Macro Links Mar 6th – Not Backing Down

Macro Links Mar 6th – Not Backing Down

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ITALY’S POPULIST ELECTION

Demagogues Win as Europe’s Populist Tide Sweeps Italy – The New York Times

The Italian elections on Sunday were the latest powerful wave in a tidal turn of anti-immigrant, anti-European Union and antidemocratic fervor that has ravaged European politics. The vote was a stinging rejection of traditional parties, and of national leadership that has been frustrated by a flood of migrants from Africa and the Middle East and stymied by years of stagnation.

Antiestablishment Parties Prevail in Italy but With Differing Tacks – WSJ

The triumph of antiestablishment parties in Sunday’s parliamentary elections in Italy thrusts onto center stage the 5 Star Movement and the League, two groups that have staked out starkly different ideological ground but have both tapped a deep reservoir of discontent among Italians.

In Italy Election, Anti-E.U. Views Pay Off for Far Right and Populists – The New York Times

Italians registered their dismay with the European political establishment on Sunday, handing a majority of votes in a national election to hard-right and populist forces that ran a campaign fueled by anti-immigrant anger. The election, the first in five years, was widely seen as a bellwether of the strength of populists on the continent and how far they might advance into the mainstream. The answer was far, very far.

Italy anti-establishment parties make big gains in election – FT

With Italy on course for a hung parliament, the populist Five Star Movement and anti-immigration Northern League party are likely to take a leading role in complex talks to form the next government. The outcome of protracted negotiations is likely to see Italy clash with Brussels on everything from budget rules to immigration. The governing centre-left Democratic party suffered a crushing defeat, forcing Matteo Renzi, leader and former prime minister, to resign while Silvio Berlusconi’s Forza Italia lost its leadership of the centre-right coalition.

Italy’s 5Stars’ dilemma: It won. Now what? – POLITICO

The 5Stars’ position as the country’s single largest party puts it in a powerful position after an election that resulted in a hung parliament. But if the party — which has its roots in mass protests against the establishment — is to lead the country, it will first have to reconcile its rage-against-the-machine roots with the practical realities of governing.

Silvio Berlusconi’s grand failure – POLITICO

The League’s victory is a major change from previous coalitions between the two forces, which were always dominated by Forza Italia. It also means Berlusconi failed to deliver on his pledge to moderate voters that he would contain Salvini’s more extreme policies. “Berlusconi has woken up to a rather cold shower. At age 81, his unique selling point was his stated ability to rein in the League and fend off the 5Stars. He did not deliver on either count,” said Francesco Galietti, founder of political risk firm Policy Sonar.

5 scenarios for Italy’s next government – POLITICO

Coalition talks will take weeks and possibly months because of the complex electoral maths in which no party is close to an overall majority. The political system will also need time to absorb the shock of a result that has blown apart the old certainties of the center-right/center-left division at the heart of Italian politics.

How Italy does Putin’s work – POLITICO

In the run-up to the election on Sunday, sympathy for Russian President Vladimir Putin among many lawmakers and voters is out in the open. The friendly attitude filters through social media and traditional publishers, which means pro-Putin messaging that would be considered propaganda or misinformation elsewhere is uncontroversial in the eurozone’s third largest economy.

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BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS

Poll Shows People Want An Amazon Cryptocurrency, Starbucks Hints Of A Blockchain App | Cointelegraph

Online retailer Amazon this week received feedback that its hypothetical creation of an “Amazon Coin” would be positively received, while Starbucks, another large traditional consumer company, spoke of plans to use Blockchain on the Starbucks app, also hinting of the possibility of creating their own currency for the app’s use.

Member Of China’s Main Political Advisory Proposes National Crypto Trading Platform | Cointelegraph

A member of China’s top political advisory board has proposed the creation of a national cryptocurrency exchange and other regulatory systems at one of the two annual sessions of China’s top legislative and advisory bodies, local news outlet Lie Yun Wang reported on March 3.

Webster’s Dictionary Adds ‘Cryptocurrency’ and ‘Initial Coin Offering’ – CoinDesk

One of the world’s most established dictionaries has gotten a cryptocurrency update. Merriam-Webster announced Monday that it has added terms such as “cryptocurrency,” “blockchain” and “initial coin offerings” to its word lists as of this month. The additions came amid more than 800 new entries.

Bitcoin Transaction Volume Hits Two-Year Low, Despite Rock-Bottom Fees | Cointelegraph

Bitcoin’s sideways price action has led to the lowest number of confirmed transactions per day since March 2016, according to Blockchain.info. Data shows BTC transactions falling in line with downward trends in price since the all-time highs of December 2017. The number of transactions reached a two-year low on Feb. 26 with only 180,000 confirmed transactions, while Sunday, March 4 saw just 195,500.

18H06 - CONFIRMED TRANSACTIONS PER DAY

Canadian Regulator Warns Against ‘Illegal’ Crypto Investment Scheme – CoinDesk

A finance regulator in the Canadian province of New Brunswick has warned residents about investing in a so-called “cryptocurrency bank” and its associated token. In a March 5 statement, representatives from the Financial and Consumer Services Commission (FCSC) sounded the alarm about Bitcoin-bank.io, which according to its website promises a daily return on deposits through the use of a “BTCB” token.

Cryptocurrency ripple jumps as traders speculate on Coinbase adding trading – CNBC

Cryptocurrency ripple climbed Monday amid renewed speculation that popular exchange Coinbase would add the cryptocurrency to its platform. Coinbase tweeted Monday that the company has “made no decision to add additional assets to either GDAX or Coinbase” and that “any statement to the contrary is untrue and unauthorized by the company.”

Square Surges After Crypto Confusion Hits Trading Desks – Bloomberg

The stock’s surge may have been prompted by an article from a little-known news site based in Latvia that said Square is “possibly testing an integration with Bitcoin,” according to three traders who declined to be identified. The story, written by contributor Oladapo Olagoke on a website called Cryptona, didn’t seem to contain any new information. Olagoke didn’t respond to a message seeking comment.

Korea’s Mandatory Crypto Real-Name System Neglected – 19% Conversion Rate – Bitcoin News

South Korea’s real-name system for cryptocurrency trading has been enforced for over a month, but most accounts have not been converted to the new system. Banks are still not converting accounts for most crypto exchanges and the government will not force them or investors to use the new system.

Coinbase Accused of Cheating Consumers in More Ways Than One – Bloomberg

Coinbase Inc. was slapped with a pair of lawsuits by disgruntled consumers, one alleging insider trading by employees at the giant digital currency exchange and the other accusing the company of failing to deliver cryptocurrencies to people who didn’t have accounts.

Coinbase Taps Former LinkedIn Exec to Lead Acquisitions Efforts – CoinDesk

Cryptocurrency startup Coinbase has enlisted a former LinkedIn executive to spearhead its acquisition efforts. Emilie Choi will serve as vice president of corporate and business development, according to a blog post published Monday. Having previously acted as LinkedIn’s vice president of corporate development, Choi’s new role will focus on bringing Coinbase to new markets, with an added emphasis on “world-class acquisition and partnership opportunities.”

Kaliningrad Offers Tax Breaks to Attract Bitcoiners – Bitcoin News

Crypto regulations have not been adopted in Russia yet, but a string of words and deeds suggests that Moscow may take full advantage of the “phenomenon” in order to uphold national interests. Ideas and proposals to attract businesses and human capital in areas of strategic importance across the vast country have been circulated by officials on local and federal levels. President Putin himself says lagging behind is not acceptable, as it carries “risks of losing sovereignty”.

US City Mulls 18-Month Moratorium on Bitcoin Mining – CoinDesk

A city in the U.S. state of New York could put an 18-month halt on new bitcoin mining operations in the area amid concerns from local officials. Plattsburgh, according to reports, is weighing a proposed law that would impose a “moratorium on commercial mining operations” until city officials can consider “zoning and land use laws and municipal lightning department regulations.” It was spurred by concerns over excessive power use in the area, drawn from Plattsburgh’s access to hydroelectrical resources.

US Marshals Service To Sell Nearly $25 Mln Worth Of Seized Bitcoin At Auction | Cointelegraph

The US Marshals Service has announced that it will be auctioning off approximately 2,170 Bitcoins seized in the course of various federal criminal, civil, and administrative cases, a press release stated March 5. The auction will take place on March 19, 2018 from 8 a.m. to 2 p.m. EDT. Bidders who wish to participate must fulfill the registration requirements by noon EDT March 14, complete with a $200,000 deposit.

How and Where To Buy Cryptocurrency? Overview | News | Cointelegraph

Despite the recent news about banks closing their doors on credit card purchases of crypto; one after the other, there are still available options you can use to buy crypto. Let’s see what they are. The easiest way is to buy cryptocurrency with a debit card on a centralized exchange. It really is as easy as buying clothes on Amazon. Coinbase, for example, is a popular interface to buy crypto with fiat (fiat = paper currency like dollars or euro). On Coinbase, users need to create an account and verify identity. After that, they can buy with their debit card.

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FOREX, CARRY TRADES, EXCHANGE RATES

Asia’s Biggest Currency Gain in 20 Years May Be About to End – Bloomberg

Asian currencies may be on the verge of a correction after completing the best year in at least two decades. The warning sign? Indonesia’s rupiah slumped to a two-year low last week. The rupiah is seen as a bellwether of sorts for Asia given the high foreign ownership of the nation’s bonds. The currency is typically among the first in the region to be sold when sentiment sours, and this often heralds a broader decline among its peers.

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TRADE, PROTECTIONISM, REGULATION, OVERSIGHT

Trump faces pushback on tariffs but says he will not back down – Reuters

U.S. President Donald Trump faced growing pressure on Monday from political and diplomatic allies as well as U.S. companies urging him to pull back from proposed steel and aluminum tariffs, although he said he would stick to his guns. Inside the White House, there still appeared to be confusion about the timing and extent of the planned tariffs, which would hit allies like Canada and Mexico hard.

Trump Tariffs Spark GOP Rift – WSJ

House Speaker Paul Ryan warned Monday that President Donald Trump’s plan to impose tariffs on steel and aluminum imports could trigger a trade war, as the president sought to wrest economic concessions from Canada and Mexico by turning up pressure on the proposal.

Ryan Criticizes Tariff Plan as Trump Issues Nafta Threat – The New York Times

Paul D. Ryan, the Republican House speaker, criticized President Trump’s proposed steel and aluminum tariffs on Monday, saying they could lead to a damaging trade war. “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” a spokeswoman for Mr. Ryan said in a statement. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”

Trump Reaffirms Commitment to Tariffs but Opens Door to Compromise – The New York Times

President Trump, facing an angry chorus of protests from leaders of his own party, including the House speaker, Paul D. Ryan, insisted on Monday that he would not back down from his plan to impose across-the-board tariffs on steel and aluminum imports. But the White House was devising ways to potentially soften the impact of the measures on major trading partners.

Cohn Tries to Head Off Trump Tariffs With White House Summit – Bloomberg

White House economic adviser Gary Cohn is summoning executives from U.S. companies that depend on aluminum and steel to meet this week with President Donald Trump in a last-ditch effort to halt steep tariffs announced last week, according to two people familiar with the matter. Cohn is arranging for a White House meeting on Thursday that would include representatives of breweries, beverage-can manufacturers and automakers, along with the oil industry. Trump is scheduled to attend the meeting, said the people, who spoke on condition of anonymity to discuss a policy disagreement.

Ray Dalio: Trade war with China would be a ‘tragedy’ – CNBC

“It seems to me that good deals are to be had for both countries, while a trade war has the risk of tit-for-tat escalations that could have very harmful trade and capital flow implications for both countries and for the world,” Dalio wrote in a LinkedIn blog post entitled “A US-China Trade War Would Be a Tragedy.” “I think and hope that both sides know this, and I believe that what is happening now is more for political show than for real threatening.”

U.S. Metals Tariffs Would Hit Canada Much Harder Than Mexico – Bloomberg

Canada has the most to lose among Nafta partners if Donald Trump presses ahead with plans to slap steel and aluminum tariffs on his neighbors. Canadian and Mexican exports of the two metals, along with iron and related products, to the U.S. reached $24.6 billion in 2017, a level surpassed only twice before, according to American data dating back to 1996. But the balance is tilted: 71 percent of those U.S. imports came from Canada.

Zinke suddenly pulls land in home state of Montana from oil and gas lease sale – The Washington Post

Interior Secretary Ryan Zinke, who before joining the Trump administration represented Montana in Congress, decided to withdraw 26 parcels from consideration, along with portions of two others. A cadre of local and national environmental groups had filed formal protests against the sale, contending that drilling would adversely impact the Yellowstone River and other areas.

Trump Administration Stalls Largest Tech Merger in New Sign of Protectionism – The New York Times

In a rare intervention by the government, the Trump administration moved on Sunday night to stall the potential takeover of Qualcomm, the leading American chip maker, by Singapore-based Broadcom on national security grounds. The action, by a little-known and secretive government panel, represents a newly aggressive posture by the administration to protect national corporate champions and scrutinize acquisitions by overseas companies.

Trump Tariffs Are a Black Day for the World, Says BHP CEO – Bloomberg

“I am worried about this sentiment shift that people all around the world might suddenly say that free trade isn’t good for the world and that would be particularly bad for a trading company like BHP,” Mackenzie said during a panel on the economy. “We have to speak up loudly against these measures as being bad for America and bad for the world.”

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RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD

‘What The F*ck?’ Former Trump Aide Sam Nunberg’s Mueller Meltdown Leaves Friends Petrified

Rarely, if ever, has a political operative acted so brazenly when facing the very real prospect of being tossed in jail. Nunberg seemed not to care about how the chips would fall. But several of his friends told The Daily Beast they were concerned that he was putting himself in severe legal jeopardy by going on multiple live cable-news programs Monday afternoon. They also said that they were worried Nunberg had been drinking prior to dialing in to MSNBC and CNN.

Former Trump aide Sam Nunberg called before grand jury, says he will refuse to go – The Washington Post

In a remarkable act of rebellion, Nunberg seized the national media spotlight for much of Monday afternoon to denounce Mueller’s investigation as a “witch hunt” and to detail what he said he had learned about the probe from his private interview last month with Mueller’s team. He at times sounded nervous and self-doubting, openly questioning his legal fate. And by Monday evening, he signaled a possible shift, telling the Associated Press he might cooperate with Mueller after all.

Senate investigators want answers from Reddit and Tumblr on Russia meddling – The Washington Post

Congressional investigators probing Russian interference around the 2016 U.S. presidential election plan to question Reddit and Tumblr over new reports that the Kremlin may have helped spread disinformation on their sites, as lawmakers continue to explore the ways in which Russia weaponized social media.

Escort Says Audio Recordings Show Russian Meddling in U.S. Election – The New York Times

Ms. Vashukevich, who described herself as close to the Russian aluminum tycoon Oleg V. Deripaska, said that audio recordings she made in August 2016 included discussions he had about the United States presidential election with people she declined to identify. Mr. Deripaska, a billionaire with close ties to Russia’s president, Vladimir V. Putin, also has business ties to Paul J. Manafort, President Trump’s former campaign chairman.

Trump Lawyer’s Payment to Stormy Daniels Was Reported as Suspicious by Bank – WSJ

The bank used by President Donald Trump’s personal lawyer to wire $130,000 to a former adult-film actress flagged the transaction as suspicious and reported it to the Treasury Department, according to a person familiar with the matter.

Trump Org Ordered Golf Markers With the Presidential Seal. That May Be Illegal. | WNYC Studios

In recent weeks, the Trump Organization has ordered the manufacture of new tee markers for golf courses that are emblazoned with the seal of the President of the United States. Under federal law, the seal’s use is permitted only for official government business. Misuse can be a crime.

Trump Organization evicted from Panama property – FT

The letters T R U M P were prised off the black marble frontage of the Trump Ocean Club International Hotel in Panama on Monday after its private equity owner succeed in evicting a Trump Organization management team. After a tense 12-day stand-off that saw scuffles between security guards and allegations that Trump officials had shredded documents and removed computers, a Panamanian judge and armed police officers escorted Orestes Fintiklis, head of the hotel owners’ association, into the Trump-branded property. Trump staff departed soon after.

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NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS

Kim Jong Un Holds First Known Meeting With South Korea – WSJ

North Korean leader Kim Jong Un hosted a high-level political delegation from the South for dinner Monday in Pyongyang and accelerated preparations for an inter-Korean summit during his first known meeting with officials from the rival government in Seoul. The banquet, which stretched on for more than four hours, according to the South Korean president’s office, could signal a new phase of rapprochement as the two Koreas seek to expand a diplomatic thaw that started ahead of the Winter Olympics and saw North Koreans travel to the Games and talk with counterparts from the South.

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VOLATILITY, BLACK SWANS, LIQUIDITY, TAIL RISKS

Fed Study Finds Inverted Yield Curve Still Good Recession Alert – Bloomberg

An inverted yield curve remains a powerful signal of a looming recession and that is still the case even if the current ultra-low level of U.S. interest rates are taken into account, according to fresh research by the Federal Reserve Bank of San Francisco. A negative curve, where the return to investors on shorter-dated securities is above that on longer-term bonds, has predicted all nine U.S. recessions since 1955, with a lag of six to 24 months. Some have argued that this time is different, because interest rates are so low and a flattening yield curve doesn’t necessarily mean the U.S. economic expansion is heading for trouble.

Riskiest Corners of Credit Shrug Off Crisis-Era Borrowing Costs – Bloomberg

As short-term borrowing costs swell to levels last seen in the financial crisis, the underbelly of credit markets shows investors are sanguine about the fortunes of Corporate America as the post-crisis stimulus era wanes. Just look at the signals from the high-yield market. The riskiest U.S. companies are outperforming their higher-rated counterparts, defying the triple threat of rising short-term dollar borrowing costs, benchmark 10-year Treasury yields at four-year highs and elevated equity volatility.

Shadow banking grows to more than $45tn assets globally – FT

“Shadow banking” grew by nearly 8 per cent globally to more than $45tn on a conservative measure after international rulemakers were able to include detailed data from China and Luxembourg for the first time. Shadow banking — the parts of the financial system that perform banklike functions such as lending but do not have the same safeguards — accounted for 13 per cent of total global financial assets, according to the Financial Stability Board, the international group of policymakers and regulators that makes recommendations to the G20.

Private equity groups under pressure to take ‘riskier’ bets – FT

Private equity groups have been raising the highest amount of cash in their history — from Apollo’s $25bn US fund to CVC’s €16bn fund in Europe — and are under pressure to put money to work for their investors, which include large pension funds, sovereign wealth funds and endowments. This pressure has also led buyout firms to pursue large public companies at their fastest pace, with deals totalling $180bn last year, according to consultancy Bain & Co.

Wall Street’s volatility products in the spotlight – FT

One reason why traders could anticipate the Vix shooting higher was because the rules governing the performance of the ETPs, which were publicly disclosed in their prospectuses, indicated outsized buying demand near the close of trading that day. “At 3.45pm it was an absolute no-brainer to buy Vix futures and watch the whole thing explode,” says a banker closely familiar with the products. At the close of Friday before February’s week of turbulence, Credit Suisse’s XIV and ProShares’ SVXY were short about 200,000 futures — three-quarters of the average daily volume across Vix futures expiring by March in the preceding month.

18H06 - MARCH VIX FUTURES CONTRACTS ROCKET HIGHER

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Christopher Steele, the Man Behind the Trump Dossier | The New Yorker

In conversations with friends, Steele said he hoped that in five years he’d look back and laugh at the whole experience. But he tended toward pessimism. No matter how the drama turned out, “I will take this to my grave,” he often predicted. A longtime friend of Steele’s pointed out to me that Steele was in a singularly unenviable predicament. The dossier had infuriated both Vladimir Putin and Donald Trump by divulging allegedly corrupt dealings between them. “You’ve got oligarchs running both superpowers,” the friend said. “And, incredibly, they both hate this same guy.”

From Bulldozers to Beer, Tariffs Could Ripple Through U.S. Economy – WSJ

President Donald Trump’s plan to impose steep tariffs on steel and aluminum imports drew sharp criticism Thursday from industries that fear it could raise their costs to make everything from airplanes to beer cans. The bigger worry, some manufacturers and agricultural groups said, is the potential for retaliatory measures by other countries that could imperil U.S. exports and jobs.

What Do Laundry Machines and Roads Have in Common? To Investors, They’re Infrastructure – WSJ

With public-works deals in short supply, many investors are stretching the definition of infrastructure to other deals they hope will offering steady, predictable returns. “When Main Street and the typical citizen think about infrastructure, they’re thinking about the roads they drive on, the water systems they use, transit systems,” said Peter Raymond, who leads PricewaterhouseCoopers LLP’s capital projects and infrastructure advisory business. “It’s difficult to get those kinds of projects packaged and into market.” It can take years for major construction projects to grind through planning and permitting, and to structure privatization agreements with local governments, with which there is always a risk that administrations will turn over and change course.

‘Splinternet’ to herald a trade war for the ages – FT

A tech-based trade war would likely splinter the US, China and Europe into three separate regions. The EU is already going in a very different direction to the US in terms of regulation of the high tech sector, with more stringent privacy rules and limits on how much data can be used by companies for AI, and in what fashion. Such a Balkanisation, which experts now refer to as “the Splinternet”, would change the functioning of the internet as we know it. It would also represent a trade battle for the ages.

Crony capitalists are the big winners in Trump’s trade war – MarketWatch

By now, nothing about Trump’s views on trade should shock us. After all, Trump has been consistent on one, and only one, issue dating back to the 1980s. And that’s his staunch opposition to free trade: his belief that international trade is a zero-sum-game, and that only countries with trade surpluses are winners. For the record, defense industries use a scant 3% of domestic steel production, a fraction of the steel used by construction (40%), automotive (26%) and heavy-machinery industries (10%).

Authers’ Note: A trade war easily won – FT

The direct adverse effects from the proposed tariffs are small. Everything depends on the reaction; a trade war, everyone bar the US president agrees, would be bad. Until the scale of retaliation is clear, this will muddy the waters, adding volatility to a jumpy environment. To grasp the stakes if the trade jousting intensifies, look at the Canadian dollar, which has surrendered much of last year’s gains in the last two weeks.

How German Cars Avoid Trump Tariffs – Bloomberg

German carmakers are under pressure from President Donald Trump’s escalating war of words with the European Union on trade. While millions of exports could be exposed to tariffs if Trump follows through on his threat, BMW AG, Daimler AG and Volkswagen AG have hedges in place to ease the blow. Since 2014, German manufacturers have produced more cars in the U.S. than they export, according to VDA, Germany’s auto lobby.

Markets May Need to Buckle Up for Trade Tensions Over Long Haul – Bloomberg

The angst about rising trade tensions that’s hit equity markets may presage a prolonged conflict, considering that when it comes to China, the Trump administration may have greater ambitions than just a more advantageous commercial arrangement. While Chinese officials have pressed for a list of specific demands as President Donald Trump prepares to execute measures including tariffs, there may be no such theoretical list, if this prism of analysis is correct. Morgan Stanley says the risks are now skewing toward a “protectionist push” scenario that roils stocks.

Trump’s Hopes of Being the ‘Neutral Guy’ in the Mideast Seem Long Gone – The New York Times

Few if any doubted that Mr. Trump came into office more supportive of Israel than the Palestinians and he trumpeted his pro-Israeli credentials, but any semblance of straddling the line between warring camps has vanished and the notion that he could bring them together appears more distant than ever. Mr. Trump and Mr. Netanyahu lavished praise on each other on Monday, and the president said he might visit Jerusalem in May to preside over the politically potent transfer of the American Embassy to the disputed holy city.

Crypto Exchanges Are Raking in Billions of Dollars – Bloomberg

“The exchanges and transaction processors are the biggest winners in the space because they’re allowing people to transact and participate in this burgeoning sector,” said Gil Luria, an equity analyst at D.A. Davidson & Co, who reviewed the methodology for the revenue estimates. “There’s a big business there and it would not surprise me if they’re making hundreds of millions of dollars in revenue and possibly even billions a year.”

18H06 - KINGS OF CRYPTO

Crypto Hawks and Doves by Howard Davies – Project Syndicate

Will cryptocurrencies usurp central banks’ role as monopoly suppliers of money, and what implications would that have for financial stability? Interestingly, a number of different answers to these questions are emerging, as monetary policymakers become either cautious fans or committed foes.

Currency markets send a warning on the US economy – FT

It is instructive to consider what the combination of interest rates and current exchange rates says about market expectations of future currency values. US 10-year interest rates are about 230 basis points above German rates and about 280bp above Japanese rates. This implies that markets expect depreciation of the dollar by more than 25 per cent against its major competitors over the next decade. If dollar depreciation of this magnitude was not expected, investors would prefer dollar assets to foreign assets, given the interest rate differentials. Some but probably less than half of the dollar’s weakness can be explained by higher than expected inflation in the US. Real interest rates imply an expectation of continuing real depreciation.

The Future of Electric Cars Depends on Two Feuding Russian Billionaires – Bloomberg

Russian billionaires are feuding over control of a giant natural-resource business that dates back to the Soviet era. So far, so Russia. What makes the battle for MMC Norilsk Nickel PJSC more important than typical business maneuvering is that it will affect development of one of the largest deposits of nickel and cobalt, which are used in batteries for goods including iPads and Tesla cars.

Silicon Valley Is Over, Says Silicon Valley – The New York Times

About a dozen venture capitalists recently took a bus tour through the Midwest, and a funny thing happened: They caught the heartland bug. In recent months, a growing number of tech leaders have been flirting with the idea of leaving Silicon Valley. Some cite the exorbitant cost of living in San Francisco and its suburbs, where even a million-dollar salary can feel middle class. Others complain about local criticism of the tech industry and a left-wing echo chamber that stifles opposing views. And yet others feel that better innovation is happening elsewhere.

How Trump’s Hudson Tunnel Feud Threatens the National Economy – Bloomberg

Economic risks keeping Americans up at night include the hastily rewritten tax code and the possibility of a global trade war set off by U.S. tariffs. Consider another cause for insomnia: President Donald Trump’s opposition to a new rail tunnel linking New York and New Jersey beneath the Hudson River. The current link is shot, corroded by age and chemical-tainted flood water. That’s unnerving enough for the 820,000 passengers a day traveling to New York City jobs or some other U.S. Northeast destination. For those farther afield, there’s the chilling fact that a tunnel predating World War I is key to 20 percent of the nation’s gross domestic product.

The $80 Billion Train Project Caught in Scandal – Bloomberg

A widening scandal that has led to arrests of executives from two construction companies threatens to put the brakes on Japan’s plan to build the world’s fastest train. To surpass the nation’s famous bullet train, the project incorporates magnetic-levitation technology that promises to cut journey times from Tokyo to Osaka by more than half, to just over an hour. The $80 billion project carries the government’s added hopes of exporting the maglev technology.

Deep in Brazil’s Mountains, a Coffee Boom Ready to Take Hold – Bloomberg

As Brazilian farmer Francisco Cesar Di Giacomo surveys his fields, he plucks a pod off a nearby coffee tree and splits it open with a penknife. He points to the thin husk: a sign that the beans inside will be plump and robust. Here in southern Minas Gerais, the mountainous state at the heart of the nation’s coffee belt, there’s growing evidence that the looming crop will be enormous.

Shale Trailblazer Turns Skeptic on Soaring U.S. Oil Production – WSJ

One of the pioneers of the U.S. shale boom plans to deliver a surprising message at a major energy conference here this week: U.S. oil production won’t keep growing as fast as the market seems to think. Mark Papa, the former chief executive of industry bellwether EOG Resources Inc., EOG 0.97% said in an interview he is eager to tell the assemblage of oil chieftains that a widely held view that shale-oil producers can quickly ramp up production, and sustain those levels if needed, is wrong.

Behind Public Persona, the Real Xi Jinping Is a Guarded Secret – The New York Times

What is striking is how little is known about Mr. Xi’s biography as a leader, even though he has held the country’s highest posts since 2012 — president, general secretary and commander in chief, among others. Mr. Xi’s deliberations and decisions unfold in utmost secrecy. Leaks have all but ended in the Xi era, a reflection of fear as much as loyalty. Even a move that could profoundly reshape China’s destiny was opaque to all but the few who work closely under him in Zhongnanhai, the government compound beside the Forbidden City that is, for ordinary Chinese, an informational black hole.

Europe Once Saw Xi Jinping as a Hedge Against Trump. Not Anymore. – The New York Times

The abolition of the two-term limit for the presidency, which could make Mr. Xi China’s ruler for life and which is expected to be ratified this week by China’s legislature, has punctured the hope that China would become “a responsible stakeholder” in the global order. Few still believe China is moving toward the Western values of democracy and rule of law. Instead, many European leaders now accuse China of trying to divide the European Union as it woos Central Europe and the Balkan states with large investments. They are also wary of how China has become more aggressive militarily, in espionage and in its investment strategy abroad — with targets including its largest trading partner in Europe, Germany.

China Is Making a Bold Military Power Play – Bloomberg

As lawmakers meet this week to cement Xi Jinping’s power at home, China’s president is also looking to boost his country’s military might abroad. He’s overhauled China’s military to challenge U.S. supremacy in the Indo-Pacific, most visibly with a plan to put half-a-dozen aircraft carriers in the world’s oceans. Still, Xi has a problem: He needs bases around the world to refuel and repair his global fleet. So far, China only has one overseas military base, compared with dozens for the U.S., which also has hundreds of smaller installations.

China’s WeChat hits 1bn user accounts worldwide – FT

China’s dominant social media platform WeChat has hit 1bn accounts, highlighting the popularity of the pervasive service used for everything from communication to shopping. Pony Ma, chief executive of Tencent, the country’s most valuable listed company which owns WeChat, said the platform had hit the landmark figure during last month’s lunar new year festival. He made the remarks on the sidelines of the opening of China’s rubber-stamp parliament on Monday, to which he is a delegate.

China’s Women-Only Subway Cars, Where Men Rush In – The New York Times

In a bid to curb sexual harassment, one city is reserving seats and space for female passengers. The problem: Men are claiming them. The women-only subway cars are in many ways a metaphor for China. It is a country with too many laws but, in many areas, too little enforcement. The government bans gender discrimination but does not define what it is. Those who complain risk getting punished. As a result, women who have been sexually harassed rarely file police reports. Offenders are almost never brought to justice.

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CENTRAL BANKS & MONETARY POLICY

Draghi’s Three Reasons to Justify No Change in ECB Guidance – Bloomberg

Mario Draghi has just received a triple whammy of evidence to justify playing it safe when he meets with fellow European Central Bank policy makers this week. The burst of negative news ahead of the ECB’s March 8 policy meeting strengthens the argument repeatedly made by President Draghi that officials must be patient and persistent in providing stimulus. It may also undercut those on the Governing Council who have pushed for a change in the central bank’s language to signal the end of asset purchases is nearing.

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USA ECONOMY DATA, CITIES AND STATES

America’s 100 Richest Places – Bloomberg

If you want to make a lot of money, your best bet is to move to one of the coasts. For the second year since Bloomberg started to compile the Richest 100, the nation’s top spot is Atherton, California. The town of six square miles is near Palo Alto, Stanford University and Menlo Park, the home of Facebook and other tech ventures. Atherton’s average household income was $443,403 in 2016, more than $50,000 higher than second-place Cherry Hills Village, Colorado.

Puerto Rico’s Positive Business Slogans Can’t Keep the Lights On – The New York Times

Everywhere you look, there are reminders of how long it will take for the economy to get back even to the beleaguered state it was in on Sept. 20, when Maria hit as a powerful Category 4 storm. The night before the conference started, parts of San Juan were plunged into darkness for several hours because of an explosion and the resulting fire at an electrical power station. The island’s patchwork power grid remains fragile. Hundreds of thousands remain without power.

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GLOBAL ECONOMY, INTERNATIONAL

Global Economic Upswing Knocked Back by Trump’s Trade-War Threat – Bloomberg

An announcement last week of tariffs on imported steel and aluminum triggered a slide in optimism among financial-market participants, according to Sentix, which said the reaction should be a “wake-up call for the U.S. president to reconsider the matter of protectionism.” Investor confidence in the euro-area economy slid to the lowest level in almost a year.

18H06 - CONFIDENCE STUMBLES

Consumer Confidence Takes a Hit With Canada’s Economy Gearing Down – Bloomberg

It’s been a dramatic reversal in consumer confidence. Over the past two months, sentiment has dropped from near record highs to below average levels, reflecting an overall deterioration in economic conditions for households. These include three rate hikes by the Bank of Canada since July, a weakening Canadian dollar, sharp declines in stock prices, renewed worries about the housing market and a slowing economy.

China Congress Applauds Xi Jinping’s Bid for Indefinite Rule – WSJ

An annual legislative session in Beijing that usually spotlights China’s economic strategy is turning into a cheering session for President Xi Jinping and a plan for him to stay in power indefinitely. At the opening of the National People’s Congress on Monday, lawmakers loudly applauded a proposal to scrap presidential term limits, a good indication that they will repeal a decades-old constitutional safeguard against life tenure for Chinese leaders.

Saudi Arabia and Egypt agree $10bn deal to develop economic zone – FT

Saudi Arabia and Egypt have extended their economic co-operation by agreeing a $10bn deal to develop a planned megacity and business zone that would span the border between the two countries. The agreement came during a visit to Egypt by Mohammed bin Salman, the powerful Saudi crown prince who is making his first foreign trip since he became heir apparent to the throne last year.

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POSITIONING, INFLECTION, MARKET CALLS

Spooked by the Selloff, Retail Investors Fled Stocks in February – Bloomberg

The correction in equity markets last month didn’t go unnoticed by retail investors, who ran for cover from plummeting stocks at the fastest pace since at least 2010, according to TD Ameritrade. Clients of the Omaha, Nebraska-based finance firm dramatically cut their exposure to the stock market in February, pushing the firm’s Investor Movement Index (IMX) down 23 percent, the largest monthly decline since TD Ameritrade started tracking the figures in 2010, according to a company statement. This was the second straight loss for the gauge, which fell 9 percent in January.

18H06 - INVESTOR MOVEMENT INDEX

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DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

Nordstrom Family’s Bid to Buy the Retailer Is Rejected – The New York Times

Nordstrom’s long, winding attempt to move into private ownership took another turn Monday. A special committee of the retailer’s board rejected a roughly $8.4 billion offer from the Nordstrom family to buy the company, saying the price was too low. In a statement late Monday, the committee said the cash offer of $50 a share was “inadequate,” and it threatened to cut off further discussions with the family group, which includes the company’s co-presidents and a granddaughter of one its founders.

Nordstrom’s Spurned $8.4 Billion Buyout Sends Family Scrambling – Bloomberg

This is no ordinary takeover battle. The group representing the founding family includes the retailer’s highest-ranking executives: co-presidents Blake Nordstrom, Peter Nordstrom and Erik Nordstrom — a triumvirate that operates in place of a traditional chief executive officer. They’re up against their own independent directors, such as JPMorgan Chase & Co. executive Gordon Smith and TaskRabbit Inc. CEO Stacy Brown-Philpot.

U.S. security panel deals major blow to Broadcom’s bid for Qualcomm – Reuters

The government action on Sunday highlighted growing U.S. concerns about safeguarding semiconductor technology and cast a doubt on the deal’s success. The Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security concerns, rarely reviews mergers before companies have clinched an agreement.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Steve Cohen Revamps Point72’s Big Data Group After Early Stumble – Bloomberg

Point72, which has been raising money from outside investors after a two-year ban, has struggled along with other hedge funds in turning big data into big profits. Cohen’s firm has been pushing to improve collaboration between scientifically minded quants and managers who rely more on experience to read markets.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

U.S. Will Be the World’s Largest Oil Producer by 2023, Says IEA – WSJ

U.S. crude production is expected to reach a record of 12.1 million barrels a day in 2023, up from 10.6 million a day this year, said the International Energy Agency, which advises governments and corporations on industry trends. American oil output will surge past Russia, currently the world’s largest crude producer at roughly 11 million barrels a day.

IEA sees U.S. oil output surge stealing OPEC share in next five years – Reuters

A landmark deal in 2017 between OPEC and rivals including Russia to curb output to reduce global oversupply improved the outlook for other producers as prices rose sharply throughout the year, the IEA said in Oil 2018, an annual report looking at the next five years. With U.S. supply surging, the Organization of the Petroleum Exporting Countries will see demand for its crude fall below current production in 2019 and 2020, the report forecast, suggesting a return to oversupply if OPEC output keeps steady.

Libya’s Biggest Oil Field Sharara Resumes Production – Bloomberg

Libya’s biggest oil field began pumping again after the reopening of a pipeline to a refinery on the coast. The Sharara deposit in western Libya began producing again after a one-day halt, the National Oil Corp. said in a statement. It was stopped due to an “illegal” closing of a pipeline valve connecting the field to a refinery in Zawiya, west of Tripoli, where there’s a also a crude-export terminal. The incident meant about 500,000 barrels of production was curbed.

Oil Gains Most in Two Weeks as Storage in Key Hub Seen Shrinking – Bloomberg

Draws at Cushing will continue, said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York, as long as near-term futures contracts trade higher than later ones, a market structure known as backwardation that discourages storage. “Why would anybody want to auto-lose money by storing crude oil?” Yawger said.

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ENERGY RENEWABLES, NUCLEAR

India Solar Goal Has a Secret Weapon: Rooftops of Small Business – Bloomberg

Rakshith Kunder is adding more solar panels to the roofs of his warehouses. He isn’t seeking to save the planet, it’s pure economics. Businesses like Kunder’s are the next target for Prime Minister Narendra Modi’s government as it seeks to achieve 100 gigawatts of solar installations by 2022. Of that, 40 gigawatts is expected to come from rooftop installations. Small businesses, which contribute about a third to India’s $2 trillion economy, suffer from high power tariffs and erratic supply causing them to fall back on expensive and polluting diesel generators to keep the lights on.

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COMMODITIES BASE METALS, MATERIALS

US tariff plan prompts aluminium and steel scramble – FT

Key commodities have not escaped the fallout from the Trump administration’s plans for levying tariffs on steel and aluminium, a protectionist step that investors fear may hurt global growth. The premium, or surcharge to get immediate delivery of aluminium from warehouses, has surged to its highest level in three years. The Midwest Aluminum Premium futures contract has jumped 17 per cent since Thursday on the CME exchange in New York to trade at 16 cents a pound.

Zinc Turned Upside Down as Prices Tank and Stockpiles Surge – Bloomberg

The zinc market is making a U-turn. The market shot up over the past two years, but is now in retreat. Prices have tumbled 8 percent since a peak in mid-February. On Monday, the losses deepened after data from the London Metal Exchange showed the biggest increase in inventories in almost three decades.

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GEOPOLITICS, CRIME, TERRORISM

China boosts spending on new weapons – FT

China will raise its defence budget 8.1 per cent this year, a slight increase over the growth of the previous two years and an apparent effort to respond to a rise in US military spending under President Donald Trump. The spending increase to Rmb1.1tn ($175bn) was announced on Monday in a budget report presented to the annual National People’s Congress in Beijing. It is the latest rise in three decades of military upgrades that have seen China become the world’s second-largest defence spender. Last year saw a 7 per cent increase.

U.S. Carrier Marks New Vietnam Ties With Port Call at Former War Site – WSJ

The visit by the USS Carl Vinson comes 53 years to the week since U.S. Marines came ashore in Danang at the launch of the Vietnam War. On Monday, the Vinson became the first American aircraft carrier to visit Vietnam since communist forces won the war in 1975, at the head of a task force of 6,000 personnel coming in peace.

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ELECTORAL POLITICS

GOP Senator Cochran to Retire April 1, Setting Up November Vote – Bloomberg

Mississippi Republican Senator Thad Cochran said Monday that he’ll resign from Congress on April 1 for health reasons. The retirement will allow Republican Governor Phil Bryant to name a temporary replacement ahead of a special election in November.

In Nigeria, Pressure Mounts on President to Bow Out of Race – The New York Times

The pressure is mounting on President Muhammadu Buhari to step down after his first term expires next year. A diverse range of Nigerians have joined the chorus, and while the presidential vote is still almost a year away, campaign season in Nigeria is in full swing. Billboards have popped up in parts of the country and election news dominates the headlines.

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SCANDALS, LAWSUITS, FINES, REGULATORY

U.S. judge orders ex-drug executive Shkreli to give up $7.36 million – Reuters

U.S. District Judge Kiyo Matsumoto in Brooklyn said the assets Shkreli could forfeit to satisfy the judgment also include $5 million in a brokerage account and his stake in Vyera Pharmaceuticals, one of the drug companies he founded. Shkreli is scheduled to be sentenced for securities fraud on Friday. A lawyer for Shkreli could not immediately be reached for comment on the judge’s order.

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CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

Next Up for Amazon: Checking Accounts – WSJ

If the product emerges, it would further inject Amazon into the lives of those who shop on its website and at its Whole Foods grocery stores, read on its Kindles, watch its streaming video and chat with Alexa, its digital assistant. Offering a product that is similar to an own-branded bank account could help reduce fees Amazon pays to financial firms and provide it with valuable data on customers’ income and spending habits. The company’s latest push also answers a question that bank executives have been asking with increasing worry: When will Amazon show up on their turf?

After Losing China, Jeff Bezos Really Wants to Win in India – Bloomberg

Amazon.com Inc.’s chief has committed $5.5 billion to India and selected Amit Agarwal to spend it wisely. A trusted lieutenant who grew up in Mumbai and admires his boss and Bollywood star Amitabh Bachchan with near-equal fervor, Agarwal, 44, is furiously adapting Amazon to local conditions. The company has set up a credit operation for Indians without bank accounts, built a streamlined mobile app so it doesn’t crash the cheaper phones typically used by small-town Indians and loaded up the online store with tens of thousands of eclectic products—from the butter chicken instant curry paste favored in Punjab in the north to the traditional churan herbal digestives used for centuries in central India.

Amazon to Expand Whole Foods Delivery to San Francisco – Bloomberg

Amazon.com Inc. plans to offer grocery deliveries from Whole Foods stores in San Francisco, according to people familiar with the matter, expanding a test of the service launched in four other cities. Workers will select groceries off the shelves from at least two San Francisco Whole Foods stores and bag them for delivery to online customers, said the people who asked not to be identified because the plans aren’t public.

Xiaomi Set to Enter U.S. Smartphone Market as Early as This Year – WSJ

Xiaomi Corp. could sell smartphones in the U.S. as early as this year, extending the Chinese company’s Western expansion as it plans a highly anticipated initial public offering of stock. Beijing-based Xiaomi, China’s fourth-largest smartphone vendor, has succeeded in emerging markets such as India and Southeast Asia in recent years. It also has pushed into some Western markets, including Spain, where it opened stores earlier this year.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Oscars Ratings Hit Record Low – The New York Times

The doomsday ratings scenario has hit the Oscars. A record low 26.5 million people watched Sunday night’s telecast, a nearly 20 percent drop versus last year. It also represents a startling drop off: As recently as four years ago, the Academy Awards had an audience of 43.7 million viewers. The previous record low was in 2008 when 32 million viewers watched a hastily organized ceremony that proceeded just days after the Writers Guild of America’s strike had ended.

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AEROSPACE, MILITARY & DEFENSE

In-flight WiFi battle over Europe takes off – FT

Both the satellite and airline industries believe that opening up the aeroplane cabin will create a gold rush of revenue in the next two decades as passengers opt to pay to stay online. A London School of Economics report, commissioned by Inmarsat, predicts in-flight broadband will generate $130bn of total revenue for the entire sector by 2035, with $30bn of that figure boosting the “ancillary revenue” of the airlines.

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ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

CaliBurger begins using ‘Flippy,’ a burger-flipping robot alternative to human workers – The Washington Post

A burger-flipping robot that doesn’t require a paycheck or benefits — and can grill 150 burgers per hour — is now a cook at CaliBurger. It’s called ‘Flippy.’ The robot, or more specifically, a specialized industrial six-axis robotic arm bolted to the kitchen floor, works lunchtime shifts at the international burger chain’s Pasadena, Calif., location. It takes burger orders through a digital ticketing system, then flips the burger patties and removes them from the grill. It uses thermal and regular vision, as well as cameras, to detect when the raw meat is placed on the grill, then monitors each burger throughout its cooking process.

Nanobots kill off cancerous tumours as fiction becomes reality – FT

The idea of armies of minuscule robots patrolling our bodies, cleaning and maintaining them has been a theme in science fiction for decades. The plot of a1966 film Fantastic Voyage in which a submarine of scientists is shrunk to microscopic size and injected into the blood stream of a colleague in order to help save his life, is now coming closer to reality. Scientists are exploring the use of nanobots for a number of healthcare uses, not only for fighting cancer, but also to unblock blood vessels in hard to reach areas, taking biopsies or measuring the level of certain chemicals in otherwise inaccessible areas of the body.

This Caltech Engineer Can Make Just About Anything Tiny. Next Up: The Camera – Bloomberg

A camera so small you could stick it on a wall, on your clothes, or even on your skin without anyone noticing? Sounds like the stuff of spy novels. But not for long. Ali Hajimiri, a professor of electrical engineering at the California Institute of Technology, estimates his lozenge-shaped camera, thinner than a human hair, could come to market in as few as three years.

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MISCELLANEOUS

Sunken U.S. World War II Aircraft Carrier Found Off Australian Coast – WSJ

The wreck of an American aircraft carrier sunk during World War II and which President Donald Trump paid tribute to last year has been discovered in deep ocean off Australia’s coast. The USS Lexington, one of the first American carriers and nicknamed the “Lady Lex,” was found 500 miles northeast of Australia in the Coral Sea by billionaire Microsoft co-founder and wreck-hunting enthusiast Paul Allen, lying in water 1.8-miles deep.

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