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China’s Largest Chipmaker De-Lists From NYSE

It’s only 9 am in New York but Friday’s session has already featured a frantic flurry of trade-war-related headlines that have – at least in the market’s view – overshadowed Theresa May’s tearful announcement that she will be stepping down as PM.

Chip

Beijing repudiated President Trump’s Thursday claim about a ‘speedy’ trade deal, saying there were no plans for a Trump-Xi meeting. US stock futures pared gains on that headline. Also, US firms ratcheted up the pressure on Huawei, with Microsoft joining the contingent of chip and tech companies that is planning to cut ties with Huawei over Washington’s blacklisting.

And now, the South China Morning Post is reporting that China’s largest chipmaker is withdrawing its ADRs from the New York Stock Exchange, and will subsequently trade only in Hong Kong. The company said ‘low trading volumes’ and the ‘cost of maintaining the listing’ motivated its decision.

China’s biggest maker of semiconductors is to withdraw from the New York Stock Exchange as the increasingly ferocious trade war with the US spills over into the technology sector.

Semiconductor Manufacturing International Corp (SMIC) said on Friday evening it has notified NYSE of its intention to apply on June 3 to delist its so-called American depositary receipts from the bourse. In a filing to the Hong Kong stock exchange, where its shares are listed, SMIC cited low trading volumes of its ADRs and the costs of maintaining the listing and complying with reporting requirements and related laws.

The delisting is expected to happen after June 13, and trading of the chip maker’s US securities will shift to the over-the-counter market, the statement said.

The sudden move comes as Washington steps up efforts to cut off its technology from China, with trade negotiations between the world’s two largest economies still deadlocked.

Just a few days ago, Steve Bannon told the SCMP that he would like to see Chinese companies shut out from American capital markets. It appears Beijing is doing him one better.

Meanwhile, a growing number of sell-side strategists now see a protracted trade war as the ‘base-case’ scenario. The latest assessment from Rabobank concluded that it’s extremely unlikely that either side will offer an olive branch in the near future: “That ship has sailed.”

China is battening down the hatches for a “Long March” and doesn’t even want to talk to the US. In fact, Xi and Trump might not even meet at the end of June in Osaka, in which case there is no obvious off-ramp.

Hovering in the background is Steve Bannon’s ‘superhawkishness’. President Trump has already accomplished something incredible: He’s united a disparate group of business leaders and politicians from both parties behind his hard-line approach. This might give him the cover he needs to ignore the market, at least until things start getting really bad.

In the mean time, expect more Chinese companies will demonstrate their ‘independence’ from American markets.

via ZeroHedge News http://bit.ly/2EpA0cv Tyler Durden

Dangerous Precedent Looms in Espionage Indictment Against Julian Assange

An unprecedented attack on free speech and the free press is afoot, as the U.S. Department of Justice (DOJ) charges Julian Assange with espionage over leaked documents published on WikiLeaks. This is “the first time in the history of our country [that] the government has brought criminal charges under the Espionage Act against a publisher for the publication of truthful information,” warns the American Civil Liberties Union.

“The Espionage Act is typically used to punish the leakers themselves, people like Edward Snowden, Reality Winner, and most recently Daniel Hale,” noted Reason‘s Scott Shackford last night. This prosecution extends the law’s reach.

Some have expressed a little schadenfreude to see Assange, an alleged Trump supporter, get screwed over by Trump’s administration. But as journalist Adam Serwer points out, this isn’t necessarily about Assange so much as “establishing a precedent that can be used to prosecute journalists for doing their jobs and publishing information that embarrasses the government or exposes wrongdoing.”

Joel Simon, executive director of the Committee to Protect Journalists, calls the prosecution a “threat to all journalists everywhere who publish information that governments would like to keep secret.”

Sen. Ron Wyden (D–Ore.) says he is “extremely concerned about the precedent this may set and potential dangers to the work of journalists and the First Amendment.”

The New York Times editorial board is aghast, saying the Assange prosecution “is aimed straight at the heart of the First Amendment.”

The authorities are attempting to justify this egregious abuse of power by declaring that “Assange is no journalist,” as DOJ National Security Chief John Demers put it yesterday. But receiving and disseminating information from a government whistleblower, as WikiLeaks did, is of course what many undeniably real journalists have done and exactly the kind of activity the First Amendment is there to protect.

The new 18-count indictment from a federal grand jury concerns classified documents Assange received in 2010 from Chelsea Manning, who was then an army intelligence analyst. The documents revealed damning details about U.S. military operations in Iraq and Afghanistan. Manning—who is currently being held in a federal detention center in Virginia because she is refusing to testify before a grand jury about Assange—says she continues “to accept full and sole responsibility for those disclosures.”

“It’s telling that the government appears to have already obtained this indictment before my contempt hearing last week,” Manning adds in her statement:

This administration describes the press as the opposition party and an enemy of the people. Today, they use the law as a sword.

The spy charges come in addition to the “hacking” charges against Assange that were revealed last month. Assange supposedly violated the Computer Fraud and Abuse Act by suggesting Manning try different passwords on government computers. “We should all be worried about such abuses of ‘hacking’ laws to crush ideological enemies,” Andrea O’Sullivan noted at the time.

The new charges seem even more worrying.

The latest indictment alleges that Assange conspired with Manning, “was complicit…in unlawfully obtaining and disclosing classified documents related to the national defense,” and “aided and abetted Manning in communicating classified documents.” These are all activities that journalists do regularly in the course of communicating with whistleblowers and other confidential sources.

“Put simply, these unprecedented charges against Julian Assange and WikiLeaks are the most significant and terrifying threat to the First Amendment in the 21st century,” says Freedom of the Press Foundation co-founder Trevor Timm.

“As a practical matter, I suspect that very few reporters actively help their sources crack passwords (even just to hide the sources’ own tracks), just as very few reporters provide sources with lock picks or instructions on breaking into safes,” argues law professor Eugene Volokh. He can even see some merit in the theory that Assange solicited Manning to commit a crime. But “the most striking counts are counts 15-17, which allege, in relevant part:”

From in or about July 2010…, [Assange], having unauthorized possession of, access to, and control over documents relating to the national defense [such as leaked Afghanistan and Iraq war activity reports and State Department cables], willfully and unlawfully caused and attempted to cause such materials to be communicated, delivered, and transmitted to persons not entitled to receive them.

Volokh notes that

nothing in this count turns on Assange’s having helped or solicited Manning’s leaks. Rather, it relies simply on Assange having published…material that he knew was improperly leaked and was related to the national defense within the meaning of the statute. To convict on these counts, a jury wouldn’t have to find any complicity by Assange in the initial leak.

And reporters do routinely publish information that they know was illegally leaked by someone.

FREE MINDS

Oof. On Radio 3’s most recent Arts & Ideas podcast, author Naomi Wolf realizes she got a big thing wrong in her upcoming book on the criminalization of homosexuality:

This is far from the first time a major error can be found in Wolf’s writing:

FREE MARKETS

Gun classified ad site Armslist wins on Section 230 grounds. Law professor Eric Goldman writes:

The case involves Armslist, an online classified ads service for guns. A shooter, Haughton, bought a gun via Armslist from a private seller, which bypassed any legally required background checks. The shooter was subject to a restraining order that prohibited him from owning guns. He used the Armslist-acquired gun to kill four people, including himself and the person protected by the restraining order, and injure four others.

The estate sued Armslist for negligence and more. Everyone agrees that the gun seller created the ad in question. The plaintiff argued that Armslist partially developed the ad….Armslist defended on Section 230 grounds. The circuit court agreed with Armslist. The appeals court reversed. The Supreme Court ruled for Armslist in a straightforward, but highly defense-favorable, opinion.

More here.

In its decision, the court explicitly states that “whether or not Armslist knew illegal content was being posted on its site, it did not materially contribute to the content’s illegality,” and that’s what matters.

Goldman comments that “this case adds to the growing precedent that plaintiffs can’t get around [Section 230 protections] by alleging defective website design. The First Circuit and Second Circuit emphatically rejected such workarounds in the Doe v. Backpage and Herrick v. Grindr rulings, respectively. This court extends that jurisprudence.”

QUICK HITS

  • Rep. Justin Amash (R–Mich.) has another Twitter thread on the president and impeachment. Start here:

  • British Prime Minister Theresa May will resign, effective June 7.
  • Uh-oh: Sen. Kamala Harris (D–Calif.) wants to “give prosecutors important new tools.”
  • Uh-oh again: Sen. Josh Hawley (R–Mo.) and colleagues have a new anti-video game bill:

from Latest – Reason.com http://bit.ly/2wk4xnr
via IFTTT

Dangerous Precedent Looms in Espionage Indictment Against Julian Assange

An unprecedented attack on free speech and the free press is afoot, as the U.S. Department of Justice (DOJ) charges Julian Assange with espionage over leaked documents published on WikiLeaks. This is “the first time in the history of our country [that] the government has brought criminal charges under the Espionage Act against a publisher for the publication of truthful information,” warns the American Civil Liberties Union.

“The Espionage Act is typically used to punish the leakers themselves, people like Edward Snowden, Reality Winner, and most recently Daniel Hale,” noted Reason‘s Scott Shackford last night. This prosecution extends the law’s reach.

Some have expressed a little schadenfreude to see Assange, an alleged Trump supporter, get screwed over by Trump’s administration. But as journalist Adam Serwer points out, this isn’t necessarily about Assange so much as “establishing a precedent that can be used to prosecute journalists for doing their jobs and publishing information that embarrasses the government or exposes wrongdoing.”

Joel Simon, executive director of the Committee to Protect Journalists, calls the prosecution a “threat to all journalists everywhere who publish information that governments would like to keep secret.”

Sen. Ron Wyden (D–Ore.) says he is “extremely concerned about the precedent this may set and potential dangers to the work of journalists and the First Amendment.”

The New York Times editorial board is aghast, saying the Assange prosecution “is aimed straight at the heart of the First Amendment.”

The authorities are attempting to justify this egregious abuse of power by declaring that “Assange is no journalist,” as DOJ National Security Chief John Demers put it yesterday. But receiving and disseminating information from a government whistleblower, as WikiLeaks did, is of course what many undeniably real journalists have done and exactly the kind of activity the First Amendment is there to protect.

The new 18-count indictment from a federal grand jury concerns classified documents Assange received in 2010 from Chelsea Manning, who was then an army intelligence analyst. The documents revealed damning details about U.S. military operations in Iraq and Afghanistan. Manning—who is currently being held in a federal detention center in Virginia because she is refusing to testify before a grand jury about Assange—says she continues “to accept full and sole responsibility for those disclosures.”

“It’s telling that the government appears to have already obtained this indictment before my contempt hearing last week,” Manning adds in her statement:

This administration describes the press as the opposition party and an enemy of the people. Today, they use the law as a sword.

The spy charges come in addition to the “hacking” charges against Assange that were revealed last month. Assange supposedly violated the Computer Fraud and Abuse Act by suggesting Manning try different passwords on government computers. “We should all be worried about such abuses of ‘hacking’ laws to crush ideological enemies,” Andrea O’Sullivan noted at the time.

The new charges seem even more worrying.

The latest indictment alleges that Assange conspired with Manning, “was complicit…in unlawfully obtaining and disclosing classified documents related to the national defense,” and “aided and abetted Manning in communicating classified documents.” These are all activities that journalists do regularly in the course of communicating with whistleblowers and other confidential sources.

“Put simply, these unprecedented charges against Julian Assange and WikiLeaks are the most significant and terrifying threat to the First Amendment in the 21st century,” says Freedom of the Press Foundation co-founder Trevor Timm.

“As a practical matter, I suspect that very few reporters actively help their sources crack passwords (even just to hide the sources’ own tracks), just as very few reporters provide sources with lock picks or instructions on breaking into safes,” argues law professor Eugene Volokh. He can even see some merit in the theory that Assange solicited Manning to commit a crime. But “the most striking counts are counts 15-17, which allege, in relevant part:”

From in or about July 2010…, [Assange], having unauthorized possession of, access to, and control over documents relating to the national defense [such as leaked Afghanistan and Iraq war activity reports and State Department cables], willfully and unlawfully caused and attempted to cause such materials to be communicated, delivered, and transmitted to persons not entitled to receive them.

Volokh notes that

nothing in this count turns on Assange’s having helped or solicited Manning’s leaks. Rather, it relies simply on Assange having published…material that he knew was improperly leaked and was related to the national defense within the meaning of the statute. To convict on these counts, a jury wouldn’t have to find any complicity by Assange in the initial leak.

And reporters do routinely publish information that they know was illegally leaked by someone.

FREE MINDS

Oof. On Radio 3’s most recent Arts & Ideas podcast, author Naomi Wolf realizes she got a big thing wrong in her upcoming book on the criminalization of homosexuality:

This is far from the first time a major error can be found in Wolf’s writing:

FREE MARKETS

Gun classified ad site Armslist wins on Section 230 grounds. Law professor Eric Goldman writes:

The case involves Armslist, an online classified ads service for guns. A shooter, Haughton, bought a gun via Armslist from a private seller, which bypassed any legally required background checks. The shooter was subject to a restraining order that prohibited him from owning guns. He used the Armslist-acquired gun to kill four people, including himself and the person protected by the restraining order, and injure four others.

The estate sued Armslist for negligence and more. Everyone agrees that the gun seller created the ad in question. The plaintiff argued that Armslist partially developed the ad….Armslist defended on Section 230 grounds. The circuit court agreed with Armslist. The appeals court reversed. The Supreme Court ruled for Armslist in a straightforward, but highly defense-favorable, opinion.

More here.

In its decision, the court explicitly states that “whether or not Armslist knew illegal content was being posted on its site, it did not materially contribute to the content’s illegality,” and that’s what matters.

Goldman comments that “this case adds to the growing precedent that plaintiffs can’t get around [Section 230 protections] by alleging defective website design. The First Circuit and Second Circuit emphatically rejected such workarounds in the Doe v. Backpage and Herrick v. Grindr rulings, respectively. This court extends that jurisprudence.”

QUICK HITS

  • Rep. Justin Amash (R–Mich.) has another Twitter thread on the president and impeachment. Start here:

  • British Prime Minister Theresa May will resign, effective June 7.
  • Uh-oh: Sen. Kamala Harris (D–Calif.) wants to “give prosecutors important new tools.”
  • Uh-oh again: Sen. Josh Hawley (R–Mo.) and colleagues have a new anti-video game bill:

from Latest – Reason.com http://bit.ly/2wk4xnr
via IFTTT

India Answers Pakistan’s Missile Test With Daring Raid On “Most Wanted Militant” In Kashmir

After a couple months of uneasy calm following the late February crisis over Kashmir involving two down Indian jets which allegedly entered Pakistani-administered territory to raid a “terror compound” it appears the long disputed border region is heating up again. And this a day after Pakistan on Thursday decided to use the moment of Indian Prime Minister Narendra Modi’s landslide victory to a second 5-year term in the world’s largest general election to test fire a ballistic missile with a reported 1,500 kilometer range.

It appears India has hit back in its own symbolic way, signalling it will stick by its pledge to root out jihadist militants in Kashmir, which New Delhi has long charged Pakistan with harboring and supporting. Early Friday India announced its forces raided the home of a top al-Qaeda commander in southern Kashmir the night before, sparking widespread anti-India protests in the Muslim-majority region. 

Zakir Rashid Bhat (also known as Zakir Musa), head of Ansar Ghazwat-ul-Hind, a group affiliated with Al-Qaeda, via The India Times

Twenty-five year old terrorist Zakir Rashid Bhat (also known as Zakir Musa), described as India’s “most wanted militant,” was reportedly trapped when Indian commandos set fire to his three-story house, leading police shooting and killing him during a counterinsurgency operation in the southern Tral area. “As we were clearing debris from the house, he tried to get up. Our troops fired at him and he was killed,” one police official told Reuters. 

The controversial raid has again put tensions with Pakistan on edge, and has further forced Indian authorities to place the administrative region on lock down, fearing the spread of more unrest. According to Reuters:

Protests by supporters of Bhat broke out in parts of Kashmir on Thursday and there were reports of demonstrations early on Friday, the police officer said.

Fearing more unrest, authorities said schools were closed and railway services suspended in the affected areas.

Any large scale unrest in the region would be a challenge for Indian Prime Minister Narendra Modi as he prepares for a second term after winning a general election on Thursday.

Facing warnings from Pakistan, India has vowed to see through ongoing offensives against militants in the disputed Muslim-majority border region following the February suicide attack which killed 40 Indian security forces, the catalyst that almost sparked war with Pakistan, and led to the latter capturing and interrogating a down Indian pilot, before he was returned across the border. 

Islamabad has long denied giving support to militant groups, only saying it supports “self-determination of the Kashmiri people” while condemning Indian intervention in the region. 

It appears India has “answered” Thursday’s provocative Pakistani ballistic missile test by raiding a jihadist enclave in southern Kashmir.

A feature of Modi’s populist platform throughout his first term, which he’s promised to renew in his second, has been to “stand up to Pakistan”.

Pakistan’s leaders, meanwhile, have lately claimed they desire peace. Previously on Wednesday Pakistan’s Foreign Minister Shah Mehmood Qureshi reportedly spoke with his Indian counterpart Sushma Swaraj on the sidelines of a central Asia economic forum. Qureshi said of the unofficial meeting, “We never speak bitterly, we want to live like good neighbors and settle our outstanding issues through talks.”

Pakistan’s foreign ministry said further on Thursday of the ongoing Kashmir crisis: “Dialogue is hence essential. We remain committed to the same, irrespective of whoever forms the new government in India,” according to Reuters. 

via ZeroHedge News http://bit.ly/2JAZN5H Tyler Durden

Here Are The Key Levels To Watch In The Market Right Now

Authored by Jesse Colombo via RealInvestmentAdvice.com,

Market volatility has reared its ugly head once again in recent weeks as the trade war with China took a turn for the worse and global economic data continues to weaken. On Thursday, the Dow lost 286.14 points, or 1.1%, the S&P 500 fell 34.03 points, or 1.2%, and the Nasdaq Composite dropped 122.56 points, or 1.6%. From a technical perspective, the S&P 500 is sitting just above a key support level at 2,800. The S&P 500 has bumped its head or bounced off of this levels quite a few times since early-2018. If the S&P 500 closes below 2,800 in a decisive manner, it would increase the likelihood of further downside.

The Dow Jones Industrial Average is sitting just above its 25,250 support level that it has bounced off of in recent months. If the Dow closes below this level in a convincing manner, it may foreshadow even more downside action.

The tech-oriented Nasdaq Composite Index is just above its 7,600 support level that has come into play several times in the past year. If the Nasdaq closes convincingly below 7,600, further bearish action is likely.

The Russell 2000 Small Cap Index closed just above its 1,500 support level. If it closes below this level, further weakness is likely.

After the U.S. stock market’s 300% gain in the past decade (which is an unsustainable bubble), it is prudent to be aware of the risk of a sharp unwind:

The S&P 500 rose much faster than earnings and is now at 1929-like valuations, which means that a painful correction is inevitable:

Another indicator that supports the “higher volatility ahead” thesis is the 10-year/2-year Treasury spread. When this spread is inverted, it leads the Volatility Index by approximately three years. If this historic relationship is still valid, we should prepare for much higher volatility over the next few years. A volatility surge of the magnitude suggested by the 10-year/2-year Treasury spread would likely be the result of a recession and a bursting of the massive asset bubble created by the Fed in the past decade.

For now, I am watching how the major indices act at their key support levels. If the indices break their supports at the same time that the trade war worsens even further, we could see another sharp sell-off like the one in late-2018.

via ZeroHedge News http://bit.ly/30Ju4V5 Tyler Durden

Betting Odds Show Boris Johnson Is Clear Favorite To Be Next Prime Minister

Now that Theresa May has confirmed that she will step down as prime minister on June 7 during a tearful resignation speech, investors, politics junkies and inveterate gamblers are all eagerly placing bets on who will win the upcoming Tory leadership contest and become the next to occupy No. 10.

BoJo

Ladbrokes latest odds put Boris Johnson – widely regarded as the front runner – at about even (5/4), while Dominic Raab, widely seen as the most serious challenger to Johnson, has been given odds of 4:1.

Despite his reputation for courting controversy, Johnson – whose full name is Alexander Boris de Pfeffel Johnson – has long been one of the most popular politicians in the UK.

Infographic: The most popular political figures in the UK | Statista You will find more infographics at Statista

The Brexiteer leader is known to have a cozy relationship with President Trump. In his first remarks after May’s resignation, Johnson said that though he wants a ‘pragmatic’ Brexit, the UK must be prepared for ‘no deal’. Because the only way to get a good deal, Johnson said, is to be prepared to walk away. Whatever happens, Johnson said he believes the UK will leave the EU on Halloween regardless.

As the Economist explains, Johnson is the overwhelming favorite among the Tory party faithful: His only real challenge will be convincing his fellow MPs to include him on the shortlist of two who will be put to the broader membership for a primary-like vote.

For those unfamiliar with the British political system, here’s how electing the new leader will work (per the Telegraph).

First, a candidate must be formally proposed ans seconded by his or her fellow MPs. Then, a ballot of Tory MPs is held in which the candidate with the least support drops off the list. Candidates who accept that they don’t have the support required may withdraw from the race. This process is repeated until just two candidates remain. Then, the two ‘shortlist’ candidates will be put to a general vote where the party’s 150,000 members will choose the winner (the vote is limited to those who have been members since at least before the ‘call for nominations’ went out). That’s compared to the 46 million voters in the UK.

During the campaign, the two candidates will appear at events around the country to deliver their pitch to the voters.

Whoever achieves more than 50% of the vote will be declared Party Leader.

Meanwhile, here are the biographies of the top three contenders (courtesy of the Independent):

BORIS JOHNSON (54)

The former foreign minister is May’s most outspoken critic over Brexit. He resigned from the cabinet in July in protest at her handling of the exit negotiations.

Johnson, regarded by many eurosceptics as the face of the 2016 Brexit campaign, set out his pitch to the membership in a bombastic speech at the party’s annual conference last October – some members queued for hours to get a seat.

He called on the party to return to its traditional values of low tax and strong policing, and not to try to ape the policies of the left-wing Labour Party.

DOMINIC RAAB (44)

Britain’s former Brexit minister quit May’s government last year in protest at her draft exit agreement, saying it did not match the promises the Conservative Party made at a 2017 election. Raab served only five months as head of the Brexit department, having been appointed in July.

He was seen as a relative newcomer to the top table of government, but had served in junior ministerial roles since being elected in 2010. Raab campaigned for Brexit ahead of the referendum and is a black belt in karate.

Asked earlier this month if he would like to be prime minister he said: “Never say never.”

ANDREA LEADSOM (55)

Another pro-Brexit campaigner who still serves in May’s cabinet, Leadsom made it to the last two in the 2016 contest to replace Cameron. But rather than force a run-off vote against Theresa May, she withdrew from the contest. She currently runs parliamentary business for the government.

* * *
Given Johnson’s Brexiteer bona fides, media outlets from the UK and US (the Telegraph, Bloomberg) have warned that his ascension to the leadership would create a ‘nightmare’ for Brussels, which is reportedly already preparing for a scenario where Johnson or Raab tries to renegotiate May’s withdrawal agreement.

The leadership election is expected to take between four and six weeks. May will stay on as a ‘caretaker’ PM until the new leader is selected. Looking further down the road, here’s a flowchart of what might follow Johnson or Raab’s move to No. 10.

Brexit

via ZeroHedge News http://bit.ly/2X1Mq1m Tyler Durden

Durable Goods Orders Tumble In April As Boeing Blowback Begins

After March’s huge upside surprise, durable goods orders were expected to slide 2.0% MoM in April but the preliminary print was slightly worse than expected (-2.1% MoM) and made worse by a notable downward revision to March (from +2.8% to +1.7%).

 

Ex Transports, durable goods orders were unch in April but notably revised downward from +0.3% in March to -0.5% MoM…

Worse still New Orders non-defense, ex-aircraft tumbled 0.9% MoM, the worst (and first negative) print of 2019…

 

As non-defense aircraft orders plunged 25% in April (as Boeing impacts start to hit) and are down 36% YoY..,

And non-defense aircraft shipments plunged 16.0% MoM…

…to the lowest in six years…

 

Coming on the heels of the collapse in PMIs yesterday, this should be no surprise and reinforces The Fed’s doves’ scenario.

via ZeroHedge News http://bit.ly/30HoWkn Tyler Durden

Rabo: My Milkshake (Keeps The Farage From The Yard)

Submitted by Michael Every of Rabobank

Weren’t we supposed to be in a bond bear market by now? I distinctly recall some famous talking heads mentioning a 4% 10-year US Treasury target, and that was at a time when we hadn’t yet broken through 3%. Instead, yet again, we see bond bears suffering Charlie Brown’s fate as Lucy pulls away the ball just before he kicks it. The 10-Y UST was at a 19-month low of 2.29% yesterday, and who is to say that we stop there given the global backdrop and the disappointing tone to key data? With oil slumping 6% on the day too, can you smell the inflation ahead?

Equities also stumbled, though hardly collapsed – and the impact was immediate. US President Trump spoke to the press and stressed that there remained a “good possibility” of a trade deal with China. Indeed, he even went so far as to suggest that Huawei, which is being hung, drawn, and quartered, could be included in that deal. You could hear the eyes rolling among the legal establishment in Canada, and among the national security establishment in the West.

So is there an olive branch being offered? Unlikely. That ship has sailed. China is battening down the hatches for a “Long March” and doesn’t even want to talk to the US. In fact, Xi and Trump might not even meet at the end of June in Osaka, in which case there is no obvious off-ramp.

Moreover, the US security establishment is finding that export controls are an incredible new economic weapon that can act against Chinese (and other nationalities’) firms no matter how deeply they have wormed their way into the global economy. Are the US really going to put down a super-straw that lets them drink China’s milkshake? That lets them suck-up global supply chains and drop them down wherever they want, saying “Damn right; it’s better than yours”? And will it do that on a Chinese pinkie swear of no more of their own milkshake stealing? And are China ever going to believe the US when they say they have put their super-straw away and won’t touch any milkshakes again, all the while humming “I know you want it, the thing that makes me”?

Just to underline that the US is still in national security = economic security mode, there are reports this morning the Commerce Department is proposing to impose tariffs on countries that undervalue their currencies: “Techniques that freaks these boys; Just know, thieves get caught” Well, for once that isn’t China – yet. It’s fighting with all it’s got to keep CNY under 7. But what if (when) that peg goes? It says US tariffs will go even higher. And who does that currency target list include today? I expect that the US will be deciding, not the IMF or other countries; and many of them should be very, very nervous – particularly if they happen to fall out with the US politically.

What about Vietnam though? There have already been suggestions that it would be in the Commerce Department’s cross-hairs….and yet it is incredibly pro-US, co-operating with the States vs. China in the South China Sea, and “doing a Mexico on fast-forward” to parts of Chinese industry, weakening the giant in the process. Is that a process the US wants to accelerate or not? And what about India, where PM Modi has just won a thumping re-election victory, receiving a belated congratulatory tweet from Trump talking about cooperation, etc.? Isn’t India the best long-term counter-weight to China in the “Indo-Pacific” region in all dimensions? These kind of clashing strategies —Make America Great Again vs. the US vs. China– are going to have to be reconciled, and the FX markets will move appropriately. “La la-la la la. The boys are waiting.”

So will bond yields, because this is either going to be a global tariff/trade war, or it’s going to be a more carefully-targeted one that aims to ‘cage’ China. Is either outcome inflationary in the short- to medium-term? The IMF swears that the US has been paying for all the tariffs so far. Yet the Treasury market doesn’t seem to think so, and that’s despite rumblings of China selling down its holdings – perhaps the only thing happening on the US-China front that shouldn’t worry us.

Meanwhile, in the UK we have politics as usual. Which in this case means a headline in the Sun “Nigel Farage ‘trapped on Brexit bus surrounded by people armed with milkshakes’.” That really does sum things up: trapped on the Brexit Bus. At time of writing the balance of the UK press was speculating heavily that PM May will announce her resignation date today as being June 10. That will allow her the singular honour of hosting President Trump in the UK first, where he will be leaning on the Brits to lean on Huawei (which will mean China will lean on the UK, according to China). Then we will see a Tory leadership contest lasting until the end of July, and a new face in No. 10 for August. Who then has three months to avoid being drenched in milkshakes. Or, May could continue to limp on uselessly to no effect. Neither outcome says GBP looks good value, surely?

via ZeroHedge News http://bit.ly/2K0XdW8 Tyler Durden

Russia Condemns US “Warships” Off Venezuela’s Coast – Says Coup Attempts Ongoing

We might chalk it up to stating the obvious, but by and large the media has moved on from Venezuela, however, the coup plotters in Washington have not. Apparently the Kremlin also wishes to remind the world of this, given its ongoing support to Maduro and his army, and given that the Russian foreign ministry has remained vocal on the issue, announcing this week that “US-backed attempts to stage a coup in Venezuela will continue.” 

Russian Deputy Foreign Minister Sergey Ryabkov told reporters in Moscow: “We will continue to resist attempts to stage a coup in Venezuela that have been a failure so far. However, these attempts will continue at the US behest,” according to TASS. This was followed with similar statements Foreign Ministry Spokeswoman Maria Zakharova on Thursday condemning the presence of American “warships” off Venezuela. She specifically identified a US Coast Guard ship as having been spotted 20 kilometers off the Venezuelan port of La Guaira. “This activity only aggravates the situation and does not contribute to the strengthening of trust,” she said.

Illustrative file photo, via the AP

She also repeated Moscow’s condemnation of ongoing externally backed illegal coup attempts: “At the same time, the radical opposition has initiated negotiations with the Southern Command of the US Armed Forces to overthrow the legitimate government,” she said in reference to the Juan Guido led opposition. 

The foreign ministry further slammed last week’s hostile takeover by D.C. police and US Secret Service of the Venezuelan Embassy in Washington after a handful of activists had been living there at the request of the Maduro government to safeguard it from opposition takeover. “This is a gross violation of Article 22 and Article 45 of the Vienna Convention in regards to ensuring the protection of the diplomatic mission,” Zakharova stated.

Amid these latest warnings of “continuing US coup attempts” it appears Moscow is indeed putting its money where its mouth is, given late last week Russian state media cited a military-diplomatic source to confirm that Russia plans to supply Venezuela’s army with more than 16,000 field rations. This after a large Russian state-run arms exporter published a contract related to the re-supply deal. 

No doubt the very open publication of the supply deal is aimed at showing Washington that the Kremlin is not going anywhere in terms of its longtime military alliance with Caracas, which was controversially on full display last December when Russian two nuclear-capable “Blackjack” strategic bombers flew to Caracas, and departed soon after amid White House threats and demands. 

Russia has also recently pledged it would assist Caracas in the country’s ongoing humanitarian crisis and failing infrastructure, which in the past two months has included a series of mass power outages, which the Maduro government has blamed on US-backed saboteurs, but which the US has blamed on the corrupt socialist regime and lack of investment and upkeep. 

In late March two Russian military plaines landed outside Caracas and offloaded equipment and troops to assist the embattled Maduro regime, via the AFP.

Meanwhile Venezuelan Health minister Carlos Alvarado said this week that amidst runaway inflation, lack of medicine among the country’s 300 still functioning hospitals, and a spike in preventable diseases like measles, the United States remains Venezuela’s number one threat.

The health minister blamed the ongoing humanitarian crisis on US sanctions, but said Russian assistance would help see the population through it, according to Reuters:

Aid agencies including the International Committee of the Red Cross (ICRC) are bringing help, he added, and Russia provided 26,000 tonnes of aid including medication in March.

“We are strengthening our bond with Russia regarding the purchase of medication, they even want to invest in Venezuela for further production of medication,” he said, declining to give details.

After a failed military uprising which the Washington threw its support behind at the end of April, international media seems to have “moved on” – with Iran taking center stage of the last couple weeks. 

Likely with the recent “distraction” of soaring tensions between the US and Iran, which only now appears to be calming, Russia could use the opportunity to quietly ramp up further support to Caracas, something by many indicators it appears to be doing. 

via ZeroHedge News http://bit.ly/2VM808L Tyler Durden

The State Can’t Keep Drugs Out of Prisons. How Was It Ever Going to Keep Them Out of America?

Of the 1,000 or so California bills that likely will become law this year, virtually every measure will give government more power to do one thing or another. The consensus in the Capitol is that the government “must do something” about any problem that pops into a lawmaker’s mind. Most bills deal with relatively small expansions, but make no mistake about it: state officials want to seize control of big stuff, too, such as the healthcare system.

However, lawmakers routinely shrug at the crises that afflict every government-controlled system in the state. The public pension funds, which provide lush retirements to state and local workers, are awash in “unfunded liabilities” (debt), thus driving municipal budgets toward the fiscal cliff and crowding out public services. Nothing to see there. California’s public schools range from incompetent to mediocre, but nothing ever changes. No one listens.

California’s leaders ignore the demonstrably true maxim that the more heavily the government controls anything, the more likely it’s going to be a disaster. Take recent reports about our prison system. “Nearly 1,000 men and women in California prisons overdosed last year and required emergency medical attention in what officials acknowledge is part of an alarming spike in opioid use by those behind bars,” the San Francisco Chronicle reported on May 5.

Prisons are tough places, but think about that revelation. They are among the most tightly controlled environments on Earth, yet correction officials can’t figure out how to deal with dramatic spikes in the number of inmates who are dying from drug overdoses and alcohol poisoning. Not only is it illegal for people to have those substances, but the California Department of Corrections and Rehabilitation controls every point of entry.

Such substances are as plentiful as ever. That’s true even though former Gov. Jerry Brown implemented a $14 million strategy to plug the drug pipeline at two Kings County facilities—and after a federal prison oversight official announced a $252 million medication plan designed to battle overdoses. Gov. Gavin Newsom’s budget would spend an additional $233 million over three years to deal with the drug problem in a variety of ways, including education programs.

California’s prisons have every manner of scanner, camera and security system. They use body scans, visitor searches, drug-sniffing dogs and drones to patrol the place. The inmates are a captive audience and can, quite obviously, be subjected to any anti-drug program that officials can concoct. And still the problem festers.

Officials say inmates’ friends throw drug-filled soccer balls, drones and other such items over the walls of some facilities. That shouldn’t be hard to stop. Most drugs apparently are coming from visitors and employees. Unions have been accused of imposing obstacles to more thorough searches of guards. That’s another feature of government: you can’t change anything without the unions’ OK.

This is the nature of government. It can’t stop the flow of illicit substances in a sealed and militarized building that’s under its total control. It throws hundreds of millions of dollars at the problem. It holds hearings, as officials ponder what to do. Decades from now, when some new type of drug is all the rage, prison officials surely will be theorizing about how to control it. Only the name of the official task force and the size of the budget request will be different.

Back in 2016, The Los Angeles Times investigated a surge in drug-related inmate deaths not just in state prisons, but on death row. As the report explained, “The condemned inmates…are among the most closely monitored in the state” and “spend most of their time locked down, isolated from the rest of the prison system under heavy guard with regular strip searches and checks every half hour for signs of life.” They can, however, obtain methamphetamine and heroin.

Meanwhile, legislators keep passing more laws cracking down on the substances that the general, non-imprisoned population can legally purchase. The latest: Senate Bill 38 would ban flavored-tobacco products, including most vaping liquids. Obviously, Prohibition’s lessons have been lost in California. Do state officials really think that they can keep menthol cigarettes and vape pens off of our street corners and out of the hands of teenagers?

Not only is the state incapable of keeping drugs out of its prisons, it is incapable of adequately maintaining its own prison infrastructure. Reporting on a Stockton inmate’s death last year from Legionnaires’ disease, The Sacramento Bee explained this month that, “Incidents of tainted water have spawned inmate lawsuits, expensive repairs, heft bills for bottled water and fines, putting a multimillion-dollar burden on the taxpayer-funded correction system.”

At the very least, shouldn’t these scandals give lawmakers pause about their ability to fix societal problems? If they can’t keep heroin off of death row, then maybe they should rethink their ability to control the rest of us.

This column was first published in the Orange County Register.

Steven Greenhut is Western region director for the R Street Institute. He was a Register editorial writer from 1998-2009. Write to him at sgreenhut@rstreet.org.

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