Month: December 2016

Did Jeff Gundlach do it again? Shortly after the DoubleLine manager told Reuters yesterday afternoon that the Trump rally is ending, that “stocks have peaked” and that it is “too late to buy the Trump trade”, US stocks tumbled to their sessions lows, and have continued to slide overnight, with S&P futures down 0.3%, alongside sliding Asian and European markets; oil and the dollar are also down with the only asset class catching a slight bid are 10Y bonds, whose yields are lower at 2.43% after reaching an 18 month high of 2.492% overnight ahead of today’s nonfarm payrolls report. The dollar was on course for its first weekly decline in four weeks as investors trimmed bets following recent gains.

However, the big risk event is not the job report, but Sunday’s Italian referendum, which has cast a blanket of concerns over Europe, and especially its banks, and has prompted financial markets to end the week the way they started, “overshadowed by caution as stocks fall with commodities, the yen advances and a selloff in Treasuries abates” in the words of Bloomberg.

“There is a great deal of trepidation among investors ahead of the
vote,” said Ken Odeluga, a market analyst at brokerage firm City Index
in London. “Even though we got a bounce yesterday after the OPEC
agreement, there is still a huge amount of interest on the bearish side
and shorts in place. It’s the focus for Europe, and we are going to see
more selling out of equities if we get a negative outcome. There is
certainly room for more volatility.”

Recent strong economic data from the U.S., including upbeat manufacturing activity and construction spending, have bolstered the view that the Fed will tighten monetary policy faster than expected to keep inflationary pressures in check. U.S. employers probably hired 179K workers in November, up from October, making it almost certain that the Federal Reserve will raise interest rates later this month. However, recent jitters that the ECB may announce a tapering of its own QE program next Thursday has become a bigger source of worry for markets than the Fed’s second rate hike in over a decade.

Today’s payroll number therefore comes at a very interesting time. The market consensus is for a 180k print which follows a 161k gain in October. The range though between economists is anywhere from 140k to 250k. Our US economists are at the lower end of the market and are forecasting a 150k reading which is below the 181k YTD and consistent with their view of a slower pace of economic activity in the current quarter. As always keep an eye on the other components of the report including the unemployment rate (consensus is for no change at 4.9%) and average hourly earnings (expected to rise +0.2% mom). The report is out at 8.30am.

The Stoxx Europe 600 Index extended its first weekly decline in a month and S&P 500 Index futures signaled further losses in U.S. equities as investors shift focus to a report on American payrolls. Oil led raw materials lower after climbing above $51 a barrel, Japan’s currency gained against all of its 16 major peers and gold rebounded from a 10-month low. While Treasuries edged higher, yields on 10-year notes are still near the highest since July 2015.

“Few investors want to have a strong position either way,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment-banking unit in London. “Less risk is a good strategy.”

Global stocks are headed for their first weekly decline since Donald Trump’s election victory last month as investors turn more wary about the outlook for higher U.S. rates and potential for rising political risks in Europe. The rally in commodities following Trump’s victory and an OPEC deal this week to cut output has boosted inflation expectations and bets the Federal Reserve will hasten increases. Volatility in European stocks and its single currency has climbed ahead of Italy’s weekend referendum and Austria’s presidential vote.

European shares fell more than 1 percent, led by industrial and financial stocks. They have gained the most since Donald Trump won the U.S. presidential election last month. The Stoxx Europe 600 Index extended its first weekly decline in a month and S&P 500 Index futures signaled further losses in U.S. equities as investors shift focus to a report on American payrolls. Oil led raw materials lower after climbing above $51 a barrel, Japan’s currency gained against all of its 16 major peers and gold rebounded from a 10-month low. While Treasuries edged higher, yields on 10-year notes are still near the highest since July 2015.

The gap between Italian and German bond yields, which shot to a 2 1/2-year high of 188 basis points (bps) last week, fell to 167 bps on Friday. “I suspect on Monday it will be very difficult to have a definitive opinion on what could be the future government in Italy and the appetite for further reform,” said Franck Dixmier, global head of fixed income at AllianzGI, adding that the fund was ‘short’ Italian bonds.

In commodity markets, oil prices eased from the 16-month high they reached after the Organization of Petroleum Exporting Countries agreed to cut output for the first time since 2008. Russia also agreed to reduce production for the first time in 15 years. Brent crude futures eased 0.26 percent to $53.80 a barrel.

Bulletin Headline Summary From RanSquawk

• As many look ahead to today’s nonfarm payroll report from the US, the European session has kicked off with equities firmly in the red
• This morning saw flow back into the JPY, which has gained across the board — notably the EUR this morning after rejecting 122.00 key resistance
• As well as US NFP report, Today’s highlights include Canadian Jobs figures, as well as comments from Fed’s Brainard and Tarullo

Market Snapshot

• S&P 500 futures down 0.3% to 2186
• Stoxx 600 down 1.1% to 337
• FTSE 100 down 0.9% to 6692
• DAX down 1% to 10426
• German 10Yr yield down 3bps to 0.34%
• Italian 10Yr yield down 6bps to 1.99%
• Spanish 10Yr yield down 4bps to 1.57%
• S&P GSCI Index down 0.3% to 383.5
• MSCI Asia Pacific down 0.5% to 136
• Nikkei 225 down 0.5% to 18426
• Hang Seng down 1.4% to 22565
• Shanghai Composite down 0.9% to 3244
• S&P/ASX 200 down 1% to 5444
• US 10-yr yield down 1bp to 2.43%
• Dollar Index down 0.14% to 100.9
• WTI Crude futures down 0.4% to $50.86
• Brent Futures down 0.6% to $53.59
• Gold spot up 0.3% to $1,175
• Silver spot up 0.2% to $16.54

Top Headline News

• Starbucks’ Schultz to Hand CEO Role to Lieutenant Kevin Johnson: 33-year veteran of tech industry starts in April
• Exelon Gets $235 Million-a-Year Nuclear Lifeline in Illinois: Legislation secures payments for power from nuclear reactors
• Goldman’s Gary Cohn Said to Meet With Trump’s Team This Weekend: A cabinet appointment is said to be unlikely as talks continue, some advisers are concerned about too many Goldman picks
• Trump Says He’ll Appoint Mattis as Sec. of Defense; Trump Supports Completion of Dakota Access Pipeline: Reuters
• Workday Falls After CEO Warns of Big Deal Delays on Uncertainty: CEO cites Brexit, elections among concerns of customers
• Viacom’s Bakish Said to Be Interested in Buying Vice Stake: NYP
• Apollo, FXI Said to Make Bid for Innocor: New York Post

Looking at Asian markets, stocks traded lower across the board following the mostly negative lead from US where tech names underperformed, with participants also tentative ahead of today’s key NFP. ASX 200 (-1.0%) and Nikkei 225 (-0.7%) declined from the open as investors booked profits, with the latter further weighed by JPY strength as USD/JPY pulled back below 114.00. In China, Hang Seng (-1.3%) and Shanghai Comp (-0.9%) conformed to the subdued tone amid higher money market rates in which despite the overnight SHIBOR snapping 16 consecutive daily increases, 14-day to 1-year term rates continued to rise and the 3-month HIBOR gained to its highest since May 2009. Finally, 10yr JGBs traded were supported amid the risk averse sentiment in the region, while the BoJ’s buying operations for a total JPY 1.23tr1 in maturities ranging from 1yr-10yr also underpinned. PBoC injected CNY 160bIn 7-day reverse repos, CNY 60bIn in 14-day reverse repos, CNY 25bn in 28-day reverse repos for a net weekly injection of CNY 70bIn vs. CNY 40bIn net injection last week.  PBoC set mid-point at 6.8794. South Korean opposition parties agreed to propose motion for the impeachment of President Park, with the vote on motion to be held on December 9th.

Top Asian News

• Singapore Sanctions Ex-Goldman Banker Leissner After Probe: Standard Chartered, Coutts fined combined S$7.6m
• Rural China Banks With $4 Trillion Assets Facing Debt Test: Guiyang Rural sparked concern about risks at smaller lenders
• PBOC Headache Worsens as New $50,000 Conversion Quota Looms: Central bank focus for yuan seen shifting as FX reserves bleed
• Singapore Wealth Fund Prompts GLP to Start Strategic Review: No assurance any transaction will materialize, GLP says
• Crown Prince Becomes First New Thai King in Seven Decades: New monarch inherits control of fortune worth tens of billions

As many look ahead to today’s nonfarm payroll report from the US, the European session has kicked off with equities firmly in the red. European stocks have followed on from their Asian counterparts, with profit taking seen in energy and material names after the recent OPEC inspired upside. Further to this, IT stocks are also among the worst performers today, moving in tandem to the recent downside seen in US IT names, with the NASDAQ vastly underperforming over the past 48 hours. Elsewhere, price action remains relatively tight — fixed income markets have seen Bunds close the opening gap and pare earlier downside, which comes in tandem with the exacerbation of risk off sentiment given the softness seen in stocks. From a European standpoint, many are looking ahead to the Italian referendum on Sunday, with the GE/IT spread tightening so far this morning

Top European News

• Italian Banks Flirt With Disaster Again as Renzi Teeters: Markets have priced in impact of a ‘No’ vote in referendum
• Hollande’s Exit Gives Valls Space to Seek French Presidency: Socialist Valls faces tough fight against Fillon and Le Pen
• Aixtron Tumbles as Obama Said Poised to Block Chinese Takeover: Aixtron rejection would be second China deal stopped by Obama

In currencies, markets have been dominated by risk sentiment this morning, with equity markets coming off better levels on Wall Street in recent sessions and Asia sporting modest losses overnight. All of this has served to pull some flow back into the JPY, which has gained across the board — notably the EUR this morning after rejecting 122.00 key resistance. USD/JPY has also suffered as a result, though buyers still stepping in in anticipation of a strong US jobs report this afternoon, but there may be other areas to express USD strength as stocks could dominate. The Italian referendum this weekend will also prompt some risk pairing to some degree, despite some suggesting the negative impacts may be overstated in the run up. EUR/USD looks the obvious sell given the immediate focus, but as we have seen in the past week or so, there has been stubborn support coming in ahead of 1.0550 on each test lower amid continuous bouts of USD strength. GBP may have softened a little vs the USD, but against the EUR stays strong as the soft Brexit perceptions have been strengthened by EU comments regarding Britain’s access to the single market. Cable looks support into the mid to low 1.2500’s, while sellers in EUR/GBP resolute ahead of .8500. Commodity FX continues to favour the CAD; unsurprising given the OPEC deal this week. Outperformance vs the AUD and NZD in evidence, but all 3 could come unstuck vs both the USD and JPY if equity market losses start to accelerate. AUD a little more buoyant than NZD, courtesy of the better than expected Oct retail sales read. The Turkish Lira crashed to an all time low of 3.5935 after Erdogan called for lower interest rates.

In commodities, it has been a mixed market as base metals have been trading lower in recent sessions, while Oil has risen in the latter part of the week in the aftermath of the OPEC meeting. Gains here are now tailing off a little with risk sentiment souring, and in turn, has seen Gold recoup some ground as emerging market weakness and the upcoming Italian referendum divert some trade into the safe havens. Dampened interest for Copper out of China looks to have been the latest catalyst for USD29 drop in the 3m contract. WTI hit highs around USD51.80, but is a little over a cent
down on these levels this morning. Gold hit USD1160.0 or so, but was up USD20.0 earlier this morning.

Looking at the day ahead, the main focus for markets today will be the November employment report in the US including the nonfarm payrolls number. Also due to be released is the ISM NY print for last month. Away from the data the BoE’s Haldane is scheduled to speak around lunchtime while the Fed’s Brainard and Tarullo are also on the cards for today. Meanwhile, along with obvious focus on the Italy referendum, a reminder also to keep an eye on the results of the Austrian presidential election re-run. Voting ends at 4pm GMT on Sunday with initial projections expected soon after.

US Event Calendar

• 8:30am: Change in Non-farm Payrolls, Nov., est. 180k (prior 161k); Unemployment Rate, Nov., est. 4.9% (prior 4.9%)
• 9:45am: ISM New York, Nov. (prior 49.2)
• 12:30pm: Fed’s Tarullo speaks in Washington
• 1pm: Baker Hughes rig count

DB’s Jim Reid concludes the overnight wtap

Bond markets must feel like my knee at the moment. Attacked from all directions. After a two-day +15.7bps rise in US 10yr yields and a +12.89% rise in WTI Oil over the same period, today’s payroll number therefore comes at a very interesting time. The market consensus is for a 180k print which follows a 161k gain in October. The range though between economists is anywhere from 140k to 250k. Our US economists are at the lower end of the market and are forecasting a 150k reading which is below the 181k YTD and consistent with their view of a slower pace of economic activity in the current quarter. As always keep an eye on the other components of the report including the unemployment rate (consensus is for no change at 4.9%) and average hourly earnings (expected to rise +0.2% mom). The report is out at 1.30pm GMT.

That move in rates yesterday actually saw 10y Treasury yields look at 2.5% at one stage (reaching a high of 2.492% intraday) before then settling into the end of the session to close at 2.448% (and +6.7bps on the day). Still, that’s the highest closing yield since July 2015. 2y Treasury yields were also up a little more than 3bps at 1.149% while 30y yields broke past 3.10% to close up nearly 8bps higher at 3.109%. There were similar moves also in Europe where 10y Bund yields in particular sold off 9.2bps to 0.364%. That was actually the biggest move higher for Bund yields since December 2015. BTP’s outperformed again in relative terms (10y +6.2bps to 2.046%) while EM had a day to forget with hard-currency bond yields in Brazil, Argentina and Columbia +20.1bps, +22.8bps and +11.6bps higher respectively.

A few factors seemed to be in play yesterday contributing to the moves. Clearly the sharp move higher again for Oil continues to challenge markets’ outlook for inflation, while some better than expected manufacturing data in the US also helped at the margin. The ISM manufacturing print rose to 53.2 (vs. 52.5 expected) in November from 51.9 in October with the new orders component also rising, while the final manufacturing PMI was revised up from 53.9 to 54.1 – a level last matched in October last year. A bumper day for corporate issuance across the pond was also said to have been a factor although much of chatter was about another ECB article on Reuters. The article suggested that the ECB will extend bond purchases beyond March but at the same time ‘consider sending a formal signal after its policy meeting next Thursday that the program will eventually end’. The suggestion was that much of the prep staff work has focused on a six-month extension at the continued 80bn purchase rate but that some have indicated that they would favour an extension at lower volumes. The article quoted ‘senior sources’ which raises the usual validity question about such a story. In any case it seemed to have some impact on markets.

Meanwhile in equity land there was a bit of a déjà-vu feeling for US equities in particular where another decent day for energy and financials stocks – reflecting the moves for Oil and rates – was more than offset by weakness across rate sensitive and defensive sectors and to a great extent, the tech sector with the Nasdaq (-1.36%) suffering its worst one-day fall since October 11th with the sector seemingly plagued by continued sector rotation post the US election. In Europe the Stoxx 600 closed -0.33% but the FTSE MIB (+0.99%) rallied for the third successive day, in which time it is up more than 5%. Like the moves for bonds, EM equities also struggled with bourses in Brazil, Mexico and Argentina down -3.88%, -0.95% and -1.97% respectively.

Alongside payrolls, Italy will continue to attract attention with the referendum being held on Sunday. In terms of timing, we’re expecting to get provisional turnout results from 7pm GMT with exit polls then expected around 10pm GMT on Sunday night (although these have proved unreliable in the past) with the first projections by Italian pollsters based on counted votes at around 10.45pm GMT. The final result could come in around 2am on Monday and we’ll have a full wrap up of it in Monday’s EMR.

Ahead of this, our European equity strategists have published a note this morning suggesting that a rebound in the Italian equity market should be largely restricted to financial stocks in case of a “Yes” vote. Although the FTSE MIB is trading at a 15% discount relative to its 10-year average vs. Europe, valuations look substantially less attractive once banks are excluded from the index. The relative P/E of the FTSE MIB ex banks is trading in line with its long-term average vs. Europe ex banks. Several Italian sectors are even trading at a premium vs. their European peers, showing no signs yet of a spillover of banking sector risks.

Over now to a recently forgotten theme – namely Brexit. Remember that? Yesterday Brexit secretary David Davies and Chancellor Hammond suggested that Britain may be prepared to pay into the EU budget for access to the single market. This is the first time such a view has been expressed in official channels. Obviously it’s still fairly early stages and also hypothetical but the UK government is seemingly becoming increasingly pragmatic from the hard line stance that was taken at the Conservative party conference back in October. Whether Europe has any interest in also being pragmatic is a debate for another day but overall the development certainly aided Sterling which climbed +0.68% vs. the Dollar to $1.2591 albeit well off the intraday high of $1.2696.

While we’re on the theme of politics, last night we also heard the slightly surprising announcement that French President Hollande will not run for re-election next year. The Socialist party will now choose its candidate through a two-round primary on the 22ndand 29th of January. The suggestion is that the door is now open for Prime Minister Valls to be in the running, as well as ex-economy minister Montebourg. It’s worth noting that the polls aren’t giving much of a chance for any Socialist candidate qualifying for the second round of the Presidential election and it appears extremely challenging for the centre-left to prevent a Fillon-Le Pen play-off in the second round and final round.

Refreshing our screens now where markets in Asia this morning are largely following the lead from the losses in Europe and on Wall Street yesterday. The Nikkei (-0.47%), Hang Seng (-0.98%), Shanghai Comp (-0.30%), Kospi (-0.75%) and ASX (-0.70%) are all currently in the red, while sovereign bond yields in the antipodeans are 7-8bps higher and a few basis higher in Asia. Oil (-0.30%) has edged a touch lower while US equity index futures are also modestly lower.

A quick wrap up of the remaining data yesterday. In the US the other data out included construction spending which rose a tad less than expected (+0.5% mom vs. +0.6% expected) but did include material upward revisions to prior months. In fact it was enough to see the Atlanta Fed revise up their Q4 GDP forecast to 2.9% from 2.4%. Initial jobless claims were reported as rising 17k last week to 268k while finally total vehicles sales in November fell as expected to an annualized rate of 17.8m from 17.9m.

Meanwhile in Europe the final manufacturing PMI’s for November didn’t throw up any real surprises. There was no change to the Euro area print at 53.7, while a 0.1pt downward revision for Germany to 54.3 was somewhat offset by a 0.2pt increase in France to 51.7. The non-core was where most interest lay though and as expected the data was reasonably strong. Italy rose 1.3pts to 52.2 (vs. 51.3 expected) and Spain rose 1.2pts to 54.5 (vs. 53.7 expected). The UK was a little more disappointing after printing at 53.4 (vs. 54.4 expected), down from 54.2 in the month prior. The final data to mention is the Euro area unemployment rate print which came in at 9.8% and a new post-financial crisis low.

Looking at the day ahead now. It’s a pretty quiet end to the week in Europe today with the sole release being the October PPI print for the Euro area. As mentioned earlier the main focus for markets today will of course be the November employment report in the US including the nonfarm payrolls number. Also due to be released is the ISM NY print for last month. Away from the data the BoE’s Haldane is scheduled to speak around lunchtime while the Fed’s Brainard (at 1.45pm GMT) and Tarullo (at 6pm GMT) are also on the cards for today. Meanwhile, along with obvious focus on the Italy referendum, a reminder also to keep an eye on the results of the Austrian presidential election re-run. Voting ends at 4pm GMT on Sunday with initial projections expected soon after.

via http://ift.tt/2gHpgbW Tyler Durden

Submitted by Soeren Kern via The Gatestone Institute,

• A German court has ruled that seven Islamists who formed a vigilante patrol to enforce Sharia law on the streets of Wuppertal did not break German law and were simply exercising their right to free speech. The "politically correct" decision, which may be appealed, effectively authorizes the Sharia Police to continue enforcing Islamic law in Wuppertal.
• The self-appointed "Sharia Police" distributed leaflets which established a "Sharia-controlled zone" in Wuppertal. The men urged both Muslim and non-Muslim passersby to attend mosques and to refrain from alcohol, cigarettes, drugs, gambling, music, pornography and prostitution.
• Critics say the cases — especially those in which German law has taken a back seat to Sharia law — reflect a dangerous encroachment of Islamic law into the German legal system.
• In June 2013, a court in Hamm ruled that anyone who contracts marriage according to Islamic law in a Muslim country and later seeks a divorce in Germany must abide by the original terms established by Sharia law. The landmark ruling effectively legalized the Sharia practice of "triple-talaq," obtaining a divorce by reciting the phrase "I divorce you" three times.
• A growing number of Muslims in Germany are consciously bypassing German courts altogether and instead are adjudicating their disputes in informal Sharia courts, which are proliferating across the country.
• "If the rule of law fails to establish its authority and demand respect for itself, then it can immediately declare its bankruptcy." — Franz Solms-Laubach, Bild's parliamentary correspondent.

A German court has ruled that seven Islamists who formed a vigilante patrol to enforce Sharia law on the streets of Wuppertal did not break German law and were simply exercising their right to free speech.

The ruling, which effectively legitimizes Sharia law in Germany, is one of a growing number of instances in which German courts are — wittingly or unwittingly — promoting the establishment of a parallel Islamic legal system in the country.

The self-appointed "Sharia Police" sparked public outrage in September 2014, when they distributed yellow leaflets which established a "Sharia-controlled zone" in the Elberfeld district of Wuppertal. The men urged both Muslim and non-Muslim passersby to attend mosques and to refrain from alcohol, cigarettes, drugs, gambling, music, pornography and prostitution.

A German court has ruled that a group of Islamists who formed a vigilante patrol to enforce Sharia law on the streets of Wuppertal did not break German law and were simply exercising their right to free speech. They were charged under a law that prohibits the wearing of uniforms at public rallies — a law originally designed to ban neo-Nazi groups from parading in public.

The vigilantes are followers of Salafism, a virulently anti-Western ideology that openly seeks to replace democracy in Germany (and elsewhere) with an Islamic government based on Sharia law.

Salafist ideology posits that Sharia law is superior to secular, common law because it emanates from Allah, the only legitimate lawgiver, and thus is legally binding eternally for all of humanity. According to the Salafist worldview, democracy is an effort to elevate the will of humans above the will of Allah, and is therefore a form of idolatry that must be rejected. In other words, Sharia law and democracy are incompatible.

Wuppertal Mayor Peter Jung said he hoped the police would take a hard line against the Islamists: "The intention of these people is to provoke and intimidate and force their ideology upon others. We will not allow this."

Wuppertal Police Chief Birgitta Radermacher said the "pseudo police" represented a threat to the rule of law and that only police appointed and employed by the state have the legitimate right to act as police in Germany. She added:

"The monopoly of power lies exclusively with the State. Behavior that intimidates, threatens or provokes will not be tolerated. These 'Sharia Police' are not legitimate. Call 110 [police] when you meet these people."

Wuppertal's public prosecutor, Wolf-Tilman Baumert, argued that the men, who wore orange vests emblazoned with the words "SHARIAH POLICE," had violated a law that bans wearing uniforms at public rallies. The law, which especially prohibits uniforms that express political views, was originally designed to prevent neo-Nazi groups from parading in public. According to Baumert, the vests were illegal because they had a "deliberate, intimidating and militant" effect.

On November 21, 2016, however, the Wuppertal District Court ruled that the vests technically were not uniforms, and in any event did not pose a threat. The court said that witnesses and passersby could not possibly have felt intimidated by the men, and that prosecuting them would infringe on their freedom of expression. The "politically correct" decision, which may be appealed, effectively authorizes the Sharia Police to continue enforcing Islamic law in Wuppertal.

German Courts and Sharia Law

German courts are increasingly deferring to Islamic law because either the plaintiffs or the defendants are Muslim. Critics say the cases — especially those in which German law has taken a back seat to Sharia law — reflect a dangerous encroachment of Islamic law into the German legal system.

In May 2016, for example, an appeals court in Bamberg recognized the marriage of a 15-year-old Syrian girl to her 21-year-old cousin. The court ruled that the marriage was valid because it was contracted in Syria, where such marriages are allowed according to Sharia law, which does not set any age limit to marriage. The ruling effectively legalized Sharia child marriages in Germany.

The case came about after the couple arrived at a refugee shelter in Aschaffenburg in August 2015. The Youth Welfare Office (Jugendamt) refused to recognize their marriage and separated the girl from her husband. The couple filed a lawsuit and a family court ruled in favor of the Youth Welfare Office, which claimed to be the girl's legal guardian.

The court in Bamberg overturned that ruling. It determined that, according to Sharia law, the marriage is valid because it has already been consummated, and therefore the Youth Welfare Office has no legal authority to separate the couple.

The ruling — which was described as a "crash course in Syrian Islamic marriage law" — ignited a firestorm of criticism. Some accused the court in Bamberg of applying Sharia law over German law to legalize a practice that is banned in Germany.

Critics of the ruling pointed to Article 6 of the Introductory Act to the German Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche, EGBGB), which states:

"A legal standard of another State shall not be applied where its application results in an outcome which is manifestly incompatible with the essential principles of German law. In particular, it is not applicable if the application is incompatible with fundamental rights."

This stipulation is routinely ignored, however, apparently in the interests of political correctness and multiculturalism. Indeed, Sharia law has been encroaching into the German justice system virtually unchecked for nearly two decades. Some examples include:

• In August 2000, a court in Kassel ordered a widow to split her late Moroccan husband's pension with another woman to whom the man was simultaneously married. Although polygamy is illegal in Germany, the judge ruled that the two wives must share the pension, in accordance with Moroccan law.

• In March 2004, a court in Koblenz granted the second wife of an Iraqi living in Germany the right to remain permanently in the country. The court ruled that after five years in a polygamous marriage in Germany, it would be unfair to expect her to return to Iraq.

• In March 2007, a judge in Frankfurt cited the Koran in a divorce case involving a German-Moroccan woman who had been repeatedly beaten by her Moroccan husband. Although police ordered the man to stay away from his estranged wife, he continued to abuse her and at one point threatened to kill her. Judge Christa Datz-Winter refused to grant the divorce. She quoted Sura 4, Verse 34 of the Koran, which justifies "both the husband's right to use corporal punishment against a disobedient wife and the establishment of the husband's superiority over the wife." The judge was eventually removed from the case.

• In December 2008, a court in Düsseldorf ordered a Turkish man to pay a €30,000 ($32,000) dowry to his former daughter-in-law, in accordance with Sharia law.

• In October 2010, a court in Cologne ruled that an Iranian man must pay his ex-wife a dower of €162,000 euros ($171,000), the current equivalent value of 600 gold coins, in accordance with the original Sharia marriage contract.

• In December 2010, a court in Munich ruled that a German widow was entitled to only one-quarter of the estate left by her late husband, who was born in Iran. The court awarded the other three-quarters of the inheritance to the man's relatives in Tehran in accordance with Sharia law.

• In November 2011, a court in Siegburg allowed an Iranian couple to be divorced twice, first by a German judge according to German law, and then by an Iranian cleric according to Sharia law. The director of the Siegburg District Court, Birgit Niepmann, said the Sharia ceremony "was a service of the court."

• In July 2012, a court in Hamm ordered an Iranian man to pay his estranged wife a dower as part of a divorce settlement. The case involved a couple who married according to Sharia law in Iran, migrated to Germany and later separated. As part of the original marriage agreement, the husband promised to pay his wife a dower of 800 gold coins payable upon demand. The court ordered the husband to pay the woman €213,000 ($225,000), the current equivalent value of the coins.

• In June 2013, a court in Hamm ruled that anyone who contracts marriage according to Islamic law in a Muslim country and later seeks a divorce in Germany must abide by the original terms established by Sharia law. The landmark ruling effectively legalized the Sharia practice of "triple-talaq," obtaining a divorce by reciting the phrase "I divorce you" three times.

• In July 2016, a court in Hamm ordered a Lebanese man to pay his estranged wife a dower as part of a divorce settlement. The case involved a couple who married according to Sharia law in Lebanon, migrated to Germany and later separated. As part of the original marriage agreement, the husband promised to pay his wife a dower of $15,000. The German court ordered him to pay her the equivalent amount in euros.

In an interview with Spiegel Online, Islam expert Mathias Rohe said that the existence of parallel legal structures in Germany is an "expression of globalization." He added: "We apply Islamic law just as we do French law."

Sharia Courts in Germany

A growing number of Muslims in Germany are consciously bypassing German courts altogether and instead are adjudicating their disputes in informal Sharia courts, which are proliferating across the country. According to one estimate, some 500 Sharia judges are now regulating civil disputes between Muslims in Germany — a development that points to the establishment of a parallel Islamic justice system in the country.

A major reason for the growth in Sharia courts is that Germany does not recognize polygamy or marriages involving minors.

The German Interior Ministry, responding to a Freedom of Information Act request, recently revealed that 1,475 married children are known to be living in Germany as of July 31, 2016 — including 361 children who are under the age of 14. The true number of child marriages in Germany is believed to be much higher than the official statistics suggest, because many are being concealed.

Polygamy, although illegal under German law, is commonplace among Muslims in all major German cities. In Berlin, for example, it is estimated that fully one-third of the Muslim men living in the Neukölln district of the city have two or more wives.

According to an exposé broadcast by RTL, one of Germany's leading media companies, Muslim men residing in Germany routinely take advantage of the social welfare system by bringing two, three or four women from across the Muslim world to Germany, and then marrying them in the presence of a Muslim cleric. Once in Germany, the women request social welfare benefits, including the cost of a separate home for themselves and for their children, on the claim of being a "single parent with children."

Although the welfare fraud committed by Muslim immigrants is an "open secret" costing German taxpayers millions of euros each year, government agencies are reluctant to take action due to political correctness, according to RTL.

Chancellor Angela Merkel once declared that Muslims must obey the constitution and not Sharia law if they want to live in Germany. More recently, Justice Minister Heiko Maas said:

"No one who comes here has the right to put his cultural values or religious beliefs above our law. Everyone must abide by the law, no matter whether they have grown up here or have only just arrived."

In practice, however, German leaders have tolerated a parallel Islamic justice system, one which allows Muslims to take the law into their own hands, often with tragic consequences.

On November 20, 2016, for example, a 38-year-old German-Kurdish man in Lower Saxony tied one end of a rope to the back of his car and the other end around the neck of his ex-wife. He then dragged the woman through the streets of Hameln. The woman, who survived, remains in critical condition.

The newsmagazine, Focus, reported that the man was a "strictly religious Muslim who married and divorced the woman according to Sharia law." It added: "Under German law, however, the two were not married." Bild reported that the man was married "once under German law and four times under Sharia law."

The crime, which has drawn renewed attention to the problem of Sharia justice in Germany, has alarmed some members of the political and media establishment.

Wolfgang Bosbach, of the ruling Christian Democratic Union (CDU), said: "Even if some people refuse to admit it, a parallel justice system has established itself in Germany. This act shows a clear rejection of our values ??and legal order."

On November 23, Bild, the largest-circulation newspaper in Germany, warned that the country was "capitulating to Islamic law." In a special "Sharia Report" it stated:

"The 2013 coalition agreement between the CDU and the Social Democrats promised: 'We want to strengthen the state's legal monopoly. We will not tolerate illegal parallel justice.' But nothing has happened."

In a commentary, Franz Solms-Laubach, Bild's parliamentary correspondent, wrote:

"Even if we still refuse to believe it: Parts of Germany are ruled by Islamic law! Polygamy, child marriages, Sharia judges — for far too long the German rule of law has not been enforced. Many politicians dreamed of multiculturalism….

 

"This is not a question of folklore or foreign customs and traditions. It is a question of law and order.

 

"If the rule of law fails to establish its authority and demand respect for itself, then it can immediately declare its bankruptcy."

via http://ift.tt/2gtSmO8 Tyler Durden

In just two short minutes MEP Daniel Hannan destroys the competitive virtue-signalling farce that is the Anti-Trump protestor, “this is the first generation that has been brought up not to tolerate opinions that they dislike… and they have been taught that the correct response to someone saying something you find ‘hurtful’ is to try and silence that person…” This is not about Trump, this is about a generation “that has never been told ‘no’ and can’t handle disagreement.”

Take two minutes… NOTE: This is not a safe space…

via http://ift.tt/2fNqOV7 Tyler Durden

Submitted by Nick Giambruno via InternationalMan.com,

It was the one moment that convinced Hitler suicide was better than surrendering.

On the morning of April 29, 1945, the bodies of Italian dictator Benito Mussolini and his mistress were dumped like garbage into Milan’s Piazzale Loreto.

A large mob of Italians quickly gathered. They pelted the former leader’s corpse with vegetables. They spat on it. They urinated on it. Some even emptied their pistols into his lifeless body.

After a few hours, the crowd hung the bodies from a metal girder at a nearby gas station for all to see.

The corpse of Benito Mussolini

I walked through Piazzale Loreto during a recent trip to Italy, which is suffering its worst economic downturn since 1945. And I realized that Italians are angrier now than they’ve been since they hung Il Duce up by his heels.

Italy has had no productive growth since 1999. Real GDP per person is smaller than it was at the turn of the century.

That’s almost two decades of economic stagnation. By any measure, the Italian economy is in a deep depression. And things will probably get much worse.

It’s no surprise Italians are in a revolutionary mood…

The Five Star Movement (M5S) is Italy’s new populist political party. It’s anti-globalist, anti-euro, and vehemently anti-establishment. It doesn’t neatly fall into the left–right political paradigm.

M5S has become the most popular political party in Italy. It blames the country’s chronic lack of growth on the euro currency. A large plurality of Italians agrees.

M5S has promised to hold a vote to leave the euro and reinstate Italy’s old currency, the lira, as soon as it’s in power. That could be very soon.

Given the chance, Italians probably would vote to return to the lira. If that happens, it would awaken a monetary volcano.

The Financial Times recently put it this way:

An Italian exit from the single currency would trigger the total collapse of the eurozone within a very short period.

It would probably lead to the most violent economic shock in history, dwarfing the Lehman Brothers bankruptcy in 2008 and the 1929 Wall Street crash.

If the FT is even partially right, it means a stock market crash of historic proportions could be imminent. It could devastate anyone with a brokerage account.

Here’s how it could all happen…

On December 4, Italian Prime Minister Matteo Renzi’s current pro-EU government is holding a referendum on changing Italy’s constitution.

In effect, a “Yes” vote is a vote of approval for Renzi’s government.

A “No” vote is a chance for the average Italian to give the finger to EU bureaucrats in Brussels.

Given the intense anger Italians feel right now, it’s very likely they’ll do just that.

According to the latest polls, the “No” camp has 54% support and all of the momentum. Even prominent members of Renzi’s own party are defecting to the “No” side.

If the December 4 referendum fails, Renzi has promised to resign. Even if he doesn’t, the loss would politically castrate him. In all likelihood his government would collapse. (Italian governments have a short shelf life. There have been 63 since 1945. That’s almost a rate of a new government each year.)

One way or another, M5S will come to power. It’s just a matter of when. If Renzi’s December 4 referendum fails—and it looks like it will—M5S will likely take over within months.

Once it’s in power, M5S will hold a referendum on leaving the euro and returning to the lira. Italians will likely vote to leave.

Italy is the third-largest member of the Eurozone. If it leaves, it will have the psychological effect of yelling “Fire!” in a crowded theater. Other countries—notably France—will quickly head for the exit and return to their national currencies.

Think of the euro as the economic glue holding the EU together. Without it, economic ties weaken, and the whole EU project unravels.

The EU is the world’s largest economy. If it collapses, it would trigger an unprecedented global stock market crash. That’s how important Italy’s December 4 referendum is. It would be the first domino to fall.

December 4 referendum fails >> M5S comes to power >> Italians vote to leave the euro currency >> European Union collapses

Almost no one else is talking about this. That’s why I just spent several weeks in Italy, taking the pulse of the country.

Italy’s December 4 referendum could make or break your wealth this year. If it fails, the EU, which has the world’s largest economy, will likely fall apart… triggering an epic stock market crash.

via http://ift.tt/2gNixQt Tyler Durden

After being forced to withdraw at least $15 billion to fund 2017 budget deficits, the $860 billion Norwegian sovereign wealth fund has announced that it will change it’s portfolio allocations to try to make up the difference.  The change will result in 75% of the fund’s capital being allocated to global equities, up from the current 60%.  Sure, because funneling another $130 billion to the global equity bubble is just the prudent thing to do for an extra 40bps of “expected average annual real returns.”

The central bank’s board, which oversees the fund, on Thursday recommended an increase in the equity share to 75 percent from 60 percent. That will raise the expected average annual real return to 2.5 percent over 10 years and to 3.5 percent over 30 years, compared with 2.1 percent and 2.6 percent, respectively, under the current setup.

 

The world’s largest sovereign wealth fund said that it expects an annual return of only 0.25 percent on bonds over the next decade and that the expected “equity risk premium,” or return on stocks over government bonds, will be just 3 percentage points in a cautious estimate.

 

“In our analyses, this is clearly evident in global data: internationally, growth in firms’ cash flows and equity returns are correlated with growth in the global economy,” Deputy Governor Egil Matsen said in a speech Thursday in Oslo. “Global economic growth in the coming years is expected to be below its historical level. This ‘pessimism’ is partly related to the driving forces behind the low level of the real interest rate.”

Of course, the decision comes after the fund has been forced to withdraw capital over the past two years to fund budget deficits that are expected to reach over 8% of GDP.

 

The withdrawals accelerated just as the heavily oil-dependent economy of Norway started to absorb the impact of lower oil prices.

 

In a previous interview with Bloomberg, Egil Matsen, the Deputy Governor at Norway’s Central Bank, said the withdrawals were starting to impact the manner in which the fund manages its risk profile.   

“Relevant for how we think about the risk-bearing capacity of the fund.  Say you have a decline in the equity market, and these returns have been partly funding the government, do you want variations in international financial markets to have a direct impact on fiscal policy?”

But Finance Minister Siv Jensen dismissed criticism of the withdrawals saying that the administration is using the fund as was intended noting that withdrawals remain below the fund’s annual return target of 4%.   

“Now that we are in an extraordinary situation, hit by the biggest oil price shock in 30 years, it would be crazy if we didn’t have an expansionary fiscal policy,” she told Bloomberg. Jensen rejected suggestions that the fund was “vulnerable.” She described it as “rock solid.”

 

The fund’s managers have warned it’s getting harder to live up to a real return target of 4 percent. It has returned 3.44 percent over the past 10 years. For now, planned withdrawals aren’t big enough to force the fund to sell assets. It estimates income from dividends, real estate and bonds will reach 207.5 billion kroner next year, almost double the amount the government plans to withdraw.

Meanwhile, as Norway admits that it expects “average annual real returns of 2.5 percent over 10 years,” in the U.S., we just wrote about how the largest pension fund, CalPERS, is struggling with whether it’s long-term return targets should be 7.5% or 6%.  Sure, good luck with that.

In just a couple of months, the largest pension fund in the United States, the California Public Employees’ Retirement System (CalPERS), will have to decide whether they’ll rely on sound financial judgement and math to set their rate of return expectations going forward or whether they’ll cave to political pressure to maintain artificially high return hurdles that they’ll never meet but help to maintain their ponzi scheme a little longer.  The decision faced by CALPERS is whether their long-term assumed rate of return on assets should be lowered from the current 7.5% down to a more reasonable 6%.

 

As pointed out by Pensions & Investments, the decision has far-reaching consequences.  First, a lower rate of return will equate to higher contribution levels for municipalities throughout California, many of which are on the verge of bankruptcy already.  Second, given that CALPERS is the largest pension fund in the United States, a move to lower return hurdles could set a precedent that would have to be followed by other funds around the country in even worse shape (yes, we’re looking at you Illinois).

While Norway is at least admitting their problem, somehow we suspect that “math/logic” will continue to lose here in the U.S…better to bury your head in the sand for a couple of more years.

via http://ift.tt/2fNcLyC Tyler Durden

Submitted by Tom Luongo via PlanetFreeWill.com,

The Syrian Arab Army (SAA) has essentially reclaimed the city of Aleppo in the past couple of days.  The failure to break the siege from the Southwest coupled with the Turkish Army not resupplying militants meant the situation wouldn’t hold for long.

Aleppo is the key to the Syrian ‘civil war.’ Now that pro-Assad forces have won the day it touches off a number of responses around the region.  This further breaks down the position of U.S/NATO-backed forces trying to oust Syrian President Bashar al-Assad from power, regardless of what Turkish President Recep Tayyip Erdogan has to say about it.

It also ushers in the next potential escalation of the proxy war between the outgoing Obama administration, doing the bidding of the U.S. Deep State, and its opponents coalescing around Russia and its front-man President Vladimir Putin.

The Aleppo Fulcrum

Aleppo is the strategic key to Assad remaining in power.  This is why it has been fought for with such vigor by all sides.

The only thing left for the U.S./NATO/GCC coalition is a diplomatic solution.  But, given the military facts on the ground there is little hope of that as well.  The time for that was back in February when U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov brokered a cease-fire and Russia announced the removal of military assets from Syria.

That agreement, however, held no more water than the Minsk II agreement over Ukraine or the later ceasefire in September. That one was broken within 24 hours by a ‘mistaken’ U.S. military strike on SAA forces near Deir Ezzor.

And now that the battle for Aleppo is over, the whole regional situation becomes more dangerous, not less.  Because the window for any kind of victory for those within the U.S. and NATO that pushed for this conflict is closing as each day brings us closer to the inauguration of President Trump.

And Trump has all but said that his primary foreign policy goal is to reverse this operation and assist Russia and Iran in wiping out ISIS.

The Responses to Aleppo

Within hours of the news that the Sunni militant resistance in eastern Aleppo collapsed, the U.S. House passed House Bill 5732, authorizing an investigation into creating a No-Fly-Zone over Syria.

In other words, the U.S. House is looking for ways to start a hot war in Syria with Russia.  This may just be more impotent sabre rattling by a fading group of back-bencher neoconservatives – think Lindsay Graham and John McCain– but it is something that bears witness all the same.

The goal of a No-Fly Zone is to implement the ‘Plan B’ strategy to break Syria up into two separate countries.  Then they can create some form of Greater Kurdistan across parts of Syria, Iraq, Iran and eastern Turkey.

Russia’s deployment of S-300 and S-400 missile defense systems around Syria and delivering them as well to Iran is an important counter-move to this plan.

On the other side, Sunni Egypt pledged to send pilots to Syria to help Assad wipe out what remains of the ISIS/Al-Qaeda resistance in the South and East of the country.

When you have Sunni Egyptians fighting alongside Shi’ite Syrians it is time to seriously re-assess any conventional narrative you might have in your head.  Egypt has now openly sided with Russia in stopping the expansion of U.S.-fomented chaos around the Middle East and North Africa.

And it seems the election of Donald Trump was the impetus to break open these old definitions of who is on which side.

Wither Saudi Arabia

When all of this is viewed within the context of the goings-on at the latest OPEC meeting the picture becomes even clearer.

The agreement by OPEC to cut production by 1.2 million barrels was done to prop up oil prices in the medium term. This is an attempt by the Saudis to remain the marginal oil producer in the world, a status they have not held now for the past couple of years with the emergence of U.S. shale production.

But cutting production to raise prices alone will not plug the massive hole in the Saudi’s budget.  So, they threw Indonesia out of OPEC to allow individual GCC members to pump more oil under the rubric of OPEC but cut overall production.

As this situation gets more desperate for the U.S./Saudi forces trying to hold onto power in the region, expect more aggressive counter moves.

We’re seeing provocations by Ukraine into Crimea now.  Erdogan was likely forced to make that statement about Turkey’s invasion of Syria being in service of ousting Assad.

The European Union and Canada are contemplating and/or enacting new anti-Russian sanctions.

All of this means that the likelihood of some ugly false flag incident rises by the hour.  I expect Putin understands this and will not take the bait but there are no guarantees.

via http://ift.tt/2fRUITi Tyler Durden

Submitted by Jake Anderson via TheAntiMedia.org,

Some of the weirdest and most disturbing advertisements ever created are done so for military campaigns. They come in the form of propaganda leaflets, which are dropped by air or otherwise disseminated into a country or territory that is being invaded. Virtually every war since the beginning of the 20th century has produced these leaflets, which are also known as psyops or psychological operations and can be divided up into three categories: white, grey, and black. The intention is to use psychology and symbolism to influence members of the general population, inciting fear and, ultimately, compliance.

Governments use psyops in a variety of contexts but the most common is during war, when entire populations must be convinced that killing in the name of God and State is not murder. Citizens also need an emotional impetus to grant their government the impunity to kill civilians and children in the most brutal of ways, including via unmanned drones. All but a few countries in the world are currently engaged in war, so there are a lot of psyops in progress as you read this.

The following leaflets come to you thanks to the incredible archives of PsyWar.org. They are, in this author’s humble opinion, the most sinister psyop leaflets ever dropped:

British leaflet produced by General Headquarters in France for German troops on the Western front 1915-1918

British balloon distributed propaganda leaflets for German troops on the Western front, 1918

World War 2 Germany to Allies – “While you were away”

“Waiting in Vain”

“Life is short – Death is quicker!”

Christmas message from Soviet Union to Germany 1941-1945

Japan to Allied Troops 1941-1945 – “CAPITALISTS DEMAND RED ENDLESSLY!”

First Iraq War – 1991 – “Adhere to the following procedures to cease resistance”

“CEASE RESISTANCE BE SAFE”

“Escape to Your Home!”

IFOR/SFOR BOSNIA-HERZEGOVINA 1996-2004

Operation Enduring Freedom – 2001-2002

Operation Iraqi Freedom – Coalition Psyop 2003-2004

Israel to Lebanon 2006 – “Your defenders are your destroyers”

These days, the internet has turned into a powerful new breeding ground for wartime psyops, but the psychological methods and imagery still follow the same tactics; you just have the added tools of chat rooms, social media, and forums as ways to manufacture consent.

via http://ift.tt/2fMyTcr Tyler Durden

In its 'year-forward' 2017 outlook, JPMorgan's Marko Kolanovic warns that:

In the short-term, with additional rate hikes imminent and the record level of the USD, we are at an increased risk of repeating the scenario from January 2016 where fundamental and systematic investors were selling at the same time in the aftermath of a Fed hike (albeit, some risks are lower this time, such as higher Oil prices and a lack of focus on China/CNY). According to our macroeconomic model, the VIX also appears to be ~3 points too cheap (1 standard deviation) relative to dozens of macroeconomic variables.

 

So what is driving the VIX and is it still a good measure of equity market risk? There are several factors that can explain the behavior of equity volatility this year. The first one is structural and we described it as market pinning during most of July and August, caused by option positioning. At the peak of market pinning in August, the S&P 500 realized less than 5% annualized volatility and moved less than 10bps on a number of days. As Brexit, the US election, and the September volatility spike were well anticipated events, they also resulted in covering of option hedges, and opportunistic selling of volatility. Low/negative bond yields increased the allure of selling volatility (and buying equities) and put further pressure on volatility levels. Finally, it appears that the time horizon of macro traders has shortened dramatically, likely as a result of increased participation of machines and algorithms that are quicker to adjust to significant events and can eliminate trading activity of slower investors (such as the overnight post-election move).

 

What will market volatility be in 2017? We think that, fundamentally, risks for equities in 2017 are higher compared to 2016. We expect an increased level of geopolitical risk and increased uncertainties related to the new US administration. In Europe, significant risks include fallouts from Brexit, the referendum in Italy, elections in France and Germany, and continued tensions related to immigration. The Middle East will likely see further turmoil in relation to developments in Syria, and low Oil prices that continue exerting pressure on budgets of Oil exporters. While the US macroeconomic cycle may get a boost from the proposed fiscal stimulus, corporate tax reform and de-regulation, both the passage and efficacy of these measures are far from certain at this moment.

 

The main market risk for equities will come from a stronger USD and higher rates, in our view, which can destabilize equity P/E, Emerging Markets, the housing market, and US equity segments such as multinationals, domestic manufacturing, bond proxies, etc. Higher USD and bond yields will also undercut the ability of the new US administration to revive US manufacturing or use the fiscal deficit to re-ignite growth.

 

Periods of low volatility may mask underlying fundamental risks. These quiet periods will be followed by quick outbursts of volatility that may not last long enough to be captured by an average investor. Hedgers may buy volatility ahead of an event and sell shortly before the catalyst to capture volatility grinding higher (rather than a spectacular increase).

 

To gauge market risks, equity investors should watch for further increases in bond yields and strengthening of USD. Geopolitical developments should be gauged from both traditional and non-traditional data sources (such as big data sentiment indicators, independent media outlets, etc.) given the failure of many traditional data sources to anticipate geopolitical developments this year.

So in summary – don't trust the "fakeness" of a low VIX or the mainstream media when it comes to managing your money.

via http://ift.tt/2fREhq0 Tyler Durden