Month: June 2018

Bill Gross Used “Fart Spray”, “Dead Fish” To Get Back At His Ex-Wife

Bill Gross’s retaliation for his ex-wife’s decision to smuggle a $35 million Picasso out of the Laguna Beach Mansion they once shared (leaving her ex-husband none the wiser) has been swift…and stinky. 

According to the to smuggle a $35 million Picasso out of the Laguna Beach Mansion they once shared (leaving her ex-husband none the wiser) has been swift…and stinky. 

According to the New York Post, Susan Gross is alleging that during their bitter divorce, her former husband, the billionaire bond king and founder of PIMCO, “used foul-smelling sprays” to leave their $36 million Laguna Beach home basically uninhabitable. In addition to the sprays, Gross reportedly placed dead fish in the air vents. Gross included details of her ex-husbands alleged harassment in court papers.

In addition to the smell, which had to be remedied by a professional cleaning squad, Bill Gross allegedly hired a security company to monitor his ex-wife and her family. Susan Gross referred to the company as her husband’s “army of spies,” and claimed they had transformed her life into an “unmitigated nightmare.” Included in the filings were photos of the plastic bottles that contained the spray, which were discarded in the home’s trash. The photos also purportedly showed water damage throughout the 6-bedroom 8-bath home, along with a severed cord to a treadmill and an art installation showing cats that had their facial features scratched out in the paintings.

All of the evidence apparently was enough to win Susan Gross a restraining order against her ex-husband. The former couple now have “his and hers” restraining orders, according to the Post, after Bill Gross secured an order against his ex-wife back in November after complaining to a judge about her “erratic behavior” and “threats of violence,” saying she would occasionally “show up at the house unannounced”.

For his part, Gross denies that the house was left in disarry.

 

“>New York Post, Bill Gross’s ex-wife, Susan Gross, is alleging that during their bitter divorce, her former husband, the billionaire bond king and founder of PIMCO, “used foul-smelling sprays” to leave their $36 million Laguna Beach home basically uninhabitable. In addition to the sprays, Gross reportedly placed dead fish in the air vents. Gross included details of her ex-husbands alleged harassment in court papers.

In addition to the smell, which had to be remedied by a professional cleaning squad, Bill Gross allegedly hired a security company to monitor his ex-wife and her family. Susan Gross referred to the company as her husband’s “army of spies,” and claimed they had transformed her life into an “unmitigated nightmare.” Included in the filings were photos of the plastic bottles that contained the spray, which were discarded in the home’s trash.

The photos also purportedly showed water damage throughout the 6-bedroom 8-bath home, along with a severed cord to a treadmill and a cat painting that showed the faces of the cats had been scratched out.

The evidence was apparently enough to win Susan Gross a restraining order against her ex-husband. The former couple now have “his and hers” restraining orders, according to the Post, after Bill Gross secured a restraining order of his own against his ex-wife back in November after complaining to a judge about her “erratic behavior” and “threats of violence,” saying she would occasionally “show up at the house unannounced”.

For his part, Gross denies that the house was left in disarry, and a source close to the bond investor said he was “shocked” when he learned that his wife had already taken the Picasso from their home without his permission.

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Trump’s Policy of Separating Immigrant Families Makes for a Contentious Father’s Day: Reason Roundup

RyanCritics of the Trump administration policy of separating children who enter the country illegally from their families continued to blast Republicans for failing to curtail this draconian measure. Actor John Legend tweeted “fuck you” at House Speaker Paul Ryan, who had posted a “Happy Father’s Day” message on social media.

First Lady Melania Trump released a statement saying that she hates seeing children separated from their families and “hopes both sides of the aisle can finally come together to achieve successful immigration reform. She believes we need to be a country that follows all laws, but also a country that governs with heart.” This remark drew a “fuck you” from Kathy Griffin (of course). Former First Lady Laura Bush also weighed in.

But according to President Trump, the whole mess is Democrats’ fault, since they won’t work with Republicans to pass new immigration legislation. “This is why we need more Republicans elected in November!” the president tweeted.

Between April 19 and May 31, at least 2,000 children were separated from their parents at the border. Contrary to what Attorney General Jeff Sessions and other Trump officials have claimed, this policy is not required by the law, according to the Volokh Conspiracy‘s Ilya Somin:

The Trump administration claims that their policy is required by the 1997 Flores court settlement. But that settlement in no way mandates family separation and detention of children away from their parents. To the contrary, it instructs federal officials to “place each detained minor in the least restrictive setting appropriate” and to release them to the custody of family or guardians “without unnecessary delay.” The settlement also mandates that federal immigration officials must “treat, all minors in its custody with dignity, respect and special concern for their particular vulnerability as minors.” Detaining children under harsh conditions, separated from their parents, is pretty obviously not “the least restrictive setting” possible, and it most definitely doesn’t qualify as treating children with “dignity, respect and special concern for their particular vulnerability.”

Sen. Susasn Collins (R–Maine) described the policy as traumatizing for the children and inconsistent with American values on CBS’s Face the Nation on Sunday. Congressional Republicans have expressed willingness to axe this “zero tolerance” approach, but only in exchange for increased funding for border security, an end to the diversity visa lottery, and several other things.

Meanwhile, Breitbart thinks it was wrong to describe the children as being kept in cages—rather, they are being held in “chain-link holding areas.”

FREE MINDS

Harvard University admissions officials consistently gave Asian American applicants low marks in the subjective “personality” category—a tactic that concealed the university’s efforts to discriminate against Asians in order to increase the number of black and Hispanic students admitted.

That’s according to documents that were publicly revealed last week as part of a lawsuit against Harvard over its race-conscious admissions policies. (I previously wrote about the lawsuit here.)

Asian American applicants had higher standardized test scores, and more extracurricular activities, than other applicants, and alumni officials who interviewed them rated them among the highest applicants. But admissions officials who did not interview the applicants still found something in their applications that supposedly merited low marks on personality.

“It turns out that the suspicions of Asian-American alumni, students and applicants were right all along,” Students for Fair Admissions, the group suing Harvard, said in a court document. “Harvard today engages in the same kind of discrimination and stereotyping that it used to justify quotas on Jewish applicants in the 1920s and 1930s.”

Blogger Stephen Hsu has a useful breakdown of the info here. Long story short: when one looks at just the “fair” applicant pool—i.e., the applicant pool that doesn’t include athletes and legacy admissions—it seems quite obvious that Asians are discriminated against.

FREE MARKETS

Trump fired another shot in the trade war with China, and China is striking back:

The Trump administration on Friday escalated a trade war between the world’s two largest economies, moving ahead with tariffs on $50 billion of Chinese goods and provoking an immediate tit-for-tat response from Beijing.

The president is battling on a global front, taking aim at allies and adversaries alike. The United States has levied global tariffs on metal imports that include those from Europe, Canada and Mexico, while threatening to tear up the North American Free Trade Agreement.

These countries are fighting back, drawing up retaliatory measures that go after products in Mr. Trump’s political base. China’s response was swift on Friday, focusing on $50 billion worth of American goods including beef, poultry, tobacco and cars.

QUICK HITS

  • Speaking of Harvard, journalist Salena Zito took a bunch of Ivy League students on trips into America’s heartland to interact with Trump voters and learn something about the world beyond the quad.
  • Four #NeverTrump Republicans discuss the future of the Republican Party.
  • Comedian and AMC host Chris Hardwick has been accused of emotional and sexual abuse by a former girlfriend, who cited the #MeToo movement as one of her reasons for coming forward.
  • Embattled FBI agent Peter Strzok expressed willingness to testify before Congress.

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Trump: “The People Of Germany Are Turning Against Their Leadership”

Moments after Angela Merkel received a 2-week ultimatum to resolve Germany’s increasingly contentious refugee issue, Donald Trump decided to capitalize on Merkel’s misfortune, and in a tweet claimed that “the people of Germany are turning against their leadership as migration is rocking the already tenuous Berlin coalition. Crime in Germany is way up. Big mistake made all over Europe in allowing millions of people in who have so strongly and violently changed their culture!”

Trump, who is currently on the receiving end of a full court media press for his decision to separate migrant children from their parents at the border, which is what the “Russian collusion” attack narrative has pivoted to in the aftermath of the humiliating for the FBI OIG report, then took it up a notch and said that “we don’t want what is happening with immigration in Europe to happen with us!”

As we reported earlier, CSU hardliners in Merkel’s conservative bloc on Monday gave her a two-week ultimatum to tighten asylum rules or risk pitching Germany into a political crisis that would also rattle Europe. Interior Minister Horst Seehofer’s CSU party at a meeting unanimously backed his call to give Merkel a fortnight to find a European deal on the burning issue by a June 28th-29th EU summit, failing which he would order border police to turn back migrants.

Merkel’s woes come as European Union countries are once again at loggerheads over immigration, triggered by Italy’s refusal this month to allow a rescue ship carrying 630 migrants to dock.

As The Local noted previously, Merkel now faces the challenge of persuading EU governments to sign up to a common plan on the migrants. Central and eastern EU nations such as Hungary and Poland have either refused outright or resisted taking in refugees under an EU quota system. A populist-far right government in Italy and the conservative-far right cabinet in neighbouring Austria have also taken an uncompromising stance.

Merkel’s talks later Monday with Italian Prime Minister Giuseppe Conte in Germany could prove crucial if she is to have any chance of forging an agreement in Brussels. On Tuesday, she will also meet French President Emmanuel Macron in Germany. Berlin is also reportedly preparing to call a meeting between Merkel and the leaders of several EU frontline nations in the migrant crisis ahead of the EU summit.

“It would be almost a miracle if she emerges a winner from the next EU summit,” Welt daily said.

But the chancellor may have no choice, as Seehofer could still launch the nuclear option of shutting Germany’s borders in defiance of her – an act of rebellion which would force her to sack him. That “would be the end of the government and the alliance between CDU and CSU,” a CDU source told Bild.

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Onward To Stock Market Nirvana… Or Not

Authored by Charles Hugh Smith via OfTwoMinds blog,

Rising wedges tend to lead to declines, so ignore them.

At long last, we have reached the Nirvana of consensus: the stock market is heading to new all-time highs. Even the perma-Bear camp seems to have accepted the inevitability of new all-time highs ahead: The FANG stocks are hitting new highs, the Russell 2000 Small-Cap Index is hitting new highs, and the laggard S&P 500 is sure to catch up to its peers, as it climbs the ladder of higher lows. Once again we’ve reached the Nirvana of ever-higher stock valuations.

Or not. That troublesome kid watching the naked Emperor ride past in his imaginary finery keeps muttering about rising wedges. Consider the Russell Small-Cap Index (RUT):

The Raging Bull of the FANG stocks, Netflix:

The S&P 500:

And the so-called “fear index,” the VIX, reduced to the Nirvana of complacency and supreme confidence:

The Nirvana of January–super-low VIX and an ever-rising stock market– was disrupted by an unwelcome eruption of reality.

The beaten down VIX traced out a couple of blue wedges before the eruption, but let’s ignore them. What matters is order was restored to the Universe by the triumph of complacency and confidence as the VIX was ground down to sub-12 levels again.

Rising wedges tend to lead to declines, so ignore them. Never mind their ubiquity– Nirvana blasts right through resistance and rising wedges.

The faithless few might be troubled by the similarities of late January to the present, but the faithful have supreme confidence in the Fed, the tremendous bite of the FANGs and the all-powerful forces of greed and complacency–a marriage made in heaven!

Here’s a look at the real Nirvana: the income and wealth gains of the top .1%.

Debt-serfs “own” nothing but debt, the Technocrat class shouldering student loans and mortgages keeps the machine running by working themselves to exhaustion, and the speculative class skims virtually all the gains.

Stock market Nirvana feeds wealth/income inequality Nirvana.

*  *  *

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Key Events This Week: Sintra Jawboning Orgy, PMIs And Non-Stop Central Bank Speakers

Following what was widely dubbed as “the most important week of the year“, which saw major announcements by both the Fed and ECB, things slow down sharply but central banks remain in the spotlight again with the ECB’s Forum on Central Banking due to take place in Sintra, with speakers including Draghi, Powell and Kuroda amongst others. We’ll also have the BoE policy meeting, while the other potentially big event for markets is a likely contentious OPEC meeting in Vienna where ministers are due to discuss a possible lift in output. Global flash PMIs at the end of the week is likely to be the big data highlight.

In the US, newsflow slows down, with the Philly Fed mfg index expected to moderate in June, but still remain at elevated levels. On the flip side, May housing starts and existing home sales are expected to rebound. Fed Presidents Bostic and Williams, and Fed Chair Powell speak next week. We will listen for clues around their views on the path of policy. Bostic likely remains a 3-hiker for 2018, while Williams and Powell may both be at 4.

* * *

In its preview, Deutsche Bank – the bank which has the most to lose from Draghi’s ongoing dovish crusade as it will keep yield curves subdued for the next year – writes the ECB’s Forum on Central Banking which runs from Monday to  Wednesday in Sintra is likely to be the big event for markets. Remember that it was this time last year that bond yields rose sharply higher when Draghi signaled that the ECB was poised to phase out its economic stimulus measures. In terms of the agenda itself, on Monday evening President Draghi will deliver opening remarks followed by a speech from former US Secretary of State Lawrence Summers. On Tuesday morning Draghi will then make the introductory speech, before board member Peter Praet speaks in two separate panels, the second including the Fed’s Bullard and ECB’s Lane. Finally on Wednesday we’ll hear from ECB board member Sabine Lautenschlager in the morning and then Benoit Coeure. The main event might well come on Wednesday afternoon however when we get to watch a policy panel featuring Draghi, Fed’s Powell, BoJ’s Kuroda and RBA’s Lowe.

However, as Jim Reid writes elsewhere, chances are that coming so close after the big ECB meeting, it’s unlikely to have the same impact on markets as it did this time last year when Draghi announced that the ECB was ready to start phasing out extreme monetary stimulus. However it’s a true A-list gathering of Central Bankers that makes the casting agents of Ocean’s Eleven look like they ran out of money. As such headlines will be aplenty.

Meanwhile, we’ll have to wait until Friday to get the main data point for the week when the flash June global  PMIs will be out. The data includes the manufacturing print in Japan along with all three services, manufacturing and composite readings in core Europe and the US. In terms of what to expect, the composite print in the Eurozone is expected to more or less hold steady at 54.0 (versus 54.1 in May which as a reminder was the lowest since November 2016). The manufacturing reading is expected to fall to 55.0 (which would be the lowest in 18 months) from 55.5 and the services print stay relatively unchanged at 53.7. For the US, the manufacturing and services readings are expected to hold steady at 56.3 and 56.8 respectively.

As for central banks, the BoE meets on Thursday although no change in policy is expected. The market will likely be most interested in the Bank’s take on recent economic data however, although this is not a meeting which contains new BoE economic projections. Later on Thursday Governor Carney is also due to make his Mansion House speech.

In terms of other data to watch next week, its fairly quiet in the US with May housing starts and building permits on Tuesday, June Philly Fed business outlook and May leading index on Thursday the highlights.

In the UK May public finances data is out on Thursday while in Japan the May CPI report is out on Friday.

Fedpseak wise we’re due to hear from departing NY Fed Chief Dudley on Monday when he speaks at a conference on reforming bank culture. His successor, Williams, will then deliver closing remarks at the same conference in the evening. The Fed’s Bostic is also due to speak at a conference on Monday evening on the subject of the economic and monetary policy outlook. Over at the ECB, outside of Sintra, Villeroy is due to speak on Wednesday and Thursday along with Weidmann and Nowotny (also both Thursday).

Meanwhile the Oil market should get its turn in the spotlight next week when we have the meeting of OPEC ministers and partners in Vienna on Friday. The meeting is due to be used to discuss whether or not to restore the oil output that was halted last year and is scheduled to continue into Saturday although OPEC ministers and CEOs of major energy firms are also due to gather from Wednesday so there are the potential for headlines from then. Bloomberg expects the contentious meeting to result in the cartel lifting its production by 600k barrels a day.

With regards to other potentially important things to look out for next week, on Monday the Brexit withdrawal bill passes to the House of Lords, while German Chancellor Merkel is due to meet new Italy PM Conte in Berlin. Then on Tuesday Merkel is due to meet France President Macron with talks expected to focus on strengthening the Euro area. Elsewhere the Fed’s results from its 2018 bank stress tests will be out on Thursday while EU finance ministers are also due to gather in Luxembourg to meet to conclude Greece’s debt relief deal and a post bailout surveillance mechanism.

* * *

Weekly preview of events by day, courtesy of Deutsche Bank

Monday: The most significant event on Monday is the start of the ECB’s Forum on Central Banking in Sintra (continuing until Wednesday), with President Draghi due to make opening remarks in the evening. Away from that, the Fed’s Dudley and Williams are all due to speak while datawise in the US the NAHB housing market index reading is due for June. In the UK house price data is due and in Japan May trade stats are due. Finally the Brexit withdrawal bill passes to the House of Lords on Monday and Germany Chancellor Merkel meets new Italy PM Conte.

Tuesday: The ECB Sintra conference will feature comments from President Draghi again, along with Board Member Praet and Governor Lane. The Fed’s Bullard is also due to take part. Away from that the only data of note is the Euro area’s current account balance reading for April and US housing starts and building permits for May. It’s worth noting that Germany Chancellor Merkel will also meet France President Macron on Tuesday.

Wednesday: Concluding the ECB conference will be comments from Board Members Lautenschlager and Coeure, along with a policy panel featuring President Draghi, Fed Chair Powell and BoJ Governor Kuroda. Away from that BoJ meeting minutes will be out overnight, while Germany PPI for May, UK CBI selling prices data for June and May existing home sales in the US will be released. Away from that the OPEC International Seminar is due to begin in Vienna.

Thursday: The main focus on Thursday will be the BoE meeting at midday. Governor Carney will hold a press conference and then later in the evening is due to make his Mansion House speech. Data releases on Thursday include June confidence indicators in France, May public sector net borrowing data in the UK, June confidence indicators for the Euro area, along with weekly initial jobless claims, June Philly Fed business outlook, May leading index and April FHFA house price index readings in the US. The ECB’s Villeroy de Galhau and Nowotny are also scheduled to speak along with the Bundesbank’s Weidmann. Elsewhere the Fed’s 2018 bank stress test results will be released, while Thursday also marks the deadline for Greece’s debt relief deal.

Friday: The big data highlight on Friday is the release of the flash June PMIs around the world. In Japan the manufacturing reading will be released while in Europe and the US we’ll receive the manufacturing, services and composite prints. Away from that the May CPI report in Japan will be released and the final Q1 GDP revisions will be made in France. The Oil market will also be in focus with the OPEC meeting in Vienna (continuing into Saturday).

* * *

Finally, here is a breakdown of just US events, along with consensus estimates, courtesy of Goldman:

The key economic release this week is the housing starts report on Tuesday. There are several scheduled speaking engagements from Fed officials this week. Federal Reserve Chairman Jerome Powell will be speaking on Wednesday.

Monday, June 18

  • 08:00 AM New York Fed President Dudley speaks: Outgoing New York Fed President William Dudley will give opening remarks at a conference on reforming bank culture.
  • 09:00 AM New York Fed President Dudley speaks: Outgoing New York Fed President William Dudley will participate in a panel discussion on “Finance, Culture, and Society.”
  • 10:00 AM NAHB housing market index, May (consensus +70, last +70)
  • 01:00 PM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will speak on the economic and monetary policy outlook and participate in a Q&A session for both the audience and press.
  • 01:00 PM New York Fed President Williams (FOMC voter) speaks: Incoming New York Fed President John Williams will give closing remarks at a conference on reforming bank culture.

Tuesday, June 19

  • 08:30 AM Housing starts, May (GS +2.5%, consensus +2.0%, last -3.7%); Building permits, May (consensus -1.0%, last -1.8%): We estimate housing starts rebounded 2.5% in May, retracing much of the 3.7% April decline. We expect a favorable swing in the weather to boost construction activity, and we believe single-family construction fundamentals remain solid.
  • 01:00 PM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will participate in a panel discussion on the “Macroeconomics of Price and Wage Setting” at the European Central Bank’s Forum on Central Banking in Portugal.

Wednesday, June 20

  • 08:30 AM Current account balance, Q1 (consensus -$129.0bn, last -$128.2bn)
  • 09:30 AM Fed Chairman Powell (FOMC voter) speaks: Federal Reserve Chair Jerome Powell will participate in a panel discussion on “Monetary Policy at a Time of Uncertainty and Tight Labor Markets” at the European Central Bank’s Forum on Central Banking in Portugal. There will be prepared text and audience Q&A.
  • 10:00 AM Existing home sales, May (GS flat, consensus +1.4%, last -2.5%): We look for unchanged existing homes sales in May based on softer regional housing data, following the 2.5% pullback in April. Existing home sales are an input into the brokers’ commissions component of residential investment in the GDP report.

Thursday, June 21

  • 08:30 AM Initial jobless claims, week ended June 16 (GS 225k, consensus 220k, last 218k); Continuing jobless claims, week ended June 9 (consensus 1,712k, last 1,697k): We estimate initial jobless claims rose 7k to 225k in the week ending June 16. Claims look depressed in California and Florida, and we note that the timing of auto plant shutdowns could modestly boost claims in the upcoming report. Consensus expects continuing claims—the number of persons receiving benefits through standard programs—to rebound 15k to 1,721k.
  • 08:30 AM Philadelphia Fed manufacturing index, June (GS +32.0, consensus +29.0, last +34.4): We estimate that the Philly Fed manufacturing index declined by 2.4pt to 32.0 in June, following a sharp 11.2pt increase in May. Incoming manufacturing surveys so far indicate continued expansion in the business activity in June, so we expect a still-elevated reading this month.
  • 09:00 AM FHFA house price index, April (consensus +0.5%, last +0.1%)

Friday, June 22

  • 09:45 AM Markit Flash US manufacturing PMI, June preliminary (consensus 56.3, last 56.4)
  • 09:45 AM Markit Flash US services PMI, June preliminary (consensus 56.7, last 56.8)

Source: BofA, DB, Goldman

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“Blow For Blow” US-China Trade Spat Expected To Become “War Of Attrition”

Every investor and fund on Wall Street is trying to discern where the blossoming trade dispute between the US and China will go next now that the first punches have finally been thrown. The US has already threatened to issue another “tit” for China’s “tat”, which China announced on Friday by unveiling a slate of tariffs to be unveiled in two stages, not unlike the US tariff rollout. So, while we await the Trump administration’s next salvo, Bloomberg is reporting that most analysts are expecting the battle to be “a war of attrition” – meaning things will get much worse before they get better.

Analysts increasingly expect the confrontation to be a war of attrition. While China has shown a willingness to make a deal on shrinking its trade surplus with the U.S., it has made clear it won’t bow to demands to abandon its industrial policy aimed at dominating the technology of the future.

“The Chinese view this as an exercise in self-flagellation, meaning that the country that wins a trade war is the country that can endure most pain,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. China “thinks it can outlast the U.S. They don’t have to worry about an election in November, let alone two years from now.”

Contrary to what the “analysts” have decided, it’s equally likely that the Trump Administration knows Xi Jinping would never cave and scale back the state-mandated “Made in China 2025” initiative, and is hoping instead to use this demand as a tool to coax the Chinese into delivering a larger trade-deficit reduction…unless we misunderstand the precepts of Game Theory.

Trade

Whatever their expectations, it appears politicians, analysts and the media have united in their insistence that whatever is happening right now between the world’s two largest economies is “not a trade war”. We are only ever “approaching” a trade war…because admitting that one has already arrived would seriously spook the market.

The two nations moved to the brink of a trade war on Friday after the Trump administration announced new tariffs on imports would take effect from July 6. A 25 percent tariff will be imposed on $34 billion in goods imports, with further duties on another $16 billion in imports under consideration. In response, China said it would charge tariffs of the “same scale and intensity” on goods from the U.S., adding that all trade commitments made during the previous weeks of negotiations are now off the table.

…

“We could be dangerously approaching such a trade war,” Jack Reed, the ranking Democrat on the Senate Armed Services Committee, told Fox News Sunday.

Bloomberg also pointed out this morning that China’s “arsenal of potential retaliatory measures” to the US’s trade tactics is wider than the US’s. As stated above, Chinese politicians don’t need to worry about elections, and the Chinese people are largely united in their support of China beating back what they consider American aggression.

Aside from slapping tariffs on American products, China’s arsenal of potential retaliatory measures is formidable, and it could inflict heavy punishment on the more than $200 billion of investment by American companies in China. Increased safety inspections and delays in approving imports are possible tools, as is consumer boycotts of American goods sold in China’s rapidly growing retail market, or stemming a flow of free-spending tourists to the U.S.

China’s punishment of South Korea for allowing the U.S. to station a missile defense system on the peninsula cost that nation billions of dollars, and it has used similar tactics against the Philippines and Japan as well. China also has a pivotal role in Trump’s goal of disarming North Korea because without its participation, sanctions have little chance of success.

“We have very legitimate reasons to be concerned about China’s trade practices,” Susan Rice, former national security adviser to President Barack Obama, told CNN’s Fareed Zakaria GPS on Sunday. “But the way to resolve this is not at the expense of American workers and manufacturers and farmers, by getting into a trade war that has potential, real global ramifications.”

And, as we noted over the weekend, Chinese officials haven’t been shy about warning US corporations about the potential consequences of a trade war if the administration continues to ignore pleas from the business community. In addition to all of the tactics cited above, China could also follow Russia’s lead and sell a large chunk of its Treasury holdings.

In a longer-term, worst-case scenario, there also are actions such as selling down its massive stockpile of U.S. treasuries or devaluing the yuan, moves that would send shock waves through global markets.

But one factor that could complicate this trade “skirmish” (or whatever you want to call it) is the fact that, as one analyst who spoke with Bloomberg pointed out, the US’s aggressive trade policies are part of a larger “technology arms race” with China as the two countries compete on building better AI and more advanced communications technology (the race for 5G is probably the best example). 

Trade is just a way to contain China from moving up the technology ladder, according to Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA in Hong Kong. Trump’s ‘America First’ policy is against every nation, but it includes a tech arms race against China, and China will respond by trying to build ties with other nations, and buying technology from wherever it can, she said.

And when the issue is framed this way, it’s much easier to imagine it spiraling out of control into a second cold war…or possibly even a military conflict. Because while analysts have fixated on the trade dispute “tit for tat”, a much more alarming military “tit for tat” is unfolding over the South China Sea, as China and the US trade military exercises and provocative “freedom of navigation” operations. China recently carried out a live-fire anti-aircraft drill over the disputed area using dummy “target drones”.

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“Can’t Work With That Woman Anymore”: On Her “D-Day” Merkel Is Given A Two-Week Ultimatum

Adding insult to injury, one day after Germany’s historic loss to Mexico, Europe’s most important country is facing the “Destiny Day” to a political crisis like no other in recent history.

For almost 13 years as chancellor, Handeslblatt writes this morning, Angela Merkel managed to outmaneuver all rivals, schemers and plotters. But her time could finally be up.  Two of her Christian-Democratic predecessors, Konrad Adenauer and Ludwig Erhard, fell from power not after losing the electorate, but after losing the support of their own parliamentary bloc. That may now be Merkel’s fate, too.

Today, the top brass of her party, the CDU, and its Bavarian frenemies, the CSU, are meeting separately in Berlin and Munich, to agree on a common course about the coming days and weeks, however chances of a deal appear increasingly remote: according to Handelsblatt, Horst Seehofer, the CSU’s boss, federal interior minister and perennial Merkel gadfly, told one newspaper that he “can’t work with that woman anymore.“

Horst Seehofer and Angela Merkel. Photo: DPA

The issue is, as it has been since the crisis of 2015, refugees.

If Seehofer, acting as interior minister, really starts turning back asylum seekers at the border, this will count as open insubordination to Merkel. She would have to fire him. That would probably lead to a break between the CDU and CSU, which would cost their governing coalition with the Social Democrats its parliamentary majority.

Merkel would step down or be forced out.

Which is why, on Sunday Germany’s Bild said that Monday is “destiny day for Angela Merkel. For the government.“

As we discussed previously, Seehofer has been one of the fiercest critics of Merkel’s liberal stance that allowed a million asylum seekers into Germany since 2015. Heading into Monday, the interior minister wanted to turn away at the border new arrivals who have previously been registered in another EU country, often their first port of call, Italy or Greece, a proposal which however is a non-starter with both Italy and Greece.

But Merkel is firmly opposed, warning that it would leave countries at the EU’s geographic southern periphery alone to deal with the migrant influx. Instead, she wants to find a common European solution at the June 28-29 EU summit.

It is hardly a secret that popular misgivings over the massive migrant influx have given populist and anti-immigration forces a boost across several European nations, including Italy and Austria where far-right parties are now sharing power. In Germany, voters handed Merkel her poorest score in September’s elections while giving seats for the first time to the far-right anti-Islam AfD. The latest poll released this morning did not help: a Forsa poll commissioned by RTL and ntv, showed that in the wake of the refugee debate, German CDU/CSU lost 4% points, as voter support for CDU/CSU slipped to 30%, the lowest since the federal elections.

  • CSU in Bavaria falls to 36%
  • Coalition partner SPD down 2 ppts to 16%
  • AfD at 15%
  • Greens at 14%; FDP at 10%; Left party at 9%; Other parties in total 6%

Several high profile crimes by migrants, including the 2016 Christmas market attack by a failed Tunisian asylum seeker as well as the recent rape-murder of a teenage girl allegedly by an Iraqi, have also helped to fuel anger. The case of a German teenager who was believed to have been stabbed to death in a supermarket by her Afghan asylum seeker boyfriend is due to be heard in court on Monday. With an eye on October’s Bavaria state election, the CSU is anxious to assure voters that it has a roadmap to curb the migrant influx.

As such, Seehofer’s “masterplan” on immigration was meant to be the showpiece of the CSU’s tough stance against new arrivals.

But the interior minister was forced to cancel a planned presentation of his vision after Merkel disagreed with his proposal to turn some asylum seekers away at the borders, sparking last week’s dramatic escalation of discord within the conservative bloc. For all the noise, the CSU knows that there is more at stake.

On Sunday, Seehofer struck a more conciliatory tone when he told Bild that “it is not in the CSU’s interest to topple the chancellor, to dissolve the CDU-CSU union or to break up the coalition” adding that “we just want to finally have a sustainable solution to send refugees back to the borders.”

Which brings us to Monday, when Seehofer’s CSU met on Monday to decide which course to take. As the Local de reported, he had the nuclear option of seeking approval to shut Germany’s borders immediately in defiance of Merkel, or the less aggressive choice of giving her an ultimatum of two weeks to sort out a deal with other EU nations.

Signalling that he is leaning towards the latter option, Seehofer wrote in a column in Frankfurter Allgemeine Zeitung that “it is essential that the EU summit takes a decision at the end of June. “The situation is serious but still solvable,” he wrote. Of course, whichever option he chooses, the ball will land in Merkel’s court.

* * *

Then, moments ago, DPA reported that Seehofer indeed gave Merkel a two week ultimatum until the end of June to agree Europe-wide migration rules. After the deadline, if Merkel is unable to get EU countries to approve a solution within the deadline, comprehensive refusals of migrants at borders will begin, which will ultimately begin a chain reaction which will likely end will the collapse of Merkel’s government, and the end of her political career.

To be sure, having been given a two-week ultimatum, Merkel now faces the Herculean challenge of persuading EU governments to sign up to a common plan on the migrants.

Good luck with that: central and eastern EU nations such as Hungary and Poland have either refused outright or resisted taking in refugees under an EU quota system that has essentially floundered. A populist-far right government in place in Italy, as well as the conservative-far right in power in neighbouring Austria, have also taken an uncompromising stance on immigration.

Meanwhile, despite howls of protests from aid groups and even the United Nations, Rome has banned rescue vessels carrying migrants from docking.

* * *

What are the next immediate catalysts? Merkel’s talks on Monday evening with Italian Prime Minister Giuseppe Conte could prove crucial, if she is to have any chance of finding concordance in Brussels. Then, on Tuesday, Merkel will meet with French President Emmanuel Macron.

Berlin is also reportedly preparing to call a meeting between Merkel and the leaders of several EU frontline nations in the migrant crisis ahead of the Brussels summit.

Underlining the unenviable task ahead for Merkel, Welt daily said “it would be almost a miracle if she emerges a winner from the next EU summit.”

Which is why, one month from today, Germany may be faced with a summer of discontent: not only does it now look increasingly unlikely that the German team will not play in the July 15 World Cup final (if its game against Mexico was any indication of what to expect), but it is increasingly likely that Angela Merkel will be absent at the final game as well.

In other news, we can’t wait until this latest European scandal resulting from Merkel’s own “progressive” politics and liberal vision is somehow blamed on Putin too.

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Mom Brings Coughing 10-Month-Old to the Hospital. Days Later, Cops Take the Baby.

BabyOutraged by cases of child protective services taking children from their competent, loving parents on flimsy medical grounds, a group in Minnesota has filed a motion in federal court to do what their organization’s name suggests: “Stop child protective services from legally kidnapping children.”

Fox 9 reports that Dwight Mitchell, the founder, had his child taken away from him “unfairly” for 22 months. His group now has over 1,000 members. One of them is Amanda Weber, whose son was taken from her for a week after she brought him to the hospital to be examined for a cough:

The doctor deemed him stable and notes show the diagnosis was, in fact, a cough. However, the recommendation was that the patient should have stayed. Weber took him home.

“After waiting, I had asked to leave because I wanted to put my kids to bed and I had my three-year-old with me and I asked if there was anything else that had to be done,” said Weber. “They said ‘No, there was no other testing or anything that needed to be done.'”

In a couple of days, police were at her door and took Zayvion to the doctor.

“She checked him out, all his vitals were stable,” she said. “They already had a foster parent in the room, in the room to remove my son before they ever proved … before they ever proved there was an emergency situation.”

This practice—overly suspicious government officials seizing children from their parents—isn’t confined to Minnesota. In Chicago, a mom named Stephanie took her toddler, “A,” to the doctor because the girl’s arm seemed tender. The doctor said it was probably just a case of “nursemaid’s elbow,” but suggested mom follow up at the hospital, where it was discovered that the girl had a fracture. Emergency room doctors assured Stephanie that fractures were very common in toddlers learning to walk. However, the one doctor on staff who specialized in “child abuse pediatrics,” thought otherwise.

The Family Defense Center in Chicago took the case. In its newsletter, the group writes that the Department of Child and Family Services allowed the child to go home:

….but only on the condition that Stephanie move out of her own home and have supervised contact with A. Because Stephanie has no relatives in Chicago, her parents flew to Chicago each week from the San Francisco Bay Area to care for A. This exhausting ordeal continued for nearly four months.

During the investigation, DCFS blatantly ignored the opinions of the leading orthopedists and relied exclusively on the child abuse doctor’s opinion. In March, the State’s Attorney’s office filed a petition to take custody of A., initiating a court proceeding that lasted for two and a half months.

Finally, in mid-May, the State’s Attorney’s office concluded that it did not have enough evidence to proceed further, and it asked the juvenile court judge to dismiss the petition. Eventually, the “child abuse” doctor rescinded his conclusion that abuse had caused the fracture.

While the Minnesota group would like CPS to shut down immediately on the grounds that its practices are unconstitutional, there are, of course, horrific tales of children truly abused by their caregivers. In those cases, CPS can save lives.

Emily Piper, commissioner of Minnesota’s Human Services, released a statement saying:

Every day, trained professionals in counties across Minnesota go to work to protect our children and families. To call their work ‘kidnapping’ is an affront to the extraordinary service they perform for all of us, particularly the most vulnerable children in our community. Our highest priority is keeping children safe and Minnesota’s child protection system is an integral part of that work.

Mitchell, the Minnesota dad who started the anti-CPS group, thinks financial concerns improperly influence the agency’s practices. He told Fox 9, “[CPS] can’t even start collecting the money until the child is taken out of the home, put into foster care, then they can start billing a minimum of one social worker a month and one supervisor a month per child.”

Diane Redleaf, legal director of the National Center for Housing and Child Welfare and author of the forthcoming book, They Took the Kids Last Night: How the Child Welfare System Puts Families At Risk, summed up the problem in an email to me:

Far too many children in far too many states are being taken from parents for reasons that defy logic and common sense, magnified by racial and class biases. Instead of supporting reasonable parent decisions, child protective services has become an integral part of the surveillance society. This has become especially insidious where health care providers work hand in hand with police and caseworkers when children show up for routine or not-so-routine care.

We need to get back to a system in which only cases in which there is clear and convincing evidence of serious imminent harm to the child at the hands of the parent [warrant intervention]. The Minnesota parents are simply demanding a child welfare system that protects children and families—something that is everyone’s right.

The answer is to stop incentivizing both worst-first thinking and the seizure of kids whose loving parents are just trying to do their best.

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Preview Of Friday’s “All-Important” OPEC Meeting

Heading into Friday’s much anticipated OPEC meeting in Vienna, the focus has shifted from (declining) global demand-side concerns to specific supply-side actions, and while it is broadly expected to conclude with an oil production increase –  the first since the historic production cut agreement in late 2016, is set to be contentious with members Iran, Venezuela and Iraq arguing against a hike proposed by Saudi Arabia and non-member Russia.

Here is a brief summary of what to expect:

  • Weekend reports noted that Russian Energy Minister Novak stated OPEC and non-OPEC countries will discuss raising oil
  • output by 1.5MMb/d in Q3 only.
  • Russian Energy Minister Alexander Novak said June 14 that a collective increase of as much as 1.5m b/d is being considered in conjunction with Saudi Arabia.
  • Meanwhile, Iran said on Sunday that 3 OPEC members – Iran, Iraq and venezuela – would veto the proposed increase.
  • That counters Saudi Arabia’s oil minister who said on June 14 that it’s “inevitable” that OPEC and its allies will decide to boost output gradually.
  • Saudi officials have been discussing different scenarios that would raise production of OPEC and allied producers by between 500k b/d and 1m b/d, people familiar with the matter said last week.
  • However, countering this, a Monday morning report from Bloomberg noted that OPEC is said to discuss an output hike of only 300k-600k bpd, while Saudi and Russia are said to work on making the oil alliance permanent. Furthermore, OPEC members are said to be looking for a compromise to overcome the Iran dissent
  • According to a Bloomberg survey, OPEC and allies will probably boost output:
    • 18 out of 31 analysts predicted an increase in the June 12 poll
    • Most predicted +500k b/d; range was +180k to +1m
  • Bloomberg tanking-tracking analysis on June 15 showed Iranian oil exports dipped in the first half of June, a sign that President Trump’s re-imposition of sanctions may be deterring buyers

In terms of Vienna logistics:

  • OPEC’s International Seminar is Wednesday, Thursday, with participation of all OPEC ministers, CEOs of Sonangol, BP, Total, among others. Click here for program.
  • OPEC’s formal, policy-setting ministerial meeting is on Friday, including a session that involves certain non-OPEC nations.

Finally, with Trump making increasingly louder noises that he won’t accept higher oil prices (most recently last week), and warning OPEC not once but twice on Twitter to produce more, it is no surprise that WTI dropped to its lowest price in the past month in the overnight session, although it has since rebounded modestly on hopes the OPEC production cut could be smaller than expected.

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Stop Trying to Get Workers Out of Their Cars: New at Reason

If you hate urban sprawl, you’re probably familiar with the complaints of the “smart growth” movement: Roadways blight cities. Traffic congestion is the worst. Suburbanization harms the environment. Fortunately, say these smart growthers, there is an alternative: By piling on regulations and reallocating transportation-related tax money, we can “densify” our urban communities, allowing virtually everyone to live in a downtown area and forego driving in favor of walking or biking.

Smart growth proponents have been gaining influence for decades. They’ve implemented urban growth boundaries (which greatly restrict the development of land outside a defined area), up-zoning (which tries to increase densities in existing neighborhoods by replacing single-family homes with apartments), and “road diets” (which take away traffic lanes to make room for wider sidewalks and bike lanes).

Alas, there are inherent flaws in the “smart growth” approach—beginning with the idea that it makes sense for everyone to live and work in the same small area, writes Bob Poole in the latest issue of Reason.

View this article.

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