Apr 182018
 
 April 18, 2018  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , , , ,  


Franco Fontana Prague 1967

 

Junk Bond Market Still in Total Denial, Fighting the Fed (WS)
World Trade System In Danger Of Being Torn Apart, Warns IMF (G.)
Eurozone Engine Sputters as German Downturn Risk Sharpens (BBG)
Bitcoin Tumbles After Mystery “Whale” Dumps $50 Million In One Trade (ZH)
Japan Asks Rusal To Stop Aluminum Shipments (ZH)
The Deep State And The Big Lie – Douma (Stockman)
Theresa May’s Husband Made A Killing From The Bombing Of Syria (EP)
Trump Tweets Support For American Pastor On Trial In Turkey (R.)
New Refugees In Greece Can Move Freely, Says Court (K.)
Recycling Is Not The Answer (G.)
30 KIlos Of Plastic Bags Killed Whale Washed Ashore On Santorini (KTG)

 

 

The wonderful world of junk.

Junk Bond Market Still in Total Denial, Fighting the Fed (WS)

The Fed’s efforts to raise interest rates across the spectrum have borne fruit only in limited fashion. In the Treasury market, yields of longer-dated securities have not risen (prices fall when yields rise) as sharply as they have with Treasuries of shorter maturities. The two-year yield has surged to 2.41% on Tuesday, the highest since July 2008. But the 10-year yield, at 2.82%, while double from two years ago, is only back where it had been in 2014. So the difference (the “spread”) between the two has narrowed to just 0.41 percentage points, the narrowest since before the Financial Crisis:

This disconnect is typical during the earlier stages of the rate-hike cycle because the Fed, through its market operations, targets the federal funds rate. Short-term Treasury yields follow with some will of their own. But the long end doesn’t rise at the same pace, or doesn’t rise at all because there is a lot of demand for these securities at those yields. Investors are “fighting the Fed”— doing the opposite of what the Fed wants them to do – and the difference between the shorter and longer maturities dwindles, and it dwindles, and it causes a lot of gray hairs, and it dwindles further, until it stops making sense to investors and they open their eyes and get out of the chase, and suddenly long-term yield surge higher, as bond prices drop sharply.

That’s why short sellers have taken record positions against the 10-year Treasury recently: they’re waiting for yields to spike to the next level. But this disconnect – this symptom of investors fighting the Fed – in the Treasury market is mild compared to the disconnect in the junk bond market. There, investors have completely blown off the Fed. At least in the Treasury market, 10-year yields have risen since the Fed started getting serious about rate increases in December 2016. In the junk bond market, yields have since fallen. In other words, despite the Fed’s tightening, the junk bond bubble has gotten bigger. And investors are not yet showing any signs of second thoughts.

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Because the IMF made sure it would be skewed towards the rich.

World Trade System In Danger Of Being Torn Apart, Warns IMF (G.)

The postwar global trading system risks being torn apart, the International Monetary Fund has warned, amid concern over the tariff showdown between the US and China. In a sign of its growing concern that protectionism is being stimulated by voter scepticism, the IMF used its half-yearly health check for the world economy to tell policymakers they needed to address the public’s concerns before a better-than-expected period of growth came to an end. Maurice Obstfeld, the IMF’s economic counsellor, said: “The first shots in a potential trade war have now been fired.” He said Donald Trump’s tax cuts would suck imports into the US and increase the size of the trade deficit 2019 by $150bn – a trend that could exacerbate trade tensions.

“The multilateral rules-based trade system that evolved after world war two and that nurtured unprecedented growth in the world economy needs strengthening. Instead, it is in danger of being torn apart.” Obstfeld said there was more of a “phoney war” between the US and China than a return to the widespread use of tariffs in the Great Depression, but that there were signs that even the threat of protectionism was already harming growth. “That major economies are flirting with trade war at a time of widespread economic expansion may seem paradoxical – especially when the expansion is so reliant on investment and trade,” Obstfeld added.

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Too much surplus?

Eurozone Engine Sputters as German Downturn Risk Sharpens (BBG)

The euro area’s economic expansion is standing on increasingly shaky ground after reports showed German investor confidence tumbling to its lowest level since late 2012 and the risk of a recession in the nation jumping. The sentiment gauge from ZEW showed more investors now see a worsening in Europe’s largest economy than forecast an improvement, a mood swing that ZEW President Achim Wambach blamed on the U.S. trade dispute combined with weak domestic retail and production numbers. The drop in confidence came as the Dusseldorf-based Macroeconomic Policy Institute (IMK) said the probability of a recession in Germany over the next three months has jumped to 32%.

While that outcome remains unlikely, the gauge is up sharply from 6.8% in March. It follows U.S. attempts to rewrite international trade rules by imposing import tariffs, triggering a tit-for-tat response by China. Even though the European Union has temporarily been exempted from the metal levies, risks of far-reaching retaliatory measures could still hurt Germany’s export-driven economy – feeding into signs that growth in the euro area is coming off its peak. At the IMK, the recession gauge, which uses data that have signaled downturns in the past is now orange – the middle of its traffic-light warning system – for the first time since March 2016. That was just as the German economy was entering a mild slowdown.

“Volatility in financial markets, which has been evident for several months, is now accompanied by a noticeable deterioration in sentiment and subdued production,” according to IMK. “This has recently become a typical constellation for the end phase of a cycle.”

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For now, still a casino.

Bitcoin Tumbles After Mystery “Whale” Dumps $50 Million In One Trade (ZH)

The price of several cryptocurrencies took a sudden hit Tuesday over the course of 20 minutes, which some suspect may be the result of a single Bitcoin whale who unloaded over $50 million worth of the digital currency in one Bitfinex trade. The drop comes one day after the third largest bitcoin wallet also unloaded around $50 million of the digital currency. As Marketwatch first noted , “the balance of wallet 3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r — an anonymous digital account which is valued at $1.49 billion — fell by 6,500 bitcoin Tuesday, with the average sale price sale being $8,146.70, a total value of just over $50 million, according to bitinfocharts.”

The sale comes a day after the third-largest wallet, which famously purchased over $400 million in bitcoin in February, let go of 6,600 bitcoin at an average price of $8,026. Combined, the two whales unloaded over $100 million of bitcoin within 24 hours. As there was no immediate news or catalyst, some attributed the sale to Tuesday’s report that New York Attorney General Eric Schneiderman had launched an investigation into 13 cryptocurrency exchanges including Coinbase, Gemini and Bit Trust. The probe seeks information on fees, volume data and procedures governing margin trading among other things. However, the news hit some 4 hours prior to the sale.

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Unintended sanctions consequences?! Aluminum much more expensive for US firms too.

Japan Asks Rusal To Stop Aluminum Shipments (ZH)

One week ago, when the Trump administration unveiled the most draconian Russian sanctions yet which among others targeted Putin-ally Oleg Deripaska and the Russian oligarch’s aluminum giant, Rusal, we said that aluminum prices are going higher, much higher, for one reason: excluding China’s zombie producers, Rusal is the world’s largest producer of aluminum. Well, prices have since surged, largely as expected, and one week later we also learned just how “radioactive’ Rusal’s products have become as a result of the US sanctions: overnight Reuters reported that major Japanese trading houses asked the Russian aluminum producer to stop shipping refined aluminum and other products in light of U.S. sanctions on the world’s No.2 producer and are scrambling to secure metal elsewhere, according to industry sources.

“We have requested Rusal stop shipments of aluminum for our term contracts as we can’t make payment in U.S. dollars and we don’t want to take the risk of becoming a secondary sanction target by the United States,” said a source at a trading house [..] It is unclear how and where Japan can find alternative sources of aluminum: Japan buys about 300,000 tonnes of refined aluminum from Russia, about 16% of the nation’s total import, according to the Japan Aluminium Association. “Everyone has been on a search for substitutes and that pushed local spot premiums to around $200-$250 per tonne by last Friday,” he said. That’s sharply higher than Japan term premiums for April-June quarter shipments at $129 per tonne.

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Pearson Sharp and Robert Fisk were both on the ground in Douma. Both say the same.

The Deep State And The Big Lie – Douma (Stockman)

The contra-narrative about Assad’s alleged gas attack is gaining traction as the evidence comes in. It increasingly seems probable that some folks suffocated or were overcome with smoke inhalation and hypoxia (oxygen deprivation) when buildings, tunnels and underground bunkers collapsed into clouds of dust during the final battle for Douma last Saturday. Then the desperate remnant of the jihadist Army of Islam (Jaysh al-Islam) holed up there piled the bodies in a basement, spread shaving cream on their lips and proceeded to videotape furiously. Thereafter, they charged into a nearby hospital (which was treating hypoxia victims) with their video cameras in hand, yelling “chemical attack” while water-hosing one and all, thereby setting off the pandemonium seen on social media around the world.

We haven’t gotten to Douma yet to check out this contra-narrative, but an intrepid young reporter named Pearson Sharp did. Along with his camera crew, he visited the site of the attack, the hospital and the nearby rebel weapons dump – and interviewed dozens of people in the immediate vicinity. According to Sharp, none of them witnessed the alleged gas attack or believed it happened, and several personnel at the Douma hospital corroborated the phony water-dousing melee. Indeed, the head surgeon insisted to him that no one had died at the hospital from chemical agents. And he also saw and videoed room after room stacked with rockets, mortars and other military gear and filmed the debris and dilapidated remnants of buildings in the town.

[..] Self-evidently, a visiting Martian might have an altogether different interpretation of which nation had ventured down the “dark path” and which one was a “force for stability and peace”. And that would especially be the case with just a few more reports like the new missive from veteran war correspondent, Robert Fisk of the Independent (UK). Unlike young Mr. Pearson Sharp, Fisk has been a war correspondent in the Middle East for four decades and has won endless awards for reporting from the front lines. But his chops were earned when he became one of the few reporters in history to conduct face-to-face interviews with Osama bin Laden on three separate occasions during the 1990s.

Fisk’s dispatch filed Monday night speaks for itself and merits quoting at length because it not only skewers Washington’s narrative about Assad’s gas attack, but also provides vivid context: Whatever happened last Saturday erupted in the fog of war and could not possibly have been instantly assessed objectively or correctly by officials 6,000 miles away, who admit to having no “assets” on the ground in Damascus.

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Yes, this is pretty crazy.

Theresa May’s Husband Made A Killing From The Bombing Of Syria (EP)

The fact that Philip May is both a Senior Executive of a hugely powerful investment firm, and privy to reams of insider information from the Prime Minister – knowledge which, when it becomes public, hugely affects the share prices of the companies his firm invests in – makes Mr May’s official employment a staggering conflict of interest for the husband of a sitting Prime Minister. However, aside from the ease at which he is able to glean insider information from his wife about potential decisions which could go on to make huge profits for his firm, there is a far darker conflict of interest that has so far gone undiscussed.

Philip May is a Senior Executive of Capital Group, an Investment Firm who buy shares in all sorts of companies across the globe – including thousands of shares in the world’s biggest Defence Firm, Lockheed Martin. According to Investopedia, Philip May’s Capital Group owned around 7.09% of Lockheed Martin in March 2018 – a stake said to be worth more than £7Bn at this time. Whilst other sources say Capital Group’s shareholding of Lockheed Martin may actually be closer to 10%. On the 14th April 2018, the Prime Minister Theresa May sanctioned British military action on Syria in response to an apparent chemical attack on the city of Douma – air strikes that saw the debut of a new type of Cruise Missile, the JASSM, produced exclusively by the Lockheed Martin Corporation.

The debut of this new – and incredibly expensive – weapon was exactly what US President Donald Trump was referring to when he tweeted that the weapons being fired on Syria would be “nice and new and ‘smart!’” Every single JASSM used in the recent bombing of Syria costs more than $1,000,000, and as a result of their widespread use during the recent bombing of Syria by Western forces, the share price of Lockheed Martin soared.

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Now let them tell Erdogan about it.

Trump Tweets Support For American Pastor On Trial In Turkey (R.)

U.S. President Donald Trump voiced his support on Tuesday for Pastor Andrew Brunson, who is on trial in Turkey on charges he was linked to a group accused of orchestrating a failed 2016 military coup, in a case that has compounded strains in U.S.-Turkish relations. “Pastor Andrew Brunson, a fine gentleman and Christian leader in the United States, is on trial and being persecuted in Turkey for no reason,” Trump tweeted. “They call him a spy, but I am more a spy than he is. Hopefully he will be allowed to come home to his beautiful family where he belongs!” Brunson, a Christian pastor from North Carolina who has lived in Turkey for more than two decades, was indicted on charges of helping the group that Ankara holds responsible for the failed 2016 coup against President Tayyip Erdogan.

He faces up to 35 years in prison. Brunson has been the pastor of Izmir Resurrection Church, serving a small Protestant congregation in Turkey’s third largest city. Brunson’s trial is one of several legal cases roiling U.S.-Turkish relations. The two countries are also at odds over U.S. support for a Kurdish militia in northern Syria that Turkey considers a terrorist organization. Washington has called for Brunson’s release while Erdogan suggested last year his fate could be linked to that of U.S.-based Muslim cleric Fethullah Gulen, whose extradition Ankara has repeatedly sought to face charges over the coup attempt.

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It’s the EU that demanded refugees would be confined to the islands.

New Refugees In Greece Can Move Freely, Says Court (K.)

New refugee and migrant arrivals in Greece will soon be able to move around the country freely without being restricted to the islands of the eastern Aegean where they arrive from neighboring Turkey, according to a Council of State ruling that emerged on Tuesday and upends a 2016 decision by the Greek asylum service that forced them to remain in so-called hotspots until their asylum application was processed. According to the leaked ruling by the country’s highest administrative court, there are no reasons of public interest or migration policy to justify their geographical restriction to the islands of Lesvos, Chios, Samos, Leros, Kos and Rhodes.

Migration Policy Minister Dimitris Vitsas said he would comment on the ruling once he is informed of it officially. Once the ruling is published, new refugees who apply for asylum will be allowed to reside in any part of the country they choose. The asylum service’s May 2016 decision restricting migrants to the Aegean islands was challenged by the Greek Council for Refugees, an NGO which filed an appeal for its cancellation. “The imposition of restrictions on movement blocked the distribution of those people throughout Greek territory and resulted in their unequal concentration in specific regions and the significant burdening and decline of those regions,” the court said in its reasoning.

However, taking into account the large number of arrivals, the court said the ruling does not have a retroactive effect, which means it will not relate to the refugees who are already languishing in reception centers. The so-called hotspots have been operating beyond capacity and the country is now witnessing a fresh spike in arrivals of often flimsy boats carrying desperate passengers from Turkey.

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Indeed. But plastics are a huge industry.

Recycling Is Not The Answer (G.)

We all know, in theory, that we ought to use less plastic. We’ve all been distressed by the sight of Blue Planet II’s hawksbill turtle entangled in a plastic sack, and felt chastened as we’ve totted up our weekly tally of disposable coffee cups. But still, UK annual plastic waste is now close to 5m tonnes, including enough single-use plastic to fill 1,000 Royal Albert Halls; the government’s planned elimination of “avoidable” plastic waste by 2042 seems a quite dazzling task. It was reported this week that scientists at the University of Portsmouth have accidentally developed a plastic-eating mutant enzyme, and while we wait to see if that will save us all, for one individual the realisation of just how much plastic we use has become an intensely personal matter.

One early evening in mid-2016, Daniel Webb, 36, took a run along the coast near his home in Margate. “It was one of those evenings where the current had brought in lots of debris,” he recalls, because as Webb looked down at the beach from his route along the promenade he noticed a mass of seaweed, tangled with many pieces of plastic. “Old toys, probably 20 years old, bottles that must have been from overseas because they had all kinds of different languages on them, bread tags, which I don’t think had been used for years …” he says. “It was very nostalgic, almost archaeological. And it made me think, as a mid-30s guy, is any of my plastic out there? Had I once dropped a toy in a stream near Wolverhampton, where I’m from, and now it was out in the sea?”

Webb decided that he would start a project to keep all the plastic he used in the course of an entire year. He would not modify his plastic consumption in that time (although he had already given up buying bottled water), and each item would be carefully washed and stored in his spare room.


Daniel Webb in front of his Mural-by-the-Sea. Photo: Ollie Harrop 2018/Everyday Plastic

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Where your plastic ends up. Never again can you say you didn’t know. From now on it’s you didn’t care.

30 Kilos Of Plastic Bags Killed Whale Washed Ashore On Santorini (KTG)

More than 30 kg of plastic, mainly plastic bags, were found in the stomach of the whale that was washed out on the island of Santorini last week. The conducted autopsy showed that the huge mammal died of a gastric shock. The whale was unable to digest or excrete the rubbish through its digestive system. The problem caused peritonitis inflammation in its intestines that led to the animal’s death, local media report. The dead whale brings back to the spotlight the problem of tonnes of plastic landing into the waters, polluting the environment and leading to death of marine life. The body of the 9-meter long sperm whale – or Physeter macrocephalus as the scientific name is – was washed ashore on Akrotiri area on the island of Santorini in the Aegean island group of Cyclades on April 10th. The body weighting more than 7 tones was in condition of advanced sepsis.

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Mar 142018
 
 March 14, 2018  Posted by at 11:03 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh Sprig of Flowering Almond in a Glass 1888

 

One Of The Greatest Minds Ever To Live Dies Age 76 (Ind.)
Trump Unmasked 68 Years Of Washington Duplicity (Stockman)
What Secretary of State Tillerson’s Firing Means (Paul Craig Roberts)
New CIA Director Gina Haspel Once Ran A Torture Site (Qz)
Theresa May Plans For ‘Economic War’ With Vladimir Putin And His Allies (Ind.)
False Flags for Newbies (Dmitry Orlov)
Google To Ban All Cryptocurrency-Related Advertising (CNBC)
The Retirement Crisis: The Elderly Are Broke (GT)
More Than 500 Refugees, Migrants Reach Greek Islands In Four Days (K.)

 

 

Bit of a hyperbole headline perhaps (how would you know), but certainly unequalled in our times. I think Hawking greatest achievement was that once people had accepted his ‘initial’ groundbreaking theories on black holes (nothing can escape, event horizons etc.), he turned around and said they were not true: matter does escape from them after all: Hawking radiation.

One Of The Greatest Minds Ever To Live Dies Age 76 (Ind.)

He once said, ‘It would not be much of a universe if it wasn’t home to the people you love.’ We will miss him forever.” Professor Hawking explored both the very smallest and very largest parts of the universe: testing the limits of human understanding across time and space space, and peering into the sub-molecular world of quantum theory. Sir Tim Berners-Lee, founder of the world wide web, was one of the first to respond to news of his death, saying on Twitter: “We have lost a colossal mind and a wonderful spirit”. Professor Hawking shot to international fame after the 1988 publication of A Brief History of Time, one of the most complex books ever to achieve mass appeal, which stayed on the Sunday Times best-sellers list for 237 weeks.

Over the years, he would also embrace areas of popular culture appearing in both The Simpsons and hit US science comedy The Big Bang Theory. His work ranged from the origins of the universe itself, through the possibility of time travel to the mysteries of space’s all-consuming black holes. His most famous theoretical breakthrough was the idea that black holes are not really black, but can produce thermal radiation and potentially “evaporate”. Scientists refer to such potential emanations as “Hawking radiation.” “My goal is simple,” Professor Hawking once said. “It is complete understanding of the universe, why it is as it is and why it exists at all.”

With Roger Penrose, Professor Hawking showed that Albert Einstein’s theory of relativity implies space and time would have a beginning in the Big Bang and an end in black holes. He spent much of his career trying to find a way to reconcile Einstein’s theory with quantum physics and produce a “Theory of Everything.” Professor Hawking said he wrote A Brief History of Time to convey as clearly as he could the topics that excited him. “My original aim was to write a book that would sell on airport bookstalls,” he told reporters at the time. “In order to make sure it was understandable I tried the book out on my nurses. I think they understood most of it.”

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Not a general view.

Trump Unmasked 68 Years Of Washington Duplicity (Stockman)

[..] the Korean peninsula never had anything to do with American security. Its partition was an accident in the final days of WWII; the 1950-1953 war was utterly pointless and unnecessary; and the prolonged US occupation of the southern half of the peninsula was at once a provocation, a massive waste of treasure and a prime example of what imperial rulers do once bivouacked astride a global empire. That is, like Imperial Rome, they puff themselves up with self-importance and busy-body rule for its own sake. So doing, they invent self-serving rationalizations for hegemony, such as the insidious “indispensable nation” conceit—even as they extract the taxes and issue the mountains of debt required to fund the endless fiscal needs of the state’s machinery of war and foreign domination.

Indeed, Washington has long ago forgotten how its global empire came about or why the Korean frontier has remained a vestigial Maginot Line – long after the “enemies” it was designed to contain disappeared from the pages of history. We are referring, or course, to the Soviet Empire, which is no more; and the Red China Menace, which has morphed into a colossal Red Ponzi scheme of debt, malinvestment and speculative building madness that is a danger mostly to the 1.3 billion Chinese caught up in history’s craziest economic freak show. So whether by inadvertence or blind impulse, the Donald has now opened the door to sweeping away six decades of Washington duplicity and double-speak.

The fact is, the Korean problem is not complicated or some kind of imponderable riddle that baffles even the so-called “experts”.To the contrary, both a visiting Martian and an attentive reader of history not enthrall to the groupthink of Imperial Washington can see that the key to “de-nuclearizing” Korea is to demilitarize it and de-internationalize it at the same time. That is, if Washington ever wishes to de-escalate its current dangerous nuclear brinksmanship with the Fat Boy Of Pyongyang, it needs to get its 29,000 troops off the peninsula and end the constant war games and practice invasions of the North Korea; and to also tear up the Washington imposed mutual security agreements, and let the two halves of the “Hermit Kingdom” restore their own version of the pre-1945 status quo ante.

[..] since 2002 South Korea’s economy has grown every eight months by more than the entire current GDP of North Korea. But that doesn’t change the reality on the ground and the overwhelming case to permit Korea to be run by the Koreans under whatever state arrangements they can agree to. That was the exact aim of the South Korean governments after the Cold War ended when they pursued “sunshine policy” rapprochement with the North. That is, until it was shutdown by George Bush’s neocon hatchet men.

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The choice for Tillerson was never a good one. But with adding Pompeo, Haspel and next up John Bolton, Trump’s own picks are a bigger threat to him than Robert Mueller ever could be.

What Secretary of State Tillerson’s Firing Means (Paul Craig Roberts)

The firing of Secretary of State Tillerson, the movement of CIA Director Pompeo to Secretary of State, and the promotion of Gina Haspel, who oversaw the secret CIA torture prisons in Thailand, indicate that the military/security complex has closed its grip on the Trump regime. There will be no more talk of normalizing relations with Russia. The combination of the Israel Lobby, the neoconservatives, and the military/security complex have proven to be too powerful for peace to be established between the two nuclear powers. If you look at Trump’s administration, the above three forces are those in charge. Israel remains determined to use the US military to destabilize Syria and Iran in order to isolate Hezbollah and cut off the milita’s support and supplies.

The neoconservatives both support Israel’s interest and their own desire for Washington’s hegemony over the world. The military/security complex intends to hold on to the “Russia threat” as a justification of its budget and power. The presstitutes are in complete harmony with the scheme. Although Russiagate has been proven to be false charges orchestrated by the DNC, FBI, and CIA, the presstitutes continue to repeat the charges as if evidence exists that proves the charges to be true. The “stolen election” is fiction turned into fact. And now we have a new charge, that Putin ordered a former British spy in England to be eliminated while sitting on a park bench with the use of a highly unlikely form of military poison.

The charge is preposterous, but that is not preventing the fiction from becoming fact. Having served in Washington for a quarter century and having known members of the British government, I do not believe that any of them believe the Russiagate and Skripal poisoning stories. What is happening is that an agenda has taken precedence over truth. This is an extremely dangerous agenda. Russia’s new weapons easily give Russia military superiority over the US. As China and Iran see the situation similarly to the Russians, the US is greatly out-classed.

Yet, Washington and its vassals persist in making violent and false charges and threats against Russia, Iran, and on occasion China. Russia, Iran, and China know that these charges are false. Confronting an endless string of false and hostile charges, they prepare for war. The world is being driven to war, which would be nuclear, by a tiny minority: Israeli Zionists, neoconservatives, and the US military/security complex. We are witnessing the most reckless and irresponsible behavior in world history. Where are the voices against it?

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She should be held in one of those sites.

New CIA Director Gina Haspel Once Ran A Torture Site (Qz)

As CIA director Mike Pompeo moves to become the United States’ secretary of state, deputy director Gina Haspel has been nominated to lead the agency. If confirmed by the Senate, she will become the first woman to run the CIA. Haspel’s nomination will be controversial; she played a leading role (paywall) in running a US torture site abroad and later destroyed the evidence of it. In 2002, she oversaw a secret prison in Thailand that tortured two terrorism suspects. That torture took place within the CIA’s “extraordinary rendition” program, in which suspected terrorists are sent to US allies, and interrogated in “black sites” on their soil. One of the men, known as Abu Zubayda, was waterboarded 83 times in one month and was slammed into walls by the head.

He was deprived of sleep and kept in a coffin-like box. Interrogators later decided he didn’t have any useful information. ProPublica found that Haspel personally signed cables to CIA headquarters that detailed Zubayda’s interrogation. CIA videos of the torture were destroyed in 2005, on the orders of a cable drafted by Haspel. Her then-boss Jose Rodriguez, the CIA’s director of operations for counterterrorism, signed off on the order. “The cable left nothing to chance. It even told them how to get rid of the tapes,” he wrote in his memoir, according to ProPublica. “They were to use an industrial-strength shredder to do the deed.” The European Center for Constitutional and Human Rights, a Berlin-based NGO, has been pushing Germany’s public prosecutor to arrest Haspel for her role in the torture program.

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You can’t pull this stuff without proof. But note how she gets support from all over, countries, media. Like the US does when it invades yet another nation.

Theresa May Plans For ‘Economic War’ With Vladimir Putin And His Allies (Ind.)

Theresa May is drawing up plans for an “economic war” with Vladimir Putin and his allies after Moscow refused to explain how a deadly Russian nerve agent came to be used in a rural British city. The Independent understands the ground is already being prepared for economic measures such as asset freezes and seizures, alongside visa bans against Russian individuals. Ms May is also understood to be considering expelling diplomats and pushing for joint international action with allies. The Prime Minister is set to meet her National Security Council on Wednesday to finalise her approach which is then likely be announced to the House of Commons in the afternoon.

Action came a step closer after the Russian Foreign Minister said his country would not cooperate with the British investigation into the poisoning of ex-spy Sergei Skripal and his daughter Yulia in Salisbury on 4 March. But Britain’s allies gave early support to Ms May’s push, with Angela Merkel calling for unified action and Donald Trump saying there must be “consequences” for those responsible. [..] A Government minister said: “What happens will be an economic war, these will be economic measures. “Russia’s economy is only half that of the UK, a lot of it concentrated in a few people’s hands. Well, we’ll do our bit to make it smaller if they want to carry on like this. “That doesn’t give us any pleasure at all, but we need the nations of Europe to behave within the rule of law and not like gangsters. The message has to be economic, political and diplomatic.”

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“.. the British secret services, in close coordination with the British government and the press, poisoned Skripal and his daughter using a nerve agent obtained from Britain’s military research base at Porton Down..”

False Flags for Newbies (Dmitry Orlov)

An important key to spotting a false flag is that the “knowledge” of who is to blame becomes available before any evidence is in. For example, in the case of the shooting down of Malaysian Airlines MH-17 over Eastern Ukraine, everyone in the West was convinced that “pro-Russian separatists” were to blame even before the means could be established. To this date, it isn’t understood how they could have done it given the equipment they had at their disposal. In this case, Russia was accused almost immediately, while British FM Boris Johnson was quick to volunteer that Britain should not send its team to the World Cup in Russia this summer, disclosing the real reason behind the assassination attempt.

Is there anything new and different behind this latest provocation? Not really; it seems like a replay of the Litvinenko assassination back in November 2006. The choice of an exotic poison (Polonium 210), the lack of evidence (the British claimed that compelling circumstantial evidence exists but haven’t provided any), and the instantaneous leap to “blame Russia” are all the same. The Russians offered to prosecute whoever is responsible if only the British would provide them with the evidence, but the British have failed to do so.

Giving the British story the benefit of the doubt, let’s see what would compel Russia’s secret services to go after Skripal. In Russia, he was convicted and sentenced for treason, then pardoned and released to the British in a prisoner exchange that included ten Russian spies who had worked in the US, including the rather memorable Anna Chapman. It is a very important rule of the spy business that those released in a spy swap are never acted against; if this rule were violated, the resulting bad faith would make spy swaps impossible to negotiate.

[..] My simple and consistent explanation, expressed in a single sentence, is as follows: Under direction from their colleagues in the US, and closely following a script previously worked out in the Litvinenko case over a decade ago, the British secret services, in close coordination with the British government and the press, poisoned Skripal and his daughter using a nerve agent obtained from Britain’s military research base at Porton Down in order to obtain an excuse to compromise the World Cup games in Russia this summer and also to create a scandal immediately before the Russian presidential election.

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Too close to politics.

Google To Ban All Cryptocurrency-Related Advertising (CNBC)

Google is cracking down on cryptocurrency-related advertising. The company is updating its financial services-related ad policies to ban any advertising about cryptocurrency-related content, including initial coin offerings (ICOs), wallets, and trading advice, Google’s director of sustainable ads, Scott Spencer, told CNBC. That means that even companies with legitimate cryptocurrency offerings won’t be allowed to serve ads through any of Google’s ad products, which place advertising on its own sites as well as third-party websites. This update will go into effect in June 2018, according to a company post.

“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution,” Scott said. Google’s hard-line approach follows a similar ban that Facebook announced earlier this year. While the crypto-currency boom has produced a lot of excitement and wealth, it’s still a largely unregulated space and has spawned countless high-profile scams.

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Virginia Fidler has it right, except for this: “The good news is, Millennials are aware of the problem”. Thing is, it makes no difference if they’re aware or not. I’ve said it before: the demise of retirement systems is the no. 1 reason for UBI.

The Retirement Crisis: The Elderly Are Broke (GT)

42% of Americans are facing their golden years with less than $10,000 in savings. A lack of savings and planning has reduced what should be an enjoyable time in seniors’ lives to a period of stress and worries for many. Out-of-pocket expenses for health care is spiraling. The Bureau of Labor Statistics indicates that Americans 65 years of age and older may spend up to $46,000 annually on healthcare. This is not good news for those with only $10,000 on which to fall back on. For adults over 50, this should be a call to act now, while there is still time. Only one-third of adults in that age group have savings greater than $10,000. Retirement planning needs to become a priority, as there is little time to waste.

Pensions are becoming rarer, and Social Security is becoming less secure than it used to be. Many health needs of seniors are not covered by Medicare. Some experts believe the Social Security system will be depleted by 2030. Adults over the age of 50 need to consider making contributions into 401(k) accounts or similar retirement plans. Social Security was never intended to be the sole income of retiring seniors. It was meant to supplement approximately only 40% of post-retirement spending. Social security was supposed to enhance seniors’ lives, not support it entirely. However, according to Investopedia.com, 43% of unmarried seniors rely on Social Security to cover 90% of their basic needs. Almost a quarter of married couples depend on Social Security to meet most of their expenses.

Some seniors struggling with poverty are able to receive supplemental income (“SPM”), such as food stamps for a bit of additional help. The need is especially high for seniors who are women, African Americans, and Hispanics, and those with ongoing health issues.6,400,000 million American seniors are living at poverty level, struggling to meet fundamental needs such as rent and food. This number is likely to increase as more boomers become eligible for Social Security and the system becomes less able to support them.

What does this mean for the Millennial generation? The current Social Security system will be unsustainable at some point. It cannot continue at the current level. It probably won’t be abolished, as that would cause chaos for seniors. However, Millennials are aware that changes are coming. They know that benefits will likely be reduced by the time they grow older. The good news is, Millennials are aware of the problem. Members of the boomer generation who assumed Social Security would take care of their needs are learning a hard lesson.

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Turkey rattles the cage.

More Than 500 Refugees, Migrants Reach Greek Islands In Four Days (K.)

According to official figures released on Tuesday more than 500 migrants reached islands of the eastern Aegean in the previous four days, following a two-week lull in arrivals. The spike in arrivals was attributed by a Greek Police official to Turkish authorities, who, he said, control the influx. “But they always make sure not to overdo it so they can claim they are honoring the joint EU-Turkey agreement,” the official said, referring to a deal signed between Brussels and Ankara in March 2016 to curb human smuggling. The two-week drop in arrivals eased the pressure on facilities, as did the transfer of migrants to camps on the mainland. But some camps, notably on Lesvos, remain overcrowded.

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 February 11, 2018  Posted by at 11:23 am Finance Tagged with: , , , , , , , , , ,  


Vincent van Gogh Peach trees in blossom 1888

 

What Crushed Stocks? (WS)
Test Of Nerve For Markets As 10 Years Of Cheap Money Come To An End (G.)
Market Tests Millennial Traders Who’ve Never Seen A Crash (BBG)
Bond-Stock Clash Has Just Begun as Inflation Looms (BBG)
IMF Chief Lagarde Says Market Swings Aren’t Worrying (R.)
UK Labour Vows Renationalisation Of Water, Energy And Rail (G.)
Australia’s Big Banks Focus On Job Cuts As Inquiry Looms (R.)
Treating Mental Illness Could Save Global Economy Billions (CNBC)
Pain Pill Giant Purdue to Stop Promotion of Opioids to Doctors (BBG)
Asylum Seekers In UK Living In ‘Disgraceful, Unsafe’ Housing (G.)
Russia Might Sell S-400 Systems To US If Americans Feel Insecure (RT)
Oxfam Staff Partied With Prostitutes In Chad, Haiti, (G.)
Maclean’s Is Asking Men To Pay 26% More For Latest Issue (Maclean’s)
US Professor Fired After Telling Student ‘Australia Isn’t A Country’ (RT)

 

 

Bond markets are 10x stock markets?!

What Crushed Stocks? (WS)

On Friday at around 1:40 p.m., during whiplash-inducing market moves, the S&P 500 index was down 1.9%, bringing the total loss for the week to 8.3%, which would have been the biggest weekly loss since November 2008, after the Lehman bankruptcy. But dip-buyers jumped in courageously and saved the day. The S&P 500 ended up 1.5%, bringing to the total loss for the week to 5.2%, the worst week since, well, the selloff in January 2016. Everyone has their own reasons why stocks plunged last week. Some blamed algorithmic trading. Others blamed the short-volatility financial complex that blew up.

More specifically, Jim Cramer blamed “a group of complete morons” who traded in this space. Others blamed the stratospheric valuations of stocks that had been rallying for eight years with only a few dimples in between, and it’s simply time to unwind some of those gains. Whatever the factors might have been, rising bond yields certainly had something to do with it. They tend to hit stocks, eventually. Last week, prices of short-dated Treasuries edged down and prices of long-dated Treasuries edged down, and their yields edged up, but there was some turmoil in the middle, with some interesting consequences.The three-month Treasury yield rose to 1.55% on Friday, the highest since September 11, 2008. Investors are beginning to price in a rate hike in March:

But the two-year yield, after having surged to 2.16% on February 1, got very nervous, dropping and bouncing during the week, and fell sharply on Friday, ending the week at 2.05%:

The 10-year yield closed on Friday at 2.83% and in late trading went on to 2.85%. The interesting thing about this is the difference (the “spread”) between the two-year yield and the 10-year yield. It surged. This spread is one of the indications of the slope of the yield curve and was one of the most watched bond-data points during the scare last year over an “inverted” yield curve. This is a phenomenon where the two-year yield would be higher than the 10-year yield. The last time this happened was before the Financial Crisis. By early January, the spread between the two-year yield and the 10-year yield had dropped as low as 50 basis points (0.5 percentage points), the lowest since October 2007. As the two-year yield kept spiking, the 10-year yield had started rising, but not fast enough. All this has changed, and the 10-year yield has been rising faster than the two-year yield and the spread has widened to 78 basis points on Friday:

The 30-year yield rose to 3.14% on Friday. For the first time, it is now back where it had been on December 14, 2016, when the Fed stopped flip-flopping and started getting serious about raising its target range for the federal funds rate. The market responded to each rate hike with increases in short-term yields but defied the Fed on longer-term yields, which fell until September 2017. So what happened last week was that the two-year yield fell, while the yields of most longer maturities stayed put or rose, steepening the yield curve from the two-year yield on up.

The chart below shows the “yield curves” as they occurred on these four dates: • Yields on Friday, February 9, 2018 (red line) • Yields on December 29, 2017 (black line) • Yields on August 29, 2017 (green line) two weeks before the QE unwind was detailed. • Yields on December 14, 2016 (blue line) when the Fed stopped flip-flopping, raised its rates, and became a clockwork. Note how the spread has widened at the longer-dated ends between the black line (December 29, 2017) and the red line (Friday), and how the slope of the red line has steepened, with the 30-year yield surging 40 basis points over those six weeks. That’s a big move:

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The cheap money has BEEN the entire market.

Test Of Nerve For Markets As 10 Years Of Cheap Money Come To An End (G.)

Stock markets are heading for a wild ride this year as central bankers strap on their bullet-proof vests and test investors’ willingness to accept higher interest rates. Last week’s share price crashes, which in two days wiped $4 trillion off the value of markets around the world, was just a foretaste of the battle to come. In the days following Monday’s crash, share values have recovered strongly only to dive again as competing theories about the path of interest rates and the likely impact on economic growth fight for attention. Most investors want the era of cheap borrowing to continue and many are willing to sell their shareholdings if it looks like coming to an end. Without low interest rates, they cannot borrow and invest cheaply, especially in the assets that for the past decade have gone up every year by much more than their salary – property and shares.

Countless businesses have also come to rely on low borrowing costs to keep going, and investors fear they might go bust should their bank raise loan rates. Weaning companies and investors off their addiction was never going to be easy, even 10 years after central banks first put their stimulus packages in place, and despite warnings that these measures need to end. For some time, the US Federal Reserve has taken on the role of the advance guard, forging a path towards higher rates for others to follow. But its campaign got off to a faltering start. Back in 2013 it was forced to retreat when it signalled in the mildest terms that it would begin withdrawing its quantitative easing programme. The main effect of QE was to drive down long-term interest rates, allowing investors to borrow cheaply not just over one or five years, but for 30 years.

And so its withdrawal was as much of a blow for some fund managers as an immediate rate rise. Wall Street and markets in Europe and Asia, where heavy selling turned into a rout, forced Fed officials to retreat. The Fed adopted a more incremental approach. It gave markets more warning and spaced out the policy decisions. As it entered 2017, US interest rates had trebled, but only from 0.25% to 0.75%. Yet the economy was booming more than ever. The Fed appeared ready to get tougher, and with justification, according to Karen Ward at JP Morgan Asset Management. After the heavy lifting needed to get the industrialised world back from bankruptcy, she said, “economies are now rested”. Ward, who until recently was an adviser to the chancellor, Philip Hammond, said: “Households and businesses are feeling better about the future. They do not need a boost in quite the same way. Central banks can ease off the accelerator without troubling either growth or markets.”

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The problem is not that they’ve never seen a crash, the problem is they’ve never seen a functioning market.

Market Tests Millennial Traders Who’ve Never Seen A Crash (BBG)

In his career in finance—all seven years of it—Ben Kumar has seen some tough days. There was 2013, when traders worried about the Federal Reserve, and 2016, with the Brexit vote. But, at 29, Kumar and many millennials like him on Wall Street and the City of London have never endured a full-blown crash. For them, markets have always bounced back—fast—and gone on to heights. Now, with world stocks sinking and central banks withdrawing stimulus that’s supported markets for years, elders worry Kumar’s generation isn’t ready for its trial. Kumar is chill. “Find me someone who worked in the era of 15% inflation and I’ll talk to them about Bitcoin and the Internet,” said the 29-year-old, a fund manager at Seven Investment Management in London .

After $3 trillion was erased from global stocks in a week, he’s weighing whether to buy on the dip now—or wait a bit longer. “I don’t even think that this move is a wake-up call,” he said on Tuesday. Many bankers older than 40 shudder at the thought of what will happen if – or when – some unforeseen trigger sparks a crash that drags down not just stocks, but also bonds and currencies together. Etched in their memories is the Lehman Brothers collapse in 2008. In its wake, stock market valuations alone were cut in half. By contrast, most millennial investors have only worked in an era where central banks printed trillions of dollars to prop up their economies and markets. Since starting their careers, average interest rates in the developed world have barely nudged above 1%, inflation all but vanished, the S&P 500 Index more than doubled and bonds rallied so high that more than $7 trillion of debt is negative yielding.

“You have to have had that stage where you’re looking at the screen through your fingers to really appreciate risk-reward in this industry,” said Paul McNamara at GAM in London. “Not just seeing things go wrong, but going so much more wrong than you imagined was possible.”

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Why own stocks when bond yields rise? Still, inflation is a ludicrous fear.

Bond-Stock Clash Has Just Begun as Inflation Looms (BBG)

The tug-of-war between stocks and bonds is at the heart of the shakeout roiling financial markets. This week’s U.S. inflation report could hold the key to the next phase. Seemingly every time 10-year Treasury yields approached a four-year high last week, equities investors panicked, fearing the specter of higher inflation and a more aggressive pace of Federal Reserve rate hikes. Whether you want to say Treasuries are in a bear market or not, the surge in yields to start 2018 has left investors reassessing the value of equities and corporate bonds. Profits were easy when the 10-year yield traded in its narrowest range in a half-century, inflation stayed subdued and volatility across financial markets plumbed record lows. Gains are harder when low rates, a linchpin of the post-crisis recovery, start to disappear.

“What’s happening now is just price discovery between bonds and equities – how far can the bond market push yields up before the equity market cracks?” said Stephen Bartolini, portfolio manager at T. Rowe Price, which manages more than $10 billion in inflation-protected strategies. “The big fear in risk markets is that we get a big CPI print and it validates the narrative that inflation is coming back and the Fed is going to have to move faster.” The focus on inflation is nothing new, but it became even more critical after a Feb. 2 report showed average hourly earnings jumped in January at the fastest pace since 2009. That contributed to the dive in stocks. (It also led President Donald Trump to tweet about the “old days” when stocks would go up on good economic news.)

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Should be filed under Famous Last Words, but won’t be.

IMF Chief Lagarde Says Market Swings Aren’t Worrying (R.)

Sharp swings in global financial markets in the past few days are not worrying since economic growth is strong but reforms are still needed to avert future crises, the managing director of the International Monetary Fund said on Sunday. Christine Lagarde, speaking at a conference on global business and social trends in Dubai, said economies were also supported by plenty of financing available. “I‘m reasonably optimistic because of the landscape we have at the moment. But we cannot sit back and wait for growth to continue as normal,” she said in her first public comments on market movements since the latest round of turmoil at the end of last week.

“I‘m ringing not the alarm signal, but the strong encouragement and warning signal.” Global stock markets were hit by wild fluctuations, with the U.S. benchmark S&P 500 tumbling 5.2% last week, its biggest weekly percentage drop since January 2016. The volatility was fuelled by investor worries about rising interest rates and potential inflation. Lagarde repeated an IMF forecast, originally issued last month, that the global economy would growth 3.9% this year and at the same pace in 2019, which she said was a good backdrop for needed reforms.

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No society should ever relinquish control over its essentials.

UK Labour Vows Renationalisation Of Water, Energy And Rail (G.)

Labour launched a full-frontal attack on the privatised water industry last night, accusing companies of paying out the “scandalous” sum of £13.5bn in dividends to shareholders since 2010, while claiming huge tax breaks and forcing up prices for millions of customers. The assault by shadow chancellor John McDonnell came as he pledged total, “permanent” and cost-free renationalisation of water, energy and rail if Labour won power at the next election. The three privatisations in the 1980s and 1990s became hallmarks of the Tory governments of Margaret Thatcher and John Major. The dramatic intervention – which stunned the companies involved – was the strongest denunciation yet by Jeremy Corbyn’s Labour of the privatisation programme that has become part of the British political landscape of the last 40 years.

The Conservative party and the Confederation of British Industry both condemned McDonnell’s comments. The CBI said Labour’s renationalisation agenda would “wind the clock back on our economy” while chief secretary to the Treasury Liz Truss warned that placing politicians in charge of public utilities “didn’t work last time and won’t work this time”. McDonnell told the Observer that water companies could not even claim to offer choice to customers but instead operated regional monopolies, and were therefore able to increase prices without the risk of losing out to competitors, as well as “load up debt” while paying out huge dividends to shareholders. “It is a national scandal that since 2010 these companies have paid billions to their shareholders, almost all their profits, whilst receiving more in tax credits than they paid in tax,” he said.

“These companies operate regional monopolies which have profited at the expense of consumers who have no choice in who supplies their water. “The next Labour government will call an end to the privatisation of our public sector, and call time on the water companies, who have a stranglehold over working households. Instead, Labour will replace this dysfunctional system with a network of regional, publicly owned water companies.” Citing figures from the National Audit Office, the shadow chancellor said water bills had risen by 40% in real terms since privatisation of the industry in 1989. In 2016-17, the forecast average for water bills was £389 per household. McDonnell claimed that in 2017, privatised water companies paid out a total £1.6bn to their shareholders. Since 2010, the total was £13.5bn.

[..] Corbyn said that Labour would back a “great wave of change across the world in favour of public, democratic ownership and control of our services and utilities. “We can put Britain at the forefront of the wave of change across the world in favour of public, democratic ownership and control of our services and utilities,” he said. “From India to Canada, countries across the world are waking up to the fact that privatisation has failed, and taking back control of their public services,” he added.

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Banks and governments are accomplices in blowing this bubble.

Australia’s Big Banks Focus On Job Cuts As Inquiry Looms (R.)

Australia’s big banks are responding to a revenue crunch by cutting jobs and other costs, prompting fears on the eve of an inquiry into their businesses that the industry’s tarnished reputation is about to take another hit. Regulators’ demands that banks hold more capital and their scrutiny into internal operations have made cost-cuts the in-vogue metric at the so-called Big Four banks, Australia and New Zealand Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac, to boost profits. But the strategic change will come at a cost for the banks. “If you can be the most successful at bringing your staff numbers down the quickest, that’s going to give you the quickest cost advantage,” said one senior bank insider with direct knowledge of the cost-cutting strategy.

But, added the insider, as jobs cuts mount, “society and the community will push back, won’t accept it.” Cost cuts are not limited to jobs, with banks preparing to make use of improved technology to reengineer back office functions, and reduce the number and physical size of their branches. But the insider said he expected the Big Four to shed up to 40,000 jobs over five years as part of that overhaul, making a reduced wages bill the primary saving. The focus on costs coincides with the start of a royal commission looking into misconduct in the financial sector starting Monday. Scandals that have shaken public confidence include allegations of interest rate rigging, claims of a toxic trading room culture within some banks, and accusations that some institutions withheld legitimate health insurance payouts and gave misleading financial advice.

The inquiry, expected to last a year and which can recommend criminal charges and legislative changes, could potentially result in restrictions that affect bank profits, similar to a government-imposed bank tax levied last year. According to the government, Australia’s big four are still among the most profitable banks in the world, earning net profit margins of 36.4% in the June quarter of 2017. Years of economic growth and a booming property market had encouraged executives to focus on lifting sales rather than trimming operations. “Top line revenue growth is going to be a struggle, so they need to look closely at their cost lines really seriously,” said Brad Potter, head of Australian equities at Nikko Asset Management, which owns shares in the major banks.

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It’s the economy that causes much of the illness. Putting dollar numbers on it is not the way to go.

Treating Mental Illness Could Save Global Economy Billions (CNBC)

Reducing mental illness is one of the key ways to increase happiness worldwide, according to a study by the Global Happiness Council (GHC). The report, published Saturday, said that while mental illness was one of the main causes of unhappiness in the world, the net cost of treating it was actually negative. “This is because people who are mentally ill become seriously unproductive. So when they are successfully treated, there are substantial gains in output. And these gains exceed the cost of therapy and medication,” GHC researchers said. The most common conditions associated with mental illness are depression and anxiety disorders, the study said. And at least a quarter of the global population were thought to experience these conditions over the course of their lifetime.

Researchers at the GHC also said that mental illness was a “major block” on the global economy as it was found to be the main illness among people of a working age. Therefore, treating the conditions, it said, would save national income per head by 5% — that equates to billions worldwide. The study estimated that for every $1 spent on treating depression, production would be restored by the equivalent of $2.5. And while physical healthcare costs were thought to balance out, the GHC claimed net savings when treating anxiety disorders was greatest of all — with production restored by the equivalent of $3 for every $1 spent. In the U.K., the National Health Service (NHS) estimates that around 10 to 15% of people are considered to have had a mental illness at some stage of their lives. There are many types of mental illness but most conditions fit into either a neurotic or psychotic category, according to the NHS.

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Any individuals will escape persecution.

Pain Pill Giant Purdue to Stop Promotion of Opioids to Doctors (BBG)

Pain-pill giant Purdue Pharma will stop promoting its opioid drugs to doctors, a retreat after years of criticism that the company’s aggressive sales efforts helped lay the foundation of the U.S. addiction crisis. The company told employees this week that it would cut its sales force by more than half, to 200 workers. It plans to send a letter Monday to doctors saying that its salespeople will no longer come to their clinics to talk about the company’s pain products. “We have restructured and significantly reduced our commercial operation and will no longer be promoting opioids to prescribers,” the company said in a statement. Instead, any questions doctors have will be directed to the company’s medical affairs department. OxyContin, approved in 1995, is the closely held company’s biggest-selling drug, though sales of the pain pill have declined in recent years amid competition from generics.

It generated $1.8 billion in 2017, down from $2.8 billion five years earlier, according to data compiled by Symphony Health Solutions. It also sells the painkiller Hysingla. Purdue is credited with helping develop many modern tactics of aggressive pharmaceutical promotion. Its efforts to push OxyContin included OxyContin music, fishing hats and stuffed plush toys. More recently, it has positioned itself as an advocate for fighting the opioid addiction crisis, as overdoses from prescription drugs claim thousands of American lives each year. Purdue and other opioid makers and distributors face dozens of lawsuits in which they’re accused of creating a public-health crisis through their marketing of the painkillers. Purdue officials confirmed in November that they are in settlement talks with a group of state attorneys general and trying to come up with a global resolution of the government opioid claims.

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At least there are still some truly pan-European values left.

Asylum Seekers In UK Living In ‘Disgraceful, Unsafe’ Housing (G.)

Asylum seekers are being placed in appalling housing conditions where they are at risk from abuse and violence, according to a survey published on Sunday documenting the lives of new arrivals. A year after the home affairs select committee found asylum seekers were being held in “disgraceful” conditions and called for a major overhaul of the system, new research suggests the situation remains poor. In-depth interviews with 33 individuals inside a north London Home Office asylum accommodation centre found that 82% had found mice in their rooms. The survey, by the human rights charity Refugee Rights Europe, also found that two-thirds of asylum seekers interviewed felt “unsafe” or “very unsafe”.

Others, some of whom have been diagnosed with post-traumatic stress disorder after fleeing violence and persecution from war zones, described how non-residents would enter the building and threaten residents, or simply use the kitchens and hallways to sleep. Of those interviewed, 30% alleged they had experienced verbal abuse in the accommodation from fellow residents or from staff, with 21% claiming they had experienced physical violence. “A number of respondents were under the impression that the cleaning staff may hold racist views. Sometimes this was expressed through abusive or hostile language in English, and, at other times, the respondents were shouted at in a foreign European language which they couldn’t understand,” said the study.

Marta Welander, head of Refugee Rights Europe, said: “An entire year has passed since the home affairs select committee released its alarming report on asylum accommodation in the UK, yet it seems as though little to nothing has changed. Our research revealed terrible hygiene standards and widespread problems with vermin. “Many of the [interviewees] said they felt unsafe in their accommodation, in particular the younger ones or those diagnosed with PTSD. Others explained they’re experiencing health problems, which they attributed to the unsanitary conditions in their bedrooms and communal areas.”

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C’mon, it’s funny.

Russia Might Sell S-400 Systems To US If Americans Feel Insecure (RT)

The head of Russia’s strategic defense industry corporation Rostec says Moscow is ready to sell S-400 air defense systems to any nation that feels insecure and wants to seal its airspace, including the US if it wants to. Just before the end of the year, Moscow agreed to supply S-400 surface-to-air missile batteries to Ankara, making Turkey the first NATO member state that will integrate Russian technology into the North Atlantic defense structure once the $2.5 billion order is delivered. On Wednesday, Sergey Chemezov, head of the Russian state conglomerate Rostec, extended the offer to purchase S-400 Triumf, or the SA-21 Growler as it is known by NATO, to the Pentagon. “The S-400 is not an offensive system; it is a defensive system. We can sell it to Americans if they want to,” Chemizov told the Wall Street Journal (WSJ) when asked about the strategic reasoning behind the S-400 sale to Turkey.

The S-400, developed by Russia’s Almaz Central Design Bureau, has been in service with the Russian Armed Forces since 2007. The mobile surface-to-air missile system which uses four projectiles can strike down targets 40-400 km away. The deployment of S-400 batteries to Syria served as one of the pillars to the successful Russian anti-Islamic State (IS, formerly ISIS/ISIL) campaign. While the Almaz Bureau is currently developing S-500 systems, foreign orders to purchase the S-400 have skyrocketed. Besides China and Turkey, who are awaiting order deliveries, India, Qatar and Saudi Arabia are currently negotiating to purchase the Russian military hardware. The growing demand can be attributed to the high reliability and long history of the S missile defense system family. The S-200, designed by Almaz in the 1960s, still serves many nations today. On Saturday, a Syrian S-200 Vega medium-to-high altitude surface-to-air missile was allegedly used to intercept an Israeli F-16.

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The humanitarian industrial complex in all its glory.

Oxfam Staff Partied With Prostitutes In Chad, Haiti, (G.)

Oxfam was hit with new allegations of staff involvement with prostitution on Saturday, after claims that employees at a second country mission had used sex workers while living at the organisation’s premises. Former staff who worked for the charity in Chad alleged that women believed to be prostitutes were repeatedly invited to the Oxfam team house there, with one adding that a senior member of staff had been fired for his behaviour in 2006. Roland van Hauwermeiren, who has since been embroiled in a sexual misconduct scandal in Haiti, was head of Oxfam in Chad at the time. Van Hauwermeiren resigned from Oxfam in 2011, after admitting that prostitutes had visited his villa in Haiti. One former Chad aid worker said on Saturday: “They would invite the women for parties. We knew they weren’t just friends but something else. “I have so much respect for Oxfam. They do great work, but this is a sector-wide problem,” the former staffer told the Observer.

[..] Oxfam said it could not confirm whether it had any records about a Chad staff member dismissed in 2006. Its staff in Chad at the time lived under a strict curfew due to security concerns: employees could not walk around freely and were confined to the guest house from early evening. Some employees had raised the issue of prostitutes with Van Hauwermeiren. Oxfam’s beleaguered chief executive, Mark Goldring, denied suggestions the charity had covered up revelations that staff had hired prostitutes in Haiti during a 2011 relief effort on the earthquake-hit island. His defence of Oxfam’s handling of the scandal came as Britain’s charity regulator said Oxfam had failed to mention allegations of abuse of aid beneficiaries in Haiti and potential sexual crimes involving minors in a report to it in 2011. It took no further action at the time.

[..] The scandal broke on Friday when the Times revealed that senior Oxfam staff had paid earthquake survivors for sex and that a confidential Oxfam report had referred to a “culture of impunity” among aid workers in Haiti. The Times on Saturday said Oxfam did not tell other aid agencies about the behaviour of staff involved after they had left to work elsewhere. Goldring told BBC Radio 4’s Today programme on Saturday: “With hindsight, I would much prefer that we had talked about sexual misconduct, but I don’t think it was in anyone’s best interest to be describing the details of the behaviour in a way that was actually going to draw extreme attention to it.”

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And what about next week?

Maclean’s Is Asking Men To Pay 26% More For Latest Issue (Maclean’s)

This month, Maclean’s has created two covers with two different prices—one at $8.81, the other at our regular price of $6.99—to reflect the 26% gap between full-time wages paid to men and women in Canada.It’s a cheeky way to draw attention to a gap that has barely budged in decades, but we’re not the first to do this. In 2016, a group of students at the University of Queensland in Australia put on a bake sale. They called it the Gender Pay Gap Bake Sale, and they priced their cupcakes higher for men than women to illustrate Australia’s pay equity gap. The fierce social media backlash (“Kill all women” and “Females are f–king scum, they should be put down as babies” and “I want to rape these feminist c–ts with their f–king baked goods”) was so horrific it made international headlines.

When we discussed the story during our Maclean’s news meeting at the time, we wondered what would happen if we tried it here in Canada. So let’s see, shall we? After years of stasis, pay equity is having its moment as the next beat in the cadence of the #MeToo movement. Our hope is that these dual covers stir the kind of urgent conversation here that is already happening elsewhere around the world. In England, Carrie Gracie, the BBC’s China editor, resigned earlier this year when her pay was revealed to be at least 50 per cent less than her two male counterparts, saying, “My managers had yet again judged that women’s work was worth much less than men’s.” #istandwithcarrie trended on Twitter. In Iceland, after women walked out of work at precisely 2:38 p.m.—a full workday minus 30%, to illustrate the pay gap there—the country enacted a new law that makes it mandatory for companies with 25 or more employees to show they provide equal pay.

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Surprised? Me neither.

US Professor Fired After Telling Student ‘Australia Isn’t A Country’ (RT)

Southern New Hampshire University has fired a lecturer who insisted that Australia was a continent – but not a country – and took some time to conduct “independent research” into the issue before reviewing a student’s paper. Ashley Arnold, 27, who is studying toward an online sociology degree at Southern New Hampshire University (SNHU), was “shocked” to learn she had failed an assignment, part of which required students to compare social norms between the United States and any other country – in her case Australia. Arnold was downgraded because her professor believed “Australia is a continent; not a country.” At first I thought it was a joke; this can’t be real. Then as I continued to read I realized she was for real,” she told BuzzFeed News. “With her education levels, her expertise, who wouldn’t know Australia is a country? If she’s hesitating or questioning that, why wouldn’t she just Google that herself?”

To address the professor’s apparent ignorance, Arnold sent a series of emails containing references from the school’s library which clearly stated Australia is both a continent and a country. Arnold even referred her to a section of the Australian government’s webpage called “About Australia” that said “Australia is an island continent and the world’s sixth largest country (7,682,300 sq km).” The female professor with PhD in philosophy, whose name is being kept private, was still not convinced, however, and said she needed to conduct “some independent research on the continent/country issue.” After reviewing Arnold’s paper the professor gave her a new grade of a B+, but never apologized, merely acknowledging that she had a “misunderstanding about the difference between Australia as a country and a continent.”

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Feb 092018
 
 February 9, 2018  Posted by at 10:41 am Finance Tagged with: , , , , , , , , , , , , , ,  


Horacio Coppola Florida y Bartolomé Mitre, Buenos Aires 1936

 

Dow Plummets 1032 Points, Down 10% From Record; S&P 500 Drops 3.7% (CNBC)
Is The Decades-Long Downtrend In Interest Rates Finally Over? (MW)
US Senate Approves Budget Deal, Too Late To Avert Shutdown (R.)
Stock Market Value Wiped Out Equals $2.5 Trillion And Counting… (CNBC)
The Stock Market Is In Turmoil And It’s Not Likely To End Anytime Soon (CNBC)
Stock, Bond Investors Pay For Fed’s Dangerous Experiment (Katsenelson)
Hong Kong And Mainland China Shares Tank In Global Rout (CNBC)
PBOC Releases Nearly 2 Trillion Yuan In Temporary Liquidity (R.)
50,000 American Bridges Are “Structurally Deficient” (ZH)
Bank Of England Signals An Interest Rate Hike Is Coming (G.)
The Biggest Privatisation You’ve Never Heard Of: Land (G.)
Northern Ireland Will Stay In Single Market After Brexit – EU (G.)
EU’s Moscovici ‘Especially Optimistic’ On Greek Debt Relief (R.)
Greek Pensions Keep Getting Smaller (K.)
Italy Accused Of Subjecting 10,000 Refugees To ‘Deplorable’ Conditions (Ind.)

 

 

Will it be labeled ‘The Olympics Crash’?

Dow Plummets 1032 Points, Down 10% From Record; S&P 500 Drops 3.7% (CNBC)

Stocks fell sharply on Thursday as strong earnings and economic data were not enough to quell jitters on Wall Street about higher interest rates. The Dow Jones industrial average closed 1,032.89 points lower at 23,860.46, entering correction territory. The 30-stock index also closed at its lowest level since Nov. 28. The Dow is also on track to post its biggest weekly decline since October 2008. “This whole correction is really about rates. It’s really about inflation creeping up. It’s really about people thinking the Fed is either behind the curve or actually has to be more aggressive,” Stephanie Link, global asset management managing director at TIAA, told CNBC’s “Closing Bell.” “That fear, that unknown is really what’s driving a lot of the anxiety,” Link said.

This is the third drop for the Dow greater than 500 points in the last five days. Despite the decline Thursday, the average is still a ways from its low for the week hit on Tuesday of 23,778.74. American Express and Intel were the worst-performing stocks in the index, sliding more than 5.4%. J.P. Morgan Chase, meanwhile, was down by more than 4%. The S&P 500 pulled back 3.75% to 2,581, reaching a new low for the week. The index also broke below its 100-day moving average and closed under 2,600, two important thresholds. For the S&P 500, it is its third drop of greater than 2% in the last five days. The Nasdaq composite fell 3.9% to close at 6,777.16 as Facebook, Amazon and Microsoft all fell at least 4.5%.

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That second chart is scary alright.

Is The Decades-Long Downtrend In Interest Rates Finally Over? (MW)

The yield on the benchmark 10-year Treasury note has an effect on all parts of the economy, as it influences everything from borrowing costs for the smallest and biggest companies, to rates for fixed and adjustable mortgages, car loans and credit cards. For three decades, one thing everyone could count on was if you were patient enough, rates would eventually be lower. Not anymore. The scariest thing for investors and consumers is often the unknown. But while some market pundits acknowledge that a “new norm” for rates is in the works, it’s not that rates are expected to spike back up to where they were in the 1980s. Besides, some people, such as those living off a fixed income, should actually welcome the new trend.

T[..] Arbeter Investments president Mark Arbeter: From a “very long-term perspective, yields appear to be tracing out a “massive bottom.” If the 10-year yield gets above the 2013 high of 3.04%, a bullish long-term “double bottom” reversal pattern would be completed, opening the door for an eventual rise toward the 4.75% area. A double bottom, according to the CMT Association, the keepers of the Chartered Market Technician certification, is this: “The price forms two distinct lows at roughly the same price level. For a more significant reversal, look for a longer period of time between the two lows.” The two bottoms Arbeter refers to are the 2012 monthly low of 1.47% and the 2016 low of 1.45%. Arbeter noted that while rates may not yet be ready to soar, equity investors may have reason to be worried. When the yield bumped up against the downtrend line before, as happened in 1987, 1990, 1994, 2000 and 2007, bad things happened on Wall Street.

T[..] Frank Cappelleri, CFA, CMT, executive director of institutional equities at Instinet LLC: In the medium term, he believes the bullish “inverted head and shoulders” reversal pattern that has formed over the last few years suggests a return toward the peaks seen in 2008 through 2010.

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Rand Paul.

US Senate Approves Budget Deal, Too Late To Avert Shutdown (R.)

The U.S. Senate approved a budget deal including a stopgap government funding bill early on Friday, but it was too late to prevent a federal shutdown that was already underway in an embarrassing setback for the Republican-controlled Congress. The shutdown, which technically started at midnight, was the second this year under Republican President Donald Trump, who played little role in attempts by party leaders earlier this week to head it off and end months of fiscal squabbling. The U.S. Office of Personnel Management advised millions of federal employees shortly after midnight to check with their agencies about whether they should report to work on Friday.

The Senate’s approval of the budget and stopgap funding package meant it will go next to the House of Representatives, where lawmakers were divided along party lines and passage was uncertain. House Republican leaders on Thursday had offered assurances that the package would be approved, but so did Senate leaders and the critical midnight deadline, when current government funding authority expired, was still missed. The reason for that was a nine-hour, on-again, off-again Senate floor speech by Kentucky Republican Senator Rand Paul, who objected to deficit spending in the bill. The unexpected turn of events dragged the Senate proceedings into the wee hours and underscored the persistent inability of Congress and Trump to deal efficiently with Washington’s most basic fiscal obligations of keeping the government open.

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The S&P 500 lost $2.49 trillion, and global markets $5.2 trillion.

Stock Market Value Wiped Out Equals $2.5 Trillion And Counting… (CNBC)

The U.S. stock market officially fell into correction territory Thursday and now we now the total damage: $2.49 trillion. That’s the market value that has been wiped out from the S&P 500 during its 10% rapid slide from a record on Jan. 26. The total is even bigger for global stock markets with $5.20 trillion gone as they followed the U.S. market’s lead. Both figures are from S&P Dow Jones Indices. Traders are worried the selling isn’t near over after the S&P 500 fell back below its Tuesday low during its 3.8% plunge Thursday. The benchmark is now at its lowest point since last November. The energy, health care, financials, materials and technology sectors are all in correction territory as well, according to S&P Dow Jones. President Donald Trump need not worry yet as the S&P 500 is still up $3.55 trillion since his election in November 2016, according to S&P Dow Jones.

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The floor is for Jay Powell. Let’s see some tricks.

The Stock Market Is In Turmoil And It’s Not Likely To End Anytime Soon (CNBC)

There’s a not-so-quiet rebellion going on in the bond market, and it threatens to take 10-year yields above 3% much faster than expected just a few weeks ago. As a result, the bumpy ride for stocks could continue for a while. There are some powerful forces at work, with global growth strong, central banks moving to tighten policy and the government’s deficit spending creating more and more Treasury supply. So, the bond market has entered a zone of no return for now, where Treasurys are expected to price in higher yields in a global sea change for bonds. Thursday’s sharp sell-off in stocks, with the S&P 500 closing down 3.8% , reversed a sharp move higher in bond yields, as buyers sought safety. The 10-year yield was at 2.81% from a high of 2.88% earlier in the day and the rising yields had started the stock market spiral lower.

“There’s going to be an interplay, a bit of push and pull between the rates market and equity market,” said Mark Cabana at Bank of America Merrill Lynch. Cabana said his call for a 2.90% 10-year this year is clearly at risk. He said technicians are watching 2.98%, and then 3.28% on the charts. The bipartisan spending bill, expected to pass Congress, called for a higher-than-expected spending cap of $300 billion. Cabana said it was encouraging in that the deal was bipartisan and that means the debt ceiling won’t be an issue. But it also had a negative impact on the bond market and resulted in forecasts of more Treasury supply and higher $1 trillion deficits. “It signals that fiscal austerity out of D.C. is a thing of the past, and Republicans aren’t nearly as concerned with the overall trajectory of the deficit as they have been and the president is worried about it,” he said.

The 10-year Treasury is the one to watch, and while many strategists targeted rates under 3% for this year, they acknowledge the risk is to the upside with yields potentially climbing to 3.25%. The 10-year is the benchmark best known to investors, and its yield influences a whole range of loans, including home mortgages. Strategists say the level of the yield is not so much the problem. Rather, it’s the rapidity of the move that has proven unnerving for global stock markets.”We’re in a vicious cycle here. If the yields go up, you have to sell stocks. If you sell stocks, and they crash, yields come back down,” said Art Hogan at B. Riley FBR.

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True, but ironically, they profited most from the experiment as well.

Stock, Bond Investors Pay For Fed’s Dangerous Experiment (Katsenelson)

In a capitalist economy, the invisible hand serves a very important but underappreciated role: It is a signaling mechanism that helps balance supply and demand. High demand leads to higher prices, telegraphing suppliers that they’ll make more money if they produce extra goods. Additional supply lowers prices, bringing them to a new equilibrium. This is how prices are set for millions of goods globally on a daily basis in free-market economies. In the command-and-control economy of the Soviet Union, the prices of goods often had little to do with supply and demand but were instead typically used as a political tool. This in part is why the Soviet economy failed — to make good decisions you need good data, and if price carries no data, it is hard to make good business decisions. When I left Soviet Russia in 1991, I thought I would never see a command-and-control economy again. I was wrong.

Over the past decade the global economy has started to resemble one, as well-meaning economists running central banks have been setting the price for the most important commodity in the world: money. Interest rates are the price of money, and the daily decisions of billions of people and their corporations and governments should determine them. Like the price of sugar in Soviet Russia, interest rates today have little to do with supply and demand (and thus have zero signaling value). For instance, if the Federal Reserve hadn’t bought more than $2 trillion of U.S. debt by late 2014, when U.S. government debt crossed the $17 trillion mark, interest rates might have started to go up and our budget deficit would have increased and forced politicians to cut government spending. But the opposite has happened: As our debt pile has grown, the government’s cost of borrowing has declined.

The consequences of well-meaning (but not all-knowing) economists setting the cost of money are widespread, from the inflation of asset prices to encouraging companies to spend on projects they shouldn’t. But we really don’t know the second-, third-, and fourth derivatives of the consequences that command-control interest rates will bring. We know that most likely every market participant was forced to take on more risk in recent years, but we don’t know how much more because we don’t know the price of money. Quantitative easing: These two seemingly harmless words have mutated the DNA of the global economy. Interest rates heavily influence currency exchange rates. Anticipation of QE by the European Union caused the price of the Swiss franc to jump 15% in one day in January 2015, and the Swiss economy has been crippled ever since.

Americans have a healthy distrust of their politicians. We expect our politicians to be corrupt. We don’t worship our leaders (only the dead ones). The U.S. Constitution is full of checks and balances to make sure that when (often not if) the opium of power goes to a politician’s head, the damage he or she can do to society is limited. Unfortunately, we don’t share the same distrust for economists and central bankers. It’s hard to say exactly why. Maybe we are in awe of their Ph.D.s. Or maybe it’s because they sound really smart and at the same time make us feel dumber than a toaster when they use big terms like “aggregate demand.” For whatever reason, we think they possess foresight and the powers of Marvel superheroes.

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Got to love the creativity: “..the current market downturn appears to be technical in nature..”

Hong Kong And Mainland China Shares Tank In Global Rout (CNBC)

The global market rout continued into Asia as Hong Kong and China shares fell sharply Friday after the U.S. stock market tanked overnight. The Hang Seng Index was down about 3.8% at 29,306.63 at 11.08 a.m. HK/SIN while the Shanghai composite was down 4.5% at 3,114.0472. Despite the sell-off, equities may just be in their “first leg of correction,” said William Ma, chief investment officer of Noah Holdings in Hong Kong. Even though the mainland market is not fully connected to the global market, fund managers on the mainland are talking about the global economy “half the time,” underscoring the international nature of markets that is causing a “synchronized collapse” in both Hong Kong and China, Ma told CNBC. With everything happening, it’s still too early to jump into the market for bargains, he said.

Ma recommends waiting for the Hang Seng Index to tank another 15% before putting money into the Chinese tech giant trio Baidu, Alibaba and Tencent — collectively known as BAT. Even amid the sharp slide, some experts recommended calm. One, Philip Li, senior fund manager at Value Partners, said the current market downturn appears to be technical in nature. Asia will be under pressure as long as its markets are correlated to the Dow, but earnings expectations for companies and the growth outlooks for regional economies are solid, so the current rout appears divorced from any fundamentals, Li added. The Chinese markets were already under pressure even before this week’s market sell-off as investors took profit ahead of the long Lunar New Year public holidays that start later next week.

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China’s small banks have -interbank- liquidity issues. Can’t have that with Lunar New Year coming up.

PBOC Releases Nearly 2 Trillion Yuan In Temporary Liquidity (R.)

China’s central bank said on Friday that it has released temporary liquidity worth almost 2 trillion yuan ($316.28 billion) to satisfy cash demand before the long Lunar New Year holidays. The People’s Bank of China had announced in December that it would allow some commercial banks to temporarily keep less required reserves to help them cope with the heavy demand for cash ahead of the festivities, which begin later next week. Interbank liquidity levels will remain reasonably stable, the PBOC said on its official microblog.

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Yeah, because who needs big government, right?

50,000 American Bridges Are “Structurally Deficient” (ZH)

Last week, President Trump announced his proposal for a $1.5 trillion infrastructure program in his State of The Union address to the American people. He failed to mention that over the next decade, the federal government would provide very little money whatsoever for America’s crumbling bridges, rails, roads, and waterways. In fact, Trump’s plan counts on state and local governments working in tandem with private investors to fork up the cash for projects. In overhauling the nation’s crumbling infrastructure, the federal government is only willing to pledge $200 billion in federal money over the next decade, leaving the remainder of $1.3 trillion for cities, states, and private companies.

Precisely how Trump’s infrastructure program would work remains somewhat of a mystery after his Tuesday night speech, as state transportation officials warned that significant hikes to taxes, fees, and tolls would be required by local governments to fund such projects. To get an understanding of the severity of America’s crumbling infrastructure. The American Road & Transportation Builders Association (ARTBA) has recently published a shocking report specifying more than 50,000 bridges across the country are rated “structurally deficient. Here are the highlights from the report: • 54,259 of the nation’s 612,677 bridges are rated “structurally deficient.” • Americans cross these deficient bridges 174 million times daily. • Average age of a structurally deficient bridge is 67 years, compared to 40 years for non-deficient bridges. • One in three (226,837) U.S. bridges have identified repair needs. • One in three (17,726) Interstate highway bridges have identified repair needs.

Dr. Alison Premo Black, chief economist for the American Road & Transportation Builders Association (ARTBA), who conducted the analysis, said, “the pace of improving the nation’s inventory of structurally deficient bridges slowed this past year. It’s down only two-tenths of a% from the number reported in the government’s 2016 data. At current pace of repair or replacement, it would take 37 years to remedy all of them. ” Black says, “An infrastructure package aimed at modernizing the Interstate System would have both short- and long-term positive effects on the U.S. economy.” She adds that traffic jams cost the trucking industry $60 billion in 2017 in lost productivity and fuel, which “increases the cost of everything we make, buy or export.”

Other key findings in the ARTBA report: Iowa (5,067), Pennsylvania (4,173), Oklahoma (3,234), Missouri (3,086), Illinois (2,303), Nebraska (2,258), Kansas (2,115), Mississippi (2,008), North Carolina (1,854) and New York (1,834) have the most structurally deficient bridges. The District of Columbia (8), Nevada (31), Delaware (39), Hawaii (66) and Utah (87) have the least. At least 15% of the bridges in six states – Rhode Island (23%), Iowa (21%), West Virginia (19%), South Dakota (19%), Pennsylvania (18%) and Nebraska (15%)—fall in the structurally deficient category. As Staista’s Niall McCarthy notes, U.S. drivers cross those bridges 174 million times a day and on average, a structurally deficient bridge is 67 years old.

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More currency wars?!

Bank Of England Signals An Interest Rate Hike Is Coming (G.)

The Bank of England has signalled that an interest rate hike is coming from as early as May and that there are more to come, as the economy accelerates with help from booming global growth. Threadneedle Street said it would need to raise rates to tackle stubbornly high inflation “somewhat earlier and by a somewhat greater extent” than it had anticipated towards the end of last year. While the Bank’s rate-setting monetary policy committee (MPC) voted unanimously to leave rates at 0.50% this month, the tone of its discussion suggests the cost of borrowing will not remain this low for much longer. The Bank’s governor, Mark Carney, had previously suggested there could be two further rate hikes to curb inflation over the next three years – but speculation will now mount over the chance of additional rate hikes.

The pound rose on foreign exchanges following the interest rate decision, hitting almost £1.40 against the dollar. City investors give a 75% chance of a rate hike in May, after having previously given a 50-50 probability. The FTSE 100 sold off sharply, falling by more than 108.7 points to below 7,200, amid a global stock market rout triggered by concerns among investors that central banks will need to raise interest rates faster than expected to curb rising inflation. On Wall Street, the Dow Jones Industrial Average was down more than 400 points by lunchtime. Threadneedle Street said inflation would fall more gradually than it had previously anticipated, because workers’ pay is slowly beginning to pick-up and as the oil prices is rising. “The outlook for growth and inflation [is] likely to require some ongoing withdrawal of monetary stimulus,” the MPC said.

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Land must belong to communities, societies. Who may lease it to individuals and firms for a good fee, but never sell it. You don’t sell seas and oceans either.

The Biggest Privatisation You’ve Never Heard Of: Land (G.)

Over the past 12 months, the issue of privatisation has surged back into the news and the public consciousness in Britain. Driven by mounting concerns about profiteering and mismanagement at privatised enterprises, Jeremy Corbyn’s Labour party has made the renationalisation of key utilities and the railways a central plank of its agenda for a future Labour administration. And then, of course, there is Carillion, a stark, rotting symbol of everything that has gone wrong with the privatisation of local public services, and which has prompted Corbyn’s recent call for a rebirth of municipal socialism. Yet in all the proliferating discussion about the rights and wrongs of the history of privatisation in Britain – both from those determined to row back against the neoliberal tide and those convinced that renationalisation is the wrong answer – Britain’s biggest privatisation of all never merits a mention.

This is partly because so few people are aware that it has even taken place, and partly because it has never been properly studied. What is this mega-privatisation? The privatisation of land. Some activists have hinted at it. Last October, for instance, the New Economics Foundation (NEF), a progressive thinktank, called in this newspaper for the government to stop selling public land. But the NEF’s is solely a present-day story, picturing land privatisation as a new phenomenon. It gives no sense of the fact that this has been occurring on a massive scale for fully 39 years, since the day that Margaret Thatcher entered Downing Street. During that period, all types of public land have been targeted, held by local and central government alike.

And while disposals have generally been heaviest under Tory and Tory-led administrations, they definitely did not abate under New Labour; indeed the NHS estate, in particular, was ravaged during the Blair years. All told, around 2 million hectares of public land have been privatised during the past four decades. This amounts to an eye-watering 10% of the entire British land mass, and about half of all the land that was owned by public bodies when Thatcher assumed power.

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The mess gets messier.

Northern Ireland Will Stay In Single Market After Brexit – EU (G.)

UK negotiators have been warned that the EU draft withdrawal agreement will stipulate that Northern Ireland will, in effect, remain in the customs union and single market after Brexit to avoid a hard border. The uncompromising legal language of the draft agreement is likely to provoke a major row, something all parties to the negotiations have been trying to avoid. British officials negotiating in Brussels were told by their counterparts that there could be a “sunset clause” included in the legally binding text, which is due to be published in around two weeks. Such a legal device would make the text null and void at a future date should an unexpectedly generous free trade deal, or a hitherto unimagined technological solution emerge that could be as effective as the status quo in avoiding the need for border infrastructure.

As it stands, however, the UK is expected by Brussels to sign off on the text which will see Northern Ireland remain under EU law at the end of the 21-month transition period, wherever it is relevant to the north-south economy, and the requirements of the Good Friday agreement. The move is widely expected to cause ructions within both the Conservative party and between the government and the Democratic Unionist party, whose 10 MPs give Theresa May her working majority in the House of Commons. The UK will be put under even greater pressure to offer up a vision of the future relationship that will deliver for the entire UK economy, but the inability of that model to ensure frictionless trade is likely to be exposed. A meeting of the cabinet to discuss the Irish border on Wednesday failed to come to any significant conclusions.

“There will be no wriggle room for the UK government,” said Philippe Lambert MEP, the leader of the Greens in the European parliament, who was briefed in Strasbourg earlier this week by the EU’s chief negotiator, Michel Barnier. “We are going to state exactly what we mean by regulatory alignment in the legal text. It will be very clear. This might cause some problems in the UK – but we didn’t create this mess.”

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This is the Big Trap now. No debt relief unless and until strong growth. As even the IMF has said strong growth depends on debt relief first.

EU’s Moscovici ‘Especially Optimistic’ On Greek Debt Relief (R.)

European Commissioner for Economic and Financial Affairs Pierre Moscovici said on Thursday he was “especially optimistic” about efforts to reach a solution on Greek debt relief. Greece’s third bailout ends in August and debt relief is expected to come up in negotiations over its bailout exit terms in the coming months. Athens and its eurozone lenders are expected to flesh out a French-proposed mechanism that was presented in June and which will link debt relief to Greek growth rates. The economy is forecast to grow by up to 2.5% this year and in 2019.

“On the issue of debt relief I am especially optimistic and I believe that our efforts will be implemented and they will be successful,” Moscovici said, through an interpreter, at a meeting with Greek President Prokopis Pavlopoulos. Greek public debt is forecast at 180% of GDP this year. Greece has received a record 260 billion euros in three bailouts since 2010. Moscovici, who is in Greece for talks on the next steps in the program, said it was up to Athens to devise a strategy for exiting its bailout and the post-bailout surveillance period. “The exit from the bailout is becoming apparent and under very good circumstances,” Moscovici said.

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A great big swirling black hole.

Greek Pensions Keep Getting Smaller (K.)

One in three pensioners has to live on less than 500 euros a month at a time when pensions in Greece have been constantly falling, according to the Helios online data system’s monthly reports. The Labor Ministry platform showed that the average income of Greek retirees amounts to 894 euros per month: The average main pension from all social security funds comes to 722 euros a month while the average auxiliary pension amounts to just 171 euros a month. The average dividend from the funds comes to 98 euros. More than two in three pensioners (66.39%) are on less than 1,000 euros a month, and 31.03% of pensions do not exceed 500 euros. In December the number of pensioners fell by 3,311 from November to 2,586,480. Compared to October’s 2,592,950, that’s a reduction of 6,470 pensioners.

Monthly expenditure on pensions decreased by 1.44 million euros from November and by 4.07 million from October. In total, 117,148 people were issued with new and definitive main and auxiliary pensions as well as dividends in 2017. As the year drew to a close, more and more new pensions issued were calculated according to the law introduced in 2016, meaning that the benefits handed out were considerably smaller. Therefore, while the average new pension for retirees who paid into the former Social Security Foundation (IKA) amounted to 640.66 euros in January 2017, this dropped to just 521.01 euros in December. Even the average IKA pension for those for whom it was first issued before May 2016 shrank considerably over the year, dropping to 618 euros per month.

Notably, more than a quarter of pensioners (26.32%) are under 65, while the distribution of retirees per age and pension category shows that the younger a person retires, the higher a pension they will receive. Meanwhile the Hellenic Statistical Authority (ELSTAT) announced on Thursday that the unemployment figures for last November showed no improvement from October, staying put at 20.9%. In November 2016 the jobless rate came to an upwardly revised 23.3%.

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Italians have had enough. Elections March 4. This will be the main theme.

Italy Accused Of Subjecting 10,000 Refugees To ‘Deplorable’ Conditions (Ind.)

Ten thousand migrants are living in “deplorable” conditions in Italy without shelter, food and clean water, Médecins Sans Frontières (MSF) has warned in a damning indictment of the country’s border practices. “Inadequate” reception policies are forcing refugees into slums, squats and abandoned buildings with limited access to basic services, the charity said. Increasing marginalisation of asylum seekers and a growing prevalence of forced evictions has led to small groups of migrants living in increasingly hidden places, the charity found, exposing them to “inhumane” living conditions. The findings, released as part of the second edition of the charity’s Out of Sight report, reveal the torturous reality facing huge swathes of Italy’s migrant population. But the survey shows Italians are increasingly uneasy over the numbers of refugees that have reached their country’s shores by boat over the past four years.

The report’s release coincides with a spike in anti-immigration rhetoric ahead of the 4 March parliamentary elections. On Saturday, a far-right extremist was arrested on suspicion of shooting six Africans in a racially motivated attack in Macerata. Days later, Silvio Berlusconi, the former Prime Minister whose Forza Italia (Go Italy!) party has entered a coalition with the Northern League and the smaller Brothers of Italy, promised to deport 600,000 migrants if their coalition came to power. “These 600,000 people, we will pick them up using police, law enforcement and the military… everyone can help identify them by pointing them out, and they will be picked up,” he said, claiming immigration was a “social bomb” linked to crime. Northern League leader Matteo Salvini also promised “irregular” migrants would be rounded up and sent home “in 15 minutes” if he and his allies take power.

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Feb 082018
 
 February 8, 2018  Posted by at 11:06 am Finance Tagged with: , , , , , , , ,  


Paul Gauguin A Day of No Gods 1894

 

The State of the American Debt Slaves (WS)
Reality Returns to Wall Street (Rickards)
Plunge Protection Team To The Rescue- Again (PCR)
Weidmann: ECB Should Wind Down QE After September (WSJ)
Tesla Announces Biggest Quarterly Loss Ever (G.)
Turkey Accused Of Recruiting ISIS Fighters To Attack Kurds In Syria (Ind.)
Huge Levels Of Antibiotic Use In Us Farming Revealed (G.)
Concerns Grow Over Conditions At Greek Refugee Camps (K.)

 

 

Behind the curtain.

The State of the American Debt Slaves (WS)

Total consumer credit rose 5.4% in the fourth quarter, year over year, to a record $3.84 trillion not seasonally adjusted, according to the Federal Reserve. This includes credit-card debt, auto loans, and student loans, but not mortgage-related debt. December had been somewhat of a disappointment for those that want consumers to drown in debt, but the prior months, starting in Q4 2016, had seen blistering surges of consumer debt. Think what you will of the election – consumers celebrated it or bemoaned it the American way: by piling on debt. The chart below shows the progression of consumer debt since 2006 (not seasonally adjusted). Note the slight dip after the Financial Crisis, as consumers deleveraged – with much of the deleveraging being accomplished by defaulting on those debts. But it didn’t last long. And consumer debt has surged since. It’s now 45% higher than it had been in Q4 2008. Food for thought: Over the period, the consumer price index increased 17.5%:

Credit card debt and other revolving credit in Q4 rose 6% year-over-year to $1.027 trillion, a blistering pace, but it was down from the 9.2% surge in Q3, the nearly 10% surge in Q2, and the dizzying 12% surge in Q1. So the growth of credit card debt in Q4 was somewhat of a disappointment for those wanting to see consumers drown in expensive debt. The chart below shows the leap of the past four quarters over prior years. This pushed credit card debt in Q3 and Q4 finally over the prior record set in Q4 2008 ($1.004 trillion), before it came tumbling down via said “deleveraging.” These are not seasonally adjusted numbers, and you can see the seasonal surges in credit card debt every Q4 during shopping season (as marked), and the drop afterwards in Q1. But then came 2017. In Q1 2017, credit card debt skyrocketed to an even higher level than Q4, when it should have normally plunged – a phenomenon I have not seen before.

This shows what kind of credit-card party 2017 and Q4 2016 was. Over the four quarter period, Americans added $58 billion to their credit card debt. Over the five-quarter period, they added $109 billion, or 12%! Celebration or retail therapy. Auto loans rose 3.8% in Q4 year-over-year to $1.114 trillion. It was one of the puniest increases since the auto crisis had ended in 2011. Since then, the year-over-year increases were mostly in the 6% to 9% range. These are loans and leases for new and used vehicles. So the weakness in new-vehicle sales volume in 2017 was covered up by price increases in both new and used vehicles in the second half and strong used-vehicle sales:

[..] Student loans surged 5.6% in Q4 year-over-year. This seems like a shocking increase, but the year-over-year increases in Q3 and Q4 were the only such increases below 6% in this data series. Between 2007 – as far back as year-over-year comparisons are possible in this data series – and Q3 2012, the year-over-year increases ranged from 11% to 15%:

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It hasn’t yet though. Wall Street can’t handle reality.

Reality Returns to Wall Street (Rickards)

In a recent article, Yale scholar Stephen Roach points out that between 2008 and 2017 the combined balance sheets of the central banks of the U.S., Japan and the eurozone expanded by $8.3 trillion, while nominal GDP in those same economies expanded $2.1 trillion. What happens when you print $8.3 trillion in money and only get $2.1 trillion of growth? What happened to the extra $6.2 trillion of printed money? The answer is that it went into assets. Stocks, bonds, emerging-market debt and real estate have all been pumped up by central bank money printing. What makes 2018 different from the prior 10 years? The answer is that this is the year the central banks stop printing and take away the punch bowl. The Fed is already destroying money (they do this by not rolling over maturing bonds).

Last week, the Fed reduced its balance sheet by $22 billion. While that doesn’t seem like much when you’re talking about a $4 trillion balance sheet, it was the Fed’s largest cut to date. Funny how the market hit the skids just after this happened. But you haven’t heard the mainstream media mention that. By the end of 2018, the annual pace of money destruction will be $600 billion — if the Fed under new chairman Jerome Powell stays on course. The ECB and Bank of Japan are not yet at the point of reducing money supply, but they have stopped expanding it and plan to reduce money supply later this year. In economics everything happens at the margin. When something is expanding and then stops expanding, the marginal impact is the same as shrinking. Apart from money supply, all of the major central banks are planning rate hikes, and some, such as those in the U.S. and U.K., are actually implementing them.

Reducing money supply and raising interest rates might be the right policy if price inflation were out of control. But despite a recent uptick in some inflation measures, prices have mostly been falling. The “inflation” hasn’t been in consumer prices; it’s in asset prices. The impact of money supply reduction and higher rates will be falling asset prices in stocks, bonds and real estate — the asset bubble in reverse. [..] This will not be a soft landing. The central banks — especially the U.S. Fed, first under Ben Bernanke and later under Janet Yellen — repeated Alan Greenspan’s blunder from 2005–06. Greenspan left rates too low for too long and got a monstrous bubble in residential real estate that led the financial world to the brink of total collapse in 2008. Bernanke and Yellen also left rates too low for too long. They should have started rate and balance sheet normalization in 2010 at the early stages of the current expansion when the economy could have borne it. They didn’t.

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Obviously.

Plunge Protection Team To The Rescue- Again (PCR)

What happened? Did the market sneeze, cough, or was something misread and today perceived in a different light? In my opinion this is what happened: The Plunge Protection Team, as they have done on previous equity market drops, or the Federal Reserve operating for the Working Group on Financial Markets, sent a purchase order for S&P futures to the trading floor. The hedge funds, seeing the incoming bid, front-ran the bid by stepping in and buying S&P futures. This pushed the market back up, ended the correction, and prevented financial panic.

The Plunge Protection Team was created in 1987, approaching the end of the Reagan administration, in order to prevent a market correction from costing George H. W. Bush the presidential election as Reagan’s successor. The Republican Establishment was desperate to reestablish its control over the party. The Republican Establishment, convinced by Wall Street that the Reagan tax cut would result in high inflation, found themselves instead confronted with a long economic expansion. In those days that meant that the expansion could be nearing its end, and a stock market correction could deny the presidency to George H.W. Bush. To prevent any such correction, the US Treasury and Federal Reserve created a “working group” to intervene in the stock market in order to support values. Whenever the market starts to drop, the team purchases S&P futures which halts the market decline.

We have witnessed this on several occasions. And, most likely, again this week. Pundits who speak about “market forces” are speaking about something that doesn’t exist. “Market forces” are the interventions that support existing values with money infusions. How long can the fraudulent valuation of equities continue? My sometimes coauthor Dave Kranzler and I think it can continue until the dollar as reserve currency comes under attack. Neither of us believed that the fraud could be perpetrated this long. The two other world powers, Russia and China, are moving away from use of the US dollar, but the consequence for the dollar could still be in the future. In the meantime, liquidity supplied by central banks and the interventions of the Plunge Protection Team could send equity prices higher.

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Time to replace Draghi.

Weidmann: ECB Should Wind Down QE After September (WSJ)

The European Central Bank should wind down its giant bond-buying program after September despite a stronger euro currency and volatility on global financial markets, German central bank President Jens Weidmann said Thursday. Speaking at a conference in Frankfurt, Mr. Weidmann, who sits on the ECB’s 25-member rate-setting committee, said “substantial net [asset] purchases beyond the announced amount do not seem to be required” if economic growth “progresses as currently expected.” ECB officials are weighing how quickly to phase out their stimulus policies as the region’s economy heats up. The ECB has pledged to buy €30 billion a month of eurozone bonds at least through September under its €2.5 trillion quantitative easing program, and ECB President Mario Draghi has signaled that the program won’t end abruptly.

Mr. Weidmann didn’t rule out a short extension of QE. But he argued that the eurozone’s economic recovery might be more advanced than that in the U.S. when the Fed wound down its own QE program in 2014. “The favorable economic outlook lends credence to the expectation that wage growth and therefore domestic price pressures will gradually increase,” Mr. Weidmann said. This week’s pay deal in Germany’s engineering sector “is consistent with this picture,” suggesting that inflation will pick up in Germany as unemployment falls, he said. Crucially, he urged policy makers not to be distracted by a rising euro or the situation in financial markets, which have gyrated wildly in recent days amid concerns about the reduction of monetary stimulus from central banks. “U.S. equity prices rose over a prolonged period without any notable corrections, which was unusual given that valuations have been high overall, Mr. Weidmann said.

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There’s more to this than meets the eye. Expected loss was more than three times that. A mixed bag.

Tesla Announces Biggest Quarterly Loss Ever (G.)

The tech billionaire Elon Musk sent one of his Tesla electric cars into space yesterday, a day before the company that built it announced its biggest ever quarterly loss. Musk’s Tesla electric car and energy storage company lost $675.4m in the three months ending 31 December, the company announced on Thursday, compared with a loss of $121m for the same period last year. The company has been spending heavily as it rolls out the next generation of electric cars, the Model 3 sedan, a semi truck and other products. The company has struggled to keep up with is production targets for the Model 3 but said it would probably build about 2,500 Model 3s per week by the end of the first quarter and that it plans to reach its goal of 5,000 vehicles per week by the end of the second quarter. On Wednesday Musk’s private aerospace company, SpaceX, blasted a cherry red Tesla Roadster sports car into space in a successful test of its Falcon Heavy rocket.

The car and its dummy driver are now heading towards the asteroid belt. Tesla delivered 101,312 Model S sedans and Model X SUVs last year, up 33% over 2016 and ahead of its targets, according to preliminary figures released last month. But it fell woefully short on the Model 3, which went into production in July. Tesla made just 2,425 Model 3s in the fourth quarter, and has pushed back production targets multiple times. At one point, Tesla had 500,000 people on a waiting list for the Model 3, but it’s not clear if all of them are continuing to wait. On a call with analysts Musk said production was getting back on track. “If we can send a Roadster to the asteroid belt we can probably solve Model 3 production,” he said. Musk is set to collect a $55.8bn (£40bn) bonus – probably be the largest ever – if he can build Tesla into a $650bn company over the next decade. In the meantime the 46-year-old has agreed to work unpaid for the next 10 years.

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WIll it really require Russia to halt this disaster? The US can’t do it?

Turkey Accused Of Recruiting ISIS Fighters To Attack Kurds In Syria (Ind.)

Turkey is recruiting and retraining Isis fighters to lead its invasion of the Kurdish enclave of Afrin in northern Syria, according to an ex-Isis source. “Most of those who are fighting in Afrin against the YPG [People’s Protection Units] are Isis, though Turkey has trained them to change their assault tactics,” said Faraj, a former Isis fighter from north-east Syria who remains in close touch with the jihadi movement. In a phone interview with The Independent, he added: “Turkey at the beginning of its operation tried to delude people by saying that it is fighting Isis, but actually they are training Isis members and sending them to Afrin.” An estimated 6,000 Turkish troops and 10,000 Free Syrian Army (FSA) militia crossed into Syria on 20 January, pledging to drive the YPG out of Afrin.

The attack was led by the FSA, which is a largely defunct umbrella grouping of non-Jihadi Syrian rebels once backed by the West. Now, most of its fighters taking part in Turkey’s “Operation Olive Branch” were, until recently, members of Isis. Some of the FSA troops advancing into Afrin are surprisingly open about their allegiance to al-Qaeda and its offshoots. A video posted online shows three uniformed jihadis singing a song in praise of their past battles and “how we were steadfast in Grozny (Chechnya) and Dagestan (north Caucasus). And we took Tora Bora (the former headquarters of Osama bin Laden). And now Afrin is calling to us”.

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SImply refuse all US food imports. It’s not that hard.

Huge Levels Of Antibiotic Use In Us Farming Revealed (G.)

Livestock raised for food in the US are dosed with five times as much antibiotic medicine as farm animals in the UK, new data has shown, raising questions about rules on meat imports under post-Brexit trade deals. The difference in rates of dosage rises to at least nine times as much in the case of cattle raised for beef, and may be as high as 16 times the rate of dosage per cow in the UK. There is currently a ban on imports of American beef throughout Europe, owing mainly to the free use of growth hormones in the US. Higher use of antibiotics, particularly those that are critical for human health – the medicines “of last resort”, which the WHO wants banned from use in animals – is associated with rising resistance to the drugs and the rapid evolution of “superbugs” that can kill or cause serious illness.

The contrast between rates of dosage in the US and the UK throws a new light on negotiations on Brexit, under which politicians are seeking to negotiate trade deals for the UK independently of the EU. Agriculture and food are key areas, particularly in trading with the US, which as part of any deal may insist on opening up the UK markets to imports that would be banned under EU rules. When negotiating outside the EU for a new trade deal, the UK will come under severe pressure to allow such imports. Over the summer, a row broke out over the potential for imports of US chlorinated chicken – bleaching chicken, according to experts in the UK, is a dangerous practice because it can serve to disguise poor hygiene practices in the food chain.

But Ted McKinney, US under-secretary for trade and foreign agricultural affairs, told an audience of British farmers last month he was “sick and tired” of hearing British concerns about chlorinated chicken and US food standards, providing further indication that the US government is likely to strike a hard deal on agricultural products as part of any trade agreement. Antibiotic use in the US is three times higher in chickens than it is in the UK, double that for pigs, and five times higher for turkeys, according to research by the Alliance to Save Our Antibiotics [..]

Suzi Shingler, at the Alliance to Save Our Antibiotics, said: “US cattle farmers are massively overusing antibiotics. This finding shows the huge advantages of British beef, which is often from grass-reared animals, whereas US cattle are usually finished in intensive feedlots. Trade negotiators who may be tempted to lift the ban on US beef should not only be considering the impact of growth hormones, but also of antibiotic resistance due to rampant antibiotic use.”

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Gorundhog Day in all its glory.

Concerns Grow Over Conditions At Greek Refugee Camps (K.)

Concerns are rising about conditions at reception centers for migrants on the islands of the eastern Aegean amid delays in much-needed infrastructure upgrades and increasingly cramped conditions, with reports of a spike in cases of mental health problems. Last summer, authorities completed a feasibility study for an upgrade of the drainage and sewerage systems at Moria, the main reception center on Lesvos. But the plan appears to have become mired in bureaucracy. Originally designed to house 1,000 migrants, the camp at Moria is currently hosting nearly seven times that number. The overcrowded and dirty conditions, and the uncertainty, are taking their toll on the mental health of many camp residents, Gavriil Sakellaridis, the head of Amnesty International’s Greek chapter, said on Wednesday.

Following a visit to camps on Lesvos and Chios, Sakellaridis expressed concern at the large number of migrants suffering from depression and called for the transfer of asylum seekers to the mainland. “The living conditions of asylum seekers at Moria and Vial [on Chios] are an open wound for Greece and Europe and for human rights,” Sakellaridis said. “The lives of those people have been put on hold for a period of up to two years in some cases and as a result the cases of despair and mental distress are growing,” he said.

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Feb 072018
 
 February 7, 2018  Posted by at 11:07 am Finance Tagged with: , , , , , , , , , ,  


Jean-Michel Basquiat Aboriginal 1984

 

Why Did US Stock Market Crash On Monday? Blame The Central Banks (Steve Keen)
Asian Shares On Edge As US Futures Slip (R.)
Two Tiny Volatility Products Helped Fuel Sudden Stock Slump (BBG)
Inside Wall Street’s $8 Billion VIX Time Bomb
The Death Of The “Death Of Contagion” Central Bank Meme (Luongo)
Icahn: “One Day This Thing Is Just Going To Implode” (CNBC)
Good Riddance, Janet, You Were A Colossal Failure, Part 1 (Stockman)
How “Opioid Janet” Got Wall Street Hooked On Monetary Heroin, Part 2 (Stockman)
The EU Is The Enemy Of The Working Classes (Spiked)
German Pay Deal Heralds End Of Wage Restraint In Europe’s Largest Economy (R.)
UK Crops Left To Rot After Drop In EU Farm Workers In Britain (Ind.)
Refugee Arrivals Have Doubled Since August, Greek Migration Minister Says (K.)

 

 

Coming to you from a Russian propaganda channel.

Why Did US Stock Market Crash On Monday? Blame The Central Banks (Steve Keen)

Everyone who’s asking “why did the stock market crash Monday?” is asking the wrong question. The real poser is “why did it take so long for this crash to happen?” The crash itself was significant—Donald Trump’s favorite index, the Dow Jones Industrial (DJIA) fell 4.6% in one day. This is about four times the standard range of the index—and so according to conventional economics, it should almost never happen. Of course, mainstream economists are wildly wrong about this, as they have been about almost everything else for some time now. In fact, a four% fall in the market is unusual, but far from rare: there are well over 100 days in the last century that the Dow Jones tumbled by this much. Crashes this big tend to happen when the market is massively overvalued, and on that front this crash is no different.

It’s like a long-overdue earthquake. Though everyone from Donald Trump down (or should that be “up”?) had regarded Monday’s level and the previous day’s tranquillity as normal, these were in fact the truly unprecedented events. In particular, the ratio of stock prices to corporate earnings is almost higher than it has ever been. There is only one time that it’s been higher: during the DotCom Bubble, when Robert Shiller’s “cyclically adjusted price to earnings” ratio hit the all-time record of 44 to one. That means that the average price of a share on the S&P500 was 44 times the average earnings per share over the previous 10 years (Shiller uses this long time-lag to minimize the effect of Ponzi Scheme firms like Enron).

The S&P500 fell more than 11% that day, so Monday’s fall is minor by comparison. And the market remains seriously overvalued: even if shares fell by 50% from today’s level, they’d still be twice as expensive as they have been, on average, for the last 140 years. After the 2000 crash, standard market dynamics led to stocks falling by 50% over the following two years, until the rise of the Subprime Bubble pushed them up about 25% (from 22 times earnings to 28 times). Then the Subprime Bubble burst in 2007, and shares fell another 50%, from 28 times earnings to 14 times. This was when central banks thought The End of the World Is Nigh, and that they’d be blamed for it. But in fact, when the market bottomed in early 2009, it was only just below the pre-1990 average of 14.5 times earnings.

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Give it a few days, and complacency may well be reinstated.

Asian Shares On Edge As US Futures Slip (R.)

Asian shares reversed their earlier gains on Wednesday as investors dumped U.S. stock futures for safer harbors, a sign market participants remain jittery after this week’s global markets rout. While most analysts believed this week’s distressed selling looks to have run its course for the moment, allowing volatility to abate a little, the prospect of monetary tightening across the globe remains a challenge for the long term. “If we look at some of the drivers of the recent volatility – the natural correction and the bond sell-off – we don’t foresee any of these factors contributing to a lengthy period of extreme volatility,” said Tom Kenny, senior economist at ANZ. “The correction is probably a healthy development and is not reflective of a souring of the macroeconomic outlook.”

Investors took their cues from a late rebound on Wall Street overnight, though many had an anxious eye on E-Mini futures for the S&P 500 which slipped about 1% in late Asian trading. Dow Minis were down 0.9%. MSCI’s broadest index of Asia-Pacific shares outside Japan was a tad softer, having risen as much as 2% in early trade. Japan’s Nikkei eased too but was still up 0.2%. Chinese blue chips and South Korea’s KOSPI index dropped more than 2%. “The only surprise about the current volatility is that it hasn’t happened sooner. Normally, even in a bull market, investors should expect a sell-off of 10-percent-plus at some point,” said Richard Titherington, chief investment officer of EM Asia Pacific Equities. “While a major market downturn is possible, it is not our current expectation. The underlying backdrop of an improving global economy, a weakening U.S. dollar and a pickup in global earnings all remain supportive factors.”

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Why have these things ever been allowed into existence? Who and what do they serve? The American people?

Two Tiny Volatility Products Helped Fuel Sudden Stock Slump (BBG)

Two days after a sudden spike in volatility sparked a stock-market crash, market participants are left to ponder the wreckage of the sell-off and the mysterious dynamics that caused it. One theory that’s emerging: the curious case of the tail wagging the dog. Two exchange-traded products that democratized access to one of Wall Street’s most tried-and-true strategies – selling volatility – had just $3.6 billion in assets on Monday. That’s a tiny fraction of the roughly $2 trillion estimated to be linked to short-volatility strategies – and a speck of dust compared to the $23 trillion in market value of S&P 500 companies. Yet the popularity of these vehicles might have contributed to one of the most violent moves in U.S. equities in history: one that saw the Dow Jones Industrial Average slump more than 6% in a span of six minutes.

After the dust settled, the combined assets in the two exchange-traded products shrank to $135 million. One of them – the VelocityShares Daily Inverse VIX Short-Term ETN, known as XIV – will soon be extinct. No one knows for sure what played out on the afternoon of Feb. 5 on Wall Street, cautioned Societe Generale SA managing director Ramon Verastegui, but there’s reason to believe the sharpness of the retreat in equities was linked to traders’ understanding of how the exchange-traded products would behave. As funds’ assets swelled, so too had their power to move the underlying VIX futures markets, he suggests. And market participants knew it. Products such as XIV and its close relation, the ProShares Short VIX Short-Term Futures ETF (SVXY), aim to offer investors exposure to the inverse of the daily moves at the front portion of the VIX futures curve, and typically benefit from market tranquility.

Demand from leveraged VIX exchanged-traded products was “the major driver for the move post the cash close,” Barclays analysts led by Maneesh Deshpande said. There are other clues in the case — notably that the big fall in stocks hasn’t yet significantly affected other asset classes. That the volatility spike was concentrated in equities supports the notion of a VIX product-propelled plunge, according to George Pearkes, macro strategist at Bespoke Investment Group. During other eruptions of volatility — the aftermath of China’s shock devaluation of the yuan in August 2015, for instance – volatility in stocks, bonds, currencies and even oil jumped. “This is the exact opposite of a number of different volatility spikes we’ve seen in recent years,” he said in an interview on Bloomberg TV. “Frankly, it’s a reason to think that some of the worst of the recent moves in the VIX and the delta moves in cash equities have been driven specifically by equity-vol products that have not spread out to other asset classes.”

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If it were just $8 billion, we wouldn’t be having this talk.

Inside Wall Street’s $8 Billion VIX Time Bomb

It was the hot trade on Wall Street, a seemingly sure thing that lulled everyone from hedge fund managers to small-time investors. Now newfangled investments linked to volatility in the stock market – until a few years ago, obscure niche products – have exploded in spectacular fashion. The shock waves have only just begun. How these investments proliferated is a classic story of Wall Street salesmanship and old-fashioned greed. In a few short years, financial engineering transformed expectations about the ups and downs of the stock market into an asset class that could be marketed and sold – as tradable as stocks but, it turns out, sometimes far riskier. Call it the volatility-financial complex. All told, financial players have created more than $8 billion of products tied to one index alone.

In a low-interest-rate world, investors desperate for returns snapped them up, and bankers collected fees along the way. But, as with mortgage investments a decade ago, complacency – in this case, over a history-defying period of market calm – masked potential dangers. No one is saying the wild swings of late presage a broad collapse like the one that hit in 2008. But the fallout nonetheless provides a glimpse into the myriad products, and growing complexity, driving global markets a decade after the last debacle. The risks, in hindsight, were clear enough even before the Dow Jones industrial average plummeted nearly 1,600 points on Monday, snapped back, and then took a wild bungee jump of nearly 1,200 points Tuesday. The CEO of Barclays, which pioneered notes linked to U.S. market volatility, warned only last month that investors might be losing their heads.

“If this thing turns, hold on to your hat,” Jes Staley told a panel at the World Economic Forum in Davos. Now, hats have been blown off by a whirlwind the likes of which Wall Street has never seen. To some, the volatility complex feels like a monster that’s been lurking in the shadows. Even one of the inventors of the VIX, Devesh Shah, is perplexed why these products exist in the first place. “Everybody knew that this was a huge problem,” said Shah, who was in his 20s when he helped create what’s become the market’s fear barometer. “Everybody knows that Inverse VIX is going to go to zero at some point, and all these inverse and leveraged products, not just in the VIX but elsewhere too, at the end of the day cost people a lot of money.”

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VIX as CDOs with lipstick on.

The Death Of The “Death Of Contagion” Central Bank Meme (Luongo)

Last year now-former FOMC Chair Janet Yellen downplayed the possibility of another financial crisis. In her hubris she believes the central banks have walled off the financial system from ‘contagion risks’ brought on by over-investment in synthetic derivative market products. Like generals, however, central planners are always fighting the last war. We’re experiencing a major correction in the equity markets brought on in a mean-reversion exercise thanks to central banks trying to shore up their defenses around the last battle they lost, namely off-exchange, unregulated CDOs — synthetic debt-based investment products. Humans are clever and will always find a way around a problem. The problem is incentives. he banks created CDO’s because there was a demand for investment returns far above what the central banks were allowing the market to pay, by setting interest rates well below the real risk profile of the investment community.

In other words, government bonds were over-priced and investors went looking for better returns. Now that Yellen et.al. have stamped out most of that market investors still need yield. And that’s where the equity markets and the VIX come in. The response to the 2008 financial crisis was zero-bound interest rates and trillions in liquidity created by the central banks sitting around looking for yield. It found its way into the equity markets which over the past six plus years been on an historic rally off the October 2011 low. During that time the VIX became more important. What was once only discussed by the real pros was now in the hands of everyone. Contagion risks jumped asset classes. For the uninitiated the VIX — or volatilty index — is a bet about the behavior of the S&P 500, itself an index of stocks. Higher VIX values equal higher implied future volatility in the S&P 500 and vice versa.

In mathematical terms the S&P 500 is the first derivative of any single stock. Stocks in the index trade in sympathy with it regardless of their current business. The VIX is then the 2nd derivative of any stock in your portfolio. During a rally the VIX falls. But, now with so many products out there, ETNs — Exchange Traded Notes — both leveraged and un-leveraged — to speculate in the VIX it became easier and more profitable to trade it than the S&P 500 or individual stocks. Trading volumes in these products have soared. The tail didn’t just wag the dog, it became the dog. Now these ETN’s are another derivative of the equity markets. And if they are leveraged, i.e. the note trades with twice or three times the volatility of the VIX itself (volatility of volatility), then options on these ETNs is the fourth derivative of the underlying stock. Volatilty of volatility of volatility.

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No doubt there.

Icahn: “One Day This Thing Is Just Going To Implode” (CNBC)

Billionaire Carl Icahn told CNBC on Tuesday there are too many exotic, leveraged products for investors to trade, and one day these securities are going to blow up the market. The market is a “casino on steroids” with all these exchange-traded funds and exchange-traded notes, he said. These funds, especially the leveraged ones, are the “fault lines” that will eventually lead to an earthquake on Wall Street, he said. “These are just the beginnings of a rumbling.” The latest example is an obscure security, designed to be a bet on a calm market, that’s being blamed for causing an influx of selling in recent days. The VelocityShares Daily Inverse VIX Short-Term exchange-traded note (XIV) blew up overnight as investors were forced to sell when the market went haywire. As a result, Credit Suisse on Tuesday said as of Feb. 20, it will end trading for its XIV, which was supposed to give the opposite return of the Cboe Volatility Index (VIX), often referred to as the market’s fear gauge.

“The market itself is way over-leveraged,” Icahn said on “Fast Money Halftime Report,” predicting that “one day this thing is just going to implode.” He described the possible implosion as “maybe eventually worse than 1929,” making reference to the stock market crash that contributed to the Great Depression. “The market has become a much more dangerous place,” he said, adding the current volatility is a precursor of potential trouble. “It’s telling you something, giving you a warning.” Investors are piling into index funds thinking they’ll never go down, Icahn said. “Passive investing is the bubble right now, and that’s a great danger.” But as much as he was sounding alarm bells, Icahn said, “I don’t think this is the explosive time.” The market will “probably bounce back,” he continued. “I don’t think this is the beginning of the end.”

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I read far too much praise for Yellen. Stockman doesn’t swallow it either.

Good Riddance, Janet, You Were A Colossal Failure, Part 1 (Stockman)

This is one for the record books. During Janet Yellen’s last week in office, the Dow dropped by 1,095 points or 4.1%. But by her lights, apparently, that wasn’t even a warning bell – just the market clearing its collective throat. So on the way out the door our Keynesian school marm could not resist delivering what will soon be seen as a grand self-indictment. There’s nothing to worry about, she averred, because Wall Street’s OK and main street is positively awesome: “I don’t want to label what we’re seeing as a bubble….(even if) asset valuations are generally elevated….(but) when I see the unemployment rate fall to 4.1%…I feel very good about the progress we’ve seen there.” No, there is a monumental bubble out there that was born, bred and nurtured at the hands of the Fed.

At the same time, Yellen and her merry band of money printers had virtually nothing to do with the 4.1% unemployment rate – even if that were a valid measure of return to full employment prosperity, which it is not. To the contrary, the mainstreet economy is sick as a dog, and it is the Fed’s giant Wall Street bubbles which made it so. That said, hereupon follows the ringing economic and financial indictment that Janet Yellen so richly deserves. In the first place, that Fed’s dangerous digression into massive QE and 100 months of near-ZIRP had virtually nothing to do with the limpid “recovery” that has transpired since the June 2009 bottom. And we do mean its contribution amounted to nothing – as in zero, zip and zilch.

[..] In general, our thesis is that central bank stimulus of household spending is equivalent to a one trick pony. Once all the latent headroom on household balance sheets and income statements to raise leverage levels is used up, cheap debt loses its efficacy in the main street economy. In fact, that is exactly what has happened. During the first 20-years of the Greenspan-incepted era of Bubble Finance, household leverage ratios exploded. Whereas wage and salary incomes rose by $4.2 trillion or 2.9X, household liabilities soared by nearly $12 trillion or 5.2X. Over the two decades, therefore, household leverage ratios (liabilities to earned income) nearly doubled from 124% to 224%.

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Yellen has been a terribly destructive force for America. It’s just that the consequences take time to seep through.

How “Opioid Janet” Got Wall Street Hooked On Monetary Heroin, Part 2 (Stockman)

Janet Yellen deserves exactly none of the adulation being conferred upon her tenure by the mainstream financial press. In fact, her reign will be judged by history as a spectacular failure that left main street high and dry—even as it finally and completely addicted Wall Street to the toxic monetary heroin that is the specialty of Keynesian central bankers. Accordingly, it may take a dozen or more episodes like the 12% crash of the last few days to finally purge the “buy the dips” addiction that is rampant in the casinos. Pending that day of deliverance, however, the soon-to-be shaking and shivering cold turkeys of Wall Street will surely come to see that Opioid Janet was not their friend at all, but their very worst nightmare.

[..] much of the mischief, madness and reckless speculation now implanted in the global financial markets happened during the Yellen-enabled global QE phase of 2014-2018. During that period, for example, corporate debt issuance set all-time records. But as we documented in Part 1, the proceeds went into financial engineering and bidding up the price of existing shares to ludicrous heights, not new growth capital. Likewise, carry trade speculation by front-runners went to mindless extremes, such as the fact that the Italian 10-year note traded under 1.0% during points in 2016. The facts that Italy’s public debt stood at 133% of GDP, that its political system was completely broken and dysfunctional and that its economy was 10% smaller than it had been earlier in this century were irrelevant to the price of its debt.

The latter was being set by front-running speculators who were buying on massive repo leverage what the idiot central banker, Mario Draghi, promised them he would be buying, too. Indeed, as Yellen dithered, deferred, ducked and delayed the urgent imperative of monetary normalization at the Fed, the other lesser central banks were given leave to expand their collective balance sheets at a stupendous $2.2 trillion annual rate during much of 2016-2017. With two massive central bank vaults swinging their doors wide open, it’s no wonder that upwards of $15 trillion of sovereign debt traded with a negative yield during the peak of the madness.

And that wasn’t the half of it. By killing the yield on sovereigns, Yellen and her convoy of Keynesian central bankers forced money managers into what will soon be evident as crazy-ass risk taking in order to scrape-up a semblance of yield. Not only did European junk bonds trade inside the UST 10-year yield at one point, but the corporate bond market was literally primed for an explosion of issuance by fund managers desperate for returns. The proceeds, of course, went almost entirely into funding giant, pointless M&A deals, stock buybacks and other forms of debt-financed recapitalization.

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“Workers” and “working classes” is the language of the 1850s. It‘s not going to get you anywhere today.

The EU Is The Enemy Of The Working Classes (Spiked)

here are two European Unions, it seems. There is the EU that stands up for the citizen, for his or her rights; the EU that can face down the behemoths of global capitalism and rein in their avarice and callousness; the EU that has legally enshrined workers’ freedoms, and which exists as a bulwark against untrammelled neoliberalism. And then there is the real EU. That heroic EU is a castle in the anti-Brexit sky, built by those who identify themselves as left-wing. It is maintained by those Labour MPs and peers who, as they did on the eve of Labour’s autumn conference, ceaselessly urge Labour leader Jeremy Corybn ‘to commit to staying in the Single Market and Customs Union… and to work with sister parties and others across Europe to improve workers’ rights’.

It is fortified by the self-appointed keepers of the left-wing flame, those among the commentariat who never tire of telling us that ‘workers’ rights… would be imperilled’ by a so-called ‘Hard Brexit’. And it is peopled by all those who cling to this image of the EU as an essentially social-democratic institution, sticking it gently to the man, defying the Daily Mail, and protecting working men and women against the inhuman workings of capital. Then there’s the other EU, the one that actually exists. This is the EU that uses the pooled-without-consent sovereignty of its member states to pursue its own institutional self-preservation, impoverishing struggling Eurozone members, from Spain to Italy, in the name of economic stability; imposing leaders-cum-administrators on recalcitrant electorates in the interests of austerity; and brazenly betraying workers’ rights at every self-interested turn.

This EU – the actual EU, the one stubbornly committed to its own, not citizens’, interests – is not on the side of the worker. And it never was. Because this EU, when the economic imperative demands, is always against the worker. But those attached to their fantasy left-wing ideal of the EU refuse to see the reality. To face up to this reality would simply be too much. It would mock their left-wing pretensions, humiliate and expose them for what they are: a craven defence of the status quo – a status quo in which they have long prospered. This is presumably why so little attention has been given to what happened in Greece last month, when the real EU was there for all to see. The EU forced the Syriza-led government of Alex Tsipras to implement new anti-union legislation, rendering strike action illegal unless over 50% of union members have formally approved it. The effect of such a measure, as the British trade-union movement discovered in the 1980s, will be to strangle workers’ freedoms in bureaucracy, and emasculate organised labour.

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The country with the most political power in the EU already has the richest citizens. And they stand to get richer. Those is Spain, Italy, Greece: not so much. Two-tier Europe is here.

German Pay Deal Heralds End Of Wage Restraint In Europe’s Largest Economy (R.)

A hard-fought deal on pay and working hours for industrial employees in southwestern Germany sets a benchmark for millions of workers across Europe’s largest economy and heralds wage growth in the coming years. The agreement between labour union IG Metall and the Suedwestmetall employers’ federation, struck overnight, foresees a 4.3% pay raise from April and other payments spread over 27 months. Tough pay negotiations are expected to end years of wage restraint in Germany, potentially aiding the ECB as it tries to get euro zone inflation back up to the bank’s target rate of just below 2%. On an annual basis, the agreement is equivalent to a 3.5% increase in wages, according to Commerzbank analyst Eckart Tuchtfeld, well below IG Metall’s initial demand for a 6% hike over 12 months, but was still seen as a good deal.

“The agreed pay rises, and accompanying measures, are at the top end of expectations and should result in annual wage increases of close to 4% over the next couple of years,” Pictet economist Frederik Ducrozet said. The “pilot” deal, struck against a backdrop of a strong economic recovery and the lowest unemployment since German unification in 1990, covers half a million employees in southwestern Germany, home to industrial powerhouses like car maker Daimler. It is expected to be applied in the rest of Germany as well and is likely to influence negotiations in other industries.

Germany’s second-biggest union, Verdi, is due to publish its wage demand for public sector workers on Thursday. Verdi and IG Metall together account for about 15% of the German workforce. IG Metall’s deal will reinforce market expectations for the ECB to dial back stimulus further this year as growth in the bloc is now self generating and wages are moving slowly upwards. It comes as world stock and bond markets are selling off on fears that a jobs bonanza in the United States may force early interest rate hikes there. But the euro zone outlook is much different with the jobless rate still at almost 9% and the broader slack, which includes part-time and temporary workers, perhaps twice as high, economists say.

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Farmers say they can’t get people to harvest their crops. Question: have you tried raising their wages enough? Something tells us if you pay them well, they will be glad to come work. Something also tells us you haven’t done that. You may say: that makes my products uncompetitive, but that’s another discussion altogether.

Also: the article says “Enough broccoli to feed 15,000 people for a year was wasted..” on that farm. And: the farmer’s loss was “between £30,000 and £50,000.” Does that mean he can feed people for £2 a year? £3? It certainly reads that way.

UK Crops Left To Rot After Drop In EU Farm Workers In Britain (Ind.)

British farmers have been forced to leave thousands of pounds worth of vegetables to rot in their fields, because of a drop in the number of farm workers from the EU. James Orr, whose farm outside St Andrews produces potatoes, carrots, parsnips, broccoli, cauliflower, said his farm suffered a 15% drop in the number of workers between August and November. “We simply could not harvest everything, and as a result we left produce in the field to rot,” he told Scotland’s Sunday Herald newspaper. Enough broccoli to feed 15,000 people for a year was wasted, he added. Mr Orr’s farm supplies more than 1,000 tones of the vegetable and he estimated he lost between £30,000 and £50,000.

The UK farming industry is heavily dependent on pickers from the EU, particularly those from eastern Europe. Britain’s low unemployment rate and the the seasonal nature of the work makes it difficult to attract domestic workers. But the fall in the value of sterling against the Euro since the Brexit vote, means the UK has become less attractive to seasonal workers from Romania and Bulgaria. Farmers also fear that a Brexit deal restricting freedom of movement could leave them with even fewer people to help harvest their crops. [..] NFU Scotland President Andrew Mr McCornick told the Herald access to workers was a key priority for the industry. “This year, there has been a shortage of between 10 and 20% of seasonal workers coming from the EU,” he said. It was essential a scheme was introduced in 2018 that would provide work permits for up to 20,000 workers from outside the EU, he added.

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Mouzalas says: “Whoever says that emptying the islands will improve the situation is wrong..” That doesn’t seem an honest assessement, because it would certainly improve the situation on the islands.

Refugee Arrivals Have Doubled Since August, Greek Migration Minister Says (K.)

Migrant and refugee arrivals onto Greek shores have doubled since August 20 to reach as many as 180 people a day in clement weather, Migration Policy Minister Yiannis Mouzalas said on Tuesday. The increase in arrivals from Turkey has resulted “in a bad situation again” on the islands of the eastern Aegean that host migrant reception and processing centers, Mouzalas admitted, saying that the ministry is trying to improve conditions at overcrowded and under-resourced facilities. Speaking on Thema radio, Mouzalas accused the European Union of contributing to the problem by failing to honor its commitments to Turkey in a deal for that country to take back asylum seekers whose applications are rejected and to crack down on migrant trafficking from its shores.

Mouzalas was also critical of what he described as contradictory reactions from local authorities and communities on the affected islands. “On the one hand, they prevent moves to improve conditions and on the other they are hysterical about dissolving the deal with Turkey at any cost so as to transfer the migrants to the mainland,” Mouzalas said, referring to reactions toward ministry plans for increasing the number of housing units at certain island camps. “Whoever says that emptying the islands will improve the situation is wrong,” Mouzalas said, reiterating concerns that moving all migrants and refugees to the mainland will simply encourage more arrivals. “In 2017, we transferred 27,000 people to the mainland and 19,000 arrived on the islands,” he added.

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Jan 302018
 
 January 30, 2018  Posted by at 11:08 am Finance Tagged with: , , , , , , , , , ,  


Horacio Coppola Obelisco, Buenos Aires 1936

 

House Intel Votes To Make “Shocking” FISA Memo Public (ZH)
Trump Administration Holds Off On New Russia Sanctions (R.)
Measure What Is Measurable (John Hussman)
Global Bond Yields Spike as Inflation Fears Rise (Street)
US Mortgage Rates Jump To The Highest Point In 4 Years (CNBC)
Stormy Weather (Jim Kunstler)
Leaked Brexit Report Shows Damage To UK Growth (G.)
Janet Yellen Sets Interest Rates One Last Time. How Will History Rate Her? (G.)
On The Death of Robert Parry (CJ)
Refugee Relocations From Italy And Greece Drawing To A Close (DW)

 

 

I like the suggestion that Trump can read the memo out loiud tonoght in SOTU. Though it’s been discussed so much already, it can only disappoint probably.

House Intel Votes To Make “Shocking” FISA Memo Public (ZH)

In a highly anticipated decision, on Monday evening the House Intelligence Committee voted to make public the memo alleging what some Republicans say are “shocking” surveillance abuses at the Department of Justice regarding the Trump presidential campaign. In immediate response to the vote, the Committee’s top democrat Adam Schiff said that “we’ve crossed a deeply regrettable line”, adding that the “committee voted to put the president’s interest above the interest of the country.” The decision [ends] weeks of speculation over whether the memo, which was drafted by staff for committee chairman Devin Nunes (R- Calif) would be made public. At the same time, it intensifies the dispute over what Democrats say is an all-out assault by Republicans to undermine special counsel Robert Mueller’s probe into Russian interference in the 2016 election.

Now the fate of the 4-page FISA memo is in the hands of Donald Trump: as we discussed earlier, the document will not be immediately released as under the House rule Republicans used to override the classification of the four-page memo, President Trump now has five days to review and reject its publication. But, as per Bloomberg’s reporting earlier, the White House has signaled support for the document’s release and is widely expected to defy the DOJ in allowing the publication to go forward. The DOJ has opposed the release of the document, reportedly infuriating President Trump. While Nunes has described the memo as “facts,” Democrats have slammed it as a collection of misleading talking points they are unable to correct without exposing the highly classified information underpinning the document.

As Bloomberg disclosed earlier on Monday, releasing the memo without allowing them to review it on those grounds, Assistant Attorney General Stephen Boyd wrote to Nunes, would be “extraordinarily reckless.” Of course, the reason for the DOJ – and the Democrats’ fury – is well-known: Republicans who have read the memo have hinted heavily that it contains information that could unravel the entire Mueller investigation, long described by the president as a “witch hunt.” In an amusing twist, now that transparency appears to be the watchword, the Republican controlled House Intel Committee also plans to release the transcript of the business meeting dealing with releasing the FISA memo.

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Russia has pledged to read the list ‘without letting emotion get in the way’.

Trump Administration Holds Off On New Russia Sanctions (R.)

The Trump administration said on Monday it would not immediately impose additional sanctions on Russia, despite a new law designed to punish Moscow’s alleged meddling in the 2016 U.S. election, insisting the measure was already hitting Russian companies. “Today, we have informed Congress that this legislation and its implementation are deterring Russian defense sales,” State Department spokeswoman Heather Nauert said in a statement. “Since the enactment of the … legislation, we estimate that foreign governments have abandoned planned or announced purchases of several billion dollars in Russian defense acquisitions.” Seeking to press President Donald Trump to clamp down on Russia, the U.S. Congress voted nearly unanimously last year to pass a law setting sweeping new sanctions on Moscow.

Trump, who wanted warmer ties with Moscow and had opposed the legislation as it worked its way through Congress, signed it reluctantly in August, just six months into his presidency. Under the measure, the administration faced a deadline on Monday to impose sanctions on anyone determined to conduct significant business with Russian defense and intelligence sectors, already sanctioned for their alleged role in the election. But citing long time frames associated with major defense deals, Nauert said it was better to wait to impose those sanctions. “From that perspective, if the law is working, sanctions on specific entities or individuals will not need to be imposed because the legislation is, in fact, serving as a deterrent,” she said in a statement.

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Next recession: Dow plunge by 2/3.

Measure What Is Measurable (John Hussman)

[..] it’s true that when we examine pre-crash extremes, like 2000 and 2007, we’ll typically find that actual returns over the preceding 12-year period were higher than the returns that one would have expected on the basis of valuations 12 years earlier. No surprise there. The only way to get to breathtaking valuations is to experience a period of surprisingly strong returns. Those breathtaking valuations are then followed by dismal consequences. Likewise, when we examine secular lows like 1974 and 1982, we’ll find that actual returns over the preceding 12-year period fell short of the returns one would have expected on the basis of valuations 12 years earlier.

The chart below offers a reminder of what this looks like, in data since the 1920’s. Look at the “errors” in 1988, 1995, and 2006. Count forward 12 years, and you’ll find the major valuation peaks of 2000, 2007 and today that were responsible for the overshoot of actual returns. The 2000 and 2007 instances were both followed by losses of 50% or more in the S&P 500. Look at the “errors” in 1937, 1962, 1966, and 1970. Count forward 12 years, and you’ll find the market lows of 1949, 1974, 1978 and 1982 that were responsible for the undershoot of actual returns. Those market lows turned out to be the best buying opportunities of the post-war era. When market cycles move to extreme overvaluation or undervaluation, they become an exercise in borrowing or lending returns to the future, and then surrendering or receiving them back over the remaining half of the cycle.

Put simply, in my view, stock prices are rising not because Wall Street has thoughtfully quantified the effect of taxes, interest rates, corporate profits, or anything else. Instead, Wall Street is mesmerized by the self-reinforcing outcomes of its own speculation, relying on verbal arguments, optimistic projections lacking grounds in observable data, and enthusiastic assertions about cause-effect relationships that are accepted without the need for any evidence at all (much less decades of it).

Back to Galileo. Measure what is measurable, and make measurable what is not so. When we do this, come to understand the current speculative extreme as the tension between two observations that are not actually contradictory – just uncomfortable. One is that stock prices are indeed three times the level at which they are likely to end the current market cycle. The other is that there is no pressure for valuations to normalize over shorter segments of the cycle, as long as risk-seeking speculative psychology remains intact.

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It’s starting to feel as if we passed an inflection point.

Global Bond Yields Spike as Inflation Fears Rise (Street)

Global government bond markets continued to sell-off Monday, taking U.S. Treasury yields to the highest level in four years amid renewed bets on faster inflation in the world’s biggest economy and hawkish comments on growth and inflation from central bank officials in Europe. The bond market moves have clipped early gains for stocks and raised the spectre of a correction in inflation assumptions as the global economy roars to life and oil and commodity prices continue to climb amid a surge in manufacturing activity. The selling was also accelerated, in part, by a Goldman Sachs research note which suggested that Wednesday’s meeting of the U.S. Federal Reserve, the last under the leadership of outgoing chairwoman Janet Yellen, could plant the early seeds for a March hike in benchmark borrowing costs.

“We expect the FOMC to issue a generally upbeat post-meeting statement that includes an upgrade to the balance of risks and a slightly hawkish rewording of the inflation assessment,” the note read, adding that public remarks since the December meeting “bolster the case for an upgrade, and by our count, at least half of the Committee has recently referenced upside risks to growth.” Benchmark 10-year U.S. Treasury yields were marked at 2.72% in early Monday trading, the highest since early 2014, while 2-year note yields were seen at 2.15%, the highest since 2008. Those gains followed Friday closing levels that showed the widest yield gap between so-called TIPS, or Treasury Inflation Protected Securities, and benchmark 10-year notes since Sept. 2014.

In Europe, five-year German bunds yields traded in positive territory for the first time since 2015 amid a solid assessment of the region’s growth prospects last week from ECB President Mario Draghi and comments over the weekend from Dutch central bank governor Klaas Knot that he saw “no reason whatsoever” to continue the Bank’s €2.55 trillion ($3.16 trillion) quantitative easing program beyond its September deadline. Both U.S. and European investors are bracing for faster inflation in the months ahead as global commodity prices – particularly crude oil – continue to rise. Brent crude futures for March delivery, the benchmark for prices around the world, were marked at $69.87 Monday, down from their Friday close of $70.52 but still some 28% higher from the same period last year, suggesting a big upside import into headline inflation readings over the first half of this year.

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Yields go up, then so do mortgage rates.

US Mortgage Rates Jump To The Highest Point In 4 Years (CNBC)

A huge sell-off in the bond market is about to make buying a home more expensive. Mortgage rates, which loosely follow the yield on the 10-year Treasury, have been rising for the past few weeks, but are seeing their biggest move higher Monday. “Bottom line, rate sheets are going to be ugly this morning,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “Some lenders will be at 4.5% on their best-case-scenario 30-year fixed quotes.” That is the highest rate since 2014. The average rate on the popular 30-year fixed started the year right around 4% but then began to climb on positive news in the U.S. economy, solid company earnings reports and a shift in foreign central bank policies which appear to now be following the Federal Reserve’s tightening of monetary policy.

The rate was at 4.28% by the end of last week. “Apart from central banks, there’s a ton of bond market supply coming down the pike due to infrastructure and tax bill spending,” Graham said. That new supply will send yields and, consequently, mortgage rates higher. While mortgage rates are still historically low, they were even lower in the years following the financial crisis. That not only helped juice the sharp increase in home prices, but it has also given borrowers a new sense of normal. Both will hurt affordability this spring on several fronts. “Today is one more reason for Realtors and buyers to move up their spring schedule,” said Chris Kopec, a mortgage loan consultant at Chicago-based Lakeside Bank.

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Why investigate Trump, but not Hillary et al?

Stormy Weather (Jim Kunstler)

It’s hard not to be impressed by the evidence in the public record that the FBI misbehaved pretty badly around the various election year events of 2016. And who, besides Rachel Maddow, Anderson Cooper, and Dean Baquet of The New York Times, can pretend to be impressed by the so far complete lack of evidence of Russian “meddling” to defeat Hillary Clinton? I must repeat: so far. This story has been playing for a year and a half now, and as the days go by, it seems more and more unlikely that Special Prosecutor Robert Mueller is sitting on any conclusive evidence. During this time, everything and anything has already leaked out of the FBI and its parent agency the Department of Justice, including embarrassing hard evidence of the FBI’s own procedural debauchery, and it’s hard to believe that Mr. Mueller’s office is anymore air-tight than the rest of the joint.

If an attorney from Mars came to Earth and followed the evidence already made public, he would probably suspect that the FBI and DOJ colluded with the Clinton Campaign and the Democratic Party to derail the Trump campaign train, and then engineer an “insurance policy” train wreck of his position in office. Also, in the process, to nullify any potential legal action against Clinton, including the matter of her email server, her actions with the DNC to subvert the Sanders primary campaign, the Steele dossier being used to activate a FISA warrant for surveillance of the Trump campaign, the arrant, long-running grift machine of the Clinton Foundation (in particular, the $150 million from Russian sources following the 2013 Uranium One deal, when she was Secretary of State), and the shady activities of Barack Obama’s inner circle around the post-election transition. There is obviously more there there than in the Resistance’s Russia folder.

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What Britain can quarrel about this week.

Leaked Brexit Report Shows Damage To UK Growth (G.)

Brexit would leave the UK worse off under three possible scenarios: a comprehensive free trade deal, single market access and no deal at all, according to a leaked government analysis of the economic impact of leaving the EU. The document was meant to be shown confidentially to cabinet ministers this week but was leaked in an embarrassing development for Theresa May and David Davis, the Brexit secretary. It said national income would be 8% lower under a no deal scenario, around 5% lower with a free trade agreement with the EU and about 2% lower with a soft Brexit option of single market membership over a 15-year period. The government would not comment on leaked documents but sources stressed the analysis did not cover May’s preferred option of a bespoke deal amounting to a “deep and special partnership” with the EU.

The document suggested that chemicals, clothing, manufacturing, food and drink, and cars and retail would be the hardest hit and every UK region would also be affected negatively in all the modelled scenarios, with the north-east, the West Midlands and Northern Ireland facing the biggest falls in economic performance. It comes after Davis refused to release impact assessments covering 58 sectors of the economy when requested to by parliament, claiming they did not in fact exist. Remain supporters said the report, seen by BuzzFeed News, was concerning but in line with what they had feared.

[..] Eloise Todd, the chief executive of anti-Brexit organisation Best for Britain, added: “According to the government’s secret analysis, even the softest Brexit scenario will mean a 2% hit to growth. “Almost every community, region and sector of the economy included in the analysis would be negatively impacted. The case for or against Brexit should be about more than balance sheets, but it’s painfully clear that the numbers are a gloomy part of the story. And behind these numbers are thousands of jobs, businesses and homes that are at risk. “The government are calling this document embarrassing but it’s more than that. It is a colossal act of economic self harm, written down clearly, in black and white. We are reading about an economy facing the abyss.”

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After Janet, the flood.

Janet Yellen Sets Interest Rates One Last Time. How Will History Rate Her? (G.)

Janet Yellen, the Federal Reserve chair, begins her final rate-setting meeting at the helm of the US central bank on Tuesday, before she is replaced by Donald Trump’s chosen successor, Jerome Powell. The first woman to lead the Fed arrived in February 2014 at a time when the money-printing machine of quantitative easing was whirring at full-tilt under her predecessor, Ben Bernanke. QE, which involved the Fed buying bonds from financial institutions, pumped billions of dollars into the US economy to keep it afloat after the financial crisis. Yellen leaves next month with a legacy as the Fed chair who began the long process of turning off the QE machine, and for raising interest rates for the first time in seven years in 2015.

Powell will have a tough act to follow, with the stock market currently sitting at a record high and as economic growth continues to strengthen and unemployment stands at the lowest level since 2000. No increase in interest rates is expected this month, although further hikes are forecast for later this year. James Knightley, senior economist at ING Bank, said: “She has followed up [Bernanke] with strong leadership and solid decision making that led to the robust economic performance we see today. Given all these successes, Jay Powell has been set a very tough bar to match.”

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Emotional by Caitlin Johnstone. We should have a piece that lists his topics through the years. And someone should pick up his legacy.

On The Death of Robert Parry (CJ)

The legendary journalistic titan Robert Parry has died, and I still haven’t quite figured out how to live with that. I did not know Parry and never had any kind of interaction with him, but I can’t stop crying. This is an immense loss and it feels deeply personal, just as one of the countless individuals his work has profoundly impacted. I’ve often recommended Parry’s outlet Consortiumnews as the overall best source of anti-war, anti-establishment information in the English-speaking world, and I cite its content constantly in my own work. This just sucks, and I’m a mess, and this might just be me getting sloppy and emotional for a few paragraphs, but this is all I can really be right now.

In a beautiful tribute to his father, Nat Parry describes a man who was driven not by self-interest, nor even ultimately by any ideology or conceptual values system, but by a deeply held commitment to humanity born out of concern for the future of our species. Parry’s journalistic integrity and ferocious dedication to the truth at all costs appear to have been a byproduct of that fundamental desire for humanity to survive and thrive, and an inability to be comfortable with our horrifying flirtation with extinction. “But besides this deeply held commitment to independent journalism, it should also be recalled that, ultimately, Bob was motivated by a concern over the future of life on Earth,” writes the younger Parry. “As someone who grew up at the height of the Cold War, he understood the dangers of allowing tensions and hysteria to spiral out of control, especially in a world such as ours with enough nuclear weapons to wipe out all life on the planet many times over.”

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Brussels, Paris and Berlin only care when it suits their careers.

Refugee Relocations From Italy And Greece Drawing To A Close (DW)

Germany’s Interior Ministry said on Monday that it will only resettle a small number of migrants from Italy and Greece in the coming weeks, as the EU’s migrant relocation program draws to a close. An Interior Ministry spokesperson told DW that far fewer people had fulfilled the necessary criteria for relocation than first expected. “There are now virtually no more asylum seekers in Greece who could be considered for resettlement,” according to the Ministry. To qualify, applicants had to be from a country where the chances of asylum are at least 75%. Last month, some 500 migrants were still waiting to be relocated from Italy to Germany, while in Greece the number less than 40. “The relocation scheme ended in September 2017, meaning all applicants arriving after that date will no longer be eligible for resettlement,” Annegret Korff, a speaker for the Interior Ministry, said.

“Germany largely completed all outstanding relocations by the end of 2017. In the coming weeks, Germany will only carry out the odd resettlement case that was left outstanding from last year.” The program to relocate migrants landing in Greece and Italy was launched by the European Union in the wake of the 2015 migrant crisis. Initially, EU member states agree to relocate some 160,000 refugees between them from the bloc’s two main points of entry by September 2017. The number was revised to just under 100,000 after officials found that fewer people were eligible under the scheme that first expected. Although the temporary progam has since passed its deadline, the final few migrants that qualify for resettlement are still awaiting asylum.

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Jan 272018
 
 January 27, 2018  Posted by at 10:58 am Finance Tagged with: , , , , , , , , , , ,  


Grete Stern Bertolt Brecht 1934

 

Bankers, Policy Makers at Davos Revel in ‘Sweet Spot’ Economy (BBG)
IMF Chief Warns Trump’s Tax Cuts Could Destabilise Global Economy (G.)
China Set To Lose ‘Emerging Market’ Status As Growth Declines (F.)
This was 1987. Start Rebalancing – David Rosenberg (ZH)
What Could Possibly Go Wrong? (Lance Roberts)
Equity Allocations At Record Highs As Investor Cash Hits All Time Low (ZH)
Japanese Cryptocurrency Exchange Loses $535 Million To Hackers (CNBC)
How Bitcoin Regulation Will Happen, And What It Will Mean (Ind.)
Bombardier Gets Surprise Win After U.S. Rebuffs Boeing Trade Case (BBG)
Canada Illegally Subsidized Bombardier: Embraer (R.)
More Than Half Of New-Build Luxury London Flats Fail To Sell (G.)
Building More Homes Will Not Solve Britain’s Housing Crisis (Pettifor)
Brexit Saddles EU With A Huge Budget Problem (CNBC)
Deal With France ‘Could Bring Hundreds More Child Refugees To UK’ (G.)

 

 

Not much longer.

Bankers, Policy Makers at Davos Revel in ‘Sweet Spot’ Economy (BBG)

The global elites have rediscovered their animal spirits. As the World Economic Forum drew to a close in the Swiss ski resort, the overarching mood of the executives, policy makers and investors was that their economies are in fine shape and that stock markets have every reason to extend their run. “Let’s celebrate what could go right for the moment because we are in a sweet spot,” IMF Managing Director Christine Lagarde said on the closing panel discussion. The Standard & Poor’s 500 Index has gained about a quarter since the start of 2017 and the IMF is forecasting the strongest worldwide economic growth this year since a brief post-recession bounce in 2011. Some 57% of executives polled by PricewaterhouseCoopers saw the economy improving in 2018, about double the number of a year ago.

The rise of cryptocurrencies was evident in the Swiss town both in conference sessions and on the promenade where companies rent shopfronts to promote their wares. “The greatest worry I’ve heard over the past days in Davos is that there is not enough worry,” Mary Callahan Erdoes, JPMorgan asset-management unit CEO, said on the panel. “It’s O.K. to not be worried, to celebrate how we got here.” Erdoes thanked the policy makers on the stage for working “tirelessly” and “giving all of these government jobs such fabulous prestige and something that I know all of us now perhaps aspire to do.” “Wow,” said Bank of England Governor Mark Carney. “This is fantastic.” Such sentiment led delegates to declare that it was the most upbeat Davos gathering since before the financial crisis. Yet the giddiness also gave some investors pause as they warned against turning too exuberant.

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Lagarde gets what she wants and then turns against it. Cover all your bases.

IMF Chief Warns Trump’s Tax Cuts Could Destabilise Global Economy (G.)

Donald Trump’s huge tax cuts are a threat to the stability of the global economy, the managing director of the IMF has warned. Christine Lagarde singled out Trump’s tax reforms as one of three risks that could destabilise the current economic recovery, especially given the boom in stock markets in the past year. “While the US tax reforms certainly will have positive effects in the short term, for the US and other countries around, it might also lead to serious risks,” Lagarde told the World Economic Forum in Davos. “That has an impact on financial vulnerability, particularly given the high asset prices that we see around the world, and the easy financing that it still available,” she added. She was speaking shortly after the US president told Davos that his tax reforms had created “a big, beautiful waterfall” of pay rises for US workers, as American companies passed the tax cut on.

However, the IMF is concerned that cutting taxes will lead to a bigger US budget deficit, and that extra borrowing by the US Treasury will force up long-term American interest rates. As a result, it fears growth could be choked off in the longer term, making the stock market vulnerable to a sudden downward lurch. Lagarde cautioned against people becoming too complacent about the pick-up in global growth reported by the IMF at the start of the WEF’s annual meeting. The IMF raised its forecasts for global expansion to 3.9% this year and in 2019, reporting that all major economies – the US, EU and Japan – are doing better. “I don’t think that we’ve completed the job,” said Lagarde, who fears that the growing economic inequality in many countries is creating “fractures”. “Having growth is good, improving productive is good, but [policymakers should] make sure that the results of that growth are properly allocated,” said the IMF chief, adding that inequality is growing in many advanced economies, and very high in emerging markets.

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An emerging market that’s stopped emerging.

China Set To Lose ‘Emerging Market’ Status As Growth Declines (F.)

China has been considered an emerging market for over 25 years due to its rapid reform process. Generally speaking, emerging markets are defined as developing countries moving toward an open market economy. Unfortunately, if one takes a close look at growth levels and reform factors, China has shed some of the key characteristics of an emerging market, due to a sharp slowdown in the reform process, an increasingly state centered economy, and lower levels of true growth. China is an upper middle income country that enjoyed gangbusters growth through the 1990s and 2000s, but that is now suffering from a major economic slowdown that has no end in sight. One major reason for slowing growth is that market forces have been quashed by a a buildup in the state sector and mounting economic and financial risks that would result in economic collapse if the reform process is restarted.

Under President Xi Jinping, China’s economic policy has shifted toward enhancing the organization and financial sources of state owned enterprises, and away from liberalizing the currency and financial sector. Strides that were made toward internationalizing the RMB and bringing about a more market-based financial system have been reversed. A simultaneous over-reliance on easy credit has created plenty of risks in the financial sector that now prevent officials from even considering making the financial sector more market-based. Slow reform of the service sector and strong state presence in service subsectors like health and education have contributed to declining growth.

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When fear is gone, all that’s left is greed. No balance.

This was 1987. Start Rebalancing – David Rosenberg (ZH)

When discussing today’s unexpectedly weak Q4 GDP print, which came in at 2.6%, far below consensus and whisper estimates in the 3%+ range, and certainly both the Atlanta and NY Fed estimates, we pointed out the silver lining: personal spending and final sales, which surged 4.6% Q/Q (vs 2.2% in Q3), although even this number had a major caveat: “as we discussed previously, much of it was the result of a surge in credit card-funded spending while the personal savings rate dropped to levels last seen during the financial crisis.” Indeed, recall the stunning Gluskin Sheff chart we presented a month ago, which showed that 13-week annualized credit card balances in the U.S. had gone “completely vertical” in the last few months of 2017 which we said “should make for some great Christmas.”

Meanwhile, even more troubling was the ongoing collapse in the US personal savings rate, which last month tumbled to the lowest level since the financial crisis as US consumers drained what little was left of their savings to splurge on holiday purchases.

And while we highlighted and qualified two trends as key contributors to the spending surge in Q4 personal spending, Gluskin Sheff’s David Rosenberg – who is once again firmly in the bearish camp – did one better and quantified the impact. Not one to mince words, the former Merrill chief economist described what is going on as “The Twilight Zone Economy” for the following reason: “how many times in the past have we seen a 2.6% savings rate coincide with a 4.1% jobless rate? How about never…huge ETF flows driving equities higher, but these metrics are screaming ‘late cycle’.” He then proceeded to give “some haunting math” from the GDP number: “The savings rate fell from 3.3% to 2.6%. If it had stayed the same, real PCE would have been 0.8% (annualized) instead of 3.8% and GDP would have been 0.6% instead of 2.6%.”

[..] a more troubling development is that the conditions observed ahead of the Black Monday crash are becoming increasingly apparent. Here is Rosenberg’s stark assessment of where we stand: “Rising bond yields. Full employment. Fed tightening. Trade frictions. Weak dollar. Rising twin deficits, spurred by tax reform. Sound familiar? It should. This was 1987. Start rebalancing.”

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More 1987.

What Could Possibly Go Wrong? (Lance Roberts)

What goes up, eventually comes down. That is just reality. The bull market that began in 2009, has now entered the final stage of “capitulation” as investors throw caution to the wind and charge headlong into the markets with reckless regard for the consequences.

Of course, it isn’t surprising given the massive amounts of liquidity continually injected into the financial markets and global Central Banks have now figured out that continually rising financial markets solve much of the world’s ills. Simply, with enough liquidity, you can cover up bad (credit risks) by guaranteeing holders they will never default. It’s genius. It’s a “no lose” investment scheme. Unfortunately, we have seen this repeatedly in the past. In the 1980’s it was “Portfolio Insurance” – a “no lose” investment program that eventually erupted into the crash of 1987. But not before the market went into a parabolic advance first.

In the 1990’s – it was the dot.com phenomenon which was “obviously” a “no lose” proposition. Even after Alan Greenspan spoke of “irrational exuberance,” two years later the market went parabolic once again.

Then in 2006-2007, banks invented the CDO-squared, a collateralized derivative obligation based on other collateralized derivative obligations. It was a genius way to invest with “no risk” because the real estate market had never crashed in history.

Today, it is once again an absolute “certainty” that markets will rise from here as global Central Banks have it all under control. What possibly could go wrong?

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Leverage squared.

Equity Allocations At Record Highs As Investor Cash Hits All Time Low (ZH)

While Bank of America may or may not be right in its forecast that as a result of the market meltup, buying panic and sheer euphoria to get into stocks, which just pushed the bank’s proprietary “Bull and Bear” indicator to a level which on 11 out of 11 prior occasions always presaged a ~12% selloff…

… a market correction or worse is imminent, one thing that is indisputable is the funding status of the Private Clients served by BofA’s Global Wealth and Investment Management (GWIM) team. What it shows is that investor cash allocation has just dropped to a record low of just 10%…

… while investor equity exposure is rising at fastest pace in 10 years.

… and total equity allocations are back to record highs.

In other words: ‘bear capitulation’ as everyone is now long stocks in what BofA called a “non-stop euphoric cabaret.” When will this stop, or reverse? According to BofA, keep an eye on the dollar, which as long as it keeps sliding is supporting of risk assets, however the risk is once it bounces, to wit, the “US dollar key catalyst; note US-Europe FX spat sparked ’87 crash” and “higher US$ “pain trade” = risk-off coming weeks”

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Even if cryptos don’t have a security issue, they certainly appear to have one.

Japanese Cryptocurrency Exchange Loses $535 Million To Hackers (CNBC)

Hackers stole several hundred million dollars’ worth of a lesser-known cryptocurrency from a major Japanese exchange Friday. Coincheck said that around 523 million of the exchange’s NEM coins were sent to another account around 3 a.m. local time (1 p.m. ET Thursday), according to a Google translate of a Japanese transcript of the Friday press conference from Logmi. The exchange has about 6% of yen-bitcoin trading, ranking fourth by market share on CryptoCompare. The stolen NEM coins were worth about 58 billion yen at the time of detection, or roughly $534.8 million, according to the exchange. Coincheck subsequently restricted withdrawals of all currencies, including yen, and trading of cryptocurrencies other than bitcoin. Bloomberg first reported the hack. A CNBC email sent to Coincheck’s listed address bounced back.

Cryptocurrency NEM, which intends to help businesses handle data digitally, briefly fell more than 20% Friday before recovering to trade about 10% lower near 85 cents, according to CoinMarketCap. Most other major digital currencies, including bitcoin, traded little changed on the day. Coincheck management said in the press conference that it held the NEM coins in a “hot” wallet, referring to a method of storage that is linked to the internet. In contrast, leading U.S. exchange Coinbase says on its website that 98% of its digital currency holdings are offline, or in “cold” storage. The Japanese exchange said it did not appear that hackers had stolen other digital currencies.

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There will never be a global consensus. Just a lot of poorly understood laws.

How Bitcoin Regulation Will Happen, And What It Will Mean (Ind.)

Bitcoin has been surging and falling in recent weeks. And it seems mostly to come down to one thing: regulation. The lack of regulation is, for now, a large part of bitcoin and other cryptocurrencies’ intrigue: they seem to allow people to avoid the traditional restrictions in place in money and other assets. But they’re also part of their bad reputation, with the same anonymity and decentralisation allowing them to be used for crime. Many governments have suggested they could introduce such rules. But it’s still not clear what they’d look like, or how they’d arrive; here’s an attempt to predict what might be to come in that most unpredictable of markets. In recent weeks, bitcoin has plunged after the threat of regulation in South Korea.

But it was part of a much broader trend – countries around the world have already introduced new rules, and those that haven’t are talking about it. The price has mostly levelled out in recent weeks, after regulation brought volatility and a slowly sliding price. But there might be more disruption coming, as countries look towards regulation, worried about the activity and behaviour that bitcoin could be enabling. That was obvious as world leaders arrived in Davos and were asked their opinion. The event could be a preview of far more wide-ranging controls that could be introduced in March, when the G20 governments’ financial and economic leaders meet in Argentina – a number of the countries attending have specifically said they will focus on fixing regulation of cryptocurrencies at that meeting.

They include France and Germany, which are said to be working together on bitcoin regulation. Many other countries have called for the international community to work together to bring regulation to bitcoin. Davos has been a platform for various world leaders to give their opinion on bitcoin. And they all seem to agree on one thing. “My number-one focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things, is that we want to make sure that they’re not used for illicit activities,” said Steven Mnuchin, Donald Trump’s most senior financial policymaker, told the World Economic Forum in Davos, Switzerland. “We encourage fintech and we encourage innovation, but we want to make sure all of our financial markets are safe,” Mnuchin said. “We want to make sure that the rest of the world – and many of the (Group of) 20 countries are already starting on this – have the same regulations.”

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Airplane makers wars are set to intensify.

Bombardier Gets Surprise Win After U.S. Rebuffs Boeing Trade Case (BBG)

Bombardier can start shipping C Series jets to Delta Air Lines after a surprise ruling by a U.S. trade panel that said the proposed imports won’t hurt American industry. U.S. companies and workers aren’t being harmed by sales of 100- to-150-seat aircraft from Canada, the International Trade Commission said Friday. The tribunal’s unanimous vote blocks a Commerce Department decision last month to impose duties of almost 300%. Friday’s vote deals a blow to Boeing, which said Bombardier sold the C Series in the U.S. at less than fair value while benefiting from government subsidies. The ruling also opens the door for Montreal-based Bombardier to woo new American customers while potentially easing U.S. trade tensions with Canada and the U.K., where the company builds wings for the aircraft. “I’m shocked,” said Chris Murray, an analyst in Toronto. “This clears the way for the jets being to delivered to Delta,” Murray said. “It also removes any concerns about potential future orders in the U.S.”

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Bombardier goes from one lawsuit to another. Should have stuck to making skidoos.

Canada Illegally Subsidized Bombardier: Embraer (R.)

Brazilian planemaker Embraer said on Friday that the U.S. Department of Commerce has shown that the Canadian government “heavily and illegally subsidized” Bombardier and its C Series aircraft, allowing the company to survive and distorting the aviation industry. The statement came just after Bombardier won an unexpected trade victory against U.S. planemaker Boeing when a U.S. agency rejected imposing hefty duties on sales of Bombardier’s new CSeries jet to American carriers.

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Oh well, there’s plenty homeless people.

More Than Half Of New-Build Luxury London Flats Fail To Sell (G.)

Developers have 420 towers in pipeline despite up to 15,000 high-end flats still on the market. More than half of the 1,900 ultra-luxury apartments built in London last year failed to sell, raising fears that the capital will be left with dozens of “posh ghost towers”. The swanky flats, complete with private gyms, swimming pools and cinema rooms, are lying empty as hundreds of thousands of would-be first-time buyers struggle to find an affordable home. The total number of unsold luxury new-build homes, which are rarely advertised at less than £1m, has now hit a record high of 3,000 units, as the rich overseas investors they were built for turn their backs on the UK due to Brexit uncertainty and the hike in stamp duty on second homes.

Builders started work last year on 1,900 apartments priced at more than £1,500 per sq ft, but only 900 have sold, according to property data experts Molior London. A typical high-end three-bedroom apartment consists of around 2,000 sq ft, which works out at a sale price of £3m. There are an extra 14,000 unsold apartments on the market for between £1,000-£1,500 per sq ft. The average price per sq ft across the UK is £211. Molior says it would take at least three years to sell the glut of ultra-luxury flats if sales continue at their current rate and if no further new-builds are started. However, ambitious property developers have a further 420 residential towers (each at least 20 storeys high) in the pipeline, says New London Architecture and GL Hearn. Henry Pryor, a property buying agent, says the London luxury new-build market is “already overstuffed but we’re just building more of them”.

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Building more is the worst of all options. See above. But it’s alos the only option that lets the illusion last a bit longer.

Building More Homes Will Not Solve Britain’s Housing Crisis (Pettifor)

Everyone – from the government, to housing charities, to housebuilders – has bought into the conventional wisdom that the dysfunction that racks our housing market is a matter of demand and supply. We’re not building enough houses, so house prices have been sent rocketing, taking home-ownership out of reach for growing numbers of young people. But in reality, our housing problems are not a simple feature of supply and demand. Rather, our housing market has a bitcoin problem. What has bitcoin mania got in common with house prices, especially in the capital? For starters, both are speculative bubbles. Vast sums of money have been poured into finite supplies of bitcoins and London property. Both have consequently exploded in value, albeit over different time periods.

And so both have become financialised assets that deliver capital gains far in excess of people’s ability to earn income from work, or from investment in the real economy. And as with bitcoin, so with London property: speculators are convinced that prices will continue to rise for ever. It’s speculation in the property market that is fuelling stratospheric house price rises, not shortage of supply. When the “fuel” of private capital, mortgage credit and cash from the bank of mum and dad is supplemented by government subsidies and tax breaks, house prices rise. Moreover, wealthy global and non-resident buyers have funnelled more than £100bn into London property over recent years, making the problem even worse.

So, rather counterintuitively, building more houses is not the right prescription. House prices won’t fall until the tide of cash flowing into the market abates, for example by tightening mortgage credit, or shrinking the pool of buy-to-let investors. That may already be starting to happen as real incomes continue to fall, the Bank of England toughens up buy-to-let mortgages, and stamp duty rises are phased in for second properties. Despite this, the government pretends the real cause of unaffordable housing is a shortage of new builds. It uses this argument to provide cover for further taxpayer-funded subsidies and tax breaks that benefit its property-owning core voters, its close allies in the construction industry and property market, and its supporters in the City of London.

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Germany crony Holland wants to pay less toward Brexit because its economy is hit harder than others. It also wants the entire EU budget cut. Juncker wants to raise that budget and buy more Europe. This could blow up. Expect more heavy handedness from Brussels.

Brexit Saddles EU With A Huge Budget Problem (CNBC)

Brexit is leaving the EU with a big problem on its hands and a “very tough” negotiation ahead, European Commission Vice-President Jyrki Katainen told CNBC on Friday. The U.K. has been one of the main contributors to the European budget, but once it has left the bloc there will be a gap in the EU budget that will have to be worked out somehow, Katainen said. “It is certainly a problem and we have to address it,” he said at the World Economic Forum (WEF) in Davos, Switzerland. “If I should bet something, we need to adjust the budget to a certain extent but also we need fresh money from member states. We also have to look at how money is spent, how we could get more out of less.”

But many EU members do not want to pay more to compensate for the U.K.’s decision to leave the union. Denmark, for example, made it clear last year that it would not step up its financial commitment because of Brexit. Katainen told CNBC that one solution could be using more financial instruments, including equity investments, to finance European projects rather than direct financial contributions. “This is what we are planning or exploring at the moment… it’s going to be a very though negotiation,” he said.

The current EU budget is planned out until 2020. The European Commission is due to come up with proposals on the future of the budget in May. During a speech in September, EC President Jean-Claude Juncker said: “An important element will be the budgetary plans the commission will present in May 2018. Here again, we have a choice — either we pursue the European Union’s ambitions in the strict framework of the existing budget, or we increase the European Union’s budgetary capacity so that it might better reach its ambitions. I am for the second option.”

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Yeah, the ones they previously promised to take but never did.

Deal With France ‘Could Bring Hundreds More Child Refugees To UK’ (G.)

Charities working to bring unaccompanied refugee children to safety are optimistic that agreements signed by Theresa May and Emmanuel Macron could lead to hundreds more receiving permission to travel legally to the UK. Details emerging from last week’s summit show that officials agreed to extend an eligibility deadline so that children fleeing conflict and arriving in Europe before last Friday could be considered under the Dubs amendment, the scheme launched in 2016 under which the government agreed to offer a safe and legal route to refugee children travelling alone. Previously, refugee children had to have arrived in Europe before March 2016 to be considered for acceptance under the scheme. This deadline meant large numbers of vulnerable young people who had arrived in France, Germany and Italy more recently were not eligible.

Lord Dubs, the Labour peer who forced the government to commit to helping more young refugees in January 2016, welcomed the development. “We hope dozens more will be transferred, but it is crucial that they get a move on. In France they are sleeping under the trees in very bleak conditions.” Although the May-Macron agreement focused on France, concerns are growing for the large number of unaccompanied refugee children in Greece where there are currently 3,150 refugee children, travelling without families, and only 1,109 spaces in shelters, according to the charity Safe Passage, which has campaigned to bring more young refugees to the UK. The charity hopes that a further 250 could be brought to safety under the Dubs scheme. The government has committed to accommodating 480 refugee children under the scheme, but has so far only transferred about 220.

Campaigners hope the announcement could reduce the number of young refugees killed on roads outside Calais, after a spike in deaths in recent weeks among asylum seekers attempting to climb on to lorries in order to travel illegally to the UK. The UK government also agreed to speed up the time it spends considering applications from young refugees for transfer to the UK, committing to providing an answer in 10 days, and to transferring them within 15 days after that. George Gabriel, at Safe Passage, said: “For those who are awaiting family reunion, these changes will mean that there is a much lower incentive to make a dangerous journey to reunite with a loved one.”

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Jan 262018
 
 January 26, 2018  Posted by at 11:09 am Finance Tagged with: , , , , , , , , , , ,  


Horacio Coppola Avenida Díaz Vélez al 4800, Buenos Aires 1952

 

Mario Draghi Slaps Down Steve Mnuchin Over Dollar Comments (Ind.)
Mueller Almost Done With Obstruction Part of Trump Probe (BBG)
Trump Denies Trying To Fire Mueller (BBC)
Flying Blind, Part 2: The Destruction Of Honest Price Discovery (Stockman)
China Chills (Mauldin)
Dear Elon: Tesla’s Base Is Not the Model S Coalition (Klippenstein)
Tory Civil War Erupts Over Brexit (Ind.)
Seven in 10 UK Workers Are ‘Chronically Broke’ (G.)
Rough Sleeping Is Now A Routine Sight In UK (G.)
Assange to Ask UK Court to Lift Arrest Warrant (BBG)
Turkish PM Disputes Greek Sovereignty, Tsipras Cites ‘Aggressive Neighbor’ (K.)
Majority Of Refugees Stranded On Aegean Islands To Stay In Greece (K.)
1.7 Billion-Year-Old Chunk Of Canada Found Stuck To Australia (Ind.)
Human Ancestors Left Africa Far Earlier Than Previously Thought (G.)
A Third Of Coral Reefs ‘Entangled With Plastic’ (BBC)

 

 

One Goldman alumni to another. And Trump repaired it somewhat, and then this morning the dollar falls again. Trump may address this in his speech today in Davos. Mnuchin never talked about anything but short term. Storm, teacup.

Mario Draghi Slaps Down Steve Mnuchin Over Dollar Comments (Ind.)

The President of the European Central Bank, Mario Draghi, has taken a sideswipe at the US Treasury Secretary, Steve Mnuchin, for endorsing a weaker dollar, emphasising deep concerns among central bankers over the economically destabilising impact of exchange rate swings. At the ECB’s regular conference Mr Draghi referred indirectly to the surprising comments at the World Economic Forum on Wednesday by Mr Mnuchin, who said “a weaker dollar is good for us as it relates to trade and opportunities.” These comments sent the dollar, which has been trending lower since early 2017, down still further. The dollar index, which measures the traded value of the greenback against a basket of other currencies, including sterling and the euro, hit a three-year low of 88.5.

Mr Draghi complained to reporters in Frankfurt that although exchange rate movements were “a fact of nature” reflecting economic fundamentals some recent volatility was caused by “someone else” – a clear reference to Mr Mnuchin – whose “use of language…doesn’t reflect the terms of reference that have been agreed.” Mr Draghi cited an IMF communique from last year, signed by the US, which said: “We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes”. Asked directly by journalists whether the ECB Council had been concerned by the Treasury Secretary’s comments Mr Draghi answered in the affirmative. “Several members of the Council expressed concern, and this concern was also in a sense was broader than simply the exchange rate, it was about the overall status of international relations right now,” he said.

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Objection, your honor. Leading.

Mueller Almost Done With Obstruction Part of Trump Probe (BBG)

Special Counsel Robert Mueller is moving at a far faster pace than previously known and appears to be wrapping up at least one key part of his investigation – whether President Donald Trump obstructed justice, according to current and former U.S. officials. Mueller has quietly moved closer to those around Trump by interviewing Director of National Intelligence Dan Coats, National Security Agency Director Michael Rogers, Attorney General Jeff Sessions and former FBI Director James Comey in recent weeks, officials said. His team has also interviewed CIA Director Mike Pompeo, NBC News reported. Those high-level officials all have some degree of knowledge about events surrounding Trump’s decisions to fire Comey and Michael Flynn, his first national security adviser.

“Clearly the names that are coming out now indicate that we’re into the obstruction of justice side of it,” said Stanley Twardy, a former U.S. attorney for Connecticut who’s now a white-collar criminal defense lawyer. “He’s now getting people who are closest to the president, closest to the issues.” Next, Mueller is expected to schedule an interview with Trump in coming weeks to discuss those events, according to a person familiar with the matter. “I’m looking forward to it,” Trump said of a meeting with Mueller, which he suggested may happen in about two to three weeks. He told reporters at the White House Wednesday that “I would love to do it” and “I would do it under oath” even though his Democratic rival Hillary Clinton wasn’t sworn in when she was interviewed in 2016 over her use of private emails as secretary of state.

Even if Mueller wraps up the obstruction probe, other elements of his investigation – such as whether Trump or anyone close to him helped Russia interfere in the 2016 presidential election or broke any other laws — are likely to continue for months more, said two officials who asked to remain anonymous speaking about the probe.

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New York Times based on anonymous sources as usual.

Trump Denies Trying To Fire Mueller (BBC)

US President Donald Trump has described as “fake news” a report that he ordered the firing of special counsel Robert Mueller last June, but backed down when his own lawyer threatened to resign. White House counsel Donald McGahn said the sacking would have a “catastrophic effect” on the presidency, the New York Times reported. Mr Mueller is leading an inquiry into possible Trump campaign collusion with Russia to influence the US election. Both Moscow and Mr Trump deny this. “Fake News. Typical New York Times. Fake Stories,” Mr Trump said at the World Economic Forum in the Swiss town of Davos, where he is due to give a speech later.

He has also been speaking about other issues: • Russian news agency Tass quoted Mr Trump as saying he “hoped” for more dialogue between the US and Russia • White House officials said Mr Trump was open to rejoining the Paris climate change agreement, if better terms for the US could be agreed • Mr Trump will say in his speech that he is in favour of “fair and reciprocal” free trade but will not tolerate trade abuses and intellectual property theft, according to US officials
Mr Mueller, a former FBI director, was appointed special counsel last May to look into the collusion allegations.

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Nobody acknowledges the importance of price discovery anymore. Without which there are no functioning markets. How fast people forget.

Flying Blind, Part 2: The Destruction Of Honest Price Discovery (Stockman)

[..] the real economic iniquity of central bank driven Bubble Finance is that it destroys all the pricing signals that are essential to financial discipline on both ends of the Acela Corridor. And as quaint at it may sound, discipline is the sine qua non of long-term stability and sustainable gains in productivity, living standards and real wealth. The pols of the Imperial City should be petrified, therefore, by the prospect of borrowing $1.2 trillion during the upcoming fiscal year (FY 2019) at a rate of 6.0% of GDP during month #111 through month #123 of the business expansion; and doing so at the very time the central bank is pivoting to an unprecedented spell of QT (quantitative tightening), involving the disgorgement of up to $2 trillion of its elephantine balance sheet back into the bond market.

Even as a matter of economics 101, the forthcoming $1.8 trillion of combined bond supply from the sales of the US Treasury ($1.2 trillion) and the QT-disgorgement of the Fed ($600 billion) is self-evidently enough to monkey-hammer the existing supply/demand balances, and thereby send yields soaring. But that’s barely the half of it. All the laws of economics, which are now being insouciantly ignored by the stock market revilers, are also time and place bound. That is to say, deficit finance in a muscle-bound Welfare State/Warfare State democracy like the US is always a questionable idea. After all, it is virtually guaranteed based on the budgetary doomsday forces now at work that by 2030 the public debt will approach $40 trillion compared to the $930 billion level where it stood when the Gipper took office in January 1981. In a half century, therefore, the GDP – swollen by inflation notwithstanding – will have grown by 8.5X versus a 43X eruption of the debt.

[..] At the present time, the S&P 500 is trading at the absurd multiple of 26.3X what are estimated to be reported profits for 2017. Yet the sell-side stock peddlers say not to worry because the one-year forward multiple on ex-items earnings is still only in the high teens. So what! The business cycle has not been outlawed and this one has at best a few quarters or even a year or two to go. So forward earnings are irrelevant nonsense. They are an interim place holder before the 30% to 50% hit to profits happens when the US economy finally experiences its next rendezvous with recession. The very idea that you would value the market based on a timeless forward PE multiple is complete baloney, of course. Yet that’s exactly where the Fed’s drastic financial repression and destruction of honest price discovery has led.

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That is one graph.

China Chills (Mauldin)

People have been predicting Chinese real estate crashes for years. Eventually they will be right. Is that time approaching? Here’s the lead from a January 16 Wall Street Journal story, “China’s Hot Housing Market Begins to Cool.” “BEIJING—China’s housing market has defied gravity and government restraints for two years, floating on a tide of bank loans and speculation. Until now. In Beijing and Shanghai – two of the country’s largest markets – and other megacities, sales have stalled and prices have dropped, falling slightly in some pockets and dramatically in others. Demand has dried up in these areas as a result of government measures including higher mortgage rates, higher down-payment requirements and limits on buying a second or third home. Would-be sellers are increasingly putting plans on hold in hope that prices will rebound.” That doesn’t sound good at all. WSJ backs up the gloomy language with data, though:

Some of this shake-out is happening by design as the government tries to manage growth on a sustainable path. The picture also varies greatly by city and region. Beijing and Shanghai are China’s equivalents of Washington and New York – except that they are much, much larger. What happens to them affects the whole country to some degree – and other countries, too. By some estimates, China’s property market accounts for a third of GDP growth. Falling construction activity will mean less need to import construction materials from Australia – and maybe fewer Chinese buyers in Canada. Falling demand won’t be good for housing prices in either of those places.

Then there are wild cards. President Trump has so far held back on promises to crack down on trade with China, in part because he wants Beijing’s help managing the North Korea issue. I doubt he will wait forever. He has a lot of latitude to impose tariffs, quotas, and other restrictions on China. Ironically, a peaceful resolution on the Korean Peninsula might be economically negative if it removes a barrier to trade war.

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Bunch of hipsters.

Dear Elon: Tesla’s Base Is Not the Model S Coalition (Klippenstein)

Losing the Obama coalition cost Hillary Clinton the Presidency in 2016; her base wasn’t big enough to bring success. Losing the Model S coalition could cost Elon Musk his own dreams, because his base isn’t big enough on its own, either. The Model S coalition of technophiles (techies) and progressives gave Tesla a strong tailwind when the vehicle launched. Techies formed the base, while progressives were the balance of the coalition. But while they came together for the Model S to strike a blow against Big Oil, these two groups aren’t natural allies.

We can see the rift growing in real time: while techies continue to celebrate Amazon, Uber, and Silicon Valley in general, there’s an escalating progressive backlash against labor conditions at warehouse distribution centres, more and more and more and more evidence of Uber’s culture of toxic lawlessness, and the obscene excesses of startup culture (which include a Dickensian digital class divide, possibly-endemic sexism, predatory sex parties and entitlement complexes worthy of the sons of Trump — and that’s only the stuff we know about so far).

The difference between the groups is aptly captured in the 2015 Canadian Plug-in Electric Vehicle study conducted by Simon Fraser University in Canada (webpage here, full report here, executive summary here).

Figure 23 from the SFU Canadian Plug-in Electric Vehicle Study 2015

The chart above shows the results of a study of Volt, Leaf, and Model S early adopters who were asked what images would be attributed to their vehicles. This tells us something about the buyers, because consumers purchase products whose so-called “symbolic benefits” (the brand, basically) match their own self-image, values, interests, and aspirations.

Volt and Leaf owners (yellow and green bars, respectively) are pretty similar, except when it comes to thinking their vehicle is attractive or sporty — the styling of the Leaf 1.0 is, shall we say, an acquired taste! Joking aside, this tells us that first-generation Leaf 1.0 buyers, like first-generation Prius buyers before them, really didn’t care about style. These people, and others of like mind, form the progressive coalition. The Tesla early adopters are different in two categories, and extremely different in four, suggesting that Tesla buyers have different motivations than Volt and Leaf owners. Tesla’s “tribe” wants status goods – which for automobiles means something sporty, exotic, powerful, and successful. They’re Tesla’s techie base.

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As if that is the most important thing as the ship sinks.

Tory Civil War Erupts Over Brexit (Ind.)

A fresh outbreak of Tory infighting is threatening Theresa May’s leadership after Philip Hammond vowed to keep Britain interlocked with the EU – while hard Brexit supporters staged an open revolt. The Prime Minister was accused of “losing control of the Brexit process” as the two wings of her party fought over her withdrawal policy, which Eurosceptics increasingly see as a sellout. In Davos, the Chancellor inflamed tensions with a dramatic call for only “very modest” changes to the UK’s trading rules with the EU, setting out the risks of trying to break free. He went out of his way to praise the plea by the CBI employers’ organisation for the “closest possible relationship between the EU and the UK post-Brexit” – days after it called for permanent membership of the customs union.

Britain must not agree to anything that “throws away all the benefits we have of the complete alignment of our regulatory systems, the complete integration of our economies”, Mr Hammond said. He later sought to clarify his remarks by saying “for anyone concerned” that the UK would be outside the customs union and single market “which clearly represents change”. But, in a major speech, Jacob Rees-Mogg put himself at the head of a growing Brexiteer revolt. The Government was accused of planning to leave the UK “shackled to the EU” and of putting the free-trade benefits of Brexit “at risk”. “The British people did not vote for that. They did not vote for the management of decline,” Mr Rees-Mogg told an audience in Hampshire. “They voted for hope and opportunity and politicians must now deliver it.

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Uk and US have much in common.

Seven in 10 UK Workers Are ‘Chronically Broke’ (G.)

Economic insecurity has become the “new normal” in the UK with at least 70% of the UK’s working population “chronically broke”, according to a study by the thinktank the Royal Society of Arts. Thriving, striving or just about surviving, the RSA/Populus survey of more than 2,000 workers, found that while about 30% of respondents said they lived comfortably, 40% said their finances were permanently precarious. The remaining 30% said they were not managing to get by. “Economic insecurity now stretches right throughout our labour market, including within jobs that appear safe on the surface,” said Brhmie Balaram, the author of the report and a senior researcher at the RSA.

According to the report, 32% of the UK’s workers have less than £500 in savings and 41% have less than £1,000. Almost 30% are concerned about their level of debt while 43% of workers do not have anyone in their household they could depend on to support them financially in the event of hardship. Fewer than half of employees (44%) feel they have progressed in their careers over the last five years; only 40% feel they have good opportunities to progress in future. “From retail workers to warehouse operatives, and from care workers to cleaners, we are beginning to uncover the hidden millions who are chronically broke year in, year out,” said Balaram. “The real danger for this group of workers is a childcare bill unpaid and yet another rent rise around the corner.”

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Anyone want to argue the UK is NOT a class society?

Rough Sleeping Is Now A Routine Sight In UK (G.)

Rough sleeping in the north London borough of Camden has increased by 647%, according to government figures released on Thursday. The huge rise is accounted for in part by an official underestimate of the problem last year, but no one who lives here will be surprised to see it confirmed that there has been a sharp jump in the numbers of people sleeping on the streets. Camden reported the largest increase in rough sleeping of any area in England, from 17 rough sleepers in 2016 (an optimistic estimate) to 127 counted this year. Ten years ago there were almost no rough sleepers in Camden. So what’s gone wrong? The Labour-run council says it’s clear that cuts are to blame. Councillor Nadia Shah said: “Rough sleeping in Camden is now at unprecedented levels. This is an appalling situation made worse by the politics of austerity that have led to cuts in services across the country.”

Nationally, welfare reform and cuts to benefits have increased financial insecurity, while soaring rents and reductions in the permitted housing benefit payments have left many people with an impossible gap between rent owing and income. On top of this, changes to the way housing benefit is paid have increasingly meant money no longer goes straight to the landlord but to the tenant, which has led to a sharp rise in arrears and evictions. Huge pressure on mental health services means vulnerable people are not getting the support they need. Drug and alcohol addiction services are struggling financially. Reductions to local authority budgets mean Camden’s funding from central government will have fallen by half between 2010 and 2020. In 2019-20 the council is forecast to receive £106m, down from the £241m received in 2010-11.

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How political is the British court system?

Assange to Ask UK Court to Lift Arrest Warrant (BBG)

After more than five years holed up in Ecuador’s embassy in London, WikiLeaks leader Julian Assange will ask a U.K. court to lift his arrest warrant. A one-day hearing will take place at Westminster Magistrates court and a ruling is scheduled to be issued Friday, according to a spokesman for the Crown Prosecution Service. Assange, 46, has been in the Ecuadorian embassy in London since evading deportation in a Swedish sexual assault probe. It’s “theoretically possible” that Assange could be released Friday, the CPS spokesman said. Assange and WikiLeaks have become famous over the past decade for disclosing confidential documents about the U.S. government and politics. In 2016, WikiLeaks injected itself into the middle of the U.S. presidential race by publishing hacked emails from Hillary Clinton’s campaign.

Assange is asking the court to lift the warrant about eight months after Swedish prosecutors dropped the underlying rape probe, saying that his steps to evade questioning made it impossible to pursue the case. Assange sought refuge in the Ecuadorian embassy in June 2012, after exhausting options in U.K. courts to avoid extradition over the allegations stemming from a 2010 trip to Sweden. He refused to return to the Scandinavian country, citing risks he would be extradited to the U.S. London police say that warrant is still in force unless lifted by court. “Westminster Magistrates’ Court issued a warrant for the arrest of Julian Assange following him failing to surrender to the court” in 2012, the police said in an emailed statement. “The Metropolitan Police Service is obliged to execute that warrant should he leave the embassy.”

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Last time they were on the brink of war was 1996. Never far away.

Turkish PM Disputes Greek Sovereignty, Tsipras Cites ‘Aggressive Neighbor’ (K.)

Turkish Prime Minister Binali Yildirim has again disputed Greece’s sovereignty over parts of the Aegean Sea, while accusing Athens of building up bilateral tension while Ankara is busy fighting what he described as “terrorism” in its wider region. In comments made to local media on Wednesday, Yildirim accused Athens of pursuing a repeat of the 1996 Imia crisis, when the two countries came to the brink of war over ownership of the uninhabited Aegean islets, adding that such an attempt “will not go down well” in Ankara. “In case something similar occurs, there are always means at Turkey’s disposal to defend itself. Let there be no qualms about that,” he said. Turkey disputes Greece’s territorial sovereignty over the rocky formations, known in Turkish as Kardak, on the basis of its “gray zones” theory.

Last week, a Turkish patrol boat conducting a dangerous maneuver bumped into a Hellenic Navy gunboat near Imia. No damage was reported from the contact. Meanwhile, notwithstanding Turkey’s ongoing air and ground operation in the Afrin region of northern Syria aimed at fighting Syrian Kurdish fighters and Islamic State militants, violations of Greek air space by Turkish fighter jets continue, if at a lower rate. A mock dogfight between Greek and Turkish F-16s took place northwest of Lesvos island on Wednesday at 2.35 p.m. The issue of Turkey’s provocations was raised on Wednesday by Greek Prime Minister Alexis Tsipras, who, speaking at the World Economic Forum in Davos, described Turkey as an “aggressive neighbor, sometimes unpredictable with an aggressive military activity in the Aegean.” “For somebody, it is very easy to be also aggressive if they are living in Luxembourg or Netherlands, because their neighbors are Belgium and Luxembourg, and not Turkey. But it’s not so easy for us,” he said in English.

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In a bankrupt country. Greece should demand hundreds of billions from the EU to handle this.

Majority Of Refugees Stranded On Aegean Islands To Stay In Greece (K.)

The majority of migrants and refugees who have landed on the Aegean islands since the March 2016 deal signed between the European Union and Ankara will remain in Greece as conditions for their return to Turkey are considered “not safe,” according to data from the country’s Asylum Service. According to the data, authorities have processed 25,814 applications for asylum submitted by individuals stuck at island screening centers, or hotspots. Authorities have rejected 5,437 of those claims and, under the terms of the deal, the applicants should be returned to Turkey. However, only around 1,400 of that number have been returned so far. Meanwhile, 20,337 people have received permission to move to the Greek mainland. They will move to the next stage of their asylum process, provided that they are not enlisted in a European relocation schemes. A total of 21,726 mostly Syrian refugees were relocated from Greece to other EU member-states under a program which was completed in 2017.

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Sometimes a headline is enough.

1.7 Billion-Year-Old Chunk Of Canada Found Stuck To Australia (Ind.)

A chunk of what is now Canada broke away from the rest of North America and collided with Australia around 1.7 billion years ago, according to a new study. A team of geologists examining rocks found in northern Queensland concluded some of them did not appear to have originated in Australia, and had characteristics more common among those found in Canada. They say the discovery indicates the region surrounding present-day Georgetown in northern Queensland broke apart from the continent of North America during its early formation and smashed into what is now known as Australia. “Our research shows that about 1.7 billion years ago, Georgetown rocks were deposited into a shallow sea when the region was part of North America,” said Adam Nordsvan, a PhD student at Curtin University, who led the study published in the journal Geology.

“Georgetown then broke away from North America and collided with the Mount Isa region of northern Australia around 100 million years later.” The discovery provides scientists with new evidence about the formation of the ancient supercontinent, Nuna – a land mass made up of many of the continents we know today. Over millennia, the Earth’s continents have slowly moved around, reorganising themselves into different combinations, and Mr Nordsvan and his collaborators are trying to understand some of these ancient movements. “This was a critical part of global continental reorganisation when almost all continents on Earth assembled to form the supercontinent called Nuna,” said Mr Nordsvan. Nuna existed long before the more well-known supercontinent of Pangaea, which was formed around 335 million years ago.

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We have no idea of our own history.

Human Ancestors Left Africa Far Earlier Than Previously Thought (G.)

A prehistoric jawbone discovered in a cave in Israel has prompted scientists to rethink theories of how the earliest human pioneers came to populate the planet, suggesting that our ancestors left Africa far earlier than previously thought. The fossil, dated to nearly 200,000 years ago, is almost twice as old as any previous Homo sapiens remains discovered outside Africa, where our species is thought to have originated. Until recently, several converging lines of evidence – from fossils, genetics and archaeology – suggested that modern humans first dispersed from Africa into Eurasia about 60,000 years ago, quickly supplanting other early human species, such as Neanderthals and Denisovans, that they may have encountered along the way. However, a series of recent discoveries, including a trove of 100,000 year-old human teeth found in a cave in China, have clouded this straightforward narrative.

And the latest find, at the Misliya cave site in northern Israel, has added a new and unexpected twist. “What Misliya tells us is that modern humans left Africa not 100,000 years ago, but 200,000 years ago,” said Prof Israel Hershkovitz, who led the work at Tel Aviv University. “This is a revolution in the way we understand the evolution of our own species.” The find suggests that there were multiple waves of migration across Europe and Asia and could also mean that modern humans in the Middle East were mingling, and possibly mating, with other human species for tens of thousands of years. “Misliya breaks the mould of existing scenarios for the timing of the first known Homo sapiens in these regions,” said Chris Stringer, head of human origins at the Natural History Museum in London. “It’s important in removing a long-lasting constraint on our thinking.”

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Plastic carrying disease.

A Third Of Coral Reefs ‘Entangled With Plastic’ (BBC)

Plastic is one of the biggest threats to the future of coral reefs after ocean warming, say scientists. More than 11 billion items of plastic were found on a third of coral reefs surveyed in the Asia-Pacific region. This figure is predicted to increase to more than 15 billion by 2025. Plastic raises by 20-fold the risk of disease outbreaks on coral reefs, according to research. Plastic bags, bottles and rice sacks were among the items found. “Plastic is one of the biggest threats in the ocean at the moment, I would say, apart from climate change,” said Dr Joleah Lamb of Cornell University in Ithaca, US. “It’s sad how many pieces of plastic there are in the coral reefs …if we can start targeting those big polluters of plastic, hopefully we can start reducing the amount that is going on to these reefs.”

More than 275 million people rely on coral reefs for food, coastal protection, tourism income, and cultural importance. It’s thought that plastic allows diseases that prey on the marine invertebrates that make-up coral reefs to flourish. Branching or finger-like forms of corals are most likely to get entangled in plastic debris. These are important habitats for fish and fisheries, the scientists say. “A lot of times we come across big rice sacks or draping plastic bags,” said Dr Lamb, who led the study. “What we do find is these corals with a lot of complexity like branches and finger-like corals will become eight times more likely to be entangled in these types of plastics.” In the study, published in the journal Science, international researchers surveyed more than 150 reefs from four countries in the Asia-Pacific region between 2011 and 2014.

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 January 23, 2018  Posted by at 10:56 am Finance Tagged with: , , , , , , , , , , , ,  


William Claxton John Coltrane at the Guggenheim Museum, New York 1960

 

Trump Makes First Big Trade Move With Tariffs Aimed At Asia (BBG)
The Shutdown Scam: The GOP Is Now The Second “Government Party” (Stockman)
Blow Back (Jim Kunstler)
IMF Raises Global Growth Forecast, Sees Trump Tax Boost (R.)
IMF: Next Recession Will Come Sooner And Will Be Harder To Fight (EuA)
Rising Interest Payments Matter (NMT)
UK Business Leaders Push For New Campaign To Reverse Brexit (G.)
Kim Dotcom Sues New Zealand Government For Billions in Damages (BBC)
Ecuador’s Correa ‘Afraid for Julian Assange’s Safety’ (TeleSur)
Australia Sends Dozens Of Refugees From Pacific Camps To US (AFP)
Angela Merkel Has Completely Reversed Her Refugee Policies (Spiegel)

 

 

Make your own solar panels. What’s wrong with that?

Trump Makes First Big Trade Move With Tariffs Aimed At Asia (BBG)

President Donald Trump imposed tariffs on imported solar panels and washing machines, in his first major move to level a global playing field he says is tilted against American companies. The U.S. will impose new duties of as much as 30 percent on foreign-made solar equipment, the U.S. Trade Representative’s office said Monday. The president also approved tariffs starting as high as 50 percent on imported washing machines. Chinese and South Korean officials condemned the move, analysts said it could backfire, while markets largely shrugged it off. The tariffs were announced as Trump prepares to travel to the World Economic Forum in Davos, Switzerland, where the international business and political elite gather to mull the current state of the global order.

While the measures may sharpen the president’s “America First” policy after months of rhetoric and herald a hotter trade conflict with China, in Asia manufacturers and investors said the reality wasn’t as bad as they had feared. Investors “are used to bluff from Trump, which often turns out to be a non-event,” said Qiu Zhicheng at ICBC International Research in Hong Kong. “As long as the situation doesn’t escalate into a full-scale trade war, the market impact will be limited. We believe the two economies will stay rational, as a trade war would hurt both.” LG Electronics, a maker of domestic appliances, and South Korean solar panel makers fell initially in Seoul trading on the news before recovering. Samsung said the tariff on washing machines is a “great loss” for U.S. workers and consumers.

South Korea’s trade minister said Tuesday that his nation will file a petition with the World Trade Organization against the U.S. for imposing anti-dumping duties on Korean washing machine and solar panel makers. The U.S. decision is “excessive,” Kim Hyun-chong said. China exported more than 21 million washing machines worth just under 19 billion yuan ($2.9 billion) globally from January through November 2017, according to customs data. China is also the world’s largest exporter of solar panels.

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David knows his shutdowns.

The Shutdown Scam: The GOP Is Now The Second “Government Party” (Stockman)

Nowadays, government “shutdowns” are obviously not all that, and we do claim some expertise on the topic. Since 1975 there have been 14 shutdowns and we have had the privilege of being on-hand up close and personnel during 11 of these. Five shutdowns occurred while your editor was a member of the US House (1977-1981) and another six during his stint as director of OMB. The idea back then, needless to say, was that shutdowns came about mainly when anti-spenders refused to capitulate to the incessant demands of the swamp creatures for more appropriations, pork and graft.

[..] What is really happening, of course, is that the Trumpite/GOP is proving in spades that America is now saddled with two pro-government parties. This means a good shutdown is going to waste and that there is no stopping the fiscal doomsday machine that is now racing toward a national calamity, unimpeded. After all, the reason Washington is operating on its 3rd CR of the fiscal year and struggled a whole weekend to get a fourth one lasting a mere 16 days, lies in the utter irresponsibility of the Trump GOP approach to fiscal policy.

These clowns want to spend $120 billion on disaster relief without a single dime of off-setting cuts; raise defense by $80 billion when the Pentagon is already a $620 billion swamp of waste; appropriate $33 billion for an utterly idiotic Wall on the Mexican border when the problem could be solved by cancelling the $32 billion per year “War on Drugs” and putting up guest worker sign-up booths along the border; and authorizing tens of billions on top of that to pay for the backroom “deals” that were made in order to get the votes for a massive tax bill that not a single Senators or House member had read before it was ram-rodded into law by desperate GOP leaders on Christmas Eve.

So this shutdown is indeed different. Unlike the case back in the day, there is no fiscal red line whatsoever at issue; only a prospective eruption of more red ink and an interim game of political chicken about 700,000 Dreamers, who at the end of the day will not be deported and who will eventually get a path to citizenship. That’s because they, and millions of more immigrants to come, comprise the only available “growth” margin for the US work force in the decades ahead; and therefore constitute the next generation of Tax Mules which will be absolutely necessary to support today’s 50 million retirees. That is, as their population inexorably swells toward 100 million during the next four decades.

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Pressure on the FBI is set to increase tenfold.

Blow Back (Jim Kunstler)

On Sunday, the FBI revealed that it had lost five months of text messages between Trump antagonists Peter Strzok and Lisa Page. The agency offered a lame explanation that “software upgrades” and “misconfiguration issues” interfered with the app that is supposed to automatically save and archive communications between officials on FBI phones. This was the couple who chattered about an FBI-generated “insurance policy” for the outcome of the 2016 election with Deputy Director Andrew McCabe. When will these three be invited to testify before a house or senate committee to inform the nation exactly what the “insurance policy” was?

The bad odor at the FBI seeps into several other areas of misbehavior involving Hillary Clinton, her campaign, the Democratic National Committee (DNC), and members of the permanent Washington bureaucracy. Did the Obama White House use the Christopher Steele dossier, paid for by the Clinton Campaign, to obtain FISA warrants against her opponent in the election for the purpose of conducting electronic surveillance on him? Was the FBI abetting a Democratic Party coup to get rid of Trump by any means necessary once he got into office?

Did the FBI conduct a stupendously half-assed investigation into Hillary Clinton’s private email server by dismissing the charges before interviewing any of the principal characters involved, granting blanket immunities to Obama White House officials, and failing to secure computers that contained evidence? Does the FBI actually know what then Attorney General Loretta Lynch discussed with Bill Clinton in the parked airplane on the Phoenix tarmac? Did the FBI fail to investigate enormous contributions (roughly $150 million) to the Clinton Foundation after the Uranium One deal was signed? Did they look into any of the improprieties surrounding the DNC’s effort to nullify Bernie Sander’s primary campaign?

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Growth is God.

IMF Raises Global Growth Forecast, Sees Trump Tax Boost (R.)

The IMF on Monday revised up its forecast for world economic growth in 2018 and 2019, saying sweeping U.S. tax cuts were likely to boost investment in the world’s largest economy and help its main trading partners. However, the IMF, in an update of its World Economic Outlook, also added that U.S. growth would likely start weakening after 2022 as temporary spending incentives brought about by the tax cuts began to expire.\ The tax cuts would likely widen the U.S. current account deficit, strengthen the U.S. dollar and affect international investment flows, IMF chief economist Maurice Obstfeld said. “Political leaders and policymakers must stay mindful that the current economic momentum reflects a confluence of factors that is unlikely to last for long,” Obstfeld told reporters at the World Economic Forum in Davos.

He said economic gains from the tax cuts would be partially paid back later in the form of lower growth as temporary spending incentives, notably for investment, expired and as rising federal debt took a toll. IMF Managing Director Christine Lagarde pointed to a “troubling” increase in debt levels across many countries and warned policymakers against complacency, saying now was the time to address structural deficiencies in their economies. Obstfeld said a sudden rise in interest rates could lead to questions about the debt sustainability of some countries and lead to a disruptive correction in “elevated” equity prices.

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IMF wants their cake and eat it. They warn against the failure of their own policy recommendations.

IMF: Next Recession Will Come Sooner And Will Be Harder To Fight (EuA)

The global economy is growing faster than expected, fuelling CEO optimism as they arrive this week at the World Economic Forum (WEF) in Davos, Switzerland. But the IMFhas warned that the next crisis will hit sooner and harder that we thought. “In seed time learn, in harvest teach, in winter enjoy,” said IMF Managing Director Christine Lagarde, issuing a warning by quoting British poet William Blake to describe the state of mind of businessmen and politicians in the world. The global economy continues to beat previous forecasts. The Fund revised upward by 0.2% the growth expected for this year and next. In Europe, the IMF increased further its outlook by 0.3% in 2018 (2.2%) and in 2019 (2%). But “complacency is one of the risks we should go against”, Lagarde told reporters in Davos hours before the official opening of the WEF.

The economy is growing but not because countries have lifted their growth potential via investment in human capital or technology. Instead, reforms have been elusive and growth has benefited just the few that are on top of the pile. “We are not satisfied,” Lagarde insisted, because “too many people have been left out of the acceleration of growth”. Against the backdrop of fragile growth and outstanding challenges, including a high level of debt, the Fund’s chief economist, Maurice Obstfeld, stressed that “the next recession will come sooner and will be harder to fight”. He warned political leaders that the economic momentum is due to factors that are “unlikely to last for long”, including the monetary stimulus and supportive fiscal stance. For that reason, he urged countries to adopt measures aimed at improving the resilience of their societies in the fast-changing digital revolution and to improve the inclusiveness of their societies.

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Another huge surge in debt. Insane. But the only way to keep the zombie from dying.

Rising Interest Payments Matter (NMT)

Is anyone paying attention? I don’t know, but the cost of carrying debt has been rising and it’s already showing measurable impacts despite the Fed Funds rate still being very low. My concern of course is that the global debt construct will bring global growth to a screeching halt (see also The Debt Beneath). As the 10 year is already piercing above the 2.6% area now I want to pay attention to the data coming in as the Fed is dot plotting more rate hikes to come. After all the Fed has hiked 5 times off the bottom floor in the past 2 years:

Can we see any measurable impact? You bet we can. Here are personal interest payments for consumers:

Mind you we are still near the lows of the previous cycle and already total interest payments are near record highs. The driver of course is record consumer debt and credit card debt. But despite rates still being historically low this rise in interest rates has an impact on the consumer. Already we see this: “The big four US retail banks sustained a near 20 per cent jump in losses from credit cards in 2017, raising doubts about the ability of consumers to fuel economic expansion. “People are using their cards to get from pay cheque to pay cheque,” said Charles Peabody, managing director at the Washington-based investment group Compass Point. “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.” Recently disclosed results showed Citigroup, JPMorgan Chase, Bank of America and Wells Fargo took a combined $12.5bn hit from soured card loans last year, about $2bn more than a year ago.”

I repeat: “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.” [..] “Economists with Deutsche Bank expect the extra debt the Treasury must issue to fund President Donald Trump’s tax package and the amount of debt the Federal Reserve plans to redeem at maturity this year will bloat issuance to about $1tn in 2018. That’s up more than 50 per cent from a year earlier and, when coupled with a 30 per cent rise in the amount of corporate debt that’s due to mature, leaves questions of who the eventual buyer will be.“ A good question indeed. That’s a lot of debt issuance:

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2018 will be the year of the Brexit reversal.

UK Business Leaders Push For New Campaign To Reverse Brexit (G.)

Business leaders are privately pushing for a new campaign to reverse Brexit as concerns mount about the viability of government plans to prevent a collapse in exports to Europe. On Monday, the CBI launched its most sustained attack yet on the government’s Brexit strategy by calling for full customs union with the EU and single market participation, even if it means abandoning the pursuit of separate trade deals with the rest of the world. Behind the scenes, senior figures on the CBI policy council are urging the lobby group to toughen its message still further and spell out their belief that this logic should ultimately lead to a national rethink of the decision to leave the EU, perhaps through a second referendum or an election.

While this is not the CBI’s official position, the group says it has decided to speak out about the problems of the government’s approach to Brexit after “thousands of conversations” and workshops with its members over the past two to three months. “It’s not for us to say [whether to reverse Brexit], we are simply pointing out that you need single market access and you need a customs union,” said a spokesman. “If someone concludes that we therefore need to retest this, that’s a political decision, we are just being very practical about it.”

Government ministers reacted furiously to previews of the CBI’s evolving position over the weekend, which now directly challenges the British strategy of leaving the customs union so that new trade deals can be pursued outside a common tariff area. The CBI director general, Carolyn Fairbairn, told an audience at Warwick University on Monday: “There may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU; a day when investing in fast-growing economies elsewhere eclipses the value of frictionless trade in Europe. But that day hasn’t yet arrived.”

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The former government, to be exact.

Kim Dotcom Sues New Zealand Government For Billions in Damages (BBC)

Kim Dotcom, the founder of file-sharing site Megaupload, is suing the New Zealand government for billions of dollars in damages over his arrest in 2012. The internet entrepreneur is fighting extradition to the US to stand trial for copyright infringement and fraud. Mr Dotcom says an invalid arrest warrant negated all charges against him. He is seeking damages for destruction to his business and loss of reputation. Accountants calculate that the Megaupload group of companies would be worth $10bn (£7.2bn) today, had it not been shut down during the raid. As he was a 68% shareholder in the business, Mr Dotcom has asked for damages going up to $6.8bn. He is also considering taking similar action against the Hong Kong government.

As stated in documents filed with the High Court, Mr Dotcom is also seeking damages for: • all lost business opportunities since 2012 • his legal costs • loss of investments he made to the mansion he was renting • his lost opportunity to purchase the mansion • loss of reputation. “I cannot be expected to accept all the losses to myself and my family as a result of the action of the New Zealand government,” he told the BBC. “This should never have happened and they should have known better. And because they made a malicious mistake, there is now a damages case to be answered.” New Zealand Prime Minister Jacinda Ardern told Radio New Zealand: “This has obviously been an ongoing matter, so no it doesn’t surprise me.”

Mr Dotcom’s key argument over his extradition is the warrants used for the raid on his mansion and arrest in January 2012 were based on Section 131 of the 1994 Copyright Act of New Zealand. “Under the NZ copyright act, online copyright infringement is not a crime,” said Mr Dotcom. “92B of Section 131 – an amendment created by parliament in 2012 – prohibits any criminal sanction against an internet service provider in New Zealand. “In order for the US to be successful with an extradition, the allegation of the crimes that they are charging someone with also have to be a crime in the country from which they request the extradition.”

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We must find ways to protect Assange et al.

Ecuador’s Correa ‘Afraid for Julian Assange’s Safety’ (TeleSur)

Former Ecuadorean president Rafael Correa has warned that WikiLeaks founder Julian Assange’s days are numbered at the Ecuadorean Embassy in London. Correa, who gave Assange asylum back in 2012, said that he’s “afraid for Julian Assange’s safety” due to the new government´s actions with regards to his case. He said that he believes President Lenin Moreno is likely “take away the support” previously afforded to the anti-secrecy activist. “It will only take pressure from the United States to” withdraw protection for Assange and “surely it’s already being done, and maybe they await the results of the Feb. 4 (referendum) to make a decision,” said Correa, in an article published by AFP.

When asked does he have evidence to support his claim, Correa said it’s clear that Moreno “has no convictions, it’s clear that he has yielded to the usual powerbrokers” and will “soon enough yield regarding the question of Assange.” The 54-year old economist added that the ambassador for the United States was shamelessly interfering in Ecuador’s internal affairs, something “hadn’t occurred during ten years” of his government. Earlier this week Correa officially left the ruling PAIS Alliance, the leftist political movement he founded in 2006 and which he first rose to political prominence. Having referred to Moreno as a “traitor,” someone who has called for an “unconstitutional” referendum that could spell an end to “democracy,” Correa went on to say that “they can rob us of Alianza Pais, but never our will and convictions. Despite the pain, this only strengthens us.”

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In the future, Manus will be compared to Birkenau.

Australia Sends Dozens Of Refugees From Pacific Camps To US (AFP)

Dozens of refugees held for years in Australia’s remote Pacific detention camps departed for resettlement in the United States on Tuesday, asylum-seeker advocates said. The Sydney-based Refugee Action Coalition said 40 men flew out from Papua New Guinea’s capital Port Moresby under a deal struck by Australia with former US president Barack Obama but bitterly criticised by his successor Donald Trump. “It was a bitter-sweet moment for the refugees — who on the one hand, are happy to be gaining the freedom that Australia denied them more than four years ago; but on the other, they remain extremely concerned for those that are being left behind,” the advocacy group said in a statement.

The refugees, from camps on Manus Island, flew to Manila from where they will fly on to the US in different groups in the coming weeks before being resettled across the country, it said. The group released photos showing the refugees lining up before dawn to get on buses for the airport, then waiting at the gate to board their flight to Manila. Another 18 men were due to leave Port Moresby in the coming weeks, it said. [..] Canberra sends asylum-seekers who try to reach Australia by boat to detention camps in Manus and the Pacific island of Nauru under a tough policy designed to choke off the flow of refugees to the country. More than 1,000 still remain in limbo in the remote locations.

Canberra has strongly rejected calls to move the refugees to Australia and instead has tried to resettle them in third countries, including the United States. But until now only about 50 refugees have been sent to the US, under an agreement President Trump attacked after taking office as a “dumb deal”. The Refugee Action Coalition said a further 130 people on Nauru have been accepted by the US and are expected to depart next month.

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Merkel can’t take that she’s yesterday’s news.

Angela Merkel Has Completely Reversed Her Refugee Policies (Spiegel)

It’s no longer about people, it’s about a number. It’s about the number of refugees who come to Germany, not about the refugees themselves. The most recent number is 223,000: That’s how many asylum applications were submitted last year, a far cry from the 746,000 applications received in 2016. The new number is rather convenient for Angela Merkel in that it is extremely close to the upper limit of 220,000 that has found its way into the German chancellor’s preliminary coalition outline agreed to by Merkel’s conservatives and the center-left Social Democrats (SPD). This number is the expression of a political policy that has never been clearly verbalized and never been adequately explained. It is the expression of an about-face on refugee policy, away from open borders and toward harsh rejection.

Late in the summer of 2015, Merkel said that if Germany cannot show “a friendly face” in an emergency, “then it is not my county.” She kept the borders open to the incoming refugees, and much of the world was inspired by her humanitarian approach. Now, however, Germany is presenting a much less friendly face to the world. And the German chancellor has no country anymore. But that doesn’t seem to be bothering her. Indeed, her views would seem to have completely changed. In 2016, Merkel engineered a deal with Turkey on behalf of the European Union which essentially shut down the refugee route across the Aegean Sea from Turkey to Greece. She also agreed to demands from the conservative Christian Social Union (CSU), the Bavarian sister party to her own Christian Democrats (CDU), that an annual upper limit be established, though it isn’t allowed to be called an “upper limit.”

In the future, there is also to be a 1,000-per-month upper limit applied to family reunifications for most refugees. That is too low. The CDU and CSU are fond of emphasizing family values, yet they have joined forces to limit family reunification — even though it should be clear to everyone that men have the best chances at integration if they live here together with their families. But none of that matters anymore. The parties only care that the number is low. And SPD leaders are going along without complaint. That, too, is a disappointment.

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