Macro Links Dec 29th – A Dark Year For Democracy
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- TAXATION, WEALTH HAVENS, INEQUALITY
- RUSSIA PROBE
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- USA ECONOMY DATA, CITIES AND STATES
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- REAL ESTATE, HOUSING, REITS, COMMERCIAL
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY COMPANIES, NOCs, INDUSTRY
- ENERGY NATURAL GAS, COAL
- COMMODITIES BASE METALS, MATERIALS
- COMMODITIES AGRICULTURE & SOFTS
- POLLUTION, CLIMATE & ENVIRONMENT
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- TRUMP WORLD
- ELECTORAL POLITICS
- SCANDALS, LAWSUITS, FINES, REGULATORY
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
In Korea, the term “bitcoin zombie” is used to refer to people who check the cryptocurrency’s price around the clock. The country’s prime minister Lee Nak-yeon even expressed concerns over Korea’s bitcoin craze, warning that it could result in “serious distortion or social pathological phenomena” and that it could lead young people into illegal activities like drug dealing.
Amid the mounting concerns over cryptocurrencies, South Korea’s government proposed new measures earlier this month to curb speculative investments in virtual currencies, such as levying taxes on cryptocurrency transactions and banning underage investors and foreigners from opening trading accounts on cryptocurrency exchanges. Today (Dec. 28), South Korean regulators announced further restrictions on cryptocurrency trading including the banning of anonymous accounts.
Requiring that trading take place using real names brings virtual currencies like Bitcoin more in line with other financial products in South Korea. Although Bitcoin has shed some of its associations with payment for illegal activity, the real-name policy set out on Thursday could also make it easier for the South Korean government to track transactions and to tax capital gains from virtual-currency investments. The price of Bitcoin tumbled after the announcement.
The latest blow to the world’s biggest cryptocurrency came from South Korea, where the government said it was eyeing options for stamping out a frenzy of speculation, including a potential shutdown of at least some exchanges.
Bitcoin fell as much as 11 percent to as low as $13,500 as of 2:02 p.m. in New York, erasing modest gains after the South Korean release, composite Bloomberg pricing shows. It’s now down 30 percent from the record $19,511 it reached on Dec. 18.
“Cryptocurrency speculation has been irrationally overheated in Korea,” the South Korean government said in a statement reported by Bloomberg. “The government can’t leave the abnormal situation of speculation any longer.”
The measures include a ban on opening anonymous cryptocurrency accounts to boost transparency and legislation to allow regulators to close digital currency exchanges if needed, a recommendation made by the justice ministry worried about scams involving cryptocurrency trading.
TAXATION, WEALTH HAVENS, INEQUALITY
China said on Thursday that it would temporarily exempt foreign companies from paying tax on their earnings, a bid to keep American businesses from taking their profits out of China following Washington’s overhaul of the United States tax code.
There is, however, a catch: To be eligible, foreign companies must invest those earnings in sectors encouraged by China’s government — including railways, mining, technology and agriculture — according to a statement from the Finance Ministry. The measure is retroactive from Jan. 1 this year, the ministry said.
The Internal Revenue Service has a message for the homeowners rushing to prepay their property taxes before new rules take effect on New Year’s Day: Not so fast.
The tax bill that President Trump signed into law last week sharply limited the itemized deductions for state and local taxes while raising the standard deduction for individuals and couples. Those rules do not take effect until 2018, however. That has led some homeowners, particularly in high-tax, affluent areas, to try to prepay their 2018 property taxes before the deduction disappears.
In an advisory notice posted to its website on Wednesday, the I.R.S. said that maneuver could work, but only under limited circumstances. To qualify for the deduction, property taxes not only need to be paid in 2017, they must also be assessed in 2017 — meaning that homeowners who prepaid their taxes based on estimated assessments, or who tried to pay several years’ worth of taxes at once, will probably be out of luck.
The streaming-video provider is scrapping its cash bonuses and will start guaranteeing its payments to top executives with salary. The recently passed tax plan eliminates companies’ ability to deduct performance-based bonuses to managers who are paid more than $1 million, so Netflix just decided to lump all cash payments into executives’ salaries.
Netflix implemented the cash bonus structure in 2015 to take advantage of the tax deductions it could make at the time. In that year and in 2016, executives got either their full target bonus or slightly less. The data for 2017 isn’t yet available.
A jailed Russian who says he hacked into the Democratic National Committee computers on the Kremlin’s orders to steal emails released during the 2016 U.S. presidential election campaign now claims he left behind a data signature to prove his assertion.
In an interview with Russia’s RAIN television channel made public Wednesday, Konstantin Kozlovsky provided further details about what he said was a hacking operation led by the Russian intelligence agency known by its initials FSB. Among them, Kozlovsky said he worked with the FSB to develop computer viruses that were first tested on large, unsuspecting Russian companies, such as the oil giant Rosneft, later turning them loose on multinational corporations.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
The total volume of dealmaking hit $3.5tn in 2017, a 1 per cent drop from a year ago and the lowest figure since 2014, according to data from Thomson Reuters. But it also marked the fourth straight year that deal levels surpassed $3tn, a record streak.
“Most of 2017 has been a slow year for megadeals . . . We believe the momentum around large deal activity will continue into next year as we see a number of industries undergoing massive strategic shifts and further consolidation,” said Marc Nachmann, co-head of global investment banking at Goldman Sachs, which ranked as the top advisory firm by volume of deals this year.
Cocos are hot again. The junior bonds that are designed to help shore-up banks during a crisis are ending 2017 with yields near record lows.
These bonds, known as contingent convertible bonds, or cocos, are mainly issued by European and Asian banks, but bought by investors all over the world. Cocos help banks deal with heavy losses because in times of stress they convert to equity or are written down. They become risky in sudden and unexpected ways.
Regulators should be nervous about their rally: the better they perform, the more likely it is that nonspecialist investors come back in hunting for yield. That matters because these bonds are complex investments. They should be in the hands of investors who understand them and can be relied upon to bear losses if needed.
Investors who loaded up on U.S. and Asian stock-index funds might be surprised to learn just what they own now: technology stocks—a lot of them. Led by Apple Inc., Facebook Inc. and their peers, the weighing of technology stocks in the S&P 500 index has climbed to 23.8% as of Dec. 26, from 20.8% at the end of last year, according to S&P Dow Jones Indices.
Three years ago, tech stocks had a 19.7% weighting in the widely used U.S. stock market benchmark, which is currently tracked by funds with more than $2 trillion in assets. Over the past 10 years, the weighting of the tech sector in the S&P 500 at year-end has averaged 19.6%.
“It’s sort of an inherent flaw of index funds,” said Kyle Moore, founder of Quarry Hill Advisors in St. Paul, Minn., referring to the way surging stocks have a bigger share of indexes that are market-value weighted, like the S&P 500.
Noting that some tech stocks have gained nearly 50% this year, Mr. Moore said a typical investor response would be to trim exposure to those stocks and take profits. When that happens in an index fund, nothing happens automatically, he said.
In response to the global financial crisis, the US Federal Reserve took extreme but necessary measures to protect the American economy from collapse. It now faces a stark choice — act promptly and potentially cause significant disruption in the US Treasury market or act later and risk greater disruption across all markets.
The Fed has said it will soon begin the daunting task of unwinding this successful stimulus, doing so against a benign economic backdrop, including full employment, a low risk of deflation and a recapitalised banking system. It plans to cut $1.5tn-$2tn from its balance sheet by late-2020 by first scaling back, then ceasing to reinvest the proceeds of bonds and securities that reach maturity. One immediate effect of this will be to push Treasury yields higher.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
Coinmarketcap.com, a website that tracks bitcoin and its rivals, has a chart that shows their market values. At the beginning of this year, bitcoin made up nearly 90 percent of the total value, or all of the money that has been invested, in digital currencies. As of Monday, though, bitcoin’s share had shrunk to just 43 percent. And the decline appears to be accelerating. It’s lost a third of its market share in December alone.
The problem has to do with one of the main investing arguments for buying bitcoin — that it is a great store of value. But if more and more people are choosing to store the money they put into digital currencies in places other than bitcoin, that raises the question of just how great a store of value bitcoin is. Another issue is that the amount of bitcoin is supposed to be capped at 21 million, which theoretically should prop up its value. But if other digital currencies are increasingly seen as rivals or even substitutes for bitcoin, then that 21 million cap becomes meaningless.
Donald Trump remains a source of bafflement and confusion to the American establishment. But I felt I understood the US president better, after trips over the course of 2017 to South Africa, Turkey, Brazil and China — where politicians like Mr Trump are all too familiar. He is the loudmouth leader who is prepared to assault and undermine the institutions of his country — rather than accept checks on his power or challenges to his dignity. He is the demagogue, who is always prepared to appeal to the mob over the heads of the media. He is the swaggering president, who draws obsequious time-servers and venal chancers into his orbit. He is the man of power, all too willing to mingle his business and political interests.
The ascendance of Mr Trump — added to the growing power of China — has changed the political atmosphere around the world. There is such a thing as a global mood and the signals coming from Washington and Beijing are disquieting. The Trump administration is sending the message that the US is no longer interested in making the case for democracy and clean government. Meanwhile, Xi Jinping’s China is increasingly confident in arguing for an authoritarian model that tolerates capitalism — but crushes civil society.
The indirect effects of those signals have stoked a crisis of liberal values that is visible in places as different as South Africa, Turkey and Brazil. These three countries are significant mid-ranking powers and members of the G20 group of leading nations. Each of them, in the recent past, looked like places where liberal and democratic values were advancing steadily. Yet all of them are now struggling to maintain independent institutions that can fight corruption and check the power of political leaders. The roots of their separate crises are local and particular. But liberals in all three places feel that they are now swimming against the global tide.
Nearly a year into his presidency, Mr. Trump remains an erratic, idiosyncratic leader on the global stage, an insurgent who attacks allies the United States has nurtured since World War II and who can seem more at home with America’s adversaries. His Twitter posts, delivered without warning or consultation, often make a mockery of his administration’s policies and subvert the messages his emissaries are trying to deliver abroad.
Mr. Trump has pulled out of trade and climate change agreements and denounced the 2015 nuclear deal with Iran. He has broken with decades of American policy in the Middle East by recognizing Jerusalem as the capital of Israel. And he has taunted Kim Jong-un of North Korea as “short and fat,” fanning fears of war on the peninsula.
President Donald Trump allowed the Iran nuclear deal to survive through 2017, but the new year will offer him another chance to blow up the agreement — and critics and supporters alike believe he may take it.
By mid-January, the president will face new legal deadlines to choose whether to slap U.S. sanctions back on Tehran. Senior lawmakers and some of Trump’s top national security officials are trying to preserve the agreement. But the deal’s backers fear Trump has grown more willing to reject the counsel of his foreign policy team, as he did with his recent decision to recognize Jerusalem as Israel’s capital.
The US has “a war plan in South Korea that we have been polishing for 70 years”, said Dennis Blair, a retired admiral who commanded a carrier battlegroup in 1994 when Bill Clinton was considering striking North Korea and later headed Pacific Command.
That plan covers, he said, among other things: “The transportation preparation, logistics — such as breaking out pre-positioned war material — communications, call up of reservists, preparations for non-combatant evacuation operations — the actions you really have to do if you think that serious conflict is a possibility.”
The logistical complexity serves as a reminder of why the US and its allies have long discounted the possibility of an attack — something that could lead to the loss of hundreds of thousands of lives and widespread economic disruption
A huge complicating factor for the US is the difficultly in locating North Korea’s nuclear weapons. Even if the US knew where they were, the only way to destroy them without visible preparations would be a nuclear first strike, launched by stealth aircraft flying from the US mainland, argues one former US military officer who has worked in the region.
On Wednesday night, Mr. Erdogan signaled a rapprochement with European leaders in an interview with Turkish reporters aboard a plane to Tunisia.
“I always say this: We are obliged to lessen the number of foes and increase the number of friends,” Mr. Erdogan said in comments reported by several Turkish news outlets and translated into English by Hurriyet Daily News, an English-language Turkish newspaper.
“We have no problems with Germany, the Netherlands or Belgium,” Mr. Erdogan said. “To the contrary, those who are in the governments of these countries are my old friends.”
He also said he hoped to visit Paris to meet with the French president, Emmanuel Macron, and to travel to the Vatican to meet with Pope Francis.
By now, the crosswinds of Mr. Erdogan’s public statements have sealed his reputation as a leader of changeable temperament who seems to shift Turkey’s policies along with his moods.
Analysts of Turkish politics were divided on the reasons behind the Turkish president’s about-face, but some took it as a sign of his desperation at ending the year ostracized internationally.
A general with no energy experience has been installed as the head of the state oil company. Arrests, firings and desperate emigration have gutted top talent. Oil facilities are crumbling, while production is plummeting.
As the rest of the oil-producing world recovers on the back of stronger energy prices, Venezuela is getting worse, the result of dysfunctional management, rampant corruption and the country’s crippling economic crisis. The deepening troubles at the state oil company, the country’s economic mainstay, threaten to further destabilize a nation and government facing a dire recession, soaring inflation and unbridled crime, as well as food and medicine shortages.
This year, most investors have been mesmerised by the soaring price of risky assets, such as US equities. But the fact that supposedly safe bond prices have stayed so high is striking too, particularly given the stratospheric levels of debt and the turning US interest rate cycle.
There is a fair chance that this pattern will continue in 2018, unless central banks suddenly accelerate the tightening cycle. But if the past 145 years are any guide to the future, it can be a dangerous mistake to assume that “safe” assets will always be boring in the long term, let alone a reliable hedge against individual country risk. Investors forget that at their peril, particularly in a 21st-century world where geopolitical tensions are rising — along with the level of debt.
Of the top 20 global employers in 2017, five are outsourcing and “workforce solutions” companies, according to an analysis by S&P Global Market Intelligence. In 2000, only one employer in the top 20—International Business Machines Corp., which offers outsourced IT services among its many businesses—fell into that bucket.
Outsourcing companies are vacuuming up the world’s workers as traditional employers are handing over more of their tasks to nonemployees, a shift that has transformed the way corporations do business and had profound effects on workers’ prospects and pay.
For employers, dispatching work to outside companies saves money and lets them access skills they need without adding to their headcount. Workers in jobs that have gone to outsourcers, though, can feel moved around like chess pieces, either displaced entirely or re-badged as employees of a service provider, sometimes with fewer benefits and lower pay. A growing body of economic research suggests that outsourcing is a significant factor fueling the rise of income inequality in the past decade.
“If all the engineers are in one firm and the cleaners are in another, you get less diversity within firms and more inequality across firms,” says Nicholas Bloom, an economist at Stanford University.
The managerial musical chairs at the top of the fashion and other luxury industries reached newly feverish levels in 2017: Every month of the year — save August, when most companies go on vacation — saw at least one big shake-up. And a big announcement came just days before Christmas: Phoebe Philo of Céline was leaving the brand after a decade as artistic director.
In part, the reshuffling is because of the shifting balance of power between creative and corporate executives; designers and creative directors appear to be gaining more control and territory than ever as brands combat the challenges of more collections, more demanding consumers and more competition than ever before. Managing a company matters, but design that reflects a distinct point of view may now matter just as much, if not more.
The middle-market brands continue to be hit by shifts in the retail landscape and the omnipresence of Amazon, while at the upper end of the spectrum, currency fluctuations and recovering emerging markets have been highlighting the triumphs — or pitfalls — in specific boardroom strategies.
Once a thriving gold-mining town, Nipton is now an experiment. The nation’s largest publicly traded marijuana company, American Green, recently bought the town for $5 million, with plans to develop a “cannabis-driven” resort on the edge of the Mojave.
The investment represents the promise some see in an expanding marijuana economy once the drug, on Jan. 1, becomes legal for recreational use in the nation’s most-populous state. “This is the Hotel California,” said Stephen Shearin, a nomadic entrepreneur who manages the project here, reciting the lyrics of the Eagles song as he walked the site.
“Cannabis will be everywhere, if you want it,” Shearin said. “You want to smoke a fatty? You want to dab? You do that. But don’t blow smoke on a family that’s enjoying the scenery.”
As fast-food chains across the country have slashed menu prices to revive flagging sales, a growing rift has emerged between some name-brand corporations and the local operators who run their outlets.
For years now, the retail industry has been shaken by giant companies that have been able to keep prices low, wooing consumers but squeezing suppliers and smaller competitors. But in the restaurant business, the push to keep prices low has pitted corporate headquarters against individual outlet owners — all operating under the same brand.
Corporations need to grow systemwide revenue to please board members and shareholders. But small-scale franchisees, who face rising costs and increased local competition, are far more concerned with store-level profits. In addition to Subway’s plans to relaunch the $5 Footlong, McDonald’s will revive a version of its Dollar Menu next month. Taco Bell has promised to expand its selection of discount items, as have Wendy’s and Jack in the Box.
“This is an inherent financial conflict between franchisees and franchisers,” said J. Michael Dady, a lawyer at the Minneapolis firm Dady & Gardner who represents franchisees in conflicts with their corporate parents. “And some have handled it much better than others have.”
USA ECONOMY DATA, CITIES AND STATES
The U.S. merchandise trade deficit reached a more than two-year high in November, while inventories at wholesalers and retailers increased, according to preliminary figures released Thursday by the Commerce Department.
Demand for the goods remained elevated as U.S. consumers, who are upbeat about the economy, continue to spend. At the same time, companies are boosting investment in equipment, helping explain demand for imported capital goods in November. Imports reached a fresh all-time high last month and will probably remain robust as a report Wednesday showed record-high buying intentions for household goods from refrigerators to carpets and washers.
Meantime, stronger global growth is boosting demand for U.S.-made goods. Exports climbed to the highest level in nearly three years. While a wider trade deficit will probably weigh on economic growth in the fourth quarter, today’s data also showed a pickup in inventories that will help boost gross domestic product.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
A SoftBank-led consortium has reached an agreement to buy more than 17 per cent of Uber for about $9bn, after shareholders elected on Thursday to sell their shares to the Japanese conglomerate at a discounted price.
The shareholders’ decision marks the clearing of the final hurdle in a complex deal whose success is critical to Uber’s efforts to turn over a new leaf. The SoftBank deal also represents a major victory for Uber’s new chief executive, Dara Khosrowshahi, and will trigger sweeping governance changes that cement his control over the troubled company.
REAL ESTATE, HOUSING, REITS, COMMERCIAL
Prime office rents in Sydney surged 30 percent in the 12 months ended Sept. 30, according to Jones Lang LaSalle Inc. Commercial space in the city is being squeezed as buildings are torn down to make way for a A$12.5 billion ($9.7 billion) metro line, while developers are cashing in on the housing boom by converting harborside towers into luxury apartments.
“You can’t dump a planned infrastructure spend on an economy and not expect things, particularly in the office sector, to be buoyant,” said Kevin George, executive general manager of office and industrial at Dexus, Australia’s largest office manager. Tenants needing to find new space because buildings were being demolished or converted “was the icing on the cake,” he said.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
A recent court ruling involving the $24bn buyout of Dell could mean “game over” for hedge funds that have profited from asking US judges to boost the prices of takeovers after they have closed.
Hedge funds such as Merion Capital and Magnetar have raised a total of more than $1bn from investors in recent years to fund lawsuits in which they challenge the fairness of the price paid to acquire public companies. These “appraisal” cases seek to profit by convincing judges in Delaware, where most US companies are incorporated, to give them a higher payout.
The funds initially scored a series of high-profile wins, pushing up the buyout prices paid to dissenting shareholders in deals involving Dell, Dole Foods and Cox Radio among others.
But earlier this month, the Delaware Supreme Court threw out an award stemming from the 2013 acquisition of Dell, and ruled that the deal price should prevail when a sale process is demonstrated to have been competitive.
That ruling and similar ones in recent months are forcing appraisal-focused hedge funds to revisit their approach. One long-time investor in this area told the Financial Times that the Dell reversal means “game over” for the strategy. He said that the initial Dell victory in 2016, among others, had made it too easy to raise money for the strategy and that many funding sources would now pull the plug.
ENERGY COMPANIES, NOCs, INDUSTRY
Russia is working to keep natural gas exports to Europe near record levels in 2018 after the continent’s biggest supplier, Gazprom PJSC, said its deliveries this year signal it is achieving on its ambitions to expand.
The state-controlled gas giant plans to ship a minimum of 180 billion cubic meters next year, Deputy Chief Executive Officer Alexander Medvedev said in an interview in St. Petersburg. That volume would be the second highest ever after at least 190 billion cubic meters expected this year, which is a record.
Gazprom meets more than a third of Europe’s demand for natural gas, Russia’s biggest and most lucrative market worth some $37 billion in revenue this year. Tighter trade links with the Kremlin-backed company contrast with increasing tensions on the military and political front.
ENERGY NATURAL GAS, COAL
U.S. natural gas staged the biggest rally in two months as a frigid forecast signaled demand for the power-plant fuel may surge to new highs through the start of 2018.
The eastern half of the country is locked in a deep freeze with the potential to generate the highest weather-driven gas demand for the last week of December and the first few days of January in data going back to the 1950s, according to MDA Weather Services. Chicago’s low on New Year’s Day will be minus 1 degree Fahrenheit (minus 18 Celsius), 11 below normal, according to
A glut of gas from U.S. shale fields is fueling a power-plant construction boom in several Northeastern states, despite fierce competition that has caused wholesale electricity prices to plummet.
The key for electricity producers is location. Having access to transmission lines to move megawatts to market is vital; but in addition by building close to natural-gas reserves, power producers can more easily access cheap fuel supplies.
The build-out comes as American shale drillers continue pumping so much gas that the price of the fuel has plunged from highs of over $13 per million British thermal units in 2008 to less than $3 per million BTUs today. “The economics are compelling for gas-fired power,” said Andrew Slaughter, head of the Deloitte Center for Energy Solutions.
COMMODITIES BASE METALS, MATERIALS
In the global rush to supply the electric-car revolution, lithium hot spot Argentina is grappling with a shortage of talent.
Battery makers are depending on the South American nation’s high-altitude salt flats as a key new supply of the metal, with vast deposits and an investor-friendly government luring prospectors and developers. Under President Mauricio Macri, Argentina has ambitions to become a lithium superpower, supplying as much as 45 percent of the market, up from about 16 percent now.
Projects have faced unpredictable weather and financing struggles. But perhaps the biggest barrier to development is a dearth of skilled workers.
“In Argentina, everyone wants to be a lawyer or a doctor,” said Miguel Angel Persoglia, who has worked on copper and silver projects and now heads the pilot operations at Minera Exar SA, a joint venture between Lithium Americas Corp. and Soc. Quimica & Minera de Chile SA. “There’s no technical personnel” for lithium.
Copper in London surged to the highest in almost four years after China ordered its top producer to halt output to combat winter pollution, fueling a rally this year driven by optimism about demand and supply disruptions at mines.
Jiangxi Copper Co. was told to cut production for at least a week before a new assessment is made on local pollution levels. Earlier in the month, the No. 2 smelter, Tongling Nonferrous Metals Group, was asked to make similar cuts.
Copper just capped its best run in almost three decades. The metal is on its longest winning streak since 1989, topping $7,300 a metric ton in London, on optimism about increased demand, supply disruptions in China and a weaker dollar.
The prospect of China slowing processing while maintaining consumption of the metal “is going to make for a strong copper market, and we’ve continued to punch through four-year highs,” Peter Thomas, a senior vice president at Zaner Group LLC in Chicago, said by telephone.
COMMODITIES AGRICULTURE & SOFTS
Cotton futures are poised for a 10th straight weekly gain, the commodity’s best run since 1998. Prices have been buoyed by robust demand for the fiber. Futures on Thursday were little changed after reaching the highest since May. Hedge funds are signaling more gains are in store, with investors holding the most net-wagers on a rally in seven months, according to U.S. government data.
“U.S. exports have been doing better than expected, the U.S. economy is strong, and there’s optimism among people, so we are probably selling more cotton products,” Sid Love, president of Sid Love Consulting Services in Overland Park, Kan., said in a telephone interview.
POLLUTION, CLIMATE & ENVIRONMENT
The arctic blast that’s turning the eastern half of the U.S. into a giant icebox this week has been good news for oil and coal. Plants are using the most fuel oil in three years to produce the electricity that’s powering heaters across New England. In the PJM market, which stretches across the eastern U.S. from Illinois to Washington, D.C., coal has once again surged past natural gas to become the biggest fuel for power generation. Oil demand there jumped by more than 400 percent.
It marks a rare, albeit temporary, reversal of a broader transformation taking place in America’s power mix: The U.S. shale boom has unleashed record volumes of cheap natural gas, turning that fuel into the country’s biggest source of power generation. But this week’s deep freeze triggered natural gas price spikes across the eastern U.S., and generators are taking advantage of the rally to burn cheaper oil and coal.
Temperatures dipped to -22 degrees without windchill being factored in. The previous record low was -18.9 set 57 years ago in 1960.
Environment Canada issued a slew of extreme cold weather alerts for the city and the rest of the GTA with the windchill making it feel closer to -30. The warning from the agency ended for Toronto and the GTA mid-day Thursday, but the city’s own cold weather alert remains in effect.
The length of this cold snap is not the norm for this time of year according to Environment Canada. The last time the city experienced similar conditions between Christmas and Jan. 1 was back in 1993.
GEOPOLITICS, CRIME, TERRORISM
Airstrikes on a market and a farm in Yemen killed at least 68 civilians in a single day, including eight children, the United Nations said on Thursday.
The two attacks occurred on Tuesday, making it one of the bloodiest days for civilians so far in Yemen’s civil war. At least 109 civilians have been killed nationwide over the past two weeks, in a conflict that has intensified since the death of the country’s former president, Ali Abdullah Saleh, this month.
Local Yemeni officials blamed the Saudi-led coalition for the airstrikes. More than three years of fighting have turned Yemen, which was already the poorest Arab country, into the world’s largest humanitarian crisis.
Mr Putin, who has cultivated a strongman image of being tough on security threats throughout his 18-year leadership, called for security forces “not to take any prisoners, to liquidate bandits on the spot”.
Mr Putin, who is standing for a fourth term in office in March, made the remarks at an event on Thursday to celebrate Russian forces who had fought in Syria, a military intervention that Moscow has portrayed as an anti-terror campaign that helped eliminate threats to Russia and other countries.
Authorities in Tehran will no longer arrest people for breaches of Islamic codes, the Iranian capital’s police chief said Wednesday, a sign of easing social strictures under relatively moderate President Hassan Rouhani.
Echoing a similar shift in Saudi Arabia, Iran’s main regional rival, Brig. Gen. Hossein Rahimi said police would change tactics in enforcing Islamic values, after decades of fines, detentions and even lashings for infractions as minor as women wearing nail polish, heavy makeup or tying their headscarves too loosely. Iranian women have been obliged to wear headscarves in public since the Iranian Revolution in 1979, which melded government with Islam.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
In less than a decade of existence, Huawei Marine Networks has won contracts to install 40,000km of submarine cable, enough to circumnavigate the planet. But the global rollout has hit a snag in the South Pacific as Australia counters China’s growing influence in its backyard.
“The Huawei deal was red-flagged by the Australian intelligence service,” says Jonathan Pryke, analyst at the Lowy Institute think-tank. “The new national security imperative has clearly jolted Australia into action.”
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
The strongman leader of the Chechen Republic has long been a prolific social media user, filling his accounts with photos of him cuddling his cat, lifting weights or soliciting poems about President Vladimir V. Putin of Russia.
So when Ramzan Kadyrov’s Facebook and Instagram accounts, which had four million followers between them, were unexpectedly taken down on Dec. 23, people took notice.
A Facebook spokeswoman said that Mr. Kadyrov’s accounts were deactivated because he had just been added to a United States sanctions list and that the company was legally obligated to act.
Mr. Kadyrov has reportedly been involved in acts of torture, kidnapping and murder, among other human rights abuses.
Many other people on sanctions lists, however, remain active on Facebook and Instagram, including President Nicolas Maduro of Venezuela and many in his government. But the move against the Chechen leader — despite his violent background — is only the latest in a seemingly arbitrary and often opaque decision-making process that has drawn criticism of the social media giant.
This is the tenth consecutive year Obama has taken the man’s title, winning for the first time in 2008 and then every year of his presidency. This is his first win as a former president. Clinton has taken the woman’s title for 16 consecutive years and held the title a total of 22 times—more than any other winner of the Gallup poll. Eleanor Roosevelt is the closest runner-up with 12 total wins.
“In the East, it could be the COLDEST New Year’s Eve on record,” Trump noted about the freezing temperatures in New York and other cities. “Perhaps we could use a little bit of that good old Global Warming that our Country, but not other countries, was going to pay TRILLIONS OF DOLLARS to protect against. Bundle up!”
Sergio Mattarella, Italy’s president, ushered the country towards a general election by dissolving parliament on Thursday, launching a two-month campaign that will mark the next big political test for the EU given the rising strength of the country’s populist opposition parties.
Paolo Gentiloni, the centre-left prime minister, said at a press conference in Rome that he had achieved his goal of bringing the legislature to an “orderly conclusion” and said Italy was “back on track” after the worst economic crisis in the postwar period.
The election is shaping up to be a three-way contest between the anti-establishment Five Star Movement, which is first in national polls; the ruling centre-left Democratic party (PD), which has dipped into second place, and a resurgent centre-right, led by former prime minister Silvio Berlusconi in conjunction with the anti-euro Northern League.
Alabama Gov. Kay Ivey, Attorney General Steve Marshall and Secretary of State John Merrill — all Republicans — signed off on election results from all 67 counties and after late-counted provisional and military ballots were added to the total, Jones defeated Republican nominee Roy Moore by 21,924 votes out of more than 1.3 million cast.
Alabama officials on Thursday unhesitatingly pushed aside a legal challenge from Roy S. Moore and certified Doug Jones as the winner of this month’s Senate election.
The action, during a brief meeting at the State Capitol, was essentially the state’s final step before the seating of the first Democrat elected to the Senate from Alabama in a quarter century. It was also a swift rejection, by some of the state’s most powerful Republicans, of Mr. Moore’s complaint that he was the victim of “systematic voter fraud.”
SCANDALS, LAWSUITS, FINES, REGULATORY
A flawed data feed at Citigroup meant that retail customers saw the wrong research ratings on hundreds of stocks over a period of five years, according to a Wall Street watchdog, which has ordered the bank to pay at least $11.5m in fines and restitution.
The Financial Industry Regulatory Authority said on Thursday that errors at Citi’s brokerage unit involved more than 38 per cent of the equity securities that the New York-based bank covered between February 2011 and December 2015. In some cases stocks were tagged “buy” rather than “sell”, meaning that brokers collected commissions for soliciting transactions that may not otherwise have been ordered.
SILICON VALLEY, UNICORNS, STARTUPS, VC
Start-ups backed by some of Silicon Valley’s leading investors have joined a new venture to hire more software engineers in Canada, as concerns about President Donald Trump’s efforts to restrict highly skilled immigration persist into his second year in office.
Terminal launched earlier this year with a mission to help tech start-ups hire staff abroad, initially focusing on Canada. The company is providing companies with offices in Waterloo, Ontario, Montreal and Vancouver as well as human resources support, including helping employers navigate Global Talent Stream, Canada’s new two-week visa service to bring in migrant employees.
CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
Apple issued a rare apology for its handling of concerns about performance issues in iPhones with older batteries and said it will reduce the price of some iPhone replacement batteries to $29 from $79.
Apple and Amazon are in licensing discussions with Riyadh on investing in Saudi Arabia, two sources told Reuters, part of Crown Prince Mohammed bin Salman’s push to give the conservative kingdom a high-tech look.
Real-estate tycoon Mohamed Alabbar launched Noon to compete for a foothold in the Middle East’s online shopping boom. How the startup fares will provide a measure of the region’s ability to move beyond oil and real estate.
MEDIA, CABLE, SPORTS, ENTERTAINMENT
Netflix Inc.’s ambitious attempt at a big-budget film, “Bright” starring Will Smith, drew an enough viewers in its first three days to rival the opening-weekend audiences of several top Hollywood movies this year, according to Nielsen data.
Renny Harlin, known for big-budget B-movies, has become a dedicated instructor in China’s push to become a global cultural force, helping the country build on its huge domestic box office to find that elusive overseas commercial hit.
The end of Belgian telegrams isn’t the end of the service across the world, but it’s getting close. Britain ditched telegrams in 1982, the United States sent its last in 2006 and India, which long-relied on telegrams for internal government communications, tossed its last message in the bin in 2013.
As perhaps the most successful player ever to fall through the cracks of the sport’s powerful recruiting machine, Mayfield is the latest example of a strange phenomenon: Football isn’t very good at identifying the most talented quarterbacks.
Mayfield went to Lake Travis High School in Austin, Texas, a fertile breeding ground of college quarterbacks, but even his own coaches admit that he was easy to miss. He was short for a quarterback at 5-foot-11 back then. He couldn’t run. He didn’t sling the ball around the field like he does now. He wasn’t his team’s starter until his junior season. Pretty much every team in the five major conferences came away with the same impression: Mayfield was not worth a college scholarship.
“He didn’t look like a big-time quarterback,” said Lake Travis coach Hank Carter. “He played like one. But he didn’t look like one.”
At the World Fly-In Expo, an air show held in the central Chinese city of Wuhan last month, jets, hot air balloons, autogiros and ultralight planes were upstaged by Chinese-made drones.
Remote-controlled flying machines drew crowds at exhibition booths and performed in tight formation, high above the ground. Teams in brightly colored jackets raced industrial drones and competed in events like delivering parcels and spraying plumes of mock pesticide. Special drones even helped clear the skies of birds before performances by manned aircraft, using loud blasts of noise.
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