Macro Links Jan 23rd – Temporary Deal

Macro Links Jan 23rd – Temporary Deal

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SHUTDOWN RESOLUTION

Dems Fold on This Shutdown, But the Next One Could Be Worse

Two truths emerged from a deal that the Senate cut on Monday to re-open the federal government after a weekend-long shutdown. The first is that Democrats caved. The second is that they find themselves somewhat better positioned for what is likely to be another, far more bitter, shutdown battle in the coming weeks.

Democrats Agree To Reopen Government Without Protections For Dreamers | HuffPost

Democrats insisted they weren’t caving, even though they didn’t get what they wanted: an immediate vote on protections for undocumented young people often called Dreamers. But the deal gave them a way out of what could have been a politically damaging shutdown. The promise of a vote on the Deferred Action for Childhood Arrivals program, although it could be reneged on, is something Democrats didn’t have before. It’s the first time Democrats received a firm deadline for a vote on an immigration bill. And if McConnell doesn’t follow through, Democrats will be able to use this promise to vote against the next spending bill and pin the blame on Republicans.

Lawmakers strike deal to reopen US government

Chuck Schumer, the Democratic Senate minority leader who on Friday orchestrated the blocking of a funding bill, reversed course after receiving the commitment from Mr McConnell to tackle what is one of the most important issues for his party’s base. “If he does not [uphold his pledge] . . . he will have breached the trust of not only the Democratic senators, but members of his own party as well,” Mr Schumer said.

Wall St. hits record highs after deal to end U.S. shutdown

U.S. stocks advanced on Monday as each of Wall Street’s main scored records in the wake of a deal by U.S. senators to end the federal government shutdown. Legislation to renew federal funding to the government cleared a procedural hurdle in the Senate and was expected soon to pass votes in the Senate and House of Representatives, allowing government to re-open through Feb 8.

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AMAZON GO

Amazon’s Cashierless ‘Go’ Convenience Store Set to Open – WSJ

The new Amazon Go store, located in the base of Amazon’s main headquarters in Seattle, uses computer vision and machine-learning algorithms to track shoppers and charge them for what they select, thereby eliminating checkout counters.

Inside Amazon Go, a Store of the Future – The New York Times

There are no shopping carts or baskets inside Amazon Go. Since the checkout process is automated, what would be the point of them anyway? Instead, customers put items directly into the shopping bag they’ll walk out with. Every time customers grab an item off a shelf, Amazon says the product is automatically put into the shopping cart of their online account. If customers put the item back on the shelf, Amazon removes it from their virtual basket.

Inside Amazon’s surveillance-powered, no-checkout convenience store | TechCrunch

Amazon’s approach wasn’t as complex as I expected, or rather not in the way I expected. Mainly the system is made up of dozens and dozens of camera units mounted to the ceiling, covering and recovering every square inch of the store from multiple angles. I’d guess there are maybe a hundred or so in the store I visited, which was about the size of an ordinary bodega or gas station mart.

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BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS

This Is Where People Are Buying Bitcoin All Over the World

Digital currencies are going through an unprecedented boom. Bitcoin has skyrocketed more than 1,600 percent in the past year. The total cryptocurrency market has grown to more than $600 billion. While several other coins have surged and taken market share away from bitcoin, dominance of the first decentralized cryptocurrency is still felt across the market, as it’s the main currency traded against other digital assets.

Cryptocurrencies Leg Lower After South Korean Tax Headlines | Zero Hedge

Headlines from South Korea’s Yonhap news regarding new tax rules for cryptocurrency exchanges appear to have sparked the latest leg down in cryptocurrencies. Which is slightly odd since this suggests shutdowns are off the cards – why would government go through the logistics of taxation when it will merely shutter these accounts?

Korea To Tax Crypto Exchanges 24.2 Percent, In Line With Existing Tax Policy

Local news agency Yonhap reports that South Korean government has announced Monday, Jan. 22 that it will be collecting a 22 percent corporate tax and a 2.2 percent local income tax from the country’s cryptocurrency exchanges. The announced tax percentages are in line with the South Korean tax code for all corporations that make a yearly income of over 20 bln won ($18.7 mln).

U.S. CFTC sues three virtual currency operators for fraud

The U.S. derivatives watchdog said on Friday that it has filed charges against three separate virtual currency operators alleging the defendants had defrauded customers and broken other commodity trading rules, in a further sign regulators globally are cracking down on the emerging asset class.

Coinbase Says Twitter’s Tina Bhatnagar to Lead Customer Support – Bloomberg

Bhatnagar will be Coinbase’s vice president of operations and technology, the San Francisco-based company said in a blog post Monday. She held a similar post at Twitter Inc., where over five and a half years her group went from addressing 20,000 monthly interactions with users to handling millions a month. She will lead all operational teams related to Coinbase and its GDAX exchange customers.

More than 10 percent of $3.7 billion raised in ICOs has been stolen: Ernst & Young

The professional services firm analyzed more than 372 ICOs, in which new digital currencies are distributed to buyers, and found that roughly $400 million of the total $3.7 billion funds raised to date had been stolen, according to research published on Monday. Phishing was the most widely used hacking technique for ICOs, with hackers stealing up to $1.5 million in ICO proceeds per month, according to the report.

South Korea’s Cryptocurrency Crackdown Isn’t Stopping This Bitcoin Exchange’s Launch – WSJ

Beijing-based OKCoin, which previously ran one of the biggest bitcoin exchanges in China before the government there banned cryptocurrency exchanges on the mainland, now plans to branch out to South Korea, another Asian hot spot for crypto trading. It has launched an OKCoin Korea website and has accepted preorder registrations for more than 150,000 people since Friday. The exchange intends to make some 60 digital coins available for trading.

Venture Capital or ICO? Startups Face Cash-Raising Dilemma – Bloomberg

ICOs are winning support with fundraisings jumping to more than $6.8 billion in 2017, up from $151 million in 2014, 2015 and 2016 combined, according to research firm Smith + Crown. Telegram Inc., an encrypted messaging service, is planning to raise at least $1.2 billion through an initial coin offering, which would be by far the largest ever. Many people buy into ICOs for a simple reason: The coins have soared in the past year, driven in part by a surge in Bitcoin of more than 10 fold.

18F23 - BILLIONS IN ICOS

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FOREX, CARRY TRADES, EXCHANGE RATES

Euro, Yen Tell Two Different Tales of Negative Rates – WSJ

Japan and the eurozone share negative interest rates and stronger economic growth, but their currencies are heading in different directions. That’s as markets project interest rates will rise quicker in the eurozone than Japan, a factor that is likely to continue pushing their currencies apart, analysts say. In the past year, the euro has rallied by 14% against the dollar, while the yen is up by less than 2%. Against a basket of trade-weighted international currencies the yen has actually declined over the same period.

FX Traders Do $100 Million Deals on Mobile Phones – Bloomberg

The world’s biggest financial market is embracing the iPhone era as investors find new ways to work when they’re not on the trading floor. In a JPMorgan Chase & Co. survey of more than 400 institutional FX, rates and commodities traders, 61 percent said they’re “extremely” or “somewhat” likely to use a mobile trading app this year, up from 31 percent in 2017.

Equity ETF Flows Show Just How Hated the U.S. Dollar Really Is – Bloomberg

The monthly gap between flows into products that offer exposure to Japanese equities on a hedged and unhedged basis is on track to blow out to its widest level on record in January. The WisdomTree Japan Hedged Equity Fund (ticker DXJ), which offers protection against foreign exchange fluctuations of the U.S. dollar relative to the yen via forwards, has been bleeding assets since the start of the year. Meanwhile, the iShares MSCI Japan ETF (ticker EWJ) is coming off two of its best five weeks for inflows in the past two years.

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FINTECH, BLOCKCHAIN, DIGITAL PAYMENTS

Commodities trader Louis Dreyfus turns to blockchain

Louis Dreyfus Co, a leading agricultural commodities trader, and a group of financing banks have completed the first agricultural deal using blockchain in a further sign that the digital technology is set to change the way raw materials are bought and sold. LDC and Shandong Bohi Industry, a Chinese agricultural processor, along with the financing groups ING, Société Générale and ABN Amro trialled the blockchain-based digital platform for the sale of 60,000 tonnes of US soyabeans to China in December.

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TAXATION, WEALTH HAVENS, INEQUALITY

World’s top 1% earn 82% of wealth generated in 2017, says Oxfam – Vanguard News

Eighty-two per cent of the wealth generated last year went to the richest one per cent of the global population, while the 3.7 billion people who make up the poorest half of the world saw no increase in their wealth, says a new Oxfam report. The report, titled “Reward Work, Not Wealth”, revealed how the global economy enabled a wealthy elite to accumulate vast fortunes while hundreds of millions of people are struggling to survive on poverty pay.

Two Reasons Why U.S. Small Caps Aren’t Cashing In on Tax Reform – Bloomberg

Peter Boockvar, chief investment officer of Bleakley Financial Group, on Monday flagged research showing more than 40 percent of debt issued by Russell 2000 companies is floating and therefore susceptible to the rise in the benchmark rate. Although some of these firms have made use of derivatives to effectively convert floating-rate into fixed obligations, they’re still more interest-rate sensitive than their larger counterparts that have embarked on a bond-issuance frenzy in recent years. In addition, bigger companies tend to get a tailwind from a weakening greenback, as a higher share of their profits are earned overseas compared to small companies.

Bank of America: No More Free Checking for Customers With Low Balances – WSJ

Banks have long grappled with how to charge customers for basic checking services. The accounts are costly for banks to maintain, though they do bring in revenue through overdraft and other fees. Some customers are unhappy about Bank of America’s latest move. A petition protesting the change has garnered more tha 45,000 signatures on Change.org.

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RUSSIA PROBE

Jared Kushner’s father on probe into family company: ‘We are not at all concerned’ – The Washington Post

In his first interview since his son entered the White House, Charles Kushner said the company has no concerns about the investigations and dismissed suggestions that his son’s work with Trump has made it harder to obtain financing for the family’s many real estate projects.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Recent ‘Odd’ Market Moves May Be a Warning Sign for Stocks – Bloomberg

Something odd has happened in U.S. markets in recent days, and it may be a sign that it’s time to start worrying about the stock rally, according to Citigroup Inc.While the S&P 500 Index has extended record highs, high-yield credit spreads have been widening a little, and implied volatility has been ticking up.

18F23 - STOCKS VS CREDIT SPREADS

US banks suffer 20% jump in credit card losses

The big four US retail banks sustained a near 20 per cent jump in losses from credit cards in 2017, raising doubts about the ability of consumers to fuel economic expansion. “People are using their cards to get from pay cheque to pay cheque,” said Charles Peabody, managing director at the Washington-based investment group Compass Point. “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.”

Listed Chinese Firms Bought $192 Billion Worth of Opaque Investment Products in 2017 – WSJ

Chinese companies are buying more high-yielding investment products that are sold by banks to raise funds and boost lending, a potentially troubling sign for China’s debt-fueled economy. Wealth-management products are short-term, deposit-like investments sold by Chinese banks, which often put the money in longer-term assets such as bonds, loans and trusts. There is little transparency about the assets backing individual products, which often use leverage to juice their returns, which are much higher than rates on bank deposits. Most investors, which include individual savers and corporations, expect banks to guarantee the products and cover any losses among the underlying assets.

China debt maturities reflect financial fragility

More defaults are a given in 2018, although the government’s efforts to control this process will become more challenging. Evidence of a system-wide refusal to lend for longer reflects growing risk aversion among buyers of financial products — the banks, non-bank financial institutions and asset managers that are worried about being left high and dry during liquidity shortages. This means companies are reliant on shorter-term debt to roll over their liabilities, which makes them more vulnerable to the impact of tighter regulation and associated liquidity strains this year.

By Adding to the Debt, Tax Cuts Could Complicate Next Downturn – WSJ

“While I’m always for reforming the tax code, the timing of this thing doesn’t make any sense,” said William Hoagland, a former budget adviser to Senate Republicans now at the Bipartisan Policy Center in Washington, referring to the tax cuts signed into law by President Donald Trump in December. “If we do actually have a downturn in the economy, what are the levers available from the federal government’s perspective?”

China’s Housing Market Is Like a Casino. Can a Property Tax Tame It? – The New York Times

China has tried just about everything to tame a property market in which home prices sometimes jump around like the value of Bitcoin. Over the years, in one city or another, it has limited mortgage lending. It has tried to halt purchases of homes by people who already own one. It has plowed billions of dollars into building new homes that regular Chinese people can afford. Now the Chinese government is considering adopting something that, while familiar to homeowners in the United States and elsewhere, could dramatically reshape the world’s second-largest economy: a property tax.

Appetite for junk bonds sparks exposure warnings

The rally in financial markets that took US stocks to record heights this year has ricocheted across the $1.3tn high yield arena where riskier companies fund themselves, prompting warnings from several large investors who say the junk bond market is being propelled by the S&P 500’s “melt-up”. The thirst for income despite a rise in sovereign bond yields across the globe has manifested in thoroughly over-subscribed junk bond sales, with recent deals from magazine publisher Meredith and brisket and roast beef sandwich chain Arby’s attracting billions of dollars in investor orders.

HNA Group Units Plunge Amid Concerns About Debt, Halted Shares – Bloomberg

Shares of HNA Group Co. units fell in Shanghai and Shenzhen trading after more of the conglomerate’s subsidiaries halted their stock from trading, pending “major”’ announcements. HNA has been facing increasing pressure — some banks are said to have frozen some unused credit lines to HNA units after they missed payments — after a debt-fueled acquisition spree that left it with global assets ranging from hotels and refrigerated trucks to aviation and car rentals.

Greece Enters Next Bailout Phase as Day-After Talks Near – Bloomberg

Greece has neared a key milestone in its financial-crisis history, as its creditors started discussing better repayment terms for its bailout loans and a smooth withdrawal of the lifeline keeping the country afloat since 2010.

As First ETF Turns 25, Exchange-Traded Funds Dominate Investing World – WSJ

The first exchange-traded fund was born 25 years ago this week, enabling investors for the first time to buy or sell the S&P 500 index in a single publicly traded share. Over the years since then, ETFs have come to dominate the financial landscape. Today, there are almost 7,200 exchange-traded products world-wide with $4.8 trillion in assets, according to London-based research firm ETFGI. Growth is accelerating as investors forsake active money managers in favor of passive, index-tracking funds. Last year, U.S. ETFs raked in a record $466 billion, a 61% increase over 2016 inflows, according to Morningstar Inc.

How ETFs Are Transforming Fixed Income – Bloomberg

In pension plans, endowments, and mutual funds, they’ve grown as liquid alternatives to cash and temporary holding pens for capital, and as trading tools. Bond ETFs around the world are swimming in more than $700 billion of cash, with about $480 billion of that in the U.S. Although those sums are a drop in the bucket compared with equity ETFs, which account for about 80 percent of the $2.8 trillion U.S. market, debt funds are growing at a faster clip than all asset classes other than commodities.

How to Make Money From Volatility Rise: Morgan Stanley’s Ideas – Bloomberg

While the factors holding down price swings are powerful and are unlikely to change within the next three months, they may not last into the next few years, Morgan Stanley’s cross-asset analysis team concluded. They’re not alone expecting a shake-up — investors see a 74 percent probability that equity-price swings will widen in 2018, according to a survey of 229 investors representing $6 trillion in managed assets conducted by Absolute Strategy Research.

This Rare Bear Who Called the Crash Warns Housing Is Too Hot Again – Bloomberg

Stack, 66, who manages $1.3 billion for people with a high net worth, predicted the housing crash in 2005, just before prices reached their peak. Now, from his perch in Whitefish, Montana, he says his “Housing Bubble Bellwether Barometer” of homebuilder and mortgage company stocks, which jumped 80 percent in the past year, once again is flashing red. “It is 2005 all over again in terms of the valuation extreme, the psychological excess and the denial,” said Stack, whose fireproof files of newspaper articles on bear markets date back to 1929. “People don’t believe housing is in a bubble and don’t want to hear talk about prices being a little bit bubblish.”

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Bitcoin – Opacity – Medium

Bitcoin will go through hick-ups (hiccups). It may fail; but then it will be easily reinvented as we now know how it works. In its present state, it may not be convenient for transactions, not good enough to buy your decaffeinated expresso macchiato at your local virtue-signaling coffee chain. It may be too volatile to be a currency, for now. But it is the first organic currency. Its mere existence is an insurance policy that will remind governments that the last object establishment could control, namely, the currency, is no longer their monopoly. This gives us, the crowd, an insurance policy against an Orwellian future.

Bitcoin’s zero-sum game | Inside Story

The argument for bitcoin based on scarcity is a form of bait and switch. The claimed uniqueness of bitcoin arises from the blockchain process, not from the fact that the supply is limited. Generating an item guaranteed to be in finite supply is far less difficult than creating a blockchain: all it requires is a reliable datestamp to ensure that no more of the item can be made. Finite supply is a necessary condition for any kind of collectible to be valuable, but it is not sufficient. Items with William Shakespeare’s signature are worth millions, while equally rare items signed by his forgotten contemporaries can be had for a few dollars. To be a store of value, an item must be valued by somebody (and not necessarily the holder).

There Is Nothing Virtual About Bitcoin’s Energy Appetite – The New York Times

The total network of computers plugged into the Bitcoin network consumes as much energy each day as some medium-size countries — which country depends on whose estimates you believe. And the network supporting Ethereum, the second-most valuable virtual currency, gobbles up another country’s worth of electricity each day. The energy consumption of these systems has risen as the prices of virtual currencies have skyrocketed, leading to a vigorous debate among Bitcoin and Ethereum enthusiasts about burning so much electricity.

MacroMania: Blockchain: what it is, what it does, and why you probably don’t need one

I’m not 100% sure, but I believe the corporate versions of blockchain are likely to stick to the standard model of reputation-based accounting. In this case, the efficiency gains of “blockchain” boil down to the gains associated with making databases more synchronized across trading partners, more cryptographically secure, more visible, more complete, etc. In short, there is nothing revolutionary or radical going on here — it’s just the usual advancement of the technology and methods associated with the on-going problem of database management. Labeling the endeavor blockchain is alright, I guess. It certainly makes for good marketing!

  1. Boone Pickens, a Texas-Size Businessman, Calls It Quits – The New York Times

Though Mr. Pickens, a famous fitness buff who once challenged President Barack Obama to an exercise competition, is still involved in his business affairs, his retirement ends a larger-than-life, only-in-America career. “Everything is big in Texas, and T. Boone is the personification of that,” said Amy Myers Jaffe, a senior fellow for energy and the environment at the Council on Foreign Relations. “He bets big. He has big ideas. And he puts big numbers behind it.”

The ugly face of ethno-nationalists – The Washington Post

Xenophobia is now a defining feature of the GOP. Trump now and then will lean toward a deal for the dreamers or sound sympathetic toward legal immigrants for a moment, only to be snatched back into xenophobic mode by the anti-immigration vanguard in the House and Senate and by advisers like Chief of Staff John F. Kelly and senior adviser Stephen Miller, enthusiasts of such measures as the Muslim ban and the attack on local law enforcement that do not enable indiscriminate deportation. When Senate Majority Leader Mitch McConnell (R-Ky.) takes to the floor to claim Democrats care more about illegal immigrants than sick kids or the military, you see how vital the race/immigrant card has become to the GOP’s unity.

What destroyed Venezuela’s economy could destroy ours too – The Washington Post

Venezuela’s government has managed to turn the country with the world’s largest oil reserves into a pauper state where food is scarce, violence is abundant and money is worthless. Despite that, however, its grip on power still seems strong. It has packed the courts, bullied the press and replaced the opposition-led legislature with a much more pliant one filled solely with regime apparatchiks. Not even mass protests have been able to stop this slide into authoritarianism. Why not? Because Nicolás Maduro’s Venezuela has learned what Robert Mugabe’s Zimbabwe did a decade ago: that you can get people to stick with you no matter what if they think your opponents are their enemies.

They Were Bad. He May Be Worse. – The New York Times

Over the decades, historians’ ratings of presidents have consistently consigned a dozen or so presidents to the bottom of the heap, including James Buchanan, Andrew Johnson, Franklin Pierce and, in recent evaluations, George W. Bush. Some of these presidents failed because they made disastrous miscalculations. Others were victims of circumstances not of their own making but whose decisions made things worse. Still others were accidental presidents of limited skill and credibility who succeeded men who died in office. And then there were a few presidents who abused their position or permitted rampant corruption. Yet the first years of these failed presidencies were not always so bad, and in nearly every case not as bad as Mr. Trump’s.

Why Markets Shrug Off Political Turmoil – Bloomberg

Political scientists can rest easier in the knowledge that markets don’t necessarily know their business better, but — rather — benefit from a combination of a narrower focus, a favorable context and a deep belief in a strong backstop. Political scientists should take these factors more into account when seeking to translate their political/geopolitical insights into market calls. Meanwhile, rather than completely dismiss what these experts have to say, investors should realize that it’s a question of a balance, which could evolve over time.

We should look closely at what Adam Smith actually believed | Aeon Essays

While Smith might be publicly lauded by those who put their faith in private capitalist enterprise, and who decry the state as the chief threat to liberty and prosperity, the real Adam Smith painted a rather different picture. According to Smith, the most pressing dangers came not from the state acting alone, but the state when captured by merchant elites.

China: market bulls beat the short sellers — for now

Why were the China bears so wrong? Did they fail to understand the way the Chinese economy works or were they just too early? In markets there is often little difference. But for the global economy this is one of the most important questions to answer in 2018.

Indeed, some of the biggest bears remain undeterred by China’s thus-far graceful slowdown in growth. Kynikos’s bets against China largely paid off, Mr Chanos says. And the hedge fund manager — as well as a handful of other prominent investors and economists — remain convinced that China’s economy is still on the road to ruin.

Trump’s Debt to Ron Paul’s Paranoid Style | by James Kirchick | NYR Daily | The New York Review of Books

Long before Donald Trump emerged as the most prominent purveyor of a racist conspiracy theory concerning the country’s first black president, played political footsie with white supremacists, condemned “globalism,” sold himself to the masses as a guru of personal enrichment, attacked American allies as scroungers, and made overtures to authoritarian regimes like Russia, there was Ron Paul. The ideological similarities between the two men, and the ways in which they created support, are striking.

Watching a Ridge Slide in Slow Motion, a Town Braces for Disaster – The New York Times

The fissure was first spotted in October on Rattlesnake Ridge in south central Washington State, overlooking Interstate 82 and the Yakima River. Since then, a 20-acre chunk of mountainside — roughly four million cubic yards of rock, enough to fill 25 football stadiums to the top of the bleachers, eight stories up — has been sliding downhill. Geologists can measure its current speed — about two and a half inches a day — but they cannot say for certain when, or if, it might accelerate into a catastrophe. And they are powerless to stop it.

Kansas Provides Compelling Evidence of Failure of “Supply-Side” Tax Cuts | Center on Budget and Policy Priorities

The deep income cuts that Kansas enacted in 2012 and 2013 for many business owners and other high-income Kansans failed to achieve their goal of boosting business formation and job creation, and lawmakers substantially repealed the tax cuts earlier this year. The Kansas experience adds to the already compelling evidence that cutting taxes does not improve state economic performance.

Tiny, Wealthy Qatar Goes Its Own Way, and Pays for It – The New York Times

Among Persian Gulf states, Qatar was the picked-on little sibling. Gas riches and an independent-minded ruling family changed that. Now it’s in the fight of its life. Qatar’s foes accuse it of financing terrorism, cozying up to Iran and harboring fugitive dissidents. They detest Al Jazeera, Qatar’s rambunctious and highly influential satellite network. And — although few say it openly — they appear intent on ousting Qatar’s young leader, Tamim, from his throne.

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CENTRAL BANKS & MONETARY POLICY

Bank of Japan’s Kuroda Faces a Communication Challenge – Bloomberg

Bank of Japan Governor Haruhiko Kuroda faces a communication challenge: expressing his usual confidence that inflation is headed to the central bank’s target while cooling speculation that the first step in normalizing policy is nearing. After a two-day policy meeting ends Tuesday, investors are sure to scrutinize Kuroda’s words and the latest price and economic growth forecasts for signs that the BOJ is closer to joining its global peers in dialing back its ultra-loose monetary policy.

Yen and Bond Traders Split on Whether the BOJ Will Taper in 2018 – Bloomberg

Japanese bond investors say yen bulls betting that the central bank is moving toward tightening its ultra-loose policy this year will likely be in for a disappointment. Any moves by the Bank of Japan to cut debt purchases or raise its targeted yield level from zero percent will be aimed at giving itself leeway to continue with its easy monetary stance as global borrowing costs rise and the economy improves, they argue. The BOJ isn’t ready to start normalizing policy yet, Daiwa SB Investments Ltd. and JPMorgan Asset Management Japan Ltd. say.

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GLOBAL ECONOMY DATA

IMF hails ‘broadest’ upsurge in global growth since 2010

The International Monetary Fund has hailed the “broadest synchronised global growth upsurge since 2010” as the global elite arrived at the World Economic Forum in Davos on Monday in ebullient mood. Consigning the troubles of the past decade to history, the fund’s upgraded forecasts signalled the strongest global economic outlook since the start of 2010.

U.S. Tax Overhaul Will Accelerate Global Growth, IMF Says – WSJ

When the IMF last released its global economic forecasts, the details of the U.S. tax overhaul weren’t finalized, nor was a bill assured of passage. This update thus serves as the IMF’s first major estimate of how the tax overhaul will ripple around the world economy—as a large, but temporary, deficit-fueled fiscal stimulus. The U.S. tax changes are “expected to be responsible for about half of the upward revision to global economic growth over the next two years,” the IMF said.

Saudi 2018 Growth Forecast Revised Up by IMF as Oil Prices Rise – Bloomberg

The International Monetary Fund has raised its economic growth forecasts for Saudi Arabia as oil prices rise, though the pace of expansion remains below government estimates. “While stronger oil prices are helping a recovery in domestic demand in oil exporters, including Saudi Arabia, the fiscal adjustment that is still needed is projected to weigh on growth prospects,” the IMF said in an update to its World Economic Outlook report.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

More Milestones: Alphabet Hits $800 Billion, Microsoft Clears $700 Billion – MoneyBeat – WSJ

The tech titans keep getting more titanic. Alphabet, the parent company of search-engine giant Google, became the second publicly traded U.S. company ever to reach a market value of $800 billion Monday, joining iPhone maker Apple. Meantime, Microsoft was on track Monday to become the third public U.S. company ever to close with a market value of $700 billion, joining Apple and Alphabet.

Number of stock indices at 3m dwarfs tally of quoted companies

There are now more than 70 times as many stock market indices as there are quoted stocks in the world, according to a groundbreaking survey by the Index Industry Association. A census of its members found that they publish and regularly re-calculate 3.28m indices, of which 3.14m cover stock markets. According to the World Bank, there are only 43,192 public companies in existence.

U.S. hedge fund Tiger Global has invested more than $1 billion in Barclays: FT

Tiger Global Management is also extending a vote of confidence in Barclays Chief Executive Jes Staley’s plans to strip back the bank to concentrate on its U.S.-led investment banking operations and its British-based consumer banking business, the report said. Barclays did not respond to a request for comment outside regular business hours. Tiger Global Management said the hedge fund had no comment on the report.

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DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

Big Pharma makes strongest start to M&A for a decade

Healthcare companies have announced almost $30bn of acquisitions since the beginning of the year in the sector’s strongest start for dealmaking in more than a decade, as Big Pharma scrambles to replace ageing blockbusters by paying top dollar for new medicines. Executives, lawyers and bankers said the January deals frenzy could be a sign of things to come in 2018, as large US drugmakers snap up innovative rivals by spending billions of dollars of cash freed up by Donald Trump’s tax overhaul.

Big Drugmakers Pay Big Prices for Promising Biotechs – WSJ

A pair of multibillion-dollar biotech deals announced Monday commanded hefty premiums, driven by big drugmakers’ need for new sources of revenue amid a scarcity of quality assets.

Health-Care Deals Fire Up With Drug Giants Facing Price Pressure – Bloomberg

The new year’s health-care deals began to snowball as Sanofi and Celgene Corp. scooped up assets that promise to offset pricing pressure for some of their top-selling drugs.

AIG Strikes $5.56 Billion Deal to Acquire a Bermuda Insurer – WSJ

AIG said it is acquiring Bermuda-based insurer and reinsurer Validus Holdings Ltd. in an all-cash deal for $5.56 billion. At $68 a share, the deal represents a 46% premium to Validus’s closing share price Friday and a 16% premium to its 52-week high.

China’s Biggest Electric-Car Maker to List in $4.5 Billion Deal – Bloomberg

China’s biggest electric-car maker will gain a stock market listing in an asset swap valuing the state-backed manufacturer at 28.8 billion yuan ($4.5 billion) and giving investors a bigger chance to participate in the world’s largest market for new-energy vehicles.

Bacardi Buying Patrón Tequila in Deal Valuing Brand at $5.1 Billion – WSJ

Bacardi is buying the maker of Patrón tequila in a deal that values the premium brand at $5.1 billion, said people familiar with the matter, one of the biggest liquor deals in years as rivals scramble to own more top shelf spirits.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

Downtown L.A. Is Starting to Mirror Manhattan’s Glut of Apartments – Bloomberg

Landlords counting on downtown Los Angeles as a cash machine may be in for the same bout of pain as their counterparts in Manhattan, where a flood of supply has started to drive down rents. More than 4,000 new apartments are forecast to hit the Los Angeles market this quarter, according to CoStar Group Inc., as the first wave of as many as 30,000 in the next three years.

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ENERGY COMPANIES, NOCs, INDUSTRY

Asian LNG derivative volumes quadruples

Volumes on the derivatives market in Asian liquefied natural gas quadrupled last year as trading for the super-cooled fuel undergoes a significant shift, attracting new players to the once closed-off market. The rise is significant because historically a large portion of LNG sold to Asia, which accounts for just under two-thirds of the market, has been based on long-term fixed destination contracts between producers and end users based on oil prices.

Big East Coast Refiner Files for Bankruptcy, Blaming Regulation – WSJ

Philadelphia Energy Solutions affiliates which account for more than one-quarter of the fuel-refining capacity on the East Coast filed for bankruptcy protection, blaming the steep cost of complying with a federal environmental regulation.

Gas from Russian Arctic to warm homes in Boston

A tanker was crossing the Atlantic on Sunday to warm New England households with natural gas whose sources are thought to include a project in the Russian Arctic under US sanctions. The US has never before imported LNG from Russia, according to government records.

Halliburton upbeat on 2018 as oil recovery spreads

Halliburton’s optimistic view for its U.S. and international operations comes as rising crude prices spur demand for oilfield services. Its results, along with those of larger rival Schlumberger, suggested the oil and gas recovery will spread beyond U.S. onshore to international exploration and production markets.

TOP

COMMODITIES BASE METALS, MATERIALS

China Is Brimming With Iron Ore as Port Stockpiles Hit Another High – Bloomberg

The mountain of iron ore stacked up at China’s ports is expanding further into uncharted territory, hitting record after record as policy makers in Beijing restrict steel production in the top importer this winter, crimping near-term consumption, while global miners add supply.

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POLLUTION, CLIMATE & ENVIRONMENT

Brazil Closes Giant Pile of Trash, Depriving Residents of a Treasure – WSJ

Nearly 60 years after Brazil carved a modernist capital out of its wind-swept central plateau and began dumping its solid waste there, the dump was closed as part of an effort to modernize waste removal. With that, thousands of poor people lost their meager livelihoods rifling through garbage.

Philippine volcano explodes, villagers flee back to shelters – ABC News

The Philippines’ most active volcano ejected a huge column of lava fragments, ash and smoke in a thunderous explosion Monday, sending thousands of villagers back to evacuation centers and prompting a warning that a violent eruption may be imminent. The midday explosion sent superheated lava, molten rocks and steam between 3.5 to 5 kilometers (2 to 3 miles) into the blue sky, and then some cascaded down Mount Mayon’s slopes and shrouded nearby villages in darkness, Renato Solidum of the Philippine Institute of Seismology and Volcanology and other officials said.

At Davos, 6 Feet of Snow Brings Limousines to a Crawl – The New York Times

A weekend blizzard was still filling the mountain valley with more snow on Monday night as heads of state and C.E.O.s tried to gather for the World Economic Forum. Fat, damp snowflakes have been tumbling down for the past six days, burying the town in six feet of snow, three feet of it in the last two days alone. Snow was still falling fast on Monday night, and the steep, pine-dotted slopes were so heavily laden that some neighborhoods here in Davos had to be evacuated for fear of avalanches.

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EUROPE

Google and Facebook unveil big investments in France

Google and Facebook on Monday unveiled significant investments in France in a vote of confidence for the country’s thriving tech scene and President Emmanuel Macron’s push to lure foreign investment.

Deutsche Telekom Calls on Merkel to Counter U.S., China Tech Threats – Bloomberg

Companies from Deutsche Telekom AG to Facebook Inc. have called on Germany to overhaul its technology policy to avoid being left behind by other countries.

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DACA, TRAVEL BAN, IMMIGRATION, WALL

ICE detains a Polish doctor and green-card holder who has lived in the U.S. for nearly 40 years – The Washington Post

Niec, now 43, never fathomed that his legal status in the United States would become an issue. With a renewed green card, and nearly 40 years in the country, his Polish nationality was an afterthought for Niec, his sister told The Washington Post. He doesn’t even speak Polish. But on Tuesday morning, immigration authorities arrested Niec at his home, just after he had sent his 12-year-old stepdaughter off to school. Niec, a physician specializing in internal medicine at Bronson Healthcare Group in Kalamazoo, Mich., has been detained in a county jail ever since, awaiting a bond hearing and possible deportation.

The Slow-Motion Unraveling of an Immigrant Family – The New York Times

Juan Villacis hoped his family would get political asylum in the United States after fleeing threats of violence in Colombia. Instead, they are being deported, starting with him. “It breaks my heart that families all over the country are dealing with this,” said Jillian Hopman, the family’s lawyer. “As we’ve seen over the past week with what we thought was going to be reform with DACA, I don’t think Trump knows what he wants. It’s only a political thing to appease his base. But I find it just disgusting and unnecessarily cruel that they’re not looking at any of these people as individuals.”

As U.S. Slows Immigration, One Latin American Nation Embraces It – WSJ

As the Trump administration aims to curb immigration, Chile—one of Latin America’s richest and safest countries—has opened its doors to some of the region’s poorest migrants in record numbers.

TOP

GEOPOLITICS, CRIME, TERRORISM

China Accuses U.S. Navy of Encroachment in South China Sea – WSJ

China criticized the U.S. Navy for sailing a guided-missile destroyer close to a disputed outcrop in the South China Sea, adding to tensions between the two governments already strained over trade and North Korea.

Number of Murders Soared in Mexico in 2017 – WSJ

The number of murders in Mexico jumped last year to its highest level in recent decades, largely the result of a powerful and relatively new drug gang expanding its operations across the country.

Pence Says U.S. Will Open Embassy in Jerusalem Next Year – WSJ

Vice President Mike Pence told Israel’s Knesset that the U.S. will open its embassy in Jerusalem next year, a move that Arab leaders warn undercuts efforts to reach a peace deal.

North Korean Delegation Visits South Korea to Prepare for Olympics Concert – WSJ

A North Korean delegation kicked off a two-day visit to South Korea to inspect facilities for a musical performance at next month’s Winter Olympics.

Saudi Graft Settlements May Top $100 Billion as Ritz Empties – Bloomberg

Saudi Arabia is winding down a controversial anti-corruption drive that led to dozens of princes and billionaires being detained at the Ritz-Carlton hotel in Riyadh. Talks with suspects are expected to end this month and authorities are likely to recover more than $100 billion in settlements, a senior government official said, asking not to be identified because the details are private. Those who don’t reach deals will be referred to prosecutors, the official said.

Turkish Troops Attack U.S.-Backed Kurds in Syria, a Clash of NATO Allies – The New York Times

Turkey intensified its offensive against a Kurdish enclave of Syria on Monday, advancing troops in a ground assault against American-allied militias there, in a clash of interests between the two NATO allies.

Up to 1,000 more U.S. troops could be headed to Afghanistan this spring – The Washington Post

The U.S. Army is readying plans that could increase the total force in Afghanistan by as many as 1,000 U.S. troops this spring beyond the 14,000 already in the country, senior military officials said. Defense Secretary Jim Mattis has not signed off on the proposals for the new forces, which are part of a broader strategy to bolster Afghan forces so that they can pound the Taliban during the upcoming fighting season.

Venezuela’s Factories Grind to a Halt – Bloomberg

Factories outside Caracas closed for the holidays as early as October amid the near disappearance of supplies, skyrocketing inflation and a rising wave of violent looting. Few reopened. The usual clamor of this industrial hub just 40 kilometers (25 miles) from the capital has been silenced by foreign-exchange controls, the collapse of the oil-based economy, price caps and an inflationary spiral that soared above 2,300 percent last year. As the nation’s economy grinds to a halt, life is defined by crime, hunger and want.

Venezuela’s Most-Wanted Rebel Shared His Story, Just Before Death – The New York Times

The text messages sent in December and January, along with recordings and interviews done over the same period, are some of the last words of Venezuela’s most-wanted man, a rogue police officer who had captured the imagination of a nation, a fugitive fighter who seemed at times to understand his days might be numbered.

TOP

PROPAGANDA, CORRUPTION, AUTHORITARIANISM

Russian Court Closes Foundation of Aleksei Navalny, a Kremlin Critic – The New York Times

A Moscow court on Monday ordered the closing of a foundation supporting the activities of Aleksei A. Navalny, the country’s leading opposition politician, moving quickly in a case filed only this month by the Justice Ministry. The court order came before a series of rallies in more than 90 Russian cities and towns, scheduled for Sunday and organized by Mr. Navalny and his supporters.

Chinese Police Seize Publisher From Train in Front of Diplomats – The New York Times

A Hong Kong-based book publisher with Swedish citizenship who was secretly spirited to China and held in custody for two years, igniting international controversy, has disappeared again in dramatic fashion — snatched from a train bound for Beijing under the eyes of two Swedish diplomats.

Facebook says it can’t guarantee social media is good for democracy

Facebook Inc warned on Monday that it could offer no assurance that social media was on balance good for democracy, but the company said it was trying what it could to stop alleged meddling in elections by Russia or anyone else.

TOP

TRUMP WORLD

“I’ve Got Another Nut Job Here Who Thinks He’s Running Things”: Are Trump and Kelly Heading for Divorce? | Vanity Fair

Kelly’s departure likely isn’t imminent, sources said. “He wants to stay longer than Reince [Priebus],” an outside adviser said. Trump can also hardly afford another high-level staff departure, which would trigger days of negative news cycles. But the prospect of a Trump-Kelly rupture became more probable as news of their clashes over immigration leaked.

Now on Stage, Stormy Daniels: A Strip Club and a Presidency Meet After Dark – The New York Times

The music came on. The clothes came off. And an airport strip club claimed its piece of the American presidency.

Trump used accent to imitate India’s prime minister: report | TheHill

President Trump reportedly uses an accent to imitate Indian Prime Minister Narendra Modi. Senior administration officials told The Washington Post that Trump has been known to “affect an Indian accent” to quote Modi, who last year condemned U.S. activity in Afghanistan during a private meeting with Trump.

Stephen Miller: Immigration agitator and White House survivor – The Washington Post

The combative conversation illustrates Miller’s influential yet delicate role within the administration — a true believer in restrictionist immigration policies attempting to broker a historic deal on behalf of a president with similarly hawkish, but far more flexible, positions. Miller also is a rare behind-the-scenes survivor in a White House roiled with firings and resignations over the past year.

The decline and fall of Wilbur Ross – Axios

Ross’s efforts to wheel and deal with the Chinese have left the president unimpressed. Another problem: He keeps falling asleep in meetings. In a series of Oval Office meetings about six months into his presidency, Trump eviscerated Ross, telling him he’d screwed up, and badly. During this period, Trump humiliated Ross in front of his colleagues, per three sources, and questioned his intelligence and competence.

TOP

TRADE, PROTECTIONISM, REGULATION, OVERSIGHT

Solar Has a $1.5 Billion, Long-Shot Plan to End a Trade War – Bloomberg

The proposal, which trade experts describe as a long shot at best, would call for Trump to drop existing duties on solar panels — and for the president to not levy new ones. China, in turn, would abandon its own tariffs on U.S. polysilicon, a key solar-panel ingredient. There would be many hurdles to making it all happen. Chief among them, of course, is convincing Trump to take a conciliatory stance with China. Yet solar companies say the deal would fit squarely into the president’s agenda.

TOP

ELECTORAL POLITICS

Pennsylvania’s Supreme Court just gave Democrats a big win on redistricting – The Washington Post

Less partisan congressional districts could give Democrats a chance this November to win back as many as half a dozen seats that had been lost to them over the past decade. It could also give the party a major boost in its quest to take back the House of Representatives, where Democrats need to net 24 seats to win control of the chamber.

White women helped carry Trump to the White House. Now they overwhelmingly favor Democrats.

Democrats can thank women voters for their surging advantage on a generic ballot ahead of the hugely important 2018 midterm elections, a new Washington Post/ABC News poll has found. Although white women supported Trump by nine points in 2016 and Republicans by 14 points in the 2014 midterm, the demographic has since swung to favor Democrats over Republicans by 12 points on a generic ballot.

TOP

SCANDALS, LAWSUITS, FINES, REGULATORY

Former KPMG Executives Charged With Conspiracy – WSJ

Starting in 2015, the giant accounting firm wanted badly to improve its standing in the eyes of its government regulator. But when KPMG recruited employees from the regulator, a scandal emerged over leaks of confidential information that resulted Monday in the indictments of five people on fraud and conspiracy charges.

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Amazon Prime’s Monthly Price Hike Will Generate $300 Million a Year – Bloomberg

Amazon.com Inc. will generate an extra $300 million annually by increasing the monthly cost of Prime membership by $2, according to Cowen & Co. The online retailer announced Friday that it would increase the price of Prime to $12.99 for customers making monthly payments, which totals $156 a year. Prime membership remains $99 for those making one annual payment, sweetening the discount for those making a longer commitment.

TOP

MEDIA, CABLE, SPORTS, ENTERTAINMENT

Netflix Shatters Estimates With a Surge in Year-End Subscriptions – Bloomberg

“Stranger Things” is the gift that keeps on giving for Netflix. The world’s largest online TV network signed up 8.33 million customers in the fourth quarter, surpassing analysts’ estimates of 6.34 million, thanks in large part to the popularity of the fantasy series. Netflix Inc. now has 117.6 million customers worldwide, wrapping up its biggest year ever for new subscribers.

TOP

AIRLINES, SHIPPERS, RAIL, TRANSPORTS

Large Airlines Flock Back to Midsize Cities – WSJ

The shifts reflect big changes in airline economics, including lower fuel prices, a desire by carriers to attract more passengers to their fortress hubs such as Chicago’s O’Hare International Airport and Dallas/Fort Worth International Airport, and competition on major routes from low-cost carriers that have driven down fares and taken market share.

TOP

AEROSPACE, MILITARY & DEFENSE

SpaceX Keeps U.S. Air Force’s Confidence After Satellite’s Loss – Bloomberg

The U.S. Air Force command that certified Elon Musk’s Space Exploration Technologies Corp. for military missions says it remains confident in the company’s capabilities despite the disappearance this month of a classified satellite it launched.

TOP

LUXURY, HIGH END, ASPIRATIONAL

High-end art is one of the most manipulated markets in the world — Quartz

In most markets prices are public knowledge and the commodity goes to the highest bidder. That process may be imperfect, but it does a good job at setting prices where supply meets demand; prices reflect their market value. The primary art market is different because galleries keep sales prices secret and are particular about who they’ll sell to; art prices are not market-set prices.

TOP

ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

Uber’s CEO Predicts the U.S. Will Have Flying Cars Within 10 Years – Bloomberg

Flying cars will be zipping across U.S. skies within the coming decade — at least that’s what Uber Technologies Inc.’s Chief Executive Officer Dara Khosrowshahi predicts. “There will be people flying around Dallas, Texas,” Khosrowshahi said at the DLD tech conference in Munich, his first public appearance in Europe since taking over the top job at Uber last year. “I think it’s going to happen within the next ten years.”

TOP

SCIENCE, NATURE, PSYCHOLOGY

China, Unhampered by Rules, Races Ahead in Gene-Editing Trials – WSJ

U.S. scientists helped devise the Crispr biotechnology tool that has captured global attention for its potential to treat incurable diseases. The first to test it in humans are Chinese doctors, who don’t face the same regulatory hurdles as American counterparts.

TOP

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