Macro Links Nov 22nd – Leaderless Europe
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- GERMAN POLITICAL CRISIS
- RIP NET NEUTRALITY
- TRUMP SUPPORTS ROY MOORE
- GOP TAX PLAN
- AT&T TIME WARNER DEAL
- SEXUAL HARRASSMENT SCANDALS
- MUGABE STEPS DOWN
- BITCOIN, CRYPTOCURRENCY
- VENEZUELA DEBT RESTRUCTURING
- NORTH KOREA
- UBER HACKING COVER-UP
- SAUDI ARABIA
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- CENTRAL BANKS & MONETARY POLICY
- USA ECONOMY DATA, CITIES AND STATES
- POSITIONING, INFLECTION, MARKET CALLS
- COLOR, EARNINGS, SENTIMENT, VALUATIONS
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- ENERGY RENEWABLES, NUCLEAR
- POLLUTION, CLIMATE & ENVIRONMENT
- CANADA, AUSTRALIA, NEW ZEALAND
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- DACA, TRAVEL BAN, IMMIGRATION, WALL
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- TRUMP WORLD
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- CLOUD, IOT, SEMICONDUCTORS, ENTERPRISE / SAAS
- RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
- AUTOS, ELECTRIC, SELF-DRIVING
- ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
- SCIENCE, NATURE, PSYCHOLOGY
GERMAN POLITICAL CRISIS
There are too many potential scenarios to make any firm predictions. But the scenario in which Ms Merkel re-emerges as German chancellor for another four years has a low probability. So if you are one of those who consider her the leader of the western world, it is time to look somewhere else.
It may be a relief for the jokes about political turmoil to have a target other than the U.K. (“I am worried about the stability of the German government,” as one senior U.K. aide said), but when it comes to the impact of Germany’s uncertain political landscape on the Brexit negotiations, it is unlikely the U.K. will find much to smile about.
Chancellor Merkel, the EU’s most prominent leader, was perhaps the one person in Europe who could have single-handedly shifted the position of the EU27 and the overall dynamic of the Brexit negotiations. But while much remains uncertain in Berlin, one quick consensus conclusion on Monday was that Merkel is now in no position to make any bold moves.
That means London should no longer hope that Merkel will be able to push hard for a verdict of “sufficient progress” by the European Council in December — even if she wanted to do so — without a clear consensus in Brussels that a deal was close at hand on the major divorce terms.
Angela Merkel insisted she will not resign despite the breakdown of talks on forming a coalition government on Sunday night and she would run again as chancellor if new elections were held, saying “Germany needs stability”. The government crisis has left her future as chancellor hanging in the balance, plunging the country and Europe into a new era of uncertainty.
Germany’s political system, long admired for its stability, now moves into uncharted constitutional waters, with even seasoned observers unsure how a functioning government will be formed. Two of the potential options under discussion — a minority government and new elections — are unprecedented in Germany’s postwar history.
The fate of German Chancellor Angela Merkel, reeling from the collapse of coalition talks, could hinge on the center-left Social Democratic Party, which has shed almost half its voters and lost every single general election over the past 15 years.
The European Union has long had to deal with the challenge of being led by a dominant Germany. But suddenly it finds itself facing a different realization — the only thing worse than a strong Germany may be a weak one.
Germany is hardly collapsing, but the failure of Chancellor Angela Merkel to form a coalition government presents a profound crisis of leadership for Europe and a protracted period of uncertainty, at a time when it can least afford it.
Serious decisions on the eurozone, migration, asylum, defense and other issues — let alone negotiating Britain’s exit from the bloc — were already put off until after the French and German elections this year. Now they will be further delayed, waiting for plodding Germany to work through this new political quandary.
Ms Merkel can change tack and seek instead to continue the “grand coalition” between her conservative bloc and the Social Democrats (SPD), which held power until September’s election. Failing that, she could try to run a minority government, which might have support from one smaller party but would not command a majority in the Bundestag. And if neither of those scenarios is possible or palatable, Germany could be heading for fresh elections.
If one thing has been made clear, it’s that more than a decade of backroom maneuvering and three previous coalitions have seen Europe’s de facto leader gather enemies at home as she made friends abroad.
“After 12 years in government, Merkel has a lot of political baggage and a lot of opponents, which makes her vulnerable,” said Carsten Brzeski, chief economist at ING Diba. “Merkel had over the years tried to secure unity and stability, which forced her political partners into painful compromises.”
The most optimistic among French diplomats and officials, who for now are a minority, believe Macron should seize the moment. “There’s a vacuum. He should embark on a few trips abroad and show that he’s still determined. Basic idea: There’s a new European leader in town,” one said. “Give a big speech to the European Parliament, make trips to Spain and Italy to show at last that he knows those two countries do count in Europe.”
At least one German commentator agreed that the vacuum at the top of Europe may soon need filling. “If Europe has a leader at all, it is Mr. Macron. It is now his turn to worry about Germany being too weak to assist in the triumphs he needs to reform France and Europe,” noted Andreas Kluth on Monday in the global edition of Handelsblatt.
European leaders have reacted with dismay to the breakdown of Germany’s coalition talks, warning that the power vacuum in Berlin risks leaving time-sensitive EU objectives, such as euro reform and managing migration, in limbo.
“It’s bad news for Europe,” Halbe Zijlstra, the Dutch foreign minister, said in Brussels on Monday. “Germany is a very influential country within the European Union. If they don’t have a government, and therefore do not have a mandate, it’s going to be hard to take tough decisions.”
RIP NET NEUTRALITY
The expected move marks a significant victory for telecoms and cable companies, led by AT&T, Verizon and Comcast, who have argued for years that US attempts at regulation have unfairly tied their hands and reduced the incentive to invest in new networks. It was widely attacked by big internet companies, internet activists and grassroots organisations.
The Federal Communications Commission took aim at a signature Obama-era regulation Tuesday, unveiling a plan that would give Internet providers broad powers to determine what websites and online services their customers see and use.
The action immediately reignited a loud and furious fight over free speech and the control of the internet, pitting telecom giants like AT&T against internet giants like Google and Amazon, who warn against powerful telecom gatekeepers. Both sides are expected to lobby hard in Washington to push their agendas, as they did when the existing rules were adopted.
TRUMP SUPPORTS ROY MOORE
President Trump said Alabama voters should not support Doug Jones, the Democratic candidate for the Senate. He declined to say whether he would campaign for Mr. Moore.
“If you look at what is really going on and you look at all the things that have happened over the last 48 hours, he totally denies it,” Trump said. “He says it didn’t happen. And you know, you have to listen to him also.”
“I do have to say, 40 years is a long time,” Trump said, referring to the allegations, which date back to the 1970s. “He has run eight races, and this has never come up.”
President Trump said Tuesday that the accusations against Moore concern events that took place “40 years ago” and noted that the candidate has insisted “this did not happen.” Asked whether he would actively campaign for Moore, Trump said he would let reporters know next week.
In fiction, this would be described as irony. Watching it in real life, in real time, is disorienting and sickening. It feels impossible to reconcile the words coming out of the mouth of the president of the United States with everything that the public knows about his record as a human being.
GOP TAX PLAN
With a few exceptions, the community of chief executives that once championed reducing the debt as the nation’s top priority is taking up a position on the other side of the issue. They are advocating an overhaul package that will reduce corporate taxes, even though both the House and Senate plans will increase the national debt by an estimated $1.5 trillion over the next decade.
You’ve heard nary a peep from the business community about that. The silence is deafening.
Utah Sen. Orrin Hatch faces some of the biggest challenges as he ushers the Republican plan to overhaul the U.S. tax code through the Senate Finance Committee that he chairs.
The Senate released the 515-page text of its sweeping tax legislation for the first time Monday evening — and Republican leaders plan to hold a floor vote on it within 10 days.
Here is the key takeaway from the new analysis, which is the work of the Tax Policy Center: By 2027, around 50 percent of taxpayers will see a tax hike. The whole purpose of this tax increase is to make it possible for Senate Republicans to pass a tax cut that overwhelmingly benefits the very wealthiest taxpayers — on party lines, without any Democrats.
Lawmakers who sped a bill through the U.S. House last week may have handed a few more goodies to Wall Street’s wealthiest than they realize. Investors in billion-dollar hedge funds might be able to take advantage of a new, lower tax rate touted as a break for small businesses. Private equity fund managers might be able to sidestep a new tax on their earnings. And a combination of proposed changes might allow the children and grandchildren of the very wealthy to avoid income taxes in perpetuity.
AT&T TIME WARNER DEAL
President Donald Trump said AT&T’s takeover of Time Warner wouldn’t be good for the country, weighing in on the $85 billion transaction the day after the Justice Department filed a lawsuit to block it.
The timing of the DoJ’s intervention has raised eyebrows — not least because the two sides were “within weeks of signing a consent decree that would have remedied any of the perceived concerns that they have with this combination”, according to one person briefed on the discussions. Multiple sources with knowledge of discussions between the companies and the DoJ allege that the opposition to the deal is politically motivated — and entirely related to Time Warner’s ownership of CNN, the cable news channel that is despised by President Donald Trump.
SEXUAL HARRASSMENT SCANDALS
Disney Animation head John Lasseter is taking a leave of absence from Pixar after acknowledging “painful” conversations and unspecified “missteps,” he wrote Tuesday in a memo to staff, obtained by The Hollywood Reporter.
“I especially want to apologize to anyone who has ever been on the receiving end of an unwanted hug or any other gesture they felt crossed the line in any way, shape or form,” Mr. Lasseter wrote in the email, a copy of which was viewed by The New York Times. “No matter how benign my intent, everyone has the right to set their own boundaries and have them respected.”
CBS fired Charlie Rose on Tuesday, a day after multiple women accused him of sexual misconduct. Not long afterward, PBS canceled distribution of his self-titled nightly interview program.
David Rhodes, the president of CBS News, told staff members in an internal email that Mr. Rose, a host of “CBS This Morning” and a “60 Minutes” correspondent, had been let go after allegations were raised “of extremely disturbing and intolerable behavior said to have revolved around his PBS program.”
PBS, which had been the longtime home of “Charlie Rose,” released a statement 70 minutes after CBS cut ties with the host.
“In light of yesterday’s revelations, PBS has terminated its relationship with Charlie Rose and canceled distribution of his programs,” the nonprofit broadcaster said in its statement. “PBS expects all the producers we work with to provide a workplace where people feel safe and are treated with dignity and respect.”
Bloomberg TV, which also carried “Charlie Rose” and provided the studio for it, announced that it had terminated its rebroadcast agreement soon after the PBS announcement.
The House Ethics Committee launched a formal investigation into allegations that senior Democratic lawmaker Rep. John Conyers Jr. (Mich.) sexually harassed female aides and used office funds to settle a former staffer’s claim that she was fired after rejecting his advances.
Ethics Chairwoman Susan Brooks (R-Ind.) and ranking Democrat Ted Deutch (D-Fla.) announced the start of a probe into Conyers, 88, the longest-serving member of the House and top Democrat on the powerful Judiciary Committe
The 88-year-old Conyers — the top Democrat on the House Judiciary Committee — is one of the most high-profile lawmakers to be caught in the national furor over sexual harassment in the workplace, with a tidal wave of reports that have engulfed Hollywood, the media and now Congress.
Michigan Rep. John Conyers acknowledged he settled a wrongful-dismissal complaint in 2015 with a former employee, after a news report said the settlement involved sexual-harassment allegations.
The BuzzFeed-Cernovich connection is odd, to say the least — something like Michael Moore dropping damning info about President Trump to Fox News. Even that doesn’t quite capture the jagged journalistic history of Cernovich, whom “60 Minutes” described earlier this year in a story about fake news as “a magnet for readers with a taste for stories with no basis in fact.”
MUGABE STEPS DOWN
President Robert Mugabe stepped down Tuesday after ruling this Southern African country for 37 years, during which he went from toppling white-minority rule to overseeing a series of punishing economic crises and escalating political repression..
It seemed to be an abrupt capitulation by Mr. Mugabe, who had refused only two days earlier to step down.
Within minutes of the announcement by the speaker of parliament that Mr Mugabe had finally quit, horns started blaring as Zimbabweans poured into the streets to celebrate the demise of the man who has ruled them since independence in 1980.
“[Xi] clearly had a personal relationship with Mugabe, not just a political-military one,” said Hannah Ryder, founder of the Development Reimagined consultancy. Now, with Mr Mugabe under house arrest in Harare, China’s role in Africa is once again in the spotlight. General Constantino Chiwenga, the head of Zimbabwe’s defence forces and the architect of last week’s military takeover, was in Beijing days before he flew home and deployed troops on the streets of the Zimbabwean capital.
Despite mass demonstrations across Zimbabwe, it was the 93-year-old president’s attempted purge of key rivals that sparked a well-coordinated military rebellion, an impeachment move and finally, his resignation.
Bitcoin hit a record high, shrugging off earlier losses posted after the $31 million theft of a cryptocurrency peer renewed concern about the security of digital coins.
The company behind tether, a cryptocurrency used by bitcoin exchanges to facilitate trades with fiat currencies, announced the theft on Tuesday. It said in a statement that a “malicious” attacker removed tokens from the Tether Treasury wallet on Nov. 19 and sent them to an unauthorized bitcoin address. The company said it’s trying to prevent the stolen coins from being used.
“Clients bring up bitcoin all the time,” said Kotok. “They think it’s cool. It has the newness, which is attractive to some people, though others would say newness is a risk they don’t want to take.”
Wealth managers across the U.S. are fielding calls and emails from clients worried they’re missing out on something big by not owning bitcoin. While most advisers don’t recommend buying such a volatile asset with no intrinsic value, they do have tips for clients who have taken the plunge, or are dead set on doing so.
High-speed firms have remade virtually every other electronic market, turning transactions over to algorithms and measuring market moves in milliseconds. But low volatility and trading volumes have eroded profits, pushing them to look for new opportunities. Bitcoin, which has huge price swings, rose to a new high above $8,000 on Monday. And with CME Group Inc. and Cboe Global Markets Inc. poised to offer bitcoin futures contracts, it will get easier for pros to place bets, either on gains or losses.
“What’s surprising me is how polarizing bitcoin is,” said Bobby Cho, head of over-the-counter trading at Cumberland, a division of DRW. “Everyone has a viewpoint on bitcoin, whereas with other asset classes you either care or you don’t care.”
The real-estate industry is taking its first steps in adopting cryptocurrencies and the technology that backs them in what could eventually produce important changes in the way property is bought and sold.
Most of the focus in the real-estate industry is on how “blockchain” technology could affect the way property titles are recorded and transferred in the sales process. Blockchain acts as a ledger for who owns a particular bitcoin or other cryptocurrency. Proponents say it can be applied to the process for recording and transferring property titles, providing an efficient and secure way to track who owns a piece of land, an office building or a home.
VENEZUELA DEBT RESTRUCTURING
People in the industry say one person is emerging as a potentially crucial player in the messy situation: a mysterious, art-loving Mexican billionaire called David Martinez. Mr Martinez runs a hedge fund called Fintech Advisory, and has been involved in almost every sovereign debt restructuring in the past quarter century, according to a rare comment piece he wrote for the Financial Times in 2013.
People familiar with Mr Martinez’s activities say the Mexican — who once reportedly contemplated the clergy before turning to high finance — often works closely but surreptitiously with governments in stricken countries. They now say he is getting involved in Venezuela, albeit in an unclear role.
In part, the confusion stems from the complexity of Venezuela’s debts, which have been issued by various entities, with varied legal clauses, to multiple parties. It owes $64bn to bondholders, more than $20bn to allies China and Russia, $5bn to multilateral lenders such as the InterAmerican Development Bank, and tens of billions to the importers and service companies that keep the all-important oil industry pumping and the regime afloat.
As Venezuela struggles to make bond payments on time, about a dozen institutions holding the country’s debt are in the early stages of organizing themselves and meeting with attorneys, according to people with knowledge of the matter.
North Korea’s leader, Kim Jong-un, is disciplining the leadership of his country’s most powerful military organization, the latest sign of his efforts to tighten his grip on party elites and the armed forces amid a nuclear standoff with the United States, South Korea’s main intelligence agency said on Monday.
Analysts and experts pay close attention to any signs of rumbling within the secretive regime in Pyongyang, seeking to determine possible implications for the stability of Mr. Kim’s rule and for his nuclear and missile programs. They have said that Mr. Kim appeared to be using his tactic of instilling fear in the elites in order to strengthen his control as the country braced for the pain that is likely to result from recently imposed United Nations sanctions.
The US has imposed more sanctions on North Korea as well as Chinese firms that trade with the regime, as part of its campaign to convince Pyongyang to abandon its missile and nuclear weapons programmes. The Treasury on Tuesday unveiled sanctions on one Chinese individual, 13 entities that included four Chinese trading companies, and 20 shipping vessels that it says are helping North Korea evade UN sanctions.
President Trump’s re-designation of North Korea as a state sponsor of terrorism may have dashed cautious hopes in the region that talks and diplomacy would replace escalating tensions and bellicose threats, analysts said on Tuesday.
Despite a two-month hiatus in North Korea’s weapons tests, Mr. Trump has held to his policy of “maximum pressure,” restoring North Korea on Monday to Washington’s list of terrorism-sponsoring states, along with Iran, Sudan and Syria. The move, he said, would be followed by “the highest level of sanctions.”
UBER HACKING COVER-UP
Uber on Tuesday disclosed it was the victim of a data breach last October that affected 57 million driver and rider accounts and that it fired its chief security officer, Joe Sullivan, for keeping the breach a secret for more than a year.
The ride-hailing company said information on driver and rider names, emails and telephone numbers had been compromised by the attack. After the breach, two hackers approached Uber demanding payment for the stolen data and proof of the deletion of the data. Uber did not make the breach public and instead paid the hackers $100,000 to ensure the stolen data was expunged.
Hackers stole the personal data of 57 million customers and drivers from Uber Technologies Inc., a massive breach that the company concealed for more than a year. This week, the ride-hailing firm ousted its chief security officer and one of his deputies for their roles in keeping the hack under wraps, which included a $100,000 payment to the attackers.
Uber said on Tuesday that it had suffered a breach in 2016 that exposed personal information, including names and phones numbers, of 57 million drivers and customers. The company said that soon after it had learned of the breach, it took steps to prevent further access to customer and driver information.
For the past two weeks, detainees at the Ritz have negotiated with Prince Mohammed and his deputies about handing large chunks of their wealth to the state in exchange for their freedom, according to Saudi officials. The amounts detainees are being asked to surrender are commensurate with what they are alleged to have gained improperly, Saudi officials said.
“This appears to be taking place outside anything that resembles a clear legal process,” said Adam Coogle, a Middle East researcher at Human Rights Watch who monitors Saudi Arabia. “If the Saudi authorities don’t offer a chance for legal defense, then this is nothing other than a shakedown.”
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
Silicon Valley is bursting with fledgling venture-capital funds like Costanoa, thanks to a seemingly endless flood of cash from college endowments, nonprofit foundations, pension funds and wealthy executives who are craving tech riches in a low-interest world. The money continues to flow despite persistent worries from industry veterans and observers that startups are overstuffed with capital and have generally returned little in profits through initial public offerings and acquisitions.
The rush has brought an unusual mix of prospectors. In addition to veterans like Mr. Sands, there are wealthy Google and Facebook Inc. engineers who want to try investing, celebrities such as the band Linkin Park and basketball stars Carmelo Anthony and Kobe Bryant, and big corporations like 7-Eleven and Campbell Soup Co. all spraying money on tech. Just since this summer, two separate venture firms were started by former Airbnb Inc. employees.
The difference between US short and long-term bond yields has dropped below the 1 per cent mark for the first time in a decade, sparking concerns that the post-crisis economic expansion may be approaching its end.
The so-called yield curve made up by the US government’s borrowing costs is one of the most widely followed financial indicators, since its shape tends to augur economic downturns. The yield curve has flattened and ultimately inverted ahead of nearly every recession in the US after the second world war.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
The military announcement last week triggered the end of an era of one of Africa’s most notorious rulers, who brutally crushed many of his opponents. Mugabe grew up in Southern Rhodesia, a self-governing British colony that later became Rhodesia and then Zimbabwe. After becoming a schoolteacher, he joined an opposition group to fight British rule. He was jailed and later forced into exile in Mozambique. After the British withdrew from his country, Mugabe grasped the opportunity and ran in national elections on the promise that he would distribute Zimbabwe’s resources more equitably.
But what began as a promise of a better future soon turned into violence and repression.
The jubilation and the sense of renewal that suffused Zimbabwe in 1980 dissipated during the 37 years of Mr. Mugabe’s uninterrupted and increasingly despotic rule. But those same ardent passions resurfaced powerfully over the weekend, inspired by the clamor for Mr. Mugabe to go — as if the country had drawn a parabola beginning and ending in hope but passing on its course through violence, oppression and impoverishment.
It was not just Trump’s supporters who were in denial about what they were voting for, but Americans across the political spectrum, who, as had been the case with those who had backed Duke, searched desperately for any alternative explanation—outsourcing, anti-Washington anger, economic anxiety—to the one staring them in the face. The frequent postelection media expeditions to Trump country to see whether the fever has broken, or whether Trump’s most ardent supporters have changed their minds, are a direct outgrowth of this mistake. These supporters will not change their minds, because this is what they always wanted: a president who embodies the rage they feel toward those they hate and fear, while reassuring them that that rage is nothing to be ashamed of.
In short, no single connection between the campaign and the Russians or between Trump and the Russians (e.g. the effort to make a Trump Tower deal in Russia, his Russia-based beauty pageant) suggests wrongdoing (aside from the June 2016 campaign meeting with Russian officials, perhaps). In totality, however, like dots in a pointillist picture, each episode contributes to a portrait of interactions between Trump’s team and a foreign, hostile power that is unprecedented and deeply disturbing.
For two decades, Representative Dana Rohrabacher has been of value to the Kremlin, so valuable in recent years that the F.B.I. warned him in 2012 that Russia regarded him as an intelligence source worthy of a Kremlin code name.
The following year, the California Republican became even more valuable, assuming the chairmanship of the Foreign Affairs subcommittee that oversees Russia policy. He sailed to re-election again and again, even as he developed ties to Vladimir V. Putin’s Russia.
Then came President Trump.
A nearly yearlong standoff has paralyzed its institutions and is threatening a 1998 treaty that largely ended three decades of fighting. As the standoff drags on, and polarization increases, people find it harder to envisage Northern Ireland as an autonomous entity. “We’re back to this binary situation where people either see it as a problematic part of the U.K. or as a part of united Ireland,” said Graham Walker, a politics professor at Queen’s University, Belfast.
How does a political party dedicated to the material interests of the top 0.1 per cent of the income distribution win and hold power in a universal suffrage democracy? That is the challenge confronting the Republican party. The answer it has found is “pluto-populism”. This is a politically successful, but dangerous, strategy. It has brought Donald Trump to the presidency. His failure might bring someone more dangerous, more determined, to power. This matters to the US and, given its power, to the wider world.
The South was a plutocracy. In the civil war, whose stated aim was defence of slavery, close to 300,000 Confederate soldiers died. A majority of these men had no slaves. Yet their racial and cultural fears justified the sacrifice. Ultimately, this mobilisation brought death or defeat upon them all. Nothing better reveals the political potency of identity.
A not dissimilar threat arises for today’s plutocrats. The economics and politics of pluto-populism have stoked cultural, ethnic and nationalist anger in the party’s base. Skilful demagogues are able to exploit this anger for their own purposes. At least Mr Trump remains a servant of the plutocracy. But his former adviser, Steve Bannon, seeks someone to promote rightwing populism shorn of its more blatantly plutocratic elements.
The plutocrats are riding on a hungry tiger. The pluto-populism of the Republican elite brought forth Mr Trump. This is not going to be forgotten. If the current tax bills get through, the tensions within the US are almost certain to get worse. Latin American inequality leads to Latin American politics. The US the world once knew is drowning in a tide of unconscionable and apparently unlimited greed. We are all now doomed to live with the unhappy consequences.
There are three main critiques of big tech. The first is that it is destroying the young. Social media promises an end to loneliness but actually produces an increase in solitude and an intense awareness of social exclusion. Texting and other technologies give you more control over your social interactions but also lead to thinner interactions and less real engagement with the world.
The second critique of the tech industry is that it is causing this addiction on purpose, to make money. Tech companies understand what causes dopamine surges in the brain and they lace their products with “hijacking techniques” that lure us in and create “compulsion loops.”
The third critique is that Apple, Amazon, Google and Facebook are near monopolies that use their market power to invade the private lives of their users and impose unfair conditions on content creators and smaller competitors. The political assault on this front is gaining steam. The left is attacking tech companies because they are mammoth corporations; the right is attacking them because they are culturally progressive. Tech will have few defenders on the national scene.
“I didn’t even understand almost what I was doing with all those papers,” she told me, in her first interview discussing her settlement. “I was really disoriented. My English was very bad. All of the words in that agreement were super difficult to understand. I guess even now I can’t really comprehend everything.” She recalled that, across the table, Weinstein’s attorney was trembling visibly as she picked up the pen. “I saw him shaking and I realized how big this was. But then I thought I needed to support my mom and brother and how my life was being destroyed, and I did it,” she told me. “The moment I did it, I really felt it was wrong.”
Weinstein used nondisclosure agreements like the one Gutierrez signed to evade accountability for claims of sexual harassment and assault for at least twenty years. He used these kinds of agreements with employees, business partners, and women who made allegations—women who were often much younger and far less powerful than Weinstein, and who signed under pressure from attorneys on both sides.
CENTRAL BANKS & MONETARY POLICY
Turkish lenders are being snared in a battle between President Recep Tayyip Erdogan and the central bank that threatens to derail a credit boom.
The tussle over the direction of interest rates is weighing on banking stocks as surging bond yields and a currency at a record low push up the cost of capital the lenders need to provide credit. The 13-member Borsa Istanbul Banks Sector Index is heading for its biggest five-day decline since the aftermath of the failed coup attempt in July last year, sliding 9 percent.
“A falling currency provokes inflation, slows economic activity, causes losses on foreign-exchange loans to be incurred, reduces the value of bond portfolios and hikes the cost of equity,” said Julian Rimmer, an emerging-markets trader at Investec Bank Plc in London. “Further down the line, especially given the excessive lending encouraged by the government, loan delinquencies will start to increase. It’s a toxic cocktail.”
USA ECONOMY DATA, CITIES AND STATES
Baltimore, which has by far the highest per-capita homicide rate among the nation’s biggest cities, is on track to have its worst year on record. More than 300 people in the city have been killed this year. Home to about 615,000 people, the city has recorded more killings this year than either New York or Los Angeles, both of which have far larger populations. While Chicago has had more homicides, Baltimore is at No. 2.
“Violence in the city is out of control,” Baltimore Mayor Catherine Pugh said recently. Days after her declaration, a homicide detective was fatally shot while on duty.
With New York’s century-old subway system engulfed in a crisis brought about by years of neglect and poor political decisions, a transit official from outside the United States was named on Tuesday to take over the management of the city’s subways and buses.
The decision to name Andrew Byford, the chief executive of the Toronto Transit Commission, the president of New York City Transit followed a series of recent changes in leadership at the Metropolitan Transportation Authority, which oversees the subway. The aim has been to restore accountability and change a culture that for years has left the system lacking adequate funding or support.
It would be tempting to view Hale’s death, at 53, as one more sad entry in the never-ending national tragedy of opioid deaths. In fact, it’s much more than that. Hale’s story is a window into the country’s silent majority of opioid sufferers. These are the millions of painkiller-dependent users inhabiting a vast gray zone somewhere between medical patient and drug addict, who are finding themselves suddenly abandoned in droves by the medical system. Under threat of lawsuits and government and insurance industry crackdowns, doctors have been cutting off the supply of painkillers, forcing many of their patients to quit cold turkey after years or even decades of dependence, sometimes with catastrophic consequences. Worst of all, those left suddenly without their meds often have nowhere to turn for help.
Hurricane victims emerging from ravaged trailer parks are discovering that the U.S. mobile-home market has left them behind. In Florida and Texas, dealerships are swarmed by buyers looking to rebuild their lives after hurricanes Harvey and Irma, but many leave disappointed.
The industry, led by Warren Buffett’s Clayton Homes Inc., is peddling such pricey interior-designer touches as breakfast bars and his-and-her bathroom sinks. These extras, plus manufacturers’ increased costs for labor and materials, have pushed average prices for new double-wides up more than 20 percent in five years, putting them out of reach for many of the newly homeless.
POSITIONING, INFLECTION, MARKET CALLS
Next year will likely bring lower returns and perhaps a “pause” for the stock market, longtime bull Jeremy Siegel told CNBC on Monday. In fact, he believes the market is “clearly near to a top.”
“We have one more push and I think it’s connected with the corporate tax reform,” the Wharton School finance professor said in an interview with “Closing Bell.” While he’s not warning everyone to sell everything, he sees valuations and political uncertainty slowing down the stock market in 2018.
“Clearly now at these valuations we’re not going to get the double-digit returns that certainly we’ve gotten over the last six or seven years, on average,” he said. Siegel expects returns under 10 percent.
Just eight companies—Facebook Inc., Apple, Amazon.com Inc., Netflix Inc., Alphabet Inc., Baidu Inc., Alibaba Group Holding and Tencent—have increased by $1.4 trillion in market cap in 2017, a sum roughly equivalent to the combined annual GDP of Spain and Portugal. Tech giants’ powerful user networks, large cash piles and access to consumer data have led many investors to expect the big will only get bigger.
Chip stocks closed in record territory after this year’s gains pushed the Philadelphia Semiconductor Index beyond levels not seen since the peak of the technology bubble more than 17 years ago.
Overall commodity returns have been lackluster this year, and face more poor performance in 2018, according to JPMorgan Chase & Co.
To make money, traders will need to pick assets, such as agriculture, and play short-term trends to take advantage of price swings, rather than buying and holding a broad basket of commodities, wrote analysts including John Normand in the bank’s outlook for 2018.
COLOR, EARNINGS, SENTIMENT, VALUATIONS
- Crew’s Sales Plummet, Overshadowing Growth at Madewell Brand – Bloomberg
- Crew Group Inc. posted another withering sales decline in the latest quarter, raising fresh concerns about the apparel chain as it heads into the crucial holiday season. Same-store sales plummeted 12 percent at the New York-based company’s flagship brand in the third quarter. That overshadowed strong growth at its newer Madewell division, which has attracted millennial women with its offbeat styles.
Apple’s main supplier in Asia has been employing students illegally working overtime to assemble the iPhone X, as it struggles to catch up with demand after production delays. Six high school students told the Financial Times they routinely work 11-hour days assembling the iPhone X at a factory in Zhengzhou, China, which constitutes illegal overtime for student interns under Chinese law.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
A secretive wealth manager that invests money for some of the most prominent names in Silicon Valley plans to ramp up its private-equity investing, a move that raises the specter of possible conflicts with some of its clients.
Iconiq Capital LLC, whose early clients included Mark Zuckerberg and Sheryl Sandberg, plans to pursue more buyouts of mature, medium-size technology companies, according to people familiar with the matter. Until now, the firm has mostly pursued venture-capital deals in potentially fast-growing startups.
Iconiq recently hired Arvindh Kumar from tech-focused private-equity firm Thoma Bravo LLC to run the new strategy and expects to make more hires, the people said. The firm also has discussed the possibility of raising a tech buyout fund.
ENERGY CRUDE OIL, OIL SANDS, SHALE
Andy Hall, the veteran crude trader who closed his hedge fund this year, will brief OPEC officials on the outlook for U.S. shale oil, according to a copy of the agenda seen by Bloomberg News.
Think of it this way. As of October, seven of the other 11 OPEC members subject to production adjustments weren’t complying fully, producing 171,000 barrels a day more than they should be. Venezuela, on the other hand, produced 112,000 barrels a day less than it should have. In other words, it provided room for two out of every three of those excess barrels being produced by the less-diligent members (Saudi Arabia, Algeria and Kuwait also effectively made room).
ENERGY RENEWABLES, NUCLEAR
India will hit peak coal demand for its power sector within a decade, according to new analysis, helping the world hit its Paris climate targets but creating a problem for the country’s biggest mining companies.
A report by the Institute for Energy Economics and Financial Analysis shows the growth in demand for coal in one of the world’s fastest growing economies will level off by 2027 — far sooner than previous projections. This would have a big impact on coal consumption worldwide, as India is the second-biggest consumer and importer in the world, and the biggest source of the sector’s growth.
While the worst smogs, or “pea soupers,” have long dispersed, London still chokes on heavy pollution. Seeking to curb toxic diesel fumes, transport officials and companies are hunting for new sources of energy for the buses.
The latest idea? Coffee grounds. On Monday, in a much-hyped debut, a company called Bio-bean, in partnership with the oil giant Royal Dutch Shell, introduced relatively small amounts of oil produced from coffee grounds into the mix of diesel and biofuels mandated by the city authorities.
POLLUTION, CLIMATE & ENVIRONMENT
By 2050, there will be so much plastic floating in the ocean it will outweigh the fish, according to a study issued by the World Economic Forum. Scientists estimate that there are at least 5.25 trillion plastic particles — weighing nearly 270,000 tons — floating in the oceans right now.
Russia said Tuesday for the first time that it had detected a significant radiation spike in the Ural Mountains, close to a sprawling Soviet-era nuclear plant still remembered as the site of an accident 60 years ago. But it rejected suggestions that it was the source of a radioactive cloud that hovered over Europe.
The storm that killed at least 21 in Greece last week was a “rare tropical-like storm” that grew in the waters of the Mediterranean Sea and even developed an eye wall like a hurricane, the National Oceanic and Atmospheric Administration said.
The pallid sturgeon is an ancient species that has been around since the Cretaceous period 70m years ago, and looks a bit like a dinosaur with bony plates down its back. It described by the US Fish & Wildlife Service as “one of the least understood fish in the Missouri and Mississippi River drainages”, and its numbers have been in steep decline since the mid-1960s.
CANADA, AUSTRALIA, NEW ZEALAND
BREXIT, SCOXIT, LONDON, UK ECONOMY
Britain and the EU are targeting a Brexit divorce deal within three weeks, with negotiators drawing up a political road map that seeks to overcome the toughest unresolved issues on a financial settlement and Northern Ireland.
Goldman Sachs’ chief executive confirmed the US investment bank would have hubs in both Frankfurt and Paris after Brexit as it prepares to shift jobs out of the UK. Lloyd Blankfein said the bank was “approaching the critical moment when we will have to make decisions” and that Goldman would “not have a single centre, but two, in Frankfurt and Paris.”
The relocation of the European Medicines Agency and the European Banking Authority indicate how Britain’s impending exit from the European Union could diminish its economic clout.
Michel Barnier, the EU’s chief negotiator, suggested that after Brexit the UK would have no preferential access for financial services other than patchy “equivalence” arrangements, such as those with the US or Singapore.
The emptying out of young people from Britain’s small towns has accelerated over the past two decades, as the gap widens between the country’s cities and university towns and everywhere else.
New research shows that, since 1981, Britain’s towns and villages have lost more than a million people aged under 25, while gaining more than 2m over-65s. By contrast, main cities have seen net inflows of more than 300,000 under-25s and net outflows of 200,000 over-65s.
As Britain and the EU27 head for the next European Council on December 14, most attention is on whether the UK will stump up enough money to move the Brexit talks on to trade. But another issue threatens to foul up Theresa May’s attempts to move to phase two of the negotiations: the dispute over the border between Northern Ireland and Ireland.
Theresa May was today warned that paying a bigger EU divorce bill is not enough to unlock vital trade talks. In an exclusive interview, Ireland’s foreign minister said his country still has a veto – and is prepared to use it. Simon Coveney told the Standard that trade talks will not be allowed to begin until the UK also agrees to maintain the open border between the Republic and Northern Ireland.
DACA, TRAVEL BAN, IMMIGRATION, WALL
A federal judge on Monday permanently blocked President Donald Trump’s executive order to cut funding from cities that limit cooperation with U.S. immigration authorities. U.S. District Court Judge William Orrick rejected the administration’s argument that the executive order applies only to a relatively small pot of money and said Trump cannot set new conditions on spending approved by Congress.
GEOPOLITICS, CRIME, TERRORISM
Russian officials have said they want the Syrian leader’s support for political reform, but doubts remain about how much Moscow was willing or able to push.
Russian President Vladimir Putin talked with his U.S. counterpart Donald Trump by phone for about an hour on Tuesday as the Kremlin mounts a diplomatic push to resolve the war in Syria after a visit by Syrian leader Bashar al-Assad.
The authorities blamed Boko Haram for the attack, which targeted worshipers at morning prayers. One official said at least 50 people had been killed.
The intrigue over whether Saudi Arabia this month sparked a crisis in Lebanon by forcing Saad Hariri to resign as its prime minister may soon be clarified. But the possible closure of one chapter opens another, potentially more dangerous, crisis.
The announcement is the latest detail in the ongoing saga of a mission gone horribly wrong.
Government officials say the expanding economy reflects early results from the president’s 10-point economic plan, nicknamed “Dutertenomics”, which includes a massive $180bn infrastructure programme called “Build Build Build” aimed at pushing spending on building projects to 5 per cent of gross domestic product.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
The White House’s weirdest holiday tradition lives on in a new administration.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
The Trump administration is leaning toward naming Thomas Brunell, a Texas professor with no government experience, to the top operational job at the U.S. Census Bureau, according to two people who have been briefed on the bureau’s plans.
Brunell, a political science professor, has testified more than half a dozen times on behalf of Republican efforts to redraw congressional districts, and is the author of a 2008 book titled “Redistricting and Representation: Why Competitive Elections Are Bad for America.”
SILICON VALLEY, UNICORNS, STARTUPS, VC
Sixt SE, the German car-rental company, will expand its luxury ride-hailing service in the U.S. next year in a drive to pick off customers from Uber Technologies Inc.’s premium UberBlack service, Chairman Erich Sixt said.
CLOUD, IOT, SEMICONDUCTORS, ENTERPRISE / SAAS
RETAIL APPAREL, SPECIALTY, DINING, BIG BOX
In the past, brick-and-mortar retailers were the cornerstone of a brand’s holiday retail strategy. And while Wonder Workshop is selling Cue in chains such as Target Corp., Best Buy Co. and at Apple Inc. stores, Amazon will make or break the toy maker’s holiday season.
A surge in holiday shopping online has made Amazon a kingmaker. Amazon is expected to drive as much as half of all U.S. retail sales growth this year during the holidays, according to Morgan Stanley estimates. About 42 cents of every dollar spent online year-to-date went to Amazon, up from 38 cents during the holiday period a year ago, according to Slice Intelligence, which tracks a panel of more than 5 million U.S. online shoppers.
With a small product lineup, “it is tough for us to create visibility for our products in stores like Target and Best Buy,” says Vikas Gupta, co-founder and chief executive at Wonder Workshop, a 5 year-old startup based in San Mateo, Calif. The only way to do that would be to invest more in displays, and that is “very hard for a small company.”
AUTOS, ELECTRIC, SELF-DRIVING
Elon Musk said last week that Tesla Inc. is designing a new sports car that could go from zero to 60 mph in 1.9 seconds. Not bad, but here’s a speed number that investors might want to focus on instead:
Over the past 12 months, the electric-car maker has been burning money at a clip of about $8,000 a minute (or $480,000 an hour), Bloomberg data show. At this pace, the company is on track to exhaust its current cash pile on Monday, Aug. 6. (At 2:17 a.m. New York time, if you really want to be precise.)
ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
“The more disruptive approach is to say maybe we can reduce the crew needs for our future aircraft,” Eremenko told Bloomberg Television’s Yvonne Man in an interview broadcast on Wednesday. “We’re pursuing single-pilot operation as a potential option and a lot of the technologies needed to make that happen has also put us on the path towards unpiloted operation.”
SCIENCE, NATURE, PSYCHOLOGY
What turns ordinary shoppers into dangerous mobs? Social scientists and psychologists are trying to find out.
Sharron Lennon, a professor in the merchandising program at Indiana University, became interested in studying consumer misbehavior after seeing news reports a few years back about fights breaking out at her local mall. “Customers were physically fighting with each other,” she said. “People were taking things from other shoppers’ carts. It was chaos.”
The cardinals use pigments called carotenoids, which are common in many leaves and seeds and tend to be reds, oranges and yellows. I find it fascinating that the birds can’t make these pigments—no animal can. But plenty of plants make them, and so animals get the pigments from their diet. A cardinal is a living splash of paint—the bird has just transferred the right pigment into its feathers, and now it’s red.
But pigments never turn a bird blue. The color of the blue jay comes from the architecture of the protein (keratin) that its feathers are made from. The outer layer of keratin is full of tiny air pockets, and as light waves flood in, they bounce off the boundaries between air and protein.
The critical part of this architecture is the spacing of the pockets in the protein. They are structured so that a red light wave, which is relatively long, can bounce off, overlap with another red wave that bounced off another pocket and, through this encounter, get canceled out. The same happens for yellows and greens.
But blue light has a much shorter wavelength, and the pocket spacing means that when a blue wave meets another scattered blue wave, they line up, reinforcing each other. Blue light is the only color that escapes intact, and so this spongelike protein structure is how the blue jay earns its name.
Walter Peat, 64, the head saw filer at a sawmill in the suburbs of Vancouver, worries every day about the son he barely recognizes. He worries mostly that Stephen will be another N.H.L. enforcer dead before turning 50. The list, just since 2010, includes Bob Probert, Derek Boogaard, Rick Rypien, Wade Belak, Steve Montador and Todd Ewen.
The Peats cannot be sure, but they presume that Stephen’s problems are rooted in concussions. Perhaps, like several of the dead enforcers and roughly 100 former N.F.L. players, one day he will be found to have chronic traumatic encephalopathy, the degenerative brain disease caused by repeated blows to the head.
For now, it cannot be accurately diagnosed until death, but Peat and his father worry that he has it. The symptoms often associated with C.T.E. — memory loss, depression, impulsiveness, addiction, headaches — are part of Stephen Peat’s daily life.
Seeking to prove that a conspiracy of astronauts fabricated the shape of the Earth, a California man intends to launch himself 1,800 feet high on Saturday in a rocket he built from scrap metal.
Assuming the 500-mph, mile-long flight through the Mojave Desert does not kill him, Mike Hughes told the Associated Press, his journey into the atmosflat will mark the first phase of his ambitious flat-Earth space program.
Hughes promised the flat-Earth community that he would expose the conspiracy with his steam-powered rocket, which will launch from a heavily modified mobile home — though he acknowledged that he still had much to learn about rocket science.
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