Month: February 2017

In a shot across the trade war bow with both Japan and Germany, on Tuesday Trump and members of his administration took aim at both Japan and Germany, in addition to China, to accuse them of devaluing their respective currencies, an unexpected move which sent the dollar sliding to multi-month lows.  Specifically, on Tuesday morning Trump said: “You look at what China’s doing, you look at what Japan has done over the years. They play the money market, they play the devaluation market and we sit there like a bunch of dummies,” according to a transcript in Congressional Quarterly.

Prior to Trump’s statement, Trump’s top trade advisor, Peter Navarro spoke to the FT, taking aim at Germany, saying it was gaming foreign-exchange markets. His comment sent the EUR surging and precipitated a sharp drop in the dollar. Chancellor Angela Merkel rejected the accusation. At the same time, Donald Tusk, the EU’s president, placed the U.S. alongside Russia, China and terrorism as a source of instability.  “The change in Washington puts the European Union in a difficult situation, with the new administration seeming to put into question the last 70 years of American foreign policy,” Tusk said in a letter to European leaders on Tuesday ahead of an EU summit on Feb. 3.

Overnight, it was Japan’s turn, after Prime Minister Shinzo Abe, his main cabinet advisor, Suga, and Japan’s top foreign exchange official on Wednesday all pushed back against Trump’s assertion that Japan is keeping its currency devalued.

“Japan’s monetary policy is for the domestic purpose of beating deflation, and isn’t done with FX in mind, so I think that those remarks are a little bit wide of the mark,” said Masatsugu Asakawa, the Finance Ministry’s foreign exchange policy chief.

Masatsugu Asakawa

Speaking in parliament, Abe said that it is not accurate to say that Japan is devaluing the yen, and that he would explain Japan’s monetary policy to Trump if necessary. He said that it’s important to exchange views, including thoughts on foreign exchange. Chief Cabinet Secretary Yoshihide Suga earlier called Trump’s comments “totally inaccurate.”Trump on Tuesday said: “You look at what China’s doing, you look at what Japan has done over the years. They — they play the money market, they play the devaluation market and we sit there like a bunch of dummies,” according to a transcript in Congressional Quarterly.

As Bloomberg adds, the barbs with Japan indicate likely friction points when Trump and Abe meet next week in the U.S. This isn’t the first time that Trump has raised the issue of Japan’s currency and relations with the U.S. On the campaign trail in 2015, he accused Japan of currency manipulation. At a press conference on Jan. 11 this year, he said the U.S. has a “trade imbalance” with Japan.

Asakawa added that Japan hasn’t recently intervened in the currency market, “so without more explanation, I am not sure what is being referred to.” The last time Japan intervened was in 2011, when the yen hit a postwar high in the aftermath of the Fukushima earthquake and nuclear meltdown.

Actually, considering the BOJ’s balance sheet is about the size of Japan’s GDP, even as the central bank has nationalized over two thirds of all outstanding ETFs, it is pretty clear what Trump is referring to.

Taking steps further, Japan’s Finance Minister Taro Aso said in parliament on Tuesday that Trump had introduced “a new factor of uncertainty,” which could contribute to a weak yen and strong dollar for “some time.” Aso will accompany Abe and explain Japan’s foreign exchange and monetary policies to Trump in the U.S. next week, according to a Reuters report, citing a government source.

Japan’s government watches the currency markets with a sense of vigilance and acts with purpose when necessary, Suga told reporters in Tokyo at the afternoon press briefing. “It will be very important for Japan and the U.S. to reach mutual understanding on the economy and trade, including the currency problems.”

Of course, what Trump told is nothing but the truth, however “established” regimes and their central banks, unfamiliar with being called out for engaging in active devaluation, are now scrambling to come up with a new narrative, one which factors in Trump’s unexpected outbursts of truth. That said, even with Trump’s accurate observation, it is unclear how he could override the ongoing currency devaluation in Japan and Europe, whose central banks continue to engage in record monetization, aided by negative rates. Unless Trump actively lobbies for a Fed rate cut – or more QE – his angry words at other currency intervening regimes will remain hollow. Unless, of course, the US rapidly tumbles into recession.

 

via http://ift.tt/2kR7SqH Tyler Durden

• Fed Unlikely to Make Its Next Rate Move Wednesday (WSJ)
• Conservative Gorsuch nominated to top court (Reuters)
• Gorsuch Is Critic of Legal Doctrine That Bolsters Executive Authority (WSJ)
• The 4 Rules That Will Explain Neil Gorsuch’s Confirmation Fight (Politico)
• Trump’s Yen Comments ‘Wide of the Mark,’ Says Japan FX Chief (Reuters)
• A barb at Germany puts Trump administration on collision course with EU (Reuters)
• Investors Pulled $4.4 Billion From Brevan Howard (WSJ)
• Specter of Global Trade War Rises as Trump Puts ‘America First’ (BBG)
• Trump’s Backers Want Action on Jobs, Taxes, Immigration (WSJ)
• Tesla’s Model S Falls Short of Top Safety Rating Awarded to 42 Other Cars (BBG)
• Apple Breaks Losing Streak, as Sales of iPhone 7 Shine (WSJ)
• The Short Seller Who Crushed Valeant Has Picked His Next Target (BBG)
• Trump’s go-to man Bannon takes hardline view on immigration (Reuters)
• Pentagon Probe of ISIS Intelligence Finds Reports Weren’t Skewed (WSJ)
• Army Corps Given Go-Ahead for Final Permit on Dakota Pipeline, Senator Says (WSJ)
• Britain’s Brexit bill set to clear first legislative hurdle (Reuters)
• It’s Getting Harder to Keep the Barbarians at the Gate—and It’s This Guy’s Job (BBG)
• EU extends emergency border controls to tackle migration (Reuters)
• Ex-JPMorgan analyst largely cleared in U.S. of insider trading (Reuters)
• Endowment Gains Aren’t Enough for Schools Facing Rising Expenses (BBG)
• Russia says Trump should be more specific on Syria safe zones plan (Reuters)

 

Overnight Media Digest

WSJ

– U.S. President Donald Trump picked Judge Neil Gorsuch as his nominee to the U.S. Supreme Court on Tuesday .http://on.wsj.com/2kfayuV

– Facebook Inc is developing a video-centric app for television set-top boxes, including Apple Inc’s Apple TV, people familiar with the matter said, giving it a home for video content-as well as a new vehicle for video advertising. http://on.wsj.com/2kf9ur2

– Sales of the new smartphone model, which Apple Inc unveiled in September, propelled total iPhone shipments 5 percent higher to a record during the three months through December. iPhones, which account for two-thirds of Apple’s sales, helped boost total revenue 3 percent to a record $78.4 billion. http://on.wsj.com/2kf9bMZ

– Exxon Mobil Corp said on Tuesday it wrote down the value of more than $2 billion in U.S. assets, departing from decades-long practice amid an investigation by securities regulators. http://on.wsj.com/2keQjO8

– The athletic-gear maker Under Armour Inc reported that sales increased just 12 percent in the holiday quarter and revenue would increase about half as much as anticipated this year. http://on.wsj.com/2kf9W8N

– Caterpillar Inc is moving its headquarters to the Chicago area, the latest U.S. company to say they are gravitating toward the Windy City in search of talent and better travel connections. http://on.wsj.com/2kf2KJq

– The U.S. Army Corps of Engineers has been given the green light to proceed with the final permit necessary to finish the Dakota Access Pipeline, according to North Dakota Senator John Hoeven. http://on.wsj.com/2kf8zH3

 

FT

* Donald Trump’s top trade adviser, Peter Navarro, accused Germany on Tuesday of using a “grossly undervalued” euro to gain a competitive advantage, drawing a rebuff from German Chancellor Angela Merkel and sending the euro to an eight-week high against the dollar.

* Apple Inc reported its first quarterly increase in iPhone sales in a year, powered by strong demand for the latest version of its flagship smartphone, sending the company’s shares up more than 3 percent in after-hours trading.

* European Council President Donald Tusk said on Tuesday that U.S. President Donald Trump has joined Russia, China and radical Islam among threats to Europe and called on Europeans to stick together to avoid domination by three other continental powers.

 

NYT

– Anthony Scaramucci, who has been named the White House liaison to the business community, is selling his firm to a company with deep ties to China’s Communist Party. http://nyti.ms/2jBgxIu

– Xiao Jianhua, a Chinese-born billionaire who has forged financial ties with some of the country’s most powerful families was taken by the Chinese police from his apartment at the Four Seasons Hotel in Hong Kong late last week and spirited across the border. http://nyti.ms/2jBhSz5

– Apple CEO Timothy D. Cook said the iPhone maker hoped to double its services business in the next four years, but it will be harder to predict how to deal with the Trump administration. http://nyti.ms/2jBeRio

– Sequoia Capital has changed up several leadership roles, including naming Roelof Botha to replace Jim Goetz as one of the “stewards” of the firm, a spokesman said Tuesday. http://nyti.ms/2jBi7dt

– The U.S. President said he would make it easier for the industry to manufacture in the United States and would further discuss lowering costs behind closed doors. http://nyti.ms/2jBpe5z

– Uber on Tuesday announced a partnership with Daimler, under which the German automaker plans to build autonomous vehicles that will operate on Uber’s transportation network. http://nyti.ms/2jBo8H9

 

Canada

THE GLOBE AND MAIL

** TransCanada Corp has long-term contracts from shippers backing its $15.7-billion Energy East project and is determined to proceed despite forecasts of a surplus in pipeline capacity in the next decade, company officials told a Senate hearing Tuesday. https://tgam.ca/2kg3K0d

** The Bank of Canada has launched a multiyear effort to overhaul the sophisticated computer models it uses to forecast the economy after they failed to foreshadow the deep and persistent aftershocks of the global financial crisis. https://tgam.ca/2kg3K0d

NATIONAL POST

** Even as the Trump administration vows to toughen the procedures the United States uses to screen refugees, it has expressed “great confidence” in Canada’s largely similar refugee-vetting procedures and believes them to be “very good”, more than one of Prime Minister Justin Trudeau’s senior advisers has told the National Post. http://bit.ly/2kUa7Fk

** The Canada Media Fund (CMF) is partnering with Google Canada to create a YouTube channel dedicated to showcasing original Canadian films as part of Canada’s 150th anniversary of Confederation celebrations. http://bit.ly/2kfZU7l

 

Britain

The Times

– Investors fear that the Co-operative Bank may be forced to wind down, leaving bondholders with heavy losses. The price of its most risky bonds has fallen as much as 30 per cent this week, with some trading as low as 57 pence in the pound, after the bank’s admission that its capital strength would be weaker than expected. http://bit.ly/2jT9H4J

– The UK economy will grow at a faster rate than that of the Eurozone and will be beaten only by the United States out of the G7 nations this year, 18 months after the vote to leave the European Union, the National Institute of Economic and Social Research has predicted. http://bit.ly/2jTd5fH

The Guardian

– Shell has sold a large part of its North Sea oil fields for $3.8 billion to a company headed by Linda Cook, who left the Anglo-Dutch group more than seven years ago. The assets sold by Shell accounted for more than half of the company’s North Sea oil production last year. http://bit.ly/2jTaH8B

– Christine Hohmann-Dennhardt, the former judge brought in to shake up Volkswagen’s compliance and culture after it was struck by a diesel emissions scandal, is to receive a payoff of more than 10 million euros ($10.79 million), despite working for the German carmaker for just 13 months. http://bit.ly/2jTqrbJ

The Telegraph

– Discovery, the U.S. media giant behind Eurosport and TLC, has reached a truce with Sky after threatening to pull its 12 channels from Sky in a bitter row over fees. With little more than four hours before the deadline, Discovery announced that an agreement had been reached. http://bit.ly/2jTgxXM

– Arqiva’s owners, a consortium including the Australian investment bank Macquarie and the Canada Pension Plan Investment Board, are understood to be putting it up for sale with a price tag of between 5 billion and 6 billion pounds ($7.55 billion). http://bit.ly/2jTgDOU

Sky News

– Brendan Barber, the former head of the TUC, is to join the board of BT’s infrastructure division amid ongoing pressure from rivals and the industry regulator to formally separate it from the FTSE-100 telecoms group. http://bit.ly/2jTbpTk

– Two of the ‘big six’ energy companies in the UK could be set to start rewarding customers who stick with them rather than switching providers for better deals. In a hearing of the Business, Energy and Industrial Strategy Committee on Tuesday, both Npower and EDF Energy said they were looking into beginning reward schemes for those customers on higher tariffs. http://bit.ly/2jTeB1C

The Independent

– Apple has missed the deadline to pay 13 billion euros it owes to the Irish government in tax benefits, the European Union’s competition commissioner said on Tuesday. European authorities have accused Ireland of helping Apple to avoid paying to pay high taxes by means of a so-called “sweetheart deal” that is in breach of EU rules. http://ind.pn/2jTchr4

 

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Why gold will benefit from the alternative fact of the cashless society

• Alternative facts prevail in the European Commission’s calls for cash controls
• Terrorism is blamed for the need to control cash
• Evidence shows criminals find alternative ways to finance activities
• Citizens continue to want and to use cash in day-to-day life
• Cashless society is being used to force through other ‘agendas’
• Gold and silver will be used as savers are forced to hold assets outside of the financial system

Why gold will benefit from the alternative fact of the cashless society

“Those who control the present, control the past and those who control the past control the future.”

? George Orwell, 1984

Last week a new phrase was introduced into our lexicon by Trump Adviser Kellyanne Conway. When asked about why press secretary Sean Spicer had made statements that were (according to the press) unverifiable she said that he had used ‘alternative facts’.

This prompted a raft of satire, journalists to flail their arms up at the audacity of Conway and Trump’s administration, and for people to rush out and buy George Orwell’s 1984.

Penguin, the world’s largest publisher, ordered a 75,000 copy reprint last week. Apparently more than the ‘typical reprint’ for the 1949 Orwellian classic. The ‘alternative facts’ statement echoed of ‘Newspeak’ the language used by the totalitarian government in Orwell’s 1984 to influence and control its citizens of Airstrip One (previously Britain).

European Commission Embraces Newspeak

A day after Conway’s interview the European Commission took of the advantage of the furore that continues to surround the Trump administration (the shock that the President is doing exactly what he promised to do) and introduced a proposal enforcing “restrictions on payments in cash.”

The EC apparently like to use their own version of alternative facts when it comes to arguing why we should be going cashless.

The proposal is based on a plan from February 2016 that explained, “Payments in cash are widely used in the financing of terrorist activities… In this context, the relevance of potential upper limits to cash payments could also be explored. Several Member States have in place prohibitions for cash payments above a specific threshold.”

And whilst terrorists do no doubt use cash to finance some activities (the US has purportedly blown-up stockpiles of ISIS’ cash), research shows that countries with higher denominations of cash in fact experience lower levels of crime and corruption.

And what about those non-criminals? EC are failing to address the fact that law-abiding citizens still like to use cash and will continue to whilst negative interest rates and bail-ins remain a reality. Not to mention the privacy it affords us.

This Newspeak is starting to feel like we’re supposed to feel bad about using cash and instead should become inclined to move to a cashless way of life. Whilst the EC is still in proposal-stage we should be reminded that the move to cashless is very much in play, as we explained in Cashless society – War on Cash to Benefit Gold?.

Cash-free does not mean terrorism free

As pointed out by Zerohedge the proposal is very focused on stopping terrorism, crime and money laundering. It states:

‘Potential restrictions to cash payments would be a mean to fight criminal activities entailing large payment transactions in cash by organised criminal networks…Terrorists use cash to sustain their illegal activities, not only for illegal transactions (e.g. the acquisition of explosives) but also for payments which are in appearance legal”

But, as argued in the Sovereign Man blog, economists such as Rogoff and Stiglitz and government organisations such as the EC are relying on the myth that ‘cash facilitates illegal activity.’

Who is so naive to think that a ban on cash will stop terrorism? What they have missed is that criminal and terrorist leanings facilitate such activities, they will always find some form of means of exchange to facilitate it.

Sovereign Man explains that criminals and terrorists can, miraculously, use means other than physical cash in order to facilitate illegal activities.

“The US military has literally blown up more than a billion dollars worth of ISIS’s stockpiles of physical cash during airstrikes.

But this hasn’t affected their terrorist activities one bit.

That’s because the most notorious terrorist group on the planet famously uses both the world’s oldest currency (gold) and the world’s newest currency (Bitcoin).”

And it’s not just big terrorist groups who are able to work their way around a cash-based monetary system.

“What Stiglitz, and perhaps many law enforcement agencies, fail to realize is that one of the biggest tools in masking illegal activity is actually Amazon.com.

Specifically, Amazon gift cards.

If you’re looking to quietly and easily pay large sums of money, even tens of thousands of dollars, you can do so with Amazon gift cards.

Amazon gift cards are essentially a “cash equivalent”.

Amazon sells just about everything on the planet, so its gift cards can either be spent or quickly resold for cash.”

Cash will soon not be a right

The EC, Rogoff and Stiglitz are all behaving as though cash is only used for illicit activities. There is apparently little thought to those of us who still use cash. Most of us look at cash as something that is both convenient and provides a way to spend money without it being anyone else’s business other than ours and the seller. But governments label this as suspicious with the intention to get us away from cash so that the banking system may be propped up and ‘bailed-in’ by our funds.

There is but a fleeting mention of the fundamental right to use cash in this recent EC proposal but it is quickly dismissed:

It should also be observed that national restrictions to cash payments were never successfully challenged based on an infringement to fundamental rights.”

Cash is still widely used, by both citizens and big businesses but this has not stopped both governments and banks looking to move us away from using cash.

The most recent example of a shift to a cashless society was of course the demonetisation of 500 and 1,000 rupee notes in India. Whilst Prime Minister Modi acknowledged that millions had been affected he reiterated calls for the country to become a cashless society.

Meanwhile In Ireland companies are making investments on the basis of the future cashless society. US company EVO, a payment processing partner of Bank of Ireland, announced a €9.1 million move to the country that is embracing a cashless way of life. Brian Cleary, managing director of BOI Payment Acceptance Ireland and UK, an arm of Evo Payment International told the Irish Independent, ”With over six million debit and credit cards in the market, debit card spend on the increase year-on-year and over 35,000 Irish businesses offering contactless payment facilities, this number continues to grow.”

In the UK, cashless is almost as popular as the likes of the Scandinavian countries. In August 2016 More than 260 million contactless transactions were made in the UK, a 200% increase from the year before. According to a Telegraph article, ATMs are close to becoming extinct as banks will no longer finance them. Rural areas will be “the hardest hit with the South West, Scotland, and the South East where 44pc, 40pc and 33pc of cash points are under threat”

The threat of a cashless society is seemingly greater than ever, so much so that MPs are being called to investigate. As Ron Delnevo, director of the ATM Industry Association in Europe, told the Telegraph: “Some organisations want to drive people away from cash because it suits their agenda.” He also warned of a “domino effect”, saying that if one big bank pulled out of the arrangement “the whole thing will just melt”. 

Cash controls will extend beyond cash

The EC doesn’t intend to stop just at putting controls on (or even outright banning) cash. Under the guise of preventing anonymity they believe that restrictions should be placed on all means of payment that mean people can have some privacy:

“In view of the development of cryptocurrencies and the existence of other means of payments ensuring anonymity, an option could be to extend the restrictions to cash payments to all payments ensuring anonymity (cryptocurrencies, payment in kinds, etc.). On the other hand, restrictions on cash payments could promote the development of alternative payments technologies compatible with the non-anonymity objective pursued.”

Aside from what this means for all forms of payments, it ultimately means that the EC has decided that anonymity, i.e. privacy, is a bad thing. To want it is to suggest that you are doing something criminal.

This will no doubt drive up demand for tangible currencies such as gold and silver which should be held outside of the banking system, as outlined in a letter to the FT following Gillian Tett’s article in support for a cashless society:

Sir, Gillian Tett sees some benefits in scrapping cash (February 5). I, instead, see an Orwellian nightmare where citizens’ every step is recorded in a Big Brother database for tax, financial and monetary purposes. In a certain sense cash means freedom. If cash is really scrapped by governments in the future I have no doubt that alternative tangible currencies will emerge. I will be in the front line using them.

At the moment negative interest rates and bail-ins will only work if cash cannot be removed from the system. And central banks and government are well aware of this. This is why ‘tangible currencies’ such as gold and silver are becomingly increasingly more attractive as the push for cashless society and reduced privacy, grows.

As Doctor Constantin Gurdgiev wrote:

Cash and monetary assets, such as gold, cannot be expropriated or bailed-in as long as they are held in physical form and under proper storage. Cashless accounts amplify the importance of monetary assets, such as gold, in fulfilling the function of being safe havens against systemic risks – risks that are associated with high probability of Government expropriation.

Conclusion: gold and silver

A cashless world means a transparent world, which is great if terrorists were the only ones using cash. But they’re really not, so a cashless world means transparent bank accounts which means restricted banks accounts.

Human behaviour and data does not support the argument for a cashless society. Instead this is seemingly a move to force to restrict our freedom and to get us to hold our wealth in a banking system where negative interest rates and bail-ins are a harsh reality and are our financial decisions are there for all to see.

Lars Feld, economic advisor to the German government, referred to cash as ‘printed freedom.’ It seems that this will not be the case for long. Unfortunately under the Newspeak guise of protecting us from criminals our cash will no longer be the ticket to a private life.

Money in a bank account is no longer yours- it is a bank deposit, an unsecured liability in a commercial bank that is entrenched in the global banking system. It relies on trust in a system that is inherently broken and on a downward spiral that is prepared to take savings and wealth with it.

Fyodor Dostoevsky wrote, ‘Money is coined liberty’ and many years later this is still the case for gold and silver. Unfortunately it is no longer the case for cash. History shows multiple attempts of wealth confiscation and restrictions on freedom, each time individuals and governments have returned to gold and silver in order to protect their savings and their privacy.

Going cashless will not rid us of people and organisations who wish to commit horrific and illegal acts. Instead it will encourage them to find additional ways to run their gangs and terrorist cells. For the rest of us it will remind us of the importance of liberty, safe-havens, security and the need to protect our wealth from negative interest rates, bail-ins and currency devaluations.

Whilst a government using ‘alternative facts’ and telling us that something is for the greater good when it is clearly for the greater banking system is disheartening we should embrace the role of gold and silver. The role of precious metals in a cashless society are key and investors should remember the importance of diversification and holding assets, under direct ownership, outside of the vulnerable and exposed banking system.

Gold and Silver Bullion – News and Commentary

Gold becomes one of investors’ favorite safe havens with Trump uncertainty (Reuters.com)

Gold rises as Trump policy fuels safe haven demand (Reuters.com)

ETF Buyers Return to Precious Metals Amid Trump Policy Angst (Bloomberg.com)

German inflation pick-up unsettles euro zone bond markets (Reuters.com)

Lloyd’s of London says it can manage a $200bn event (CityAM.com)

Ultra Easy Money: Digging the Hole Deeper? (LMBA.org.uk)

Major Inflection Point Coming In Stocks – Hussman (DollarCollapse.com)

ECB Assets Rise Above 36% Of Eurozone GDP; Draghi Now Owns 10.2% Of European Corporate Bonds (ZeroHedge.com)

What totalitarianism looks like – Daily Reckoning (DailyReckoning.co.uk)

United States Is On The Precipice Of Widespread Civil Unrest (ZeroHedge.com)

Gold Prices (LBMA AM)

01 Feb: USD 1,210.00, GBP 960.01 & EUR 1,122.03 per ounce
31 Jan: USD 1,198.80, GBP 964.91 & EUR 1,119.20 per ounce
30 Jan: USD 1,189.85, GBP 949.38 & EUR 1,112.63 per ounce
27 Jan: USD 1,184.20, GBP 943.81 & EUR 1,108.77 per ounce
26 Jan: USD 1,191.55, GBP 945.14 & EUR 1,111.95 per ounce
25 Jan: USD 1,203.50, GBP 956.90 & EUR 1,119.62 per ounce
24 Jan: USD 1,213.30, GBP 972.22 & EUR 1,130.07 per ounce
23 Jan: USD 1,213.75, GBP 974.03 & EUR 1,130.12 per ounce

Silver Prices (LBMA)

01 Feb: USD 17.60, GBP 13.91 & EUR 16.29 per ounce
31 Jan: USD 17.29, GBP 13.86 & EUR 16.07 per ounce
30 Jan: USD 17.10, GBP 13.65 & EUR 16.03 per ounce
27 Jan: USD 16.70, GBP 13.32 & EUR 15.61 per ounce
26 Jan: USD 16.86, GBP 13.39 & EUR 15.71 per ounce
25 Jan: USD 16.93, GBP 13.46 & EUR 15.74 per ounce
24 Jan: USD 17.10, GBP 13.73 & EUR 15.92 per ounce
23 Jan: USD 17.14, GBP 13.78 & EUR 15.97 per ounce

Recent Market Updates

– Silver, Platinum and Palladium As Safe Havens – Reassessing Their Role
– Why 2017 Could See the Collapse of the Euro
– Dow 20K … US Debt $20 Trillion … Trump and $15,000 Gold
– Switzerland’s Gold Exports To China Surge To 158 Tons In December
– Blockchain – Central Banks Banking On It
– Sharia Standard May See Gold Surge
– Gold Price To 2 Month High As Fiery Trump Declares New American Order
– Gold’s Gains 15% In Inauguration Years Since 1974
– Turkey, ‘Axis of Gold’ and the End of US Dollar Hegemony
– Gold Up 5.5% YTD – Hard Brexit Cometh and Weaker Dollar Under Trump
– Bitcoin and Gold – Outlook and Safe Haven?
– Physical Gold Will ‘Trump’ Paper Gold
– Gold Lower Before Trump Presidency – Strong Gains Akin To After Obama Inauguration

www.GoldCore.com

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As the political scandal gripping (former) French presidential frontrunner Francois Fillon grows, his public support is tumbling and according to a new opinion poll released on Wednesday, the conservative presidential candidate would no longer even make the second round of this spring’s presidential election in France, raising the pressure on him as a scandal over his wife and children’s publicly funded “fae work” engulfed his campaign.

The poll by Elabe showed rising support for far-right National Front leader Marine Le Pen, but notably it showed centrist Emmanuel Macron most likely to win the presidency – snatching the position of favorite that Fillon held until last week – in the presidential runoff round.

Former minister Emmanuel Macron, head of the political movement En Marche!

The poll’s findings summarized:

• Marine Le Pen leads the first round voting intentions with 27% support, up 3 points.
• Emmanuel Macron on 23%, unchanged
• Francois Fillon has slipped to 20%, down 6 points.
• Macron beats Le Pen 65%-35% in 2nd round
• Fillon beats Le Pen 59%-41% in 2nd round

Elabe predicted Macron would beat Le Pen in the second round with 65 percent of the vote. Should Fillon make the second round, he too would beat Le Pen, but by a lower margin, at 59 percent, Elabe said. The poll, published on Wednesday and covering among about 1,000 people, is the second one to be conducted since the scandal engulfed Fillon’s campaign. Then again, as the past year has shown, when it comes to non-traditional candidates or outcomes, polls are notoriously wrong, so it is possible that Le Pen’s chances in the second round are underestimated.

The poll by Elabe for Les Echos newspaper was conducted on Jan. 30 and 31, a few days after a newspaper report that said Fillon’s wife was paid taxpayers’ money for fake work. While Fillon has denied accusations of graft, and said repeatedly the work was genuine, an inquiry has been opened and the couple have been interviewed by police. Fillon, chosen in November by a party primary, said he will stand down if he is put under formal investigation. He is expected to meet members of his party on Wednesday as some of them reportedly consider a campaign without him. It was unclear how a new candidate could emerge with less than three months to go before the election.

That said, as WikiLeaks pointed out this morning, the description of the unexpected presidential frontrunner – a former Rothschild M&A banker – in Hillary Clinton’s email “is at odds with campaign image.”

French presidential candidate Emmanuel Macron’s description in Hillary Clinton’s email at odds with campaign image https://t.co/38Krq50zkW http://pic.twitter.com/C29r1aZ4gJ

— WikiLeaks (@wikileaks) February 1, 2017

As we reported yesterday, on Tuesday, French police searched Fillon’s office in parliament and party leaders began to consider a “Plan B” without him.

The Fillon scandal has heightened investor uncertainty about the outcome of the presidential election, with players nervous about the possibility that the anti-euro, anti-EU Le Pen could win power and pursue a French exit from the bloc.

Meanwhile, uncertainy about the outcome of the election has spread to French assets, with the gap between French and German government borrowing costs soaring to 3 year highs.

 

Should Fillon drop out, which now seems increasingly likely, expect further French asset turmoil as the Conservatives scramble to unveil a replacement candidate with less than three months until the first round of the presidential election.

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

After yesterday US officials reported that Iran conducted a nuclear ballistic missile test on Sunday, which some claimed would be another violation of the UN resolution and Obama’s nuclear deal, on Wednesday Iran’s defense minister admitted that the Islamic Republic had indeed tested a new missile, but added the test did not breach Tehran’s nuclear accord with world powers or a U.N. Security Council resolution endorsing the pact.

Iran has test-fired several ballistic missiles since the nuclear deal in 2015, but this is the first during U.S. President Donald Trump’s administration. Trump said in his election campaign that he would stop Iran’s missile program. Furthermore, the confirmed launch comes at a precarious time, with president Trump seemingly looking for excuses to scrap the Iran deal, which could potentially lead to the reestablishment of Iran sanctions and the halt of Iranian oil exports to global markets, taking away as much as 1 million barrels of daily supply.

“The recent test was in line with our plans and we will not allow foreigners to interfere in our defense affairs,” Defence Minister Hossein Dehghan said, according to Tasnim news agency . “The test did not violate the nuclear deal or the (U.N.)resolution 2231,” he said.

A U.S. official said on Monday that Iran test-launched a medium-range ballistic missile on Sunday and it exploded after traveling 630 miles (1,010 km). Iran’s Foreign Minister Mohammad Javad Zarif neither confirmed nor denied the U.S. report, but said on Tuesday that Tehran would never use its ballistic missiles to attack another country.

The U.N. Security Council resolution, adopted in a deal to curb Iran’s nuclear activities, “called upon” Iran to refrain from work on ballistic missiles “designed to” deliver nuclear weapons. Critics say the language does not make this obligatory. 

However, the landmark nuclear deal between Iran and world powers does not include provisions preventing Iran from conducting ballistic missile tests.

Ultimately, it will be up to Trump to decide whether and how to retaliate to Iran’s latest show of force, which comes just days after Trump announced travellers from Iran could be temporarily banned from entering the US, sparking retaliation on behalf of Iran which blocked US visitors to the Islamic Republic.

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European stocks rise the first day in four, with Asian stocks, S&P futures and the Dollar all gaining following strong Apple earnings ahead of today’s Fed decision and the U.K. parliament’s first vote on the Article 50 bill.

World stocks made their first gain in five days on Wednesday as the dollar steadied from turbulence after the Trump administration accused Germany, Japan and China of devaluing their currencies to gain a trade advantage. The U.S. currency suffered its worst January in three decades after President Donald Trump complained that every “other country lives on devaluation”. Bargain hunters nudged the dollar up 0.15% in Asian and European trading, reassuring themselves that the Federal Reserve should signal later that it still plans to raise U.S. interest rates a number of times this year

Speaking of, today’s main event – in addition to any off the cuff Trump statements and/or tweets – is the Fed decision, however it should be relatively uneventful as officials aren’t expected to increase rates when the Federal Open Market Committee convenes, but investors will trawl the statement accompanying the decision for any change in forward guidance which earlier indicated there could be three hikes this year. The Fed watchers will also look for clues on how the Fed interprets Trump’s impact on the US economy. The overall tone should still be one that is relatively positive but it’s hard to see much new information that would really shift market expectations. A reminder that Yellen’s Humphrey-Hawkins testimony is only two weeks away so that may end up being the more relevant event for markets.

“The markets are caught in this dilemma about whether to pay more attention to fundamentals or to politics,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd. in Edinburgh. “We’re getting a fairly steady stream of profits exceeding expectations. The dollar is the canary in the coal mine — it’s the asset to watch because it’s so closely correlated to risk-on, risk-off sentiment across all other assets.”

Following a weak two-day close to the month in US markets, an upbeat mood in Europe’s aided by generally strong final Mfg PMI readings as well as strong corporate earnings underpinned a rebound in global stocks, while the dollar stabilized as investors prepare to scour today’s Fed statement for clues on the path of interest rates this year. The mood was also better in Asia this morning, with the Nikkei, Kospi and ASX all higher while in FX the Dollar index has also rebounded.

“European shares are trading higher this morning receiving a boost from firmer markets across Asia, better than expected Apple earnings and Siemens revising upwards its profit forecast,” Markus Huber, a trader at City of London Markets said in a note. “Focus will be on the FOMC meeting with the interest rate decision due out later tonight.”

The positive sentiment was bolstered by positive data out of China which released the latest, January PMI report. All in all the data was relatively stable with the manufacturing reading falling a modest 0.1pts to 51.3 (vs. 51.2 expected) in January, offset by a 0.1pt rise in the non-manufacturing reading to 54.6.

“We believe that the manufacturing sector will continue to underperform the services sector,” analysts at BMI Research, Fitch Group’s research arm, wrote in a note. “Weaker domestic demand and an uncertain external environment due to rising U.S. protectionism will weigh on the former, while services will benefit from continued investment by the government and the private sector.”

“Behind the headline is still an outperformance of large enterprises, suggesting that China’s manufacturing industry continues to consolidate,” said Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “Looking ahead, the government will continue to juggle growth and capacity reduction. This headline PMI will still stay above the threshold of 50, but it’s hardly impressive.”

Exports from tech bellwether South Korea also grew at the fastest pace in almost five years, another sign the global economy had been on the mend before all the talk of U.S. protectionism darkened the air.

Over to Europe, where stocks climbed alongside S&P 500 futures rising by 0.3%, offsetting yesterday’s loss, after companies including Apple, Siemens AG and Volvo AB posted results that exceeded expectations, along with optimistic forecasts for the year ahead. After its worst month since March, the greenback edged higher as frets over President Donald Trump’s policies were overshadowed by the Federal Reserve’s first meeting of the year.

The pound rose before a parliamentary vote on formally triggering an exit from the European Union. The U.K. parliament on Wednesday holds its first vote on the Article 50 bill. Bank of England Governor Mark Carney faces a delicate balancing act when policy makers meet to decide interest rates on Thursday.

Looking at markets, the Stoxx Europe 600 Index jumped 1% as of 10:41 a.m. in London, rebounding after a three-day decline. Futures on the S&P 500 rose 0.3%. The benchmark for American equities advanced 1.8 percent in January for a third monthly gain, and is higher by more than 6% since Nov. 8. The FTSE 100 Index gained the most in a month, advancing 0.8%. Oil touched $53 a barrel.

The yield on the 10-year U.S. Treasury note added two basis points to 2.47 percent. It fell four basis points on Tuesday. European government bonds extended a decline, with the yield on bunds due in a decade rising three basis points to 0.46 percent. French 10-year yields rose six basis points to 1.09 percent.

* * *

Overnight Bulletin Summary from RanSquawk

• European equities are trading modestly in the green this morning with price action largely dictated by the latest batch of earnings across Europe
• Despite the upcoming FOMC, it has been GBP in the spotlight, as the prospects for inflation and growth have spurred calls for a possible BoE rate hike later in the year
• Looking ahead, highlights include FOMC rate decision, Global Mfg. PMI data, US ISM Mfg. PMI and DoE crude oil inventory report

Market Snapshot

• S&P 500 futures up 0.3% to 2,281
• Stoxx 600 up 1% to 364
• FTSE 100 up 0.9% to 7166
• DAX up 1% to 11648
• MSCI Asia Pacific up 0.1% to 142
• Nikkei 225 up 0.6% to 19148
• Hang Seng down 0.2% to 23318
• S&P/ASX 200 up 0.6% to 5653
• German 10Yr yield up 3bps to 0.46%
• Italian 10Yr yield up 3bps to 2.29%
• Spanish 10Yr yield up 4bps to 1.64%
• S&P GSCI Index up 0.1% to 396.4
• Brent Futures up 0.3% to $55.73/bbl
• Gold spot down 0.01% to $1,210.63
• U.S. Dollar Index up 0.2% to 99.70

Top Overnight News

• Fed to Hold Rates Steady to Reassess Outlook: Decision-Day Guide
• Trump Court Pick Gorsuch Faces Senate Riven by Bitter Fights
• Japan Hits Back at Trump Charge That It Is Devaluing the Yen
• Iran’s Missile Launch ‘Unacceptable,’ Senior U.S. Official Says
• GE’s Immelt Talks Up Global Ties as Trump Pivots Away From Trade
• Apple Attracts New IPhone Fans as Existing Owners Await Upgrade
• Apple Weighs Legal Action on Trump’s Immigration Order, WSJ Says
• Disney Agrees to Pay $100 Million to End No-Poaching Lawsuit
• Ford Seen Reaping Edge Over Toyota in U.S. Border Tax Overhaul
• Tesla Falls Short of Top Safety Pick Awarded to 42 Other Cars
• Dakota Access Oil Pipeline Seen Gaining U.S. Approval Soon
• Amazon Plans $1.5 Billion Air Hub Near Cincinnati for Fleet
• Medtronic Said to Prepare Sale of Medical-Supplies Business
• First Hawaiian Prices Secondary Stock Offering at $32/Shr

Asia stocks traded mostly higher as the region digests the latest expectation-beating Chinese PMI data and after having shrugged off the negative lead from US where equity markets were dampened by Trump policy concerns and on month-end, pre-FOMC position squaring. ASX 200 (+0.6%) was led by miners after gains in the metals complex in which gold rose over 1% and copper rallied around 3% to its highest level since May 2015, while KOSPI (+0.6%) was underpinned after South Korean trade data showed exports increased by the most since February 2012. Nikkei 225 (+0.5%) was initially subdued by a firmer JPY, but then recovered alongside a rebound in USD/JPY and the Hang Seng (-0.2%) lagged as it reacted to the recent weakness in global stocks on return from the Lunar New Year holiday. 10yr JGBs saw uneventful trade with prices subdued amid an improvement in risk sentiment and after the BoJ also refrained from purchases of 5yr-10yr in today’s buying operation, which resulted in a mixed curve and some mild underperformance in the belly.

Top Asia News

• Hong Kong Shares Fall as Market Reopens to U.S. Policy Concerns
• Missing Billionaire Stokes Fears of China Meddling in Hong Kong
• China’s Factory PMI Shows Stabilization Carried into New Year
• IndiGo Declines on Surprise Drop in Profit, Costlier Jet Fuel
• Japan’s Takeda Beats Sales Estimates on Gastroenterology Drugs

European equities are trading modestly in the green this morning with price action largely dictated by the latest batch of earnings across Europe. Industrials have been lifted by German heavyweight Siemens after company profits beat analyst forecasts while they also raised their outlook. Elsewhere, Julius Baer tops the SMI after net profit beat expectations. Additionally, sentiment has also been supported by firm Chinese PMI figures overnight, alongside firmer than expected Eurozone PMI data. Fixed income markets have centred around the continued widening of the 10yr French/German spread which is now at its widest since Jan’14 as uncertainty increases over Fillon’s Presidential bid (Previously favourite to win). While some of the downside in French debt has been attributed to the unwind of yesterday’s month-end extensions.

Top Europe News

• Euro-Area Manufacturing Picks Up as Demand Drives Prices Higher
• Siemens Taps New Boss With Head in the Cloud as Profits Surge
• BBVA Profit Beats Estimates, Bank Moves to All-Cash Dividend
• Trans-Atlantic Mood Sours as Merkel Refutes Trump on Euro
• Fund That Beat 90% of Its Peers Is Now Betting on Greek Banks
• VW, U.S. Drivers Reach $1.2 Billion Settlement as Costs Rise
• BMW CEO Pleads for Free Trade After Trump Border Tariff Threat
• Volvo Stock Surges as Truck Orders Jump 10% on European Growth

In currencies, the pound was the biggest gainer among Group of 10 nation currencies, advancing 0.3 percent to $1.2616; U.K. manufacturing PMI for January was in line with estimates, hovering near a 2 1/2-year high. The Bloomberg Dollar Spot Index rose 0.1 percent, after completing a 2.6 percent loss for January and sliding to its lowest level since Nov. 11. The euro retreated 0.1 percent to $1.0789.  Despite the upcoming FOMC, it has been GBP in the spotlight, as the prospects for inflation and growth have spurred calls for a possible BoE rate hike later in the year. This was loosely underlined by the manufacturing PMI report this morning, which highlighted firmer PPI and output production at 32 month highs. Many accept this is significantly due to the weaker GBP of late, but this was further addressed as Cable managed to push through 1.2600 after some initial hesitation this morning. Little momentum to suggest we will test the recent 1.2680 highs in the very near term — ahead of tomorrow’s BoE – but with EUR/GBP demand having passed through, we have also seen some softness in the cross rate as we dip into the mid 0.8500’s. Elsewhere the USD looks to be on the front foot against the JPY again, having rejected the 111.00-112.50 support zone, but failure to break back above 114.00 puts the latest move back in the balance. EUR/USD also still looks intent on retesting 1.0800+ in the wake of the better than expected 2016 Q4 GDP and CPI numbers released yesterday, with the risk of any dovish moderation in tonight’s Fed statement also supportive in the near term.

In commocidites, copper prices are back above 2.70 after Chile’s largest mine voted against the BHP Billiton’s wage offer and voted to go on strike. Modest moves seen recently as much of this was priced in — many anticipating this. Base metals elsewhere continue to chop around, with Iron Ore demand out of China clearly supportive. West Texas Intermediate crude gained 0.2 percent to $52.90 a barrel amid cuts from OPEC producers including Iraq.  Russian oil output has been reported down 100k a day in January, and this may have provided some modest support, but also ‘fits in’ to a more supportive tone rather than providing fresh impetus for the upside — $51-54 WTI looks set to continue in the near term here. Finally for Gold, USD1200+ looks set to hold into the FOMC, but USD1220.00 looks firm resistance which will need a significant turn in the USD and/or risk sentiment (in the aftermath?).  U.S. natural gas rose 3 percent to $3.211 per million British thermal units. Prices were rebounding from the lowest settlement price in three weeks amid forecasts for warmer-than-normal weather across the country.

Looking at the day ahead, we’ve got a busy diary to get through in the US: we’ll kick off with the January ADP employment change reading which should offer some early clues as to what to expect in Friday’s payrolls. Thereafter we’ll get the final manufacturing PMI revision followed closely by the ISM manufacturing print which the market expects to nudge up 0.5pts to 55.0. Construction spending data for December and vehicle sales in January rounds out the data before attention then turns to this  evening’s conclusion of the FOMC meeting. As a reminder there is no Yellen press conference due today. On the earnings side of things we’ll also receive reports from 27 S&P 500 companies including Facebook.

US Event Calendar

• 7am: MBA Mortgage Applications, Jan. 27 (prior 4.0%)
• 8:15am: ADP Employment Change, Jan., est. 168k (prior 153k)
• 9:45am: Markit US Manufacturing PMI, Jan. F, est. 55.1 (prior 55.1)
• 10am: ISM Manufacturing, Jan., est. 55.0 (prior 54.7)
• 10am: Construction Spending MoM, Dec., est. 0.2% (prior 0.9%)
• 10:30am: DOE Energy Inventories
• 2pm: FOMC Rate Decision, Upper Bound, est. 0.75% (prior 0.75%)
• FOMC Rate Decision, Lower Bound, est. 0.5% (prior 0.5%)

US Government docket

• 8:30am: Sen. Orrin Hatch gives speech at U.S. Chamber of Commerce on Senate Finance Cmte’s 2017 agenda
• 10am: Senate Commerce, Science and Transportation Cmte hearing on reducing regulations
• 10am: House Armed Services Cmte hears from retired Gen. David Petraeus and former acting CIA Director John McLaughlin on national security threats
• 10:10am: Senate Budget Cmte vote on nomination of Rep. Mick Mulvaney for White House budget director
• 10:30am: Senate Budget Cmte hears from CBO Director Keith Hall on FY17 economic outlook
• 10:30am: Senate Judiciary Cmte to vote on nomination of Sen. Jeff Sessions to be U.S. atty general
• 10:45am: Senate Environment and Public Works Cmte to vote on nomination of Okla. Atty General Scott Pruitt for EPA administrator
• 12pm: House votes to disapprove Interior Dept stream-protection rule and SEC payment disclosure rule

DB’s Jim Reid concludes the overnight wrap

It’s difficult to know what’s normal in financial markets these days as the world tries to get used to the ebbs and flows of a Trump Presidency. Although January saw a lot of talk of a reversal of “Trump trades” the reality is that the only leg that has been weak has been the dollar which was down -2.59% in the month. Risk assets have generally performed well across the month. Talking of currencies there was plenty of Trump administration talk on the subject yesterday. The main focus was on the comments from President Trump’s top trade adviser, Peter Navarro, who said to the FT that Germany is using a “grossly undervalued” euro in order to gain an advantage over both the US and EU trade partners. It didn’t stop there though with Trump also saying at a meeting with US drug makers that Japan and China “play the money market” and “play the devaluation market while we sit here like a bunch of dummies”. The comments from Navarro about the euro has prompted a response from the head of the European Council, Donald Tusk, who said that the “worrying declarations” have only increased the uncertainty levels facing Europe and “puts the EU in a difficult situation”.

All in all that contributed to another rough day for the Greenback yesterday with the US Dollar index falling -0.91% and to the lowest closing level since November 11th. On the other side of that we saw the Japanese Yen rally +0.86%, Euro +0.96% and the onshore Chinese Renminbi +0.36%. These moves come ahead of today’s Fed meeting although we’re not expecting much new to come out of it. The overall tone should still be one that is relatively positive but it’s hard to see much new information that would really shift market expectations. A reminder that Yellen’s Humphrey-Hawkins testimony is only two   weeks away so that may end up being the more relevant event for markets.

Back to Trump briefly. With all the furore and fallout from the weekend immigration executive order it has been interesting to see the first poll released in the aftermath. A Reuters/Ipsos poll released yesterday and conducted over January 30th/31st from 1201 respondents found that 49% of US respondents “strongly” or “somewhat” agreed with the order. 41% “strongly” or “somewhat” disagreed while 10% said that they were unsure. It was interesting to see the party split too with 53% of Democrat supporters saying that they “strongly disagreed” and 51% of Republican supporters saying that they “strongly agree”. This follows a Quinnipiac poll conducted at the start of the month which showed that voters supported “suspending immigration from terror prone regions, even if it means turning away refugees” by a majority of 48% to 42%.

Staying with politics, early this morning we also had the announcement of the Supreme Court nominee with federal appellate judge Neil Gorsuch picked by Trump. The event ended up being a bit of a spectacle with the announcement also broadcast on live TV – although that may also come as little surprise to readers. Gorsuch is said to be known for his conservative approach and originalist philosophy and if confirmed, will bring the split between liberals and conservatives on the court to 5-4 in favour of the conservatives. According to the WSJ, Gorsuch is known as a well established conservative figure but also having been outspoken about the need for courts to have a limited role in American life and also being critical about disproportionate powers amongst federal agencies.

Back to markets. Away from the jolts in FX it was another day of relative Trump driven unease for risk assets with earnings misses from the likes of UPS and Under Armour also helping to drag stocks lower, although in fairness a late bounce into the close at least helped momentum finish on a high. The S&P 500 ended -0.09% after being down as much as -0.60% although the loss still meant that the index closed down for the fourth session in a row which is the longest such streak since early November and prior to the election result. The Dow also finished -0.54% although US equity index futures are pointing higher this morning after Apple reported after the close. The tech giant beat both Q1 sales and earnings street estimates sending shares up as much as 3% in aftermarket trading.

Elsewhere yesterday equity markets also had a rough time of it in Europe with the Stoxx 600 closing -0.67% which takes the three-day loss to -2.00% now. Credit indices also edged wider with CDX IG and iTraxx Main +0.5bps and +1.5bps wider respectively while sovereign bond yields dipped lower. 10y Treasury yields fell 3.5bps to 2.454% while Bunds (-1.3bps) also tracked lower. With the exception of Greece – where yields rose another 23bps on those concerns over the lack of progress over talks with creditors that we highlighted yesterday – the periphery also had a bounce back day with yields 3bps to 6bps lower. The big movers in the commodity complex meanwhile were precious metals with Gold (+1.26%) and Silver (+2.53%) both up sharply.

The mood is a bit better in Asia this morning. The Nikkei (+0.28%), Kospi (+0.49%) and ASX (+0.51%) are all higher while in FX the Dollar index has also rebounded +0.18%. The Hang Seng (-0.71%) has retreated although that reflects some catch up with the market reopening for the first time this week. There’s also been some data out of China to digest with the latest official PMI’s having been released. All in all the data was relatively stable with the manufacturing reading falling a modest 0.1pts to 51.3 (vs. 51.2 expected) in January, offset by a 0.1pt rise in the non-manufacturing reading to 54.6.

Away from Trump the other political focus at the moment is in France where it feels like with each passing day the presidential race is blowing more and more open. The focus currently is on the scandal  facing Francois Fillon with the candidate now facing fresh claims over the employment of family members as well as his wife, and the use of public funds in the employment. Fillon has said that he will withdraw from the race should the preliminary inquiry turn into a formal inquiry. In addition, the Washington Post ran an article yesterday suggesting that the National Front could be open to implementing a similar immigration order to that put in place by Trump, should Le Pen be elected. Certainly these political developments are worth monitoring.

Yesterday’s economic data in the US again played second fiddle to Trump related headlines. The Q4 employment cost index was reported as rising +0.5% qoq during the quarter which was a tad below the consensus for +0.6%. That saw the annual rate edge down to +2.2% yoy and so remain below the post financial crisis high mark of +2.6%. Meanwhile, the Chicago PMI for January slipped 3.6pts to 50.3 (vs. 55.0 expected) which is actually lowest level since May last year. The conference board’s consumer confidence index also edged down to 111.8 from 113.3 although there was a reasonable divergence in the two components. The expectations component tumbled 6.6pts to 99.8 while the present situations gauge rose 6.2pts to 129.7. The jobs plentiful diffusion index also suggested that the labour market remained solid during the month.

Over in Europe the main focus was on the inflation data. Euro area headline CPI surprised to the upside in January after printing at +1.8% yoy (vs. +1.5% expected) which follows a +1.1% reading in December. The big driver was energy and food and it was more notable that the more relevant core reading stayed unchanged at +0.9% yoy. Keep in mind that core inflation 12 months ago was +1.0% yoy. In addition, Q4 GDP for the Euro area came in-line at +0.5% qoq and so keeping the YoY constant at +1.8%. Our economists argue that core inflation is still too low and the ECB needs to observe a self-sustained improvement in core inflation above +1.0%. As such, our team expect the ECB to make its next taper decision in September, although strong data in the mean time could bring this forward to June.

In terms of the other data yesterday, the Euro area unemployment rate was reported as dipping one-tenth to 9.6% helped by a similar fall for the rate in Germany to 5.9%. Meanwhile in the UK mortgage approvals in December edged up to 67.9k from 67.5k although still missed relative to consensus (of 69.2k). Finally net consumer credit was weaker than expected in the UK in December (£1.0bn vs. £1.7bn) which saw Sterling temporarily dip before then coming roaring back with the weakness in the US Dollar to finish back above $1.250.

Looking at the day ahead, this morning in Europe the focus will be on the final revisions to the January manufacturing PMI’s as well as a first look at the data for the periphery and the UK. Following that we’ve got a busy diary to get through in the US this afternoon. We’ll kick off with the January ADP employment change reading which should offer some early clues as to what to expect in Friday’s payrolls. Thereafter we’ll get the final manufacturing PMI revision followed closely by the ISM manufacturing print which the market expects to nudge up 0.5pts to 55.0. Construction spending data for December and vehicle sales in January rounds out the data before attention then turns to this  evening’s conclusion of the FOMC meeting. As a reminder there is no Yellen press conference due today. On the earnings side of things we’ll also receive reports from 27 S&P 500 companies including Facebook.

 

 

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Submitted by Nonie Darwish via The Gatestone Institute,

• The interviewer seemed shocked to hear that I do not have any Arab or Muslim friends who are protesting President Trump's ban, and that many immigrants of Islamic origin support the ban and are fed up and embarrassed by what jihadists are doing.
• The lesson America needs to know is that the West is not doing Muslims a favor by constantly treating them as children who should be shielded from reality. They hunger for the truth: that their educational system and mosque preaching are full of incitement, are abhorrent, hate-filled and the foundation upon which violent jihad is built.
• Muslims need to know that the world does indeed have a justifiable and legitimate concern about Islam and actions done in the name of Islam by Muslims.
• Muslims need to look at themselves in the mirror and see the world from the point of view of their victims. Instead, the West is sacrificing its culture, values, laws, pride and even self-respect.
• It might compassion that leads the West to take in millions of Muslim refugees but it is reckless compassion. Do Westerners question the motivation of Islamic theocracies as to why ultra-rich Arab nations are sending us their refugees but taking in none?
• Some "tough love" is urgently needed if Muslims are to be motivated to change and reform.

Early this morning an Arabic radio station in the Middle East called asking my opinion about President Trump's ban on refugees and citizens of seven Muslim nations. The radio host, who sounded angry over the ban, was a Christian Arab. She was surprised to hear that I supported the ban and think that it should have taken place the day after 9/11.

She then asked me if I knew any Arab American activist who was against the ban because she wanted to interview someone against the ban. She seemed shocked to hear that I do not have any Arab or Muslim friends who are protesting the ban, and that many immigrants of Islamic and Middle East origin support the ban and are fed up and embarrassed by what jihadists are doing.

She said that all she sees on CNN and other channels are riots that portray almost all Americans supporting Muslims and against Trump. I am upset over the success of the leftist propaganda all over the Middle East. It brings back memories of the life of the hate indoctrination and misinformation I lived under for most of my life.

What would Muslim countries do to the West, I asked, if 19 American terrorists flew airplanes into Arab capitals and their government and military headquarters? What did she think Arabs would do if every week or so American terrorists would conduct synchronized killing sprees all over the Muslim world, gunning Muslims down, blowing them up with homemade pressure cookers, ramming into crowds with trucks? There was silence.

She then started calming down and said that of course she is against terrorism, "but". I asked: "Do you see what jihad did to your Christian community in the Middle East?" She was silent for a minute, then it occurred to me that she might be afraid to continue the conversation because her bosses were probably Muslims.

I was sure she was going to hang up on me, but to my surprise she asked me to please hold. Then she was back, live from the studio, and started interviewing me and asked the same questions on air. I poured my heart out in Arabic to the Arab listeners.

The lesson here is that Arabs are hungry to hear the truth; this Arab station, instead of rejecting these ideas, ended up putting them on air. The lesson America needs to learn is that the West is not doing Muslims (especially the reformists) a favor by constantly treating them as children who should be shielded from reality.

Muslims need to know that the world does indeed have a justifiable and legitimate concern about Islam and actions done in the name of Islam by Muslims. Muslims need to look at themselves in the mirror and see the world from the point of view of their victims. Instead, the West is sacrificing its culture, values, laws, pride and even self-respect. Muslim culture needs a wake-up call telling them that, sooner or later, non-Muslim nations will close their doors to any kind of Muslim immigration if the jihad culture continues. That will also be a strong message to Muslims already in the West who still believe in jihad.

President Donald Trump signs an executive order restricting immigration, January 27, 2017. (Image source: Reuters video screenshot)

The Muslim people are hungry for the truth: that their educational system and mosque preaching are full of incitement, abhorrent, hate-filled and the foundation upon which violent jihad is built. The Islamic commandment to do jihad sacrifices Muslim men, women and children to kill and get killed.

As long as the West continues its appeasement of Islamic jihad, Islam will never reform and the West will lose. So far, the West has continued to extend a lifeline to the religion of Islam; a religion for which the number one enemy is the truth, and which struggles to suppress the truth.

It might be compassion that leads the West to take in millions of Muslim refugees, but it is reckless compassion. Why isn't Saudi Arabia taking refugees temporarily until things settle down in Syria and Iraq? Do Westerners question the motivation of Islamic theocracies, as to why ultra-rich Arab nations are sending us their refugees but taking in none?

Who is really benefiting from the policy of appeasement, the acceptance of Sharia-stricken theocracies and their jihadist, hate-filled education? Some "tough love" is urgently needed if Muslims are to be motivated to change and reform.

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After a turbulent week for the French Presidential front-runners, the latest polls show far-right and anti-EU candidate Marine Le Pen gaining traction.

Le Pen has the younger vote…

 

And as Bloomberg points out, markets are starting to take notice.

The premium investors demand to hold French bonds over bunds has risen to the highest since 2014 (red), and the country’s stocks (blue) have fallen to at least a 30-year relative low against their German counterparts.  

Simply put – the core of Europe is coming apart.

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