Macro Links Jan 16th – Hawaii False Alarm
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- HAWAII FALSE ALARM
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- FOREX, CARRY TRADES, EXCHANGE RATES
- TAXATION, WEALTH HAVENS, INEQUALITY
- RUSSIA PROBE
- NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- CENTRAL BANKS & MONETARY POLICY
- USA ECONOMY DATA, CITIES AND STATES
- POSITIONING, INFLECTION, MARKET CALLS
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- REAL ESTATE, HOUSING, REITS, COMMERCIAL
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- ENERGY RENEWABLES, NUCLEAR
- COMMODITIES AGRICULTURE & SOFTS
- POLLUTION, CLIMATE & ENVIRONMENT
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- DACA, TRAVEL BAN, IMMIGRATION, WALL
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- TRUMP WORLD
- ELECTORAL POLITICS
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
- RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
- AUTOS, ELECTRIC, SELF-DRIVING
- AIRLINES, SHIPPERS, RAIL, TRANSPORTS
- AEROSPACE, MILITARY & DEFENSE
- ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
HAWAII FALSE ALARM
The alert appeared on cellphones warning people to “seek immediate shelter,” and said, “This is not a drill.” The authorities said it was a false alarm.
An errant cellphone alert about an incoming ballistic missile set off a panic and prompted calls for major improvements to America’s approach to disaster notification.
Security experts called it a frightening warning of how a technical error could trigger an unintended conflict with North Korea.
Details are emerging on how the mistake occurred — and what officials are doing to prevent it from happening again.
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
Government attempts to tighten control over cryptocurrency trading are sparking a fierce public backlash in South Korea. A petition on the official website of the presidential office is set to reach 200,000 signatures.
China is escalating its clampdown on cryptocurrency trading, targeting online platforms and mobile apps that offer exchange-like services, according to people familiar with the matter.
Bitcoin exchange Kraken has been down a day and a half. Ripple, Bitcoin, and Ethereum investors are speculating if it’s another Mt. Gox.
One of the biggest cryptocurrency exchanges has been down for hours and its clients are starting to freak out.
Bitcoin investors trying to channel their new fortunes into UK property are being turned away by mortgage lenders and brokers who fear breaching anti money-laundering regulations.
Indonesia’s central bank has issued a fresh warning about trading in cryptocurrencies like bitcoin because of the risk of losses to the public and even a potential threat to the stability of the financial system.
FOREX, CARRY TRADES, EXCHANGE RATES
Hedge funds and other speculative investors have amassed the heaviest long positions on the euro ever, according to the latest CFTC data. The Group-of-10’s best currency in 2017 is getting fresh momentum from the prospect of a September end to European Central Bank stimulus and an upswing in growth.
The euro shot to a three-year high on Monday as optimism around growth buoyed expectations of tighter monetary policy from European Central Bank, while the chance of a pro-European Union coalition in Germany also boosted confidence in the continent.
The promise of accelerating economic growth overseas is propelling investor funds into the yen, euro and many emerging-market currencies, intensifying a yearlong siege on the U.S. dollar.
Germany’s central bank has decided to include the Chinese yuan in its own reserves, in a further boost to the international status of the currency.
The Chinese yuan hit its strongest level against the faltering U.S. dollar since October 2015, even as authorities in Beijing loosen controls meant to prop up the yuan.
TAXATION, WEALTH HAVENS, INEQUALITY
The Supreme Court said it would consider whether states can broadly require online retailers to collect sales taxes even for states where they lack a physical presence—with a potential major impact on online commerce.
Stephen Bannon and Corey Lewandowski are scheduled to testify in the coming week as the House Intelligence Committee’s investigation of possible Russian interference in the 2016 election reaches a crescendo.
“They said, like, ‘Look, you have more of a social media following than any of us do, can you please post some of these things just in a way that… sort of put it out there.’”
NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
It’s normal for American commanders to draw up combat plans. But recent exercises signal that the military wants to be ready for options on the Korean Peninsula.
The Trump administration vowed to pull out of the Iran nuclear accord without substantial changes, setting the clock ticking on tough talks with Washington’s European allies.
A willingness by members of Iran’s mainstream society to dispute official versions of protester deaths suggest that the fallout may be just beginning.
Iran’s Foreign Ministry said Saturday that it would not agree to any changes to the nuclear deal, as President Trump has demanded, and it vowed a “serious response” to new U.S. sanctions that it said crossed a red line.
Global businesses faced a deadline last week to exit joint ventures operating in North Korea, but dozens of them are still there, providing the country with significant revenue and diluting the effects of financial sanctions against leader Kim Jong Un’s rogue regime.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
California Governor Jerry Brown said legal rulings may clear the way for making cuts to public pension benefits, which would go against long-standing assumptions and potentially provide financial relief to the state and its local governments.
The world’s largest asset manager reached a new milestone during 2017: the equivalent of $1 billion of new client cash every day.
A U.S. government shutdown could spook investors and is the biggest threat to the stock-market rally, according to Nobel prize-winning economist Joseph Stiglitz.
China’s banking regulator pledged to continue its crackdown on malpractice in the $38 trillion industry in 2018, vowing to tackle everything from poor corporate governance and violation of lending policies to cross-holdings of risky financial products.
Acquisitive Chinese conglomerate HNA Group is offering unusually high interest payments for short-term financing, in the latest sign that the company faces a cash shortage.
US inflation strengthened at the end of last year, lifting expectations that the Federal Reserve will raise rates as soon as March as rapid growth and low unemployment promise to boost prices.
Carillion Plc, a U.K. construction company with government contracts in everything from hospitals to the HS2 high-speed rail project, filed for compulsory liquidation after failing in a last-ditch effort to shore up finances and get a government bailout.
In Europe’s northern tip, corporate bond issuance is heating up. The volume of securities listed on Nasdaq’s Nordic bond platform climbed 10 percent to hit a record 74 billion euros ($90 billion) last year, according to the exchange. Bond managers say this year may well be better.
Sweden is in the worst housing-market downturn since the global financial crisis. But with bigger bank buffers and an economy that’s growing much faster than the rest of Europe, analysts, regulators and politicians all say everything will be just fine.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
A new crypto-currency is born almost daily, often through an “initial coin offering” (ICO), a form of online crowdfunding. CoinMarketCap, a website, lists about 1,400 digital coins or tokens, including PutinCoin, Sexcoin and InsaneCoin (worth $7m). Most are no more than curiosities, but by January 10th, around 40 had a market capitalisation of more than $1bn.
The wealth is intoxicating news, feverish because it seems so random. Investors trying to grok the landscape compare it to the dot-com bubble of the late 1990s, when valuations soared and it was hard to separate the Amazons and Googles from the Pets.coms and eToys.
Economists are interested in how a monetary system based on Bitcoin compares to a gold-standard monetary system. Both Bitcoin and gold are stateless and both provide a base money that is reliably limited in quantity. However, Bitcoin and the gold standard are obviously different in other ways.
Despite some of the hype, blockchains are “incredibly inefficient,” Ravikant said. “It’s worth paying the cost when you need the decentralization, but it’s not when you don’t.”
It was a violent year. Liberals reeled, a war dragged on and protests raged. People got all their news from radio, TV and newspapers. But what if they’d had phones vibrating with modern news alerts?
Every hour, our sun bombards the Earth with enough light to satisfy humanity’s energy needs for an entire year. But at least three barriers stand between us and that sunny future.
California’s generous spending has not only failed to decrease poverty; it actually seems to have made it worse.
Suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.
Forty-five young companies are building processors just for artificial intelligence. At least five have raised more than $100 million from investors. The explosion is akin to the sudden proliferation of PC and hard-drive makers in the 1980s. While these are small companies, and not all will survive, they have the power to fuel a period of rapid technological change.
The Indian middle class conjured up by the marketers and consultants scarcely exists. Firms peddling anything much beyond soap, matches and phone-credit are targeting a minuscule slice of the population. Worse, the chances of India developing a middle class to match the Middle Kingdom’s are being throttled by growing inequality.
On a day when billions in profits and losses would be determined by split-second trades, the salaried professionals of Japan’s financial markets were glued to their news terminals. Another group was staring at the feed of an anonymous Twitter account.
How Uber grappled with a 2016 hack is under scrutiny and has cast a chill over how other companies deal with security threats. The hacking is now the subject of at least four lawsuits, with attorneys general in five states investigating whether Uber broke laws on data-breach notifications. In addition, the United States attorney for Northern California has begun a criminal investigation into the matter.
The machine will continue to change finance. It is the unique job of the humans to ensure that this translates to lower costs and better risk control.
“Nobody knows exactly what impact it’ll have, but in a lot of ways, it looks like the end of the social news era,” Jacob Weisberg, the chairman and editor in chief of the Slate Group, said on Friday. “Everybody’s Facebook traffic has been declining all year, so they’ve been de-emphasizing news. But for them to make such a fundamental change in the platform — I don’t think people were really anticipating it.”
For Facebook, journalism has been a pain in the neck from day one. Now, bogged down with the insoluble problems of fake news and bad PR, it’s clear that Facebook will gradually pull the plug on news. Publishers should stop whining and move on.
AlphaZero taught itself chess from scratch in just four hours, playing games against itself, learning and rejecting openings and endgames that humans have developed over the course of centuries. Starting with only the basic rules of chess, the system was free to make up its own strategy, unconstrained by anything that came before.
CENTRAL BANKS & MONETARY POLICY
Most economists polled by The Wall Street Journal expected the Federal Reserve will raise short-term interest rates in March and again in June. Nearly 93% of business and academic economists surveyed this month predicted the Fed’s first rate increase of 2018 will come at its March 20-21 policy gathering.
USA ECONOMY DATA, CITIES AND STATES
A shortage of candidates is providing opportunities to people long shunned by employers and is forcing recruiters to consider new approaches to hiring.
Economists surveyed by The Wall Street Journal say President Donald Trump has had generally positive effects on U.S. economic growth, hiring and the performance of the stock market during his first year in office.
Spending at U.S. retailers rose in December for the fourth consecutive month, capping the strongest year for sales growth since 2014.
POSITIONING, INFLECTION, MARKET CALLS
The New Year’s rally has pushed the S&P 500 Index to its best start since the administration of George W. Bush. Now it’s bumping against speed barriers that marked the upper limits of bull markets for decades.
A rare calm has settled over the stock market. Whether it turns out to be the one before the storm is a compelling question after a year of conditions so placid that investing has begun to look deceptively simple.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Mergers and acquisitions among investment managers in 2017 reached levels not seen since the aftermath of the financial crisis, with the market under intense pressure to consolidate.
SoftBank Group Corp. said Monday it may list shares of its profitable Japanese cellphone operator, a move that could raise nearly $20 billion and help SoftBank make big bets on technology companies.
Xiaomi, the Chinese smartphone maker, has appointed Goldman Sachs and Morgan Stanley to lead a flotation later this year, which could value the group as high as $100bn in the biggest tech IPO since Alibaba floated in New York in 2014.
REAL ESTATE, HOUSING, REITS, COMMERCIAL
The new year brought little cheer for London’s housing market with asking prices dropping to the lowest since August 2015.
Apartment shoppers in Manhattan are taking a pause after a federal tax overhaul removed some key incentives for homeownership, brokers say. After four consecutive months of increases, the number of contracts signed in December declined both for new condo buildings and older co-ops and condos.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
A.I., including an ability to analyze data and actually learn from it, is considered useful in executing certain investing models, such as high-frequency trading, and in helping fund managers with tasks that rely on gathering and interpreting reams of information.
Hedge funds returns have been battered by central bank monetary policies that have made it more difficult for them to outperform the market in everything from bonds to equity futures. That’s prompting some trend followers to move into less crowded markets such as over-the-counter securities, electricity and coal.
ENERGY CRUDE OIL, OIL SANDS, SHALE
Iraq joined the United Arab Emirates, Qatar and Oman in calling for OPEC and allied producers to stick with their agreement to cut oil output until the end of the year, despite recent price gains.
Oil hovered near a three-year high of $70 a barrel on Monday on signs that production cuts by OPEC and Russia are tightening supplies, but analysts warned of “red flags” due to surging U.S. production.
Oil prices have surged more than 50% since the summer—a sign investors are reassessing what was once the biggest risk in the market: U.S. shale.
ENERGY RENEWABLES, NUCLEAR
COMMODITIES AGRICULTURE & SOFTS
America is producing more meat than ever. Farmers and meatpackers produced a record 99.7 billion pounds of red meat and poultry in 2017, the U.S. Department of Agriculture estimates. They are on track for an even bigger slaughter this year.
POLLUTION, CLIMATE & ENVIRONMENT
Four people remain missing after last week’s flash floods, according to fire officials.
BREXIT, SCOXIT, LONDON, UK ECONOMY
DACA, TRAVEL BAN, IMMIGRATION, WALL
The government complied with a judge’s order to resume accepting renewal requests from immigrants who were brought illegally to the United States as children.
President Trump said Sunday that he is “not a racist” and denied that he had spoiled chances for an immigration overhaul in Congress by using a vulgarity to describe poor countries. Trump blamed Democrats for fouling chances for a deal and, in an extraordinary statement, called himself “the least racist person.”
GEOPOLITICS, CRIME, TERRORISM
Russian Foreign Minister Sergey Lavrov has accused the United States of destabilizing the world, airing a list of grievances over US foreign policy.
The RAF said two Russian Blackjack bombers were approaching a UK “area of interest” over the North Sea.
The Iranian oil tanker Sanchi sank into the East China Sea on Sunday afternoon after a blast, causing a “serious” oil spill that covered 10 square kilometers (3.9 square miles), state television reported, citing China’s State Oceanic Administration.
Two suicide bombers blew themselves up in a square in central Baghdad, killing at least 26 people in the deadliest attack since Iraq claimed victory over Islamic State late last year.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
Facial recognition is the new hot tech topic in China. Banks, airports, hotels and even public toilets are all trying to verify people’s identities by analyzing their faces. But the police and security state have been the most enthusiastic about embracing this new technology.
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
Rappler, a popular news website that has been critical of the government of Philippine President Rodrigo Duterte, was shut down by the country’s securities regulator, a move the company called harassment.
A lawyer for President Donald Trump arranged a $130,000 payment to a former adult-film star a month before the 2016 election as part of an agreement that precluded her from publicly discussing an alleged sexual encounter with Mr. Trump.
Alana Evans says Stormy Daniels requested Evans join her and Trump, while another actor Jessica Drake is reportedly subject to a non-disclosure agreement.
‘I ended up with Donald in his hotel room. Picture him chasing me around his hotel room in his tighty-whities,’ Stormy Daniels told fellow porn star Alana Evans.
Steve Bannon suggested that Donald Trump’s lawyers paid off 100 women who had sexual encounters with the then-candidate during the 2016 presidential campaign.
The president said he did not say “I probably have a very good relationship” with the North Korean leader, claiming he said “I’d.” It was difficult to tell from audio clips whether the complaint had merit.
“He is an asteroid of awfulness that has fallen on this world,” Thornberry said. “I think that he is a danger and I think that he is a racist.”
“I’m not a racist. I’m the least racist person you will ever interview, that I can tell you,” President Trump said in Florida.
A telephone briefing on the status of Iran sanctions was delayed while the White House struggled with the “listen only” feature on the conference call, in a saga that was filled with expletives and confusion
Retirements, recruitment challenges and Trump’s pattern of veering off message have caused growing concern that the GOP is facing a wave election.
Democrats have a narrow path to the majority in the Senate. The debate is over just how narrow, and whether the forces working against the GOP and President Trump are setting the stage for a wave election.
SILICON VALLEY, UNICORNS, STARTUPS, VC
CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
Mark Zuckerberg’s latest Facebook post is proving expensive. The co-founder of the world’s largest social-media business saw his fortune fall $3.3 billion Friday after he posted plans to shift users’ news feeds toward content from family and friends at the expense of material from media outlets and businesses.
RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
Whole Foods’ brand items like bacon, coconut water and frozen blueberries helped Amazon gobble up more U.S. online grocery sales last year. Products carrying the natural foods chain’s brand helped push sales at Amazon’s online grocery-delivery service, AmazonFresh, up 35%.
AUTOS, ELECTRIC, SELF-DRIVING
Sergio Marchionne, one of the longest-serving CEOs in the automotive industry, has a blunt warning: Carmakers have less than a decade to reinvent themselves or risk being commoditized amid a seismic shift in how vehicles are powered, driven and purchased.
Three years of record sales mask signs that harder times lie ahead: bigger incentives, more fleet purchases and higher used-car values.
For carmakers vying to fill their fleets with electric vehicles, a spike in Cobalt prices has been a rude awakening as to how much their success is riding on the scarce silvery-blue mineral found predominantly in one of the world’s most corrupt and underdeveloped countries.
Durability and longevity will be essential for self-driving vehicles, because they will be part of transportation fleets that are in near-constant use. This shift will represent a massive disruption for carmakers, as the advent of autonomous fleets of electric vehicles has the potential to upend their traditional business models.
Ford Motor Co will significantly increase its planned investments in electric vehicles to $11 billion by 2022 and have 40 hybrid and fully electric vehicles in its model lineup, Chairman Bill Ford said on Sunday at the Detroit auto show.
Fiat Chrysler Automobiles NV Chief Executive Officer Sergio Marchionne, one of the longest-serving bosses in the auto industry, said the company can double profit within five years by exploiting the potential of the Jeep brand.
Autonomous vehicles are in danger of being turned into “weapons”, leading governments around the world to block cars operated by foreign companies, the head of Baidu’s self-driving car programme has warned.
AIRLINES, SHIPPERS, RAIL, TRANSPORTS
Airbus chief salesman John Leahy, who’s retiring this year, said that unless Emirates bought more A380 superjumbos, Airbus would have “no choice but to shut down the program”.
Airbus is in talks with German prosecutors to end an investigation into the sale of Eurofighter jets to Austria in exchange for a settlement of between 70 million and 80 million euros ($85 million to $98 million), a German newspaper reported.
Boeing and Airbus both built more jets last year than ever, but not enough to lessen their backlogs. The delivery frenzy has been a boon to both planemakers but it has strained manufacturing and supply lines around the world.
AEROSPACE, MILITARY & DEFENSE
The classified mission is shrouded in secrecy, so speculation of a failure — and responsibility for it — lingers. For SpaceX, the stakes are especially high — not just because a valuable national security asset valued at hundreds of millions of dollars, or more, that it was hired to launch was possibly lost.
ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
Alibaba on Monday said its artificial research outperformed mere mortals in a global reading comprehension test that seeks answers to such pressing questions as “what was Nikola Tesla’s ethnicity?” and “how big is the Amazon rainforest?”
Alibaba has developed an artificial intelligence model that scored better than humans in a Stanford University reading and comprehension test.
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