Macro Links Mar 21st – Congratulating Putin
You are viewing the Macro Links delayed archive. The real time Macro Links, posted each trading day, are available via the Mercenary Research Suite. To see how it works, click here.
MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- TRUMP CONGRATULATES PUTIN
- CAMBRIDGE ANALYTICA, FACEBOOK
- SELF-DRIVING FATALITY
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- FOREX, CARRY TRADES, EXCHANGE RATES
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- GUN CONTROL, POT BOOM, OPIOIDS, PUBLIC POLICY
- RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
- KOREAN PENINSULA, MIDDLE EAST, NUCLEAR WEAPONS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- USA ECONOMY DATA, CITIES AND STATES
- GLOBAL ECONOMY, INTERNATIONAL
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- ENERGY RENEWABLES, NUCLEAR
- COMMODITIES AGRICULTURE & SOFTS
- POLLUTION, CLIMATE & ENVIRONMENT
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- SCANDALS, LAWSUITS, FINES, REGULATORY
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
- AIRLINES, SHIPPERS, RAIL, TRANSPORTS
TRUMP CONGRATULATES PUTIN
The call came one day after the White House said there were no plans to congratulate Mr. Putin, who easily won a presidential election Sunday in which he faced no real competition. Both leaders have spoken of a desire for better relations, even as Western capitals have tried to isolate Russia over a raft of disputes.
President Trump on Tuesday congratulated President Vladimir V. Putin of Russia on his recent re-election victory, but failed to ask him about either the fairness of the Russian vote, which Mr. Putin won with a lopsided margin, or about allegations of Russian meddling in the 2016 presidential election. Mr. Trump also did not raise Russia’s apparent role in a nerve agent attack on a former Russian spy and his daughter on British soil — an act that prompted the United States to join with Britain, France and Germany in denouncing the Russian government for violating international law.
“Special attention was paid to making progress on the question of holding a possible meeting at the highest level,” the Kremlin’s statement about the phone call said. “In all, the conversation carried a constructive, businesslike character and was oriented toward overcoming the problems that have piled up in U.S.-Russian relations.”
The Russian leader was elected to a third six-year term with about 75 percent of the vote after a campaign in which rival candidates were excluded and state-controlled media showered praise on him. “Sham elections for a dictator,” Freedom House declared. Trump’s call with Putin drew a sharp retort from Senator John McCain (R-Ariz.), a fierce Putin critic who said in a statement that “an American president does not lead the Free World by congratulating dictators on winning sham elections.”
CAMBRIDGE ANALYTICA, FACEBOOK
The Federal Trade Commission probe — confirmed by a source familiar with the agency’s thinking and not authorized to speak on the record — marks the most substantial political and legal threat yet to Facebook as it grapples with the fallout from Cambridge Analytica and its controversial tactics. And it could result in the U.S. government slapping Facebook with a fine that might reach into millions, if not billions, of dollars.
Cambridge Analytica is suspending its chief executive, Alexander Nix, effective immediately, and is launching an independent investigation to determine if the company engaged in any wrongdoing, the company said. The moves followed the release of a video Monday that depicted Mr. Nix touting campaign tactics such as entrapping political opponents with bribes and sex. The sales pitch was captured by undercover journalists at British broadcaster Channel 4.
Parakilas said he “always assumed there was something of a black market” for Facebook data that had been passed to external developers. However, he said that when he told other executives the company should proactively “audit developers directly and see what’s going on with the data” he was discouraged from the approach. He said one Facebook executive advised him against looking too deeply at how the data was being used, warning him: “Do you really want to see what you’ll find?” Parakilas said he interpreted the comment to mean that “Facebook was in a stronger legal position if it didn’t know about the abuse that was happening”.
Facebook Inc.’s privacy crisis has turned into a shareholder crisis. The social media giant has lost over $60 billion in market value over the past two days, following revelations that personal data of millions of users was obtained by a data analytics firm. That’s more than the market capitalization of Tesla Inc. at around $52 billion or three times that of Snapchat owner Snap Inc. at about $19 billion.
Schrems, a law-school graduate who has taken on Facebook many times and won a landmark European Union court ruling in 2015, said he already sounded the alarm about a “privacy flaw” that exposed Facebook users’ data seven years ago. He filed complaints about the issue to the data regulator in Ireland, where the U.S. tech giant has its European base. No one listened, he said. “I find it amusing that people are now taking it seriously and getting upset about all this,” said Schrems in a phone interview on Tuesday. “I raised this all already in 2011.”
US regulators are set to grill Facebook about how user data were leaked to Cambridge Analytica, as the UK political consultancy suspended its chief executive. The Federal Trade Commission is asking the technology group for more information about how Cambridge Analytica, which worked for Donald Trump’s presidential campaign, obtained data of more than 50m Facebook users, mostly US voters, according to people familiar with the matter.
Front-running the stories along with the letters to newsrooms are but two of several ways Facebook failed to contain fallout from the Cambridge Analytica revelations. Silence on the part of Chief Executive Officer Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg didn’t help. Nor did a report late Monday in the New York Times that Chief Security Officer Alex Stamos is leaving after clashing with other executives, including Sandberg, over how Facebook handled Russian disinformation campaigns. Facebook said Stamos is still at the company, but didn’t outright deny that he plans to leave.
Pushing a bicycle laden with plastic shopping bags, a woman abruptly walked from a center median into a lane of traffic and was struck by a self-driving Uber operating in autonomous mode. From viewing the videos, “it’s very clear it would have been difficult to avoid this collision in any kind of mode (autonomous or human-driven) based on how she came from the shadows right into the roadway,” Moir said. The police have not released the videos.
Police say a video from the Uber self-driving car that struck and killed a woman Sunday shows her moving in front of it suddenly, a factor that investigators are likely to focus on as they assess the performance of the technology in the first pedestrian fatality involving an autonomous vehicle.
Any litigation that arises from the accident, the first fatality involving a fully autonomous vehicle, could pit the ride-hailing service against technology suppliers and the vehicle’s manufacturer, legal experts said. It could also provide a window into confidential indemnification agreements that companies developing self-driving car systems may have reached to shield themselves legally.
This week’s pedestrian fatality involving a self-driving car is likely to complicate efforts in Congress to speed the vehicles’ development by wiping away state safety regulations. The industry has said the federal legislation is vital to preventing a patchwork of state and local safety regulations from blocking innovation. The technology’s backers have argued it should be fast-tracked because of its potential to ultimately save thousands of lives, as well as the need to stay ahead of competitors in Europe and Asia.
Toyota Motor Corp. said Tuesday it would suspend certain autonomous-vehicle testing operations on public roads after an Uber Technologies Inc. self-driving car struck and killed a pedestrian in Arizona. The Japanese auto maker said it has “decided to temporarily pause our Chauffeur mode testing on public roads” in California and Michigan, but the move doesn’t affect similar operations in Japan. The company said it is concerned that the Uber “incident may have an emotional effect on our test drivers.”
It isn’t yet clear whether Uber is at fault, but the accident puts Mr. Khosrowshahi in a difficult position. Like his predecessor, Travis Kalanick, he has publicly touted Uber’s driverless-car program, saying it could one day eliminate the need for people to own cars. He has even trumpeted flying taxis as a viable business in as soon as five years to shuttle people around cities. But some executives at Uber say they have called for the company to rein in spending on self-driving vehicles particularly as it looks to a planned initial public offering next year. They see autonomous vehicles as a promising technology but also a financial and legal liability.
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
According to an executive at a Russian state bank who deals with cryptocurrencies, senior advisers to the Kremlin have overseen the effort in Venezuela, and President Vladimir Putin signed off on it last year. “People close to Putin, they told him this is how to avoid the sanctions,” says the executive, who spoke to TIME on condition of anonymity. “This is how the whole thing started.”
While the G-20 highlighted the rising risk of cryptocurrencies, traders are relieved the ministers didn’t call for tighter regulation, according to John Spallanzani, a portfolio manager at Miller Value Partners. Investor concern about a coordinated clampdown had grown after the ministers said they would discuss a common approach to cryptocurrencies at their meeting in Buenos Aires on Monday and Tuesday.
Cryptos rocketed up the G-20 agenda, after one of the wildest investment manias in history that’s led policy makers to worry about tax evasion, money laundering, terrorism, consumer protection and more. The industry could have financial stability implications at some point, they said in their final communique.
Regulators looking into potentially widespread violations in cryptocurrency markets have taken a bite out of the once-soaring investor demand for token deals. While the pace of new proposed initial coin offerings has remained near record levels, there has been a marked deceleration in the amount of money being raised and a change in the source of the capital being provided.
While the bulk of the decline is over, a bull market for the coins, which include tokens such as Eos and Dash, isn’t necessarily underway, strategists including Thomas Lee, Robert Sluymer and Sam Doctor wrote in a note to investors Tuesday. In prior cycles, alt-coins go through “purgatories,” or periods of consolidation, that last 70 to 231 days, the report said. Until then, investors should stay in larger cryptocurrencies, like Bitcoin, according to Fundstrat.
“Our analysis shows that certain content, eg, illegal pornography, can render the mere possession of a blockchain illegal,” . “Although court rulings do not yet exist, legislative texts from countries such as Germany, the UK, or the USA suggest that illegal content such as [child abuse imagery] can make the blockchain illegal to possess for all users.”
“Whether you call it crypto assets, crypto tokens — definitely not cryptocurrencies — let that be clear a message as far as I’m concerned,” said Klaas Knot, president of De Nederlandsche Bank NV, who also chairs the Financial Stability Board’s standard committee on the assessment of vulnerabilities. “I don’t think any of these cryptos satisfy the three roles money plays in an economy.” It’s already proving an issue in the U.S., where only a tiny fraction of Americans are reporting their crypto deals to the Internal Revenue Service, according to Credit Karma Inc. Less than 100 of the first 250,000 federal tax returns filed as of February 2018 included a declaration related to crypto gains and losses, it found.
Johann Schneider-Ammann, economics minister, this year hailed Zug as a model for Switzerland to become the “crypto nation”, stealing a march on global rivals as technology spurs more developments. Thanks to Zug, Switzerland last year ranked second after the US in funds generated from “initial coin offerings” — when start-ups sell tokens or coins — to investors. The strategy has obvious risks, however. Cryptocurrencies have seen wild price swings, threatening big losses for investors. Worldwide, regulators warn that ICOs and crypto ventures may prove frauds, flops, fronts for criminal organisations or threats to the financial system. Zug must show its cryptocurrency credentials can outlast local marketing tricks and stave off regulatory threats.
Sheri Kaiserman was Wedbush Securities Inc.’s head of equities in 2013 when she made a bold call, granting permission to publish the first Wall Street analysis of Bitcoin’s value. The report didn’t explicitly recommend buying the cryptocurrency, but it did say huge gains were possible — and investors who dove in that day have seen a more than 600 percent return. Now, she’s in the midst of another big leap: After 18 years at Wedbush, Kaiserman left this year and co-founded Maco.la Management, a blockchain-focused investment fund and advisory firm. On Tuesday, the Los Angeles-based company announced it has raised $6 million toward a $40 million goal.
Two bills before the Maryland legislature call for the U.S. state to study and possibly regulate blockchain technology. House Bill 1634 and its companion Senate Bill 1068, together known as the Financial Consumer Protection Act of 2018, would mandate that the Maryland Financial Consumer Protection Commission study the technology and the space. Afterward, the commission would “include recommendations for State actions to regulate cryptocurrencies in its 2018 report to the Governor and … the General Assembly regarding State action to regulate cryptocurrencies.”
Not every nation is on board with this plan. On Monday, Brazil Central Bank president Ilan Goldfajn said cryptocurrencies will not be regulated in his country, according to news service El Cronista. The outlet further reported that Brazil would not necessarily be following the regulations outlined by the G20, on cryptocurrencies or other issues.
FOREX, CARRY TRADES, EXCHANGE RATES
Foreign-exchange investors who grew accustomed to a one-way dollar trade over the past year suddenly face a new challenge: a sideways market. A widely tracked gauge of the U.S. currency has been confined to a range of just 3 percent over the past two months, displaying signs of exhaustion after plunging as much as 15 percent since the start of 2017. The U.S. Dollar Index was up 0.6 percent in Tuesday trading in New York. Yet even with analysts showing little confidence in a breakout by the end of next quarter, potential triggers that could free the dollar from its straitjacket lurk on the horizon.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
The Trump administration is expected to unveil up to $60 billion in new tariffs on Chinese imports by Friday, targeting technology, telecommunications and intellectual property, two officials briefed on the matter said Monday. One business source, who has discussed the issue with the administration, said that the China tariffs may be subject to a public comment period, which would delay their effective date and allow industry groups and companies to lodge objections.
The exact size and makeup of the sanctions could still change, said two people who spoke on condition of anonymity because the discussions aren’t public. While Trump has repeatedly singled out China as a key trade violator, his toughest actions such as withdrawing from an Asia-Pacific trade pact — which excluded China — and slapping tariffs on steel have undermined relations with allies more than with the world’s second-biggest economy.
China responded to the threat of new tariffs from the United States by vowing Tuesday to further open its own markets to foreign trade and investment, while warning that a trade war between the two nations would hurt both sides. President Trump is preparing to impose a package of $60 billion in annual tariffs against Chinese products, a move that he says will punish China for intellectual property theft and create more U.S. jobs, administration officials say. He is determined to bring down the U.S. trade deficit with China, which reached $375 billion last year.
China’s responses to challenges from President Donald Trump loomed large as the country’s leaders closed out an annual political gathering, promising a more open market but drawing a red line over Taiwan. Premier Li Keqiang, the titular No. 2 leader, struck a conciliatory tone on trade with the U.S., while both he and President Xi Jinping declared that any effort to divide China is doomed to fail—days after Washington passed legislation to allow high-level two-way visits with Taiwan.
The European Union’s top trade official arrives in Washington Tuesday with a daunting task: convince the Trump administration that, contrary to White House claims, the bloc’s economic relationship with the U.S. is fair. In two days of meetings, EU Trade Commissioner Cecilia Malmstrom will press counterparts including Commerce Secretary Wilbur Ross to exempt the bloc from President Donald Trump’s steel and aluminum tariffs, which are set to take effect Friday.
Finance ministers and central bankers from the Group of 20 nations finished talks in the Argentine capital on Tuesday with little to show for their efforts to convince Mnuchin to pare back protectionist steps, including new metal tariffs. Rather, the U.S. ended up co-opting allies, many of whom lobbied for exemptions at the gathering.
GUN CONTROL, POT BOOM, OPIOIDS, PUBLIC POLICY
There are few reliable numbers on how many former Wall Street professionals who now work in the cannabis industry, though those in the sector say that they expect the migration to accelerate as revenue growth continues to attract talent. Companies in the U.S. marijuana market posted revenues of approximately $6 billion in 2017, a 500 percent increase from the roughly $1 billion in 2011, according to estimates from Marijuana Business Daily, a trade publication.
A male student opened fire with a handgun in the hallway of a southern Maryland high school on Tuesday, the local sheriff said, spurring a deputy stationed at the school to confront him less than a minute later. The episode left two students injured — one critically — and the gunman fatally wounded.
RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
President Trump must face a defamation lawsuit by a former contestant on his reality TV show “The Apprentice” after a Manhattan judge ruled in a first-of-its-kind decision that he could not claim immunity through his job as the nation’s commander-in-chief. “No one is above the law,” Justice Jennifer Schecter wrote in the 19-page decision released Tuesday.
A New York judge said Tuesday that a defamation lawsuit against President Trump related to an allegation that he sexually harassed a former “Apprentice” contestant may go forward. Summer Zervos filed the suit last year after Trump said publicly that she and other women making similar claims made them up. Trump sought to block the legal action, but New York Supreme Court Judge Jennifer G. Schecter, citing court precedent that led to the impeachment of President Bill Clinton in 1998, said that “a sitting president is not immune from being sued in federal court for unofficial acts.”
Ms. McDougal is the second woman this month to challenge Trump associates’ efforts to bury stories of extramarital affairs. Both women, who argue that their contracts are invalid, are trying to get around clauses requiring them to resolve disputes in secretive arbitration proceedings rather than in open court. Mr. Trump has denied the affairs.
An extraordinary tussle between the president of the United States and Stormy Daniels, a former adult-film star, has been building since 2011. It is rapidly escalating, as the actress, Stephanie Clifford, seeks to go public with details of her claims of an extramarital affair, and Donald Trump and his attorneys fight to stop her.
A real estate investment company that partnered with the Trump Organization on an office tower project in India has been accused of defrauding its foreign investors of at least $147 million, according to documents obtained by The Washington Post. Two global investment companies based in New York and London that have invested nearly $300 million in the Indian real estate development company IREO filed a criminal complaint with New Delhi police last month alleging that the fund’s Indian managing director, Lalit Goyal, co-founder Anurag Bhargava and others engaged in “large-scale fraud” by “illegally siphoning off” at least $147 million of investor money, although the actual sum could approach $200 million, they allege.
Senate Majority Leader Mitch McConnell praised Special Counsel Robert Mueller and said he “should be allowed to finish his job,” breaking his three-day silence on President Donald Trump’s attacks on Mueller and his Russia investigation. “I don’t think Bob Mueller is going anywhere,” McConnell said Tuesday at a news conference. “I have a lot of confidence in him.”
KOREAN PENINSULA, MIDDLE EAST, NUCLEAR WEAPONS
The U.S. and South Korea said they would resume combined military exercises aimed at deterring North Korea, despite a recent detente with Pyongyang that yielded promises from the regime to suspend weapons tests and commit to denuclearization talks. The allies opted earlier this year to delay the annual maneuvers, which North Korea routinely denounces, to avoid conflicting with the Winter Olympics and Paralympics in South Korea in February and March.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
One dilemma that will tower over EU leaders when they gather for a summit in Brussels this week: what to do about Donald Trump? While trade spats and noisy political disputes have punctuated postwar transatlantic relations, rarely if ever has Europe faced a US president throwing out problems so numerous, foreboding and unpredictable. “Donald Trump knows what he is doing: he wants to put his finger in the wounds of Europe,” said one eurozone finance minister battling with Washington over tax and trade. “We have to show we are strong . . . otherwise there is no reason for Europe any more.”
Perhaps the key lesson of Mueller’s investigation thus far has been that at every step, Mueller and his investigative dream team have known more and been further ahead in their process than the public anticipated or realized. There’s no reason to believe, in fact, that Mueller—who has surrounded himself with some of the most thoughtful minds of the Justice Department, including Michael Dreeban, arguably the country’s top appellate lawyer, whose career has focused on looking down the road at how cases might play out months or even years later—hasn’t been organizing his investigation since day one with the expectation that he’d someday be fired and worked to ensure that this, his final chapter in a lifetime of public service at the Justice Department, won’t be curtailed before it has gotten to what Mueller calls “ground truth.”
It is possible that the tightening labor market — the unemployment rate, at 4.1 percent, is the lowest since 2000 — could force companies to pay higher wages. That could lead to inflation and prompt the Fed to raise rates more quickly than planned, and the tighter credit for businesses and consumers could cause a recession. The likelihood of such a chain of events may have increased in recent months with the Republican tax bill’s passage and the adoption of a big spending package in Congress, which together could pour hundreds of billions of dollars in fiscal stimulus into the economy. Mr. Trump’s tariffs could also increase consumer prices by limiting cheaper imports from abroad. “We already had a tight economy, and then you add fiscal stimulus, and then you add on top of that trade protections,” said Torsten Slok, chief international economist for Deutsche Bank. “It’s close to the perfect storm coming together with these risks of overheating.”
The next wave of batteries, long in the pipeline, is ready for commercialization. This will mean, among other things, phones with 10% to 30% more battery life, or phones with the same battery life but faster and lighter or with brighter screens. We’ll see more cellular-connected wearables. As this technology becomes widespread, makers of electric vehicles and home storage batteries will be able to knock thousands of dollars off their prices over the next five to 10 years. Makers of electric aircraft will be able to explore new designs.
USA ECONOMY DATA, CITIES AND STATES
Reno is among several Western cities experiencing congestion and new tensions as California residents and businesses seek more affordable locations. The Reno housing market has gone from moribund to scorching. As of February, the median home price in the metropolitan area was about $340,000, more than double its recessionary trough of about $150,000, according to Zillow. The inventory of homes for sale was down 22 percent from a year earlier, according to Redfin, and sales were happening at a much faster clip. The typical home for sale was under contract in 55 days, 24 days faster than a year earlier.
GLOBAL ECONOMY, INTERNATIONAL
Recent weeks have seen a flurry of warnings about Turkey’s widening current account deficit and persistent double-digit inflation. The IMF cautioned that the country was vulnerable to changing global conditions. Moody’s downgraded Turkish sovereign debt to two notches below investment grade, citing concerns about the country’s political climate and a heavy reliance on foreign financing. Goldman Sachs said Turkey was showing the “classic signs of an overheating economy”, warning that rebalance would require lower growth. Now with elections in his sights, some investors fear Mr Erdogan is unwilling to tolerate a slowdown, an approach that some fear increases the risk of a hard landing.
After years of economic uncertainty, the European Central Bank’s policymakers have another reason to be dovish: the eurozone’s rapidly ageing society. An increasingly elderly population threatens to depress economic growth and add to the pressure on policymakers to leave interest rates at low levels in the decades ahead, according to research from the central bank that warns of the need to start taking into account the effects of demographic change. Fewer babies and longer lives are beginning to have a knock-on impact on Europe’s economy as baby boomers born after the second world war retire and birth rates continue to stagnate.
Central Europe’s property market has taken almost 10 years to recover from the financial crisis. Now, after a bumper year in 2016, levels of investment are finally within touching distance of their 2007 peak. Drawn by the region’s growth prospects and attractive yields, and fuelled by cheap money, investors pumped €12.2bn into central European real estate last year. This was 40 per cent more than in 2015, according to Colliers International, the property consultants. If the first-quarter trend continues — volumes were up 41 per cent on a year earlier — this year’s deal flow could beat the 2007 record of €13bn.
POSITIONING, INFLECTION, MARKET CALLS
Money managers have flagged the spectre of a trade war as their top “tail risk” for the first time in more than a year, according to a closely watched survey released on Tuesday that highlights growing caution among some investors. Three-in-10 participants surveyed this month by Bank of America Merrill Lynch said a trade war was the biggest risk to global markets, the first time it registered at the top of the list since January 2017.
Fears of a trade war haven’t been enough to push investors out of stocks yet. Investors have poured billions of dollars into equity funds this year, and measures of market sentiment look strong, in part because corporate earnings have continued to impress this year. But don’t take that for granted, analysts say. “Cracks in the bull case are starting to emerge, with fund managers citing concerns over trade, stagflation and leverage,” said Michael Hartnett, Bank of America Merrill Lynch’s chief investment strategist, in a research note.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
Amazon.com Inc. vaulted ahead of internet rival Alphabet Inc. in market value for the first time, a sign of growing investor optimism about the prospects for the world’s largest online retailer as it reaches into new markets such as groceries, health insurance and consumer devices. Shares of the Seattle-based e-commerce giant rose 2.7 percent at the close in New York on Tuesday, giving it a market capitalization of $768 billion. That made it the world’s second-most valuable publicly traded company behind Apple Inc. Google parent Alphabet was little changed, putting its value at $762.6 billion.
The Chicago-based company is a top global agricultural merchant, shipping bulk foods such as corn, wheat and soyabeans or processing them into ingredients. Ample grain supplies and flat prices have weighed on profits for parts of ADM’s business, impelling it to cut costs and streamline operations over the past few years. On Monday, the company said it would reshuffle divisions into four new ones, reflecting internal changes to how it operates. The change will also give investors more transparency, said Juan Luciano, chief executive.
Oracle Corp. shares tumbled the most in more than six years after the company forecast slower sales growth for its cloud revenue, sparking investor fears that it was falling behind rivals competing in the burgeoning sector. Looking forward, the picture for Oracle is even worse, as it projects it fiscal fourth-quarter cloud revenue to rise only 19 percent to 23 percent, at most about 44 percent of its eight-quarter average.
In an interview with Bloomberg released on Tuesday, the renowned investor said he would probably split the $13bn Kingdom Holding Company’s by spinning off domestic property holdings and other assets into another entity, possibly a real estate investment trust, or REIT. The 63-year-old was the most recognisable figure hauled into Crown Prince Mohammed bin Salman’s dragnet purge against princes, businessmen and bureaucrats who were held at Riyadh’s luxury Ritz Carlton hotel.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
If Mr Wiseman succeeds in turning around BlackRock’s underperforming equity unit he will put himself in a good position to succeed Mr Fink at the helm. And such is BlackRock’s heft that a successful quant revolution there will have an impact that is felt across the investment industry. “It would be very aspirational for other firms if they pull it off,” says Gary Chropuvka, a partner at Goldman Sachs Asset Management’s quant arm. “As more people try to do this, the bar will probably go even higher for everyone, demanding and requiring even further innovation.”
ENERGY CRUDE OIL, OIL SANDS, SHALE
The chairman of Vitol, the world’s largest independent oil trader, has warned that Opec will need to extend its production cuts with Russia into 2019, cautioning that he sees prices slipping back by the end of this year. Ian Taylor, a 40-year industry veteran who stepped down as Vitol chief executive last week to become chairman, told the Financial Times that surging US shale output was weakening the crude market outlook as prices pivot around $65 a barrel.
ENERGY RENEWABLES, NUCLEAR
Virginia is the latest southeast state planning a solar shift, with a law this month calling for 5.5 gigawatts of wind and solar power. Florida recently replaced an expensive coal-fired plant with cheap solar power, and developers are eyeing South Carolina, where a $20 billion nuclear power project was abandoned last year. Meanwhile, First Solar Inc., the largest U.S. panel producer, is developing a solar farm in Georgia that’s expected to be the region’s biggest. “This is really all about cost competitiveness,” Colin Meehan, First Solar’s director of regulatory & public affairs, said during a panel discussion Tuesday at Infocast’s Solar Power Finance & Investment Summit in San Diego.
The owners of 60,000 cargo ships are bracing for tighter emissions rules that are forcing them to make a multibillion-dollar choice: Start buying cleaner-burning fuel or invest in a device that treats the ship’s exhaust before letting it out. It isn’t an easy call. Retrofitting a vessel with a sulfur-trapping exhaust system called a “scrubber” costs as much as $10 million a ship, while cleaner fuels are about 55% more expensive than the ones shipping operators use now. Whether it makes sense to install scrubbers and absorb a bigger financial hit upfront depends on whether scrubbers will be adequate to meet even stricter pollution caps expected in the future and the availability and cost of cleaner fuels. Both factors are difficult to gauge.
The key to the technology, according to the Mullers, is to take advantage of fracking techniques to place nuclear waste in 2-mile-long tunnels, much deeper than they’ve been before—a mile below the Earth’s surface, where they’ll be surrounded by shale. “We’re using a technique that’s been made cheap over the last 20 years,” says Richard, a famed physicist and climate change expert. “We could begin putting this waste underground right away.”
COMMODITIES AGRICULTURE & SOFTS
Investors scrambling to cover short positions in cocoa have sent its U.S. price surging 31% this year, making the chocolate ingredient one of this year’s best-performing assets. Cocoa futures prices fell to 10-year lows in New York in December 2017, after a year of pressure from record supply out of Ivory Coast, the world’s biggest producer. But signs of tighter supply and rising demand have spooked investors into slashing long-held bets on falling prices, called short positions, sending cocoa to its highest level in 16 months.
POLLUTION, CLIMATE & ENVIRONMENT
The showdown in the Florida statehouse last year had all the drama of a knock-down political brawl: Powerful industries clashing. Warnings of death and destruction. And a surprise last-minute vote, delivering a sweeping reform bill to the governor’s desk. The battle wasn’t about gun control, immigration or healthcare, but about making it easier to ignore national guidelines on building codes. To the surprise of the insurers, engineers and safety advocates who opposed the change, the home builders won — in a state that gets hit by more hurricanes than any other.
Climate change does not mean the immediate end of cold weather, as recent nor’easters have shown, but it is putting a squeeze on outdoor skating, a deep part of this country’s cultural identity. Irregular freezing weather is not enough for a good outdoor rink; consistency is key.
Collecting the trash involves days of walking. Porters and yaks ferry garbage on their backs from a string of villages leading up to base camp, which takes about a week to reach by foot from Lukla. Umesh Chandra Rai, the chief executive of Yeti Airlines, a local operator, said the plan was to transport 200,000 pounds of garbage to Kathmandu, Nepal’s capital, by the end of the year, where it will be recycled. So far, about 24,000 pounds of garbage has been collected. Along the trails, 16 waste dumping sites, 46 trash cans and three toilets have also been installed.
The warming Arctic could unleash larger-than-expected quantities of methane, a study asserts. “How much of it makes it into the atmosphere is the big thing,” Commane said. “Ecosystems will probably produce more methane as they stay wet. The big question we have is, how much of that makes it into the atmosphere, and I don’t think they get to that question here.”
BREXIT, SCOXIT, LONDON, UK ECONOMY
U.K. Prime Minister Theresa May on Monday agreed there needed to be a backstop plan for the Irish border if it’s not solved through the future trade relationship, but gaps remain on what exactly it should be. While the EU has suggested Northern Ireland could effectively remain in the customs union to avoid a border after Brexit, May branded a detailed plan laying out how that might work as unacceptable.
GEOPOLITICS, CRIME, TERRORISM
Myanmar’s military is fortifying its border with Bangladesh with a new fence, security forces and land mines, inflaming tensions with its neighbor and sending a “keep out” message to the hundreds of thousands of Rohingya refugees it drove from the country. The chain-link fence, reinforced with barbed wire, anchored in concrete and buttressed in some sections with bunkers and military posts, now runs for much of the 170-mile border. Rohingya say it is now impossible to get back into the country they left behind.
The Minneapolis police officer who fatally shot an unarmed Australian woman last summer, an incident that led to protests and the ouster of the city’s police chief, was jailed Tuesday on charges of third-degree murder and second-degree manslaughter. The shooting of the woman, Justine Damond, by Officer Mohamed Noor on July 15 renewed questions about police conduct and training in a region that has seen a series of police shootings in recent years. “Officer Noor did not act reasonably,” Mike Freeman, the Hennepin County attorney, said at a news conference Tuesday afternoon, adding that the officer “abused his authority to use deadly force.”
Chinese President Xi Jinping said Tuesday that any “tricks” to divide China will be thwarted, a warning that followed U.S. legislation opening the door to high-level visits with Taiwan. China has denounced the Taiwan Travel Act, signed last week by President Donald Trump, which authorizes such visits between the U.S. and the self-ruled island claimed by Beijing as part of its territory. “Any actions or tricks to separate the country are bound to fail,” said Mr. Xi during a speech at the end of China’s annual legislative session. “They will receive the condemnation of the people and the punishment of history.”
In Britain, Ms. Campbell, 26, was active in causes like animal rights and environmental protection, but until recently, she had no personal connection to the Kurds. Yet she was deeply moved, family and friends said, by the fight to defend an autonomous, mostly Kurdish region in northern Syria, known as Rojava, whose leaders advocate a secular, democratic and egalitarian politics, with equal rights for women. “She was somebody who saw the injustices of the world and the plight of the weak and vulnerable and disempowered, and she also saw the idealism, the amazing utopian vision of Rojava, and she found those two elements irresistible,” her father, Dirk Campbell, said in an interview. “She wanted to prevent that from being stamped out, which Turkey and Syria are trying to do.”
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
Russia’s communications regulator said on Tuesday it would move to block popular messaging app Telegram next month if it did not hand over its encryption keys to security services. The decree from Roskomnadzor came shortly after Russia’s supreme court also ruled against Telegram. It raises the stakes in Telegram founder Pavel Durov’s long-running battle with the FSB, the successor to the KGB, and casts a shadow over Telegram’s $850m initial coin offering, by far the largest ever cryptocurrency listing.
Orbitz didn’t disclose which business partners were affected by the breach, but American Express Co. AXP 0.12% said separately that travel booked through its representatives and through Amextravel.com had been affected by the cyberattack. The breach is estimated to have affected about 880,000 payment cards, Orbitz said.
SCANDALS, LAWSUITS, FINES, REGULATORY
Former French President Nicolas Sarkozy has been taken into police custody for questioning over allegations that he received campaign funding from the late Libyan leader Col Muammar Gaddafi. Police are investigating alleged irregularities over the financing of his 2007 presidential campaign. Police have questioned him previously as part of the probe. Mr Sarkozy has denied any wrongdoing. The centre-right politician failed to return to power in 2012.
SILICON VALLEY, UNICORNS, STARTUPS, VC
Venture capital firm 500 Startups opened an office this month in Miami, a boost for the fledgling technology hub that’s seen companies form and then struggle to secure funding. Bedy Yang, a managing partner with the Mountain View, California-based company, said the office will serve as its base of operations for South Florida and Latin America, in addition to other markets in the eastern U.S. where the early-stage startup invests. The firm, which looks for talented entrepreneurs and helps them build companies, is occupying 7,200 square feet in a downtown Miami building.
The European Union is getting ready to propose an unusual new tax: a levy on the revenue (not the profit) of technology companies. Many EU countries say the tech industry isn’t paying its fair share to public coffers, and the effort to crack down on tax-avoidance schemes has led to large bills delivered in recent years to Apple Inc. and Amazon.com Inc. The idea behind the new tax is to focus on where tech users are based, rather than where a company chooses to place its European headquarters. The European Commission, the EU’s executive arm, is about to announce its proposal for such a levy.
RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
Amazon.com Inc. has looked at the possibility of expanding its retail footprint by acquiring some locations from bankrupt Toys “R” Us Inc., according to people with knowledge of the situation. The online giant isn’t interested in maintaining the Toys “R” Us brand, but has considered using the soon-to-be-vacant spaces for its own purposes, said the people, who asked not to be identified because the talks are private.
MEDIA, CABLE, SPORTS, ENTERTAINMENT
Google unveiled a three-year, $300 million commitment to help news organizations adapt to the digital age, the search giant’s latest olive branch to a publishing industry that has been critical of its dominance over information and digital advertising. In New York on Tuesday, the company announced the launch of the Google News Initiative, which it says is designed to help news organizations strengthen quality journalism, develop new business models and upgrade their technology.
Google is making its grandest overture to the news business yet. Alphabet Inc.’s search giant is providing a new suite of tools to help media publishers grow subscriptions, advertising sales and readership — an attempt to resuscitate an industry the search giant helped decimate. And it includes another shot at stamping out fake news.
AIRLINES, SHIPPERS, RAIL, TRANSPORTS
United Continental Holdings Inc. won’t take new reservations for its animal-transport service after drawing worldwide scorn in recent weeks for the death of a dog and other blunders in handling pets. The airline will review the procedures for its PetSafe program until May 1, including which breeds of dogs it will accept, according to a statement Tuesday. During that time, the carrier will honor existing reservations without accepting new ones for the service, which is for animals traveling in the cargo hold.
The son of Greek immigrants, Peterson served as U.S. Commerce secretary under President Richard Nixon and assembled contacts and diplomatic skills that he used to become a leading architect of international business deals. After a tumultuous turn at Lehman, he teamed with Stephen Schwarzman to create Blackstone, and helped make it the world’s largest private-equity firm. When Blackstone went public in 2007, Peterson became a billionaire. He accumulated an estimated net worth of $2 billion, according to Forbes magazine.
The Mercenary Trader Macro Links were created by Justice “Jack” Litle, aka Justice Litle / Jack Litle — the founder of Mercenary Trader — to provide a compact summary of daily information flows. They are accessed via the Mercenary Research Suite, the flagship offering of Mercenary Trader, which combines trading education and trading research. To see how it works, click here.