“It’s time for a revolution in higher education. It’s time for a renegade university.”
That’s the sales pitch for Thaddeus Russell’s Renegade University (RU), a radical, innovative experiment in higher education that is inspired by his 2010 book A Renegade History of the United States. Russell argues that it wasn’t the Founding Fathers, straight-laced business tycoons, or moral crusaders that made America great but runaway slaves, ladies of the evening, bootleggers, and assorted other dropouts and discontents who defined and created our freedom. In online courses and events held around the country, Russell, a Columbia-trained historian who has taught at Barnard, Occidental, and other colleges, and his faculty offer bracing, engaging alternative takes on U.S. history, political philosophy, postmodernism, the war on terror, and more. Russell also hosts the Unregistered Podcast.
He spoke with Nick Gillespie while visiting New York to participate in a Reason/Soho Forum debate about postmodernism and libertarianism.
To read Thaddeus Russell’s Reason archive, go here.
Last fall, he debated legal blogger Ken White at a Reason event about censorship and social-media platforms.
Audio production by Ian Keyser.
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“It’s time for a revolution in higher education. It’s time for a renegade university.”
That’s the sales pitch for Thaddeus Russell’s Renegade University (RU), a radical, innovative experiment in higher education that is inspired by his 2010 book A Renegade History of the United States. Russell argues that it wasn’t the Founding Fathers, straight-laced business tycoons, or moral crusaders that made America great but runaway slaves, ladies of the evening, bootleggers, and assorted other dropouts and discontents who defined and created our freedom. In online courses and events held around the country, Russell, a Columbia-trained historian who has taught at Barnard, Occidental, and other colleges, and his faculty offer bracing, engaging alternative takes on U.S. history, political philosophy, postmodernism, the war on terror, and more. Russell also hosts the Unregistered Podcast.
He spoke with Nick Gillespie while visiting New York to participate in a Reason/Soho Forum debate about postmodernism and libertarianism.
To read Thaddeus Russell’s Reason archive, go here.
Last fall, he debated legal blogger Ken White at a Reason event about censorship and social-media platforms.
Audio production by Ian Keyser.
from Latest – Reason.com https://ift.tt/32vgC8n
via IFTTT
In a string of tweets, Trump quotes Louisiana Senator John Kennedy, who blasts the members of the “squad” – AOC, Ayanna Pressley, Ilhan Omar and Rashida Tlaib – as “left wing cranks” and “the four horsewomen of the apocalypse.” Kennedy blasted the Congresswomen as irredeemably dumb (“they’re the reason there are directions on a shampoo bottle”) and lamented the fact that Democratic presidential candidates are “falling over themselves to try and agree” with them.
Kennedy starts by accusing the four women of believing that America is “wicked in its origins” and that “we are all racist and evil.”
“In America, if you hate our Country, you are free to leave. The simple fact of the matter is, the four Congresswomen think that America is wicked in its origins, they think that America is even more wicked now, that we are all racist and evil. They’re entitled to their…..
…opinion, they’re Americans. Now I’m entitled to my opinion, & I just think they’re left wing cranks. They’re the reason there are directions on a shampoo bottle, & we should ignore them. The “squad” has moved the Democrat Party substantially LEFT, and…..
….they are destroying the Democrat Party. I’m appalled that so many of our Presidential candidates are falling all over themselves to try to agree with the four horsewomen of the apocalypse. I’m entitled to say that they’re Wack Jobs.” Louisiana Senator John Kennedy
After the lengthy quote, Trump followed up with a tweet knocking Democrats for getting nothing done on immigration, infrastructure, drug pricing or any other issue because they’re too busy “fishing” for dirt on the president with their various investigations into Trump’s finances, business interests etc.
The Democrats in Congress are getting nothing done, not on drug pricing, not on immigration, not on infrastructure, not on nothing! Sooo much opportunity, yet all they want to do is go “fishing.” The American people are tired of the never ending Witch Hunt, they want results now!
Fundamentally, Kennedy is right: Left wingers like AOC believe America was founded by evil colonialist racists and has shifted from perpetrating one horrible atrocity to another over the course of its nearly 250-year history.
via ZeroHedge News https://ift.tt/2JRgYOe Tyler Durden
With Bank of America reporting Q2 earnings this morning, the results of the big-4 are now all out, and the emerging picture is one where declining interest rates and future rate cuts threaten to gut the core revenue stream of the largest US banks to the point where US banks are in danger of being Europeanized.
To wit: for Q2, Bank of America reported an 8% increase in net income, which rose to $7.3BN from a year ago, resulting in EPS of $0.74, better than the $0.71 expected even as revenue of $23.1BN, up 2% on the year, came just short of the $23.25 expected. The 8% jump in net income was largely the result of cost-cutting with noninterest expense of $13.3 billion flat on the year, while interest tax expense actually declined by 6% to $1.6 billion, resulting in the net income jump.
As a result of modest revenue growth and flat or declining expense growth, BofA reported positive operating leverage for the 18th consecutive quarter.
Of course, with investors focused first and foremost on bank trading results, BofA came largely as expected, with 2Q trading revenue excluding DVA $3.27 billion, just above the estimated $3.26 billion, but 10% below last year’s $3.63 billion. The decline “reflects lower sales and trading revenue and lower investment banking fees, partially offset by a gain on sale of an equity investment (excluded from sales and trading revenue).”
Looking at the trading segments, FICC was a small beat while equities were a miss to expectations:
2Q FICC trading revenue excluding DVA $2.13 billion vs estimate $2.08 billion, and -7.1% y/y primarily due to lower client activity across most products.
2Q equities trading revenue excluding DVA $1.15 billion vs estimate $1.18 billion, and -12% y/y primarily due to weaker performance in EMEA derivatives vs. a stronger year-ago quarter.
At the same time, non-interest expense decreased 2% vs. 2Q18, driven by lower revenue-related compensation, while VaR remained subdued, at just $34 in Q2, down from 37 in Q1.
Yet while BofA’s trading division was lackluster for another quarter, similar to most of its peers, it was BofA’s consumer banking group that stood out, and extended its winning streak for another three months. Profits in the retail division helped drive overall profit to a record in the second quarter as loans…
… and deposits grew…
… while mortgage activity jumped even as provisions for bad loans posted a surprise drop from the first quarter as Total net charge-offs of $0.9B decreased $104MM from 1Q19, while the credit loss provision expense of $0.9B decreased $0.2B from 1Q19, and was well below the $1+ billion expected.
Overall consumer banking revenue of $9.7B increased $0.5B, or 5%, from 2Q18, driven primarily by NII, while noninterest expense increased 1% from 2Q18, driven by investments for business growth, including marketing, and higher compensation and benefits expense, largely offset by improved productivity and lower FDIC expense. On the deposit side, average deposits of $707B grew $19B, or 3%, from 2Q18 (53% of deposits in checking accounts; 92% primary accounts) while the average cost of deposits was 1.52%. Meanwhile, average loans and leases of $296B increased $16B, or 6%, from 2Q18, driven by growth in residential mortgages and small business.
“We see solid consumer activity across the board, with spending by Bank of America consumers up 5% this quarter over the second quarter of last year,” Chief Executive Officer Brian Moynihan said Wednesday in a statement.
But while investors glossed over both the 10% drop in trading revenue and the record jump in consumer banking revenue, where they punished the bank was for the same reason Wells was hammered yesterday as described in “Wells’ Interest Income Tumbles In Urgent Warning How Fed Will Cripple US Banks” – the bank’s Net Interest Income slumped to $12.2 BN from $12.4 BN in Q1, missing estimates of $12.3 billion as a result of “lower short-term rates (impacting variable-rate assets and improving long-term debt costs), higher bond premium amortization expense driven by lower long-term rates and higher funding costs in Global Markets.”
Demonstrating just how vulnerable big banks are to lower long-term rates, BofA’s Net Interest Maring slumped to 2.44% from 2.51%, missing the lowest sellside estimate
Bank of America’s net interest income – revenue from customers’ loan payments minus what the bank pays depositors — rose 3% to $12.2 billion, compared with the $12.3 billion average estimate in a Bloomberg MODL survey. The bank joined rival lenders including JPMorgan, Wells Fargo & Co. and Citigroup Inc. in reporting sliding net interest margins compared with the previous quarter, with BofA explaining that “asset sensitivity position increased, primarily driven by lower
long-term rates.“
In short, with the Fed set to cut rates, expect much more pain from banks.
Despite the NIM slump, CEO Moynihan remained optimistic on the economy:
“Our view of the economy reflects the activity by the one-in-two American households we serve, which points to a steadily growing economy. We see solid consumer activity across the board, with spending by Bank of America consumers up five percent this quarter over the second quarter of last year.”
Investors were less excited, with the kneejerk reaction to the net interest income miss lower, although the gap is slowly being filled as the BTFDers jump in.
via ZeroHedge News https://ift.tt/2xUcSyU Tyler Durden
Now that the EU’s anti-trust regulator is finished fining the bejeezus out of Alphabet, the European Commission is turning its attention to another American tech giant: Amazon.
The e-commerce giant is facing a formal EU anti-trust probe over its treatment of third-party merchants on its platform, a premise that doesn’t sound all that different from the EU’s investigation into Google’s AdSense advertising business (the EU hit Google with three multi-billion anti-trust fines over the past few years). In addition to the Amazon probe, the EU is also juggling investigations into Facebook, Apple and Twitter over violations of the EU’s new GDPR privacy laws.
According to WSJ, Amazon is suspected of “abusing its dual role as both the provider of a marketplace where independent sellers can offer products and a retailer of products in its own right.” In particular, the probe will explore whether “Amazon is using sensitive data from independent merchants to compete against them.”
The investigation could lead to formal charges, fines and orders to change business practices – but they could also be dropped, WSJ says.
Though, if the past is any guide, the latter option is unlikely. Also, the timing of this announcement is interesting, coming one day after Congressional hearings where lawmakers from both parties attacked Amazon, Apple, Facebook and Google for their market dominance.
It used to be that the Europeans were leading the anti-trust charge against the tech giants because, well, they’re all American companies, and there would be no political risks to fining American companies. Now, breaking up Amazon and the other tech giants might be the only issue that Elizabeth Warren and President Trump agree on. Facebook’s ill-timed push into finance with its Calibra foundation has only further incensed lawmakers, as evidenced by yesterday’s hearing.
On a related note, Germany’s antitrust regulator on Wednesday said Amazon has agreed to change its terms of service on its marketplace platform for third-party sellers after an unrelated, eight-month probe.
What only months ago looked like a remote possibility – the breakup of the big four tech giants – is looking increasingly probable. And though the FAANG stocks aren’t powering the rally like they once did, it’s still worth considering what kind of impact this could have on the bull market if the floor suddenly falls out from under tech.
via ZeroHedge News https://ift.tt/32yIwAb Tyler Durden
GoerTek, a Chinese firm that is one of Apple’s key contract manufacturers, will start testing the resilience of its manufacturing processes for the new generation of AirPods at one of its factories in northern Vietnam. This will mark the first production of wireless earbuds outside of China.
To help Goertek, Apple has asked its other suppliers to “support” Goertek’s efforts (by not hiking prices on components during this trial stage until Goertek can improve its economies of scale).
Apple has written to components suppliers to ask them to support Goertek’s efforts despite initially very small volumes, according to a communication seen by the Nikkei Asian Review. “Suppliers are requested to keep the pricing unchanged for the trial production stage, but this can be reviewed once volumes are increased,” said one of the sources with direct knowledge of the communication.
“The initial output will be limited, but it is easy to increase capacity once all the manufacturing procedures are running smoothly,” the person said.
Apple has long sourced its traditional EarPods – connected to the iPhone with wires – in Vietnam. However, until now, AirPods have been made in China by suppliers Inventec, Luxshare-ICT, and GoerTek. Apple refused to comment on production plans for AirPods.
The decision to shift AirPod production to Vietnam comes as Apple works to move 15% to 30% of production outside of China, where rising labor costs (a byproduct of the country’s accelerating development) and the trade-war tariffs have made depending completely on the mainland untenable.
Interestingly, just because Apple is ramping up production in Vietnam doesn’t mean it’s going to dramatically scale back its production in China – at least, not yet. Instead, the company will rely on what one analyst calls the “China Plus One” strategy.
“It’s very likely that Apple will adopt the “China plus one” strategy when it comes to diversification efforts,” said Chiu Shih-fang, a supply chain analyst at Taiwan Institute of Economic Research. That meant the company would increase production in countries outside China without reducing Chinese volume significantly at the start. “Reducing significant volumes of inside China is too sensitive now for Apple, as well as for its suppliers,” said Chiu. Moreover, initial diversification would involve “shipping some half-finished goods to the new destination and then assembling all these together. It will not build all the things from the beginning to the end,” Chiu added.
Apple is sensitive to any perception that it might not be as committed to the country which has been a pillar of its success over recent decades. China has strongly backed Apple’s manufacturing base, offering generous support for factories, infrastructure and energy and manpower costs. Over the last two decades the company’s presence has helped to create a high quality and deeply connected supply chain that is capable of mobilizing hundreds of thousands of skilled workers and components at short notice.
Vietnam boasts a number of advantages that make it an ideal alternative to China. Geographically, its nearby, which makes coordinating transnational supply chains easier. Labor is also cheaper. Though, with a population of just 95 million people, one-fifteenth of China’s, its workforce is constrained and the flood of new manufacturing activity could rapidly push wages higher.
“Many tech players are relocating or increasing production [in Vietnam] to avoid tariffs, given that it is close to China, and has a relatively complete supply chain compared with other Southeast Asian countries,” said Karen Ma, an analyst specializing in emerging markets at Hsinchu-based Industrial Technology Research Institute. “However, everyone is now worried that Vietnam could become overheated and might soon suffer labor shortages, as well as increased production costs.”
So, where will companies go when Vietnam becomes too expensive? Maybe President Trump has a point about the possibility of North Korea’s economy taking off like “a rocket ship” if Kim Jong Un would only surrender his nukes.
via ZeroHedge News https://ift.tt/2JC8rzO Tyler Durden
John Paul Stevens, the former leader of the Supreme Court’s liberal wing who started his career as a Republican anti-trust lawyer, died Tuesday at a hospital in Fort Lauderdale, Fla. He was 99.
According to the New York Times, which cited a statement from the Supreme Court, Stevens died from complications of a stroke that he suffered on Monday.
When Stevens retired from the Court in 2010, he was the second-oldest and second-longest serving justice to ever sit on the court after Oliver Wendell Holmes, who was eight months older than Stevens was when Holmes retired in 1932, and William Douglas, who served 36 years on the court (compared with Stevens’ 35).
Stevens has been relatively quiet in retirement, but he made headlines a couple of months ago when he spoke to WSJ to tout his new book “The Making of a Justice: Reflections on My First 94 Years.”
Stevens was nominated to the court by President Ford, and while many expected him to move the court to the right (he came from a family that was known for its opposition to FDR’s ‘New Deal’), he swiftly became a liberal leader.
In one of his final interviews, with WSJ, Stevens expressed frustration with the court’s unwillingness to take on the issue of partisan gerrymandering: “I’ve been disappointed in their failure to treat political gerrymandering just like racial gerrymandering, because it’s certainly easier to identify which voters belong to a particular party than knowing what their race is,” he said.
via ZeroHedge News https://ift.tt/2JLosSM Tyler Durden
75 years ago this month, a group of 744 delegates from around the world gathered at the very posh Mount Washington Hotel in New Hampshire to build a brand new global financial system.
The year was 1944. World War II was still raging in Europe and the Pacific.
But with the successful invasion of Normandy well underway, the Allies knew that Hitler’s days were numbered. And they needed to start preparing for a post-war world.
Everyone knew the US would emerge from World War II as the the dominant superpower.
So the financial system they designed put the United States at the center of the world economy.
They called it the Bretton Woods system, named for the town in New Hampshire where they gathered.
And their central idea was that the value of the US dollar would be fixed to gold at a rate of $35 per troy ounce, while every other currency would be fixed to the US dollar.
The Swiss franc, for example, was fixed at a rate of 4.3 francs per US dollar, while the Danish krone was fixed at 4.8.
Bretton Woods ushered in a period of remarkable economic stability worldwide.
During the roughly quarter-century that the Bretton Woods system was in place, banking crises were almost nonexistent. Recessions were rare.
And global debt fell from nearly 150% of GDP at the end of World War II, to roughly 30% by the early 1970s.
Then it all came to a screeching halt in 1971.
The United States, weighed down by a costly war in Vietnam, suddenly and unilaterally terminated the agreement.
The US government wanted the flexibility to print as much money as it needed without being forced to maintain the gold standard.
So the whole system collapsed, practically overnight.
And it was replaced by a new standard where unelected central bankers have supreme authority to conjure near infinite quantities of money out of thin air.
The effects have been pretty disastrous.
Ever since the end of Bretton Woods, global debt has skyrocketed to roughly $200 TRILLION, approximately 225% of GDP.
Banking crises and financial shocks have become much more commonplace. Market crashes are more severe. Recessions are more common. Inflation worldwide has soared.
(It’s ironic that, back in 1944, the price of a room at the Mount Washington was $18. Today it’s over $250.)
Perhaps most of all, we now regularly witness some of the most extreme financial anomalies imaginable.
And one of the most obvious examples of this is negative interest rates.
In a number of countries, including Switzerland, Japan, Denmark, and the entire Eurozone, central bankers have printed so much money that interest rates are actually negative.
If you buy a TEN YEAR German government bond, for instance, your annual investment return will be NEGATIVE 0.27% per year, based on this morning’s rates.
That’s insane.
But just a few days ago the insanity reached a whole new level.
Think about this: a junk bond is basically debt issued by a company with financials so risky that analysts expect there’s a good chance the company won’t pay its debts.
Hell, the company might not even be in business by the time the debt matures.
And yet, despite these substantial risks, investors are willing to loan money to these companies… at NEGATIVE rates of return.
Seriously?? You take all that risk and then GUARANTEE that you’ll lose money.
Why do investors put up with it? Saturday’s Wall Street Journal offers a chilling explanation:
One euro junk bond from U.S. packaging company Ball Corp, for example, trades at a yield of minus 0.2% and matures in December 2020. That compares to a European deposit rate of minus 0.4% or a yield on a German government bond with a similar maturity of about minus 0.7%.
The choice for investors is about the balance between needing to stay invested and how much risk to take, according to Tim Winstone, a fixed-income portfolio manager at Janus Henderson. A bond like Ball Corp’s is “a safe place to hang out,” Mr. Winstone said. “And just because something is negative-yielding, that doesn’t mean it can’t get more negative-yielding.” Falling yields mean rising bond prices and gains for investors, at least on paper.
Many expect more bond yields to go negative as central banks in the U.S. and Europe cut interest rates or return to bond-buying to stimulate economies. In Europe especially, investors are realizing that negative interest rates are going to last a long time because the ECB needs to overshoot its inflation target to make up for the long spell when inflation has been far below 2%. Without a period of higher inflation, it won’t meet its target on average over the medium term.
The number of junk-rated companies with negative-yielding bonds will definitely go up, according to Barnaby Martin, credit strategist at Bank of America Merrill Lynch. “It doesn’t take much for it to go from 14 companies to 30 or 50 or 100,” he said.
In other words, as John Rubino recently noted, investors are now extrapolating falling interest rates into the future and playing junk bonds for the capital gains they’ll generate when their future borrowing costs go down. This is one of those sentiment shifts that financial historians will single out for special attention when sifting through the rubble of the coming crash.
Honestly I’m not a pessimistic person. But this sort of absurdity makes me pause and consider what might happen next.
The global economic expansion is one of the longest on record, ever. Financial markets around the world are soaring at all-time highs. Stocks. Bonds. Real Estate.
One of the only things we know for sure about financial markets is that they are ALWAYS cyclical. Up/Down, Boom/Bust. These cycles have been with us forever.
It’s impossible to predict exactly WHEN the decline will occur. But when you see JUNK bonds with NEGATIVE yields, it’s likely that we’re probably close to the end of the boom phase.
It’s possible this madness could continue for a while longer. Or it could end tomorrow.
No one has a crystal ball… but the important fact is to realize that at some point, this trend has got to correct.
All the trillions of dollars printed out of thin air to buy securities that yield negative interest rates will eventually have consequences.
That’s why I think makes sense to take sensible steps to protect yourself… no matter what happens next.
That’s why I own gold.
Gold is still one of the only asset classes in the world that’s not anywhere near an all-time high (unlike stocks, bonds and real estate).
In fact, relative to what’s going on in the world, gold is downright cheap.
Gold is something people tend to buy in times of uncertainty… and right now, there is a lot of uncertainty.
Between trade disputes, financial madness, and the Bolsheviks coming to power, I see a lot of reasons to own gold.
It’s never a good idea to dump all your life savings into any one thing. But at a time when central banks are printing more money out of thin air, and the bull market is long in the tooth, allocating a portion of your savings to gold can make a lot of sense.
via ZeroHedge News https://ift.tt/2O0VX8T Tyler Durden
Okechukwu Efobi, a sergeant with London’s Metropolitan Police Service, has pleaded guilty to three counts of computer misuse for accessing a police database to monitor an investigation into his own misconduct. A court ordered him to perform 50 hours of community service and pay a total of £540 ($679) in fines and prosecution costs. He remains employed by the police department but on restricted duty.
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Financial firms that sell research have now stapled fees to all of their services, not unlike airlines do, according to Bloomberg.
Speaking to an analyst, meeting a corporate executive order or getting a custom report are all going to run an extra fee as a result of European rules introduced last year to promote transparency and investor protection. Banks are now required to attach a price to a service that had long just been an ancillary benefit for trading clients. But after 18 months, pricing still remains somewhat of a mystery for research.
Nick Burchett, head of U.K. equities at London-based Cavendish Asset Management said:
“It’s difficult to try and work out what the right value is. It’s not like going to buy a book.”
Few sectors have been as damaged as research over the last few years. Research has met headwinds not only from regulation, but also from passive investing and AI. This means that analysts are a dying breed and have to fight harder for a “smaller piece of a shrinking pie”.
The top 12 investment banks employed about 3700 people in cash equities research as of Q1 this year – that number is down 14% from 4300 five years ago.
In addition, spending on researchers tumbled, with boutiques sharpening their niche, causing names like BNP Paribas to outsource its equity research to shops like MorningStar.
Benjamin Quinlan, chief executive officer of financial-services consultancy Quinlan & Associates in Hong Kong said:
“You’re starting to see the buy side consolidate their research providers. If you’re having to shell out and cough up money for research out of your own pocket, you’re not going to go to a ninth or 10th-ranked analyst that BNP has to offer you. You want to go with the top one, two or three.”
A survey of 27 banks, brokers, fund managers and research shops shows that the base price for research is generally about $10,000. Critics like the European Association of Independent Research Providers called that “predatory pricing”. One report alone from an independent shop generally costs about $2000 on average.
And pricing models for research span from tiered subscriptions to “all you can eat” packages. They can be customized to a client size and needs. The average revenue per client ranges from $1600-$1 million annually – and some banks even price written research cheaper in order to upsell clients to premium services.
Morgan Stanley, for instance, charges $25,000 for 10 users and Goldman Sachs offers the same price for four logins. Bank of America’s research costs $30,000 for five users and a one on one meeting with corporate executives will cost $150 per attendee to arrange.
The new regulation, called MiFID II, has generated complaints from just about everybody. Detractors say that it favors large banks over smaller brokerages and independent analysts, and bigger asset managers over smaller ones. Detractors also say that it favors US firms over European ones and large-cap stocks over smaller ones.
Big banks have a few advantages. They have more comprehensive coverage and can afford to make less money off of research.
Colin McGranahan, head of research at Sanford C. Bernstein in New York said:
“Some of our competitors as a result have increased the cross-subsidization of their research departments from their banking. What it’s causing in some instances is sort of a return to a situation we try to correct two decades ago where banking is now paying for a much larger portion of the research department and is exerting more influence over how the research department acts.”
The market is finally starting to stabilize during the second year under MiFID II. After equity research budgets were slashed 19% last year, large European institutions are planning a smaller 6% cut in 2019, with the average budget coming in at $8.3 million.
Thomas Brown, a London-based fund manager at Miton Group said: “We actually discovered it’s quite nice to have fewer phone calls, fewer emails. We get more time to actually do our own work.”
via ZeroHedge News https://ift.tt/32xDSCs Tyler Durden
