Macro Links Nov 10th – Disturbing Allegations
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- SENATE CANDIDATE ROY MOORE ALLEGATIONS
- LOUIS CK ALLEGATIONS
- GOP TAX PLAN
- TWITTER AND FACEBOOK
- SAUDI ARABIA, UAE, LEBANON, QATAR
- TRUMP IN ASIA, TRADE TALKS
- RUSSIA PROBE
- FOREIGN AGENT, RETALIATION
- AT&T MERGER TURBULENCE
- BROKEN BREXIT
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- CENTRAL BANKS & MONETARY POLICY
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS
- ENERGY RENEWABLES, NUCLEAR
- COMMODITIES AGRICULTURE & SOFTS
- POLLUTION, CLIMATE & ENVIRONMENT
- DACA, TRAVEL BAN, IMMIGRATION, WALL
- GEOPOLITICS, CRIME, TERRORISM
- HEALTHCARE, TAX REFORM, BUDGET
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- MEDIA, CABLE, SPORTS, ENTERTAINMENT
- AUTOS, ELECTRIC, SELF-DRIVING
- ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
- SCIENCE, NATURE, PSYCHOLOGY
SENATE CANDIDATE ROY MOORE ALLEGATIONS
Alabama resident Leigh Corfman said that in 1979, when Moore was an assistant district attorney, he brought her to his home and touched her sexually. Three other women said that Moore – now a candidate for U.S. Senate — pursued them when they were teenagers and he was in his early 30s.
So far, Republican officials are almost all saying that Moore needs to quit the campaign if the allegations are true. It’s a slightly more extreme version of the GOP’s general reaction to the leaked “Access Hollywood” tape of Donald Trump’s remarks about sexual assault that was published by the Washington Post about a month before the election last year.
Roy S. Moore, the Republican nominee for the Senate, was accused of making sexual advances toward teenage girls, throwing his candidacy in doubt.
‘[T]ake Joseph and Mary. Mary was a teenager and Joseph was an adult carpenter. They became parents of Jesus.’
Moore blasted the accusations, levied in a new story by The Washington Post, in a fundraising email to supporters. He called the allegations attacks from “the Obama-Clinton Machine’s liberal media lapdogs.”
The local news channel says it offered the Moore campaign six different date possibilities, but Moore refused every one of them. WHNT said that senatorial candidates should be held accountable, but Moore is neglecting that duty.
LOUIS CK ALLEGATIONS
As soon as they sat down in his room, still wrapped in their winter jackets and hats, Louis C.K. asked if he could take out his penis, the women said.
They thought it was a joke and laughed it off. “And then he really did it,” Ms. Goodman said in an interview with The New York Times. “He proceeded to take all of his clothes off, and get completely naked, and started masturbating.”
The ‘I Love You, Daddy’ screening was abruptly axed just hours before it was set to take place.
GOP TAX PLAN
Conservative groups are spending tens of millions of dollars on ads to build support for the GOP tax overhaul, aiming to sell it to middle-class voters and rebut Democrats’ charge that it primarily benefits wealthy Americans.
Under the House plan, a family making $59,000 would pay more in 2024 than they did last year.
The tax deduction on medical expenses helps millions of Americans cope with high health care costs. The Republican tax proposal would eliminate it.
Taxpayers in the wealthiest 1 per cent of US households stand to receive nearly half the benefit of the Republicans’ tax overhaul by 2027, according to a think-tank.
Their after-tax incomes would likely be boosted 2.2 per cent, while lower income taxpayers would see little change, according to new analysis of the House of Representatives’ tax reform bill by the Tax Policy Center. Those in the middle would see a 0.4 per cent lift.
The federal tax plan, introduced by House Republicans last week, was carefully constructed to penalize Americans who live in Democratic-leaning states. It would repeal the state and local tax deduction, which 1 in 3 Californians use. And it would cut in half the deduction for mortgage interest, capping it at $500,000 for new loans.
This change would hardly affect most of the country — less than 3% of all homeowners carry over half a million in mortgage debt — but it would bite places like New York and California hard because of their expensive real estate markets.
The Senate bill differs significantly from the House version approved by the Ways and Means committee on Thursday: It would preserve some popular tax breaks, including ones for mortgage interest and medical expenses, and would maintain a bottom tax rate of 10 percent for lower earners. But it would also jettison the state and local tax deduction entirely and delay the enforcement of a 20 percent corporate tax rate until 2019, which could rankle the White House and mute the economic growth projections that Republicans are counting on to blunt the cost of the tax cuts.
Yawning divisions have emerged between the House, Senate and White House over tax reform, raising doubts about whether Republicans will be able to achieve their most important political and policy priority before the end of the year.
Gary Cohn maintains that the estate tax is about much more than simply protecting wealth for the richest American families.
Talking on live TV like he did off-camera inside 200 West Street is so tone deaf that it defies logic. Whether or not Gary is right about any of this (and he made some very solid points) the politics around this tax plan are pitched to an 11, and he needs to select his words with that in mind. Sure, he’s smarter and more financially respected than anyone else in the current West Wing, but this kind of Goldman Sachs capitalist straight-talk is also political self-harm.
TWITTER AND FACEBOOK
A young American woman living in Zimbabwe will be tried on charges of attempting to overthrow the government of Zimbabwe with a tweet mocking President Robert Mugabe, the world’s oldest head of state.
The arrest of the woman, Martha O’Donovan, 25, has raised fears that the Zimbabwean government is stepping up efforts to control social media ahead of national elections in 2018. Mr. Mugabe, who will be 94 next year, is running for re-election despite his increasingly frail health.
Twitter Inc. halted a system for verifying user identity, calling it “broken” after the process became seen as a stamp of approval for trolls, white supremacists and others disseminating hateful speech online.
A federal judge challenged the government’s claim that President Donald Trump’s promised ban on transgender soldiers was still up in the air and that lawsuits challenging the policy are premature.
Tweeting isn’t presidential, says France’s Emmanuel Macron.
The far-right leader must now answer judges’ questions about a case involving graphic photographs of Islamic State violence.
Disguised Russian agents on Twitter rushed to deflect scandalous news about Donald Trump just before last year’s presidential election while straining to refocus criticism on the mainstream media and Hillary Clinton’s campaign, according to an Associated Press analysis of since-deleted accounts.
Less than a year before Brazil’s presidential elections, potential candidates are ramping up social media presence as they brace for a tight race with shrinking financial resources.
Facebook Inc., Twitter Inc. and Google parent Alphabet Inc. agreed to turn over information to Congress on Russian entities purchasing ads that may have been used to manipulate U.S. energy markets, according to the chairman of the House Science Committee.
The Treasury Department accused the officials of undermining democracy in Venezuela through their support of President Nicolás Maduro.
Venezuela’s state oil company came through with an overdue $1.1 billion principal payment, sending another signal to investors that the cash-strapped country intends to stay current on its obligations even as it seeks debt relief.
SAUDI ARABIA, UAE, LEBANON, QATAR
Analysts say that a war in the region is unlikely, but the escalation of tensions in a bewildering crisis involving the two Arab nations raises the risk.
Saudi Arabia has called on its citizens to leave Lebanon “as soon as possible”, after days of escalating rhetoric against a country at the centre of a deepening regional crisis.
Thursday’s travel warning called on Saudi visitors and residents of Lebanon to leave and advised nationals not to visit the country. Lebanon is a prime target as tensions escalate between Saudi Arabia and regional rival Iran because it is home to Hizbollah, the Tehran-backed Shia militia that has grown increasingly powerful across the region in recent years.
Sheikh Saud al-Mojeb said 201 people were being held for questioning as part of a sweeping anti-corruption drive that began on Saturday night. He did not name any of them, but they reportedly include senior princes, ministers and influential businessmen. “The evidence for this wrongdoing is very strong,” Sheikh Mojeb said.
An official says the arrests were based on three years of investigations, which found that $100 billion in state funds had been lost to corruption.
A plan for the United Arab Emirates to wage financial war against its Gulf rival Qatar was found in the task folder of an email account belonging to UAE Ambassador to the United States Yousef al-Otaiba and subsequently obtained by The Intercept.
The economic warfare involved an attack on Qatar’s currency using bond and derivatives manipulation. The plan, laid out in a slide deck provided to The Intercept through the group Global Leaks, was aimed at tanking Qatar’s economy, according to documents drawn up by a bank outlining the strategy.
The outline, prepared by Banque Havilland, a private Luxembourg-based bank owned by the family of controversial British financier David Rowland, laid out a scheme to drive down the value of Qatar’s bonds and increase the cost of insuring them, with the ultimate goal of creating a currency crisis that would drain the country’s cash reserves.
The United Arab Emirates’ central bank has asked financial firms operating in the country to provide information on several individuals detained in Saudi Arabia as part of a government-led corruption investigation there, including billionaire tycoon Prince al-Waleed bin Talal.
The Trump administration is wrestling with how closely it should align its policies with longtime ally Saudi Arabia and how forcefully to confront their mutual foe Iran as tension between the two Middle East rivals rises sharply, according to current and former administration officials.
“Saudi Arabia’s greatest concern in the region is the rise and expansion of Iranian influence,” Wittes said. When asked about Saudi Arabia’s military actions in Yemen (which we’ll get to), she was more blunt. “Everything that Saudi Arabia is doing outside of its borders — and some of what it’s doing inside its borders — is about Iran,” she said.
The overarching tension worth remembering is that between the two major Muslim denominations, Sunni and Shiite (or Shia). Saudi Arabia is heavily Sunni. Iran is heavily Shiite.
“The Saudis [believe] that the Iranians are instigating dissent and activism in the Shia population of Saudi Arabia,” Wittes said. “In the eastern province, the Saudis have been engaged in security operations in Qatif for a couple of years now, trying to deal with regular unrest. How much of it is domestically generated and how much of it is Iranian-instigated, I don’t know. But the Saudis believe that it’s Iranian-instigated.”
TRUMP IN ASIA, TRADE TALKS
Mr. Trump met with his Chinese counterpart, Xi Jinping, in Beijing on Thursday, offering personal praise and qualified criticisms of China’s trade practices. China, in return, offered modest concessions on some thorny trade issues. The two sides also pointed to what they claimed were billions of dollars of deals between Chinese and American companies to show face-saving progress.
But behind the scenes, Washington and Beijing are gearing up for what may well be months of contentious relations between the world’s two largest trading partners.
Donald Trump blamed his predecessors for the US’s widening trade deficit with China, praising Xi Jinping and telling an audience in Beijing he did not “blame” Chinese leaders for “taking advantage” of Washington.
In a striking change of tone from the US president, who portrayed China as an economic bogeyman throughout last year’s election campaign, Mr Trump appeared at pains to rekindle the bonhomie that characterised the leaders’ first meeting at his Florida compound in April, a tenor that quickly deteriorated over North Korea.
Mr. Trump’s warm words, on a state visit to China replete with ceremony but short of tangible results, showed a president doubling down on his gamble that by cultivating a personal connection with Mr. Xi, he can push the Chinese leader to take meaningful steps on North Korea and trade.
Less than a day after Mr Trump left the South Korean capital for Beijing, Japanese diplomats lodged a protest with their South Korean counterparts over the decision to serve the US leader “Dokdo shrimp” — crustaceans from waters around islets disputed by the two Asian nations.
The envoys also fumed at Seoul’s decision to allow a former sex slave during Japan’s wartime occupation of Korea to attend the state dinner between Mr Trump and South Korean President Moon Jae-in.
The diplomatic spat underscores the geopolitical and historical complexities of the region, which Mr Trump is attempting to unite against Pyongyang and its nuclear provocations.
They call him “Donald the Strong.” They heap praise on his family. They fawn over his rapid-fire tweets. They have even created an online fan club.
In America, President Trump faces a feisty press corps, damaging investigations into associates and sagging approval ratings. But in China, where Mr. Trump arrived Wednesday, he has acquired a legion of admirers who hail him as a straight-talking politician and business mogul with a knack for deal-making.
“He’s true to himself,” said Dai Xiang, a resident of the eastern province of Jiangsu who belongs to an online group of more than 23,000 people that exchanges news and commentary about Mr. Trump. “He’s real, unlike other politicians.”
As in the United States, Mr. Trump can be a polarizing figure in China. He has his share of critics, who mock him as egoistical and erratic, and for fanning the war flames with North Korea. But he also has many ardent supporters, which is perhaps a surprising development for the leader of China’s biggest geopolitical rival.
Months of tensions over a multilateral trading system came to the fore Thursday in Vietnam, with objections from U.S. negotiators holding up a joint statement at the Pacific Rim’s annual economic summit.
Japan and 10 other countries were moving closer to a deal on pushing ahead with the Trans-Pacific Partnership trade pact without the US, in a sign of how Pacific Rim economies are moving on with globalisation despite resistance from Donald Trump.
Japanese prime minister Shinzo Abe was expected to join leaders from other TPP countries including Australia, Canada, Chile, Mexico, New Zealand, Peru, Singapore and Vietnam as soon as Friday in declaring their commitment to the pact on the sidelines of a regional summit that Mr Trump is attending.
Keith Schiller told House investigators this week that he turned down a suggestion that five women visit Trump’s hotel room during the 2013 Miss Universe pageant.
Keith Schiller told the House Intelligence Committee on Tuesday that he rejected the offer from the man, who appeared to be Russian or Ukranian, according to two people familiar with the discussion. He quickly dismissed what appeared to be a suggestion of procuring prostitutes for Trump, they said.
Keith Schiller said he viewed the offer as a joke and turned it down, and he and Trump laughed about it. One source noted that Schiller testified he eventually left Trump’s hotel room door and could not say for sure what happened during the remainder of the night.
He’s been dismissed as a “low-level volunteer” and just a “coffee boy,” but former Trump campaign foreign policy adviser George Papadopoulos represented the Trump campaign at various meetings with foreign officials up until Inauguration Day.
The longtime Trump adviser Roger Stone issued a plea for help paying his legal bills resulting from the Russia investigation — he says they exceed $450,000.
The Justice Department is seeking to reach a plea deal in its criminal investigation of the former son-in-law of Paul Manafort, President Donald Trump’s one-time campaign chairman.
FOREIGN AGENT, RETALIATION
The DoJ has given RT America until Monday to register as a foreign agent, otherwise the channel’s head faces arrest and its accounts could be frozen.
Russia said it will retaliate next week against American media after the U.S. government ordered state broadcaster RT to register as a foreign agent, following accusations it interfered in last year’s presidential elections.
AT&T MERGER TURBULENCE
CNN is at the heart of a dispute between the Justice Department and AT&T and Time Warner, raising the possibility of interference by President Trump.
A day after disagreements between AT&T and the U.S. government over the company’s proposed takeover of Time Warner spilled out into the open, both sides tried to mute tensions that threatened to mar negotiations.
Randall L. Stephenson, chief executive of telecommunications giant AT&T, said selling CNN in order to push through his company’s $85.4 billion acquisition of Time Warner has never been and will never be on the table.
Government and parliament have lost control. A majority of MPs think Brexit is a mistake but feel obliged to pursue it lest they be accused of defying what the tabloids declare to be “the will of the people”. This is what happens when the subtle checks and balances of representative democracy are subordinated to the crude majoritarianism of referendums. Germans, ever mindful of what happened in the 1930s, understand this.
British hopes of opening Brexit trade and transition talks this December were thrown into renewed doubt as it emerged that Ireland is making fresh demands over the Northern Ireland border question, the Telegraph can reveal.
The man who helped write the rule book on leaving the European Union says Brexit is reversible and Britons should be given the right to change their minds.
Prime Minister Theresa May’s letter in March, which triggered Britain’s departure under Article 50 of the bloc’s Lisbon Treaty, can be unilaterally withdrawn, John Kerr will say in a speech in London Friday. Kerr played a key role in drafting the exit clause as secretary-general of the European Constitutional Convention in 2002-2003.
“We are not required to withdraw just because May sent her letter,” Kerr will say at an event hosted by Open Britain, according to extracts released by the pro-EU pressure group. “We can change our minds at any stage during the process.”
Some of Britain’s largest carmakers have warned that the complexity of new customs checks after the UK leaves the EU could cost the industry tens of millions of pounds.
Ford, Honda, Vauxhall and the SMMT, the industry lobby group, were among those to submit evidence to parliament’s business committee on the impact of leaving the EU, which was published on Thursday.
The UK is set to have the lowest growth of almost any EU country when it leaves the bloc in 2019, according to forecasts from the European Commission that show Britain being outstripped by an accelerating eurozone.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
The run-up in junk bonds is showing signs of returning to earth. After a spate of bad news triggered sell-offs of a few big speculative-grade borrowers, the pain has spread and even led NRG Energy Inc. to pull a $870 million bond offering on Thursday. Exchange-traded funds that buy high-yield debt have plunged the most since August, with $563 million of retail outflows since the start of this week alone. Three of the biggest junk-rated borrowers, IHeartMedia Inc., CenturyLink Inc. and Community Health Systems Inc., posted disappointing earnings that sent their bonds plunging.
It’s hard to say whether the sell-off will accelerate. Others like it have largely been treated as buying opportunities for yield-starved asset managers. But with more supply to come, investors may be less willing to take a chance on shaky companies, especially with yields at historical lows. Matt Eagan, a debt-fund manager at Loomis Sayles & Co., said he’s not going to start buying until the market sells off by another 3 percent to 5 percent.
“It seems like buyers have simply stepped away from the market,” Eagan said in an interview with Bloomberg Radio Thursday. “I wouldn’t be buying the market.”
While the short-end of the yield curve can easily be explained, it’s the long end that is the mystery. The 4-basis-point increase in two-year yields in recent weeks has been overwhelmed by the big 11-basis-point drop in 10-year yields. The move in 30-year bonds is even more remarkable, as yields have dropped 18 basis points to 2.79 percent. That translates into a 3 ½-point increase in prices, or $35 per $1,000 face amount. What makes the move unusual is that there is little evidence that demand is being driven by foreign investors, which has usually been the case in recent history whenever yields fall.
The movements suggest the drop in longer-term yields is related to action in the futures market, specifically the 20-year contract. The nature of the futures market means it’s hard to pin responsibility on any one group of traders. In this day and age of high-speed digital and algorithmic trading, though, large players can move huge positions quickly and anonymously, avoiding the large dealer banks that used to control the flows in the cash markets. The consensus is that there are a number of futures-only leveraged players driving the gains in longer maturities, particularly risk-parity funds that add to long positions as volatility falls.
The spike indicates Spanish banks were losing retail deposits, a source of long-term stable funding, traders said, and piling into wholesale money markets in search of an alternative source. Although banks said the outflows were small, the issue underscores the potential problems for Spain’s economy as the standoff continues. Madrid in late October took full control of the Catalan regional government and jailed local officials.
More than eight years after Bernie Madoff pleaded guilty to orchestrating his epic Ponzi scheme, the U.S. Department of Justice today began distributing $772.5 million in recovered funds to the fraud’s 24,000 victims.
“This is the largest restoration of forfeited property in history,” Deputy Attorney General Rod Rosenstein said in a statement. Officials ultimately expect to return more than $4 billion to victims.
US mutual funds tracked by EPFR have not enjoyed a week of inflows since November 2016, and their cumulative outflows over the past decade has now crossed the $900bn mark, according to the data provider. Over that period, US ETFs have sucked in just over $880bn.
“These are strong headwinds,” David Lafferty, chief market strategist at Natixis Global Asset Management, said in a note to clients. “While active managers have always competed against each other, they have never had to confront a threat of this magnitude.”
A portfolio stuffed with allegedly over-inflated assets would have returned more than 120 percent so far in 2017, trouncing the S&P 500 Index and underscoring the challenge for investors facing a plethora of pricey securities.
The hypothetical ‘Bubblicious’ portfolio includes Chinese real estate and internet names, a pair of U.S. tech behemoths, a cryptocurrency fund, the ETF industry, bonds that mature decades from now, and a dash of short volatility bets just to make things more interesting.
The out-performance is a testament to the momentum mania prevalent in today’s markets, a dynamic which has prompted the likes of Greenlight Capital’s David Einhorn, Goldman Sachs Group Inc., and Sanford C Bernstein & Co. LLC to mull whether value investing is in the midst of an existential crisis given ultra-low interest rates and abundant liquidity.
With the benefit of hindsight, it’s easy — and somewhat tautological — to suggest that investors would have done better had they bought the things that went parabolic. But at any point in 2017, getting into many of these names would have proved a nail-biting endeavor.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
Prince Mohammed seems to be playing the equally ruthless roles of autocrat and reformer. The millennial has been outspoken about his bold plans to modernize Saudi society and wean the kingdom from fossil fuel. Now, Prince Mohammed has locked up globe-trotting tycoons and other dynastic rivals, sending shock waves across the desert and around the world. Since Saudi Arabia’s founding in 1932 by his grandfather, Abdulaziz Al Saud, successive kings have sought consensus among the family’s thousands of princes, balancing religious, princely, and tribal factions to maintain stability in the world’s largest oil supplier. Decisions were made at a glacial pace, often capped with generous payouts for anyone left unhappy. Prince Mohammed has smashed that conservative status quo in an act, he no doubt believes, of creative destruction.
This is a man of dead-certain belief in himself, who told this magazine in a long, autobiographical interview in April 2016 that his childhood experiences among princes and potentates were more valuable and formative than Steve Jobs’s, Mark Zuckerberg’s, and Bill Gates’s. So, he wondered aloud, “if I work according to their methods, what will I create?” Now we know his disruptive potential.
As the personal trajectories of Mr. Trump and Mr. Xi diverge, so too does the focus of their leadership. While Mr. Trump is obsessed with building walls, Mr. Xi is busy building bridges.
At the World Economic Forum in January, Mr. Xi proclaimed China the new champion of free trade and globalization. His “One Belt, One Road” initiative — with funding from the made-in-Beijing Asia Infrastructure Investment Bank — will invest $1 trillion in linking Asia with Europe through a network of sea routes, roads, railways and, yes, bridges. China will gain access to resources, export its excess industrial capacity and peacefully secure strategic footholds from which to project power.
While Mr. Trump shuns multilateralism and global governance, Mr. Xi increasingly embraces them.
The Trump administration has belittled the United Nations, withdrawn from the Trans-Pacific Partnership trade agreement, jettisoned America’s commitment to the Paris climate accord, tried to renege on the nuclear deal with Iran, questioned America’s core alliances in Europe and Asia, disparaged the World Trade Organization and multicountry trade deals, and sought to shut the door on immigrants.
Mr. Xi? He has grabbed leadership of the climate-change agenda, embraced the World Trade Organization’s dispute-resolution system and increased China’s voting shares at the World Bank and International Monetary Fund. Beijing is forging ahead with a trade pact that would include the major Asian economies plus Australia and New Zealand, but not the United States. China is now one of the leading contributors to the United Nations budget and peacekeeping operations. And Mr. Xi is making a determined play to attract the world’s cutting-edge scientists and innovators to China.
The Chinese authoritarian-capitalist model wasn’t supposed to survive in a global free market, let alone thrive. As recently as five years ago, there was consensus that China would one day need fundamental political reform for the state to maintain its legitimacy and that China could not sustain its state capitalist system. Today China’s political and economic system is better equipped and perhaps even more sustainable than the American model, which has dominated the international system since the end of World War II. While the U.S. economy remains the world’s largest, China’s ability to use state-owned companies to boost the party’s domestic and foreign influence ensures that the emerging giant is on track to surpass U.S. GDP in 2029, according to the Center for Economics and Business Research.
The China striding into that spotlight is not guaranteed to win the future. In this fragmenting world, no one government will have the international influence required to continue to set the political and economic rules that govern the global system. But if you had to bet on one country that is best positioned today to extend its influence with partners and rivals alike, you wouldn’t be wise to back the U.S. The smart money would probably be on China.
Across the U.S., cities, states and research institutions are vying to capture business in the rapidly growing field of driverless-vehicle technology. Some are building new proving grounds or expanding existing ones to provide controlled and secluded environments for testing. Others are opening public roadways to self-driving cars, with technicians behind the wheel, so they can be subjected to real-world conditions.
Cities are teaming up with auto makers such as General Motors Co. and technology companies like Waymo LLC, the driverless-car division of Google parent Alphabet Inc., in a bid to become key testing centers. The goal is to convert the partnerships into investments in the local economy.
Interviews with dozens of people close to Snap’s listing, including bankers, investors, analysts and current and former Snap employees, show that many had concerns at the time, especially about the growth prospects for the maker of the disappearing message app Snapchat. But, in a fever for a big listing—and with about $98 million in fees at stake—they allowed Snap to set the terms. The shares listed on March 2 and soared 44% on the first day of trading.
Eight months later, after a third weak quarterly earnings report in a row, Snap shares are wallowing more than 25% below their offering price.
On Tuesday, Snap reported its quarterly loss had more than tripled, sending shares down 18% over the following two days. Its previous two quarterly reports had also made clear revenue wasn’t meeting expectations, user growth was slowing amid fierce competition from Facebook Inc. and a high-profile product launch had fizzled.
Investors and bankers had hoped Snap would thrive as a public company and awaken what had been a largely dormant tech IPO market. Instead, the company’s struggles have further strengthened the impulse for highly valued startups to opt for private capital.
It may not matter whether bitcoin’s a bubble. The staggering energy costs associated with “mining” the digital currency could prove to be its downfall.
Even as bitcoin flirts with $8,000, the price required for mining to be marginally profitable stands at a jaw-dropping $300,000 to $1.5 million by 2022 based on current growth trends and electricity use, according to Christopher Chapman, an analyst at Citigroup Inc. At that pace, the implied consumption would match that for the whole of Japan over the long haul.
CENTRAL BANKS & MONETARY POLICY
Economists surveyed by The Wall Street Journal this month expect that a Federal Reserve led by Jerome Powell would mean little change in monetary policy and a less aggressive approach to financial regulation.
Bank of the Ozarks was regulated by the Federal Reserve, the Federal Deposit Insurance Corp., a state banking agency and others. When it wanted to cut costs, it ditched the Fed.
Cutting costs holds obvious appeal for banks at a time when tepid economic growth, superlow interest rates and stringent regulation have kept profitability in check. But dollars and cents aren’t the only driver of decisions like Bank of the Ozarks’: Changes in U.S. banking laws in recent decades have limited the advantage of the holding company structure for many firms, and the pro-business shift in Washington has helped embolden some bankers.
While some skeptics of the move worry about banks shedding a layer of oversight—potentially enabling them to engage in more risky lending or other activities—bank executives counter that they will still be under the scrutiny of the FDIC.
POSITIONING, INFLECTION, MARKET CALLS
Not everyone was celebrating wildly when Japan’s Topix index closed at its highest level since 1991. “If you bought Topix at the closing price on Feb. 26, 2007, you will have made a capital gain of 0.03% over the following 10 and 1/2 years,” Allum, a strategist at SMBC Nikko Capital Markets Ltd. in London, wrote in a note to clients.
The city-state’s equity funds received some $2 billion in 10 straight months of inflows, the most annually since 2007, according to data from asset allocation tracking company EPFR Global. That’s more than the combined inflows of the past five years and the longest monthly rally since mid-2013, the data show.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
Equifax Inc. said its third-quarter earnings tumbled from a year ago as costs mounted in the wake of a massive hack at the company that led customers to take business elsewhere.
Third Point bought 2.1 million American depositary receipts of Alibaba, amassing a position valued at more than $1.1 billion as of Sept 30, according to a regulatory filing on Thursday. As of the end of the quarter, the stock represented the New York-based hedge fund firm’s second-largest U.S. equity holding. Alibaba’s ADRs have more than doubled in value this year.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
For the past few years, despite emerging as an apparent winner from the 2008 financial crisis, Germany’s biggest bank has appeared locked in a downward spiral. Last autumn, the stock market’s alarm about the bank’s finances was so severe that investors and even government officials discussed the possibility of a bailout.
A recent note on the bank from analysts at Autonomous Research was titled “Beyond Repair”. “It’s obvious something has to be changed,” says one of the bank’s biggest shareholders. “They [Deutsche’s management] don’t understand the sense of urgency.”
The shifting balance of power in the cellphone industry explains why a major chip maker is suddenly a takeover target. In earlier generations of products, faster wireless connections sold new phones. Today, people walk into stores looking for an Apple iPhone or a Samsung Galaxy, and ask about features like the size of the screen, the camera, and its memory and storage capacity.
“All these technologies have little or nothing to do with Qualcomm,” said Romit Shah, an analyst at Nomura Instinet. “The landscape, the environment has changed.”
FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS
Creditors of the collapsed Japanese bitcoin exchange Mt. Gox are due to miss out on the surge in bitcoin prices. But the exchange’s former chief, now on trial for embezzlement, could make a tidy profit.
That is because the claims by people who deposited bitcoin at Mt. Gox are calculated based on the yen value of the cryptocurrency at the beginning of Mt. Gox liquidation proceedings in April 2014. Meanwhile, Mt. Gox, which is mostly owned by a company controlled by former chief Mark Karpelès, is sitting on more than 200,000 bitcoins worth 17 times as much today as they were then.
Bankruptcy-court filings suggest Mt. Gox will have hundreds of millions of dollars left over after paying creditors—money that Mt. Gox’s bankruptcy trustee has indicated would belong to the collapsed exchange’s shareholders, with Mr. Karpelès’s company being the biggest.
Some lawyers say the Mt. Gox bankruptcy is an example of how existing laws aren’t yet fully adapted to issues involving virtual currencies. When a bank fails, governments and courts have well-established procedures for refunding depositors and apportioning losses if the bank’s assets fall short. But they have little experience when a bitcoin exchange fails, with both assets and liabilities largely in the volatile virtual currency
ENERGY RENEWABLES, NUCLEAR
Vestas Wind Systems and Siemens Gamesa are giants of the wind-power industry, building mammoth turbines that rise high into the air and power more and more homes. But disappointing earnings reports from the two companies this week indicated that even they are struggling to adapt to a fast-changing sector.
Wind power is an increasingly important source of electricity around the world, and prices for the technology are dropping fast. But belt-tightening governments across Europe and North America are phasing out subsidies and tax incentives that had helped the industry grow, squeezing companies like Vestas and Siemens Gamesa in the process.
Just five years ago it would have been almost unthinkable that one of the world’s biggest mining companies would not dig any coal. It’s now likely to become a reality.
Rio Tinto Group, the world’s second-largest miner, has been steadily backtracking from coal to focus on better assets. It’s now looking for buyers for its remaining coal mines in Australia, and a sale will mark a complete exit from the fuel.
The dispute over the refuge, a pristine habitat in northern Alaska, has been simmering for decades. But with Republicans holding both houses of Congress and the presidency, the prospects for opening the refuge to drilling are better than they have been in years.
There’s long been a Catch-22 about residential solar: despite staggering market demand, it’s been hard to make money doing it. Until now. Sunrun Inc. said Wednesday that it’s cash-flow positive. And Blackstone Group LP-backed Vivint Solar Inc. expects to hit that mark next year.
Rooftop solar installers have chased growth in recent years, investing revenue into marketing and installations. The model helped fuel the expansion of residential power systems in the U.S., driven by leases and power-purchase agreements that require little to no upfront cash from consumers.
COMMODITIES AGRICULTURE & SOFTS
POLLUTION, CLIMATE & ENVIRONMENT
With calm winds, seasonal crop burns, and the usual vehicle and industrial emissions, an extremely thick, toxic fog of pollution has settled on Delhi, choking and sickening residents.
Pollution measurements and indexes have exceeded charted ranges, blowing past the highest categorized levels dubbed “severe” and hazardous to health. In some areas of the gigantic metropolitan area, measurements of certain pollutants were around 30 times the levels considered safe by the World Health Organization. Local journalists reported that the smog is causing throat irritation, wheezing, nausea, vomiting, and extreme fatigue.
Delhi’s chief minister, Arvind Kejriwal, took to Twitter to call the city a “gas chamber.”
Climate change remains a polarizing topic in the nation’s capital, and FEMA is caught in the middle. A recent report from the Government Accountability Office warned that rising sea levels and heavier downpours fueled by global warming could increase flooding costs in coastal communities by $23 billion per year by midcentury unless they start adapting now.
“There are plenty of people who want to debate the vocabulary” around climate change, said Roy E. Wright, FEMA’s deputy associate administrator for insurance and mitigation. “But Congress’ instruction was for us to attend ourselves to future risks and reduce the costs of future disasters. So as I look at the adaptation dimension, that’s about resilience. That’s resilience against future events.”
China, some analysts argue, just does not have the leverage over North Korea that Mr. Trump thinks it has.
“There are big differences in the way of thinking between the United States and China on North Korea,” said Yang Xiyu, a former Chinese Foreign Ministry negotiator on North Korea. “Trump thinks of North Korea too simplistically — that if China cuts off the oil, the nuclear issue will be solved.”
In less than a decade, Alibaba has turned a quirky celebration for young adults in China into a global extravaganza drawing in thousands of retailers and shoppers of all ages, married as well as single.
In the front-page version of Mr. Xi’s portrait, the color and saturation were adjusted, hiding gray hairs and skin imperfections and giving the photo the feel of a painting, said Hany Farid, a professor at Dartmouth College and an expert on photo forensics.
The processed image evokes the same visual style as portraits of Mao, said Jan Plamper, professor of history at Goldsmiths, University of London. “It’d be like depicting Trump more like George Washington.”
DACA, TRAVEL BAN, IMMIGRATION, WALL
New York and 15 other states can sue President Donald Trump to prevent him from rescinding legal protection for hundreds of thousands of immigrants who were brought to the U.S. illegally as children, a federal judge in Brooklyn ruled.
Duke held her ground, the official said. “She was angry. To get a call like that from Asia, after she’d already made the decision, was a slap in the face.”
“They put massive pressure on her,” said another former official with knowledge of the call.
Duke wanted to proceed cautiously, because the Central Americans have lived in the United States for two decades or more, and she had been contacted by former U.S. diplomats who implored her to weigh the decision carefully.
GEOPOLITICS, CRIME, TERRORISM
The Syrian government and its allies claimed victory over Islamic State in its last urban stronghold in the country, pushing remnants of the group into the desert straddling the border with Iraq.
The Navy-Marine Corps Court of Criminal Appeals ruled this week the case of Staff Sgt. Joseph Chamblin must be set aside because of apparent unlawful command influence, which occurs when a senior military officer uses his or her position of authority to influence legal proceedings. The ruling cited the actions of now-retired Gen. James F. Amos, who was commandant of the Marine Corps from 2010 to 2014, and some of his senior staff members.
To prove he’s not scared of going to jail, President Rodrigo Duterte claimed on Thursday, November 9, that he stabbed someone to death at the age of 16. This is not the first time Duterte admitted to this act. In 2015, before he ran for president, he told Esquire magazine that he “maybe” killed a man by stabbing when he was 17 years old.
U.S. allies in Europe said they would provide more troops to train soldiers and police in Afghanistan as its government tries to stem an escalating insurgency, but the number fell short of U.S. expectations.
President Rodrigo Duterte decided to stop building on a sandbar in the disputed region before a regional summit meeting in Vietnam this weekend.
HEALTHCARE, TAX REFORM, BUDGET
More than 600,000 people signed up last week for health insurance under the Affordable Care Act, significantly beating the pace of prior years as consumers defied President Trump’s assertion that the marketplace was collapsing.
In a report on the first four days of open enrollment, the Trump administration said Thursday, 601,462 people selected health plans in the federal marketplace, HealthCare.gov. Of that number, 137,322 consumers, or 23 percent, were new to the marketplace and did not have coverage this year through the federal insurance exchange.
“It’s the biggest start to open enrollment ever,” said Lori Lodes, an Obama administration official and a founder of Get America Covered, a nonprofit group helping people get information about insurance options. “It shows that people really want to get health insurance and value it.”
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
Carrier Corp., the HVAC manufacturer that had planned to move its operations to Mexico before President Trump staged a much-heralded intervention, is gearing up for a final round of layoffs.
The probability of a U.S. withdrawal from the North American Free Trade Agreement is roughly 1 in 4, according to private-sector forecasters, who said such a move would likely weigh on economic growth.
American trade negotiators are taking aggressive measures to close what they describe as a Mexican “back door” through which steel and other auto-manufacturing components produced outside North America are sold tariff-free in the U.S.
SILICON VALLEY, UNICORNS, STARTUPS, VC
Speaking publicly for the first time since he became Uber’s chief executive in August, Mr. Khosrowshahi painted a rosier vision of the future of his company. His aim: To escape from the shadow cast over the ride-hailing giant after a series of scandals shook the company to its core and resulted in the eventual ousting of former chief executive and co-founder, Travis Kalanick.
“The culture went wrong, the governance went wrong, the board went in a very bad direction,” Mr. Khosrowshahi said in conversation with Andrew Ross Sorkin at the DealBook conference on Thursday. “I think winning gives some excuses for bad behavior.”
MEDIA, CABLE, SPORTS, ENTERTAINMENT
Walt Disney Co. reported falling sales in the most recent quarter as the company continued to grapple with a decline in network subscribers and a weaker year at the box office.
AUTOS, ELECTRIC, SELF-DRIVING
To be fair to the shuttle, the fender bender Wednesday was caused by the other driver — in this case a delivery truck that backed into the front of the shuttle, which stopped after it sensed it was in danger of collision, according to a report from the Las Vegas Review-Journal. The Las Vegas Metropolitan Police department confirmed to The Washington Post that the delivery truck driver was at fault, and had been cited.
Ford Motor Co.’s top executive says cars aren’t going to disappear on tomorrow’s connected roadways — as long as their brainpower can keep up. “Ford’s future is not about giving up the car,” Jim Hackett, the automaker’s chief executive officer, said at the Michigan CEO Summit in Detroit. But there are “no dumb cars in the future.”
Robots have replaced many U.S. manufacturing workers, but new mechanical exoskeletons being tested by Ford Motor Co. may help factory workers to function like bionic people, reducing the physical damage of millions of repetitive tasks over many years.
ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
With sales of smartphones and personal computers cooling, Nvidia, Intel, AMD and a raft of startups are crafting new processors to tap into a broader AI market that is growing 50% a year.
Global spending on AI-related hardware and software could expand to $57.6 billion in 2021 from $12 billion this year, IDC estimates. Of that, a sizable portion will go into data centers, which by 2020 are expected to devote a quarter of capacity to AI-related computations, IDC projects.
SCIENCE, NATURE, PSYCHOLOGY
Analyzing his database, Dr. Stone has concluded that about 65 percent of mass killers exhibited no evidence of a severe mental disorder; 22 percent likely had psychosis, the delusional thinking and hallucinations that characterize schizophrenia, or sometimes accompany mania and severe depression. (The remainder likely had depressive or antisocial traits.)
Most mass murderers belong to a rogue’s gallery of the disgruntled and aggrieved, whose anger and intentions wax and wane over time, eventually curdling into violence in the wake of some perceived humiliation.
“In almost all high-end mass killings, the perpetrator’s thinking evolves,” said Kevin Cameron, executive director of the Canadian Center for Threat Assessment and Trauma Response. “They have a passing thought. They think about it more, they fantasize, they slowly build a justification. They prepare, and then when the right set of circumstances comes along, it unleashes the rage.”
Aaron Hernandez suffered the most severe case of chronic traumatic encephalopathy ever discovered in a person his age, damage that would have significantly affected his decision-making, judgment and cognition, researchers at Boston University revealed at a medical conference Thursday.
The Harteaus swam a river and bushwhacked through a jungle teeming with predators to get their two daughters, 6-year-old Colette and 3-year-old Sierra, to safety. A ferryman later plucked the family from a river in Pará state in the Brazilian Amazon.
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