Macro Links Mar 9th – Plans to Meet Kim Jong Un
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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, POT BOOM, OPIOIDS, PUBLIC POLICY
- RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
- NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
- INFLATION, RATES, DEBT AND CREDIT, BALANCE SHEETS
- VOLATILITY, BLACK SWANS, LIQUIDITY, TAIL RISKS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- CENTRAL BANKS & MONETARY POLICY
- GLOBAL ECONOMY, INTERNATIONAL
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- CANADA, AUSTRALIA, NEW ZEALAND
- GEOPOLITICS, CRIME, TERRORISM
- SCANDALS, LAWSUITS, FINES, REGULATORY
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
- AUTOS, ELECTRIC, SELF-DRIVING
- SCIENCE, NATURE, PSYCHOLOGY
- HEALTH, PRODUCTIVITY AND WELLNESS
BITCOIN, CRYPTOCURRENCY, INITIAL COIN OFFERINGS
The world’s richest people are putting more and more money into cryptocurrency, despite the fact they don’t understand it very well, a new report reveals. Terms like “distributed ledger” and “blockchain” are not especially familiar to the wealthy, according to their advisers. The widespread misunderstanding about the technology behind bitcoin seems to have little or no effect on the attractiveness of crypto investments however.
The Binance team chalked it up to a massive, well-coordinated phishing attempt, but they ensure users that “[all] funds are safe and no funds have been stolen.” According to Binance, the hacker(s) had been accumulating user accounts for some time, beginning sometime in January and really picking up steam in February. The malicious actors used a practically identical domain name to nab user accounts, one that used an umlaut accent mark underneath two characters in the Binance name.
Binance has found itself at the center of an unusual trading bug that has created big winners and losers. In a matter of minutes, viacoin pumped by 70x. Just to compound the drama, bitcoin experienced a massive sell-off shortly afterwards following bearish news from the SEC. Binance suspended withdrawals while it investigated the matter, but these have since been reactivated. Wednesday March 7 will go down as a memorable day in the exchange’s short history, but one with a happy ending.
Bitcoin investors seething over a clampdown on Japanese cryptocurrency exchanges and renewed regulatory scrutiny of trading venues in the U.S. now have bigger fish to fry as they assign blame for the recent price decline. They’re citing the attorney Nobuaki Kobayashi, known as the Tokyo “whale,” for helping to push Bitcoin below $10,000 this week, when news emerged that in his role as bankruptcy trustee he has been liquidating cryptocurrencies on behalf of creditors in the now-defunct Mt. Gox crypto exchange.
Observers attributed Wednesday’s move to several factors, including issues at cryptocurrency exchange Binance, a warning from the U.S. Securities and Exchange Commission about exchange compliance and a report from the trustee of Mt Gox revealing that some $400 million in bitcoin and bitcoin cash had been liquidated over a several-month period.
Speaking at the Economic Club of New York in Manhattan, PayPal Chief Executive Officer Dan Schulman said cryptocurrencies have a very uncertain future. “Regulations need to be sorted out and a whole number of other things,” he said. “It’s an experiment right now that is very unclear which direction it will go.” Earlier this week, news emerged that PayPal filed for a patent aimed at expediting virtual currency transactions, leading some bitcoin enthusiasts to assume the company was taking a hard look at it. However, some analysts noted that the patent was actually filed 18 months ago and was only recently made public.
A committee in the Arizona House of Representatives has recommended the passage of a bill allowing state residents to pay their tax bills in bitcoin. Public records show that the House’s Ways and Means Committee advanced the measure on March 7. While the bill won’t be finalized until the full House puts it up to a vote, the endorsement raises the likelihood that it will be sent to the governor’s desk for signature – and become state law.
The Ways and Means Committee of the Arizona House of Representatives passed SB1091, a tax bill that would allow state residents to pay their tax bills with cryptocurrencies, legislative records show March 7. The bill’s advancement through committee signifies the first of three readings required of each bill by Arizona law. Support for the bill by Republican legislators raises the likelihood of it passing the House, which is ruled by a Republican majority.
“Central banks are in the business of debasing your currency,” he proclaimed. “Central governments are in the business of debasing your citizenship.” However, Bannon reassured that audience that with the use of cryptocurrencies “We take control of the central banks away. That will give us the power again.”
Coincheck Inc. said it will start compensating users who had their cryptocurrency stolen beginning as soon as next week, as the Japanese exchange seeks to resume more of its operations. All of the 260,000 users impacted by the theft of NEM coins in the Jan. 26 theft will be reimbursed according to conversion rates detailed by Coincheck after the attack, the Tokyo-based company said at a news conference Thursday.
The Financial Services Agency told Coincheck to revise its management structure, improve anti-money laundering procedures and submit a report by March 22. Two exchanges — FSHO and bit station — were instructed to halt operations for a month, the agency said at a briefing in Tokyo Thursday. The other exchanges facing penalties are GMO Internet’s GMO Coin, Tech Bureau Corp.’s Zaif, Bicrements and Mr. Exchange.
Speaking to CoinDesk on the sidelines of this week’s DC Blockchain Summit, U.S. Representative Tom Emmer – a member of the subcommittee – suggested that the hearing would largely be educational in nature, aimed at providing members with more information about the market for cryptocurrencies and token sales.
The announcement follows the SEC’s warning Wednesday that cryptocurrency marketplaces offering digital assets that are securities will need to register with the agency as an exchange, or qualify for an exemption. It also comes a week after a person with direct knowledge of the matter said the regulator issued subpoenas to firms and individuals behind specific ICOs that the agency believes might be breaking the law.
Quebec-based Bitfarms said it entered into six hydropower purchasing agreements with generator Hydro-Sherbrooke, totaling 98 megawatts. By way of comparison, Hut 8 Mining Corp., a miner backed by billionaire investor Mike Novogratz, is working on a data center in Alberta that’ll have 42 megawatts of capacity by the end of the year.
Cameron and Tyler Winklevoss said they hope to add more digital currency options to their Gemini Exchange in 2018, possibly including bitcoin cash and litecoin. The twins made this announcement on Thursday at an event hosted by Cboe Global Markets Inc., Bloomberg reported. The Chicago futures exchange uses Gemini’s pricing data for bitcoin contracts, and it would need
BLOCKCHAIN, FINTECH, DIGITAL PAYMENTS
South Burlington, Vermont’s pilot program made in cooperation with global Blockchain real estate marketplace Propy Inc. has completed the first completely Blockchain-based real estate deed in the US, financial blog ZeroHedge reported Thursday, March 8. An unnamed source at Propy told ZeroHedge that the first totally Blockchain-based real estate transaction in the US had been completed, making the city of South Burlington a “global blockchain leader.”
In an apparent first, the African nation of Sierra Leone has employed Blockchain technology in tallying its presidential elections, according to Agora CEO Leonardo Gammar March 7. Agora is the Swiss-based Blockchain voting technology company which participated in tallying Sierra Leone’s presidential election results yesterday. Jason Lukasiewicz, the COO of Agora, told Cointelegraph that this is the “first time in history a Blockchain has been used in any government election, ever.”
Blockchain technology needs to make more progress before it can handle the billions of dollars of daily cross-border payments between the world’s banks, Swift has concluded after testing the new system on its interbank messaging network. Swift, which handles more than half of all high-value cross-border payments, said on Thursday that it had completed a “proof of concept” test of blockchain technology to reconcile international payments between the accounts of 34 banks.
FOREX, CARRY TRADES, EXCHANGE RATES
As the Hong Kong dollar sinks toward the weak end of its trading band, it’s worth looking back to 1997 for lessons of how the authorities may respond. What was back then a currency peg has since been replaced by a band, but that will not alter the determination of the Hong Kong Monetary Authority to defend it.
Malaysia, which defied the advice of the International Monetary Fund during the Asian financial crisis two decades ago, is again disagreeing with the agency over how to manage its currency. This time, it’s about a crackdown in the offshore trading market. In its annual Article IV report on Malaysia, the IMF said the measures contributed to capital outflows, while authorities say they succeeded in curbing volatility and improving the efficiency of the onshore market.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
President Trump defied opposition from his own party and protests from overseas as he signed orders on Thursday imposing stiff and sweeping new tariffs on imported steel and aluminum. But he sought to soften the impact on the United States’ closest allies with a more flexible plan than originally envisioned. After a week of furious lobbying and a burst of last-minute internal debates and confusion, Mr. Trump agreed to exempt, for now, Canada and Mexico, and held out the possibility of later excluding allies like Australia. But foreign leaders warned of a trade war that could escalate to other industries and take aim at American goods.
The proclamations he signed on Thursday impose a 25 per cent penalty on steel imports and 10 per cent penalty on aluminium imports. The tariffs, which will come into force within 15 days, are expected to lead to retaliation from the EU and other steel producers and heighten fears of a trade war. But the tariff regime was softened at the last minute to spare Canada and Mexico, albeit temporarily, while the US and its neighbours renegotiate the North American Free Trade Agreement. The US would also create a process for the exclusion of certain products and for countries with a close security relationship with the US to seek exemptions.
“As for our trade frictions, history teaches that trade war is never the right solution. In a globalized world it is particularly unhelpful as it will harm the initiator as well as the target country,” he said. He added: “In the event of a trade war, China will make a justified and necessary response.” Wang went on to say that, “as the world’s largest economies, China’s and America’s interests are deeply entwined” and that, if there is competition between the countries it must be “healthy and positive.”
China will take “strong” measures to protect its own interests, the Ministry of Commerce said in response to President Donald Trump’s decision to levy tariffs on steel and aluminum imports. The measures will be based on evaluation of the potential losses triggered by the U.S. trade actions, the ministry said in a statement on its website Friday. “China urges the U.S. to respect the authority of the multilateral trade system, and repeal the measures as soon as possible,” it said.
The prospect of 25 percent U.S. tariffs on steel imports has raised fears of a global trade war but steel producers outside North America believe they can weather the storm without too much disruption to their business or steel prices. While the United States imported 36 million tonnes of steel in 2017, with Canada, Brazil and South Korea the leading suppliers, that was less than 8 percent of global steel market traded volumes of 473 million tonnes during the year.
Small manufacturers that fashion metal into parts for makers of cars, appliances and other products fear they could be the hardest hit by new tariffs on aluminum and steel. “I’m worried,” said Dave Arndt, chief executive of Pentaflex Inc. of Springfield, Ohio, whose products include components such as truck axles and exhaust systems. Steel accounts for 60% of his product costs, and customers could leave if he raises prices. “There’s a lot of risk.”
Japan, which is not just led by a friendly politician but also is a key security ally of the United States, looks likely to be slapped with tariffs on its steel exports to the United States. And to add insult to injury, the reason, Trump says, is rooted in national security. “The U.S. is suddenly treating Japan as a target,” said Tsuyoshi Kawase, a professor of international trade policy at Sophia University in Tokyo. “The Japanese side is bewildered and confused.”
A trade pact originally conceived by the United States to counter China’s growing economic might in Asia now has a new target: President Trump’s embrace of protectionism. A group of 11 nations — including major United States allies like Japan, Canada and Australia — signed a broad trade deal on Thursday in Chile’s capital, Santiago, that challenges Mr. Trump’s view of trade as a zero-sum game filled with winners and losers.
The Trump administration is asking Beijing for a plan to cut the annual U.S. trade deficit with China by $100 billion, according to people familiar with the matter. President Donald Trump tweeted Wednesday that Washington had asked Beijing for a $1 billion reduction—less than 0.3% of the countries’ annual trade gap or around one day’s worth of the trade imbalance. His tweet was off by $99 billion.
GUN CONTROL, POT BOOM, OPIOIDS, PUBLIC POLICY
The addiction crisis that is killing tens of thousands of Americans every year is also creating a financial crisis for many families, compounding the anguish caused by a loved one’s destructive illness. Families are burning through savings and amassing huge debt paying for rehab that often doesn’t work.
The students didn’t get everything they wanted in Tallahassee, and clearly more changes are needed. But their victory over the National Rifle Association in a state that has long done the gun-rights group’s bidding was nothing short of stunning. Hopefully it will embolden efforts in other states — not to mention in Congress — for stricter gun-control laws that will help protect public safety.
RUSSIA MEDDLING, RUSSIA PROBE, TRUMP WORLD
“Among the club’s regular acts cited by the judge was one called ‘Hot for Teacher,’ in which naked college girls simulate urinating on a professor,” Isikoff and Corn reported. “In another act, two women disrobe and then ‘one female stands over the other female and simulates urinating while the other female catches the urine in two wine glasses.’” The club had been under undercover surveillance since March 2013 by the Nevada Gaming Control Board and private investigators hired by its landlord, the Palazzo — which was owned by Republican megadonor Sheldon Adelson.
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. The White House did not respond to several requests for comment. Mr. Priebus and Mr. McGahn declined to comment through their lawyer, William A. Burck.
The dinner was the latest in a series of donor events associated with a pair of independent groups — America First Policies and America First Action — that are aiming to raise $100 million this year, mostly in large donations, to support Mr. Trump’s agenda and the election campaigns of allied congressional candidates.
A security consultant who has worked for the company that compiled the controversial dossier on Donald Trump was close to the Russian double agent poisoned last weekend, it has been claimed. The consultant, who The Telegraph is declining to identify, lived close to Col Skripal and is understood to have known him for some time.
The comment by Kirill Kleimenov – the presenter on government-controlled Channel One’s flagship Vremya news programme – sounded like a veiled, mocking threat to anyone considering becoming a double agent for Britain. “I don’t wish death on anyone, but for purely educational purposes, I have a warning for anyone who dreams of such a career,” he said. “The profession of a traitor is one of the most dangerous in the world,” Kleimenov said, adding that few who had chosen it had lived to a ripe old age.
Rep. Adam B. Schiff (D-Calif.) said he wants to determine whether Prince lied to the panel about a meeting last year in the Seychelles that evidence suggests was an effort to establish a back channel between the incoming Trump administration and the Kremlin. He wants the panel to also speak with George Nader, a Lebanese American businessman who helped organize the meeting in the Seychelles, because his reported version of events “is obviously at odds with” what Prince told the panel in November.
A review of the private Facebook messages, as well as interviews with the Trump campaign operatives who were targeted by Russians, reveal that Mr. Trump’s team was susceptible to Moscow’s interference campaign. It preyed on unsuspecting staff members who were more interested in capturing the enthusiasm of supporters of their unorthodox nominee and did not envision the seemingly far-fetched possibility that Russians might enlist them as unwitting players in a scheme to undermine American democracy.
NORTH / SOUTH KOREA, IRAN, NUCLEAR WEAPONS
President Donald Trump has agreed to meet directly with the North Korean leader, Kim Jong Un, in what could be the biggest breakthrough in the tense nuclear saber-rattling that has defined the president’s stance since taking office. The invitation from the North Korean dictator was announced at the White House by South Korea’s national security adviser, who reported that North Korea also agreed that in the interim it would halt its missile tests and was prepared to negotiate ending its nuclear weapons program altogether.
The leader-to-leader meeting, which American officials said would take place within the next “couple of months” at a location yet to be determined, is a potential turning point after more than six decades of confrontation involving North Korea, its southern neighbor and South Korea’s allies. But it also stands to sharply raise the diplomatic stakes in one of the world’s most volatile standoffs.
President Donald Trump has accepted an invitation to meet with North Korean leader Kim Jong Un by May, setting in motion the most significant development in years of intermittent negotiations about North Korea’s nuclear weapons program. The invitation to meet was delivered in person by a South Korean envoy who met with Trump and key national security officials in the Oval Office on Thursday, according to a senior administration official who briefed reporters following the announcement.
U.S. President Donald Trump hailed “great progress” in talks with North Korea after agreeing to meet Kim Jong Un in what would be an unprecedented summit. “Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze,” Trump said on Twitter late Thursday in Washington. “Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!”
President Trump’s high-wire gambit to accept a meeting with North Korean leader Kim Jong Un sets off a scramble among U.S. officials to assemble a team capable of supporting a historic summit of longtime adversaries and determine a viable engagement strategy. State Department officials, including Secretary of State Rex Tillerson, were playing down the immediacy of talks in the hours before the White House rolled out the South Korean national security adviser, who made the surprise announcement that Trump would meet with Kim.
While McAfee policy is to not officially identify cyber groups from nation-states as culprits, they mention in the report that the code of the malware in question closely resembles code used by a hacking operative associated with North Korea. The hackers used modified malware known as a “Bankshot” which utilized a recently revealed vulnerability in Adobe Flash. The attackers tried to lure their victims with spear-phishing emails containing an infected Microsoft Word file named Agreement.docx.
INFLATION, RATES, DEBT AND CREDIT, BALANCE SHEETS
U.S. household debt jumped in the fourth quarter at the fastest pace of this expansion while wealth gains continued amid a rising stock market, underscoring the forces behind recent strength in consumer spending, a Federal Reserve report showed Thursday. Such activity helped fuel a 3.8 percent rise in consumer spending in the period, the fastest in more than a year. Figures released Wednesday showed Americans put away their credit cards in January, as revolving credit outstanding rose by the least since early 2015.
Americans’ wealth pushed further into record territory in the final quarter of last year, hitting nearly $100 trillion thanks to rising stock markets and property prices. Household net worth—the value of all assets such as stocks and real estate minus liabilities like mortgage and credit-card debt—rose more than $2 trillion last quarter to a record $98.746 trillion.
When the American job market heats up, demand for technology talent boils. Nationally, the unemployment rate was 4.1 percent in January, and analysts project that it declined to 4 percent, the lowest since 2000, in Labor Department figures due Friday. For software developers, the unemployment rate was 1.9 percent in 2017, down from 4 percent in 2011.
The number of Americans filing for unemployment benefits rebounded last week from a more than 48-year low, but the trend continued to point to robust labor market conditions. “The well looks increasingly dry to many companies seeking skilled workers, and time will tell whether the lack of labor will slow the overall economy in future months,” said Chris Rupkey, chief economist at MUFG in New York.
VOLATILITY, BLACK SWANS, LIQUIDITY, TAIL RISKS
JPMorgan Chase & Co. executive Daniel Pinto warned equity markets could fall as much as 40 percent in the next two to three years. His comments come as investors worry over the effect of central banks raising interest rates and rising inflation. “It could be a deep correction,” said Pinto, the bank’s co-president, in an interview with Bloomberg Television on Thursday. “It could be between 20 percent to 40 percent depending on the valuation.”
It’s been years coming, but the latest Chinese moves to rein in leverage mean 2018 may be the year for the country’s first bond default by a local government financing vehicle. The units that amassed record debt in the borrowing-and-building binge after the global financial crisis have faced increasing strains, and with their borrowing costs climbing Moody’s Investors Service and others have anticipated a default at some stage. Aberdeen Standard Investments says the groundwork is now ready for that to happen in 2018.
America’s rapidly expanding non-bank mortgage lenders are poorly equipped to weather financial shocks and present mounting risks to taxpayers, researchers from the Federal Reserve and University of California have warned. Analysis to be presented at a Brookings Institution conference finds that non-banks, which originated half of US residential home loans in 2016, are vulnerable to the kind of liquidity pressures that caused several to fail during the financial crisis.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
“The people in the building have no idea what’s about to happen,” one donor said of the White House. As it turned out, Trump announced the controversial tariffs with potential exceptions for some allies — another ending to another Trump political episode. The president thrives on conflict and runs his White House as if he were the producer of a television show, placing characters in situations pumped up with tension and setting up tantalizing cliffhangers to keep viewers tuning in.
There is still some ambiguity about how all this well play out. While the European Union will have an opportunity to push for an exemption to the tariffs, Trump has put one of his administration’s nationalist hardliners — trade representative Robert Lighthizer — in charge of arbitrating such requests. Nonetheless, even in the most pessimistic reading, Trump appears to be scaling back his ambitions from “win a global trade war” to “extort some policy concessions and/or Mar-a-Lago memberships” from core allies in exchange for tariff relief.” Which is to say: He appears to be less interested in pursuing protectionism than a protection racket.
Right now China isn’t even among the top 10 producers of U.S. steel imports. The top country we import from is Canada, which apparently should be grateful it has been given a reprieve from these tariffs “at least at this time.” If hurting Canada is Trump’s best strategy for intimidating China, our next step should be maple-syrup taxes. Misdirected metal tariffs are hardly the only way our dealmaker in chief has revealed himself to be a less-than-slick negotiator with China.
For Peter Navarro, President Donald Trump’s trade guru, it’s been quite a turnaround. Last spring, he was running the White House’s Office of Trade and Manufacturing Policy, an impressive-sounding group that consisted of himself and an aide in a single room in a building across the alley from the Oval Office. He couldn’t persuade the White House to hire him an administrative assistant, and he reported to the president through his rival, National Economic Council Director Gary Cohn.
Choosing Navarro would be the path of least resistance for Trump’s trade agenda, but it would cause something approaching a riot on Capitol Hill and within the White House. Senior officials tell me they expect the entire National Economic Council staff would quit their posts immediately if Trump appoints Navarro; and Republicans on the Hill would go crazy. Republican leaders view Navarro as a menace and a danger to both the U.S. and world economies.
As Mr Xi begins to articulate his immediate plans for the government, he also faces more fundamental questions about how the Chinese system will function. Having swept away many of the rules and procedures that encouraged greater consensus in decision-making, Mr Xi now has to demonstrate whether a one-dimensional political system can effectively govern an increasingly sophisticated economy and society. “You can click your fingers and have the head of PetroChina taken into custody,” says Richard McGregor, an analyst at the Lowy Institute in Sydney. “But you can’t click your fingers and change a fast-moving, complex and continental-sized economy with deep international [links].”
Sending a spacecraft to the far reaches of our solar system to mine asteroids might seem like an improbable ambition best left to science fiction. But it’s inching closer to reality. A NASA mission is underway to test the feasibility on a nearby asteroid, and a niche group of companies is ramping up to claim a piece of the pie. Industry barons see a future in finding and harnessing water on asteroids for rocket fuel, which will allow astronauts and spacecrafts to stay in orbit for longer periods. Investors, including Richard Branson, China’s Tencent Holdings and the nation of Luxembourg, see a longer-term solution to replenishing materials such as iron and nickel as Earth’s natural resources are depleted.
Globetrotting lifestyles aside, these holders of crypto-wealth aren’t quick to rest on their laurels. Many hold the sincere belief that the decentralised technologies have the potential to reconcile many of the inequities and institutional failures that they see as having plagued history. “I still work all day, every day, seven days a week because I’m excited about the underlying changes that this is going to bring to the way societies work worldwide,” says Ver, who splits his time between Japan and the Caribbean island of St Kitts.
On Friday, Feb. 9, Pasts sold all of his $900 million mutual fund’s high-yield bond investments so that the fund was fully in cash. BTS Asset Management Inc. employs no credit analysts to study the fundamentals of bonds. Pasts is a market timer, trying to suss out whether the whole high-yield asset class is going to rise or fall in value. He watches trend and momentum measures, such as the moving average of the price of exchange-traded funds that track the junk bond market. When not in junk, BTS is either in Treasuries or cash. Trading completely in and out of the market is simple for BTS because the fund doesn’t directly hold the bonds. Instead, it has the unusual strategy for a fund of investing almost entirely via ETFs. In late January, before it sold, BTS had about 95 percent of its assets in the two largest junk-bond ETFs.
In Taleb’s universe, the fieriest circle of hell is reserved for bankers and neoconservatives. “The best thing that could happen to society is the bankruptcy of Goldman Sachs,” he tells me. “Banking is rent-seeking of industrial proportions.” Taleb, who became rich as a derivatives trader, is not a foe of capitalism but of “cronyism”. “If you’re taking risks, God bless you. This is why I accept inequality. I’ve seen people go from trader to cab driver and back again.”
A one-time U.S. Justice Department lawyer, Wertkin came up with a plan to steal secret whistle-blower lawsuits and then sell the documents to the companies named in them because he believed his $450,000 salary at Washington’s Akin Gump Strauss Hauer & Feld LLP undervalued him, a prosecutor told the judge during a sentencing hearing in San Francisco federal court. “He wanted a get-rich quick scheme,’’ said Assistant U.S. Attorney Robin Harris. “He was motivated by money and greed.’’ Wertkin’s undoing came in January 2017, when he disguised himself with a wig and sunglasses to pick up a $310,000 payoff from a Silicon Valley company targeted in a whistle-blower case. Instead, he was nabbed by FBI agents who’d set up a sting to lure him to a California hotel.
China is cracking down on pollution like never before, with new green policies so hard-hitting and extensive they can be felt across the world, transforming everything from electric vehicle demand to commodities markets. Four decades of breakneck economic growth turned China into the world’s biggest carbon emitter. But now the government is trying to change that without damaging the economy—and perhaps even use its green policies to become a leader in technological innovation.
Technology is the hot new thing in oil, which should make OPEC nervous. The U.S. oil-rig count has jumped about 30 percent and domestic production is set to hit a new record in 2018. Earlier this week, the International Energy Agency forecast that extra supply from non-OPEC countries, especially the U.S., would be enough to cover the world’s extra demand expected through the end of 2020. If that pans out, then OPEC is in deep trouble.
Since 1970 marijuana has been a DEA Schedule I substance, meaning that in the view of the federal government, it’s as dangerous as LSD, heroin, and Ecstasy, and has “no currently accepted medical use and a high potential for abuse.” Studies around the world have shown that marijuana has considerable promise as a medicine. Craker says he spoke late last year at a hospital in New Hampshire where certain cannabinoids were shown to facilitate healing in brain-damaged mice. “And I thought, ‘If cannabinoids could do that, let’s put them in medicines!’ ” He sighs. “We can’t do the research.”
“A lot of big companies, especially if they get bigger, become conservative,” Jassy says. “Adding a radical new business is just too daunting. But we understand that a higher rate of experimentation is going to lead to more innovative ideas that expand the relevance and scope of the business for ever. “So we hire a disproportionate number of builders,” he says, using a catch-all tech term for both founders and software innovators. “And the leadership team is always trying to say yes to them.”
What if the scourge of false news on the internet is not the result of Russian operatives or partisan zealots or computer-controlled bots? What if the main problem is us? People are the principal culprits, according to a new study examining the flow of stories on Twitter. And people, the study’s authors also say, prefer false news. As a result, false news travels faster, farther and deeper through the social network than true news. The researchers, from the Massachusetts Institute of Technology, found that those patterns applied to every subject they studied, not only politics and urban legends, but also business, science and technology.
CENTRAL BANKS & MONETARY POLICY
Federal Reserve Governor Lael Brainard has given a defining speech that marks a regime shift in US monetary policy. She says that economic headwinds that favored caution have turned to tailwinds. The implication is a more aggressive tightening. The macro outlook supports robust business spending. And the only reason the dollar is declining is because things are so good abroad. Other central banks are going to tighten too.
The European Central Bank has taken a significant step towards ending its crisis-era economic stimulus measures, dropping an explicit commitment to expand its bond-buying programme if the current eurozone expansion sputters. As often with the ECB, the important policy shift was couched in a minor change in wording in its post-governing council meeting statement on Thursday, where it took out language vowing to intervene more aggressively in bond markets should growth disappoint.
The European Central Bank president’s decision to drop a pledge to increase quantitative easing if needed shows confidence in the durability of euro-area growth. But it’s an unexpected gamble when U.S. President Donald Trump is threatening to start a trade war and indicators show the region’s expansion is coming off the boil. Draghi’s shift nevertheless acknowledges that the ECB’s emergency stimulus will have to end in the not-so-distant future.
GLOBAL ECONOMY, INTERNATIONAL
China delivered another bumper trade report in February, logging a far larger trade surplus than markets had been expecting. According to China’s General Administration of Customs, a trade surplus of $33.74 billion was recorded during the month, breezing past expectations for a far smaller surplus of $600 million. Within the headline total, China’s trade surplus with the United States stood at $20.96 billion, slightly below the $21.895 billion level reported in January.
New loans in China dipped last month as growth in total financing slowed, signalling a more measured increase in credit and tighter conditions for shadow financing after a record jump in new lending in January.
POSITIONING, INFLECTION, MARKET CALLS
Donald Trump’s proposed steel and aluminum tariffs have made American corporate executives jittery. That’s because they can easily imagine other countriesresponding by trying to tax U.S. whiskey, Caterpillar Inc. excavators, and Boeing Co. jets. “God bless Boeing,” Trump said last February, right around the time he exclaimed, “I love Caterpillar.” A lot of good those warm feelings will do Boeing and Caterpillar: Both are big metal users and face competitive pressures from abroad that a trade war will only intensify.
Sometimes in the stock market a month can seem like a lifetime ago. This is one of those times. “Investors are clinging to every trade-related word that comes out of the White House, unsure if they need to put their helmet on or prepare for a relief rally, and this big unknown is what’s causing the volatility,” said Chad Morganlander, a portfolio manager at Washington Crossing Advisors.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
Troubled toy chain Toys “R” Us Inc. is preparing to liquidate all of its U.S. stores and abandon efforts to restructure through the bankruptcy process, people familiar with the matter said, after a weak holiday season torpedoed plans to reorganize. The big box retailer filed for chapter 11 protection in September with the hopes of reorganizing its roughly $5 billion debt load, revamping its stores and operations, and continuing as a mainstay toy business.
On Thursday Wynn Resorts moved to resolve a standoff by agreeing to pay $2.6 billion to settle litigation with Universal Entertainment Corp., a Japanese company that was forced by Wynn in 2012 to give up its 20% stake in the casino giant, according to a statement from Universal’s lawyers, Buckley Sandler LLP.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Cigna’s $54 billion deal for Express Scripts is the latest sign that health care’s biggest players believe they can no longer go it alone, and they must branch into other businesses to forge integrated products aimed at curbing costs.
The deal is the latest in a wave of consolidations that is sweeping through the health care industry. Companies are reacting to concerns over rising health care costs and the possibility of powerful new rivals entering the fray. In particular, Amazon’s move into the health care business has forced established companies to rethink how they can compete.
Claire’s Stores Inc., the fashion accessories chain where legions of preteens got their ears pierced, is preparing to file for bankruptcy in the coming weeks, according to people with knowledge of the plans. The current debt load is more than 10 times a key measure of its annual earnings, the result of its 2007 leveraged buyout by Apollo. More than $1.4 billion of its debt matures next year, and more immediate pressure comes from a $60 million interest payment that’s due March 13. A Chapter 11 bankruptcy filing, which is typical for retailers, would allow the chain to continue operating and keep creditors at bay until a turnaround plan could be formalized.
Chinese companies trying to list shares on China’s stock exchanges are facing stricter rules, and applications are being rejected in droves. The nation’s securities regulator tightened standards on initial public offerings in recent months, increasing the scrutiny of candidates’ reported profits and disclosures, according to investment bankers and analysts. The regulator’s powerful vetting committee is on notice that its members will be held responsible if companies approved for listings turn out to be duds.
ENERGY CRUDE OIL, OIL SANDS, SHALE
Bob Dudley, in his 38 years in the oil industry, has never seen anything like what happened with BP Plc’s old fields last year: They gushed more crude. “I cannot remember ever in my career having seen a negative decline rate,” the British oil-giant’s chief executive officer said in an interview on the sidelines of the CERAWeek by IHS Markit energy conference in Houston.
Soaring demand is the main reason for the rebound in oil prices — but if the economy falters, crude could tumble back to $40 a barrel, according to Exxon Mobil Corp. Cuts by OPEC countries have helped, but economic expansion is what’s “really driving demand at levels much higher than recent history,” Chief Executive Officer Darren Woods said Wednesday in a presentation to analysts in New York.
CANADA, AUSTRALIA, NEW ZEALAND
Quebec physicians insist they already make too much money, according to a petition to cancel the pay raises and redistribute the money throughout the province’s health-care system. The physicians group said it could not in good conscience accept pay raises when working conditions remained difficult for others in their profession — including nurses and clerks — and while patients “live with the lack of access to required services because of drastic cuts in recent years.”
GEOPOLITICS, CRIME, TERRORISM
The State Department on Wednesday night issued a security alert for Playa del Carmen, a tourist draw on the Caribbean coast, saying the U.S. Embassy in Mexico City had received “credible information” about a threat to the city. “Effective immediately, U.S. Government employees are prohibited from traveling to Playa del Carmen until further notice,” the security alert states. “The U.S. Consular Agency in Playa del Carmen will be closed until further notice.”
Even with Putin cruising to a virtually certain win in the March 18 election, the Kremlin is worried that pocketbook issues are a growing liability. Never mind that a credit rating company elevated Russia out of the “junk” category last month. For many, the pain of the most recent recession—which at seven quarters was the longest of Putin’s rule—lingers. Video simulations showing new missiles seemingly targeting Florida got most of the attention at Putin’s state of the nation address on March 1, but he actually devoted more of the speech to promising to lift living standards that are lower than they were during his last campaign.
SCANDALS, LAWSUITS, FINES, REGULATORY
General Motors Co. again faces the prospect of a potential $1 billion stock payout to address claims stemming from the auto giant’s ignition-switch crisis after a trust for the company’s bankruptcy estate renewed discussions with plaintiffs about a settlement.
SILICON VALLEY, UNICORNS, STARTUPS, VC
Travis Kalanick, a co-founder of Uber, has unveiled a new investment fund called 10100, just weeks after cashing in $1.4bn worth of stock in the car-hailing app company. The fund will focus on “large-scale job creation”, Mr Kalanick said in a statement posted on Twitter, at a time when technologies such as artificial intelligence have been blamed for threatening employment. That means making investments in property, ecommerce and “emerging innovation” in the fast-growing tech markets of China and India, he said, alongside not-for-profit efforts focused on education and cities.
Uber Technologies Inc. has reached an agreement in principle to sell most of its Southeast Asia operations to local rival Grab Inc., ending a costly fight for market share in the fast-growing region, according to people familiar with the matter. In exchange for its operations in Southeast Asia, Uber would gain a roughly 30% stake in Grab, these people said. The two companies are still hashing out the final terms of the pact, the people said, cautioning any deal would be subject to regulatory scrutiny. One of the people said Uber’s stake in Grab could wind up being smaller.
CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
Hawley, a 38-year-old Yale Law School graduate with Ken doll looks and Federalist Society bona fides, has spent his 14 months in office pursuing cases that seem designed to attract attention beyond Missouri’s borders. Alphabet Inc., Google’s parent, is his biggest target yet. The company owes its market value of more than $750 billion to its overwhelming share of global internet searches—more than 90 percent, according to analyst Statcounter. In November, Hawley subpoenaed Alphabet as part of an investigation into its possible violations of Missouri antitrust and consumer protection law.
These sellers are a linchpin of the e-commerce giant’s success. They give Amazon a huge array of merchandise options that it couldn’t provide on its own, and Amazon’s commission of at least 15 percent on those merchants’ sales adds up to a fast-growing and high-margin gold mine. Last year, Amazon’s revenue from commissions, fees and services provided to third-party sellers jumped 39 percent, much faster than the 18.5 percent revenue growth from goods Amazon sold itself.
“In rare circumstances, Alexa can mistakenly hear the phrase ‘Alexa, laugh,’” when other words are spoken, Amazon said in an emailed statement. “We are changing that phrase to be ‘Alexa, can you laugh?’ which is less likely to have false positives, and we are disabling the short utterance ‘Alexa, laugh.’” The company also said that instead of simply laughing when asked, the digital assistant, which is accessible through its line of Echo and Fire devices, will first acknowledge the request, saying, “Sure, I can laugh.”
MEDIA, CABLE, SPORTS, ENTERTAINMENT
Former President Barack Obama is in advanced negotiations with Netflix to produce a series of high-profile shows that will provide him a global platform after his departure from the White House, according to people familiar with the discussions. Under terms of a proposed deal, which is not yet final, Netflix would pay Mr. Obama and his wife, Michelle, for exclusive content that would be available only on the streaming service, which has nearly 118 million subscribers around the world. The number of episodes and the formats for the shows have not been decided.
The “Black Panther” star pledged that his production company would meet diversity requirements by using a contract provision Frances McDormand had promoted in her Oscars speech. The announcement made him the first major actor to publicly adopt the idea since Ms. McDormand’s speech. But Mr. Jordan, the villain of “Black Panther” and the hero of “Creed,” gave no indication that he would require the rider for the blockbuster movies he performs in.
AUTOS, ELECTRIC, SELF-DRIVING
Branderiz’s exit follows a spate of high-level management departures including Jon McNeill, president of global sales and service; Diarmuid O’Connell, vice president of business development; and Kurt Kelty, director of battery technology. Chief Financial Officer Jason Wheeler also left last year. Tesla lists its dependence on Chief Executive Officer Elon Musk as a risk factor in securities filings and will have shareholders vote next month on an equity award valued at $2.6 billion aimed at keeping him with the company for the long term.
SCIENCE, NATURE, HISTORY, PSYCHOLOGY
A team of scientists says it has created a pig that can be used in transplantations in humans. According to the team, which includes researchers from Meiji University and Kyoto Prefectural University, the animal is the first to be developed for transplantation based on national guidelines for xenotransplantation, in which animal organs and cells are transplanted into humans.
HEALTH, PRODUCTIVITY AND WELLNESS
The findings, outlined in two papers in the journal Aging Cell, showed that the cyclists preserved muscle mass and strength with age while maintaining stable levels of body fat and cholesterol. In men, testosterone levels remained high. More surprisingly, the anti-ageing effects of cycling appeared to extend to the immune system.
The record is mixed. Some studies have shown heavy cellphone use results in a greater chance of brain tumor, while others haven’t. The U.S. government’s position, determined largely by the Food and Drug Administration, is that the weight of the evidence shows there isn’t a cancer risk from cellphones. The effect, if there is one, could be small, meaning it’s hard to tell if observations in studies are just random or signs of a real hazard.
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