Macro Links December 4th – Begging For War
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- NORTH KOREA
- BITCOIN, CRYPTOCURRENCY
- GOP TAX PLAN
- MICHAEL FLYNN
- MUELLER INVESTIGATION, RUSSIA CONTACTS, KUSHNER
- TRUMP BLOWBACK
- SAUDI ARABIA
- SEXUAL HARASSMENT
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- USA ECONOMY DATA, CITIES AND STATES
- GLOBAL ECONOMY DATA
- POSITIONING, INFLECTION, MARKET CALLS
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- ENERGY RENEWABLES, NUCLEAR
- POLLUTION, CLIMATE & ENVIRONMENT
- FRONTIER MARKETS
- CANADA, AUSTRALIA, NEW ZEALAND
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- TRUMP WORLD
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- ELECTORAL POLITICS
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
- AUTOS, ELECTRIC, SELF-DRIVING
- SCIENCE, NATURE, PSYCHOLOGY
“We believe this is a new type of missile,” said Roh Jae-cheon, a spokesman for the South Korean military’s Joint Chiefs of Staff. “It looks clearly different from the Hwasong-14 in the external looks of its nose cone, the linkage between its first and second stages, and its overall size.”
South Korean officials said the launch suggested that North Korea’s missile program was advancing faster than previously believed.
North Korea responded to the planned drill by saying the U.S. is “begging” for war by planning the “largest-ever” joint aerial drill with South Korea, according to Bloomberg News and CNN. National security adviser H.R. McMaster said Saturday that the chances of war between North Korea and the United States are “increasing every day.”
Russia’s top diplomat accused the U.S. on Thursday of trying to provoke North Korean leader Kim Jong Un into “rash action,” pushing back against a call by Washington for countries to increase pressure on Pyongyang after its latest intercontinental ballistic missile launch.
A “flash crash” on the world’s biggest cryptocurrency exchange has left customers demanding answers and refunds, with many claiming to have lost thousands of dollars. The price of cryptocurrencies NEO, OMG, and ETP crashed as much as 90% in minutes on the Bitfinex exchange on Wednesday before quickly bouncing back to former levels.
Customers have taken to Twitter, Reddit, Medium, and messaging app Telegram to protest Bitfinex’s treatment of those who use margin trading on the platform.
They claim that Bitfinex’s platform was hit by delays and technical issues at the time of the “flash crash,” leaving many powerless to respond. Traders are also upset that the crash only appeared to happen on Bitfinex and are suspicious of what caused it. And many say stop losses — automated sell orders meant to activate once an asset price reaches a certain floor and therefore limit losses — were executed at prices well below those set by users.
Bitfinex argues that it was functioning as normal and the company’s terms of service include provisions to close out positions once leverage ratios fall below 15%. The company puts the “flash crash” down to the volatility of cryptocurrency markets.
A three-bedroom house in south London, a vineyard and a “fully vegan” tattoo parlor are among a rush of new businesses offering to accept bitcoin as payment. But so far, few are buying, in a dearth that may have been made worse by the currency’s recent surge and could hamper its development as a regular currency.
On the same day bitcoin prices plunged after a massive rally, the central bank official cautioned about the growth that digital currencies have seen and the destabilizing effect they could pose in times of liquidity stress.
“While these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide-scale usage,” Quarles said, according to prepared remarks from a speech he is delivering in Washington.
“While these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide-scale usage,” Quarles said in his first formal speech since being sworn in in October. “Risk management can act as a mitigant, but if the central asset in a payment system cannot be predictably redeemed for the U.S. dollar at a stable exchange rate in times of adversity, the resulting price risk and potential liquidity and credit risk pose a large challenge for the system.”
CME Group Inc. and Cboe Global Markets Inc. are poised to offer bitcoin futures contracts, easing the way for mainstream investors to bet big while dragging regulators into a realm skeptics call a fad and fraud.
And as bitcoin’s price surged as much as 11-fold this year alone, moving from an obsession for computer geeks and libertarians to a hot topic at the Thanksgiving dinner table, more people are listing it as a skill on LinkedIn. There are now 28 times as many profiles that cite cryptocurrency talents as there were were four years ago, and 5.5 times more who claim bitcoin aptitude specifically. The precise skill sets involved weren’t listed.
Bitcoin rebounded on Friday to hit the day’s highs above $10,500, recovering from an earlier dip below $9,500, after the U.S. derivatives regulator said it would allow CME Group and CBOE Global Markets to list bitcoin futures.
The new contract will be listed on and subject to the rules of CME. It will be available for trading on the CME Globex electronic trading platform, and for submission for clearing via CME ClearPort, effective on Sunday, December 17, 2017 for a trade date of December 18.
Venezuela’s currency is in free fall. Cryptocurrencies such as bitcoin are going precisely the other direction. And there, President Nicolas Maduro sees a way out of his country’s economic ills.
On his Sunday television show, Maduro announced the nation would create its own “petrocurrency,” backed by reserves in oil, gas, gold and diamonds. It will enable Venezuela “to advance in monetary sovereignty, carry out its financial transactions to overcome the financial blockade,” Maduro said.
The rate in the black market — the place where most Venezuelans acquire dollars in the authoritarian country — weakened to 103,000 bolivars per greenback Friday, according to dolartoday.com, a website that tracks the data. That’s a 20 percent drop just this week and compared with a rate as low as 10,000 per dollar as recently as late July. The official government-set exchange rate — which is virtually inaccessible — is 10 bolivars per dollar.
Venezuelans of all classes have been hit hard by sharply rising costs, and the economic turmoil has turned the most basic tasks — like food shopping and commuting — into feats of endurance.
At first glance the severity of the situation might not be immediately obvious to a newcomer. Viewed from a certain remove, Caracas may seem like any other capital in the developing world: streets crowded with traffic, people hustling to work, shops open and doing business.
GOP TAX PLAN
The Republican tax plan — which supporters call reform and opponents describe as a giveaway to corporations and the wealthy — is unpopular across the nation. A recent Reuters/Ipsos poll found that only 29 per cent of Americans supported the effort with 49 per cent opposed. Broken down by party, only 59 per cent of respondents belonging to the Republican party backed the plan, while 82 per cent of Democrats were opposed.
Polls consistently show that more Americans oppose the tax plan than support it — including, most recently, a Quinnipiac survey in November that showed that for every two people who disapproved of the plan, only one supported it. That poll found that fewer than 1 in 6 Americans expect their taxes to be reduced, while more than twice that many expect their taxes to go up. When it comes to just Republicans, a third expect to personally get a tax cut.
Why is support so low? Americans are opposed to the bill because they think it disproportionately benefits the rich. (It likely will.) President Trump’s administration has argued, however, that there were similar complaints about the Reagan tax cut plan of 1981, which preceded an economic boom.
The Reagan plan, though, was far more popular in 1981 than the current Republican plan is now. In a Gallup survey taken in the days after Reagan signed his tax cuts into law on Aug. 13, 1981, 51 percent of Americans were in favor of it. Just 26 percent of Americans were opposed. The other major tax cut of the Reagan administration (signed in 1986) wasn’t nearly as popular, but it was still more popular than the current GOP legislation.
Congressional Republicans, buoyed by the Senate’s approval early Saturday of a landmark tax overhaul, expressed confidence that final legislation would be sent to President Trump by the end of this month. While the tax bills approved by the House and the Senate diverge in significant ways, the same forces that rocketed the measures to passage appear likely to bond Republicans in the two chambers as they work to hash out the differences.
“You always have competing interests for that cash,” Mr. Regis said. “Do you pay dividends? Do you buy new equipment? Do you buy out competitors? Do you add employees? Do you pay employees better?”
Multinational corporations have a lot to like in both the House and Senate tax-overhaul proposals. Depending on a company’s structure and operations, there could be a lot to worry about as well.
Wall Street forecasters have been hiking their outlooks for 2018 corporate profits on rising expectations that the proposed U.S. tax overhaul, championed by President Donald Trump, will pass, giving a boost to companies’ bottom lines.
The legislation hurtling through Congress seems almost tailor-made to benefit the president, despite his claims that the bills are “not good for me.”
Far from simplifying taxes, the bill opened up a whole range of tactics to lower the amount owed to the Internal Revenue Service. “Business owners or managers that plan well and pay for good advice will be able to achieve much more favorable rates,” said Adam Looney, a senior fellow at the Brookings Institution and a former Treasury Department official. “I’m not sure if that is a loophole or the intent of the legislation.”
“The change to the state and local tax deduction would reduce disposable income for many taxpayers, likely outweighing the positive effect of lower federal rates on consumption in many communities and states,” said Nick Samuels, a vice president at Moody’s Investor Service.
“The SALT change would also reduce financial flexibility by increasing political resistance to tax increases at the state and local level. The overall negative effect would be felt most sharply in high-tax states such as California, New York, and New Jersey,” he added.
Senate Republicans, in their successful push last week to pass a sweeping tax bill, may have undermined a R&D tax credit many companies count on to encourage innovation.
President Donald Trump, hours after Republicans delivered the 20% corporate tax rate he insisted on, said the final rate may be 22%. “Business tax all the way down from 35 to 20,” he told reporters outside the White House on Saturday morning. “It could be 22 when it comes out but it could also be 20. We’ll see what ultimately comes out.”
Mr Flynn has agreed to co-operate with Mr Mueller’s probe. He faces a five-year maximum prison sentence and $250,000 maximum fine for the offences. However, sentencing guidelines suggest he could serve between zero and six months in prison and pay a fine of $9,500 or less.
The Flynn plea deal is the most significant moment in Mueller’s probe to date. Flynn is the first person who had actually served in the Trump White House to admit he broke the law. And he wasn’t just any old official: His role as national security adviser is one of the highest-level and most powerful posts in Washington, and the retired three-star general temporarily had enormous sway over Trump’s early policy and personnel choices.
Due to his unique ties to both the Trump campaign and the Trump White House, Flynn is particularly well-suited to answer the two central questions in the Mueller probe: Did the Trump campaign knowingly collude with Russia, and did Trump obstruct justice by trying to limit or derail the FBI’s investigation? A plea deal would get Mueller closer to answering those questions.
When Flynn was forced out of the White House in February, officials said he had misled the administration, including Vice President Pence, about his contacts with Kislyak. But court records and people familiar with the contacts indicated he was acting in consultation with senior Trump transition officials, including President Trump’s son-in-law, Jared Kushner, in his dealings with the diplomat. Flynn’s plea revealed that he was in touch with senior Trump transition officials before and after his communications with the ambassador.
The documents do not disclose what Mr. Trump knew about Mr. Flynn’s discussions. But in at least one instance, prosecutors say, Mr. Flynn was directed by a “very senior member” of the presidential transition team to discuss a United Nations resolution. Mr. Trump’s lawyers believe that unnamed aide was Mr. Trump’s son-in-law and close adviser, Jared Kushner, according to a lawyer briefed on the matter.
MUELLER INVESTIGATION, RUSSIA CONTACTS, KUSHNER
President Trump over the summer repeatedly urged senior Senate Republicans, including the chairman of the Senate Intelligence Committee, to end the panel’s investigation into Russia’s interference in the 2016 election, according to a half dozen lawmakers and aides. Mr. Trump’s requests were a highly unusual intervention from a president into a legislative inquiry involving his family and close aides.
Once inside, most witnesses are seated in a windowless conference room where two- and three-person teams of FBI agents and prosecutors rotate in and out, pressing them for answers. Often listening in is the special counsel himself, a sphinx-like presence who sits quietly along the wall for portions of key interviews.
The special counsel had a top agent removed from his inquiry after the Justice Department’s inspector general began examining whether the agent sent texts expressing political views.
While Mr. Trump has disparaged as a Democratic “hoax” any claims that he or his aides had unusual interactions with Russian officials, the records suggest that the Trump transition team was intensely focused on improving relations with Moscow and was willing to intervene to pursue that goal despite a request from the Obama administration that it not sow confusion about official American policy before Mr. Trump took office.
A conservative operative trumpeting his close ties to the National Rifle Association and Russia told a Trump campaign adviser last year that he could arrange a back-channel meeting between Donald J. Trump and Vladimir V. Putin, the Russian president, according to an email sent to the Trump campaign.
Jared Kushner, President Donald Trump’s son-in-law, is the “very senior” member of the presidential transition identified by former National Security Adviser Michael Flynn as having instructed him to reach out to Russia and several other countries last December, according to two people familiar with the matter.
A Logan Act investigation would explain the bureau’s interest in Flynn’s conversations about the U.N. Security Council resolution on Israel. If that’s all there is, then the whispers of collusion will look foolish. Nonetheless, it may be enough to take out not only Flynn, but also the man who married the president’s daughter.
Yet another omission was discovered on Jared Kushner’s financial disclosure forms Friday, as news broke of his reported involvement in attempting to sway a U.N. Security Council vote before Donald Trump became president.
A series of tweets by U.S. President Donald Trump about the investigation into contacts between his 2016 campaign and Russia prompted concerns on Sunday among both Democratic and Republican lawmakers, with Republican Senator Lindsey Graham saying Trump could be wading into “peril” by commenting on the probe.
President Trump issued a fresh denial Sunday that he asked then-FBI Director James B. Comey to halt an investigation into the conduct of his dismissed national security adviser Michael Flynn. “I never asked Comey to stop investigating Flynn,” Trump said in a pre-dawn message on Twitter. “Just more Fake News covering another Comey lie!”
In a series of early-morning tweets, Mr. Trump said the F.B.I.’s standing was now the “worst in history.” The attack was one of the harshest in a generation on an independent agency that two days earlier had helped secure a guilty plea and a pledge of cooperation from the president’s first national security adviser.
A tweet posted Saturday afternoon by the president suggested that Flynn’s misstatements to the FBI were part of the rationale for Trump’s firing him 25 days into the new administration — something the White House had never asserted before and that some observers speculated could be legally problematic for Trump. The tweet was drafted by one of the president’s lawyers, however, according to two people familiar with the communication.
“What has been shown is no collusion. No collusion. There’s been absolutely — there’s been absolutely no collusion, so we’re very happy,” Trump told reporters Saturday.
The exercise reflects the banks’ nervousness about being found in breach of rules governing money laundering and corruption. It follows the arrest last month of more than 200 people, including some of Saudi Arabia’s richest businessmen and princes. They were detained at the Ritz-Carlton hotel in Riyadh as part of an anti-graft operation launched by Crown Prince Mohammed bin Salman, the kingdom’s powerful heir apparent.
Saudi Arabia’s $300-billion privatization program was billed as the sale of the century when Crown Prince Mohammed bin Salman unveiled his plan to great fanfare. Nineteen months later, it is moving at a snail’s pace, bankers, investors and analysts familiar with the process say.
Rep. Blake Farenthold, Republican of Texas, settled a sexual harassment suit for $84,000, one of six House settlements funded by taxpayers since 2013.
Five women tell Bloomberg the venture capitalist used his position of power to pursue romantic relationships and unwanted sexual encounters.
The man’s accusation and the inquiry by the Met, one of the world’s most prestigious opera houses, showed that the national reckoning over claims of sexual misconduct had entered the world of classical music at its very highest echelons.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
“We are currently witnessing more than his usual state of instability — in fact, a pattern of decompensation: increasing loss of touch with reality, marked signs of volatility and unpredictable behavior, and an attraction to violence as a means of coping. These characteristics place our country and the world at extreme risk of danger.”
“Ordinarily, we carry out a routine process for treating people who are dangerous: containment, removal from access to weapons and an urgent evaluation. We have been unable to do so because of Mr. Trump’s status as president. But the power of the presidency and the type of arsenal he has access to should raise greater alarm, not less.”
“We urge the public and the lawmakers of this country to push for an urgent evaluation of the president, for which we are in the process of developing a separate but independent expert panel, capable of meeting and carrying out all medical standards of care.”
Congress faces another frantic week as GOP leaders and President Donald Trump wrestle with a possible government shutdown; immigration, tax and gun policies; multiple allegations of sexual harassment against lawmakers; and the probe into Russia’s meddling in the 2016 election.
Funding for federal agencies is set to run out on Friday, but lawmakers don’t really think there will be a shutdown — at least not yet. Still, a pile-up of contentious policy fights coupled with frequent distractions as Trump’s frustration grows with the Russia investigation has many Republicans anxious about the next few weeks.
House Republicans are divided over the terms of a stopgap plan to avert a partial shutdown of the federal government, heightening tensions with just a week left before current funding is set to expire.
GOP leaders on Friday were mulling a spending plan that would keep government services operating for two weeks beyond the Dec. 8 deadline, buying time to negotiate a longer-term agreement with Democrats. But some conservative lawmakers voiced resistance, arguing that such a tight window could produce an unnecessary burst of spending and concessions to Democrats.
A provision in the GOP tax plan giving U.S. companies a one-time cut for repatriation of earnings and cash held overseas could ripple through financial markets, including currencies, foreign savings vehicles and dollar funding for global banks.
The details of a final tax plan remain unclear, as the Senate bill passed early Saturday morning still needs to be reconciled with the House bill passed in November. But the vast sums of cash held abroad by large U.S. corporations such as Apple Inc. and Microsoft Corp. are a tantalizing target for the Internal Revenue Service and companies themselves, as they could use that money for investing at home—or, simply to return to eager shareholders through buybacks or dividends.
However, questions remain about precisely how the trillions of dollars in U.S. corporate profits are stashed overseas—and how a potential sudden mass repatriation of that cash could warp markets.
The FTCR China Real Estate Index fell in November for the first time in four months, as a further tightening of credit conditions led to a drop in sales across all city tiers. House prices continued to rise, if at a slower pace than in October, and developers expect them to continue doing so through the end of the year, although they also expect sales to fall again in December.
The Federal Reserve’s rate increases don’t appear to have cooled financial markets and may not therefore be having much impact on the U.S. economy, the Bank for International Settlements said Sunday.
In its quarterly report, the club for central bankers said that despite the four increases in short-term policy interest rates since the end of 2015, asset prices suggest that investors are just as willing to take on risk as before, if not more so.
The worry at the BIS is that companies and households continue to pile up debts that may weigh on economic growth in the future, as well as make the financial system vulnerable to a repeat of the 2008 crisis.
“The longer the risk-taking continues, the higher the underlying balance sheet exposures may become,” Mr. Borio said. “Short-run calm comes at the expense of possible long-run turbulence.”
Bullard said that as it stands, within a year short-term interest rates, pushed higher by Fed action, may move above long-term interest rates — an “inversion” of the yield curve that is classically taken as a signal of economic weakness.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
Prosecutors generally offer favorable plea bargains like this one only when the cooperating defendant can provide evidence that incriminates someone “up the ladder” — someone more senior than the defendant himself. In our experience, that is particularly true when the prosecutor is deciding not to pursue other, readily provable charges, like those that seem to exist here.
Lest there be any doubt about what is happening, the statement of the offense filed along with Mr. Flynn’s plea shows that he is prepared to testify that the communications that he lied about, concerning conversations with the Russian ambassador in December 2016, were discussed with multiple members of the transition team — including one “senior official” and one “very senior member.” It is not yet clear who those individuals are, but transition officials and members included Jared Kushner and Donald Trump Jr. as well as Vice President Mike Pence, Representative Devin Nunes of California; the former White House chief strategist Steve Bannon, and Treasury Secretary Steven Mnuchin.
It is probably Mr. Kushner who is in greatest jeopardy now. Bloomberg has reported that he is the very senior transition member who directed Mr. Flynn to reach out to Russia. Mr. Kushner has already been questioned by the special counsel and by Congress. If he was one of those officials Mr. Flynn spoke to and he was not honest about it when questioned, he could face similar false statement charges.
There is no evidence in recent American economic history, no evidence from international comparisons and no evidence from individual U.S. states that corporate tax cuts will boost the wages of American workers. This is a case we’ve been making for a while. As it turns out, the CEOs of major companies agree with us. Companies including Cisco, Pfizer, Coca-Cola and Amgen have said that the gains from corporate tax cuts will go to shareholders.
There are times when the politicization of economic arguments becomes dangerous. This is one of those times. The US simply can’t afford the current tax cuts making their way through Congress. According to the nonpartisan Congressional Budget Office, the cuts will result in a cumulative deficit of about $1.4 trillion over the next decade. The problem arises because America’s chronic saving shortfall has now moved into the danger zone, making it much more difficult to fund multi-year deficits today than was the case when cutting taxes in the past.
The so-called Kennedy tax cuts of 1964 and the Reagan tax cuts of 1981 are important cases in point. The net national saving rate – the broadest measure of domestic saving, which includes depreciation-adjusted saving of households, businesses, and the government sector – averaged 10.1% during those two years (1964 and 1981). In other words, back then the US could afford to enact major tax cuts.
That is not the case today, with the net domestic saving rate a mere 1.8% of national income. Even during the two tax cuts that followed – the second installment of Reagan’s fiscal program in 1986, and the initiatives of George W. Bush in 2001 – the net national saving rate averaged 4.2%, more than double the current level.
Both experience and macroeconomic theory indicate what to expect. Saving-short economies simply cannot go on deficit-spending binges without borrowing surplus saving from abroad. That is what brings the balance-of-payments and trade deficits directly into the debate over fiscal policy.
There is a long-running, almost metaphysical, argument about the GOP’s deficit hawkery. One school of thought holds that it has always been pure cynicism. Republicans passed the Bush tax cuts without offsets and paid for neither Medicare Part D nor the Iraq War. When they began decrying the deficit and debt during President Obama’s administration, under this theory, it was nothing but opportunistic political attacks, and it was obvious they would be abandoned as soon as Republicans regained power.
The response many Republicans gave was that the party had lost its way under George W. Bush, but it had recognized its mistakes and rediscovered its fiscally conservative soul. The Tea Party and its relentless campaign of primary challenges was proof the Republican Party had changed, and would stay changed.
The House and Senate passage of the GOP tax bills shows the cynics had it right.
Bitcoin satisfies most of the classic conditions for an investment mania. In his seminal 1978 work, Manias, Panics and Crashes, Charles Kindleberger said such episodes could start with “the widespread adoption of an invention with pervasive effects” that lie in the future and are hard to value.
Loose monetary policy — of the kind that followed the 2008 financial crisis — can provide additional fuel for investment crazes. As prices increase, peer pressure takes over. The number of hedge funds that invest in cryptocurrencies rose from 55 at the end of August to 169 by this week, according to research firm Autonomous NEXT.
“There are massive similarities between the dotcom bubble and bitcoin,” says Clare Nicholls, senior partner at Invenio Corporate Finance. “The dotcom bubble was driven largely by ‘fear of missing out’. Many people acted without really understanding what they were doing or the real truth behind it. As a result, prices skyrocketed and now, over a decade later, we are looking at the same volatile situation.”
As the far right rises across Europe, mainstream parties, seeing an existential threat to liberal democracy, have searched for ways to contain its influence. The solution that major European powers like France and Germany have settled on — and that will be a component of any solution to Ms. Merkel’s current dilemma — is a so-called cordon sanitaire against the far right.
The term, which roughly translated means “quarantine” in French, means sealing off the far right from any power or influence, no matter how many votes it wins. Mainstream parties will not allow the far right into political coalitions or work with it on joint legislation. In Germany’s case, that means an absolute refusal to allow the far-right Alternative for Germany, or AfD, into any governing coalition. The party recently won seats in Germany’s national legislature for the first time.
In the short term, such policies have effectively limited the influence of both longstanding far-right parties like the National Front in France and insurgent upstarts like the AfD. To the many politicians and citizens who fear what might happen if the far right were to exercise real power, that feels like an important victory.
But in the longer term, it turns out to have unintended side effects, making the underlying problems worse — with potentially serious consequences for democracy.
The White Queen in Lewis Carroll’s Through the Looking Glass claimed to believe six impossible things before breakfast. Alas, The Brexit Inflection Point: The Pathway to Prosperity, a recent pamphlet from the London-based Legatum Institute, fully matches the queen. This matters because the view it advances of the “Brexit prize” to be won by the UK is influential. Here then are six impossible things it argues. If people in the UK government believe such stuff, it really is terrifying. This is nonsense. Wake up!
Some British ministers have a touching faith in the desire of the other 27 members to forge a partnership that maximises economic benefits for all concerned. Unfortunately for the UK, however, the EU’s approach is driven less by economics than by a mix of high principles and low politics. Its principles are to maintain the unity of the 27, the autonomy of its decision-making procedures, and the indivisibility of the single market’s “four freedoms” (of goods, services, capital and people). This means that a country restricting free movement cannot be in the single market. The politics are to protect services firms from UK competition and to steal business in areas such as finance and aviation — while demonstrating to everyone that leaving the EU does not pay. EU officials point out that the UK is not driven by economics, either; if it wanted to minimise the economic damage of Brexit, it would not have rejected the Norway model of staying in the single market.
Both then and now, to London’s great annoyance, Europe’s approach has what one senior EU diplomat calls a “mechanical” quality. Rather than a fluid exchange between equal parties, it approaches talks as more like a process where the weaker country eventually adapts. The main variable is the pace of change, the so-called transition.
If we crash out of the EU without any deal at all — as Theresa May used to threaten in her “no deal is better than a bad deal” days — Labour could storm into power with a huge majority. Such a government might be far from moderate.
Even Mrs May’s current policy, which is to roll over and do whatever it takes to get a deal, could let Mr Corbyn romp into Downing Street. This is because the prime minister wants a transition period of only two years. Since there is precious chance of nailing down a free-trade agreement with the EU so rapidly, the economy would probably be driven off a cliff in 2021 — a year before the next general election. That would be like rolling out the red carpet for Labour.
Many of us recognize robotic automation as an inevitably disruptive force. However, in a classic example of optimism bias, while approximately two-thirds of Americans believe that robots will inevitably perform most of the work currently done by human beings during the next 50 years, about 80% also believe their current jobs will either “definitely” or “probably” exist in their current form within the same timeframe.
Somehow, we believe our livelihoods will be safe. They’re not: every commercial sector will be affected by robotic automation in the next several years.
Needless to say, this is not the sort of place you expect to be a hub of the high-tech digital world. But in a surprising, and bittersweet, side effect of global warming — and of the global economy — one of the fastest internet connections in America is arriving in Point Hope, giving the 700 or so residents their first taste of broadband speed.
The new connection is part of an ambitious effort by Quintillion, a five-year old company based in Anchorage, to take advantage of the melting sea ice to build a faster digital link between London and Tokyo.
High-speed internet cables snake under the world’s oceans, tying continents together and allowing email and other bits of digital data sent from Japan to arrive quickly in Britain. Until recently, those lines mostly bypassed the Arctic, where the ice blocked access to the ships that lay the cable.
But as the ice has receded, new passageways have emerged, creating a more direct path for the cable — over the earth’s northern end through places like the Chukchi Sea — and helping those emails move even move quickly. Quintillion is one of the companies laying the new cable, and Point Hope is one of the places along its route.
USA ECONOMY DATA, CITIES AND STATES
Just a few years ago, landlords likely would have turned away retailers looking for shorter leases in favor of tenants willing to hunker down for a decade or longer. But times are changing, and short-term tenants are becoming more common even in New York’s swankiest retail corridors.
The federal agency that oversees the U.S. Postal Service gave permission for the service to speed up its pricing increases over the next five years, an effort to shore up its finances as the amount of mail it delivers has plunged.
Those boxes piling up on your doorstep over the holidays don’t ship from Santa’s workshop. As Americans spend more money shopping online, real estate developers are sinking record amounts of money into new warehouse space, building bigger, taller structures to meet the needs of e-commerce — and the robots that help it along.
“It’s the notion of the endless aisle,” said Joe Dunlap, a managing director at CBRE, where he leads the supply chain advisory practice. A retailer that stocks 30,000 items in its stores might offer 10 times as many items for sale online. More stock requires larger footprints. Higher ceilings accommodate mezzanine levels, letting operators cram more shelves into a building.
GLOBAL ECONOMY DATA
Torikizoku Co. , a budget restaurant chain offering sticks of yakitori grilled chicken, lifted prices for the first time in nearly 30 years in October. It now charges the equivalent of $2.65 for a two-skewer plate, up from $2.49 before. It was egged on by a shortage of part-time staff, which forced it to pay higher wages, a spokesman said.
And the beer to wash it down is getting pricier, too: Japan’s four major beer companies recently decided to raise prices for the first time in a decade.
Making diners pay 8 cents more for a skewer might not be news elsewhere, but it could be a breakthrough for Japan, which struggled through 15 years of deflation beginning in the late 1990s. Prime Minister Shinzo Abe has put defeating deflation at the center of his economic revival plan.
Factories across the world were at their busiest for decades during November when a global upswing in economic activity and trade boosted manufacturing activity.
In surveys published on Friday, the Dutch manufacturing purchasing managers’ index for November hit a record high, the Italian index reported the strongest new orders in 17 years and Ireland’s the strongest rate of growth for 18 years.
Overall eurozone manufacturing expanded at the second-highest rate on record. The IHS Markit purchasing managers’ index for the currency bloc came in at 60.1. Anything above 50 indicates expansion, a reading beaten only by one survey in April 2000.
The FTCR China Cost of Living Index has crept up since hitting a series low during the turmoil of late 2015 and early 2016 (see chart). In response to that shock, the government flooded the economy with credit, much of which flowed into regional housing markets. However, our index remains well below 2011-14 levels, reflecting the economy’s slowdown and excess capacity in consumer sectors.
POSITIONING, INFLECTION, MARKET CALLS
Investors betting on momentum, or the continuation of existing market trends, have made a killing thus far in 2017, with indexes tracking the strategy in the U.S. and Europe at or near record highs. Now, firms including Morgan Stanley and JPMorgan Chase & Co. are predicting that the trade — akin to piling into technology stocks, this year’s top stock-market performers — could be getting stretched.
“Investors should be aware of a growing risk of a reversal in this factor in the months ahead,” Morgan Stanley strategists wrote in a recent note. “This momentum set-up will likely magnify the effects of sector rotation when it does occur.”
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
China has the world’s largest market for electric cars and wants its companies to dominate globally when it comes to the batteries that power these vehicles. That makes the initial public offering of a turbocharged player at the center of that effort well worth watching.
Privately held Contemporary Amperex Technology Co. Ltd (CATL) is one of China’s largest manufacturers of batteries for electric vehicles. It plans to raise about $2 billion in an IPO in the coming months in China, valuing the company at up to $20 billion and putting it in the big leagues of listed battery makers.
CVS Health said on Sunday that it had agreed to buy Aetna for about $69 billion in a deal that would combine the drugstore giant with one of the biggest health insurers in the United States and has the potential to reshape the nation’s health care industry.
The transaction, one of the largest of the year, reflects the increasingly blurred lines between the traditionally separate spheres of a rapidly changing industry and represents an effort to make both companies more appealing to consumers as health care that was once delivered in a doctor’s office more often reaches consumers over the phone, at a retail clinic or via an app.
FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS
A market that is already positioned for a breakthrough in the talks, as well as the possibility of the Federal Reserve raising U.S. interest rates in December, could put a cap on sterling’s gains, according to Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
In the wake of Hurricane Maria’s devastation, hedge funds holding Puerto Rico debt are fighting with the government — and each other — to get paid. But hedge funds may have themselves to blame for the mess they’re in.
Andrew Bound and Aadarsh Malde, who were co-chief investment officers of the Tudor Discretionary Macro Fund, will be leaving by mutual agreement, the letter said. The fund, which lost 1.6 percent this year through Nov. 3, is made up of multiple managers not including Jones himself. Jones, who ran the BVI fund with a team of managers, will now have a smaller team and will assume a more dominant role in the fund.
“I will be the largest risk taker and will manage a notional capital account equal to the AUM of the Tudor BVI strategy itself,” Jones said in the letter, referencing assets under management. “This means that my results will have a one-for-one performance impact on Tudor BVI. I relish this challenge.”
Years of central bank monetary easing has suppressed market volatility, hurting macro fund returns and spurring investor withdrawals. Clients pulled a net $500 million from Tudor in the third quarter, leaving the firm’s assets at $7 billion, about half the level it managed in June 2015, Bloomberg News reported in October. Jones, who has been frustrated with the macro trading environment, said things are “on the verge of a significant change” and that the current market is reminiscent of the bubble of 1999.
“That was a year in which Tudor BVI’s macro book was basically flat while U.S. equities experienced one of the greatest bubbles in history,” Jones, 63, wrote. “The termination of that bull market kicked off a three-year macro feast.” That storyline is much the same today, with bitcoin and fine art taking the place of the Nasdaq 100 of 1999, he wrote.
ENERGY CRUDE OIL, OIL SANDS, SHALE
Hedge funds are giving Saudi Arabia and Russia a big vote of confidence. As the two oil powerhouses pushed for the extension of supply curbs ahead of Thursday’s OPEC meeting, money managers shifted their stance on West Texas Intermediate crude to the most bullish since February. That’s largely due to a strong decline in short-selling. Bets on rising Brent crude also increased as short positions slumped.
As corporate boards for American oil explorers prepare to sketch out 2018 drilling budgets, Thursday’s historic agreement by Saudi Arabia, Russia and other major crude producers to extend supply caps for another year may prompt directors to spend more on drilling. That’s because the producer group’s restraint has meant higher prices for U.S. shale drillers, who haven’t been shy about hiring more rigs or flooding global markets with more cargoes.
ENERGY RENEWABLES, NUCLEAR
The tax-reform proposal moving through the U.S. Senate would hobble — and potentially cripple — the supply of tax-equity investment, an esoteric but critical source of clean-energy finance.
About half the companies that invest in tax equity for solar farms, and a majority of wind investors, may find the new tax policies make these deals irrelevant, according to John Marciano, co-head of project finance at Akin Gump Strauss Hauer & Feld LLP.
Solar will become the cheapest source to produce power in many countries over the next 15 years, according to a new report from Bloomberg New Energy Finance.
Part of the cheap solar power will be unleashed because the cost of installing solar panels at big solar farms and on rooftops will drop 60% to an estimated average of around four cents per kilowatt hour by 2040, the report said. That’s cheaper than coal and natural gas power in many regions.
A limited number of solar projects in sunny and solar-friendly places like in Mexico have already gotten to that ultra-low four cent cost this year. But those projects have been able to optimize costs by building at huge scale, across miles of land, and selling power to utilities. By 2040, even the generally more expensive process of installing solar panels on residential rooftops could be that cheap. At the same time, large scale utility solar projects could even drop into the range of three cents per kilowatt hour.
POLLUTION, CLIMATE & ENVIRONMENT
Nine nations and the European Union have reached a deal to place the central Arctic Ocean (CAO) off-limits to commercial fishers for at least the next 16 years. The pact, announced yesterday, will give scientists time to understand the region’s marine ecology—and the potential impacts of climate change—before fishing becomes widespread.
“There is no other high seas area where we’ve decided to do the science first,” says Scott Highleyman, vice president of conservation policy and programs at the Ocean Conservancy in Washington, D.C., who also served on the U.S. delegation to the negotiations. “It’s a great example of putting the precautionary principle into action.”
The near-empty shelves and deserted aisles at a sprawling outlet of Kenya’s homegrown supermarket giant, Nakumatt Holdings Ltd., here are reminders of the risks—and opportunities—presented by East Africa’s biggest retail market.
The family-run retailer was once emblematic of the “Africa Rising” narrative of a rapidly growing urban consumer class and local champions outmaneuvering larger, foreign competitors. At its height in 2014, Nakumatt took over the Tanzanian stores of South Africa-based Shoprite Holdings Ltd., the continent’s largest retailer.
Then in late October, Nakumatt filed for bankruptcy after a series of ill-fated decisions including the introduction of a private label line, an overreliance on unsecured, short-term debt that dried up after the collapse of three Kenyan banks, and other events including floods and a terrorist attack.
CANADA, AUSTRALIA, NEW ZEALAND
That decision was part of a larger, more troubling pattern: From 2011 to 2015, Reuters has found, senior FSCO investigators rejected or ignored compliance officers’ multiple recommendations that the agency investigate or take action to rein in the marketing and sales of Fortress syndicated mortgages.
BREXIT, SCOXIT, LONDON, UK ECONOMY
Lloyd Blankfein, the bank’s chief executive, said on Twitter: “Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there.” The hashtag that accompanied the tweet was #Brexit.
The UK has yet to quit the EU, and no bank has so far moved its staff from London to the German financial centre. But for local real estate agents, the Brexit effect is in full swing.
“Brexit has already arrived,” says Markus Kullmann, commercial property expert at Jones Lang LaSalle in Frankfurt. “We are seeing the biggest increase in demand for office space in many years.”
The Irish government will have final say on whether the U.K. government’s proposals for avoiding customs checks on the island are acceptable, the European Union’s president, Donald Tusk, said.
The pro-Brexit campaign was built on a heavy anti-immigrant platform, and Britain’s EU referendum seems to be having the effect Leave voters wanted. In the three months after the June 2016 referendum, net long-term migration fell by 19%, according to data released by the UK’s Office for National Statistics today (Nov. 30).
In his resignation letter to Mrs May, reported in the Observer, Mr Milburn said that ministers were utterly preoccupied by Brexit. There was “indecision, dysfunctionality and a lack of leadership” at the top of the government.
He said he was stepping down with great sadness but argued that it had become obvious that the government was therefore unable to commit sufficient support to social mobility.
Tony Blair has confirmed that he is trying to reverse Brexit, arguing that voters deserve a second referendum because the “£350m per week for the NHS” promise has now been exposed as untrue.
In an interview with the BBC Radio 4’s The World This Weekend on Sunday, the former prime minister said that what was happening to the “crumbling” NHS was a “national tragedy” and that it was now “very clear” that the Vote Leave promise about Brexit leading to higher NHS spending would not be honoured.
The prime minister’s financial offer is the latest sign that Britain’s “negotiation” with the EU resembles more closely a series of capitulations as months of tough talk in London turn into surrender to political reality.
Paris hardly seems to have noticed that Nationalists on the rugged island, with an ambivalent relationship to France, are predicted to win elections on Sunday.
Martin Schulz has set out a list of tough conditions for talks with Angela Merkel aimed at forming a new German government, making clear that he would not rush his Social Democrats into a repeat of the so-called “grand coalition” with the chancellor’s conservative bloc.
China’s tightening grip on the internet has forced U.S. companies to recalibrate their efforts here, but there was little outward sign of friction as American executives on Sunday touted their commitment to the crucial Chinese market during the government’s annual cyberspace conference.
GEOPOLITICS, CRIME, TERRORISM
An American citizen being held as an enemy combatant in a secret location in Iraq has asked for a lawyer but FBI agents have told him it isn’t clear when he will get one, a government lawyer told a judge Thursday.
South Korean prosecutors have raided the offices of one of the nation’s largest conglomerates amid allegations it offered multimillion-dollar kickbacks to the US Army in exchange for construction contracts.
Dozens of investigators were dispatched to the headquarters of SK Engineering and Construction in downtown Seoul on Friday to confiscate computer hard disks, documents and other material related to construction projects at a new US army base in South Korea’s Pyeongtaek county.
The Pentagon has received permission to put precision-guided bombs and missiles on drones in Niger. The drones would increase the military’s ability to go after extremists in West Africa.
Snipers took over rooftops in residential areas, tanks deployed and militiamen set up checkpoints Sunday across the Yemeni capital, where fighting forced families to hunker down indoors in anticipation of more violence.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
British government departments responsible for national security have been banned from using software made by the Russian technology company Kaspersky Labs as concern grows that its products are being used as an intelligence-gathering tool by the Kremlin.
U.S. banks have quietly launched a doomsday project they hope will prevent a run on the financial system should one of them suffer a debilitating cyberattack.
The effort, which went live earlier this year and is dubbed Sheltered Harbor, currently includes banks and credit unions that have roughly 400 million U.S. accounts. The effort requires member firms to individually back up data so it can be used by other firms to serve customers of a disabled bank.
While most people worry about their money being stolen in a hack, banks fear something more sinister: an attacker destroying, or even simply locking, data.
Stanford University said confidential data covering about 10,000 current and former Stanford University employees was left on a shared drive for six months, accessible to all students, faculty and staff at the campus’s business school.
US diplomats have dropped plans for Donald Trump to conduct a visit to Britain in January amid a war of words between the two countries’ leaders. Mr Trump, the US president, had been pencilled in for a ‘working visit’ in the first month of 2018 to formally open America’s new London embassy.
Elton John blares so loudly on Donald Trump’s campaign plane that staffers can’t hear themselves think. Press secretary Hope Hicks uses a steamer to press Trump’s pants — while he is still wearing them. Trump screams at his top aides, who are subjected to expletive-filled tirades in which they get their “face ripped off.”
And Trump’s appetite seems to know no bounds when it comes to McDonald’s, with a dinner order consisting of “two Big Macs, two Fillet-O-Fish, and a chocolate malted.”
The scenes are among the most surreal passages in a forthcoming book chronicling Trump’s path to the presidency co-written by Corey Lewandowski, who was fired as Trump’s campaign manager, and David Bossie, another top aide. The book, “Let Trump Be Trump,” paints a portrait of a campaign with an untested candidate and staff rocketing from crisis to crisis, in which Lewandowski and a cast of mostly neophyte political aides learn on the fly and ultimately accept Trump’s propensity to go angrily off message.
President Trump has reportedly given staffers direct assignments by calling them secretly to the residence in the evenings, in an attempt to circumvent chief of staff John Kelly.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
Along with 10 other nations, Canada is trying to revive the Trans-Pacific Partnership, a trade deal championed by the Obama administration and abandoned by Mr. Trump. It is in trade talks with numerous other countries and free-trade groups — including India, Japan and Singapore. And in late September its sweeping free-trade pact with Europe clicked into action.
Now Mr. Trudeau is widely expected to add free-trade talks with China to Canada’s list of negotiations at his meeting with President Xi Jinping.
Put it all together and it suggests that Mr. Trudeau, who announced that “Canada is back” after his election two years ago, is positioning his country to fill a void left by the United States by becoming the global champion of free trade.
Major manufacturers in the United States and China, as well as numerous other businesses that buy and use solar panels, are readying for a clash that could begin as soon as January. The solar panel dispute comes at a time when senior administration officials have been signaling their intention to take a much tougher trade stance toward China, where most solar panels are made.
The solar panel industry could be Mr. Trump’s first test of whether his harsh language toward China will result in significant trade measures — and whether those moves would help restore American businesses. Factories in China now account for more than two-thirds of the world’s production, up from a negligible share a decade ago. Faced with intense competition, more than a dozen solar companies in the United States have closed factories over the past six years.
Senator Mitch McConnell, the majority leader, had argued for weeks that Roy S. Moore, the Republican Alabama Senate candidate, should leave the race.
With less than two weeks to go, support for Democrat Doug Jones among likely voters stands at 50 percent vs. Moore’s 47 percent — a margin of a scant three points that sets up a nail-biter for the oddly timed Dec. 12 special election.
The Democratic nominee, Doug Jones, is widely admired. But in his race against Roy Moore, many voters say they are struggling to get past his party affiliation.
SILICON VALLEY, UNICORNS, STARTUPS, VC
Amid record amounts of capital raised by VCs worldwide, and a sharp rise in the number of private “unicorns” valued at $1 billion-plus, there has been a quiet, barely noticed implosion in early-stage VC activity worldwide.
The chart below is dramatic, and accurate. Since 2014, the number of VC rounds in technology companies worldwide has nearly halved, from 19,000 to 10,000, according to PitchBook. During that time, the drop in VC funding amount has been nowhere near as dramatic, highlighting that VCs are concentrating investment into fewer later-stage companies.
This is now a three-year trend, so cannot be “blamed” on macro or short-term factors. More worryingly, it comes at a time of unprecedented stock market valuations worldwide.
MEDIA, CABLE, SPORTS, ENTERTAINMENT
“The streaming services have a bad situation, there’s no margins, they’re not making any money,” he said. “Amazon sells Prime; Apple sells telephones and iPads; Spotify, they’re going to have to figure out a way to get that audience to buy something else. If tomorrow morning [Amazon CEO] Jeff Bezos wakes up and says, ‘You know what? I heard the word “$7.99″ I don’t know what it means, and someone says, ‘Why don’t we try $7.99 for music?’ Woah, guess what happens?”
The short answer is it would rattle the entire streaming business ecosystem and probably most of all the industry-leading Spotify, which nine years after launching is still unable to turn a profit.
“The streaming business is not a great business,” he continued. “It’s fine with the big companies: Amazon, Apple, Google… Of course it’s a small piece of their business, very cool, but Spotify is the only standalone, right? So they have to figure out a way to show the road to making this a real business.”
AUTOS, ELECTRIC, SELF-DRIVING
The self-driving car race sped up Thursday with General Motors’ announcement that it plans to introduce an autonomous ride-sharing service to several big cities in 2019. That target is two years ahead of the automaker’s closest rival, Ford, which has plans to roll out a similar product in 2021.
GM outlined its vision during an investors call from San Francisco, where it allowed journalists to ride in prototype vehicles earlier this week. The company said it’s aiming for a future of “zero crashes, zero emissions, and zero congestion” enabled by a system entirely controlled by GM, beginning with assembly line production all the way to deployment using its own ride-hailing service.
“We think this represents one of the biggest business opportunities of all time, since the creation of the Internet,” Dan Ammann, GM’s president and chief of autonomous vehicle strategy, told investors.
General Motors aims to launch a public ride-sharing service across several cities that uses fully self-driving cars by 2019, potentially becoming the first traditional carmaker to deploy autonomous technology at scale in the real world.
Describing self-driving cars as “the biggest thing since the internet”, the company said it eventually expected to make profit offering rides to the public for as little as $1 a mile.
General Motors’s Chinese joint venture, Baojun, is taking more market share in the world’s biggest car market but the U.S. company’s minority stake leaves it vulnerable to a powerful local company.
It wasn’t that long ago when Tesla seemed like the only company making cool electric cars that you’d want to drive. If this year’s Los Angeles Auto Show is any indication, that niche no longer belongs exclusively to Elon Musk. After months of signs suggesting a shift in global momentum toward an electric future, some of the world’s most established automakers are starting to reveal what they’ve been working on for the EV world. The results are not only promising but surprisingly provocative, offering a glimpse of an automotive future that is beginning to feel substantially real.
The 2018 Panamera Hybrid Sport Turismo hatchback sedan gets 680 total horsepower and 626 pound-feet of torque, more than both the $143,600 911 GT3 and the massive $118,100 Cayenne Turbo SUV. To achieve these results, it uses a hybrid boost strategy from the track-dominating 918 Spyder roadster.
SCIENCE, NATURE, PSYCHOLOGY
For women with uterine factor infertility who want to be mothers, the calculus has always been heartbreakingly simple: No uterus means no pregnancy. The equation changed drastically in 2014, when Swedish doctors delivered a healthy 3.9-pound baby that was the result of a successful uterus transplant.
Now, doctors at Baylor University say a woman born without a uterus has delivered a baby after a successful transplant, the first time the surgery has worked outside of the Swedish hospital that pioneered the procedure.
It’s hard to see what’s so special about a scallop. It looks a lot like a clam, mussel or any other bivalve. Inside its hinged shell lurks a musclebound creature that’s best enjoyed seared in butter.
But there’s something more to this ubiquitous entree: the scallop sees its world with hundreds of eyes. Arrayed across the opening of its shell, the eyes glitter like an underwater necklace. Each sits at the tip of its own tentacle and can be extended beyond the rim of the shell.
While some invertebrate eyes can sense only light and dark, scientists have long suspected that scallops can make out images, perhaps even recognizing predators quickly enough to jet away to safety. But scallop eyes — each about the size of a poppy seed — are so tiny and delicate that scientists have struggled to understand how they work.
Now, a team of Israeli researchers has gotten a look at the hidden sophistication of the scallop eye, thanks to powerful new microscopes. On Thursday, they reported in the journal Science that each eye contains a miniature mirror made up of millions of square tiles. The mirror reflects incoming light onto two retinas, each of which can detect different parts of the scallop’s surroundings.
The pterosaurs were an order of flying reptiles that went extinct some 66 million years ago. They were not actually dinosaurs, but they went extinct at the same time. Along with bats and birds, they are the only vertebrates to truly fly. And though these creatures lorded over the skies for around 162 million years, only a handful of pterosaur egg fossils have ever been unearthed. And of those, paleontologists have just six three-dimensional eggs — that is, eggs not completely flattened by millions of years of being crushed under younger sediments.
But now, we have a pterosaur egg extravaganza. According to the new research, a site in China’s Turpan-Hami Basin in Xinjiang has coughed up 215 beautiful, pliable and miraculously three-dimensional eggs — 16 of which contain embryonic remains. The researchers also suspect there could be as many as 300 more eggs within the same sandstone block. No wonder Xiaolin Wang, the study’s lead author and a paleontologist at the Chinese Academy of Sciences, said the discovery could be described as a sort of “pterosaur Eden.”
There are lots of reasons the NBA’s popularity has exploded in recent years, but the most fundamental one is how the game itself is played. It’s exhilarating. This pace-and-space era has resulted in more of most things: more possessions, more points, more 3-pointers and more dramatic twists that would be impossible to explain to anyone who doesn’t follow the league as a telenovela.
And more comebacks. There are now more comebacks than ever before. ‘“People have to change their thinking,” Detroit Pistons coach Stan Van Gundy said. “It’s not the same game.”
The number of 3-pointers in the average game is on the trajectory of a loose balloon. It keeps going up and up. NBA teams are taking a record number of threes for the seventh consecutive season. The league average is now 28.9 per game—a 60% increase over the last decade. NBA teams were combining to attempt that many per game not too long ago.
“We have everything we need to live underwater,” an Argentine submariner assured his mother early last month. By mid-month he and 43 fellow crew members were dead after what Argentine Navy officials and outside experts suspect was a blast caused by a battery mishap.
In recent days, Argentine authorities have gathered crucial evidence to piece together a theory of what happened after the San Juan left Ushuaia on Nov. 8, bound for its home base of Mar del Plata about 260 miles south of Buenos Aires. They believe the sub took on water that caused a short circuit and a subsequent fire in a key battery compartment. The crew got the fire under control, but hours later there was a loud noise consistent with an explosion near the sub’s last reported location.
Top Argentine officials now believe a blast instantly killed the sailors and sent the vessel to the seafloor. While no one knows for sure what caused the explosion, the batteries are the likeliest culprit, Argentine naval officials and outside experts say.
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