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One day after Axios White House Correspondent Jonathan Swan sent markets reeling by reporting that Attorney General Rod Rosenstein had “verbally resigned” in a conversation with White House Chief of Staff John Kelly, Swan is back with what he claims is the text of the resignation letter that the DOJ sent to the White House on Rosenstein’s behalf.

The letter, which was reportedly written in the voice of Attorney General Jeff Sessions, declared that Sessions was “confident” that Noel Francisco, the solicitor general who is said to be more amenable to Trump, would dutifully carry out the oversight of the Mueller probe.

Importantly, Axios said the statement’s veracity was confirmed by three sources. Read the brief statement in full below:

Rod Rosenstein has served the Department of Justice with dedication and skill for 28 years. His contributions are many and significant. We all appreciate his service and sincerely wish him well.

Matt Whitaker, my Chief of Staff for the last year, will instill confidence and uphold the integrity of the Department as the second highest law enforcement officer in the Nation.

Finally, I am confident that Noel Francisco will oversee the special counsel with a commitment to justice as Acting Attorney General for this matter. As I have said before, the American people deserve an expeditious resolution of this investigation consistent with the rule of law.

According to Axios, talks over Rosenstein’s resignation were effectively foiled after Axios published its misleading report, setting off a frenzy of media speculation that forced the White House to reconsider its tactics after markets tanked and allies of Trump warned against letting Rosenstein leave. Rosenstein initially offered his resignation to Kelly on Friday, and negotiations had been ongoing over the weekend.

Still, there’s one important piece of the puzzle that Axios doesn’t yet know:

What I don’t yet know: How exactly the conversation between Rosenstein and Kelly changed on Monday. I don’t know what terms he had demanded and how, if at all, his demands changed from Friday to Monday. As of now, it’s possible that he remains Deputy Attorney General for the foreseeable future. He meets with President Trump on Thursday.

With Rosenstein expected to meet with Trump on Thursday, his fate remains uncertain. On the one hand, a New York Times report published Friday claiming that Rosie had been pushing cabinet officials to invoke the 25th amendment in what would have been a palace coup made the Deputy AG look not just bad, but biased in his oversight of the Mueller probe. On the other hand, many Trump allies have warned that firing Rosie would be “a trap” for the president.

Whatever happens, we should know more by the end of the week, as the White House will likely be looking to seize control of the narrative to avoid another bout of chaos like what investors experienced on Monday.

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BMW Shareholders are not impressed by what management calls a “moderate” drop in pretax profit expectations due to trade tensions and pricing pressure.

“The continuing international trade conflicts are aggravating the market situation and feeding uncertainty,” BMW said in a statement.

“These circumstances are distorting demand more than anticipated and leading to pricing pressure in several automotive markets.”

Specifically, BMW cut its overall 2018 pretax profit and automotive revenue and Ebit margin outlook.

The initial plunge was the biggest drop since Brexit (Summer 2016), but a modest bounce has pulled share ‘off the lows’

BMW also cited industry-specific factors like “unexpected competition” amid the industry-wide shift to the new WTLP test cycle, as well as increased goodwill and warranty measures.

It should not be a total surprise to see the European automakers cutting outlooks and the broad EU auto market is weak on this straw breaking the camel’s back…

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Cryptocurrencies are crashing once again following reports that the trustee liquidating the defunct exchange Mt. Gox has offloaded another 25.98 billion yen ($230 million) of Bitcoin and Bitcoin Cash.

While Bitcoin is the best-performer (down around 4%), the rest of the crypto space is collapsing faster…

Notably, as Bloomberg reports, the disposals were made in the period since the 10th creditors meeting was held on March 7, Nobuaki Kobayashi said in a statement on Tuesday.

Based on the yen raised and the number of coins sold, the latest disposal received an average price of $8,100 per Bitcoin, according to calculations by Bloomberg.

The total compares with 43 billion yen in the prior round of sales, which the bankruptcy attorney announced six months ago.

Despite the fact that these disposals are old history, Bitcoin is seeing more selling pressure…

And Ethereum is plunging, testing back down towards a $100 handle…

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Though it’s hardly surprising, given President Trump’s stridently anti-China rhetoric during the campaign, relations between the US and China have deteriorated to a dramatic degree since the beginning of 2018. And with the US and China trading threats following the US’s decision to sanction a branch of the Chinese military for buying arms from Russia (as China threatened the US with unspecified “consequences” if it didn’t undo its “mistake”), the US has thrown gasoline on the fire by moving ahead with a planned sale of F-16 fighter jets and other weaponry to Taiwan in defiance of China’s warnings, per Reuters and Bloomberg.

The arms sale follows China’s participation in joint military drills with Russia earlier this month, as well as drills in the Strait of Taiwan earlier this year that were intended to simulate an invasion.

Taiwan welcomed the arms package, adding that a “case-by-case” approach to arms sales might be more efficient than previous large shipments of arms. According to Reuters, the order includes parts for both US-made and domestic fighter aircraft as well as tools to help Taiwan maintain its “defensive and aerial fleet” as mainland China has never renounced the “use of force” to bring Taiwan under control.

The $330 million request covers spare parts for “F-16, C-130, F-5, Indigenous Defense Fighter (IDF), all other aircraft systems and subsystems, and other related elements of logistics and program support,” the Pentagon said, adding that it notified Congress of the possible sale. Lockheed Martin Corp (LMT.N) makes the F-16.

The Pentagon said the proposed sale is required to maintain Taiwan’s “defensive and aerial fleet,” and would not alter the military balance in the region.

In response, China “strongly” urged the US to honor “One China” principle and immediately revoke its sales of military hardware to Taiwan, Chinese defense ministry spokesman Ren Guoqiang said. Chinese Foreign Minister Geng Shuang echoed that warning in a Tuesday press briefing, saying that U.S. arms sales to Taiwan were a serious breech of international law and harmed Chinese sovereignty and security interests.

China strongly opposes the planned arms sales and has already lodged “stern representations” with the United States, he told a daily news briefing in Beijing.

China on Tuesday expressed dissatisfaction and said it had lodged stern representations with the United States after the State Department approved the sale to Taiwan of spare parts for military aircraft worth up to $330 million.

China’s foreign ministry spokesman Geng Shuang made the comments at a daily news briefing in Beijing.

U.S. military sales to self-ruled Taiwan, which China claims as its territory, are an irritant in ties between the world’s two largest economies. Taiwan would still need to finalize sale details with U.S. companies.

Notably, the arms sale follows China’s decision to call off trade talks with the US set for this week, ratcheting up trade tensions between the two countries and rattling markets as investors started to doubt whether the trade conflict between the world’s two largest economies would come to a swift and amicable solution.

The US has approved $1.3 billion in arms sales to Taiwan since Trump’s victory in the 2016 election. Trump nearly triggered a diplomatic crisis later that year when he accepted a congratulatory phone call from the leader of Taiwan, which China interpreted as an insult and a violation of the “One China” policy that has held since the days of Richard Nixon.

Faced with a newly defiant Taiwan, Chinese President Xi Jinping has repeatedly warned that the mainland won’t “give up an inch” of territory when it comes to its rogue province, while also warning that attempts to drive a wedge between Taiwan and China would be “punished by history.”

Trump’s relationship with Taiwan has been a hot issue for China since he accepted a congratulatory phone call from President Tsai Ing-wen after his election and questioned why the U.S. recognizes Beijing instead of Taipei, a policy that underpins China-U.S. relations.

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One day after the US-China trade war entered “phase II”, with another $200BN in US tariffs slapped on Chinese imports  sending global stocks lower, markets found their footing, and stocks in Europe traded higher after a mixed session in Asia as investors put trade war and political jitters on the backburner and turned their attention to tomorrow’s FOMC rate hike and 2019 dot plot.

Europe’s Stoxx Europe 600 rebounded from Monday’s drop, rising 0.3% as most European bourses traded in the green, while U.S. index futures pointed to a mixed open, with S&P 500 futures slightly firmer even as the Nasdaq hugged the flatline after Instagram’s founders said they were leaving Facebook .

After a one-day holiday, China and Japan returned to the market with diverging reactions: Japanese stocks climbed to the highest since February as the Nikkei closed at session highs, some 0.3% higher, a function of the ongoing decline in the yen…

… while Chinese shares headed in the opposite direction after a long weekend. Meanwhile, Hong Kong where stocks dropped on Monday due to escalating trade tensions, and South Korea were shut.

Italian bonds rallied as the country crept closer to a budget compromise. According to La Stampa, Italy would propose a 1.9% budget deficit, which while somewhat wider than previously expected, would include budget cuts and 36 billion-euro investment package. Five Star leader Di Maio suggested Italy should copy France with a 2.8% deficit-to-GDP but later backtracked and said the gap should be narrower than that. Even with a budget deal imminent, Goldman strategist George Cole remained skeptical, warning that the extra premium investors demand to hold Italian debt over its German equivalent is unlikely to shrink to levels seen before May anytime soon. That’s even if Italy’s leaders project a deficit below the bank’s forecast of 2% and the European Union limit of 3% in their 2019 budget targets, which must be published by Thursday.

Specifically, Cole predicted a difficult outlook over the medium term, due to the “upcoming fiscal expansion, coupled with the weakening in higher frequency indicators” in Italy, should result in only a limited and temporary fall in Italian yields. If the deficit comes in as Goldman expects or lower, the spread could tighten to 210 basis points, but will be hard to narrow beyond 200 basis points

However, the main driver behind global sentiment remains the trade showdown between the US and China, as the two nations dig in for what BBG called “could be a long and bruising trade war, after China’s decision to call off planned talks after the latest round of tariffs. China’s Vice Commerce Minister said China was willing to promote US-China trade in a fairer fashion and is hoping US takes more positive steps as well, although he added trade talks with the US are hard to proceed as US has  abandoned mutual understanding and the restart of trade talks depends completely on the US.

Separately, China’s NDRC Vice Chairman said China is able to offset trade risks through expanding domestic demand and that China will give more support for Chinese firms to expand into international markets including EU, Japan and Africa, while he reiterated the domestic economy is resilient.

Political fears also emerged overnight, following conflicting reports that U.S. Deputy Attorney General Rod Rosenstein may be poised to leave his post – although it remains unclear if he will quit or be fired – while the nomination of Brett Kavanaugh to the U.S. Supreme Court continues to be mired in controversy.

With just one day until the Fed’s latest decision, in which the FOMC is expected to hike another 25 bps and feature fresh projections for the next few years, traders are gearing for further strength in the dollar and more bond weakness. According to JPM portfolio manager Iain Stealey, “what will be more interesting will be to find out the number of rate hikes anticipated for next year. Inflation is above target, so they can keep going on this sort of slow normalization. I don’t see them stopping unless we see a pickup in trade rhetoric which actually does impact the overall economy.”

Meanwhile, speaking of the dollar, it swung between gains and losses amid choppy price action in most major currencies.

The euro edged higher against the dollar after earlier reversing gains and bunds trimmed losses after ECB Chief Economist Peter Praet said he didn’t believe President Mario Draghi intended Monday to send a new signal when he said the pickup in underlying euro-area inflation is “relatively vigorous.” Elsewhere in FX, the pound swung between losses and gains as the U.K. opposition Labour Party said it will vote against Prime Minister Theresa May’s exit deal with the European Union, and is keeping all options open on Brexit including a second referendum and the choice to stay in the bloc. The yen fell to a two-month low against the dollar as markets note the BOJ’s reluctance – and impossibility – to tighten financial conditions. Sweden’s krona held steady against the euro even as the country’s parliament voted to oust Prime Minister Stefan Lofven.

Treasuries remained in their recent defensive mode, with the 10-year yield rising close to its year-to-date high, pushing above 3.11%. 

In commodities, Brent continued its ascent after OPEC+ nations defied Trump’s demands for a production boost, and traded above $81 a barrel, the highest in 4 years, while most metals fell.

In the latest Brexit news, UK PM May said it was always clear there would come a critical point in Brexit negotiations and now is the time to hold nerve, while there were separate reports the UK cabinet is said to give PM May’s Brexit plan 2 weeks for progress. May was also said to meet US President Trump on Wednesday to discuss Brexit and a post-Brexit trade deal, according to a British official.

On today’s calendar, expected data includes FHFA House Price Index and Conference Board Consumer Confidence. Aurora Cannabis, IHS Markit, Nike are among companies reporting earnings.

Market Snapshot

• S&P 500 futures up 0.1% to 2,929.25
• STOXX Europe 600 up 0.3% to 383.08
• MXAP up 0.07% to 165.27
• MXAPJ down 0.2% to 523.04
• Nikkei up 0.3% to 23,940.26
• Topix up 1% to 1,822.44
• Hang Seng Index down 1.6% to 27,499.39
• Shanghai Composite down 0.6% to 2,781.14
• Sensex down 0.4% to 36,175.40
• Australia S&P/ASX 200 down 0.02% to 6,185.88
• Kospi up 0.7% to 2,339.17
• German 10Y yield rose 1.4 bps to 0.524%
• Euro down 0.02% to $1.1746
• Italian 10Y yield rose 11.6 bps to 2.586%
• Spanish 10Y yield fell 0.9 bps to 1.515%
• Brent futures up 1% to $81.99/bbl
• Gold spot down 0.1% to $1,200.24
• U.S. Dollar Index little changed at 94.19

Top Overnight News from Bloomberg

• World’s two biggest economies are digging in for what could be a long and bruising trade war, testing the resilience of the strongest global upswing in years
• President Trump didn’t bring up any new areas of contention in his Monday meeting with French President Emmanuel Macron, and the two found areas of agreement over Iran and Syria, French officials said
• U.K. opposition Labour Party is preparing to vote down any deal with the EU that Theresa May brings to Parliament, adding to pressure on the beleaguered premier
• German Chancellor Angela Merkel says U.K.-EU exit deal “might already be achievable in October,” ahead of EU summit likely in November
• European Union will establish mechanism to protect European companies’ financial dealings with Iran from the effect of U.S. sanctions in a bid to keep Iranian nuclear agreement alive
• Unwinding central bank quantitative easing shouldn’t have a material impact on the economy, according to Bank of England policy maker Gertjan Vlieghe
• Euro bears are holding tight, setting the common currency up for a potential short squeeze that could turbocharge a burgeoning rally
• The extra premium investors demand to hold Italian debt over German peers shrunk as La Stampa reported that the budget deficit would be 1.9 percent, below the European Union limit of 3 percent. The coalition needs to publish its 2019 budget targets by Thursday
• The Federal Reserve will raise interest rates this week and continue its quarterly drumbeat of 25-basis-point increases straight through to June 2019, according to economists surveyed by Bloomberg
• Swedish PM Lofven was voted out in a confidence vote in parliament as the center-right opposition and the nationalists joined forces to end four years of Social Democratic rule
• Oil held a gain above $72 a barrel as banks and trading houses became bullish on prices after OPEC and allies rebuffed President Trump’s call to boost production

Asian stocks traded mixed with the region indecisive following a lacklustre lead from Wall St. where both S&P 500 and Dow slipped from all-time highs on trade related concerns. ASX 200 (flat) losses were initially led by weakness in the financial sector but the index recovered later in the session. The Nikkei 225 (+0.3%) was choppy in lock-step with an indecisive currency. The Shanghai Composite (-0.6%) underperformed on the return from the long weekend and took its first opportunity to react to China’s cancellation of trade discussions, while the PBoC conducted a net liquidity drain and China was also reportedly to create a national system to monitor government spending. Elsewhere, Hang Seng and KOSPI are closed due to public holidays. Finally, 10yr JGBs were marginally lower in which prices tested the 150.00 level to the downside coinciding with weakness in T-notes, while the BoJ’s Rinban announcement was for a relatively reserved JPY 475bln.

Top Asian News from BBG

• Amarin’s 475% Rally Boosts Japanese Supplier of Fish-Oil EPA
• Japan Stocks Erase This Year’s Loss on Seven-Day Winning Streak
• Japan Court Clears Reactor Restart in Win for Nuclear Push
• China Stocks Fall as Trade Spat Deepens; Developers Lead Retreat
• Defaulting Shadow Lender Is Said to Face India Insolvency Filing

European equities have started the day higher with the FTSE MIB the marked outperformer as reports suggest the Italian Government are set to announce a deficit/GDP under 2%. Next are leading the gains in the FTSE and the Stoxx 600 after the UK retailer reported inspiring earnings and upwardly revised FY guidance for profits by GBP 10mln. Evonik shares are languishing close to the foot of the Stoxx 600 after RAG-Stiftung reduced its holding in the co. to 64.3%. The energy sector is extending on the gains seen yesterday and is the outperforming sector off the back of rising oil prices.

Top European News

• Praet Says Draghi’s Inflation Comments Didn’t Reveal Any News
• Telecom Italia Board Is Said to Discuss Nextel Bid
• Goldman Sees Choppy Waters for Italy’s Bonds Even After Budget
• Labour Sees Second Referendum as Tool to Avoid No-Deal Brexit

In FX, the dollar index is clinging to recovery gains just above the 94.000 level as the clock begins to tick down to  Wednesday’s FOMC meeting, but largely due to dovish/bearish impulses from the BoJ and resultant JPY weakness vs the Greenback alongside other major counterparts on a cross basis. Indeed, Usd/Jpy looks poised to probe 113.00 as Governor Kuroda effectively endorsed further upside potential given ongoing easy policy in Japan vs more normalisation in the US. Technically, 113.24 forms the 200 WMA, and the 2018 high so far is 113.40, assuming the big figure is surpassed and that  could be down to the Fed via September’s SEP and/or the tone of the accompanying statement given that another 25 bp hike seems baked in. GBP/EUR – The Pound is in pole position among G10s, partly due to the aforementioned lack of yen for the Jpy and perhaps positive sounding Brexit deal vibes from German Chancellor Merkel amidst all the divergence at home. Cable is retesting offers/resistance around 1.3150 and bids/support circa 0.8950 vs the single currency as ECB’s Praet plays down hawkish inflation comments from President Draghi, or at least perceptions and the rather ‘vigorous’ market reaction. Eur/Usd has eased back towards 1.1750 vs 1.1800+ yesterday, and from a chart perspective has retreated through a key Fib again (1.1780). CAD/AUD/CHF – All extending losses vs the Greenback, or perhaps shouldering the weight of the Dollar’s partial revival, with the Loonie slipping further from recent highs to circa 1.2960 and still mainly contingent on NAFTA instead of still  bid/rising crude prices, the Aud capped below 0.7250 and hampered by the lack of US-China trade talks, and the Franc  underperforming around 0.9650 and down through 1.1350 vs the Eur amidst latest Italian fiscal reports suggesting compliance with EU budget rules.

In commodities, the oil market added to gains seen yesterday, with the fossil fuel hitting over 4 year highs, and Brent breaking USD 82.00 to the upside in European trade as the production-shy rhetoric from OPEC remains fresh in traders minds. In the metals scope, gold is uneventful and trading within an exceedingly thin range of USD 3/oz with the yellow metal consolidating around the USD 1200/oz, as traders look ahead to tomorrows anticipated hike from the FOMC. Copper is seeing further weakness, with the construction material down over a percent, as market participants express demand concerns amid continued US-Sino trade tensions.

Looking at the day ahead, the focus in markets may well be on any headlines which come from the General Debate of the UN General Assembly. President Trump is to due address the Assembly (time 10:15 EST/ 15:15 BST) while Japan PM Shinzo Abe is also due to meet Trump on the sidelines to discuss trade while EU Trade Commissioner Malmstrom is due to meet with US Trade Representative Lighthizer as well as Japan’s Economy Minister Seko on the subject of trade and the WTO. Outside of that the data releases are mostly second tier. In Europe we’ll get September confidence indicators in France while in the US we get the July FHFA house price index and S&P CoreLogic house price index, along with September consumer confidence data and the September Richmond Fed manufacturing index.

US Event Calendar

• 9am: FHFA House Price Index MoM, est. 0.25%, prior 0.2%
• 9am: Case Shiller 20-City MoM SA, est. 0.1%, prior 0.11%; YoY NSA, est. 6.2%, prior 6.31%
• 10am: Richmond Fed Manufact. Index, est. 20, prior 24
• 10am: Conf. Board Consumer Confidence, est. 132.1, prior 133.4; Present Situation, prior 172.2; Conf. Board Expectations, prior 107.6

DB’s Jim Reid concludes the overnight wrap

Draghi’s comments yesterday (see below) led to a rates selloff that pushed 10yr yields up 3-6bps across most of Europe yesterday – BTPs +11.9bps due also to politics – with Bunds in particular closing at 0.507% (+4.9bps) and to the highest since 23 May just before Italy’s politics took a turn for the worse. Yields are now up 32.2bps from the intraday May lows and 20.8bps from the August lows. 10yr Treasuries out-performed but still closed 2.6bps higher at 3.090%.

Draghi spoke in the early afternoon to the European Parliament in Brussels and said that “underlying inflation is expected to increase further over the coming months as the tightening labour market is pushing up wage growth” and also that “domestic price pressures are strengthening and broadening”. There was also plenty of excitement when Draghi said that he sees a “relatively vigorous” pickup in underlying inflation however this language was used in reference to ECB staff projections of a pickup in future underlying inflation offsetting slowing non-core components so it was a little misleading that this got all the initial attention. Draghi also endorsed current market pricing with respect to forward guidance and downplayed any conditionality of an end of asset purchases by year end. DB broadly agrees with Draghi’s comment, and we expect core inflation to hit 1.3% by year-end and to average 1.5% next year, enough to justify our call for a September 2019 rate hike.

The euro also rose sharply post the comments, though it subsequently pared back the move into the close to end the session flat versus the dollar. That initial Euro strength seemed to partly weigh on equity markets in the region although to be fair they were already weak going into the headlines. The STOXX 600 eventually ended -0.56% and the DAX and CAC -0.64% and -0.33% respectively. In the US it was much the same with markets also dealing with the news (per Bloomberg) that Deputy Attorney General Rod Rosenstein will meet with President Trump on Thursday to possibly resign – adding to the political volatility around the Russia investigation. The S&P 500 and the DOW closed -0.35% and -0.68% lower, respectively, while the NASDAQ advanced +0.08%. If you were wondering which assets actually had a good day yesterday then the Oil complex ticks that box with Brent (+3.05%) and WTI (+1.84%) both rallying. The key driver was the weekend news that OPEC and its allies seemingly are in no rush to raise output. Talk of $100/bbl Brent is now becoming more frequent. That would certainly flush out inflation.

This morning in Asia sentiment is a lot more mixed. The Nikkei (+0.17%) is slightly higher – albeit for the seventh session in succession – having reopened from a long weekend however bourses in China (Shanghai Comp -0.76%) are much weaker and clearly impacted by the weekend trade news. Vice Commerce Minister Wang Shouwen has also reiterated overnight that trade talks have stalled and that China won’t talk under when the US is “putting a knife on China’s neck”.

The ASX (+0.02%) is more or less flat while markets in Hong Kong and South Korea are both closed. Futures in the US are slightly in the red while the rate selloff has continued across much of the Asia region – with 10y yields in the likes of Australia 4.6bps higher.

Moving on. With just two days until the 2019 budget deadline in Italy, there’s an unsurprising steady stream of daily headlines for markets to digest. After Messaggero reiterated that Finance Minister Tria was aiming to fix the deficit at 1.6%, Repubblica reported that Five Star were pushing for 2.6%. As seen above BTPs were a bit nervous yesterday in light of the week ahead. Headlines from Italian newswires tend to come out just as we go to print so expect more shortly. In other markets yesterday, it was a relatively soft day for EM FX (-0.24%) and EM equities (-0.86%). Argentina’s assets generally sold off, with 10-year bond yields 21bps higher, the Peso -0.22% weaker, and benchmark equities down -3.39% after the news that the country was in talks for an increase to its $50bn credit line with the IMF. Argentina’s President Mauricio Macri actually said yesterday in an interview with Bloomberg TV that there is “zero chance” of Argentina defaulting again. Given that Argentina has defaulted on its sovereign debt a total of 8 times since independence in 1816, history would suggest slightly more prudence here.

On the economic data front, surveys were relatively strong in Germany and the US. The German IFO business confidence survey printed at 103.7 from 103.8. Both the current assessment and the forward-looking expectations sub-indexes beat expectations. In the US, surveys from the Chicago and Dallas Federal Reserve Banks both printed in expansionary territory. Overall yesterday’s data continued to signal growth near the top of its post-recession range.

Looking at the day ahead, the focus in markets may well be on any headlines which come from the General Debate of the UN General Assembly. President Trump is to due address the Assembly (time 10:15 EST/ 15:15 BST) while Japan PM Shinzo Abe is also due to meet Trump on the sidelines to discuss trade while EU Trade Commissioner Malmstrom is due to meet with US Trade Representative Lighthizer as well as Japan’s Economy Minister Seko on the subject of trade and the WTO. Outside of that the data releases are mostly second tier. In Europe we’ll get September confidence indicators in France while in the US we get the July FHFA house price index and S&P CoreLogic house price index, along with September consumer confidence data and the September Richmond Fed manufacturing index. Outside of that, BoJ Governor Kuroda is due to speak just after we go to print, while the ECB’s Praet and Coeure also speak at various stages today. It will be interesting to hear after Draghi yesterday.

Finally look out for the Brexit debate at the U.K. Labour Party conference today. It may start to shape their policy going forward which will be especially important if a general election is the only way out of the current Brexit impasse. Some kind of second referendum may start to gather momentum in the opposition party after today although not necessarily an in/out one which may disappointment many in the party. Bloomberg reported last night that Labour is also planning to vote down PM May’s Brexit deal.

via RSS https://ift.tt/2NDH7Vr Tyler Durden

Facebook shares dropped 2% in premarket trading on Tuesday after the co-founders of Instagram, the company’s fast-growing photo-sharing app, decided to leave Facebook under mysterious circumstances amid alleged clashes with CEO Mark Zuckerberg, deepening an executive exodus that has intensified over the past six months as Facebook struggled with accusations of Russian interference and the rolling fallout of the Cambridge Analytica scandal.

According to the Financial Times, Instagram founders Kevin Systrom and Mike Krieger are leaving the photo-sharing app that they sold to Facebook for $1 billion back in 2012. With the departure of Systrom and Krieger, the founders of Facebook’s biggest acquisitions have now left the company.

Their departure comes less than six months after WhatsApp’s founders Jan Koum and Brian Acton quit the US social media group, after clashing with Facebook chief executive Mark Zuckerberg over privacy and data protection in the wake of the Cambridge Analytica scandal.

Including the departure of Oculus VR co-founder Palmer Luckey 18 months ago, the founders of Facebook’s three biggest acquisitions have now all left the company.

Bloomberg provides some context to the departure, reporting that Systrom and Krieger had been able to keep the brand and product independent while relying on Facebook’s infrastructure and resources to grow. But lately, “they grew frustrated with an uptick in day-to-day involvement by Zuckerberg, who has become more reliant on Instagram in planning for Facebook’s future.”

The departure of Systrom and Krieger follows several high-profile executive departures at Facebook, including that of Chief Security Officer Alex Stamos, who famously suggested that the company was pressured into finding “evidence” pointing to Russia’s purported interference in the 2016 election, and Product Chief Chris Cox, who was put in charge of the “family of apps” that includes Instagram, WhatsApp, Messenger and Facebook.

Systrom said in a blog post that the two men are “grateful for the last eight years” and the opportunity to grow the team from “13 people to more than a thousand”. He added that the two men would be taking some time off before their next venture.

Mike and I are grateful for the last eight years at Instagram and six years with the Facebook team. We’ve grown from 13 people to over a thousand with offices around the world, all while building products used and loved by a community of over one billion. We’re now ready for our next chapter.

We’re planning on taking some time off to explore our curiosity and creativity again. Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do.

We remain excited for the future of Instagram and Facebook in the coming years as we transition from leaders to two users in a billion. We look forward to watching what these innovative and extraordinary companies do next.

As one VC said, the two founders leaving Instagram is “a real moment”.

Wow. @mikeyk and @kevin leaving Instagram is a real moment. I figured they would leave at some point, but what an impact they’ve had on all of us. Maybe my favorite mobile native app of all time. 👏

— John Lilly (@johnolilly) September 25, 2018

Shortly after Facebook bought the app for roughly $1 billion, its rapid user growth sent its valuation to $100 billion, according to Bloomberg intelligence.

The deal immediately turned Mr. Systrom and Mr. Krieger into millionaires many times over.

The deal immediately turned Mr. Systrom and Mr. Krieger into millionaires many times over. Instagram has since been valued at 100 times that $1 billion acquisition price by Bloomberg Intelligence, a sizable return on investment on paper.

And Zuckerberg followed up his Instagram buy with the $19 billion purchase of Whatsapp, according to the NYT.

Facebook went on to purchase Parse, a service that provided tools for mobile developers, and Oculus, a virtual reality hardware start-up, branching into new areas beyond the original social network. Mr. Zuckerberg also spent $19 billion to buy WhatsApp.

While Instagram was relatively scandal-free when compared with Facebook’s main product and its other apps, their departure raises questions about a possible falling-out with Zuckerberg. To wit, six months earlier, WhatsApp founders Jan Koum and Brian Acton quit after reportedly clashing with Zuckerberg over privacy issues.

What’s more, the departures of Systrom and Krieger followed the departure of Marne Levine, who was previously Instagram’s chief operating officer and left her role at Instagram earlier this month to return to Facebook and lead partnerships. All of this begs the question: Who will lead Instagram during the coming months and years, which are bound to be a crucial time for Facebook and its portfolio of apps.

via RSS https://ift.tt/2xNuxIe Tyler Durden

Authored by Kai Weiss via The Mises Institute,

Elections are just around the corner in Bavaria, Germany’s largest andeconomically strongest state.

On October 14, Bavarians will go the polls to elect a new state government. One thing that is already sure is that the Left Party, Germany’s mainstream socialist party, will not have much success. It is currently polling around three to four percent, far away from the usual ten percent it has countrywide and below the threshold of five percent to have seats in the Bavarian parliament.

Seemingly this has led to some desperation in the ranks of the party. Socialism and Christianity have always had a rough going with one another, to say it mildly. All the more surprised I was when I spotted the following billboard of the Left Party recently in my hometown Regensburg (which is in Bavaria):

It says:

“More sharing.

More peace.

More brotherly love.

Jesus would have voted for us.”

As a practicing Catholic, this left me in slight bewilderment to say the least. Of course, these assertions are mere political opportunism. Bavaria is one of the most conservative and religious states in Germany. It is also a Catholic stronghold – 58.6 percent of Bavarians are Catholic. Bavarians don’t like extremism: in contrast to many other places in Germany, they are as much anti-communist as anti-fascist. The usual reaction of Bavarians when they see a Nazi or socialist would be disgust coupled with thinking that this guy should get off his high horse quickly (this reaction holds true for most other extremes – including libertarianism, as I have been happy to find out. over the years). This is the reason why the Left, generally much disliked in Bavaria, is attempting to suddenly be religious.

But what is the track record of socialists, and more so, the Left Party, on religion? Of course, Karl Marx himself once noted that “religion is the opium of the people” – which is bad, since in their view Communism should be the opium — should be what people believe in — not some mystic Church from the Dark Ages.

Thus, the conflict between socialism and the Church began quickly – a conflict which is continuing to this day when we look to China. It was a dominant factor in Communist regimes of the twentieth century, where the despots tried to subordinate the Church and eliminate religion once and for all. But again and again, Christianity stood tall. Indeed, it spurred the “ revolution of conscience” in Eastern Europe, especially in Poland, where Pope John Paul II played an instrumental part in the fall of the Soviet Union.

Similar things happened in East Germany – or officically the German Democratic Republic (GDR), which was long barred from the virtues of Western liberal values – and barred they literally were with a wall surrounding them.

This is especially interesting considering Germany’s Left Party is the direct successor of the Socialist Unity Party of Germany (SED) which held East Germany in an iron grip for many decades. And yes, strangely enough, religion was suppressed there as well. In 1950, before Communism truly took hold in the country, 95 percent of Eastern Germans were religious. In 1989, when the Berlin Wall fell, it was only 30 percent. Today, what as once East Germany is still considered the “most godless place on the planet,” with more than half of the people saying they don’t believe a God exists.

It was the result of decades of attempts to suppress religion by the SED – again, the direct forerunner of the Left Party. This Communist regime actively propagated a materialist and atheist world view, instituted “Communist rites” as a substitute to mass, and tried in many way to suppress Christianity, especially in the early stages of the GDR.

Starting in the late 1970s, the peaceful rebellion of the Church increasingly gained steam. It organized peace movements, for instance the “Swords into Plowshares.” It welcomed people who wanted to live a different life than the SED chose for them – from punks, who were allowed to do concerts in Church buildings, to helping those who tried to flee the country. It went so far that in 1988, Erich Hoenecker, the General Secretary, i.e. the head of state, called the actions of the Church “counterrevolutionary.” From rounds of prayers in the St. Nikolai Church in Leipzig, the peaceful revolution, with the famous “Monday Revolutions,” sprang forth, which ultimately led to the end of the regime.

There are many arguments to be made that Jesus was neither a socialist nor would have ever voted for them – and they have been made better than I ever could. Of course, socialism doesn’t lead to “more sharing” – it leads to more taking forcefully from one to give it to others. It doesn’t lead to “more peace” – it leads to destruction and death. And it doesn’t lead to “more brotherly love” – it leads to distrust among one another. All the more, not even The Left’s official campaign slogan “more for the majority” holds true – after all, it leads to less for everyone except a tiny elite.

The assertion, however, that Jesus would have voted for all of this, for the party which suppressed Christianity for decades, the party which the Church fought against for decades and ultimately peacefully put out of power, and the party which normally never talks about anything religious approvingly (as long as elections are not in a religious state), is nothing but abominable. In a sense, however, it should leave us feeling good: it shows that Germany’s socialists have to be very desperate right now.

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A spokesman for Turkish President Erdogan said during a Friday press conference that “operations” have been ordered against Turkey’s political enemies, including those on US soil. 

“Our relevant units and institutions will continue their operations in the countries the FETO operates in whether it be the U.S. or some other country,” said spokesman Ibrahim Kalin, describing how Turkey’s National Intelligence Organization, MIT, would target followers of Muslim cleric Fethullah Gulen worldwide. 

“Rest assured that they will feel Turkey breathing down their neck,” added Kalin. 

Erdogan has been cracking down on Gulen’s network, which is said to be in the millions, while Gulen himself lives in exile in Pennsylvania following the failed July 15, 2016 coup attempt that resulted in over 250 deaths and the imprisonment of thousands of suspected dissidents. 

In March, MIT officials kidnapped six Turkish nationals in Kosovo to stand trial in Turkey for their support of Gulen. The incident caused international outrage. 

“Operations similar to the one conducted in Kosovo can be carried out in other countries. All should know that Turkey will not allow the FETO to breathe a sigh of relief,” Kalin told reporters Friday, adding that Erdogan “has given very clear instructions on this issue.”

Friday’s announcement marks the most extreme steps taken by Ankara against Erdogan’s enemies. As the Daily Caller‘s Chuck Ross notes: 

Operations in the U.S. have yet to go as far as the Kosovo incident.

Instead, the Turkish government has hired several lobbying firms and lawyers to debilitate a network of charter schools operated by Gulen’s followers. The lobbyists have also pressed officials in both the Obama and Trump administrations to extradite Gulen, who has lived in the U.S. since 1999.

Perhaps the most high-profile lobbyist for Turkey was Michael Flynn, the former national security adviser to President Donald Trump. A Turkish businessman linked to the government hired Flynn to investigate Gulen during the 2016 campaign. Flynn and the businessman, Ekim Alptekin, discussed kidnapping Gulen and returning him to Turkey, according to reports. –Daily Caller

Meanwhile, Turkey has been intimidating enemies of the state living in US exile. As the Caller reported last year, “at least six academics and journalists living in exile in the states were tracked and photographed by Turkish news outlets.”

Since Turkish media is largely under Erdogan’s control, outlets published photos and videos of exiles during routine activities such as shopping, running errands and even picking up their children from a swimming pool. 

A Gulen-aligned nonprofit, the Alliance for Shared Values, told the Daily Caller that “Rather than being ashamed of such operations, they are boasting about them,” adding “Any actual efforts should be met swiftly with the full force of the United States government.”

Emre Uslu, a former editor at Today’s Zaman, a now-defunct newspaper that was controlled by Gulen supporters, has become one of Erdogan’s main U.S.-based targets. He has been included on a list of Erdogan critics sought for return to Turkey and was tracked by Turkish media outlets near his home in Virginia.

Erodgan supporters have also openly discussed on Turkish television the idea of kidnapping Uslu from the U.S. and returning him to Turkey.

“Turkey is no longer a stable country that one would be able to predict what its leaders would do,” Uslu told TheDCNF. “There is a possibility that operatives who wanted to further deteriorate the U.S.-Turkey relations would attempt to carry operations in the U.S.” –Daily Caller

Usulu fears that he will be targeted in any “operations” on American soil, and fears assassination – pointing to the 2013 Paris murder of three Kurdish activists. French authorities believe MIT was responsible. 

Another journalist targeted by Erdogan, Aydogan Vatandas, doesn’t think Erdogan’s threat is that serious – telling the Caller that while MIT is more than capable of running operations in the US, he thinks Kalin’s statements are more likely aimed at tamping down protests against Erdogan’s visit to the UN General Assembly. 

“The Turkish Intelligence is capable of carrying out this kind of activities in the U.S. There is no doubt about this,” Vatandas, a former reporter at Today’s Zaman, told TheDCNF. But he said that he does not believe that the Turkish government would jeopardize its already-frayed relationship in the U.S. by carrying out illegal activities on U.S. soil. –Daily Caller

“Mr. Kalin actually aims to frighten the opponents for potential demonstrations while Erdogan is in NY next week for U.N. Summit,” Vatandas added.

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