Pat Buchanan Blasts Bibi: He’s “Been Crying Wolf For Decades” About Iran

Following Israeli Prime Minister Benjamin Netanyahu’s powerpoint presentation Monday evening – allegedly demonstrating captured evidence, documents, and computer disks, showing a secret Iranian nuclear weapons program much more advanced and ambitious than the Iranian government publicly admits existed – Pat Buchanan joined Sean Hannity on his show to discuss the reality behind Bibi’s warning.

As RealClearPolitics’ Tim Hains reports, Buchanan pulled no punches in his criticism, exclaiming that the Israeli PM has been “crying wolf for decades” about Iran and that “Bibi Netanyahu, with due respect, wants the United States to fight a war with Iran on Israel’s behalf.”

“I don’t want my country getting into another war,” Buchanan said about Netanyahu’s revelation.

“The reason Iran doesn’t have a bomb is because they don’t want it. They could have built a bomb.”

“Tell the IAEA to go in and either confirm or deny what Netanyahu said.

“Don’t rely on him. Rely on our CIA coming out and saying, ‘We were wrong, Netanyahu is right, they have a secret atomic bomb program and they’re working on it right now and they have been and we were lied to.

If the CIA and DIA do that, I would say first to fire the guys in charge who didn’t cover it. And second, maybe we should act, but certainly not act on second-hand documents and a press conference from Bibi Netanyahu.”

“What are we going to do, rely on a press conference from Bibi Netanyahu to go to war?”

And Buchanan is not alone in his disdain for Bibi’s historic warmongering and lies.

H/T to @snarwani for the above

Liberty Blitzkrieg’s Mike Krieger notes that, of course, this isn’t the first time Netanyahu aggressively pitched the U.S. on war in the Middle East. He did the exact same thing, using the exact same playbook, in the run up to the Iraq war.

Fortunately, we have video evidence of his 2002 testimony to Congress, during which he hyperventilated and exaggerated about Iraq’s grave threat to the world as a result of its non-existsent WMDs. The guy was so incredibly wrong on Iraq, to such a disastrous degree, it’s amazing anyone listens to him at all anymore.

What follows are two must watch video clips from Netanyahu’s 2002 testimony. One of the more memorable — and spectacularly wrong — claims he made back then was when he proclaimed:

“If you take out Saddam, I guarantee, it will have enormous positive reverberations on the region”

Watch for yourself.

Instead, we got a failed state and the creation of ISIS. But hey, everyone makes mistakes that lead to the pointless murder of hundreds of thousands.

But that’s just a taste. In the clip below he all but guarantees (wrongly) that Saddam was putting all his energy into creating a nuclear bomb, and he talks repeatedly about “washing machine” sized centrifuges being surreptitiously moved around Iraq to evade the watchful eye of weapons inspectors.

In reality, Iraq simply didn’t have WMD.

Fast forward to today and Netanyahu is doing the exact same thing he did back in 2002, except he’s dropping a “Q” and replacing it with an “N” and asking the U.S. to hold hands with Israel and they instigate another calamitous conflict in a desperate attempt to solidify regional dominance.

None of this surprises me, and I’ve been warning about it in detail since early last year. I continue to believe another major military mistake in the Middle East will be the final nail in the coffin of the U.S. empire. When exactly this final mistake happens is hard to know, but I expect it to occur over the next several years. The ducks are all being put in a row.

*  *  *

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Inflation “Warning Lights” Are Flashing As Manufacturing Prices Soar Most Since 2011

Despite a tumble in ‘hard’ and ‘soft’ data in April, Markit reports the Manufacturing PMI survey surged to 56.5 (as expected) – its highest since Sept 2014. Output is rising at its fastest pace since Jan 2017 as inflationary pressures intensify dramatically.

As is usual recently in our baffle ’em with bullshit world, ISM Manufacturing disappointed, dropping to 57.3 (exp 58.5) to its lowest since July 2017.

Looks like ISM is fitting real data better than PMI…

ISM saw a big drop in employment, modest drop in new orders, but big jump higher in Prices Paid…

But there was a major divergence between adjusted and unadjusted new orders…

One ISM respondent summed things up well…

“[The] 232 and 301 tariffs are very concerning. Business planning is at a standstill until they are resolved. Significant amount of manpower [on planning and the like] being expended on these issues.

Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“April saw US manufacturers reporting the strongest monthly improvement in business conditions since September 2014. The survey suggests the economy has started the second quarter on a solid footing and sends an encouraging signal for GDP growth to accelerate after the modest 2.3% rate of expansion seen in the first quarter.

“With inflows of new orders rising at an accelerated pace, greater input buying and business expectations regarding future production levels running at one of the highest levels seen over the past three years, there’s plenty of evidence to suggest strong growth will persist through May.

“The upturn is being led by large firms, with smaller companies trailing behind but nonetheless also seeing some of the best business conditions for three years.

However, Williamson leaves the best/worst for last as inflationary pressures are intensifying dramatically…

Warning lights are being flashed in relation to inflation, however, with factories reporting the strongest rise in prices for nearly seven years. Suppliers are hiking prices in response to surging demand, while tariffs and higher oil prices are also exerting upward pressure on costs.

With the average price of goods leaving factories rising at the fastest rate since 2011, consumer price inflation looks set to accelerate.

And ISM data shows the soaring Prices Paid index (to its highest since April 2011) diverging from new orders and employment…

That did not end well last time.

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10 Reasons To Prepare For A Summer Of Dollar Love

Bloomberg’s macro strategist Mark Cudmore believes the stars are aligning for the Dollar’s ‘summer of love’.

The Dollar just broke above its 200DMA…

Whether the dollar ultimately goes on to test the 2017 highs may be a completely different issue, but the stars are aligned for recent dollar appreciation to sustain for a few months. Here are 10 reasons why the dollar will strengthen this summer…

1. Tuesday is expected to bring confirmation that the U.S. April manufacturing PMI was at a multi-year high. In February, the ISM equivalent — also out Tuesday — printed at the loftiest level since 2004

2. Factory owners are confident this year because the U.S. economy is indisputably strong, whether growth has peaked already or not. February industrial production saw the fastest annual increase since 2011.

3. Add in an outstanding U.S. earnings season that’s making equity valuations more attractive, and it’s clear that the U.S. is relatively fertile ground for putting cash to work.

4. This is happening amid a clear growth slowdown in major developed-market alternatives, notably the U.K. and Europe.

5. Note also that the rise in U.S. yields has been significant enough to start attracting unhedged inflows into Treasuries.

6. That’s important because it has seen the dollar begin to recorrelate to U.S. yields in the last month, just as there’s been further domestic pressure on the U.S. sovereign-debt market from increased issuance.

7. The dollar offers the highest FX-implied carry of G-10 currencies and that’s hard to ignore.

8. This positive growth and yield story isn’t new, but the positive divergence from large liquid peers has widened at the exact time the narrative around trade is evolving to be perceived as more likely to be beneficial for the U.S..

9. The U.S. administration is being consistent in its hardline message: either it gets most of what it wants or it will disrupt global trade. Either outcome will boost the dollar in the short-term.

10. And all this is against a backdrop of a fast-money investor base that has spent the last few months getting themselves short the dollar.

And in case that was not convincing enough, here are BofAML’s 8 reasons for selling EURUSD now…

  1. Continued soft Eurozone data in April discredits the “bad weather” theory but lends support to the “euro is too strong” theory.

  2. In the US, the recent upturn in business investment is paving the way for higher productivity and wage growth.

  3. A NAFTA deal over the next few weeks should increase US leverage in trade negotiations with China.

  4. Corporate America may use the Q1 earning season to repatriate their offshore cash.

  5. Continued Chinese deleveraging will limit the ability of the PBOC to match further Fed hikes.

  6. The flatness (steepness) of the US (Eurozone) yield curve means foreign investors will only consider currency unhedged (hedged) investment in US (Eurozone) bonds.

  7. The fiscal risk premium in the USD is already very high.

  8. Divergence between momentum and positioning are turning the tables on overextended EUR longs.

And EURUSD broke below its 200DMA…

Everything is coming together for a summer of greenback gains.

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Steve Cohen’s Point72 Names New Head Of US Trading

Having reopened Point72 as a traditional hedge fund at the start of the year after the expiration of his insider trading penalty (and already swimming in well over $3 billion in outside capital) hedge fund “information arbitrage” legend Steve Cohen has been busy ramping up his ranks, recently adding former Goldman and Morgan Stanley traders, not long after October’s departure of the hedge fund’s trop trader, Phil Villhauer, who had been with SAC since 2002.

To be sure, Villhauer’s departure left big shoes to fill, however Cohen appears to have done just that, when this morning Point72 announced the fund has named Dan Lota its new Head of U.S. Trading. According to the release, “Lota was named after the Firm conducted an extensive candidate search” and ended up hiring internally.

“We have concluded that the best candidate already sits within the Firm,” said the co-heads of Point72’s Central Liquidity Group, Drs. Hamid Biglari and Massoud Heidari. The Central Liquidity Group is Point72’s global trading organization.

“During his six-month tenure as Acting Head of U.S. Trading, Dan has done a superb job leading the U.S. traders,” said Dr. Biglari.

“In his 15 years at Point72, Dan has built strong relationships with Steve, Portfolio Managers, within the trading team, and has developed a deep institutional knowledge of the Firm,” said Dr. Heidari.

Having kept a very low public profile, it is not immediately clear what Lota’s product/strategy focus will be at what many believe will soon re-emerge as one of the most important hedge funds in the market.

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Read Bob Mueller’s List of Questions for President Trump: Reason Roundup

TrumpSpecial Counsel Bob Mueller has a long list of questions for President Trump regarding alleged collusion between the Trump campaign and Russia. The New York Times obtained a list of more than forty questions that would feature in any official interview between Mueller and Trump:

The open-ended queries appear to be an attempt to penetrate the president’s thinking, to get at the motivation behind some of his most combative Twitter posts and to examine his relationships with his family and his closest advisers. They deal chiefly with the president’s high-profile firings of the F.B.I. director and his first national security adviser, his treatment of Attorney General Jeff Sessions and a 2016 Trump Tower meeting between campaign officials and Russians offering dirt on Hillary Clinton.

But they also touch on the president’s businesses; any discussions with his longtime personal lawyer, Michael D. Cohen, about a Moscow real estate deal; whether the president knew of any attempt by Mr. Trump’s son-in-law, Jared Kushner, to set up a back channel to Russia during the transition; any contacts he had with Roger J. Stone Jr., a longtime adviser who claimed to have inside information about Democratic email hackings; and what happened during Mr. Trump’s 2013 trip to Moscow for the Miss Universe pageant.

Unsurprisingly, Trump is furious the questions were leaked to the media. On Twitter, he accused his enemies of making up a “phony crime, collusion, that never existed.”

One of Mueller’s prospective questions may suggest he already possesses some evidence that former Trump campaign manager Paul Manafort was involved in collusion. Mueller intends to ask Trump, “What knowledge did you have of any outreach by your campaign, including by Paul Manafort, to Russia about potential assistance to the campaign?” The Washington Post‘s Aaron Blake thinks this signals a special interest in Manafort.

As Reason contributing editor Ken White has explained previously, Trump shouldn’t agree to speak with the authorities (and neither should you).

FREE MINDS

Student government officials at Harvard University warned a libertarian student group not to use the words “free speech” in an event title. The Harvard Libertarian Club is hosting Flemming Rose—a senior fellow at the Cato Institute best known for publishing cartoons depicting the Prophet Muhammad—and several other speakers for an event about minorities and free speech rights.

But the term “free speech,” is now presumed by leftist students to be a far-right dog whistle, The College Fix reported. The event will be called “Dissent from Minorities Within Minorities,” instead of “Why Minorities Need Free Speech.”

The administration previously tried to place restrictions on another event, “Unsafe Space: Is Political Correctness Why Trump Won?” That event featured Harvard Psychology Professor Steven Pinker, the author Wendy Kamniner, Spiked magazine’s Brendan O’Neill, and me.

FREE MARKETS

Trump delayed implementation of steel and aluminum tariffs for another 30 days. The tariffs are supposed to impact imports from Canada, Mexico, and the European Union. According to The Washington Post:

The White House said it has reached agreements to permanently carve out three of the countries that got exemptions — including Argentina, Australia, and Brazil — and will finalize details soon. South Korea likewise has nailed down terms waving off the steel tariffs as part of a retooled bilateral trade pact. But leaders of Canada, Mexico, and the European Union need to sweat through another month of heat from Washington, as the Trump administration presses them for more concessions.

Top Trump officials are headed to China later this week for trade negotiations.

QUICK HITS

  • Stormy Daniels has filed a dubious defamation lawsuit against Trump for expressing skepticism about the alleged threats made to her in a parking lot in Las Vegas in 2011.
  • Some people think it’s already time to give Trump a Nobel Peace Prize for bringing North Korea to the negotiating table.
  • The New York Times begs Supreme Court Associate Justice Anthony Kennedy not to retire.
  • FOSTA and SESTA may be driving prostitutes back into the arms of abusive pimps.
  • Roxane Gay was incredibly dismissive and disdainful toward Laura Kipnis during a debate between the two at Pomona College.

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West Coast Rapper Issues “Crip Alert” To “Fu*k Kanye Up”,”Bang On His Ass”

A former associate of rapper Snoop Dogg has put out a nationwide “Crip alert” for Kanye West on social media, calling on “all the Crips out there” to “Fu*k Kanye up” over West’s support of Donald Trump and black conservative Candace Owens. 

Yo national alert, all the Crips out there, y’all f— Kanye up,” reads an Instagram post by Delmar Drew Arnaud, aka Daz Dillinger of the “The Dogg Pound,” as reported by a Los Angeles CBS affiliate before it was removed. 

“Better not ever see you in concert,” added Arnaud. “Better not ever see you around the LBC [Long Beach]. Better not ever see you around California. Stay in Calabasas, ya hear me? ‘Cuz we got a Crip alert for Kanye. You don’t speak on Crip gods, n—. We the Crips gods, n—. You know what I’m saying? … All the Crips out there, you see that n—, bang on his a— . F— his a— up.”

Arnaud also tweeted a link to his Instagram video.

In reaction to the video, rapper 50 cent wrote on Instagram “Crips Vs Kardashian’s – get the strap.”

West shocked fans on April 21 when he tweeted his support for Candace Owens, a black conservative and director of urban engagement for Turning Point USA – who feels that black Americans are “slaves on the Democratic Party plantation.” 

Over the next few days, Kanye came out of the closet over his views, tweeting to fans that the “mob can’t make me not love him,” referring to Trump. “He is my brother. I love everyone,” adding “I don’t agree with everything anyone does. That’s what makes us individuals. And we have the right to independent thought.” 

A little later, Kanye tweeted a picture of himself in a red MAGA hat, posing with two men, one of whom is YouTube global head of music Lyor Cohen who is flashing an “OK” sign. A YouTube rep told SPIN magazine that “The hand gesture made by Lyor Cohen is representative of the company he founded, 300 Entertainment and absolutely nothing more.” 

President Trump gave Kanye a virtual fist-bump in response: 

Five minutes later, Kanye tweeted a signed MAGA hat: 

Then, at 5:29, two hours later, political advisor Ali Alexander suggested that Kanye’s friend and fellow-Chicago entertainer, Chance the Rapper, support Kanye… which Chance did 20 minutes later, tweeting “Black people don’t have to be democrats. 

Shortly after Chance’s support, Kanye tweeted that “Obama was in office 8 years and nothing in Chicago changed.” 

Trump, meanwhile, sent the ATF to Chicago on June 2017 to help with police operations. The Chicago murder rate has dropped sharply since the 2016 election. Homicides were down 16% in 2017 vs 2016, while the Year-to-date figure as of April 30, 2018 stands at 153 homicides vs. 192 in 2017, a 20% decrease. 

Over the last few days, Kanye has been “schooled” by entertainers John Legend.

Earlier this week the two music icons let politics get in between their friendship when the “Gold Digger” rapper tweeted praise for President Donald Trump. He then posted text messages from Legend who said, ““You’re way too influential to endorse who he is and what he stands for…So many people who love you feel so betrayed right now because they know the harm that Trump’s policies cause, especially to people of color. Don’t let this be part of your legacy.”

West then accused Legend of “manipulating” his thoughts.

“I love you John and I appreciate your thoughts. You bringing up my fans or my legacy is a tactic based on fear used to manipulate my free thought,” he wrote in the private conversation that was blasted on social media. –Page Six

Legend and West have since made up, with Kanye tweeting a selfie accompanied by the text “We got love. Agree to disagree.” 

Kanye and Legend, and “Charlamagne Tha God” have most recently been going back and forth with others over whether or not Democrats and Republicans switched platforms in the 1960s, prompting Twitter users to chime in with 

And while Kanye absorbs both sides of a history lesson, he must now contend with a nationwide Crip alert. 

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New York Officials Weaponize Regulatory Power Against the NRA: New at Reason

Do you need another demonstration of how dangerous regulatory power can be when it’s weaponized by politicians? Look no further than New York Gov. Andrew M. Cuomo’s recent directive to financial regulators. Cuomo wants them to pressure private companies to break ties with the National Rifle Association (NRA).

“I am directing the Department of Financial Services to urge insurers and bankers statewide to determine whether any relationship they may have with the NRA or similar organizations sends the wrong message to their clients and their communities who often look to them for guidance and support,” the governor wrote. The Department of Financial Services, which regulates the banking and insurance industries in New York, followed up with guidance letters to insurance companies and banks.

In such a politicized environment, getting on the wrong side of regulators can be dangerous, writes J.D. Tuccille. Don’t be surprised if banks and insurers cave.

View this article.

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Turkey Calls On Europe To Criminalize “Islamophobia”

Authored by Uzay Bulut via The Gatestone Institute,

  • Given Turkey’s inhospitable treatment of non-Muslims throughout the ages, it is the height of hypocrisy for its foreign minister to complain about Europe’s attitude towards Muslims, which has been the opposite of Islamophobic.

  • To refresh Çavuşoğlu’s memory, a review of Turkey’s record is in order.

  • By proposing to block all criticism of Islam on the grounds that it is “extremist, anti-immigrant, xenophobic and Islamophobic,” Çavuşoğlu is revealing that he would welcome banning free speech to protect a religious ideology.

At an event held in on April 11 to unveil the 2017 European Islamophobia Report — released by the Foundation for Political, Economic and Social Research — Turkish Foreign Minister Mevlut Çavuşoğlu called on EU governments to criminalize Islamophobia.

“There is no ideology or terminology called ‘Islamism’; There is only one Islam and it means ‘peace,'” he declared — incorrectly: salaam means peace; Islam means submission. He also claimed that populist politicians are “increasingly engaging in extremist, anti-immigrant, xenophobic, and Islamophobic rhetoric to get a few more votes,” and that “centrist politicians are… using a similar rhetoric to get back the votes they have lost.”

Urging all politicians to recognize Islamophobia as “a hate crime and a form of racism” in their constitutions, Çavuşoğlu accused European judiciaries of applying a double standard by not paying as much attention to Islamophobia as they do to anti-Semitism. Using the Holocaust as an analogy, he continued: “There is no need to relive Auschwitz or wait for Muslims to be burned in gas chambers like Jewish people.”

Çavuşoğlu’s view is not new, but it is a gross distortion of past and contemporary history; it seems shaped by a notion that Islam is superior to other religions, as well as from surah 9:33 of the Quran:

“It is He who has sent His Messenger with guidance and the religion of truth to manifest it over all religion…” (Sahih Translation)

Çavuşoğlu’s views also echo those of the Turkish government, headed by President Recep Tayyip Erdoğan.

Non-Muslims, as we all have been seeing, are persecuted throughout the Islamic world. Muslims in Europe, on the other hand, enjoy equal rights and religious liberty. Unfortunately, many radical imams use the freedoms granted to them by European democracies to preach Jew-hatred and violent jihad, to recruit fightersand to establish sharia (Islamic) law courts in their neighborhoods.

Some Muslims, inspired by the teachings of and atmosphere created by these imams, engage in gruesome, religiously motivated crimes against non-Muslims. A disabled 85-year-old Holocaust survivor, for instance, was recently raped, tortured and murdered in her Paris apartment by an extremist Muslim.

Çavuşoğlu, in his talk against Islamophobia, did not mention the atrocities committed by radical Islamists in Europe. Those abuses are at the root of the debate about how to tackle the calls to violence in Islam without hampering the civil liberties of law-abiding Muslims. By proposing to block all criticism of Islam on the grounds that it is “extremist, anti-immigrant, xenophobic and Islamophobic,” Çavuşoğlu is revealing that he would welcome banning free speechto protect a religious ideology.

Given Turkey’s inhospitable treatment of non-Muslims throughout the ages, it is the height of hypocrisy for its foreign minister to complain about Europe’s attitude towards Muslims, which has been the opposite of Islamophobic. To refresh Çavuşoğlu’s memory, a review of Turkey’s record is in order.

Non-Muslims in Turkey have been exposed to severe persecution and attempts at annihilation, such as the 1914-1923 Christian genocide; the 1941-1942 conscription of the “twenty classes,” of all male Christians and Jews, including the elderly and mentally ill; and the 1942 Wealth Tax, which aimed to impoverish non-Muslims and transfer their wealth to Muslims.

Today, only 0.2 percent of Turkey’s population of nearly 80 million is Christian or Jewish.

The following is a brief account of how Turkish governments have rid the country of its non-Muslim citizens:

Greeks: There are fewer than 2,000 Greeks left in Istanbul, which, until the 15th century Ottoman Turkish invasion, was the Greek city of Constantinople. Even despite its tiny size, the community still suffers from violations of its rights. Among these was the forced closure in 1971 of the Orthodox Halki Seminary, the only school for training the leadership of Orthodox Christianity. Since that time, the Ecumenical Patriarchate of Constantinople, the spiritual center of Orthodox Christianity, based in Turkey, has been unable to train clergy and potential successors for the position of patriarch.

It is also important to note that the cities in Asia Minor or Anatolia, which were established by Greeks during the 9th and 8th centuries B.C., no longer have any Greeks. They were either murdered, deported or forced to flee severe persecution, including the anti-Greek pogrom of September 1955 in Istanbul, and the 1964 expulsion of Greeks from all over Turkey.

Armenians: Even after the 1915 genocide, in which 1.5 million Armenians perished, the persecution of Armenians in Turkey did not end. Since then, the remaining Armenians have witnessed the continued seizure of their property and other assets. In addition, verbal and physical attacks against Armenian community members, schools and the only Armenian newspaper in the country by the Turkish public and the media are still common.

Jews: Since 1923, when the Turkish Republic was established, Jews have been exposed to systematic discrimination and various pressures. The laws that excluded Jews and other non-Muslim citizens from certain occupations in the 1920s and blocked the Jews’ freedom of movement; the 1934 anti-Jewish pogrom in eastern Thrace, and the continued anti-Jewish hate speech in the Turkish media and certain political circles are among the forms of persecution and discrimination against Jewish citizens of Turkey.

Assyrians: According to the Minority Rights Group International, Assyrian Christians in Turkey

“suffered forced evictions, mass displacement and the burning down of their homes and villages, abductions (including of priests,) forced conversions to Islam through rape and forced marriage, and murder. These pressures, and other insidious forms of persecution and discrimination, have decimated the community.”

Today, there are only around 20,000 Assyrians left in the country. And they are still struggling to open an elementary school in Istanbul, as the government refuses to grant them any financial support. Meanwhile, both the government and some Muslim Kurdish locals in southeast Turkey continue to seize their lands and property illegally.

Protestants: The Turkish government does not recognize the Protestant community as a “legal entity.” Hence, according to a 2017 human rights violations report by Turkey’s Association of Protestant Churches, Protestants are still devoidof the right freely to establish and maintain places of worships. Other problems encountered by Protestants include but are not limited to hate crimes and speech, verbal and physical attacks and workplace discrimination.

Yazidis: The Turkish government does not recognize Yazidism as a religion. Therefore, the “religion” box on the ID papers of Yazidis in Turkey is either left blank or marked with an “X.” Due to continued persecution and pressure from the government and society, many Yazidis from Turkey have fled to Europe. Their privately-owned lands were reportedly invaded and their owners threatened. Some of their abandoned villages have become uninhabitable. Most of the former Yazidi villages in Turkey have been completely Islamized. The estimated population of Yazidis in the country today is approximately 350 — excluding the recent asylum-seekers from Iraq and Syria. Recently it was reported:

“The Yazidis, who were recently the target of massacre, rape and sex slavery by Isis, are now facing forcible conversion to Islam under the threat of death from Turkish-backed forces which captured the Kurdish enclave of Afrin on 18 March.”

Alevis: The Turkish government does not recognize Alevism, another minority faith. Alevis in Turkey have been subjected to perpetual massacres and pogroms, including: the 1937-1938 Dersim (Tunceli) Massacres, the 1978 Malatya Massacre, the 1978 Sivas Massacre, the 1978 Maras Massacre, the 1980 Corum Massacre, the 1993 Sivas Massacre and the 1995 Gazi Massacre. Today’s Alevis in Turkey are still often exposed to threats and arbitrary arrests.

The faces of many of the victims who were murdered in the 1993 Sivas massacre of Alevis are featured on this poster, used in a 2012 commemoration in Germany. (Image source: Bernd Schwabe, Wikimedia Commons)

Since the 11th century — when Turkic tribes originally from Central Asia, who had converted to Islam and began occupying cities in Asia Minor and the Armenian highland — Turks seem to have had a tradition, as above, of being unneighborly to non-Muslims. The West needs to be reminded that this tradition is alive and well in modern Turkey.

Çavuşoğlu’s critique of Europe may have been an attempt to cloud his country’s sordid past and precarious present, but it should serve as a warning about the danger posed to liberal democracies the world over.

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“We Know It’s Going To Be Painful”: Half Of Existing Canadian Mortgages Are Up For Renewal In 2018

When commenting last week on the latest troubling trends in Canada’s housing market, we predicted that unlike a previous forecast by Deutsche Bank’s Torsten Slok from early 2015, who at the time said that “Canada is in serious trouble”, this time the moment of truth for Canada’s all important housing market was indeed at hand.

The reason?

While it had taken banks some time to push up their mortgage rates, they were finally “catching up” and as Bloomberg reported, just in the past few days Toronto-Dominion Bank – Canada’s second largest lender – lifted its posted rate for five-year fixed mortgages by a whopping 45 bps to 5.59% as government bond yields touched their highest levels since 2011 this week.

“It’s a big move, the biggest move in years,” said Rob McLister, founder of RateSpy.com, a mortgage comparison website.

As regular readers are well-aware, rising rates in Canada has often been cited as the catalyst that could and would burst the country’s housing bubble, because Canadian households, unlike American ones, never managed to delever…

… and even modest increases in rates would have adversely cascading effects.

And while Toronto Dominion was not alone in raising key borrowing rates last week – it was joined by all of Canada’s biggest banks – just as the busy season for residential real estate gets underway, a more troubling development is taking place in the mortgage market, which according to Bloomberg is set for a particularly heavy year of renewals in an environment where debt-servicing costs are already soaring at the fastest pace in a decade.

What happens next is anyone’s guess, but the answer is critical as it will determine the severity of the recession that is now virtually assured to hit Canada.

“The economy has never been as levered as it currently is, and the economy is far more interest sensitive than it has been in the past, to a degree that we don’t have certainty over how each interest rate hike is going to affect Canadian consumers,” Frances Donald, senior economist at Manulife Asset Management, said by phone from Toronto. “All we know is it’s going to be painful, but how painful isn’t quite clear.”

As Bloomberg notes, the heavy household debt burden is perhaps the key reason the central bank has been reluctant to raise borrowing costs further, after hiking interest rates three times between July and January. Given the nation’s debt load – as of February, households had a record C$2.1 trillion ($1.6 trillion) of mortgage and non-mortgage debt – Poloz estimates the economy is 50% more sensitive to rate hikes than at any time in the past.

And yet, the banks appear to have capitulated last week when one after another they all hiked key mortgage rates in rapid succession, akin to the infamous selling scene in the movie “Margin Call”: the bank knew it would launch a financial crisis by being the first to sell as it would force the world to finally admit the emperor was naked.

Now it is Canada’s turn.

And here’s why Canada will no longer be able to avoid the troubling reality of rising rates: the country is entering a period in which no less than 47% of existing mortgages need to be refinanced this year versus 25% to 35% typically, according to Ian Pollick, head of North American rates strategy at Canadian Imperial Bank of Commerce in Toronto.

Worse, the refis will take place smack in the biggest mortgage interest increase in over a decade, just as the country’s biggest banks are raising key mortgage rates. To be sure, as we reported last week, Toronto-Dominion kicked it off Thursday, hoisting its five-year fixed mortgage rate 45 basis points to 5.59 percent. Royal Bank followed with its own hikes Friday.

Even worse, new mortgage stress tests are pushing some borrowers from the big banks to alternative lenders charging higher rates. Lenders such as the infamous Home Capital Group, which only survived a furious bank run thanks to a last minute bailout by Warren Buffett.

“That’s an unfortunate outcome of the stress test,” Will Dunning, an economic consultant who specializes in the housing market, said by phone from Toronto. “In that sense, the stress test is not reducing risk. It’s increasing risk.”

No matter who they refi with, the pain for Canadian homeowners appears unavoidable. According to Statistics Canada, total payments on debt made by Canadian households rose 6.7% in the fourth quarter from a year earlier, and the interest-paid component climbed 9.2%. Those were the biggest gains since the financial crisis.

A moving average of quarter-over-quarter changes shows a similar pattern, with the 1.62% increase in the latest period the fastest since 2008.

Meanwhile, as shown in the top chart, debt payments now represent about 14% of household disposable income, the highest share in three years: as long as rates keep rising, debt-service ratios will continue moving higher as well over the coming quarters, until a tipping point is reached, and there is a wholesale interest payment revulsion.

“The world spends a lot of time talking about the level of Canadian debt being extremely elevated, but what matters most is not the level of debt that Canadians hold, but the cost of carrying that debt,” Manulife’s Frances Donald said said. He’s right, and the problem is that the cost of carrying that debt is now spiking.

Canadians are going to start to feel the pinch” Donald added ominously.

To be sure, as we reported three weeks ago, the cracks are already appearing: as RBC analyst Vivek Selot pointed out, the roll rate – the percentage of credit card users who “roll” from early stage delinquencies to 60-89 day delinquencies – reached the highest since 2008 for one credit card program, while delinquencies for another were above the 10-year average.

And while the level of mortgage arrears is still low by historical standards, a rising debt service ratio could signal that’s about to change.

The big question, of course, is what happens if and when the economy – which has never been more levered – falls into an all out recession. Perversely, Canada’s economy led the G-7 in growth last year, mostly because of the willingness of the country’s consumers to spend money, much of it on even more (cheap credit). But growth is expected to slow this year; GDP shrank unexpectedly in January, with February due latest Tuesday. Another disappointment, and that may be it for the BOC’s tightening cycle.

Meanwhile, leading indicators suggest that the tipping point may have already come:

Canada’s retailers have already had a tough few months. Retail sales in February were still 1.8% below 2017 peak levels. In volume terms, the input used to calculate gross domestic product data, first-quarter retail sales probably posted the biggest quarterly drop since the 2008-09 recession.

Canada bulls hang their hat on the country’s still low unemployment rate, which has benefited from rising oil prices,  and decent economic growth which should help the economy weather higher rates, although with ever basis point increase, risks are rising.

“You have some capacity in the economy to absorb this, but the fact that rates are going up isn’t positive for consumers, because it’s making credit more expensive,” Bloomberg Intelligence analyst Paul Gulberg said “That’s the but”, and in an economy that has never been more in debt, that is a very big ‘but’.

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Frontrunning: May 1

  • Netanyahu says not seeking Iran war as U.S. faces deadline (Reuters)
  • Trump Extends Relief, Confusion as Allies Get Tariff Reprieve (BBG)
  • Canada repeats that U.S. steel tariffs would hurt American jobs (Reuters)
  • Dollar goes positive for year before Fed meeting (Reuters)
  • As Cities Gentrify, Efforts Help Families Stay (WSJ)
  • Boom time comes early to West Texas oil patch (Reuters)
  • Mnuchin Says U.S. Isn’t Looking to Put Rusal Out of Business (BBG)
  • How Bad Is the Labor Shortage? Cities Will Pay You to Move There (WSJ)
  • Fed likely to keep rates steady; investors bet on June hike (Reuters)
  • Guitar-Maker Gibson Brands Files for Bankruptcy (WSJ)
  • Peter Thiel-Backed Venture to Help Big Investors Bet on Bitcoin (WSJ)
  • Mall Owners and Retailers Clash Over Avalanche of Online Returns (BBG)
  • Netanyahu told Trump about Iran claims at March 5 meet: senior official (Reuters)
  • Forget 3%. That Amazing Bull Run in Treasuries Ended Years Ago (BBG)
  • Weinstein Company set to be taken over by Lantern Capital (Reuters)
  • BP Shares, Boosted by Higher Oil Prices, Hit Eight-Year High (WSJ)
  • Michael Cohen Hit With New Taxi Taxes, Owes New York $282,000 (BBG)
  • Insurgents start leaving south Damascus pocket, release hostages (Reuters)
  • Tomorrow’s jobs require impressing a bot with quick thinking (Reuters)
  • Iraq’s Shiite-Sunni Divide Eases, in Unity Against Islamic State (WSJ)
  • Banker’s Alleged Use of F-Word Sparked Legal War With Jersey Guy (BBG)
  • North and South Korea start to dismantle border speakers, fulfilling summit pledge (Reuters)
  • Pfizer revenue misses as breast cancer drug sales disappoint (Reuters)

Overnight Media Digest

WSJ

– In a twist during closing arguments of a six-week trial, the Justice Department urged the judge in the AT&T Inc merger case to consider “alternative” remedies if he decides not to block the planned acquisition of Time Warner Inc outright. (on.wsj.com/2HZuAb4)

– A federal jury found Autonomy Corp’s former financial chief guilty of falsifying financial statements and exaggerating the British software maker’s value before its sale to Hewlett Packard for $11 billion in 2011. (on.wsj.com/2rbhopP)

– Jan Koum, Facebook Inc director and co-founder of its WhatsApp unit, is leaving the messaging service. (on.wsj.com/2rcBgZP)

– Twitter Inc said it sold data to the Cambridge University academic who had separately shared user data he gleaned from Facebook Inc with third parties including the controversial research firm Cambridge Analytica. (on.wsj.com/2I5ULwK)

– Banks and credit-card companies are discussing ways to identify purchases of guns in their payment systems, a move that could be a prelude to restricting such transactions. (on.wsj.com/2rbuMKQ)

 

FT

Influential shareholder advisory group, Glass Lewis, has piled pressure on Paul Achleitner, chairman of the supervisory board at Deutsche Bank AG, saying shareholders should push for a process to find his successor.

Marathon Petroleum Corp has agreed to buy rival refining group Andeavor in a $36 billion deal to create the largest crude oil processor in the US.

The former chief financial officer of Autonomy was convicted of fraud in San Francisco on Monday, in the first courtroom test of claims by Hewlett Packard that it was defrauded when it bought the British software company.

Jan Koum, the founder of WhatsApp and board member at Facebook Inc, said he is stepping down from the social network, as the company struggles to deal with the fallout from the Cambridge Analytica revelations.

 

NYT

– Jan Koum, co-founder of Facebook Inc’s WhatsApp, said on Monday he was leaving the company. Koum’s exit is the highest-profile departure from Facebook after months of controversy that has roiled the social network nyti.ms/2HEbpV5

– The Trump administration said on Monday it would delay a decision to impose steel and aluminum tariffs on the European Union, Canada and Mexico for another 30 days, giving key allies a reprieve as the White House tries to extract concessions from trading partners who have resisted those demands. nyti.ms/2rcHfwP

– Anthony Scaramucci, the Wall Street investor whose short tenure as President Trump’s White House communications director elevated him to national prominence, is not going to sell his hedge fund company to Chinese conglomerate HNA Group, the two companies announced on Monday. nyti.ms/2rbHGID

– The New York Times said on Monday Wendell Jamieson, the newspaper’s metro editor, had resigned after an internal investigation but did not specify the reason for his departure. nyti.ms/2I36KeB

 

Canada

THE GLOBE AND MAIL
** Ontario’s Liberal government took direct aim at Hydro One Ltd’s “unjustifiably generous” compensation on Monday, forcing the electrical transmission utility’s board to revisit pay packages for senior executives. tgam.ca/2jkIpCT

** The Liberal government defended its carbon-pricing plan on Monday, with an analysis that concludes the federal and provincial levies would reduce greenhouse gas emissions by up to 90 mega tonnes by 2022, the equivalent of shutting down more than 20 coal-fired power plants. tgam.ca/2KuyaIu

** The federal government introduced new legislation on Monday aimed at curbing foreign interference in Canadian elections, but is leaving parliament with a tight schedule for passing the bill in time for the 2019 campaign. tgam.ca/2rcuSRn

NATIONAL POST
** Canada’s largest medical regulator is taking too long to resolve its thousands of discipline cases, according to an inquiry commissioned by the Ontario government, with even unfounded patient complaints against doctors lingering for months. bit.ly/2I2SzGh

 

Britain

The Times

The founder of Shire Plc, Harry Stratford, has come out in support of a proposed takeover by Japanese rival, saying that a 46 billion pound proposal from Takeda Pharmaceutical Co represented a “fair price”. bit.ly/2raZSBu

A jury in San Francisco convicted former CFO of Autonomy Sushovan Hussain of using accounting tricks to flatter the company’s finances before it was bought by Hewlett-Packard . bit.ly/2rcqJgf

The Guardian

WPP is to sell stakes worth billions of pounds that it holds in a wide range of companies, as the world’s largest advertising group looks to refocus after the departure of founder Sir Martin Sorrell. bit.ly/2raU3nv

A 400-million-pound ($550.64-million) government plan to build electric car charging points looks likely to be significantly delayed, in a blow to car manufacturers and efforts to tackle air pollution in UK cities. bit.ly/2rbjmWu

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