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President Trump’s personal attorney Rudy Giuliani told CNN’s Chris Cuomo on Wednesday night that he doesn’t deny the Trump campaign may have colluded with Russians in the 2016 US election – only that President Trump himself did not. 

“There is not a single bit of evidence the President of the United States committed the only crime you can commit here, conspiring with the Russians to hack the DNC,” said Giuliani. 

“I never said there was no collusion between the campaign or between people in the campaign… I have not. I said the President of the United States,” Pres. Trump’s attorney @RudyGiuliani tells @ChrisCuomo https://t.co/Jy0gttT6Ac pic.twitter.com/JGISmtgrdy

— Cuomo Prime Time (@CuomoPrimeTime) January 17, 2019

Giuliani also claimed that Trump has never denied that there was no collusion by his campaign – just that he didn’t personally collude. 

“[Trump] didn’t say ‘nobody,’ he said he didn’t,” said Giuliani. “How would you know nobody in your campaign…” before Cuomo interjected.

Giuliani has, in fact, denied there was any collusion by the Trump campaign on numerous occasions, including telling Fox News’ Laura Ingraham last May that the Trump campaign didn’t use information obtained from Russia thus proving there was no collusion. “If there was collusion with the Russians, they would have used it,” he said at the time. That same month, he told Fox News’ Sean Hannity that “Russian collusion is total fake news.” –MarketWatch

Giuliani then attempted to walk back his statements later in Wednesday’s interview, saying if “the collusion happened, it happened a long time ago. . . . It’s not provable because it never happened. … I’m telling you there’s no chance it happened.”

In July, the Trump attorney questioned in a CNN interview whether collusion is criminal at all. “I don’t even know if that’s a crime, colluding about Russians,” he said. 

Special Counsel Robert Mueller accused former Trump campaign chief Paul Manafort of lying about sharing polling data with an alleged Rusian spy while the 2016 election was in full swing. 

Asked by Cuomo whether that was considered collusion, Giuliani said that “polling data is given to everybody,” while trying to downplay the situation – adding that Trump didn’t know about it until it was covered in the news. 

via RSS http://bit.ly/2VZBmSp Tyler Durden

Authored by Tom Luongo,

For weeks I’ve been telling my subscribers that something changed in the gold market. Since Donald Trump’s election there was a pretty clear pair trade between the U.S. dollar and gold.

And that trade was most manifested in the price of gold in euros.

During last summer gold experienced its worse (in terms of time) downtrend of the seven-year bear market.

But since bottoming in October it has rallied, albeit weakly. It is still mired in that bear market, gamely trying to push through the $1300 barrier. The important zone is the $1365-75 post-Brexit vote area.

And with Brexit very much up in the air at this point, despite the best efforts to project otherwise by The Davos Crowd and their political/media quislings, gold’s relative weakness is a real worry for long-suffering gold bulls.

While the currently monthly chart is a mildly-bullish uptrend, and has been since December 2015, it is a counter-trend withing a broader bear market that has not finished.

But, we know all this. Nothing about gold has been interesting for months. Newmont Minng (NYSE:NEM) and Goldcorp (NYSE:GG) announced a huge merger the other day, funds are scrubbing gold from both their names and their portfolios, investors have lost all interest.

That is because the real story is not what’s happening in the U.S., and consequently the dollar, it is Europe.

And this is reflected in the euro.

As I said at the beginning, the election of Donald Trump created a very strong pair trade between the euro and gold. Since the October bottom, however, that trade is breaking down.

Look at the strength of the move by gold in euros since the October low. This is now challenging the 2018 high — a triple top breakdown — and hinting at a push towards €1200.

This is a far more bullish move than we saw in dollars. And it says that the breakdown in gold last summer may very well be the false move to get everyone on the wrong side of the trade.

New bull or bear markets happen only when a significant majority of actors are betting with the current trend which has played out. Once everyone is a bull there are no more buyers and vice versa.

It also screams that investors are now looking at gold as a safe-haven play again and it is not purely trading as a currency pair. There is a new dynamic at play that hasn’t been there, frankly, since the run up to Brexit.

Moreover, it has been plainly obvious watching the day-to-day trading of both gold and the euro that there is a concerted effort to manage this price level.

Gold isn’t breaking out in Japanese Yen or Swiss Francs, at this point only the euro and the British pound.

So despite the Project Fear mongers, gold is making the right noises about where things are heading. Gold’s primary role is as a check on the public’s confidence of political institutions.

A secular bull market only happens when Gold is rising against every government currency. Given the importance of the EU to the global trade and financial status quo a breakdown there politically has the potential to turn a localized bull market into a secular one.

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As President Trump orders 46,000 federal employees back to work without pay (while signing a bill to compensate all federal employees going without pay after the shutdown ends), the word around the water cooler at the TSA is that, six days after federal employees missed their first paycheck since the shutdown began, more of the airport security agency’s screeners and other employees are citing financial hardship as a reason for calling out of work as the shutdown enters its 27th day.

Though it hasn’t released data about absenteeism witnessed since the shutdown, in a news release Wednesday about checkpoint operations (released as airports around the country cut down on security lines or, like Houston Airport, close whole terminals, the agency said “many employees are reporting that they are not able to report to work due to financial limitations.”

TSA Administrator David Pekoske said that most employees who call out have been honest about their reasons, and the most common excuse he hears is financial hardship – like, for example, employees being unable to afford child care or transportation (i.e. no gas in the car).

#breaking @TSA_Pekoske confirms to @cbsnews the increase in @tsa sick calls is from officers calling out for financial reasons. It’s not a sick out, officers aren’t pretending to be sick. They are saying they cannot afford to work for free any longer. #shutdown

— Kris Van Cleave (@krisvancleave) January 16, 2019

TSA spokesman Michael Bilello confirmed this in a statement.

“We are hearing from our workforce that many of them are calling out not because they are sick but because they are unable to make it to work for financial reasons,” Bilello said.

There are no plans to punish workers who call out, the agency said. The TSA employs some 51,000 federal security workers who earn roughly $41,000 a year.

As of Tuesday, callout rates had roughly doubled from the same day a year earlier, with 6.1% of security officers absent, compared with 3.7% the year prior.

And now that Trump is ordering more airport security workers to return to work, expect this number to rise as the shutdown has no end in sight.

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After 5 out of 5 big investment banks reported disappointing FICC revenue results, hopes that Morgan Stanley would break the trend when it reported Q4 earnings this morning were subdued at best, and for good reason: moments ago the bank reported Q4 FICC revenue of just $564MM, a huge miss to the $823MM consensus expectation and a whopping 30% drop Y/Y which was also the biggest fixed income revenue drop on Wall Street.

The result was so bad, one has to go back to 2015 to find a lower FICC revenue.

Had that been all, the bank may have scraped through unscathed like so many of its peers, but whereas other banks managed to cover up for FICC disappointment with the outperformance of other groups, Morgan Stanley did not, and as a result Q4 revenue printed at just $8.55BN, far below the $9.35BN expected and in fact below the lowest estimate in the range of forecasts of $8.97BN to $10.17BN.

This also resulted in a painful EPS miss, with the company reported 73 cents in Q4 EPS (thanks to a 16.2% effective tax rate), far below the 89 cents expected, a number which excluded a 7 cent per share tax benefit. And while net income more than doubled to $1.53 billion from $643 million a year earlier, that is because the firm took a $1 billion charge related to the U.S. tax overhaul last year.

So alas whereas other banks could at least pretend the core business is doing well, MS had no such luxury, especially since equity sales and trading revenue of $1.93BN also missed expectations of $2.01BN; the number was “essentially unchanged from a year ago reflecting higher revenues in the financing business, partially offset by lower results in execution services.” As for the FICC plunge, the bank said that this is due to “unfavorable market making conditions that resulted from significant credit spread widening and volatile rate movements.”

The company’s key Wealth Management group also disappointed, reporting pre-tax income from continuing operations of $1.0 billion compared with $1.2 billion a year ago. Net revenues for the current quarter were $4.1 billion compared with $4.4 billion a year ago principally driven by losses related to investments associated with certain employee deferred compensation plans. Even so, total client assets were $2.3 trillion and client assets in fee-based accounts were $1.0 trillion at the end of the quarter.

There was a silver lining in the bank’s investment banking revenue of $1.49BN which while unchanged from a year ago, was better than the $1.35BN expected.

• Advisory revenues of $734 million increased from $522 million a year ago on higher levels of completed M&A activity across all regions.
• Equity underwriting revenues of $323 million decreased from $416 million a year ago reflecting lower revenues primarily on IPOs.
• Fixed income underwriting revenues of $360 million decreased from $499 million a year ago driven by lower bond and loan issuances.

Alas, this was not enough to offset the broader gloom. To be sure, the bank tried to make up for the drop in revenue by slashing expenses, as compensation costs of $3.8 billion decreased from $4.3 billion a year ago on lower net revenues, partially offset by
a reduction in the portion of discretionary incentive compensation subject to deferral (non-compensation expenses of $2.9 billion increased from $2.8 billion a year ago).

Of course, CEO James Gorman was optimistic, saying that “In 2018 we achieved record revenues and earnings, and growth across each of our business segments – despite a challenging fourth quarter. We delivered higher annual returns, producing an ROE of 11.8% and ROTCE of 13.5%, as we continued to invest in our businesses. While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients.”

Yet after the first truly dreadful bank results of the earnings season the market disagreed, and MS stock, which is a 0.2% contributors to the S&P, tumbled 5% and sent US equity futures near session lows and in danger of breaching 2,600 – the new key support – in the S&P500.

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US equity futures and European markets fell after a mixed session in Asia as a better than expected start to earnings season was overshadowed by resurfacing trade tensions between the U.S. and China amid a federal investigation into Huawei Technologies for allegedly stealing trade secrets, as fears about profits and global economic headwinds returned on news Apple plans to cut back hiring for some divisions while Singapore exports unexpectedly fell. Treasuries and the dollar were mixed.

Europe’s Stoxx 600 Index was down 0.2%, dragged lower by autos and leisure stocks, although defensive food and drink stocks rebound from Wednesday’s drop. After being the top performing sector Wednesday, the Stoxx 600 Bank Index declined 1.5% in early trading, making it the worst performing industry group in Europe on the day, and erasing nearly half of Wednesday’s gain after French bank Societe Generale warned it now sees a 20% trading revenue drop on challenging markets, dragging its stock as much as 4% lower. The Stoxx 600 Automobiles & Parts index slumped, hitting Germany’s auto and export-heavy DAX, after Senate Finance Committee Chairman Chuck Grassley said President Donald Trump was inclined to impose tariffs on European cars to win better terms on agriculture. 

“There is some focus on the Grassley comments in relation to auto trade tariffs and also reference to there not being much progress in the U.S. China negotiations last week,” said Bank of Tokyo Mitsubishi strategist Derek Halpenny. “There has obviously there has been a lot of optimism (in markets) since the start of the year and risk appetite has had a pretty good run, but this will place a few question marks over that.”

In the UK, the FTSE 100 Index underperformed despite a stable pound, as Prime Minister Theresa May began talks with her political rivals to try deliver a Brexit deal.

Fresh news was thin as European trading got underway, but traders had more than enough to digest from last 24 hours to follow Asia’s overnight dip into the red. China’s blue-chip index ended down 0.55%, led lower by a decline in the country’s second-largest home appliances maker, Gree Electric, after it warned of slower profit growth as the economy loses steam. Chinese Premier Li Keqiang promised increased government investment this year and the country’s central bank injected more cash into the financial system, bringing the amount for the week to 1.14 trillion yuan ($168.74 billion).

Shares in Hong Kong tumbled, and some companies dropped more than 75 percent without obvious explanations.

Stoking some caution was news that U.S. lawmakers introduced bills on Wednesday that would ban the sale of U.S. chips or other components to Huawei or other Chinese telecommunications companies that violate U.S. sanctions or export control laws. That came shortly before the Wall Street Journal reported federal prosecutors were investigating allegations that Huawei stole trade secrets from U.S. businesses. Separately, Handelsblatt reported the German government is actively considering stricter security requirements and other ways to exclude Huawei from a buildout of fifth-generation (5G) mobile networks.

Also lurking were worries that the U.S. government shutdown – now in its record 27th day – was starting to take a toll on its economy. White House economic adviser Kevin Hassett said the shutdown would shave 0.13% off quarterly economic growth for each week it goes on.

A better-than-expected start to the earnings season has so far not been enough to spur an extended rally, and on Thursday S&P futures were down 0.3%, the sames as Dow futures while Nasdaq fuitures were 0.4% lower. The VIX was trading 1.5% higher.

As Bloomberg writes this morning, risk assets are showing fresh signs of fatigue after a stronger start to 2019 than 2018’s (and the January meltup), when optimism about trade tensions and central bank support overshadowed a litany of concerns as the global economy slowed. Now with both the U.S. government shutdown and Brexit impasse dragging on, and lingering stress between America and China, there are plenty of reasons for caution.

Over in Brexit-land, as expected, British Prime Minister Theresa May narrowly won a confidence vote overnight and invited other party leaders for talks to try to break the impasse on a Brexit agreement. An outline for Plan B is due by next Monday. Markets assume the exit date will be extended past March 29.

“Nothing has happened in the last 24 hours to dissuade us from the view that we are headed in the direction of an Article 50 delay, a softer Brexit or no Brexit,” said Ray Attrill, head of FX strategy at NAB. This left the pound steady at $1.2872, though still short of Monday’s peak at $1.2929. It reached a seven-week low against the euro before steadying at 88.50 pence

UK PM May said there is now an opportunity to find a way forward on the Brexit and that she intends to deliver on Brexit which she believes it is her duty to do so. PM May also said we must work out what lawmakers want and that she spoke to several parties although the Labour party leader has yet to take part in discussions, while there were comments from Labour Party leader Corbyn who declared there will be no talks with PM May until a no-deal Brexit is off the table.

BBC’s Political Correspondent Nick Eardley tweets “Tory sources predict majority of Conservatives in Commons would refuse to back permanent customs union and several ministers would quit.” Subsequently reported that the EU are to condition any potential delay to Brexit on an agreement being struck between UK PM May and opposition leader Corbyn, according to El Pais.

In central bank news, Fed’s Kashkari (Non-Voter, Dove) said Fed has less room to cut rates in future downturn but has other tools, while he repeated that he wants to see wage growth and inflation before backing a rate hike.

In the ongoing shutdown drama, President Trump signed bill to give Federal workers back pay from the shutdown, while there was also reports that the White House threatened to veto the stopgap bill the House is preparing, while US Senate Finance Committee Chairman Grassley said Trump administration’s trade negotiations may be delayed due to government shutdown.

In currencies, the U.S. dollar was mixed, easing against the yen to 108.79 but flat versus the euro at $1.1396. The dollar index was up at 96.088. The yen led G10 gains following a U.S. probe into China’s Huawei and as equities and emerging-market currencies drifted lower. The dollar rose on supportive early London flows yet lost steam as the session progressed and the euro and sterling eventually erased modest losses. Commodity currencies were under pressure as risk sentiment waned, with Treasuries edging up and oil lower.

In commodities, oil traded lower, with U.S. crude remaining close to $52 a barrel as traders worried about the strength of demand in the United States after its gasoline stockpiles grew last week more than analysts had expected. Brent (-1.0%) and WTI (-1.2%) prices hover under $61/bbl and $52/bbl respectively, weighed on by the record EIA US crude production figure of 11.9mln BPD for the previous week, an increase from the prior of 11.7mln BPD; a level which was already the largest national output globally. Elsewhere, it has been reported that Russian Energy Minister Novak and Saudi Energy Minister Al Falih are to meet at next weeks Davos summit. Separately, Libyan oil ports Es Sider, Zueitina and Hariga have reportedly reopened following weather improvements. Palladium hit record highs thanks to increasing demand and lower supply. Spot gold was little changed at $1,294.91 per ounce.

The publication of housing starts and building permits is postponed because of the government shutdown. U.S. initial jobless claims are expected to be little changed against last week, while the Philadelphia Fed Business Outlook and the Bloomberg Consumer Comfort will be watched.

Morgan Stanley, PPG Industries and Fastenal are among companies reporting earnings before the market opens, while Netflix and American Express will report after the close.

Markets Snapshot

• S&P 500 futures down 0.4% to 2,604.00
• STOXX Europe 600 down 0.2% to 349.81
• MXAP up 0.06% to 152.46
• MXAPJ down 0.1% to 494.41
• Nikkei down 0.2% to 20,402.27
• Topix up 0.4% to 1,543.20
• Hang Seng Index down 0.5% to 26,755.63
• Shanghai Composite down 0.4% to 2,559.64
• Sensex up 0.3% to 36,415.78
• Australia S&P/ASX 200 up 0.3% to 5,850.05
• Kospi up 0.05% to 2,107.06
• German 10Y yield rose 0.3 bps to 0.227%
• Euro up 0.07% to $1.1400
• Italian 10Y yield fell 11.7 bps to 2.396%
• Spanish 10Y yield fell 1.4 bps to 1.361%
• Brent futures down 0.7% to $60.92/bbl
• Gold spot little changed at $1,293.94
• U.S. Dollar Index little changed at 96.10

Asian equity markets were choppy throughout the session but eventually followed suit to the gains on Wall St, where financials led after strong earnings from banking powerhouses Goldman Sachs and Bank of America. ASX 200 (+0.3%) and Nikkei 225 (-0.2%) were mixed as resilience in financials and commodity-related sectors kept the Australian benchmark afloat, while Tokyo trade was hampered again by currency effects. Hang Seng (-0.5%) briefly surmounted the 27,000 level for the first time since early December where it then met resistance and Shanghai Comp. (-0.4%) swung between gains and losses as participants digested another substantial liquidity operation by the PBoC, as well as US-China concerns after reports that US prosecutors are to pursue criminal charges against Huawei over theft of trade secrets. Finally, 10yr JGB futures recovered from the prior day’s lows but with price action kept range-bound on the session alongside the indecisive risk tone in the region and a relatively tepid Rinban announcement by the BoJ.

Top Asian News

• China Confirms Vice Premier Liu to Attend Trade Talks in U.S.
• China’s Coffee Unicorn Is Burning Millions to Overtake Starbucks
• Debt-Laden Indian Airline Jet Working With Banks on Bailout Plan
• Erdogan Gets Emergency Powers to Use If Turkish Economy at Risk
• Time to Sell Rally in Developed Market Stocks: Credit Suisse

Major European equities (ex-SMI) are mostly in the red, albeit off worst levels [Euro Stoxx 50 -0.3%]. The DAX (-0.3%) is the underperforming index weighed on by the poor performance in the auto sector (-0.9%), following US Senate Finance Committee Chairman Grassley commenting that he believes US President Trump is inclined to impose new US auto tariffs; with Daimler (-1.4%), Volkswagen (-1.4%) and BMW (-0.6%) in the red as a result. Sectors are broadly in the red, with financials underperforming due to Societe Generale (-4.0%) being firmly in the red after stating that Q4 2018 was impacted by disposals. Other notable movers include Sage Group (+5.7%) towards the top of the Stoxx 600 after the Co reiterated their full year 2019 guidance. Elsewhere, ITV (-6.8%) and Voestalpine (-6.2%) are at the bottom of the Stoxx 600 following a broker downgrade and profit warning respectively.

Top European News

• Alstom Warns Siemens Rail Deal Could Be Blocked by Europe
• Italy’s League Said to Seek Far-Right Ally to Box In Five Star
• U.K. Nuclear Plans Ditched as Hitachi Sees $2.8 Billion Charge
• Primark Owner Gains After Holiday Rebound From Tough November

In FX, it has been a choppy day for the Dollar as the index fluctuated in a range of 96.021-250 with upside triggered by rising tensions between US and China regarding Huawei. In terms of the latest, US prosecutors are to pursue criminal charges against the company over trade secret theft, while separate reports noted that US lawmakers are looking to pass a bill which bans chip sales to Huawei and ZTE. In response, the Chinese Foreign ministry urged US lawmakers to stop this bill. On the technical front the index sits just above its 100 DMA at 96.045 ahead of its 50 DMA at 96.639, just below the 2019 peak at 96.960.

• JPY–  The Yen firmer on the back of safe-haven demand amid the aforementioned Huawei-related US-Sino tensions. USD/JPY retreats further below the recently-claimed 109.00 level to a low of 108.72 as the pair is underpinned by its 50 HMA around the intraday low. In terms of option expiries, nothing major to report today, however tomorrow sees some USD 3bln between 109.00-10.
• EUR – The Euro was largely unreactive to the in-line December inflation figures as the single currency continues to move in tandem with the Dollar, thus EUR/USD has experienced a relatively choppy session in the range of 1.1372-1.1404 ahead of comments from ECB-hawk Lautenschlager who is due to speak in Dublin at 1100GMT following a recently published interview in which she said she will wait for the March projections before changing her view about a rate hike this year. In terms of option expiries, tomorrow sees 4bln scattered between 1.1400-25.
• GBP – Sideways action following PM May’s victory at last night’s Labour-tabled vote of no confidence in which the Premier defeated the motion via 325 vs 306 votes, as expected. Sterling sold off with Cable re-testing 1.2700 to the downside in the run up to the results before spiking higher to levels just shy of 1.2900 upon the announcement. In terms of the latest, Spanish press reported that the EU are to condition any potential delay to Brexit on an agreement being struck between UK PM May and opposition leader Corbyn, though Sterling was unreactive to this as Corbyn already made it clear that he will not hold talks with the Premier until a no-deal Brexit is off the table. GBP/USD action is largely dominated by Dollar fluctuation as the pair remains choppy sub-1.2900 and below its 100 DMA at 1.2893.

In commodities, Brent (-1.0%) and WTI (-1.2%) prices hover under USD 61/bbl and USD 52/bbl respectively, weighed on by the record EIA US crude production figure of 11.9mln BPD for the previous week, an increase from the prior of 11.7mln BPD; a level which was already the largest national output globally. Elsewhere, it has been reported that Russian Energy Minister Novak and Saudi Energy Minister Al Falih are to meet at next weeks Davos summit. Separately, Libyan oil ports Es Sider, Zueitina and Hariga have reportedly reopened following weather improvements. Gold has traded within a narrow USD 4/oz range, as the dollar has also traded largely unchanged due to a lack of catalysts. Elsewhere, the US Senate voted to reject legislation to keep sanctions on companies linked to Oleg Deripaska, including Rusal. Separately, steel company Voestalpine have issued their second profit warning in 4 months; citing US plant operating problems and cartel investigation provisions as the cause. OPEC monthly report: OPEC crude production fell 751k bpd in December to average 31.58mln bpd, according to secondary sources with cuts led by Saudi Arabia, Libya.

Looking at the day ahead, we get more housing market data with December housing starts and building permits numbers although these will likely be delayed due to the govt shutdown. There should also be some focus on the Philly Fed business outlook print in light of the weak empire manufacturing reading earlier this week, while the other data due is the latest weekly initial jobless claims reading. It’s worth noting that Japan’s December CPI reading is also due out late this evening. Away from all that the ECB’s Lautenschlaeger is due to speak this morning in Dublin while the Fed’s Quarles speaks this afternoon at an insurance forum. Meanwhile the OPEC monthly report is due out while earnings wise it’s the turn of Netflix and Morgan Stanley today.

US Event Calendar

• NOTE: Housing starts/bldg permits data postponed by govt shutdown
• 8:30am: Philadelphia Fed Business Outlook, est. 9.5, prior 9.4
• 8:30am: Initial Jobless Claims, est. 220,000, prior 216,000
• 8:30am: Continuing Claims, est. 1.73m, prior 1.72m

DB’s Jim Reid concludes the overnight wrap

Watching the House of Commons over the last 48 hours has been a good appetiser for the final series of Game of Thrones out this April. Well we haven’t had dragons…….. yet! It seems that the new series is out on April 14th and I move in to my new house supposedly (builder permitting) on April 22nd. Given that the size and quality differential between the TV in my temporary rental accommodation and my new house is substantial I will likely be going off the grid and away from civilisation for 8 or 9 days from mid April to avoid spoiler alerts before I move in and watch two episodes back to back.

I wonder what difference going off the grid for 8 or 9 days now would mean in terms of progress on Brexit when you returned. Now PM May has won her confidence vote by 325-306 (ironically by a ratio of 52:48), things have to move fast to ensure she reports back to the house by Monday (as required) on the next steps. In her post-vote remarks, she continued her pivot toward a softer Brexit, saying “we must find solutions that are negotiable and command sufficient support in this House.” She said she planned to begin talks immediately with senior parliamentarians and leaders of all parties, which was encouragingly conciliatory. The latter point, indicating she would invite Corbyn and other opposition leaders to contribute was new and positive.

However, Mr. Corbyn and the LibDem’s both indicated that they will not meet unless and until May commits to removing the possibility of a “no-deal” outcome, a move that she has so far refused. In a late televised statement though, PM May said she had met with the LibDem leader already while expressing disappointment that Labour aren’t currently prepared to talk. Pressure is now building on the Labour Party to announce what their strategy is. Previously they have said that if they can’t force a general election then they will pivot towards a second referendum. We will wait and see. Four other opposition parties wrote a letter urging the Labour Party to back the second referendum with the implication that if they didn’t then these parties may not support any further confidence votes called by Labour in the Government. So it’s less likely that Labour can hide behind no firm policy and repeated try to bring the government down. Elsewhere the SNP’s Ian Blackford committed to working with May, but did reiterate their call for a “people’s vote” to be on the table. Finally, the DUP’s Nigel Dodds (whose 10 votes effectively provided May her majority in the confidence vote) called for the UK to leave the EU as one country, in a possible move to resist any regulatory divergence between Northern Ireland and the rest of the UK.

DB’s strategists still think the direction of travel is unequivocally toward a soft Brexit and a stronger pound. For them to be right, someone has to back down though and while I personally think there would be a cross party majority for staying in the customs union such a move could split the Conservative Party and as such be a poisoned chalice to them. What will Mrs May see as the priority? Keeping her party from the risks of a damaging split or trying to find a deal? The next stage of negotiations really feels like one ginormous game of “whac-a-mole”.

The pound was directionless yesterday (and this morning), bouncing around the $1.2870 level all day ahead of the vote, and ultimately closing in that region, up +0.14% on the day. The FTSE 100 dipped -0.47%, consistent with the prior rally in sterling after Tuesday’s vote.

The London Times reported late yesterday afternoon that the EU is considering offering a delay of Brexit until 2020. It comes from a credible source but whether it’s realistic is another matter. Many Conservative MPs would probably not be keen on the extension being that long. It wouldn’t do much to focus minds in the short-term and also allow more time to build more and more momentum for a second referendum which creates a more binary outcome and uncertainties. So interesting (if true) that the EU are prepared to offer a lot of road for the can to be kicked along but not too sure it will be that useful.

Earlier, the EU, via Barnier, confirmed that they would actively engage with a softer Brexit approach on the future relationship while late in the afternoon the Handelsblatt reported that the EU is ready to make further offers on the backstop, but that EU officials want the initiative to come from Ireland. So a lot of noise, some small steps in a positive direction but a long way to go to get this resolved.

Around all this, risk assets had US bank earnings to thank yesterday as the S&P 500, DOW, and NASDAQ notched up modest gains of +0.21%, +0.59%, and +0.15% respectively with the banks sector of the S&P rallying +2.72% and to the highest since early December. This followed results from Bank of America (+7.16%) and Goldman Sachs (+9.63%). Like what we’ve seen with the other US banks so far, there were much bigger-than-expected revenue declines in FICC trading however the market has instead focused on positive net interest income and investment banking fees, and to the rosier outlooks being painted by management.

Just before US markets closed, the Wall Street Journal reported that US federal prosecutors are close to indicting Chinese tech firm Huawei for allegedly stealing trade secrets from US businesses. The move could exacerbate economic tensions between the US and China, and the S&P 500 promptly surrendered half of its gains. Regardless, this year still ranks as the 10th best start to a year ever for the S&P 500 (out of the 92 years we have daily data) with a +4.35% YTD gain. In fact it’s the best start since 1987 based on data through to the 16th of January each year while the NASDAQ (+6.02%) has had its best start since the post-tech crisis rebound of 2003.

Credit also performed well yesterday with US HY cash spreads finishing -7bps tighter. That puts the rally back from the January 3rd wides this year at an impressive -92bps. US IG spreads were 2bps tighter and are now 12bps tighter over the same period while Treasury yields ticked +1.1bps higher to 2.722% and continue to be a bit of a sideshow at the moment. European bond markets weakened slightly as well, with Bund yields +1.8bps, though BTPs rallied -12.0bps. Sentiment around the Italian banking sector improved after Finance Minister Tria told reporters that banks are reducing NPLs in line with their plans, in a rebuke to reporting earlier this week that hinted at potential NPL problems. Italian bank stocks rallied +3.97%, back to flat on the week.

Oil continued its strong run, with WTI crude prices rising +0.48% for their 11th gain over the last 13 sessions, the best stretch since October 2017. US inventories data showed a 2.68million barrel draw in US stockpiles, though gasoline inventories continued to build. Saudi Arabia reportedly cut its crude shipments to US refineries, which could reflect either a reduction in Saudi supply or reduced demand from US refiners given the large stockpiles of refined products. Overall, the data did not give a clear signal on where prices are heading, though our strategists target further gains over the medium term.

Overnight in Asia markets are largely up with the Shanghai Comp (+0.46%) and Hang Seng (+0.37%) reversing early losses and leading the gains likely on overnight news that China is speeding up its investment law approval process that would create measures for the administration to protect the intellectual property of foreign investors and protect them from forced transfer of technologies. This is clearly a move towards addressing two of the thorniest issues in the US-China trade talks. The official Xinhua News Agency reported that the National People’s Congress Standing Committee has scheduled a special session for January 29-30 to consider the bill and a personnel reshuffle. Interestingly the closed door gathering will start just a day prior to China’s Vice Premier Liu’s expected travel to the US for trade talks. In the meantime, Kospi (+0.16%) is also up while the Nikkei (-0.09%) is trading flattish after a volatile start to today’s session on a strengthening yen (+0.08%). Elsewhere, futures on S&P 500 are down -0.28% while all the G10 currencies (except the yen) and most Asian currencies are trading weak against the greenback this morning. In commodities, crude oil prices (WTI -0.59% and Brent -0.51%) are heading lower today after the spectacular run described above.

In other news it’s been confirmed that US Secretary of State Pompeo will meet with a senior North Korean official overseeing nuclear talks this Friday with the view that this could lead to a second summit soon. The North Korean representative, Kim Yong Chol, will reportedly bring a new letter for President Trump from Kim Jung Un. In his New Year’s address, the dictator suggested that he may seek a “new path” if talks do not progress, potentially signaling more binary risks moving forward, toward either further reconciliation or a breakdown in discussions.

The Fed released its regular beige book, with anecdotal economic details. The report said that wages grew across skill levels, though the gains remain modest. The economy continues to grow but the report cited some weak spots emerging, and price gains remain “modest to moderate.” Overall, the report is consistent with slowing, but still positive growth, and since inflationary pressures remain muted, it should allow the Fed to maintain its stance of paused rate hikes.

As far as yesterday’s data was concerned, in the US the NAHB housing market index surprised to the upside at 58 versus expectations of 56. That was only the third monthly improvement since 2017, and it at least provides some relief from the recent fall which has seen the index drop from a peak of 74 at the end of 2017. The other data out in the US was the December import price index which fell slightly less than expected at a headline level (-1.0% mom vs. -1.3% expected) and rose a bit more than expected on the core measure (+0.3% mom vs. 0.0% expected). Here in the UK, we got the December inflation data and there was a small upside surprise in the core reading at +1.9% yoy (vs. +1.8% expected). The headline was on the money at +2.1% yoy with the overall message not really changing the narrative from our economists that inflation is slipping faster than expected and should settle below target this year.

To the day ahead now where this morning in Europe we’ll get the final December CPI revisions for the Euro Area (no change from +1.0% yoy expected) along with November construction output data. In the US this afternoon there’s more housing market data due with December housing starts and building permits numbers. There should also be some focus on the Philly Fed business outlook print in light of the weak empire manufacturing reading earlier this week, while the other data due is the latest weekly initial jobless claims reading. It’s worth noting that Japan’s December CPI reading is also due out late this evening. Away from all that the ECB’s Lautenschlaeger is due to speak this morning in Dublin while the Fed’s Quarles speaks this afternoon at an insurance forum. Meanwhile the OPEC monthly report is due out while earnings wise it’s the turn of Netflix and Morgan Stanley today.

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For the second time in two years, children’s clothing retailer Gymboree Group Inc. has filed for Chapter 11 bankruptcy protection, offering the latest sign of the looming bloodbath in the retail space following stagnant foot-traffic during the holiday sales season (which was dominated by e-commerce), and the strain from higher interest rates. Gymboree, which filed late Wednesday, wasn’t the only retailer to file within the last 24 hours: Department Store Shopko also filed on Wednesday.

As part of its restructuring plans, Gymboree will close 800 Gymboree- and Crazy 8-branded stores in the US and Canada. In its press release, the retailer said it’s planning to sell its high-end children’s fashion line Janie and Jack, its online platform and its intellectual property – though all of these will remain open for now as the restructuring continues. Gymboree Play & Music, which split from Gymboree in 2016, will not be impacted.

The filing comes after Gymboree said last month that it had begun to review “strategic options” including a “sale at the brand level”.

The company previously invoked Chapter 11 in the summer of 2017, leading to the closure of about 350 of its 1,281 locations. The company was founded in the 1970s as a company that offered classes for toddlers and parents in Northern California, before diversifying into making children’s clothing.

The filing notably followed by less than a day a deal struck by Eddie Lampert to save Sears from liquidation.

Read the full press release below:

* * *

SAN FRANCISCO, Jan. 16, 2019 /PRNewswire/ — Gymboree Group, Inc. (the “Company” or “Gymboree Group”), today announced that the Company and its U.S. subsidiaries have voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia.

In addition, the Company’s Canadian subsidiary, Gymboree, Inc., intends to seek protection in proceedings pursuant to the Bankruptcy and Insolvency Act of Canada(“BIA”) in the Ontario Superior Court of Justice (Commercial List). Gymboree Group intends to use these proceedings to facilitate an orderly wind-down of all of its Gymboree® and Crazy 8® store locations and operations, while continuing to pursue a going-concern sale of its Janie and Jack® business and a sale of the intellectual property and online platform for Gymboree®. The Company has entered into an asset purchase agreement with Special Situations Investing Group, Inc. (“SSIG”), an affiliate of Goldman Sachs & Co. LLC, pursuant to which SSIG will serve as the stalking-horse bidder in a court-supervised sale process for Janie and Jack®.

Gymboree Group expects to conduct an auction pursuant to Section 363 of the U.S. Bankruptcy Code no later than February 25, 2019, pursuant to bid procedures to be approved by the Court. Pursuant to the asset purchase agreement, SSIG has agreed to acquire the Janie and Jack® business and the intellectual property and online platform for Gymboree®. The asset purchase agreement sets the floor for the auction, which is designed to achieve the highest or otherwise best offer, subject to approval by the Bankruptcy Court. Shaz Kahng, appointed in November 2018 as Gymboree Group CEO, said, “The Company has worked diligently in recent months to explore options for Gymboree Group and its brands, and we are saddened and highly disappointed that we must move ahead with a wind-down of the Gymboree and Crazy 8 businesses.

At the same time, we are focused on using this process to preserve the Janie and Jack business – a strong brand that is poised to grow – by pursuing a sale of the business as a going concern. As we move ahead, we are working to minimize the impact on our employees, customers, vendors and other stakeholders.”

Ms. Kahng continued, “We have tremendous appreciation for the hard work of our dedicated employees and their commitment to Gymboree Group and our customers. We are also incredibly grateful for the many years of support by our vendors. And, finally, we thank the customers of the Gymboree, Janie and Jack and Crazy 8 brands for their loyalty – our teams have been proud to serve you since Gymboree was first started as a provider of mom-and-baby classes in 1976.” Gymboree®, Janie and Jack® and Crazy 8® stores and online platforms are currently open and continuing to serve customers. The Company will provide an update on plans for its Janie and Jack® stores as the court-supervised sale process progresses.

Gymboree Group will provide more details about the plans for its Gymboree® and Crazy 8® going out of business sales in the near term. Gymboree Group has received a commitment for a debtor in possession financing, which consists of $30 million in new money loans to be provided by SSIG and Goldman Sachs Specialty Lending Holdings, Inc. and a “roll up” of all of Gymboree’s obligations under the prepetition Term Loan Credit Agreement in an amount not less than $89 million.

If approved by the court, the financing package is expected to support the Company’s operations during these proceedings. Gymboree Group has filed a number of customary motions with the U.S. Bankruptcy Court seeking authorization to support its operations during the process, including authority to continue payment of employee wages and maintain healthcare benefits and certain other relief customary in these circumstances. The Company has sought authorization from the Court to continue to honor customer gift cards for 30 days.

Gymboree Group has discontinued its GymBucks and Gymboree Rewards programs effective immediately. Additional information regarding Gymboree Group’s Chapter 11 filing is available at www.GymboreeGroupRestructuring.com. Court filings and information about the claims process are available at https://cases.primeclerk.com/gym or by calling the Company’s claims agent, Prime Clerk, at (929) 272-0801 (or toll-free at (844) 399-4163 for international calls), or by sending an email to gyminfo@primeclerk.com.

Additional information regarding the Canadian proceedings of Gymboree, Inc. under the BIA will be available on the website of KPMG Inc., as Proposal Trustee: home.kpmg/ca/gymboree, or by calling (416) 777-3520 or (833) 467-5379, or by sending an email to gymboree@kpmg.ca Gymboree Play & Music®, a separate entity, is not included in the court proceedings.

Milbank, Tweed, Hadley & McCloy LLP is serving as the Company’s legal counsel, Berkeley Research Group is serving as its restructuring advisor, and Stifel, Nicolaus & Co., Inc. and Miller Buckfire & Co., LLC are serving as its financial advisor. Norton Rose Fulbright Canada LLP is counsel to Gymboree Canada. KPMG Inc. is acting as Proposal Trustee and is represented by Osler, Hoskin & Harcourt LLP.

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Authored by Martin Armstrong via ArmstrongEconomics.com,

The latest in Germany is now Merkel, who offered cash to refugees to return home last November, has stepped up her game and offered to pay their living expenses for one year if they return home.

Billboards are appearing all over Germany making this latest offer. Believe it or not, more than 20,000 refugees vanished when they were going to be deported. This illustrates that politicians should simply NOT be allowed to make unilateral decisions. In this case, Merkel’s decision has impacted ALL of Europe when the rest of Europe had NO opportunity to agree or vote on the issue.

Chancellor Merkel’ poll rating internationally collapsed after her refusal to yield to Greece in the debt crisis. She allowed the Greek people to be strip-mined of assets to pay for their corrupt politicians. When she was being criticized by the world press for her obstinance with regard to Greece, she did a 180-degree turn and changed the subject from Greece to Syria.

It all began when on July 15, 2015, Time Magazine wrote:

“Berlin’s role as the enforcer in negotiations over Greece’s debt could cause lasting damage to Germany’s global image.”

Merkel has kept her own poll people to make sure she turns and stays with the popular swings. When her image was tanking due to her policies in Greece, this is when, without a European vote, she flipped solely for her personal political career. The Washington Times wrote on September 10, 2015:

“Angela Merkel welcomes refugees to Germany despite rising anti-immigrant movement.” 

The entire refugee crisis was created by Merkel as a diversion because Germany was being viewed as the harsh enforcer of loans, which were structured to hide what Goldman Sachs had instituted to get Greece into the euro from the outset. The entire reason for the refugee crisis was simply the view of Merkel globally. She needed to reshape her image from the loan shark to the caring Mother Merkel.

Europe is now paying the price because Merkel was simply concerned about her polls.

The Refugee Crisis thus began with the peak in government on our model projected for October 1st, 2015 (2015.75). When Russia invaded Syria on the very day of the Economic Confidence Model, it signaled that Syria would be a focal point of this wave. The Refugee Crisis has been monumental ever since.

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A dramatic and sudden slowdown in the rate at which numerous commodities are being shipped to China suggests slowing demand for raw materials in the world’s second-largest economy, and signals a wider economic slowdown globally looms.

“Recent shipping data has turned negative with charter rates across all sectors notably weaker compared to late November levels,” Morgan Stanley analysts Fotis Giannakoulis, Qianlei Fan, and Max Yaras wrote.

“While such moves are common, the synchronized decline may be a warning for Chinese commodity demand.”

Morgan Stanley continues:

During the last six weeks almost all shipping sectors have seen charter rates move lower, raising concerns about the health of underlying demand.

• The Baltic Dry Index is down 17% since mid-December (Exhibit 6) with all vessel types earning lower rates compared to a year ago despite the sharp drop in dry bulk supply growth.

• Meanwhile, data from China Customs show that iron ore imports shrunk by 3.2% in the last three months through November (Exhibit 7), while steel margins have recently turned negative.

• On the crude side, VLCC rates to Asia have also seen a notable decline, falling from $60 in November down to $30k currently (Exhibit 8) with crude flows to China showing signs of decelerating momentum. According to ClipperData, in 2018 crude flows to China remained strong, growing by 7.6%, but below the 10.1% growth rate seen in 2017. Over the last four weeks data shows further declines, although this is mostly attributed to the slowdown in supply due to the OPEC+ cuts, as well as delays at Chinese ports.

• On the gas side, spot LNG charter rates have also been weaker, dropping from $190k in November to $80k currently (Exhibit 10). While in percentage terms the drop in LNG shipping rates seems dramatic, the chartering market remains relatively tight with vessels still earning above mid-cycle levels.

Of course, this data is just the latest in a long line of worrying news for the Chinese economy, but might just be the straw that breaks the ‘hope’ camels’ back.

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Authored by Judith Bergman via The Gatestone Institute,

• The decision to send the criminal inhabitants of the asylum center to the uninhabited island of Lindholm caused great relief in Bording — an element the international press appears to have missed. Clearly, the right of law-abiding citizens to live in peace does not count for much on the scale of international moral outrage.

• Significantly, the outraged international press did not offer any answers to the legitimate question of what governments are supposed to do with hardened criminal asylum seekers, who pose a genuine threat to their surroundings and have been sentenced to deportation, but cannot be deported from the country because of international human rights obligations.

• The problem is far from a uniquely Danish one: virtually all European countries have signed international human rights conventions that leave them with the same dilemma.

• The country did not just “change”. Danish politicians, with their policies, changed it.

In his recent New Year’s speech, Danish Prime Minister Lars Løkke Rasmussen mentioned that Muslim parallel societies constitute a problem and that immigrants must learn to put secular values over religious ones. He just did not say how he planned to address all that. Pictured: Rasmussen in October 2018. (Photo by Rune Hellestad/Getty Images)

Denmark made international headlines in late November 2018, when the Danish government announced a plan to send certain asylum seekers to the small, uninhabited island of Lindholm. The international outrage was intensified when it came to light that the island currently houses a research center for contagious animal diseases; that the ferry which the asylum seekers will be able to take to the mainland during the day (it does not operate in the evening) is named “Virus”; and that the asylum center will be accompanied by a constant police presence on the island.

The group of asylum seekers meant to live in Lindholm consists of criminals of various sorts, including those who have been sentenced to be deported from Denmark, those who are considered a security threat to Denmark, and so-called “foreign warriors”.

The asylum seekers, however, cannot be deported to their country of origin, either because those countries do not adhere to human rights conventions, (which Denmark has signed and by which it is therefore obligated) that prohibit the use of torture, so-called inhumane treatment and the death sentence, or simply because the country of origin refuses to take them back.

The island will undergo a comprehensive renovation, estimated to take nearly three years and to cost Danish taxpayers approximately 759 million Danish kroner (approximately $116 million). Until the renovation is completed, this group of asylum seekers will remain at their current housing facility, an asylum center known as Kærshovedgård, 6 kilometers from the nearest town of Bording. Kærshovedgård, a former prison, was established as an asylum center in 2016.

In the two and a half years since, police have filed 85 charges of violence, threats of violence, vandalism, shoplifting, and drug-related crimes against the inhabitants of the asylum center. The manager of the local supermarket in Bording called the presence of the asylum center “a living hell on earth”. The decision to send the criminal inhabitants of the asylum center to the uninhabited island of Lindholm caused great relief in Bording — an element the international press appears to have missed. Clearly, the right of law-abiding citizens to live in peace does not count for much on the scale of international moral outrage. Now, however, neighbors of Lindholm in the tiny town of Kalvehave on the mainland have voiced their fearsregarding the establishment of the asylum center on Lindholm, which they see as merely moving the problem from one area to another. Some inhabitants are talking about putting up cameras, fences, barbed wire and even acquiring gun permits.

Significantly, the outraged international press did not offer any answers to the legitimate question of what governments are supposed to do with hardened criminal asylum seekers, who pose a genuine threat to their surroundings and have been sentenced to deportation, but cannot be deported from the country because of international human rights obligations. The problem is far from a uniquely Danish one: virtually all European countries have signed international human rights conventions that leave them with the same dilemma.

The prospect of inadvertently attracting more foreigners who may prove to be either criminals or security threats, however, did not dissuade Denmark’s Prime Minister Lars Løkke Rasmussen from signing the UN’s Global Migration Compact in December 2018, despite opposition to the initiative in his own government. It was even claimed that computer “bots” had generated the popular opposition against the Compact on the internet. The more likely reason for opposition to the UN Compact is that more Danes have come to acknowledge that migration has led to a number of grave problems in Denmark.

One such problem is the presence of Muslim parallel societies in major Danish cities, a situation that Danish documentary filmmakers already documented in 2016 in an undercover investigation, with hidden cameras, into claims that imams are working towards keeping parallel societies for Muslims within Denmark.

Since then, things have not improved. In February 2018, for example, Danish television station TV2 News visited Vollsmose, a neighborhood in Denmark’s third largest city, Odense, where Muslim parallel societies are prevalent. The television crew spoke to young Somali women in a café, where men and women sit in separate areas. 31-year-old Hibo Abdulahi, who came to Denmark when she was ten years old, said the reason for the self-imposed gender-segregation is that “Those are our rules. Yes, our law… That is Islamic law, men and women do not sit together”. The reporter asked her if that meant that he was not allowed to sit in the women’s section of the café. “Yes, you can sit here, because you are a white person, so you probably don’t know any better”. Hibo Abdulahi apparently did not consider the café part of a Muslim parallel society:

“The café follows Danish law… This is our culture which we lack and miss a little. What is wrong with that? I simply do not understand why we have to become so integrated. Does that mean we should put away all our culture and be completely Danish? I’ve had enough now. I am very integrated, I have many Danish friends, take it easy, let us have something to ourselves”.

Another way Denmark’s landscape has changed is in the increased presence of mosques. “The minaret is first and foremost a symbol”, according to the Turkish Cultural Association, which is behind the building of a Turkish mosque in Århus, Denmark’s second largest city. The mosque’s minaret, a 24-meter-high construction, is visible to visitors to the city when approaching it from the motorway.

Turkey has been extremely active in ramping up its activities in Denmark, apparently as part of Turkish President Recep Tayyip Erdogan’s plan of strengthening Islam in the West. Denmark already has around 30 Turkish mosques out of approximately 170 mosques in total as of end of 2017. In 2006, there were 115 mosques in all of Denmark — an increase of nearly 50% in little more than a decade.

A recent government study, “Analysis of children of descendants with a non-Western background”, shows that there continue to be huge problems with assimilating immigrants into Danish society.

According to the study, third-generation immigrants — the second generation to be born in Denmark — still do not get better grades in school than their parents did, nor do more of them finish higher education or find employment. As of January 2018, there were 24,200 third-generation immigrants in Denmark, of whom 92% had a non-Western background. Of those with a non-Western background, 41% were of Turkish descent, and 21% were of Pakistani descent.

Today, there are roughly 500,000 immigrants and descendants of immigrants in Denmark. The cost to the Danish state is 33 billion Danish kroner per year ($5 billion or 4.4 billion euros), according to the Danish Ministry of Finance. It is estimated that in 2060 there will be nearly 900,000 immigrants and descendants of immigrants in Denmark, according to Denmark’s official statistical bureau, Danmark’s Statistik. Denmark currently has a total population of 5.8 million people. If the lack of integration persists in the next generation of descendants of immigrants, Denmark is looking at a significant societal problem to which no one appears to have a solution.

Least of all, Prime Minister Lars Løkke Rasmussen. In his New Year’s speech, he said that things are “going well” in Denmark. He did not mention the study about the descendants of non-Western immigrants, or that the Danish government has no significant answers to the many questions that the existence of Muslim parallel societies poses — although he did mention that Muslim parallel societies constitute a problem and that immigrants must learn to put secular values over religious ones. He just did not say how he planned to address all that. “When I was in high school, he also said, “there were around 50,000 people with a non-Western background in Denmark. Today, there are almost half a million. In one generation, our country has changed”. The country did not just “change”. Danish politicians, with their policies, changed it.

Rasmussen also mentioned the recent brutal rape and beheading by ISIS terrorists of two young Scandinavian women, one of whom was Danish, hiking in Morocco:

“We all react with disgust and sorrow. But we must also react by standing for what we believe. Freedom and equality of men. We must fight for our values…. It is not enough to have tough policies, police and border controls. It requires close European cooperation, development aid, diplomacy and increased investments in our defense. We must stand for our free societies”.

Danes might be excused for thinking that their prime minister, who recently joined the UN Global Migration Compact, which encourages more migration, comes across as less than sincere.

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