Macro Links Feb 8th – Big Mistake

Macro Links Feb 8th – Big Mistake

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BIG MISTAKE, SHUTDOWN, TANK PARADE

Trump says stock market plunge was ‘big mistake,’ promises economy will keep roaring – The Washington Post

There are signs that wages are beginning to increase at a higher rate, and job gains have been mostly steady in the past several years. But there are growing concerns about inflation, and the Federal Reserve is expected to continue raising interest rates, moves that would likely impact investor appetite for stocks. The federal government is also adding hundreds of billions of dollars in debt each year, another factor that is fueling investor concerns.

18G08 - BIG MISTAKE

Trump’s Latest Surprise: Shutdown Might Be a Good Idea – The New York Times

Mr. Trump’s threat of a shutdown seemed to have little effect on the delicate negotiations on Capitol Hill to raise spending caps on military and nonmilitary spending — an agreement that, if passed by both houses of Congress, would pave the way for long-term deal to fund the government.

D.C. Council hits Trump on military parade: ‘Giant Tank Parade is cancelled’ | TheHill

The D.C. Council mocked President Trump over his proposed military parade, which the Pentagon has confirmed is in the works. The District’s legislative body on Wednesday tweeted out a graphic of a “no tanks” symbol. Trump has floated the idea several times in the past and was particularly enthusiastic after viewing the Bastille Day military parade in Paris.

Ret. major general pens damnation of Trump parade: ‘We do not have a commander in chief right now’ – Rawstory

“Donald Trump has continually shown himself to have authoritarian tendencies, and this is just another example,” the statement from Eaton said. “The military is not Donald Trump’s to use and abuse in this way,” the retired major general continued, insisting that the U.S. military would not be “reduced to stagecraft to prop up Donald Trump’s image… unfortunately, we do not have a commander in chief, right now, as much as we have a banana republic strong man.”

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BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS

Big Investors May Be Dragging Bitcoin Toward Market Correlation – Bloomberg

It may just be a coincidence that Bitcoin’s plunge preceded the latest equities selloff, but Morgan Stanley clients are watching the digital currency as a potential leading indicator for risk in the broader stock market. “The idea is that as institutional investors seek out increasingly higher level of risk/return, that Bitcoin may represent the most risk/potentially highest return available, and hence could be evolving quickly into a primary barometer,” Morgan Stanley analysts led by James Faucette wrote in a note Wednesday.

18G08 - BITCOIN CORRELATION

Losing Interest in Bitcoin – Bloomberg

Investors in Bitcoin counting on a rush of fresh money to lift the cryptocurrency’s slumping fortunes may face a new obstacle: disinterest from the mainstream. Global online searches for the term “Bitcoin” have tumbled alongside the price since both peaked in mid-December, according to Google Trends data. While the latest tumble in Bitcoin’s value — as much as two-thirds from the December high — is seen as par for the course by crypto veterans, it appears the red-hot demand for information on the digital currency has burned out for many others.

18G08 - BITCOIN SEARCHES

Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says – Bloomberg

The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group Inc.’s global head of investment research. “The high correlation between the different cryptocurrencies worries me,” Strongin said. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”

Bitcoin May Evolve Into What Everyone Fears, Mathematicians Say – Bloomberg

Prices of cryptocurrencies such as Bitcoin may never stabilize, and digital tokens risk simply ending up being the equivalent of Ponzi schemes. Using mathematical modeling and experimental economics, two University of Pittsburgh researchers tried to determine Bitcoin’s value, and concluded that it’s “an asset which has no value by traditional measures” and may be in a bubble.

Bitcoin on Credit? For 20 Percent of Owners, That’s a Yes – Bloomberg

Nearly 20 percent of people who own cryptocurrencies such as Bitcoin went into debt to buy it, or bought it on margin. That’s the finding of a survey of more than 3,000 people conducted in mid-January by CoinDesk, a New York-based provider of price data, information and news about digital tokens. The rising use of debt is one of the reasons banks including Citigroup Inc. are halting purchases of Bitcoin and other cryptocurrencies on their credit cards.

Here Are the World’s Virtual Currency Billionaires (or at Least They Were) – The New York Times

While the list in Forbes magazine, which was assembled in recent weeks, identifies about 10 virtual currency billionaires, most of them were not billionaires by the time the feature went online on Wednesday morning. On Monday alone, the prices of many virtual currencies plummeted over 20 percent, before stabilizing on Tuesday.

Novogratz Raises $250 Million for Crypto Merchant Bank – Bloomberg

Mike Novogratz, the former Wall Street macro trader, raised about $250 million for his cryptocurrency merchant bank during one of the biggest routs yet in Bitcoin, according to a person familiar with the deal. Terry Gou, the billionaire chief executive officer of China’s Foxconn, is among the investors in the private placement, said the person, who asked not to be identified because the transaction isn’t public.

A Tiny Canada Bank Is Building a Vault for Cryptocurrencies – Bloomberg

“We’re using what banks are all about — safety and security — only what we’re doing now is saying that physical box in the basement is getting obsolete,” David Taylor, chief executive officer of Canada’s smallest bank by assets, said in interview at Bloomberg’s Toronto office. “Most people’s really valuable assets are contained in some sort of digital format, whether it be a deed or a contract or a cryptocurrency.”

A startup raised $59 million in a token sale to usher in the next generation of crypto – Business Insider

The token sale, which was open to accredited investors, was filed with the regulator as a private placement, a way for companies to raise capital from a select amount of investors, after the company raised the funds. A portion of the token sale went towards building Polymath’s platform, which aims to allow financial-services companies to make and issue tokenized securities, according to a person familiar with the matter.

Cryptocurrencies Get Word From SEC Inspectors: We Are Watching – Bloomberg

Digital currencies just got name-checked by a group that many of their boosters would probably rather avoid: Securities and Exchange Commission inspectors. For the first time ever, the SEC’s Office of Compliance Inspections and Examinations put cryptocurrencies and initial coin offerings on a list of focal points for scrutiny this year at the financial firms and advisers the agency oversees. The markets for such products “present a number of risks for retail investors,” the office said.

Bitcoin’s Bear Market Leaves Its Mark on Coin Offerings – WSJ

Bitcoin’s roughly 70% selloff from the December peak to recent lows has weighed heavily on “altcoins” and especially the newer tokens created via initial coin offerings. Throughout 2017, the price rallies in bitcoin and the smaller digital currency ether helped feed the appetite for the new coin offerings, in which startups publicly sell bitcoin-like tokens. Now, that process is reversing.

Cryptocurrency Regulation ‘Not High On To-Do List’ Says European Central Bank | Cointelegraph

The European Central Bank (ECB) has moderated its stance on cryptocurrency regulation Wednesday, Feb. 7, describing it as “not exactly very high on its to-do list” in a brief interview with CNBC. The comment come ahead of an increasingly-anticipated G20 Summit this coming March in Argentina, where cryptocurrency regulation will form a major topic of discussion, according to a growing number of sources, including the ECB.

The Bitcoin Boom Could Be Great for Sex Businesses – Bloomberg

Sex-toy entrepreneur Polly Rodriguez is sick of bankers giving her funny looks. Freedom from mainstream financial complications has some adult companies cheering the swell of digital currencies, including Bitcoin and Ethereum, and the rise of digital-payment tokens, which could help them skirt skeptical intermediaries and allow customers to make direct payments.

New Research Suggests Ripple Is Even More Centralized Than Previously Thought – Bitcoin News

Despite being associated with cryptocurrencies such as bitcoin and ethereum, ripple’s status as a decentralized currency is a matter of dispute. Critics have taken aim at XRP for years, claiming that Ripple exerts an unprecedented degree of control over transactions, something the company has always denied. A new report from Bitmex Research, whose cryptocurrency analysis carries great weight, suggests that ripple may be even more centralized than previously thought.

New York Mandates Stronger Fraud Controls for Crypto Companies – CoinDesk

The New York State Department of Financial Services (NYDFS) is pushing for companies that offer cryptocurrency services in the state to beef up their protective measures against fraud and market manipulation. In a Wednesday statement, the office – which several years ago developed the BitLicense regulatory framework – released new guidance for firms, including those that have been issued either a BitLicense or a money transmission by the state.

Why the Cryptocurrency World Is Watching South Korea – Bloomberg

Many South Koreans are obsessed with cryptocurrencies. The country’s lawmakers? Not so much. From the prime minister down, officials have warned that the speculative mania surrounding Bitcoin and its peers is dangerous. Demand for the virtual currency was so extreme at one point in January that it lifted prices in Korea 50 percent higher than those in America. The premium has since receded, but policy makers are still worried. Given the nation’s outsized role in the crypto world, the prospect of

Polychain and Andreessen Horowitz invest $61 million in DFINITY – Business Insider

The investment is the largest ever from Polychain Capital, a San Francisco hedge fund set up in 2016 to invest in blockchain startups. Polychain itself is backed by blue chip venture capital firms including Sequoia Capital, which was an early backer of Apple and Google, and Union Square Ventures, the New York fund set up by renowned VC Fred Wilson which has invested in the likes of Twitter and Etsy.

Winklevoss Twins Say Increased Regulation Is Bullish for Bitcoin – Bloomberg

“These technologies can’t flourish and grow without thoughtful regulation that connects them to finance,” Tyler Winklevoss, chief executive and co-founder of the Gemini Exchange, said in an interview on Bloomberg Television. “As long as jurisdictions strike the right balance, we think that its going to be a huge boon and win for cryptocurrencies.”

Ultimo’s Michelle Mone and Doug Barrowman launch $75 million Equi ICO – Business Insider

The pair plans to sell “Equi Tokens,” which are crypto tokens built to the same specifications as ethereum. Funds raised through the sale will be used to develop the Equi platform, an investment website that the pair hope will open up venture capital investment to ordinary people.

Ohio teen invests entire savings in cryptocurrencies, becomes millionaire – Business Insider

He describes himself as the “Crypto Millionaire” on his website, and he’s often pictured in a tropical location or beside a flashy sports car. In one photo, Zillan smiles broadly beside a painting of himself in which he’s depicted as the infamous Wall Street mogul Jordan Belfort in a scene from the movie “The Wolf of Wall Street.” The caption reads: “The wolf of Crypto Street.”

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FOREX, CARRY TRADES, EXCHANGE RATES

Wall Street FX Strategists Hit Reset After Euro Calls Fall Short – Bloomberg

Foreign-exchange forecasters are headed back to the drawing board less than six weeks into the new year after the euro blew straight past most of their predictions for 2018. Europe’s common currency has already advanced more than 3 percent since Dec. 31, easily topping the median survey forecast of $1.22 from back then. It’s currently trading closer to $1.24, even after a pullback over recent days, and its advance has prompted a swath of analysts to lift their projections.

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HEALTHCARE, BUDGET, INFRASTRUCTURE

Pelosi sets record for longest speech in House history – The Hill

House Minority Leader Nancy Pelosi (D-Calif.) on Wednesday set a record for the longest speech on record in the chamber after she spoke in defense of young immigrants for more than seven hours on the House floor. In her speech, Pelosi read letters from recipients of the Deferred Action for Childhood Arrival (DACA) program who have found jobs using the program’s work permits.

Sweeping budget deal would add $400 billion in federal spending, end months of partisan wrangling – The Washington Post

Trump backed the deal Wednesday, saying in a tweet that it would give Defense Secretary Jim Mattis “what he needs to keep America Great” and calling on lawmakers of both parties to “support our troops and support this Bill!” The Senate is expected to vote first on the plan, clearing it Thursday afternoon or evening — giving the House just hours to act before a midnight deadline for a government shutdown.

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TAXATION, WEALTH HAVENS, INEQUALITY

Republican tax cuts shift voters’ perceptions ahead of midterms

Since the Republicans passed their tax bill in December, the Democrats’ lead in the 2018 midterms has shrunk from 13 points to 6.6 points, according to a poll tracker from RealClearPolitics. Alongside strong figures for economic growth and job creation, the revival in Republican fortunes has been driven by improving perceptions of the tax reforms.

Self-Employed Workers Face Mortgage Hurdles – WSJ

Lenders need to rely on tax returns to verify a self-employed applicant’s income. That’s a challenge for lenders, because on one hand, self-employed applicants need to show enough income to qualify for a mortgage. On the other hand, they want to lower their taxable income by taking deductions and write-offs that they’re legally entitled to.

As Utilities Move To Pass Tax Savings To Customers, Credit Concerns Arise – WSJ

A flurry of regulated gas and electric utilities are passing savings stemming from the recent tax overhaul to their customers, a move welcomed by consumers but met with concern by credit ratings analysts. Rate changes will save a few dollars off the average customer’s bill. Although state authorities may give regulated utilities little choice but to return tax savings to customers, credit markets may still penalize the sector for the diminished cash flow.

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RUSSIA PROBE

Russians penetrated U.S. voter systems, says top U.S. official – NBC News

A top official at DHS said that the Russians were able to gain access to the registration rolls of an “exceptionally small” number of states. There is no evidence that any of the registration rolls were altered in any fashion, according to U.S. officials. In a new NBC News/SurveyMonkey poll, 79 percent of the respondents said they were somewhat or very concerned that the country’s voting system might be vulnerable to computer hackers.

Eric Holder Warns Trump Risks Long-Term Damage to FBI, Justice Department – WSJ

Former Attorney General Eric Holder warned that President Trump’s attacks on top FBI and Justice Department officials are undermining the credibility of law-enforcement agents investigating and prosecuting criminal cases. Mr. Holder, who spent six years as attorney general under Democratic President Barack Obama, said that rank-and-file FBI agents testifying in court cases could face undue skepticism following the scorn aimed at the nation’s top law-enforcement agencies.

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NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS

North Korea Plans Pre-Olympics Military Parade – Bloomberg

Kim Jong Un was expected to parade his latest military hardware through the North Korean capital Thursday, underscoring the danger that will remain after the Olympic displays of good will are over. The procession of goose-stepping soldiers and mobile missile launchers comes one day before Kim’s sister, Kim Yo Jong, joins South Korean leader Moon Jae-in and U.S. Vice President Mike Pence to mark the start of the Winter Games in the South.

For Korea Inc., Money and Politics Make an Awkward Olympics – The New York Times

The country is hosting its first Winter Games amid a national reckoning about big business, politics and the tentacles of influence that link them. Calls for a cleanup intensified this week after the heir apparent at Samsung, a top-tier Olympic sponsor, was freed from prison by a court ruling that reduced and suspended his sentence for bribery.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

China’s War on Risk Has Banks Fleeing Shadowy Wealth Products – Bloomberg

Some have warned that the interbank market for the products was an accident waiting to happen, vulnerable to the same kind of collapse of confidence that struck U.S. and European banks during the 2008 financial crisis. The failure of one institution could quickly spread to others in a market where banks were buying increasing quantities of each others’ WMPs.

Deutsche Bank Shares Plunge to Crisis Level – Bloomberg

Shares of the bank have lost 11 percent since Friday, when the Frankfurt-based company reported revenue at a seven-year low and declines at businesses from transaction banking to equity derivatives. The sell-off across global equity markets added to the slump, though many of its European competitors posted gains on Wednesday as Deutsche Bank slipped an additional 0.4 percent.

18G08 - DB DROP

A Map to the Underworld: $2 Trillion of Volatility Trades Here – Bloomberg

There are two categories of securities linked to price turbulence, roughly speaking: ones tied to the VIX directly, and others that take their cue from the volatility of individual stocks. Altogether, estimates for the space are anywhere from $1.5 trillion to $2 trillion. Beyond that is the options market, which itself is an implicit bet on swings in shares.

18G08 - VOLATILITY AWAKENS

One Short-Volatility Product Is Already Rising From the Ashes – Bloomberg

While Monday’s market mayhem that sent the Cboe Volatility Index to its biggest one-day gain in history claimed several victims, the second-largest exchange-traded product offering a way to go long market tranquility, ProShares Short VIX Short-Term Futures exchange-traded fund (ticker SVXY), is still kicking. The fund’s total assets almost quadrupled to nearly $280 million on Tuesday, though it’s still just 1/6th of what it was on Friday.

How Two Tiny Volatility Products Helped Fuel Sudden Stock Slump – Bloomberg

Two days after a sudden spike in volatility sparked a stock-market crash, market participants are left to ponder the wreckage of the sell-off and the mysterious dynamics that caused it. One theory that’s emerging: the curious case of the tail wagging the dog. There’s reason to believe the sharpness of the retreat in equities was linked to traders’ understanding of how the exchange-traded products would behave. And market participants knew it.

King Says Global Debt May Contain Seeds of Next Financial Crisis – Bloomberg

Former Bank of England Governor Mervyn King says a buildup of debt needs to be more closely monitored to ensure it doesn’t spark the next financial crisis. “The areas of weakness in the current system are really focused on the amount of debt that exists, not just in the U.S. and U.K. but across the world,” he said on Bloomberg Radio on Wednesday. “Debt in the private sector relative to GDP is higher now than it was in 2007, and of course public debt is even higher still.”

Is Wall Street’s Untested Millennial Majority a Risk? – Bloomberg

“Find me someone who worked in the era of 15 percent inflation and I’ll talk to them about Bitcoin and the Internet,” said the 29-year-old, a fund manager at Seven Investment Management in London who helps oversee 12 billion pounds ($17 billion). After $3 trillion was erased from global stocks in a week, he’s weighing whether to buy on the dip now—or wait a bit longer. “I don’t even think that this move is a wake-up call,” he said on Tuesday.

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Forget the bravado — Elon Musk’s SpaceX achievement is stunning – FT

The US space establishment was initially wary of tech billionaires such as Mr Musk and the Amazon founder Jeff Bezos, when they first declared their ambitions to run their own private space programmes. But Nasa quickly came to admire the highly innovative and hard-charging attitude that these entrepreneurs have brought to the business. Such has been Nasa’s faith in Mr Musk that it has even granted SpaceX a licence to operate from the hallowed ground of Launchpad 39A, the site from which Neil Armstrong, Buzz Aldrin and Michael Collins blasted off to the Moon in 1969.

SpaceX Stuns the World – Bloomberg

Even without customers, the Falcon Heavy is a milestone in American spacefaring. Longer-term, the new rocket could open up novel commercial possibilities. Companies are already testing gear for asteroid mining, space tourism, moon expeditions and much else, spurred on in no small part by SpaceX’s earlier achievements. Add cheap, reliable heavy-lift rockets to the equation and the opportunities only expand. A few decades from now, more far-out stuff — space-based energy production, say — may no longer be science fiction.

Should You Buy Bitcoin? by Adair Turner – Project Syndicate

Over the next year, the Bitcoin price could double, soar tenfold, or collapse by 95% or more, and no economic analysis can help predict where in that range it will lie. Like other cryptocurrencies, Bitcoin serves no useful economic purpose, though in macroeconomic terms, such currencies probably also do little harm.

Ken Rogoff on bitcoin and the future of crypto – Business Insider

“We have to remember the private sector invented standardized coinage, and then the government eventually regulated it, took it over — different times different places. Same thing with paper currency — private-sector invented it, government regulate it, took it over. What makes you think it will be different? And that bitcoin evangelist say, “no, no, no; this is Libertarian. They will not touch us.” I’m sorry when it comes to the monetary system, the government makes the rules. You cannot win the game. If they’re not winning, they will change the rules. That’s what will happen here.”

A down day on the markets? Analysts say blame the machines. – The Washington Post

Investors and market experts say trading algorithms made a crazy stock-market day that much crazier, sparking an outburst of panic selling and making its rebound seem even more baffling. The market is always “just one step away from massive volatility because of programmed trading,” said Michael Yoshikami, the chief executive of Destination Wealth Management, an investment-management firm in Walnut Creek, Calif. “There’s no way that investors can compete with a computer making 1,000 trades a second. What it does is it ramps up the psychology of fear and greed for individual investors.”

A Warning Sign Behind the Market Swings – WSJ

Don’t worry about stock-market volatility: It is perfectly normal. Do worry about how stocks got so high to start with because it is evidence of an economy still abnormally dependent on low interest rates and richly priced assets. Nearly a decade of ultra-easy monetary policy has sent asset prices sky-high and kept volatility unnaturally low. Even with the latest downdraft, U.S. stock values at Monday’s close equaled 152% of gross domestic product, compared with 127% at the precrisis peak.

The ‘buy the dip’ mantra faces unexpected test – FT

US stock volatility’s return poses a challenge for investors used to buying any pullback. The euphoria that propelled Wall Street to its best January in three decades was already losing momentum as an acceleration in US earnings growth pushed bond yields towards 2.90 per cent early on Monday. The one-two punch of inflation worries and higher yields finally fractured the resolve of equity bulls, helping trigger the S&P 500’s worst trading day since 2011.

18G08 - SPX FPR

Unpacking Amazon.com and its Prime economy – Reuters

The world’s largest online retailer Amazon.com Inc reported its highest profit ever, almost $2 billion in the last quarter of 2017. Here’s how Amazon’s focus on fast shipping, customer loyalty and new technologies combined with aggressive expansion into other industries continues to pay off.

A Driverless Future Threatens the Laws of Real Estate – Bloomberg

“Real estate might be the industry that is most transformed by autonomous vehicles,” said David Silver, who teaches self-driving engineering at Udacity Inc., an online university that has enrolled more than 10,000 students who want in on the transport of the future. “It could change real estate from a business that is all about location, location, location.”

Why Trump’s military parade won’t be ‘like the one in France’ – The Washington Post

“At what point does healthy appreciation for the military turn into unhealthy obsession?” asked a German defense analyst. “People are going to compare it more with Kim Jong Un than with the Champs-Elysees,” said Nicholas Dungan, a France-based senior fellow with the Atlantic Council. “If (a parade is organized due to a) personal desire of Trump, because he sat at the Champs-Elysees, then it becomes political. In France, the parade isn’t political, though. It’s part of this nation.”

Someone is wrong on the internet, wages and the stock market edition | FT Alphaville

It would certainly be ironic if financiers convinced themselves to sell stocks because of a single data release, which had been distorted by their own aggressive pay packets, which in turn were based on a market melt-up partly justified by the stability of inflation.

Investors should keep calm but stay alert after mini-crash – FT

Is it really such a good idea to follow all the market clichés and keep calm and carry on when volatility flares? Research in the Journal of Finance suggests that in the long run, the best strategy is to sell when realised volatility rises. Its great advantage comes from avoiding the worst percentage drawdowns that are suffered by buy-and-hold strategies. The “volatility-managed” strategy sailed through 2008 almost unscathed, largely because volatility suddenly exploded after a long period of calm in early 2007 (rather as it has just done), some months before markets peaked and started to fall much later in the year. It also survived 2000 relatively unscathed, after the market had endured correction after correction in the last three years as it melted up.

In Sweeping War on Obesity, Chile Slays Tony the Tiger – The New York Times

They killed Tony the Tiger. They did away with Cheetos’ Chester Cheetah. They banned Kinder Surprise, the chocolate eggs with a hidden toy. The Chilean government, facing skyrocketing rates of obesity, is waging war on unhealthy foods with a phalanx of marketing restrictions, mandatory packaging redesigns and labeling rules aimed at transforming the eating habits of 18 million people.

How YouTube Drives People to the Internet’s Darkest Corners – WSJ

The Journal investigation found YouTube’s recommendations often lead users to channels that feature conspiracy theories, partisan viewpoints and misleading videos, even when those users haven’t shown interest in such content. When users show a political bias in what they choose to view, YouTube typically recommends videos that echo those biases, often with more-extreme viewpoints.

One Man’s Fight Against the Lions of Japanese Investing – Bloomberg

In Western financial capitals, what Nakano preaches would make him the equivalent of an ice cream man who sells only vanilla. Invest in a wide range of stocks and other assets, he maintains, hold them for the long haul, and buy more during market dips. But this is Japan, home of an asset-price bubble that erased trillions of dollars in wealth when it burst in the early 1990s, creating a generation of people who believe stocks will only go down. This is the country where two “lost” decades of deflation made it sensible to keep savings in cash, where buy-and-hold investing has few proponents.

As climate changes threaten California’s giant redwoods, the key to their salvation might be within them – The Washington Post

For the first time, scientists are mapping the coast redwood’s genome, a genetic code 12 times larger than that of a human being. By the end of the year, scientists hope to have mapped the complete genome of the coast redwood and of the giant sequoia, a close cousin that also is among the tallest trees in the world, some reaching hundreds of feet high. The genetic code of a single 1,300-year-old redwood from a stand just north of here and of a same-age sequoia will serve as baselines and the first step in better understanding how to make these forests more genetically diverse as a defense against rising man-made threats.

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CENTRAL BANKS & MONETARY POLICY

Fed’s Evans says no rate hikes needed before mid-2018 – Reuters

Sluggish price increases in the United States give the Federal Reserve room to hold off on interest rate increases until at least mid-2018, Chicago Federal Reserve President Charles Evans said on Wednesday. “If we get to that point and have more confidence that inflation is moving up sustainably, then further rate increases would be warranted,” Evans, who does not have a vote on rates this year but participates in the central bank’s policy debates, said in a speech at a banking conference.

Fed Officials Aren’t Worried About the Turmoil in Equities – Bloomberg

Federal Reserve officials played down recent turmoil in global stock markets, sounding as resolved to push ahead with gradual increases in interest rates as before the rout. “Having a bump like this has virtually no consequence in my view of the economic outlook,” New York Fed President William Dudley said Wednesday at an event in New York. “My outlook hasn’t changed because the stock market is a little bit lower than a few days ago. It’s still up sharply from where it was a year ago.”

Fed officials maintain outlook despite market gyrations- FT

The gyrations in the stock market over recent days have not changed the outlook for the US economy or central bank policy, two senior Federal Reserve officials said. Robert Kaplan, the Dallas Fed president, told the Financial Times that volatility was to be expected in markets and “can be healthy”, adding that he was sticking with a forecast of three increases in short-term interest rates this year.

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USA ECONOMY DATA, CITIES AND STATES

Consumer Credit Growth in U.S. Cools After November Surge – Bloomberg

An $18.4 billion pickup in U.S. consumer debt in December followed an upwardly revised November increase, Federal Reserve data showed Wednesday. Fourth-quarter revolving debt accelerated from the previous three months, increasing at an annualized 9.7 percent rate. The advance in revolving debt shows larger credit-card balances during the holiday-shopping season. The increase in non- revolving credit outstanding probably reflects steady purchases of motor vehicles.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Goldman Is Close to Buying Personal-Finance Startup Clarity – Bloomberg

Goldman Sachs Group Inc. is in discussions to acquire personal-finance startup Clarity Money, with plans to fold it into its Marcus online lender, according to people familiar with the matter.

SoftBank in Talks to Buy Nearly a Third of Swiss Re – WSJ

SoftBank Group is in advanced talks to buy a stake in reinsurance giant Swiss Re that could be worth $10 billion or more, in the latest example of the Japanese conglomerate’s soaring ambitions.

Steve Wynn Resigns From Company Amid Sexual Misconduct Allegations – The New York Times

Mr. Wynn, a billionaire casino mogul, stepped down on Tuesday as chief executive and chairman of the board of Wynn Resorts. He is accused of decades of sexual misconduct.

Wall Street Sours on Cboe Following Collapse of VIX-Linked Funds – Bloomberg

The pain continues for Cboe Global Markets Inc. The exchange fell as much as 5.1 percent Wednesday, building on Tuesday’s record 10 percent plunge, after analysts at Goldman Sachs Group Inc. and JPMorgan Chase & Co. downgraded the stock to “neutral,” leaving just two buy recommendations on Wall Street.

Short-vol collapse may deal lasting blow to CBOE — JPMorgaN – FT

“Investors are concerned with the impact of Vix exchange-traded note damage to CBOE’s Vix franchise. We believe investors are right to be concerned,” said JPMorgan brokers, asset managers and exchanges analyst Kenneth Worthington. “Given they are key drivers of Vix futures volume for CBOE, their loss will probably be felt.”

Rio Tinto rewards investors with record dividend- FT

Rio Tinto has rewarded shareholders with the biggest dividend in its 145-year history and added a further $1bn to a share buyback programme as annual profits surged on the back of higher commodity prices. The $5.2bn payment declared by the Anglo-Australian company on Wednesday highlights the turnround in the fortunes of the mining industry.

Amazon’s market value on verge of beating out Microsoft- Reuters

Amazon.com Inc on Wednesday was on the verge of ending the day with a stock market value higher than Microsoft Corp’s for the first time, as the online shopping behemoth weathered the recent turmoil on Wall Street.

Chipotle Pressure Ramps Up – Bloomberg

Turnaround concerns have analysts paring their 12-month target prices on the burrito chain’s stock. “While Chipotle has had some setbacks along the way, we’re past that time,” said Mizuho Securities USA analyst Jeremy Scott, who downgraded the stock to a neutral rating from buy. “We’re in something different, and I think traffic is not recovering.”

Wells Fargo Downgraded by S&P in Wake of New Fed Asset Limit – Bloomberg

Wells Fargo & Co. lost a credit-rating advantage over its biggest rivals after the Federal Reserve banned the bank from growing until it convinces authorities it’s addressing problem areas.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Trend-following funds hit by global rout – FT

Surging global share prices during January lured in more money from computer-driven hedge funds that ride market momentum, but the sudden eruption of volatility triggered abrupt losses for many of the industry’s biggest operators. “The rally had accelerated, and we kind of knew an accident would happen, but it’s never pretty when it does,” said David Harding, the head of Winton Capital, one of the biggest such funds in the industry. “We’ve had a couple of painfully bad days . . . This will go down as one of the weeks one remembers.”

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ENERGY COMPANIES, NOCs, INDUSTRY

U.S. Gas Drillers Are Missing Out on Asia’s Oil-Driven Cash Boom – Bloomberg

If you’re pumping natural gas in the U.S., you’re probably missing out on Asia’s boom. That’s because the fortunes of most U.S. natural gas producers are pegged to the nation’s benchmark gas price, which slipped almost 9 percent since June. Meanwhile, companies like Exxon Mobil Corp.’s partner Oil Search Ltd. sell most of their output to Asian customers linked to crude prices, which are up about 40 percent over that period.

A Fossil-Fuel Startup in California Is Using Solar’s Playbook – Bloomberg

A California startup is applying the Big Solar playbook to fossil fuels. Concentric Power raised funds to support $100 million of natural gas-fired generating systems it plans to offer to commercial customers using the same leasing model that companies including Sunrun Inc. and Tesla Inc. use for rooftop solar panels.

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COMMODITIES AGRICULTURE & SOFTS

Can Americans Eat More Chicken? U.S. Industry Bets on Growth – Bloomberg

As if Americans didn’t have enough chicken on the menu already, production of the nation’s most-popular meat is headed for the biggest growth spurt in more than a decade. Companies including Tyson Foods Inc. and Sanderson Farms Inc. are leading an industry expansion with new processing plants from Tennessee to Texas, fueled by years of profit gains from cheap feed grain and record demand.

Drought Across U.S. Reaches Highest Levels Since 2014 – Bloomberg

Drought, which has left winter wheat struggling across the Great Plains, expanded to cover 38.4 percent of the contiguous U.S., the most since May 2014. Only 14 percent of Kansas wheat was rated in good or excellent condition at the end of the month, the lowest for that time since 2006, according to an earlier U.S. Department of Agriculture report.

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POLLUTION, CLIMATE & ENVIRONMENT

Taiwan Earthquake Toll Rises to 7 Dead, With Dozens Missing – The New York Times

The magnitude-6.4 quake struck at 11:50 p.m. Tuesday and was centered 14 miles northeast of the coastal city of Hualien. The shaking was felt across Taiwan, but in Hualien the force was disastrous, collapsing walls and leaving buildings resting at alarming angles.

18G08 - TAIWAN QUAKE

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EUROPE

Angela Merkel Reaches Deal to Form Coalition Government in Germany – The New York Times

What is troubling for many Germans is not necessarily bad news for Europe, which for years has depended on stability in Berlin and has been waiting in limbo as Ms. Merkel stumbled toward a deal. The new arrangement must still be approved by the Social Democrats’ rank and file. But if endorsed, the coalition may provide France’s new president, Emmanuel Macron, with the partner he has been looking for to help buck up the European Union and move it away from the austerity policies that were identified with Ms. Merkel’s old team and often blamed for stifling growth.

German union wins right to 28-hour working week and 4.3% pay rise – FT

The agreement between IG Metall, which represents a wide swath of industrial workers, and the Südwestmetall employers’ federation, shows how unions in Germany, that for years have been a model of wage restraint, are flexing their muscles in ways more typical of organised labour in France, home of the 35-hour working week.

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GEOPOLITICS, CRIME, TERRORISM

‘Extreme’ Suffering in Syria as Government Steps Up Bombing – The New York Times

More than 80 people were killed in rebel-held areas amid carnage that the United Nations called “outrageous” and an international failure. The toll, compiled by rescue workers and rising into the night, came as at least six more people were killed in another rebel-held area, in the northern province of Idlib. There, in the past week alone, the government’s Russian-backed air war has damaged several hospitals and clinics and killed dozens of people, including many civilians.

China developing naval rail gun technology, say experts – FT

Rail guns rely on electromagnetic pulses to fire projectiles further and faster than conventional guns, targeting enemy ships, aircraft and missiles from up to 100 nautical miles (185km) away. However, they require massive amounts of electric power to function, one of the reasons they have remained mainly on the drawing board.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Chinese Police Add Facial-Recognition Glasses to Surveillance Arsenal – WSJ

As hundreds of millions of Chinese begin traveling for the Lunar New Year holiday, police are showing off a new addition to their crowd-surveillance toolbox: mobile facial-recognition units mounted on eyeglasses. The eyeglass-mounted camera is equipped with facial-recognition technology capable of “highly effective screening” of crowds for fugitives traveling under false pretenses, the official People’s Daily newspaper reported Monday.

U.S. Announces Take-Down of $530 Million Cyberfraud Network – Bloomberg

The U.S. charged 36 people in a take-down of an international cybercrime ring that prosecutors say used the slogan “In Fraud We Trust” and stole $530 million with the help of pilfered identities and malware. The Justice Department on Wednesday announced the racketeering conspiracy along with the arrest of 13 people, eight of whom the government will seek to extradite.

US DoJ leads global arrests in bust of cyber crime ring – FT

The crackdown comes as banks and other financial institutions globally are spending billions of dollars to upgrade their defences against cyber attacks, fearing lawsuits and demands for the heads of top executives if they fail to fend off threats.

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PROPAGANDA, CORRUPTION, AUTHORITARIANISM

China Detains Executive Close to Family of Former Prime Minister – The New York Times

The authorities in China have detained a wealthy investor who went into business with relatives of the previous prime minister, a sign that the anticorruption campaign initiated five years ago by President Xi Jinping may again be closing in on a former top leader. Mr. Xi has ventured into uncharted territory with the prosecution of several party heavyweights, including China’s former security chief Zhou Yongkang, who was sentenced to life imprisonment in 2015.

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ELECTORAL POLITICS

How rich is Vladimir Putin? Official wealth and income disclosed ahead of Russian election – The Washington Post

The Russian leader claims a $112,000 average annual income and $241,000 in the bank. Putin’s stated income and wealth would make him relatively wealthy in Russia, where the average national salary was estimated to be less than $6,700 a year in 2015. However, most outside observers believe that Putin’s wealth is far greater than he lets on. Many estimates are generally in the billions — in 2015, Bill Browder, a former fund manager in Russia and major critic of Putin, estimated the president’s net worth at $200 billion, a figure that would likely make him the richest person on Earth.

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BANKS, BROKERS, INSURANCE, EXCHANGES

Bank of America Hires Law Firm to Help Probe $292 Million Loss – WSJ

Bank of America has brought in a law firm to help examine a soured lending arrangement that led to a $292 million quarterly charge. Bank of America was one of a number of global lenders that held pieces of a €1.6 billion ($2.0 billion) loan to Christo Wiese, then chairman of the South African retailer. Mr. Wiese’s shares in the company served as collateral for the financing.

Goldman Sachs in Talks With Apple to Finance iPhone Sales – WSJ

The Wall Street firm is in talks to offer financing to shoppers buying phones, watches and other gadgets from Apple, people familiar with the matter said. Customers purchasing a $1,000 iPhone X could take out a loan from Goldman instead of charging it to credit cards that often carry high interest rates.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Fox Tops Estimates, Showing Why Cable News Anchors Its Future – Bloomberg

The good news for investors was that Fox was supported once again by its cable business, led by Fox News, which will become a key profit contributor for the company if the Disney deal goes through. Rising subscriber fees at networks including Fox News and FX boosted total revenue to $8.04 billion, beating Wall Street estimates of $7.95 billion.

In the first full trailer for ‘Deadpool 2,’ Josh Brolin’s Cable stars front and center – The Washington Post

Ryan Reynolds and Twentieth Century Fox have posted the first full trailer for “Deadpool 2″ online, and one thing is clear: This movie is going to have a lot of Cable. For a second you could almost believe “Deadpool” is changing its normally comedic approach to take on a more serious character, but then we see Brolin with a green-screen sleeve where his metal limb is supposed to be. Reynolds-as-Deadpool takes over the narration, berating the trailer editors for the mix-up.

Vice Just Had a Big Revenue Miss, and Investors Are Getting Antsy – WSJ

Vice Media, working to stabilize its executive ranks, endured a substantial revenue miss last year and is trying to fend off shareholders pressing for an exit.

How Did ‘The Shape of Water’ Become the Film to Beat at the Oscars? – The New York Times

Awards voters have loved it so far, but just why is a matter of debate: Some think it taps into the zeitgeist; others say it’s just filmmaking at its best.

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AUTOS, ELECTRIC, SELF-DRIVING

Tesla Posts Smaller-Than-Expected Loss, Touts Sale of More Than 100,000 Cars Last Year – WSJ

Tesla reported a narrower fourth-quarter loss than expected, a promising sign that could ease some pressure on the electric car company as it tries to overcome months of production woes building its long-awaited Model 3 sedan.

Tesla Slows Red-Hot Cash Burn on Model 3 Progress, Deposit Boost – Bloomberg

Tesla Inc. burned through cash at a slower clip as the electric-car maker made progress building more Model 3 sedans and took deposits for its Semi truck and Roadster sports car. “If we can send a Roadster to the asteroid belt, we can probably solve Model 3 production,” Musk said on a conference call with analysts Wednesday, shortly after tweeting another photo of his Roadster hurtling through space.

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AEROSPACE, MILITARY & DEFENSE

SpaceX success lifts Pentagon hopes of ending launch pad monopoly

SpaceX has so far carried out three national security missions with its smaller Falcon 9. Mystery surrounds the outcome of the third mission last month amid reports it failed to deliver its payload into orbit. SpaceX, however, insisted its rocket performed normally. Success in delivering military payloads into orbit is a key part of the company’s strategy as it aims to provide a reliable alternative to the longstanding Boeing-Lockheed monopoly to launch sensitive US government kit.

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SCIENCE, NATURE, PSYCHOLOGY

‘Cheddar Man,’ Britain’s Oldest Skeleton, Had Dark Skin, DNA Shows – The New York Times

He had dark skin, brown curly hair and blue eyes, DNA tests suggest, upending a common assumption that Britain’s indigenous populations were all pale skinned with fair features. He is “Cheddar Man,” Britain’s oldest complete skeleton, which was discovered in 1903 in Gough’s Cave near the village of Cheddar in Somerset, in southwest England. He lived about 10,000 years ago in the Mesolithic period, the middle part of the Stone Age.

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HEALTH, PRODUCTIVITY AND WELLNESS

Lift Weights, Eat More Protein, Especially if You’re Over 40 – The New York Times

The review finds that eating more protein, well past the amounts currently recommended, can significantly augment the effects of lifting weights, especially for people past the age of 40. But there is an upper limit to the benefits of protein, the review cautions. On the other hand, any form of protein is likely to be effective, it concludes, not merely high-protein shakes and supplements. Beef, chicken, yogurt and even protein from peas or quinoa could help us to build larger and stronger muscles.

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