Macro Links Feb 12th – “A New Era of Volatility”

Macro Links Feb 12th – “A New Era of Volatility”

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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)

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BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS

IRS Cops Are Scouring Crypto Accounts to Build Tax Evasion Cases – Bloomberg

The U.S. Internal Revenue Service, fresh off its success in uncovering U.S. assets hidden in Swiss banks, has assigned elite criminal agents to investigate whether Bitcoin and other cryptocurrencies are being used to cheat the taxman. A new team of 10 investigators is focusing on international crimes. In addition to following undeclared assets that are flowing out of Swiss banks after a crackdown, it will also build cases against tax evaders who use cryptocurrency.

Is Puerto Rico а Crypto Tax Paradise? – Expert Take | Cointelegraph

The IRS is just getting around to developing a strategy to identify, assess and collect the billions of dollars in taxes from cryptocurrencies that some believe are going unreported. The notion that US and Puerto Rico tax authorities will allow millions (if not billions) in cryptocurrency sales to escape taxation entirely is pretty optimistic, to say the least.

The Computer Part People Are Hoarding: ‘I Felt Like I Was Buying Drugs’ – WSJ

Graphics cards, usually a plentiful and ordinary PC commodity, produce the kind of rich visuals gamers love. Now there’s a new kind of buyer: People who need them to run software capable of creating virtual currencies—an act known as “mining.” That’s giving gamers a different kind of competition. Lately, people mining ether and other cryptocurrencies have hunted graphics cards nearly to retailing extinction.

Russian nuclear scientists arrested for ‘Bitcoin mining plot’ – BBC News

Russian security officers have arrested several scientists working at a top-secret Russian nuclear warhead facility for allegedly mining crypto-currencies. The suspects had tried to use one of Russia’s most powerful supercomputers to mine Bitcoins, media reports say.

Bitcoin Finds a Bottom as Risk Aversion Grips Global Markets – Bloomberg

What’s supposed to be the most volatile asset in the universe is proving to be a bastion of stability compared with wild swings and carnage in global equities this week. Bitcoin clawed its way back from the four-month low of $5,922 it touched on Tuesday, rebounding 53 percent to $9,069. Bitcoin’s supporters are quick to extol the cryptocurrency’ virtues as an asset that’s uncorrelated to the broader market — independent from any single country, company or central bank — which can serve as a haven in times of market turmoil.

Bitcoin dives as regulators call for cryptos to be reined in – FT

The total value of cryptocurrencies is tiny compared with the stock market or monetary supply — they would buy only a fifth of all euro banknotes in circulation, Mr Mersch said. But what seems to worry regulators most is the danger that crypto-assets will seep into the traditional financial system, raising the risk of contagion to major institutions in the event of a crypto crisis.

Financiers ‘keep skills sharp’ by trading cryptocurrencies – FT

While many investing in cryptocurrencies are ordinary people with little to no investing experience, people like David are finance professionals investing because it’s a challenge, or because the philosophy rings true to them, or simply for their own entertainment. On any given day, David, who asked that we not use his real name, trades about £20,000 of exposure across the top 150 cryptocurrencies.

Fed Economists Say Bitcoin Can’t Compete in World of Trust – Bloomberg

Consumers trust institutions and the value of their currencies, at least in the U.S. and the rest of the developed world, so cryptocurrencies will have trouble competing with established payment methods like cash, checks, debit and credit cards, PayPal and others, wrote Antoine Martin, a senior vice president in the bank’s Research and Statistics Group.

France and Germany Urge Discussions on Crypto Policy at G20 Summit – Bitcoin News

High ranking officials from France and Germany have issued a letter urging the finance officials of other nations to discuss the regulatory and policy considerations pertaining to cryptocurrencies at the upcoming G20 Summit.

Trading Tip `the Wall´ – Disappearing Premiums Signal Bearish Mid-Term Outlook – Bitcoin News

Up until now, bitcoin has largely been behaving as an uncorrelated asset. This got a lot of people excited, categorizing bitcoin as a future digital gold or a safe haven asset. The worst thing about this recent dip in price was not the decrease in the price itself. Much more daunting for bitcoin, was that the price dip coincided with the dip of the US stock market.

NY Fed Economists: ‘Advanced Economies’ May Not Need Crypto | Cointelegraph

The Federal Reserve Bank of New York published an interview on their site Friday, Feb. 9, in which two of its economists explain cryptocurrency, highlighting crypto’s “trustless” nature, but expressing doubt that cryptocurrency could ever “realistically compete with current payment methods.”

Is Darknet Done With Bitcoin? | Cointelegraph

A new study by Recorded Future has found that Bitcoin is losing its position as the number one currency on the Darknet markets. The Internet tech company analyzed 150 of the most active message boards, marketplaces, and illicit service providers and noticed that the Darknet communities sentiments toward Bitcoin have taken a turn.

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RUSSIA PROBE

No. 3 Official at the Justice Department Is Stepping Down – The New York Times

Rachel L. Brand, the No. 3 official at the Justice Department, plans to step down after nine months on the job as the country’s top law enforcement agency has been under attack by President Trump, according to two people briefed on her decision.

Rachel Brand Joins Walmart as Executive Vice President, Global Governance and Corporate Secretary

Walmart announced Rachel Brand will join the company as Executive Vice President, Global Governance and Corporate Secretary. Brand will report to President and CEO Doug McMillon. She will be responsible for the organization’s Legal, Global Ethics and Compliance and Global Investigation, Security, Aviation and Travel departments, along with her role as corporate secretary.

Trump Says Democrats Must ‘Re-Do’ Memo They Want to Release – WSJ

The White House denied a request to release a Democratic memo that aimed to rebut GOP allegations regarding the investigation of a onetime associate of President Donald Trump, sending it back for revisions due to national-security concerns.

Trump Blocks Release of Memo Rebutting Republican Claims – The New York Times

Democrats expressed outrage at the president’s decision. “Republicans and Democrats on the Intelligence Committee voted UNANIMOUSLY to release this memo,” Representative Terri Sewell of Alabama, a Democratic member of the committee, wrote on Twitter. “@realDonaldTrump is not interested in transparency, he is interested in protecting himself and derailing the Russia investigation.”

U.S. Spies, Seeking to Retrieve Cyberweapons, Paid Russian Peddling Trump Secrets – The New York Times

After months of secret negotiations, a shadowy Russian bilked American spies out of $100,000 last year, promising to deliver stolen National Security Agency cyberweapons in a deal that he insisted would also include compromising material on President Trump, according to American and European intelligence officials.

CIA calls report of $100K payment to Russian “fictional” – CBSNews

“The people swindled here were James Risen and Matt Rosenberg,” the CIA said in a statement provided to CBS News. “The fictional story that CIA was bilked out of $100,000 is patently false.”

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NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS

Pence: The United States is ready to talk with North Korea – Washington Post

The frame for the still-nascent diplomatic path forward is this: The United States and its allies will not stop imposing steep and escalating costs on the Kim Jong Un regime until it takes clear steps toward denuclearization. But the Trump administration is now willing to sit down and talk with the regime while that pressure campaign is ongoing.

Kim Jong Un Invites South Korea’s Moon to Summit in Pyongyang – Bloomberg

North Korean leader Kim Jong Un invited South Korean President Moon Jae-in to meet in Pyongyang, a dramatic gesture that may raise prospects for easing tensions on the Korean Peninsula.

Kim Jong-un Invites South Korean Leader to North for Summit Meeting – The New York Times

After North Korea’s leader relayed the proposal through his sister, President Moon Jae-in said the Koreas should “create the environment to make it happen.”

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TAXATION, WEALTH HAVENS, INEQUALITY

Paul Tudor Jones sees tax reform as a nightmare for bonds – Yahoo News

“I wonder if they would have remained cheering if President Trump had followed with, ‘By the way, Treasury auctions will increase this year from the current projection of $583 billion to almost $1 trillion. Relative to recent auction sizes, Treasury auctions will be higher by $500 billion next year and by $545 billion in 2020. And, secondly, the Congressional Budget Office’s long-term projection for our debt/GDP will eclipse that of Japan at its peak, possibly making us the most indebted country in the world by 2033.’”

New Tax Law Haunts Companies That Did ‘Inversion’ Deals – WSJ

The new U.S. tax law has something in store for some “inverted” companies, which signed mergers overseas that lowered their U.S. taxes: higher taxes. Overall, the new restrictions are estimated to raise tens of billions of dollars in tax revenue, though not all of it will come from inverted companies. Tax experts and companies say the law will reduce the advantages of the corporate relocations, but probably not enough to bring companies back to the U.S.

U.S. Budget Director Warns Interest Rates May ‘Spike’ on Deficit – Bloomberg

The U.S. will post a larger budget deficit this year and could see a “spike” in interest rates as a result, but lower deficits are possible over time based on sustained economic growth from Donald Trump’s tax cuts, said Budget Director Mick Mulvaney. “This is not a fiscal stimulus; it’s not a sugar high,” Mulvaney said on of the president’s economic program, including the $1.5 trillion tax cut passed in late 2017.

Wealthy Chinese push racing pigeon prices skywards – FT

An elite group of Chinese pigeon fanciers have pushed the prices of racing birds to record highs, reflecting a mood of exuberance among China’s wealthy following a pick-up in economic growth and asset prices that has buoyed luxury spending. Xing Wei, a property tycoon, paid €400,000 ($490,000) to purchase a Belgian pigeon called Nadine, in what is thought to be the largest deal on record. He followed that with a Rmb3m ($475,000) purchase of a champion bird called Extreme Speed Goddess at a Beijing auction in December.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Bridgewater investment chief sees new era of volatility – FT

The world’s biggest hedge fund has warned that global markets are entering a new era of volatility as the world adjusts to higher interest rates after a decade of ultra-loose monetary policy. Bob Prince, co-chief investment officer at Bridgewater, said last week’s market turbulence, which helped trigger record outflows from global stock funds, was set to continue.

This Is the Worst Momentum Swing for U.S. Stocks in History – Bloomberg

“The journey from ecstasy to agony is entirely unprecedented, in the United States at least,” writes Bloomberg macro strategist Cameron Crise, who earlier noted this inauspicious achievement. “That’s the largest momentum swing in history — and it’s not particularly close.” The next-closest reversal was a 48-point drop over the same span in 1987.

Investors brace for more swings as U.S. inflation specter rises – Reuters

Next week, coming off one of the most volatile stretches in years, two important readings on U.S. inflation could help determine whether the stock market begins to settle or if another bout of volatility is in store. If the January’s U.S. consumer price index due next Wednesday from the U.S. Labor Department, and the producer price index the next day, come in higher than the market anticipates, brace for more selling and gyrations for stocks.

Junk Bonds Stung by Stock Market Misery, Bruising Borrowers – Bloomberg

“We’re really flipping from a positive economic scenario to a negative economic scenario,” said Ben Emons, chief economist and head of credit portfolio management at Intellectus Partners LLC in Los Angeles. “That takes its toll immediately — not only in equities, but it starts to become an issue in high-yield.”

The U.S. Junk-Bond Market Just Had Its Worst Week in Two Years – Bloomberg

A selloff in the market for speculative-grade corporate bonds accelerated amid turmoil in the stock market, handing investors their worst weekly loss since the oil slump two years ago. The market had held up for much of the week as stock markets were hammered. But a relentless decline in exchange-traded junk-bond funds and an almost 10 percent decline in oil prices took their toll.

Fidelity bans retail investors from trading short volatility – FT

Fidelity, one of the largest retail brokerages in the US, has temporarily stopped clients from buying an exchange traded fund that bets on markets remaining calm and was a victim of this week’s market rout. Two similar ETFs, the largest going by the ticker “XIV”, have already announced their closure as a result of losses, leaving the Proshares product, which goes by the name “SVXY”, as one of the few retail vehicles available for betting the Vix will now fall.

The unstoppable rise of trading market volatility – FT

Vix ETPs are merely what we know of the bigger volatility-trading universe that has grown over the past decade. And the ructions caused this week highlight how even small moves can cause tumult in financial markets even when the economic backdrop is favourable. “These funds are just the tip of the iceberg,” says Jeff Shen, co-head of BlackRock’s Systematic Active Equities business. “This gave us a potent example of what a potential turning point (for markets) will look like.”

One Cause of Market Turbulence: Computer-Driven Index Funds – The New York Times

The transition has been years in the making, but its effect has been on full display over the past week. After propelling the market to historic highs, passive investment strategies — which follow a simple set of rules and are carried out by sophisticated computer programs, not humans — are among the factors fueling the market’s recent plunge.

US stocks suffer one of worst weeks since financial crisis – FT

At one point, the S&P 500 was facing an 8.3 per cent weekly loss — which would have been its worst weekly slide since November 2008 — but the late bounce helped the index pare its losses over the past five days to 5.2 per cent. That makes it the worst week since January 2016, and the eighth worst since 2008.

Emerging Market Stocks Enter a Correction – Bloomberg

The MSCI Emerging Markets Index of equities had a weekly loss of 7.2 percent, the sharpest decline since September 2011 and fell more than 10 percent from its January high. A gauge tracking developing-market currencies had their biggest decline in more than four months, down 0.8 percent. The Bloomberg Barclays EM local currency government bond index completed the worst week since October.

High-Speed Traders Savor Volatility as Rest of Market Is Crushed – Bloomberg

Happy days are here again for high-frequency traders. In a week where scores of companies around the world saw their stocks buried in red, two of the major middlemen in modern, high-speed electronic trading are basking in the sun of volatility. Virtu Financial Inc. and Flow Traders NV both surged more than 40 percent since last Friday. Virtu reached a record high.

ETF market smashes through $5tn barrier after record month – FT

Investors ploughed more than $100bn in new cash into exchange traded funds in January, a record monthly inflow that helped drive assets held in ETFs globally above the $5tn mark for the first time. The surge in January follows four consecutive years of record breaking inflows into ETFs, a tectonic shift that is sending shockwaves across the entire asset management industry.

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Crypto Canon — Andreessen Horowitz

Here’s a list — building on and including Chris’ last roundup — of crypto readings and resources. It’s organized from building blocks and basics; foundations (& history); and key concepts and beginners’ guides — followed by specific topics such as governance; development, privacy, and security; scaling; consensus; cryptoeconomics and investing; fundraising and token distribution; decentralized exchanges; stablecoins; and cryptoeconomic primitives (crytocollectibles, curation markets, games & culture). We also included a section with other resources, such as newsletters and courses, at the end.

North Korea: what war with the US would look like – Vox

A full-blown war with North Korea wouldn’t be as bad as you think. It would be much, much worse. There is a genuine risk of a war on the Korean Peninsula that would involve the use of chemical, biological, and nuclear weapons. Several estimated that millions — plural — would die. “This would be nothing like Iraq,” Flournoy told me. “It’s not that the North Korean military is so good. It’s that North Korea has nuclear weapons and other weapons of mass destruction — and is now in a situation where they might have real incentives to use them.”

One Cause of Market Turbulence: Computer-Driven Index Funds – The New York Times

After propelling the market to historic highs, passive investment strategies — which follow a simple set of rules and are carried out by sophisticated computer programs, not humans — are among the factors fueling the market’s recent plunge. This is the new reality of today’s stock market: Funds that track financial indexes have become a dominant force, and they can act as accelerants, adding momentum to the market’s rise and fall.

The GOP is Flirting With Fiscal Disaster – The New York Times

While fiscal stimulus to restore economic growth has merit, staggering deficits in the ninth year of a recovery, with unemployment down to 4.1 percent, make no sense. In addition to piling more debt onto the current $20 trillion of outstanding obligations, today’s mounting gap between revenues and expenses is already contributing to higher interest rates and the shakiness in the stock market.

Why did the GOP vote for a budget-busting spending bill? Because voters don’t seem to care. – The Washington Post

More than 70 percent of Republicans in the House and Senate happily voted for the huge bipartisan budget compromise, despite years of preaching the gospel of small government and lowering federal spending. Why would any party risk becoming such an easy target this close to an election in which they are already running into a strong head wind? The answer is simple: Voter concern over surging deficits is at its lowest level in nearly a generation.

The end of an era for market tranquility – FT

Wall Street suffered its worst week in years as investors grasped that the era of cheap money is set to disappear. “The system has changed,” says Jean Ergas, head strategist at Tigress Partners, who said the market had made more of a “rethink” than a correction. “This is the unwinding of a massive carry trade, in which people borrowed at zero per cent and put money into stocks for a yield of 2 per cent.”

The Era of Fiscal Austerity Is Over. Here’s What Big Deficits Mean for the Economy. – The New York Times

It depends on whether you look at the short, medium or long term. In the long run, the United States risks two grave problems. It may find itself with less flexibility to combat the next recession or unexpected crisis. And higher interest payments could prove a burden on the federal Treasury and on economic growth. This is particularly true given that the ballooning debt comes at a time when the economy is already strong and the costs of paying retirement benefits for baby boomers are starting to mount.

It’s Alive! Or Is It? Economists Spar on Inflation Frankenstein – Bloomberg

As markets calm after a roller-coaster start to the week, the question bears asking: Has the U.S. finally reached the long-missing inflection point where labor markets are so tight that wages begin to rise and companies begin to pass along higher costs? Economists looking at the same evidence are taking opposing views.

With Yellen Out of the Picture, Get Ready for Trump vs. Powell – Bloomberg

If this turns out to be more than a shudder, Trump may start looking for someone to blame. And that someone could be Jerome “Jay” Powell, who was sworn in as Fed chairman on Feb. 5. The Fed is an independent institution, but Powell still must answer to Congress, which in turn heeds the president.

China Plays Yuan to Demand a `Powell Put’ – Bloomberg

Although U.S. President Donald Trump’s use of a rarely employed trade-protection measure against washing machines and solar panels is indeed a provocation, Washington think-tank folks can take a break: the People’s Republic has no intention of starting a global currency war. Friday’s weakest yuan fixing in more than a year may have a much simpler — and more tactical — motivation. Think of it as Beijing’s insistence on a “Powell Put.”

Central Banks Are Telling Markets It’s Time to Grow Up – Bloomberg

What’s more galling to investors than inflation is that central banks are actually not running to their rescue at the first sign of trouble. After nearly a decade of being granted a flood of emergency support at the tiniest little scratch, now officials are daring to ask them to stand on their own two feet. The longer this correction extends, the bigger the hit to confidence and the need for repricing of leveraged risk. Stock markets have seen tailwinds turn into headwinds.

Can Past Market Corrections Hold Clues to What Lies Ahead? – WSJ

The first stock market correction in two years is prompting analysts and investors to look at previous collapses, even 1987’s Black Monday, to glean what might come next. “If markets drop precipitously and stay down—down for two or three months, not weeks—they start to have an impact on the real economy, particularly the unemployment rate,” said Roger Farmer, an economics professor and research director at the U.K.’s National Institute of Social and Economic Research. “You look at your 401(k) a few months later and that’s when you decide not to take your vacation.”

George Soros: I oppose Brexit because I love Britain – Daily Mail

I am a proud supporter of Best For Britain, a group that wants Britain to remain a member of the European Union. I consider Brexit a tragic mistake. Prior to Brexit, Britain enjoyed the best of all possible worlds: it was a member of the European Union without adopting the euro. Allowing a referendum on membership was a fatal error. Experience has shown that referenda often lead to bad decisions. Egged on by unscrupulous agitators, people use them to express their dissatisfaction with the current state of affairs rather than contemplating the consequences. The fact that conditions are unsatisfactory does not mean they can’t get worse. That is what has happened in Britain.

Fiscal Stimulus — America’s extraordinary economic gamble – The Economist

To be clear, this newspaper would not advise a fiscal stimulus of the scale that America is undertaking. It is poorly designed and recklessly large. It will add to financial-market volatility. But now that this experiment is under way, it is even more important that the Fed does not lose its head.

Short Sellers Do Good, So Leave Them Alone – Bloomberg

What’s forgotten is the real value of short sellers: they are the market’s detectives. A short seller was the first to sniff out Enron. Short sellers tried to warn investors that Valeant was a house of cards. For decades, short sellers have done the hard digging required to expose frauds. The Securities and Exchange Commission often first learns about a fraud after it’s been exposed by a short-seller.

Cognitive Ability and Vulnerability to Fake News – Scientific American

A study recently published in the journal Intelligence suggests that some people may have an especially difficult time rejecting misinformation. Asked to rate a fictitious person on a range of character traits, people who scored low on a test of cognitive ability continued to be influenced by damaging information about the person even after they were explicitly told the information was false. The study is significant because it identifies what may be a major risk factor for vulnerability to fake news.

Michael Lewis: Has Anyone Seen the President? – Bloomberg

Bannon has a favorite line: “If I had to choose who will run the country, 100 Goldman Sachs partners or the first 100 people who walk into a Trump rally, I’d choose the people at the Trump rally.” I have my own version of this line: “If I had to choose a president, Donald Trump or anyone else I’ve ever known, I’d choose anyone else I’ve ever known.” Among the revelations of Wolff’s book was just how many of the people in and around Trump’s White House feel more or less as I do.

Trump believes the men – POLITICO

For President Donald Trump, the allegations that his now-former staff secretary was a serial domestic abuser are another #HimToo moment. Never mind the FBI background check that found the allegations and restraining order credible enough to delay Rob Porter’s security clearance, or the close-up photos of the black eye Porter’s ex-wife says he gave her on vacation in Italy. Trump has been down this road before—many times— starting with two dozen women who’ve alleged he sexual harassed or assaulted them. His ex-wife Ivana Trump claimed once in a deposition that he raped her, in a rage over bad hair plugs. She later said she didn’t mean “rape” literally.

Citizen Thiel – NZ Herald

Billionaire Peter Thiel was secretly granted New Zealand citizenship, but within months of his “solemn vow” appeared to move on and has barely been seen since. What remains are his boltholes in Queenstown and questions over whether political pressure played any part in his granting of citizenship. Thiel declined to be interviewed for this story, but issued a brief statement about the saga saying, “I believe in New Zealand”, and noting that he’s invested $50 million in New Zealand tech companies. This story is, instead, based on dozens of interviews and hundreds of pages of documents sourced under the Official Information Act. This is the story of Citizen Thiel.

Didi Chuxing took on Uber and won. Now it’s taking on the world – Wired

Backed by investment from some of the biggest global tech companies – including Apple, Tencent and Alibaba – Jean Liu’s Didi Chuxing defeated Uber in China. Now, the firm is leading the way for Chinese tech giants – by taking on the planet. “We aspire to be a company that serves global transportation,” Liu says. And it is here that her vision carries its greatest significance – the dawn of a world in which Didi, alongside Chinese titans Alibaba, Baidu and Tencent, begins to expand abroad, potentially becoming as well-known and ubiquitous in the west as Uber, Amazon, Google and Facebook are today.

The Story of the Johnsons, the Boisterous Dynasty That’s Taken Over Britain – VICE

From sibling rivalry via Eton and Oxford, and up to the cabinet, those closest to the Johnsons tell us how the family has shambled its way to the top. Boris Johnson, the Foreign Secretary and two-term London Mayor, was the first of the brood to make his mark on public life, but it now feels impossible to ignore the relentless rise of the boisterous, irritating, enviable clan that’s taken over politics, the media and everything in between.

The Yorkie’s Dominance: We Analyzed Every Dog Registration in New York – The New York Times

Downtown poodles. Uptown pit bulls. A Xoloitzcuintli on the block. To understand New York real estate, follow Fido. New York’s dogs are as varied as its people, and their numbers can be just as telling. They can be a cipher for understanding gentrification, and sometimes predicting it — when the designer pups arrive, rising home prices may not be far behind. They become part of the identity of a neighborhood, and their shifting numbers, rising or falling, can say much about its future. Most of all, they say something about the humans who take them home.

Standoff: How the Dallas SWAT team cornered and killed the July 7 police shooter – Dallas News

In the darkness and chaos of July 7, 2016, a small group of elite cops had to gear up and get the shooter. This is the first full account of what happened inside El Centro College that night. It is based on documents, photographs and dozens of hours of interviews with the police officers who tracked down the gunman, engaged him in a fierce gun battle, negotiated with him and meticulously planned and carried out his death.

Trump’s Infrastructure Plan May Ignore Climate Change. It Could Be Costly. – The New York Times

The Trump infrastructure blueprint is almost certain to call for expensive new roads, bridges, airports and other projects in areas that are increasingly vulnerable to rising waters and other threats from a warming planet. Engineers and researchers say that construction plans should consider these design constraints at the outset. Their concern is that a plan led by a White House that has both discounted climate science and weakened climate change regulations could mean that costly projects may be vulnerable to damage or, in a worst-case scenario, quickly rendered obsolete by the changing environment.

Inside North Korea’s Hacker Army – Bloomberg

The regime in Pyongyang has sent hundreds of programmers to other countries. Their mission: Make money by any means necessary. Reports from Korea watchers suggest that, sometime in the back half of the 1990s, Kim Jong Il formed a cyber army designed to expand North Korea’s hacking activities. Initially the unit managed only random incursions, on targets like government websites and banking networks, but when Kim died in 2011, his son expanded the program. Soon it was launching attacks more consistently and on more important targets, such as nuclear plants, defense networks, and financial institutions.

Inside the Abrupt End of Silicon Valley’s Biggest Trial – Bloomberg

As former Uber chief Travis Kalanick prepared to take the stand this week in a courtroom battle that’s gripped Silicon Valley, Waymo lawyer Kevin Vosen privately made a late settlement offer: Would the ride-hailing startup pay $500 million in stock and let an outside monitor review of its autonomous-vehicle software? Only days later, Waymo accepted half that amount, abruptly halting a case that had rocked the emerging driverless car industry and slowed the progress of two leaders in the field. The behind-the-scenes negotiations, recounted by people familiar with the case, show why both companies took the unusual step of ending the fight in the midst of a trial.

The global technopolitics of space exploration – FT

No federal space agency can currently do what SpaceX did. As Marx might have put it, private enterprise has seized the means of propulsion. We are in a new era when it comes to technopolitics, the intersection between technology and politics. While the original space race between the US and the Soviet Union showed off each country’s political ideals through technological prowess, that crossover between innovation and ideology has a different feel today.

The Enlightenment Is Working – WSJ

To what do we owe this progress? Does the universe contain a historical dialectic or arc bending toward justice? The answer is less mysterious: The Enlightenment is working. Our ancestors replaced dogma, tradition and authority with reason, debate and institutions of truth-seeking. They replaced superstition and magic with science. And they shifted their values from the glory of the tribe, nation, race, class or faith toward universal human flourishing.

Why Businesses Are Pushing for Better Child Care in America – WSJ

Historically low unemployment is forcing headway on an issue that has been around since women entered the workforce: child care. Businesses increasingly see it as an issue vital to their operations and communities, and policy makers from New Hampshire to Michigan to Colorado have identified it as key to freeing up workers to fill stubborn vacancies and building a talent pipeline.

Tim Harford’s guide to statistics in a misleading age – FT

Dubious numbers and false assertions fill our daily lives. The case for everyday practical numeracy has never been more urgent. Statistical claims fill our newspapers and social media feeds, unfiltered by expert judgment and often designed as a political weapon. We do not necessarily trust the experts — or more precisely, we may have our own distinctive view of who counts as an expert and who does not.

As West Fears the Rise of Autocrats, Hungary Shows What’s Possible – The New York Times

Through legislative fiat and force of will, Mr. Orban has transformed the country into a political greenhouse for an odd kind of soft autocracy, combining crony capitalism and far-right rhetoric with a single-party political culture. He has done this even as Hungary remains a member of the European Union and receives billions of dollars in funding from the bloc. European Union officials did little as Mr. Orban transformed Hungary into what he calls an “illiberal democracy.” In the European Union’s political hierarchy, Mr. Orban has often been cast as an unruly outsider — a loud, populist voice peripheral to the mainstream, and peripheral to real power. But he is now possibly the bloc’s greatest political challenge.

It’s Hard to Believe, but Syria’s War Is Getting Even Worse – The New York Times

Since the rout of the Islamic State last year, and steady government advances against other insurgent groups, a misperception has grown abroad that the Syrian war is winding down. Instead, the carnage is reaching a new peak. Since December, 300,000 people have fled new fighting. In one 48-hour period this week, government strikes killed more than 100 people, mostly civilians, according to rescue and medical workers, in the besieged, rebel-held suburbs just east of the capital, Damascus. The explosions could be heard and the smoke seen from the seat of power just a few miles away.

His 2020 Campaign Message: The Robots Are Coming – The New York Times

Mr. Yang, a former tech executive who started the nonprofit organization Venture for America, believes that automation and advanced artificial intelligence will soon make millions of jobs obsolete — yours, mine, those of our accountants and radiologists and grocery store cashiers. He says America needs to take radical steps to prevent Great Depression-level unemployment and a total societal meltdown, including handing out trillions of dollars in cash.

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USA ECONOMY DATA, CITIES AND STATES

New Worry for CEOs: Rising Costs From Metals to Meat – WSJ

U.S. manufacturers and food companies are grappling with rising material costs on top of pressure from higher wages—a potential double whammy that could force them to raise prices or accept lower profit margins. Fears that higher wages would push central banks to raise interest rates more aggressively to tamp down inflation have fed the global market selloff.

The U.S. Is Running Out of Truckers – Bloomberg

The trucking industry is unique because it’s the lifeblood of moving goods around the country, representing 70 percent of the nation’s freight volume by weight. Without enough trucks and drivers on the road, some combination of things is going to happen: Shipments will be delayed, and producers will have to pay higher prices to get goods to market.

Budget Deficits Are Projected to Balloon Under the Bipartisan Spending Deal – The New York Times

The two-year budget agreement reached by Senate leaders would contribute hundreds of billions of dollars to federal deficits. According to a preliminary analysis of the deal, federal deficits are projected surpass $1 trillion by 2019, a level not seen since the recession and its aftermath. Deficits will grow even more if the policies in the deal are extended beyond 2019. Lawmakers have also promised that individual tax cuts passed in December that are set to expire after 10 years will be extended, which would put even more pressure on the federal debt.

18G12 - DEFICIT

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POSITIONING, INFLECTION, MARKET CALLS

Ray Dalio’s Bridgewater Quadruples Shorts on European Union Stocks – Bloomberg

In just one week Bridgewater, the world’s biggest hedge fund firm, more than quadrupled how much it’s betting against European Union companies. The firm, run by Ray Dalio, has at least $13.1 billion in shorts, or wagers that a stock will fall, according to EU regulatory filings. That’s up from the $3.2 billion it had disclosed on Feb. 1. It also more than doubled the number stocks it’s shorting to 44 from 20.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

U.S. gunmaker Remington seeks financing to file for bankruptcy: sources – Reuters

Remington Outdoor Company Inc, one of the largest U.S. makers of firearms, has reached out to banks and credit investment funds in search of financing that will allow it to file for bankruptcy, people familiar with the matter said on Thursday.

Steve Wynn No Longer Seeking to Block Ex-Wife From Selling Wynn Resorts Shares – WSJ

The embattled gambling mogul will no longer seek to prevent Elaine Wynn from selling her shares in the company they co-founded, signaling a major shift in Mr. Wynn’s strategy in a long-running legal battle.

Wynn Resorts Board Cancels Outside Investigation of Steve Wynn’s Conduct – WSJ

Wynn Resorts Ltd.’s board of directors said it has stopped an independent law-firm investigation into allegations of sexual misconduct against former Chairman and Chief Executive Steve Wynn.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

World’s Biggest Wealth Fund Eyes Long Game in Japanese Property – Bloomberg

The property-investment arm of Norway’s $1 trillion sovereign wealth fund is keen to buy more real estate in Japan after making its first investment in the country last year. Coming to Tokyo was an “obvious choice” as part of a global portfolio, said Kallevig, pointing out that unlike Japan as a whole, the capital city’s population is still growing. “You still have a lot of economic activity, you still have supply constraints that we typically like in most of our markets.”

An Expat’s Guide to Hong Kong Luxury Real Estate Rentals – Bloomberg

For the eighth year in a row, Hong Kong holds the dubious distinction of being the world’s least affordable city in which to buy a home. And yet, as locals clamor to get a foothold on the property ladder and wealthy Chinese seeking an offshore haven keep buying into the top end of the market, demand for real estate continues to rise.

Overseas buyers snap up majority of exclusive London homes – FT

Overseas investors snapped up more than half of all properties for sale in London’s most exclusive postcodes in the last half of 2017 as buyers took advantage of big discounts in areas such as Belgravia and Kensington. The rise in international buyers follows new figures showing that high-end homes in central London are selling at the biggest discounts to asking price in more than a decade.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Market upheaval gives active managers chance to shine – FT

The past week’s market corrections could be a boon for macro investors and stock pickers. Outflows from active funds have already started to slow, says Jefferies. Higher interest rates, the likelihood of greater separation in performance of individual stocks and the sort of higher volatility seen this week, all offer the opportunity for managers to prove themselves.

This Tiny Hedge Fund Just Made 8,600% On a Vix Bet – Bloomberg

Not everyone got crushed when the market collapsed. For traders at a little-known Denver hedge fund who saw it coming, it was the score of a lifetime — a $17.5 million payday on a $200,000 bet. “People were laughing at us, saying this could never happen, this should never happen,” Justin Borus, the 41-year-old founder and manager at Denver-based Ibex Investors, said in an interview. “We saw people pricing this as a 1-in-5,000 event, but it was more like a one-in-five-year event.”

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ENERGY CRUDE OIL, OIL SANDS, SHALE

Oil funds remain bullish after crude’s worst week in two years – FT

Exchange and government data released on Friday showed that hedge funds and other money managers had slightly reduced what had been their net long, or bullish, positions in crude futures from the preceding week. But the positions still amounted to more than a billion barrels equivalent, suggesting strong hopes of a price rebound.

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ENERGY NATURAL GAS, COAL

China Signs First Long-Term Deal for U.S. Natural Gas – WSJ

President Donald Trump has made U.S. LNG exports a focus of his plans to make America an energy superpower. Commerce Secretary Wilbur Ross announced a deal last May to “expedite” the approvals of U.S. exports to China. While the deal didn’t alter any existing regulations, it was billed as a signal to China that U.S. LNG suppliers are open for business.

Cheniere signs long-term LNG export deal with China – FT

The 25-year deal with China National Petroleum Corporation means Cheniere has pulled ahead in the race to develop a new wave of US LNG export projects to come on stream in the 2020s. But it will also encourage other aspiring suppliers by showing that Chinese buyers can be persuaded to make long-term commitments.

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COMMODITIES BASE METALS, MATERIALS

Copper is still cheap, despite its surging price – FT

This is not just a China story, or unsustainable speculative demand. Speculative interest in copper futures is quite low, particularly considering that the price of the metal is up more than 60 per cent over the past two years. Mining companies’ managers still have a battered-child syndrome after the 2015-2016 pause in Chinese import growth.

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COMMODITIES AGRICULTURE & SOFTS

Flu Fears Halt a Long Decline in Orange Juice Sales – WSJ

The most severe flu outbreak in the U.S. in at least eight years has those worried about getting sick turning to this traditional source of vitamin C, helping boost sales for the first time since April 2013. Flu pandemics have aided orange juice sales before. In 2009, an outbreak of the H1N1 influenza virus, better known as swine flu, helped to boost sales by 8%.

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POLLUTION, CLIMATE & ENVIRONMENT

In China’s Coal Country, a Ban Brings Blue Skies, Cold Homes – The New York Times

What has happened here in the northern Chinese province of Shanxi, the country’s largest coal-producing region, and in other regions shows how far the government has gone in imposing its environmentalism from above. Eager to impress Beijing, officials in this province of 37 million people have moved so aggressively that in some cases they have created unintended consequences.

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BREXIT, SCOXIT, LONDON, UK ECONOMY

As Britain Stumbles Over ‘Brexit,’ Support Grows for 2nd Vote – The New York Times

As the political stalemate drags on, and with business leaders issuing ever more urgent alarms about the threats to the economy, growing public doubts are beginning to register in some opinion polls. And opponents of Brexit are quietly cultivating what they see as that rising sentiment in their campaign to soften, if not reverse, the whole process.

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DACA, TRAVEL BAN, IMMIGRATION, WALL

Not So Fast on Deportations, Judges Tell Immigration Agency – The New York Times

These federal judges are not deciding immigration cases, over which they have no jurisdiction, but rather giving people time to fight in the immigration courts. They are slowing deportations by insisting that undocumented immigrants still have the right of due process, even if in many of these cases, the immigrants had known for years that they could be expelled.

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GEOPOLITICS, CRIME, TERRORISM

Israel Strikes Iran in Syria, Losing Jet, as Conflict Moves Into Perilous Phase – The New York Times

On its way back from the mission, one of Israel’s F-16 fighter jets crashed in northern Israel after coming under heavy Syrian antiaircraft fire. It is believed to be the first Israeli plane lost under enemy fire in decades. That prompted a broad wave of Israeli strikes against a dozen Syrian and Iranian targets in Syrian territory. The Israeli military said it hit eight Syrian targets, including three aerial defense batteries, and four Iranian positions that it described as “part of Iran’s military entrenchment in Syria.”

Israel carries out ‘large-scale attack’ in Syria after Israeli jet crashes under antiaircraft fire – The Washington Post

Israel carried out extensive airstrikes inside Syria on Saturday, targeting what the Israeli military said were air defense batteries and army bases as well as Iranian positions, in a day of dramatic cross-border confrontations as the threat of a wider regional conflict looms.

Turkish Helicopter Is Downed in Northern Syria – WSJ

A Turkish military helicopter was downed in northern Syria during Ankara’s offensive on Syrian Kurdish militia, President Recep Tayyip Erdogan said. Speaking in Istanbul on Saturday, Mr. Erdogan didn’t mention by name the Syrian Kurdish People’s Protection Units, or YPG, but said that those responsible would pay for it.

After a Mosque Massacre, Egypt Strikes Back in Sinai – The New York Times

Egypt said its warplanes struck militant targets in North Sinai on Friday night, destroying weapons dumps as ground forces raided militant hide-outs, as part of a major offensive against the Islamic State in one of the group’s most enduring Middle East strongholds.

Saudi women should not have to wear abaya robes, top cleric says – BBC News

Sheikh Abdullah al-Mutlaq, a member of the Council of Senior Scholars, said women should dress modestly, but this did not have to mean wearing the abaya. Saudi women are currently required to wear the garment by law. The cleric’s intervention comes amid moves to modernise Saudi society and relax restriction on women.

Mexico: Zetas drugs cartel leader caught – BBC News

The US state department said he was responsible for “importing thousands of kilograms of cocaine and methamphetamine to the US every year”. On its website, it said the Zetas “have murdered an untold number of Guatemalan civilians during the systematic overtake of the Guatemalan border region with Mexico during recent years”.

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TRUMP WORLD

‘No Fire, No Fury?’ Trump Is on Board With a Jeanine Pirro Book to Rebut Michael Wolff – The New York Times

Jeanine Pirro, the Fox News personality and longtime friend and champion of President Trump, has discussed with him the possibility of a book project to counter the damning portrayal of his presidency in Michael Wolff’s book “Fire and Fury,” according to three people with knowledge of their conversations.

Donald Trump: Unearthed 1994 Interview on Family, Why Women Shouldn’t Work (Q&A) | Hollywood Reporter

“Psychologists will tell you that some women want to be treated with respect,” he told Nancy Collins in a never-released 1994 transcript from ABC’s ‘Primetime Live.’ “I tell friends who treat their wives magnificently, get treated like crap in return, ‘Be rougher and you’ll see a different relationship.'”

In Private, Donald Trump Voices Doubt About Rob Porter’s Accusers – Dailybeast

Trump’s skepticism has been apparent in discussions with confidants and officials, who tell The Daily Beast that, at least in their conversations, he has not expressed sympathy for the ex-wives, Colbie Holderness and Jennifer Willoughby, who have gone on the record to allege physical violence.

Second White House official departs amid abuse allegations, which he denies – The Washington Post

The abrupt departure of David Sorensen, a speechwriter who worked under senior policy adviser Stephen Miller, came as The Washington Post was reporting on a story about abuse claims by his ex-wife, Jessica Corbett. Corbett told The Post that she described his behavior to the FBI last fall as the bureau was conducting a background check of Sorensen.

As domestic abuse claims roil the White House, Trump says lives are being ruined ‘by a mere allegation’ – The Washington Post

The sympathetic response made no mention of accusers or victims of sexual harassment or abuse, or the professional or personal harm that can come to those — usually women — who come forward. Saturday’s tweet follows spousal abuse allegations against two Trump aides that roiled the White House over the past week. Both men left their posts despite denying the allegations of physical and emotional abuse from ex-wives.

G.O.P. Squirms as Trump Veers Off Script With Abuse Remarks – The New York Times

The president’s seeming indifference to claims of abuse infuriated Republicans, who were already confronting a surge of activism from Democratic women driven to protest, raise money and run for office because of their fervent opposition to Mr. Trump. “This is coming, this is real,” Stephen K. Bannon, Mr. Trump’s former chief strategist, said recently about the female-fueled wave of liberal energy.

Developers Seek $6 Million Tax Break for Trump-Managed Hotel – The New York Times

As President Trump’s family business prepares to open a hotel in the Mississippi Delta this fall, its local development partners have asked the State of Mississippi to subsidize the project with up to $6 million in tax breaks, according to documents obtained through an open records request.

White House denies John Kelly offered to resign – FT

The White House denied that John Kelly had offered to quit as chief of staff, amid mounting criticism over how he handled claims of domestic violence that led to the firing of a top aide. Criticism of Mr Kelly has mounted daily since Rob Porter, White House staff secretary, was forced to resign following accusations from his two former wives that he had subjected them to physical and mental abuse.

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ELECTORAL POLITICS

Sinn Fein Gets a New Leader, Mary Lou McDonald – The New York Times

Gerry Adams tried to turn the page on a troubled period in Irish history on Saturday when he passed the presidency of Sinn Fein to his deputy, Mary Lou McDonald, who becomes the party’s first female leader. Mr. Adams’s retirement after 34 years as party leader is seen as an opportunity for Sinn Fein, until recently the political wing of the banned Provisional Irish Republic Army, to reposition itself closer to the political mainstream in southern Ireland.

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SCANDALS, LAWSUITS, FINES, REGULATORY

Wells Fargo Fumbles Efforts to Repay Aggrieved Customers – WSJ

The big bank acknowledged that it recently sent out 38,000 erroneous communications to customers that it forced to buy unneeded auto insurance. In some cases, according to two people briefed on the matter, Wells Fargo has also sent refunds to people who weren’t the bank’s customers; notified those who were harmed of incorrect amounts to be paid; and told people of coming refunds though they had never gotten the insurance.

Uber eyes a smoother road after Waymo lawsuit settlement – FT

The ride-hailing company has already paid a heavy price for the lawsuit, which has generated a stream of negative headlines and revelations about unsavory business practices. The lawsuit, filed last February, was one of the factors that prompted investors to oust the then chief executive Travis Kalanick in June.

Insider trading has been rife on Wall Street, academics conclude – Economist

The papers make imaginative use of pattern analysis from data to find that insider trading is probably pervasive. The approach reflects a new way of analysing conduct in the financial markets. It also raises questions about how to treat behaviour if it is systemic rather than limited to the occasional rogue trader.

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SILICON VALLEY, UNICORNS, STARTUPS, VC

After Settling With Uber, Waymo Faces Bigger Challenges – The New York Times

Waymo’s competition extends well beyond Uber — and a good part of that competition is directed by engineers it used to employ. Much of the artificial intelligence technology that has come out of Waymo’s work and research run by Google’s parent company, Alphabet, has made it easier for companies, even start-ups, to compete. “Waymo may have a technical advantage,” said Jason Doran, who helped run the delivery service Sidecar and joined General Motors when the carmaker acquired the start-up. “But they have to figure out a business model.”

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Amazon Is Turning These Four Cities Into Grocery Battlegrounds – Bloomberg

News that Amazon.com will start offering two-hour delivery from Whole Foods stores in four U.S. cities has the food world buzzing that competition is about to heat up in an industry that survives on razor-thin margins. In the six months since Amazon acquired the organic grocer, the e-commerce giant has been mum about its plans for its ballyhooed push into brick-and-mortar food retail. Now, the grocery world will get a first-hand look at Amazon’s strategy, with two-hour delivery available through its Prime Now service in Dallas and Austin, Texas; Virginia Beach, Virginia; and Cincinnati, Ohio.

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AUTOS, ELECTRIC, SELF-DRIVING

Tesla Wraps Up Worst Week Since July on Slow-Going Model 3 – Bloomberg

Elon Musk went from flying high after his successful SpaceX launch to watching Tesla Inc. shares fall back to Earth. The electric-car maker’s stock dropped 9.7 percent this week, the biggest one-week slide in seven months. The decline — which has been steeper than the broader market selloff — has been fueled by concerns surrounding Tesla’s Model 3 sedan.

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MEDICAL, PHARMA, BIOTECH

Experimental Drug Promises to Kill the Flu Virus in a Day – WSJ

As Americans suffer through the worst influenza outbreak in almost a decade, a Japanese drugmaker says it has developed a pill that can kill the virus within a day. But even if the experimental drug lives up to the claim, it likely won’t be available in the U.S. until next year at the earliest.

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ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

Exclusive: Intel’s new Vaunt smart glasses actually look good – The Verge

There is no camera to creep people out, no button to push, no gesture area to swipe, no glowing LCD screen, no weird arm floating in front of the lens, no speaker, and no microphone (for now). From the outside, the Vaunt glasses look just like eyeglasses. When you’re wearing them, you see a stream of information on what looks like a screen — but it’s actually being projected onto your retina.

China is the rising artificial intelligence power — Quartz

Companies relying on AI need huge amounts of data to effectively compete. US companies are in a strong position to succeed because of their first-mover advantage, while Chinese companies benefit from their large domestic market. Taiwanese AI expert and venture capitalist Kai-Fu Lee has said he thinks Chinese companies have another advantage: their country’s government is less concerned than most with privacy issues.

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HEALTH, PRODUCTIVITY AND WELLNESS

The Mental Tricks of Athletic Endurance – WSJ

All of us, it turns out, are capable of pushing back the physical and psychological limits that we encounter at the gym, on the trails and in our sporting adventures. The feeling that you can go no further is just that—a feeling. And feelings can be changed. The subjective perception of effort is a sort of master controller—which means, in practical terms, that if you change your perception of a task’s difficulty, you can change your actual results.

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