Mar 292019
 
 March 29, 2019  Posted by at 10:22 am Finance Tagged with: , , , , , , , , , , ,  14 Responses »


Pablo Picasso Self portrait 1906

 

Theresa May Cuts Brexit Deal In Half (Ind.)
Theresa May Tries To Buy Time For Brexit Deal As MPs Call On Her To Leave (G.)
Number Of Children In Absolute Poverty Across UK Hits 3.7 Million (Ind.)
The Humbling of Britain (Fletcher)
Trump Rails Against ‘Greatest Hoax’ At First Rally Since Mueller Report (G.)
EU Members Unanimously Reject Israel’s Sovereignty Over Golan Heights (Ind.)
Pelosi and McConnell Are Inching Us Closer to Nuclear War (TD)
Average Americans Can’t Afford A Home In 70% Of The Country (CBS)
Australian Economy Relies On Coal Exports To China (G.)
Tylenol -Paracetamol- Reduces Positive Empathy (FR.)
Mosquito-Spread Diseases May Endanger Millions In New Places (G.)
Skin-Eating Fungal Disease Wipes Out 90 Amphibian Species In 50 Years (G.)
Rare Sight Of An Animal On The Brink Of Extinction (AFP)
A Year of Silencing Julian Assange (Vos)

 

 

Crazier by the day. What if one plan or another gets voted through by 1 single vote unleashing events that will last 50 years or more? That’s democracy?

Theresa May Cuts Brexit Deal In Half (Ind.)

Theresa May is set to push ahead with a critical vote on part of her Brexit deal after overcoming the speaker’s ban on repeatedly putting the same plan to MPs. Commons leader Andrea Leadsom confirmed on Thursday that the government will exclude the political declaration, which deals with Britain’s future relations with the EU, in Friday’s vote – focusing solely on the withdrawal agreement. The withdrawal agreement and the political declaration together form Theresa May’s Brexit deal. The EU has said the prime minister needs to secure approval by 11pm UK time on Friday for the withdrawal agreement – not the political declaration – if the UK is to be given an automatic delay of its departure date from the bloc until 22 May. Otherwise, Britain has until 12 April to announce a new plan or leave the bloc without a deal.


The announcement came as Downing Street made a last push to win over Tory rebels and the DUP to her Brexit deal after offering to quit before the next stage of talks. There is still substantial opposition to the agreement, even after the prime minister sacrificed her job for her deal, promising to quit if MPs approved the agreement and let Britain leave the EU on schedule in May. Jeremy Corbyn and Theresa May spoke for 20 minutes on Thursday evening and the Labour leader said his MPs would not back the Government move. “Jeremy made clear Labour will not agree a blindfold Brexit to force through Theresa May’s damaging deal, which would leave the next Tory party leader free to rip up essential rights and protections and undermine jobs and living standards,” a Labour spokesperson said.

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Sometimes I wonder what John Lennon would have said.

Theresa May Tries To Buy Time For Brexit Deal As MPs Call On Her To Leave (G.)

Theresa May will put only half of her Brexit deal to a vote on Friday, in a final desperate attempt to secure MPs’ support as senior cabinet ministers made clear she must leave No 10 very soon, whatever happens. On the day Britain was originally meant to leave the EU – something May had promised would happen more than 100 times – the prime minister will put only the withdrawal agreement to a vote, having promised to step aside if the MPs give her their approval. No 10 is hoping that some Labour MPs could back the withdrawal agreement severing the UK’s membership of the EU, without the political declaration governing Britain’s future relationship with Brussels. However, it remains extremely unlikely to pass as Labour said it would never vote for a “blindfold Brexit”, while around 30 Eurosceptic Tories and the 10 Democratic Unionist MPs are also holding out against it.


MPs will be warned that failure to back the withdrawal agreement this time will lead to a long extension that requires participation in European parliament elections or crashing out without a deal on 12 April. MPs who support a soft Brexit are meanwhile working on a new round of votes on the alternatives on Monday, including a compromise that could combine the support of those MPs who voted for a customs union, for Labour’s Brexit plan and for the Norway-style option dubbed “common market 2.0”. With European leaders sceptical that such efforts will be successful, the EU’s chief negotiator Michel Barnier told diplomats on Thursday that a no deal was now “the most plausible outcome” and ordered work to begin on wargaming the bloc’s response.

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This is what all those politicians should be working on.

Number Of Children In Absolute Poverty Across UK Hits 3.7 Million (Ind.)

The number of children living in absolute poverty across the UK has increased by 200,000 in a year, to a total of 3.7 million. New government data shows that while the rate of absolute child poverty had been gradually falling since 2012, it is now rising again. It will come as an embarrassment for ministers, who last year responded to a rise in relative poverty by highlighting that absolute poverty rates – their preferred measure – had fallen. Campaigners said the main drivers of the increase were cuts to benefits and tax credits, which they said hit working families with more than two children particularly hard.


The figures show that among children in poverty, there has been a rise in those who live in working families – up from 69 per cent to 72 per cent in a year. There has also been an increase in the risk of poverty for children in larger families, with the number of households with three or more children up from 33 per cent in 2012 to 43 per cent. Overall, across the whole population, 100,000 more people are living in absolute poverty, with the figure standing at 12.5 million. Research carried out for the Child Poverty Action Group (CPAG)to coincide with the publication of the figures found that the four-year freeze on children’s benefits alone would lead to average loses of £240 per year for families with children.

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“They proceeded to seduce voters with fake facts and bogus promises. They stoked fears, fuelled grievances and inflamed prejudices. They appealed to the lowest human impulses, and unlocked the ugliest features of the British character – xenophobia, jingoism, aggression, insularity, arrogance and a perverse, pig-headed pride in our own ignorance.”

The Humbling of Britain (Fletcher)

We are reduced to this. A humiliated, supplicant British prime minister sitting alone in a Brussels side room for six hours while the rest of the European Union discusses our fate. A government no longer capable of governing. A country that has become a byword for chaos and dysfunction. A sundered “United Kingdom”. Hundreds of thousands of Britons seeking citizenship in other EU states. Industry howling in rage and frustration. MPs needing police protection. People stockpiling food and medicines. The public discourse poisoned. Families split. Friends riven. The military on standby in case of civil unrest. This is not “taking back control”. This is not the proud, independent, liberated Britain that the Brexiteers promised.

It is grotesque, calamitous, an epic act of self-harm brought about not by some war or disaster but by our own stupidity. And the true “enemies of the people” are not those opposing this catastrophic Brexit. They are not the million decent people from every background who marched in London last Saturday, or the five million who have petitioned to revoke Article 50, but those whose lies, zealotry, and political recklessness have all but broken Britain. For posterity’s sake, those self-styled “patriots” who have so grievously betrayed their country should be named and shamed. The original sin was that of David Cameron, now blithely writing his memoirs in his shepherd’s hut, enjoying exotic holidays and enriching himself on the speakers’ circuit.

The public was not clamouring for a referendum on EU membership. Cameron called it for the narrow purpose of uniting his party and fending off Ukip. He offered an ill-informed electorate a binary choice on an extraordinarily complex issue of profound constitutional importance without even the safeguard of a 60 per cent threshold for approval. It was one of the most foolish gambles ever taken by a British prime minister, and one that unleashed the charlatans, rogues and demagogues of the Leave campaign. They proceeded to seduce voters with fake facts and bogus promises. They stoked fears, fuelled grievances and inflamed prejudices. They appealed to the lowest human impulses, and unlocked the ugliest features of the British character – xenophobia, jingoism, aggression, insularity, arrogance and a perverse, pig-headed pride in our own ignorance.

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The Guardian’s not going to give up. They just turn things upside down, it’s Trump who’s the bogeyman, he attacks media, not the other way around, no matter that the media’s Russiagate was exposed by Mueller: “Donald Trump continued his assault on the media and Democrats on Thursday night..”

This bit says a lot, though it’s hard to decide whether the author has no sense of humor or he thinks his readers don’t:“Trump’s more outlandish claims came in an attack on progressives’ Green New Deal, which he falsely stated called for the elimination of airplanes and cows.”

Trump Rails Against ‘Greatest Hoax’ At First Rally Since Mueller Report (G.)

Donald Trump continued his assault on the media and Democrats on Thursday night, wrongly claiming “total exoneration, complete vindication” at his first rally since Robert Mueller submitted his report. Trump dedicated about half of his approximately 90-minute speech in front of a raucous audience at Grand Rapids to the topic, labeling the accusations and investigation “ridiculous bullshit”. The president bounced between theories about why the special counsel’s investigation happened and attacks on his opponents. “All of the Democrats, politicians, the media also – bad people,” Trump told the crowd at Michigan’s Van Andel Arena. “The crooked journalists, the totally dishonest TV pundits” helped perpetuate “the single greatest hoax in the history of politics”.

He later claimed that the investigation was really an effort “to overturn the results of the 2016 election”. “It was nothing more than a sinister effort to undermine our historic election and to sabotage the will of the American people,” Trump said to loud boos. He repeatedly called for “accountability”, drawing chants of “Lock them up”. At other points, the president mocked Democratic opponents, including “little pencil-neck Adam Schiff” and his fellow lawmaker Jerry Nadler, whom Trump said he “beat again”. Though Trump told the crowd multiple times that Mueller found “no collusion and no obstruction”, the attorney general William Barr’s four-page summary of Mueller’s report only stated that it found no proof that Trump criminally colluded with Russia.

Barr’s summary said Mueller had reached no conclusion about whether Trump had obstructed justice, but Barr wrote that he decided there was insufficient evidence to pursue an obstruction charges against Trump. [..] Trump’s more outlandish claims came in an attack on progressives’ Green New Deal, which he falsely stated called for the elimination of airplanes and cows.

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I’ll give you my neighbor’s house if you want it.

EU Members Unanimously Reject Israel’s Sovereignty Over Golan Heights (Ind.)

The 28 member countries of the European Union have unanimously declared that they do not recognise Israeli sovereignty over the Golan Heights region, despite a change in policy by the United States. This week US president Donald Trump signed a presidential proclamation officially recognising Israel’s control of the area, which it has occupied since 1967 when it captured the region from Syria during the Six Day War. But in a statement approved by the European Council’s 28 members, the EU’s high representative for foreign affairs said: “The position of the European Union as regards the status of the Golan Heights has not changed.


“In line with the international law and UN Security Council resolutions 242 and 497, the European Union does not recognise Israeli sovereignty over the occupied Golan Heights.” The territory is widely internationally recognised as belonging to Syria’s Arab neighbour. Mr Trump said: “After 52 years it is time for the United States to fully recognise Israel’s sovereignty over the Golan Heights, which is of critical strategic and security importance to the State of Israel and regional stability!” Israel’s prime minister Benjamin Netanyahu said Mr Trump’s recognition was “historic”, while Syria said it was “blatant attack” on its sovereignty and pledged to take the territory back by “all available means”. Turkey and Russia also voices opposition to the move.

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Same party.

Pelosi and McConnell Are Inching Us Closer to Nuclear War (TD)

When Nancy Pelosi and Mitch McConnell teamed up to invite NATO Secretary General Jens Stoltenberg to address a joint session of Congress, they had every reason to expect the April 3 speech to be a big hit with U.S. media and political elites. The establishment is eager to affirm the sanctity of support for the transatlantic military alliance. Huge reverence for NATO is matched by how dangerous NATO has become. NATO’s continual expansion — all the way to Russia’s borders — has significantly increased the chances that the world’s two nuclear superpowers will get into direct military conflict. But in the United States, when anyone challenges the continued expansion of NATO, innuendos or outright smears are likely.

Two years ago, when the Senate debated whether to approve bringing Montenegro into NATO, the mud flew at Sen. Rand Paul of Kentucky after he showed up to object. An infuriated Sen. John McCain declared on the Senate floor: “I have no idea why anyone would object to this, except that I will say — if they object, they are now carrying out the desires and ambitions of Vladimir Putin, and I do not say that lightly.” Moments later, when Paul said “I object,” McCain proclaimed: “The senator from Kentucky is now working for Vladimir Putin.” With those words, McCain conveyed the common madness of reverence for NATO — and the common intolerance for anything that might approach a rational debate on whether it’s a good idea to keep expanding an American-led military alliance to, in effect, push Russia into a corner. Doing so is understandably viewed from Russia as a dire threat.

Ever since the fall of the Berlin Wall — and the quickly broken promises by the U.S. government in 1990 that NATO would move “not one inch eastward” — NATO has been closing in on Russia’s borders while bringing one nation after another into full military membership. During the last three decades, NATO has added 13 countries — and it’s not done yet. NATO members “have clearly stated that Georgia will become a member of NATO,” Stoltenberg asserted days ago while visiting the Georgian capital of Tbilisi. He added: “We will continue working together to prepare for Georgia’s NATO membership.” For good measure, Stoltenberg tweeted on March 25 that he was “delighted to observe the joint NATO-Georgia exercise” and “honored to meet veterans & serving soldiers,” adding that “Georgia is a unique partner for #NATO & we are stepping up our cooperation.”

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Make the rates cheaper then!

Average Americans Can’t Afford A Home In 70% Of The Country (CBS)

Even with rising wages and falling mortgage rates, Americans can’t afford a home in more than 70 percent of the country. Out of 473 U.S. counties analyzed in a report, 335 listed median home prices more than what average wage earners could afford, according to a report from ATTOM Data Solutions. Among them are the counties that include Los Angeles and San Diego in California, as well as Miami-Dade County in Florida and Maricopa County in Arizona. New York City claimed the largest share of a person’s income to purchase a home, according to the report. While average earners nationwide need to spend only about one-third of their income on a home, residents in Brooklyn and Manhattan must shell out more than 115 percent of their income.


In San Francisco, residents must spend 103 percent, and in Hawaii’s Maui County, it takes 101 percent. Homes were found to be affordable in Chicago, Cleveland, Houston, Detroit and Philadelphia. Broadly speaking, homes are more affordable today than they were one year ago. While home prices are still rising in many areas, they’re also falling in others. Unaffordability in the market has been the result of slower homebuilding and homeowners staying put longer. Both trends have reduced the supply of homes for sale in the market. So long as interest rates don’t go up and the impact from last year’s tax cuts don’t wholly fade away, the market may yet create better conditions for buyers. “Affordability may improve because of the simple fact that homes are out of reach for so many home seekers,” Todd Teta, chief product officer at ATTOM Data Solutions, said in a statement.

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China has no intention of burning less.

Australian Economy Relies On Coal Exports To China (G.)

Australia’s booming earnings from coal exports could be in jeopardy if China switches to more domestic supply and if port restrictions continue to favour competing exporters, a federal government report has warned. The country’s energy and resources exports will rake in an extra $20bn to rise to $278bn this financial year, the report by the industry department said, creating a timely bonanza for the treasurer, Josh Frydenberg, to exploit in next week’s federal budget. But the report, released on Friday, warned that Australia faced an imminent threat to the $5bn thermal coal trade with China.


Amid growing concern about delays imposed on Australian coal shipments at Chinese ports, it detailed how the government in Beijing had restructured its domestic coal sector in the past 10 years, with potentially serious implications for Canberra’s coffers. China was poised to switch on 200m tonnes of thermal capacity, it said, after it built rail freight lines to hard-to-reach coalfields hundreds of kilometres inland. Another 400m tonnes of capacity was under construction. Australia is the second largest exporter of thermal coal in the world, with 208m tonnes worth $26bn exported last year. About 20% of that went to China. The report warned that although Australian producers could find other markets, such as India, the pressure on prices would be downwards.

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Drugs that are prescribed too easily are never good.

Tylenol -Paracetamol- Reduces Positive Empathy (FR.)

Acetaminophen – a potent physical painkiller that also reduces empathy for other people’s suffering – blunts physical and social pain by reducing activation in brain areas (i.e. anterior insula and anterior cingulate) thought to be related to emotional awareness and motivation. Some neuroimaging research on positive empathy (i.e., the perception and sharing of positive affect in other people) suggests that the experience of positive empathy also recruits these paralimbic cortical brain areas. We thus hypothesized that acetaminophen may also impair affective processes related to the experience of positive empathy. We tested this hypothesis in a double-blind, placebo-controlled experiment.


Specifically, we administered 1,000 mg acetaminophen or a placebo and measured effects on different measures of positive empathy while participants read scenarios about the uplifting experiences of other people. Results showed that acetaminophen reduced personal pleasure and other-directed empathic feelings in response to these scenarios.

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“Canada and parts of northern Europe..”

Mosquito-Spread Diseases May Endanger Millions In New Places (G.)

Half a billion more people could be at risk from mosquito-transmitted diseases within 30 years as a result of the warming climate, according to a new study. Canada and parts of northern Europe could be newly exposed to the threat. People there could come into contact with yellow fever, Zika, dengue and chikungunya, as well as other emerging diseases. The study, published in the journal PLOS Neglected Tropical Diseases, finds that humans could prevent the spread of disease-carrying mosquitoes if they aggressively take actions to combat global warming. Sadie Ryan, a co-author from the University of Florida, said the study and the maps it produced could help policymakers and medical professionals understand where the bugs and their diseases might move.


“As you move into a hotter world, the places that get really hot are going to have all kinds of other vulnerabilities with them,” Ryan said. “Having studies like this that say, hey, this is potentially where these things can show up is going to be one tool in a big tool box.” Currently, a little more than six billion people are in climates where the two mosquitoes studied can live for a month or more each year. But as climate change pushes milder weather toward the poles, new regions become hospitable to them. One of the mosquitoes studied, the yellow fever mosquito Aedes aegypti, thrives in a warmer climate. But another, the tiger mosquito Aedes albopictus, prefers it cooler. So the researchers determined what different levels of rising temperatures would mean for the spread of both. They found thatif the world only moderately stalls rising temperatures, it’s possible both mosquitoes might do well, presenting a conundrum for climate-health planners.

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Everything’s in decline that lives.

Skin-Eating Fungal Disease Wipes Out 90 Amphibian Species In 50 Years (G.)

A deadly disease that wiped out global populations of amphibians led to the decline of 500 species in the past 50 years, including 90 extinctions, scientists say. A global research effort, led by the Australian National University, has for the first time quantified the worldwide impact of chytridiomycosis, or chytrid fungus, a fungal disease that eats away at the skin of amphibians. The disease was first discovered in 1998 by researchers at James Cook University in Queensland investigating the cause of mysterious, mass amphibian deaths. Chytridiomycosis is caused by two fungal species, both of which are likely to have originated in Asia, and their spread has been facilitated by humans through activities such as the legal and illegal pet trade.


Forty-two researchers worked on the new study, published in Science on Friday, which pinpoints the extent of the disease and how devastating it has been for frog, toad and salamander species. They found evidence that at least 501 species had declined as a result of chytrid fungus and 90 of those were presumed or confirmed extinct. “The results are pretty astounding” Benjamin Scheele, a research fellow at the ANU and the project’s lead researcher, said. “We’ve known that chytrid is really bad for the better part of two decades but actually researching and quantifying those declines, that’s what this study does.” The scientists identified declines in amphibian species in Europe, Africa, Central and South America and Australia because of the disease. Scheele said there were no declines in Asia because species had evolved to be naturally resistant.

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The sadness is deafening.

Rare Sight Of An Animal On The Brink Of Extinction (AFP)

Three rare Sumatran tiger cubs ventured into public view for the first time Friday in what Sydney zookeepers called a “wonderful success” for the future of the critically endangered species. Two female cubs — Mawar, which means “rose” in Indonesian, and Tengah Malam (“midnight”) — and their brother Pemanah (“archer”) were allowed outside their closed dens to explore the more natural outdoor tiger compound at Sydney’s Taronga Zoo. Zookeeper Louise Ginman said the move from the dens to the outdoors for the cubs, which were born on January 17, posed a challenge for their mother, Kartika. “Now that they are moving about a larger space and learning to climb terrain, she will have a much harder time controlling them,” Ginman said.

Sumatran tigers are classified as critically endangered, with as few as 350 remaining in patches of forest on the Indonesia island of Sumatra, where their natural habitat has been devastated by illegal wildlife trade and jungle clearing for palm oil plantations. “This birth is such a wonderful success for the conservation of this fragile species, and I am so excited that we can now invite guests to share our joy,” Gilman said. “It’s such a shock that these three little cubs represent one per cent of the remaining wild population, but with zoo-based conservation programs worldwide and the support of our guests here in Sydney, there’s still hope for the future of this species,” she said.

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Burn a candle.

A Year of Silencing Julian Assange (Vos)

One year ago Thursday, Ecuador’s government under President Lenin Moreno silenced Julian Assange. WikiLeaks wrote on Twitter Wednesday: “… March 28, marks one year that WikiLeaks publisher Julian Assange has been illegally gagged from doing journalism—any writing that expresses a ‘political opinion’? even on his own treatment, after pressure from the U.S. on Ecuador.” On this date in 2018 Moreno imposed on Assange what Human Rights Watch’s legal counsel Dinah Pokempner described as looking “more and more like solitary confinement.” Moreno cut off Assange’s online access and restricted visitors to the Ecuador embassy in London where Assange has had legal political asylum since 2012.

Moreno cited Assange’s critical social media remarks about Ecuador’s allies, the U.S. and Spain. Assange’s near-total isolation, with the exception of visits from legal counsel during week days, has been augmented by the Ecuadorian government’s imposition of a complex “protocol,” which, although eased slightly in recent months in respect of visits allowed, has not improved Assange’s overall status over the last 12 months. In some respects, it seems to have worsened. [..] On Thursday Ecuador’s foreign minister threatened additional “‘firm and sustained’ measures against Assange after @WikiLeaks reports on the @INAPapers offshore scandal involving the president and his brother,” WikiLeaks tweeted.


[..] The end of the collusion conspiracy theory came as a victory for Assange and WikiLeaks. Special Counsel Robert Mueller made it clear there would be no indictments against either for their roles during the 2016 election. However, the damage has been significant, with Assange unable to comment and WikiLeaks saddled with residual, unresolved smears. Over the last three years, cable news pundits endlessly vilified WikiLeaks and Assange by claiming the publisher coordinated with the Trump presidential campaign and became an instrument of the Kremlin in 2016.

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Jul 222016
 
 July 22, 2016  Posted by at 8:26 am Finance Tagged with: , , , , , , , , ,  1 Response »


Lewis Wickes Hine Night scene in Cumberland Glass Works, Bridgeton, NJ 1909

(There’s No) Money In The Mattress (Roberts)
Sub-Zero Government Bonds Turn the Hunt For Yield Upside Down (BBG)
US Sides With HSBC To Block Release Of Money Laundering Report (R.)
Are Wall Street Banks in Trouble? You’d Never Know from the Headlines (WSoP)
Denmark Faces ‘Out of Control’ Housing Market in Negative Spiral (BBG)
Fracklog in Biggest US Oil Field May All But Disappear (BBG)
China Continues To Produce More Steel Than The Rest Of The World Combined (BI)
China’s Vice FinMin: We’ve Got No Reason To Devalue The Yuan (CNBC)
Apple’s Q2 China Revenues Could Fall 20%: Baidu (CNBC)
Pension Funds Are Underwater – And Taking Us With Them (VW)
Once-Expanding EU Prepares To Contract For The First Time In Its History (G.)
Earth On Track For Hottest Year Ever As Warming Speeds Up (R.)
Fighting the Most Dangerous Animal in the World (Spiegel)

 

 

“Every time someone says, ‘There is a lot of cash on the sidelines,’ a tiny part of my soul dies.”

Scary graph.

(There’s No) Money In The Mattress (Roberts)

Here is a myth that just won’t seem to die: “Cash On The Sidelines.” This is the age old excuse why the current “bull market” rally is set to continue into the indefinite future. The ongoing belief is that at any moment investors are suddenly going to empty bank accounts and pour it into the markets. However, the reality is if they haven’t done it by now after 3-consecutive rounds of Q.E. in the U.S., a 200% advance in the markets, and now global Q.E., exactly what will that catalyst be? However, Clifford Asness summed up the problem with this myth the best and is worth repeating:

“Every time someone says, ‘There is a lot of cash on the sidelines,’ a tiny part of my soul dies. There are no sidelines. Those saying this seem to envision a seller of stocks moving her money to cash and awaiting a chance to return. But they always ignore that this seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines. If you want to save those who say this, I can think of two ways. First, they really just mean that sentiment is negative but people are waiting to buy. If sentiment turns, it won’t move any cash off the sidelines because, again, that just can’t happen, but it can mean prices will rise because more people will be trying to get off the nonexistent sidelines than on.

Second, over the long term, there really are sidelines in the sense that new shares can be created or destroyed (net issuance), and that may well be a function of investor sentiment. But even though I’ve thrown people who use this phrase a lifeline, I believe that they really do think there are sidelines. There aren’t. Like any equilibrium concept (a powerful way of thinking that is amazingly underused), there can be a sideline for any subset of investors, but someone else has to be doing the opposite. Add us all up and there are no sidelines.”

Margin debt levels, negative cash balances, also suggest the same. Cash on the sidelines? Not really.

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And there are plenty plans to ‘do more’.

Sub-Zero Government Bonds Turn the Hunt For Yield Upside Down (BBG)

The erosion of yields on government debt is generally thought to push investors into riskier assets as they seek out higher returns. That’s true, argue Credit Suisse analysts in a new note, but only in the ‘first phase’ of a negative yield world. That is, when yields on government bonds with shorter-durations dip below zero, total returns on riskier assets such as junk-rated corporate debt do trump returns on German bunds. That tendency disappeared, however, as yields on longer-dated government debt also fell into negative territory — at least in Europe.

“The defining characteristic of Phase One is a strong outperformance of high-yielding credit assets versus low-yielding credit assets and government bonds, i.e. a strong hunt for yield trend. Nothing unusual so far,” write Credit Suisse’s William Porter and Chiraag Somaia. “However, more interestingly, Phase Two, still characterized by negative yields, actually sees an outperformance of government bonds versus both low- and high-yielding credit assets, i.e. any hunt for yield over the past 2.5 years as a whole has been an unsuccessful strategy.” The trend is shown in the below chart, where total returns on German government bonds have bested high-yield and investment-grade corporate debt.

“For now, we think ever-falling yields represent an overall risk aversion and/or verdict on economic policies that is not overly friendly to yieldier assets despite the obvious incentives they carry in this environment,” conclude the analysts. “So yield-hunting behavior is not always and everywhere wrong – this summer may treat it favorably – but any outperformance has subsequently been counter-trend in the past 2.5 years.”

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Quick! Find me a carpet to sweep this under!

US Sides With HSBC To Block Release Of Money Laundering Report (R.)

The U.S. government asked a federal appeals court on Thursday to block the release of a report detailing how HSBC is working to improve its money laundering controls after the British bank was fined $1.92 billion. In a brief filed with the 2nd U.S. Circuit Court of Appeals, the U.S. Department of Justice sought to overturn an order issued earlier this year by U.S. District Judge John Gleeson to make public a report by the bank’s outside monitor. “Public disclosure of the monitor’s report, even in redacted form, would hinder the monitor’s ability to supervise HSBC,” the government’s court filing said, adding that bank employees would be less likely to cooperate with the monitor if they knew their interactions could be released.

HSBC concurred with the court’s finding. “HSBC also argues that the Monitor’s report should remain confidential, as have the Monitor, the UK Financial Conduct Authority, the US Federal Reserve and other HSBC regulators,” HSBC said in a statement. “The effectiveness of the monitorship is dependent on confidentiality.” The filing comes a week after U.S. congressional investigators criticized senior officials at the Department of Justice for overruling internal recommendations to criminally prosecute HSBC for money-laundering violations. Instead, the government in 2012 fined HSBC and entered into a five-year deferred prosecution agreement that stipulated all charges would be dropped if the bank agreed to install an independent monitor to help improve compliance. In the 2012 settlement, HSBC admitted to violating U.S. sanctions laws and failing to stop Mexican and Colombian cartels from laundering hundreds of millions of dollars in drug proceeds through the bank.

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Martens & Martens. Strong.

Are Wall Street Banks in Trouble? You’d Never Know from the Headlines (WSoP)

On July 14, when America’s biggest bank by assets reported its second quarter earnings, this headline ran at the New York Times: “JPMorgan Chase Has Strong Quarter as Earnings Top Estimates.” CNBC, a unit of NBCUniversal, used the same criteria in its headlines to report the earnings of Citigroup, Bank of America and Morgan Stanley — putting a positive spin in the headline because the earnings had topped what analysts were expecting – rather than the far more meaningful, and traditional, measure of whether earnings had beaten the same quarter a year earlier. CNBC’s headlines read: Citigroup earnings handily top Wall Street expectations: CNBC-July 15, 2016 Bank of America earnings top expectations: CNBC-July 18, 2016 Morgan Stanley solidly beats earnings expectations: CNBC-July 20, 2016.

This is hubris of the highest order. Publicly traded companies simply guide research analysts toward lowered expectations on their upcoming quarterly earnings so that the companies can surprise on the upside and get these kinds of misleading headlines in the all-to-willing New York media – which has a vested interest in making everything appear rosy in the Big Apple. (New York media is dependent on fat Wall Street profits to boost the price of their own publicly traded shares since ad revenue in New York is linked to the health of Wall Street.) One would never know by these headlines that big bank earnings were actually down year over year – and in some cases, down dramatically. JPMorgan Chase earned $6.2 billion in the second quarter of 2016 versus $6.29 billion in the second quarter of 2015.

The news was far worse at Citigroup, despite the rosy headline at CNBC. Citigroup’s second quarter profit fell 17.5% year over year, to $4 billion from $4.85 billion in the second quarter of 2015. Its revenues were the lowest in 14 years according to S&P Capital IQ. At Bank of America, profit fell to $4.23 billion from $5.3 billion in the second quarter of 2015, a sharp decline of 20%. Morgan Stanley reported a year over year decline of 8%, with profits in the second quarter of 2016 falling to $1.67 billion from $1.82 billion in the second quarter of 2015. Now news of jobs cuts is spilling out with the Wall Street Journal reporting that Bank of America will make “$5 billion in annual cost cuts by 2018 as part of its strategy to deal with persistently low interest rates that are eating away at lenders’ profitability.”

The New York Post is calling job cuts at Goldman Sachs the worst since the financial crisis in 2008. Fortune’s Stephen Gandel reported two days ago that Goldman had slashed a whopping “1,700 positions in the past three months.” Something else one won’t find in those smiley-face headlines is the fact that Wall Street is not only bleeding profits and jobs but it’s also bleeding equity capital – the only thing that separates the word “bank” from the word “bankruptcy.” While the Dow Jones Industrial Average and Standard and Poor’s 500 Indices may be setting new highs, the big Wall Street banks are decidedly not.

Over the past 52 weeks, Goldman is down from a share price of $214.61 to an open this morning of $162.55 – a decline of 24%. Bank of America is off 22% from its 52-week high, based on today’s open. Morgan Stanley and Citigroup are in decidedly worse shape with declines of 28% and 27%, respectively, from their 52 week highs versus their share price at the open of the New York Stock Exchange this morning. Add this all up and you’re talking about tens of billions of dollars in equity capital vaporizing.

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Denmark is in the same position as dozens of other countries: “..there’s a real risk that housing prices can see a dramatic fall, even though we’re not seeing a bubble in the classical definition of the term..”

Denmark Faces ‘Out of Control’ Housing Market in Negative Spiral (BBG)

Denmark’s biggest mortgage bank is warning there’s a risk the housing market may get “out of control,” especially around cities, as long-term negative interest rates make borrowers complacent. “To be concrete, there is a danger that Danes go blind to the risk of rates ever rising again,” Tore Stramer, chief analyst at Nykredit in Copenhagen, said in an e-mail. “That raises the risk of a major housing price decline, when rates at some point or other start to rise again.” Denmark’s central bank has had negative interest rates for the better part of four years. Thomas F. Borgen, CEO of Danske Bank, says his managers are operating under the assumption that rates won’t go positive until “at least” 2018, with Britain’s departure from the EU adding to the risk of an even longer period below zero.

With no other country on the planet having experienced negative rates longer than Denmark, the distortions the policy is wreaking may provide a preview of what other economies face should they go down a similar path. Danes can get short-term mortgages at negative interest rates, and pay less to borrow for 30 years than the U.S. government. Apartment prices in Denmark are now about 5% above their 2006 peak. Back then, the country’s bubble burst and apartment prices slumped about 30% through 2009. “It’s worth remembering that there’s a real risk that housing prices can see a dramatic fall, even though we’re not seeing a bubble in the classical definition of the term,” Stramer said. Denmark’s negative rates are a product of the central bank’s policy of defending the krone’s peg to the euro. Its main rate was minus 0.75% for most of last year, though the bank raised it by 10 basis points in January in an effort to normalize policy.

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Reality kicks in. What’s going to happen to the lenders who made it all possible?

Fracklog in Biggest US Oil Field May All But Disappear (BBG)

The number of dormant crude and natural gas wells in the U.S. stopped growing in the first quarter – and may all but disappear in the nation’s biggest oil field should prices hold steady. As of April 1, there were 4,230 wells left idle after being drilled, a figure little changed from January, according to an analysis by Bloomberg Intelligence. While some explorers have continued to grow their fracklog of drilled but not yet hydraulically fractured wells, others began tapping them in February as oil prices rose, the report showed.

Crude in the $40- to $50-a-barrel range may wipe out most of the fracklog in Texas’s Permian Basin and as much as 70% of the inventory in its Eagle Ford play by the end of 2017, according to Bloomberg Intelligence analyst Andrew Cosgrove. While bringing them online is the cheapest way of taking advantage of higher prices, the wave of new supply also threatens to kill the fragile recovery that oil and gas markets have seen so far this year. “We think that by the end of the third quarter, beginning of the fourth quarter, the bullish catalyst of falling U.S. production will be all but gone,” Cosgrove said in an interview Thursday. “You’ll start to see U.S. production flat lining.”

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It’s the same as oil producers. In China’s steel industry, a return to reality would mean too many jobs lost to bear.

China Continues To Produce More Steel Than The Rest Of The World Combined (BI)

For the fourth month in a row, China produced more steel than all other nations combined in June. According to data released by the WorldSteel Association on Wednesday, a group that accounts for approximately 85% of the world’s steel production, China produced 69.5 million of crude steel in June, dwarfing production in all other nations which came in at 66.5 million tonnes. At 136 million tonnes, total global output in June was unchanged from the levels of a year earlier.

While down 1.4% on the 70.5 million tonnes produced in May, Chinese crude steel production is now 1.7% higher than the levels of June 2015, fitting with the splurge in state-backed infrastructure investment seen in recent months. Despite the recent uplift in steel production, shown in the chart below supplied by WorldSteel, global steel production came in at 794.8 million tonnes in the first half of the year, down 1.9% on the same corresponding period in 2015.

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They fix it daily, but that’s not manipulation nor devaluation…. That’s just fixing.

China’s Vice FinMin: We’ve Got No Reason To Devalue The Yuan (CNBC)

China has no reason to devalue the yuan, as economic fundamentals remained strong, with growth at 6.7% in the first half, the country’s Vice Finance Minister Zhu Guangyao told CNBC. Zhu’s comments came shortly before Republican presidential candidate Donald Trump lambasted China again, this time for what he said was “devastating currency manipulation. [..] “The yuan has been trading around five-year lows recently, as concerns over the state of the economy fueled capital outflows. Investors have also expressed concerns over the level of debt built up in the economy. China suffered almost $700 billion worth of capital flight in 2015. The surge in outflows late in 2015 sparked market concerns that China’s foreign reserves weren’t sufficient to stabilize the currency by buying yuan over the long term.

Meanwhile, the greenback has strengthened against most major currencies as investors reacted to negative interest rates in Japan and Europe, as well as the possibility the Federal Reserve would continue on its rate-hiking path. On Friday the dollar/yuan traded at 6.6683 on-shore and 6.6754 off-shore. China fixes its currency against the dollar every day. In August, China shifted the market mechanism for setting the daily fix, saying it would set the spot rate based on the previous day’s close, theoretically allowing market forces to play a greater role in its direction. That resulted in an effective 2% devaluation in the currency, a move that sparked fears of a “currency war” to make Chinese exports more competitive.

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What’s that going to do to the share price?

Apple’s Q2 China Revenues Could Fall 20%: Baidu (CNBC)

Apple’s revenues in China could be down 20% in China in its quarterly earnings report, according to research by Baidu, the so-called “Chinese Google.” As part of its online suite of products Baidu offers mapping software and a search platform. It has about a 70 to 80% market share in search in China and logs billions of location requests on Baidu Maps. Using this so called “big data” from the use of its map and search products, which is all anonymized, Baidu said it could predict employment and consumer trends and their impact on a company’s revenues. It used these tools on Apple’s retail sales in China, selecting a list of flagship Apple stores in mainland China and the counting the volume of map queries of all the stores.

Baidu found that in the last quarter of 2015, map query volumes were up 15.4% year-on-year, which corresponded with a 14% rise in Apple’s China revenue in that same period. But in the first quarter of 2016, map queries declined 24.5% year-on-year, which was parallel with a 26% decline in Apple’s China revenue. “The impressively strong correlation indicates that map query data provides possibilities for us to ‘nowcast’ the company’s revenues and reveal the future trends. Based on our analysis of latest data, we project that the Apple’s revenue in China of second quarter of 2016 may be down around 20% on a year-over-year basis,” Baidu concluded. The “second-quarter” that Baidu references is Apple’s fiscal third-quarter and will be announced on July 26.

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Pensions. A word your children will know only from history books.

Pension Funds Are Underwater – And Taking Us With Them (VW)

The California Public Employees’ Retirement System (CalPERS) has announced its worst performance in seven years. Its meager rate of return for the fiscal year ending June 30 just managed to squeak by .6%, not even beating our current meager rate of inflation. After two successive years of tepid returns, long-term fund averages have sunk far below the critical 7.5% benchmark. It’s bad news for California taxpayers, because if returns don’t soon show a long-term average of 7.5%, they’ll be the ones who will have to make up the difference. Ted Eliopoulos, the fund’s chief investment officer, admits the massive pension fund’s long-term returns are well below anticipated levels, telling the Los Angeles Times, “We’re moving into a much more challenging, low-return environment.”

Yeah. Average returns are now barely over seven% for a twenty-year period, and returns over ten and fifteen years now average less than 6%. These changes are not just a blip on the investment horizon, as we assume bond yields and stock dividends will improve. According to the Milliman pension consulting firm, many public pension funds have had to adjust their expectations to accommodate lower returns overall. CalPERS needs to adjust its own expectations accordingly, even though doing so would drive up costs for state and local government agencies covered by the big pension firm. “We quite clearly have a lower return expectation than we had just two years ago,” Eliopoulos said. “That will be reflected in our next cycle. We are cognizant that this is a challenging environment for institutional investors.”

Thus, while the Times reports this dismal turn of events as a new development, it’s apparent Eliopoulos and CalPERS have been struggling for a while. What’s more, financial observers have been voicing concerns about pension fund depletion for at least as long as bond yields and stock dividends have been anemic. [..] The bad news is: If you’re a California public employee, you’re going to take a hit. But even if you’re not a public employee, but merely a California taxpayer, you’ll also take a hit. In addition, while private employee pension funds don’t pose the same financial risk to non-participants, their members run a similar risk; after all, they’re toiling in the same universe of stocks and bonds.

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The Guardian gets the headline right, but shows no understanding of what it means.

Once-Expanding EU Prepares To Contract For The First Time In Its History (G.)

Johannes Hahn’s job title sounds a little incongruous these days: he’s the EU commissioner for European neighbourhood policy and enlargement negotiations. The job title was created in the late 1990s during a period of optimism and expansion. But now, thanks to the will of 52% of British voters, the EU looks set to contract rather than enlarge for the first time in its history. There are still six candidate countries for EU membership, in the process of making formal applications to join the bloc, as well as a number of other countries with various levels of association. But with many in the EU wary and sceptical of further expansion, the only enlargement negotiations going on at the moment are about managing the expectations of countries that want to join.

Hahn was in Kiev last week, meeting Ukrainian government officials and chairing ministerial meetings of the EU’s Eastern Partnership, a programme linking the EU with six former Soviet countries, which was launched as a response to the Russian war with Georgia in 2008 and was implicitly meant as the first step towards EU membership for the nations. “Don’t believe that the unfortunate decision of Brexit will have any influence on our relationship – quite the opposite,” he told a meeting of the group’s foreign ministers.

But in reality, the initial Eastern Partnership plans are in tatters, as both enlargement fatigue inside the EU and a stick-carrot combination from Russia has pushed a number of the countries away from wanting further integration with the EU. Two of them, Belarus and Armenia, have joined Russia’s Eurasian Economic Union, an explicit challenge to the EU, while nobody seriously speaks about Ukraine or Georgia as members any more.

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Surprise? What surprise?

Earth On Track For Hottest Year Ever As Warming Speeds Up (R.)

The earth is on track for its hottest year on record and warming at a faster rate than expected, the World Meteorological Organization (WMO) said on Thursday. Temperatures recorded mainly in the northern hemisphere in the first six months of the year, coupled with an early and fast Arctic sea ice melt and “new highs” in heat-trapping carbon dioxide levels, point to quickening climate change, it said. June marked the 14th straight month of record heat, the United Nations agency said. It called for speedy implementation of a global pact reached in Paris last December to limit climate change by shifting from fossil fuels to green energy by 2100.

“What we’ve seen so far for the first six months of 2016 is really quite alarming,” David Carlson, director of the WMO’s Climate Research Program, told a news briefing. “This year suggests that the planet can warm up faster than we expected in a much shorter time… We don’t have as much time as we thought.” The average temperature in the first six months of 2016 was 1.3° Celsius (2.4° Fahrenheit) warmer than the pre-industrial era of the late 19th Century, according to space agency NASA. [..] “There’s almost no plausible scenario at this point that is going to get us anything other than an extraordinary year in terms of ice (melt), CO2, temperature – all the things that we track,” Carlson said. “If we got this much surprise this year, how many more surprises are ahead of us?”

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Hard to gauge what’s going to happen with this.

Fighting the Most Dangerous Animal in the World (Spiegel)

[..] Aedes aegypti presents a threat to some 4 billion people across the globe. The world long approached the Aedes agypti plague as though it were a storm that would soon blow over, but it has now become a fixture in large cities in the tropics. If nothing is done, experts say, more and more people will die as a result. And it has also become clear that some of the tropical diseases carried by this insect are coming to Europe. Partly, that is the result of rising temperatures on the European continent. In the southwestern German city of Freiburg, for example, scientists have determined that a population of Aedes mosquitoes survived the German winter for the first time. It used to be that only those who traveled to the tropics were at risk of becoming infected with tropical illnesses.

But now, many in Europe must face the prospect of the tropics coming to them. It was images from Brazil that sent a jolt of fear around the world at the beginning of this year. Across the country, babies were suddenly being born with heads that were misshapen and too small. When indications mounted that this curious increase in cases of so-called microcephaly was connected to the Zika epidemic that had stormed across Brazil in the previous months, the WHO declared an international emergency. Brazil mobilized 220,000 soldiers for the battle, sending them through bathrooms, yards and garages to eliminate standing water where female Aedes mosquitoes lay their eggs. But the campaign did little to reduce the threat. In the first four months of this year, officials registered 100,000 additional cases thought to be Zika.

In addition, almost a million people were infected with dengue fever, more than ever before in such a short span of time. There is no vaccine against the Zika virus and there is no medicine that can prevent people from becoming infected. In March, medical researchers said that Zika can also be transmitted via sexual intercourse and, as if that weren’t enough, 151 health experts wrote an open letter in May demanding that the Olympic Games – set to kick off in Rio in two weeks – be postponed or moved. Taking the risk of holding the games as planned, they said, would be irresponsible. The city is expecting a half-million visitors. If only a tiny fraction of them become infected by the virus, these games – intended to crown Brazil’s climb to economic power status – could mark the beginnings of a catastrophe.

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