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Authored by Jerri-Lynn Scofield via NakedCapitalism.com,

The WSJ published a comprehensive investigation Friday, How Google Interferes With Its Search Algorithms and Changes Your Results, that provides fodder for ongoing or new antitrust investigations of the company,  both in the US, and worldwide:

THE JOURNAL’S FINDINGS undercut one of Google’s core defenses against global regulators worried about how it wields its immense power – that the company doesn’t exert editorial control over what it shows users. Regulators’ areas of concern include anticompetitive practices, political bias and online misinformation.

Permit to me quote from the WSJ’s takedown at length – although I encourage readers, if possible, to read the entire (paywalled)  version, for it contains a wealth of information, as well as lots of cool graphics:

Google’s evolving approach marks a shift from its founding philosophy of “organizing the world’s information,” to one that is far more active in deciding how that information should appear.

More than 100 interviews and the Journal’s own testing of Google’s search results reveal:

• Google made algorithmic changes to its search results that favor big businesses over smaller ones, and in at least one case made changes on behalf of a major advertiser, eBayInc., contrary to its public position that it never takes that type of action. The company also boosts some major websites, such as Amazon.com Inc. and Facebook Inc., according to people familiar with the matter.

• Google engineers regularly make behind-the-scenes adjustments to other information the company is increasingly layering on top of its basic search results. These features include auto-complete suggestions, boxes called “knowledge panels” and “featured snippets,” and news results, which aren’t subject to the same company policies limiting what engineers can remove or change.

• Despite publicly denying doing so, Google keeps blacklists to remove certain sites or prevent others from surfacing in certain types of results. These moves are separate from those that block sites as required by U.S. or foreign law, such as those featuring child abuse or with copyright infringement, and from changes designed to demote spam sites, which attempt to game the system to appear higher in results.

• In auto-complete, the feature that predicts search terms as the user types a query, Google’s engineers have created algorithms and blacklists to weed out more-incendiary suggestions for controversial subjects, such as abortion or immigration, in effect filtering out inflammatory results on high-profile topics.

• Google employees and executives, including co-founders Larry Page and Sergey Brin, have disagreed on how much to intervene on search results and to what extent. Employees can push for revisions in specific search results, including on topics such as vaccinations and autism.

• To evaluate its search results, Google employs thousands of low-paid contractors whose purpose the company says is to assess the quality of the algorithms’ rankings. Even so, contractors said Google gave feedback to these workers to convey what it considered to be the correct ranking of results, and they revised their assessments accordingly, according to contractors interviewed by the Journal. The contractors’ collective evaluations are then used to adjust algorithms.

Biases

Big vs. Small. 

One major bias: a preference for big versus small. The WSJ notes that at least for shopping results, Google made the tweak as  it believed consumers are more likely to find what they want at larger vendors. But this bias looks to me like it stymies, rather than promotes competition.

The bias is not limited to shopping, as WSJ reader James West noted in comments (agreeing implicitly with my interpretation of the anti-competitive effect of the Google practice):

 James West

Our company, an independent publisher of financial coverage of small cap Canadian companies, has routinely been the target of what can only be explained as “manual downgrades” in Google search results. Our tests indicate a persistent pattern where Google is awarding search visibility increasingly to large US media enterprises, even where ours is local to the issue, and more detailed.

Google’s founders Page and Brin have built the company to thwart contact from its users, and now, as evidenced by WSJ’s coverage, there are widespread issues with Google’s monopoly on search. Thanks to WSJ’s coverage, we will commence a request process with Canada’s competition bureau to investigate Google for anti-competitive practices.

This company needs to be more closely regulated, as they are systematically eviscerating entire industries but reserving the bad behaviour it claims to police for its own financial gain.

Political

Conservative sites often claim their sites are disadvantaged compared to “liberal” or “mainstream” sites.  This is not exactly news. Yet the bias extends beyond rightwing sites.

Yves has written about how changes to Googles’s search algorithm have whacked Naked Capitalism’s traffic (see Google Algorithm Change Whacks Naked Capitalism; Naked Capitalism is Back! Google Whackage Reversed (note the recovery in traffic was due to remedial measures Naked Capitalism undertook, rather than a Google reversal and upranking; and Google Further Crapifies Search, Exploiting Both Users and Advertisers).

As the World Socialist Web Site wrote in 2017 in Google’s new search protocol is restricting access to 13 leading socialist, progressive and anti-war web sites:

New data compiled by the World Socialist Web Site, with the assistance of other Internet-based news outlets and search technology experts, proves that a massive loss of readership observed by socialist, anti-war and progressive web sites over the past three months has been caused by a cumulative 45 percent decrease in traffic from Google searches.

The drop followed the implementation of changes in Google’s search evaluation protocols. In a statement issued on April 25, Ben Gomes, the company’s vice president for engineering, stated that Google’s update of its search engine would block access to “offensive” sites, while working to surface more “authoritative content.”

The World Socialist Web Site has obtained statistical data from SEMrush estimating the decline of traffic generated by Google searches for 13 sites with substantial readerships. The results are as follows:

* wsws.org fell by 67 percent
* alternet.org fell by 63 percent
* globalresearch.ca fell by 62 percent
* consortiumnews.com fell by 47 percent
* socialistworker.org fell by 47 percent
* mediamatters.org fell by 42 percent
* commondreams.org fell by 37 percent
* internationalviewpoint.org fell by 36 percent
* democracynow.org fell by 36 percent
* wikileaks.org fell by 30 percent
* truth-out.org fell by 25 percent
* counterpunch.org fell by 21 percent
* theintercept.com fell by 19 percent

Also on point is a Naked Capitalism crosspost of this 2018 Paul Jay interview, Matt Taibbi on Facebook and Google Playing the Censor; From the intro by Yves:

I’m glad to see Taibbi speaking out in this Real News Network interview on this issue of growing censorship by Facebook and Google and hope that more journalists join him. With the help of so many of your readers sharing our post and encouraging your friends and family members to check us out, we’ve managed to stay on an even keel, while other “deemed to be leftie” sites have taken a traffic hit due to Google downgrading non-MSM sites greatly in their search rankings. Even the Intercept, hardly a blog-scale operation, got whacked.

The problem is only getting worse. The WSJ notes that Google is increasing the aggregate number of changes to its algorithms, to about 3,200 tweaks in 2018, up from more than 2,400 in 2017, and further from about 500 in 2010.

Influence of Advertisers: Blacklisting; Paywalled Sites

The WSJ investigation discusses how Google caters to the interests of big advertisers:

Some very big advertisers received direct advice on how to improve their organic search results, a perk not available to businesses with no contacts at Google, according to people familiar with the matter.In some cases, that help included sending in search engineers to explain a problem, they said.

In another incident, the WSJ documents how Google reversed a decision that demoted the search results of certain e-Bay pages, in response to lobbying by the company, a significant advertiser.

Yves discussed the influence of advertisers blacklisting “controversial” content in this August post, Advertisers Blacklisting News, Other Stories with “Controversial” Words Like “Trump” (a piece that also keyed to a WSJ story):

It’s no longer paranoid to say that “they” are out to kill news. First it was the Internet almost entirely displacing classified ads, which had accounted for roughly half of newspaper industry revenues in the US. The Internet also turned most people save those who are now oldsters off print newspapers, even though nothing is so efficient to scan, taking with it higher subscription rates and display ads. Then Facebook and Google sucked most online advertiser revenues to themselves.

To add insult to injury, Google implemented algos hostile to smaller sites, first targeting those that did what Google deemed to be too much aggregation, like our daily Links feature. Google deemed those sites to be “low quality”. One wonders if the real issue was that they competed with Google News. Then Google downgraded sites it deemed not to be “authoritative,” whacking not only many left and right leaning sites but even The Intercept. Facebook’s parallel action was to change its search and newsfeed algos, supposedly to combat fake news, but also hurting left-leaning publishers.

Now, as the Wall Street Journal reports, many major advertisers have created blacklists, nixing ad placements that appear next to or in stories with headlines using naughty words like “bomb” that amount to a partial or total ban on news content. It isn’t isn’t just fluffy feel good brands that want to steer clear of controversy. Startlingly, even some financial services companies like Fidelity want to stay away from hot words like “Trump” even though “Trump” appears regularly in business news headlines, such as ones discussing his China trade spat, his tax cuts, his deregulatory efforts, and today, his interest in buying Greenland.

In the interests of keeping my post short, I’ve limited my quotation;  I encourage interested readers to read Yves in full.

Despite maintaining in Congressional testimony that it doesn’t use blacklists, the WSJ account found that Google does. Google tries to wiggle around this apparent contradiction by relying  on a narrow interpretation of what constitutes a “political” blacklist:

Google’s first blacklists date to the early 2000s, when the company made a list of spam sites that it removed from its index, one of those people said. This means the sites wouldn’t appear in search results.

Engineers known as “maintainers” are authorized to make and approve changes to blacklists. It takes at least two people to do this; one person makes the change, while a second approves it, according to the person familiar with the matter.

The Journal reviewed a draft policy document from August 2018 that outlines how Google employees should implement an anti-misinformation blacklist aimed at blocking certain publishers from appearing in Google News and other search products. The document says engineers should focus on “a publisher misrepresenting their ownership or web properties” and having “deceptive content”—that is, sites that actively aim to mislead—as opposed to those that have inaccurate content.

“The purpose of the blacklist will be to bar the sites from surfacing in any Search feature or news product sites,” the document states.

The process for creating such blacklists is opaque, so it’s difficult to determine whether there is indeed a political motivation for so doing.

And finally, the Journal discussed its own efforts to change a Google policy to disfavor outlets, such as itself, that charge for subscriptions:

(The Wall Street Journal is owned by News Corp, which has complained publicly about Google’s moves to play down news sites that charge for subscriptions. Google ended the policy after intensive lobbying by News Corp and other paywalled publishers. More recently, News Corp has called for an “algorithm review board” to oversee Google, Facebook and other tech giants. News Corp has a commercial agreement to supply news through Facebook, and Dow Jones & Co., publisher of The Wall Street Journal, has a commercial agreement to supply news through Apple services. Google’s Ms. Levin and News Corp declined to comment.)

The Bottom Line

To sum it all up: Thomas Ferguson notes in an email “the last third of the WSJ article basically describes ‘electronic corporatism’ in which big private tech concerns look out for each other. Everyone else can’t even get an answer.”

What Is to be Done?

Some if not much of this info is well known to at least some antitrust regulators. Yet by publishing it, the WSJ increases pressure on them to address the problems Google’s dominance raises. The company currently captures more than  90% of the market share for all search engines.

As to those ongoing antitrust investigations, Matt Stoller, writing in the Guardian a few months ago, The great breakup of big tech is finally beginning, summarized the then-state of play:

Last week, state attorneys general, led by Texas and New York, announced investigations into Google and Facebook for possible antitrust violations. This is a big deal. No society has ever centralized control of information as we have in big tech, and this is the first real American strike at the problem. As Scott Galloway frequently notes in his podcast with tech journalist Kara Swisher, the big tech breakup has finally begun.

Note that this is one of many areas where Trump inattention or inaction doesn’t really matter. The feds aren’t the only game in town, and attorney general from US states, as well as the EU and many other countries, are on the case – not to mention Congress critters. Over to Stoller:

Normally, antitrust enforcement would come from the federal government, but Trump enforcers have proved irrelevant at best. Instead these investigations are being led by the states. The Republican attorney general of Texas and the Democratic attorney general of New York are informal leaders, meaning that the investigations are bipartisan. The state attorneys general complement an important investigation by the House antitrust subcommittee led by David Cicilline. Such leadership suggests the rule of law, absent from American business for several decades, may be on its way back. There are also important investigations, hearings or cases by enforcers in Germany, France, the European Union, Israel, India, Singapore, Russia, Mexico and Australia, among others.

(I should mention Stoller here has a new book out, Goliath: The 100-Year War between Monopoly Power and Democracy,which I’ve purchased (from my friendly independent bookstore). It’s next up in my to-read queue after I finish William Dalrymple’s The Anarchy, The Relentless Rise of the East India Company. I got sidetracked and polished off Matt Taibbi’s Hate, Inc. after seeing John Siman’s rave review, Manufacturing Fear and Loathing, Maximizing Corporate Profits! A Review of Matt Taibbi’s Hate Inc.: Why Today’s Media Makes Us Despise One Another).

From WSJ comments:

Steve W. Bell

This is a terrific piece of Journalistic work – just when I thought the WSJ no longer was capable of it, comes this which is a Pulitzer class expose’. It is fair and objective., and introduces strong evidence.

A 4th Grader could easily discern that Google search results are sharply biased and shaped to suppress legitimate Conservative speech that Google doesn’t like (that is, most all of it) from search results.

Google took a dark turn, in my view, 2-3 years ago. I do not believe that their many great mid-level employees are the reason. They changed out the Sr. management team 3 years back. Now, two immense anti-trust investigations underway.

Google has also turned sharply arrogant, e.g. on Jan 1st shifting all support calls – even from Agencies, to barely-trained staff in India.

Breaking up Google into 2 or 3 regulated entities would be great for Google, it’s employees AND consumers. Although they enjoy a dominant market position, Google is a commodity – EASILY replaced.

To repeat what I said above, the political bias extends beyond downranking conservative sites, to obscuring the output of other sites that also may have something to say.

Rep. Ilhan Omar (D-MN) funneled another $150,000 in previously undisclosed funds to her lover Tim Mynett’s political consulting group, within months of a New York Post report that the two were romantically involved. 

The 37-year-old Minnesota congresswoman’s campaign has funneled $146,712.63 to Mynett’s E Street Group since The Post in August reported allegations she was having an affair with her paid consultant, records show.

The latest payments to Mynett’s group were for digital advertising, fundraising consulting and video production. –NY Post

Mynett had already received $223,000 through Omar’s campaign prior to this report, bringing his latest ‘take’ to a total of $370,000. 

According to the Post, however, the federal agency charged with investigating the campaign finance complaint against Omar doesn’t have the manpower to investigate. 

“This is something every American should be very concerned about,” said government affairs lobbyist Craig Holman with the watchdog group Public Citizen. 

“We have no election cop on the beat. The Federal Election Commission essentially closed its doors so everyone knows they can pretty much do whatever they want to do and that’s the status of our political system today.”

The allegations of an affair, levied by Mynett’s estranged wife Beth, have been denied by both Omar and Tim Mynett. Beth claims Tim left her in April over the affair with the Somali-born US Congresswoman. 

And after allegedly committing perjury, immigration fraud, marriage fraud, state and federal tax fraud, and federal student loan fraud – and potentially marrying her own brother Omar filed for divorce in October from her husband Ahmed Hirsi (not the brother) amid the allegations, claiming their relationship was ‘irretrievable.” Hirsi had reportedly been pushing for a divorce for months. 

Conservative watchdog the National Legal and Policy Center filed a complaint against Omar with the Federal Election Commission in the wake of the bombshell report — seeking a probe into whether the Democrat used campaign funds to rendezvous with her alleged lover.

But because the FEC has only three of six commissioner slots filled and needs at least four members to vote on complaints — their hands are tied.

“It doesn’t surprise me at all,” Holman said of the continued payments from Omar to her alleged love interest. “We literally have no election cop on the beat and we’re entering the 2020 election that promises to be the most expensive election in history.” 

The FEC complaint focused on the fact that more than $12,673.43 of the payments to Mynett were simply labelled “travel expenses” — a potential breach of campaign finance law which states that travel expenses be itemized. –NY Post

For those keeping track, two members of ‘the squad’ are now linked to alleged inappropriate disbursements of campaign funds. 

Technically the world’s youngest self-made billionaire at the tender age of 22, Kylie Jenner owns a beauty empire worth billions thanks to her irresistible ‘Kylie lip kits’. And now it appears she’s cashing in some of her chips.

According to WSJ, Jenner is selling a $600 million stake in her beauty empire to struggling cosmetics giant Coty Inc. The fragrance and cosmetics company said it plans to buy 51% of Kylie Cosmetics, valuing the company at $1.2 billion. Jenner, who founded the brand in 2015, will remain the public face of the brand, which will be renamed Kylie Beauty.

Kylie’s company added a skin line this summer, and last year struck a deal with Ulta Beauty to carry Jenner’s products in all of its 1,100 stores. The brand is on track for $200 million in sales for this year.

Per WSJ, Jenner is part of a “wave of fledgling cosmetics lines capitalizing on celebrity founders and social media-driven marketing.” While sales of mass market brands like CoverGirl flounder, it’s these upstart brands that are stealing market share, led by brands like Kylie Cosmetics and Glossier, a skin-care and makeup company launched by a popular fashion blogger.

“This is where the growth of the market is,” Coty finance chief Pierre-André Terisse said in an interview, adding that the brand’s online presence is another attractive element.

With all of this new capital, it appears Kylie Beauty is poised for even more rapid growth. Coty, which bought up a number of beauty brands from Proctor & Gamble a few years back, is reportedly hoping to sell some more underperforming brands as it shifts to more of a ‘fast-fashion’ approach.

Looking at the event calendar for this week, Deutsche Bank’s Jim Reid notes that “we might find ourselves stuck a little this week as well as it isn’t the biggest for important data but there are still some key highlights for markets and the global economy to look forward to.”

The main data release will come in the form of the preliminary November PMIs on Friday, and if global data is indeed turning upward as many now suspect, this will be a useful point for it to show itself. Ahead of that, both the Federal Reserve (Weds) and the ECB (Thurs) will be releasing accounts of their October monetary policy meetings. In politics, we’ll see the first televised debate for the UK general election (Tues) alongside further impeachment hearings in the US and a Democratic primary debate (Weds). Finally, we’ll hear from ECB President Lagarde on Friday, and earnings season will continue to draw to a close.

As Reid goes on to explain, the preliminary November PMIs on Friday will be important as expectations have risen that the global economy has bottomed. Indeed, DB’s own economists put out a global piece on Friday suggesting such an outcome (albeit with event risks still there) in the US, Europe and in Asia. Back to PMIs, and consensus for the German composite currently stands at 49.2, above October’s 48.9 but still in contractionary territory. Meanwhile, the Euro Area composite PMI is seen rising to 50.8, having been 50.6 in October. A similar increase is expected in the US.

Elsewhere in the US, there aren’t a great deal of data releases out this week. We’ll get the final University of Michigan sentiment indicator for November on Friday, following the preliminary reading which saw a small increase to 95.7, a three-month high. On Wednesday, October’s building permits and housing starts data comes out, before Thursday sees the release of October’s existing homes sales, along with the Philadelphia Fed’s business outlook indicator for November.

The FOMC minutes on Wednesday will be interesting but with the Fed seemingly on hold until further notice it’ll be difficult to gain too much new insight into it. However our economists think that given the growing contingent of policymakers that have either voiced opposition to the latest rate cut or only supported it conditional on sending a hawkish signal with it, then the minutes could provide more intelligence as to the power of the different camps in the Fed at the moment.

Before we look at the rest of the weekly economic highlights, this morning in Asia the PBOC has cut the interest rate on its seven-day reverse repurchase agreements to 2.5% from 2.55% for the first time since October 2015. Along with the reduction in interest rates, the PBoC also added CNY 180bn of cash into the financial system via open market operations, helping to alleviate liquidity concerns. Meanwhile, over the weekend the PBOC’s quarterly report warned not only on growth risks but also on rising inflation, highlighting the limited room that monetary policy has to respond. The PBoC also said in the report that it will “increase counter-cyclical adjustment” to ward off downward pressure on the economy while adding that monetary policy will “properly handle the short-term pressure,” making sure not to offer excessive funding, while keeping an eye on the risk of expectations that inflation may spread.

We also saw new trade headlines over the weekend with the Chinese Commerce Ministry saying in a statement that the US and Chinese trade negotiators held “constructive discussions” in a phone call on Saturday to address each side’s core concerns ahead of “phase one“ of the trade deal. The talk was held between China’s Vice Premier Liu He and the US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer. The report further added that the call was held at the request of the U.S. negotiators, and the two sides agreed to remain in close communication.

Asian markets are trading mixed this morning with the Nikkei (+0.22%), Hang Seng (+0.83%) and Shanghai Comp (+0.43%) all up while the Kospi (-0.29%) is trading down. Elsewhere, futures on the S&P 500 are trading flat.

Back to this week’s highlights and we have a number of central bank speakers over the week ahead, with ECB President Lagarde scheduled to speak on Friday. Her first speech at the start of the month didn’t feature monetary policy at all, so if her remarks do cover monetary policy issues, markets will be paying close attention in order to find out more about her views. Alongside Lagarde, we’ll hear from ECB Vice President de Guindos, along with Bundesbank President Weidmann. And from the US, this week’s Fed speakers include Cleveland Fed President Mester, New York Fed President Williams, and Minneapolis Fed President Kashkari.

Turning to politics, this week has two notable debates occurring on either side of the Atlantic. The first will be the televised head-to-head debate tomorrow between Prime Minister Johnson and Labour Party leader Corbyn, which comes ahead of the UK general election on 12 December. The polls this weekend showed the Conservatives anywhere from 8 to 16 percentage points in the lead with some evidence of Brexit Party votes slightly going their way this week relative to the week before. Elsewhere, Bloomberg reported that in a speech today at the CBI, PM Johnson will offer tax cuts to the business leaders for the disruption caused by Brexit. He will say a Conservative government victory at the December 12 election will lead to a “fundamental review” of business rates. On taxes, the U.K. and US elections over the next 12 months possibly bring the sharpest divide between cutting and raising taxes in living memory. A fascinating fork in the road moment for both countries. Staying with the U.K., over the weekend PM Johnson said that every Conservative candidate has signed a pledge to vote for his deal if elected, thereby giving credibility to his claim that he can break the Brexit deadlock. Sterling is up +0.20% this morning on the news.

Staying with politics, there’ll be another debate in the US between the Democratic primary candidates on Wednesday. Although the presidential election itself isn’t until November 2020, the first primaries and caucuses occur in February. Finally, we’ll see further impeachment hearings in the US over the week ahead.

On earnings, we’re nearing the end of this season, with 461 of the S&P 500 companies having reported. Of those that have, nearly 80% have reported a positive surprise on earnings, while just under 60% have reported a positive surprise on sales. Even if your view is that expectations were managed beforehand or that share buybacks continue to distort the picture, it’s hard not to be impressed with the resilience of US markets. Highlights to watch out for this week include Home Depot on Tuesday, Lowe’s and Target on Wednesday, and Thyssenkrupp and Macy’s on Thursday.

Courtesy of DB, here is the day-by-day calendar of events:

Monday

• Data: US November NAHB housing market index
• Central Banks: ECB’s de Guindos, Hernandez de Cos, Lane, and Fed’s Mester speak

Tuesday

• Data: Italy September industrial sales, industrial orders; Euro Area September construction output; UK November CBI industrial trends survey; US October building permits, housing starts; Canada September manufacturing sales; Japan October trade balance
• Central Banks: RBA November meeting minutes released; Fed’s Williams speaks.
• Earnings: Home Depot
• Politics: UK election TV debate.

Wednesday

• Data: Germany October PPI; US weekly MBA mortgage applications; Canada October CPI;
• Central Banks: FOMC’s October minutes released
• Earnings: Lowe’s, Target
• Politics: US Democratic Primary presidential debate

Thursday

• Data: Japan September all industry activity index, final October machine tool orders; France November business confidence, manufacturing confidence; UK October public sector net borrowing; US November Philadelphia Fed business outlook, weekly initial jobless claims, October leading index, existing home sales; Euro Area advance November consumer confidence; Japan October nationwide CPI
• Central Banks: ECB October monetary policy account released; policy decisions from South Africa and Indonesia; ECB’s Mersch, de Guindos, Fed’s Mester, Kashkari, Bank of Canada’s Poloz speak.
• Earnings: Thyssenkrupp, Macy’s
• Other: OECD publishes economic outlook

Friday

• Data: Preliminary November manufacturing, services and composite PMIs in Japan, France, Germany, Euro Area, US; Germany final Q3 GDP; Canada September retail sales; US final November University of Michigan sentiment, November Kansas City Fed manufacturing activity
• Central Banks: ECB’s Lagarde, Weidmann speak.

* * *

Finally, here is Goldman’s take on key US data which is the Philadelphia Fed manufacturing report on Thursday. The minutes of the October FOMC meeting will be released on Wednesday. There are a few scheduled speaking engagements from Fed officials this week, including from NY Fed President Williams on Tuesday.

Monday, November 18

• 10:00 AM NAHB housing market index, November (consensus 71, last 71)
• 12:00 PM Cleveland Fed President Mester (FOMC non-voter) speaks; Cleveland Fed President Loretta Mester will speak at an event at the University of Maryland. Audience Q&A is expected.

Tuesday, November 19

• 08:30 AM Housing starts, October (GS +6.5%, consensus +5.1%, last -9.4%); Building permits, October (consensus -0.3%, last -2.7%); We estimate housing starts rose 6.5% in October. Our forecast incorporates lower mortgage rates and mean-reversion following last month’s 9.4% drop.
• 09:00 AM New York Fed President Williams (FOMC voter) speaks; New York Fed President John Williams will give a speech at a SIFMA event in Washington. The event will be live streamed. Prepared text is expected. Audience and media Q&A is expected.

Wednesday, November 20

• 2:00 PM Minutes from the October 29-30 FOMC meeting: At its October meeting, the FOMC lowered the funds rate target range to 1.5-1.75%, as widely expected. The Committee used more neutral language in the statement to replace the “act as appropriate” pledge, indicating in our view that the rate cut was the final step of a 75bp mid-cycle adjustment. In the minutes, we will look for further discussion of the path of the policy rate and the growth and inflation outlook.

Thursday, November 21

• 08:30 AM Philadelphia Fed manufacturing index, November (GS +7.5, consensus +6.0, last +5.6); We estimate that the Philadelphia Fed manufacturing index rebounded by 1.9pt to +7.5 in November after falling by 16.2pt cumulatively over the last three months.
• 08:30 AM Initial jobless claims, week ended November 16 (GS 215k, consensus 215k, last 225k); Continuing jobless claims, week ended November 9 (consensus 1,684k, last 1,683k); We estimate jobless claims decreased by 10k to 215k in the week ended November 16, following a 14k increase in the prior week.
• 08:30 AM Cleveland Fed President Mester (FOMC non-voter) speaks; Cleveland Fed President Loretta Mester will speak at a conference on financial stability at the Cleveland Fed. Audience and media Q&A is expected.
• 10:00 AM Existing home sales, October (GS +1.0%, consensus +2.0%, last -2.2%); After declining by 2.2% in September, we estimate that existing home sales rebounded by 1.0% in October. Existing home sales are an input into the brokers’ commissions component of residential investment in the GDP report.
• 10:10 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks; Minneapolis Fed President Neel Kashkari will participate in a moderated Q&A in Bloomington, MN.

Friday, November 22

• 09:45 AM Markit Flash US manufacturing PMI, November preliminary (consensus 51.5, last 51.3)
• 09:45 AM Markit Flash US services PMI, November preliminary (consensus 51.2, last 50.6)
• 10:00 AM University of Michigan consumer sentiment, November final (GS 96.0, consensus 95.8, last 95.7); We expect University of Michigan consumer sentiment to edge 0.3pt higher from the preliminary estimate for November, in which the index rose 0.2pt. The report’s measure of 5- to 10-year inflation expectations increased by one tenth to 2.4% in the preliminary report.

Source: Deutsche Bank, BofA, Goldman,

Submitted by Michael Every of Rabobank

“No sweat”. Once again, this is the very public message markets are hearing and echoing. And, yes, stocks are very high, bond yields are well off their lows, and key crosses like USD/CNH are stable around lucky seven. Yet unlike an absence of sweat, it all somehow still smells very bad.

Let’s start with Prince Andrew. His TV interview over the weekend to try to extricate himself from the Epstein sex-scandal mess is being seen as an epic failure. “Calls for royal to say sorry and talk to the FBI”, says The Guardian; “Prince Charles urged to exile brother when he is king after ‘misguided’ interview”, says The Telegraph; “Prince ‘I-didn’t-party-or-do-PDAs’ Andrew is pictured doing plenty of both at wild parties on the French Riviera in 2007 (and he looks a wee bit sweaty too)”, says The Mail. However, the fact a pathologist (and, less helpfully, Syria’s Assad) have stated Epstein was murdered doesn’t seem to need any coverage. No need to sweat over that story any more, please, thank-you very much.

Meanwhile, the financial press says nothing much is happening other than US and Chinese trade representatives still edging closer to the “phase one” deal, which is underpinning market sentiment. There is no mention of the weekend New York Times’ story about Xinjiang, even given claims it is a leak from Beijing aimed at preventing anyone “from escaping culpability.” Clearly, however, nothing is going to be allowed to get in front of a “phase one” trade deal politically – until it fails. Indeed, think back to Khashoggi, for example, and to the 20th century, and we understand that for all their social-justice focus at the domestic level, internationally businesses only see what they Wannsee. Notably, however, the NYT story was re-tweeted by both US China-hawk Rubio, who takes the hardest of lines, and, more surprisingly, by Democratic presidential nominee Warren. Does that mean President Trump is now the main China-trade dove? And shouldn’t that make us sweat? Like I said, USD/CNH certainly isn’t.

There is also little news about the Fed’s latest financial stability review, which argued that a low rates environment damages banks and leads to misallocation of capital and hence future problems/crises: right after the Fed cut rates three times, of course, and as other central banks keep easing.

Likewise, I see precious little coverage of the fact that the IIF report global debt just hit a new record high of USD250 trillion as of H1 2019, and there is no sign that this is going to slow. It increased USD7.5 trillion from January to June 2019, even as global growth showed a synchronised slowdown. Where did the money go? Into assets, of course, which is why they are frothy and all else is not. Then again, if debt accumulation does slow, the global economy and global markets are going to crash as a result. That’s the real Minsky issue that should be making us all sweat, even as we head towards one of several possible socio-economic cliff edges (deflationary slump/inflationary spiral/MMT) in air-conditioned central-bank comfort.

WATCH: Follow the increase of global #debt over two decades.

Latest IIF Global Debt Monitor finds global debt has now surpassed a record $250T & is projected to reach $255T by the end of 2019. pic.twitter.com/D001VVzZmD

— IIF (@IIF) November 14, 2019

Over in the UK, Labour has thrown a cat among the Brexit pigeons by promising free broadband to everyone. There we were, all thinking this was going to be a political battle over concepts of sovereignty and immigration, and instead it might be about The Word of Warcraft – a global reality which Labour’s foreign policy certainly does not address, of course. That manifesto pledge also underlines what was mentioned last week: the Overton Window is now an Overton French Window looking out onto a patio with some crazy paving. And if the IIF are right, we ain’t seen nothing yet.

Of course, none of this matters either – until it does. So Happy Monday and don’t sweat it too much.

As the left prepares for another week of impeachment testimonies – desperately hoping that what “witnesses” say this week will actually matter to the average joe in America – President Trump continues to expose the farce.

In two tweets this morning, the president took aim at Pelosi directly:

“Our Crazy, Do Nothing (where’s USMCA, infrastructure, lower drug pricing & much more?) Speaker of the House, Nervous Nancy Pelosi, who is petrified by her Radical Left knowing she will soon be gone (they & Fake News Media are her BOSS)…”

Then went on to suggest he will “strongly consider” testifying…

“[Pelosi] suggested on Sunday’s DEFACE THE NATION that I testify about the phony Impeachment Witch Hunt. She also said I could do it in writing. Even though I did nothing wrong, and don’t like giving credibility to this No Due Process Hoax, I like the idea & will, in order to get Congress focused again, strongly consider it!“

We suspect Trump’s lawyers will not be so forthcoming but it would be fun to see Trump and Schiff go face-to-face…