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It has been a morning session of two halves.

In Asia, the mood was somber, and stocks fell with the Shanghai Composite (+1.1%) outperforming on another late session binge-fest by the National Team, and the Nikkei 225 (-1.4%), Hang Seng -1%, Kospi -0.2%, ASX -0.6%, Sensex -0.4% and the South Korean Won all down following news of the biggest Chinese Yuan devaluation in five weeks.

The European session, on the other hand was a different matter and after the USDJPY slid as low as 113.35 at the European open, it then proceeded to soar 100 pips and push European stocks (Stoxx 600 +1.7%) and US equity futures up with it, with the ES trading above 1900 as of this posting, adding to the best 2-day rally in the S&P in five months.

Shares in Europe also rose as companies including Credit Agricole SA and Schneider Electric SE reported better-than-estimated results. 

Among the key corporate news, Glencore Plc pushed a gauge of commodity stocks higher, advancing 8.6 percent after the Swiss trader said it won new loan commitments from banks to replace an existing $8.45 billion revolving credit facility. Its bonds also gained. Total SA dropped 1.7 percent after a shareholder sold a stake at a discount. ABN Amro Group NV bucked the banking industry trend, sliding 2.2 percent after its quarterly profit missed analysts’ projections as regulatory costs rose.

Some observations were optimistic, such as this one by Justin Urquhart Stewart, co-founder of Seven Investment Management in London: “I’d love to think this is the start of a lasting rebound but it’s too early to tell. Any gains have been pretty fragile and short-lived lately, even though earnings haven’t been all that bad and economic figures have been quite supportive.”

Others less so, such as this UBS technical analyst note: “We see Europe starting our suggested multi-week corrective/volatile rebound into later 1Q/early 2Q before resuming its underlying bear trend into deeper summer on the back of the recent break down in small and mid-caps. After the undershooting in banks, we expect a bounce in the Euro Stoxx 50 to remain capped at 3050 to best case 3200. On the sector front, a bounce should be led by autos, chemicals, industry, energy and miners, whereas a rebound in financials should sooner or later lose momentum.”

But ultimately it all remains about oil, which after sliding to $29 yesterday after the disappointing summit between Russia and Saudi Arabia, has rebounded on hope that today’s follow up meeting between Iran, Iraq and Venezuela may provide something actionable. It won’t, as the following tweet from a WSJ correspondent indicates, and instead the stage for the fingerpoint is now set.

Gulf OPEC Official: “If Iran rejects the proposal, we cannot be blamed for not trying. The ball is in their court now.”

— Summer Said (@summer_said) February 17, 2016

Focusing on regional markets, we start in Asia where stocks shrugged off Wall St. gains to trade negative with energy losses weighing bourses. Nikkei 225 (-1.4%) underperformed on JPY strength, while the biggest decline in machine orders in over a year also added to the gloom. ASX 200 (-0.6%) saw energy names heavily pressured after crude retreated back below the USD 30/bbl level, while Woodside Petroleum shares also dragged the sector lower following a 99% decline in profits. Elsewhere, the Shanghai Comp (+1.1%) fluctuated between gains and losses after an early upbeat tone following reports of increased funds for infrastructure spending and officials also discussing a reduction in bad loan provision ratios, was counter-balanced by a somewhat reserved PBoC liquidity operation. Finally, 10yr JGBs saw spillover selling from T-Notes where large corporate issuances and firm US stock momentum weighed on US paper while the BoJ’s presence in the market today was for a relatively modest amount. Japanese PM Abe adviser Honda says the BoJ may increase stimulus at the March meeting and that the tax hike should be delayed until 2019.

In Europe, European equities started the session off on the front-foot with a slew of earnings reports and a paring of yesterday’s losses enough to out-muscle underperformance in energy names amid the latest OPEC/Non-OPEC¬related headlines. Furthermore, financials have also been dealt a helping hand by stellar earnings from Credit Agricole (+11.1%) and elsewhere to the downside, utilities are seen softer in the wake of RWE suspending their dividend for ordinary shares. From a fixed income perspective, Bunds trade modestly higher with no real sustained direction as participants awaited supply from both the UK and Germany for much of the morning, which was technically uncovered when auctioned. Portugal spent the European morning wider to the German benchmark as has often been the case over the past few week. Elsewhere in the periphery, concerns continue to linger for Spain as to whether or not the nation would be able to obtain a definitive outcome if they were to hold a fresh round of elections.

In FX, much of the focus has been on GBP this morning, with the backdrop of the EU renegotiations added to by the UK employment report. The jobless rate was unchanged at 5.1% which caused and immediate hit on the Pound, led by Cable. Earlier in the day, we saw losses through 1.4250 limited to 1.4242, held up by some strong bids at these levels, which then formed the basis of a sharp turnaround as the rest of the numbers proved very healthy. Claims fell by a much larger than expected 14.8k and once digested, saw Cable taking out 1.4300 and pushing the GBP to session highs against the rest of its major counterparts. Elsewhere, early stock market jitters saw USD/JPY dipping below 113.50, but as sentiment eased, we saw a slow grind back to 114.00 and above, but the Asia highs ahead of 114.40 cap for now. Oil prices moving higher despite ongoing wrangling over the production freeze (Iran), and this has given CAD some relief to send the spot rate back towards 1.3800.

In commodities, energy markets traded relatively unchanged through most of the session as participants await further headlines regarding any success/breakdown in negotiations regarding a co-orindated production freeze. However, in the lead up to the beginning of the 1030GMT meeting between Qatar, Venezuela, Iraq and Iran WTI and Brent futures both saw a bid, with the former heading higher, towards the USD 30/bbl level, although with no fundamental catalyst immediately behind the move. In terms of metals markets, Gold traded higher overnight amid weakness in Asia-Pac stocks and a pull-back in the USD, however, prices have since retreated from their best levels alongside the upside seen in European equities.

* * *

Bulletin Headline Summary from RanSqawk and Bloomberg

• FX markets have seen USD/JPY and GBP/USD retrace earlier losses with both heading into US crossover seeing a bid, as participants shrug off mixed UK employment release and sentiment strengthens through the European morning
• While Asian equities failed to benefit from the positive Wall St close, European equities have traded higher this morning, benefitting from stock specific news as well as an uptick in sentiment
• Today’s highlight is the release of the FOMC Minutes, while participants will also be looking out for US housing starts, building permits, industrial production and API Crude Oil Inventories
• Treasury yields little changed as European equities and oil rally during overnight trading; Fed minutes to Jan. 26-27 meeting to be released at 2pm ET.
• The yuan posted the biggest two-day decline in more than a month as the central bank’s fixing for the currency tracked an overnight advance in the dollar and official media voiced concern that capital outflows will increase
• China’s unprecedented jump in new loans at the start of 2016 is fueling concern that excessive credit growth is piling up risks in the nation’s financial system. The increase could pressure the country’s credit rating, S&P said Tuesday
• China is stepping up support for the economy by ramping up spending and considering new measures to boost bank lending. The nation’s chief planning agency is making more money available to local governments
• The BOJ should act preemptively to change the deflationary mindset in Japan and this action could come as soon as March, said Etsuro Honda, an adviser to Prime Minister Shinzo Abe
• Wall Street firms are readying themselves for a provision of the 2010 Dodd-Frank law that takes effect in December that forces banks to keep a stake in the commercial-property loans they package into securities and sell off to investors
• Syria’s five-year war has turned into a tangled web of proxy conflicts between global and regional powers, with a growing risk that some of them could clash directly. Right now the most dangerous flashpoint is between Russia and NATO member Turkey
• Apple rejected a court order to help the Justice Department unlock an iPhone used by one of the shooters in a terrorist attack in California, accusing the U.S. government of “overreach” that will set a dangerous precedent
• $23.425b IG corporates priced yesterday (YTD volume $206b) and $350m priced yesterday (YTD volume $9.625b)
• Sovereign 10Y bond yields little changed; European stocks higher, Asian markets drop; U.S. equity-index futures higher. Crude oil, copper and gold rally

US Event Calendar

• 7:00am: MBA Mortgage Applications, Feb. 12 (prior 9.3%)
• 8:30am: Housing Starts, Jan., est 1.173m (prior 1.149m)
  • Housing Starts m/m Jan., est. 2.0% (prior -2.5%)
  • Building Permits, Jan., est. 1.2m (prior 1.232m, revised 1.204m)
  • Building Permits m/m, Jan., est. -0.3% (prior -3.9%, revised 6.1%)
• 8:30am: PPI Final Demand m/m, Jan., est. -0.2% (prior -0.2%)
  • PPI Ex Food and Energy m/m, Jan., est. 0.1% (prior 0.1%, revised 0.2%)
  • PPI Ex Food, Energy, Trade m/m, Jan., est. 0.1% (prior 0.2%)
  • PPI Final Demand y/y, Jan., est. -0.6% (prior -1%)
  • PPI Ex Food and Energy y/y, Jan., est. 0.4% (prior 0.3%)
  • PPI Ex Food, Energy, Trade y/y, Jan. (prior 0.3%)
• 9:15am: Industrial Production m/m, Jan., est. 0.4% (prior -0.4%)
  • Capacity Utilization, Jan., est. 76.7% (prior 76.5%)
  • Manufacturing (SIC) Production, Jan., est. 0.2% (prior -0.1%)
• TBA: Consumer Price Index benchmark revisions
• TBA: Mortgage Delinquencies, 4Q (prior 4.99%)
• Mortgage Foreclosures, 4Q (prior 1.88%)

Central Banks

• 2:00pm: FOMC Minutes, Jan. 26-27
• 7:30pm: Fed’s Bullard speaks in St. Louis

DB’s Jim Reid concludes the overnight wrap

While the rally in Europe succumbed to a bit of fatigue yesterday with the Stoxx 600 closing with -0.43% after a day of whippy price action, the US reopened after Monday’s holiday with a fairly positive tone to build on the momentum generated from the end of last week, culminating with the S&P 500 closing with a +1.65% gain. Much of the focus however was on oil markets and specifically the meeting between Saudi Arabia and Russia. The initial headlines appeared positive and saw WTI spike as high as $31.50/bbl before disappointment set in that actually there was little fundamental change from the meeting and instead realization set in that talks had moved from cuts to a freeze in production. WTI closed -1.36% on the day at $29.04/bbl.

In terms of the details, it emerged that Saudi Arabia and Russia, along with Venezuela and Qatar had agreed to freeze current production at January levels. As our Commodity strategy colleagues highlighted yesterday in their note, the Russia Oil Ministry stated that this freeze would only take effect if other producers participate, without specifying how many or which countries would be required to join the agreement. While a credible agreement to hold production flat by all OPEC members at the January level would be quite meaningful in tightening forward expectations of market balance, a lot of this would hinge on the need for the inclusion of Iran and Iraq. Talks are expected to continue in Tehran today but expectation levels are low given that Iran has publicly stated that it will restore production to pre-sanctions levels regardless of price.

A silver lining is that the talks are overall a positive step forward for sentiment in advance of the scheduled June OPEC meeting. Clearly though there is the need for negotiations to progress to achieve any sort of coordinated agreement in production cuts between OPEC and non-OPEC members however.

Glancing at our screens this morning it appears that weakness in energy names following the news yesterday is to blame for a broadly weaker start in Asia this morning. Bourses in Japan in particular have seen the greatest losses with the Nikkei currently -1.88%. Elsewhere the Hang Seng (-0.50%), Kospi (-0.27%) and ASX (-0.57%) are also in the red as we go to print, while Chinese bourses (Shanghai Comp +0.31%) have just nudged back into positive territory. Oil markets are actually about half a percent firmer while US equity index futures are unchanged.

Away from the focus on Oil yesterday there was also some data and Fedspeak for us to digest. With regards to the former first of all there was a notable downturn in this month’s German ZEW survey. The current situations index plunged 7.4pts to a below-market 52.3 (vs. 55.0 expected) which is the lowest in 12 months and clearly a reflection of the European banks, global growth and China woes which have played their part this year. The expectations survey fared little better, tumbling 9.2pts to 1.0 (vs. 0 expected). In the UK meanwhile the January CPI print was lower than expected at -0.8% mom (vs. -0.7% expected). That said the YoY rate did nudge up one-tenth to +0.3% with the core sitting at +1.2%. In the US we saw the February Empire manufacturing survey continue to remain weak this month at -16.6 (vs. -10.0) despite improving nearly 3pts from January. Meanwhile the NAHB housing market index declined 3pts to 58 which came as a slight surprise with consensus expectations having been at 60, although it still remains close to its cyclical high.

In terms of the Fedspeak, Philadelphia Fed President Harker (non-voter) provided a fairly cautious overview of the US economy. Harker opined that ‘it might prove prudent to wait until the inflation data are stronger before we undertake a second rate hike’ and that ‘I am approaching near-term policy a bit more cautiously than I did a few months ago’. Harker did highlight that his overall view of the US economy is upbeat, but that risks to his outlook are very much tilted to the downside. New Minneapolis Fed President Kashkari also made some interesting comments yesterday. The former US Treasury official was fairly up front with his views on US Banks, saying that ‘the biggest banks are still too big to fail and continue to pose a significant risk to our economy’. He remarked that ‘now is the right time for Congress to consider going further than Dodd-Frank with bold, transformational solutions to solve this problem once and for all’.

Recapping the rest of the price action yesterday, Gold extended its move lower for a third day, finishing -0.73% at $1200. US Treasury yields were a smidgen higher with the benchmark 10y in particular up 2.4bps to 1.773%. European credit indices and financials in particular were a touch wider, while US indices finished 1bp tighter although the real news was in the primary market with the new issue market in the US reopening with a bang. Indeed over $23bn of deals were said to have been raised yesterday in the second busiest day of the year, led by a bumper nine-part $12bn deal for Apple while IBM and Toyota Motor Corp were also out with sizeable deals of their own. Despite the volatility in credit markets of late, clearly demand hasn’t waned too much with the order book for Apple in particular said to have reached $28bn.

Taking a look at today’s calendar now, the only data of note in the European session this morning will again come from the UK where we get the latest employment report where focus will be on the December unemployment and weekly earnings prints in particular. This afternoon in the US we’ll see the January housing starts and building permits data. Last month’s PPI print will also be worth keeping an eye on before we get the January IP report where expectations are currently running for +0.4% mom. Capacity utilization and manufacturing production data is also due before we get the January FOMC minutes this evening (7pm GMT) although as we’ve since heard from Fed Chair Yellen at her semi-annual testimony so the minutes will now look a little outdated. There’s no Fedspeak due today while earnings wise we’ve got 13 S&P 500 companies set to report.

via Zero Hedge http://ift.tt/1mH61Re Tyler Durden

Yesterday we reported that the ECB has begun contemplating the death of the €500 EURO note, a fate which is now virtually assured for the one banknote which not only makes up 30% of the total European paper currency in circulation by value, but provides the best, most cost-efficient alternative (in terms of sheer bulk and storage costs) to Europe’s tax on money known as NIRP.

That also explains why Mario Draghi is so intent on eradicating it first, then the €200 bill, then the €100 bill, and so on.

We also noted that according to a Bank of America analysis, the scrapping of the largest denominated European note “would be negative for the currency”, to which we said that BofA is right, unless of course, in this global race to the bottom, first the SNB “scraps” the CHF1000 bill, and then the Federal Reserve follows suit and listens to Harvard “scholar” and former Standard Chartered CEO Peter Sands who just last week said the US should ban the $100 note as it would “deter tax evasion, financial crime, terrorism and corruption.”

Well, not even 24 hours later, and another Harvard “scholar” and Fed chairman wannabe, Larry Summers, has just released an oped in the left-leaning Amazon Washington Post, titled “It’s time to kill the $100 bill” in which he makes it clear that the pursuit of paper money is only just starting. Not surprisingly, just like in Europe, the argument is that killing the Benjamins would somehow eradicate crime, saying that “a moratorium on printing new high denomination notes would make the world a better place.“

Yes, for central bankers, as all this modest proposal will do is make it that much easier to unleash NIRP, because recall that of the $1.4 trillion in total U.S. currency in circulation, $1.1 trillion is in the form of $100 bills. Eliminate those, and suddenly there is nowhere to hide from those trillions in negative interest rate “yielding” bank deposits.

So with one regulation, the Fed – if it listens to this Harvard charlatan, and it surely will as more and more “academics” get on board with the idea to scrap paper money – could eliminate the value of 78% of all currency in circulation, which in effect would achieve practically the entire goal of destroying the one paper alternative to digital NIRP rates, in the form of paper currency.

That said, it would still leave gold as an alternative to collapsing monetary system, but by then there will surely be a redux of Executive Order 6102 banning the possession of physical gold and demanding its return to the US government.

Here is Summers’ first shot across the bow in the upcoming war against U.S. paper currency, first posted in the WaPo:

It’s time to kill the $100 bill

Harvard’s Mossavar Rahmani Center for Business and Government, which I am privileged to direct, has just issued an important paper by senior fellow Peter Sands and a group of student collaborators. The paper makes a compelling case for stopping the issuance of high denomination notes like the 500 euro note and $100 bill or even withdrawing them from circulation.

I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime. Since the crime and corruption in significant part would happen outside European borders, I suggested that, to paraphrase John Connally, it was their currency, but would be everyone’s problem. And I made clear that in the context of an international agreement, the U.S. would consider policy regarding the $100 bill.  But because the Germans were committed to having a high denomination note, the issue was never seriously debated in international forums.

The fact that — as Sands points out — in certain circles the 500 euro note is known as the “Bin Laden” confirms the arguments against it. Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime. He is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.

What should happen next?  I’d guess the idea of removing existing notes is a step too far. But a moratorium on printing new high denomination notes would make the world a better place.  In terms of unilateral steps, the most important actor by far is the European Union. The €500 is almost six times as valuable as the $100. Some actors in Europe, notably the European Commission, have shown sympathy for the idea and European Central Bank chief Mario Draghi has shown interest as well.  If Europe moved, pressure could likely be brought on others, notably Switzerland.

I confess to not being surprised that resistance within the ECB is coming out of Luxembourg, with its long and unsavory tradition of giving comfort to tax evaders, money launderers, and other proponents of bank secrecy and where 20 times as much cash is printed, relative to gross domestic, compared to other European countries.

These are difficult times in Europe with the refugee crisis, economic weakness, security issues and the rise of populist movements.  There are real limits on what it can do to address global problems. But here is a step that will represent a global contribution with only the tiniest impact on legitimate commerce or on government budgets. It may not be a free lunch, but it is a very cheap lunch.

Even better than unilateral measures in Europe would be a global agreement to stop issuing notes worth more than say $50 or $100.  Such an agreement would be as significant as anything else the G7 or G20 has done in years. China, which is hosting the next G-20 in September, has made attacking corruption a central part of its economic and political strategy. More generally, at a time when such a demonstration is very much needed, a global agreement to stop issuing high denomination notes would also show that the global financial groupings can stand up against “big money” and for the interests of ordinary citizens.

* * *

And then there was this from Bloomberg:

Lawrence Summers urged countries around the world to agree to stop issuing high-denomination banknotes, adding his voice to intensifying criticism of a practice alleged by police to abet crime and corruption.

“Even better than unilateral measures in Europe would be a global agreement to stop issuing notes worth more than say $50 or $100,” Summers said on his blog on Tuesday. “Such an agreement would be as significant as anything else the G-7 or G-20 has done in years.”

The 500-euro note has been in circulation since the paper currency went live in 2002. British banks and money-exchange services stopped distributing the bills in 2010 after a report showed that 90 percent of demand for them came from criminals. ECB Executive Board member Yves Mersch said earlier this month that his institution still wanted to see “substantiated evidence” that the notes facilitate illegal activity.

For now, “I’d guess the idea of removing existing notes is a step too far,” Summers wrote. “But a moratorium on printing new high-denomination notes would make the world a better place.”

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First they came for the $100 bill and nobody said anything…

via Zero Hedge http://ift.tt/1okxARD Tyler Durden

Submitted by Burak Bekdil via The Gatestone Institute,

After Russia's increasingly bold military engagement in war-torn Syria in favor of President Bashar al-Assad and the Shiite bloc, the regional Sunni powers — Turkey and its ally, Saudi Arabia — have felt nervous and incapable of influencing the civil war in favor of the many Islamist groups fighting Assad's forces.

Most recently, the Turks and Saudis, after weeks of negotiations, decided to flex their muscles and join forces to engage a higher-intensity war in the Syrian theater. This is dangerous for the West. It risks provoking further Russian and Iranian involvement in Syria, and sparking a NATO-Russia confrontation.

After Turkey, citing violation of its airspace, shot down a Russian Su-24 military jet on Nov. 24, Russia has used the incident as a pretext to reinforce its military deployments in Syria and bomb the "moderate Islamists." Those are the Islamists who fight Assad's forces and are supported by Turkey, Saudi Arabia and Qatar. The Russian move included installing the advanced S-400 long-range air and anti-missile defense systems.

Fearing that the new player in the game could vitally damage their plans to install a Sunni regime in Damascus, Turkey and Saudi Arabia now say they are ready to challenge the bloc consisting of Assad's forces, Russia, and Shiite militants from Iran and Lebanon.

As always, Turkish Prime Minister Ahmet Davutoglu spoke in a way that forcefully reminded Turkey-watchers of the well-known phrase: Turkey's bark is worse than its bite. "No one," he said on Feb. 9, "should forget how the Soviet forces, which were a mighty, super force during the Cold War and entered Afghanistan, then left Afghanistan in a servile situation. Those who entered Syria today will also leave Syria in a servile way." In other words, Davutoglu was telling the Russians: Get out of Syria; we are coming in. The Russians did not even reply. They just kept on bombing.

Will direct military involvement in Syria by Turkey and Saudi Arabia spark a NATO-Russia confrontation? Pictured: Russian President Vladimir Putin with Turkish President Recep Tayyip Erdogan (then prime minister), meeting in Istanbul on December 3, 2012. (Image source:kremlin.ru)

Turkey keeps threatening to increase its military role in Syria. Deputy Prime Minister Yalcin Akdogan pledged that Turkey will no longer be in a "defensive position" over maintaining its national security interests amid developments in Syria. "Can any team," he said, "play defensively at all times but still win a match? … You can win nothing by playing defensively and you can lose whatever you have. There is a very dynamic situation in the region and one has to read this situation properly. One should end up withdrawn because of concerns and fears."

Is NATO member Turkey going to war in order to fulfill its Sunni sectarian objectives? And are its Saudi allies joining in? If the Sunni allies are not bluffing, they are already giving signals of what may eventually turn into a new bloody chapter in the sectarian proxy war in Syria.

First, Saudi Arabia announced that it was sending fighter jets to the Incirlik air base in southern Turkey, where U.S. and other allied aircraft have been hitting Islamic State strongholds inside Syria. Saudi military officials said that their warplanes would intensify aerial operations in Syria.

Second, and more worryingly, Turkish Foreign Minister Mevlut Cavusoglu said that Turkey and Saudi Arabia could engage in ground operations inside Syria. He also said that the two countries had long been weighing a cross-border operation into Syria — with the pretext of fighting Islamic State, but in fact hoping to bolster the Sunni groups fighting against the Shiite bloc — but they have not yet made a decision.

In contrast, Saudi officials look more certain about a military intervention. A Saudi brigadier-general said that a joint Turkish-Saudi ground operation in Syria was being planned. He even said that Turkish and Saudi military experts would meet in the coming days to finalize "the details, the task force and the role to be played by each country."

In Damascus, the Syrian regime said that any ground operation inside Syria's sovereign borders would "amount to aggression that must be resisted."

It should be alarming for the West if Turkey and Saudi Arabia, two important U.S. allies, have decided to fight a strange cocktail of enemies on Syrian territory, including Syrian forces, radical jihadists, various Shiite forces and, most critically, Russia — all in order to support "moderate" Islamists. That may be the opening of a worse disaster in Syria, possibly spanning over the next 10 to 15 years.

The new Sunni adventurism will likely force Iran to augment its military engagement in Syria. It will create new tensions between Turkey-Saudi Arabia and Iraq's Shiite-dominated government. It may also spread and destabilize other Middle Eastern theaters, where the Sunni bloc, consisting of Turkey, Saudi Arabia and Qatar, may have to engage in new proxy wars with the Shiite bloc plus Russia.

Washington should think more than twice about allowing its Sunni allies militarily to engage their Shiite enemies. This may be a war with no winners but plenty of casualties and collateral damage. Allowing Sunni supremacists into a deeper sectarian war is not a rational way to block Russian expansion in the eastern Mediterranean. And it certainly will not serve America's interests.

Turkey with Saudi Arabia are too weak militarily to damage Russia's interests. It is a Russian trap — and precisely what the Russians are hoping their enemies will fall into.

via Zero Hedge http://ift.tt/1XwPOeM Tyler Durden

Wouldn’t it be a strange world to live in if 50% of military spending was paid for by just 5% of the population? Sometimes truth is stranger than fiction.

Every year, the United States government spends the equivalent of $3,300 for each working citizen on its military budget. In aggregate, this grand total of $610 billion in defense spending amounts to about half of the dollars globally spent on the military.

With $216 billion spent per year, China has the next largest budget by far. But, to get to a number even close to U.S. spending, the military budgets of China, Russia, Saudi Arabia, India, Japan, United Kingdom, and France would have to be added together.

From another perspective, the amount of annual defense spending per working person in the U.S. is higher than the income per capita of 70 countries, including places such as Morocco, Nigeria, Nicaragua, India, and Ukraine.

This means that if somehow the people of Nicaragua were taxed 100% with all money going to defense, it would only amount to a budget 1.8% of the size of America’s.

Source: Visual Capitalist

via Zero Hedge http://ift.tt/1U6SqQS Tyler Durden

Submitted by Neal Gabler via TheAntiMedia.org,

So here is how you play the media like an accordion.

First, you deliver a debate performance so notably bad, so mechanical and unthinking, that you have everyone buzzing about it, even those in the media who gush over you. Then you take responsibility for being awful because, after all, you don’t want to give the impression that you might not really be responsible for uttering the words you uttered – four times.

 

Then you invite a bunch of reporters on your campaign plane to show what a personable fellow Marco Rubio is, how unrehearsed and natural, and they take the bait, basically writing mash notes about how unrehearsed and natural you are. Note Sean Sullivan of The Washington Post: “His hour-long charter flight interview also did not begin with an emphasis on his ‘new American century’ theme, as is often the case. Instead, it started with Twix bars: Rubio wanted to demonstrate how cold and hard they were after explaining at breakfast that he had cracked a molar biting into one.” What a normal, unrobotic guy!

 

And then the piece de resistance. You don’t repeat yourself mindlessly at the next debate. You give exactly the same kind of debate performance you gave before Gov. Chris Christie called you out, sounding like a polished kid in a high school debate club. And guess what? Surprise of surprises, the media declare you the winner because you didn’t make the same idiotic mistake you made the last time out. Chris Cillizza of the Post found him “thoughtful, nuanced and convincing.” (Whatever else one might say about them, nuanced is about the last thing any of these Republicans is.) The reliable Republican booster, Jennifer Rubin, in the same paper called his performance a “strong comeback.” CNN: “Rubio turned in a notably better performance than he did the last time.” Charles Krauthammer: “I think he was number one, Rubio.” And, best of all, from the Washington Examiner: “The narrative coming out of this debate will be about Rubio redeeming himself.”

Exactly. The narrative the press comes away with – the narrative they just happen to be writing — is that Rubio is back. But, let’s face it. He isn’t back because he was so brilliant last Saturday night, wielding some sort of rapier wit or intellectual superiority or a plethora of ideas. The New York Times, which hasn’t had much of a Rubio crush, save for a small post-Iowa lapse, found him lackluster. No. He’s back because the media desperately need him to come back to save the Republic from Trump and Cruz. The media, who are usually just content to stir up some trouble so that they can cover it, have got a horse in this race, and they are going to keep whipping him to the finish line, even after he stumbles.

It’s enough to give you whiplash. Two weeks ago, the media cheered Marco Rubio’s third-place finish in the Iowa caucuses – yes, third place – as a stunning victory. On Tuesday, NBC Nightly News declared “Rubio Rising.” Before the Iowa vote, The New York Times reported, “A Resurgent Marco Rubio Sprints to the Finish in Iowa” and then, after the vote, bannered, “Marco Rubio Sees Bounce in Latest New Hampshire Poll.”

Two days later it ran an idolatrous piece (that aforementioned lapse) which would turn into a major goof considering what was to come: “Once Cautious in Campaign, Rubio Shows More of His Personal Side.” The AP also gushed: “Rubio Could See Fortunes Rise From Iowa Finish.” “Rubio Soars,” wrote Washington Post columnist Jennifer Rubin. CNN’s Alex Conant explained, “Why Marco Rubio is the Real Winner.” Bill O’Reilly declared “Rubio a big winner.” Did I mention he finished third with 23% of the vote?

Then came New Hampshire, where Rubio finished fifth behind even the political zombie Jeb Bush, prompting Nick Baumann of The Huffington Post to crack sarcastically: “Marco Rubio Was the Real Winner of the New Hampshire Primary.” And now? He’s baaaack

Before we get to the debate debacle in which New Jersey Gov. Chris Christie eviscerated Rubio and derailed his candidacy (at least temporarily), you have to understand why the media seem to love Rubio, and why they were willing to elevate him to frontrunner status when he was barely registering in the polls they so worship, not only because it helps explain Rubio but also because it helps explain the media.

It was back in February 2013 that TIME magazine ran its now-famous cover of Rubio, staring confidently into the camera, with “The Republican Savior” slathered over him in big yellow letters. Here is how Michael Grunwald’s article began:

“Oriales Garcia Rubio knows how it feels to want more. When she was a girl in central Cuba in the 1930s, her family of nine lived in a one-room house with a dirt floor. Her dolls were Coke bottles dressed in rags. She dreamed of becoming an actress. Instead she married a security guard, moved with him to the U.S. and found work as a hotel maid. Her husband got a job as a bartender while starting a series of failed businesses – a vegetable stand, a dry cleaner, a grocery. They never had much. But their house had a real floor. Their daughters had real dolls. They sent all four of their children to college to chase their own dreams.”

No, that’s not a Rubio press release. That was actually written by a journalist. But you can see the appeal. It is a stirring if somewhat stale narrative, and the media are narratively driven. It panders to American exceptionalism, and the media are, after all, in the pandering business. And it turns Rubio into a star, and the media are into the star making.

None of this would matter, of course, if Rubio didn’t also have the aesthetic desiderata the media adore. Despite the saying that politics is show business for ugly people, the media recognize the role of aesthetics. Mitt Romney based his entire political career on them. Rubio was young, which meant he was new – an iPhone 6 in an iPhone 5 business. He had “boyish good looks” according to Grunwald. He knew how to give a good speech – “a compelling speaker,” said Grunwald. He was Hispanic in a party that had pretty much disdained Hispanics even though that demographic was expanding. And he had seemed to strike a balance between idealism and pragmatism – between the aspirational, as pundits like to call it, and the political.

In short, he was a designer candidate – practically hand-tooled to fill the holes in the Republican demographic, which is why he was allowed to jump the line to get to the presidency.

And then there was the symmetry. Rubio is often called the GOP’s Barack Obama, given their ages and the fact that both were first-term senators at the time of their candidacies. They each have minority status, they delivered well-received keynote speeches at their party conventions, and they were ambitious enough not to wait their turn. (Of course the dissimilarities are far more striking.)

The mainstream media love this sort of symmetry – Rubio is Obama, Sanders is Trump, the Clintons are the Bushes — presumably because it allows them to appear balanced and thus defend themselves from the bias flak they invariably take. It is the Newton’s Law of political coverage that for every action in one party, there is an equal and opposite reaction in the other, though these are usually false equivalencies that have served to make the Republican Party seem more rational than it really is. Denial of climate change? Well, Democrats want to stop coal-burning plants. So there!

For Rubio, symmetry had another advantage besides making him seem less extremist. It made him the youthful idealist of the party, its unifier, and blessed him with a sense of Obama-like inevitability.

And  that was before the 2016 race began to unfold. No one suspected in the early going that Donald Trump, a kind of novelty candidate, would actually gain traction, much less become a serious contender. And though the media knew that Cruz would have a formidable advantage in his evangelical base, no one took him seriously as the actual nominee for the simple reason that just about everyone in the party except the extremist rank and file hated him.

Rubio’s only real competitor for what pundits call the “moderate lane” way back in the fall was Jeb Bush, and he was a tired one at that. Once the race began, however, and Trump and Cruz attracted their constituencies, while Jeb foundered, the Florida senator became not only the Chosen One but also the Great Hispanic Hope who, we are told endlessly, is the candidate who can and must stop Trump and Cruz from getting the nomination. Among party stalwarts, Nate Silver’s FiveThirtyEight has him with a commanding lead in the endorsement poll.

It is certainly no coincidence that the media, who loathed Trump and didn’t like Cruz much either, saw Rubio as their kind of candidate, too. That is precisely the argument New York Times’ columnist Ross Douthat made back in October when he predicted Rubio would be the GOP nominee. The party had no choice, he wrote, since it couldn’t possibly nominate Trump (or Carson back then) and Cruz had that likeability problem. And don’t forget this when you consider why Rubio is such a media favorite: whereas Trump and Cruz don’t need the media, Rubio needs them desperately. With his thin resume, they give him credibility. The media enjoy that power. They like being kingmakers, or even savior-makers.

The new narrative of the campaign season, then, was that Trump might pull in the “angries” and Cruz the “crazies,” but that one establishment candidate would emerge to stop them and that Rubio was the most likely to do so, which is why he got such an outpouring of media attention after Iowa. Not incidentally, this also plays into one of the few demonstrable media biases. The mainstream press likes moderates, or at least those they perceive to be moderates, much better than it likes extremists or alleged extremists. Presumably it fits the press’s self-image both as objective observers and as national stewards, gently guiding the country away from the fringes. Rubio is not a moderate by any means. In fact, he brags that he is the most conservative candidate in the race, and he might not be far off. But in this field, the media have apparently decided he is one because, again, they may feel they have no other choice.

So there it was – Trump bloviating toward a New Hampshire victory, Cruz lazing his way through the state on his way to Super Tuesday and the South, and Rubio, the fair-haired boy, needing only a second or third-place finish to set the media hearts aflutter. What happened last Saturday night at the Republican debate, with Chris Christie’s perfectly timed attack on Rubio’s authenticity, suddenly changed all that.

We know now that Rubio committed a huge gaffe by repeating verbatim four times a little speech about Obama deliberately changing America, just as Christie was accusing him of repeating the same rote speeches again and again and again. (It is worth mentioning, since no one seems to have done so, that the substance of Rubio’s charge of Obama being the first president to change the country, which should have been the object of obloquy, is both idiotic and just plain wrong.) But the problem really wasn’t that Rubio was on autopilot. He had been on autopilot throughout the entire campaign. Indeed, Rubio had often been praised by the media for the very thing Christie called him out on. Rubio had “got his message locked down,” according to one reporter. He was “well-spoken” and “articulate” – a “great debater.” In debate after debate, in which he recited his talking points mechanically without any hesitation or evident ratiocination, the pundits declared him a winner.

What voters didn’t seem to know, and what they certainly weren’t told by the media, is that whenever Rubio appeared, he was regurgitating what he had memorized. If you do a Lexis-Nexis search of the terms “Rubio” and “robot” in major newspapers from January 1 through February 6, here is what you will find: Not once was the term “robot” or “robotic” applied to him.

Political reporter Jason Zengerle of GQ explained why. “Want to know a dirty little secret about political journalists?” he wrote on his blog after the debate. “A lot of the time, we don’t pay attention to the speeches of the politicians we cover.”

Yes, they all heard Rubio saying the same things over and over. The father/bartender story, the mother/K-Mart story, the American Dream stuff, etc. etc., etc. – all canned. And, Zengerle goes on: “Even Rubio’s jokes are canned. And Rubio doesn’t merely confine these lines to his stump speech. They unerringly show up in debates and his answers to voters’ questions, as well. In fact, when The New York Times recently published a story about Rubio’s supposedly ‘intimate—and increasingly improvised—glimpses’ into his life in response to voters’ questions [the story cited earlier], at least two of the examples buttressing this dubious claim were well-worn passages from his stump speech.”

So, many in the press knew. They knew what Christie knew. They knew Rubio wouldn’t, couldn’t, deviate from the script. Why didn’t they tell us? Because they didn’t much care, even if Rubio continuously crossed the line from repetitive to rehearsed to robotic. What’s more, they didn’t think the voters would care either.

Again, Zengerle of Christie’s criticisms: “It was hard to imagine them striking a chord with voters.” Even after Rubio’s Teddy Ruxpin performance, Byron York of the Washington Examiner wrote that the press coverage of Rubio’s debate flub “showed again how the concerns of the media commentators are sometimes far from the minds of the actual voters.” And, York didn’t seem to realize, sometimes they aren’t. The press couldn’t imagine that voters might actually want candidates who were thoughtful and authentic and intellectually nimble.

What the MSM did not think worthy of reporting, however, the blogosphere did report. (In fairness, one local New Hampshire reporter, Erik Eisele of The Conway Daily Sun, wrote on December 23, after spending twenty minutes with Rubio for an editorial interview, that “it was like someone wound him up, pointed him towards the doors, and pushed play.”) Go back into the Twitter-sphere – way back to last year – and you’ll find hundreds if not thousands of tweets talking specifically about Rubio’s repetitions, about his canned speeches, about his avoiding answering press questions, about his obsession with his talking points. The tweeters knew, many of them, because they had seen him doing it during the debates – the very same debate performances the media lauded. And when Christie, who may very well have been following the lead of the Twitter-sphere, lunged, Twitter erupted. (An argument actually ensued over whether Marcobot was a better moniker for Rubio than Rubiobot.) It took Christie to do the work the media should have been doing. But it probably took the blogosphere and social media to poke Christie.

And then, and only then, the media pounced, not because they observed something they hadn’t previously seen, but because, I guess, they didn’t want to be left behind by the social media. (It is hard to keep a tally of how many YouTube views of the Rubio repetitions there have been; I lost count at about two million.) Thus did Rubio’s standard operating procedure become his Howard Dean Scream or his Rick Perry Brain Freeze.

But there were differences between his gaffe and theirs, not the least being that Rubio’s was not an aberration; it was his campaign. The media didn’t need any prompting to humiliate and ultimately destroy Dean and Perry because the media didn’t particularly like them. Dean’s media narrative was that he was a lucky, somewhat daffy, beneficiary of a leftish tilt in the Democratic Party after the Iraq War, and Perry’s was that he was a dunce. Their actions only confirmed the pre-existing narratives, and the media were only too happy to amplify their missteps in print and on the air. (When you come right down to it, Dean’s exuberance, which turned out to be a mic problem not a candidate problem, or Perry’s forgetfulness really weren’t much of anything, except for confirming the media narrative.)

On the other hand, the media liked Rubio. They were the ones who had helped propel him. They didn’t want to pile on. But when Christie underlined Rubio’s mindless parroting, he not only struck at one of the struts of Rubio’s alleged strength – that well-spokenness – and made him look foolish, he made the media look foolish, too. Rubio turned out to be a confirmation of exactly what Christie had said he was – a “student council president,” an empty suit, a face-man. As Ross Douthat, who had predicted Rubio’s eventual victory, tweeted that debate night: “I’ve watched Rubio for a long time, always thought that critiques of him as a talking points robot were way overblown. But oh dear.”

Trying to save himself, Rubio was contrite on election night in New Hampshire. He said he accepted responsibility for what had happened and promised he wouldn’t do it again, though exactly what that meant was hard to parse. Of course, he was responsible. Who else could be? And what wouldn’t he do again? Repeat himself word for word four times while he was being told he kept repeating himself? But no sooner had Rubio issued his mea culpa than Van Jones, one of CNN’s talking heads, pronounced himself impressed, and said it “took a lot of character” for Rubio to do what he had done. Later that week, on the PBS NewsHour, Mark Shields said the same thing. He actually praised Rubio for taking responsibility.

So the rehabilitation had begun almost as soon as the New Hampshire debate ended, and it was pre-ordained that as soon as the South Carolina debate ended, the media would announce that Rubio is back on the ascent — a self-fulfilling prophecy, if ever there was one. After all, the media were the ones writing the script. It is going to take a lot more than self-inflicted wounds to fell this candidacy. It is going to take an objective media. Good luck with that.

via Zero Hedge http://ift.tt/20YkzyR Tyler Durden

It was just last month when we profiled Canada’s “other problem”: record high household debt.

Canada is struggling to cope with falling crude prices which have put enormous amounts of pressure on some parts of the country, most notably Alberta, where suicide rates are on the rise, as is property crime and foodbank usage.

Amid the malaise, households are also being pressured by persistent CAD weakness – which is of course a symptom of falling crude. The currency’s decline has driven up prices for things like fresh fruits and vegetables, 75% of which Canada imports. That puts an extra burden on households that are already laboring under record debt.

As we showed three weeks ago, household debt relative to disposable income is sitting at 171% in Canada meaning that for every $100 in disposable income, households have debt obligations of $171. That’s the highest figure for any G7 country.

That’s disconcerting for any number of reasons. As we wrote, “this would be bad enough in a favorable economic environment with a benign outlook for rates, but it’s a veritable nightmare when the economy is sliding headlong into recession and central planners are hell bent on trying to normalize policy some time in the next five or so years.”

In other words, the outlook for Canada’s economy isn’t good, and that means joblessness is likely to rise going forward…

But interest rates have virtually nowhere to go but up – at least in the medium to long-term. Sure Stephen Poloz may cut rates one or two more times to try and help the oil patch avert certain insolvency, but at 50 bps, there’s only so much lower Canada can go unless the BoC intends to experiment with NIRP. 

This means that households could face the disastrous prospect of rising rates in an unfavorable economic environment. Think a monetary policy mistake like hiking into a recession can’t happen? Just look at what the Fed did in December. Throw in the fact that many families are overburdened thanks to the astronomical cost of housing in places like Vancouver and Toronto and one is inclined to think that some Canadian households may find themselves in quite a bit of trouble going forward. 

But don’t take our word for it, just ask Canadians, half of whom said in response to a new Ipsos Reid survey that they are within $200 per month of not being able to pay their bills and make their debt payments.

“Ipsos Reid conducted the poll about a week after the Parliamentary Budget Office issued a report on Jan. 19 that said Canada has seen the largest increase in household debt relative to income of any G7 country since 2000,” The Calgary Herald writes, adding that “31 per cent of respondents said any increase in interest rates could move them towards bankruptcy“.

The survey also found that 25% of Canadians are already unable to cover their bills and service their debt.

So what do you do if you’re the BoC? Cut rates to boost the economy and rescue the oil patch at the risk of driving the cost of imported goods through the roof, thus pressuring consumer spending and thereby creating another headwind for the economy? Or hike to bolster the loonie at the risk of tanking not only the oil patch but also the 31% of the country that say they’ll slip into bankruptcy it rates rise?

Your guess is as good as ours.

via Zero Hedge http://ift.tt/1R7cQqd Tyler Durden