Macro Links Dec 26th – “An Act of Political Theater”
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- FBI SMEARS, MUELLER PROBE, DEUTSCHE BANK
- TAX REFORM
- NORTH KOREA
- SAUDI ARABIA
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- USA ECONOMY DATA, CITIES AND STATES
- GLOBAL ECONOMY DATA
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY COMPANIES, NOCs, INDUSTRY
- ENERGY RENEWABLES, NUCLEAR
- POLLUTION, CLIMATE & ENVIRONMENT
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- TRUMP WORLD
- ELECTORAL POLITICS
- SCIENCE, NATURE, PSYCHOLOGY
Bitcoin plunged by 30 percent to below $12,000 on Friday as investors dumped the cryptocurrency after its sharp rise to a peak close to $20,000 prompted warnings by experts of a bubble.
Many skeptics of the virtual currency, which operates with no government or company in charge, have predicted that it was in bubble territory and due for a collapse. Still, the drop to around $12,000 a Bitcoin from around $17,500 was enough to set off a panic among buyers, even while stock market investors remained calm and much of the world, unaware that Bitcoin exists, was oblivious to the uproar.
Michael Novogratz, the former macro manager who’s turned into one of the biggest champions of bitcoin, shelved plans to start a cryptocurrency hedge fund and predicted that the digital money may extend its plunge to $8,000.
Israeli authorities became the latest national regulators to crack down on cryptocurrencies, announcing on Monday they would bar companies trading in bitcoin from operating on the Tel Aviv stock exchange.
Faucette backed his argument with this chart of online retailers who accept bitcoin, titled “Virtually no acceptance, and shrinking.”
While regulators don’t oversee primary trading in bitcoin, the Commodity Futures Trading Commission has sounded an alarm over leveraged trading on unregulated exchanges, and the Securities and Exchange Commission is cracking down on initial coin offerings.
It is not hard to see what has sparked the bit-curiosity in Japan, or why some observers have decided that much of bitcoin’s 1,400 per cent rise in 2017 has been driven by “Mrs Watanabe”, the often misleading shorthand for the holder of Japan’s family purse-strings and her, or his, risk-reward appetite.
“I think it is perfectly asinine to even pause to think about them,” Munger said. “It’s bad people, crazy bubble, bad idea, luring people into the concept of easy wealth without much insight or work. That’s the last thing on Earth you should think about … There’s just a whole lot of things that aren’t going to work for you. Figure out what they are and avoid them like the plague. And one of them is bitcoin. … It is total insanity.”
FBI SMEARS, MUELLER PROBE, DEUTSCHE BANK
Current and former F.B.I. officials say Mr. Trump’s criticisms, and those of normally supportive Republican members of Congress, have damaged morale in some quarters of the bureau. Senior agents have expressed fear that if their names appear in the news media, they will be singled out for attack by politicians.
McCabe won’t become eligible for his full pension until early March. People close to him say he plans to retire as soon as he hits that mark. “He’s got about 90 days, and some of that will be holiday time. He can make it,’’ one said.
The partisan atmosphere is a sharp departure from the near-universal support that greeted Mueller’s selection as special counsel in May — and threatens to shadow his investigation’s eventual findings. Trump, while vowing to cooperate with the special counsel, has also encouraged attacks on Mueller’s credibility, tweeting that the investigation is “the greatest Witch Hunt in U.S. political history.”
“You all just got a lot richer,” Trump said Friday at a dinner at Mar-a-Lago, two friends at a table near the president told CBS News.
The new law could change the financial consequences of major life decisions for millions of Americans, such as who you work for, whether you move or re-model your home, how you get to work, and even whether you get married or divorced. If you make a substantial amount of money, the right decisions could save thousands of dollars.
Economists on Wall Street are revising up their estimates of U.S. economic growth over the coming two years due to Washington’s embrace of tax cuts and government spending increases. Another impact of Washington’s fiscal stance will be larger budget deficits in future years, which could constrain the government’s ability to respond to future downturns or crises.
While Americans are anxiously awaiting full details of the tax bill now being finalized in Congress, German economists are warning that the changes sought by President Donald Trump mean that significant amounts of new investment and jobs will shift from Europe to the United States.
The tax overhaul is expected to create winners and losers among housing markets across the U.S., dealing a blow to high-cost coastal regions but potentially fueling demand in places in the middle of the country.
For New York developer Steven Witkoff, the tax overhaul signed today by President Donald Trump will have an immediate effect: he’s plowing ahead with his plan to develop the stalled Fontainebleau resort in Las Vegas.
North Korea on Sunday called the latest round of punishing United Nations sanctions an “act of war,” and reminded the United States that the North’s rapid development of missiles and atomic bombs meant it posed a “substantial nuclear threat to the U.S. mainland.”
The new sanctions, adopted 15 to 0, could constrict North Korea’s supplies of fuel and foreign currency, but experts say sanctions alone are unlikely to halt its nuclear program.
The U.N. Security Council voted unanimously to slash the amount of crude oil and refined petroleum North Korea may import, dealing a serious blow to Pyongyang in response to its missile launch last month.
An EMP could damage electronic circuits over large areas, depending on the configuration of the weapon and how high it was detonated, though there’s disagreement over how effective such a tactic would be. Scientists also emphasize that a nuclear bomb that hits a ground target is much more worrisome. Nevertheless, with North Korea’s increasingly successful missile and warhead tests in mind, Congress moved to renew funding for the Commission to Assess the Threat to the U.S. from Electromagnetic Pulse Attack as part of the National Defense Authorization Act.
The $11 billion Ostrovets nuclear-power project, 30 miles from Lithuania’s capital, Vilnius, is fueling fears in the Baltic republic. Lithuanians say they don’t think Moscow would actually trigger a nuclear accident but they do worry about a panic-inducing warning of a leak—real or not.
“Even a fake message about the disaster could trigger a lot of damage to our country,” said Lithuanian President Dalia Grybauskaitė. “We treat this as a national security threat.”
The list of journalists provides new evidence for the U.S. intelligence community’s conclusion that Fancy Bear acted on behalf of the Russian government when it intervened in the U.S. presidential election. Spy agencies say the hackers were working to help Republican Donald Trump. The Russian government has denied interfering in the American election.
Russia has denounced the Trump administration’s decision to provide new lethal weapons to the Ukrainian military, saying the US had “crossed the line” in the conflict and accusing Washington of fomenting bloodshed.
The Saudi government in recent days has released at least two dozen high-profile suspects held in a wide-ranging crackdown on corruption, a sign that those accused of illegally amassing wealth are increasingly agreeing to settle as authorities push to expedite the investigation process.
Saudi authorities are demanding at least $6 billion from Saudi Prince al-Waleed bin Talal to free him from detention, people familiar with the matter said, potentially putting the global business empire of one of the world’s richest men at risk.
This, it seemed, was the real reason he had been beckoned to the Saudi capital, Riyadh, a day earlier: to resign under pressure and publicly blame Iran, as if he were an employee and not a sovereign leader. Before going on TV, he was not even allowed to go to the house he owns there; he had to ask guards to bring him a suit.
As bizarre as the episode was, it was just one chapter in the story of Prince Mohammed, the ambitious young heir apparent determined to shake up the power structure not just of his own country but of the entire region. At home, he has jailed hundreds of fellow princes and businessmen in what he casts as an anticorruption drive. Abroad, he has waged war in Yemen and confronted Qatar.
A series of recent decisions by Crown Prince Mohammed bin Salman, the country’s young, de facto ruler, could revolutionize the lives of Saudi women. They will soon be allowed to attend soccer matches at public stadiums. They have been named to prominent positions. In June, they will be allowed to drive cars, even motorcycles, the government says. Women will probably even be able to join the traffic police.
But how much these dizzying decisions will affect individuals will depend on several factors, including where they live, their age, their own beliefs and the willingness of their male relatives to give up the control that many consider a religious prerogative.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
Companies could bring back as much as $400 billion, according to one estimate, as they take advantage of a one-time cut for repatriation of earnings and cash held overseas written into the GOP tax overhaul. That typically requires them to sell foreign holdings and buy assets denominated in dollars, which could boost the U.S. currency.
The VIX is getting a rival. Nasdaq Inc. is working on launching futures and options linked to an index that uses a different way to track volatility in the S&P 500, the benchmark gauge for the U.S. stock market, said people familiar with the matter. The launch is subject to regulatory approval and would compete against the market’s so-called fear gauge from Cboe Global Markets Inc.
Companies have announced about $361 billion of mergers and acquisitions this month, making it the busiest December in at least 12 years, according to data compiled by Bloomberg. On Friday, the last work day before bankers and executives break for the holiday, GVC Holdings Plc of the U.K. agreed to buy bookmaker Ladbrokes Coral Group Plc for as much as 4 billion pounds ($5.4 billion), Deutsche Telekom AG said it will buy Liberty Global Plc’s Austrian unit and Roche Holding AG announced the $1.7 billion acquisition of U.S. biotech Ignyta Inc.
The debt boom has been accompanied by a sharp deterioration of the legal protection offered to creditors, as borrowers have taken advantage of desperate investors to weaken or scrap “covenants” designed to help insulate lenders from financial shenanigans. This means that any recoveries in a default are likely to be much lower in the future than the historical norms.
Just how bad have things got? Talk to some hedge fund managers and it seems the legal documentation might as well have been written on the back of a napkin. That is obviously overdone, but Moody’s “Covenant Quality Indicator” index has now been hovering near its weakest-ever levels for half a year.
A Chinese central bank official said China should allow local governments to go bankrupt to help rein in regional authorities’ excessive borrowing.
A case like the bankruptcy of Detroit would convince investors that the central government is really determined to dispel beliefs of an implicit guarantee for regional authorities, Xu Zhong, head of research bureau at the People’s Bank of China, wrote in an article in the China Business News Monday. Just a couple of days ago, China’s finance ministry pledged to break the “illusion” that Beijing would bail out local governments’ hidden debt.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
Almost two years since the start of the reform drive, officials are grappling with crucial questions of how to save money and speed up social change without crippling the economy and clashing with one of the world’s most conservative religious establishments. Before the government declared it would lift the long-standing Saudi ban on female drivers last month, security services rounded up independent clerics and other critical figures.
“This is a huge challenge for the country, and it has great implications for the world,” Goldman Sachs Inc. Chief Executive Officer Lloyd Blankfein said at the Bloomberg Global Business Forum in New York in September. While there should be urgency, there’s also a case for caution so the change needed for “stability in the long run doesn’t produce instability in the short run,” he said.
Failure to find the right answers risks leaving the kingdom in limbo: an absolute monarchy with diminishing resources to fund an unsustainable version of state capitalism. Saudis will get more restless and the economy, already ground to a halt, could get worse. Finance Minister Mohammed Al-Jadaan told Bloomberg last week that cuts to energy subsidies may be more gradual and the government might take longer to balance its budget, softening the impact on society.
Everyone says the blockchain, the technology underpinning cryptocurrencies such as bitcoin, is going to change EVERYTHING. And yet, after years of tireless effort and billions of dollars invested, nobody has actually come up with a use for the blockchain—besides currency speculation and illegal transactions.
Each purported use case — from payments to legal documents, from escrow to voting systems—amounts to a set of contortions to add a distributed, encrypted, anonymous ledger where none was needed. What if there isn’t actually any use for a distributed ledger at all? What if, ten years after it was invented, the reason nobody has adopted a distributed ledger at scale is because nobody wants it?
The new nationalism does not just insist on the differences between countries, it also thrives on the anger within them. Michal Bilewicz, a social psychologist at the University of Warsaw, explains this anger in terms of what his profession calls “agency”—the power to control your own life. Nationalism is determined not by patriotic ardour, he argues, but by self-esteem. Loyalty to the nation combined with confidence and trust favours altruism. By contrast, feelings of frustration and inadequacy tend to lead to narcissism.
Altruists acknowledge a chequered past, give thanks for today’s blessings and look forward to a better future—a straight line sloping up across time. Narcissists exalt in a glorious past, denigrate a miserable present and promise a magnificent future—a rollercoaster U-curve, with today in its pit. This geometry explains why nationalist books such as “The French Suicide” and “Germany Destroying Itself” can succeed while appearing to do down the very nation they worship. If you need a rule of thumb for assessing a nationalist movement, ascending ramp v switchback U is as good as you are likely to get.
Judt issued a dying warning: “We have entered an age of insecurity: economic insecurity, physical insecurity, political insecurity.” Populist politicians—almost always nationalist—exploit those insecurities. Claiming a special connection to “the people”, they tell and retell their narratives of corrupt elites, crooked immigrants, misleading media and sinister conspiracies. Social media, which amplify outrage, are the ideal vehicle to spread the word. Rodrigo Duterte, president of the Philippines, has a “keyboard army” to purvey his half-truths. Mr Trump uses Twitter to shout his Schmitt-like distinctions between friend and foe. Nigel Farage, of the UK Independence Party, fans grievance and discontent.
Often the populists are from the hard right. Edmund Fawcett, a writer on political philosophy who was on the staff of this newspaper for many years, points out that the right has always rebelled against the creative destruction wrought by progress. Liberals (in the British sense) try to deal with change through tolerance, education, material improvement and ensuring that no set interest ever dominates. Conservatives, however, look to tradition, hierarchy, deference, protectionism and orthodoxy to keep the chaos at bay. Some have never abandoned their belief that only a strong, ethnic culture and a powerful government can keep them safe. Such people are the backbone of the new nationalism.
What happens to America’s manufacturing heartland when Silicon Valley turns to China? Where do former mill and mining towns fit in when big cities shift to digital work? How does upstate New York benefit when New York City increases business with Tokyo?
The answers have social and political implications at a time when broad swaths of the country feel alienated from and resentful of “elite” cities that appear from a distance to have gone unscathed by the forces hollowing out smaller communities. To the extent that many Americans believe they’re disconnected from the prosperity in these major metros — even as they use the apps and services created there — perhaps they’re right.
“These types of urban economies need other major urban economies more than they need the standardized production economies of other cities in their country,” said Saskia Sassen, a sociologist at Columbia who has long studied the global cities that occupy interdependent nodes in the world economy. New York, in other words, needs London. But what about Bethlehem, Pa.?
Such a picture, Ms. Sassen said, “breaks a past pattern where a range of smaller, more provincial cities actually fed the rise of the major cities.” Now major cities are feeding one another, and doing so across the globe.
Americans are spending more money than ever trying to be happy, but all signs say that we’re still pretty miserable. Happiness in this country—if you were to even try to measure it—has plunged. In 2007, the United Nations ranked the United States as the third happiest nation in the world, but in 2017, it dropped us to 19th place. As New York recently noted, “for 80 years, young Americans have been getting more anxious and depressed, and no one is quite sure why.” Among the dreary subsets of analysis is that of Angus Deaton, a Nobel laureate in economics, who found that since 1990, middle-aged white Americans have been living sicker and dying earlier even as mortality rates elsewhere in the world are increasing.
Seizing on immigration as the cause of countless social and economic problems, Mr. Trump entered office with an agenda of symbolic but incompletely thought-out goals, the product not of rigorous policy debate but of emotionally charged personal interactions and an instinct for tapping into the nativist views of white working-class Americans.
Like many of his initiatives, his effort to change American immigration policy has been executed through a disorderly and dysfunctional process that sought from the start to defy the bureaucracy charged with enforcing it, according to interviews with three dozen current and former administration officials, lawmakers and others close to the process, many of whom spoke on the condition of anonymity to detail private interactions.
But while Mr. Trump has been repeatedly frustrated by the limits of his power, his efforts to remake decades of immigration policy have gained increasing momentum as the White House became more disciplined and adept at either ignoring or undercutting the entrenched opposition of many parts of the government. The resulting changes have had far-reaching consequences, not only for the immigrants who have sought to make a new home in this country, but also for the United States’ image in the world.
The story of Reality Winner, who leaked a classified report about a Russian cyberattack to journalists at the Intercept. But Winner isn’t an ideological combatant like Edward Snowden and Chelsea Manning. She’s much more like you or me.
The people closest to her did not know precisely what Airman Reality L. Winner did during her 12-hour shifts at Fort Meade. They only knew that there were certain days when she knew something big was coming and went to bed early. Reality told her mother that she might have PTSD. If she were to explain the nature of her work stress to a therapist, she would risk being charged with espionage. She exercised, and she journaled. She kept thick diaries full of small text, Post-it notes scrawled to the margins. She wrote down instructions, inspirational quotes, arguments she was having with herself. A couple of times a week, for hours at a time, she would talk to her father, whose health was failing but who was constantly watching the news. They discussed current events of concern to her, like the war in Syria.
Reality would later tell the FBI that she worked in the drone program; as a cryptolinguist, her job would likely have been to translate communications so that drone operators would know whom to target. “It was definitely traumatizing,” says Boyle. “You’re watching people die. You have U.S. troops on the ground getting shot at, you miss something, a bomb goes off, and you get three people killed.”
Philip Alston, the United Nations special rapporteur on extreme poverty and human rights, has just wrapped up a 15-day tour of the United States. His team visited Alabama, California, Puerto Rico, West Virginia and Washington, D.C. The findings, released last Friday, documented homelessness, unsafe sanitation and sewage disposal practices, as well as police surveillance, criminalization and harassment of the poor. The rise in poverty, they found, disproportionately affects people of color and women, but also large swaths of white Americans. The report concluded that the pervasiveness of poverty and inequality “are shockingly at odds with [the United States’] immense wealth and its founding commitment to human rights.”
To be sure, poverty in the United States is not equivalent to poverty in less developed countries. This has never been a country free of inequality and poverty, but their rapid growth over the past two decades has undermined any professed commitment to equal opportunity or the belief that the nation’s prosperity rests on the well-being of ordinary Americans.
The common refrain is that the devastation is the product of a profound shift in consumption to online, with Amazon frequently identified as the leading culprit. But this is maybe an over-simplification. “It’s not Amazon, it’s rent,” says Jeremiah Moss, author of the website and book Vanishing New York. “Over the decades, small businesses weathered the New York of the 70s with it near-bankruptcy and high crime. Businesses could survive the internet, but they need a reasonable rent to do that.”
The financial fabric of rural America is fraying. Even as lending revives around cities, it is drying up in small communities. In-person banking, crucial to many small businesses, is disappearing as banks consolidate and close rural branches. Bigger banks have been swallowing community banks and gravitating toward the business of making larger loans.
Distant banks with few ties to local communities—which often rely heavily on algorithms to gauge creditworthiness—are also less likely to have the personal relationships that have helped local bankers judge which borrowers were a good bet.
The phenomenon, almost automatically, is getting worse. Bankers say they don’t see enough business in small towns. Small towns say bank closings make it harder to do business.
Local officials have been asked to identify things that make their places unique—some combination of industry, tourist attractions and the local way of life—and then cultivate them into a full-fledged theme, a lodestar for development. The result, it is hoped, will be a mass of differentiated, thriving towns. Over the past 18 months the central government has approved 403 speciality towns and aims to have 1,000 of them by 2020. In the past, cities racked up massive debts by building vast new districts in the hope of developing a wide variety of businesses. The speciality towns, by contrast, are supposed to be focused on one particular industry, and much cheaper to build.
There are worries, though, that the campaign is veering off course. While the central government—fearful that local administrations might splurge on wasteful schemes—is trying to restrict approvals, lower-level officials are forging ahead, with or without permission. China Times, a newspaper in Beijing, estimates that as many as 6,000 speciality towns are being developed. The average investment so far has been about 5bn yuan ($755m) per town, according to Shenwan Hongyuan Securities, a brokerage. If that were spent on all the 1,000 towns in the government’s plan, the total cost would reach 5trn yuan, or nearly 7% of GDP—a huge amount, even by China’s standards.
Some of the towns appear to deviate from what China’s leader, Xi Jinping, had in mind when he lent support to the idea. Yucheng, a hamlet in Zhejiang, aims to be “happy town”, complete with a sex-toy shopping street and a hotel for amorous couples. Zhongxian, a poor city in the west, wants to be an online gaming mecca. It is building a 6,000-seat stadium to host e-sport competitions, even though three other cities have similar plans.
Erik Seiersen manages a new crisis every day. “I’ve been working in Mexico since 1990 and I’ve never seen this level of volatility and insecurity,” says the Mexican head of British drinks group Diageo and president of the country’s wine and liquor commission.
On just about every front, 2017 has been a catastrophic year for crime in Mexico. Homicide levels are higher than the worst years of former President Felipe Calderón’s war on drug cartels. October was the most murderous month in 20 years, with 2,371 killings, according to official data. Offences in virtually all categories — from murder to robbery to extortion to kidnapping — are rising. Only bank heists and cattle rustling are down.
Some crimes have been particularly shocking: the 12th journalist to be killed this year was gunned down at his son’s school Christmas play. In November, an ice box containing two severed heads was dumped outside a television station. Six bodies were recently strung up from bridges in the state of Baja California Sur, a tourist draw.
As the security crisis has spread beyond cartel heartlands to all but a handful of states, legislators in December enshrined the army’s decade-long role in policing and fighting crime in a controversial law. Critics, including Zeid Ra’ad al Hussein, the UN human rights chief, called the law ambiguous and open to abuse.
USA ECONOMY DATA, CITIES AND STATES
Fueled by high consumer confidence and a robust job market, U.S. retail sales in the holiday period rose at their best pace since 2011, according to Mastercard SpendingPulse, which tracks both online and in-store spending.
Americans are saving at the slowest pace in a decade, likely in anticipation of continued job and wealth gains as stock indexes barreled to new records last month and the unemployment rate stood at a 17-year low. The personal saving rate in November was 2.9%, the Commerce Department said Friday, falling below 3% for the first time since November 2007, just before the last recession hit.
U.S. consumer spending rose more than forecast in November and the Federal Reserve’s preferred inflation gauge advanced to an eight-month high, signs of economic vitality that should keep the central bank on track to raise interest rates gradually in 2018.
U.S. purchases of new homes unexpectedly surged in November to the highest level since before the last recession, indicating resilient demand, according to government data Friday.
Americans are losing faith in the value of a college degree, with majorities of young adults, men and rural residents saying college isn’t worth the cost, a new Wall Street Journal/NBC News survey shows.
GLOBAL ECONOMY DATA
Chinese households were only slightly less exuberant in December than in November, with our sentiment index slipping from the previous month’s record high. Consumers said their incomes continued to increase at a record pace but their discretionary spending rose more slowly, while views on the economy were less bullish than in November.
POSITIONING, INFLECTION, MARKET CALLS
This year is set to become the first in which the S&P 500 has delivered total returns, including dividends, every month in a rally propelled by stronger earnings growth and the prospects of a deep cut in the domestic corporate tax rate.
According to S&P Dow Jones Indices, a so-called “perfect” calendar year is a first based on data going back to 1928. Beyond calendar years, the index is posting total returns for 14 straight months, which while impressive, is trumped by a 15-month string of consecutive months of such returns in 1959.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
The firm that is marketing his hedge-fund-in-waiting has received $2 billion to $4 billion in commitments from investors, said three people familiar with the matter who were not authorized to speak publicly. That is a far cry from the $11 billion Mr. Cohen ran at his family office the past two years.
And according to several industry consultants, some pension funds and institutional investors are wary about putting their money with Mr. Cohen, who remains tainted by the insider-trading scandal that engulfed him and his former hedge fund.
There is also anxiety, these consultants say, that Mr. Cohen’s new firm plans to charge higher-than-average fees and will not let some investors withdraw their money for at least three years. Others wonder if the trader’s best days are behind him.
ENERGY COMPANIES, NOCs, INDUSTRY
Federal regulators are proposing to roll back safety measures put in place after the Deepwater Horizon oil spill, which could affect real-time monitoring of offshore installations and third-party inspector certification.
ENERGY RENEWABLES, NUCLEAR
Germany has spent $200 billion over the past two decades to promote cleaner sources of electricity. That enormous investment is now having an unexpected impact — consumers are now actually paid to use power on occasion, as was the case over the weekend.
Power prices plunged below zero for much of Sunday and the early hours of Christmas Day on the EPEX Spot, a large European power trading exchange, the result of low demand, unseasonably warm weather and strong breezes that provided an abundance of wind power on the grid.
Such “negative prices” are not the norm in Germany, but they are far from rare, thanks to the country’s effort to encourage investment in greener forms of power generation. Prices for electricity in Germany have dipped below zero — meaning customers are being paid to consume power — more than 100 times this year alone, according to EPEX Spot.
POLLUTION, CLIMATE & ENVIRONMENT
A sprawling Southern California wildfire that has been burning through rugged, drought-parched coastal terrain since Dec. 4 has become the largest on record in the state, state fire officials said on Friday.
BREXIT, SCOXIT, LONDON, UK ECONOMY
A Labour government under Jeremy Corbyn would be a “nightmarish” prospect for the business world, the outgoing head of the Engineering Employers’ Federation has warned.
Nearly all the possible trading relationships between Britain and the European Union following Brexit would be less favourable than staying in the European Union, according to an influential US think tank. The Rand Corporation study said the worst option would be a “no deal”.
The EU executive launched an unprecedented process on Wednesday to suspend Poland’s voting rights in the European Union after two years of dispute over judicial reforms that Brussels says undermine Polish courts’ independence.
The European Commission, the guardian of EU law, will now ask the other EU governments to declare that Poland’s changes to the judiciary constitute “a clear risk of a serious breach” of EU values — especially the rule of law.
However, it gave Warsaw, where a new prime minister took office only this month, three months to remedy the situation and said it could rescind its decision if it did so. Often referred to as the EU’s “nuclear option”, the move carries the ultimate threat of sanctions but is in fact unlikely to result in that.
Spain’s prime minister warned Catalan leaders not to restart their campaign for secession after pro-independence parties scored a victory in the region’s election. Speaking the day after the poll in which pro-independence parties won an absolute majority in the regional parliament, Mariano Rajoy said the result would not lead Madrid to change its stance towards Catalonia.
China poured $20 billion into ship financing this year, reflecting the country’s ambition to become the world’s dominant maritime player as European banks have scaled back their investments. That is 33% more than Chinese banks invested in 2016, according to the leasing arm of Industrial & Commercial Bank of China Ltd. It dwarfs China’s financing as recently as 2008, when its lessors lent just a few million to shipowners that built their vessels in the country’s shipyards.
China’s small loans are piling up. More than 8,600 companies offer some form of small loan, and about $145 billion of those debts remain unpaid, according to the People’s Bank of China. Other estimates run as high as $392 billion, according to the Boston Consulting Group. The government does not track default rates among online lenders, which disclose little on their own.
“We are worried that in an environment where there is no effective credit system, people tend to overborrow, especially when capital comes in,” said Bai Chengyu, an executive at the China Association of Microfinance, who is no relation to Bai Shichao.
GEOPOLITICS, CRIME, TERRORISM
Guatemalan President Jimmy Morales said on Sunday he had given instructions to move the Central American country’s embassy in Israel to Jerusalem, a few days after his government backed the US in a dispute over the city’s status.
The former warlord Atta Muhammad Noor told supporters that the Afghan president did not have the power to unilaterally remove him from office.
The last phase of the American campaign against the caliphate is relying heavily on warplanes that are focused on an area half the size of Manhattan.
The Trump administration will provide the Ukrainian military with “enhanced defensive capabilities” at a time of intensifying fighting with Russian-backed forces in the country’s eastern provinces, reversing an Obama-era policy and threatening to escalate the four-year-old conflict.
The rebels who control Sana, the capital of Yemen, have tightened their grip on the city and its people in recent weeks, shutting off access to the internet, blocking social media sites and sending gunmen to raid the homes of anyone they suspect of opposing them. Hundreds of people have been detained, and prices for basic goods like food and fuel are soaring, threatening to exacerbate an already dire humanitarian crisis.
The general who led the military intervention that ousted longtime leader Robert Mugabe last month has been named as one of the two vice presidents of Zimbabwe’s ruling party, setting the stage for him to be appointed vice president of the country.
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
Mr. Murdoch and President Trump — both forged in New York’s tabloid culture, one as the owner of The New York Post, the other as its perfect subject — have traveled in the same circles since the 1970s, but they did not become close until recently, when their interests began to align more than ever before.
The Trump administration said Friday that it will renew mining leases to extract copper and nickel adjacent to a Minnesota wilderness area, giving a victory to a Chilean billionaire who also is renting a mansion to the president’s daughter.
A day after granting a medical pardon to former President Alberto Fujimori, who has been imprisoned for human rights abuses, Peru’s current president, Pedro Pablo Kuczynski, came under attack from both lawmakers in Peru’s Congress and from human rights experts.
El Mencho is one of the last people anyone would want to offend. His cartel, the New Generation, is relatively new, coalescing less than a decade ago. It stemmed from the remnants of another group, the Milenio cartel, and makes money by selling guns, stealing gasoline, extortion and kidnapping, The Washington Post’s Josh Partlow wrote in 2015. It is one of the fastest-rising drug cartels in Mexico, operating in several Mexican states and forging underworld ties around the globe.
In an unanimous vote — a turn of events increasingly common in the Constituent Assembly — lawmakers adopted a decree declaring that political parties that want to participate in coming elections must have been active in previous ones. The could mean trouble for the three biggest opposition parties, which called on members to abstain in protest from recent municipal elections.
Fairfax County police would not offer a motive for the double slaying, but family members and friends tied it directly to the couple’s struggle to keep hate out of their home, as one friend put it. They agreed to talk about the efforts because they said it was important to expose what happened.
President Enrique Peña Nieto’s administration has spent hundreds of millions of dollars a year in government money on advertising, creating what many Mexican media owners, executives and journalists call a presidential branding juggernaut capable of suppressing investigative articles, directing front pages and intimidating newsrooms that challenge it.
Despite vowing to regulate government publicity, Mr. Peña Nieto has spent more money on media advertising than any other president in Mexico’s history — nearly $2 billion in the past five years, according to government data compiled by Fundar, a transparency group. It found that his administration spent more than twice the generous media budget Mexican lawmakers allotted it for 2016 alone.
And that is just the federal money. Leaders from all parties marshal hundreds of millions of dollars in state money for advertising each year, money they dole out to favored news outlets, Fundar calculated. According to the executives and editors involved in the negotiations, some government press secretaries openly demand positive coverage from news organizations before signing an advertising contract.
Thanks to an overlooked filing made in federal court this past summer, we can now add a jewelry business to the list of Trump family enterprises that allegedly served as vehicles to fraudulently hide the assets of ultra-rich foreigners with checkered backgrounds. In late June, the Commercial Bank of Dubai sought—and later received—permission to subpoena Ivanka Trump’s now-defunct fine jewelry line, claiming its diamonds were used in a massive scheme to hide roughly $100 million that was owed to the bank, according to filings at the U.S. District Court for the Southern District of New York.
The package — which contained horse manure — was dropped off at a neighbor’s house. It was cleared by investigators around 8 p.m.
Robert Strong has come forward as the man who left a box of horse manure for Treasury Secretary Steven Mnuchin.
The presidential seal has been replaced by an eagle bearing President Trump’s signature. The eagle’s head faces right, not left, as on the seal. The 13 arrows representing the original states have disappeared. And the national motto, “E pluribus unum” — a Latin phrase that means “Out of many, one” — is gone.
Instead, both sides of the coin feature Trump’s campaign slogan, “Make America Great Again.”
The changes don’t stop there. In addition to his signature, Trump’s name appears three times on the coin, which is thicker than those made for past presidents. And forget the traditional subdued silver and copper: Trump’s coin, a White House aide marveled, is “very gold.”
The White House denies a report that the president allegedly made highly offensive comments about black immigrants — specifically Haitians and Nigerians.
Mr. Lewandowski aggressively criticized the Republican National Committee, as well as several White House departments, five people briefed on the discussion said. He told the president that his government staff and political advisers at the party committee were doing little to help him, three of the people briefed on the meeting said. He pointed to, among other thinned-out departments, the Office of Public Liaison.
Federal Election Commission filings show that if a wave crashes on the Republican House majority in November, as many have predicted, Democratic surfers will be on their boards to catch it. Nearly a year out from the election, Democratic candidates have filed in all but 20 House districts held by Republicans. By comparison, Democrats in 80 districts do not have a Republican opponent for their seat.
The victory by separatists in Catalonia will embolden pro-independence groups to continue their push for secession from Spain, prolonging the country’s political crisis and pressuring the Rajoy government to find a way to avert another showdown with the restive region.
Members of South Africa’s newly elected African National Congress’ executive committee will meet with President Jacob Zuma to advise him to step down, Johannesburg’s City Press reported, citing unidentified people.
SCIENCE, NATURE, PSYCHOLOGY
Although the next fly-by won’t be as impressive as the last, since it will be about 100 times farther away, astronomers are still looking forward to a second look at the skull-shaped rock.
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