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Yesterday’s sharp Chinese selloff is now a distant memory after the BTFDers emerged, and this morning U.S. equity futures are once again levitating as the FOMC begins its two-day policy meeting, following an uneventful BOJ announcement on Tuesday morning which left all QE parameters unchanged. Asian stocks traded mixed steady while European shares climb.

The key event overnight was the BOJ meeting, in which the central bank maintained QQE with Yield Curve Control and kept NIRP unchanged at -0.1% as expected. The decision to keep QQE with YCC was made by 8-1 vote, with Kataoka the sole dissenter again who suggested the BoJ needs to buy JGBs so that 15yr yield stays below 0.2%, while Kataoka also commented that the BoJ should ease if domestic factors lead to delays in reaching the inflation target. In terms of changes to its outlook forecasts, the BoJ raised FY 17/18 Real GDP growth forecast to 1.9% from 1.8%, while it cut Core CPI forecasts to 0.8% from 1.1% for FY 17/18 and to 1.4% from 1.5% for FY 18/19

Asian shares rose in afternoon trading, with the MSCI Asia Pacific Index gaining 0.1 percent to 168.29 and ignoring the overnight miss across the board in Chinese PMIs…

 

… Confirming China’s economy is rolling over…

 

 

… supported by tech stocks as companies including Sony and Nintendo boosted their forecasts. Samsung gave the biggest boost to the regional gauge and South Korea’s benchmark after announcing a revamp of its executives. Japan’s Nikkei closed just barely lower, technically only its second down day in October, with SoftBank weighing on the index after talks to merge its Sprint unit with T-Mobile US were said to be in peril. Samsung Electronics closed at a record after nominating its Chief Executive Officer Lee Sang-hoon as its next board chairman, along with other management changes, hours after detailing a boost in shareholder payouts. The company’s plans, along with a pledge by South Korea and China to move beyond a year-long dispute over Seoul’s decision to deploy a U.S. missile shield, helped lift the Kospi Index to a new all-time high (remember the North Korea nuclear armageddon threat? Neither does the market).

“South Korean equities gained led by the Korea-China agreement on the Thaad issue and also because of Samsung Electronics’ announcement,” said Min Byungkyu, a global market analyst at Yuanta Securities Korea. Technology stocks rose the most among sub-indexes on the regional gauge, with Nintendo soaring after nearly doubling its annual profit forecast and Sony and Denso Corp. climbing after both companies boosted earnings outlooks. In India, Axis Bank surged after a report that Bain Capital plans to invest in the lender.

Speaking of China, the slump in Chinese government bonds is close to an end, with sentiment set to stabilize as the central bank boosts cash injections, analysts said The yield on the benchmark 10-year government bond fell 3 basis points to 3.90% on Tuesday, halting a four-day increase of 20 basis points that took it to the highest level in three years. The People’s Bank of China injected funds for a fourth day on Tuesday, adding a net 230 billion yuan ($35 billion) in the period.As a result, the SHCOMP halted the recent slump, rising just under 0.1% to 3,393.

In Europe, traders ignored the miss in euro-area inflation data in stride as closed German markets due to a local public holiday has led to a muted European session. The euro-area’s unemployment rate inched lower in September as the economy expanded for an 18th consecutive quarter, but consumer inflation unexpectedly slowed in October, complicating the European Central Bank’s task as it considers tightening policy.

Oil and gas stocks led gains in the Stoxx Europe 600 Index as crude hovered near a six-month high. Most European stocks climb, led by oil and gas sector; FTSE 100 rebounds after BP (+2.6%) earnings and buyback announcement. European energy names lead the way higher in the wake of BP’s earnings (+3.3%) which have subsequently supported the index. Financial names have seen slight underperformance after BNP’s (-3.2%) weak earnings which has also subsequently seen the CAC modestly underperform its  peers. Elsewhere, UK gambling names have been granted some reprieve after the UK government’s crackdown on fixed-odd betting terminals does not appear to be as bad as some had initially feared.

Treasuries and core European bonds were mostly steady. Earlier a note of caution had crept into markets in Asian hours following a drop in China’s factory gauge, and equity benchmarks in that region were mixed. Japanese stocks ended the day slightly lower after the Bank of Japan maintained its key policy rate and target for the yield on 10-year government bonds, while showing concerns remain on the inflation outlook.

The yield on 10Y TSY rose less than one basis point to 2.37%. Germany’s 10Y yield decreased less than one basis point to 0.37%, the lowest in two weeks. Britain’s 10Y yield dipped one basis point to 1.335%, the lowest in more than a week.

American tax reform also remains a key theme, with lawmakers said to be considering a phase-in plan. The indictment of former Trump campaign aides in Robert Mueller’s investigation of Russian meddling in the U.S. election, however, may pose a danger to the White House as it tries to push tax cuts though Congress. Fed and BOE rate decisions this week remain in focus for FX, with major currency pairs trading in tight ranges; GBP/USD continues to trade with an upside bias due to positioning into BOE announcement.

West Texas Intermediate crude fell less than 0.05 percent to $54.14 a barrel. Gold decreased 0.1 percent to $1,275.55 an ounce.  Oil is poised for its second monthly gain for the first time this year.

Economic data include employment-cost index, Chicago PMI and consumer confidence. Mastercard and Pfizer are among companies reporting earnings today

Bulletin Headline Summary from RanSquawk

• European bourses trade higher with energy names topping the leaderboard after earnings from BP
• EU inflation fell short of expectations but little reaction for EUR with markets already braced for a softer print given German readings yesterday
• Looking ahead, highlights include US APIs

Market Snapshot

• S&P 500 futures up 0.2% to 2,573.25
• MSCI Asia up 0.1% to 168.30
• MSCI Asia ex Japan up 0.3% to 550.81
• Nikkei unchanged at 22,011.61
• Topix down 0.3% to 1,765.96
• Hang Seng Index down 0.3% to 28,245.54
• Shanghai Composite up 0.09% to 3,393.34
• Sensex down 0.06% to 33,245.25
• Australia S&P/ASX 200 down 0.2% to 5,909.02
• Kospi up 0.9% to 2,523.43
• STOXX Europe 600 up 0.08% to 394.22
• German 10Y yield fell 0.8 bps to 0.359%
• Euro down 0.06% to $1.1644
• Brent Futures down 0.4% to $60.67/bbl
• Italian 10Y yield fell 10.0 bps to 1.582%
• Spanish 10Y yield fell 1.8 bps to 1.477%
• Brent Futures down 0.3% to $60.70/bbl
• Gold spot up 0.05% to $1,276.96
• U.S. Dollar Index down 0.04% to 94.52

Top Overnight News

• The Bank of Japan left its massive monetary-stimulus program unchanged even as it trimmed its inflation forecasts, signaling further divergence ahead from its global peers
• France’s economy extended its run of growth into a fifth quarter, marking its best streak in more than six years; the 0.5% expansion in the three months through September, compared with an upwardly revised 0.6% the previous three quarters, was supported by corporate and household investment while trade weighed on growth
• Catalan leader Carles Puigdemont kept his followers guessing as to the next step in his pursuit of an independent republic, after fleeing to Belgium where he’s expected to emerge on Tuesday
• China’s official factory gauge fell to 51.6 in Oct., vs. 52 forecast in Bloomberg survey, and five-year high of 52.4 in Sept., with new orders and prices leading the decline, as officials increasingly prioritize a campaign to clamp down on polluting industries and rein in debt
•  White House Downplays Mueller Indictments; Apple Escalates Qualcomm Dispute; Ex-Third Point Partner Drawing SEC Probe
• Congress will put Facebook, Twitter and Google under a public microscope Tuesday about Russia’s use of their networks to meddle in the 2016 election, a day after Special Counsel Robert Mueller’s criminal investigation disclosed its first indictments and guilty plea
• Apple Inc. is designing iPhones and iPads for 2018 that don’t use components from Qualcomm Inc. amid an escalating dispute between the companies
• House tax writers have completed about 90 percent of the tax bill they plan to release this week, Ways and Means Chairman Kevin Brady said Monday — but the last part may be the hardest
• SoftBank Group Corp.’s talks to merge U.S. unit Sprint Corp. with T-Mobile US Inc. have hit a serious snag throwing the deal into jeopardy after months of talks
• The Bank of Japan left its massive monetary stimulus program unchanged even as it trimmed its inflation forecasts, signaling further divergence ahead from its global peers
• Treasury Secretary Steven Mnuchin put to rest for now the idea bubbling in the $14.2 trillion Treasuries market that the government might introduce ultra-long term debt sales
• The old recipe of using bonds to hedge against risks from equity holdings may not be a winner anymore, and investors would be better off with a more complex approach that relies on multiple tactics, according to Pacific Investment Management Co. analysis

A cautious tone persisted in Asia as the region digested softer than expected Chinese PMI data and a dampened lead from the US where reports suggested corporate tax cuts could be gradual. ASX 200 (-0.2%) was indecisive and failed to maintain early energy-led gains, while Nikkei 225 (unch) was kept grounded by a firmer JPY and with SoftBank among the worst performers on reports it plans to abandon merger talks between its unit Sprint and T-Mobile US. KOSPI (+0.9%) gained after reports China and South Korea agree to resolve THAAD-related dispute and with Samsung shares buoyed by record quarterly profits, while Shanghai Comp (+0.1%) and Hang Seng (-0.3%) initially weakened following the miss on Chinese Manufacturing PMI and with some of the big 4 banks pressured post-earnings; the mainland pared losses heading into the clsoe. Finally, 10yr JGBs were relatively flat with only minimal gains seen amid a risk averse tone in Japan and after an unsurprising BoJ policy announcement where dovish dissenter Kataoka suggested more easing.

Top Asian News

• China Factory PMI Falls From Five-Year High on Pollution Cleanup
• BOJ Keeps Stimulus Unchanged as It Trims Inflation Outlook
• China, South Korea Agree to Shelve Thaad Missile Shield Dispute
• Macau Casinos Emerge From Rut as October Revenue Hopes Brighten
• Indian Billionaire Fund Says Bank Boost to Help Clear Loans

With Germany on vacation today, European bourses have started the session on the front-foot (Eurostoxx 50 +0.2%), albeit modestly so. In terms of sector performance, energy names notably lead the way higher in the wake of FTSE-heavyweight BP’s earnings (+3.3%) which have subsequently supported the index. Financial names have seen slight underperformance after BNP’s (-3.2%) lacklustre earnings which has also subsequently seen the CAC modestly underperform its peers. Elsewhere, UK gambling names have been granted some reprieve after the UK government’s crackdown on fixed-odd betting terminals does not appear to be as bad as some had initially feared. A really low key final business day of October in the sovereign bond markets, thus far. Turnover has been extremely light, even allowing for Germany’s Reformation holiday with Bund volume on Eurex around 100k lots (at writing). The German benchmark has also been very rangebound, albeit mainly on the plus side of a 162.64-162.83 trading band, and it appears that many are sitting tight ahead of the key risk events later this week. Indeed, UK Gilts are even more contained within 124.37-54 parameters, awaiting BoE ‘super Thursday’ when a widely anticipated first rate hike in a decade comes with an uncertain vote split, policy meeting minutes, forward guidance and the latest QIR. US Treasuries largely consolidating on Monday’s decent gains made on risk aversion and month end positioning, which saw the 10 year yield retreat clearly below 2.40%, ahead of the FOMC, new Fed chair announcement and monthly jobs report.

Top European News

• Standard Chartered Retail Banking Chief Karen Fawcett to Retire
• Ryanair Chief Seeks Solution to Pilot Crisis as Earnings Slide
• Davis to Brief Cabinet on Brexit Amid Plans to Ramp Up Talks
• MiFID Investment Research May Face VAT Hit From U.K. Taxman
• BNP Slides as 3Q Earnings Miss Estimates on Weaker CIB Revenue
• WPP Lowers Revenue Forecast as Ad Industry’s Woes Deepen

In FX, trade has been particularly tentative thus far with the BoJ only causing a modest uptick in USD/JPY towards 113.00 after the Bank stood pat on rates as expected with 1 dissenter suggesting the need to buy 15yr JGBs to keep yields below 0.2%. EUR saw little in the way of a reaction to the latest miss on expectations for Eurozone inflation (Y/Y 1.4% vs. Exp. 1.5% and core 0.9% vs. Exp. 1.1%) with markets potentially already braced for a lacklustre figure  given yesterday’s German prints.

Commodities continue to trade in a particularly tight range with WTI crude futures consolidating around USD 54/bbl. Elsewhere, the metals complex has been relatively non-committal ahead of this week’s FOMC and NFP, while copper lacked impetus overnight amid a cautious risk tone and after weaker than expected PMI data from its largest consumer China.

Looking at today’s key data, notable data includes the flash October CPI print for the Euro area and France, the advanced Q3 GDP report for the Euro area and consumer confidence for the UK for October. In the US the Q3 employment cost index, October Chicago PMI, October consumer confidence and the August S&P/ Case-Shiller house price index is amongst the data due. Onto other events, the ECB’s Visco and Padoan are also due to speak while UK Brexit Secretary David Davis is questioned by the House of Lords EU Committee about the state of Brexit talks. BP and BNP Paribas are amongst the companies reporting results.

US Event Calendar

• 8:30am: Employment Cost Index, est. 0.7%, prior 0.5%
• 9am: S&P CoreLogic CS 20-City MoM SA, est. 0.4%, prior 0.35%; YoY NSA, est. 5.93%, prior 5.81%; US HPI YoY NSA, prior 5.94%;
• 9:45am: Chicago Purchasing Manager, est. 60, prior 65.2
• 10am: Conf. Board Consumer Confidence, est. 121.3, prior 119.8; Present Situation, prior 146.1; Expectations, prior 102.2

DB’s Jim Reid concludes the overnight wrap

The bond bullish/bearish switch that has alternated at regular intervals over the last few weeks has firmly switched to bull mode since the ECB meeting less than 72 business hours ago. Yesterday this got an additional boost by good news from the Peripherals, weaker German inflation, a former Trump campaign manager charged in connection with the Russia probe and reports that the US corporate tax rate may only be lowered in increments over 5 years.

In the US, House tax writers are discussing a phase-in approach for corporate tax cuts, allowing the tax rate to gradually fall from 35% in 2018 to 20% by 2022 (ie: -3ppt per year), as per Bloomberg. The plans are not yet final and when asked, House Ways and Means Chairman Brady only said “we want to get the growth up front”. Treasury secretary Mnuchin noted “the objective is not to have that phase in, but we will see how that goes”. Looking ahead, the Ways and Means panel is expected to release the draft bill this Wednesday for further debate.

Staying in the US, Bloomberg reported that three people have been indicted by Robert Mueller’s Special Counsel in relation to potential Russian influence on the 2016 US presidential election, including: 1) President Trump’s former campaign chairman (Paul Manafort) for conspiracy and money laundering (receiving payments from Ukrainian political parties and then laundered some of the payments back into US, 2) Ex-foreign policy adviser to Trump (George Papadopoulos), who reportedly lied about the timing of his contacts with foreign nationals, where he communicated with an overseas professor during the campaign (March 2016), who told him about Russians possessing “dirt” on Hillary Clinton in the form of “thousands of emails” and 3) a business partner of Mr Manafort. Elsewhere, President Trump tweeted “sorry, but this is years ago, before Paul Manafort was part of the Trump campaign”. However, the indictment noted Manafort’s illegal acts lasted into early 2017.

It’s too early to know if there’s are any ramifications for politics or even the tax reforms but the guilty plea by George Papadopoulos, who served as a foreign-policy adviser to President Trump during the campaign suggests the Investigators may have someone who appears to be fully cooperating. This could potentially have a material impact.

Turning to Catalonia where tensions have cooled. The Spanish government retook control of the Catalan region yesterday with little resistance and the ousted Catalan President Puigdemont has reportedly fled to Brussels, potentially seeking asylum while other party members will continue with the  new election scheduled for 21 December. Puigdemont is expected to make an address later today. Elsewhere, El Mundo reports that opinion polls conducted early last week (before independence was declared) show that support for Catalan independence fell to 33.5% in the region. As a reminder, El Mundo also reported yesterday that opinion polls suggest Catalan secessionists could win 65 seats in a new election, but fall short of the 68 seats needed for new majority. The Spanish markets responded favourably, with the IBEX up 2.44% and 10y yields down 9.3bp. To put the mini bond rally in context, Spanish 10y yields are now the lowest since early September and 20bp lower than the day after referendum took place (1 October) and 15bp lower than the day before last week’s ECB meeting.

Staying in government bonds, core European bond yields fell c2bp yesterday (Bunds -1.6bp; Gilts -1.4bp; OATs -2.9bp) while UST 10 fell 3.8bp driven by the aforementioned factors. Peripherals outperformed with 10y yields down 9-12bp  (Spain -9.3bp; Italy -10.4bp; Portugal -11.9bp), with Italian bonds likely supported by S&P’s credit rating upgrade late last Friday, where it lifted the country’s rating 1 notch higher to BBB, citing strengthening economic outlook, an  uptick in employment and a stronger banking sector.

This morning, the BOJ voted 8-1 to retain its monetary stimulus policy, with the new board member dissenting. As our Japanese economist expected, the BOJ has trimmed its near term core inflation outlook to 0.8% for 2017  (-0.3ppt) and 1.4% for 2018 (-0.1ppt). However, the outlook for 2019 remains unchanged at 1.8%. In China, the October manufacturing PMI was softer than expectations at 51.6 (vs. 52), but remember that last month’s reading of  52.4 was the highest since 2012. This morning, Asian markets have followed the negative lead from the US and are trading slightly lower. The Nikkei (-0.24%), Hang Seng (-0.08%) and Shanghai Comp. (-0.25%) are down slightly, but the Kospi is up 0.66%, after China and South Korea agreed to restore bilateral relations and put aside a yearlong disagreement over the deployment of a US missile shield.

Recapping other market performance from yesterday now. US bourses softened from their record highs with the S&P and Dow both down slightly (-c0.3%), while the Nasdaq was broadly flat (-0.03%), partly aided by Apple where its shares rose 2.25% following reports of strong demand for its new iPhone X. Indeed my devise won’t be shipped for 4-5 weeks!!! Within the S&P, modest gains in the real estate and tech sectors were more than offset by losses from health care and t elco stocks (-1.41%), with the latter partly impacted by reports suggesting the merger between Sprint and T-Mobile may not occur. Core European markets were little changed, with the Stoxx 600 and DAX  up 0.1% while the FTSE dipped 0.23%. Elsewhere, Spain’s IBEX led the gains (+2.44%) as tensions cooled in the region, while Italy’s MIB also rose 0.39%.

Turning to currencies, the US dollar index fell 0.38%, while the Euro gained 0.37% and Sterling rose 0.61% ahead of the BOE rate meeting this Thursday where the majority expect a rate hike (85.9% odds per Bloomberg). In commodities, WTI rose slightly (+0.46%) while Iron ore fell (-2.21%) for the fourth consecutive day. Elsewhere, both precious metals (Gold +0.23%; Silver -0.07%) and other base metals were mixed but little changed (Copper +0.28%; Zinc +0.57%; Aluminium -0.22%).

Away from the markets, Treasury secretary Mnuchin has backed away from the notion of issuing US treasuries with ultra-long maturities. He noted “we’ve done a bunch of research…at least for now, we don’t see a lot of demand for it” and that “if we could issue ultra-long bonds at the same yield as 30-year bonds, it makes a lot of sense”, but “if it turns out there’s a big premium….there’s no reason for us to do that”.

Turning to Brexit, perhaps in a bid to fast track progress before the big EU summit on 14 December where EU leaders may give the green light to start talks on trade and transition deals, the UK PM May and Brexit Secretary Davis are seeking to change the timing and structure of the negotiations with the EU, from four day sessions held once a month to more regular and ongoing talks as it may help both sides to make the necessary compromises. We shall find out more today as Mr Davis is scheduled to speak to the cabinet.

The latest ECB holdings were released yesterday. Net CSPP averaged €352mn/ per day last week (€367mn before April 2017 and €321mn since then, i.e. -12.3% since QE trimming). Net PSPP averaged €2,286mn/per day last week (€3,178mn before April 2017 and €2,440mn since then, i.e. -23.2% since QE trimming). This left the CSPP/PSPP ratio at 15.4% last week (13.5% over last 4 weeks vs. 11.5% before QE was trimmed in April 2017). We still think the ECB will likely keep CSPP relatively unscathed when they halve their APP in January.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the macro data was a bit mixed. The September PCE Core was in line at 0.1% mom and 1.3% yoy. On a six-month annualized basis, core inflation is running slightly higher at 1.5%, but still remains below the Fed’s target of 2%. Elsewhere, personal spending grew at the fastest pace since 2009 up 1% mom (vs. 0.9%) and outpacing an in line personal income growth of 0.4% mom. Finally, the October Dallas Fed manufacturing activity index was above expectations at 27.6 (vs. 21 expected) – marking the highest reading since March 2006.

In Germany, October CPI was lower than expected, at -0.1% mom (vs. 0.1% expected) and 1.5% yoy (vs. 1.7% expected) – the lowest annual rate since November 2016. The September retail sales was in line at 0.5% mom, but datarevisions to prior readings meant annual growth was higher at 4.1% yoy (vs. 3% expected). In Europe, the final reading of consumer confidence was in line at -1, while the business climate confidence (1.44 vs 1.4 expected) and economic confidence (114 vs 113.3 expected) both beat expectations, the latter is now at the highest level since January 2001. In the UK, the September mortgage approvals was broadly in line at 66.2 (vs. 66k expected). Over in Spain, 3Q GDP was in line at 0.8% qoq, leaving a solid through year growth of 3.1%. Elsewhere, October Spanish inflation rose 0.6% mom, leading to an annual reading of 1.7% yoy (vs. 1.7% expected).

Looking at the day ahead, notable data includes the flash October CPI print for the Euro area and France, the advanced Q3 GDP report for the Euro area and consumer confidence for the UK for October. In the US the Q3 employment cost index, October Chicago PMI, October consumer confidence and the August S&P/ Case-Shiller house price index is amongst the data due. Onto other events, the ECB’s Visco and Padoan are also due to speak while UK Brexit Secretary David Davis is questioned by the House of Lords EU Committee about the state of Brexit talks. BP and BNP Paribas are amongst the companies reporting results

via http://ift.tt/2z5O60N Tyler Durden

The bitter legal dispute between Apple and Qualcomm has escalated sharply overnight as the former designs out Qualcomm components from future products. According to the WSJ, Apple, locked in an intensifying legal fight with Qualcomm, is designing iPhones and iPads for next year that would jettison the chipmaker’s components.

Apple is considering building the devices only with modem chips from Intel and possibly MediaTek because "Qualcomm has withheld software critical to testing its chips in iPhone and iPad prototypes, according to one of the people." The move is a dramatic reversal for the long-running relationship: Qualcomm, which has worked with Apple for a decade, stopped sharing the software after Apple filed a federal lawsuit in January accusing Qualcomm of using its market dominance unfairly to block competitors and to charge exorbitant patent royalties. Qualcomm has accused Apple of mischaracterizing its practices.

The dispute is centered on modem chips, but Apple’s strategy to reduce its dependence on Qualcomm has been underway since the iPhone 7 rollout. The WSJ continues.

Apple’s planned move for next year involve the modem chips that handle communications between wireless devices and cellular networks. Qualcomm is by far the biggest supplier of such chips for the current wireless standard. Qualcomm said its “modem that could be used in the next generation iPhone has already been fully tested and released to Apple.” The chip company said it is “committed to supporting Apple’s new devices” as it does for others in the industry. Apple in the past used only Qualcomm modem chips for iPhones, but started also procuring the chips from Intel for its iPhone 7 and 7 Plus models last year. It again used a mix of the two in the iPhone 8 and 8 Plus that started selling in September.

Some additional context on Apple’s significance to Qualcomm’s revenue.

The Apple plans indicate the battle with Qualcomm could spill beyond the courtroom feud over patents into another important Qualcomm business where it has the potential to send ripples through the smartphone supply chain. Qualcomm last year sold around $3.2 billion of modem chips a year to Apple, or 20% of its total chip sales, according to an estimate by Macquarie Capital. This year, Qualcomm’s chip sales to Apple are likely to come to $2.1 billion, or 13% of total chip revenue, reflecting more fully the iPhone 7’s mix of Qualcomm and Intel modems. Selling chips is generally less profitable for Qualcomm than its patent business. Apple paid $2.8 billion last year in Qualcomm royalties, which accounted for nearly 30% of the chip maker’s per-share earnings, according to Macquarie Capital. In the last year, Apple has stopped reimbursing those fees to iPhone and iPad manufacturers, which in turn have stopped paying Qualcomm.

Despite the continuing escalation, both in commercial and legal terms, the situation is fluid and there is hope for compromise, the Journal notes.

Apple’s plans to exclude Qualcomm chips from next year’s model could still change. People familiar with Apple’s manufacturing process said the company could change modem-chip suppliers as late as June, three months before the next iPhone is expected to ship. Still, some of the people said Apple hasn’t previously designed iPhones and iPads to exclude Qualcomm chips at a similar stage of the process. Qualcomm Chief Executive Steve Mollenkopf earlier in October described the dispute with Apple as “fundamentally about pricing” and expressed optimism that the two companies would find common ground. “For big companies, you sometimes have these disputes but you have a broader relationship,” he said at the The Wall Street Journal’s WSJ D.Live conference.

While Qualcomm remains heavily exposed to Apple, the latter has a precarious course to steer if it is going to drop Qualcomm components entirely.

Jettisoning Qualcomm chips would create risks for Apple. Semiconductor analysts widely consider modem chips from Intel and MediaTek, a smaller chip designer based in Taiwan, to lag Qualcomm in performance in areas such as download speeds. For example, Qualcomm has shipped a chip in phones that can process 1 gigabit of data per second, while Intel and MediaTek haven’t demonstrated modem chips that fast, said Patrick Moorhead, principal analyst at technology research firm Moor Insights & Strategy. Also, Apple typically wants at least two suppliers of key iPhone components to bolster its negotiating leverage, according to people familiar with its procurement process. So it would have to add a new supplier such as MediaTek in addition to Intel to maintain that for modem chips.

Meanwhile, Intel has the biggest opportunity to grow its market share by a factor in modem chips.

If Apple—which ships more than 200 million iPhones annually—taps Intel and MediaTek to provide modems for future handsets, both would stand to gain a greater piece of the roughly $5 billion market for stand-alone modem chips. Qualcomm currently dominates that market with a 50% unit share while MediaTek has a 25% share and Intel a 6% share, according to market research firm Strategy Analytics. Intel’s chips so far have been designed to manage communications for only one of two earlier-generation cellular standards still in use, while Qualcomm’s chips have been capable of handling both. As a result, Intel has been trying to broaden its portfolio to catch up with Qualcomm and this year announced a chip compatible with both of those standards. The chip would be Intel’s first modem that works with a full scope of wireless carriers. Intel hasn’t said when the unit would be available. Qualcomm and Intel also are vying for leadership in the next generation of wireless technology, known as 5G. Phones featuring 5G-capable chips are expected to hit the market largely in 2019, and Qualcomm is ahead of many peers, said Mr. Moorhead of Moor Insights & Strategy.

Removing Qualcomm components is not Apple’s only near-term challenge to its iPhone franchise. Overnight, the South China Morning Post reported further headaches for Apple's recent product offering, as retailers in mainland China are offering steep discounts only a month after the disappointing launch of the iPhone 8.

Unlike the frenzy generated by pre-orders for the wallet-busting iPhone X on Friday, the popularity of Apple’s other new smartphone, the iPhone 8, has quickly run out of steam in mainland China just a month after its release, with major e-commerce platforms offering big discounts to encourage customer orders. Suning.com, the e-commerce platform of China’s largest electrical appliance retailer, Suning Appliance, is offering discounts of as much as 1,100 yuan (US$165.5) on the iPhone 8 to customers, making its prices as competitive as or even cheaper than those offered in Hong Kong, where mainland visitors swarm to purchase Apple products for savings of up to 15 per cent. Customers who pay a 100-yuan deposit on Suning.com and Suning’s official store on Tmall will be offered discounts of 900 yuan or 1,100 yuan on different iPhone 8 models, which will ship after Single’s Day on November 11. The cheapest iPhone 8 model, the 64-gig variant, for instance, will cost 4,788 yuan (US721) after the discount by Suning, as compared with the official price tag of 5,888 yuan in China, which is 6 per cent lower than the phone’s HK$5,988 (US$768) price tag in the Apple Store in Hong Kong.

The SCMP article contained a stinging assessment from one analyst.

“The iPhone 8 might be the most poorly sold flagship iPhone model in China, as such huge discounts have never been seen before in the country,” said Zhao Ziming, a senior analyst at Pintu Tank in Beijing. Zhao said a month after the iPhone 7 was launched last year, the models were still hard to find in the market and consumers had to compete for an order online, let alone any huge discounts offered by authorised retailers. The iPhone 8, which offers few upgrades in terms of appearance over the previous version, has failed to trigger any shopping spree in China since its launch on September 22.

With hindsight, the lack of upgrades and, to some extent, cannibalization of iPhone 8 sales by the imminent rollout of iPhone X has exposed poor judgement on behalf of Apple’s senior management. Will the Qualcomm decision have a similar fate?

via http://ift.tt/2iO4EnI Tyler Durden

Authored by George Friedman via MauldinEconomics.com,

For centuries, Europe has fought wars over borders. In the 19th century and the first half of the 20th century, Europe’s borders shifted wildly. As empires fragmented, new nations arose and wars were waged.

After 1945 and the beginning of the Cold War, a new principle emerged on the Continent. The borders that existed at the end of World War II were deemed sacrosanct—not to be changed.

Europeans knew that border disputes had been one of the reasons of the two world wars and that even raising the legitimacy of post-war borders risked igniting passions that led to violence.

Similarly, untouchable were the existing spheres of influence on the Continent. There was the East and the West, and neither would mess with the other.

Thus, when the Soviets crushed independence movements in Hungary and Czechoslovakia, the United States refrained from any military action (not that there were many options). When Yugoslavia chose a pro-Western neutrality over membership in the Warsaw Pact, the Soviets didn’t intervene.

But in the early 1990s, everything changed.

Border Issues Arise, Again

In 1991–1992, two things happened.

First came the fall of the Soviet Union; then came the signing of the Maastricht Treaty and the creation of the European Union. Border issues began to drive events again.

The border of the Soviet Union collapsed, and a multitude of countries popped up to reclaim their past. There were many questions about borders that were mumbled about.

But for Eastern European countries, other problems took precedence: establishing national sovereignty, finding their place in a Europe that they longed to join, and building a new life for their people. They let the border issue drop—for the most part.

Yugoslavia and the Caucasus were exceptions that drove home the lesson of European borders. There, outside the framework of the EU and of little consequence to others, more than 100,000 people died.

Compare this to the Velvet Divorce of the Czechs and Slovaks, which took place within the context of future European states and left no one dead.

After this, and with Yugoslavia and the Caucasus in mind, the European Union tried to reinstate the principle that borders were sacrosanct. It provided what it had promised—peace and prosperity—and treated borders as anachronistic. No one was supposed to care where the lines were drawn. But there was a problem.

The Europeans Union’s Oversight

The European Union had affirmed the principle of national self-determination while avoiding the question of what a nation actually was. A nation was, under the bloc’s definition, any political entity that was in place when the EU was formed. There was little consideration after that.

This is why Catalonia is so important, along with Scotland. The Scots rejected a divorce by a startlingly narrow vote. One would have expected 90% of Scots to want to remain in the United Kingdom. Slightly more than 55% wanted to.

This means secessionists are within striking distance of secession—which would not only divide Scotland from England, but would also maintain the divide among the Scots.

Add to this another critical element. Catalonia has been part of Spain for a long time, but it has considered itself a unique nation apart for an even longer time. Spain will not legalize an independence vote.

The underlying questions are the ones the Europeans tried to bury, particularly after Yugoslavia: What is a nation, and what rights does it have? Both Scotland and Catalonia are nations. Do they therefore have a right to national determination or have they lost that right?

And what are the consequences if the Catalans disagree?

No Solution

This is not the only such issue festering in Europe.

Hungary was partitioned between Romania and Slovakia. Does it have a right to reclaim these lands? Belgium was a British invention binding the Dutch and French in an unhappy marriage. Can they divorce? Lviv used to be a very Polish city, and now it is part of Ukraine. Can western Ukraine secede and its people rejoin the countries they were citizens of before 1945?

The European Union promised universal prosperity if everyone suspended the question of borders and ignored their identities. It was a good bargain. But times have changed, and economic problems make borders much more important.

Europe, of course, has no solution to the problem.

That we would be talking about an independent Scotland and Catalonia in 2017 would seem preposterous. No economist would see it as a rational discussion.

Nations matter because Europe is merely a continent, and the EU is merely a treaty. It is a useful entity, and being useful is the only thing that justifies it. If it loses its utility, it loses its legitimacy. And that would also mean that the boundaries it has set would wither and die.

Almost all current nations in Europe have border issues and some parts that want to be independent. Most are quiet at the moment. But they are watching Scotland and Catalonia. And they know where border issues in Europe lead.

*  *  *

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Another week, another warning regarding financial crash scenarios from those keen minds at the IMF.

In “Here Is The IMF’s Global Financial Crash Scenario” last week, we highlighted the institution’s surprisingly candid discussion hidden away in its latest Financial Stability Report “Rising Medium-Term Vulnerabilities Could Derail the Global Recovery"…or as we paraphrased the IMF’s “politically correct way of saying the financial system is on the verge of crashing”.

As we noted previously, in the section also called "Global Financial Dislocation Scenario" because "crash" sounds just a little too pedestrian, the IMF uses a DSGE model to project the current global financial situation, and ominously admits that "concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions" and – in modeling out the next crash, pardon "dislocation" – the IMF conducts a "scenario analysis" to illustrate how a repricing of risks could "lead to a rise in credit spreads and a fall in capital market and housing prices, derailing the economic recovery and undermining financial stability."

This week the IMF has gone a step further, courting the mainstream financial media to publicise its warning about the dangers of historically low volatility and related short volatility strategies.

As The FT reports, The International Monetary Fund has warned that the increasing use of exotic financial products tied to equity volatility by investors such as pension funds is creating unknown risks that could result in a severe shock to financial markets. In an interview with the Financial Times Tobias Adrian, director of the Monetary and Capital Markets Department of the IMF, said an increasing appetite for yield was driving investors to look for ways to boost income through complex instruments.

“The combination of low yields and low volatility facilitates the use of leverage by investors to increase returns, and we have seen rapid growth in some types of products that do this,” he said.

It explains some of the short vol strategies that we’ve been expressing concern about for several years. To wit.

Mr Adrian’s warning comes amid increasing evidence that pension funds and insurance companies are venturing into riskier types of investments to gain income.

 

Some are also effectively writing insurance contracts against a market crash to pocket premiums. Last year the $14bn Hawaii Employees Retirement System said it was writing put options to boost its income, while other US pension schemes such as the South Carolina Retirement System Investment Commission and Illinois State Universities Retirement System have also hired outside managers to use option writing strategies. The IMF estimates that assets invested in volatility targeting strategies have risen to about $500bn, with this amount increasing by more than half over the past three years. Marko Kolanovic, head of macro, derivative and quantitative Strategies at JPMorgan, last month warned of “strategies that sell on ‘autopilot’”, and how risk management models that use volatility could be luring investors into taking on too much risk.

 

“Very expensive assets often have very low volatility, and despite downside risk are deemed perfectly safe by these models,” he wrote in a note to clients.

While we applaud this warning from the IMF, it’s absurdly belated and the short vol “horse” has long since bolted. Moreover, we think that the IMF is seriously under-estimating the magnitude of short vol risk in financial markets. Indeed, the IMF’s research department would do well to read the recent report from Artemis Capital Management which we drew investors’ attention to.

Artemis estimates that financial engineering strategies that are short vol, either explicitly or implicitly, amount to more than $2 trillion. However, both Artemis and the IMF are “on the same page” when it comes to what would unfold if there was a sustained spike in volatility. The FT continues…

The IMF believes that sustained low volatility increases incentives for investors to take on higher levels of leverage while causing risk models that use volatility as an important input to understate real levels of risk participants may be taking on.

“A sustained increase in volatility could then trigger a sell-off in the assets underlying these products, amplifying the shock to markets,” Mr Adrian said…

With equity implied volatility continuing to drop over the course of this year, investors who have bet that markets will remain tranquil have been rewarded. Yet the true quantity of complex products being sold that are linked to volatility of various assets is hard to ascertain due to such deals mostly being done in private. Regulators therefore find it difficult to map out the risks in the event of an unexpected market shock.

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Authored by Wayne Madsen via The Strategic Culture Foundation,

The Spanish government decided to reach back into its history and borrow from the playbook of longtime Spanish fascist dictator Francisco Franco in dealing with Catalonia’s decision to declare independence from the Spanish Kingdom as the Republic of Catalonia. The Catalan government’s decision to declare independence followed an October 1 referendum in the region that resulted in a “yes” for independence.

Spanish Prime Minister Mariano Rajoy, whose Popular Party is a direct political descendant of Franco’s fascist Falangist Party, wasted no time in invoking, for the first time, Article 155 of the Spanish Constitution, which allows the Spanish Kingdom to impose direct rule on regions not adhering to the whiplashing from Madrid. Catalonia is the first, but possible not the last victim, of Spain’s neo-fascism on display for the entire world.

During the Spanish Civil War, the Catalans and Basques fought with bravery on behalf of the Spanish Second Republic against the fascist forces of Franco and his fascists. Adolf Hitler and Benito Mussolini provided all-out support for Franco, much like the European Union, NATO, and the United States have fully backed Rajoy in his confrontation with Catalonia. Spain’s King Felipe VI October 3 speech, in which he condemned the Catalan referendum’s pro-independence results, was seen by many Catalans, as well as other groups like the Basques, Galicians, and Andalusians, as an unnecessary involvement in politics. Not only Catalans, but others across Spain, began calling for the scrapping of the Bourbon family’s monarchy and the establishment of the Spanish Third Republic. The Bourbons have little respect among the working peoples of Spain and France. After all, it was an ancestor of Felipe VI, Louis XVI of France, who lost his head to a French revolutionary guillotine after ignoring the poverty of the French people.

Spain’s reaction to Catalonia’s independence was swift and reminiscent of Hitler’s extinguishment of Austria’s independence in his infamous “Anschluss” (union) between Nazi Germany and Austria. Rajoy ordered the sacking of Catalan First Minister Carles Puigdemont; his entire Cabinet, chief of the Catalan Mossos d’Esquadra police Jose Luis Trapero, Catalan representatives in Madrid, Brussels, Strasbourg, London, Paris, Copenhagen, Rome, Berlin, Vatican City, Lisbon, Rabat, Warsaw, Vienna, Zagreb, and Geneva; and even Catalan schoolteachers. Catalan government ministers were replaced with lisp-talking Castillian apparatchiks sent to the Catalan capital of Barcelona to administer, by fiat, all Catalan government institutions. Spanish Deputy Prime Minister Soraya Saenz de Santamaria took over Puigdemont’s job, while Spanish Interior Minister Juan Ignacio Zoido took over the Catalan police functions from Trapero. Police duties in Catalonia were largely transferred from the Mossos d’Esquadra to the feared “Guardia Civil,” the notorious political enforcers for Franco’s fascist regime that were created by Franco as a Spanish version of Nazi Germany’s Gestapo.

The Madrid regime announced that new Catalan elections would be held on December 21 of this year, however, it is far from clear whether Catalonia’s pro-independence parties will be permitted to field candidates. Madrid may proscribe all of Catalonia’s pro-independence parties and groups, including “Junts Pel Sí” ("Together For Yes") and the Popular Unity Candidacy (CUP), leaving only pro-Spanish parties like Rajoy’s neo-fascist Popular Party and the accommodationist Socialists, Ciudadanos, and George Soros-financed Podemos on the ballot. Moreover, Madrid has threatened to put on trial all of Catalonia’s independence leaders for sedition. Sedition convictions under Spanish law carry a maximum 15-year prison term.

Madrid also ordered shut down a Catalan government special commission that was investigating Spanish police brutality against Catalan citizens during pro-independence demonstrations following the October 1 referendum. Ominously, the Madrid authorities ordered sacked police chief Trapero to turn in his passport, a sign that Madrid is contemplating seizing the passports of all of Catalonia’s independence leaders to prevent them from operating a Republic of Catalonia government-in-exile. The precedent for such action was the anti-Franco Spanish Second Republic’s government-in-exile established in Paris in 1939 after Franco’s seizure of Spain. After Nazi Germany’s invasion of France in 1940, the government-in-exile moved to Mexico City, where it was recognized by Mexico, Panama, Guatemala, Venezuela, Poland, Czechoslovakia, Hungary, Yugoslavia, Romania, and Albania until its dissolution in 1977 after Spain’s so-called “constitutional monarchy” was restored after Franco’s death. The seizure of passports from Catalan officials and the closure of Catalan foreign missions abroad by Madrid is clearly aimed at preventing a Catalan government-in-exile from being formed.

Today, Rajoy and his junta have the support of all the major corporate periodicals in Spain, El País, El Mundo, ABC, El Razón, and Barcelona’s quisling newspaper La Vanguardia. However, no newspaper endorsements or messages of support from Donald Trump, Angela Merkel, Theresa May, and Jean-Claude Juncker that will enable Rajoy’s thugs to keep Catalonia under his boot heel. Catalonia’s future will be determined by its own people and their friends abroad, many of whom have rallied to Catalonia’s cause.

No sooner had Catalonia declared its independence, messages of support began streaming into Barcelona.

Jean-Guy Talamoni, the president of the National Assembly of Corsica, a French island where independence sentiment is strong, praised the “birth of the Republic of Catalonia.” Carole Delga, the president of the French region of Occitania, where Catalan is spoken in the Pyrenees-Orientales department, recognized Occitania’s strong ties to Catalonia and called for urgent talks between Spanish and Catalan authorities to maintain the civil peace.

Scotland’s First Minister Nicola Sturgeon, who has promised a second Scottish independence referendum, voiced support for Catalonia. The leader of the Scottish National Party government in Edinburgh said, “The right to self-determination is an important international principle, and I hope very much it will be respected in Catalonia, and everywhere else." There is every reason to believe that Rajoy is seizing the Spanish European Union passports of Catalan leaders to prevent them from establishing a government-in-exile in either Edinburgh or Glasgow, two cities from which they could have at their service satellite communications links and direct air access to Europe’s major cities. There is a great degree of support among Scots for Catalan independence. The new Catalan Defense Committee Scotland is organizing opposition to Madrid’s aggression against Catalonia. It has stated, “The brutality and repression that has been visited upon the people of Catalonia cannot be allowed to continue, or to be legitimized.” The committee is not only confining its activities in Scotland and is vowing to spearhead a Europe-wide movement.

Catalonia’s cause is also supported by Jan Peumans, the speaker of the Flemish regional parliament. Citing the example of Scotland, Peumans said of Catalonia and his own region of Flanders, that independence of such regions is an “evolution that no European government can avoid.”

Regional leaders in Italy’s Lombardy and Veneto regions, which both voted in favor of more autonomy in recent referendums, rallied to Catalonia’s side and condemned Spain’s arrest and intimidation of Catalan leaders. Separatist leaders in the Faroe Islands, which voted in 1946 for independence from Denmark only to see the Danish government bow to pressure from Washington to keep the islands Danish, hope to repeat the 1946 vote in an April 2018 referendum for a new constitution for an independent Faroes. The declaration of the Republic of Catalonia has provided encouragement to not only the Faroese but those in Greenland who want to see a total break from Danish (and NATO) control.

Rajoy’s junta’s crackdown in Catalonia could also re-ignite the Basque region’s desire for independence. The Basque guerrilla group ETA declared a unilateral cease fire in 2010 but it never fully disarmed. If the Spanish suppression of Catalonia succeeds, the Basques may see themselves as next on Rajoy’s list. Unlike the Catalans, the Basques have shown Madrid that they are quite capable of bringing a war home to the very center of the Spanish state in Madrid. The Galicians may also see their autonomy at risk and a mobilization of the armed “Restistencia Galega” would force Madrid to face multiple fronts in not only Catalonia and the Basque region, but Galicia, as well.

Señor Rajoy and his proto-fascists would do well to listen to the Catalan protesters singing from the streets of Barcelona their traditional Catalan songs and one from the musical “Les Misérables” that should worry the puppet minister for the Bourbon king of Spain: “Do you hear the people sing? Singing a song of angry men? It is the music of a people Who will not be slaves again!.. Will you join in our crusade? Who will be strong and stand with me? Beyond the barricade. Is there a world you long to see? Then join in the fight. That will give you the right to be free!”

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The last time the Bank of England raised rates was July 2007, when rates increased to 5.75%. Credit markets began to dislocate a month later (when LIBOR diverged from Fed Funds), equity markets peaked three months after the increase and things eventually got much worse.

So, the track record is not auspicious, but the alleged global macro narrative this time is one of synchronised global growth, notwithstanding Catalonia, North Korea and embryonic concerns about Chinese deleveraging. On the domestic front, UK inflation is a bit too warm, growth a bit too tepid and Brexit a bit too uncertain.

Nonetheless, the BoE is expected to vote 6-3 in favour of a rate hike from 0.25% to 0.50% on Thursday, as Bloomberg reports, not everyone at the Bank of England will be on board with raising interest rates.

While Nov. 2 may see the U.K.’s first rate increase in more than a decade, economists surveyed by Bloomberg say three out of nine officials on the Monetary Policy Committee will vote against the move. That’s based on the median estimate from 24 responses. Any divide within the BOE panel reflects the conflicting signals from the economy, which is seeing both a currency-driven inflation surge and weaker expansion. While for some officials, the economy may still be too fragile to endure a rate increase, Governor Mark Carney and others see Brexit reducing potential output, making the U.K. more vulnerable to overheating.

Two of the three likely dissenters are two of the three deputy governors no less, as Bloomberg notes…

Policy makers Dave Ramsden and Jon Cunliffe may be among those to dissent. Ramsden said this month he doesn’t yet see domestic inflationary pressures building, and Cunliffe said it’s an “open question” when the BOE should lift its benchmark rate from a record-low 0.25 percent.

 

Silvana Tenreyro, described as “neutral” on policy by Bloomberg Economics, has also hinted that she’ll proceed with caution. The overriding thinking on the committee, however, seems to be that above-target inflation and a shock to supply from leaving the European Union means a rate hike is warranted.

 

In the build-up to the decision on Thursday, some recent data may have emboldened the more hawkish policy makers. The economy expanded by 0.4 percent in the third quarter, more than economists expected, and inflation hit 3 percent last month, a full percentage point above the BOE’s target. The central bank will update its economic forecasts alongside the policy decision. Compared with August, economists see a chance of an increase in the bank’s inflation estimate for this year.

If a rate hike is forthcoming – and markets are pricing in an 88% probability of one – the more important question is the signal about future hikes. While many commentators believe that it will be a question of “one and done” (a “dovish” hike), Bloomberg believes that the “BOE may also say markets underestimating further hikes”, noting, even with a division on the MPC, economists forecast that the BOE will keep alive the prospect that further rate increases are on the cards. While another move may not come soon, more than half of those surveyed expect Carney to indicate that markets are still under-pricing the odds of future tightening.

Never mind further rate hikes, a substantial percentage of economists are against a rate increase this week. A Reuters poll published in the past week showed more than 70 percent of economists believe now is not the time to raise rates – though slightly more than that said it would happen anyway.

When Carney was appointed BoE Governor in 2012, then UK Chancellor of the Exchequer, George Osborne, described him as “the outstanding central banker of his generation.” While he might be outstandingly handsome (we’re told), the coming months will determine whether he lives up to that billing, or is seen as making a catastrophic policy error – like Jean Claude Trichet in 2008.

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Authored by Paul Craig Roberts,

Before the idiots in Washington get us blown off of the face of the earth, the morons had better come to terms with the fact that the US military is now second class compared to the Russian military.

For example, the US Navy has been made obsolete by Russia’s hypersonic maneuvering Zircon missile.

For example, the speed and trajectory changes of the Russian Sarmat ICBM has nullified Washington’s ABM system. One Sarmet is sufficient to take out Great Britain, or France, or Germany, or Texas. It only takes a dozen to wipe out the United States.

Why don’t you know this?

For example, Washington’s enormously expensive F-35 jet fighter is no match whatsoever for Russian fighters.

For example, US tanks are no match for Russian tanks.

For example, Russian troops are superior in their combat readiness and training and are highly motivated and not worn out by 16 years of pointless and frustrating wars over no one knows what.

If the US ends up in a catastrophic war with a militarily superior power, it will be the fault of Hillary Clinton, the DNC, former CIA director John Brennan and the military/security complex, the presstitute media, and the American liberal/progressive/left, which, made completely stupid by Identity Politics, has allied with neoconservative warmongers against President Trump and prevented Trump from normalizing relations with Russia.

Without normal relations with Russia, nuclear Armageddon hangs over us like the sword of Damocles.

Do you not agree that it is outrageous, astounding, inexcusable, inexplicable, reckless and irresponsible that the Democratic Party, the print and TV media, the military/security complex that is supposed to protect us, and the liberal/progressive/left are working hand in glove to destroy the human race?

Why is there so much opposition to normalizing relations with a nuclear power? Why did even the Greens jump on the anti-Trump propaganda bandwagon. Don’t the Greens understand the consequences of nuclear war?

Why is there such a crazed, insane effort to eject a president who wants to normalize relations with Russia?

Why are these questions not part of the public discourse?

The failure of political leadership, of media, of the intellectual class in America is total.

The rest of the world must find some means of quarantining Washington before the evil destroys life on earth.

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