Fintech Revolution – Finance Professionals Rushing To Take Courses As Career Hedge

Fintech, blockchain and A.I. are revolutionising the banking industry and have the potential to replace a significant percentage of the human capital, eliminating a chunk of their cost bases. Last month, former Citi CEO, Vikram Pandit, was particularly pessimistic, claiming that 30% of jobs could be lost in the next five years.

As CNBC reports, finance professionals, especially “more experienced” ones, are acutely aware of the risk and are rushing to educate themselves via online learning.

Financial professionals are taking online financial technology (fintech) courses to fend off competition and stay ahead of disruption. The boost in uptake is due in part to a feeling among those in the industry that financial technology has reached a turning point in its evolution. A report from Citigroup in 2016 caused widespread debate when it estimated that between 2 million and 6 million jobs would be lost in banking across the U.S. and Europe over the next 10 years. That was attributed to both automation and artificial intelligence (AI), innovation and the rise of more efficient and less cost-intensive challenger banks. Santander's fintech-focused venture capital fund, Santander InnoVentures, estimates cost savings for banks that implement blockchain technology as high as $20 billion per year by 2022.

Blue chip educational establishments launching new courses and corporate M&A are features of this growth market.

Highly-regarded educational institutions are also being forced to innovate and provide the resources to the financial industry to up-skill and stay ahead of an ever-steepening curve. The likes of Oxford University, Princeton and Massachusetts Institute of Technology (MIT) now all offer online courses aimed at busy and high-level banking executives. According to a report from e-learning software provider Docebo, online education in general is set to grow by 5 percent over the next decade and generate over $240 billion by 2023. LinkedIn also joined the sector as early as 2015, buying online education firm Lynda for $1.5 billion. Lynda has finance and technology courses, including ones that aim to help business executives implement tech into their firm…

GetSmarter was acquired by American education technology giant 2U for over $100 million in July as it looks to join the non-degree focused line of online course offerings. The Nasdaq-listed 2U has had a good 2017 itself after posting a year-on-year increase of 32 percent on its top line in the second quarter. The company's stock is up over 110 percent year-to-date and it is scheduled to report third-quarter figures on November 7.

Oxford University’s new course is attracting seasoned pros and executives from the world’s biggest banks.

GetSmarter has capitalized on the uptrend and is the software and online campus provider for the Said Business School at Oxford University's new online fintech course. At the time of the program's mid-October start date, nearly 1,000 people from across 71 countries had enrolled, with the U.K. accounting for a third of sign-ups. Here's where the numbers get interesting. About three-quarters of participants are currently working in financial services, with half having more than 15 years' experience in the industry. Over half the students are company leaders, with many listing job titles such as managing director. And a large proportion are employed by the world's biggest banks, including Bank of America, Barclays, CitiBank, Deutsche Bank, HSBC, Standard Chartered and UBS. Peter Tufano, dean at Oxford's Said Business School, told CNBC:

"Fintech is an exciting, fast-moving and important phenomena. By collaborating with partners from around the world, practitioners in all the major financial sectors, and GetSmarter, we are able to offer something that is up-to-date and useful to not just our program participants, but the world."

Another major financial hub, Singapore, is targeting a more constructive approach to the fintech revolution. According to The Straits Times, a road map to transform the financial services industry is targeting the creation of 3,000 net jobs annually, with another 1,000 in fintech alone.

The industry transformation (ITM) also aims to achieve growth in financial sector real value-added of 4.3 per cent and productivity of 2.4 per cent annually, faster than the overall economy. At the same time, banks and financial institutions have to do more to retrain workers whose jobs are affected by disruptive changes in the finance industry and match them to new jobs, Education Minister Ong Ye Kung said on Monday (Oct 30). Speaking at the launch of the financial services ITM, Mr Ong noted that the most important aspect of any transformation plan lies in people. However, he noted, when an existing activity is disrupted and jobs become at risk, the tendency is to lay off staff.


"But this cannot be the solution of first resort," he said. "For professionals who have honed their craft over many years, a large part of what they already know can be reapplied within the financial services sector or in other adjacent sectors."


Without addressing the concerns of those affected by change, there can be no change, and by extension, no innovation, he added. And so the Monetary Authority of Singapore will work with key financial institutions to make a strong push in implementing Professional Conversion Programmes (PCPs) to help their staff move into new jobs, including in growth areas such as technology and compliance.

There is an online forum for students participating in Oxford University’s new fintech course. Courtesy of CNBC’s report, we know their favourite topic of conversation…

 An online student forum for a course from Oxford University showed that the main topic of conversation was cryptocurrency bedfellows, bitcoin, and ether.

…which is unlikely to change while the cryptocurrency bull market continues.


via Tyler Durden

500 Years Later… The Revolution Is Just Beginning

Authored by Simon Black via,

500 years ago to the day, on October 31, 1517, a German monk of the Augustinian order named Martin Luther sent a letter to his Archbishop expressing concern about certain practices of Church officials.

In Luther’s era it had become typical for clergymen to sell ‘indulgences’ to anyone who wanted to be pardoned for sins.

Martin Luther felt this practice was a terrible affront to Christian doctrine, so he sent a letter up the chain of command outlining 95 logical points in his argument.

Luther’s letter was hardly a revolutionary work. He was polite. Formal. Almost apologetic.

He actually asks forgiveness of the Archbisop for having “dared to think of a letter to the height of your Sublimity.”

And yet this letter is responsible for kicking off one of the most important social transformations in all of human history, what we now call the Protestant Reformation.

The Reformation was ultimately about rejection of central authority… specifically, the Church.

When the fall of Rome in the 5th century AD left a power vacuum across Western Europe, it was the Catholic Church that stepped in to fill this void.

By the 1500s the Church had firmly cemented its influence over nearly every aspect of life– commerce, politics, economics, family affairs, war, social trends, etc.

At the core of the Church’s power was its theological monopoly.

Remember that the Bible was written in Latin back then… a language that few commoners could speak, let alone read. So Church officials had uncontested control over their flock.

Imagine that benevolent space aliens came to Earth tomorrow morning brandishing a book filled with hidden secrets of the universe.

Sounds exciting. Except that the book is only written in their alien language. So anyone who wanted to understand the secrets would have no choice but to listen to the aliens.

The Church had this same authority 500 years ago… though there was already a growing constituency that had become tired of blind obedience.

Martin Luther became the champion of Catholics who were weary of Church authority.

He was immediately viewed as a threat by the Pope in Rome, and Church officials ordered their top scholars to refute Luther’s arguments.

Luther responded by writing a short, simple explanation of his views in the local German language so that common people could read it and understand it.

It was incredibly popular and widely circulated… which infuriated the Pope even more.

With the Church’s every effort to silence and malign Martin Luther, he responded with more simple, German language essays for the locals.

His popularity grew. Young people flocked to his aid, to the point that they seized and destroyed some of the Church’s anti-Luther propaganda.

By the time the Church excommunicated Martin Luther in 1521, he was already a hero and symbol of the revolution.

The following year, Luther’s German-language translation of the New Testament was published.

It was revolutionary. For the first time in 1,000 years, people had the resources to reject Church authority and explore their own spiritual beliefs.

Suddenly there was no more middle man standing between an individual and his relationship with a higher power– it was the ultimate in decentralization.

Underpinning this entire revolution was relatively new game-changing technology– the movable-type printing press.

The printing press had already been around in Europe for several decades. But it wasn’t until Martin Luther that the invention factored so heavily into social change.

With this powerful technology at their disposal, Luther and his followers were able to rapidly publish their ideas (including the German-language Bible) and spread them across the continent faster than had ever been achieved before.

I thought this was appropriate to bring up today because, on the 500th anniversary of Martin Luther’s 95 Theses, the echoes of history remain with us… and it’s easy to see similar examples of decentralization and rejection of authority underpinned by game-changing technology.

Over the past several years, for example, there have been a number of revolutions (starting with the Arab Spring movement) supported by relatively new technologies like social media and mobile mesh networks.

But perhaps the most prevalent example today is Bitcoin and the blockchain.

Cryptocurrencies represent the antithesis of the traditional monetary system.

While our dollars, pounds, pesos, and euros are all highly centralized and under the total authority of unelected central bankers, cryptocurrencies are decentralized.

There is no central authority with Bitcoin. Its value is determined by the market… its community of users, not some bureaucratic committee.

And whenever there is disagreement within the community about a cryptocurrency’s fundamentals or technological limitations, participants have the option to split off on their own.

This is known as a ‘hard fork’. And Bitcoin alone has had a few so far.

Bitcoin forked in July with ‘Bitcoin Cash’ splitting off. And just last week Bitcoin forked again with the creation of ‘Bitcoin Gold’.

Bitcoin Gold and Bitcoin Cash both have technological differences from the original Bitcoin. But the larger point is that the community can choose which one they want to follow.

(I wish traditional currencies could fork; that Greece and Germany are in the same monetary union suggests that the EURO is in DESPERATE need of a hard fork.)

For some reason the media always makes a big deal about these forks, viewing them as a weakness.

They’re wrong. It’s a BIG strength. And it’s quite common in software.

GNU/Linux is an operating system kernel, for example, that has forked countless times since its creation.

Today there’s Redhat Linux, Debian, Ubuntu, Fedora, Kali, CentOS, and dozens of other distributions. Each has its own particular strengths and weaknesses.

But the user is free to choose based on his/her specific needs.

Microsoft Windows, on the other hand, is 100% centralized. The user has no choice.

Forks are crucial for any idea to evolve… which means the concepts behind crypto will only get better.

This is just the beginning. The monetary revolution is absolutely underway. And at a minimum, it’s worth learning about.

Do you have a Plan B?

via Tyler Durden

Germany Forced To Pay Consumers To Use More Electricity

A stormy weekend led to free electricity in Germany, as Bloomberg reports wind generation reached a record, forcing power producers to pay customers the most since Christmas 2012 to use electricity.

Power prices turned negative as wind output reached 39,409 megawatts on Saturday, equivalent to the output of about 40 nuclear reactors.

 To keep the grid supply and demand in balance, negative prices encourage producers to either shut power stations or else pay consumers to take the extra electricity off the network.

via Tyler Durden

Gold vs. Bitcoin: Goldman Sachs Weighs In

Authored by James Rickards via The Daily Reckoning,

I write and speak a lot on gold. In contrast – and this surprises some people – bitcoin is my least favorite topic. I’m made my views known many times.

Still, interviewers love to get into the “gold versus bitcoin” debate. I continually get dragged into discussing bitcoin in interviews on TV, radio and the internet. So I discuss it whether I want to or not.

From my perspective, you might as well discuss gold versus watermelons or bicycles versus bitcoin. In other words, it’s a phony debate. I agree that gold and bitcoin are both forms of money, but they go their own ways.

There’s no natural relationship between the two (what traders call a “basis”).

The gold/bitcoin basis trade does not exist. But people love to discuss it, and I guess Goldman Sachs is no different.

Goldman Sachs has released a new research report that comes down squarely on the side of gold as a reliable store of wealth rather than bitcoin, which is untested in market turndowns.

Precious metals like gold are “neither a historic accident or a relic,” said the report.

It affirmed that gold is more durable than cryptocurrencies because cryptocurrencies are vulnerable to hacking, government regulation and infrastructure failure during a crisis.

Goldman also reminds us that gold holds its purchasing better than cryptocurrencies and has much less volatility. In dollar terms, bitcoin has had seven times the volatility of gold this year.

Since Goldman’s research department has not been notable as a friend to gold, the fact that they favor gold over bitcoin is highly revealing in more ways than one.

I don’t deny that bitcoin has made some people multimillionaires, but I also believe it’s a massive bubble right now.

I don’t own any bitcoin and I don’t recommend it. My reasons have to do with bubble dynamics, potential for fraud and the prospect of government intrusion.

So bitcoin evangelists seem to think I’m a technophobe. But I’ve read many bitcoin and blockchain technical papers. I “get it” when it comes to the technology.

I even worked with a team of experts and military commanders at U.S. Special Operations Command (USSOCOM) to find ways to interdict and disrupt ISIS’ use of cryptocurrencies to fund their terrorist activities.

I will say, however, that I believe in the power of the technology platforms on which the cryptocurrencies are based. These are usually called the “blockchain,” but a more descriptive term now in wide use is “distributed ledger technology,” or DLT.

So although I am a bitcoin skeptic, I believe there is a great future for the blockchain technology behind them.

I’m not telling anyone not to own cryptocurrencies, but you need to do your homework before you do.

via Tyler Durden

Iceland’s Biggest Volcano Is “Ready To Erupt” As Europe Faces A Disaster

Authored by Mac Slavo via,

Iceland’s biggest volcano has been rocked by the strongest earthquake since it last erupted in 2014.

With swarms of earthquakes occurring in the French Alps too, Europe is facing what could be one of the largest natural disasters in history.

Last week, the 6,591-foot tall Bardarbunga, a “powerful and versatile” volcano, was rattled by the four largest earthquakes since it last erupted in 2014.  The earthquakes, measuring in magnitudes of 3.9, 3.2, 4.7, and 4.7 on the Richter scale, struck the caldera region over several days last weekend. Another magnitude 4.1 earthquake hit the 200km long and 25km wide volcanic system earlier last week and several tremors struck in September.

Páll Einarsson, a volcanology expert at the University of Iceland, said the latest quakes are part of a series that have been “in progress for two years”. Speaking exclusively to Daily Star Online, he said the volcano is “clearly preparing for its next eruption” within the next few years.

Fears are spiking even higher when considering the earthquake swarm that has been rocking the French Alps recently.

The 10,000-year-old volcano spewed out large volumes of sulfur dioxide during its last seven-month eruption which took place between August of 2014 and February of 2015. Although the eruption did not disrupt any flights, the emissions harshly impacted the air quality in Iceland, leading to health consequences across the country.

In spite of describing the volcanoes activity as “high”, the Icelandic Met Office has yet to issue any warnings about the possibility of Bardarbunga’s eruption. In fact, the warning code remains green; meaning the volcano is in a normal, non-eruptive state, according to the volcano monitor.

Seven years ago Iceland’s massive Eyjafjallajökull volcano erupted, spewing a choking veil of ash across Europe. Residents worry as memories of the 2014 eruption and the flight chaos caused by the 2010 eruption of the Eyjafjallajökull volcano resurface. 

The deadly volcanic dust wiped out skies and grounded 100,000 flights, resulting in the economy losing £4 billion.

Should an eruption of Bardarbunga take place, it’s highly possible that there would be another even more drastic air travel restriction and poorer air quality.

via Tyler Durden

Goldman: Global Capex Is Accelerating (But It Might Not Be Good News)

In “Capex complex: Seeking a revival in global capex”, Goldman Sachs is reversing its bearish stance and getting bullish on global capex prospects.

Global capex has hit a trough. After three years of declines, aggregate capex for Goldman Sachs’ coverage of c.2,500 companies is set to grow by c.4% yoy in 2017 according to our analyst estimates, in line with c.4% real growth in global GDP and an 8% rise in aggregate sales. However, to call this the beginning of a recovery in ‘growth capex’ seems premature.

We’ll return to the issue of growth versus maintenance capex below but, at the aggregate level, each of the four constraints Goldman previously identified – low nominal GDP growth, overcapacity, uncertainty and technology – is easing.

Firstly, our economists expect global GDP to grow at 6.2% yoy this year on a nominal basis, the fastest rate since 2011…Secondly, while global overcapacity persists, it is beginning to dissipate thanks mostly to concerted restructuring efforts in China over the last 12-18 months, in terms of shutting down inefficient and emission-intensive supply in sectors such as steel, coal, chemicals and cement. The third factor is low confidence, stemming from geopolitical and policy uncertainty, i.e. potential turnover in governments, populism, taxation policy, minimum wages and mixed signalling over regulation…Finally, there is technology. Digitisation – including physical devices being replaced by software…However, the ubiquity of technology and the disruptive competition it enables is increasingly pushing incumbents to invest in new types of assets in order to upgrade and catch up to new competition.

On a sectoral basis, Goldman sees divergent trends for 2016-19E.

13 global sectors are expected to grow capex over the next three years, while five are set to shrink total spending. This divergence is evident across regions…(for example) US shale producers are expected to continue spending on supply growth (+5%), while Big Oil in Europe pares back (-5%). After years of building out capacity, Chinese utilities are focused on improving utilisation rates and rationalising spending (-7%)…and within sectors; speciality retailers in the West are upgrading to better compete in an omnichannel world (+8%), even as food retailers remain under pressure from discounters and Amazon (0%). Traditional carrier capex is only expected to grow 1% yoy in 2017 and in 2018 as the recent capex cycle comes to an end, but within that, cable and cloud-related capex should continue growing rapidly”

Which it summarises in a heat map…

Here’s the difficult bit…

Picking winners and losers from the analysis is more complex these days, as Goldman laments.

In the absence of mammoth capital investment upcycles such as the commodity boom, EM infrastructure build-out or a telecom upgrade cycle, identifying capex winners in today’s economic backdrop is a much more nuanced exercise and requires us to delve into sector-specific and company-specific drivers.

Paraphrasing Goldman’s findings, one problem is that capex is not what it was. For example, it can’t be assumed that investment in excess of depreciation is simplistically equated with “growth capex”. Goldman explains…

In many sectors, this increase in capex, over and above depreciation, is not expansionary, but defensive in nature; companies are spending more on capex to fight against disruptive competition and counter regulatory costs.

In the “Spending to defend” category, for example, Goldman lists the following sectors:

  • Auto OEMS;
  • Utilities; and
  • Retail

On the other side of the “ledger”, Goldman identifies four “buckets of winners” which are.

  • Returns accretive capex;
  • Prudent spenders;
  • Value chain beneficiaries; and
  • R&D winners.

Companies undertaking “Returns-accretive capex” to drive revenue growth are “relatively scarce”, although, unsurprisingly, Tech features prominently. However, the next statistic in Goldman’s report about concentration in tech spending raised our eyebrows.

The spike in software and semis capex can be attributed to large tech companies investing to tap new, and often capex-intensive, end markets. With c.US$18 bn between them, four firms – Alphabet, Facebook, Alibaba and Microsoft – will account for c.70% of the growth in capex for our global coverage of 190 software companies between 2016 and 2019E, as they venture into more asset-heavy businesses such as autos, retail and cloud.

Goldman lists 33 global companies where its analysts expect capex to increase by at least 5% in 2017-19 versus 2015-17 and increase CROCI by 2%.

In the “Prudent spenders” category, Goldman identifies.

  • Big Oil companies;
  • European telecoms;
  • Chinese utilities; and
  • Subsectors such as Casinos, Tyres, Brazilian beer and Materials

Goldman’s “Value chain beneficiaries” are capex enablers which benefit from the spending of others (e.g. their customers), no matter what the motivation for that spending is. In this category, Goldman lists eleven companies.

Finally, there are the “R&D winners”, who are spending on innovation. We were interested to learn that the five biggest R&D spenders globally in 2015 were VW, Samsung, Intel, Alphabet and Microsoft. This category is also plagued by “growth versus defensive” issues and the “quality” of spend. Goldman publishes a list of companies where its analysts are positive based on “R&D strategy and productivity”. High-profile names on the list include Facebook, ASML, Applied Materials and Mazda.

So, a faster rate of global capex growth is the good news. The bad news is that some traditional sectors are investing to survive and will dilute their return on invested capital in the coming years.

One of Goldman’s charts sparked another thought.

This economic cycle is long in the tooth and corporate capex in the chart above betrays more than a little propensity to be pro-cyclical.

via Tyler Durden

Trick Or Treat: One Year Later, Is Trump A Blessing Or A Curse To The Deep State?

Authored by John Whitehead via The Rutherford Institute,

Has Donald Trump been a blessing or a curse to the architects of the American police state?

One thing is for sure: a year into his presidency, Trump hasn’t done much to improve the lot of the American people.

The predators of the police state are still wreaking havoc on our freedoms, our communities, and our lives.

The government still doesn’t listen to the citizenry, it still refuses to abide by the Constitution, which is our rule of law, and it still treats the citizenry as a source of funding and little else. Police officers are still shooting unarmed citizens and their household pets. Government agents—including local police—are still being armed to the teeth and encouraged to act like soldiers on a battlefield. Bloated government agencies are still fleecing taxpayers. Government technicians are still spying on our emails and phone calls. Government contractors are still making a killing by waging endless wars abroad.

In other words, the American police state is still alive and well and flourishing.

Nothing has changed.

Rather than draining the corrupt swamps of Washington, as he repeatedly promised, Trump and his brand of reality TV politics have merely redirected our attention.

Trust me, the swamps are still stagnant with corruption.

Indeed, we are still the unwitting victims of a system so corrupt that it spans all branches of government.

We are still ruled by an elite class of individuals who are completely out of touch with the travails of the average American.

We are still viewed as relatively expendable in the eyes of government: faceless numbers of individuals who serve one purpose, which is to keep the government machine running through our labor and our tax dollars.

We are still being made to suffer countless abuses at the government’s hands.

We still have little protection against standing armies (domestic and military), invasive surveillance, marauding SWAT teams, an overwhelming government arsenal of assault vehicles and firepower, and a barrage of laws that criminalize everything from vegetable gardens to lemonade stands.

In other words, despite Trump (or because of him), freedom—or what’s left of it—is still being threatened from every direction.

Trump has done nothing to wrest control of the government from the Deep State, that shadowy elite group of powerbrokers and corporations who call the shots in Washington.

Trump has done nothing to prevent the government from continuing to plunder and steal from the American taxpayer. In fact, his administration has paved the way for even more theft in the form of civil asset forfeiture.

Trump has failed to end the government’s endless wars. To the contrary, he has fallen in line with the military industrial complex.

Most of all, Trump has proven to be as deaf, dumb and blind as every president before him when it comes to the plight of the citizenry.

The new boss really is just the same as the old boss.

We’re still on the losing end of a tug-of-war over control of our country and our lives.

The Deep State is winning.

Get ready.

We’re just a few short years away from the dystopian future depicted in the film V for Vendetta, which is no future at all.

Written and produced by the Wachowskis, V for Vendetta (2005) provides a powerful visual commentary on how totalitarian governments such as our own exploit fear and use mass surveillance, censorship, terrorism, and militarized tactics to control, oppress and enslave.

The lesson is this: once a free people allows the government to make inroads into their freedoms or uses those same freedoms as bargaining chips for security, it quickly becomes a slippery slope to outright tyranny.

In other words, it makes no difference whether it’s a Democrat or a Republican at the helm, because the bureaucratic mindset on both sides of the aisle now embodies the same philosophy of authoritarian government, whose priority is to remain in power.

So where does that leave us?

In V for Vendetta, it takes a desperate act of terrorism (V blows up the seat of government on the fifth of November) for the people to finally mobilize and stand up to the government’s tyranny.

This is what happens when a parasitical government muzzles the citizenry, fences them in, herds them, brands them, whips them into submission, forces them to ante up the sweat of their brows while giving them little in return, and then provides them with little to no outlet for voicing their discontent: people get desperate, citizens lose hope, and lawful, nonviolent resistance gives way to unlawful, violent resistance.

Do not wait to act until there is no alternative but violence.

We’ve got to make the government hear us using every nonviolent means available to us: picket, protest, march, boycott, speak up, sound off and reclaim control over the narrative about what is really going on in this country.

Mind you, the government doesn’t want to hear us. It doesn’t even want us to speak. In fact, it’s done a diabolically good job of establishing roadblocks to prevent us from exercising our First Amendment right to speech and assembly and protest.

Still we must persist.

For starters, stop worshipping false idols. Stop waiting for Trump to drain the swamps, or some whistleblower to topple the tyrants, or some other political savior to swoop in and fix all that’s wrong with this country. Stop allowing yourselves to be drawn into divisive party politics. Stop thinking of yourselves as members of a particular political party, as opposed to citizens of the United States. Most of all, stop looking away from the injustices and cruelties and endless acts of tyranny that have become hallmarks of American police state.

Remember, remember the fifth of November, warns V for Vendetta.

Why should we remember the fifth of November?

Because it commemorates a day in history when a desperate vigilante tried to bring about a violent revolution.

Trust me, no one wants a violent revolution.

Americans speak reverently of how our founders mounted a revolution to secure our freedoms, but our platitudes gloss over the terrible toll it demanded of them: families torn apart, lives lost and years of misery and hardship.

As I make clear in my book Battlefield America: The War on the American People, the moral choice before us is clear: it is the choice between tyranny and freedom, dictatorship and autonomy, peaceful slavery and dangerous freedom, and manufactured pipedreams of what America used to be versus the gritty reality of what she is today.

via Tyler Durden

Connecticut Becomes Last State To Pass A Budget After 123-Day Battle

Four months after the beginning of the fiscal year, Connecticut has become the last state in the US to pass a budget after Democratic Gov. Dannel Malloy signed a bipartisan budget bill, but used his line-item veto power to block a section of the nearly 900-page document related to the controversial hospital tax.

The deal marks the culmination of a bitter struggle between Malloy and lawmakers in both chambers of the CT legislature as they struggled to close a $3.5 billion two-year budget deficit. Fiscal problems have plagued the state since the financial crisis thanks to its overly generous benefits from state employees that have left its pension accounts dangerously underfunded. Malloy was effectively frozen out of the budget negotiations after vetoing a bipartisan budget that was sent to his desk in late September.

“After 123 days without a budget, it is time to sign this bipartisan bill into law and continue the steady and significant progress our state has made over the past several years,” Malloy said.


“Connecticut’s families and businesses deserve to have a budget in place, one that provides a stable environment to live and work,’’ Malloy said.


“While there are certainly many provisions of this budget I find problematic, there’s also a clear recognition of many of the fiscal priorities and concerns I’ve consistently articulated since January. I appreciate the work of the General Assembly in passing a budget to my desk that I can sign.”

The budget battle became the longest such stalemate in Connecticut history, surpassing the epic, summer-long fight to create the state income tax that ended on Aug. 22, 1991.

Connecticut was the last of nearly a dozen states that experienced last-minute budget battles in May and June ahead of the end of the fiscal year. Many of those states – as a senior official at S&P Ratings warned at the time – were struggling with festering budget problems and woefully underfunded employee pension programs that the official characterized as “chronic budget stress.”

The battles triggered government shutdowns in Maine and New Jersey, and nearly triggered a ratings downgrade in Illinois after the state legislature and Gov. Bruce Rauner blew past a deadline set by the ratings agencies to pass what became the state’s first budget in more than two years.

Malloy finally expressed his frustration with the drawn-out process, which cast a shadow over his final months as governor after he announced last year that he wouldn’t seek a third term, given his low popularity rating after eight years in office and two tax hikes.

“There’s nothing in this budget that couldn’t have been done in June or May,’’ he told reporters during a mid-afternoon press conference at the state Capitol. “People in the state of Connecticut are rightly frustrated by how long this has taken.’’

But according to the Courant, Republican leaders said that it took a veto by Malloy in September and then extensive negotiations for them to get a constitutional spending cap on expenses and a bonding cap on construction projects as part of the final budget deal.

Republicans also obtained changes to the binding arbitration system and to the “prevailing wage’’ on local construction projects as part of a comprehensive, bipartisan compromise.

However, the battle isn’t finished just yet. Senate Republican leader Len Fasano said legislators would return to the capitol in the next two weeks to either override Malloy’s line-item veto of the hospital provider tax, or vote on an amendment to fix language regarding the hospital provider tax. In the days before signing the budget, Malloy complained that the budgetary language regarding the hospital tax contained significant flaws – which he characterized as oversights by the bill’s writers – that could cost Connecticut $1 billion over two years. Malloy said that unless language about an increase in the hospital tax was changed, the state risked losing out on hundreds of millions of dollars in federal Medicaid funding.

However, as Fasano pointed out, lawmakers have been skeptical of these claims.

Even if Malloy had vetoed the bill, the House and Senate had enough support for the bipartisan budget to force it through.

Connecticut’s constitution gave Malloy until Wednesday to act on the $41.3 billion two-year spending plan. If no action were taken, the bill would've automatically become law. As the Courant pointed out, the budget closes a $3.5 billion deficit without significant income tax or sales tax increases, but cuts municipal aid, funding for the University of Connecticut and eliminates the property tax credit for many homeowners. It also includes a new surcharge on motor vehicle registrations to fund the operations of state parks. It would raise the state's tax on cigarettes by 45 cents per pack and reduce a tax credit designed to help the working poor. And it would assess a new fee on all rides booked through Uber and Lyft.

Connecticut has struggled with deteriorating finances for much of Malloy’s tenure in office – a problem made worse over the last year by the departures of three high-profile companies – GE, Aetna and Alexion Pharmaceuticals. Back in May, S&P became the last of the big three ratings firms to cut Connecticut’s debt into single-A territory.

The budget provides relief for Connecticut’s troubled capital, Hartford, which city officials had warned would’ve been facing a bankruptcy filing by year’s end if it couldn’t secure relief from either its creditors or the state.

The budget deal greenlighted by the General Assembly Thursday calls for the capital city to receive at least $40 million in additional revenue, half from an account set aside for distressed municipalities, and half through state-subsidized debt payments – meaning that taxpayers across the state are picking up a $20 million tab for Hartford debt relief.

Despite the relief, city leaders will continue to negotiate with bondholders and employee unions, Mayor Luke Bronin said, according to the Courant.

While the elimination of the $3.5 billion deficit is an important development, unfortunately it’s not a cure-all: Funding ratios for the state’s public-employee pensions are still among the lowest in the country by market value:


via Tyler Durden

Welcome To The Offended States Of America

Authored by Daisy Luther via The Organic Prepper blog,

If you know something is going to upset you, why would you deliberately put yourself in a situation in which you will be angered, saddened, or hurt? There’s no other answer except that you actually want to be offended.

Why would you go to George Washington’s church if you’re offended by George Washington? Why would you attend the university founded by Thomas Jefferson if you are offended by Thomas Jefferson?

Why do we live in a world in which the offended people get to make the rules when they deliberately propel themselves into places that are certain to offend them? It’s so blatant of late that I am positive they’re doing it on purpose. We no longer live in the United States of America. We live in the Offended States of America.

Take George Washington. Wait – I didn’t mean that literally!

I’ve never seen anything so ridiculous in my life as the historic church founded by George Washington taking down the memorial of George Washington. I was gobsmacked.

“The plaques in our sanctuary make some in our presence feel unsafe or unwelcome,” the church leaders said, according to The Washington Times. “Some visitors and guests who worship with us choose not to return because they receive an unintended message from the prominent presence of the plaques.” (source)

Even the Google listing promotes the history of the church.

And it isn’t like people have no option but to attend Christ Church. This is a map of the other Episcopal churches in the area.

By my count, there are 21 different churches of that denomination right there in the Alexandria, Virgina area, so, honestly, I don’t think I’m being outrageous when I suggest that there are multiple options to attend an Episcopalian service in a church that George Washington did not found if one is outraged by the existence of George Washington.

This is even worse than tearing down every last vestige of Southerners who fought in the Civil War. (Here’s why I think that removing Civil War memorials is baloney.) While I don’t think any of those monuments should be removed, at least it makes a smidgeon of sense if they’re in a public place. But these people went to a church famous for its attendance by George Washington and Robert E. Lee and then got mad about it.

This underlines my belief that there are some people who want nothing more than to find something by which they can be offended. They must actually search out a setting and put themselves into it deliberately so that they can share their outrage with the world. This virtue-signaling, politically correct melodrama is a symbol of everything that is wrong with the world. People get attention from their outrage. They become famous amongst the other virtue-signallers who then jump on the Outrage Express about something that had never even crossed their minds before.

Our college campuses are rife with it as students are brainwashed by professors promoting violent sedition into resisting perceived “fascism” with the goal of changing our country into a Communist one. You’re worried about fascism, boys and girls? If you somehow succeeded in your overthrow of the Trump/Pence administration, you’d have it in spades in your ridiculously idealized Commie utopia.

And what about your privilege?

Everyone is cast in either the role of victim or victimizer. They are either the privileged or the downtrodden. In this tunnel-visioned world, men are privileged as long as they aren’t black, and then they’re probably going to prison through no fault of their own. Caucasian people need to check their white privilege, smart people need to check their cognitive privilege, and holy guacamole, according to this article, there are a metric ton of privileges we need to look out for. In case you aren’t sure if you are part of the privileged class or the victim class, here’s a handy list from the article. This way you can identify your privilege and check it.

  • Ability: Being able-bodied and without mental disability
  • Class: Class can be understood both in terms of economic status and social class, both of which provide privilege. Social class can determine access to opportunities, to participation in politics, and opens up particular educational and vocational doors more easily.
  • Education: Access to higher education confers with it a number of privileges as well. Educational privilege opens a number of doors to higher paying careers (which links it to social class privilege).
  • Gender: Male-identified, masculine individuals still hold a level of privilege over people of other genders. Another word for the systemic operation of male privilege is “patriarchy”.
  • Gender Identity: While often linked to sexual orientation and gender privilege, this is the privilege that comes with having a gender identity (how one identifies and express oneself in gendered terms) that conforms to the gender identity that was assigned at birth and to societal and cultural expectations of such a gender identity.
  • Passing: Passing is the ability to appear to belong to another group. The ability to pass is itself a privilege because it allows an individual to claim the advantages of a more privileged group.
  • Racial: In the West, racial privilege is usually equated with white privilege since power, money, and influence tends to be concentrated among Caucasians in Western Europe and North America.
  • Religious: Religious privilege comes with being a member of the dominant religion in a culture – to have one’s own religious practices and observances recognized as the norm.
  • Sexuality: Heterosexual privilege includes the assumption that everyone is heterosexual which forces Queer people to be constantly undergoing a coming out process in their daily lives…Sexuality privilege also includes sexual practices and sexual history – the media often associates a woman’s worth with her sexual history through the hypersexualization of women, but also by relating a girl’s self-worth to her chastity and the public disparagement of women who are sexually active. This links sexuality privilege to gender privilege as well. (source)

Welcome to the Offended States of America

Literally, no one can win because if you win, someone will be offended. We have become a nation where no one is anyone if someone hasn’t offended them.

Personally, I’m offended by the constant barrage of offenses, and this isn’t the first time I’ve written about the outrageous level of outrages.

Words to express our affront are being made up left and right by the mere addition of “ism” to the ends of what were formerly perfectly neutral words. It seems like pundits can take basically any word and add “ism” to the end of it and that means they’re being slighted. The list of isms could go on and on, but instead of promoting more equality, all they’re doing is promoting more division. Isn’t that divisionism?


Personally, I’m affronted by the constant barrage of affronts. When did we, as a nation, become such weenies? How is it that such a collection of whiners has become the vocal majority? Certain people are constantly offended and demand the attention of others so they can express the epic level of their personal offendedness.


So vast is the recent level of Great American Butthurt that no mainstream news outlet is complete without breathlessly exposing a secret “ism” each day. These secret “isms” are called “microaggressions,” defined as “the everyday verbal, nonverbal, and environmental slights, snubs, or insults, whether intentional or unintentional, which communicate hostile, derogatory, or negative messages to target persons based solely upon their marginalized group membership.” (source)

Why stop with the Founding Fathers?

Now that we’re taking down all the statues of previous figures in history that offend us, let’s really get on a roll and fix this country. I think we should throw into the wormhole any movie produced by Harvey Weinstein since he was a sexual predator. And anything touched by any of those other people recently accused of being harassers? All of that needs to go, too. Don’t think Hollywood isn’t scrambling before someone demands it. Will that whole industry go down in flames because of the pervs who couldn’t stop raping and fondling women without consent?

I’m not making light of their crimes. Like most women, I’ve been on the receiving end of sexual harassment when I was in the workforce, and it’s horrible. But what I’m saying is, where does it end?

Who has not committed some act that made others feel bad? Should all of their contributions to society, entertainment, or enlightenment be ignored because they did something bad or were even wholly awful people? If something is accepted as common during a specific era, who are we to demonize them centuries later?  Where is the line drawn between people who must be erased from history and people who are foul individuals that still get to have their accomplishments present?

Find me more than a handful of our current politicians who don’t have repugnant secrets, who haven’t abused their power, who haven’t sold out to industries that are willfully poisoning us all to make a buck, or, by golly, erase every vote they have ever cast. Undo the laws that they sponsored. Tar and feather them and remove any mention of them forever. Think about it, we have the freaking William J. Clinton Library and Museum, and he was a serial harasser, womanizer, and cheater. I demand that library be renamed for someone who was perfect…or just be called The Library unless that offends illiterate people. Does this make me a readerist? Please don’t take my books away.

If our nation could be powered by offendedness, we would no longer have a need for fossil fuels. If we could earn money from outrage, we could finally correct that pesky national debt.

But until then, could we please put a lid on it before all we have left is a country completely bereft of history and culture?

via Tyler Durden

Previewing Wednesday’s Fed Policy Decision: The Week’s Biggest Non-Event

While normally Wednesday’s Fed meeting would be the week’s biggest market-moving event, this time – smack in the middle of the busiest earnings week of the year – it may not even make the top three, buried ahead of the coming news of the next Fed Chair (in which Trump is set to unveil Jerome Powell on Thursday), and the GOP tax bill (which just saw its Wednesday release delayed by one day). One can make the argument that tomorrow’s fully priced in FOMC announcement is also secondary to not only Friday’s jobs report, which may help decide who is right, the Fed’s “dots” or the market, but also to tomorrow’s Treasury refunding announcement.

In fact, the latter is precisely what JPM analyst Jay Barry claimed earlier today, saying the “quarterly refunding announcement at 8:30am ET Wednesday “has the possibility to be a bigger event for markets in the morning than the Fed statement in the afternoon” and since market are “priced for a December hike,” the FOMC meeting isn’t likely to alter expectations in a way that would move the market. Where there is confusion is in the Treasury market, where market participants are divided on whether the Treasury will announce increases to coupon auction sizes Wednesday, or wait until the 1Q refunding announcement in February: “There’s a dispersion of views because of the pivot the Treasury Department has had over last few years,” specifically toward portfolio metrics and aiming to extend the weighted average maturity of the portfolio. Merely reversing the cuts that have been made to 2Y and 3Y auctions since 2013 wouldn’t serve that objective.

“If they don’t get announced tomorrow, it’s a muted rally, and if they do, it’s a muted steepening, but I think it’s all small because the numbers we’re talking about are only $1 billion month, and because Treasury has been clear in communicating that financing needs are moving higher over the medium term”

Ok so, while hardly the market terror of years and months gone by, at least we one can agree that tomorrow’s FOMC Monetary Policy decision will be somewhat important, ranking behind the Fed Chairman choice, the unveiling of the GOP tax proposal, Friday’s payrolls report, and tomorrow’s Treasury refunding announcement… oh and whatever the latest episode in the Mueller drama reveals.

So what will the Fed say tomorrow? Here consensus is uniform: all those surveyed expect the FOMC to leave its monetary policy settings unchanged this time out, and punt to December when markets are almost fully pricing in a 25bps hike in December. Additionally, tomorrow’s meeting is one of the especially boring ones, as there will be no updated economic projections, nor will there be a press conference from Fed Chair Janet Yellen.

Below we present several other observations what to expect tomorrow from RanSquawk:

  • Last time out the Fed formally outlined and announced the implementation of its balance sheet unwind programme, no further guidance on the long-run framework for the balance sheet is anticipated in the upcoming statement.
  • Since then Fedspeak has come to the fore. UBS suggest that “recent Fedspeak has shown an eagerness to move at the December meeting, but given the touch more concern about low inflation relative to earlier this year, participants would prefer to see some more evidence of inflation rising before moving again.”
  • On the inflation front, headline CPI pushed up to 2.2% Y/Y in September, the core metric stood at 1.7% Y/Y for the fifth consecutive month, while core PCE stands at 1.3% Y/Y. The latest US labour market report pointed to an uptick in wages, although it will be several months before we can assess if this was a “one-off” hurricane induced jump, or the start of a broader trend.
  • Looking forwards CME Fed Fund Futures are virtually fully pricing in a December hike, with one additional hike 75% priced in by the end of September 2018 N.B. the Fed’s median estimate looks for 3 hikes in 2018.

Below is an abbreviated take of what Wall Street’s various sellside desks are saying about tomorrow’s FOMC snoozer :

BAML: We don’t expect fireworks. Since we will only receive the statement and not an updated Summary of Economic Projections or press conference, there are few opportunities for the FOMC to send a signal to the markets about the future direction of policy. Importantly, we do not expect the Fed to explicitly signal a hike in the upcoming meeting on December, as the market is already pricing in an over 80% probability of a hike. There will likely be small language changes, particularly in the first paragraph regarding the economic outlook. It is likely that the FOMC notes that the data have been volatile due to disruptions from the hurricanes and that the Committee is not reacting to such short-term fluctuations. We think they will reiterate that “past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term.” We do not expect changes to the characterization of inflation or the risk statement. The FOMC is likely to maintain the language that “near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.”

Barclays: We expect the FOMC to leave its target range for the federal funds rate unchanged at 1.00%-1.25% at the November meeting as it continues to evaluate to what degree recent disinflation is temporary or persistent. The  committee, in our view, is likely to look favourably at the underlying components of the Q3 GDP report which showed a positive contribution to growth from both net exports and inventories; we see trends in these categories as reflecting the synchronized global growth backdrop. Distortions to domestic data from the hurricanes that made landfall in August and September are likely to be ignored.

BMO: We look for no change in the Fed’s policy rates or forward guidance. However, in likely talking a bit more upbeat about the economy, the Fed will signal that December’s SEP-and-presser-packing confab could see a rate hike. There is clearly more slack in the labour market than the headline jobless rate portrays, and the culprits are some of the many reasons why the real neutral fed funds rate might still be close to zero. Other reasons include the non-idiosyncratic factors contributing to a below-target PCE inflation rate of 1.5% y/y (with core at 1.3%). However, with the broad economy, on balance, now at full capacity, the current nominal fed funds rate should be closer to the 1.3%-to-1.5% range to minimize the risk of overshooting the inflation target, while still maintaining an accommodative policy stance from a longer-run perspective.

Deutsche Bank: With market expectations running very much in line with the FOMC’s latest median projection of a rate hike in December, the FOMC will have little reason to either amplify or alter its message in the November statement. We expect an uneventful outcome, with primary focus on the tea leaves in the first two paragraphs: i.e, in how the Committee sees recent and prospective economic developments. On balance, we expect that the economic picture has not changed enough to alter the Committee’s central expectation that it will be raising rates another 25 bps in December, and recent Fedspeak from Chair Yellen and others has not tried to modify that perception. With inflation still running low, we expect the statement to continue to say that “the Committee is monitoring inflation developments closely,” and in our post-meeting assessment, we will take a look at what it might take to change the expected outcome for December.

HSBC: There are unlikely to be any major policy surprises delivered at this meeting, we continue to expect the next 25bps rate hike to come in December. The policy statement may repeat that Hurricanes Harvey, Irma, and Maria disrupted near-term economic activity but are unlikely to impact the medium-term outlook for the economy. The statement will also likely reiterate the Committee’s view that inflation may remain somewhat below 2% in the near term but should stabilise close to 2% over the medium term. It is possible the policy statement released after this meeting will note that the balance sheet normalisation programme has commenced.

ING: Financial markets remain sceptical over the Federal Reserve’s predictions for the path of monetary policy. Uncertainty over whether Janet Yellen will remain the Chair, low inflation and some concerns about a potential government shutdown in December goes some way to explaining this. However, with Fed officials broadening out the factors justifying tighter monetary policy, such as financial stability and financial conditions, and with growth looking strong and inflation edging higher, we think a December rate hike looks probable.

RBC: On the FOMC statement, practically speaking there is little that needs to change. There were no significant economic developments over the intermeeting period, balance sheet tapering is on automatic pilot (at least for the time being), and the next hike (which the market seems fully braced for) will not come until December. This all suggests no material changes to the statement.

* * *

Elsewhere, and more importantly, the Trump Administration will announce its nominee for the role of Fed Chair on Thursday. Current Federal Reserve Governor Jerome Powell appears to be the front runner, and is seen as the logical replacement to current Chair Yellen by many, with the perception that he would provide a steady continuation of the monetary policy implemented under Yellen. John Taylor appears to be the only other name in major contention at present. Taylor is perceived as a more hawkish candidate owing to his Taylor Rule (which suggests that rates should be perhaps as high as 4.00%), although many have argued that he would not have portrayed such a hawkish view to US President Donald Trump in his interview. One outsider still rumoured to be in the mix (according to Politico sources at least) is former Fed Governor Kevin Warsh, who also falls on the hawkish side of the spectrum. It is also worth remembering that three of the seven seats on the board are vacant at present.

How to trade this announcement? Easy, at least according to Morgan Stanley: just fade the kneejerk reaction in the market and do the opposite.

via Tyler Durden