Macro Links Oct 6th – Bump Stocks

Macro Links Oct 6th – Bump Stocks

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17V06 - ECONOMIST COVERSTOCKS BREAK 20-YEAR RECORD

US stocks break 20-year record

US stocks hit their sixth consecutive closing high on Thursday for the first time in more than 20 years, fuelled by signs of economic strength and renewed optimism over tax cuts.

The S&P 500 closed 0.6 per cent up at 2,552.07, to mark the benchmark index’s longest such streak since June 1997, according to Thomson Reuters data. It has more than doubled in the decade since its pre-crisis peak of October 2007, and is up 350 per cent from the low it set in March 2009.

President Donald Trump, whose administration has faced a string of legislative failures, was quick to note the gains, tweeting on Thursday morning: “Stock Market hits an ALL-TIME high! Unemployment lowest in 16 years! Business and manufacturing enthusiasm at highest level in decades!”

Stocks Extend Run of Record Highs; VIX at New Low – WSJ

Financial firms and technology companies contributed significant gains to the index, but the day’s gains were broad. Nine of the index’s 11 major sectors rose to help the S&P 500 notch its sixth consecutive high. As stocks advanced, Wall Street’s so-called fear gauge fell to its lowest reading ever.

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PATH TO NUCLEAR-ARMED IRAN

Trump administration seeks face-saving way to ‘fix’ Iran deal

Senior administration officials are pushing to harden Iran policy without destroying a historic nuclear deal with Iran that US president Donald Trump has called an “embarrassment” and threatened to scrap.

Mr Trump has until October 15 to announce whether he will recertify the 2015 deal, in which Iran agreed to limit its nuclear programme in exchange for limited sanctions relief. The deal was signed by seven countries and endorsed by the UN Security Council.

Trump expected to decertify Iran nuclear deal, official says

President Donald Trump is expected to announce soon that he will decertify the landmark international deal to curb Iran’s nuclear program, a senior administration official said on Thursday, in a step that potentially could cause the 2015 accord to unravel.

Trump plans to declare that Iran nuclear deal is not in the national interest – The Washington Post

The decision would amount to a middle ground of sorts between Trump, who has long wanted to withdraw from the agreement completely, and many congressional leaders and senior diplomatic, military and national security advisers, who say the deal is worth preserving with changes if possible.

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CATALAN INDEPENDENCE FIGHT

Spanish Court Moves to Block Catalan Parliamentary Session – WSJ

A top Spanish court has suspended Catalonia’s planned parliamentary session on independence, as pro-union forces attempt to stop the wealthy northeastern region from breaking away from Spain.

Big bank to move headquarters out of Catalonia

The second-largest bank based in Catalonia has decided to move its legal headquarters out of the region as Catalan separatists and the Spanish authorities hurtle towards a showdown on Monday over the region’s push for independence.

The decision on Thursday by Banco de Sabadell to move its headquarters to the eastern Spanish town of Alicante came at the same time that CaixaBank, the biggest bank in the region and the country’s third largest, also considered redomiciling outside Catalonia.

Bank flight piles pressure on breakaway Catalans – POLITICO

“It’s a serious warning to Puigdemont: Don’t go ahead [with the declaration of independence],” said Carlos Rivadulla, vice president of Empresaris de Catalunya, an anti-independence business association. He described the sentiment among business leaders as “very worrying.”

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BUMP STOCKS LEGISLATION

As Bump Stock Demand Surges, Retailers Remove the Product From Websites – The New York Times

Sales of the firearm accessory that the Las Vegas gunman used to modify his rifles jumped this week, causing some companies to sell out of the so-called bump stocks even as Walmart and Cabela’s stripped them from their websites.

The products — conversion kits that allow semiautomatic weapons to fire hundreds of rounds per minute, similar to an automatic weapon — were once relatively obscure specialty items aimed at gun enthusiasts who own semiautomatic rifles.

But since the massacre on Sunday, when the gunman fired on a music festival crowd from the 32nd floor of the nearby Mandalay Bay Resort and Casino, killing dozens and injuring more than 500, interest in the accessory has surged. Officials said that 12 of the rifles found in the gunman’s suite were outfitted with bump stocks.

Republicans Open to Banning ‘Bump Stocks’ Used in Massacre – The New York Times

After resisting any gun legislation for decades, Republican lawmakers say they will examine the kits used in Las Vegas to turn rifles into rapid-firing weapons.

NRA moves to head off gun control fight in Congress – POLITICO

The move by the influential gun lobby, which often stifles any legislation that might be interpreted as curbing Second Amendment rights, is designed to head off a messy gun control debate in Congress. Officials with the group have told Capitol Hill Republicans and Trump administration officials they would prefer a new rule or regulations from ATF, rather than hastily cobbled together legislation.

NRA bans bump stocks at its own firing range – POLITICO

The firing range at the National Rifle Association headquarters, like many ranges across the nation, bans the use of bump fire systems such as the one used by Las Vegas shooter Stephen Paddock, according to firearms experts.

Bump stocks increase the speed at which bullets are fired and cause the entire weapon to move back and forth in the shooter’s grip. While the devices are said to convert semiautomatic weapons into fully automatic ones, they also decrease accuracy and are less safe, the experts say.

Nothing Divides Voters Like Owning a Gun – The New York Times

Over all, gun-owning households (roughly a third in America) backed Mr. Trump by 63 percent to 31 percent, while households without guns backed Mrs. Clinton, 65 percent to 30 percent, according to SurveyMonkey data. No other demographic characteristic created such a consistent geographic split.

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LAS VEGAS GUNMAN

From Broken Home to Real-Estate Riches: The Life of the Las Vegas Shooter – WSJ

At 64 years old, Paddock didn’t have the usual profile of a mass shooter. He left virtually no footprint on social media, had no criminal record and, his youngest brother Eric Paddock said, revealed no particular ideology. Interviews with law-enforcement officials, casino employees he encountered and two of his brothers, reveal an intensely private, self-contained man.

After his father’s arrest, he grew up in Sun Valley, a largely working-class Los Angeles suburb. He was married as a young man and twice divorced. He began buying rental properties around Los Angeles in the 1990s, records show, a decade that sent prices soaring.

Though Paddock had few social ties, he maintained relationships with a small set of people, who described him as loyal and generous. He sent cookies to his 89-year-old mother in Florida, and he treated his youngest brother and nephew to $1,000 dinners in Las Vegas, the brother said.

Yet he moved often, to look-alike houses, one after another, in a string of retirement communities in sunny places. He wore gloves when he drove and kept his window shades drawn.

Las Vegas gunman ‘led secret life’ for decades

While much about Paddock’s life for the past decade remains a mystery, recent updates from investigators and facts confirmed by Las Vegas police have begun to illuminate a picture of the events leading up to the biggest mass shooting in US history.

Paddock’s preparations began long before Sunday night’s “meticulously planned” attack, Mr Lombardo said.

At a press briefing on Tuesday evening, an official from the Bureau of Alcohol, Tobacco, Firearms and Explosives said Paddock had purchased his rifles, shotguns and pistols at a variety of locations across the states of Nevada, Utah, California and Texas.

After he had packed off Ms Danley to the Philippines, Paddock loaded his car with weapons and explosive materials, and drove to Las Vegas. His first stop was an apartment at the Ogden complex in downtown Las Vegas, which was rented using Airbnb.

He stayed there at the same time as tens of thousands of people were attending the Life is Beautiful music festival, held across the street from the Ogden from September 22 to 25. Police are still investigating whether he had planned another attack there.

Last Thursday, Paddock checked into a large suite at the Mandalay Bay, a high-end hotel at the southern end of the Las Vegas Strip. Over the course of several days, he carried more than 10 suitcase loads, containing 23 firearms and thousands of rounds of ammunition, from his car to his room.

Las Vegas Gunman’s Girlfriend Was Concerned About His Mental Health – WSJ

The girlfriend of the man who carried out a deadly massacre in Las Vegas said she had concerns about his mental health, especially in recent months, a federal law-enforcement official said Thursday.

The official said Marilou Danley, who returned to the U.S. and is cooperating with investigators, provided investigators with specific examples that Stephen Paddock was likely struggling with mental-health issues. The official didn’t go into detail about those examples, but said they led agents to believe he was showing signs of fraying mental health.

Stockpiling Guns Is Easy: Laws Don’t Bar It – WSJ

The issue of whether large-scale gun purchases during a short period should trigger greater oversight is likely to draw more scrutiny in the wake of Sunday’s rampage on the Vegas strip, which left 58 dead and nearly 500 injured, before the gunman, Stephen Paddock, killed himself.

According to the Bureau of Alcohol, Tobacco, Firearms and Explosives, Paddock purchased 33 of the 47 weapons recovered from his hotel suite and two Nevada homes since last October. A law-enforcement official said Paddock bought the weapons from several gun stores in the Las Vegas area and in Texas and Utah. An avid gun collector and gambler, Paddock also bought guns in California.

It doesn’t appear that Paddock bought any of the firearms illegally, authorities said. “There was nothing noteworthy about the purchase,” said Dennis Keck, the managing partner of Discount Firearms & Ammo in Las Vegas, which sold Paddock two AR-15-style rifles and one handgun in November and December of 2016.

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POLLING DATA

Poll: GOP’s popularity ‘is in freefall’ | TheHill

The Republican Party is in freefall,” said Suffolk University poll director David Paleologos. “In March the GOP had a 48 percent unfavorable rating, in June the negative swelled to 55 percent. Today the GOP unfavorable is 62 percent. What’s next?”

When it comes to the president, more than half of respondents say Trump has not delivered on his promises. Nearly 57 percent of respondents say they want to see a Congress elected in 2018 that will stand up against Trump, while just 33 percent want Congress to cooperate with Trump and his legislative agenda.

Media winning battle for trust with Trump – POLITICO

“Confidence in the media has gone up this year while confidence in the executive branch has gone down,” said Chris Kahn, Reuters’ U.S. political polling editor.

Kahn added that when the president weighs in on a subject, he usually heavily influences how people feel. Trump has certainly weighed in on the media. His war on the press may have reached a new level Thursday morning, when he tweeted: “Why Isn’t the Senate Intel Committee looking into the Fake News Networks in OUR country to see why so much of our news is just made up-FAKE!”

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RUSSIAN HACKERS, PROBE

Russian Hackers Stole NSA Data on U.S. Cyber Defense – WSJ

Hackers working for the Russian government stole a vast collection of highly classified material from the home computer of a National Security Agency contractor, said people familiar with the matter. The breach could enable Russia to evade NSA surveillance and more easily infiltrate U.S. networks.

Reach of Russian propaganda and content on Facebook – Business Insider

Facebook estimated on Monday that 10 million people saw the ads, whereas approximately 19 million users interacted with the six accounts analyzed by Albright.

The research also shed new light on the character and tone of the pages: While many posted racially charged and divisive content, others, like LGBTUN, shared apolitical, day-to-day musings. The goal of this was likely to gauge Facebook users’ interests in certain issues before targeting them with ads and content that would discourage them from voting altogether.

John Kelly’s personal cell phone was compromised, White House believes – POLITICO

White House officials believe that chief of staff John Kelly’s personal cellphone was compromised, potentially as long ago as December, according to three U.S. government officials.

The discovery raises concerns that hackers or foreign governments may have had access to data on Kelly’s phone while he was secretary of Homeland Security and after he joined the West Wing.

Mueller’s team met with Russia dossier author – CNNPolitics

Special Counsel Robert Mueller’s investigators met this past summer with the former British spy whose dossier on alleged Russian efforts to aid the Trump campaign spawned months of investigations that have hobbled the Trump administration, according to two people familiar with the matter.

Information from Christopher Steele, a former MI-6 officer, could help investigators determine whether contacts between people associated with the Trump campaign and suspected Russian operatives broke any laws.

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GOP TAX PLAN

Senate GOP Hits Resistance on Estate-Tax Repeal—From Republicans – WSJ

Senate Republicans are running into internal resistance to their proposed repeal of the estate tax, making it a potential casualty of the trade-offs the GOP faces in its effort to overhaul the tax code.

The party’s leaders included estate-tax repeal in the tax-overhaul framework they released last week. But Republican Sens. Mike Rounds of South Dakota and Susan Collins of Maine said this week that repeal isn’t needed. Others say their desire to eliminate the tax must be balanced against other priorities including tax cuts for businesses and middle-class families.

Under current law, the tax, with a top rate of 40%, applies to estates valued at more than $5.49 million per person or $10.98 million per married couple. Those levels are indexed to inflation under a deal Congress reached in 2010. The tax applies to about 5,500 estates a year.

According to IRS data, more than 40% of the estate tax in 2015 was paid by estates with gross values over $50 million.

Republicans step up campaign to defend tax plan

Top Republicans see a tax overhaul as central to their prospects in midterm elections next year, but to win over voters they will have to argue that it responds to prevailing concerns about middle class decline. Pat Tiberi, the Republican chairman of the Joint Economic Committee, said on Wednesday that failing to pass a tax overhaul would be tantamount to Congress turning its back on “the most vulnerable Americans”.

Democrats dismiss those suggestions. The preliminary analysis of the tax plan by the TPC, which describes itself as non-partisan but is seen by Republicans as left-leaning, suggested that the overhaul would slash business taxes by $2.65tn over a decade while increasing the tax burden on families and individuals by $471bn in the same period.

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HARVEY WEINSTEIN

Decades of Sexual Harassment Accusations Against Harvey Weinstein – The New York Times

An investigation by The New York Times found previously undisclosed allegations against Mr. Weinstein stretching over nearly three decades, documented through interviews with current and former employees and film industry workers, as well as legal records, emails and internal documents from the businesses he has run, Miramax and the Weinstein Company.

During that time, after being confronted with allegations including sexual harassment and unwanted physical contact, Mr. Weinstein has reached at least eight settlements with women, according to two company officials speaking on the condition of anonymity. Among the recipients, The Times found, were a young assistant in New York in 1990, an actress in 1997, an assistant in London in 1998, an Italian model in 2015 and Ms. O’Connor shortly after, according to records and those familiar with the agreements.

In a statement to The Times on Thursday afternoon, Mr. Weinstein said: “I appreciate the way I’ve behaved with colleagues in the past has caused a lot of pain, and I sincerely apologize for it. Though I’m trying to do better, I know I have a long way to go.”

Harvey Weinstein to Sue N.Y. Times, Says His Attorney | Hollywood Reporter

As a public figure, Weinstein will need to show actual malice to prevail in a defamation lawsuit against the Times. By discussing how the paper ignored eyewitness statements, his attorney appears to be priming the coming argument that the Times’ reporters recklessly disregarded truth. Actual malice is a tough standard for plaintiffs as Sarah Palin recently learned in an unsuccessful defamation suit against the paper. In fact, the Times helped establish the precedent in a famous 1964 case.

But Harder’s talk of stolen files hints at more exotic claims against the paper. Also, Weinstein’s settlements presumably carried confidentiality obligations, and if the Times knew about those, the movie mogul could eye a claim for tortious interference if any of the women who settled subsequently spoke to the paper about their ordeals.

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NORTH KOREA, IRAQ, PUERTO RICO

Inside North Korea, and Feeling the Drums of War – The New York Times

Far more than when I previously visited, North Korea is galvanizing its people to expect a nuclear war with the United States. High school students march in the streets in military uniform every day to denounce America. Posters and billboards along the public roads show missiles destroying the U.S. Capitol and shredding the American flag. In fact, images of missiles are everywhere — in a kindergarten playground, at a dolphin show, on state television. This military mobilization is accompanied by the ubiquitous assumption that North Korea could not only survive a nuclear conflict, but also win it.

CIA: N. Korea’s Kim Jong Un not a madman – CNNPolitics

Between the ruthless executions of his own senior officers, bombastic threats of nuclear annihilation and defiant missile tests, it may be easy to agree with President Donald Trump’s recent assessment that North Korean leader Kim Jong Un is a “madman” who is “on a suicide mission for himself.”

But top officials from the CIA said Wednesday that Kim’s actions are not those of a maniacal provocateur but a “rational actor” who is motivated by clear, long-term goals that revolve around ensuring regime survival.

“There’s a clarity of purpose in what Kim Jong Un has done,” according to Yong Suk Lee, deputy assistant director of the CIA’s Korea Mission Center, who discussed the escalating tensions between North Korea and the US during a conference organized by the agency at George Washington University.

“Waking up one morning and deciding he wants to nuke” Los Angeles is not something Kim Jong Un is likely to do, Lee said. “He wants to rule for a long time and die peacefully in his own bed.”

Iraq Claims Victory in ISIS’ Last Urban Stronghold – The New York Times

Although fighting continues in surrounding districts, the loss of Hawija adds to a series of crushing blows for the militants in Iraq, who are left in control of only a string of desert outposts in the Euphrates River valley and the city of Qaim, on the border with Syria.

The victory is also likely to bolster the confidence of Iraqi troops, who dropped their weapons and fled by the thousands when the militants swept across northern Iraq in the summer of 2014. Iraqi forces are now fighting the militants along the Euphrates in the northern part of Anbar Province, where they have already taken several towns, according to the United States military statement.

FEMA removes statistics about drinking water access and electricity in Puerto Rico from website – The Washington Post

As of Wednesday, half of Puerto Ricans had access to drinking water and 5 percent of the island had electricity, according to statistics published by the Federal Emergency Management Agency on its Web page documenting the federal response to Hurricane Maria. By Thursday morning, both of those key metrics were no longer on the Web page.

For Many on Puerto Rico, the Most Coveted Item is a Plane Ticket Out – The New York Times

On a hurricane-battered island where people may still wait hours for gasoline, cash and ice, one of the scarcest, most precious commodities has become a plane ticket out.

Two weeks after Hurricane Maria, thousands of Puerto Ricans are cramming onto the small number of scheduled flights and charter jets and are fleeing for the mainland United States, rather than endure months more without power, cellphone service or regular running water.

“Nothing is beautiful anymore,” said Glenda Gomez, 31, who is planning to leave for Miami on Friday with her three children. So people are selling their cars, abandoning wrecked houses and leaving their property in the hands of relatives who are staying behind. Some expect to return after a few months on the mainland; others say they are going for good.

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TRADE DISPUTES, TARIFFS

US trade ruling set to hand Trump tariff firepower

Donald Trump is set to be handed an opportunity to impose tariffs or other restrictions on imports of washing machines made by two of South Korea’s biggest industrial groups just as his administration sets about renegotiating a trade deal with Seoul, an important strategic ally.

On Thursday the US International Trade Commission ruled unanimously that US appliance maker Whirlpool had suffered “serious injury” from an increase of imports of large home washing machines made by LG and Samsung.

The ITC ruling comes amid a crisis over North Korea’s missile and nuclear tests that the US and South Korea are working on, and just a day after the two allies agreed to try to improve a 2012 trade deal that the president has been threatening to pull out of. It also comes just months after both LG and Samsung announced plans to open new factories in the US in moves celebrated by Mr Trump’s administration.

Proposed U.S. Solar Tariff Is a ‘Farce,’ Sunrun Chairman Says – Bloomberg

In a case that threatens to roil the $29 billion U.S. solar industry, U.S. International Trade Commission ruled last month that the U.S. solar industry has been harmed by a flood of cheap imports. President Donald Trump may decide to impose tariffs by mid-January. Some analysts had speculated that Sunrun could ultimately benefit because higher prices may show customers are willing to pay more for the panels.

“It’s a farce,” Fenster said. “The data shows clearly that a tariff here not only obviously causes great detriment to the installation of solar and solar installation jobs, but it actually eliminates more manufacturing jobs than it creates.”

US rounds on Britain over food quotas as post-Brexit trade woes deepen – POLITICO

The U.S. and other international trade heavyweights have dashed Prime Minister Theresa May’s hopes of a smooth Brexit by rejecting one of her core plans for reintegrating into global trade networks.

Washington’s slap-down of Britain is the second big trade reality check for May in less than a fortnight. Only last week, the U.K.’s increasingly fragile position in trade disputes was exposed by the country’s inability to prevent new, ultra-high tariffs from the U.S. that could hit thousands of jobs in a plane factory in Northern Ireland.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Private credit booms as new hedge funds pile in

Private equity and hedge fund firms are lending to companies at the highest rate ever, driving up competition in the sector and forcing funds to look outside the US for more opportunities. Private credit, which has sprouted while post-crisis regulation curtailed the amount that banks were willing to lend, is growing at a rate not seen since the hedge fund industry boom in the 1990s.

The amount of dry powder — money that is not being deployed — is also at a low, despite the record level of funds the industry is managing. About one-third of the money being managed is currently not invested, the lowest level since the end of 2013 and among the lowest since 2000.

Investors are piling into private credit in search of sometimes double-digit returns as interest rates stay low, some hedge fund strategies suffer and private equity firms sit on record levels of ready cash.

ECB policymakers signal support for winding down QE next year, meeting minutes show

The European Central Bank’s policymakers are keen to press ahead with plans to end their bond-buying spree next year — despite some reservations on wage inflation and the strength of the euro.

Accounts of the bank’s September vote, published on Thursday, suggest members of its governing council were increasingly confident that the region’s economic recovery would last. Market developments were favourable, while there were “nascent” signs of reflationary forces.

American public pensions suffer from a gaping hole

Moody’s, a rating agency, puts the total shortfall of American public-sector pension plans at around $4trn. That gap does not have to be closed at once, but it does mean that contributions by employers (and hence taxpayers) will increase even more than they already have (see chart).

In consequence, it is in no one’s interest to make more realistic assumptions about future returns. Workers (and their unions) fear it might generate calls for their benefits to be cut; states worry it would require them to raise taxes. Don Boyd, the director of fiscal studies at the Rockefeller Institute of Government, a think-tank, reckons that with a 5% assumed rate of return, states would have to stump up an extra $120bn a year just to tread water—ie, to fund their pensions without making any progress on closing the deficit. So the game of “extend and pretend” continues.

But the danger of optimistic projections is that, if missed, they simply create a bigger long-term hole. The danger of the current optimism is that the American stockmarket is at a record high, and, even using their sanguine return assumptions, state and local pension plans are only 72% funded. A market downturn could have a disastrous impact.

17V06 - US PENSION CONTRIBUTIONS

US consumer watchdog moves ahead with payday loans curbs

The CFPB argues payday lending companies target vulnerable consumers who they know will struggle to repay the loans, which can carry annual interest rates of more than 300 per cent. Describing the new protections as “common sense”, Mr Cordray said: “Too often, borrowers who need quick cash end up trapped in loans they can’t afford.”

The restrictions are the latest regulatory move against the financial industry by the CFPB director, whose appetite to take action stands in contrast to the Trump administration’s deregulatory push.

Unwinding QE could trigger financial crisis, warns JP Morgan

JP Morgan has warned that another financial crash could be round the corner as the decade of ultra-loose money comes to an end. Central banks have purchased roughly $15 trillion (£11.3 trillion) of financial assets since the crisis, but the Wall Street bank’s head of quantitative and derivatives strategy Marko Kolanovic said this will start to unwind next year in a move that could “potentially cause a financial crisis”.

Dubbing the hypothetical crash the “great liquidity crisis”, he said that outflows – or lack of new inflows – from undoing stimulus could lead to “asset declines and liquidity disruptions” that in turn trigger a crash.

“The timing will largely be determined by the pace of central bank normalisation, business cycle dynamics and various idiosyncratic events, and hence cannot be known accurately,” he said, pointing out that some had started to predict the nature of the 2008 crisis two years earlier.

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

A Volatility Trap Is Inflating Market Bubbles – Bloomberg

What appears to be a Goldilocks economy could in actuality conceal a low-volatility trap, a situation where excessive monetary stimulus keeps asset prices rising and volatility low across markets even though real-economy risks are rising. On one hand, central bank stimulus directly lowers risk premiums and volatility in rates and credit markets, pushing investors into riskier assets to generate sufficient returns. On the other hand, politics have become less stable as inequality rises, as the recent elections in the U.S., U.K. and Europe show, and the number of geopolitical hotspots continues to rise. And yet, markets continue threading higher and volatility remains at record lows.

A prolonged environment of low volatility and low interest rates can promote asset bubbles, as European Central Bank President Mario Draghi said a few days ago. A number of markets show not only elevated valuations, but also irrational behavior on the part of investors, including a suspension of traditional valuation models, an increase in trading volumes or “flipping” in the hopes of quick gains, and financial engineering. Potential bubbles can be found in emerging-market debt, technology stocks, U.S. high yield bonds, some sovereign debt, cryptocurrencies, properties — even art and collectibles.

It is becoming clearer to economists and central bankers that even though we may be experiencing a long phase of growth, stretching the cycle with monetary stimulus inspired by crisis-era toolkits may be bringing several collateral effects. These include not only asset bubbles, but also a worsening of wealth inequality and a misallocation of resources.

The longer the debt cycle, the longer companies and workers develop business and skills in leverage-heavy sectors (e.g. finance, real estate, energy), the deeper the scars when the bust comes. Often the misallocation is so large that low rates are necessary to keep people in their jobs: Zombie companies that would otherwise fail continue to be in business, refinancing at near-zero interest rates in bond markets. Over time, this can reduce the rate of adjustment in an economy, and its workforce, toward new business models.

17V06 - QE INFINITY CYCLE

17V06 - BUBBLE GALAXY

Are magazine covers a contrarian indicator?

Finding a reliable way of timing the market is something that has eluded the greatest investment minds in history. That is why many people are tempted by the “magazine cover indicator” as a contrarian signal.

An intriguing example is the January 1999 issue “Why internet shares will fall to earth”. Was that wrong or right? Yes, 12 months later the internet sector was still riding high. But the peak came in March 2000 and many internet shares subsequently fell 80-90%; our timing wasn’t right but our overall call was. And since people are supposed to invest in equities with a 5-10 year time horizon, our scepticism was vindicated. Furthermore, since internet shares were booming in January 1999, our cover was itself attempting to be contrarian. Is a contrarian cover a contrarian indicator? The head starts to swim at this stage.

Journalists themselves are awkward so-and-sos who, after a career of listening to sales pitches from public relations people and executives, are deeply cynical. When we express an opinion, we often try to be contrarian. When we are just reporting on a general trend (the rise of the Chinese economy, say) that is when we are more likely to be reflecting the general wisdom. So that is when the signal is most likely to work best.

Repeal the Second Amendment – The New York Times

Repealing the Amendment may seem like political Mission Impossible today, but in the era of same-sex marriage it’s worth recalling that most great causes begin as improbable ones. Gun ownership should never be outlawed, just as it isn’t outlawed in Britain or Australia. But it doesn’t need a blanket Constitutional protection, either. The 46,445 murder victims killed by gunfire in the United States between 2012 and 2016 didn’t need to perish so that gun enthusiasts can go on fantasizing that “Red Dawn” is the fate that soon awaits us.

Some conservatives will insist that the Second Amendment is fundamental to the structure of American liberty. They will cite James Madison, who noted in the Federalist Papers that in Europe “the governments are afraid to trust the people with arms.” America was supposed to be different, and better.

I wonder what Madison would have to say about that today, when more than twice as many Americans perished last year at the hands of their fellows as died in battle during the entire Revolutionary War. My guess: Take the guns—or at least the presumptive right to them—away. The true foundation of American exceptionalism should be our capacity for moral and constitutional renewal, not our instinct for self-destruction.

More Americans killed by guns since 1968 than in all U.S. wars — – WRCBtv.com

More Americans have died from gunshots in the last 50 years than in all of the wars in American history.

Since 1968, more than 1.5 million Americans have died in gun-related incidents, according to data from the U.S. Centers for Disease Control and Prevention. By comparison, approximately 1.2 million service members have been killed in every war in U.S. history, according to estimates from the Department of Veterans Affairs and iCasualties.org, a website that maintains an ongoing database of casualties from the wars in Iraq and Afghanistan.

Guns Aren’t a Bulwark Against Tyranny. The Rule of Law Is. – The New York Times

Stories about the use of guns in self-defense — a good guy with a gun dispensing with a bad guy with a gun — are legion among gun enthusiasts and conservative talk radio hosts. But a 1998 study in The Journal of Trauma and Acute Care Surgery, to take one of many examples, found that “every time a gun in the home was used in a self-defense or legally justifiable shooting, there were four unintentional shootings, seven criminal assaults or homicides and 11 attempted or completed suicides.” That means a gun is 22 times more likely to be used in a criminal assault, an accidental death or injury, a suicide attempt or a homicide than it is for self-defense.

Gun-rights advocates also make the grandiose claim that gun ownership is a deterrent against tyrannical governments. Indeed, the wording of the Second Amendment makes this point explicitly: “A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.” That may have made sense in the 1770s, when breech-loading flintlock muskets were the primary weapons tyrants used to conquer other peoples and subdue their own citizens who could, in turn, equalize the power equation by arming themselves with equivalent firepower. But that is no longer true.

The Bitcoin Economy, in Perspective

As you see on this head-spinning graph below, the total amount of money in the world is $84 trillion. But that includes money in the bank. In physical coins and notes, the total global money supply is only $31 trillion. See the problem? Hence the rise of Bitcoin and other cryptocurrencies. Bitcoin is the cryptocurrency that refuses to die. Its demise has been predicted numerous times, and one expert calculated that its value is eighteen times more volatile than the U.S. dollar. Yet the virtual money keeps going from strength to strength.

17V06 - ALL MONEY IN PERSPECTIVE

Bitcoin’s Rise Happened in Shadows of Finance. Now Banks Want In – Bloomberg

At first, bitcoin was a way to make payments without banks. Now, with more than $100 billion stashed in digital currencies, banks are debating whether and how to get in on the action.

Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein tweeted Tuesday that his firm is examining the cryptocurrency. Other global investment banks are looking into facilitating trades of bitcoin and other cryptocurrencies, according to industry consultants. Bitcoin has surged more than 300 percent this year, drawing the attention of hedge funds and wealthy individuals.

“They’re clearly receiving interest from their clients, both from retail investors and on the institutional side,” said Axel Pierron, managing director of bank consultant Opimas. “It’s highly volatile, it’s highly illiquid when you need to trade large volumes, so they see the opportunity for a new asset class which would require the capability of a broker-dealer.”

But bitcoin presents Wall Street with a conundrum: How do banks that are required by law to prevent money-laundering handle a currency that’s not issued by a government and that keeps its users anonymous?

How We Think About the Deficit Is Mostly Wrong – The New York Times

When the government spends more than it gets in taxes, a “deficit” is recorded on the government’s books. But that’s only half the story. A little double-entry bookkeeping paints the rest of the picture. Suppose the government spends $100 into the economy but collects just $90 in taxes, leaving behind an extra $10 for someone to hold. That extra $10 gets recorded as a surplus on someone else’s books. That means that the government’s -$10 is always matched by +$10 in some other part of the economy. There is no mismatch and no problem with things adding up. Balance sheets must balance, after all. The government’s deficit is always mirrored by an equivalent surplus in another part of the economy.

The problem is that policy makers are looking at this picture with one eye shut. They see the budget deficit, but they’re missing the matching surplus on the other side. And since many Americans are missing it, too, they end up applauding efforts to balance the budget, even though it would mean erasing the surplus in the private sector.

Here’s How Breitbart And Milo Smuggled White Nationalism Into The Mainstream

In August, after a white nationalist rally in Charlottesville ended in murder, Steve Bannon insisted that “there’s no room in American society” for neo-Nazis, neo-Confederates, and the KKK. But an explosive cache of documents obtained by BuzzFeed News proves that there was plenty of room for those voices on his website.

During the 2016 presidential campaign, under Bannon’s leadership, Breitbart courted the alt-right — the insurgent, racist right-wing movement that helped sweep Donald Trump to power. The former White House chief strategist famously remarked that he wanted Breitbart to be “the platform for the alt-right.”

These new emails and documents, however, clearly show that Breitbart does more than tolerate the most hate-filled, racist voices of the alt-right. It thrives on them, fueling and being fueled by some of the most toxic beliefs on the political spectrum — and clearing the way for them to enter the American mainstream.

It’s a relationship illustrated most starkly by a previously unreleased April 2016 video in which Yiannopoulos sings “America the Beautiful” in a Dallas karaoke bar as admirers, including the white nationalist Richard Spencer, raise their arms in Nazi salutes.

These documents chart the Breitbart alt-right universe. They reveal how the website — and, in particular, Yiannopoulos — links the Mercer family, the billionaires who fund Breitbart, to underpaid trolls who fill it with provocative content, and to extremists striving to create a white ethnostate.

We Snuck into Seattle’s Super Secret White Nationalist Convention – News – The Stranger

Much bleaker is Dr. Johnson’s Seattle-suitable, “secret agent” racism plan. Basically, white nationalists meet in secret at conventions like Northwest Forum while paying “lip service to diversity” at their day jobs. They move into positions of power where they can hire other racists and keep non-whites from getting into the company. Two years ago, this method would have seemed like a total joke, but these guys really do mostly work in tech, and they were doing a lot of networking. When talking about the people he has counseled on the “secret agent” method, Dr. Johnson has written that they include “college professors, writers, artists, designers, publishers, creative people working in the film industry, businessmen, and professionals, some of them quite prominent in their fields.” When I told Dr. Johnson I was reluctant to use my super film editing skills (I can’t even work iMovie) for the movement because I was afraid I would be outed in Hollywood he said, “You know, you can always be a secret agent, there’s no shame in that.”

Why Some Scars From the Recession May Never Vanish – The New York Times

The question is how a recovery in progress for eight years could have left so many people on the sidelines. Is it a reflection of lingering economic weakness — which traditional stimulus policies might yet address — or long-term forces such as automation, globalization and changing demographics?

Work like that of Ms. Kahn and Mr. Krueger suggests that what begins as a cyclical recession-driven problem can harden into a permanent structural issue. That could carry a lesson for policy makers: If the United States no longer recovers as quickly from recessions as it once did, and if those slow recoveries can leave permanent scars on workers, then it is all the more important to kick-start the economy before too much damage is done.

Lower for longer oil prices vs higher, sooner

The central planks of the “lower for longer” argument for oil are still in place. On the demand side, rising fuel efficiency and then electrification of transport are expected to chip away at consumption, while on the supply side the US shale industry is expected to be able to respond with surging production as higher prices improve returns. The US Energy Information Administration was already forecasting that the country’s oil production would hit a record high next year. Shale producers have been taking advantage of the latest uptick in prices to lock in next year’s revenues with swaps and options.

Recently, though, both sides of the thesis have been under attack. Developed countries’ oil demand, which had been on a declining trend for a decade, has now been growing for the past three years as low prices draw drivers back into gas-guzzling cars. Cutting oil demand might take more radical government action, such as the long-term ban on internal combustion engine vehicles now apparently being considered by California. It may be a while before Shell’s electric car charging stations are everywhere.

On the supply side, meanwhile, there is still uncertainty about how strong and how sustained the rise in US production can be. Wood Mackenzie, the research company, suggested production in the Permian Basin of Texas and New Mexico, the hottest spot in the shale oil industry, could top out in 2021. Dan Murtaugh reported for Bloomberg that the hectic pace of activity in the Permian was “so reminiscent of the last boom that went bust that it has folks on edge.” Moody’s, the rating agency, argued that shale producers need oil to be above $50 to make “meaningful” returns.

The global importance of China’s oil imports

Whatever you think of the central thesis, it is clear that oil is a potential source of friction between China and the US. The oil and gas reserves of the South China Sea are one factor underlying tensions in the region, with China in April trying to sell drilling rights in disputed waters. Another recent book, Bernard Cole’s China’s Quest for Great Power: Ships, Oil, and Foreign Policy, explored Chinese diplomacy, naval power and energy security, arguing that the three were closely linked.

In June, China held a joint naval exercise with Iran near the Strait of Hormuz. It was a very small drill, involving just four vessels in total, but it did put a marker down about China’s interest in the Gulf region. China is the world’s largest net oil importer, comfortably outstripping the US, and much of its crude comes from countries in the Middle East, including Iran. The security of those oil flows will be an increasingly pressing worry as China’s economy expands and its consumption rises. The Nikkei Asian Review reported recently that China was looking at launching a crude contract priced in renminbi, not dollars, which could help Russia and Iran if they need to circumvent US sanctions when selling their oil.

Wang Chuanfu, founder and chairman of BYD, China’s largest maker of battery-powered cars, argued this week that the country was likely to go all-electric for road transport by 2030. “This is not only because of environmental pollution and traffic congestion issues,” he said. “The most urgent reason is China’s oil safety and security. China will run out of oil soon.”

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CENTRAL BANKS & MONETARY POLICY

Randal Quarles, Trump’s First Fed Nominee, Wins Senate Approval – WSJ

Mr. Quarles, who will also sit on the Fed’s monetary policy committee, has been skeptical of the government’s intervention in financial markets and has criticized the Fed for unpredictable policy-making. He said at a hearing in July that “with the benefit of experience and reflection, some refinements will undoubtedly be in order” to the regulatory regime adopted after the 2008 financial crisis. He specifically noted big bank stress tests as ripe for review.

ECB hints at ‘lower for longer’ bond-buying plan

The European Central Bank has started to drop hints that it could remain active in the region’s bond markets for longer than many expect, with some policymakers signalling a wish to keep the bank’s quantitative easing programme in operation for most of 2018.

The ECB’s governing council is set to make a crucial decision on how to wind down its €2tn QE programme on October 26. The bank is buying €60bn of mostly government bonds each month but the pace of purchases will almost certainly slow from January 2018.

While many analysts expect the ECB to pledge to buy €40bn-worth of bonds a month until the middle of next year, some think the bank will slow the pace of purchases more abruptly while keeping the programme going for longer.

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USA ECONOMY DATA, CITIES AND STATES

US service sector growth tipped at highest level since ’05

Growth in the all-important US services sector picked up sharply in September, providing further evidence that the recent string of hurricanes that battered swathe of southeastern US is unlikely to have a significant impact on US third quarter growth.

The Institute for Supply Management’s non-manufacturing gauge came in at 59.8 last month – the highest reading since August 2005. It is a sharp leg up from the reading of 55.3 recorded in August and easily trounced expectations for it to dip to 55.1.

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America’s Child-Poverty Rate Has Hit a Record Low – The Atlantic

The economy is nearing full employment. The stock market is at record highs. The expansion keeps continuing. Add to that one more very good piece of economic news: The child-poverty rate fell to a record low in 2016.

“The figures were actually a little surprising to us, and might be surprising to those who are following the poverty debate,” said Shapiro. “The argument, at least on the conservative side, is that we have poured a lot of money into safety-net programs and poverty hasn’t gone down. But it has.”

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GLOBAL ECONOMY DATA

Global Growth Picking Up Despite Social Tensions, Lagarde Says – Bloomberg

Nearly three quarters of the world is “experiencing an upswing” in terms of gross domestic product, and the end result is the broadest-based acceleration in global growth since the start of the decade, according to the Washington-based fund.

Led by China and India, Asian emerging markets remain strong, while the outlook has become “a bit brighter” in other emerging and developing economies, including commodity exporters in sub-Saharan Africa and Latin America, she said. “We are seeing some sun break through,” Lagarde said in prepared remarks of her speech. “But it is not a clear sky.”

She warned that the global economy faces a number of threats, from high levels of debt in many countries to rapid credit expansion in China and “excessive risk taking” in financial markets. Persistently low growth since the 2008 financial crisis has reinforced the problem of inequality, while exposing “long-running weaknesses” in the world’s ability to adapt to technological change and global integration, she said.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Netflix’s shares surge after move to increase prices

Netflix is increasing prices in the US and UK by as much as 17 per cent, as it looks to cover its growing investment in original content. The move sent shares in the video streaming service to a record intraday high.

Netflix plans to spend $6bn this year on original shows and movies that include Okja, Stranger Things and Orange is the New Black. That investment will grow to $7bn next year, executives have said.

Netflix is racing to fill up its library, at a time when some former media partners, including the Walt Disney Company, are pulling their catalogue to launch rival streaming services. It also faces growing competition from the likes of Amazon, Hulu, YouTube, Facebook and Apple, who are all investing in original content for streaming.

Jessica Alba’s Honest Co. slashes its valuation – Axios

Honest’s new round would be Series E stock priced at around $19.60 per share, which is 57% lower than the price of its Series D shares (sold in the summer of 2015). It also would slash the Los Angeles-based company’s valuation from around $1.7 billion to below $1 billion. An Honest Co. spokeswoman declined comment.

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ENERGY COMPANIES, NOCs, INDUSTRY

Major Canadian Pipeline Project Is Abandoned – The New York Times

TransCanada, the company behind the Keystone XL pipeline in the United States, on Thursday abandoned a plan for a pipeline that would have sent oil from the province of Alberta in western Canada to Ontario, Quebec and New Brunswick.

The company, based in Calgary, Alberta, offered little explanation for its decision beyond citing “changed circumstances” in a brief statement. Terry Cunha, a spokesman for TransCanada, declined to elaborate.

Scotland Rejects Fracking, Citing Overwhelming Public Opposition | Rigzone

Scotland will block fracking indefinitely after a public consultation found overwhelming opposition to the practice, the British region’s energy minister said on Tuesday in a victory for environmentalists.

Scotland imposed a moratorium on fracking, the process of fracturing underground shale rock to release gas and oil, in 2015 and that will now remain for the foreseeable future.

“The decision taken today means fracking cannot and will not take place in Scotland,” Paul Wheelhouse told the Scottish parliament in Edinburgh. “Taking account of available evidence and the strength of public opinion, my judgment is that Scotland should say ‘no’ to fracking.”

U.S. Shale Juggernaut Shows Signs of Fatigue – WSJ

American shale drillers, which defied expectations and upended traditional oil markets by increasing production in the face of lower prices, are finally showing signs of slowing down.

The number of rigs currently drilling for oil in the U.S., typically viewed as a proxy for activity in the sector, grew 6% in the third quarter—a marked deceleration from the previous four quarters, when it rose more than 20% on average. Last month, the U.S. Energy Information Administration cut its forecast for U.S. oil production, saying it now expects the industry to end the year at 9.69 million barrels a day, down from 9.82 million.

U.S. oil output remains robust and may still surpass the record annual average of 9.6 million barrels a day, set in 1970. But companies, confronting technological, operational and financial obstacles, are starting to ease up on drilling.

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ENERGY NATURAL GAS, COAL

American LNG developers wade into market awash with gas

A new route is about to open up to take US gas to the world. Dominion Energy’s Cove Point, about 50 miles south-east of Washington, is scheduled to start producing liquefied natural gas by the end of the year.

It is part of a first wave of LNG plants built to take advantage of low-cost gas from the US shale revolution. LNG — gas super-cooled to -160°C so it can be carried in tankers — is bringing the surge in US gas production over the past 15 years to the rest of the world.

This moment of triumph for the US LNG industry, however, is shadowed by uncertainty. A second wave of about 20 more proposed plants, backed by companies including ExxonMobil and Royal Dutch Shell, is waiting to go. They have the support of the US administration, which is trying to boost gas exports to contribute to President Donald Trump’s goal of reducing the trade deficit. But those projects first need to find buyers for their gas.

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POLLUTION, CLIMATE & ENVIRONMENT

‘Black Death’ outbreak strikes Madagascar, killing 30 and triggering panic – The Washington Post

Some might consider the plague a thing of the past, buried deep in medieval history. But it thrives in Madagascar, where the disease is a seasonal worry.

And this year, the country is experiencing what may be its deadliest outbreak in years: About 194 people are suspected to have fallen ill from the plague since August, and 30 people have died as of Tuesday, according to Madagascar’s Ministry of Health. Experts say they can’t remember the last time the death toll was so high. Last year, 63 people died over the course of the year, out of 275 cases.

Pesticides linked to bee deaths found in most honey samples – BBC News

A new study has found traces of neonicotinoid chemicals in 75% of honey samples from across the world. The scientists say that the levels of the widely used pesticide are far below the maximum permitted levels in food for humans. In one third of the honey, the amount of the chemical found was enough to be detrimental to bees.

Industry sources, though, dismissed the research saying the study was too small to draw concrete conclusions. Neonicotinoids are considered to be the world’s most widely used class of insecticides.

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BREXIT, SCOXIT, LONDON, UK ECONOMY

‘Two-thirds’ of Hammond’s £26bn Budget war chest faces wipeout

Philip Hammond is facing what officials describe as “a bloodbath” in the public finances in his Budget next month as weak economic forecasts derail the government’s plans.

As much as two-thirds of the £26bn of headroom in the public finances that the chancellor created last year as a buffer for the economy through the Brexit period is likely to be wiped out after the government’s fiscal watchdog concludes its forecasts for growth have been too optimistic.

Tories ponder how to solve a problem like Theresa – POLITICO

Theresa May will cling on as prime minister. If she wants to. Her disastrous conference speech in Manchester emboldened internal party opponents, with reports of five former Cabinet ministers planning to call on her to go, and one ex-minister, Ed Vaizey, breaking cover to confess that “quite a few people” in the party think she should resign.

But conversations with five senior MPs suggest that the plotters are far from reaching the critical mass of 48 MPs required under party rules to force a leadership contest.

“While the current situation is far from ideal, the possible alternatives might be even worse: going through a harrowing leadership election while we’re in the process of the Brexit negotiation,” said one of the MPs, an ally of Foreign Secretary Boris Johnson, who is touted as a leadership rival.

The only thing that could force May out at this stage would appear to be herself.

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GEOPOLITICS, CRIME, TERRORISM

Deadly Ambush of Green Berets in Niger Belies a ‘Low-Risk’ Mission – The New York Times

The reconnaissance patrol was supposed to be a routine training mission along the border between Niger and Mali for the nearly dozen United States Army Special Forces trainers and the Nigerien soldiers with them.

The American team leaders told their superiors in seeking approval for the mission that there was a “low risk” of hostile activity in the region 120 miles north of Niamey, Niger’s capital, according to a senior United States military official briefed on the mission planning.

Late Wednesday afternoon, that mission proved anything but low risk. The patrol was ambushed by what commanders believe was a heavily armed Qaeda force from Mali, leaving three Americans dead and two others wounded. The combat casualties were the first that the United States has suffered in a widening counterterrorism mission in Niger, in northwest Africa.

Pentagon officials expressed shock on Thursday at the deaths during such a routine mission. The brazen daytime attack raised serious questions about how the Special Forces — elite Green Berets who have spent years operating in shadowy combat zones — conduct threat assessments in the country and how their chain of command approves them.

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PROPAGANDA, CORRUPTION, AUTHORITARIANISM

Congressman suggests Charlottesville was George Soros–backed conspiracy – VICE News

Arizona Rep. Paul Gosar suggested the participants in the white nationalist rally in Charlottesville in August may have been organized by an “Obama sympathizer” and funded by George Soros, whom Gosar accused of having “turned in his own people to the Nazis.”

Gosar made these comments — and there is no evidence backing these theories — to VICE News in an interview about one of his constituents who is suing him in federal court for blocking her on his official Facebook page. The constituent, J’aime Morgaine, argues that Gosar is violating her First Amendment right to engage in debate in a virtual public forum.

The congressman justifies blocking Morgaine and hundreds like her by pointing to the attempted assassination of Louisiana Rep. Steve Scalise. Scalise, a Republican, was shot at a congressional baseball practice in June by a homeless man who belonged to left-wing Facebook groups. Hateful comments on social media, Gosar said, could lead to violence. Gosar is a Republican. Morgaine made critical comments on his page from a liberal perspective.

YouTube Tweaks Search Results as Las Vegas Conspiracy Theories Rise to Top – WSJ

YouTube this week surfaced videos peddling misinformation, hateful messages and conspiracy theories to users tracking major news events—prompting the site to change its search results to promote more authoritative sources.

For example, the fifth result when searching “Las Vegas shooting” on YouTube late Tuesday yielded a video titled “Proof Las Vegas Shooting Was a FALSE FLAG attack—Shooter on 4th Floor.” The video said there were multiple shooters in Sunday’s mass shooting, a claim dismissed by law enforcement. Posted by a channel called the End Times News Report, it amassed more than 1.1 million views in about 27 hours.

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RESISTANCE, PROTEST, COUNTER-EFFORTS

Trump’s ‘Grab ’em by the Pussy’ Video Will Play Near White House for 12 Hours

It was just a few minutes of audio and video, but it was so packed with vulgar, sexist and curse-laden language that some expected it to derail Donald Trump’s run for the White House.

Now, just days removed from the one-year anniversary of the Access Hollywood tape’s release, a group devoted to fighting sexism wants to make sure President Trump and the rest of the country remember what he told Billy Bush while on a tour bus in 2005.

The group, Ultraviolet, will splash the video across a screen almost 10 feet high and 16 feet wide set in between the White House and the Washington Monument on Constitution Avenue, and the images and the audio of Trump’s comments will run over and over Friday for 12 consecutive hours. The clip will start rolling at 9 a.m. EDT.

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TRUMP WORLD

Seven Flights for $800,000: Mnuchin’s Travel on Military Jets – The New York Times

Treasury Secretary Steven Mnuchin has flown on military aircraft seven times since March at a cost of more than $800,000, including a $15,000 round-trip flight to New York to meet with President Trump at Trump Tower, according to the Treasury Department’s Office of Inspector General.

The inquiry into Mr. Mnuchin’s air travel, prompted by an Instagram posting by his wife, found he broke no laws in his use of military aircraft but lamented the loose justification provided for such costly flights.

“What is of concern is a disconnect between the standard of proof called for” by the Office of Management and Budget “and the actual amount of proof provided by Treasury and accepted by the White House in justifying these trip requests,” the inspector general wrote.

Chao used government planes seven times when cheaper flights would not work – The Washington Post

Chao has flown on the government’s Gulfstream IV and two leased Cessnas seven times in the past eight months, including during day trips to cities about an hour’s flight from Washington, as well as longer official sojourns to France and Italy for which flights cost taxpayers tens of thousands of dollars.

Chao’s use of the FAA planes is a new twist in the controversy over highflying Cabinet members running up extravagant costs at taxpayers’ expense. Agencies that have government aircraft at their command must justify using them with either comparative pricing analyses or explanations of why they needed to incur extra costs because of scheduling difficulties or security concerns.

Trump fuming over report that Secretary of State Tillerson considered resigning

For the second-straight day, Trump took to Twitter to deride the NBC News report, calling it “fake news.” He said the secretary “never threatened to resign.”

For Tillerson, Diplomatic Breakthrough With Trump Proves Elusive – The New York Times

Even if he stays, Mr. Tillerson is now a wounded figure, his credibility at home and abroad diminished by the perception that he does not have a close alignment with the president. Foreign leaders and diplomats may doubt that he truly represents the administration or that his assurances will stick. A countdown clock has been set, ticking away toward what many assume is the inevitable departure.

Welcome to Rex Tillerson’s life – Axios

You were Rex Tillerson, CEO of Exxon. Now you’re Rex Tillerson, Secretary of State to Donald Trump. Your life blows.

Trump Said ‘Despicable’ Racist Comments About Blacks, Jews in Taped ‘Apprentice’ Meetings, Claims Former Producer

A former producer on The Apprentice has said President Donald Trump made “unfathomably despicable” racist comments while on the set of the show. The news about the remarks was disclosed by Bill Pruitt on NPR’s Embedded podcast released Wednesday. The comments, he said, were allegedly captured on videos that “are somewhere, in some warehouse.”

After the Access Hollywood audio tape, on which Trump could be heard bragging to host Billy Bush about committing sexual assault, leaked, Pruitt tweeted that when it came to Trump tapes, “there are far worse.” He added that it was “just the beginning.”

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ELECTORAL POLITICS

For Republican Leaders in Congress, the Headaches Keep Mounting – The New York Times

Senator Richard C. Shelby, Republican of Alabama, who was first elected to Congress in 1978, said he had never seen rank-and-file Republicans so stirred up against the party’s leaders in Congress. “Right now, the Moore-Bannon faction prevails,” Mr. Shelby said.

Republican leaders on Capitol Hill are making no attempt to mask their fear, predicting that failure to pass a tax overhaul in the coming months will lead to a wipeout in next year’s midterm elections. For the first time, some senators are contemplating whether their advantages on the electoral map next year could crumble amid a wave of primary challenges and other departures, putting their two-seat majority in jeopardy next year.

Republicans are increasingly mystified by their own grass roots, an electorate they thought they knew, and distressed that a wave of turnover in their ranks could fundamentally change the character of Congress. They fear that the inchoate populism that Mr. Trump personifies, and which Mr. Bannon is attempting to weaponize against incumbents, is on the march.

Moore plots with conservatives, snubs GOP leaders – POLITICO

Roy Moore rode into Washington this week to shore up his main constituency: Rebellious Republicans. One person Moore did not see: Senate Majority Leader Mitch McConnell, whom Moore wants to dethrone. And he did not visit the Senate Republican lunch, as is customary for Senate GOP primary winners.

Tim Murphy resigns from Congress – POLITICO

Rep. Tim Murphy (R-Pa.), the embattled anti-abortion lawmaker who allegedly encouraged his lover to terminate a pregnancy, on Thursday announced his plan to resign from office later this month — just a day after announcing his plan to retire following the 2018 election.

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SCANDALS, LAWSUITS, FINES, REGULATORY

Bank Behind Fearless Girl Statue Settles U.S. Gender Pay Dispute – Bloomberg

State Street Corp., the $2.6 trillion asset manager that installed the Fearless Girl statue on Wall Street, agreed to settle U.S. allegations that it discriminated against hundreds of female executives by paying them less than male colleagues.

Investor CEO in $1.3 Billion Divorce Denies Being Married – Bloomberg

A U.K. investment executive is fighting to keep the bulk of his 1.1 billion pound ($1.3 billion) fortune in a divorce case that will turn on whether he was really married.

Asif Aziz, founder and chief executive officer of the real estate investment company Criterion Capital Ltd., says he was never married to Tagilde Aziz under English law, in a case that lawyers say is one of the largest divorce cases ever in a U.K. court.

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Amazon Is Testing Its Own Delivery Service to Rival FedEx and UPS – Bloomberg

Amazon.com Inc. is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses, according to two people familiar with the plan, which will push the online retailer deeper into functions handled by longtime partners United Parcel Service Inc. and FedEx Corp.

The service began two years ago in India, and Amazon has been slowly marketing it to U.S. merchants in preparation for a national expansion, said the people, who asked not to be identified because the U.S. pilot project is confidential. Amazon is calling the project Seller Flex, one person said. The service began on a trial basis this year in West Coast states with a broader rollout planned in 2018, the people said. Amazon declined to comment.

Amazon’s War to the Door – Bloomberg Gadfly

Control of the delivery process is Amazon’s obsession. Now the company is negotiating to lease 20 cargo jets, according to the Seattle Times, again with the ambition of having more autonomy over a part of the delivery path typically handled by shippers such as UPS and FedEx.

Even if Amazon’s self-delivery initiatives never move beyond the experimental phase, they have the benefit of keeping the pressure on shipping companies not to drop the ball. Amazon can’t afford a repeat of Christmas 2013, when UPS and FedEx were overwhelmed by holiday packages and made a portion of deliveries well after Christmas. Amazon had to offer gift cards to some of its customers to make amends. When Amazon executives are asked publicly about its partners in the package delivery business, they tend to say Amazon is happy with its existing relationships with shippers. Behind closed doors, it’s a different story.

Robotic Chefs Arrive in Restaurant Industry – WSJ

In what could be the first mainstream test of a new wave of automation technology, startups such as Zume Pizza, Miso Robotics and others aim to automate America’s restaurant industry, upending how restaurants do business by designing new ways of cooking and distributing meals to consumers.

And in contrast to the hotly debated arrival of autonomous vehicles, much of the food industry’s innovation is already in operation or about to launch, raising the near-term prospect of workers being displaced in cities and towns across the nation.

“We want to make it as close to a restaurant experience as we can,” said Zume Pizza executive chef Aaron Butkus of the technology at the delivery-only business in Mountain View, Calif.

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AUTOS, ELECTRIC, SELF-DRIVING

Car Makers Woo Millions of Saudi Women as Driving Ban Ends – WSJ

Saudi Arabia’s decision last week to allow women to drive has opened up a large market for automobile companies searching for growth, and the competition has already begun.

Within days of King Salman’s decree announcing what will be one of the deeply conservative kingdom’s most profound social reforms, Western and Asian car makers were tweeting out their welcome to woo new customers among the eight million adult Saudi women.

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SCIENCE, NATURE, PSYCHOLOGY

A ‘Sonic Attack’ on Diplomats in Cuba? These Scientists Doubt It – The New York Times

Sound can cause discomfort and even serious harm, and researchers have explored the idea of sonic weaponry for years. But scientists doubt a hidden ultrasound weapon can explain what happened in Cuba.

“I’d say it’s fairly implausible,” said Jurgen Altmann, a physicist at the Technische Universitat Dortmund in Germany and an expert on acoustics. “I know of no acoustic effect that can cause concussion symptoms,” Dr. Altmann said. “Sound going through the air cannot shake your head.”

An ultrasound-emitting device planted inside a building might be close and powerful enough to cause harm to occupants. But even an interior wall would block its waves. A smaller emitter placed even more closely, perhaps in someone’s pillow, might do the trick, said Dr. Qin. But it’s hard to believe such a device could escape attention. In theory, a building could be packed with small emitters; however, experts called it unlikely. And while ultrasound can cause many of the symptoms reported by the diplomats, there’s no evidence that it can cause mild brain injury.

For all of these reasons, experts said, ultrasound weapons should not top the list of possible explanations for the hearing loss and headaches and other symptoms said to have been observed in diplomats.

“I believe those people got something that hurt them,” said Dr. Qin. “But it could be something in the environment.” The possibilities include toxins, or bacterial or viral infections, that can damage hearing.

Bronze Arm Found in Famous Shipwreck Points to More Treasure Below – The New York Times

A bronze statue’s orphaned arm. A corroded disc adorned with a bull. Preserved wooden planks. These are among the latest treasures that date back to the dawn of the Roman Empire, discovered amid the ruins of the Antikythera shipwreck, a sunken bounty off the coast of a tiny island in Greece.

Marine archaeologists working on a project called Return to Antikythera announced these findings on Wednesday from their most recent excavation of the roughly 2,000-year-old wreck, which was first discovered 115 years ago. They said the haul hints at the existence of at least seven more bronze sculptures still buried beneath the seafloor. Bronze sculptures from that era are rare because they were often melted down to make swords, shields and other items. Only about 50 intact examples have survived, so if the team can salvage the submerged statues, it would be a remarkable recovery of ancient artifacts.

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New Species of Sponges Found on the Pacific Seafloor – The New York Times

Thirteen thousand feet deep, on the cold, dark desert of the Pacific Ocean seafloor, scientists have discovered new sponges living on rock nodules targeted for deep-sea mining. The tiny sponges, named Plenaster craigi partly for the multitude of stars that make up their backbones, belong in a genus of their own and are the most abundant organism found to date that live on the nodules.

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HEALTH, PRODUCTIVITY AND WELLNESS

Young Worker Clocked 159 Hours of Overtime in a Month. Then She Died. – The New York Times

The case — the latest high-profile example of karoshi, or “death from overwork” — came to light only after the broadcaster, NHK, announced it this week.

Karoshi became widely recognized as a phenomenon in the late 1980s, as stories of blue-collar employees keeling over at work appeared to expose a sinister side to Japan’s postwar economic miracle. Over the years, cases of karoshi have been reported among white-collar executives, automotive engineers and immigrant trainees.

In a 2016 government report on karoshi, nearly a quarter of companies surveyed said that some employees were working more than 80 hours of overtime a month. Months later, the president of the advertising agency Dentsu resigned after an outcry over the 2015 death of an employee, Matsuri Takahashi, 24, who jumped from the roof of an employee dormitory.

Like Ms. Takahashi, Ms. Sado was a young woman making her way in a blue-chip organization. Her employer is considered one of the most prestigious companies in Japan, a country where exhaustion is often seen as a sign of diligence.

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MISCELLANEOUS

Rose McGowan Is Starting A Revolution

After 20 years of acting — and finally realizing she hates it — Rose McGowan has become Hollywood’s feminist whistleblower. To the industry, she says, “Fuck your rules.”

The Progressive Voice Bursting From Texas and Spreading Everywhere – The New York Times

Hansen, a white-haired grandfather who hasn’t voted since 1972, has become an unlikely viral video star at age 69. Maybe you’ve seen Hansen talking — in remarkably personal terms — about sexual abuse. Or about violence against women. Or racism in sports. Or, to borrow his words, nuts with guns. The Dallas sportscaster Dale Hansen has become a viral video star for his sometimes controversial commentaries. He just wants you to hear him out.

The riffs have made Hansen something of an outlier: a local newsman with a national voice, a champion for social issues in a stick-to-sports world, a liberal voice in a deeply red state that’s as passionate about its sports as it is its politics. Here in Texas, mixing those two religions is nearly a sin, but the cocky Hansen revels in taking on sacred cows, saying, “Oh, well, I’m agnostic anyway.”

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The Mercenary Trader Macro Links were created by Justice “Jack” Litle, aka Justice Litle / Jack Litle — the founder of Mercenary Trader — to provide a compact summary of daily information flows. They are accessed via the Mercenary Research Suite, the flagship offering of Mercenary Trader, which combines trading education and trading research. To see how it works, click here.



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