Macro Links Dec 5th – Ban Reinstated
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- SUPREME COURT AUTHORIZES TRAVEL BAN
- NORTH KOREA
- TRUMP VS FBI
- OBSTRUCTION OF JUSTICE
- RUSSIA PROBE
- ALABAMA, UTAH SENATE RACES
- BROKEN BREXIT
- CVS-AETNA DEAL
- FAST FOOD WARS
- BITCOIN, ICOS, CRYPTOCURRENCY
- GOP TAX PLAN
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- CENTRAL BANKS & MONETARY POLICY
- USA ECONOMY DATA, CITIES AND STATES
- POSITIONING, INFLECTION, MARKET CALLS
- CREDIT, YIELD, BUYBACKS, CORPORATES
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- COMMODITIES BASE METALS, MATERIALS
- COMMODITIES AGRICULTURE & SOFTS
- POLLUTION, CLIMATE & ENVIRONMENT
- GEOPOLITICS, CRIME, TERRORISM
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- TRUMP WORLD
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
- AUTOS, ELECTRIC, SELF-DRIVING
- SCIENCE, NATURE, PSYCHOLOGY
SUPREME COURT AUTHORIZES TRAVEL BAN
The Supreme Court on Monday granted President Trump’s request to fully enforce his revised order banning travel to the United States by residents of six mostly Muslim countries while legal challenges to it proceed in lower courts.
It was a victory for the White House, which has seen the courts trim back various iterations of the travel ban, and it bodes well for the administration if the Supreme Court is called upon to finally decide the merits of the president’s actions.
The court’s orders mean that the administration can fully enforce its new restrictions on travel from eight nations, six of them predominantly Muslim. For now, most citizens of Iran, Libya, Syria, Yemen, Somalia, Chad and North Korea will be barred from entering the United States, along with some groups of people from Venezuela.
The restrictions vary in their details, but in most cases, citizens of the countries will be unable to emigrate to the United States permanently and many will be barred from working, studying or vacationing here.
The latest version of the order also includes North Korea and some government officials in Venezuela. Sudan and Iraq, included in previous versions of the ban, have been removed. The list doesn’t include Muslim-majority countries where the Trump Organization has done business or pursued potential deals. Properties include golf courses in the United Arab Emirates and two luxury towers operating in Turkey.
The microwave weapons, known as CHAMPs, are fitted into an air-launched cruise missile and delivered from B-52 bombers. With a range of 700 miles, they can fly into enemy airspace at low altitude and emit sharp pulses of microwave energy to disable electronic systems.
“These high-powered microwave signals are very effective at disrupting and possibly disabling electronic circuits,” said Mary Lou Robinson, who heads development of the weapons at the Air Force Research Laboratory in Albuquerque, in an exclusive interview with NBC News.
Advocates say they could be used to stop North Korea from launching missiles by targeting the ground controls and the circuitry in the missiles themselves. The weapons are not currently operational.
Time is running out to avoid a war with North Korea, the White House national security has warned, after it emerged that the US is scoping out sites for missile interception batteries following the latest ballistic missile tests from Pyongyang.
“We’re in a race to be able to solve this problem,” H.R McMaster told Fox News during a weekend defence forum. “There are ways to address this problem short of armed conflict, but it is a race because he’s getting closer and closer and there’s not much time left,” he said, adding that dictator Kim Jong-un’s nuclear ambitions were the “greatest immediate threat” to the US and the world.
The United States and South Korea began large-scale combined air force drills Monday, with plans to carry out simulated strikes on North Korean nuclear and missile testing sites, South Korean military officials said.
Some 230 aircraft will take part in the drills, which will include some of the Pentagon’s most powerful warplanes, such as stealth F-35 Lightning II fighters and B1-B Lancer bombers. They come just a week after North Korea tested a missile that analysts said had the capability of reaching much of the continental United States.
The annual Vigilant Ace exercise is taking place amid increased tensions with North Korea over its nuclear program and the recent test of an improved, longer-range ICBM.
The Republican senator Lindsey Graham has called on the Pentagon to move the families of US military personnel out of South Korea, as a senior Trump administration official warned that the potential for war with North Korea was growing by the day.
TRUMP VS FBI
“I feel badly for General Flynn,” Mr. Trump said on Monday. “I feel very badly. He’s led a very strong life and I feel very badly. Hillary Clinton lied many times to the F.B.I. Nothing happened to her. Flynn lied and they destroyed his life.”
He continued his attacks on Sunday, characterizing the bureau’s investigation into Clinton’s use of a private email server while she was secretary of state as “tainted” because of text messages sent last year by one of the agents in charge of that probe that appeared to show an anti-Trump skew. The president also laid into James Comey, the former FBI director whom he blamed for leaving the bureau’s reputation “in Tatters” after a “phony and dishonest Clinton investigation.”
Christopher A. Wray, the F.B.I. director, defended his work force in an email on Monday, a day after President Trump said on Twitter that the agency’s standing was the “worst in History” and its reputation was in “Tatters.”
In a message to the F.B.I.’s 35,000 agents and support staff that was provided to The New York Times, Mr. Wray said that he was “inspired by example after example of professionalism and dedication to justice demonstrated around the bureau. It is truly an honor to represent you.” He did not mention Mr. Trump by name.
OBSTRUCTION OF JUSTICE
Trump’s legal team is clearly setting the stage to say the president cannot be charged with any of the core crimes discussed in the Russia probe: collusion and obstruction. Presumably, you wouldn’t preemptively make these arguments unless you felt there was a chance charges are coming.
In 1999, Sessions – then an Alabama senator – laid out an impassioned case for President Bill Clinton to be removed from office based on the argument that Clinton obstructed justice amid the investigation into his affair with White House intern Monica Lewinsky.
“Dowd’s argument is the last refuge of a scoundrel, and it would lead us down a path to despotism.”
“[there are] two converging currents: the Mueller investigation, looking for that obstruction of justice charge and then Alabama, Roy Moore coming to the Senate possibly in a week,” Castellanos said. “[If he wins], he becomes the face of the Republican Party for the next year when we’re already in danger of losing the House. It’s likely we’ll do that without him, lose the House. Trump gets impeached. We’re closer to impeachment now than we think.”
Trump has repeatedly said the accusations against him are groundless. But by turning personal and branding the women liars, Trump has perhaps unwittingly played into a cutting-edge strategy in the legal pursuit of sexual misconduct — claims of defamation such as those used against comedian Bill Cosby and in a lesser-known New York case, argued by two lawyers who are now representing Zervos.
As recently as last week, Manafort was ghostwriting an editorial with a longtime colleague with ties to a Russian intelligence agency, seeking to put a positive spin on his work for the Ukrainian government, according to prosecutors for Special Counsel Robert Mueller. The charges against Manafort relate to his work in that country.
Federal prosecutors asserted Monday that a longtime associate of Paul Manafort, the former chairman of President Trump’s campaign, has been “assessed to have ties” to Russian intelligence — the first time the special counsel has alleged a Trump official had such contacts.
A Republican delegate to the convention says a Trump campaign aide claimed Trump had directed him to weaken support for U.S. aid to Ukraine. Congressional investigators are looking into it.
The Kremlin issued several sharp, successive denials Monday to questions about whether then-President-elect Donald Trump’s national security adviser, Michael Flynn, persuaded Russian President Vladimir Putin not to retaliate for sanctions issued by President Barack Obama.
President Trump’s former aide had told lawmakers that she knew nothing of the national security adviser’s contacts with the Russian ambassador. But newly surfaced emails undermine her assertion.
As the White House contends with questions about who knew about former national security adviser Michael Flynn lying to the FBI, people close to Vice President Mike Pence are trying to make clear that President Donald Trump’s No. 2 knew nothing at all.
ALABAMA, UTAH SENATE RACES
Roy S. Moore, the Senate candidate from Alabama, is accused of sexual misconduct with minors. President Trump has endorsed him, but other Republicans are wrestling with the political risk of supporting him.
President Trump offered his endorsement and said he needed “a fighter to help him” in the Senate, according to Roy Moore, the embattled Republican candidate.
President Donald Trump endorsed Alabama Republican Senate candidate Roy Moore, linking his candidacy to the need to pass tax cuts, criminal-justice measures, stricter immigration laws and enforcement and more.
“He called me a liar,” said Gibson, who says she not only openly dated Moore when she was 17 but later joined him in passing out fliers during his campaign for circuit court judge in 1982 and exchanged Christmas cards with him over the years. “Roy Moore made an egregious mistake to attack that one thing — my integrity.”
Republican former Massachusetts Gov. Mitt Romney slammed Republican Senate nominee Roy Moore of Alabama, rebuking the candidate accused of sexual assault and harassment on the same day President Donald Trump embraced him.
The future of Hatch, who is 83, has dominated political chatter in Utah and has sparked much behind-the-scenes maneuvering. Privately, Trump has told people he wants Hatch — chairman of the powerful Senate Finance Committee — to keep the seat and has implored the senator to run, saying he does not want Romney in the Senate. He also has told the senator that on several occasions.
Theresa May came closer than ever on Monday to the Brexit deal she’s been working on for months. A last-minute upset over the Irish border left all parties embarrassed and doesn’t bode well for a second run at a breakthrough.
A carefully choreographed divorce deal between London and Brussels was derailed at the eleventh hour on Monday after Northern Ireland’s hardline Unionists rejected Theresa May’s agreement to potentially keep the province aligned with EU law after Brexit.
Britain’s divorce negotiations with the European Union hit a major snag on Monday, when a hard-line Northern Ireland party that is a crucial ally of Prime Minister Theresa May pulled its support at the last minute from an agreement on the future of the border between the United Kingdom and Ireland.
The abrupt decision, which appeared to take Mrs. May by surprise as she held talks in Brussels, derailed a draft deal between Britain and the European Union that is a prerequisite for moving on to the next stage of negotiations.
May’s openness to allow Northern Ireland to continue abiding by the bloc’s rules and standards after the U.K. leaves appeared to open a Pandora’s Box of constitutional woes, as first Scotland’s first minister and then London’s mayor — both of whom opposed Brexit — suggested that they too could benefit from such a deal.
“If one part of U.K. can retain regulatory alignment with EU and effectively stay in the single market (which is the right solution for Northern Ireland) there is surely no good practical reason why others can’t,” Scotland’s Nicola Sturgeon tweeted.
London Mayor Sadiq Khan followed suit minutes later. “Huge ramifications for London if Theresa May has conceded that it’s possible for part of the U.K. to remain within the single market & customs union after Brexit,” Khan said in a tweet. “Londoners overwhelmingly voted to remain in the EU and a similar deal here could protect tens of thousands of jobs.”
Britain is leaving the European Union thanks to the Brexit referendum. This poses some very tricky questions for both Britain and Ireland. First, they will no longer have a shared political context, calling the stability of the peace deal into question. Second, they now have to confront new questions. If Britain is no longer a member of the E.U., it is no longer automatically part of the E.U.’s customs arrangements and Ireland and Britain might have to reintroduce customs controls along the border. The Irish and Northern Irish economies are closely intertwined; goods cross over all the time. These ties would be weakened or severed if border controls were reintroduced.
The deal is a direct consequence of Amazon’s penchant for disruption. Analysts say CVS snapped up Aetna to stay competitive with Amazon, which has made several moves this year that have pharmaceutical companies atremble. In May, CNBC reported that the company was looking to hire a general manager to develop a strategy for getting into the pharmaceutical business. Then word spread that Amazon had acquired pharmacy licenses in a dozen states. The company said it did so to sell medical supplies, but the move positions Amazon to sell drugs down the line, should it decide it wants to. And just last week, reports circulated that Amazon had held preliminary discussions with generic drugmakers Mylan and Sandoz.
The combination of the two companies, in a deal valued at $69 billion and announced Sunday, is supposed to bring together Aetna’s patient data and CVS’s sprawling network of nearly 10,000 brick-and-mortar sites to squeeze out costs while improving care and convenience.
But no major health-care company has tried to build a vertical system around the combination of drugstores, insurance and pharmacy-benefit management, the main businesses of CVS and Aetna, experts said. The merged company will lack a strong foundation of its own doctors, who make many of the decisions that influence both costs and quality of care.
The dream is that CVS-Aetna will send patients to CVS’ pharmacies, many of which already include Minute Clinics that can provide basic medical care, instead of more expensive doctor’s offices or emergency rooms, and that CVS will do a better job keeping track of high-risk patients than Aetna does now. The best argument for this vision is perhaps CVS’ initiative to reduce the prescribing of opioids. Last week at the Forbes Healthcare Summit, CVS Chief Medical Officer Troyen Brennan said the restrictions as to the doses of these drugs the pharmacy will dole out are setting “a new normal” without complaints from employers, insurers, or patients.
This idea, that the physical store and human workers could improve healthcare outcomes and save money, overturns the usual assumptions about the digital revolution. If true, it would also represent a huge firewall against potential competitors like Amazon, which is rumored to be looking for opportunities in drug distribution.
FAST FOOD WARS
McDonald’s Corp said on Monday it would introduce new menus with $1, $2 and $3 items in early January as restaurants battle to win U.S. customers who have come to expect deals on fast food. McDonald’s is in a price war with rivals ranging from Yum Brands Inc’s Taco Bell to Dunkin’ Brands Group Inc.
With visits to U.S. fast-food restaurants seen remaining flat next year, the major burger chains are jockeying for position and announcing discounts to keep diners’ attention. This includes McDonald’s Corp., which earlier Monday unveiled a new value-priced menu.
Taco Bell, the Mexican-themed chain owned by Yum Brands Inc., is responding with what it calls its “biggest value push in company history.” The chain is reminding customers that it has a $1 menu with 20 items, and this dollar lineup will be boosted by 20 more limited-time offerings in 2018. The menu will include nacho French fries and a new “stacker” quesadilla — beef and cheese in a folded flour tortilla.
BITCOIN, ICOS, CRYPTOCURRENCY
The two former Olympic rowers disclosed in 2013 that they owned $11 million worth of bitcoin. The cryptocurrency’s meteoric rise since then — it has risen by over 1,000% this year — has propelled that investment to over $1 billion, according to The Telegraph. The Winklevoss twins are long-time bitcoin bulls and are also investors in the crypto exchange Gemini.
“The cause is a DDoS attack. A person or group is intentionally trying to cause the platform to not operate normally,” the exchange said. A DDoS, or distributed denial-of-service attack, attempts to paralyze a system with a flood of information.
“It’s really very premature to be talking about the Federal Reserve offering digital currencies, but it is something we are thinking about,” New York President William Dudley said on Wednesday.
Chicago’s two largest derivatives exchanges are going head to head in coming weeks to become the US market of choice for bitcoin futures trading.
Cboe Global Markets said on Monday it would begin trading its bitcoin futures contracts, known as XBT futures, next week, on December 11, offering free trading for the rest of the month to help spur transactions. That will steal a march on its rival, CME Group, the world’s largest futures exchange, which will launch its futures contracts the following Monday.
“The futures reduce the frictions of going short more than they do of going long, so it’s probably net bearish,” said Craig Pirrong, a business professor at the University of Houston. “Having this instrument that makes it easier to short might keep the bitcoin price a little closer to reality.”
Israel should look at the explosion of cryptocurrencies as an opportunity to develop an international financial center for so-called initial coin offerings, the head of the country’s securities market regulator said.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla said the central bank is in talks with the nation’s Securities and Exchange Commission on ways to oversee ICOs, in which companies raise funds through the sale of digital tokens. Companies are seeking to facilitate ICOs and act as a central counterparty for trade in the related tokens to take advantage of the “strong growth potential in this space,” he said in an email.
The SEC announced its first-ever enforcement action by its new cyber unit against an initial coin offering, alleging a Canadian company violated U.S. securities laws in raising $15 million through this new, red-hot area of finance.
GOP TAX PLAN
This is a big problem. The Senate bill brings the normal corporate rate down to 20 percent — while leaving the alternative minimum rate at … 20 percent. The legislation would still allow corporations to claim a wide variety of tax credits and deductions — it just renders all them completely worthless. Companies can either take no deductions, and pay a 20 percent rate — or take lots of deductions … and pay a 20 percent rate.
With this blunder, Senate Republicans have achieved the unthinkable: They’ve written a giant corporate tax cut that many of their corporate donors do not like.
As Republicans in the Senate sought to limit the cost of their tax bill shortly before voting to approve it at 2am on Saturday, they decided to retain the corporate Alternative Minimum Tax, which sets a limit on how far companies can use credits to reduce their tax bills.
The threat to the value of the credits has emerged as one of many potential unintended consequences of a wholesale upheaval of the tax system that is passing through Congress at speed. One of the worst affected industries could be renewable energy, which faces not only a clampdown on the future availability of tax credits but also retrospective increases in tax on investments already made.
“The fact is, almost everyone who’s a corporate taxpayer is going to be an AMT taxpayer” under the bill, said Bret Wells, a tax law professor at the University of Houston. Shares of technology companies dropped Monday. An index of technology companies on the S&P 500 fell around 2 percent. The Nasdaq 100 Tech Index fell 1.8 percent.
Already, the U.S. Chamber of Commerce is seeking the AMT’s repeal — as the Senate bill would have done before Saturday’s changes. Seeing the provision retained in the legislation was “a very unpleasant surprise,” wrote Caroline L. Harris, the organization’s chief tax counsel.
Republican senators inserted last-minute changes into their tax overhaul bill early Saturday morning, including ones aimed at helping oil and gas companies, cruise-ship operators, auto dealers, universities and mortgage bankers.
Many of the late provisions, which were blasted by Democrats, made it in with support from various interest groups. The question now is whether they survive as House and Senate lawmakers attempt to reconcile their bills into one measure that can pass both chambers.
Public statements and messaging documents obtained by The New York Times show a concerted push by Republican lawmakers to discredit a nonpartisan agency they had long praised. Party leaders circulated two pages of “response points” that declared “the substance, timing and growth assumptions of J.C.T.’s ‘dynamic’ score are suspect.” Among their arguments was that the joint committee was using “consistently wrong” growth models to assess the effect the tax cuts would have on hiring, wages and investment.
“I think not having the estate tax recognizes the people that are investing,” Grassley told the Register in a story published Saturday. “As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
Republicans are moving toward passing a two-week stopgap measure to avoid a looming government shutdown, but the path in the coming weeks is treacherous, with obstacles on both sides of the aisle as lawmakers push their own priorities, some unrelated to government spending.
With government funding set to expire at the end of Friday, Republicans are aiming to buy more time so they can negotiate over a long-term spending package. The task is complicated by a feud between President Trump and Democrats, whose votes Republicans need to secure passage, and measures on the politically fraught issues of immigration and the Affordable Care Act.
A $1tn wave of fixed-income debt is set to mature in Europe, the Middle East and Africa in the coming year, posing a significant challenge for investors searching for returns, according to new research. The debt was raised by investment-grade companies, sovereigns and financial institutions in the aftermath of the financial crisis, when bond yields were much higher than they are now.
The bonds have delivered attractive total returns to investors, who now face a less appealing environment for putting their money to work and will probably demand higher fixed rates from borrowers looking to refinance. The Bank of America Merrill Lynch global high-yield index yielded over 8 per cent when the wave of debt-raising began in 2012. It is now returning around 5.3 per cent.
The $1tn set to mature next year is the first in what is likely to be several years of similarly sized waves of redemptions, according to Anthony Barklam, MUFG’s co-head of debt capital markets bonds and loans.
The scale of the redemptions is significant in relation to the global scale of the international debt capital markets, which total over $10tn in outstanding maturities according to figures from the International Capital Markets Association and data provider Dealogic. Of this, around $2.5tn is due to mature in 2018.
BlackRock Inc. and Vanguard Group — already the world’s largest money managers — are less than a decade from managing a total of $20 trillion, according to Bloomberg News calculations. Amassing that sum will likely upend the asset management industry, intensify their ownership of the largest U.S. companies and test the twin pillars of market efficiency and corporate governance.
Vanguard is poised to parlay its $4.7 trillion of assets into more than $10 trillion by 2023, while BlackRock may hit that mark two years later, up from almost $6 trillion today, according to Bloomberg News projections based on the companies’ most recent five-year average annual growth rates in assets. Those gains in part reflect a bull market in stocks that’s driven assets into investment products and may not continue.
Global ETF assets could explode to $25 trillion by 2025, according to estimates by Jim Ross, chairman of State Street’s global ETF business. That sum alone would mean trillions of dollars more for BlackRock and Vanguard, based on their current market share.
The firm produced its most cautious outlook in a decade on concerns of more volatility, inflation and dipping market performance next year, according to a report released Monday. Higher U.S. wages or inflation could cause investors to expect more aggressive rate normalization from the Federal Reserve, sparking more market volatility, the report said.
“While our global market outlook suggests a somewhat more challenging and volatile environment ahead, investors can continue to find potential for long-term success by lowering their return expectations,” Joseph Davis, Vanguard’s global chief economist, said in a press release.
The total value of companies listed on the world’s stock markets as of Friday’s close was $98,750,067,000,000 — within touching distance of $100 trillion for the first time.
A Reuters examination, including a review of court records of cases such as Zhu’s dispute with Lei, shows that across China, unqualified borrowers use fake documents to secure mortgages, while loans deceptively obtained for other purposes are funnelled into property. These frauds are often committed with the consent and encouragement of other parties to the transactions, including lending brokers, property agents, valuation companies and the banks themselves.
And these alleged crimes are rarely punished.
Hu Weigang, a senior partner at Guangdong Shen Dadi Law Firm, would like to see the law enforced on the mainland as it is in Hong Kong, where creating a bogus document can lead to jail. But, he acknowledges, the scale of this cheating makes it virtually impossible.
“When everyone is doing it, you can’t put everyone in jail,” says Hu, who specializes in real estate litigation.
Assuming the legislation goes through, it will effectively put Republicans in a position to adopt the recovery as their own, pointing to their tax changes as fuel for the continued growth and potentially boosting their prospects in 2018’s midterm elections. Kevin Hassett, the chairman of the Council of Economic Advisers, told the FT before the Senate deal went through that significant tax reform would mean “at the very least the odds of sustaining growth at the 3 per cent level go up enormously”.
But the GOP will also have to take responsibility for widening deficits, with the Committee for a Responsible Federal Budget projecting that tax and spending legislation currently on the agenda could propel the US back to trillion-dollar deficits as soon as 2019. And the package arguably leaves unaddressed longer-term economic challenges alongside rising public debt, including higher inequality, poor educational outcomes, and slowing labour force growth.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
As someone who spent hundreds of hours observing Trump so I could write “The Art of the Deal,” I find his increasingly extreme behavior entirely consistent and predictable. Michael Flynn’s guilty plea Friday, and his promise to cooperate with special counsel Robert S. Mueller III, brings the investigation closer than ever to the president’s doorstep. For five decades now, Trump’s pattern has been that the more aggrieved and vulnerable he feels, the more intensely he doubles down on the behaviors that have always worked for him in the past.
If Mr. Flynn violated the Logan Act, then so did the “very senior” official who directed his actions. If that official is Mr. Kushner, then Mr. Kushner could go to jail. If it is Mr. Pence or Mr. Trump, then impeachment proceedings could be in order. To be sure, the Republican-controlled Congress, not Mr. Mueller, decides who to impeach. But if the phrase “high crimes or misdemeanors” means anything, it includes violation of a serious criminal statute that bars citizens from undermining the foreign policy actions of the sitting president.
The official story was clear: Saudi forces shot down a ballistic missile fired by Yemen’s Houthi rebel group last month at Saudi Arabia’s capital, Riyadh. It was a victory for the Saudis and for the United States, which supplied the Patriot missile defense system.
“Our system knocked the missile out of the air,” President Trump said the next day from Air Force One en route to Japan, one of the 14 countries that use the system. “That’s how good we are. Nobody makes what we make, and now we’re selling it all over the world.”
But an analysis of photos and videos of the strike posted to social media suggests that story may be wrong. Instead, evidence analyzed by a research team of missile experts appears to show the missile’s warhead flew unimpeded over Saudi defenses and nearly hit its target, Riyadh’s airport. The warhead detonated so close to the domestic terminal that customers jumped out of their seats.
In August, the bitcoin world split in two when bitcoin cash broke away from bitcoin. It was the culmination of years of growing tension about how to improve the world’s most popular cryptocurrency. The divide has set up a battle over which is the “true” bitcoin, pitting rivals whose combined market value has eclipsed that of Citigroup Inc. and Coca-Cola Co. Now, investors are bracing for volatility and a fight that could define what a cryptocurrency can or should be.
Much like bitcoin, a central bank cryptocurrency would be universally accessible, electronic and exchanged peer-to-peer. A helpful taxonomy devised by Morten Bech and Rodney Garatt at the Bank for International Settlements (BIS) suggests it should be issued by the central bank itself, rather than via a privately run algorithm. This is a crucial difference: Only the monetary authority would be able to create and destroy this “official” cryptocurrency, which would be fully convertible with cash or bank reserves.
The Republican plan can only be described as a Bizarro version of Reaganomics — all the downside (meaning a huge deficit increase, according to a variety of sources, including Congress’s own tax watchdog) with none of the upside of growth. Tax cuts have not created real economic growth in America in 20 years, under either Democratic or Republican administrations. Yes, we saw growth from tax cuts during the Ronald Reagan era, but we also saw a huge increase in the deficit in the second term. And the growth won’t be repeated this time around since a variety of big factors, from demographics to productivity levels, are quite different now.
What we will see is an increase in wealth inequality, since it is very clear that any money that large corporations (the main beneficiaries of the Republican plan) get from the cuts will go straight into stock buybacks. This will add another dose of financial glucose to what is already a very saccharine market — one that is by almost any measure totally divorced from the reality of most people’s lives.
It’s clearly not a good thing that the U.S. economy is maxing out at a relatively low level of output. But if the secret to happiness is lowering your expectations, as some people say, maybe we should all be happy now.
Mr. Turnbull has called this the first time in Australia’s history that its dominant trading partner was not also its dominant security partner. He argued that the country should see this as an opportunity and not a risk, but his comments were also laced with uncertainty and concern.
“Now power is shifting, and the rules and institutions are under challenge,” he said. “The major players are testing their relationships with each other, while undergoing rapid change themselves.”
AI systems are such one-trick ponies because they’re designed to be trained on specific, diverse, huge datasets. It could be argued that they still exist within philosopher John Searle’s “Chinese Room.” In that thought experiment, Searle, who doesn’t speak Chinese, is alone in a room with a set of instructions, in English, on correlating sets of Chinese characters with other sets of Chinese characters. Chinese speakers are sliding notes in Chinese under the door, and Searle pushes his own notes back, following the instructions. They can be fooled into thinking his replies are intelligent, but that’s not really the case. Searle devised the “Chinese Room” argument — to which there have been dozens of replies and attempted rebuttals — in 1980. But modern AI is still working in a way that fits his description.
Yemen was the poorest country in the Middle East even before the outbreak of war in 2014 between Houthi rebels and government forces. The conflict has heaped devastation upon poverty. Since fighting began Yemen has suffered the biggest cholera outbreak in modern history and is on the brink of the harshest famine the world has seen for decades. The conflict has shattered the water, education and health systems. The UN says that it is the world’s worst current humanitarian crisis. Three-quarters of the population of 28m need help.
Yemen’s infrastructure has been crumbling for years, so it is difficult for a visitor to tell between buildings that are falling down through neglect and those half-levelled by explosions. But locals point out the damage wrought by a bombing campaign led by Saudi Arabia, part of an international coalition that supports the government. Although American and British military advisers have helped the Saudis to choose targets, and their governments have provided them with precision-guided munitions, or “smart bombs”, the air strikes often seem to miss their mark.
CENTRAL BANKS & MONETARY POLICY
Bank of Japan Governor Haruhiko Kuroda gave the clearest signal yet that his recent comments about the “reversal rate” theory weren’t an indication of tighter monetary policy in the coming year.
The BOJ’s yield-curve control program, partly intended to address the impact of monetary easing on Japanese banks, has been successful and hasn’t created any problems for financial institutions such as those described in the reversal rate theory, Kuroda said Monday during a conference in Tokyo when asked about his comments last month.
Should the market detect even a tentative first step towards exiting easy monetary policy, then such a development “could have momentous repercussions” for the policy-sensitive yen, Mr Mellor says. It is not that most investors are suddenly, or seriously fretting that the BoJ is poised to become hawkish, said one Tokyo-based currency strategist, “it’s just that there is now much less conviction that it will remain super-dovish”.
USA ECONOMY DATA, CITIES AND STATES
While other retailers focus on cities, the thriving discount chain is building thousands of small-town stores aimed at lower-income shoppers. “The economy is continuing to create more of our core customer.”
Montana has become the latest state to sue Purdue Pharma LP for its alleged role in the opioid crisis, as the maker of OxyContin presses for joint talks with states to resolve similar, widespread accusations.
A proposal for an apartment complex without parking in Phinney Ridge has generated pushback from residents who say that’s unrealistic. Officials, meanwhile, say they are crucial as the city grows.
Workers who earn tips, such as waiters, could be required by their employer to share that money with nontipped colleagues under a Labor Department proposal that would be a win for business owners.
Even though U.S. cities tend to be reasonably safe for commuters on two wheels, 70 percent of all fatal bike accidents still tend to occur in urban areas. Which cities have the highest rate of cyclist fatalities?
POSITIONING, INFLECTION, MARKET CALLS
Foreign-investor money is pouring into the U.S. stock market at the fastest clip in years, ending a long period of selling and providing a fresh boost to a more than eight-year rally.
Overseas buyers have pumped $66.4 billion into U.S. stocks this year through September in their biggest buying spree since 2012, according to the most recently available data compiled by Deutsche Bank. Foreign buying was particularly robust heading into the fall, when investors bought $26.3 billion of stock in September.
There’s much to encourage commodity investors in 2018, if they can keep a wary eye out for wildcards including China, according to Citigroup Inc. Demand gains will be sustained through next year and in 2019, lifted by emerging markets as well as advanced economies, the bank said in a report. While there may be a slowdown in China, the top consumer of metals and energy and grains, stricter environmental standards and pressure to support bank balance sheets by eliminating overcapacity and curbing a glut could lead to tightness in some commodities, according to Citigroup.
While the stock-market rally is welcome news for retirement investors, Federal Reserve data show that only about half of U.S. households have any skin in the game to begin with. The share of families with retirement accounts, including IRAs and 401(k) plans, rose to 52.1 percent in 2016, from 49.2 percent in 2013, but still below its pre-recession level of 53 percent, according to the Fed’s most recent survey of consumer finances.
CREDIT, YIELD, BUYBACKS, CORPORATES
The company, which provides the means for merchants to process credit card sales by authorising transactions and facilitating the transfer of funds between both parties, announced that the new share repurchasing program would begin once its previously announced $4bn buyback is completed. It said about $1.5bn remained under that programme.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Xiaomi Corp., the Chinese smartphone maker that was once the most valuable startup in the world, is in talks with investment banks about a possible initial public offering and seeking a valuation of at least $50 billion, according to people familiar with the matter.
ENERGY CRUDE OIL, OIL SANDS, SHALE
ANZ said commodities were broadly under pressure with a rising US dollar and a risk-on tone in the markets. The oil price “also wasn’t helped by the market returning its focus to US shale oil output after last week’s agreement to extend the OPEC-led production cuts,” the bank’s analysts said, noting a rise in the US rig count last week and a decision by a major US producer to more than triple its output over the coming years.
Oil supply curbs by global producers are expected to continue throughout 2018 even though countries may start discussing when to raise output in June, Saudi Arabia’s energy minister said on Monday. Khalid al-Falih said he expected that the 24 participating countries “will not alter our course in the second half of the year” — assuming that there were no unexpected developments in the oil market.
COMMODITIES BASE METALS, MATERIALS
Iron ore has rallied back into a bull market. Prices are surging as China’s crackdown on steel output this winter runs down inventories, helping mills’ profitability and stoking demand for high-grade ore even as investors discount signs of ample supply.
COMMODITIES AGRICULTURE & SOFTS
Guacamole fans take heart. Good weather and better pest control are expected to boost Mexico’s Hass avocado production in the year that began in July, the U.S. Department of Agriculture said in an update last week. Wholesale prices have already come down from the records set this summer, and the larger crop should prevent costs from reaching those peaks again.
POLLUTION, CLIMATE & ENVIRONMENT
For the first time in 40 years, power plants are no longer the biggest source of U.S. greenhouse gas pollution. That dubious distinction now belongs to the transport sector: cars, trucks, planes, trains and boats.
Up to eleven countries could end up on a European Union blacklist of tax havens and potentially face sanctions for failing to bring their tax standards in line with the bloc, according to the latest draft of proposals.
A Portuguese economist will be the new leader of the group that manages crises for the eurozone, a sign that the region’s officials may be ready to leave behind an era during which the euro often appeared to be on the brink of collapse.
The choice on Monday of Mário Centeno, Portugal’s finance minister, as the Eurogroup’s next president reflects a change in the body’s focus. The move could signal that austerity policies imposed on struggling countries like Greece are nearing an end, and that rather than simply trying to survive, the 19 finance ministers who make up the Eurogroup are debating how to make the bloc less susceptible to future crises.
GEOPOLITICS, CRIME, TERRORISM
In a late-night call Sunday, Jordan’s foreign minister, Ayman Safadi, warned Secretary of State Rex Tillerson that such a decision could “trigger anger across the Arab and Muslim world, fuel tension and jeopardize peace efforts,” according to Jordan’s state news agency.
According to Palestinian, Arab and European officials who have heard Mr. Abbas’s version of the conversation, Crown Prince Mohammed bin Salman presented a plan that would be more tilted toward the Israelis than any ever embraced by the American government, one that presumably no Palestinian leader could ever accept.
Israeli Prime Minister Benjamin Netanyahu recently sent a message to Syria’s leader threatening to strike the country if it allows Iran to set up military bases there, a sign Israel is prepared to drop its neutral stance on the yearslong war next door, according to Israeli officials.
A West African force that’s being created to fight a surge in jihadist attacks is getting ready to be deployed after France persuaded Saudi Arabia to help fund the operation, according to a person familiar with the matter.
Former President Ali Abdullah Saleh was killed on Monday after the collapse of his alliance with the Houthi rebels controlling the capital, opening a new chapter in a conflict that is part of the regional power struggle between Saudi Arabia and Iran.
Mr. Saleh’s death signaled a turning point in the country’s war by shattering the alliance between his loyalists and the rebels known as the Houthis, who had taken over the capital, prompting a punishing bombing campaign by Saudi Arabia and its allies.
That political fracturing could make it harder for the parties to negotiate an end to the conflict, analysts said, while renewed fighting in the capital, Sana, could worsen the humanitarian crisis afflicting Yemen, which the United Nations has called the world’s worst.
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
Marchers demanded an impartial count of last week’s presidential vote as negotiations between the electoral commission and the opposition broke down. Huge demonstrations in the capital, Tegucigalpa, and the country’s industrial hub, San Pedro Sula, snaked through the streets with an almost festive air as marchers waved the red flags of the main opposition party, which has denounced what it calls fraud in the vote tally.
Green Party presidential candidate Jill Stein was the beneficiary of at least one of the Russian-bought political ads on Facebook that federal government officials suspect were intended to influence the 2016 election. Other advertisements paid for by shadowy Russian buyers criticized Hillary Clinton and promoted Donald Trump. Some backed Bernie Sanders and his platform even after his presidential campaign had ended, according to a person with knowledge of the ads.
So far, Hatreon is a one-man operation in Austin. Wilson says he collects $25,000 in monthly donations from a few thousand people. But the number of recipients is even smaller, so that can translate into real money. The big winners are white supremacists. Andrew Anglin, the creator of prominent neo-Nazi website the Daily Stormer, receives almost $4,000 a month from more than 220 Hatreon donors, down from a peak of about $8,000. White supremacist leader Richard Spencer collects about $1,000 from more than 70 donors. Wilson says his own slim profits—5 percent of $25,000 is $1,250—have been doubling from month to month.
A tweet from Sarah Huckabee Sanders last year has a bit of a different meaning after President Donald Trump blasted the FBI on Twitter over the weekend. With Trump’s numerous tweets attacking the FBI on Sunday, the tweet has gained some new life.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
Trump’s move to shrink the Bears Ears and Grand Staircase-Escalante national monuments by more than 1.1 million acres and more than 800,000 acres, respectively, immediately sparked an outpouring of praise from conservative lawmakers as well as activists’ protests outside the White House and in Utah. The changes plunge the Trump administration into uncharted legal territory, as no president has sought to modify monuments established under the 1906 Antiquities Act in more than half a century.
The decision to reduce Bears Ears is expected to set off a legal battle that could alter the course of American land conservation, putting dozens of other monuments at risk and possibly opening millions of preserved public acres to oil and gas extraction, mining, logging and other commercial activities.
MEDIA, CABLE, SPORTS, ENTERTAINMENT
It’s the biggest, most lavish-looking Netflix series ever, one based on an acclaimed sci-fi novel, and yet chances are you’ve never heard of Altered Carbon. Based on Richard K. Morgan’s 2002 cyberpunk novel, Carbon is set 300 years in the future when human consciousness can be stored on digital implants (called “stacks”) which allow the mega-rich to continually upgrade their bodies (dubbed “sleeves”) and essentially live forever.
“House of Cards” will return on Netflix for one more season, ending speculation that the sexual harassment scandal that led to the firing of actor Kevin Spacey would also end the political drama.
A brutal winter is setting in. BuzzFeed will probably miss its revenue target, of $350m this year, by 15-20%, and is to lay off 100 of its 1,700 staff. Vice is also expected to fall short of its revenue target, of $800m. Mashable, a once-trendy site valued in 2016 at $250m, in November agreed to be sold for $50m to Ziff Davis, a print-turned-digital publisher. Other news sites are up for sale, cutting their staff or closing shop, sending ink-free scribes in search of work. Digital media are, in other words, enduring similar woes to their print peers. “There was this hype bubble that convinced everybody that these digitally native companies are different but they are not,” says an executive at one such previously overvalued firm. “People need to readjust their expectations.”
AUTOS, ELECTRIC, SELF-DRIVING
Elon Musk fully intends to put a red sports car made by a company that he runs into an enormous rocket ship made by another company that he runs and fire both into Mars orbit. The car, as it hurtles into space, will be playing a song by David Bowie on repeat.
It goes without saying that the song will be “Space Oddity”—and that this plan was announced, like so many of Musk’s business decisions, in a cryptic message on Twitter over the weekend. A person familiar with the launch plan at SpaceX Inc. confirmed that it is real.
BMW AG is targeting another ambitious hike in plug-in hybrid and battery car sales next year to defend its position in the electric-car shift as competitors like Volkswagen AG ready their own battery lineups.
Toyota Motor Corp should decide by the first quarter of 2018 on a location for a new U.S. vehicle assembly plant it will build with Mazda Motor Corp, the head of Toyota’s North American operations said on Monday.
Urus has a 650-horsepower, 4.0 liter V8 twin-turbo engine and gets 850 Nm of torque from a 4WD, eight-speed automatic transmission. It can hit 62 mph in 3.6 seconds and will continue accelerating all the way to 190 mph. The standard model rolls on 21-inch rims and comes with adaptive air suspension and carbon ceramic brakes, as well as active roll stabilization.
SCIENCE, NATURE, PSYCHOLOGY
NASA has nailed an engine test on a spacecraft 13 billion miles away.
Last week, ground controllers sent commands to fire backup thrusters on Voyager 1, our most distant spacecraft. The thrusters had been idle for 37 years, since Voyager 1 flew past Saturn.
To NASA’s delight, the four dormant thrusters came alive. It took more than 19 hours — the one-way travel time for signals — for controllers at the Jet Propulsion Laboratory in Pasadena, California, to get the good news.
Blessed with a cornucopia of precious metals buried beneath a desert of snow, but so bereft of sunlight that nights in winter never end, Norilsk, 200 miles north of the Arctic Circle, is a place of brutal extremes. It is Russia’s coldest and most polluted industrial city, and its richest — at least when measured by the value of its vast deposits of palladium, a rare mineral used in cellphones that sells for more than $1,000 an ounce.
“Norilsk is a unique city, it was put here by force,” said Alexander Kharitonov, owner of a printing house in the city. “It is like a survivor. If it had not been for Norilsk, there would have been another principle of life in the Arctic: You came, you worked, you froze — and you left.”
The residents of Norilsk have stayed, turning what until the 1930s had been an Arctic wilderness inhabited only by a scattering of indigenous peoples into an industrial city dotted with smoke-belching chimneys amid crumbling Soviet-era apartment blocks and the ruins of former prison barracks.
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