Macro Links Sep 21st – Private Briefings

Macro Links Sep 21st – Private Briefings

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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)


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PAUL MANAFORT

Manafort offered to give Russian billionaire ‘private briefings’ on 2016 campaign – The Washington Post

Less than two weeks before Donald Trump accepted the Republican presidential nomination, his campaign chairman offered to provide briefings on the race to a Russian billionaire closely aligned with the Kremlin, according to people familiar with the discussions.

Paul Manafort made the offer in an email to an overseas intermediary, asking that a message be sent to Oleg Deripaska, an aluminum magnate with whom Manafort had done business in the past, these people said.

“If he needs private briefings we can accommodate,” Manafort wrote in the July 7, 2016, email, portions of which were read to The Washington Post along with other Manafort correspondence from that time.

The emails are among tens of thousands of documents that have been turned over to congressional investigators and special counsel Robert S. Mueller III’s team as they probe whether Trump associates coordinated with Russia as part of Moscow’s efforts to interfere in the 2016 U.S. election.

Paul Manafort’s ominous email to an aide: ‘How do we use [this] to get whole?’ – The Washington Post

We can argue over what’s innocuous and what’s not, but that seems to be an acknowledgment from his own spokesman that Manafort was discussing how he could leverage his status as a leading strategist on an American presidential campaign to chase down debts he was owed — i.e. to enrich himself financially.

Manafort used Trump campaign account to email Ukrainian operative – POLITICO

Former Donald Trump aide Paul Manafort used his presidential campaign email account to correspond with a Ukrainian political operative with suspected Russian ties, according to people familiar with the correspondence.

Manafort sent emails to seek repayment for previous work he did in Ukraine and to discuss potential new opportunities in the country, even as he chaired Trump’s presidential campaign, these people said.

Manafort Working on Kurdish Referendum Opposed by U.S. – The New York Times

Paul J. Manafort, the former campaign chairman for President Trump who is at the center of investigations into Russian meddling in the 2016 presidential election, is working for allies of the leader of Iraq’s Kurdish region to help administer and promote a referendum on Kurdish independence from Iraq.

The United States opposes the referendum, but Mr. Manafort has carved out a long and lucrative career advising foreign clients whose interests have occasionally diverged from American foreign policy. And he has continued soliciting international business even as his past international work has become a focus of the investigation by the special counsel, Robert S. Mueller III, into ties between Russia and Mr. Trump and his associates, including possible collusion between them to influence the presidential election.

Lewandowski: Manafort should go to jail for the rest of his life if he colluded | TheHill

President Trump’s former campaign manager Corey Lewandowski said this week that, if anyone on Trump’s campaign colluded with Russian officials during the 2016 election, they should “go to jail for the rest of their lives.”

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RUSSIA PROBE, FACEBOOK, TWITTER

RNC covering Trump Jr.’s legal fees: report | TheHill

The Republican National Committee (RNC) has reportedly spent almost $200,000 on legal fees for Donald Trump Jr. According to Politico, $166,000 from the committee’s legal proceedings account went to Alan Futerfas, who is one of Trump Jr.’s attorneys. The law firm Williams & Jensen received $30,000.

Mueller casts broad net in requesting extensive records from Trump White House – The Washington Post

The special counsel investigating Russian election meddling has requested extensive records and email correspondence from the White House, covering areas including the president’s private discussions about firing his FBI director and his response to news that the then-national security adviser was under investigation, according to two people briefed on the requests.

Mueller Seeks White House Documents Related to Trump’s Actions as President – The New York Times

Robert S. Mueller III, the special counsel, has asked the White House for documents about some of President Trump’s most scrutinized actions since taking office, including the firing of his national security adviser and F.B.I. director, according to White House officials.

Mr. Mueller is also interested in an Oval Office meeting Mr. Trump had with Russian officials in which he said the dismissal of the F.B.I. director had relieved “great pressure” on him.

Twitter a growing focus of Senate Russia probe – POLITICO

While Facebook — and its giant user base — has garnered much of the early attention in the Senate’s investigation, Twitter is also emerging as an area of interest. Twitter has a much smaller user base than Facebook, but its ability to inject information into the U.S. media ecosystem has become a focus of investigators.

Trump Is Using Targeted Facebook Ads To Reassure Supporters He Will Build The Border Wall

President Donald Trump is using targeted Facebook ads to reassure supporters that he still plans to build the border wall after his recent public comments caused many to question whether he would keep his promise.

Facebook, After ‘Fail’ Over Ads Targeting Racists, Makes Changes – The New York Times

That its ad-targeting tools could be used in such a way was “a fail” for the company, Sheryl Sandberg, Facebook’s chief operating officer, said in a post. She added that Facebook would add “more human review and oversight” to its automated systems to prevent further misuse.

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HURRICANE MARIA

Hurricane Maria Strikes, and Puerto Rico Goes Dark – The New York Times

Hurricane Maria, the most powerful storm to make a direct hit on Puerto Rico in almost a century, ravaged the island on Wednesday, knocking out all electricity, deluging towns with flashfloods and mudslides and compounding the already considerable pain of residents here.

Hurricane Maria: Forceful storm knocks out power to all of Puerto Rico – The Washington Post

Maria is the strongest hurricane to hit Puerto Rico since 1932. With sustained winds of 155 mph at landfall — a strong Category 4 storm and nearly a Category 5 — Maria was so powerful that it disabled radar, weather stations and cell towers across Puerto Rico, leaving an information vacuum in which officials could only speculate about property damage, injuries or deaths.

Hurricane Maria: Whole of Puerto Rico without power – BBC News

Hurricane Maria has knocked out power across the island of Puerto Rico, home to 3.5m people, officials have said. Abner Gómez, head of the disaster management agency, said none of the customers of Puerto Rico’s Electric Power Authority had any electricity.

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MEXICO EARTHQUAKE, JAPAN QUAKE

Mexicans Dig Through Quake Rubble as Death Toll Passes 200 – The New York Times

Mexicans, fighting fatigue and ebbing hope, hurried Wednesday to dig out survivors still trapped in dozens of collapsed buildings a day after a powerful earthquake rattled the capital and killed at least 230 people, including 30 schoolchildren.

Thousands of government and rescue workers were mobilized, plunging into the shattered shells of residences and offices across the city as legions of residents helped clear debris. The harried activity at disaster sites stood in sharp contrast to the rest of the city, where an eerie quiet prevailed, with schools closed, businesses largely shuttered and the normally clogged rush-hour streets mostly empty.

In Mexico Quake, Geography and Building Codes Played Important Roles – WSJ

Mexico City’s central neighborhoods were built on the bed of a long since drained highland lake on whose islands the Aztecs had built their city. The soft lake bed means that when a quake strikes, the ground goes very wobbly. “Think of a bowl of jelly. If you shake it, it just keeps on shaking,” said Gavin Hayes, a research geophysicist at the U.S. Geological Survey.

Japan earthquake: Magnitude 6.1 tremors hit east coast | The Independent

An earthquake with a magnitude of 6.1 has been detected off the coast of Japan. The US Geological Survey said that the earthquake struck about 175 miles south east of Kamaishi, and around 200 miles east of Fukushima. It is the third major earthquake to strike around the world in the last 24 hours – following one in Mexico that measured a magnitude of 7.1, while another 6.1 magnitude earthquake stuck New Zealand.

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PRIVATE JET, BUDGET, TAX CUTS

Price’s private-jet travel breaks precedent

The travel by corporate-style jet comes at a time when other members of the Trump administration are under fire for travel expenditures, and breaks with the practices of Obama-era secretaries Sylvia Mathews Burwell and Kathleen Sebelius, who flew commercially while in the continental United States.

Price, a frequent critic of federal spending who has been developing a plan for departmentwide cost savings, declined to comment.

Tom Price Reportedly Spent $60,000 on Private Jets Last Week

Charter operators told Politico’s Dan Diamond and Rachana Pradhan that Price’s private flights last week would have cost at least $60,000. For at least one leg of travel, a short jaunt from Washington to Philadelphia and back on Friday, Diamond and Pradhan write that there were ample commercial alternatives. A round-trip United flight would have cost between $447 and $725 per person. A cheap ticket on an Amtrak train would have cost $72. A road trip would have cost around $46 in gas and tolls per SUV. Price’s round trip to Philly—just over an hour of flight time—cost $25,000.*

Senate Republicans Embrace Plan for $1.5 Trillion Tax Cut – The New York Times

Senate Republicans, abandoning a key fiscal doctrine, agreed on Tuesday to move forward on a budget that would add to the federal deficit in order to pave the way for a $1.5 trillion tax cut over the next 10 years.

The Republican lawmakers, under mounting pressure to score a legislative win on taxes, say a tax cut of this magnitude will stimulate economic growth enough to offset any deficit impact.

Yet critics say a deficit-financed tax cut is at odds with longstanding Republican calls for fiscal discipline, including that tax cuts not add to the ballooning federal deficit. The federal debt topped $20 trillion earlier this month and is projected to grow by another $10 trillion over the next decade.

Senate Republicans Reach a Deal on Budget – WSJ

Sens. Pat Toomey (R., Pa.) and Bob Corker (R., Tenn.), representing opposing fiscal-policy viewpoints in the Senate Budget Committee, said Tuesday that they struck the agreement, which senators said could lead to a committee vote as early as next week.

Mr. Toomey had been seeking tax cuts that might reduce revenues by as much as $2 trillion over a decade. Mr. Corker, more wary of budget deficits, had been arguing for a smaller number. The number could be up to $1.5 trillion in revenue-reducing tax cuts, but neither senator would confirm the figure in advance of a formal announcement.

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ZOMBIE OBAMACARE REPEAL

The GOP Wants to Buy Murkowski’s Vote on Obamacare Repeal

The GOP’s (ostensible) plan for passing Graham-Cassidy is to win over a politically secure senator — who has opposed every other repeal bill and owes nothing to the Republican Party — to the most radical repeal legislation yet, even though it violates at least five separate promises she made to her constituents, by offering to cut federal subsidies to her state by a relatively modest amount.

GOP Health Bill Would End Guarantee That Sick People Won’t Pay More – Bloomberg

The latest effort to repeal Obamacare — which Senate GOP leaders hope to pass next week — would end the current health law’s guarantee that sick people won’t pay higher premiums.

Cassidy-Graham bill would cut funding to 34 states, new report shows – The Washington Post

The latest Senate Republican drive to dismantle the Affordable Care Act would sharply reduce federal spending on health insurance and cause 34 states to lose such funding, according to an analysis that details the checkerboard of winners and losers the plan would create.

States with relatively low medical costs, skimpy Medicaid benefits and no program expansion would win out. Texas would gain more than any state, about $35 billion from 2020 through 2026. On the other hand, states with higher-priced medicine and generous benefits for their low-income residents, such as California and New York, would lose billions of dollars.

Insurers Come Out Swinging Against New Republican Health Care Bill – The New York Times

The health insurance industry, after cautiously watching Republican health care efforts for months, came out forcefully on Wednesday against the Senate’s latest bill to repeal the Affordable Care Act, suggesting that its state-by-state block grants could create health care chaos in the short term and a Balkanized, uncertain insurance market.

McConnell Plans Vote on GOP Health Bill Next Week – WSJ

Senate Majority Leader Mitch McConnell said he planned to hold a vote next week on the latest GOP effort to unwind the Affordable Care Act, even as Republicans were scrambling to secure support to pass the legislation.

Christie comes out against Graham-Cassidy | TheHill

The Associated Press reported on Wednesday that Christie is refusing to support the bill, which Sens. Lindsey Graham and Bill Cassidy are currently pushing in the upper chamber, because it would hurt states like New Jersey that expanded Medicaid under ObamaCare.

Kimmel, not Cassidy, is right on health care, analysts say – POLITICO

The proposal’s overhaul of Medicaid and other changes to Obamacare would lead to dramatic reductions in coverage, most analysts concur.

Jimmy Kimmel doubles down, slams Sen. Bill Cassidy, Trump and ‘Fox & Friends’ over health-care bill – The Washington Post

Kimmel: “Oh, I get it, I don’t understand because I’m a talk show host, right? Well, then help me out. Which part don’t I understand? The part where you cut $243 billion from federal health-care assistance? Am I not understanding the part where states would be allowed to let insurance companies price you out of coverage for having preexisting conditions? Maybe I don’t understand the part of your bill in which federal funding disappears completely after 2026? Or maybe it was the part where the plans are no longer required to pay for essential health benefits like maternity care or pediatric visits?”

“Or the part where the American Medical Association, the American College of Physicians, the American Academy of Pediatrics, the American Hospital Association, the American Cancer Society, the American Diabetes Association, American Heart Association, Lung Association, Arthritis Foundation, Cystic Fibrosis Foundation, ALS, Multiple Sclerosis Society, and the March of Dimes, among many others, all vehemently oppose your bill? Which part of that am I not understanding? Or could it be, Sen. Cassidy, the problem is that I do understand and you got caught with your G-O-Penis out? Is that possible? Because it feels like it is.

“When Sen. Cassidy was on my show in May, he told me that he believed that every American family, regardless of income, should be able to get quality health care. And I believed he was sincere. Sadly, the bill he unveiled last week with Sen. Lindsey Graham indicates that he was not sincere. It is, by many accounts, the worst health care bill yet.”

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NORTH KOREA

Why Sanctions Against North Korea Are Causing Pain in China – Bloomberg

Along China’s border with North Korea, residents are more worried about feeding their families than the possibility of nuclear war.

In Hunchun, a city of about 230,000 people near China’s shared frontier with North Korea and Russia, protests briefly broke out last month after the United Nations Security Council approved sanctions banning exports of seafood and other goods from Kim Jong Un’s regime. Dozens of wholesale stores were shuttered, dealing a blow to the packagers, distributors, drivers and restaurateurs who depend on the trade.

Trump Says Nothing While North Korea Gets Fuel From Russian Companies

President Donald Trump has yet to directly condemn Russia for interfering in last year’s election, and his silence appears to extend to Russian companies linked to North Korea.

Despite U.N. sanctions meant to cripple the North Korean economy, ships from the rogue nation earlier this year reportedly left Russian ports carrying fuel as cargo and headed back to their home country instead of to their listed destinations, China and South Korea, according to a Reuters analysis of ship data.

The data showed at least eight North Korean ships traveled to the Russian port of Vladivostok and claimed they were then heading to their two closest neighbors. Instead, those vessels went off to one of four North Korean ports: Chongjin, Hungnam, Kimchaek or Najin.

Report: Russia getting around sanctions, supplying North Korea with fuel – Business Insider

US officials say that changing destination mid-voyage is a hallmark of North Korean state tactics to circumvent the international trade sanctions imposed over Pyongyang’s nuclear weapons program.

Changing course and the complex chain of different firms — many offshore — involved in shipments can complicate efforts to check how much fuel is supplied to North Korea and monitor compliance with a cap on fuel imports under UN sanctions.

China to Donald Trump: Your North Korea speech was really unhelpful | Toronto Star

China rebuked the U.S. president on Wednesday for his threat to “totally destroy” North Korea if necessary, a warning that gave Beijing an easy opportunity to seize the moral high ground.

North Korean defector witnesses 22 musicians executed

A defector from North Korea has described the shocking brutality she witnessed from inside Kim Jong-un’s regime. Hee Yeon Lim described how the North Korean leader ordered executions of anyone who dared to cross him and alleged that he picks teenage girls to become his sex slaves.

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IRAN DEAL, AFRICA LUNCH

Iranian president says 2015 nuclear deal will ‘collapse’ if Trump pulls the U.S. out – The Washington Post

The international nuclear agreement with Iran is a “closed issue” and cannot be extended or changed in any way, Iranian President Hassan Rouhani declared Wednesday, flatly rejecting President Trump’s criticism that the deal is weak and “an embarrassment.”

“This is a building the frame of which, if you take out a single brick, the entire building will collapse,” Rouhani said. “This issue must be understood by the American officials,” he added. “Either the JCPOA will remain as it is in its entirety or it will cease to exist.”

Rex Tillerson was startled that Trump told reporters he had made up his mind on Iran deal – The Washington Post

Trump has a long history of undermining or contradicting what his underlings, including press secretaries and Cabinet secretaries, say in public, often within hours. That can make the administration appear chaotic and disorganized; Tillerson, in particular, has suffered from the public impression that, while he has worked hard to develop a personal relationship with Trump, he remains outside the inner circle when it comes to decision-making.

Trump Leaning Toward Decertifying Iran Nuclear Deal, Say Sources – NBC News

Four sources say President Trump is leaning toward decertifying the Iranian nuclear deal and then letting Congress decide whether the U.S. will withdraw from the pact.

Trump Pushes to Revisit Iran Nuclear Deal, and Asks Allies to Help – The New York Times

The maneuvering suggested a possible path forward for Mr. Trump short of abandoning the accord, but it remains uncertain whether he can reach consensus with the European allies, much less with Russia and China, the deal’s other patrons. Iran on Wednesday ruled out revisiting the agreement as President Hassan Rouhani declared it a “closed issue” and warned that if the United States pulled out, Iran might resume uranium enrichment.

Trump makes up an African nation during lunch with African leaders

President Trump announced that the nonexistent country of “Nambia” has an increasingly self-sufficient health-care system during a United Nations lunch with African leaders on Wednesday.

Trump Says His Friends go to Africa to ‘Try to Get Rich’ | Time.com

His remarks, made at a luncheon Wednesday in New York City, were met with silence from African leaders.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

States Need $645 Billion to Pay Full Health-Care Costs – WSJ

The new Governmental Accounting Standards Board principles urge officials to record all health-care liabilities on their balance sheets instead of pushing a portion of the debt to footnotes. The adjustments will show that U.S. states as a group have promised hundreds of billions more in retiree health benefits than they have saved up.

The shortfall amounts to at least $645 billion, according to a new report from the nonprofit Pew Charitable Trusts based on 2015 data. That is in addition to the $1.1 trillion that states need to pay for promised pension benefits, according to Pew.

17U21 - STATE LIABILITIES

Managers of $3 Trillion Buy Dollars After Six-Month Slide – Bloomberg

The dollar has been mired in its worst slump in a decade, battered by political drama in Washington and shifting bets on central-bank policy. Managers of $3 trillion say the carnage has gone on long enough.

Mellon Capital Management Corp., State Street Global Advisors and UBS Asset Management are wagering that the greenback will recoup some of its 9 percent slide in 2017 as traders embrace a scenario that was all but written off a few weeks ago: a December rate hike by the Federal Reserve. That view gained traction Wednesday after policy makers stuck to their forecast for another increase this year. The dollar surged on the announcement.

Venezuela Said to Be Late on $185 Million Sovereign Bond Payment – Bloomberg

Venezuela, one of the world’s riskiest countries for investors, is late on a debt payment. The intermediaries tasked with passing along interest payments for the cash-strapped nation haven’t received the funds for an $185 million coupon that was due Sept. 15, according to people with knowledge of the matter. Investors interviewed by Bloomberg say they haven’t been paid, and brokers say their clients are still waiting on the cash.

Russia to Bail Out Second Major Bank in Month as Troubles Spread – Bloomberg

The move highlights the complications accompanying the Bank of Russia’s efforts to clean up the financial sector after the dual economic shocks of a collapse in oil prices and international sanctions in 2014. B&N was among a handful of private lenders picked by the regulator to help rescue other ailing banks, unchecked expansion and mounting bad debt.

Ronaldo Hawks 500-1 Leverage Derivatives That Regulators Loathe – Bloomberg

Ronaldo’s new partner, an online brokerage based in Cyprus, deals in contracts for difference, or CFDs, complex derivatives that officials across the continent are seeking to curb because of the risks they pose to retail investors. Exness offers leverage, or borrowed funds, of as much as 500 times traders’ deposits, a feature that rule-makers say helps people lose money on market bets they don’t understand.

Real Madrid and Ronaldo, who has 21 million more Twitter followers than U.S. President Donald Trump, aren’t alone in signing deals with CFD firms. Some of the biggest soccer clubs in Europe have links to brokerages similar to Exness, ranging from Real Madrid rival Atletico de Madrid to Manchester City and Liverpool in England, even as regulators impose advertising bans and consider capping the risks CFD investors can take.

China’s Postal Savings Bank Taps Overseas Investors for $7.6 Billion in Capital – WSJ

The bank, China’s sixth-largest by assets, on Thursday launched a sale of U.S. dollar-denominated securities that are known in the debt market as “cocos,” or contingent convertibles. Investment bankers in recent days have been marketing the offering to investors in Hong Kong, Singapore, Paris and London.

The deal, which is expected to be priced later in the day, will be a test of global investors’ appetite for risk in China’s financial sector. The securities are initially being offered with a yield of about 4.85%, according to a person familiar with the matter.

Toys ‘R’ Us Bankruptcy Good for Silver in Retail Rankings – Bloomberg

Toys “R” Us Inc. is the second-largest U.S. retail bankruptcy ever, with $6.6 billion of total assets at the time of filing, according to S&P Global Market Intelligence. Only Kmart, which has since reorganized, was bigger with $16.3 billion of assets when it went under in 2002. The toy chain said this week it doesn’t plan to close stores and will continue operations, unlike Circuit City Stores Inc. and RadioShack Corp., which were forced to liquidate.

17U21 - TOYSRUS

Investors Fleeing Junk Credit See Less Risk in Emerging Markets – Bloomberg

Investors tired of the measly returns in junk bonds are shifting their money to emerging-market debt. Funds are flowing into developing-nation assets as traders pulled cash from high-yield funds in recent weeks. Investors at Deutsche Asset Management and Brandywine Global Investment Management, who have more than $170 billion under management, say they are making the switch in pursuit of higher yields with less risk.

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Why Mexico Is So Prone to Strong Earthquakes – The New York Times

Mexico’s location makes the country prone to strong earthquakes because it is in a so-called subduction zone.

Subduction zones are the parts of the earth where one slab of the crust is slowly sliding under another. In Mexico’s case, an oceanic plate — the Cocos — is gradually sinking beneath a continental plate — the North American. Over time, stress builds because of friction between the slabs, and at some point, the strain becomes so great that all the pent-up energy is released in the form of an earthquake.

The subduction zone responsible for the two recent quakes runs along the western coast of Central America, from Central Mexico to Panama, said Gavin Hayes, a research geophysicist with the United States Geological Survey. Other subduction zones are found across the globe — and experts say they are responsible for the world’s most powerful earthquakes.

Trump’s UN Speech Was More Embarrassing Than the Iran Deal | Fortune.com

Of course, the U.S. has the capacity to destroy North Korea. But it could not do so without provoking the destruction of South Korea and much of Japan. Kim may be a tyrant, but he is not a fool. He is not going to hand a justification for his own annihilation to Trump. While the military option is always available, it is also unthinkable. One thing such a threat will accomplish, however, is making an acceptable solution to this issue all the more difficult to find.

The Stock Market Has Been Magical. It Can’t Last. – The New York Times

Several statistical measurements demonstrate how unusual this market environment has been. The most obvious is the bull market’s longevity, fueled largely by the Federal Reserve’s ultralow interest rates and voracious bond buying. The upward trend in stocks already ranks as the second longest in American history since 1900 and the third highest in percentage gains, according to a tally by Bespoke Investment Group. From the trend’s start, in 2009, through its latest high, on Aug. 7, the Standard & Poor’s 500 has risen 267 percent.

But that’s not all. By one standard — the market’s average daily movement, measured against its trend for that year — stocks so far in 2017 are the steadiest they have been since 1965, when Lyndon B. Johnson was in the White House and the Rev. Dr. Martin Luther King Jr. was leading an epochal civil rights march from Selma to Montgomery, Ala. On Wall Street that year, a young man named Warren Buffett gained effective control of a textile firm called Berkshire Hathaway, making it the vehicle for a legendary investing career.

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CENTRAL BANKS & MONETARY POLICY

Confident Fed Sets Stage for December Rate Increase – The New York Times

Nearly a decade after the Federal Reserve embarked on an unprecedented effort to shore up the collapsing American economy, the central bank said on Wednesday that it would begin withdrawing some of the trillions of dollars it invested in the wake of the 2008 financial crisis.

The decision, while widely expected, is nevertheless a significant sign that the Fed is confident that economic growth and low unemployment will continue. In other words, the central bank believes that the American economy has emerged safely from the crisis.

Fed calls historic end to quantitative easing

The Federal Reserve will throw its crisis-era stimulus programme into reverse from next month and stick with plans for further rate rises, in a mark of confidence that stagnant inflation is set to bounce back.

The US central bank, chaired by Janet Yellen, held rates on Wednesday but said it would consider a further interest rate rise this year. It starts paring back its multitrillion-dollar balance sheet in October. While acknowledging the damage inflicted by recent hurricanes, most policymakers stuck with forecasts for another rate rise in 2017 — most likely in December — as well as three further increases in 2018.

Fed set to press the button to unwind quantitative easing

Nearly a decade after unleashing a stimulus programme that more than quadrupled the size of its balance sheet, the Federal Reserve is on Wednesday likely to formally announce the process of unwinding quantitative easing, in a signal of its confidence in the recovery.

The move, which comes as a range of central banks plan to rein in their stimulus, will gradually start reducing the size of the US central bank’s $4.5tn balance sheet, which former Fed chair Ben Bernanke started to radically boost in late 2008 in the teeth of the worst financial crisis of modern times.

Fed to Start Paring Holdings, Keeps December Rate Rise on the Table – WSJ

The Federal Reserve said it would initiate in October its long-telegraphed plan to shrink the portfolio of bonds acquired after the 2008 crisis and left open the possibility of raising short-term interest rates by December.

Yellen Brushes Aside Inflation ‘Mystery’ While Fed Eyes Rate Hike – Bloomberg

Federal Reserve Chair Janet Yellen acknowledged that the fall in inflation this year was a bit of a “mystery” but suggested that the central bank was on course to raise interest rates again in 2017 nonetheless.

“We continue to expect that the ongoing strength of the economy will warrant gradual increases” in rates, she told a press conference after the Federal Open Market Committee announced that it will slowly begin to pare its bond holdings next month. As expected, the target range for the federal funds rate was held at 1 percent to 1.25 percent.

ECB Faces Communication Challenge Over Easing QE – Bloomberg

The European Central Bank is set to face a communication challenge if it opts to scale back bond purchases next year. Its forecast for a dip in annual inflation will make it hard for the central bank to point to price growth approaching its target as justification for cutting back on support for the economy. Strong increases in energy and unprocessed-food prices in early 2017 will drop out of the year-on-year comparison in the first quarter of 2018.

ECB Stimulus Is Finally Reaching the Whole Euro Zone – Bloomberg

Transmission of low interest rates to business loans in weaker economies had been virtually severed, but now it’s back. That relationship has finally been restored, “perhaps the strongest sign” that the crisis has ended, according to Steil, who directs international economics at the Council of Foreign Relations in New York. In fact, the link between ECB rates and how much banks charge on new business loans is now, on average, “considerably stronger in the periphery than in the core,” he wrote in a blog post.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

Apple Falls After Analyst Report Indicates Weak iPhone 8 Demand – Bloomberg

Apple Inc. shares fell the most in more than a month after an analyst said demand for the iPhone 8 is “substantially lower” than for earlier models of the world’s best-selling smartphone.

Pre-order volumes in the U.S. for the iPhone 8 fell below those for the iPhone 7 and iPhone 6, Rosenblatt Securities analyst Jun Zhang said in a note to clients. Demand in China is even lower, the analyst said. Zhang has a neutral rating on Apple shares.

Bed Bath & Beyond Falls the Most in Five Years – Bloomberg

Bed Bath & Beyond Inc. suffered its worst stock decline in five years after its sales tumbled last quarter and the home-furnishings chain warned that recent hurricanes would take a toll on profit.

Plan to ease U.S. firearm export rules may relieve gunmakers facing sales slump

A move by the Trump administration to make it simpler to sell small arms abroad may provide some relief to gun makers American Outdoor Brands and Sturm Ruger & Company in an industry grappling with a deep sales slump since the election of President Donald Trump.

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DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

Bain-Led Group to Buy Toshiba Chip Unit in $18 Billion Deal – Bloomberg

Toshiba Corp.’s board agreed to sell its flash memory chip unit to a group led by Bain Capital for 2 trillion yen ($18 billion), taking an important step toward ending a contentious bidding process that has stretched over eight months.

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FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS

Bitcoin ‘Fugitives’ Gather in Hong Kong to Skirt China’s Curbs – WSJ

China’s crackdown on cryptocurrencies isn’t stopping the industry’s enthusiasts from preaching their tune. Instead, it is emboldening them to find ways to circumvent the curbs.

Hundreds of bitcoin traders and blockchain-technology experts gathered in Hong Kong on Wednesday for a two-day conference originally scheduled to be held in Beijing. The recent regulatory clampdown caused the event to be moved “to lower the risks of being canceled,” according to the website of conference organizer Bitkan, a bitcoin-trading firm.

“We are fugitives here,” John McAfee, a bitcoin bull who is best known for the antivirus company he founded, told the audience. A former fugitive himself for past misadventures in Belize, Mr. McAfee described what the Chinese government is doing as “the opening bell of what will get worse and worse.”

Bitcoin Is Likely to Split Again in November, Say Major Players – Bloomberg

Bitcoin is looking increasingly likely to splinter off again in November, creating a third version of the world’s largest cryptocurrency as miners and developers pursue separate visions to scale its rapidly growing marketplace.

Yuan Fix Is Back in the Spotlight – Bloomberg

China’s daily currency fixing is made all the more important by the dearth of other ways to decipher the central bank’s outlook for the currency it manages. PBOC Governor Zhou Xiaochuan rarely comments on the yuan, while views from more junior officials in local newspapers can be contradictory to market moves and the speakers aren’t always identified by name.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

Two Big Words Show Why U.S. Oil May Finally Be Turning a Corner – Bloomberg

Oil futures in New York have been stuck in glut mode, but that may be starting to change for the first time in years as backwardation, one of those big words used by traders, begins to replace contango.

After prices collapsed in 2014, West Texas Intermediate gradually started selling at a discount to its longer-dated futures. That’s what contango means. This occurs when buyers are willing to pay more for future deliveries as a way to limit their storage costs. Meanwhile, those who have the ability to store crude gain an advantage by buying it cheaply, then selling it for later delivery at a profit.

In the past few days, at least a portion of the futures curve has begun to show the opposite: backwardation. This pattern typifies a shortage, when traders want their oil as quickly as possible and will pay more for delivery that will arrive sooner. It’s a sign that traders expect the glut to ease and are now trying to lock in their supply.

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COMMODITIES AGRICULTURE & SOFTS

Citigroup Hails Outlook for Commodities Over Rest of Year – Bloomberg

Raw materials are set to round out 2017 with a bang, according to Citigroup Inc., which flagged prospects for further gains in oil and metals. “Commodities have hit their stride since the start of the third quarter and are set for a sterling performance for the rest of 2017, particularly given stronger incentives for investment inflows,” the bank said in a report on Wednesday.

Cocoa Prices Have Crashed but Smugglers Are Still Making Money – Bloomberg

It’s almost impossible to monitor the scale of illicit trading between the countries supplying 60 percent of the world’s cocoa because their borders are porous. Ivory Coast’s cocoa regulator estimates about 70,000 tons of beans were smuggled into Ghana this season, equal to at least 7 percent of Ghana’s annual production. People familiar with the trade forecast that figure will multiply with the next crop.

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POLLUTION, CLIMATE & ENVIRONMENT

Nicaragua to sign Paris deal, leaving US, Syria as only countries opposed | TheHill

The Nicaraguan government is preparing to join the Paris climate agreement, making Syria the only country not to be a party to the deal and the United States the only nation determined to pull out of it.

Sea Turtles Appear to Be Bouncing Back Around the World – The New York Times

Antonios Mazaris, an ecologist at Aristotle University of Thessaloniki in Greece and a team of international researchers found that globally, most populations of sea turtles are bouncing back after historical declines. Their research helps clarify why some conservation and research groups have reported both increases and decreases for individual nesting sites over the past decade.

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FRONTIER MARKETS

Investors Shrug Off Doubts on Duterte to Lift Philippine Stocks to Record Highs – WSJ

The unpredictable leader of the Philippines, Rodrigo Duterte, hasn’t damped investor optimism about the country’s stock market. The benchmark PSEi has jumped 20% this year, making it among the world’s better-performing stock indexes.

In World’s Manic Search for Yield, South Africa Fails to Excite – Bloomberg

Amidst a clamor for yield which recently saw investors lapping up bonds from a country some couldn’t even place on an Asian map, South Africa’s latest debt sale had a lukewarm reception.

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CANADA, AUSTRALIA, NEW ZEALAND

Mysterious flesh-eating bacteria is raging in Australia | Ars Technica

In the last year, cases of a ghastly but mysterious flesh-eating bacterial infection have more than doubled in Victoria, Australia, raising alarm among health experts. While the rises alone are enough to worry health experts, the fact that virtually nothing is known about the cause of the infection has some dismayed.

“I’m at the forefront as a clinician trying to treat patients and getting more and more overwhelmed but also distressed at the fact that we are doing nothing to try and prevent people getting it in the first place,” Dr. Daniel O’Brien, of Royal Melbourne and Geelong hospitals, told Nine News.

New Zealand Economy Rebounds Ahead of Election – WSJ

New Zealand’s economy rebounded in the second quarter after six months of lackluster progress, an indication that growth may be regaining momentum as the nation prepares to go to the polls Saturday in a tightly fought general election.

Protester sets himself on fire outside Parliament – NZ Herald

“When police got here there was a person on fire. He has subsequently been put out. Unfortunately he is in a critical condition in hospital,” he said. “Police are appealing to members of the public and witnesses and other people that may have assisted.”

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BREXIT, SCOXIT, LONDON, UK ECONOMY

U.K. Property Slowdown Continues as Prices Fall for Fifth Month – Bloomberg

U.K. house prices fell for a fifth month in August, according to a new report, dragging their annual gain to the weakest since 2012.

In a monthly report published Wednesday, Acadata said values fell 0.2 percent from July to an average 297,398 pounds ($400,863). From a year earlier, they rose 2.1 percent. Detailed figures published with a lag show London values dropped 1.4 percent in July, led by prime boroughs such as Kensington and Chelsea, and Westminster.

17U21 - SLOWEST GROWTH SINCE 2012

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DACA, TRAVEL BAN, IMMIGRATION, WALL

California is suing Trump to stop construction of the border wall – The Washington Post

California took aim Wednesday at one of President Trump’s key campaign promises: building a border wall.

A lawsuit filed by the state to stop construction of the wall argues that Trump and the Department of Homeland Security violated federal environmental standards and unconstitutionally overrode the power vested in states. The move by the country’s most populous state — which has emerged as a global force in the fight against climate change and a center of opposition to the president — is the most recent obstacle Trump faces in fulfilling his promise to build a “big, beautiful wall” along the United States-Mexico border.

First Refugees Off to U.S. in Deal That Triggered Trump Tirade – WSJ

Refugees from Australia’s offshore detention centers will arrive in the U.S. under a resettlement deal that President Trump blasted as “dumb,” before his administration reluctantly agreed to honor it.

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GEOPOLITICS, CRIME, TERRORISM

Pakistan’s Leader Says Military Has Routed Taliban From Afghan Border – The New York Times

The U.S. and Afghanistan doubt that claim and say Pakistan must do more to thwart militants.

Suu Kyi, Under Fire, Says Myanmar Will Allow Certain Rohingya to Return – WSJ

Aung San Suu Kyi defended her country’s treatment of Rohingya Muslims, saying her country had nothing to fear from international scrutiny after more than 410,000 Rohingya fled to Bangladesh over the past three weeks.

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PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Hackers Entered Equifax Systems in March – WSJ

Hackers roamed undetected in Equifax’s computer network for more than four months before its security team uncovered the massive data breach, a security firm said in a confidential note Equifax sent to some of its customers.

SEC Discloses Edgar Corporate Filing System Was Hacked in 2016 – WSJ

The SEC disclosed that hackers penetrated its electronic system for storing public-company filings and may have traded illegally on the information.

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PROPAGANDA, CORRUPTION, AUTHORITARIANISM

Emboldened China Wields Its Laws to Silence Critics From Abroad – The New York Times

The case of a rights activist from Taiwan awaiting sentencing in China for subversion is emblematic of a wider, global campaign, critics say. “China has been extending its clampdown — its choking of civil society — throughout the world, and often it is attempting this through official channels such as the U.N. or Interpol,” said Michael Caster, a rights campaigner who was a co-founder of the Chinese Urgent Action Working Group. “Unfortunately, they’re very adept at doing it.”

Kenya Court Says It Nullified Election Over Possible Hacking – The New York Times

Kenya’s Supreme Court said on Wednesday that it had nullified last month’s presidential election because the voting may have been hacked, and accused the electoral commission of failing to verify results before announcing them.

It stopped short, however, of calling the vote rigged, and rejected the opposition’s assertion that President Uhuru Kenyatta had used state resources and undue influence to sway the outcome.

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TRUMP WORLD

Networks Pass on Sean Spicer for Paid Contributor Role – NBC News

Despite his turn at the Emmy Awards, news network sources tell NBC News that Spicer will not be a paid contributor for any of the five major organizations.

Fox News Slammed by Legal Experts for Saying Trump Was Right About Obama Wiretap

The president’s claims that Obama wiretapped Trump Tower aren’t true even after Manafort disclosure, say legal experts.

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SCANDALS, LAWSUITS, FINES, REGULATORY

Pfizer Alleges J&J Thwarted Competition to Remicade, in Legal Test of Biotech-Drug Copies – WSJ

Pfizer filed suit against Johnson & Johnson alleging it has thwarted competition to its arthritis drug Remicade by effectively preventing health insurers, hospitals and clinics from offering Pfizer’s lower-priced copy.

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SILICON VALLEY, UNICORNS, STARTUPS, VC

Europe Renews Offensive on Silicon Valley With Tax Reforms – The New York Times

A new set of proposals presented by officials in Brussels seek to tax technology companies differently, but risk being seen as an effort to target American tech giants.

Google Is Close to Buying HTC Assets to Bolster Hardware – Bloomberg

Alphabet Inc.’s Google is close to acquiring assets from Taiwan’s HTC Corp., according to a person familiar with the situation, in a bid to bolster the internet giant’s nascent hardware business.

By owning a manufacturer, Google could gain tighter control over production of its new Pixel smartphone and other devices, helping it ramp up sales. Those gadgets are fast becoming the pillars of Google’s strategic push to keep critical software products, such as its voice-enabled assistant, in circulation, contain costs in its main advertising business and better compete with Apple Inc.

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RETAIL APPAREL, SPECIALTY, DINING, BIG BOX

Amazon ‘Reviewing’ Its Website After It Suggested Bomb-Making Items – The New York Times

A British television news report said that the online retailer’s algorithms were automatically offering items that could be used to create an explosive device.

Amazon working on first wearables to interact with Alexa

Amazon is working on its first wearable device: a pair of “smart glasses” that would allow its virtual assistant Alexa to be summoned any time, anywhere, according to people familiar with its plans.

The device, which would tether wirelessly to a smartphone, is designed to look like a regular pair of spectacles so that it could be worn comfortably and unobtrusively, the people said. A bone-conduction audio system would allow the wearer to hear Alexa without having to insert headphones into their ears.

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SCIENCE, NATURE, PSYCHOLOGY

China Rushes to Surpass U.S. in Decoding Citizens’ Genes – WSJ

Scientists here hope to identify mutations, or glitches in genes, that contribute to disease, then eventually personalize medicine based on the genetic blueprint of each individual—an emerging and lucrative field known as precision medicine.

UK scientists edit genome to change human embryo development

The Crick team used Crispr, an ultra-precise genome editing tool that is transforming biology, to knock out a gene called Oct4 in fertilised human eggs. Embryos missing Oct4 developed abnormally and failed to become blastocysts — balls of 200 cells that can implant in the uterus. The Human Fertilisation and Embryology Authority approved the project in February 2016.

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MISCELLANEOUS

Jake LaMotta, ‘Raging Bull’ in and Out of the Ring, Dies at 95 – The New York Times

LaMotta, who learned to box in a reformatory, won the middleweight championship and inspired an acclaimed film in which he was played by Robert De Niro.

Battered, Not Broken: Pictures of Mexico After the Quake – The New York Times

As Mexicans rush to one another’s aid, portraits of a country that is already dusting itself off.

17U21 - MEXICO QUAKE

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