Macro Links Jan 11th – Battered Bond Market

Macro Links Jan 11th – Battered Bond Market

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BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS

South Korea justice ministry prepares to ban cryptocurrency trading, exchanges raided

South Korea’s justice minister said on Thursday the government is preparing a bill to ban cryptocurrency trading, throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion.

Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.

The government’s tough stance triggered a selloff of the cyrptocurrency on both local and offshore exchanges.

World’s Top-Ranked Crypto Exchange Adds 240,000 Users in One Hour

The world’s biggest cryptocurrency exchange keeps getting bigger. Hong Kong-based Binance.com is adding “a couple of million” registered users every week, with 240,000 people signing up in just an hour on Wednesday, Chief Executive Officer Zhao Changpeng said in an interview with Bloomberg Television. Demand is so high that the company is limiting new customers, he said, though Binance may fully reopen in the coming weeks.

Cryptocurrencies Drop as High Flier Ripple Trades 50% Below Peak – Bloomberg

The digital currency tumbled as much as 24 percent to $1.61, or about half the value of its Jan. 4 peak, according to data compiled by Bloomberg. Ripple pared the loss to 12 percent, as bitcoin and litecoin both fell by about 5 percent.

China Quietly Orders Closing of Bitcoin Mining Operations – WSJ

Chinese authorities ordered the closing of operations that create a large share of the world’s supply of bitcoin, tightening a clampdown that has already shuttered exchanges for the trading of cryptocurrencies in China.

Miami Bitcoin Conference Stops Accepting Bitcoin Due to Fees and Congestion – Bitcoin News

Next week the popular cryptocurrency event, The North American Bitcoin Conference (TNABC) will be hosted in downtown Miami at the James L Knight Center, January 18-19. However, bitcoin proponents got some unfortunate news this week as the event organizers have announced they have stopped accepting bitcoin payments for conference tickets due to network fees and congestion.

Russian Telegram app plans to join blockchain mania

Telegram, a messaging app, is to join the blockchain bandwagon by launching its own cryptocurrency later this year following an “initial coin offering” that could raise as much as $500m.

The WhatsApp rival, which says it expects to surpass 200m global users this year, wants to raise money to help create a platform using blockchain, the technology that underpins cryptocurrencies, that would allow users to make payments through its app, according to plans seen by the Financial Times.

Goldman Says Cryptocurrencies May Succeed as Form of Real Money – Bloomberg

Bitcoin may seem like a solution in search of a problem in the U.S., where transaction costs are already low and the dollar stable. But in developing countries, digital currencies could succeed as a real form of money, Goldman Sachs Group Inc. says.

Many currencies in sub-Saharan Africa have lost value due to high inflation and supply mismanagement. As a result, foreign money makes up more than 90 percent of deposits and loans in the Democratic Republic of the Congo, and Zimbabwe demonetized its currency in 2015. Bitcoin could also be useful in regions where governments impose strict rules on the use of traditional currencies from other countries.

Buffett says cryptocurrencies will almost certainly end badly

“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” the chairman and CEO of Berkshire Hathaway said.

“When it happens or how or anything else, I don’t know,” he added in an interview on CNBC’s “Squawk Box” from Omaha, Nebraska. “If I could buy a five-year put on every one of the cryptocurrencies, I’d be glad to do it but I would never short a dime’s worth.”

Bitcoin Could End Up Using More Power Than Electric Cars – Bloomberg

The global power needed to create cryptocurrencies this year could rival the entire electricity consumption of Argentina and be a growth driver for renewable energy producers from the U.S. to China.

Miners of bitcoin and other cryptocurrencies could require up to 140 terawatt-hours of electricity in 2018, about 0.6 percent of the global total, Morgan Stanley analysts led by Nicholas Ashworth wrote in a note Wednesday. That’s more than expected power demand from electric vehicles in 2025.

Bitcoin energy demand in 2018 could match Argentina – Morgan Stanley

Electricity consumption for bitcoin this year could be as great as or even exceed that used by global electric vehicles in 2025 and Argentina, said Morgan Stanley.

While they don’t see crypto power consumption moving the needle for global utilities just yet they note that bitcoin demand “may represent a new business opportunity for renewable energy developers and that many utility companies like NextEra, Iberdrola, Enel and even Big Oil is moving into the renewables space.

Morgan Stanley estimates the cost of creating an individual Bitcoin at between $3,000 to $7,000. And low cost regions are likely to be favoured for mining namely Mexico, Norway, China, Canada and the US. However, China is already moving to clamp down on the country’s bitcoin mining industry over concerns about both excessive electricity consumption and financial risk and miners are now thought to be seeking ways to transfer their operations abroad, either by physically moving factories or selling their expertise.

Now More Established Companies Are Getting Gripped by Crypto Mania – Bloomberg

In the past week, at least four companies with well-known brands have seen their stocks skyrocket after reports linked them to cryptocurrencies or initial coin offerings. Eastman Kodak Co. has almost doubled for a second day after saying it’ll sell a token, while Seagate Technology Plc jumped more than 16 percent Monday after a simple blog mention suggested it was entering the space.

The flood of higher-profile names is perhaps the next logical step for a frenzy that’s generated massive paper profits for virtually all comers in recent weeks. Long Island Iced Tea Corp. became the poster child for the craze, when its shares tripled after morphing into Long Blockchain.

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FOREX, CARRY TRADES, EXCHANGE RATES

Sharp yen gains signal growing G10 tightening hopes

A sharp move for the yen is a sign investors are growing confident that G10 central banks will be tightening monetary policy, seizing on supporting evidence from data and statements from policymakers to drive currencies higher.

Japan’s currency made a two-day gain of 1.5 per cent against the dollar as a Bank of Japan reduction in long-term government bonds was interpreted as a shift towards policy normalisation.

Higher than expected inflation in Norway and the hawkish tone of minutes from the December meeting of Sweden’s central bank triggered spikes in the Scandinavian currencies.

Markets are already primed for the first major central bank rise in the year, pricing in a 90 per cent expectation that the Bank of Canada will next week raise rates for the third time in seven months, following stellar jobs data on Friday.

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TAXATION, WEALTH HAVENS, INEQUALITY

IRS Needs Funding for GOP Tax Overhaul, Report Says – WSJ

The Internal Revenue Service, after years of budget cuts, will struggle to implement the new tax law without more money, according to the agency’s in-house public advocate. It is far from clear, however, whether Congress will provide the IRS with additional funds.

The tax agency needs to update forms, create new definitions, write regulations and field questions from taxpayers, which tend to increase when Congress passes new laws. That will be challenging for the IRS, which is planning to answer just 60% of taxpayer calls during the tax-filing season and has cut its training budget by 75% since 2009, said Nina Olson, the national taxpayer advocate.

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RUSSIA PROBE

Mueller adds veteran cyber prosecutor to special-counsel team – The Washington Post

Dickey’s addition is particularly notable because he is the first publicly known member of the team specializing solely in cyber issues. The others’ expertise is mainly in a variety of white-collar crimes, including fraud, money laundering and public corruption, though Mueller also has appellate specialists and one of the government’s foremost experts in criminal law.

Trump Declines to Say if He Would Meet With Special Counsel in Russia Probe – WSJ

President Donald Trump declined to commit to a potential meeting with Robert Mueller after reports the special counsel told the

president’s lawyers he may want to interview Mr. Trump soon as part of his Russia election-interference investigation.

Trump Sidesteps Question on Mueller Interview – The New York Times

“I’ll speak to attorneys,” Mr. Trump said during a news conference with Prime Minister Erna Solberg of Norway, when asked whether he would agree to an interview. “We’ll see what happens.”

That answer was a marked change from June, when Mr. Trump defended his firing of the F.B.I. director, James B. Comey, denying that it was related to his handling of the Russia investigation, and said he would be “100 percent” willing to give a sworn statement to Mr. Mueller.

Trump Says ‘Sneaky’ Feinstein Testimony Release May Have Been Illegal – Bloomberg

The comments came after Feinstein released the full transcript of the Senate Judiciary Committee’s closed-door interview with Glenn Simpson, a former journalist who co-founded Fusion GPS, the firm that commissioned the dossier. The committee’s Russia probe has dissolved into bitter partisan sniping, with Republicans and Democrats tangling over the origins of the dossier, which was funded in part by Trump’s political opponents, and how the FBI and other agencies may have used it in their investigations.

Manafort Sued by Russian Billionaire Deripaska Over TV Deal – Bloomberg

President Donald Trump’s former campaign manager Paul Manafort was sued by a company tied to Russian billionaire Oleg Deripaska, who claims he was defrauded after giving $18.9 million to Manafort to invest in a Ukrainian cable television venture.

The suit, filed Wednesday in New York state court by Deripaska’s Surf Horizon Ltd., claims Manafort and his former associate, Rick Gates, used the invested funds as “their personal piggy banks,” moving funds in and out “without any apparent business reason.”

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NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS

McMaster Rushes to Save the Iran Deal That Trump Promised to Kill

Donald Trump’s national security adviser has been working closely with two key senators to prevent Trump from destroying the Iran deal, multiple sources in and outside government tell The Daily Beast.

By Friday, Trump will face a pivotal congressional deadline: whether to again waive nuclear-related sanctions on Iran; or permit their restoration, which would put the U.S. in violation of a multinational deal it spearheaded during Barack Obama’s administration.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Is the Great Bond Blowout Finally Happening? – WSJ

The bond market has had an early alarm call in 2018. The 10-year U.S. Treasury yield has risen to its highest since March; bond guru Bill Gross says the move confirms a bear market. Bonds still have support, but that could erode quickly.

The move higher—to 2.59% for the 10-year Treasury yield, from 2.43% at the end of 2017—is relatively sharp after a year that was notable for how little global bond yields moved. For some, the high of 2017, at around 2.63%, is a key level to watch for whether yields move higher still; for others, the move has already broken out of a downward channel for yields that has persisted for more than 25 years. That implies big changes.

Battered Bond Market May Give Pause to Stampeding Stock Bulls – Bloomberg

Whether or not Bill Gross and Jeffrey Gundlach are right about the end of the golden era for bonds, the selloff may give pause to equity bulls after a euphoric and overbought rally.

Surging Treasury yields caused a key stock-valuation measure to touch the most overheated since 2010 this week, while the new-year equity rally came to a screeching halt. Shifting expectations about the pace of U.S. interest-rate tightening could be the trigger for a potentially overdue stock correction, according to Goldman Sachs Group strategist Peter Oppenheimer. Bank of America Corp.’s James Barty reckons a taper tantrum and benchmark 10-year yields rising another 50 basis points represent the biggest threat to the equity rally this year.

Chinese Caution on U.S. Debt Clouds Financing for Trump’s Tax Cut – Bloomberg

The yield on 10-year Treasuries increased three basis points to 2.58 percent on Wednesday — its highest level in 10 months. For U.S. policy makers, there’s an extra layer of caution: The Republican Congress and the Trump administration just approved a bill laden with tax cuts that are estimated to increase federal deficits by about $1 trillion over the next decade.

“Financing a big deficit in the U.S. is going to be tough if China is not involved at all, or even worse, if they start competing with Treasury by selling their own holdings,” said Thomas Simons, a senior economist at Jefferies LLC in New York. He sees tax cuts and the Federal Reserve’s moves to shrink its balance sheet pushing up Treasury’s financing needs by 70 percent in 2018.

US government bond sell-off triggers warnings

The sell-off deepened early on Wednesday on market speculation that Chinese authorities viewed US government bonds as less attractive. The sense that the three-decade bond bull market was coming to a close was reinforced by Bill Gross, the so-called bond king, who publicly declared his funds were short selling US Treasuries.

Jeffrey Gundlach, the founder of DoubleLine Capital who is viewed as Mr Gross’s rival and is a closely followed bond investor, lent his weight to the bearish sentiment, saying central bank policy was shifting to an “era of quantitative tightening”.

China Weighs Slowing or Halting Purchases of U.S. Treasuries – Bloomberg

Senior government officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, according to people familiar with the matter. The news comes as global debt markets were already selling off amid signs that central banks are starting to step back after years of bond-buying stimulus. Yields on 10-year Treasuries rose for a fifth day, touching the highest since March.

China Treasuries Unease Mostly Political Posturing, Analysts Say – Bloomberg

While the Treasury market was roiled Wednesday by a report that Chinese officials are growing wary of U.S. debt, some analysts took Beijing’s message to be mostly political posturing amid escalating trade tensions with the U.S.

Senior government officials reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of Treasuries, according to people familiar with the matter.

China owns almost $1.2 trillion of U.S. government debt (not including Belgian holdings, which analysts say is home to Chinese custodial accounts), more than any other nation and double the level from a decade ago. But that massive stake is precisely what will keep the country from making any abrupt or radical moves, strategists say.

Is the VIX Being Gamed? A Sudden Swoon Has Traders Talking Again – Bloomberg

Exchange officials say nothing untoward is going on, that the VIX settlement repels tampering through a transparent auction process that is separate and distinct from its pricing the rest of the day. And conversations with a half dozen options professionals show that while the topic is hotly discussed, many reject claims of overt manipulation.

But the events of Dec. 20 are familiar enough that questions keep coming back. Why does the VIX, a reference value for futures whose final price is set in an auction by the Cboe, often settle so far away from its market price?

Why another debt crisis might be looming

One must recall that debt is both a liability and an asset. In a closed economy – and we don’t owe anything to non-Earthlings – overall debt and the corresponding assets necessarily cancel each other out. So what really matters is the composition of debts and liabilities – or, to put it simply, who owes what to whom.

High public-sector debt, for example, signals the possible need for tax increases – the opposite of the tax legislation being advanced by Republican legislators in the United States – and/or higher interest rates (real or nominal, depending on monetary policy and inflation). If debt is owed largely to foreign lenders, interest-rate risk is compounded by exchange-rate risk.

For private-sector debt, much depends on its type: the hedging sort, where a debtor’s cash flow covers all obligations; the speculative type, where cash flow covers interest only; or the Ponzi kind, where cash flow does not even cover that. As the late American economist Hyman Minsky explained, the higher the share of debt that falls into the speculative or Ponzi categories, the higher the risk that a confidence shock will trigger a sudden wave of deleveraging that quickly morphs into a full-blown financial crisis.

18F11 - GLOBAL DEBT RECORD HIGHS

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CENTRAL BANKS & MONETARY POLICY

For New Fed Chief, Stock Boom May Bring Bubble Déjà Vu – WSJ

It doesn’t take a crisis for an asset bust to hurt. The 1990s tech stock run-up fueled a surge in investment and spending via higher wealth and easier financing conditions. When the bubble burst in 2001, that surge reversed, dragging the economy down. The damage was contained because the Fed quickly slashed interest rates by nearly 5 percentage points. Today, it can at most cut them by 1.5 points.

The stock market’s 23% rise since the end of 2016 has been a powerful economic tailwind. Increased wealth has encouraged consumers to spend more and save less of their paychecks, driving the personal saving rate below 3%, the lowest since 2007. Both spending and stocks have gotten an added kick from the recent tax cut.

It isn’t a stretch to see all those factors switching into reverse within a year or two. And if dangerous excesses are simmering in the financial system, they may not appear until the boom goes bust.

Minneapolis Fed proposes massive regulation change for big banks

The Minneapolis Federal Reserve proposed a set of sweeping new regulations Wednesday aimed at reducing the risk big banks pose to the economy.

At the core of the recommendations are higher capital requirements for the nation’s largest financial institutions as well as a reduction in burdens for smaller regional and community banks. The proposals also take aim at so-called shadow banks — nonbank lenders — which are targeted for sharp taxes on the bigger firms.

In total, the proposal offers a contrast with the current regulatory aims of the White House, which is seeking to reduce many of the banking rules imposed by the Dodd-Frank reforms, adopted in the wake of the 2008 financial crisis. Incoming Fed Chairman Jerome Powell also has indicated that a lighter touch is likely for regulations.

Fed’s Bullard says inflation miss has ‘cost’ U.S. lost growth

Sub-par inflation over the past five years has caused a shortfall in the United States economy versus its potential growth path, St Louis Fed President James Bullard said on Wednesday as he fleshed out a proposal for a more dynamic system of setting price increase goals.

Several policymakers are encouraging the U.S. central bank to review its method for controlling inflation and consider a system that makes up for weak inflation in one year by allowing prices to rise more quickly in future years so that the overall level, over time, stays on a set path.

Fed’s Evans Wants to Hold Off on Rate Rises Until Midyear – WSJ

Federal Reserve Bank of Chicago President Charles Evans said Wednesday he would prefer the central bank to hold off on its next rate rise until the summer while taking stock of what happens with inflation.

“I don’t really see inflation taking off, and so I don’t think the cost of waiting” on rate rises is very big right now, Mr. Evans told reporters after a speech in Lake Forest, Ill.

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USA ECONOMY DATA, CITIES AND STATES

Bigger Companies Once Meant Much Bigger Pay. No More. – WSJ

For the last century, economists have noted that similar workers tend to earn significantly more at large firms than at small ones—a premium that worked out to nearly 50% higher pay in the early 1980s for an employee who went from a company employing fewer than 100 people to one employing 10,000 or more.

But more recently, that premium has shrunk to just 20%, Stanford University economist Nicholas Bloom and his co-authors found in an analysis of federal income data from the late 1970s through 2013. The study was presented Saturday at the annual meeting of the American Economic Association in Philadelphia.

“This large-firm pay premium that’s been around for over 100 years, in the last 30 or 40 years, it seems to have collapsed in the U.S.,” Prof. Bloom said.

The Most Awful Transit Center in America Could Get Unimaginably Worse – Bloomberg

Penn, the Western Hemisphere’s busiest train station, serves 430,000 travelers every weekday—more than LaGuardia, JFK, and Newark airports combined. More than 200,000 people also use the subway stops that connect to Penn through harshly lit, low-ceilinged subterranean corridors. Locals race through the place; out-of-towners proceed more anxiously, baffled by the layout of what is truly not one station but three: Amtrak shares the space with the Long Island Rail Road and New Jersey Transit.

All who schlep through the complex are united by a powerful urge to leave. “Everybody just wants to get the hell out of there,” says Mitchell Moss, director of the Rudin Center for Transportation Policy and Management at New York University.

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GLOBAL ECONOMY DATA

China Premier Li says 2017 GDP growth expected around 6.9 percent

China’s Premier Li Keqiang said the economy is expected to have grown around 6.9 percent last year, the official Xinhua news agency reported, accelerating from a 26-year low the year before.

In the past year, China’s economy has maintained a steady and favorable trend, with the overall situation better than expected, Li said at the Mekong-Lancang Cooperation Forum on Wednesday.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Warren Buffett Further Reveals Succession Plan at Berkshire Hathaway – WSJ

It is now officially a two-man race to succeed Warren Buffett as chief executive of a conglomerate that owns everything from auto insurer Geico to fast-food chain Dairy Queen.

Berkshire Hathaway Inc. on Wednesday promoted Ajit Jain, head of the company’s reinsurance operations, and Greg Abel, chief executive of its utility business, to newly created spots on its board of directors and new jobs overseeing Berkshire’s day-to-day operations.

“They are the two key figures at Berkshire” in terms of succession, Mr. Buffett said Wednesday on CNBC. “I know that if I were in the position of those two fellows…I would like to get some experience with supervising a whole group of businesses before I eventually took over.”

Warren Buffett promotes 2 potential Berkshire successors

Mr Abel was named vice-chairman of non-insurance business operations while Mr Jain was elevated to vice-chairman of Berkshire’s insurance group.

Mr Buffett, 87, the so-called Oracle of Omaha, will continue as chairman and chief executive of the $500bn company that he has led over the past 50-plus years. Charlie Munger, the 94-year-old vice-chairman of the company, will remain in his current role.

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ENERGY COMPANIES, NOCs, INDUSTRY

New York City Sues Oil Companies Over Climate Change – WSJ

New York City Mayor Bill de Blasio said Wednesday his administration had filed a lawsuit against five major oil companies and was pushing New York City pension funds to divest from fossil fuel, both part of an effort to fight climate change.

“This is a tragedy that was wrought by the fossil-fuel companies,” Mr. de Blasio, a Democrat, said at a news conference. “We are going after those who have profited. And what a horrible, disgusting way to profit.”

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ENERGY CRUDE OIL, OIL SANDS, SHALE

Whispers of $80 Oil Are Growing Louder – MoneyBeat – WSJ

Oil prices have been grinding higher and higher, spurring forecasters to predict they could hit $80 a barrel this year. Oil is already trading at its highest levels in three years after a 22% gain for U.S. crude futures over the past 12 months, and some market watchers expect prices to take out new milestones as the rally continues in 2018.

London loses oil futures listings as Mifid bites

Intercontinental Exchange plans to transfer trading in hundreds of energy futures contracts from London to the US, as customers seek to escape new Mifid II rules governing European financial markets.

Europe’s far-reaching new Mifid II markets legislation sets stricter transparency standards on institutions trading on EU-based markets. It took effect on January 3.

Traders also now face tighter position limits, designed to prevent any trader from having an outsized influence on the market, for a multitude of commodities contracts listed in Europe. The limits are set by national regulators and although the UK is leaving the EU, authorities have insisted on fully applying Mifid II.

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ENERGY NATURAL GAS, COAL

U.S. Became a Net Gas Exporter for the First Time in 60 Years – Bloomberg

America’s trade imbalance just got a wee bit smaller. The U.S. has now become a net exporter of natural gas on an annual basis for the first time since at least 1957.

Net exports averaged about 0.4 billion cubic feet per day last year, flipping from net inflows of 1.8 billion in 2016, according to Victoria Zaretskaya, a Washington-based analyst for the U.S. Energy Information Administration. The numbers will be officially released by the agency in a report Thursday, she said.

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POLLUTION, CLIMATE & ENVIRONMENT

New York City Sues Oil Companies Over Climate Change – WSJ

New York City Mayor Bill de Blasio said Wednesday his administration had filed a lawsuit against five major oil companies and was pushing New York City pension funds to divest from fossil fuel, both part of an effort to fight climate change.

“This is a tragedy that was wrought by the fossil-fuel companies,” Mr. de Blasio, a Democrat, said at a news conference. “We are going after those who have profited. And what a horrible, disgusting way to profit.”

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EUROPE

German regulator makes flexible pitch to lure banks after Brexit

So far Frankfurt, with or without help from BaFin, is emerging as a likely winner from Brexit. Seven of 15 global lenders have decided to make Frankfurt their post-Brexit EU headquarters — among them Citi, Goldman Sachs and Morgan Stanley — a Financial Times survey in December showed. The EU’s four other big financial centres — Paris, Dublin, Luxembourg and Amsterdam — have attracted the same number of banks between them.

Abstaining from an aggressive marketing campaign may actually be one contributing factor. “If you promise me something, you can take it away from me again,” said a senior US banker who is moving operations to Frankfurt.

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DACA, TRAVEL BAN, IMMIGRATION, WALL

Immigration Agents Target 7-Eleven Stores in Push to Punish Employers – The New York Times

Federal immigration agents descended on dozens of 7-Eleven convenience stores across the country before daybreak on Wednesday, arresting undocumented workers and demanding paperwork from managers, in what the Trump administration described as its largest enforcement operation against employers so far.

The sweeps of 98 stores in 17 states, from California to Florida, resulted in 21 arrests, according to United States Immigration and Customs Enforcement, which signaled intensified efforts against businesses that hire unauthorized workers.

Corporate America warns Trump over immigration policy

Corporate America has fired a warning shot at President Donald Trump on immigration, telling the White House that moves threatening the legal status of 1m US immigrants are a danger to economic growth.

The message from Tom Donohue, head of the US Chamber of Commerce, underscored how business has quickly moved on from celebrations over tax reform and is preparing to step up its role as a voice of opposition to key parts of the Trump agenda.

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GEOPOLITICS, CRIME, TERRORISM

With U.S. Aid Cut, Pakistan Drifts Closer to China – WSJ

Senior Pakistani officials warned that the U.S. suspension of security aid announced last week will push their country closer to China, Washington’s main rival for influence in Asia, as regional alliances realign.

“Punishing Pakistan pushes it towards America’s major adversaries,” Khurram Dastgir-Khan, Pakistan’s defense minister, said in an interview. “By choosing castigation over cooperation, the U.S. has emasculated the war on terror in this region.”

Pakistan has been a U.S. ally for decades, a nuclear-armed nation of 208 million people offering a strategic foothold touching the Arabian Sea, Iran, China and Afghanistan. Most recently, it has served as a counterterrorism partner and a U.S. supply route for more than 15 years of war in Afghanistan.

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TRUMP WORLD

Michael Wolff’s Book on Trump Sells a Million Copies – WSJ

Sales of Michael Wolff’s book “Fire and Fury: Inside the Trump White House” have gotten off to a sizzling start. John Sargent, chief executive of publisher Macmillan, confirmed that a million copies had been sold through Monday.

Trump Renews Pledge to ‘Take a Strong Look’ at Libel Laws – The New York Times

“We are going to take a strong look at our country’s libel laws, so that when somebody says something that is false and defamatory about someone, that person will have meaningful recourse in our courts,” Mr. Trump said during a public portion of a cabinet meeting in the White House.

The president added, “Our current libel laws are a sham and a disgrace and do not represent American values or American fairness.”

First Amendment lawyers were quick to point out that Mr. Trump has little power to modify those laws, barring a Supreme Court appeal or constitutional amendment. Other libel laws are determined at the state level, where Mr. Trump, as president, has no direct influence.

Trump’s real estate: Secretive sales continue unabated

President Trump’s companies sold more than $35 million in real estate in 2017, mostly to secretive shell companies that obscure buyers’ identities, continuing a dramatic shift in his customers’ behavior that began during the election, a USA TODAY review found.

In Las Vegas alone, Trump sold 41 luxury condo units in 2017, a majority of which used limited liability companies – corporate entities that allow people to purchase property without revealing all of the owners’ names.

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TRADE, PROTECTIONISM, REGULATION, OVERSIGHT

Canada Raises Alarm on Trump Leaving Nafta – Bloomberg

Canadian government officials said there’s an increasing likelihood U.S. President Donald Trump will give six-months’ notice to withdraw from Nafta, dragging down the loonie, yields on government bonds and Mexico’s peso.

The officials, speaking Wednesday on condition they not be identified, declined to say whether they think the odds of Trump following through on repeated threats to quit the pact now exceed 50 percent. A White House official, speaking on background, said there hasn’t been any change in the president’s position on the North American Free Trade Agreement.

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ELECTORAL POLITICS

Decision to exempt Florida from offshore drilling prompts bipartisan uproar

The Trump administration’s decision to exempt Florida from expanded offshore drilling kicked off a frenzy Wednesday in other coastal states, with governors from both political parties asking: Why not us?

The Florida carve-out, announced Tuesday by Interior Secretary Ryan Zinke, created new doubts about the fate of the entire offshore drilling decision — and immediately became another challenge for Republicans as they work to hold off Democrats in the midterm elections. Nine of the 11 states that opposed the drilling order have gubernatorial races this year, and many of the most competitive contests for the House of Representatives will unfold in districts that touch coastline.

Rash of retirements dim GOP hopes of keeping the House

A flurry of Republican retirements in recent weeks has further weakened the party’s hold on the House heading into the midterms — and the exodus probably isn’t over.

GOP Lawmaker Issa to Step Down, Raising Democrats’ Hopes – WSJ

Rep. Darrell Issa, a prominent Republican who narrowly won his 2016 race, announced Wednesday he planned to retire at the end of this term, bolstering Democratic lawmakers’ hopes to pick up another seat in California as they work to retake the House.

J.D. Vance Is Now Seriously Considering Running For Senate In Ohio

The Hillbilly Elegy author is fielding increased calls for him to enter the race now that Josh Mandel has dropped out. And he’s in Washington this week, talking to Republican leaders about the possibility.

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SILICON VALLEY, UNICORNS, STARTUPS, VC

Facebook, Google Have a Tough New Job in Germany: Content Cop – WSJ

Since Jan. 1, technology companies face fines of up to €50 million ($60 million) if they fail to delete illegal content on their platforms, ranging from slander and libel to neo-Nazi propaganda and calls to violence. The law applies to most social-media networks in Germany.

The banned content was always illegal. What’s new is that social networks with more than two million users in Germany now are responsible for cleaning it up themselves.

The new law pushes U.S.-based social-media platforms in Germany one step closer to the level of responsibility that newspapers and media here have long faced—a level far higher than what the platforms have faced domestically. Under U.S. law, tech platforms aren’t liable for user content shared on their services.

Huawei’s CEO going off-script to rage at US carriers was the best speech of CES – The Verge

Richard Yu, the CEO of Huawei’s consumer products division, addressed the failure of Huawei’s carrier deal directly. He called it a loss for the (unnamed) carrier, a loss for Huawei, but more than anything a loss for consumers.

German start-ups attract record investment in 2017

German start-ups enjoyed a record year in 2017, with investment in newly-launched companies jumping 88 per cent to €4.3bn. The sharp rise in funding was driven by a string of big investments in relatively mature businesses, such as meal-kit service HelloFresh and food delivery company Delivery Hero, both of which were listed on the stock market last year.

Power Outage Dims Lights on Tech at CES Show in Las Vegas – Bloomberg

All the newest, most advanced technology in the world couldn’t protect the CES consumer electronics show in Las Vegas from the most basic of system failures: a power outage.

The region has been afflicted by heavy rainfall, and on Tuesday, a booth run by Google had to be closed because of flooding. A joint statement from the city’s visitor and convention authority, local utility NV Energy Inc. and the Consumer Technology Association said a preliminary check showed condensation affected one of the facility’s transformers.

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SCIENCE, NATURE, PSYCHOLOGY

Scientists zoom in on fast radio bursts, the most mysterious signals in space – The Washington Post

Nobody knows what causes fast radio bursts — brief, bizarre radio wave beams that emit more energy in a fraction of a millisecond than the sun does all day. Scientists just got closer than ever before to the source of one of these enigmatic signals.

In research presented Wednesday at the annual meeting of the American Astronomical Society, an international team of astronomers traced a repeating fast radio burst to a region of star formation in a dim dwarf galaxy 3 billion light-years away. There, they said, the high-energy beam is being savagely twisted by a powerful magnetic field amid a dense cloud of hot, ionized gas.

The finding helps illuminate the extreme environment these radio bursts call home. Scientists are still scratching their heads over what could cause such a mighty blast.

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