May 272021
 


Brassaï The Sun King 1930

 

CDC: More Than 10,000 Covid-19 Vaccine Breakthrough Infections (JTN)
More Flagrant Data Manipulation From The CDC (OffG)
DOD Tracking 14 Cases of Heart Inflammation in Troops After COVID-19 Shots (M.com)
Dr. Fauci Gets In Heated Debate With 17 Previous Versions Of Himself (BBee)
Covid Spike Protein, In All Vaccines, Is What Causes Deadly Blood Clots (NN)
Does Ivermectin Really Work Against Covid-19? (IT)
Snopes Introduces New Rating: ‘False For Now’ (BBee)
Facebook No Longer Treating ‘Man-Made’ Covid As A Crackpot Idea (Pol.)
Senate Unanimously Passes Hawley Bill Declassifying Intel On Wuhan Lab (F.)
Netherlands Court Orders Shell To Cut Emissions By 45% (BBC)
ExxonMobil, Chevron Investors Vote For More Action On Climate Change (Y!)
Hunter Biden’s Ukraine Salary Was Cut In Half After Joe Biden Left Office (NYP)
US-Funded Belarus Activist Arrested On Plane Joined Neo-nazis In Ukraine (GZ)
Billionaires’ Secretive Speculation Threatens Next Financial Meltdown (MW)
Chaos Erupts After Stiffed UniCredit Bondholders Get Fat-Fingered Payment (ZH)

 

 

 

 

And says it’s a “substantial undercount”.

CDC: More Than 10,000 Covid-19 Vaccine Breakthrough Infections (JTN)

More than 10,000 vaccine breakthrough infections have been reported in the U.S. in individuals who had already been fully vaccinated against COVID-19, according to the U.S. Centers for Disease Control and Prevention. “A total of 10,262 SARS-CoV-2 vaccine breakthrough infections had been reported from 46 U.S. states and territories as of April 30, 2021,” the government agency said. The report covered the period from January 1 to April 30 this year. More than half (63%) of the breakthrough cases happened in females, according to the CDC. Preliminary data indicated that more than a quarter (27%) of the cases were asymptomatic and 160 people (2%) passed away. But 28 of the deceased were asymptomatic or passed away due to a cause not connected to coronavirus. The median age for the deceased was 82.


The CDC noted that the quantity of reported vaccine breakthrough cases probably falls far short of the actual amount of breakthroughs among the vaccinated. “The findings in this report are subject to at least two limitations. First, the number of reported COVID-19 vaccine breakthrough cases is likely a substantial undercount of all SARS-CoV-2 infections among fully vaccinated persons. The national surveillance system relies on passive and voluntary reporting, and data might not be complete or representative. Many persons with vaccine breakthrough infections, especially those who are asymptomatic or who experience mild illness, might not seek testing. Second, SARS-CoV-2 sequence data are available for only a small proportion of the reported cases,” the agency noted.

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They know it’s a “substantial undercount” because they keep changing their methods: “the CDC has taken their “substantial undercount”, and then slashed it by 90%.”

More Flagrant Data Manipulation From The CDC (OffG)

A new report, published just yesterday, has provided yet more evidence that the CDC is manipulating data to conceal the number of “breakthrough infections”. A “breakthrough infection” (or “breakthrough case”) is defined as a person who tests positive for Sars-Cov-2 infection, despite already being fully vaccinated. And this new report finds that the CDC’s official record of breakthrough cases is: “likely a substantial undercount.” Going on to explain: “The national surveillance system relies on passive and voluntary reporting, and data might not be complete or representative. Many persons with vaccine breakthrough infections, especially those who are asymptomatic or who experience mild illness, might not seek testing.” Which is partially accurate, but also a pretty major lie by omission. It is probably true that vaccinated people with no symptoms are unlikely to seek testing, but it is also true that, on March 17th, the CDC updated their advice on testing policy to specifically exclude such people from testing protocols:

So, while it’s certainly true that “breakthrough cases” are likely a substantial undercount, it is dishonest to pretend that this is just an accident of the system. Rather, the system is specifically designed to hide such cases. Of course, this report only goes up to the end of April, the “undercount” will only have gotten worse since then, because the CDC changed their rules AGAIN to make it even harder to keep an accurate count of breakthrough cases. As we wrote last week, as of May 1st the CDC will no longer be counting mild or asymptomatic cases as “breakthrough infections”, choosing to focus only on hospitalisations and deaths. According to the CDC’s own report, though, over a quarter (27%) of breakthrough infections were asymptomatic, and a further 61% were only mildly ill. Conversely, only 10% of them were ever hospitalised, and only 2% died: “Based on preliminary data, 2,725 (27%) vaccine breakthrough infections were asymptomatic, 995 (10%) patients were known to be hospitalized, and 160 (2%) patients died.”


So, the CDC has taken their “substantial undercount”, and then slashed it by 90%. The official figures, moving forward, will be so inaccurate as to be completely useless. The CDC claims these changes “will help maximize the quality of the data collected on cases of greatest clinical and public health importance.” But that is an obvious and absurd lie. Statistical studies have shown up to 86% of Covid “cases” never experience symptoms. To exclude such cases from your vaccine effectiveness studies is to poison your data in order to prop up a pre-determined conclusion. It is, at the very best, extremely poor science.

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How many deaths and injuries will it take before the “vaccines” are banned?

DOD Tracking 14 Cases of Heart Inflammation in Troops After COVID-19 Shots (M.com)

The Defense Department is tracking 14 cases of heart inflammation, or myocarditis, in military health patients who developed the condition after receiving either the Pfizer or Moderna COVID-19 vaccine. The rare disorder, usually caused by a virus, has been linked to COVID-19. But following a number of reports from Israel of patients developing the inflammation in conjunction with receiving vaccines, the Israeli Health Ministry is exploring a possible link, Israel’s Channel 12 reported Friday, according to the Jerusalem Post. Myocarditis is an inflammation of the heart muscle, the myocardium, that can reduce the heart’s ability to function or cause abnormal heart rhythms.


The first report of myocarditis in a patient who received a COVID-19 vaccine was published in Israel on Feb. 1. Another case of myocarditis in a 39-year-old male was reported in Revista Española de Cardiología in early March. The DoD has been tracking myocarditis cases through March, according to spokesman Peter Graves. Of the 14 cases, one patient, who tested positive for COVID-19 three months ago, developed myocarditis after their first dose of vaccine. The remaining 13 patients developed myocarditis after their second vaccine doses. Eleven received the Moderna vaccine; three got Pfizer.

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Ha!

Dr. Fauci Gets In Heated Debate With 17 Previous Versions Of Himself (BBee)

After a brief temporal anomaly occurred in Washington, D.C., causing a version of Dr. Fauci from just two weeks ago to materialize in the city, the current Dr. Fauci got in a heated debate with the manifestation of himself from the past. “The virus was created in a lab!” present-day Fauci said indignantly, causing past Fauci to wag his finger and shake his head emphatically. “No, no, no, that’s a deranged conspiracy theory!” past Fauci said. “It’s practically alt-right! Didn’t you check Snopes? Anyway, at least we can agree we should wear double masks forever.” “No, masks aren’t necessary anymore!” said current Fauci. “We just wear them for political theater.” “That’s insulting! They’re absolutely not theater!” said early May Fauci.


At that moment, another version of Fauci suddenly appeared from March 2020, agreeing with current Fauci but taking it a step further, saying, “Masks are useless. They just make people feel better!” Both of the other Faucis then ganged up on March 2020 Fauci, calling him an “anti-science mask denier.” Another Fauci then appeared, and then another, and then another, and all heck broke loose, with the Faucis screaming at one another and calling each other “Q anon crazies” and “progressive totalitarians,” depending on the version of Fauci. Finally, an uneasy truce was called, as all the Faucis agreed they at least all wanted the same thing: to stay in the spotlight forever.

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From yesterday’s Comment section.

Covid Spike Protein, In All Vaccines, Is What Causes Deadly Blood Clots (NN)

The prestigious Salk Institute, founded by vaccine pioneer Jonas Salk, has authored and published a bombshell scientific article revealing that the SARS-CoV-2 spike protein is what’s actually causing vascular damage in covid patients and covid vaccine recipients, promoting the strokes, heart attacks, migraines, blood clots and other harmful reactions that have already killed thousands of Americans (source: VAERS.hhs.gov). Critically, all four covid vaccine brands currently in widespread use either inject patients with the spike protein or, via mRNA technology, instruct the patient’s own body to manufacture spike proteins and release them into their own blood. This floods the patient’s body with the very spike protein that the Salk Institute has now identified as the smoking gun cause of vascular damage and related events (such as blood clots, which are killing many people who take the vaccines).

Put simply, it means the vaccines were designed to contain the very element that’s killing people. The false assumption of the vaccine industry and its propagandists is that the spike protein is “inert” and harmless. The Salk Institute proves this assumption to be dangerously inaccurate. [..] the virus spike proteins (which behave very differently than those safely encoded by vaccines) also play a key role in the disease itself. The paper, published on April 30, 2021, in Circulation Research, also shows conclusively that COVID-19 is a vascular disease, demonstrating exactly how the SARS-CoV-2 virus damages and attacks the vascular system on a cellular level.

“A lot of people think of it as a respiratory disease, but it’s really a vascular disease,” says Assistant Research Professor Uri Manor, who is co-senior author of the study. “That could explain why some people have strokes, and why some people have issues in other parts of the body. The commonality between them is that they all have vascular underpinnings.” …the paper provides clear confirmation and a detailed explanation of the mechanism through which the protein damages vascular cells for the first time. In the new study, the researchers created a “pseudovirus” that was surrounded by SARS-CoV-2 classic crown of spike proteins, but did not contain any actual virus. Exposure to this pseudovirus resulted in damage to the lungs and arteries of an animal model—proving that the spike protein alone was enough to cause disease. Tissue samples showed inflammation in endothelial cells lining the pulmonary artery walls.

The team then replicated this process in the lab, exposing healthy endothelial cells (which line arteries) to the spike protein. They showed that the spike protein damaged the cells by binding ACE2. This binding disrupted ACE2’s molecular signaling to mitochondria (organelles that generate energy for cells), causing the mitochondria to become damaged and fragmented. Previous studies have shown a similar effect when cells were exposed to the SARS-CoV-2 virus, but this is the first study to show that the damage occurs when cells are exposed to the spike protein on its own. [..] covid vaccines are inducing vascular disease and directly causing injuries and deaths stemming to blood clots and other vascular reactions. This is all caused by the spike protein that’s deliberately engineered into the vaccines.

[..] any person who actually survives the covid vaccine only does so because their innate immune system is protecting them from the vaccine, not with the vaccine. The vaccine is the weapon. Your immune system is your defense. [..] The covid vaccine, built with the spike protein that causes vascular damage. The number of Americans who died after taking covid vaccines is already in the thousands, and realistic estimates put that number at tens of thousands (with more dying each day). The mechanism is now well understood: The covid vaccine injects the patient with spike proteins, the spike proteins proceed to cause vascular damage and blood platelet aggregation, this leads to blood clots which circulate around the body and lodge in different organs (the hart, lungs, brain, etc.), causing deaths that are attributed to “strokes” or “heart attacks” or “pulmonary embolism.”

The common cause is the vascular damage stemming from the spike protein. In essence, millions of people are being injected with artificial blood clotting factors and then dying from blood clots, all while the disastrously dishonest corporate media claims all covid vaccines are completely “safe” and have harmed no one.

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From India.

Does Ivermectin Really Work Against Covid-19? (IT)

Q.Is Ivermectin, a drug that has traditionally been used to treat parasitic infections in humans, effective against Covid-19?

The World Health Organization recently issued guidelines saying Ivermectin should only be used on Covid-19 patients in clinical trial settings, saying there was a ‘very low certainty of evidence’ on Ivermectin’s effects on mortality rates and its ability to purge the virus from the body. After this, many state governments in India have rejected its use for Covid-19 patients. This has caused confusion and worry among patients and providers alike. However, [I believe] there is enough evidence to show the effectiveness of the drug. A study published in the American Journal of Therapeutics clearly mentions a large number of randomised and observational controlled trials of Ivermectin that repeatedly reported large improvements in clinical outcomes. Numerous prophylaxis trials demonstrate that regular use of Ivermectin leads to large reductions in virus transmission. Moreover, a comprehensive review of the available efficacy data as of December 12, 2020, taken from in-vitro, animal, clinical and real-world studies, all show the above impacts of Ivermectin in treating cases of Covid-19.

Q. How does Ivermectin help Covid patients? Here are few points worth considering. Since 2012, multiple in-vitro studies have demonstrated that Ivermectin inhibits the replication of many viruses, including those that cause Influenza, Zika, Dengue, and others. Ivermectin inhibits SARS-CoV-2 replication and binding to host tissue through several observed and proposed mechanisms. Ivermectin also has anti-inflammatory properties that prevents viral replication, and it hastens recovery and prevents deterioration in patients in mild to moderate cases of the disease, if they are treated early after symptoms appear.

Q. So should all Covid patients take Ivermectin as part of their treatment?

Having said the above, anything used in excess or abused is harmful to health. Providers need to careful while prescribing these drugs as they are still under review. The best way is to be wise and not let panic take precedence over logical reasoning. Most repurposed drugs have pros and cons when used to treat Covid-19, and this needs to be explained to patients while prescribing treatment. We have to be cautious but wise too—let us all make informed choices and ensure that we come out of this crisis stronger and more empowered.

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“Did COVID escape from a Wuhan lab? Well, it depends! Did a Republican say it?”

Snopes Introduces New Rating: ‘False For Now’ (BBee)

World-renowned fact-checking website Snopes has unveiled a brand new fact check rating called “False For Now.” This will allow them to provide a rating for claims that are just conspiracy theories uttered by deranged far-right people until they later turn out to be true. “At Snopes, it’s important for us to keep up with the undulating, ever-changing ocean of truth claims as they fluctuate across different official narratives we approve of,” said Snopes founder David Mikkelson. “Did COVID escape from a Wuhan lab? Well, it depends! Did a Republican say it? Does it serve the official narrative of trusted sources like CNN? We have to keep all these important questions in mind as we continue to live our truth, which is what Snopes is all about.”


To save time, Snopes will just attach this rating to everything said by someone on the Right until a mainstream, unbiased source like The New York Times approves it to be upgraded to “Mixture”. Snopes also announced they will be attaching a rating of “Not Funny” to all Babylon Bee articles.

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Imagine getting your news from Facebook.

Facebook No Longer Treating ‘Man-Made’ Covid As A Crackpot Idea (Pol.)

Facebook will no longer take down posts claiming that Covid-19 was man-made or manufactured, a company spokesperson told POLITICO on Wednesday, a move that acknowledges the renewed debate about the virus’ origins. A narrative in flux: Facebook’s policy tweak arrives as support surges in Washington for a fuller investigation into the origins of Covid-19 after the Wall Street Journal reported that three scientists at the Wuhan Institute of Virology were hospitalized in late 2019 with symptoms consistent with the virus. The findings have reinvigorated the debate about the so-called Wuhan lab-leak theory, once dismissed as a fringe conspiracy theory. President Joe Biden said Wednesday that he has ordered the intelligence community to “redouble” its efforts to find out the virus’ origin and report back in 90 days.

Biden also revealed that the intelligence community is split between two theories about Covid-19’s origin, and said the review will examine “whether it emerged from human contact with an infected animal or from a laboratory accident.” Bipartisan support is also building on Capitol Hill for a congressional inquiry. But the focus of late has been on the notion that the virus may have accidentally escaped from the lab, not that it was man-made or purposely released — theories that could now propagate on Facebook. Genetic studies of the virus have found flaws in the protein it uses to bind to human cells. Those are features that someone trying to engineer a bioweapon likely would have avoided. Shifting definitions on social media: Facebook announced in February it had expanded the list of misleading health claims that it would remove from its platforms to include those asserting that “COVID-19 is man-made or manufactured.”

The tech giant has updated its policies against false and misleading coronavirus information, including its running list of debunked claims, over the course of the pandemic in consultation with global health officials. But a Facebook spokesperson said Wednesday that the origin language had been stricken from that list due to the renewed debate about the virus’ roots. “In light of ongoing investigations into the origin of COVID-19 and in consultation with public health experts, we will no longer remove the claim that COVID-19 is man-made from our apps,” the spokesperson said in an emailed statement. “We’re continuing to work with health experts to keep pace with the evolving nature of the pandemic and regularly update our policies as new facts and trends emerge.”

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Smokescreen?!

Senate Unanimously Passes Hawley Bill Declassifying Intel On Wuhan Lab (F.)

The U.S. Senate on Monday unanimously approved a bill to require the federal government to declassify information about any links between China’s Wuhan Institute of Virology and Covid-19 following reporting by the Wall Street Journal that three researchers at the lab were hospitalized with Covid-like symptoms in November 2019. The bill requires the Director of National Intelligence to declassify “any and all information” about links between the lab and the virus within 90 days. The bill also calls for the DNI to make “as much information as possible” about the origin of the virus publicly available, in order to identify the origin “as expeditiously as possible.” Introduced by Sen. Josh Hawley (R-Mo.) and cosponsored by Sen. Mike Braun (R-Ind.), the bill passed Wednesday night by unanimous consent, meaning no senator objected.


While support has grown among Democratic lawmakers to investigate the origins of Covid-19, House leaders have not yet said whether it will get a vote in the lower chamber and the White House hasn’t said if President Joe Biden will sign it. Theories that the virus was man-made as opposed to naturally occurring have been cast as fringe for much of the pandemic. However, the Journal’s revelation this week has caused experts to concede the “lab leak” theory – which remains unproven – can’t be ruled out. 90. That’s how many days the intelligence community has been given by Biden to “bring us closer to a definitive conclusion” on the origins of the virus, the president said in a statement Wednesday. Biden said he asked for the inquiry to include “specific questions for China” and a look at “work by our National Labs.”

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Prediction: Shell will appeal, and appeal, and…

Netherlands Court Orders Shell To Cut Emissions By 45% (BBC)

A court in the Netherlands has ruled in a landmark case that the oil giant Shell must reduce its emissions. By 2030, Shell must cut its CO2 emissions by 45% compared to 2019 levels, the civil court ruled. The Shell group is responsible for its own CO2 emissions and those of its suppliers, the verdict said. It is the first time a company has been legally obliged to align its policies with the Paris climate accords, says Friends of the Earth (FoE). The environmental group brought the case to court in 2019, alongside six other bodies and more than 17,000 Dutch citizens. Though the decision only applies in the Netherlands, it could have wider effects elsewhere. BBC Netherlands correspondent Anna Holligan tweeted that it was a “precedent-setting judgement”.

A Shell spokesperson said they “fully expect to appeal today’s disappointing court decision” and added that they are stepping up efforts to cut emissions. “Urgent action is needed on climate change, which is why we have accelerated our efforts to become a net-zero emissions energy company by 2050,” the spokesperson said, adding that Shell was investing “billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels”. “This is really great news and a gigantic victory for the earth, our children and for all of us,” FoE director Donald Pols said in a statement. “The judge leaves no doubt about it: Shell is causing dangerous climate change and must now stop it quickly.” Under the terms of the Paris Agreement on climate change, nearly 200 nations agreed to keep global temperatures “well below” 2C above pre-industrial levels.

The legally binding treaty came into force on 4 November 2016. The US withdrew under former President Donald Trump but has since rejoined under President Joe Biden. A number of groups around the world are now trying to force companies and governments to comply with the accords through the courts. Shell has previously said it wants net zero emissions for itself and from products used by its customers by 2050. In December its defence lawyers told the Dutch court the company was already taking “serious steps” to move away from fossil fuels, and said there was no legal basis for the case.

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“At ExxonMobil, two board nominees from activist group Engine No. 1 won enough votes to secure board seats..”

ExxonMobil, Chevron Investors Vote For More Action On Climate Change (Y!)

Investors rejected the responses of US oil giants to climate change Wednesday, installing activist board members at ExxonMobil and directing Chevron to deepen emissions cuts. The dual decisions at the two biggest US oil giants’ annual meetings are clear evidence that addressing climate change has moved from being an environmentalist cause to one championed by mainstream investors. At ExxonMobil, two board nominees from activist group Engine No. 1 won enough votes to secure board seats. Shareholders also backed a proposal requiring a report on the oil giant’s lobbying activities on climate change.


At Chevron, a majority of investors approved an activist proposal calling on the company to reduce “scope 3” emissions, which encompass energy products. Earlier in the day, a Dutch court ordered oil giant Shell to slash its greenhouse gas emissions by a net of 45 percent by the end of 2030 following a challenge launched by environmental group Friends of the Earth. “Today’s Exxon vote sends the unmistakable signal that climate action is a financial imperative,” said Fred Krupp, president of Environmental Defense Fund. “Now Exxon’s board has an important responsibility to help the company transform its approach to the climate crisis and energy transition.”

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Miranda Devine is working on a book, “Laptop From Hell”, due out in September.

Hunter Biden’s Ukraine Salary Was Cut In Half After Joe Biden Left Office (NYP)

The Ukrainian energy company that was paying President Biden’s son Hunter $1 million a year cut his monthly compensation in half two months after his father ceased to be vice president. From May 2014, Burisma Holdings Ltd. was paying Hunter $83,333 a month to sit on its board, invoices on his abandoned laptop show. But in an email on March 19, 2017, Burisma executive Vadym Pozharskyi asked Hunter to sign a new director’s agreement and informed him “the only thing that was amended is the compensation rate.” “We are very much interested in working closely together, and the remuneration is still the highest in the company and higher than the standard director’s monthly fees. I am sure you will find it both fair and reasonable.”


After the email, the amount listed on Hunter’s monthly Burisma invoices was reduced to $41,500, effective from May 2017. The amount was paid in Euros, at the rate of between 35,000 Euros and 36,100 Euros per month, based on currency fluctuations at the time. No reason is given for the decrease in salary. The only change in circumstance appears to be that Hunter’s father was no longer in office. In 2016, Hunter’s total income from Burisma was $999,996. In 2017 it dropped to $665,000, and then $498,000 in 2018. Hunter resigned from the Burisma board in April 2019, according to his lawyer George Mesires, after his controversial business dealings dogged his father’s presidential campaign.

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Lukashenko has already used this to defend his actions.

US-Funded Belarus Activist Arrested On Plane Joined Neo-nazis In Ukraine (GZ)

A high-profile Belarusian regime-change activist whose detention on a forcibly grounded airplane caused an international scandal has extensive links to neo-fascist groups, which his political sponsors in Western capitals have conveniently overlooked. Right-wing activist Roman Protasevich was traveling on the Irish airliner Ryanair on May 23 when the plane crossed into Belarusian airspace and was ordered to land by state authorities. Protasevich was subsequently taken off the aircraft and arrested. The incident triggered a wave of denunciations by Western governments, and a new round of aggressive sanctions on Belarus. Many anti-interventionist critics pointed out the hypocrisy of the US government’s condemnations, recalling how, in 2013, it forcibly grounded the plane of Bolivian President Evo Morales in an egregious violation of international law because it wrongly suspected he was harboring NSA whistleblower Edward Snowden.

Effortlessly ignoring Washington’s own precedent, Western governments and major corporate media outlets blasted the government of Belarusian President Alexander Lukashenko as a brutal dictatorship while lavishing praise on Protasevich, portraying the high-profile opposition figure as a heroic human rights defender. What they refused to acknowledge is Protasevich’s recent history serving with a neo-Nazi militia in Ukraine, and his extensive ties to other far-right extremist organizations. A leader of Ukraine’s notorious Azov Battalion, an explicitly neo-Nazi militia that uses white supremacist imagery, publicly acknowledged that Protasevich joined the fight alongside Azov. A Ukrainian newspaper reported that Protasevich worked with the neo-Nazi militia’s press service.

Protasevich personally admitted in an interview to traveling to Ukraine and spending a year battling pro-Russian forces in the eastern war zone of Donbas. He is even suspected of possibly posing with an assault rifle and a military uniform on the front of Azov’s propaganda magazine, which is emblazoned with a large neo-Nazi symbol. The influence of Azov and similar ultra-nationalist groups in Ukraine has extended well outside of its borders, spilling over into neighboring countries in Eastern Europe, while also influencing politics in Canada and even Hong Kong, where Azov extremists joined a Western-backed “color revolution” operation targeting China.

Like Azov, Protasevich has benefited from direct support from Western governments. Just as the neo-Nazi Ukrainian militia received weapons and military training from the United States in order to fight in its proxy war against Russia, Protasevich’s media career was launched by a US government-backed outlet, Radio Free Europe / Radio Liberty, which was created by the CIA as part of an information war against Moscow.

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The banks are now the victims? Vraiment?

Billionaires’ Secretive Speculation Threatens Next Financial Meltdown (MW)

Here’s the recipe: Start with a few billionaires. Next, let them put trillions of dollars in unregulated pools of capital. Next, add a dash of pandemic speculation. What could possibly go wrong? Meet the family office, the last known vestige of the shadow financial system—and a potential cause of the next meltdown. Super-rich individuals—those with over $250 million—form these secretive offices (sometimes called “family funds”) in order to bring their wealth management, tax planning, and sometimes charitable activities under one private roof. There are now an estimated 7,000 to 10,000 family offices managing an estimated $6 trillion. For perspective, the global hedge-fund industry manages $3.6 trillion.


The spotlight is shining on family offices thanks to the sudden collapse of Bill Hwang’s Archegos Capital, which cost Credit Suisse and Morgan Stanley $10 billion in bank losses—and plunged the value of stocks the office held by $33 billion. ‘This has to be one of the single greatest losses of personal wealth in history,’ says stock-market pro of Archegos margin call. Unlike hedge funds, family offices aren’t required to register with the Securities and Exchange Commission (SEC) or publicly report certain option and stock positions. That’s no accident—during the 2009 Dodd-Frank financial reform after the 2008 crash, family offices successfully lobbied and fended off oversight. That lack of transparency is precisely what makes them so dangerous. Because Archegos didn’t have to disclose their highly leveraged positions, the banks that were lending to it were completely in the dark.

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How is UniCredit still a going concern in 2021? I know cats with fewer lives.

Chaos Erupts After Stiffed UniCredit Bondholders Get Fat-Fingered Payment (ZH)

Step aside Citigroup, and your erroneous $500MM transfer to Revlon bondholders: there is an even dumber “fat finger” in town. Late last week the financial world was shocked when Andrea Orcel, the new CEO of Italy’s second largest bank UniCredi, decided not to make a €30MM debt coupon payment on the grounds that the bank made a loss last year, even though investors had been assured of the cash. Then, on Tuesday, the financial world was even more shocked when the news broke that despite the bank’s decision, some bondholders said they had received notice of payment after all. And while UniCredit insists it didn’t pay it, raising Citigroup-esque dejavi questions about how the payment was made, Orcel’s calculated show of strength has “rapidly descended into a farce”, according to Bloomberg.

What happened? It all started last Friday when UniCredit made the shocking decision to skip the payment of coupons on some financial instruments, in a U-turn that sent he bond in question into a tailspin and hurt some other debt sold by Italy’s No. 2 bank. Just back in February, when presenting full-year results, Finance Chief Stefano Porro had told analysts the bank expected to pay a coupon on the legacy bond it issued over a decade ago, as well as on Additional Tier 1 bonds. But a spokesman on Friday said UniCredit would not do so after posting a 2.79 billion euro ($3.4 billion) loss last year. As Reuters noted, UniCredit has withheld coupon payments on the CASHES notes in the past after ending the year in the red, but the latest decision, taken by new Chief Executive Andrea Orcel barely a month after his arrival, took bond investors by surprise.

However, some bond investors were even more surprised when they woke up on Tuesday to find that their bank accounts had been properly debited with the required coupon payment from the UniCredit bonds. Initially there was much confusion who was responsible for the payment or where it came from, even if the confusion was understandable: the 2.98 billion euro bond’s complicated structure meany that there are several players involved, and the error could have come from any one of them. The CASHES, short for Convertible and Subordinated Hybrid Equity-Linked Securities, have different banks serving as depository and fiduciary for the instruments.

The confusion went away this morning when we learned that Euroclear – Europe’s largest bond custodian and settlement agent of securities transactions – said it had mistakenly credited client accounts with funds for a coupon payment on UniCredit bonds that the bank had decided not to honor. The flub by Euroclear added a fresh – and confusing – twist to the surprise decision by new UniCredit Chief Executive Officer Andrea Orcel not to pay the debt coupon of about 30 million euros.

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Dec 132016
 
 December 13, 2016  Posted by at 9:36 am Finance Tagged with: , , , , , , , ,  1 Response »


Lewis Wickes Hine Newsies Gus Hodges, 11, and brother Julius, 5, Norfolk VA 1911

Trump-Powered Dollar To Be The Bogeyman Of 2017 For Emerging Markets (MW)
Oil Prices Moderate as Doubts Over OPEC’s Output-Cut Plan Set In (WSJ)
Saudi Arabia Is Playing Defense To Hold On To Its Most Prized Customers (BBG)
UniCredit To Raise €13 Billion In Fresh Capital, Lay Off 14,000 (AFP)
One Bad Deal That Destroyed Four Bad Banks (WSJ)
Indian Banks’ Poisoned Chalice (BBG)
London House Prices Are Having Their Worst December in Years (BBG)
Mrs. O’Leary’s Cow (Thomas)
Trumpxuberance… Until It’s Not (Jim Kunstler)
Greece Faces Permanent Crisis – IMF: Bail-Out Plan ‘Simply Not Credible’ (Tel.)
Greece Heads Toward New Crisis in Debt Saga, Support for Tsipras Slumps (WSJ)
World’s Largest Reindeer Herd Plummets (BBG)

 

 

Prime candidate for biggest 2017 finance story.

Trump-Powered Dollar To Be The Bogeyman Of 2017 For Emerging Markets (MW)

Foretelling the future is a daunting task. But the one thing that strategists are agreed on for 2017 is that Donald Trump’s presidency will usher in a new era of dominance for the U.S. dollar that will have wide-ranging implications. Among the biggest casualties of the buck’s rise will be developing economies, which tend to be more sensitive to external shock. Ethan Harris at BofAML cautioned that emerging markets are vulnerable on two fronts: capital outflows in response to higher rates in the U.S. and trade restrictions that will hurt economies that heavily depend on U.S. markets. The ICE U.S. Dollar index measure of the greenback’s performance against a basket of six rivals, has recently broken out of its narrow range to trade at the highest level since late 2002, FactSet data show.

That spells trouble for Brazil, China and Russia, which statistically have the highest negative correlation to the dollar, according to Mislav Matejka, an equity strategist at J.P. Morgan Cazenove. Even before Trump’s election, Matejka had downgraded emerging markets to neutral from overweight, citing the bullish dollar on the back of a Federal Reserve rate hike in December. Hans Redeker, a strategist at Morgan Stanley, expects the dollar index to gain 6% before topping out in the second quarter of 2018. Apart from the rallying dollar, Redeker warned that the possibility of a global shift toward protectionism will put trade-centric economies at a disadvantage, weigh on economic growth and add to deflationary pressure.

Meanwhile, higher bond yields on expectations of stronger growth and accelerated inflation will widen the yield spread in favor of the dollar against the Chinese yuan, where authorities are projected to maintain easy monetary policy. The yuan has retreated over 6% in 2016 to 6.92, with more room to fall in the coming months. “We expect the Chinese yuan depreciation to continue. The balance of payments position remains in deficit, indicated by declining foreign exchange reserves,” said Redeker in a report. Even though capital outflows from China have not been as large as they had been earlier this year, muted economic growth and limited investment opportunities domestically could lead to more funds fleeing the country, pressuring the yuan, he said.

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Headfake.

Oil Prices Moderate as Doubts Over OPEC’s Output-Cut Plan Set In (WSJ)

Crude-oil prices lost steam in early Asian trade Tuesday as investors turned bearish over oil producers’ commitment to observe a deal aimed at easing supply to the market. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $52.75 a barrel at 0347 GMT, down $0.08 in the Globex electronic session. February Brent crude on London’s ICE Futures exchange rose $0.01 to $55.70 a barrel. The price fall is largely a reflection of investors’ bearishness over a deal that is supposed to lift prices to at least the $60-$70 range per barrel. This shows the market isn’t really buying the OPEC rhetoric and that they recognize the potential risks. Over the weekend, 11 non-OPEC countries, including Russia, agreed to slash their output by 558,000 barrels a day, in concert with OPEC’s own pledge to cut 1.2 million barrels a day.

The total sum represents almost 2% of global supply. The deal will take effect on Jan. 1 but the reduction will be carried out in phases. Participating countries will meet in six months to evaluate progress. Analysts say if producers fully adhere to agreed quotas, the oil market could shift into a deficit. OPEC’s own calculations forecasts world crude demand will hit 95.5 million barrels a day in 2017, an increase of 1.2 million barrels a day. Removing excess barrels will lift prices, possibly into the target range of $60-$70 per barrel, but it would mostly hinge on the compliance of the producers who have been known to cheat, BMI Research said. “We note that the higher the barrel price, the greater the temptation to break allocated quotas,” the firm said. In 17 production cuts since 1982, OPEC members have reduced output by an average of just 60% of their commitments, according to Goldman Sachs.

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OPEC cuts, prices rise, shale expands.

Saudi Arabia Is Playing Defense To Hold On To Its Most Prized Customers (BBG)

As Saudi Arabia goes on a shock and awe attack to curb a global oil glut, it’s also playing defense to hold on to its most prized customers. The kingdom is largely sparing Asia from reductions in crude sales, at least for now. That’s amid the threat of more U.S. and European supply coming to the world’s biggest market, as Saudi-led production cuts have boosted the Middle East oil benchmark relative to other regions. Also, crude’s surge risks reviving shale output while American shipments are already making their way to countries including Thailand, Japan and South Korea. While OPEC’s biggest member could yet curb some volumes to Asia in coming months, it’s unlikely to completely abandon the battle for market share even as it changes tack from its pump-at-will policy of the past two years.

It’s counting on regional refiners’ inability to completely switch over to rival supply, as their plants are geared to process ‘sour’ sulfurous crudes like those produced by Saudi Arabia rather than ‘sweet’ shale or North Sea oil. It can afford to cut sales more significantly in other places that aren’t as valuable as Asia. “Now that Saudi Arabia has committed to such large production cuts, it’s important for them to retain market share in the region where they see the most growth potential,” said Peter Lee at BMI Research. “In Asia, we still have India and China where Saudi Arabia is vying for market share. It makes sense for them to concentrate on the region and try to keep buyers happy.”

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UniCredit’s entire market cap is €14 billion for pete’s sake.

UniCredit To Raise €13 Billion In Fresh Capital, Lay Off 14,000 (AFP)

Italy’s biggest bank, UniCredit, on Tuesday confirmed plans for a capital increase worth €13 billion as it scrambles to raise funds amid market uncertainty. UniCredit also announced plans to shed around 14,000 jobs by the end of 2019, which it said would save it €1.1 billion in staff costs. The bank’s plans to raise fresh funds come at a time when investor confidence in Italy has been shaken by the collapse of former PM Renzi’s government. And the Italian banking sector is in a perilous state, with the world’s oldest bank, Monte dei Paschi di Siena, scrambling to put together a private-sector rescue after losing 80% of its market capitalisation in the past year. UniCredit’s announcement was part of a major strategic review launched under new chairman Jean-Pierre Mustier, that involves selling off assets to strengthen the bank’s capital base. Mustier said it was a “pragmatic plan based on conservative assumptions, with tangible and achievable targets.” The bank is targeting a net profit of €4.7 billion in 2019.

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When Europe’s bankers and politicians alike proved they’re inept.

One Bad Deal That Destroyed Four Bad Banks (WSJ)

The crisis engulfing the world’s oldest bank, Italy’s Banca Monte dei Paschi di Siena, has many causes, but its roots go back nine years to a lunch at a fancy Geneva hotel. It was there, at the Four Seasons Hotel des Bergues, that three of Europe’s top bankers gathered to plot a hostile bid to buy and break up Dutch bank ABN Amro in what became the biggest bank takeover, worth €71 billion (then $101 billion). The deal will go down as one of humankind’s worst business transactions. It led to government rescues of what was then the biggest bank in the world, Royal Bank of Scotland, and the biggest bank in Belgium, Fortis, as well as taking out Dutch bank SNS Reaal. Now its legacy threatens the oldest bank in the world.

With M&A booming again, have investors learned the lessons of ABN? The brief answer is probably that yes, enough of the lessons have sunk in that an equally catastrophic bank takeover is unlikely soon. The longer answer is a resounding no, and investors retain a pigheaded inability to avoid taking excessive risks when the good times beckon—as they do now. The Michelin-starred restaurant in Geneva gave the chief executives of RBS, Fortis and Santander a pleasant start to what became a vicious 2007 bidding battle for ABN. The weak Dutch bank had been an obvious target for years, with a complex string of small businesses spread across retail and investment banking in the Netherlands, U.S., U.K., Italy and Brazil. Each banker saw opportunities, but they had to wrest ABN away from an agreed deal with Barclays.

After succeeding, the canny Santander abandoned its stated aim of expanding in Italy and flipped ABN’s Banca Antonveneta to Monte dei Paschi for €9 billion—before it had even completed the deal. Santander was badly hurt by the crisis, but thanks to its highly profitable Italian switcheroo was the only bank involved not to be critically injured by ABN. Monte dei Paschi, after overpaying wildly, has been short of capital ever since, making it even harder to cope with years of Italian recessions. The biggest lesson is that the good times don’t last forever. RBS, Fortis and Monte dei Paschi took on too much debt to buy parts of ABN, leaving them even weaker than the rest of the overstretched banking system when the bust came.

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Throw in utter corruption and you have a recipe for unrest.

Indian Banks’ Poisoned Chalice (BBG)

What should have been a cornucopia of new deposits from old cash has become a poisoned chalice. Lenders don’t have enough banknotes to meet even the restrictive withdrawal limits the central bank has set for depositors. People have died waiting in ATM queues, and bank staff fear the wrath of crowds. Safety concerns are rising amid pressure from authorities to expand card and online-payment systems that are still rudimentary. Even the ATM networks, running on outdated software, aren’t very secure.To top it all, the taxman is waiting in the wings, ready to confiscate any unusual surge in deposits that people don’t surrender voluntarily. Instead of sympathy for lenders, there’s schadenfreude. Some feel bank employees have colluded with the holders of ill-gotten cash to give their unaccounted wealth safe passage. The poor, and their bank accounts, are suspected to have been used as mules.

The initial premise of demonetization was that a big chunk of cash would be too tainted to dare return to the banking system, and canceling those liabilities would generate a bumper profit for the government. With most old currency deposited into accounts or exchanged into new money, however, that hypothesis has been shredded. Banks – and bankers – are in the crosshairs for robbing the nation of its demonetization rewards. Reporting requirements have gone through the roof: The government wants to know how much of lenders’ fresh deposits are old legal tender, and how much is new. Axis Bank suspended 19 employees for allegedly exchanging old banknotes illegally and asked KPMG to do a forensic audit. That, one suspects, is the genesis of the whisper campaign.

As banking regulator, the Reserve Bank of India ought to be keeping a lid on operational risks, lest they overwhelm the system and scar its reputation. But the monetary authority is too busy shoring up its own sullied credibility to be of any real assistance. The barrage of befuddling rule changes it has unleashed since Nov. 8 – including a temporary but ham-handed confiscation of banks’ excess liquidity with no compensation – have made things worse, and investors have been forced to change their minds about the impact of the cash ban. Amid the chaos, discussions about improving the governance of India’s dominant state-run banks, and selling or shuttering the weakest of them, have come to a standstill.

The more urgent task of cleaning up their compromised balance sheets has also lost the steam it had gathered under previous RBI Governor Raghuram Rajan. If a month ago there was fond but foolish hope that banks would get a big one-time recapitalization boost, now there’s despair about how long they can go on fighting fires without any chance of a revival in credit demand. It’s hard to believe PM Modi didn’t think through these unintended consequences. What’s even scarier is the possibility that he did, and topped up the banking industry’s chalice regardless.

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No, their best.

London House Prices Are Having Their Worst December in Years (BBG)

London home prices are having their worst December in six years, led by weakness in prime areas in the capital that is likely persist into 2017. Rightmove said on Monday that asking prices fell 4.3% from November to 616,160 pounds ($775,500), with inner London dropping 6%. The property website operator said the bubble in prime London “continues to deflate,” and it sees prices there declining 5% next year. “Alongside the seasonal slowdown, the readjustment of prices to match buyers’ greater reticence continues, especially in more expensive inner London,” said Rightmove Director Miles Shipside. “Buyers are being put off the really big-ticket purchases.” In a sign of the disparity within the city, average prices in inner London are down 2.6% over the past year, whereas outer areas are up 2.7%.

That left average prices across the capital little changed. The split partly reflects the luxury end of the market, where an April tax increase on property investors and worries about Brexit are sapping demand. Rightmove’s report also showed demand in London — as measured by sales agreements – was down 7.2% in November from a year earlier. Nationally, asking prices fell 2.1% in December from the previous month, in line with the seasonal average, and were up 3.4% from a year earlier. In contrast to London, Rightmove expects national prices to increase for a seventh consecutive year in 2017, forecasting a 2% advance.

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One spark will do.

Mrs. O’Leary’s Cow (Thomas)

In 1871, a large portion of the city of Chicago burned to the ground. The Chicago Tribune attributed the fire to a cow owned by a Mrs. O’Leary. The Tribune stated that the cow kicked over a lantern as she was being milked, burning the barn and much of Chicago. Whether the story is accurate is of little concern. (Somebody always has to be found to take the blame for catastrophe.) Whatever started the barn fire in Mrs. O’Leary’s neighbourhood, a seemingly minor event resulted in a major conflagration. And so it is with economic events. Bankers are expected to maintain a fractional reserve of 3–10%, depending on the level and type of liabilities, but, not surprisingly, they often drop below the official level, especially in times of economic difficulties. Bank managers assume that they can always increase the reserve when good times return.

The trouble is they’re at their most exposed at a time when a substantial reserve is most critical. But why would bankers take such a risk? Aren’t they fearful that they’ll get caught out if a crisis occurs? Not really. Their assumption is very often that their indiscretion exists in isolation. They assume that if they alone cheat the system a bit, they can always catch up later. For whatever reason, it rarely occurs to them that, in a struggling economy, each of their associates in the industry is also cheating the system. Since each one keeps his activities under wraps, it doesn’t become apparent that the whole system is a house of cards until a black swan jolts the system, which, due to its overall instability, self-destructs. Similarly, in shaky economic times, there’s quite a bit of fiddling that’s done in the stock market.

As the public begins to lose their confidence in the system, they offers their shares for sale. In order to cover up the loss of confidence, these shares may be bought up by central banks, governments, and/or the corporations themselves – buying back their own shares. Of course, this is risky, as crashes are caused by loss of confidence. Papering over that loss of confidence by papering over the cause of the problem only means that when the crash comes, it will be worse than if it had been allowed to collapse earlier. Pensions tend to be heavily invested in the markets, which tends to put them at risk as well. The foremost mutual fund in the US is invested in 507 companies – commodities, energy, financials, industrials, IT, etc. To be sure, these will not suffer equally in a crash, but all will be affected – some severely.

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Trump may have buildings, but he has no room.

Trumpxuberance… Until It’s Not (Jim Kunstler)

When Reagan stepped in the national debt was only (only!) about half a trillion dollars. It will be over $20 trillion when Trump hangs his golden logo on the White House portico. Oh, by the way, consider that a trillion dollars is a thousand billion dollars and a billion dollars is a thousand million dollars. Just so you know. Reagan had room for plenty of government finance monkey business. Trump has no room. Bush One, Clinton, Bush Two and Obama dug the deadfall debt trap for poor Donald and the election shoved him right into it. He thinks he’s on an upper floor of his enchanted tower; he’s actually down in a pit. Trump thinks he’s going to rebuild highways and bridges for another century of Happy Motoring — to make America like it was in 1962 forever. Fuggeddabowdit.

The bond market is poised for collapse as I write, and Trump’s money people (that is, the Goldman Sachs gang he has assembled) are talking about issuing fifty and 100 year “Build America” bonds. Their nostrils must be rimed with the frost of Medellin. They’re certainly not going to accomplish this trick by raising taxes. On who? Corporations? Ha! The 1%? Double-Ha! Everyone else? Pitchforks and torches! American oil companies can no longer make a buck doing their thing. Exxon-Mobil’s U.S. production business lost $477 million in the third quarter, the seventh straight quarter in the red. Why? Because it costs a lot more to get the stuff out of the ground than it did ten years ago, and that high cost is bankrupting oil companies and industrial economies. That is the stealth action of Peak Oil that so many people pretend is not happening. It will ultimately destroy the banking system.

The disappointment issuing from this dire set of circumstances is apt to be epic as Trump flounders and the furious tweets of futility waft out of the hole he’s trapped in. Christmas will be over, and with it the hopes of a retail reprieve. Gasoline may remain cheap, but the little people won’t be able to buy the cars to run it in. Or buy much of anything else. Not even tattoos. We’ll soon discover the temperamental difference between Donald J. Trump and Franklin Delano Roosevelt.

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This will not stop.

Greece Faces Permanent Crisis – IMF: Bail-Out Plan ‘Simply Not Credible’ (Tel.)

The IMF has hit back at claims that it is demanding more austerity in Greece, as the Fund warned that the country’s ambitious budget targets were “simply not credible”. Firing a broadside at Brussels and Athens, Maurice Obstfeld, the IMF’s chief economist, and Poul Thomsen, director of the IMF’s European department, said cuts to investment and discretionary spending had “gone too far” and would prevent the Greek economy from recovering. Just 48 hours after Euclid Tsakalotos, Greece’s finance minister, accused the IMF of “betraying” the country by pushing for more belt tightening, the senior IMF officials insisted that they were “not demanding more austerity”. “We have not changed our view that Greece does not need more austerity at this time. Claiming that it is the IMF who is calling for this turns the truth upside down,” they wrote in a blog post.

They warned that demands by Greece’s creditors for a sustained 3.5pc primary surplus – which excludes debt servicing costs – were unrealistic and unnecessary. The IMF has previously insisted that a primary surplus target of 1.5pc of GDP is more realistic. It has also called for significant debt relief that goes beyond the action taken this month to reduce Greece’s debt share by 20 percentage points. Mr Obstfeld and Mr Thomsen said the IMF was not demanding more cuts either now or in the future to lower the need for debt relief, as they signalled that Greece itself had signed up for tougher budget targets. “To be more direct, if Greece agrees with its European partners on ambitious fiscal targets, don’t criticise the IMF for being the ones insisting on austerity when we ask to see the measures required to make such targets credible,” they said.

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Tsipras is going to call 2017 snap elections with the intent of losing them.

Greece Heads Toward New Crisis in Debt Saga, Support for Tsipras Slumps (WSJ)

Greece’s crisis is approaching a potential breaking point after a year of relative calm, as a government with declining political stamina confronts creditors’ unyielding demands. The ruling left-wing Syriza party, grappling with slumping popularity, is considering the option of calling snap elections in 2017, as it loses hope of winning concessions on debt relief or austerity from the eurozone and IMF. No decision for elections has been made, said Greek officials, who added that they would review the state of negotiations in January, after pressing creditors again to show more flexibility. Elections would allow Syriza—if not Greece—to escape from the pressures of an unpopular bailout program whose strained math has eventually brought down every Greek government since the crisis began in 2009.

Syriza’s leader and Prime Minister Alexis Tsipras, like his predecessors, is struggling to meet strict fiscal targets in a recession-scarred country weary of austerity. A renewed flare-up of the Greek debt crisis in 2017 would create a further test for the cohesion of the EU, whose political establishment is facing challenges from EU-skeptic populists in a string of major elections next year. European governments’ appetite for another bout of Greek drama is low—but so too is willingness to grant Athens concessions to avoid one. The embattled Mr. Tsipras, who is due to hold talks with the leaders of Germany and France in the coming days, surprised Greeks and creditors last week with fiscal gifts that were widely seen as preparing the option of elections.

He promised 1.6 million pensioners a Christmas bonus of between €300 and €800. He also suspended a planned increase in sales tax for Aegean islands that have received large numbers of Middle-East refugees. EU officials said they would study whether Mr. Tsipras’s promises are compatible with Greece’s bailout commitments.

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It all dies baby, that’s a fact. We’re not even trying to stop it from happening. All we got is words.

World’s Largest Reindeer Herd Plummets (BBG)

The world’s largest wild reindeer herd has fallen by 40% since 2000, scientists have warned. They say that the animals, which live in the Taimyr Peninsula in the northernmost tip of Russia, are being affected by rising temperatures and human activity. This is causing the animals to change their annual migration patterns. The research has been presented at the Fall Meeting of the American Geophysical Union (AGU). “There is a substantial decline – and we are also seeing this with other wild reindeer declining rapidly in other parts of the world,” said Andrey Petrov, who runs the Arctic Centre at the University of Northern Iowa, US. The Taimyr herd is one of the most monitored groups of reindeer in the world. The animals have been tracked for nearly 50 years by aerial surveys and more recently by satellite imagery.

The population reached a peak of one million in 2000, but this latest research suggests that there are now only 600,000 reindeer. “Climate change is at least one of the variables,” explained Prof Petrov. “We know in the last two decades that we have had an increase in temperatures of about 1.5C overall. And that definitely impacts migration patterns.” Industrial development is increasing in the region, which is also changing the animals’ distribution. The researchers found that in the summer, the reindeer were moving east to avoid human activity. But they were also shifting north and to higher elevations. The team thinks this is to try to get to cooler ground and also to avoid the mosquitoes that are booming as the region gets warmer and wetter.

“They just move and move and move to escape them,” said Prof Petrov. This is extending the distance that the animals have to migrate between winter and summer. “They now have to travel much longer distances to reach those areas with their newborn calves, and that means there is an increase in calf mortality.”

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Sep 122016
 
 September 12, 2016  Posted by at 8:52 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »


Harris&Ewing WSS (War Savings Stamps) poster, Washington DC 1917

Clinton Health Another Landmine for Suddenly Vulnerable Markets (BBG)
Asia Stocks, Bonds Sell-Off In Central Bank Anxiety Attack (R.)
Global Stocks Sink With Bonds, Commodities as Fed Angst Builds (BBG)
A ‘Perfect Storm’ In Stocks Is Coming, And Nothing Can Stop It (CNBC)
Goldman: We’ve Reached ‘Maximum’ Bullishness; Bad News for US Stocks (BBG)
Governments May Boost Fiscal Stimulus As Central Banks Step Back (CNBC)
Oil Prices Fall As US Drillers Add New Rigs, Long Positions Are Cut (R.)
Woes at Italy’s Biggest Bank Reverberate in Europe (WSJ)
Where Have The Jobs Gone? Australians Grapple With Less Work, Low Pay (R.)
EU/IMF Rift On Greek Debt Is Hurting Country, Says Tsipras (R.)
It’ll Take More Than Hanjin’s Crisis To Fix Shipping’s Overcapacity (CNBC)
Low-Income US Teens Often Forced To Trade Sex For Food (G.)

 

 

Markets are in for a huge US election shock. An apt question Mish asked: what was she doing running around in public with a potentially highly contagious disease? More on this later.

Clinton Health Another Landmine for Suddenly Vulnerable Markets (BBG)

Investors nursing wounds after the worst selloff in three months for equity and debt markets got another stress to ponder after concerns over Hillary Clinton’s health flared anew. The 68-year-old Democratic presidential nominee, whose polling edge over Donald Trump has soothed traders who fear ruptures to U.S. policy and see virtue in political gridlock, is suffering from pneumonia and became overheated and dehydrated during a Sept. 11 commemoration Sunday, forcing her to leave abruptly, her doctor said. Clinton was prescribed antibiotics and advised to modify her schedule so she can rest.

Volatility is already resurfacing in markets that had purred along for two months inured to everything from politics to weakening global growth, with the S&P 500 Index getting jarred Friday out of its tightest trading range ever in a selloff that erased about $500 billion of share value. While investors and analysts were reluctant to speculate on Clinton’s health, they said expectations she will prevail in November have been a factor in the calm and predicted the scrutiny will intensify. “If we found out that there was something catastrophic about her health it obviously would matter, but you have to be very careful about extrapolating shorter-term news,” Jonathan Golub at RBC Capital Markets in New York, said by phone.

“What we do know is we have two candidates around 70 years old and in reality it must be brutal running around the world for two years.” Speculation central banks are losing their taste for extra stimulus on Friday tore through the blanket of tranquility that has enveloped global markets. The S&P 500, global equities and emerging-market assets tumbled at least 2 percent in the biggest drop since Britain voted to secede from the European Union. The yield on the 10-year Treasury note jumped to the highest since June and the dollar almost erased a weekly slide.

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It’s Brainard day. From Friday: “..investors recoiled over news that the central bank’s most dovish official, Governor Lael Brainard, will be delivering a previously unannounced speech Monday..”

Asia Stocks, Bonds Sell-Off In Central Bank Anxiety Attack (R.)

Asian shares suffered their sharpest setback since June on Monday as investors were rattled by rising bond yields and talk the Federal Reserve might be serious about lifting U.S. interest rates as early as next week. Reports that the Bank of Japan was considering ways to steepen the Japanese yield curve, along with worries that central banks more generally were running short of fresh stimulus options, also hit sovereign debt and risk appetite globally. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.4%, pulling away from a 13-month peak. It was the largest daily drop since the frenzy caused by Britain’s vote in late June to leave the European Union. On a technical basis the index had been overbought in recent sessions, leaving it vulnerable to a pullback.

Shanghai followed with a fall of 2%, while Australian stocks sank 2.2%. The Nikkei 225 lost 1.9% as the safe haven yen firmed and selling in bonds drove yields on 20-year JGBs to the highest since March. Traders were unsure how the BOJ would try to steepen the yield curve if it goes down that path at a policy review later this month, but markets are worried that tapering of its buying in long-dated bonds could be among the options. EMini futures for the S&P 500, traded in Chicago during Asian hours, swung 0.6% lower, though Treasuries were finding safe-haven demand. Some Fed members have been trying to convince markets that the September meeting would be “live” for a hike, even though futures only imply a one-in-four chance of a move.

No less than three Fed officials are expected to speak later in the day, including board member and noted dove Lael Brainard. Any hint of hawkishness would likely further pressure bonds and equities.

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Angst alright.

Global Stocks Sink With Bonds, Commodities as Fed Angst Builds (BBG)

Global selloffs in stocks and bonds resumed Monday, while commodities slumped amid concern central banks in the world’s biggest economies are questioning the benefits of loose monetary policy. Shares in Europe and Asia dropped by the most since the aftermath of Brexit, and futures foreshadowed declines in U.S. equities. Portugese debt led losses among euro-area bonds, while yields in Australia and New Zealand climbed to their highest levels of the quarter. Oil sank to about $45 a barrel as nickel tumbled the most in four weeks. The yen strengthened and South Korea’s won tumbled. Financial markets have been jolted out of a period of calm by an uptick in concern over the outlook for central bank policies.

Federal Reserve Bank of Boston President Eric Rosengren spurred bets on an interest-rate hike on Friday, saying the U.S. economy could overheat should policy makers wait too long to tighten. The comments came a day after European Central Bank chief Mario Draghi surprised markets by playing down the prospect of further stimulus. The S&P 500 slumped 2.5% Friday, breaking out of a range that hadn’t seen it move more than 1% in either direction for 43 days. “Central banks are reluctant to add additional stimulus and that’s causing a lot of concern,” Niv Dagan, executive director at Peak Asset Management in Melbourne, told Bloomberg Radio. “We expect additional downside in the near term. You want to wait and see and remain cautious,” he said.

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“..I wouldn’t be surprised that we see some kind of repeat as we had towards the end of last year into January-February, which was something close to a 12% correction.”

A ‘Perfect Storm’ In Stocks Is Coming, And Nothing Can Stop It (CNBC)

A sharp stock market pullback is imminent, according to David Rosenberg, chief economist and strategist at Gluskin Sheff. On Friday, stocks were hammered by fears the Federal Reserve might hike rates sooner than expected, sending the S&P 500 index and the Dow Jones industrial average into a tailspin. According to Rosenberg, there’s more trouble ahead. “You have a perfect storm here if you get something like a Fed rate hike into the next several months,” Rosenberg said Thursday on CNBC’s “Futures Now. “The problem is that the market is not priced for it. I wouldn’t be surprised that we see some kind of repeat as we had towards the end of last year into January-February, which was something close to a 12% correction.”

Rosenberg, who has been named to the U.S. Institutional Investor All-America All Star Team several times in his career, doesn’t think the shake-up can be avoided. His reasoning doesn’t just include a potential Fed rate hike. He also takes into account a more richly valued stock market, signs of investor complacency and a sluggish U.S. economy. “We entered into the third quarter with momentum and a lot of hope, and now we’re exiting the third quarter,” he said. “And, let’s face it: The last five or six [economic] numbers have been really soft,” he contended. “The problem now, looking at where the market is priced, you’ve got cycle high multiples, you’ve got a lot of hedge funds in the futures options market that have been chasing performance here up to the price highs, and it doesn’t take much in the way of any sort of near-term adverse news to cause the market to correct.”

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“Where to Invest Now: None of the Above.”

Goldman: We’ve Reached ‘Maximum’ Bullishness; Bad News for US Stocks (BBG)

U.S. stocks have climbed many walls of worry as they marched to fresh all-time highs in 2016. But the market calm that characterized the summer also propelled investor enthusiasm to extremely elevated levels, according to Goldman Sachs Group Inc., which bodes ill for the near-term performance of equities. Goldman’s sentiment indicator, which tracks S&P 500 futures positioning, now stands at 100 – its maximum level. Readings above 90 or below 10 are contrarian indicators that are “significant in predicting future returns,” writes Chief U.S. Equity Strategist David Kostin in a note titled “Where to Invest Now: None of the Above.” This degree of enthusiasm “points to a 2% near-term S&P 500 fall,” he said.

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AKA: After central banks fail, governments have a go. But they are equally clueless.

Governments May Boost Fiscal Stimulus As Central Banks Step Back (CNBC)

Central banks have done bulk of the heavy lifting to boost growth since the global financial crisis, but economists now were expecting fiscal spending will get some life. Analysts and central bankers alike have talked up the benefits recently of letting the sun shine in on government spending after years of an austerity drumbeat amid an anaemic global recovery from the financial crisis. “Numerous central bankers, including Mario Draghi, have stressed that monetary policy alone cannot get the world out of its current malaise,” noted Andrew Kenningham, senior global economist at Capital Economics, in a note Wednesday.

“The U.S. Treasury Secretary, Jacob Lew, even claimed ahead of the G-20 summit in China last weekend that the U.S. had won the argument in favour of ‘growth rather than austerity’ and that this had prompted a policy shift by many G-20 governments.” That was in part due to the effects of long-running easing efforts by central banks, Kenningham noted. Many sovereigns have seen their bond yields turn negative, while smaller government budget deficits have reduced debt sustainability concerns, he said. “With global growth still lacklustre, monetary policy seemingly ineffective and government bond yields unprecedentedly low, the case for fiscal stimulus has become more compelling,” Kenningham said. “Partly as a result, we now expect advanced economies overall to benefit from a small fiscal boost in the next couple of years.”

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Oil is no longer an industry, it’s a gambling den.

Oil Prices Fall As US Drillers Add New Rigs, Long Positions Are Cut (R.)

Crude prices fell over 1.5% on Monday after U.S. oil drillers added rigs to look for new production as producers adapt to cheaper crude, with speculators cutting positions betting on further price rises. Brent crude futures were trading at $47.29 per barrel at 0200 GMT (10:00 p.m. EDT), down 72 cents, or 1.5%, from their last settlement. U.S. West Texas Intermediate futures were down 80 cents, or 1.74%, at $45.08 a barrel. Traders said the price falls on Monday and Friday were a result of increasing oil drilling activity in the United States, which indicated that producers can operate profitably around current levels.

“Each dollar is being used far more efficiently and, as a result, $50 oil appears much more palatable,” Barclays bank said in a note to clients. U.S. drillers added oil rigs for a tenth week in the past 11, according to a Baker Hughes rig count report on Friday. It was the longest streak without rig cuts since 2011. Speculative oil traders also became less confident of higher oil prices, cutting their net long U.S. crude futures and options positions for a second consecutive week last week, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. Oil’s near 5%price decline since Sept. 8 partly reverses a 10% rally early in the month, which was fueled by speculation that oil exporters could cap production.

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“Monte dei Paschi presented a plan in July to sell €28 billion of bad loans at 27% of face value. That has effectively set a new benchmark for the pricing of Italian bad loans..” But UniCredit expects to lose just 10%? Since UniCredit attributes a higher value to its bad loans, a sale of €20 billion of loans would force it to take €2 billion in write-downs…

Woes at Italy’s Biggest Bank Reverberate in Europe (WSJ)

For UniCredit, the summer of discontent for Italy’s banks looks likely to stretch well into the fall—and possibly beyond. UniCredit, Italy’s largest lender by assets, emerged as one of the weakest big banks in Europe in July’s stress tests, showcasing the failure of its attempts to respond to rock-bottom interest rates and a huge pile of bad loans. Now, as Jean-Pierre Mustier, the bank’s new CEO, readies a big-bang plan to revive UniCredit’s fortunes, he faces a series of unpalatable choices: Aggressive action to cut the bank’s €80 billion ($89.9 billion) in bad loans—the largest of any European bank—would force the Milanese bank to raise billions in fresh capital, while an asset sale could help bolster its capital position but would hurt already thin profit.

Meanwhile, the travails of Italy’s No. 3 lender, Banca Monte dei Paschi di Siena, promise to only complicate Mr. Mustier’s job. On Thursday, Monte dei Paschi said its CEO, Fabrizio Viola, had agreed with the bank’s board to resign, in a surprise move that came as that bank works on a plan to shed €28 billion in bad loans. Troubles at UniCredit, which has a vast business in Germany and Eastern Europe, could threaten not only Italy’s ailing economy but also the continent’s already fragile financial stability. Brexit has upended Europe’s status quo, making the financial system more sensitive to shocks. Investors are watching UniCredit closely, as they expect its fate to affect both Italy and potentially other lenders on the continent.

[..] A major move to unload bad loans, perhaps as much as €20 billion, “will be key for a rerating of the stock,” said Vicenzo Longo at IG Markets. However, Monte dei Paschi presented a plan in July to sell €28 billion of bad loans at 27% of face value. That has effectively set a new benchmark for the pricing of Italian bad loans. Since UniCredit attributes a higher value to its bad loans, a sale of €20 billion of loans would force it to take €2 billion in write-downs…

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Quality vs quantity. If it can hide reality in the US, it can do so in Oz.

Where Have The Jobs Gone? Australians Grapple With Less Work, Low Pay (R.)

While the unemployment rate in Australia has been relatively stable, at 5.7% in July, there is a historically high underemployment rate – people who want to work more – of 8.5%. Combined, the measures lead to an underutilisation rate of 14.2%, much higher than during the global financial crisis and a worrying trend for the Reserve Bank of Australia (RBA). That spare capacity in the labor market limits the ability of workers to push for pay rises, and feeds through to muted demand and confidence. If this trend persists, the RBA could be forced to lower rates again after already easing twice this year. Indeed, wages growth is already at record lows while inflation is likely to remain below the central bank’s target band of 2-3% until 2018.

“For that to turn around you need to see a pick-up in domestic demand,” said Gareth Aird, senior economist at Commonwealth Bank. “We have cash rates down to 1.5% and we’re still not seeing a pick-up in wages or inflation. We probably need to see a pick-up in investment in order to see full-time employment materially lift.” For policymakers – unable to do much in the face of slow global demand – the low business investment is a particularly worrying phenomenon, especially as the end of the mining boom and a slowdown in major trading partner China leave corporate managers leery about spending on new projects. Indeed, latest data showed business investment tumbled in the June quarter as miners continued to cut back while spending plans slipped 9%.

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The Troika enjoys its stranglehold on an entire people.

EU/IMF Rift On Greek Debt Is Hurting Country, Says Tsipras (R.)

A rift between the IMF and the EU on how to address Greece’s debt crisis is damaging for the country, Prime Minister Alexis Tsipras said on Sunday. “I would say that what is creating conditions of delay in regaining trust of markets and investors … is the constant clash and disagreement between the IMF and European institutions,” Tsipras told a news conference in the northern city of Thessaloniki. The IMF has yet to decide whether to participate in a third international bailout Greece signed up to in mid-2015, saying it is not convinced its debt is sustainable. The country’s current debt to GDP ratio exceeds 170% of national output, the highest in the eurozone. Tsipras said disagreements between the EU and the IMF was preventing timely participation of the country in the quantitative easing program of the ECB. “A country which has made such harsh adjustment cannot wait much more… It is entitled to a fair regulation of the debt issue. The Greek problem is a European problem,” Tsipras said.

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No-one’s ever considered that trade was a bubble?!

It’ll Take More Than Hanjin’s Crisis To Fix Shipping’s Overcapacity (CNBC)

The crisis surrounding Hanjin Shipping has rocked the industry, but even more shipping lines could find themselves in trouble thanks to the huge amount of overcapacity in the industry, warns the CEO of a logistics company. Hanjin, which had around 3% of market share in shipping, filed for court receivership at the end of August, which has meant that its ships have been denied access to ports and, in some cases, have been seized. One result of Hanjin’s troubles is that shipping rates have spiked. Prices for shipments between Asia and the U.S. have risen 50% through September, according to data from Freightos, an online shipping rate marketplace. However, this is likely to prove temporary, as prices will fluctuate and currently empty container slots are brought into use, the company added.

Not only have shipping rates risen, but companies which were using Hanjin have received charges from some ports, according to Philip Damas, director for supply chain advisors at Drewry. “Some ports have imposed surcharges on exporters and importers who used Hanjin as a carrier and are waiting for their products in the destination port to cover the port costs unpaid by Hanjin. This is also increasing exporters’ costs,” he told CNBC in an email. Hanjin has been a shock to the system, but a glut in the number of ships carrying goods around the world is still an issue, warns Dr. Zvi Schreiber, CEO of Freightos, an online logistics marketplace. “There has been a significant overcapacity, which is why rates have been so low and that’s why Hanjin went bankrupt in the first place, but it’s not clear if that’s enough..”

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A curious article on a curious report. I don’t quite know what to make of it.

Low-Income US Teens Often Forced To Trade Sex For Food (G.)

Teenagers in America are resorting to sex work because they cannot afford food, according to a study that suggests widespread hunger in the world’s wealthiest country. Focus groups in all 10 communities analysed by the Urban Institute, a Washington-based thinktank, described girls “selling their body” or “sex for money” as a strategy to make ends meet. Boys desperate for food were said to go to extremes such as shoplifting and selling drugs. The findings raise questions over the legacy of Bill Clinton’s landmark welfare-reform legislation 20 years ago as well as the spending priorities of Congress and the impact of slow wage growth. Evidence of teenage girls turning to “transactional dating” with older men is likely to cause particular alarm.

“I’ve been doing research in low-income communities for a long time, and I’ve written extensively about the experiences of women in high poverty communities and the risk of sexual exploitation, but this was new,” said Susan Popkin, a senior fellow at the Urban Institute and lead author of the report, Impossible Choices. “Even for me, who has been paying attention to this and has heard women tell their stories for a long time, the extent to which we were hearing about food being related to this vulnerability was new and shocking to me, and the level of desperation that it implies was really shocking to me. It’s a situation I think is just getting worse over time.”

The qualitative study, carried out in partnership with the food banks network Feeding America, created two focus groups – one male, one female – in each of 10 poor communities across the US. The locations included big cities such as Chicago, Los Angeles and Washington and rural North Carolina and eastern Oregon. A total of 193 participants aged 13 to 18 took part and were allowed to remain anonymous. Their testimony paints a picture of teenagers – often overlooked by policymakers focused on children aged zero to five – missing meals, making sacrifices and going hungry, with worrying long-term consequences. Popkin said: “We heard the same story everywhere, a really disturbing picture about hunger and food insecurity affecting the wellbeing of some of the most vulnerable young people.”

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Aug 022016
 
 August 2, 2016  Posted by at 9:10 am Finance Tagged with: , , , , , , ,  2 Responses »


Lewis Wickes Hine ‘Hot dogs’ for fans waiting for gates to open at Ebbets Field 1920

Asia Stocks Fall as Japan Awaits Stimulus (BBG)
Japanese Bonds Are Plunging, Australia’s Surge To Record (BBG)
China Debt Situation Gets Worse And Other EMs Start To Struggle (VW)
China Set For Special Drawing Rights Bond Issues (SCMP)
China Regulator Shutters 10,000 Funds (R.)
Student-Loan Defaulters in a Standoff With Federal Government (WSJ)
The State Of Europe’s Banks Is Far From Steady (CNBC)
UniCredit Shares Fall Sharply After European Bank Stress Tests (G.)
UK PM May Revives Industrial Policy Killed Off By Thatcher 30 Years Ago (R.)
Home Ownership In England At Lowest Level In 30 Years (G.)
South Korea Halts Sale of 80 Volkswagen Models Over Emissions Scandal (AFP)
Aid Workers Try To Convert Muslim Refugees At Greek Camp (G.)
New Greek Bailout Finds IMF In A Political Bind (AFP)
Let the Games Begin! (Jim Kunstler)

 

 

With the BOJ running out of playing field, what goood can Abe do?

Asia Stocks Fall as Japan Awaits Stimulus (BBG)

Asian stocks fell for the first time in seven days, retreating from an almost one-year high, as Japanese shares slid ahead of the announcement of a $274 billion stimulus package and a slump in oil weighed on energy and commodity companies. The MSCI Asia Pacific Index dropped 0.4% to 136.85 as of 9:03 a.m. in Tokyo after closing Monday at the highest since Aug. 17. Material and industrial shares led losses on the regional gauge, while energy producers also retreated, after crude sank into a bear market and sank below $40 a barrel for the first time since April on Monday. Japan’s Topix index lost 0.8% as investors weighed earnings and the government was poised to give details on steps to bolster an economy threatened by a strengthening yen and weak consumer spending.

Asian equities have extended their July rally, which was the best month since March, on the prospect of more global stimulus. The regional gauge has now shrugged off the fallout of Britain’s vote to leave the European Union and is up 3.7% for the year. Still, oil’s fall of more than 20% from its June high is muddying the waters and raising concerns about the recovery of the global economy. Crude’s decline “will probably weigh on sentiment a little bit and we may see some risk-off moves associated with that,” James Woods, a strategist at Rivkin Securities in Sydney, said by phone. “We’ll have an update from Shinzo Abe in Japan today, just running through the measures of the 28 trillion yen stimulus package. It’s really what’s going to dictate risk sentiment today.”

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Yikes.

Japanese Bonds Are Plunging, Australia’s Surge To Record (BBG)

Japanese bonds are plunging. Australia’s surged to a record. Blame it all on central banks. Benchmark sovereign notes in Japan headed for their biggest loss in three years on speculation the central bank will amend its unprecedented debt-purchase plan as soon as September. Australian yields tumbled to levels never seen before as the Reserve Bank cut interest rates in response to inflation running below its target. The divergence highlights the potency central banks have over their bond markets, even when analysts are questioning the limits of monetary policy. The Reserve Bank of Australia, with a benchmark of 1.5%, still has room to cut. PIMCO said the Bank of Japan – which is buying 80 trillion yen ($780 billion) a year of bonds and uses negative interest rates – has pushed policy as far as it can.

“The financial markets are being driven by what the central banks are doing,” said Roger Bridges at Nikko Asset Management in Sydney. “The central bank here has room to cut if necessary. In Japan, the policy options are deemed to be running out.” [..] Japanese policy makers fueled speculation they’re running out of options when they finished a meeting last week and opted against extending their two main tools, the bond purchases and negative interest rates, even as the inflation rate falls further below zero. They also announced a review of the effectiveness of the central bank’s policies. “We have probably seen the low of the yield of the super long JGBs,” Tomoya Masanao, Pimco’s head of portfolio management in Japan, wrote. “The BOJ hit its limit,” he wrote in a report on the company’s website last week.

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Let’s see the NPLs in the shadow system.

China Debt Situation Gets Worse And Other EMs Start To Struggle (VW)

One article this month pretty much summed up the overbuilding issue in China. In aggregate, Chinese cities are planning for 3.4 billion people in 2030. That’s three times the existing population and forecast population growth is minimal. Peak urbanisation may have arrived for China, the substantial slowdown in wage inflation is a strong indicator that the demand for labour is flat at best. This aligns with recent reports of a substantial increase in the unemployment rate. The city of Tieling is one example of what happens when a construction and manufacturing bubble pops. Remember that local governments earn most of their revenues from property development activities, which would fall flat if urbanisation stops.

A collapse in revenue would make debt servicing problematic, which is particularly concerning as local governments have seen an enormous increase in their debt issuance in 2015 and 2016. This includes continuing to build coal fired power plants when the existing plants are running at low capacity. Local governments are blocking lenders from withdrawing credit in order to protect jobs at zombie companies. 7.5% of companies in China are believed to be economically unviable, with medium and large state owned entities the worst.

Last month I wrote about the first non-performing loan securitisations in China and it looks like this process is ramping up. The Agricultural Bank of China is planning to sell a US$1.6b securitisation of non-performing loans which includes the underlying loans being marked down to 29% of face value. The other big way that banks are planning to clean up their loan books is debt to equity swaps, which are expected to start soon. There’s plenty to worry about with peer to peer lending and a crackdown is coming for wealth management products. In order to reduce fraud in these areas executives are being given tours of prisons, as a reminder of what might happen to them when investors lose money.

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I talked about this yesterday in Why Should The IMF Care About Its Credibility? I don’t see it becoming a major issue any time soon, if at all.

China Set For Special Drawing Rights Bond Issues (SCMP)

China might take another big step forward this month in its long-term aim to forge an IMF money system into the world’s dominant currency. Mainland media group Caixin reported that the World Bank planned to issue bonds denominated in Special Drawing Rights in China as early as the end of this month. It said policy bank China Development Bank was also planning an SDR bond issue. The SDR is a unit of money created by the IMF and defined by a weighted average of various convertible currencies. Market traders questioned the real purpose of such bonds, saying the SDR had little use in investment and trade. China has long had an obsession with the IMF’s SDR and wants to reduce the global reliance on the US dollar.

The IMF agreed last November to add the yuan to its SDR basket of currencies and offered the weighting as the third-biggest in the group, which Beijing saw as a triumph in its push for the yuan to have greater global influence. But the yuan later came under heavy depreciation pressure amid massive capital outflows, raising doubts about its credibility as a global currency. Beijing then began to publish its foreign exchange reserves, overseas investment and payments denominated in SDR. Central bank governor Zhou Xiaochuan said in April that the People’s Bank of China was studying the feasibility of issuing SDR bonds in China. If the World Bank issue went ahead, it would be one month before the yuan was formally included in the currency basket.

Bank of China researcher Zhao Xueqing said the timing was proper because the IMF was looking for ways to expand the use of the monetary unit. However, one Shanghai-based trader at a major bank said the issue would be more symbolic than meaningful. “It’s more like China wanting to show it has a big role in the global financial market”, she said. “But who will buy them? How will they be priced and transacted? … Even yuan-denominated bonds issued by foreign institutions are not actively traded.” An in-house economist at a Shenzhen-based domestic bank said:“I doubt there is any meaningful use to the issuing of such bonds. If such bonds were worth investing in, why hasn’t there been any active issues or transactions in much more mature countries before?”

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China’s financial world is still Wild East. Lots of abuse and losses for grandma’s.

China Regulator Shutters 10,000 Funds (R.)

China’s funds regulator said on Monday it has canceled the licenses of over 10,000 funds, amid a crackdown on the country’s poorly regulated fund management sector, which has been dogged by runaway managers and misappropriation of investments. The move comes after the hedge fund industry was thrown into disarray earlier this year as managers rushed to comply with stringent new rules. “Some funds registered in reality had no intention of getting into the business,” the Asset Management Association of China (AMAC) said. “Some engaged in illegal fundraising for illegal and criminal activities under the guise of funds, cheating the public,” the note added. New rules introduced by AMAC that took effect in July require fund managers to fully disclose their investment risks, review the identities of investors, and set up special accounts to manage capital.

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Something will have to give. The numbers are getting out of hand.

Student-Loan Defaulters in a Standoff With Federal Government (WSJ)

The letters keep coming, as do the emails. They head, unopened, straight into Jason Osborne’s trash and deleted folder. The U.S. government desperately wants Mr. Osborne and his wife to start repaying their combined $46,500 in federal student debt. But they are among the more than seven million Americans in default on their loans, many of them effectively in a standoff with the government. These borrowers have gone at least a year without making a payment—ignoring hundreds of phone calls, emails, text messages and letters from federally hired debt collectors. Borrowers in long-term default represent about 16% of the roughly 43 million Americans with student debt, now totaling $1.3 trillion across the U.S., and their numbers have continued to climb despite the expanding labor market.

Their failure to repay—in many cases due to low wages or unemployment, in other cases due to outright protest at what borrowers see as an unfair system—threatens to leave taxpayers on the hook for $125 billion, the total amount they owe. The Osbornes say they are the victims of a for-profit school that made false promises and a predatory lender—the government. “Do you think I’m going to give them one penny I’m making to pay back the loan for a job I’m never going to hold?” said Mr. Osborne, 45, who studied to be a health-care worker but can’t find a job as one. The rising number of borrowers in default weakens the economy as underwater homeowners did after the housing crash: by damaged credit, an inability to spend and save for the future, and a lack of resources to move to better jobs.

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“..the 34 listed banks in the latest stress tests results have lost on average 33% of their book value since the last stress tests were done less than two years ago..”

The State Of Europe’s Banks Is Far From Steady (CNBC)

Bank investors rejoice! The European Banking Authority declares stress tests should no longer be about pushing fresh capital into the system, as they were five years ago, or drilling down in to asset quality, as in 2014. Nope. The good news is that we are now in a world where “steady-state monitoring” is what’s needed. So will this “steady state’ policy pronouncement provide the confidence and assurance investors need? I hate to say it but I’m not convinced. Even if the stock prices overall bounce a bit this week, the banking sector did not get off to a good start Monday. I fear the market will continue to apply their own version of stress tests and find both the banks – and the regulators for that matter -lacking.

I asked European Central Bank President Mario Draghi at the last policy meeting if investors were over-exaggerating the risks. His response was cautious but positive. ”I don’t want to underplay the situation, to say it’s not a solvency problem, it’s a profitability problem doesn’t mean that one underplays but figure wise, we see from a solvency viewpoint, our banks are better off than years ago but our banks do have profitability issues, especially those with a high share of NPLs (non-performing loans), but not only those with high share of NPLs, some of it has to do with weak growth performance of the past few years. Draghi added that he was pretty confident that “strong supervision, robust regulation and better communication by supervisory authorities will still improve the situation and the perception in the rest of the world’s eyes.”

Call me cynical but I’m not sure the EBA’s “steady state” monitoring communication is quite what investors are looking for. Especially when you have a panel of respected academics including ZEW’s Sascha Steffen suggesting this month that European banks need €900 billion ($1 trillion) of fresh capital to convince investors they are robust. Who knows? But just compare that to the €280 billion the EBA says has been pumped in since 2011. Plus the report’s authors also point out that the 34 listed banks in the latest stress tests results have lost on average 33% of their book value since the last stress tests were done less than two years ago. A clear sign in my mind that the market still had significant concerns about the health of bank balance sheets and their ability to make profits.

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Can Renzi bail out his biggest banks too, like he trying to do with Monte Passchi?

UniCredit Shares Fall Sharply After European Bank Stress Tests (G.)

Italy’s biggest bank, UniCredit, has borne the brunt of lingering anxiety about the country’s banking sector, seeing its shares fall sharply following the EU-wide banking health checks. The 9.4% drop in UniCredit shares, which were being closely monitored by the Italian Borse on Monday amid heavy trading, followed Friday’s publication of stress tests on 51 banks across the EU. In the European Banking Authority tests, UniCredit recorded a capital ratio of more than 7% after the stress test applied a hypothetical shock to global growth, interest rates and currencies. Although well above the legal minimumof 4.5%, it left Unicredit as one of the five weakest out of the 51 banks tested.

The deterioration in its capital ratio was not on the scale of Banca Monte dei Paschi di Siena (MPS) – Italy’s third largest bank – which announced a rescue package on Friday aimed at funding at least €5bn worth of capital, after the stress test showed that its entire capital base would be wiped out under the adverse scenario. MPS was the worst-performing bank of any bank tested. Shares in MPS, regarded as the world’s oldest bank, were among the few to rally after the stress test results as its rescue operation appeared to alleviate pressure on the Italian government to intervene. Even so, questions remained about how easily MPS could find investors willing to stump up €5bn when its existing stock market value was less than €1bn.

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In itself, not a bad idea. Just don’t push it all towards exports. Make your own stuff. It’s the way of the future.

UK PM May Revives Industrial Policy Killed Off By Thatcher 30 Years Ago (R.)

Prime Minister Theresa May will on Tuesday outline her bid to reshape the British economy for a post-Brexit world, reviving the once unfashionable concept of industrial policy 30 years after Margaret Thatcher killed it off. May will chair the first meeting of the “Cabinet Committee on Economy and Industrial Strategy” in her Downing Street Offices, bringing together the heads of 11 other ministries to set out her vision for a state-boosted industrial renaissance. “If we are to take advantages of the opportunities presented by Brexit, we need to have our whole economy firing,” May said ahead of the meeting in a statement released by her office. “We also need a plan to drive growth up and down the country – from rural areas to our great cities.”

After a referendum campaign that revealed dissatisfaction in many of Britain’s struggling post-industrial regions, May is pitching a plan to reunite the country by raising the prospects of those who she casts as “hard-working people”. The June 23 vote to leave the EU has raised serious questions about the future of the world’s fifth largest economy, with some surveys indicating a recession, a hit to consumer confidence and a possible fall in investment. “We need a proper industrial strategy that focuses on improving productivity, rewarding hard-working people with higher wages and creating more opportunities for young people so that, whatever their background, they go as far as their talents will take them,” May said ahead of the meeting.

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This is the kind of pain that takes a long time to heal. But how predictable would you like it? “According to Nationwide, the UK average had risen to £196,930 in February – a 60% increase in 13 years.”

Home Ownership In England At Lowest Level In 30 Years (G.)

Home ownership in England has fallen to its lowest level in 30 years as the growing gap between earnings and property prices has created a housing crisis that extends beyond London to cities including Manchester. The struggle to get on the housing ladder is not just a feature of the London property market, according to a new report by the Resolution Foundation thinktank, with Greater Manchester seeing as big a slump in ownership since its peak in the early 2000s as parts of the capital, and cities in Yorkshire and the West Midlands also seeing sharp drops. Home ownership across England reached a peak in April 2003, when 71% of households owned their home, either outright or with a mortgage, but by February this year the figure had fallen to 64%, the Resolution Foundation said.

The figure is the lowest since 1986, when home ownership levels were on the way up, with a housing market boom fuelled by the deregulation of the mortgage industry and the introduction of the right-to-buy policy for council homes by Margaret Thatcher’s Conservative government. The Resolution Foundation’s analysis highlights the scale of the job faced by the prime minister, Theresa May, who has pledged to tackle the housing deficit. May warned last month that unless the issue was dealt with “young people will find it even harder to afford their own home. The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing.”

The report, based on analysis of the latest Labour Force Survey, showed that in early 2016 only 58% of households in Greater Manchester were homeowners, compared with a peak of 72% in 2003. In outer London, the peak in ownership came earlier, in 2000, but the fall was also from 72% then to 58% in February. The West Midlands and Yorkshire have also seen double-digit drops, driven by declines in Sheffield and Leeds.

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VW had already suspended sales July 25. BTW: 80 different models?!

South Korea Halts Sale of 80 Volkswagen Models Over Emissions Scandal (AFP)

South Korea is suspending sales of 80 Volkswagen models as part of a widening investigation into the German carmaker’s emissions cheating scandal. The environment ministry said most of the models had been showcased for sale until recently, and added that the problem vehicles had fabricated documents for emissions and noise-level tests. “As of August 2 we have revoked the certification of 83,000 vehicles of 80 models,” said a ministry statement. In July South Korean prosecutors arrested an executive of Volkswagen’s South Korean unit as part of their investigations.

The world’s second-largest automaker faces legal action in several countries after it admitted to faking US emissions tests on some of its diesel-engined vehicles. In November 2015 Seoul ordered Volkswagen Korea to recall more than 125,000 diesel-powered cars sold in South Korea and fined the firm 14.1bn won ($12.3m). Foreign carmakers, especially German brands like Volkswagen, have steadily expanded their presence in South Korea’s auto market, long dominated by the local giant Hyundai and its affiliate Kia. Sales of foreign cars account for about 15% of total auto sales, compared with 10% in 2012. Around 70% of foreign auto sales in South Korea are diesel-engined vehicles.

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One of many things that are going wrong in Greece vis a vis refugees.

Aid Workers Try To Convert Muslim Refugees At Greek Camp (G.)

Christians working in Greece’s most notorious asylum detention centre have tried to convert some of the Muslim detainees, who have been held under the terms of the EU-Turkey migration deal. On at least two occasions in recent months, aid workers have distributed conversion forms inside copies of Arabic versions of the St John’s gospel to people held at the Moria detention camp on Lesbos. The forms, seen by the Guardian, invite asylum seekers to sign a statement declaring the following: “I know I’m a sinner … I ask Jesus to forgive my sins and grant me eternal life. My desire is to love and obey his word.” Muslim asylum seekers who received the booklet said they found the aid workers’ intervention insensitive.

“It’s a big problem because a lot of the people are Muslim and they have a problem with changing their religion,” said Mohamed, a detainee from Damascus. “They were trying this during Ramadan, the holiest Muslim month.” A second Syrian, Ahmed, said: “We like all religions, but if you are a Christian, and I give you a Qur’an, how would you feel?” Detainees alleged that the forms were distributed by at least two representatives of Euro Relief, a Greek charity that became the largest aid group active in Moria after other aid organisations pulled out in protest against the EU-Turkey deal. The camp is overseen by the Greek migration ministry, but aid groups perform most of the day-to-day management.

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As I wrote yesterday in Why Should The IMF Care About Its Credibility?, the IMF has a credibility problem. Multiple, in fact.

New Greek Bailout Finds IMF In A Political Bind (AFP)

The IMF can scarcely ignore Europe. Its members together hold the largest voting bloc on the Executive Board, the body which approves bailouts. The United States is still the single-largest member. The result is a complex equation for the Fund, which has pledged to make a decision before the end of the year. If it bails Greece out again, some will surely see Europes hand pulling the strings. But if it abstains, the Fund may appear to suggest the bailout is doomed to fail. “That’s the conundrum they face,” Peter Doyle, a former official in the IMF’s European Department, told AFP. ”If they go along they look like they’re caving in; if they reject, it means that they could potentially be raising new big alarms.” With its nerves already frayed by Brexit, Europe can still hardly afford a new, large-scale Greek crisis.

This latest dilemma could still offer the IMF a means of proclaiming its independence from the member countries. “Theres a need for them to rebuild their credibility,” Desmond Lachman, a former European Department official, told AFP. “By staying out of Greece, they could tell the rest of the world ‘weve realized that we were politically used.’” Doyle does not believe the IMF can be truly independent, saying the United States and Europe will still call the shots. ”That’s only what matters and that has always been the case,” said Doyle, who left the Fund in 2012. At the center of the drama and after six years of recession, Greece has seized on the latest controversy to make its views known. “The IMF has been neither useful nor needed in Europe,” said Olga Gerovassili, a government spokeswoman.

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“And so the great disaster movie of 2016 commences: Godzilla Versus Rodan the Flying Reptile.”

Let the Games Begin! (Jim Kunstler)

The distraction du jour is whether Trump has become an agent of Russia. Notice that this line of intel comes direct from the neo-con central agitprop desk. This unofficial US War Party representing the amalgamated war industries has been busy demonizing Russia throughout the current presidential term. Not all Americans are so easily gulled, though. Those who know history understand, for instance, that the Crimea has been a province of Russia almost continually for hundreds of years — except the brief interval when the ur-Ukrainian Soviet leader, Nikita Khrushchev one drunken evening gave it away to the then-Soviet region of Ukraine in a fit of sentimentality, assuming it would remain a virtual property of Greater Russia forever.

Notice, too, that since Russia annexed it in 2014 (being the site of its only warm water port and major naval stations) not even the US neo-con war party has been able to make a credible case for fighting over it. Instead, they’ve resorted to name-calling: Putin the “thug,” Putin the “worst political gangster in the world.” This is exactly the brand of foreign policy that Hillary will bring to the Oval Office. Not that Donald Trump offers a coherent alternative. The reasonable suspicion persists that he doesn’t know his ass from a hole in the ground vis-à-vis how the affairs of the world actually work. For him it’s all same as tough-talking the sheet-rocker’s union. Then, of course, Trump had to immediately step in dog-shit by bad-mouthing the mother of an American army hero who-just-happened-to-be of the Mohammedan persuasion.

Trump for practical purposes is a child and a reasonable case is not hard to make for denying him presidential power. And so the great disaster movie of 2016 commences: Godzilla Versus Rodan the Flying Reptile. Which one will survive to completely destroy the sclerotic remains of our nation? The good news is that voters are moving to the Third and Fourth party nominees, Gary Johnson (Libertarian) and Jill Stein (Green) in droves, herds, flocks, porpoise pods, and stampedes. Perhaps both of these relatively sane candidates will show enough polling strength to make it into the Great Debates. Won’t that be fun?

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