Macro Links Jan 2nd – When Nothing is Cheap
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- IRAN PROTESTS
- NORTH KOREA RAPPROCHEMENT
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- TAXATION, WEALTH HAVENS, INEQUALITY
- RUSSIA PROBE
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- USA ECONOMY DATA, CITIES AND STATES
- GLOBAL ECONOMY DATA
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- ENERGY RENEWABLES, NUCLEAR
- COMMODITIES AGRICULTURE & SOFTS
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- RESISTANCE, PROTEST, COUNTER-EFFORTS
- TRUMP WORLD
- ELECTORAL POLITICS
- SCANDALS, LAWSUITS, FINES, REGULATORY
- CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
- AUTOS, ELECTRIC, SELF-DRIVING
- AIRLINES, SHIPPERS, RAIL, TRANSPORTS
Anti-government protests in Iran have turned increasingly violent with the deaths of 12 demonstrators and a police officer, raising the stakes as unrest on the streets has raged now for five days and confounded leaders who have struggled to respond.
The protests have been stunning in their ferocity and geographic reach, spreading to far-flung towns and cities that are strongholds of the middle and working classes.
The demonstrators themselves appeared Monday to be leaderless and their demands diffuse, ranging from better living conditions to more political freedoms and even an end to the Islamic republic. Their chants and attacks on government buildings broke taboos in a system that brooks little dissent. The demonstrations were the boldest challenge to government authority since a pro-democracy revolt in 2009.
Videos on social media showed demonstrators in western Tehran tearing up a banner of Ayatollah Ali Khamenei, Iran’s supreme leader and ultimate decision maker. In other cities, protesters chanted “death to Khamenei” and called for the removal of clerics from power. In the northern city of Rasht, protesters chanted “independence, freedom, Iranian Republic” — a rallying cry against the Islamic republic.
Ignoring pleas for calm from President Hassan Rouhani, Iranian protesters took to the streets in several cities for the fifth day on Monday as pent-up economic and political frustrations boiled over in the broadest display of discontent in years.
The Iranian government responded with conciliatory words from Mr. Rouhani, but also a widening security clampdown — and a pledge late Monday to crack down even harder.
When Mr Rouhani took power in 2013, he inherited an economy shattered by the populist policies adhered to by his hardline predecessors and international restrictions over the nuclear programme.
While progress has been made — inflation is now 10 per cent, far lower than the 45 per cent seen in 2013, and after years of recession, gross domestic product is 6 per cent — youth unemployment remains at 25 per cent. An estimated 830,000 more people are expected to join the job market in the next Iranian year, which begins in March, 70 per cent of them university graduates.
“Iran is failing at every level despite the terrible deal made with them by the Obama administration,” Trump said Monday morning in one of several New Year’s Day tweets, including one that was critical of Pakistan. “The great Iranian people have been repressed for many years. They are hungry for food & for freedom. Along with human rights, the wealth of Iran is being looted. TIME FOR CHANGE!”
NORTH KOREA RAPPROCHEMENT
North Korea’s leader, Kim Jong-un, moved Monday to ease his country’s isolation by offering to send a delegation to the Winter Olympics in South Korea next month, even as he claimed to have accomplished the ability to launch a nuclear missile at the mainland United States.
Mixing the nuclear threat with an overture for easing tensions on the divided Korean Peninsula, Mr. Kim proposed immediate dialogue with South Korea to discuss the North’s participation in the Olympics.
If such talks were held, they would mark the first time the two Koreas have had an official dialogue since the South’s new president, Moon Jae-in, took office in May. Mr. Moon has doggedly championed dialogue with the North, even as President Trump has threatened military action to stop the North’s nuclear weapons program.
Until now Mr. Kim has largely ignored Mr. Moon, whom the North Korean media has portrayed as a spineless lackey of the United States. But the dramatic shift in tone and policy, toward bilateral talks between the two Koreas, suggests that Mr. Kim sees an opportunity to develop and accentuate the split between Mr. Moon and Mr. Trump, betting that the United States will be unable to mount greater pressure on the North if it does not have South Korean acquiescence.
The gambit may work. Hours after Mr. Kim’s speech, Mr. Moon’s office welcomed the North’s proposal, in a way that could further aggravate tensions with the United States.
North Korean leader Kim Jong Un boasted in an annual New Year’s Day speech Monday that he had a nuclear button on his desk and that the entire United States was within range of his weapons — but he also vowed not to attack unless threatened.
Kim promised to focus this year on producing nuclear warheads and missiles for operational deployment. But he also struck a conciliatory note, opening the door to dialogue with South Korea and saying he would consider sending a delegation to the Winter Olympics to be held in his southern neighbor in February.
“The United States can never fight a war against me and our state,” he said in the nationally televised speech. “It should properly know that the whole territory of the U.S. is within the range of our nuclear strike and a nuclear button is always on the desk of my office, and this is just a reality, not a threat.”
For decades, North Korea has dispatched laborers to points around the globe, engaging tens of thousands in logging, mining and construction ventures while taking a hefty slice of their earnings. The United States has sought to shut down this enterprise, lobbying other countries to eject the workers and eliminate a source of hard currency for the North Korean economy.
But the continued presence of these workers in Poland — a NATO ally at the heart of the European Union — underscores how difficult it is to fully sever North Korea from the global economy, even as the nation accelerates efforts to build a nuclear missile capable of striking the United States.
Russian tankers have supplied fuel to North Korea on at least three occasions in recent months by transferring cargoes at sea, according to two senior Western European security sources, providing an economic lifeline to the secretive Communist state.
The sales of oil or oil products from Russia, the world’s second biggest oil exporter and a veto-wielding member of the United Nations Security Council, breach U.N. sanctions, the security sources said.
The transfers in October and November indicate that smuggling from Russia to North Korea has evolved to loading cargoes at sea since Reuters reported in September that North Korean ships were sailing directly from Russia to their homeland.
North Korea’s nuclear program has long triggered condemnation – including the U.N. Security Council’s recent decision to apply some of the toughest sanctions in history – but is something far more lethal lurking in the Hermit Kingdom’s arsenal?
“They have a large stockpile of chemical weapons, but the one that gets the least attention, and that I worry most about, is their biological weapons program,” said Andrew Weber, the former U.S. Assistant Secretary of Defense for Nuclear Chemical and Biological Defense Programs from 2009-2014.
When it comes to biological weapons, Weber said, just a tiny amount can bring incredibly lethal results. “Ounces or pounds would be enough. You can have millions of lethal doses of anthrax in a several-pound quantity… With smallpox, maybe just a few grams.”
South Korea said on Friday that it had seized a Hong Kong-registered ship it accuses of transferring oil to North Korea, in an announcement that came hours after Donald Trump threatened to take trade action against Beijing for allowing petrol supplies to reach Pyongyang.
Yonhap, South Korea’s state-run news agency, said the vessel, the Lighthouse Winmore, had broken UN sanctions by secretly transferring 600 tonnes of refined petroleum to a North Korean ship in international waters in October.
The Lighthouse Winmore docked at the South Korean port of Yeosu on Oct. 11 to load 14,039 tons of refined petroleum from Japan, they said. Four days later, it departed Yeosu, saying it was headed for Taiwan. Instead, it transferred the refined oil to four other ships in international waters, including 600 tons transferred to the North Korean ship Sam Jong 2 on Oct. 19, officials said.
Beijing and Washington clashed over a U.S. push to blacklist cargo ships for violating international sanctions against North Korea, including one vessel South Korea said it seized after an illegal transfer of oil.
The confrontation, playing out in jockeying at the United Nations, comes amid an escalating war of words between President Donald Trump and Beijing over China’s willingness to tightly enforce sanctions following Pyongyang’s nuclear and long-range missile tests. China’s critics say it has agreed to tough-sounding Security Council resolutions while modulating how strictly the sanctions are actually enforced. China denies it violates sanctions.
A North Korean nuclear scientist who had gone to China poisoned himself after he was forced home.
The scientist killed himself in a state security cell while he awaited interrogation.
Resources said that he was a researcher in the physics center of the State Academy of Sciences in Pyongyang. He belonged to a group of North Koreans who were detained in Shenyang city in China on Nov 4 and were sent back on Nov 17.
A source that wishes to be anonymous told the media that “He killed himself only a few hours after he was placed in solitary confinement at the State Security Department in Sinuiju city” just across the border from China. “He died before he could be questioned about the reasons for his escape, who had helped him, and what his route had been. He must have been searched many times while being taken from China to Sinuiju, so it’s a mystery how he was able to conceal the poison he took,” he said.
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
Last week’s announcement that three of Japan’s big credit card companies have signed up to use Ripple’s technology triggered another bounce in the price of XRP, which is up sixfold in the past month and almost 300-fold in a year.
Its market capitalisation climbed to $76bn on Friday, above Ethereum’s $73bn market value, but well behind bitcoin’s $246bn overall value, according to coinmarketcap.com. Ripple’s current market value would put it among the world’s 30 biggest banks, ahead of the UK’s Lloyds Banking Group or Japan’s Mizuho Financial Group.
Ripple’s cross-border payments system uses blockchain technology — an electronic record-keeping system — to move money almost instantaneously and at low cost between countries and currencies. Blockchain is a core component of cryptocurrencies such as bitcoin and Ripple’s own XRP.
The price of the digital currency XRP, also called Ripple, surged 50% on Friday, pushing its market valuation to a record $85 billion, second only to bitcoin among crypto-assets.
The sharp one-day move, which brought the price of XRP to $2.17, is the latest outsized swell for virtual currencies in a year that has been rife with spikes. Investors in the field are increasingly placing widespread bets on a number of different currencies.
Based on Friday’s gains, the market value of XRP tokens totals around $84 billion, according to research site coinmarketcap.com. Friday’s move puts it ahead of Ethereum’s $72 billion valuation, and is second to only bitcoin, currently at $244 billion.
That puts XRP’s year-to-date gains at more than 30,000%; it began the year trading at less than a penny. Most of the gains have come in the last three weeks. On Dec. 11, XRP was trading at 25 cents. By comparison, bitcoin is up about 1,400%, and Ethereum is up 9,300%.
India’s finance ministry on Friday cautioned investors about the risks of trading in cryptocurrencies such as bitcoin, saying digital currency investments are like “Ponzi schemes.”
Cryptocurrencies are not legal tender and have no regulatory permission or protection in the country, the finance ministry said in a statement, but stopped short of announcing an outright ban or imposing any curbs.
An executive of a UK-registered cryptocurrency exchange kidnapped in Ukraine this week has been released after paying a ransom of more than $1m in bitcoins, according to an adviser to the Ukrainian interior minister, in a crime he dubbed “bitcoin kidnapping and extortion”.
Pavel Lerner, who runs the Exmo exchange and is a locally-renowned cryptocurrency expert, was kidnapped near his office in Kiev on Tuesday but freed on Thursday, Anton Gerashchenko, the Ukrainian adviser, said.
“He was kidnapped by an armed gang for the purpose of extorting bitcoins,” Mr Gerashchenko told the Financial Times, adding: “We have operative information that he paid more than $1m worth of bitcoins.”
Bitcoin investors are claiming Australia’s banks are freezing their accounts and transfers to cryptocurrency exchanges, with a viral tweet slamming the big four and an exchange platform putting a restriction on Australian deposits.
Cryptocurrency trader and Youtuber Alex Saunders called out National Australia Bank, ANZ, the Commonwealth Bank of Australia and Westpac Banking Corporation on Twitter for freezing customer accounts and transfers to four different bitcoin exchanges – CoinJar, CoinSpot, CoinBase and BTC Markets.
TAXATION, WEALTH HAVENS, INEQUALITY
The new tax bill, and its $10,000 cap on all local and state tax deductions, has generated a variety of strong emotions — including anxiety and frustration — in places like Hempstead.
By Thursday, however, that stew of emotions had been replaced by utter confusion, as well as rage, including among people who had shelled out money only to discover that they might not get any benefit.
This week’s tax-prepayment roller coaster could be just the beginning. Republicans pushed through their tax overhaul at blistering speed, giving lawyers and accountants only about a week to study the bill before it goes into effect.
Lenders are struggling to accommodate mortgage borrowers who are rushing to prepay property taxes before the new tax law takes effect. Many homeowners in high-tax states such as New York, Massachusetts and California are prepaying 2018 property taxes before year-end in order to claim a bigger deduction on their 2017 tax return.
Banks and other lenders can play a key role in these property-tax payments, as the payments often are lumped together with a borrower’s mortgage payment and held in escrow until they are paid to local authorities. But due to time constraints in the last week of the year, many banks are telling customers they’re better off paying their future taxes directly and settling up with the bank later.
At the center of the rush is the doubling of the standard tax deduction to $12,000 for individuals and $24,000 for couples that will kick in Jan. 1. That increase could translate into fewer households itemizing their taxes, which could reduce the incentive to give to charity. Only taxpayers who itemize deductions can deduct charitable contributions from their taxable income.
Tim Delaney, chief executive officer of the National Council of Nonprofits, said the law is likely to lead to a decline in charitable giving of several billion dollars next year.
“There’s great concern and indeed fear among nonprofits because of what the new federal tax law will do,” Mr. Delaney said. “We are concerned there will be a huge decline next year.”
Democrats in high-cost, high-tax states are plotting ways to do what their states’ representatives in Congress could not: blunt the impact of the newly passed Republican tax overhaul.
Governors and legislative leaders in New York, California and other states are considering legal challenges to elements of the law that they say unfairly single out parts of the country. They are looking at ways of raising revenue that aren’t penalized by the new law. And they are considering changing their state tax codes to allow residents to take advantage of other federal tax breaks — in effect, restoring deductions that the tax law scaled back.
One proposal would replace state income taxes, which are no longer fully deductible under the new law, with payroll taxes on employers, which are deductible. Another idea would be to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments.
Goldman Sachs Group Inc. said the U.S. tax reform will cut profit this year by about $5 billion, mainly because of a tax targeting earnings held abroad.
About two-thirds of the hit comes from the repatriation tax, while writing down U.S. deferred tax assets also contributed, the company said in a filing on Friday. The bank also accelerated the delivery of previously granted stock awards to many of its top executives to lower its taxable profit subject to this year’s higher rates.
Under federal law, any tax shelter must have “economic substance,” or a legitimate business purpose for entering into it, and can’t simply be to avoid taxes. Caterpillar has never wavered from its position that the Swiss subsidiary is perfectly legal, even though some employees raised doubts internally.
A senior person in Caterpillar’s management in the early 2000s recalls asking colleagues at the time how it planned to bring profits that were piling up in Switzerland back home without paying U.S. taxes on them. He says he didn’t get any clear answers.
“It was pretty obviously just a tax initiative,” he says. Caterpillar wouldn’t comment on his recollections.
A provision in the tax law allows sole proprietors — along with owners of partnerships or other so-called pass-through entities — to deduct 20 percent of their revenue from their taxable income.
The tax savings, which could be around $15,000 per year for many affluent couples, may prove enticing to workers. “If you’re above the median but not at the very, very top, one would think you’d be thinking it through,” said David Kamin, a professor of tax law at New York University.
The provision may also turn out to be a boon for employers who are trying to reduce their payroll costs. Workers hired as contractors, who tend to be cheaper, may be less likely to complain about their status under the new tax law. “Firms currently have a lot of incentives to turn workers into independent contractors,” said Lawrence Katz, a labor economist at Harvard. “This reinforces the current trends.”
“Republicans, in particular, have been very harsh on the IRS in terms of budget cuts and taking away some of their resources,” said Scott Hodge, the president of the Tax Foundation, an independent think-tank. He predicted a “rocky” first year for both the IRS and taxpayers.
The agency has been dealing with real-terms funding cuts of 21 per cent since 2010, according to figures from the Centre on Budget and Policy Priorities, and Mr Trump’s March budget proposed an additional reduction of $239m. Staffing is down 21,000 since the start of the decade.
Jacob Leibenluft of the CBPP argued that there was already a mismatch between the IRS’s resources and those of the private sector attempting to minimise bills. “There is a lot of opportunity for gaming and avoidance created by many of the new provisions,” he said.
The head of a conservative Republican faction in the U.S. Congress, who voted this month for a huge expansion of the national debt to pay for tax cuts, called himself a “fiscal conservative” on Sunday and urged budget restraint in 2018.
Meadows was among Republicans who voted in late December for their party’s debt-financed tax overhaul, which is expected to balloon the federal budget deficit and add about $1.5 trillion over 10 years to the $20 trillion national debt.
George Papadopoulos, a Trump foreign policy adviser, was the improbable match that set off a blaze that has consumed the first year of the Trump administration.
During a night of heavy drinking at an upscale London bar in May 2016, George Papadopoulos, a young foreign policy adviser to the Trump campaign, made a startling revelation to Australia’s top diplomat in Britain: Russia had political dirt on Hillary Clinton.
About three weeks earlier, Mr. Papadopoulos had been told that Moscow had thousands of emails that would embarrass Mrs. Clinton, apparently stolen in an effort to try to damage her campaign.
Exactly how much Mr. Papadopoulos said that night at the Kensington Wine Rooms with the Australian, Alexander Downer, is unclear. But two months later, when leaked Democratic emails began appearing online, Australian officials passed the information about Mr. Papadopoulos to their American counterparts, according to four current and former American and foreign officials with direct knowledge of the Australians’ role.
A growing campaign by President Trump’s most ardent supporters to discredit the special counsel, Robert S. Mueller III, and the law enforcement agencies assisting his investigation is opening new fissures in the Republican Party, with some lawmakers questioning the damage being done to federal law enforcement and to a political party that has long championed law and order.
A small but vocal group of conservative lawmakers, much of the conservative media and, at times, the president himself have launched a series of attacks to paint not only Mr. Mueller but institutions once considered sacrosanct to Republicans like the F.B.I. and Justice Department as dangerously biased against Mr. Trump. One of them, Representative Francis Rooney of Florida, called on Tuesday for top F.B.I. and Justice Department officials to be “purged.”
Now some Republican lawmakers are speaking out, worried that Trump loyalists, hoping for short-term gain, could wind up staining the party, dampening morale at the F.B.I. and Justice Department, and potentially recasting Democrats as the true friends of law enforcement for years to come.
Although Nunes has not officially wrested his panel’s Russia probe back from the Republicans he deputized to run it, the chairman’s reemergence as a combative Trump loyalist has raised alarm among Democrats that the future of the investigation may be clipped short or otherwise undermined. Even some of Nunes’s GOP allies have expressed concern about his tactics, prompting rare public warnings that he should temper his attacks on federal law enforcement.
The president said in an interview on Thursday that the special counsel will treat him fairly, contradicting a campaign by some Republicans to discredit the investigation.
President Trump in a new interview denied any collusion between his 2016 presidential campaign and Russia, adding “even if there was, it’s not a crime.”
Trump made the comments to the New York Times when he was asked whether the investigation into Hillary Clinton’s emails should be reopened. “I have absolute right to do what I want to do with the Justice Department,” Trump said.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
Inside and outside China, alarms are now sounding about mounting debt. Zhou Xiaochuan, the head of China’s central bank, the People’s Bank of China, has openly warned that authorities need to curb financial risks that might lead to a “Minsky Moment” – a sudden collapse of asset prices, sparked by debt or currency pressures, after a long period of growth. Zhou said corporate debt levels were relatively high and household debt was rising fast, in remarks in October on the sidelines of the Communist Party’s 19th congress in Beijing. “We should focus on preventing a dramatic adjustment,” he said.
Earlier this year, Moody’s Investors Service and Standard & Poor’s downgraded China’s sovereign rating, citing concerns over the nation’s rising debt.
Countries with close trading ties to China are monitoring efforts to restrain shadow banking and the accumulation of debt. The Reserve Bank of Australia (RBA) warned in its October Financial Stability Review that “financial stability risks in China remain high.” The RBA acknowledged that Chinese authorities were taking steps to curb risk. “But the more that leverage and risky lending grow, the more likely that China’s economic transition will include a significant disruption of some form,” the bank said.
Securitisations of US car loans hit a post-financial crisis high in 2017, as investor demand for yield continued to provide favourable borrowing conditions across a range of credit markets.
Wall Street sold more than $70bn worth of auto asset backed securities, which bundle up car loans into bond-like products, this year, the highest level since 2007, according to data from S&P Global Ratings.
The boom in auto ABS comes as other structured credit products, such as deals backed by leveraged loans or credit card debt, have also seen a glut of issuance. Demand is being driven by investors who are seeking alternative assets as the premiums offered on corporate bonds and loans continue to decline.
Investors should brace for a rush of Komodos in 2018. Indonesia launched the first offshore bond denominated in its local currency through a state-owned company earlier this month to help the country feed its voracious appetite for infrastructure projects. And like the Komodo dragons the bonds are named after, the country is likely to soon hunger for more.
Such bonds are attractive to Indonesian firms because they allow them to access to a greater pool of capital than if they had issued at home. And they are preferable to foreign-currency debt as the income of Indonesian state-owned enterprises is typically in local currency.
The timing is right for Indonesians to borrow. Flows into emerging-market debt funds this year stood at $80 billion on Dec. 14, around $20 billion above the 2012 record, according to data by fund tracker EPFR Global.
HNA’s move to raise more debt against one of its most well-known—and liquid—assets comes a week after it added debt to its Deutsche Bank AG stake and pledged its shares in one of China’s largest banks, underscoring the once-acquisitive conglomerate’s tightening cash situation.
The airlines-to-asset management group has spent about $40 billion since 2015 buying up stakes and companies across the world, much of it backed by debt. It frequently pledged shares in companies it had purchased to raise financing. The group has estimated it has more than $100 billion in debt.
The buying spree has now slowed sharply. In recent months, the company has sought to calm investors and lenders, buying back bonds and highlighting its access to credit lines. It has struggled to raise debt in stock and bond markets.
A Chinese court has seized the known assets of LeEco founder Jia Yueting as authorities close in on the erstwhile technology magnate who only a year ago aimed to take on some of Silicon Valley’s biggest names.
The Beijing First Intermediate People’s Court said it had seized millions of dollars’ worth of shares in Shenzhen-listed LeEco subsidiary Leshi Internet Information & Technology, two homes in Beijing and about Rmb1.3m ($200,000) from a bank account, enforcing a petition filed by Fujian province-based Huafu Securities.
The securities house had sought to recover more than Rmb200m from Mr Jia. But the December 19 ruling, posted to the Beijing court’s website several days later, said the businessman had no other bank accounts, houses or cars to seize.
The rise of car-booking apps such as Uber and Lyft is causing a deepening financial crisis at lenders that have financed the US’s traditional taxi drivers, who are now defaulting on their debts.
Regulators have warned that some co-operative lenders are so exposed to soured taxi loans that an insurance fund will need to step in to ensure depositors can get their cash. While some listed lenders such as Capital One have posted rising losses from the yellow-cab business, smaller credit unions that specialise in the trade have run into serious financial difficulties.
The largest U.S. public pension fund debated in December whether to sell more than $50 billion in stocks as global markets raced higher. But in the end, the board of the California Public Employees’ Retirement System decided it was fine to hold more.
Retirement systems that manage money for firefighters, police officers, teachers and other public workers aren’t pulling back on costly bets at a time when markets are rising around the world. Some public pension funds are adding to traditional allocations of stocks and bonds while both are expensive. Others are loading up on more private-equity or real-estate holdings that are less liquid and sometimes carry high fees.
How much risk to take is a question facing all investors as they enter 2018. “Everything is overvalued,” said Wilshire Consulting President Andrew Junkin, who advises public pension funds. “There’s no magic option out there.”
It is the latest ignominy for Wall Street traders who have seen their ranks, compensation and clout dwindle since the financial crisis. New regulations have curbed risk-taking, while electronic trading has moved into once-opaque corners of the market ruled by brokers, bringing transparency to prices and slashing profits.
Meanwhile, investor dollars continue to flow into passive index funds, which trade in smaller amounts and negotiate hard on fees.
“Anybody who’s realistic knows this is a different world than it was eight or 10 years ago,” said Alan Johnson, a consultant who advises banks on their compensation. “It’s time to stop waiting for sales and trading to come back.”
Nothing seemed to jolt markets from their slumber. Investors shrugged at one jarring headline after another, from escalating nuclear tensions with North Korea to the widening probe into the White House’s connections to Russia.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
The Iranian government has the highest per capita execution rate in the world, treats women as second class citizens, persecutes gays and religious minorities, and stifles free speech. While there is a natural inclination among decent people everywhere to want a peaceful civil rights movement to succeed in Iran, there are ample reasons to believe it will not. The regime’s coercive apparatus—the Islamic Revolutionary Guard Corps (IRGC) and the Bassij milita—are organized, armed, and abundant, and well-practiced in the brutal science of repression. Opponents of the government, in contrast, are unarmed, leaderless, and rudderless. In addition, Iran has at its disposal tens of thousands of Shia militiamen—including Lebanese Hezbollah—it has been cultivating for years and in some cases decades. For these battle-hardened forces, crushing unarmed Iranian protesters is a much easier task than fighting Syrian rebels or Sunni jihadists.
While some have expressed hope these protests might compel the Iranian government to try and address popular grievances, history shows us the opposite is more likely true. In the weeks and months to come, expect the regime to grow ever more repressive. Iran’s security forces thrive when there is insecurity. Some Iranians even fear the IRGC has allowed the protests to fester as a pretext for expanding their authority in the name of national security.
“I’m a pessimist because of intelligence,” the Italian philosopher Antonio Gramsci apparently liked to say, “but an optimist because of will.” Two-thousand-five-hundred years of Persian civilization and a century-long quest for democracy offer hope about the irrepressible Iranian will for change. But the Islamic Republic’s four-decade history of brutality suggests that change will not come easily, or peacefully, or soon.
Mr. Trump is the 45th president of the United States, but he has spent much of his first year in office defying the conventions and norms established by the previous 44, and transforming the presidency in ways that were once unimaginable.
Under Mr. Trump, it has become a blunt instrument to advance personal, policy and political goals. He has revolutionized the way presidents deal with the world beyond 1600 Pennsylvania Avenue, dispensing with the carefully modulated messaging of past chief executives in favor of no-holds-barred, crystal-breaking, us-against-them, damn-the-consequences blasts borne out of gut and grievance.
He has kept a business on the side; attacked the F.B.I., C.I.A. and other institutions he oversees; threatened to use his power against rivals; and waged war against members of his own party and even his own cabinet. He fired the man investigating his campaign and has not ruled out firing the one who took over. He has appealed to base instincts on race, religion and gender as no president has in generations. And he has rattled the nuclear saber more bombastically than it has been since the days of Hiroshima and Nagasaki.
The presidency has served as a vehicle for Mr. Trump to construct and promote his own narrative, one with crackling verve but riddled with inaccuracies, distortions and outright lies, according to fact checkers. Rather than a force for unity or a calming voice in turbulent times, the presidency now is another weapon in a permanent campaign of divisiveness. Democrats and many establishment Republicans worry that Mr. Trump has squandered the moral authority of the office.
One year out, this may be Mr. Trump’s greatest trick: His tornado of news-making has scrambled Americans’ grasp of time and memory, producing a sort of sensory overload that can make even seismic events — of his creation or otherwise — disappear from the collective consciousness and public view.
He is the magician who swallows a sword no one thought was part of the act, stuffs a dozen rabbits into a hat before the audience can count them — and then merrily tweets about “Fox & Friends” while the crowd strains to remember what show it had paid to attend in the first place.
The disorientation has had far-reaching effects, shaping not only Mr. Trump’s public image but also the ways in which lawmakers, journalists and others in his ecosystem are compelled to operate. It is not exactly that “nothing matters,” to borrow social media’s favorite nihilistic buzz-phrase of the Trump age. It is that nothing matters long enough to matter.
In the increasingly drawn-out case of Prince Alwaleed bin Talal, the public face of the Saudi royal family to many foreign executives and investors, there’s more at stake than taking over his global business empire and talks on a settlement have hit an impasse.
The Saudi crown prince, Mohammed bin Salman, is about to enter a crucial few months that will show his true motives and the scope of his power. How the case unfolds will help investors and diplomats answer a question puzzling them since the nightly raids of Nov. 4: Whether the purge is an effort to root out graft before selling shares in the country’s oil giant, or simply a shakedown to boost state coffers while he asserts himself at home and abroad.
“The Alwaleed case will define the crackdown to western investors,” said Emily Hawthorne, Middle East and North Africa analyst at Texas-based advisory firm Stratfor. The longer Alwaleed remains behind closed doors, the more the government “appears the unreasonable actor,” she said.
A weaker dollar tends to act as an accelerator for emerging markets. Debt denominated in U.S. dollars becomes easier to service with local-currency revenue as the dollar depreciates; that in turn creates more credit capacity. Meanwhile, for foreign investors, a weaker dollar juices returns, and encourages inflows. Even though many emerging-market countries have deeper domestic markets than in the past, foreign investors putting cash to work still makes a big difference. This year returns have been particularly strong: the MSCI Emerging Markets index is up over 30%, and a Bloomberg Barclays local-currency government bond index has returned more than 13%.
A rising dollar, by contrast, can crimp risk appetite and cause foreign investors to pull back from emerging markets, reducing access to funding and dimming growth prospects. Falling currencies can force emerging-market central banks to raise rates, adding to the chill for economies. There was a full-scale retreat between 2013 and 2016 as emerging-market currencies fell against the dollar: investors pulled $155 billion from emerging equity funds over that period, according to investment bank Renaissance Capital, and have put less than half of that back since.
It isn’t clear that 2018 will indeed bring a stronger dollar: there are offsetting factors, including prospective shifts away from ultraloose central bank policy in Europe and Japan. The dollar has already risen a long way in recent years. But many investors are looking forward to another good year for emerging markets, supported by the better global growth picture. All of them should be watching the dollar closely: It could spoil the party.
If the big US tax cut that brought 2017 to a conclusion has its intended consequences, then capital expenditures will start to rise in the next year, as will wages. With consumer confidence high, that should lead to higher consumption. It would also lead to monetary policy at the tightest end of what currently seems probable. The European Central Bank and Bank of Japan would indeed desist from their asset purchases, the Federal Reserve would reduce its balance sheet, and liquidity would flow out of world markets. The Fed could be expected to raise rates four times.
This would be a consummation devoutly to be wished, vindicating both the belated fiscal stimulus that the US has just administered and the desperate muddle-through strategy that preceded it. But significantly higher rates and lower liquidity would be bad news for equity markets, which look historically expensive. High valuations can be justified while rates are historically low. Future earnings can be discounted at a low rate and the cash yields on stocks look attractive. But if all goes according to the US Republican party’s plan, interest rates will need to be significantly higher a year from now, and valuations will come under pressure.
The alternative scenario is that the tax cut achieves no meaningful stimulus, and is merely put towards higher corporate dividends and expensive mergers and acquisitions. The synchronised global economic recovery of the past year peters out, as other brief post-crisis recoveries have done. In this situation, the Fed tightens far less aggressively, other central banks blink and keep buying assets, and bond yields stay where they are, or even fall. On this gloomy prognosis, the legacy of the tax cut would be no more than greater inequality. But equity markets would enjoy much the same benign conditions they have had this year.
The 10-year Treasury yield, arguably the most important number in world finance, which sets the notional “risk-free rate” in global transactions, has trended down steadily ever since Paul Volcker’s Fed stamped out inflationary psychology in the early 1980s. Bond yields have ticked up since the tax cut passed and are very close to breaking above that steady downward trend.
Scepticism about chartism and technical analysis is always justified. But sometimes a trend is so obvious and strong that it is foolish to deny it. If the downward trend in 10-year yields were at last broken, it would be profoundly important.
Most traders today have no idea what it is like for yields to trade upwards. It would open the risk of a financial accident. Sharply higher yields would crimp the economy, put over-extended corporate credit under pressure and render high stock valuations impossible to justify. It could change everything for asset markets.
This is a real and present danger. If we exclude unmeasurable risks of warfare or natural disaster, it is by far the greatest risk facing asset markets.
The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world. The recently completed Second Avenue subway on Manhattan’s Upper East Side and the 2015 extension of the No. 7 line to Hudson Yards also cost far above average, at $2.5 billion and $1.5 billion per mile, respectively.
For years, The Times found, public officials have stood by as a small group of politically connected labor unions, construction companies and consulting firms have amassed large profits.
Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more laborers than elsewhere in the world, documents show.
Construction companies, which have given millions of dollars in campaign donations in recent years, have increased their projected costs by up to 50 percent when bidding for work from the M.T.A., contractors say.
Consulting firms, which have hired away scores of M.T.A. employees, have persuaded the authority to spend an unusual amount on design and management, statistics indicate.
Public officials, mired in bureaucracy, have not acted to curb the costs. The M.T.A. has not adopted best practices nor worked to increase competition in contracting, and it almost never punishes vendors for spending too much or taking too long, according to inspector general reports.
At the heart of the issue is the obscure way that construction costs are set in New York. Worker wages and labor conditions are determined through negotiations between the unions and the companies, none of whom have any incentive to control costs. The transit authority has made no attempt to intervene to contain the spending.
The 3-year-old boy in the kitchen screamed. His mother ran in from the bathroom. He had been playing with the knobs of the stove again. With flames jumping through the kitchen, she scooped up the boy and a 2-year-old child and ran into the cold. She left her first-floor apartment door ajar behind her.
The fire flashed out into the hallway of the five-story building in the Bronx on Thursday night. The stairwell became in effect a chimney. The fire climbed up, up, up, seeking air. Confronted with a hallway inferno, residents upstairs retreated and threw open their windows, giving the fire more oxygen, before they crowded onto fire escapes, screaming in several languages.
Others, along the side and back of the building, where the fire began, could not even get to their fire escape.
When all the dead were counted, there were 12, making the fire at 2363 Prospect Avenue in the Belmont neighborhood New York City’s deadliest in 27 years. Four other people were critically injured, “fighting for their lives right now,” Mayor Bill de Blasio said on Friday.
The fire broke out on the coldest night of the year, and the first firefighters to the scene could not get water from the hydrant in front of the burning building. It was frozen.
“There is a lot going on here, if you know what to look for,” said Mikako Sasa, one of the Novozymes scientists.
Their work is helping the company develop enzymes for laundry and dishwasher detergents that would require less water, or that would work just as effectively at lower temperatures. The energy savings could be significant. Washing machines, for instance, account for over 6 percent of household electricity use in the European Union.
Enlisting enzymes to battle dirt is not a new strategy. Over thousands of years, mushrooms and their fungi cousins have evolved into masters at nourishing themselves on dying trees, fallen branches and other materials. They break down these difficult materials by secreting enzymes into their hosts. Even before anyone knew what enzymes were, they were used in brewing and cheese making, among other activities.
The race to lock down Las Vegas’ highest-paying residency is heating up with Lady Gaga announcing a two-year engagement at the MGM Park Theater. According to two well-placed sources, Gaga is guaranteed just over a million dollars per show, and is committed to 74 appearances. Should all go well with ticket sales, she could extend that run, inching closer to the $100 million mark, a new — and record — threshold for the city and for even the biggest of current pop artists. Gaga stands to earn even more on merchandise sales — typically a 50/50 split with the venue — and VIP offerings.
The price tag for a superstar artist’s residency has been inching up steadily in the post-recession years and as more and more acts, both contemporary (like Bruno Mars, also performing a run of shows at the MGM Park Theater, and Pitbull) and heritage (Cher), nostalgic (Backstreet Boys) and somewhere in between (Jennifer Lopez, Britney Spears), plant semi-permanent roots in the desert outpost.
It’s a rite of passage that goes back to the days of Elvis Presley and Dean Martin, the hottest acts of their respective days, but one that eventually gave way to those whose careers were careening to a halt. Which is why in recent decades Las Vegas was viewed more as a destination for also-rans — where a musician goes to die, was a common crack. Not so any more.
In much of the world, people whose livelihoods depend on paychecks are increasingly anxious about a potential wave of unemployment threatened by automation. As the frightening tale goes, globalization forced people in wealthier lands like North America and Europe to compete directly with cheaper laborers in Asia and Latin America, sowing joblessness. Now, the robots are coming to finish off the humans.
But such talk has little currency in Sweden or its Scandinavian neighbors, where unions are powerful, government support is abundant, and trust between employers and employees runs deep. Here, robots are just another way to make companies more efficient. As employers prosper, workers have consistently gained a proportionate slice of the spoils — a stark contrast to the United States and Britain, where wages have stagnated even while corporate profits have soared.
“In Sweden, if you ask a union leader, ‘Are you afraid of new technology?’ they will answer, ‘No, I’m afraid of old technology,’” says the Swedish minister for employment and integration, Ylva Johansson. “The jobs disappear, and then we train people for new jobs. We won’t protect jobs. But we will protect workers.”
In Silicon Valley, the office parks blend into the landscape. They might have made their workers exceedingly rich, they might have changed the world — whether for better or worse is currently up for debate — but there is nothing about them that says: We are a big deal.
Skyscrapers tell a different story. They are the pyramids of our civilization, permanent monuments of our existence. They show who is in charge and what they think about themselves. Salesforce Tower is breaking a San Francisco height record that stood for nearly half a century.
“A ceiling has been breached,” said Alison Isenberg, a professor of urban history at Princeton University. “Now the discussion becomes is this just a building that is taller than the ones we already had, or does it raise new questions about the nature of the city?”
Salesforce Tower is visible from just about everywhere. Go to the farthest edges of the city and its 61 stories of tapered steel and glass stick up like a forceful thumb. On the drive north from the airport, the tower is the one building discernible over Potrero Hill. From the distant North Bay, it is the first thing you notice as San Francisco sheds its customary morning fog. The building catches the morning sun, dazzling the way none of its lesser neighbors do.
When announcing this fall that the company, Sidewalk Labs, would create a city of tomorrow, Prime Minister Justin Trudeau of Canada promised the project would create “technologies that will help us build smarter, greener, more inclusive” communities. Even the nasty weather off Lake Ontario would be tamed, the developer pledged.
But tempering the excitement of some Toronto residents are concerns that are perhaps inevitable when it comes to a company renowned for collecting and analyzing data.
Quayside, as the project is known, will be laden with sensors and cameras tracking everyone who lives, works or merely passes through the area. In what Sidewalk calls a marriage of technology and urbanism, the resulting mass of data will be used to further shape and refine the new city. Lifting a term from its online sibling, the company calls the Toronto project “a platform.”
But extending the surveillance powers of one of the world’s largest technology companies from the virtual world to the real one raises privacy concerns for many residents. Others caution that, when it comes to cities, data-driven decision-making can be misguided and undemocratic.
The United States has tripled the number of airstrikes this year against Al Qaeda’s branch in Yemen, one of the deadliest and most sophisticated terrorist organizations in the world. American allies have pushed the militants from their lucrative coastal strongholds. And the Pentagon recently boasted of killing key Qaeda leaders and disrupting the group’s operations.
Yet the top United States counterterrorism official and other American intelligence analysts concede the campaign has barely dented the terrorist group’s ability to strike United States interests.
“It doesn’t feel yet that we’re ahead of the problem in Yemen,” Nicholas J. Rasmussen, who stepped down this month after three years as the director of the National Counterterrorism Center, said in an interview. “It continues to be one of the most frustrating theaters in our counterterrorism work right now.”
“Sales in our mall stores are down this year from 30 to 60 percent,” said Bill Streur, Book World’s owner. “The internet is killing retail. Bookstores are just the first to go.”
As e-commerce becomes more deeply embedded in the fabric of daily life, including for the first time in rural areas, bookstores are undergoing a final shakeout. Family Christian Stores, which had 240 stores that sold books and other religious merchandise, closed this year, not long after Hastings Entertainment, a retailer of books, music and video games with 123 stores, declared bankruptcy and then shut down.
“Books aren’t going away, but bookstores are,” said Matthew Duket, a Book World sales associate waiting for customers in the West Bend, Wis., store.
Here is one way to measure the upheaval in bookselling: Replacing Book World as the fourth-largest chain, Publishers Weekly says, will be a company that had no physical presence a few years ago. That would be Amazon, which having conquered the virtual world has opened or announced 15 bookshops, including at the Time Warner Center in Manhattan.
As the Arctic Circle’s ice melts away, people of the High North feel their top-of-the-world economy heating up. Gold mines, roads and a full spectrum of energy projects dot the horizon—with Russia leading the way and other Arctic countries scrambling to catch up. There’s much to do, and not enough capital to go around. That means countries with deep pockets, deep ambition and no Arctic coastline—namely China—can get a seat at the table, too.
Investing at the top of the world isn’t easy. The remoteness of the region, and a lack of basic infrastructure means the Arctic is simply not wired into the rest of the global trade system. Arctic financial data are scarce. But the global asset manager Guggenheim Partners has shed some light on what’s likely to come next in the Arctic. They’ve spent the last seven years studying the region and the last three amassing a database of 900 planned, in-process, finished, cancelled and desired Arctic infrastructure projects.
Some of the projects reflect grand ambitions to upgrade national, industrial and social systems. Others are smaller scale and meant to connect remote places into larger patterns of trade. Taken together, they would require as much as $1 trillion in investments.
China’s largest shipping company has poured billions of dollars into buying seaports in Greece and other maritime nations around the world. But the location of its latest big foreign investment has given a curious twist to the expanding ambitions of the China Ocean Shipping Company: The nearest ocean is more than 1,600 miles away.
The state-owned Chinese shipping giant, known as COSCO, became the 49 percent owner this past summer of a patch of frost-covered asphalt bisected by railway tracks and lined with warehouses in landlocked Kazakhstan. The barren wilderness close to the border with China stands near the Eurasian Pole of Inaccessibility, meaning that nowhere on the landmass of Europe and Asia is more distant from the sea.
But it is here, where huge, Chinese-made cranes load containers onto trains instead of ships, that China and Kazakhstan are embracing what they see as the new frontier of global commerce.
Forbidding as it is, the place is a central link in what President Xi Jinping of China trumpets as the “project of the century” — a $1 trillion infrastructure program known as “One Belt, One Road,” which aims to revive the ancient Silk Road and build up other trading routes between Asia and Europe to pump Chinese products to foreign markets.
The gamble is not only reshuffling global transport routes, but also shaking up Kazakh and global politics as China inserts itself deeper into a region that Russia considers squarely within its area of influence. Not least, it is testing the economic logic of China’s ability to carry out its grandest of ambitions.
USA ECONOMY DATA, CITIES AND STATES
In U.S. cities with the tightest labor markets, workers are finding something that’s long been missing from the broader economic expansion: faster-growing paychecks.
Workers in metro areas with the lowest unemployment are experiencing among the strongest wage growth in the country. The labor market in places like Minneapolis, Denver and Fort Myers, Fla., where unemployment rates stand near or even below 3%, has now tightened to a point where businesses are raising pay to attract employees, often from competitors.
It’s an outcome entirely expected in economic theory, but one that’s been largely absent until now in the upturn that began more than eight years ago.
Protection for undocumented immigrants, tougher gun laws, recreational marijuana: California will welcome 2018 by turning into the US equivalent of a Scandinavian country. Hundreds of new laws of markedly progressive inspiration will go into effect in the Golden State come the new year, affecting everything from crime, to transportation, to wages.
Authorities have been going after so-called “pill mills” for years, but the new approach brings additional federal resources to bear against the escalating epidemic. Where prosecutors would spend months or longer building a case by relying on erratic informants and only limited data, the number-crunching by analysts in Washington provides information they say lets them quickly zero in on a region’s top opioid prescribers.
“This data shines a light we’ve never had before,” Cessar said. “We don’t need to have confidential informants on the street to start a case. Now, we have someone behind a computer screen who is helping us. That has to put (doctors) on notice that we have new tools.”
GLOBAL ECONOMY DATA
China’s official factory gauge maintained momentum, signaling campaigns to reduce excess industrial capacity and clean up pollution haven’t curbed output. The manufacturing purchasing managers index edged down to 51.6 in December, in line with the forecast in Bloomberg’s survey of economists, from 51.8 the prior month.
Steadiness in manufacturing comes even amid intensifying efforts to curb smog and a push to reduce excessive borrowing. Top leaders have been signaling less emphasis on pursuing expansion at all costs and this month, at their main economic planning conclave for 2018, they pledged to focus on “critical battles” against financial risk, pollution and poverty.
While imports are still increasing, steel prices are also on the rise globally. And demand for U.S. steel is starting to rebound, thanks to rising oil prices and a strengthening manufacturing sector, steel executives say. Still, others see expansion as a risky bet.
Some steel companies say they can capture more customers with new plants that can make more steel at less cost than older plants, and can deliver it faster to customers. They’re also counting on additional U.S. tariffs to drive out cheap, foreign-made steel, creating more opportunities for domestic producers. Stiff tariffs imposed over the past 18 months have significantly slowed steel imports from China, according to Commerce Department reports.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
At the end of a very difficult year for Uber, the company this week scored a victory by securing a $9bn investment from a SoftBank-led consortium that will trigger sweeping governance changes at the troubled company. For Uber’s chief executive Dara Khosrowshahi, the deal and governance overhaul will provide a much needed fresh start and puts Uber on a path towards an initial public offering.
While the deal has many benefits for Uber, including a cash injection of $1.25bn in a new share purchase, its complex structure and the deeply discounted valuation of its secondary shares underscore the extent of the group’s recent difficulties.
According to Tobias Tretter, who oversees the fund as managing director of Zurich-based Commodity Capital AG, the mining industry is emerging from a period of cutbacks that while strengthening balance sheets has curtailed growth prospects.
“There will be a lot of mergers in the next 12 to 24 months,” Tretter said. “The market is pretty desperate for new exploration. That will change the strategies of the majors. They are struggling because they have to buy in, do joint ventures and have a look at companies at a way earlier stage.”
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
Since markets left bustling exchange floors for computer data centres a decade ago, the majority of deals in equities and futures have come to be executed by machines — automated and lightning-fast. The high-frequency trading land rush unleashed frenzied investment in wireless capacity, efficient computer switches and coding talent. It also sparked complaints that the speediest preyed on investors and caused flash crashes. The rise of HFT means that ordinary investors buying or selling stocks, bonds, exchange traded funds or futures are likely to be transacting with an algorithm on the other side.
But the bonanza has now ended. Trading firms are struggling to wring profits from the incremental millisecond. Subdued volumes and reduced volatility have shrunken the size of the pie. Exchanges have ratcheted up market data and technology costs for customers. In 2017, aggregate revenues for HFT companies from trading US stocks was set to fall below $1bn for the first time since at least the financial crisis, down from $7.2bn in 2009, according to estimates from Tabb Group, a consultancy.
“The combination of low volatility and increasing costs has been tough for firms,” says Rob Creamer, chief executive of Geneva Trading, a Chicago-based firm. “People see it as a war of attrition.”
The straitened times have led to consolidation, with some firms selling out to stronger rivals. The wave could result in only a few large players that are able to invest in the best technology and a bottom tier of niche specialists, making mid-sized firms uncompetitive, industry executives say. The effects on liquidity, the ability to buy and sell without moving the price, are unknown.
The plaintiffs, led by the State Teachers Retirement System of Ohio and the Iowa Public Employees’ Retirement System, had claimed they were tricked when Mr Ackman bought their shares in the knowledge that Valeant was planning a bid.
“We continue to believe the case had absolutely no merit,” said Mr Ackman, in the statement. “We decided, however, that it was in the best interest of our investors to settle the case now instead of continuing to spend substantial time and resources pursuing the litigation.”
ENERGY CRUDE OIL, OIL SANDS, SHALE
This western Siberian oil field is called “Red Lenin,” but its reserves have a distinctly American ring: shale. The future of the Russian oil industry could lie in the vast Bazhenov shale formation, the largest in the world. Russia has become the biggest global producer of crude oil with almost no contribution from shale, a sometimes technically difficult and expensive resource to pump.
Only Americans have really gotten shale right so far, but the Kremlin is taking the first steps to unlock Russia’s potential. Companies like PAO Gazprom are leading Moscow’s drive to replicate the U.S. shale boom, experimenting with a uniquely Russian state-controlled approach to fracking that contrasts with the free-for-all among independent producers in Texas and North Dakota.
Futures are up more than 12 percent in 2017, having entered a bull market in September. In 2018, investors will watch whether rising prices trigger a new flood of U.S. output.
“The current highs are unsustainable in the short-to-medium term, with prices likely to head back below $60 once we get past January, but for now the season of goodwill appears to be in full swing,” said analysts led by Michael dei-Michei at consultants JBC Energy GmbH in Vienna.
ENERGY RENEWABLES, NUCLEAR
Here on the West Coast and in other pockets around the country, many people are looking to get off the water grid.
Start-ups like Live Water in Oregon and Tourmaline Spring in Maine have emerged in the last few years to deliver untreated water on demand. An Arizona company, Zero Mass Water, which installs systems allowing people to collect water directly from the atmosphere around their homes, began taking orders in November from across the United States. It has raised $24 million in venture capital.
And Liquid Eden, a water store that opened in San Diego three years ago, offers a variety of options, including fluoride-free, chlorine-free and a “mineral electrolyte alkaline” drinking water that goes for $2.50 a gallon.
What adherents share is a wariness of tap water, particularly the fluoride added to it and the lead pipes that some of it passes through. They contend that the wrong kind of filtration removes beneficial minerals. Even traditional bottled spring water is treated with ultraviolet light or ozone gas and passed through filters to remove algae. That, they say, kills healthful bacteria — “probiotics” in raw-water parlance.
The quest for pure water is hardly new; people have been drinking from natural springs and collecting rainwater from time immemorial. The crusade against adding fluoride to public water began in the 1950s among Americans who saw danger in the protective measures that had been adopted over decades to protect the populace from disease and contamination.
COMMODITIES AGRICULTURE & SOFTS
Of the nine components tracked by the Bloomberg Agriculture Subindex, only cotton and wheat contracts posted gains last year. The fiber lead the way with an 11 percent advance as demand grew for U.S. exports. Prices capped 2017 with 10 straight weekly gains, the best streak since 1998.
While oil and copper are jumping, the Bloomberg Grains Subindex — tracking returns for corn, wheat and soybean futures — is set for a fifth straight yearly drop in 2017. That’s the longest losing streak in data that stretches back 25 years. Prices for the staples have been plagued by swelling global stockpiles. Export competition for U.S. supply has also intensified as production climbs in South America and the Black Sea region.
BREXIT, SCOXIT, LONDON, UK ECONOMY
Witnesses said cars seemed to explode every couple of seconds when the fire was at its peak. They said the fire appeared to start in the engine of an older Land Rover and quickly spread.
Police said initial reports indicate that an “accidental fire within a vehicle caused other cars to ignite.” The blaze started Sunday afternoon. Witness Sue Wright, who helped move some of the horses, said flames were shooting out of the Land Rover engine.
GEOPOLITICS, CRIME, TERRORISM
“What we’re seeing is the perfect breeding ground for a massive mental health crisis for children,” said Lalou Rostrup Holdt, a mental health adviser for Save the Children.
“You have trauma on a huge scale, children seeing brutal killings and being forced to leave home with nothing,” Ms. Holdt said. “You have hunger. You also have significant developmental delays due to malnutrition and understimulation that predate the recent trauma. It’s absolutely devastating for an entire community.”
Pakistan’s defense minister responded angrily Monday to an early-morning tweet by President Trump that accused America’s once-close ally of “lies & deceit,” countering that the United States had given Pakistan “invective & mistrust” in return.
In his first tweet of the new year, Trump had said the United States had “foolishly” given Pakistan $33 billion in aid over the last 15 years, “and they have given us nothing but lies & deceit, thinking of our leaders as fools.”
The administration’s internal debate over whether to deny Pakistan the money is a test of whether President Trump will deliver on his threat to punish Islamabad for failing to cooperate on counterterrorism operations. Relations between the United States and Pakistan, long vital for both, have chilled steadily since the president declared over the summer that Pakistan “gives safe haven to agents of chaos, violence and terror.”
China’s increasing military projection around East Asia is undermining regional stability, Taiwan’s president, Tsai Ing-wen, said at a year-end news conference on Friday just days after Beijing reiterated its goal of annexing the self-ruled democracy.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
While Russia has traditionally relied on bots to push its agenda online, China’s Communist party has raised a volunteer troll army of real people, most of them young men, to go online and attack its enemies.
For years, China’s nationalist trolls were known as “50 cents”, or wumao, for the Rmb0.50 they were said to earn for each patriotic post. But more recently a new breed of volunteer warrior has emerged, nicknamed the “bring-your-own-rations wumao” for their willingness to work without pay. Some like to call themselves “little pinks”, a name derived from the colour of a popular online forum used by nationalists.
With nationalism on the rise, fuelled by China’s economic ascent and perceptions of western decline, the propaganda drive has gone global. “Tell the China story well and build China’s soft power,” President Xi Jinping urged delegates at the party’s 19th congress in October.
It has been a secret, long known to intelligence agencies but rarely to consumers, that security software can be a powerful spy tool.
Security software runs closest to the bare metal of a computer, with privileged access to nearly every program, application, web browser, email and file. There’s good reason for this: Security products are intended to evaluate everything that touches your machine in search of anything malicious, or even vaguely suspicious.
By downloading security software, consumers also run the risk that an untrustworthy antivirus maker — or hacker or spy with a foothold in its systems — could abuse that deep access to track customers’ every digital movement.
“In the battle against malicious code, antivirus products are a staple,” said Patrick Wardle, chief research officer at Digita Security, a security company. “Ironically, though, these products share many characteristics with the advanced cyberespionage collection implants they seek to detect.”
RESISTANCE, PROTEST, COUNTER-EFFORTS
Fengqiao, a township of some 80,000 people in Zhejiang, is being hailed nationwide as a showcase for the platform. Resistance so far has been stiff, principally from citizens who resent being forced to use a surveillance tool, or fear official retribution for voicing their concerns. For some, it smacks of the Mao era, when the party gathered detailed files on citizens and incentivized them to inform on each other.
Former White House intern Jack Breuer held up a ‘white power’ sign during a photo-op with President Trump and fellow interns in the East Room in November. He worked for Stephen Miller.
President Donald Trump said Friday that the U.S. Postal Service should charge Amazon.com Inc. and other companies more to deliver their packages.
“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?,” he tweeted Friday morning. “Should be charging MUCH MORE!”
Mr. Trump in his tweet ties Amazon’s rise to the quasigovernmental agency’s deteriorating financial situation. The USPS posted a $2.7 billion loss in its fiscal year that ended Sept. 30. Earlier this month the federal agency that oversees the USPS gave the service permission to speed up its pricing increases over the next five years.
If you ask some close to President Trump what worries them most about 2018, it’s not Robert Mueller’s probe. It’s that establishment guardrails of 2017 come down — and Trump’s actual instincts take over. Next year will bring “full Trump,” said one person who recently talked to the president.
While President Trump spent the past week at his Mar-a-Lago Club — golfing, tweeting, relaxing with family and talking to old friends — White House officials have been in quiet talks about revamping the West Wing operation and filling open posts ahead of what could be a politically difficult 2018.
South Africa’s highest court has ordered parliament to consider the impeachment of Jacob Zuma, adding to pressure on the president following Cyril Ramaphosa’s election as leader of the ruling African National Congress.
The court ruling comes just weeks after Mr Ramaphosa, the deputy president, narrowly won the ANC leadership over Nkosazana Dlamini-Zuma, Mr Zuma’s former wife and his preferred candidate. The election to the party leadership has fuelled speculation that Mr Zuma could be removed to allow Mr Ramaphosa to consolidate power.
SCANDALS, LAWSUITS, FINES, REGULATORY
PricewaterhouseCoopers LLP was negligent in connection with one of the biggest bank failures of the financial crisis, a federal judge has ruled, opening up the Big Four accounting firm to the potential of hundreds of millions of dollars in damages.
CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
A mobile browser rarely used in the West, UC Browser, has outflanked Google’s Chrome in some of Asia’s fastest-growing markets, giving owner Alibaba Group an advantage in the race for the next generation of internet users.
MEDIA, CABLE, SPORTS, ENTERTAINMENT
“Star Wars: The Last Jedi” became North America’s highest-grossing movie of 2017 over the New Year’s weekend, as it topped $1 billion in global revenue after just three weeks in theaters.
AT&T Inc said on Friday that all 50 U.S. states had decided to participate in the nationwide broadband network it is building for first responders as part of a $6.5 billion government contract.
The death of Playboy founder Hugh Hefner is ushering in a new era for the adult-entertainment enterprise, setting in motion a process that will move ownership of the iconic brand out of his family’s hands and could soon spell the end of its once pace-setting U.S. magazine.
AUTOS, ELECTRIC, SELF-DRIVING
The new year will present Tesla’s greatest operational challenge. Rather than issuing promises of an electric semi truck, a new sports car and a pickup truck, as he did in recent months, Mr. Musk needs to figure out how to produce hundreds of thousands of mass-market sedans at a profit.
If he can’t, Tesla could find itself trying to raise capital in a less-friendly market, meaning his highly loyal shareholders could be hurt by a wave of stock issuance. So far, the investors have forgiven Tesla for its production problems. Shares were up 47% in 2017, and Tesla’s market value of $53 billion rivals that of Ford Motor Co. and General Motors Co. But the gaudy stock performance belies a more-troubled picture.
In its return to the market this month, Apollo unveiled a model it says is capable of hitting speeds of up to 300km per hour or 186mph, making it one of the world’s fastest cars designed for domestic use.
The company will sell just 10 of the models, each at a cost of €2.3m, before expanding operations into new areas such as electric vehicles, according to Mr Choi.
“This is a way of proving ourselves to the market,” Mr Choi said of the limited release of the latest model, called Apollo IE. “We don’t want to talk too much at this point. We want to show people what we are capable of first.”
AIRLINES, SHIPPERS, RAIL, TRANSPORTS
The chief executive of the world’s biggest catering company, which is also one of Britain’s biggest businesses, died on Sunday in a plane crash near Sydney, the Australian police said.
Richard Cousins, the chief executive of Compass Group, was among the six people killed when a seaplane went down off Jerusalem Bay, just north of Sydney, according to a statement from the New South Wales police. Police representatives confirmed that those who died were Mr. Cousins, his two sons, his fiancée, her daughter and the pilot of the plane. The cause of the crash was being investigated.
Mr. Cousins, 58, led Compass for more than 11 years. The company employs more than 550,000 people worldwide, providing food for a wide range of organizations including Costco, Qualcomm, the University of Houston and the stadium that houses the Utah Jazz basketball team.
In a year when more people flew to more places than ever, 2017 was the safest on record for airline passengers. The Dutch-based aviation consultancy, To70, has released its Civil Aviation Safety Review for 2017. It reports only two fatal accidents, both involving small turbo-prop aircraft, with a total of 13 lives lost. No jets crashed in passenger service anywhere in the world.
The war devastated Korea. Historians said that between three million and four million people were killed, although firm figures have never been produced, particularly by the North Korean government. As many as 70 percent of the dead may have been civilians.
Destruction was particularly acute in the North, which was subjected to years of American bombing, including with napalm. Roughly 25 percent of its prewar population was killed, Professor Cumings said, and many of the survivors lived underground by the war’s end. “North Korea was flattened,” he said. “The North Koreans see the American bombing as a Holocaust, and every child is taught about it.”
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