Jul 262021
 
 July 26, 2021  Posted by at 9:08 am Finance Tagged with: , , , , , , , , ,  134 Responses »


Henri Matisse Reading woman in violet dress 1898

 

CDC Withdraws PCR Tests: “They Can’t Tell SARS-CoV-2 from Influenza” (GN)
Bill Gates Primary Funder Of MHRA, Owns Major Shares In Pfizer & BioNTech (DE)
Little Known Osteopath In The Spotlight As An Anti-vaxx Superspreader (NYT)
CDC ‘Actively’ Considering Face Cover Advisory For Vaccinated: Fauci (RT)
The Other Side of the COVID Vaccination Argument (CTH)
159 Dead, 593 Hospitalized in Illinois Breakthrough COVID Cases (NBC)
Biden DOJ Drops Civil Rights Probe Of Gov. Cuomo Over Nursing Homes (NYP)
UK Economy Growing At Fastest Rate In 80 Years (G.)
Judge Refuses To Identify 5 Market Participants In VIX Manipulation (ZH)
The Insect Apocalypse: ‘Our World Will Grind To A Halt Without Them’ (G.)
CNN Airs Hour-Long Public Service Message On Dementia (BBee)

 

 

 

 

Seneff long term effects

 

 

Lee Merritt – Synthetic Spike Protein Affects Every Cell
– start at 50 min

 

 

In case you were wondering why there are no flu cases left.

Google translated.

Note: Bill Gates and George Soros bought UK testing firm Mologic just days ago.

CDC Withdraws PCR Tests: “They Can’t Tell SARS-CoV-2 from Influenza” (GN)

On 21 July 2021, the 18 lines that rewrite the history of the Covid-19 pandemic were published. The CDC (Centers for Disease Control and Prevention) of the USA, the highest health authority of the American government for monitoring diseases and in particular infectious ones, has launched an alert that assumes the range of a nuclear missile against the rubber wall of the international narrative on the emergency caused by the SARS-Cov-2 virus ( believed to have been built in the laboratory by many scientific researches now ).

“After December 31, 2021, the CDC will withdraw the application to the US Food and Drug Administration (FDA) for the Emergency Use Authorization (EUA) of the CDC 2019-Novel Coronavirus (2019-nCoV) Real-Time RT-PCR Diagnostic Panel, the test first introduced in February 2020 for the detection of SARS-CoV-2 only. CDC provides this notice in advance to clinical laboratories to allow sufficient time to select and implement one of the many alternatives authorized by the FDA.”

This is the “Lab Alert” launched by the Division of Laboratory System (DLS), the specialized section of the CDC ( link at the bottom of the article ). Alone, it would already be enough to confirm all the investigations carried out in recent months on 97% unreliable tampons, as claimed by various scientific researches and international judicial authorities . But the official communication of the CDC (branched body in all the confederate states) states between the lines something already shocking, anticipated by Gospa News already last year: that is the risk that the nasopharyngeal swabs PCR, subject to cycles of variable amplifications , may not distinguish Covid-19 from a simple flu.

Visit the FDA website for a list of authorized COVID-19 diagnostic methods. For a summary of the performance of FDA-cleared molecular methods with an FDA reference panel. In preparation for this change, CDC recommends clinical laboratories and testing sites that have used the CDC 2019-nCoV RT-PCR assay to select and begin transitioning to another FDA-cleared COVID-19 assay. The CDC encourages laboratories to consider adopting a multiplex method that can facilitate the detection and differentiation of SARS-CoV-2 and influenza viruses.Such tests can facilitate the continuation of testing for both influenza and SARS-CoV-2 and can save time and resources as we head into the flu season. Laboratories and test sites must validate and verify the selected test within their facility before starting clinical trials. ”

The Real time PCR – also known as Quantitative PCR , abbreviated qPCR – is a method that simultaneously amplifies (polymerase chain reaction or PCR) and quantifies the DNA , similar but not to be confused with the RT-PCR method (Reverse Transcriptase -PCR ) . DNA is amplified by DNA-polymerase chain reactions. After each round of amplification, the DNA is quantified. Common methods of quantification include the use of fluorescent stains that intercalate with double-stranded (ds) DNA and modified DNA oligonucleotides (called probes) which are fluorescent when hybridized with a DNA. Real-time PCR is often combined with Retro Transcriptional PCR (RT-PCR) to quantify the expression levels of specific RNA: retro-transcription (or reverse transcription) produces single-stranded complementary DNA called cDNA (complementary DNA) keeping the relative concentration ratios of the different RNA species unchanged. In this way it is possible, for example, to measure the relative expression of a gene at a particular time, either in a cell or in a particular type of tissue.

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Fully impartial.

Bill Gates Primary Funder Of MHRA, Owns Major Shares In Pfizer & BioNTech (DE)

An investigation has revealed that the Bill & Melinda Gates Foundation are the primary funders of the UK’s Medicine & Healthcare products Regulatory Agency, and that the Foundation also owns major shares in both Pfizer and BioNTech. The Medicine & Healthcare products Regulatory Agency (MHRA) extended the emergency authorisation of the Pfizer/BioNTech mRNA jab in the UK to allow it to be given to children between the ages of 12 – 15 on the 4th June 2021. At the time, the Chief Executive of the MHRA, Dr June Raine said the MHRA had “carefully reviewed clinical trial data in children aged 12 to 15 years and have concluded that the Pfizer vaccine is safe and effective in this age group and that the benefits outweigh any risk”.

We are left wondering if Dr June Raine and the MHRA have even read the results of the extremely short and small study. If they have then they would have seen that 86% of children in the study suffered an adverse reaction ranging from mild to extremely serious. Just 1,127 children took part of the trial, however only 1,097 children completed the trial, with 30 of them not participating after being given the first dose of the Pfizer jab. The results do not state why the 30 children did not go on to complete the trial. The information is publicly available [..] There was never any doubt that the MHRA would give emergency authorisation for the Pfizer/BioNTech vaccine to be used in children when you consider that a certain Mr Bill Gates owns shares in both Pfizer and BioNTech and is the primary funder of the MHRA.

The Bill & Melinda Gates Foundation bought shares in Pfizer back in 2002, and back in September 2020 Bill Gates ensured the value of his shares went up by announcing to the mainstream media in a CNBC interview that he viewed the Pfizer jab as the leader in the Covid-19 vaccine race. “The only vaccine that, if everything went perfectly, might seek the emergency use license by the end of October, would be Pfizer.” The Bill & Melinda Gates Foundation also “coincidentally” bought $55 million worth of shares in BioNTech in September 2019, just before the alleged Covid-19 pandemic struck.

The MHRA received a grant from the Bill & Melinda Gates Foundation in 2017 to the tune of £980,000 for a “collaboration” with the foundation. However, a Freedom of Information request which the MHRA responded to in May 2021 revealed that the current level of grant funding received from the Gates Foundation amounts to $3 million and covers “a number of projects”.

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“More than 97% of people hospitalised for COVID-19 are unvaccinated..”

Because the vaccinated are no longer tested.

NYT going after Mercola big time. Who’s next? They’ll pick them off one by one.

Little Known Osteopath In The Spotlight As An Anti-vaxx Superspreader (NYT)

The article that appeared online February 9 began with a seemingly innocuous question about the legal definition of vaccines. Then over its next 3400 words, it declared coronavirus vaccines were “a medical fraud” and said the injections did not prevent infections, provide immunity or stop transmission of the disease. Instead, the article claimed, the shots “alter your genetic coding, turning you into a viral protein factory that has no off-switch”. Its assertions were easily disprovable. No matter. Over the next few hours, the article was translated from English into Spanish and Polish. It appeared on dozens of blogs and was picked up by anti-vaccination activists, who repeated the false claims online. The article also made its way to Facebook, where it reached 400,000 people, according to data from CrowdTangle, a Facebook-owned tool.

The entire effort traced back to one person: Joseph Mercola. Mercola, 67, an osteopathic physician in Cape Coral, Florida, has long been a subject of criticism and government regulatory actions for his promotion of unproven or unapproved treatments. But most recently, he has become the chief spreader of coronavirus misinformation online, according to researchers. An internet-savvy entrepreneur who employs dozens, Mercola has published more than 600 articles on Facebook that cast doubt on COVID-19 vaccines since the pandemic began, reaching a far larger audience than other vaccine sceptics, an analysis by The New York Times found. His claims have been widely echoed on Twitter, Instagram and YouTube.

The activity has earned Mercola, a natural health proponent with an Everyman demeanour, the dubious distinction of the top spot in the “Disinformation Dozen,” a list of 12 people responsible for sharing 65 per cent of all anti-vaccine messaging on social media, said the nonprofit Centre for Countering Digital Hate. Others on the list include Robert F. Kennedy jnr, a longtime anti-vaccine activist; and Erin Elizabeth, founder of the website Health Nut News, who is also Mercola’s girlfriend. “Mercola is the pioneer of the anti-vaccine movement,” said Kolina Koltai, a researcher at the University of Washington who studies online conspiracy theories. “He’s a master of capitalising on periods of uncertainty, like the pandemic, to grow his movement.”

Some high-profile media figures have promoted scepticism of the vaccines — notably, Tucker Carlson and Laura Ingraham of Fox News, though other Fox personalities have urged viewers to get the shots. Now Mercola and others in the “Disinformation Dozen” are in the spotlight as vaccinations in the United States slow, just as the highly infectious delta variant has fuelled a resurgence in coronavirus cases. More than 97% of people hospitalised for COVID-19 are unvaccinated, according to the Centres for Disease Control and Prevention. President Joe Biden has blamed online falsehoods for causing people to refrain from getting the injections. But even as Biden has urged social media companies to “do something about the misinformation,” Mercola shows the difficulty of that task. Over the last decade, Mercola has built a vast operation to push natural health cures, disseminate anti-vaccination content and profit from all of it, said researchers who have studied his network. In 2017, he filed an affidavit claiming his net worth was “in excess of $US100 million”.

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In religion, credibility is not a factor.

CDC ‘Actively’ Considering Face Cover Advisory For Vaccinated: Fauci (RT)

White House health advisor Dr. Anthony Fauci has revealed that the Centers for Disease Control and Prevention (CDC) could soon reconsider its guidelines, recommending vaccinated Americans to mask up again. Top health officials have reportedly been having preliminary talks about revising mask recommendations for vaccinated Americans due to a rise in cases and concerns over the more infectious Delta variant of Covid-19. According to current guidance, those vaccinated against the virus do not need to wear masks in most public spaces. The revision of the mask guidance is indeed “under active consideration,” Fauci confirmed to CNN on Sunday. The infectious disease expert did not give a timeframe for when the federal guidance could change, but he praised those state officials who had already rushed ahead to reinstate local mask mandates in response to rising coronavirus cases.


“If you look at what’s going on locally in the trenches, in places like L.A. County,” Fauci said, “the local officials have the discretion, and the CDC agrees with that ability and discretion capability to say, you know, you’re in a situation where we’re having a lot of dynamics of infection, so even if you are vaccinated, you should wear a mask.” Fauci and other White House officials have used the uptick in cases to continue pushing unvaccinated Americans to get inoculated. Recent polling, however, has signified that those who have refused getting vaccinated thus far have little to no interest in changing their minds.

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Great video.

The Other Side of the COVID Vaccination Argument (CTH)

There is a lot of incoming information from government and the private sector promoting the vaccine. Recently, there has been a significant uptick in compulsory demands for taking the COVID vaccine. This forced vaccination approach has made many people start to question why this coordinated pressure campaign has increased with such ferocity. As a result of such one-side information, people are increasingly skeptical. In this video below you can review the counter-position for why people do not want to take the vaccination shot.


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Very rare.

159 Dead, 593 Hospitalized in Illinois Breakthrough COVID Cases (NBC)

More than 150 people have died and nearly 600 have been hospitalized in Illinois due to COVID-19 in “breakthrough” cases after they were fully vaccinated, according to state health officials. According to data updated Wednesday by the Illinois Department of Public Health, 159 people in Illinois have died due to COVID-19 or complications after being fully vaccinated. That figure equates to 2.3% of COVID-19 deaths in the state since Jan. 1, officials said. At least 593 fully vaccinated people have been hospitalized in Illinois, IDPH said. The state only reports breakthrough infections among those who have been hospitalized or died, following guidance from the Centers for Disease Control and Prevention, IDPH said.


Those totals mean eight more fully vaccinated individuals have died and 30 more have been hospitalized in the past week since the state last updated its reported numbers. The state does not publicize the number of residents who tested positive after being fully vaccinated but did not die or require hospitalization in order to “help maximize the quality of the data collected on cases of greatest clinical and public health importance,” IDPH’s website reads.

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He’s a made man.

Biden DOJ Drops Civil Rights Probe Of Gov. Cuomo Over Nursing Homes (NYP)

The Department of Justice has decided not to investigate whether the civil rights of residents in New York’s government-run nursing homes were violated by Gov. Andrew Cuomo’s controversial admission policy related to the COVID-19 pandemic. In a letter Friday, the DOJ’s Office of Legislative Affairs told US Rep. Steve Scalise (R-La.), ranking member of that House Subcommittee on the Coronavirus Crisis, that New York was off the hook in connection with potential violations of the Civil Rights of Institutionalized Persons Act. In August, the DOJ’s Civil Rights Division requested information from New York in connection with a March 25, 2020, order from the state Department of Health that required nursing homes to admit “medically stable” COVID-19 patients discharged from hospitals.

It also sought records from Pennsylvania, Michigan and New Jersey, which adopted similar rules that the DOJ said “may have resulted in the deaths of thousands of elderly nursing home residents.” “We have reviewed the information provided by these states along with additional information available to the Department,” Deputy Assistant Attorney General Joe Gaeta wrote Friday. “Based on that review, we have decided not to open a CRIPA investigation of any public nursing facility within New York, Pennsylvania, or Michigan at this time.” In a prepared statement, Scalise called it “outrageous that the Department of Justice refuses to investigate the deadly ‘must admit’ orders issued by governors in New York, Pennsylvania, and Michigan that resulted in the deaths of thousands of senior citizens.”

“Where is the justice for nursing home victims and their grieving families? These deadly orders contradicted the [Centers for Disease Control and Prevention’s] guidance, and needlessly endangered the most vulnerable among us to the deadly COVID-19 virus,” Scalise said. “Even worse, Governor Cuomo in New York intentionally tried to cover up the true death toll resulting from his mandate. Grieving families deserve answers and accountability. It’s unconscionable that Biden’s Department of Justice refuses to investigate the deadly actions that went against CDC’s medical guidance taken in these states.”

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Oh sure. As the media scream Armageddon.

UK Economy Growing At Fastest Rate In 80 Years (G.)

The British economy is growing at its fastest pace in 80 years and could recover its pre-pandemic size by the end of this year, according to a leading economic forecaster. Buoyed by the vaccine rollout and a bounce back in consumer spending, the EY Item Club said it now expected GDP to grow by 7.6% – which would be the fastest annual growth in national income since 1941. The UK economy shrank by 9.8% in 2020, the worst performance in the G7. The optimism comes despite the chaos caused by widespread staff shortages as workers self-isolate en masse after being pinged by NHS test and trace. The “pingdemic” is affecting the running of shops, restaurants, factories and even railway services as bosses struggle to find staff to cover shifts.

Although the economy has proved increasingly resilient through lockdowns, the EY Item Club report came with the health warning that the “future pattern of the pandemic and any renewed pandemic-related restrictions will have a significant bearing on whether the forecast is achieved”. The UK economy is more dependent on consumer spending on services, such as recreation and leisure activities, which meant that the lockdowns had a greater economic impact than in other countries, said Martin Beck, the EY Item Club’s senior economic adviser. The reopening of these “face-to-face parts of the economy means the UK should have a correspondingly faster recovery”, he said. In the spring, the group of economists, which is the only non-government forecasting organisation to use the Treasury’s modelling of the economy, pencilled in growth of 6.8%.

This is the second time this year it has upgraded its forecast, putting the economy on track to attain its pre-pandemic peak by the end of 2021. That milestone would now be reached some six months sooner than when it last crunched the numbers in April, with the UK’s successful vaccine programme a key factor. Recent surveys of economic activity have, however, been less encouraging, leading to concerns that the recovery is stalling. The IHS Markit and the Cips survey showed growth at its slowest since March, which was attributed to wide-ranging staff shortages, rising Covid cases and thousands of workers having to isolate owing to the pingdemic. It also highlighted a new mood of caution among the public triggered by the rapidly rising infection rates.

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Because the Fed is one? Because the market makers are?

Judge Refuses To Identify 5 Market Participants In VIX Manipulation (ZH)

[..] on Feb 5, 2018 the steamroller woke up with a vengeance, and shortly after the close, the infamous volmageddon event took place when a handful of the most popular inverse VIX strategies crashed from near record highs to zero in a manner of minutes as ETN liquidation triggers were activated, sending the VIX briefly to record highs and wiping out billions in value and leaving countless retail investors stunned and facing total losses. Yet while to retail investors losses were in the hundreds or, at most, thousands of dollars (recall this was in the pre-stimmy stage when people cared about their money), some hedge funds got completely wiped out. One among them was LJM Partners, a Chicago-based fund that lost $446.8 million in one day from the market moves, wiping out 86.5% of its assets in seconds.

And so LJM and more than two dozen other investors and fund managers sued over the next year to recover losses, claiming unidentified market participants that rigged the index “repeatedly posted and immediately canceled” tens of thousands of quotes for S&P 500 options, whose prices are used to calculate the VIX. The plaintiffs, understandably furious at the events of Feb 5, claiming that unidentified market participants manipulated the VIX by posting S&P 500 options quotes that only stayed in the order book for milliseconds, not long enough for anyone to trade against but enough time for them to be incorporated into the value of the VIX.

That technique, known as “flashing” and popularized back in 2009 first by this website, was unrelated to any legitimate positions the unidentified market participants held or wished to hold, but successfully manipulated the price of S&P 500 options and futures contracts, LJM claimed, even though the CBOE which is the Chicago-based owner of the VIX and the exchange where S&P 500 options trade, has repeatedly dismissed claims of manipulation of the index. And while LJM has yet to recover any funds, on Friday the defunct fund suffered another setback, when a federal judge refused to identify five market participants accused in the lawsuit of manipulating the VIX index.

US District Judge Manish S. Shah, during a telephone conference Friday in Chicago, said the plaintiffs had failed to provide enough evidence of actual manipulation to justify revealing the names of the market participants, who were identified only by code names in exchange records. “Plaintiffs have not demonstrated good cause” for the disclosure, said Shah, who had earlier authorized the release of exchange data to help them make their case. “Rather than specific allegations of manipulation, plaintiffs’ complaints offer a menu of what they characterize as potentially manipulative conduct that may have occurred on February 5 and 6, 2018,” the market participants said in a court filing.

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Many people asking where the bugs on their windshields went. Which is a typical “connection” with nature.

The Insect Apocalypse: ‘Our World Will Grind To A Halt Without Them’ (G.)

In 2015 I was contacted by the Krefeld Society, a group of entomologists who, since the late 1980s, had been trapping flying insects on nature reserves scattered across Germany. They had amassed insects from nearly 17,000 days of trapping across 63 sites and 27 years, a total of 53kg of insects. They sent me their data to ask for my help in preparing it for publication in a scientific journal. In the 27 years from 1989 to 2016 the overall biomass (ie weight) of insects caught in their traps fell by 75%. In midsummer, when in Europe we see the peak of insect activity, the decline was even more marked, at 82%. I thought initially that there must have been some sort of mistake, because this seemed too dramatic a drop to be credible. We knew that wildlife in general was in decline, but for three-quarters of insects to have disappeared so rapidly suggested a pace and scale of decline that had previously not been imagined.

In October 2019 a different group of German scientists published their findings from a study of insect populations in German forests and grasslands over 10 years from 2008 to 2017. The study’s results were deeply troubling. Grasslands fared worst, losing on average two-thirds of their arthropod biomass (the insects, spiders, woodlice and more). In woodlands, biomass dropped by 40%. What about elsewhere? Is there something peculiar going on in Germany? It seems highly unlikely. Perhaps the best-studied insect populations in the world are the UK’s butterflies. They are recorded by volunteers as part of the Butterfly Monitoring Scheme, the largest and longest-running scheme of its kind in the world. The trends it reveals are worrying. Butterflies of the “wider countryside” – common species found in farmland, gardens and so on, such as meadow browns and peacocks – fell in abundance by 46% between 1976 and 2017.

Meanwhile, habitat specialists, fussier species that tend to be much rarer, such as fritillaries and hairstreaks, fell by 77%, despite concerted conservation efforts directed at many of them. Worldwide, although the bulk of insect species – the flies, beetles, grasshoppers, wasps, mayflies, froghoppers and so on – are not systematically monitored, we often have good data on population trends for birds that depend on insects for food, and these are mostly in decline. For example, populations of insectivorous birds that hunt their prey in the air (ie the flying insects that have decreased so much in biomass in Germany) have fallen by more than any other bird group in North America, by about 40% between 1966 and 2013. Bank swallows, common nighthawks (nightjars), chimney swifts and barn swallows have all fallen in numbers by more than 70% in the past 20 years.

In England, populations of the spotted flycatcher fell by 93% between 1967 and 2016. Other once-common insectivores have suffered similarly, including the grey partridge (-92%), nightingale (-93%) and cuckoo (-77%). The red-backed shrike, a specialist predator of large insects, went extinct in the UK in the 1990s. Overall, the British Trust for Ornithology estimates that the UK had 44m fewer wild birds in 2012 compared with 1970. All the evidence above relates to populations of insects and their predators in highly industrialised, developed countries. Information about insect populations in the tropics, where most insects live, is sparse. We can only guess what impacts deforestation of the Amazon, the Congo, or south-east Asian rainforests has had on insect life in those regions. We will never know how many species went extinct before we could discover them.

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“The strawberries. The strawberries. The strawberries. That’s what makes it work! Airplanes!”

CNN Airs Hour-Long Public Service Message On Dementia (BBee)

As part of a campaign to raise awareness and improve public knowledge on treatment options, CNN aired an hour-long public service announcement on the warning signs of dementia Wednesday night. The PSA, which ran over an hour, showed tragic footage of an old man ranting and making nonsensical, confusing statements. CNN says they hope the footage will encourage family members of the elderly to get them tested for the early warning signs of dementia. The cable news channel displayed a phone number for a hotline people can call if they believe someone they know might be suffering from symptoms of the condition.


“If you or a loved one act like this man,” said Don Lemon, “please, we beg you, get help. Slurred speech, inaccurate statements, an inability to remember where you are—these are all signs that your loved one might be suffering from dementia, whether he’s retired or the president of the United States.” “… and we’d take the rhubarb and we’d put it in the pie, right in the ol’ pie,” the old man said suddenly, in a rare moment of lucidity. “It was incredible. You wouldn’t think rhubarb would taste good, but it’s the sweetness. The strawberries. The strawberries. The strawberries. That’s what makes it work! Airplanes! Airplanes are neat, you know, but they’re a myth. How do they get them up there? They don’t—d-d-don’t even have feathers.” Many of the attendees were touched by both the PSA and the old man.

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Feb 032021
 
 February 3, 2021  Posted by at 10:38 am Finance Tagged with: , , , , , , , , , , ,  41 Responses »


Joseph Mallord William Turner Norham Castle, Sunrise 1845

 

Dems Threaten To Exclude Families Crushed By Pandemic (DP)
Senate Approves Budget Process For Passage of $1.9T COVID19 Stimulus (JTN)
Criticism Piles On Cuomo After Week Of Blunders (F.)
France Raises More Questions About AstraZeneca Jab (ZH)
P.2 Coronavirus Variant From Brazil Found In California (LAT)
WHO Team Visits Wuhan Virus Lab At Center Of Speculation (AP)
Will WallStreetBets Send The VIX Soaring Next? (ZH)
White House Reporters Say Biden Team Wanted Questions In Advance (JTN)
Florida Gov. DeSantis, Lawmakers Plan To Take Action On Big Tech (JTN)
Academic Media Censorship Conference Censored by YouTube (MPN)
NYPD Deploys Counter Terrorism Unit To Protect Wall Street (MPN)
Economics’ Failure Over Destruction Of Nature Presents ‘Extreme Risks’ (G.)

 

 

 

 

 

 

Oh, c’mon man, he lied about sending out the checks “immediatedly”. At least have the guts to call him on that. You may be on his side, but your credibility is at stake.

Dems Threaten To Exclude Families Crushed By Pandemic (DP)

The nation’s biggest business lobby is pushing Democrats to slash COVID relief checks for middle class families, despite new census data showing that nearly half of those families have lost income because of the pandemic. Top Democrats are now reportedly considering excluding millions of those families from the checks, and President Biden himself has said he is willing to negotiate with Republicans on limiting eligibility for the checks. The U.S. Chamber of Commerce, which spent $82 million lobbying in Washington last year, sent a letter to the White House and Congress on Tuesday urging them to consider “targeting any additional stimulus checks based on income, loss of employment, or similar criteria.”

The corporate lobbying group — whose members undoubtedly benefit from a desperate workforce — attempted to twist census data showing broad economic devastation to make the point that families earning more than $50,000 don’t need new survival checks. “While the pandemic induced recession has created near unprecedented levels of hardship, the impact has not been universal,” the Chamber wrote. “The Census Bureau Pulse survey indicates that while a majority of households with less than $50,000 in income have experienced a loss of employment income, a majority of household with more than $50,000 in income — including those between $50,000 and $150,000 — have not experienced any loss in earned income.”

This is a misleading way to frame the census survey results. Recent census data shows that 45 percent of households earning between $50,000 and $150,000 have experienced a loss of employment income since March 2020 — including 48 percent of households earning between $50,000 and $75,000. Nearly a quarter of households earning between $50,000 and $150,000 say they expect to lose employment income over the next four weeks. The Chamber is adding its voice to a chorus of pleas in the Beltway to limit who’s eligible for COVID relief checks. The campaign was first kicked off by discredited austerity economist Larry Summers and columnists at the Washington Post and Bloomberg News, which are owned by billionaires Jeff Bezos and Mike Bloomberg respectively.

President Biden’s COVID relief plan would send full $1,400 survival checks to individuals earning up to $75,000 and couples earning up to $150,000. Sen. Joe Manchin, D-W.Va., has repeatedly demanded the relief checks be more “targeted.” Senate Republicans on Monday proposed that Congress limit full stimulus checks to individuals earning up to $40,000 and couples earning $80,000 — a move that would deny checks to an additional 80 million people, according to the Institute on Taxation and Economic Policy.

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“Immediately” now has a whole new meaning. See you in summer.

Senate Approves Budget Process For Passage of $1.9T COVID19 Stimulus (JTN)

The Democratic-led Senate voted on Tuesday in favor of starting the budget reconciliation process for President Joe Biden’s $1.9 trillion coronavirus stimulus proposal. The vote on the budget resolution was 50-49 with Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona voting with the Democrats in favor of the resolution. Pennsylvania Republican Sen. Pat Toomey was not present for the vote. The use of budget reconciliation would allow Democrats to pass their coronavirus relief plan without relying on any votes from Republicans.


Senate Republicans have criticized Senate Democrats for proceeding with reconciliation instead of seeking bipartisan input on additional COVID-19 stimulus funds. Large-scale coronavirus relief bills were passed last year with votes from Republicans and Democrats in the GOP-led Senate when former President Trump was in office. GOP senators like John Barrasso of Wyoming said on Tuesday the reconciliation move conflicts with Biden’s message of unity during his inaugural address. Senate Democrats are tying a $15 per hour federal minimum wage to the coronavirus stimulus bill.

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Hiw own brother’s network turns on him. That part is sort of interesting. Other than that, he’s as out of his depth as 95+% of politicians.

Criticism Piles On Cuomo After Week Of Blunders (F.)

Starting with last Thursday’s report from the New York Attorney General’s Office that accused Gov. Andrew Cuomo’s administration of underreporting nursing home deaths tied to Covid-19—potentially by as much as 50%—the Democratic governor has consistently found himself at the center of harsh bipartisan criticism over the past week regarding his pandemic leadership. The report renewed outrage over Cuomo’s early policy to send recovering Covid-19 patients back to nursing homes, which the attorney general’s office said may have led to excess deaths—a possibility Cuomo brushed off on Thursday by saying the patients would have died either way, there or in a hospital: “Who cares? 33 [percent]. 28 [percent]. Died in a hospital. Died in a nursing home … they died.”

The report, coupled with Cuomo’s reaction, drew sharp criticism from both sides of the aisle and both state and federal officials, with Democratic Assemblyman Ron Kim (Queens) saying there are serious talks underway about stripping Cuomo’s emergency powers, which are in place until April and can be revoked by a joint resolution from the state’s Democrat-controlled Senate and Assembly. “We’ve seen this governor prioritize his ego over the best interests of New Yorkers time and time again,” Democratic state Sen. Alessandra Biaggi (Bronx) said Monday. Another round of scrutiny came on Monday after The New York Times reported that at least nine of New York’s senior health officials left their positions in recent months amid a rift between the governor and experts, who he poked at during a Friday news conference, saying: “When I say ‘experts’ in air quotes, it sounds like I’m saying I don’t really trust experts … because I don’t.”

Cuomo was sharply criticized in light of the reporting and his press conference rhetoric, with CNN anchor Jake Tapper labeling Cuomo’s statement “wildly irresponsible” and the network’s chief medical correspondent Dr. Sanjay Gupta saying he was “really quite stunned,” adding, “If you start to take away the credence of these experts I think that’s really, really harmful, especially now.” When asked about the staff departures, a spokesperson for Cuomo directed Forbes to the governor’s response at a Tuesday press conference, in which he attributed turnover in the New York State Health Department to the “highly stressful, highly challenging, highly exhausting, highly fatiguing” nature of the pandemic.

The governor continued to stir controversy into Tuesday as he spontaneously announced the expansion of vaccine eligibility to NYC restaurant workers after calling demands for this group’s immediate inclusion “a cheap, insincere discussion” a day prior, and as a New York Times report highlighted his announcement about bringing back indoor dining last week had cited misleading data about test positivity rates in the city.

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This piece is actually more about AZ doing its own peer review..

France Raises More Questions About AstraZeneca Jab (ZH)

The latest update on the AstraZeneca-Oxford COVID jab was released Tuesday afternoon in a report from the University which offered more insight on exactly when vaccine-induced immunity begins, and how effective the vaccine can be after its first dose and after its second. Unsurprisingly, the data offer a more optimistic read than the batch released by AZ and Oxford the first time around. But they also suggest that the vaccine is actually more effective overall if doctors wait roughly 3 months before inoculating patients with the second dose, which provides support for “current policy” in the UK. However, in the US, the FDA-recommended vaccination dosing schedule is 21 days, which has endured despite logistical problems and other issues that have caused delivery delays in NYC and elsewhere (so much for the consistency of the “science”).

And the new AstraZeneca vaccine might be able to fix all that. According to the research team, the first dose alone offers 76% protection from symptomatic COVID 22 days post-vaccination. But the jab successfully offers sustained protection through a 3-month period, even without receiving the second dose, a data point that has already been transformed into a marketing opportunity by AstraZeneca. Prof Andrew Pollard, Chief Investigator of Oxford Vaccine Trial and co-author of the paper, said in a statement: “These new data provide an important verification of the interim data that was used by more than 25 regulators including the MHRA and EMA to grant the vaccine emergency use authorization.”

“It also supports the policy recommendation made by the Joint Committee on Vaccination & Immunisation for a 12-week prime-boost interval, as they look for the optimal approach to roll out, & reassures us that people are protected from 22 days after a single dose of the vaccine.” The new data, which are culled from cases extended through Dec. 7, purportedly show the optimal window for the second booster dose could be up to 14 weeks. That means it’s less risky to give patients the AstraZeneca shot, because even if there are supply delays, patients won’t be badly harmed. After the second dose, immunity rises to 82.4%, according to data taken from cases throughout the 3-month interval window. The research team offered the data with a 95% confidence interval of 62.7% – 91.7% at 12+ weeks

In another “unprecedented” update, the data suggest the vaccine helps prevent transmission of the virus, with 67% reduction in positive swabs among those vaccinated” “However, overall cases of any PCR+ were reduced by 67% (95%CI 49%, 78%) after a single SD vaccine suggesting the potential for a substantial reduction in transmission,” the authors of the paper wrote. Officials likely hoped the report would help cement public support for the AstraZeneca vaccine, (at least in Europe, its primary market, where it has inked deals for billions of doses). The AZ vaccine is, notably, also less effective than Russia’s “Sputnik V” vaccine, according to data published by the Lancet a few days back.

Unfortunately, its release was timed with more “problematic” comments from French President Emmanuel Macron and the French authorities. Specifically, French health authorities have approved the vaccine, but they have also warned that the AZ-Oxford vaccine should only be given to people aged under 65, after the initial preliminary reports on AZ released late last year suggested some adverse health reactions in older patients.

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Close your borders?!

P.2 Coronavirus Variant From Brazil Found In California (LAT)

A coronavirus variant from Brazil has been detected in a sample from the Bay Area, underscoring the urgency of ramping up inoculation efforts as researchers try to learn whether it, as well as others circulating in California, could undermine the effectiveness of COVID-19 vaccines. Researchers at Stanford’s Clinical Virology Laboratory screened nearly 1,000 specimens during the last two weeks and found one case of the Brazilian variant, P.2, said Dr. Benjamin Pinsky, the laboratory’s medical director. They reported the finding to public health authorities on Jan. 25. The researchers also identified four cases of a variant from the U.K., B.1.1.7, that appears to spread more easily, may be more virulent and is already known to be circulating in California, Pinsky said.

And they found that about 29% of the specimens had the L452R mutation, a feature of a homegrown variant that has been increasingly detected across the state and may have helped drive the most recent case surge. “It’s definitely possible that they already contributed to the humongous surge we’ve seen over the last six weeks or so,” said Dr. Edward Jones-Lopez, an infectious diseases expert at USC. “And it could get even worse if these strains are indeed fitter than previous strains and people lower their guard and we are not very logistically efficient in delivering vaccines. “When we put those two factors together, it might still be a rough next two to three months.”

The P.2 variant is distinct from another detected in Brazil, P.1, that was linked to an abrupt resurgence in cases in Manaus that took place after much of the population was already believed to have been infected. But the variants share a mutation that appears to help the virus evade antibodies generated by either a previous infection or vaccine, Pinsky said. And there are at least two examples of people being infected with the P.2 variant after they had been infected by another strain, a feat that has been demonstrated by P.1 and multiple other coronavirus strains. That finding has led researchers to theorize that P.2 may have similar properties as the P.1 variant, he said. “There’s a lot less known about the Brazil P.2 strain, so that’s one to keep an eye on,” he said.

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A carefully orchestrated pantomime.

WHO Team Visits Wuhan Virus Lab At Center Of Speculation (AP)

World Health Organization investigators on Wednesday visited a research center in the Chinese city of Wuhan that has been the subject of speculation about the origins of the coronavirus, with one member saying they’d intended to meet key staff and press them on critical issues. The WHO team’s visit to the Wuhan Institute of Virology was a highlight of their mission to gather data and search for clues as to where the virus originated and how it spread. “We’re looking forward to meeting with all the key people here and asking all the important questions that need to be asked,” zoologist and team member Peter Daszak said, according to footage run by Japanese broadcaster TBS.

Reporters followed the team to the high security facility, but as with past visits, there was little direct access to team members, who have given scant details of their discussions and visits thus far. Uniformed and plainclothes security guards stood watch along the facility’s gated front entrance, but there was no sign of the protective suits team members had donned Tuesday during a visit to an animal disease research center. It wasn’t clear what protective gear was worn inside the institute. The team left after around three hours without speaking to waiting journalists.

Following two weeks in quarantine, the WHO team that includes experts in veterinary medicine, virology, food safety and epidemiology from 10 nations has over the past six days visited hospitals, research institutes and a traditional wet market linked to many of the first cases. Their visit followed months of negotiations as China seeks to retain tight control over information about the outbreak and the investigation into its origins, in what some have seen as an attempt to avoid blame for any missteps in its early response.

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They don’t have that kind of clout yet.

Will WallStreetBets Send The VIX Soaring Next? (ZH)

One week ago, the Reddit crowd – then numbering 2 million users- sparked a historic squeeze among the most shorted Russell 3000 stocks (led by Gamestop) which inflicted hundreds of billions of losses on some hedge funds (while making other hedge funds that much richer), and launched a deleveraging VaR shockwave which forced even non-shorting hedge funds to unwind some of their biggest (and most popular) positions. Then, this Monday, the same Reddit crowd – now having tripled to 7.5 million users – managed to spark the biggest surge in silver prices since the collapse of Lehman, and even though there were not nearly as many shorts here, the move was sizable enough to unleash another major VaR shockwave across markets, and forcing even unlinked assets to selloff amid another degrossing wave.

What the two episodes had in common is that any outlier event – and last week’s “most shorted vs most popular” slamdown was a 7 sigma event, which nobody had anticipated, with Goldman writing that Tuesday “was the worst day for GS HF VIP longs vs GS Most Short in our records (-7.7%)”… stood to unleash a cascading sequence of adverse events due to just one thing: leverage. It’s the record level of leverage in the system that prompted Morgan Stanley’s chief equity strategist to warn that the short-squeeze shake out is not yet over and that the correction is “likely to get worse”:

“Third, the aggressive short squeeze strategies employed by a certain group of investors was the spark. These targeted squeezes forced the leverage to come out of the system starting with hedge fund gross exposures. Initially, it didn’t have much of an effect on the major indices but last week that all changed. The forced reduction of gross leverage via short covering led to a reduction in long exposure and net leverage. Major averages traded lower by 3-5% with many stocks down 10% or more.”

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But that’s just to serve you better…

White House Reporters Say Biden Team Wanted Questions In Advance (JTN)

The Daily Beast on Monday published a rather scathing piece about the new Biden White House and its press operation. “White House Reporters: Biden Team Wanted Our Questions in Advance,” blared the headline. “If you’re a reporter with a tough question for the White House press secretary, Joe Biden’s staff wouldn’t mind knowing about it in advance,” said the lead. “According to three sources with knowledge of the matter, as well as written communications reviewed by The Daily Beast, the new president’s communications staff have already on occasion probed reporters to see what questions they plan on asking new White House Press Secretary Jen Psaki when called upon during briefings.”

Pretty damning report. The Fourth Estate is protected in the Constitution and its job is to demand answers from America’s political leaders, without fear or prejudice. The idea that the media, already viewed as liberal and supportive of Democrats — from Bill and Hillary Clinton to Barack Obama to Biden to congressional lawmakers — could be colluding with the White House provoked alarm. “The left demands 100 percent loyalty from the press, not the 99 percent they already get,” Media Research Center Vice President Dan Gainor told Fox News. “In today’s cancel culture, journalists don’t dare be open in their criticism, so that’s why this story is all whispers,” said Gainor.

The Beast’s report drew other questions, though. Was the White House simply trying to find out what reporters were interested in on any given day, or asking for the exact questions they would ask the press secretary in the daily briefing? Citing anonymous sources, the Beast said it was the latter. “[T]he press can’t really do its job in the briefing room if the White House is picking and choosing the questions they want,” one White House correspondent told the website. “That’s not really a free press at all.” Biden’s press team “did not deny that staffers had solicited questions from reporters,” said the Beast. “But the White House contended that it has tried to foster a better relationship with the press corps than the previous administration, and has tried to reach out to reporters directly in order to avoid appearing to dodge questions during briefings.”

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Censor him!

Florida Gov. DeSantis, Lawmakers Plan To Take Action On Big Tech (JTN)

Florida Gov. Ron DeSantis during a Tuesday news conference discussed plans for the Sunshine State to pursue legislation pertaining to big tech companies. “The message is loud and clear: When it comes to elections in Florida, big tech should stay out of it,” Gov. DeSantis said. “We can’t allow Floridans’ privacy to be violated, their voices and even their livelihoods diminished and their elections interfered with.” Among the various moves that the governor and state lawmakers have planned is a fine for deplatforming political candidates during an election. “Under our proposal if a technology company deplatforms a candidate for elected office in Florida during an election, a company will face a daily fine of $100,000 until the candidate’s access to the platform is restored,” he said.


“Further, if a technology company promotes a candidate for office against another, the value of that free promotion must be recorded as a political campaign contribution enforced by the Florida Elections Commission,” he said. The governor, who previously served as a lawmaker in the U.S. House of Representatives, said that tech businesses will face fines if they utilize “content and user-related algorithms” to boost or depress access to material pertaining to a candidate or cause that is up for a vote. “Florida consumers deserve protection for their privacy,” DeSantis said, noting that “with the help of our legislative partners we’re gonna stand together in support of Floridians and put a stop to big tech’s practice of preying on consumers.”

Tucker De Santis
https://twitter.com/i/status/1356792854647984129

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There you go.

Academic Media Censorship Conference Censored by YouTube (MPN)

An academic critical media literacy conference warning of the dangers of media censorship has, ironically, been censored by YouTube. The Critical Media Literacy Conference of the Americas 2020 took place without incident online over two days in October and featured a number of esteemed speakers and panels discussing issues concerning modern media studies. Weeks later, however, the entire video record of the conference — estimated at around 24 hours of material — disappeared from YouTube. Organizer Nolan Higdon of California State University East Bay, began receiving worried messages from other academics, some of which were shared with MintPress, who had been using the material in their classrooms, noting that it had all mysteriously disappeared.

“At first I thought it was a joke,” said Mickey Huff of Diablo Valley College, California. “My initial reaction was ‘that’s absurd;’ there must have been a mistake or an accident or it must have got swept under somehow. There is no violation, there was no reasoning, there was no warning, there was not an explanation, there was no nothing. The entire channel was just gone,” he told MintPress. Huff is also the director of Project Censored, an organization that sponsored the event. Higdon suspected that it was the content critical of big tech monopolies like Google, YouTube, Facebook, and Twitter that was the reason why the channel was deleted. “Each video was a different panel and every panel had different people from the other ones, so it is not like there was one theme or person or copyrighted content in all of our videos; this seems to be an attack on the conference, not on a singular video,” he said.

The organizers were careful to avoid copyright infringement, with the large majority of their videos in lecture format, essentially a recorded Zoom call. Speakers included some of the best-known names in media studies, with the event sponsored by institutions like Stanford University and UCLA. “This wasn’t a keg party with Parler users: it was an academic conference,” Huff said. These are pioneering figures in critical media literacy scholarship. It’s mind numbing that all of this was just disappeared from YouTube. The irony is writ large…This is part of a potentially algorithmic way of getting rid of more radical positions that criticize establishment media systems, including journalism.”

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Ha ha ha. “The bull was covered in a blue tarp to prevent further vandalism.”

NYPD Deploys Counter Terrorism Unit To Protect Wall Street (MPN)

The Charging Bull statue in Manhattan’s Financial District has become the sight of protests amid a wider financial rebellion happening online. On Friday, a handful of activists were seen in Bowling Green Park, posing with the bull, and holding signs that said “Tax Wall Street Trades.” A thin band of tape was also placed on the statue’s head and rear end, featuring slogans like “Hold the line” and “WSB” — both allusions to the GameStop insurrection against hedge funds organized by Reddit’s “Wall Street Bets” community. A similar fate befell the new Fearless Girl statue, which faces the New York Stock Exchange building. Both the bull and the girl are meant to symbolize the power, bravery and daring of the city’s financial traders.


In response, the New York Police Department (NYPD) mobilized its anti-terrorism unit, sending masked, blad clad police officers wearing armor and carrying assault rifles to protect and secure the area. “The Stock Market has had an interesting week to say the least. We are happy to report that the Wall Street Charging Bull is secure and continues to preside over Bowling Green for the foreseeable future,” it announced. The bull was covered in a blue tarp to prevent further vandalism. The decision to deploy counter-terrorism officers on the streets of Manhattan was not well appreciated, at least judging by replies left on the unit’s official social media pages. “Perfect example of how police exist to protect private property and not people,” was the highest rated response. Other popular replies included, “You brought out the automatic rifles and body armor… for tape,” “Good ad for defunding the police right here,” and, “If this was a shot in a movie, I’d think it was too on the nose.”

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A summit hosted by Boris will not protect the planet, but the rich. It’s like the Paris accord, designed to let them continue to control the topic. And make a lot of money of painting stuff green.

Economics’ Failure Over Destruction Of Nature Presents ‘Extreme Risks’ (G.)

The world is being put at “extreme risk” by the failure of economics to take account of the rapid depletion of the natural world and needs to find new measures of success to avoid a catastrophic breakdown, a landmark review has concluded. Prosperity was coming at a “devastating cost” to the ecosystems that provide humanity with food, water and clean air, said Prof Sir Partha Dasgupta, the Cambridge University economist who conducted the review. Radical global changes to production, consumption, finance and education were urgently needed, he said. The 600-page review was commissioned by the UK Treasury, the first time a national finance ministry has authorised a full assessment of the economic importance of nature. A similar Treasury-sponsored review in 2006 by Nicholas Stern is credited with transforming economic understanding of the climate crisis.

The review said that two UN conferences this year – on biodiversity and climate change – provided opportunities for the international community to rethink an approach that has seen a 40% plunge in the stocks of natural capital per head between 1992 and 2014. “Nature is our home. Good economics demands we manage it better,” said Dasgupta. “Truly sustainable economic growth and development means recognising that our long-term prosperity relies on rebalancing our demand of nature’s goods and services with its capacity to supply them. It also means accounting fully for the impact of our interactions with nature. Covid-19 has shown us what can happen when we don’t do this.” Sir David Attenborough said the review was “immensely important”. In a foreword, he said: “If we continue this damage, whole ecosystems will collapse. That is now a real risk. The review at last puts biodiversity at the core [of economics]. It shows how we can help save the natural world at what may be the last minute, and in doing so, save ourselves.”

The British prime minister, Boris Johnson, who will host the UN climate summit in Glasgow in November, said: “This year is critical in determining whether we can stop and reverse the concerning trend of fast-declining biodiversity. I welcome the review, which makes clear that protecting and enhancing nature needs more than good intentions – it requires concerted, coordinated action.” Humanity’s impact on the natural world is stark, with animal populations having dropped by an average of 68% since 1970 and forest destruction continuing at pace – some scientists think a sixth mass extinction of life is under way and accelerating. Today, just 4% of the world’s mammals are wild, hugely outweighed by humans and their livestock.

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Dec 282018
 
 December 28, 2018  Posted by at 10:33 am Finance Tagged with: , , , , , , , , , , , ,  5 Responses »


Berthe Morisot After luncheon1881

 

Investors Fear Historic Market Rebound Was Just A ‘Wicked Bear Trap’ (MW)
US Stocks Follow Record-Breaking Rise With Day Of Wild Swings (G.)
VIX Is About To Do Something It Hasn’t Done Since 2011 (MW)
Watch Out When Men Of War Come To The Rescue (Fisk)
Giuliani: Mueller Must Be Investigated For Destruction Of FBI Evidence (Hill)
Donald Trump ‘Worst Perpetrator’ Of Fake News: UN Special Rapporteur (Pol.eu)
Macron ‘Lost Authority’ After Caving To Yellow Jackets, Says Oettinger (Pol.eu)
Corbyn Wants May To Recall MPs Early Over Critical Brexit Vote (Ind.)
Brexit’s Aura Of Inevitability Is Vanishing (Kaletsky)
Turning Brexit Into a Celebration of Democracy (Varoufakis)
Crime and Punishment in an Age of the Jungle (Vallianatos)

 

 

Catchy, but A Christmas Carol might be a better example. ‘Investors’ believe the ghosts are real, just like they believe markets are real. Read yesterday’s 2019: Zombie Markets Before The Fall to understand why that is nonsense.

Investors Are Speechless: “It’s Like Watching Pulp Fiction” (ZH)

With market action becoming increasingly surreal and the panicked, vertigo-inducing bear market rallies (spawned by a record $64 billion pension fund reallocation into stocks in a historically illiquid market) reminiscent of the chaos observed at the depths of the financial crisis, it is only appropriate that some of the quotes Bloomberg picked for its daily wrap piece which commemorated the biggest intraday reversal since 2010, be just as surreal. “Investors are becoming desensitized,” Bryce Doty, SVP at Sit Investment Associates, told Bloomberg, then continued the verbal poetry: “It’s like watching ‘Pulp Fiction.’ Halfway through, the violence doesn’t even bother you anymore.”

He’s right, although whereas the market “violence” in past weeks was one directional, this week it has developed a twist to trap both the bulls and bears, and while the latest Dow swing (of nearly 1000 points) was only slightly bigger than the average up-and-down move last week, back then equities were merely tumbling, now it tends to drop early in the day then soar in afternoon trading. So fast forwarding to the post-Christmas chaos – which this website explicitly warned about when last Friday we said to “Brace For Seismic Volatility” – strategists are starting to ask: if days like these are now normal, is there a context in which the whole three-month rout starts to feel routine?

There are the optimists like Jim Kelleher, director of research at Argus Research, who said market turmoil that happens when the economy is holding up reminds him of past stock declines that ended gently. Unless evidence emerges of deep global growth erosion, what’s going on now “will prove to be shorter and more shallow than the declines experienced in ‘classic’ bear markets.” Others are not so sure: “Investors are wondering if this will be a crash,” said Dave Campbell, a principal at San Francisco’s BOS, who nonetheless still managed to put a favorable spin on events.

“The risks are there, but they’re always there. They’re more heightened but it’s not the most likely outcome. The economy continues to grow – maybe a little more slowly – but next year markets will have hit their lows and we’ll be on the rebound.” Then there are those who echo what we asked yesterday, namely if this is only a bear market rally, although granted a very furious one: as Bloomberg writes in its second end of day wrap, “on the surface, the rally is good news for investors searching for a bottom after a three-month sell-off sent the S&P 500 to the brink of a bear market. But days like this are rarely good omens.”

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What’s happening is much more profound than bear markets.

Investors Fear Historic Market Rebound Was Just A ‘Wicked Bear Trap’ (MW)

It’s been a rough three months, and a particularly difficult December, for stocks, however. The Nasdaq is in a bear market while the Dow and S&P 500 are solidly in correction territory and nursing hefty December losses and year-to-date declines. Some market watchers find big bounces in such an environment less than convincing. Russ Mould, investment director at AJ Bell, offered up the table below in a Thursday note. It takes a look back at the 20 biggest one-day percentage gains for the S&P 500 going back to 1970, a stretch that includes nearly 12,800 trading days.

[..] Bulls can take encouragement from the fact that three of the 17 other days that saw an advance of 5% or more came immediately in the aftermath of the October 1987 crash, “when buying did prove a good plan,” while two more came in March 2009, when the S&P 500 hit bottom and began its current bull run. But here’s the rub: Eight of those gains of 5% or more came during the 2007-09 bear market and three more occurred during the downturn of 2000-03, “to suggest there is still a risk that this year’s Boxing Day bonanza could be no more than a wicked bear trap set to lure investors into more trouble,” Mould wrote ahead of Thursday’s open, saying that traders and investors “will be looking out for a couple of further definitive signals before they decide it really is time to buy on the dips following this year’s Christmas selloff.”

Indeed, market veterans warn that massive, one-day rallies are often more characteristic of downturns, occurring as selloffs lead to significantly oversold technical conditions that leave markets ripe for short covering only to give way to renewed selling once the frenzy of forced buying is exhausted. Investors who short a stock are essentially betting that its price will fall by first borrowing the shares, but those traders can be forced to buy shares back if prices suddenly swing higher, which, in turn, can amplify price swings.

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When is all this cheap money going to bail out?

US Stocks Follow Record-Breaking Rise With Day Of Wild Swings (G.)

US stock markets seesawed again on Thursday as a record-breaking day of gains gave way to selling once again before rising again in late trading. By lunchtime all the major US markets were in the red, with the Dow Jones Industrial Average down 1.4%, the S&P 500 losing 1.5% and the Nasdaq off 1.9%. But most US markets ended the day in the black with the Dow up 1.13%, the S&P adding 0.85% and the Nasdaq 0.38%. After a series of often wild swings the US stock markets are still on course to end the year in bear market territory – triggered when markets fall 20% from their most recent high. A bear market would be the first in close to a decade.

Michael Antonelli, managing director, institutional sales trading at Robert W Baird in Milwaukee, said he expected more dramatic days aheads. “There’s only two more sessions left before the end of the year. I would expect volatility to reign. It’s dug in like a tick,” he said. Stocks had fallen for four consecutive days through Monday. Wednesday’s rally – with the Dow adding close to 5% and a record 1,080 points – could have signaled a turning point. Markets closed up in Japan and Australia but European markets sank again on Thursday, with the FTSE closing down 1.5% in London, sinking to it’s lowest level since July 2016 (a month after the Brexit vote). Germany’s DAX closed down 2.3% and France’s CAC fell 0.6%

Stock markets have become increasingly volatile in recent months and recorded both record losses and record gains this week. The Dow Jones plummeted 653 points on Monday, capping its worst week in a decade and marking its “worst day of Christmas Eve trading ever”.

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The low VIX shows you how out of touch the financial world is. There can be only one reason for it: the Fed.

VIX Is About To Do Something It Hasn’t Done Since 2011 (MW)

It shouldn’t come as a surprise to anyone paying attention that stock-market volatility is on the rise. But here’s a statistic that underlines the phenomenon. The Cboe Volatility Index, commonly known as the VIX and often, if not sometimes derisively, referred to as Wall Street’s fear gauge, was on track Thursday to close above 30 for the fourth day in a row. The index, an options-based measure of expected volatility over the coming 30-day period, traded at 32.92 in recent action, up 2.51 points. According to data compiled by Dow Jones Market Data, that would be the longest streak since a 14-day run that ended in November 2011, surpassing a three-day period seen in August 2015. The index has a long-term average near 20.

It’s certainly been a week of whipsaw trading for investors. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all falling more than 2% in Monday’s holiday-abbreviated session to post the worst Christmas Eve performance in Wall Street history, only to roar back on Wednesday to more than reverse those declines as the S&P and Dow jumped 5% each and the Nasdaq gained 5.8%. On Thursday, stocks were back under pressure, with the Dow giving up more than half of the previous day’s 1,086-point gain.

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Robert Fisk is done. Comparing Putin to Hitler on the brink of 2019 is all we need to know. BTW, Mattis DID consider running.

Watch Out When Men Of War Come To The Rescue (Fisk)

When a general popularly known as James “Mad Dog” Mattis abandons a really mad American president, you know something has fallen off the edge in Washington. Since the Roman empire, formerly loyal military chiefs have fled crackpot leaders, and Mattis’s retreat from the White House might have the smell of de Gaulle and Petain about it. De Gaulle was confronted by an immensely powerful hero of the people – the Lion of Verdun – who was, in his dotage, about to shrug off the sacred alliance with Britain for Nazi collaboration (for which, I suppose, read Putin’s Russia). The decision was made to have nothing to do with Petain, or what Mattis now refers to as “malign actors”. De Gaulle would lead Free France instead.

Mattis has no such ambitions – not yet, at any rate – although there are plenty of Lavals and Weygands waiting to see if Trump chooses one of them for his next secretary of defence. Besides, history should not grant Trump and Mattis such an epic panorama. After all, no Trump tweet could compare with Petain’s 1916 “We’ll get them!” (“on les aura”) slogan, and the dignified, cold and fastidious de Gaulle would never have lent himself to the rant Mattis embarked upon in San Diego in 2005: “You go into Afghanistan, you got guys who slap women around for five years because they didn’t wear a veil. You know, guys like that ain’t got no manhood left anyway. So it’s a hell of a lot of fun to shoot them. Actually, it’s a lot of fun to fight. You know, it’s a hell of a hoot. It’s fun to shoot some people. I’ll be right upfront with you, I like brawling.”

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If investigations like this are not held, the US risks becoming a very volatile place.

Giuliani: Mueller Must Be Investigated For Destruction Of FBI Evidence (Hill)

Rudy Giuliani has an unmistakable New Year’s message for special counsel Robert Mueller: It is time for the chief investigator in the Russia case to be investigated in 2019. In wide-ranging interviews with Hill.TV’s Buck Sexton and me on Wednesday and Thursday, President Trump’s defense lawyer pointedly accused Mueller’s office of destroying evidence by allowing text messages from now-fired FBI official Peter Strzok and his FBI lover, Lisa Page, to be erased in the Russia probe. “Mueller should be investigated for destruction of evidence for allowing those text messages from Strzok to be erased, messages that would show the state of mind and tactics of his lead anti-Trump FBI agent at the start of his probe,” Giuliani said.

The Justice Department inspector general (IG) reported this month that it found large gaps in the preservation of official government text messages between Strzok and Page, the two top FBI agents who helped to start the Russia probe in 2016, who were having an affair at the time, and who expressed disdain for Trump. The report said a technical glitch was to blame for the FBI’s failure to save those text messages, but the IG was able to recover more than 19,000 from the early part of the Russia probe before Mueller was named special prosecutor. However, the IG said it was unable to recover messages from the time Strzok and Page worked for Mueller’s office in spring and summer 2017 because the memories of both FBI officials’ government phones were wiped clean by technicians.

That erasure occurred after Strzok and Page left Mueller’s team over revelations they exchanged anti-Trump text messages, including one string in which they talked about stopping Trump from becoming president. “That should be investigated, damn it, that should be investigated fully. You want a special counsel, get one for that,” Giuliani said.

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Really? The UN is going to pick sides? Against Trump and pro Big Tech?

Donald Trump ‘Worst Perpetrator’ Of Fake News: UN Special Rapporteur (Pol.eu)

The President of the United States is the “worst” perpetrator of misinformation on the internet, the U.N. Special Rapporteur on Freedom of Expression and Opinion David Kaye said in an interview published today. “Governments are real offenders when it comes to disinformation,” said Kaye. “In my own country, the United States, the worst perpetrator of false information is the President of the United States.” The problem of fake news emanating from governments should be covered by journalists, the rapporteur said. Platforms such as Google, Facebook or Twitter can help the broader fight against disinformation — bots, foreign interference… — but should not remove content, Kaye said.

“The platforms, I think, can do things that are more technical as long as they are not evaluating content. There are things they can do. They can’t just zap it and say, “This is fake news, it’s off the platform.” According to Kaye, platforms should focus on reducing spam and bot accounts rather than on policing content. And even bots are “tricky, because there are good bots and bad bots.” Google, Facebook and Twitter are under intense pressure from the European Commission to tackle fake news ahead of the European election in May 2019.

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When did the Yellow Vests become an insect species?

Macron Lost Authority After Caving To Yellow Jackets – EU’s Oettinger (Pol.eu)

The EU will accept a French budget deficit above the EU’s 3 percent ceiling in 2018 “as a one-time exception,” Budget Commissioner Günther Oettinger said in an interview published Thursday. Oettinger told the Funke media group of German newspapers that French President Emmanuel Macron had “lost authority with his budget for 2019” by upping his spending in response to the Yellow Jackets protests, “but he remains a strong supporter of the European Union.” Brussels reviewed the French budget several weeks ago and won’t be revisiting it, Oettinger added. “It crucial now that Macron continues his reform agenda, especially in the labor market, and that France remains on its growth track.”

“Under this condition, we will tolerate a national debt higher than 3 percent as a one-time exception. However, it must not continue beyond 2019.” Oettinger also told the Funke media group that there’s still a chance Britain’s parliament will vote in favor of Prime Minister Theresa May’s Brexit deal in January and that “there is certainly no majority for a disorderly Brexit or for a new referendum.” If the U.K. leaves the bloc without a Brexit deal, it will become “a third country like Morocco or Azerbaijan,” Oettinger said. He added that if Britain withholds its divorce payment in 2019, Germany would be left footing the bill “in the mid-three-digit range” of hundreds of millions of euros.

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The sudden urgency is too late.

Corbyn Wants May To Recall MPs Early Over Critical Brexit Vote (Ind.)

Jeremy Corbyn has challenged Theresa May to cut short the Christmas recess and recall parliament early in the new year in order to bring forward a critical vote on the Brexit deal. In an interview with The Independent, the Labour leader said he believed the prime minister and her allies were engaged in a “cynical manoeuvre” to run down the clock and offer MPs the “choice of the devil or the deep blue sea”. His remarks come as the Commons prepares to vote on the UK-EU deal in the week beginning 14 January – in what is being billed as the most significant moment in parliament for a generation.

With just 91 days remaining until Britain formally leaves the European Union, Mr Corbyn also reiterated it is a matter of “when, not if” Labour attempts to force a general election by tabling a motion of no confidence in the government, which he signalled will come in the aftermath of Ms May’s deal failing to receive MPs’ backing. But he refused to be drawn on whether a Labour government would seek to extend Article 50, given that just weeks would remain for any renegotiation of Britain’s exit from the bloc, and claimed: “Lots of things are possible, the EU has longform on reopening and extending negotiations, but let’s not jump too many hoops when we haven’t arrived at them.”

Speaking in his constituency office in Islington, north London, ahead of Christmas Day, he poured scorn on the prime minister’s decision earlier this month to pull a vote on the deal in the face of near-certain defeat and instead begin a last-ditch attempt to seek assurances from the EU to assuage Brexiteers’ concerns over the contentious issue of the Irish backstop. Pressed on whether he believed Ms May should now recall parliament a week early, on 2 January, the Labour leader replied: “Well it is in her hands to recall parliament. I want us to have a vote as soon as possible, that’s what I’ve been saying for the past two weeks, and if that means recalling parliament to have the vote let’s have it.

“But it looks to me the government has once again reneged on that and tried to put it back another week. We need to have that vote so a decision of parliament can be made. What I suspect is that it’s a completely cynical manoeuvre to run down the clock and offer MPs the choice of the devil or the deep blue sea.”

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For some, perhaps.

Brexit’s Aura Of Inevitability Is Vanishing (Kaletsky)

In times of political turmoil, events can move from impossible to inevitable without even passing through improbable. In early 2016, the idea of Britain leaving the European Union seemed almost as absurd as the next American president being the six-time bankrupt and serial sex pest Donald Trump. A few months later, Brexit and the Trump presidency were universally acknowledged as the inevitable consequence of an anti-elitist, anti-globalization backlash that was predictable decades ago. This sense of inevitability, far more than genuine anti-European conviction, is what has discouraged Britain from changing its mind about a pointless and self-destructive policy that few voters cared about until 2016.

The message from post-Brexit polling and focus groups has been: “We all know that Brexit has to happen, so why don’t the politicians just get on with it?” But with the Brexit process now moving toward its climax, another outcome is moving from impossible to inevitable: Britain could soon change its mind and decide to stay in the EU. This reversal of fortune could begin next month, when Prime Minister Theresa May is expected to lose the decisive parliamentary vote on her Brexit deal. If and when this defeat happens, May will face two unpalatable options. She could preside over a “No Deal” rupture with Europe — tantamount to a declaration of economic war against the EU — and risk a 2008-level economic crisis accompanied by a border upheaval in Ireland that could reignite the “Troubles.”

Or she could break her extravagant promises to honor the “people’s instruction” from the 2016 referendum and allow a new popular vote that might cancel Brexit. To avoid this invidious choice, May could try one last time to push her proposals through Parliament after losing the vote scheduled for the week of January 14. But if this last-ditch effort fails, her choices will be reduced to a No Deal rupture with Europe and a new referendum.

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Varoufakis is basically right, but I can’t see a three-year People’s Debate tackling 6 issues. Brits will think: we can’t even deal with one issue. And an extension of a transition period until 2022 is hard to see, too.

Turning Brexit Into a Celebration of Democracy (Varoufakis)

With weeks left before the UK leaves the EU by default, none of the three main options on offer – a no-deal Brexit, Prime Minister Theresa May’s withdrawal agreement with the EU, and rescinding Article 50 in order to remain in the EU – commands a majority in Parliament or among the population. Each generates maximum discontent: The no-deal scenario strikes most as a dangerous plunge into the unknown. May’s deal appalls Remainers and is seen by most Leavers as the kind of document only a country defeated at war would sign. Lastly, a Brexit reversal would confirm Leavers’ belief that democracy is allowed only when it yields results favored by the London establishment.

The conventional wisdom in Britain is that this impasse is lamentable, and that it proves the failure of British democracy. I disagree on both counts. If any of the three immediately available options were endorsed, say, in a second referendum, discontent would increase and the larger questions plaguing the UK would remain unanswered. Britons’ reluctance to endorse any Brexit option at present is, from this perspective, a sign of collective wisdom and a rare opportunity to come to terms with the country’s great challenges while re-thinking the UK’s relationship with the EU. But to seize it, the UK must invest in a “People’s Debate,” leading, in time, to a “People’s Decision.”

The People’s Debate must address six issues: the British constitution, including the creation of an English parliament or multiple regional English assemblies; the electoral system and the role of referenda; the Irish question, including the possibility of joint UK-Irish sovereignty over Northern Ireland; migration and freedom of movement; Britain’s economic model, particularly the outsize role of finance and the need to boost green investment across the country; and of course the UK-EU relationship.

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Proudly poisoning your food for 100 years.

Crime and Punishment in an Age of the Jungle (Vallianatos)

[..] studies funded by EPA and others have been connecting farmers’ sprays to ecocide, disease and death. I traced the catastrophic decline of honeybees to the neurotoxic pesticides of the farmers. This brought me in touch with a caring beekeeper from Colorado named Tom Theobald. He was telling me his days as a beekeeper were coming to an end. In December 2018, he summarized 44 years of living with honeybees and the poisoners of honeybees. “Almost every problem we face,” he said, “can be traced to a Criminal Corporatism and an out of control Capitalism. If there is a profit to be made, there is little regard paid to the consequences. If challenged, we get denial, diversion, excuses and junk science. It simply doesn’t matter how many people are sickened or die, how many species are pushed to extinction or how seriously the planet is compromised.”

[..] We are fortunate we have a reliable history of that irresponsible age by Deborah Blum, director of the Knight Science Journalism Program at MIT. A prolific and outstanding writer, Blum is telling a story that illuminates both early twentieth century, but, perversely, our own times. Her timely book, The Poison Squad: One Chemist’s Single-Minded Crusade for Food Safety at the Turn of the Twentieth Century (Penguin Press, 2018) paints an unforgettable picture of an American table full of “adulterated” food. Milk and meat were routinely treated with formaldehyde, a carcinogen used for embalming of corpses. Wine drinkers drank a liquid that had nothing to do with grapes. Wine was made from “tannin and coal tar.”

The poisonous copper sulphate dressed canned vegetables. The cleaning chemical borax coated butter. Honey had nothing to do with real honey. It was rather a version of “thickened, colored corn syrup.” Coffee was usually “sawdust, or wheat, beans, peas and dandelion seeds, scorched black and ground to resemble the genuine article.” Bread was baked with alum or chalk, or “sawdust chopped up very fine or gypsum in powder… Terra alba just out of the mine.” There was no law against the poisonous adulteration of food and drink. However, the adulteration of food, Blum says, gave sickness and death, potentially to huge number of Americans. Tainted milk alone killed thousands of children in New York City every year.

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Apr 192018
 
 April 19, 2018  Posted by at 8:35 am Finance Tagged with: , , , , , , , , , ,  8 Responses »


Edgar Degas The laundress 1873

 

Triffin Warned Us (Lebowitz)
Global Debt Has Reached A Record High, And 3 Countries Are To Blame – IMF (MW)
Dollar Bears Beware, Trump Tweets May Not Be Enough (Karamanlis)
Facebook Says Users Must Accept Targeted Ads Even Under New EU Law (R.)
Facebook To Put 1.5 Billion Users Out Of Reach Of New EU Privacy Law (R.)
VIX Rigging Talk Erupts on Wall Street After Another Wild Swing (BBG)
UK Government Loses Key Brexit Vote (CNN)
Lawmakers Make Criminal Referral on Clinton, Comey, Lynch to DOJ (Carter)
New York Attorney General Wants Power To Bypass Trump Pardons (R.)
German Prosecutors Raid Homes Of Porsche Executives Over Dieselgate (Pol.)
Turkey Disputes Sovereignty of 152 Greek Islets (GR)
Top Greek Court To Rule Irrevocably On Asylum For Turkish Servicemen (K.)
Americans Waste 150,000 Tons Of Food Each Day – A Pound Per Person (G.)

 

 

We sold our souls to the Debt Devil. There has been no growth for years. We borrowed it all.

Triffin Warned Us (Lebowitz)

Folklore states that Robert Johnson went down to the crossroads in Rosedale, Mississippi and made a deal with the devil in which he swapped his soul for musical virtuosity. In 1944, the United States and many nations made a deal at the crossroads in Bretton Woods, New Hampshire. The agreement, forged at a historic meeting of global leaders, has paid enormous economic benefits to the United States, but due to its very nature, has a flawed incongruity with a dear price that must be paid. In 1960, Robert Triffin brilliantly argued that ever-accumulating trade deficits, the flaw of hosting the reserve currency and the result of Bretton Woods, may help economic growth in the short run but would kill it in the long run.

Triffin’s theory, better known as Triffin’s Paradox, is essential to grasp the current economic woes and, more importantly, recognize why the path for future economic growth is far different from that envisioned in 1944. We believe the financial crisis of 2008 was likely an important warning that years of accumulating deficits and debts associated with maintaining the world’s reserve currency may finally be reaching their tipping point. Despite the last nine years of outsized fiscal spending and unprecedented monetary stimulus, economic growth is well below the pace of recoveries of years past. In fact, as shown below, starting in 2009 the cumulative amount of new federal debt surpassed the cumulative amount of GDP growth going back to 1967. Said differently, if it were not for a significant and consistent federal deficit, GDP would have been negative every year since the 2008 financial crisis.

[..] In 1960, 11 years before Nixon’s suspension of gold convertibility and essentially the demise of the Bretton Woods Agreement, Robert Tiffin foresaw this problem in his book Gold and the Dollar Crisis: The Future of Convertibility. According to his logic, the extreme privilege of becoming the world’s reserve currency would eventually carry a heavy penalty for the U.S. Although initially his thoughts were generally given little consideration, Triffin’s hypothesis was taken seriously enough for him to gain a seat at an obscure congressional hearing of the Joint Economic Committee in December the same year. What he described in the book, and his later testimony, became known as Triffin’s Paradox.

Events have played out largely as he envisioned it. Essentially, he argued that reserve status affords a good percentage of global trade to occur in U.S. dollars. For this to occur the U.S. must supply the world with U.S. dollars. In other words, to supply the world with dollars, the United States would always have to run a trade deficit whereby the dollar amount of imports exceeds the dollar amount of exports. Running persistent deficits, the United States would become a debtor nation. The fact that other countries need to hold U.S. dollars as reserves tends to offset the effects of consistent deficits and keeps the dollar stronger than it would have been otherwise.

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The increase in Chinese debt is staggering. And worrisome.

Global Debt Has Reached A Record High, And 3 Countries Are To Blame – IMF (MW)

Global debt has reached a record high, and three countries account for more than half of it, according to a new International Monetary Fund report released Wednesday. The IMF’s fiscal monitor said total debt reached $164 trillion in 2016, or 225% of global gross domestic product. That includes the debt of governments, households and companies. Compared with the previous peak in 2009, the world is now 12% of GDP deeper in debt, the IMF said. Just three countries — China, Japan and the U.S. — account for more than half of global debt, and China alone accounts for almost three-quarters of the increase in private debt since the financial crisis.

The IMF warns that countries with elevated government debt are vulnerable to a sudden tightening of global financing conditions, and it said advanced economies were resting on their laurels, with deficits remaining unchanged on average. It said the U.S. was the only advanced economy expecting an increase in debt-to-GDP ratio over the next five years. That’s due to the recently enacted tax cuts as well as the big increase in spending. The IMF said its U.S. forecasts are similar to those published by the Congressional Budget Office.

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Trump as currency manipulator?

Dollar Bears Beware, Trump Tweets May Not Be Enough (Karamanlis)

The entrenched bearish dollar view has all the ingredients to become the pain-trade of the year. It has become super crowded based on occasional utterances from the White House while ignoring a fundamental shift at the Fed. The Bloomberg Dollar Spot Index is hovering near a three-year low as uncertainties surrounding the Trump administration weigh on investor confidence. Be it verbal intervention toward a weaker currency, personnel changes or trade protectionism, the U.S. President has had a way of frustrating dollar longs. As a result, any rebounds in the U.S. currency this year have been short- lived. That’s led to a massive build in short-dollar positions. Hedge funds and other large speculators haven’t been more bearish on the greenback in more than five years, CFTC data show.

With less room for additional short exposure, dollar bears are going to need something more than the short-term turbulence generated by Trump. Those hoping for an assist from monetary policy are likely to be sorely disappointed. The Fed isn’t just retaining its bullish stance, it’s looking for a more aggressive rate-hike trajectory than the market anticipates. With almost half of Fed policy makers projecting at least four interest rate increases for 2018, upside risks prevail. Those risks may become more pronounced should the U.S. Senate confirm Richard Clarida as vice chairman. Clarida, no stranger to the notion of a total of four hikes this year, may spark another round of speculation on whether the FOMC could include a price-level target in its policy framework.

Soon-to-be New York Fed President John Williams also advocates such a shift, which Clarida said, in a Pimco commentary back in 2014, would – in theory – result in higher yields on longer-duration bonds. Given the dollar has been feeling the pressure of a flatter curve since late 2016, the all-new Fed may bring an end to fears that the curve’s shape portends a U.S. recession. After all, the composition of voting members this year has shifted from 2017’s dovish roster. Dollar pricing hasn’t reflected that. Even if Trump shifts away from weak-dollar rhetoric and the market catches up with the Fed’s dot plot, the dollar may struggle to gain the 6% needed to retest October’s highs. But that doesn’t mean we’ll see a slide to fresh, sustainable year-to-date lows.

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Users must leave instead.

Facebook Says Users Must Accept Targeted Ads Even Under New EU Law (R.)

Facebook said on Tuesday it would continue requiring people to accept targeted ads as a condition of using its service, a stance that may help keep its business model largely intact despite a new European Union privacy law. The EU law, which takes effect next month, promises the biggest shakeup in online privacy since the birth of the internet. Companies face fines if they collect or use personal information without permission. Facebook Deputy Chief Privacy Officer Rob Sherman said the social network would begin seeking Europeans’ permission this week for a variety of ways Facebook uses their data, but he said that opting out of targeted marketing altogether would not be possible.

“Facebook is an advertising-supported service,” Sherman said in a briefing with reporters at Facebook’s headquarters. Facebook users will be able to limit the kinds of data that advertisers use to target their pitches, he added, but “all ads on Facebook are targeted to some extent, and that’s true for offline advertising, as well.” Facebook, the world’s largest social media network, will use what are known as “permission screens” – pages filled with text that require pressing a button to advance – to notify and obtain approval. The screens will show up on the Facebook website and smartphone app in Europe this week and globally in the coming months, Sherman said.

The screens will not give Facebook users the option to hit “decline.” Instead, they will guide users to either “accept and continue” or “manage data setting,” according to copies the company showed reporters on Tuesday. “People can choose to not be on Facebook if they want,” Sherman said.

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Time to get Facebook out of its misery?!

Facebook To Put 1.5 Billion Users Out Of Reach Of New EU Privacy Law (R.)

If a new European law restricting what companies can do with people’s online data went into effect tomorrow, almost 1.9 billion Facebook Inc users around the world would be protected by it. The online social network is making changes that ensure the number will be much smaller. Facebook members outside the United States and Canada, whether they know it or not, are currently governed by terms of service agreed with the company’s international headquarters in Ireland. Next month, Facebook is planning to make that the case for only European users, meaning 1.5 billion members in Africa, Asia, Australia and Latin America will not fall under the European Union’s General Data Protection Regulation (GDPR), which takes effect on May 25.

The previously unreported move, which Facebook confirmed to Reuters on Tuesday, shows the world’s largest online social network is keen to reduce its exposure to GDPR, which allows European regulators to fine companies for collecting or using personal data without users’ consent. That removes a huge potential liability for Facebook, as the new EU law allows for fines of up to 4 percent of global annual revenue for infractions, which in Facebook’s case could mean billions of dollars. [..] The change affects more than 70 percent of Facebook’s 2 billion-plus members. As of December, Facebook had 239 million users in the United States and Canada, 370 million in Europe and 1.52 billion users elsewhere.

[..] In practice, the change means the 1.5 billion affected users will not be able to file complaints with Ireland’s Data Protection Commissioner or in Irish courts. Instead they will be governed by more lenient U.S. privacy laws, said Michael Veale, a technology policy researcher at University College London. Facebook will have more leeway in how it handles data about those users, Veale said. Certain types of data such as browsing history, for instance, are considered personal data under EU law but are not as protected in the United States, he said.

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If possible, it’ll be done.

VIX Rigging Talk Erupts on Wall Street After Another Wild Swing (BBG)

The Cboe Volatility Index is how Wall Street measures anxiety. Lately it’s the gauge’s own plumbing that’s making people nervous. It’s a recurrent claim – the VIX is rigged. It got a fresh airing Wednesday, when the index swung wildly just as derivatives on it were expiring. Billions of dollars are earned or lost as VIX futures settle. The concern is that owners of those wagers are willing to spend a few million to make them pay off. The suspicions are only that, suspicions. Volatility markets are too complex for easy conclusions to be drawn, and reasonable explanations have been offered for the patterns. But strange-looking outcomes have happened enough on VIX settlement day that the debate keeps being revived.

Cboe Global Markets declined to comment. Last month, Cboe CEO Ed Tilly said at a conference that “the integrity of our VIX products and markets is paramount. And, if our regulatory team were to uncover any manipulation, it would be rooted out, swiftly and decisively. Period.” Evidence the VIX is anything less than a pure readout on trader nerves would raise thorny questions for its overseers, who have succeeded in making it a central piece of Wall Street wiring. Its ability to turn stomachs was on display in February’s stock correction, whose worst moments came when the VIX doubled and wiped out bets on calm.

“You have people watching and using it as a barometer for all sorts of trading decisions,” Steve Sosnick, chief options strategist at Interactive Brokers in Greenwich, Connecticut, said by phone. “People take clues from what it’s doing as to what the market’s psychology is out there. But when the settlement time comes around, it can take on a life of its own.”

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Lost a second one as well, on throwing out Carribeans who’ve lived in Britain for 50+ years.

UK Government Loses Key Brexit Vote (CNN)

The UK Government has lost a key Brexit vote, with the upper House of Parliament backing calls to remain in the EU customs union after Brexit. The House of Lords voted 348 to 225 to amend the government’s EU Withdrawal Bill, which will now return to the House of Commons where the defeat is likely to spur renewed opposition. The amendment requires the government to report to Parliament by October 31 on what steps it has taken to remain in the customs union, which allows goods to flow freely across the EU. The government opposed the amendment. Prime Minister May had previously said Britain will not remain in the customs union after Brexit takes effect. The House of Lords is now considering other amendments to the proposed legislation.

The customs union enables the 28 EU member states, and other countries such as Turkey that have signed up to its rules, to function as a single trading area. In practice, it means that cars made in France can be sent to Italy without facing tariffs or a customs check at the border. Goods made outside the union are allowed to circulate freely once they’ve gained initial entry. However, membership prevents a country from negotiating its own bilateral trade deals with other nations. The ability to agree new trade deals – with the United States or China, for example – is central to Prime Minister Theresa May’s vision for Britain after Brexit. In a speech in September, she ruled out staying in the customs union.

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The Empire strikes back.

Lawmakers Make Criminal Referral on Clinton, Comey, Lynch to DOJ (Carter)

Congressional lawmakers made a criminal referral Wednesday to the Department of Justice Attorney General Jeff Sessions against former senior-level Obama administration officials, including employees of the FBI connected with the unverified dossier alleging collusion between the Trump campaign and Russia, as well as those involved in the warrants used to spy on a former Trump campaign volunteer, this reporter has learned. The lawmakers also made a criminal referral on former Attorney General Loretta Lynch and threats made by her DOJ against the FBI informant, who provided the bureau with information on the Russian nuclear industry and the approval in 2010 to sell roughly 20 percent of American uranium mining assets to Russia.

House Oversight and Government Reform Committee member Rep. Ron DeSantis, R-Florida, along with ten other colleagues sent the letter Wednesday to Sessions and FBI Director Christopher Wray criminally referring former FBI Director James Comey, former Secretary of State Hillary Clinton, former Attorney General Loretta Lynch, and former FBI Deputy Director Andrew McCabe for their involvement in the investigations into President Trump and alleged violations of federal law. FBI Special Agent Peter Strzok and his paramour FBI lawyer Lisa Page, whose anti-Trump text messages obtained by the DOJ Inspector General Michael Horowitz, were also included in the referral.

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Limiting presidential powers may not be such a bad idea in the US. But to do it through a single state governor?

New York Attorney General Wants Power To Bypass Trump Pardons (R.)

New York’s attorney general on Wednesday asked Governor Andrew Cuomo and state legislators to give him and other local prosecutors power to bring criminal charges against people pardoned by U.S. President Donald Trump. In a letter, Attorney General Eric Schneiderman urged Cuomo and legislative leaders to close a loophole in New York’s double jeopardy law shielding recipients of presidential pardons from state prosecution. A change could make it more difficult for Trump aides and others who might be pardoned to escape criminal prosecution, even if special counsel Robert Mueller’s probe into possible Russian interference in the 2016 presidential election were curbed or shut down.

The president has no constitutional power to pardon state crimes, but Schneiderman said the current law means defendants pardoned for serious federal crimes could be freed from “all accountability” under state criminal law. Schneiderman, a Democrat in his eighth year as attorney general, has made his office a central figure in blue state challenges to Trump, tangling with the Republican president on such matters as consumer finance, the environment, immigration and the 2020 census. Cuomo, a Democrat, is reviewing Schneiderman’s proposal, and “believes that the federal legal system should not provide a basis for any wrong doers to escape justice,” press secretary Dani Lever said in a statement.

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33 prosecutors alone were involved.

German Prosecutors Raid Homes Of Porsche Executives Over Dieselgate (Pol.)

German police carried out raids at properties linked to three current and former executives at Porsche today in connection with allegations of emissions cheating by the Volkswagen subsidiary. The raids covered ten properties across the states of Baden-Württemberg and Bavaria. The Stuttgart prosecutors office said in a statement they were “in connection with the manipulation of the emission control system of diesel cars.” Two of the executives still work for the carmaker, with one former employee also investigated as part of the probe. The individuals were not named by the prosecutor.

Porsche confirmed that documents were taken as part of the raids, adding that an Audi facility in Ingolstadt was also visited by authorities on Wednesday. The two carmakers said they are cooperating with investigating teams. Previously, authorities in Stuttgart, where Porsche is based, and Munich have launched smaller raids on homes and offices connected with officials at Audi and BMW over alleged emissions cheating. Volkswagen was caught out by U.S. authorities in September 2015 for installing defeat device software in 11 million diesel vehicles sold worldwide. Since then, the carmaker has agreed to pay out some $25 billion in compensation and settlements in the U.S.

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Erdogan called a snap poll on June 24. Then he can really act as an emperor. Beware.

Turkey Disputes Sovereignty of 152 Greek Islets (GR)

Ankara has issued a list of 152 Greek islets, disputing their sovereignty and the international treaties that have established the status quo in the Aegean. The list is called EGAYDAAK, the acronym for “Egemenligi Anlasmalarla Yunanistan’a Devredilmemis Ada Adacıkve Kayaliklar”, meaning “islands, islets and rocky islets the sovereignty of which was not granted to Greece under international agreements and treaties”. The list includes more than 20 islet formations belonging to the Fournoi Complex, a cluster of uninhabited islets between Ikaria, Samos and Patmos. Turkey’s aim is to bring Greece to the table and revise the 1923 Treaty of Lausanne and the 1947 Treaty of Paris, the two international agreements that granted the islets to Greece, establishing the sea borders between the two countries in the Aegean.

The issue has been brought up again after Turkish Prime Minister Binali Yildirim said that the Turkish coast guard removed a Greek flag on the Mikros Anthropofas rocky formation. However, new photos show the flag is still flying. The two Anthropofas islets are between Ikaria, Lemnos, Samothraki, Lesvos, Chios and Samos; therefore they are included in Article 12 of the Treaty of Lausanne that says all the above belong to Greece. Turkey, however, claims that since the islets and rocky formations are not specifically listed by name in the two international treaties, their sovereignty is contestable.

The EGAYDAAK list is comprised of the Zourafas complex and the Oinousses complex of islets in the North Aegean; the Kalogeroi complex of islets in the Central Aegean; the Fournoi complex in the East Aegean; the Arkoi, Agathonissi, Farmakonissi, SE Nissyros, SA Astpalea, NW Karpathos complexes of islets in the South Aegean; and the Cretan Sea complex of islets.

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Independent judiciary.

Top Greek Court To Rule Irrevocably On Asylum For Turkish Servicemen (K.)

Greece’s top administrative court is expected to rule on Thursday on whether the country can provide asylum to the eight Turkish officers whose extradition has repeatedly been demanded by Ankara. The Council of State carries the burden of resolving the asylum issue, in a high-profile case that has rattled relations between Greece and Turkey. The Supreme Court has ruled irrevocably against their extradition arguing they will not be given a fair trial in Turkey. The decision drew an angry rebuke from Ankara which accuses the eight of involvement in the country’s foiled coup attempt in July 2016.

If the court grants protection to “Turkey’s eight,” as they have become known, they will have to be immediately released from detention where they have remained for months while they wait for their application to be examined. An asylum appeals committee had ruled in favour of one of the servicemen in December 2017 but the government appealed the decision. If the court decides to reject their asylum request, then the government will have to issue documents that will allow them to remain in the country under a special status.

Whatever the ruling, the soldiers will have to be released at the end of May, when the maximum detention period of 18 months expires. Justice Minister Stavros Kontonis confirmed earlier this week the Turkish servicemen will be allowed to walk free when this period is completed. The eight men, three majors, three captains and two sergeant-majors, flew with a helicopter into northern Greece a day after the failed coup and sought asylum, saying they feared for their lives if they remained in Turkey.

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This is what our economies run on. Waste. Cutting the waste is an economic threat.

Americans Waste 150,000 Tons Of Food Each Day – A Pound Per Person (G.)

Americans waste about a pound of food per person each day, with people who have healthier diets rich in fruit and vegetables the most wasteful, research has found. About 150,000 tons of food is tossed out in US households each day, equivalent to about a third of the daily calories that each American consumes. Fruit and vegetables were the most likely to be thrown out, followed by dairy and then meat. This waste has an environmental toll, with the volume of discarded food equivalent to the yearly use of 30m acres of land, 780m pounds of pesticide and 4.2tn gallons of irrigated water. Rotting food also clogs up landfills and releases methane, a powerful greenhouse gas.

Researchers at the US Department of Agriculture analysed eight years of food data, up to 2014, to see where food is wasted and also what members of the public say they do at mealtimes. The research has been published in Plos One. The study found that the healthiest Americans are the most wasteful, because of their high consumption of fruits and vegetables, which are frequently thrown out. Fruit and vegetables require less land to grow than than other foods, such as meat, but require a large amount of water and pesticides. Lisa Jahns, a nutritionist at USDA and co-author of the study, said: “We need a simultaneous effort to increase food quality as well as reduce food waste. We need to put both of those things out.”

Jahns’s study recommends educating consumers on fruit and vegetable storage in order to reduce food waste. She said: “Consumers aren’t connecting the dots, [and] they don’t see the cost when they throw food in the trash. At the same time, we don’t want to undermine legitimate food safety concerns and we need to be aware it’s not just the cost of food that’s the issue. It’s the time and energy required to prepare and store food, which often isn’t a priority in a busy household.”

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Apr 012018
 


Rembrandt van Rijn Christ and St Mary Magdalene at the Tomb 1638

 

US Homes Become ATMs Again (MW)
The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)
Fear is Back (MW)
The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)
Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)
Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)
Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)
Emmanuel Macron On France’s AI Strategy (Wired)
Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)
More Poachers Than Rhinos Killed In India Reserve (BBC)

 

 

There’s nonsense and then there’s nonsense. Staying in your home is now a “huge expansion of retirement options”: “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

US Homes Become ATMs Again (MW)

As interest rates rise, fewer households refinance their mortgages. And the refinances that do get done are often very different than those initiated during low-rate periods. “When rates are low, the primary goal of refinancing is to reduce the monthly payment,” wrote researchers for the Urban Institute in a recent report. “But when rates are high, borrowers have no incentive to refinance for rate reasons. Those who still refinance tend to be driven more by their desire to cash out.” “Cashing out” is shorthand for taking out a new mortgage that’s bigger than the remaining balance on the old one and using the money that makes up the difference for discretionary purchases.

As of the fourth quarter of last year, the share of all refinances that were cash-outs rose to the highest since 2008, according to Freddie Mac data. Rates have churned higher since the presidential election in late 2016, though they spent much of 2017 reversing the immediate post-election surge. It’s not clear whether the overall volume of cash-out refinances is rising. Right now they’re making up a bigger share of the pie because traditional lower-monthly-payment refis are plunging. Tapping into home equity is often a good way for owners to consolidate or manage other, more expensive, forms of debt like high-interest credit cards or bills for higher education.

“As people stay in their homes longer we see people reinvesting in their homes by using equity to update their homes and do repair work,” said Rick Sharga, executive vice president for Carrington Mortgage Holdings and an industry veteran. That’s especially true for older Americans, he added. “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

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Housing markets need ever more private debt. So then does the overall economy.

The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)

The supply side of the housing market has two main two factors: the turnover of the existing stock of housing, and the net change in the number of houses (thanks to demolition of old properties and construction of new ones). The turnover of existing properties is far larger than the construction rate of new ones, and this alone makes housing different to your ordinary market. The demand side of the housing market has one main factor: new mortgages created by the banks. Monetary demand for housing is therefore predominantly mortgage credit: the annual increase in mortgage debt. This also makes housing very different to ordinary markets, where most demand comes from the turnover of existing money, rather than from newly created money.

We can convert the credit-financed monetary demand for housing into a physical demand for new houses per year by dividing by the price level. This gives us a relationship between the level of mortgage credit and the level of house prices. There is therefore a relationship between the change in mortgage credit and the change in house prices. This relationship is ignored in mainstream politics and mainstream economics. But it is the major determinant of house prices: house prices rise when mortgage credit rises, and they fall when mortgage credit falls. This relationship is obvious even for the UK, where mortgage debt data isn’t systematically collected, and I am therefore forced to use data on total household debt (including credit cards, car loans etc.).

Even then, the correlation is obvious (for the technically minded, the correlation coefficient is 0.6). The US does publish data on mortgage debt, and there the correlation is an even stronger 0.78—and standard econometric tests establish that the causal process runs from mortgage debt to house prices, and not vice versa (the downturn in house prices began earlier in the USA, and was an obvious pre-cursor to the crisis there).

None of this would have happened – at least not in the UK – had mortgage lending remained the province of money-circulating building societies, rather than letting money-creating banks into the market. It’s too late to unscramble that omelette, but there are still things that politicians could do make it less toxic for the public. The toxicity arises from the fact that the mortgage credit causes house prices to rise, leading to yet more credit being taken on until, as in 2008, the process breaks down. And it has to break down, because the only way to sustain it is for debt to continue rising faster than income. Once that stops happening, demand evaporates, house prices collapse, and they take the economy down with them. That is no way to run an economy.

Yet far from learning this lesson, politicians continue to allow lending practices that facilitate this toxic feedback between leverage and house prices. A decade after the UK (and the USA, and Spain, and Ireland) suffered property crashes – and economic crises because of them – it takes just a millisecond of Internet searching to find lenders who will provide 100% mortgage finance based on the price of the property. This should not be allowed. Instead, the maximum that lenders can provide should be limited to some multiple of a property’s actual or imputed rental income, so that the income-earning potential of a property is the basis of the lending allowed against it.

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Fear is needed.

Fear is Back (MW)

The Dow and the S&P 500 halted a record-setting streak of quarterly wins at nine, and the clearest reason why may be explained by the VIX index, widely known as Wall Street’s “fear gauge.” The Dow Jones Industrial Average posted a quarterly decline of more than 2.3%, snapping the longest streak of quarterly gains for the blue-chip average since an 11-quarter rally that ended in the third quarter of 1997. The S&P 500 index booked a 1.2% quarterly fall, ending its longest such stretch since the first quarter of 2015.

There are perhaps a host of reasons for the surcease of such a lengthy bullish run for the most prominent equity benchmarks: The Federal Reserve’s normalization of monetary policy, with the central bank lifting rates for the fifth time this month since December 2015; Intensifying uncertainty in the makeup and agenda of President Donald Trump’s administration, underscored by a number of high-profile departures; and the intensification of trade-war fears, after the president imposed duties on steel and aluminum imports and leveled more targeted tariffs at the world’s second-largest economy: China.

However, the surge in the Cboe Volatility Index VIX is perhaps the most correlated with the market’s downtrend. According to WSJ Market Data Group, the VIX posted its biggest quarterly rise, up 81% since it jumped in the third-quarter of 2011 following Standard & Poor’s historical downgrade of the U.S. credit rating and European debt-crisis jitters.

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Rhyme and repeat.

The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)

For the last five years the S&P 500 has been dancing up its ascending 200-day moving average (200-DMA), bouncing higher repeatedly whenever the dip-buyers did their thing. Only twice did the index actually break below this seeming Maginot Line: In August 2015, after the China stock crash, and in February 2016, when the shale patch/energy sector hit the wall. As is evident below, since the frenzied peak of 2873 on January 26, the index has fallen hard twice—on February 8 (2581) and March 23 (2588). Self-evidently, both times the momo traders and robo-machines came roaring back with a stick-save which was smack upon the 200-DMA.

But here’s the thing. The blue line below ain’t no Maginot Line; it’s just the place where the Pavlovian dogs of Bubble Finance have “marked” the charts. And something is starting to smell. In fact, it’s starting to smell very much like an earlier go-round when Pavlov’s 200-DMA barkers had enjoyed a prolonged ascent – only to find an unexpected cliff-diving opportunity at the end. We refer to the nearly identical five year run-up to the March 2000 top at 1508 on the S&P 500. Back then, too, the 200-DMA looked invincible, and had only been penetrated by the August 1998 Russian bankruptcy and the Long Term Capital Management meltdown a month later.

Indeed, the bounce from the October 8, 1998 interim bottom of 960 was nearly parabolic, rising by 57% to the March 2000 top. That latter point might sound vaguely familiar. That’s because the rebound from the February 11, 2016 interim bottom (1829) to the January 26th top (2873) this year was, well, 57%!

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This is going to cost Amazon.

Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)

President Donald Trump lit into Amazon.com Inc. for the second time in three days with a pair of Twitter messages that said the online retailer “must pay real costs (and taxes) now!” The president on Saturday claimed, citing reports he didn’t specify, that the U.S. Postal Service “will lose $1.50 on average for each package it delivers for Amazon” and added that the “Post Office scam must stop.” Amazon has said the postal service, which has financial problems stretching back for years, makes money on its deliveries. Amazon shed $53 billion in market value on Wednesday after Axios reported that the president is “obsessed” with regulating the e-commerce giant, whose founder and chief executive officer, Jeff Bezos, also owns the Washington Post newspaper.

Those losses were pared on Thursday, the final day of a shortened trading week, even as Trump tweeted that Amazon was using the postal service as its “Delivery Boy.” White House spokeswoman Lindsay Walters said on Thursday that while the president was displeased with the e-commerce giant, and particularly instances where third-party sellers on the site didn’t collect sales tax, there were no administrative actions planned against Amazon “at this time.” Still, Brad Parscale, who’s managing Trump’s 2020 presidential campaign, hinted in a tweet late Thursday that the administration may act to raise Amazon’s postal costs. “Once the market figures out that a single @usps rule change will crush @amazon’s bottom line we will see,” Parscale wrote.

Amazon.com and the Washington Post have been regular punching bags for Trump. In July, the president mused about whether the newspaper was “being used as a lobbyist weapon” to keep Congress from looking into Amazon’s business practices. He echoed that comment on Saturday, saying the Post “is used as a ‘lobbyist’ and should so REGISTER.” [..] While full details of the agreement between Amazon and the U.S. Postal Service are unknown – the mail carrier is independently operated, and strikes confidential deals with retailers – David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40% of Amazon’s volume the previous year.

He estimated at the time that Amazon pays the postal service $2 per package, which is about half what it would pay UPS or FedEx. A sudden increase in postal rates would cost Amazon about $2.6 billion a year, according to a report by Citigroup from April 2017. That report predicted UPS and FedEx would also raise rates in response to a postal service hike. Citigroup also said that the “true” cost of shipping packages for the USPS is about 50% higher than its current rates, leading some editorial writers to conclude that Amazon was receiving the type of subsidy cited in Trump’s Thursday tweet.

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Wait, wasn’t she supposed to be the anti-Trump?

Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)

U.S. policy toward China has been misdirected for decades and policymakers are now recalibrating ties, Senator Elizabeth Warren told reporters during a visit to Beijing amid heightened trade tensions between the world’s two largest economies. Warren’s visit comes as U.S. President Donald Trump prepares to implement more than $50 billion in tariffs on Chinese goods meant to punish China over U.S. allegations that Beijing systematically misappropriated American intellectual property. The Massachusetts Democrat and Trump foe, who has been touted as a potential 2020 presidential candidate despite rejecting such speculation, has said U.S. trade policy needs a rethink and that she is not afraid of tariffs.

After years of mistakenly assuming economic engagement would lead to a more open China, the U.S. government was waking up to Chinese demands for U.S. companies to give up their know-how in exchange for access to its market, Warren said. “The whole policy was misdirected. We told ourselves a happy-face story that never fit with the facts,” Warren told reporters on Saturday, during a three-day visit to China that began on Friday. “Now U.S. policymakers are starting to look more aggressively at pushing China to open up the markets without demanding a hostage price of access to U.S. technology,” she said.

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A poisonous political climate.

Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)

Yanis Varoufakis is back. He, of course, would say he never went away, but in Greece’s hurly-burly world of politics his is a name prone to triggering toxic reaction. Abroad, the shaven-headed economist is feted as the man who took on Europe’s establishment. At home, the former finance minister is seen, on both left and right, as a reckless incarnation of all that was wrong with Greece at the height of its struggle to remain in the eurozone. In Athens and Brussels, his confrontational style is still blamed for the price the debt-stricken country had to pay to be bailed out in the summer of 2015. Although his resignation now seems a long time ago, the sight of Varoufakis launching his own party in Greece has unleashed emotions that have run the gamut from enthusiasm to anger and disdain.

Media reaction has been cool; so, too, has that of politicians. None of which seems to bother him in the least. “Nobody believes the systemic media in Greece, and they’re all bankrupt,” he told the Observer with typical defiance, days after announcing his new venture in a packed Athens theatre. “To those who say I cost the country, and I’ve heard €30bn, €86bn, €100bn and even €200bn… I say I cost exactly zero. The troika [of creditors] cost Greece two generations and continue to impose cost.” At 57, in his leather bomber jacket and boots, Varoufakis clearly relishes his anti-establishment role and believes the birth of his European Realistic Disobedience Front, AKA MeRA25, is not a moment too late. Greece, almost nine years after the eurozone crisis erupted, is still condemned to being a debtors’ colony, he says.

[..] MeRA 25 has been working behind the scenes for a year now. Its plan is to contest the European elections in May 2019, although Varoufakis acknowledges Tsipras may elect to call a general election before that. After almost a decade under international surveillance, Athens will exit its third international rescue programme – the biggest sovereign bailout in global financial history – in August. With his popularity compromised under the weight of enforcing measures he once vehemently opposed, Tsipras may opt to capitalise on the success of finally exiting the programme and economic oversight. “We have travelled the whole country and held rallies in all major towns,” says Varoufakis, adding that politicians are already expressing interest in jumping ship.

Far from being saved, Varoufakis believes Greece’s future has been put on hold. If anything, he argues, it is in for an even tougher time because Europe has elected to tackle its debt problem by taking the “extend and pretend” approach of prolonging repayment timetables and condemning the country to decades of further austerity. More pension cuts and tax hikes loom, legislated by MPs at the behest of the EU and IMF. Short of measures to stop the rot, Varoufakis quips that he sees Greece becoming another Kosovo, “with beautiful beaches, only it’s a protectorate emptied of its young people. Every month 15-20,000 young Greeks leave. Everywhere I go, I meet them.”

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Macron knows what’s best for you. He’s your big brother.

Emmanuel Macron On France’s AI Strategy (Wired)

I want to create an advantage for my country in artificial intelligence, directly. And that’s why we have these announcements made by Facebook, Google, Samsung, IBM, DeepMind, Fujitsu who choose Paris to create AI labs and research centers: this is very important to me. Second, I want my country to be part of the revolution that AI will trigger in mobility, energy, defense, finance, healthcare and so on. Because it will create value as well. Third, I want AI to be totally federalized. Why? Because AI is about disruption and dealing with impacts of disruption. For instance, this kind of disruption can destroy a lot of jobs in some sectors and create a need to retrain people. But AI could also be one of the solutions to better train these people and help them to find new jobs, which is good for my country, and very important.

I want my country to be the place where this new perspective on AI is built, on the basis of interdisciplinarity: this means crossing maths, social sciences, technology, and philosophy. That’s absolutely critical. Because at one point in time, if you don’t frame these innovations from the start, a worst-case scenario will force you to deal with this debate down the line. I think privacy has been a hidden debate for a long time in the US. Now, it emerged because of the Facebook issue. Security was also a hidden debate of autonomous driving. Now, because we’ve had this issue with Uber, it rises to the surface. So if you don’t want to block innovation, it is better to frame it by design within ethical and philosophical boundaries. And I think we are very well equipped to do it, on top of developing the business in my country.

But I think as well that AI could totally jeopardize democracy. For instance, we are using artificial intelligence to organize the access to universities for our students That puts a lot of responsibility on an algorithm. A lot of people see it as a black box, they don’t understand how the student selection process happens. But the day they start to understand that this relies on an algorithm, this algorithm has a specific responsibility. If you want, precisely, to structure this debate, you have to create the conditions of fairness of the algorithm and of its full transparency. I have to be confident for my people that there is no bias, at least no unfair bias, in this algorithm.

I have to be able to tell French citizens, “OK, I encouraged this innovation because it will allow you to get access to new services, it will improve your lives—that’s a good innovation to you.” I have to guarantee there is no bias in terms of gender, age, or other individual characteristics, except if this is the one I decided on behalf of them or in front of them. This is a huge issue that needs to be addressed. If you don’t deal with it from the very beginning, if you don’t consider it is as important as developing innovation, you will miss something and at a point in time, it will block everything. Because people will eventually reject this innovation.

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“..more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades..”

Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)

An extinction crisis is rippling though America’s wildlife, with scores of species at risk of being wiped out unless recovery plans start to receive sufficient funding, conservationists have warned. One-third of species in the US are vulnerable to extinction, a crisis that has ravaged swaths of creatures such as butterflies, amphibians, fish and bats, according to a report compiled by a coalition of conservation groups. A further one in five species face an even greater threat, with a severe risk of being eliminated amid a “serious decline” in US biodiversity, the report warns. “America’s wildlife are in crisis,” said Collin O’Mara, chief executive of the National Wildlife Federation. “Fish, birds, mammals, reptiles and invertebrates are all losing ground. We owe it to our children and grandchildren to prevent these species from vanishing from the earth.”

More than 1,270 species found in the US are listed as at risk under the federal Endangered Species Act, an imperiled menagerie that includes the grizzly bear, California condor, leatherback sea turtle and rusty patched bumble bee. However, the actual number of threatened species is “far higher than what is formally listed”, states the report by the National Wildlife Federation, American Fisheries Society and the Wildlife Society. Using data from NatureServe that assesses the health of entire groups of species on a sliding scale, rather than the case-by-case work done by the federal government, the analysis shows more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades and have possibly also been snuffed out.

Whole classes of creatures have suffered precipitous drops, with 40% of freshwater fish species in the US now vulnerable or endangered, a third of bat species experiencing major declines in the past two decades and amphibians dwindling from their known ranges at a rate of about 4% a year. The true scale of the crisis is probably larger when species with sparse data, or those as yet unknown to science, are considered. “This loss of wildlife has been sneaking up on us but is now like a big tsunami that is going to hit us,” said Thomas Lovejoy, a biologist at George Mason University. Lovejoy was consulted on the study and said it “captures the overall degradation of American nature over recent decades, rather than little snapshots”.

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The future of wildlife conservation?! in 2015, park guards shot dead more people than poachers killed rhinos.

More Poachers Than Rhinos Killed In India Reserve (BBC)

A census in India’s Kaziranga National Park has counted 2,413 one-horned rhinos – up 12 from 2015. The Unesco World Heritage Site, in Assam state, is home to two-thirds of the world’s population of the species. The census is carried out every three years. It is an incredible conservation success story given the fact that there were only a few hundred rhinos in the 1970s, says the BBC’s South Asia editor Anbarasan Ethirajan. However, the conservation effort has not been without controversy. The government has in recent years given the park rangers extraordinary powers to protect the animals from harm – powers usually only given to soldiers intervening in civil unrest. About 150 rhinos have been killed for their horns since 2006, but in 2015, park guards shot dead more people than poachers killed rhinos.

[..] The census total given is an estimate, with authorities cautioning that the population could be bigger than that counted because some animals were concealed by tall grasses and reeds. This vegetation is usually burnt down to encourage its regeneration but this was hampered by unseasonal rains, said reports. It could mean the census is carried out again next year. Since its foundation in 1905, Kaziranga has had great success in conserving and boosting animal populations. As well as being a haven for one-horned rhinoceroses, the park was declared a tiger reserve by the Indian government, and is also home to elephants, wild water buffalo and numerous bird species. The endangered South Asian river dolphin also lives in the rivers that criss-cross the park.

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Feb 242018
 
 February 24, 2018  Posted by at 11:21 am Finance Tagged with: , , , , , , , , , ,  5 Responses »


Arthur Rothstein Rear of interstate truck. Elko, Nevada 1940

 

Debt On Track To Destroy The American Middle Class (GoldT)
The Only Thing That Can Save Stocks Is QE (ZH)
Fed ‘Quite Likely’ To Require Large-Scale QE Again (ZH)
VIX Funds Face Fresh Scrutiny From US Regulators (BBG)
Xi Confidant Emerges As Front Runner To Head China’s Central Bank (R.)
Brexit To End London House Price Boom (Ind.)
UK Post-Brexit Plans Based On A “Pure Illusion”- EU (G.)
Ecuador Blames UK As Assange Talks Break Down (G.)
Europe to Wind Down Latvian Bank Targeted by U.S. Over Sanctions (BBG)
After New Incident Off Cyprus, EU Calls On Turkey To Stop Naval Aggression (K.)

 

 

Going down down down.

Debt On Track To Destroy The American Middle Class (GoldT)

Economists report the household debt to be at its highest in decades. Yet, at the same time, we are being told that the economy is doing great. Does anyone see a serious contradiction? In fact, the current economy only favors the wealthy owing to their flourishing financial assets such as stocks and bonds. Owing to the lack of real assets such as property and commodities, the middle and lower classes are becoming overwhelmed due to the serious consequences of the spending/debt cycle. American consumers have a collective outstanding household debt of about $13.15 trillion of which nearly $1 trillion is the credit card debt alone, households are truly on a debt binge. These figures should be a wake-up call to all the Americans. The convulsive household debt has surpassed the bubble of 2008 and is still escalating. The economy may not be doing so great, after all.

Compared to 2008, the automobile credit balances have increased to $367 billion whereas the outstanding student loans are around $671 billion. Moreover, 67% of household debts belong to consumer mortgages. In 2016, 25% of all the Americans purchased a new or used vehicle and two-thirds of them are repaying through high-interest, long-term loans. In fact, the consumer debt has exceeded their income for majority of the Americans. Consumers have become accustomed using easy credit to maintain a lifestyle unaffordable for them otherwise. If this trend continues, and facts indicate that it will, we will be facing a monumental credit crisis in the near future. A huge portion of credit card debt is the interest. Credit cards are a convenience and consumers readily pay for the privilege.

[..] The decline in automobile sales is already an indication of the future consumer debt crisis. If lenders continue to provide easy access to credit regardless of its looming default and delinquent potential, retail purchase will face a sharp decline in 2018. This will have serious consequences on the overall economy. The Federal Reserve and other global lenders are a significant contribution to the problem. They allow printing of trillions of dollars and yens for the lenders to distribute to the borrowing consumers at a high interest, leading to a worldwide inflation. All this printed wealth is merely an illusion yet it is raising the cost of living. Prices are rising at an alamingly faster rate compared to the consumer income. There is no increase in real assets. All this is but a mere mushrooming of debt.

The consequences of federal policy will be inescapable unless reversed and there are no signs of any reversal in near or distant future. At this rate, the consumers will soon face a critical financial bubble. Financial assets, such as stocks and bonds, risk losing substantial value. The wealthy can absorb the losses but the poor and middle class will face financial ruin. Consumers need to seriously consider the need to increase their “real” assets, such as real estate and commodities to prevent a long-term financial nightmare. The chart below shows how the real assets have curved to an all-time low.

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Gee, what a surprise.

The Only Thing That Can Save Stocks Is QE (ZH)

In the last 45 years, there have been seven periods of persistent US dollar and Treasury bond weakness and as BofAML notes, during six of those periods, stocks have been pressured significantly lower.

This could be a problem, as it’s happening again… and stocks are beginning to wake up to it…

There has only been one period in history when falling dollar and bond prices did not lead to slumping stocks…And that was when QE was expanded drastically in March 2009.

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Tightening and then not.

Fed ‘Quite Likely’ To Require Large-Scale QE Again (ZH)

Ahead of Fed Chair Powell’s first semi-annual monetary policy report to Congress next week (brought forward to 2/27), The Fed has released his prepared remarks warning that “valuations are still elevated across a range of asset classes” and fears “signs of rising non-financial leverage.” To wit: Looking at the key topic of inflation, and the labor market, the Fed found that U.S. labor market is “near or a little beyond” full employment in early 2018, and that while the pace of wage growth has been modest, “serious labor shortages” would probably give it an upward push. Ironically, and paradoxically for an “economy beyond full employment”, the Fed observes that “the pace of wage gains has been moderate; while wage gains have likely been held down by the sluggish pace of productivity growth in recent years.”

Regardless, the Fed clearly is concerned about labor supply-demand imbalances, and has even added a new word: serious, as in “serious labor shortages would probably bring about larger increases than have been observed thus far.” In a separate special section on financial stability, the Fed notes that overall vulnerabilities in the U.S. financial system remain moderate, while noting some spots where things are warming up. These include signs of increased leverage to the nonbank sector, noting greater provision of margin credit to equity investors such as hedge funds. Looking at financial imbalances, the Fed warns that “leverage in the nonfinancial business sector has remained high, and net issuance of risky debt has climbed in recent months. In contrast, leverage in the household sector has remained at a relatively low level, and household debt in recent years has expanded only about in line with nominal income.”

[..] Curiously, before Powell’s remarks were dropped, both Dudley and Rosengren were on the tape this morning talking super dovish about QE as “useful to have in the toolkit for those times when the short-term interest rate tool may not be available,” adding that The Fed is “quite likely” to require large-scale asset purchases again because real rates will remain low due to slow productivity and labor-force growth.

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Horse has left that barn ages ago.

VIX Funds Face Fresh Scrutiny From US Regulators (BBG)

U.S. regulators are scrutinizing this month’s implosion of investments that track stock-market turmoil, including whether wrongdoing contributed to steep losses for VIX exchange-traded products offered by Credit Suisse and other firms, several people familiar with the matter said. The Securities and Exchange Commission and the Commodity Futures Trading Commission have been conducting a broad review of trading since Feb. 5, when volatility spiked and investors lost billions of dollars, the people said. Among those looking into what happened are lawyers in the SEC’s enforcement division, which investigates firms for potential misconduct and fines them if it finds violations of securities laws, two of the people said. There is no indication thus far that specific companies, including Credit Suisse, are being probed.

The scrutiny puts a spotlight on a small corner of the $3.4 trillion exchange-traded fund industry that lets everyone from hedge funds to mom-and-pop investors engage in complex trading strategies. With losses now piling up, allegations of market manipulation are getting more attention and government watchdogs face questions about why small-time investors were permitted to buy such products in the first place. “The values of these exchange-traded products are based on a combination of futures, options and three indices. Quite the maze,” Democratic SEC Commissioner Kara Stein said Friday in a speech at a conference in Washington. “What troubles me is that oftentimes complex products fall into the hands of people who don’t fully understand them.”

SEC Chairman Jay Clayton told reporters at the same event Friday that he wasn’t concerned about how the market functioned during the steep decline in equities on Feb. 5 and in the two weeks since. He said it would be appropriate, however, to review which types of more complex investments are widely available to average investors. “The portfolio of products available to retail investors has changed dramatically and it’s worth taking a look at,” Clayton said.

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Tough job. Xi sets rates all by himself.

Xi Confidant Emerges As Front Runner To Head China’s Central Bank (R.)

Liu He, a Harvard-trained economist who is a trusted confidant of Chinese President Xi Jinping, has emerged as the front runner to be the next governor of the People’s Bank of China (PBOC), according to three sources with knowledge of the situation. Liu may be in a position to become one of China’s most powerful economic and financial officials ever, as he is already top adviser to Xi on economic policy and is also expected to become vice premier overseeing the economy. Liu would replace current PBOC chief, 70-year-old Zhou Xiaochuan, who is China’s longest-running head of the central bank, having taken the job in 2002. Zhou is expected to retire around the time of the annual session of parliament in March, sources previously told Reuters.

The change would be part of a wider government reshuffle following the 19th Communist Party Congress in October last year, during which Xi laid out his vision for China’s long-term development, and elevated his key allies. Speculation has been rife for months over the choice of the next central bank governor. Xi will have the final say, and the sources noted that while Liu is clearly the frontrunner he is not yet certain to get the job. Just before last October’s Congress, sources told Reuters that China’s banking regulator head Guo Shuqing and veteran banker Jiang Chaoliang were leading contenders for the PBOC job. But at the congress, the influence of the 66-year-old Liu continued to grow. He was elected into the 25-member Politburo, the second-highest tier in Beijing’s political power structure after the seven-member Politburo Standing Committee.

Sources previously told Reuters that Liu, a fluent English speaker, is set to become one of China’s four vice premiers and would oversee the economy and financial sector. Two of the sources said that Liu could serve concurrently as vice premier and head of the central bank.

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Brexit is not all bad.

Brexit To End London House Price Boom (Ind.)

UK inflation will outstrip gains in house prices this year and next, particularly in the capital, as uncertainty over Brexit and weak consumer spending power hits demand, a Reuters poll found on Friday. According to the latest quarterly Reuters poll of 33 housing market specialists, taken in the past week, property prices will rise 2.0% this year, much slower than the predicted 2.5% rise in general costs in the economy. In London – long the hotbed for foreign investors behind a decade of skyrocketing prices – the difference will be even starker: the average price is expected to fall 0.5% this year. Next year, house prices will rise 0.9% in London and 2.0 nationally, still both below the 2.1% expected inflation rate. In 2020, London prices will increase 2.0% and by 2.3% nationally. “A significant effect of Brexit is subdued investment confidence,” said Rod Lockhart at online mortgage lender LendInvest.

“Would-be sellers are holding onto assets for longer and buyers are being a little more diligent before committing to significant expenditures, all this against a backdrop of inflation-surpassing wage growth.” Most respondents in the poll said the Brexit vote had been negative for both turnover and prices in London but were split over whether it had been negative or had no impact nationally. Sterling is over 6% weaker than before the June 2016 vote to leave the EU, something that should make properties more attractive to foreign investors, who can take advantage of cheaper prices. But uncertainty over how Brexit divorce talks will pan out has deterred overseas buyers. “Foreigners get more pounds in their pockets, but the nation and its capital has lost some of its allure,” said Tony Williams at property consultancy Building Value.

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May the masochist.

UK Post-Brexit Plans Based On A “Pure Illusion”- EU (G.)

Theresa May’s reported agreement with her cabinet on a future trading relationship with the EU has been criticised as based on “pure illusion” by the European council president, Donald Tusk, as frustration with the UK erupted in Brussels. Reports that May’s inner cabinet had agreed on a policy of “managed divergence” during eight hours of talks at an awayday in Chequers were met with incredulity by EU leaders. Tusk told reporters on Friday: “I am glad the UK government seems to be moving towards a more detailed position. “However, if the media reports are correct, I am afraid the UK position today is based on pure illusion. It looks like the cake [and eat it] philosophy is still alive. “From the very start it has been a set principle of the EU27 that there cannot be any cherrypicking of single market à la carte. This will continue to be a key principle, I have no doubt.”

Speaking at a summit of EU27 member states in Brussels, to discuss the EU’s budget and leadership post-Brexit, Leo Varadkar, the Irish taoiseach, also insisted that the single market was “not à la carte”. It is believed the British government is seeking to maintain frictionless trade in some sectors by staying in lock-step alignment with EU regulation, while opening up the prospect of diverging in other areas in order to gain a competitive advantage in the international marketplace. “It is not possible for UK to be aligned to EU when it suits and not when it doesn’t,” Varadkar said. “The UK position needs to be backed up with real detail that can be written into a legal treaty with the EU. We are well beyond the point of aspirations and principle. We need detail.”

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Britain should be taken to The Hague for its involvement.

Ecuador Blames UK As Assange Talks Break Down (G.)

Talks between the UK and Ecuador over the future of Julian Assange at its London embassy have broken down, the South American country’s foreign minister has said. Maria Fernanda Espinosa suggested British officials had been unwilling to negotiate over the Wikileaks founder’s potential release. Earlier this month, a judge upheld an arrest warrant issued when Assange skipped bail as he fought extradition to Sweden in 2012. The 46-year-old has been at the embassy ever since because he fears extradition to the United States for questioning over the activities of WikiLeaks if he leaves. Espinosa said of the failed talks: “To mediate you need two parties, Ecuador is willing, but not necessarily the other party.”

Ecuador said it would continue to protect Assange’s rights, however there was a risk to his physical and psychological wellbeing after spending nearly six years in the building as a “refugee”. The country has assessed more than 30 similar cases in a bid to break the deadlock, including that of British-Iranian citizen Nazanin Zaghari-Ratcliffe, who is in prison in Iran accused of spying. This included options for granting diplomatic immunity, although Ecuador said it would continue to respect the UK’s laws. In November, Espinosa said Assange had been granted Ecuadorian citizenship. The foreign minister said Ecuador was trying to make Assange a member of its diplomatic team, which would grant him additional rights under the Vienna Convention on Diplomatic Relations – including special legal immunity and safe passage.

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All because of North Korea?!

Europe to Wind Down Latvian Bank Targeted by U.S. Over Sanctions (BBG)

European authorities moved to liquidate Latvia’s ABLV Bank after clients pulled assets from the lender following U.S. accusations that it laundered money. The ECB, which had already placed a freeze on payments by the lender, said that ABLV was failing or likely to fail, handing it over to Europe’s Single Resolution Board. That authority said a resolution of the bank, which generally means a sale or restructuring, isn’t in the public interest because neither ABLV nor its Luxembourg-based subsidiary provide “critical functions” and their failure won’t have a “significant adverse impact” on financial stability. ABLV was plunged into crisis after the U.S. Treasury this month proposed to ban it from the American financial system, saying it helped process illicit transactions, including for entities with alleged ties to North Korea’s ballistic missile program.

The bank responded by saying the allegations are wrong and misleading and that it was working to provide information to the Treasury that would help to overturn the proposal. “The bank is likely unable to pay its debts or other liabilities as they fall due,” the ECB said in a statement on Saturday in Frankfurt. “The bank did not have sufficient funds which are immediately available to withstand stressed outflows of deposits before the payout procedure of the Latvian deposit-guarantee fund starts.” ABLV took a different view, saying it accumulated more than €1.36 billion over four business days to strengthen its liquidity and ensure 86% of its demand deposits. “The bank considers that it has fulfilled all requirements of the regulator in order to resume operation,” ABLV said. “It was absolutely sufficient for the bank to resume executing payments and meet all obligations toward its clients, yet due to political considerations the bank was not given a chance to do it.”

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Turkey threatens to fire on an Italian ship.

After New Incident Off Cyprus, EU Calls On Turkey To Stop Naval Aggression (K.)

Just a day after it said it won’t allow Cyprus to conduct a “unilateral” gas search off the Eastern Mediterranean island’s coast if Turkish Cypriots don’t also reap the benefits, Ankara ratcheted up tensions with Nicosia Friday when its warships threatened to use force against a drillship contracted to Italian energy giant Eni as it tried, again, to reach an area in Cyprus’s exclusive economic zone (EEZ) to commence exploratory gas drilling. Turkey has been obstructing the Saipem 12000 drillship from approaching an area in Block 3 of Cyprus’s EEZ since February 9, citing naval exercises. This week it announced it is reserving the area until March 10. Earlier in the month a Turkish gunboat rammed a Hellenic Coast Guard vessel near the eastern Aegean islet of Imia. Turkey’s aggression was raised by Greek Premier Alexis Tsipras and Cypriot President Nicos Anastasiades at the informal summit of EU leaders in Brussels Friday.

European Council President Donald Tusk told reporters after the meeting that the bloc was calling on Turkey to stop activities that have led to recent incidents in Greece and Cyprus, stressing that both countries have the “sovereign right” to explore for resources. He also said the EU will assess during March’s European Council meeting whether the conditions are ripe for a high-level meeting with Turkey in Varna on March 26. The drillship left the area after the incident and headed west for the city of Limassol, where it is expected to remain for a few days before sailing to Morocco. “Unfortunately, the drillship was halted by five Turkish warships and after threats of violence and the threat of a collision, it was compelled to return back,” said Cypriot government spokesman Victoras Papadopoulos, who stressed, however, that the postponement of the scheduled drilling does not mean that the island’s energy plans will change.

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Feb 182018
 


Jerome Liebling Butterfly Boy, Harlem, New York City 1949

 

US Tax Cuts, Repatriated Cash Used For Record Stock Buybacks (ZH)
VIX Products Were Extremely Ill-Designed (Eric Peters)
Until There Are Facts On Election Meddling, It’s All Just Blather – Lavrov (RT)
Apocalypse Now For Britain’s Retailers As Low Wages And The Web Cause Ruin (G.)
UK Will Need ‘Thousands’ More Customs Officers After Brexit (R.)
The Big PFI Heist: How Big Banks Launched The Takeover Of UK Plc (Ind.)
Software Helped Daimler Pass US Emissions Tests (R.)
Global Sea Ice Hits New Record Low For January (Ind.)
Should We Give Up Half Of The Earth To Wildlife? (O.)

 

 

The last few drops squeezed from a stone-dry stone. Buybacks kill economies.

US Tax Cuts, Repatriated Cash Used For Record Stock Buybacks (ZH)

While there is still some fringe debate what companies will do with the hundreds of billions in offshore funds repatriated to the US as part of the recently passed Trump tax reform, the discussion is largely over, especially after last week’s Cisco results. The company, which has $68 billion of overseas cash, third after AAPL and MSFT, announced that it would raise its buyback authorization by $25 billion, and revealed plans to repurchase its entire authorization of $31 billion during the next 6-8 quarters, equal to roughly 15% of its current market cap. Call it a partial LBO, courtesy of Donald Trump.

[..] Here’s what Goldman’s David Kostin said in his latest Weekly Kickstart report: “Since December, S&P 500 firms have announced buybacks totaling $171 bn. YTD announcements of $67 bn represent a 22% increase versus the same period in 2017. The buyback window has re-opened and firms are taking advantage of the recent correction; the GS Buyback Desk reported that last week was the most active week in its history.” The $171 billion in YTD stock buyback announcements is the most ever for this early in the year. In fact, it is more than double the prior 10 year average of $77 billion in YTD buyback announcements.

[..] in addition to what we first pointed out over two years ago, namely that all net debt issuance in the 21st century has been used to pay for stock buybacks… here is what John Hussman commented on this record last hurrah in stock buybacks: “Though buybacks are primarily debt-financed, they are also highest at market peaks, and contract sharply at major market troughs. Corporations are still borrowing to buy the dip at peak valuations, within a few percent of extremes associated with prospective 10-12yr market losses.”

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There was no need for better design, the Fed has traders’ backs regardless.

VIX Products Were Extremely Ill-Designed (Eric Peters)

There’s no question that, in an economy and in a financial system where there’s the level of debt that we have and the sensitivity to interest rates, rising rates are kind of a pre-condition to equity market disruptions and selloffs. I think that the level of volatility selling and its integration into risk models across virtually every type of investment strategy are contributors. And, having gone through such a long period with very, very little movement, I’d say that many people’s trading books were robust for relatively small moves. But once you’ve passed a certain move – and I think in this case it was probably the S&P down 3-ish% that triggered a whole series of different adjustments that people needed to make to their books and their option books – that then amplified the move in volatility and led to this blowup in the VIX product.

But you have to remember that these VIX products were extremely ill-designed. And they were very vulnerable to this. They’re a rare thing that you see in our industry, which is they had a predefined stop loss. And markets are pretty good at finding stop losses and triggering them. I started my career in the commodity pits, and I witnessed firsthand how the commodity pit is built around finding stop losses on the top side of the bottom side of markets. So I think the market did a great job of finding the stops – and in this case finding the weakest ones, which were in the VIX complex – and hitting them. But I don’t think that that really explains why this move happened. Why did we get the first leg down, and why are markets starting to move with very little news flow? And, again, that’s something that’s difficult to explain for a lot of people that are trying to do it.

[..] The biggest problem in the investment industry today, the portfolio construct that investors have come to rely on, which is a brilliant construct really pioneered by Ray Dalio – he naturally has done incredibly well from this, and it’s been a fantastic strategy – this risk parity strategy. And, while there’s certainly more complexity to it that just being long equities and leveraged funds, let’s just view it as that strategy for a moment. It’s essentially what the dominant portfolio has become at all the major investors, pensions, endowments, etc. in the industry. And the beauty of that portfolio has been that you’ve been able to own risk assets and then you’ve been able to own a hedge, which is a leveraged bond portfolio, and that hedge has actually paid you a positive return.

The problem is when equity valuations become very high and interest rates get very low it’s difficult for that strategy to continue to perform very well. All else being equal. Now, however, if you add modest inflation into the formula, that portfolio actually becomes pretty toxic. That’s the environment I think we’re entering into. And that’s why, ultimately, I see some of these shocks like this most recent market shock as just being trail markers on this path to a much more difficult investment environment.

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Deputy A.G. Rod Rosenstein: “There is no allegation in the indictment that the charged conduct altered the outcome of the 2016 election.”

Virginia State Senator Richard Black: “When you become a special counsel, you have an open checkbook for the US Treasury and you are guaranteed to become a mega-millionaire if you simply can drag out the proceedings,”

Until There Are Facts On Election Meddling, It’s All Just Blather – Lavrov (RT)

Russian Foreign Minister Sergey Lavrov has again dismissed claims of Russian meddling in the US election, saying that until facts are presented by Washington, they are nothing but “blather.” Speaking at the Munich Security Conference in Germany on Saturday, he said that “Until we see facts, everything else will be just blather.” When asked to comment on the indictment of Russian nationals and companies in the US over alleged meddling in the 2016 US election, the foreign minister answered:“You know, I have no reaction at all because one can publish anything he wants. We see how accusations, statements, statements are multiplying.”

On Friday, a US federal grand jury indicted 13 Russian nationals and three entities accused of interfering in the 2016 election and political processes. According to the indictment, those people were “supporting the presidential campaign of then-candidate Donald J. Trump… and disparaging Hillary Clinton” as they staged political rallies and bought political advertising, while posing as grassroots entities.

[..] Even US Deputy Attorney General Rod Rosenstein had to admit that there were “no allegations” that this “information warfare” yielded any results and affected the outcome of the presidential election. The underwhelming indictment was also slammed in the US. Virginia State Senator Richard Black accused FBI Special Counsel Robert Mueller of deliberately dragging out the Russian meddling probe for his own gain. “To a certain extent, I think, Robert Muller is struggling to keep alive his position of a special counsel. The special counsel has already earned seven million dollars. When you become a special counsel, you have an open checkbook for the US Treasury and you are guaranteed to become a mega-millionaire if you simply can drag out the proceedings,” Black told RT.

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Maxed out. Forget the web. Think savings, pensions.

Apocalypse Now For Britain’s Retailers As Low Wages And The Web Cause Ruin (G.)

“Who’d be a retailer now?” That was the comment from City economist Jeremy Cook when the latest set of grim retail sales data was released by the Office for National Statistics last Friday. “The average Brit,” he added, “has spent the past few years living by the mantra ‘When the going gets tough, the tough go shopping.’” After a grim December, many had been hoping for a bounceback, but the figures showed that consumers were not as hardy as they once were, said Cook, and the retail sector was facing a long-term, continuing slowdown. Shoppers are being hit by declining real wages, record levels of consumer debt and the prospect of higher borrowing costs. But the wider problem is a structural shift in the way consumers spend their money.

This is threatening famous retailers and forcing a rethink about how high streets will look in years to come, and what might be done with retail parks and malls when retailers shut up shop. It is not just about shoppers preferring to buy online – although 20% of fashion sales, where the pressures are perhaps worst, have now moved to the internet. There’s been a seismic shift in the way we spend our time and money. Social media, leisure, travel, eating out, eating in – using takeaways and delivery services – and technology are all taking time and cash that would once have gone straight to shops. In food, increasing numbers of people now prefer to buy local and often. Fewer big weekly shops mean out-of-town superstores are under pressure and the big supermarkets are trying to lure in other retailers to take space they no longer need.

This rapid change in shopping habits is boosting sales at the likes of Amazon, Asos and Boohoo, but forcing radical change on British towns and cities as physical retail space becomes redundant. The past few months have seen a stream of collapses – from fashion store East to shoe chain Shoon and bed specialists Warren Evans and Feather & Black. Toys R Us is teetering on the brink of bankruptcy, while House of Fraser, Debenhams and New Look are all struggling, with all three considering large-scale closures of stores or space.

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Almost funny.

UK Will Need ‘Thousands’ More Customs Officers After Brexit (R.)

The Dutch government plans to hire at least 750 new customs agents in preparation for Britain’s exit from the European Union. The Dutch parliament’s Brexit rapporteur, Pieter Omtzigt, who had recommended the move, said both sides of the English Channel had been slow to wake up to the reality that Britain was on course to leave the EU in 14 months’ time. “If we need hundreds of new customs and agricultural inspectors, the British are going to need thousands,” he said. Omtzigt warned that “for a trading nation like the Netherlands, you just cannot afford for customs not to work, it would be a disaster”.

In a letter to parliament on Friday, the deputy finance minister, Menno Snel, said the cabinet had “decided that the Customs and Food and Wares agencies should immediately begin recruiting and training more workers”. He said the government was working on the basis of two scenarios: that Britain leaves the EU with no deal in place, or that it leaves on similar terms to those of the EU’s recent trade deal with Canada. “The results are that … around 930 or 750 full-time employees are needed,” Snel said. “It speaks for itself that the cabinet is following the negotiations closely in order to be able to react appropriately.”

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“The real story of how Britain’s economy has been left high and dry by a doomed economic philosophy..”

The Big PFI Heist: How Big Banks Launched The Takeover Of UK Plc (Ind.)

Sir Howard Davies, chairman of the Royal Bank of Scotland (RBS), recently made an astonishing admission on BBC1’s Question Time when he stated that private finance initiatives (PFI) had been a “fraud on the people”. Beyond seemingly populist rhetoric, the real story of PFI reveals that RBS alongside other global banks, notably HSBC, were instrumental in what Sir Howard has effectively labelled a great heist. The past month has seen the demise of construction giant Carillion followed by the collapse of Capita’s market value: both firms having built huge empires by providing outsourced services to public authorities. These initial tremors might be the canary in the coal mine. Profit warnings have been issued for other government contractors, such as Interserve. The domino effect has shades of the 2007-08 financial crisis even though it is clearly not of the same magnitude.

All this has thrown up searching questions, not least around staff redundancies and pensions, bailouts, inflated dividends and executive remuneration. Yet even in the throes of this PFI and outsourcing crisis, public-private Partnerships (PPP) are far from dead and buried. On the contrary, the Naylor Review – a report recommending the disposal of NHS land and assets to generate investment – is rehabilitating PPP. Furthermore, the Government is pushing through Accountable Care Organisations (ACO), a form of PPP based on an American model of healthcare. The Government cites too the model of Alzira in Spain where a consortium of private companies not only financed and built facilities but also delivered health services.

Of course, PFI was not always a toxic brand. In 1997 it appeared to be New Labour’s magical solution to chronic underinvestment in public services in the wake of Thatcherism. As Alan Milburn – the former Labour Health Secretary described by Private Eye as an “almost maniacal convert to PFI” – put it: “It’s PFI or bust.” The argument went that Labour had inherited public services in such a diabolical state of neglect that there was no alternative to the private financing of whole swathes of infrastructure. It was a persuasive argument which seduced many. The Blairite Third Way would somehow square the circle by delivering new schools, hospitals, roads, railways and prisons without the debt or inefficiency of the public sector. It seemed too good to be true yet those who dared to question the orthodoxy du jour were swatted away.

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“..including one which switched off emissions cleaning after 26 km of driving..”

Software Helped Daimler Pass US Emissions Tests (R.)

U.S. investigators probing Mercedes maker Daimler have found that its cars were equipped with software which may have help them to pass diesel emissions tests, a German newspaper reported on Sunday, citing confidential documents. There has been growing scrutiny of diesel vehicles since Volkswagen admitted in 2015 to installing secret software on 580,000 U.S. vehicles that allowed them to emit up to 40 times legally allowable emissions while meeting standards when tested by regulators. Daimler, which faces ongoing investigations by U.S. and German authorities into excess diesel emissions, has said investigations could lead to significant penalties and recalls.

The Bild am Sonntag newspaper said that the documents showed that U.S. investigators had found several software functions that helped Daimler cars pass emissions tests, including one which switched off emissions cleaning after 26 km of driving. Another function under scrutiny allowed the emissions cleaning system to recognize whether the car was being tested based on speed or acceleration patterns. Bild am Sonntag also cited emails from Daimler engineers questioning whether these software functions were legal.

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We don’t we just shoot the remaining polar bears right now, and move on?!

Global Sea Ice Hits New Record Low For January (Ind.)

The world’s sea ice shrank to a record January low last month as the annual polar melting period expanded, experts say. The 5.04 million square miles of ice in the Arctic was 525,000 square miles below the 1981-to-2010 ice cover average, making it the lowest January total in satellite records, according to the US National Snow and Ice Data Center (NSIDC). Combined with low levels in the Antarctic, global sea ice amounted to a record low for any first month of the year, the organisation concluded. The news comes just days after researchers from the University of Colorado Boulder said the rate at which sea levels are rising was increasing every year, driven mostly by accelerated melting in Greenland and Antarctica.

The NSIDC, a respected authority on the Earth’s frozen regions, which researches and analyses snow, glaciers and ice sheets among other features, said that ice in the Arctic Ocean hit “a new record low” at both the start and end of last month. In an online post, the group said: “January of 2018 began and ended with satellite-era record lows in Arctic sea ice extent, resulting in a new record low for the month. Combined with low ice extent in the Antarctic, global sea ice extent is also at a record low.” It said the Arctic experienced a week of record low daily ice totals at the start of the month, with the January average beating 2017 for a new record low. “Ice grew through the month at near-average rates, and in the middle of the month daily extents were higher than for 2017,” the report went on. “However, by the end of January, extent was again tracking below 2017.”

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• Yes, we should. Even if 50% ia an arbitrary number.

• No, we won’t.

Should We Give Up Half Of The Earth To Wildlife? (O.)

The orangutan is one of our planet’s most distinctive and intelligent creatures. It has been observed using primitive tools, such as the branch of a tree, to hunt food, and is capable of complex social behaviour. Orangutans also played a special role in humanity’s own intellectual history when, in the 19th century, Charles Darwin and Alfred Russel Wallace, co-developers of the theory of natural selection, used observations of them to hone their ideas about evolution. But humanity has not repaid orangutans with kindness. The numbers of these distinctive, red-maned primates are now plummeting thanks to our destruction of their habitats and illegal hunting of the species. Last week, an international study revealed that its population in Borneo, the animal’s last main stronghold, now stands at between 70,000 and 100,000, less than half of what it was in 1995.

“I expected to see a fairly steep decline, but I did not anticipate it would be this large,” said one of the study’s co-authors, Serge Wich of Liverpool John Moores University. For good measure, conservationists say numbers are likely to fall by at least another 45,000 by 2050, thanks to the expansion of palm oil plantations, which are replacing their forest homes. One of Earth’s most spectacular creatures is heading towards oblivion, along with the vaquita dolphin, the Javan rhinoceros, the western lowland gorilla, the Amur leopard and many other species whose numbers are today declining dramatically. All of these are threatened with the fate that has already befallen the Tasmanian tiger, the dodo, the ivory-billed woodpecker and the baiji dolphin – victims of humanity’s urge to kill, exploit and cultivate.

As a result, scientists warn that humanity could soon be left increasingly isolated on a planet bereft of wildlife and inhabited only by ourselves plus domesticated animals and their parasites. This grim scenario will form the background to a key conference – Safeguarding Space for Nature and Securing Our Future – to be held in London on 27-28 February. The aim of the symposium is straightforward: to highlight ways of establishing sufficient reserves and protected areas to halt or seriously limit the major extinction event that humanity now faces. According to one recent report, the number of wild animals on Earth has halved in the past 40 years, as humans kill for food in unsustainable numbers and pollute or destroy habitats, and worse probably lies ahead.

[..] The current focus on protecting what humans are willing to spare for conservation is unscientific, they say. Instead, conservation targets should be determined by what is necessary to protect nature. This point is stressed by Harvey Locke, whose organisation, Nature Needs Half, takes a far bolder approach and campaigns for the preservation of fully 50% of our planet for wildlife by 2050. “That may seem a lot – if you think the world is a just a place for humans to exploit,” Locke told the Observer. “But if you recognise the world as one that we share with wildlife, letting it have half of the Earth does not seem that much.” The idea is supported by E O Wilson, the distinguished Harvard biologist, in his most recent book, Half Earth. “We thrash about, appallingly led, with no particular goal other than economic growth and unfettered consumption,” he writes. “As a result, we’re extinguishing Earth’s biodiversity as though the species of the natural world are no better than weeds and kitchen vermin.”

The solution, he says, is to fill half the planet with conservation zones – though just how this division is to be decided is not made clear in his book. In any case, Hoffman points out, simply setting aside huge chunks of land or marine areas will not, on its own, save the day. “We could earmark the whole of northern Canada as a wildlife reserve but, given the paucity of animals who live in these frozen regions, that would not have a significant effect on a great many species who live elsewhere,” he said.

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Feb 142018
 
 February 14, 2018  Posted by at 10:56 am Finance Tagged with: , , , , , , , ,  1 Response »


Times Square, New York 1954

 

The Payback Date For Today’s Economic Recovery Is Getting Closer (WEF/PS)
Big Reset Looms for Corporate Credit Market (WS)
Record $23 Billion Flees World’s Largest ETF (BBG)
Wednesday Could Be a Huge Day for the VIX (BBG)
Europe Has a $1 Trillion Bad-Loan Problem (BBG)
Draghi Faces Impossible Task To Weaken The Euro; He Might Not Even Try (CNBC)
Greek Bond Yields Keep Increasing (K.)
Britons Face Surge In Household Debts In Next Five Years (G.)
The World’s Biggest Housing Bubbles According To UBS (VisualC)
UK House Price Growth Accelerates To 5.2% (Ind.)
First-Time Buyers Hit 10-Year High As Buy-to-let Property Sales Fade (G.)
House Price Flatlining Is A Good Thing, Despite Estate Agents’ Gripes (G.)
Boris Johnson: Stopping Brexit Would Be ‘Disastrous’ (Ind.)

 

 

But nary a soul still sees a payback ahead….

The Payback Date For Today’s Economic Recovery Is Getting Closer (WEF/PS)

In recent days, the initial New Year optimism of many investors may have been jolted by fears of an economic slowdown resulting from interest-rate hikes. But no one should be surprised if the current sharp fall in equity prices is followed by a swift return to bullishness, at least in the short term. Despite the recent slide, the mood supporting stocks remains out of sync with the caution expressed by political leaders. Market participants could easily be forgiven for their early-year euphoria. After a solid 2017, key macroeconomic data – on unemployment, inflation, and consumer and business sentiment – as well as GDP forecasts all indicated that strong growth would continue in 2018. The result – in the United States and across most major economies – has been a rare moment of optimism in the context of the last decade.

For starters, the macro data are positively synchronized and inflation remains tame. Moreover, the IMF’s recent upward revision of global growth data came at precisely the point in the cycle when the economy should be showing signs of slowing. Moreover, stock markets’ record highs are no longer relying so much on loose monetary policy for support. Bullishness is underpinned by evidence of a notable uptick in capital investment. In the US, gross domestic private investment rose 5.1% year on year in the fourth quarter of 2017 and is nearly 90% higher than at the trough of the Great Recession, in the third quarter of 2009. This is emblematic of a deeper resurgence in corporate spending – as witnessed in durable goods orders. New orders for US manufactured durable goods beat expectations, climbing 2.9% month on month to December 2017 and 1.7% in November.

Other data tell a similar story. In 2017, the US Federal Reserve’s Industrial Production and Capacity Utilization index recorded its largest calendar year gain since 2010, increasing 3.6%. In addition, US President Donald Trump’s reiteration of his pledge to seek $1.5 trillion in spending on infrastructure and public capital programs will further bolster market sentiment. All of this bullishness will continue to stand in stark contrast to warnings by many world leaders. In just the last few weeks, German Chancellor Angela Merkel cautioned that the current international order is under threat. French President Emmanuel Macron noted that globalization is in the midst of a major crisis, and Canadian Prime Minister Justin Trudeau has stated that the unrest we see around the world is palpable and “isn’t going away.”

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Ne’er a lesson learned: Collateralized Loan Obligations.

Big Reset Looms for Corporate Credit Market (WS)

“Leveraged loans,” extended to junk-rated and highly leveraged companies, are too risky for banks to keep on their books. Banks sell them to loan mutual funds, or they slice-and-dice them into structured Collateralized Loan Obligations (CLOs) and sell them to institutional investors. This way, the banks get the rich fees but slough off the risk to investors, such as asset managers and pension funds. This has turned into a booming market. Issuance has soared. And given the pandemic chase for yield, the risk premium that investors are demanding to buy the highest rated “tranches” of these CLOs has dropped to the lowest since the Financial Crisis. Mass Mutual’s investment subsidiary, Barings, has packaged leveraged loans into a $517-million CLO that is sold in “tranches” of different risk levels.

[..] These floating-rate CLOs are attractive to asset managers in an environment of rising interest rates. If rates rise further, Libor rises in tandem, and investors would be protected against rising rates by the Libor-plus feature of the yields. Libor has surged in near-parallel with the US three-month Treasury yield and on Monday reached 1.83%. So the yield of Barings CLO was 2.82%. While the Libor-plus structure compensates investors for the risk of rising yields and inflation, it does not compensate investors for credit risk!

[..] One of the measures that track whether “financial conditions” are getting “easier” or tighter is the weekly St. Louis Fed Financial Stress Index. In this index, zero represents “normal.” A negative number indicates that financial conditions are easier than “normal”; a positive number indicates that they’re tighter than “normal.” The index, which is made up of 18 components – including six yield spreads, including one based on the 3-month Libor – had dropped to a historic low of -1.6 on November 3, 2017. Despite the Fed’s rate hikes and the accelerating QE Unwind, it has since ticked up only a smidgen and remains firmly in negative territory, at -1.35.

The Financial Stress Index and the two-year Treasury yield usually move roughly in parallel. But since July 2016, about the time the Fed stopped flip-flopping on rate hikes, the two-year yield began rising and more recently spiking, while the Financial Stress Index initially fell. The chart below shows this disconnect between the St. Louis Fed’s Financial Stress Index (red, left scale) and the two-year Treasury yield (black, right scale). Note the tiny rise of the red line over the past few weeks (circled in blue):

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Volatility ain’t done with you yet.

Record $23 Billion Flees World’s Largest ETF (BBG)

Investors actively abandoned the world’s biggest passive fund during the onset of market mayhem. The SPDR S&P 500 exchange-traded fund (ticker SPY) suffered a record $23.6 billion in outflows last week amid the worst momentum swing in history for the underlying U.S. equity benchmark. Outflows amounted to 8% of the fund’s total assets at the start of the week, a rate of withdrawals not seen since August 2010. A blowup in volatility-linked products sent markets haywire, eliciting waves of risk aversion from jittery investors. Strategists at JPMorgan said the swiftness and severity of the positioning unwind is a sign that further selling from the likes of commodity trading advisors and risk parity funds “should be limited from here.”

“The picture we are getting in the U.S. equity ETF space is one of advanced rather than early state de-risking,” they added. The five-session stampede for the exits erased the previous nine weeks of inflows into the fund, which is issued by State Street. The combination of price declines and withdrawals erased $38.6 billion in SPY’s assets. That’s nearly double the second-worst showing of $19.4 billion in asset shrinkage during the week ending Aug. 21, 2015, when China’s surprise devaluation of the yuan roiled markets. Prior to this recent market tumult, extreme enthusiasm for U.S. equities had propelled the fund’s total assets above $300 billion.

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What you say? Volatility?

Wednesday Could Be a Huge Day for the VIX (BBG)

Tomorrow’s VIX options expiration could prove extra volatile for the gauge. The Cboe Volatility Index tends to have bigger swings on days its contracts mature, with intraday moves of 13% on average on the past 12 monthly expirations. That compares with a mean daily fluctuation of 10% in the year through January. Of course, that was before this month, when a record VIX surge on Feb. 5 sent its average intraday move for February to almost 60%. What’s more, the recent market turmoil has led to a surge in the number of VIX contracts, and put open interest almost tripled to a record since the Jan. 17 expiration. Counting puts and calls, there are 15.4 million VIX options outstanding, and 40% of them mature tomorrow. While most stock-index options expire on the third Friday of every month, monthly VIX contracts expire two days earlier, on the Wednesday.

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Wait for rates to rise.

Europe Has a $1 Trillion Bad-Loan Problem (BBG)

For European banks, it’s a headache that just won’t go away: the €944 billion ($1.17 trillion) of non-performing loans that’s weighing down their balance sheets. Economists say the pile of past-due and delinquent debt makes it harder for banks to lend more money, hurting their earnings. European authorities are prodding lenders to sell or wind down non-performing credit, but they’re split on how to tackle the issue, and some investors are disappointed by the pace of progress.

The problem is particularly acute in the countries that were hit hardest by the sovereign debt crisis. Greece, which has yet to exit its bailout program, tops the list of non-performing loans as a share of total credit, while Italy has the biggest pile of bad debt in absolute terms.

Italian banks have fixed goals for shrinking their bad credit levels by selling portfolios or winding down loans. Intesa Sanpaolo, the country’s biggest bank by market value, got a head start on its rivals two years ago and plans to accelerate the reduction of non-performing loans, Chief Executive Officer Carlo Messina said last month. He says other Italian banks “are doing the right job” and should make further progress this year.

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Trumped.

Draghi Faces Impossible Task To Weaken The Euro; He Might Not Even Try (CNBC)

Mario Draghi is facing yet another headache this year as a strong currency threatens to derail his quest to keep prices stable, with many analysts suggesting there’s no easy way out for the president of the ECB. Investors have been flocking to the single currency as the euro zone economy keeps growing and political risks dissipate. However, that could become a problem for the ECB as a stronger currency can mean that European-produced products become pricier and less attractive outside the region. The euro has risen nearly 3% against the U.S. dollar since the start of the year, at a time when the ECB has been assessing how to reduce its monetary stimulus – which aims to increase lending and stoke consumer prices. At the bank’s last press conference in January, Draghi admitted that recent volatility in the exchange rate was a “source of uncertainty.”

The ECB’s primary target has always been inflation and not the exchange rate and Draghi — like many central bankers around the world — has been cautious when speaking of his own currency. However, analysts believe that Draghi wouldn’t be able to talk down the euro, even if he wanted to. “I believe it will be difficult for the ECB to talk the euro down in a very significant manner as it has already pretty much exhausted its preferred expansionary monetary policy instruments which it could use to weaken the currency (rate hikes and QE),” Thu Lan Nguyen at Commerzbank told CNBC via email. “And as the G-20 nations have agreed that they will refrain from manipulating their exchange rates, interventions are not a viable option either. Or even directly talking the euro down for that matter, because other nations would see this as a violation of the agreement as well,” she said.

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As everyone else’s yields rise (often from below zero), Greece is helpless.

Greek Bond Yields Keep Increasing (K.)

Greek bond yields continued to rise Tuesday, increasing worries about the cost of borrowing the country will face once it has to cover all of its financing needs through the market. At the same time Finance Minister Euclid Tsakalotos is adamant that Greece will not need a precautionary credit line and is embarking on a series of contacts in an attempt to attract investor interest. Tsakalotos departed on Tuesday for Paris for meetings with representatives of investment companies, hoping to convince them about the prospects of the Greek economy. He will continue his mission in London on Thursday. He is due back to Athens on Friday. The Greek 10-year bond saw its yield climb further on Tuesday, reaching 4.38% from 4.29% on Monday, while the yield on five-year paper advanced from 3.64% to 3.77% in a day. The 7-year debt yield exceeded 4%, having been sold to investors with a 3.5% yield just last Thursday.

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I shudder to imagine what Britain will look like in 5 years time.

Britons Face Surge In Household Debts In Next Five Years (G.)

Britons will spend almost a third more on their mortgages and other household debts over the next five years, according to new data, sparking fears many may struggle to cope with mounting costs if interest rates rise as predicted. The projection, revealed by a freedom of information request to the Office for Budget Responsibility, found household debt servicing costs were set to climb 29% by 2023, the vast majority of which are likely to be mortgages. The rise may take homeowners by surprise, given that costs fell 9% over the previous five years and also declined as a share of household income by almost a quarter due to historically low interest rates.

The Bank of England has indicated that it plans to raise interest rates from as early as May. On Monday the Resolution Foundation warned it could hit millions of low-income families who have relied on cheap credit. The Bank’s governor, Mark Carney, has said he believes the growing economy, including GDP growth and rising average wages, warrants a rise in interest rates from their low of 0.5%. Labour’s analysis found that an average household would see an increase of £468 in annual debt costs, from £1,983 in 2018 to £2,451 by 2023. The shadow chancellor, John McDonnell, called the figures “eye-watering increases in the potential costs faced by working families at a time when incomes are being squeezed”.

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Nice series of articles on UK housing. Nice because contradictory.

The World’s Biggest Housing Bubbles According To UBS (VisualC)

If you had $1 billion to spend on safe real estate assets, where would you look to buy? For many funds, financial institutions, and wealthy individuals, the perception is that the world’s financial centers are the places to be. After all, world-class cities like New York, London, and Hong Kong will never go out of style, and their extremely robust and high-density city centers limit the supply of quality assets to buy. But what happens when too many people pile into a “safe” asset? According to UBS, certain cities have seen prices rise at rates that are potentially not sustainable – and eight of these financial centers are at risk of having real estate bubbles that could eventually deflate.

Every year, UBS publishes the Global Real Estate Bubble Index, and the most recent edition shows several key markets in bubble territory. The bank highlights Toronto as the biggest potential bubble risk, noting that real prices have doubled over 13 years, while real rents and real income have only increased 5% and 10% respectively. However, the largest city in Canada was certainly not the only global financial center with real estate appreciating at rapid rates in the last year. In Munich, Toronto, Amsterdam, Sydney and Hong Kong, prices rose more than 10% in the last year alone. Annual increases at a 10% clip would lead to the doubling of prices every seven years, something the bank says is unsustainable.

In the last year, there were three key markets where prices did not rise: London, Milan, and Singapore. London is particularly notable, since it holds more millionaires than any other city in the world and is rated as the #1 financial center globally.

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Article above: Prices did not rise in London. Article below: they did.

UK House Price Growth Accelerates To 5.2% (Ind.)

UK house price growth accelerated to 5.2% in the year to December, new official data shows. That was a rise from 5% in the twelve months to November. The jump exceeds rises in average wages, prompting experts to warn of a further strain on affordability. The average UK house price hit £227,000 in December 2017, up £1,000 from the previous month and £12,000 higher than in December 2016. The house price index compiled by the Office for National Statistics and the Land Registry shows Scotland and the South-west experienced the highest annual house price growth, registering 7.7% and 7.5% respectively.

Average prices in England rose 5% in the year, to £244,000 while Wales saw house prices increase by 5.4% over the last 12 months to stand at £154,000. Growth in Northern Ireland was slightly more subdued, with the average price rising 4.3% to £130,000. Richard Snook, a senior economist at PwC, said the overall UK rise was above his projection made at the start of 2017. [..] “In terms of regional trends, London prices showed a slight recovery from the sharp fall in November so the picture is one of a market that has plateaued since the summer. London prices are just 2.5% above their level a year ago.

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And first time buyers rise. That’s supposed to be a good thing.

First-Time Buyers Hit 10-Year High As Buy-to-let Property Sales Fade (G.)

The number of first-time buyers hit the highest level for a decade in 2017 while lending for buy-to-let has gone into retreat, according to official figures. A total of 365,000 buyers took ownership of their first home last year, an increase of 7.4% on 2016 and the highest number since 2006, said UK Finance, the trade body for Britain’s banks. Its data showed that the average first-time buyer was 30 and had an income of £41,000. Property experts said the government’s help-to-buy programme plus lower deposit and cheap mortgage deals propelled first-time buyers in 2017. But in a sign that the boom may be waning, the figures for December show the number slipped compared with the same month last year. The slowdown comes despite the stamp duty cut in the November budget, which is expected to save four out of five first-time buyers up to £5,000.

The raft of tax measures on buy-to-let introduced last year has sent the sector swiftly into retreat. There were 5,300 new buy-to-let house purchase mortgages completed in December, 17.2% fewer than in the same month a year earlier. Paul Smee, of UK Finance, said: “2017 saw the number of first-time buyers reach its highest level in a decade, which is welcome news for those getting started on the housing ladder. “But although the market remains competitive there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year. [..] Separate figures from the Office for National Statistics revealed that house price inflation in 2017 was 5.2%, taking the price of a typical UK home to £226,760.

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OK, we’ve had rising prices and falling prices. Flatlining is door no. 3.

House Price Flatlining Is A Good Thing, Despite Estate Agents’ Gripes (G.)

Over the past year the rate of house price inflation has fallen while the number of first-time buyers has risen to its highest level since 2006. These two facts are connected: the reason young people have become renters rather than owner-occupiers is that property became expensive. Property has become so dear that the average first-time buyer is now 30 years old and has a salary of £41,000 a year. Owner-occupation rates have fallen from 70% to 63% over the past decade and it is not difficult to see why. Ultra-low interest rates mean that it has never been cheaper to service a mortgage, but that doesn’t matter all that much when the price of a home relative to incomes is so high.

For those who want to buy their own home, the good news is that house-price inflation will be modest in 2018. Earnings growth is still around 2.5%; the Bank of England is warning that interest rates are likely to go up faster and by more than previously expected; and tax changes that have helped cause a 17% annual drop in buy-to-let purchases in the year to December are going to become more stringent in April. House prices would already be falling were it not for the fact that interest rates and unemployment are low. It was the combination of 15% interest rates and a doubling of the jobless total that caused the property-price collapse of the early 1990s, and a repeat of that looks highly improbable because of a (welcome) lack of distressed sellers.

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For his career.

Boris Johnson: Stopping Brexit Would Be ‘Disastrous’ (Ind.)

Boris Johnson will say he fears people are becoming “even more determined” in their efforts to stop Britain’s withdrawal from the European Union (EU), as he sets out in a major speech what allies claim is a liberal vision of Brexit. The Foreign Secretary’s Valentine’s Day address – entitled the Road to Brexit – will be the first in a series of set pieces from Cabinet ministers and preludes Theresa May’s address in Germany this weekend. At a central London location, Mr Johnson will say he fears that some are becoming “even more determined” to stop Brexit and “frustrate the will of the people”.

“I believe that would be a disastrous mistake that would lead to permanent and ineradicable feelings of betrayal,” Mr Johnson will say. “We cannot and will not let it happen.” “But if we are to carry this project through to national success – as we must – then we must reach out to those who still have anxieties. “I want to try today to anatomise at least some of those fears and to show to the best of my ability that they are unfounded, and that the very opposite is usually true: that Brexit is not grounds for fear but hope.”

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Feb 132018
 


Camille Corot Study for “The Destruction of Sodom” 1843

 

We Are Sitting On A “Full Tank Of Gas” (Roberts)
‘Whistleblower’ Alleges VIX Manipulation, Urges Regulatory Probe (R.)
How A 5% Mortgage Rate Would Roil The US Housing Market (CNBC)
Interest-Only Loan Cash Flow Crunch Sparks Fears Of Fire Sales (AFR)
These Bonds Should Make ECB Hawks Apoplectic With Rage (BBG)
China Real Estate Under Pressure (BBG)
Greece Rocked By Claims Drug Giant Novartis Bribed Former Leaders (G.)
Greece Is a Turkey, and the Market’s Going to the Dogs (BBG)
An Englishman’s Home Is an Unreliable Pension Plan (BW)
Charities Face Crackdown On ‘Horrific’ Culture Of Sexual Exploitation (Ind.)
Unicef Admits Failings With Child Victims Of Sex Abuse By Peacekeepers (G.)

 

 

“Individuals just simply refuse to act “rationally” by holding their investments as they watch losses mount.”

We Are Sitting On A “Full Tank Of Gas” (Roberts)

Yea….it’s that psychology thing. Individuals just simply refuse to act “rationally” by holding their investments as they watch losses mount. This behavioral bias of investors is one of the most serious risks arising from ETFs as the concentration of too much capital in too few places.

But this concentration risk in ETF’s is not the first time this has occurred: In the early 70’s it was the “Nifty Fifty” stocks, Then Mexican and Argentine bonds a few years after that; “Portfolio Insurance” was the “thing” in the mid -80’s; Dot.com anything was a great investment in 1999; Real estate has been a boom/bust cycle roughly every other decade, but 2006 was a doozy; Today, it’s ETF’s and Bitcoin.

Risk concentration always seems rational at the beginning, and the initial successes of the trends it creates can be self-reinforcing. Until it goes in the other direction. While the sell-off last week was not particularly unusual, it was the uniformity of the price moves which revealed the fallacy “passive investing” as investors headed for the door all at the same time. Such a uniform sell-off is indicative of what we have been warning about for the last several months. For price chasing investors, last week’s plunge should serve as a warning. “With everyone crowded into the ‘ETF Theater,’ the ‘exit’ problem should be of serious concern. Unfortunately, for most investors, they are likely stuck at the very back of the theater.

I warned of this previously: “At some point, that reversion process will take hold. It is then investor ‘psychology’ will collide with ‘margin debt’ and ETF liquidity. It will be the equivalent of striking a match, lighting a stick of dynamite and throwing it into a tanker full of gasoline. When the ‘herding’ into ETF’s begins to reverse, it will not be a slow and methodical process but rather a stampede with little regard to price, valuation or fundamental measures. Importantly, as prices decline it will trigger margin calls which will induce more indiscriminate selling. The forced redemption cycle will cause catastrophic spreads between the current bid and ask pricing for ETF’s.

As investors are forced to dump positions to meet margin calls, the lack of buyers will form a vacuum causing rapid price declines which leave investors helpless on the sidelines watching years of capital appreciation vanish in moments. Don’t believe me? It happened in 2008 as the ‘Lehman Moment’ left investors helpless watching the crash.” “Over a 3-week span, investors lost 29% of their capital and 44% over the entire 3-month period. This is what happens during a margin liquidation event. It is fast, furious and without remorse.” Make no mistake we are sitting on a “full tank of gas.”

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No! “The flaw allows trading firms with advanced algorithms to move the VIX up or down by simply posting quotes on S&P options..”

‘Whistleblower’ Alleges VIX Manipulation, Urges Regulatory Probe (R.)

A scheme to manipulate Wall Street’s fear gauge, VIX, poses risk to the entire equity market and costs investors hundreds of millions of dollars a month, a law firm on behalf of an “anonymous whistleblower” told U.S. financial regulators and urged them to investigate before additional losses are suffered. The Washington-based law firm which represents an anonymous person who claims to have held senior roles in the investment business, told the Securities and Exchange Commission and Commodity Futures Trading Commission on Monday that he discovered a market manipulation scheme that takes advantage of a widespread flaw in the Chicago Board Options Exchange (CBOE) Volatility Index (VIX).

The CBOE Volatility Index measures the cost of buying options and is the most widely followed barometer of expected near-term stock market volatility. “The flaw allows trading firms with advanced algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital,” it said in a letter. Those bets against volatility unraveled last week as the benchmark S&P 500 and the Dow Jones Industrial Average suffered their biggest respective percentage drops since August 2011. Investors using exchange-traded products linked to the VIX were pummeled and two banks, Credit Suisse and Nomura, said they would terminate two exchange traded notes that bet on low volatility in stock prices.

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Try 6%, 7%.

How A 5% Mortgage Rate Would Roil The US Housing Market (CNBC)

Mortgage rates are now at their highest level in four years and poised to move even higher. The timing couldn’t be worse, as the usually busy spring housing market kicked into gear early this year amid higher home prices and strong competition for a record low supply of homes for sale. Add it all up, and affordability is starting to hurt. The average rate on the popular 30-year fixed is now right around 4.50%, still low when looking historically, but buyers over the past six years have gotten more used to rates in the 3% range. Mortgage rates have not been at 5% since 2011. A 5% rate would cause more than a quarter of today’s homebuyers to slow their plans, according to a Redfin survey of 4,000 consumers at the end of last year. Just 6% said they would drop their plans to buy altogether.

About one-fifth of consumers said 5% rates would cause them to move with more urgency to purchase a home, fearing rates would rise even further. Another fifth said they would consider more affordable areas or just buy a smaller home. Despite rate concerns, the bigger issue for buyers is changes to tax laws that had lowered the cost of homeownership. Specifically, the deduction on property taxes is now limited to $10,000. While that does not affect homeowners in the majority of the country, it does hit those in high-cost states like New York, New Jersey and Illinois, and those in higher-priced housing markets like California. Some have claimed that higher rates and the new tax law will put downward pressure on home prices, alleviating some of the current sticker shock, but other factors are fighting that assertion.

“Tight credit, lack of inventory and high demand are the major factors that tell us there’s no housing bubble, despite rapid price increases,” said Redfin’s chief economist, Nela Richardson. “There are still many more buyers than the current housing supply can support, with no major relief in sight.”

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From Australia. Check interest-only where you live. Big Threat.

Interest-Only Loan Cash Flow Crunch Sparks Fears Of Fire Sales (AFR)

Interest-only property investors seeking to switch their loan to principal and interest may be forced to sell because of lenders’ tough new serviceability requirements. A typical borrower paying 4.5% on a $400,000 loan will have to prove to their lender they can meet repayments for a 7.25% loan, or an increase in annual repayments from $18,000 to more than $32,700. The higher serviceability rates have been introduced after many investors took out their loans and are forcing borrowers to try and sell their properties, despite markets beginning to soften. It’s worse for many self-managed super fund investors who bought investment properties and are boxed in from making bigger payments because of annual caps on the size of their contributions. Real estate agents are warning the cash flow crunch is causing mortgage stress to rapidly spread from one-time mining boom towns and the outer suburbs into prestigious inner suburbs.

“Clients are ringing to say they need to refinance and their next call is that they need to sell,” said Andrew Fawell, director of Beller Property Group. Mr Fawell, whose business covers inner Melbourne within 10 kilometres of the central business district, has been asked to value four potential mortgagee property sales in the past month after having none in the past two years. “Many investors who bought two or three apartments with, in many cases, only 10% deposit with cheap interest-only loans are beginning to feel the heat,” Mr Fawell said. “These numbers will get a lot worse as investors find it harder to service their debt.”

The potential problem arises for many three- to five-year fixed rate loans that have reached the end of their terms and the much stricter regime introduced by the Australian Prudential Regulation Authority. Many borrowers deposited only 10%. In recent years most major lenders have introduced a 7.25% “floor for serviceability” for investor and owner-occupier loans, which is the minimum rate at which the bank will assess a home loan. Serviceability is the lenders’ assessment of the borrowers’ capacity to afford the loan and takes into account possibly higher future interest rates. It is usually assessed by a review of income and fixed commitments over the life of the loan and potential rental income.

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The ECB supports those parties that don’t need it.

These Bonds Should Make ECB Hawks Apoplectic With Rage (BBG)

This is tapering? With the economic recovery well under way in Europe the European Central Bank has cut its government bond purchases by two-thirds. Fair enough. However, it is not reining in its involvement in company debt. The securities now comprise about 20% of monthly purchases, up from 7% at the start of the program in mid-2016. The total amount could top €200 billion ($244 billion) before quantitative easing ends. If it had any self-knowledge the ECB should be aware of the problems it’s creating. The fact that, by its purchases, it has soaked up all the liquidity in the secondary market and has had to turn to the primary market should be a warning sign. The central bank’s growing involvement in company borrowing should be causing ructions among the hawks on the Governing Council, who seem alive to the dangers of being late in withdrawing stimulus.

Yet their silence is deafening. Through QE the ECB has invested in over 230 individual companies, and with an average maturity of 5.6 years it’s impossible to see them as being exposed only in the short term. Performance has been decent – spreads have tightened on about three-quarters of its holdings. The odd misstep, such as having to liquidate Steinhoff or German fertilizer maker K+S bonds when they fell below investment grade, can be overlooked. The knock-on effect of such largess is that corporate bond spreads have had a seemingly unending streak of achieving record lows. Support for credit markets in times of strife is one thing. But driving outsized performance isn’t just storing up trouble for an individual company or investor for the future, it’s a reckless refusal to allow financial discipline to inform the decision making of actors in the financial system.

[..] The surge of demand for additional tier one bank capital is another particularly worrying phenomenon. Investors face a total loss if the issuing bank’s capital ratios fall below regulatory requirements. Raiffeisen Bank was able in January to issue an AT1 perpetual bond at 4.5%, having issued a similar 6.125% AT1 security in June. Though there was a one-notch credit-rating upgrade, that can hardly justify such an enormous improvement. And 4.5% can never be enough compensation for the risk of getting completely wiped out.

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Now Beijing wants to push rental housing. Easier to control?

China Real Estate Under Pressure (BBG)

While all eyes are on China’s stocks rout after the U.S. swoon, there’s a troubled sector that’s garnering fewer headlines but will have broader reverberations – real estate. Chinese property stocks slumped last week, dragged down not just by the global sell-off but by worries this may be the year when housing finally takes a hit. To date, Beijing’s crackdown on risk amid soaring household debt has had little effect on prices. December data showed values in small cities continued to rise, while they were mostly flat in top-tier conurbations like Guangzhou, Shenzhen and Beijing. There are several reasons, though, why the 13-year rally in house prices must end at some point. First, banks are making borrowing tough, not only raising costs for home loans but also restricting supply, especially in major centers such as Beijing and Shenzhen, under a semi-official mortgage quota.

Even last year’s stars, the second- and third-tier cities that led price gains, may fade as China curtails easy home loans that were intended to help soak up a glut of property. Downpayments there ranged between 20 and 30%, compared with 40 to 80% in top-tier locations, according to Credit Suisse. As the curbs bite, mortgage lending has started to decline. (The other plank of household debt, consumer lending, has been an even bigger problem, surging 180% last year, according to Credit Suisse.) Second, perhaps further down the line, a property tax is looming. Finance Minister Xiao Jie indicated this might happen as early as 2020. When President Xi Jinping exhorted people to remember that houses are for living, not speculation, real estate investors must have grown nervous; a tax will make them quake.

With few investment options available to individuals beyond the volatile stock market and wealth-management products (more and more of which are being banned), it’s no surprise that as much as 25% of the demand for real estate is speculative, according to Bloomberg Economics. Third, there’s the more immediate threat to real estate prices of a supply-side push by Beijing. The government is starting to shift from tamping down demand to promoting new housing. Among measures the government is promoting, according to BNP Paribas economist Chen Xingdong, is encouraging homes where the government and buyers share property rights, and even allowing state-owned firms to sell apartments to their employees. The government is also encouraging the growth of a rental market. While much of the current stock of rental housing is of poor quality, that’s likely to change.

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And only now does this reach European media. The upshot: Novartis pulled the same stunt in South Korea.

Greece Rocked By Claims Drug Giant Novartis Bribed Former Leaders (G.)

The Greek prime minister, Alexis Tsipras, has called for parliament to investigate whether two of his predecessors and eight former ministers accepted bribes from the Swiss drugmaker Novartis, after allegations of industrial-scale bribery involving senior politicians. The former PMs Antonis Samaras and Panagiotis Pikrammenos, the governor of the Bank of Greece and the EU’s migration commissioner were all identified as alleged beneficiaries of bribes in a report compiled by anti-corruption prosecutors with the help of US authorities. Novartis is alleged to have bribed politicians to approve overpriced contracts and to have made payments to thousands of doctors as part of concerted efforts to boost sales between 2006 to 2015.

The claims have rocked Greek society since coming to light last week. One serving government minister claimed the kickbacks surpassed €50m and resulted in costs of more than €4bn to the Greek public health system. The deputy justice minister, Dimitris Papangelopoulos, said it was “the biggest scandal since the establishment of the Greek state” almost 200 years ago. Widening the net on Monday, Tsipras said it was imperative there could be no cover-up. “We will make use of every power afforded by national and international law to recover the money stolen from the Greek people down to the last euro,” the leftist leader told MPs in his Syriza party. “We will do everything we can to reveal the truth.”

MPs will vote on establishing a committee of inquiry later this month. Only parliament has the power to investigate politicians for alleged infractions during their term in office. The allegations have been rebutted vehemently by the accused. The report’s reliance on three unnamed witnesses – who are currently under government protection – has been especially criticised, and legal experts contend that the claims would not stand up in court. The EU commissioner Dimitris Avramopoulos demanded that the identity of the witnesses be revealed and expressed his “disgust” at what he said were fabrications created by “sick minds”. He stands accused of purchasing 16m anti-flu vaccines from Novartis while health minister between 2006 and 2009. [..] Novartis has faced similar investigations in recent years. Last year South Korea fined the company $48m for offering kickbacks to doctors.

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Just as Greece starts selling bonds again, it faces increasing competition,

Greece Is a Turkey, and the Market’s Going to the Dogs (BBG)

Greece almost makes it look easy. It issued a new €3 billion ($3.7 billion) seven-year bond on Thursday, at a very healthy 3.5% yield, stepping into a briefly open window for raising money during the most torrid week for markets in years. The security is now trading very close to 4%. Ouch. The benefits of going ahead with the sale went to Greece rather than to investors. With a €6 billion order book there was no lack of demand – but there is buyer’s remorse now. It’s the first sovereign syndicated new issue to perform badly in Europe so far this year. This could make it troublesome for the region’s other governments to bring deals on top of an already-heavy regular auction schedule. Greece may just be one turkey, but investor demand is going to become a lot pickier.

And there’s plenty to choose from. Governments have been crowding out the syndicated new issue market even more this year, comprising 26.5% of deals versus an already-strong 23% at this stage in 2017. If supra-nationals and agencies are included then half of all new syndicated deals are from an official institution. It’s a curious result, given that the European new-issue market is supposed to be much more about companies. For example, the European Financial Stability Facility – created to fund Greece’s bailout – has already issued half of its €28 billion annual plan. The EFSF has come three times in 2018 with €13.5 billion in maturities ranging from 6 to 23 years. That is an almost indecent rush to complete its annual funding schedule as early as possible. It’s smart for the issuer – less so for the investor.

Borrowers can try to front-load sales in a low-rate environment, but with more central banks getting comfortable with tightening, investors are not going to play that game unless the yield is generous. It’s an increasing struggle, given that the German benchmark 10-year yield has risen sharply since the mid-December lows of 30 basis points. The yield famine is easing up.

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What a shame: too late!

An Englishman’s Home Is an Unreliable Pension Plan (BW)

“A man’s house is his castle,” Sir Edward Coke wrote back in the 17th century. These days, Britons are relying on their properties not just for refuge but also to fund their retirements. It’s a strategy that could backfire badly. Along with the rest of the world, the U.K. has an aging population: a growing number of retirees are being supported by a shrinking pool of workers. The U.K.’s dependency ratio – calculated by adding together the over 65s and under 15s, then dividing by the working-age population and multiplying by 100 – will rise to 60% by 2027. That’s up from 55% in 2017 and from 54% in 1997. As the pyramid grows more inverted, how does the top-heavy non-working cohort propose to finance a life of leisure and superannuation? By releasing the equity they expect to have accumulated in their homes once they’re ready to hit the golf course.

One in five Brits agreed with the statement “when I retire, I plan to sell my house, downsize and live off the profit,” according to a survey commissioned by pension consultants LCP from polling firm YouGov. That gamble seems unwise. In recent years home values, like global stock markets, only ever seemed to increase. But, again as with global stock markets, the notion of ever-rising prices has taken something of a beating recently. According to a report published on Monday, U.K. house prices posted their first annual decline in six years in January. Moreover, with wage growth in recent years failing to keep pace with either rising property prices or inflation, it’s become harder for those of working age to get on the housing ladder in the first place. And the percentage of under 34s who own their own homes has slumped in the past decade.

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This is so sick it makes one silent.

Charities Face Crackdown On ‘Horrific’ Culture Of Sexual Exploitation (Ind.)

British charities are facing a government crackdown to combat the “horrific” sexual exploitation exposed at Oxfam, amid concerns about a wider culture of abuse. All British charities working overseas have been ordered to provide “absolute assurances” that they are protecting vulnerable people and referring complaints to authorities. Oxfam’s deputy chief executive resigned during crisis talks with the Government, saying she took “full responsibility” for the alleged use of prostitutes by senior staff in Haiti. But aid workers told The Independent sexual misconduct against both locals and staff remains “widespread” in humanitarian agencies and called for wholesale reforms.

Penny Mordaunt, the International Development Secretary, has written a letter to all UK charities working overseas demanding “absolute assurance that the moral leadership, the systems, the culture and the transparency needed to fully protect vulnerable people are in place”. “It is not only Oxfam that must improve,” she said. “My absolute priority is to keep the world’s poorest and most vulnerable people safe from harm. In the 21st century, it is utterly despicable that sexual exploitation and abuse continues to exist in the aid sector.” The Department for International Development (Dfid) has created a new unit dedicated to reviewing safeguarding in the aid sector and stopping “criminal and predatory individuals” being employed by other charities.

[..] “Oxfam made a full and unqualified apology – to me, and to the people of Britain and Haiti – for the appalling behaviour of some of their staff in Haiti in 2011, and for the wider failings of their organisation’s response to it,” said Ms Mordaunt. “They spoke of the deep sense of disgrace and shame that they and their organisation feel about what has happened, and set out the actions they will now take to put things right and prevent such horrific abuses happening in future.“

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It’s not just Oxfam, it’s an industry-wide culture.

Unicef Admits Failings With Child Victims Of Sex Abuse By Peacekeepers (G.)

The UN’s children’s agency has admitted shortcomings in its humanitarian support to children who allege that they were raped and sexually abused by French peacekeepers in Central African Republic. A statement by Unicef Netherlands is the first public acknowledgement of the agency’s recent failure to provide support to some of the victims of alleged abuse by peacekeepers in the African nation. It comes as the aid sector and the UN face increasing scrutiny for their failings in managing internal sexual misconduct by their own staff. Unicef was given the task of overseeing the support for children who said they had been abused by peacekeepers.

But in March last year, an award-winning investigation by Swedish Television’s Uppdrag Granskning (Mission Investigate) revealed that some of the children supposedly in the UN’s care were homeless, out of school and forced to make a living on the streets, despite UN assurances that they would be protected. Unicef’s representative in CAR told the programme that the children were in the agency’s assistance programme for minors and were being supported. He said he was not aware that some were on the streets. But earlier this month – ahead of a Dutch screening of the programme – Unicef Netherlands admitted to the Dutch television programme Zembla that Unicef had failed in its duty to help some of the alleged victims. But it said that since the programme had first aired, it had taken steps to locate the children featured in the programme and provide them with support.

Marieke van Santen, of Zembla, said she found the Swedish film “astonishing” because the children who were interviewed were known to Unicef, yet they were not being cared for. Van Santen said: “It is quite shocking to realise that not only once but twice UN agencies have failed to help these victims.” The statement from Unicef Netherlands was welcomed by Karin Mattisson, a reporter for Mission Investigate. “I hope it makes a difference to the children and gives them strength. They have said they were failed,” said Mattisson.Several boys who testified to having been sexually assaulted by French soldiers were living rough, Mattisson found, while a girl, who became pregnant at the age of 14 by a Congolese peacekeeper and had later found out she was HIV-positive, was out of school looking after her baby. Another boy, aged eight, who was too traumatised to be interviewed, was in an orphanage. “I hope they live up to this statement,” she said. “When we investigated the UN and Unicef it was a long journey into their culture of silence.”

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Feb 122018
 
 February 12, 2018  Posted by at 10:46 am Finance Tagged with: , , , , , , , , , , ,  4 Responses »


Camille Corot The Burning of Sodom (formerly “The Destruction of Sodom”) 1843 and 1857

 

Rising Debt + Rising Rates (Northman)
Last Week’s ‘Volocaust’ “Just An Appetizer” – Cole (ZH)
Why People Who Make Money Are Usually Wrong – Taleb (ZH)
‘Big Shakeout Coming’: Bridgewater Sounds Warning (G.)
History Suggests The Correction Isn’t Nearly Over (MW)
Interest Rate Rise Would Hit Millions In UK Who Depend On Cheap Credit (G.)
May Starts Drive to End the Conservative Civil War Over Brexit (BBG)
China Enters The Graveyard Of Empires (Escobar)
China Pledges ‘Employment First’ Policies To Create Millions Of Jobs (R.)
Party On, Dudes (Jim Kunstler)
Oxfam Faces Losing Funding As Crisis Grows Over Abuse Claims (G.)
Oxfam Reels From Prostitution Scandal (G.)
The UK’s Hidden Role In Assange’s Detention (Cook)

 

 

Ultra low rates but ultra high payments.

Rising Debt + Rising Rates (Northman)

“Interest On The Debt Will Be The Fastest Growing Part Of The Federal Budget…By Far. Forget Medicare, Social Security and the Pentagon: $1 trillion-plus deficits means massive increases in the national debt and that debt will have to be borrowed at higher interest rates. Add the need for the Treasury to roll-over existing debt at higher and higher rates and you get an immediate increase in the amount the U.S. will need to spend on interest each year.” Watch this space:

Some people may argue that tax cuts will bring in so much economic growth it will all pay for itself. There is precisely zero evidence for such an assertion:

If you know your tax cut history you know where in the chart above major tax cuts were passed. The debt continued to rise and will continue to rise as spending continues to be expanded. But here’s the kicker: Never in modern times have we seen tax cuts being implemented and spending increased with debt to GDP north of 100%:

Many corporations are drowning in debt, as are consumers, and so are their interest payments:

People invariably argue and say: Yea well, but as a percent of disposable income it’s not so bad. Yes, it’s called artificial low rates, they can mask a lot, but what is currently the situation is not the point, it’s sustainability of debt loads in the very immediate future. As you saw in the above data we are already seeing a vast increase in interest payments despite rates having barely moved off of the historic zero bound line. “As for total debt, the CBO last predicted borrowings of $25.5 trillion by 2027. According to Riedl, the tax cuts, new discretionary outlays and additional interest on the extra spending could add $5 trillion to that number, bringing the total of $30 trillion. That’s 107% of the national income estimate projected by the CBO.

The scariest unknown is what happens to interest expense. At $25.5 trillion, the CBO forecasts outlays for interest of $818 billion in 2027. Going to $30 trillion will raise the load to over $1 trillion. One dollar in seven in spending would be going to interest, versus one in 15 today. And that scenario assumes that the yield on the 10-year Treasury increases to just 3.5% over the next decade, far below its historic average. “If rates go to their average in the 1990s,” warns Riedl, “the deficit will go not to $2 trillion, but to between $2.5 and $3 trillion.”

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“..the VIX ETPs are only 5 billion dollars. You have 1.5 trillion of implicit short-volatility strategies..”

Last Week’s ‘Volocaust’ “Just An Appetizer” – Cole (ZH)

While Cole is happy to accept the back-patting and congratulations for having foretold in near-perfect detail the dynamics that would drive this week’s volatility explosion, those who read our piece summarizing Cole’s (uncannily well-timed) interview two weeks ago will remember that short-vol ETPs like XIV represent only a fraction of the collective $2 trillion short-gamma position that touches nearly every corner of the market. Other components of what calls the ‘implicit’ gamma short – which we’ve touched on this week – include $600 billion invested in risk-parity strategies, $400 billion in volatility-control funds. And $250 billion of risk premium strategies… Rather than buy the dip, Cole ominously warned that it’s more likely this is the beginning of a much larger selloff. Or, as Kevin Spacey’s character put it in the movie “Margin Call”, because of vulnerabilities related to the market’s massively short gamma positioning, “there will be turmoil in the markets for the foreseeable future.”

Everyone talks – congratulations about calling this. Well, I don’t think what I’ve really talked about has come to pass yet. The VIX ETPs are the smallest portion of the global short-vol trade. Talk about this idea of about 1.5 to 2 trillion dollars’ worth of short-vol exposure, both explicit and implicit. Explicit short volatility are VIX exchange-rated products and vol overwriting funds. You know, the VIX ETPs are only 5 billion dollars. You have 1.5 trillion of implicit short-volatility strategies, strategies that may not be directly shorting options, but use financial engineering to mimic the components of a short-option portfolio. About 1.5 trillion dollars’ worth of these, of exposure, this is what we’re seeing come online now.

This is the real risk. So stocks and bonds sell off together. You have disorderly unwind withdrawal of liquidity. And then, all of a sudden, increasing volatility results in a quick deleveraging of these implicit short-volatility strategies. And this will drive the next leg of the crisis. So, people say congratulations, you called the short-vol trade. No, nothing has happened yet. This is an appetizer. This is just the appetizer for the unwind that is about to come. I think this is what people should be really afraid of, and I think this is the next leg of this that we will see. Whether this happens in two weeks or whether this happens over two years, I don’t know. But I strongly believe this will come to pass. And it will be quite disorderly and ugly.

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Practice and theory.

Why People Who Make Money Are Usually Wrong – Taleb (ZH)

Echoing Mark Spitznagel’s insights into how ‘naiveté’ led to the epic losses experienced by many ‘nickel-picker-uppers’ this week in the short-vol game, Nassim Taleb takes to YouTube to provide some more color on the fallacy of forecasting and what destroyed XIV traders. Taleb begins by noting that “many people attempted to profit by forecasting volatility [would drop] and from the fact that the contract [in this case XIV] was poorly constructed… they were right, until they were destroyed.” Academics cannot get the idea that you don’t have to be right about the world to make money.

“Antifragile explains why understanding x is different from f(x) the payoff or exposure from x. Most of the harm/gains come from f(x) being convex or concave, not from understanding x. Forecasting is off an average, and average is for academics and other morons.” As Valuewalk’s Jacob Wolinsky writes, this video illustrates the point with XIV that went bust while being correct about volatility –and why people who make money are usually wrong.

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Has Pandora’s box been opened?

‘Big Shakeout Coming’: Bridgewater Sounds Warning (G.)

Financial markets are braced for more volatility this week amid predictions from the world’s biggest hedge fund that a “big shakeout” is coming. The Australian stock market was the first to test the water on Monday morning and one point was down 0.7%. But it rallied slightly in afternoon trade to close down 0.3%. Bourses elsewhere in Asia Pacific also found calmer waters. South Korea’s Kospi was up 0.9% while Hong Kong put on 0.8%. The Nikkei in Japan was closed for a holiday. The FTSE100 is London is due to open up 1.25% according to futures trading, while the Dow Jones average on Wall Street is set to rise 0.7%. Last week saw $4tn wiped off the value of shares around the world and the US market entered into an official correction after falling more than 10% from its record level in January.

Wall Street staged a late rally on Friday as the Dow Jones finished 330 points higher and the closely watched Vix index, or “fear index”, has dropped four points to 29 on Monday from 33 on Friday. But Bob Prince, co-chief investment officer at the $160bn US hedge fund Bridgewater, told the Financial Times on Monday (paywall): “There had been a lot of complacency built up in markets over a long time, so we don’t think this shakeout will be over in a matter of days. “We’ll probably have a much bigger shakeout coming.” David Bassanese, the chief economist at BetaShares Capital in Sydney, said in a note on Sunday that despite the big falls last week, the selling could continue. “History suggests the depth of corrections – assuming the underlying bull market persists – don’t usually get beyond 15%, so there’s certainly some scope for market weakness before a bottom is reached,” he said.

Investors would be jittery about US inflation figures on Wednesday, he said. The market was forecasting a “fairly benign” 1.7% annual prices growth, but anything above that was likely to result in more stock losses. Chris Weston at online trader IG said on Monday: “A massive buildup in market leverage has been partially unwound in the blink of an eye and what started as systematic funds selling out of equity and futures positions, as implied volatility headed higher, has morphed into something far more broad-based incorporating many other market participants.”

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“..the median decline for the S&P in a correction is 16.4%, and the median length of a pullback is 64 days..”

History Suggests The Correction Isn’t Nearly Over (MW)

Perhaps the biggest question on Wall Street right now is whether the recent pain in the U.S. stock market is over. If history is any indication, the answer is no. Both the Dow Jones Industrial Average and the S&P 500 entered correction territory on Thursday, defined as a 10% drop from a recent peak—in this case, record highs that were hit in late January. According to Bespoke Investment Group, which analyzed the 95 corrections the S&P has seen since 1928, investors might want to brace themselves for more pain.

Per Bespoke’s data, the median decline for the S&P in a correction is 16.4%, and the median length of a pullback is 64 days. Were the S&P to hit that median in the current selloff, it would bottom around 2,400, or roughly 7.8% below current levels. “Keep in mind, though, that these are median levels. There have been a number of corrections (13) that saw declines of less than 11%, while several saw deeper declines of more than 20%,” the research group wrote in a blog post. A decline of 20% would put the index into bear-market territory, where nearly one-fifth of S&P components currently trade. “In terms of length, prior corrections have also been all over the map. Some have lasted as little as three days, while others have stretched on for well over a year.”

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It will hit millions everywhere.

Interest Rate Rise Would Hit Millions In UK Who Depend On Cheap Credit (G.)

The Bank of England’s warning that it plans to raise interest rates from as early as May will hit millions of low-income families who have only survived financially for a decade by using cheap credit. The Resolution Foundation said almost half of low-income families were in debt distress before Threadneedle Street said last week that it needed to increase the base rate at an accelerated pace over the next two years. The Bank governor, Mark Carney, said the strength of the economy warranted higher borrowing costs. He cited rising average wages and resilient GDP growth as reasons to begin pushing interest rates from the historically low level of 0.5%.

But a study by the foundation showed the proportion of households in some form of debt distress rose to 45% among the poorest fifth of working age households, with more than a third experiencing difficulty in paying for accommodation and one in six in arrears on either their mortgage or consumer debts. Households headed by someone aged 25-34 spent nearly £1 in every £5 of their pre-tax income on debt repayments in 2017, compared with 20p for households aged 65 and over. Levels of consumer credit have soared in recent years to more than £200bn, prompting debt charities to warn that lenders are repeating the mistakes made in the early part of the century, when households on low incomes were sold loans they could not repay.

Matt Whittaker, the chief economist at the Resolution Foundation, said most of the increase in consumer debt since 2014 was among middle and higher income groups and they could afford to absorb an increase in interest rates. The cost of servicing Britain’s household debt is low by historical standards, he said, with repayments accounting for 7.7% of disposable income, well below the 12.3% recorded just before the financial crisis, and in line with the level seen during the mid-1990s and early 2000s. “However, while the recent growth in debt is less of a concern, it is very worrying that almost half of low-income families are already showing signs of debt distress,” Whittaker said. “While rates have been at historic lows for a decade now, many families have experienced a tight income squeeze over this period and have not been able to get back on the front foot when it comes to servicing their debts.”

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Yawn.

May Starts Drive to End the Conservative Civil War Over Brexit (BBG)

U.K. Prime Minister Theresa May embarks this week on a determined push to bring her divided Cabinet together and come up with a Brexit plan. As European negotiators show increasing signs of impatience, senior U.K. ministers are preparing to deliver a series of speeches in the coming weeks setting out a vision of life outside the European Union. They’ll culminate with an address by May. Dubbed a “Road Map to Brexit,” the schedule begins on Wednesday when Foreign Secretary Boris Johnson issues an appeal to both sides of the Brexit debate. May is expected to offer a new security relationship three days later when she addresses a conference in Munich. Also scheduled to make speeches are Brexit Secretary David Davis, Trade Secretary Liam Fox, and Cabinet Office Minister David Lidington.

Absent, however, is Chancellor of the Exchequer Philip Hammond, who enraged Brexit supporters in January by suggesting Britain would see only “very modest” changes to its relationship with the EU once it leaves the bloc. May has ordered key ministers to attend an “away day” at Chequers, the prime ministerial country retreat outside London, after two meetings to find a joint position on Brexit ended without agreement last week. With just 13 months to go before Britain exits the EU, the ruling Conservatives are mired in a civil war between those who want to retain close ties to the bloc and hard-liners demanding a clean break, including total withdrawal from the EU single market and the customs union. On Friday, Michel Barnier, the EU’s chief Brexit negotiator, expressed his exasperation by warning that the post-Brexit bridging period that once seemed a certainty “is not a given,” prompting investors to sell the pound.

Businesses have said they’ll start to activate contingency plans to move jobs and operations out of the U.K. unless a transition deal is nailed down by the end of March. In her speech to cap off the “Road to Brexit” push — the date of which hasn’t been announced — May will set out the government’s “ambitions for Britain’s partnership with the EU after we have left.” It will be her third major address, following her Lancaster House speech in January last year and her Florence speech in September. “Brexit is a defining moment in the history of our nation,” May’s office said in a statement. “We will be forging an ambitious new partnership with Europe and charting our own way in the world to become a truly global, free-trading nation.”

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Afghanistan is like a Bermuda triangle.

China Enters The Graveyard Of Empires (Escobar)

The latest plot twist in the endless historical saga of Afghanistan as a graveyard of empires has thrown up an intriguing new chapter. For the past two months, Beijing and Kabul have been discussing the possibility of setting up a military base alongside Afghanistan’s border with China. “We are going to build it [the base] and the Chinese government has committed to help financially, provide equipment and train Afghan soldiers,” Mohammad Radmanesh, a spokesman for the Afghan Ministry of Defense, admitted to the AFP. On the record, the Chinese Foreign Ministry only admitted that Beijing was involved in “capacity-building” in Afghanistan, while NATO’s Resolute Support Mission, led by the United States, basically issued a “no comment.”

The military base will eventually be built in the mountainous Wakhan Corridor, a narrow strip of territory in northeastern Afghanistan that extends to China and separates Tajikistan from Pakistan. It is one of the most spectacular, barren and remote stretches of Central Asia and according to local Kyrgyz nomads, joint Afghan-Chinese patrols are already active there. True to Sydney Wignall’s fabled Spy on the Roof of the World ethos, a great deal of shadow play is in effect. Apparently, this is basically about China’s own war on terror. Beijing’s strategic priority is to prevent Uyghur fighters of the East Turkestan Islamic Movement (ETIM), who have been exiled in Afghanistan, crossing the Wakhan Corridor to carry out operations across Xinjiang, an autonomous territory in northwest China.

There is also the fear that ISIS or Daesh jihadis from Syria and Iraq may also use Afghanistan as a springboard to reach the country. Even though the jihad galaxy may be split, Beijing is concerned about ETIM. As early as September 2013, the capo of historic al-Qaeda, Ayman al-Zawahiri, supported jihad against China in Xinjiang. Later, in July 2014, Abu Bakr Al-Baghdadi, the leader of Daesh said: “Muslim rights [should be] forcibly seized in China, India and Palestine.” Then, on March 1, 2017, Daesh released a video announcing its presence in Afghanistan, with the terror group’s Uyghur jihadis vowing, on the record, to “shed blood like rivers” in Xinjiang. At the heart of the matter is China’s Belt and Road Initiative, or the New Silk Road, which will connect China with Asia, Africa, the Middle East and Europe.

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Empty politics.

China Pledges ‘Employment First’ Policies To Create Millions Of Jobs (R.)

China will boost its job creation effort and promote entrepreneurship this year, a spokeswoman for the top state planner said on Sunday, under pressure to find work for millions of unemployed people and new college graduates. Meng Wei of the National Development and Reform Commission (NDRC) said China needs to create jobs for 9.7 million people registered as unemployed and 8.2 million new college graduates, as well as workers affected by industrial capacity cuts. China’s urban-registered unemployment rate fell to 3.9 percent last year and has remained generally stable despite slowing economic growth and the government forging ahead with plans to cut back industrial capacity.

Many analysts say, however, that the official data is an unreliable indicator of employment conditions because it only measures employment in urban areas and does not take into account the millions of migrant workers who form the bedrock of China’s labour force. “We will implement an employment-first strategy and more proactive employment policies…and vigorously promote employment and entrepreneurship,” Meng told a news conference on Sunday, adding that protecting jobs was fundamental to China’s stable growth policy. Authorities are counting on “new growth engines” such as technology and services to support job creation. Meng said China will create a policy environment that supports the digital economy and will promote the big data, artificial intelligence and industrial internet sectors.

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QE bankrolls the house.

Party On, Dudes (Jim Kunstler)

In June of 2008, US crude hit $144-a-barrel, a figure so harsh that it crippled economic activity — since just about everything we do depends on oil for making, enabling, and transporting stuff. The price and supply of oil became so problematic after the year 2000 that the US had to desperately engineer a work-around to keep this hyper-complex society operating. The “solution” was debt. If you can’t afford to run your society, then try borrowing from the future to keep your mojo working. The shale oil industry was a prime beneficiary of this new hyper-debt regime. The orgy of borrowing was primed by Federal Reserve “creation” of trillions of dollars of “capital” out of thin air (QE), along with supernaturally low interest rates on the borrowed money (ZIRP). The oil companies were desperate in 2008. They were, after all, in the business of producing… oil! (Duh….) — even if a giant company like BP pretended for a while that its initials stood for “Beyond Petroleum.”

The discovery of new oil had been heading down remorselessly for decades, to the point that the world was fatally short of replacing the oil it used every year with new supply. The last significant big fields — Alaska, the North Sea, and Siberia — had been discovered in the 1960s and we knew for sure that the first two were well past their peaks in the early 2000s. By 2005, most of the theoretically producible new oil was in places that were difficult and ultra-expensive to drill in: deep water, for instance, where you need a giant platform costing hundreds of millions of dollars, not to mention armies of highly skilled (highly paid) technicians, plus helicopters to service the rigs. The financial risk (for instance, of drilling a “dry hole”) was matched by the environmental risk of a blowout, which is exactly what happened to BP’s 2010 Deepwater Horizon platform in the Gulf of Mexico, with clean-up costs estimated at $61 billion.

[..] The shale oil companies could get plenty of cash-flow going, but it all went to servicing their bonds or other “innovative” financing schemes, and for many of the companies the cash flow wasn’t even covering those costs. It cost at least six million dollars for each shale well, and it was in the nature of shale oil that the wells depleted so quickly that after Year Three they were pretty much done. But it was something to do, at least, if you were an oil company — an alternative to 1) doing no business at all, or 2) getting into some other line-of-work, like making yoga pants or gluten-free cupcakes.

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“..87 allegations of sexual abuse by staff in 2016-17..” “..more than 120 workers across a range of leading charities had been accused of sexual abuse in the past year alone..”

Oxfam Faces Losing Funding As Crisis Grows Over Abuse Claims (G.)

Oxfam was scrambling on Sunday night to contain a growing crisis over claims of sexual misconduct by aid workers before a crunch meeting on Monday that could see the charity stripped of its government funding. Amid anger from the government and the wider aid sector at revelations that Oxfam staff in Haiti paid prostitutes – possibly underage – for sex in 2011, the charity’s chair of trustees, Caroline Thomson, pledged to widen a review of its practices to include the Haiti allegations and admitted “anger and shame that behaviour like that … happened in our organisation”. She set out the steps Oxfam would take to avoid a similar scandal in future after the international development secretary, Penny Mordaunt, issued a damning rebuke to the charity. Mordaunt warned that it would receive no more public money unless it demonstrated “moral leadership” and handed over all information on aid workers’ alleged use of prostitutes on the island.

[..] Oxfam’s fight to secure its financial footing came after days of escalating stories about the conduct of its workers after revelations that staff in Haiti had been dismissed for using prostitutes for sex parties. Any hopes the charity’s leadership had that the scandal might quickly subside were dashed when it was reported in the Observer that Oxfam staff in Chad had also used prostitutes and when Oxfam’s own annual report resurfaced, showing it dealt with 87 allegations of sexual abuse by staff in 2016-17. Oxfam’s crisis threatened to spill across the charity sector on Sunday with reports that more than 120 workers across a range of leading charities had been accused of sexual abuse in the past year alone.

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Everyone in Haiti knew about this. And it’s not just Oxfam either.

Oxfam Reels From Prostitution Scandal (G.)

deep disgust at what they were hearing was tinged with a sense of inevitability for some. “We’ve all worked with people who’ve worked in Ethiopia, DRC, Haiti, Malawi, Thailand etc who’ve seen similar things across the entire sector,” said one Oxfam worker in the Middle East. Goldring, admired by staff as “deeply thoughtful”, set out the story – first a chronology of what happened in Haiti in 2011, and then a commentary on the issues it raised, including pointing out the dilemmas that the Oxfam staff handling the case faced. For example, he said, the charity didn’t report it to the Haitian police because it was concerned that could rebound adversely on the women involved.

He struck one attendee as “desperately keen to put across the point that we don’t think there was a cover-up because we didn’t hide that there was a problem in Haiti”. Only Oxfam hadn’t been open about what that problem was. Some staff also felt there was a “single-mindedness about the attack on Oxfam” that was not commensurate with the weight of what had happened in 2011. It was shocking and wrong, but some felt that the problems revealed were probably not unique to Oxfam. “I’m really frustrated at the Oxfam-only lens in this – granted what happened was horrific,” said one Oxfam worker abroad. “I’ve worked for [several other NGOs] and there just isn’t any type of policy or procedure in place for any of this stuff.”

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The people responsible for these decisions should be taken to court. Even -make that especially- politicians must be held to their own laws.

The UK’s Hidden Role In Assange’s Detention (Cook)

It now emerges that the last four years of Julian Assange’s effective imprisonment in the Ecuadorean embassy in London have been entirely unnecessary. In fact, they depended on a legal charade. Behind the scenes, Sweden wanted to drop the extradition case against Assange back in 2013. Why was this not made public? Because Britain persuaded Sweden to pretend that they still wished to pursue the case. In other words, for more than four years Assange has been holed up in a tiny room, policed at great cost to British taxpayers, not because of any allegations in Sweden but because the British authorities wanted him to remain there. On what possible grounds could that be, one has to wonder? Might it have something to do with his work as the head of Wikileaks, publishing information from whistleblowers that has severely embarrassed the United States and the UK.

In fact, Assange should have walked free years ago if this was really about an investigation – a sham one at that – into an alleged sexual assault in Sweden. Instead, as Assange has long warned, there is a very different agenda at work: efforts to extradite him onwards to the US, where he could be locked away for good. That was why UN experts argued two years ago that he was being “arbitrarily detained” – for political crimes – not unlike the situation of dissidents we support in other parts of the world. According to a new release of emails between officials, the Swedish director of public prosecutions, Marianne Ny, wrote to Britain’s Crown Prosecution Service on 18 October 2013, warning that Swedish law would not allow the case to be continued. This was, remember, after Sweden had repeatedly failed to take up an offer from Assange to interview him at the embassy in London, as had happened in 44 other cases between Sweden and Britain.

Ny wrote to the CPS: “We have found us to be obliged to lift the detention order … and to withdraw the European arrest warrant. If so this should be done in a couple of weeks. This would affect not only us but you too in a significant way.” Three days later, suggesting that legal concerns were far from anyone’s mind, she emailed the CPS again: “I am sorry this came as a [bad] surprise… I hope I didn’t ruin your weekend.” In a similar vein, proving that this was about politics, not the law, the chief CPS lawyer handling the case in the UK, had earlier written to the Swedish prosecutors: “Don’t you dare get cold feet!!!”

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