Macro Links Oct 4th – Michigan and Wisconsin

Macro Links Oct 4th – Michigan and Wisconsin

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RUSSIA TARGETING SWING STATES

Exclusive: Russian-linked Facebook ads targeted Michigan and Wisconsin – CNNPolitics

A number of Russian-linked Facebook ads specifically targeted Michigan and Wisconsin, two states crucial to Donald Trump’s victory last November, according to four sources with direct knowledge of the situation.

Michigan saw the closest presidential contest in the country — Trump beat Democratic nominee Hillary Clinton by about 10,700 votes out of nearly 4.8 million ballots cast. Wisconsin was also one of the tightest states, and Trump won there by only about 22,700 votes. Both states, which Trump carried by less than 1%, were key to his victory in the Electoral College.

House Russia Probe Targets Google’s YouTube and Gmail – Bloomberg

Google’s most vulnerable property might be YouTube. The world’s largest digital-video portal is a glut of content. Russia Today, a Kremlin-tied media outlet and a focus of Congressional investigators, has YouTube channels with more than 2.5 million subscribers. Google sells the network, known as RT, in its package of premium ad inventory, which commands higher rates because of its large audience. The internet giant said on Tuesday it recently pulled RT from this program, known as Google Preferred.

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PUERTO RICO RESPONSE

Trump Lobs Praise, and Paper Towels, to Puerto Rico Storm Victims – The New York Times

President Trump ventured on Tuesday to a storm-ravaged American island territory where residents have felt neglected by their government, telling Puerto Rican officials that they should be proud that only 16 people were known to have died in Hurricane Maria.

“Sixteen versus in the thousands,” Mr. Trump said, comparing the storm’s certified death toll to the 1,833 killed in 2005 by Hurricane Katrina. “You can be very proud of all of your people, all of our people working together. Sixteen versus literally thousands of people. You can be very proud.”

Trump Says The Hurricane That Crushed Puerto Rico Wasn’t A “Real Catastrophe” Like Katrina

Trump delivered a bizarre, train-of-thought speech during his first stop, a meeting with military and local leaders, repeatedly applauding the response to the disaster and congratulating his staff. People who live on the island are still widely without electricity, running water, telecommunications, and access to basic aid.

‘Incredible.’ ‘Great.’ ‘Unbelievable.’ In storm-torn Puerto Rico, Trump focuses on the positive – The Washington Post

At one brief stop at a church, Trump told the gathering that they no longer needed flashlights, and he tossed rolls of paper towels into the crowd as if they were basketballs. He took a helicopter tour, visited a ship, posed for selfies — and then left an hour earlier than scheduled.

Trump was upbeat and, at times, playful during the visit, often sounding more like an athletic coach congratulating his team after a winning season than a president addressing American citizens at a moment of crisis.

Aid Is Getting to Puerto Rico. Distributing It Remains a Challenge. – The New York Times

Two weeks after Hurricane Maria split apart Puerto Rico, basic aid is arriving in San Juan and reaching more remote towns and barrios aching for assistance. But some families say that they are still receiving only meager portions, and ill-equipped and overburdened local mayors have been left to figure out how to haul supplies from regional drop-off points to their storm-ravaged towns. The death toll from the hurricane rose to 34, Gov. Ricardo Rosselló said on Tuesday.

Puerto Rican schoolchildren could be out of class for months – The Washington Post

The island is home to one of the nation’s largest and poorest school systems, with 347,000 students in more than 1,100 schools scattered across the island. The extended school closures may not only delay education for schoolchildren but also sever a lifeline for students who rely on schools for free lunches and clean drinking water.

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LAS VEGAS SHOOTING

Why this Onion story goes viral after every mass shooting – The Washington Post

The publication saw one of its largest days of online traffic ever on Monday, according to a spokeswoman. One of its most popular stories of the day was a story that it first published about a mass shooting more than three years ago: ‘No Way To Prevent This,’ Says Only Nation Where This Regularly Happens’ reads the headline of the piece.

The site republishes the story after mass shootings, changing only the dates, the location of the violence, and the number of individuals killed.

17V04 - ONION HEADLINE

Bannon warns: “end of everything” if Trump supports gun controls – Axios

I asked Steve Bannon whether he could imagine Trump pivoting to the left on guns after the Las Vegas massacre. “Impossible: will be the end of everything,” Bannon texted. When asked whether Trump’s base would react worse to this than they would if he supported an immigration amnesty bill, Bannon replied: “as hard as it is to believe actually worse.”

Nine Rounds a Second: How the Las Vegas Gunman Outfitted a Rifle to Fire Faster – The New York Times

An arsenal of firearms was recovered from Mr. Paddock’s hotel room, said Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department. At least one rifle in Mr. Paddock’s suite had a “bump stock,” a device used to retrofit a semiautomatic firearm to make it function like a fully automatic weapon, according to a law enforcement official who requested anonymity to divulge details of the investigation.

Las Vegas Gunman Planned ‘Extensively’ – WSJ

The gunman behind Sunday night’s massacre on the Las Vegas Strip planned his rampage carefully, stocking his 32nd-floor hotel suite with an arsenal of pricey, high-powered rifles and multiple cameras, authorities said Tuesday.

Stephen Paddock set up three cameras both inside and outside his hotel room, including one located on a service cart and another lodged inside the peephole of his hotel door so he could see into the hallway, police said Tuesday.

Las Vegas Shooter Stephen Paddock Wired $100,000 to Philippines Last Week – NBC News

Las Vegas shooter Stephen Paddock wired $100,000 to an account in his live-in girlfriend’s home country, the Philippines, in the week before he unleashed the worst mass shooting in modern U.S. history, according to multiple senior law enforcement officials.

But while officials have confirmed that Marilou Danley was in the Philippines on Sunday when Paddock opened fire on a crowd attending a country music festival on the Las Vegas Strip, it was not known whether the money was for her or her family or for another purpose.

Stephen Paddock, Las Vegas Suspect, Was a Gambler Who Drew Little Attention – The New York Times

He was a high-stakes gambler recognized in the casinos of Nevada. He dabbled in real estate investments in Texas. His last known full-time employment was 30 years ago. He was twice divorced. He had a pilot’s license and had owned two single-engine planes.

While his motive for the mass shooting outside a Las Vegas casino on Sunday night is unknown, details of Stephen Paddock’s history pointed to an unmoored and highly unconventional life. From his neighbors in a quiet retirement community in Mesquite, Nev., he drew little attention, unless it was for his extreme propensity to keep to himself. He displayed no strong religious or political views, his relatives said, and was not known for angry outbursts.

But he was the son of a bank robber who ultimately escaped from prison and spent most of the 1970s on the F.B.I.’s most wanted list. His girlfriend, sought for questioning by law enforcement officials after the shooting, had passed through Tokyo, officials said.

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GOP TAX PLAN

The GOP Tax Plan Is Already Hitting Speed Bumps – Bloomberg

The White House is showing “softness” on ending a $1.3 trillion federal tax deduction filers get for their state and local taxes, Senator Bob Corker said Monday, warning that it raises questions about the GOP’s “intestinal fortitude” and could imperil a tax overhaul.

Corker, who insists he won’t vote for a tax bill that adds a penny to the deficit, said in an interview that he’s concerned about the early signals from the White House. On Friday — two days after the tax framework was rolled out — National Economic Council Director Gary Cohn said that ending the state and local tax break was negotiable.

Republicans Are Reconsidering Full Repeal of State and Local Tax Deduction – The New York Times

Preserving the deduction entirely would raise the cost of the Republican tax plan by more than $1 trillion over 10 years and another $2.3 trillion over the following decade, according to an analysis by the Tax Policy Center, a nonpartisan think tank. The analysis has not calculated for alternate scenarios, such as higher taxes on the wealthiest Americans, but anything less than a full repeal would mean less money for federal coffers and could make it more difficult for Republicans to slash corporate tax rates as low as they are proposing.

Two Wall Street giants criticize Trump tax plan

President Donald Trump’s tax reform plan came under new criticism on Tuesday from two towering Wall Street figures, including billionaire investor Warren Buffett, who called into question a Republican drive to slash the U.S. corporate rate.

With the White House and top Republicans in Congress already on the defensive over claims the plan would not cut taxes for many middle-class Americans, Buffett and BlackRock Inc Chief Executive Larry Fink suggested in separate interviews that the corporate rate may not have to be cut as deeply as proposed.

Warren Buffett says eliminating the estate tax is a ‘terrible mistake’

“If they pass the bill they’re talking about, I could leave $75 billion to a bunch of children and grandchildren and great-grandchildren. And if I left it to 35 of them, they’d each have a couple billion dollars,” Buffett said. He then asked rhetorically, “Is that a great way to allocate resources in the United States?”

Warren Buffett trolls Trump and GOP on tax cuts – Oct. 3, 2017

Buffett said that his Berkshire Hathaway holding company owns 60 or 70 businesses, but none of them are “noncompetitive in the world because of the corporate tax rate.” He noted that American businesses earn “extraordinary” returns compared with history and other countries.

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CATALONIA VOTE

Spain’s king censures Catalonia in rare political intervention

The mere fact that King Felipe was moved to give a speech is a sign of the gravity of the political challenge now facing Spain and Catalonia. By tradition, Spain’s monarch makes a televised address only once a year, at Christmas, and does not intervene in day-to-day politics.

In his address, Felipe said the Catalan government had “systematically violated the law, demonstrating a disloyalty that is inadmissible” and “undermined the harmony and coexistence in Catalan society”.

Spanish King Says Catalan Leaders Have ‘Undermined Harmony’ as Protests Swell in Restive Region – WSJ

The king of Spain accused leaders in the region of Catalonia of pushing the country toward a constitutional crisis on a day when hundreds of thousands of Catalans mobilized to protest against the actions of Spanish police.

Catalan president urges EU to mediate after independence vote

The Catalan government said it wanted to avoid a “traumatic break” from Spain and appealed to the EU to help mediate with Madrid, in signs it was holding back from an early declaration of independence after Sunday’s referendum on secession.

Catalan president Carles Puigdemont said that after Sunday’s vote, when 90 per cent of the 2.3m ballots cast were in favour of independence, Catalonia now had the right to be free from Spain. But he hinted that this would not happen immediately.

“There is no button to push for independence, it does not exist,” said Mr Puigdemont at a press conference. He called on the EU to help broker negotiations: “It is not a domestic matter . . . It’s obvious that we need mediation.”

Catalans Who Did Not Vote (More Than Half) Ask: What Now? – The New York Times

In the turbulence over Sunday’s referendum, there had been surprisingly little public debate about the practical effect of declaring independence. Spain’s heavy-handed response made the referendum into a battle over the right to vote, an issue over which there is far greater consensus in Catalonia. With the referendum behind them, Catalans have begun to ask: What just happened? And what happens now?

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IRAN DEAL, NORTH KOREA, IRAQ

Mattis Contradicts Trump on Iran Deal Ahead of Crucial Deadline – The New York Times

Days before President Trump has to make a critical decision on whether to hold up the Iran nuclear deal, Defense Secretary Jim Mattis openly split with him on abandoning the agreement, the second senior member of the president’s national security team to recently contradict him.

Mr. Mattis told senators on Tuesday that it was in America’s interest to stick with the deal, which Mr. Trump has often dismissed as a “disaster.”

“Absent indications to the contrary, it is something that the president should consider staying with,” Mr. Mattis told members of the Senate Armed Services Committee after being repeatedly pressed on the issue.

U.S. Defense Secretary Mattis suggests sticking with Iran nuclear deal

U.S. Defense Secretary Jim Mattis said on Tuesday the United States should consider staying in the Iran nuclear deal unless it were proven that Tehran was not abiding by the agreement or that it was not in the U.S. national interest to do so.

A Nuclear Deal With North Korea May Be Tillerson’s Mission Impossible – The New York Times

For those worried about a nuclear war between North Korea and the United States, the weekend disclosure by Secretary of State Rex W. Tillerson that the two nations were in direct communication was a rare glimmer of hope that a diplomatic resolution to the standoff might be possible.

But President Trump’s remarkable public rebuke of Mr. Tillerson’s efforts — he said the nation’s top diplomat was “wasting his time” — was a sharp reminder of how difficult it will be for the two sides to reach an agreement even if they begin serious talks.

Apart from conflicting messages from President Trump and his aides about their willingness to enter negotiations, the hurdles to a meaningful dialogue with North Korea are high, and it will be even more difficult to reach a deal with the North than it was with Iran, analysts said.

After Threat of War, Iraq and Kurds Lower the Temperature – The New York Times

The world could be excused for thinking that another war was about to break out in Iraq. After Iraq’s Kurds voted in favor of independence, they took to the streets, waving flags and honking horns, and loudly scoffing at Baghdad’s threats of military action. Iraq shut down international flights into the region and sent its gendarmes to the Kurdish borders, while its neighbors threatened economic and military intervention.

More than a week later, however, the Kurds have taken no steps to actually declare independence, and Baghdad and its allies have done nothing to make good on their threats of intervention. The referendum on independence was a seminal moment in the Kurds’ long struggle for a homeland, but neither the Kurds nor Baghdad seem determined to force that moment to a crisis.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Credit Markets Rally Sends Hedging Costs to Another Record Low – Bloomberg

For U.S. credit markets, the bullish business cycle is trumping the hawkish monetary policy outlook. The latest sign: Markit’s CDX North American Investment Grade Index — a basket of credit default swaps on 125 companies — fell to as low as 54.2 basis points, a fresh post-crisis trough. That bests the 54.63 basis points notched the previous day — itself the tightest spread since 2011 on a closing basis.

17V04 - CREDIT RALLYING

Leverage on US LBOs Hits Highest Level Since Financial Crisis – LeveragedLoan.com

Leverage on large U.S. LBOs crept to 6:1 in 2017’s third quarter, the highest it’s been since the financial market meltdown of 2007, according to LCD.

That 6x number is of particular interest to the global leveraged finance market.

Federal regulators, in an effort to shore up the financial markets after the crisis, in 2013 issued guidance saying that loans with a debt/EBITA ratio in excess of 6x “raises concerns.” This prompted traditional corporate lenders – banks regulated by the Fed – to proceed cautiously regarding highly leveraged transactions. This cautiousness, in turn, has helped open up the direct lending/private credit market, where non-regulated asset managers increasingly are stepping in to provide often-riskier credits to leveraged borrowers.

17V04 - US LARGE CORPORATE LBOs

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POSITIONING, INFLECTION, MARKET CALLS

A $1 Trillion Fund Doubts Dollar Rally Will Last – Bloomberg

Dollar skeptics are extending their bets outside the U.S., even as the greenback rallies. Amundi SA, which oversees more than $1.1 trillion, prefers to wager on European currencies, including the euro, while Schroder Investment Management Ltd. is putting its money into emerging markets. Eaton Vance Corp. in Boston says improving growth outside the U.S. could see the dollar resume weakening as it has for most of the year.

Why Emerging Markets Are Popping Again Despite the Risks – WSJ

The amount of money flowing into emerging markets is set to top $1 trillion in 2017, the biggest flow of funds in three years, as economic growth in these countries and low returns in the developed world bump up demand for assets in many developing nations.

Nonresident capital flows to emerging markets are likely to rise to $1.1 trillion in 2017 and edge up to $1.2 trillion in 2018, according to the Institute of International Finance, a trade group that represents more than 500 of the world’s biggest banks, hedge funds and other financial firms.

17V04 - EMERGING MARKET REBOUND

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Rovio Entertainment: Angry Birds IPO fails to take off – Oct. 3, 2017

Shares in Rovio Entertainment, the Finnish company behind Angry Birds, traded as much as 5% below their initial price of €11.50 ($13.50) on Tuesday. The mobile gaming firm, which listed on the Nasdaq Helsinki, is now valued at just over $1 billion.

Snap looks to AR to restore Wall Street’s faith

Disappearing message company Snap sought to take back a lead in augmented reality on Tuesday, as it tries to bolster Wall Street’s fading confidence and outrun giant rivals including Facebook.

This year, Apple, Google and Facebook have all announced tools for developers to build AR experiences for their services, intensifying pressure on Snap. The company’s shares, at $14.70, are 14 per cent below their IPO price, and roughly half the peak they touched after trading began in March.

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CREDIT, YIELD, BUYBACKS, CORPORATES

We Can Finally Identify One Of The Largest Holders Of Puerto Rican Debt

The Baupost Group, a Boston-based hedge fund managed by billionaire Seth Klarman, owns nearly a billion dollars of Puerto Rican debt.

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DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

Warren Buffett’s Berkshire Bets Big on America’s Truckers, Buys Stake in Pilot Flying J – WSJ

Warren Buffett’s Berkshire Hathaway is making a bet on American truckers with a deal to acquire nearly 40% of the operator of Pilot and Flying J travel centers.

Laurene Powell Jobs is buying a big stake in Wizards, Capitals sports empire – The Washington Post

Laurene Powell Jobs, a billionaire philanthropist, entrepreneur and president of the Emerson Collective, is buying a significant stake in Monumental Sports & Entertainment, a sprawling $2.5 billion complex that includes the NBA Wizards, NHL Capitals and Capital One Arena, people familiar with the deal said.

Bruce Sherman: The Real Money Man Behind Derek Jeter’s Marlins Deal – WSJ

When Derek Jeter emerged as the front-runner to take over the Miami Marlins, a who’s who of South Florida billionaires came up in the chatter about his possible backers. One name that didn’t get mentioned much was the guy who finally made the deal: retired money manager Bruce Sherman.

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REAL ESTATE, HOUSING, REITS, COMMERCIAL

Apartment Slowdown Spreads to Less Expensive Cities – WSJ

A chill that started in the New York and San Francisco rental-apartment markets last year is spreading to less expensive cities. Several metros that enjoyed strong rent growth last year dropped off sharply in the third quarter of 2017.

Higher-flying markets slowed as well. Sacramento, Calif., experienced annual rent growth of 6.9% in the third quarter, down from 10.5% last year, while Las Vegas posted growth 5.8% in the third quarter, compared with 6.5% a year earlier, according to RealPage.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Mark Yusko accepts Buffett’s second wager against hedge funds

Warren Buffett already won once betting passive investing in a simple index fund can beat a basket of hedge funds over 10 years. Now a new challenger is stepping up. The “Oracle of Omaha” told CNBC’s Becky Quick on Tuesday that he is willing to do another bet on active versus passive as long as anybody wants to put up “a significant percentage of their net worth” on the wager.

Morgan Creek Capital’s founder and chief investment officer, Mark Yusko, accepted Buffet’s offer on Tuesday. His firm manages a fund of hedge funds and also does direct and private investments.

The investment manager said he is willing to accept the exact terms as Buffett’s previous bet with hedge fund manager Ted Seides. Yusko said he has not talked or reached out to Buffett yet.

Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag – Bloomberg

Instead of speculating on bitcoin, the smart money has figured out that one of the surest ways to get rich quickly with cryptocurrencies is to be in early on initial coin offerings.

Hedge funds are proving to be first among equals when it comes to digital token sales by technology startups, receiving preferential discounts and terms and then often cashing out. While legal, the maneuver is drawing comparisons to some of the eyebrow-raising practices that took place during the IPO heyday of the 1990s, when many preferred investors would quickly resell shares for big profits.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

There’s a New Energy Term in Town: the West Texas Mullet – Bloomberg

The oil market is starting to emulate the flowing locks of Andre Agassi at the 1987 Wimbledon Championships, or Billy Ray Cyrus in the Achy Breaky Heart era. The futures curve for West Texas Intermediate crude has developed into a “mullet-like structure,” RBC Capital Markets LLC analysts including Mike Tran said in a note. Near-term contango shows a market that is still oversupplied, while the backwardated portion of the curve shows that long-dated futures have been driven down by shale producer hedging, according to RBC.

17V04 - WT MULLET

Oil-Price Forecasts Fall for Fifth Month in a Row – WSJ

Banks cut their oil-price forecasts for a fifth consecutive month despite a recent price rally amid concerns that the oversupply of crude will grow next year.

A poll of 15 investment banks surveyed by The Wall Street Journal at the end of September predicted that Brent crude, the international benchmark, will average $53 a barrel next year, down $1 from the August survey. The banks expect West Texas Intermediate, the U.S. oil gauge, to average $50 a barrel in 2018, also down $1 from the previous survey.

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COMMODITIES AGRICULTURE & SOFTS

India’s Coffee Output Seen Climbing to Record, Coffee Board Says – Bloomberg

Coffee output in India, Asia’s third-largest producer, is estimated to climb to a record high this year, the state-run Coffee Board said.

Production may increase 12 percent to 350,400 metric tons in 2017-18 from a year earlier, the board said in an emailed statement on Tuesday. The figure includes 103,100 tons of arabica and 247,300 tons of the robusta variety, it said. The rise in the estimate is mainly due to the officials surveying new areas under the crop in traditional growing regions, the board said, without elaborating.

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FRONTIER MARKETS

‘We Don’t Exist’: Life Inside Mongolia’s Swelling Slums – The New York Times

Ms. Dashnyam, 55, was once an ambitious college graduate who dreamed of owning a farm and getting rich. But a scarcity of affordable housing has pushed her and thousands of low-income residents to the fringes of Ulan Bator, the city of 1.4 million that is Mongolia’s capital, where they struggle for basic necessities like food and clean water.

“Nobody cares about us,” said Ms. Dashnyam, who makes about $3 a day and says she has been unable to obtain government-subsidized housing. She was laid off from a job in farming. “We don’t exist.”

Obesity Was Rising as Ghana Embraced Fast Food. Then Came KFC. – The New York Times

KFC’s expansion here comes as obesity and related health problems have been surging. Public health officials see fried chicken, french fries and pizza as spurring and intensifying a global obesity epidemic that has hit hard in Ghana — one of 73 countries where obesity has at least doubled since 1980.

In that period, Ghana’s obesity rates have surged more than 650 percent, from less than 2 percent of the population to 13.6 percent, according to the Institute for Health Metrics and Evaluation, an independent research center at the University of Washington.

The causes of obesity are widely acknowledged as complex — involving changing lifestyles, genetics, and, in particular, consumption of processed foods high in salt, sugar and fat.

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EMERGING MARKETS

Property Investors Bet on Emerging-Market Mall Culture – WSJ

Retail development in the U.S. has slowed to a crawl as consumers switch to online shopping. But in emerging markets it is a different story. Development pipelines are packed with shopping centers, outlet malls and other retail properties in such countries as India, China, Malaysia, Indonesia and Colombia.

Indeed, retail is one of the most attractive property types in emerging markets for international investors who are showing more interest in these markets now that growth rates are increasing and many governments are implementing structural reforms.

Part of the reason retail development is hotter in emerging markets than the U.S. is simply because U.S. is over-stored, as experts in the retail business put it. Experts say there is about 25 square feet of retail space per capita in the U.S.

Retail space is tiny in emerging markets by comparison. There is roughly 1 to 2 square feet of retail space per capita in Mexico and India, experts say.

Retail experts say that this existing supply isn’t enough to serve the growing consumer classes in many of these countries. “As emerging middle classes continue to gain household wealth, the natural extension of that is they will be interested in consumption,” Mr. Rosenberg said.

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CANADA, AUSTRALIA, NEW ZEALAND

26 Recession-Free Years Hide a Darker Picture for Australia – Bloomberg

The global crown for the longest stretch of uninterrupted economic growth is within sight for Australia. But it’s limping to the line as policy paralysis weighs on the nation’s prospects.

Twenty-six years without recession have put Australia within two years of overtaking the Netherlands’ record growth streak and government, central bank and economist forecasts all suggest it’ll take the mantle. After all, the economy has a head start with 2.5 percent growth virtually baked in — 1.5 percent from population gains that are among the developed world’s quickest and 1 percent from resource exports feeding Asia’s giant economies.

Yet the reliance on rapid immigration is straining infrastructure, while mining profits fuel riches for stakeholders but do little for the vast majority of Australians living in major cities. Meantime, wages are barely growing, households carry some of the world’s heaviest debt loads, and productivity gains from the economic reforms of the 1980s and early 1990s have petered out.

There’s been no major economic reform since the turn of the century, with just about every attempt reversed or cannibalized by toxic politics. And the impact is starting to show. Just when the economy needs growth drivers outside of mining, a slide in global rankings for innovation and education suggest living standards could decline. The miracle economy that shrugged off the global recession is turning mediocre.

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BREXIT, SCOXIT, LONDON, UK ECONOMY

Boris Johnson Takes Center Stage in U.K. Leadership Shadow Play – The New York Times

Mr. Johnson’s jovial, bumbling persona belies a ferocious ambition, and, after weeks of cabinet leaking, backstabbing and politicking over Brexit, a battle to succeed Mrs. May is emerging from the shadows.

The conflict has been sharpened by the newfound success of Jeremy Corbyn, the leader of the Labour Party, which held an upbeat conference last week. With his reputation for authenticity, his clear anti-austerity message and his left-wing agenda, Mr. Corbyn has appealed to many younger voters and alarmed the Tories, who are wondering how to compete.

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EUROPE

EU to hit Amazon with bill for Luxembourg back taxes

Brussels will hit Amazon on Wednesday with a bill for Luxembourg back taxes worth several hundred million euros in the latest fallout from the EU crackdown on tax avoidance by big multinationals.

The European Commission’s move, confirmed by several people familiar with the case, comes on the heels of Apple’s record €13bn bill for Irish back taxes last year, which prompted a fierce political backlash from Washington.

French Parliament Approves Sweeping Counterterrorism Law – The New York Times

The French government on Tuesday moved a significant step closer to making permanent some of the emergency measures put in place after the terrorist attacks of 2015, expanding the powers of the security forces to combat terrorism in ways that critics say may also curtail civil liberties.

The legislation, approved by a wide margin in the lower house of the French Parliament, codifies measures like search and seizure and house arrest without judicial review — steps once considered exceptional — and effectively institutionalizes a trade-off between security and personal liberty.

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GEOPOLITICS, CRIME, TERRORISM

Bold Attack Near Airport Rattles Kashmir – The New York Times

Three militants, who the Indian authorities said had slipped in from neighboring Pakistan, attacked a paramilitary camp near the airport, setting off a prolonged gun battle that lasted for hours and shut down the airport for the better part of the day.

It was the boldest strike in recent months, and though government troops eventually overpowered the militants and killed them all, the attack raised troubling questions about the airport’s level of security.

Iranian Chess Player, Shunned for Refusing to Wear Hijab, Will Play in U.S. – The New York Times

A female chess champion from Iran has joined the United States Chess Federation, months after learning that she was officially barred from playing for her homeland because she refused to wear a head scarf.

“Iran wasn’t letting her play in certain tournaments that she needs federation approval to play in, such as world champion cycles or world juniors,” Alejandro Ramirez, her team coach at St. Louis University, which she now attends, said on Tuesday. “Of course, America is not going to have a problem with that.”

Syrian Soldier Is Guilty of War Crime, a First in the 6-Year Conflict – The New York Times

A Swedish court sentenced a government soldier, who is now a refugee, for violating the dignity of a corpse in Syria. The ruling, issued last week in Sweden, is a landmark event, legal experts and human rights advocates say, the first conviction in any court of anyone from the Syrian government’s side for crimes committed in the multisided war.

It offers a glimmer of hope that courts outside Syria can hold at least some war criminals accountable on all sides of a conflict that has claimed nearly half a million lives, even now that Mr. Assad is looking more and more likely to stay in power.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

IRS awards multimillion-dollar fraud-prevention contract to Equifax – POLITICO

Lawmakers on both sides of the aisle blasted the IRS decision.

“In the wake of one of the most massive data breaches in a decade, it’s irresponsible for the IRS to turn over millions in taxpayer dollars to a company that has yet to offer a succinct answer on how at least 145 million Americans had personally identifiable information exposed,” Senate Finance Chairman Orrin Hatch (R-Utah) told POLITICO in a statement.

The committee’s ranking member, Sen. Ron Wyden (D-Ore.), piled on: “The Finance Committee will be looking into why Equifax was the only company to apply for and be rewarded with this. I will continue to take every measure possible to prevent taxpayer data from being compromised as this arrangement moves forward.”

Yahoo says all three billion accounts hacked in 2013 data theft

Yahoo on Tuesday said that all 3 billion of its accounts were hacked in a 2013 data theft, tripling its earlier estimate of the size of the largest breach in history, in a disclosure that attorneys said sharply increased the legal exposure of its new owner, Verizon Communications Inc.

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PROPAGANDA, CORRUPTION, AUTHORITARIANISM

Pence’s chief of staff floats ‘purge’ of anti-Trump Republicans to wealthy donors – POLITICO

“Just imagine the possibilities of what can happen if our entire party unifies behind him? If — and this sounds crass — we can purge the handful of people who continue to work to defeat him,” Ayers said, according to an audio recording of the remarks obtained by POLITICO.

This Is What It Looks Like When the President Asks People to Snitch on Their Neighbors

In April, the Trump Administration launched what it called the Victims of Immigration Crime Engagement (VOICE) hotline, with a stated mission to “provide proactive, timely, adequate, and professional services to victims of crimes committed by removable aliens.” But internal logs of calls to VOICE obtained by Splinter show that hundreds of Americans seized on the hotline to lodge secret accusations against acquaintances, neighbors, or even their own family members, often to advance petty personal grievances.

The logs—hundreds of which were available for download on the Immigrations and Customs Enforcement web site despite containing extremely sensitive personal information—call to mind the efforts of closed societies like East Germany or Cuba to cultivate vast networks of informants and an atmosphere of fear and suspicion.

Ecuador’s Vice President Is Jailed in Bribery Investigation – The New York Times

A scandal involving a Brazilian construction giant has widened with the jailing of Ecuador’s vice president as part of an investigation into accusations of bribery.

The authorities ordered Vice President Jorge Glas, 48, held in pretrial detention on Monday night and froze his assets. The case relates to Odebrecht, an international construction company, which admitted last year to playing a role in one of the world’s largest bribery rings. The case implicated governments throughout Latin America.

Egypt Expands Crackdown on Gay and Transgender People – The New York Times

At least 34 people have been arrested in Egypt as part of an expanding crackdown on the gay and transgender community following a rock concert last month when audience members waved a rainbow flag.

The crackdown has been fueled by social media, where images of the flag-waving were widely shared, and by dating apps and other websites, which the Egyptian police have used to entrap suspected gay and transgender people, activists and officials say.

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TRUMP WORLD

Hedge fund billionaire flew top Mnuchin aide on private jet to Palm Beach – The Washington Post

Treasury Secretary Steven Mnuchin’s top aide flew on a hedge fund billionaire’s private jet to Palm Beach, Fla., several months ago, people familiar with the trip said, the latest example of senior Trump administration officials using luxury air travel even though it often raises red flags with ethics officials.

Jared Kushner personal email redirected to Trump Organization after reports

Records show the personal email Jared Kushner used for White House business was redirected to a Trump Organization computer after scrutiny intensified.

The move, made just days after Kushner’s use of a personal email account first became public, came shortly after special counsel Robert Mueller asked the White House to turn over records related to his investigation of Russia’s interference in the 2016 election and possible collusion with Trump associates. It also more closely intertwines President Trump’s administration with his constellation of private businesses.

Trump Put Ivanka and Jared In The White House After Past Presidents Were Told it Was Unlawful

Breaking with decades of precedent, a Justice Department lawyer dismissed anti-nepotism guidelines that denied four former presidents from hiring family members in order to grant President Donald Trump the “freedom” to name son-in-law Jared Kushner to a top White House job.

Legal memos issued during four previous presidencies stated it was unlawful for presidents to hire family members, but Deputy Assistant Attorney General Daniel Koffsky changed the department’s longstanding opinion on January 20, paving the way for Trump to hire Kushner and eventually daughter Ivanka Trump.

Past presidents have made attempts to name family members to commissions and posts before. Obama attempted to name his half-sister to a fellowship commission and his brother-in-law to a fitness commission in 2009, according to The Hill, but Obama was advised against doing so by then acting assistant attorney general David Barron.

Mueller Tasks an Adviser With Getting Ahead of Pre-Emptive Pardons – Bloomberg

Acting as Mueller’s top legal counsel, Dreeben has been researching past pardons and determining what, if any, limits exist, according to a person familiar with the matter. Dreeben’s broader brief is to make sure the special counsel’s prosecutorial moves are legally airtight. That could include anything from strategizing on novel interpretations of criminal law to making sure the recent search warrant on ex-campaign adviser Paul Manafort’s home would stand up to an appeal.

“He’s seen every criminal case of any consequence in the last 20 years,” said Kathryn Ruemmler of Latham & Watkins LLP, who served as White House counsel under President Barack Obama. “If you wanted to do a no-knock warrant, he’d be a great guy to consult with to determine if you were exposing yourself.”

John Kelly blocking Rep. Dana Rohrabacher from talking to Trump – Business Insider

California Rep. Dana Rohrabacher, a Republican known for his fondness of the Russian government and ties to WikiLeaks founder Julian Assange, said he is unable to even speak to President Donald Trump due to barriers put in place by White House Chief of Staff John Kelly.

E.P.A. Chief’s Calendar: A Stream of Industry Meetings and Trips Home – The New York Times

The calendar of Scott Pruitt, obtained through the Freedom of Information Act, shows fine dining with officials from companies he regulates but few meetings with environmentalists.

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ELECTORAL POLITICS

John McCain: SCOTUS Must Create Partisan Gerrymandering Rule | Time.com

Sens. John McCain and Sheldon Whitehouse doubled down on their bipartisan effort encouraging the U.S. Supreme Court to create a new standard for determining the constitutionality of partisan gerrymandering.

The Republican and Democratic senators reaffirmed their efforts Tuesday as the highest court in the U.S. heard oral arguments for a key case that could determine the future of partisan gerrymandering in the U.S. Gerrymandering is the drawing of electoral district lines to favor typically the party in power.

“The Court can clean up a cause of America’s crisis in confidence in our democracy, protect our elections from wildly partisan ‘bulk’ gerrymandering, and return control of our elections to the people,” McCain and Whitehouse said in a joint statement on Tuesday. “We hope the Court will.”

Kennedy’s Vote Is in Play on Voting Maps Warped by Politics – The New York Times

Justice Anthony M. Kennedy has long been troubled by extreme partisan gerrymandering, where the party in power draws voting districts to give itself a lopsided advantage in elections. But he has never found a satisfactory way to determine when voting maps are so warped by politics that they cross a constitutional line.

After spirited Supreme Court arguments on Tuesday, there was reason to think Justice Kennedy may be ready to join the court’s more liberal members in a groundbreaking decision that could reshape American democracy by letting courts determine when lawmakers have gone too far.

TOP

SCANDALS, LAWSUITS, FINES, REGULATORY

Wells Fargo accused of lying to Congress about auto insurance scandal – Oct. 3, 2017

Wells Fargo was just accused of lying to Congress last year by failing to disclose a brewing scandal in the bank’s auto insurance business. The startling allegation came from Senator Sherrod Brown on Tuesday during a Senate hearing on Wells Fargo’s various scandals.

“The company pure and simple lied to this committee — and lied to the public,” said Brown, the ranking Democrat on the Senate Banking Committee.

Elizabeth Warren to Wells Fargo CEO: ‘You should be fired’ – Oct. 3, 2017

Senator Elizabeth Warren accused Wells Fargo CEO Tim Sloan of trying to cover up the bank’s creation of millions of phony accounts and said he deserves to get fired.

“You enabled this fake-account scandal. You got rich off it, and then you tried to cover it up,” Warren said during a fiery exchange Tuesday at a hearing of the Senate Banking Committee.

Wells Fargo has uncovered at least 3.5 million potentially fake accounts, which the bank has blamed on a corrupt culture hungry for sales. Sloan was installed a year ago after CEO John Stumpf was ousted over the scandal.

TOP

SILICON VALLEY, UNICORNS, STARTUPS, VC

Uber board truce paves way for SoftBank deal

Uber’s board has voted to approve a sweeping governance overhaul that will tip the balance away from founding investors including former chief executive Travis Kalanick, opening the way for an investment from SoftBank that could be worth more than $10bn.

The changes, which represent a compromise among deeply divided board members, stopped short of barring Mr Kalanick from ever returning to lead the company, a condition that some members had discussed. However the board did agree to strip all “super-voting” shareholders of their extra votes, a change that will shift voting power to more recent investors. These changes will take effect only if the SoftBank deal closes.

The board also agreed to make Uber a public company by the end of 2019, the most definitive declaration yet of how soon the company might move towards an initial public offering.

Uber: tank traps

It is the sheer number of fronts that should unnerve Uber investors. Not all of these grab headlines. Regular riders in its big markets can be ignorant of just how precarious Uber’s position is. Yet if it is unsuccessful at grabbing or maintaining the leading position internationally, its $70bn valuation falls apart.

TOP

AUTOS, ELECTRIC, SELF-DRIVING

Ford to cut costs $14 billion, invest in trucks, electric cars: CEO

Ford Motor Co plans to slash $14 billion in costs over the next five years, Chief Executive Officer Jim Hackett told investors on Tuesday, adding that the No. 2 U.S. automaker would shift capital investment away from sedans and internal combustion engines to develop more trucks and electric and hybrid cars.

Tesla Falters With Model 3 as Initial Output Trails Forecast – Bloomberg

“I would be surprised if anyone was surprised that they came up short,” said Sam Korus, an analyst at Ark Investment Management in New York, which holds Tesla shares. “When Musk gives a prediction, you know it’s an extraordinarily ambitious goal.”

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ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

Quantum computing rivals muster software power in new ‘arms race’

In a book published this month, Satya Nadella, Microsoft’s chief executive, describes the current battle over quantum computing as “an arms race” as important as AI or virtual and augmented reality, though it is one that has “gone largely unnoticed”.

“We are moving out of the science discovery stage and into the engineering phase,” says Vijay Pande, a partner at venture capital firm Andreessen Horowitz, one of the backers of Rigetti. Like the early days of semiconductors, he adds, the challenge now lies in finding ways to “scale up” a technology that has, in most cases, been demonstrated to work.

While today’s computers use a binary system in which bits represent either a 1 or 0, the quantum bits — or qubits — in the future computers could, in some states, represent both at the same time. By connecting large numbers of these together, the machines could in theory process a massive number of calculations simultaneously, yielding capabilities far beyond classical computers.

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MISCELLANEOUS

Big ideas, stupendous spectacle — Blade Runner 2049 is an astoundingly good film

On an Imax screen, where I saw it, BR2049 blows your specs off. I doubt it will do less on other screens. At the beginning the inside of a vast, tessellated future-dome revolves like a giant egg and we are inside it. Perhaps we are being born. Later the giant cityscapes hum, throb and teem with the outlandish: streets blitzed by neon, strafed by drizzle, monstered by those holographic geishas. (Jared Leto as another holo-being lives in a mansion whose Babylon walls ripple with water-light and where real and unreal beings rise at command like Venus from the deep. The marvels never stop.)

Paul Otellini, former Intel chief executive, dies aged 66

A company built and run in its first 37 years by engineers, Intel’s culture was defined by the remorseless process improvements it made in one of the world’s toughest manufacturing industries.

Otellini, by contrast, was a product and marketing specialist who brought a new sensibility. If the results during his eight-year tenure were mixed, he played an important transitional role in shoring up Intel’s fortunes while it slowly reset its sights on a world beyond the personal computer.

TOP

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