Macro Links Nov 2nd – Freaking Out

Macro Links Nov 2nd – Freaking Out

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FREAKING OUT

Americans Are Officially Freaking Out – Bloomberg

For those lying awake at night worried about health care, the economy, and an overall feeling of divide between you and your neighbors, there’s at least one source of comfort: Your neighbors might very well be lying awake, too.

Almost two-thirds of Americans, or 63 percent, report being stressed about the future of the nation, according to the American Psychological Association’s Eleventh Stress in America survey, conducted in August and released on Wednesday. This worry about the fate of the union tops longstanding stressors such as money (62 percent) and work (61 percent) and also cuts across political proclivities. However, a significantly larger proportion of Democrats (73 percent) reported feeling stress than independents (59 percent) and Republicans (56 percent).

Poll: Most say this is lowest point they can remember for US | TheHill

A majority of people surveyed in a new poll say this is the lowest point in U.S. history. A recent poll published by the American Psychological Association finds 59 percent of Americans surveyed think this is the lowest point in the nation’s history that they can remember.

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RUSSIAN FACEBOOK ADS

These Are the Ads Russia Bought on Facebook in 2016 – The New York Times

They made for a wildly varied slide show, designed by Russia to exploit divisions in American society and to tip the 2016 presidential election in favor of Donald J. Trump and against Hillary Clinton. The House Intelligence Committee provided on Wednesday the biggest public platform to date for a sample of the Facebook ads and pages that were linked by a trail of ruble payments to a Russian company with Kremlin ties.

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How Russian Facebook ads worked – Washington Post

While some of the ads urged support for Republican Donald Trump or attacked Democrat Hillary Clinton, others sought to exploit divisive social issues. The Russian operatives used Facebook tools to precisely target people with strong feelings about gun rights, African American political activism, illegal immigration or issues that might affect how Americans cast their ballots.

How the Russian ads looked to 150m Facebook viewers

The sophistication of the Russian-linked pages were demonstrated in the tangible outcomes that came from their posts. As many as 5,000 to 10,000 protesters attended a New York City rally organised by one Russia-linked page in the days following President Trump’s victory. The Facebook page, called ‘Black Matters US’, amassed nearly 100,000 likes as of early 2017.

House Drops Motherlode of Russian Propaganda

Ad targeting information associated with Defend The 2nd showed how highly targeted it was. The location for viewership had to be within the United States. They had to be between the ages of 18 to over 65. They had to match Facebook users with interests including the National Rifle Association, Second Amendment Sisters, Gun Owners of America, Concealed carry in the United States, and Second Amendment to the United States Constitution.

Thousands Of New Yorkers Took To The Streets In An Anti-Trump March Promoted By Russia-Linked Account

BlackMattersUS, a social media campaign believed to be Russians meddling in US politics, promoted the march in the days after the 2016 election.

Russia-Financed Ad Linked Clinton and Satan – The New York Times

Lawmakers of both parties expressed frustration with answers that fell short of what they had hoped and insisted that the companies, long the darlings of American technology, do better.

“I must say, I don’t think you get it,” said Senator Dianne Feinstein, Democrat of California, who was also at the first hearing a day earlier. “I went home last night with profound disappointment. I asked specific questions, I got vague answers.”

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RUSSIA PROBE

Trump didn’t dismiss idea when adviser suggested setting up Putin meeting – CNNPolitics

Candidate Donald Trump did not dismiss the idea of arranging a meeting with Russia’s president when it was suggested in a meeting with his campaign foreign policy advisers last year, according to a person in the room.

Trump does not recall suggestion of Putin meeting: White House

U.S. President Donald Trump does not recall a meeting with his foreign policy advisers in March 2016 in which one of them suggested he could arrange a meeting between candidate Trump and Russian President Vladimir Putin, the White House said on Wednesday.

Looks like Jeff Sessions perjured himself. | New Republic

The good news for Sessions is that he can plausibly claim to have opposed any Russian collusion. The bad news is that, in making those claims, he opens himself up to charges of perjury.

Michael Flynn Followed Russian Troll Accounts, Pushed Their Messages in Days Before Election

The news that Flynn also pushed Russian propaganda comes at an unwelcome time for the former three-star general and head of the Defense Intelligence Agency. Flynn is one of the people under investigation by Robert Mueller’s widespread probe into Russian influence in the 2016 campaign.

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MANAFORT, PAPADAPOLOUS

Paul Manafort’s Roots Run Deep in a Connecticut City – The New York Times

Mr. Manafort grew up in a family whose name dotted the map of this part of central Connecticut. Mr. Manafort’s father was a three-term Republican mayor of New Britain, serving from 1965 to 1971, who later became the chair of the state’s public works commission.

Paul Manafort Drive, which is named after Mr. Manafort’s father, curves through the campus of Central Connecticut State University. Manafort Brothers Inc., the construction company founded by Mr. Manafort’s Italian immigrant grandfather, has built train stations and roadways all over the region. (It is now run by another branch of the family.) Manafort Brothers is one of the subcontractors currently erecting a building at the university. The site stands, naturally, on Paul Manafort Drive.

Now, for some residents, Mr. Manafort’s travails rank as among the worst stains on the city, right up there with the Donna Lee Bakery murders of 1974 (six killed in a botched robbery), the municipal jobs-for-bribes corruption scandal of 1979 (nine city officials arrested) and the real-estate Ponzi scheme of the 1980s (6,000 investors swindled out of $350 million).

Of course Paul Manafort spent $1.4 million on his clothes – The Washington Post

From 2008 to 2014, Manafort apparently spent millions of dollars on art, antique rugs and various home improvement projects — and nearly $1.4 million on clothes.

This is a sum that is challenging for some people to digest. Those people have clearly not spent an afternoon at Barneys New York or any large designer boutique. They have not browsed the $5,000 suits at Brioni. They have not felt the call of John Lobb’s $1,500 cap-toe dress shoes. They have not been lured by an $8,500 Kiton cashmere sportcoat. (Barneys New York, by the way, says that it was not the beneficiary of Manafort’s bi-coastal shopping sprees.)

It would require a bit of energy and an unabashed willingness to indulge, but spending that much money on clothes and various accessories can be done. It’s even easier if one’s preferences tilt toward bespoke. It can also be accomplished with subtlety. There is a misguided assumption that if a man is spending that much on clothing, he must be dressing like a bedazzled rock star with a penchant for fur throws. It must surely be obvious. But no. Obvious isn’t the point.

Papadopoulos Followed a Winding Path Into Trump’s Orbit – WSJ

For George Papadopoulos, the path to Donald Trump was a circuitous one that led him into the political world with no campaign experience and little foreign policy background.

A Big Question in Washington: How Has Papadopoulos Aided Investigators? – WSJ

Mr. Papadopoulos has made “efforts to cooperate” with the government, according to the plea documents, and since his arrest in July he has met with investigators “on numerous occasions to provide information and answer questions.”

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MUELLER PUSHBACK

In Call With Times Reporter, Trump Projects Air of Calm Over Charges – The New York Times

President Trump said that he wasn’t ‘angry at anybody’ and that investigations into his campaign’s links to Russia had not come near him personally. “I’m in the office early and leave late; it’s very smooth,” Mr. Trump said. “Honestly,” he added, “I’m really enjoying it.”

“A Different Level of Crazy”: Is Civil War Breaking Out in The Wall Street Journal Over the Editorial Board’s Coverage of Mueller? | Vanity Fair

A series of virulent anti-Mueller editorials has reporters worried about their paper’s credibility.

“You Can’t Go Any Lower”: Inside the West Wing, Trump Is Apoplectic as Allies Fear Impeachment | Vanity Fair

After Monday’s indictments, the president blamed Jared Kushner in a call to Steve Bannon, while others are urging him to take off the gloves with Robert Mueller.

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NEW FEDERAL RESERVE CHAIRMAN

Trump set to name Powell as Fed chair nominee

Mr Powell has been a serving Fed governor since 2012. A centrist on monetary policy, he is known as a pragmatic and down-to-earth official with private sector and government experience. A trained lawyer and former partner at private equity firm Carlyle, he also served in the Treasury under former president George H W Bush in the 1990s.

Trump to Tap Jerome Powell as Next Fed Chairman – WSJ

The White House has notified Federal Reserve governor Jerome Powell that President Donald Trump intends to nominate him as the next chairman of the central bank, according to a person familiar with the matter, a move likely to combine continuity on interest-rate policy with perhaps a lighter touch on financial regulation.

Yellen’s Exit as Fed Chief Would Mark Break From Recent Precedent – WSJ

Janet Yellen’s leadership at the Fed looks set to end after just one four-year term, the shortest tenure at the helm of the central bank in nearly four decades, and a break from recent precedent.

Trump choice of Powell would be vote for continuity

Under Mr Powell, the gradualism pursued by Ms Yellen when it comes to rate rises is unlikely to change suddenly, and nor is the Fed’s policy of slowly but steadily reducing the size of its $4.5tn balance sheet.

Powell, Once an Also-Ran, Set to Chair Trump’s Bank-Friendly Fed – Bloomberg

A few months ago, Jerome Powell was reckoned to be too tough on banks to get President Donald Trump’s nod for a key supervisory post at the Federal Reserve.

Powell as Fed pick may not be the non-event it seems

Unfortunately, history has a nasty way of disguising momentous decisions. The Fed’s policy has moved into truly unprecedented territory under its last two chairs, with extraordinarily easy monetary policy, while Paul Volcker took the Fed into equally unprecedented territory in the early 1980s when he took 10-year yields up as far as 15 per cent in a bid to kill off inflation. None of those appointments excited the market much, either, and none of those Fed chairs were perceived as making a difference.

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GOP TAX PLAN

‘The Cut Cut Cut Act’: Trump, Hill leaders differ on tax overhaul bill’s name – ABC News

President Donald Trump has told senior congressional leaders that he wants to name the forthcoming tax overhaul bill “the Cut Cut Cut Act,” two senior administration officials told ABC News.

Less than 24 hours before the bill is slated to be revealed, there is still dispute over the name, according to a senior congressional aide and a senior White House official. The sources said it has been decided that the Ways and Means Committee will have the final say over the name.

Trump: ‘I will be blaming Mnuchin and Cohn’ for any trouble with tax reform – POLITICO

“Key administration officials, including Secretary Mnuchin and Gary Cohn, will be staying back from the trip to Asia to remain vigilant and making sure the tax cuts pass,” the president told reporters during a Cabinet meeting at the White House. “So if I have any problems, I will be blaming Mnuchin and Cohn. Believe me, they’ll be hearing from me.”

People in the room laughed at the remark. But Trump also said that Mnuchin and Cohn will “do very well.” He said his administration is already “doing very well.”

Math Problem Bedevils Republican Tax Rewrite – The New York Times

Republicans are running into political challenges as they try to offset lost revenue to stay within the confines of the $1.5 trillion tax cut that lawmakers have voted to allow.

GOP Goes With the Global Flow: Tax People, Not Companies – WSJ

For decades, Republican tax reform has meant cutting the rate on America’s highest earners. No longer. The GOP tax plan is a tacit admission of something the rest of the world has already concluded: It’s better to tax people than capital.

House GOP waffles on Trump’s promised permanent cut in corporate tax rate – The Washington Post

House Republican leaders are preparing to release their tax plan on Thursday after numerous delays, but in a late switch, they now say the initial version of their bill will not contain one of President Trump’s major promises.

House Ways and Means Committee Chairman Kevin Brady (R-Tex.) said Wednesday that the bill he will introduce would not permanently lower the corporate tax rate to 20 percent. Instead, the cut would be temporary, and that reduction would expire in around eight years, according to a person briefed on the planning who wasn’t authorized to disclose details.

House Republicans Rush to Release Tax Bill – WSJ

A day after missing a self-imposed deadline, House GOP leaders pressed ahead to release a tax bill Thursday, despite the hesitation of some Republicans from high-tax states who could be crucial to the bill’s passage.

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BITCOIN BUBBLE

Bitcoin blasts to new all-time high of $6,450

Bitcoin climbed to a new all-time high of $6,450 on Wednesday, boosted by bets the cryptocurrency could enter the financial mainstream after the world’s largest derivatives exchange operator said on Tuesday it would launch bitcoin futures.

Gold Bugs Embrace Bitcoin, Upending Retail Sellers – WSJ

Retail sellers of gold coins and bullion are hurting despite rallying gold prices, as investors make crytpocurrencies the new ‘hedge against chaos.’

SEC Warns Celebrities Against Endorsing Stock and Coin Offerings – WSJ

Celebrities who pitch investors on stock sales and initial coin offerings without disclosing their pay may be breaking the law, the U.S. markets regulator said.

One of the Most High-Profile Initial Coin Offerings Has Crashed 50% – Bloomberg

Bancor, one of the most successful initial coin offerings in the short history of digital tokens, is proving to be a dud for investors. After raising $153 million in a matter of hours in June, the Tel Aviv, Israel-based startup — whose market maker-like application aims to facilitate trading in other digital coins — has seen the price of its token decline 56 percent, one of the worst performances among the 10 largest crowd-funding sales.

Backed by billionaire venture capitalist Tim Draper, Bancor is the fifth-largest ICO by amount raised by startups, which totals more than $3 billion this year. “All of these projects are in development,” Draper said in an email. “Wait two years, and I believe we will all be blown away by what these people can do for the world.”

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NORTH KOREA, SOUTH KOREA

South Korea’s Companies Eager for End to Costly Spat With China – WSJ

Signs of improved ties are raising hopes in South Korea’s business community that the Thaad-sparked dispute, which is seen costing the nation’s economy billions of dollars since last summer, will soon be resolved.

South Korean Leader Warns Against Attack on North, Ahead of Trump’s Asia Trip – WSJ

South Korea’s leader used a closely watched speech to oppose military action in countering North Korea, as the U.S. builds up its forces in the region and Donald Trump prepares to make his first trip to Asia as president.

Soaps and dramas may achieve change in North Korea more than military force, defector says – The Washington Post

North Korea’s former deputy ambassador in London told a House panel that the regime’s grip on the population is weakening under economic sanctions and spreading discontent.

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TESLA MISSES

Tesla Delays Model 3 Goals After Record Cash Burn – Bloomberg

Tesla Inc. still hasn’t figured out how to overcome manufacturing challenges that threaten its viability as an automaker, with battery factory-line glitches pushing out production targets for the Model 3 sedan.

The company won’t make 5,000 units per week of its cheapest car until sometime in March, three months later than planned. “I have to tell you I was really depressed about three or four weeks ago,” Chief Executive Officer Elon Musk said on a call with analysts Wednesday after Tesla reported a record quarterly loss and cash burn.

Tesla Drives Farther Off Course – WSJ

Tesla burned through a record amount of cash during the period—some $1.4 billion. That is disconcerting, but investors’ emphasis has been on the future with this company. Developments during the quarter make CEO Elon Musk’s vision look more and more like a pipe dream. For starters, Tesla said it would build 10% fewer Model S and X vehicles in the fourth quarter than the third quarter—a worrying sign on future demand for its more expensive, higher margin products.

17X02 - TESLA EARNINGS EST

Tesla Is Three Years Away From Making Cars in China, Musk Says – Bloomberg

The company is about three years away from starting production in the world’s largest auto market, Chief Executive Officer Elon Musk told analysts during an earnings call Wednesday. The plant will make a couple hundred thousand vehicles a year for buyers in China and potentially other parts of Asia, he said.

“Don’t set your watch by this,” Musk told an analyst, calling his estimate of a three-year wait before the start of production a “rough target.” Tesla probably will make the smaller and cheaper Model 3 sedan and upcoming Model Y crossover in China and won’t build the pricier Model S or Model X there, he said.

Tesla Model 3 production target falls further behind schedule

Elon Musk, chief executive officer, had always warned that production of the Model 3 — designed to be the world’s first mass market electric car — would face teething troubles. But the one-quarter delay came barely three months after the company completed the first of the new cars, and fresh details about the problem suggested it was more deep-seated than Tesla had suggested before.

Tesla Posts Loss, Boosting Pressure to Speed Output of Model 3 – WSJ

Tesla warned it will take months longer than expected to reach its goal of making 5,000 Model 3 sedans a week, a significant delay that could will put additional pressure on CEO Elon Musk’s limited cash pile.

Tesla’s Nightmare Before Christmas – Bloomberg Gadfly

Having racked up its first quarter of burning through more than $1 billion of cash in the three months ending in June, Tesla topped that with $1.4 billion of negative free cash flow in the third quarter. In the past two quarters, therefore, Tesla has burned through more cash than the previous six combined.More importantly, it has burned through roughly four out of every five of the $3.2 billion dollars it has raised since late March through selling new equity and convertible debt and its debut in the high-yield bond market.

Tesla’s Elon Musk Reassures Investors Over Model 3 Delays – The New York Times

The electric-car maker cited record output of its existing models, and its chief said bottlenecks on its first mass-market offering were being resolved.

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SEXUAL HARASSMENT

Six women accuse filmmaker Brett Ratner of sexual harassment or misconduct – LA Times

In interviews with the Los Angeles Times, six women – including actresses Olivia Munn and Natasha Henstridge — accused filmmaker Brett Ratner of sexual harassment or misconduct.

Top NPR editor resigns amid allegations of harassment – Nov. 1, 2017

NPR put executive Michael Oreskes on leave after the Washington Post reported decades-old allegations of sexual harassment against two journalists while working at the New York Times.

British Defense Secretary Michael Fallon resigns after allegations of inappropriate sexual behavior – The Washington Post

The Sun ran a front-page story about Fallon repeatedly putting his hand on a female journalist’s knee in 2002.

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NEW YORK TERROR ATTACK

Terror Charges Filed Against New York Suspect – WSJ

Federal prosecutors on Wednesday filed terrorism charges against the man accused of killing eight people and injuring 12 in a truck attack in New York City Tuesday afternoon.

When Its Attacker Is in Handcuffs, Islamic State Stays Mum – The New York Times

“It’s essentially about loyalty. No one would be motivated to do an ISIS attack if they know that when they end up getting caught, someone will out them,” said Raphael Gluck, an independent researcher who focuses on the group’s digital footprint and has embedded himself in many of the group’s online chat rooms. “It would work counter to their whole recruitment line and would serve to push off the next attack.”

Others said they see a theological justification: The Islamic State encourages recruits to die in a standoff with the police in a “martyrdom operation.” When the fighter survives, the mission is incomplete, Mr. Brisard said.

Trump, Citing Attack in New York, Calls for End to Visa Program – The New York Times

The suggestion set off a debate over some of the most divisive issues in American life as the president sought to advance his agenda on immigration and national security.

Trump seizes on N.Y. attack to push immigration and vetting policies – The Washington Post

Democrats complain that the White House is politicizing a tragedy after refusing to consider gun-control measures after the Las Vegas shooting.

Prosecutors Describe Driver’s Plan to Kill in Manhattan Terror Attack – The New York Times

The charges describe the driver, Sayfullo Saipov, 29, as a meticulous student of ISIS propaganda who started planning the attack a

year ago.

Police Officer Ryan Nash Ended New York Rampage With 9 Bullets – The New York Times

The officer had been called to Stuyvesant High School to help a distressed student when a terrorist attack unfolded outside.

Bump stocks used by Las Vegas gunman are for sale again – NY Daily News

A bump stock manufacturer has resumed selling the devices in the wake of last month’s mass shooting in Las Vegas.

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FACEBOOK, TWITTER, SOCIAL MEDIA

Facebook, Under Fire in Russia Inquiry, Posts 79% Rise in Profit – The New York Times

Facebook’s top executives skipped congressional hearings on Russian meddling to report the company’s blockbuster financial results to shareholders.

Facebook profit soars, with no sign of impact from Russia scandal

Facebook Inc faced harsh criticism in Washington on Wednesday over its failure to prevent Russian operatives from using its platform for election meddling, but the earnings report it issued hours later showed just how insulated its business remains from political risk.

Even the Russians (Mostly) Can’t Slow Facebook’s Money Machine – Bloomberg Gadfly

The users keep coming, and the social network keeps matching them with businesses.

Zuckerberg Is ‘Dead Serious’ About Russia, Open to Legislation – Bloomberg

Facebook Inc. CEO Mark Zuckerberg said he is “dead serious” about preventing future interference by foreign powers in U.S. elections on his social network, adding that the company is working with Congress on political ad-transparency legislation.

Why Twitter Is the Best Social Media Platform for Disinformation – Motherboard

It is time for Twitter to confront bots, extremists, and hostile spies by owning up to its own values.

Twitter Offered Russian TV Network 15% Of Its Total Share Of US Elections Advertising

A Russian news outlet described by the US intelligence community as “the Kremlin’s principal international propaganda outlet” was once a top sales prospect for Twitter’s US elections ads.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

US yield curve flattens to 10-year record

A measure of investors’ expectations of future economic conditions fell to its lowest level since the 2008 financial crisis on Wednesday.

The difference between longer dated 10-year Treasury yields and shorter dated 2-year Treasury yields dropped to 74.58 basis points, its lowest since November 2007.

It marks a “flattening” of the yield curve. The slope of the yield curve is important, since it provides a real-time glimpse of Wall Street’s expectations for how the economy will perform in the future. The flattening suggests investors are expecting growth and inflation to be subdued in the years to come.

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Canadian Junk Bond Sales Are Headed for a Record – Bloomberg

Canada’s junk bond market is on track for record issuance this year as an increase in crude oil prices has boosted confidence among local energy companies and investors.

New high-yield issuance in the Canadian dollar accelerated in recent weeks, taking the year-to-date total to C$3 billion ($2.3 billion), a record for this time of year, according to data compiled by Bloomberg. National Bank Financial and BMO Capital Markets, which occupy the top two spots in a ranking of the deals’ arrangers in both volume and number of deals, are hopeful they can bring more transactions to the market in the coming months.

Venezuela in Crisis: Investors Brace for Default – WSJ

Venezuela has the world’s highest inflation, estimated by the International Monetary Fund to reach 653% this year. The country has been ravaged by shortages of food and medicine, and months of protests that cost more than 120 lives. As Mr. Maduro has consolidated power, the opposition has been weakened and divided.

17X02 - VENEZUELA INFLATION RATE

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Mueller and the fate of the US republic

Mr Trump has said any inquiry into his commercial history would cross a “red line”. Mr Mueller is already doing that. He is playing a bold game. People in autocracies should watch him work. This is democracy in action. Some might say that Mr Mueller is putting “America First”. Alas, those two words may get him fired.

Robert Mueller in the Cross Hairs – The New York Times

The reason for Republican reticence is simple: Trump still has 78 percent backing among Republicans, and senators like Flake who have challenged him have lost support. If you’re a Republican senator, I fear that your political interest may be to respond to Trump firing Mueller by calling for an investigation of Hillary Clinton. Governing is hard, so it can feel more rewarding to pretend that Clinton won and scream for her imprisonment. Indeed, Sean Hannity forgot himself and referred to her as President Clinton.

After Nixon fired him, Cox declared: “Whether ours shall continue to be a government of laws and not of men is now for Congress and ultimately the American people.”

That is our challenge now, and I hope we can all rise to it, Republicans and Democrats alike. That means not acting as cheerleaders for Mueller’s ouster and for a national crisis. That means insisting that Mueller’s investigation continue, unimpeded by firings or pardons. That means recognizing that there is something larger than party labels, and that is our adherence to laws and the pursuit of truth.

Robert Mueller Will Never Get to the Bottom of Russia’s Meddling – The New York Times

While Russia’s meddling was a shock in the West, in Russia it was neither surprising nor scandalous. In my recent discussions with Russian foreign policy experts, they have made clear that if Moscow wants to be a world power, on an equal footing with Washington, it should be able and willing to match the United States. Russian leaders believe that Washington interferes in their domestic politics and that the United States intends to orchestrate a regime change in Moscow. So if they take that as given, the Kremlin should be able to similarly meddle and to show the world that it has the capabilities and will to do so. Reciprocal action is, after all, how you gain the respect of your enemies and the loyalty of your allies.

The common sense in Moscow foreign policy circles today is that Russia can regain its great power status only by confronting the United States, not by cooperating with it. Speaking two weeks ago at the Valdai International Discussion Club, President Vladimir Putin declared that post-Communist Russia’s gravest mistake was “putting its trust in the West.” In the 1990s, Boris Yeltsin’s Russia wanted to imitate the West, its values and institutions; today Moscow is focused on mirroring Western policies with respect to Russia, doing to the West what Russians believe the West is doing to them.

And contrary to conventional wisdom, Russia’s craving for global power status is not simply about nostalgia or psychological trauma. It is a geopolitical imperative. Only by proving its capacity to be a 21st century great power can Russia hope to be a real, equal partner with countries like China, which it needs to take it seriously. Believe it or not, from the Russian perspective, interfering in the American presidential election was a performance organized mostly for the benefit of non-American publics.

Although Russia knows that it is vastly weaker than the United States militarily, economically, technologically and in just about every possible other way, the Kremlin still believes that power and weakness are complex concepts today, and that the stronger party doesn’t always win. The Russians see great power rivalries as a game of rock-paper-scissors. What is critical is what kind of power you aspire to or are ready to use: Rock beats the scissors, but it is defeated by paper; paper, of course, has no chance against the scissors.

Trump’s Trade Endgame Could Be the Undoing of Global Rules – The New York Times

It is unclear whether Mr. Trump has the legal authority to pull the United States out of the trade regime governed by W.T.O., or even out of Nafta. Rufus Yerxa, a former top American trade diplomat on the team that negotiated both Nafta and the Uruguay Round of multilateral talks that led to the creation of the W.T.O. in 1995, argues that whatever the legalities, the thought that Mr. Trump may pull the United States out of the trade organization is not credible.

The losses, he said, would be far too steep. Countries would discriminate at will against American products and services. “Everybody in the world could do anything they wanted to do to us,” Mr. Yerxa said. The sprawling supply chains that American companies have laid out across the world since the trade organization came into being would be under threat.

Chad P. Bown, an economist at the Peterson Institute for International Economics, agreed. “It would hurt economic activity much more than in the 1980s,” he said. “So much trade back then was in final goods. Now a lot is in intermediate parts.”

A Strengthening Dollar Could Crash the U.S. Earnings Party – Bloomberg

Nothing, seemingly, can stop the upward march of earnings that’s underpinning the latest leg of the stock market rally. But if anything could halt the climb, it’s the dollar.

But investors should beware of that benefit dissipating as the dollar reverses course. After bottoming in September, it has strengthened 4 percent against a basket of currencies. According to estimates by Goldman Sachs Group Inc., every 10 percent shift in the dollar affects S&P 500 Index earnings per share by $3.

The Upside of Being Ruled by the Five Tech Giants – The New York Times

I have argued that the companies’ size and influence pose a danger. But another argument suggests the opposite — that it’s better to be ruled by a handful of responsive companies capable of bowing to political and legal pressure. In other words, wouldn’t you rather deal with five horse-size Zucks than 100 duck-size technoforces?

The insatiable appetite of digital technology to alter everything in its path is among the most powerful forces shaping the world today. Given all the ways that tech can go wrong — as we are seeing in the Russia influence scandal — isn’t it better that we can blame, and demand fixes from, a handful of American executives when things do go haywire?

The Democratic Civil War Is Getting Nasty, Even if No One Is Paying Attention | The New Yorker

In the wake of Trump’s win, it’s easy to blame Hillary Clinton for being a flawed candidate with a tin ear for politics. Or to rationalize Trump’s unexpected victory as an accident of history. But I haven’t talked with a single Democrat or independent analyst who doesn’t think that the Party remains in serious danger of another electoral catastrophe.

“The caricature of this debate is, Bill Clinton says you have a problem and the numbers people say you don’t,” Jake Sullivan, who served as Clinton’s top policy adviser for the campaign after working with her closely at the Obama State Department, recalled. But it wasn’t that Hillary Clinton’s team disagreed over the problem, he insisted, just over what to do about it: “Everybody recognized we had a huge working-class, non-college white issue. The question was, How do you add up to victory? Do you attack it head-on or by compensating elsewhere? That was the fundamental strategic debate.”

A Post-Obama Democratic Party in Search of Itself – The New York Times

The 44th president left office as one of the most popular in American history. He also left behind a party struggling to find an identity — and to reconnect with voters in time for the 2018 elections.

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CENTRAL BANKS & MONETARY POLICY

New Czech Hike to Set the Pace For European Rate Rises – Bloomberg

Czech policy makers are set to raise borrowing costs for the second time this year and outline the pace of further monetary tightening to counter inflation pressures in one of Europe’s fastest-growing economies.

The Bank of England prepares to jump the gun

The last time the Bank of England raised interest rates, Tony Blair had just stepped down as the British prime minister, and Northern Rock was still a going concern.

The MPC has signalled that rates will very likely go up by a quarter-point on Thursday. On balance, this is an unnecessary rise, though not an egregiously mistaken one. In any case, the committee should make clear it represents only the taking-back of an insurance cut it made last summer in the aftermath of the Brexit referendum. The evidence of growth and underlying inflationary pressure simply do not support the beginning of a sustained campaign of tightening.

The next few months will see more information about what kind of Brexit the UK is heading for. Both from the view of short-term confidence, and the disruption to trade and longer-term productivity growth, that could prove to be highly material information for the conduct of monetary policy.

Fed keeps rates unchanged, remains on road to December hike

The Federal Reserve kept interest rates unchanged on Wednesday and pointed to solid U.S. economic growth and a strengthening labor market while playing down the impact of recent hurricanes, a sign it is on track to lift borrowing costs again in December.

Fed Leaves Rates Unchanged, Cites ‘Solid Rate’ of Economic Growth – WSJ

The Federal Reserve left short-term interest rates unchanged Wednesday, but signaled it would consider lifting them before year’s end amid signs the economy is gaining momentum.

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USA ECONOMY DATA, CITIES AND STATES

White House opioid commission calls for wide-ranging changes to anti-drug policies – The Washington Post

The drug crisis group, led by New Jersey Gov. Chris Christie, recommended drug courts, better education for prescribers and medication-assisted treatment for addiction.

October Was Apparently Pickup Truck Month in the U.S. – Bloomberg

The strong showing by pickups is a positive indicator both for carmakers’ profits and the U.S. economy. Companies added more workers than forecast to U.S. payrolls last month as employment in the construction industry — a sector closely tied to truck sales — climbed to the highest in more than a decade. Automakers also are boosting discounts and benefiting from consumers in Texas continuing to replace vehicles damaged by Hurricane Harvey.

Auto Sales Continued Hot Streak in October – WSJ

The auto industry’s hot streak continued in October with most high-volume car companies posting strong U.S. sales performances, setting the stage for a strong finish in 2017.

America’s Most Popular Type of Beer Is in Free Fall – WSJ

The big three U.S. light-lager brands—Bud Light, Coors Light and Miller Lite—are all losing volume as consumers shift to craft and Mexican import beers as well as to wine and spirits.

The downward slide of American lagers isn’t new. But according to Molson Coors, demand has been even more sluggish than anticipated amid a spate of hurricanes, discounted prices on spirits and changes in consumer behavior.

U.S. factory activity index eases off 13-1/2-year high

A measure of U.S. factory activity retreated from a 13-1/2-year high in October as some of the boost from hurricane-related supply disruptions faded, but continued to point to strengthening manufacturing conditions.

TOP

POSITIONING, INFLECTION, MARKET CALLS

Growth Trouncing Value Most Since Tech Bubble Is Just the Start – Bloomberg

Growth stocks are smashing the return from value shares as the likes of Apple Inc. and Facebook Inc. go from strength to strength. The gap though is still just a blip compared with the peak of the technology bubble.

The spread between the Russell growth index and its value gauge is at its widest in 17 years after a 17 percentage point beat this year. While investors may be disappointed at the lack of opportunities in the value group, the extent of under performance is small compared to levels reached at the March 2000 market top, Marc Chandler, global head of currency strategy at Brown Brothers Harriman, observed in a recent report.

17X02 - GROWTH TOPS VALUE

TOP

COLOR, EARNINGS, SENTIMENT, VALUATIONS

Two More Senior Executives to Exit From Under Armour – WSJ

Under Armour is shedding more of its senior leadership, including its chief marketing officer and the head of its women’s business, as the sportswear company continues to grapple with declining sales.

Buffett’s Streak of ‘Free’ Insurance Money May Be Ending – Bloomberg

As an industry, insurers may incur claims of as much as $120 billion after one of the worst U.S. hurricane seasons on record, according to catastrophe-modeling firm RMS. Travelers Cos. temporarily suspended its share-buyback program while it assessed storm damage. Munich Re, the world’s largest reinsurer, said natural disasters would cause a third-quarter loss.

New York Times Profit Grows With Digital Boost – WSJ

New York Times Co.’s revenue grew 6.1% in the third quarter, powered by growth in subscribers and advertising sales for its digital products.

TOP

REAL ESTATE, HOUSING, REITS, COMMERCIAL

Private Equity Executive Joshua Harris Pays $52 Million for New York Mansion – WSJ

Though the property first listed for $72 million in 2016, the sale still represents the second highest price ever paid for a New York City residential townhouse, according to agent Paula Del Nunzio of Brown Harris Stevens. Financier J. Christopher Flowers paid $53 million for the Harkness mansion on East 75th Street in 2006, setting the current record, according to public records. And earlier this year, art heir David Wildenstein sold his Upper East Side townhouse for $79.5 million to an affiliate of Chinese conglomerate HNA Holdings Group, records show; that property is being used for commercial purposes, Ms. Del Nunzio said.

TOP

ENERGY CRUDE OIL, OIL SANDS, SHALE

Opec cuts help push oil prices to 2-year highs

While doubts remain that the rally will go much further — crude prices fell back in late afternoon trading in London — the move above $60 a barrel has provided much-needed relief to oil companies and producing nations that have been hammered by the downturn.

TOP

GEOPOLITICS, CRIME, TERRORISM

2 Killed, 1 Hurt in Colorado Wal-Mart Shooting – Bloomberg

Witnesses described a frantic scene as customers and employees were forced to hide in the store or flee to the exits. Investigators have not said what led to the shooting, which happened in a busy shopping center that includes restaurants, a movie theater and several other shops.

Saudi-led air strike kills 26 people in Yemen: medics

An air strike by a Saudi-led military coalition killed 26 people at a hotel and an adjoining market in Yemen’s northern Saadah province on Wednesday, according to medics and a Reuters witness.

TOP

TRUMP WORLD

Awaiting Trump’s coal comeback, miners reject retraining

When Mike Sylvester entered a career training center earlier this year in southwestern Pennsylvania, he found more than one hundred federally funded courses covering everything from computer programming to nursing.

He settled instead on something familiar: a coal mining course.

”I think there is a coal comeback,” said the 33-year-old son of a miner.

Despite broad consensus about coal’s bleak future, a years-long effort to diversify the economy of this hard-hit region away from mining is stumbling, with Obama-era jobs retraining classes undersubscribed and future programs at risk under President Donald Trump’s proposed 2018 budget.

Trump has promised to revive coal by rolling back environmental regulations and moved to repeal Obama-era curbs on carbon emissions from power plants.

“I have a lot of faith in President Trump,” Sylvester said.

TOP

SILICON VALLEY, UNICORNS, STARTUPS, VC

Uber-SoftBank Deal In Jeopardy Over Spat About Kalanick’s Role – WSJ

Uber’s effort to close a multibillion-dollar investment by SoftBank is in danger of derailing as co-founder Travis Kalanick tussles with fellow board members over the limits of his power at the ride-hailing giant, people familiar with the matter said.

TOP

ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

Stephen Hawking says he fears artificial intelligence will replace humans – Cambridge News

Prof Hawking said that he believes artificial intelligence (AI) will eventually reach a level where it will essentially be a “new form of life that will outperform humans” in an interview with WIRED magazine.

He said: “I fear that AI may replace humans altogether. If people design computer viruses, someone will design AI that improves and replicates itself. This will be a new form of life that outperforms humans.”

TOP

MISCELLANEOUS

Houston Astros Beat Los Angeles Dodgers 5-1 to Win World Series – Bloomberg

Playing for a city still recovering from Hurricane Harvey, and wearing an H Strong logo on their jerseys, the Astros brought home the prize that had eluded them since they started out in 1962 as the Colt .45s.

TOP

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