Macro Links Nov 29th – Going Ballistic
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- NORTH KOREA’S NEW BALLISTIC MISSILE
- SHUTDOWN THREAT, TRADE TENSIONS
- UBER PROBLEMS
- BITCOIN FRENZY
- RUSSIA PROBE
- GOP TAX PLAN
- SAUDI CRACKDOWN
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- USA ECONOMY DATA, CITIES AND STATES
- GLOBAL ECONOMY DATA
- CREDIT, YIELD, BUYBACKS, CORPORATES
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- ENERGY RENEWABLES, NUCLEAR
- COMMODITIES BASE METALS, MATERIALS
- POLLUTION, CLIMATE & ENVIRONMENT
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- TRUMP WORLD
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- AUTOS, ELECTRIC, SELF-DRIVING
- ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
NORTH KOREA’S NEW BALLISTIC MISSILE
The president reacted cautiously to news of the launch, stating, “It is a situation that we will handle.”
Earlier, US Defense Secretary James Mattis said the missile launched demonstrated North Korea had the ability to hit “everywhere in the world.”
The statement described the new missile as “significantly more” powerful than previous long-range missiles used and said all of the U.S. mainland would now be within range of a nuclear strike.
If these numbers are correct, then if flown on a standard trajectory rather than this lofted trajectory, this missile would have a range of more than 13,000 kilometers (km) (8,100 miles). This is significantly longer than North Korea’s previous long range tests, which flew on lofted trajectories for 37 minutes (July 4) and 47 minutes (July 28). Such a missile would have more than enough range to reach Washington, D.C., and in fact any part of the continental United States.
Initial assessments indicate the missile could be the farthest-flying that Pyongyang has ever tested. The test also occurred at night in North Korea, a not insignificant development for a country striving to achieve a round-the-clock nuclear deterrent.
The Attack Warning Tone, described as a “wailing tone,” will be heard for about 50 seconds on the first business day of every month, beginning on Dec. 1. It will sound after the regular monthly test of the sirens that warn residents of hurricanes or tsunamis, the Emergency Management Agency said in a news release on Monday that was intended to update the population on what the agency is doing to “prepare our state for a nuclear threat.”
SHUTDOWN THREAT, TRADE TENSIONS
Tensions began rising early Tuesday after Trump tweeted ahead of the scheduled meeting that Schumer and Pelosi “want illegal immigrants flooding into our Country unchecked, are weak on Crime and want to substantially RAISE Taxes. I don’t see a deal!”
Democratic aides on Capitol Hill spotted the president’s tweet and, within hours, Schumer and Pelosi agreed to skip the meeting, saying that they would rather negotiate only with McConnell and Ryan as they did in the spring to pass a similar spending plan.
The politics of trade are shifting in Washington. In the 1990s, a Democrat in the White House, Bill Clinton, worked with free-market Republicans in Congress to open the world trading system to Mexico and China. Now a White House Republican, Donald Trump, hopes to work with trade skeptics among the Democrats to reverse that trade liberalization. It is too soon to say whether Mr. Trump will succeed. But if he does, it will be in alliance with people like Mr. Brown, a leading voice among Democrats in the Senate against free trade agreements written in the past three decades.
The Trump administration launched a fresh trade attack against China on Tuesday, with Washington initiating an anti-dumping investigation against a major trading partner for the first time in more than a quarter century amid fears that it is preparing for the opening skirmishes of a trade war.
A letter written on behalf of a former Uber employee detailed secretive efforts inside the company to monitor competitors and hide information.
Uber has been accused of operating a sophisticated unit dedicated to “stealing trade secrets”, the latest in a litany of damaging allegations against the ride-hailing app that has forced a boardroom shake-up and hit its valuation. The new revelations were made in a high-stakes $1.8bn court battle with Alphabet’s self-driving unit, Waymo, in which Uber is accused of stealing confidential technology for its own autonomous car projects.
The claims came in a 37-page letter sent to Uber management earlier this year by an attorney for a former member of Uber’s security team, Ric Jacobs. The letter, portions of which were read aloud at a hearing Tuesday in Uber’s civil dispute with Alphabet Inc., describes a deeply secretive culture that allegedly entailed disappearing messages, mobile devices that stored information outside of Uber’s servers and training for employees on how to communicate in ways to evade legal discovery. Mr. Jacobs left Uber in April, and the company later reached a settlement with him over his claims.
The bigger problem is that estimating the scope of Uber’s myriad wrongdoing and the scale of potential punishments is impossible. Even the known unknowns are frightening. The full Holder report into harassment has never been published. If and when it does emerge, it may inflict more reputational damage. Uber is under criminal investigation over possible violations of the US Foreign Corrupt Practices Act. The biggest fines there, such as last year’s action against Sweden’s Telia, have reached $1bn.
Washington state’s attorney general sued the ride-sharing company Uber on Tuesday, alleging it had violated the state’s data breach notification law.
Uber executives are reassuring regulators that the company is changing the way it does business, after a massive data breach.
Uber Technologies Inc withheld evidence in a lawsuit filed by Alphabet Inc’s Waymo, a U.S. judge said on Tuesday, delaying a trial to give Waymo time to review a letter alleging Uber trained employees to steal trade secrets and hide their tracks.
A deal would further concentrate SoftBank’s power in the car-booking market worldwide. The company is negotiating a $10bn investment in Uber and also has invested in Didi Chuxing in China as well as Grab, which operates across Southeast Asia.
Bitcoin crossed $10,000 on smaller exchanges such as the CEX.IO exchange, and the crypto-currency index coinmarketcap.com long before it hit the milestone on BitStamp.
The change in demographic reflects the growing interest from Wall Street investment houses as bitcoin hurtled toward $10,000 — a milestone hit on Wednesday — after starting the year below $1,000. It also highlights how they’re grappling with addressing an investment craze that has captured the zeitgeist, making it virtually too big to ignore even as many warn it’s a fraud bound to end in pain.
“Avoid bitcoin like the plague. Did I make myself clear?” Bogle, founder of Vanguard Group Inc., said in response to an audience question at a Council on Foreign Relations event in New York Tuesday. The virtual currency has skyrocketed 945 percent this year, and has hovered near $10,000 this week.
“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.”
The news, which Arrington announced at an investor conference in New York, is significant because investors will buy shares of the fund and receive distributions in XRP. While dozens of hedge funds have sprung up this year to invest in the white-hot digital currency market, this one, known as Arrington XRP Capital, is the first to be denominated in a crypto-currency rather than dollars or euros.
The banter coincides with Bitcoin approaching $10,000 for the first time, bringing this year’s price surge to almost 11-fold even as warnings multiply that the largest digital currency has become an asset bubble. Should it bust the benchmark today, bitcoin’s $167 billion value would exceed that of about 95 percent of the S&P 500 Index members.
Any source of electricity you don’t have to pay the normal rate for, or that you don’t have to pay for at all, is an opportunity for miners to increase their already thin profits. Teslas and other EVs have free access to power at many charging stations, so it was probably only a matter of time until somebody decided to plug their mining computers in.
One member of the Tesla Owners Worldwide on Facebook suggested the idea, possibly in jest. Then another owner went ahead and did it, posting a photo of his setup. Some members suggested that his setup could pull as much as 3 kilowatts of power and would probably require the vehicle’s air conditioning to be on for cooling. Other members raised ethical questions. Is it stealing to use the power for something other than driving?
On the one hand, this could be a good way to offset the cost of owning an electric vehicle. On the other hand, it lowers the efficiency of the vehicle and increases the environmental impact. But then again, the mining was going to be done somewhere anyway, so does it really? Will many EV owners do this? Will they do it at places they were going to charge anyway, or will there be opportunistic fleets of EVs blocking up charging stations to make a quick buck? How will charging station owners respond?
Flynn allegedly discussed getting paid $15 million to help free Reza Zarrab. Now Zarrab is working with federal prosecutors, including possibly Robert Mueller.
Reza Zarrab the Turkish gold trader whose prosecution with others in New York has strained ties between the U.S. and Turkey, has pleaded guilty and will serve as a cooperating witness for the U.S. government.
Mr. Zarrab is expected to testify on Wednesday as a government witness in the trial of a Turkish banker, Mehmet Hakan Atilla, that began this week in Federal District Court. Mr. Zarrab, Mr. Atilla, and seven other defendants were charged with participating in a billion-dollar scheme to smuggle gold for oil in violation of the Iran sanctions.
President Donald Trump’s Commerce Secretary Wilbur Ross is doing business with Russian President Vladimir Putin’s son-in-law, a bombshell new report revealed Tuesday.
Private-sector backers of a controversial Middle East nuclear plan worked with former national security adviser Mike Flynn to promote it inside the White House, to the point of sending him a draft memo for the president to sign authorizing the project.
GOP TAX PLAN
The Senate took a big step forward when the Budget Committee voted to pass the Republicans’ $1.5 trillion tax package, clearing the way for the full Senate to vote on the bill later this week. After a day of deal making, several senators who were on the fence now seem more receptive to voting for the bill.
Republican senators were scrambling to negotiate changes to the tax legislation ahead of key committee and floor votes later this week.
With the Senate aiming for a tax vote late this week, White House and Senate aides express constant behind-the-scenes concern about three senators who are a) worried about the deficit, (b) wholly unbeholden to leadership and (c) relish the opportunity to snub President Trump.
The Senate Budget Committee sent Republicans’ massive tax-cut bill to the full Senate for a marathon debate and vote as early as Thursday.
Repeated claims by Treasury secretary Steven Mnuchin that the cuts will more than pay for themselves have been widely lambasted, given his failure to offer any supporting analysis. Academic models including one run at the University of Pennsylvania’s Wharton School suggest the package will pile on trillions of additional dollars in public debt as tax revenue sinks, sapping positive growth effects over time.
Because he was the longtime public face of finance for Saudi Arabia, Prince Alwaleed’s arrest — and the lack of transparency around what has happened to him — is causing increasing consternation among his various business partners and in much of the Western business community.
His arrest has also created a sense of uncertainty among investors about whether to do business with Saudi Arabia and, by extension, could affect some of its partners, like Masayoshi Son’s $100 billion SoftBank fund, in which the kingdom holds a 45 percent stake. It could also affect the highly anticipated public offering of the state-owned oil company, Aramco, planned for next year.
Prince Miteb bin Abdullah, one of the most senior Saudi royals detained in a declared crackdown on corruption, has been released after reaching a settlement deal believed to exceed the equivalent of $1 billion, an official said.
The Saudi government released several high-profile suspects held in an anticorruption campaign, an indication that those accused of amassing wealth illegally are agreeing to cash settlements for their freedom.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
Canada’s central bank has amplified a warning on the growing risks of loose lending, as borrowers strain to keep up with stubbornly high house prices in the country’s C$1.4tn mortgage market.
In its previous review of the financial system in June, the Bank of Canada said it was worried about sloppy underwriting of so-called “high-ratio” mortgages, where borrowers contribute less than 20 per cent of the purchase price as a down payment while buying insurance against default on the loan.
China’s president Xi Jinping said at the Communist party congress last month that “houses are for living, not for speculation”. But government plans to realise this mantra by expanding the rental market, coupled with an oversupply of empty housing in China, threaten to reduce demand for iron ore, steel, copper and nickel and weigh on metal prices.
Mounting concern about excess leverage in China is exacerbating these risks, in the event that frothy credit conditions stall and hurt the housing market. Analysts at Liberum say the Chinese rental reform could “cannibalise” about 3bn square metres of future housing demand, and estimate a slowdown in floor space sales will crimp annual demand for iron ore by 4.3 per cent and copper 2.1 per cent.
We’re almost 10 years out from the financial crisis. Here, the pros share their thoughts on what could go wrong.
To AQR’s founder, Clifford Asness, Quant Quake 2.0 is inevitable. Quant strategies are popular, and popularity is what makes a coordinated action, whether it’s a run on the bank or a crash, possible. “In the early ’90s, when I first started doing these strategies, they were relatively unknown. There was a low chance of a significant amount of dollars fleeing at once,” he says. “What we don’t have now is a monopoly that protects you from common actions.”
Bill McNabb took over Vanguard Group Inc. just as the financial crisis hit. He’s since helped the buy-side behemoth add more than $3 trillion to its assets under management. As he prepares to leave the post of chief executive officer at the end of 2017, he says his biggest worry isn’t a big correction so much as “some sort of cyber event.”
Kyle Bass, the founder and chief investment officer of Hayman Capital Management LP, earned his reputation as a Cassandra when his misgivings about subprime mortgages, which he shorted, proved correct. He’s had his eyes on China for the past few years. Now he has a new noneconomic catalyst that could finally put a ball in motion: President Trump. “The politics are likely to accelerate the economics,” he says.
One of Tad Rivelle’s favorite charts shows the widening gap between the value of U.S. household assets and GDP growth—a sign the economy is heading for a fall. Prices for stocks, bonds, homes, and even art that make up total household net worth have outrun U.S. GDP growth for years. This is an unsustainable deviation, according to Rivelle, CIO at TCW Group Inc., which oversees about $200 billion.
Preiser thinks the European Union and the euro zone will be among the likely triggers. While the EU has weathered a number of crises and even stared into the Greek abyss more than once, something changed on June 23, 2016, when the U.K. voted to go its own way. “For a long time, Europeans blinked and stuck together,” he says. “But with the Brexit vote, one of the main tenets has been undermined.”
Fiscal weakening, as ever, poses risks, says Ryutaro Kono, chief Japan economist at BNP Paribas. If no decisive action is taken to fix the nation’s fiscal woes, he says, the yen could weaken to well beyond 150 per dollar—compared with around 111 now—and inflation could accelerate to 4 to 5 percent or even higher, from the current 0.7 percent.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
This is not just a short-term phenomenon. Bitcoin may have gone into orbit this year, but you may recall that many of us thought that bitcoin prices were crazy a year ago. Its average annual real return since people started trading it in 2010 is 411 per cent. This is unlike anything seen in any stock market in the modern era.
Another example of a mania which in its final stages outstripped even bitcoin was the South Sea Bubble, which suckered in many Britons in 1721. Note, however, that this mania involved outright fraud — those buying had been told basic lies about the assets on offer. Note also that the Bubble did not last as long as the boom in bitcoin has lasted to date. But in the last few months of madness, South Sea stock managed to appreciate by 800 per cent. And famously, it was not just idiots who were caught by this. Isaac Newton, one of history’s greatest geniuses, was ruined by his decision to buy South Sea stock near the top.
Michael Bauer, an economist at the Federal Reserve Bank of San Francisco, argued in a blog post last week that there was “compelling” evidence that a host of lesser-appreciated factors were now subduing the curve and jamming its predictive signal.
These are the fading inflation risks, global uncertainty, a sharp shift downwards in the “neutral” long-term interest rate and a secular decline in the “term premium” offered by longer-maturity bonds. The trillions of dollars worth of central bank stimulus sloshing around the financial system also helps cap long-term bond yields, irrespective of the economic fundamentals.
How long it takes a recession to strike after a yield curve inversion can also vary greatly. The shortest time was just one quarter, but that was way back in 1957, notes Joseph LaVorgna, chief US economist at Natixis. The average lead time is five quarters, but the longest period between a negative yield curve and a recession was two years, and that was before the financial crisis.
That indicates that the curve may be losing its forecasting potency, or at least that a recession may be years away.
Now, suddenly, the league that was once for everyone seems to be in crisis. Worse, it has no natural constituency. Liberals think it’s dangerous, classist, totalitarian, and cruel. Conservatives think it’s pandering, too “politically correct.” A lot of this is attributable, like so much else, to the president. Dozens of players were protesting the first two weeks of the season, but no one seemed to care … until Trump’s weekend tweetstorm from his golf club back in September. But the fact that we’re even framing this in political terms — the idea that a game in which people throw a ball and tackle each other has somehow become another thing for us all to yell at each other about from our ideological corners — is a large part of the problem. You can no longer watch the NFL without thinking of everything swirling around it off the field. The bigger problem for the league is: So many people just aren’t watching at all.
A few weeks ago, sportscaster Bob Costas told a group of students at the University of Maryland that “the reality is that this game destroys people’s brains” and that “the whole thing could collapse like a house of cards if people actually begin connecting the dots.” Costas is a smart man, and more than that, he is a survivor: One of the skills of his career has been understanding which way the winds are blowing and adjusting accordingly. For the past several years, he was the host of the pregame show for the most-watched NFL game every week, Football Night in America. He left the show this year and has been speaking out against the NFL ever since. For the past few years, it was reasonable to wonder whether defending the NFL was going to put you on the wrong side of history. It is becoming increasingly clear that that history is nigh.
The reality is that there’s no single villain, nor a magic formula for success in a world in which the internet and smartphones changed everything. Media companies young and old are still coming to terms with this reality and must brace themselves for the possibility that they may fail even if they do everything right.
It’s not a pretty picture. But it’s also a complex one. It’s true that a growing share of the population is digesting news and entertainment digitally. A survey this summer by the Pew Research Center found that about two-thirds of U.S. adults get their news at least some of the time from social media. Young Americans are watching far less TV than older ones, but they devour TV programming online and other digital videos.
The people are online, but the spoils are distributed unevenly. Google parent company Alphabet Inc. and Facebook Inc. collectively have a global audience in the billions, and many of them are hanging out there instead of watching TV, reading newspapers or scouring other companies’ media and entertainment websites.
The Foreign Service, our country’s irreplaceable asset for understanding and interacting with a complex and dangerous world, is facing perhaps its greatest crisis. President Trump’s draconian budget cuts for the State Department and his dismissive attitude toward our diplomats and diplomacy itself threaten to dismantle a great foreign service just when we need it most.
The United States is facing an extraordinary set of national security challenges. While we count on our military ultimately to defend the country, our diplomats are with it on front lines and in dangerous places around the world. They are our lead negotiators as we work with our European allies in NATO to contain growing Russian power on the Continent. They are our lead negotiators seeking a peaceful end to the wars in Afghanistan, Iraq and Syria. Our diplomats are assembling the coalition of countries in East Asia to counter the irresponsible regime of the North Korean dictator, Kim Jong-un.
Thanks to offshoring practices like those revealed in the Paradise and Panama Papers, global investment figures are “a big black hole,” says Daniel Haberly, an economic geographer at the University of Sussex. “We don’t really know what the world economy actually looks like. That’s the big burning question for me. We have this picture of what it looks like on paper but in reality it’s probably something completely different.”
Look no further than the UK for an example of how crazy investment statistics are. The first name on its list of top foreign direct investors doesn’t surprise—it’s the world’s biggest economy, the United States. Second place, however, isn’t such a behemoth. According to British government stats, the Netherlands supposedly shoveled £139.8 billion ($186 billion), 28% of its GDP, into the UK in 2015.
Anglo-Dutch ties run long and deep, but can a country of just 17 million people really be investing so much cash into Britain alone?
Quite simply, no. The Netherlands is not just a smallish European trading nation—it’s also one of the world’s biggest conduits for cash going to and from tax havens. When the British government broke down its FDI statistics this year (chapter 6), it realized that only 34.5% of that money actually came from the Netherlands; much of the rest being from European subsidiaries of big US companies or… from British companies rerouting their money.
The UK is far from the only country where tax havens and secrecy jurisdictions provide an eyebrow-raising proportion of foreign direct investment. Tiny Luxembourg is technically the United States’ third-biggest investor and the Netherlands is fifth. That’s alongside the fact that the US has plenty of onshore tax havens, like Delaware, Nevada, and South Dakota.
The figures are even more distorted for China, the world’s second-biggest economy. Nearly half of its foreign investment technically comes from Hong Kong, which is basically a “black box,” Haberly says. Bizarrely, much of the money seemingly comes from state-owned Chinese companies that are registered in Hong Kong with subsidiaries in tax havens. For example, China Mobile, a global telecoms giant and one of the country’s “national champions,” is based in Hong Kong, with opaque offshoots in the British Virgin Islands.
The populist surge that threatened this year to engulf Western Europe and created existential worries for Brussels seems to have slowed, if not crested.
Nigel Farage, the populist who helped engineer Britain’s vote to exit the European Union, is now a mostly marginalized talk-show host. Marine Le Pen, who terrified the French establishment as the presidential candidate of the National Front, was soundly vanquished. Geert Wilders, who came in second in the Dutch election in March, was sidelined in the four-party coalition that finally emerged.
But there is a different story going on in the east, which has become a showcase for populism in its many varieties, widening a fissure in the bloc.
The four countries of the European Union’s east that make older members anxious — Poland, Hungary, the Czech Republic and Slovakia — are all led by populists of one stripe or another.
Populism is not easy to define, the roots of its success are varied, and its adherents do not represent a single ideology, even if they all criticize uncontrolled migration, especially of Muslims. But their success is fragmenting traditional politics and making coalition governments harder to build.
Some may be surprised to learn that people still hold such views. After all, the Earth has been photographed from space. But such photos could have been faked by the evil forces who secretly control the world, right? And all those centuries of scientific evidence suggesting that the Earth is spherical could be wrong, right? In America interest in the flat-Earth movement appears to be growing. In September Bobby Ray Simmons Jr., a rapper also known as B.o.B, launched a crowd-funding campaign to send satellites into orbit to determine the Earth’s shape. On November 9th, 500 “flat-Earthers” assembled in North Carolina for the first annual Flat Earth International Conference. Data from Google Trends show that in the past two years, searches for “flat earth” have more than tripled (see chart).
Conspiracy theories are not always harmless. The bogus notion that vaccines cause autism has led to a decline in immunisation rates in some places, which has allowed outbreaks of measles. Scepticism about climate change has infiltrated schools. A recent survey found that a third of American science teachers tell their students that climate change is driven in part by natural causes. One in ten say humans play no role in it.
Conspiracy theories are appealing because they offer simple explanations for complex phenomena, or because they let people believe they are in possession of secret knowledge that the powerful wish to suppress. They tend to be most popular among less-educated people who do not trust public institutions. They are extremely common in dictatorships, where people assume, often correctly, that the authorities are lying.
Simply rebutting conspiracy theories may make adherents even more entrenched in their views. (If “they” are so keen to deny it, it must be true!) Absence of evidence is taken as evidence of a fiendishly effective cover-up. Some conspiracy theories are irrefutable—the American government cannot prove, for example, that it is not storing dead aliens in a secret underground laboratory.
USA ECONOMY DATA, CITIES AND STATES
For further evidence of a divided nation, look no further than state-level job markets. Though the labor market has grown robustly nationwide this year, progress has been uneven across blue states and red states. An increasing number of people in red states have stopped looking for work, while a larger share of people in blue states are actively in the workforce.
The participation rate, which shows the number of people who are employed or are looking for work, fell in red states to 62% in September from 62.6% in April, while notching up in blue states to 63.9% from 63.8% over the same period, according to research from the Institute of International Finance. The report categorized a state red if it voted for President Donald Trump in 2016′s presidential election and blue if it voted for Hillary Clinton.
Property prices are a mile high in Denver and up big in Dallas. An index of Denver home values has soared 43.9 percent, while a price gauge for Big D has jumped 42 percent since their respective peaks prior to the 2007-2009 recession, according to data from S&P CoreLogic Case-Shiller on Tuesday. In all, measures of home values in eight of 20 U.S. cities are now above their pre-Great Recession highs.
The existing-home market has presented a mixed picture in recent months of robust price gains coupled with lackluster sales activity. Inventory is especially constrained in the bottom third of the market, where prices are growing twice as quickly as the top third, said Svenja Gudell, chief economist at Zillow. “In order for the market to be healthy you would want to see more stable supply,” Ms. Gudell said, along with renters converting more easily to buyers.
Interstate-95 is busier than any other highway and among the longest. It runs through some of the country’s biggest cities and costs billions of dollars a year to maintain. Congestion costs commuters and businesses $160 billion nationally in 2014 in lost fuel and time, according to the Texas Transportation Institute, a 280% increase since 1982.
Fairfield County, Conn. is one of I-95’s most congested stretches. Stamford is ranked as the second-most congested city per-capita after Los Angeles, according to INRIX Roadway Analytics. Traffic moves at an average speed of 16 mph on an average Friday at 5 p.m. between Stamford and Bridgeport, according to a Wall Street Journal analysis of 2015 data from the University of Maryland. Five hours earlier at noon, traffic along the same segments move at 57 mph on average, according to the Journal’s analysis.
Fixing the problem isn’t easy. Business groups are opposed to bringing in tolls. Without tolls or another form of new revenue, it will be difficult for the state to make improvements to I-95 like adding lanes, or increasing access to public transit. Bad road quality is another serious problem of I-95. Poor and uneven pavement leads to higher fuel consumption and increased accidents, industry experts say.
GLOBAL ECONOMY DATA
It’s looking like boom time in the world economy again: As more economists publish their 2018 outlooks, those from Goldman Sachs Group Inc. and Barclays Plc are proving the most bullish in predicting global growth will reach 4 percent next year. That would be the strongest since 2011 and up from the 3.7 percent that Goldman Sachs estimates for this year.
Like Ms Faria, millions of Brazilians are beginning take out credit again, adding a growing head of steam to a budding recovery as Brazil emerges from its worst recession in history. “Households and corporates have been deleveraging, so the pick-up in growth could be fast, and more than expected,” says Mauro Roca, sovereign analyst for TCW, a US fund manager.
CREDIT, YIELD, BUYBACKS, CORPORATES
Oxford University, alma mater to a raft of U.K. prime ministers, former U.S. President Bill Clinton and Nobel Prize–winning physicist Albert Einstein, among countless notables over its nine centuries of history, is planning its first-ever bond issue, and it can expect to price it on good terms.
Moody’s has assigned the university a top rating, Aaa, to reflect its “extraordinary market position as one of the world’s elite universities, ensuring consistent student demand and wide-ranging support from the government, donors, and research funding bodies.”
While individual Oxford colleges have issued bonds in the past, this will be the first from the university as a whole. The debt is expected to have a 100-year maturity. The university is planning to raise at least $250 million and has hired J.P. Morgan JPM, +3.50% to underwrite the deal, according to the Financial Times.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Time Warner Inc.’s promise not to pull channels like TNT and CNN off the air in contract disputes with cable and satellite companies, is a commitment that should resolve U.S. concerns that its merger with AT&T Inc. would harm competition, the companies said.
Buffalo Wild Wings has agreed to be purchased by Arby’s Restaurant Group, taking the restaurant chain private for $2.44 billion in cash plus debt.
Time Inc has been sold to rival media group Meredith Corporation in a deal valued at $2.8bn and backed by the Koch brothers, giving the conservative billionaires a stake in one of America’s best-known publishers.
The Kochs will end up controlling about 10 per cent of the company, but it is not clear what role, if any, they will take through their investment in the publisher. They will not have a seat on Meredith’s board and, Meredith said, “will have no influence on Meredith’s editorial or managerial operations”.
Emerson Electric, the US automation and building equipment group, has withdrawn its $29bn bid for rival Rockwell Automation after failing to win support from investors. Emerson said that it would seek small bolt-on deals alongside a $1bn share buyback instead, after shareholders supported the Rockwell board’s opposition to the deal.
FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS
The street price of hard currency in Zimbabwe has dropped more than 30 percent since Robert Mugabe was ousted as president last week.
Zimbabwe doesn’t have its own currency, with the government adopting a basket of foreign currencies including the U.S. dollar and South African rand as legal tender in 2009 after hyperinflation rendered the local dollar worthless. A bond note is an instrument issued by the central bank that is, in theory, pegged one-to-one to the dollar.
“The markets had overpriced as investors and other market players had been hedging themselves against a possible hyper-inflationary outlook,” said Welcome Mavingire, Managing Partner at Intellego Investments Consultants in Harare. “Now that there is optimism about the economic outlook emanating from the new political dispensation, those fears of hyperinflation have dissipated, hence naturally the markets had to self-correct.”
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
Private equity groups are again teaming up to buy high-priced businesses in so-called club deals as global investors seek to share the mounting costs as well as the risk of acquiring assets at an uncertain part of the economic cycle in some regions.
But while the strategy may make sense for investment managers, clients among the large institutions are becoming concerned. These private equity partnerships can increase exposure to a single deal through different managers, they say, and leave the private equity firms less able to influence the business directly if something goes wrong.
Santiago Jariton, a former money manager at George Soros’s family office, is planning to start a hedge fund focused on stock bets in Latin America with anchor investments from two of the billionaire’s sons, according to people familiar with the matter.
ENERGY CRUDE OIL, OIL SANDS, SHALE
Opec kingpin Saudi Arabia and Russia, the biggest exporter outside the cartel, are close to an agreement for extending curbs throughout 2018 — a move industry analysts think is necessary to keep draining oil inventories and support prices.
But the relationship between the two oil superpowers risks being weakened by the very goal that first brought them together. Crude’s recovery above $60 a barrel this month is driving a narrow wedge between Moscow and Riyadh.
Russia has voiced concern that oil’s rally, while broadly benefiting its economy, could unleash rival supplies on to the market. Russian producers are hamstrung by the deal and have lobbied President Vladimir Putin against agreeing an extension.
Saudi Arabia, meanwhile, is preoccupied with a corruption crackdown in the kingdom and needs stronger prices to boost revenues as it embarks on sweeping political and economic reforms led by the powerful Crown Prince Mohammed bin Salman.
The price of oil in the U.S. has climbed to levels not seen since 2015, as unexpectedly strong global growth has helped soak up a supply glut that plagued the market for years.
Oil explorers took advantage of a market rally to lock in prices for almost 1 million barrels a day’s worth of future output, signaling the shale boom’s staying power as OPEC ponders the extension of its supply curbs.
ENERGY RENEWABLES, NUCLEAR
“The storage battery is, in my opinion, a catchpenny, a sensation, a mechanism for swindling the public by stock companies,” wrote Thomas Edison in 1883.
Today, the battery industry is mustering for exponential growth as car makers electrify their fleets, most visibly at Telsa’s $5 billion factory in Nevada. For investors looking to gain from the battery’s rise, though, the doubts of the 19th century entrepreneur linger. The path to profitability is far from clear, and technological breakthroughs could upset the current competitive order.
COMMODITIES BASE METALS, MATERIALS
Iron ore will weaken next year as global supplies increase including from a new mine in Brazil at the same time that steel production risks topping out in China, according to Goldman Sachs Group Inc., which expects prices to decline back toward $50 a metric ton.
The forecast for lower prices “is mainly because we see steel production in China peaking and should fall going forward and iron ore supply is still growing, with S11D ramping up,” analyst Hui Shan said in an email to Bloomberg, referring to Vale SA’s giant new mine.
POLLUTION, CLIMATE & ENVIRONMENT
A massive eruption would be disastrous for Bali, where the economy depends on tourism and agriculture. It could also alter global temperature for months — maybe years — to come.
Oil companies and their allies are getting closer to opening the Arctic National Wildlife Refuge to drilling for the first time as congressional Republicans seek to use the tax overhaul to end the nearly 40-year debate.
Animal advocacy groups urge speed limits, new fencing and digital tracking to prevent more accidents.
Mootral, a new natural feed supplement from Zaluvida, a biotech company that tackles health challenges ranging from antibiotic resistance to livestock emissions, claims to instantly reduce cow methane emissions by at least 30%. The powdery supplement, which is compressed into pellets and mixed into cattle feed streams, is made of two basic ingredients, garlic and citrus extracts (the exact formula is proprietary). Zaluvida’s team of researchers have found that the two compounds combined improve cows’ ability to digest without emitting excess methane in the process. While cow farts are often blamed for the bulk of their methane emissions, it’s really their burps that are the culprits–and that is what Mootral is most effective in neutralizing.
BREXIT, SCOXIT, LONDON, UK ECONOMY
The deep split in the British electorate has not healed since the referendum in June 2016. Its competing tribes continue to inhabit separate universes. A series of recent surveys conducted by polling company YouGov suggested they had different views not only about the merits of the European Court of Justice but also steak, sex, the BBC and much else.
“There is very little evidence, if any, that Leavers and Remainers are changing their minds,” said Matthew Goodwin, a politics professor at the University of Kent. “While all voters have become a little more pessimistic about the economic effects of Brexit, we need to consider that against evidence that for Leavers the vote for Brexit was driven chiefly by non-economic factors.”
British and EU negotiators have reached a deal over the so-called Brexit bill, opening the door to a potential breakthrough in the talks this December, the Telegraph has learned. Sources on both sides confirmed that an agreement-in-principle has now been reached over the EU’s demand for a €60bn financial settlement ahead of a crucial lunch meeting next Monday between Theresa May and Jean-Claude Juncker, the European Commission president.
Britain has bowed to EU demands and agreed to fully honour its financial commitments as identified by Brussels, removing one of the biggest obstacles to a Brexit divorce settlement. According to several diplomats familiar with the talks, the UK would assume EU liabilities worth up to €100bn although net payments, discharged over many decades, could fall to less than half that amount.
Ireland’s deputy prime minister has resigned in response to her links to a long-running policing scandal, averting the immediate threat of a snap election but raising doubts over the longer-term survival of Leo Varadkar’s government.
The deception, which Toray said took place between 2008 and 2016, echoed similar practices admitted in recent weeks by Kobe Steel and Mitsubishi Materials. Together, the revelations have embarrassed a country that has built its economic reputation on reliable, high-quality manufacturing.
The revelations appear to be creating a kind of snowball effect. Toray said it became aware of the problem in July 2016 but had not disclosed it widely because there was no threat to public safety. Toray Hybrid Cord’s products met basic safety standards, Toray said, so the car tires and other items that incorporate them do not need to be recalled or replaced.
GEOPOLITICS, CRIME, TERRORISM
Air Force officials say they are moving to fix problems that prevented the conviction of a gunman who opened fire at a church in Texas from being reported.
Rights advocates had hoped the pope would specifically denounce the military’s campaign of violence against the Muslim ethnic group.
Sayfullo Saipov, who has been accused of killing eight people in a Halloween terrorist attack in lower Manhattan, pleaded not guilty in federal court.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
Apple Inc. customers have discovered a significant security flaw in the latest version of the operating system for Mac computers that allows anyone to log in without a password, potentially making private user data vulnerable.
A pillar of modern policing will come under Supreme Court scrutiny Wednesday as the government defends its power to seize, without a search warrant, data that telecom and internet companies collect about an individual.
Key findings: One pro-repeal spam campaign used mail-merge to disguise 1.3 million comments as unique grassroots submissions. There were likely multiple other campaigns aimed at injecting what may total several million pro-repeal comments into the system. It’s highly likely that more than 99% of the truly unique comments³ were in favor of keeping net neutrality.
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
A senior Chinese general committed suicide while being investigated for corruption in a case that state media portrayed as proof of President Xi Jinping’s determination to root out graft in the military.
Kenyan police used tear gas to prevent supporters of opposition leader Raila Odinga gathering for a memorial service to coincide with the inauguration of Uhuru Kenyatta for his second term as president.
Sen. John McCain (R-Ariz.) on Tuesday said President Trump insulted the sacrifice of Native American veterans when he made a “Pocahontas” crack at a White House ceremony honoring them.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
A decade after the financial crisis, the federal government is easing up its policing of Wall Street and the banking industry, even without actually repealing broad swaths of regulation.
The public battle over who will serve as the acting director of the Consumer Financial Protection Bureau — with the White House trying to install Mick Mulvaney, a staunch opponent of the agency — is the most recent example of the banker-friendly approach that has gripped Washington. Less visible are the subtle but steady efforts at the White House, in federal agencies and on Capitol Hill to lessen the regulatory burden on banks and financial firms since President Trump took office.
A US judge has denied a bid to block the Trump administration’s pick to lead the US Consumer Financial Protection Bureau, the consumer-finance watchdog that was thrown into chaos last week when competing interim heads were named to replace its outgoing director.
SILICON VALLEY, UNICORNS, STARTUPS, VC
Consider the ways that WeWork stands to benefit from Meetup. Though WeWork has been adding locations at a rapid clip—and currently boasts 170 offices in 58 cities across the globe—the office-space sector is crowded with competition, from the practical-but-boring old-guard companies, like Regus, to a new crop of startups, like Knotel and Grind, trying to elbow into the market. So WeWork has aimed to distinguish itself by offering an energetic work environment that appeals to millennials, in which people can bond casually over beers or at brown-bag lunch events. WeWork community managers attempt to get to know members, and even mark momentous occasions, in elaborately designed areas with slogans like, “Do What You Love.” WeWork recently acquired the New York-based coding program The Flatiron School, and led a round of funding in a coworking space and social club for women called The Wing. Both are businesses that prioritize culture.
But it’s not lost on Neumann that, despite these efforts, most of WeWork’s members clear out after hours. Those post-clock-out hours are important: We office workers usually fill them with the things that matter most to us. For me, one of those things actually is a Meetup—a grassroots group called GenderAvenger that focuses on getting awesome women more exposure at conferences and in the media. Participating in it builds my sense of purpose and connection. Why should that happen at, say, a Starbucks, when Neumann could harness that goodwill within the confines of a WeWork? Meetups would fill the space on nights and weekends and offer WeWork an opportunity to sell a new group of potential customers—Meetup’s 300,000 organizers—on its services by giving them memberships that include access to the space as well as a set of services that might help them lead their groups.
AUTOS, ELECTRIC, SELF-DRIVING
Almost every sixth car in the world will be electric by 2025, according to a UBS global autos survey released Tuesday. And if things go the way they have in 2017, those cars are more likely to be emblazoned with a Tesla Inc. logo than BMW AG’s.
“The shift to electric cars will come faster and in a more pronounced way, fueled by the diesel demise in Europe, battery technology advancements and regulation in China and Europe,” Hummel said. Europe will have the highest EV penetration, approaching 30 percent of new cars sold.
ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH
With his capsule networks, Mr. Hinton aims to finally give machines the same three-dimensional perspective that humans have — allowing them to recognize a coffee cup from any angle after learning what it looks like from only one. This is not something that neural networks can do.
“It is a fact that is ignored by researchers in computer vision,” he said. “And that is a huge mistake.”
Loosely modeled on the web of neurons in the human brain, neural networks are algorithms that can learn discrete tasks by identifying patterns in large amounts of data. By analyzing thousands of car photos, for instance, a neural network can learn to recognize a car.
This mathematical idea dates back to the 1950s, but the concept has found real-world applications in recent years, thanks to improvements in processing power and the large amounts of data generated by the internet. Over the last five years, neural networks have accelerated the progress of everything from smartphone digital assistants to language translation services to autonomous robots.
The millions of small civilian drones plying the nation’s skies can cause significant damage to airplanes in a midair collision, new research commissioned by the U.S. Federal Aviation Administration concluded.
The bird, apparently a female falcon, wheels into view 100 feet over Edmonton International Airport, flapping her wings — hunting behavior. She pursues a flock of starlings, which scatter into the safety of the woods. The falcon is majestic, graceful and resolute.
She is also a machine — a battery, sensors, GPS, barometer and flight control computer stuffed into a falcon-shaped, hand-painted exterior. A human on the ground controls her wings.
The Robird patrols the skies around the airport, in Alberta, Canada. Her mission is to mimic falcon behavior in order to head off a serious threat to aviation: the bird strike, which happens when a bird or flock collides with an airplane. The Robird doesn’t actually catch any prey. Its job is to alert birds to the presence of a predator, herd them away from the airport, and teach them to prefer a less dangerous neighborhood.
The risk of war is greater than the public appreciates. There’s a complacency surrounding this crisis, which has been kicked down the road by several American presidents. Now, with war more likely than ever, talks are even more urgent, and we hope this video can serve as a call for politicians on both sides to seek exit ramps for peace.
Panarat Chaiyaboon was using the toilet in her downstairs bathroom in July when she felt a sharp bite on her thigh. She jumped up to see a scene straight out of a nightmare: an 8-foot python emerging from her toilet.
She rushed to the hospital, bleeding heavily, and still bears the marks from eight tooth punctures that were around half an inch deep. That snake was captured. But a week later, Ms. Panarat’s 15-year-old daughter found a second python in the same toilet. The daughter was so shaken, she went to stay with relatives.
It could be argued that snakes have always owned this corner of Thailand, and that the people of Bangkok are merely borrowing it from them. The main airport, Suvarnabhumi, was built in a place called Cobra Swamp, and the city itself took shape on the Chao Phraya River delta — a marshy reptile paradise. But this year, the Bangkok Fire and Rescue Department, which removes snakes from homes, has been busier than ever.
To most people, it’s an idea that’s relegated to the realm of fiction, as every law of physics indicates that motion forward through time is an absolute necessity. Philosophically, there’s also a famous paradox that seems to indicate the absurdity of such a possibility: if traveling backwards through time were possible, you’d be able to go back and kill your grandfather before your parents were ever conceived, rendering your own existence impossible. For a long time, there seemed to be no way to go back. But thanks to some very interesting properties of space and time in Einstein’s General Relativity, traveling back in time may be possible after all.
The place to start is with the physical idea of a wormhole. In our known Universe, we have tiny, minuscule quantum fluctuations in the fabric of spacetime on the smallest of scales. These include energy fluctuations in both the positive and negative directions, often very close by one another. A very strong, dense, positive energy fluctuation would create curved space in one particular fashion, while a strong, dense, negative energy fluctuation would curve space in exactly the opposite fashion. If you connected these two curvature regions together, you could — for a brief instant — arrive at the notion of a quantum wormhole. If the wormhole lasted for long enough, you could even potentially transport a particle through it, allowing it to instantly disappear from one location in spacetime and reappear in another.
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