Macro Links Mar 8th – Seychelles Kremlin Backchannel
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
- BLOCKCHAIN, FINTECH, DIGITAL PAYMENTS
- FOREX, CARRY TRADES, EXCHANGE RATES
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- GUN CONTROL, MARIJUANA BOOM, PUBLIC POLICY
- RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
- NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
- INFLATION, RATES, DEBT AND CREDIT, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- CENTRAL BANKS & MONETARY POLICY
- USA ECONOMY DATA, CITIES AND STATES
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- CREDIT, YIELD, BUYBACKS, CORPORATES
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- COMMODITIES AGRICULTURE & SOFTS
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- SCANDALS, LAWSUITS, FINES, REGULATORY
- RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
- AUTOS, ELECTRIC, SELF-DRIVING
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
The drop came as concerns mounted about Binance, a major cryptocurrency exchange based in Hong Kong. Around 12 p.m. ET, a Reddit account associated with the exchange announced on the social media platform it had temporarily disabled withdrawals and was “investigating reports of some users having issues with their funds. Our team is aware and investigating the issue as we speak.” A couple of hours later, Binance CEO Changpeng Zhao wrote on Twitter that “all funds are safe. There were irregularities in trading activity, automatic alarms triggered. Some accounts may have been compromised by phishing from before. We are still investigating.
“I lost everything,” a user named Joey Raye said in a message. “If Binance do not reimburse I am ruined.” Another person said their account was almost completely emptied when someone got access to it and sold $92,000 worth of their crypto for Bitcoin, used that Bitcoin to buy a token called Viacoin, and then withdrew the Viacoin. Three people told Bloomberg News that their accounts were used to purchase Viacoin without their permission.
While Binance is investigating the issue, they have disabled all withdrawals. Moderators of the CryptoCurrency subreddit recommend several courses of action for traders using a portfolio management tool or third-party trade bots that use Binance API keys. These include disabling those accounts on Binance or the tools themselves, disabling trade access to the API on Binance, or resetting the API key.
The largest cryptocurrency dropped as much as 13 percent to $9,416 after the SEC statement boosted concern that tightening regulation may limit trading. Bitcoin is down about 50 percent from its high of almost $20,000 in December in part because regulators worldwide have clamped down on trading, mining and initial coin offerings. Adding to concern is speculation that Asia-based Binance, one of the largest exchanges, has been hacked.
The Securities and Exchange Commission warned Wednesday that cryptocurrency exchanges risk operating illegally because they don’t disclose how they prioritize investors’ orders or pick tokens that trade on their markets. The investor alert represents the SEC’s latest effort to herd the multibillion-dollar U.S. market for raising funds in cryptocurrencies into a zone that the government regulates.
He’s not your typical Bitcoin whale, but Nobuaki Kobayashi has become a force to be reckoned with in the cryptocurrency world. The Tokyo attorney and bankruptcy trustee for the now-defunct Mt. Gox exchange disclosed on Wednesday that he sold about $400 million of Bitcoin and Bitcoin Cash since late September. Kobayashi, who’s liquidating the tokens on behalf of Mt. Gox creditors, has another $1.9 billion to offload.
The former head of right-wing media outlet Breitbart, who helped Trump win the presidency in 2016 as the campaign’s chief strategist, lauded the importance of decentralization when he said: “Central banks are in the business of debasing your currency. Central governments are in the business of debasing your citizenship. The central technology conglomerates are in the business of debasing your own personal sovereignty and your own personal data.”
Two Russian-based social networking platforms have announced they are now accepting cryptocurrency payments. Vkontakte, the most popular social media among Russian-speaking users, and Odnoklassniki, which has many subscribers in former Soviet states, will take bitcoin from advertisers. They also intend to start paying developers and partners in cryptocurrency.
Just recently the firm Crescent Electric Supply Company conducted a study that showed the cost of mining one single bitcoin in each state in the U.S. Since then the company’s subsidiary business Elite Fixtures took the research further by charting the cost to mine a single bitcoin in each country across the world.
Venezuela continued the rollout of its oil-backed cryptocurrency Tuesday, announcing how the so-called Petro will be introduced into wider circulation, which it says will also mark “the burial” of various black market rate tracking platforms that have embarrassed the government.
BLOCKCHAIN, FINTECH, DIGITAL PAYMENTS
The research project called “Pantos” aims to solve the problem of the increasing fragmentation of Blockchain tokens and to allow “worthwhile transfers of tokens over several blockchains” for the first time, Bitpanda announced in its press release on on Wednesday, March 7. This will enable traders to capitalize on price differences between pairs of digital currencies on one single platform.
JP Morgan’s write-up on “Unlocking Economic Advantage with Blockchain: A guide for asset managers” is one of the first blockchain-related economic reports of its time. In it, the legacy financial institution makes a bullish case for cryptocurrencies and blockchain adoption in the financial sector.
Blockdaemon describes itself as a “Nodes as a Service” platform on its website, acting as “multi-chain, multi-cloud network management system” that deploys nodes and connects them to Blockchains. Blockdaemon also recently launched a public node deployment service for Ethereum (ETH) and Bitcoin (BTC) on Blockdaemon’s “own infrastructure,” in Richter’s words.
FOREX, CARRY TRADES, EXCHANGE RATES
One of the most prominent currency-markets gurus says the Canadian dollar will plunge to levels not seen in more than 15 years as trade turmoil intensifies. John R. Taylor, who formerly headed what was then the world’s biggest currency hedge fund, says his analysis of statistical patterns projects the loonie to weaken about 20 percent to C$1.60 per U.S. dollar by the end of next year. It hasn’t been that weak since August 2002. Canada’s currency looks bleak by the charts and given the potential hit to the nation’s exports as President Donald Trump tinkers with Nafta and announces tariffs on metals.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
More than 100 Republican lawmakers implored President Trump to drop plans for stiff and sweeping steel and aluminum tariffs as the White House prepared to formalize the measures on Thursday afternoon. Officials said late Wednesday that the plan would initially exempt Canada and Mexico and could ultimately exclude other allies.
More than 100 House Republicans have signed a letter to the White House objecting to President Donald Trump’s proposal to slap tariffs on steel and aluminum imports, a day ahead of the expected unveiling of the plan.
One version of the plan, which was still being finalized ahead of an expected announcement on Thursday, would give Canada and Mexico a 30-day exemption from the tariffs, the officials said. The exemptions could be extended based on progress in renegotiating the North American Free Trade Agreement.
China’s appetite for U.S. soybeans has waned, and concerns abound that exports of the legume could suffer further if President Donald Trump makes good on a promise to impose tariffs on imports of steel and aluminum. Farmers and grain traders worry that China might retaliate by slowing imports of U.S. beans or by erecting trade barriers to them.
A provisional list of items being targeted ranges from steel to T-shirts, also including bed linen, chewing tobacco, cranberries and orange juice, among other products. The overall size of the business affected is relatively small, worth about 2.8 billion euros, or $3.5 billion, in imports, paling in comparison with the nearly €250 billion of goods the 28-nation bloc bought from the United States in 2016.
“These tariffs right now are just talk, but they have the potential to become quite inflammatory and impact economic growth,” Kristina Hooper, chief global market strategist at Invesco, said in an interview with Bloomberg Television. “Tariffs beget more tariffs. It’s like putting bacteria in a petri dish.”
The U.S. isn’t the only country that has a chip on its shoulder about trade. When it comes to China, so do countless others. For President Donald Trump, this could be an opportunity to lead a coalition against China’s predatory trade behavior. Instead, he is threatening trade war with the countries that would make up such a coalition, over commodities that are much less vital to the U.S.’s economy and national security than the sectors threatened by China’s expropriation of intellectual property.
Leaders of the 11-strong Trans-Pacific Partnership trade deal are on the hunt for new members as they prepare for a formal signing ceremony in Chile on Thursday that will illustrate how the world is moving on without Donald Trump’s America. Taiwan, Thailand, South Korea, the Philippines, Sri Lanka and even the UK are all regarded as possible additions to a pact that lays down strong rules for trade in the most dynamic region of the world economy.
GUN CONTROL, MARIJUANA BOOM, PUBLIC POLICY
Connecticut Gov. Dannel Malloy (D) this week accused the National Rifle Association (NRA) of acting like a “terrorist organization.” “They act, quite frankly, in some cases, as a terrorist organization,” Malloy said, according to Fox61. “’You want to make safer guns? We will boycott your company.’ That’s who they are. That’s what they do.” He added that the group had evolved into an entirely different organization than it had been just a couple of decades ago.
Wells Fargo & Co. has emerged as the preferred financier for the U.S. gun industry. The bank has helped two of the biggest U.S. firearm and ammunition companies access $431.1 million in loans and bonds since December 2012, when the gun control debate gained steam after the school shooting in Newtown, Connecticut, according to data compiled by Bloomberg. That puts it on the top of the list of banks arranging funding for gunmakers.
RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
Special counsel Robert S. Mueller III has gathered evidence that a secret meeting in Seychelles just before the inauguration of Donald Trump was an effort to establish a back channel between the incoming administration and the Kremlin — apparently contradicting statements made to lawmakers by one of its participants, according to people familiar with the matter.
The special counsel in the Russia investigation has learned of two conversations in recent months in which President Trump asked key witnesses about matters they discussed with investigators, according to three people familiar with the encounters. The episodes demonstrate that even as the special counsel investigation appears to be intensifying, the president has ignored his lawyers’ advice to avoid doing anything publicly or privately that could create the appearance of interfering with it.
A day before she resigned as White House communications director, Hope Hicks told the House Intelligence Committee last week that one of her email accounts was hacked, according to people who were present for her testimony in the panel’s Russia probe. Her assertion of a hack raises the questions of who might have compromised her account, as well as when, why and what information could have been obtained.
“I have no disappointment at all,” Putin said when asked about the U.S. president. “Moreover, on a personal level he made a very good impression on me.” The two leaders met on the sidelines of international summits last year. Putin praised Trump as a “balanced” man, who easily gets into the gist of various issues and listens to his interlocutor.
A lawyer for Stormy Daniels hinted to NBC’s Today show Wednesday morning that the adult-film actress possibly possessed evidence that a “sexual relationship” between herself and President Trump occurred—and would be willing to return the $130,000 paid to her to nullify a nondisclosure agreement signed days before the 2016 election.
An opponent of the bill, State Senator Jim Dabakis, has said he would fight it by adding the name of an adult film star who is reported to have had an affair with the president. “If it gets to the Senate,” Mr. Dabakis threatened on Twitter this week, “I will present an amendment that the frontage road be designated as the Stormy Daniels rampway.”
President Trump’s lawyer secretly obtained a temporary restraining order last week to prevent a pornographic film star from speaking out about her alleged affair with Mr. Trump, according to legal documents and interviews. The details of the order emerged on Wednesday after the White House’s spokeswoman, Sarah Huckabee Sanders, said that Mr. Trump’s lawyer had won an arbitration proceeding against Ms. Clifford, who goes by the name of Stormy Daniels.
NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
When a delegation of South Korean officials arrived to visit they did not know what to expect from the leader, Kim Jong-un, a 34-year-old with a nuclear arsenal, who has remained an enigma even as his weapons tests have terrified the world. The envoys, some old enough to be Mr. Kim’s father, were taken aback by his friendliness and “forthcoming and daring” responses during a Monday meeting in Pyongyang, the North’s capital, that exceeded four hours, according to South Korean officials.
For almost his entire political career, South Korean President Moon Jae-in has been dogged by criticism that he is an appeaser who lacks the diplomatic prowess to deal with North Korea. Now the Korean peninsula seemingly stands on the cusp of a breakthrough, with Pyongyang appearing willing to compromise on its nuclear weapons programme — a situation analysts say could not have happened without the quiet, careful diplomacy of Mr Moon. “Mr Moon should be credited for significantly reducing the risk of war on the Korean peninsula by opening dialogue with North Korea,” says Paik Hak-soon, a researcher at the Sejong Institute.
INFLATION, RATES, DEBT AND CREDIT, BALANCE SHEETS
Moody’s downgraded Turkey’s debt on Wednesday, warning of the erosion of checks and balances under the leadership of President Recep Tayyip Erdogan and an increased risk of an external economic shock. “This overall picture suggests that the possibility of a sudden, disruptive reversal in foreign capital inflows, a more rapid fall in already inadequate FX reserves and, in a worst-case scenario, a balance of payments crisis, while still quite low, has increased beyond Moody’s expectations a year ago,” it said.
Despite the prospect of more expensive debt, U.S. and European companies have raised less money at the start of 2018 than for many years. Some analysts, however, say they should take advantage of continued ultralow costs of capital, and some companies say they are watching the market closely. That could see a burst of corporate issuance later in the year.
There are ferociously strong, longer-term phenomena that are still subduing inflation, interest rates and bond yields. A recent paper by the Bank of Japan offers some useful clues on one of the most under-appreciated factors: demographics. The world is getting older and richer. That saps economies of their vim and helps quell inflationary pressures — as pensioners tend not to be big spenders — and increases demand for the safety of government bonds.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
One lesson from real warfare is that battles tend to be won and lost on the home front — and in that respect, the U.S. is laboring under a significant handicap. Its major imports from China are overwhelmingly consumer goods, where the predictable effect of tariffs will be to increase costs to American citizens, as Gadfly’s Tim Culpan points out. The largest categories are computers, phones, knitwear, other clothing, and toys. It won’t be easy for U.S. retailers to replace these goods.
At the end of World War II, American steel had no real challengers. It produced nearly three quarters of the world’s steel, and the factories of its biggest competition — Japan and Germany — lay in ruins. Giants like U.S. Steel looked poised to dominate the world for the foreseeable future. Instead, the industry was lapped by foreign producers — and unfair trade practices were simply not a factor. Instead, the blame lies with U.S. manufacturers who held onto the so-called “open hearth” method of steel production decades after its expiration date.
Most of it is unintentional. Yet the west could not be helping China more if it tried. Is the US president the west’s greatest gift to China? That depends on how far he goes. For the time being, the answer is yes. America’s advantage lies in the strength of its alliances. China’s only treaty ally is Mongolia. The more Mr Trump undercuts friends such as Canada and Germany, the easier Mr Xi’s task of taking global centre stage. He is a cheerleader for China’s authoritarianism.
“From a short-term perspective, it sure feels like 1987: a little spookiness in the stock market and yields rising. So there are a lot of parallels to 1987. For example, tariffs, a weak dollar and a new Fed Chairman. And remember, there was the crash before the crash. That year, the stock experienced some jitters already in April and about six months later you had the big crash on Black Monday…. The reason we had this sell off is not algos or risk parity. It’s because of humans. For instance, we all have been told that ETF buyers are buy and hold investors forever. But they’re buy and hold investors until they’re not, until they panic. That’s why these websites for electronic trading like Betterment and all the other Robo-Advisers were down on February 5th. I think even Fidelity had an issue because of the huge volume. So why did all these people try to log in? They weren’t logging in to buy, they were logging in to sell!”
A fire hose of destabilizing news from the White House hasn’t budged investors’ optimism about the market. Are they missing something? There’s another possibility: that Wall Street has it all wrong. If Trump really were the black swan he seemed on election night, it’s possible that the kinds of risk he presents—a constitutional crisis, a neomercantilist trade battle, even a nuclear war—just aren’t the kind of things that the markets can price in. And what I found is that some investors are wondering whether the market really is missing something, and that destabilizing moment might still be in our future.
The dramatic initial reaction in thin after-hours trading, with exchange-traded funds intended to track the benchmark S&P 500 falling by 1.2 per cent within a matter of minutes, is not at all surprising. What was more surprising — and disquieting — was investors’ previous ability to ignore President Donald Trump’s ill thought-out tariffs announcement and to continue as though nothing had happened. This speaks to unrealistic confidence in markets. Ahead of his election in 2016, markets tended to sell off in response to good polling numbers for Mr Trump. This largely reflected fears of his policies for trade. The rally once he was elected reflected not only joy about his tax-cutting agenda, but also relief that during his first year in office he eschewed significant moves towards protectionism.
The loss of Mr. Cohn, who carried the banner for free trade and free markets in the White House, portends more populist trade and economic policies to come. Congressional Republicans and industry leaders, who only recently were celebrating the party’s passage of a sweeping tax cut, are suddenly very worried about Mr. Trump’s next moves on economic policy. A senior Republican aide said on Wednesday that the departure would allow the White House to move ahead with damaging economic policies that could stifle growth.
A registered Democrat, Cohn was regarded as one of the few political moderates close to the president. His absence will amplify voices like Commerce Secretary Wilbur Ross and trade adviser Peter Navarro who back the president’s impulses to buck convention and pick trade fights on a global stage. Cohn also served as a counterbalance to figures like senior adviser Stephen Miller and chief of staff John Kelly, who have pushed Trump to the right on immigration — and worked to keep him there — and have encouraged the president’s forays into the culture wars.
Byrne, 55, has been reborn as a crypto-evangelist, giving himself and his unsexy e-commerce company a new shine. He’s positioning himself at the intersection of Wall Street and the mushrooming business of initial coin offerings, sales of new cryptocurrencies touted for their ability to revolutionize every industry. Dreamers and schemers raised more than $6.5 billion for ICOs last year, according to figures from blockchain research firm Smith + Crown. Some ventures pulled in millions of dollars with little more than a glorified blog post sketching a tangential link to the space inhabited by Bitcoin. Even with crypto prices well off their peaks, token sales raised another $3.1 billion in the first two months of 2018.
After his entrepreneurial adventure in Switzerland, he returned to his native South Tyrol at the age of 18 and moved in with his parents. He did his high school diploma. “Although I lost all my money, I was still convinced of crypto currencies,” Schiener said. This conviction eventually led to IOTA in early 2015. Together with David Sønstebø, Sergey Ivancheglo and Serguei Popov, he launched the digital currency. But he also knew that South Tyrol was not the ideal location to advance such an ambitious project. Hence the move to Berlin.
Every country produces its share of underperforming altcoins. They’re called shitcoins for a reason. But China has a track record for creating altcoins that are shittier than most. The country has spawned a slew of talented developers, and has made a huge contribution to cryptocurrency adoption and innovation as a whole. But when it comes to altcoins, China’s wither and die at a phenomenal rate. The question is, why?
The idea of a blockchain, the cryptographically enhanced digital ledger that underpins Bitcoin and most cryptocurrencies, is now being used to describe everything from a system for inter-bank transactions to a new supply chain database for Walmart. The term has become so widespread that it’s quickly losing meaning. This uncertainty has contributed to the general bubbliness of the industry by inflating the number of “blockchain” projects and exaggerating the capabilities of the technology. It may also cause unpredictable problems in the future as states pass blockchain-related legislation.
We have seen this mass delusion play out before, and you don’t have to go back to the Tulip Mania of 1636-1637 to see it. The late 1990s featured a mania around Beanie Babies, where adults spent thousands of dollars for plush toys made in China. Their price continued to rise based on the belief that the Beanie Babies had turned into a new type of asset, and lots of people lost major savings. But still, there was a winner: Creator Ty Warner is currently worth $2.7 billion.
The last time Italy’s political foundations collapsed — in 1993 when the parties that had governed Italy since the end of World War II were swept away by mafia and corruption scandals — the political leader who emerged was Silvio Berlusconi. But while Berlusconi was radically new, what he offered was also more of the same. The winners of last Sunday’s conflagration are, by contrast, aliens — that is they are almost totally estranged from the mere idea of a common code of conduct. Salvini has realized in Italy what Marine Le Pen could not in France: uniting euro-bashers and immigrant haters into a powerful political force.
In search of reasonable rent, the middle-class backbone of San Francisco — maitre d’s, teachers, bookstore managers, lounge musicians, copywriters and merchandise planners — are engaging in an unusual experiment in communal living: They are moving into dorms. Shared bathrooms at the end of the hall and having no individual kitchen or living room is becoming less weird for some of the city’s workers thanks to Starcity, a new development company that is expressly creating dorms for many of the non-tech population.
The human competitors here weren’t worried. SAM is far from being widely adopted. There are only 11 of them, costing roughly $400,000 each, a prohibitive amount for many small contractors. The machines can’t do corners or curves or read blueprints. SAM also requires workers to load its brick, refill its mortar and clean up the joints of the brick it lays. What SAM does do is work without getting thirsty, sick or tired. In some ways, it is running a different kind of race.
Having reverse engineered the AP audio, Fu, Xu, and Yan then considered what combination of things might have caused the sound at the U.S. embassy in Cuba. “If ultrasound is to blame, then a likely cause was two ultrasonic signals that accidentally interfered with each other, creating an audible side effect,” Fu says. There are existing sources of ultrasound in office environments, such as room-occupancy sensors. “Maybe there was also an ultrasonic jammer in the room and an ultrasonic transmitter,” he suggests. “Each device might have been placed there by a different party, completely unaware of the other.”
In the not-so-distant future, places like Phoenix and Tucson will become so hot that just walking across the street will be a life-threatening event. Parts of the upper Middle West will become a permanent dust bowl. South Florida and low-lying sections of the Gulf Coast will be underwater. Some people may try to stick around and fight it out with Mother Nature, but most will not. “People will do what they have done for thousands of years,” says Vivek Shandas, a professor of urban studies and planning at Portland State University. “They will migrate to better climates.”
The short end of the yield curve is oversold, while the long end has not even started to understand what a true bond bear market looks like. Huh? What do I mean by that? Well, I think the front end of the curve is overly optimistic about the Fed’s ability to keep hiking, while the long end of the curve is way too sanguine about the Fed’s skill in controlling inflation. Now that inflation is perking up, many market participants are aggressively selling the front end of the curve, assuming the Fed will raise rates to combat rising prices. I think they are wrong.
CENTRAL BANKS & MONETARY POLICY
Employers across the U.S. said wage growth picked up since the beginning of the year, according to a Federal Reserve report released Wednesday, signaling the tight labor market may be forcing employers to beef up paychecks to compete for workers. In many of the Fed’s 12 regional districts, wage growth picked up to a moderate pace, the Fed reported in its latest roundup of anecdotal information about regional economic conditions known as the beige book. The report was based on information collected through Feb. 26.
Officials in the eurozone’s largest and most powerful economy are still hesitating whether to risk political capital on a campaign to anoint one of their own as Mario Draghi’s successor. The fear is that they will have to bend too much to Paris and Rome’s vision of European monetary union in return. “The price can’t be too high,” said one German official. “The question is what political and economic benefit it brings to Germany.”
USA ECONOMY DATA, CITIES AND STATES
Nearly half of all Americans have less than $10,000 saved for retirement, according to a new report. The No. 1 reason most people cited for not stashing more away was because they didn’t earn enough to save, followed by the fact that they were already struggling to pay bills, GoBankingRates said. The personal finance site polled more than 1,000 adults online in February.
If you want to buy a home in the metro area, the average price of a single family home just surpassed the $500,000 mark for the first time on record. “The prices are being driven by the lack of inventory so you know we have more buyers in the market then we have houses,” said Athena Wilson-Flierl, long-time broker with The Peak Properties Group.
The economy is booming, take-home pay is rising and millennials are getting married and having children. Despite all those homebuying catalysts, real-estate agents said this could be one of the weakest spring selling seasons in recent years. The culprits: rising mortgage rates, a new tax law that reduces the incentives for homeownership and a growing weariness among first-timebuyers being priced out of the market—all of which are expected to damp demand for homes this year.
US Steel plans to restart steelmaking facilities and one of two idled blast furnaces in Illinois, saying Donald Trump’s “strong leadership” in imposing tariffs on imports would allow it to bring back 500 workers. The company closed the operations at its Granite City Works, an integrated plant across the Mississippi River from St Louis, “temporarily” in November 2015, citing challenging conditions including low oil prices, depressed steel prices and a surge of cheap Chinese steel coming into the US. Employment at the site fell from 1,800 to 730.
Donald Trump’s planned 25 per cent tariffs on steel imports could jeopardise jobs in some of the struggling mills he set out to protect, according to industry executives whose businesses depend on 30 tonne slabs they cannot source domestically. Most imports to the US come in the form of finished steel, but about 20 per cent are semi-finished slabs from Brazil, Russia, Mexico and Japan that are converted into the products then sold to carmakers, construction companies and other customers.
U.S. productivity growth stalled late last year while the cost of labor grew more quickly than previously thought. Productivity—a measure of the goods and services Americans produced per hour worked—was flat in the fourth quarter of 2017, the Labor Department said Wednesday. That figure, based on revised data, replaced the agency’s prior estimate of a 0.1% decline, at an annual rate, for nonfarm business productivity.
The U.S. trade deficit increased to a more than nine-year high in January, with the shortfall with China widening sharply, suggesting that President Donald Trump’s “America First” trade policies aimed at eradicating the deficit will likely fail. “Trump’s economics team is trying to turn back the clock on trade, but we doubt they will succeed as they are interfering with the business decisions made by thousands of American companies over the years,” said Chris Rupkey, chief economist at MUFG in New York. “This is a trade war with ourselves.”
The trade deficit widened further in early 2018, a deteriorating backdrop to President Donald Trump’s ramped-up efforts to close the gap with the help of tariffs. The wider deficit “will only add fuel President Donald Trump’s protectionist rhetoric in recent weeks,” said Michael Pearce, senior U.S. economist at Capital Economics, in a note to clients.
Mr. Sessions told a crowd of more than 200 law enforcement officials in a hotel ballroom that he would not stand for the insubordination of California lawmakers and what he called the dangerous obstruction of federal immigration laws. A 10-minute walk away, in a briefing room of the State Capitol, Gov. Jerry Brown unleashed a tirade against Mr. Sessions and the Trump administration. He said that the administration was “full of liars” and that Mr. Sessions was “basically going to war against the state of California.”
POSITIONING, INFLECTION, MARKET CALLS
Almost $4 billion in block trades of exchange-traded funds were recorded Tuesday, encompassing strategies from sector funds to popular international bets, according to Josh Lukeman, head of ETF market making for the Americas at Credit Suisse Group AG. The largest trade in the iShares Core MSCI EAFE ETF, ticker IEFA, was a $262.6 million block that amounted to almost 48 percent of the average daily turnover in the fund over the past 90 days, according to an analysis of Bloomberg data.
Washington’s largest business lobby, the US Chamber of Commerce, said on Wednesday that it was “very concerned about the increasing prospects of a trade war” following the resignation of Mr Cohn, a former president of Goldman Sachs. “Alienating our strongest global allies amid high-stakes trade negotiations is not the path to long-term American leadership,” said Thomas Donohue, the chamber’s president, calling for the administration to refrain from worldwide tariffs that it said would harm US manufacturers.
The S&P 500 Index stormed back from losses of almost 1 percent to end little changed, as investors heeded a strategy that’s worked more often than not during the nearly nine-year bull run: Buy the dip. This time the rally was sparked by comments from White House officials that suggested the Trump administration isn’t spoiling for a trade war and that key allies may be spared the most severe tariffs.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
Dollar Tree Inc. plummeted after saying profit this year would fall well below expectations, rattling investors who are concerned about Trump administration plans to reduce food-stamp benefits. The shares fell as much as 16 percent Wednesday, the steepest intraday plunge since August 2012, and making them the worst performer in the S&P 500 Index. Shares of other discounters, such as Dollar General Corp., Ross Stores Inc. and Walmart Inc., fell as well, just a day after Target Corp.’s stock declined on concerns about its ability to keep pace with Amazon.com Inc.
Snapchat parent Snap Inc is laying off nearly 10 percent of its engineering team, or about 100 people, CNBC reported on Wednesday. The layoffs would be Snap’s largest yet and the first to affect its engineers, CNBC said.
CREDIT, YIELD, BUYBACKS, CORPORATES
The ride-hailing company has begun approaching loan investors directly to borrow the funds, instead of going through banks, and has scheduled a March 9 meeting to discuss the financing, said the people, who asked not to be identified because the information isn’t public. Uber last tapped the loan market in 2016 for a $1.15 billion loan, a deal that was arranged by Morgan Stanley.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Broadcom has refused to back down from its months-long pursuit of Qualcomm, the San Diego-based chipmaker, despite intervention by the US government, announcing that it would create a $1.5bn fund to invest in American engineering talent. The move by the Singapore-based group, which vowed to maintain Qualcomm’s research and development efforts on the next-generation wireless standard, known as 5G, could relax regulatory resistance in Washington to its $142bn hostile takeover offer for Qualcomm.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
Private equity investors are increasingly turning their backs on the bulk of emerging markets, even as they throw record sums of money at Asia, according to industry figures. Private capital funds targeting Latin America, Africa, the Middle East, and eastern Europe and the former Soviet Union raised just $7.9bn between them last year, down from a cycle high of $18.6bn in 2014 and the weakest out-turn since 2009, according to data from the Emerging Market Private Equity Association.
ENERGY CRUDE OIL, OIL SANDS, SHALE
The plumbing of the US oil market is pivoting. Old pipelines have been reversed to deliver crude to Gulf of Mexico terminals. New ones also point at the coast. The changes are cementing the stature of the US in world oil markets, feeding exports of crude from shale fields and fuel made by coastal refineries. More pipelines and expanded ports have enabled American oil producers to reach 10m barrels a day in output, in league with Saudi Arabia and Russia.
Iran’s oil-and-gas industry was supposed to take off after the nuclear deal. Instead, one of the world’s largest energy sectors is languishing. International oil companies are staying on the sidelines as the Trump administration threatens to rip up the 2016 deal and reimpose oil sanctions lifted in exchange for limits on its atomic-power program.
COMMODITIES AGRICULTURE & SOFTS
“We have been hearing reports of not only blooms being destroyed but in some cases even flowers that were at ‘pink bud’ stage, where the blossom is still very tightly packed before opening,” said Giles Hacking at London-based nut traders CG Hacking & Sons. Prices have jumped with those almonds used by food processors rising to about $2.80 a pound, up from $2.45 before the frost.
BREXIT, SCOXIT, LONDON, UK ECONOMY
Philip Hammond, the chancellor, has warned that if the European Union punishes the UK by restricting the City of London’s access to its financial markets after Brexit, it will penalise all European companies and consumers, not only British ones. “We should be under no illusion about the significant additional costs that would be borne if this highly efficient market were to fragment,” Mr Hammond said in a speech at HSBC’s Canary Wharf headquarters on Wednesday, adding that these costs “would be borne by Europe’s businesses and consumers.”
Five Star will be the largest party in Italy’s parliament after winning 32 per cent of the vote in Sunday’s election, in a sign of how anti-establishment sentiment has upended the country’s traditional politics. But Five Star fell short of winning a majority and could only govern with support from other parties. If overtures to parties on the left were successful it could help Five Star thwart rival attempts by the League and other parties on the right to form a government. The League and its partners won 37 per cent of the vote and would also need to put together a broader coalition to govern.
Mr. Salvini’s nativist message echoes that of other European nationalists such as France’s Marine Le Pen and Hungary’s Viktor Orban. For millions of Italian voters, it fell on open ears. The face of Italy has changed enormously in recent years. The country is on the front lines of Europe’s migration crisis. Nearly 750,000 seaborne migrants have landed on its shores since 2011, hundreds of thousands of whom have swelled Italy’s population of undocumented migrants. That influx is just a part of a generalized rise in Italy’s foreign population, which has tripled since 2000. Especially in recent years, those newcomers have landed in a country with a sluggish economy and sharply rising poverty.
GEOPOLITICS, CRIME, TERRORISM
A former Russian spy and his daughter were poisoned by a nerve agent in Britain this week, the British police said on Wednesday, heightening suspicions that the episode was an assassination attempt by a national government, amid rampant speculation that Russia was responsible. The development forces the British government to confront the possibility that once again, an attack on British soil was carried out by the government of President Vladimir V. Putin, which Western intelligence officials say has, with alarming frequency, ordered the killing of people who have crossed it.
A former Russian double agent and his daughter were poisoned with a nerve agent, British counter-terrorism police said on Wednesday, marking one of the first times it has been used as a weapon away from the battlefield and increasing the likelihood that the attack was backed by a foreign government.
An Iranian woman who publicly removed her veil in protest against Iran’s compulsory headscarf law has been sentenced to two years in prison, the judiciary said on Wednesday. Tehran’s chief prosecutor, Abbas Jafari Dolatabadi, said the unidentified woman took off her headscarf in Tehran’s Enghelab Street to “encourage corruption through the removal of the hijab in public”.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
Facebook is now so good at watching what we do online—and even offline, wandering around the physical world—it doesn’t need to hear us to know what we like. Here are some ways to limit the amount of data Facebook and advertisers are collecting about you.
SCANDALS, LAWSUITS, FINES, REGULATORY
Royal Bank of Scotland Group Plc agreed to pay $500 million to settle New York’s probe into its marketing of toxic mortgage-backed securities that triggered the financial crisis, moving the government-owned lender a step closer to resolving a series of costly U.S. investigations.
RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
The online retail giant said Wednesday that it will extend its $5.99 monthly Prime membership to the roughly 20% of the U.S. population that is signed up for Medicaid. Last year, the company introduced the discount—Prime membership ordinarily costs $12.99 a month or $99 a year—by offering it to people who obtain government assistance with cards typically used for the food-stamp program, formally called the Supplemental Nutrition Assistance Program.
AUTOS, ELECTRIC, SELF-DRIVING
The unprecedented pay package has been criticized as too costly by proxy adviser Glass Lewis & Co., which has recommended that investors reject the plan. While it would likely have slim chances of getting passed elsewhere, Tesla isn’t a typical company, and Musk isn’t a conventional chief executive officer.
Russ Solomon, who died on Sunday at 92, created what for many music fans was the ultimate music emporium: Tower Records, whose yellow-and-red color scheme, “No Music, No Life” slogan, and wide aisles stocked with LPs and CDs defined the retail music business in the pre-digital era. At its peak, the chain had nearly 200 stores in 15 countries and more than $1 billion in annual sales, before debt and shifting consumer habits forced it to close in 2006. Starting at his father’s drugstore in Sacramento, where he sold used jukebox records as a teenager, Mr. Solomon built a retail empire that became known as much for its selection — vast by brick-and-mortar standards — as for the culture that surrounded it.
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