Mercenary Trading Desk Author: Jack Sparrow

Daily Macro Links – Specter of Global Trade War [2]

MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

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GEOPOLITICS, CRIME, TERRORISM

Trump lambastes Pena Nieto in ‘humiliating,’ ‘threatening’ phone call – Business Insider

“I don’t need the Mexicans. I don’t need Mexico,” Trump reportedly told the Mexican president. “We are going to build the wall and you all are going to pay for it, like it or not.”

Trump hinted that the US would force Mexico to fund the wall with a 10% tax on Mexican exports “and of 35% on those exports that hurt Mexico the most,” Estevez wrote in Proyecto Puente.

Before the call, White House press secretary Sean Spicer said Trump was considering a tax on imports from Mexico to pay for the wall.

Donald Trump tweets he will study ‘dumb’ refugee deal with Australia

Australia’s relationship with the United States, its closest ally, has been rocked by the leaking of a fiery telephone conversation between Malcolm Turnbull and Donald Trump over the proposed refugee resettlement deal.

Relations between the nations were plunged into confusion on Thursday after a bombshell report in The Washington Post detailed that President Trump had called the arrangement the “worst deal ever”, called the Saturday phone call “the worst call by far” he had had with a world leader and that the President had hung up on Mr Turnbull after just 25 minutes when the two men spoke.

Trump Slams Australia Refugee Deal as ‘Dumb,’ Hints at Possible Pullout – WSJ

President Donald Trump suggested he could back out of an agreement the Obama administration reached with Australia to take in 1,250 refugees, potentially straining ties with a close U.S. ally.

Donald Trump’s closest advisor Steve Bannon thinks there will be war with China in the next few years | The Independent

Donald Trump’s closest advisor thinks that the US will be at war with China in the next few years. The far-right figure, who has been given unprecedented power in the White House and has suggested in the past that he supports white supremacy, suggested that the two countries are headed towards war over the South China Sea.

China ‘steps up preparedness for possible military conflict with US’ | South China Morning Post

China is stepping up preparedness for a possible military conflict with the US as the Donald Trump presidency has increased the risk of hostilities breaking out, state media and military observers said.

Beijing is bracing itself for a possible deterioration in Sino-US ties, with a particular emphasis on maritime security.

The People’s Liberation Army said in a commentary on its official website last Friday, the day of Trump’s inauguration, that the chances of war have become “more real” amid a more complex security situation in Asia Pacific.

US puts Iran ‘on notice’ after weekend missile test

Donald Trump’s administration declared that it was putting Iran “on notice” on Wednesday, signalling both a tougher US line with Tehran and a new test of relations after a weekend missile test by the Islamic republic.

During his campaign, Mr Trump vowed to rip up a 2015 nuclear deal negotiated by the Obama administration and other world powers with Tehran but has taken no public steps to deliver on that since taking office.

In a terse statement delivered on Wednesday by retired general Michael Flynn, the new national security adviser, the White House signalled that was about to change, as the Trump administration faced its first potential security-related foreign policy crisis.

White House Steps Up Iran Criticism in Wake of Missile Test – Bloomberg

Beyond the tougher words, the administration didn’t offer details of what policy or military options it may be considering. An administration official, who asked not to be identified, told reporters afterward that there are a range of options available to counter Tehran’s actions.

Iran Confirms It Recently Conducted Ballistic Missile Test Launch – WSJ

Iran confirmed Wednesday it recently conducted a ballistic missile test launch, a move that drew criticism from U.S. and Israeli officials this week and raised concern about the potential violation of a United Nations Security Council resolution.

Eight-year-old American girl ‘killed in Yemen raid approved by Trump’

The operation was launched to gather intelligence on suspected operations by al-Qaida in the Arabian peninsula (AQAP), according to Thomas. Planning for the raid “started months before”, under Barack Obama’s administration, but was “not previously approved”, he said.

Thomas said he did not know why the prior administration did not authorize the operation, but said the Obama administration had effectively exercised a “pocket veto” over it.

A former official said the operation had been reviewed several times, but the underlying intelligence was not judged strong enough to justify the risks, and the case was left to the incoming Trump administration to make its own judgment.

On the campaign trail, Trump endorsed killing relatives of terrorist suspects, which is a war crime. “The other thing with the terrorists is you have to take out their families, when you get these terrorists, you have to take out their families,” he told Fox News in December 2015.

White House claims five-year-old boy detained in US airport for hours ‘could have posed a security threat’ | The Independent

The White House has said a five-year-old boy was detained for more than four hours and reportedly handcuffed at an airport because he posed a “security risk”. The boy, reportedly a US citizen with an Iranian mother, was one of more than 100 people detained following President Donald Trump’s immigration order.

In a press briefing, Mr Trump’s press secretary Sean Spicer was unrepentant about the incident. He said: “To assume that just because of someone’s age and gender that they don’t pose a threat would be misguided and wrong.”

U.K.’s May Attacks Trump Travel Ban as ‘Divisive And Wrong’ – Bloomberg

Theresa May told Parliament that Donald Trump’s travel ban was “divisive and wrong,” as she defended her decision to seek a close relationship with the new U.S. president.

The words were the strongest condemnation that the U.K. prime minister has used against the ban on refugees and travelers from seven predominantly Muslim countries. Still, she went on to argue that Britain’s interests were best served by engaging with Trump as much as possible.

US launches review of North Korea policy

The White House has launched a review of its policy on North Korea, reflecting the growing nuclear threat from Pyongyang that Barack Obama told Donald Trump would represent his most pressing national security challenge.

Two people familiar with the review, which the White House has not disclosed, said it was designed to determine what the Trump administration could do differently to address concerns that North Korea could strike the US with a nuclear-armed missile. One person said Michael Flynn, national security adviser, ordered the review on Friday.

Mr Trump has personally had several detailed intelligence briefings in recent days, according to a third person familiar with the discussions.

Russia Deploys Chechens to Win Hearts and Minds in Aleppo – WSJ

Russia has reinforced its military presence on the ground in Aleppo with a police unit drawn largely from the Muslim-majority region of Chechnya, part of a bid to win hearts and minds in Syria.

Recent video footage by a Russian-language news agency shows the Chechen-led formation patrolling the city’s battered landscape in armored trucks and personnel carriers.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Fearful of Hacking, Dutch Will Count Ballots by Hand – The New York Times

The decision to forgo electronic counting, in national elections scheduled for next month, was a response to fears that outside actors, like Russia, might try to tamper with the election.

Reports of treason and CIA spies shed light on Russian hacking

The charges follow US accusations that Russian intelligence hacked Democratic party servers last year. While there is no direct link between those accusations and the latest arrests, Russian media say the FSB investigation into the two men began after ThreatConnect, a US cyber security company, alleged that hackers used King Servers, an internet hosting company, to attack US state election rolls. The business partner of the owner of King Servers has long accused Mr Mikhailov of working for the FBI.

This is believed to have prompted the investigation into Mr Mikhailov and Mr Dokuchaev, a former hacker known as “Forb” who joined the secret services to avoid prison, according to the Interfax news agency. The men were arrested as part of a wider-reaching investigation into a group that, according to the Interfax report, conducted cyber attacks, stole private information from people close to the Kremlin, and worked as sources for US intelligence.

Russia Charges Show U.S. Intelligence Compromised Top Cyber-Cops – Bloomberg

Prosecutors in Moscow suspect that U.S. intelligence compromised one of Russia’s most senior cybersecurity officials and have charged him and at least two others with treason in the case, according to a lawyer involved.

The three were detained in December and include Sergei Mikhailov, who was a top official in the information-security division of the Federal Security Service, the main successor to the KGB, and Dmitry Dokuchaev, a member of his staff. The third suspect to be named publicly is Ruslan Stoyanov, a manager at Kaspersky Lab, a Russian cybersecurity company.

India to Deploy Flying Camera Drones to Track Illegal Miners – Bloomberg

Desperate to develop its own mineral deposits, resource-hungry India is trying to revive investment by taking aim at illegal miners like the sand mafia — from a few hundred feet in the air.

The government will deploy flying camera drones to track renegades who for years have been extracting everything from sand to coal to iron ore without permits. Unsanctioned diggers pay no tax, violate the mineral rights of others and employ rudimentary methods blamed for widespread environmental damage. They’re also hard to catch, working in remote areas and sometimes getting help from corrupt officials.

Fear of Trump Move Drives Cash Transfers to Mexico to Record – Bloomberg

Donald Trump’s election raised the prospect of the U.S. blocking the flow of cash to make its southern neighbor pay for a border wall.

Remittances rose 6 percent in December from a year earlier to $2.34 billion, the most ever for the holiday season, according to data released by Mexico’s central bank on Wednesday.

Credit-Card Thieves Move Online as Chips Thwart In-Store Fraud – Bloomberg

The adoption of credit-card chip technology by U.S. retailers is having an unintended consequence: Criminals are moving from brick-and-mortar stores to the internet.

The use of stolen card data to pay for merchandise on websites, in mobile apps and by dialing call centers surged 40 percent last year, according to a report from Javelin Strategy & Research released Wednesday. That’s forcing merchants to spend billions on online fraud protection in an effort to detect when a crook is using someone else’s card number.

Credit-Card Fraud Keeps Rising, Despite New Security Chips—Study – WSJ

More consumers became victims of identity fraud last year than at any point in more than a decade despite new security protections implemented by the credit-card industry, a new report says.

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PROPAGANDA, CORRUPTION, AUTHORITARIANISM

Key U.S. Arab Ally Says Trump’s Visa Ban Doesn’t Target Muslims – Bloomberg

A top U.A.E. official defended the Trump administration against accusations that the U.S. travel ban on citizens of seven predominantly Muslim countries is targeting Islam.

“The vast majority of Muslims and Muslim countries have not been affected by this ban,” United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed told a news conference in Abu Dhabi on Wednesday. “This is a temporary ban that will be reviewed within three months. It’s important to take these points into account.”

Exclusive: Trump to focus counter-extremism program solely on Islam – sources | Reuters

The Trump administration wants to revamp and rename a U.S. government program designed to counter all violent ideologies so that it focuses solely on Islamist extremism, five people briefed on the matter told Reuters.

The program, “Countering Violent Extremism,” or CVE, would be changed to “Countering Islamic Extremism” or “Countering Radical Islamic Extremism,” the sources said, and would no longer target groups such as white supremacists who have also carried out bombings and shootings in the United States.

Leaked Draft of Trump’s Religious Freedom Order Reveals Sweeping Plans to Legalize Discrimination | The Nation

A leaked copy of a draft executive order titled “Establishing a Government-Wide Initiative to Respect Religious Freedom,” obtained by The Investigative Fund and The Nation, reveals sweeping plans by the Trump administration to legalize discrimination.

Billionaire Peter Thiel Sparks New Zealand Passport-for-Sale Row – Bloomberg

Tech billionaire and Trump adviser Peter Thiel has sparked a passport-for-sale row in New Zealand after it was revealed he was granted citizenship in 2011 despite visiting the nation only four times.

Thiel’s application was approved by the New Zealand government on the grounds his entrepreneurial skills and philanthropy were beneficial to the country, even though he didn’t meet the standard criteria or intend to live there, official documents released late Wednesday in Wellington show.

New Zealand has become a preferred bolthole for the ultra rich as they seek a haven from global political uncertainty and terror threats. Opposition parties accuse the government of turning citizenship into an asset wealthy foreigners can buy, a claim Prime Minister Bill English has denied.

Reddit Bans Alt-Right Group – The Daily Beast

The company, once a haven for right wing extremism, is cracking down on the hub of white nationalists—right after its founder blasted Trump’s ban on immigrants and refugees.

Nikki Haley Vows to ‘Take Names’ of Nations Opposing U.S. – Bloomberg

President Donald Trump’s UN ambassador started her first day saying she’s prepared to “take names” of countries that oppose the U.S., as the new administration in the White House starts its overhaul of foreign policy.

The U.S. will “have the backs of our allies and make sure that our allies have our back as well,” Ambassador Nikki Haley told reporters at the United Nations on Friday. “For those that don’t have our back, we’re taking names. We will make points to respond to that accordingly.”

Tillerson’s Vow to Keep Away From Exxon Runs Into a World of Oil – Bloomberg

“He has severed himself in a pretty final and conclusive way, and I just don’t see him being influenced given the structure of his disengagement,” Stan Brand, an ethics lawyer at Akin Gump Strauss Hauer & Feld, said in an interview.

Yet the $350 billion company is so big, and so deeply entrenched in countries around the world, that Tillerson’s past will inevitably shadow him, critics say. They say that no ethics agreement can protect against Tillerson viewing the world through “oil-coated glasses,” as Senator Ed Markey, a Massachusetts Democrat, said this week.

Panasonic says its avionics business under probe by U.S. authorities | Reuters

Panasonic Corp said on Thursday its avionics business is being investigated by the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) under the Foreign Corrupt Practices Act (FCPA) and U.S. securities-related regulations.

Minister Quits as Biggest Post-Communist Protests Rock Romania – Bloomberg

Romania’s political crisis deepened Thursday as a minister pledged to resign amid the largest protests since the collapse of communism following sudden changes to criminal law that undermine a four-year anti-corruption clampdown.

Business Environment Minister Florin Jianu said he couldn’t support the government’s stance after at least 300,000 people took to the streets of cities across the country. About 150,000 gathered in freezing temperatures outside the government building in Bucharest on Wednesday evening, the Digi24 TV station and News.ro estimated.

“I don’t want to have to tell my child I was a coward and I agreed to something I don’t believe in,” Jianu said, according to a post on his Facebook page.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Inflation Surprise Index Shows Unexpected Global Turn: Chart – Bloomberg

Inflation across the world is beating analysts’ forecasts even before the potential effect from Donald Trump’s economic policies. The global Citi Inflation Surprise Index, which measures price surprises relative to market expectations, is at the highest in more than five years. The reading turned positive in December — meaning inflation data were higher than expected — for the first time since 2012.

17G02 - analysts behind inflation ball

European Junk Bonds Falter at QE’s Fault Line – Bloomberg Gadfly

For the high-yield bond market, the root of the problem problem now is that it isn’t living up to its name. Yields just aren’t high enough. Investing in low-rated companies is a skillset that requires a lot of due diligence, and for that extra effort and risk taken there needs to be a commensurate reward.

The ECB’s well-meaning actions are actually now deterring financing in the very area it is trying to support — financing for small- and medium-sized companies, the engine of the economy. Investor demand is very clearly still there for a juicy coupon, as can be seen from the order books for Tier 1 issues, where coupons can be around 8 percent. It’s quite a different matter to buy high-risk debt that yields next to nothing.

Derivatives ‘Big Bang’ catches market off guard

Almost a decade on from the financial crisis, a global deadline for reform of the $544tn derivatives market has triggered a last-minute scramble by hundreds of small banks, insurers and pension funds.

Many of these institutions use bespoke derivatives such as swaps to protect their operations from sudden changes in asset prices. In a month’s time they face higher costs and regulatory burdens. Plenty are not ready.

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MACRO OP-EDS, DATA, INQUIRY AND THEORY

Specter of Global Trade War Rises as Trump Puts ‘America First’ – Bloomberg

“A massive clash is starting to emerge with Trump willing to get into major geopolitical spats with China and other countries to advance his ‘America First’ agenda,” Mark Leonard, director of the European Council on Foreign Relations, said in a phone interview.

The sparks that have dominated the initial days of Trump’s presidency have set the stage for increased tensions over global trade and currency regimes. Decades of economic ties are at stake. Signs that the U.S. will favor bilateral trade agreements at the expense of multilateral deals have forced world leaders to define their own red lines, and forge new alliances.

Trump devaluation claims raise fears of global currency war

The Trump administration’s willingness to break with tradition and comment about currency valuations has raised fears that the US might lead the world into a new round of currency wars, angering and unnerving allies.

Stephen Mnuchin, the former Goldman Sachs banker whom Mr Trump has tapped for treasury secretary, has publicly adopted a more cautious approach than the new president. During his confirmation hearing last month he told senators that he believed the “long-term strength” of the dollar was “important”.

But the chaotic start to the administration and what many see as its protectionist agenda have amplified fears of not only currency wars but a fully fledged trade confrontation that could be disastrous for the world economy.

The U.S.-Mexico relationship is dangerously on the edge – The Washington Post

It took only one week of bilateral engagement between the new U.S. administration and Mexico to throw the relationship into a tailspin.

Mexico is not the enemy. And neither should it be taken for granted or simply be an afterthought for U.S. national security and foreign policy interests. Trump, despite his evident disdain for Mexico, cannot press Control-Alt-Delete and dispense with a nation on his border. If you approach a relationship as complex as ours — which has so many moving parts and which profoundly affects so many facets of U.S. public policy and interests — with a chainsaw, as Trump has done, you are bound to cut off your own foot.

Mexico is certainly no military power and does not possess nuclear weapons, nor cannot it threaten or challenge Washington’s core interests. But it is not toothless, either. It can impose compensatory tariffs (as we did in 2009 to ensure U.S. compliance regarding the access of Mexican trucks). Moreover, Mexico deepened intelligence and counter-terrorism cooperation with the United States after the heinous terrorist attacks of 2001, convinced that we needed to enhance North American common domain awareness, and that by having Washington’s back, we would continue to foster a vision of two neighbors and partners intent on building a paradigm of common prosperity and common security.

Inside Europe’s Balkan Tinderbox – Bloomberg

It’s the kind of economic backdrop that helped propel Donald Trump to the White House, fueled the U.K.’s Brexit vote and lifted support for populist parties across Europe. But on a staging ground where Russian and western influences collided throughout the 20th century, disillusionment carries even greater dangers: blood-and-soil beliefs that triggered the Yugoslav wars are finding new life in the new world order.

As Trump belittles NATO and sends conciliatory signs to the Kremlin, Russian President Vladimir Putin is stepping in. He has pledged to strengthen defense cooperation with Serbia, a traditional ally, donating six used MiG-29 fighter planes to the army. He also offered the country to join a trade agreement that would be incompatible with Serbia’s plan to join the European Union.

“The Balkans have always been a cauldron of risks boiling over, and in this sense, the situation is not much different from the situation 20, 50 or 100 years ago,” said Konstantin Kosachyov, head of the Russian upper house of parliament’s foreign affairs committee and a former aide to Yevgeny Primakov, prime minister during the Kosovo conflict who aborted a U.S. trip when the bombing started.

17G02 - caught between east and west

Goldman Asks Whether Country Risk Will Return to Europe – Bloomberg

Looming polls in France, the Netherlands and potentially Italy have reignited concerns about members’ commitments to the single-currency bloc just as Greece’s debt woes are back on the radar screen. Even so, when it comes to picking European equities, getting the sector right is likely to remain more important than choosing between countries, according to Goldman Sachs Group Inc. analysts led by by Lilia Peytavin and Peter Oppenheimer.

“Although dispersion of returns across countries remains far less important than across sectors, country risk has picked up recently and could increase further ahead of elections,” they wrote in a note published this week, adding that the situation could escalate if concerns surface over a tapering in the European Central Bank’s monetary stimulus.

Goldman Fund Manager Ignores Trump Noise to Bet on Dollar – Bloomberg

The dollar’s worst start to the year in more than a decade is just a blip on its path to further gains, according to Goldman Sachs Asset Management, which oversees more than $1 trillion.

The money manager is betting on the greenback and a steeper yield curve as a reflationary era takes hold in the U.S. and other countries, said Philip Moffitt, the Asia-Pacific head of fixed income who is based in Sydney. The dollar will continue to strengthen against the euro and yen as policy makers in Europe and Japan maintain quantitative easing while the Federal Reserve is set to raise interest rates about three times this year, he added.

“It’s just a bit of a pause in the new trend,” he said in a phone interview. “There’s been a profound shift away from fiscal orthodoxy and deflation threats to a more reflationary policy environment globally that’s seen most strongly in the U.S.”

Trump Pushes Dark View of Islam to Center of U.S. Policy-Making – The New York Times

A vision of Islam as inherently hostile has long flourished on the far right. Now President Trump has brought that view to the White House.

This worldview borrows from the “clash of civilizations” thesis of the political scientist Samuel P. Huntington, and combines straightforward warnings about extremist violence with broad-brush critiques of Islam. It sometimes conflates terrorist groups like Al Qaeda and the Islamic State with largely nonviolent groups such as the Muslim Brotherhood and its offshoots and, at times, with the 1.7 billion Muslims around the world. In its more extreme forms, this view promotes conspiracies about government infiltration and the danger that Shariah, the legal code of Islam, may take over in the United States.

Those espousing such views present Islam as an inherently hostile ideology whose adherents are enemies of Christianity and Judaism and seek to conquer nonbelievers either by violence or through a sort of stealthy brainwashing.

Where Is Jared Kushner? – The New York Times

Jared Kushner, where are you?

I ask that specifically, in terms of Trump’s inner circle and Bannon’s obviously greater sway. But I ask it in a broader sense as well. Where among Trump’s sanest advisers and the most reasonable Republicans in Congress is the degree of pushback that’s called for? Where are the sufficiently loud voices of dissent? Right now Trump has too many mum collaborators too content to hope for the best. I put Kushner in that pack.

If Kushner has sturdy principles or half the say that Bannon does, then explain the wording of the statement that the president put out on Friday in remembrance of the Holocaust. It failed to mention Jews, an omission so glaring that it incited a furor among Jewish Republican groups. And rather than apologize to them, the administration dug in, reprimanding them for being too touchy.

This had all the markings of Bannon, who deplores what he deems the politically correct coddling of minority groups. But it seemed to go against what Kushner holds dearest. He’s the descendant of Holocaust survivors, including a grandmother who helped to found the United States Holocaust Memorial Museum and once complained of America’s reluctance to take in Jewish refugees who were trying to avoid extermination.

Trump and Trade: Extreme Tactics in Search of a Point – The New York Times

Rejecting the premise of international accords is one thing. But displaying irrationality for effect, without a rational objective, can end in war.

War would be a uniquely bad idea. China, after all, has nuclear weapons. But perhaps what troubles the professor most is that Mr. Trump’s stand seems pointless. “One can justify provocative moves if they serve an important strategic goal,” Mr. Mearsheimer told me. “It is not clear what purpose these moves are designed to serve.”

And yet pointlessness is coming to define American foreign policy. Mr. Trump lacks an end game.

Security experts in the United States are baffled by Mr. Trump’s executive order abruptly barring entry by citizens from seven mostly Muslim countries, noting that it will ultimately put the security of the United States at risk by sending a uniform message of hostility to 1.6 billion followers of Islam.

In Mexico, government officials are scratching their heads about what Mr. Trump hopes to achieve by threatening to walk away from the trade agreement that has cemented bilateral relations for the last quarter-century. And who knows what Mr. Trump thinks the United States would stand to gain by leaving the World Trade Organization?

“What is a better Nafta?” asked Douglas Irwin, a trade historian at Dartmouth College. “He hasn’t said.”

US executives ride Donald Trump’s wave of uncertainty

Strategies for dealing with Mr Trump have diverged. Some companies have tried to negotiate their way out of his Twitter attacks, wielding facts and figures. Others have tried using their own “alternative facts”, repackaging planned investment and jobs as “new”, or have mixed fact with flattery.

One chief equated life under the new president to dealing with a “natural disaster”: no one in corporate America knew where he would strike next — or how it would hit their share price.

Requiem for an American dream

For 70 years, we have thrived in the embrace of an America that believed in freedom and stood up to evil. We have seen America get it badly wrong but we have never seen it ready to retreat from the fight. For all its mistakes, only the hard left considered it the world’s greater evil. All those years later, we are still quoting the inspirational rhetoric of the Kennedy inaugural speech and Martin Luther King’s words from the march on Washington. So yes, it was a place of low politics and high ideals. Now it is just a place of low politics.

Perhaps this too shall pass. We have had bad men in the White House before. But the angst so many feel about Trump goes beyond his views, or fear that he might start a war. Many feared Ronald Reagan. But his was an optimistic country whereas Trump’s America is a dark, fearful and insular place. Reagan’s was an America that would stand tall in the world; right now, the home of the brave is crouched in a corner. And while the most extreme fears — the talk of fascism — will surely prove overblown, it seems remarkable even to consider America in such terms.

Refugees are already vigorously vetted. I know because I vetted them. – The Washington Post

During nearly four years as an immigration officer with Homeland Security, I conducted in-person interviews with hundreds of refugees in 10 countries from 20 different nationalities. I have had countless refugees break down crying in my interview room because of the length and severity of the vetting process. From that experience and numerous security briefings, I can affirm that whoever wrote Trump’s executive order blocking refugees from the United States is wholly unfamiliar with the U.S. immigration system, U.S. laws, international law and the security threats facing our nation. I can’t speak for all refugee and asylum officers, but I can say that those who have been working in immigration for years from opposite ends of the political spectrum are appalled by these new policies.

The psychology of why Americans are more scared of terrorism than guns, though guns are 3,210 times likelier to kill them — Quartz

According to the New America Foundation, jihadists killed 94 people inside the United States between 2005 and 2015. During that same time period, 301,797 people in the US were shot dead, Politifact reports.

At first blush, these numbers might seem to indicate that Donald Trump’s temporary ban on immigrants from seven countries—a goal he said was intended to “protect the American people from terrorist attacks by foreign nationals admitted to the United States”—is utterly misguided.

But Trump is right about at least one thing: Americans are more afraid of terrorism than they are of guns, despite the fact that guns are 3,210 times more likely to kill them.

17G02 - what Americans are afraid of

Boom and bust returns as oil market loses its swing

Even in these hyper-partisan times, loathing for Opec still unites most Americans. Yet paradoxically, over four decades from the early 1930s to early 1970s, the United States was Opec, and much better at oil supply manipulation and price fixing than today’s Opec ever was.

Up until 1972, independent US oilmen and oil states like Texas acquiesced to heavy-handed government regulations over oil, imposing monthly quotas on producers. This was all done to vanquish chronic booms and busts that vexed the oil industry, consumers, investors, and officials.

This paradox bears directly on the epic, structural shift currently under way in the global oil market, with far-reaching repercussions not only for oil and energy, but also economic growth, security, and the environment. Wildly gyrating oil prices over the past decade mark the demise of Opec as an effective supply manager and the return of free crude oil markets. The resulting unwelcome and likely protracted return of boom-bust oil prices constitutes a major and under-appreciated financial, economic, and geopolitical risk to consumers, businesses, the incoming administration and governments worldwide.

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CENTRAL BANKS & MONETARY POLICY

The Uneasy Politician: Janet Yellen Is Struggling to Fend Off the Fed’s Many Critics – WSJ

The political landscape has eroded for the Fed in recent years, and Ms. Yellen has struggled to confront the challenge.

Once revered as the masterminds of the U.S. economy, Fed policy makers now face the most intense political scrutiny in a generation. The path of monetary policy, which is emerging from a decade of basement-level rates, is being debated in the political arena in a way not seen since the Paul Volcker era in the 1980s.

The person leading the institution isn’t a politician—she’s a macroeconomist who spent most of her career at the Fed and in academia. Yet the task ahead of her, now that Donald Trump is president, might require a different set of skills. The new president thrust Ms. Yellen and the Fed onto the national political stage by criticizing them sharply during the campaign, and his election raised expectations that GOP bills to rein in the central bank could become law.

Fed Leaves Policy Rate Unchanged, Offers No Hint on When It Might Next Move – WSJ

The Federal Reserve said Wednesday it remains on track to gradually raise short-term interest rates this year and gave no hint about when the next increase might come. Following a two-day policy meeting, officials unanimously held their benchmark rate steady in a range between 0.50% and 0.75%, while noting in a statement some recent improvements in the economy.

Fed Nods to Improved Sentiment While Leaving Rates Unchanged – Bloomberg

Federal Reserve officials left interest rates unchanged while acknowledging rising confidence among consumers and businesses following Donald Trump’s election victory.

Fed Waiting to See Economic Results From Flurry of Trump Actions – Bloomberg

Like everyone trying to figure out where the U.S. economy is heading, the Federal Reserve is waiting to see what the whirlwind of executive orders and remarks from President Donald Trump mean for growth as they weigh the timing of the next interest-rate hike.

Investors Split Bets on Fed and Trump – WSJ

Investors are making two different bets on the markets and on the Federal Reserve. They can be right on only one of them.

The reason for the difference is investors have baked into their forecasts Mr. Trump’s stimulus and bid up markets in anticipation. The Fed has to be more cautious and can’t act based on policies that Mr. Trump and congressional Republicans haven’t even put together yet. It won’t be until Mr. Trump puts his signature to those policies that the Fed will be able to incorporate them into their forecasts and set policy appropriately.

Turkish Markets Stabilize as Central Bank Measures Bear Fruit – Bloomberg

The Turkish central bank’s unorthodox efforts to support the lira are breathing life into the nation’s battered markets even as some investors remain concerned about the effectiveness of the policy maker’s approach.

The lira has bounced from a record low reached earlier this month as the central bank’s efforts to tighten liquidity through daily funding operations pushed up funding costs to an almost five-year high. The currency’s volatility has also been damped by foreign-exchange swap auctions, while the nation’s bonds have jumped.

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POSITIONING, INFLECTION, MARKET CALLS

The honeymoon is over: Wall Street is finally taking Trump literally – MarketWatch

The market this week is dealing with the realization that President Donald Trump means all the things he says. He really is a protectionist, really does think America needs to be protected from the world both economically and physically. He really does make policy without much care or thought to get details right, he really has recruited an honest-to-God terrible team, and it actually is kind of dangerous.

For months, Wall Street strategists scrambled to justify a post-election rally most didn’t see coming by claiming Trump’s proposed tax cuts and vague infrastructure spending plans would goose growth, while discounting his vow to impose trade barriers as not really serious. Ten days into his presidency, the president has alienated our third-biggest trading partner in Mexico while having his spokesman float vague proposals about 20% taxes the president himself says might apply to all imports.

We’re in Phase III of the Trump Rally – Bloomberg View

The post-election movements of U.S. stocks have been heavily influenced by policy. First they soared, then they traded in a narrow range. Now the markets have entered a period of greater volatility underpinned by a tug of war between the expectation of reflationary policies and the risk of stumbling into stagflation. Where we end up will be predominantly a political call.

Specifically, the implementation of a well-designed set of policies built around the president’s three headline initiatives — tax reform, deregulation and infrastructure — would unleash reflationary forces that would validate existing asset valuation, and could take them a lot higher if the rest of the world were also to improve its policy mix. If, however, the U.S. stumbled into protectionism and trade wars, the markets would give up more of the recent gains, and possibly even overshoot on the way down.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Gunmaker CEO: People are buying less gun ammunition – Business Insider

People seem to be easing up on their ammunition buying after the presidential election.

John Fischer, CEO of Winchester-maker Olin Corporation, said that gun retailers are seeing slower than expected sales of bullets and ammunition post-election.

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DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

Global M&A Is Having a Moment With Best Start to Year Since 2000 – Bloomberg

With pent-up demand from 2016 and the challenges of an unpredictable U.S. administration ahead, companies seeking to get deals done kicked off this year with a bang.

Global M&A activity amounted to $224 billion in January, the highest volume since 2000 in the first month of the year, according to data compiled by Bloomberg. For the first time since 2008, Europe topped North America on the list of target regions, as firms from Swiss drugmaker Actelion Ltd. to Italian eyewear maker Luxottica Group SpA agreed to be bought.

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TAXATION, HAVENS, TRADE, PROTECTIONISM

Here’s a Glimpse of the Global Trade Carnage From a U.S. Border Tax – Bloomberg

Whether or not a border tax proposed by Republican congressional leaders helps U.S. President Donald Trump pay for his Mexico border wall, it would have a radical impact on global trade patterns.

Deutsche Bank AG economists Robin Winkler and George Saravelos have calculated the amount of trade with the U.S. that countries stand to lose if they face a 20 percent penalty at the border. Mexico is the obvious biggest loser, but Canada and Asian manufacturing economies including Vietnam, Malaysia and Thailand would also be in line for a big hit.

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GE’s Immelt Talks Up Global Ties as Trump Pivots Away From Trade – Bloomberg

Jeffrey Immelt has spent his career riding the great wave of globalization. Now, he warns, the time of unbridled trade is over.

It’s not merely the rise of President Donald Trump, said Immelt, the long-time head of General Electric Co. A confluence of forces, both economic and political, have chipped away at the postwar order, presenting new challenges — and opportunities — for big business around the world.

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Donald Trump’s Trade Posture Unnerves Deep-Red South Carolina – WSJ

Deep-red South Carolina has twice come out strongly for President Donald Trump, giving him a key win in last year’s Republican primary and delivering him a 14-point win in November over Hillary Clinton.

But some in the state, which relies heavily on foreign investment and free trade, already are questioning some of Mr. Trump’s early moves to withdraw from a Pacific Rim trade deal and erect new physical and economic barriers with Mexico.

“It means real trouble,” said Rep. Mark Sanford, a Republican and former governor who tentatively backed Mr. Trump’s campaign. “This is America stepping away from the table in a way that’s never been done since World War II.”

BMW CEO Pleads for Free Trade After Trump Border Tariff Threat – Bloomberg

BMW AG Chief Executive Officer Harald Krueger defended the importance of free trade, responding to recent remarks by U.S. President Donald Trump suggesting he’ll push for tariffs to protect American jobs.

BMW’s U.S. factory in Spartanburg, South Carolina, is the German manufacturer’s largest worldwide. The plant produces BMW’s popular sport-utility vehicles for global markets and is currently being expanded to an annual capacity of about 450,000 vehicles. Krueger said BMW is the largest exporter on a net basis from the U.S., with goods worth $10 billion per year, and employs 70,000 people (including indirect positions) in the country.

“Free trade has only made this success story in the U.S. possible — 70 percent of the automobiles produced here are exported,” Krueger said.

This Mexican Town Paid the Price for Trump’s Attacks on Ford – Bloomberg

It juts up from the vast arid plains of central Mexico, a hollow shell of steel beams that serves as a harbinger of the damage Donald Trump’s “America First” push could wreak on trade partners across the globe.

This was to be no ordinary auto plant. The Ford Motor Co. project, about four hours north of Mexico City, was hyped as the region of San Luis Potosi’s biggest private investment ever, a $1.6 billion facility that would have employed almost 3,000 people and added a half-percentage point to the state’s economic growth.

San Luis Potosi state still owes money on the land that it bought and donated to Ford. Now, it’s scrambling to regain control of the abandoned site and find a new tenant to pick up the pieces. That’ll be no easy feat as Trump floats the idea of a border tax of up to 20 percent and continues his Twitter attacks against American companies that ship jobs abroad. When Dearborn, Michigan-based Ford up and scrapped its project on Jan. 3, it became at least the second foreign company in Mexico to bow to the pressure.

“Ford was going to be the engine to make us grow faster,” said Gustavo Puente, head of the state’s economic development office. “The worst part has been the uncertainty about what Trump’s policies will do.”

Retailer-Backed Coalition Launches Campaign Against Border Tax – Bloomberg

A broad coalition of lobbyists for retailers like Wal-Mart Stores Inc., energy companies and the auto industry is launching a battle against a proposed U.S. tax on imports, aiming to sway both federal lawmakers and American consumers.

The Retail Industry Leaders Association and more than 120 other trade groups are backing the campaign, called “Americans for Affordable Products,” which will center on how a border-adjusted tax could increase prices for consumers. Part of the message: that export-focused companies may get their federal taxes drastically cut, maybe even to zero. Behind the scenes, the campaign will rely in part on lobbying by industry executives.

Super Bowl Advertisers Face New Risk of Accidentally Provoking Trump – Bloomberg

With an audience of more than 100 million tuning in Sunday, Super Bowl advertisers want their commercials to get attention — just not the wrong kind. That’s even more true in an era where everything from Skittles to avocados has been politicized.

None of the ads for this weekend’s game on Fox are expected to purposely press any political buttons, but advertisers want to avoid even accidentally offending anyone. That’s a tall order in a particularly tense moment in America, when CEOs are under pressure to take sides on major issues and the president routinely scolds companies on Twitter.

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FOREX, CURRENCY IMPACTS

Dollar Caught Between President Trump’s Tough Talk, Policy Plans – WSJ

Major currencies are posting their largest swings in months, highlighting a growing difficulty for investors and traders to discern the likely path of Trump administration policy.

The U.S. currency rallied in the weeks following Donald Trump’s election Nov. 8, reflecting in part investor expectations that deregulatory, tax-reduction and stimulus plans will push up U.S. growth. But since the New Year, the dollar has declined and volatility has picked up, driven by statements by administration officials that have been interpreted by investors as advocating a lower dollar.

The remarks, from Mr. Trump and some important advisers, have surprised some investors and pushed many traders to take a more-defensive stance. Few analysts expect quick clarity on Washington policies that could settle the dollar’s path, likely meaning more unpredictable trading in the months ahead.

The U.S. Dollar Gets an Injection of Political Risk – Bloomberg

Currency traders have long been used to analyzing political risk — just not so much when it comes to the U.S. dollar.

The greenback has been rattled this week by political concerns, spurring debate over the long-term implications of Trump administration policies and their impact on demand for assets denominated in the world’s reserve currency. It’s a relatively unfamiliar dynamic for those accustomed to looking at bond-yield differentials when attempting to gauge the dollar’s outlook.

“I’m not sure serious analysis is possible, and I don’t trust my gut instincts on something as far from the usual state of affairs,” said Kit Juckes, a global strategist at Societe Generale SA in London and a veteran of more than three decades of market research. Juckes was referring, in a note Tuesday, to the dollar’s reaction to President Donald Trump’s selective travel ban.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

Blackstone to Spend $500 Million Remaking Chicago’s Willis Tower – Bloomberg

Blackstone Group LP said it plans to spend $500 million to revamp Chicago’s Willis Tower as it tries to draw more tourists and office tenants to the country’s second-tallest building.

The makeover of the 110-story skyscraper will be the first major renovation in the tower’s 43-year history, according to a statement today by Blackstone. The investment is the largest the firm has made in one of its properties, real estate chief Jon Gray said in the statement.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Ray Dalio Makes Clients $4.9 Billion in 2016 as Paulson, Soros Falter – Bloomberg

Billionaire Ray Dalio’s Bridgewater Associates earned almost $5 billion for its clients last year while rivals George Soros and John Paulson lost money, according to a report by hedge-fund investor LCH Investments NV.

Endowment Gains Aren’t Enough for Schools Facing Rising Expenses – Bloomberg

Spending, which is often determined by three- or five-year averages of investment returns, is coming under increasing pressure as endowments struggle to keep up with historical results. Boards of trustees and investment committees are re-calibrating expectations for performance, said Paul Dimitruk, chairman of Partners Capital, which handles investments for clients including endowments and foundations.

Computer-driven hedge funds join industry top performers

Computer-based hedge funds have been admitted to a list of the all-time top 20 best performers for the first time in a sign that the dominance of traditional human investing is being radically challenged by technology.

DE Shaw, Citadel and Two Sigma, which all incorporate so-called “systematic strategies” that trade using computer algorithms, joined the closely followed annual list compiled by LCH Investments, the fund of hedge funds run by the Edmond de Rothschild group.

The 20 best-performing hedge fund managers of all time index measures the total dollars made for investors since inception. DE Shaw, which manages $27bn in assets, entered the list in third spot, while Ken Griffin’s Citadel joined at number five. Two Sigma came in 20th place.

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Dan Loeb: Trump will make hedge funds great again | Reuters

“This environment is undoubtedly better for active investing – just as active investing was considered to be on its deathbed,” Loeb wrote in a letter to clients of his $15 billion Third Point LLC Wednesday.

A shift from government monetary stimulus to measures that will increase personal and corporate spending will create lower correlations between various types of securities and greater dispersion of results within them, such as stocks, Loeb said.

This Is Who George Soros Trusts to Oversee His $25 Billion Family Office – Bloomberg

The move marks the seventh time Soros has appointed a new chief investment officer since the billionaire philanthropist decided to scale back risk following the departures of star traders Stanley Druckenmiller and Nicholas Roditi in April 2000. Early last year, Burdick replaced Scott Bessent, who oversaw investments for four years before leaving at the end of 2015 to start his own hedge-fund firm. Since then, Soros has become more involved in day-to-day trading at his family office, taking a series of bearish bets. The firm returned about 5 percent in 2016, a person with knowledge of the matter said.

“Her expertise at allocating risk across a diverse set of strategies makes her a perfect fit for the Soros family office,” said Nicolas Roth, co-head of alternative assets at Geneva-based investment firm Reyl & Cie, which invests in hedge funds. “O’Connor is a recognized multi-strategy platform.”

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USA ECONOMY DATA

ADP Says Companies in U.S. Added Most Workers in Seven Months – Bloomberg

Companies last month added the most workers to payrolls since June on pickups in services and manufacturing jobs, data from the ADP Research Institute in Roseland, New Jersey, showed Wednesday.

Manufacturing Accelerates in U.S. for a Fifth Straight Month – Bloomberg

Manufacturing growth accelerated in January for a fifth consecutive month on stronger orders and production that signal America’s factories are rebounding.

The Institute for Supply Management’s index rose to 56, the highest since November 2014, from 54.5 the prior month, data from the Tempe, Arizona-based group showed Wednesday. The median forecast in a Bloomberg survey of economists called for 55. A reading above 50 signals expansion.

U.S. Factory Activity Accelerated to Fastest Pace in More Than Two Years – WSJ

U.S. manufacturing activity rose to the highest level in more than two years in January amid rising demand and expectations for a friendlier business environment during the Trump administration.

U.S. to Reach 100 Weeks of Jobless Claims Below Key Level – Bloomberg

Filings for unemployment benefits in the U.S. are estimated to have dropped to 250,000 for the week ended Jan. 28, marking the 100th consecutive period below 300,000, a threshold economists see as indicative of a healthy labor market. That’s the longest streak since a 161-week stretch that ended in 1970, with companies reluctant to fire employees as it becomes tougher to find experienced workers to replace them.

U.S. car, truck sales downshift in January; Toyota falls 11 percent | Reuters

U.S. car and light truck sales slipped 1.8 percent in January as automakers pulled back on bulk sales to rental, government and business fleets and concentrated on more profitable retail sales to individual consumers.

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GLOBAL ECONOMY DATA

These Countries Are Struggling the Most to Support Their Retirees – Bloomberg

The world’s working-age population is shrinking faster than expected, leaving fewer people to support a growing number of seniors, according to the Bloomberg Sunset Index.

Conventional measures of old-age dependency calculate the ratio of people ages 65 and older with those of working age: 15 to 64. But many people stop working well before 65: Men in 66 percent of the 178 countries Bloomberg evaluated and women in 78 percent can begin receiving retirement benefits earlier.

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ENERGY COMPANIES, NOCs, INDUSTRY

Shell Profit Slips to Lowest Level in More Than a Decade – WSJ

Royal Dutch Shell PLC’s annual profit tumbled to the lowest level in more than a decade, reflecting a tough year for an industry hit hard by low oil prices.

Shell said Thursday its profit for 2016 on current cost-of-supplies basis—a measure similar to the net income that U.S. oil companies report—was $3.5 billion, down from $3.8 billion a year earlier. Profit for the fourth quarter fell to $1 billion from $1.8 billion a year earlier.

PDVSA Braces for Oil Production Drop as Default Looms Large – Bloomberg

The recent bump in oil prices isn’t enough to help Petroleos de Venezuela SA as it faces its fourth consecutive year of declining production.

The company’s crude output is expected to fall this year as it failed to raise cash for investments and after Venezuela agreed to cut 95,000 barrels a day for six months as part of a deal struck by the Organization of Petroleum Exporting Countries and other non-members to lift oil prices, analysts say. Even the recent increase in oil prices, following the cuts, aren’t enough to ease the company’s financial burden, Lucas Aristizabal, a senior director at Fitch Ratings, said.

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Saudi Energy Minister Praises Trump’s Pro-Fossil-Fuel Policies – Bloomberg

President Donald Trump’s energy policies are good for the petroleum industry and Saudi Arabia sees no problem with growth in U.S. oil production as long as it’s in line with demand, Saudi Energy Minister Khalid Al-Falih said.

“President Trump has policies which are good for the oil industries,” Al-Falih said in an interview with the BBC. “He has steered away from excessively anti-fossil-fuel, unrealistic fossil-fuel policies.”

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ENERGY CRUDE OIL, OIL SANDS, SHALE

China Oil Trader’s Mideast Spree Contributes to Shake-Up in Global Supply Flows – Bloomberg

Crude purchases in one corner of the oil market by a Chinese trader are contributing to the shake-up of supply flows across the globe.

China National United Oil Co. last month bought at least 7 million barrels of Middle East crude for March loading as part of an assessment process operated by Platts used to set price benchmarks, data compiled by Bloomberg show. The spree was made at a time the region’s supply is shrinking as producers including Saudi Arabia shoulder a majority of global output curbs.

The purchases by the trader known as Chinaoil have helped raise the value of Middle East crude, which had already turned costlier relative to supplies from other regions on OPEC’s deal to cut production. The increase in the Dubai crude benchmark versus West Texas Intermediate and Europe’s Brent has spurred previously unviable flows of cargoes into Asia from areas such as the Gulf of Mexico and boosted shipments from West Africa and the North Sea.

U.S. May Export More Oil in 2017 Than Four OPEC Nations Produce – Bloomberg

U.S. crude exports are poised to surpass production in four OPEC nations in 2017 and may grow even more if President Donald Trump honors pledges to ease drilling restrictions and maximize output.

The world’s largest oil-consuming country could sell as much as 800,000 barrels a day of crude overseas this year, according to four analysts surveyed by Bloomberg. That’s more than OPEC producers Libya, Qatar, Ecuador and Gabon each pumped in December. The U.S. exported 527,000 barrels a day in the first 11 months of 2016, Energy Information Administration data show.

“Godzilla is even taller in person,” Vikas Dwivedi, senior analyst at Macquarie Capital (USA) Inc., said in a telephone interview from Houston. “U.S. production will be bigger than most people are expecting.”

U.S. Enjoys First-Ever Oil Trade Surplus With Latin America – Bloomberg

The U.S. for the first time is pushing more crude and refined petroleum products into Latin America than it brings back, signaling a change in the global trade map that could be tested if President Donald Trump introduces border taxes.

The scales tipped in favor of the U.S. in October, when it recorded a surplus of 89,000 barrels a day of petroleum, the first gain for the U.S. since records began in 1993, according to the U.S. Energy Information Administration. In November, the surplus grew to 184,000 barrels a day, the EIA said Tuesday. That compares to a 4.3 million barrel deficit in 2005.

The change comes as Latin America, led by Mexico, is importing unusually large amounts of gasoline as aging refineries fail to keep up with soaring demand. At the same time, the region’s output of heavy crude, once a staple for U.S. refiners, is declining just as Canada’s production is on the rise.

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ENERGY RENEWABLES, NUCLEAR

Saudi Arabia Plans the World’s Cheapest Power With Solar and Wind – Bloomberg

Saudi Arabia will award its first tender to build 700 megawatts of solar and wind energy in September, with the cost of power forecast to be the lowest in the world, Energy Minister Khalid Al-Falih said.

OPEC’s biggest oil producer plans to build 300 megawatts of solar plants in the al-Jouf area in northern Saudi Arabia and 400 megawatts of wind projects in nearby Tabuk, he said. Requests to qualify for bidding will be issued Feb. 20 and bids will be on April 17.

“The terms on renewable contracts will be motivating so that the cost of generating power from these renewable sources will be the lowest in the world,” Al-Falih said Wednesday at a press conference in Riyadh.

U.S. Wind, Solar Power Tout Rural Jobs as Trump Pushes Coal – Bloomberg

The renewable-energy industry has a message for the Trump administration about bringing energy jobs to rural communities: get out of the coal mines and look to the sky.

U.S. wind-farm developers and suppliers had more than 100,000 workers at the end of the year and the solar industry had more than double that, and they’re a significant source of employment in many of the rural red states that supported Donald Trump’s campaign. That compares to 65,971 coal mining jobs at the start of last year, according to the U.S. Energy Department.

Leaders of the solar and wind industries say the rural areas that missed out on economic growth under President Barack Obama are benefiting from the expansion of clean energy. And that growth isn’t driving the collapse of coal mining, according to Abigail Hopper, the recently hired chief executive officer of the Solar Energy Industries Association.

“I reject the idea that there has to be a winner and a loser,” Hopper said in an interview Tuesday at the trade group’s Washington headquarters. “These are good paying, local jobs that the solar industry is creating everywhere.”

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COMMODITIES BASE METALS, MATERIALS

Australia Delivers Record Trade Surplus on Coal-Iron Price Surge – Bloomberg

Australia’s trade performance closely correlates with demand from China’s old growth drivers like infrastructure and apartment construction. The government in Beijing’s stimulus program, together with cutbacks in coal output, has helped underpin a surge in coal and iron ore prices that’s now reflected in Australia’s sharply improved trade balance. However, the impact of a fall in coal prices since November remains to be seen.

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COMMODITIES AGRICULTURE & SOFTS

U.S. Bacon Supplies Fall to Record Low for December – WSJ

Demand for bacon depleted frozen pork-belly supplies in the U.S. to a record low for December, but the pork industry is taking steps to avoid any serious shortages.

The U.S. Department of Agriculture reported last week that pork bellies in cold storage fell to 17.7 million pounds last month, the lowest December inventory since records began in 1957. In comparison, more than 52.3 million pounds of pork bellies—the cut of the hog from which bacon is derived—remained in storage in December 2015.

Bacon Shortage? Calm Down. It’s Fake News. – The New York Times

Despite alarming headlines, and people taking advantage of any excuse to share bacon pictures, there’s no reason to panic. The frozen reserves are just that — reserves. There will be no rationing at breakfast, or for your burgers (or B.L.T.s, or quiche, or roasted bacon-wrapped rabbit, or apples and ice cream. Not even for your bacon footballs this weekend).

“To imply that there’s going to be some shortage of bacon is wrong,” said Steve Meyer, the vice president of pork analysis for EMI Analytics, in an interview as the bacon reports spread. “There’s plenty of hogs coming. There’s going to be plenty of bacon.”

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POLLUTION, CLIMATE & ENVIRONMENT

Pittsburgh Issues Boil Order for Water Affecting 100,000 People – WSJ

Roughly 100,000 people in Pittsburgh were unable to drink their tap water Wednesday without boiling it first because of concerns the city’s water authority failed to adequately disinfect part of its system.

Earth Day picked as date for science march on Washington – CNNPolitics.com

Just like protesters who have taken to the streets and airports — for the Women’s March and against the travel ban — scientists are planning their own march.

The group behind the March for Science in Washington just announced in a tweet that they will rally on April 22 — Earth Day.

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FRONTIER MARKETS

Southeast Asian Governments Are Ramping Up Spending – Bloomberg

Governments in Southeast Asia are ramping up spending just as central banks are putting away their policy-easing tools.

From Thailand to Malaysia, states are boosting budgets for railways, roads and other infrastructure projects to help bolster growth in a region facing uncertain global markets and the threat of a pullback in trade under U.S. President Donald Trump.

“Fiscal is going to be the main story this year,” said Selena Ling, an economist at Oversea-Chinese Banking Corp. in Singapore. “All of these countries don’t really have much room for cutting rates further. Their currencies may weaken more if rates are lower.”

Egypt’s Banks Attract $9 Billion in Inflows Since Pound Float – Bloomberg

Foreign holdings of Egyptian treasury bills have grown since the pound was floated three month ago, while renewed trust in the currency has sent billions of dollars into local banks.

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EMERGING MARKETS

India Plans to Create Oil Giant by Integrating State-Run Firms – Bloomberg

India is planning to create a state-owned oil giant through mergers to match the might of international companies and billionaire Mukesh Ambani’s Reliance Industries Ltd.

“We see opportunities to strengthen our central public-sector enterprises through consolidation, mergers and acquisitions,” Finance Minister Arun Jaitley said in Parliament while presenting the federal budget for the year beginning April 1. “It will give them the capacity to bear high risk, avail economies of scale, take higher investment decision and create more value for stakeholders.”

Predators of Russian Banking Track Their Prey in Economy’s Ruins – Bloomberg

Businesses that prey on the vulnerable and desperate by charging exorbitant interest have sidestepped authorities’ crackdown on risky practices, an approach that’s throttled credit and winnowed the ranks of banks. In contrast, Russia’s payday lenders posted 65 percent growth in 2016 and have more than tripled the volume of outstanding loans over the last two years.

That may be about to change. Patriarch Kirill, the spiritual leader of 150 million Russian Orthodox worldwide who’s also closely allied with President Vladimir Putin, condemned the microfinance organizations last week. Labeling them “bloodsuckers” and amoral predators, he called for Russia to create banks that will cater to the poor.

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CANADA, AUSTRALIA, NEW ZEALAND

How Trump Could Push the Bank of Canada to the Brink of QE – Bloomberg

If Trump and Congressional Republicans get everything they want — tax cuts, infrastructure spending, and a border-adjustment tax — what happens to Canada?

According to Deutsche Bank AG macro strategist Sebastien Galy, this trifecta of policies would force the Bank of Canada to cut rates and warn that quantitative easing might be needed to support the economy. The negative effect on exporters and competitiveness will likely dwarf any benefits stemming from the boost to U.S. aggregate demand.

Canada Manufacturing Sector Providing No Cure for Economic Ills – Bloomberg

Canada’s economy may be returning to health after an oil shock, but keeping up that momentum could hinge on whether manufacturers show more resilience.

The problem is that manufacturing output has gone sideways for more than two years and is a smaller part of the economy, making it harder to drive future growth. Manufacturing, like the country’s battered energy industry, may not be ready deliver a huge jolt of momentum.

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BREXIT, LONDON, UK ECONOMY

U.K. Factories Warn of Mounting Price Pressures From Weak Pound – Bloomberg

Smaller manufacturers are warning of increasing price pressures as the collapse in the pound since Britain voted to leave the European Union drives up the cost of raw materials.

Costs built at the quickest pace since 2011 in the three months through January, prompting factories to raise their expectations for output-price inflation to the highest level in more than two decades, the Confederation of British Industry said in a report published Thursday.

Germany Said to Let Most Banks Fleeing Brexit Keep Risk Models – Bloomberg

Germany’s financial regulator offered to allow most banks that move operations there because of Brexit to keep current models for setting capital requirements for as long as two years, people with knowledge of the matter said.

Brexit Law Passes First Test as May Warned of Fights Ahead – Bloomberg

U.K. Prime Minister Theresa May faces a battle with pro-European lawmakers in her Conservative Party after they grudgingly backed her plan to trigger Brexit negotiations by the end of March in its first test in Parliament.

The House of Commons on Wednesday approved by 498 votes to 114 to allow May to start divorce talks with the European Union. But with more parliamentary hurdles ahead, lawmakers warned their backing shouldn’t be mistaken for unconditional support to negotiate Brexit freely.

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EUROPE

Germany Inc. Touts Benefits of Trade After Trump Dumps on Euro – Bloomberg

With Donald Trump stepping up criticism of Germany’s colossal trade surplus, the country’s business leaders say there’s a problem with the new president’s “America First” policy: U.S. consumers and workers are the likely losers from many of his proposed restrictions.

Chief executive officers from BMW AG, Deutsche Lufthansa AG, and Siemens AG all emphasized the perils of protectionism in comments Wednesday, after a top Trump administration official criticized German trade policies. In an interview with the Financial Times, Peter Navarro, the head of the White House National Trade Council, called Germany’s surplus a sign of a “grossly undervalued” currency.

Europe’s Volatility Curve Is Getting Kinky Ahead of French Vote – Bloomberg

France’s election is making Europe’s markets nervous.

Traders, already wearied from the 2016 gyrations that followed Brexit, Donald Trump’s victory and Italy’s referendum, are pricing in a surge in volatility for April, when the first round of French voting will occur. The scandal threatening to unhinge Republican candidate Francois Fillon’s run for the presidency has raised concerns that Marine Le Pen, the populist who wants to withdraw France from the euro, may have less of a long shot at winning.

A New Front Opens Up Against Merkel’s Re-Election Bid – Bloomberg

Just as Angela Merkel gears up to campaign against populist foes, Germany’s Social Democrats are opening a different front against her re-election bid.

Within a week of nominating Martin Schulz as its lead candidate in the Sept. 24 national vote, the political outsider has given the country’s second-biggest party a clear bump in the polls. That’s shifting the race’s momentum after a year dominated by the surge of the smaller, anti-immigration Alternative for Germany in the wake of Europe’s refugee crisis.

Greece’s Deadlocked Debt Talks Unnerve Investors – WSJ

Investors are dumping Greek bonds, fearing that Athens will be unable to pay debt that comes due this summer.

The selloff comes as the Greek government is again at a standstill in negotiations with its creditors in the eurozone and at the International Monetary Fund. Athens needs to break the deadlock and secure more aid before about €6 billion ($6.5 billion) in debt has to be repaid in July.

Complicating matters is a scheduled IMF board meeting next week and a lack of clarity over what position the U.S.—which has the largest vote at the fund—would take under the Trump administration.

Merkel’s Challenger Leads Social Democrats to German Poll Boost – Bloomberg

Support for Germany’s Social Democrats jumped to the highest level in almost four years in a poll that underscores the party’s revival after it picked Martin Schulz as Chancellor Angela Merkel’s election challenger.

Top French Presidential Candidate François Fillon Battered by Growing Scandal – WSJ

Conservative leaders are trying to steady the campaign of François Fillon, once the clear front-runner to become France’s next president, as he faces a deepening criminal investigation.

Soros’s Foundation Fights Irish Bankers Over Home Foreclosures – Bloomberg

War crimes, attacks on media freedom in former communist states and prejudice against Europe’s Muslims. Now mortgages in Ireland have made it onto the ignominious list for George Soros’s campaigners.

The billionaire investor’s Open Society Foundations is opening a new front in the fight against evictions as the legacy of one of the worst real-estate market crashes in history continues to haunt Ireland. About one in 10 Irish mortgages is in arrears, or 4.5 billion euros ($4.9 billion) of missed payments, and foreclosures tripled over the last five years.

“Essentially, we are aiming to apply a human rights approach in repossession cases,” said Marguerite Angelari, senior attorney at Soros’s organization. “It looks pretty easy to get a repossession order in Ireland. Based on European Union law, it shouldn’t be.”

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CHINA

China labour unrest spreads to ‘new economy’

Chinese labour unrest extended its footprint last year as workforce tensions that have long beset the manufacturing and construction industries began to hit the fast-growing sectors on which Beijing has pinned its hopes for future growth.

While the 2,663 strikes and protests recorded in 2016 by China Labour Bulletin marked a fall of 112 on the previous year, the total was still almost double that of 2014, with the spread to new sectors partly offsetting a drop in manufacturing unrest.

“The new economy is rife with the old labour problems of the past,” said Keegan Elmer, a researcher at the Hong Kong-based workers’ rights organisation.

China sends its billionaires a chilling message

Until now, Hong Kong has been regarded as a haven from arbitrary police and judicial action, but global companies will have to reconsider this in the wake of Mr Xiao’s disappearance. In mainland China itself, his abduction will send a chilling message to the super-wealthy, who already believe Mr Xi has launched a war against them. It will also accelerate the pace of capital flight.

These Chinese Developers Are Making Their Creditors Anxious – Bloomberg

Chinese property developers investing in new ventures outside their core business are hurting their bonds. Purchases by highly leveraged Chinese developers unrelated to real estate raise the “knee-jerk question” of whether they might be having problems with their existing business, said Bryan Collins, a fixed-income portfolio manager at Fidelity International in Hong Kong.

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TRUMP WORLD

Donald Trump’s Longtime Doctor Says President Takes Hair-Growth Drug – The New York Times

The disclosure that Mr. Trump uses a prostate-related drug to maintain growth of his scalp hair, which has not been publicly known, appears to solve a riddle of why Mr. Trump has a very low level of prostate specific antigen, or PSA, a marker for prostate cancer. Mr. Trump takes a small dose of the drug, finasteride, which lowers PSA levels. Finasteride is marketed as Propecia to treat male-pattern baldness.

Dr. Bornstein said he also took finasteride and credited it for helping maintain his own shoulder-length hair and Mr. Trump’s hair. “He has all his hair,” Dr. Bornstein said. “I have all my hair.”

Judge Orders Trump-Owned Golf Resort to Pay Millions – The New York Times

The decision is the first court judgment against a company owned by Mr. Trump since he became president last month.

First Lady Melania Trump May Never Move Into the White House – Us Weekly

First Lady Melania Trump, who planned to move to the White House in mid-2017, may stay in NYC, a source reveals in the new issue of Us Weekly.

Trump Raised Record $6.5 Million in Weeks After Winning Election – Bloomberg

President Donald Trump’s campaign finished last year with $16.1 million in the bank after pulling in a record $6.5 million after he’d already won, Federal Election Commission filings show.

Trump is still actively soliciting donations via the campaign’s website and targeted text messages during a time when most new administrations pause fundraising and shift to governing. In the final 33 days of the year, Trump’s campaign hawked Christmas ornaments emblazoned with his campaign slogan, as well as other merchandise commemorating his December thank-you tour and January inauguration.

Trump Team Kept Gorsuch Secret With Back Roads and Military Jet – Bloomberg

Less than 48 hours before Neil Gorsuch was introduced as President Donald Trump’s Supreme Court nominee, he was traveling in secret down Colorado back roads to a military aircraft as part of a White House operation to keep his selection under wraps.

TOP

ELECTORAL POLITICS

Former Exxon CEO Tillerson Confirmed as Secretary of State – Bloomberg

Rex Tillerson, the former Exxon Mobil Corp. chief, won Senate confirmation as secretary of state after lawmakers split mostly along party lines on U.S. President Donald Trump’s choice of an oilman with no government experience but a career negotiating billions of dollars of energy deals worldwide.

Anthony Scaramucci Won’t Get Announced White House Role, Official Says – The New York Times

Mr. Scaramucci will not become the president’s liaison to the business community after the sale of his investment firm to a Chinese conglomerate raised questions.

Donald Trump Urges Senate GOP to Scrap 60-Vote Rule for Court Pick – WSJ

The battle over Supreme Court nominee Neil Gorsuch began in earnest, with President Trump saying Senate Republicans should change rules requiring 60 votes should there be Democratic opposition.

Four Hurdles That Could Block Republicans’ Tax-Cut Ambitions – Bloomberg

Since his surprise victory, the president and Republican leaders in both chambers have described a tax overhaul as a top priority — a once-in-a-generation opportunity for meaningful change. Here’s a closer look at four of the hurdles they’ll have to overcome: Trump’s controversies; issues with the border tax; deduction and disputes; and opposition from Democrats.

Republicans Rebrand Obamacare Strategy From ‘Repeal’ to ‘Repair’ – Bloomberg

The repair language was discussed by Republicans during their closed-door policy retreat in Philadelphia last week as a better way to brand their strategy. Some of that discussion flowed from views that Republicans may not be headed toward a total replacement, said one conservative House lawmaker who didn’t want to be identified.

TOP

DEMOGRAPHICS, INEQUALITY & POPULISM

Obamacare More Popular Than Ever, Now That It May Be Repealed – The New York Times

When the Affordable Care Act passed Congress in 2010, more Americans disliked it than liked it. And that was the pattern in public opinion for the next six years.

But since Donald J. Trump, who promised to repeal the law, was elected president, that long-held pattern has begun to shift. In a variety of recent polls, with questions asked in different ways, more Americans are now saying they favor Obamacare than oppose it.

The NBC News/Wall Street Journal poll has been tracking views of the health law since 2009. Its poll in January indicated for the first time that more people viewed the health law as a good idea than as a bad one.

17G02 - Obamacare pollA Third of Americans Are Still Struggling to Find Affordable Healthcare – Bloomberg

Uninsured rates in low-income families have fallen under the Affordable Care Act, yet more than a third of Americans continued to face difficulties paying their medical bills in 2016, a survey found.

Adults in poor families were among the greatest beneficiaries of the ACA, with uninsured rates falling as much as 17 percentage points since it became law in 2010, according to a study from the Commonwealth Fund, a private, New York-based research organization. Still, 34 percent of Americans said it’s difficult or impossible to find affordable health coverage.

Millennials Take Back Seat to Seniors When It Comes to U.S. Consumer Confidence – Bloomberg

In the Conference Board’s monthly consumer confidence gauge, Americans 55 and older have seen the biggest rise in optimism since the November election of President Donald Trump.

“Confidence continues to trend higher across age groups; post-election, most of the major gains have come from older Americans, though younger folks are also feeling broadly more confident through January,” Bespoke Investment Group said in a note.

Part of the reason for this could come from the fact that older Americans were more likely to have voted for Trump in the first place. Regardless, other surveys of investor confidence have also been shifting post-election. According to both UBS Group AG and Charles Schwab Corp., sentiment among their customers has improved since November.

“Investors cited Trump’s pro-business policies — including lower personal and corporate taxes – expectations for less regulation and increased infrastructure spending, which they believe will spur U.S. economic growth, as the primary sources of their optimism,” UBS said in a note.

TOP

SCANDALS, LAWSUITS, FINES, REGULATORY

Facebook Loses $500 Million Virtual Reality Headset Verdict – Bloomberg

The virtual reality headset maker that Facebook Inc. bought in 2014 for $2 billion used stolen computer code, a jury said in awarding $500 million to ZeniMax Media Inc.

The case was over the Oculus Rift, the device that has put the social media giant at the forefront of the virtual reality boom.

Wednesday’s verdict in Dallas federal court is a rebuke to Facebook Chief Executive Officer Mark Zuckerberg, who isn’t a defendant but who told jurors in his first-ever courtroom testimony that it was important for him to be there because the claims by ZeniMax were “false.” An Oculus spokeswoman said the company will appeal.

TOP

BANKS, BROKERS, INSURANCE, XCHANGES

Deutsche Bank Misses Estimates as Client Jitters Hit Trading – Bloomberg

Deutsche Bank AG fell the most in four months after earnings missed analysts’ estimates, in part because clients stepped back from doing business with the lender amid concern about its financial strength.

The stock slumped as much as 7.1 percent, the most since September, after revenue from debt trading, its biggest source of income, fell short of estimates and equity trading revenue unexpectedly declined.

Research analysts culled at top investment banks

The ranks of investment bank research analysts have fallen by one-tenth since 2012, as tighter regulation and falling profits have forced financial institutions to cull their brigades of economists, bond strategists and stock pickers.

The number of analysts working at the world’s 12 biggest investment banks fell to 5,981 last year, according to fresh numbers from Coalition, a data provider on the industry. That is down from 6,282 at the end of 2015, and 6,634 at the end of 2012, when Coalition began to collect the numbers.

The cuts are expected to deepen in the coming years. “We will have massive cost pressures in an industry that is not ready for it at all,” said Matthew Benkendorf, chief investment officer at Vontobel Asset Management. “They’ll have to gut things pretty hard.”

TOP

SILICON VALLEY, UNICORNS, STARTUPS, VC

Who Will Pay for San Francisco’s Tilting, Sinking Millennium Tower? – Bloomberg

The building, which opened in 2008 and was touted as the most luxurious tower in San Francisco, became a beacon of the city’s burgeoning wealth, attracting tech millionaires, venture capitalists, and even the San Francisco 49ers retired quarterback Joe Montana.

The 58-story tower’s shine faded on May 10, 2016, when Agabian attended a homeowners association meeting and was informed that the building had sunk 16 inches into the earth and tilted over 15 inches at its tip and 2 inches at the base, according to suits filed by residents and the city of San Francisco. “You can imagine how distressed we were to know that, for one, our lifetime investment and savings are at risk,” she said. “And we have no idea whether or not there’s a fix to it, and if there is a fix to it, what it will entail.”

The building, meanwhile, continues to sink.

Why Silicon Valley’s Young Elite Won’t Invest in Art – Bloomberg

The difference between the tech industry and other sectors, dealers said, was that—while billionaire tech chief executive officers have begun to buy art along with the houses, planes, cars, and other objects that cement their status as members of the global rich—there has been little to no emulation from the lower, merely wealthy ranks.

Buell, the adviser, speculates that the rising ranks of tech managers will eventually get around to buying art, but “I think it’s going to take a little bit more time, I’ll be totally honest,” she said. “People in the art world are like ‘hurry up and spend money,’ but many of these guys are working their tails off,” she continued. “They’re just having their children and buying their first houses. I think the trickle-down will happen, but further down the line.”

Uber Offers Drivers $1 Each to Wipe Away Labor Threats Valued in Billions – Bloomberg

Uber Technologies Inc. is offering its drivers an average of about a dollar apiece to dispose of alleged labor code violations that their own lawyer said might be worth billions.

The ride-hailing company asked a state judge in Los Angeles Wednesday to approve a $7.75 million settlement to resolve claims stemming from the company’s refusal to give California drivers the protections and benefits of employees. The accord doesn’t require Uber to stop classifying the drivers as independent contractors.

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CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

Snap’s Chief Taps Into the ‘Right Now’ – The New York Times

While online identity previously emphasized everything anyone has ever done, with Snapchat “my identity is who I am right now,” Mr. Spiegel said in a 2015 video to describe the app.

Mr. Spiegel, 26, Snap’s chief executive, has since built a budding digital empire based on that initial unconventional insight — and has continued upending the tech industry with his different way of seeing the world, often with a touch of ego. Rather than accept the norms of the social networking ecosystem, he has stuck to atypical viewpoints on matters from mobile video to video-recording spectacles. And he has done all of this more than 350 miles away from Silicon Valley, in the sunny climes of Venice, Calif., where Snapchat is based.

“If you want to understand Snap, look at Evan Spiegel,” said Todd Chaffee, a partner at IVP, one of Snap’s three largest venture capital investors. “He is the visionary who drives that company.”

Facebook Revenue Jumps Again, Buoyed by Mobile Advertising – WSJ

Facebook recorded a 51% jump in fourth-quarter revenue, reflecting the still-vibrant mobile advertising business that has driven the social-media giant’s growth over the last four years.

Facebook Sales Top Estimates on Gains in Mobile Advertising – Bloomberg

Facebook Inc.’s fourth-quarter revenue climbed more than forecast, driven by advertisers’ continued push to reach consumers on mobile phones.

Facebook’s Loss in Court Doesn’t Dim Excitement Over Huge Growth – The New York Times

Sales for the social media giant grew 51 percent in the most recent quarter, and a $500 million jury decision should do little to hurt its bottom line.

TOP

CLOUD, SILICON, ENTERPRISE / SAAS

Apple Said to Work on Mac Chip That Would Lessen Intel Role – Bloomberg

Apple Inc. is designing a new chip for future Mac laptops that would take on more of the functionality currently handled by Intel Corp. processors, according to people familiar with the matter.

TOP

RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Apple to Expand Iconic NYC ‘Cube’ Store in Lift for Fifth Avenue – Bloomberg

Apple Inc. is more than doubling the size of its renowned store on Manhattan’s Fifth Avenue, bringing a boost to a retail corridor that’s suffered from Trump Tower congestion and persistently high vacancies in the past year.

The technology giant will expand the store — known for its distinctive glass cube — to 77,000 square feet (7,150 square meters) from about 32,000 square feet, Douglas Linde, president of Boston Properties Inc., said on the company’s earnings conference call Wednesday. The Boston-based landlord is co-owner of the General Motors Building at 767 Fifth Ave., which houses the Apple location.

Under Armour Sinks After Dismal Forecast Rattles Investors – Bloomberg

Under Amour — which has doubled its sales about every three years — is now having a hard time maintaining that rapid growth. While the company helped make moisture-wicking clothing a staple of gym-goers’ wardrobes, the increased popularity of athletic wear as everyday apparel has brought a raft of new competitors. The growth concerns caused Under Armour’s shares to slip 30 percent last year, and the stock is the most shorted in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

“This leaves very little optimism for 2017,” said Chen Grazutis, an analyst at Bloomberg Intelligence. Increased competition is “going to continue to weigh on the company.”

TOP

MEDIA, CABLE, SPORTS, ENTERTAINMENT

Sony cuts annual profit view on movie business writedown | Reuters

Sony Corp on Thursday said it does not plan to sell its pictures business after suffering a $1 billion writedown, and instead aims to turn it around by adding sales channels and making more use of movie characters.

“We believe in long-term upside potential for pictures,” Chief Financial Officer Kenichiro Yoshida said at an earnings briefing, reiterating that Sony continues to regard the business as important to the group.

TOP

AUTOS, ELECTRIC, SELF-DRIVING

Mercedes Jumps Out to Big Early Lead in U.S. Luxury-Car Race – Bloomberg

Daimler AG’s Mercedes-Benz jumped out to an early lead in the race for U.S. luxury auto sales supremacy, posting a record January after winning the crown last year for the first time since 2013.

Tesla Is Testing Self-Driving Cars on California Roads – Bloomberg

Tesla Inc. started testing four self-driving cars on California’s public roads late last year, a milestone for Chief Executive Officer Elon Musk who has promised to demonstrate an autonomous road trip from Los Angeles to New York by the end of 2017.

Tesla Drops ‘Motors’ From Name to Show It’s Not Just a Carmaker – Bloomberg

Elon Musk’s Tesla Motors Inc. said in a regulatory filing today that its new name is Tesla Inc. The decision to drop the word “Motors” was made to reflect the fact that Tesla, which merged with SolarCity Corp., another Musk company, is now in the solar business as well.

TOP

AIRLINES, SHIPPERS, RAIL, TRANSPORTS

Amazon Plans $1.5 Billion Air Hub Near Cincinnati for Fleet – Bloomberg

Amazon.com Inc. is building a new air hub near Cincinnati to support a growing fleet of planes that can move inventory around the U.S. so online shoppers get their orders quickly.

Amazon will invest $1.49 billion to build the facility on 900 acres at Cincinnati/Northern Kentucky International Airport, said Mindy Kershner, an airport spokeswoman. The airport is located in Hebron, Kentucky, and is southwest of Cincinnati.

The e-commerce giant has 11 warehouses in Kentucky where inventory is stored, packed and shipped to customers ordering goods over the internet. The air hub will support the 16 planes transporting Amazon inventory around the country. Amazon last year signed agreements with two carriers to lease as many as 40 cargo planes to support its new Prime Air operation.

TOP

HEALTHCARE, PHARMA, BIOTECH

Malaria superbugs threaten global health disaster

Drug-resistant malaria superbugs threaten a global public health disaster unless urgent action is taken to fight their spread in Southeast Asia, authors of new research have warned.

The mosquito-borne uber-parasites have taken hold in parts of Thailand, Laos and Cambodia and could sweep into India and on to Africa where most malaria deaths occur, their results suggest.

The conclusions will deepen concerns that growing resistance to the main artemisinin class of antimalarial drugs might reverse international success in almost halving estimated death rates from the disease over the past 15 years.

Sir Nicholas White, co-author of the research published on Thursday in The Lancet Infectious Diseases, warned that the last wave of drug-resistant malaria parasites to spread from Asia to Africa “killed millions”.

Obamacare’s Slow and Painful Death Puts Health Insurers in Limbo – Bloomberg

Obamacare looks like it’s going away. Until that happens, big health insurers aren’t sure what to do with it.

Republicans and President Donald Trump haven’t given details on how they’ll repeal and replace the Affordable Care Act. Uncertainty about the law, which covers millions of Americans, has left companies trying to figure out if they’re better off stuck in limbo or just quitting entirely.

TOP

SCIENCE, NATURE, PSYCHOLOGY

Take Back Your Brain From Social Media – WSJ

Our brains are wired to “voraciously feed on information,” says University of California, San Francisco neuroscientist Adam Gazzaley, co-author of the 2016 book “The Distracted Mind.” So why let social media companies decide when they should tempt you? Turn off app notifications on your phone and computer, particularly ones for live video broadcasts, whose see-it-while-you-can alerts are designed to engender a fear of missing out.

To further stem the temptations, try what I call the digital Paleo Diet: Do serious work only on tech that was available before the year 2000. Make your main work devices completely off-limits to social media so distractions aren’t even possible. Don’t log into Facebook or even install the app. (For extra help, try the News Feed Eradicator for Facebook browser plugin.)

Hide your phone when you’re working, driving or doing important socializing. Studies have shown even the presence of a phone, on silent, can cause poor academic performance or less-meaningful face-to-face interaction.

TOP

MISCELLANEOUS

Meet the Coach for Lady Gaga, Super Bowl Halftime Star – WSJ

Gaga’s halftime extravaganza represents the latest achievement of Mr. Lawrence’s nearly five-decade career. The 71-year-old coach began training Gaga 17 years ago, when she was a 13-year-old student on Manhattan’s Upper West Side named Stefani Joanne Angelina Germanotta. Mr. Lawrence’s nephew heard her singing in a clothing boutique he ran and recommended her to Don. During their first lesson, in Mr. Lawrence’s studio near 72nd Street and Broadway in Manhattan, Gaga’s mother sat outside in a waiting room. “Within three months, I knew this girl was going to be it,” Mr. Lawrence says.

Mr. Lawrence uses a classical technique associated with opera singers and has attracted an avid following among rock and pop’s top talent. His clients have included Mick Jagger, Axl Rose, Bono, Courtney Love and Christina Aguilera, among many others.

Will a Test for Brain Trauma Protect NFL Players—or End the NFL? – Bloomberg

While the NFL is backing Quanterix, a test for the living could present an existential crisis for the league. Discovering, for instance, that half its linemen show signs of CTE could starve the league of talent or force changes that make it unrecognizable to fans. And football isn’t alone: CTE presents similarly dire questions for hockey, soccer, and ultimate fighting, among other contact sports.

“The NFL may not realize they have awakened an animal here,” Hrusovsky says. “If they want it, they should invest like crazy in it. If they don’t really want it, holy moly, what have they created? Because I am not going to go away.”

Daily Macro Links Thurs Feb 2nd – Specter of Global Trade War

MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

TOP

GEOPOLITICS, CRIME, TERRORISM

Trump lambastes Pena Nieto in ‘humiliating,’ ‘threatening’ phone call – Business Insider

“I don’t need the Mexicans. I don’t need Mexico,” Trump reportedly told the Mexican president. “We are going to build the wall and you all are going to pay for it, like it or not.”

Trump hinted that the US would force Mexico to fund the wall with a 10% tax on Mexican exports “and of 35% on those exports that hurt Mexico the most,” Estevez wrote in Proyecto Puente.

Before the call, White House press secretary Sean Spicer said Trump was considering a tax on imports from Mexico to pay for the wall.

Donald Trump tweets he will study ‘dumb’ refugee deal with Australia

Australia’s relationship with the United States, its closest ally, has been rocked by the leaking of a fiery telephone conversation between Malcolm Turnbull and Donald Trump over the proposed refugee resettlement deal.

Relations between the nations were plunged into confusion on Thursday after a bombshell report in The Washington Post detailed that President Trump had called the arrangement the “worst deal ever”, called the Saturday phone call “the worst call by far” he had had with a world leader and that the President had hung up on Mr Turnbull after just 25 minutes when the two men spoke.

Trump Slams Australia Refugee Deal as ‘Dumb,’ Hints at Possible Pullout – WSJ

President Donald Trump suggested he could back out of an agreement the Obama administration reached with Australia to take in 1,250 refugees, potentially straining ties with a close U.S. ally.

Donald Trump’s closest advisor Steve Bannon thinks there will be war with China in the next few years | The Independent

Donald Trump’s closest advisor thinks that the US will be at war with China in the next few years. The far-right figure, who has been given unprecedented power in the White House and has suggested in the past that he supports white supremacy, suggested that the two countries are headed towards war over the South China Sea.

China ‘steps up preparedness for possible military conflict with US’ | South China Morning Post

China is stepping up preparedness for a possible military conflict with the US as the Donald Trump presidency has increased the risk of hostilities breaking out, state media and military observers said.

Beijing is bracing itself for a possible deterioration in Sino-US ties, with a particular emphasis on maritime security.

The People’s Liberation Army said in a commentary on its official website last Friday, the day of Trump’s inauguration, that the chances of war have become “more real” amid a more complex security situation in Asia Pacific.

US puts Iran ‘on notice’ after weekend missile test

Donald Trump’s administration declared that it was putting Iran “on notice” on Wednesday, signalling both a tougher US line with Tehran and a new test of relations after a weekend missile test by the Islamic republic.

During his campaign, Mr Trump vowed to rip up a 2015 nuclear deal negotiated by the Obama administration and other world powers with Tehran but has taken no public steps to deliver on that since taking office.

In a terse statement delivered on Wednesday by retired general Michael Flynn, the new national security adviser, the White House signalled that was about to change, as the Trump administration faced its first potential security-related foreign policy crisis.

White House Steps Up Iran Criticism in Wake of Missile Test – Bloomberg

Beyond the tougher words, the administration didn’t offer details of what policy or military options it may be considering. An administration official, who asked not to be identified, told reporters afterward that there are a range of options available to counter Tehran’s actions.

Iran Confirms It Recently Conducted Ballistic Missile Test Launch – WSJ

Iran confirmed Wednesday it recently conducted a ballistic missile test launch, a move that drew criticism from U.S. and Israeli officials this week and raised concern about the potential violation of a United Nations Security Council resolution.

Eight-year-old American girl ‘killed in Yemen raid approved by Trump’

The operation was launched to gather intelligence on suspected operations by al-Qaida in the Arabian peninsula (AQAP), according to Thomas. Planning for the raid “started months before”, under Barack Obama’s administration, but was “not previously approved”, he said.

Thomas said he did not know why the prior administration did not authorize the operation, but said the Obama administration had effectively exercised a “pocket veto” over it.

A former official said the operation had been reviewed several times, but the underlying intelligence was not judged strong enough to justify the risks, and the case was left to the incoming Trump administration to make its own judgment.

On the campaign trail, Trump endorsed killing relatives of terrorist suspects, which is a war crime. “The other thing with the terrorists is you have to take out their families, when you get these terrorists, you have to take out their families,” he told Fox News in December 2015.

White House claims five-year-old boy detained in US airport for hours ‘could have posed a security threat’ | The Independent

The White House has said a five-year-old boy was detained for more than four hours and reportedly handcuffed at an airport because he posed a “security risk”. The boy, reportedly a US citizen with an Iranian mother, was one of more than 100 people detained following President Donald Trump’s immigration order.

In a press briefing, Mr Trump’s press secretary Sean Spicer was unrepentant about the incident. He said: “To assume that just because of someone’s age and gender that they don’t pose a threat would be misguided and wrong.”

U.K.’s May Attacks Trump Travel Ban as ‘Divisive And Wrong’ – Bloomberg

Theresa May told Parliament that Donald Trump’s travel ban was “divisive and wrong,” as she defended her decision to seek a close relationship with the new U.S. president.

The words were the strongest condemnation that the U.K. prime minister has used against the ban on refugees and travelers from seven predominantly Muslim countries. Still, she went on to argue that Britain’s interests were best served by engaging with Trump as much as possible.

US launches review of North Korea policy

The White House has launched a review of its policy on North Korea, reflecting the growing nuclear threat from Pyongyang that Barack Obama told Donald Trump would represent his most pressing national security challenge.

Two people familiar with the review, which the White House has not disclosed, said it was designed to determine what the Trump administration could do differently to address concerns that North Korea could strike the US with a nuclear-armed missile. One person said Michael Flynn, national security adviser, ordered the review on Friday.

Mr Trump has personally had several detailed intelligence briefings in recent days, according to a third person familiar with the discussions.

Russia Deploys Chechens to Win Hearts and Minds in Aleppo – WSJ

Russia has reinforced its military presence on the ground in Aleppo with a police unit drawn largely from the Muslim-majority region of Chechnya, part of a bid to win hearts and minds in Syria.

Recent video footage by a Russian-language news agency shows the Chechen-led formation patrolling the city’s battered landscape in armored trucks and personnel carriers.

TOP

PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Fearful of Hacking, Dutch Will Count Ballots by Hand – The New York Times

The decision to forgo electronic counting, in national elections scheduled for next month, was a response to fears that outside actors, like Russia, might try to tamper with the election.

Reports of treason and CIA spies shed light on Russian hacking

The charges follow US accusations that Russian intelligence hacked Democratic party servers last year. While there is no direct link between those accusations and the latest arrests, Russian media say the FSB investigation into the two men began after ThreatConnect, a US cyber security company, alleged that hackers used King Servers, an internet hosting company, to attack US state election rolls. The business partner of the owner of King Servers has long accused Mr Mikhailov of working for the FBI.

This is believed to have prompted the investigation into Mr Mikhailov and Mr Dokuchaev, a former hacker known as “Forb” who joined the secret services to avoid prison, according to the Interfax news agency. The men were arrested as part of a wider-reaching investigation into a group that, according to the Interfax report, conducted cyber attacks, stole private information from people close to the Kremlin, and worked as sources for US intelligence.

Russia Charges Show U.S. Intelligence Compromised Top Cyber-Cops – Bloomberg

Prosecutors in Moscow suspect that U.S. intelligence compromised one of Russia’s most senior cybersecurity officials and have charged him and at least two others with treason in the case, according to a lawyer involved.

The three were detained in December and include Sergei Mikhailov, who was a top official in the information-security division of the Federal Security Service, the main successor to the KGB, and Dmitry Dokuchaev, a member of his staff. The third suspect to be named publicly is Ruslan Stoyanov, a manager at Kaspersky Lab, a Russian cybersecurity company.

India to Deploy Flying Camera Drones to Track Illegal Miners – Bloomberg

Desperate to develop its own mineral deposits, resource-hungry India is trying to revive investment by taking aim at illegal miners like the sand mafia — from a few hundred feet in the air.

The government will deploy flying camera drones to track renegades who for years have been extracting everything from sand to coal to iron ore without permits. Unsanctioned diggers pay no tax, violate the mineral rights of others and employ rudimentary methods blamed for widespread environmental damage. They’re also hard to catch, working in remote areas and sometimes getting help from corrupt officials.

Fear of Trump Move Drives Cash Transfers to Mexico to Record – Bloomberg

Donald Trump’s election raised the prospect of the U.S. blocking the flow of cash to make its southern neighbor pay for a border wall.

Remittances rose 6 percent in December from a year earlier to $2.34 billion, the most ever for the holiday season, according to data released by Mexico’s central bank on Wednesday.

Credit-Card Thieves Move Online as Chips Thwart In-Store Fraud – Bloomberg

The adoption of credit-card chip technology by U.S. retailers is having an unintended consequence: Criminals are moving from brick-and-mortar stores to the internet.

The use of stolen card data to pay for merchandise on websites, in mobile apps and by dialing call centers surged 40 percent last year, according to a report from Javelin Strategy & Research released Wednesday. That’s forcing merchants to spend billions on online fraud protection in an effort to detect when a crook is using someone else’s card number.

Credit-Card Fraud Keeps Rising, Despite New Security Chips—Study – WSJ

More consumers became victims of identity fraud last year than at any point in more than a decade despite new security protections implemented by the credit-card industry, a new report says.

TOP

PROPAGANDA, CORRUPTION, AUTHORITARIANISM

Key U.S. Arab Ally Says Trump’s Visa Ban Doesn’t Target Muslims – Bloomberg

A top U.A.E. official defended the Trump administration against accusations that the U.S. travel ban on citizens of seven predominantly Muslim countries is targeting Islam.

“The vast majority of Muslims and Muslim countries have not been affected by this ban,” United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed told a news conference in Abu Dhabi on Wednesday. “This is a temporary ban that will be reviewed within three months. It’s important to take these points into account.”

Exclusive: Trump to focus counter-extremism program solely on Islam – sources | Reuters

The Trump administration wants to revamp and rename a U.S. government program designed to counter all violent ideologies so that it focuses solely on Islamist extremism, five people briefed on the matter told Reuters.

The program, “Countering Violent Extremism,” or CVE, would be changed to “Countering Islamic Extremism” or “Countering Radical Islamic Extremism,” the sources said, and would no longer target groups such as white supremacists who have also carried out bombings and shootings in the United States.

Leaked Draft of Trump’s Religious Freedom Order Reveals Sweeping Plans to Legalize Discrimination | The Nation

A leaked copy of a draft executive order titled “Establishing a Government-Wide Initiative to Respect Religious Freedom,” obtained by The Investigative Fund and The Nation, reveals sweeping plans by the Trump administration to legalize discrimination.

Billionaire Peter Thiel Sparks New Zealand Passport-for-Sale Row – Bloomberg

Tech billionaire and Trump adviser Peter Thiel has sparked a passport-for-sale row in New Zealand after it was revealed he was granted citizenship in 2011 despite visiting the nation only four times.

Thiel’s application was approved by the New Zealand government on the grounds his entrepreneurial skills and philanthropy were beneficial to the country, even though he didn’t meet the standard criteria or intend to live there, official documents released late Wednesday in Wellington show.

New Zealand has become a preferred bolthole for the ultra rich as they seek a haven from global political uncertainty and terror threats. Opposition parties accuse the government of turning citizenship into an asset wealthy foreigners can buy, a claim Prime Minister Bill English has denied.

Reddit Bans Alt-Right Group – The Daily Beast

The company, once a haven for right wing extremism, is cracking down on the hub of white nationalists—right after its founder blasted Trump’s ban on immigrants and refugees.

Nikki Haley Vows to ‘Take Names’ of Nations Opposing U.S. – Bloomberg

President Donald Trump’s UN ambassador started her first day saying she’s prepared to “take names” of countries that oppose the U.S., as the new administration in the White House starts its overhaul of foreign policy.

The U.S. will “have the backs of our allies and make sure that our allies have our back as well,” Ambassador Nikki Haley told reporters at the United Nations on Friday. “For those that don’t have our back, we’re taking names. We will make points to respond to that accordingly.”

Tillerson’s Vow to Keep Away From Exxon Runs Into a World of Oil – Bloomberg

“He has severed himself in a pretty final and conclusive way, and I just don’t see him being influenced given the structure of his disengagement,” Stan Brand, an ethics lawyer at Akin Gump Strauss Hauer & Feld, said in an interview.

Yet the $350 billion company is so big, and so deeply entrenched in countries around the world, that Tillerson’s past will inevitably shadow him, critics say. They say that no ethics agreement can protect against Tillerson viewing the world through “oil-coated glasses,” as Senator Ed Markey, a Massachusetts Democrat, said this week.

Panasonic says its avionics business under probe by U.S. authorities | Reuters

Panasonic Corp said on Thursday its avionics business is being investigated by the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) under the Foreign Corrupt Practices Act (FCPA) and U.S. securities-related regulations.

Minister Quits as Biggest Post-Communist Protests Rock Romania – Bloomberg

Romania’s political crisis deepened Thursday as a minister pledged to resign amid the largest protests since the collapse of communism following sudden changes to criminal law that undermine a four-year anti-corruption clampdown.

Business Environment Minister Florin Jianu said he couldn’t support the government’s stance after at least 300,000 people took to the streets of cities across the country. About 150,000 gathered in freezing temperatures outside the government building in Bucharest on Wednesday evening, the Digi24 TV station and News.ro estimated.

“I don’t want to have to tell my child I was a coward and I agreed to something I don’t believe in,” Jianu said, according to a post on his Facebook page.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Inflation Surprise Index Shows Unexpected Global Turn: Chart – Bloomberg

Inflation across the world is beating analysts’ forecasts even before the potential effect from Donald Trump’s economic policies. The global Citi Inflation Surprise Index, which measures price surprises relative to market expectations, is at the highest in more than five years. The reading turned positive in December — meaning inflation data were higher than expected — for the first time since 2012.

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European Junk Bonds Falter at QE’s Fault Line – Bloomberg Gadfly

For the high-yield bond market, the root of the problem problem now is that it isn’t living up to its name. Yields just aren’t high enough. Investing in low-rated companies is a skillset that requires a lot of due diligence, and for that extra effort and risk taken there needs to be a commensurate reward.

The ECB’s well-meaning actions are actually now deterring financing in the very area it is trying to support — financing for small- and medium-sized companies, the engine of the economy. Investor demand is very clearly still there for a juicy coupon, as can be seen from the order books for Tier 1 issues, where coupons can be around 8 percent. It’s quite a different matter to buy high-risk debt that yields next to nothing.

Derivatives ‘Big Bang’ catches market off guard

Almost a decade on from the financial crisis, a global deadline for reform of the $544tn derivatives market has triggered a last-minute scramble by hundreds of small banks, insurers and pension funds.

Many of these institutions use bespoke derivatives such as swaps to protect their operations from sudden changes in asset prices. In a month’s time they face higher costs and regulatory burdens. Plenty are not ready.

TOP

MACRO OP-EDS, DATA, INQUIRY AND THEORY

Specter of Global Trade War Rises as Trump Puts ‘America First’ – Bloomberg

“A massive clash is starting to emerge with Trump willing to get into major geopolitical spats with China and other countries to advance his ‘America First’ agenda,” Mark Leonard, director of the European Council on Foreign Relations, said in a phone interview.

The sparks that have dominated the initial days of Trump’s presidency have set the stage for increased tensions over global trade and currency regimes. Decades of economic ties are at stake. Signs that the U.S. will favor bilateral trade agreements at the expense of multilateral deals have forced world leaders to define their own red lines, and forge new alliances.

Trump devaluation claims raise fears of global currency war

The Trump administration’s willingness to break with tradition and comment about currency valuations has raised fears that the US might lead the world into a new round of currency wars, angering and unnerving allies.

Stephen Mnuchin, the former Goldman Sachs banker whom Mr Trump has tapped for treasury secretary, has publicly adopted a more cautious approach than the new president. During his confirmation hearing last month he told senators that he believed the “long-term strength” of the dollar was “important”.

But the chaotic start to the administration and what many see as its protectionist agenda have amplified fears of not only currency wars but a fully fledged trade confrontation that could be disastrous for the world economy.

The U.S.-Mexico relationship is dangerously on the edge – The Washington Post

It took only one week of bilateral engagement between the new U.S. administration and Mexico to throw the relationship into a tailspin.

Mexico is not the enemy. And neither should it be taken for granted or simply be an afterthought for U.S. national security and foreign policy interests. Trump, despite his evident disdain for Mexico, cannot press Control-Alt-Delete and dispense with a nation on his border. If you approach a relationship as complex as ours — which has so many moving parts and which profoundly affects so many facets of U.S. public policy and interests — with a chainsaw, as Trump has done, you are bound to cut off your own foot.

Mexico is certainly no military power and does not possess nuclear weapons, nor cannot it threaten or challenge Washington’s core interests. But it is not toothless, either. It can impose compensatory tariffs (as we did in 2009 to ensure U.S. compliance regarding the access of Mexican trucks). Moreover, Mexico deepened intelligence and counter-terrorism cooperation with the United States after the heinous terrorist attacks of 2001, convinced that we needed to enhance North American common domain awareness, and that by having Washington’s back, we would continue to foster a vision of two neighbors and partners intent on building a paradigm of common prosperity and common security.

Inside Europe’s Balkan Tinderbox – Bloomberg

It’s the kind of economic backdrop that helped propel Donald Trump to the White House, fueled the U.K.’s Brexit vote and lifted support for populist parties across Europe. But on a staging ground where Russian and western influences collided throughout the 20th century, disillusionment carries even greater dangers: blood-and-soil beliefs that triggered the Yugoslav wars are finding new life in the new world order.

As Trump belittles NATO and sends conciliatory signs to the Kremlin, Russian President Vladimir Putin is stepping in. He has pledged to strengthen defense cooperation with Serbia, a traditional ally, donating six used MiG-29 fighter planes to the army. He also offered the country to join a trade agreement that would be incompatible with Serbia’s plan to join the European Union.

“The Balkans have always been a cauldron of risks boiling over, and in this sense, the situation is not much different from the situation 20, 50 or 100 years ago,” said Konstantin Kosachyov, head of the Russian upper house of parliament’s foreign affairs committee and a former aide to Yevgeny Primakov, prime minister during the Kosovo conflict who aborted a U.S. trip when the bombing started.

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Goldman Asks Whether Country Risk Will Return to Europe – Bloomberg

Looming polls in France, the Netherlands and potentially Italy have reignited concerns about members’ commitments to the single-currency bloc just as Greece’s debt woes are back on the radar screen. Even so, when it comes to picking European equities, getting the sector right is likely to remain more important than choosing between countries, according to Goldman Sachs Group Inc. analysts led by by Lilia Peytavin and Peter Oppenheimer.

“Although dispersion of returns across countries remains far less important than across sectors, country risk has picked up recently and could increase further ahead of elections,” they wrote in a note published this week, adding that the situation could escalate if concerns surface over a tapering in the European Central Bank’s monetary stimulus.

Goldman Fund Manager Ignores Trump Noise to Bet on Dollar – Bloomberg

The dollar’s worst start to the year in more than a decade is just a blip on its path to further gains, according to Goldman Sachs Asset Management, which oversees more than $1 trillion.

The money manager is betting on the greenback and a steeper yield curve as a reflationary era takes hold in the U.S. and other countries, said Philip Moffitt, the Asia-Pacific head of fixed income who is based in Sydney. The dollar will continue to strengthen against the euro and yen as policy makers in Europe and Japan maintain quantitative easing while the Federal Reserve is set to raise interest rates about three times this year, he added.

“It’s just a bit of a pause in the new trend,” he said in a phone interview. “There’s been a profound shift away from fiscal orthodoxy and deflation threats to a more reflationary policy environment globally that’s seen most strongly in the U.S.”

Trump Pushes Dark View of Islam to Center of U.S. Policy-Making – The New York Times

A vision of Islam as inherently hostile has long flourished on the far right. Now President Trump has brought that view to the White House.

This worldview borrows from the “clash of civilizations” thesis of the political scientist Samuel P. Huntington, and combines straightforward warnings about extremist violence with broad-brush critiques of Islam. It sometimes conflates terrorist groups like Al Qaeda and the Islamic State with largely nonviolent groups such as the Muslim Brotherhood and its offshoots and, at times, with the 1.7 billion Muslims around the world. In its more extreme forms, this view promotes conspiracies about government infiltration and the danger that Shariah, the legal code of Islam, may take over in the United States.

Those espousing such views present Islam as an inherently hostile ideology whose adherents are enemies of Christianity and Judaism and seek to conquer nonbelievers either by violence or through a sort of stealthy brainwashing.

Where Is Jared Kushner? – The New York Times

Jared Kushner, where are you?

I ask that specifically, in terms of Trump’s inner circle and Bannon’s obviously greater sway. But I ask it in a broader sense as well. Where among Trump’s sanest advisers and the most reasonable Republicans in Congress is the degree of pushback that’s called for? Where are the sufficiently loud voices of dissent? Right now Trump has too many mum collaborators too content to hope for the best. I put Kushner in that pack.

If Kushner has sturdy principles or half the say that Bannon does, then explain the wording of the statement that the president put out on Friday in remembrance of the Holocaust. It failed to mention Jews, an omission so glaring that it incited a furor among Jewish Republican groups. And rather than apologize to them, the administration dug in, reprimanding them for being too touchy.

This had all the markings of Bannon, who deplores what he deems the politically correct coddling of minority groups. But it seemed to go against what Kushner holds dearest. He’s the descendant of Holocaust survivors, including a grandmother who helped to found the United States Holocaust Memorial Museum and once complained of America’s reluctance to take in Jewish refugees who were trying to avoid extermination.

Trump and Trade: Extreme Tactics in Search of a Point – The New York Times

Rejecting the premise of international accords is one thing. But displaying irrationality for effect, without a rational objective, can end in war.

War would be a uniquely bad idea. China, after all, has nuclear weapons. But perhaps what troubles the professor most is that Mr. Trump’s stand seems pointless. “One can justify provocative moves if they serve an important strategic goal,” Mr. Mearsheimer told me. “It is not clear what purpose these moves are designed to serve.”

And yet pointlessness is coming to define American foreign policy. Mr. Trump lacks an end game.

Security experts in the United States are baffled by Mr. Trump’s executive order abruptly barring entry by citizens from seven mostly Muslim countries, noting that it will ultimately put the security of the United States at risk by sending a uniform message of hostility to 1.6 billion followers of Islam.

In Mexico, government officials are scratching their heads about what Mr. Trump hopes to achieve by threatening to walk away from the trade agreement that has cemented bilateral relations for the last quarter-century. And who knows what Mr. Trump thinks the United States would stand to gain by leaving the World Trade Organization?

“What is a better Nafta?” asked Douglas Irwin, a trade historian at Dartmouth College. “He hasn’t said.”

US executives ride Donald Trump’s wave of uncertainty

Strategies for dealing with Mr Trump have diverged. Some companies have tried to negotiate their way out of his Twitter attacks, wielding facts and figures. Others have tried using their own “alternative facts”, repackaging planned investment and jobs as “new”, or have mixed fact with flattery.

One chief equated life under the new president to dealing with a “natural disaster”: no one in corporate America knew where he would strike next — or how it would hit their share price.

Requiem for an American dream

For 70 years, we have thrived in the embrace of an America that believed in freedom and stood up to evil. We have seen America get it badly wrong but we have never seen it ready to retreat from the fight. For all its mistakes, only the hard left considered it the world’s greater evil. All those years later, we are still quoting the inspirational rhetoric of the Kennedy inaugural speech and Martin Luther King’s words from the march on Washington. So yes, it was a place of low politics and high ideals. Now it is just a place of low politics.

Perhaps this too shall pass. We have had bad men in the White House before. But the angst so many feel about Trump goes beyond his views, or fear that he might start a war. Many feared Ronald Reagan. But his was an optimistic country whereas Trump’s America is a dark, fearful and insular place. Reagan’s was an America that would stand tall in the world; right now, the home of the brave is crouched in a corner. And while the most extreme fears — the talk of fascism — will surely prove overblown, it seems remarkable even to consider America in such terms.

Refugees are already vigorously vetted. I know because I vetted them. – The Washington Post

During nearly four years as an immigration officer with Homeland Security, I conducted in-person interviews with hundreds of refugees in 10 countries from 20 different nationalities. I have had countless refugees break down crying in my interview room because of the length and severity of the vetting process. From that experience and numerous security briefings, I can affirm that whoever wrote Trump’s executive order blocking refugees from the United States is wholly unfamiliar with the U.S. immigration system, U.S. laws, international law and the security threats facing our nation. I can’t speak for all refugee and asylum officers, but I can say that those who have been working in immigration for years from opposite ends of the political spectrum are appalled by these new policies.

The psychology of why Americans are more scared of terrorism than guns, though guns are 3,210 times likelier to kill them — Quartz

According to the New America Foundation, jihadists killed 94 people inside the United States between 2005 and 2015. During that same time period, 301,797 people in the US were shot dead, Politifact reports.

At first blush, these numbers might seem to indicate that Donald Trump’s temporary ban on immigrants from seven countries—a goal he said was intended to “protect the American people from terrorist attacks by foreign nationals admitted to the United States”—is utterly misguided.

But Trump is right about at least one thing: Americans are more afraid of terrorism than they are of guns, despite the fact that guns are 3,210 times more likely to kill them.

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Boom and bust returns as oil market loses its swing

Even in these hyper-partisan times, loathing for Opec still unites most Americans. Yet paradoxically, over four decades from the early 1930s to early 1970s, the United States was Opec, and much better at oil supply manipulation and price fixing than today’s Opec ever was.

Up until 1972, independent US oilmen and oil states like Texas acquiesced to heavy-handed government regulations over oil, imposing monthly quotas on producers. This was all done to vanquish chronic booms and busts that vexed the oil industry, consumers, investors, and officials.

This paradox bears directly on the epic, structural shift currently under way in the global oil market, with far-reaching repercussions not only for oil and energy, but also economic growth, security, and the environment. Wildly gyrating oil prices over the past decade mark the demise of Opec as an effective supply manager and the return of free crude oil markets. The resulting unwelcome and likely protracted return of boom-bust oil prices constitutes a major and under-appreciated financial, economic, and geopolitical risk to consumers, businesses, the incoming administration and governments worldwide.

TOP

CENTRAL BANKS & MONETARY POLICY

The Uneasy Politician: Janet Yellen Is Struggling to Fend Off the Fed’s Many Critics – WSJ

The political landscape has eroded for the Fed in recent years, and Ms. Yellen has struggled to confront the challenge.

Once revered as the masterminds of the U.S. economy, Fed policy makers now face the most intense political scrutiny in a generation. The path of monetary policy, which is emerging from a decade of basement-level rates, is being debated in the political arena in a way not seen since the Paul Volcker era in the 1980s.

The person leading the institution isn’t a politician—she’s a macroeconomist who spent most of her career at the Fed and in academia. Yet the task ahead of her, now that Donald Trump is president, might require a different set of skills. The new president thrust Ms. Yellen and the Fed onto the national political stage by criticizing them sharply during the campaign, and his election raised expectations that GOP bills to rein in the central bank could become law.

Fed Leaves Policy Rate Unchanged, Offers No Hint on When It Might Next Move – WSJ

The Federal Reserve said Wednesday it remains on track to gradually raise short-term interest rates this year and gave no hint about when the next increase might come. Following a two-day policy meeting, officials unanimously held their benchmark rate steady in a range between 0.50% and 0.75%, while noting in a statement some recent improvements in the economy.

Fed Nods to Improved Sentiment While Leaving Rates Unchanged – Bloomberg

Federal Reserve officials left interest rates unchanged while acknowledging rising confidence among consumers and businesses following Donald Trump’s election victory.

Fed Waiting to See Economic Results From Flurry of Trump Actions – Bloomberg

Like everyone trying to figure out where the U.S. economy is heading, the Federal Reserve is waiting to see what the whirlwind of executive orders and remarks from President Donald Trump mean for growth as they weigh the timing of the next interest-rate hike.

Investors Split Bets on Fed and Trump – WSJ

Investors are making two different bets on the markets and on the Federal Reserve. They can be right on only one of them.

The reason for the difference is investors have baked into their forecasts Mr. Trump’s stimulus and bid up markets in anticipation. The Fed has to be more cautious and can’t act based on policies that Mr. Trump and congressional Republicans haven’t even put together yet. It won’t be until Mr. Trump puts his signature to those policies that the Fed will be able to incorporate them into their forecasts and set policy appropriately.

Turkish Markets Stabilize as Central Bank Measures Bear Fruit – Bloomberg

The Turkish central bank’s unorthodox efforts to support the lira are breathing life into the nation’s battered markets even as some investors remain concerned about the effectiveness of the policy maker’s approach.

The lira has bounced from a record low reached earlier this month as the central bank’s efforts to tighten liquidity through daily funding operations pushed up funding costs to an almost five-year high. The currency’s volatility has also been damped by foreign-exchange swap auctions, while the nation’s bonds have jumped.

TOP

POSITIONING, INFLECTION, MARKET CALLS

The honeymoon is over: Wall Street is finally taking Trump literally – MarketWatch

The market this week is dealing with the realization that President Donald Trump means all the things he says. He really is a protectionist, really does think America needs to be protected from the world both economically and physically. He really does make policy without much care or thought to get details right, he really has recruited an honest-to-God terrible team, and it actually is kind of dangerous.

For months, Wall Street strategists scrambled to justify a post-election rally most didn’t see coming by claiming Trump’s proposed tax cuts and vague infrastructure spending plans would goose growth, while discounting his vow to impose trade barriers as not really serious. Ten days into his presidency, the president has alienated our third-biggest trading partner in Mexico while having his spokesman float vague proposals about 20% taxes the president himself says might apply to all imports.

We’re in Phase III of the Trump Rally – Bloomberg View

The post-election movements of U.S. stocks have been heavily influenced by policy. First they soared, then they traded in a narrow range. Now the markets have entered a period of greater volatility underpinned by a tug of war between the expectation of reflationary policies and the risk of stumbling into stagflation. Where we end up will be predominantly a political call.

Specifically, the implementation of a well-designed set of policies built around the president’s three headline initiatives — tax reform, deregulation and infrastructure — would unleash reflationary forces that would validate existing asset valuation, and could take them a lot higher if the rest of the world were also to improve its policy mix. If, however, the U.S. stumbled into protectionism and trade wars, the markets would give up more of the recent gains, and possibly even overshoot on the way down.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Gunmaker CEO: People are buying less gun ammunition – Business Insider

People seem to be easing up on their ammunition buying after the presidential election.

John Fischer, CEO of Winchester-maker Olin Corporation, said that gun retailers are seeing slower than expected sales of bullets and ammunition post-election.

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DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

Global M&A Is Having a Moment With Best Start to Year Since 2000 – Bloomberg

With pent-up demand from 2016 and the challenges of an unpredictable U.S. administration ahead, companies seeking to get deals done kicked off this year with a bang.

Global M&A activity amounted to $224 billion in January, the highest volume since 2000 in the first month of the year, according to data compiled by Bloomberg. For the first time since 2008, Europe topped North America on the list of target regions, as firms from Swiss drugmaker Actelion Ltd. to Italian eyewear maker Luxottica Group SpA agreed to be bought.

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TOP

TAXATION, HAVENS, TRADE, PROTECTIONISM

Here’s a Glimpse of the Global Trade Carnage From a U.S. Border Tax – Bloomberg

Whether or not a border tax proposed by Republican congressional leaders helps U.S. President Donald Trump pay for his Mexico border wall, it would have a radical impact on global trade patterns.

Deutsche Bank AG economists Robin Winkler and George Saravelos have calculated the amount of trade with the U.S. that countries stand to lose if they face a 20 percent penalty at the border. Mexico is the obvious biggest loser, but Canada and Asian manufacturing economies including Vietnam, Malaysia and Thailand would also be in line for a big hit.

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GE’s Immelt Talks Up Global Ties as Trump Pivots Away From Trade – Bloomberg

Jeffrey Immelt has spent his career riding the great wave of globalization. Now, he warns, the time of unbridled trade is over.

It’s not merely the rise of President Donald Trump, said Immelt, the long-time head of General Electric Co. A confluence of forces, both economic and political, have chipped away at the postwar order, presenting new challenges — and opportunities — for big business around the world.

17G02 - GE's sales from outside USA

Donald Trump’s Trade Posture Unnerves Deep-Red South Carolina – WSJ

Deep-red South Carolina has twice come out strongly for President Donald Trump, giving him a key win in last year’s Republican primary and delivering him a 14-point win in November over Hillary Clinton.

But some in the state, which relies heavily on foreign investment and free trade, already are questioning some of Mr. Trump’s early moves to withdraw from a Pacific Rim trade deal and erect new physical and economic barriers with Mexico.

“It means real trouble,” said Rep. Mark Sanford, a Republican and former governor who tentatively backed Mr. Trump’s campaign. “This is America stepping away from the table in a way that’s never been done since World War II.”

BMW CEO Pleads for Free Trade After Trump Border Tariff Threat – Bloomberg

BMW AG Chief Executive Officer Harald Krueger defended the importance of free trade, responding to recent remarks by U.S. President Donald Trump suggesting he’ll push for tariffs to protect American jobs.

BMW’s U.S. factory in Spartanburg, South Carolina, is the German manufacturer’s largest worldwide. The plant produces BMW’s popular sport-utility vehicles for global markets and is currently being expanded to an annual capacity of about 450,000 vehicles. Krueger said BMW is the largest exporter on a net basis from the U.S., with goods worth $10 billion per year, and employs 70,000 people (including indirect positions) in the country.

“Free trade has only made this success story in the U.S. possible — 70 percent of the automobiles produced here are exported,” Krueger said.

This Mexican Town Paid the Price for Trump’s Attacks on Ford – Bloomberg

It juts up from the vast arid plains of central Mexico, a hollow shell of steel beams that serves as a harbinger of the damage Donald Trump’s “America First” push could wreak on trade partners across the globe.

This was to be no ordinary auto plant. The Ford Motor Co. project, about four hours north of Mexico City, was hyped as the region of San Luis Potosi’s biggest private investment ever, a $1.6 billion facility that would have employed almost 3,000 people and added a half-percentage point to the state’s economic growth.

San Luis Potosi state still owes money on the land that it bought and donated to Ford. Now, it’s scrambling to regain control of the abandoned site and find a new tenant to pick up the pieces. That’ll be no easy feat as Trump floats the idea of a border tax of up to 20 percent and continues his Twitter attacks against American companies that ship jobs abroad. When Dearborn, Michigan-based Ford up and scrapped its project on Jan. 3, it became at least the second foreign company in Mexico to bow to the pressure.

“Ford was going to be the engine to make us grow faster,” said Gustavo Puente, head of the state’s economic development office. “The worst part has been the uncertainty about what Trump’s policies will do.”

Retailer-Backed Coalition Launches Campaign Against Border Tax – Bloomberg

A broad coalition of lobbyists for retailers like Wal-Mart Stores Inc., energy companies and the auto industry is launching a battle against a proposed U.S. tax on imports, aiming to sway both federal lawmakers and American consumers.

The Retail Industry Leaders Association and more than 120 other trade groups are backing the campaign, called “Americans for Affordable Products,” which will center on how a border-adjusted tax could increase prices for consumers. Part of the message: that export-focused companies may get their federal taxes drastically cut, maybe even to zero. Behind the scenes, the campaign will rely in part on lobbying by industry executives.

Super Bowl Advertisers Face New Risk of Accidentally Provoking Trump – Bloomberg

With an audience of more than 100 million tuning in Sunday, Super Bowl advertisers want their commercials to get attention — just not the wrong kind. That’s even more true in an era where everything from Skittles to avocados has been politicized.

None of the ads for this weekend’s game on Fox are expected to purposely press any political buttons, but advertisers want to avoid even accidentally offending anyone. That’s a tall order in a particularly tense moment in America, when CEOs are under pressure to take sides on major issues and the president routinely scolds companies on Twitter.

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FOREX, CURRENCY IMPACTS

Dollar Caught Between President Trump’s Tough Talk, Policy Plans – WSJ

Major currencies are posting their largest swings in months, highlighting a growing difficulty for investors and traders to discern the likely path of Trump administration policy.

The U.S. currency rallied in the weeks following Donald Trump’s election Nov. 8, reflecting in part investor expectations that deregulatory, tax-reduction and stimulus plans will push up U.S. growth. But since the New Year, the dollar has declined and volatility has picked up, driven by statements by administration officials that have been interpreted by investors as advocating a lower dollar.

The remarks, from Mr. Trump and some important advisers, have surprised some investors and pushed many traders to take a more-defensive stance. Few analysts expect quick clarity on Washington policies that could settle the dollar’s path, likely meaning more unpredictable trading in the months ahead.

The U.S. Dollar Gets an Injection of Political Risk – Bloomberg

Currency traders have long been used to analyzing political risk — just not so much when it comes to the U.S. dollar.

The greenback has been rattled this week by political concerns, spurring debate over the long-term implications of Trump administration policies and their impact on demand for assets denominated in the world’s reserve currency. It’s a relatively unfamiliar dynamic for those accustomed to looking at bond-yield differentials when attempting to gauge the dollar’s outlook.

“I’m not sure serious analysis is possible, and I don’t trust my gut instincts on something as far from the usual state of affairs,” said Kit Juckes, a global strategist at Societe Generale SA in London and a veteran of more than three decades of market research. Juckes was referring, in a note Tuesday, to the dollar’s reaction to President Donald Trump’s selective travel ban.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

Blackstone to Spend $500 Million Remaking Chicago’s Willis Tower – Bloomberg

Blackstone Group LP said it plans to spend $500 million to revamp Chicago’s Willis Tower as it tries to draw more tourists and office tenants to the country’s second-tallest building.

The makeover of the 110-story skyscraper will be the first major renovation in the tower’s 43-year history, according to a statement today by Blackstone. The investment is the largest the firm has made in one of its properties, real estate chief Jon Gray said in the statement.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Ray Dalio Makes Clients $4.9 Billion in 2016 as Paulson, Soros Falter – Bloomberg

Billionaire Ray Dalio’s Bridgewater Associates earned almost $5 billion for its clients last year while rivals George Soros and John Paulson lost money, according to a report by hedge-fund investor LCH Investments NV.

Endowment Gains Aren’t Enough for Schools Facing Rising Expenses – Bloomberg

Spending, which is often determined by three- or five-year averages of investment returns, is coming under increasing pressure as endowments struggle to keep up with historical results. Boards of trustees and investment committees are re-calibrating expectations for performance, said Paul Dimitruk, chairman of Partners Capital, which handles investments for clients including endowments and foundations.

Computer-driven hedge funds join industry top performers

Computer-based hedge funds have been admitted to a list of the all-time top 20 best performers for the first time in a sign that the dominance of traditional human investing is being radically challenged by technology.

DE Shaw, Citadel and Two Sigma, which all incorporate so-called “systematic strategies” that trade using computer algorithms, joined the closely followed annual list compiled by LCH Investments, the fund of hedge funds run by the Edmond de Rothschild group.

The 20 best-performing hedge fund managers of all time index measures the total dollars made for investors since inception. DE Shaw, which manages $27bn in assets, entered the list in third spot, while Ken Griffin’s Citadel joined at number five. Two Sigma came in 20th place.

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Dan Loeb: Trump will make hedge funds great again | Reuters

“This environment is undoubtedly better for active investing – just as active investing was considered to be on its deathbed,” Loeb wrote in a letter to clients of his $15 billion Third Point LLC Wednesday.

A shift from government monetary stimulus to measures that will increase personal and corporate spending will create lower correlations between various types of securities and greater dispersion of results within them, such as stocks, Loeb said.

This Is Who George Soros Trusts to Oversee His $25 Billion Family Office – Bloomberg

The move marks the seventh time Soros has appointed a new chief investment officer since the billionaire philanthropist decided to scale back risk following the departures of star traders Stanley Druckenmiller and Nicholas Roditi in April 2000. Early last year, Burdick replaced Scott Bessent, who oversaw investments for four years before leaving at the end of 2015 to start his own hedge-fund firm. Since then, Soros has become more involved in day-to-day trading at his family office, taking a series of bearish bets. The firm returned about 5 percent in 2016, a person with knowledge of the matter said.

“Her expertise at allocating risk across a diverse set of strategies makes her a perfect fit for the Soros family office,” said Nicolas Roth, co-head of alternative assets at Geneva-based investment firm Reyl & Cie, which invests in hedge funds. “O’Connor is a recognized multi-strategy platform.”

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USA ECONOMY DATA

ADP Says Companies in U.S. Added Most Workers in Seven Months – Bloomberg

Companies last month added the most workers to payrolls since June on pickups in services and manufacturing jobs, data from the ADP Research Institute in Roseland, New Jersey, showed Wednesday.

Manufacturing Accelerates in U.S. for a Fifth Straight Month – Bloomberg

Manufacturing growth accelerated in January for a fifth consecutive month on stronger orders and production that signal America’s factories are rebounding.

The Institute for Supply Management’s index rose to 56, the highest since November 2014, from 54.5 the prior month, data from the Tempe, Arizona-based group showed Wednesday. The median forecast in a Bloomberg survey of economists called for 55. A reading above 50 signals expansion.

U.S. Factory Activity Accelerated to Fastest Pace in More Than Two Years – WSJ

U.S. manufacturing activity rose to the highest level in more than two years in January amid rising demand and expectations for a friendlier business environment during the Trump administration.

U.S. to Reach 100 Weeks of Jobless Claims Below Key Level – Bloomberg

Filings for unemployment benefits in the U.S. are estimated to have dropped to 250,000 for the week ended Jan. 28, marking the 100th consecutive period below 300,000, a threshold economists see as indicative of a healthy labor market. That’s the longest streak since a 161-week stretch that ended in 1970, with companies reluctant to fire employees as it becomes tougher to find experienced workers to replace them.

U.S. car, truck sales downshift in January; Toyota falls 11 percent | Reuters

U.S. car and light truck sales slipped 1.8 percent in January as automakers pulled back on bulk sales to rental, government and business fleets and concentrated on more profitable retail sales to individual consumers.

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GLOBAL ECONOMY DATA

These Countries Are Struggling the Most to Support Their Retirees – Bloomberg

The world’s working-age population is shrinking faster than expected, leaving fewer people to support a growing number of seniors, according to the Bloomberg Sunset Index.

Conventional measures of old-age dependency calculate the ratio of people ages 65 and older with those of working age: 15 to 64. But many people stop working well before 65: Men in 66 percent of the 178 countries Bloomberg evaluated and women in 78 percent can begin receiving retirement benefits earlier.

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ENERGY COMPANIES, NOCs, INDUSTRY

Shell Profit Slips to Lowest Level in More Than a Decade – WSJ

Royal Dutch Shell PLC’s annual profit tumbled to the lowest level in more than a decade, reflecting a tough year for an industry hit hard by low oil prices.

Shell said Thursday its profit for 2016 on current cost-of-supplies basis—a measure similar to the net income that U.S. oil companies report—was $3.5 billion, down from $3.8 billion a year earlier. Profit for the fourth quarter fell to $1 billion from $1.8 billion a year earlier.

PDVSA Braces for Oil Production Drop as Default Looms Large – Bloomberg

The recent bump in oil prices isn’t enough to help Petroleos de Venezuela SA as it faces its fourth consecutive year of declining production.

The company’s crude output is expected to fall this year as it failed to raise cash for investments and after Venezuela agreed to cut 95,000 barrels a day for six months as part of a deal struck by the Organization of Petroleum Exporting Countries and other non-members to lift oil prices, analysts say. Even the recent increase in oil prices, following the cuts, aren’t enough to ease the company’s financial burden, Lucas Aristizabal, a senior director at Fitch Ratings, said.

17G02 - PDVSA production

Saudi Energy Minister Praises Trump’s Pro-Fossil-Fuel Policies – Bloomberg

President Donald Trump’s energy policies are good for the petroleum industry and Saudi Arabia sees no problem with growth in U.S. oil production as long as it’s in line with demand, Saudi Energy Minister Khalid Al-Falih said.

“President Trump has policies which are good for the oil industries,” Al-Falih said in an interview with the BBC. “He has steered away from excessively anti-fossil-fuel, unrealistic fossil-fuel policies.”

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ENERGY CRUDE OIL, OIL SANDS, SHALE

China Oil Trader’s Mideast Spree Contributes to Shake-Up in Global Supply Flows – Bloomberg

Crude purchases in one corner of the oil market by a Chinese trader are contributing to the shake-up of supply flows across the globe.

China National United Oil Co. last month bought at least 7 million barrels of Middle East crude for March loading as part of an assessment process operated by Platts used to set price benchmarks, data compiled by Bloomberg show. The spree was made at a time the region’s supply is shrinking as producers including Saudi Arabia shoulder a majority of global output curbs.

The purchases by the trader known as Chinaoil have helped raise the value of Middle East crude, which had already turned costlier relative to supplies from other regions on OPEC’s deal to cut production. The increase in the Dubai crude benchmark versus West Texas Intermediate and Europe’s Brent has spurred previously unviable flows of cargoes into Asia from areas such as the Gulf of Mexico and boosted shipments from West Africa and the North Sea.

U.S. May Export More Oil in 2017 Than Four OPEC Nations Produce – Bloomberg

U.S. crude exports are poised to surpass production in four OPEC nations in 2017 and may grow even more if President Donald Trump honors pledges to ease drilling restrictions and maximize output.

The world’s largest oil-consuming country could sell as much as 800,000 barrels a day of crude overseas this year, according to four analysts surveyed by Bloomberg. That’s more than OPEC producers Libya, Qatar, Ecuador and Gabon each pumped in December. The U.S. exported 527,000 barrels a day in the first 11 months of 2016, Energy Information Administration data show.

“Godzilla is even taller in person,” Vikas Dwivedi, senior analyst at Macquarie Capital (USA) Inc., said in a telephone interview from Houston. “U.S. production will be bigger than most people are expecting.”

U.S. Enjoys First-Ever Oil Trade Surplus With Latin America – Bloomberg

The U.S. for the first time is pushing more crude and refined petroleum products into Latin America than it brings back, signaling a change in the global trade map that could be tested if President Donald Trump introduces border taxes.

The scales tipped in favor of the U.S. in October, when it recorded a surplus of 89,000 barrels a day of petroleum, the first gain for the U.S. since records began in 1993, according to the U.S. Energy Information Administration. In November, the surplus grew to 184,000 barrels a day, the EIA said Tuesday. That compares to a 4.3 million barrel deficit in 2005.

The change comes as Latin America, led by Mexico, is importing unusually large amounts of gasoline as aging refineries fail to keep up with soaring demand. At the same time, the region’s output of heavy crude, once a staple for U.S. refiners, is declining just as Canada’s production is on the rise.

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ENERGY RENEWABLES, NUCLEAR

Saudi Arabia Plans the World’s Cheapest Power With Solar and Wind – Bloomberg

Saudi Arabia will award its first tender to build 700 megawatts of solar and wind energy in September, with the cost of power forecast to be the lowest in the world, Energy Minister Khalid Al-Falih said.

OPEC’s biggest oil producer plans to build 300 megawatts of solar plants in the al-Jouf area in northern Saudi Arabia and 400 megawatts of wind projects in nearby Tabuk, he said. Requests to qualify for bidding will be issued Feb. 20 and bids will be on April 17.

“The terms on renewable contracts will be motivating so that the cost of generating power from these renewable sources will be the lowest in the world,” Al-Falih said Wednesday at a press conference in Riyadh.

U.S. Wind, Solar Power Tout Rural Jobs as Trump Pushes Coal – Bloomberg

The renewable-energy industry has a message for the Trump administration about bringing energy jobs to rural communities: get out of the coal mines and look to the sky.

U.S. wind-farm developers and suppliers had more than 100,000 workers at the end of the year and the solar industry had more than double that, and they’re a significant source of employment in many of the rural red states that supported Donald Trump’s campaign. That compares to 65,971 coal mining jobs at the start of last year, according to the U.S. Energy Department.

Leaders of the solar and wind industries say the rural areas that missed out on economic growth under President Barack Obama are benefiting from the expansion of clean energy. And that growth isn’t driving the collapse of coal mining, according to Abigail Hopper, the recently hired chief executive officer of the Solar Energy Industries Association.

“I reject the idea that there has to be a winner and a loser,” Hopper said in an interview Tuesday at the trade group’s Washington headquarters. “These are good paying, local jobs that the solar industry is creating everywhere.”

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COMMODITIES BASE METALS, MATERIALS

Australia Delivers Record Trade Surplus on Coal-Iron Price Surge – Bloomberg

Australia’s trade performance closely correlates with demand from China’s old growth drivers like infrastructure and apartment construction. The government in Beijing’s stimulus program, together with cutbacks in coal output, has helped underpin a surge in coal and iron ore prices that’s now reflected in Australia’s sharply improved trade balance. However, the impact of a fall in coal prices since November remains to be seen.

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COMMODITIES AGRICULTURE & SOFTS

U.S. Bacon Supplies Fall to Record Low for December – WSJ

Demand for bacon depleted frozen pork-belly supplies in the U.S. to a record low for December, but the pork industry is taking steps to avoid any serious shortages.

The U.S. Department of Agriculture reported last week that pork bellies in cold storage fell to 17.7 million pounds last month, the lowest December inventory since records began in 1957. In comparison, more than 52.3 million pounds of pork bellies—the cut of the hog from which bacon is derived—remained in storage in December 2015.

Bacon Shortage? Calm Down. It’s Fake News. – The New York Times

Despite alarming headlines, and people taking advantage of any excuse to share bacon pictures, there’s no reason to panic. The frozen reserves are just that — reserves. There will be no rationing at breakfast, or for your burgers (or B.L.T.s, or quiche, or roasted bacon-wrapped rabbit, or apples and ice cream. Not even for your bacon footballs this weekend).

“To imply that there’s going to be some shortage of bacon is wrong,” said Steve Meyer, the vice president of pork analysis for EMI Analytics, in an interview as the bacon reports spread. “There’s plenty of hogs coming. There’s going to be plenty of bacon.”

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POLLUTION, CLIMATE & ENVIRONMENT

Pittsburgh Issues Boil Order for Water Affecting 100,000 People – WSJ

Roughly 100,000 people in Pittsburgh were unable to drink their tap water Wednesday without boiling it first because of concerns the city’s water authority failed to adequately disinfect part of its system.

Earth Day picked as date for science march on Washington – CNNPolitics.com

Just like protesters who have taken to the streets and airports — for the Women’s March and against the travel ban — scientists are planning their own march.

The group behind the March for Science in Washington just announced in a tweet that they will rally on April 22 — Earth Day.

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FRONTIER MARKETS

Southeast Asian Governments Are Ramping Up Spending – Bloomberg

Governments in Southeast Asia are ramping up spending just as central banks are putting away their policy-easing tools.

From Thailand to Malaysia, states are boosting budgets for railways, roads and other infrastructure projects to help bolster growth in a region facing uncertain global markets and the threat of a pullback in trade under U.S. President Donald Trump.

“Fiscal is going to be the main story this year,” said Selena Ling, an economist at Oversea-Chinese Banking Corp. in Singapore. “All of these countries don’t really have much room for cutting rates further. Their currencies may weaken more if rates are lower.”

Egypt’s Banks Attract $9 Billion in Inflows Since Pound Float – Bloomberg

Foreign holdings of Egyptian treasury bills have grown since the pound was floated three month ago, while renewed trust in the currency has sent billions of dollars into local banks.

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EMERGING MARKETS

India Plans to Create Oil Giant by Integrating State-Run Firms – Bloomberg

India is planning to create a state-owned oil giant through mergers to match the might of international companies and billionaire Mukesh Ambani’s Reliance Industries Ltd.

“We see opportunities to strengthen our central public-sector enterprises through consolidation, mergers and acquisitions,” Finance Minister Arun Jaitley said in Parliament while presenting the federal budget for the year beginning April 1. “It will give them the capacity to bear high risk, avail economies of scale, take higher investment decision and create more value for stakeholders.”

Predators of Russian Banking Track Their Prey in Economy’s Ruins – Bloomberg

Businesses that prey on the vulnerable and desperate by charging exorbitant interest have sidestepped authorities’ crackdown on risky practices, an approach that’s throttled credit and winnowed the ranks of banks. In contrast, Russia’s payday lenders posted 65 percent growth in 2016 and have more than tripled the volume of outstanding loans over the last two years.

That may be about to change. Patriarch Kirill, the spiritual leader of 150 million Russian Orthodox worldwide who’s also closely allied with President Vladimir Putin, condemned the microfinance organizations last week. Labeling them “bloodsuckers” and amoral predators, he called for Russia to create banks that will cater to the poor.

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CANADA, AUSTRALIA, NEW ZEALAND

How Trump Could Push the Bank of Canada to the Brink of QE – Bloomberg

If Trump and Congressional Republicans get everything they want — tax cuts, infrastructure spending, and a border-adjustment tax — what happens to Canada?

According to Deutsche Bank AG macro strategist Sebastien Galy, this trifecta of policies would force the Bank of Canada to cut rates and warn that quantitative easing might be needed to support the economy. The negative effect on exporters and competitiveness will likely dwarf any benefits stemming from the boost to U.S. aggregate demand.

Canada Manufacturing Sector Providing No Cure for Economic Ills – Bloomberg

Canada’s economy may be returning to health after an oil shock, but keeping up that momentum could hinge on whether manufacturers show more resilience.

The problem is that manufacturing output has gone sideways for more than two years and is a smaller part of the economy, making it harder to drive future growth. Manufacturing, like the country’s battered energy industry, may not be ready deliver a huge jolt of momentum.

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BREXIT, LONDON, UK ECONOMY

U.K. Factories Warn of Mounting Price Pressures From Weak Pound – Bloomberg

Smaller manufacturers are warning of increasing price pressures as the collapse in the pound since Britain voted to leave the European Union drives up the cost of raw materials.

Costs built at the quickest pace since 2011 in the three months through January, prompting factories to raise their expectations for output-price inflation to the highest level in more than two decades, the Confederation of British Industry said in a report published Thursday.

Germany Said to Let Most Banks Fleeing Brexit Keep Risk Models – Bloomberg

Germany’s financial regulator offered to allow most banks that move operations there because of Brexit to keep current models for setting capital requirements for as long as two years, people with knowledge of the matter said.

Brexit Law Passes First Test as May Warned of Fights Ahead – Bloomberg

U.K. Prime Minister Theresa May faces a battle with pro-European lawmakers in her Conservative Party after they grudgingly backed her plan to trigger Brexit negotiations by the end of March in its first test in Parliament.

The House of Commons on Wednesday approved by 498 votes to 114 to allow May to start divorce talks with the European Union. But with more parliamentary hurdles ahead, lawmakers warned their backing shouldn’t be mistaken for unconditional support to negotiate Brexit freely.

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EUROPE

Germany Inc. Touts Benefits of Trade After Trump Dumps on Euro – Bloomberg

With Donald Trump stepping up criticism of Germany’s colossal trade surplus, the country’s business leaders say there’s a problem with the new president’s “America First” policy: U.S. consumers and workers are the likely losers from many of his proposed restrictions.

Chief executive officers from BMW AG, Deutsche Lufthansa AG, and Siemens AG all emphasized the perils of protectionism in comments Wednesday, after a top Trump administration official criticized German trade policies. In an interview with the Financial Times, Peter Navarro, the head of the White House National Trade Council, called Germany’s surplus a sign of a “grossly undervalued” currency.

Europe’s Volatility Curve Is Getting Kinky Ahead of French Vote – Bloomberg

France’s election is making Europe’s markets nervous.

Traders, already wearied from the 2016 gyrations that followed Brexit, Donald Trump’s victory and Italy’s referendum, are pricing in a surge in volatility for April, when the first round of French voting will occur. The scandal threatening to unhinge Republican candidate Francois Fillon’s run for the presidency has raised concerns that Marine Le Pen, the populist who wants to withdraw France from the euro, may have less of a long shot at winning.

A New Front Opens Up Against Merkel’s Re-Election Bid – Bloomberg

Just as Angela Merkel gears up to campaign against populist foes, Germany’s Social Democrats are opening a different front against her re-election bid.

Within a week of nominating Martin Schulz as its lead candidate in the Sept. 24 national vote, the political outsider has given the country’s second-biggest party a clear bump in the polls. That’s shifting the race’s momentum after a year dominated by the surge of the smaller, anti-immigration Alternative for Germany in the wake of Europe’s refugee crisis.

Greece’s Deadlocked Debt Talks Unnerve Investors – WSJ

Investors are dumping Greek bonds, fearing that Athens will be unable to pay debt that comes due this summer.

The selloff comes as the Greek government is again at a standstill in negotiations with its creditors in the eurozone and at the International Monetary Fund. Athens needs to break the deadlock and secure more aid before about €6 billion ($6.5 billion) in debt has to be repaid in July.

Complicating matters is a scheduled IMF board meeting next week and a lack of clarity over what position the U.S.—which has the largest vote at the fund—would take under the Trump administration.

Merkel’s Challenger Leads Social Democrats to German Poll Boost – Bloomberg

Support for Germany’s Social Democrats jumped to the highest level in almost four years in a poll that underscores the party’s revival after it picked Martin Schulz as Chancellor Angela Merkel’s election challenger.

Top French Presidential Candidate François Fillon Battered by Growing Scandal – WSJ

Conservative leaders are trying to steady the campaign of François Fillon, once the clear front-runner to become France’s next president, as he faces a deepening criminal investigation.

Soros’s Foundation Fights Irish Bankers Over Home Foreclosures – Bloomberg

War crimes, attacks on media freedom in former communist states and prejudice against Europe’s Muslims. Now mortgages in Ireland have made it onto the ignominious list for George Soros’s campaigners.

The billionaire investor’s Open Society Foundations is opening a new front in the fight against evictions as the legacy of one of the worst real-estate market crashes in history continues to haunt Ireland. About one in 10 Irish mortgages is in arrears, or 4.5 billion euros ($4.9 billion) of missed payments, and foreclosures tripled over the last five years.

“Essentially, we are aiming to apply a human rights approach in repossession cases,” said Marguerite Angelari, senior attorney at Soros’s organization. “It looks pretty easy to get a repossession order in Ireland. Based on European Union law, it shouldn’t be.”

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CHINA

China labour unrest spreads to ‘new economy’

Chinese labour unrest extended its footprint last year as workforce tensions that have long beset the manufacturing and construction industries began to hit the fast-growing sectors on which Beijing has pinned its hopes for future growth.

While the 2,663 strikes and protests recorded in 2016 by China Labour Bulletin marked a fall of 112 on the previous year, the total was still almost double that of 2014, with the spread to new sectors partly offsetting a drop in manufacturing unrest.

“The new economy is rife with the old labour problems of the past,” said Keegan Elmer, a researcher at the Hong Kong-based workers’ rights organisation.

China sends its billionaires a chilling message

Until now, Hong Kong has been regarded as a haven from arbitrary police and judicial action, but global companies will have to reconsider this in the wake of Mr Xiao’s disappearance. In mainland China itself, his abduction will send a chilling message to the super-wealthy, who already believe Mr Xi has launched a war against them. It will also accelerate the pace of capital flight.

These Chinese Developers Are Making Their Creditors Anxious – Bloomberg

Chinese property developers investing in new ventures outside their core business are hurting their bonds. Purchases by highly leveraged Chinese developers unrelated to real estate raise the “knee-jerk question” of whether they might be having problems with their existing business, said Bryan Collins, a fixed-income portfolio manager at Fidelity International in Hong Kong.

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TRUMP WORLD

Donald Trump’s Longtime Doctor Says President Takes Hair-Growth Drug – The New York Times

The disclosure that Mr. Trump uses a prostate-related drug to maintain growth of his scalp hair, which has not been publicly known, appears to solve a riddle of why Mr. Trump has a very low level of prostate specific antigen, or PSA, a marker for prostate cancer. Mr. Trump takes a small dose of the drug, finasteride, which lowers PSA levels. Finasteride is marketed as Propecia to treat male-pattern baldness.

Dr. Bornstein said he also took finasteride and credited it for helping maintain his own shoulder-length hair and Mr. Trump’s hair. “He has all his hair,” Dr. Bornstein said. “I have all my hair.”

Judge Orders Trump-Owned Golf Resort to Pay Millions – The New York Times

The decision is the first court judgment against a company owned by Mr. Trump since he became president last month.

First Lady Melania Trump May Never Move Into the White House – Us Weekly

First Lady Melania Trump, who planned to move to the White House in mid-2017, may stay in NYC, a source reveals in the new issue of Us Weekly.

Trump Raised Record $6.5 Million in Weeks After Winning Election – Bloomberg

President Donald Trump’s campaign finished last year with $16.1 million in the bank after pulling in a record $6.5 million after he’d already won, Federal Election Commission filings show.

Trump is still actively soliciting donations via the campaign’s website and targeted text messages during a time when most new administrations pause fundraising and shift to governing. In the final 33 days of the year, Trump’s campaign hawked Christmas ornaments emblazoned with his campaign slogan, as well as other merchandise commemorating his December thank-you tour and January inauguration.

Trump Team Kept Gorsuch Secret With Back Roads and Military Jet – Bloomberg

Less than 48 hours before Neil Gorsuch was introduced as President Donald Trump’s Supreme Court nominee, he was traveling in secret down Colorado back roads to a military aircraft as part of a White House operation to keep his selection under wraps.

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ELECTORAL POLITICS

Former Exxon CEO Tillerson Confirmed as Secretary of State – Bloomberg

Rex Tillerson, the former Exxon Mobil Corp. chief, won Senate confirmation as secretary of state after lawmakers split mostly along party lines on U.S. President Donald Trump’s choice of an oilman with no government experience but a career negotiating billions of dollars of energy deals worldwide.

Anthony Scaramucci Won’t Get Announced White House Role, Official Says – The New York Times

Mr. Scaramucci will not become the president’s liaison to the business community after the sale of his investment firm to a Chinese conglomerate raised questions.

Donald Trump Urges Senate GOP to Scrap 60-Vote Rule for Court Pick – WSJ

The battle over Supreme Court nominee Neil Gorsuch began in earnest, with President Trump saying Senate Republicans should change rules requiring 60 votes should there be Democratic opposition.

Four Hurdles That Could Block Republicans’ Tax-Cut Ambitions – Bloomberg

Since his surprise victory, the president and Republican leaders in both chambers have described a tax overhaul as a top priority — a once-in-a-generation opportunity for meaningful change. Here’s a closer look at four of the hurdles they’ll have to overcome: Trump’s controversies; issues with the border tax; deduction and disputes; and opposition from Democrats.

Republicans Rebrand Obamacare Strategy From ‘Repeal’ to ‘Repair’ – Bloomberg

The repair language was discussed by Republicans during their closed-door policy retreat in Philadelphia last week as a better way to brand their strategy. Some of that discussion flowed from views that Republicans may not be headed toward a total replacement, said one conservative House lawmaker who didn’t want to be identified.

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DEMOGRAPHICS, INEQUALITY & POPULISM

Obamacare More Popular Than Ever, Now That It May Be Repealed – The New York Times

When the Affordable Care Act passed Congress in 2010, more Americans disliked it than liked it. And that was the pattern in public opinion for the next six years.

But since Donald J. Trump, who promised to repeal the law, was elected president, that long-held pattern has begun to shift. In a variety of recent polls, with questions asked in different ways, more Americans are now saying they favor Obamacare than oppose it.

The NBC News/Wall Street Journal poll has been tracking views of the health law since 2009. Its poll in January indicated for the first time that more people viewed the health law as a good idea than as a bad one.

17G02 - Obamacare pollA Third of Americans Are Still Struggling to Find Affordable Healthcare – Bloomberg

Uninsured rates in low-income families have fallen under the Affordable Care Act, yet more than a third of Americans continued to face difficulties paying their medical bills in 2016, a survey found.

Adults in poor families were among the greatest beneficiaries of the ACA, with uninsured rates falling as much as 17 percentage points since it became law in 2010, according to a study from the Commonwealth Fund, a private, New York-based research organization. Still, 34 percent of Americans said it’s difficult or impossible to find affordable health coverage.

Millennials Take Back Seat to Seniors When It Comes to U.S. Consumer Confidence – Bloomberg

In the Conference Board’s monthly consumer confidence gauge, Americans 55 and older have seen the biggest rise in optimism since the November election of President Donald Trump.

“Confidence continues to trend higher across age groups; post-election, most of the major gains have come from older Americans, though younger folks are also feeling broadly more confident through January,” Bespoke Investment Group said in a note.

Part of the reason for this could come from the fact that older Americans were more likely to have voted for Trump in the first place. Regardless, other surveys of investor confidence have also been shifting post-election. According to both UBS Group AG and Charles Schwab Corp., sentiment among their customers has improved since November.

“Investors cited Trump’s pro-business policies — including lower personal and corporate taxes – expectations for less regulation and increased infrastructure spending, which they believe will spur U.S. economic growth, as the primary sources of their optimism,” UBS said in a note.

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SCANDALS, LAWSUITS, FINES, REGULATORY

Facebook Loses $500 Million Virtual Reality Headset Verdict – Bloomberg

The virtual reality headset maker that Facebook Inc. bought in 2014 for $2 billion used stolen computer code, a jury said in awarding $500 million to ZeniMax Media Inc.

The case was over the Oculus Rift, the device that has put the social media giant at the forefront of the virtual reality boom.

Wednesday’s verdict in Dallas federal court is a rebuke to Facebook Chief Executive Officer Mark Zuckerberg, who isn’t a defendant but who told jurors in his first-ever courtroom testimony that it was important for him to be there because the claims by ZeniMax were “false.” An Oculus spokeswoman said the company will appeal.

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BANKS, BROKERS, INSURANCE, XCHANGES

Deutsche Bank Misses Estimates as Client Jitters Hit Trading – Bloomberg

Deutsche Bank AG fell the most in four months after earnings missed analysts’ estimates, in part because clients stepped back from doing business with the lender amid concern about its financial strength.

The stock slumped as much as 7.1 percent, the most since September, after revenue from debt trading, its biggest source of income, fell short of estimates and equity trading revenue unexpectedly declined.

Research analysts culled at top investment banks

The ranks of investment bank research analysts have fallen by one-tenth since 2012, as tighter regulation and falling profits have forced financial institutions to cull their brigades of economists, bond strategists and stock pickers.

The number of analysts working at the world’s 12 biggest investment banks fell to 5,981 last year, according to fresh numbers from Coalition, a data provider on the industry. That is down from 6,282 at the end of 2015, and 6,634 at the end of 2012, when Coalition began to collect the numbers.

The cuts are expected to deepen in the coming years. “We will have massive cost pressures in an industry that is not ready for it at all,” said Matthew Benkendorf, chief investment officer at Vontobel Asset Management. “They’ll have to gut things pretty hard.”

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SILICON VALLEY, UNICORNS, STARTUPS, VC

Who Will Pay for San Francisco’s Tilting, Sinking Millennium Tower? – Bloomberg

The building, which opened in 2008 and was touted as the most luxurious tower in San Francisco, became a beacon of the city’s burgeoning wealth, attracting tech millionaires, venture capitalists, and even the San Francisco 49ers retired quarterback Joe Montana.

The 58-story tower’s shine faded on May 10, 2016, when Agabian attended a homeowners association meeting and was informed that the building had sunk 16 inches into the earth and tilted over 15 inches at its tip and 2 inches at the base, according to suits filed by residents and the city of San Francisco. “You can imagine how distressed we were to know that, for one, our lifetime investment and savings are at risk,” she said. “And we have no idea whether or not there’s a fix to it, and if there is a fix to it, what it will entail.”

The building, meanwhile, continues to sink.

Why Silicon Valley’s Young Elite Won’t Invest in Art – Bloomberg

The difference between the tech industry and other sectors, dealers said, was that—while billionaire tech chief executive officers have begun to buy art along with the houses, planes, cars, and other objects that cement their status as members of the global rich—there has been little to no emulation from the lower, merely wealthy ranks.

Buell, the adviser, speculates that the rising ranks of tech managers will eventually get around to buying art, but “I think it’s going to take a little bit more time, I’ll be totally honest,” she said. “People in the art world are like ‘hurry up and spend money,’ but many of these guys are working their tails off,” she continued. “They’re just having their children and buying their first houses. I think the trickle-down will happen, but further down the line.”

Uber Offers Drivers $1 Each to Wipe Away Labor Threats Valued in Billions – Bloomberg

Uber Technologies Inc. is offering its drivers an average of about a dollar apiece to dispose of alleged labor code violations that their own lawyer said might be worth billions.

The ride-hailing company asked a state judge in Los Angeles Wednesday to approve a $7.75 million settlement to resolve claims stemming from the company’s refusal to give California drivers the protections and benefits of employees. The accord doesn’t require Uber to stop classifying the drivers as independent contractors.

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CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

Snap’s Chief Taps Into the ‘Right Now’ – The New York Times

While online identity previously emphasized everything anyone has ever done, with Snapchat “my identity is who I am right now,” Mr. Spiegel said in a 2015 video to describe the app.

Mr. Spiegel, 26, Snap’s chief executive, has since built a budding digital empire based on that initial unconventional insight — and has continued upending the tech industry with his different way of seeing the world, often with a touch of ego. Rather than accept the norms of the social networking ecosystem, he has stuck to atypical viewpoints on matters from mobile video to video-recording spectacles. And he has done all of this more than 350 miles away from Silicon Valley, in the sunny climes of Venice, Calif., where Snapchat is based.

“If you want to understand Snap, look at Evan Spiegel,” said Todd Chaffee, a partner at IVP, one of Snap’s three largest venture capital investors. “He is the visionary who drives that company.”

Facebook Revenue Jumps Again, Buoyed by Mobile Advertising – WSJ

Facebook recorded a 51% jump in fourth-quarter revenue, reflecting the still-vibrant mobile advertising business that has driven the social-media giant’s growth over the last four years.

Facebook Sales Top Estimates on Gains in Mobile Advertising – Bloomberg

Facebook Inc.’s fourth-quarter revenue climbed more than forecast, driven by advertisers’ continued push to reach consumers on mobile phones.

Facebook’s Loss in Court Doesn’t Dim Excitement Over Huge Growth – The New York Times

Sales for the social media giant grew 51 percent in the most recent quarter, and a $500 million jury decision should do little to hurt its bottom line.

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CLOUD, SILICON, ENTERPRISE / SAAS

Apple Said to Work on Mac Chip That Would Lessen Intel Role – Bloomberg

Apple Inc. is designing a new chip for future Mac laptops that would take on more of the functionality currently handled by Intel Corp. processors, according to people familiar with the matter.

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Apple to Expand Iconic NYC ‘Cube’ Store in Lift for Fifth Avenue – Bloomberg

Apple Inc. is more than doubling the size of its renowned store on Manhattan’s Fifth Avenue, bringing a boost to a retail corridor that’s suffered from Trump Tower congestion and persistently high vacancies in the past year.

The technology giant will expand the store — known for its distinctive glass cube — to 77,000 square feet (7,150 square meters) from about 32,000 square feet, Douglas Linde, president of Boston Properties Inc., said on the company’s earnings conference call Wednesday. The Boston-based landlord is co-owner of the General Motors Building at 767 Fifth Ave., which houses the Apple location.

Under Armour Sinks After Dismal Forecast Rattles Investors – Bloomberg

Under Amour — which has doubled its sales about every three years — is now having a hard time maintaining that rapid growth. While the company helped make moisture-wicking clothing a staple of gym-goers’ wardrobes, the increased popularity of athletic wear as everyday apparel has brought a raft of new competitors. The growth concerns caused Under Armour’s shares to slip 30 percent last year, and the stock is the most shorted in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

“This leaves very little optimism for 2017,” said Chen Grazutis, an analyst at Bloomberg Intelligence. Increased competition is “going to continue to weigh on the company.”

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Sony cuts annual profit view on movie business writedown | Reuters

Sony Corp on Thursday said it does not plan to sell its pictures business after suffering a $1 billion writedown, and instead aims to turn it around by adding sales channels and making more use of movie characters.

“We believe in long-term upside potential for pictures,” Chief Financial Officer Kenichiro Yoshida said at an earnings briefing, reiterating that Sony continues to regard the business as important to the group.

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AUTOS, ELECTRIC, SELF-DRIVING

Mercedes Jumps Out to Big Early Lead in U.S. Luxury-Car Race – Bloomberg

Daimler AG’s Mercedes-Benz jumped out to an early lead in the race for U.S. luxury auto sales supremacy, posting a record January after winning the crown last year for the first time since 2013.

Tesla Is Testing Self-Driving Cars on California Roads – Bloomberg

Tesla Inc. started testing four self-driving cars on California’s public roads late last year, a milestone for Chief Executive Officer Elon Musk who has promised to demonstrate an autonomous road trip from Los Angeles to New York by the end of 2017.

Tesla Drops ‘Motors’ From Name to Show It’s Not Just a Carmaker – Bloomberg

Elon Musk’s Tesla Motors Inc. said in a regulatory filing today that its new name is Tesla Inc. The decision to drop the word “Motors” was made to reflect the fact that Tesla, which merged with SolarCity Corp., another Musk company, is now in the solar business as well.

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AIRLINES, SHIPPERS, RAIL, TRANSPORTS

Amazon Plans $1.5 Billion Air Hub Near Cincinnati for Fleet – Bloomberg

Amazon.com Inc. is building a new air hub near Cincinnati to support a growing fleet of planes that can move inventory around the U.S. so online shoppers get their orders quickly.

Amazon will invest $1.49 billion to build the facility on 900 acres at Cincinnati/Northern Kentucky International Airport, said Mindy Kershner, an airport spokeswoman. The airport is located in Hebron, Kentucky, and is southwest of Cincinnati.

The e-commerce giant has 11 warehouses in Kentucky where inventory is stored, packed and shipped to customers ordering goods over the internet. The air hub will support the 16 planes transporting Amazon inventory around the country. Amazon last year signed agreements with two carriers to lease as many as 40 cargo planes to support its new Prime Air operation.

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HEALTHCARE, PHARMA, BIOTECH

Malaria superbugs threaten global health disaster

Drug-resistant malaria superbugs threaten a global public health disaster unless urgent action is taken to fight their spread in Southeast Asia, authors of new research have warned.

The mosquito-borne uber-parasites have taken hold in parts of Thailand, Laos and Cambodia and could sweep into India and on to Africa where most malaria deaths occur, their results suggest.

The conclusions will deepen concerns that growing resistance to the main artemisinin class of antimalarial drugs might reverse international success in almost halving estimated death rates from the disease over the past 15 years.

Sir Nicholas White, co-author of the research published on Thursday in The Lancet Infectious Diseases, warned that the last wave of drug-resistant malaria parasites to spread from Asia to Africa “killed millions”.

Obamacare’s Slow and Painful Death Puts Health Insurers in Limbo – Bloomberg

Obamacare looks like it’s going away. Until that happens, big health insurers aren’t sure what to do with it.

Republicans and President Donald Trump haven’t given details on how they’ll repeal and replace the Affordable Care Act. Uncertainty about the law, which covers millions of Americans, has left companies trying to figure out if they’re better off stuck in limbo or just quitting entirely.

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SCIENCE, NATURE, PSYCHOLOGY

Take Back Your Brain From Social Media – WSJ

Our brains are wired to “voraciously feed on information,” says University of California, San Francisco neuroscientist Adam Gazzaley, co-author of the 2016 book “The Distracted Mind.” So why let social media companies decide when they should tempt you? Turn off app notifications on your phone and computer, particularly ones for live video broadcasts, whose see-it-while-you-can alerts are designed to engender a fear of missing out.

To further stem the temptations, try what I call the digital Paleo Diet: Do serious work only on tech that was available before the year 2000. Make your main work devices completely off-limits to social media so distractions aren’t even possible. Don’t log into Facebook or even install the app. (For extra help, try the News Feed Eradicator for Facebook browser plugin.)

Hide your phone when you’re working, driving or doing important socializing. Studies have shown even the presence of a phone, on silent, can cause poor academic performance or less-meaningful face-to-face interaction.

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MISCELLANEOUS

Meet the Coach for Lady Gaga, Super Bowl Halftime Star – WSJ

Gaga’s halftime extravaganza represents the latest achievement of Mr. Lawrence’s nearly five-decade career. The 71-year-old coach began training Gaga 17 years ago, when she was a 13-year-old student on Manhattan’s Upper West Side named Stefani Joanne Angelina Germanotta. Mr. Lawrence’s nephew heard her singing in a clothing boutique he ran and recommended her to Don. During their first lesson, in Mr. Lawrence’s studio near 72nd Street and Broadway in Manhattan, Gaga’s mother sat outside in a waiting room. “Within three months, I knew this girl was going to be it,” Mr. Lawrence says.

Mr. Lawrence uses a classical technique associated with opera singers and has attracted an avid following among rock and pop’s top talent. His clients have included Mick Jagger, Axl Rose, Bono, Courtney Love and Christina Aguilera, among many others.

Will a Test for Brain Trauma Protect NFL Players—or End the NFL? – Bloomberg

While the NFL is backing Quanterix, a test for the living could present an existential crisis for the league. Discovering, for instance, that half its linemen show signs of CTE could starve the league of talent or force changes that make it unrecognizable to fans. And football isn’t alone: CTE presents similarly dire questions for hockey, soccer, and ultimate fighting, among other contact sports.

“The NFL may not realize they have awakened an animal here,” Hrusovsky says. “If they want it, they should invest like crazy in it. If they don’t really want it, holy moly, what have they created? Because I am not going to go away.”

Gallery Post Test

Numerous members expressed fears about the backlash they would face by snatching coverage from 20 million Americans. They have spent eight years promising to implement something better, and the Republican Party is still gawking at a whiteboard trying to figure out step one.

Numerous members expressed fears about the backlash they would face by snatching coverage from 20 million Americans. They have spent eight years promising to implement something better, and the Republican Party is still gawking at a whiteboard trying to figure out step one.

Numerous members expressed fears about the backlash they would face by snatching coverage from 20 million Americans. They have spent eight years promising to implement something better, and the Republican Party is still gawking at a whiteboard trying to figure out step one.

Daily Macro Links Thur Jan 26th – Dow 20,000

MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Wildest China Bond Market in Eight Years Lifts Hedging Needs – Bloomberg

China’s most-volatile corporate bond market in eight years and angst over monetary tightening are spurring demand for tools to curtail risks.

Thirty-day volatility on five-year top-rated corporate notes has spiked to the highest since early 2009, while one-year swap rates and 10-year government yields are both resuming the increases seen in December after falling earlier in the month. The volume of bond futures and interest-rate swaps both surged in the latest data.

“Hedging is becoming an increasingly important factor our clients consider when they give us funds to manage,” said Wang Ming, chief operating officer at Shanghai Yaozhi Asset Management LLP, which oversees 20 billion yuan of fixed-income securities. “Before, clients were more concerned about total return or how to mitigate credit risks. Now they want to hedge interest-rate risks.”

17F25 - turnover in China govmt bond futures contracts

China Said to Order Banks to Curb New Loans in First Quarter – Bloomberg

China’s central bank has ordered the nation’s lenders to strictly control new loans in the first quarter of the year, people familiar with the matter said, in another move to curb excess leverage in the financial system.

China Bond Yields Near Highest Level Since 2015 – WSJ

Government bond yields climbed after China raised rates on a tool the central bank uses to manage liquidity—a move some interpreted as an effective interest-rate increase.

China Policy Signals Perplex Market as Fidelity Says ‘Confused’ – Bloomberg

China’s frequent tweaks to monetary policy are puzzling market watchers.

In recent weeks, the People’s Bank of China has been using lending tools to both tighten and loosen liquidity as authorities seek to curb leverage while preventing a cash squeeze before the country’s biggest annual holiday starts on Friday.

“I’m very confused,” Tim Orchard, Fidelity International’s chief investment officer for Asia Pacific excluding Japan, said at a briefing in Hong Kong. “They’re trying to send signals the whole time and trying to micromanage the economy. That looks like a bit of a muddle sometimes when you’re looking at it from the outside.”

On Eve of Lunar New Year, China’s Bond Investors Are Hurting – Bloomberg

China’s embattled bond investors should expect little respite in the Lunar New Year.

Since an 11-quarter debt rally came to an abrupt end last month, losses have deepened and analysts are turning more bearish. The benchmark 10-year sovereign yield is heading for its biggest monthly increase since October 2010, rising to levels last seen during the height of the turmoil in December. And there is no sign of a let-up in policy makers’ efforts to weed out excessive leverage in the financial system

Gulf bonds booming as oil producers seek to fill budget holes

The rush of first-time bond sales in a previously untapped region has created a new centre of gravity in capital markets — pushing total emerging market debt sales to a new high. Excluding China, borrowers in emerging markets issued bonds worth $482bn in 2016, up 46 per cent on the year before.

With budget deficits in Gulf states still substantial, bankers say 2017 could break that record.

17F25 - GCC country external currency bond issuance

Looming Debt Limit Divides Trump’s Treasury and Budget Chiefs – Bloomberg

The two people President Donald Trump has chosen to manage the federal budget appear to be at odds over how to tackle their first assignment: handling the debt limit.

Treasury Secretary nominee Steven Mnuchin and Trump’s choice to head the Office of Management and Budget, Mick Mulvaney, face their first joint test in the run-up to March 16, when debt-limit suspension period expires. Failure to agree means investors in the world’s deepest debt market may grow uneasy about the potential of a U.S. default.

The debt limit is a favorite bargaining chip of Republicans who are concerned about the nation’s finances, which could worsen as Trump breaks with the party’s fiscal hawks in pushing tax cuts and more spending.

A co-founder of the conservative House Freedom Caucus, Mulvaney used his vote on the debt ceiling to push President Barack Obama’s administration for spending cuts, and the incoming OMB director recently downplayed the dangers of defaulting. That puts him out of sync with Mnuchin, who has cautioned against playing politics with the country’s debt.

Europeans Aren’t Taking Advantage of Low Rates to Manage Debt – Bloomberg

After years of record-low interest rates, Europeans never had a better opportunity to sort out their debt before the monetary-policy tide turns. The problem is, they haven’t taken it.

Almost two thirds of people in the region have not seized the chance to take on new loans, refinance or expand existing ones at lower borrowing costs, reduce payments or use savings to pay down debt, according to a survey by ING published Wednesday.

Capital One Racks Up Bad Cab Loans – Bloomberg

The value of Capital One Financial Corp.’s taxi medallion lending portfolio has declined for at least eight consecutive quarters, while the percentage of those loans deemed nonperforming has skyrocketed. More than half of the company’s cab loans are now considered in or near default, up from 39 percent last quarter. The credit-card issuer noted as early as April 2015 that medallion values had softened due to competition from Uber Technologies Inc.

Emerging-Market Countries Greet Trump by Rushing to Sell Debt – WSJ

Emerging-market governments are selling debt at close to a record pace this month, concerned about the prospect of rising U.S. interest rates and that President Donald Trump’s policies could bring uncertainty to the developing world.

17F25 - record pace for EM debt sales

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MACRO OP-EDS, DATA, INQUIRY AND THEORY

The Fragile Economic Foundation of Dow 20000 – WSJ

Britain is leaving the European Union, a protectionist is in the White House, the front-runner in France’s presidential election wants out of the euro. Yet paradoxically, investors have concluded the world is getting less risky, not more. The result: a hunger for shares that carried the Dow Jones Industrial Average over the 20000 mark Wednesday for the first time.

It is hard to explain this with economic fundamentals. They have improved since Donald Trump’s improbable election victory in November, but not by much. After the election, economists surveyed by The Wall Street Journal added 0.3 percentage point to expected growth over the next two years. At their December meeting, Federal Reserve officials barely touched their growth forecast. Analysts’ profit estimates haven’t changed much either.

What has changed is how investors assess the balance between upside and downside risks. Their worries about Mr. Trump’s protectionism or European populists’ growing threat to the euro are outweighed by the pro-business tilt of Mr. Trump’s cabinet picks; the prospect of more infrastructure spending and lower taxes, especially on profits; better bank profits from rising bond yields and lower odds of more negative central-bank rates; and the boost to U.S. oil producers since the Organization of the Petroleum Exporting Countries and several other countries agreed to trim production to prop up prices.

You People Made Me Give Up My Peanut Farm Before I Got To Be President – The Onion

Boy, times sure have changed, haven’t they? I couldn’t help but notice that the current occupant of the White House owns more than 500 companies, has business interests across the Middle East and Asia, and owes hundreds of millions of dollars to banks he is now responsible for regulating. It seems a touch unfair that a bigger fuss was made about my little peanut operation than all his office towers, hotels, and golf courses combined. All I had was a farm, you know? A small, precious farm.

Seriously, it was just a few fields and a warehouse, and you idiots still appointed a special prosecutor and spent six months investigating it.

Trump Hotels, Amid Calls to Divest, Instead Plans U.S. Expansion – Bloomberg

Only days after Donald Trump took the oath of office, the head of his hotel-management company outlined hopes for an ambitious expansion across the U.S., raising new questions about potential conflicts between his business and the presidency.

Trump Hotels Chief Executive Officer Eric Danziger suggested the company’s broad U.S. ambitions while saying it shelved plans for expansion in China, where the president’s comments have already led to rocky diplomatic relations.

“There are 26 major metropolitan areas in the U.S., and we’re in five,” Danziger said after a panel discussion Tuesday at the Americas Lodging Investment Summit in Los Angeles. “I don’t see any reason that we couldn’t be in all of them eventually.”

What the world hears from Donald Trump

The problem for others — perhaps more so for traditional allies than adversaries — is that Mr Trump cannot be ignored. The US is still the world’s sole superpower. Its role as the linchpin of the geopolitical order cannot be wished away. Washington is the reference point for everyone else’s foreign policy.

So the lights have been burning late as policymakers around the world deliberate on how to handle a president with so a slight a grip on history or strategic realities. A first take from friendly foreign ministries is that Mr Trump’s economic nationalism threatens to fracture the open international trade system. And his eagerness to bully Mexico holds a serious warning for erstwhile friends.

Indifference towards longstanding security alliances invites others to step into the vacuum — Russia in eastern Europe and Middle East, China in East Asia. Once-secure allies now feel vulnerable. How long before Japan, say, considers its own nuclear deterrent?

Trump Has 1.3 Billion Reasons Not to Pick a Fight With China – Bloomberg

China has a population of 1.3 billion and its dominant state-run media seeks to burnish the image of the Communist Party. In that environment, Trump’s hectoring could stoke nationalism in a year where China’s leaders are already working hard to instill public pride and stress unity.

If Trump’s rhetorical blasts fan Chinese patriotism it could give Xi less room to negotiate without appearing weak at home, raising the odds he retaliates. That’s even as China’s leaders generally are careful to try and prevent nationalism taking on a life of its own, in case it sets off broader social unrest.

“If the Chinese people perceive Xi Jinping to be bullied by Trump, they will expect a very strong response,” said Paul Haenle, a China adviser to former President George W. Bush and now director of the Carnegie-Tsinghua Center for Global Policy in Beijing. “If it gets really bad, you could see nationalism kick in” like the anti-Japan protests of late 2012.

U.S. falls from full to flawed democracy – NY Daily News

The Democracy Index has downgraded the U.S. from a full democracy to a flawed one, marking the first time the nation has fallen into the lower ranking.

Other flawed democracies include Botswana, India, Japan and Ghana, while much of Western Europe stayed in the full democracy category.

Americans’ growing distrust in their government, elected officials and the media prompted the demotion, the Economist Intelligence Unit — the UK-based economic firm that produces the annual index — wrote in a Wednesday report.

Trump Will Need Imports for His Domestic Priorities – Bloomberg View

His infrastructure program and anti-trade proposals don’t go together. With the exception of energy, the U.S. imports significant amounts of the commodities it consumes. According to the U.S. Census Bureau, as of November 2016, the U.S.’s top three trading partners were China (15.8 percent), a major supplier of steel, zinc and aluminum; Canada (15 percent), which supplies wood, machines, engines and pumps, and Mexico (14.5 percent), a source for machinery, mineral oils and plastics.

Copper is essential in the electrical, construction and industrial machinery sectors. In 2015, the U.S. imported 756,000 metric tons of refined copper and exported only 95,000 metric tons, according to the Department of the Interior and the U.S. Geological Survey.

Trump’s executive order to build a US-Mexico border wall attacks a vanishing issue — Quartz

In reality, undocumented immigration from Mexico to the US is less of an issue that it has been in over 40 years. And more recently, due to a growing Mexican economy, the number of people attempting to cross the US-Mexico border fell precipitously over the last 15 years. Since 2007, the total number of Mexican immigrants in the US has actually been on the decline.

17F25 - US apprehensions of non-documented immigrants by nationality
How Donald Trump’s Wall Would Measure Up to World’s Barriers – WSJ

President Donald Trump signed an executive order Wednesday directing federal officials to construct a “physical wall” on the Mexican border. The wall would rival some of the most well known barriers around the world.

America’s New President Is Not a Rational Actor | Foreign Policy

People who opposed [the Trump] administration’s policies should take heart, because his conduct so far will make it harder to proceed as he seems to want.

For starters, Trump made zero effort to exploit the honeymoon period traditionally accorded a new president by the press, didn’t try to drive a wedge or two in the large coalition that opposes him, and declined to appeal to a broader sense of national unity. Thus far he has played entirely to his base, painting a dark portrait of a crumbling America where everybody except Trump himself is untrustworthy, corrupt, deceitful, and not to be heeded at all. The result: a president who lost the popular vote by 2.5 million people is even less popular now, and he enters office with the lowest approval ratings of any new president in history.

…Even more important, Trump seems to be blithely unaware that the United States is engaged in a serious geopolitical competition with China, and that this rivalry isn’t just about jobs, trade balances, currency values, or the other issues on which he’s fixated. Instead, it is mostly about trying to keep China from establishing a hegemonic position in Asia, from which it could eventually project power around the world and possibly even into the Western hemisphere itself. It’s easier to favor “America First” when no other great power is active near our shores, but that fortunate position may not last if China establishes a position in its neighborhood akin to the one the United States has long enjoyed in its backyard. With its surroundings secured, China could forge alliances around the world and interfere in distant regions — much as the United States has done since World War II — including areas close to U.S. soil. This development would force Americans to worry a whole lot more about defending our territory, something we haven’t had to worry about for more than a century.

Kyle Bass Calls Trump ‘Gasoline’ on Smoldering Fire in China – Bloomberg

Hedge fund manager Kyle Bass likened President Donald Trump’s trade and tax policies to gasoline — hastening an economic restructuring in China while stimulating capital investment and growth in the U.S.

China has “recklessly built a system that’s going to need to restructure and that just so happens to be metastasizing right when Trump becomes elected,” Bass told Bloomberg Television’s Erik Schatzker on Wednesday. “This is a fire that’s been smoldering and it’s now starting to burn, and Trump is just more gasoline.”

Homeland Security Secretary Has Said Border Wall Alone Will Not Work – The New York Times

John F. Kelly said that a wall would need to be backed up by far more sweeping measures. “It has to be a layered defense,” he said during his confirmation.

Trump faces ‘alternative facts’ from Putin in the Middle East

President Donald Trump and his team talk about what they are pleased to call “alternative facts”. The master of the Kremlin he so admires, President Vladimir Putin, is busy with his friends creating alternative facts across the Middle East.

“Putin intends to start the post-Obama chapter in Syria on his terms, confronting the new American administration with the fait accompli of [Assad] regime victory in Aleppo,” writes Fabrice Balanche of the Washington Institute for Near East Policy. “On the diplomatic front, the new Turkey-Russia-Iran alliance threatens to marginalise other outside actors.”

Trump’s First Foreign Policy Crisis: Balkan War Drums Beat Again | Observer

In the decade-and-a-half of war in far-flung places since the 9/11 attacks on our country, it’s easy to forget how much time Western spies, soldiers and diplomats spent in the 1990s trying to save the Balkans from themselves. After Yugoslavia collapsed in 1991, leaving violence and turmoil in its wake, it fell to NATO, led by the United States, to sort out that ugly mess. Now, a generation later, the temporary solutions Washington crafted are coming apart, and war may be returning to Europe’s unstable Southeast.

George Orwell’s ‘1984’ Is Suddenly a Best-Seller – The New York Times

The dystopian novel, published in 1949, about tyranny and the suppression of critical thought, has found a fresh audience in the United States.

Germany to abolish law on insulting foreign leaders — just in time for you know who – The Washington Post

It is hard not to see symbolism in the timing. The Justice Minister of Germany announced on Wednesday that his government would scrap a long-standing law prohibiting Germans from insulting foreign heads of state. He said the law was “outdated and unnecessary.”

As such, the symbolic timing of the move is likely more important than the move itself. In other words: Donald Trump became a foreign head of state five days ago.

High Tariffs on China, Mexico Wouldn’t Guarantee U.S. Jobs – WSJ

Even if Donald Trump hits large U.S. trading partners such as China and Mexico with tariffs, diminishing the allure of their exports, there are several countries with cheap labor that could step in to fill the void.

Trump’s Impulses Now Carry the Force of the Presidency – The New York Times

Impetuous and instinctive, convinced of broad but hidden plots to undermine him, eager to fight and prone to what an aide called “alternative facts,” President Trump has shown in just days in office that he is like few if any occupants of the White House before him.

He sits in the White House at night, watching television or reading social media, and through Twitter issues instant judgments on what he sees. He channels fringe ideas and gives them as much weight as carefully researched reports. He denigrates the conclusions of intelligence professionals and then later denies having done so. He thrives on conflict and chaos.

For a capital that typically struggles to adjust to the ways of a new president every four or eight years, Mr. Trump has posed a singular challenge. Rarely if ever has a president been as reactive to random inputs as Mr. Trump. Career government officials and members of Congress alike are left to discern policy from random Twitter posts spurred by whatever happened to be on television when the president grabbed the remote control.

Brexit as a game of Chicken

Chicken is an idiotic game, whose players have little to gain and much to lose. But Chicken teaches us that you can gain an advantage by limiting your own options. Imagine detaching your steering wheel and flamboyantly discarding it as you race headlong towards your opponent. Victory would be guaranteed. Nobody would drive straight at a car that cannot steer out of the way. But here’s a worrisome prospect: what if, as you hurl your own steering wheel out of the window, you notice that your rival has done exactly the same thing?

All this matters because both the UK and the EU are doing their best to give the impression that they’ve thrown their steering wheels away. Control of immigration is non-negotiable, says Theresa May. Fine, says the EU — in that case membership of the single market is out of the question. Fine, says May: we’re out. Don’t let the door hit you as you leave, says the EU.

It’s easy to see why both sides are behaving like this — it’s the logic of Chicken. But the eventual result may be something no sane person wants: a car crash.

Why Germany needs to accelerate into the digital fast lane

The question urgently being asked is this: as the pillars of German success — its cars and machines — are increasingly mediated by software and digital technologies, could the country’s relative weakness in IT become a fatal flaw? Could the traditional industries that Germany dominates, such as chemicals, mechanical engineering and logistics, now face the same kind of disruption seen in music, media and travel? The angst has only intensified with Google’s recent forays into cars, energy and robotics, three areas Germany excels in.

The issue clearly exercises Angela Merkel, the country’s chancellor. “We have the opportunity for a digital economic miracle,” she said at a summit in 2014. “The question is whether or not it will happen in Germany.”

17F25 - the biggest companies in Germany are from the old economy

Whispers of ‘Grexit’ start again – POLITICO

Halfway through its seventh year on financial life support from its European partners, doubts are again mounting over not only the stability of Greece’s government but its commitment to the long list of demanding reforms involving its labor force, state-owned businesses and banking sector. The country is in a race against time to make sure it can raise money on capital markets on its own by mid-2018 — the end date of its current €86 billion bailout package.

As Greece lurches forward with the difficult reforms, the Eurogroup of EU finance ministers is expected to conduct a “stocktaking” of the Greek program on Thursday at a meeting in Brussels.

But in dozens of conversations with shopkeepers, business owners, students and the unemployed in Athens in recent days, it’s clear that the Greeks’ disappointment with Tsipras’ broken or undelivered promises is overwhelming.

Why ISIS Is Winning the Social Media War | WIRED

Today the Islamic State is as much a media conglomerate as a fighting force. According to Documenting the Virtual Caliphate, an October 2015 report by the Quilliam Foundation, the organization releases, on average, 38 new items per day—20-minute videos, full-length documentaries, photo essays, audio clips, and pamphlets, in languages ranging from Russian to Bengali. The group’s closest peers are not just other terrorist organizations, then, but also the Western brands, marketing firms, and publishing outfits—from PepsiCo to BuzzFeed—who ply the Internet with memes and messages in the hopes of connecting with customers. And like those ventures, the Islamic State hews to a few tried-and-true techniques for boosting user engagement.

But the most significant way in which the Islamic State has exhibited its media savviness has been through its embrace of openness. Unlike al Qaeda, which has generally been methodical about organizing and controlling its terror cells, the more opportunistic Islamic State is content to crowdsource its social media activity—and its violence—out to individuals with whom it has no concrete ties. And the organization does not make this happen in the shadows; it does so openly in the West’s most beloved precincts of the Internet, co-opting the digital services that have become woven into our daily lives. As a result, the Islamic State’s brand has permeated our cultural atmosphere to an outsize degree.

This has allowed the Islamic State to rouse followers that al Qaeda never was able to reach. Its brand has become so ubiquitous, in fact, that it has transformed into something akin to an open source operating system for the desperate and deluded—a vague ideological platform upon which people can construct elaborate personal narratives of persecution or rage. Some individuals become so engrossed in those narratives that they scheme to kill in the Islamic State’s name, in the belief that doing so will help them right their troubled lives. Here in the US, the group’s message has found a foothold among people who map their own idiosyncratic struggles and grievances, real or imagined, onto the Islamic State ideology. These half-cocked jihadists, while rare, come from all walks of American life, creating a new kind of domestic threat—one that is small in scale but fiendishly difficult to counter.

Why Amazon beating Netflix to a Best Picture Oscar nomination matters – The Verge

Awards glory has as much to do with visibility as it does quality filmmaking, and Amazon has positioned itself as a distributor Hollywood can work easily with. Unlike Netflix, whose insistence on simultaneous streaming release for its films has rankled theater chains, Amazon’s more lax policy allows its movies to show in theaters before they debut online.

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CENTRAL BANKS & MONETARY POLICY

Top Forecaster Says Fed to Hike Rates Every Quarter in 2018 – Bloomberg

The Federal Reserve is about to go rapid-fire on interest rates, boosting them in the second half of this year and following that with a rise in every single quarter of 2018, according to BNP Paribas SA, which expects the tightening to strengthen the dollar and push gold down toward $1,000 an ounce.

New Keynesians, You Were Right All Along, ECB Economists Argue – Bloomberg

Even though inflation in the 19-nation currency bloc has undershot the official goal for almost four years, unconventional monetary policy prevented a worse slump and will continue to support expectations for future consumer-price growth, according to the paper edited by ECB economists Matteo Ciccarelli and Chiara Osbat.

“Unconventional monetary-policy measures are effective in mitigating the downside risks to price stability, curtailing risks of deanchoring, and expanding aggregate demand,” the authors write. “Public belief in the ECB’s commitment to keep the annual rate of inflation below but close to 2 percent has remained intact.”

How Team Trump Sees Unemployment and Why It Matters – Bloomberg

Donald Trump has long cast a skeptical eye on the official unemployment rate — and this week, both Treasury Secretary nominee Steven Mnuchin and White House Press Secretary Sean Spicer have clarified what the president might mean when he says the jobless figure isn’t real.

While they’ve stopped short of defending Trump’s most extreme claims, Mnuchin and Spicer have upheld his broader point that headline unemployment understates labor market slack. That’s important, because team Trump’s insistence that weakness persists could affect how they view fiscal policy proposals as the new administration takes office.

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POSITIONING, INFLECTION, MARKET CALLS

Canada Stocks Touch Record, Joining Global Equity Surge – Bloomberg

Canadian stocks touched a record, joining a global rally in stocks amid expectations of stronger global growth as U.S. President Donald Trump tries to shift the U.S. economy into higher gear.

Trump’s Tweets Aren’t Stock Tips – Bloomberg Gadfly

A conventional wisdom is taking root that Trump’s tweets move stock prices in predictable ways, and a growing number of outlets will alert investors when Trump tweets about a company. The Bloomberg terminal is one, and so are apps from Trigger Finance Inc. and IFTTT Inc.

There’s just one problem: It’s not at all clear that Trump’s tweets have any predictable effect on stock prices.

Investors pull most cash from U.S. stock funds since election: ICI | Reuters

Investors sold U.S.-based domestic stock funds at the fastest pace since equities leapt following the presidential election, Investment Company Institute data for the latest week showed on Wednesday.

Vanguard Growth ETF Assets Tumble as Value Rotation Accelerates – Bloomberg

Bank of America Corp. predicted investors would shift away from growth stocks in favor of value names this year as part of its list of “violent rotations” to expect in financial markets this year. On Tuesday, withdrawals from Vanguard’s growth exchange traded fund, ticker VUG, reached $900 million, the second most in its 12 year history. With $23 billion in assets, it’s the second-biggest such product in the world.

U.S. Rally Is the Envy of Stock Markets Worldwide – WSJ

U.S. stock markets have rallied since Donald Trump’s election victory more than two months ago, rising on improved economic data and hopes Mr. Trump can stimulate the economy. But most major stock markets around the globe haven’t enjoyed the same postelection bump, and many remain far below their record levels.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

The Dow Hit 20,000. Now What? – The New York Times

Yes, it is just another number. But in an industry that lives and dies by the power (seen and unseen) of sums in all their varieties, that the Dow Jones industrial average closed above 20,000 on Wednesday was enough to give even the most hardened stock market watchers reason to smile. The Dow finished the day at 20,068.51.

Dow at 20,000 Shows Price of Everything, Value of Nothing – Bloomberg

Bill Gross might be right. There are good reasons that the 2.6 percent level on 10-year Treasuries is much more important than Dow 20,000.

Time and time again analysts, investors and traders have reminded us why words such as “antiquated”, “anachronism” and “relic” are so often applied to the 121-year-old index. As Bloomberg Intelligence’s Eric Balchunas puts it, the gauge was designed before aspirin was invented.

Lockheed Martin 2017 Guidance Falls Short – WSJ

Lockheed Martin reported forecast-beating fourth-quarter earnings, though its initial 2017 profit guidance fell short of expectations and triggered a drop in shares of the world’s largest defense company by revenue.

No Turnaround in Sight for Starbucks – WSJ

Starbucks is facing slowing growth, a management shake-up and aweak stock price ahead of Thursday’s earnings report.

TOP

TAXATION, HAVENS, TRADE, PROTECTIONISM

Trump Advances Border Wall to Start Immigration Crackdown – Bloomberg

President Donald Trump acted on two of the most fundamental — and controversial — elements of his presidential campaign, declaring on Wednesday that he would build a wall on the border with Mexico and greatly tighten restrictions on who can enter the U.S.

Texas Border Cities React to Donald Trump’s Border Wall – WSJ

Some officials and residents in border states that have benefited from stronger ties with Mexico reacted with concern over the potentially negative impact building a wall could have on regional economies, while expressing support for enhanced security along the border.

Texas GOP congressman slams Trump plan for border wall – The Washington Post

The Republican representative whose district includes more miles of U.S.-Mexico border than any other came out against President Trump’s new executive action ordering the “immediate construction” of a border wall to block undocumented immigrants from entering the United States.

“Building a wall is the most expensive and least effective way to secure the border,” Rep. Will Hurd (R-Tex.) said in a statement late Wednesday.

“Each section of the border faces unique geographical, cultural, and technological challenges that would be best addressed with a flexible, sector-by-sector approach that empowers the agents on the ground with the resources they need.”

Trump Moves Shake Deep U.S.-Mexico Relationship – WSJ

President Donald Trump’s moves to erect new physical and economic barriers between the U.S. and Mexico are shaking up longstanding commercial and diplomatic ties between the two countries that could affect everything from manufacturing supply chains to efforts to combat the flow of illegal drugs.

Latin American Leaders Vow to Resist Trump’s ‘Protectionism’ – Bloomberg

Leaders from across Latin America said they’ll unite to confront the threat posed by “protectionist” U.S. policies, just hours after President Donald Trump took the first step to build a wall between the U.S. and Mexico.

Mexico’s President Rejects Wall; Is ‘Considering’ Scrapping US Trip: AP – Bloomberg

Mexico’s president is “considering” canceling next week’s visit to Washington following President Donald Trump’s order to begin construction of a wall between the two countries, a senior official said.

In a nationally televised speech late Wednesday, President Enrique Pena Nieto condemned the U.S. decision and repeated that Mexico would not pay for the wall despite Trump’s avowals that it would.

“I regret and reject the decision of the U.S. to build the wall,” he said. “I have said time and again, Mexico will not pay for any wall.”

Facing Trump, Mexicans Think the Unthinkable: Leaving Nafta – The New York Times

Many free traders in Mexico are concluding their country could have more to lose from long haggling with Donald Trump and uncertainty than from opting out.

Mexican Cement Maker Poised to Profit From Trump’s Wall – Bloomberg

President Donald Trump’s plans to build a Mexican border wall are boosting the prospects of builders and material suppliers from Alabama to Frankfurt, but there may be no bigger winner than a giant cement maker based in Mexico.

Cemex SAB would be one of the companies best-positioned to profit from a wall that could cost $15 billion or more as it has operations along both sides of the border. Cemex’s share price jumped as much as 2.6 percent Wednesday and is the best performing among its peers this year, with its stock up 18 percent as of Tuesday, according to Bloomberg Intelligence analyst Sonia Baldeira. The outlook for its U.S. business has also been aided by Trump’s plan to spend as much as $500 billion on roads, bridges, tunnels and airports.

EU Tells Trump Reviving Borders, Trade Barriers ‘Doomed to Fail’ – Bloomberg

The European Union’s trade chief rejected Donald Trump’s protectionist views, vowing to press ahead with market-opening deals a day after the U.S. president abandoned a 12-nation trans-Pacific trade agreement.

“Those who, in the 21st century, think that we can become great again by rebuilding borders, re-imposing trade barriers, restricting people’s freedom to move — they are doomed to fail,” EU Trade Commissioner Cecilia Malmstrom said on Tuesday at a Bruegel conference in Brussels. “Building a wall is not the answer.”

Trump’s Move to Dump TPP Bucks Growing Dependency on Asia: Q&A – Bloomberg

U.S. President Donald Trump’s decision to withdraw from the Trans-Pacific Partnership, one of the largest proposed regional trade blocs in history, has dealt a blow to some of Asia’s biggest economies.

The seven Asia-Pacific signatories to the TPP — Japan, Vietnam, Malaysia, Singapore, Australia, Brunei and New Zealand — had collective two-way trade with the U.S. of almost $400 billion in 2015, about 60 percent of America’s total commerce with the European Union. Other Asian countries such as South Korea, Thailand and Indonesia had signaled interest in joining the agreement.

U.S. companies are probably not happy either: The deal would’ve removed 18,000 tariffs on American-made products.

Toyota’s ‘Made in America’ Strategy Isn’t Enough to Shield It From Trump – Bloomberg

After criticizing Toyota’s plans to build a Corolla plant in Mexico, Trump this week rebuked Japan for sending the U.S. hundreds of thousands of cars from what he said were “the biggest ships I’ve ever seen.” General Motors Co. and its peers, meanwhile, struggle to sell their vehicles in Japan.

“For years, Toyota was extremely paranoid about being a foreign company, and about the possibility of tariffs,” said Jeff Liker, a University of Michigan professor who’s written nine books on the company. “They just try to be Boy Scouts, perfect corporate citizens, to hedge against a possible backlash.”

Under Trump, It’s Make a Deal With the President—or Else – Bloomberg

In the opening days of his presidency, Donald Trump has leaned heavily on what he believes is his strongest skill, and the secret to his success in both business and politics: negotiation.

People come in, he offers them a deal — and an “or else.”

He told the CEOs of major manufacturers they can look forward to lower taxes on products made in America. But if they move operations abroad, they’ll be slapped with a 35 percent border tax. He summoned U.S. automakers to make the same proposal, and dangled easier pollution rules as a sweetener. He offered to revive the Keystone and Dakota Access pipelines, with a catch: the pipes have to be made with U.S. steel.

It’s too soon to tell whether Trump will back up the threats and promises, or even whether he can. But the effort, aides say, is at the heart of the administration’s push to spur a rebirth of American manufacturing. In the coming weeks, he’s likely to employ the same tactic with other industries reliant on the federal government, pushing pharmaceutical companies to lower prices and defense contractors to reduce project bids.

Vietnam Turns to Its Neighbors After Trump Kills Trade Deal – Bloomberg

The end of the Trans-Pacific Partnership “will push us to expand in other markets,” Nguyen Duc Kien, deputy head of the National Assembly Economic Committee, said on Wednesday in a phone interview. “We have a lot of potential to increase exports” to markets in the Association of Southeast Asian Nations, or Asean, and some “regional countries where we have bilateral trade agreements such as South Korea, Japan,” he said.

McCormick CEO on Border-Tax Threat: We Can’t ‘Move the Equator’ – Bloomberg

McCormick & Co. Chief Executive Officer Lawrence Kurzius said the idea of imposing new border taxes on imports could be a “negative” for the spice company, especially since it can’t control where many of its ingredients are grown.

Panama Papers Show Global Corruption Got Worse in 2016: Watchdog – Bloomberg

Revelations of tax-evasion and money-laundering networks on a global scale in the so-called Panama Papers helped make the world appear more corrupt last year, according to graft watchdog Transparency International.

TOP

FOREX, CURRENCY IMPACTS

Pound Risks Becoming Irrelevant as Brexit Dims Reserve Status – Bloomberg

The fallout from the U.K.’s vote to exit the European Union includes the risk of the pound losing favor as a place for safe-keeping by global managers and their $11 trillion stockpile of reserves.

Trump ‘border tax’ threatens global dollar chaos

The threat of sweeping US tariffs against China, Mexico, and any other country that falls foul of President Donald Trump, may be mere noise at this point.

What is not noise is the Republican plan for a “border-adjusted tax” that is just as explosive in its effects, and is emerging as the biggest single risk to the global financial system.

Let us call it the ‘Iraq War’ of Republican economic policy: strategic folly pursued with dogged certainty by ideologues with limited feel for how the world economy works. “A terrible idea,” says Adam Posen, head of the Peterson Institute.

Trade experts mostly agree that this abstruse measure would lead more or less automatically to a spike in the dollar by 15pc to 20pc. If allowed to happen, this would drain liquidity from a global financial system anchored on dollar-based lending. It risks causing capital flight from China to spin out of control.

Dollar’s Fading Link With Treasuries Aids Commodity Currencies – Bloomberg

The positive correlation between the dollar and Treasury yields, which touched 93 percent on Nov. 1, the highest in three years, has now declined to less than 54 percent. That in turn has helped spur gains in high-yielding, commodity currencies like the Australian and New Zealand dollars, the two best-performing major currencies so far this year, which continue to benefit from rising yields.

Mr. Yen Sees Rally Toward 100 in 2017 as ‘Trump Fever’ Ends – Bloomberg

The yen may strengthen beyond 100 per dollar this year as expectations for Trumponomics shatter when the U.S. president fails to attain the economic growth he’s promised, according to Eisuke Sakakibara, a former top currency official at Japan’s Finance Ministry.

The dollar is close to its peak and has already started to target 110 yen since Donald Trump’s inauguration, said the man dubbed as “Mr. Yen” for his ability to influence the exchange rate in the 1990s. The trend for a weaker U.S. currency and stronger yen will intensify as the president’s pledge of 4 percent annual growth proves unrealistic, he added.

UBS Says Dollar to ‘Roll Over’ Amid Trump Spending, Tax Cuts – Bloomberg

The dollar has peaked and will probably decline this year under President Donald Trump, according to UBS Group AG’s wealth-management unit, which expects the currency’s impending weakness will help to benefit prices of base and precious metals.

“The more debt that Donald Trump promises through higher infrastructure and lower tax and tax cuts tends to lead itself to a twin deficit situation in the U.S., which clearly is negative for the currency,” Wayne Gordon, executive director for commodities and forex at the unit, said in a Bloomberg TV interview.

TOP

REAL ESTATE, HOUSING, REITS, COMMERCIAL

Americans Are Flipping Houses Like It’s 2006 – Bloomberg

A tactic that helped define the height of homebuying madness in the U.S. in the years before the market collapsed is rearing its head again.

Home flippers, who buy homes as a speculative bet on short-term price appreciation, accounted for 6.1 percent of U.S. home sales in 2016, according to Trulia, which defines a flip as a property sold twice in a 12-month period in arm’s-length transactions. That’s the highest share since 2006, when flips accounted for 7.3 percent of sales.

17F25 - flip cities

Warehouse Space Shortage Eases, New Construction Catches Up With Demand – WSJ

A nationwide shortage of warehouse space that drove a yearslong surge in rents is showing signs of easing, the chief executive of the biggest owner of U.S. industrial real estate said Tuesday.

Warehouse demand has outpaced new supply since the end of the recession, as economic growth picked up. Retailers also stepped up leasing as online orders rose. The cost of renting space has soared, particularly in urban areas such as Los Angeles and Seattle, where less than 5% of total warehouse capacity is available for leasing, according to CBRE Group Inc.

TOP

HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Harvard Endowment to Lay Off Half Its Staff – WSJ

Harvard University’s endowment plans to outsource management of most of its assets and lay off roughly half the staff, in a radical overhaul of the way the world’s wealthiest school invests its money.

Harvard’s New Fund Manager, Copying Yale, Will Farm Out Money – Bloomberg

The new head of Harvard University’s endowment moved quickly to remake the fund in the model of better-performing rivals such as Yale, pledging to cut its 230-person staff in half and shift most of its money to outside managers.

Private equity frets as Congress eyes interest cost deduction

The Robber Barons were spooked. The US Congress was considering removing the tax deduction for interest on corporate debt. Because of their reliance on heavy borrowing to fund their businesses, the loss of such a subsidy could devastate their bottom lines.

The year was 1894 and the tycoons’ fortunes came from railways. But their fight echoes today as Republicans look to rewrite corporate tax rules that could particularly sting private equity.

Since 1918, after multiple legislative fights, the deductibility of interest costs has been a bedrock of not just corporate taxation but corporate valuation. Still, the inconsistent treatment of capital sources — debt is subsidised while equity is not — has gnawed at many policymakers.

Now, the most consequential US tax reform in a generation is on the table. Some proposals in the Republican “blueprint”, such as cutting the corporate tax rate to 20 per cent, are favourable to business.

But the deductibility of interest is also in the crosshairs. That could spell bad news for heavily leveraged companies, including many portfolio companies owned by private equity firms.

The Failed Quest to Bring Down Wall Street’s Most Wanted Man – Bloomberg

Kolhatkar paints a picture of a reclusive man who’s quick to anger, driven by greed, and insecure about his place in moneyed society. (Growing up, the Cohens were on the “low end of the financial spectrum” in prosperous Great Neck, N.Y.) He’s also an unflappable trader. At least one employee Kolhatkar quotes said his understanding was that giving Cohen your best trading ideas meant giving him inside information—the “black edge” of the book’s title. While he was at Gruntal, allegations emerged in a since-dismissed lawsuit from Cohen’s ex-wife that he traded on nonpublic information. At SAC, Cohen didn’t ask for details on how a portfolio manager got his ideas, just his level of conviction.

World’s Biggest Wealth Fund Sits Out Liquidity Trap Others Fear – Bloomberg

Trades made by Norway’s $890 billion Government Pension Fund Global can take an hour, or they can take as long as six months, according to the chief investment officer for asset strategies.

The fund, which from its headquarters in Oslo invests Norway’s oil wealth in foreign stocks, bonds and real estate, relies on being able to execute massive transactions to build its portfolio. That leaves it particularly exposed to two challenges that have grown over the past years: fewer but bigger investors, and less liquidity. Its response is to try to keep trading to a minimum, and stretching transactions over as much time as needed to keep costs in line, CIO Geir Oivind Nygard said in an interview on Wednesday.

“We’re a long-term fund, so we take our time to trade as cheaply as possible,” Nygard said. “You can always find liquidity if you’re willing to pay. We wish to stretch it out in order to find the natural buyer or seller.”

TOP

ENERGY COMPANIES, NOCs, INDUSTRY

Oil Supermajors’ Debt From the Crude Collapse May Have Peaked – Bloomberg

Surging debt dogged the world’s largest oil companies during crude’s collapse. Now, sweeping cost cuts and rising prices have combined to lessen the need to borrow.

While Trump Backs Oil Pipelines, Gas Lines Are in Limbo – Bloomberg

Trump has pledged to accelerate approvals for energy infrastructure, but lines like Rover underscore the unique challenges facing the gas industry. The Federal Energy Regulatory Commission, charged with reviewing gas lines, was established as an independent agency when it was formed by Congress in 1977. As environmental opposition to gas projects mounts, the time it takes for the commission to review them has also risen — to average 429 days by Bloomberg Intelligence’s estimates.

TOP

ENERGY CRUDE OIL, OIL SANDS, SHALE

BP Sees a Future of Slowing Oil Demand Growth, Abundant Supplies – Bloomberg

Oil demand growth will slow and supplies will remain abundant in the coming decades, meaning producers in the Middle East, Russia and U.S. continue to gain market share at the expense of higher-cost rivals, said BP Plc.

Kuwait Expects Oil Output Cuts to Balance Market in Early 2017 – Bloomberg

OPEC and other oil producers are likely to comply fully with a deal to reduce supply, bringing global crude markets into balance early this year, Kuwaiti Oil Minister Essam Al-Marzouk said.

Europe Chomps Most Iran Oil in Years With Supertankers Due in Days – Bloomberg

Europe is poised to receive the most Iranian crude in about five years this month in a sign that the Persian Gulf nation may be regaining its share of a market it had lost to sanctions.

TOP

ENERGY RENEWABLES, NUCLEAR

Biggest Indian Solar Project Stalls as State Balks at Cost – Bloomberg

India’s biggest solar power project has stalled as the state which sought bids from generators says it can’t buy the energy at prices it had agreed upon.

New York State’s First Offshore Wind Farm Gets Green Light – WSJ

The Long Island Power Authority completed an agreement Wednesday to build New York state’s first offshore wind farm 30 miles east of Montauk, N.Y., the latest effort by the industry to gain traction in the U.S. market.

TOP

COMMODITIES BASE METALS, MATERIALS

Iron Ore Extends New Year Ascent as Slump Warnings Intensify – Bloomberg

Iron ore just won’t back down. Prices are near the highest in more than two years as speculation of sustained Chinese demand for imports outweighs repeated warnings from analysts that the rally is overextended and will unravel.

17F25 - iron ore chart

TOP

COMMODITIES AGRICULTURE & SOFTS

American Beef Boom Is Probably Over, Putting Squeeze on Tyson – Bloomberg

The U.S. beef boom is probably over.

Thanks to tightening animal supplies and tepid demand, companies including Tyson Foods Inc., the largest U.S. meat processor, and Cargill Inc. are facing plunging profits on every head of cattle they slaughter.

That’s a sharp reversal of fortune from last year, when the fastest expansion of the American cattle herd in four decades increased margins for packers. But, the herd growth didn’t last long. As a result, cattle futures in Chicago have rebounded 23 percent since bottoming in mid-October, while the price packers get for wholesale beef has tumbled in the past year amid stiff competition from chicken and pork.

TOP

POLLUTION, CLIMATE & ENVIRONMENT

Biofuel Credits Plummet as Trump Freezes EPA Regulations – Bloomberg

Prices for credits used by refiners to show compliance with the U.S. biofuel mandate plunged after President Donald Trump’s administration ordered a freeze and review of 30 environmental regulations published before he assumed office.

Exxon Praises ‘Monumental’ Paris Agreement in Signal to Trump – Bloomberg

Exxon “fully appreciates and acknowledges the risk posed by climate change,” Colton said, following a panel discussion at an energy conference. “We really admire the Paris process, where you have all the major nations of the world coming together on a global basis — for it is a global challenge.”

Trump administration backs off plan to scrub climate pages from EPA website – The Washington Post

The Trump administration on Wednesday backed away from plans to take down some climate-change information from the Environmental Protection Agency’s website, which employees said had been planned for this week. But political appointees are exerting more oversight over the agency’s scientific communications.

Trump Oil Policies Are Bad for Planet, French Minister Says – Bloomberg

“These are very bad decisions for the future of the planet,” Environment and Energy Minister Segolene Royal said Wednesday on RMC radio. “I hope they aren’t definitive. If the production of fossil energies gain in the U.S., it will contribute to global warming.”

Environmental Activists Prep for Battle as Trump Pushes Projects – Bloomberg

Trump’s embrace of the oil and natural gas industry was a blow to opponents who have argued against new infrastructure for fossil fuels. It may also help them raise money, according to Christine Tezak, managing director of research at ClearView Energy Partners LLC in Washington.

EPA Science Under Scrutiny By Trump Political Staff – Bloomberg

The Trump administration is scrutinizing studies and data published by scientists at the Environmental Protection Agency, while new work is under a “temporary hold” before it can be released.

The communications director for President Donald Trump’s transition team at EPA, Doug Ericksen, said Wednesday the review extends to all existing content on the federal agency’s website, including details of scientific evidence showing that the Earth’s climate is warming and man-made carbon emissions are to blame.

W.H.O. Warns of Worrisome Bird Flu in China – The New York Times

After a spate of deaths from bird flu among patients in China, the World Health Organization has warned all countries to watch for outbreaks in poultry flocks and to promptly report any human cases.

Several strains of avian flu are spreading in Europe and Asia this winter, but the most worrisome at present is an H7N9 strain that has circulated in China every winter since 2013.

‘The Greatest Forest Disaster in Our History’: Wildfires Tear Through Chile – The New York Times

A series of wildfires has devastated homes, farmland and livestock in a large area of southern and central Chile over the past week.

A prolonged drought and high temperatures have worsened the blazes, which have so far destroyed around 300,000 acres of forest land and killed three firefighters. The government has declared a state of emergency, deployed 1,200 troops to support the efforts of firefighters, and appealed for help from other countries.

Chile has “practically exhausted its capacity to fight the blaze,” President Michelle Bachelet said, adding that her country was living through “the greatest forest disaster in our history.”

TOP

GEOPOLITICS, CRIME, TERRORISM

North Korean Defector Says Kim Jong Un Can’t Last – WSJ

North Korea’s former deputy ambassador to Britain, who last year became Pyongyang’s highest-profile defector in two decades, said “Kim Jong Un’s days are numbered” and vowed to help bring down the North Korean leader, calling that the only way to resolve the nuclear issue and unify the Korean Peninsula.

Trump Blocks Syrian Refugees and Orders Mexican Border Wall to Be Built – The New York Times

When the refugee program resumes, it would be much smaller, with the total number of refugees resettled in the United States this year more than halved, to 50,000 from 110,000.

It would also suspend any immigration for at least 30 days from a number of predominantly Muslim countries — Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen — while the government toughened its already stringent screening procedures to weed out potential terrorists.

Faith and fury: what drives Isis?

What Wood writes discomforts analysts who have cast Isis as rooted in un-Islamic ways. Instead, he makes the case that the followers of Isis have developed their notion of terrible righteousness through a studied approach, drawing inspiration from tracts and practices or “hadith” that indeed are part of the religion. Religious citations — and the men Wood interviews cite such in defence of slavery and extreme violence — are essential to recruitment. Wood contends that the Isis message, whether conveyed through video or sparky websites, offers a coherent worldview that has not been so coherently challenged by Islamic scholars.

These zealots do not represent the entire religion, writes Wood, who provides careful scholarship of the splits within Islam as well as jihadi groups. Grievances may feed their radicalism but scripture underpins their plans. “It will not do to pretend that they believed in nothing, or that they believe weakly,” he writes. They have convinced thousands of people to kill and to die for Islam that way.

TOP

PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Israeli Cybersecurity Industry Grows as Global Threats Multiply – Bloomberg

Investments in Israel’s cybersecurity industry jumped 9 percent in 2016, a year when the world suffered a successful cyberattack on a national power grid, a massive e-mail leak that may have altered U.S. elections, and an $81 million central bank heist, according to a new report from Start-Up Nation Central.

Top Russian Cybercrimes Agent Arrested on Charges of Treason – The New York Times

A senior official in the Russian cyberintelligence department that American officials say oversaw last year’s election hacking has been arrested in Moscow on charges of treason, a Russian newspaper reported Wednesday.

The arrest of Sergei Mikhailov, a senior officer of the Federal Security Service, or F.S.B., the main successor agency to the K.G.B., is a rare instance of turmoil in the country’s usually shadowy cybersecurity apparatus slipping into public view.

Mr. Mikhailov served in the F.S.B.’s Center for Information Security, the agency’s cyberintelligence branch, which has been implicated in the American election hacking. But it is not clear whether the arrest was related to those intrusions.

He was detained along with one of Russia’s leading private-sector cybersecurity experts, Ruslan Stoyanov, the head of computer incident response investigations at the Kaspersky Lab, which makes antivirus programs.

The company confirmed in a statement that Mr. Stoyanov had been arrested, but said his arrest “has nothing to do with Kaspersky Lab and its operations.”

That Old Phone Trump Uses for Twitter Could Be an Opening to Security Threats – The New York Times

President Trump has carried his Twitter habit into his presidency. He has also brought with him another tech habit that is causing concern.

Mr. Trump has been using his old, unsecured Android phone to post on Twitter since moving to Washington late last week.

The president’s use of an unsecured personal device raises concerns that his desire to use his old smartphone could be exposing him and the nation to security threats.

He is using the Android smartphone mainly to post on Twitter, not to make calls. But it’s unclear what security measures have been put in place on the device and how vulnerable he could be to someone stealing data or breaking into his Twitter account.

TOP

FRONTIER MARKETS

Chicken Fight Rocks South Africa’s Trade Relations With Europe – Bloomberg

Chinese steel and Mexican-made cars became political dynamite last year as politicians including U.S. President Donald Trump championed anti-free trade rhetoric. Now chickens are at the center of a bitter fight between South Africa and Europe.

South African farmers and labor unions say the European Union is selling chicken legs, thighs and wings at below cost, threatening local companies and jobs. EU producers make enough money marketing breasts in their home market that dark meat is sold as a waste product, they say. Europe says its farmers are simply more competitive than their peers in South Africa.

The argument has left South Africa with a tough choice: either upset relations with its biggest trading partner or watch the demise of its chicken industry, which employs 60,000 people and is source of 65 percent of all meat consumed in the country. The row marks a rocky start to the European Partnership Agreement, a free trade deal signed last year by the EU and southern African countries including South Africa.

Rising Tiger Philippines Posts Some of the World’s Fastest Growth – Bloomberg

After years spent languishing behind its neighbors, the Philippines is finally catching up with its fellow Asian tiger economies as it posts some of the fastest growth rates in the world.

The region’s former powerhouses are giving way to newcomers like the Philippines and Vietnam, whose younger populations and rising middle classes help lure manufacturers. While Philippine President Rodrigo Duterte has alienated some with his anti-U.S. rhetoric and deadly drug war, his ambitious $160 billion infrastructure plan and push for greater investment from China, Russia and the Middle East are strengthening the outlook.

TOP

EMERGING MARKETS

For Hasenstab, All Roads Lead to Rio as Haven From Nationalists – Bloomberg

Michael Hasenstab believes he has found a refuge from the anti-establishment politics creating waves across the developed world, and it’s not where you’d expect.

The Franklin Templeton money manager dedicated more than 35 percent of his $41 billion flagship Templeton Global Bond Fund to Latin America by the end of 2016 to seize on a shift away from the anti-trade policies now gaining favor in the U.S. and parts of Europe. That’s an increase of 11 percentage points in just one year, according to filings published this week.

Trump Invites Indian PM Modi to Visit Later This Year – Bloomberg

President Donald Trump spoke by phone Tuesday with India’s prime minister and invited him to visit the United States later in the year.

Trump told Prime Minister Narendra Modi that the U.S. considers India “a true friend and partner in addressing challenges around the world,” a White House statement said.

India Budget Seeks Sweet Spot as Cash Grab Sours: QuickTake Q&A – Bloomberg

Some 100 bureaucrats have been locked away in a basement in New Delhi, a single desk phone among them, planning the generation and expenditure of $300 billion. India’s budget day is approaching, and the officials responsible will have huddled in isolation for two weeks by the time Finance Minister Arun Jaitley delivers his Feb. 1 speech. In a process steeped in tradition, the task of guiding India’s economy begins with a sugary Indian dish and culminates in a speech laden with literary references. For all the tradition, there’s a lot that’s different this year.

Modi’s Budget Holds Key to Boosting Outlook for India Stock Flows – Bloomberg

Foreign investors’ renewed interest in Indian equities faces a big test as Prime Minister Narendra Modi’s government prepares to present the federal budget.

Investors say the first stock inflows from overseas in more than a month could accelerate if the Feb. 1 budget unveils steps to boost spending to stimulate growth that’s forecast to slow to a three-year low. On the other hand, a move to end a tax break on equity gains or a levy on foreigners will once again sour the sentiment for India just when the markets are facing uncertainties over Brexit and U.S. President Donald Trump’s economic policies.

Russia Moves to Soften Domestic Violence Law – The New York Times

Defenders of the measure say it will protect parents’ rights to discipline their children and generally reduce the state’s role in domestic life.

“In the traditional Russian family culture, relations between ‘fathers and sons’ are built upon the authority of parents’ power, mutual love and personal indispensability as the basis for children’s upbringing,” said Yelena B. Mizulina, one of the initiators of the new legislation and author of a law that banned “gay propaganda” aimed at minors.

Opponents called it a step back to medieval times and a license for violent behavior by domestic tyrants. “It is clear that lawmakers recognized violence as a norm of family life,” said Svetlana G. Aivazova, a Russian specialist in gender studies. “This shows that Duma deputies are not simply conservative or traditional, it shows that they are archaic.”

Putin Confident Glencore, Qatar Will Develop Russia Business – Bloomberg

Russian President Vladimir Putin met the heads of global commodities and financial giants on Wednesday and expressed support for their investment and partnership with Russia.

Putin received billionaire Ivan Glasenberg, the chief executive officer of Glencore Plc, as well as Qatar’s sovereign wealth fund head Sheikh Abdullah Bin Mohammed Bin Saud Al Thani and Intesa Sanpaolo SpA Managing Director Carlo Messina in the Kremlin. He thanked them for their roles in the privatization of Rosneft PJSC, whose CEO Igor Sechin also attended.

“I want to express my confidence that your business in Russia will develop and will develop successfully,” Putin said.

Putin’s Sanctioned Ally May Win Quarter of Russian Gold Reserves – Bloomberg

Russia’s auction of its giant Sukhoi Log gold field this week pits a long-time ally of President Vladimir Putin against a rival bidder with little background in mining.

TOP

CANADA, AUSTRALIA, NEW ZEALAND

Resisting Trump Tariffs Would Be Futile for Trudeau, Report Says – Bloomberg

Donald Trump is holding a big stick over Prime Minister Justin Trudeau in pending trade negotiations because retaliating against any new tariffs would do even more damage to Canada’s economy, a new study shows.

For Justin Trudeau, Canada’s Leader, Revival of Keystone XL Upsets a Balancing Act – The New York Times

President Trump’s move to proceed with the pipeline project leaves the Canadian prime minister facing anger from both energy advocates and environmentalists.

China’s Australia Coal Deal Boosts Link to Fuel-Hungry World – Bloomberg

China isn’t just buying Australia’s coal assets, it’s also expanding access to the limited infrastructure needed to ship it globally.

“In Australia, logistics are very important, especially the port terminals,” Helen Lau, a Hong Kong-based analyst at Argonaut. “You must have your own stakes or facilities to ensure shipments are smooth and won’t be disrupted. If you don’t own access to infrastructure, that makes shipments more expensive.”

17F25 - Australian coal for Asia

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BREXIT, LONDON, UK ECONOMY

Credit Suisse Said to Consider Dublin Expansion as Brexit Nears – Bloomberg

Credit Suisse Group AG is exploring options for expanding in Dublin, as the U.K. moves closer to exiting the European Union, according to two people familiar with the matter.

The Irish capital is emerging as a favored location for the bank’s so-called back-office jobs, said one of the people, who asked not to be identified because a final decision hasn’t been made. The Zurich-based bank also is considering cities including Frankfurt as it develops plans for moving jobs to adapt to Brexit, said the person.

U.K. Government Overloaded as It Approaches Brexit, Study Finds – Bloomberg

Officials in Theresa May’s U.K. government are overloaded as they prepare for the biggest challenge to face them in decades, according to an influential think tank.

In a report published Thursday, the Institute for Government warned that some departments that have taken the biggest budget cuts in recent years now face huge additional workloads as a result of Britain’s decision to leave the European Union.

EU Won’t Let U.K. Be Better Off After Brexit, Negotiator Says – Bloomberg

The European Union will work to ensure the U.K. won’t be in a better position after Brexit, the European Parliament’s negotiator said.

U.K. Prime Minister Theresa May “announced a very radical Brexit because she knows that the European Union will never accept a situation in which the status of a country outside the union is more favorable than to be a member of the European Union,” Guy Verhofstadt said on Wednesday in Washington.

May-Trump Trade Talks Said to Be Hit by Lack of U.K. Negotiators – Bloomberg

The U.K. doesn’t have enough expert trade negotiators for talks on a sweeping new commerce agreement with the U.S., according to two senior British officials, raising concern that Prime Minister Theresa May could end up with a bad deal.

The six-month old Department for International Trade will need to launch a major recruitment drive to handle the workload that negotiations with U.S. President Donald Trump’s administration will involve, the officials said on the condition of anonymity because the matter is sensitive. The disclosure prompted warnings that May’s inexperienced and understaffed team could be out-maneuvered in talks with the U.S.

“Donald Trump knows how desperately Theresa May wants this,” Liam Byrne, a senior lawmaker on Parliament’s international trade committee, said in an interview. “We have got to be incredibly careful about rushing into a bad deal. When it comes to the U.S., no deal is better than a bad deal.”

May Gives In to U.K. Lawmakers’ Demands to Publish Brexit Plan – Bloomberg

U.K. Prime Minister Theresa May said she’ll publish her plan for Brexit, giving in to demands from lawmakers seeking greater scrutiny in Parliament.

The government will publish a so-called white paper to allow proper debate of the strategy May outlined in a speech last week, the premier told lawmakers in Parliament on Wednesday.

Theresa May Faces WTO Trade Tangle as Brexit Lift-Off Nears: Q&A – Bloomberg

As U.K. Prime Minister Theresa May prepares to trigger negotiations on leaving the European Union in 2019, she’s also laying the groundwork for British talks with non-EU countries including the U.S. and China on post-Brexit trade pacts. All this will take place in the framework of the World Trade Organization, where what the U.K. plans to do is unprecedented, and in the wake of a protectionist tilt under President Donald Trump.

U.K. Auto Investment Slumps as Industry Warns of Brexit Threat – Bloomberg

Auto-industry investment in the U.K. plunged by more than one-third in 2016 as carmakers concerned about Brexit deferred long-term commitments despite staying put for now.

TOP

EUROPE

French open inquiry into payments to François Fillon’s wife

French authorities are investigating claims that presidential frontrunner François Fillon gave his wife a fake job as his parliamentary aide.

Mr Fillon, who won the centre-right presidential nomination in November on a vow to restore high moral standards in French politics, is facing allegations from a weekly French satirical newspaper that his wife Penelope Fillon earned a total of €500,000 over eight years as an aide but did little work.

State prosecutors from a unit investigating alleged financial crimes on Wednesday said a preliminary investigation had been opened into possible embezzlement and misuse of public funds.

French Frontrunner Rocked by Probe Offering Opening to Rivals – Bloomberg

“This is no small matter and anything could happen,” said Gerard Grunberg, a senior researcher at the Paris Institute for Political Sciences. “This affair hurts Fillon’s political image, which was built on transparency and old-fashioned respectability.”

Greece’s Tsipras Insists on ‘Not One Euro More’ of Austerity – Bloomberg

Greek Prime Minister Alexis Tsipras dug in against creditor demands for more pension cuts and tax increases before a meeting of euro-area finance ministers to unblock the country’s bailout review.

Italian Court Ruling Could Pave Way for Elections – WSJ

Italy’s highest court ordered limited changes to a controversial new electoral law, a ruling that could pave the way for early national elections as soon as June.

In a much-anticipated ruling, Italy’s constitutional court kept the bulk of the law unchanged, scrapping only some aspects of it. That will make ongoing negotiations among Italy’s political parties on a new electoral system easier, raising the chance that Italians will go to vote sooner than 2018, when the Parliament ends its five-year term.

Polish schools told to pare back science in push for ‘new Pole’

Middle schools such as Startowa, which teach 13- to 16-year-olds, would be abolished, but Ms Korulska and many education professionals have deeper concerns. They say the planned changes, including less time devoted to science and less compulsory schooling, will leave children ill-prepared for jobs and modern life.

“What’s happening is disastrous,” says Ms Korulska, whose bright, modern school has walls covered with photographs of its pupils. “The current curriculum wasn’t perfect. But this is like someone with a hole in his roof who, instead of repairing the hole, wrecks the house and has nowhere to live afterwards.”

Many in the education establishment fear the reform is part of a “cultural counter-revolution” promised by Jaroslaw Kaczynski, chairman of the ruling Law and Justice party. This aims to roll back the advance of social liberalism since communism collapsed and Poland joined the EU, returning the country to more conservative, Catholic roots.

Paris Fights the Effects of Crimes Against the Very Rich – The New York Times

There are indications that heightened fears for personal safety have led many high-net-worth individuals, particularly from Asia and the Middle East, to think twice about visiting (and spending) in Paris. Hotel occupancy rates, restaurant reservations and boutique foot traffic all fell steadily over the course of last year, with European destinations, particularly Switzerland and London, benefiting from Paris’s fall from favor.

Some visitors who can afford to are spending hundreds of euros a day on increased protection.

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CHINA

Premier Li Says China to Remain Open and Stable Amid Uncertainty – Bloomberg

Premier Li Keqiang said China will continue to champion economic openness while providing stability for the global economy with ongoing domestic reforms.

“This is a testing time,” Li wrote in the latest edition of Bloomberg Businessweek. “China offers an anchor of stability and growth with its consistent message of support for reform, openness, and free trade.”

China Industrial Profits Increase at Slowest Pace in a Year – Bloomberg

Profit growth at industrial firms in China rose at the slowest pace in a year even as prices surged, underscoring how weaker demand threatens to weigh on the economic expansion.

Industrial profits rose 2.3 percent in December from a year earlier to 844.4 billion yuan ($123 billion), down from a 14.5 percent increase in November, the statistics bureau said. Full-year earnings climbed 8.5 percent to 6.88 trillion yuan, reversing a 2.3 percent decline in 2015.

“Raw materials prices are rising, but producers weren’t able to pass it on to consumers, so they’re kind of squeezed,” said Tommy Xie, an economist at OCBC Bank in Singapore. “If the economy continues to stabilize, there’s still room for profit growth, but the global environment, especially a more protectionist U.S. under Trump, will also pose uncertainty.”

At Over $800 Million, China Soccer Team Worth More Than AC Milan – Bloomberg

A recent investment in Chinese soccer team Beijing Guoan pegs the value of the club at more than $800 million, putting it on par with some of the best teams in the West, including seven-time European champion AC Milan.

PetroChina Warns Profit May Drop to Record Low on Oil Plunge – Bloomberg

PetroChina Co., the country’s biggest listed oil and gas producer, said full-year net income in 2016 fell by as much as 80 percent, putting it on pace to report a record-low profit.

The slump is due to lower international oil prices and domestic natural gas prices dropping “drastically” compared with the previous year, it said in a filing with the Hong Kong stock exchange on Wednesday. The company reported net income of 35.5 billion yuan ($5.16 billion) in 2015, which means profit last year may have fallen to as low as about 7.1 billion yuan, down for a third year to the least in data going back to 1996.

China Likely to Stick to a Two-Child Policy – WSJ

China acknowledged it has demographic challenges, saying its population will peak in 2030 but left little hope the country would further ease birth restrictions after lifting its one-child policy a year ago.

The country’s State Council, its cabinet, unveiled a key plan detailing deep demographic changes over the next 15 years, including low birthrates and a rapidly aging population, but said it would stick to a policy of letting families have a maximum of two children.

China’s Metals Curb Plan Seen Risking Shortages in Biggest User – Bloomberg

China’s proposal to halt some metals production to fight air pollution over the winter would create shortages of alumina but have a more limited impact on aluminum supply, according to China’s top industry body, which has been consulted on the plan.

The proposal involves an alumina suspension in three provinces that would affect about a fifth of the nation’s operating capacity producing the raw material for aluminum. The halts to aluminum, which is used in everything from cans to window frames, would be less severe — about a tenth of the country’s operating capacity would be targeted, across four provinces, according to the plan.

China’s Newest Problem With Fakes Threatens Bond Market Pain – Bloomberg

Forged seals, fake letters, and counterfeit documents. They’re all part of China’s recent spate of fraud coming to light in the country’s $3 trillion corporate debt market amid a rout that has analysts predicting a record number of defaults in 2017.

As it becomes harder for Chinese companies to issue new notes to repay maturing debt, expect more scandals to come — and to worsen the bond market’s already-precipitous downturn.

“We expect to see more of this type of behavior given the increasingly problematic environment for refinancing in the domestic bond market,” said Charles Macgregor, head of emerging markets at Lucror Analytics in Singapore. “Unfortunately, these frauds may be difficult to detect, as documentation and seals may appear authentic given collusion between various parties.”

TOP

JAPAN

Japan Display Joins Flexible-Screen Battle With Bendier LCD – WSJ

The flexible-smartphone-screen battle, until now fought using a technology called OLED, is heating up with an entry from Apple supplier Japan Display, which says it can reduce the cost by adapting older LCD technology.

Japan Open to Two-Way Trade Talks With U.S. – WSJ

Prime Minister Shinzo Abe says he is willing to consider two-way talks after Donald Trump pulled the U.S. out of the Trans-Pacific Partnership.

Japan PM says free trade talks with U.S. possible | Reuters

Japanese Prime Minister Shinzo Abe said on Thursday it was possible Tokyo and Washington could hold bilateral free trade talks in the wake of U.S. President Donald Trump’s withdrawal from the Trans-Pacific Partnership (TPP) this week.

Japan Trade Surplus Follows Trump’s Criticism of Tokyo’s Advantage – WSJ

Japan recorded its first trade surplus in six years in 2016, which comes at a sensitive time following President Donald Trump’s recent criticism of Japan for its trade advantage against the U.S.

Stingy Pay Raises Pull the Handbrake on Japan’s Inflation Drive – Bloomberg

As the world puts the worst of the disinflationary threat behind it, tepid wage growth is shaping up as a key restraint to a genuine reflationary era taking hold in some economies. Nowhere is this more so than Japan.

Unlike the U.S. and Germany, where higher prices are driving up salary expectations, there is little pressure for pay hikes in Japan. The risk is that nascent inflation — forecast to emerge this year on the back of resurgent oil prices and a weak yen — erodes households’ purchasing power and crimps consumer spending.

Instead of a “virtuous cycle” in which rising wages boost spending, in turn spurring price gains that encourage more production and investment, consumers tighten their purse strings, undermining demand.

“Inflation works against households, whether it’s in Europe, the U.S. or Japan, but the negative impact is bigger here because pay hikes are harder to get,” said Masamichi Adachi, senior economist at JPMorgan Securities Japan. He sees “a good chance” that wages weigh down inflation in the world’s third-largest economy.

Abe Has a Trump Problem: How to Get Japan to Buy U.S. Cars – Bloomberg

Abe must now consider whether, or how, to placate the new U.S. administration, something Japan has done at other times since World World II to maintain healthy ties with its main security ally. Hemmed in by a pacifist constitution and a non-nuclear pledge, Japan relies on the U.S. to provide a “nuclear umbrella” to protect it from regional threats, including its neighbor China.

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ASIA PACIFIC

Chinese Billions Fail to Sway Taiwan’s Last Two Allies in Africa – Bloomberg

Taiwan’s last two African allies have no plans to switch allegiances and break ties with Taipei as Beijing tries to woo the self-ruled island’s diplomatic partners.

Burkina Faso won’t cut relations with Taiwan despite people and companies with links to China offering funding in return for recognition of the One-China principle, according to Foreign Minister Alpha Barry. Swaziland said its relationship with Taiwan is based on mutual interests, not on money.

“We get outrageous proposals telling us, ‘if you sign with Beijing we’ll offer you $50 billion or even more,’’’ Barry said in an interview in the capital, Ouagadougou, this month. “Taiwan is our friend and our partner. We’re happy and we see no reason to reconsider the relationship.”

Ivanka Trump’s Clothing Is Made in China, Indonesia, and Vietnam | Teen Vogue

One of Donald Trump’s biggest policies is his opposition to American companies that manufacture their products overseas. However, Ivanka Trump’s clothing lines is made in countries like China. How will that impact her role as “First Lady”?

Singapore’s December Manufacturing Surges 21% as Exports Pick Up – Bloomberg

Singapore avoided a recession last year after the economy rebounded from a contraction in the third quarter, and early signs of a trade pick-up is helping to support growth in the export-reliant city state. Despite an increase in unemployment to a six-year high last quarter, export growth beat forecasts for a second consecutive month in December. Preliminary data showed gross domestic product grew at the fastest pace in more than three years in the fourth quarter.

TOP

TRUMP WORLD

It’s No Trump Tower, but White House Has ‘Beautiful’ Phones – The New York Times

Candidate Trump preferred to sleep in his own bed. But President Trump has spent the past five nights in his new home. His review? “Pure elegance.”

Is Donald Trump’s War With CNN Personal?

Sources say the president feels personally betrayed by CNN chief Jeff Zucker.

Contractor Sues Trump Company, Alleges Unpaid Bills at D.C. Hotel – WSJ

AES Electrical said its employees worked overtime for 50 days to finish the electrical and fire-alarm systems at the Old Post Office building in time for a Donald Trump campaign event.

Trump Calls Chicago a ‘War Zone’ in Interview – WSJ

President Donald Trump likened Chicago to a ‘war zone’ in a recent interview, and said he has told Mayor Rahm Emanuel he needs to ‘smarten up’ and ‘toughen up’ to make the city safer.

Trump Charges Millions of Fraudulent Votes And Asks for Probe – Bloomberg

President Donald Trump said he wants an investigation into fraudulent voting as he claimed millions of illegal ballots were cast in the 2016 election, which he won in the Electoral College despite losing the popular vote by almost 3 million ballots.

“You have people that are registered who are dead, who are illegals, who are in two states. You have people registered in two states,” Trump said in an interview broadcast Wednesday on ABC’s “World News Tonight” program. “There are millions of votes, in my opinion.”

Trump has repeatedly made the unsubstantiated claim that the 2016 election was tainted by massive voter fraud. He has not provided any credible evidence to back up the claim. He didn’t specify which agency would handle the inquiry and didn’t say whether he had already issued such a directive.

Trump’s Voter Fraud Example? A Troubled Tale With Bernhard Langer – The New York Times

The president told lawmakers the pro golfer had seen suspicious people voting while in line to cast his ballot, according to people there. One problem: Mr. Langer, a German, can’t vote.

Report: Trump is mad about voter fraud because his “friend” saw Latino people vote – Vox

As the Times puts it, the story is “a memorable example” of how Trump’s “fact-gathering owes more to the oral tradition than the written word.” This is a polite way of saying that Trump is apparently moved more by what people tell him — even if it’s completely unverified — than he is by actual news articles and research.

Mar-a-Lago Doubles Its Initiation Fee as Membership Interest Swells – The New York Times

President Trump’s Palm Beach “Winter White House” has doubled its membership fee, to $200,000, leading to charges that the Trump Organization is cashing in on the election.

Trump Taps Private-Equity Investor as Civilian Head of Navy – WSJ

President Donald Trump selected an American private-equity investor to oversee the U.S. Navy in its top civilian post, adding another figure from the finance world to the civilian leadership of the Pentagon.

Trump’s Family Business Gets Two New Ethics Overseers, Source Says – Bloomberg

Trump Organization officials will task a Washington attorney and a veteran executive in President Donald Trump’s businesses to help ensure separation between the White House and the family business, according to a person familiar with the matter.

Secret Service Investigates Denver Agent After Facebook Posts – The New York Times

The agent published posts before the election that suggested she would prefer to go to jail rather than take a “bullet” for Donald J. Trump, a newspaper reported.

TOP

PROPAGANDA, AUTHORITARIANISM, ALTERNATIVE FACTS

Felony Charges for Journalists Arrested at Inauguration Protests Raise Fears for Press Freedom – The New York Times

The six journalists charged with felony rioting were among 230 people detained in the anti-Trump demonstrations.

Leaked Draft of Executive Order Could Revive C.I.A. Prisons – The New York Times

The White House disclaimed the document that raised the prospect of reviving “black site” prisons, but three administration officials said it had been circulated among National Security Council staff members.

Mattis, Pompeo stunned by CIA ‘black sites’ report – POLITICO

The two officials in charge of Trump’s terrorism detainee policies were ‘blindsided’ by a draft calling for the CIA to revisit techniques critics call torture.

President Donald Trump says he believes waterboarding works – BBC News

Donald Trump says “we have to fight fire with fire” but is warned of taking a “backward step”.

Trump Faces Criticism Over Prospect of Enhanced Interrogation Techniques – WSJ

Donald Trump drew sharp criticism from Republicans as well as Democrats on Capitol Hill over the prospect of an administration review of U.S. policy on the interrogation and detention of enemy combatants.

Russian Army’s Flagship Store Gives Americans Discount to Celebrate Trump – Bloomberg

If you’re an American shopper in Moscow who simply must have that leather bomber jacket with an airbrushed image of U.S. and Soviet troops converging on Nazi Germany, Friday’s your lucky day.

The Russian Army’s flagship retail store is offering a 10 percent discount for all Americans to celebrate Donald Trump’s inauguration. For a T-shirt of Vladimir Putin in fatigues, the saving works out to about a buck. It was conspicuously empty early Friday.

In Race Against Fake News, Google and Facebook Stroll to the Starting Line – The New York Times

Google and Facebook emphasized their efforts to combat the spread of false articles, but industry watchers say their measures have had little impact.

Google has banned 200 publishers since it passed a new policy against fake news – Recode

The company routinely weeds out “bad ads.” Now it weeds out more bad ad publishers, too.

Facebook Moves to Curtail Fake News on ‘Trending’ Feature – WSJ

Facebook Inc. is overhauling its “trending topics” box, part of its effort to curb fake news and expose users to a broader range of information.

Beware of Fake News: Europe’s Eastern Front Warns West – Bloomberg

Hybrid attacks using propaganda and false news narratives now represent a danger to this year’s elections in France and Germany, according to Latvian Prime Minister Maris Kucinskis. His nation of 2 million people has watched hackers target its Baltic neighbors, and has firmly backed European Union sanctions after Russia aided separatist rebels and flooded Ukraine with fake news.

“Our arguments didn’t resonate” until these tactics appeared in Germany and elsewhere last year, Kucinskis said in an interview in Riga, Latvia’s capital, on Tuesday. “There’s been a tendency to spread disinformation, to engage in hybrid warfare. Considering the upcoming elections in France and Germany, I’m not very optimistic that things will suddenly change.”

‘1984’ Publisher Orders New Printing as Sales Soar – Bloomberg

With “alternative facts” the latest catchphrase, George Orwell’s “1984” is No. 1 on Amazon.com and the publisher has ordered an additional 75,000 copies.

Signet Classics told The Associated Press in a statement Wednesday that sales have been “remarkably robust” for a book that already is a classroom standard. The publisher noted that books such as Orwell’s tap into “the fears, anxieties, and even hopes” of readers.

TOP

ELECTORAL POLITICS

Trump Prepares Orders Aiming at Global Funding and Treaties – The New York Times

The Trump administration is preparing executive orders that would clear the way to drastically reduce the United States’ role in the United Nations and other international organizations, as well as begin a process to review and potentially abrogate certain forms of multilateral treaties.

The first of the two draft orders, titled “Auditing and Reducing U.S. Funding of International Organizations” and obtained by The New York Times, calls for terminating funding for any United Nations agency or other international body that meets any one of several criteria.

A Supreme Court Pick Is Promised. A Political Brawl Is Certain. – The New York Times

Three federal appeals court judges appear to be the leading Supreme Court candidates, but Democrats, still stung over the snub of Judge Merrick B. Garland, have vowed to oppose whomever the president picks.

As Trump Orders Mexican Border Wall, Questions Rise Over Who Will Build It – WSJ

Shares in some construction, infrastructure and heavy-equipment companies rose on Wednesday as investors weighed which firms stood to benefit from President Trump’s proposal to build a wall along the Mexican border.

GOP Acknowledges It Won’t Meet Self-Imposed Deadline to Repeal Obamacare – Washington Wire – WSJ

Two days before Republicans’ self-imposed deadline for producing legislation to repeal the Affordable Care Act, GOP lawmakers acknowledged they were unlikely to meet it, in part because a sizable group of Republicans have balked at repealing the health care law without having a replacement in hand.

Trump Is the Big Unknown on Obamacare Repeal at GOP Lawmakers’ Retreat – Bloomberg

President Donald Trump will be the star attraction at a three-day policy retreat Senate and House Republicans are kicking off Wednesday, where they are under pressure to bridge sharp divisions over how to devise a promised replacement for Obamacare.

Hill Republicans want answers. On Wednesday, Trump gave them only more questions — and fresh headaches. – The Washington Post

Questions loom about how much of congressional Republicans’ agenda Trump will support — and about torture, border walls and voter fraud.

Senate Confirms Nikki Haley as U.N. Ambassador – WSJ

The U.S. Senate on Tuesday confirmed Nikki Haley, the Republican governor of South Carolina, to be ambassador to the United Nations.

Senate Votes to Require Women to Register for the Draft – The New York Times

The policy shift, which is not included in the House’s version of a broader military bill, reflects the evolving role of American women in the Armed Services.

Trump Faces GOP Split on Whether to End ‘Dreamers’ Shield – Bloomberg

President Donald Trump faces a fight within his own party over whether he should immediately end deportation relief for undocumented immigrants brought to the U.S. as children, a central part of his campaign pledge to take a harder line on illegal immigration.

TOP

DEMOGRAPHICS, INEQUALITY & POPULISM

Foreclosure Prevention Returns to the Unknown – The New York Times

After an eight-year run, a troubled government effort to prevent foreclosures and keep struggling borrowers in their homes came to an end last month.

What happens next will be a Trump-era laboratory experiment in how financial services companies conduct themselves when the regulatory fetters are loosened.

Undocumented ‘Dreamers’ Still Getting Work Permits Under Trump – Bloomberg

President Donald Trump’s administration is continuing to grant work permits to undocumented immigrants who arrived in the U.S. as children, despite his campaign promise to “immediately terminate” the program.

The permits allow the immigrants to legally hold jobs, protect their employers against sanctions and open up broader economic opportunities to a group of people who otherwise would likely be relegated to the shadow economy because of their unlawful presence in the country.

TOP

SCANDALS, LAWSUITS, FINES, REGULATORY

RBS Sets Aside $3.8 Billion for U.S. Mortgage Settlement – WSJ

Royal Bank of Scotland put aside an extra $3.8 billion to cover future settlements with U.S. authorities over the sale of toxic mortgage-backed securities before the financial crisis.

Bolt Loses 2008 Olympic Relay Gold in Teammate’s Doping Case – Bloomberg

Usain Bolt has lost one of his nine Olympic gold medals because of a doping case involving Jamaican teammate Nesta Carter.

The IOC said Wednesday that Carter tested positive for methylhexaneamine, a banned stimulant, in re-analysis of samples from the 2008 Beijing Olympics. Olympic rules state that the entire relay team can be disqualified and stripped of medals if one runner fails a doping test.

Geneva Art World Pens Anti-Money-Laundering Guide Amid Scandals – Bloomberg

Geneva’s art world suffered another blow to its reputation in November when prosecutors seized pillaged Syrian antiquities from the city’s free port, raising concerns about money laundering and terrorist financing. Now a group of art dealers, lawyers and consultants is fighting back.

Shkreli Wins Access to Law Firm Records to Defend Himself – Bloomberg

Martin Shkreli won a court ruling allowing him to move forward with his strategy of blaming his ex-lawyers to defend himself against criminal fraud charges.

The 33-year-old founder of Retrophin and Turing Pharmaceuticals AG, who was dubbed in the media as the “most hated man in America” for raising the price of a potentially life-saving drug by 5,000 percent, persuaded a judge to order his former law firm to turn over three years’ worth of documents. He says the evidence will help clear him.

No Coat, No Tie Leads to Rough Start for Accused Insider Trader – Bloomberg

Prosecutors say Afriyie used a TD Ameritrade Holding Corp. brokerage account in his mother’s name to buy $25,000 of ADT call options that mushroomed into $1.5 million in profits, once news of the deal became public in February 2016 and ADT shares rose 50 percent.

TOP

BANKS, BROKERS, INSURANCE, XCHANGES

Banks’ AI plans threaten thousands of jobs

Thousands of jobs will be put at risk as the world’s biggest banks harness artificial intelligence systems to the wave of roles created in recent years to meet ever-growing regulatory demands, industry experts have warned.

New technologies mean that banks could make vast savings in compliance, according to Richard Lumb, head of financial services at Accenture, who estimated that “thousands of roles” in the banks’ internal policing could be replaced by automated systems.

“We are seeing work with clients today which is very much around big data and robotic process automation, where in compliance — take anti-money laundering — you can take out thousands of roles,” Mr Lumb told the Financial Times at last week’s World Economic Forum in Davos. “That is coming quite quickly now and that will sweep across the industry.”

Goldman’s $285 Million Package for Gary Cohn Is Questioned – The New York Times

Mr. Cohn’s exit pay as he left for President Trump’s National Economic Council drew criticism as a possible incentive to give Goldman Sachs special treatment.

TOP

FINTECH, BLOCKCHAIN, DIGITAL PAYMENTS

Fintechs warned to expect tougher regulation

The governor of the Bank of England has put banks and fintech companies on notice to expect tougher, more intrusive regulation as the use of disruptive technology in financial services becomes more sophisticated and widespread.

Mark Carney, who is also chairman of the Financial Stability Board that makes recommendations to G20 nations, said on Wednesday that fintech could signal an end to the traditional universal bank model. He added that it could also increase “herding” risks and make the system more interconnected and complex.

TOP

SILICON VALLEY, UNICORNS, STARTUPS, VC

Cisco’s Secretive AppDynamics Deal May Pave Way for Unicorns – Bloomberg

The deal is seen by some advisers as the first in a long-expected wave of unicorn buyouts. With more than 150 companies valued at more than $1 billion and a temperamental IPO market, being acquired offers startups an exit from the funding rollercoaster and can also shield them from the regulatory and investor scrutiny that comes with a public listing. At the same time, it can create the risk that the startup loses its culture, independence and key staffers when folded into a larger business.

These Are the 20 Fastest-Growing Skills in the Online Job Market – Bloomberg

Freelancers who know natural language processing earned an average hourly rate of $123 per hour, and the total amount that they billed soared by 2300 percent last quarter from a year earlier. Only about 400 freelancers currently list the skill on their Upwork profile, and the fourth quarter was the first time that there was a significant pool of freelancers with this talent, according to the company. The nascent boom in these jobs also foreshadows the employment that advances in artificial intelligence could create, even while they replace other human tasks.

Other tech specialties dominated Upwork’s list of the 20 fastest-growing skills (scroll down for the full list). No.2 was Swift, a programming language used to build apps for Apple Inc. devices, and no.3 was Tableau, a system to create data visualizations offered by Tableau Software Inc. Some non-technical skills were part of the list as well, such as Instagram marketing.

The data also highlighted how rapidly some skills can become obsolete. The demand for workers who know how to analyze Twitter data plunged 51 percent last quarter from a year earlier, reflecting the social media service’s struggle to grow its user base.

TOP

CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

Middle-Aged Americans Beat Millennials in Time Spent on Social Media – Bloomberg

It’s no exaggeration: Despite the popular belief that millennials are the generation most addicted to their phones, a recent report from Nielsen, the media information and analysis company, found that it is, in fact, Generation X that lavishes the most time on social media pages.

Asked how many hours a week they spend on these networks, 35- to 49-year-olds averaged six hours and 58 minutes. Millennials, defined by the study as those aged 18 to 34, spent 39 fewer minutes per week. (People 50 and over, boomers and above, spent just four hours a week or so e-socializing.) The study, conducted in the third quarter of last year, took into account 9,000 smartphone and 1,300 tablet users across the country. The media activity was measured passively to avoid any self-reporting bias.

Another Live-Streamed Suicide Puts Spotlight on Social Media Ethics – WSJ

A teenage girl in Miami Gardens, Fla., committed suicide early Sunday morning while streaming live on Facebook, the latest disturbing incident to illustrate the challenges confronting technology companies that are investing heavily in live video.

Hugo Barra to Lead Facebook’s Virtual Reality Efforts After Leaving China’s Xiaomi – Bloomberg

Facebook Inc. hired Hugo Barra to lead its virtual reality efforts just days after he quit Chinese smartphone maker Xiaomi Corp.

TOP

RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Retailers Chasing Fast Fashion Stumble Under Heavy Buyout Debts – Bloomberg

Visitors to the newly redeveloped Kings Plaza shopping mall in Brooklyn later this year will encounter brand-new, multilevel Primark and Zara stores. Names not on the directory? Debt-laden older brands such as J. Crew, Rue21 and True Religion.

“Euro fast fashion,” featuring trendy clothing that can move from catwalks to stores in mere weeks, has taken the U.S. by storm, and distressed specialty apparel retailers are among the biggest casualties. Their business models and balance sheets are in tatters, especially at smaller and slower chains that jacked up debt during leveraged buyouts.

That’s left them short on cash just when they need it to buy updated systems and keep their shelves constantly refreshed to keep pace with their newer, nimbler rivals. The result has been the biggest spate of restructurings and bankruptcies since the Great Recession. There are more on the way.

“Companies that have the highest leverage are going to be the least able to address those challenges and invest the capital necessary to explore different strategies and evolve the business models,” said Chris Grubb, a managing director in Greenhill & Co.’s restructuring group who focuses on struggling retailers. “There will continue to be a slew of these smaller filings.”

Amazon Expands Into Ocean Freight – WSJ

Amazon.com has begun handling shipment of goods by ocean, taking on a role it previously left to global freight-transportation companies and marking the retailer’s latest move to build out its delivery business.

Amazon Steals Netflix’s Spotlight to Become Toast of Hollywood – Bloomberg

While Netflix Inc., the streaming leader with almost 94 million subscribers worldwide, has upended entertainment industry traditions, Amazon.com Inc. has played more by Hollywood’s rules. In the movie business, that means giving motion pictures a serious run in theaters, rather than releasing them simultaneously online, as Netflix often does.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Discovery, Sky at Impasse Over New TV Deal, Risking Blackout – Bloomberg

Discovery Communications Inc. channels including TLC and Animal Planet are at risk of going dark for 5.5 million Sky Plc TV customers in U.K., as the companies hit an impasse in negotiations toward a new contract.

Discovery and Sky traded accusations in statements Wednesday, with a Jan. 31 deadline looming to strike a new deal. All 12 Discovery channels currently available to Sky and NOW TV customers, like Discovery Channel, Eurosport and DMAX, would be blacked out if the two sides remain deadlocked.

GE Deal With Boston Celtics Said to Be Over $7 Million a Year – Bloomberg

General Electric Co. will pay more than $7 million a year under an agreement with the Boston Celtics to put the company’s iconic round logo on the basketball team’s uniforms, according to a person familiar with the deal who asked not to be identified.

The industrial giant, which moved its headquarters to Boston last year, also will provide data and analytics services to the Celtics under the multiyear deal, GE said Wednesday in a statement. Representatives of GE and the Celtics declined to comment on the deal’s value.

Snapchat Is in Talks for Big Ad Deals Ahead of IPO – WSJ

As Snap woos Wall Street ahead of its initial public offering, the parent of the popular messaging app is also spending plenty of time courting another constituency: advertisers on Madison Avenue.

Snickers to Air First Live Super Bowl Ad – WSJ

Candy-maker Mars Inc. will shoot and air a commercial in real-time for its Snicker brand during the Super Bowl, in an effort to stand out from the pack. The spot will feature actor Adam Driver and have a western theme.

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AUTOS, ELECTRIC, SELF-DRIVING

Trump Is Squeezing Detroit at the Worst Possible Time – Bloomberg

President Donald Trump is asking U.S. automakers to invest in domestic manufacturing at a bad time.

Car sales have gained for seven-straight years after the U.S. auto bailouts and the financial crisis, a streak that’s close to running out of gas. That’s a recipe for trouble facing companies wary of undoing the painful but necessary steps they took to shut dozens of factories across the country, before and during a more than $70 billion government bailout.

Canada, U.S. Auto Industry Coordinating on Trump Response – Bloomberg

Automakers and parts manufacturers on both sides of the Canada-U.S. border are meeting state and provincial governments to coordinate a response to President Donald Trump as he pushes far-reaching changes to a trade deal that’s crucial to the industry, the head of Canada’s biggest autoparts maker said.

The group has been meeting to put together an analysis of the industry to show how integrated it is and how free trade is key to the competitiveness of manufacturers across North America, said Don Walker, chief executive officer of Magna International Inc. He declined to say who is joining the talks.

“We’re a very integrated industry and neither Canada or the U.S. — or Mexico for that matter — want to make the whole value chain less efficient,” Walker told reporters at a conference in Toronto Wednesday. “We want to make sure that nothing happens that will inadvertently drive the cost up.”

Lyft Cuts Fares 1 Percent, Plans to Add 100 Cities – Bloomberg

Lyft Inc., the No. 2 U.S. ride-hailing company, plans to boost the number of cities it covers to 300 from 200 by the end of 2017 while cutting prices to attract more customers.

Neither Lyft or top rival Uber Technologies Inc. are making money in the U.S. as they compete for driver-and-rider loyalty. Uber covers more than 75 percent of the U.S. Lyft says that its network reaches 55 percent of the population, and that will rise to about 72 percent after the expansion, which begins this week with the addition of 40 cities.

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HEALTHCARE, PHARMA, BIOTECH

Shark antibodies join battle against Alzheimer’s

Lundbeck, the Danish pharmaceuticals company, has breached the blood-brain barrier in mice using shark antibodies for the first time, in a development it says could be used to treat Alzheimer’s and Parkinson’s diseases.

The drugmaker, which has had a longstanding focus on treating brain diseases such as depression and schizophrenia, has undertaken the work in partnership with Ossianix, a privately held US group, to which it has paid an undisclosed sum to develop the treatment.

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LUXURY, HIGH END, ASPIRATIONAL

Soil, Not Grapes, Is the Latest Must-Know When Picking a Wine – Bloomberg

True, the concept that specific flavors are being transmitted from rocks to vines is not exactly backed by scientists—“Vineyard geology can’t be tasted in wine in any direct way,” says Dr. Alex Maltman, a geologist at Aberystwyth University—but many winegrowers remain convinced. Which means wine lovers should get prepared.

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ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

Apple Set to Join Amazon, Google, Facebook in AI Research Group – Bloomberg

Apple Inc. is set to join the Partnership on AI, an artificial intelligence research group that includes Amazon.com Inc., Alphabet Inc.’s Google, Facebook Inc. and Microsoft Corp.

Eye Scans Are Replacing Airline Boarding Passes – Bloomberg

The new option doesn’t replace TSA PreCheck so much as complement it. It checks travelers’ identities with a fingerprint or iris scan, eliminating the boarding pass and identity checks. That lets Clear members proceed directly to bag and body screening. The company says about 65 percent of its users at the busiest airports have also enrolled in PreCheck, allowing them to retain their shoes, belts, and laptops during the screening.

Why It Matters That Human Poker Pros Are Getting Trounced By an AI

We’re at the halfway point of the epic 20-day, 150,000-hand “Brains Vs. Artificial Intelligence” Texas Hold’em Poker tournament, and a machine named Libratus is trouncing a quartet of professional human players. Should the machine maintain its substantial lead—currently at $701,242—it will be considered a major milestone in the history of AI.

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SCIENCE, NATURE, PSYCHOLOGY

6 Million Years Ago, Otters the Size of Wolves Roamed China’s Wetlands – The New York Times

Fossils of the extinct relative of modern-day otters suggest that it was six feet long, and it had jaws that could possibly crack through shellfish.

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MISCELLANEOUS

John Cena a champion in the ring and in the sports business world

One of John Cena’s catchphrases is “You Can’t See Me,” but the longtime WWE star is seen all over the world as one of the most visible and successful athletes in sports business.

Mary Tyler Moore, Who Incarnated the Modern Woman on TV, Dies at 80 – The New York Times

Ms. Moore was best known as the spunky professional Mary Richards on “The Mary Tyler Moore Show” and as Laura Petrie, the wife of a comedy writer, on “The Dick Van Dyke Show.”

Macro Links Wed Jun
25th – Role Switch

MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

A $90 Billion Debt Wave Shows Cracks in U.S. Property Boom – Bloomberg

A $90 billion wave of maturing commercial mortgages, leftover debt from the 2007 lending boom, is laying bare the weak links in the U.S. real estate market.

It’s getting harder for landlords who rely on borrowed cash to find new loans to pay off the old ones, leading to forecasts for higher delinquencies. Lenders have gotten choosier about which buildings they’ll fund, concerned about overheated prices for properties from hotels to shopping malls, and record values for office buildings in cities such as New York. Rising interest rates and regulatory constraints for banks also are increasing the odds that borrowers will come up short when it’s time to refinance.

“There are a lot more problem loans out there than people think,” said Ray Potter, founder of R3 Funding, a New York-based firm that arranges financing for landlords and investors. “We’re not going to see a huge crash, but there will be more losses than people are expecting.”

17F24 chart - a boom in cheap debt

China Floods Financial System With Cash Ahead of Lunar New Year – WSJ

China has injected a torrent of money into its financial system in recent days, using a mix of short-term tools aimed at pre-empting a seasonal cash crunch without signaling a shift toward an easier monetary policy.

17F24 - alternative easing

China Raises Mid-Term Lending Rates in New Signal of Tightening – Bloomberg

China increased interest rates on the medium-term loans it uses to manage liquidity, the strongest signal yet of tightening as it shifts focus to curbing risk in the financial system.

“As China has essentially liberalized deposit and lending rates, the rates charged on MLF effectively play the role of medium-term policy rates,” Ding Shuang, chief China economist at Standard Chartered Plc in Hong Kong, wrote in a report. “Today’s move confirms that monetary and credit policy will likely be moderately tighter this year.”

China trade flows threatened by capital flight battle

China’s battle against capital flight is threatening the country’s trade flows, with recent restrictions on the use of basic tools for cross-border finance beginning to hamper the businesses driving the country’s $1.7tn in annual imports.

While regulators seeking to keep Chinese money onshore remain focused on outbound foreign direct investment that they believe is being used to funnel money abroad, payments for goods and services have also felt the squeeze. Transactions are being delayed and contracts forced into renegotiation, while trade credit insurers are cutting exposure to the country.

“Trapped cash in China is nothing new but now we are seeing these problems creeping from the capital account into the current account,” said Jolyon Ellwood-Russell, a Hong Kong-based trade finance lawyer at Simmons & Simmons.

China’s Efforts to Stem Capital Outflows Are Starting to Pay Off – Bloomberg

China’s campaign to stop cash flooding out of the country is showing some success.

For the first time since the yuan’s devaluation in August 2015, Chinese banks last month registered net inflows under the capital account, according to cross-border payments figures released last Thursday by the currency regulator. The yuan, which plunged last year by the most in two decades, is now heading for its biggest monthly advance against the dollar since March.

17F24 chart - China banks fund inflows turnaround

Vanguard to Deutsche AM See Sub-Zero Bond Yields Persisting – Bloomberg

Good news for bond bulls: as far as some of the world’s biggest investors are concerned, negative yields will be a feature of Europe for years to come.

Vanguard Group says the euro zone’s sluggish economy, where policy makers are barely halfway to reaching their inflation target, means monetary easing will persist, and sub-zero bond yields with it. Deutsche Asset Management predicts rates on benchmark German two-year notes will climb about 0.2 percentage point in 2017 — just twice the advance in the past month and keeping them well below the zero threshold.

“We can easily see negative yields through 2020,” said Paul Malloy, who as Vanguard’s head of European fixed income runs teams responsible for $100 billion of assets. The firm as a whole oversees $3.5 trillion. “As long as you think central banks have credibility and are working toward their mandate, there’s not a lot to be concerned about.”

U.S. Government Bonds Fall Amid New Debt Sales, Return to Risk – WSJ

The U.S. government bond market suffered the biggest one-day selloff in more than a month, following a price rally in the prior session, as investors’ risk appetite improved.

The latest price swing underscores the bond market’s sensitivity to Mr. Trump’s policy outlook as investors are caught between the prospect of large fiscal stimulus, which had been the key driver sending yields higher since Election Day, and the risk of trade frictions.

Remember ABX? Wall Street Said to Test New Mortgage Index – Bloomberg

The derivatives would work much like ones created in the run-up to the U.S. housing crisis. Those products, known as the ABX indexes, were blamed for amplifying risks as big traders like American International Group Inc. wagered that subprime mortgage bonds would perform fine. After losses surged and the government had to bail out the financial system, demand for ABX bets faded.

The new derivatives, however, would be tied to higher-quality mortgages that are less likely to default. The indexes Vista is building are linked to mortgage bonds issued by Fannie Mae and Freddie Mac known as “credit-risk transfer” securities, which force investors to bear losses when borrowers default on their loans, said Richard MacWilliams, Vista’s co-founder. The underlying loans are safer, but the bonds are still riskier for their owners than standard Fannie Mae and Freddie Mac mortgage bonds, which are fully supported by the government.

Federal Debt Projected to Grow by Nearly $10 Trillion Over Next Decade – The New York Times

After seven years of fitful declines, the federal budget deficit is projected to swell again, adding nearly $10 trillion to the federal debt over the next 10 years, according to projections from the nonpartisan Congressional Budget Office that reveal the strain that government debt could have on the economy as President Trump presses to slash taxes and ramp up spending.

The deficit figures released Tuesday will be a major challenge to House Republicans, who were swept to power in 2010 on fears of a bloated deficit and who made controlling red ink a major part of their agenda under former President Barack Obama.

Eurozone’s Four-Year Binge on Global Bonds Is Halted – WSJ

Investors in the eurozone turned into net sellers of foreign bonds for the first time in four years, a shift in trade that could affect the euro and even U.S. fixed-income markets.

Between September and November, European investors sold €15.99 billion ($17.2 billion) more in foreign bonds than they bought, according to the most recent data from the European Central Bank. The last time the eurozone was a net seller of global debt was in the three months to August 2012.

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MACRO OP-EDS, DATA, INQUIRY AND THEORY

The UK Supreme Court rules for democracy

The UK parliament is back where it should be: at the heart of a great debate about the nation’s future. In the most significant constitutional judgment for a generation, the Supreme Court has ruled 8 to 3 that an act of parliament must be passed by the Houses of Commons and Lords before the government can activate the Article 50 process to leave the EU. In simple terms: Prime Minister Theresa May does not have the authority to trigger Brexit without the consent of MPs and peers.

The Supreme Court ruling is a minor headache for Theresa May

For Theresa May, prime minister, this ruling is a minor headache that could turn into a migraine. MPs overwhelmingly voted for a non-binding motion in December to support leaving the EU so, if the bill mirrors this wording, there is no reason for MPs to oppose the legislation. They are all too aware of the public outrage bubbling away if Brexit is blocked.

There will be plenty of moaning from some Brexit supporters that rich judges are somehow denying the will of the people. This ruling is nothing of the sort. It is about due process. Those who campaigned to regain parliamentary sovereignty from Brussels should welcome this judgment and the scrutiny from our democratic representatives. This is what Brexit should look like.

Theresa May’s global ambitions disguise diminished status

It is easy to dismiss the UK prime minister’s vision of Britain as a global opportunity state as wishful thinking, and an attempt to reassure a divided electorate at home and perplexed and scornful observers and investors overseas. It is also easy to point out that Britain’s exit from the EU may very well constrict, not widen, its strategic and diplomatic opportunities and leverage in the world.

Brussels and its multifarious networks provide member states not just with trading access, but also a guarantee of regular encounters, negotiations, contacts, informants and alliances. The UK will in the future have to generate these things much more on its own. The idea, cherished by some, that it can easily compensate for this by cleaving even more closely to the US looks increasingly problematic.

Too close and unthinking an allegiance to Washington has sometimes got British governments into trouble. Such difficulties seem likely only to multiply under President Donald Trump, an erratic nationalist who is already at odds with sections of America’s own foreign policy establishment. Then there is the real possibility of Scotland opting for independence, which has been reignited by Brexit. If this comes to pass, some of the UK’s remaining foreign policy assets — its role in the UN, Nato and the Group of seven leading nations — will also be put under strain.

Yet the fact that the official British response to these potential dilemmas has been to summon up global prospects is revealing. Revealing in that it points to what has proved the most persistent chimera haunting postwar British foreign policy. It is not simply that “Britain has lost an empire and has not yet found a role”, an over-repeated verdict. It is rather that many in the UK’s governing class have found it difficult to make the adjustment from being a world power to accepting regional power status.

Donald Trump and Xi Jinping’s battle over globalisation

Xi Jinping, president of China, made a speech last week on globalisation at the World Economic Forum that one would have expected to come from a US president. At his inauguration, Donald Trump made remarks on trade that one would never have expected to come from a US president. The contrast is astounding.

[The Trump adminstration believes] trade policy determines the trade deficit. To a first approximation, this is not so, because the trade (and current account) balances reflect differences between income and spending. Assume imposition of an across-the-board-tariff. Purchases of foreign exchange will fall and the exchange rate will appreciate, until exports fall and imports rise enough to return the deficit to where it started. Protection then just helps some businesses at the expense of others. The Trump proposals seem to aim at resurrection of the economically dead. True, protection might lower the external deficit by making the US a less attractive destination for foreign investment. But that hardly seems a sane strategy.

17F24 - deficit with China

A U.S.-China Role Switch: Who’s the Globalist Now? – WSJ

The irony of a U.S. president seeking to stir the public, and define America’s place in the world with stridently nationalist and populist language—the staple of the Communist Party’s propaganda machine—isn’t lost on China’s vast army of internet users.

Nor on Mr. Xi, who is making the most of it. China’s authoritarian head of state sees a historic opportunity to brand his nation as the standard-bearer of globalization, and remake his own image as an enlightened internationalist, in stark contrast to Mr. Trump.

We are in a topsy-turvy world. The leaders of the U.S. and China, rhetorically at least, appear to have switched roles.

Trump Injects High Risk Into Relations With China – The New York Times

The Chinese fear that if Mr. Trump was willing to toss aside years of delicate negotiations with allies and decades of American trade policy, he could also go his own way on issues he has staked out with Beijing, including Taiwan and the South China Sea.

As if to bolster that point, on Monday — the same day that Mr. Trump withdrew from the Trans-Pacific Partnership, the 12-nation trade agreement — his spokesman said the United States would prevent China from accessing islands it claims in the South China Sea, a threat that one nationalist Chinese newspaper had already warned would mean war.

NAFTA and other trade deals have not gutted American manufacturing — period – Vox

Yes, America has been losing manufacturing job share at a furious rate. Yes, the spread between the incomes of the non-college-educated and the college-educated has widened massively. Yes, the spread between the incomes of even the college-educated and our overclass has exploded.

But this is not due to NAFTA. This is not due to bringing China into the WTO rather than keeping it out. This is not due to the not-yet-completed — and now never-to-be-completed — TPP.

Try to calculate the share that those three “bad trade agreements” played in the processes of manufacturing job loss, of widening income inequality, and the coming of the overclass of the Second Gilded Age, and — as long as you calculate honestly — you get a share of responsibility of less than 5 percent, and usually less than 1 percent.

This is what caused a populist backlash?

Why the U.S. Has a Monopoly on Jobless Recoveries – Bloomberg View

Economists have recently discovered that it’s middle-skill routine jobs — think of cashiers, telemarketers, or cooks — that tend to get eliminated in jobless recoveries. In a landmark paper titled “The Trend is the Cycle: Job Polarization and Jobless Recoveries,” Nir Jaimovich and Henry Siu found that it’s these workers who aren’t being hired back in the U.S. after recessions hit. In fact, the much-feared phenomenon of job polarization — the separation of the labor market into low-paid grunt work and high-paid knowledge work — happens entirely during these U-shaped recoveries.

What to make of Trump’s economic intentions? | International Selection Comment | Finanz und Wirtschaft

Much of what Trump said is undoable. If he really tries, he will face very unpleasant consequences. He also may be restrained by the famous «check and balances» of the US system of government. It is not clear either that he ever meant what he said. His experience so far has been that of a salesman who tells customers what they want to hear, and we know that truth is irrelevant for him. We may come to appreciate this character trait.

For Trump, Everything Is a Rating – The New York Times

Mr. Trump’s tendency to treat truth as negotiable was idiosyncratic in a TV star. In a president, it’s disturbing. Alternative facts are what they use in alternatives to democracy.

If anything, presidents receive more grades and metrics than candidates do, from approval polls — rigged again, apparently — to unemployment figures, which Mr. Trump cast doubt on when they were favorable to Mr. Obama. Every sign says that Mr. Trump will respond to these figures exactly as he has in the past: as the TV star, up early in the morning, stewing, waiting for the overnight ratings to come in.

Trump, the Press and the Dictatorship of the Trolletariat – WSJ

Few journalists have appreciated the degree to which Mr. Trump’s entire political and governing strategy depends on trolling them. They’ve mostly assumed his penchant for exaggeration and invention was the result of psychosis, or just ego. By now, though, it ought to be apparent that he’s doing it intentionally, and strategically.

The Trump-Putin Parallels Pile Up – Bloomberg View

Reports that President Donald Trump travels with a claque — a group of supporters that creates the impression of support for him at functions like a recent meeting with Central Intelligence Agency staff — have added to a growing list of ways his administration resembles Russian President Vladimir Putin’s.

The parallels began in earnest with Trump’s pre-inauguration news conference, when Alexei Kovalev, known for debunking Russian government propaganda, compared the event to Putin’s circus-like annual meetings with the press. The piece resonated with Western journalists, who are not used to being denied questions by the president and also expect that he will be nice to them. It also resonated with their Russian colleagues, who have been dealing with carefully staged press appearances and punitive access restrictions since Putin’s first term in power.

Truth, lies and the Trump administration

The man from the BBC was laughing as he reported the White House’s false claims about the size of the crowd at Donald Trump’s inauguration. He should have been crying. What we are witnessing is the destruction of the credibility of the American government.

This spectacle of obvious lies being peddled by the White House is a tragedy for US democracy. But the rest of the world — and, in particular, America’s allies — should also be frightened. A Trump administration that is addicted to the “big lie” has very dangerous implications for global security.

As Robert Moore, the Washington correspondent for ITN, puts it: “If the White House press secretary says things that we know to be demonstrably false, why will we trust him on North Korea, Russia, Iran [and the] war on Isis?” That is not just a good question — it is a vital one.

Donald Trump isn’t serious about his 3 to 5 million illegal votes claim, and this proves it – The Washington Post

Trump still hasn’t called for an investigation, which makes no sense.

Once you get past the lack of a factual basis for Trump’s strange and incredible claim, this is what really doesn’t make sense about it. Trump is alleging that as many as 3.6 percent of the votes cast in a 2016 contest decided by even fewer votes may have been illegitimate. He’s saying the number of illegal votes may have been larger than the populations of 38 states. He’s saying that as many as 30 to 40 percent of the estimated 11 million undocumented immigrants in the United States cast ballots.

If that’s even close to true, it’s a massive, unprecedented electoral scandal that requires investigations to, if nothing else, prevent it from happening again. And that would seem to be something Trump, with his hard-line policy on illegal immigrants and pre-election warnings of large-scale voter fraud, should clearly support. The idea that Trump would truly believe this but not investigate it as one of his first priorities makes precisely zero sense.

This is how Donald Trump engineers applause – The Washington Post

This isn’t the first time that Trump has engineered applause. When he first announced his candidacy, he got wild cheers — from actors who had been paid to applaud him (Trump then stiffed the company that hired them for four months). When he gave his first news conference as president, he filled the back of the room with aides to cheer for him, and jeer at the journalists he was attacking.

Trump is actually reviving a very old tradition — the tradition of the claque. A claque is a group of people whose job is to generate applause. In the description of the 1911 Encyclopedia Britannica, a claque is:

an organized body of professional applauders in the French theatres. The hiring of persons to applaud dramatic performances was common in classical times, and the emperor Nero, when he acted, had his performance greeted by an encomium chanted by five thousand of his soldiers. … The recollection of this gave the 16th-century French poet, Jean Daurat, an idea which has developed into the modern claque. … There are commissaires, those who learn the piece by heart, and call the attention of their neighbours to its good points between the acts. The rieurs are those who laugh loudly at the jokes. The pleureurs, generally women, feign tears, by holding their handerkerchiefs to their eyes. The chatouilleurs keep the audience in in a good humour, while the bisseurs simply clap their hands and cry bis! bis! to secure encores.

Trump, probably without knowing about the historical precedent, has revived this old tradition.

CEOs Savor New Status in Trump’s Washington – WSJ

Donald Trump’s presidency isn’t yet a week old, but he has made it clear that business leaders matter in his White House—and chief executives say it’s about time.

Former Exxon Mobil Corp. chief executive Rex Tillerson is primed to lead the State Department, and Mr. Trump’s transition team has tapped a panel of executives to provide the president with economic insight and advice. On Monday, Mr. Trump began his first full week on the job in a breakfast meeting with corporate chiefs.

For CEOs, the moves have sent a message that their stock is rising in Washington, with some betting that they will have a louder say in running the country.

Larry Summers: Time for business leaders to wake up

I wonder what the business leaders who have been waxing enthusiastic about our new pro-business administration are thinking right now.

Confidence and prosperity depend on a perception of government credibility and confidence. Is that present when an administration lies about readily observable facts like crowd sizes and then defends the lie with the Orwellian concept of alternative facts?

Does the business community really want NAFTA to be abrogated, Asian trade architecture turned over to the Chinese or a trade war launched with China?

Secretary of commerce designate Wilbur Ross vows to self-initiate dumping cases rather than waiting for industry to file. During the two administrations I served in, industry discouraged such efforts because of retaliation fears. Have matters really changed or is Mr Ross ahead of his constituency?

Do the financial cheerleaders for a business-leader dominated administration approve of the emerging combination of weak dollar rhetoric from both the president and Treasury secretary nominee along with strong dollar policy?

If as secretary designate Steven Mnuchin has just written to Congress and the president has asserted the administration believes the dollar is too strong, why are all its policies calculated to raise the dollar: (i) very expansionary fiscal policy (ii) complaints about easy money (iii) measures like the border tax adjustment that discourage imports and encourage exports (iv) measures to reduce capital outflows as American companies outsource? This is the least coherent dollar policy since the Carter administration.

I guess as someone put it to me in Davos, business people are more comfortable with fellow business people than with policy people. Perhaps in forming views they should get modern and look at data.

Why does Erdogan want a new Turkish constitution?

If the new constitution is adopted, Mr Erdogan will control budgets, appoint judges, have a say in cabinet appointments and resume leadership of the AKP — presidents are currently banned from being affiliated to political parties. The proposed changes will also restart the clock on Mr Erdogan’s term limits, meaning he could serve two more times as president after this term expires in 2019. That would allow him to lead the country until 2029, an unprecedented run for any Turkish leader.

For those who have lamented Mr Erdogan’s authoritarian tendencies, the draft constitution represents the concentration of almost all political power in the president’s hands.

Trump says making products in the U.S. is ‘gonna be cheaper.’ Economists disagree. – The Washington Post

On Monday morning, President Trump met with business leaders to present a plan for keeping jobs in the United States. He offered a carrot — a dramatic cut in taxes and regulations — as well as a stick — a substantial tax on companies that decide to send their factories offshore.

Whether companies follow suit will depend on how they weigh the benefits Trump is offering with the potential higher costs of keeping production in the United States. But in Trump’s statements, he claimed that the move would have no cost at all — a statement that rankled some economists.

Trump’s Gift to China – Bloomberg View

Trump touted the move as a “great thing for the American worker.”

In fact, it’s a great thing for the Chinese economy and government. One of the few things that seemed clear about Trump’s foreign policy was that he wanted to get tougher on China — to limit its geopolitical ambitions and end its allegedly unfair trade practices. He’s just made both tasks much harder.

Regardless of Trump’s constant vilification, the TPP was a key part of the U.S. strategy to contain and influence a rising China. Trump and his appointees have talked instead of imposing “peace through strength” in Asia — threatening to rethink the One-China Policy, block China from accessing its artificial islands in the South China Sea and build up U.S. naval forces in the region. All any of this is likely to do is embolden Chinese hardliners and raise the costs to the U.S. of maintaining its preeminence in region.

It’s also likely to cost the U.S. some of its allies. A successful TPP would’ve bound important economies around the Pacific Rim, from Japan to Vietnam to Chile, more closely to the U.S., while solidifying America’s presence in the most vibrant and vital part of the global economy. Asian nations now have every reason to question U.S. commitment and staying power, not to mention the promises of its leaders. Several will focus their energies on China’s own free-trade pact for the region, which will increase rather than decrease their dependence on the Chinese economy. If Trump asks for their backing to roll back Chinese expansionism, they’re unlikely to answer the call.

McCain: Without trade pact, China will be economically dominant – POLITICO

President Donald Trump’s decision to back the United States out of the Trans-Pacific Partnership trade agreement will ultimately cede economic and political power to China, Sen. John McCain said Tuesday morning, making it a decision that “is not good for the United States of America.”

“My concern is that we consign the Asia pacific region to China,” McCain (R-Ariz.) said Tuesday on “CBS This Morning.” “They have now a very significant economic role, where 60 percent of the world’s economy is in the Asia-Pacific region, and we are stepping back. I have talked to leaders of Asian countries who have all said that this will cede the field to China. And that, to me, is not good for the United States of America.”

George Soros essay on Trump: defending an open society – Business Insider

Democracy is now in crisis. Even the US, the world’s leading democracy, elected a con artist and would-be dictator as its president. Although Trump has toned down his rhetoric since he was elected, he has changed neither his behavior nor his advisers. His Cabinet comprises incompetent extremists and retired generals.

What lies ahead?

I am confident that democracy will prove resilient in the US. Its Constitution and institutions, including the fourth estate, are strong enough to resist the excesses of the executive branch, thus preventing a would-be dictator from becoming an actual one.

But the US will be preoccupied with internal struggles in the near future, and targeted minorities will suffer. The US will be unable to protect and promote democracy in the rest of the world. On the contrary, Trump will have greater affinity with dictators. That will allow some of them to reach an accommodation with the US, and others to carry on without interference. Trump will prefer making deals to defending principles. Unfortunately, that will be popular with his core constituency.

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CENTRAL BANKS & MONETARY POLICY

Fed Debate Over $4.5 Trillion Balance Sheet Looms in 2017 – Bloomberg

It’s time to talk about the balance sheet.

Eight years after the Federal Reserve launched the first of three controversial bond-buying campaigns to help save the U.S. economy, its holdings are stuck at $4.5 trillion, and the question of when to let them shrink is beginning to simmer.

Several policy makers have pushed publicly to get the debate started. How the discussion plays out could have big implications for the pace of future interest-rate hikes and for the dollar.

17F24 chart - Fed balance sheet 4.5 trillion

Mnuchin Backs Fed Independence and Signals Reform Isn’t Priority – Bloomberg

U.S. Treasury Secretary nominee Steven Mnuchin isn’t jumping on the Republican bandwagon to audit the Fed.

In written questions by senators following his confirmation hearing on Thursday, Mnuchin was asked about his thoughts on “politicizing decisions made by the Federal Reserve Board of Governors and the benefits of an independent central bank.”

Mnuchin’s answer was crafted carefully.

“The Federal Reserve is organized with sufficient independence to conduct monetary policy and open market operations,” Mnuchin responded to Senator Bill Nelson, a Florida Democrat. “I endorse the increased transparency we have seen from the Federal Reserve Board over recent years.”

Turkey’s interest rate moves leave country in a mess

The central bank opted to leave its benchmark interest rate on hold on Tuesday, stunning economists who had predicted a rise of anywhere between a quarter and a full percentage point, and sending the lira plunging, albeit briefly. The central bank did not stand still entirely, raising the overnight lending rate by 0.75 percentage points and pledging more tightening in future if “inflation expectations, pricing behaviour and other factors affecting inflation” warrant it.

Still, the decision to leave the key rate on hold in spite of the lira’s record-breaking plunge was, to put it diplomatically, brave. The currency is the worst performer of the year so far, down by more than 6 per cent against the dollar. Labelling lira sellers as terrorists and railing against the evils of higher interest rates, as president Recep Tayyip Erdogan has done, is unlikely to calm investors’ nerves. Some fear that the mixture of grim domestic politics, a collapse in tourism and the prospect of more tightening from the Fed could be on the brink of getting out of hand.

Turkey Raises Key Rate to Tighten Liquidity as Lira Slumps – Bloomberg

Turkey’s central bank raised its overnight lending interest rate on Tuesday and said it would tighten further if necessary, building on recent extraordinary measures to bolster the lira and contain its impact on inflation.

The Monetary Policy Committee led by Governor Murat Cetinkaya raised the overnight lending rate by 75 basis points to 9.25 percent, in line with the median estimate in a Bloomberg survey. The one-week repo and overnight borrowing rates were kept unchanged at 8 percent and 7.25 percent, compared with predicted increases of 50 basis points and 25 basis points respectively.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

J&J’s Forecast Disappoints as Drugmaker Mulls Diabetes Unit Sale – Bloomberg

Johnson & Johnson forecast lower-than-predicted 2017 profit, blaming the impact of the stronger dollar, as negotiations drag into weeks with Swiss biotechnology company Actelion Ltd., potentially its largest deal ever.

Texas Instruments quarterly revenue beats on automotive demand | Reuters

Chipmaker Texas Instruments Inc reported higher-than-expected quarterly revenue, helped by strong demand for its analog and embedded chip products from the automotive and industrial markets.

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CREDIT, YIELD, BUYBACKS, CORPORATES

Undeterred, Global Investors Still Buying Mexican Bonds – Bloomberg

Global investors continue to buy Mexico’s peso-denominated sovereign bonds despite a 15 percent slide in the currency against the U.S. dollar since the election and amid prospects of higher rates. Traders increased their holdings by 112 billion pesos since Donald Trump’s victory, according to Bank of Mexico data through Jan. 12.

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TAXATION, HAVENS, TRADE, PROTECTIONISM

Call to Create Jobs, or Else, Tests Trump’s Sway – The New York Times

President Trump summoned the titans of American business to the White House on Monday for what was billed as a “listening session,” but it was the new president who delivered the loudest message: Bring back domestic manufacturing jobs, or face punishing tariffs and other penalties.

The contrast between Mr. Trump’s talk and the actual behavior of corporate America, however, underscored the tectonic forces he was fighting in trying to put his blue-collar base back to work in a sector that has been shedding jobs for decades.

Many of the chief executives Mr. Trump met with have slashed domestic employment in recent years. What is more, their companies have frequently shut factories in the United States even as they have opened new ones overseas.

Mexico braces for confrontation with Trump team

Battle lines have been drawn as Mexico and the US kick off what promise to be tough negotiations on the future of the two-decades old North American Free Trade Agreement, which both sides have threatened to kill off if they do not get their way.

Pressure from US president Donald Trump has already cowed US corporate investors operating in Mexico. President Enrique Peña Nieto has vowed to stand up to pressure from the White House, but with Nafta as the backbone of Mexico’s export-oriented economy, he has most to lose from the talks.

“If there are no clear benefits, there’s no point staying,” Ildefonso Guajardo, Mexico’s economy secretary, told a television interviewer. A worse deal for Mexico made no sense, he said.

How Trump Would Rework Nafta—and What Mexico, Canada Want in Return – Bloomberg

Trump’s plan to re-negotiate the North American Free Trade Agreement was received in Mexico with a call to protect tariff-free trading, while in Canada officials seemed more worried about avoiding unintentional damage to the economy as the U.S. targets Mexico. The U.S. president has broad powers to implement trade policies. While Trump has given few details about exactly what he’s seeking from a Nafta re-think, it could be a long and potentially messy process.

Trump, who was sworn in Friday, has already spoken to Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto about his objective to re-negotiate Nafta, which he’s routinely blamed for the loss of U.S. jobs and called “the worst trade deal in the history of this country.”

Trump, in Meeting, Urges Automakers to Build in United States – The New York Times

President Trump met on Tuesday with the chief executives of the three Detroit automakers and urged them to build new factories in the United States, and he vowed to change environmental regulations to encourage the creation of jobs.

The tenor of the White House meeting appeared far more cooperative than adversarial, despite the president’s repeated criticisms of automakers in recent weeks for building cars in Mexico for sale in the American market.

Mr. Trump stuck to the “America First” theme of his new administration, and he challenged executives of the automakers — General Motors, Ford Motor and Fiat Chrysler — to add jobs and production in exchange for more favorable regulations and tax policies.

U.S. Exit From Trans-Pacific Partnership Buoys Critics in Asia – WSJ

President Donald Trump’s decision to remove the U.S. from the Trans-Pacific Partnership is encouraging critics of the pact around Asia while some countries look for ways to keep it alive.

It is a reminder that there are groups in Asia that oppose the growth of free trade, just as their counterparts in the U.S. and elsewhere have done, potentially complicating the pursuit of other trade agreements.

Australia’s government, for instance, said it would try to revive the TPP, possibly as a free-trade pact among some or all of the remaining 11 nations, even possibly including China. But lawmakers opposed to the agreement said Mr. Trump had done the country a favor.

US tax policy chief Kevin Brady vows to push on with import levy

The Republican shaping plans for US tax reform has vowed to push ahead with a controversial levy on imports, saying it is vital to fixing the current “backward” system despite the opposition of foreign countries and American importers.

Kevin Brady, the chief tax policymaker on Capitol Hill, launched a robust defence of his proposal to tax imports and sought to tie it to President Donald Trump’s “America first” economic agenda just as the new president appears to waver on the idea.

The plan to penalise importers and incentivise American exports has emerged as the most contentious part of the biggest proposed overhaul of the tax code in 30 years, a process that begins in Mr Brady’s Ways and Means committee in the House of Representatives.

Trump’s Push to Protect Small-Town Workers Leaves Farmers Behind – Bloomberg

Donald Trump’s push against trade deals he says have devastated small-town U.S. workers is bringing disappointment to another key piece of his rural American coalition: Farmers and ranchers who heartily supported the president in hopes of less regulation and lower taxes.

Trump’s decision Monday to pull out of the Trans-Pacific Partnership, which would have reduced tariffs and strengthened economic ties between the U.S. and 11 other countries, will cost the agriculture industry as much as $4.4 billion a year in potential sales, according to the American Farm Bureau Federation, the biggest U.S. farmer group.

Toyota Adding 400 Indiana Jobs in $600 Million Answer to Trump – Bloomberg

Toyota Motor Corp. will invest $600 million and add 400 jobs at an assembly plant in Princeton, Indiana, weeks after Donald Trump criticized Japan’s largest automaker for its plan to open a plant in Mexico.

The investment is part of a $10 billion spending plan over the next five years that the carmaker announced earlier this month to expand and modernize its U.S. factories, according to a company statement. The expansion in Indiana will boost production of the Highlander, Toyota’s second-best-selling sport utility vehicle in the U.S., by 40,000 units a year. The plant currently employs 5,100 workers.

Why Trump Tariffs on Mexican Cars Probably Won’t Stop Job Flight

Cheaper labor is only one reason Mexico has seen a surge in new-car production. While the country’s low wages have been the big attraction, one of its key advantages is that it has trade agreements with 44 countries, giving automakers access to half the global car market tariff-free. The U.S. has similar trade deals with just 20 countries, which make up 9 percent of global car sales, according to the Center for Automotive Research in Ann Arbor, Michigan.

17F24 graphic - Made in Mexico

Nike and Ford Caught in Crossfire of Trump’s Trade Overhaul – Bloomberg

Sneaker producers, automakers and retail giants are facing tumult in their international operations as President Donald Trump pushes ahead with a dramatic overhaul of U.S. trade policy.

His decision not to join the Trans-Pacific Partnership and pledge to renegotiate the North American Free Trade Agreement are forcing companies to rethink supply chains and capital investments in a new era of protectionist policies. Trump’s moves weigh heavily on importers such as Nike Inc. and Ford Motor Co. as he seeks to boost domestic manufacturing and create jobs.

“Any company right now that is global is trying to understand what will change,” said Simeon Siegel, an analyst with Instinet LLC, a New York broker. The effect on supply chains, taxes and cost structures “is obviously very much in question.”

Oil Traders Aren’t So Sure About Republicans’ Border Tax Plan – Bloomberg

President Donald Trump has dealt global oil markets a major case of whiplash.

After piling into bets that the benchmark prices for crude oil traded in New York and London would converge by December 2018, traders are now paring those wagers amid doubts that a Republican Congress will be able to push through plans for a levy on oil imports and a tax exemption for exports, moves that would incentivize production in the U.S. relative to bringing in oil from overseas.

How Trade and Sanctions Made This Russian Fisherman a Billionaire – Bloomberg

“I’ve only ever been sure of one thing — that my life will always be tied to the north and the fishing industry,” Orlov, 51, polite and deliberate, pocket square tucked into a tailored suit, said in his first foreign media interview.

From that modest goal, Orlov has built a fortune that the Bloomberg Billionaires Index values at $1 billion, benefiting from the colliding forces of global trade and sanctions that today define Vladimir Putin’s Russia. While his business derives as much as 60 percent of its sales from outside the country, it’s also seen a surge in domestic consumption as sanctions limit food imports.

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FOREX, CURRENCY IMPACTS

Dollar May Reach Parity With Euro by End of Year, Goldman Says – Bloomberg

The strong U.S. dollar will continue and the Federal Reserve will normalize policy at a faster rate than the market expects, according to Goldman Sachs Group Inc. Chief Economist Jan Hatzius.

“We do expect a strong dollar,” Hatzius said on Bloomberg TV on Tuesday in response to a question about whether he expects the strong currency to continue. He forecast the dollar would reach parity with the euro by the end of the year.

Inside the Mind of Mnuchin: Too-Strong Dollar May Hurt Economy – Bloomberg

U.S. Treasury Secretary nominee Steven Mnuchin said an “excessively strong dollar” could have a negative short-term effect on the economy.

“The strength of the dollar has historically been tied to the strength of the U.S. economy and the faith that investors have in doing business in America,” Mnuchin said in a written response to a senator’s question about the implications of a hypothetical 25 percent dollar rise. “From time to time, an excessively strong dollar may have negative short-term implications on the economy.”

The dollar slumped to the weakest in more than six weeks after the remarks, obtained by Bloomberg News on Monday. The comments were included in answers from Mnuchin to questions from U.S. senators following his confirmation hearing last week. In that session, he had said a strong dollar is important over the long term, while noting it’s currently “very, very strong.”

$1 Trillion Fund Buys Yen as Trade Ruckus Vexes Dollar Bulls – Bloomberg

Currencies of economies with big external surpluses including the yen will benefit when trade conflicts flare up, while the Canadian dollar is set to lose because of the nation’s current account deficit, said Kwok, whose fund has added to positions that will benefit from worsening tensions. Japan’s currency has strengthened 3.6 percent versus the dollar this year, while the loonie has trailed most of its Group-of-10 peers with a 1.6 percent gain.

Trump Makes Swedish Krona Biggest Gainer in Test for Riksbank – Bloomberg

Much has been surprising about the market reaction to Donald Trump’s upset U.S. presidential election win. But that the Swedish krona would be the biggest gainer among the G10 currencies could top the list.

Sweden’s small, export-focused economy — home to global powers such as clothing retailer H&M AB and Ikea — would likely be one of the main victims should Trump’s protectionism push harm global trade. So far, investors have ignored that threat, sending the krona higher amid bets U.S. tax cuts and fiscal stimulus will stoke global growth and signals from the Swedish central bank that it’s reaching the end of an unprecedented easing campaign.

Trump’s Keystone XL Boost Sends Loonie Soaring Against Peers – Bloomberg

The Canadian dollar surged after U.S. President Donald Trump moved to advance the construction of the Keystone XL pipeline, which would enable the country to ship more crude oil to the U.S. and buoy growth.

The currency rallied as much as 1 percent to C$1.3106 per U.S. dollar, outperforming all of its Group-of-10 peers and extending its advance this year to 2.1 percent. It appreciated for a second day, recovering from a two-week low reached on Friday.

Note to U.S. Senate: Here’s What Happens When Dollar Rises 25% – Bloomberg

While some analysts have warned of an emerging-market crisis should the dollar climb further — because that would make it costlier for developing countries to service debt in the U.S. currency — it’s hard to point to any dollar-sparked crisis in recent years. Except, maybe, when it comes to China, where policy makers faced bouts of instability in managing their currency.

“China was the biggest beneficiary of the dollar weakness,” said Kevin Lai, chief economist for Asia excluding Japan at Daiwa Capital Markets in Hong Kong. “Naturally it has been the biggest loser of its strength — it’s payback time.”

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

ETFs are eating the US stock market

Mounting disappointment with the ability of stockpickers to pick stocks that consistently beat the broader market has spurred a momentous shift towards passive investing strategies such as index-tracking funds and, increasingly, ETFs.

Global inflows averaged more than $12,000 a second last year, but because of tax and cost advantages, this trend is particularly advanced in the US — and especially in equities, where it is easier to structure cheap ETFs that accurately track the market.

While outflows from actively-managed mutual funds have hit a cumulative $1.2tn since 2007, overall inflows into index-trackers and ETFs have topped $1.4tn over that period.

17F24 chart - flows from active to passive funds in US equities

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USA ECONOMY DATA

Existing U.S. Home Sales Fell in Dec.; 2016 Best in Decade – Bloomberg

Sales of previously owned U.S. homes declined more than forecast in December, data from the National Association of Realtors data showed Tuesday. Still, sales for the full year were the strongest since 2006.

17F24 chart - existing home sales highest in a decade

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ENERGY COMPANIES, NOCs, INDUSTRY

Robots Are Taking Over Oil Rigs – Bloomberg

The robot on an oil drillship in the Gulf of Mexico made it easier for Mark Rodgers to do his job stringing together heavy, dirty pipes. It could also be a reason he’s not working there today.

The Iron Roughneck, made by National Oilwell Varco Inc., automates the repetitive and dangerous task of connecting hundreds of segments of drill pipe as they’re shoved through miles of ocean water and oil-bearing rock. The machine has also cut to two from three the need for roustabouts, estimates Rodgers, who took a job repairing appliances after being laid off from Transocean Ltd.

17F24 chart - US employees on drilling payrolls

Trump Revives Keystone Pipeline Rejected by Obama – The New York Times

President Trump sharply changed the federal government’s approach to the environment on Tuesday as he cleared the way for two major oil pipelines that had been blocked, and set in motion a plan to curb regulations that slow other building projects.

In his latest moves to dismantle the legacy of his predecessor, Mr. Trump resurrected the Keystone XL pipeline that had stirred years of debate, and expedited another pipeline in the Dakotas that had become a major flash point for Native Americans. He also signed a directive ordering an end to protracted environmental reviews.

Trump Pins Keystone, Dakota Pipeline Fate on Renegotiation – Bloomberg

President Donald Trump took steps to advance construction of the Keystone XL and Dakota Access oil pipelines, while demanding a renegotiation to get a better deal for the U.S. government.

Trump stopped short of green lighting construction on either pipeline but put a deadline on the government’s review of TransCanada Corp.’s proposed Keystone XL to transport Alberta oil sands crude to U.S. refineries. Trump also announced policies to encourage the use of American-made products in U.S. pipeline projects and to curtail federal environmental reviews for major infrastructure projects.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

Libya Says Oil Sector Open Again for Business – WSJ

Libya intends to reopen its oil sector to new foreign investments, its state-run oil company’s chief said Tuesday, a move that would give oil companies the opportunity to develop the largest petroleum reserves in Africa for the first time in five years.

Libya froze all new foreign investment in 2011 after the civil war that toppled strongman Moammar Gadhafi. International oil companies such as Total SA of France and ConocoPhillips have long had operations in Libya, and Eni SpA of Italy has found ways to keep pumping even as clashes among warring militias and Islamic State damaged the country’s oil infrastructure.

Libya’s Oil Output Is at Three-Year High and Rising – Bloomberg

Libya is pumping 715,000 barrels a day of oil, the most since 2014, and is on track to keep boosting output this year as the country restores much of the production lost amid political chaos and conflict, the state oil company’s chairman said.

“Every single major oil-export route is now open, although some are operating at significantly reduced levels due to damage suffered in conflicts,” Sanalla said, according to the text of his speech. “For the moment the oil is flowing. This can be an important foundation of stability in Libya, if we build on it.”

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ENERGY NATURAL GAS, COAL

Energy Suppliers Hit Pay Dirt in EU’s Surprise Deep Freeze – Bloomberg

From Houston to Oslo and Moscow, companies that sell natural gas have seen sales and exports surge at the start of the year as Europe scrambles to secure enough supplies to manage the harsh weather. After forecasts for a mild winter, January temperatures plunged enough to freeze rivers and cut off supplies for tens of thousands of homes.

The revenue boost offered a reprieve from a price collapse that’s lingered since 2014, with supply overwhelming demand during the three warmest years on record. While consumers and industry will be hit by higher bills after February power prices in Germany surged to a record and U.K. gas traded near a four-year high, energy companies are enjoying a winter windfall.

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ENERGY RENEWABLES, NUCLEAR

A 100,000-Year Tomb for Finland’s Nuclear Waste – WSJ

In billion-year-old bedrock, 100 stories below ground, the Finns have found what the whole world is looking for: A place to bury their most dangerous nuclear waste.

From the U.S. to the U.K., Germany and Japan, plans to dig tombs for the highly radioactive fuel rods have hit political roadblocks or faced backlash from locals who don’t want toxic waste in their backyards.

But Finland has been quietly breaking ground.

On this Baltic Sea island off the Finnish coast, the country’s two main nuclear-power companies have just begun digging the main chambers of a tunnel system they aim to complete by 2020 to safely house 6,500 tons of spent uranium for the next 100,000 years.

Solar Employs More Workers Than Coal, Oil and Natural Gas Combined

U.S. solar employs more workers than any other energy industry, including coal, oil and natural gas combined, according to the U.S. Department of Energy’s second annual U.S. Energy and Employment Report.

6.4 million Americans now work in the traditional energy and the energy efficiency sector, which added more than 300,000 net new jobs in 2016, or 14 percent of the nation’s job growth.

U.K. Offshore Wind Seen as Cheapest Future Large-Scale Energy – Bloomberg

U.K. offshore wind power is on target to become the cheapest source of large-scale clean energy, surpassing the government-mandated price target four years early.

The levelized cost of energy for offshore wind — a benchmark measuring affordability over the lifetime of generation assets — dropped below 100 pounds ($125) a megawatt-hour in 2016, according to a report published Tuesday by the the U.K.’s Offshore Wind Programme Board, a group that includes industry and government representatives. The goal had been to pass the 100-pound threshold by 2020.

“This growing industry will be an important part of the government’s new industrial strategy, and will be underpinned by 730 million pounds of annual support for renewable energy over the course of this Parliament,” said U.K. Energy Minister Jesse Norman.

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COMMODITIES BASE METALS, MATERIALS

Iron to ‘Correct Down Sharply’ as Supply Rises, Citigroup Says – Bloomberg

Iron ore is headed for a sharp decline as higher-grade supplies from Brazil and Australia are set to increase, according to Citigroup Inc., which combined its forecast for a second-half tumble with upgrades to the bank’s outlook in the opening quarters of the year.

Recent gains have been supported by a deficit in higher-grade material, analysts including Ed Morse said in a note received Monday. The bank boosted its first-quarter forecast to $77 a metric ton from $60, raised the second-quarter call to $70 from $57, while holding the fourth-quarter figure at $53.

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COMMODITIES PRECIOUS METALS

Gold Demand in India May Only Return to Normal Levels in 2018 – Bloomberg

Gold consumption in India won’t return to normal levels until 2018, delaying a forecast recovery from a seven-year low, as a liquidity squeeze tightens spending this year in the world’s largest consumer after China, according to the World Gold Council.

This year “has a lot of uncertainties,” P.R. Somasundaram, managing director for the council in India, said by phone from Mumbai. The government’s move to ban high denomination currency is keeping demand muted, while further uncertainty is expected from a proposed uniform goods and services tax and a plan to standardize the quality of jewelry, he said.

Gold ETF Lures Most Money Since ‘12 as Europe Frets on Trump – Bloomberg

European investors are leading the race to gold as concerns over growing populism and protectionism embraced by Donald Trump fuel demand for haven assets.

The four exchange-traded funds backed by the metal that have attracted the most money this year are all based in Western Europe. Frankfurt-listed Xetra-Gold tops the list, bringing in about $544 million last week, the biggest weekly inflow since at least 2012, according to data compiled by Bloomberg. That’s more than 10-times the new money added into SPDR Gold Shares, the largest commodity ETF, data show.

European investors are piling into gold, fueling the metal’s rebound, amid concern that Trump’s “America first” rhetoric and plans to scrap regional trade deals will impede global economic growth. Adding to the anxiety is the impact from Britain’s exit from the European Union and the growing popularity of anti-establishment politicians running in this year’s elections in Germany, France and the Netherlands.

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POLLUTION, CLIMATE & ENVIRONMENT

EU Said to Spare Foreign Flights From Carbon Curbs Through 2020 – Bloomberg

The plan aims to ensure the EU continues to combat aviation pollution at home before the the global measures take effect, while averting a conflict with trade partners from the U.S., to Russia and China, who say the European carbon-market legislation breaches international law. Europe imposed the curbs on all flights into and out of the bloc five years ago before scaling back the rules to encourage the United Nations to reach a worldwide agreement.

17F24 chart - EU greenhouse gas emissions

Trump’s Climate Stance Threatens to Worsen China Relations – Bloomberg

President Donald Trump’s vow to pull back from climate-change efforts endangers one of the few areas where China and the U.S. have seen eye-to-eye, exacerbating tensions as he takes on more contentious subjects.

“There is a long history of countries that struggle to get along, using the subject of the environment to continue talking and build good will,” said David Victor, co-chair of the Brookings Institution’s foreign policy, energy security and climate initiative. “This is the equivalent of fathers and sons talking about sports.”

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GEOPOLITICS, CRIME, TERRORISM

US pledges to protect its interests in South China Sea

The White House on Monday said the US would protect its interests in international waters in the South China Sea but refused to say whether it would attempt to block China from accessing artificial islands in the disputed area.

Rex Tillerson, the former ExxonMobil chief executive nominated by Donald Trump for secretary of state, angered China this month by declaring that the US would attempt to prevent China from accessing islands where it has been building runways and other facilities that have potential military use.

In his first press conference, Sean Spicer, White House press secretary, said the US would prevent China from taking over any islands located in international waters in the region.

“The US is going to make sure that we protect our interests there,” he said when asked by the Financial Times if Mr Trump agreed with Mr Tillerson. “If those islands are in fact in international waters and not part of China proper, then, yes, we’re going to make sure that we defend international territories from being taken over by one country.”

China Urges U.S. to Act Cautiously Following Hard-Line Remarks on South China Sea – WSJ

China urged the U.S. to speak and act cautiously on the South China Sea after the new U.S. administration’s first public comment on the issue echoed the hard-line tone struck by Secretary of State Rex Tillerson during his confirmation hearing.

Russia’s Libyan ambitions are cause for European alarm

Russia’s support for Mr Haftar worries EU policymakers. They fear that Moscow is advancing his cause in order to expand to north Africa the regional influence it acquired in the Middle East after its armed intervention in Syria’s civil war.

Doubts linger over big powers’ ability to keep Syria truce intact

Russia, Iran and Turkey pledged to ensure Syria’s shaky ceasefire would hold after brokering two days of talks between the Damascus regime and rebels that they hope will pave the way for a settlement to end the six-year conflict.

But grave doubts linger over their ability to force the country’s warring parties to respect the truce — and whether a deal will aim to tilt any political agreement in favour of President Bashar al-Assad at the expense of rebels.

Days Into Trump Term, Israel Approves 2,500 West Bank Homes – Bloomberg

Israel will build 2,500 new housing units in the West Bank, the country’s prime minister and defense minister said Tuesday, beginning to unleash pent-up demand following eight years of conflict with the Obama administration over Israeli building anywhere beyond the 1967 border.

That comes days after the municipality unfroze plans for more than 500 apartments in contested areas of Jerusalem, most of them for Jewish residents. The government had shelved settlement plans in the final months of the Obama administration, preferring to wait for a more favorable reception in Washington once Donald Trump became president Jan. 20.

Trump Told Afghan Leader He Would Consider Troop Increase – WSJ

U.S. President Donald Trump told Afghanistan’s president in a call in December that he would consider sending more American troops, Afghan officials said, in a step to halt the deterioration in the country’s security.

Afghan officials say Mr. Trump—at the time president-elect—and Afghan President Ashraf Ghani talked about the security situation and relations with Pakistan and Mr. Trump asked if the Afghan leader needed more U.S. troops.

“President-elect Donald J. Trump said he would certainly continue to support Afghanistan security forces and will consider a proposal for more troops after an assessment,” according to one Afghan official briefed on the call.

Israel gives go-ahead to large West Bank settlement building

Israel has approved the building of 2,500 new homes in settlements in the West Bank, in a sign that Benjamin Netanyahu’s rightwing government has been emboldened to push ahead with the building on occupied Palestinian land by the election in the US of Donald Trump.

Palestinian officials and Peace Now, a leftwing non-governmental organisation that tracks the settlements, said the move was the largest of its kind since at least 2013-14, when Israel approved plans to build thousands of new homes to offset public anger about the release of Palestinian prisoners during a round of failed peace talks.

Malnutrition Wiping Out Children in Northern Nigeria, Aid Workers Say – The New York Times

Starvation in northern Nigeria’s Borno State is so bad that a whole slice of the population — children under 5 — appears to have died, aid agencies say.

As the Nigerian army has driven the terrorist group Boko Haram out of the area, about two million people have been displaced. Many are living in more than 100 refugee camps.

Doctors Without Borders, which has been in Borno State since 2014, reported in November that it was seeing hardly any children under age 5 at its clinics, hospitals and feeding centers.

“There are almost always small children buzzing around the camps,” Dr. Joanne Liu, the agency’s president, and Dr. Natalie Roberts, an emergency operations manager, wrote then.

“We saw only older brothers and sisters. No toddlers straddling their big sisters’ hips, no babies strapped to their mothers’ backs.”

Measles, diarrhea, pneumonia and malaria — all of which are worsened when starvation weakens immune systems — were taking a huge toll on infants and toddlers, they said.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Google Privacy-Policy Change Faces New Scrutiny in EU – WSJ

Alphabet Inc.’s Google faces new scrutiny of how it handles users’ web-browsing, search and email data, as regulators examine recent policy changes Google made to build more-robust user profiles and better sell advertising.

Software giant Oracle Corp. said it briefed European antitrust regulators late last year on the changes to Google’s privacy policies, in hopes of compounding its rival’s already complicated regulatory challenges.

U.S. privacy advocates filed a complaint with the Federal Trade Commission about the changes in December.

Messaging App Has Bipartisan Support Amid Hacking Concerns – WSJ

Signal, a smartphone app that allows users to send encrypted messages, is gaining popularity in the political world amid rising fears about hacking and surveillance in the wake of a tumultuous election year.

Political aides close to President Donald Trump, former President Barack Obama and former Secretary of State Hillary Clinton are users. So are some close to New York Gov. Andrew Cuomo and Mayor Bill de Blasio.

Some say the legion of political types has a singular goal to avoid a repeat of the WikiLeaks scandal, in which the emails of Mrs. Clinton and her closest allies were dumped onto the internet.

“Everybody learned the lessons of the Clinton campaign when it came to communicating about sensitive issues over email,” one former senior aide to President Obama said in a phone interview. “No one wants to see that happen again.”

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EMERGING MARKETS

In Its Third Month, India’s Cash Shortage Begins to Bite – The New York Times

First, Yashpal Singh Rathore’s marriage was delayed by his future in-laws, who, like most Indians, ran short of cash after Prime Minister Narendra Modi banned the country’s largest currency notes in November.

Then the 29-year-old lost his job when the ensuing cash crunch hit demand for motorcycles and scooters sold by the company where he worked, Hero MotoCorp Ltd. After that, the prospective in-laws refused to let the wedding go forward until he found another job.

“So I lost my job and I lost my marriage,” he said in an interview at a protest, where he shouted slogans with more than 100 red-flag-waving workers let go by Hero.

Mr. Rathore is one among a large number of Indians — the precise number is not known — who have lost their jobs since Nov. 8, when Mr. Modi abruptly banned 86 percent of the country’s currency in a bid to eliminate “black money,” currency on which taxes had not been paid.

Living in the Dark: 240 Million Indians Have No Electricity – Bloomberg

When Prime Minister Narendra Modi pledged to bring reliable power to all citizens during the campaign that propelled him into office in 2014, the same year the World Bank pegged India as home to the world’s largest un-electrified population. While his government has made progress meeting its 2019 deadline, many families are still missing out, holding back some of India’s poorest, most-vulnerable citizens and preventing the country from achieving its development ambitions.

In the year after Modi’s election, an audit identified 18,452 villages without electricity. Since then, that number has fallen by a third, leaving only 1 percent of the country’s total villages to be electrified, the data show. But a closer look at what constitutes “electrified” reveals how much further India has to go.

Reliance Jio’s big giveaway gamble reshapes India’s mobile world

“Back home too, the whole village is on it,” he says. “All of India is on Jio.” Mr Babu is one of more than 70m Indians who have rushed to take advantage of the biggest corporate gamble in the country’s history.

Reliance Industries, chaired by Mukesh Ambani, India’s richest man, has ploughed more than $25bn into an assault on the country’s telecom sector, announcing its entry with a promotion of unprecedented scale. The service giveaway by its Jio subsidiary, which began at its September launch, is scheduled to continue until the end of March and may run for even longer, a Jio executive hinted to the Financial Times this month.

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CANADA, AUSTRALIA, NEW ZEALAND

Toronto’s Home-Price Gains Are Rippling Toward Niagara Falls – Bloomberg

Toronto’s housing boom is fueling price gains in markets as far away as the Niagara region, better known for its waterfall and wine.

Towns including St. Catharines, more than 100 kilometers (62 miles) south of Toronto, and Barrie, about 100 kilometers north, are showing a “stronger price growth relationship” to the country’s largest city, Canada Mortgage & Housing Corp. said Tuesday. The agency used high, medium and low correlation labels in analyzing the effect of Toronto’s boom on surrounding markets.

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BREXIT, LONDON, UK ECONOMY

What Does U.K. Ruling Mean for Brexit and What Comes Next? – Bloomberg

Will Parliament block Article 50? Almost certainly not. The referendum result makes it hard for lawmakers to vote against leaving the EU. Most of May’s Conservative Party now supports exit, and the opposition Labour Party has said it won’t block Article 50 — though individual lawmakers may rebel. The unelected Lords will likewise be reluctant to defy the will of the people as expressed in the referendum.

What will Brexit opponents do, then? They can put roadblocks in the government’s way, adding amendments to the legislation. May’s Commons majority is small. Most members campaigned against Brexit, and many have reservations about the flavor of the divorce that May is going for. If someone can find the right amendment, he or she could well carry the chamber.

So what does this mean for Brexit? As Theresa May is fond of saying, “Brexit means Brexit.” The ruling doesn’t change that, but it does make it harder for May and her team to push ahead with their vision of a so-called hard Brexit. It may also slow the process down and give other parties a greater say.

Theresa May to fast-track Brexit bill following court defeat

The Supreme Court defeat was a setback for Mrs May, since it will allow MPs and peers to tie her hands in the Brexit negotiations by tabling amendments to what Brexit minister David Davis said would be “a straightforward bill”.

But aides say Mrs May remains confident she will ultimately win parliamentary backing for the activation of Article 50 amid signs that most MPs and peers from the opposition Labour party will not try to frustrate last year’s referendum vote backing Brexit.

Scotland Gets Closer to Independence Vote With Brexit Ruling – Bloomberg

Scotland took another step closer to a second referendum on independence after the U.K.’s highest court ruled that the parliament in Edinburgh has no legal right to challenge Brexit.

Scottish First Minister Nicola Sturgeon, in a statement reacting to Tuesday’s ruling, said the British government’s promises to uphold a political convention to consult lawmakers in Scotland now were “not worth the paper they are written on.” She said it’s “becoming ever clearer” that Scotland must decide whether it should “take our future into our own hands.”

Airbus warns of investment cut if Brexit costs rise

Airbus may cut investment into the UK if it has to bear extra costs as a result of Britain’s exit from the EU, a senior executive told MPs.

Meanwhile, a number of car companies are holding off on investment decisions until the terms of Brexit are clarified, according to the sector’s trade body.

The warnings came in a hearing of the Commons Treasury select committee on the UK’s future relationship with the EU. Three of Britain’s biggest industries – aerospace, automotive and chemicals — were summoned to give evidence of their concerns.

All three suggested that abandoning the EU single market and customs union risked leaving their industries vulnerable to extra costs and delays that could damage Britain’s competitiveness.

They expressed concerns about a costly duplication of regulations and potentially damaging constraints on moving employees freely around operations that spanned several countries.

Tom Williams, Airbus chief operating officer, also said Britain was entering a “dangerous phase” where competitors in other countries would seek to profit from any uncertainty or cost burden arising from Brexit.

Theresa May’s industrial strategy meets with faint praise

Theresa May’s promise to bolster Britain’s “world-leading” industries through a new industrial strategy was met with faint praise from business leaders amid claims it was little more than a sprawling discussion paper.

U.S., U.K. May Lose Luster as M.B.A. Destinations – WSJ

Political changes in the U.S. and United Kingdom may be spurring some graduate business-school students to look elsewhere for their degrees.

More than a third (37%) of 760 prospective M.B.A. candidates who are non-U.S. citizens say they are less likely to pursue a graduate business degree in the U.S. because of the outcome of last year’s presidential election, according to a survey by the Graduate Management Admission Council.

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EUROPE

Defense Chief Mattis Assures Europeans of ‘Unshakable’ U.S. Bond to NATO – Washington Wire – WSJ

Mr. Mattis, a retired Marine general sworn in Friday as the Pentagon’s top civilian official, used his first full day at the Pentagon to call his counterparts in Canada and the United Kingdom, as well as Jens Stoltenberg, the secretary general for NATO in Brussels.

In a statement regarding a separate call Mr. Mattis placed on Monday, to British Defense Minister Michael Fallon, the Pentagon referred to America’s “unshakable” commitment to NATO.

At a summit in Germany, nationalism goes international | The Economist

Koblenz brought together the leaders of populist, nationalist parties from Germany, France, Italy, the Netherlands and elsewhere under the banner of the “Europe of Nations and Freedom,” their collective grouping in the European Parliament. That in itself was unusual: feuds and personality clashes have long marred attempts by these groups to find common cause. But although parties like France’s National Front, led by Marine Le Pen, and Austria’s Freedom Party are well established, they are surfing a new wave of success; several of the parties at the summit are leading polls in their respective countries. Plainly, they see themselves at the vanguard of a movement.

Yet behind the comity lurked a familiar flaw. The “counter-summit”, as its name hints, was fuelled by discontent with the mainstream rather than anything resembling a programme. There was vanishingly little to the speeches beyond complaints, xenophobia and martyr complexes. Sceptical voters might have wondered exactly what Ms Le Pen’s policy on France’s euro membership is; how Ms Petry hopes to integrate the hundreds of thousands of refugees who have already reached Germany; or how Italy’s secessionist Northern League (represented by its leader Matteo Salvini) can respond to the challenge of its more successful populist rival, Beppe Grillo’s 5-Star Movement.

Dutch Leader Takes Trump-Like Turn in Face of Hard-Right Challenge – The New York Times

The prime minister of the Netherlands, aiming to head off an insurgent challenge from right-wing populists, stunned many Dutch citizens this week with a strategy that could have come from President Trump’s playbook.

In an open letter, published online and in full-page newspaper advertisements, the prime minister, Mark Rutte, warned of “something wrong with our country” and said “the silent majority” would no longer tolerate immigrants who come and “abuse our freedom.”

Mr. Rutte castigated “antisocial” behavior like littering and spitting, then broadened his critique to include people who do not respect women or gay rights.

While the letter did not explicitly mention Islam, the inference was not lost on anyone, whether or not they support Mr. Rutte, who has been prime minister since 2010 and is seeking a third term in an election set for March. Muslims make up about 6 percent of the population, and there have been sharp debates in the Netherlands for nearly two decades about the role of Muslim immigrants in political and social life.

Fillon Conjures a New European Pragmatism – Bloomberg View

French center-right presidential candidate Francois Fillon has long been in favor of closer ties with Russia. Until very recently, that made him an outlier among serious European politicians. But now that the U.S. is no longer exerting anti-Russian pressure on Europe, Fillon is far more confident in pushing his creed to fellow conservatives, such as German Chancellor Angela Merkel. They aren’t convinced yet, but that may be a matter of time.

Merkel Hits Back at Populists in Defense of Refugee Stance – Bloomberg

Angela Merkel hit back at a surge in “polarization and populism” two days after the German chancellor featured as the main target of criticism by a gathering of right-wing European leaders.

Defending her refugee policy as an act of moral and legal obligation by a “state of laws,” Merkel said that Europeans must stand by principles that include offering asylum to those fleeing from war and oppression.

“In my view it’s not helpful to try to solve the problems with polarization and populism,” Merkel said in a speech to a Catholic church group in the southern German city of Wuerzburg on Monday evening. “We have to show — and we can show — that we’re convinced by the fundamental principles of our country.”

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CHINA

China Readies for World’s Biggest Human Migration: QuickTake Q&A – Bloomberg

It brings much of China’s economy to a halt and strains transport systems, not to mention waistlines. Chinese New Year is an annual ritual of family reunification and overindulgence. The scale of the migration is astounding: While some 49 million Americans undertake a significant journey for Thanksgiving, Chinese citizens will rack up 3 billion trips during this year’s travel-fest. Best book those seats early.

A Chinese Nuclear Site, Hidden in a Mountain, Is Reborn as a Tourist Draw – The New York Times

“Back then, the project took so much from these young men, including our livelihoods,” said Chen Huaiwen, 69, a former soldier who worked on the excavation of the mountain from 1969 to 1974. “We need to make this clear to the public. Otherwise it will have been a huge waste of our efforts and manpower.”

To address these concerns, the 816 site recently underwent a year of renovations. Since it reopened in September, visitors — including, for the first time, foreigners — can now see about one-third of the cave, which contains nearly 13 miles of tunnel roads.

China Small-Cap Stocks Extend January Slump on Liquidity Squeeze – Bloomberg

A gauge of China’s small-cap shares slid, extending a monthly retreat, as a liquidity crunch pressured the most speculative part of the nation’s equities.

The ChiNext index fell 1.4 percent in Shenzhen, taking its January loss to 5.1 percent. The measure of mostly technology shares has underperformed the large-cap CSI 300 Index this year as funding costs rose and speculation mounted the regulator will accelerate the pace of initial public offerings, already at a 19-year high — thereby diverting liquidity from existing shares.

17F24 chart - China small cap gauge trailing larger peers

China-led investment bank attracts 25 new members

About 25 African, European and South American countries are set to join the China-led Asian Infrastructure Investment Bank this year, reinforcing Beijing’s determination to push a global agenda even as US president Donald Trump rails against the ills of economic globalisation.

Jin Liqun, president of the AIIB, said on Monday that an expanded membership would help boost lending by the $100bn multilateral organisation, which was created last year with 57 founding shareholders in spite of opposition from the US.

“Now that China has developed, it is our turn to contribute,” Mr Jin said in an interview. “China needs to do something that can help it be recognised as a responsible leader.”

China’s Birthrate Rises After One-Child Policy Loosened – Bloomberg

The number of births in China has risen nearly 8 percent in the year after the government loosened its unpopular one-child policy.

China’s National Health and Family Planning Commission said this week that 17.86 million children were born last year, an increase of 1.31 million from 2015. Nearly half of the children born were to couples who already had a child, the commission said.

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JAPAN

Japanese Emperor’s Abdication Moves a Step Closer – WSJ

There is a strong case for allowing Japan’s 83-year-old Emperor Akihito to step down, a government panel said, giving Parliament a green light to permit the first abdication in the nation’s modern history.

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ASIA PACIFIC

Asia looks to Beijing for new trade deals after Trump quits TPP

Australia has called for the Trans-Pacific Partnership to go ahead without the US after president Donald Trump’s withdrawal from the 12-country free-trade deal forced Asian capitals to rethink a decade of international economic policy.

Malcolm Turnbull, prime minister of Australia, vowed to keep TPP alive and said he was open to China joining the pact instead of the US — a sign of how withdrawal could damage American interests in the region, even with its closest allies.

But trade negotiators from several countries said it would be hard to sustain TPP in its current form. Instead, big players such as China and Japan are likely to engage in intensive diplomacy as they try to shape a new regional deal.

“Losing the United States from the TPP is a big loss, there is no question about that,” said Mr Turnbull. “But we are not about to walk away from our commitment to Australian jobs.”

“Certainly there is the potential for China to join the TPP,” he added. “There is also the opportunity for the TPP to proceed without the United States and I’ve had active discussions with other leaders as recently as last night with Prime Minister [Shinzo] Abe about that.”

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TRUMP WORLD

Trump Aides Can’t Stop Blabbing About How He’s a Madman

Three days in, and the president is consumed by rage, while his staffers are consumed by infighting. And reporters are hearing all about it.

Press Secretary Affirms that Trump Believes Lie of Millions of Illegal Voters – The New York Times

Sean Spicer, the White House press secretary, confirmed on Tuesday that President Trump has long believed that millions of undocumented immigrants voted illegally in the 2016 election, furthering a false claim from the podium of the West Wing briefing room and refusing to rule out an investigation down the road.

“He said 3 to 5 million people could have voted illegally, based on the studies that he’s seen,” Mr. Spicer told stunned reporters, acknowledging a statement that Mr. Trump made privately in a meeting with congressional leaders on Monday afternoon.

Sean Spicer, Trump’s Press Secretary, Reboots His Relationship With the Press – The New York Times

The Trump White House sent a message to the media on Monday: Be nice.

At his first formal briefing on Monday, Sean Spicer, the new White House press secretary, told reporters here that his administration sometimes does “the right thing,” adding: “And it would be nice, once in a while, for someone just to report it straight up.”

It was an oddly plaintive appeal from an administration that tends to attack the press, not bemoan it. And it was a sharp contrast from Mr. Spicer’s appearance 48 hours prior, when he blasted the news media as “shameful,” made false claims about the attendance for Mr. Trump’s inaugural and prompted speculation that his relationship with the White House press corps had been irreparably damaged after a single day.

Facebook billionaire Peter Thiel a Kiwi citizen, owns Wanaka estate – Business – NZ Herald News

Controversial American billionaire, Trump donor and venture capitalist Peter Thiel has taken New Zealand citizenship and quietly acquired a Wanaka lakefront estate.

Trump Didn’t Give Ethics Office Documentation, Cummings Says – Bloomberg

President Donald Trump didn’t provide government ethics officials documentation to show he had carried out his plan to step away from his businesses, a Democratic lawmaker said, something every other president since 1978 had done prior to inauguration.

In a meeting Monday with lawmakers, Office of Government Ethics Director Walter Shaub said that his agency hadn’t received the paperwork finalizing Trump’s arrangements, which Trump’s lawyers had presented two weeks earlier, according to Representative Elijah Cummings, the top Democrat on the House Oversight Committee, who attended the meeting.

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PROPAGANDA, AUTHORITARIANISM, ALTERNATIVE FACTS

Donald Trump’s shadow Cabinet – POLITICO

The arrangement, described by four people involved in the transition planning, appears designed to help the White House maintain control over its priorities despite pledging to give Cabinet secretaries unusual autonomy. Having senior advisers reporting to both the agency chiefs and the White House could spur early tensions and create conflicts with that pledge of autonomy.

“They want to keep kind of a West Wing-infused attachment to the agencies,” said a person familiar with the arrangement. “There will be tentacles from the White House to these agencies. … The effort is to demonstrate that all points lead back to certain people,” such as Donald Trump’s son-in-law, White House senior adviser Jared Kushner, or chief of staff Reince Priebus.

Trump issues EPA media blackout and suspends agency’s grants | PBS NewsHour

The Trump administration has instituted a media blackout at the Environmental Protection Agency and barred staff from awarding any new contracts or grants, part of a broader communications clampdown within the executive branch.

Trump bans agencies from ‘providing updates on social media or to reporters’ | US news | The Guardian

The two blackouts reported on Tuesday bring to at least five the number of federal agencies which have been ordered silent by Trump in as many days. In his briefing on Tuesday, Trump’s press secretary Sean Spicer said he needed to look further into the matter before making any comment.

Information lockdown hits Trump’s federal agencies – POLITICO

Federal agencies are clamping down on public information and social media in the early days of Donald Trump’s presidency, limiting employees’ ability to issue news releases, tweet, make policy pronouncements or otherwise communicate with the outside world, according to memos and sources from multiple agencies.

The steps to mute federal employees — seen to varying degrees in the Environmental Protection Agency and the departments of the Interior, Transportation, Agriculture and Health and Human Services — are sparking early fears of a broader crackdown across the government, as Trump vows to pursue an agenda sharply at odds with his predecessor.

Inside The Private Chatrooms Trump Supporters Are Using To Manipulate French Voters – BuzzFeed News

The chatroom’s admins have instructed users to make fake Facebook accounts that are “ideally young, cute girl, gay, Jew, basically anyone who isn’t supposed to be pro-[FN].” Users are then instructed to lock down these dummy accounts so no one can tell they’re fake. Once they have their fake Facebook profiles, they’re told to infiltrate the comment sections of large French Facebook pages and post pro-FN memes and jokes about François Fillon, France’s current frontrunner for the presidency.

And they’re doing something similar on Twitter, creating dozens of French-appearing sock puppet accounts. They then collect all of them on lists and organize campaigns to make things trend in French.

White House Expresses Willingness to Cooperate With Russia on Islamic State – WSJ

The White House said President Donald Trump is open to cooperating with Russia on combating the Islamic State extremist group—if Russia shares U.S. interests in doing so—but didn’t outline plans or a process for establishing joint military ventures or strikes.

Trump Is Said to Keep James Comey as F.B.I. Director – The New York Times

President Trump has decided to retain Mr. Comey as head of the agency that is leading an inquiry into ties between Trump associates and Russia’s government.

Key Claims in Trump Dossier Said to Come From Head of Russian-American Business Group – WSJ

Some of the most explosive parts of a dossier containing unverified allegations that President Donald Trump had secret ties to Russian leaders originated from the Belarus-born head of a Russian-American business group, according to a person familiar with the matter.

Sergei Millian, a 38-year-old American citizen who has claimed he helped market Trump properties to Russian buyers, wasn’t a direct source for the 35-page dossier, this person said. Rather, his statements about the Trump-Russia relationship were relayed by at least one third party to the British ex-spy who prepared the dossier, the person said.

Among the unverified allegations of Mr. Millian’s that an intermediary passed along, the person said: The claim that the Russians had compromising video of Mr. Trump that could be used to blackmail him, and a claim that there was a “conspiracy of cooperation” between the Trump camp and Russian leadership that involved hacking the computers of Mr. Trump’s Democratic opponents.

Massive networks of fake accounts found on Twitter – BBC News

Massive collections of fake accounts are lying dormant on Twitter, suggests research. The largest network ties together more than 350,000 accounts and further work suggests others may be even bigger. UK researchers accidentally uncovered the lurking networks while probing Twitter to see how people use it. Some of the accounts have been used to fake follower numbers, send spam and boost interest in trending topics.

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ELECTORAL POLITICS

Conservatives Try to Shape Donald Trump’s Budget Priorities – WSJ

President Donald Trump is being pulled in several directions within the Republican Party and conservative circles seeking to mold his plans for government spending.

Mr. Trump’s economic team has taken early steps toward gutting spending on some small domestic programs like the National Endowment for the Arts. But on bigger proposals to increase defense and infrastructure spending while safeguarding Medicare and Social Security, he is colliding with budget hawks and other conservatives pushing for smaller government.

Health Nominee Drops Hints About Obamacare Replacement Plans – Bloomberg

U.S. Representative Tom Price, President Donald Trump’s pick to lead the Department of Health & Human Services, on Tuesday gave the clearest clues yet about how the administration might repeal and replace Obamacare.

Clearest, however, doesn’t mean entirely clear. In a confirmation hearing before the Senate Finance Committee, Price laid out broad goals such as affordability and a focus on patients. He wouldn’t say whether a new measure would cover as many people as the Affordable Care Act or what kind of coverage would be available for individuals to buy.

EXCLUSIVE: Trump team compiles infrastructure priority list | McClatchy DC

President Donald Trump’s team has compiled a list of about 50 infrastructure projects nationwide, totaling at least $137.5 billion, as the new White House tries to determine its investment priorities, according to documents obtained by McClatchy’s Kansas City Star and The News Tribune.

The documents, circulated within the congressional and business communities, offer a first glimpse at which projects around the country might get funding if Trump follows through on his campaign promise to renew America’s crumbling highways, airports, dams and bridges.

Among the projects could be a new terminal for the Kansas City airport, upgrades to Interstate 95 in North Carolina and the construction of a high-speed railway from Dallas to Houston.

Senate Panel Backs Wilbur Ross, Donald Trump’s Pick for Commerce Secretary – WSJ

Wilbur Ross, President Donald Trump’s choice to run the Commerce Department, cleared a key test Tuesday when a Senate panel approved his nomination.

The Senate Commerce Committee, on a voice vote, sent Mr. Ross, a billionaire private-equity investor and adviser to Mr. Trump on trade issues, to the full Senate for a confirmation vote.

Trump’s Claim of Massive Illegal Voting Gets Little Support From GOP Lawmakers – Washington Wire – WSJ

GOP leaders didn’t back Mr. Trump’s assertion, but nor did they chastise the president for telling senior lawmakers in a meeting Monday night that he would have won more votes than Democratic nominee Hillary Clinton if three million to five million illegal immigrants had not cast ballots. Mr. Trump has alleged for months, without providing evidence, that voter fraud occurred in November.

Trump’s Supreme Court Choices Come Into Focus – The New York Times

President Trump said on Tuesday that he would reach a decision this week on his nominee to fill the nearly yearlong vacancy on the Supreme Court, a choice that will plunge the nation’s capital into what promises to be an all-consuming political fight only weeks into his presidency.

The refusal of Republicans last year to even consider President Barack Obama’s nomination of Judge Merrick B. Garland to fill the vacancy created by the death of Justice Antonin Scalia last February remains a source of deep bitterness for Democrats. They have vowed to embrace the same tactics against Mr. Trump.

Senator Chuck Schumer of New York, the minority leader, has said Democrats are prepared to try to keep Justice Scalia’s seat open indefinitely if the president proposes a nominee who is out of the legal mainstream.

Zuckerberg scotches rumours of White House run

Mark Zuckerberg has denied he is planning to run for the White House, after speculation that the Facebook founder harbours political ambitions and could follow in Donald Trump’s footsteps by becoming a chief executive turned president.

In an interview with BuzzFeed news, he said he was focused on building Facebook and working on the Chan Zuckerberg Initiative, the philanthropic venture he founded with his wife Priscilla Chan.

Mr Zuckerberg embarked last week on the first stage of his tour across the US, aiming to visit 30 states this year, as part of a bid to better understand the impact of globalisation and technology on communities far from Silicon Valley.

The tour to Texas was reminiscent of a political campaign, with stops at a police station, a community garden and his very first rodeo, as well as fulfilling his role as Facebook chief executive with a visit to a data centre and a Dallas courtroom to defend subsidiary Oculus in a lawsuit. The virtual reality start-up Facebook acquired for nearly $3bn in 2014 is accused of stealing the technology used in its headset.

While Mr Zuckerberg has not commented on whether he supported Mr Trump, he wrote in a post on Facebook that he was embarking on the tour after a “tumultuous last year” and declared “we are at a turning point in history”.

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DEMOGRAPHICS, INEQUALITY & POPULISM

Blame Technology, Not Longer Life Spans, for Health Spending Increases – The New York Times

Every year you age, health care technology changes — usually for the better, but always at higher cost. Technology change is responsible for at least one-third and as much as two-thirds of per capita health care spending growth. After accounting for changes in income and health care coverage, aging alone can explain only, at most, a few percentage points of spending growth — a conclusion reached by several studies.

Go Ahead, Write a Check for Your Coffee, I’ve Got All Day – WSJ

Check-writing may be dying, but it isn’t dead yet. A sliver of consumers still clings to paper and pen, forgoing the ease of plastic for the rigor of balancing their checkbooks every month.

Such behavior is bewildering to more modern consumers brandishing payment apps and chip cards, some of whom don’t even know how to write a check. To other shoppers, check-writers are the scourge of the check-out line.

How Andy Puzder’s fast-food industry sticks taxpayers with the cost of supporting its workers – LA Times

A 2013 study by the Center for Labor Research and Education at UC Berkeley found that public assistance for front-line fast-food workers costs roughly $7 billion a year. That’s a subset of the $152.8 billion the federal government spends on support for low-wage working families, according to a separate study.

Puzder’s CKE Restaurants, which owns the Carl’s Jr. and Hardee’s brands, collects a taxpayer-funded subsidy of about $247 million a year, according to an estimate by the National Employment Law Project. That’s what it takes, NELP said, to “offset poverty wages and keep [CKE’s] low-wage front-line workers and their families from economic disaster.”

US boards are less ‘male, stale and frail’ but concerns remain

Shareholders have had some success in making US boardrooms less “male, stale and frail” but the progress could go into reverse because companies are raising age limits and filling key committees with long-time directors, a new study has found.

A wave of investor pressure for board refreshment, aimed at bringing the US closer into line with international norms, managed to halt the increase in the average age of directors last year and to reduce the tenure of the average director, according to figures from ISS, a shareholder adviser.

However, ISS also found that “75 is the new 72” when companies are setting age limits, suggesting that recently hired directors could stay in post for many years to come unless companies establish formal board refreshment practices.

Wider Racial Gap Found in Cervical Cancer Deaths – The New York Times

A new study, which excluded women with hysterectomies, showed the disparity in death rates between blacks and whites was significantly wider.

The horrifying way some drug addicts are now getting their fix – The Washington Post

Police said Pereira had been intentionally wounding her dog and “vet shopping,” visiting vet after vet to obtain prescription medication for her pet, then taking it. Although these cases appear uncommon, authorities say they underscore the nation’s widespread opioid epidemic, showing the lengths people go to obtain drugs for personal use or for sale on the street. They also say it’s a concern — one they want to get ahead of.

At the same time, some veterinarians say it’s a relatively small problem — arguing that publicizing it will only give drug addicts the idea to do it, and that formally regulating it will only put more of a burden on the vets.

‘Hamilton’ Sued Over Show’s Lack of Services for Blind Patrons – WSJ

Mark Lasser, like many other Americans, wanted nothing more than to attend the hit Broadway musical “Hamilton” on a trip to New York.

But the blind Denver resident was surprised to learn last fall that “Hamilton” didn’t offer any services for blind patrons to enhance their understanding of the show, like providing a live audio narrative of the action happening between songs.

After trying unsuccessfully to get “Hamilton’s” producers to add such service, Mr. Lasser is suing the producers and the owner of the theater, claiming the lack of accommodation violates federal disability laws.

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SCANDALS, LAWSUITS, FINES, REGULATORY

BT European chief to resign over Italian scandal – BBC News

The boss of BT’s Continental European operation is to resign after the firm was forced to write down the value of its Italian unit by £530m after years of “inappropriate behaviour”.

The investigation of BT’s Italian business, which included an independent review by accountancy firm KPMG, found improper accounting practices and “a complex set of improper sales, purchase, factoring and leasing transactions”.

It added: “These activities have resulted in the overstatement of earnings in our Italian business over a number of years.”

Tesco faces new legal action over accounting scandal | Reuters

Britain’s biggest retailer Tesco PLC is facing a new claim for damages from an investor about its 2014 profit overstatement, the company said on Tuesday. A spokesman for the supermarket group said it was aware of a claim filed by Manning & Napier, the U.S. fund manager, and would be filing a defense shortly.

Manning & Napier declined to comment. However, the Financial Times reported that the fund manager said it suffered losses of $212 million because of Tesco’s accounting irregularities.

At Wells Fargo, Bank Branches Were Tipped Off to Inspections – WSJ

As Wells Fargo’s sales-tactics scandal unfolded, investors, regulators and politicians asked how improper practices could have persisted for so long. One possible reason: bank branches were given a heads up before Wells Fargo’s internal monitors landed for inspections.

Amazon subpoenaed by textbook publishers over counterfeit sales

Three of the world’s largest textbook publishers have subpoenaed Amazon to reveal the names and financial accounts of online vendors who allegedly sell counterfeit books at “too good to be true” prices.

Pearson Education, Cengage Learning and McGraw Hill Education are suing 100 unnamed Amazon marketplace sellers for copyright infringement. In a complaint filed in New York federal court earlier this month, the publishers accused the sellers of “hiding behind the anonymity of internet pseudonyms” to profit from unauthorised copies of their books.

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FINTECH, BLOCKCHAIN, DIGITAL PAYMENTS

Trading Plunges at China’s Bitcoin Exchanges After Fees Levied – Bloomberg

High-speed traders are pulling out of China’s bitcoin market after the three biggest venues started charging transaction fees on Tuesday.

One-hour volume at OkCoin fell 89 percent to 1,026 bitcoins at 1 p.m. local time, from 10,062 during the same period on Monday, according to the venue’s website. Huobi and BTC China saw declines of 92 percent and 82 percent respectively. Prices were little changed, at around 6,350 yuan per bitcoin.

The lack of fees was seen as the main reason why as much as 80 percent of bitcoin trading in China was automated, with professionals using strategies such as cross-exchange arbitrage. The platforms made money by charging clients to withdraw bitcoin, but Tuesday’s changes may have ended that system for good. The moves came after the Chinese central bank made on-site inspections of the exchanges and reportedly found a number of violations.

A Rude Awakening for Blockchain’s Dreamers – Bloomberg Gadfly

The finance world’s attempt to build a white-collar version of blockchain — the shared-ledger technology that underpins rebellious virtual currencies such as Bitcoin — has generated Silicon Valley quantities of buzz. There hasn’t been much genuine risk-taking, though, nor have we seen much of a result.

This year will bring a needed dose of reality. It might even herald a shake-out of an increasingly over-hyped sector as the banking industry tries to get myriad projects out of the lab and into the real world.

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SILICON VALLEY, UNICORNS, STARTUPS, VC

Doubts Arise as Investors Flock to Crowdfunded Start-Ups – The New York Times

Advocates of a new law that aims to make it easier for businesses to raise capital worry whether investors are getting the information they need.

“I’m legitimately concerned that a lot of people are going to be losing money,” Mr. Feit said. “Investing in start-ups is really risky, and it’s very different than buying a used couch. We definitely do not think you should treat it like Craigslist.”

Startup Wants to Bring Uber Marketplace Model to Data Scientists – Bloomberg

A London-based startup wants to make hiring a data scientist as simple as booking an Uber.

Pivigo is launching a marketplace that will allow smaller companies that can’t afford to hire in-house data scientists or expensive consulting firms to connect with researchers on a project-by-project basis, the company said Tuesday.

The four-year-old London startup, which has around 1,500 data scientists on its platform, previously provided training courses and job boards for researchers looking for full-time positions, with clients including KPMG, Barclays Plc., Marks & Spencer Group Plc. and Royal Mail Plc.

Pivigo’s new online marketplace is the latest example of how the “gig economy” — a term that refers to the way technology is enabling an increasing number of people to work on a freelance basis — is penetrating a range of sectors, from law to accounting to research, where in the past most workers held full-time positions.

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CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

‘Clash of Clans’ Developer Ups Its Game After Sales Stumble – WSJ

Supercell’s CEO said the mobile-game developer learned from a dip in revenue for its “Clash” franchise and is now back on track.

Samsung Looks to Repair Consumer Trust – WSJ

Samsung Electronics’ apology and diagnosis of the Galaxy Note 7’s battery problems marked the company’s most concerted attempt to move past its biggest recent crisis, but concerns over product safety could continue to weigh on its brand as it looks ahead to the Galaxy S8 launch.

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Mall Owners Rush to Get Out of the Mall Business – WSJ

Mall landlords are increasingly walking away from struggling properties, leaving creditors in the lurch and posing a threat to the values of nearby real estate.

As competition from online retailers batters store owners, some of the largest U.S. landlords are calculating it is more advantageous to hand over ownership to lenders than to attempt to restructure debts on properties with darkening outlooks.

That, in turn, leaves lenders with little choice but to unload the distressed properties at fire-sale prices.

In the period from January to November 2016, 314 loans secured by retail property—totaling about $3.5 billion—were liquidated, 11% more loans than in the same period a year earlier, according to data from Morningstar Credit Ratings. The liquidations resulted in a loss of $1.68 billion

Wal-Mart to Cut 200 E-Commerce Staffers in California – WSJ

Wal-Mart Stores Inc. plans to lay off about 200 e-commerce employees in its California offices Tuesday, part of a round of job cuts hitting the retailer’s corporate offices before the end of January.

Marc Lore, the company’s new e-commerce chief, said the retail giant is “focused on adding the right talent to our team and making sure we’re investing in ways that directly improve our customer experience,” according to a memo to staff that was reviewed by the The Wall Street Journal.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Lack of Blockbuster Nominees Could Pose Ratings Challenge for Oscars – WSJ

With not a single blockbuster hit, this year’s crop of best-picture Oscar nominees appears to be the least commercially successful since the Academy of Motion Picture Arts and Sciences expanded the category to more than five films seven years ago.

Facebook, Snapchat Deals Produce Meager Results for News Outlets – Bloomberg

Newspapers and other media outlets are struggling to make money from their partnerships with tech giants like Facebook and Snapchat, raising concerns over their business models in a news landscape increasingly dominated by social media platforms.

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AUTOS, ELECTRIC, SELF-DRIVING

Trump Looks to Mend Fences With Detroit Car Makers – WSJ

President Donald Trump told bosses of the Detroit three car makers that he would work to ease environmental regulations, cut corporate taxes and push for economic policies favorable to U.S. manufacturing, in an effort to mend fences with an industry that he spent months criticizing.

Tesla quietly brings online its massive – biggest in the world – 80 MWh Powerpack station with Southern California Edison

After announcing the project back in September, we have now learned that Tesla and Southern California Edison (SCE) have completed the massive 80 MWh energy storage station using Tesla’s new Powerpack 2 at the Mira Loma substation.

There are a few bigger projects in various phases of development, but it looks like this one is the biggest energy storage project in the world using lithium-ion batteries currently in operation.

Two-Speed America for Subaru and Mazda – Bloomberg Gadfly

President Donald Trump’s decision to pull out of the Trans-Pacific Partnership trade accord is bad (if unsurprising) news for all of Japan’s automakers. There are two that face an outsized impact — Mazda Motor Corp. and Fuji Heavy Industries Ltd., the maker of Subaru.

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HEALTHCARE, PHARMA, BIOTECH

Trump Administration Makes Drug and Medical-Device Companies Nervous – WSJ

The pharmaceutical and medical-device industries are deeply unsettled about their future under the Donald Trump administration and Republican control of Congress, which presents threats as well as opportunities, according to industry officials and advisers.

Egypt combats hepatitis C epidemic with state-run scheme

Since the programme began two years ago, nearly 1m hepatitis C patients have been treated, most at the government’s expense, and experts say it could be a model for the rest of the world. Globally, some 700,000 people die every year from liver disease related to hepatitis C, according to the World Health Organisation.

“We are thrilled because what was really needed was a champion country to say ‘Yes we can do this’,” says Charles Gore, president of the Geneva-based World Hepatitis Alliance, a patient-led organisation. “We have such large numbers of the infection globally, so we really need to know how to do this. Egypt is providing such a wonderful field test.”

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SCIENCE, NATURE, PSYCHOLOGY

Human skin can now be printed out in transplant breakthrough | The Independent

A team of biologists has built a prototype 3D bioprinter that can create functional human skin, which could help bring an end to animal testing once and for all.

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HEALTH, PRODUCTIVITY AND WELLNESS

The Hidden Effects of Jet Lag on Baseball Players – WSJ

When Los Angeles Dodgers ace Clayton Kershaw allowed five runs in Game 6 of the NLCS, his disappointing outing was largely attributed to some combination of the Chicago Cubs’ powerful lineup and the general unpredictability of baseball. Researchers at Northwestern University have another theory: He might have been jet lagged.

According to a study published Monday in the Proceedings of the National Academy of Sciences, teams traveling eastward at least two time zones give up more home runs than they otherwise would, offering insights into how the internal body clock affects performance.

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MISCELLANEOUS

Much of the Cuisine We Now Know, and Think of as Ours, Came to Us by War | Travel | Smithsonian

It wasn’t just new food that the invaders introduced. They brought better farming techniques as well. Clifford Wright, who has traced the history of Sicilian-Arab foods in two books, Cucina Paradiso and A Mediterranean Feast, points to the Arab approaches to irrigation and agronomy, which led to larger crop yields. Before the Arabs, Sicilian peasants had avoided planting in the hotter summer months. After the Arabs, the land was in cultivation all year round. The new immigrants planted lemons and other heat-tolerant fruits and vegetables that would increase the bounty of the harvest.

Oscar Nomination Puts Lin-Manuel Miranda One Step Closer to an EGOT – The New York Times

Only 12 performers have won an Emmy, a Grammy, an Oscar and a Tony. Mr. Miranda is poised to become the next.

Macro Links Tue Jun 24th
– Let’s Play Chess

MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

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MACRO OP-EDS, DATA, INQUIRY AND THEORY

Trump White House vows to stop China taking South China Sea islands | Reuters

The new U.S. administration of President Donald Trump vowed on Monday that the United States would prevent China from taking over territory in international waters in the South China Sea, something Chinese state media has warned would require Washington to “wage war.”

China Says Prepared to Lead Global Economy if Necessary – WSJ

China is prepared to take the helm of the global economy if Western nations abdicate their leadership role, a top Chinese diplomat said Monday, days after U.S. President Donald Trump pledged in his inaugural address to put “America first.”

“If it’s necessary for China to play the role of leader, then China must take on this responsibility,” Zhang Jun, head of the Chinese foreign ministry’s office of international economic affairs, told a small group of foreign reporters in Beijing.

Many who listened to Mr. Xi’s Davos speech saw it as a rebuke to Western politicians like Mr. Trump, who have pushed for a more inward focus. A stream of commentary in Chinese state media has since sought to portray Mr. Xi as an internationalist and China as the new standard-bearer for free trade.

Why Trump’s Staff Is Lying – Bloomberg View

First and most obviously, the leader wishes to mislead the public, and wants to have subordinates doing so, in part because many citizens won’t pursue fact-checking. But that’s the obvious explanation, and the truth runs much deeper.

By requiring subordinates to speak untruths, a leader can undercut their independent standing, including their standing with the public, with the media and with other members of the administration. That makes those individuals grow more dependent on the leader and less likely to mount independent rebellions against the structure of command. Promoting such chains of lies is a classic tactic when a leader distrusts his subordinates and expects to continue to distrust them in the future.

Another reason for promoting lying is what economists sometimes call loyalty filters. If you want to ascertain if someone is truly loyal to you, ask them to do something outrageous or stupid. If they balk, then you know right away they aren’t fully with you. That too is a sign of incipient mistrust within the ruling clique, and it is part of the same worldview that leads Trump to rely so heavily on family members.

In this view, loyalty tests are especially frequent for new hires and at the beginning of new regimes, when the least is known about the propensities of subordinates. You don’t have to view President Trump as necessarily making a lot of complicated calculations, rather he may simply be replicating tactics that he found useful in his earlier business and media careers.

The Five Lessons of Populist Rule | International Selection Comment | Finanz und Wirtschaft

Unfortunately, what won’t lose, in Poland and elsewhere, is nationalism – the only ideology that has survived in the post-ideological era. By appealing to nationalist sentiment, populists have gained support everywhere, regardless of the economic system or situation, because it is being fueled externally, namely by the influx of migrants and refugees.

Mainstream politicians, especially on the left, currently have no effective message on the issue. Opposing migration contradicts their ideals, while supporting it means electoral defeat.

But the choice should be clear. Either populism’s opponents drastically change their rhetoric regarding migrants and refugees, or the populists will continue to rule. Migrants and refugees lose in either scenario, but in the second, so does liberal democracy. Such calculations are ugly – and, yes, corrosive of liberal values – but the populists, as we have seen, are capable of far nastier tradeoffs.

Dear Mr. Putin, Let’s Play Chess | patribotics

The King is dead. And I didn’t even have to bother with Sessions, Page, Manafort, Stone, Flynn, and all the SIGINT that we have on them, the deals they made with Wikileaks to receive intel that you hacked and phished and planted with your viruses.

Impeachment of Mr. Trump is on the way.

Coppola Comment: President Trump’s Triffin problem

In many eyes, President-elect Trump is a loose cannon. He says things that upset people the world over. Many of these things perhaps should not be taken too seriously – after all, he is a showman. But it would be a mistake to dismiss his rhetoric on trade. There, he is in deadly earnest – and it does not bode well either for America or for the world.

I’m with Larry Summers on this. Navarro & Ross have failed to understand the nature of the US’s relationship with the rest of the world. And they have therefore disastrously misinterpreted the cause of its trade deficit. There may well be currency manipulation, mercantilism and skewed trade deals. But these are not the principal cause. No, the main reason for the US’s trade deficit is the US dollar.

The US dollar is the world’s premier currency for international trade and investment. More trade is done in U.S. dollars than any other currency. More trade finance is issued in U.S. dollars than in any other currency. More business investment is financed in U.S. dollars than in any other currency. Global markets price oil, metals and commodities in dollars. Even currencies are priced in dollars. The world relies on dollars to lubricate the flow of goods and services around the world.

Why Kentucky Couldn’t Kill Obamacare: A Lesson for Congress – Bloomberg

“A lot of people, they just know they have insurance but they don’t know it’s Obamacare,” said Amber Lewis, 34, who sells guns, Kennedy half dollars, baseball cards and knives every day at a booth at the Bull Creek Trade Center in Prestonburg, Kentucky.

“They say they have Kynect insurance, or Passport insurance, I hear it both ways,” said Lewis, who has insurance for the first time, pays nothing for it and knows what it is. “I know what I have. I have Obamacare.”

Goldman Sachs: Occupying Washington again

It has been a while since Goldman was cast as a proper villain. Since the financial crisis, when it became a symbol of Wall Street excess — kept alive by bailouts, then subject to countless lawsuits alleging wrongdoing — the bank has worked hard to stay out of trouble.

But the controversy over Mr Trump’s appointees has brought the bank back into focus at a tricky time. For decades Goldman has been the go-to institution of the rich and the powerful, focused on brokering big deals and raising huge amounts of money. Within the past year it has made a pivot towards Main Street, supplying simple products such as loans and savings accounts, in an attempt to offset the revenue-draining effects of new rules put in place since the crisis.

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CENTRAL BANKS & MONETARY POLICY

The Rising Risk of Central Bank Instability – Bloomberg View

Facing an unusually timid cyclical response and a challenged structural one, central banks have again demonstrated that they would rather err on the side of too much stimulus rather than too little, despite the risks entailed for future financial stability and the efficient allocation of resources. And that is what traders and investors have gotten to expect after observing and internalizing central banks’ preferences over the last few years.

But the more central banks persist with this approach amid changing economic and fiscal conditions, the greater the potential need for a sudden shift in monetary policy that, while economically warranted, could be quite jarring for markets. And it is a possibility that investors may be underestimating as judged by market metrics, including measures of implied volatility.

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POSITIONING, INFLECTION, MARKET CALLS

‘Idiosyncratic’ Risks Aren’t Necessarily Good for Active Stock Investors This Time – Bloomberg

Donald Trump’s penchant for unpredictability, such as taking to social media to slam individual industries or even companies, means idiosyncratic stock volatility — risk not explained by industry- or economy-wide forces — is set to rise during his term.

Active investors have traditionally thrived in such an environment, but analysts at Sanford C. Bernstein Ltd. argue that looks less likely this time around because Trump’s pronouncements may not be “potentially forecastable.”

“One aspect of all this presidential tweeting that we can actually forecast is that the component of portfolio risk accounted for by idiosyncratic stock-level vol should be higher under a Trump presidency than it was before,” Inigo Fraser-Jenkins and his colleagues wrote in a Jan. 20 note.

Investors seek policy detail from Trump administration

Investors are seeking policy detail rather than a reiteration of headline intentions at a time when credit markets are flagging after a pronounced rally on the prospect of a stronger economy.

“Most people are looking for clarity on policy,” said Henry Peabody, portfolio manager at Eaton Vance. “It’s less the 140 character tweet but more about action. Trump’s words won’t necessarily be what is executed by the administration.”

Wall Street Questions If Trump Can Turn His Promises Into Policy – Bloomberg

A number of Wall Street analysts are becoming increasingly concerned that President Donald Trump won’t be able to follow through on several key proposals that he campaigned on, such as lowering corporate taxes and increasing infrastructure spending. If he doesn’t, or aspects of the reforms are pared back, their outlooks would become much less optimistic.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Goldman Sachs, Morgan Stanley, J.P. Morgan Executives Have Sold Almost $100 Million in Stock Since the Election – WSJ

Executives at some of the biggest Wall Street banks have sold nearly $100 million worth of stock since the presidential election, more than in that same period in any year over the past decade, according to a Wall Street Journal review of securities filings.

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TAXATION, HAVENS, TRADE, PROTECTIONISM

Contradictions on a US border tax | FT Alphaville

Mnuchin: “He hasn’t suggested a border tax. What he suggested is that for certain companies that move jobs, that there may be repercussions to that. He has not suggested in any way an across-the-board 35 per cent border tax. If anything, quite the contrary…”

“What he has referred to as a border tax — he has referred to a small number of companies that have moved their jobs or are moving their jobs, putting products back into United States and taxing them. He has in no way contemplated a braod 35 per cent border tax. That couldn’t be further from anything he would possibly consider.”

WSJ: President Donald Trump said Monday that the U.S. will impose a “very major” border tax on companies that move overseas as he sharpens his focus on recasting America’s international trade relations.

President Trump Focuses on Trade With Promise of ‘Very Major’ Border Tax – WSJ

Mr. Trump has described his “border tax” in the past as a selective 35% tax on companies that outsource production to other countries and then import goods back to the U.S. That is different from the “border adjustment” that is a key feature of the House Republicans’ tax plan. Mr. Trump has criticized that idea, which would tax all imports and exempt exports from U.S. business taxation.

Trump Abandons Trans-Pacific Partnership, Obama’s Signature Trade Deal – The New York Times

Although the Trans-Pacific Partnership had not been approved by Congress, Mr. Trump’s decision to withdraw not only doomed former President Barack Obama’s signature trade achievement, but also carried broad geopolitical implications in a fast-growing region. The deal, which was to link a dozen nations from Canada and Chile to Australia and Japan in a complex web of trade rules, was sold as a way to permanently tie the United States to East Asia and create an economic bulwark against a rising China.

Instead, Mr. Trump said American workers would be protected against competition from low-wage countries like Vietnam and Malaysia, also parties to the deal.

Trump’s Attacks on Outsourcing Put Companies on Guard – WSJ

Leaders of U.S. companies with offshore operations are privately worrying that they will come under the scrutiny of a president who has blasted firms for moving production outside American borders.

Donald Trump in recent months has used his Twitter account to criticize Ford Motor Co., United Technologies Corp.’s Carrier division and General Motors Co., for outsourcing jobs.

The attacks are reverberating at companies with production and IT operations in countries like India, China and the Philippines, outsourcing executives say. Some companies are looking for U.S.-based alternatives, while vendors that provide outsourced services are pushing automation as a cost-effective way to re-shore work—but not necessarily jobs.

IBM Touts Trump-Pleasing Hiring Plans While Firing Thousands – Bloomberg

On the eve of a summit last month between technology executives and then President-elect Donald Trump, IBM Chief Executive Officer Ginni Rometty publicly pledged to hire about 25,000 U.S. workers and spend $1 billion on training over the next four years.

She didn’t mention that International Business Machines Corp. was also firing workers and sending many of the jobs overseas.

In late November, IBM completed at least its third round of firings in 2016, according to former and current employees. They don’t know how many people have lost their jobs but say it’s probably in the thousands, with many of the positions shipped to Asia and Eastern Europe.

“Ginni Rometty is terminating thousands of IT workers and touting herself as some hero who’s out to hire 25,000 workers,” says Sara Blackwell, a Sarasota, Florida-based lawyer and advocate for Protect U.S. Workers, who represents about 100 IBM ex-employees who have filed discrimination and other complaints. “To me, that’s hypocritical.”

Renegotiating Nafta: 5 points to keep in mind

Donald Trump has put “renegotiating” the two-decades-old North American Free Trade Agreement between the US, Canada and Mexico at the top of his economic agenda and threatened to pull out of the deal if the US does not get what it wants.

But how might he do that and what would it mean for business? Here are five points to keep in mind. The economic stakes are enormous; everyone agrees Nafta is in need of an update; a ‘border tax’ is a threat that could be hard to deliver on; US demands are more likely to focus on tax, disputes and ‘rules of origin’; Mexico has the weakest hand of the countries at the Nafta negotiating table.

17F24 chart - value of NAFTA trade

Trump Revamps U.S. Trade Focus by Pulling Out of Pacific Deal – Bloomberg

“Never has the president been the one to initiate protectionism or been so vocal about turning inward,” Dan Ikenson, the director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, said by telephone. “U.S. trade policy on a bipartisan basis since 1934 has been geared toward liberalization and accommodation and internationalism.”

Trump Imperils Argentine Trade Talks as Lemon Deal Stalls – Bloomberg

In one of its first actions, the administration of President Donald Trump delayed implementation of a rule allowing Argentine farmers to export lemons after a decade of talks, putting into doubt trade negotiations between the two countries.

The White House ordered a stay of 60 days “on its final rule to allow the importation of fresh lemon fruit from northwest Argentina,” the Animal and Plant Health Inspection Service said on its website.

Trump’s Withdrawal From Asia Trade Deal Viewed as Boon for China – Bloomberg

U.S. President Donald Trump’s withdrawal from a long-planned Pacific trade pact creates a political and economic vacuum that China is eager to fill, potentially damaging American prestige in Asia.

With Trump making good on his campaign pledge to nix a deal that was the centerpiece of predecessor Barack Obama’s Asia policy, China’s leaders are already ramping up support for globalization and free trade. In a speech last week to the World Economic Forum at Davos, President Xi Jinping likened protectionism to “locking oneself in a dark room.”

Trump opposed the pact because he said it could hurt American jobs. But the impact of his decision is likely to go beyond trade, giving more leeway to Xi to position China as an economic and military anchor in the western Pacific. Since coming to power, Xi has sought to expand China’s trade ties with its neighbors and begun an ambitious infrastructure project designed to reinvigorate ancient trading routes to the Middle East and Europe.

Trump Hasn’t Yet Shown His Hand on Keystone XL, Canada Says – Bloomberg

Donald Trump’s administration has given no indication he’ll seek tolls or other financial benefits as a condition of approving TransCanada Corp.’s Keystone XL pipeline, Canada’s natural resources minister says.

Jim Carr, speaking Monday during a cabinet retreat in Calgary, said the two governments have already discussed Keystone, but the minister hadn’t received any indication of whether Trump will actually proceed with a project he’s expressed support for previously.

Why Canada is the country to watch on Trump’s trade policy – Business Insider

Where Canada fits in here is that it is the next obvious candidate in line for a UK trade deal. The EU, having just signed a deal with Canada, that still only has provisional support from the Belgians from my understanding, will look askance at a UK – EU trade negotiation. Therefore, a possible arrangement that works politically here would be to use Canada as an adjunct to a US-UK deal, that squeezes out Mexico.

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FOREX, CURRENCY IMPACTS

Strong dollar to test Donald Trump’s presidential powers

Richard Nixon’s Treasury secretary John Connally once told foreign counterparts that the US dollar is “our currency, but your problem” — a blunt observation that has often rung true. Under President Donald Trump it may no longer be so simple.

The new US president inherits a subdued but long economic expansion, low but accelerating inflation and a robust jobs market, which will probably force more interest rate increases in the coming years.

But the dollar may well prove Mr Trump’s biggest economic challenge, and the vast $5tn-a-day currency market will be harder to browbeat into submission via Twitter outbursts than corporate chieftains and political opponents.

“Of all the things that drive a currency, a policymaker’s opinions is not in the top 10,” says Marc Chandler, head of currency strategy at Brown Brothers Harriman.

Currency traders see tug of war over the dollar

The new president faces a conundrum. However much he might want to talk down the dollar, Ms Yellen hovers in the background, her words counting for more.

Mr Trump will probably continue to complain about a strong dollar, but any subsequent currency weakness will not last. “Otherwise the market would have to come to the conclusion that the Fed will just sit and watch as the US economy overheats,” says Ulrich Leuchtmann, head of currency research at Commerzbank.

Pound hits high for 2017 ahead of Supreme Court Brexit ruling

The pound has hit another high for the year against the dollar at the start of a week that will determine whether the currency can sustain the momentum generated by Theresa May’s Brexit speech.

In London trading on Monday, the currency climbed 1 per cent higher to just below $1.25, its strongest level since December, as investors anticipated a ruling from the Supreme Court on whether the government must hold a parliamentary vote to trigger the start of official negotiations to exit the EU.

“The market would welcome greater parliamentary involvement in the process, viewing it as reducing the risk of a more disorderly Brexit,” according to Lee Hardman, a currency analyst at Japanese bank MUFG.

Global markets turn back on euro as economic woes reinforce dollar as the currency of choice

Banks are using the euro less and less in international transactions, with financiers preferring to use dollars – indicating the euro’s declining importance in the global economy.

Economists believe sustained political risk in the eurozone, fears that the currency area could fall apart, and the continuing hangover from the sovereign debt crisis have all contributed to the currency’s relative decline.

Figures from the Bank of International Settlements, sometimes referred to as the central bank for central banks, show that the euro is being used less in international banking, while the US dollar continues to grow in importance.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

Hong Kong Retains Title of World’s Costliest Home Market – Bloomberg

Hong Kong retained its rank as the most expensive housing market among 406 major metropolitan regions in the annual Demographia International Housing Affordability Survey for the seventh year in a row.

The median price of a home in Hong Kong last year was 18.1 times the median annual pretax household income, the survey showed. While that’s a modest improvement in affordability compared with 19 times in the previous year, Demographia considers a score of more than 5.1 as “severely unaffordable,” according to its website.

17F24 chart - the world's least affordable housing markets

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Hedge Fund Assets Pass $3 Trillion in 2016 for First Time: Chart – Bloomberg

The hedge fund industry ended 2016 with $3.02 trillion in global assets under management, surpassing the $3 trillion mark for the first time as performance gains offset net withdrawals, according to data released by Hedge Fund Research Inc. on Friday. The industry, which saw about $70 billion in outflows last year, had about $2.9 trillion in assets in 2015.

17F24 chart - hedge fund capital surpasses 3tr first time

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ENERGY COMPANIES, NOCs, INDUSTRY

Chevron Slams Canadian Backdoor in $9.5 Billion Pollution Fight – Bloomberg

Now entering its 24th year, an international legal war seeking to hold Chevron Corp. liable for oil pollution in the Amazon has featured battles in courtrooms ranging from the U.S. to Ecuador to Canada. In a blow to Ecuadorian villagers who contend the company sullied their lands, an Ontario judge last week protected Chevron’s Canadian assets from being seized as part of the fight.

Halliburton Leaves Investors Wanting More in U.S. Shale Recovery – Bloomberg

North America’s drilling revival is leading the oil industry’s recovery, with shale explorers seen increasing spending four times faster than the global average this year. While the number of rigs drilling for oil and gas in the U.S. and Canada has more than doubled since May, and grew 19 percent in the last three months of the year, Halliburton’s revenue in the region rose just 9 percent from the previous quarter, according to an earnings report Monday. The shares fell the most in more than four months.

Oil Declines as Drillers in U.S. Add Most Rigs in Three Years – Bloomberg

Oil fell for the first time in three days after U.S. drillers added the most rigs in more than three years, making it difficult for OPEC to drain global oversupply.

“Prices at these levels allow shale producers to profit from increasing output,” Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $133 billion of assets, said by telephone. “We’re seeing this reflected in the rising rig count and increases in 2017 investment plans.”

Protesters, Oil Companies Gear Up for Next Round at Standing Rock – WSJ

Protesters opposed to the Dakota Access Pipeline are gearing up for a new round of clashes after the inauguration of President Donald Trump. So are oil companies—and the private security firms they have hired to police the protests.

Oil Bonds May Face Sharp Repricing on Climate, BOE Analysts Blog – Bloomberg

Bondholders may face a “sharp repricing” on debt issued by oil and gas companies as demand for polluting fossil fuels falls and investment in clean energy grows, analysts from the Bank of England wrote in a blog post.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

The Last Time Oil Speculators Were This ‘Long’, Crude Collapsed | Zero Hedge

Despite soaring rig counts, surging US shale production, and increasing doubts over OPEC/NOPEC cuts being sustained (albeit with Saudi jawboning), oil speculators have decided to add to their long positions in the last week, pushing the net position in futures to a new record high – above the 2014 peak from which crude collapsed.

17F24 chart - WTI crude futures net spec

Equatorial Guinea Applies to Join OPEC – WSJ

Equatorial Guinea said it had applied to join OPEC, in a sign of the cartel’s renewed clout following its first output cuts in eight years.

The African oil-rich nation was part of a group of 11 producers that agreed to join the Organization of the Petroleum Exporting Countries last month in carrying combined production cuts of 1.8 million barrels a day and end a global oil glut.

“There is a consensus amongst producers that an oversupply of oil has been dragging down the price of the barrel,” the country’s ministry said in a press release. “Equatorial Guinea is doing its part to ensure stability in the market and that the industry continues to invest in exploring and developing our resources.”

OPEC Helps Cheap U.S. Oil Find Its Way to Group’s Top Customers – Bloomberg

Add Southern Green Canyon and Mars Blend to the growing list of American crude that’s challenging OPEC’s dominance in the world’s biggest oil market.

Cargoes of the two varieties produced in the Gulf of Mexico, which are heavier and more sulfurous than supply from U.S. shale fields, are poised to flow into Asia as they turn cheaper relative to similar-quality crudes from nations such as Saudi Arabia and Oman.

Russia Wrests Crown of Top China Oil Supplier From Saudi Arabia – Bloomberg

Russia overtook Saudi Arabia as China’s top oil supplier last year for the first time ever amid the ongoing battle for market share in the world’s biggest energy market.

Russia boosted crude supply to the Asian nation by 24 percent from 2015 to 52.5 million metric tons, or 1.05 million barrels per day, according to data released Monday by the General Administration of Customs. The Middle Eastern kingdom became the second-biggest supplier, shipping 51 million tons, or 1.02 million barrels per day, little changed from a year earlier.

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ENERGY NATURAL GAS, COAL

Ships steer bullish bets for liquefied natural gas

A rapid increase in liquefied natural gas supplies is threatening to flood the market for at least the next three years, forcing producers and traders to find more nimble ways to place cargoes of the super-chilled fuel into the global market.

The looming glut is focusing attention on whether existing customers stretching from Asia to the UK will benefit from lower prices, but also whether LNG can increase its market share by utilising a growing fleet of ships that can deliver directly into power plants and gas networks.

These so-called floating storage and regasification units (FSRUs) have become the key to opening up new markets to LNG over the past five years, allowing deliveries into countries like Egypt and Argentina without the need for expensive new onshore import terminals.

17F24 chart - LNG supply

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POLLUTION, CLIMATE & ENVIRONMENT

CDC Halts Meeting on Climate Change and Health – WSJ

The Centers for Disease Control and Prevention said it recently postponed a gathering it had planned to hold next month on the effects of climate change on health.

The agency informed partner organizations and participants after Donald Trump was elected president, but before he was inaugurated. The CDC took the step out of caution rather than responding to a directive from the incoming administration, according to people familiar with the matter. Mr. Trump has called climate change a hoax and vowed late last year to cut off funding of international climate-change initiatives.

The Stomach Bug Norovirus Rips Through U.S. Schools – WSJ

Highly contagious and resilient, the norovirus, which causes vomiting and other flu-like symptoms, has brought families and school systems to a halt. Each year brings an average of 19 to 21 million cases.

Readers in India Reflect on Coping With Miserable 2016 Heat – The New York Times

Scientists announced last week that 2016 was the Earth’s hottest year on record. This was the third straight year that the record was broken.

In May, when the western and northern parts of India experienced a brutal heat wave, we asked our readers there how the hot weather affected them, and how they managed to cope.

We heard from nearly 100 people suffering from the heat, which reached 123.8 degrees — a record — in the deserts of Rajasthan. Many said they did everything possible to stay indoors during the day’s peak hours. A student in Gurgaon wrote that stepping outdoors could cause you to “wrinkle up inside like a cactus.”

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GEOPOLITICS, CRIME, TERRORISM

U.S. Army Deployment to Europe Encounters Logistical Challenges – WSJ

The U.S. Army deployed an armored unit with 4,000 soldiers and 90 tanks to Europe in January in a test of its ability to quickly reinforce the front lines in any possible confrontation with Russia. Getting them where they need to go, however, has been unexpectedly difficult.

Donald Trump Speaks With Egyptian President Sisi – WSJ

U.S. President Donald Trump spoke with Egyptian President Abdel Fatah Al Sisi, White House officials and Egyptian state media said, in the first conversation between the two since Mr. Trump took office.

The first drone strikes of the Trump administration happened over the weekend – The Washington Post

Pentagon says five al-Qaeda militants were killed.

Russia’s Syria Peace Effort With Iran, Turkey Hits Obstacles – Bloomberg

The joint initiative by Russia, Turkey and Iran to end the six-year war in Syria suffered a setback when opposition groups rejected face-to-face meetings with government representatives at peace talks in Kazakhstan.

Afghanistan Orders Arrest of Vice President’s Guards – WSJ

Afghanistan’s attorney general ordered the arrest of nine of Vice President Abdul Rashid Dostum’s bodyguards on charges related to allegations of abduction and sexual assault of a political rival.

Trump Already Looms Large Over Some of the Hottest Israeli-Palestinian Issues – Bloomberg

Donald Trump is already looming large over some of the most contentious issues dividing Israelis and Palestinians, emboldening some Israeli officials to take moves that threaten to reignite violence and make the prospect of reviving peace efforts ever more dim.

Trump CIA Speech may have made worsened intel community relations – CBS News

Authorities are pushing back against the perception that the CIA workforce was cheering for the president. They say the first three rows in front of the president were largely made up of supporters of Trump’s campaign.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Lloyds Said to Suffer Cyber Attack on Bank’s U.K. Systems – Bloomberg

Lloyds Banking Group Plc was hit by a cyber attack that disrupted online services for customers two weeks ago, a person with knowledge of the matter said, amid mounting concern over the threat hackers pose to major banks.

Microsoft Asserts Clients’ Rights in FBI E-Mail Searches Fight – Bloomberg

Microsoft Corp.’s effort to halt the FBI’s so-called sneak-and-peek searches of e-mails may ride on whether it’s allowed to defend its customers’ constitutional rights.

Obama’s Tech Surge Is One Effort Trump May Not Reverse – Bloomberg

As Silicon Valley girds for a possible rollback of net neutrality, the H-1B visa program and other prized policies, here’s a bit of potentially favorable news: The administration of U.S. President Donald Trump seems to be ready to embrace the “Obama tech surge,” the organized insertion of technologists and modern digital tools into the highest branches of the federal government.

French Prosecutors Looking at 22 Targets in Panama Leaks Probe – Bloomberg

French prosecutors have identified 22 targets in their investigation into the Panama Papers leak that revealed the widespread use of offshore shell companies possibly set up to avoid taxes.

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EMERGING MARKETS

Peru Cancels Pipeline Contract With Odebrecht – WSJ

Peru will terminate a contract with a consortium led by Odebrecht SA to build a $7-billion natural-gas pipeline, the latest blow to the Brazilian construction giant amid an expanding corruption scandal.

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CANADA, AUSTRALIA, NEW ZEALAND

Australia Catches Protectionist Wave by Tightening Oversight of Overseas Deals – WSJ

The Australian government said it would give greater scrutiny to overseas deals, joining counterparts in the U.S. and Europe in signaling resistance to Chinese investment in sensitive assets.

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BREXIT, LONDON, UK ECONOMY

Vision of post-Brexit trade puzzles experts

Theresa May’s vision of Britain’s trading relationship with the EU has left trade officials and business executives scratching their heads about how it could work in practice.

The British prime minister has confirmed the UK will leave the EU single market but seek market access for certain industries such as cars and aerospace. She also confirmed that Britain would pull out of the EU customs union, but retain a “customs agreement” to remove tariffs and have “frictionless trade”.

Trade experts suggested that it will be very difficult for a sector-specific customs union to be technically, legally and politically achievable. “Every time you try to think about one or two of these pillars, you crash into the third one,” says Samuel Lowe, a London-based trade analyst.

Tory donor predicts Theresa May will have to quit within two years | Politics | The Guardian

A Tory donor who helped fund the legal challenge to the government’s Brexit plans has predicted Theresa May will be forced from office within two years because of the economic consequences of leaving the EU.

Charlie Mullins, the founder of the London-based company Pimlico Plumbers, said the prime minister and other senior Tories had isolated themselves from core Conservative businesspeople and sacrificed the public good for their careers.

Speaking on the eve of the result of the government’s supreme court challenge to the ruling that May must consult parliament to trigger article 50, Mullins’s comments are a reflection of growing splits within the Conservative business community over Brexit.

Starwood Said to Be Selling London Tower Project on Brexit – Bloomberg

Starwood Capital Group LLC is in talks to sell its interest in a planned London tower over concerns that Brexit will hurt demand for office space, three people familiar with the plan said.

London’s Mayor Issues First ‘Very High’ Air Pollution Alert – Bloomberg

Sadiq Khan issued the first “very high” air pollution alert of his eight-month tenure as London mayor, advising citizens to reduce physical exertion and avoid running outside.

Pound Has Priced in Government Defeat in Supreme Court, ING Says – Bloomberg

A Supreme Court ruling that allows Parliament to vote on the triggering of Article 50 is already priced into the pound, meaning there is a smaller potential for a rally on Tuesday following such a decision, according to ING Groep NV.

May Plans Short Brexit Bill If Supreme Court Rules Against Her – Bloomberg

If the U.K. Supreme Court rules against her, Prime Minister Theresa May plans to rush a short bill through Parliament to trigger Brexit by her self-imposed March 31 deadline.

May prepares for bumpy ride on Brexit plans

Theresa May will discover this week whether her legal battle to trigger Britain’s exit from the EU will be followed by a parliamentary fight.

The Supreme Court will on Tuesday deliver its judgment on whether MPs and peers need to vote before Mrs May can trigger Article 50 — the formal legal process which notifies the EU of Britain’s intention to leave.

May Set to Defy EU by Opening Pre-Brexit Trade Talks With Others – Bloomberg

U.K. officials are preparing to fire the starting gun on trade negotiations with countries outside the European Union within months, defying warnings from the bloc that such action would be illegal.

After Prime Minister Theresa May triggers the formal process for leaving the EU, which she intends to do by the end of March, her team will be free to start trade talks around the world, a senior official said, speaking anonymously about the confidential plans.

The move would directly contradict senior EU politicians, who say Britain cannot legally begin negotiations on trade deals with countries outside Europe until it has left the bloc. Despite this, officials in May’s team believe the EU will have no authority to stop the U.K. once the Brexit process has started, and little political appetite for a fight on this issue.

U.K. Can Only Discuss Trade, Not Negotiate Deals, EU Says – Bloomberg

The U.K. is allowed to discuss trade agreements with other countries as long as it doesn’t formally negotiate with them before it leaves the European Union, a spokesman for the bloc said.

“There’s nothing in the treaties that prohibits you from discussing trade,” European Commission spokesman Margaritis Schinas told reporters in Brussels on Monday. But he reiterated previous remarks that EU countries can’t hold official talks on future deals while still a member.

Brexit Flight to Shift 30,000 Jobs to Poland, Minister Says – Bloomberg

Poland will attract as many as 30,000 British jobs to its business-service sector this year, its government said, as the biggest eastern European Union member tries to lure companies considering leaving the U.K. after it voted to depart from the bloc.

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EUROPE

Eurozone Confidence at Highest in Nearly Two Years, But Uncertainty Looms – WSJ

European consumers continued to grow more optimistic in January, ahead of key elections that could lead to major changes in economic policy.

“Consumers across the eurozone currently seem to be focusing on recent, largely decent economic news and improved job markets and for now at least, are brushing off political uncertainties,” Howard Archer, an economist at IHS Global Insight, said.

Draghi Invokes Italy’s Unifier as Dark Past Threatens Europe – Bloomberg

Mario Draghi pointed to one of the fathers of Italian unity as a model of liberal realism and calm as he warned against populist rhetoric and any nostalgia for “dark pasts.”

Leftwinger Hamon galvanises urban voters in French presidential race

Growing support for Mr Hamon highlights a widening ideological rift in the Socialist party — between those sticking to the view that the economy needs a dose of liberalisation and those who cling to old leftwing egalitarian ideals and want a return to basics.

Le Pen Risk Flashes in Tightest Yield Spread to Spain Since 2010 – Bloomberg

The ‘Frexit’ barometer is flickering into life. With National Front leader Marine Le Pen ahead in a poll on the first round of France’s presidential election, the country’s government bonds are starting to lose their cachet as some of the safest in the euro area. The yield on 10-year French securities is the highest relative to Spanish debt since April 2010 and the spread between French and German yields is near the widest level in more than two years.

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CHINA

China Bitcoin Exchanges to Impose Trading Fee – WSJ

Under heightened scrutiny from Chinese regulators, China’s three largest bitcoin exchanges will seek to rein in speculation in the virtual currency by charging a 0.2% trading fee starting at noon Tuesday.

In China, an Ancient People Watch Their Floating Life Dissolve – The New York Times

Members of the Tanka group in southern China have survived on coastal waterways, and on the margins of society. As cities spread, their way of life is disappearing.

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TRUMP WORLD

Donald Trump Wastes No Time Going to Battle – WSJ

“I’m not sure that President Trump is picking new fights as much as he is continuing the old one, without intermission,” said Republican consultant and pollster Alex Castellanos. “He’s enjoying no honeymoon because there has been no marriage. He declared war against the Washington establishment during the campaign. To Washington’s unending surprise, President Trump actually meant what he said.”

Trump Falsely Tells Hill Leaders Millions Of ‘Illegals’ Cost Him The Popular Vote

President Donald Trump told Capitol Hill leaders Monday evening that he lost the popular vote because 3 million to 5 million “illegals” voted for Democrat Hillary Clinton, according to three sources in both parties familiar with the meeting.

Trump has repeatedly claimed that he lost the popular vote in November’s election because of voter fraud. There is no evidence of this, and none that millions of undocumented immigrants voted for Clinton. It’s a fixation for Trump, who won the election because of Electoral College votes, but has had trouble accepting that Clinton won the popular vote by more than 2.8 million.

“I don’t think he was joking,” said one person familiar with what happened in the meeting. “He spent 10 minutes on his win and said he won the popular vote, except 3 to 5 million illegals voted for” Clinton.

Trump Sets New Low Point for Inaugural Approval Rating | Gallup

President Donald Trump is the first elected president in Gallup’s polling history to receive an initial job approval rating below the majority level. He starts his term in office with 45% of Americans approving of the way he is handling his new job, 45% disapproving and 10% yet to form an opinion. Trump now holds the record for the lowest initial job approval rating as well as the highest initial disapproval rating in Gallup surveys dating back to Dwight D. Eisenhower.

Trump’s biggest donors consider abandoning new political arm – POLITICO

The unrest has senior Trump aides, well aware of the risk that rival groups could hamper efforts to drive the administration’s message, scrambling to unite the disparate factions. “The Trump people are putting a ton of pressure on everybody to fall in line on this thing,” said a Republican source familiar with the conversations. Those efforts, however, may be floundering. “I don’t think the Mercers are going to be in this thing,” said the source. Others say a compromise agreement remains a distinct possibility; either way, a decision is expected this week.

Trump plans to ban EPA from funding science: Report – Business Insider

Donald Trump plans to ban the Environmental Protection Agency (EPA) from funding science, and “overhaul” its use of science from outside groups, according to a Monday report published in Axios.

Sessions Won’t Recuse Himself From Trump Conflicts If Confirmed – Bloomberg

Republican Senator Jeff Sessions says he won’t recuse himself from handling any potential conflicts of interest involving President Donald Trump or his family members if confirmed as the nation’s next attorney general.

As the top U.S. law enforcement official, Sessions, an early and avid supporter of Trump’s presidential campaign, could be drawn into the continuing debate over Trump’s extensive holdings.

Trump Lost $1.2 Million at Hotel He Should Sell, Democrats Say – Bloomberg

President Donald Trump’s Washington hotel lost almost $1.2 million during its first two months of operation, before he was elected president, according to a letter released Monday by four congressional Democrats who say the president is violating the hotel’s lease with the federal government.

Lawsuit Against Donald Trump Shines Light on Emoluments Clause – WSJ

A lawsuit against President Donald Trump spotlights a rarely litigated passage in the Constitution aimed at curbing foreign influence over federal officeholders.

Trump’s Foreign Dealings Violate Constitution, Suit Claims – Bloomberg

Citizens for Responsibility and Ethics in Washington said in a complaint filed in federal court in New York that Trump, who has retained his ownership stake in his businesses, violated the provision, known as the emoluments clause, in several ways. These include a lease with the state-owned Industrial & Commercial Bank of China in Trump Tower, bookings by foreign diplomats at Trump’s Washington hotel and payments from broadcasters owned by foreign governments for airing his television show “The Apprentice.”

For Wall Streeters Who Bet Long on Trump, It’s Bonus Time

“It’s been great, everybody’s kissing Anthony’s ass now because of Trump,” Nelson Braff, one of the restaurant’s owners, told a table of customers back in the mirrored dining room.

Trump’s Taxes May Stay Hidden, No Matter What Senior Aide Says – Bloomberg

A senior adviser to President Donald Trump sought to clarify her remarks about the president’s tax returns on Monday in a statement that leaves open the possibility that Trump will never release them.

Kellyanne Conway, who managed Trump’s successful election campaign, said unconditionally on Sunday that Trump would not make his tax returns public. Then, on Monday, she posted on Twitter that Trump is “under audit and will not release until that is completed.” Her Monday statement echoed the justification Trump has offered since February 2016 for not releasing his tax documents.

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PROPAGANDA, RUSSIA, ALTERNATIVE FACTS

Putin Awaits Call to President Trump as Russia Sees Shared Goals – Bloomberg

The Kremlin said it hopes to arrange the first official phone call between President Vladimir Putin and U.S. President Donald Trump very soon, as Russia emphasized how much it has in common with the new administration.

While there are no preparations yet for a meeting between the two leaders, “a phone call is being agreed on,” Kremlin spokesman Dmitry Peskov told reporters on a conference call Monday. “We expect that the date of such a phone call will be agreed very soon.”

Report: Trump Stocked Audience At CIA Speech With Cheering Supporters

CBS News cited unnamed U.S. government sources who claimed that the first three rows in the audience at Trump’s speech were filled in part with supporters, including about 40 people who were invited by Trump, Pence and Pompeo.

CIA leadership in the front row did not cheer in response to Trump’s remarks, the report said.

Fox News Hires Nigel Farage, a Trump Ally Who Backed ‘Brexit’ – The New York Times

Mr. Farage, the right-wing British politician, will have an unlikely American megaphone when he joins the network as a paid on-air contributor.

The President’s official tweets are now written by a man who regularly promotes fake stories on Twitter | The Independent

The man behind Donald Trump’s official presidential tweets is a former golf caddy who has repeatedly promoted fake news stories and conspiracy theories on social media. The official President of the United States (POTUS) Twitter page was updated on Sunday to confirm the messages are being posted by Dan Scavino, Mr Trump’s “assistant” and Director of Social Media.

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ELECTORAL POLITICS

Trump Declares Federal Hiring Freeze and Renews Abortion Ban – Bloomberg

President Donald Trump signed executive memorandums to impose a hiring freeze across the U.S. government, except for national security, and renew an intermittent federal policy that forbids international nonprofits receiving federal money from providing abortion services.

Donald Trump Reinstates Antiabortion Policy for Overseas Groups – WSJ

President Donald Trump signed a memorandum on Monday to reinstate a policy that prevents federal funds from going to foreign nongovernmental organizations that perform abortions.

GOP preps massive tax overhaul for private equity – Axios

Private equity is in for a massive shakeup if Paul Ryan and Donald Trump get their way.In short, the GOP is expected to offer two sticks and two carrots. Each of them would change the industry’s way of doing things for the past several decades.

Rex Tillerson Clears Another Hurdle for Secretary of State Position – WSJ

Despite lingering concerns from some Republicans, secretary of state nominee Rex Tillerson cleared a key procedural hurdle on Monday, all but ensuring he will be approved as the nation’s top diplomat.

Rubio Backs Rex Tillerson’s Nomination for Secretary of State – Bloomberg

Senator Marco Rubio said he will support Rex Tillerson’s nomination for secretary of state, all but ensuring that the former Exxon Mobil Corp. chief will win Senate confirmation.

States Send Trump Lists for Promised Roads-and-Bridges Plan – Bloomberg

With President Donald Trump promising to rebuild crumbling U.S. highways, bridges and buildings, states have begun submitting lists of priority projects in need of funding.

U.S. judge finds that Aetna misled the public about its reasons for quitting Obamacare – LA Times

The judge’s conclusions about Aetna’s real reasons for pulling out of Obamacare — as opposed to the rationalization the company made in public — are crucial for the debate over the fate of the Affordable Care Act. That’s because the company’s withdrawal has been exploited by Republicans to justify repealing the act.

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DEMOGRAPHICS, INEQUALITY & POPULISM

Peak Millennial? Cities Can’t Assume a Continued Boost From the Young – The New York Times

A number of demographers, along with economists and real estate consultants, are starting to contemplate what urban cores will look like now that the generation — America’s largest — is cresting.

Millennials are generally considered to be those born between the early 1980s and late 1990s or early 2000s, and many in this generation are aging from their 20s into the more traditionally suburban child-raising years. There are already some signs that the inflow of young professionals into cities has reached its peak, and that the outflow of mid-30s couples to the suburbs has resumed after stalling during the Great Recession.

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DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

Aetna-Humana merger blocked – Business Insider

The deal, in which Aetna proposed to buy Humana for $37 billion, has been ruled anticompetitive.

Chan Zuckerberg Initiative Makes Its First Acquisition, Meta – Bloomberg

Mark Zuckerberg’s philanthropic organization made its first acquisition, buying Meta, a website that makes it easier for scientists to find the latest academic research.

Jose Cuervo Said to Plan Mexico IPO for as Early as Feb. 8 – Bloomberg

Jose Cuervo, the world’s largest tequila maker, is pushing forward with plans for an initial public offering after delaying the share sale last year, according to a person with knowledge of the matter.

Yahoo Says Sale to Verizon Delayed Until Second Quarter – Bloomberg

Yahoo! Inc. said the sale of its main web operations to Verizon Communications Inc. has been delayed until next quarter to meet closing conditions while the company recovers from the disclosure of massive hacks to its user accounts.

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SILICON VALLEY, UNICORNS, STARTUPS, VC

Alphabet Gets Robotics Pioneer Back After Her Stint With Apple – Bloomberg

Alphabet Inc. re-hired Yoky Matsuoka to oversee technology at its Nest Labs Inc. smart home unit, snapping up the robotics and artificial intelligence expert after she recently left Apple Inc.

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CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

Apple’s Legal Assault on Qualcomm Is Part of Phone Margin Grab – Bloomberg

Apple Inc. is piling onto lawsuits that attack the way Qualcomm Inc. licenses technology for mobile phones in a widespread effort to rake back profits in a slowing market.

The latest suit by Apple, filed Friday, alleges that Qualcomm has unfairly used the power of its patents, which cover the fundamentals of phone systems, and its chip business to prop up its dominant position in the industry. Apple’s legal actions follow regulatory investigations and fines on three continents, including a lawsuit announced last week by the U.S. Federal Trade Commission.

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Retail Malaise Puts Pressure on Chains to Shutter More Stores – Bloomberg

Reeling from a shaky holiday season and slowing mall traffic, U.S. retailers are facing increasing pressure to close stores as more of their business migrates to the internet.

More than 10 percent of U.S. retail space, or nearly 1 billion square feet, may need to be closed, converted to other uses or renegotiated for lower rent in coming years, according to data provided to Bloomberg by CoStar Group. That’s on top of about 5,000 stores that have been shuttered in the past 18 months, an estimated 50 million square feet of space, according to Clarion Partners.

McDonald’s U.S. restaurant sales fall after five quarters of gains | Reuters

McDonald’s Corp’s sales at established U.S. restaurants fell for the first time in six quarters as the novelty of all-day breakfast failed to overcome competition from supermarkets and other food sellers.

McDonald’s All-Day Breakfast Push No Longer Fueling Growth – Bloomberg

The slowdown from all-day breakfast leaves McDonald’s in search of its next big source of U.S. growth. The company is looking to technology, such as touch screens and mobile ordering, to help fuel domestic sales. But it’s not clear how quickly that will pay off, said Michael Halen, an analyst at Bloomberg Intelligence.

“We still don’t know where the sales are going to come from,” he said. “People are in wait-and-see mode.”

Amazon’s next frontier to conquer? Auto parts | New York Post

Amazon boss Jeff Bezos, whose online behemoth is likely to become the country’s No. 1 apparel retailer this year, is setting his sights on what could be his next sector to dominate: the $50 billion do-it-yourself after-market auto parts business.

In recent months, Amazon has struck contracts with the largest parts makers in the country — including Robert Bosch, Federal-Mogul, Dorman Products and Cardone Industries, sources told The Post.

And that could be bad news for the nation’s retailers — O’Reilly Auto Parts, Advance Auto Parts, AutoZone and Genuine Parts, insiders said.

Too Early to Junk Auto Retailers on Report of Amazon Parts Push – Bloomberg

Amazon.com Inc.’s reported push into the auto parts retail sector spooked investors on Monday, sending shares of several auto retailers down, but analysts say the market might be overestimating the threat.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Trump’s new FCC chief is Ajit Pai, and he wants to destroy net neutrality – The Verge

Donald Trump has elevated Ajit Pai to chairman of the Federal Communications Commission, giving control over the agency to a reliable conservative who’s been opposed to pretty much every big action the commission has taken in recent years, from establishing net neutrality to protecting consumer privacy to restricting major cable mergers.

Inside Pandora’s Quest to Take on Spotify, Apple Music & Amazon

With 78 million users, streaming’s original music service remains an online radio giant — but increasingly threatened by subscription services from Spotify to Apple Music. Now, amid layoffs and acquisition rumors, co-founder/CEO Tim Westergren is about to launch an ambitious bid for subscribers of its own: “The other products out there are unsatisfying.”

Tidal, Jay Z’s Streaming Service, Sells a Stake to Sprint – The New York Times

“Tidal has struggled to make a dent in the streaming market and has shallower pockets than Spotify, Apple or Amazon,” said Mark Mulligan, an analyst at Midia Research, a market research company. “The Sprint deal gives it access to a big customer base, free marketing and a war chest to take on the streaming incumbents.”

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AUTOS, ELECTRIC, SELF-DRIVING

Auto Industry’s No. 1 Preoccupation: Trump – WSJ

Auto executives typically spend the end of the year prepping for product debuts and thinking up ways to spark sales.

This time around, Detroit’s chiefs devoted considerable time to trying to figure out how to deal with the nation’s new commander in chief. Union bosses are being called in to consult on how to reshuffle factory work, board members are trying to figure out who has friends in President Donald Trump’s new administration, and task forces have been created to monitor his Twitter account.

A Rising Tide of Used Cars Threatens Ford’s Profits – Bloomberg

All those years of rising U.S. auto sales are starting to work against carmakers.

A glut of used vehicles has started to depress prices. That trend will intensify as Americans will return 3.36 million leased cars and trucks this year, another jump after a 33 percent surge in 2016, according to J.D. Power. The fallout has already begun, with Ford Motor Co. shaving $300 million from its financial-services arm’s profit forecast for this year.

Ford Takes Step Toward Online Car Shopping With Fintech Investment – WSJ

The lending arm of Ford Motor Co. has tapped a San Francisco startup to make it easier for its customers to buy and finance a car without going into a showroom.

Uber Wants Court Stamp on Arbitration Win as Hint to Drivers – Bloomberg

Uber Technologies Inc. is asking a California judge to grant a stamp of approval on what it says is the first decision by an arbitrator denying a driver’s bid to be treated as an employee instead of an independent contractor.

It could be the first of many such rulings after a federal appeals court’s decision last year that most Uber drivers can be forced by the company to resolve disputes through binding arbitration.

When Their Shifts End, Uber Drivers Set Up Camp in Parking Lots Across the U.S. – Bloomberg

The vast majority of Uber’s full-time drivers return home to their beds at the end of a day’s work. But all over the country, there are many who don’t. These drivers live near, but not in, expensive cities where they can tap higher fares, ferrying wealthier, white-collar workers to their jobs and out to dinner—but where they can’t make enough money to get by, even with longer hours. To maximize their time, drivers find supermarket parking lots, airports and hostels where they catch several hours of sleep after taking riders home from bars and before starting the morning commute.

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AEROSPACE, MILITARY & DEFENSE

SpaceX is about to launch one of its final expendable rockets | Ars Technica

In many ways SpaceX has acted more like a startup company than a traditional aerospace company, and as such it has constantly been tinkering with the design of the Falcon 9, seeking to improve its performance. Unofficially, there have been at least four versions of the Falcon 9 booster—the Falcon 9 v1.0, Falcon 9 v1.1, Falcon 9R v1.1, and Falcon 9 Full Thrust. First flown in December, 2015, this last variant included and updated Merlin-1D rocket engine and used chilled, densified propellant. Combined, the rocket and propellant add about 30 percent to the lift performance of the previous Falcon 9.

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HEALTHCARE, PHARMA, BIOTECH

The Fight Trump Faces Over Drug Prices – The New York Times

President Trump has made it clear that he thinks drug prices are too high and that the pharmaceutical industry, as he put it at a news conference this month, is “getting away with murder.”

He joins a host of lawmakers and others who have excoriated drug makers in recent years for high-priced drugs that are out of the reach of many Americans. On Monday, Sean Spicer, Mr. Trump’s press secretary, reaffirmed that the issue would be a priority.

Pharma Lobby Fights Back Against Trump Criticism With TV Ads – Bloomberg

Big pharma’s lobbying arm is fighting back against outrage over rising drug costs from the public and President Donald Trump, who has the industry in his crosshairs.

“We are going on offense,” Ubl said. “We are launching the most comprehensive campaign we’ve ever embarked on.”

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LUXURY, HIGH END, ASPIRATIONAL

What It’s Like to Custom-Design Your Own Benetti Superyacht – Bloomberg

So how much, on average, are clients prepared to spend to personalize a boat, buy extra tenders, or simply add that “unique” touch to the high-tech kitchen or cabin layout?

The sky is the limit, Fotilas said. “Honestly, I don’t think they even know,” he admitted.

Money might not be a big issue, but trends and personalization requests can vary substantially from customer to customer and from country to country. People from the Middle East generally prefer larger interiors; Europeans and Americans favor more outdoor life and therefore choose larger deck spaces and focus more on making those areas “special.”

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SCIENCE, NATURE, PSYCHOLOGY

Genes determine how young use internet and social media

Genes play an unexpectedly big role in determining how young people use the internet and social media, according to a large UK study of 16-year-olds.

More than one-third of differences between individuals’ online behaviour — for example, how much time they spend playing games or in chat rooms — can be attributed to genetics rather than environmental factors such as family circumstances and availability of computers and smartphones.

The researchers at King’s College London say the study, published in the journal PLoS One, challenges a common belief that people are passive or helpless consumers of media.

The Man Who’s Trying to Kill Dark Matter | WIRED

At the end of 2016, a series of developments has revived a long-disfavored argument that dark matter doesn’t exist after all. In this view, no missing matter is needed to explain the errant motions of the heavenly bodies; rather, on cosmic scales, gravity itself works in a different way than either Isaac Newton or Albert Einstein predicted.

The latest attempt to explain away dark matter is a much-discussed proposal by Erik Verlinde, a theoretical physicist at the University of Amsterdam who is known for bold and prescient, if sometimes imperfect, ideas. In a dense 51-page paper posted online on Nov. 7, Verlinde casts gravity as a byproduct of quantum interactions and suggests that the extra gravity attributed to dark matter is an effect of “dark energy”—the background energy woven into the space-time fabric of the universe.

Instead of hordes of invisible particles, “dark matter is an interplay between ordinary matter and dark energy,” Verlinde said.

Macro Links Mon Jan
23rd – Alternative Facts

MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

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INTEREST RATES, SYSTEMIC RISK, BALANCE SHEETS

Why China Needs to Watch the Pennies – Bloomberg Gadfly

China’s penny-stock market could be bringing the giant to its knees.For the second time in less than a year, the ChiNext venue for small-cap companies is weighing on the nation’s equities. It’s probably healthy for the market to correct, but the fact that this is happening amid a cash crunch means the effects threaten to be far more damaging than usual.

The timing couldn’t be worse. With less than two weeks before the Lunar New Year holiday, people across China are pulling cash out of investments and deposit accounts to pay for trips home and buy presents for relatives. Money is traditionally scarce and expensive at this time, but it’s been particularly bad this year.

The danger of a domino effect should be clear. It was to China’s authorities, who intervened in the stock market, including the ChiNext, on Tuesday, people familiar told Bloomberg News. In tandem with the reverse repo operations, they may have averted any wider fallout. This time.
17F23 chart - China Shibor jump

Good Times Seen Coming to End for China’s Real Estate Bonds – Bloomberg

Steps to cool China’s property market are stoking speculation the good times are about to end for developer bonds offshore.

The hangover would be big. Yield-starved fund managers around the world have piled into the $65 billion market for dollar-denominated notes sold by Chinese builders. There is plenty of scope for pain after yield premiums for lower-rated U.S.-currency securities from the nation, the majority of which are from real estate borrowers, dropped to the lowest level since 2007 this month, according to a Bank of America Merrill Lynch index.

China clamps down on banks moving currency overseas

Chinese regulators are stamping out moves by banks to shift renminbi out of the country as they attack one of the few loopholes remaining in the country’s strict new capital controls regime.

The tightening is another setback for the Chinese government’s larger strategy of internationalising its currency — a goal that has taken a back seat to stabilising capital outflows and the renminbi’s depreciation against the dollar.

According to several people briefed on rules introduced this month, banks in Shanghai must “import” Rmb100 for every Rmb100 they allow a client to remit overseas, ensuring no net outflows of the Chinese currency. Shanghai-based banks had been allowed to remit Rmb160 overseas for every Rmb100 they brought back into China.

The clampdown goes even further in Beijing where banks must import Rmb100 for every Rmb80 they remit overseas on behalf of clients, ensuring a net inflow into the capital. The People’s Bank of China declined to comment.

Quicken Loans, the New Mortgage Machine – The New York Times

In the years since the financial crisis, Quicken has emerged as a leader in the nation’s shadow-banking system, a network of nonbank financial institutions that has gained significant ground against its more heavily regulated bank counterparts in providing home loans to Americans. Increased regulation and decreased profits sent the nation’s banks packing.

Nonbanks, like Quicken, have filled that gap. Today, Quicken is the nation’s second-largest retail residential mortgage lender, behind Wells Fargo, but ahead of banking giants like J. P. Morgan, Bank of America and Citigroup, according to Mortgage Daily.

For JPMorgan, Buying Junk Bonds Is the Debt Market Trump Trade – Bloomberg

JPMorgan Asset Management is boosting its holdings of high-yield debt on the expectation that President Donald Trump’s policies will fuel domestic growth and improve corporate earnings, strengthening the balance sheets of junk-rated companies.

Following the election, the firm nearly tripled its exposure to junk bonds in its unconstrained debt fund, which permits shifts of that magnitude, and raised its exposure “meaningfully” across the board, according to Bob Michele, who oversees $470 billion as the chief investment officer and head of global fixed income, currency and commodities at the firm’s $1.8 trillion asset management arm.

“This is historically the largest move we’ve ever made,” he said in an interview.

17F23 chart - high yield going higher

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MACRO OP-EDS, DATA, INQUIRY AND THEORY

News Media, Target of Trump’s Declaration of War, Expresses Alarm – The New York Times

The news media world found itself in a state of shock on Sunday, a day after Mr. Trump declared himself in “a running war with the media” and the president’s press secretary, Sean Spicer, used his first appearance on the White House podium to deliver a fiery jeremiad against the press.

“It was absolutely surprising and stunning,” the president of the White House Correspondents’ Association, Jeff Mason, said on CNN on Sunday.

Dan Rather: “These are not normal times”

These are not normal times. These are extraordinary times. And extraordinary times call for extraordinary measures.

When you have a spokesperson for the president of the United States wrap up a lie in the Orwellian phrase “alternative facts”…

When you have a press secretary in his first appearance before the White House reporters threaten, bully, lie, and then walk out of the briefing room without the cajones to answer a single question…

When you have a President stand before the stars of the fallen CIA agents and boast about the size of his crowds (lies) and how great his authoritarian inaugural speech was….

These are not normal times.

The press has never seen anything like this before. The public has never seen anything like this before. And the political leaders of both parties have never seen anything like this before.

What can we do? We can all step up and say simply and without equivocation. “A lie, is a lie, is a lie!” And if someone won’t say it, those of us who know that there is such a thing as the truth must do whatever is in our power to diminish the liar’s malignant reach into our society.

There is one group of people who can do a lot – very quickly. And that is Republicans in Congress. Without their support, Donald Trump’s presidency will falter. So here is what I think everyone in the press must do. If you are interviewing a Paul Ryan, a Mitch McConnell, or any other GOP elected official, the first question must be “what will you do to combat the lying from the White House?” If they dodge and weave, keep with the follow ups. And if they refuse to give a satisfactory answer, end the interview.

Facts and the truth are not partisan. They are the bedrock of our democracy. And you are either with them, with us, with our Constitution, our history, and the future of our nation, or you are against it. Everyone must answer that question.

Rocky First Weekend for Trump Troubles Even His Top Aides – The New York Times

To the extent that there was a plan to take advantage of the first days of his administration, when a president is usually at his maximum leverage, Mr. Trump threw it aside with a decision to lash out about crowd sizes at his swearing in and to rewrite the history of his dealings with intelligence agencies.

The lack of discipline troubled even senior members of Mr. Trump’s circle, some of whom had urged him not to indulge his simmering resentment at what he saw as unfair news coverage. Instead, Mr. Trump chose to listen to other aides who shared his outrage and desire to punch back. By the end of the weekend, he and his team were scrambling to get back on script.

Trump’s Tough Talk Further Rattles World Capitals on Day One – Bloomberg

The speech reaffirmed campaign themes that had unnerved foreign leaders fearful the U.S. would back away from its role as the “indispensable nation” and put less stock in traditional alliances, globalism and free trade. On the revamped White House website, the Trump administration vowed to withdraw from the Trans-Pacific Partnership and renegotiate the North American Free Trade Agreement.

“It was Trump and his populist base against the world — including every other country and the Washington establishment, and that surprised me,” said Jacob Kirkegaard, a senior fellow with the Peterson Institute for International Economics in Washington. “What really struck me the most was the dark tenor of the speech. This was ‘Midnight in America,’” he added, referring to President Ronald Reagan’s optimistic “Morning in America” theme.

Leaders Abroad, Joyful or Wary, Face Uncertainty of Trump Era – The New York Times

There was dismay in Britain, applause in Russia and silence in Japan. French populists found hope, Mexican leaders expressed concern and Germany’s vice chancellor offered an allusion to his country’s dark past.

In his first speech as president of the United States, Donald J. Trump showed the world he could be as divisive abroad as he is at home. His vow to place America first — and his threat to upend longstanding alliances, trade deals and many other tenets of the liberal democratic order the nation has chosen for nearly 70 years — was received across the globe with fear, silence and glee, sometimes within the same country.

Trump China Trash Talk Risks Collateral Damage to Global Economy – Bloomberg

China may be growing at its slowest annual pace since 1990, but it’s still the powerhouse of global growth. That’s something Donald Trump’s trade hawks will need to consider if they’re truly serious about risking a conflict with China to win economic concessions.

Not only would a clash derail bilateral ties, it might also deep-six a nascent global recovery.

If Trump backs up harsh campaign rhetoric — he accused China of raping America and cheating on trade — with punishing tariffs, the move would have repercussions for supply chains in South Korea, Taiwan, Japan and beyond. Nor would the U.S. economy escape unscathed: state-controlled media have warned the incoming Trump administration that Beijing has a “big stick” to punish U.S. companies that sell goods and services to China.

“With China America’s third largest and most rapidly growing export market, that’s hardly a trivial consideration for a growth-starved U.S. economy,” said Stephen Roach, a senior fellow at Yale University and former non-executive chairman for Morgan Stanley in Asia. “Also expect China to be far less interested in buying Treasury debt – a potentially serious problem in light of the expanded federal budget deficits likely under Trumponomics.”

Trump Era May Force Europe Into Deciding What Role It Wants – Bloomberg

Donald Trump’s arrival in the White House means it may, finally, be decision time for Europe.

The new U.S. president’s barrage of criticism in the run up to his inauguration last week prompted pledges to stick together and revive support for the European Union. Germany’s Angela Merkel vowed to maintain unity through continuous dialogue with other members. Mark Rutte of the Netherlands called for a fresh focus on the economy, while European Commission Vice President Frans Timmermans warned critics not to underestimate the bloc’s determination.

The test will be whether their renewed commitment is enough to address flaws in the EU’s structure that have been glossed over in recent years. Since the high water mark of integration brought the single currency and expansion in the east, the EU has fudged questions such as how far to pool its taxes and debts, how much to spend on defense and whether to adopt a common foreign policy toward neighbors such as Russia and Libya.

Trump Team Leaves Germany Out in the Cold – Handelsblatt Global

As Donald Trump officially enters office, the German government is still struggling to establish contacts with the new administration and distinguish campaign bluster from actual policy.

Decision makers in Berlin have largely been left to read the tea leaves in Mr. Trump’s campaign rhetoric and his recent interviews with the European press.

Instead of expressing his concerns through private diplomatic channels, Mr. Trump has publicly dismissed NATO as “obsolete,” threatened German carmakers with a 35 percent tariff and predicted that other nations would leave the European Union.

Ms. Merkel’s team has given up any pretense that Mr. Trump might become more statesman-like once he enters the Oval Office.

“None of us here believe that anymore,” a source in the chancellor’s circle of advisors told Handelsblatt. “The Americans, and the world, will get the Trump they elected.”

Brexit Good for Terra Firma, Bad for Most People, Guy Hands Says – Bloomberg

The U.K.’s decision to leave the European Union is going to lead to dramatic changes in the way the country’s economy operates, which could create opportunities for a firm like Terra Firma Capital Partners, Chairman Guy Hands said.

The country will have to get rid of much of its social safety net and may see a 30 percent decline in wages in real terms in the next 20 years to enable it to compete outside of Europe, Hands said in an interview on Bloomberg Television. Debt will command higher interest rates as more risk is ascribed to an independent U.K., and immigrants from Europe will be replaced with workers from the Indian subcontinent and Africa, who may be willing to accept “substantially” lower pay, he said.

A Greek tragedy: how much can one nation take?

Greece’s economic crisis has disappeared from the minds of many in Europe, but inside the country, the pain is only getting worse.

Today the country has become a byword for the brutal economic, political and social fallout that followed the 2008 crisis. The economy shrunk almost a third in the ensuing years, and the government is effectively bankrupt without outside support: it owes about €320bn — not far from double its gross domestic product of €181bn.

The effects of such economic hardship are now being felt across the country. Unemployment is at 23 per cent and 44 per cent of those aged 15-24 are out of work. More than a fifth of Greeks get by without basics such as heating or a telephone connection.

In 2015, 15 per cent of the population lived in extreme poverty compared with 2 per cent in 2009, according to a recent study by Dianeosis, a Greek NGO. “There are families that do not have anything to eat,” says Petropoulos, a squat man in his mid-forties. “I give bread away for nothing. I know everybody here and I know who needs it the most.”

Rex Tillerson, ExxonMobil and the separation of oil and state

There is another way to look at Mr Tillerson’s experiences in Russia: as an indication of his character and competence. He worked at Exxon — which became ExxonMobil in 1999 — for 41 years, and led it as chief executive for 11, before stepping down at the end of last year. That record is the key to understanding his strengths and his weaknesses.

Mr Tillerson is an engineer and Exxon is an engineer’s company, fixated on efficiency and precision. “Exxon has a very strong culture,” says Robin West of the BCG Center for Energy Impact. “Asked to define Germany, Angela Merkel said it’s a country that has tight seals on windows. That’s how Exxon works: everything fits.”

A former executive at another oil company says meetings with Exxon on joint projects were always a source of amusement. The Exxon team would turn up with identical crewcuts, khakis and white short-sleeved shirts, and arrange their pencils and notepads in the same alignment on the table.

Trump’s Vainglorious Affront to the C.I.A. – The New Yorker

Trump’s remarks caused astonishment and anger among current and former C.I.A. officials. The former C.I.A. director John Brennan, who retired on Friday, called it a “despicable display of self-aggrandizement in front of C.I.A.’s Memorial Wall of Agency heroes,” according to a statement released through a former aide. Brennan said he thought Trump “should be ashamed of himself.”

Crocker, who was among the last to see Ames and the local C.I.A. team alive in Beirut, was “appalled” by Trump’s comments. “Whatever his intentions, it was horrible,” Crocker, who went on to serve as the U.S. Ambassador in Iraq, Syria, Afghanistan, Pakistan, Lebanon, and Kuwait, told me. “As he stood there talking about how great Trump is, I kept looking at the wall behind him—as I’m sure everyone in the room was, too. He has no understanding of the world and what is going on. It was really ugly.”

“Why,” Crocker added, “did he even bother? I can’t imagine a worse Day One scenario. And what’s next?”

President Obama, who hoped to sow peace, instead led the nation in war – Los Angeles Times

U.S. military forces have been at war for all eight years of Obama’s tenure, the first two-term president with that distinction. He launched airstrikes or military raids in at least seven countries: Afghanistan, Iraq, Syria, Libya, Yemen, Somalia and Pakistan.

Yet the U.S. faces more threats in more places than at any time since the Cold War, according to U.S. intelligence. For the first time in decades, there is at least the potential of an armed clash with America’s largest adversaries, Russia and China.

Obama slashed the number of U.S. troops in war zones from 150,000 to 14,000, and stopped the flow of American soldiers coming home in body bags. He also used diplomacy, not war, to defuse a tense nuclear standoff with Iran.

But he vastly expanded the role of elite commando units and the use of new technology, including armed drones and cyber weapons.

“The whole concept of war has changed under Obama,” said Jon Alterman, Middle East specialist at the Center for Strategic and International Studies, a nonprofit think tank in Washington.

Why robots, not trade, are behind so many factory job losses | The Big Story

America has lost more than 7 million factory jobs since manufacturing employment peaked in 1979. Yet American factory production, minus raw materials and some other costs, more than doubled over the same span to $1.91 trillion last year, according to the Commerce Department, which uses 2009 dollars to adjust for inflation. That’s a notch below the record set on the eve of the Great Recession in 2007. And it makes U.S. manufacturers No. 2 in the world behind China.

Trump and other critics are right that trade has claimed some American factory jobs, especially after China joined the World Trade Organization in 2001 and gained easier access to the U.S. market. And industries that have relied heavily on labor — like textile and furniture manufacturing — have lost jobs and production to low-wage foreign competition. U.S. textile production, for instance, is down 46 percent since 2000. And over that time, the textile industry has shed 366,000, or 62 percent, of its jobs in the United States.

But research shows that the automation of U.S. factories is a much bigger factor than foreign trade in the loss of factory jobs. A study at Ball State University’s Center for Business and Economic Research last year found that trade accounted for just 13 percent of America’s lost factory jobs. The vast majority of the lost jobs — 88 percent — were taken by robots and other homegrown factors that reduce factories’ need for human labor.

Technology vs. the Middle Class – WSJ

What we’re going through now is called the fourth industrial revolution, marked by rapid innovation in automation, artificial intelligence, biotechnology, nanotechnology and other areas.

Last week, it was the talk of Davos, where Microsoft Chief Executive Satya Nadella worried it could lead to social unrest or excessive regulation. “If we don’t get it right we are going to have a vicious cycle,” Mr. Nadella said at a panel on AI.

Polarization has hit the middle class hard, but the devaluation of human labor will continue up the income ladder, says Branko Milanovic, an economist who specializes in income inequality.

That’s partly because, more than ever, we have the ability to eliminate higher-paying knowledge work. Ian Barkin, co-founder of Symphony Ventures, which helps some of the world’s largest companies automate everything from call centers to human-resource departments, says this phenomenon is known as “no-shoring.” The idea is that digitizing back-office tasks brings them back to the country in which a company operates, but without bringing back any jobs.

Why economists need to start paying more attention to conspiracy theories | The Independent

“There are idiots, look around.” That was the famously tactless response, in the 1980s, from the veteran economist Larry Summers to the efficient markets hypothesis – the assumption of many financial models that people always make decisions guided by rationality and with perfect information. Tactless Summers may have been but was he wrong? Irrational crazes are as old as human history.

A quarter of Americans say they think the US government helped to plan the 9/11 attacks. Around 45 per cent think “millions” of illegal votes were cast in November’s presidential election.

The picture of the ivory tower academic economist who assumes perfect rationality and perfect information is something of a caricature, as Summer’s well-known quip itself demonstrates.

Yet there has been a tendency among some economists to continue to assume – sometimes for the sake of convenient modelling, sometimes owing to ideology – that people are well-informed about the world around them.

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CENTRAL BANKS & MONETARY POLICY

Trump Seeks 4% Annual GDP Growth, High End of Prior Goals – Bloomberg

The U.S. economy has expanded at an average annual rate of 2.1 percent since the last recession ended in June 2009. Economists expect gross domestic product to grow 2.3 percent both this year and next year, according to the median estimates in a Bloomberg survey. The last time U.S. growth topped 4 percent in a full calendar year was in 2000, at 4.1 percent.

Trump in September called for a “national goal” of 4 percent economic growth while also saying his plans would create an average of 3.5 percent expansion over 10 years. His Treasury secretary nominee, Steven Mnuchin, told lawmakers Thursday in his confirmation hearing that “we should be able to get to” a sustained rate of 3 percent to 4 percent growth.

Economists are largely skeptical that the U.S. can grow at such a pace for a sustained period, even with assistance from fiscal stimulus or other policies. The Federal Reserve sees the economy’s long-term potential growth rate at about 1.8 percent.

Central Banks Embrace Risk in Era of Low Rates – WSJ

By keeping interest rates low and in some cases negative, central banks have prompted some of the most conservative investors to join the hunt for higher returns: Other central banks.

Central banks from Switzerland to South Africa are investing a bigger share of their growing foreign-exchange reserves in equities, corporate bonds and other riskier assets.

Branching out from the traditional central-bank practice of investing primarily in ultrasafe government bonds such as U.S. Treasurys means taking on more risk. But at a time when global growth, interest rates and potential returns on many assets are low, many central bankers are becoming increasingly focused on maximizing investment returns.

“When yields started to get really low and closer to zero in 2014, we decided to start equity investments,” said Jarno Ilves, head of investments at the Bank of Finland, who said he plans to increase his allocation to stocks.

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POSITIONING, INFLECTION, MARKET CALLS

Investors Taper Bullish Bets, as Trump Takes Office – WSJ

Investors are turning more cautious as President Donald Trump takes office, a shift from the early days after his victory when stocks surged on the hopes that his policies would accelerate growth.

The S&P 500 is still up 6.2% since Election Day, and it hasn’t fallen by 1% or more in 69 trading sessions. But investors also are positioning themselves more defensively by increasing cash or hedging against a potential resurgence in volatility.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

One Stat That Shows a Trump Bull Market Is Unlikely – WSJ

To better gauge the market’s future returns, investors should look at another measure of valuation: At the end of last year, the total value of U.S. stocks was an estimated 169% of gross domestic product. That compares with 85% at the end of 2008, and is approaching the 177% valuation the market hit at the end of 1999.
17F23 chart - market value of US equities as a percentage of gross domestic product

Energy Stocks Can’t Keep Up With Analysts’ Earnings Exuberance – Bloomberg

Energy stocks posted the biggest gains of any sector in the S&P 500 Index last year — and yet they still look cheap to Wall Street.

Spurred by an improving outlook for global demand and an agreement to cut oil production from OPEC and non-OPEC producers, analyst optimism for energy earnings jumped the most on record over the New Year. This has made the shares inexpensive on a price-to-earnings basis.

Investment in infrastructure assets soars to record

Private investment in infrastructure assets soared last year as fierce competition for roads, airports, ports and power plants pushed prices higher.

Investment in global infrastructure assets hit a record $413bn in 2016, a rise of 14 per cent on the year before. But although the deal value rose from $362bn to $413bn in 2016, the number of deals held steady at 1,772, showing that there is still a surplus of money chasing too few projects.

The search for low-risk investments has led to several large funds raising new multibillion-pound infrastructure funds. Their optimism has been fuelled by increasing willingness by governments to support private sector investment in infrastructure, but Mr Carr said it was unclear whether “the pace of the market can be sustained moving into 2017 or if managers struggle to deploy their available capital in attractive projects”.

17F23 chart - global infrastructure deals

Wall Street Week Ahead: Optimism among S&P 500 CEOs as Trump takes power | Reuters

U.S. President Donald Trump’s administration is only hours old, but already a small parade of S&P 500 companies’ chiefs have voiced optimism that his promised tax cuts, stimulus spending and deregulation will boost corporate profits.

In the days ahead of Friday’s inauguration, senior executives from Morgan Stanley (MS.N), Delta Air Lines (DAL.N) and other major U.S. corporations said the Trump White House has already sparked a brighter outlook for business.

“There is certainly more reason to be optimistic as we enter 2017 than there was at the beginning of 2016,” Morgan Stanley CEO James Gorman said on Tuesday after his bank said profit doubled in the fourth quarter. He pointed to factors including a surge in consumer confidence after the Nov. 8 election and lower taxes promised by Trump.

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CREDIT, YIELD, BUYBACKS, CORPORATES

Beware the Hedge-Fund Wipeout in Treasuries as Bearish Bets Soar – Bloomberg

There’s a big showdown looming in the U.S. Treasury market.

The “fast money,” made up of hedge funds and other speculators, upped its bearish bets like never before this month, based on futures data for five-year notes. At the same time, “real-money” accounts, composed of institutional buyers like mutual funds and insurers, did the opposite and built up their bullish positions in much the same way.

What will happen, especially in the era of Donald Trump, is anyone’s guess. But for JPMorgan Chase & Co.’s Jay Barry, the speculators are sowing their own demise. While Treasuries have suffered five straight months of losses, fast-money investors tend to be reliable contrarian indicators whenever they crowd together. More than 75 percent of the time, the market moves the other way over the following month, his figures show. The recent backup in yields is already starting to lure long-term investors back into Treasuries.

“I’m surprised the speculative data remains as short as it does,” said Barry, a U.S. fixed-income strategist at JPMorgan.

17F23 chart - fast money and asset managers take different view on USTs

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TAXATION, HAVENS, TRADE, PROTECTIONISM

These Companies Are at Risk in a U.S.-China Trade War – Bloomberg

Widespread boycotts of American products in China could hit brands including Nike Inc., General Motors Co., Ford Motor Co. and Tiffany & Co., while U.S. sanctions would put Chinese electronics exporters such as Lenovo Group Ltd. and ZTE Corp. under pressure, according to Credit Suisse Group AG. Domestic competitors stand to gain from diminished commerce.

“Most people I talk to tend not to think a trade war is the base-case scenario — they treat it as a black swan event,” Hao Hong, an analyst at Bocom International Holdings Co. based in Hong Kong, said in a phone interview. “I think the possibility is much larger.”

17F23 chart - America's China export problem

‘It’s made in Vietnam!’ At inauguration, origin of red Trump hats shocks many | Reuters

One of the biggest cheers President Donald Trump received from supporters watching his inaugural address on Friday was his call to “buy American and hire American.”

It was a moment rich in irony. Many of those supporters were sporting Trump’s trademark red “Make America Great Again” baseball caps that were made in China, Vietnam and Bangladesh. Some were horrified when they discovered their Trump hats were foreign made.

Rob Walker, 44, who had driven to Washington from Georgia with his wife Abby, 36, had stopped at a truck stop on the way to buy a “Make America Great Again” cap. “Oh God, I hope it’s not made in China,” Abby said, flipping the cap over to check. She looked at its label. “China! Don’t tell anyone!”

The Trump hats available for purchase on Trump’s official campaign website are made in the United States and cost between $25 and $30, according to the label inside those caps. But they are also more expensive than the $20 versions sold by street vendors in Washington on Friday.

Trump Set for ‘Antagonistic’ China Relations, Citigroup Says – Bloomberg

Donald Trump’s administration may be on course for a fraught relationship with China amid disputes over trade policy, according to Citigroup Inc., which warned the new U.S. government could introduce more protectionist measures against manufactured goods from Asia’s top economy.

“There are growing signs that the Trump administration is heading for antagonistic relations with China,” the bank said in a report that examined how commodities including metals and farm goods may fare in the upcoming lunar year. While the bank stuck with its view that a trade war could be avoided, it did anticipate “increasing trade frictions” between the two.

Braced for Trump Challenge, China Signals Readiness to Cooperate – Bloomberg

Confronted by the challenge of a Donald Trump-led White House, China is signaling it’s ready to work with the new administration and has already taken a handful of policy steps that may help fend off criticism over access to its markets.

The official Xinhua News Agency congratulated Trump on his inauguration and said it hoped for “win-win” cooperation between the two nations. An editorial run by state-backed newspaper China Daily took a similar tone, saying the world’s two largest economies should work together toward “an updated, more desirable version of globalization.”

Canada Signals Possible U.S. Trade Deal That Excludes Mexico – Bloomberg

Canada’s government will consider bilateral trade measures during renegotiation of the North American Free Trade Agreement, a sign it could potentially move ahead at least in part without Mexico.

The comments from David MacNaughton, Canada’s ambassador to the U.S., suggest Donald Trump’s protectionist pledges are splintering the continental pact as the U.S. leader prepares to meet Mexican President Enrique Pena Nieto late this month.

Foxconn Weighs $7 Billion U.S. Factory With Apple, Nikkei Says – Bloomberg

Foxconn Technology Group is considering building a U.S. display-making facility for upwards of $7 billion, a major investment for Apple Inc.’s main manufacturer that may create tens of thousands of American jobs during President Donald Trump’s first year in office.

The company is considering a joint investment with Sharp Corp., the Japanese display supplier it bought last year, but details have yet to be hammered out, Reuters cited Chairman Terry Gou as telling reporters in Taipei on the sidelines of a company event. Foxconn confirmed the report Monday.

President Donald Trump Makes Revised Trade Deals an Early Priority – WSJ

President Donald Trump is taking immediate steps to reorder U.S. economic alliances in his first days in office, setting up meetings with leaders from Mexico and Canada on North American affairs and hosting U.K. Prime Minister Theresa May this Friday to lay the groundwork for a trade pact with London.

Just two days after taking office, Mr. Trump said he would follow through on plans to renegotiate the North American Free Trade Agreement, or Nafta, the two-decade-old deal that binds the U.S. economy to Canada and Mexico.

President Trump Promises ‘Good Results’ From Nafta Talks – Bloomberg

“We’re going to start renegotiating on Nafta, on immigration, and on security at the border,” Trump said at the start of a swearing-in ceremony for top White House staff. “I think we’re going to have a very good result for Mexico, for the United States, for everybody involved. It’s really very important.”

“We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength,” Trump said in Friday’s inaugural address.

Protests in Bangladesh Shake a Global Workshop for Apparel – The New York Times

Bangladesh exports billions of dollars’ worth of clothes each year, making it the world’s second-largest exporter of ready-made garments after China. But its factories are efficient for some of the same reasons that they have been deadly: overcrowded buildings, limited oversight and a government that has historically repressed workers’ efforts to organize and fight for better conditions.

In the wake of the Rana Plaza collapse, retailers formed two coalitions dedicated to improving the lives of workers: the accord, led by H&M, and the Alliance for Bangladesh Worker Safety, which includes Gap and Walmart.

Both groups have created safety standards and mechanisms to enforce them, although the accord, with a legally binding arbitration provision, is largely seen as the stronger of the two. The alliance has no such clause, but it can impose financial penalties and expel members that violate its terms.

Both groups point to progress, like the installation of fire doors and regular safety inspections. But as international attention has waned in the years since Rana Plaza, worker rights groups have expressed concern that the gains could be lost.

“Now the spotlight is off Bangladesh,” said Richard Appelbaum, a labor and worker rights expert at the University of California, Santa Barbara. “The government is responding more typically as it would have responded several years ago, if it could have.”

Philippine outsourcing sector braces for Duterte and Trump effect

Business from the US has driven a long boom in the Philippines’ flagship outsourcing industry, but potential political threats to ambitious growth plans now loom in both countries.

Global companies are scrambling to work out whether tough talk from Rodrigo Duterte and Donald Trump, the Philippine and US presidents, will mean trouble if they run operations in the Philippines.

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FOREX, CURRENCY IMPACTS

Crumbling lira pressures Turkish retailers as economy slows | Reuters

Turkey’s currency has lost around a quarter of its value since the middle of last year, causing havoc for retailers selling imported goods or paying rent pegged to the U.S. dollar. Many were already suffering from a sharp economic slowdown and dwindling tourism numbers after a spate of deadly bombings.

Foreign brands in Turkey are also suffering. Dutch clothing chain C&A, Britain’s Topshop, German cosmetics firm Douglas and U.S.-based dietary supplement retailer GNC have disappeared from shopping centers in recent months. Retail spaces in some of Istanbul’s biggest malls stand empty.

Trump Trade Risks Seen Spreading Peso Woes to Canadian Dollar – Bloomberg

While the currency market fixates on the Mexican peso every time U.S. President Donald Trump tweets about trade, the Canadian dollar may have more at stake if protectionist policies materialize.

Both currencies fell roughly 2 percent against the U.S. dollar after commerce secretary nominee Wilbur Ross said Wednesday the new administration will start the process of renegotiating Nafta soon after the inauguration. But while the peso has sunk 15 percent since Trump’s victory, the recent weakness has so far left the Canadian dollar little changed.

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GLOBAL ECONOMY DATA

Global Uncertainty Gets Brushed Off in the U.S. and Europe – WSJ

The conventional wisdom among economists is that people don’t like uncertainty and the unknowable. Faced with the prospect of upheaval and change with unpredictable outcomes, they become less confident about their prospects and more cautious about making big decisions on spending.

If that conventional wisdom were to be correct, higher than usual levels of uncertainty should be acting as a drag on growth. That would be bad news for a global economy that has struggled to grow at its precrisis pace.

But there are few signs that the fact and prospect of political change is denting what are known as animal spirits, a term coined by John Maynard Keynes to describe the emotions that drive economic behavior.

“Extremely uncertain public policy should be a drag that constricts growth,” said Eric Lascelles, chief economist at RBC Global Asset Management. “It clearly has not been in the U.K. It simply seems not to be a powerful variable.”

Surveys of sentiment point to a strengthening of confidence in both the U.S. and the U.K. over recent months, while a similar rise in optimism is under way in Europe, which faces a number of elections in 2017 that could lead to big changes in policy.

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ENERGY COMPANIES, NOCs, INDUSTRY

LNG project boosted by trials of icebreaker ship

A ship capable of breaking through thick Arctic ice to deliver Russian liquefied natural gas to Asia is due to begin trials, marking an important step towards completion of a $27bn LNG project championed by president Vladimir Putin.

The tanker is the first of a new class of icebreaking LNG carriers that will open an export route from Siberia to the Pacific — reducing Russia’s dependence on selling gas through pipelines to Europe.

17F23 chart - Russia-Asia LNG route

Schlumberger Waits for International Oil Spending to Pick Up – Bloomberg

Schlumberger Ltd. is waiting for the rest of the world’s oil producers to catch up to the North American crude recovery.

The world’s largest oilfield service provider sees international spending picking up in the second half of the year and into 2018, Chief Executive Officer Paal Kibsgaard told analysts and investors on an earnings conference call Friday.

That will follow growth in North America, which has been adding rigs as oil prices stabilized and is forecast to see spending increase about 30 percent, he said. The promise of international growth was not enough for investors — Schlumberger fell the most in more than a month.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

Too Much Ain’t Enough as Investors Jump Into Oil Market Rebound – Bloomberg

Hedge funds are showing they have some faith in OPEC.

Their bets on rising West Texas Intermediate crude prices reached the highest since June 2014 as the Organization of Petroleum Exporting Countries and other producers reduce output to balance the market. Saudi Arabia, Algeria and Kuwait have already made deeper cuts than required, while Russia has been able to reduce supply faster than expected, ministers from the countries said over the weekend in Vienna as they gathered for the first meeting to monitor adherence to their output-cut accord.

17F23 chart - post OPEC speculation surge

As Oil Prices Climb, China and India Curb Their Enthusiasm for Reserves – WSJ

The world’s oil producers are counting on a production cut to boost crude prices, but a slowdown in stockpiling by China’s and India’s governments could offer obstacles to that plan.

For years, the governments of emerging oil consumers like China and India have been stockpiling crude, looking to build buffers like those long held by the U.S. and other developed countries.

These stockpiling efforts have been important—if difficult to quantify—sources of demand throughout the oil-price downturn. Analysts say China in particular has been aggressive in exploiting low oil prices to boost stockpiling. India, too, has picked up its buying, while other Asian countries have signaled plans to build crude cushions.

OPEC, Russia Meet for First Check on Oil-Cuts Progress – Bloomberg

Representatives of OPEC and several other major oil producers are arriving in Vienna for their first meeting to monitor compliance with an agreement to cut output.

Ministers from Saudi Arabia, Kuwait, Qatar, Algeria and Venezuela will meet counterparts from non-OPEC nations Russia and Oman to figure out ways to verify that the 24 signatories to the historic deal are following through on their pledge to remove a combined 1.8 million barrels a day from the market for six months. They intend to prove the group is serious about finally eliminating a three-year crude oversupply and dispel skepticism stemming from previous unfulfilled promises.

Oil-Output Cuts Proceeding Faster Than Planned – WSJ

The Organization of the Petroleum Exporting Countries and Russian officials said Sunday they were making good progress on their pledges to cut back crude-oil production and raise global prices.

Saudi Energy Minister Khalid al-Falih said OPEC’s 13 nations and 11 producers outside the cartel had made collective cuts totaling 1.5 million barrels a day since agreements were struck in late November and early December. Oil prices have risen nearly 20% since those deals were made, despite widespread skepticism over whether OPEC and other producers would follow through.

Mr. Falih also brushed off a new energy policy statement from the Trump administration, which said the U.S. would seek independence from OPEC but maintain close relationships with its Persian Gulf allies to fight terrorism.

OPEC Shrugs Off Threat of U.S. Cutting Oil Imports – Bloomberg

OPEC’s two biggest suppliers to the U.S. shrugged off a vow by President Donald Trump to end dependence on the group’s oil, saying the world’s biggest economy would continue to need crude from abroad.

The U.S. is “closely integrated in the global energy market,” Saudi Arabia’s Energy and Industry Minister Khalid Al-Falih said, while his Venezuelan counterpart Nelson Martinez said he expects his country’s crude exports to the world’s top consumer to remain stable.

Trump’s Vow to Break From OPEC Oil Imports Echoes Old Refrain – Bloomberg

U.S. President Donald Trump’s pledge to make America independent from OPEC isn’t a new refrain in Washington.

His “America First Energy Plan” posted on the White House website Friday doesn’t just echo his own campaign pledges but also President George W. Bush’s vow to cut imports from the Middle East when he famously said the nation was “addicted to oil.” Shipments from OPEC rose more than 10 percent during Bush’s time in office.

It’s not an easy task. It would mean replacing about 3 million barrels a day of imports. That’s about three times as much as East Coast refineries consume.

17F23 chart - US purchases from OPEC have increased

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ENERGY RENEWABLES, NUCLEAR

Off Long Island, Wind Power Tests the Waters – The New York Times

The wind power industry is poised to take off, just as the American political landscape and energy policy itself face perhaps the greatest uncertainty in a generation.

Last fall, five turbines in the waters of Rhode Island — the country’s first offshore farm — began delivering power to the grid. European energy developers like Statoil and Dong Energy are making big investments to bring projects to American waters. Last year in Massachusetts, Gov. Charlie Baker, a Republican, signed into law a mandate that is pushing development forward.

And in New York, after years of stymied progress, the Long Island Power Authority has reached an agreement with Deepwater Wind, which built the Rhode Island turbine array, to drop a much larger farm — 15 turbines capable of running 50,000 average homes — into the ocean about 35 miles from Montauk. If approved by the utility board on Wednesday, the $1 billion installation could become the first of several in a 256-square-mile parcel, with room for as many as 200 turbines, that Deepwater is leasing from the federal government.

The Global Solar Boom: How Solar Is Finally Moving Beyond Boom and Bust | Fox Business

The past decade of solar energy has been all about a series of boom and bust cycles. Germany’s generous solar tariffs drove the industry for most of the 2000s before the country cut subsidies to the bone. The U.S. investment tax credit (ITC) has helped drive a boom in installations, but its extension in late 2015 also lead to a decline in demand for 2017 because utilities have little urgency to sign solar contracts. Even China’s solar boom suddenly went bust in mid-2016.

A bust cycle has happened in nearly every country that has a significant solar market, even if they’ve been caused by different forces. But that trend may be coming to a close and that would be great news for the solar industry’s health long term.

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POLLUTION, CLIMATE & ENVIRONMENT

Trump Administration Aims to Reverse Obama’s Climate Agenda – WSJ

The Trump administration is looking to take action within days to reverse former President Barack Obama’s climate agenda and show its commitment to promoting fossil-fuel infrastructure, according to people familiar with the plan.

Antarctic mission underlines Argentina’s territorial claims

For now, commercial activity in the Antarctic is limited mainly to fishing and tourism — enforcement largely involves the use of satellites and naval patrols to keep poaching of the rich fishery stocks in check.

But there are increasing concerns that nations such as Russia and China are looking at opportunities to exploit Antarctica’s mineral riches, mirroring fears over the Arctic as melting sea ice opens up the historic Northern Sea Route between Europe and Asia and the possibility of oil exploration.

17F23 chart - Antarctica claims

At Least 14 People Killed in Georgia Storms – WSJ

At least 14 people were killed when powerful storms swept through a rural section of southern Georgia Saturday night and Sunday morning, according to the Georgia Emergency Management & Homeland Security Agency.

All the deaths were weather related, said Catherine Howden, a spokeswoman. She declined to provide further details on the deaths. State emergency workers were trying to assess the damage from the storms and figure out what local agencies needed, she said.

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GEOPOLITICS, CRIME, TERRORISM

Iraqis Are Pissed That Trump Said The US Might Try To Seize Their Oil, Again – BuzzFeed News

“I participated in the attack against the Americans by attacking them with mortars and roadside bombs, and I’m ready to do it again,” said Abu Luay, an Iraqi security official who provided his nom de guerre and said he was not allowed to speak to the press. His is now fighting along the frontlines with armed Shiite groups in northwest Iraq. “We kept our ammunition and weapons from the time the Americans left for fighting ISIS. But once ISIS is gone we will save our weapons for the Americans.”

Abu Luay and others spoke to BuzzFeed News one day after Trump made a series of explosive remarks to CIA employees — including suggesting that Americans should have taken Iraq’s oil and floating the possibility of seizing the Middle East country’s primary export and natural resource at some point in the future.

“If we kept the oil, you probably wouldn’t have ISIS because that’s where they made their money in the first place,” Trump told CIA employees in a speech broadcast on television. “So we should have kept the oil, but, OK, maybe we’ll have another chance.”

Syria Talks in Kazakhstan Will Test Russia-Turkey Cooperation – WSJ

Russia and Turkey, which for years have backed opposing sides in Syria’s civil war, say they will work to map the outlines of a peace agreement during negotiations this week, the first major test of whether the powers’ newfound cooperation can achieve a breakthrough to end the conflict.

The Trump administration has said it won’t be sending a delegation to the talks—which begin Monday in the Kazakh capital, Astana—despite being invited to attend alongside Syrian rebels and envoys from Iran, and will be represented instead by the U.S. ambassador to Kazakhstan.

Trump Presidency Is Already Altering Israeli-Palestinian Politics – The New York Times

Just two days old, the presidency of Donald J. Trump is already reshaping the politics between Israelis and Palestinians, on issues from the location of the American Embassy to possible annexation of a major settlement bloc to whether Palestinians are on the edge of a renewed revolt.

Sunday was a day of intense maneuvering on all sides, with an elation among many Israelis that the rancorous relations with the Obama administration were over — but with questions about just how far or how quickly Mr. Trump would go on moving the embassy from Tel Aviv to Jerusalem, a quandary that has bedeviled American presidents for decades.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Yahoo Faces SEC Probe Over Data Breaches – WSJ

U.S. authorities are investigating whether Yahoo’s two massive data breaches should have been reported sooner to investors, according to people familiar with the matter, in what could prove to be a major test in defining when a company is required to disclose a hack.

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FRONTIER MARKETS

Turkey Parliament Triggers Referendum on Presidential System – Bloomberg

Turkish President Recep Tayyip Erdogan’s campaign to secure sweeping executive authority won parliament’s approval early Saturday. Turks will have the final say in a referendum that could be held in early April.

The parliament voted 339-142 to make the president the head of the executive and abolish the job of prime minister, triggering a referendum on the proposal and putting Erdogan one step away from building a power center unrivaled since the days of parliamentary founder Mustafa Kemal Ataturk. In Turkey’s system, amendments to the constitution need to be approved by 367 of 550 members to become law. Proposals that receive between 330 and 367 votes can be referred to a plebescite.

Turkey’s Erdogan kicks-off referendum campaign to boost powers

Recep Tayyip Erdogan has begun a final push to increase his power as Turkey’s president — a goal he has sought for years — after the country’s parliament agreed far-reaching constitutional changes that will now be put to referendum.

The proposed changes, which were shepherded through parliament on Friday night in alliance between Turkey’s ruling AKP and a nationalist party, would crown Mr Erdogan’s 14-year rule by boosting his formal role as president and allowing him to remain in post until 2029.

What Do Traders at Myanmar’s Stock Exchange Do All Day? Nothing. – WSJ

Yangon’s market, with only four listings, is largely deserted as speculators have switched to flipping used cars and trading currency on the black market.

Cubans Newly Blocked at U.S. Border Place Hopes in Trump – The New York Times

The Obama administration ended special immigration privileges for Cubans after normalizing relations with Cuba. Now migrants arrive into a desperate limbo after an arduous journey.

Vietnam to Allow Some Citizens to Gamble During Three-Year Trial – Bloomberg

Casinos that will be considered for a license allowing locals to gamble must commit a minimum of $2 billion to its complex. Vietnamese that are at least 21 years old and have a monthly income of at least 10 million dong ($443) will be allowed to enter casinos. They will also be required to pay 1 million dong for a 24-hour casino ticket or 25 million dong for a month-long pass.

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EMERGING MARKETS

India’s prime property market hit by banknote ban

India’s prime property market is in turmoil. Eye-watering inflation is the first problem, translating steady nominal price gains into considerable real losses. Since autumn 2014 inflation has ranged from 4 to 6 per cent; over the past five years average annual inflation has been just shy of 8 per cent.

More problematic for the market in India’s priciest homes is the banknote ban. In India’s high-end resale property market, buyers typically pay “30 to 40 per cent of the value” of a home in physical cash, says Samantak Das, chief economist at Knight Frank India.

In the final three months of 2016, sales volumes in India’s eight major cities dropped 44 per cent to their lowest level since 2010, according to the agent. New launches were down 61 per cent. “In the prime market, with a few exceptions, sales across India have come to a complete standstill,” says Baijal.

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CANADA, AUSTRALIA, NEW ZEALAND

Australia bolsters protection of strategic assets

Australia has ordered a sweeping security review of its critical infrastructure and is drawing up a register of key assets to help regulators assess whether any privatisation or sale to overseas investors would raise national security concerns.

The initiative, unveiled on Monday, was prompted by concerns about an increased risk of “sabotage, espionage and coercion” involving key water, energy and port facilities amid a surge in foreign investment from China.

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BREXIT

U.K. Prime Minister May Plans U.S. Trip to Meet Trump on Friday – Bloomberg

U.K. Prime Minister Theresa May will visit the U.S. on Friday, becoming the first foreign leader to visit President Donald Trump since his election, aides said.

Trump said during a visit to the Central Intelligence Agency on Saturday that May would visit “very shortly,” and two aides later said a meeting is set for Friday. Newspapers in the U.K. reported they’ll discuss maintaining European unity and a U.K.-U.S. trade deal.

May Industrial Strategy Sees ‘Sector Deals’ With U.K. Business – Bloomberg

The U.K. government will pick winning areas in the economy to champion as part of an industrial strategy aimed at boosting Britain’s productivity as the country prepares to leave the European Union.

Announcing the long-promised plan on Monday, Prime Minister Theresa May said she wanted to see “sector deals” to identify and address barriers to expansion in different industries. The government also aims to target areas where it thinks the U.K. could excel in the future, including biotechnology, artificial intelligence, and mobile networking. Ministers will hold a cabinet meeting in northwest England to emphasize their desire to help parts of the country that have sometimes been left behind by industrial shifts.

Supreme Court Brexit Ruling Unlikely to End May’s Legal Battles – Bloomberg

At stake this week is how easy May will find it to implement Article 50 of the Lisbon treaty to start the exit. A win for the prime minister would let her trigger Brexit unilaterally, while defeat could force the government to pass legislation that can be amended by opponents looking to water down her proposals.

But even Tuesday isn’t the conclusion: A Dublin court is being asked if the two-year exit process can be terminated at a later date, while two campaigners filed a lawsuit claiming the June vote didn’t give May the authority to pull Britain from the European single market.

Theresa May Gets Another Brexit Headache Amid Brussels Upheaval – Bloomberg

U.K. Prime Minister Theresa May’s path to leave the European Union just got a little bit more complicated.

Europe’s Socialist party, already struggling in France, Italy and the Netherlands, lost the presidency of the European Parliament, which must approve any Brexit deal. The election last week of a center-right leader signaled the end of a long-standing power-sharing agreement in the assembly, creating the threat of division that could encumber May’s departure preparations.

Trump Team in Talks with U.K. on Post-Brexit Trade Deal – Bloomberg

Trump officials believe their discussions with May’s government encouraged her to be more aggressive in exiting the EU. She can use any American support to argue the U.K. will prosper outside the bloc although she risks inflaming tensions with European leaders if they suspect her government is actively negotiating trade deals while still an EU member.

Trade to Be a Big Topic in Theresa May’s U.S. Visit – WSJ

“I will be talking to Donald Trump about the issues we share and how we can build on the special relationship,” Mrs. May told the British Broadcasting Corp. “We’ll have an opportunity to talk about our possible future trading relationship but also some of the world challenges that we all face.”

U.K. Lawmakers Mull Steps to Halt Hard Brexit, Observer Reports – Bloomberg

A cross-party group of U.K. parliament members is seeking to stop Prime Minister Theresa May from carrying out a so-called hard Brexit on fears businesses will end up paying high tariffs on goods sold in the European Union, the Observer reported, without citing anyone.

Lawmakers from the Labour, Liberal Democrats and Green parties, and even some in May’s own party, are in talks ahead of a Supreme Court verdict on Tuesday on whether parliament needs to vote to trigger Brexit, the newspaper said. If the court rules a vote is required, the MPs will seek legislation to block May’s proposed strategy for Brexit, the newspaper said.

Bankers Worry Post-Brexit Transition Won’t Be Long Enough – Bloomberg

Global banks, already accelerating plans to pull back from London as Brexit looms, are increasingly concerned that Prime Minister Theresa May is underestimating the time they’ll need to adjust to the upcoming changes in trade and regulations.

Despite the prime minister’s promise to seek a transitional phase, financial professionals expressed disappointment after Brexit Secretary David Davis estimated that the period would amount to one to two years.

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EUROPE

Marine Le Pen Extols Far Right During Speech in Germany – The New York Times

Marine Le Pen wasted no time in proclaiming 2017 as the year of far-right awakening in Europe.

“We are living through the end of one world, and the birth of another,” Ms. Le Pen, the leader of France’s National Front party, told a cheering gathering of members of European right-wing parties on Saturday in this Rhine River city to chart a joint path to success in elections in the Netherlands, France and Germany this year.

“In 2016, the Anglo-Saxon world woke up,” Ms. Le Pen said. “In 2017, I am sure that it will be the year of the Continental peoples rising up.”

EU Populists See Trump Victory as Beginning of End for Old Order – Bloomberg

Europe’s populist right predicted Donald Trump’s entry into the White House will herald the end of the old way of doing business in the west, as the continent’s leaders wrestled with how to deal with the new president.

Anti-establishment politicians including Marine Le Pen, head of the National Front in France, and Geert Wilders of the Dutch Freedom Party echoed the combative language of the new U.S. president’s inaugural address at a celebratory rally in Koblenz, western Germany, on Saturday while Chancellor Angela Merkel was trying to reassure her supporters at a meeting in the country’s industrial heartland.

Europe’s Future Scares Davos Elite as Political Risk Mounts – Bloomberg

The disintegration of Europe is becoming the next source of angst for a global elite that’s only just coming to terms with the concept of President Donald Trump.

While the Davos elite spent much of the week trying to figure out what a Trump presidency will look like, the future of the world’s largest trading bloc became a hotter and hotter theme as the week wore on.

“I worry much more about Europe,” Merck KGaA CEO Stefan Oschmann said in an interview at the World Economic Forum. “If the French elections go utterly wrong, the EU is in real trouble: we have the Italian banking situation, we still have Greece and we have the situation with migrants in Germany, everything is changing, we are somewhat concerned about that.”

Merkel Scours Trump Archive for Clues on How to Read Him – Bloomberg

German Chancellor Angela Merkel has been poring over old interviews and video of Donald Trump, seeking clues on how to influence the incoming U.S. president when they first meet, according to two people familiar with her preparations.

Merkel, the European leader who’s been most in Trump’s sights before his inauguration, was struck by the frenzied supporters at his post-election “Thank You” tour rallies and by an archived interview with Playboy magazine that quoted Trump as saying he’d only run for president if he saw the U.S. “continue to go down the tubes,” said the people, who asked not to be named discussing private conversations.

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CHINA

China Slams Western Democracy as Flawed – Bloomberg

China’s state media used Donald Trump’s inauguration as U.S. president to warn about the perils of democracy, touting the relative stability of the Communist system as President Xi Jinping heads toward a twice-a-decade reshuffle of senior leadership posts.

With ministries and senior officials stressing unity as a priority for China, smoothing the path for the party’s congress in the fourth quarter, state media were quick to highlight divisions within America shown by Trump’s elevation, without necessarily directly referencing the new president.

China cracks down on Mao critics

China’s ruling Communist party has closed the website of a prestigious economist as it launches a campaign against “nihilist” interpretations of former leader Mao Zedong that is stirring up ghosts of the Cultural Revolution.

Chairman Mao’s legacy has became a battleground for “leftists” and “rightists” over the past year, 50 years after he launched the chaotic and violent Cultural Revolution. The rancorous debates come as current president Xi Jinping tightens control over the party and society.

On Friday, censors closed down the social media accounts and website of a think-tank founded by 88-year-old economist Mao Yushi, a frequent target of neo-Maoists (and no relation with the Communist leader), among others. A total 17 websites were taken down for posting “fake news”.

Mr Mao is one of the most outspoken opponents of China’s top-down economic planning and of its state-owned monopolies, which he has called “termites eating away the country’s wealth”.

Transport, Catering and Hotels Led China’s Economic Expansion – Bloomberg

Transport, deliveries and eateries spurred the first acceleration in Chinese economic growth in two years last quarter, highlighting the robust expansion of new drivers and the underlying risks in real-estate since the introduction of policy curbs to halt property speculation.

The nation’s economy is going through a transition that sees it depend more on waiters, delivery people, doctors and software engineers than the smoke-stack industries. Gross domestic product increased 6.8 percent in the three months through December from a year earlier, with services accounting for 51.6 percent of the expansion and consumption contributing 64.6 percent.

China Gives ‘Hedge Fund Brother No.1’ 5 1/2 Years in Prison – Bloomberg

China sentenced former hedge fund manager Xu Xiang to five-and-a-half years imprisonment for market manipulation, in one of the most high-profile cases following the 2015 market rout, a court in the eastern city of Qingdao said in its official Weibo account.

Xu, known as “hedge fund brother No. 1” for his winning record in the stock market, was charged with colluding to manipulate share prices in an operation from 2010 to 2015, the court said in a statement Monday. Wang Wei, another defendant that Xu collaborated with, was sentenced to three years in jail while Zhu Yong, a third, was given two years with a three-year reprieve on the same charges.

China Stock Trading Most Muted Since 1992 as State Tightens Grip – Bloomberg

Chinese stocks haven’t been so subdued since 1992 as government efforts to maintain stability as well as tightening liquidity deter traders.

A gauge of 90-day volatility on the Shanghai Composite Index fell to a 24-year low at the end of December and has barely budged since, while turnover on the nation’s equity exchanges slumped to the lowest in two years last week. The benchmark measure added 0.4 percent to 3,136.78 at the close. China’s markets will be shut for a week-long holiday from Friday.

17F23 chart - China stock market swings smallest since 1992

Alibaba’s Million-Job Boast Reflects Slower China Growth Outlook – Bloomberg

Alibaba is trying to broaden its revenue sources as China’s economy grows at the slowest pace since 1990. Ma’s attention-grabbing pronouncement was portrayed as a new initiative, though the company has been talking up a U.S. expansion since Ma said he wanted more than half of sales to come from outside China by 2025.

China’s Entry to Global Bond Indexes May Be Announced This Year, BlackRock Says – Bloomberg

BlackRock Inc., the world’s largest money manager, said that China’s inclusion in major global bond indexes may be announced this year, a move that could attract billions of dollars of foreign capital to the country and help shore up its flagging currency.

“We’ve been part of the discussions with various index providers, as many of the houses have been, and I think it’s possible it could happen this year,” said Gregor Carle, the head of Asia Pacific fixed income product strategy at BlackRock. Once an index provider announces inclusion, there will be a future date when this becomes “effective” and it is unlikely China bonds will actually be in the index before next year, he said in an interview.

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ASIA PACIFIC

Singapore Consumer Prices Rise for First Time Since 2014 – Bloomberg

Consumer prices in Singapore rose in December for the first time in more than two years, adding to signs of recovery in the city-state’s economy.

South Korean shipyards shed thousands of jobs as orders dive

South Korea’s top shipbuilders are shedding thousands of jobs as one of the country’s most important industries battles to survive amid a sharp slowdown in global business.

Mired in overcapacity and saddled with billions of dollars in debts, the yards — and their employees — are facing a bleak future unless global trade picks up.

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TRUMP WORLD

Transcript: President Donald Trump’s 2017 Inaugural Address – Bloomberg

The Republican was sworn in as the 45th president of the U.S. on Friday.

Donald Trump Strikes Nationalistic Tone in Inaugural Speech – WSJ

President Donald Trump delivered what historians and speechwriters said was one of the most ominous inaugural addresses ever, reinforcing familiar campaign themes of American decline while positioning himself as the protector of the country’s “forgotten men and women.”

In a speech that his predecessors had famously used to inspire Americans to place country before self and urged them to fear only fear itself, Mr. Trump on Friday described the nation as a landscape of “rusted-out factories scattered like tombstones” and inner cities infested with crime, gangs and drugs.

“The American carnage stops right here and stops right now,” Mr. Trump said, using a noun never before uttered in such a speech.

Women’s Marches Flood Cities Worldwide on Trump’s First Day – Bloomberg

Hundreds of thousands of people gathered in cities across the U.S. and around the world on Saturday for massive protests a day after President Donald Trump’s inauguration, a signal of discontent with America’s new leader that threatened to upstage his first days in office.

The Women’s March on Washington, billed as a response to Trump’s surprise election victory, eclipsed Trump’s swearing-in as the most widely attended political event in the capital this weekend. It was mirrored by large rallies across the U.S. and in international capitals including Berlin, Paris and Ottawa.

Crowd Scientists Say Women’s March in Washington Had 3 Times More People Than Trump’s Inauguration – The New York Times

The women’s march in Washington was roughly three times the size of the audience at President Trump’s inauguration, crowd counting experts said Saturday.

Marcel Altenburg and Keith Still, crowd scientists at Manchester Metropolitan University in Britain, analyzed photographs and video taken of the National Mall and vicinity and estimated that there were about 160,000 people in those areas in the hour leading up to Mr. Trump’s speech Friday.

They estimated that at least 470,000 people were at the women’s march in Washington in the areas on and near the mall at about 2 p.m. Saturday. The two images below show the crowds when they were at their peak density at the two events.

17F23 chart - inauguration vs womens march

Trump Mocks Protesters Before Affirming Right to Demonstrate – Bloomberg

President Donald Trump mocked protesters who gathered for large demonstrations across the U.S. and the world on Saturday to signal discontent with his leadership, but later offered a more conciliatory tone, saying he recognized such marches as a “hallmark of our democracy.”

“Watched protests yesterday but was under impression that we just had an election! Why didn’t these people vote? Celebs hurt cause badly,” Trump said early Sunday in a Twitter post. It was his administration’s first direct response to the Women’s March on Washington and related events.

Less than two hours later, Trump tweeted, “Peaceful protests are a hallmark of our democracy. Even if I don’t always agree, I recognize the rights of people to express their views.” Trump’s posts came from his @realDonaldTrump account, where he has 21 million followers, not the official @POTUS handle.

Democrats Ponder How to Use Marches to Build Challenge to Trump – WSJ

One day after protesters denouncing President Donald Trump flooded city streets around the U.S., Democrats faced the prospect of turning the freewheeling day of protest into sustained popular opposition to the new president’s agenda.

Democrats, out of power and in the midst of an internal debate about the party’s future direction, said they were cheered by the depths of the opposition to Mr. Trump shown by large turnouts for Women’s March events in dozens of cities.

But party veterans said the key to any Democratic reversal of fortunes would be capitalizing on opposition to Mr. Trump, who enters office as the least popular president in the history of modern polling. That effort will take sustained organizing and outreach to people who haven’t necessarily been previously engaged in politics, strategists said.

Trump’s Focus on First Days in Office Remains His TV Ratings – Bloomberg

While his days on “The Celebrity Apprentice” are behind him, President Donald Trump is still paying close attention to his television ratings.

“Wow, television ratings just out: 31 million people watched the Inauguration, 11 million more than the very good ratings from 4 years ago,” the former reality-television star posted to Twitter on Sunday morning, referring to the second time Barack Obama took the oath of office upon his re-election.

The nearly 31 million people that watched President Donald Trump’s inauguration did top the total that watched the 2013 event. But it fell short of the audience that tuned in for Obama’s first inauguration eight years ago, according to Nielsen. It also trailed Ronald Reagan’s record audience.

Foreign Payments to Trump Firms Violate Constitution, Suit Will Claim – The New York Times

A team of prominent constitutional scholars, Supreme Court litigators and former White House ethics lawyers intends to file a lawsuit Monday morning alleging that President Trump is violating the Constitution by allowing his hotels and other business operations to accept payments from foreign governments.

The lawsuit is among a barrage of legal actions against the Trump administration that have been initiated or are being planned by major liberal advocacy organizations. Such suits are among the few outlets they have to challenge the administration now that Republicans are in control of the government.

Trump’s Son-in-Law Kushner Can Take White House Job, DOJ Says – Bloomberg

The Justice Department said President Donald Trump isn’t prohibited by a federal anti-nepotism statute from appointing his son-in-law, Jared Kushner, to a job as a senior White House adviser.

Daniel L. Koffsky, a deputy assistant attorney general in the Office of Legal Counsel, wrote in a memorandum that the White House is exempted from a 1967 law that prevents public officials from appointing relatives to federal agencies they can control, and therefore the law “would not prohibit the contemplated appointment.”

Trump Promised to Resign From His Companies — But There’s No Record He’s Done So – ProPublica

At a news conference last week, now-President Donald Trump said he and his daughter, Ivanka, had signed paperwork relinquishing control of all Trump-branded companies. Next to him were stacks of papers in manila envelopes — documents he said transferred “complete and total control” of his businesses to his two sons and another longtime employee.

Sheri Dillon, the Trump attorney who presented the plan, said that Trump “has relinquished leadership and management of the Trump Organization.” Everything would be placed in a family trust by Jan. 20, she said.

That hasn’t happened.

Ethics lawyers to sue Trump over foreign payments | Reuters

A group including former White House ethics attorneys will file a lawsuit on Monday accusing President Donald Trump of allowing his businesses to accept payments from foreign governments, in violation of the U.S. Constitution.

The lawsuit, brought by the Citizens for Responsibility and Ethics in Washington, will allege that the Constitution’s emoluments clause forbids payments to Trump’s businesses. It will seek a court order forbidding Trump from accepting such payments, said Deepak Gupta, one of the lawyers working on the case.

Trump does business with countries like China, India, Indonesia and the Philippines, the group noted in a statement.

“When Trump the president sits down to negotiate trade deals with these countries, the American people will have no way of knowing whether he will also be thinking about the profits of Trump the businessman,” it said.

Trump Aide Says He Won’t Release Taxes, Breaking Campaign Pledge – Bloomberg

The White House now has no intention of releasing President Donald Trump’s tax returns, said a top presidential adviser, stepping away from a campaign promise he will do so when an audit of them is completed.

“The White House response is that he’s not going to release his tax returns. We litigated this all through the election. People didn’t care. They voted for him,” Kellyanne Conway, counselor to the president, said on Sunday.

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PROPAGANDA, RUSSIA, ALTERNATIVE FACTS

Putin supporters cheer Trump’s inauguration

Mr Trump’s victory in the US presidential election has been met with glee among diehard supporters of his Russian counterpart Vladimir Putin. During the campaign, he broke with bipartisan political convention to praise Mr Putin repeatedly, suggested lifting US sanctions over Russia’s role in the Ukraine conflict, and questioned the role of NATO — issues at the top of the Kremlin’s wishlist.

U.S. Eyes Michael Flynn’s Links to Russia – WSJ

U.S. counterintelligence agents have investigated communications that President Donald Trump’s national security adviser had with Russian officials. Michael Flynn is the first person inside the White House whose links are known to have faced scrutiny as part of probes to determine the extent of Russian government contacts with people close to Mr. Trump.

Attack on Alt-Right Leader Has Internet Asking: Is It O.K. to Punch a Nazi? – The New York Times

Mr. Spencer, who is credited with coining the term alt-right and describes himself as an “identitarian,” was punched in the head on Inauguration Day by a person clad in black as he was being interviewed by a journalist. At the time of the attack, Mr. Spencer was explaining the meaning of Pepe the Frog, a cartoon figure adopted as a mascot by the alt-right, a racist, far-right fringe movement that is anti-immigrant, anti-Semitic and anti-feminist. Video of the attack shows Mr. Spencer reeling to one side under the force of the blow and his attacker darting through a crowd after landing the punch.

Trump Aide Says Press Secretary Used ‘Alternative Facts’ – Bloomberg

A top adviser to President Donald Trump said Sunday that his press secretary, Sean Spicer, had offered “alternative facts” in a statement the day before from the White House briefing room in which he contested reports on the size of Trump’s inauguration audience.

“Sean Spicer, our press secretary, gave alternative facts,” Trump counselor Kellyanne Conway said on NBC’s “Meet the Press” on Sunday.

Her remark drew a riposte from the program’s host, Chuck Todd. “Look, alternative facts are not facts. They’re falsehoods.”

Conway’s characterization of Spicer’s statement exacerbated a growing rift between Trump’s White House and the news organizations that cover it, less than two days into his administration. On Saturday, his first full day in office, Trump and Spicer both made easily disproved claims, adding fuel to his opponents’ charges that the president is a habitual liar.

White House vows to fight media ‘tooth and nail’ over Trump coverage | Reuters

The White House vowed on Sunday to fight the news media “tooth and nail” over what it sees as unfair attacks, with a top adviser saying the Trump administration had presented “alternative facts” to counter low inauguration crowd estimates.

On his first full day as president, Trump said he had a “running war” with the media and accused journalists of underestimating the number of people who turned out Friday for his swearing-in.

White House officials made clear no truce was on the horizon on Sunday in television interviews that set a much harsher tone in the traditionally adversarial relationship between the White House and the press corps.

Trump Gives FBI’s Comey a Handshake and Hug Amid Investigations – Bloomberg

President Donald Trump called out embattled FBI Director James Comey on Sunday at a reception at the White House with a handshake, a bro-hug and a quip that “he’s become more famous than me.”

The surprise interaction at a Blue Room event comes amid questions over whether Trump is prepared to keep Comey on through the remainder of his 10-year term as director, which runs through 2023, or seek his resignation. White House spokeswoman Lindsay Walters declined to comment when asked about Trump’s plans.

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ELECTORAL POLITICS

Mattis, Kelly Confirmed as Fight Over Trump Cabinet Heats Up – Bloomberg

The Senate confirmed James Mattis as defense secretary and John Kelly to run the Homeland Security Department as Democrats balked at Republicans’ demand to also install the CIA director on President Donald Trump’s first day in office.

Key Republicans Drop Opposition to Tillerson at State Department – Bloomberg

Senators John McCain and Lindsey Graham said Sunday they will vote for President Donald Trump’s secretary of state nominee, despite ongoing concerns about Rex Tillerson’s past dealings with the Russian government and President Vladimir Putin.

Their decisions appear to open the way for Senate confirmation for Tillerson, the former chief executive officer of Exxon Mobil Corp., whom no Senate Democrat has said they will support

Schumer Proposes Bill Limiting Trump on Easing Russian Sanctions – Bloomberg

Democrats have bipartisan support for proposed legislation to limit President Donald Trump’s ability to reduce sanctions on Russia, said Senate minority leader Chuck Schumer.

The bill would require that any changes to sanctions against the country be put to a vote in Congress, restricting the president’s ability to act unilaterally. In a statement on Sunday, Schumer said the bill is similar to legislation introduced by Republicans in 2015 to limit the president’s ability to ease sanctions against Iran. That bill passed easily with bipartisan support.

New Trump White House Website Sets Agenda That Mirrors Campaign Pledges – WSJ

The Trump administration overhauled the White House’s website Friday and published action plans that ranged from building a wall along the Mexico border to pulling back from trade deals, transforming a number of populist campaign themes into concrete agenda items.

The revised website created six different issue pages for energy policy, foreign policy, economic policy, expanding the size of the military, bolstering law enforcement, and rethinking trade.

Trump Order Declares He’ll Seek ‘Prompt Repeal’ of Obamacare – Bloomberg

President Donald Trump signed an executive order Friday commanding federal agencies to try to waive or delay requirements of Obamacare that impose economic or regulatory burdens on states, families, the health-care industry and others.

The order declares that Trump’s administration will seek the “prompt repeal” of the law and that the government should prepare to “afford the states more flexibility and control to create a more free and open healthcare market.”

Trump May End Obamacare Insurance Requirement, Conway Says – Bloomberg

The Trump administration may stop enforcing the Obamacare requirement that most Americans carry health insurance even before Congress repeals the law, Kellyanne Conway, a top adviser to the new president, said in interviews broadcast on Sunday.

Such a move would take the teeth out of former President Barack Obama’s health-care law and could destabilize insurance markets, analysts say. It was not clear from Conway’s remarks whether President Donald Trump would try to use his executive authority to make the change, which would be much faster than writing new regulations or waiting on lawmakers.

Trump Poised to Wield Executive Power to Make Immigration Changes – WSJ

President Donald Trump is soon expected to seek sharp changes in U.S. immigration policy by using his executive power, echoing the politically contentious approach taken by Barack Obama.

The new White House released its first executive actions on Inauguration Day, regarding the Affordable Care Act and on regulations across the government. Mr. Trump is planning others early this week on immigration and trade, two White House officials said.

Trump Reverses Obama’s Mortgage Fee Cuts on First Day – Bloomberg

Soon after Donald Trump was sworn in as president, his administration undid one of Barack Obama’s last-minute economic-policy actions: a mortgage-fee cut under a government program that’s popular with first-time home buyers and low-income borrowers.

The new administration on Friday said it’s canceling a reduction in the Federal Housing Administration’s annual fee for most borrowers. The cut would have reduced the annual premium for someone borrowing $200,000 by $500 in the first year.

Donald Trump’s Health-Law Directive Spurs a Dash to Decode It – WSJ

Lawmakers, insurers and the health-care industry rushed over the weekend to decipher the full meaning and consequences of President Donald Trump’s executive order urging agency heads to do whatever they can to unwind some provisions of the Affordable Care Act.

The order, issued late Friday, encouraged officials to use “all authority and discretion available to them” to waive or delay ACA provisions they deem onerous on individuals, states or insurers. It isn’t yet clear how many provisions officials may choose to apply that to or when, leaving the political and health care worlds in a state of some confusion.

At a minimum, the move signals Mr. Trump’s willingness to take aggressive public aim at the law often dubbed Obamacare, as Republicans in Congress wrestle with their own efforts to dismantle the law and come up with a new health-insurance system in its place.

TOP

DEMOGRAPHICS, INEQUALITY & POPULISM

Texas has highest maternal mortality rate in developed world, study finds | US news | The Guardian

The rate of Texas women who died from complications related to pregnancy doubled from 2010 to 2014, a new study has found, for an estimated maternal mortality rate that is unmatched in any other state and the rest of the developed world.

The finding comes from a report, appearing in the September issue of the journal Obstetrics and Gynecology, that the maternal mortality rate in the United States increased between 2000 and 2014, even while the rest of the world succeeded in reducing its rate. Excluding California, where maternal mortality declined, and Texas, where it surged, the estimated number of maternal deaths per 100,000 births rose to 23.8 in 2014 from 18.8 in 2000 – or about 27%.

But the report singled out Texas for special concern, saying the doubling of mortality rates in a two-year period was hard to explain “in the absence of war, natural disaster, or severe economic upheaval”.

Trump’s Vow to Repeal Health Law Revives Talk of High-Risk Pools – The New York Times

“I thought I was being smart in going to the doctor and getting checked out,” Ms. Fitzgerald, 55, who currently lives in Washington, D.C., said recently. “Then I tried to go get insurance and everyone denied me.”

Her fortunes changed under the Affordable Care Act, the major health law signed by President Barack Obama that required insurers to cover pre-existing medical conditions. She was one of the millions of people who jumped at the opportunity and bought a policy available under the new law.

Now, after President Trump and the Republican-controlled Congress have vowed to repeal and replace the health law, one of the most vexing questions is whether people like Ms. Fitzgerald will be covered.

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CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

Samsung Says Irregularly Designed Batteries Caused Note 7 Fires – Bloomberg

In a presentation and news conference on Monday that lasted more than two hours, Samsung Electronics Co. detailed the results of its investigation into Note 7 smartphones that overheated and burst into flames last year. There were few surprises. While the company cited flaws in battery manufacturing and design for the fiasco, it took full legal

responsibility and vowed never to let it happen again.

The crisis was a public relations fiasco for South Korea’s biggest company. Reports of people injured by exploding Note 7 phones raced around the web, and nervous airlines banned the gadget — and sometimes all Samsung devices — from their planes. The total cost of the recall was estimated to be more than $6 billion.

Snapchat Is Justifying Its $20 Billion Valuation by Emphasizing User Engagement – Bloomberg

The company gave out numbers on daily active users, which currently sit at just more than 150 million. Management talked about the number of snaps — annotated photos and short videos — its users take daily, and how long they spend on the app.

They detailed what percentage of users take photos using the app’s camera, as well as how many of those images use geofilters — colorful place names which users can place on top of their snaps — or are being saved with the new Memories feature. Snap also divulged the percentage of users sending messages through the chat feature.

Convincing investors of the value of its engaged users will be critically important. As management told the analysts, Snap is still an early stage business where short-term performance may be “lumpy” as it grows.

Snapchat Discover Takes a Hard Line on Misleading and Explicit Images – The New York Times

The social network has updated its guidelines for publishers, aiming to raise the bar on the quality of its news service — a move that may bode well for its planned I.P.O.

The new rules more explicitly restrict publishers from posting questionable pictures on Discover that do not have news or editorial value. Snapchat also clarified guidelines that prevent publishers from including reports or links to outside websites that could be considered fake news, saying that all content must be fact-checked and accurate.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Forbes settles long-running takeover dispute

A long legal battle over the takeover of Forbes magazine has been settled after the Chinese investors who bought the media company in 2014 agreed an out of court deal with the Forbes family.

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AUTOS, ELECTRIC, SELF-DRIVING

Elon Musk says to expect “major” Tesla hardware revisions almost annually | TechCrunch

Tesla CEO and founder Elon Musk has advice for prospective buyers hoping their vehicles will be future-proof: Shop elsewhere.

Musk made the comment when responding to a Twitter question about the possibility of a paid upgrade path for existing vehicle owners who want the new sensors, computer and other components now shipping in so-called ‘HW2’-equipped Teslas. He also gave us some insight into the pace with which Tesla will be significantly revising the tech offered on existing models — big changes will come every year or year-and-a-half, on average.

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AIRLINES, SHIPPERS, RAIL, TRANSPORTS

United Airlines Says It Has Resolved Problem That Grounded Domestic U.S. Flights – WSJ

United Continental Holdings Inc. had a computer issue Sunday evening that caused it to ask the Federal Aviation Administration to put into effect a “ground stop” for its arriving and departing flights.


TOP

LUXURY, HIGH END, ASPIRATIONAL

Rolls-Royce Million-Dollar Bespoke Program Set Sales Records in 2016 – Bloomberg

The company produced more than 800 bespoke cars in 2016, each worth more than half a million dollars. Those timeless, exclusive models led the company to record results in the U.S. and abroad.

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ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

AI Software Learns to Make AI Software

Progress in artificial intelligence causes some people to worry that software will take jobs such as driving trucks away from humans. Now leading researchers are finding that they can make software that can learn to do one of the trickiest parts of their own jobs—the task of designing machine-learning software.

In one experiment, researchers at the Google Brain artificial intelligence research group had software design a machine-learning system to take a test used to benchmark software that processes language. What it came up with surpassed previously published results from software designed by humans.

In recent months several other groups have also reported progress on getting learning software to make learning software. They include researchers at the nonprofit research institute OpenAI (which was cofounded by Elon Musk), MIT, the University of California, Berkeley, and Google’s other artificial intelligence research group, DeepMind.

If self-starting AI techniques become practical, they could increase the pace at which machine-learning software is implemented across the economy. Companies must currently pay a premium for machine-learning experts, who are in short supply.

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SCIENCE, NATURE, PSYCHOLOGY

Neanderthals Were People, Too – The New York Times

Neanderthals weren’t the slow-witted louts we’ve imagined them to be — not just a bunch of Neanderthals. As a review of findings published last year put it, they were actually “very similar” to their contemporary Homo sapiens in Africa, in terms of “standard markers of modern cognitive and behavioral capacities.” We’ve always classified Neanderthals, technically, as human — part of the genus Homo. But it turns out they also did the stuff that, you know, makes us human.

TOP

MISCELLANEOUS

Doomsday Prep for the Super-Rich – The New Yorker

Survivalism, the practice of preparing for a crackup of civilization, tends to evoke a certain picture: the woodsman in the tinfoil hat, the hysteric with the hoard of beans, the religious doomsayer. But in recent years survivalism has expanded to more affluent quarters, taking root in Silicon Valley and New York City, among technology executives, hedge-fund managers, and others in their economic cohort.

Hollywood’s Extreme Close-Up – WSJ

Once used sparingly to heighten drama and engage audiences, tight shots have grown more abundant and more extreme in recent years, many film experts say. New technology has helped make close-ups a common tool, changing not just how movies look but how actors perform and stories unfold.

The popularity of close-ups speaks, in part, to a changing entertainment landscape. Filmmakers know more of their work will live online, especially as streaming services enter the movie business, and they are aware that wide shots won’t always translate as well on computers and phones. Close-ups are tempting because they’re easier for people to see.

SIR 135: Pax Americana 1945-2017

In SIR 135 — Pax Americana 1945-2017 — we describe why a historic era has ended (along with the dark implications ahead)… revisit the weakening reflation trade, and reasons to remain bullish on the US dollar… and take a closer look at Bitcoin, newly popular but no threat to sovereign currencies.

 

Macro Links Fri Jan 13th – What Vladimir Wants

MACRO LINKS FRI JAN 13TH (CLICK OR SCROLL DOWN)

TOP

NIRP, SYSTEMIC RISK, BALANCE SHEETS

Wall Street Gets Early Win as House Tries to Ease Swaps Rules – Bloomberg

Republican lawmakers who want to rein in Wall Street’s watchdogs aren’t waiting around for Donald Trump.

In a likely preview of things to come, the GOP-controlled House passed legislation 239-to-182 Thursday that would make it much harder for the top U.S. regulator of the $544 trillion derivatives market to justify new rules. The bill also could reduce the Commodity Futures Trading Commission’s authority over some swaps trades made overseas, even if the transactions involve U.S. banks. Wall Street and Republicans have sought such a change for years.

The derivatives legislation marks one of the first financial measures to advance in the new Congress. While a similar bill stalled in the Senate last year, Trump’s surprise victory in the presidential election has increased the prospects that at least some of its provisions will become law.

PBOC Said to Boost Yuan Curbs as Banks Told to Balance Flow – Bloomberg

China has asked some banks to stop processing cross-border yuan payments until they balance inflows and outflows, people familiar with the matter said, as authorities step up a campaign to curb a record amount of money leaving the nation in the local currency.

The directions, given verbally on Wednesday, require the lenders to show at the end of every month that the amount of outgoing yuan matches the sum that comes in, said the people, asking not to be identified because they aren’t authorized to speak publicly on the matter. The People’s Bank of China guidance will apply to transactions involving both companies and individuals, the people said. The offshore yuan rallied against the dollar Friday.

China banks extend record 12.65 trillion yuan in loans in 2016 as debt worries mount | Reuters

China’s banks extended a record 12.56 trillion yuan ($1.82 trillion) of loans in 2016 as the government encouraged more credit-fueled stimulus to meet its economic growth target, despite worries about the risks of an explosive jump in debt.

China’s top leaders pledged last month to stem the growth of asset bubbles in 2017 and place greater importance on preventing financial risk, even as some global financial experts warned the nation’s debt load is nearing crisis levels.

In December alone, Chinese banks extended 1.04 trillion yuan in net new yuan loans, far more than economists had expected, central bank data showed on Thursday.

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MACRO OP-EDS, DATA, INQUIRY AND THEORY

I can’t reach out to Brexiters anymore – they’re destroying this country

I’m not sure what’s been worst about the Brexit process so far. The inability of the prime minister to be direct, or transparent, with the country; the laughably low quality of cabinet ministers central to the task – a laughter that always rings hollow, given we are now represented on the world stage by a serial liar and buffoon; the continual rhetorical attacks on key British values and institutions by the now-victorious Leavers; the endless, mindless demands for empty-headed positivity by people who never cared, or knew, about the colossal damage Brexit would cause; the staggeringly incurious columns written by people demanding I should ‘understand’ Leave voters, none of whom have ever shown the slightest interest in understanding me; or the fact that the country is going to make itself poorer, smaller, less tolerant, weaker, a pitiful stunted lump of a thing, because people were upset that they once heard Polish being spoken on a bus.

Worst of all is the overblown hand-wringing insincerity of people who call themselves ‘Liberal Leavers’. There was never going to be a Liberal Brexit – they were mere gloss, a coating of faint respectability on a project dominated by populists, nativists and the downright rotten of British politics. Having stood shoulder to shoulder with fascists – Le Pen, for example – they now complain that those who voted Remain want nothing to do with them. Having indulged a project whose logical conclusion was the erection of trade barriers between the UK and its largest single export market, they bleat that free trade must be defended. After a campaign in which a British MP was murdered by a far-right terrorist motivated by anti-immigration sentiment, a sentiment stoked up by those same individuals and institutions that campaigned for Leave alongside the ‘Liberal Leavers’, they have been pitifully silent in the face of the surge of hatred on our streets since last June. Their wafer-thin commitment to liberalism provided just enough legitimacy to the enemies of liberalism to get their hands around its neck. For that, history must record them as failures in every aspect.

Why Trump Doesn’t Tweet About Automation

Trump’s lack of attention to the issue is based on good reasons and bad ones. The bad ones are more fun, so let’s start with them. Trump knows virtually nothing about technology — other than a smartphone, he doesn’t use it much. And the industries he’s worked in — construction, real estate, hotels, and resorts — are among the least sophisticated in their use of information technology. So he’s not well equipped to understand the dynamics of automation-driven job loss.

The other Trump shortcoming is that the automation phenomenon is not driven by deals and negotiation. The Art of the Deal‘s author clearly has a penchant for sparring with opponents in highly visible negotiations. But automation-related job loss is difficult to negotiate about. It’s the silent killer of human labor, eliminating job after job over a period of time. Jobs often disappear through attrition. There are no visible plant closings to respond to, no press releases by foreign rivals to counter. It’s a complex subject that doesn’t lend itself to TV sound bites or tweets.

What Vladimir Putin really wants from Donald Trump

As vague as Mr Trump is about what he wants from the Kremlin, Mr Putin’s goals are crystal clear. They start with western acquiescence in Russian revanchism in Ukraine and in the merciless bombing of civilians to prop up Bashar al-Assad’s regime in Syria. They continue with the lifting of economic sanctions against Moscow, and end with eventual US disengagement from Europe and the establishment of a Russian sphere of influence in the territories of the former Soviet Union.

When Kremlin officials talk about a new security architecture for Europe what they mean is the end of the US presence. The cold war is over so the Americans should go home. Through this prism, Georgia, Belarus, and Moldova and central Asia as well as Ukraine “belong” to Moscow. For its part, Nato has outlived its purpose and certainly has no place in the former states of the Warsaw Pact.

If these ambitions sound fanciful, Mr Trump’s public disdain for Nato and his temperamental aversion to propping up allies has given Mr Putin an opening. Mr Trump is less interested in preserving the Pax Americana than in striking “deals” with other great powers. Europeans can pay for their own security.

Trump Shows How to Smother a Scandal: With a Bigger Story – The New York Times

Scandals need time and space to develop. When the news cycle is congested, potential scandals are deprived of attention, causing the media to move on to other stories and the political opposition to anticipate that any criticisms will probably have little effect.

Many observers suspect that Mr. Trump seeks to exploit this dynamic by distracting the press and the public with stunts like meeting with Kanye West after delaying a news conference on conflicts of interest or tweeting about Meryl Streep before hearings to consider his nominees on Capitol Hill. It’s impossible to determine his motivations, of course, but the effect is often to divert attention from less flattering issues.

As Trump Berates News Media, a New Strategy Is Needed to Cover Him – The New York Times

There were two big lessons in the Wednesday morning melee.

  1. Mr. Trump remains a master media manipulator who used his first news briefing since July to expertly delegitimize the news media and make it the story rather than the chaotic swirl of ethical questions that engulf his transition.
  1. The news media remains an unwitting accomplice in its own diminishment as it fails to get a handle on how to cover this new and wholly unprecedented president.

Turkish president Erdogan lauds Trump for putting CNN reporter ‘in his place’

Because international media organizations such as CNN actively seek to undermine national unity, Erdogan said, Trump was right to shut down Acosta’s question.

“Mr. Trump put the reporter of that media group in his place there,” Erdogan said triumphantly. ”

A message to my doomed colleagues in the American media – Medium

Congratulations, US media! You’ve just covered your first press conference of an authoritarian leader with a deep disdain for your trade. Here are some tips from Russia.

Given that Putin is probably a role model for Trump, it’s no surprise that he’s apparently taking a page from Putin’s playbook. I have some observations to share with my American colleagues. You’re in this for at least another four years, and you’ll be dealing with things Russian journalists have endured for almost two decades now. I’m talking about Putin here, but see if you can apply any of the below to your own leader.

Facts don’t matter. You can’t hurt this man with facts or reason. He’ll always outmaneuver you. He’ll always wriggle out of whatever carefully crafted verbal trap you lay for him. Whatever he says, you won’t be able to challenge him. He always comes with a bag of meaningless factoids (Putin likes to drown questions he doesn’t like in dull, unverifiable stats, figures and percentages), platitudes, false moral equivalences and straight, undiluted bullshit. He knows it’s a one-way communication, not an interview. You can’t follow up on your questions or challenge him. So he can throw whatever he wants at you in response, and you’ll just have to swallow it. Some journalists will try to preempt this by asking two questions at once, against the protests of their colleagues also vying for attention, but that also won’t work: he’ll answer the one he thinks is easier, and ignore the other. Others will use this opportunity to go on a long, rambling statement vaguely disguised as a question, but that’s also bad tactics. Non-questions invite non-answers. He’ll mock you for your nervous stuttering and if you’re raising a serious issue, respond with a vague, non-committal statement (“Mr President, what about these horrible human rights abuses in our country?” “Thank you, Miss. This is indeed a very serious issue. Everybody must respect the law. And by the way, don’t human rights abuses happen in other countries as well? Next question please”).

But your colleagues are there to help you, right? After all, you’re all in this together?

Wrong.

The Russia Story Reaches a Crisis Point – Rolling Stone

Three days into the “Russian dossier” scandal, which history will remember by a far more colorful name, we still have no clue what we’re dealing with. We’re either learning the outlines of the most extraordinary compromise to date of an incoming American president by a foreign power, or we’re watching an unparalleled libel and media overreach.

The only solution is an immediate unveiling of all the facts and an urgent public investigation. A half-assed whispering campaign a week and a half from a Trump presidency, with BuzzFeed at the center of the action, isn’t going to cut it. We need to know what the likes of Clapper and Comey know, and we need it all now, before it’s too late.

The leaked Russia-Trump dossier rings frighteningly true | The Guardian

Unverifiable sensational details aside, the Trump dossier is a good reflection of how things are run in the Kremlin – the mess at the level of decision-making and increasingly the outsourcing of operations, combined with methods borrowed from the KGB and the secret services of the lawless 1990s. That is not the picture projected by the Kremlin externally – namely, that the Russian government is an effective bureaucracy, strategic in foreign policy planning and ruthless in execution. And that, whatever the truth of Putin’s connections with Trump, makes it all pretty scary.

Russia’s Sexual Blackmail Didn’t Die With the Soviets – The New York Times

Whatever did or did not happen in Mr. Trump’s hotel suite in 2013, when he visited Moscow to attend a Miss Universe contest, Russia has a long and well-documented record of using kompromat to discredit the Kremlin’s foes and to lean on its potential friends.

For decades, hotels across the former Soviet Union visited by foreigners were equipped with bugging devices and cameras by the K.G.B. A remnant can still be seen in Tallinn, the capital of the former Soviet republic Estonia, where the new Finnish owners of the former Intourist hotel have set up a museum to display the surveillance and other techniques used to spy on and blackmail foreign guests.

Peep Ehasalu, who helped set up the museum, said that 60 of the hotel’s 423 rooms were bugged and reserved for “interesting persons” like foreign businessmen. Guests who were judged vulnerable to blackmail were put in a handful of rooms with holes in the walls through which special cameras would film dalliances with prostitutes. All the prostitutes, Mr. Ehasalu said, worked for the K.G.B., which chased away freelance sex workers who had not been officially approved.

How Kompromat Works – The Atlantic

After years of covering and reporting from Russia, it is bizarre to me that this term has surfaced in U.S. domestic politics, but here we are. Kompromat is a Russian squishing together of two words: “compromising material,” which Americans refer to as “blackmail.” But kompromat is different in that it is often coupled with what is called “black PR”—for example, Dorenko showing the video on his popular television show, artfully stringing it out, and bashing his viewers over the head with questions like, “Is lying something inherent to prosecutors or is it something unusual?” Or using Wikileaks and Kremlin-owned news sites to pound Hillary Clinton using the hacked contents of the DNC servers or John Podesta’s emails.

In Skuratov’s case, the kompromat-black PR combination proved a killer one-two punch, one that helped change the political trajectory of post-Soviet Russia and helped make Putin president in 2000.

Rex Tillerson’s South China Sea Remarks Foreshadow Possible Foreign Policy Crisis – The New York Times

Rex W. Tillerson’s call for China to be denied access to its artificial islands in the South China Sea, made Wednesday during his confirmation hearing for secretary of state, set the stage for a possible crisis between the world’s two biggest economies should his comments become official American policy.

Mr. Tillerson told members of the Senate Foreign Relations Committee on Wednesday that China’s multibillion-dollar island-building campaign in the oil-and-gas rich sea was illegal and “akin to Russia’s taking of Crimea.”

“We’re going to have to send China a clear signal that, first, the island-building stops,” Mr. Tillerson told the senators. “And second, your access to those islands also is not going to be allowed.”

Should those words be translated into action after Donald J. Trump assumes the presidency on Jan. 20, it would be a remarkable change in the American approach to Beijing’s island-building in the South China Sea, which is transforming the area into what one Washington think tank said would by 2030 become “virtually a Chinese lake.” China asserts sovereignty over most of the South China Sea despite competing claims by countries including Vietnam and the Philippines and an international ruling rejecting most of Beijing’s assertions.

Robots Will Take Jobs, but Not as Fast as Some Fear, New Report Says – The New York Times

The robots are coming, but the march of automation will displace jobs more gradually than some alarming forecasts suggest.

A measured pace is likely because what is technically possible is only one factor in determining how quickly new technology is adopted, according to a new study by the McKinsey Global Institute. Other crucial ingredients include economics, labor markets, regulations and social attitudes.

Pace of automation depends on how easily workers are displaced

For society at large, the pace of automation will determine how easily the displacement of workers can be handled — and whether the political backlash grows worse. The pace is equally important for the companies trying to push the latest robots and smart machines into the real world, and their investors. Few are in the position of Google parent Alphabet, which has taken the long view on bets such as driverless cars — and even Alphabet these days has a new sense of impatience about when it will see returns from “moonshots” like this.

The variables that will affect the rate of adoption are huge. In a new report on automation this week, McKinsey estimates that half of all the tasks people perform at work could be automated using technologies that have already been proven. But this estimate gives no clue about how long it will take.

Goldman Sachs Completes Return From Wilderness to the White House – The New York Times

“Government Sachs” is back.

After eight years in the political wilderness, its name synonymous with the supposedly undue and self-serving influence in Washington that brought us the financial crisis and the Wall Street bailout, Goldman Sachs is again making its presence felt. In the Trump administration, to an unprecedented degree, economic policy making is largely being handed over to people with Goldman ties.

The Goldman alumni include Steven T. Mnuchin, the nominee for Treasury secretary; Gary D. Cohn, tapped as director of the National Economic Council and White House adviser on economic policy; and Stephen K. Bannon, who was named chief White House strategist. Jay Clayton, named to head the Securities and Exchange Commission, is a Wall Street lawyer who has represented Goldman.

This week President-elect Donald J. Trump hired Dina H. Powell, a Goldman partner who heads impact investing, as a White House adviser. Anthony Scaramucci, a Goldman alumnus (whom I spotlighted last week), is on the Trump transition committee and is expected to be named to a White House position as well.

And this after Mr. Trump campaigned against Wall Street, excoriated Senator Ted Cruz for his ties to Goldman, and castigated Hillary Clinton for giving paid speeches to big banks, Goldman among them.

Donald Trump’s Economic Policies: Pro-Business, Not Pro-Market –

After two months, it is clear that the Trump industrial policy will be pro-business, not pro-market.

It may seem to be a nuance, but there is a fundamental difference. A pro-business policy favors existing companies at the expense of future generations. A pro-market policy favors conditions that allow all businesses to thrive without any favoritism. A pro-business policy defends domestic enterprises with favorable rates and treatment. A pro-market policy opens the domestic market to international competition because doing so would not only benefit consumers, but would also benefit the companies themselves in the long term, which will have to learn to be competitive on the market, rather than prosper thanks to protection and state aid. A pro-business policy turns a blind eye (often two) when companies pollute, evade, and defraud consumers. A pro-market policy seeks to reduce the tax and regulatory burden, but ensures that laws are applied equally to all.

Paradoxically, a pro-business policy ends up damaging not only the economy, but also, in the long-run, those companies that it had originally benefited. This matters little to its supporters, because when the chickens come home to roost they will have already grossed billions. Angelo Mozilo, founder of Countrywide, the bank responsible for a large chunk of the toxic mortgages that led to the 2008 crisis, lives happily on the $600 million he accumulated, despite the enormous damage of the financial crisis that he helped to create.

During the presidential campaign Trump used many populist themes. The first signal that his policies will be neither populist nor popular, but strictly pro-business, is his choice of Cabinet members.

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CENTRAL BANKS & MONETARY POLICY

Yellen Sees No Serious Short-Term Obstacles for U.S. Economy – Bloomberg

Federal Reserve Chair Janet Yellen said the U.S. economy faces no serious short-term obstacles, though it must deal with important long-term challenges of low productivity and growing inequality.

“Unemployment has now reached a low level, the labor market is generally strong and wage growth is beginning to pick up,” Yellen said Thursday in a meeting with educators. “Inflation has moved up from a very low level, and it’s a little bit under our 2 percent objective, but it’s pretty close.”

Federal Reserve Shows Greater Unity on Path for Interest Rates – WSJ

Federal Reserve Chairwoman Janet Yellen is starting the year leading a central bank largely unified in expectations of a gradual series of interest-rate increases, though they aren’t hinting when they are likely to move next. The harmony reflects a return to normal monetary policy in a stable economy after years of contentious debates over the unconventional tools used by the Fed during and after the recession. The current consensus contrasts sharply with the debates detailed in transcripts of the Fed’s 2011 policy meetings that were released Thursday.

Central-Bank Bashing Has Gold Only Asset Safe From Meddling – Bloomberg

Baring Asset Management’s Christopher Mahon has one major conviction about 2017: it will be the year in which central-bank bashing by politicians becomes the new normal, so he’s seeking shelter in gold.

“This year is the turning point,” Mahon said in an interview on Monday. “For seven years or so, central banks have largely escaped critique even though one could argue that their policies have been pretty inadequate in many senses. It’s very plausible now that politicians stand up and throw stones at central bankers.”

Forecasters See Upside Risks to Their Economic Outlooks at Highest in More Than Two Years – WSJ

“Policy changes, if done right, could boost growth substantially,” said Stephen Stanley, chief economist of Amherst Pierpont Securities.

On that list of potentially growth-expanding policy changes, most forecasters would include: business-friendly regulatory changes, tax cuts for businesses and consumers, and major spending on U.S. infrastructure.

The key caveat is that phrase “if done right.”

“There is a good chance Congress will greatly dilute or delay Trump’s fiscal stimulus program and disappoint Wall Street and Main Street,” said Bernard Baumohl, chief global economist of the Economic Outlook Group.

Key Reforms From Dodd-Frank Shouldn’t Be Rolled Back, Yellen Says – WSJ

Federal Reserve Chairwoman Janet Yellen said Thursday that key regulatory changes implemented by the 2010 Dodd-Frank law—including higher capital standards and enhanced supervision for big banks and new tools to help regulators deal with potential bank failures—should not be rolled back.

Speaking at a Fed town hall discussion with teachers, Ms. Yellen said, “Dodd-Frank was a very important road map for strengthening the financial system and mitigating the chance of another financial crisis.”

Officials Planned to Prioritize Debt Payments as 2011 Debt-Ceiling Deadline Loomed – WSJ

Federal Reserve and Treasury Department officials in August 2011 had privately formalized a plan to make on-time payments on Treasury debt and delay paying other government bills if Congress and the White House failed to reach an agreement to raise the federal borrowing limit, according to transcripts of a central bank meeting released Thursday.

The transcripts provide the most detailed description yet from any government agency of what officials were prepared to do in the event of a debt-limit breach.

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POSITIONING, INFLECTION, MARKET CALLS

Extreme Bets on Higher Yields Inflict a New Kind of Pain Trade – Bloomberg

In the rush to price in firming economic data and the seemingly inflationary policies of President-elect Donald Trump, bond bears might have gotten ahead of themselves.

That’s how analysts are reading the most recent report of trader commitments, which shows investors are making record bets on higher yields. In the first week of the year, futures positioning for U.S. Treasuries was at an all-time high of 1.2 million ten-year Treasury contract equivalents, according to Macro Risk Advisors head derivatives strategist Pravit Chintawongnavich.

Based on past episodes when shorts swelled to extremes, Bespoke Investment Group says the rally in Treasuries since Dec. 16 may be poised to accelerate. “Historically, large duration shorts have typically led to bond rallies,” the analysts write in a Jan. 11 note, referring to the pessimistic positioning on longer-maturity debt. “In our view, the pain trade in bonds is no longer higher yields.”

Investors show bond fund appetite as Trumpflation trade cools

Investors have returned to the world of debt in a cooling of the Trumpflation trade that pummelled bond markets and propelled equities to record highs after the US election.

The shift, which has included fresh inflows to municipal, Treasury and emerging market bond funds over the past week, dovetails with a near month-long rally in haven US Treasuries and fatigue in benchmark stock indices.

Chip Stock Skepticism Fanning S&P 500’s Worst Tumble of New Year – Bloomberg

A selloff in technology stocks that earlier reached the deepest depths in seven weeks was contributing to the U.S. stock market’s worst day of 2017.

Weighed down by Apple Inc. and semiconductor producers, tech shares slipped, dragging the S&P 500 Index to a decline of as much as 0.9 percent. The iPhone maker was hurt by cautious analyst comments, while chipmakers slumped after Taiwan Semiconductor Manufacturing Co. forecast sales that trailed estimates. Goldman Sachs Group Inc. also voiced concern on the industry.

Collapsing Asset Correlations Have Active Managers Celebrating Trump Disruption – Bloomberg

The lockstep moves in financial assets that characterized markets in the past few years are breaking down. And that’s got stock pickers ready to pounce.

Correlations among stocks, bonds and other securities have tumbled since the U.S. election, as investors scramble to assess the implications of Donald Trump’s policies on global financial markets. For money managers who’ve been consistently beaten by passive investments, the divergence provides an opportunity to reassert dominance.

U.S. Bank Stocks May Rise 50% During Next Three Years, Mayo Says – Bloomberg

U.S. bank stocks may rise as much as 50 percent during the next three years as lenders cut costs, get better at responding to post-crisis capital rules and persuade investors the industry is safer, according to Mike Mayo, an analyst at CLSA Ltd.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Stocks Are No Longer the Most Actively Traded Securities in Stock Markets – Bloomberg

Stock exchanges are increasingly getting out of the stock trading business.

As weird as it may seem, individual shares no longer are the most actively traded securities in the market. That distinction goes to exchange-traded funds, which took in a record $400 billion in the past year to become a $3.8 trillion industry.

“What we are seeing is investors are increasingly using ETFs as a replacement for individual stocks,” said Todd Rosenbluth, director of ETF and mutual funds at CFRA, an independent research provider. “That happened in 2016 and it’s going to continue in 2017 and beyond.”

Trump’s Drug-Price Stance Puts Pharma on Notice – Bloomberg

President-elect Donald Trump’s fiery stance on drug prices is putting pressure on pharmaceutical companies that may be designed to bring their support for his planned overhaul of the nation’s health-care system.

Hours after Trump upended pharmaceutical stocks Wednesday with a pledge to force drugmakers to bid for government business, the U.S. Senate narrowly rejected a proposal to allow importation of cheaper prescription drugs from Canada. While votes on most amendments to the budget resolution went along party lines Wednesday night and Thursday morning, 12 Republicans supported the drug-import measure, with 13 Democrats opposed.

Guggenheim’s Minerd Calls Topping 3% ‘Beginning of the End’ – Bloomberg

Scott Minerd, who oversees $250 billion as chief investment officer for Guggenheim Partners, said benchmark 10-year Treasury yields could upend their long-term trend if they pierce 3 percent.

“It’s basically the beginning of the end,” Minerd said in a Bloomberg Television interview on Thursday. “Long-term trends like this don’t reverse quickly,” he added, saying yields might spend years building a new base before truly taking flight.

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TAXATION, HAVENS, TRADE, PROTECTIONISM

Amazon Touts Job-Creation Plans, Patching Up Rift With Trump – WSJ

Amazon.com said the online retail giant plans to create more than 100,000 full-time jobs in the U.S. by mid-2018, becoming the latest company to promise job creation during president-elect Donald Trump’s first term.

US tariffs are an arbitrary and regressive tax | VOX, CEPR’s Policy Portal

We match import duties to standard consumer expenditure data to take a more detailed look and find evidence that low- and middle-income households do, indeed, spend a higher fraction of their income and non-housing expenditure on tariffs. The findings indicate that tariffs act as a regressive tax on American consumers and are distortionary in their variation across products.

LVMH’s Trump Visit Marks Paralyzing Moment for Fashion Industry – Bloomberg

The encounter underscores an agonizing moment for apparel makers, most of which had written off America as a major source of production. A whopping 97 percent of clothes sold in the U.S. is manufactured in other countries, but Trump has threatened to rip up trade agreements and impose tariffs in a bid to bring domestic jobs back.

That’s led many clothing giants to freeze their overseas expansion plans — and at least pay lip service to the idea of making more of their wares in America.

“You’re not going to have a big expansion until you know what’s going to happen,” said Julia Hughes, president of a fashion industry association that represents names such as Ralph Lauren Corp. and Under Armour Inc.

Mnuchin May Have Used Tax Loophole Obama Attacked – Bloomberg

Steven Mnuchin, Donald Trump’s nominee to lead the U.S. Treasury Department, may be taking advantage of a loophole that allows the nation’s richest families to shield their wealth from estate taxes for generations into the future.

Mnuchin placed assets worth at least $32.9 million into the Steven Mnuchin Dynasty Trust I, according to a disclosure to federal ethics officials made public Wednesday, as well as securities filings by a company where he used to work. The assets include corporate stock and interests in a Willem de Kooning painting and a three-engine corporate jet.

Dynasty trusts are designed to foil the estate tax, which in its current form takes a 40 percent bite of a person’s fortune at death. Because the first $5.5 million of wealth is exempt from the tax, and there are ample opportunities to avoid it, in 2013 only one in 555 estates paid anything at all.

Structured properly, dynasty trusts comply with the law and are common among the wealthiest Americans, tax professionals say. Tara Bradshaw, a spokeswoman for Mnuchin, declined to comment.

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FOREX, CURRENCY IMPACTS

Lira’s fall imperils Erdogan’s grand designs in Turkey

After surviving a coup attempt last year, Turkish president Recep Tayyip Erdogan had a plan: hold the economy together while overhauling the constitution and then parlay the promised political stability into a welcome mat for investors. But then the lira went into meltdown.

After falling 12 per cent in the two trading weeks of 2017, the currency, more than anything else, has exposed Turkey’s greatest economic weaknesses — an addiction to imports and a reliance on foreign money at time of huge uncertainty.

The lira plummeted by 4 per cent on Wednesday, hitting a record low and highlighting how a government crackdown, Mr Erdogan’s push for a new constitution to grant him an executive presidency and a wave of terrorist attacks have combined to rattle investors at home and abroad.

The lira rebounded on Thursday, while Mr Erdogan was saying the economy was under “terror” attack, and his government was blaming currency speculators and rating agencies for the malaise.

Malaysia to Consider More Steps to Stabilize Ringgit If Needed – Bloomberg

Malaysia’s central bank will consider introducing more measures to stabilize the ringgit if needed as previous steps to reduce speculation of the currency show progress, Governor Muhammad Ibrahim said.

Pimco Bets Pound Plunge Is Far From Over as Brexit Clouds Gather – Bloomberg

No happy new year for the battered pound, if you ask Pacific Investment Management Co.

After profiting last year from sterling’s steepest slump since the global financial crisis, the money manager is betting on the drop extending well into 2017 amid political uncertainties and a current-account deficit. The pound has fallen more than 17 percent against the dollar since Britain voted out of the European Union in June and touched a 31-year low in October.

Sterling remains attractive to sell even as it’s now undervalued by about 5 percent based on purchasing-power parity, according to Thomas Kressin, portfolio manager at Pimco, which managed $1.55 trillion of assets at the end of September 2016.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

Jeff Bezos is the anonymous buyer of the biggest house in Washington – The Washington Post

The Amazon founder and Washington Post owner paid $23 million for the former Textile Museum, which is being turned into a massive family home on S Street NW.

Property Taxes in New York City Skyrocket – WSJ

Tax bills on New York City commercial property have soared under Mayor Bill de Blasio, according to city data. The annual increases have been driven largely by increases in assessments of the value of properties, as well as a small increase in the tax rate for commercial properties.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Soros Lost Nearly $1 Billion After Trump Election, WSJ Reports – Bloomberg

George Soros lost nearly $1 billion as a result of the stock-market rally spurred by Donald Trump’s surprise presidential election, the Wall Street Journal reported.

But Stanley Druckenmiller, Soros’s former deputy who helped him score $1 billion of profits betting against the British pound in 1992, anticipated the market’s recent climb and had sizable gains, the newspaper reported Thursday, citing sources it didn’t identify.

Soros became more bearish immediately after Trump’s election. But the stock market has rallied on expectations that Trump’s policies will boost corporate earnings and the overall economy. The S&P 500 Index has risen 5.6 percent since Trump’s election through yesterday.

As a result, some of Soros’s trading positions incurred losses approaching $1 billion, the Journal said. Soros exited many of his bearish bets late last year, avoiding further losses. The broader portfolio held by Soros’s firm performed better. His firm gained about 5 percent on the year, according to the report.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

OPEC Takes Aim at Its Biggest Problem: Oil Storage – WSJ

A big obstacle is emerging for the Organization of the Petroleum Exporting Countries’ plan to raise oil prices with output cuts: vast global reserves of crude that threaten its power over markets.

Oil prices have risen about 20% since the 13-nation group decided to cut production in November. However, analysts said there isn’t enough incentive for oil traders to start emptying storage tanks that rose to record levels in 2016.

OPEC is scrambling to find ways to force stored-oil volumes down to more manageable levels before U.S. producers use the price recovery to kick-start output.

17F13 chart - oil stash

U.S. Oil-Export Prospects – WSJ

U.S. oil production, on the rebound for months, has picked up steam since November’s OPEC production-cut pact—raising anew the prospect of greater U.S. exports, which has long tantalized U.S. oil producers, traders and policy makers.

17F13 chart - rising US oil exports

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ENERGY NATURAL GAS, COAL

Coal Curbs in Asia Could Save 50,000 Lives Annually, Study Says – Bloomberg

About 50,000 lives a year could be saved by 2030 if no new coal-fired power plants are built in Southeast Asia, South Korea, Japan and Taiwan, according to a study from researchers at Harvard University and Greenpeace International.

If coal plants currently planned or under construction in the region are actually built, some 70,000 deaths could result annually, up from about 20,000 deaths at the moment, Greenpeace said Friday in a statement summarizing the study. A majority of the mortalities will be in Southeast Asia, the group said.

Coal’s Recovery Too Good to Resist for World’s Biggest Exporter – Bloomberg

Indonesia will exceed its coal production target for another year as miners cash in after prices recovered from a five-year collapse.

The world’s biggest exporter will produce about 489 million metric tons this year, 18 percent above the government-mandated target, according to energy ministry forecasts. That’s up from last year’s output estimated at 434 million tons and would be at least the third year in a row that the nation has produced more than it planned.

Ports Turn to Natural Gas in Quest for Cleaner Marine Fuel – Bloomberg

The tightening of emissions limits for deep-water ships has some of North America’s busiest ports chasing a new opportunity.

The UN’s International Maritime Organization last year cut limits on sulfur in marine fuels to 0.5 percent from 3.5 percent, starting in 2020. The target: So-called bunker fuel, a cheap, tar-like oil residue used by most ships. Now ports in Vancouver, Los Angeles and Tacoma are all studying whether they can profit from supplying liquefied natural gas, which emits virtually no sulfur, as a cleaner alternative fuel that’s almost as cheap.

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COMMODITIES BASE METALS, MATERIALS

Uranium looms as big winner among resources under Trump

Donald Trump’s upcoming presidency has led many investors to size up oil, coal and gold trades that could benefit from the sweeping changes he has promised.

But a growing band of specialist commodity traders think investors may be overlooking the one raw material in line for bigger price gains than others when the US president-elect takes office: uranium.

While interest in the key fuel for nuclear power and weapons may strike investors as somewhat macabre, a six-year downturn in the uranium market has convinced some that any indication of stronger demand could drive prices significantly higher.

Mr Trump has voiced support for nuclear energy and has indicated he could expand the US’s nuclear arsenal, threatening to reverse a decades-long push towards non-proliferation and arms reduction.

“Uranium traders have lots of oil envy,” says Roy Adams, who set up and ran uranium trading desks at Deutsche Bank and Lehman Brothers. “We think uranium — not crude oil — is unquestionably the most geopolitically sensitive commodity in the world.”

17F13 chart - uranium price

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COMMODITIES PRECIOUS METALS

India’s Diamond Exports to Top Buyer U.S. Seen Rising on Trump – Bloomberg

India’s diamond cutters, who polish 14 of every 15 of the world’s gems, are betting on Donald Trump to sustain the expansion of their biggest market in the U.S., even as Asian buying of luxury stones falters.

India expects to export 10 percent to 15 percent more polished diamonds to the U.S. in the year beginning April, growth similar to that seen in 2016, on the belief that a Trump presidency will reinvigorate the world’s largest economy, according to Praveen Shankar Pandya, chairman of the government-sponsored Gem & Jewellery Export Promotion Council.

Goldcorp to Focus on Partnering With Peers to Develop New Mines – Bloomberg

Goldcorp Inc.’s future growth strategy will likely focus on partnering with other senior miners as Canada’s second-largest producer of the metal looks to share the burden of developing multibillion-dollar projects, the chief executive officer said.

The Vancouver-based company has been looking for deposits in the portfolios of other miners or privately held properties that it can develop as joint ventures, David Garofalo said Thursday in comments following an interview on Bloomberg TV Canada. The focus, he said, has been primarily large-scale projects in the Americas.

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POLLUTION, CLIMATE & ENVIRONMENT

Tri-State Sees Record Highs as Temps Soar Above 60 Degrees | NBC New York

LaGuardia and Newark shattered their 1975 records of 60 and 61 degrees, respectively, with the mercury climbing to 67 and 66 degrees at the airports by early afternoon. Record warmth was also recorded at John F. Kennedy Airport.

California Storms Bring Destruction and Drought Relief – WSJ

Storms have ripped through California, knocking out power and closing highways, but the destruction has brought drought relief.

Nevada woman dies of superbug resistant to all available US antibiotics

If it sometimes seems like the idea of antibiotic resistance, though unsettling, is more theoretical than real, please read on.

Public health officials from Nevada are reporting on a case of a woman who died in Reno in September from an incurable infection. Testing showed the superbug that had spread throughout her system could fend off 26 different antibiotics.

“It was tested against everything that’s available in the United States … and was not effective,” said Dr. Alexander Kallen, a medical officer in the Centers for Disease Control and Prevention’s division of health care quality promotion.

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GEOPOLITICS, CRIME, TERRORISM

Trump Nominee’s Proposal to Block China From Islands Sets Off Alarms – WSJ

A U.S. blockade of Chinese-built islands in the South China Sea risks triggering a dangerous military confrontation and would be too costly to sustain long-term, experts warned Thursday after U.S. President-elect Donald Trump’s pick for secretary of state proposed such a move.

The proposal by Rex Tillerson in his Senate Foreign Relations Committee confirmation hearing Wednesday is likely to have alarmed Chinese leaders as it went well beyond Mr. Trump’s own remarks, as well as the advice from more hawkish elements of the U.S. military, security experts said.

U.S. intelligence officials reportedly warn Israeli counterparts against sharing info with Trump administration – Israel News – Haaretz.com

Israeli intelligence officials are concerned that the exposure of classified information to their American counterparts under a Trump administration could lead to their being leaked to Russia and onward to Iran, investigative journalist Ronen Bergman reported by Israeli daily Yediot Ahronot on Thursday.

The intelligence concerns, which have been discussed in closed forums recently, are based on suspicions of unreported ties between President-elect Donald Trump, or his associates, and the government of Vladimir Putin in Moscow.

As Russian intelligence is associated with intelligence officials in Tehran, highly classified information, such as Israel’s clandestine methods of operation and intelligence sources, could potentially reach Iran. Such information has been shared with the United States in the past.

American intelligence officials expressed despair at the election of Trump during a recent meeting with their Israeli counterparts, Bergman reported. They said that they believed that Putin had “leverages of pressure” over Trump, though they did not elaborate. The American media reported on Wednesday that Russia has embarrassing intelligence about the president-elect.

How China rules the waves — FT.com

Pakistan’s Arabian Sea port of Gwadar is perched on the world’s energy jugular. Sea lanes nearby carry most of China’s oil imports; any disruption could choke the world’s second-largest economy.

Owned, financed and built by China, Gwadar occupies a strategic location. Yet Islamabad and Beijing for years denied any military plans for the harbour, insisting it was a purely commercial project to boost trade. Now the mask is slipping.

“As Gwadar becomes more active as a port, Chinese traffic both commercial and naval will grow to this region,” says a senior foreign ministry official in Islamabad. “There are no plans for a permanent Chinese naval base. But the relationship is stretching out to the sea.”

Gwadar is part of a much bigger ambition, driven by President Xi Jinping, for China to become a maritime superpower. An FT investigation reveals how far Beijing has already come in achieving that objective over the past six years.

17F13 chart - China's dual use ports

China, Russia agree on more ‘countermeasures’ against U.S. anti-missile system: Xinhua | Reuters

China and Russia have agreed to take further unspecified “countermeasures” in response to a U.S. plan to deploy an anti-missile system in South Korea, state news agency Xinhua reported on Friday.

The countermeasures “will be aimed at safeguarding interests of China and Russia and the strategic balance in the region”, Xinhua said, citing a statement released after a China-Russia security meeting.

Vietnam Recalibrates After Trump-Duterte Combo Upsets Strategy – Bloomberg

Vietnam is moving to firm up key relationships after the rise of unpredictable politicians in the U.S. and the Philippines upset its trade and security strategy.

A trio of high-profile diplomatic exchanges over the next week highlight a careful balancing act as Donald Trump prepares to take office. Communist Party chief Nguyen Phu Trong began a four-day visit on Thursday to China — Vietnam’s biggest trading partner — that includes a meeting with President Xi Jinping. Outgoing U.S. Secretary of State John Kerry arrives in Hanoi on Friday for talks. And next week Japanese Prime Minister Shinzo Abe makes his first trip to Vietnam since 2013.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

N.S.A. Gets More Latitude to Share Intercepted Communications – The New York Times

New rules relax longstanding limits on what the National Security Agency may do with the information gathered by its most powerful surveillance operations.

India’s Digital ID Rollout Collides With Rickety Reality – WSJ

India’s new Aadhaar digital identification system, relying on fingerprints and eye scans, now covers over 1 billion people, but at such a scale small glitches can multiply.

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FRONTIER MARKETS

Obama administration ends special immigration policy for Cubans | Reuters

The Obama administration on Thursday repealed a measure granting automatic residency to virtually every Cuban who arrived in the United States, whether or not they had visas, ending a longstanding exception to U.S. immigration policy.

US ends ‘wet-foot, dry-foot’ policy for Cubans

Since 1996 the US has allowed Cuban nationals reaching the US to stay and qualify for residency, while turning away those detained at sea before making it to dry land.

The so-called wet-foot, dry-foot policy has long angered the Cuban government, which says the policy spurs illegal migration, and encourages Cubans to undertake dangerous voyages to reach the US.

While some observers expected that the US would end the wet-foot, dry-foot policy when the White House renewed diplomatic relations with Cuba in July 2015, the Obama administration had given no indication before Thursday’s announcement that it would be reversed.

Exclusive: Venezuela’s PDVSA sees 2017 oil output stuck near historic lows – document | Reuters

Venezuelan state energy company PDVSA projects oil production will remain near 23-year lows in 2017, an internal document shows, suggesting more hardship ahead for the crisis-wrought OPEC member country.

Abe’s Soft Power Play Wins Him Breakfast in Duterte’s Davao Home – Bloomberg

Japan Prime Minister Shinzo Abe sat for breakfast Friday at the modest home of Rodrigo Duterte in Davao, making him the first national leader to set foot in the Philippine president’s green bungalow.

Duterte served local rice cakes and mung bean soup to Abe. After breakfast, the two leaders met with business executives, and Duterte named an endemic Philippine eagle “Sakura” (cherry blossom) in honor of Abe.

The personal touch shows Abe’s determination to maintain ties with the Philippines as Japan competes with China for business deals. Security ties between the Southeast Asian nation and the U.S. have deteriorated under Duterte, and with China growing increasingly assertive in the region, Abe is seeking to convince his counterpart to stick with Japan and the U.S.

Shoe-Queen Imelda Owned Art Too and Her Country Wants It Back – Bloomberg

Hear the name Imelda Marcos and everyone, of course, thinks shoes. But, it turns out, the former Philippines first lady had a thing for fine art too and amassed a collection of paintings worth millions of dollars.

There were Monets and a Sisley, and for years they hung in an Upper East Side townhouse owned by the Philippines and a Fifth Avenue apartment across the street from St. Patrick’s Cathedral. Today, they sit in a high-security, climate-controlled warehouse in Brooklyn’s Red Hook section, the focus of a contentious legal battle raging across multiple New York courts to determine ownership of the artwork.

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EMERGING MARKETS

Drug Cartels Are Looting Mexican Gas Pipelines – Bloomberg

“How long will it take you to get here?” Panchito, a gasoline thief, shouts into his cell phone at a truck driver headed his way. “I’ve got 12 canisters filled with diesel just for you.”

“I’ll be there in about an hour,” replies the driver, known by his nickname, El Chile Verde. “I’m just leaving Mexico City now.”

Panchito sells stolen fuel from the side of a highway outside Mexico City. He declined to give his last name. He says demand for his services will only grow after the government raised fuel prices as much as 20 percent on New Year’s Day—the most in almost two decades.

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CANADA, AUSTRALIA, NEW ZEALAND

Australia’s Set to Lose a New Electric Engine to Silicon Valley – Bloomberg

For the cost of a Sydney home, Paul Evans would be able to market an electric car engine that could help put Aussie innovation back on the map. In risk-averse Australia, most investors would prefer to buy a house.

The entrepreneur has been shunned by local venture capital funds in attempts to raise A$3 million ($2.2 million) for a product that’s been a decade in the works, despite what he describes as strong interest from some global carmakers. Now, after a series of fruitless investor meetings, he’s heading down the inevitable path: straight to the U.S.

“We’ve been pushed to the point where we’re going to Silicon Valley to raise funds,” Evans said. “To me, that’s an unfortunate outcome because it’s a long way from here and we don’t really want to move there.”

Australia’s Health Minister Ley Resigns Amid Expenses Scandal – Bloomberg

Australia’s Health Minister Sussan Ley resigned Friday amid an investigation into her travel expenses, as Prime Minister Malcolm Turnbull pledged to overhaul entitlements for lawmakers.

Booming Lentil Prices Are Back After Canadian Harvest Washout – Bloomberg

The lentil market has gone from boom to bust, and back to boom again. In the middle of 2016, prices for the pulse crop had plunged from record highs on the outlook for large global harvests. Now, the curry-and-soup food staple has rebounded more than 40 percent since August after rain and snow damaged a bumper crop in Canada, the world’s top exporter.

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BREXIT, EUROPE DIVERGENCE WATCH

German industry chief backs Berlin’s tough stance on Brexit

A leading German industry chief has warned the UK against expecting any softening of Berlin’s increasingly tough stance on Britain’s plans to leave the EU.

Dieter Kempf, who took over this month as president of the BDI, the German employers’ federation, told journalists on Tuesday there could be no question of Europe bowing to British demands for immigration controls, saying the EU’s four freedoms — including the freedom of movement — must not be “put into danger”.

The EU 27’s message to Brexit Britain

Britain’s 27 EU neighbours have sent a clear, consistent message this week on what they think Brexit should look like. For the government in London, it is a politically unpalatable notice: don’t expect any favours for leaving the EU.

British business and UK citizens should pay attention. Otherwise, reality will drench them like an ice-cold shower as the negotiations on Britain’s exit from the EU get under way this year.

U.K.’s May to Detail Brexit Vision in Speech on Tuesday – Bloomberg

U.K. Prime Minister Theresa May will set out her vision for Brexit and her hopes for creating a “truly global Britain” in a speech on Tuesday, her spokeswoman said.

The address, planned since December, will attempt to answer calls from businesses and politicians for more detail on her goals as she prepares to trigger the formal process for leaving the European Union by the end of March.

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EUROPE

France’s Le Pen Generates a Stir With Stops at Trump Tower – Bloomberg

French National Front leader Marine Le Pen made an unannounced visit to New York and caused a stir when she was spotted at Trump Tower flanked by a longtime friend of President-elect Donald Trump.

But Le Pen, who leads in the latest opinion poll for the French presidential election, had no meeting scheduled with Trump nor with members of his transition team, according to representatives for her and for the president-elect. Her campaign chief, David Rachline, said she was making a private trip to New York.

Le Pen waved off reporters when approached while she sat drinking coffee with three other people outside the Trump Ice Parlor on Thursday.

German economy grows at quickest rate in 5 years

Germany’s economy has expanded at its fastest pace in five years, boosting Chancellor Angela Merkel’s re-election hopes and underlining the country’s importance to hopes of a broader eurozone recovery.

German gross domestic product rose 1.9 per cent in 2016 while the country also recorded a third successive year of not needing new government borrowing, with a public sector budget surplus of €6.2bn.

The data allow Ms Merkel to continue to boast of a strong economic record as she campaigns for a fourth term in office this year. But the figures could also revive criticism from Germany’s trading partners that it should be more prepared to loosen the purse strings to help weaker eurozone states and rebalance the regional economy.

Merkel Presses for EU Defense Boost as U.S. Support May Falter – Bloomberg

German Chancellor Angela Merkel said Europe needs to do more to ensure its security, citing uncertainty about U.S. post-World War II guarantees eight days before Donald Trump’s inauguration as president.

Faced with a global refugee crisis and terror attacks in France, Germany and elsewhere, the European Union would be “naive” to rely on others as global risks threaten the EU’s stability, Merkel said Thursday in a speech in Brussels.

“Let’s not fool ourselves,” she said. “From the point of view of some of our traditional partners — I’m thinking about the trans-Atlantic relationship among others — there is no infinite guarantee I’m convinced that Europe and the EU will have to learn to take on more responsibility in the world.”

Merkel Says Brexit Will Force EU to Confront Corporate Tax Rates – Bloomberg

German Chancellor Angela Merkel said the U.K.’s divorce from the European Union will be a catalyst for the bloc to confront the thorny issue of corporate tax rates as it renews a push for a common agenda.

Saying that “we all know that we need more harmonization” across the 28-member EU, Merkel told reporters Thursday in Luxembourg, itself at the center of an EU storm over tax issues, that the topic will increasingly be a point of contention as Brexit negotiations loom.

Hungary Backs Away From Vow to ‘Sweep Out’ Soros-Funded NGOs – Bloomberg

Hungary’s government retreated from a pledge to “sweep out” charities funded by billionaire George Soros, but it’s still planning to tighten rules on non-governmental organizations, according to the head of the prime minister’s office.

A senior member of Premier Viktor Orban’s Fidesz party vowed this week to use “all tools at its disposal” to crack down on the 86-year-old billionaire’s network of charities and accused it of “serving global capitalists” and backing “political correctness over national governments.”

TOP

CHINA

China December Exports Tumble More Sharply Than Expected – WSJ

Chinese exports fell sharply owing to weak demand in many major markets, and the country is bracing for further difficulties this year given the prospect of a more protectionist Trump administration.

Chinese Paper Calls Tillerson’s South Sea Threat ‘Foolish’ – Bloomberg

China’s state media rebuffed a suggestion by President-elect Donald Trump’s nominee for secretary of state that Beijing must be denied access to reclaimed reefs in the disputed waters of the South China Sea.

“Unless Washington plans to wage a large-scale war in the South China Sea, any other approaches to prevent China access to the islands will be foolish,” the Communist Party-run Global Times newspaper wrote in an editorial. The English-language China Daily took a similar line: “It is certainly no small matter for a man intended to be the U.S. diplomat in chief to display such undisguised animosity toward China.”

China Smashes 1 Billion Ton Mark in Iron Ore as Prices Surge – Bloomberg

Iron ore imports by China surged to a record above 1 billion metric tons last year as unexpectedly strong steel production and lower local mine output combined to fire up demand in the world’s top buyer for cargoes from Australia and Brazil, supporting a rebound in prices.

TOP

JAPAN

Japan’s Rethinking Its Culture of Long Work Hours – Bloomberg

Japan is stepping up its drive to pressure companies into abandoning a culture of long working hours.

Prosecutors this week began reviewing whether Mitsubishi Electric Corp. forces its employees to work excessive hours — a move that follows an investigation of Dentsu Inc., Japan’s biggest advertisement agency, where a female worker who put in more than 100 hours of overtime in a month committed suicide.

TOP

TRUMP WORLD

Trump and spy chief differ on what was said in call on Russia dossier | Reuters

U.S. spy chief James Clapper and President-elect Donald Trump gave different accounts of a phone conversation they had about a dossier of unverified, salacious claims linking Russia to Trump, who is locked in a war of words with the intelligence agencies he will command in eight days.

Clapper said he emphasized to Trump that the report was not produced by U.S. intelligence agencies and that they had not judged whether the information was reliable. He did not say the document was false.

By contrast, Trump suggested in a tweet on Thursday that Clapper agreed that the report was untrue.

“James Clapper called me yesterday to denounce the false and fictitious report that was illegally circulated. Made up, phony facts. Too bad!” Trump wrote.

Democratic congressman Adam Schiff, an opponent of the Republican Trump, was asked by CNN on Thursday morning about Trump’s characterization of Clapper’s statement that the document was false.

“Sadly, you cannot rely on the president-elect’s tweets or statements about what he’s receiving in intelligence briefings. And that’s a real problem,” said Schiff, the leading Democrat on the House Intelligence Committee.

“If people really want to know what Director Clapper had to say to Donald Trump, do not rely on Donald Trump’s tweets, rely on Director Clapper’s statement.”

Trump Under Fire for Invoking Nazis in Criticism of U.S. Intelligence – The New York Times

Jewish groups are demanding an apology for the president-elect’s remarks in response to the disclosure of unsubstantiated reports that Russia collected compromising information

about him.

Trump Endorses L.L. Bean After Board Member Supports Him – Bloomberg

President-elect Donald Trump urged people to buy products from L.L. Bean after the founder’s granddaughter sparked controversy by donating to a political action committee that supported his campaign.

“Thank you to Linda Bean of L.L. Bean for your great support and courage,” Trump said on Twitter Thursday. “People will support you even more now. Buy L.L. Bean.”

Overrated? Loser? Not if It’s Trump Who Calls You Out – The New York Times

From book publishers to magazine editors, the president-elect’s insult tweet has become a badge of honor.

Scaramucci Gets Respect He’s Craved by Scoring White House Post – Bloomberg

Anthony Scaramucci finally has a real reason to grin.

“The Mooch,” as he’s widely known, is sitting in a conference room in Trump Tower, holding forth on his unlikely path from hedge fund ringmaster to Trump administration insider. Scaramucci, you see, is the Donald Trump of the hedge fund game — and now he’s going to Washington, too.

Scaramucci, who founded SkyBridge Capital, has been given a White House role as an assistant to Trump, people familiar with the matter said Thursday. He will serve as a general adviser, they said, after working on Trump’s transition team, making dozens of television appearances in support of the incoming administration.

Goldman Sachs’s Dina Powell Named as Trump’s Economic Assistant – Bloomberg

Dina Powell will leave her post as the head of philanthropic investing at Goldman Sachs Group Inc. to join the Trump administration as an assistant to the president and senior counselor for economic initiatives, the president-elect’s transition team said Thursday.

Powell, the president of the Goldman Sachs Foundation and global head of impact investing at the bank, will assist the administration’s “new efforts around entrepreneurship, small-business growth and the global economic empowerment of women,” according to the statement.

In Iowa, Trump Voters Are Unfazed by Controversies – The New York Times

Washington may be veering from one Trump pre-inaugural controversy to another: unproved reports of Russia’s holding embarrassing information against him, possible ethical conflicts, the donors and billionaires of his cabinet, his pushback against intelligence findings on Russian hacking in the election. But there does not seem to be much angst in Iowa among those who voted for Mr. Trump, including some Democrats and independents.

Many were hazy on specific policy details about how, say, House Republicans were seeking to replace Medicare with a voucher system. These voters feared an outbreak of European-style terrorist attacks by Muslims in the United States, maybe in their own communities. And overwhelmingly, Trump supporters did not want their hard-earned money redistributed to people they regarded as undeserving.

Trump’s Cabinet Nominees Diverge on Russia, Security Issues – WSJ

Donald Trump’s picks for top national security posts diverged from the president-elect’s positions on key issues during confirmation hearings a week before the inauguration, increasing uncertainty about what policies the incoming administration would pursue, even on matters almost entirely under White House control.

Retired Gen. James Mattis, the secretary of defense nominee; Rex Tillerson, named to be secretary of state; and Rep. Mike Pompeo (R., Kan.), the Central Intelligence Agency director nominee, all made statements at Senate hearings this week that differed from views Mr. Trump has expressed, staking out positions that might help them win approval from the Senate but could set them on a collision course with the incoming White House over critical issues, ranging from Russia to Iran.

The break with Mr. Trump was on display perhaps most prominently this week during the three-hour confirmation hearing Thursday for Gen. Mattis. The defense secretary nominee classified Russia as the principal threat to the U.S. and expressed little hope that Washington would develop a substantive partnership with Moscow, as Mr. Trump has suggested.

Mattis Calls Russia Strategic Competitor in Rebuff of Trump – Bloomberg

Defense secretary nominee James Mattis branded Russia a “strategic competitor” with which the U.S. will find little common ground, making him the latest of President-elect Donald Trump’s Cabinet picks to break with their boss on the wisdom of seeking better ties with Vladimir Putin.

“I’m all for engagement, but we also have to recognize reality in what Russia is up to, and there’s a decreasing number of areas where we can engage cooperatively,” Mattis told the Senate Armed Services Committee as it considered his nomination Thursday. The former Marine general’s assessment echoed that of committee Chairman John McCain, who said Russia “will never be our partner.”

Trump’s Pick for Education Could Face Unusually Stiff Resistance – The New York Times

Nominees for secretary of education have typically breezed through confirmation by the Senate with bipartisan approval.

But Betsy DeVos, President-elect Donald J. Trump’s choice for the post, is no typical nominee. She is a billionaire with a complex web of financial investments, including in companies that stand to win or lose from the department she would oversee. She has been an aggressive force in politics for years, as a prominent Republican donor and as a supporter of steering public dollars to private schools.

Her wealth and her politics seem likely to make her confirmation hearing unusually contentious, and possibly drawn out.

TOP

FAKE NEWS, RUSSIA HACKS

Donald Trump dossier: intelligence sources vouch for author’s credibility | US news | The Guardian

At his press briefing on Wednesday, the president-elect dared the world’s media to scrutinise the 35 pages of claims, before throwing down a challenge – where’s the proof? Nobody had any. Case closed.

But in the rush to trample all over the dossier and its contents, one key question remained. Why had America’s intelligence agencies felt it necessary to provide a compendium of the claims to Barack Obama and Trump himself?

And the answer to that lies in the credibility of its apparent author, the ex-MI6 officer Christopher Steele, the quality of the sources he has, and the quality of the people who were prepared to vouch for him. In all these respects, the 53-year-old is in credit.

BBC claims a second source backs up Trump dossier

BBC correspondent Paul Wood came forward Wednesday to reveal that there are multiple intelligence sources alleging Russia is in possession of potentially embarrassing or compromising material regarding President-elect Donald Trump. Formerly, only a single source was known to have been aware of the alleged material.

“I saw the report, compiled by the former British intelligence officer, back in October,” Wood said. “He is not, and this is the crucial thing, the only source for this.” The Wall Street Journal alleges the British source is Christopher Steele, a director of the London-based Orbis Business Intelligence Ltd.

Former MI6 officer lies low after unmasking as dossier’s author

The author of the dossier of sensational allegations against Donald Trump disappeared from view on Wednesday, slipping away from his home to an unknown destination in a manner befitting his past as an intelligence agent.

The dossier by Christopher Steele, including allegations of bizarre sexual exploits and international political conspiracies at the highest levels, has been strongly condemned by Mr Trump and the Kremlin. It presents no conclusive proof and nobody has independently verified its claims.

Yet some of those who worked with Mr Steele are prepared to vouch for his previous work. He is a British former intelligence officer who operated in Moscow in the early 1990s, later served as MI6’s chief expert on Russia in London, and resigned in 2009 to set up his own company, Orbis Business Intelligence.

In his early fifties and quietly spoken, Mr Steele has a reputation among colleagues for integrity, discretion and for selecting his clients with care. Always keen to keep a low profile, he left his Belgravia office and Surrey home after his dossier on Mr Trump was published and he was unmasked as the author. His present whereabouts are not known and attempts to reach him were unsuccessful.

What We Know and Don’t Know About the Trump-Russia Dossier – The New York Times

How did American intelligence officials come to brief President Obama, President-elect Donald J. Trump and lawmakers about supposed Russian plans to blackmail Mr. Trump? There are far more questions than answers. But here is a look at the story so far.

TOP

ELECTORAL POLITICS

4 pieces of evidence showing FBI Director James Comey cost Clinton the election – Vox

Many people — most notably Trump and other Republicans — have scoffed at the claim that the letter changed the outcome of the election, suggesting that it’s a convenient excuse for a weak candidate who made some questionable strategic decisions.

But the Comey effect was real, it was big, and it probably cost Clinton the election. Below, we present four pieces of evidence demonstrating that this is the case.

FBI Chief Under Fire Again With Justice Department Investigation – Bloomberg

New questions were raised Thursday about whether FBI Director James Comey will be able to keep his job after the Justice Department’s internal watchdog opened an investigation into his handling of Hillary Clinton’s use of a private e-mail server.

The investigation by the department’s inspector general will examine whether the Federal Bureau of Investigation failed to follow appropriate procedures and improperly released information about the Clinton probe — renewing scrutiny of one of the most contested developments of the 2016 election campaign.

Public pronouncements by Comey at different points last year drew denunciations from Donald Trump, who will become president next week, and from Hillary Clinton, who has blamed her defeat in part on Comey’s statements.

“What Comey did, commenting on an investigation, was totally improper,” said Nick Akerman, a partner at the law firm Dorsey & Whitney LLP and a former federal prosecutor. “There is no need to have an inspector general investigation to justify the president firing him.”

In Tearful Farewell, Obama Awards Biden the Medal of Freedom – Bloomberg

At the dusk of both of their political careers, surrounded by teary friends and family, President Barack Obama on Thursday bestowed the Presidential Medal of Freedom on Joe Biden, the man he called “the finest vice president we have ever seen.”

The vice president winced in shock as Obama announced he was conferring the nation’s highest civil honor on his right-hand-man for eight years. Biden turned away from the cameras, wiped away some tears, then stood stoically as Obama draped the blue-and-white ribbon around his neck.

Kansas Gov. Sam. Brownback proposes tax increases to help fix the state’s budget problems | The Kansas City Star

The governor wants to double the tax on alcohol and boost the tax on cigarettes by a dollar to help fill a budget shortfall. He is also proposing liquidating a long-term investment fund and selling off the state’s future proceeds from a settlement with the tobacco companies to get cash now in the face of the more than $900 million budget shortfall the state faces for the next 18 months.

A Soft-Spoken Ethics Chief Rips Up the Playbook to Challenge Trump – Bloomberg

“This is truly the situation of the mouse that roared,” said Meredith McGehee, chief of policy, programs and strategy at Issue One, a group that seeks to limit the impact of large donors on politicians. “Here is this civil servant who takes his position seriously and sees the president-elect failing to sit down and take his seriously.”

G.O.P. Lawmaker Hints at Investigating Ethics Chief Critical of Trump – The New York Times

Representative Jason Chaffetz said Walter M. Shaub Jr., the director of the Office of Government Ethics, blurred the line “between public relations and official ethics guidance.”

Pressure on House to Back Obamacare Repeal Bid After Senate Vote – Bloomberg

The pressure is now on U.S. House Republicans to complete the first step toward repealing Obamacare after a razor-thin Senate vote showed the contentiousness surrounding efforts to undo President Barack Obama’s signature domestic achievement.

The House plans to vote as early as Friday on a budget resolution that would set the repeal effort in motion, but the timing could slip because of intra-party angst. Doubts were growing among both moderate and conservative Republicans about the wisdom of voting for repeal without laying out more details about the eventual replacement.

TOP

DEMOGRAPHICS, INEQUALITY & POPULISM

A Divided America: How We Die Depends on Where We Live – Bloomberg

As lawmakers prepare for a showdown over health insurance legislation, a new report finds that for rural Americans, a lack of coverage is just one of many reasons they are more vulnerable to early death than their urban counterparts.

While the top five causes of death were the same for all Americans from 1999 to 2014—heart disease, cancer, unintentional injury, chronic lower respiratory disease, and stroke—they were more likely to kill the 15 percent of Americans living in rural areas than their urban counterparts, according to research from the Centers for Disease Control and Prevention. “This new study shows there is a striking gap in health between rural and urban Americans,” said CDC Director Tom Frieden.

Health Care’s Bipartisan Problem: The Sick Are Expensive and Someone Has to Pay – WSJ

Congress has begun the work of replacing the Affordable Care Act, and that means lawmakers will soon face the thorny dilemma that confronts every effort to overhaul health insurance: Sick people are expensive to cover, and someone has to pay.

The 2010 health law, also known as Obamacare, forced insurers to sell coverage to anyone, at the same price, regardless of their risk of incurring big claims. That provision was popular. Not so were rules requiring nearly everyone to have insurance, and higher premiums for healthy people to subsidize the costs of the sick.

If policyholders don’t pick up the tab, who will? Letting insurers refuse to sell to individuals with what the industry calls a “pre-existing condition”—in essence, forcing some of the sick to pay for themselves—is something both parties appear to have ruled out. Insurers could charge those patients more or taxpayers could pick up the extra costs, two ideas that are politically fraught.

TOP

SCANDALS, LAWSUITS, FINES, REGULATORY

Fiat Chrysler Accused of Diesel Emissions Cheating by U.S. – Bloomberg

Fiat Chrysler Automobiles NV was accused of violating pollution laws with 104,000 diesel vehicles, sending the shares plunging on the prospect the automaker may follow Volkswagen AG in facing billions of dollars in fines.

Fiat Chrysler becomes the second automaker in less than three years the EPA has accused of violating the law by using software to pass laboratory emissions tests. Volkswagen, which admitted to using defeat devices in September 2015, agreed Wednesday to pay a $4.3 billion fine, boosting the cost of the scandal to about 20.5 billion euros ($21.9 billion).

E.P.A. Accuses Fiat Chrysler of Secretly Violating Emissions Standards – The New York Times

Federal regulators said the automaker used secret software that allowed more than 100,000 vehicles to emit illegal levels of harmful pollutants.

Volkswagen Executive to Remain in Custody – WSJ

A federal judge on Thursday ruled that Oliver Schmidt, one of the six Volkswagen AG executives charged this week in the company’s emissions-cheating scandal, will remain in custody without bond ahead of trial in Michigan.

Justice Department Toughened Approach on Corporate Crime, but Will That Last? – The New York Times

After “too big to jail” criticism from the financial crisis, the department has had success pursuing corporate employees. Now the two prosecutors who led the push are leaving.

Former Wells Fargo Employee Sentenced to More Than Seven Years in Prison – WSJ

Former Wells Fargo employee Ronald Charles Reed, who organized a bank fraud scheme to steal customer-account data was sentenced to more than seven years in prison.

TOP

DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

AT&T Chief and Donald Trump Meet, But Merger Doesn’t Come Up – WSJ

Randall Stephenson, the chairman and chief executive of AT&T Inc., visited Trump Tower to meet with an incoming president who has expressed concerns about the company’s proposed purchase of Time Warner Inc.

AT&T Chief Visits Trump With Time Warner Deal Looming Large – The New York Times

The president-elect’s dispute with CNN, a Time Warner asset, makes for a delicate meeting.

AT&T Says CEO Didn’t Discuss Time Warner Merger With Trump – Bloomberg

“Mr. Stephenson had a very good meeting with President-Elect Trump earlier today covering a wide-range of topics,” AT&T said Thursday in a statement. “AT&T’s proposed merger with Time Warner was not a topic of discussion. Rather, as the country’s leading investor of capital for each of the last five years, the conversation focused on how AT&T can work with the Trump administration to increase investment in the U.S., stimulate job creation in America, and make American companies more competitive globally.”

Exclusive: Morgan Stanley cuts bankers, bonuses as deals, IPOs stall – sources | Reuters

Morgan Stanley laid off a number of senior investment bankers last week and cut bonuses by roughly 15 percent because of a decline in revenue from dealmaking and capital raising across Wall Street, people with knowledge of the matter told Reuters.

Singapore Warehouse Operator Shaping Up to Be Asia’s Biggest Buyout Deal – Bloomberg

Since Bloomberg News first reported takeover interest in GLP, the company’s shares have soared 46 percent, valuing it at $11.3 billion including debt. At that level, a purchase of the industrial property owner would be the largest-ever buyout of an Asian company, surpassing last year’s takeover of Qihoo 360 Technology Co., data compiled by Bloomberg show.

TOP

SILICON VALLEY, UNICORNS, STARTUPS, VC

Lyft Loses $600 Million in 2016 as Revenue Surges – Bloomberg

Lyft Inc., the second-largest ride-hailing startup in the U.S. behind Uber Technologies Inc., lost about $600 million last year while increasing revenue 250 percent, according to people familiar with the matter.

In 2016, Lyft generated about $700 million in sales, said the people, who asked not to be identified because the financials are private. The San Francisco company’s revenue growth far exceeded its 46 percent increase in losses.

Peter Thiel, Trump’s Tech Pal, Explains Himself – The New York Times

The Silicon Valley billionaire and scourge of Gawker describes his admiration for the president-elect, who told him, “We’re friends for life.”

The mobile app gold rush may be over | TechCrunch

This indicates that apps have maxed out on the finite resource that is users’ time. That is, drawing attention to a new app will mean having to shift users away from others. This could be a problem for new app businesses — especially those that mean to take on the incumbents like 2016’s most used apps: Facebook, Messenger, Google, Gmail, Instagram, Amazon, Apple Music and others.

FarmLogs raises $22 million to make agriculture a more predictable business | TechCrunch

According to CEO and co-founder of FarmLogs Jesse Vollmar, the company has invested heavily in satellite imagery and data since it graduated from the Y Combinator accelerator in 2012. It develops predictive models on top of that raw data to help farmers “program” their fields, Vollmar says.

“We analyze fields all around the U.S. all season long. We can highlight and alert farms when we see a problem developing, and send them out to examine and fix things they never would have caught on the ground. It’s all thanks to a multi-year history of performance satellite imagery,” he explained.

TOP

RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Amazon to Add 100,000 Jobs as Bricks-and-Mortar Retail Crumbles – The New York Times

Amazon’s new warehouse in Baltimore is a rare economic bright spot there, employing 3,000 people full-time in a city ravaged by poverty and a lack of opportunities for less educated workers.

And with Amazon’s announcement Thursday that it plans to hire 100,000 new employees in the next 18 months, the Baltimore facility and at least 70 other Amazon fulfillment centers across the country stand to be among the biggest beneficiaries.

Fifteen miles away in the suburbs, all that is left of Owings Mills Mall is rubble, demolition having started in the fall, after the last anchor stores, Macy’s and J. C. Penney, closed within months of each other.

The contrast between the two scenes is an example of what the economist Joseph Schumpeter termed “creative destruction,” the inevitable process in which new industries rise and replace old ones.

Sorry, Wal-Mart. Amazon Wants Your Food Stamp Customers As Well – Bloomberg

Low-income shoppers are an intriguing target for Amazon, which has been trying with mixed success to disrupt the $800 billion grocery market. More than 80 percent of food stamp recipients live in or near big cities, which are served by Amazon’s vast network of warehouses and home to the affluent and poor in close proximity. A truck delivering gluten-free chia seed bars and organic soy coffee creamer to Manhattan’s posh Upper West Side can also cart a box of cereal, bread and baby food to low-income housing projects in Harlem.

Lowe’s to Cut Thousands of Store Workers, Shuffle Jobs – WSJ

Lowe’s Cos. is cutting thousands of workers and shuffling the jobs of thousands more, according to people familiar with the matter, as the home-improvement retailer tries to adapt to shifting shopping habits.

TOP

AIRLINES, SHIPPERS, RAIL, TRANSPORTS

Where to Catch a Final Ride on America’s Queen of the Skies – Bloomberg

Call it the Queen of the Skies Retirement Tour 2017. With United Continental Holdings Inc. joining rival Delta Air Lines Inc. in retiring the iconic jumbo jet this year, plenty of aviation enthusiasts may be pondering a trip or two to experience a U.S.-operated 747 one last time.

Boeing Wins $22 Billion Plane Order From India’s SpiceJet – Bloomberg

Boeing Co. won an order for 205 planes fromSpiceJet Ltd., marking the biggest expansion plan by the Indian budget carrier that is seeking to claw back market share from leader IndiGo.

TOP

HEALTHCARE, PHARMA, BIOTECH

Pharma company executives debate drug pricing increases | Reuters

Grappling with a backlash against high U.S. prescription drug prices, more pharmaceutical companies are pledging to limit annual increases to under 10 percent – but the tactic is doing little to salve critics, including President-elect Donald Trump, who on Wednesday said drugmakers are “getting away with murder.”

TOP

ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

AI arms race risks spiralling out of control, report warns

A new arms race in artificial intelligence and robotics risks spiralling out of human control, according to a report paving the way for next week’s World Economic Forum in Davos.

The WEF’s annual Global Risks report highlights mounting concern at the few regulatory constraints on AI technologies that are increasingly used in defence, as in other walks of life, and that may soon be able to out-think humans.

The report registers particular concerns in the field of autonomous weapons systems, a sector attracting large amounts of investment.

Poker Is the Latest Game to Fold Against Artificial Intelligence

In a landmark achievement for artificial intelligence, a poker bot developed by researchers in Canada and the Czech Republic has defeated several professional players in one-on-one games of no-limit Texas hold’em poker.

Perhaps most interestingly, the academics behind the work say their program overcame its human opponents by using an approximation approach that they compare to “gut feeling.”

“If correct, this is indeed a significant advance in game-playing AI,” says Michael Wellman, a professor at the University of Michigan who specializes in game theory and AI. “First, it achieves a major milestone (beating poker professionals) in a game of prominent interest. Second, it brings together several novel ideas, which together support an exciting approach for imperfect-information games.”

Robot Nannies Look After 3 Million Chickens in Coops of the Future – Bloomberg

In a nation where food safety is so elusive that even some chicken eggs have been found to be fake, China’s consumers have good reason to be skeptical about their groceries. That’s forced many food processors to look for novel ways to highlight the wholesomeness of their products. But few have gone to such extremes as poultry powerhouse Charoen Pokphand Group, which is deploying a flock of robots to convince customers its birds are healthy.

TOP

SCIENCE, NATURE, PSYCHOLOGY

Scientists turn mild-mannered mice into killers

Step aside killer zombies: scientists have delved deep into ancient brain circuits to reveal neurons that can instantly turn mild-mannered mice into ferocious predators — before switching the rodents back to their normal placid selves.

Wild vampire bats are now sucking blood from humans at night | New Scientist

Bats in Brazil exclusively feed on bird blood, but new arrivals in their territory are now on the menu – they have been caught feasting on human blood.

TOP

HEALTH, PRODUCTIVITY AND WELLNESS

Feeling unwell? Now your phone can diagnose you

Powerful new apps are turning smartphones into mobile medical clinics. Could this help solve the issue of rising healthcare costs?

Macro Links Thurs Jan 12th – American Fascist

MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

 

TOP

NIRP, SYSTEMIC RISK, BALANCE SHEETS

China’s Great Ball of Money Has More Bubbles in Sight for 2017 – Bloomberg

After a string of market bubbles in recent years, China will again see assets threatened in 2017 by prices detaching from fundamentals.

That’s the opinion of all but one of 14 economists surveyed by Bloomberg late last month. Half penciled in the risk of a real-estate bubble inflating, despite efforts by policy makers in recent months to avoid exactly that outcome. An additional four saw the corporate bond market as most vulnerable to becoming a bubble, again even as officials take steps to raise costs and reduce a build-up in debt.

17F11 chart - bubble trouble - gaging risk in China

In China, Insurers Sell Risky Products to Fund Risky Investments, Freaking Out Regulators – WSJ

When Han Deqiang decided to plow $15,000 of his savings into life insurance, he wasn’t planning for posterity. Instead, the 27-year-old was jumping into the latest trend in China’s internet-powered investment boom—one that is alarming regulators.

Though the product that Mr. Han bought from Foresea Life Insurance Co. is called insurance, it was more like a high-yield one-year deposit, earning over twice the rate of a bank savings account. Foresea and other insurers are tapping massive amounts of cash raised from sales of newfangled investments to take big stakes in other Chinese companies and to fund international expansion.

China’s regulators have publicly criticized insurers for straying from their core mission of providing long-term security and punished at least 10 firms, including Foresea.

A Free-Floating Yuan Is Looking a Bit More Likely – Bloomberg

As China’s yuan swings back into the global spotlight, it might seem like an odd time for authorities in Beijing to loosen their grip on the tightly-managed currency.

Yet for a growing number of analysts and investors, the prospect of a freely floating yuan — a Chinese exchange rate wholly determined by market forces — is no longer a distant possibility. Advocates include a government-backed researcher and a former central bank adviser, while bond-market powerhouse Pacific Investment Management Co. says the chances of a free float are rising.
17F11 chart - China yuan pressures

Bitcoin Price Slides as Chinese Officials Inspect Local Exchange – Bloomberg

Bitcoin tumbled to a one-month low on worries that Chinese authorities are going to tighten their oversight of the digital currency.

The price of bitcoin dropped to $752.5 on Thursday, the lowest since Dec. 7, after a decline of as much as 16 percent in the previous session. It was trading down 2.6 percent as of 6:46 p.m. in Hong Kong, according to data compiled by Bloomberg. The cryptocurrency hit an all-time high of $1,161.89 on Jan. 5.

UniCredit Announces $8.6 Billion in Bad-Loan Provisions – WSJ

Italian lender UniCredit SpA said Thursday it will book €8.1 billion ($8.57 billion) in provisions for bad loans, as part of a balance-sheet cleanup it unveiled in December.

The bank said last month it planned to launch a €13 billion rights issue by the end of March—one of the largest Italy has seen—as well as cutting thousands of jobs and selling a large chunk of bad loans.

The move follows a tumultuous year for Italian banks, which have been battered by investor anxiety about the solidity of a sector that struggles with bad loans and low profitability. Italian banking stocks have fallen more than 30% in the past year.

TOP

MACRO OP-EDS, DATA, INQUIRY AND THEORY

How a Sensational, Unverified Dossier Became a Crisis for Donald Trump – The New York Times

The consequences of the dossier, put together by a former British spy named Christopher Steele, are incalculable and will play out long past Inauguration Day.

Donald Trump’s News Session Starts War With and Within Media – The New York Times

He called BuzzFeed “garbage” and shouted at a CNN reporter, and the two outlets argued with each other over publishing unverified claims about him.

Trump’s trainwreck press conference ushers in a clueless presidency | The Guardian

Reagan and his advisers knew how to project a sunny image that kept the presidency separate from whatever the pesky media wanted to focus on, such as high unemployment or secret gun-running to enemy states.

Judging from Wednesday’s trainwreck press conference – the first since July – Trump and his handlers have no self-discipline and no strategy to deal with the Russian crisis that has been simmering for the best part of the past year.

Donald Trump Press Conference Was a Live Performance from an Aspiring American Dictator

What was beaming in from New York was nothing less than a genuine aspiring American dictator having what amounted to a very public tantrum. By the way, you knew it was a bag job when you saw that El Caudillo del Mar-A-Lago had brought in his own personal claque of hecklers and cheerleaders. (It should be noted for the record that the “fake news” chant is merely lugenpresse for the digital age.) And the first thing he did on Wednesday morning was intimate that it’s the American intelligence community that is a bunch of fascists.

Trump is ‘walking through a minefield blindfolded’: Experts say his business plan is not enough

Donald Trump’s plan to separate himself from his business empire does not go far enough and could create major ethics and even constitutional problems on the first day of his administration, experts said.

A Trump lawyer on Wednesday told reporters in New York that Trump will separate from his global business assets by putting them into a trust run by his two eldest sons and a Trump Organization executive. The company will also hire an ethics advisor to clear any new domestic deals, and Trump will donate any hotel profits generated from foreign governments to avoid the appearance of gifts.

With this structure, Trump is “walking through a minefield blindfolded” when he takes office Jan. 20, said Norman Eisen, a former top White House ethics lawyer under President Barack Obama who has led calls for Trump to divest his businesses, along with former George W. Bush lawyer Richard Painter.

“The president-elect’s disregard for ethics and precedent and the Constitution in his press conference today are going to precipitate an ethics and constitutional crisis from the day he’s sworn in,” he told MSNBC on Wednesday.

Trump’s Border Tax Threat May Weaponize the Dollar – Bloomberg

Is fiscal war the new currency war?

President-elect Donald Trump’s threat to impose a “major” border tax on U.S. manufacturers that make products abroad to sell in the U.S. could fuel the next leg in the post-election dollar rally, some analysts reckon.

In his first post-election press conference, Trump doubled down on his proposal to impose policies aimed at boosting onshore production of U.S. goods and services through penalties on imports. “There will be a major border tax on these companies that are leaving and getting away with murder,” Trump said on Wednesday, without elaborating. “You’ve got a lot of places you can move,” he added. “As long as it’s within the U.S.”

Amid Hacking Blowback and ‘Golden Showers,’ Moscow Fears Losing Trump – The Daily Beast

The eruption of the latest scandals around U.S. President-elect Donald Trump is making many in Moscow nervous about the long-term consequences for Russia’s future.

It was not news that Trump had friends among Russian pop stars, oligarchs, and casino owners. It wouldn’t surprise anyone if he consorted with prostitutes, however eccentric his sexual tastes. But the notion that Trump might have worked as Russian President Vladimir Putin’s recruited agent passing on intelligence about Russians in New York? That’s something different. And as Trump backs away from the allegations, will he back away from Russia, too? That certainly was the impression over the last day or so.

And just recently it all looked so good.

Trump Dossier Spotlights Russian History of ‘Kompromat’ – WSJ

The public airing of a dossier packed with unverified allegations related to President-elect Donald Trump casts a spotlight on a Russian practice of collecting compromising material on prominent individuals for the purposes of blackmail.

$64 Billion Norway Manager Bets Trump Fiscal Boom May Never Come – Bloomberg

The bond market may have overplayed its hand in anticipating a fiscal push from U.S. President-elect Donald Trump, according to the head of asset management at DNB ASA, Norway’s biggest bank.

The recent surge in bond yields was driven by positive economic developments before the election, as well as in anticipation of fiscal stimulus, said Torkild Varran, chief executive officer of DNB Asset Management.

But that trade “may not have fully taken into account what may come of various initiatives from Trump,” Varran, who oversees about 61 billion euros ($64 billion) in assets, said in an interview in Oslo on Tuesday. “We’re a bit concerned that people are thinking that fiscal stimulus is coming faster than it de facto can come. Or, that it never comes at all.”

US spy agencies in crisis over Trump claims

An escalating civil war between incoming president Donald Trump and the US intelligence community is presenting America’s spies with their biggest crisis since the failures in the run-up to the Iraq war.

By blaming intelligence agencies for the possible leaking of a dossier detailing alleged efforts by the Kremlin to cultivate and compromise him and likening it to “Nazi Germany”, Mr Trump has opened a new offensive against officials who pride themselves for their non-partisan professionalism.

“This is the first time that I know of where a president has accused [intelligence agencies] of having a political position . . . and that really challenges this industry that works very hard to be non-partisan,” said Cortney Weinbaum, a former intelligence officer now at the Rand Corporation.

As Crisis That Vexed Obama Fades, Trump Will Benefit – WSJ

In ways that few appreciate, the financial crisis that ushered Barack Obama into office in 2008 shaped all eight years of his presidency. It drove his regulatory and economic agenda, polarized politics and policy, hobbled output and wage growth, and ultimately helped make Donald Trump president.

Ironically, Mr. Obama steps down as the recovery from that crisis is largely complete, which could leave Mr. Trump to preside over the longest expansion since World War II.

Carmen Reinhart and Kenneth Rogoff of Harvard University have documented that recoveries that follow crises are weaker than those after a typical recession; on average, it takes eight years for a country to achieve its previous peak in per-capita gross domestic product.

The U.S. has done well, reaching its precrisis peak in just six years, in 2013. Nonetheless, at 2.1%, average annual growth over this expansion is the weakest of the postwar period.

Some of the reasons are structural: The aging workforce is growing more slowly; and the efficiency boost from new technologies of the 1990s and early 2000s has faded. Others can be traced to the crisis.

US’s flawed economic recovery divides Trump and Obama supporters

Having publicly trashed the US economy’s performance during the presidential campaign, Donald Trump has become its most prominent cheerleader.

The president-elect has in recent weeks claimed credit for surging consumer confidence, stellar equity prices and stronger end-of-year household spending, arguing there was “no hope” before he arrived on the scene.

To Barack Obama’s supporters, claims from Mr Trump that the US was cloaked in economic gloom before November 8 are risible.

The seeds for accelerating wages, full employment and rebounding housing equity were laid in 2009 during the financial conflagration, they argue, with the subsequent recovery trouncing those of other advanced economies and forming the cornerstone of the outgoing president’s legacy.

Yet while today’s US economy is indeed dramatically stronger than the one Mr Obama inherited, the recovery remains a flawed one, riddled with socially dangerous levels of inequality and hobbled by poor productivity growth.

Some analysts fear it is an inheritance that Mr Trump could shatter if he embraces hazardous policy choices such as barrelling into a trade war with China.

1930s-Like Demographic Headwinds Are Restraining the U.S. Economy – Bloomberg

All eyes are on President-elect Donald Trump’s imminent arrival at the White House and whether his administration follows through on an agenda that — when it comes to the economy — features a growth target almost double that of recent years.

Outside the headlines, however, are demographic pressures reaching levels not seen since the Great Depression. That bodes ill for achieving the 3 percent to 4 percent gains in gross domestic product envisioned by Trump’s pick for U.S. Treasury secretary, Steven Mnuchin. Without an improvement in productivity or an influx of people into the workforce, GDP can’t accelerate.

17f11-chart-us-population-growth

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CENTRAL BANKS & MONETARY POLICY

Why ‘Teflon-Like’ Global Markets Are Resisting the Bears – Bloomberg

For Citi’s King, market technicals and the potential for more fiscal stimulus in the U.S. are over-hyped reasons to justify the rally.

Central banks continue to distort fundamentals in credit and equity markets, he said, raising the risk of a violent selloff once markets price in the prospect of diminishing central bank support. For example, spreads continue to tighten despite an uptick in policy uncertainty and rising leverage, he noted. The culprits are the European Central Bank and the Bank of Japan, who have taken over from the Fed as providers of global liquidity — a boon for spreads, he said.

This view is borne out by fixed-income analysts at Deutsche Bank AG, citing the U.S. term premium, or the extra compensation investors demand to hold longer-dated notes relative to shorter-dated obligations.

Fed on Edge as Trump Growth Bump Boosts Risks of Rate-Hike Error – Bloomberg

To err is human. To err when you’re the Federal Reserve means national wealth gets destroyed and millions of people lose their jobs.

That’s why U.S. central bankers have taken a patient approach to raising interest rates –just two hikes in the past 13 months — as unemployment declined with barely a flicker of inflation. As the Fed tightened in December and wages jumped at the end of the year, a new risk crept into their debate: What if they lift too slowly?

Turning points in the business cycle are notoriously hard to spot, and a new U.S. president promising policies to shift growth into a higher gear has introduced an upside surprise to the challenges the central bank faces. Fed officials want to run the economy a little hot to eke out labor market gains and push inflation higher. And with fiscal stimulus promised by President-elect Donald Trump potentially coming with unemployment already low, the chance increases for an error.

Those Hostile to Negative Rates Are ‘Ignorant,’ Rogoff Says – Bloomberg

The critics of negative interest rates are “ignorant” in their analysis of the unprecedented measures forced on central banks across the world over the past years, according to U.S. economist Kenneth Rogoff.

It’s impossible to analyze the effects of the “early experiment” with negative rates because central banks were left to themselves amid a global fiscal retrenchment, Rogoff, a professor at Harvard University, said Wednesday in an interview after speaking at the Skagen Funds annual conference in Oslo.

“I find a lot of what is written by representatives of the financial sector, they’re very hostile to negative rates, to be kind of ignorant,” he said ahead of a tour of Scandinavia, where sub-zero rates first saw the light of day. “They’re talking about their short-term profits, and their short-term interest, but it’s a long-run policy if you do the homework, if you lay the groundwork, it would certainly work very well.”

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POSITIONING, INFLECTION, MARKET CALLS

Drug Stocks Plunge as Trump Threatens to Force Price Bidding – Bloomberg

Pharmaceutical and biotech stocks plummeted after President-elect Donald Trump said he’d force the industry to bid for government business, a position that aligns him with congressional Democrats and against the powerful drug-manufacturing lobby.

“They’re getting away with murder,” Trump said at a press conference in New York. “Pharma has a lot of lobbyists and a lot of power and there is very little bidding. We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to save billions of dollars.”

Emerging-Market Currencies, Stocks Slump Amid Political Turmoil – Bloomberg

Emerging-market currencies and stocks retreated as heightened political risk in Turkey and South Korea soured investor appetite for assets in developing nations amid a rout in crude oil.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Value investing back in fashion amid Great Rotation

The Great Rotation is back in the news. For the uninitiated, this is the concept that at some point money will flow out of bonds and into stocks as the historic bull market in bonds finally begins to turn. For some, it is only a matter of time; for others it is a fallacy.

But another slightly lesser rotation is undeniably under way. Within the equity market, a rotation in favour of the “value” style of investing — buying stocks because they are cheap compared with their fundamentals — is under way. This is a big development and follows eight years of value underperformance. The question is whether it can be distinguished from the rise in bond yields and the strengthening belief that economic growth is returning.

US earnings: last tango on Wall St

Wall Street is keen to hear plans for growth-boosting business investment to capture the Trump zeitgeist. But according to research by Goldman Sachs, the net impact to earnings of any economic boost might be small. The positive effects of faster real GDP growth could be offset by the impact of dollar strength hurting exports. While higher rates are good for banks, they will ultimately increase companies’ costs to borrow. Infrastructure spending will take time to implement and with the economy near capacity in any case, may not deliver the desired boost.

Only substantive positive guidance on this years’ prospects is likely to provide further upside after the recent rally. An optimistic tax scenario appears priced in. Chatter about Mr Trump’s plans emerging from within the Beltway will soon dominate the investment narrative. Managers should enjoy their upcoming moment in the limelight. For the rest of the year, events in Washington are likely to be the main determinant of returns.

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TAXATION, HAVENS, TRADE, PROTECTIONISM

Trump recommits to ‘major border tax’ on foreign-produced U.S. products | Reuters

President-elect Donald Trump on Wednesday promised a “major border tax” on companies that shift jobs outside the United States, further pressuring American businesses days after Fiat Chrysler Automobiles NV said heavy tariffs could force the company to shutter Mexican plants.

Trump Leans on GM to Follow Ford, Fiat Chrysler U.S. Investments – Bloomberg

President-elect Donald Trump nudged General Motors Co., the largest U.S. automaker, to follow its biggest peers by investing in domestic auto plants and adding jobs.

Less than two minutes into his first formal press conference after the November election, Trump highlighted Ford Motor Co.’s plans to cancel a $1.6 billion factory in Mexico and expand an existing plant in Michigan. Fiat Chrysler Automobiles NV committed $1 billion toward building three new Jeeps in the U.S. and enabling a Michigan facility to build a Ram pickup now produced in Mexico.

“I hope that General Motors will be following and I think they will be,” Trump said Wednesday at Trump Tower in Manhattan. “I think a lot of people will be following. I think a lot of industries are going to be coming back.”

Toy Makers Gird for Tax-Code Change – WSJ

Mattel, Hasbro and other U.S. toy makers are bracing for an overhaul of the tax code that could penalize an industry long reliant on overseas labor to manufacture Barbie dolls, Nerf guns and Hot Wheels cars.

Ford Says Beams Were Up on Aborted Mexico Plant Trump Jeered – Bloomberg

Before Ford Motor Co. abruptly canceled a factory in Mexico criticized by President-elect Donald Trump, the foundation was poured, some of the steel beams were up and parts makers were preparing to supply the plant.

The automaker is working now on a plan to compensate those manufacturers and return the land to its owner, the government of Mexico, said Joe Hinrichs, Ford’s president of the Americas. The company intends to eventually disclose the construction cost of the aborted project, he said.

“It’s not an easy decision to cancel a plant that you’ve already started,” Hinrichs said after a speech at Automotive News World Congress in Detroit. “We don’t take it lightly. It was a big decision to build the plant in the first place and it was a big decision to cancel it.”

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FOREX, CURRENCY IMPACTS

Here’s why the U.S. dollar could soar by another 30% – MarketWatch

Defying critics who say the greenback is near its peak, Raoul Pal, a Goldman Sachs alum who successfully predicted the financial crisis in 2008, says the rally could go on for another three-four years, taking a key dollar index another 30% higher.

“Looking at the shortfall of dollars and what is happening in the world right now, I think it could probably rally something like 75% from its low, so that’s still a long way from here. My personal target for the last six year has been the euro goes to 75 cents against the dollar and the yen at 200,” he said at a conference in London on Tuesday.

Hong Kong’s forex market benefits from a yen for hedging

Remember when the dollar plunged from ¥135 to ¥115 in a week? Anyone who went through those heart-stopping days in 1998 does. Foreign exchange is a market whose steady action is taken for granted until it suddenly isn’t. Witness more recently the pound’s plunge last October when it lost 6 cents against the dollar in two minutes for no clear reason.

Both those events have Asian links. Dealing in the yen — subject that particular week to heavy intervention — is still a dominant feature of the region’s markets. Sterling’s flash crash, meanwhile, happened in the “grey zone” where Sydney is the main trading centre between the close in New York and Tokyo, Hong Kong and Singapore taking over.

Forex is the market whose round-the-clock functioning the world depends on more than any other, and Asian trading, divided among multiple centres, has long appeared to be its weak link. The region’s four biggest centres combined only just surpass the average $1.2tn traded in New York each day and reach less than two-thirds the $2.4tn done through London, the global leader.

But Asia’s “graveyard shift” label could be changing. The most comprehensive survey of the market, co-ordinated every three years by the Bank for International Settlements, last year showed that volumes globally fell for the first time since 2001. Yet trading in Asia rose a fifth, according to the BIS, led by growth in its largest centres.

The Three Worst Currencies of 2017 Show That Politics, Not Economics, Are Driving Markets – Bloomberg

Forget about current-account deficits, purchasing-power parity, and government debt.

The new year’s currency action suggests politics is trumping economics in the world’s foreign-exchange markets, according to Societe Generale Global Strategist Kit Juckes. Consider the three worst-performing currencies in the first ten days of the year, he said in a note on Wednesday.

These laggards “all face significant political headwinds: terror attacks and government interference in monetary policy in Turkey, Brexit-dithering in the U.K., and fears of U.S. protectionism in Mexico,” he writes. “The takeaway, two weeks into the year, is that as expected, politics is at least as important as economics in driving markets in 2017.”

Yen Hedging Cost Jumps to Three-Year High on Fragmented Forecast – Bloomberg

As analysts spar over the yen’s direction this year, investors are paying the price.

The cost to hedge against fluctuations in the Japanese currency over a year using options has surged to the highest level in more than three years amid a lack of consensus on where it’s headed. Global banks’ predictions for the yen in a Bloomberg survey range from a call for a 14 percent rally from now through 2017 to that for a 9 percent slump.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

Brooklyn Home Sales Soar as Buyers Flee Hyped Manhattan Prices – Bloomberg

Home buyers in Brooklyn competed for a record-low number of listings in the fourth quarter, driving up prices in the New York borough that’s historically been seen as a refuge from Manhattan’s high costs.

Purchases in Brooklyn rose 22 percent from a year earlier to 2,582, while the median price of those deals climbed 15 percent to a record $750,000, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The number of homes for sale at the end of December tumbled 31 percent to 2,232, the fewest since the firms started keeping the data in 2008.

Vancouver Renters Help Million-Dollar Homeowners With Their Taxes – Bloomberg

In Canada’s priciest real estate market, the provincial government is pitching in to pay the property taxes of million-dollar Vancouver homeowners and offering loans to first-time buyers for down payments.

Too bad for renters, who are among the taxpayers footing a C$1.5 billion ($1.2 billion) bill at least in the next few years.

“This is a remarkably lousy policy,” said Thomas Davidoff, head of the University of British Columbia’s Centre for Urban Economics and Real Estate. “You’re going to take money from people who don’t own homes and give it to people who own homes. That seems to be a step exactly in the wrong direction if the dominant issue is affordability.”

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Long-Short Hedge Funds Are Ditching the Shorts to Focus on Longs – Bloomberg

What happens when you take the “short” out of a long-short trading strategy? Some hedge funds are about to find out.

Equity long-short fund managers, the biggest category in hedge funds, hold the fewest bearish stock bets on record, data compiled by Credit Suisse Group AG show. The shift reflects their abysmal performance in 2016, when the S&P 500 advanced 9.5 percent as the long-short managers tracked by Credit Suisse fell 4.3 percent, their worst year since 2011.

Wall Street’s Most Famous Quants Fed Up With JPMorgan Soothsayer – Bloomberg

AQR’s quants say they’ve had it after listening to more than a year’s worth of hectoring from analysts who blame managed futures and risk-parity strategies for everything from August 2015’s China meltdown to the post-Brexit plunge.

“The analysis is inaccurate,” said Brian Hurst, a principal and portfolio manager for AQR’s managed futures and risk-parity strategies. “They are using oversimplified models with bad inputs.”

However self-serving, AQR’s complaints amount to more than quibbles among math geeks. The past year has seen an ascendancy in the type of analysis the investment firm is describing, efforts to predict the impact of automated traders by estimating how much money they control and theorizing about their reactions to things like volatility.

Chris Rokos Is Said to Be Seeking to Raise More Than $2 Billion – The New York Times

Raising new capital would allow Mr. Rokos, whose specialty is trading interest rates, to expand his fund’s footprint in areas like emerging markets, even though it was a trade closer to home that thrust Mr. Rokos into the limelight this year.

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USA ECONOMY DATA

Business Loves Trump But May Need Help to Start Spending Again – Bloomberg

American companies are feeling confident again. Now it’s up to President-elect Donald Trump and Congress to get them spending again.

Sentiment from small firms to large manufacturers has rocketed to lofty heights since Trump was elected, mirroring brighter attitudes among consumers. But the true test for the economy now lies in the details and how quickly plans for deregulation, tax reform and infrastructure outlays come to fruition — and translate that confidence into investment.

Some solid pieces are already in place. Companies are hiring, the jobless rate is near a nine-year low and wage growth is picking up. What’s more, oil prices are starting to rise, encouraging a resumption of drilling, while a slump in manufacturing appears to have run its course.

The NFIB report on Tuesday showed 73 percent of the December advance was due to more upbeat views about the outlook for sales and the economy. The share of business owners who say now is a good time to grow is triple the average of the current expansion.

Still, “business investment may not pick up dramatically until some of the policy-related optimism is actually validated,” Stephen Stanley, chief economist at New York-based Amherst Pierpont Securities LLC, said in a note.

U.S. property foreclosures at 10-year low in 2016 | Reuters

Foreclosure proceedings affected nearly a million U.S. homes and other real estate last year, down 14 percent from 2015 and down 70 percent from the worst of the housing crisis in 2009, a report released Thursday shows.

Foreclosures hit a 10-year low and property owners in all but 15 states experienced fewer of the early stages of foreclosure, usually begun after owners have missed four mortgage payments, according to the report by ATTOM Data Solutions, formerly called RealtyTrac.

Final repossessions of properties also dropped overall, but did increase in 21 states and the District of Columbia, including Massachusetts, Alabama, New York, Virginia and New Jersey.

Suddenly, Home Sale Agreements Are Falling Apart Across the U.S. – Bloomberg

Spending months to find the perfect home in your price range, only to have your mortgage application rejected, or a home inspection turn up expensive repairs, is a nightmare—one that is coming true with increasing frequency, according to a new report from real estate listings website Trulia.

A Trulia analysis of U.S. listings shows that 3.9 percent of homes that moved from for-sale to pending moved back to for-sale again, nearly double the rate in 2015. Such “failed sales” increased in 96 of the 100 biggest U.S. metros, with big swings in areas large and small, rich and poor. That includes Los Angeles and Charleston, S.C., as well as San Jose and Akron, Ohio.

The Job Market Is Heating Up for Fast-Food Workers – Bloomberg

In today’s tight labor market, restaurants are embroiled in a full-on food fight over workers. The rank-and-file is winning referral bonuses, free meals and days off, and the scarcity of candidates may be raising the minimum wage without help from lawmakers.

While good news for millions of lower-skilled workers who’ve felt left behind by the economic recovery, it may not be for companies and customers. Restaurants will either have to raise prices or accept falling margins. Some stores’ service is suffering.

The U.S. unemployment rate was 4.7 percent in December, near a nine-year low. With its insatiable appetite for new workers, the fast-food business serves as a leading indicator of a labor shortage. In September, annual turnover for restaurant workers jumped to 113 percent, the highest since industry-tracker People Report began collecting data in 1995.

U.S. Workers’ Wages Expected to Keep Growing – WSJ

A new forecast suggests the fattening of American paychecks is likely to continue this year.

As employers reckon with a tighter labor market, many are raising wages to attract and hang onto employees. Wages for U.S. workers are expected to rise at a 1.5% annual pace during the first three months of 2017, after growing 1.7% in the last quarter of 2016, according to PayScale, a firm that tracks pay data.

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GLOBAL ECONOMY DATA

World Economic Forum: Inequality, Divisions Are Primary Risks to Global Economy – WSJ

The rising income gap and growing rifts in Western societies that led to the election of Donald Trump and the Brexit vote are the main global risks, according to a report by the World Economic Forum ahead of its annual forum in Davos next week.

Climate change and technological disruption were also listed as important risks in a survey of 750 lawmakers, business leaders and academics carried out by the WEF, the group that organizes the Davos meeting.

Those risks pose a threat to global economic growth, the report said.

From Brexit to Trump, Polarization Heightens Risk, WEF Says – Bloomberg

Rising inequality and social polarization are set to shape world developments for the next decade after contributing to Britain’s decision to leave the European Union and the ballot-box success of U.S. President-elect Donald Trump, the World Economic Forum said.

Climate change was underlined as the third major global trend in the WEF’s annual assessment of global risks, published on Wednesday at an event at Bloomberg LP’s European headquarters in London. It said world leaders must work together to avoid “further hardship and volatility in the coming decade.”

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ENERGY COMPANIES, NOCs, INDUSTRY

Energy’s Drunken-Sailor Legacy Hangs Over Debt Rescue Plans – Bloomberg

Debt-laden energy companies that still don’t have a financial escape plan in place are running out of time and willing lenders even after oil doubled from its February lows.

Crude prices topping $50 a barrel helped to ease pressure on distressed energy companies, allowing at least 27 issuers to sell $16 billion of junk-rated bonds in last year’s final quarter, according to data compiled by Bloomberg. That still leaves about $44.5 billion maturing by the end of 2020, according to Fitch Ratings. A “mountain” of more than $18 billion in credit-line commitments comes due in 2019, said Spencer Cutter at Bloomberg Intelligence.

Kinder Morgan Clears Pipeline Hurdle With Billion-Dollar Pledge – Bloomberg

Kinder Morgan Inc.’s proposal to expand an oil pipeline in western Canada cleared its final major regulatory hurdle, winning environmental approval from British Columbia after it promised to share part of the spoils with the province.

The provincial government has granted the Trans Mountain project an environmental assessment certificate along with 37 conditions, according to a government statement. Kinder Morgan has also agreed to pay the province as much as C$1 billion ($760 million) over 20 years in a revenue-sharing agreement, British Columbia Premier Christy Clark said.

“Every penny of that will go into environmental protection,” Clark, whose Liberal Party will seek re-election in May, told a news conference in Victoria.

Oil Industry Starts Revival as Project Approvals to Double – Bloomberg

The oil industry will shake off the effects of the biggest downturn in a generation this year as they more than double project approvals and increase exploration spending for the first time in three years, according to Wood Mackenzie Ltd.

Companies will green-light more than 20 oil and gas fields for development compared with nine in 2016, the Edinburgh-based industry consultant said in a report Wednesday. Drillers, led by U.S. shale operators, will also increase spending on exploring for new oil and developing existing projects by 3 percent to $450 billion following two years of cuts.

Saudi Arabia to cull billions of dollars of projects

Saudi Arabia is planning to cull billions of dollars of projects as part of its latest cost-cutting measures to narrow a gaping budget deficit and balance the books by 2020.

The government, which has been forced to slash spending because of low oil prices, has awarded a contract to PwC, the consultancy group, to identify between SR50bn and SR75bn ($13bn-$20bn) in savings, say people aware of the matter.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

Saudis Curb Oil to China, Southern Asia as Others Spared – Bloomberg

Saudi Arabia was said to cut February crude sales to China and southern Asian nations while largely sparing countries including Japan and South Korea, as it curbs supply as part of a deal between OPEC and other producers.

Two Southeast Asian refiners received cuts of about 30 percent from the world’s biggest crude exporter, according to two people with knowledge of the matter who asked not to be identified because the information is confidential. Reductions to a buyer in India were about 20 percent, one of the people said.

U.A.E. Says $50 Oil ‘Isn’t Going to Cut It’ for Producers – Bloomberg

Crude oil at $50 a barrel is too low for most producing countries, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.

Prices have climbed almost 20 percent to above $50 a barrel since the Nov. 30 agreement by the Organization of Petroleum Exporting Countries to cut production for the first time in eight years to curb a global glut. OPEC is reducing output along with 11 other producing nations including Russia after a slump in oil prices the past two years eroded revenue.

Crude at $50 a barrel “isn’t going to cut it” for most producers, Mazrouei told an Abu Dhabi energy conference Wednesday. When asked if that level should be a floor, he said: “I will never quote a price because I truly believe we should not target a price.”

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ENERGY RENEWABLES, NUCLEAR

India Solar Prices Set to Drop Amid Competition, Lower Costs – Bloomberg

The price paid for solar power in India at auction is set to fall below last year’s record lows for the South Asia nation, driven by plummeting panel prices, falling interest rates and competition among developers seeking a slice of the country’s renewables market.

Prices could dip lower than the 4.34 rupees (6 cents) a kilowatt-hour offered in auctions held in the state of Rajasthan a year ago, according to at least one developer of solar projects in India.

Uranium Gains 10% as Top Producer Plans Output Cut Amid Glut – Bloomberg

Uranium surged the most in more than three weeks as Kazakhstan said it will reduce production by 10 percent this year after prices slumped in 2016 amid a global inventory glut.

Spot uranium rose $2.25, or 10 percent, to close at $24.25 a pound on Tuesday, the highest level since September, according to data from Ux Consulting Co. Prices have gained 19 percent this year. The announcement from Kazakhstan, the world’s biggest producer, may mark an inflection point for the market, according to Cantor Fitzgerald LP. The cuts could lead to higher prices, according to Ux, a provider of research on the nuclear industry.

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COMMODITIES BASE METALS, MATERIALS

Would-Be Kingmaker Calls Out Iron Giants in Ore Tax Battle – Bloomberg

The world’s biggest mining companies producing iron ore from Australia aren’t paying their fair share in taxes, according to a lawmaker who wants a 20-fold raise in a state levy that’s been unchanged since the 1960s and the era of imperial pounds, shillings and pence.

The proposal has “overwhelming” support and Rio Tinto Group and BHP Billiton Ltd.’s objections don’t stack up, according to Brendon Grylls, Western Australia’s Nationals party leader. Grylls, a farmer and one-time baker turned politician, is championing the drive to raise the lease rental payment, levied on ore from the two companies, to A$5 a metric ton ($3.68) from 25 Australian cents.

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POLLUTION, CLIMATE & ENVIRONMENT

Scientists Map Vast Peat Swamps, a Storehouse of Carbon, in Central Africa – The New York Times

The peatlands, covering an area the size of New York State, contain billions of tons of stored carbon but are vulnerable to warming and development.

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GEOPOLITICS, CRIME, TERRORISM

Trump’s secretary of state pick says China should be barred from South China Sea islands | Reuters

U.S. President-elect Donald Trump’s nominee for secretary of state has set a course for a potentially serious confrontation with Beijing, saying China should be denied access to islands it has built in the contested South China Sea.

In comments expected to enrage Beijing, Rex Tillerson told his confirmation hearing on Wednesday before the U.S. Senate Foreign Relations Committee that China’s building of islands and putting military assets on those islands was “akin to Russia’s taking Crimea” from Ukraine.

Asked whether he supported a more aggressive posture toward China, he said: “We’re going to have to send China a clear signal that, first, the island-building stops and, second, your access to those islands also is not going to be allowed.”

Tillerson sets stage for clash with Beijing over South China Sea

Mr Tillerson said any move by Beijing to dictate access to the waterway would be a threat to the “entire global economy”.

Responding on Thursday to Mr Tillerson’s comments, Lu Kang, spokesman at China’s foreign ministry, said “China has full right to conduct all lawful activities within its own sovereign zone”.

“The South China Sea situation has recently cooled down, and we hope all countries outside the region can respect this consensus” he told reporters.

Asked specifically how China would respond if the US tried to block access to the islands, Mr Lu said he “cannot comment on Mr Tillerson’s personal comments or make a projection on China’s policies . . . we don’t answer hypothetical questions”.

Saudi Cash Can’t Buy Mideast Clout – Bloomberg

The wider challenge for Saudi Arabia is to translate oil wealth into greater regional clout, something the country’s youthful leadership has vowed to do. There were few signs of success last year. The Yemen war grinds on; in Syria, Saudi-backed fighters were driven out of their stronghold in Aleppo; Egypt, kept afloat by Saudi Arabia’s dollars, has sometimes seemed reluctant to fall in line with its foreign policy.

Arms Seized Off Coast of Yemen Appear to Have Been Made in Iran – The New York Times

Photographs of the weapons were analyzed by the Small Arms Survey, which obtained them after an open-records dispute with the Australian military.

Morocco Said to Ban Sale of Burqas, Citing Security Concerns – The New York Times

Although the government did not confirm the ban, media reports said vendors and merchants received notice of the prohibition on the full-body veil.

Netanyahu’s Grip on Power Under Threat as Gift Scandal Grows – Bloomberg

Benjamin Netanyahu has survived many challenges on his way to becoming the second longest-serving prime minister in Israeli history. A deepening criminal investigation now presents a new threat to his grip on power.

“It’s clear that some members of his party are seeing this and beginning their preparations to try to become the next leader,” Gilboa said. “The opposition obviously is trying to capitalize on this moment, pointing to his conflict of interest as minister of communications and accusing him of living the life of an oligarch.”

Russian Warship Hosts Libya’s Haftar as Putin Courts New Ally – Bloomberg

Khalifa Haftar toured Russia’s aircraft carrier anchored off the Libyan coast and held a video call with Defense Minister Sergei Shoigu, the biggest sign yet of growing ties between the Kremlin and the eastern Libyan-based military commander.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Hack the Army: Get cash to attack the U.S. military’s online systems – VICE News

Asking hackers to help find vulnerabilities isn’t exactly a new concept. “Bug bounty” programs are de rigueur for Silicon Valley giants like Facebook, Google, Microsoft, and, most recently, Apple, which use them to find flaws that in-house developers never would. But it is new for the U.S. military, and it’s a major step into the unknown.

Brother and Sister Charged With Hacking Prominent Italians – The New York Times

It could have made an entertaining spy movie, if it wasn’t disturbingly real: The Italian police say a brother and sister for years hacked into the phones and computers of the top tiers of Italian society — from high-ranking government officials, to business leaders to Freemasons and even Vatican prelates.

On Wednesday, the brother and sister, Giulio Occhionero, 45, and Francesca Maria Occhionero, 49, appeared before a judge here. They are accused of illegally accessing classified information, and breaching and intercepting information technology systems and data communications.

The police said the charges described an unprecedented cyberattack on prominent Italian institutions and individuals.

Information gleaned from the breaches was stored on servers in the United States, police officials said, and inquiries continue with the assistance of the F.B.I.’s cyberdivision.

Old Espionage Ruse, With a Modern Twist: Israelis Say Hamas Used Online Seduction – The New York Times

It usually started with a bit of cyberflirting. A direct message was sent through Facebook or another social network from an unknown woman to an Israeli soldier’s smartphone. Then, according to Israeli military officials, it developed into a chat in flawless Hebrew, heavily peppered with millennial slang.

“Good morning (smiley emoji),” one typical chat began.

“What’s up? Do we know each other?” the soldier replied.

Alluring photos soon followed. Only the correspondents were apparently not who they said they were.

Instead, senior Israeli intelligence officials said on Wednesday, they were Hamas operatives who set up fake profiles and trawled social networks, befriending naïve soldiers and enticing them to download applications that effectively turned their cellphones into tracking devices and tools for spying.

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FRONTIER MARKETS

Iceland Forms Coalition Government After Months of Talks – The New York Times

For a country of just 300,000 inhabitants, forming a government in Iceland has been strangely laborious.

But on Wednesday, after more than two months of negotiations among seven political parties, this island finally up its mind — a three-party coalition, no less, whose leadership includes a lawmaker who used to play with a punk rock band called Dr. Spock.

The Tiny Gulf Country With a $335 Billion Global Empire

The country—with a population smaller than Houston—has amassed $335 billion in assets around the globe, making its sovereign wealth fund the 14th largest in the world, according to the Sovereign Wealth Fund Institute.

17f11-img-qatar-portfolio

Venezuela’s Awful Economy Got Even Worse in 2016 – Bloomberg

Venezuelans have to navigate a labyrinth of lines to buy staples like sugar or aspirin. They’ve gotten used to finding that the store shelves are empty, a frustration that sometimes boils over into looting. So they don’t really need economic data to tell them that 2016 was a terrible year.

Still, when and if the numbers do come in, they’ll likely confirm a collapse that’s almost unprecedented outside wartime. The government has long since halted regular publication of GDP figures, maintaining radio silence since February. But the International Monetary Fund’s estimate, of a 10 percent contraction, would make Venezuela the world’s worst economy last year — and that’s toward the optimistic end of the spectrum. Private economists put the drop at as much as 15 percent.

“One could say this is a wartime economy,” said Jose Manuel Puente, an economist at the Institute of Advanced Studies in Administration in Caracas. “But this year Venezuela’s numbers are worse than economies at war.”

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EMERGING MARKETS

India’s Economy Faces a Bumpy Road to Recovery – Bloomberg

India’s economy is set for a choppy recovery from the world’s most sweeping currency policy change in decades.

Inflation continued to slow in December as the cash ban squelched demand while a volatile factory output gauge rose in November, according to Bloomberg surveys before data due at 5:30 p.m. in New Delhi on Thursday. Companies are bracing for lower sales and employment and bond-market swings are at the highest level since 2013.

In Surprise Rate Cut, Brazil Signals New Pace of Easing Ahead – Bloomberg

Brazil slashed its benchmark interest rate in an unexpected move, as policy makers ratcheted up their efforts to jumpstart the country’s stagnant economy.

The central bank board, led by President Ilan Goldfajn, unanimously voted on Wednesday to lower the benchmark Selic rate by three quarters of a point to 13 percent — a move that was predicted by just four of 48 analysts in a Bloomberg survey. Most of them expected a 50-basis-point cut.

Mexican Drivers Flood to California for ‘Gasolinazo’ Relief – Bloomberg

Mexico’s fuel market liberalization has done something rarely seen before: make California’s pump prices look cheap.

Drivers are flooding across the border to southern California to fill up on gasoline, after protesters blocking distribution centers near the Baja California capital of Mexicali caused stations to run dry. Antunez’s Shell gas station in Calexico is just five blocks away from the Mexican border and rarely has business been as busy as now. Mexicali drivers wait four to five hours to cross into the U.S. just to fill their fuel tanks and then wait two more hours to cross back into Mexico.

“Right now, it’s crazy,” Rodrigo Marquez, 30, a station employee, said in a telephone interview. “We are having a lot, lot of people, everybody is fueling up their tanks.”

Mexico hits back at Trump after carmaker comments knock peso

Mexican President Enrique Peña Nieto blasted Donald Trump’s pressuring of US companies not to manufacture south of the border hours after the president-elect on Wednesday sent the peso tumbling to an all-time low by predicting “big, big factories are going to be built in this country as opposed to another country”.

“We reject any attempt to influence corporate investment decisions on the basis of fear or threats,” Mr Peña Nieto told an annual gathering of Mexico’s diplomatic corps.

Modi’s Setback on Black Money – Bloomberg View

India’s controversial decision to ban 500- and 1,000-rupee notes has backfired. The idea was to root out “black money” — the profits of political corruption, tax evasion and ordinary crime. But efforts to get around the ban have been so effective that those problems may now be harder to solve than before.

Prime Minister Narendra Modi deserves credit for confronting the issue so boldly — few of his predecessors even tried — but he needs to rethink his approach.

Since November, an estimated 97 percent of the banned notes have been deposited in banks or exchanged for other denominations. Either Indians were hoarding far less illicit cash than the government believed or they found new ways to launder much of the money. There’s plenty of evidence to support the second theory: The money launderers rose to the challenge.

Foreign Minister Threatens Amazon Over Indian Flag Doormats – Bloomberg

India’s foreign minister has lashed out at Amazon.com Inc. on Twitter for selling doormats bearing an image of the Indian flag, prompting the online retail giant to remove the offending item amid a storm of controversy.

Sushma Swaraj threatened to withhold visas for Amazon employees, and rescind those already granted, if the company did not remove the Indian flag doormats from its website.

Rising price of tortillas piles pressure on Mexico

The price of tortillas, Mexico’s staple food, flummoxed Enrique Peña Nieto when he was asked by an interviewer in the run-up to the 2012 elections and did not know. Now the president’s most pressing task is to make sure the cost of tortillas and other basic goods does not go through the roof.

Inflation, fanned by the peso’s apparently unstoppable slide against the dollar, had already accelerated from historic lows to a two-year high even before the government ushered in the new year with a 20 per cent increase in fuel prices. With fears that Donald Trump’s protectionist agenda will wreak havoc on Mexico’s economy, the gloom is deepening. If the cost of mainstays of the Mexican diet such as tortillas, eggs, milk and chicken starts to soar, an already unpopular government can expect snowballing protests in a country where nearly half the population lives in poverty.

Temer and Brazilians put faith in economic revival

A series of horrific prison riots have got 2017 off to a miserable start for Michel Temer, the Brazilian president installed by congress last year in the hope that he would set the country’s collapsing economy back on a path to growth.

His government’s bungled response to the riots has done nothing to repair Mr Temer’s falling popularity, as the expected economic rebound fails to materialise and jobs continue to be lost at an alarming rate. The threat of a security crisis has increased the pressure on his administration as it rushes to push unpopular pro-growth reforms through a notoriously obstructive congress.

So far, however, the government has scored a string of successes in its legislative programme. Analysts hope the absence of any credible challenger will help Mr Temer push ahead with more difficult reforms despite his lack of a popular mandate.

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BREXIT, EUROPE DIVERGENCE WATCH

Pound Looks Past Economic Resilience as Brexit Only Game in Town – Bloomberg

The pound fell to the weakest in more than two months as a larger-than-forecast increase in industrial output failed to soothe investors worried about Brexit.

“Investors in the U.K. and overseas appear to be writing off good news on the basis that bad news lies ahead,” said Neil Jones, the head of hedge-fund sales at Mizuho Bank Ltd. in London. “If a market can’t go up on good news, it must go down. Today is no exception.”

Brexitology: Divining Britain’s Plan to Leave the EU – WSJ

In the absence of a detailed blueprint for Brexit, investors and analysts are paying close attention to the public comments of Prime Minister Theresa May and her aides. A perceived shift—or even a lack of one—can send markets spiraling.

Carney Warns of Brexit Danger to EU If Transition Isn’t Agreed – Bloomberg

Mark Carney said the European Union faces a greater financial stability danger than Britain if the country leaves the bloc abruptly, his starkest warning yet of the need for both sides to agree on a transition deal for Brexit.

U.K. Bankers Make Fresh Appeal to May for Special Brexit Deal – Bloomberg

In a 17-point list of industry priorities for the upcoming negotiations released on Thursday, TheCityUK lobby group made no mention of so-called passporting, which currently allows banks with bases in London to service markets throughout the EU. Instead, the group is pushing for a new deal that offers access and additional time to adapt.

Draghi Calls for ECB Oversight of U.K. Clearing After Brexit – Bloomberg

Mario Draghi said the European Central Bank should maintain oversight of U.K.’s vital clearing business even after Britain leaves the European Union, touching on an issue that became a battleground after the June referendum.

The supervision of U.K. clearinghouses has been thrown into question since the Brexit vote, with both Germany and France seeking to chip away at London’s dominance in the business. Britain’s exit could lead to a loss of ECB oversight of such institutions, ECB President Draghi said in a letter to lawmaker Pervenche Beres.

EU Drug Oversight May Become ‘Mission Impossible’ After Brexit – Bloomberg

Keeping up with the demands of overseeing drug safety across Europe was already difficult. Brexit could make it impossible.

The European Medicines Agency, based in London, is likely to be relocated after the U.K. voted to leave the European Union, spelling uncertainty for its almost 900 employees. Even as the workload swells, some staff have left and the regulator faces the possibility of more departures, said Guido Rasi, its executive director.

“That discrepancy is leading to mission impossible if it continues,” Rasi said in an interview at the agency’s headquarters at Canary Wharf. “The major challenge is expertise, which is made more severe by the possibility of losing what we already have with Brexit.”

U.K. Mulls EU Migration Cap, Charge for Hiring Skilled Labor – Bloomberg

The U.K. could set an annual limit on migrants entering the country from the European Union and a new fee for companies recruiting from the bloc, the government minister responsible for immigration suggested, outlining options for a post-Brexit visa regime.

One possibility would be to require businesses to pay an “immigration skills charge” of about 1,000 pounds ($1,200) for every skilled European worker they bring into the U.K., Home Office Minister Robert Goodwill told lawmakers in London on Wednesday.

U.K.’s May Faces Call to Reveal Investments Put Into Blind Trust – Bloomberg

U.K. Prime Minister Theresa May is facing calls to disclose who manages her financial interests after revealing she had placed her personal investments into a blind trust.

The premier uses the “well-established mechanism” of a blind trust to manage her shareholdings in order to avoid any conflict of interests, May’s office in London said in a statement Tuesday.

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EUROPE

Malta Takes the Reins of a Frayed and Anxious European Union – The New York Times

It is a ritual of the European Union, rich in symbolism even if many Europeans are not paying close attention: Every six months, the presidency of the 28-nation bloc rotates among its member countries, giving small nations a chance to help set an agenda that is usually dominated by larger countries like Germany and France.

This time, it is Malta’s turn, and the tiny country, made up of an archipelago of islands in the Mediterranean, is trying to meet the challenge with a sense of urgency.

“There is a huge disconnect right now between political classes around the world and the lives of normal people,” Joseph Muscat, Malta’s prime minister, said at a news conference on Wednesday at the Auberge de Castille, an 18th-century Baroque building in Valletta, the capital.

If anything, his prognosis may be an understatement.

Merkel Bolstered by Refugee Decline Ahead of Election Campaign – Bloomberg

Germany’s influx of asylum seekers fell by about two thirds in 2016, handing Chancellor Angela Merkel an election-year argument against critics of her open-borders policy.

An estimated 280,000 refugees entered Germany last year, compared with 890,000 in 2015, Interior Minister Thomas de Maiziere told reporters on Wednesday. After a large influx during the first three months, the flow slowed to fewer than 17,000 in December, according to government data. More than half came from Syria, Afghanistan or Iraq.

German Companies Take a Relaxed View of Potential Brexit Impact – Bloomberg

When it comes to Brexit, German companies appear to be relaxed for now.

More than 90 percent of firms in a survey by the the Cologne Institute for Economic Research don’t see “strong effects” on them from the U.K.’s decision to leave the European Union.

“They are relaxed because they don’t see a large impact on their business,” said Juergen Matthes, head of international economic research at the institute.

Soros Group to Stay in Hungary Amid Trump-Inspired Crackdown – Bloomberg

“The Open Society Foundations will continue to work in Hungary despite government opposition to our mission of fairer, accountable societies,”’ the organization’s president, Christopher Stone, said in an e-mail to Bloomberg News on Wednesday. “In Hungary and around the world we are more focused than ever on working with local groups to strengthen democratic practice, rights, and justice.”

TOP

CHINA

China, Fanning Patriotism, Adds 6 Years to War with Japan in History Books – The New York Times

For generations, the “Eight-Year War of Resistance Against Japanese Aggression” has been ingrained in the minds of Chinese schoolchildren. Revolutionary hymns evoked the bloody years, from 1937 to 1945, of what is known outside China as the Second Sino-Japanese War. Chinese documentaries denounced Japan’s “eight years of belligerence.”

Now the war is getting a new name, and an extended time frame.

In a move aimed at stirring up nationalism and support for the ruling Communist Party, President Xi Jinping’s government has ordered educators to rewrite textbooks to describe the conflict as the “14-Year War of Resistance Against Japanese Aggression,” lasting from 1931 to 1945, the authorities said in a statement on Wednesday.

Under the decision, the Second Sino-Japanese War will be described as having started in the fall of 1931, when the Imperial Japanese Army invaded Manchuria. Previously, the war’s beginning had been traced to the Marco Polo Bridge incident, a skirmish in 1937 between Japanese forces and Chinese troops along a rail line southwest of Beijing that represented the beginning of full-scale conflict.

The Chinese Ministry of Education said the decision to add six years to the war sought to promote patriotic education and to highlight the Communist Party’s “core role” in resisting Japanese fascism in the prelude to World War II. It also seemed intended to rally support for the party among young people as Mr. Xi vigorously promotes Communist history and thought in schools.

China vehicle sales to grow 5 percent in 2017 as tax cut reduced | Reuters

China’s vehicle sales jumped 13.7 percent in 2016, the fastest pace in three years, thanks to a tax cut on small-engine cars but growth is expected to slow this year as the incentive is reduced.

Need ‘Love Insurance’? China Is Your Place – WSJ

Unconventional policies in China reflect how the world’s largest population of smartphone users also has few fixed notions about insurance. The booming niche of selling cheap insurance for short-term and sometimes improbable risks could generate $32 billion in annual revenue within four years, forecasts New York-based consulting firm Oliver Wyman.

More than one insurer has offered compensation for clouds or smog during China’s mid-autumn festival, when a glimpse at the moon is considered good luck. Firms tap data from cellphones to individually tailor and price the products, for instance a customer’s location on deals tied to weather.

At $14, “love insurance” from Anxin Property & Casualty Co. would earn a couple about $288 or a small diamond if they marry three years after buying a policy.

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ASIA PACIFIC

Hong Kong Billionaire Li’s Force Field May Be Fading – Bloomberg

Billionaire Li Ka-shing is so powerful, Hong Kongers quip, he emanates a force field shielding the city from dangerous typhoons that could harm his businesses. Yet Li’s magic is showing signs of wearing off after his wealth shrank by $1.3 billion in 2016 amid headwinds from Europe — a trend that’s likely to persist this year.

After Britain’s unexpected decision to leave the European Union drove down shares of Li’s companies last year, Hong Kong’s wealthiest tycoon is preparing for more uncertainty as elections loom in the Netherlands, France and Germany that could reshape the political landscape in the region in 2017.

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TRUMP WORLD

Trump’s News Conference Bravado Foreshadows Tone for His Term – Bloomberg

Donald Trump’s first and only press conference as president-elect was a display of the chaos and bravado that have defined his political career.

Reporters crammed in the Trump Tower lobby were eager for a chance to pepper the next commander in chief about explosive claims that Russia gathered compromising intelligence against him and hacked his opponent’s e-mails.

But it was Trump who set the tone, angrily denouncing reporters for propagating what he called “fake news” and trashing the intelligence community for not doing more to prevent the release of unsubstantiated, but salacious, allegations.

Trump to Step Down From Business But Won’t Divest Ownership – Bloomberg

President-elect Donald Trump will leave his positions at the various companies of the Trump Organization, but he will not divest his ownership, raising questions about whether he has adequately addressed conflict-of-interest concerns.

“I could actually run my business and run government at the same time,” Trump said at a press conference Wednesday, adding that he recently turned down an offer of $2 billion to do a deal in Dubai. “I don’t like the way that looks, but I would be able to do that if I wanted to.”

Trump’s businesses, which include more than 500 companies with $3.6 billion in assets and ties to more than 20 countries, will be placed into a trust. The trust will be overseen by an independent ethics officer and managed by Trump’s sons Eric and Don Jr., and chief financial officer Allen Weisselberg, who will make decisions without consulting the president. The Trump Organization will terminate all pending partnerships, and won’t enter into new international business arrangements, such as licensing deals for new hotels, while Trump remains in the White House.

“That doesn’t solve any of the problems,” said Richard Painter, who served as a top White House ethics lawyer to President George W. Bush and is now a professor at the University of Minnesota Law School. “If he owns it, he has conflicts of interest.”

Donald Trump to Place Business Holdings in a Trust Run by Adult Sons – WSJ

President-elect Donald Trump said he would put his assets into a trust and relinquish control of his business to his two adult sons in an effort to avoid conflicts of interest during his presidency.

Mr. Trump will sever management ties to the Trump Organization and play no role in its operations under the terms of the trust. While he is in office, his real-estate empire will abide by “severe restrictions on new deals,” an attorney retained by the president-elect said. If foreign governments make payments to his hotels—including a new one near the White House—Mr. Trump plans to donate all profits to the U.S. treasury, said the attorney, Sheri Dillon.

The announcement drew sharp criticism from ethics experts who said the steps laid out Wednesday are inadequate to create a clean separation between Mr. Trump’s business interests and his presidency.

Another Goldman Executive Is Said to Be Going to Trump Administration – The New York Times

Dina H. Powell, a former member of George W. Bush’s staff who runs many of Goldman’s philanthropic efforts, is said to be taking a new job as White House adviser.

Trump suggests states that voted for him will get special attention – The Washington Post

President-elect Donald Trump twice suggested at his news conference that states that voted for him overwhelmingly during the election would get special attention from his White House, especially on the issue of jobs and trade.

Referring to his victory in November, Trump said that many states “did get it right” by voting for him and those states would have better jobs, security and veterans services.

“And we focused very hard in those states, and they really reciprocated,” Trump said. “And those states are going to have a lot of jobs, and they’re going to have a lot of security. They’re going to have a lot of good news for their veterans.”

Later, he warned companies against moving jobs to Mexico or other countries from “places that I won.”

Ivanka Trump Handing Reins to Brand President as She Steps Down – Bloomberg

Ivanka Trump, who is stepping down from her clothing and accessories brand, has tasked President Abigail Klem with managing the company’s strategy and day-to-day operations.

The U.S. president-elect’s daughter plans to take a leave of absence and help her three young children adapt to a new home and schools, she said in a message on Facebook. As Donald Trump heads to the Oval Office, she is moving to Washington, where husband Jared Kushner will work as a senior White House adviser.

She also is taking leave from the Trump Organization, where her two brothers will remain and manage the business.

Trump’s Transportation Pick Backs ‘Bold New’ Rebuilding Plan – Bloomberg

While she stopped short of specifics such as how large the building program would be, she made clear she endorses Trump’s vision of relying on private money to pay for it so it won’t increase the deficit. Such so-called public-private partnerships typically rely on tolls or fees for new roadways, bridges and tunnels, generating revenue to allow investors to make a profit. Investors may also receive a tax break.

“As we work together to develop the details of President Trump’s infrastructure plan, it is important to note the significant difference between traditional program funding and other innovative financing tools, such as public-private partnerships,” she said. “In order to take full advantage of the estimated trillions in capital that equity firms, pension funds and endowments can invest, these partnerships must be incentivized with a bold new vision.”

Trump’s Indonesia Partner Heads to Inauguration to Bolster Deals – Bloomberg

Indonesian tycoon Hary Tanoesoedibjo will fly to New York next week for meetings with Trump’s sons on resort projects in the Southeast Asian nation. Days later he will watch in Washington DC as Trump is sworn in as U.S. president.

While their association began long before Trump ran for office, Tanoesoedibjo’s itinerary, with its mix of corporate and political conversations, illustrates the tricky task for Trump in divorcing himself entirely from his sprawling international business empire — with interests in about 20 countries — once he’s in office.

A Financial Mystery Emerges. Its Name? Steven T. Mnuchin Inc. – The New York Times

Steven T. Mnuchin plans to divest himself of his financial interests in 43 companies, hedge funds and investment funds and resign from numerous board positions as he tries to disentangle himself from potential conflicts of interest before his confirmation as the next Treasury secretary.

But Mr. Mnuchin, a former hedge fund manager and Goldman Sachs executive, intends to retain control of one of his oldest companies — one named after himself.

In an ethics statement and a 42-page financial disclosure form filed on Wednesday with the Office of Government Ethics, Mr. Mnuchin said without elaboration that he would retain his “unpaid position” as president of Steven T. Mnuchin Inc., a company he said is used to manage some of his investments.

The financial disclosure statement did not say what investments the company manages, nor did it ascribe a value to any of those investments. But Mr. Mnuchin said he would “not participate personally and substantially in any particular matter” that could have a “direct and predictable effect on the financial interests” of the little-known entity.

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FAKE NEWS, RUSSIA HACKS

BuzzFeed Posts Unverified Claims on Trump, Igniting a Debate – The New York Times

A 35-page dossier on ties between Russia and Donald Trump surfaced months ago, but other news outlets, including The Times, discounted it as unproven.

Former MI-6 spy known to U.S. agencies is author of reports on Trump in Russia | Reuters

Christopher Steele, who wrote reports on compromising material Russian operatives allegedly had collected on U.S. President-elect Donald Trump, is a former officer in Britain’s Secret Intelligence Service, according to people familiar with his career.

Trump says he has ‘nothing to do with Russia.’ The past 30 years show otherwise. – The Washington Post

“Russians make up a pretty disproportionate cross-section of a lot of our assets,” his son once said.

These are Donald Trump’s ties to Russia – CNNPolitics.com

He has had dealings in the country. We took a look at a few of them.

Intelligence Dossier Puts Longtime Trump Fixer in Spotlight – WSJ

Michael D. Cohen, the attorney named in explosive but unsubstantiated allegations about secret links among the Trump camp, Russian operatives and cyber hackers, has long been a troubleshooter for President-elect Donald Trump.

National Intelligence Director James Clapper Says Agencies Didn’t Leak Trump Dossier – WSJ

Mr. Clapper said in a statement that he expressed his dismay to Mr. Trump over leaks about the briefing, and said the release of the dossier, a private report compiled at the behest of Mr. Trump’s political opponents, was not the fault of the U.S. intelligence community, which he said only became aware of it after it had been circulating among the media, members of Congress and congressional aides.

A Digital Fact-Checker Fights Fake News – Bloomberg

For seven years, Storyful, a social media researcher in Dublin, has consulted for news outlets such as ABC and the Wall Street Journal, using a small team of reporters to try to keep those operations from embarrassing themselves online. Mostly, that’s meant fact-checking viral media in real time, making sure a video floating around Twitter really shows, say, the latest barrel bomb explosion in Aleppo—rather than a roadside bomb in Homs—before it goes into a client’s breaking-news post.

Since Election Day, the team’s strategy has become more complicated. “Fake news has dominated 90 percent of our conversations,” says Storyful Chief Executive Officer Rahul Chopra. While Facebook and Twitter denied, then grudgingly acknowledged, the role they played in spreading newsy-looking lies during the crucial final weeks of the presidential campaign, Chopra’s staff focused on ways to debunk false items.

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ELECTORAL POLITICS

Trump Backs ‘Simultaneous’ Obamacare Repeal and Replacement – Bloomberg

President-elect Donald Trump said Obamacare should be repealed and replaced “essentially simultaneously,” weighing in on a political debate among Republican lawmakers who are grappling with how to tackle the effort.

“It’ll be repeal and replace. It’ll be essentially simultaneously,” Trump said Wednesday in his first press conference since the election.

Senate Takes Major Step Toward Repealing Health Care Law – The New York Times

By a 51-48 vote, the Senate approved a budget blueprint Thursday that would allow Republicans to gut the law without the threat of a filibuster.

GOP lawmaker: I still care about Trump’s tax returns | TheHill

Rep. Mark Sanford (R-S.C.) on Wednesday said it would be a “grave mistake” for President-elect Donald Trump to think that only reporters care about whether he makes his tax returns public.

“I care — or more aptly said, I still care,” Sanford said in a statement. “I cared five months ago when I wrote an op-ed published in The New York Times on this very issue. And I care now because the consequences of not doing so will echo into future campaigns.”

During his press conference Wednesday, Trump said that “the only ones who care about my tax returns are reporters.”

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DEMOGRAPHICS, INEQUALITY & POPULISM

Baltimore Will Steer Some Drug Offenders to Treatment—Not Jail – WSJ

Amid the opioid-abuse crisis, Baltimore is joining a growing number of U.S. cities where police can divert low-level drug offenders to treatment and services, rather than putting them behind bars.

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SCANDALS, LAWSUITS, FINES, REGULATORY

VW Officials Destroyed Files, E-Mails as Diesel Scheme Unraveled – Bloomberg

Volkswagen AG’s nearly decade-old plot to cheat U.S. emissions tests — all while marketing its diesel cars as environmentally friendly — was quickly unraveling by 2015. A campaign to mislead regulators was failing so badly that top executives signed off on a script for employees to use when questioned.

It didn’t work. The next day, Aug. 19, 2015, an employee went off script and told regulators for the first time that its diesel cars were designed to behave differently during emissions tests, according to court documents. In the home office in Germany, some executives and engineers began deleting documents related to U.S. emissions and the company’s head of engine development told an assistant to dispose of a hard drive containing e-mails from him and other supervisors.

U.S. Indicts Six Volkswagen Executives in Emissions Scandal – WSJ

Six Volkswagen current and former executives were indicted by a grand jury on Wednesday as the German auto maker formally admitted to criminal wrongdoing in its diesel-emissions cheating case.

Volkswagen faces reforms, oversight for three years under U.S. settlement | Reuters

Volkswagen AG, as part of a $4.3 billion settlement with U.S. regulators, on Wednesday agreed to sweeping reforms, new audits and oversight by an independent monitor for three years to resolve diesel emissions cheating investigations.

Falcon Bank’s Former Singapore Manager Sent to Prison in 1MDB Probe – WSJ

A Singapore court sentenced a former branch manager of Switzerland’s Falcon Private Bank to prison for crimes connected to the alleged multibillion-dollar misappropriation at a Malaysian state investment fund.

Samsung Heir Questioned as Bribery Suspect in South Korean Probe – WSJ

Lee Jae-yong is being questioned by special prosecutors, drawing the country’s biggest business group deeper into an unfolding political scandal that has led to the impeachment of the president.

Ex-Barclays Banker Leaked Tips for Job With Plumber; Gets Jail – Bloomberg

A former Barclays Plc director said he had enough after 32 years on Wall Street and was hoping to land a less stressful job at a friend’s Long Island plumbing company. So he started passing tips about pending mergers to him.

Instead of landing a cushier job, Steven McClatchey will spend five months in prison, as a judge rejected his request for home detention. Prosecutors sought a prison term of 10 to 16 months.

A Scandal at Korea’s Retirement Giant – Bloomberg

With 546 trillion won ($456.5 billion) in assets, South Korea’s public National Pension Service is the world’s third-largest pension fund, behind Japan’s and Norway’s. It’s also become a part of the widening scandal surrounding impeached President Park Geun-hye.

TOP

SILICON VALLEY, UNICORNS, STARTUPS, VC

Food Delivery Startup Munchery Cuts Staff, Parts With Founders – Bloomberg

Food delivery startup Munchery cut about 30 employees this week. The company’s founders Tri Tran, the former chief executive officer, and Conrad Chu, the company’s chief technical officer, will leave the startup at the end of the month, CEO James Beriker said.

Silicon Valley’s rank and file prepare to fight Trump – Recode

“Do not cede an inch of your power to these people.”

VCs Raise Most Since Dot-Com Era But Are Slow to Spend It – Bloomberg

Venture capital funds in the U.S. received the most money since the heady dot-com days, but they’re moving more cautiously as their investments are slow to realize returns.

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CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

The Next Big Thing in Smartphones? The Software – WSJ

Nearly a decade after taking off, the smartphone is at a turning point as advances in hardware become incremental, and handset sales stall. But, booming development of software and services on the phone offers hope.

Fitbit Off to Slow Start in 2017 as Devices Pile Up, Report Says – Bloomberg

The maker of wearable fitness trackers halted production in mid-December because the devices were piling up at retailers and suppliers amid disappointing sales, according to a report by the firm published Tuesday. Demand so far this year is “characterized as weak,” Cleveland Research said, suggesting analysts’ estimates for 2016 fourth-quarter earnings may be too high.

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Amazon to Launch Credit Card for Prime Members – WSJ

Amazon is trying to ring up more sales with a new credit card aimed at its most loyal customers. The card for Prime customers offers 5% back on all purchases made on its site.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Facebook, Nodding to Its Role in Media, Starts a Journalism Project – The New York Times

The effort calls for, among other things, the company to forge deeper ties with news organizations by collaborating on publishing tools and features before they are released.

Facebook to Push for Better Journalism – WSJ

Facebook said it will advocate for what it determines is good journalism and forge closer ties with news organizations, a sign of it taking a more active role in managing the content on its site.

European Broadcasters Hook Up in Web Push as Viewers Move Online – Bloomberg

Three European broadcasting giants are joining forces to accelerate a push into online video, seeking scale as global internet services such as YouTube pull audiences and advertisers to the web.

TOP

AUTOS, ELECTRIC, SELF-DRIVING

China’s anti-Teslas: cheap models drive electric car boom | Reuters

More electric cars are sold in China than in the rest of the world combined, but are mainly locally-branded models that are cheaper and have a shorter range than those offered by foreign automakers such as Tesla and Nissan.

Honda Pans U.S. Auto Industry Reliance on Fleet, Long-Term Loans – Bloomberg

Carmakers would’ve sold about 1.5 million fewer vehicles last year if they hadn’t turned increasingly to long-term loans and unprofitable fleet sales that will hurt customers, Honda Motor Co.’s U.S. sales chief said.

Automakers relying on heavily-discounted fleet sales to governments and car-rental companies for as much as 40 percent of their volume are undercutting the resale value of vehicles that individuals pay for at full price, Honda Executive Vice President John Mendel said Wednesday. Almost all of Honda’s 1.6 million deliveries were to retail customers.

“I’m not saying there’s not profitable fleet sales, but profitable for whom?’’ Mendel said at Automotive News World Congress, a conference in Detroit. “It’s certainly not for the customer.’’

U.S. Sets Up an Advisory Panel on Self-Driving Cars – WSJ

The Obama administration is moving in its waning days in office to set up closer coordination between companies developing autonomous-vehicle technology and regulators who will set rules for how self-driving cars and drones will operate on public roads and airways.

Big Is Beautiful on China’s Roads, Where SUVs are Edging Out Sedans – Bloomberg

Chinese consumers are expected to buy more SUVs and minivans than sedans this year for the first time, according to projections from the China Passenger Car Association, as the combination of sophisticated vehicles, rising incomes, lower oil prices and policies allowing more children triggers a fundamental shift in the world’s biggest market. SUV and minivan sales may grow by double-digit percentages this year, while sedan sales may decline by 4.7 percent, according to a Bloomberg survey of three analysts.

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AIRLINES, SHIPPERS, RAIL, TRANSPORTS

Boeing Jumbo-Jet Era Ending in U.S. as United Retires 747 Fleet – Bloomberg

United Airlines plans to fly its last Boeing Co. 747 jumbo jet late this year, retiring its largest airplanes a year ahead of schedule as the iconic aircraft glides into the sunset.

The decision marks the end of an era for U.S. airlines, which have relied on the humpbacked 747 to bring jet travel to a mass consumer market since the plane debuted in 1970. United flew its first jumbo between California and Hawaii that year.

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HEALTHCARE, PHARMA, BIOTECH

Trump Attacks Drugmakers on Pricing – WSJ

Donald Trump attacked the pharmaceutical industry on Wednesday in his first press conference as president-elect, accusing drugmakers of “getting away with murder” and pledging to “save billions of dollars” by changing how the U.S. purchases drugs.

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INVESTING, TRADING, PERSONAL FINANCE

Warren Buffett in New HBO Documentary: ‘I’m Getting Down to Salvage Value’ – WSJ

“Becoming Warren Buffett,” which airs Jan. 30, recounts the oft-told story of the legendary investor and philanthropist, mostly in his own words. The movie focuses on Mr. Buffett’s family relationships, particularly with his first wife and his father, and the personal sacrifices he made while building his business empire.

lose Buffett watchers will find little to learn. Biographies and articles have retold Mr. Buffett’s life story in detail. And the film doesn’t devote much time to Mr. Buffett’s investment decisions as chairman and chief executive of Berkshire Hathaway Inc., one of the largest companies in the U.S.

But the film introduces watchers who are unfamiliar with the “Oracle of Omaha” to Mr. Buffett and many members of his inner circle, including his three children, Berkshire Vice Chairman Charles Munger and philanthropists Bill and Melinda Gates. Director Peter Kunhardt previously made films about activist Gloria Steinem and former U.S. President Richard Nixon, among others.

The movie weaves together home videos and photos, news footage, dramatic re-enactments and animation. Interviews with Mr. Buffett in his office and a talk given at an Omaha high school provide most of the narration.

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ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

Alphabet Says It Shut Down Titan Drone Internet Project – Bloomberg

Alphabet canceled Titan because of economic and technical challenges. Project Loon, another X project to beam internet from high-altitude balloons, is still going. So is Project Wing, an effort to use drones for deliveries, rather than internet service.

“By comparison, at this stage the economics and technical feasibility of Project Loon present a much more promising way to connect rural and remote parts of the world,” the X spokeswoman said on Wednesday. “Many people from the Titan team are now using their expertise as part of other high flying projects at X, including Loon and Project Wing.”

Computer Chips Evolve to Keep Up With Deep Learning – WSJ

Companies that make computer chips are struggling with some of the toughest times in the industry’s history, thanks to slowing demand for certain devices and diminishing performance gains from making smaller circuitry.

Yet the pressures are spurring a renaissance of semiconductor innovation, along with a growing band of startups aiming to exploit it, industry executives say.

Big and small companies in the $335 billion global semiconductor indu