Month: July 2019

BYND Is Barfing Ahead Of Earnings

BYND is down over 14% this morning  – the biggest intraday drop since the IPO – as investors take some money off the table ahead of tonight’s earnings…

Short interest, according to Bloomberg, remains high.

Wall Street expects the company to lose 9 cents a share from $52.5 million in sales.

Price to Sales Ratios…

  • Beyond Meat: 118

  • Facebook: 9.9

  • Twitter: 9.2

  • Microsoft: 8.5

  • Google: 5.7

  • Amazon: 4.1

  • Apple: 3.9

  • Tesla: 2.0

What could go wrong?

via ZeroHedge News https://ift.tt/2MtYc1Y Tyler Durden

Chinese “Cyber-Dissident” Sentenced To 12 Years For Publishing State Secrets

China has sentenced a so-called “cyber-dissident” to 12 years in prison for leaking state secrets on his controversial website, according to The Guardian. 

Huang Qi was found guilty of “leaking national state secrets and providing state secrets to foreign entities” to his website, 64 Tianwang – named after the bloody 1989 Tienanmen Square crackdown on pro-democracy protesters. 

In addition, Huang will be stripped of political rights for four years. 

According to human rights advocates, Huang was one of the most ‘prominent and well connected’ activists monitoring human rights in China today, and his imprisonment will silence an important voice in the debate. 

“It sends a strong signal to others documenting abuses, who are already under threat. If they shut down and silence the human rights monitors, it will make it harder to know about the rights abuses going on inside China,” said Frances Eve, deputy director of research at Chinese Human Rights Defenders. 

Huang’s website, which reported on local corruption, human rights violations and other topics rarely seen in ordinary Chinese media, is blocked on the mainland.

The website was awarded a Reporters Without Borders prize in November 2016. A few weeks later, Huang was detained in his home town of Chengdu, according to Amnesty International.

Huang’s work has repeatedly drawn the ire of Chinese authorities. In 2009 he was sentenced to three years in prison after campaigning for parents of children killed in the 2008 Sichuan earthquake, which left nearly 87,000 people dead or missing and authorities facing huge public anger over shoddy building construction.

Five years later Huang and at least three citizen journalists who contribute to 64 Tianwang were detained by police after the site reported on a woman who had set herself on fire in Tiananmen Square.

Eve said Huang’s sentencing is effectively a death sentence, given his deteriorating health. –The Guardian

“His is an outrageously long sentence for a citizen journalist documenting human rights abuses” said Eve. “It seems designed to kill him in detention, totally out of proportion with what they were charging him with.” 

Huang’s 85-year-old mother, Pu Wenqing, has been subject to police surveillance, and has been blocked from leaving her home or having visitors. She says her phone line is often blocked as well – and hadn’t yet received news of her son’s sentencing. 

“I don’t get the news. People can’t get in and I can’t get out,” she said. 

via ZeroHedge News https://ift.tt/32QKxYG Tyler Durden

Here’s how you can protect yourself from crazy lawsuits like this one…

Our annual Sovereign Academy is just around the corner.

Each year, I invite the most talented entrepreneurs I know to teach and mentor a group of 50 young people from around the world.

The camp is entirely free for students – I pay for everything myself out of pocket. It’s also one of my favorite times of the year.

One of the mentors there has been with me since the inception of the camp nearly ten years ago.

He’s hands-down one of the most talented entrepreneurs I know.

For simplicity’s sake, we’ll call him Michael.

A couple of years ago, Michael started an automated domain sales business.

The business model was brilliant. Michael’s proprietary software would scan the internet for attractive domains for sale, purchase them, and then scour the web for a potential buyer.

So for example, Michael’s company would acquire ilovedomains.com, and then find out who would be interested in buying it – including owners of similar domains like ilovedomains.net.

The business immediately became highly profitable. And Michael made a lot of money.

But a couple of years ago, Michael was sued by somebody who claimed they had been victim of a phishing attack on a domain that Michael had owned six years prior.

(A phishing attack happens when hackers build fake websites who resemble real ones to extract sensitive data like online bank login details or social security numbers from people).

But here’s the interesting part… Michael owned the domain for exactly 30 minutes– in 2009.

Since then, it has been bought and sold multiple times, eventually ending up as domain for a scam website.

And so the victim sued Michael, even though he was no longer in possession of the domain – and wasn’t when the attack happened.

Of course, any rational person would have seen that Michael couldn’t possibly have been involved in the scam.

But lawyers on the other side refused to budge.

That’s because no matter the outcome of the lawsuit, they’d collect their fees. That’s the sad truth of America’s justice system.

Lawyers are willing to take on completely baseless cases – simply because they know that most people will settle at the simple prospect of facing a lawsuit that could drag on for years.

It used to be that success was celebrated in America. But today, it puts a target on your back that says “come after me, I’ve got money.”

Remember, if you pay any kind of income tax at all, you’re better off than 50% of Americans.

So lawyers will not care whether their case makes any sense at all, as long as they get paid fat fees for dragging you in court for years.

And since I started Sovereign Man ten years ago, the situation has only gotten worse. I hear almost daily of cases like my friend Michael.

That didn’t use to happen. But now it seems like it’s almost a full-time career to spend your time suing successful people.

It’s pathetic and sad. But it’s the new norm in the Land of the Free.

Therefore, it makes sense to take simple steps to ensure that even if frivolous creditors come after you with bogus lawsuits, you and your family are protected.

You can form a domestic LLC for asset protection purposes – or even better, you can consider opening a foreign LLC in a country with solid asset protection features.

And despite what pornstars might tell you, opening offshore corporations for asset protection is completely legal.

In fact, they’re the grease of the world economy. They allow international entities to come together on neutral ground, and operate under a recognized legal system.

That way, a Chilean investor in a Sri Lankan infrastructure project can structure their investment in the British Virgin Islands, to have recourse under one of the most recognized and clear legal systems in the world.

Unfortunately, most people are completely misinformed and think all offshore structures are used to shelter dirty terrorist money.

But that couldn’t be further from the truth.

Offshore structures have the benefit of offering some of the strongest asset protection benefits in the world.

Members of our flagship international diversification service, Sovereign Man: Confidential have access to an in-depth video library with over a dozen videos covering everything you’d ever want to know about asset protection.

Domestic and foreign companies, trusts, estate planning, taxes, compliance– you name it, we’ve got it.

But it’s such an important topic that I want to make sure our free readers also benefit from it. So I decided to share one of our premium videos with you.

Inside, you’ll learn why a well-structured foreign asset protection company will terrify lawyers of frivolous creditors that are trying to come after you and your assets.

The beauty of this strategy is that once you implement it, it becomes almost pointless to come after your assets. Even if a frivolous creditor wins a suit against you, they still lose (you’ll learn in the video how that’s possible).

You can watch the video here. 

And if you’d like to get access to every other premium video, intelligence report and black paper we’ve released over the past ten years… There hasn’t been a better time to join Sovereign Man: Confidential in years.

As part of Sovereign Man’s 10-year anniversary we’ve been offering a large 63% discount on Sovereign Man: Confidential.

But we’re closing this rare offer ON WEDNESDAY.

So click here to learn about Sovereign Man: Confidential and take advantage of our offer to join and save 63%.

(And you can try it risk-free for 30 days with our 100% money back guarantee)

Source

from Sovereign Man https://ift.tt/2Mow40w
via IFTTT

Minerd: The Fed Should Hike Interest Rates, Not Cut Them

Authored by Scott Minerd via Barron’s,

In the runup to the Federal Reserve’s Open Market Committee meetings on July 30 and July 31, policy makers are debating the value of what would normally be considered unorthodox policy actions. The consequences of the Fed’s actions in the next week – the U.S. central bank is expected to cut interest rates by a quarter of a percentage point – could be with us for much longer than we think, culminating in the next recession and increasing the risk to financial stability.

In the meantime, the Fed could be delivering yet another sugar high to the economy that doesn’t address underlying structural problems created by powerful demographic forces that are constraining output and depressing prices.

By almost every measure, policy makers should be considering another rate hike, not a rate cut, in anticipation of potential economic overheating from looming limitations on output. Instead, debate has been focused on the need to take preemptive action to avoid a potential slowdown.

An abrupt shift in thinking was set in motion last December when, after raising overnight rates by a quarter of a percentage point, Fed Chairman Jerome Powell signaled more hikes would come and that balance-sheet reduction was on “autopilot.” Alarmed by the market tantrum that ensued, Fed policy makers began a mop-up campaign that included the Fed’s now-famous “pivot” to patience.

While the Fed has more than succeeded in stabilizing markets, the ensuing liquidity-driven rally in various markets has boosted asset prices, including stocks, bonds, precious metals, energy, and even cryptocurrencies.

As Europe faces prospects that negative rates might become a long-term fixture in the euro region, concerns are mounting in the U.S. that a global slide toward negative yields could infect the market for Treasury securities, should the U.S. slip into a recession. These concerns are well founded.

In the postwar era, the Fed has reduced short-term interest rates by an average of 5.5 percentage points during easing cycles associated with recession. The required stimulus in the next recession could necessitate large-scale asset purchases of nearly $5 trillion to overcome the monetary limitations of the zero bound. Such a policy action could result in negative Treasury yields.

To immunize against the global contagion of negative rates, the Fed is intentionally overheating the U.S. economy in the hope of pushing inflation above its 2% target rate. Once inflation approaches some undefined rate, perhaps 2.5%, the Fed likely will reverse course and lift rates above today’s levels, creating another set of risks.

Additional accommodation this late in the business cycle is likely to push asset prices higher, just as in 1998, when the Fed cut rates by 75 basis points (a basis point is one-hundredth of a percentage point) during the Asian crisis, only to reverse course nine months later by raising short-term rates to the cycle high. Just as Fed accommodation inflated the internet bubble then, asset inflation associated with stimulative policy at this point in the cycle is likely to have a similar impact.

Chairman Powell has been clear that the Fed will go for broke, doing whatever is necessary to keep the expansion going. Most likely, a quarter point next week will be followed by another half percentage point before year end.

The real problem leading to the depressed yield curve can’t be solved by the Fed, short of the remote possibility of an overt policy to increase inflation well above 2%. This problem is the product of structural changes within the economy that have reduced growth potential relative to the past 50 years.

Demographics play an important role. Not only is an aging population creating an acute labor shortage, but the opioid crisis and failures in education and job training are limiting the supply of skilled labor.

Without growth in supply-side contributors including labor, capital, and other forms of investment, and increased demand associated with a faster-growing, younger demographic, the real neutral rate—or the Fed’s sweet spot to maintain economic output—is likely to remain low and may even fall into negative territory. The depressed neutral rate is limiting the power of policy makers to stimulate demand without risking significantly higher inflation and financial instability.

The simplest way to avoid recession and the associated negative rates would be a rapid increase in the supply of labor, aided by education, job training, and solutions to address the blight of opioids. A rational immigration initiative could quickly offset the risks of a slowing economy by providing more workers to fill open jobs. Two million new workers could raise output potential by 2% or more. This would push the neutral rate higher by stimulating economic growth while increasing tax revenue due to the rapid growth in personal income.

The Fed’s current policy of anticipatory and preemptive rate cuts likely will lead to unsustainably high asset prices and increased financial instability. This can only make the next downturn worse. If the U.S. continues down the current policy path, we will find out that the Fed’s cure for avoiding a near-term recession and negative interest rates may ultimately make the disease worse.

*  *  *

Scott Minerd is co-founder and global chief investment officer of Guggenheim Partners, and a member of the Board of Overseers of the Hoover Institution.

via ZeroHedge News https://ift.tt/2SMx3bO Tyler Durden

Is Another Recession Coming? Or Does Elizabeth Warren Just Want to Scare Us?

Are we due for another recession? As President Donald Trump continues to tout (and take credit for) America’s current stretch of economic good fortune, other onlookers are getting nervous. “Whether it’s this year or next year, the odds of another economic downturn are high—and growing,” wrote Sen. Elizabeth Warren (D–Mass.) last week.

It’s been “10 years since the Great Recession ended, making this officially the longest expansion in American history,” points out Ben Casselman at The New York Times. Does that mean we must be due for another downturn?

It’s complicated.

“Economists are notoriously terrible at forecasting recessions, especially more than a few months in advance,” notes Casselman, adding that “it’s possible (though unlikely) that a recession has already begun, and we just don’t know it yet.” But there are a few “indicators that have historically done the best job of sounding the alarm.”

These indicators include the unemployment rate, the state of Treasury bonds, the Institute for Supply Management’s Manufacturing Index, and consumer confidence levels. And on three out of four fronts, things are looking a tad bit rough.

The good news is that the unemployment rate remains low and hasn’t seen any recent spikes. (“Not only is it low, it’s trending down,” the Times points out.) But interest rates on 10-year Treasury bonds have fallen below rates on three-month bonds, and that’s not a good sign—no reason to “panic yet,” but a “storm warning,” writes Casselman. So are tepid consumer confidence levels. And on the manufacturing front, things are also murky.

It is almost always a sign of recession if the Manufacturing Index falls below 45 for a sustained period, writes Casselman. Right now it’s above 50. “Many economists think it will fall below 50 in the coming months but don’t expect a steeper drop.”

Put it all together and…lol, nobody really knows anything! Or at least that seems to be the consensus among cautious econ types. But some Democrats reading the tea leaves are seeing much more assured signs of trouble.

Warren in particular has been issuing warnings. “I went through this back in the years before the 2008 crash, and no one wanted to listen. So, here we are again,” the presidential candidate told reporters last week.

Of course, Warren and her ilk have good reason to portray things as particularly fraught. The more Trump’s team relies on campaign messaging that suggests he has helped the economy flourish, the more Democratic presidential candidates—and opponents of Trump more generally—will reach for a message that combats that. But if their predictions are too dire, it could cost them credibility.

Warren’s predictions “could help her win over primary voters by tapping into anxieties about middle-class economic stability despite broad gains over the past decade,” says the AP.

But Warren’s opponents could seize on her warning to undermine her credibility should a crash fail to materialize before next year’s election, and some economists sympathetic to her agenda say that—for the moment—her conclusion of a looming recession is overblown.

Meanwhile, the Federal Reserve is poised to cut interest rates for the first time in more than a decade. The Washington Post calls it “a highly unusual action” and a big gamble. “Typically, when the Fed slashes interest rates, borrowing costs drop for mortgages, business loans, auto loans, and credit cards, leading to more homes being sold, more businesses investing, and more economic activity overall,” writes the Post‘s Heather Long.

But loans are already cheap and few industries are asking for lower rates, suggesting that other factors outside the Fed’s control—a labor shortage, trade wars, a lack of housing supply—are capping the economy’s potential.

“A Fed rate cut will have zero impact on the housing market,” said Tendayi Kapfidze, chief economist at Lending Tree. “Mortgage rates are already at three-year lows.”

As the American Enterprise Institute’s James Pethokoukis pointed out in May, it’s certainly “better to be running during an expansion rather than a contraction”—but that’s far from an insurmountable obstacle for Trump opponents:

That doesn’t seem to be how things really work anymore. Recent research finds the relationship between the economy and presidential approval has weakened in recent decades. Perhaps, as the study “Motivated Reasoning, Public Opinion, and Presidential Approval” suggests, rising polarization means partisan[s] are more likely than ever to view presidents from their party through rose-colored lenses. They’re less likely to blame their guy for the bad times, just as the opposition is less likely to give credit for the good times.

FREE MINDS

Lucy Steigerwald tackles “Justin Amash and the Libertarian Future” for The New Republic:

The great danger is that, in America’s two-party system, standing outside a party means relegating yourself and your movement to insignificance. There is a reason that Bernie Sanders, an independent, is running for the Democratic presidential nomination, instead of pursuing a third-party bid. But the Sanders example, in fact, is instructive in more ways than one, showing the ways an outsider can make inroads once his party is prepared to face a great reckoning—which, if there is to be any hope for the republic, is exactly what awaits a post-Trump GOP.

When the president isn’t a party loyalist but the party is loyal to him, it makes someone like Amash, who is above all loyal to his beliefs, both an oddity and a potential hero. Like Sanders, he is remarkably consistent in his views, so much so that he has grown increasingly out of step with his party as it has been drawn into the orbit of the Trump supernova. According to FiveThirtyEight, Amash has voted with Trump about 60 percent of the time; the rest of the Republicans are closer to 90 percent. His supposed fellow libertarian travelers in Congress have also grown closer to Trump, despite being bullied by him in the 2016 Republican primary. Ted Cruz, whose libertarian credentials were always shaky anyway, is fully lost to the right wing. Rand Paul, at best, is whispering in Trump’s ear for the greater good on issues like criminal justice, at worst flattering him because he knows it’s the only game in town. What we know for sure is that Paul has never tweeted, as Amash has, “Dude, just stop,” at the president.

More here.

FREE MARKETS

Foreign investors in U.S. housing aren’t the problem, argues Scott Beyer at Governing. “Absentee property owners from abroad take much of the blame for rising housing prices in America,” the magazine notes. “But they’re really a net win for cities.” How so?

Foreign investors thus get lumped in with other scapegoats who are thought to “take” housing from more deserving recipients. These include Airbnb guests, college students, techies and immigrants, among others. Some cities impose regulations against these groups, cracking down on Airbnb, outlawing student housing in certain areas, or taxing foreign speculation.

But this mindset is impractical, because it ignores the complexity of modern urban housing markets. At a time when global travel is easy and labor more fluid than ever, cities are full of temporary workers and visitors. With rising global wealth—and instability—there are also many foreigners looking for second homes, or wishing to diversify their assets by purchasing U.S. real estate.

Cities can respond in either of two ways. They can view these unorthodox housing uses as a legitimate form of demand, and allow enough construction to accommodate it, alongside the more traditional demands. Or they can nitpick about the “right” and “wrong” uses of housing, and write laws accordingly. But one thing’s likely: Neither strategy will stop the activity or cool the market, because no city can just wall off people or capital.

And why would cities want to? Foreign speculation is a net win for municipalities. This kind of development generates impact fees, tax revenue and construction jobs. If units are left empty, it may create bad optics, but it also means the absentee owners are giving money to the city without using services.

Read the whole thing here.

QUICK HITS

  • Dan Coats is resigning as director of national intelligence and Trump has nominated Rep. John Ratcliffe (R–Texas) to replace him.
  • The president is tweeting that Al Sharpton is a con man who “hates Whites & Cops!” Sharpton responds:

  • Three people, including a six year old boy, were killed by a shooter at the Gilroy Garlic Festival in California.
  • “‘Nutrition’ is now a degenerating research paradigm in which scientifically illiterate methods, meaningless data, and consensus-driven censorship dominate the empirical landscape,” say researchers Edward Archer and Carl Lavie. A new study on eggs helps highlight this; see Salon for more.
  • A federal judge has dismissed the lawsuit filed by Covington Catholic student Nick Sandmann against The Washington Post.
  • The CEO of Overstock.com defends “Russian spy” Maria Butina:

  • Why, Rand, why?

from Latest – Reason.com https://ift.tt/2Mn9gOE
via IFTTT

Is Another Recession Coming? Or Does Elizabeth Warren Just Want to Scare Us?

Are we due for another recession? As President Donald Trump continues to tout (and take credit for) America’s current stretch of economic good fortune, other onlookers are getting nervous. “Whether it’s this year or next year, the odds of another economic downturn are high—and growing,” wrote Sen. Elizabeth Warren (D–Mass.) last week.

It’s been “10 years since the Great Recession ended, making this officially the longest expansion in American history,” points out Ben Casselman at The New York Times. Does that mean we must be due for another downturn?

It’s complicated.

“Economists are notoriously terrible at forecasting recessions, especially more than a few months in advance,” notes Casselman, adding that “it’s possible (though unlikely) that a recession has already begun, and we just don’t know it yet.” But there are a few “indicators that have historically done the best job of sounding the alarm.”

These indicators include the unemployment rate, the state of Treasury bonds, the Institute for Supply Management’s Manufacturing Index, and consumer confidence levels. And on three out of four fronts, things are looking a tad bit rough.

The good news is that the unemployment rate remains low and hasn’t seen any recent spikes. (“Not only is it low, it’s trending down,” the Times points out.) But interest rates on 10-year Treasury bonds have fallen below rates on three-month bonds, and that’s not a good sign—no reason to “panic yet,” but a “storm warning,” writes Casselman. So are tepid consumer confidence levels. And on the manufacturing front, things are also murky.

It is almost always a sign of recession if the Manufacturing Index falls below 45 for a sustained period, writes Casselman. Right now it’s above 50. “Many economists think it will fall below 50 in the coming months but don’t expect a steeper drop.”

Put it all together and…lol, nobody really knows anything! Or at least that seems to be the consensus among cautious econ types. But some Democrats reading the tea leaves are seeing much more assured signs of trouble.

Warren in particular has been issuing warnings. “I went through this back in the years before the 2008 crash, and no one wanted to listen. So, here we are again,” the presidential candidate told reporters last week.

Of course, Warren and her ilk have good reason to portray things as particularly fraught. The more Trump’s team relies on campaign messaging that suggests he has helped the economy flourish, the more Democratic presidential candidates—and opponents of Trump more generally—will reach for a message that combats that. But if their predictions are too dire, it could cost them credibility.

Warren’s predictions “could help her win over primary voters by tapping into anxieties about middle-class economic stability despite broad gains over the past decade,” says the AP.

But Warren’s opponents could seize on her warning to undermine her credibility should a crash fail to materialize before next year’s election, and some economists sympathetic to her agenda say that—for the moment—her conclusion of a looming recession is overblown.

Meanwhile, the Federal Reserve is poised to cut interest rates for the first time in more than a decade. The Washington Post calls it “a highly unusual action” and a big gamble. “Typically, when the Fed slashes interest rates, borrowing costs drop for mortgages, business loans, auto loans, and credit cards, leading to more homes being sold, more businesses investing, and more economic activity overall,” writes the Post‘s Heather Long.

But loans are already cheap and few industries are asking for lower rates, suggesting that other factors outside the Fed’s control—a labor shortage, trade wars, a lack of housing supply—are capping the economy’s potential.

“A Fed rate cut will have zero impact on the housing market,” said Tendayi Kapfidze, chief economist at Lending Tree. “Mortgage rates are already at three-year lows.”

As the American Enterprise Institute’s James Pethokoukis pointed out in May, it’s certainly “better to be running during an expansion rather than a contraction”—but that’s far from an insurmountable obstacle for Trump opponents:

That doesn’t seem to be how things really work anymore. Recent research finds the relationship between the economy and presidential approval has weakened in recent decades. Perhaps, as the study “Motivated Reasoning, Public Opinion, and Presidential Approval” suggests, rising polarization means partisan[s] are more likely than ever to view presidents from their party through rose-colored lenses. They’re less likely to blame their guy for the bad times, just as the opposition is less likely to give credit for the good times.

FREE MINDS

Lucy Steigerwald tackles “Justin Amash and the Libertarian Future” for The New Republic:

The great danger is that, in America’s two-party system, standing outside a party means relegating yourself and your movement to insignificance. There is a reason that Bernie Sanders, an independent, is running for the Democratic presidential nomination, instead of pursuing a third-party bid. But the Sanders example, in fact, is instructive in more ways than one, showing the ways an outsider can make inroads once his party is prepared to face a great reckoning—which, if there is to be any hope for the republic, is exactly what awaits a post-Trump GOP.

When the president isn’t a party loyalist but the party is loyal to him, it makes someone like Amash, who is above all loyal to his beliefs, both an oddity and a potential hero. Like Sanders, he is remarkably consistent in his views, so much so that he has grown increasingly out of step with his party as it has been drawn into the orbit of the Trump supernova. According to FiveThirtyEight, Amash has voted with Trump about 60 percent of the time; the rest of the Republicans are closer to 90 percent. His supposed fellow libertarian travelers in Congress have also grown closer to Trump, despite being bullied by him in the 2016 Republican primary. Ted Cruz, whose libertarian credentials were always shaky anyway, is fully lost to the right wing. Rand Paul, at best, is whispering in Trump’s ear for the greater good on issues like criminal justice, at worst flattering him because he knows it’s the only game in town. What we know for sure is that Paul has never tweeted, as Amash has, “Dude, just stop,” at the president.

More here.

FREE MARKETS

Foreign investors in U.S. housing aren’t the problem, argues Scott Beyer at Governing. “Absentee property owners from abroad take much of the blame for rising housing prices in America,” the magazine notes. “But they’re really a net win for cities.” How so?

Foreign investors thus get lumped in with other scapegoats who are thought to “take” housing from more deserving recipients. These include Airbnb guests, college students, techies and immigrants, among others. Some cities impose regulations against these groups, cracking down on Airbnb, outlawing student housing in certain areas, or taxing foreign speculation.

But this mindset is impractical, because it ignores the complexity of modern urban housing markets. At a time when global travel is easy and labor more fluid than ever, cities are full of temporary workers and visitors. With rising global wealth—and instability—there are also many foreigners looking for second homes, or wishing to diversify their assets by purchasing U.S. real estate.

Cities can respond in either of two ways. They can view these unorthodox housing uses as a legitimate form of demand, and allow enough construction to accommodate it, alongside the more traditional demands. Or they can nitpick about the “right” and “wrong” uses of housing, and write laws accordingly. But one thing’s likely: Neither strategy will stop the activity or cool the market, because no city can just wall off people or capital.

And why would cities want to? Foreign speculation is a net win for municipalities. This kind of development generates impact fees, tax revenue and construction jobs. If units are left empty, it may create bad optics, but it also means the absentee owners are giving money to the city without using services.

Read the whole thing here.

QUICK HITS

  • Dan Coats is resigning as director of national intelligence and Trump has nominated Rep. John Ratcliffe (R–Texas) to replace him.
  • The president is tweeting that Al Sharpton is a con man who “hates Whites & Cops!” Sharpton responds:

  • Three people, including a six year old boy, were killed by a shooter at the Gilroy Garlic Festival in California.
  • “‘Nutrition’ is now a degenerating research paradigm in which scientifically illiterate methods, meaningless data, and consensus-driven censorship dominate the empirical landscape,” say researchers Edward Archer and Carl Lavie. A new study on eggs helps highlight this; see Salon for more.
  • A federal judge has dismissed the lawsuit filed by Covington Catholic student Nick Sandmann against The Washington Post.
  • The CEO of Overstock.com defends “Russian spy” Maria Butina:

  • Why, Rand, why?

from Latest – Reason.com https://ift.tt/2Mn9gOE
via IFTTT

Leading Indicator Of Home-Remodeling Activity Warns Big Drop Coming

Growth in residential remodeling spending is expected to fall through 2H20, according to the Leading Indicator of Remodeling Activity (LIRA) published by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

The leading indicator [LIRA] forecasts that annual growth in homeowner expenditures for improvement will plunge 6.3% in the current quarter to just .40% by late spring 2020, an ominous sign that a deep structural slowdown which started in 1Q18 is now spreading like cancer through the broader economy.

“Declining home sales and homebuilding activity coupled with slower gains in permitting for improvement projects will put the brakes on remodeling growth over the coming year,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “However, if falling mortgage interest rates continue to incentivize home sales, refinancing, and ultimately remodeling activity, the slowdown may soften some.”

“With the release of new benchmark data from the American Housing Survey, we’ve also lowered our projection for market size about 6% to $323 billion,” says Abbe Will, Associate Project Director in the Remodeling Futures Program at the Center. “Spending in 2016 and 2017 was not nearly as robust as expected, growing only 5.4% over these two years compared to 11.9% as estimated.”

Fannie Mae has reported sales of existing homes will total 5.35 million in 2019, flat from last year’s 5.34 million. Data from the National Association of Realtors shows existing-home sales reached a post-housing-bust high of 5.51 million in 2017 – but since – the trend has stalled.

Another measure of the remodeling market is the confidence of building contractors which topped in December 2017 and has formed a top comparable to what was seen in June 2005, June 1999, November 1993, and December 1986/88. Over the last three decades, as soon as the Federal Reserve transitions from a tightening cycle to pause, then cutting, the confidence of building contractors tends to crash.

With homebuilder sentiment expected to slump for the next four quarters, XHB SPDR S&P Homebuilders ETF, which is heavily weighted with Williams-Sonoma (4.97%), Whirlpool Corp (4.81%), Lowe’s Companies (4.61%), and the Home Depot (4.59%), companies that are widely popular with contractors and homeowners looking to remodel, could be headed for a plunge.

But through the summer, Wall Street anticipates that rate cuts will produce a soft landing with a tremendous rebound in the 2H; and in our humble opinion, a rate cycle is nine months too late – stimulus in the form of rate cuts will be less effective than ever before to save President Trump’s moribund economy.

via ZeroHedge News https://ift.tt/32VlNP2 Tyler Durden

Expect Big Discounts: Car Dealers Complain “We’re Full”

Authored by Mike Shedlock via MishTalk,

After a long sales boom, dealers are struggling to sell cars.

New models are on the way but the Lots are Full Car Dealers Say.

“We are turning down cars and are being more picky on the cars we stock,” said Brian Benstock, general manager of Paragon Honda in New York City. “We just can’t take more. We’re full.”

New car sales have been slumping in many of the world’s major auto markets. In China, sales were down more than 12 percent in the first six months of the year.

In the United States, after many years of strong sales, many consumers are driving vehicles that don’t need to be replaced. Newer cars and trucks tend to be more durable and hold up longer than cars made even a decade or two earlier. At the same time, the average price of new vehicles has risen to around $35,000, while interest rates on auto loans have edged higher. That means people have to be willing and able to spend more to buy a new car than they were just a few years ago.

“It’s a double whammy,” said Mike Jackson, chairman of AutoNation, the nation’s largest chain of new-car dealerships. “Customers are having monthly payment shock.”

The slump in car sales has already forced some companies to cut production and jobs. General Motors recently stopped making cars at a plant in Lordstown, Ohio, that made the Chevrolet Cruze and is winding down manufacturing at another factory in Detroit. Honda recently ended a shift at its plant in Marysville, Ohio, that makes its Accord sedan and other models.

What is perhaps most worrying for the industry is that sales of larger vehicles — S.U.V.s and trucks — that had more than made up for a recent collapse in purchases of sedans, are showing signs of strain.

Despite declining car sales manufacturers kept of profits by selling more expensive SUVs but the boom is now over

Trump won the 2016 election with help from rust-belt states. Now manufacturers are scaling back production on Michigan and Ohio.

Expect this trend to accelerate.

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Cable Crashes To 29-Month Lows As ‘No-Deal’ Brexit Looms

Sterling has plunged back below 1.23 for the first time since March 2017 after new U.K. Prime Minister Boris Johnson’s first high-level Brexit cabinet meeting today.

Unless the EU agrees to re-open negotiations, Johnson’s top aide Michael Gove warns that a ‘no deal’ exit is the most likely outcome.

“We still hope they will change their minds, but must operate on the assumption that they will not,” Gove wrote in the Sunday Times.

“No deal is now a very real prospect, and we must make sure we are ready.”

And nothing this morning has improved the prospects, prompting traders to sell hard.

This is the weakest level for Sterling since March 2017…

And as cable crashes to FTSE stocks soar…

Most worrying for many is the fact that, as Bloomberg reports, Dominic Cummings, a key leader in the 2016 Brexit campaign, called advisers to the prime minister’s residence Friday night and told them Brexit will happen “by any means necessary,” the Times said. Cummings said Johnson is prepared to suspend Parliament or hold an election to thwart those who may seek to block a no-deal Brexit.

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Here It Comes: The Most Important Week Of The Year

The “most important week of the year” is finally here, when in addition to an avalanche of economic data including US payrolls, European PMIs, BOE and BOJ announcements, and the restart of US-China trade talks, we are in for a historic treat with the Fed set to cut rates for the first time in over a decade, effectively ushering in the next recession (the US economy contracted within 3 months of the first rate cut in the last three economic cycles; this time won’t be different).

As Deutsche Bank’s Craig Nicol summarizes, it’s an incredibly busy schedule for markets this week as they anticipate what will be the first (fully priced-in) rate cut from the Federal Reserve since 2008, as well as the latest decisions from the Bank of England and the Bank of Japan. There are also a number of key data releases, with the US jobs report, Q2 Euro Area GDP and manufacturing PMIs the main highlights. As all this occurs, we’ll see the resumption of US-China trade talks, along with further earnings releases as over 150 S&P 500 companies report.

With the much-anticipated FOMC decision finally taking place on Wednesday, that will be the key focus for markets over the coming week. Markets are expecting a rate cut, but the question of whether that will be a 25bp or 50bp cut is still on investors’ minds. At time of writing, markets put the probabilities at 82.5% for a 25bp cut and 17.5% for a larger 50bp cut, with DB’s US economists are expecting a 25bp cut in July, before further cuts in September and December, while Morgan Stanley is alone in expecting the Fed will go against the grain – and the NY Fed’s own warnings – and cut by 50 bps.

While the Fed can be expected to dominate the agenda, they aren’t the only major central bank that’s meeting next week. Ahead of the Fed, the Bank of Japan will be setting rates on Tuesday, with the consensus expecting policy will be unchanged. On Friday, they will also be publishing the minutes of their June Monetary Policy Meeting. Meanwhile on Thursday, we’ll have the Bank of England’s latest decision, as well as a press conference from Governor Carney and their quarterly inflation report. Although no change in rates is expected this week, markets are now expecting the BoE’s next  move to be a cut rather than a hike.

The data highlight this week will also be from the US, with the monthly jobs report out this Friday. After last month’s strong nonfarm payrolls number of 224k, the consensus is for the number to fall to 160k for July, with the unemployment rate remaining at 3.7%. Another data release to watch out for in the US will be the Conference Board Consumer Confidence number, which is out on Tuesday. June’s 121.50 reading was the lowest number since September 2017, so it’ll be interesting to see if there’s a pickup as expected.

In the Euro Area, we’ll get the first look at Q2 GDP numbers, with the consensus that growth will fall to 0.2%, down from 0.4% in Q1. We’ll also get the country breakdowns for France, Italy, and Spain, so it’ll be interesting to see whether there’s any divergence across the currency union. The other highlights this week will be the Euro Area unemployment rate for June on Tuesday, as well as the final manufacturing PMI on Thursday.

Turning to politics, this week will see the resumption of trade talks between the US and China. The US team, including Trade Representative Lighthizer and Treasury Secretary Mnuchin, travel to Shanghai next week to meet their Chinese  counterparts, beginning on Tuesday. The meeting comes after the G20 meeting between Presidents Trump and Xi, where they agreed to resume talks and Trump didn’t put further tariffs on $300bn worth of Chinese imports. Sticking with the US, this week will see the second round of the Democratic primary debates for the 2020 Presidential election, with the  two debates taking place on Tuesday and Wednesday night. Meanwhile in the UK, there’ll be a parliamentary by-election on Thursday in the Welsh constituency of Brecon and Radnorshire.

Finally, earnings season will continue, with 168 S&P 500 companies report this week. So far, of the 205 companies in the S&P 500 which have reported at time of writing, 78% have beat on earnings, and 59% have beat on sales. Highlights in the coming week include Apple, BP, Procter & Gamble, Mastercard and Pfizer on Tuesday; General Electric, Airbus and Lloyds  Banking Group on Wednesday; Royal Dutch Shell, Barclays, Verizon Communications,  General Motors, Rio Tinto and Siemens on Thursday; and Exxon Mobil, Chevron and RBS on Friday.

Summary of key events by day, courtesy of Deutsche Bank

  • Monday: It’s a light start to the week with the key releases of note being Japan’s June retail sales overnight. After that we will get Spain’s preliminary July CPI, Italy’s June PPI and the UK’s June consumer credit, mortgage approvals and  money supply data. In the US the only release of note is July’s Dallas Fed manufacturing activity index.
  • Tuesday: The main highlight of the day is going to be the outcome of the BoJ’s monetary policy meeting while in the US June core PCE is also due. In terms of data, we will get the Euro Area’s June unemployment rate, preliminary Q2 GDP in France along with June consumer spending, preliminary July CPI in Germany along with August GfK consumer confidence and July confidence indicators for the Euro Area. In the US, we will get June personal income and spending data, May S&P Corelogic house price index and July Conference Board consumer confidence indicator. Trade talks between the US and China will resume and it’s the first of two nights of Democratic primary debates. Earnings releases include Apple, BP, Procter & Gamble, Mastercard and Pfizer.
  • Wednesday: The outcome of the FOMC meeting followed by Chair Powell’s press conference (07:30pm London Time) will be the main event of the day. Overnight China’s official July PMIs are also due. In terms of data, we’ll get the UK’s July GfK consumer confidence, the Euro Area, France and Italy’s preliminary July CPI, Euro Area, Spain and Italy’s preliminary Q2 GDP, and Germany’s July unemployment report. In the US, we will get July’s ADP employment change and MNI Chicago PMI.  It’s also the second night of Democratic primary debates while earnings releasesinclude General Electric, Airbus and Lloyds Banking Group.
  • Thursday: The main highlight of the day is going to be the outcome of the BoE’s monetary policy meeting followed by Governor Carney’s press conference, while the release of final July manufacturing PMIs is also due in Japan, China, the Euro Area, UK, Germany, France, Spain, Italy and the US. In the US, we will also get July Challenger job cuts, ISM manufacturing data and total vehicle sales along with latest weekly initial and continuing claims, and June construction spending. Away from data, BoJ’s Amamiya is also due to speak, while the UK has a parliamentary by-election. Earnings releases include Royal Dutch Shell, Barclays, Verizon Communications, General Motors, Rio Tinto and Siemens.
  • Friday: It’s a payrolls Friday with July’s nonfarm payrolls report due in the US (1:30pm London Time). Prior to that, we will get the BoJ’s June Monetary Policy Meeting minutes, the UK’s July construction PMI and the Euro Area’s June PPI and retail sales. In the US, we’ll get the June trade balance, factory orders, and final durable and capital goods orders along with the final University of Michigan survey results. Earnings releases include Exxon Mobil, Chevron and RBS.

Looking at just the US, the key event this week is the July FOMC meeting, with the release of the statement at 2:00 PM ET followed by Chair Powell’s press conference at 2:30 PM. The ISM manufacturing report will be released on Thursday and the employment report on Friday. There are no other scheduled speaking engagements from Fed officials this week.

Monday, July 29

  • 10:30 AM Dallas Fed manufacturing index, July (consensus -5.3, last -12.1).

Tuesday, July 30

  • 08:30 AM Personal income, June (GS +0.4%, consensus +0.3%, last +0.5%); Personal spending, June (GS +0.3%, consensus +0.3%, last +0.4%); PCE price index, June (GS +0.06%, consensus +0.1%, last +0.16%); Core PCE price index, June (GS +0.19%, consensus +0.2%, last +0.19%); PCE price index (yoy), June (GS +1.32%, consensus +1.5%, last +1.52%); Core PCE price index (yoy), June (GS +1.57%, consensus +1.7%, last +1.60%): Based on details in the PPI, CPI, import price, and GDP reports, we forecast that the core PCE index rose 0.19% month-over-month in June, or 1.57% from a year ago. Additionally, we expect that the headline PCE index increased 0.06% in June, or 1.32% from a year earlier. We expect a 0.4% increase in personal income in June and a 0.3% increase in personal spending.
  • 09:00 AM S&P/Case-Shiller 20-city home price index, May (GS +0.3%, consensus +0.2%, last flat): We estimate the S&P/Case-Shiller 20-city home price index increased 0.3% in May, following a flat reading in April. Our forecast reflects the appreciation in other home price indices such as the CoreLogic house price index in May.
  • 10:00 AM Pending home sales, June (GS +1.5%, consensus +0.4%, last +1.1%): We estimate that pending home sales rose 1.5% in June based on regional home sales data, following a 1.1% increase in May. We have found pending home sales to be a useful leading indicator of existing home sales with a one- to two-month lag.
  • 10:00 AM Conference Board consumer confidence, July (GS 126.0, consensus 125.0, last 121.5): We estimate that the Conference Board consumer confidence index rebounded by 4.5pt to 126.0 in July, reflecting continued increases in stock prices and other confidence measures.

Wednesday, July 31

  • 08:15 AM ADP employment report, July (GS +140k, consensus +150k, last +102k): We expect a 140k gain in ADP payroll employment, reflecting roughly stable jobless claims but a potential drag from other ADP inputs. While we believe the ADP employment report holds limited value for forecasting the BLS nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises.
  • 08:30 AM Employment Cost Index, Q2 (GS +0.7% vs. consensus +0.7%, prior +0.7%): We estimate that the employment cost index rose 0.7% in Q2 (qoq sa), raising the year-over-year rate to +2.9%. Our Q2 wage tracker stands at +3.0% year-over-year (up from 2.7% for Q1).
  • 09:45 AM Chicago PMI, July (GS 51.2, consensus 51.5, last 49.7): We estimate that the Chicago PMI rebounded out of contractionary territory in July, though we note that weak global manufacturing growth likely continues to weigh on the index.
  • 2:00 PM FOMC statement, July 30-31 meeting: As discussed in our FOMC preview, we expect the FOMC to cut the funds rate by 25bp at the July meeting, as virtually all the signals from the Committee point this way. While we cannot entirely rule out a 50bp move, we assign subjective probabilities of 90% to a 25bp cut and 10% to a 50bp cut. Our view remains that the justification for cuts remains tenuous, as growth, employment, and inflation remain close to the Fed’s goals, financial conditions are very easy, and data have mostly surprised to the upside since the June FOMC meeting.

Thursday, August 1

  • 08:30 AM Initial jobless claims, week ended July 27 (GS 215k, consensus 212k, last 206k); Continuing jobless claims, week ended July 20 (last 1,676k): We estimate jobless claims increased 9k to 215k in the week ended July 27, after decreasing by 10k in the prior week. The claims reports of recent weeks suggest that the pace of layoffs remains very low.
  • 10:00 AM ISM manufacturing index, July (GS 52.5, consensus 52.0, last 51.7): After three straight declines, we expect the ISM manufacturing index to rebound by 0.8pt to 52.5 in July, reflecting a pickup in various business confidence measures.
  • 10:00 AM Construction spending, June (GS +0.3%, consensus +0.3%, last -0.8%): We estimate a 0.3% increase in construction spending in June, with scope for an increase in private nonresidential construction and public construction.

Friday, August 2

  • 08:30 AM Nonfarm payroll employment, July (GS +190k, consensus +170k, last +224k); Private payroll employment, July (GS +175k, consensus +170k, last +191k); Average hourly earnings (mom), July (GS +0.2%, consensus +0.2%, last +0.2%); Average hourly earnings (yoy), July (GS +3.1%, consensus +3.2%, last +3.1%); Unemployment rate, July (GS 3.7%, consensus 3.7%, last 3.7%): We estimate nonfarm payrolls increased 190k in July. Our forecast reflects low jobless claims, a 10-20k boost from Census hiring ahead of August canvassing, and minimal drag from Hurricane Barry—which struck at the end of the survey week. We expect the unemployment rate to remain at 3.7%, as continuing claims were broadly stable. Finally, we estimate average hourly earnings increased 0.2% month-over-month with the year-over-year rate stable at 3.1%, reflecting negative calendar effects but some scope for a further rebound in the supervisory category.
  • 08:30 AM Trade balance, June (GS -$54.7, consensus -$54.5bn, last -$55.5bn): We estimate the trade deficit declined by $0.8bn in June, reflecting a decline in the goods trade deficit.
  • 10:00 AM Factory Orders, June (GS +0.6%, consensus +0.7%, last -0.7%): Durable goods orders, June final (last +2.0%); Durable goods orders ex-transportation, June final (last +1.2%); Core capital goods orders, June final (last +1.9%); Core capital goods shipments, June final (last +0.6%): We estimate factory orders increased by 0.6% in June following a 0.7% decline in May. Durable goods orders rose in the June advance report, driven by a rebound in orders of aircraft and parts.
  • 10:00 AM University of Michigan consumer sentiment, July final (GS 98.4, consensus 98.5, last 98.4): We expect University of Michigan consumer sentiment remained flat from the preliminary estimate for July. The report’s measure of 5- to 10-year inflation expectations increased by three tenths to 2.6% in the preliminary report for July.

Source: Goldman, Deutsche, Bank of America

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