Aug 062019
 


Piet Mondriaan Avond (Evening): The Red Tree 1908-10

 

Yuan, Futures Surge After PBOC Fix Is Stronger Than Expected (ZH)
China’s Yuan Steadies But Stocks Plunge As Trade Tensions Grow (R.)
Kyle Bass: Yuan Would Collapse 30%-40% If China Stopped Supporting It (CNBC)
US Designates China As Currency Manipulator For First Time In 25 Years (R.)
China State Media Says US ‘Destroying International Order’ (R.)
China Confirms It Is Suspending US Farm Products Purchases (CNBC)
Trump Orders Freeze On All Venezuelan Government Assets In US (AFP)
Hold the Teddy Bears and Candles (Kunstler)
Fourth Turning Economics (Jim Quinn)
Things Fall Apart (Michael Krieger)
Sinn Féin Joins the Great Disruption (Fintan O’Toole)
Nicola Sturgeon: ‘Talking To Theresa May Was Soul Destroying’ (Sky)

 

 

Anything above/below 7.10 is deemed to risky in Beijing. For now.

Yuan, Futures Surge After PBOC Fix Is Stronger Than Expected (ZH)

In the aftermath of the US shockingly designating China a currency manipulator – for the first time in over 25 years – there was a tense period of several hours in which it appeared that all bets were off, and that with both the US and China seemingly going full tilt, China would fix the Yuan not only far weaker than its Monday rate, but also weaker than expected according to an imputation of the country’s currency basket, which was 6.9736, well below the previous fixing of 6.9225, the first fixing below 6.90 in 2019 and the catalyst for the overnight plunge in risk assets. Heck, some even speculated that Beijing may fix the Yuan below 7.00 vs the USD, if not launch a couple of nukes at the US for good measure.

It wasn’t meant to be though: shortly after 9pm EST, the PBOC lifted the kimono so to speak… and the market collectively exhaled when China revealed that while it had indeed fixed the onshore yuan weaker than Monday, it did so stronger relative to both the 7.00 proverbial line in the sand, and which would have been a retaliatory declaration of outright currency war, but also relative to the expected fixing, with the number coming at 6.9683. In kneejerk reaction, a wave of relief washed over the market, sending the offshore Yuan surging, and reversing all prior session losses which had dragged it as low as 7.14 just moments ahead of the fix, to above 7.10 last…

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Presented as a strength, this is instead perhaps China’s biggest weakness: “.. this is something that we control rather than markets or whatever other pressures.”

China’s Yuan Steadies But Stocks Plunge As Trade Tensions Grow (R.)

China’s tumbling yuan steadied on Tuesday as authorities took steps to contain its slide while stocks plunged after Washington labelled Beijing a currency manipulator, marking a sharp escalation in U.S. trade tensions. The currency has slumped 2.3% over the past three days and broken past the symbolic 7-per-dollar level, pounding stocks and pushing bonds higher as investors feared the yuan’s value has become a new front in the U.S.-China trade war. On Monday, U.S. Treasury Secretary Steven Mnuchin said Washington would designate China a currency manipulator, its first such move since 1994, sending both the onshore and offshore yuan to record lows..


The People’s Bank of China’s firmer-than-expected yuan fixing on Tuesday helped pull the currency away from these lows as did an announced bond sale in the offshore market, seen as signs authorities wanted to stem the rout. “(China is) seizing the narrative on the renminbi,” said Andy Wong, multi-asset senior investment manager at Pictet Asset Management in Hong Kong. “Rather than being pressured to signal that 7 is just a psychological level, they are … saying this is something that we control rather than markets or whatever other pressures.”

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“.. they are trying to hold this whole thing together.”

they have to have dollars to sell to buy their own currency to hold it up..”

Kyle Bass: Yuan Would Collapse 30%-40% If China Stopped Supporting It (CNBC)

Hedge fund manager and Hayman Capital Management founder Kyle Bass said on Monday that without state support, China’s currency would plunge. “What’s happening in China is they have to have dollars to sell to buy their own currency to hold it up. If they were to ever free float their currency, I think it would drop 30% or 40%,” Bass told CNBC’s “Closing Bell.” “And the reason is they claim to be 15% of global GDP in dollar terms, but less than 1% of global transactions settled in their own currency,” Bass added. “And so, they prop their currency up…everyone calling them a currency manipulator – they are trying to hold this whole thing together.” Bass’s comments came after the Chinese yuan crossed a closely watched barrier against the U.S. dollar.


The onshore Chinese yuan changed hands above 7 against the dollar, the currency’s weakest levels against the greenback since 2008. The new lows for the yuan came after U.S. President Donald Trump unexpectedly announced fresh tariffs on Beijing last week that are set to take effect from Sept. 1. China on Monday said it could slap tariffs on U.S. agricultural goods that it bought recently, state-run media Xinhua reported. Bass, known across Wall Street for his prescient bets against subprime mortgages during the financial crisis in 2008, is also a noted China bear. The hedge fund manager has previously admonished American corporations for pushing Trump to strike a deal with Beijing too quickly and told CNBC as recently as June that the U.S. has leverage over China and should pressure negotiators into a better settlement.

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Which allows for much higher tariffs.

US Designates China As Currency Manipulator For First Time In 25 Years (R.)

The U.S. government has determined that China is manipulating its currency and will engage with the International Monetary Fund to eliminate unfair competition from Beijing, U.S. Treasury Secretary Steven Mnuchin said in a statement on Monday. The move brings already tense U.S.-Chinese relations to a boil and fulfills U.S. President Donald Trump’s promise to label China a currency manipulator for the first time since 1994. The U.S. action follows China allowing its yuan to weaken past the key 7-per-dollar level on Monday for the first time in more than a decade. Beijing later said it would stop buying U.S. agricultural products, inflaming a yearlong trade war with the United States.

The sharp 1.4% drop in the yuan comes days after U.S. President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief ceasefire in a bruising trade war that has disrupted global supply chains and slowed growth. The news knocked the dollar sharply lower and bolstered the price of gold . The Treasury Department said a statement from the People’s Bank of China (PBOC) on Monday made clear that Chinese authorities had ample control over the yuan exchange rate.

The PBOC said Monday it would “continue to … take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market.” “This is an open acknowledgement by the PBOC that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis,” the Treasury statement said. It said China’s actions violate its commitment to refrain from competitive devaluation as part of the Group of 20 industrialized countries. Treasury said it expected China to adhere to those commitments and not target China’s exchange rate for competitive purposes.

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“..Trump’s election campaign pledge was to lift import tariffs to 45% on China.”

China State Media Says US ‘Destroying International Order’ (R.)

China’s official Communist Party newspaper said on Tuesday that the United States was “deliberately destroying international order”, a day after Washington branded Beijing a currency manipulator in a rapidly escalating trade dispute. The accusation, which followed a sharp slide in the yuan on Monday, has driven an even bigger wedge between the world’s largest economies and crushed any lingering hopes for a quick resolution to their year-long trade war. The dispute has already spread beyond tariffs to other areas such as technology, and analysts caution tit-for-tat measures could widen in scope and severity, weighing further on global economic growth.

In a strongly-worded editorial, the People’s Daily said the United States was holding its own citizens to ransom, without mentioning the latest U.S. decision. The responsibility of big countries is to provide the world with stability and certainty while creating conditions and opportunities for the common development of all countries, according to the editorial. “But some people in the United States do just the opposite,” it said. [..] The yuan has tumbled 2.3% in three days since President Donald Trump’s sudden declaration last week that he will impose 10% tariffs on $300 billion of Chinese imports from Sept. 1.

But it appeared to steady on Tuesday amid signs that China’s central bank may be looking to stem the slide, which has sparked fears of a global currency war. “Naming China a currency manipulator could open the door for U.S. tariffs to eventually increase to more than 25% on Chinese goods,” according to a note from DBS Group Research. “Apart from naming China a currency manipulator, Trump’s election campaign pledge was to lift import tariffs to 45% on China.”

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Try to buy from Brazil instead?

China Confirms It Is Suspending US Farm Products Purchases (CNBC)

China confirmed reports that it was pulling out of U.S. agriculture as a weapon in the ongoing trade war. A spokesperson for the Chinese Ministry of Commerce said Chinese companies have stopped purchasing U.S. agricultural products in response to President Trump’s new 10% tariffs on $300 billion of Chinese goods. “This is a serious violation of the meeting between the heads of state of China and the United States,” the Minister of Commerce said in a statement Monday that was translated via Google. The department also said it would “not rule out” tariffs on newly purchased agricultural goods after August 3.


China is one of the largest buyers of U.S. agriculture. Bloomberg News reported that Beijing may stop importing them completely in response to new tariffs by the United States. According to reports by Chinese State media, it would also consider slapping tariffs on U.S. agricultural products that it already bought. Those stories helped exacerbate fears on Wall Street pushing stocks to their worst day of the year. Now that China has confirmed the reports, it could add to pressure on equities. Stock futures fell Monday, implying a 480 point drop Tuesday.

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This is ridiculous. Know when you’ve lost.

Trump Orders Freeze On All Venezuelan Government Assets In US (AFP)

President Donald Trump on Monday ordered a freeze on all Venezuelan government assets in the United States and barred transactions with its authorities, in Washington’s latest move against President Nicolas Maduro. Trump took the step “in light of the continued usurpation of power by Nicolas Maduro and persons affiliated with him, as well as human rights abuses,” according to the order. The Wall Street Journal said the move was the first against a Western Hemisphere government in over 30 years, and imposes restrictions on Caracas similar to those faced by North Korea, Iran, Syria and Cuba. Asked last week if he was considering a “blockade or quarantine” of Venezuela, Trump responded: “Yes, I am.”


The order affects “all property and interests in property of the Government of Venezuela that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person.” These assets “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in,” the order said. The measure also bars transactions with Venezuelan authorities whose assets are blocked. It prohibits “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order,” as well as “the receipt of any contribution or provision of funds, goods, or services from any such person.”

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“This abyss of missing social relations is made worse by the everyday physical settings for everyday lives based on nothing: the wilderness of parking lots that America has turned itself into.”

Hold the Teddy Bears and Candles (Kunstler)

In a nation afflicted by fads, crazes, manias, and rages, mass murder is the jackpot for nihilists — begging the question: why does this country produce so many of them? Answer: this is exactly what you get in a culture where anything goes and nothing matters. Extract all the meaning and purpose from being here on earth, and erase as many boundaries as you can from custom and behavior, and watch what happens, especially among young men trained on video slaughter games. For many, there is no armature left to hang a life on, no communities, no fathers, no mentors, no initiations into personal responsibility, no daily organizing principles, no instruction in useful trades, no productive activities, no opportunities for love and affection, and no way out.

This abyss of missing social relations is made worse by the everyday physical settings for everyday lives based on nothing: the wilderness of parking lots that America has turned itself into. Such is the compelling myth of the New World as a wilderness that we obliged ourselves to re-enact it, minus nature, including human nature, especially what may be noble and sacred about human nature. The old truism sticks: when nothing is sacred, everything is profane, and what could be more profane than slaughtering your fellow humans en masse, for no good reason? Just because you felt like it at the time? Another time, you might feel like scarfing some tacos, or checking in on the free porn sites, or tweaking some crushed-up oxycontin.

One message from the culture of anything-goes-and-nothing-matters comes through loud and clear: if it feels good, do it! And if you feel bad, do something to make yourself feel better. The wonder is that the way we live these days hasn’t turned more people into homicidal maniacs, considering how many are out there feeling bad in this grotesque landscape of incessant motoring, vivid purposelessness, and lost aspiration — unless these bloody skirmishes are the precursor to some more general outbreak of murderous havoc. It’s not hard these days to imagine the political animus ratcheting up to something like a new civil war. If it works out that way, it will be the most psychologically confused political event of modern history.

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Don’t make the ideas too big.

Fourth Turning Economics (Jim Quinn)

The specific details of each crisis change, but economic catalysts have initiated all previous Fourth Turnings and led ultimately to bloody conflict. There is nothing in the current dynamic of this Fourth Turning which argues against a similar outcome. The immense debt, stock and real estate bubbles, created by feckless central bankers, corrupt politicians, and spineless government apparatchiks, have set the stage for the greatest financial calamity in world history. Rather than taking the bitter medicine of purging the system of bad debt and allowing zombie banks and corporations to die, the ruling class has chosen to ramp up the debt orgy and reward themselves and their cronies with ill-gotten riches, while impoverishing the masses.

Their arrogance and hubris have grown to vast proportions and will eventually result in a bloody backlash from those they have screwed over. The election of Donald Trump over the hand-picked candidate of the oligarchy, was a reaction to the raping and pillaging of Main Street by the greedy soulless psychopaths in suits on Wall Street and in the halls of the Eccles building in Washington D.C. The average hard-working American has seen eight years of “government of the bankers, by the bankers, for the bankers”. Wall Street was bailed out and rewarded with the ability to borrow at 0% from their captured Federal Reserve. Zombie corporations were kept alive with low interest debt, with no adjustment for risk.

The cowardly politicians drove the national debt from $11.5 trillion to over $20 trillion, while accomplishing minimal GDP growth (negative growth using a real inflation rate), and enriching mega-corporations and the top .1%. Meanwhile, risk averse senior citizens, depending upon some interest income to survive, were thrown under the bus by Bernanke, Yellen and Powell. It was the deplorables in flyover country, the blue-collar workers in Pennsylvania, Michigan, Wisconsin and Ohio, and senior citizens in Florida who voted their wallets, which had been picked by establishment politicians for the previous eight years.

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Again, big ideas. You easily get lost in those.

Things Fall Apart (Michael Krieger)

The primary shift that’s occurring is the U.S. empire has lost its ability to dictate all terms to all countries at all times. This capacity to dictate has been enforced via a two-pronged approach for decades. The prongs are global military dominance and control of the financial system. The first is threatened by the fact we’ve already entered a world in which it’s easier to frustrate global empire than it is to maintain it. We’ve seen this manifest in numerous places over the course of the 21st century. The war in Afghanistan is an ongoing failure despite it being the longest conflict in U.S. history, and the Iraq war (based on fake news) resulted in the death of hundreds of thousands and merely strengthened Iran’s position in the region.

Meanwhile, U.S. regime change plans in Syria were thwarted despite the empire’s best efforts, and Trump’s deranged crew of neocons still can’t even get rid of Maduro in Venezuela. Deny it all you want, but the geopolitical map has fundamentally changed. Meanwhile, the financial system itself (a tremendous source of U.S. imperial power) is also fundamentally broken. The first major failure in this regard happened back on August 15, 1971 when Richard Nixon closed the gold window.

Whether you believe this was a primary contributor to many of the negative trends that emerged afterwards likely depends on your personal ideology, but it’s undeniable that shortly after this event we started to see a major ramp up in the financialization of everything as well as a stagnation in median wage growth. A global buildup of financialization and fraud-based financial products played a key role in bringing us to where we are today, and also culminated in the second major failure of the global financial system in 2008. That was the moment when serious reform and severe consequences for the criminal perpetrators of economic collapse could’ve reset the system and brought the world back to a sustainable path, but we all know that’s not what happened.

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“It does not deny that no-deal would be awful – it welcomes this awfulness as the Great Disruption that completes the Irish national revolution.”

Sinn Féin Joins the Great Disruption (Fintan O’Toole)

The first – and at the moment by far the most decisive – group of Great Disruptors consists of the disaster capitalists fronted by Johnson. Their Utopia is Singapore. They believe, as Priti Patel, Dominic Raab, Liz Truss and other Tory young Turks wrote in Britannia Unchained in 2012, that the British have grown lazy and useless, their buccaneering spirit sapped by a culture of dependency. They see no-deal as the Big Bang that will blow the welfare state, environmental standards and labour protections to smithereens. Out of this chaos will come a new Global Britain of very low taxes for the rich, unregulated hyper-capitalism and boundless “free” markets.

The second group is the high command of the Labour Party around Jeremy Corbyn. Their Utopia is Socialism in One Country. They believe that a no-deal Brexit will free Britain from the wishy-washy social market capitalism of the EU and thus ultimately from capitalism itself. They have their roots in the socialist distaste for the European project that was, it is easy to forget, once the mainstream of British Euroscepticism. In that mentality, the EU was seen as a last, desperate attempt to shore up a dying capitalist system. Thus, on the far side of a no-deal Brexit, lies the workers’ paradise that is the inevitable outcome of history.

The third group of Great Disruptors is Sinn Féin. Their Utopia is, of course, a United Ireland. They ostensibly oppose a no-deal Brexit, and indeed Brexit itself. But beneath this opposition lies the belief that the worse Brexit is, the quicker we will have a Border poll and the more likely it is that Protestants in Northern Ireland will swim for the green lifeboat to avoid going down with the British ship. Alongside the disaster capitalism of Johnson’s faction and the disaster socialism of Corbyn’s, there is this disaster nationalism. It does not deny that no-deal would be awful – it welcomes this awfulness as the Great Disruption that completes the Irish national revolution.

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If that isn’t scathing, what is?

“I started the meeting off by saying, ‘before we get onto Brexit, fantastic shoes’, and in that instant I could see in her eyes, that she didn’t have an answer in the script before her for this. “So it became, what should have been a light-hearted moment, really quite awkward.”

Nicola Sturgeon: ‘Talking To Theresa May Was Soul Destroying’ (Sky)

Nicola Sturgeon has delivered a brutal verdict on the current and former prime ministers, claiming Boris Johnson tried to put his arm around her back and that talking to Theresa May was “soul destroying”. In a candid and indiscreet interview, Scotland’s first minister said her conversation with Mr Johnson last week was “crazy”, while Mrs May would never depart from a script, which made conversation awkward. Ms Sturgeon’s withering disclosures came in an Edinburgh Fringe Festival event with broadcaster Iain Dale in which she claimed there was growing support for Scottish independence. Asked by Mr Dale about the difference between her meetings with Mrs May and her first encounter with Mr Johnson at her Bute House official residence, she replied: “It was a very different experience.

“I don’t want to be too derogatory or pejorative about Theresa May. She’s obviously no longer prime minister, but having conversations with Theresa May was pretty soul destroying. “She would never depart from a script, no matter where you tried to take the conversation. “I remember in one meeting, going in and trying to think about how can we get this meeting off on a sort of gentler start before we immediately got into the areas where we disagreed. “And she had, as she often did, a fantastic pair of shoes, a really stylish pair of shoes. And I quite like shoes, so I started the meeting off by saying, ‘before we get onto Brexit, fantastic shoes’, and in that instant I could see in her eyes, that she didn’t have an answer in the script before her for this. “So it became, what should have been a light-hearted moment, really quite awkward.

“So talking to Boris, at least it was like having a conversation, albeit a bit of a crazy one. [..] “Boris Johnson is a prime minister that the vast of majority of people in Scotland, had they been given any choice, would not have chosen to give the keys of Number 10 Downing Street to. “He’s a prime minister who is intent on taking us out of Europe against our will, looks intent on taking us out without a deal and the catastrophe that would bring about I think is well understood here. “So I wasn’t overly thrilled to be standing on the steps of Bute House welcoming Boris Johnson as prime minister.”

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Apr 152017
 
 April 15, 2017  Posted by at 8:48 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »


Copenhagen 1965

 

US Urges China to Open Trade After Sparing It Manipulator Tag (BBG)
US: China, Germany Must Do More To Cut Trade Surpluses (AFP)
China Shadow Banking Rebounds In March, Household Loans Surge (R.)
Record High US Multi-Family Construction Set To Wreak Havoc On Rents (ZH)
Falling US Retail Sales Cast Doubt On Further Fed Interest Rate Rise (G.)
Leaked NSA Malware Threatens Windows Users Around The World (IC)
Hackers Release Files Indicating NSA Hacked SWIFT, Global Bank Transfers (R.)
The ‘Smoking-Gun’ Quote On The Recent Syrian Gas-Attack (Zuesse)
US Insurers Sue Saudis for $4.2 Billion Over 9/11 (TAM)
Understanding Land Value Taxation (Walker)
Le Pen Ready to Be ‘Crucified’ for France (BBG)
French Prosecutors Seek To Lift Le Pen Immunity Over Expenses Inquiry (AFP)
More Than 2,000 Migrants Rescued In Dramatic Day In Mediterranean (R.)

 

 

Step away from the confrontation and still get what you want. Maybe not that stupid.

US Urges China to Open Trade After Sparing It Manipulator Tag (BBG)

The U.S. stopped short of branding China a currency manipulator, but urged the world’s second-largest economy to let the yuan rise with market forces and embrace more trade. No major trading partner is manipulating its currency for an unfair trade advantage, according to the first foreign-currency report released by the Treasury Department under President Donald Trump on Friday. It kept China, South Korea, Japan, Taiwan, Germany and Switzerland on its foreign-exchange monitoring list. “China currently has an extremely large and persistent bilateral trade surplus with the United States, which underscores the need for further opening of the Chinese economy to American goods and services,” as well as quicker reforms to boost household consumption, according to the Treasury report.

Trump declared on Wednesday that he’ll back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world’s largest economies as they try to boost trade cooperation and address North Korea’s nuclear threat. Trump, in a Wall Street Journal interview, said China hasn’t manipulated the yuan for months, while accusing nations that he didn’t identify of devaluing their currencies and saying the dollar is getting too strong.

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Germany must increase domestic demand? How? Housing bubble?

US: China, Germany Must Do More To Cut Trade Surpluses (AFP)

Even though China has not moved to keep its currency weak in the past three years, the country “has a long track record of engaging in persistent, large-scale, one-way foreign exchange intervention, doing so for roughly a decade,” the Treasury Department said. That “distortion in the global trading system… imposed significant and long-lasting hardship on American workers and companies.” With a trade surplus in goods with the United States of $347 billion last year, and continued policies that restrict free trade and foreign investment, “Treasury will be scrutinizing China’s trade and currency practices very closely.” The large goods surplus “underscores the need for further opening of the Chinese economy to American goods and services, as well as faster reform to rebalance the Chinese economy toward greater household consumption.” Beijing also will need to prove that the recent stance of not trying to weaken the currency is “a durable policy shift,” even if the renminbi begins to appreciate again.

The Treasury Department said Germany should take steps, notably spending policies, “to encourage stronger domestic demand growth,” something the country’s trading partners and the IMF have been urging for some time. Increased demand “would place upward pressure on the euro… and help reduce its large external imbalances,” increasing domestic consumption, including of imported goods. Those imbalances include its $65 billion goods trade surplus with the United States last year, and what the department calls “the world?s largest current account surplus at close to $300 billion.” The report also called on Japan to do more “to revive domestic demand and combat low inflation while avoiding a return to export-led growth.” This would include more “flexible” government spending policies, and continued reforms to boost the labor market and increase productivity of the Japanese economy.

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“Social financing”. Sure. Sounds good, right? But it‘s all shadows.

China Shadow Banking Rebounds In March, Household Loans Surge (R.)

China’s banks unexpectedly extended less credit in March than in the previous month as the government tries to contain the risks from an explosive build-up in debt and an overheating housing market. But aggregate financing, which includes bank loans as well as off-balance sheet lending, surged in March and was a record in the first quarter, raising doubts about the effectiveness of official efforts so far to clamp down on risks in the financial system. A surge in household lending in March also added to worries about whether authorities will be able to get the frenzied property market under control, even as cities roll out increasingly stringent curbs on home buying.

The central bank has raised interest rates on money market instruments and special short- and mid-term loans several times in recent months, most recently in mid-March, to contain debt risks and discourage speculation, though it is treading cautiously to avoid hurting economic growth. Outstanding bank loans grew at the slowest pace since July 2002 in March at 12.4%, while M2 money supply growth hit a more than 6-month low, reflecting the moderately tighter policy stance by the People’s Bank of China (PBOC). On the surface, the level of March new loans fell, also suggesting authorities are making some headway in weaning borrowers off endless cheap credit and coaxing debt-laden companies to deleverage.

China’s banks made 1.02 trillion yuan ($148.15 billion) in new loans in March, data showed on Friday, down from 1.17 trillion yuan in February and well below the 1.25 trillion yuan that analysts had predicted in a Reuters poll. However, banks still extended the third highest loans on record for a single quarter, totaling 4.22 trillion yuan in January-March. The first quarter is usually the busiest of the year for Chinese banks, when they have a fresh annual quota and look to lock up key clients. Loans to households surged to 797.7 billion yuan in March, according to Reuters calculations using PBOC data, accounting for 78% of all new loans in the month. That was much higher than either January or February and even the 50% of new loans in 2016.

[..] China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, rocketed to 2.12 trillion yuan in March from 1.15 trillion yuan in February. For the first quarter, TSF reached a record 6.93 trillion yuan – roughly equivalent to the size of Mexico’s economy – and well above last year’s first quarter total. For analysts, that suggests a surge in off-balance sheet lending, likely in the less regulated shadow banking system, despite repeated attempts by authorities to target riskier lending in past years. Loans to companies totaled 368.6 billion yuan in March, less than half the amount of household lending, PBOC data showed. That could be an ominous signal for the economy, unless firms were finding other sources of funding.

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Bubble dynamics.

Record High US Multi-Family Construction Set To Wreak Havoc On Rents (ZH)

Softening apartment rents, particularly in the massively over-priced, millennial safe-spaces of New York City and San Francisco, have been a frequent topic of conversation for us over the past several quarters…Now, a new report from Goldman’s Credit Strategy Team, led by Marty Young, helps to highlight some of the key data points that suggest that sinking rent will likely not be just an ephemeral problem. To start, an just like almost any bubble, sinking rents are the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders. Per the chart below, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.

Rents have already started to rollover but we suspect the correction has only just begun.

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Consumer spending falls = money velocity goes down = deflation.

Falling US Retail Sales Cast Doubt On Further Fed Interest Rate Rise (G.)

Falling retail sales and lower inflation in the US have added to signs that the world’s biggest economy has lost momentum in recent months, casting doubt over how many more times the Federal Reserve will raise interest rates this year. Stronger takings at clothing and electronics stores in March were not enough to offset a continued drop in demand for cars, according to figures from the US government (pdf). As a result, retail sales fell for the second month running. The 0.2% drop was deeper than forecasts in a Reuters poll of economists and followed a bigger than previously reported decline of 0.3% in February. Sales were also hurt by lower demand for building materials in March, chiming with a sharp slowdown in construction hiring as parts of the US were hit by severe snowstorms. Petrol station takings also dipped in March as fuel prices fell.

The few bright spots were a 2.6% rise in takings at electronics and appliance stores and a 1% rise in clothing sales. The drop in fuel prices in March echoed a pattern seen in the UK following a fall in global oil prices last month. Cheaper pump prices were also a key factor in softer US inflation. A measure of prices in the US fell for the first time in more than a year, dipping 0.3% in March, according to figures from the Labor Department. It said falling fuel prices and mobile phone charges drove the decline in the consumer price index (CPI) and were only partially offset by rising food prices. As a result, inflation – or the pace of price changes over a year – eased to 2.4% in March from 2.7% in February. Core inflation, which strips out volatile food and energy prices, eased to 2% from 2.2% in February and was the weakest since November 2015.

The retail sales and inflation data follow news of a sharp slowdown in job creation in the US in March as the poor weather, a government hiring freeze and a faltering retail sector all appeared to put a chill on President Donald Trump’s promise to boost hiring. But the unemployment rate declined to 4.5%, the lowest rate in a decade. The latest indications that the economy slowed in the opening months of the year will give policymakers at the US central bank more to debate as they decide when to next raise interest rates.

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“Hacker Fantastic @hackerfantastic: This is really bad, in about an hour or so any attacker can download simple toolkit to hack into Microsoft based computers around the globe.”

Leaked NSA Malware Threatens Windows Users Around The World (IC)

The ShadowBrokers, an entity previously confirmed by The Intercept to have leaked authentic malware used by the NSA to attack computers around the world, today released another cache of what appears to be extremely potent (and previously unknown) software capable of breaking into systems running Windows. The software could give nearly anyone with sufficient technical knowledge the ability to wreak havoc on millions of Microsoft users. The leak includes a litany of typically codenamed software “implants” with names like ODDJOB, ZIPPYBEER, and ESTEEMAUDIT, capable of breaking into — and in some cases seizing control of — computers running version of the Windows operating system earlier than the most recent Windows 10.

The vulnerable Windows versions ran more than 65% of desktop computers surfing the web last month, according to estimates from the tracking firm Net Market Share. The crown jewel of the implant collection appears to be a program named FUZZBUNCH, which essentially automates the deployment of NSA malware, and would allow a member of agency’s Tailored Access Operations group to more easily infect a target from their desk. According to security researcher and hacker Matthew Hickey, co-founder of Hacker House, the significance of what’s now publicly available, including “zero day” attacks on previously undisclosed vulnerabilities, cannot be overstated:

“I don’t think I have ever seen so much exploits and 0day [exploits] released at one time in my entire life,” he told The Intercept via Twitter DM, “and I have been involved in computer hacking and security for 20 years.” Affected computers will remain vulnerable until Microsoft releases patches for the zero-day vulnerabilities and, more crucially, until their owners then apply those patches. “This is as big as it gets,” Hickey said. “Nation-state attack tools are now in the hands of anyone who cares to download them…it’s literally a cyberweapon for hacking into computers…people will be using these attacks for years to come.”

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Russia and China are close to launching their own competitor to SWIFT. Good timing. This is nuts.

Hackers Release Files Indicating NSA Hacked SWIFT, Global Bank Transfers (R.)

Hackers released documents and files on Friday that cybersecurity experts said indicated the U.S. National Security Agency had accessed the SWIFT interbank messaging system, allowing it to monitor money flows among some Middle Eastern and Latin American banks. The release included computer code that could be adapted by criminals to break into SWIFT servers and monitor messaging activity, said Shane Shook, a cyber security consultant who has helped banks investigate breaches of their SWIFT systems. The documents and files were released by a group calling themselves The Shadow Brokers. Some of the records bear NSA seals, but Reuters could not confirm their authenticity. Also published were many programs for attacking various versions of the Windows operating system, at least some of which still work, researchers said.

In a statement to Reuters, Microsoft, maker of Windows, said it had not been warned by any part of the U.S. government that such files existed or had been stolen. “Other than reporters, no individual or organization has contacted us in relation to the materials released by Shadow Brokers,” the company said. The absence of warning is significant because the NSA knew for months about the Shadow Brokers breach, officials previously told Reuters. Under a White House process established by former President Barack Obama’s staff, companies were usually warned about dangerous flaws. Shook said criminal hackers could use the information released on Friday to hack into banks and steal money in operations mimicking a heist last year of $81 million from the Bangladesh central bank. “The release of these capabilities could enable fraud like we saw at Bangladesh Bank,” Shook said. The SWIFT messaging system is used by banks to transfer trillions of dollars each day.

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“..if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward.”

The ‘Smoking-Gun’ Quote On The Recent Syrian Gas-Attack (Zuesse)

After detailed decimation of President Trump’s ‘intelligence’ ‘justifying’ his invasion of Syria, the MIT specialist on such intelligence-analysis, Dr. Theodore Postol, concludes:

“I have worked with the intelligence community in the past, and I have grave concerns about the politicization of intelligence that seems to be occurring with more frequency in recent times – but I know that the intelligence community has highly capable analysts in it. And if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward. I am available to expand on these comments substantially. I have only had a few hours to quickly review the alleged White House intelligence report.

But a quick perusal shows without a lot of analysis that this report cannot be correct, and it also appears that this report was not properly vetted by the intelligence community. This is a very serious matter. President Obama was initially misinformed about supposed intelligence evidence that Syria was the perpetrator of the August 21, 2013 nerve agent attack in Damascus. This is a matter of public record. President Obama stated that his initially false understanding was that the intelligence clearly showed that Syria was the source of the nerve agent attack.

This false information was corrected when the then Director of National Intelligence, James Clapper, interrupted the President while he was in an intelligence briefing. According to President Obama, Mr. Clapper told the President that the intelligence that Syria was the perpetrator of the attack was “not a slamdunk.” The question that needs to be answered by our nation is how was the president initially misled about such a profoundly important intelligence finding?

The U.S. ‘news’media hid from the public Dr. Postol’s disproof of the Obama regime’s still-continuing assertions that the 21 August 2013 sarin attack was from Syria’s government instead of from the ‘moderate rebels’ (jihadists) whom the U.S. supported. Will they hide from the U.S. public his disproof of the U.S. regime’s latest such scam backing the actual perpetrators of a war-crime — will they do now as they did then?

This issue presents a challenge to the U.S. ‘news’ media, to finally show some integrity, some honor, and expose the operations of the gang at the U.S. government’s top, instead of simply continuing to pump that gang’s propaganda. Without the continuing cooperation of America’s ‘news’media, we would not now be heading toward World War III — global nuclear war. What would be the time when these ‘news’media will do their job, instead of do what they’re being paid to do, if that time is not now.

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Even more lobbyists needed?!

US Insurers Sue Saudis for $4.2 Billion Over 9/11 (TAM)

Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack. The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack. The biggest target is the Saudi National Commercial Bank, which is majority state-owned.

The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law. While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups. Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.

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Everybody should know this.

Understanding Land Value Taxation (Walker)

Back in the 18th and 19th centuries, economists took a dim view of landowners. Influential theorists like Adam Smith, David Ricardo and John Stuart Mill saw them as a drag on economic activity, primarily because they reduced the value of other people’s economic activity (through rent) without any incentive to make an economic contribution themselves. In the late 1800s, American social theorist and economist Henry George started a movement arguing for a single land value tax (LVT) – on the unimproved value of land – to replace other forms of taxation. It was rooted in the idea that if economic activity (labour, trade etc.) is the source of tax revenues, tax inevitably becomes a drag on the very thing that creates it. And while productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity.

Rent and taxes are a ‘double whammy’ on productive people. While productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity. That means rent – like taxes – is a drag on the economy. But unlike taxes, which can be used to stimulate economic activity through public spending, rent disappears into landlords’ pockets. So apart from the relatively small economic impact from landlords’ spending, their rent takes value out of the economy and delivers little value back to it. Understandably, the Georgists (Henry George’s LVT supporters) are still going strong today.

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The Vichy comment looks odd; why go there? But do remember: French polls are meaningless by now.

Le Pen Ready to Be ‘Crucified’ for France (BBG)

Far-right candidate Marine Le Pen pulled all the stops to stem her slide in the polls, saying she’s willing to be “crucified” for her stance on absolving France for the wartime deportation of Jews, and pledging to protect the country from Islamic fundamentalists. In a wide-ranging interview Friday on France Info radio nine days before the first round of the presidential vote, the 48-year-old anti-immigration candidate expressed disappointment at what she said was U.S. President Donald Trump going back on campaign promises, while focusing mainly on well-worn themes that most strike a chord with her electorate: Islam, immigration, national identity and terrorism.

“I don’t want France to be damaged, to be humiliated, that it be held responsible when it is not responsible,” Le Pen said. “People can crucify me, I will not change my mind, I will always defend France.” The National Front candidate’s lead in the polls has been whittled away over the last few weeks, leaving her struggling to regain momentum. First-round support for both Le Pen and centrist Emmanuel Macron slipped 0.5 points to respectively 23.5% and 22.5%, according to a daily rolling poll by Ifop on Thursday. Le Pen was at 26.5% in mid-March. [..] In the radio interview, Le Pen maintained her contention that France had no responsibility for the 1942 roundup of Jews in and around Paris by French police at the request of the German occupying forces to be sent to concentration camps.

The candidate, who first made that comment on April 9, was reverting to the long-established party line that shuns any hint of repentance. Le Pen said she is “extremely sensitive to the martyrdom of the Jews,” adding that the only issue was “juridical,” whether the Vichy regime was France or not. “I consider that Vichy was not France. French people can commit crimes without France being criminal.” In the interview, Le Pen criticized Trump for changing his mind on the U.S.’s global role after he said on Wednesday that the North Atlantic Treaty Organization was “no longer obsolete” in fighting terrorism. “Undeniably he is in contradiction with the commitments he had made,” Le Pen said. Trump had said in January that NATO was “obsolete.” Among her key proposals is for France to quit the alliance.

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9 days before an election. They’re trying to make her win?!

French Prosecutors Seek To Lift Le Pen Immunity Over Expenses Inquiry (AFP)

French prosecutors have asked the European parliament to lift the immunity of the far-right presidential candidate Marine Le Pen over an expenses scandal, deepening her legal woes on the eve of the election. The move comes just nine days before France heads to the polls for a highly unpredictable vote, with Le Pen – who heads the Eurosceptic Front National (FN) – one of the frontrunners in the 23 April first round. The request was made at the end of last month after Le Pen, who is a member of the European parliament, invoked her parliamentary immunity in refusing to attend questioning by investigating magistrates. The prosecutors also made a similar request regarding another MEP from Le Pen’s party, Marie-Christine Boutonnet, who also avoided questioning.

Le Pen, who has denied misusing parliamentary funds, shrugged off the move. “It’s totally normal procedure, I’m not surprised,” she told France Info radio. The case was triggered by a complaint from the European parliament, which accuses the FN of defrauding it to the tune of about €340,000 (£290,000). The parliament believes the party used funds allotted for parliamentary assistants to pay FN staff for party work in France. In February, it said it would start docking Le Pen’s pay unless she paid the money back. The allegations appear to have had little impact on Le Pen’s campaign, dwarfed by the bigger scandal engulfing her conservative rival François Fillon.

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A day like so many others.

More Than 2,000 Migrants Rescued In Dramatic Day In Mediterranean (R.)

More than 2,000 migrants trying to reach Europe were plucked from the Mediterranean on Friday in a series of dramatic rescues and one person was found dead, officials and witnesses said. An Italian coast guard spokesman said 19 rescue operations by the coast guard or ships operated by non-governmental organizations had saved a total of 2,074 migrants on 16 rubber dinghies and three small wooden boats. The medical charity Medecins Sans Frontieres (MSF) said in a tweet that one teenager was found dead in a rubber boat whose passengers were rescued by its ship Aquarius. “The sea continues to be a graveyard,” MSF said in a Tweet. The coast guard spokesman confirmed that one person had died but gave no details. MSF said two of their ships, Aquarius and Prudence, had rescued about 1,000 people in nine boats.

Desperate refugees struggled to stay afloat after they slid off their rubber boat during a rescue operation by the Phoenix, a ship of the rescue group Migrant Offshore Aid Station (MOAS). Video footage showed rescuers jumping into the water off the coast of Libya to help them. “In 19 years of covering the migration story, I have never experienced anything like today,” said Reuters photographer Darrin Zammit Lupi, who was aboard the Phoenix. In one operation, the Phoenix rescued 134 people, all from sub-Saharan counties, he said. Those rescued by the MOAS and MSF ships were transferred to Italian coast guard ships, which had rescued other migrants, to be taken to Italian ports. According to the International Organisation for Migration, nearly 32,000 migrants have arrived in Europe by sea so far this year. More than 650 have died or are missing.

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