week summit was the most important since Paris and that it must deliver firm funding commitments. “We have a collective responsibility to invest in averting global climate chaos,” he said. He highlighted the opportunities of the green economy: “Climate action offers a compelling path to transform our world for the better. Governments and investors need to bet on the green economy, not the grey.”

Read more …

Nov 252018
 
 November 25, 2018  Posted by at 9:51 am Finance Tagged with: , , , , , , , , , , , ,  


Floris van Schooten Still-Life with Glass, Cheese, Butter and Cake 1st half 17th century

 

Assange Lawyers Barred From Visiting Client Ahead Of US Court Hearing (ZH)
‘He Has Moved Incredibly Quickly’: Mueller Nears Trump Endgame (G.)
One Of The Most Spectacularly Misleading Uses Of Statistics Ever (Porter)
Russia A Greater Threat Than ISIS or Al-Queda – New British Army Chief (PA)
European Security Held Hostage By Washington’s Geopolitical Games – Lavrov (RT)
Why Theresa May’s Brexit Deal Is Terrible For The UK (Coppola)
UK Food Banks Fear Winter Crisis (G.)
UK Parliament Seizes Cache Of Facebook Internal Papers (O.)
Trump Says Asylum Seekers To Wait In Mexico, Incoming Government Denies (R.)
Amazon To Contribute Over Half Of Q4 Earnings Growth For S&P 500 Retail (MW)
JPMorgan Spots The Next Big Problem: A Plunge In Global Bond Demand (ZH)
Bear Necessities: The Charts That Predict Market Downturns (MW)
EU Unhappy With China Penetrating Greek Energy Market (K.)
Climate Change Will Wreck Economic Growth – US Government Report (MW)

 

 

These are dark days.

Assange Lawyers Barred From Visiting Client Ahead Of US Court Hearing (ZH)

After being cooped up for six years inside the Ecuadorian Embassy in London, the Department of Justice is finally closing in on Julian Assange, and the government of Ecuadorian President Lenin Moreno is doing everything in its power to evict its most infamous tenant. To wit, lawyers for Assange have been refused entry to the Ecuadorian Embassy in London, WikiLeaks announced in a tweet, which has only helped to spur fears that Assange will soon be evicted. And what’s worse, he’s being denied access to legal counsel at a time of desperate need. WikiLeaks said the Ecuadorian government refused to allow Assange’s lawyers, Aitor Martinez and Jen Robinson, to meet with their client this week, which is a huge problem for the whistleblower, because Assange is facing a US court hearing Tuesday, and needs to meet with his legal team to prepare.

The hearing is being called to remove the secrecy order on the charges against Assange (which were only publicly revealed because of a copy and paste error). “The hearing is on Tuesday in the national security court complex at Alexandria, Virginia,” WikiLeaks tweeted, adding it is to “remove the secrecy order on the US charges against him.” Visitors to Assange were only recently readmitted after being cut off by the Ecuadorian government. The government also restored Assange’s communications in October. But this was accompanied by restrictions on Assange’s communications. In another sign that Moreno is preparing to oust Assange, the Ecuadorian government recently terminated the credentials of Ecuador’s London ambassador Abad Ortiz without explanation. As Wikileaks explained: “Now all diplomats known to Assange have now been transferred away from the embassy.”

Read more …

The Guardian has a guy named David Taylor in new York doing a series, in which yesterday he called Robert Mueller: ‘America’s straightest arrow’. Yeah, that’s the same Mueller who lied through his teeth about WMD in Iraq as FBI chief. Taylor lists ‘four distinct parts’ of Mueller investigation, and is fully oblivious to the fact that all four have been thoroughly dismantled long ago. Taylor and the Guardian count on you not reading anything but them.

In a few words:
1• Manafort is not linked to Trump-Russia collusion, not even Mueller suggests that
2• See article below
3• There was no hacking that we know of, and certainly not in connection with WikiLeaks and/or Democratic party
4• Papadopoulos was set up, and only a bit player

‘He Has Moved Incredibly Quickly’: Mueller Nears Trump Endgame (G.)

The investigation, which cost more than $16.6m in its first 11 months, can be broken down into four distinct parts which have all led to indictments:

1• Manafort and his business connections to Russia following years of work in support of the former Ukrainian president Viktor Yanukovych.

2• Russian use of fake social media accounts to influence the 2016 election.

3• Russian hacking of the Democratic party and the Clinton aide John Podesta – and the subsequent leak of thousands of emails by WikiLeaks.

4• Trump campaign connections to Russia – including the Trump Tower meeting and the adviser George Papadopoulos’s involvement with a professor who told him the Russians had “dirt” on Clinton including “thousands of emails”.

Anne Milgram, a law professor at New York University and a former prosecutor and attorney general of New Jersey, said Mueller and his 17 lawyers had done “a terrific job”. “Months have gone by – people think it’s a long time – it is not in criminal justice,” she said. “He has moved incredibly quickly, got a lot of co-operation agreements, charges, done an extraordinary job of running down Russian hacking of the election.”

Read more …

As per the second point in the article above, here’s Gareth Porter ripping that to shreds.

One Of The Most Spectacularly Misleading Uses Of Statistics Ever (Porter)

What Facebook general counsel Colin Stretch testified before the Senate Judiciary Committee on October 31, 2017 is a far cry from what the Times claims. “Our best estimate is that approximately 126,000 million people may have been served one of these [private Russian company, Internet Research Agency, ‘IRA’-generated] stories at some time during the two year period,” Stretch said. Stretch was expressing a theoretical possibility rather than an established fact. He said an estimated 126 million Facebook members might have gotten at least one story from the IRA –- not over the ten week election period, but over 194 weeks during the two years 2015 through 2017—including a full year after the election.

That means only an estimated 29 million FB users may have gotten at least one story in their feed in two years. The 126 million figure is based only on an assumption that they shared it with others, according to Stretch. Facebook didn’t even claim most of those 80,000 IRA posts were election–related. It offered no data on what proportion of the feeds to those 29 million people were. In addition, Facebook’s Vice President for News Feed, Adam Moseri, acknowledged in 2016 that FB subscribers actually read only about 10 percent of the stories Facebook puts in their News Feed every day. The means that very few of the IRA stories that actually make it into a subscriber’s news feed on any given day are actually read.

And now, according to the further research, the odds that Americans saw any of these IRA ads—let alone were influenced by them—are even more astronomical. In his Oct. 2017 testimony, Stretch said that from 2015 to 2017, “Americans using Facebook were exposed to, or ‘served,’ a total of over 33 trillion stories in their News Feeds.” To put the 33 trillion figure over two years in perspective, the 80,000 Russian-origin Facebook posts represented just .0000000024 of total Facebook content in that time.

Shane and Mazzetti did not report the 33 trillion number even though The New York Times’ own coverage of that 2017 Stretch testimony explicitly stated, “Facebook cautioned that the Russia-linked posts represented a minuscule amount of content compared with the billions of posts that flow through users’ News Feeds everyday.” The Times‘ touting of the bogus 126 million out 137 million voters, while not reporting the 33 trillion figure, should vie in the annals of journalism as one of the most spectacularly misleading uses of statistics of all time.

Read more …

The new army chief himself is the greatest threat.

Russia A Greater Threat Than ISIS or Al-Queda – New British Army Chief (PA)

Russia “indisputably” poses a far greater threat to national security than Islamic terrorist groups such as al-Qaida and Isis, the new head of the British army has warned. General Mark Carleton-Smith said the UK cannot be complacent about the threat Russia poses “or leave it uncontested”. The former SAS commander said Russia had made plain its preparedness to use force to expand its interests, while it had also been “systematic” in its efforts to exploit cyber space and undersea military arenas. “The Russians seek to exploit vulnerability and weakness wherever they detect it,” he told the Daily Telegraph.

“Russia today indisputably represents a far greater threat to our national security than Islamic extremist threats such as al-Qaida and Isil,” he said, using another name for Isis. Carleton-Smith, who graduated from Sandhurst in the final years of the Cold War, took over as chief of the general staff in June. He led the hunt for Osama bin Laden after the 9/11 terror attacks and later spearheaded Britain’s role in the campaign to defeat Isis. Now, with the threat from Islamist groups in the Middle East reduced by years of concerted international military action, the focus needs to shift to Russia, he said. “We cannot be complacent about the threat Russia poses or leave it uncontested,” Carleton-Smith warned.

Read more …

The European arms industry holds the entire continent hostage.

European Security Held Hostage By Washington’s Geopolitical Games – Lavrov (RT)

The blindness of the EU bureaucrats allows the US to instigate dangerous military activity near Russian borders, jeopardizing the security of the whole European continent, Sergey Lavrov, Russia’s Foreign Minister, said. The Ukrainian crisis, which was used as a justification for sanctions against Moscow, is “a result of geopolitical games, played by the US and their allies in several countries, as well as the blindness of the bureaucrats in Brussels,” Lavrov, who was visiting Portugal on Saturday, said in an interview with local Publico paper. The EU leadership “not only sacrificed its principles and values by turning a blind eye to the armed coup in Kiev, in which a democratically elected president was deposed, but followed Washington’s lead and joined the anti-Russian sanctions,” he added.

In February 2014, Ukrainian President, Viktor Yanukovich, was removed from power as a result of a violent uprising, in which a key role was played by the radical nationalist groups. A few months later, the new government in Kiev launched the so-called “anti-terrorist operation” in the south-east of the country after the local population refused to recognize the results of the coup. The conflict in Donbas, which has claimed more than 10,000 lives, is still ongoing as the Ukrainian authorities don’t seem willing to commit to the truce earlier reached with the Republics of Donetsk and Lugansk.

“And what have we now?” Lavrov wondered. “The architecture of dialogue between Russia and the EU is seriously damaged; the European producers suffer multi-billion losses [due to sanctions and countermeasures by Moscow]; there’s a new conflict in Europe.” Meanwhile, the Americans, who are directly responsible for the “unhealthy situation” in Europe, “suffer no losses,” he said.

Read more …

Good explanation by Frances Coppola of why the Irish border is such a hot iron in the Brexit talks.

Why Theresa May’s Brexit Deal Is Terrible For The UK (Coppola)

After Brexit, the border between Northern Ireland and the Republic of Ireland will become an international border, rather than an intra-EU border as at present. In the absence of a trade agreement, both the EU and the U.K. would be obliged to apply the WTO’s “Most Favored Nation” (MFN) rules on that border. This would mean tariffs and regulatory checks on a border which is politically highly sensitive, because of its long history of conflict, and economically extremely important to the economies of Northern Ireland and its southern neighbour. Neither the U.K. nor the EU wants there to be a hard border between Northern Ireland and Ireland after Brexit. But preventing one is proving difficult.

The U.K. Government proposed technological solutions that it said would eliminate the need for actual checks at the border, but the EU doesn’t believe that the technology exists. The EU proposed a temporary arrangement which would keep Northern Ireland in the Customs Union and Single Market until a free trade agreement could be negotiated, but the U.K. objected on the grounds that customs checks on goods in transit between Northern Ireland and the rest of the U.K. would undermine the U.K.’s own internal market.

The Withdrawal Agreement breaks this deadlock by providing for the U.K. to remain in the EU’s Customs Union, and Northern Ireland in the Single Market, not merely until the end of the transitional period scheduled to end in December 2020, but until a replacement trade agreement can be negotiated, or (potentially) indefinitely if none can be agreed. This is by any measure unsatisfactory. Everyone hates “frozen Brexit.” But the backstop is not the only problem with this deal. Buried in the accompanying Political Declaration, which establishes the framework for future trade negotiations, is this conundrum:

“The future relationship will be based on a balance of rights and obligations, taking into account the principles of each Party. This balance must ensure the autonomy of the Union’s decision making and be consistent with the Union’s principles, in particular with respect to the integrity of the Single Market and the Customs Union and the indivisibility of the four freedoms. It must also ensure the sovereignty of the United Kingdom and the protection of its internal market, while respecting the result of the 2016 referendum including with regard to the development of its independent trade policy and the ending of free movement of people between the Union and the United Kingdom.” When combined with the backstop, this conundrum makes Mrs. May’s deal terrible for the U.K.

Read more …

Hostile environment. Signed, Theresa May.

UK Food Banks Fear Winter Crisis (G.)

Food banks in some of the poorest areas are preparing for a big rise in demand when universal credit is rolled out by calling for more donations and volunteers, and stockpiling essential supplies. Volunteers have told the Observer they are concerned about how their communities will cope this winter. In areas where the new benefit has been in place for months, the pressure on food banks has increased. Under the new system, people are made to wait for over a month to receive the benefit. When universal credit is paid out, it is often given as a lump sum, which many find difficult to budget. The Trussell Trust, which operates 428 food banks, reported in April that its facilities were four times busier in areas where the new credit had been in place for 12 months or more compared with those where it had been introduced more recently.

Blackpool, the Isle of Anglesey, Milton Keynes and parts of Liverpool and Glasgow will become some of the last places to introduce universal credit in the coming weeks. Roy Fyles, who supervises the Anglesey food bank, said he was not looking forward to its arrival on 5 December. “Even if there are only a few new claimants between now and Christmas, they will not get any money, unless they request an advance, until the new year,” he said. “We’re talking five weeks.” In nearby Flintshire, the credit piled a lot of pressure on food banks when it was brought in 20 months ago. “We are hoping that, because we’re only a small island, we’ll have fewer problems,” Fyles said. Already, the number of packages his food bank delivers has gone up by a third in the past few months. “We’re preparing by trying to get more volunteers and collecting food for Christmas hampers.”

Read more …

Nice twist.

UK Parliament Seizes Cache Of Facebook Internal Papers (O.)

Parliament has used its legal powers to seize internal Facebook documents in an extraordinary attempt to hold the US social media giant to account after chief executive Mark Zuckerberg repeatedly refused to answer MPs’ questions. The cache of documents is alleged to contain significant revelations about Facebook decisions on data and privacy controls that led to the Cambridge Analytica scandal. It is claimed they include confidential emails between senior executives, and correspondence with Zuckerberg. Damian Collins, the chair of the culture, media and sport select committee, invoked a rare parliamentary mechanism to compel the founder of a US software company, Six4Three, to hand over the documents during a business trip to London.

In another exceptional move, parliament sent a serjeant at arms to his hotel with a final warning and a two-hour deadline to comply with its order. When the software firm founder failed to do so, it’s understood he was escorted to parliament. He was told he risked fines and even imprisonment if he didn’t hand over the documents. “We are in uncharted territory,” said Collins, who also chairs an inquiry into fake news. “This is an unprecedented move but it’s an unprecedented situation. We’ve failed to get answers from Facebook and we believe the documents contain information of very high public interest.” [..] MPs leading the inquiry into fake news have repeatedly tried to summon Zuckerberg to explain the company’s actions. He has repeatedly refused.

Collins said this reluctance to testify, plus misleading testimony from an executive at a hearing in February, had forced MPs to explore other options for gathering information about Facebook operations. [..] The documents seized were obtained during a legal discovery process by Six4Three. It took action against the social media giant after investing $250,000 in an app. Six4Three alleges the cache shows Facebook was not only aware of the implications of its privacy policy, but actively exploited them, intentionally creating andeffectively flagging up the loophole that Cambridge Analytica used to collect data. That raised the interest of Collins and his committee.

Read more …

Negotiating.

Trump Says Asylum Seekers To Wait In Mexico, Incoming Government Denies (R.)

U.S. President Donald Trump tweeted on Saturday that migrants at the U.S.-Mexico border would stay in Mexico until their asylum claims were individually approved in U.S. courts, but Mexico’s incoming government denied they had struck any deal. Mexico’s incoming interior minister said there was “no agreement of any type between the future government of Mexico and the United States.” Olga Sanchez Cordero, also the top domestic policy official for president-elect Andres Manuel Lopez Obrador who takes office on Dec. 1, told Reuters that the incoming government was in talks with the United States but emphasized that they could not make any agreement since they were not yet in government.

Sanchez ruled out that Mexico would be declared a “safe third country” for asylum claimants, following a Washington Post report of a deal with the Trump administration known as “Remain in Mexico,” which quoted her calling it a “short-term solution.” The plan, according to the newspaper, foresees migrants staying in Mexico while their asylum claims in the United States are being processed, potentially ending a system Trump decries as “catch and release” that has until now often allowed those seeking refuge to wait on safer U.S. soil.

Read more …

At what point will we call it a monopoly? Apparently not at 50%. How about 75%?

Amazon To Contribute Over Half Of Q4 Earnings Growth For S&P 500 Retail (MW)

Amazon.com’s fourth quarter earnings are expected to account for more than half of earnings growth among S&P 500 retailers, according to a report from FactSet. FactSet expects Amazon to report earnings per share of $5.51, more than double the $2.16 the e-commerce giant reported last year. Amazon beat FactSet earnings expectations the last five quarters. “Amazon.com is expected to report the highest earnings growth and is expected to be the largest contributor to earnings growth for the Retailing Industry Group and Food & Staples Retailing Industry Group combined,” wrote John Butters at FactSet. “If Amazon were excluded, the estimated earnings growth for Q4 for these two retail industry groups would fall to 6.8% from 15%.”

Ten of the 13 retail sub-industries, including internet and direct marketing retail (projected for 69.4% growth), automotive retail (expected to be up 22.4%) and home improvement retail (forecast for 20.1% growth) are expected to report higher fourth-quarter earnings. Other categories projected for double-digit growth include general merchandise stores (up 12.3%) and food distributors (up 11.1%). Drug retail, department stores and specialty stores are forecast to grow 6.9%, 6.8% and 6.4% respectively. “Amazon alone accounts for more than half of the projected earnings growth for all S&P 500 retailers for the fourth quarter,” Butters wrote.

Read more …

As supply skyrockets, central banks stop buying. A recipe for fun, we’re sure.

JPMorgan Spots The Next Big Problem: A Plunge In Global Bond Demand (ZH)

[..] with traders – across all asset classes, including equity, credit and rates, all focusing on what happens to US Treasury yields next, the JPMorgan strategist revisits his previous analysis on global bond demand and supply, incorporating updated supply forecasts both for the balance of 2018 as well as for 2019. “Given this year has seen the largest increase in excess supply of bonds since 2010, which as we noted last week has together with continued Fed hikes contributed to a tightening in financial conditions that has been reverberating across markets, there has been considerable interest in how next year is shaping up.”

Attention on 2019 is especially acute as the Fed’s balance sheet normalization process is set to accelerate given that it is only in 4Q18 that the monthly cap for the quantity of maturing bonds that are allowed to roll off has reached its steady state of $50Bn/month, which unlike 2018 when QT was just starting, will induce a further increase in net supply that needs to be absorbed by the market of more than $100bn. It’s not just the Fed: with the ECB set to end its QE purchases in December this year and we see the BoJ continuing its gradual slowdown in bond purchases to ¥30tr in 2019 compared to around ¥40tr this year, JPMorgan notes that this collective shrinkage of the G-4 balance sheet means that the market needs to absorb a further decrease in price-insensitive QE demand of more than $400bn next year.

Here’s the bad news: adding together both the supply and demand side impact, the G4 central bank flow looks set to decline a further $550bn next year. Which begs the question: will there be an incremental increase in demand to offset this dramatic net increase in supply in the coming year? JPMorgan’s answer is hardly what bond bulls are looking for…

Read more …

Entertainment.

Bear Necessities: The Charts That Predict Market Downturns (MW)

Is a bear market on the horizon? WSJ markets reporter Riva Gold analyzes the trends that came before the dot-com bubble burst and the financial crisis hit.

Read more …

Yes, that’s right, lignite. But that’s not what bothers the EU.

EU Unhappy With China Penetrating Greek Energy Market (K.)

Brussels is raising obstacles to Chinese plans to enter Greece’s energy market, reversing the situation in the tender for the privatization of Public Private Corporation’s lignite-fired plants where CHN Energy had appeared to be the favorite. Days before bid submissions for the four plants at Meliti and Megalopoli, the European Commission’s Directorate-General for Energy sent a letter to Greece’s Regulatory Authority for Energy, seen by Kathimerini, raising the issue of European law violation and asking for the review of ADMIE’s certification after China State Grid purchased 24 percent of the grid operator.

Read more …

People may feel vindicated in some way because of this, especially because of Trump. But really, expressing environmental damage in dollars is a road to nowhere at all. If economic growth is your main worry, you’re not too smart.

Climate Change Will Wreck Economic Growth – US Government Report (MW)

Climate change is a threat to Americans’ health and the country’s economic well-being, a major report issued Friday by 13 federal agencies said. “Without substantial and sustained global mitigation and regional adaptation efforts, climate change is expected to cause growing losses to American infrastructure and property and impede the rate of economic growth over this century,” wrote the authors of the Fourth National Climate Assessment Volume II. The report, authored by more than 300 experts, spells out a litany of impacts linked to climate change, including problems with human health, water quality, agriculture, tourism, and infrastructure.

Flooding will decrease crop yields, warming oceans will slow the shellfish industry, and heat stress will cause a drop in dairy production, the authors wrote, describing just a few of the economic effects. If people don’t take action to lessen its effects, climate change is expected to affect import and export prices and U.S. businesses with overseas operations and supply chains, the report notes. “With continued growth in emissions at historic rates, annual losses in some economic sectors are projected to reach hundreds of billions of dollars by the end of the century — more than the current GDP of many U.S. states,” the authors wrote.

Read more …

Nov 242018
 
 November 24, 2018  Posted by at 10:33 am Finance Tagged with: , , , , , , , , , , ,  


Joseph Mallord William Turner The Sun Rising over Water 1825-30

 

Britain’s Opposition Labour Party Plots Overthrow Of Capitalism (R.)
This Sell-Off is Just One Step in Methodical Unwind of Stock Prices (WS)
Oil Plunges More Than 6% Despite Potential OPEC Cut (R.)
Bitcoin Loses 25% Of Its Remaining Value During Thanksgiving Week (CNBC)
Trump Dismisses Report He Is Unhappy With Treasury’s Mnuchin (R.)
Holiday Doings and Undoings (Kunstler)
Rising Fuel Price Protests Should Serve As A Red Alert For Macron (I.ie)
Gibraltar Rocks Final Stages Of Brexit Negotiation (AFP)
Ecuador Ousts Its London Ambassador, ‘Last Diplomat Assange Knew’ (RT)
Prosecution of Julian Assange, America’s Betrayal of Its Own Ideals (CD)
Why You Should Care About the Julian Assange Case (Taibbi)
Anonymous Blows Lid Off Huge Psyop In Europe Funded By UK & US (RT)

 

 

You really think you can win an election saying this?

Britain’s Opposition Labour Party Plots Overthrow Of Capitalism (R.)

The British Labour Party’s would-be finance minister, John McDonnell, has a message for the world: he is deadly serious about overthrowing capitalism and building a socialist society. McDonnell, 67, who describes Karl Marx as one of his main influences, has been at the vanguard of a left-wing revival in Britain’s main opposition party under fellow socialist Jeremy Corbyn. He has promised sweeping nationalization, higher public spending and an overhaul of the banking system. Asked about his entry in the Who’s Who directory of influential people which lists his passion for “generally fermenting the overthrow of capitalism”, McDonnell said it was a joke about beer-making, but he agrees with the principle.

“I believe it. I am serious in my intent. I want to transform this economy,” McDonnell told Reuters in an interview. “That means evolving into a system which can achieve that equality, that democracy, that fairness, and tackles the major challenges that we are facing.” With PM Theresa May’s grip on power looking ever more vulnerable as she faces the most perilous crisis of her premiership struggling to win backing for her Brexit deal, Labour are increasingly confident that they will be the next guardians of the world’s fifth-largest economy. McDonnell’s gambit is that the social discontent in Britain which fueled the shock 2016 Brexit vote runs much deeper, and that voters who feel left behind by decades of unchecked capitalism and wounded by years of public spending cuts will rally to his call.

“(It was) like everyone’s grievance went into one vote,” McDonnell said. The polls show that is only part of the picture: voters are tired of economic austerity and unhappy with May’s Brexit negotiations, but Labour are only marginally ahead of the ruling Conservative Party. Some commentators have suggested they should be polling better against a government in disarray. Nevertheless, the combination of an unsated appetite for change and a Brexit-inspired political crisis which has trashed the centrist orthodoxy of British politics, has left Labour confident they will soon win power. McDonnell said his ambition is create the most radical government in modern British history even as the country is grappling with its exit from the EU, the most complex negotiations in Europe since the end of World War Two.

[..] McDonnell has outlined a program of nationalizing the railways, energy and water companies and the postal service, raising taxes on businesses and the wealthy. This would be combined with increased spending on education, skills training, and health care, and harnessing the financial sector to help fund a huge infrastructure investment. At his party’s annual conference two months ago, McDonnell did little to conceal the scale of his ambition. Businesses were stunned by his plan to force all large companies to hand over a tenth of their equity to their workforce.

Read more …

Possible.

This Sell-Off is Just One Step in Methodical Unwind of Stock Prices (WS)

It was an ugly Monday and Tuesday followed by a Wednesday that at first look like a real bounce but ended with the indices giving up their gains. This was followed, mercifully, by Thursday when markets were closed, which was followed unmercifully by Friday, during which the whole schmear came unglued again. The S&P 500 index dropped 0.7% on Friday to 2,632 and 3.8% for Thanksgiving week, though this week is usually – by calendar black-magic – a good week, according to the Wall Street Journal: During Thanksgiving weeks going back a decade, the S&P 500 rose on average 1.3%. This leaves the S&P 500 index 1.5% in the hole year-to-date. It’s now back where it had first been on November 30, 2017:

Clearly, when seen over the longer term, the sell-off for now still belongs to the small-fry among sell-offs, with S&P 500 down just 10.5% from its peak:

The Dow dropped 0.7% on Friday and 4.4% during Thanksgiving week, to 24,286. It’s 1.75% in the hole for the year. Technically speaking, it’s not even in a correction, being down only 9.9% from its peak. And the Nasdaq, dropped 0.5% on Friday and 4.3% during Thanksgiving week. According to the Wall Street Journal, during Thanksgiving week over the past 20 years, the Nasdaq rose on average 1.3%. So this is no good for calendar-black-magic aficionados. Where’s the free-wheeling holiday spirit? The Nasdaq is now down 14.7% from its peak at the end of August but remains up 0.5% year-to-date. The Russell 2000 small-caps index edged down today and is down 14.5% from its peak on August 31. It’s 3% in the hole year-to-date and right back where it had first been on September 27, 2017:

The seven FANGMAN stocks – Facebook, Amazon, Netflix, Google’s parent Alphabet, Microsoft, Apple, and NVIDIA – fell 1.3% on Friday in combined market cap. Over Thanksgiving week, they have now plunged 6.7%, or by $259 billion. Those are real dollars gone in four trading days with just seven stocks. Since their combined market-cap peak of $4.63 trillion at the end of August, nearly $1 trillion — $994 billion to be precise – has dissolved into ambient air, as their combined market cap has plunged 21.5% in ca. 12 weeks. But if you look at them as individual stocks, it’s even worse. The saving grace for the group as a whole was Microsoft, the second largest stock by market cap, which is threatening to become the largest stock shortly if Apple continues to fall at this pace. Three of the seven have already plunged by 38% to nearly 50%. Two more have plunged by 26% to 27%.

Read more …

What is it, 34% since the high this year?

Oil Plunges More Than 6% Despite Potential OPEC Cut (R.)

Oil prices slumped more than 6 percent on Friday, with Brent set for a 12-percent plunge this week, as fears that supply would overpower demand intensified, even as major producers considered cutting output. Oil supply, led by U.S. producers, is growing faster than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, OPEC is expected to start trimming output after a meeting on Dec. 6. But this has done little so far to prop up prices, which have dropped more than 20 percent so far in November, in a seven-week streak of losses. Deep trade disputes between the world’s two biggest economies and oil consumers, the United States and China, have weighed upon the market.

“The market is pricing in an economic slowdown – they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand.” [..] Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally. Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a three-month high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 percent higher than a year ago.

Read more …

Starting to feel serious.

Bitcoin Loses 25% Of Its Remaining Value During Thanksgiving Week (CNBC)

Bitcoin continued its move lower Friday, struggling to find footing after a week of pain for the world’s largest cryptocurrency. The digital asset hit a low of $4,119 Friday, according to data from CoinDesk, bringing its seven-day losses to more than 25 percent. In dollar terms, bitcoin’s value dropped by about $1,400 over that time frame. Other cryptocurrencies didn’t hold up this week either. Not a single one in the top 28 by market capitalization was trading in the green Friday, according to CoinMarketCap.com. XRP, the second-largest by market capitalization, fell 6 percent Friday, bringing its one-week losses to 10 percent. Ether was down 7 percent in 24 hours and lost roughly 30 percent for the week.

The total market capitalization for cryptocurrencies fell to $138.6 billion Friday, according to CoinMarketCap data, its lowest level since September 2017. Since its peak, the market has lost about $700 billion in value, according to the data. The tumble for bitcoin started abruptly last week when it fell below $6,000 and hit a new low for the year. The plunge followed what had been a surprisingly calm few months for bitcoin and a break from the rest of its volatile trading year. Since then, prices have hit new 13-month lows and struggled to move out of the $4,300 range. The price dips are a stark contrast from last Thanksgiving when the cryptocurrency was entering a hot streak thanks to a wave of new retail investors. Since that holiday week last year, prices are down by more than 55 percent.

Read more …

“They never like to ask me for a quote b/c it would kill their story..”

Trump Dismisses Report He Is Unhappy With Treasury’s Mnuchin (R.)

U.S. President Donald Trump said on Twitter on Friday that he was quite happy with Treasury Secretary Steven Mnuchin’s performance, after The Wall Street Journal reported that the president was dissatisfied with Mnuchin. “I am extremely happy and proud of the job being done by @USTreasury Secretary @stevenmnuchin1,” Trump said in a tweet. The Journal reported that Trump blames Mnuchin for the appointment of Federal Reserve Chairman Jerome Powell, who has been steadily raising U.S. interest rates. Trump is concerned that higher rates could undercut economic gains ahead of his 2020 reelection bid, the newspaper reported.

Quoting unnamed sources, the Journal said Trump has also expressed displeasure with Mnuchin over stock market turbulence and the Treasury secretary’s skepticism about the White House trade actions against China. “The FAKE NEWS likes to write stories to the contrary, quoting phony sources or jealous people, but they aren’t true. They never like to ask me for a quote b/c it would kill their story,” Trump said on Twitter. Trump has repeatedly criticized the Fed’s rate increases under Powell. In October, he called the Fed “crazy,” “ridiculous” and “my biggest threat.”

A year ago when Trump picked Powell to head the Federal Reserve, Mnuchin, a former Goldman Sachs banker, was a strong advocate of his nomination. The Wall Street Journal, citing a person familiar with the matter, said Trump, in a conversation with someone who praised Mnuchin’s performance, mentioned stock market volatility and said: “If he’s so good, why is this happening?”

Read more …

“..Somehow I doubt that this Christmas will win the Bing Crosby star of approval.”

Holiday Doings and Undoings (Kunstler)

Somehow I doubt that this Christmas will win the Bing Crosby star of approval. Rather, we see the financial markets breaking under the strain of sustained institutionalized fraud, and the social fabric tearing from persistent systemic political dishonesty. It adds up to a nation that can’t navigate through reality, a nation too dependent on sure things, safe spaces, and happy outcomes. Every few decades a message comes from the Universe that faking it is not good enough. The main message from the financials is that the global debt barge has run aground, and with it, the global economy. That mighty engine has been chugging along on promises-to-pay and now the faith that sustained those promises is dissolving.

China, Euroland, and the USA can’t possibly meet their tangled obligations, and are running out of tricks for rigging, gaming, and jacking the bond markets, where all those promises are vested. It boils down to a whole lot of people not getting paid, one way or the other — and it’s really bad for business. Our President has taken full credit for the bubblicious markets, of course, and will be Hooverized as they gurgle around the drain. Given his chimerical personality, he may try to put on an FDR mask — perhaps even sit in a wheelchair — and try a few grand-scale policy tricks to escape the vortex. But the net effect will surely be to make matters worse — for instance, if he can hector the Federal Reserve to buy every bond that isn’t nailed to some deadly derivative booby-trap.

But then he’ll only succeed in crashing the dollar. Remember, there are two main ways you can go broke: You can run out of money; or you can have plenty of worthless money.

Read more …

Urban vs rural. Just like in America.

Rising Fuel Price Protests Should Serve As A Red Alert For Macron (I.ie)

Within the space of a week, the gilets jaunes have managed to tap into wider discontent with Macron’s presidency and policies, gaining opposition support and momentum as a result. These are not the usual protests or strikes co-ordinated by political parties or unions in France. With no official organisation, no identified leader and no political affiliation, the gilets jaunes phenomenon has been almost completely co-ordinated on social media where it declares “[This] comes about only from the French people”. [..] one thing is certain: their actions have chimed with the public. This despite chaos across France last weekend with roads blocked by protesters at some 2,000 locations. Two people were killed – one when a driver panicked and accidentally accelerated their car into the crowd – in the protests and hundreds reported injured.

Nevertheless, a number of polls have shown that almost three-quarters of French voters approve of the demonstrations, one survey found that more than half of those who voted for Macron support them. The planned tax increases – the price of diesel is due to go up another 6.5 cents per litre and petrol by 2.9 cents – are to come into force in January. They follow a 23pc rise in the cost of diesel and 15pc in petrol in the past year. Internationally, Macron has made much of his commitment to battling climate change and these hikes are part of his domestic policies on that front. His ministers have also argued that the higher price of crude globally also necessitates a rise but protesters complain that fuel taxes have been increasing steadily over the past four years.

One survey this week found that 82pc believe Macron should drop the plans. It also showed that particular demographics – the self-employed and business leaders, plus pensioners and low-income households – were most supportive of the gilets jaunes. The episode also highlights the rift between France’s urban elite and those in its poor rural peripheries. Workers who rely on their cars to get to their jobs in the countryside are particularly aggrieved by the planned tax increases.

Read more …

One more topic they try to push into the limitless future.

Gibraltar Rocks Final Stages Of Brexit Negotiation (AFP)

Preparations for a summit to endorse Britain’s deal to quit the European Union risked running aground on the rock of Gibraltar Friday, as Spain defended its veto over the fate of the tiny territory. Britain’s Prime Minister Theresa May and leaders of the other 27 EU member states are to meet Sunday to approve their divorce agreement and set a course for negotiating their future post-Brexit relationship. But Spanish officials emerged from talks Friday warning that Prime Minister Pedro Sanchez might not attend unless it is guaranteed that no future accord on EU relations involving Gibraltar will be signed without Madrid’s specific assent.

Visiting Cuba, Sanchez said that if the Gibraltar row is not resolved, he might not go to Brussels on Sunday, warning: “If there’s no agreement, it’s very clear hat will happen, there very probably won’t be a European Council.” In Brussels, Luis Marco Aguiriano Nalda, Spain’s secretary of state for European affairs, said Madrid wanted London to put in writing that it shared Madrid’s interpretation of the negotiated Brexit deal regarding Gibraltar. “We have demanded that it be published by the British authorities before the European Council on Sunday,” he said. In London, however, a Downing Street source said he did not know what document Aguiriano could be referring to and added: “We have negotiated on behalf of the whole of the UK family. That includes Gibraltar and the overseas territories.”

Read more …

The torture never stops.

Ecuador Ousts Its London Ambassador, ‘Last Diplomat Assange Knew’ (RT)

Ecuador’s President Lenin Moreno has terminated the credentials of his UK ambassador, who has been at the center of negotiating the fate of WikiLeaks co-founder Julian Assange, as concerns mount over the whistleblower’s safety. The decree, with which Moreno effectively sacked Ecuador’s London ambassador Abad Ortiz, was published by WikiLeaks on Wednesday. The document does not offer any explanation as to why Ortiz, who had been his country’s ambassador to the UK since 2015, is now being permanently recalled. Nor does it name a successor for the outgoing diplomat. The decree is effective immediately.

WikiLeaks tweeted that Abad, appointed to the office under President Rafael Correa, was the last diplomat the long-term self-exiled editor knew in the embassy. “All diplomats known to Assange have now been transferred away from the embassy,” the whistleblowing site claimed. This new and sudden twist in the Assange saga has been met with concern by his supporters, with some suggesting that Moreno is doing Washington’s bidding by removing people who might have stood by Assange and opposed his potential handover to the British police – which is expected to bring about a swift extradition to the US. The dismissal has been called “a silent pro-US coup.”

Read more …

Best piece on Assange in a while, from Nozomi Hayase.

Prosecution of Julian Assange, America’s Betrayal of Its Own Ideals (CD)

Just as the Founding Fathers of the United States, by revolting against the autocratic rule of King George were regarded as traitors, by aiding ordinary people expose and defy unjust secret law, WikiLeaks too has been branded as an enemy of the state. Trump’s Secretary of State and the former CIA director, Mike Pompeo calls WikiLeaks a non-state hostile intelligence agency, claiming that the organization threatens American values and needs to be shut down. Members of the US Congress urged the Ecuadorian President to persecute Assange, calling him a “dangerous criminal” and a “threat to global security”. While all these vicious verbal attacks are thrown at him, Assange remains in confinement, over the past months, being completely shut out from the outside, being continually deprived of fresh air, access to medical care and sunlight by the UK government in violation of UN rulings.

All wars start and are fueled by lies and propaganda. Once it was the Vietnam War, where under the command of the US President Lyndon B. Johnson, the Gulf of Tonkin lies unleashed military forces into Southeast Asia. Then came the invasion of Iraq with the former Secretary of State Colin Powell’s speech at the UN, falsely claiming Iraq had ‘Weapons of Mass Destruction’. This battle against free speech is another secret war of this empire. It now has become a fog of war, where with the hype of Russia Gate that was created out of thin air, the public was prevented from seeing who the real enemies are.

Read more …

Taibbi’s piece is okay, and he says some good things, but he doesn’t appear to like Assange, and fails to hide that.

Valid point he makes: The -secret- charges vs Assange have nothing to do with Trump, they pre-date his presidency by years.

Why You Should Care About the Julian Assange Case (Taibbi)

It always seemed that Assange viewed his primary role as being a pain in the ass to this increasingly illegitimate system of secrets, a pure iconoclast who took satisfaction in sticking it to the very powerful. I didn’t always agree with its decisions, but Wikileaks was an understandable human response to an increasingly arbitrary, intractable, bureaucratic political system. That it even had to exist spoke to a fundamental flaw in modern Western democracies — i.e. that our world is now so complex and choked with secrets that even releasing hundreds of thousands of documents at a time, we can never be truly informed about the nature of our own societies. Moreover, as the Snowden episode showed, it isn’t clear that knowing unpleasant secrets is the same as being able to change them.

In any case, the institutions Wikileaks perhaps naively took on once upon a time are getting ready to hit back. Frankly it’s surprising it’s taken this long. I’m surprised Assange is still alive, to be honest. If Assange ends up on trial, he’ll be villainized by most of the press, which stopped seeing the “lulz” in his behavior for good once Donald Trump was elected. The perception that Assange worked with Vladimir Putin to achieve his ends has further hardened responses among his former media allies. As to the latter, Assange denies cooperating with the Russians, insisting his source for the DNC leak was not a “state actor.” It doesn’t matter. That PR battle has already been decided.

Courts have held reporters cannot be held liable for illegal behavior of sources. [..] It’s always been the source’s responsibility to deal with that civil or criminal risk. The press traditionally had to decide whether or not leaked material was newsworthy, and make sure it was true. The government has been searching for a way to change that equation. The Holy Grail would be a precedent that forces reporters to share risk of jail with sources. Separate from Assange, prosecutions of leakers have sharply escalated in the last decade. The government has steadily tiptoed toward describing publishers as criminal conspirators.

It’s impossible to know exactly what recent news about an indictment means until we see it (the Reporters’ Committee for the Freedom of the Press has already filed a motion to unseal the charges). If there is a case, it could be anything in the federal criminal code, perhaps even unrelated to leaks. Who knows? But the more likely eventuality is a prosecution that uses the unpopularity of Assange to shut one of the last loopholes in our expanding secrecy bureaucracy. Americans seem not to grasp what might be at stake. Wikileaks briefly opened a window into the uglier side of our society, and if publication of such leaks is criminalized, it probably won’t open again.

Read more …

Europe needs an enemy. Or rather, NATO does.

Anonymous Blows Lid Off Huge Psyop In Europe Funded By UK & US (RT)

Anonymous has published documents which it claims have unearthed a massive UK-led psyop to create a “large-scale information secret service” in Europe – all under the guise of countering “Russian propaganda.” In a document dump on November 5, the group exposed the UK-based ‘Integrity Initiative’, said to have been established by the ominously titled Institute for Statecraft in 2015. The main objective is “to provide a coordinated Western response to Russian disinformation and other elements of hybrid warfare.” The Institute for Statecraft is affiliated with the NATO HQ Public Diplomacy Division and the Home Office-funded ‘Prevent’ program, so objectivity is, of course, at the forefront of their work.

Operating on a budget of £1.9 million (US$2.4 million), the secretive Integrity Initiative consists of “clusters” of local politicians, journalists, military personnel, scientists and academics. The team is dedicated to searching for and publishing “evidence” of Russian interference in European affairs, while themselves influencing leadership behind the scenes, the documents claim. The UK establishment appears to be conducting the very activities of which it and its allies have long-accused the Kremlin, with little or no corroborating evidence. The program also aims to “change attitudes in Russia itself” as well as influencing Russian speakers in the EU and North America, one of the leaked documents states.

At present, the vast network allegedly has clusters for Spain, France, Germany, Italy, Greece, the Netherlands, Lithuania, Norway, Serbia, and Montenegro… but there’s more! According to the Anonymous leak, major plans to expand the sphere of influence throughout eastern Europe, the US, and Canada, as well as the MENA region, are allegedly underway. The clusters’ work is apparently done under absolute secrecy via concealed contacts embedded throughout British embassies, the leak claims, some of which are listed as part of the documentation.

Read more …

Nov 042018
 
 November 4, 2018  Posted by at 10:53 am Finance Tagged with: , , , , , , , , , ,  


Francisco Goya The straw mannequin 1791-92

 

Where the Heck are Share Buybacks in This Rotten Market? (WS)
Corporate Buybacks Return, Supporting Market (WSJ)
US Mortgage Rates Rise Sharply to Fresh 7-Year Highs (MND)
Theresa May’s ‘Secret’ Brexit Deal (Ind.)
Brexit Puts Good Friday Agreement At Risk – Irish PM (Ind.)
UK Business Leaders Call For Second Brexit Vote (BBC)
Brexit Is Just A Sideshow For An EU Beset By Problems On All Sides (G.)
“Posh Ghost Towers”: Gloom Spreads Over London Housing Market (DQ)
33 Trillion More Reasons Why New York Times Gets Russiagate Wrong (CN)
Break-in Attempted at Assange’s Residence in Ecuador Embassy (CN)

 

 

No blackout, no market. Only deceit.

Where the Heck are Share Buybacks in This Rotten Market? (WS)

Shares fell today in part because Apple, the giant in the indices, gave iffy guidance for the holidays Thursday evening; and with product sales not going anywhere, and only price increases boosting revenues, it said it would no longer disclose unit sales. This combo worked like a charm, and shares dropped 6.6%. So where are the corporate share buybacks when you need them? This is when companies buy back their own shares in order to prop up their price and thereby the overall market. Where is this panacea that was considered securities fraud until 1982? Throughout October, Wall Street gurus promised that shares would rise as soon as companies emerged from their “blackout” period that prevents them from buying back their shares. Alas, there is no federally mandated “blackout” period.

[..] Let’s take a gander at International Business Machines [IBM], one of the biggest share buyback queens. Since 2000, it blew $146 billion on share buybacks. The chart below shows the cumulative amounts since 2013 that IBM wasted on share buybacks: $43 billion (data via YCharts):

Wall Street gurus keep hyping that share buybacks “unlock shareholder value,” or “return cash to shareholders,” or some such thing. But here’s what IBM’s share buybacks did to shareholder value, as measured by the stock price:

[..] IBM has been buying back the shares it issued its own executives as part of their stock compensation plans, and the shares it issued to buy other companies, including minuscule privately-owned startups for billions of dollars. Buybacks covered up the dilutive effects from those actions. IBM could have spent this money on research and invented something cool. But that would have been too hard. Far better to farm out much of the work to cheap countries like India, shut down US operations, waste money on share buybacks in a vain effort to manipulate up its shares, and instead watch them go to heck.

Read more …

There are no functioning markets without price discovery, so what exactly is supported here? Deceit?

Corporate Buybacks Return, Supporting Market (WSJ)

U.S. companies are ramping up share buybacks again, offering potential support to volatile markets. Share buybacks fell ahead of earnings season, when regulations bar such repurchases. As that so-called blackout period ends, there has been a resurgence, with companies making the most of last month’s selloff. That has eased analysts’ concerns that the year’s buyback boom is over. Net buybacks in the month totaled just $12 billion by Oct. 19, but jumped to $39 billion by Oct. 29, according to estimates from JPMorgan Chase & Co. That is more than the $30 billion recorded in September and just under the $48 billion recorded in August.

The bank’s estimates are based on the average drop in share count across the S&P 500, FTSE Russell1000, Datastream U.S. and MSCI U.S. indexes. Some analysts hope a resurgence in buybacks could help support share prices during a period of geopolitical and economic uncertainty. Others are skeptical that companies can continue purchasing their own shares at the current pace, particularly as the stream of repatriated cash that helped drive the year’s buybacks slows down. “It is possible that some companies saw the equity correction as an opportunity to buy back their stock” in October, said Nikolaos Panigirtzoglou, global-markets strategist at JPMorgan. “But this raises the hurdle for November.”

Read more …

Great jobs numbers equals higher rates.

US Mortgage Rates Rise Sharply to Fresh 7-Year Highs (MND)

Mortgage rates had a bad week and an especially bad day following a much stronger-than-expected jobs report. The Employment Situation (the most important piece of labor market data and arguably the most important economic report as far as interest rates are concerned) showed the highest pace of wage growth since before the recession and a surprisingly robust addition of new jobs in October. Strong jobs data is the nemesis of low interest rates and today was no exception. Mortgage rates were already operating fairly close to long-term highs, but today’s move easily took them to new highs. The average lender is now quoting conventional 30yr fixed rates of 5% for relatively ideal scenarios.

Those without a big down payment or without perfect credit/income can expect to see even higher rates. Most lenders ended up recalling the morning’s initial rate sheets and reissuing higher rates at least once today. There’s really no silver lining apart from the fact that the higher rates go, and the quicker they get there, the closer we get to the point that the economy slows down as a result. When that happens, rates will begin to fall before just about anything else. Unfortunately, the expected time frame for such things is incredibly wide (not the sort of thing you hope for if you need to buy/refi). And yes… it’s also unfortunate that our one source of solace at the moment involves an economic downturn, but if you want low interest rates, that tends to come with the territory.

Read more …

The wool over your eyes.

Theresa May’s ‘Secret’ Brexit Deal (Ind.)

Theresa May has reportedly secured concessions from Brussels to keep the whole of the UK in a customs union in the wake of Britain’s withdrawal from the European Union. The agreement reached would prevent the need for Northern Ireland to be treated differently from the rest of the UK, a main stumbling block during Brexit negotiations. The “secret” deal would avoid the need for an Irish backstop and will be written into the legally-binding deal, according to The Sunday Times. However, Downing Street has poured cold water on the report, calling it speculation. The EU has reportedly suggested a backstop post-Brexit customs arrangement covering all of the UK could give mainland Britain some scope to set trade rules.

Preparations for a final deal were far more advanced than previously disclosed, the report said, and would lead to a document of 50 pages or more being published. The agreement would include an “exit clause” designed to convince Brexit-supporting MPs that remaining in the customs union was only temporary, The Sunday Times said. Ms May’s cabinet would meet on Tuesday to discuss her plan, and she hoped there would be enough progress by Friday for the EU to announce a special summit, the newspaper reported. The prime minister’s office has described the report as speculation, but claimed the majority of a deal on Britain’s exit from the bloc in March 2019 had been agreed.

“This is all speculation,” a spokesman for Ms May said. “The prime minister has been clear that we are making good progress on the future relationship and 95 percent of the withdrawal agreement is now settled and negotiations are ongoing.”

Read more …

Peace in Ireland is the no.1 concern.

Brexit Puts Good Friday Agreement At Risk – Irish PM (Ind.)

Brexit is “fraying” the relationship between the UK and Ireland and putting peace in Northern Ireland at risk, Irish premier Leo Varadkar has said. The Taoiseach said the Good Friday Agreement was being “undermined” by fractious relations between the two countries over how the Northern Irish border should be managed once Britain leaves the EU. It comes just a day after Theresa May’s de facto deputy, David Lidington, travelled to Dublin to hold talks with his Irish counterpart, Simon Coveney, in a bid to improve relations between the two governments.

But speaking within hours of the visit, Mr Varadkar described the relationship between the two countries as “fraying”. He told Irish broadcaster RTE: “Brexit has undermined the Good Friday Agreement and is fraying the relationship between Britain and Ireland. “Anything that pulls the communities apart in Northern Ireland undermines the Good Friday Agreement, and anything that pulls Britain and Ireland apart undermines that relationship.” The warning comes despite Mr Coveney having claimed a deal between the UK and the EU was “very close”.

Read more …

Many sides will call for this.

UK Business Leaders Call For Second Brexit Vote (BBC)

More than 70 business leaders have signed a letter to the Sunday Times calling for a public vote on the UK’s Brexit deal. The chief executive of Waterstones and former Sainsbury’s boss Justin King are among those saying a “destructive hard Brexit” will damage the UK economy. A group called Business for a People’s Vote will launch on Thursday. A Downing Street source told the BBC the Prime Minister was clear that there would be no new referendum. The letter was coordinated by The People’s Vote campaign, which wants a ballot on whether to accept the terms of the UK’s departure from the EU. Richard Reed, co-founder of Innocent Drinks, Lord Myners, the former chairman of Marks and Spencer and Martha Lane Fox, the founder of Lastminute.com, also signed the letter.

It reads: “The business community was promised that, if the country voted to leave, there would continue to be frictionless trade with the EU and the certainty about future relations that we need to invest for the long term. “Despite the Prime Minister’s best efforts, the proposals being discussed by the government and the European Commission fall far short of this. “The uncertainty over the past two years has already led to a slump in investment.” The letter concludes: “We are now facing either a blindfold or a destructive hard Brexit. “Given that neither was on the ballot in 2016, we believe the ultimate choice should be handed back to the public with a People’s Vote.”

Read more …

The only true Brezit reality. Merkel’s departure is a far bigger issue for Europe.

Brexit Is Just A Sideshow For An EU Beset By Problems On All Sides (G.)

There is a weariness to the coterie of diplomats and officials based in Brussels intimately involved in the negotiations over the United Kingdom’s withdrawal from the European union. Privately they describe it as “Brexit fatigue”, the result of second-guessing a chaotic situation in Westminster for two years, and working through the summer in response to the demand from the Brexit secretary, Dominic Raab, for continuous negotiations. These officials from the 27 other EU member states were picked as the brightest and the best for the existential crisis of the time, but the hard truth for these ambitious men and women is that the crisis in question is no longer Brexit.

“You go to the capitals, you can see that, because no one talks about it any more,” said Fabian Zuleeg, chief executive of the leading EU thinktank, the European Policy Centre. Speaking to his parliament on his return to Madrid from the recent leaders’ summit in Brussels, Spain’s prime minister, Pedro Sánchez, put it succinctly: “The British spend 24 hours a day thinking about Brexit and the Europeans think about it for four minutes every trimester.” While the UK’s chaotic withdrawal has become a dreary process to be managed, the EU is being dealt hammer blows from elsewhere – from crises that really could make or break the bloc, along with many diplomatic careers.

Foremost on the list of problem zones right now is Italy. “Nothing and nobody, no big or small letter will make us backtrack,” the country’s deputy prime minister, Matteo Salvini, and leader of the far-right League, told his followers in a Facebook video made in his office in Rome on Friday. “Italy will no longer be a slave and will no longer kneel down.”

Read more …

Let’s build a few highways to nowhere too.

“Posh Ghost Towers”: Gloom Spreads Over London Housing Market (DQ)

After decades of mind-boggling growth, home prices in metropolitan London, according to official numbers, started to fall this year, if barely. Between March and September, they slid 2.3%. But it’s a lot worse in the most expensive parts of the city: Prices in central London have already dropped 15% since 2014, according to James Hyman, head of the residential agency division at Cluttons. He expects another 7% drop over the next year and a half. And the total volume of transactions has fallen by a fifth, according to Residential Analysts. In 2014, a change in the stamp duty made buying high-end homes in the UK more costly. In London, the city that hosts the highest number of super-rich individuals per capita in the world, high-end homes are the staple product.

And it’s getting harder and harder to offload them: The Guardian reported that over half of the 1,900 ultra-luxury apartments built in London last year failed to sell. This freeze at the high end is fueling concerns that the city would be left with dozens of “posh ghost towers.” The newest phantom skyscraper is London’s Centre Point Tower, a 33-story office building from the 1960s that was recently converted into multi-million-pound luxury apartments. But demand is anemic and the developer behind the project, Almacantar, has all but given up trying to sell the flats after receiving too many “detached from reality” lowball offers. Until conditions improve, half of the tower’s 82 flats will lie empty.

Yet even as demand for upscale real estate in London fades, there’s little sign of any slow down in the construction of luxury apartments, meaning there will be an even greater glut of upscale real estate in the near future. That’s likely to further exacerbate the fall in prices. It’s the latest in a long line of reality checks for London. Clearly, those at the thin upper crust of the global wealth and income scale — just about the only people left who can afford to buy residential property in London these days — either have less money to spend on over-priced high-end London real estate or are splashing it elsewhere, including in other parts of the UK.

Read more …

Russiagate is a non-story kept alive by papers and TV stations.

33 Trillion More Reasons Why New York Times Gets Russiagate Wrong (CN)

Even more damning evidence has come to light undermining The New York Times‘ assertion in September that Russia used social media to steal the 2016 election for Donald Trump. The Times‘ claim last month that Russian Facebook posts reached nearly as many Americans as actually voted in the 2016 election exaggerated the significance of those numbers by a factor of hundreds of millions, as revealed by further evidence from Facebook’s own Congressional testimony. Further research into an earlier Consortium News article shows that a relatively paltry 80,000 posts from the private Russian company Internet Research Agency (IRA) were engulfed in literally trillions of posts on Facebook over a two-year period before and after the 2016 vote.

That was supposed to have thrown the election, according to the paper of record. In its 10,000-word article on Sept. 20, the Times reported that 126 million out of 137 million American voters were exposed to social media posts on Facebook from IRA that somehow had a hand in delivering Trump the presidency. The newspaper said: “Even by the vertiginous standards of social media, the reach of their effort was impressive: 2,700 fake Facebook accounts, 80,000 posts, many of them elaborate images with catchy slogans, and an eventual audience of 126 million Americans on Facebook alone.” The paper argued that 126 million was “not far short of the 137 million people who would vote in the 2016 presidential election.”

But Consortium News, on Oct. 10, debunked that story, pointing out that reporters Scott Shane and Mark Mazzetti failed to report several significant caveats and disclaimers from Facebook officers themselves, whose statements make the Times’ claim that Russian election propaganda “reached” 126 million Americans an exercise in misinformation. [..] only an estimated 29 million FB users may have gotten at least one story in their feed in two years. The 126 million figure is based only on an assumption that they shared it with others, according to Stretch. Facebook didn’t even claim most of those 80,000 IRA posts were election–related. It offered no data on what proportion of the feeds to those 29 million people were.

In addition, Facebook’s Vice President for News Feed, Adam Moseri, acknowledged in 2016 that FB subscribers actually read only about 10 percent of the stories Facebook puts in their News Feed every day. The means that very few of the IRA stories that actually make it into a subscriber’s news feed on any given day are actually read.

Read more …

Completely insane. Next time it might be police, military, mercenaries. Julian’s supporters need to stand watch 24/7 now.

Break-in Attempted at Assange’s Residence in Ecuador Embassy (CN)

An attempted break-in at Julian Assange’s residence inside the Ecuadorian Embassy in London on Oct. 29, and the absence of a security detail, have increased fears about the safety of the WikiLeak’s publisher. Lawyers for Assange have confirmed to activist and journalist Suzie Dawson that Assange was awoken in the early morning hours by the break-in attempt. They confirmed to Dawson that the attempt was to enter a front window of the embassy. A booby-trap Assange had set up woke him, the lawyers said. Scaffolding has appeared against the embassy building in the Knightsbridge section in London which “obscures the embassy’s security cameras,” the lawyers said.


Scaffolding near balcony where Assange has appeared. (Sean O’Brien)

On the scaffolding electronic devices, presumably to conduct surveillance, can be seen, just feet from the embassy windows. Later on the day of the break-in, Sean O’Brien, a lecturer at Yale University Law School and a cyber-security expert, was able to enter the embassy through the front door, which was left open. Inside he found no security present. Someone from the embassy emerged to tell him to send an email to set up an appointment with Assange. After emailing the embassy, personnel inside refused to check whether it had been received or not. O’Brien then noticed more scaffolding being erected and observed the devices, which he photographed. Though a cyber-security expert, O’Brien said he could not identify what the devices are.


One of the apparent surveillance devices. (Sean O’Brien.)

“I’ve never seen devices quite like this, and I take photos of surveillance equipment often,” O’Brien said. “There were curious plastic tubes with yellow-orange caps, zip-tied to the front. I have no idea what these are but they seem to have equipment inside them.” The devices are pointed towards the embassy, where all the blinds were open, and not the street, he said. “The surveillance devices in the photos reveals no manufacturer branding, serial numbers or visible device information,” Dawson said. “The combination of the obscuring of the street-facing surveillance cameras and the installation of surveillance equipment pointed into instead of away from the Embassy, is alarming.”

[..] On Thursday the government suddenly barred all access to Assange visitors, including his legal team until next Monday, raising fears that no witnesses could be present should there be an attempt to abduct Assange over the weekend.

Read more …

Oct 242018
 
 October 24, 2018  Posted by at 9:18 am Finance Tagged with: , , , , , , , , , , ,  


Paul Gauguin Fatata te Miti (By the sea) 1892

 

The Stock Market Faces ‘Unlimited Downside Risk,’ Warns Veteran Trader (MW)
Former Fed Chairman Paul Volcker Thinks ‘We’re In A Hell Of A Mess’ (CNBC)
Trump Says Saudi Crown Prince Could Have Been Involved In Khashoggi Killing (G.)
How Congress Can Force Trump’s Hand On Saudi Sanctions (CNBC)
Trump Has “Strongest Negotiating Position Ever” With China – Kyle Bass (ZH)
China Talks Up Stock Market Amid Concerns About Share-Backed Loans (CNBC)
A “Blue Wave” in Midterm Elections? Not So Fast (Rickards)
It’s Too Late To Prepare UK Borders For No-Deal Brexit – Watchdog (Ind.)
UK Could Be Forced To Charter Ships To Bring In Food And Supplies (Ind.)
Ecuador Likely To Turn Assange Over To US – Ex-President Correa (RT)
Ecuador Won’t Help Assange Leave UK Embassy Safely – Foreign Minister (RT)

 

 

In the absence of price discovery you get unlimited.

The Stock Market Faces ‘Unlimited Downside Risk,’ Warns Veteran Trader (MW)

The stock market opened with a resounding thud on Tuesday morning, as the Dow Jones, at one point, had shed more than 500 points. The S&P 500 and the Nasdaq Composite endured even harder hits, down more than 2% each. So, you must positioning yourself for that tasty bounce we’ve grown accustomed to over the course of this stubborn bull market. Well, don’t, warns J.C. Parets, the technical analyst behind the All Star Charts blog. “There is unlimited downside risk in the market right now and I don’t think it’s being respected,” he wrote. “It’s not until afterwards that they ask, ‘what happened?’” When the bottom falls out, that’s when the blaming begins.

“The Fed, the Trump, the ebola, or whatever excuse du jour is being regurgitated on the various media outlets,” Parets wrote. “The only one to blame is ourselves.” He pointed to several divergences that should make clear to investors just how precarious the market situation is at these current levels. The first one is what we’re seeing in this chart of the S&P vs. the rest of the world. “The divergence is telling,” Parets explained in his blog post. “The last time we saw this was at the 2015 market top.”

Another divergence we haven’t seen since the 2015 top, and, before that, the 2007 top, is the relationship between consumer staples and the broader market. “When stocks fall, staples get a sympathy bid and outperform due to that very same lower beta and their defensive qualities,” Parets said. “With new highs in stocks, bulls want to see new lows in relative strength for staples. That’s a normal environment. It’s when they diverge that it is evidence of something changing.”

And finally, Parets took a look at what Dow Theory is telling us. This idea here is that when either industrial or transportation stocks make new highs, it’s important for the other to follow. When that confirmation doesn’t come, there’s cause for concern. “We saw these divergences lead to collapses in 2000, 2007 and more recently a severe selloff in 2015,” Parets wrote. “You can see that with new highs in the Dow this month, transports put in a lower high, typical behavior at market tops.”

Read more …

Mostly critical of the Fed, of which he was the chair.

Former Fed Chairman Paul Volcker Thinks ‘We’re In A Hell Of A Mess’ (CNBC)

Former Federal Reserve Chairman Paul Volcker, who has reached legend status in the world of central banking, isn’t optimistic about current conditions. When Volcker looks around now, he sees “a hell of a mess in every direction,” including a lack of basic respect for government institutions, a current Fed that seems to be following a completely arbitrary benchmark and a “swamp” in Washington run by plutocrats. “At least the military still has all the respect. But I don’t know, how can you run a democracy when nobody believes in the leadership of the country?” Volcker asks New York Times columnist and CNBC “Squawk Box” co-anchor Andrew Ross Sorkin in a column for the newspaper’s DealBook section.

“Tall Paul” is most known for willfully taking the country into recession in the early 1980s to finally defeat the inflation that had been strangling the economy. Since then, he’s lent his name to the “Volcker rule” part of banking reform legislation that restricts risk-taking at big Wall Street institutions. In a book set for release Oct. 30, Volcker laments the current state of conditions, particularly the monied interests eating away at the system of governing. “There is no force on earth that can stand up effectively, year after year, against the thousands of individuals and hundreds of millions of dollars in the Washington swamp aimed at influencing the legislative and electoral process,” he writes, according to Sorkin.

Volcker, in ailing health but not short of opinions, also seems unhappy with the Fed itself. Though it’s unusual for former chairmen to comment on Fed matters, Volcker said there appears to be no “theoretical justification” for its 2 percent inflation target. He said the Fed is just one of the institutions in which people have lost confidence. And he also dispels with the myth that presidents historically haven’t tried to influence interest rates. Recounting a 1984 meeting he had with former President Ronald Reagan, then-chief of staff James Baker flatly told Volcker, “The president is ordering you not to raise interest rates before the election.” “I was stunned,” Volcker said.

Read more …

Developing as I expected. Adapting as evidence comes in.

Trump Says Saudi Crown Prince Could Have Been Involved In Khashoggi Killing (G.)

Donald Trump has said for the first time that Saudi crown prince Mohammed bin Salman could have been involved in the operation to kill dissident journalist Jamal Khashoggi noting that “the prince is running things over there” in Riyadh. The comments, in an interview with the Wall Street Journal, appeared to mark a shift in the president’s view of Khashoggi’s murder on 2 October in the Saudi consulate in Istanbul. He has hitherto appeared to take Saudi royal denials of involvement at face value. But on a day the state department announced it would sanction Saudi officials implicated in the writer’s death, the president appeared to give the benefit of the doubt to King Salman but not necessarily to his powerful son.

Asked about the crown prince’s possible involvement, Trump said: “Well, the prince is running things over there more so at this stage. He’s running things and so if anybody were going to be, it would be him.” Trump told the Wall Street Journal he had closely questioned Prince Mohammed about Khashoggi’s murder, posing questions repeatedly and “in a couple of different ways”. “My first question to him was, ‘Did you know anything about it in terms of the initial planning’,” Trump said. Prince Mohammed replied that he didn’t, Trump said. “I said, ‘Where did it start?’ And he said it started at lower levels.” Asked if he believed the denials, the president paused for several seconds. “I want to believe them. I really want to believe them,” he said.

Twenty-one Saudis will have their US visas revoked or be made ineligible for US visas over the journalist’s killing, the state department announced, as the Trump administration struggled to regain the initiative amid the uproar over a murder that has thrown the US-Saudi alliance into question. Mike Pompeo, the US secretary of state, said other measures were being considered, including sanctions: “These penalties will not be the last word on the matter from the United States. “We’re making very clear that the United States does not tolerate this kind of ruthless action to silence Mr Khashoggi, a journalist, through violence,” Pompeo said. “Neither the President nor I am happy with this situation.”

Read more …

For now, they’re in no position to force anything. They’re in recess. By the time they come back the situation will have changed a lot.

How Congress Can Force Trump’s Hand On Saudi Sanctions (CNBC)

As the world awaits the truth, or something close to it, about Saudi journalist Jamal Khashoggi’s killing inside the Saudi consulate in Istanbul, one of the Gulf’s most stalwart security relationships hangs in a precarious position. Congress and the White House have sharply different views on how to approach the diplomatic crisis, now in its third week. Legislators are loudly calling for sanctions on weapons sales on Saudi Arabia and a robust response if the government in Riyadh is proven to have been behind Khashoggi’s death. But while President Donald Trump has expressed his desire to get to the bottom of the case, he’s appeared more reluctant to punish his allies in the kingdom, whose support is vital in carrying out his agenda to isolate Iran and keep oil prices stable ahead of the November midterm elections.

[..] a former U.S. national security official with extensive experience in the Gulf, who preferred to remain anonymous due to the sensitivity of the situation, warned that after the midterm elections, the mood toward the Saudis would be much more aggressive than in the past. Whatever the election’s outcome, “I think either way there will be a more skeptical — if not hostile — relationship with Saudi Arabia in the legislature,” the former official said. “And the relatively free hand that the administration gave is going to be a little more constrained. “The Saudis are very lucky that Congress is in recess for campaigning — if Congress were in session there would be hearings, and they would not be good hearings.”

Read more …

“$40 trillion worth of credit, somewhere between 40 and 50, no one knows, in a system with only a couple trillion dollars’ worth of equity..”

Trump Has “Strongest Negotiating Position Ever” With China – Kyle Bass (ZH)

The Trump administration needs to level the playing field on trade, Bass said, and “it looks like they are doing so.” And it certainly helps that Trump’s trade push, while initially reviled by globalists in both parties, has since won the reluctant support of both Democrats and Republicans as the US economy has largely escaped any serious repercussions so far. But ultimately, the arbiter of government money and influence over the domestic economy is the yuan-dollar exchange rate. And as the yuan sinks, foreign ownership of Chinese assets is falling as the PBOC runs “a structural and more permanent” current-account deficit with the rest of the world as the US continues to institute trade barriers.

“So they can change a lot of things domestically, but their – the arbiter of the Chinese plan is their cross rate or their exchange rate with the rest of the world. China Inc.’s working capital account is now going South because they’re running what we believe to be a structural and more permanent deficit on the current account. And so, ie, their working capital, their dollar balance whether it’s dollars, euros, yen or pounds, it’s mostly dollars.” All of this instability risks toppling the mountain of bad debt upon which China’s economic growth in recent years has depended. Already, corporate defaults have surged in 2018 to the highest level on record.

With all of these factors at play, China is running what Bass described as “the largest financial experiment the world has ever seen.” “And they’ve got, you know, $40 trillion worth of credit, somewhere between 40 and 50, no one knows, in a system with only a couple trillion dollars’ worth of equity. And so China is running the largest financial experiment the world has ever seen. And the economic tides have turned negative for them. If you notice the narrative amongst the United States, it’s actually a bipartisan narrative whereby you’re seeing both sides of the aisle pushing back on China taking advantage of the US.”

Read more …

Financial innovation.

China Talks Up Stock Market Amid Concerns About Share-Backed Loans (CNBC)

A flurry of comments from Chinese officials over the last few days have been aimed at pledging support for private businesses with financing problems, as Beijing seeks to ease fears of a sell-off in stocks. The worry is that a drop in stock prices would force the selling of shares used as collateral, and lead to further market declines in China. In one of Beijing’s latest interventions, the Securities Association of China announced Monday night that 11 securities firms will form a $100 billion yuan ($14.5 billion) asset management plan to take some pressure off “share pledges” for companies with good development prospects.

In share pledge financing, companies use a percentage of their equities as collateral to obtain loans. If the stock price falls far below a level that was agreed upon, the lender will sell the shares to obtain funds, leading to the destabilization of equity markets. Despite Beijing’s latest move and other recent measures to support local businesses, stocks closed sharply lower Tuesday, giving back some gains from the rally in the previous two sessions. [..] The prevalence of share pledges is partly the result of Beijing’s own actions. Chinese banks prefer to lend to state-owned enterprises, while the government continues to crack down on shadow banking — the primary alternative for private businesses. As a result, many Chinese companies, especially small and mid-sized businesses, have turned to share pledges.

Read more …

I don’t see it either. And Rickards is right about media coverage of Trump.

A “Blue Wave” in Midterm Elections? Not So Fast (Rickards)

Tuesday, Nov. 6, is the date of the U.S. midterm elections that will determine control of the U.S. House of Representatives and U.S. Senate. The outcome of those contests will determine whether Trump is allowed to finish his term or not (see below for more on that, and which outcome is most likely). Let’s dive in… Whatever you think of Trump personally, we all know how the mainstream media treat Donald Trump. The coverage from The Washington Post, The New York Times, NBC and other outlets is relentlessly and exclusively negative. The media campaign against Trump is not normal bias; it’s more like a political jihad. Trump gets no credit for reducing unemployment, cutting taxes, boosting growth, achieving a breakthrough with North Korea, defeating ISIS and standing up to the dictators in Syria and Venezuela.

Meanwhile, Trump is hammered continually on the bogus Russia collusion story while Robert Mueller is cheered on in his fishing expedition into Trump’s personal finances and unrelated problems of Trump associates. The mainstream pundits are predicting a “blue wave” that will put the Democrats in control of the House of Representatives and lead directly to impeachment proceedings early in 2019. That’s been the mainstream narrative for months. Basically, the idea is that Democratic voters are more motivated than Republican voters because their hatred of Trump is more powerful than support for Trump among Republican voters. The Kavanaugh confirmation process only inflamed Democratic passions even further and should help the turnout.

Read more …

It’s too late for many things.

It’s Too Late To Prepare UK Borders For No-Deal Brexit – Watchdog (Ind.)

Britain has left it too late to prepare its borders for a no-deal Brexit, which would be a gift for organised criminals and chaotic for traders, the UK’s spending watchdog warns Theresa May today. Only one of 12 new “critical systems” is likely to be ready after planning was undermined by “political uncertainty and delays in negotiations”, the National Audit Office (NAO) has concluded. The failure would open up “weaknesses or gaps in the enforcement regime” which “organised criminals and others are likely to be quick to exploit”, its highly-critical report says. And the problem will be made worse by the UK losing full access to EU security databases after Brexit, which police chiefs have already warned will weaken the fight against crime.

Meanwhile, firms would be hit with delays for goods crossing the border while rogue operators would escape tax and regulatory checks, the report predicts. Diane Abbott, Labour’s shadow home secretary, seized on the findings as “painting a damning picture on the government’s lack of security preparation for Brexit”. She said: “The British people will never forgive this government if its in-fighting and political jockeying led them to neglect border security and the international co-operation needed to tackle serious, organised crime and terrorism.” And the Federation of Small Businesses said ministers were living in “dreamland” if they believed the ability to track and examine goods at the border would be in place for leaving the EU next March.

Read more …

No-deal Brexit will be disastrous, much more than anyone realizes. Everything still looks normal, after all.

UK Could Be Forced To Charter Ships To Bring In Food And Supplies (Ind.)

The UK could be forced to charter ships to bring in supplies in the event of a no-deal Brexit, ministers have been warned. The cabinet was briefed on plans for alternatives if new customs controls in France block the Dover-Calais route, potentially causing chaos in the English Channel, according to the Financial Times. Transport secretary Chris Grayling reportedly discussed the possibility of hiring entire ships, or securing cargo space in vessels, to bring food, medicines and other supplies in through alternative ports. David Lidington, the cabinet office minister, told his colleagues the Dover-Calais route could only run at a maximum of 25 per cent of its capacity under a no-deal scenario.

A department for transport spokesperson said: “We remain confident of reaching an agreement with the EU, but it is only sensible for government and industry to prepare for a range of scenarios. “We are continuing to work closely with partners on contingency plans to ensure that trade can continue to move as freely as possible between the UK and Europe.” Labour MP David Lammy, who is pushing for Britain to stay in the European Union, said: “Brexit has become like a declaration of war on ourselves. Emergency ships will be chartered for food and medicine if we leave the EU with no deal. “But at least when we’re using ration books and running out of drugs, we’ll have taken back control.”

Read more …

Not the first time Correa says this.

Ecuador Likely To Turn Assange Over To US – Ex-President Correa (RT)

The Ecuadorian government might eventually hand the Wikileaks co-founder Julian Assange to Washington even though it is legally obliged to protect him, former Ecuadorian president Rafael Correa told RT. “I believe they are going to turn over Assange to the US government,” Correa, who was leading the Latin American country at the time when it granted the Wikileaks co-founder asylum, told RT, calling the policy of the current Ecuadorian government “a shame.” “The Ecuadorian state has to protect Assange’s rights, he is not just an asylum [seeker]; he is a citizen,” Correa said. Granted Ecuadorian citizenship back in 2017, Assange is now supposed to be protected by the Ecuadorian constitution. But the current government is too desperate for Washington’s favor, Correa believes.

The Wikileaks co-founder might be a bargaining chip in an agreement between the Ecuadorian authorities and US Vice President Mike Pence, who visited the Latin American country and met with President Lenin Moreno earlier this year. Quito’s behavior shows that it has “absolutely submitted” to Washington without actually earning any favor, Correa said. His comments came a week after two US lawmakers called on Moreno to “hand Assange over to the proper authorities,” calling him “a dangerous criminal and a threat to global security.” In the letter, representatives Eliot Engel (D-NY) and Ileana Ros-Lehtinen (R-FL) spoke about the US willingness “to move forward in collaborating” with Moreno’s government, mulling enhanced economic cooperation and development aid from the US. They portrayed Assange as an obstacle on the way to a bright future together for the two nations.

Read more …

Wondering why his lawyers sued Ecuador. Who sues their host? Looks like they know something’s afoot.

Ecuador Won’t Help Assange Leave UK Embassy Safely – Foreign Minister (RT)

Ecuador will not help Julian Assange leave the UK, the country’s foreign minister said, claiming its only duty was to look after the WikiLeaks founder’s “well-being” after Assange sued them for restricting his rights and freedoms. Ecuadorian FM Jose Valencia told Reuters that Ecuador was not responsible for helping Assange leave the London embassy safely, even though the Inter-American Court on Human Rights recently found them responsible for protecting him from US extradition. UK authorities are poised to apprehend Assange should he step outside the building. Assange accused the Ecuadorian government of violating his rights after they drew up a “Special Protocol” barring him from speaking about politics or involving himself in the political affairs of other countries.

The list of restrictions runs to nine pages and permits authorities to confiscate the property of visitors, who must be approved in advance, submit their social media profiles, and turn over the make, model, serial and IMEI numbers of their mobile devices. The conditions added insult to injury with a threat to turn Assange’s cat over to a shelter if he fails to clean up after it adequately. The cat has been Assange’s only companion during nearly seven months in which the Ecuadorian government has kept him cut off from the outside world, jamming his phone lines, scrambling wifi signals, and banning almost all visitors. The “Special Protocol” also states that Ecuador will cease paying for Assange’s food, medical care, laundry, and all but the most basic needs on December 1.

Between this deadline, the limitations on his speech, and the Foreign Minister’s statement, the government appears to be stepping up the pressure to force Assange to leave on his own. In July, the Inter-American Court on Human Rights ruled that Ecuador must protect Assange from US extradition. The ruling came just weeks after a meeting between Ecuadorian President Lenin Moreno and US VP Mike Pence during which they were rumored to have reached an agreement regarding handing over the WikiLeaks founder.

Read more …

Oct 182018
 
 October 18, 2018  Posted by at 9:21 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Glass 1914

 

Bondholders Lost Nearly $1 Trillion Since September 26 (CR)
The US Housing Recovery Is Built On Quicksand (MW)
Fed Indicates It’s Staying The Course On Rate Hikes (CNBC)
Trump Is Completely Misguided On Interest Rates (Colombo)
China Not Manipulating Currency But Lacks Transparency – Mnuchin (AFP)
Bank of England Raises Alarm Over Surge In High-Risk Lending (G.)
Theresa May Opens Door To Longer Brexit Transition Period (Ind.)
Germany And France Start To Draw Up No-Deal Brexit Contingency Plans (G.)
Congress Members Pen Letter Demanding Ecuador Hand Over Julian Assange (GWP)
Stephen Hawking: Time Travel More Likely Than The Existence Of God (F.)
Largest, Oldest ‘Living Thing’ On Earth Is Dying (Ind.)

 

 

Interest rates.

Bondholders Lost Nearly $1 Trillion Since September 26 (CR)

At the Daily, we’ve been warning readers for months that rising interest rates will lead to an exodus of investors from the bond markets. Income Exodus (or Income Extermination) is when bond investors get “exterminated” by rising interest rates. As interest rates rise, bond prices drop. So when interest rates rise rapidly (like they are now), bond prices drop a lot. Now, we’re seeing this exodus play out in real time. Since September 26, bondholders lost nearly $1 trillion according to the Bloomberg Barclays Multiverse Index… This index tracks the market value of publicly traded bonds around the world. The reason it’s down is simple: The rate on the benchmark 10-year U.S. Treasury has risen from 2.8% to 3.2% since August 24.

Bloomberg says the bond rout could spark an even worse sell-off than in 1976, the worst year for bond returns over the last four decades. And there’s good reason for fear… The Federal Reserve has already hiked rates three times in 2018… with plans for one more rate hike before the end of the year. And Fed chair Jerome Powell has indicated at least three more rate hikes in 2019 and one more in 2020. We’ve warned you that higher rates were coming for more than a year now. Hopefully, you’ve followed our steps and prepared for Income Exodus… because it’s here.

Read more …

On debt.

The US Housing Recovery Is Built On Quicksand (MW)

Home price gains since 2013 have been much less impressive than you think. While reports show that home prices have recovered nationwide, the increase has been uneven and not as strong as you have been led to believe. Consider RealtyTrac’s latest report on 148 major U.S. metropolitan areas. The average gain on the sale of property was 30%. Not bad, except the average holding period was just over eight years. That comes to an annual price increase of 3.75%. High-yield corporate bonds would have earned you considerably more. Taken together, the average gain for all metros is deceptive. While the average price gain in booming Silicon Valley was a remarkable 116%, it was a pitiful 2% in El Paso, Texas, 10% in Cleveland, and 15% in Chicago. Even the price rise in the New York City metro area was just 25%. The table below shows the great disparity:

At the same time, I am greatly troubled by the consistently weak volume of home sales. During the insane bubble years, sales volume rocketed along with prices. In the hottest metros, desperate buyers dove into the market in record numbers. This has not happened since 2013. Statistics from brokerage Trulia.com show that sales volume has declined substantially in all major metros from the torrid pace of 2005-2006. Most analysts have attributed the weak sales, as well as rising prices, to a lack of available inventory. The number of homes listed for sale has indeed fallen dramatically over the past five years, but look closer: Trulia’s Inventory and Price Watch, first published in March 2016, divides homes for sale into three segments: (1) starter homes — the least-expensive homes for first-time buyers; (2) trade-up homes, and (3) premium homes.

Read more …

What will a normal economy look like?

Fed Indicates It’s Staying The Course On Rate Hikes (CNBC)

Federal Reserve officials remain convinced that continuing to gradually increase interest rates is the best formula to preserve a steady economy, according to minutes released Wednesday of the central bank’s most recent policy meeting. That may not please President Donald Trump, who has been vocal in his criticism of the central bank’s actions. A summary of the Sept. 25-26 Federal Open Market Committee session reflected both confidence in the rate of economic growth and some hesitancy over the impact that tariffs might have on the future path.

Ultimately, the committee unanimously voted to approve a quarter-point hike to its benchmark rate target, with members indicating that more increases are on the way. The increase took the Fed’s overnight target to a range of 2 percent to 2.25 percent. “With regard to the outlook for monetary policy beyond this meeting, participants generally anticipated that further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2 percent over the medium term,” the minutes read.

Read more …

“There is no means of avoiding the final collapse of a boom brought about by credit expansion.”

Trump Is Completely Misguided On Interest Rates (Colombo)

President Donald Trump has been making a big stink about the Federal Reserve’s rate hikes lately. Last week, after the Dow plunged nearly 2,000 points, he blamed the Fed for it, saying “I think the Fed is making a mistake. They’re so tight. I think the Fed has gone crazy…” On Tuesday, Trump said that the Federal Reserve is “my biggest threat.” Since he became president, Trump has been praising the soaring stock market (something I said was very dangerous to do), viewing it as evidence of the success of his administration’s policies. Trump is worried that rising interest rates will put an end to the stock market boom, which will make him look bad.

Unfortunately, the president is extremely misguided about how interest rates work and the role they play in creating booms in the stock market and economy. As I’ve explained in great detail, the U.S. stock market has been booming because the Fed held interest rates at record low levels for a record length of time after the Great Recession. This Fed-driven stock market boom is an unsustainable bubble instead of a genuine, organic boom. The fact that the Fed held rates at record low levels and inflated a credit and asset bubble meant that a crisis was already “baked into the cake” whether the Fed raised interest rates or not. Once a credit expansion or bubble is already in motion, the actions of the central bank from that point on can only determine what type of crisis occurs when the credit expansion ends – not whether a crisis will occur or not.

The Austrian School economist Ludwig von Mises said it best in his book Human Action: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

Read more …

Negotiating.

China Not Manipulating Currency But Lacks Transparency – Mnuchin (AFP)

Beijing is not a currency manipulator but China’s exchange rate practices and the yuan’s recent decline are of “particular concern,” US Treasury Steven Mnuchin said Wednesday. In putting Beijing and five other US trading partners on notice, the Treasury again refrained from escalating a fight over China’s currency as US President Donald Trump had once pledged to do on the campaign trail. “Of particular concern are China’s lack of currency transparency and the recent weakness in its currency,” Mnuchin said in releasing a twice-yearly report to Congress on how country’s manage exchange rates and trade.

“These pose major challenges to achieving fairer and more balanced trade and we will continue to monitor and review China’s currency practices, including through ongoing discussions with the People’s Bank of China.” Washington has long argued that China keeps its currency artificially low to make its exports more competitive but in recent years the yuan or renminbi (RMB) has strengthened and is viewed by economists as more in line with economic fundamentals. Still, as US interest rates have risen, the US dollar has strengthened further, which makes American exports more expensive.

Read more …

Yield.

Bank of England Raises Alarm Over Surge In High-Risk Lending (G.)

The Bank of England has issued a stark warning over the rapid growth in lending to indebted companies around the world, drawing parallels with the US sub-prime mortgage market that triggered the 2008 financial crisis. Threadneedle Street said Britain was not immune from a global boom in risky lending that had alarmed financial regulators around the world this year, with the US market for such loans more than doubling since 2010 to surpass $1tn (£763bn). “The global leveraged loan market was larger than – and was growing as quickly as – the US sub-prime mortgage market had been in 2006,” the central bank said of the rapid growth in leveraged loans, which are defined as loans to firms that already have debts worth more than four times their earnings.

The Bank’s financial policy committee (FPC), set up after the crisis to assess the risks to UK financial stability, noted that lending standards were falling and that it would more closely monitor the risks to Britain. Though far from the scale of the US market, which is the largest in the world, gross issuance of leveraged loans by UK companies reached a record £38bn in 2017, while a further £30bn has been issued so far this year. Taken together with high-yield bonds, which are debts of firms with weaker credit ratings, the Bank estimates the total stock of debt to riskier firms in Britain was worth about a fifth of all lending to UK companies.

Read more …

Which of course the Brexiteers don’t want. Ministers will leave her government.

Theresa May Opens Door To Longer Brexit Transition Period (Ind.)

Theresa May has opened the door to an even longer Brexit transition period, setting herself on yet another collision course with Tory Eurosceptics and potentially growing the EU divorce bill by billions. The prime minister brought up the possibility of an extension during meetings with EU leaders in Brussels on Wednesday as she sought to find a way to break the deadlock in negotiations. The period – during which the UK would stay completely tied to EU rules without any say on them – is hugely unpopular with Brexiteers, who believe it would make Britain a “vassal state” of the bloc. European Parliament president Antonio Tajani, who was in the room while Ms May spoke with leaders, said the prime minister had listed a longer transition as a possible solution to the current impasse.

“It was mentioned – both sides mentioned the idea of an extension of a transition period as one possibility that is on the table and would be looked into,” Mr Tajani told reporters after Ms May’s address. “Theresa May during her speech said it’s possible to achieve an agreement also on a transition period, but not with a clear position on the timing.” With a smile, he added: “This Council is the transition Council.” The prime minister is also understood to have brought up an extension to the period in a private bilateral meeting with Council president Donald Tusk earlier in the afternoon. One Brussels official told The Independent that the UK’s negotiators had been sounding out a possible extension to the transition “for months” in talks.

Read more …

“Britons would be “obliged to present a visa to enter French territory and to hold a residence permit to remain there..”

Germany And France Start To Draw Up No-Deal Brexit Contingency Plans (G.)

Germany and France are starting to step up their preparations for a no-deal Brexit even though both publicly insist an agreement with the UK over the terms of its departure from the EU can still be achieved. Angela Merkel revealed for the first time on Wednesday that Germany was drawing up contingency plans, saying the government had started making “suitable preparations” for the possibility of Britain leaving with no accord. While there was there was still a chance for a deal, it was “only fitting as a responsible and forward-thinking government leadership that we prepare for every scenario”, the German chancellor told MPs in Berlin. “That includes the possibility of Britain leaving the EU without an agreement.”

France has published a draft bill that would allow the government to introduce new legal measures to avoid or mitigate the consequences of a hard Brexit by emergency decree, as opposed to parliamentary vote, within 12 months of the law being passed. It said those consequences would include include Britons needing visas to visit and UK nationals resident in the country being in an “irregular” legal situation. Without emergency measures, British citizens living in France would become third-country nationals, the draft bill states, which would prevent them from holding jobs restricted to EU nationals and limit their access to healthcare and welfare.

Britons would be “obliged to present a visa to enter French territory and to hold a residence permit to remain there”, the bill’s preamble says. A no-deal Brexit would also mean “British citizens with a work contract under French law with a French employer could be asked for a document authorising them to work in France”.

Read more …

But Rand Paul still wants him to testify.

Congress Members Pen Letter Demanding Ecuador Hand Over Julian Assange (GWP)

Representatives Eliot L. Engel (D-NY), Ranking Member of the House Committee on Foreign Affairs, and Ileana Ros-Lehtinen (R-FL), Chair Emeritus of the Committee, have sent a letter to Ecuadorian President Lenín Moreno demanding that Julian Assange be handed over to authorities. The firm stance against press freedom comes as Ecuador is preparing to restore Assange’s communications — with strict limitations that will not allow him to properly continue his work as a publisher. The letter threatens that the United States will be unwilling to provide economic cooperation with Ecuador unless the WikiLeaks founder and political refugee is handed over.

“Many of us in the United States Congress are eager to move forward in collaborating with your government on a wide array of issues, from economic cooperation to counternarcotics assistance to the possible return of a United States Agency for International Development mission to Ecuador. However, in order to advance on these crucial matters, we must first resolve a significant challenge created by your predecessor, Rafael Correa – the status of Julian Assange,” the members wrote in their letter.

“Most recently, we were particularly disturbed to learn that your government restored Mr. Assange’s access to the Internet. On numerous occasions, Mr. Assange has compromised the national security of the United States. He has done so by publicly releasing classified government documents along with confidential materials from individuals connected to our country’s 2016 presidential election. As you yourself have noted, he has repeatedly used his standing in the international media to meddle in the affairs of foreign governments such as Spain and the United Kingdom. This has frayed Ecuador’s relations with like-minded governments. Mr. Assange also remains wanted by British authorities for a bail violation. It is clear that Mr. Assange remains a dangerous criminal and a threat to global security, and he should be brought to justice,” the letter states.

Read more …

“These laws may or may not have been decreed by God, but he cannot intervene to break the laws or they would not be laws.”

Stephen Hawking: Time Travel More Likely Than The Existence Of God (F.)

In Stephen Hawking’s universe there was no room for God, because the famous cosmologist came to believe that the entirety of existence was created out of, well… nothing. As he explains in his final book, “Brief Answers to the Big Questions,” before the Big Bang there was nothing, not even a God to create the universe. “I think the universe was spontaneously created out of nothing according to the laws of science,” Hawking writes. “There is no time for a creator to have existed in.” He goes on to explain that the only God who could be consistent with the laws of physics would be a deity who never directly influences the workings of the universe. “These laws may or may not have been decreed by God, but he cannot intervene to break the laws or they would not be laws.”

While the existence of God makes little sense to Hawking, he’s more open to the possibility of something that most people might consider much more far-fetched: time travel. Hawking famously held a party for time travelers but did not send out the invitations until after the party. No one showed up for the festivities. But the scientist writes that there is still some hope that traveling back in time could be possible according to the laws of the universe. He pegs this notion on the promise of something called “M theory” that suggests the universe may contain seven hidden dimensions in addition to the familiar four dimensions of space-time. “Rapid space travel and travel back in time can’t be ruled out according to our present understanding,” he writes. “Science fiction fans need not lose heart: there’s hope in M theory.”

Read more …

40,000 tree clones.

Largest, Oldest ‘Living Thing’ On Earth Is Dying (Ind.)

Scientists have warned that an ancient forest widely considered the largest single living thing in the world is dying, despite efforts to preserve it. The Pando aspen is an enormous expanse of 40,000 trees, all of which are clones with identical genetic compositions, meaning they are classified together as one individual. Thought to be up to 80,000 years old, the colony known as the “trembling giant” is a contender for the oldest organism as well as the heaviest and largest. In total the trees, which originate from a single underground parent clone, cover 43 hectares of Utah’s Fishlake National Forest. But in recent years a tragedy has been quietly unfurling. Despite their best efforts, scientists think this natural wonder that has lasted millennia may not survive a few decades of human interference.

“While Pando has likely existed for thousands of years – we have no method of firmly fixing its age – it is now collapsing on our watch,” said Professor Paul Rogers, an ecologist at Utah State University. After analysing Pando’s condition comprehensively, Professor Rogers and his colleague Professor Darren McAvoy examined a 72-year aerial photo sequence that revealed its steady decline. [..] As it has often proved difficult to measure the true extent of such enormous organisms, Pando has some contenders for the largest living thing – including massive fungi growing in Oregon and clonal colonies of underwater Neptune grass.

Read more …

Oct 162018
 
 October 16, 2018  Posted by at 9:15 am Finance Tagged with: , , , , , , , , , , ,  


M. C. Escher Doric columns 1945

 

Yemen On Brink Of ‘World’s Worst Famine In 100 Years’ (G.)
Humanity Is ‘Cutting Down The Tree Of Life’ (G.)
‘Hyperalarming’ Study Shows Massive Insect Loss (WaPo)
America’s Budget Deficit Jumps By 17% As Spending Surges (CNBC)
More Free Money: A Carry Trade in Liquidity (Mish)
Powell Has Lost His North Star, And The Fed Is Flying Blind (MW)
Facebook Paid £15.8 Million In UK Tax On £1.2 Billion In 2017 Revenues (BBC)
Ecuador To Assange: No Talking Politics, Pay Own Bills, Look After Cat (RT)
Brexit Deal Slipping To December Amid Deadlocked Talks (Ind.)
No-Deal Brexit Is ‘More Likely Than Ever Before’ – Tusk (Ind.)
Syria’s Chessboard (Hallinan)

 

 

As Stormy Daniels and Elizabeth Warren see their ‘cases’ blow up in their faces 3 weeks before the midterms, the best PR and legal teams that money can buy are framing a Khashoggi narrative nobody will be able to credibly deny. Or at least Erdogan is not showing his hand. But now that Pompeo’s in the region anyway, let’s put this on his agenda. 12 to 13 million at risk of starvation.

Yemen On Brink Of ‘World’s Worst Famine In 100 Years’ (G.)

Yemen could be facing the worst famine in 100 years if airstrikes by the Saudi-led coalition are not halted, the UN has warned. If war continues, famine could engulf the country in the next three months, with 12 to 13 million civilians at risk of starvation, according to Lise Grande, the agency’s humanitarian coordinator for Yemen. She told the BBC: “I think many of us felt as we went into the 21st century that it was unthinkable that we could see a famine like we saw in Ethiopia, that we saw in Bengal, that we saw in parts of the Soviet Union – that was just unacceptable. “Many of us had the confidence that would never happen again and yet the reality is that in Yemen that is precisely what we are looking at.”

Yemen has been in the grip of a bloody civil war for three years after Houthi rebels, backed by Iran, seized much of the country, including the capital, Sana’a. The Saudi-led coalition has been fighting the rebels since 2015 in support of the internationally recognised government. Thousands of civilians have been caught in the middle, trapped by minefields and barrages of mortars and airstrikes. The resulting humanitarian catastrophe has seen at least 10,000 people killed and millions displaced. Speaking on Sunday evening, Grande said: “There’s no question we should be ashamed, and we should, every day that we wake up, renew our commitment to do everything possible to help the people that are suffering and end the conflict.”

Read more …

And it’s not just people that we’re killing:

Humanity Is ‘Cutting Down The Tree Of Life’ (G.)

Humanity’s ongoing annihilation of wildlife is cutting down the tree of life, including the branch we are sitting on, according to a stark new analysis. More than 300 different mammal species have been eradicated by human activities. The new research calculates the total unique evolutionary history that has been lost as a result at a startling 2.5bn years. Furthermore, even if the destruction of wild areas, poaching and pollution were ended within 50 years and extinction rates fell back to natural levels, it would still take 5-7 million years for the natural world to recover. Many scientists think a sixth mass extinction of life on Earth has begun, propelled by human destruction of wildlife, and 83% of wild mammals have already gone.

The new work puts this in the context of the evolution and extinction of species that occurred for billions of years before modern humans arrived. “We are doing something that will last millions of years beyond us,” said Matt Davis at Aarhus University in Denmark, who led the new research. “It shows the severity of what we are in right now. We’re entering what could be an extinction on the scale of what killed the dinosaurs. “That is pretty scary. We are starting to cut down the whole tree [of life], including the branch we are sitting on right now.” Ecosystems around the world have already been significantly affected by the extermination of big animals such as mammoths, he said.

[..] Davis said each lost species had its own intrinsic value, but the loss of the most distinct creatures was most damaging: “Typically, if you have something that is off by itself, it does some job that no other species is doing.” The losses are already affecting ecosystems, he said, particularly the vanishing of “megafauna”. These huge creatures roamed much of Earth until humans arrived and included giant cats, deer, beavers and armadillos. “We are now living in a world without giants,” said Davis. “So the seeds of big fruit are not dispersed any more because we don’t have mammoths or gomphotheres or giant ground sloths eating those fruits.” Another example, he said, is the widespread loss of wolves. This means smaller predators like coyotes thrive and more birds are killed, radically changing food chains.

Read more …

“Between January 1977 and January 2013, the catch rate in the sticky ground traps fell 60-fold..”

“..our study indicates that climate warming is the driving force behind the collapse of the forest’s food web. ”

‘Hyperalarming’ Study Shows Massive Insect Loss (WaPo)

Insects around the world are in a crisis, according to a small but growing number of long-term studies showing dramatic declines in invertebrate populations. A new report suggests that the problem is more widespread than scientists realized. Huge numbers of bugs have been lost in a pristine national forest in Puerto Rico, the study found, and the forest’s insect-eating animals have gone missing, too. In 2014, an international team of biologists estimated that, in the past 35 years, the abundance of invertebrates such as beetles and bees had decreased by 45 percent. In places where long-term insect data are available, mainly in Europe, insect numbers are plummeting. A study last year showed a 76 percent decrease in flying insects in the past few decades in German nature preserves.

The latest report, published Monday in the Proceedings of the National Academy of Sciences, shows that this startling loss of insect abundance extends to the Americas. The study’s authors implicate climate change in the loss of tropical invertebrates. “This study in PNAS is a real wake-up call — a clarion call — that the phenomenon could be much, much bigger, and across many more ecosystems,” said David Wagner, an expert in invertebrate conservation at the University of Connecticut who was not involved with this research. He added: “This is one of the most disturbing articles I have ever read.”

[..] “We went down in ’76, ’77 expressly to measure the resources: the insects and the insectivores in the rain forest, the birds, the frogs, the lizards,” Lister said. He came back nearly 40 years later, with his colleague Andrés García, an ecologist at the National Autonomous University of Mexico. What the scientists did not see on their return troubled them. “Boy, it was immediately obvious when we went into that forest,” Lister said. Fewer birds flitted overhead. The butterflies, once abundant, had all but vanished. García and Lister once again measured the forest’s insects and other invertebrates, a group called arthropods that includes spiders and centipedes. The researchers trapped arthropods on the ground in plates covered in a sticky glue, and raised several more plates about three feet into the canopy.

The researchers also swept nets over the brush hundreds of times, collecting the critters that crawled through the vegetation. Each technique revealed the biomass (the dry weight of all the captured invertebrates) had significantly decreased from 1976 to the present day. The sweep sample biomass decreased to a fourth or an eighth of what it had been. Between January 1977 and January 2013, the catch rate in the sticky ground traps fell 60-fold. “Everything is dropping,” Lister said. The most common invertebrates in the rain forest — the moths, the butterflies, the grasshoppers, the spiders and others — are all far less abundant. “Holy crap,” Wagner said of the 60-fold loss.


Comparison of the average dry-weight biomass of arthropods caught per 12-h day in 10 ground (A) and canopy (B) traps within the same sampling area in the Luquillo rainforest.

Read more …

If there are no insects left, who cares about deficits? What’s the use?

America’s Budget Deficit Jumps By 17% As Spending Surges (CNBC)

The U.S. federal budget deficit rose in fiscal 2018 to the highest level in six years as spending climbed, the Trump administration said Monday. The deficit jumped to $779 billion, $113 billion or 17 percent higher than the previous fiscal period, according to a statement from Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Mick Mulvaney. It was larger than any year since 2012, when it topped $1 trillion. The budget shortfall rose to 3.9 percent of U.S. GDP. The deficit increased by $70 billion less than anticipated in a report published in July, according to the two officials.

Federal revenue rose only slightly, by $14 billion after Republicans chopped tax rates for corporations and most individuals. Outlays climbed by $127 billion, or 3.2 percent. A spike in defense spending, as well as increases for Medicaid, Social Security and disaster relief, contributed to the increase.

Read more …

“If the goal was to bail out the banks at public expense (and it was) it’s clear Bernanke had a far better plan than the ECB.”

More Free Money: A Carry Trade in Liquidity (Mish)

Not only do banks earn free money on excess reserves, they can borrow money and make guaranteed free money on that.

The Federal Reserve Bank of St. Louis discusses the Carry Trade in Liquidity: “The IOER [interest on excess reserves] has been the effective ceiling of other short-term interest rates. The figure above compares the IOER with overnight rates on deposits and repos. As we can see, the IOER has mostly remained above these two rates, implying that (at least some) banks have been able to borrow funds overnight, deposit them at the Fed and earn a spread, in essence engaging in carry trade in liquidity markets.”

How Much Free Money?

While the Fed has been busy giving banks free money by paying interest on excess reserves, banks in the EU have suffered with negative interest rates, essentially taking money from banks and making them more insolvent. If the goal was to bail out the banks at public expense (and it was), it’s clear Bernanke had a far better plan than the ECB.

Read more …

The Fed’s been flying blind at least since Bernanke talked about ‘entering uncharted territory’. That’s what that means.

Powell Has Lost His North Star, And The Fed Is Flying Blind (MW)

Federal Reserve Chairman Jerome Powell is in an unenviable position. Folks expect him to fine-tune interest rates to keep the economy going and inflation tame but he can’t make things much better — only worse. Growth is nearly 3% and unemployment is at its lowest level since 1969. What inflation we have above the Fed target of 2% is driven largely by oil prices and those by forces beyond the influence of U.S. economic conditions — OPEC politics, U.S. sanctions on Iran, and dystopian political forces in Venezuela and a few other garden spots. When the current turbulence in oil markets recedes, we are likely in for a period of headline inflation below 2%, just as those forces are now driving prices higher now.

Overall, long-term inflation has settled in at the Fed target of about 2%. The Fed should not obsess about it but keep a watchful eye. Amid all this, Powell’s inflation compass has gone missing. The Phillips curve, as he puts it, may not be dead but just resting. To my thinking, it’s in a coma if it was ever alive at all. That contraption is a shorthand equation sitting atop a pyramid of more fundamental behavioral relationships. Those include the supply and demand for domestic workers and in turn, an historically large contingent labor force of healthy prime-age adults sitting on the sidelines, the shifting skill requirements of a workplace transformed by artificial intelligence and robotics, import prices influenced by weak growth in Europe and China, and immigration.

Of course, Mariner Powell has his North Star — what economists affectionately call R* (R-Star), but it is no longer at a fixed position in Powell’s sky. R* is the federal funds rate that neither encourages the economy to speed up or slow down. However, with businesses needing much less capital to get started or grow these days and for decades China and Germany—the second and fourth largest economies globally—racking up current account surpluses and savings to invest abroad, it is no wonder the forces of supply and demand have been driving R* down to historically low levels.

Read more …

They use what they don’t pay in taxes, to spy on you.

Facebook Paid £15.8 Million In UK Tax On £1.2 Billion In 2017 Revenues (BBC)

Facebook’s UK tax bill has tripled to £15.8m – but the social media giant will see an immediate cut because of a tax credit. The final bill comes to £7.4m, since Facebook will see tax relief of £8.4m after awarding shares to employees. In 2016, Facebook’s tax bill rose to £5.1m, following a major overhaul of the social media firm’s tax structure. However, the company’s profits only climbed by £4m year-on-year from £58.4m to £62.7m in 2017. The company’s UK office provides marketing services and sales and engineering support to the company. Facebook’s revenue rose by a third year-on-year to £1.2bn in 2017, because of increased revenues from inter-company and advertising reseller services in 2017.

“We have changed the way we report tax so that revenue from customers supported by our UK teams is recorded in the UK and any taxable profit is subject to UK corporation tax,” said Facebook’s Northern Europe vice-president, Steve Hatch. [..] The publication of Facebook’s 2017 tax accounts follows extensive criticism from policymakers and the media over the last 12 months of how much tax tech giants typically pay in Europe. Large technology companies have been condemned for moving sales through other countries and paying modest amounts of tax in the UK.

Read more …

Hard to gauge what exactly this means, time must tell. Seems good that they talk of medical help. but will he be able to get it?

Ecuador To Assange: No Talking Politics, Pay Own Bills, Look After Cat (RT)

WikiLeaks supporters were thrilled to hear that Ecuador would restore Julian Assange’s internet connection. But his hosts – who have in some ways become his jailers – reportedly imposed a long list of restrictions on his behavior. While stating that he is allowed to exercise his “right of communication and freedom of expression,” a nine-page document already leaked online forbids the journalist from engaging in political activity or doing anything to interfere in the affairs of other states. The document expressly states that Ecuador cannot be held liable for the content of Assange’s communications, but nevertheless prohibits him from engaging in activities that might damage the relationship between Ecuador and other states.

Assange’s communications were cut seven months ago, after he criticized Spanish authorities’ treatment of voters during the Catalan independence referendum. Assange must pay for his own WiFi. He must use only his own devices, absent written government permission, and provide the embassy with serial number, model number, and brand name for those devices. He must also pay for his own medical evaluations, with the option of transferring to a hospital in case of an emergency – an option repeatedly denied him by UK authorities, who refused to guarantee safe passage without arrest in the event of such a transfer. Assange’s health has been the subject of much concern during his six-year confinement in the Embassy.

Visitors are also slapped with new restrictions. They must submit visit requests in writing to the embassy chief, giving their name, nationality, profession and place of work, reason for visiting, email and social media accounts, and even the serial numbers for phones and other devices they wish to bring inside. The new rules even mandate the collection of IMEIs, unique identification numbers specific to a phone handset. While repeat visitors receive a less restrictive screening process, they can have their access revoked at any time without an explanation. All visitor data will be turned over to the Ecuadorian Ministry of Foreign Affairs and other unspecified parties.

The restrictions include a threat to use UK police to arrest visitors or seize communications equipment should the journalist violate the lengthy list of rules. Adding insult to injury, the embassy threatened to remove Assange’s cat to a shelter should they decide he is not cleaning up after the animal properly.

Read more …

They lost two years doing nothing but fight amongst themselves. That time was always badly needed.

Brexit Deal Slipping To December Amid Deadlocked Talks (Ind.)

A Brexit deal now looks unlikely until just before Christmas after Theresa May admitted “weeks” may be needed to break the deadlock in talks with Brussels. The delay was also signalled by Ireland’s prime minister who warned of log-jammed negotiations dragging into December, increasing concern that stalled talks could simply collapse into a “disaster” no-deal situation. In a veiled swipe at Brexiteers, European Council President Donald Tusk said solving the vexed issue of the Irish border had proved “more complicated than some may have expected” and said no deal is now “more likely than ever”.

A further sign of slippage came when the EU confirmed it would take a decision this week on whether a special summit once proposed for November to publicly seal a Brexit deal, will be needed given the state of talks. But despite the deadlock, Ms May again came under intense pressure from Conservative Eurosceptics to refuse anything resembling the EU’s proposals, amid signs she is diluting her stance to secure a deal. The October summit was once supposed to be the moment a withdrawal deal was locked in, with expectations already having slipped to a potential specially arranged meeting in November – even under those circumstances the outline would have had to have been agreed at this week’s meeting.

Read more …

More likely by the day.

No-Deal Brexit Is ‘More Likely Than Ever Before’ – Tusk (Ind.)

A no-deal Brexit is “more likely than ever before”, the president of the European Council has warned, ahead of a make-or-break summit of EU leaders in Brussels. Donald Tusk, who has described this week’s top-level meeting as “the moment of truth”, said Brexit had “proven to be more complicated than some may have expected”. But he said that “that we are preparing for a no-deal scenario must not, under any circumstances, lead us away from making every effort to reach the best agreement possible”.

Mr Tusk’s warning, made in a letter to EU leaders formally inviting them to the summit, comes a day after negotiations between the European Commission and UK Government hit a a wall over the question of how to prevent a hard border in Northern Ireland. Over dinner on Wednesday night the heads of state or government of the 27 remaining EU member states will decide whether there is any pointing holding a special Brexit summit in November – or whether the horse has already bolted. It is now confirmed that Theresa May will address the 27 leaders before the dinner in a last-ditch bid to win them over; though she will not be allowed into the main discussion itself.

Read more …

Russia and Assad delayed their final offensive to offer the jihadists a way out. But now these are refusing to leave.

Syria’s Chessboard (Hallinan)

The Syrian civil war has always been devilishly complex, with multiple actors following different scripts, but in the past few months it appeared to be winding down. The Damascus government now controls 60 percent of the country and the major population centers, the Islamic State has been routed, and the rebels opposed to Syrian President Bashar al-Assad are largely cornered in Idilb Province in the country’s northwest. But suddenly the Americans moved the goal posts—maybe—the Russians have fallen out with the Israelis, the Iranians are digging in their heels, and the Turks are trying to multi-task with a home front in disarray. So the devil is still very much at work in a war that has lasted more than seven years, claimed up to 500,000 lives, displaced millions of people, destabilized an already fragile Middle East, and is far from over.

There are at least three theaters in the Syrian war, each with its own complexities: Idilb in the north, the territory east of the Euphrates River, and the region that abuts the southern section of the Golan Heights. Just sorting out the antagonists is daunting. Turks, Iranians, Americans and Kurds are the key actors in the east. Russians, Turks, Kurds and Assad are in a temporary standoff in the north. And Iran, Assad and Israel are in a faceoff near Golan, a conflict that has suddenly drawn in Moscow. Assad’s goals are straightforward: reunite the country under the rule of Damascus and begin re-building Syria’s shattered cities. The major roadblock to this is Idilb, the last large concentration of anti-Assad groups, Jihadists linked with al-Qaeda, and a modest Turkish occupation force representing Operation Olive Branch. The province, which borders Turkey in the north, is mountainous and re-taking it promises to be difficult.

For the time being there is a stand down. The Russians cut a deal with Turkey to demilitarize the area around Idilb city, neutralize the jihadist groups, and re-open major roads. The agreement holds off a joint Assad-Russian assault on Idilb, which would have driven hundreds of thousands of refugees into Turkey and likely have resulted in large numbers of civilian casualties. But the agreement is temporary—about a month—because Russia is impatient to end the fighting and begin the reconstruction. However, it is hard to see how the Turks are going to get a handle on the bewildering number of groups packed into the province, some of which they have actively aided for years. Ankara could bring in more soldiers, but Turkey already has troops east of the Euphrates and is teetering on the edge of a major economic crisis.

Read more …

Oct 152018
 
 October 15, 2018  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , , , ,  


Paul Gauguin Haymaking in Brittany 1889

 

What’s The Point Of Growth If It Creates So Much Misery? (G.)
Don’t Rule Out $400 Oil If The US Sanctions Saudi Arabia (MW)
How Much Damage Can Saudi Arabia Do To The Global Economy? (G.)
Ecuador Partly Restores Assange’s Internet (AAP)
Pages Purged By Facebook Were On Blacklist Promoted By Washington Post (Wsws)
Sears Files For Bankruptcy (CNBC)
The Housing Crisis Will Not Be Solved By Building More Homes (FT)
Violence, Public Anger Erupts In China As Home Prices Slide (ZH)
‘Intense Effort’ Fails To Seal UK-EU Brexit Deal After Sunday Talks (AP)
The EU Wants Fiscal Austerity In A Sinking Economy (CNBC)
Merkel’s Conservative Allies Humiliated in Bavaria Election (G.)
Stephen Hawking Predicted Race Of ‘Superhumans’ (G.)

 

 

The essential discussion of our times.

What’s The Point Of Growth If It Creates So Much Misery? (G.)

The late Prof Mick Moran, who taught politics and government at Manchester University for most of his professional life, had, according to his colleagues, once had “a certain residual respect for our governing elites”. That all changed during the 2008 financial crisis, after which he experienced an epiphany “because it convinced him that the officer class in business and in politics did not know what it was doing”. After his epiphany, Moran formed a collective of academics dedicated to exposing the complacency of finance-worship and to replacing it with an idea of running modern economies focused on maximising social good. They called themselves the Foundational Economy Collective, based on the idea that it’s in the everyday economy where there is most potential for true social regeneration: not top-down cash-splashing, but renewal and replenishment from the ground upwards.

Foundational activities are the materials and services without which we cannot live a civilised life: clean, unrationed water; affordable electricity and gas without cuts to supply; collective transport on smooth roads and rails; quality health and social care provided free at the point of use; and reliable, sustainable food supply. Then there’s the “overlooked economy” – everyday services such as hairdressing, veterinary care, catering and hospitality and small-scale manufacturing – which employ far more people, across a wider geographical range, than the “high-skill, hi-tech” economy with which recent governments have been obsessed.

For the Foundational Economy authors, focusing on the fundamental value of invisible and unglamorous jobs “restores the importance of unappreciated and unacknowledged tacit skills of many citizens”. It’s a way of looking at economics from the point of view of people rather than figures, and doing something revolutionary (yet so blindingly obvious) in the process. What is the point of “growth” if the basic elements of a decent life are denied to a large and growing number?

Read more …

A license to kill, then?!

Don’t Rule Out $400 Oil If The US Sanctions Saudi Arabia (MW)

“The Kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures, or repeating false accusation,” a government source reportedly told the official Saudi Press Agency. “The Kingdom also affirms that if it receives any action, it will respond with greater action.” Hence, Saudi-owned Al Arabiya channel’s general manager Turki Aldakhil, in our call of the day, warned we could see an explosive move in oil prices. “If U.S. sanctions are imposed on Saudi Arabia, we will be facing an economic disaster that would rock the entire world,” he wrote in an op-ed.

“If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure.” This mess could ultimately throw the entire Muslim world “into the arms of Iran, which will become closer to Riyadh than Washington,” Aldakhil said. “The truth is that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh.”

Read more …

Or the end of OPEC?

How Much Damage Can Saudi Arabia Do To The Global Economy? (G.)

Saudi Arabia enjoys a privileged position both in geopolitical and economic terms. It will have a powerful hand to play if tensions with the US and the west escalate and it follows through with Sunday’s warning of retaliation. Its vast oil reserves – it claims to have about 260bn barrels still to extract – afford the most obvious advantage. The kingdom is the world’s largest oil exporter, pumping or shipping about 7m barrels a day, and giving Riyadh huge clout in the global economy because it wields power to push up prices. An editorial in Arab News by Turki Aldhakhil, the general manager of the official Saudi news channel, Al Arabiya, offers a hint of what could be in the offing.

He said Riyadh was weighing up 30 measures designed to put pressure on the US if it were to impose sanctions over the disappearance and presumed murder of Jamal Khashoggi inside the country’s Istanbul consulate. These would include an oil production cut that could drive prices from around $80 (£60) a barrel to more than $400, more than double the all-time high of $147.27 reached in 2008. This would have profound consequences globally, not just because motorists would pay more at the petrol pump, but because it would force up the cost of all goods that travel by road.

Read more …

Wonder why the UN has acted now. And did it do so after consulting with the US?

Ecuador Partly Restores Assange’s Internet (AAP)

The Ecuadorian government has decided to partly restore communications for WikiLeaks founder Julian Assange. They were cut in March, denying the Australian access to the internet or phones and limiting visitors to members of his legal team. He has been living inside Ecuador’s embassy in London for more than six years. The Ecuadorian government said in March it had acted because Assange had breached “a written commitment made to the government at the end of 2017 not to issue messages that might interfere with other states”.

WikiLeaks said in a statement: “Ecuador has told WikiLeaks publisher Julian Assange that it will remove the isolation regime imposed on him following meetings between two senior UN officials and Ecuador’s President Lenin Moreno on Friday.” Kristinn Hrafnsson, WikiLeaks’ editor-in-chief, added: “It is positive that through UN intervention Ecuador has partly ended the isolation of Mr Assange although it is of grave concern that his freedom to express his opinions is still limited. “The UN has already declared Mr Assange a victim of arbitrary detention. This unacceptable situation must end. “The UK government must abide by the UN’s ruling and guarantee that he can leave the Ecuadorian embassy without the threat of extradition to the United States.”

Read more …

Thought PropOrNot was done, but the Atlantic Council did not.

Pages Purged By Facebook Were On Blacklist Promoted By Washington Post (Wsws)

Media outlets removed by Facebook on Thursday, in a massive purge of 800 accounts and pages, had previously been targeted in a blacklist of oppositional sites promoted by the Washington Post in November 2016. The organizations censored by Facebook include The Anti-Media, with 2.1 million followers, The Free Thought Project, with 3.1 million followers, and Counter Current News, with 500,000 followers. All three of these groups had been on the blacklist. In November 2016, the Washington Post published a puff-piece on a shadowy and up to then largely unknown organization called PropOrNot, which had compiled a list of organizations it claimed were part of a “sophisticated Russian propaganda campaign.”

The Post said the report “identifies more than 200 websites as routine peddlers of Russian propaganda during the election season, with combined audiences of at least 15 million Americans.” The publication of the blacklist drew widespread media condemnation, including from journalists Matt Taibbi and Glenn Greenwald, forcing the Post to publish a partial retraction. The newspaper declared that it “does not itself vouch for the validity of PropOrNot’s findings regarding any individual media outlet.” While the individuals behind PropOrNot have not identified themselves, the Washington Post said the group was a “collection of researchers with foreign policy, military and technology backgrounds.”

Read more …

Long expected.

Sears Files For Bankruptcy (CNBC)

After years of Sears Holdings staying afloat through financial maneuvering and relying on billions of CEO Eddie Lampert’s own money, the 125-year-old retailer filed for bankruptcy. The filing comes more than a decade after Lampert merged Sears and Kmart, hoping that forging together the two struggling discounters would create a more formidable competitor. It comes after Lampert shed assets and spun out real estate, all to pay down the debt the retailer accumulated when that plan went askew. The company still has roughly 700 stores, which have at times been barren, unstocked by vendors who have lost their trust.

Many of the stores have never been visited by a generation of shoppers that can barely recall it was once the the country’s biggest retailer. Lampert, who has a controlling ownership stake in Sears, personally holds some 31 percent of the retailer’s shares outstanding, according to FactSet. His hedge fund ESL Investments owns about 19 percent. Ultimately, it was a $134 million payment that did the company in. The company had a payment due Monday it had not the money to pay.

Read more …

Why does this still need to be explained?

The Housing Crisis Will Not Be Solved By Building More Homes (FT)

With great flourish, Theresa May last week announced that she was lifting the borrowing cap which constrains local councils’ ability to finance new housebuilding. “We will only fix this broken market by building more homes,” the prime minister said. “Solving the housing crisis is the biggest domestic policy challenge of our generation. It doesn’t make sense to stop councils from playing their part in solving it. So today I can announce that we are scrapping that cap.” Nope. In reality, councils – or anyone else for that matter – building more homes will do very little to address the fundamental problem in the housing market, and if you want to understand why, there’s a new book which explains it.

‘Why Can’t You Afford To Buy A Home?’ by Josh Ryan-Collins – a researcher at University College London’s Institute for Innovation and Public Purpose – is about the phenomenon which he dubs ‘residential capitalism’. It follows on from his less snappily-titled volume ‘Rethinking The Economics of Land and Housing’, which was written jointly with fellow economist Laurie Macfarlane and policy wonk Toby Lloyd and published last year. Both books address the question of why a growing number of people are being priced out of the property market, with rising house prices accelerating away from household incomes. The answer is financialisation – and it is not an aberration, according to Ryan-Collins.

The ‘housing crisis’ needs to be understood primarily as a product of the banking system. For starters it’s not just a British problem; this is a trend which has gripped developed economies across the world over the past three decades. “Two of the key ingredients of contemporary capitalist societies, private home ownership and a lightly regulated commercial banking system, are not mutually compatible,” he writes. Instead they “create a self-reinforcing feedback cycle”. [..] In the early 1980s, business lending equated to around 40 per cent of GDP on average in advanced economies, while mortgage lending was around 25 per cent. By the time of the financial crisis, mortgage lending had grown to 75 per cent of GDP while business lending had only grown slightly, to 45 per cent.

Read more …

The Chinese will hold Beijing responsible when their housing bubble bursts.

Violence, Public Anger Erupts In China As Home Prices Slide (ZH)

Last March, we discussed why few things are as important for China’s wealth effect and economy, as its housing bubble market. Specifically, as Deutsche Bank calculated at the time, “in 2016 the rise of property prices boosted household wealth in 37 tier 1 and tier 2 cities by RMB24 trillion, almost twice their total disposable income of RMB12.9 trillion.” The German lender added that this (rather fleeting) wealth effect “may be helping to sustain consumption in China despite slowing income growth” warning that “a decline of property price would obviously have a large negative impact.” Naturally, as long as the housing bubble keeps inflating and prices keep rising, there is nothing to worry about as the population will keep spending money buoyed by illusory wealth appreciation.

It is when housing starts to drop that Beijing begins to panic. Fast forward to today, when Beijing may be starting to sweat because whereas Chinese property developers usually count on September and October to be their “gold and silver” months for sales, this year has turned out to be different. As the SCMP reports, not only were sales figures grim for September, but the seven-day national holiday last week also brought at least two “fangnao” incidents – when angry, and often violent, homeowners protest against price cuts offered by developers to new buyers.

These protests are often directed at sales offices, with varying levels of intensity – from throwing rocks to holding banners and putting up funeral wreaths. The risk, of course, is that as what has gone up (wealth effect) will come down, and as home ownership has remained the most important channel of investment for urban households in China in the past decade, price cuts have become increasingly unacceptable and a cause for social unrest. Just last week, angry homeowners who paid full price for units at the Xinzhou Mansion residential project in Shangrao attacked the Country Garden sales office in eastern Jiangxi province last week, after finding out it had offered discounts to new buyers of up to 30%.

Read more …

There is no solution that everyone can accept.

‘Intense Effort’ Fails To Seal UK-EU Brexit Deal After Sunday Talks (AP)

The European Union’s top Brexit negotiator says urgent talks with Britain’s point person did not result in their reaching agreement on outstanding issues. EU negotiator Michel Barnier said: “Despite intense efforts, some key issues are still open” in the divorce talks between the European Union and Britain. Barnier and his British counterpart, Dominic Raab, met in Brussels for surprise talks on Sunday. The discussion prompted rumors that a full agreement might be imminent, but Barnier says the future of the border on the island of Ireland remain a serious obstacle. He says the need “to avoid a hard border” between Ireland and the U.K’s Northern Ireland is among the unsettled issues. An EU official says no further negotiations are planned before an EU leaders summit on Wednesday.

The “Irish backstop” is the main hurdle to a deal that spells out the terms of Britain’s departure from the EU and future relationship with the bloc. After Brexit, the currently invisible frontier between Northern Ireland and Ireland will be the U.K.’s only land border with an EU nation. Britain and the EU agree there must be no customs checks or other infrastructure on the border, but do not agree on how that can be accomplished. The EU’s “backstop” solution — to keep Northern Ireland in a customs union with the bloc — has been rejected by Britain because it would require checks between Northern Ireland and the rest of the U.K.

Read more …

Budget was accepted by almost two thirds in Senate and Parliament.

The EU Wants Fiscal Austerity In A Sinking Economy (CNBC)

Over the last three years, net exports shaved 0.5 percent off Italy’s quasi stagnant 1.1 percent GDP growth. And while exports in the first seven months of this year increased 4 percent from the year earlier, that did absolutely nothing to revive the country’s manufacturing output. The industrial production during the January-to-July period dropped at an annual rate of 0.5 percent. That, of course, bodes ill for business investments because the weakness in the manufacturing sector indicates plenty of spare production capacity. In other words, Italian businesses need no new machines and bigger factory floors; they already have what they need to meet the current and expected sales demand.

So, what’s left to support Italy’s jobs and incomes? Nothing — emphatically nothing — keeps screaming the German-run EU: Italy has no independent monetary policy, and, according to the EU Commission, the fiscal stance should remain frozen in a restrictive mode of indefinite duration. Italy knows what that means. Before the onset of the last decade’s financial crisis, and the German-imposed fiscal austerity, Italy’s budget deficit in 2007 was whittled down to 1.5 percent of GDP (compared to nearly 3 percent of GDP in France), the primary budget surplus (budget before interest charges on public debt) was driven up to 1.7 percent of GDP, helping to bring down the public debt to 112 percent of GDP from an annual average of 117 percent in the previous six years.

But then all hell broke loose once the Germans — defiantly rejecting Washington’s call to reason — set out to teach a lesson to “fiscal miscreants” by imposing austerity policies on the euro area’s sinking economies. Italy should never allow that to happen again. What, then, should Italy do? The answer is simple: Exactly what it says it wants to do in the 2019 budget passed last Thursday by an overwhelming majority in the Senate (61 percent of the votes) and in the Parliament’s Lower House (63.4 percent of the votes).

Read more …

Not just conservatives, the SPD is going going gone as well.

Merkel’s Conservative Allies Humiliated in Bavaria Election (G.)

Angela Merkel’s conservative partners in Bavaria have had their worst election performance for more than six decades, in a humiliating state poll result that is likely to further weaken Germany’s embattled coalition government. The Christian Social Union secured 37.3% of the vote, preliminary results showed, losing the absolute majority in the prosperous southern state it had had almost consistently since the second world war. The party’s support fell below 40% for the first time since 1954. Markus Söder, the prime minister of Bavaria, called it a “difficult day” for the CSU, but said his party had a clear mandate to form a government.

Among the main victors was the environmental, pro-immigration Green party, which as predicted almost doubled its voter share to 17.8% at the expense of the Social Democratic party (SPD), which lost its position as the second-biggest party, with support halving to 9.5%. Annalena Baerbock, the co-leader of the Greens, said: “Today Bavaria voted to uphold human rights and humanity.” Andrea Nahles, the leader of the SPD, delivered the briefest of reactions at her party’s headquarters in Berlin, calling the results “bitter” and blaming them on the poor performance of the grand coalition in Berlin.

Read more …

But this suggests that gene editing would be very expensive.

Stephen Hawking Predicted Race Of ‘Superhumans’ (G.)

The late physicist and author Prof Stephen Hawking has caused controversy by suggesting a new race of superhumans could develop from wealthy people choosing to edit their and their children’s DNA. Hawking, the author of A Brief History of Time, who died in March, made the predictions in a collection of articles and essays. The scientist presented the possibility that genetic engineering could create a new species of superhuman that could destroy the rest of humanity. The essays, published in the Sunday Times, were written in preparation for a book that will be published on Tuesday. “I am sure that during this century, people will discover how to modify both intelligence and instincts such as aggression,” he wrote.

“Laws will probably be passed against genetic engineering with humans. But some people won’t be able to resist the temptation to improve human characteristics, such as memory, resistance to disease and length of life.” In Brief Answers to the Big Questions, Hawking’s final thoughts on the universe, the physicist suggested wealthy people would soon be able to choose to edit genetic makeup to create superhumans with enhanced memory, disease resistance, intelligence and longevity. Hawking raised the prospect that breakthroughs in genetics will make it attractive for people to try to improve themselves, with implications for “unimproved humans”. “Once such superhumans appear, there will be significant political problems with unimproved humans, who won’t be able to compete,” he wrote. “Presumably, they will die out, or become unimportant. Instead, there will be a race of self-designing beings who are improving at an ever-increasing rate.”

Read more …