Month: July 2019

Iran has issued a surprising contradiction to the official US account of Thursday’s drone downing. President Trump had announced that the amphibious assault ship, the USS Boxer, shot down an Iranian drone in the Strait of Hormuz in a defensive action. The president said in a press briefing it was “immediately destroyed,” when it came within 1,000 yards of the ship according to the president, “threatening the safety of the ship and the ship’s crew.” 

But Iran denied losing any of its drones following the perplexing statement from Iranian Foreign Minister Javad Zarif yesterday evening saying he was not be aware of any drone downing following Trump’s announcement, according to Reuters. “We have no information about losing a drone today,” Zarif had told reporters at the United Nations. Instead, Iranian officals are now suggesting the US Navy actually shot down its own drone by mistake. Iran’s Deputy Foreign Minister Abbas Araghchi said on Twitter early Friday:

“We have not lost any drone in the Strait of Hormuz nor anywhere else. I am worried that USS Boxer has shot down their own UAS (Unmanned Aerial System) by mistake!“ 

And Iran military spokesman, Gen. Abolfazl Shekari, was also quoted by the semi-official Tasnim news agency as saying that “all Iranian drones that are in the Persian Gulf and the Strait of Hormuz, including the one which the U.S. president mentioned, after carrying out scheduled identification and control missions, have returned to their bases.”

We have not lost any drone in the Strait of Hormuz nor anywhere else. I am worried that USS Boxer has shot down their own UAS by mistake!

— Seyed Abbas Araghchi (@araghchi) July 19, 2019

According to President Trump’s account of the incident, the Iranian operators of the drone refused calls to stand down, after which it was “immediately destroyed,” when it came within 1,000 yards of the ship, “threatening the safety of the ship and the ship’s crew.” 

Trump has called on “other nations to protect their ships as they go through the Strait,” also as a State Department official told Bloomberg that the elite Islamic Revolutionary Guard Corps which patrols the area has kept up “continued harassment” of vessels in and around the strait.

I want to apprise everyone of an incident in the Strait of Hormuz today, involving #USSBoxer, a U.S. Navy amphibious assault ship. The BOXER took defensive action against an Iranian drone…. pic.twitter.com/Zql6nAUGxF

— Donald J. Trump (@realDonaldTrump) July 18, 2019

Concerning the now deeply conflicting narratives over the downed drone — which Tehran is now saying was actually American, but which Washington says was clearly Iranian— the evidence is out there somewhere in the Persian Gulf, and assuming it’s recovered and presented to the world, could prove hugely embarrassing to one side or the other, most especially the White House if its claims are wrong.

via ZeroHedge News https://ift.tt/2Z1ivr1 Tyler Durden

NY Fed President John Williams screwed up… or did he? Since he “academically” strawman’d a 50bps rate cut – which the market instantly soaked up, priced-in, and looked for moar – a Fed spokesman (and The Fed’s Jim Bullard) have since desperately walked-back the comments back towards a preference for a 25bps cut.

This has erased the spike in 50bps rate-cut odds (from 35% to 71% and back down to 35%) and retraced the dollar dump that Williams created…

However, as former fund manager and FX trader Richard Breslow, there are important rules governing any sort of effective communication strategy, made all the more important when financial markets are on tenterhooks. One of them is that it’s the responsibility of the speaker to make sure their message was successfully delivered. It’s not on the listener to figure out what, in hindsight, they were meant to hear. Forget that and you are asking for trouble.

Via Bloomberg,

This was one of the first lessons drilled into the heads of people new to a trading floor. And for good reason. Because when it wasn’t observed, things inevitably didn’t end well. And make no mistake, Thursday’s “miscommunication” was perfectly analogous. This wasn’t a case of algorithms gone wild. A lot of very smart people know what they heard. Despite the walk-back, I suspect there remains a number of people who will cling to the notion that where there is smoke, there is fire. Now it remains to be seen what the price tag will be.

It isn’t insignificant that trading volumes were quite high in the Asia session. A lot of interest-rate products changed hands. The early hours of the session saw Treasury volumes running three times normal. It wasn’t just U.S. securities trying to price and reprice themselves. Euribor futures traded at the same time at five times average volumes.

Heading into the weekly close, it’s worth taking a look at various assets to see if there is any lasting technical damage. Although, trading may be sloppy Friday, so I wouldn’t sharpen any pencils too finely. What may complicate matters further is that traders will need to decide whether to reestablish positions that were stopped out. And whether to stick with or head for the hills on new ones. It may not end up being as quiet a day as one would normally expect.

Foreign exchange should have the least difficulty righting itself. The Dollar Index held where it had to. And the euro has so far failed miserably in attempting a topside run. After all, the ECB is unlikely to let the possibility of a more dovish than expected FOMC go to waste. DXY will look very different outside of a 96.80 to 97.15 range. Both doable, and it probably won’t require giving it more room than that to get the lay of the land.

Equities have proven once again the perils of investors trying to stay short. But nothing has really changed for them. S&P 500 would need to get back above this week’s highs or back below Wednesday’s low to really change anyone’s opinion. Although that is probably giving it too much room. At least on the downside.

Emerging-market currencies are more straightforward. And relevant because Thursday’s action put them back into vogue. The MSCI Emerging Market Index has so far topped out almost exactly where it did four times earlier this year. That’s the level to watch. Back below the week’s lows and they too will look different. But, in truth, they don’t look as interesting as they sound.

Ten-year Treasuries have stayed safely within no-man’s land. And none of the very widely agreed upon levels have been tested. The two-year pivot at 1.80% isn’t too far away.

Twos are messy and require a fundamental view to go along with any trades

With gold, traders keep giving up location and paying the price for it. There are lots of bids below and plenty of supply above. Fading extremes is the only way to give yourself a chance of sticking with a position.

As far as Fed funds futures are concerned, I’m not ready to touch them with a 10-foot pole.

via ZeroHedge News https://ift.tt/2SrE95j Tyler Durden

A plan to ‘Storm Area 51‘ in search of aliens on September 20th started out on Facebook as “kind of a joke” which spiraled out of control, according to the guy who created the event.

“I posted it on like June 27th and it was kind of a joke,” Matty Roberts told Nevada’s KLAS-TV. “And then it waited for like three days and like 40 people, and then it just completely took off, out of nowhere. It’s pretty wild.”

Now, over 1.7 million people have signed up for the Facebook event, with another 1.3 million people having expressed interest in the event.

Roberts, who had initially communicated with NPR anonymously via Facebook messenger, says he was worried that the FBI would show up at his house.

Roberts says he came up with the idea after Joe Rogan interviewed Area 51 whistleblower Bob Lazar and filmmaker Jeremy Corbell. During the interview, Lazar claims to have been involved in all types of alien matters while working at a branch of Area 51 known as “S4,” where he was tasked with reverse-engineering the propulsion system on one of nine flying saucers kept on the base.

Lazar said this of the inside of a UFO: “It’s a very ominous feeling because everything is one color. It’s like a dark pewter color. There are no right angles anywhere. It’s as if somebody took a model and fashioned it out of wax and then heated it just for a short time so everything melted. Everything looks like it’s fused together. Everything has a radius, a curvature where two items meet. It’s a really weird looking thing. There was almost nothing, other than a small foldable hatchway, that looked recognizable. Everything was really unworldly.”

Needless to say, the “Storm Area 51” event has attracted a ton of attention.

The event — a tongue-in-cheek attempt to find aliens hidden by the government — has taken on a life of its own in the internet zeitgeist, receiving nods from celebrities and brands while also turning into its own meme on the short-form video app TikTok.

Celebrity chef Guy Fieri jokingly offered to cater the event with radioactive ribs. Bud Light created an Area 51-themed beer can. And MoonPie naturally got in on the fun. –NBC News

Rapper Lil Nas X even came out with a special alien-themed video for his hit, “Old Town Road.”

Roberts says that while he doubts the group will form an actual army to make a run at Area 51 this September, he’s met “some pretty great people” along the way who are planning a safer event, per CNN.

The Air Force, meanwhile, has issued a warning that is not a joke – warning that “any attempt to illegally access the area is highly discouraged.”

via ZeroHedge News https://ift.tt/2Z1jzvc Tyler Durden

Authored by William Suberg via CoinTelegraph.com,

United States regulator the Commodity Futures Trading Commission (CFTC) is reportedly investigating derivatives giant BitMEX.

image courtesy of CoinTelegraph

CFTC wants to know if Americans using BitMEX

According to sources citing people familiar with the matter speaking to Bloomberg on July 19, the CFTC suspects that BitMEX, which is registered in the Seychelles, allowed U.S. residents to use its platform to trade.

Under current law, the U.S. is one of the countries excluded from using BitMEX and similar crypto-based financial services, but users may have sought to circumvent the geoblock using services such as VPNs.

The investigation, details of which have not yet been confirmed by either BitMEX or the CFTC, came to light on social media via Bloomberg journalist Tim Culpan. 

Bitcoin was under heavy pressure as the news broke Friday, dropping around $500 in minutes to target $10,000.

Roubini calls BitMEX a money laundering ‘rekting racket’ 

BitMEX remains in the spotlight this week after a showdown between CEO Arthur Hayes and serial Bitcoin naysayer Nouriel Roubini earlier in July.

Following the heated debate, Roubini hit out at Hayes for delaying the release of a video recorded for the occasion. 

On Wednesday, meanwhile, Roubini heightened the stakes, publishing what he said was incriminating evidence of malpractice at BitMEX while openly insulting both Hayes and his platform.

Roubini described his report as “my new column where I expose the shady rekting racket that is (BitMEX) run by the thug (Hayes): evasion of AML/KYC, front-running, insider trading, massive scale money laundering, gouging of clients, etc.”

“It is high time that US and other law-enforcement agencies stepped in. So far, regulators have been asleep at the wheel as the crypto cancer has metastasized. According to one study, 80% of “initial coin offerings” in 2017 were scams. At a minimum, Hayes and all the others overseeing similar rackets from offshore safe havens should be investigated, before millions more retail investors get scammed into financial ruin.

Even US Secretary of the Treasury Steven Mnuchin – no fan of financial regulation – agrees that cryptocurrencies must not be allowed to “become the equivalent of secret numbered accounts,” which have long been the preserve of terrorists, gangsters, and other criminals.“

via ZeroHedge News https://ift.tt/2Ycfwz6 Tyler Durden

A new resolution introduced by Senators Ted Cruz (R-TX) and Bill Cassidy (R-LA) would “properly identify” Antifa as “Domestic Terrorists.”

Introduced Thursday, the resolution defines Antifa as “a movement that intentionally combines violence with the group’s alt-left positions,” and “represents opposition to the democratic ideals of peaceful assembly and free speech for all.” 

The measure then lists several examples of Antifa behavior, including: 

• Assaulting conservative journalist Andy Ngo in February and June of 2019, putting him in the hospital. 
• Doxxing ICE employees.
• Confronting an ICE officer when he went to pick up his daughter from summer camp, as well as plastering “his name and photo” on flyers outside his home labeling him as part of the “Gestapo.”
• Explicitly rejecting the authority of law enforcement to
• “protect free speech and stop acts of violence.”

⚠️🚨READ: 🇺🇸Senate Resolution proposal presented to designate ANTIFA as a domestic terrorist group. https://t.co/Wr68qPMIBd pic.twitter.com/Em9uOg5HeG

— NewsChute (@NewsChute) July 19, 2019

After Ngo was beaten and robbed by members of Portland’s Antifa cell, a GoFundMe established for the journalist raised $195,680 out of its original $50,000 goal after an outpouring of support. 

First skirmish I’ve seen. Didn’t see how this started, but @MrAndyNgo got roughed up. pic.twitter.com/hDkfQchRhG

— Jim Ryan (@Jimryan015) June 29, 2019

As noted by The Blaze, however, labeling Antifa as “Domestic Terrorists” may also require an entirely new law. 

federal law does not have the same clear-cut designation for domestic terrorism organizations that it does for foreign terror organizations (FTOs), explained Andy McCarthy in a 2017 column at National Review. 

“There are federal-law processes for designating foreign and international terrorism because defending against foreign threats to national security is primarily a federal responsibility,” McCarthy explained, because foreign operatives have fewer civil rights protections than American citizens and that the best weapon against domestic terror is local law enforcement, not federal. –The Blaze

Portland, meanwhile, is mulling a ban on wearing masks at protests in an effort to crack down on Antifa violence.

via ZeroHedge News https://ift.tt/2JPhbkX Tyler Durden

Following June’s dip in ‘hope’, UMich Sentiment was expected to improve in preliminary July data but it disappointed in most aspects.

• Headline Sentiment rose from 98.2 to 98.4 (but missed 98.8 exp)

• Current Conditions dipped from 111.9 to 111.1 (missing 112.8 exp)

• Expectations inched higher from 89.3 to 90.1

Still close to the best level in more than a decade

“ Favorable trends in personal finances remained widespread,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

“These favorable financial expectations were supported by gains in household incomes and wealth.”

June’s surge in buying conditions dipped in preliminary July data…

However, perhaps most notable – given The Fed’s focus – longer-term inflation expectations spiked from 2.3% to 2.6%…

The Consumer Expectations Index falls as inflation expectations rise, signifying that consumers view higher inflation as a threat to economic growth.

“Consumers’ views appear to be more consistent with the stagflation thesis, which holds that inflation and unemployment move in the same direction. This thesis is more consistent with how consumers process and organize diverse bits of news about the economy.”

Additionally, the reading of expectations for personal finances rose to 136, matching the highest level since 2004.

The share of households that expected interest rate increases fell to 44%, the lowest since May 2013, while 19% expected rates to fall, the most in 10 years.

via ZeroHedge News https://ift.tt/2XY54vT Tyler Durden

Blain’s Morning Porridge, submitted by Bill Blain

“I don’t know, lad. It’s like no cheese I’ve ever tasted. Let’s try another spot. ”

Tomorrow is the 50th anniversary of Man on the Moon. Extra points for anyone who gets this morning’s moon connected quote. This morning’s photo is my completed Lego Lunar Lander. Yep. I know what you are thinking… 50 years after spending 4% of US GNP to enable Man to achieve the technological marvel of reaching the moon, the small boy who watched it has gone back to playing with Lego. It’s confirmation mankind’s evolutionary curve has peaked and it’s all down here for now.

(Fellow Baby Boomers – that’s the first time I’ve touched Lego since the kids were young, and its brilliant fun! Go buy some. I’m thinking of putting a Lego play pit in the office!)

Back in the Real World

Netflix shook markets. It was a “Wake up smell the coffee moment. It’s amazing how folk have woken up to the reality: Netflix is struggling. FANG becomes FAG. Which means Netflix’s days as a market disrupter are over.

It pioneered streaming as a business, but now is facing competitive pressures it can’t hope to beat with its current model. Its high content spending to capture subscribers appeared to be working in a competition free environment, but today’s reality is subscribers have choice where to go for quality content. Netflix’s library of classics are going back to their owners, and even they admit their current production wasn’t good enough to attract new customers. Which means they have a problem going to the market for more money to spend on more content to attract customers – who are going elsewhere.

If that all sounds a bit familiar – go remind yourself what happened to Blockbuster.

And then there is Boeing. If you think a $5 bln accounting charge is the end of the B737 Max saga, then think again. That number will cover the costs of the airlines forced to reschedule and cancel flights, replacement aircraft, and other charges from customers, but I don’t think it will cover the planned class action suites being envisioned by the families of the 346 dead passengers. Nor will it cover potential regulatory fines that may be levied. I suspect $5 bln is just a first number. 

The damage is still piling up. There is still no clear timeline to get the plane back in the air. They are piling up on Airplane maker’s parking lots. They cost lots to build, and Boeing doesn’t get its money till they are delivered. US Transportation Secretary Elaine Chao said: “The FAA will lift the aircraft’s prohibition order when it is deemed safe to do so. That is the bottom line. There is no timeline.”

What’s Boeing’s problem? Fixing the Max is proving more difficult than ever expected. After years of essentially letting Boeing inspect and certify itself, I’m told the FAA are making sure they are being seen to be involved, and are “supervising” every aspect of the fix. The company is still working on software patches to solve the issues, but apparently every solution thus far has uncovered more problems. The flight control computers on fly-by-wire aircraft are enormously complex – a software patch isn’t a simple solution, which is why Boeing got such heat earlier this year for paying Indian software engineers $9 to write new code! 

And then there is the legacy effects. Pilots have made clear they don’t want to fly the plane. Passengers are not going to be happy. Boeing have a patch for that as well.. If you are going on holiday next year on a Ryan Air flight and your plane looks suspiciously new, and it’s got Boeing 737 8200 written on the nose, then you a flying in the Death-Trap B-737 MAX!

Quick word about Brexit: Arg!

The next chapter in this riveting saga of Britain tearing itself apart might get gory. Yesterday, Parliament voted to take a no-deal Brexit off the Table. That means our new Prime Minister – I shall give my considered view of whichever one of them wins on Monday – has to craft a New Deal with Europe, ask for another extension, or call a general election with the aim of getting a parliament that will support a no-deal. It could also result in a government that revokes Article 50!

Which means… we are exactly where we were a few months ago. There is not a majority in Parliament for any kind of deal. Therefore.. a general election beckons. And Boris (yep, its looking nailed on) may as well go for it early September. More woe and uncertainty. Excellent. Lets start gaming sterling..

Have a great weekend.

via ZeroHedge News https://ift.tt/2JPG7bN Tyler Durden

In yet another unprecedented move from our iconoclastic president, President Trump bashed New York Fed President John Williams in a tweet on Friday morning, saying the Fed doesn’t deserve any credit for engineering what has become the longest period of economic expansion in US history.

Yesterday, Williams sent the S&P 500 back into the green after he appeared to suggest that the Fed would deliver the 50 bp rate cut that the market so desperately craves. However, the NY Fed soon walked back Williams extremely dovish comments, saying Williams’ words didn’t reflect “potential policy actions” at the FOMC meeting later this month.

Now, Trump is praising Williams for acknowledging yesterday that the central bank raised rates too quickly, then bashed Williams for trying to take credit for the booming economy.

I like New York Fed President John Williams first statement much better than his second. His first statement is 100% correct in that the Fed “raised” far too fast & too early. Also must stop with the crazy quantitative tightening. We are in a World competition, & winning big,…

— Donald J. Trump (@realDonaldTrump) July 19, 2019

….but it is no thanks to the Federal Reserve. Had they not acted so fast and “so much,” we would be doing even better than we are doing right now. This is our chance to build unparalleled wealth and success for the U.S., GROWTH, which would greatly reduce % debt. Don’t blow it!

— Donald J. Trump (@realDonaldTrump) July 19, 2019

….Fed: There is almost no inflation!

— Donald J. Trump (@realDonaldTrump) July 19, 2019

Trump then insisted that there’s almost no inflation, which means the central bank should acquiesce to his demand to slash interest rates by a full percentage point and launch QE4.

….Fed: There is almost no inflation!

— Donald J. Trump (@realDonaldTrump) July 19, 2019

While the USD and short-dated Treasury yields have unwound their post-Williams move after the central bank’s walkback, US stocks opened higher…so they rallied on the comments AND the walk back.

At this point, economists and analysts agree that the Fed’s December rate hike was a mistake. And we’d bet money that Neel Kashkari is probably fuming about how the president hasn’t noticed his eagerness to cut to -1%.

via ZeroHedge News https://ift.tt/2JGOR5q Tyler Durden