Giuliani Calls On Sessions To “Step In” On Cohen Probe

Moments after White House Press Secretary Sarah Huckabee Sanders finished a grueling daily press briefing where he was grilled by reporters on a range of subjects – including Rudy Giuliani’s Wednesday night revelation that President Trump was aware of Michael Cohen’s $130,000 payment to Stormy Daniels – the former New York Mayor unloaded on the FBI during a phone call with the Hill, which the Washington media organization promptly published.

Giuliani

During his conversation with the Hill’s Niall Stanage, Giuliani – echoing comments made by Trump in a similarly angst-ridden Fox & Friends interview last week – called on Attorney General Jeff Sessions to intervene in the Cohen case and “put the people behind the probe under investigation.”

After first threatening to “do something” about the DOJ’s legal overreach during his Fox interview, Trump tweeted on Wednesday that “at some point I will have no choice but to use the powers granted to the Presidency to get involved!”

Now, Giuliani is stepping up the pressure on Sessions, to whom he lost out when Trump was making his cabinet selections. Of course, Trump himself has repeatedly threatened to fire his AG over Sessions’ decision to recuse himself from the Mueller probe, and devoted a few minutes to bashing Sessions during his Fox interview.

“I am waiting for the Attorney General to step in, in his role as defender of justice, and put these people under investigation,” Giuliani said, reacting to an NBC News report that phones belonging to Cohen, President Trump’s longtime personal attorney, had been tapped by investigators.

Giuliani argued that the wiretapping of Cohen’s phone was a blatant violation of attorney-client privilege, adding that the FBI was deliberately trampling over the Constitution. Giuliani, who said he has not yet spoken with Trump following his Wednesday night comments, said he is already anticipating the first question that Trump will ask him when they speak next.

He also reiterated that Trump was aware “in general terms” of what Giuliani was planning to say during his interview last night with Sean Hannity. Asked if Trump was content with his performance, Giuliani responded “yep.”

When he does so, Giuliani predicted, “He is going to say to me, ‘Isn’t there an attorney-client privilege?’ And I am going to tell him, ‘No, the Department of Justice seems to want to trample all over the Constitution of the United States.'”

As the Hill reminds us, Deputy AG Rod Rosenstein signed off on the Cohen raid after prosecutors after approving a criminal referral to the Southern District of New York put forth by Special Counsel Bob Mueller and his team.

Giuliani also pushed back against former FBI Director James Comey’s accusation that he had compared the FBI with the Nazis by referring to the agents who executed the Cohen raid as “stormtroopers.” 

Giuliani countered that he had not made a Nazi comparison, arguing, “there are stormtroopers all over.”

But, he added, “If you don’t like it, don’t act that way.”

The comments are the latest indication that Giuliani is siding with Trump lead attorney Jay Sekulow in advocating an “aggressive” course of action in terms of dealing with the Mueller probe.

Now, we’re waiting to see if Giuliani will say anything about the chances of Trump agreeing to sit for an interview with Mueller. Earlier this week, Giuliani said an interview would likely take place, but it would probably be limited to two or three hours and the final decision likely won’t be made for a few weeks.

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“We’re Sorry” – Twitter Shares Slide After Admitting Password Storage Problem

Shortly after the close, Twitter announced – via a blog post – that it had identified a bug that enabled stored passwords to be unmasked.

The share kneejerked lower and are holding down around 2-3% for now – though the company claims it has resolved the issue, they recommend every user change their password.

From Twitter’s blog,

When you set a password for your Twitter account, we use technology that masks it so no one at the company can see it. We recently identified a bug that stored passwords unmasked in an internal log. We have fixed the bug, and our investigation shows no indication of breach or misuse by anyone.

Out of an abundance of caution, we ask that you consider changing your password on all services where you’ve used this password. You can change your Twitter password anytime by going to the password settings page.

About The Bug

We mask passwords through a process called hashing using a function known as bcrypt, which replaces the actual password with a random set of numbers and letters that are stored in Twitter’s system. This allows our systems to validate your account credentials without revealing your password. This is an industry standard.  

Due to a bug, passwords were written to an internal log before completing the hashing process. We found this error ourselves, removed the passwords, and are implementing plans to prevent this bug from happening again.

Tips on Account Security

Again, although we have no reason to believe password information ever left Twitter’s systems or was misused by anyone, there are a few steps you can take to help us keep your account safe:

  1. Change your password on Twitter and on any other service where you may have used the same password.
  2. Use a strong password that you don’t reuse on other websites.
  3. Enable login verification, also known as two factor authentication. This is the single best action you can take to increase your account security.
  4. Use a password manager to make sure you’re using strong, unique passwords everywhere.

We are very sorry this happened. We recognize and appreciate the trust you place in us, and are committed to earning that trust every day.

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Stocks Near Worst Start To A Year Since 2002; Bonds, Bitcoin, & Bullion Bid

Today’s market…

S&P and Dow both broke below their 200DMAs but the intraday chart of cash indices today shows the massive rebound off the 200DMA (that began as Europe closed)..

And took stocks back to unchanged… and by the miracle of machines and VIX crushing algos, The Dow closed green!!!

For context, Dow futures tumbled 400 points at the lows, before ripping back almost 500 points to the highs and into the green

Small Caps briefly went red YTD, but that also seemed to spark a bounce…

Gold and The Long Bond remain bid since yesterday’s FOMC Statement, the dollar is lower along with stocks…

 

Despite the best earnings season in 24 years, The Dow is suffering the worst start to a year since 2009…

And, at the lows today, The S&P is having its worst yearly start since 2002…

As Market Watch reports, according to Thomson Reuters I/B/E/S, of the 343 companies, or about 70%, of S&P 500 members that have reported earnings to date, 79.9% have reported earnings per share that were above analysts’ expectations, putting the season on track for the highest earnings beat rate on record, going back to 1994.

Musk was massacred….

Banks were battered then panic-bid…

 

Before we leave stock-land, this made us smile… Hong Kong and Chinese stocks were slammed early on as HKMA chief warned the public to prepare for volatility and the currency tumbled back to the lower end of the peg BUT just as the trade talks began, Chinese stocks – particularly the tech stocks under most scrutiny – rocketed higher…“cough National Team cough”

 

Treasury yields extended their drop from yesterday’s Fed statement…the whole curve is now lower on the week…

 

With 10Y holding well below 3.00%…

 

And the yield curve flattening once again… (2s10s erased all the steepening post-FOMC)

 

The Dollar drifted lower erasing the FOMC Spike, back below Tuesday’s close…

 

But the Argentine Peso plunged (the worst performing currency in the world today despite a 300bps hike)…

 

While the peso plunged, bitcoin and his brothers bounced…

 

Commodities ended the day higher but crude was the big v-shaped recovery play intraday…

 

Finally – it’s official, there is no hope! For the first time since Trump’s election, ‘soft’ survey data has no implicit hope-premium in it over real ‘hard’ data…

 

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K Street Lobbyists Are Loving Trump’s Tariff Threats

President Donald Trump’s threat to start a trade war with China by imposing tariffs on steel, aluminum, and potentially thousands of other goods is rattling global markets and causing serious economic pain for American businesses and consumers. But at least the lobbyists are happy.

Federal lobbyists reported pulling in more than $90 million for work related to “tariffs” during the first quarter of 2018, up from just $10 million spent on the same issue during the final quarter of 2017, according to an analysis by The Daily Beast‘s Lachlan Markay and Betsy Woodruff. Lobbyists who reported working on “tariff” (in the singular) were paid more than $70 million in the first three months of this year, up from a quarterly average of about $32 million last year, the Beast reports.

A good chunk of that money is coming from Chinese firms, probably trying to blunt Trump’s proposed tariffs. A 25 percent tariff on steel and 10 percent tariff on aluminum are already in place, as are tariffs on washing machines and solar panels, and Trump is mulling additional tariffs on more than 1,300 Chinese-made goods. But major American companies, including Google, Amazon, and Exxon Mobil, also ramped up lobbying on trade issues during the first quarter of 2018.

All of this activity is a boon to the network of longtime government insiders that Trump campaigned against. As Lachlan and Woodruff put it, “A man who pledged to drain the swamp is dramatically contributing to it by having little in the way of straightforward policy strategy.”

This lobbying is playing out on two levels. In March, Trump announced plans to slap tariffs on all imported steel and aluminum but then quickly moved to issue temporary exemptions for major U.S. trading partners such as Canada, the E.U., and Mexico. The administration has been negotiating with those countries on new, bilateral trade deals, with Trump using the threat of tariffs to force them to the table. But all those negotiations require negotiators—and that’s where the lobbyists come in.

On a smaller scale, individual businesses and trade groups such as the U.S. Chamber of Commerce are pressuring the administration to keep or excise certain elements of the tariff plan. If the government is going to be picking winners and losers, which is what deciding to put tariffs on product X but not on product Y amounts to, there is a strong incentive to hire lobbyists to make sure you don’t come out on the losing end.

This cajoling is a good thing to the extent that lobbyists are pushing back against Trump’s impulsive trade warring. But some lobbyists have more nefarious agendas. Perversely, Trump’s trade agenda has encouraged some businesses to demand more tariffs as a way to blunt the effects of the ones he has already proposed. The COO of a small company that makes steel wheels for tractors and other equipment told Bloomberg News last week that his company is paying 25 percent more for steel because of Trump’s tariffs, which creates “an unfair price advantage for Chinese companies that sell finished steel wheels” without having to pay tariffs.

That company, Americana Development, probably doesn’t have a six-figure lobbying budget, but the same dynamic is playing out in other corporate offices across the country. If you’re going to get hit by Trump’s tariffs, you have an incentive to lobby for tariffs on your competitors. As long as the government has the ability to make or break companies’ balance sheets, those companies are going to have an interest in hiring lobbyists to protect them (or at least to hurt their competitors in equal measure).

Rather than reducing the influence of the K Street swamp, Trump is recklessly pursuing a major economic policy shift without clearly defined goals, or even a basic understanding of the policy he’s pursuing. That course of action creates openings for lobbyists. The swamp wins again.

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ESPN Loses 500,000 Subscribers In 30 Days

ESPN lost nearly 17,000 subscribers a day in the month of April, costing them $48 million in annual revenue – and bringing the total subscriber count down to around 86 million, reports Outkick the Coverage

Putting that into context, this is $48 million in revenue that ESPN has lost forever. (That’s $8 a month x 500,000 lost subscribers x 12 months in a year).

The loss in subscribers puts ESPN down to just north of 86 million, which is a precipitous decline from the 100 million subscribers the network had as recently as the end of 2011. –Outlook the Coverage

OtC’s Clay Travis says that part of the trend may be attributed to the fact that come tax season, penny pinching cable and satellite subscribers cut back, or “whether the end of the NFL, college football, and college basketball causes many sports fans to tune out for the summer.”

While the numbers of lost subscribers haven’t been as bad in the past few months, I suspect that’s because ESPN threw such a fit over last year’s numbers that Nielsen slowed down its subscriber attrition data for several months to make sure they weren’t off in their data measurements. –Outlook the Coverage

Here’s ESPN compared to other networks:

Meanwhile, the NFL network is regretting its decision to bring Thursday night football to Fox – resulting in its former network Comcast, which owns NBC, kicking them into a lower programming tier. This caused the network to also lose nearly half a million subscribers. 

That said, ESPN’s loss is more notable considering the dollar figures involved:

The larger story here remains that ESPN, which is the most expensive channel on cable by far, loses more than any other channel with cord cutting because their revenue takes the biggest hit. That’s easy to illustrate by using FS1 as an example. FS1 brings in roughly $1 a month in subscriber fees so losing 328,000 subscribers would cost it just shy of $4 million total a year. Whereas ESPN 500,000 lost subscribers cost it $48 million a year.

Given that ESPN costs three times what every other channel costs — and given the substantial fixed rate costs involved with its insanely overpriced and paid sports programming schedule — the network needs to be saving money wherever it can.

So it’s probably a good thing the network isn’t spending $35 million a year on a brand new New York City studio and paying three people $15 million a year to host a show whose ratings are declining by 20% over the much cheaper show they replaced. –Outlook the Coverage

Between cord cutters and penny pinching subscribers, ESPN better think of a solution to their dwindling subscriber base, and fast. 

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How Big Government Backed Bad Science and Made Americans Fat: New at Reason

“Government made a big mistake with the dietary guidelines,” says Nina Teicholz, author of New York Times bestseller The Big Fat Surprise: Why Butter, Meat and Cheese Belong in a Healthy Diet. “Given the track record that they have so far, you can really make a plausible argument that they’ve done more harm than good.”

Consumption of meat, butter, eggs, and cheese were once encouraged as part of a healthy diet. Then in the 1950s, a Minnesota doctor named Ancel Keys put forth his diet-heart hypothesis, claiming that saturated fats raise cholesterol levels and cause heart attacks.

Keys produced landmark studies of the relationship between diet and heart disease that transformed nutrition science. He became a powerful figure in the science community. Contemporaries who publicly questioned the validity of his findings risked losing their research funding or becoming pariahs. When the U.S. adopted dietary guidelines in 1980, Keys’ recommendations became enshrined in national food policy.

“We have made our policy based upon this weak kind of science called epidemiology which shows association, but not causation,” Teicholz explains. “We have the situation where we just cannot reverse out of these policies that were originally based on really weak science.”

Keys’ flawed research is one reason Americans have been getting fatter and unhealthier for decades. Despite major advances in treatment, heart disease is still the leading cause of death for men and women.

“The really dominant view is that the dietary guidelines are good…and the reason America is fat and sick is that America has failed to follow them,” Teicholz says. “That’s when you start looking at the data…By every food category you can find, we have faithfully, dutifully followed the guidelines.”

Today the science behind Keys’ dietary findings is once again being challenged. Teicholz has launched the Nutrition Coalition, which aims to inform food policy with rigorous science.

“Our goal is educate people about how the dietary guidelines have not been successful…and to bring this alternative policy viewpoint to policy makers,” says Teicholz. “More and more experts are willing to talk out about the science, and I think that will support change.”

Produced by Alexis Garcia. Camera by Jim Epstein.

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Why America Distrusts ‘the Media’ and What to Do About It

How bad is the relationship between national news outlets and their audience? I’ll get to the survey data in a bit, but if you bothered to watch or read about last Saturday’s White House Correspondents’ Dinner, you already know the answer: It’s really, really bad. And it’s certainly not helped when wealthy, well-connected TV journalists side with powerful politicians against freedom of expression or when Brooklyn-based scribes imagine Americans as children and Donald Trump as “a stepfather who was going to rape us.”

Whatever else you can say about comedian Michelle Wolf’s polarizing performance at the correspondents’ dinner, in which she brutally mocked the president in absentia and administration officials seated just a few feet from her, the press came off looking even worse. Within hours of the event, NBC stars such as Mika Brzezinski and Andrea Mitchell, newly minted Pulitzer Prize winner Maggie Haberman, and other prominent journalists attacked Wolf for her raw language and untoward humor, especially her jokes at the expense of White House Press Secretary Sarah Huckabee Sanders. So much for freedom of expression. Although the evening was explicitly framed as a celebration of the First Amendment, even the head of the White House Correspondents’ Association (WHCA), which sponsors the event, regretted Wolf’s appearance. Margaret Talev, whose day job is writing for Bloomberg, wrote:

Last night’s program was meant to offer a unifying message about our common commitment to a vigorous and free press while honoring civility, great reporting and scholarship winners, not to divide people. Unfortunately, the entertainer’s monologue was not in the spirit of that mission.

At best, the dinner, once celebrated and widely covered as the “nerd prom” to which journalists brought glamorous guests from Hollywood, was poorly organized. At worst, the quickness with which members of the press condemned an utterly predictable (and hence preventable) attack on the Trump administration reveals a deference to power and a desire to maintain access to politicians that far outweigh any watchdog role the Fourth Estate pretends to play.

Greenwald, a winner of Reason‘s Lanny Friedlander Prize for exposing secret state surveillance and creating platforms that expand expression, and Spiers, the original writer at the defunct alternative outlet Gawker, aren’t the only journalists who criticized the WHCA for the way its dinner played out. But the response from many establishment journalists only aggravates the alienation of readers, viewers, and listeners. The purest distillation of this perspective comes from Virginia Heffernan, whose résumé includes stints at The New Yorker, Slate, and The New York Times as well as regular contributions to Wired, The Wall Street Journal, and Politico. The correspondents’ dinner contretemps moved Heffernan to tweet:

It’s magnanimous of a well-connected journalist with a Harvard Ph.D. to identify with the plebes (“…who was going to rape us“). But the implications of the metaphor are unmistakable: Regular Americans are children who are defenseless against a predator. “We” must be protected, either by President Dad or Media Mom, because we have no agency, no power, no strength of our own. Forget the fact that even though Trump was charged with sexual harassment and assault by many women, he won 2 million more votes than Mitt Romney managed; that must be evidence of a political-sexual Stockholm Syndrome. Trump has been repeatedly rebuffed by the courts and, from time to time, even by his own party in Congress. I have no love for him, but to cast Americans, including his supporters, as children incapable of independent action or thought only confirms the critique of the press as an elite that has more in common with D.C.’s political class than jes’ plain folks toiling away at mundane jobs in flyover country.

Do most members of the media see their audience with this mixture of pity and contempt? Journalists do seem to be increasingly concentrated in the well-heeled, coastal enclaves that breed such attitudes. As Jack Shafer and Tucker Doherty wrote last year at Politico,

The national media really does work in a bubble, something that wasn’t true as recently as 2008. And the bubble is growing more extreme. Concentrated heavily along the coasts, the bubble is both geographic and political. If you’re a working journalist, odds aren’t just that you work in a pro-Clinton county—odds are that you reside in one of the nation’s most pro-Clinton counties. And you’ve got company: If you’re a typical reader of Politico, chances are you’re a citizen of bubbleville, too.

While newspaper jobs, which were scattered around the country among local dailies and weeklies, have been halved since 1990, online media jobs have grown. But these new gigs are clustered in just a few places. Shafer and Doherty explain:

Today, 73 percent of all internet publishing jobs are concentrated in either the Boston-New York-Washington-Richmond corridor or the West Coast crescent that runs from Seattle to San Diego and on to Phoenix. The Chicagoland area, a traditional media center, captures 5 percent of the jobs, with a paltry 22 percent going to the rest of the country. And almost all the real growth of internet publishing is happening outside the heartland, in just a few urban counties, all places that voted for Clinton. So when your conservative friends use “media” as a synonym for “coastal” and “liberal,” they’re not far off the mark.

Not so long ago, journalism was a trade that was open to high-school graduates. During the last several decades, writing for a living has been professionalized to the point that most journalists have a college degree and an increasing number have majored in journalism. That trend only increases the distance between news producers and news consumers.

All of this matters because the news media play a unique role in society. Earlier this year, the Knight Foundation released a report based on a national survey of 19,000 people. Among its findings:

More than eight in 10 U.S. adults believe the news media are critical or very important to our democracy. They see the most important roles played by the media as making sure Americans have the knowledge they need to be informed about public affairs and holding leaders accountable for their actions.

Yet respondents lacked confidence in print, online, TV, radio, and cable sources, with fully 66 percent agreeing that “most news media do not do a good job of separating fact from opinion.” In 1984, the corresponding figure was 42 percent. Only 30 percent said the media did “well” or “very well” at holding leaders accountable, while 42 percent said the media performed this function “poorly” or “very poorly.”

Nothing that’s happened in the last week will inspire more confidence that the press is comforting the afflicted and afflicting the comfortable. Sadly, even when it tries to police and critique itself, the press seems likely to inflame the situation by insulting the intelligence and autonomy of its audience. Few industries do well by alienating their customers, and the media are proving no exception.

What can be done? In an age when newspapers and other sources that at least aspired to be “objective” are declining, the future belongs to viewpoint-driven journalism. That isn’t a bad thing, even if it means that “the media” as a general category might never regain the public confidence it had in the mid-1970s, when 72 percent of Americans told Gallup they trusted the press. Objectivity has always been something of a con, since the selection of stories, of what counts as news and why, has always been hidden from view. So even a story that presents “both sides” can have an agenda despite its seemingly evenhanded approach.

Audiences are increasingly drawn to highly personalized and idiosyncratic approaches that emphasize drama, personality, and viewpoint. Podcasts represent the democratization of radio, and the most popular podcasts tend to be ones that push an agenda and have outsized personalities as hosts. Narrative journalism, blogging, and other popular forms don’t hide behind the royal we or pretend to be omniscient. But if objectivity is elusive, impossible, and unattractive, that doesn’t mean that basic codes of fairness and engagement shouldn’t be front and center in contemporary journalism. Not misrepresenting opponents’ viewpoints is a good a place to start, as is foregrounding biases and predispositions rather than hiding them. Admitting errors and correcting them in real time is a prerequisite, and so is engaging the audience, which long ago stopped being passive (if it ever was).

According to the Knight Foundation survey, Americans are split “on the question of who is primarily responsible for ensuring people have an accurate and politically balanced understanding of the news,” with 48 percent saying it’s up to individuals and 48 percent saying it’s up to the media. Either way, Americans want trail guides to their world and what’s happening in it, not infallible experts who issue ex cathedra statements with Pope-like certainty. They also want choice and variety and don’t expect, say, the Associated Press to follow the same blueprint as Reason, even if they expect each of us to adhere to our missions and ethics. The turn to the “artisanal” matters every bit as much in journalism as it does in restaurants, woodworking, and crafts. People want to know what you believe, how your shit is sourced, and that they can trust you to live up to your word. That should come naturally, if not easily, to journalists.

Years ago, pioneering blogger Ken Layne notoriously proclaimed, “It’s 2001, and we can Fact Check your ass.” His specific target was Robert Fisk, a reporter whose last name was turned into a verb signifying a point-by-point refutation of an article or argument. Now it’s 2018, and readers can still fact-check journalists’ collective ass. They will respond more favorably to those of us who make it easy for them by being upfront, honest, and responsive without having to be asked first.

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Bean Ban Blowback: Bunge CEO “China Deliberately Not Buying US Products”

Authored by Mike Shedlock via MishTalk,

In its trade dispute with the US, started by Trump, China is deliberately not buying US products.

Bunge Ltd. CEO Soren Schroder told Bloomberg on Wednesday China has essentially stopped buying U.S. supplies amid the brewing trade war. Bunge is the world’s biggest oilseed processor.

“They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S.”

It’s “very clear” that the trade tensions have already stopped China from buying U.S. supplies, Schroder said.

“How long that will last, who knows? But so long as there is this big cloud of uncertainty, that’s likely to continue.”

Bunge has still been able to meet Chinese demand by filling shipments with supplies from outside the U.S., Schroder said. The White Plains, New York-based company has a large presence in South America.

Soybean Price

The futures symbol for soybeans is “ZS”. A chart shows the price of soybeans peaked in summer of 2012 near $1790.

Since bottoming in September of 2014, the price has mostly flatlined between $900 and $1,050.

It appears that the lack of Chinese buying US soybeans has neither hurt nor helped US farmers. But the dispute not done a damn thing for the deficit either.

At best, China’s soybean retaliation has made the US the deficit with China worse while improving it by the same degree elsewhere.

Trump Playing With Fire

President Trump is playing with fire. He has started a trade war on multiple front simultaneously: China, the EU, NAFTA (Canada and Mexico).

Nothing good can possibly come from this. For discussion, please see Germany Seethes and Juncker Warns Trump About Tariffs: Can Trump Win?

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Here’s Why The Goldman Of 2008 Would Be Shorting The Goldman Of 2018

Ten years ago, Goldman made a killing by betting – alongside some of its best clients such as John Paulson – against subprime Residential Mortgage Backed Securities (and their various synthetic and “squared” derivatives) and companies the lent money to subprime borrowers. Now, a decade later, Goldman is once again hoping to profit off America’s sub-660 FICO population, only instead of betting against subprime borrowers, it is lending to them.

That’s right: Goldman is now a subprime lender itself, because through its retail-facing bank, which both collects deposits and issues loans, subprime borrowers have emerged as one of the most important client bases of the FDIC-backed trading desk which until just 2 years ago had no conventional, retail-facing banking operations whatsoever.

However, as the contribution of prop, flow and FICC trading – historically Goldman’s bread and butter – to the company’s revenue declined as trillions in central bank liquidity removed risk and volatility from markets, Goldman was forced to find alternative revenue streams. As a result, over the past year and a half, Goldman built out a digital banking arm which it acquired from GE Capital Bank, and now has about $20BN in deposits and $2.4BN in unsecured consumer loans. The new business, named Marcus and which we profiled previously, is a key part of the bank’s plan to increase annual revenues by $5bn by 2020 after several years of lacklustre growth from its core businesses serving big companies, big investors and ultra-rich clients of its private-banking arm.

And herein lies the rub, because as the FT reports citing analysts, Goldman has been targeting riskier borrowers, supplying about one-fifth of its loans to people with credit scores below 660 on the commonly used FICO scale; there is a familiar name for this group of borrowers: “subprime.”

And as Goldman’s own balance sheet exposure to subprime has grown, analysts are wondering if the bank is setting itself up for big losses down the track, as deja vu strains are once again emerging in the $3.7tn US consumer debt market, where subprime loan losses on autos have already surpassed the financial crisis record, and where credit card delinquencies are now the highest they have been in the past 6 years.

Addressing these concerns at Goldman’s annual meeting in Jersey City on Wednesday morning, Lloyd Blankfein accepted that “a poor credit environment” could bring new risks, but said that the 149-year-old bank was not too concerned with “timing” its entry into retail banking; he was referring to the fact that according to Morgan Stanley, Socgen, the IMF and virtually everyone else, the US economy is already very late cycle.

“We intend to be in the [consumer-focused] business for the long-term and we have to manage it through all points,” he said, responding to a shareholder’s question about the revenue plan announced last year. “We’re in the ninth year of a favourable cycle; five years ago, we might have waited for a better time to get into it, at a down part of the cycle, but we haven’t had that yet. So we take our risk accordingly.”

Quoted by the FT, Blankfein said Goldman was “being very careful” in its development of Marcus, “growing very slowly and deliberately with a lot of controls”, so that people do not take out loans they cannot afford to pay back.

He emphasised that so far, the digital bank has focused on supplying loans to replace balances held on credit cards, which tend to have “substantially” higher rates of interest.

“That is a win/win,” he said, “recognised by a community of people generally concerned with public welfare.”

People like Lloyd.

Ironically, while Goldman’s equity trading desk enjoyed its best quarter on record in Q1, largely thanks to the “one-time” volatility explosion on February 5, shareholders were less curious about the fate of Goldman’s high margin FICC operations, and far more curious about how Goldman plans to grow out “Marcus” and the strategic shift it implies.

Sister Barbara Aires of the Sisters of Charity of St Elizabeth, who was representing the Unitarian Universalist Association, asked Mr Blankfein to shed more light on the growth plans, noting that the bank had recently recruited an Instagram personality — JoJo Fletcher, a former Bachelorette contestant — as a spokesperson for its home-improvement loans.

Yes, Goldman has sunk so low that it hired a former “bachelorette” to sell loans to retail.

It gets worse, because it turns out that the Goldman of 2008 would be waving in every CDS it could find on Goldman of 2018. And so, in delightful irony, Goldman has become the very company that just ten years ago it wanted nothing more than to short into oblivion.

* * *

And now, here are some more photos of JoJo to make all-red blooded Americans rush to their nearest Goldman branch and take out a loan.

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OPEC Production Cuts: Is Russia Complying?

Authored by Tsvetana Paraskova via OilPrice.com,

Russia’s oil production held onto an 11-month high in April, flat compared to March and above its quota under the OPEC/non-OPEC deal for a second consecutive month, according to data by Russia’s Energy Ministry.

Russia pumped a total of 10.97 million bpd of oil in April, unchanged from March, and slightly above its quota under the production cut deal, according to energy ministry data, as carried by Reuters.

Russia’s pledge in the OPEC/non-OPEC deal is to shave off 300,000 bpd from its October 2016 level, which was the country’s highest monthly production in almost 30 years – 11.247 million bpd.

Last month, production at the larger Russian companies increased, while a decline at the smaller firms offset that growth. Production at Rosneft, the largest Russian oil company, inched up by 0.1 percent in April over March, while Gazprom Neft—which has an ambitious production growth plan—saw its oil production increase by 0.9 percent month on month. The combined production of the smaller oil companies decreased by 0.9 percent last month, offsetting the production gains at the bigger producers.

After three months of steady output, Russia’s crude oil production increased in March to 10.97 million bpd, the highest level since April 2017, as the top two Russian companies – Rosneft and Lukoil – boosted their production.

Russia is leading the non-OPEC group of oil producers part of the pact with OPEC to cut production in order to draw down inventories and boost oil prices. Analysts and official figures are already estimating that global oil stocks in developed economies are very close to or already within the five-year average—OPEC’s metric for the deal’s success.

Nevertheless, OPEC’s leader Saudi Arabia insists that there is more work to be done and the cuts should continue by the end of this year, as planned. Russia is more careful in comments, although it has repeatedly said that it is committed to the deal. Last month, Russia’s Energy Minister Alexander Novak said that at the June meeting, OPEC and allies could discuss ‘easing the cuts’ until the end of the year. 

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