Macro Links Jan 30th – Secret Memo
You are viewing the Macro Links delayed archive. The real time Macro Links, posted each trading day, are available via the Mercenary Research Suite. To see how it works, click here.
MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- SECRET MEMO
- WYNN ALLEGATIONS FALLOUT
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- BLOCKCHAIN, FINTECH, DIGITAL PAYMENTS
- FOREX, CARRY TRADES, EXCHANGE RATES
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- HEALTHCARE, BUDGET, INFRASTRUCTURE
- TAXATION, WEALTH HAVENS, INEQUALITY
- RUSSIA PROBE
- NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- CENTRAL BANKS & MONETARY POLICY
- USA ECONOMY DATA, CITIES AND STATES
- GLOBAL ECONOMY, INTERNATIONAL
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY COMPANIES, NOCs, INDUSTRY
- COMMODITIES AGRICULTURE & SOFTS
- POLLUTION, CLIMATE & ENVIRONMENT
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- TRUMP WORLD
- ELECTORAL POLITICS
- SCANDALS, LAWSUITS, FINES, REGULATORY
- BANKS, BROKERS, INSURANCE, EXCHANGES
- RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
- AUTOS, ELECTRIC, SELF-DRIVING
- AIRLINES, SHIPPERS, RAIL, TRANSPORTS
- AEROSPACE, MILITARY & DEFENSE
- LUXURY, HIGH END, ASPIRATIONAL
- ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
- SCIENCE, NATURE, PSYCHOLOGY
- HEALTH, PRODUCTIVITY AND WELLNESS
Republicans on the House Intelligence Committee, disregarding Justice Department warnings that their actions would be “extraordinarily reckless,” voted Monday evening to release a contentious secret memorandum said to accuse the department and the F.B.I. of misusing their authority to obtain a secret surveillance order on a former Trump campaign associate.
The vote followed negotiations by both the FBI and the committee to give greater access for the bureau, to a memo that the FBI has not seen and which the Justice Department warned might harm counterintelligence investigations should it be released without vetting.
The renewal shows that the Justice Department under President Trump saw reason to believe that the associate, Carter Page, was acting as a Russian agent. But the reference to Mr. Rosenstein’s actions in the memo — a much-disputed document that paints the investigation into Russian election meddling as tainted from the start — indicates that Republicans may be moving to seize on his role as they seek to undermine the inquiry.
FBI Deputy Director Andrew McCabe, who has received blistering criticism from President Donald Trump, has stepped down and will be on leave until he retires sometime in the spring, a person familiar with the matter said Monday. Trump and some Republican lawmakers have increasingly argued there’s evidence that past officials at the Federal Bureau of Investigation, including McCabe, were biased toward Democrat Hillary Clinton and against Trump in the run-up to the presidential election.
Though Mr. McCabe’s retirement had been widely expected soon, his departure was nevertheless sudden. As recently as last week, Mr. McCabe had told people he hoped to stay until he was eligible to retire in mid-March. Instead, Mr. McCabe made his intentions known to colleagues on Monday, an American official said, and will immediately go on leave.
President Trump reportedly told then-acting FBI Director Andrew McCabe that he should ask his wife, who had lost a bid for political office in Virginia, how it felt to be a loser, NBC News reported Monday.
WYNN ALLEGATIONS FALLOUT
Republicans worked to distance themselves from Steve Wynn in the wake of a Wall Street Journal report of former employees describing a decadeslong pattern of sexual misconduct by the casino mogul and GOP financial bigwig.
Wynn Resorts has lost $3 billion in market value since its founder and chief executive was accused by former employees of behavior that amounts to a decadeslong pattern of sexual misconduct. The situation is unique because of Steve Wynn’s role and his outsize importance to the company.
The Chinese government knows exactly what Wynn has to lose in Macau, and it’s going to the jugular. If you think Macau’s #MeToo moment is happening because Chinese President Xi Jinping is a feminist, then I have an asset to sell you on a Chinese online investment platform that will definitely yield 50%, I promise.
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
Eager to trade Bitcoin for free on Robinhood? Take a number and get in line…a very long line. More than one million people have signed up for “early access” to the brokerage app’s cryptocurrency section in the four days since it said it would offer no-cost trading in digital coins. It could be a long time before they’re able to trade.
Authorities around the world worry that cryptocurrencies could become tax havens. Too late. It’s already happening. Take David Drake, whose New York-based family office has more than $10 million in cryptocurrency and blockchain investments. He’s using digital money like an offshore bank account — a place to legally park overseas business profits and reduce U.S. taxes.
Polychain Capital, the crypto hedge fund backed by venture firms Sequoia Capital and Andreessen Horowitz, has decided not to go public in Canada after holdings talks with bankers about an initial public offering.
China’s first Bitcoin exchange said it has been acquired by an unnamed Hong Kong-based blockchain investment fund after a regulatory crackdown by Chinese officials. BTCC, which was known as BTC China when it was founded in 2011 and run by American Bobby Lee, was purchased for undisclosed terms.
The number of cryptocurrency exchanges participating in self-regulation has nearly doubled in South Korea. The crypto self-regulation efforts are led by the Korean Blockchain Association which has recently launched with 66 members. The association also plans to develop standard price indices for the main cryptocurrencies.
German supervisors ordered a Berlin-based firm to immediately stop offering the exchange of clients’ Bitcoins into euros, saying it had no permission to offer such brokerage services. Crypto.exchange GmbH was advertising online that it could sell bitcoins on exchanges and transfer the proceeds within 30 minutes, according to Germany’s Federal Financial Supervisory Authority.
Another case of “cryptojacking” was detected on YouTube and resolved by Google over the course of this week, Ars Technica reported Friday, Jan. 26. According to the report, anonymous hackers have managed to run ads on YouTube that consumed the visitors’ CPU power and electricity in order to mine cryptocurrencies for the attackers.
Deutsche Bank’s Chief Investment Office head Markus Mueller has suggested that “governance” that will legitimize crypto investments could exist in “five to ten years.” Originally speaking in an interview with Bloomberg on Monday, Jan. 29, Mueller cautioned against current investment in cryptocurrency as only for those “who invest speculatively” while appealing for businesses in the sphere to work together with regulators.
On Jan. 25, the Office of Securities Commissioner – a division of the Kansas Insurance Department – issued a statement to the public that investment in cryptocurrencies, including initial coin offerings (ICOs) and futures tied to digital currencies, are not insured by the government. As such, the commissioner warns investors to be cautious regarding investment pitfalls.
To prevent Chinese investors from buying digital currencies, the Chinese government and the People’s Bank of China (PBoC), have asked local banks to disclose any suspicious transactions linked to Hong Kong-based markets. However, even this action will not be able to prevent Chinese investors from accessing Hong Kong-based markets, due to apps such as Alipay and WeChat Pay.
Former Russian Finance Minister Alexei Kudrin favors “self-regulation” in the cryptocurrency sector. He believes it will be more effective, at this early stage, than any imposed regulations. Others have expressed similar views about the currently proposed regime.
Early Friday morning in Tokyo, hackers broke into a cryptocurrency exchange called Coincheck Inc. and made off with nearly $500 million in digital tokens. It’s one of the biggest heists in history, with the exchange losing more than 500 million of the somewhat obscure NEM coins. The hack has raised questions about security of cryptocurrencies around the world.
People who have worked for Mr. Wada, now 27 years old, said the hacking reflected Coincheck’s rush to expand its business without always adopting the latest security. Mr. Wada and a Coincheck spokeswoman didn’t respond to repeated messages seeking comment. Among other things, Coincheck kept the customers’ NEM in “hot wallets,” meaning the accounts were connected to the internet and more easily accessed by hackers.
Two former employees of distributed ledger startup Ripple are raising money for a cryptocurrency hedge fund, public records show. Twin filings to the U.S. Securities and Exchange Commission (SEC) dated Jan. 25 and 26 show that co-founders Tim Lewkow and Eli Lang are seeking funds to back Fractal Investments, which invests in crypto-assets, per its official website.
After the successful ‘Satoshi’s Vision Conference’ held in San Francisco in 2016, and last year’s ‘The Future of Bitcoin’ event in Arnhem, the Bitcoin Unlimited team is hosting another conference this year in Tokyo, Japan. Satoshi’s Vision Conference Tokyo will be held on March 23-25 and aims to bring cryptocurrency luminaries, the brightest developers, business executives, and proponents of this emerging technology together for three days of discussions and networking.
“We aren’t at the stage of considering issuing a digital currency because there is no demand,” Yuko Kawai, the head of the BOJ division, said in an interview last week. “To begin with, do we really need a digital currency in the nation where cashless living isn’t making much progress?”
Major Japanese consumer electronics retailer Yamada Denki has partnered with cryptocurrency exchange bitFlyer to add a bitcoin payments service in two of its stores. Launched this weekend, according to a press release, one of the stores to receive the new service is based in Shinjuku, an area of Tokyo that attracts large numbers of foreign visitors.
Answering demands from the private and public sectors, US government scientists have created a guide to the technology behind bitcoin and its applications for a variety of uses. Among various issues, the 59-page report explains that, “technically, Bitcoin is a fork and Bitcoin Cash is the original blockchain.”
Isabelle Mateos Y Lago, chief multi-asset strategist at BlackRock, an investment management corporation with $5.7 trln in assets under management, has said that the company is keeping cryptocurrency under “close review” as an “interesting development.”
BLOCKCHAIN, FINTECH DIGITAL PAYMENTS
There are plans in the pipeworks to try and bring Bitcoin back to its original purpose, with the Lightning Network being tested in certain instances. The belief being that Lightening network can cut the exorbitant transaction fees, and slice the waiting times to a manageable level.
ING said on Monday it has agreed to buy a majority stake in payment group Payvision as the Dutch lender looks to boost its foothold in the payment processing market. The lender’s business clients will be able to accept payments through “any channel” including online stores and through retail terminals by using the Payvision platform. Payvision, founded in 2002, allows payments through 150 currencies, 80 payment methods and has offices in the US, Europe and Asia.
FOREX, CARRY TRADES, EXCHANGE RATES
The explanation for the weak dollar is both ludicrously simple and deeply puzzling. The simple explanation is that the economies in the rest of the world are finally growing again, so their currencies are strengthening. The U.S. economy isn’t improving as fast—because it was stronger to start with—so the dollar’s falling. The puzzle is that other markets, particularly bonds, aren’t telling the same story.
Global investors are shifting more of their money overseas, betting that even as the U.S. stock market reaches new highs a resurgent global economy creates greater opportunities elsewhere. That rising tide of capital chasing foreign stocks may even be helping drive the dollar to more-than-three-year lows, some analysts say.
A further rapid fall in the dollar may yet cause headaches for central bankers who have created the conditions in which markets are partying. In the U.S., financial conditions have been loosening even as the Federal Reserve lifts rates. At some point, that might cause a reappraisal of policy, potentially upsetting markets that have come to rely on the idea that U.S. rates will peak much lower than in the past. Meanwhile, a much weaker dollar could spur further risk-taking in markets where worries about valuations are already rife.
Once the market has fully adjusted to stronger eurozone growth prospects, along with a more restrictive ECB, the fall in the dollar will lose one of its main driving forces. This could happen in the fairly near future.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
The European Union gave President Donald Trump a fresh warning about any U.S. curbs on imports from Europe by pledging rapid retaliation, highlighting the persistent risk of a trans-Atlantic trade war.
The European Commission has warned that it will react “swiftly and appropriately” to any threat of a trade war by the US, after Donald Trump appeared to threaten a trade war against the continent. Speaking after slapping new ‘America First’ tariffs on some imported goods, the US president said he had “a lot of problems” with the European Union’s trade policy and hinted he might take similar action against the bloc.
President Donald Trump’s message at Davos aimed to soothe anxieties of business and political elites, but it left the world unsettled: Whose rules does the U.S. intend to abide by? And why does it punish so many countries when only one, China, is systematically breaking the rules?
President Xi Jinping is turning to a trusted political ally who ran his potent anticorruption campaign to help manage the critical but fraught relationship with the U.S. as trade tensions escalate, according to officials familiar with the leadership’s thinking.
Discussions to revamp the North American Free Trade Agreement moved from stalemate to actual negotiation during the sixth round of talks that concluded on Monday, but a deal was still far from guaranteed as Mexico, Canada and the United States continue to squabble over how to reshape the 24-year-old pact.
Talks to renegotiate the North American Free Trade Agreement are moving too slowly, Donald Trump’s trade tsar complained on Monday as he rejected a Canadian proposal to rethink the rules governing the auto trade on the continent. Robert Lighthizer, the US trade representative, also clashed with Chrystia Freeland, his Canadian counterpart, over trade data, pointing to Canadian figures showing the US had a trade deficit in goods with its northern neighbour rivalling the US imbalance with Mexico.
Lawmakers are moving to stanch the flow of U.S. technology to foreign investors, creating potential problems for a number of American companies that have bet big on partnering with China. The Senate and House, with the backing of the White House, are working on bipartisan legislation to broaden the authority of the Committee on Foreign Investment in the U.S., a multi-agency body that has oversight of deals that could lead to the transfer of sensitive technology to rival countries.
Donald Trump told a Davos audience last week that a signature achievement of his first year was a slash-and-burn offensive against Obama-era red tape. But he has eliminated fewer regulations than his administration’s rhetoric suggests.
HEALTHCARE, BUDGET, INFRASTRUCTURE, FISCAL POLICY
Trump national security officials are considering an unprecedented federal takeover of a portion of the nation’s mobile network to guard against China, according to sensitive documents obtained by Axios.
Federal Communications Commission Chairman Ajit Pai said Monday he opposes a government takeover of the next-generation 5G wireless system, casting further doubt on an idea that has been floated by some Trump administration officials.
TAXATION, WEALTH HAVENS, INEQUALITY
U.S. defense executives urged lawmakers and federal officials to let them invest the windfall from new tax rules in weapons research rather than on lower prices for the Pentagon.
The law creates “Opportunity Zones,” which will use tax incentives to draw long-term investment to parts of America that continue to struggle with high poverty and sluggish job and business growth. The provision is the first new substantial federal attempt to aid those communities in more than a decade. And it comes as a disproportionate share of economic growth has been concentrated in so-called superstar metropolitan areas like Los Angeles and New York.
Two percent of U.S. adults said they had gotten a raise, bonus or other additional benefits due to the Republican tax law enacted a month ago by President Donald Trump, according to a Reuters/Ipsos poll released on Monday.
The Congressional Leadership Fund, a group with close ties to House GOP leadership, recently found that voters in battleground districts are more likely to think Republicans raised their taxes than cut them. And a recent Pew Research Center survey found that only around a third of adults thought the tax bill would help them and the country as a whole.
GE’s tax department, employing hundreds of accountants and lawyers, has long been acknowledged as one of the most effective in US business, for years keeping the group’s tax charges well below the main corporate rate of 35 per cent. Other companies have sought to emulate its success. But the Tax Cuts and Jobs Act, signed into law by President Donald Trump on December 22, is expected to wipe out much of the advantage that GE has enjoyed.
President Donald Trump’s frustrations with the Russia investigation boiled over on Air Force One last week when he learned that a top Justice Department official had warned against releasing a memo that could undercut the probe, according to four people with knowledge of the matter.
Congress late last year received “extraordinarily important new documents” in its investigation of President Donald Trump and his campaign’s possible collusion with the 2016 Russian election hacking, opening up significant new lines of inquiry in the Senate Intelligence Committee’s probe of the president, Sen. Mark Warner (D-Va.) says in an exclusive new interview.
Ken Starr, who prosecuted President Bill Clinton in the Monica Lewinsky case, said on ABC’s “This Week,” when asked about reports Trump sought to have Mueller fired, despite denials: “You’re now talking about something called lying to the American people, and I think that is something that Bob Mueller should look at.”
Natalia Veselnitskaya, who organized the notorious Trump Tower meeting, has been named in an explosive Swiss court case about bribery, corruption, and double-agents.
The U.S. intelligence community has concluded that Russia launched an unprecedented series of cyber attacks and fake news floods to sow division and sway voters ahead of Trump’s surprise victory.
The law’s wording makes it unclear whether or not the list will be made public, and who might be included. What has become clear, though, is that Russia’s businessmen—some of the world’s wealthiest people—see this government-created list, though informal, as endangering their fortunes, reputations, and connections in the West and potentially exposing them to future additional sanctions.
NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
North Korea has cancelled a joint cultural performance with South Korea, accusing southern media of encouraging “insulting” public sentiment towards the North, South Korea’s unification ministry said. Seoul said North Korea’s decision to cancel the joint performance was “very regrettable” and stressed Pyongyang should uphold all agreements made between North and South Korea.
North Korea’s armed forces have scaled back their annual winter military exercises this year, U.S. officials said, a development they believe reflects pressure from international sanctions on the North’s economy and its military preparedness.
The US is stepping up pressure on African states to cut longstanding military and diplomatic ties with North Korea as part of its push to squeeze the funding of Kim Jong Un’s nuclear missile programme.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
The price of government debt is falling in leading markets including the US and Germany as the recent sell-off in sovereign paper gathers steam. US Treasuries hit their cheapest level in almost four years on Monday morning, with the yield on 10-year debt hitting 2.71 per cent. Yields rise when prices fall.
Goldman Sachs warns that “extreme” sentiment is propelling global shares to their best start to a year ever, while U.S. government bonds head for their worst on record. Investors are throwing caution to wind to wager more gains are nigh. Those piling into same-way bets are causing some to warn that markets are dangerously close to overextended.
The Fed is expected to keep rates unchanged at the conclusion of its two-day policy meeting on Wednesday, but markets will be looking for hints pointing toward a March tightening. Markets are putting the chance of a March rate rise at 94.5 per cent, according to pricing tracked by Bloomberg.
A subplot that has gone largely unnoticed in this year’s relentless stock rally is playing out in public Monday. It’s the steady hammering in companies with the highest dividends, a trend that before today had done little to slow the advance in the S&P 500 and Dow average. That resistance wavered Monday as drops in real-estate, utility and telecom shares proved too strong for the market to shake off.
China’s $4tn bond market faces a refinancing challenge over the next five years as more than half of the outstanding debt matures, heightening concerns over default risk by some borrowers. A test for many borrowers is that new debt will be more expensive given a higher interest rate environment. Higher servicing costs are expected to weigh on some borrowers, given the scale of China’s debt binge in recent years.
Sentiment among London’s Brexit-hit bankers sank to its gloomiest depths since the 2008 financial crisis, a survey showed — a stark contrast to the bullish tone of finance executives gathered last week in Davos, Switzerland.
Online investing in China isn’t for the vulnerable or the naïve — but frequently, that’s exactly who it draws. The $5 billion flameout last week of the popular online investment portal Qianbao is the latest in a string of collapses that has devastated small investors and prompted Beijing to take steps to tamp down on potential unrest.
Its $146bn in global assets range from airports to trucking companies, shipping groups and stakes in Deutsche Bank and the Hilton hotel chain. But it is the company’s stretched finances, and questions over its ultimate ownership, that have brought it to international attention in recent months. The case illustrates how a particularly Chinese mix of debt and politics can affect markets far from its shores.
Speculative net long positions in euro futures and crude oil futures have reached historically extreme levels.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
There is a case that both the US and China will get what they want out of this episode of dollar weakness. If so, we may once again be surprised at the resilience of global asset markets and activity. That is the most likely scenario. If trade sparring becomes an all out ruckus, the broad weaker-dollar trade becomes a more narrow safe-haven trade, and we will have bigger problems than currencies to worry about.
The initial price of Bitcoin, set in 2010, was less than 1 cent. It crossed $19,000 last month. Since then, events have reminded the world that it’s wild ride involves downs as well as ups, as it fell to about $11,400. The ups have been driven by investors anxious to get in on the best-established cryptocurrency as new trading opportunities nudge it toward the mainstream. South Korea’s plan to ban cryptocurrencies contributed to the recent slump. News of a heist of $500 million worth of a different digital currency called NEM in Japan isn’t likely to help. This may also prompt regulators around the globe to rethink their rules.
It has been almost nine years since the last U.S. bear market, as defined by a 20 percent or more decline in the S&P 500 Index. That’s the second-longest stretch without one since 1928, according to Yardeni Research Inc. Only the period from December 1987 to March 2000 was longer. That’s a long time for questions to pile up that can only be answered by the next downturn.
For years, I’ve been saying Steven Pinker’s The Better Angels of Our Nature was the best book I’d read in a decade. If I could recommend just one book for anyone to pick up, that was it. Pinker uses meticulous research to argue that we are living in the most peaceful time in human history. I’d never seen such a clear explanation of progress. I’m going to stop talking up Better Angels so much, because Pinker has managed to top himself. His new book, Enlightenment Now, is even better.
There are far fewer cases of political persecution in Russia than of lawless prosecutions that bring down businessmen and professionals who have never challenged the government of President Vladimir Putin. There is even a cottage industry in girding company owners and their employees for a legal assault, the sort of hostile-environment training that executives and journalists working in dangerous places are given.
“You break it, you own it,” runs the pottery shop slogan. But when it comes to the global rules-based order, the Trump administration’s view seems to be, “We no longer own it, so we are going to break it.” America is turning against the world it made — and the consequences are unpredictable and potentially dangerous.
Wellness communities like Serenbe increasingly attract homeowners looking for a refuge from modern life. In North America alone, the market is worth $52.5 billion and is growing by 6.4% annually, according to a new report by the Global Wellness Institute titled Build Well to Live Well: Wellness Lifestyle Real Estate and Communities. Wellness real estate was a $134 billion worldwide industry in 2017, and is expected to grow to $180 billion in 2022.
The two-year Finnish trial is at its halfway stage and there is already anecdotal evidence that basic income has helped reduce stress among participants by easing the requirements of benefits bureaucracy. But there are also increasing doubts about the trial itself and whether it offers a viable example of how basic income could work.
CENTRAL BANKS & MONETARY POLICY
The European Central Bank has to end its quantitative easing as soon as possible, according to ECB Governing Council member Klaas Knot, who said there’s not a single reason anymore to continue with the program. “The program has done what could realistically be expected of it,” Knot, who also heads the Dutch Central Bank, said in an interview on the television talk show Buitenhof on Sunday.
As Janet Yellen prepares to step aside as the Federal Reserve chair this week and hand the levers of monetary policy to Powell, her gradual approach to interest-rate hikes aimed at countering a fragile recovery and low inflation looks increasingly timid. The leadership transition at the world’s most powerful monetary authority comes just in time for a fresh approach.
“We shouldn’t underestimate how perilous the situation is,” said Seth Carpenter, chief US economist at UBS. “You have massive tax cuts and potentially very large increase in federal spending coming; when the unemployment rate is already very low and inflation is already rising — which is a largely unprecedented situation. You also have continually easing financial conditions. This point in the cycle is the most difficult for monetary policymakers to manage.”
Far from being a complete nonevent, Goldman Sachs Group Inc. expects a slightly hawkish upgrade of language at the Federal Reserve meeting this week, slated to be Janet Yellen’s last. Inflation remains below target, but measures of it have firmed recently and “we think many Committee members will view the core inflation rebound in recent months as additional evidence that last year’s shortfall largely reflected temporary, idiosyncratic factors,” the report said.
USA ECONOMY DATA, CITIES AND STATES
Most Americans can’t afford even a minor emergency, according to a recent report from Bankrate, a website that provides financial advice. Of those surveyed, just 39 percent of respondents said they’d be able to cover an unexpected $1,000 bill with funds from their savings. Most of the other respondents said they would have no choice but to accrue debt ― by paying with a credit card, borrowing from family and friends, or getting a loan.
The U.S. household saving rate dropped in December to its lowest level since the height of the 2000s housing boom, when many Americans were drawing on rising equity in their homes to spend on vacations, new cars, appliances and more. Previous busts—in the mid-2000s and the late-1990s—were preceded by periods of rising asset values and especially low saving.
The drop matters because consumers make up roughly 70 percent of the economy and they can only push savings down so far before it impacts their ability to keep spending, which in turn fuels U.S. growth.
Thousands of jobs in the US mortgage sector have been put at risk as lenders prepare for the weakest year for refinancings since the turn of the century. The drop in demand comes as interest rates rise and threaten to squeeze a sector that employs an estimated 450,000 people across the country at banks and specialist lenders.
GLOBAL ECONOMY, INTERNATIONAL
The gains have put some investors on edge, intensifying analysts’ concerns about the rising price of buying into a bull market almost nine years old. The rallies have also drawn comparisons to the 2000 Nasdaq peak, when a mania for technology stocks drove the index to a level that it wouldn’t recapture for more than a dozen years.
The global bond market sell-off deepened on Monday, lifting the 10-year US Treasury yield above 2.7 per cent for the first time in nearly four years and sparking concerns that the roaring stock market rally could be vulnerable to a reversal. Mounting optimism over the strength of the world economy has buoyed equities, which have enjoyed their best start to a year since 1987, but stirred concerns that long-dormant inflation might finally make a comeback and force central banks to turn more aggressive.
The euro area is set to start the new year the way it ended the old: the economy is strong but inflation is weak. The region’s fastest growth in a decade will be confirmed this week in a burst of data that should also show economic confidence at the highest since the currency bloc’s early days, unemployment at a post-crisis low, and manufacturing continuing to boom. Yet inflation, the key metric for the European Central Bank, will probably be the slowest in six months.
With the addition of the Arctic and Latin America last week, Chinese President Xi Jinping’s signature Belt and Road Initiative has become truly global. Only the U.S., its neighbor Canada and ally Japan have yet to be included in the plan, which seeks to build or upgrade a network of highways, railways, ports and pipelines.
POSITIONING, INFLECTION, MARKET CALLS
It has been a blistering start to the year for emerging markets. Yet this is happening in a world where the odds may appear stacked against EMs. The commodities supercycle is a distant memory and EMs have found no new growth engine to take its place. US interest rates are rising as quantitative easing gives way to quantitative tightening. The Trump administration is preparing a multi-pronged assault on the international trading system in which the biggest losers would be EM exporters.
Goldman Sachs Group Inc.’s index of financial conditions broke through its internet bubble trough to reach a record low Monday, signaling that the economy may be poised to pick up steam. The index tracks changes in interest rates, credit spreads, equity prices, and the value of the greenback, with a lower reading suggesting expansion lies ahead.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
Apple executives said in November they were expecting its “biggest quarter ever” and a return to double-digit revenue growth during the holiday season for the first time in years. The US corporate earnings season is in full swing this week with other tech leaders including Amazon, Facebook and Alphabet also expected to report higher revenues and profits.
Apple executives said in November they were expecting its “biggest quarter ever” and a return to double-digit revenue growth during the holiday season for the first time in years. The US corporate earnings season is in full swing this week with other tech leaders including Amazon, Facebook and Alphabet also expected to report higher revenues and profits.
Shares in MetLife dropped almost 10 per cent on Monday after the insurance and pensions group warned of “material weakness” in its financial reporting, forcing it to boost its reserves by about $550m. Regulators including at the Securities and Exchange Commission and the New York Department of Financial Services are probing the matter, the company said.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
The combination gives Keurig, best known for its K-Cup coffee systems, an express lane to get its bottled coffee drinks into coolers at convenience stores, drugstores and other retailers.
VMware Inc. plunged after CNBC reported that it’s considering acquiring Dell Technologies in a reverse merger, bringing Dell back to public markets in what could be the industry’s biggest deal ever.
After years of creative corporate structures and financial maneuvering, Michael Dell is finally ready to bring all the pieces of his technology empire under one, publicly traded roof. The billionaire’s ultimate goal is to create a structure that would help his two companies, Dell Technologies Inc. and VMware Inc., better manage a massive debt load, according to people familiar with the matter.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
Bill Ackman’s Pershing Square Capital Management reported a net loss of 4 percent on its investments in 2017, with assets under management falling by almost $10 billion over the past two years. Pershing Square has suffered from an exodus of money out of hedge funds — particularly the poorer performers — as investors move to cheaper passive products.
Accusations of sexual harassment have felled dozens of executives, but in one quiet corner of the financial world, the #MeToo movement looks like a golden opportunity. Companies that offer money to plaintiffs in anticipation of future legal settlements are racing to capitalize on sexual harassment lawsuits. That is setting off alarms in some quarters because the industry, like payday lenders, has a history of providing cash at exorbitant interest rates to customers who need the money for living and sometimes medical expenses.
“It is absolutely an attempt to fill the void,” Context Capital’s Chief Executive Ron Biscardi said in an interview Monday. “We think with SALT not happening this year, it does leave a void on the thought-leadership side.”
Investment groups have more than quadrupled their number of “alternative data” analysts over the past five years, as asset managers scramble to unlock the potential of trading signals contained in website scrapes, language analysis, credit card purchases and satellite data.
Vanguard fears that ‘’predators’’ are taking advantage of exchange traded funds at the expense of retail investors and hopes that an expected overhaul by US regulators will not mandate perfect transparency for the booming $4.8tn industry. Tim Buckley, who took over at Vanguard this month, likens the predicament faced by ETF providers to the children’s tale of Little Red Riding Hood, who told the wolf where she was going, allowing him to take a shortcut to devour her unsuspecting grandmother.
Large financial firms including Fidelity Investments, TD Ameritrade and Morgan Stanley have all made changes to their fees or product lineups that make it more expensive for some customers to invest in Vanguard’s funds. The changes made so far are small and have occurred in several different corners of the investing market, but they represent a stark shift for an industry that has struggled to manage being both Vanguard’s partner and competitor.
ENERGY COMPANIES, NOCs, INDUSTRY
Hard-nosed negotiating by Canada’s big railway companies is preventing Canadian oil producers from cashing in on a world-wide oil price rally. As the price of oil has surged in recent months, hitting $66.25 a barrel on Friday, the price of Canadian crude pulled from the oil sands of Alberta has remained mired at lower levels. Canada’s oil was priced at a discount of roughly $28 to the benchmark, the largest spread since 2013.
Exxon Mobil Corp. plans to spend $50 billion to expand its business in the U.S. in the next five years, investments that were “enhanced” by the American tax overhaul. Exxon Chief Executive Darren Woods made the announcement in a blog post, adding that the company was still studying whether the tax overhaul made additional investment more economically viable.
Explorers like Extraction Oil & Gas Inc. and SRC Energy Inc., which are focused entirely on an oil and gas field northeast of Denver known as the D-J/Niobrara Basin, aren’t fully benefiting from soaring energy prices because of concerns about their future freedom to drill. Shares of those operators are undervalued, having gained only half as much in the last six months as geographically diverse drillers, said Welles Fitzpatrick of Suntrust Robinson Humphrey Inc.
COMMODITIES AGRICULTURE & SOFTS
Goldman Sachs Group Inc. participated in a $65 million investment in Ripple Foods Inc., a little-known beverage company that makes a milk-like drink from yellow peas.
The largest U.S. maker of equipment for pig farms opened a new factory in China on Saturday, investing in its third plant in the world’s top hog market in a bet the country’s ambitious push into large-scale pig farming will bring a surge in demand.
Tyson Foods Inc. is boosting its bet on meat that comes from the lab instead of the slaughterhouse. The investment adds to a string of high-profile backers for Memphis including Cargill Inc., Bill Gates and Richard Branson. The company will use the Tyson funds for product development.
POLLUTION, CLIMATE & ENVIRONMENT
Oxygen levels in oceans are dropping and all life – in the seas and on land – is at risk. “If you can’t breathe, nothing else matters. That pretty much describes it,” said the study’s lead author, Denise Breitburg, who is a marine ecologist at the Smithsonian Environmental Research Center. “As seas are losing oxygen, those areas are no longer habitable by many organisms,” she told the Associated Press.
BREXIT, SCOXIT, LONDON, UK ECONOMY
The EU warned Britain that it faced gridlock in trade talks unless it spelt out its Brexit goals as the minority UK government struggled to deal with a backlash from its own MPs over a transition out of the bloc.
One of the biggest advocates of a hard Brexit has obtained a Maltese passport, the Financial Times reported. New Zealand-born billionaire Christopher Chandler is behind Legatum, the London based think-tank that emerged as one of the most vocal advocates for Britain’s departure from the single market and the customs union.
“It’s very hard for people to travel around and not suffer from the cracks in the system,” says Christian Wolmar, a train historian. “It’s everything, from knowing who to buy a ticket from to the signalling failure that delays the train to the lack of information when your train is cancelled. It’s hard to know which is worse — fragmentation or privatisation — but I’d probably say fragmentation.”
Exclusive: BuzzFeed News has seen a new Brexit impact assessment, which says leaving the EU will adversely hit almost every sector and every UK region.
Michel Barnier, visibly confident and upbeat at a news conference shortly after EU27 ministers approved directives for the next phase of negotiations, effectively dictated the transition terms. His performance immediately drew objections from London, where officials insisted key elements of a transition deal were still up for grabs.
GEOPOLITICS, CRIME, TERRORISM
As the wait dragged on, the anxiousness of Mr. Nayel and many other family members grew into an anger that has become widespread across the city. Why is the government unable to protect a capital that is heavily militarized, with checkpoints and barriers at every roundabout — some even with bomb-sniffing dogs? How is it that insurgents can strike at will?
In his State of the Union address, President Trump is expected to promote his strategy to win the war in Afghanistan. He’ll be the third president to do so. “We’re fighting the same battle over and over again,” Senator Tammy Duckworth, Democrat of Illinois and a veteran of the Iraq war. “Our troops are losing their friends, they are shedding blood, over the same patch of ground, over and over again.”
President Donald Trump told visiting members of the U.N. Security Council on Monday the U.S. would no longer talk with the Taliban following a recent string of deadly attacks in Afghanistan.
Mexican officials said on Sunday the government was set to unleash a new wave of troops to crack down on criminal groups in regions where a surge in violence led to more than 25,000 murders last year.
Pakistan is deepening its relationships with Russia and China, the country’s defence minister has said, as the fallout continues from the US decision to suspend $2bn in military aid to Islamabad.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
In more than one hundred cities across the country, Russians took to the streets in support of opposition politician Alexei Navalny’s call for what he has termed a “voters’ strike.” Navalny called for the boycott earlier in January after being barred from registering as a candidate due to a prior criminal conviction his supporters see as a political ploy.
The International Paralympic Committee said that it would not restore the nation’s team to compete at the Pyeongchang Games, but that some athletes could compete as individuals.
Shares in Kingdom Holding Company soared on Sunday after Prince Alwaleed bin Talal, its billionaire owner, returned to his palace in Riyadh almost three months since his arrest and detention over corruption allegations.
A new poll published Thursday found that 72 percent of Republican voters feel that President Trump “is a good role model for children.” Every other category, meanwhile — be it race, age group, or gender — strongly disagreed with that assessment.
White evangelical Protestants remain the president’s strongest base of support even amid continuing moral controversies.
Rep. Matt Gaetz of Florida appeared on conspiracy theory outlet Infowars to complain that he is being called a conspiracy theorist for pushing the narrative that a secret memo by the chairman of the House Intelligence Committee proves that the Obama administration improperly sought to spy on Donald Trump and his presidential campaign.
“It’s just been announced: Donald Trump is coming to Britain on a visit later this year. Let’s be ready ― and be prepared to take to the streets in the most incredible protest in our history,” said the post. By Sunday night, the page had some 22,000 people signed up to take to the streets, with another 62,000 marked as “interested.”
“Did I make mistakes? Absolutely,” Spicer said Monday in an interview with MSNBC. “I regret things that I did that brought embarrassment to myself, my family, friends of mine who have been very big supporters,” he added.
Turns out President Trump son-in-law and senior advisor Jared Kushner was Guy Fieri’s landlord at the now-shuttered Guy’s American Kitchen & Bar — and high rents reportedly led to the Times Square restaurant’s late December shutter in the struggling building.
History, demographics and the national mood are pointing to one conclusion about the 2018 congressional races: Democrats are well-positioned to bring one-party government in Washington under Donald Trump’s presidency to a screeching halt.
The conservative political network led by billionaires Charles and David Koch is planning an early advertising blitz to try to help Republicans hold majorities in Congress in the 2018 midterms.
Rep. Rodney Frelinghuysen, chairman of the powerful House Appropriations Committee, said he wouldn’t seek re-election, making him the latest in a parade of senior House Republicans and committee leaders heading to the exits.
In China, the vice presidency is a relatively weak position, and the current holder of the job, Li Yuanchao, has left barely any imprint. But in previous decades, the job was held by powerful politicians who influenced policy and supported the top leader.
Vladimir Putin is taking credit for the Russian economy’s emergence from recession as he travels the country ahead of a March presidential election that is almost certain to extend his 18-year rule.
The Senate is set to consider a bill criminalizing abortions after 20 weeks of pregnancy, a vote almost certain to fail but which may force red-state Democrats to take sides on the issue.
On Jan. 15, Pat Tiberi became the 12th member of the 115th Congress to resign from office. If that feels like a lot, that’s because it is; it’s the most people who have resigned from Congress through this point in the session in at least 117 years.
SCANDALS, LAWSUITS, FINES, REGULATORY
Three European banks have been fined a total of over $40m to settle US charges of “spoofing” futures markets, extending the efforts of regulators to crack down on the illegal trading practice. Spoofing involves placing bogus orders to create the illusion of substantial supply or demand, which moves prices. Computers then cancel the orders before they can be executed, allowing the spoofer to exploit the manipulation for their own gain.
BANKS, BROKERS, INSURANCE, EXCHANGES
Colleges and universities are in the business of education. Increasingly, they are also in the business of banking. Banks like Wells Fargo, PNC and U.S. Bancorp have signed scores of deals with schools nationwide that essentially make the universities their sales representatives.
RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
Amazon asked every city and state applying for its second headquarters for details about local resources, like available talent and transit options. Local officials were also prodded for tips on local education programs and tax incentives. The answers — most of which have not been released publicly — essentially do Amazon’s homework for it, providing valuable information that the company otherwise would have needed to dig up on its own or obtain through one-on-one negotiations.
McDonald’s Corp. is seeing a jump in customers, a sign its new Dollar Menu is attracting penny pinchers. “It’s the power of a value offering,” said Dave Jenkins, managing director of customer solutions at Datassential in Chicago, referring to McDonald’s share gains over the past three weeks.
MEDIA, CABLE, SPORTS, ENTERTAINMENT
Mr Mars and Kendrick Lamar were the big winners at the ceremony, scoring six and five awards respectively to cap off a year dominated by hip-hop and R&B as digital streaming dominates music’s biggest market.
The Grammy Awards struck a sour note with viewers on Sunday, with fewer than 20 million tuning in to watch the CBS broadcast, a 24% decline from last year’s show and the smallest number since 2009.
The logo has long been the source of anguish and frustration for those who consider it offensive, outdated and racist, but for many of the team’s fans it is a cherished insignia — a divide that has played out at all levels of sports in recent years with teams featuring such nicknames and insignias.
AUTOS, ELECTRIC, SELF-DRIVING
Chinese e-commerce giant Alibaba Group Holding Ltd. and Foxconn Technology Group led a new fundraising round by electric carmaker Xiaopeng Motors, investing 2.2 billion yuan ($350 million) in the startup as a push toward battery-powered vehicles intensifies.
Booming demand for cellphone and electric-vehicle batteries has created a once-unthinkable metals-industry player: the pure cobalt company. Cobalt prices have risen 270% on the London Metal Exchange to about $80,000 a metric ton since early 2016, creating an opening for companies to specialize in a metal once seen as a waste product. Cobalt is now valued for its ability to withstand the intense heat generated by lithium-ion batteries.
The bizarre side venture has already generated $5 million for his tunnel business. The danger of selling a fire-emitting device and the lighthearted way Musk is treating the topic raised questions about whether it’s a joke and the legality of selling such a weapon online. The company says it’s serious.
The Elon Musk-led carmaker could agree to build a processing plant in Chile to produce the high-quality lithium it needs for its batteries, Eduardo Bitran, the executive vice-president of Chilean development agency Corfo, told the Financial Times. If successful, the deal would mark Tesla’s first foray into securing battery raw materials, which have soared in price due to the growing popularity of electric cars.
AIRLINES, SHIPPERS, RAIL, TRANSPORTS
The Los Angeles Memorial Coliseum, a city landmark and historic venue for both sports and music, will become the United Airlines Memorial Coliseum in a $69 million deal struck between the airline and the coliseum’s operator, the University of Southern California, according to people familiar with the agreement.
AEROSPACE, MILITARY & DEFENSE
The Falcon Heavy—the most powerful operational rocket in the world—could launch for the first time as soon as Feb. 6. Musk’s message on Twitter over the weekend specifying a launch date anticipated a public turnout in Cape Canaveral, Florida: “Easy viewing from the public causeway,” he wrote. The spectacle has even tempted a five-year-old fanboy into begging Musk for tickets, and the Kennedy Space Center reported a website jam as would-be watchers scrambled to buy their way in.
LUXURY, HIGH END, ASPIRATIONAL
A new wave of big-spending Chinese shoppers has emerged to drive the global luxury-goods industry, igniting torrid sales growth after two years of cautious Chinese buying. Luxury-goods purchases by Chinese shoppers jumped 12% last year to €84 billion ($104 billion), according to consulting firm Bain & Co., with their share of the global total rising to 32% from 30% in 2016. Analysts say the pickup in spending could even accelerate this year.
ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
Two scientific milestones are expected to be announced in the coming weeks by two of the world’s biggest technology companies that will highlight the rapid advances now being made in the field. But whether they also point to useful commercial applications in the near term is another matter.
“The beta rhythm acts like a brake, controlling when to express information held in working memory and allow it to influence behavior,” says Mikael Lundqvist, a postdoc at MIT’s Picower Institute for Learning and Memory and the lead author of the study.
SCIENCE, NATURE, PSYCHOLOGY
Unhindered by regulation, the country’s researchers excel in controversial biotech. While the US still spends more than any other nation on basic science — $86bn in 2015 — the OECD estimates China will outspend its rival on R&D by 2019. When it comes to science and technology, the sun is most assuredly rising in the east.
The cameras the rover uses to take its amazing images of Mars run the gamut from its Mast Camera, which takes HD video and can analyze light patterns, the Mars Hand Lens Imager, which allows for extreme close-ups of the planet’s geological formations, and a variety of navigational cameras that allow Curiosity to see where it’s going, among other high-tech gear.
HEALTH, PRODUCTIVITY AND WELLNESS
E-cigarette users are possibly putting themselves at risk for developing heart disease, lung and bladder cancers, according to a new report. The findings, though preliminary, indicate that the devices—which aerosolize nicotine and contain no tobacco—may not be as safe as previously assumed.
A rare super blue blood moon is set to occur this Wednesday, Jan. 31, and stargazers are right to be (excuse the pun) over the moon about it. To understand their excitement, you’ll need to understand what’s happening, exactly. Even though the phrase “once in blue moon” suggests they’re rare, blue moons—the second full moon in a one-month period—are relatively frequent, taking place once every 2.7 years. Supermoons are full moons that occur at the closest possible point to Earth, making them appear slightly bigger and brighter, and grace us once every 14 months. And blood moons, also known as total lunar eclipses, take place about twice a year when the moon passes through the Earth’s shadow, turning it an eerie, copper-hued color. But to have all three happen at the same time? It hasn’t happened since 1866.
Last year we were calling this a Federer revival. I don’t think it’s a revival anymore. It’s a whole new chapter—Federer re-writing the rules for what’s possible for an aging player in Open-era men’s singles. And Federer isn’t simply the Last Man Standing. He’s very clearly playing better tennis than he was a few years ago. He switched up equipment, remodeled his game—shortening points, and turning his elegant one-handed backhand into a devastating weapon.
From the outside, the three connected spheres resemble a glass-and-steel sculpture of a triple-scoop sundae. The biggest sphere is 90 feet high and 130 feet wide. Inside, visitors first notice the warm, moist air, about 72 degrees and 60 percent humidity, compared with the 30 percent humidity in a typical office. Eyeglasses fog over and sweat beads on foreheads while bodies adjust. Just inside the doors is a five-story “living wall” cascading with greenery. The climate varies throughout so visitors can find a “micro-climate” to their liking.
The Mercenary Trader Macro Links were created by Justice “Jack” Litle, aka Justice Litle / Jack Litle — the founder of Mercenary Trader — to provide a compact summary of daily information flows. They are accessed via the Mercenary Research Suite, the flagship offering of Mercenary Trader, which combines trading education and trading research. To see how it works, click here.