Macro Links Mar 19th – “You Will Not Destroy America”
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- MCCABE, BRENNAN, MCCAFFREY, MUELLER
- CAMBRIDGE ANALYTICA
- SPY POISONING BACKLASH
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- TAXATION, WEALTH HAVENS, INEQUALITY
- RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
- KOREAN PENINSULA, MIDDLE EAST, NUCLEAR WEAPONS
- INFLATION, RATES, DEBT AND CREDIT, 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
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- COMMODITIES AGRICULTURE & SOFTS
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- ELECTORAL POLITICS
- SCANDALS, LAWSUITS, FINES, REGULATORY
- CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
MCCABE, BRENNAN, MCCAFFREY, MUELLER
Attorney General Jeff Sessions said Friday that he had fired former FBI deputy director Andrew McCabe, a regular target of President Donald Trump’s anger and criticism, just two days before his scheduled retirement date. McCabe immediately decried the move and suggested it was part of the Trump administration’s “war on the FBI.”
“I have been an FBI Special Agent for over 21 years. I spent half of that time investigating Russian Organized Crime as a street agent and Supervisor in New York City. I have spent the second half of my career focusing on national security issues and protecting this country from terrorism. I served in some of the most challenging, demanding investigative and leadership roles in the FBI. And I was privileged to serve as Deputy Director during a particularly tough time. For the last year and a half, my family and I have been the targets of an unrelenting assault on our reputation and my service to this country. Articles too numerous to count have leveled every sort of false, defamatory and degrading allegation against us. The President’s tweets have amplified and exacerbated it all. He called for my firing. He called for me to be stripped of my pension after more than 20 years of service. And all along we have said nothing, never wanting to distract from the mission of the FBI by addressing the lies told and repeated about us. No more…”
Brennan tweeted: “When the full extent of your venality, moral turpitude, and political corruption becomes known, you will take your rightful place as a disgraced demagogue in the dustbin of history. “You may scapegoat Andy McCabe, but you will not destroy America… America will triumph over you.”
Trump has been mysteriously silent on provocations from Russia. Early this month, Putin boasted of his nation’s nuclear weapons capabilities. A simulated video he presented appeared to depict next-generation nuclear missiles striking Florida. Trump has yet to respond. Last month, Adm. Michael Rogers, head of the National Security Agency and U.S. Cyber Command, told the Senate Armed Services Committee that Trump had not given him any authority to take action against Russian cyber attacks. The Trump administration sanctioned several Russians and Russian organizations on Thursday for interfering in the U.S. presidential election and cyber attacks. But critics derided the action as too little too late.
Andrew McCabe, the former FBI deputy director who was fired Friday night, has met with special counsel Robert Mueller’s team and has turned over memos detailing interactions with President Trump, according to a source familiar with the exchange.
In making the statement, a senior member of Trump’s legal team joins the calls from his base to end the probe. As late as mid-December, another Trump lawyer, Ty Cobb, had brushed aside talk of stopped Mueller’s investigation, stressing that there was “no consideration at the White House of terminating the special counsel.” The president himself has called the Mueller probe a “witch hunt,” but has not publicly urged Rosenstein to shutter it.
Gowdy’s comments came a day after Trump’s attorney John Dowd called for Mueller’s investigation to be shut down. Gowdy issued the same exhortation to Dowd: “If you have an innocent client, Mr. Dowd, act like it.” Trump himself spent the weekend lobbing repeated Twitter attacks at Mueller’s investigation over the weekend, including on Sunday, when he labeled Mueller’s team of prosecutors “hardened Democrats.”
“It was a horrible day for democracy. To have firings like this happening at the top from the president and the attorney general does not speak well for what’s going on,” Flake said on CNN’s “State of the Union.” Asked if he believes the president is laying the groundwork to fire Mueller, Flake said “it seems to be building towards that. But I just hope it doesn’t go there, because it can’t.”
The New York Times revealed one possible reason for Trump’s especially intense wrath of late: the special counsel’s office has sent over a list of questions to the White House to set up a possible interview with the president. Last week, Mueller also subpoenaed documents relating to the Trump Foundation, crossing a “red line” the president had set dictating that Mueller not delve into Trump and his family’s personal finances. The investigation, in other words, appears to be drawing ever closer to the president and he’s responding the only way he knows how: by preparing to take out his enemy, no matter the consequences.
He may have played a pivotal role in the momentous political upheavals of 2016. At the very least, he played a consequential role. At 24, he came up with an idea that led to the foundation of a company called Cambridge Analytica, a data analytics firm that went on to claim a major role in the Leave campaign for Britain’s EU membership referendum, and later became a key figure in digital operations during Donald Trump’s election campaign. Or, as Wylie describes it, he was the gay Canadian vegan who somehow ended up creating “Steve Bannon’s psychological warfare mindfuck tool”.
Lukoil was interested in how data was used to target American voters, according to two former company insiders who said there were at least three meetings with Lukoil executives in London and Turkey. SCL and Lukoil denied that the talks were political in nature, and SCL also said there were no meetings in London. The contacts took place as Cambridge Analytica was building a roster of Republican political clients in the United States — and harvesting the Facebook profiles of over 50 million users to develop tools it said could analyze voters’ behavior.
Cambridge Analytica, the data firm alleged to have used the personal information of millions of Facebook users without their knowledge in its work for Donald Trump’s election campaign, is trying to stop the broadcast of an undercover Channel 4 News report in which its chief executive talks unguardedly about its practices. Channel 4 reporters posed as prospective clients and had a series of meetings with Cambridge Analytica that they secretly filmed — including at least one with Alexander Nix, its chief executive. Channel 4 declined to comment.
An examination by The New York Times and The Observer of London reveals how Cambridge Analytica’s drive to bring to market a potentially powerful new weapon put the firm — and wealthy conservative investors seeking to reshape politics — under scrutiny from investigators and lawmakers on both sides of the Atlantic. Christopher Wylie, who helped found Cambridge and worked there until late 2014, said of its leaders: “Rules don’t matter for them. For them, this is a war, and it’s all fair.”
Facebook is in another awkward situation. The company claims that it wasn’t breached, and that while it has suspended Cambridge Analytica from its service, the social giant is not at fault. Facebook contends that its technology worked exactly how Facebook built it to work, but that bad actors, like Cambridge Analytica, violated the company’s terms of service. On the other hand, Facebook has since changed those terms of service to cut down on information third parties can collect, essentially admitting that its prior terms weren’t very good. So how did Cambridge Analytica get Facebook data on some 50 million people?
The algorithm at the heart of the Facebook data breach sounds almost too dystopian to be real. It trawls through the most apparently trivial, throwaway postings –the “likes” users dole out as they browse the site – to gather sensitive personal information about sexual orientation, race, gender, even intelligence and childhood trauma. A few dozen “likes” can give a strong prediction of which party a user will vote for, reveal their gender and whether their partner is likely to be a man or woman, provide powerful clues about whether their parents stayed together throughout their childhood and predict their vulnerability to substance abuse. And it can do all this without an need for delving into personal messages, posts, status updates, photos or all the other information Facebook holds.
Aleksandr Kogan, the Cambridge University academic who orchestrated the harvesting of Facebook data, had previously unreported ties to a Russian university, including a teaching position and grants for research into the social media network, the Observer has discovered. Cambridge Analytica, the data firm he worked with – which funded the project to turn tens of millions of Facebook profiles into a unique political weapon – also attracted interest from a key Russian firm with links to the Kremlin.
The demands came in response to news reports Saturday about how the firm, Cambridge Analytica, used a feature once available to Facebook app developers to collect information on 270,000 people and, in the process, gain access to data on tens of millions of their Facebook “friends” — few, if any, of whom had given explicit permission for this sharing. Though both companies have been embroiled in investigations in Washington and London for months, this weekend’s demands have taken on a more personal tone, focusing explicitly on Zuckerberg, who has not testified publicly on these matters in either nation.
SPY POISONING BACKLASH
The Russian chemist who revealed the existence of the novichok family of chemical agents to the world has dismissed the notion that a non-state actor could be behind the poisoning of former spy Sergei Skripal and his daughter in Salisbury, England, earlier this month. Vil Mirzayanov, 83, said the chemical was too dangerous for anyone but a “high-level senior scientist” to handle and that even he – who worked for 30 years inside the secret military installation where novichok was developed and gained extensive personal experience in handling the agent – would not know how to weaponize it. He said he did not see how a criminal organization or other non-state group could pull off such an attack.
British Foreign Secretary Boris Johnson said Friday it was “overwhelmingly likely” that Russian President Vladimir Putin was behind the poisoning of a Russian former spy, the most direct British accusation against the Russian leader to date. Kremlin spokesman Dmitry Peskov immediately shot back, saying that bringing up Putin in the context of the case was “shocking and unforgivable in terms of diplomatic behavior.”
Mr. Johnson’s remarks were a significant escalation in the dispute between London and Moscow, directly linking the Russian leader to the poisoning of Sergei V. Skripal and his daughter, Yulia, in the English city of Salisbury. They came hours before Scotland Yard said it was treating the death of another Russian expatriate, who was a close associate of a prominent Putin critic, as a murder.
Russian elites have been secretly buying up London property for years through shell companies. With tensions high, British leaders mull a crackdown. “If you start to take away Astons and Bentleys and huge apartments in Kensington, freezing those assets, people will care a lot more,” said Cliff Kupchan, chairman of Eurasia Group, a consulting firm, adding that the pressure would be conveyed to Mr. Putin.
British police said Friday they have launched a murder investigation into the death of London-based Russian businessman Nikolai Glushkov after an autopsy revealed that he died from compression to the neck. Counterterrorism detectives are leading the case “because of the associations Mr. Glushkov is believed to have had,” the Metropolitan Police force said.
Russian politicians and oligarchs should be forced to disclose their property assets in the UK and face sanctions if they cannot explain where their money has come from, according to senior Labour and Liberal Democrat MPs pressing for a tough response to Sergei Skripal’s poisoning. New estimates reveal that prominent Russian figures with ties to the Putin regime own British properties worth nearly £1.1bn, mostly in London, although the true value is likely to be far greater because buyers can take advantage of offshore secrecy loopholes left open under Theresa May.
Sleepy Salisbury — famed for its majestic cathedral, which has been the subject of John Constable paintings and a backdrop to Thomas Hardy novels — is now the unlikely setting for the first use of chemical weapons in Europe since the second world war, and Ground Zero for the worst crisis in UK-Russia relations since the Cold War.
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
On Reddit earlier this week, one contributor, under the heading “I just discovered that I owe the IRS $50k that I don’t have, because I traded in cryptos. Am I fucked?”, wrote they had ended up with a $50,000 tax liability on trades after they sold $120,000 worth of bitcoin to buy different coins. The current value of those coins is about $30,000. “I feel like I might have accidentally ruined my life because I didn’t know about the taxes,” the poster wrote. One complication for crypto investors is that digital currencies that were, in part, devised to operate outside of government and banking industry oversight, are still of interest to the US tax authorities, who look at cryptocurrency as property and not currency.
The 2018 Joint Economic Report – an assessment of the nation’s economic status and recommendations for the upcoming year – notably includes an entire section dedicated to cryptocurrencies and blockchain. This is the first known instance of the technology being mentioned in such a substantial way in the annual publication, which is produced by Congress’ Joint Economic Committee and draws on members from both the House of Representatives and the Senate.
By March 16, the IRS will have data on about 13,000 Coinbase account holders who bought, sold, sent or received digital currency worth $20,000 or more between 2013 and 2015. The data include the customer’s name, taxpayer identification number, birth date and address, plus account statements and the names of counterparties. Criminal tax lawyers expect the IRS will act on the information and high-profile cases will follow.
According to an announcement from the Israel Securities Authority (ISA) on Wednesday, the watchdog said it will bar the entry of public companies who mainly hold, invest in or mine cryptocurrencies from the indices, citing high volatility as a risk for passive investors whose portfolios track the indices.
The State Department said this is the government agency’s first major project on this issue using blockchain, reinforcing the technology’s growing application for social causes. According to the International Labor Organization, nearly 25 million people work in forced-labor conditions worldwide, with 47 percent of them in the Asia-Pacific region.
Prosecutors in South Korea carried out a raid of three crypto exchanges in the country last month, confiscating computer hard drives, mobile phones, and financial records after a January investigation showed that some of the customers’ crypto holdings had been moved to the bank accounts belonging to exchange managers, the Wall Street Journal reported today, March 16.
Genesis Capital, the recently launched subsidiary of market making firm Genesis Trading, has close to $100 million in loans outstanding, a person familiar with the company’s operations told Business Insider. That’s a striking milestone, considering the business was launched two weeks ago. Genesis Trading was one of the first trading firms to jump on the bitcoin bandwagon. The company spun-off from SecondMarket’s cryptocurrency trading desk in 2015. The new lending business has attracted more than 60 clients, including market making firms and cryptocurrency hedge funds, the person said.
Visa’s chief financial officer told mainstream media he thinks Bitcoin and cryptocurrencies are used by “every crook and dirty politician” March 16. In an interview, Vasant Prabhu directly linked the assets to crime, saying that other people talking about buying and selling Bitcoin “have no clue” and are “a real shock” to him. “With a currency issued by the Federal Reserve, I know who stands behind it,” he said. With cryptocurrency, conversely, “Who’s good for the money? Who the hell knows?” Prabhu joins a seemingly diminishing number of major legacy finance figures decrying the merits of cryptocurrency.
A small lakeside town in upstate New York is fed up with Bitcoin miners using up so much of its low-cost electricity. Plattsburgh, whose residents are a quick jaunt from the Canadian border, has put an 18-month moratorium on cryptocurrency mining to preserve natural resources, the health of its residents, and the “character and direction” of the city.
Traders who look for future price direction in chart patterns are finding more indicators suggesting the world’s largest digital currency may have further to fall. Bitcoin’s 50-day moving average has dropped to the closest proximity to its 200-day moving average in nine months. Crossing below that level — something it hasn’t done since 2015 — signals fresh weakness to come for technical traders who would dub such a move a “death cross.” Another moving-average indicator of momentum has already turned bearish.
Messaging app Telegram is finishing up the biggest digital token sale in history, hoping to raise $2.55 billion. Valuing it requires unusual computational gymnastics like pondering illegal weapons sales. That’s according to Aaron Brown, a former managing director at renowned quantitative investment firm AQR Capital Management LLC. He owns Bitcoin, so digital currencies don’t scare him, but he’s passing on the Telegram deal, in part because it’s overvalued. But his thought process — which involves everything from internet companies to Silk Road, the website that peddled guns and drugs for Bitcoins before being shut down — is instructive.
More than 90 percent of American adults don’t own cryptocurrencies — and most have a lot of concerns about the coins, a new survey from Finder found. Overall, only about 8 percent of the U.S. population has invested in digital tokens such as Bitcoin that have dominated headlines for the past year with more than 1,000 percent gains before many of the speculative assets collapsed in price the past few months.
The model Fundstrat used for calculating the cost of mining one BTC includes the cost of equipment, overhead such as sustaining cooling apparatuses, and the cost of electricity, assumed to be 6 cents per kilowatt. The head of quantitative data science at Fundstrat, Sam Doctor, said that the cost of replacing equipment takes up more than half of the overall cost of mining.
Eximchain, a supply-chain focused blockchain startup founded in 2015, has raised $20 million from a group of investors. Founded at the Massachusetts Institute of Technology’s media lab, the startup raised the funds to continue developing its own public blockchain – powered by private smart contracts – to provide different solutions for recording, transacting and distributing data for supply chain stakeholders.
On Thursday, Stephanie Avakian, co-director of the SEC’s Enforcement Division, said the agency had “dozens” of investigations that relate to cryptocurrency and ICOs, according to Bloomberg BNA, during an appearance at this week’s Investment Adviser Association conference in Washington, D.C. During her remarks, Avakian said that the agency is “seeing a lot in the crypto space.”
In a first-of-a-kind transaction happening Friday, all it takes to switch from the old world of centralized clearing houses to the frontier of decentralized blockchains is the press of a button. A company called Marex Solutions is issuing two separate structured notes. Both notes were created using ResonanceX, an investing platform built by Guillaume Chatain, a former managing director at JPMorgan Chase. The first note will be settled the old-fashioned way, on Clearstream, the European clearing house.
PayPal co-founder Peter Thiel described Bitcoin as “a hedge against the whole world falling apart” in new bullish comments March 15. Speaking at the Economic Club of New York quoted by CNBC, the Facebook and rumored $20 mln Bitcoin investor said that while he did not foresee Bitcoin fulfilling the role of a currency as yet, its ability to replace gold as a store of value was different.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
President Donald Trump’s tensions with China came to the fore on the eve of a meeting of global finance chiefs, which was already set to be dominated by opposition to the U.S.’s tariffs on steel and aluminum imports. A top U.S. Treasury official opened a conference on Sunday by announcing America’s withdrawal from decade-old economic talks with Beijing, saying the White House is “disappointed” with the Chinese government’s expanding role in its economy.
The dust has yet to settle on President Trump’s decision to impose sweeping tariffs on steel and aluminum imports, but the White House is preparing another major trade measure, this time aimed squarely at China. Mr. Trump and his top trade advisers are readying a raft of actions to penalize China’s theft of American intellectual property, including tariffs on at least $30 billion of annual Chinese imports, people familiar with the discussions said.
The Trump administration’s proposed crackdown on China’s trade practices could hit one sector where the U.S. runs a big trade surplus: higher education. The White House is considering limiting visas to Chinese students as part of a broad package of measures targeting Beijing, which the U.S. accuses of violating intellectual-property laws and other misdeeds. A White House official said the package, including tariffs, could be unveiled later this month.
Members of the MSCI China Index depend on the U.S. for just 5 percent of their sales, Citigroup Inc. strategists led by Robert Buckland wrote in a March 15 note. By comparison, North America accounts for about 22 percent of revenue for British firms, 17 percent for those based in the euro area and 15 percent for Japanese companies, according to the note.
TAXATION, WEALTH HAVENS, INEQUALITY
A transatlantic rift over tax and trade widened on Friday after Washington opposed the EU’s plans for a levy on digital revenues and Brussels set out its retaliatory measures over the US’s steel and aluminium tariffs. Steven Mnuchin, US Treasury secretary, said the US was firmly against proposals by any country to single out technology companies, as the EU stepped up efforts to raise more taxes from American tech groups including Google, Facebook and Apple.
Republicans aiming to use an upcoming spending bill to fix a glaring problem with their recently passed tax overhaul are running into a wall with Democrats, who were shut out of the tax law process and now don’t want to cooperate unless they get something in return. They say they warned Republicans that pushing through the $1.5 trillion tax law in a matter of weeks — without public hearings — would result in problems and unintended consequences. And now that such issues are emerging, some Democrats resent being asked to lend their votes to a solution.
Finance ministers from the Group of 20 largest economies will discuss ways to increase taxes from the digital economy during a meeting in Buenos Aires next week. But a report prepared ahead of that gathering by the Organization for Economic Cooperation and Development, which helms a global effort to improve tax rules, said there were “a number of areas where there are clear differences of view” that won’t be resolved before 2020.
The United States just started another epic borrowing binge. And if you borrow money — through a credit card, a mortgage or an auto loan — you could end up paying the price. It is a phenomenon that economists call “crowding out.” Large-scale government borrowing sucks up the supply of available funds, driving up financing costs for just about everyone else. And there are signs it’s already playing out.
RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
Ivanka Trump is likely to face new legal scrutiny by Robert Mueller following reports that the special counsel has demanded documents from the Trump Organization, where she served as a senior executive. Trump, who is married to Jared Kushner, a senior White House adviser who was recently stripped of his security clearance, has been described by her father as a “natural-born dealmaker” and was known to have played a leading role in deals between the Trump Organization and a Russian national who has come under scrutiny and bragged about his ties to top Kremlin officials.
President Trump has decided to remove H.R. McMaster as his national security adviser and is actively discussing potential replacements, according to five people with knowledge of the plans, preparing to deliver yet another jolt to the senior ranks of his administration.
President Donald Trump and John Kelly have settled on a truce, at least temporarily, to keep the chief of staff in place as the White House grapples with the turbulence of several senior departures and the prospect of further changes to come.
Stormy Daniels’ lawyer claims she was physically threatened by someone. The adult film actress’ lawyer, Michael Avenatti, said on MSNBC’s “Morning Joe” Friday that someone physically threatened his client — but he declined to reveal who allegedly threatened her.
Vanessa Trump has hired a criminal defense attorney to represent her in her divorce from Donald Trump Jr. just as special counsel Robert Mueller subpoenaed the president’s family business. White Plains, NY-based lawyer David Feureisen is representing Vanessa, according to paperwork filed in Manhattan Supreme Court.
The Kushner Cos. routinely filed false paperwork with the city declaring it had zero rent-regulated tenants in dozens of buildings it owned across the city when, in fact, it had hundreds. While none of the documents during a three-year period when Kushner was CEO bore his personal signature, they provide a window into the ethics of the business empire he ran before he went on to become one of the most trusted advisers to the president of the United States.
KOREAN PENINSULA, MIDDLE EAST, NUCLEAR WEAPONS
North Korea almost doubled its electricity exports to China last year despite its own chronic power shortages, drawing in more revenue as other sources of income were shut off by international sanctions. At the same time, China has been helping to boost North Korea’s power supplies by building two new joint-venture hydropower plants on the Yalu River that forms their common border, according to notices on Chinese government and procurement websites.
INFLATION, RATES, DEBT AND CREDIT, BALANCE SHEETS
North Korea almost doubled its electricity exports to China last year despite its own chronic power shortages, drawing in more revenue as other sources of income were shut off by international sanctions. At the same time, China has been helping to boost North Korea’s power supplies by building two new joint-venture hydropower plants on the Yalu River that forms their common border, according to notices on Chinese government and procurement websites.
America’s biggest foreign creditor is tightening its belt. China’s holdings of US government debt fell to a six-month low of $1.17 trillion in January, according to Treasury Department data published Thursday. The country remains the top foreign holder of US Treasury debt — a position its held for most of the last decade — but its move to reduce its investments comes amid rising trade tensions between the world’s two biggest economies.
People who would be put on the restricted lists included those found to have committed acts like spreading false information about terrorism and causing trouble on flights, as well as those who used expired tickets or smoked on trains, according to two statements issued on the National Development and Reform Commission’s website on Friday.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
Let’s say you’re driving to someone’s house in the country and you’ve been told to turn at the big rock—so big, you can’t miss it—and drive a mile down the side road. You’re driving on the main road and come to a big rock but it doesn’t reach the can’t-miss level, so you keep driving. Then you see another, even bigger rock and make the turn, but there’s no house down the road. So you double back and keep driving down the main road until you see a really huge rock. It’s enormous, and that’s the rock. We risk managers sometimes get fooled by the big rock and get negative too early. We’ve got something now that qualifies as the big rock. It’s these derivatives blow-ups. It’s the triple-B tranche of the ABX cracking and sinking in value. It’s CryptoKitties—a cartoon drawing of a digital cat that someone bought for the equivalent of $100,000. The hip bone is connected to the thigh bone. These events are all tied to manic speculation, whether it’s betting on something with the word crypto or shorting the VIX at historically low levels. It’s people telling you you’re insane for not seeing that this time is totally, fundamentally different.
In recent months, with bitcoin’s value and cultural prominence rising spectacularly, dozens of cryptocurrency mines have popped up in the rural West, following in the geographic footsteps of a previous gold rush. Lured by cheap rent and wide-open space, they’re bent on bringing “mining” back to a region that was largely defined by pulling precious materials from the earth — only this time, the gold is digital.
Xi’s strategy recognizes enormous challenges facing the country, and could make some of them easier to overcome: By centralizing power, he may indeed advance China to greater material success and full superpower status. But his methods involve great risk. Whatever happens, Xi is choosing to stand alone, and will own the outcome.
These days when Mr. Xi speaks, officials from the top of the Communist Party to the lowest village committees snap to unflinching attention. The pressure on them may grow now that Mr. Xi has swept away a constitutional term limit on his presidency, strengthening his grip over the country. But as these recent cases suggest, Mr. Xi’s daunting power may undercut effective policy or provoke public ire when lower officials scramble over each other to meet or exceed expectations, often leading to overreach and disarray.
The only company in the United States making beer kegs fashioned from American steel is struggling to survive. The president’s newly signed levies on imported steel are unlikely to help. The American Keg Company of Pottstown, Pa. — its prices undercut by kegs imported from China, France and Germany — slashed its workforce by a third earlier this year. Only 20 people now work where 30 were once employed.
In this view, crime is not defined by a specific offense. Crime is defined by who commits it. A political movement that rails against “immigrant crime” while defending alleged abusers and child molesters is one that has stopped pretending to have any universalist aspirations. The president’s moral framework springs from an American tradition of cultivating fear and contempt among its white citizens against immigrants, indigenous people and people of color, who are placed on the other side of “the law.” It’s a practice that has taken on new strength at a time when many white people fear they may be outnumbered, outvoted and out of time.
So what exactly is Mueller looking for? We don’t know, but it’s unlikely that he’s just fishing around. It’s obvious that Mueller’s investigation has been extremely systematic, and he has on his team a number of prosecutors with experience in areas such as money laundering. If he’s demanding documents from the Trump Organization, chances are he knows exactly what he’s after.
“Londongrad” is the nickname, not entirely affectionate, that wealthy Russians have bestowed upon Britain’s capital. The term doesn’t just designate a physical place, though many Russians do indeed live here. Londongrad is more properly a state of mind — encompassing not only the nonresident owners of large houses in Kensington, but also the British institutions, banks, law firms, accountants, private schools, art galleries, and even the Conservative Party fundraisers that have gone out of their way to accommodate them.
The Labour leader’s response would be worrying even if it only reflected a failure of judgment. But it is worse than that. Mr Corbyn’s entire political career and worldview have been shaped by a deep suspicion of the west in general and the US in particular. Decades of leading marches and addressing “peace” rallies underpin his rejection of the western orthodoxy — he has called for Nato to be disbanded, for example. By contrast, Mr Corbyn has been all too willing to call for understanding of unsavoury groups or regimes — inviting Irish Republicans to the House of Commons soon after the Brighton bombing, describing Hamas and Hizbollah as “friends” and lauding Hugo Chávez’s Venezuela.
The next six years will show whether Russia can get away with not following any rules. If Putin continues getting away with aggression of various kinds, if it turns out that whatever rules have existed since the Soviet Union’s collapse do not apply to a country as big and militarily powerful as Russia, if the economic damage to the Russian state and companies is as minimal as it has been in the last six years, and if non-Western nations continue working constructively with Putin the way Turkey, Middle Eastern nations and China have been doing, Putin’s legacy will be assured. His successors will learn the lesson that thuggishness is no sin if you have the strength, or even just the appetite for risk, to back it up.
Trade deficits and surpluses are nothing more nor less than borrowing and lending between countries. Borrowing to buy a home or run a business is not for losers only, and neither are trade deficits. What matters are the terms of the loan and the use to which it is put. America is uniquely positioned to borrow cheaply from the rest of the world by virtue of its large economy, strong military, sound policies and the dollar’s historical role in international trade and finance. As long as we use foreign loans to help our economy grow, a trade deficit can leave us better off.
Many of the billionaires and princes swept up in the Saudi corruption crackdown have been released. Sheikh Mohammed Al Amoudi has not. While Sheikh Amoudi lacks a princely pedigree, he is in other ways an archetype of those entangled in the kingdom’s power play: a billionaire with assets stretching across the world who had close ties to previous governments.
It’s an audacious proposal to get Californians out of their cars: a bill in the State Legislature that would allow eight-story buildings near major transit stops, even if local communities object. The idea is to foster taller, more compact residential neighborhoods that wean people from long, gas-guzzling commutes, reducing greenhouse-gas emissions. So it was surprising to see the Sierra Club among the bill’s opponents, since its policy proposals call for communities to be “revitalized or retrofitted” to achieve precisely those environmental goals.
I tell Bisnow that his alpine town for wealthy elites could be perceived as dangerously detached and exclusive. He says he’s “really not into exclusive communities”, before taking a few moments to mull the meaning of the word exclusive. “It is one of those words like ‘luxury’ or ‘utopia’,” he says. “It is one of those words that is very charged. Maybe there’s a yoga retreat for people who are really great at yoga, and I can’t get into it. Does that mean that it’s exclusive?”
Li Ka-shing, a high school dropout who got his start selling plastic flowers, will retire from the empire that made him Hong Kong’s richest man, he said on Friday, bringing a symbolic end to an era when the road to China’s riches went through the onetime British colony. Mr. Li, 89, who some called Superman for his business acumen, grew his plastic manufacturing business into a sprawling conglomerate. He did so just as Hong Kong was undergoing a transformation from a British trading post into a beating heart of capitalism and the entry point into China, which was then closed off from the world.
Many residents of Ulan Bator, Mongolia, use coal-burning stoves during the winter months when staying warm is a matter of survival. But the pollution is hazardous to their health. In recent years, the predominantly lower- to middle-income migrant workers who reside in these unplanned districts have been burning over a million tons of raw coal per year. The heaviest use is during the winter when staying warm is a matter of survival as temperatures remain well below freezing for weeks at a time. Those who can’t afford coal often burn garbage, adding plastics and other pollutants into the soupy mix.
Britain’s diplomatic and military establishment is a bit like an aristocratic family that has inherited a crumbling pile in the country and insists on keeping up appearances. The defence budget has fallen by 20% in real terms since 2007. The Foreign Office’s budget has fallen by even more. Many embassies in Africa consist of one man (or woman) and a dog. Look beneath the surface of Britain’s global companies and you find a long tail of ill-managed firms that know nothing of global markets. Talk of “global Britain” fosters dangerous illusions. It encourages grandiloquent promises about intervening here and providing aid there. It also distracts attention from serious economic problems. A sensible government would try to do something about dismal companies that trap people in unproductive work, rather than dream of freeing Britain’s successful multinationals from the (often imaginary) shackles of Brussels.
Jim Chanos, the short seller famous for betting against Enron, has said he thinks Tesla Inc.’s stock is “worthless.” Chanos got some new evidence this week that may support his short sales against Elon Musk’s car company. A string of executives have headed for the exits, including a surprising number from the company’s finance team, as Tesla is dogged by questions about whether it can meet its production targets.
Why have so many otherwise law-abiding elderly women resorted to petty theft? Caring for Japanese seniors once fell to families and communities, but that’s changing. From 1980 to 2015, the number of seniors living alone increased more than sixfold, to almost 6 million. And a 2017 survey by Tokyo’s government found that more than half of seniors caught shoplifting live alone; 40 percent either don’t have family or rarely speak with relatives. These people often say they have no one to turn to when they need help.
CENTRAL BANKS & MONETARY POLICY
President Xi Jinping has picked an American-trained economist known for pushing pro-market overhauls to run the central bank, according to people with knowledge of the matter, adding to an economic team strong on proponents of liberalization. The changing of the guard at the central bank is part of a broad reshuffle of government positions following on from a new Communist Party leadership installed last fall. Mr. Xi has seized the opportunity to shape an economic team, which now mostly consists of his trusted allies.
USA ECONOMY DATA, CITIES AND STATES
U.S. consumers’ confidence hit a fresh 14-year high this month, as lower-income households reported feeling more optimistic about the economy. The University of Michigan on Friday said the preliminary result of its consumer-sentiment index was 102.0 in March, up from 99.7 in February. That was the highest level since January 2004, and well above the 99.0 economists surveyed by The Wall Street Journal had expected.
U.S. housing starts declined in February, returning to a long-term trend of modest improvement in single-family construction and a slowdown in apartment building. Total housing starts fell 7% in February from the previous month to a seasonally adjusted annual rate of 1.236 million, the Commerce Department said Friday.
While strong job gains, rising industrial production and elevated consumer confidence indicate underlying health, the data as a whole suggest the tax cuts haven’t had a major impact yet. With Americans starting to enjoy fatter paychecks, though, most economists see the sluggishness as temporary, blaming it on factors including inclement weather, delays in tax refunds and consumers taking a break after a late-2017 spending spree tied partly to post-hurricane rebuilding.
GLOBAL ECONOMY, INTERNATIONAL
Xi Jinping was set to be confirmed to a second term as China’s president, the final formality in a five-month political shake-up that saw him emerge as the country’s paramount leader. China’s rubber-stamp parliament is expected to overwhelmingly approve Xi’s appointment to a second five-year term on Saturday in Beijing. The decision by the National People’s Congress comes days after it voted 2,964-to-2 to repeal a constitutional provision that would’ve barred Xi, 64, from a third term.
POSITIONING, INFLECTION, MARKET CALLS
Outsized returns delivered by Amazon.com, Netflix and other heavyweight technology stocks have made them heroes on Wall Street, but some strategists warn that investors’ reliance on them exacerbates the risk of a steep downturn. Amazon’s 35 percent surge in 2018 has pushed its market capitalization up to $770 billion, equivalent to 3 percent of the S&P 500 and close behind Apple’s nearly 4 percent share of the index. Technology stocks have been widely viewed in recent months as a “crowded trade,” a situation where most investors have the same opinion, increasing the potential for a volatile selloff if sentiment changes.
Ructions in February that sent the benchmark US S&P 500 index briefly falling into a technical correction sparked concerns that the nine-year-old bull market could be running out of steam. But sentiment has once again turned optimistic. “Extraordinarily strong earnings momentum, corporate tax cuts and fiscal stimulus underpin our positive view” of US stocks, said Richard Turnill, BlackRock’s chief investment strategist. The world’s biggest money manager last month formally upgraded its view on US stocks to ‘overweight’.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Shares of Zscaler jumped on Friday to $33, a gain of more than 106 per cent from the offer price, giving the cloud security company the best first-day “pop” for a US-listed initial public offering this year, according to Dealogic, and a market value of $3.9bn. The rally came even after the company had twice raised the price of its offering this week, first increasing the indicated range to $13-$15 per share and finally setting the price at $16 late on Thursday.
The $76 billion Alibaba stake owned by the rump of Yahoo could finally be unwound. Recent corporate tax cuts may end up being the catalyst to close one of the hedge-fund industry’s highest-profile trades.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
Activist investors aren’t a new thing in Europe, but they ratcheted up campaigns dramatically in 2017, according to Katherine Moir, a mergers and acquisitions partner at global law firm Clifford Chance. Elliott has stood out as “a key player and at the more disruptive end of the spectrum,” Ms. Moir said.
Gray may not, at first glance, seem like much of a risk taker. He joined Blackstone right out of college and never left. People who’ve worked with him describe him as preternaturally composed. “He’s that right combination of somebody you want your daughter to bring home when she’s going on dates, somebody you trust with your money, and somebody with steel balls,” says Thomas Saylak, who was Gray’s boss as co-head of real estate at Blackstone until 2002. “He has the ability to make hard decisions under stress.”
Paulson & Co’s assets have now shrunk to about $9bn, of which two-thirds is Mr Paulson’s own money, and this week the hedge fund manager let a string of employees go. They included two partners, Victor Flores and Allen Puwalski, and two senior traders, Keith Hannan and Brad Rosenberg, according to people familiar with the matter. The news was first reported by Business Insider. “We are rightsizing the firm to focus on our core expertise in areas that are growing,” a spokesman for Paulson & Co said in a statement.
Saudi Arabia’s sovereign-wealth fund is moving to buy a stake in Endeavor, the world’s largest talent agency, Saudi officials said, as the kingdom builds an entertainment industry with a once-unthinkable partner: Hollywood. The deal would give the kingdom a foothold in the firm with the most clients, one that represents American talent across film, music, sports and media, including Oprah Winfrey, Dwayne Johnson and Serena Williams.
COMMODITIES AGRICULTURE & SOFTS
Thailand’s expanding sugar output is surprising traders and giving more ammunition to bears betting that a global oversupply will further weigh on prices. Bigger output is adding to a global surplus that traders from Alvean to Cofco International Ltd. already forecast will continue for a second year next season. That’s made raw sugar this year’s worst performer in a Bloomberg gauge of 22 commodities, with the sweetener trading near the lowest since 2015 in New York.
BREXIT, SCOXIT, LONDON, UK ECONOMY
U.K. labor costs are rising at their fastest pace in more than two years, figures Friday showed. The cost of employing someone for an hour of work rose 3.7 percent in the fourth quarter compared with a year earlier, up from 3.1 percent in the previous three months and the most since the July-September period in 2015, the Office for National Statistics said.
Emmanuel Macron pressed Angela Merkel to reinvigorate plans to overhaul the eurozone on Friday, as concerns grow in Paris over Berlin’s commitment to meaningful reforms. The French president conveyed his impatience over the slow progress of negotiations at a meeting with the German chancellor at the Elysée palace.
French and German leaders pledged to present a road map for a stronger euro area by June, signaling a push to overcome historic differences as Chancellor Angela Merkel begins her new term. “For many years, Europe has waited for the French-German couple to move forward,” French President Emmanuel Macron said alongside Merkel in Paris on Friday. “That’s where we’re at and this is the road that’s now ahead of us.”
GEOPOLITICS, CRIME, TERRORISM
Airstrikes killed and burned scores of people Friday in a rebel-held suburb of Damascus, rescue workers and a monitoring group said, as the Syrian army closed in amid a growing exodus from the area. Activists and doctors from the town of Kfar Batna shared photographs of charred bodies — some mangled in the wreckage, others wrapped in rugs and blankets. The Syrian-American Medical Society, a nonprofit that supports medical facilities in the area, said 61 people were killed in the attack.
European foreign ministers, anxious to salvage the nuclear deal with Iran, on Monday plan to sketch out new measures to increase pressure on the country over its ballistic missile program and regional actions, European Union officials said. The talks come as time shrinks for the EU and the U.S. to agree on steps aimed at meeting President Donald Trump’s demands to strengthen the 2015 nuclear deal and crack down on Iran’s other activities.
An American military helicopter crashed Thursday near the city of Qaim in western Iraq, killing some of the seven service members aboard, United States officials said. It was unclear why the aircraft, an HH-60 Pave Hawk, went down, the officials added. They did not rule out ground fire, and they could not confirm how many people had been killed.
A court in London convicted the teenager, Ahmed Hassan, 18, of attempted murder for leaving an explosive device, concealed in a bucket and a supermarket plastic bag, on a train at the Parsons Green Station in west London on Sept. 15. The explosion at the height of the morning rush and the resulting panic left 30 people injured, some with serious burns, but none were killed.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
The corporate playbook in China has long required a few extra pages on defense for companies with intellectual property at risk. To protect confidential discussions, companies sweep conference rooms and hotel suites for hidden listening devices, people familiar with corporate security say. Executives visiting China from abroad are often equipped with so-called burner phones that don’t have stored contacts, emails or other data vulnerable to theft. Text messages are sometimes encrypted, these people say.
United States officials and private security firms saw the attacks as a signal by Moscow that it could disrupt the West’s critical facilities in the event of a conflict. They said the strikes accelerated in late 2015, at the same time the Russian interference in the American election was underway. The attackers had compromised some operators in North America and Europe by spring 2017, after President Trump was inaugurated.
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
In Manila, there is a growing sense that the institutions of Philippine democracy are giving way as Duterte’s rule becomes increasingly personalized and authoritarian. “I am very worried,” said John Nery, associate editor and opinion columnist at the Philippine Daily Inquirer, one of the country’s largest newspapers. “It’s at the point where Duterte, confronting a journalist, said, ‘Press freedom is a privilege in a democracy.’ But it’s one of our very first freedoms.”
“I get it, that some of our opinion programming is there strictly to be entertaining. I get that,” he told the magazine. “I don’t work there. I wouldn’t work there. I don’t want to sit around and yell at each other and talk about your philosophy and my philosophy. That sounds horrible to me.”
Democrats have regained a double-digit advantage over Republicans as the 2018 midterm congressional campaign intensifies and the GOP works to persuade voters of the benefits of the tax cut it passed three months ago, a new Wall Street Journal/NBC News poll has found. Asked which party should control Congress, registered voters picked Democrats by a 50%-to-40% margin, the second time in three months the party claimed a double-digit advantage.
SCANDALS, LAWSUITS, FINES, REGULATORY
A cronyism scandal engulfing the Japanese government has taken a dark turn, with reports that a finance official left a note before his suicide saying that he was forced to rewrite crucial records. The finance ministry admitted this week that it had altered 14 documents surrounding the sale of public land at an 85% discount to a nationalistic school operator with links to prime minister Shinzo Abe’s wife Akie.
A federal investigation into sales practices at Wells Fargo now includes the bank’s wealth-management business, extending beyond the firm’s retail-banking unit where the problems originated.
Former South African President Jacob Zuma will face trial on 16 charges including graft and racketeering after prosecutors announced they’re pursuing a case shelved nine years ago amid allegations of political interference.
CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
For LinkedIn Corp. to justify the $27 billion that Microsoft Corp. paid for it in 2016, the professional social network must convince its 546 million members that it is more than a place to find jobs or pitch customers. Just 18% of LinkedIn members used the service daily in April 2016, according to Pew Research’s most recent look at the service’s usage in November 2016, a month before Microsoft closed the deal. That’s down from 21% a year earlier.
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