Here’s our Friday roll up of the most bizarre stories we’re following this week.
Mom can’t sue cop who accidentally shot her child
On July 10, 2014, a Sheriff’s Deputy from a rural county in southern Georgia was in pursuit of a suspect when he wandered onto the property of Ms. Amy Corbitt.
Corbitt’s ten year old child was playing outside with several other children (as young as 3 years old), under the supervision of an adult.
The Sheriff’s Deputy came into the yard, drew his firearm, and ordered everyone (including the children) to get down on the ground.
Needless to say the children panicked, and several started crying at the sight of deadly weapons.
Then ‘Bruce’, the family dog, appeared. And according to witness reports, he was completely non-threatening.
Yet for some bizarre reason the Deputy tried to kill the animal, firing two rounds from his weapon at Bruce.
But the Deputy missed. And instead he accidentally shot Ms. Corbitt’s ten year old child in the leg.
You might be thinking– which is worse? The fact that the Sheriff’s deputy drew a deadly weapon in the presence of so many children… or that he tried to kill a defenseless animal… or that his aim was so poor that he shot a child instead…
I’m going with (d), none of the above.
As you might imagine, Ms. Corbitt filed a lawsuit against the Deputy. But a federal court just dismissed the lawsuit last week, stating that the Deputy has ‘qualified immunity’ because he shot the child as part of his official duties.
The Court also stated that “intentionally firing at the dog and unintentionally shooting [the child] did not violate any clearly established [Constitutional] rights.”
Professor of Feminist Studies investigated for discrimination
A Feminist Studies doctoral candidate recently drew the ire of a California University because she stated that being a woman requires not just a female personality, but a female body as well.
This feminist, who has also taught and created classes at the University, doesn’t like transgender men calling themselves women. She says they are appropriating female culture.
Her website says her research involves, “the mistaken idea that biological sex is socially constructed or possible to change… and the abusive and dangerously experimental practices of medically “transing” children and young adults.”
Because of this difference in opinion, students and faculty have alleged that she has violated anti-discrimination law, and are urging the administration to take action.
University officials are now investigating and soliciting feedback from students about how to proceed.
National Education Association not actually interested in education
The National Education Association (which represents school teachers) is the largest labor union in the US.
And the union just held its annual conference, where officials voted on a number of resolutions to more clearly define its policies and values.
At this year’s meeting, the NEA voted to teach “white fragility,” which is, they say, produced by a white supremacist culture.
They also endorsed abortion, reparations for slave descendants, and recognized the US as a destabilizing force in South America which has led to the current immigration crisis.
Yet when the resolution which would “make student learning the priority of the Association,” went up for a vote, it failed.
However you might feel about these issues, we can probably at least agree that the teacher’s union should probably be focused on… teaching… rather than politics.
Apparently white guilt indoctrination is more important than real education.
Colorado State University thinks the word ‘America’ is offensive
Colorado State University recently published an ‘Inclusive Language Guide’ to help people avoid words that might be considered offensive.
This list of offensive words includes “America” and “American” because it “erases other cultures and depicts the United States as the dominant American country.”
Gender words like male, female, ladies, and gentlemen should also be avoided, along with phrases like “food coma”, “starving”, “senile”, and “no can do”.
The Strait of Hormuz these days seems to be what the streets of Compton used to be in the 90s. Yesterday, Iran’s Revolutionary Guard said it has seized a “foreign vessel” for smuggling fuel. And this morning, news came in that the US has shot down an Iranian drone in the Strait of Hormuz, after it allegedly threatened a US warship. About a fifth of global daily oil consumption (c. 21 million barrels) passes through the Strait each day. Moreover, tensions between the US and Iran are more likely to increase than not (don’t forget Iran also shot down a US drone last month). So don’t expect a smooth ride for oil prices this summer.
From the Strait of Hormuz, to back to Europe. According to Bloomberg sources, ECB staff is looking into potentially reforming its inflation target from “below, but close to 2%” to perhaps a policy band around 2%. Such a band would explicitly make the inflation target symmetric (something President Draghi favours), which means that the ECB can better signal willingness to overshoot the target for a short while. As such, it can reinforce inflation expectations if it is seen as a signal of more (or a prolonged period of) loose monetary policy. However, our ECB watcher Bas van Geffen cautions that the risk of such a symmetric band is that the market could also interpret the lower bound as ‘good enough’, especially if inflation keeps undershooting the ECB’s aim. Suppose the band is 0.5%. This implies the ECB might target an inflation rate of 2.5%, but it also implies that an inflation rate of 1.5% is within the ECB’s target band. Hooray, the ECB has achieved its inflation target by simply changing the definition of the target. What does that mean for its credibility? To avoid that situation, a symmetric band should probably be accompanied by more stimulus to rekindle inflation expectations.
Staying in Europe, geographically at least, the chance of a hard Brexit just became a bit smaller. The UK parliament voted for an amendment that in effect blocks the Prime Minister’s ability to prorogue parliament. Candidate PM Boris Johnson has repeatedly said he would not rule out proroguing parliament, which would in effect stop parliament from voting against a hard Brexit before the October 31 deadline. Importantly, the amendment passed with a 315 to 274 vote, which sends an important signal to Johnson. Namely, that he will face fierce opposition from parliament if he tries to pursue a Hard Brexit. The pound sterling rose on the news, but is likely to stay volatile as the next Brexit-deadline nears.
Over to emerging markets, where the FX streets can be quite rough too. Bank of Indonesia (BI) cut interest rates by 25 bps yesterday to 5.75% and has signaled it is willing to cut rates more as it “sees open space for accommodative monetary policy “, even though inflation is within BI’s inflation target band (3.3%) and the country is enjoying decent economic growth (5%). The South African Reserve Bank (SARB) also cut its interest rate by 25 bps to 6.75% (as we expected), citing weaker business confidence, weak economic growth (SARB cut its growth forecast for South Africa in 2019 from 1% to 0.6%) and ZAR strength as of late. As such, BI, SARB and Bank of Korea (which also cut rates yesterday) have joined a growing list of central banks loosening monetary policy, seemingly taking advantage of strengthening EM currencies.
However, we believe the recent strength of EM currencies will be overshadowed in the medium term by a gloomier world economic outlook, a resurfacing US China trade war and resulting negative sentiment towards emerging markets. Indonesia, for example, not only depends heavily on China for exports, IDR is quite sensitive to US monetary policy and market sentiment given the country’s twin deficits and high amount of US dollar-denominated corporate debt.
via ZeroHedge News https://ift.tt/2Y2JwsO Tyler Durden
Mixed in with complaints about the amount of media coverage devoted to supporters at his Wednesday night rally chanting “send her back” about Rep. Ilhan Omar (D-Minn.) as he dug in on his attacks against the first-term congresswomen and three of her colleagues, President Trump took a twitter moment to do the “told you so” dance on Puerto Rico’s political crisis, and to blast establishment operative Tom Friedman for his hypocrisy… no holds barred.
With massive protests in the streets, Trump was quick to claim vindication for his criticism of Puerto Rico’s corrupt and incompetent government and political class, including San Juan mayor Carmen Yulín Cruz.
“A lot of bad things are happening in Puerto Rico.
The Governor is under siege, the Mayor of San Juan is a despicable and incompetent person who I wouldn’t trust under any circumstance, and the United States Congress foolishly gave 92 Billion Dollars for hurricane relief, much…
…of which was squandered away or wasted, never to be seen again. This is more than twice the amount given to Texas & Florida combined.
I know the people of Puerto Rico well, and they are great. But much of their leadership is corrupt, & robbing the U.S. Government blind! “
A lot of bad things are happening in Puerto Rico. The Governor is under siege, the Mayor of San Juan is a despicable and incompetent person who I wouldn’t trust under any circumstance, and the United States Congress foolishly gave 92 Billion Dollars for hurricane relief, much….
….of which was squandered away or wasted, never to be seen again. This is more than twice the amount given to Texas & Florida combined. I know the people of Puerto Rico well, and they are great. But much of their leadership is corrupt, & robbing the U.S. Government blind!
Then the President switched his focus, mocking New York Times opinion columnist Thomas Friedman’s appearance and dismissing the writer as a “phony” after he penned a column calling the president a “racist” and “woman-abusing jerk.”
“Thomas ‘the Chin’ Friedman, a weak and pathetic sort of guy, writes columns for The New York Times in between rounds of his favorite game, golf. Two weeks ago, while speaking to a friend on his cell phone, I unfortunately ended up speaking to Friedman.
We spoke for a while and he could not have been nicer or more respectful to your favorite President, me.
Then I saw the column he wrote, “Trump Will Be Re-elected, Won’t He?” He called me a Racist, which I am not, and said Rhode Island went from economically bad to great in 5 years because the…
…Governor of the State did a good job. That may be true but she could not have done it without the tremendous economic success of our Country & the turnaround that my Administration has caused. Really Nasty to me in his average I.Q. Columns, kissed my a.. on the call. Phony!“
Thomas “the Chin” Friedman, a weak and pathetic sort of guy, writes columns for The New York Times in between rounds of his favorite game, golf. Two weeks ago, while speaking to a friend on his cell phone, I unfortunately ended up speaking to Friedman. We spoke for a while and…
….he could not have been nicer or more respectful to your favorite President, me. Then I saw the column he wrote, “Trump Will Be Re-elected, Won’t He?” He called me a Racist, which I am not, and said Rhode Island went from economically bad to great in 5 years because the…..
….Governor of the State did a good job. That may be true but she could not have done it without the tremendous economic success of our Country & the turnaround that my Administration has caused. Really Nasty to me in his average I.Q. Columns, kissed my a.. on the call. Phony!
US big cap stocks have rallied to new highs in recent months, but just as in the rally from the low of the February 2018 mini-panic to the September/October 2018 peak, sizable divergences between different indexes have emerged in the process. New highs in the big cap indexes (DJIA, SPX, NDX) are once again not confirmed by small caps (RUT), the broad market (NYA) and a number of sub-sectors (such as the DJTA which is included in the chart below; according to Dow Theory, the DJTA must confirm moves in the DJIA to validate its trend).
From the top: weekly charts of DJIA, SPX, NDX, RUT, NYA and DJTA. The recent new highs in the three large cap indexes have not been confirmed by small caps and the broad market. Note also the sizable RSI/price divergence in the DJIA (which is mirrored by SPX and NDX) – this is a sign of faltering momentum that is often seen ahead of trend changes.
We last discussed a “lengthy non-confirmation” in mid-September 2018 (see “US Equities – Approaching an Inflection Point”). Everything we said about the phenomenon at the time applies to the current case as well. In fact, it could well be argued that the current spate of non-confirmations is even more ominous as they are stretching over a time period of approximately 18 months by now (the broad market represented by the NYSE Index has yet to overcome its January 2018 peak).
US big caps are diverging from European and Japanese stocks as well, which have failed to reach new highs in the recent rally. It is also noteworthy that stocks and junk bonds have studiously ignored weakening macro-economic data in recent months – the rationale is apparently that an impending easing of monetary policy by Fed and ECB is more important than the economy’s poor performance and the prospect of lackluster earnings. The idea seems to be that a resumption of monetary pumping will immediately arrest and reverse recent economic trends, which is quite a leap of faith.
More non-confirmations: S&P 500 Index vs. FEZ (Euro Stoxx 50 ETF) and the Nikkei 225 (all weekly).
Government bonds and gold have rallied strongly as well this year, and while these markets also reflect rate cut expectations, they normally don’t move in the same direction as stocks for very long. It is a good bet that something will eventually give. Considering the recent yield curve inversion, investors buying stocks and corporate bonds are probably too sanguine about what lies ahead.
The Roaring 20s vs. Today
In April we briefly discussed parallels between the current time period and the late 1920s (see “A Trip Down Memory Lane”). What prompted us to look into this was the fact that the sharp correction in the (normally) seasonally strong October-December period last year was actually a spitting image of the late 1928 correction. As it turned out, this was far from the only similarity between the two eras.
Incidentally, market participants ignored a weakening real economy in the final stretch of the 1920s bull market as well: economic data deteriorated noticeably in the course of 1929, but that did nothing to curb the stock market’s advance – at least initially.
Two women studying the ticker tape in a stock broker’s office in St. Paul, Minnesota in 1929.
Below is a long term chart comparison as a supplement to the charts we showed in April. Interestingly, there is quite a strong resemblance between the stock market patterns of the 1914-1930 and 1997-2019 periods. The cyclical bull and bear markets of the two eras differ slightly in terms of extent and duration, but the basic patterns look remarkably similar.
It should be noted to this that chart pattern similarities are not unusual per se – all liquid markets exhibit self-similar fractal patterning – both across different time frames and over different historical periods. At some point, these patterns will always diverge – particularly self-similarity between historical periods is usually quite limited.
It is fairly easy to find close correlations over time periods of one year or less, and more often than not they have no predictive value. Nevertheless, we find these long term pattern similarities quite interesting:
Booms and busts in the stock market from 1997 to 2019 and from 1914 to 1930. It is of course possible that the “acceleration phase” of the current bull market still has further to go, but the increase in market volatility, weak money supply growth, historically high valuations and the divergences discussed further above all suggest that a trend change is probably not too far off.
Conclusion
The divergences between the different indexes at the very least represent a heads-up that another correction is likely to begin fairly soon. In view of the increase in market volatility since the January 2018 peak, the next downturn will probably be quite a doozy again.
via ZeroHedge News https://ift.tt/2JNmNvU Tyler Durden
Jeffrey Epstein’s former IT contractor, Steve Scully, says that he ended his business relationship with the 66-year-old pedophile over hordes of young women all over his infamous private island, as well as an extensive collection of photographs depicting topless women displayed in the island’s various compounds, according to Good Morning America.
“There were photos of topless women everywhere,” said contractor Steve Scully, who said he worked for Epstein for six years beginning in 1999. “On his desk, in his office, in his bedroom,” Scully, a 69-year-old father of three girls, said of the private island dubbed “Little St. James.” –GMA
Of note, the FBI found a “substantial collection of photographic trophies of his victims (p. 12) and other young females” at Epstein’s Manhattan residence.
Scully told ABC News that he owned and operated a telecommunications business on nearby St. Thomas island when he was hired by Epstein to set up a communications network on Little St. James, also known as ‘Pedo Island.’ He visited the island over 100 times, and says that his memories of Epstein are ‘vivid.’
“He was the most intense person I ever met,” said Scully.
Epstein wanted phone or internet access nearly everywhere on the 72-acre island, Scully said, including in a secluded cove that the financier referred to as “the grotto.” Given his work in high-volume financial trading, Scully said, Epstein “never wanted a call to drop” because of weak digital coverage on the island.
The island’s primary compound was arranged in a “Danish style” layout — with individual bedroom suites in individual buildings surrounding a courtyard, Scully recalled, including a pair of large cockatoo statues lording over the island’s gardens. He said that at one point, he recalled Epstein wanting to change the name of the island from “Little St. James” to “Little Saint Jeff.”
According to Scully, that the strange ‘temple’ structure was actually a gym, which contained a massive framed photo of a topless woman.
On July 6, Epstein was arrested on charges of sex-trafficking of minors, and has been held at the Metropolitan Correctional Center (MCC) in lower Manhattan where he awaits trial. On Thursday, Judge Richard M. Berman denied his request to be released under house arrest pending trial.
Epstein, who maintained close ties with former President Bill Clinton and several other prominent individuals, has denied the charges.
New York Police Department (NYPD) took Epstein into custody at the Teterboro Airport in Bergen County, New Jersey, after he returned to the United States by private jet from France, sources told ABC News.” data-reactid=”24″ type=”text”>For those interested in a closer look at Epstein’s island, check out ‘Rusty Shackleford’s’ YouTube channel full of HD drone footage.
New York Police Department (NYPD) took Epstein into custody at the Teterboro Airport in Bergen County, New Jersey, after he returned to the United States by private jet from France, sources told ABC News.” data-reactid=”24″ type=”text”>For example, here’s a peek inside one of the very buildings Scully was talking about. You can see an Apple computer monitor in the window.
New York Police Department (NYPD) took Epstein into custody at the Teterboro Airport in Bergen County, New Jersey, after he returned to the United States by private jet from France, sources told ABC News.” data-reactid=”24″ type=”text”>
via ZeroHedge News https://ift.tt/2O68nfL Tyler Durden
This Doe v. Doe case was filed Monday in San Francisco Superior Court; plaintiff (described only as a “business executive”) is suing defendants for libel, false light, and harassment, but it’s basically a libel claim:
On or about May 21, 2019, Defendants caused to be published false and unprivileged statements directly injuring Plaintiff in his business and professional reputation by expressly stating in a written flyer … that Plaintiff is “an abuser.” The Flyer identified both Plaintiff and his employer’s names and their incomplete email addresses, as well as the hashtags: “#BelieveVictims” and “#SupportSurvivors.” … Defendants retained and paid individuals … to distribute copies of it outside of a nearby event space where Plaintiff was speaking at a private conference sponsored by his employer.
Now I understand why the plaintiff wants to be anonymous—if he is identified, then more people will hear of the accusations against him, even if he’s ultimately vindicated (or, as is more likely, the case eventually settles). But nearly all criminal defendants (except the very few whose identities have already become widely known), most civil defendants, and nearly all libel plaintiffs would prefer anonymity for the same reason; yet that’s not the way that our system works.
As Seventh Circuit Judge Richard Posner put it (in an opinion joined by Judges Frank Easterbrook and Ilana Rovner), “Judicial proceedings are supposed to be open, … in order to enable the proceedings to be monitored by the public. The concealment of a party’s name impedes public access to the facts of the case, which include the parties’ identity.” Indeed, even the great bulk of sexual harassment cases are litigated under both the plaintiffs’ and defendants’ real names.
There are, to be sure, exceptions; victims of outright sexual assault are generally allowed to use pseudonyms, for instance. Minors usually litigate under pseudonyms (whether John Doe or initials such as M.V.). Facial challenges to government actions—such as claims that a speech restriction is unconstitutionally overbroad on its face—are sometimes brought pseudonymously, with little controversy because the identity of the particular plaintiff is largely irrelevant in such cases (I was involved as a consultant in one such case). There are some other categories as well.
But, again, they are exceptions. That one has been accused—perhaps falsely—of bad behavior (e.g., sexual harassment as an employer) is generally not seen as sufficient to justify concealment of one’s name, whether one is a libel plaintiff, a sexual harassment civil defendant, or a criminal defendant.
What’s more, if the legal system really commits itself to concealing a libel plaintiff’s identity, it will have to suppress a great deal of information at the heart of the case, including the specific statement that’s alleged to be libelous. After all, even if the plaintiff’s name is redacted from the statement, there will often be enough to identify the plaintiff—for instance, in online libel cases, if the material hasn’t yet been removed, including any part of it in court filings may make it easy for people to just Google that part and see the whole statement. (The wrongful search optimization lawsuit I blogged about two weeks ago is an example of that; I found the underlying facts using Lexis, a pay service, but I think they could have been found via Google as well.)
That may push the court towards not just allowing pseudonymity but also sealing the allegedly libelous statements that are at the very heart of the litigation (as I’ve seen happen in at least two pseudonymous libel lawsuits). And that would make it much harder for the public to monitor how courts are resolving the libel lawsuits—and in the process monitor (and perhaps critique) when and why courts are restricting defendants’ speech, whether through damages awards or injunctions.
Of course, a court could adopt pseudonymity without sealing, perhaps on the theory that pseudonymity will at least expose the plaintiff’s identity less to casual searchers, even if determined reporters (and others) who really want to cover the case can figure out what’s going on. But my sense is that allowing a libel plaintiff to proceed as a Doe is often just the first step towards broader public access restrictions as well.
In any event, I thought I’d flag this case as an interesting example of this broader question—and an interesting consequence of the recent increase in public attention to alleged sexual harassment. I hope to write about a few other such cases in coming months as well.
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In October 1950, as U.S. forces were reeling from hordes of Chinese troops who had intervened massively in the Korean War, a 5,000-man Turkish brigade arrived to halt an onslaught by six Chinese divisions.
Said supreme commander Gen. Douglas MacArthur:
“The Turks are the hero of heroes. There is no impossibility for the Turkish Brigade.”
President Harry Truman awarded the brigade a Presidential Unit Citation.
In 1951, Turkey ended a neutrality dating to the end of World War I and joined NATO. In the seven decades since, there has been no graver crisis in U.S.-Turkish relations than the one that erupted this week.
Turkey has just received the first components of a Russian S-400 air and missile defense system, despite U.S. warnings this would require the cancellation of Turkey’s purchase of 100 F-35 Joint Strike Fighters.
“The F-35 cannot coexist with a Russian intelligence collection platform that will be used to learn about its advanced capabilities,” said the White House.
The sale has been canceled. The Turkish pilots and instructors training in the U.S. are being sent home. Contracts with Turkish companies producing parts for the F-35 are being terminated. Under U.S. law, the administration is also required to impose sanctions on Turkey for buying Russian weaponry.
Wednesday, the Pentagon warned Turkey against military action in an area of Syria where U.S. troops are deployed. The Turks appear to be massing for an incursion against U.S.-backed Syrian Kurdish forces Ankara regards as terrorist allies of the Kurdish PKK inside Turkey.
How America and Turkey avoid a collision that could wreck NATO, where the Turks field the second-largest army in the alliance, is not easy to see.
U.S. hawks are already calling for the expulsion of Turkey from NATO. And expulsion of U.S. forces and nuclear weapons from the Incirlik air base in Turkey in retaliation is not out of the question.
President Recep Tayyip Erdogan sounds defiant: “We have begun to receive our S-400s. … God willing, they will have been installed in their sites by April 2020. … The S-400s are the strongest defense system against those who want to attack our country. Now the aim is joint production with Russia. We will do that.”
While potentially the most crucial of recent developments in the Middle East, the U.S.-Turkish situation is not the only one.
The UAE is pulling its forces out of Yemen as Congress seeks to restrict U.S. support for Saudi forces fighting Houthi rebels there and to sanction Riyadh for the murder of Washington Post columnist Jamal Khashoggi.
If the UAE pulls out, and the U.S. cuts its military aid, the Saudis cannot prevail in a war they have been unable to win with our help after four years of fighting. And if the Houthis win, the Saudis and Sunni Arabs lose, and Iran wins.
This week, to strengthen the U.S. presence for any confrontation with Iran, President Donald Trump is sending 500 additional U.S. troops to Saudi Arabia.
While the U.S. and Iran have thus far avoided a military or naval clash that could ignite a major war, the “maximum pressure” sanctions Trump has imposed are choking Iran’s economy to death. How this ends in a negotiated resolution and not a shooting war remains difficult to see.
In Doha, Qatar, the U.S. is negotiating with the Taliban over the conditions for a withdrawal of the 14,000 U.S. troops still in Afghanistan. And with the Taliban controlling more of the countryside than they have since being ousted from power in 2001, and conducting regular suicide bombings in Afghan cities and towns, it is hard to see how this Kabul regime and its army prevail in a civil war when we are gone, when they could not while we were there.
In this new century, leaders of both parties have plunged our country into at least five wars in the Middle and Near East.
In 2001, after ousting the Taliban and driving al-Qaida out, we decided to use our power and ideas to build a new democratic Afghanistan. In 2003, we invaded and occupied Iraq to create a pro-Western bastion in the heart of the Middle East.
In 2011, Barack Obama ordered U.S. planes to attack Colonel Gadhafi’s forces in Libya. We brought him down. Obama then backed Syrian rebels to overthrow the dictator Bashar Assad. In 2015, U.S. forces supported a Saudi war to roll back the Houthi rebels’ victory in Yemen’s civil war.
None of these wars has produced a victory or success for us.
But taken together, they did produce a multitrillion-dollar strategic and human rights disaster. Meanwhile, China gained much from having its great rival, the world’s last superpower, thrashing about ineffectually in the forever wars of the Middle East.
“Great nations do no fight endless wars,” said Trump.
Yes, they do. As the British, French, Germans, Japanese and Russians showed in the last century, that is how they cease to be great nations.
via ZeroHedge News https://ift.tt/30FoLoT Tyler Durden
When even the otherwise bullish Goldman Sachs says that something wicked this way comes, and that the VIX is far too low for the coming close encounter, it probably makes sense to listen.
In his latest note published earlier today, Goldman’s derivatives quant, Rocky Fishman, points out that – with the S&P hugging the 3,000 level – the VIX and S&P realized volatility are not far from 2019 lows, as are many global index volatility levels. Indeed, while implied vol, i.e., VIX, may be just inches away from single digits, realized volatility over the past month has been even lower, or just 8%, which is marginally above recent lows set in April and September, while the VIX has been in the 12 and 13’s.
That said, while the VIX may be low, it could certainly be lower. As Fishman points out, “it is normal for the S&P to see low vol as the index deliberately tests new highs,” and he further adds that the mid-12 level in the VIX when the SPX first closed above 3000 “was actually higher than the VIX was when most levels above 2400 were first reached”; as a reminder the VIX spend much of the second half od 2017 below 10.
Yet even so, Fishman – and by implication Goldman – is confident that the market is too complacent, for the simple reason that there are just too many catalysts coming up, the least of which is the upcoming July Fed meeting:
To the extent expectations of Fed easing were the drivers of the recent equity valuation expansion, the coming FOMC meeting will be closely watched for indications of the extent of potential Fed easing over the next year.
Additionally, over the next two months there will also be debt ceiling negotiations and another Brexit deadline. And while Goldman expects trade negotiations with China to wrap up well before 2020 elections there is a high probability of market-moving trade developments in the coming months as well.
As a result, “the combination of these events and weakening economic growth seem incongruous with very low vol, and we expect higher vol in H2 than in 2019-to-date.”
Not convinced? Then here is JPMorgan’s Market Intelligence team, which has listed what it believes are the top 6 risks for markets right now (via themarketear.com)
Monetary expectations – If the big upcoming decisions (ECB on 7/25 and/or the FOMC on 7/31) were to disappoint, the multiple expansion process could stall (or reverse)
Earnings – the earnings risks have actually declined a bit in the last few days. Loan growth is one of the best proxies of underlying economic activity and this was a bright spot in bank earnings (bank earnings overall were mixed w/NII-NIM and trading coming in mixed-to-bad but loan growth was strong and loan growth guidance was actually raised by a few firms). The qualitative tone from bank CEOs/CFOs also has been sanguine, at least relative to sentiment among investors. This doesn’t mean the 2020 EPS consensus will improve but it should stop bleeding (for now).
US-China trade – Substantive negotiations don’t appear to be occurring but neither side is very eager to escalate tensions at the moment (notwithstanding the occasional bellicose utterance from Trump). Note that headline risk may be skewed slightly to the upside to the extent the Commerce Department begins handing out some (partial) waivers for Huawei or if China makes a few (token) agricultural purchases
Global Growth – data lately has been better-than-feared and while growth has certainly cooled from 2018 and earlier in 2019, evidence suggests trends may be stabilizing (the 7/17 Beige Book certainly doesn’t point to an economy in need of aggressive easing).
Non-China trade – Trump won’t ever not talk about trade but the risk of the US imposing incremental tariffs on Mexico, Eurozone (autos), Japan, etc., doesn’t seem very high
US fiscal policy – fiscal policy in Washington is never easy but neither side is showing any appetite to weaponize the debt ceiling and that is all stocks care about (whether or not a shutdown happens is another story but this isn’t something the SPX would be terribly bothered by).
Of course, none of this matters any more. As Richard Clarida delineated the Fed’s new thinking, the US central bank is no longer data dependent, but is pre-data dependent – i.e. a pre-cog Fed – and the Fed will no longer respond to data that is, but to what the Fed believes the data will be. And since at at some arbitrary point in the future the economy will certainly contract and a recession (or depression) will ensue, this is now a sufficient reason for the Fed to cut rates as much as it wants at any given moment. Which is precisely what it will do in three weeks, in the process likely sending the VIX back under 10.
via ZeroHedge News https://ift.tt/2GeFVlB Tyler Durden
US stock futures rose back over 3,000 as blowout results for Microsoft’s cloud business fed into a bullish mood despite confusing signs from NY York Fed President John Williams that the U.S. central bank was set to cut interest rates either once or twice (if one is academically inclined) this month, while Jim Bullard said one rate cut is enough, even as the market is now pricing odds as high as 70% of a 50bps in rate cuts.
Microsoft, now America’s most valuable company, gained 3.5% pre-market, after it topped analysts’ estimates at the end of a week of mixed corporate results in the United States and Europe. Boeing rose 1.7% after disclosing it would take a $4.9 billion after-tax hit in the second quarter on estimated disruptions from the grounding of its 737 MAX passenger jets. Morgan Stanley analyst Rajeev Lalwani said that was a sign that investors were comfortable with the size of the charge and Boeing’s production plans ahead of its results next week.
These bullish signal contrasted with the latest round of ample confusion from the Fed. One of the more notable announcements late on Thursday was the New York Fed’s announcement that comments made by Fed’s Williams were academic, based on research and not about potential policy actions at the upcoming FOMC meeting. As a reminder, earlier in the day, NY Fed head John Williams said it is better to take preventative measures on rates than to wait for a disaster to unfold and that the long-run neutral rate for US interest rates is 0.5%; the move sent the dollar tumbling. Elsewhere, Fed’s Bullard said he would listen to arguments for a larger rate cut, but thinks 25bps is appropriate; doesn’t think the situation calls for a larger cut, the WSJ reported.
US stocks had reversed losses and closed green at the end of a disappointing week for earnings as dovish comments from the two Fed officials spurred bets on a 50 basis-point cut. Schlumberger also rose in premarket trading after reporting revenue that beat estimates. Shares of the world’s largest oilfield services provider rose 1% as it announced better-than-expected revenue numbers and named company insider Olivier Le Peuch as new Chief Executive Officer
Over in Europe, the Stoxx Europe 600 wiped an earlier advance as Italian shares slid on speculation about snap elections, and after the New York Fed downplayed the comments as being more academic than potential near-term policy action.
Anheuser-Busch InBev NV bounced back from last week’s failed IPO of its Asian unit, after it sold Australian beer assets in a deal valued at $11.3 billion and kept alive the prospect of a share sale. The disposal of Foster’s and other brands to Asahi Group Holdings Ltd. less than a week after the IPO was pulled shows that the world’s largest brewer means business about cutting its $100 billion-plus debt pile. AB InBev shares rose as much as 5.6%, its biggest gain in 5 months.
Italy’s FTSE MIB (-1.2%) lags amid reports of a possible coalition crisis as ties between the League and 5SM sour, whilst speculation about the possibility of early Italian elections in Autumn did the rounds in Italian press on Friday. Sectors are mostly higher with some underperformance in defensive sector, albeit the Consumer Staples is buoyed by AB InBev (+4.3%) as shares surged amid the sale of its of its Australian unit to Japan’s Asahi for USD 11.3bln in a bid to nurse part of its debt. Furthermore, reports stated that the Co. is also mulling the sale of its South Korean and Central American units
Asian stocks advanced, set for the biggest gain in a month, as Japanese semiconductor firms led a technology rally amid optimism the chip industry is stabilizing. Most markets in the region were up, with Japan and South Korea among the best-performing countries. The Topix jumped 1.9%, supported by SoftBank Group and Toyota Motor, ahead of Japan’s upper house election on Sunday. A key inflation gauge fell in June, adding to pressure on the Bank of Japan to step up monetary stimulus. The Shanghai Composite Index closed 0.8% higher, snapping a three-day losing streak, as China Merchants Bank, Ping An Insurance and Kweichow Moutai provided the biggest boosts. China’s new stock venue designed for technology startups will start trading on Monday. India’s Sensex fell 1.3%, bucking the regional trend, amid disappointment that the government didn’t offer any respite to foreign investors registered as trusts from the proposed super-rich tax. ICICI Bank and HDFC Bank led large financial firms lower.
Adding to the dovish mood, investors are also looking to next week when the ECB could shed light on plans to ease monetary policy. Meanwhile, European bond yields mostly inched lower, with the exception of Italian BTPsas reported earlier. The Italian government debt saw increased yields after a solid rally this month and speculation over early elections.
In FX, the dollar outperformed all Group-of-10 peers amid signs of progress in U.S-China trade talks and after the Federal Reserve clarified that New York Fed President Williams’s comments on the need for action if the economy stumbles were not in reference to its July meeting. The pound slipped as the U.K.’s budget deficit widened while the euro weakened ahead of next week’s European Central Bank meeting. The Japanese yen fell and Treasuries slipped as risk sentiment improved.
In commodities, oil rose to $56 a barrel in New York, trimming a weekly decline which was exacerbated by refineries in the Gulf of Mexico restarting operations after the passing of storm Barry, with reports stating that only 19% of production is currently offline vs. 73% on Sunday. Upside in the complex is also supported by the rising geopolitical tensions after US President Trump stated that the US took defensive actions and downed an Iranian drone, a statement which was denied by Iranian officials. Gold fell and silver gained for a sixth straight day.
Expected data include the University of Michigan Consumer Sentiment Index. American Express and BlackRock are among companies reporting earnings.
Market Snapshot
S&P 500 futures up 0.3% to 3,007.50
STOXX Europe 600 up 0.6% to 389.25
MXAP up 1.3% to 161.01
MXAPJ up 0.9% to 530.19
Nikkei up 2% to 21,466.99
Topix up 1.9% to 1,563.96
Hang Seng Index up 1.1% to 28,765.40
Shanghai Composite up 0.8% to 2,924.20
Sensex down 1.2% to 38,421.36
Australia S&P/ASX 200 up 0.8% to 6,700.35
Kospi up 1.4% to 2,094.36
German 10Y yield fell 0.7 bps to -0.317%
Euro down 0.2% to $1.1257
Italian 10Y yield fell 3.9 bps to 1.203%
Spanish 10Y yield fell 1.3 bps to 0.392%
Brent futures up 1.4% to $62.78/bbl
Gold spot down 0.4% to $1,440.27
U.S. Dollar Index up 0.2% to 96.95
Top Overnight News
Fed Vice Chairman Richard Clarida and New York Fed chief John Williams stressed the need to act quickly if the U.S. economy looked likely to stumble, reinforcing bets the central bank could cut interest rates by as much as half a percentage point later this month
Federal Reserve Bank of New York President John Williams says the lessons for central banks from operating near the zero lower bound on interest rates is “don’t keep your powder dry” though a New York Fed spokeswoman later clarified that Williams’s prepared remarks were an academic speech and not about policy actions at the upcoming meeting.
European Central Bank policy makers will give a clear signal next week that interest rates are about to fall even further below zero, economists predict.
Foreign-exchange strategists say the risk of a U.S. move to weaken the dollar has risen after Treasury Secretary Steven Mnuchin said there’s no change in the nation’s currency policy “as of now.”
U.S. and Chinese senior officials spoke by phone on Thursday in Washington, the second call since the late June summit at which the two sides agreed to a truce in their ongoing trade conflict.
Mnuchin said the Trump administration and congressional Democrats have agreed on spending levels for a budget deal that could clear the way for raising the federal debt limit before Congress leaves town.
Japan’s key inflation gauge fell again in June, adding to pressure on the Bank of Japan to join its global peers in increasing monetary stimulus
UK Justice Secretary David Gauke is set to resign, while Chancellor of the Exchequer Philip Hammond and International Development Secretary Rory Stewart are also considering departing, The Times reports, citing unidentified allies. They seek to depart before Boris Johnson takes office
The UK should expect a “rigorous” assessment of its regulations before financial firms will be allowed to do business in the European Union after Brexit, according to a draft document to be presented by officials in Brussels later this month.
President Donald Trump said the U.S. “immediately destroyed” an Iranian drone that approached the USS Boxer near the Strait of Hormuz, the latest sign of escalating military tensions around the critical oil choke point
Oil snapped four days of losses after the drone incident, which stoked concerns crude flows from the Middle East may be disrupted.
Jeremy Hunt is counting on a late surge to beat Boris Johnson and become U.K. Prime Minister but YouGov reckons he’d have to have a huge swing behind him to win at this stage.
Asian equity markets were positive across the board as the region took its cue from the late gains in US following dovish comments from Fed’s Williams who suggested it is better to take preventative measures on rates and that the long-run neutral rate for US interest rates is 0.5%, although the New York Fed later clarified the rhetoric was academic and not about potential policy action this month. Nonetheless, ASX 200 (+0.8%) was led higher by strength in the mining sector especially gold-related stocks after the precious metal surged to a fresh 6-year high on the Fed comments and with NAB front running the gains for financials after it appointed RBS head McEwan as its next CEO. Nikkei 225 (+2.0%) outperformed as exporters cheered currency outflows, while Hang Seng (+1.1%) and Shanghai Comp. (+0.8%) conformed to optimism after US-China trade negotiators resumed discussions via telephone and with the PBoC’s liquidity efforts resulting to a net weekly liquidity injection of CNY 460bln. Finally, 10yr JGBs gained as they tracked the upside in T-notes amid the dovish Fed bets, but with upside limited by the lack of safe-haven demand and slightly softer demand in the enhanced-liquidity auction for 2yr-20yr JGBs.
Top Asian News
China’s New Nasdaq-Style Venue Set for Monday Trading Start
China’s Biggest Carmaker Braces for Its First Annual Sales Drop
China Minsheng Investment Can’t Pay Bond as Debt Woes Deepen
European equities have given up earlier gains and now trade mostly lower [Eurostoxx 50 -0.2%] as the initial upside momentum seen in Asia and on Wall St. following the dovish comments from Fed voter Williams somewhat waned. The New York Fed downplayed the comments as being more academic than potential near-term policy action. It’s also worth noting that the initial support for equities also came amid comments from Fed’s Vice Chair Clarida who acknowledged the increased global uncertainties and soft US inflation, which somewhat revived market pricing for a 50bps manoeuvre at the July 31st meeting. Italy’s FTSE MIB (-1.2%) lags amid reports of a possible coalition crisis as ties between the League and 5SM sour, whilst speculation about the possibility of early Italian elections in Autumn did the rounds in Italian press on Friday. Sectors are mostly higher with some underperformance in defensive sector, albeit the Consumer Staples is buoyed by AB InBev (+4.3%) as shares surged amid the sale of its of its Australian unit to Japan’s Asahi for USD 11.3bln in a bid to nurse part of its debt. Furthermore, reports stated that the Co. is also mulling the sale of its South Korean and Central American units. On the flip side, shares in Publicis (-8.4%) declined due to a cut in its FY 19 organic growth guidance, as such WPP (-3.0%) fell in sympathy.
Top European News
ECB Seen Priming Markets in July for Rate Cut After Summer Break
U.K. June Budget Deficit Widens Sharply Amid Spending Surge
Orlen Earnings Beat Provides Tonic for Languishing Polish Market
Salvini Flirts With New Elections as Russiagate Rumbles On
In FX, – The Buck continues to see-saw through US data points, survey findings and the final pre-FOMC commentary from Fed officials ahead of the black-out period that begins at COB today. On that note, Williams and Clarida provided ‘guidance’ and despite denials or clarification of the former rate expectations have shifted again, with the probability of a 25 bp or 50 bp ease now much closer to even vs circa 75%/25% after Thursday’s upbeat Philly Fed survey. In response, the Greenback weakened vs all major rivals and the index hit a 96.750 low before tentatively regaining 97.000 status and holding above support, as Usd/G10 pairs pare back or rebound from late yesterday/overnight extremes. Note, remarks from renowned dove Bullard are not really impacting as he repeats his preference for smaller policy adjustment, though would countenance arguments in favour of ½ point.
JPY – Having benefited most from the aforementioned Dollar retreat, and with added safe-haven premium gleaned via another US-Iran dispute (former claims that a drone was downed and latter denies any damage), the Yen is now ‘underperforming’. However, Usd/Jpy remains well below the 108.00 axis that has been constricting trade and with decent option expiries now capping the pair along with technical resistance (1.1 bn between 107.90-108.05, 55 DMA at 107.87 and daily chart level at 107.88).
EUR – The single currency is still flanked between 1.1200 and 1.1300 parameters with ECB policy stimulus weighing against Fed easing and only days separating the respective July policy meetings. Note also, Italian coalition Government conflicts are coming to a head and expiry interest may also be dragging Eur/Usd down given 1.2 bn rolling off from 1.1240-25 and 1.55 bn at 1.1210-00.
AUD/CHF/NZD/GBP/CAD – The Aussie ran up against some key chart hurdles ahead of 0.7100, like the 200 DMA (0.7090) after extending its rebound from just under 0.7000 with some encouragement from the US and China conducting trade dialogue over the phone. However, Aud/Usd is holding above 0.7050 where export bids are touted and if those are filled there are said to be more underlying buy orders between 0.7040-30 linked to 900 mn expiries residing from 0.7035 to 0.7025. Elsewhere, the Franc has faded into 0.9800 and Kiwi not far from 0.6800, while the Pound topped out around 1.2550 and the Loonie continues to pull-up on approaches to 1.3000, with Canadian retail sales data looming.
EM – Amidst widespread declines vs the Usd, Zar losses or rather retracement from post-SARB highs has been compounded by more SA political issues as current President Ramaphosa joins a former counterpart in the corruption dock. Rand currently closer to the base of 13.9410-8165 parameters.
In commodities, WTI and Brent futures are consolidating following the recent decline which was exacerbated by refineries in the Gulf of Mexico restarting operations after the passing of storm Barry, with reports stating that only 19% of production is currently offline vs. 73% on Sunday. Upside in the complex is also supported by the rising geopolitical tensions after US President Trump stated that the US took defensive actions and downed an Iranian drone, a statement which was denied by Iranian officials. Furthermore, IRGC said that Iran will release images to disprove US’ claim. WTI and Brent futures currently reside just above 56/bbl and 63/bbl and with little by way of notable DMAs given the recent slump in prices. Elsewhere, precious metal prices have drifted lower after rallying on the dovish comments from Fed voters Williams and Clarida coupled with the aforementioned geopolitical developments, in which gold hit a fresh 6yr high and briefly breached 1450/oz to the upside. Meanwhile, copper prices are also supported by the overall risk appetite. Finally, iron ore prices were mildly pressured as Iron ore exports from Australia’s port Hedland increased 6% M/M to a record high as miners increased shipments to meet targets.
US Event Calendar
10am: U. of Mich. Sentiment, est. 98.8, prior 98.2;
Current Conditions, est. 112.8, prior 111.9
Expectations, est. 90, prior 89.3
DB’s Jim Reid concludes the overnight wrap
via ZeroHedge News https://ift.tt/2Y0u4Ob Tyler Durden
After the U.S. invasion of Iraq in 2003 turned into a mess that led to an immense loss of life and years of violent havoc in the Middle East, the war’s backers flippantly declared that “everyone” agreed on the war. The invasion’s evolving justifications—Saddam’s supposed amassing of “weapons of mass destruction” to his alleged ties to Al-Qaeda—were overblown, but if everyone was in agreement then who could possibly second-guess the military effort?
At the Editorial Board of the Orange County Register, we produced one piece after another questioning the war. We even got in a spat with one Fox News personality, who took umbrage at criticism of the war while the fighting was going on. That was somehow unpatriotic. But the United States has been involved in endless conflicts. If Americans held their tongues while bombs are dropping, then when could they ever feel free to air their concerns?
“There is no real threat to the United States, only a theoretical one based on faulty premises,” I opined at the time. “It is unjust, in that it is not a war of last resort. It will run up tens of billions of dollars in costs, and it will lead to the limiting of civil liberties at home. Furthermore, America will be managing Iraq for years, perhaps decades, and our presence there is more likely to destabilize than democratize the region.”
Those points largely were correct. (This column isn’t about “I told you so,” by the way, but about “look how far we’ve come.”) Even the current GOP president has lamented that war. When Donald Trump recently called off airstrikes on Iran at the last minute, almost everyone expressed relief. It’s a new world ideologically and our long-standing foreign policy consensus is, finally, up for debate again. It’s taken long enough, but better late than never.
Many of us have serious concerns about our increasingly fractious political discourse, but it’s great that old coalitions are falling apart, new ideas are flourishing, and we’re seeing a rethinking of age-old international policies that have been off-limits to debate. It’s refreshing to see many conservatives abandon their kneejerk support for militarism—and nice to watch a prominent Democratic presidential candidate, former Sen. Joe Biden, held accountable for his support for the Iraq blunder.
One recent Boston Globe column highlights how much the ground has shifted. Both sides have their billionaire bogeymen. Conservatives dislike George Soros and liberals dislike the Koch brothers. But Soros and the Kochs are “uniting to revive the fading vision of a peaceable United States,” according to the article. They are working to end our “forever war” policies and “promote an approach to the world based on diplomacy and restraint rather than threats, sanctions, and bombing.” Bring it on.
The founding fathers were skeptical of empire. In his oft-quoted farewell address, George Washington warned against “the necessity of those overgrown military establishments which, under any form of government, are inauspicious to liberty, and which are to be regarded as particularly hostile to republican liberty.” This has been a constant thread even in modern times. We all know that President Dwight D. Eisenhower, a celebrated general, warned about the “military-industrial complex.”
During World War I—another costly, unnecessary conflict that led to horrific unforeseen consequences—progressive writer Randolph Bourne warned that “war is the health of the state.” Indeed it is. During wartime, the public becomes part of “the herd,” he wrote. It is reluctant to criticize its own government, which always is the main threat to our liberties.
These days, many of Trump’s supporters are paleo-conservatives, who have always looked askance at military adventurism. Presidential candidate Tulsi Gabbard, a member of Congress from Hawaii who served in the U.S. military in the Middle East and is a major in the Army National Guard, has been the most thoughtful Democrat on the subject.
She complained to National Public Radio about “leaders in this country from both political parties looking around the world and picking and choosing which bad dictator they want to overthrow.” She opposes “sending our military into harm’s way and then trying to export some American model of democracy that may or may not be welcome by the people in those countries.”
These are unusual political times. We’ve got many evangelical Christians celebrating the “miracle” of a president who, let’s just say, has a spotty moral background. We’ve got “limited government” conservatives championing government control of the economy through tariffs and “big government” Democrats espousing free trade. And yikes—we’re even debating socialism again.
But the good news is things have gotten weird enough that Americans appear ready to consider a foreign policy based on peace and diplomacy. I didn’t believe that was possible in 2003 when the United States was invading Iraq, but it’s possible now—and that’s heartening even if everyone isn’t on board with it yet.
This column was first published in the Orange County Register.
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