Macro Links Jan 5th – Essence of a Bubble
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- FOREX, CARRY TRADES, EXCHANGE RATES
- RUSSIA PROBE
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- CENTRAL BANKS & MONETARY POLICY
- USA ECONOMY DATA, CITIES AND STATES
- POT BOOM, MARIJUANA LEGALIZATION, DRUG POLICY
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY COMPANIES, NOCs, INDUSTRY
- ENERGY NATURAL GAS, COAL
- POLLUTION, CLIMATE & ENVIRONMENT
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- TRUMP WORLD
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
- AUTOS, ELECTRIC, SELF-DRIVING
- HEALTH, PRODUCTIVITY AND WELLNESS
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
The chief investment strategist for GMO in Boston described the bitcoin market as a “true, crazy mini-bubble” in a letter to investors this week. Grantham follows the likes of Warren Buffett and even bitcoin-bull Mike Novogratz in warning of a bubble in cryptocurrencies, which have exploded into the mainstream consciousness in the past few months.
“This is beyond insane,” said Jeremy Gardner, an investor who previously worked at the virtual currency hedge fund Blockchain Capital, which invested in Ripple. “There’s absolutely nothing driving this rally except rampant FOMO, misinformation, and speculation.”
Ripple, whose tokens are known as XRP, is far from the only virtual currency being fueled by the hysteria. In 2017, there were 29 tokens — including Einsteinium and Byteball — that rose more than Bitcoin’s remarkable 1,600 percent jump, according to OnChainFx, a data provider.
Nearly 40 virtual currencies are worth more than $1 billion — when all the outstanding tokens are counted at their current value — despite many of them not having been used in any sort of transaction other than speculative trading.
Ripple, the white-hot crypto currency that more than doubled in the past week, plunged as much as 20 percent after Coinbase said it’s not adding any new coins to its exchange at this time.
Ripple fell to as low as $2.65 after reaching an all-time high of $3.30 earlier Thursday. The coin was down 1.1 percent on the day to $2.78 as of 2:52 p.m. in New York. Ripple last week surpassed ether as the world’s second-most valuable cryptocurrency after bitcoin.
Zuckerberg referenced cryptocurrencies in a posting Thursday in which he laid out how he will spend 2018 trying to correct persistent problems -— including the proliferation of hate speech and misinformation -— that have dogged his wildly popular social network for the past two years.
“There are important counter-trends to this — encryption and cryptocurrency — that take power from centralized systems and put it back into people’s hands,” Zuckerberg wrote. “But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”
In the developed world, central banks and senior bankers have warned investors away from such currencies, which they say they don’t trust. In frontier markets, some people are turning to bitcoin precisely because they don’t trust the country’s bankers or the state.
“Buying cryptocurrencies is seen as a protection by people who have been constantly disappointed by central banks and politics,” said Arnaud Masset, a Geneva-based analyst at brokerage Swissquote , which offers bitcoin trading to retail clients. “When conventional money fails, bitcoin wins.”
In one sign of rising demand, bitcoin often trades in frontier markets, which are the smaller and least developed of emerging countries, at a significant premium to elsewhere. On Golix, a Harare, Zimbabwe-based exchange, a bitcoin goes for $22,000, a premium of more than $7,000 to the price quoted on CoinDesk.
Confusion reigns in India’s cryptocurrency ecosystem. The Narendra Modi government and India’s central bank have made it amply clear they aren’t comfortable with virtual currencies. The recent spike in bitcoin’s value, which attracted hordes of investors, has only made the government more vociferous in its criticism. However, these announcements don’t make these virtual currencies, or trading in them, against the law.
“The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment,” the officials said.
Two Commodity Futures Trading Commission advisory committees, which include both regulators and industry participants, will meet in late January to address issues related to policing activity on virtual-currency exchanges, the clearing of bitcoin futures and the unique risk of fraud and manipulation related to virtual currencies.
FOREX, CARRY TRADES, EXCHANGE RATES
Emerging market currencies have recovered to their pre-taper tantrum peak and were making further gains on Thursday morning, lifting a key index close to its highest level in more than six years.
The MSCI Emerging Markets Currency Index ended trading on Wednesday at 1687.07, its highest level since early May 2013 – shortly before the then Federal Reserve chair Ben Bernanke sparked the so-called “taper tantrum” by unexpectedly suggesting the Fed could start rolling back its quantitative easing policy.
A weaker dollar could be doing the work of global central banks. The greenback begins 2018 after its worst year since 2003, and analysts at Bank of New York Mellon Corp. and Credit Agricole SA say further declines could mean central banks don’t have to tighten monetary policy as much as they may now be planning.
The argument goes that by forcing up rival exchange rates, a decline in the U.S. currency could slow economic growth and inflation elsewhere, creating room for interest rates to stay lower than they otherwise would be.
“A weaker dollar can potentially have an impact on other central banks,” said Mohit Kumar, Credit Agricole’s London-based head of interest-rates strategy. “From a broader perspective, a stronger currency is akin to tightening of monetary policy.
President Trump gave firm instructions in March to the White House’s top lawyer: stop the attorney general, Jeff Sessions, from recusing himself in the Justice Department’s investigation into whether Mr. Trump’s associates had helped a Russian campaign to disrupt the 2016 election.
Public pressure was building for Mr. Sessions, who had been a senior member of the Trump campaign, to step aside. But the White House counsel, Donald F. McGahn II, carried out the president’s orders and lobbied Mr. Sessions to remain in charge of the inquiry, according to two people with knowledge of the episode.
Mr. McGahn was unsuccessful, and the president erupted in anger in front of numerous White House officials, saying he needed his attorney general to protect him. Mr. Trump said he had expected his top law enforcement official to safeguard him the way he believed Robert F. Kennedy, as attorney general, had done for his brother John F. Kennedy and Eric H. Holder Jr. had for Barack Obama.
Mr. Trump then asked, “Where’s my Roy Cohn?” He was referring to his former personal lawyer and fixer, who had been Senator Joseph R. McCarthy’s top aide during the investigations into communist activity in the 1950s and died in 1986.
Justice Department officials are taking a fresh look at Hillary Clinton’s use of a private email server while she served as secretary of State, The Daily Beast has learned.
An ally of Attorney General Jeff Sessions who is familiar with the thinking at the Justice Department’s Washington headquarters described it as an effort to gather new details on how Clinton and her aides handled classified material. Officials’ questions include how much classified information was sent over Clinton’s server; who put that information into an unclassified environment, and how; and which investigators knew about these matters and when. The Sessions ally also said officials have questions about immunity agreements that Clinton aides may have made.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
Investors devoted to the idea that inflation will stay subdued should be worried. Worldwide data have recently made clear that producer-price increases have picked up steam. That’s led bond buyers to begin wagering that consumer inflation could be soon to follow, with U.S. breakeven rates above 2 percent in many tenors for the first time since March.
The shift represents a sea change for investors who have grown complacent about the threat of rising prices over the past few years, when inflation was subdued by modest economic growth rates, suppressed wages and shifts in technology and demographics. While few are betting on runaway increases anytime soon, even a modest uptick in prices could have an outsize impact on sentiment and change the prevailing narrative.
“There is this idea that inflation is dead,” said Peter Boockvar, the chief financial officer at Fairfield, New Jersey-based Bleakley Financial Group. “But what we are beginning to see — such as in the purchasing managers index surveys — is a lot of talk about inflation pressures. For the markets, inflation is an under appreciated risk in 2018.’
Asian investors bought a record amount of US dollar bonds in 2017 from the region’s companies and governments, a trend bankers expect to be built on this year and a sign the continent is becoming less reliant on US investors.
Sovereigns, corporations and financial institutions sold a record amount of dollar-denominated bonds last year, and Asian investors bought more of them than before. Figures from Dealogic show that $217bn of Asia dollar bonds were marketed to non-US investors — mainly Asian — in 2017, a record high, compared with $124bn in 2016 and $83bn the previous year.
Asia’s record dollar debt volumes come as companies take advantage of low interest rates in dollars to expand or refinance higher-cost debt.
Global investors have raised their holdings of emerging market bonds to a three-year high, even as average EM sovereign credit ratings have plunged to their lowest level since early 2010. The unusual move is a sign of an increasingly desperate hunt for yield in emerging market bonds, irrespective of the apparent decline in credit quality, at least in the opinion of the major rating agencies.
Investors are pouring money into funds that protect against higher inflation, starting 2018 by positioning themselves for higher global growth.
Funds that buy inflation-protected bonds took in a fresh $743m for the week ending January 3, according to data from EPFR Global — the 11th straight week of positive flows. This is the longest streak of inflows since early 2017, when investors added cash to inflation-protected funds for 16 weeks up to March 29.
With hospital shelves bare and the government stumped on how to settle $5 billion in arrears to pharmaceutical companies, cash-strapped Venezuela recently offered some foreign suppliers alternative compensation: diamonds, gold and coltan, the rare metal used to make cellphones and Playstations.
The proposed exchange perplexed the pharma representatives, whose companies had no policies on accepting precious gems and metals as payment, according to three people familiar with the meeting last month where Venezuela’s health minister made the offer.
While it isn’t clear if any of the companies accepted it, the proposal underscores how Venezuela’s economic collapse is forcing President Nicolás Maduro’s embattled administration to improvise to pay for goods as severe dollar shortages push the country toward a barter society.
CENTRAL BANKS & MONETARY POLICY
While the Bank of Japan resolutely maintains its 2 percent inflation target, Credit Suisse Group AG says that’s an unrealistic goal.
The Japanese economy is enjoying a cyclical recovery, benefiting from a pick up in global demand, but nothing suggests structural change, said Hiromichi Shirakawa, chief Japan economist at Credit Suisse and a former BOJ official.
“It’s difficult for us to say that 2 percent inflation is achievable in a sustained manner,” said Shirakawa, speaking to Bloomberg Television’s Rishaad Salamat and Haidi Lun in an interview. “We are not seeing yet any structural shift in the mindset or behavior of corporates and households in Japan.”
USA ECONOMY DATA, CITIES AND STATES
The new year will bring higher minimum wages in 18 states and almost two dozen municipalities, continuing a recent trend of steady pay increases for the lowest-paid workers.
In some cases, the increases represent one of several steps in a multiyear process to slowly raise the minimum wage. Arizona, for instance, will see its pay floor rise 50 cents on Jan. 1, followed by another 50 cents in 2019 and $1 in 2020, part of a four-year process to boost the base salary for workers who don’t work for tips to $12 an hour by 2020. Voters approved a measure in 2016 to raise the minimum wage in four steps.
An underground gun-making industry that enables criminals to elude background checks and bypass gun regulations is creating a growing trade of “ghost guns,” weapons that can’t be traced by police, authorities say.
Ghost guns have been in the spotlight since a Northern California man, who was prohibited from possessing firearms because of a restraining order, killed five people in a November rampage using semiautomatic rifles that he made himself, police say. Other gunmen have employed the weapons as well. In 2016, a Baltimore man fired at police with a homemade AR-15, and Santa Monica shooter John Zawahri used a ghost gun in his shooting spree that killed five in 2013.
The number of these weapons in the U.S. is unknown. Because the guns bear no serial numbers, the Bureau of Alcohol, Tobacco, Firearms and Explosives is unable to track them. Serial numbers and gun registration play a key role in police and government investigations, allowing officers to trace a weapon’s history and owners.
Ghost guns appear to be most prevalent in California, where there are restrictions on assault weapons that make it difficult to buy guns that are available in other states. But the firearms have been seized in criminal investigations in other states, including Arizona, Maryland, New York and Texas.
POT BOOM, MARIJUANA LEGALIZATION, DRUG POLICY
The sale of recreational cannabis became legal in California on New Year’s Day. Four days later, the Trump administration acted in effect to undermine that state law by allowing federal prosecutors to be more aggressive in prosecuting marijuana cases.
A memo by Attorney General Jeff Sessions on Thursday was widely interpreted in the nation’s most populous state as the latest example of Trump vs. California, a multifront battle of issues ranging from immigration to taxes to the environment.
And on marijuana, once again California reacted with defiance. “There is no question California will ultimately prevail,” Gavin Newsom, the lieutenant governor of California, said. “The public has accepted legalization’s inevitability. It will be very difficult for Sessions to bring us back to a mind-set that existed five years or a decade ago.”
Attorney General Jeff Sessions on Thursday rescinded Obama-era policies that took a largely hands-off approach to enforcing federal marijuana laws in states that have legalized the drug for medical or recreational purposes.
In a single-page memo, Mr. Sessions called the previous guidance “unnecessary” and permitted U.S. attorneys to take a more aggressive approach to enforcing laws on marijuana trafficking and use. Justice Department officials said the previous guidance wasn’t consistent with federal law.
Mr. Sessions was concerned that the guidance had created “a safe harbor for the marijuana industry to operate” in certain states, an official said. The conflict between the federal ban and state laws that permit the drug has long been an anomaly in the legal system, one that has only grown as more states have legalized marijuana.
The viability of the multibillion-dollar marijuana legalization movement was thrown into new doubt on Thursday when the Trump administration freed prosecutors to more aggressively enforce federal laws against the drug in states that have decriminalized its production and sale, most recently California.
Attorney General Jeff Sessions, long a vocal opponent of the legalization of marijuana, rescinded an Obama-era policy that discouraged federal prosecutors in most cases from bringing charges wherever the drug is legal under state laws.
“It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law,” he said in a statement. In his memo to United States attorneys, he called the earlier policy “unnecessary” and pointed to federal laws that “reflect Congress’s determination that marijuana is a dangerous drug and that marijuana activity is a serious crime.”
Those opposing federal pot laws said they felt Sessions was trying to stop the country’s momentum toward full legalization of marijuana — which just days earlier had become legal to some fanfare in California. They warned that Sessions wants to impose his view that the country should return to the war on drugs. Sen. Cory Gardner (R-Colo.), a member of Sessions’s political party, even threatened to hold up the confirmation of nominees for key Justice Department leadership posts in response.
In most of the 22 states that, along with Washington, D.C., and Puerto Rico, have legal marijuana markets, cash is not simply king; it is all-consuming. It is counted and recounted and stuffed into bulging envelopes, slid into back pockets and ferried around town in beaters and fully loaded S.U.V.s. Customers exchange it for marijuana at the counter; businesses use it to buy weed from wholesalers and for gardening supplies, plastic bottles and lab equipment. They use it for money orders at grocery stores. It pays employees and the rent and electric bills and taxes. It is fed into owners’ personal bank accounts at A.T.M. machines. On Jan. 1, California, which has permitted medical marijuana for decades, began allowing legal sales of recreational marijuana, creating a potential market many times the size of Colorado’s, with the potential for many more banking headaches.
But for Behzadzadeh, a solution lay in sight. In the fall of 2016, Elsberg and another employee, both veterans in the marijuana industry, put him in touch with Sundie Seefried, the chief executive of Partner Colorado, a credit union in Arvada, a Denver suburb. A division of the credit union, Safe Harbor Private Banking, provides checking accounts expressly for the marijuana industry, in clear violation of federal law.
Partner Colorado was originally chartered in 1931 to serve postal workers; with about $350 million in assets, it still amounts to little more than a rounding error in the state’s financial-services market. But in three years it has established itself, entirely through word of mouth, as the marijuana industry’s biggest banker. These clients deposited $931 million in 2017. No other United States bank or credit union has probably taken as much, says Robert McVay, a Seattle-based lawyer who advises institutions on banking marijuana business. Most of those deposits are cash, taken off the streets and thereby reducing the latent, associated threat of robbery — a threat not just to those working in the industry but also to the ordinary people around them. As one banker put it to me, “I don’t want to stand in line next to a backpack filled with $30,000” while someone fills out money orders.
POSITIONING, INFLECTION, MARKET CALLS
It took a mere 23 days for the Dow to jump from 24,000 to its latest milestone. This is the shortest stretch between 1,000 point milestones ever. All three major indexes closed in record territory. The Dow Jones Industrial Average rallied about 152 points to 25,075. The S&P 500 advanced 10 points to 2,723. The Nasdaq Composite was up 12 points at 7,077.
So far the Dow Jones Industrial Average has crossed six 1,000-point milestones since President Donald Trump’s election on Nov. 8, 2016. A finish above 25,000 would be the seventh 1,000 point milestone.
Commodities are forging a record-setting run of gains that straddles the end of 2017 and the start of the new year as crude oil notches multiyear highs and investors bet that booming global manufacturing output will help to sustain rising demand for raw materials.
The Bloomberg Commodity Index, which tracks returns on 22 raw materials, was poised for an unprecedented 15 days of gains on Thursday. The index may be headed for further advances as metals and oil climb higher, supported by supply disruptions, a weaker dollar and improving demand. Palladium, used in car exhaust systems, is approaching an all-time high.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
The Dow Jones Industrial Average closed above 25000 for the first time on Thursday, punctuating a record-setting period nearly unmatched in U.S. history. Yet throughout the nearly nine-year surge in share prices, individual investors have continued to yank money out of funds that own U.S. stocks.
Nearly $1 trillion has been pulled from retail-investor mutual funds that target U.S. stocks since the start of 2012, according to EPFR Global, a fund-tracking firm. Over that same period through Wednesday, the S&P 500 soared 116% and, along with the Dow Industrials and Nasdaq Composite Index, rose to 190 all-time highs.
The net profits of listed companies in the Asia ex-Japan region have risen 33-fold since 1999, trouncing gains in the rest of the world, where they have merely tripled in nominal terms.
Asia’s earnings surge has been led by mainland China, where the net profits of listed companies in the MSCI All Countries World Index were around $303bn in 2017, a 362-fold increase from the $834m generated in 1999, according to figures from JPMorgan Asset Management, accounting for about half of Asia’s rise.
The big one-time losses are a prelude to even bigger profits — a paradox caused by the tax cuts that recently zoomed through Congress and that largely benefit corporations.
A couple of provisions in the tax package are prompting many companies — those based in the United States as well as some foreign corporations with big American presences — to pay the taxman while anticipating huge savings for decades to come.
“Although hundreds of companies are going to report unfavorable charges, ultimately the legislation should be a big win for them,” said J. Richard Harvey, a Villanova University law professor and former I.R.S. official. “Multinationals have been pursuing this sort of legislation for over a decade. We wouldn’t have the legislation if they didn’t want it.”
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Wealthfront Inc., one of the largest independent digital wealth management startups, just closed a $75 million round of funding to help develop new products for its growing client base.
The company has amassed just over $9 billion in assets under management since launching in late 2011. While it took 13 months for the firm to get its first $100 million in assets under management, it added $100 million yesterday alone, Chief Executive Officer Andy Rachleff said in an interview. The new round should be “more than enough” to see them through to becoming profitable, he said.
Weinstein Co. is nearing the end of a sale process in which the embattled independent film studio could go for less than $500 million and its shareholders may lose all of their equity, said people close to the discussions.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
Crispin Odey’s European long-short equity fund deepened its losses for the year, plummeting about 20.5 percent in 2017, according to a performance document seen by Bloomberg News.
The Odey European fund, which is overseen by the hedge-fund manager himself in London, fell 8.2 percent in its Euro share class in December, the document shows. This follows the firm’s 49.5 percent slump in 2016, its worst annual decline since it started trading in 1992.
Brevan Howard Asset Management’s flagship macro hedge fund lost 5.4 percent last year, recording its worst annual performance since starting in 2003, according to an investor letter.
The Brevan Howard Master Fund, which managed $5.5 billion at the end of November, was flat last month, the letter showed. The full-year loss reverses the money pool’s 3 percent gain in 2016. A spokesman for the Jersey-based investment firm run by billionaire Alan Howard declined to comment.
Billionaire Michael Platt, who decided to relinquish his external clients and about $7 billion in fee paying assets two years ago, is on a roll. Free to take more risks and sweeten returns with borrowed money, the former hedge fund titan led his private investment firm to a 54 percent gain last year, according to a person with knowledge of the firm.
The outsize return came on top of an almost 50 percent jump in 2016, BlueCrest Capital Management’s first year of trading with Platt’s and his partners’ money. A spokesman for the firm declined to comment.
Platt’s success contrasts with mediocre returns at some of the largest hedge funds in the world. Traders including Alan Howard, Andrew Law and Ben Melkman lost money last year. “Investors are asking their managers to explain and justify their returns more often,” said Nicolas Roth, head of alternative assets at Geneva-based Reyl & Cie. “It seems that getting rid of the monthly return pressure was the recipe of success for BlueCrest.”
The Jersey-based firm said in December 2015 that it would return client money — about $7 billion of the $8 billion it managed — and wanted to trade with high levels of borrowed capital. The decision followed investor withdrawals after years of middling returns and concern an internal fund run for employees could pose a conflict of interest. In 2016, Platt said that leverage had played a strong part in generating returns.
ENERGY COMPANIES, NOCs, INDUSTRY
The Trump administration on Thursday proposed opening up nearly all the country’s offshore areas for oil and gas drilling, a move that would touch every coastal state, some that have been off limits to drillers for decades.
Under the plan announced by Interior Secretary Ryan Zinke, the government would offer for sale the largest number of oil and gas leases in U.S. history starting late next year. It would open up 90% of offshore areas for drilling as part of a five-year plan, reversing an Obama-era plan that would have kept only 6% of the same acres available for drilling.
The proposal lifts a ban on such drilling imposed by President Barack Obama near the end of his term and would deal a serious blow to his environmental legacy. It would also signal that the Trump administration is not done unraveling environmental restrictions in an effort to promote energy production.
While the plan puts the administration squarely on the side of the energy industry and against environmental groups, it also puts the White House at odds with a number of coastal states that oppose offshore drilling. Some of those states are led by Republicans, like Gov. Rick Scott of Florida, where the tourism industry was hit hard by the Deepwater Horizon rig disaster in 2010 that killed 11 people and spilled millions of gallons of oil into the Gulf of Mexico.
ENERGY NATURAL GAS, COAL
Natural gas surged to 60 times the going rate as howling blizzard conditions stoked demand for the furnace fuel across the U.S. Northeast. Spot prices for the fuel used to heat homes and generate power reached a record $175 per million British thermal units in New York, according to Consolidated Edison Inc. That’s a far cry from the $2.93 that U.S. gas futures have been averaging on the New York Mercantile Exchange this winter.
Other major trading hubs in New York and New England saw prices exceed $100, according to a person familiar with those markets. Even if the rally cools later Thursday as the storm lambasting New York and Boston moves off to the north, prices in the region probably will close in the triple digits, the person said.
POLLUTION, CLIMATE & ENVIRONMENT
Insurers are set to pay out a record $135 billion to cover losses from natural disasters in 2017, the world’s largest reinsurer said Thursday, driven by the costliest hurricane season ever in the United States and widespread flooding in South Asia.
Overall losses, including uninsured damage, came to $330 billion, according to the reinsurer, Munich Re of Germany. That tally was second only to 2011, when an earthquake and tsunami in Japan contributed to losses of $354 billion at today’s dollars.
A severe winter storm hammered the East Coast on Thursday, bringing ferocious conditions from Virginia to Maine and flooding parts of downtown Boston and other coastal communities.
Snow fell along the mid-Atlantic coast, closing schools, workplaces and airports and making roads treacherous from Interstate 95 east. Wind-whipped ocean water, already pumped up by extremely high tides, flooded onto roadways along the Massachusetts coast.
The storm, called a “bomb cyclone” by some meteorologists for how quickly the barometric pressure fell, created winds that topped 75 miles per hour in Nantucket and 65 miles per hour on Long Island, tearing the roof off a gas station and making some crossings impassable for trucks.
As treacherous as it was, elected officials warned that the storm was a prelude to worse misery, with days of subzero wind chills ahead that could freeze snowy roads and put homeless people in grave danger.
GEOPOLITICS, CRIME, TERRORISM
The Trump administration said it would freeze all security assistance to Pakistan until the country takes a tougher stance against terror networks on its territory, a move that reflects new tensions and could lead to problems in supplying U.S. troops in neighboring Afghanistan.
“Pakistan has played a double game for years,” U.S. Ambassador to the United Nations Nikki Haley said this week as she announced the U.S. would continue to withhold $255 million in already budgeted military aid. She said while working with the U.S., the country is also harboring terrorist groups that target American troops in Afghanistan. The U.S. originally suspended that payment in August.
The U.S. imposed sanctions on five entities tied to Iran’s ballistic-missile program, seeking to punish Tehran for its management of the economy as thousands of Iranians protest against their government.
Treasury Department officials blamed Iran’s Islamic Revolutionary Guard Corps and other parts of the government for funding proxies across the Middle East despite the needs of the Iranian people at home.
The person-to-person talks will be held January 9th — one day after North Korean leader Jim Jong Un’s birthday — at the Peace House, located on the South Korean side of the so-called truce village of Panmunjom, located in the Demilitarized Zone (DMZ)
between the two nations, Baik said.
The spokesman said the two sides agreed to work on the details of the talks “through the exchange of documents,” and added the agenda items of the talks will be “issues related to improving inter-Korean relationships including the Pyeongchang (Winter) Olympic Games.”
US President Donald Trump has agreed to suspend joint military exercises with South Korea in an attempt to avoid North Korean retaliation that could disrupt the Winter Olympics, a concession that may help efforts to establish a thaw between Pyongyang and Seoul.
The suspension comes as the apparent thaw between the two countries accelerated on Friday when South Korea confirmed that Pyongyang had accepted Seoul’s offer of talks for next week. South Korea’s unification ministry said the agenda will include the Pyeongchang Winter Olympics as well as other issues of mutual interest.
A suicide bomber working for the Islamic State attacked a market where shopkeepers were protesting against the police in Kabul late on Thursday, killing at least 20 people and wounding more than two dozen others, officials said.
Nasrat Rahimi, a deputy spokesman for the Interior Ministry, said that civilians and members of the security forces were among the casualties, which he put at 20 dead and 30 wounded. Other security officials said that most of the victims were members of the country’s police force.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
A US government-sponsored cyber security team has stepped back from its drastic warning about the impact of a pervasive computer security problem that came to light this week, as the tech industry struggled on Thursday to understand the scope of a problem that affects nearly all computers and smartphones.
The group at Carnegie Mellon University, which is backed by the Department of Homeland Security, advised computer users to apply software “patches”, or repairs, as a solution to the problem. It said these would “mitigate” the risk of attacks, though it did not say whether it believed they would fully resolve the issue.
The disclosure of security flaws in computer chips dealt Intel Corp. what seemed like a sudden crisis, but behind the scenes it and other tech companies and experts have been grappling with the problem for months.
Apple Inc. late Thursday became the latest tech giant to acknowledge it was affected by the vulnerabilities. The company said all iPhones, iPads and Mac computers were exposed, and that it already issued updates to fix the flaws.
Keep your software up-to-date. That includes your operating system and apps like your web browser and antivirus software. Microsoft, Mozilla and Google have already released patches for Internet Explorer, Firefox and Chrome to help address the problem.
Installing an ad blocker on your web browser is also a safeguard, according to security experts. Even the largest websites do not have tight control over the ads that appear on their sites — sometimes malicious code can appear inside their ad networks. A popular ad blocker among security researchers is uBlock Origin.
“The real problem is ads are dangerous,” said Jeremiah Grossman, the head of security strategy for SentinelOne, a computer security company. “They’re fully functioning programs, and they carry malware.”
The country’s largest internet companies, and the government itself, have gathered ever more data on internet users. While Chinese culture does not emphasize personal privacy and Chinese internet users have grown accustomed to surveillance and censorship, the anger represents a nascent, but growing, demand for increased privacy and data protections online.
Fueled in part by widespread internet fraud and personal information theft, the call for privacy, if it continues, could become a major challenge to China’s internet titans, and eventually to the cyber-authoritarian aspirations of the Chinese government itself.
China has long had high levels of surveillance, from ubiquitous closed-circuit cameras in its big cities to the monitoring of much of its citizens’ online communications. But such efforts have proliferated as new technologies like facial recognition have begun to be rolled out and artificial intelligence has made crunching vast amounts of data much easier.
For now, it is far from clear that this rising discomfort will give way to policy changes. Many Chinese people, even as they express concerns about how companies use their data online, offer little criticism of Beijing’s desire to use that data to help compile a broad social tracking system that rewards what it regards as good citizens and punishes others.
That Murdoch got suckered by Wolff says volumes about Murdoch’s naiveté. But the fact that Trump got suckered by Wolff a decade after his frequent telephone companion Murdoch got suckered says even more. Did Trump never ask Murdoch about Wolff? (If that’s the case, Murdoch would have very good reason to have called Trump a “fucking idiot,” as Wolff reports.)
How can it be that Murdoch never volunteered to Trump in one of their phone calls that Wolff would smile in his face but ultimately stab him? Wolff’s penetration of the White House presents two equally damning conclusions about Trump—that’s he’s too much of an egoist to care who might be loitering around the White House, gathering string on him, and that he’s too incurious about the world to spot a potential danger to his presidency.
If ever there were a man who deserved to get Wolffed, it’s Donald Trump.
The threats did not appear to work, at least as far as the book is concerned: Wolff and his publisher announced Thursday that publication had been moved forward four days to Friday because of what they described as “unprecedented demand.”
But legal experts and historians said the decision by a sitting president to threaten “imminent” legal action against a publishing house, a journalist and a former aide represented a remarkable break with recent precedent and could have a chilling effect on free-speech rights.
President Trump threatened legal fire and fury on Thursday in an effort to block a new book portraying him as a volatile and ill-equipped chief executive, but the publisher defied his demand to halt its release and instead moved up its publication to Friday because of soaring interest.
“I authorized Zero access to White House (actually turned him down many times) for author of phony book!” Mr. Trump wrote on Twitter shortly before 11 p.m. “I never spoke to him for book. Full of lies, misrepresentations and sources that don’t exist. Look at this guy’s past and watch what happens to him and Sloppy Steve!”
Michael Wolff has tapes to back up quotes in his incendiary book — dozens of hours of them. Among the sources he taped, I’m told, are Steve Bannon and former White House deputy chief of staff Katie Walsh. So that’s going to make it harder for officials to deny embarrassing or revealing quotes attributed to them in “Fire and Fury: Inside the Trump White House,” out Tuesday. In some cases, the officials thought they were talking off the record. But what are they going to do now?
The Mercers were blunt on Thursday in cutting the cord, reiterating support for Mr. Trump while disavowing Mr. Bannon’s remarks and disowning his political endeavors. “My family and I have not communicated with Steve Bannon in many months and have provided no financial support to his political agenda, nor do we support his recent actions and statements,” Rebekah Mercer, Mr. Mercer’s daughter, said in a statement. “I have a minority interest in Breitbart News and I remain committed in my support for them.”
The reference to Breitbart seemed an implicit threat. Mr. Bannon is chairman of Breitbart, and many staff members there believe there is a strong chance he might lose the job, though he was dismissive of that possibility on the site’s daily editorial conference call on Thursday night, according to one person with knowledge of the call.
Mr. Bannon’s longtime benefactors, billionaires Robert Mercer and his daughter Rebekah Mercer, are actively distancing from him even before the expected release this week of a book that has roiled Messrs. Trump and Bannon’s relationship, according to two people close to the Mercers.
They and other Breitbart News Network LLC board members on Thursday were debating whether to oust Mr. Bannon as chairman, with many supportive of the move, according to a person familiar with the exchanges. Among the considerations are Breitbart’s contractual relationships with other entities, including Sirius XM radio, that involve Mr. Bannon.
Stephen K. Bannon’s main financial backer is formally cutting ties with the former Trump adviser. In a new statement Thursday, billionaire conservative donor Rebekah Mercer said that she has not spoken to Bannon, the former White House chief strategist, in many months and that she continues to support President Trump.
SILICON VALLEY, UNICORNS, STARTUPS, VC
In a Facebook post Thursday that highlights his company’s mounting difficulties, Mr. Zuckerberg said the social network has made “too many errors enforcing our policies and preventing misuse of our tools.” The Facebook chief executive, a self-described optimist about technology, said promising tools such as encryption and cryptocurrency could help counter concerns about the growing power of technology giants, but added that they, too, carried risks that needed to be deliberated.
“The world feels anxious and divided, and Facebook has a lot of work to do—whether it’s protecting our community from abuse and hate, defending against interference by nation states, or making sure that time spent on Facebook is time well spent,” he wrote. “My personal challenge for 2018 is to focus on fixing these important issues.”
Former Uber Technologies Inc. Chief Executive Officer Travis Kalanick, who has long boasted that he’s never sold any shares in the company he co-founded, plans to sell about 29 percent of his stake in the ride-hailing company, people with knowledge of the matter said.
Kalanick stands to reap about $1.4 billion from the transaction with SoftBank Group Corp. and a consortium of investors who have agreed to buy equity valuing Uber at $48 billion, said the people, who asked not to be identified discussing private negotiations. Kalanick, who owns 10 percent of the company, had offered to sell as much as half of his stake — the maximum board members were allowed to tender. He had to pare back the amount because of limits outlined in the agreement between Uber and the buyers, the people said.
RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
Sears Holdings is closing an additional 103 stores around the country, as it struggles to win over customers who are increasingly shopping online. The beleaguered retailer on Thursday said it will close 64 Kmart stores and 39 Sears stores by early April. The company has shuttered more than 400 locations in the past year, leaving it with about 875 stores. The closures include a Kmart store in Crofton, Md., as well as 13 Sears and Kmart locations in Pennsylvania.
Macy’s said its same-store sales rose 1% in November and December from a year earlier, while Penney reported a 3.4% increase. The results were an improvement from a year earlier, when declines occurred at both chains. The mall anchors are the first large retailers to give investors a readout on the holiday season.
AUTOS, ELECTRIC, SELF-DRIVING
As Japan embraces autonomous-driving technologies with more cars able to brake for themselves or warn drivers of impending collisions, traffic deaths have fallen to record lows.
Fatalities fell more than 5% to 3,694 in 2017, the lowest since 1948 when Japan began maintaining statistics—and when there were far fewer cars on the road.
Japan’s National Police Agency, which released the statistics, credited the record low number of deaths to stricter enforcement by police and said the “spread and use of advanced technology” would help improve the figures further.
Tesla, headed by Elon Musk, has been struggling to overcome production bottlenecks and reported its biggest-ever quarterly loss in the July-September quarter.
The company burned through $1.1 billion in cash in that quarter and said in November it would spend roughly the same amount in the fourth quarter. It had about $3.5 billion in cash and cash equivalents as of Sept. 30. Chief Financial Officer Deepak Ahuja had reassured investors that cash flow would “improve significantly” over the next few quarters as Tesla continued to ramp up Model 3 production.
By getting hitched to Volkswagen, Aurora will be able to bring “mobility as a service” to urban areas, Urmson says, meaning an Uber-like service, minus the Uber human drivers. That’s a common move: Alphabet’s Waymo says it will start the same way. So do Uber, Ford, and GM. But that’s just a start: The deal with VW could expand to put Aurora software into other vehicles (delivery vans, trucks, shuttles), and use cases (urban and long haul shipping, micro-transit). The Hyundai agreement will put Aurora’s software into the Korean automaker’s cars, including some custom-developed rides that will roam cities all on their own.
HEALTH, PRODUCTIVITY AND WELLNESS
Fewer Americans are getting cancer, and more of those who do are surviving the disease, according to a new study.
In 2015, the most recent year with available data, cancer deaths dropped to 158.6 per 100,000 people, according to a report released Thursday by the American Cancer Society. That rate is 26 percent lower than in 1991, according to the report, or about 2.4 million fewer deaths over that period.
While a number of breakthrough, high-cost drugs have improved the outlook for people with some deadly cancers, the biggest cause of the decrease in deaths is that Americans are smoking less. “It’s the low-hanging fruit,” said Ahmedin Jemal, the cancer group’s vice president of surveillance and health services research. “We’re going to continue to see this decline because of prevention, primarily reduction in smoking prevalence.”
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