Category: zerohedge

Like the other lagging European investment banks (Deutsche and SocGen immediately spring to mind), UBS is resorting to the last resort of the embattled megabank CEO when shareholders are demanding higher profits ‘or else’.

After a decade where UBS cut thousands of jobs in its investment bank unit, Sergio Ermotti is turning to one of the few business lines where fat can feasibly be cut: UBS’s once legendary asset-management business.

Before the crisis, the Swiss bank held the title of world’s largest asset manager. But it has seen its stature diminish during the intervening years, largely thanks to rise of passive managers like BlackRock (the current title-holder). Though the number of employees at UBS’s asset-management business have declined by one-third since 2006, the cost-to-income ratio has remained stuck at 72.7%, acccording to the FT. 

According to Bloomberg, most of these cuts will focus on the unit’s back office, where managers are being told that for ever five employees who leave, they can only hire one to replace them. That’s now an informal rule at the bank, according to BBG’s sources.

For the client-facing employees, the rule is less strict: Managers can hire one employee for every two who leave.

UBS Group AG is telling executives in its large wealth management business to be more selective when hiring bankers as it seeks to cut costs following a challenging first quarter, according to people familiar with the matter.

The bank has introduced an informal rule to allow hiring of one back-office employee only if five are leaving, the people said, asking not to be identified because the matter is private. For client-facing staff, the rule is less strict: Managers can hire one banker for two departing ones, the people said.

Like other banks (for example, State Street), we imagine UBS will try and compensate for the back-office cuts by using automation to streamline workflow.

The bank said earlier this year that it would slow hiring and cut costs as Ermotti warned that this year saw one of the worst first quarter environments in history. When the bank reported earnings, its investment banking revenue took a hit from weak trading revenues, while its asset-management business outperformed thanks to a surprisingly strong pickup in its client business.

However, this hasn’t stopped Ermotti from seeking a tie-up with DWS, the Deutsche Bank-controlled asset manager, which would create, as the FT described it, a new “European champion” better equipped to compete with BlackRock and Vanguard.

via ZeroHedge News http://bit.ly/2GT2RHQ Tyler Durden

Just hours after IMF Director Christine Lagarde got done telling the world that “everybody” would like a little more inflation, McDonald’s warned investors on Tuesday that it could be under pressure from commodity costs in the U.S. rising as much as 3% – higher than the 1% to 2% inflation that it had forecast just three months ago.  In fact, the dining industry as a whole is reeling under the same pricing pressure, according to Bloomberg. 

BJ’s Restaurants Inc. is expecting higher pork prices and Yum China Holdings Inc. told investors that rising poultry costs will hit their margins for the rest of the year. These worries come on top of a cost concerns about a rise in the minimum wage. 

The rise in meat prices has been largely driven by the swine fever that is decimating China’s hog population. Processors around the world have been trying to make up for the shortages caused by the outbreak, but prices have spiked nonetheless. As companies look to substitute pork with more chicken and beef, those prices have also risen. 

At Texas Roadhouse Inc., the price hikes have already hit the menu, with customers paying as much as 3% more to help the company try to offset its costs. President Scott Colosi said: “That’s going to go a long ways on margins.”

And so it seems that just about “everybody” in the industry is recognizing these signs of inflation – except, of course, for people like Jerome Powell, Christine Lagarde and other central bankers. 

We reported back in mid April that pork prices were starting to rise as a result of the swine flu in China. Six weeks ago we reported that US federal agents seized 1 million pounds, or 454 metric tons, of pork smuggled from China to the same port amid growing fears the meat could contain traces of the African swine fever virus that has ravaged the Asian country’s hog herd.

As the disease continued to spread throughout China – the world’s largest producer and consumer – we predicted the trend would only get worse, which it has. US retail prices for boneless hams hit $4.31 per pound in March, the highest since 2015.

In the European Union, wholesale pig prices have climbed 16% in two months, while lean hog futures traded on the CME are higher by 32% since the February lows.

This is on top of the fact that Americans are already paying more for everyday items like beverages and diapers, according to a recent analysis  In our prior note about Lagarde’s comments, we noted that most working people are already struggling to process the inflation in health-care costs, tuition, rent and other necessities that have hammered the standard of living in the developed world.

But as we know, inflation, like every other basic economic “mystery” that the Fed tries fruitlessly to understand, will only wind up being an issue after it’s too late to correct the problem. 

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

Submitted by Oilprice.com

China and India—two of the world’s largest oil importers and the biggest demand growth centers globally—are close to setting up an oil buyers’ club to have a say in the pricing and sourcing of crude oil amid OPEC’s cuts and U.S. sanctions on Iran and Venezuela, Indian outlet livemint reports, citing three officials with knowledge of the talks.

This is not the first time that the two major oil importers are working to create such an oil club.

India and China have discussed creating an ‘oil buyers’ club’ to be able to negotiate better prices with oil exporting countries and will be looking to import more U.S. crude oil in order to reduce OPEC’s sway, both over the global oil market and over prices, India’s Petroleum Ministry said in June 2018.

“With oil producers’ cartel OPEC playing havoc with prices, India discussed with China the possibility of forming an ‘oil buyers club’ that can negotiate better terms with sellers as well as getting more US crude oil to cut dominance of the oil block,” a tweet from the Petroleum Ministry’s Twitter account said in the middle of last year, when oil prices were rising ahead of the return of the U.S. sanctions on Iran’s oil industry.

According to the officials cited by livemint, China and India have exchanged senior-level visits several times since then and have made progress on “joint sourcing of crude oil.”

Reports of the strengthened Chinese-Indian cooperation in potentially forming an oil buyers’ club come just as the U.S. sanction waivers for all Iranian oil customers expire this week.

China is Iran’s number-one customer, while India is the second-largest buyer of Iranian oil, so the end of the U.S. waivers will mostly affect refiners in those two oil importers who will be scrambling to source crude from other sources or risk secondary U.S. sanctions.

“China and India should do so to grab more bargaining power to make oil prices more sustainable,” Jawaharlal Nehru University Professor Srikanth Kondapalli told the Global Times in a recent interview, commenting on the benefits of an oil buyers’ club.

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

An Alabama judge on Tuesday struck down a bid by the American Civil Liberties Union (ACLU) to help the Southern Poverty Law Center (SPLC) defend itself against a lawsuit filed by Gavin McInnes, the founder of the ‘Proud Boys’ – a fraternal organization which the SPLC labeled a hate group. 

The SPLC says the group is “known for anti-Muslim and misogynistic rhetoric,” and that members “maintain affiliations with known extremists.”

McInnes hit back – filing a defamation lawsuit in early February which claims that the ‘hate group’ label is false and has damaged his career.

In response to the ACLU’s amicus curiae Brief – which allows non-parties in a case to offer supporting information – US District Judge Myron H. Thompson ruled that “the court is convinced that both sides of this case can adequately present and argue the issues without outside assistance.” 

The judge in our case just DENIED the ACLU’s attempt to rush to the SPLC’s side

Huge win

Your help is still needed at https://t.co/BJ3vgeY1Y3 🇺🇸 pic.twitter.com/qgui2Puckv

— Gavin McInnes (@DefendGavin) April 30, 2019

Prior to Thompson’s decision, McInnes’ counsel argued that the SPLC is “essentially, a law firm, and -as is well known – a very effective one, and one endowed with phenomenal financial resources, and noted that the ACLU “have not identified any special abilities or expertise that is not already available to the SPLC.” 

Last June, the SPLC agreed to apologize and pay $3.4 million to a British group and its founder after the Alabama-based organization labeled them anti-Muslim extremists. 

The SPLC’s downward spiral

The SPLC has a long and sordid history of labeling mainstream Christian and conservative organizations as “hate groups” – including the Alliance Defending Freedom, Family Research Council, the Ruth Institute, the David Horowitz Freedom Center, and Jihad Watch, according to Life Site‘s Calvin Freilburger. 

Meanwhile, more than two-dozen employees signed a letter of concern over “allegations of mistreatment, sexual harassment, gender discrimination, and racism” within the organization following the ouster of co-founder Morris Dees over sexual misconduct claims. 

Weeks after Dees’ departure, the head of the SPLC, Richard Cohen, as well as the organization’s legal director, Rhonda Brownstein, resigned.

“It is long overdue that social media companies stop using the hypocritical SPLC as a reliable source to police their content and discriminate against pro-family and conservative nonviolent organizations,” said Liberty Counsel founder and chairman Mat Staver earlier this month. 

To that end, Twitter dropped the SPLC as a “trusted safety council” member in response to the scandals plaguing the organization. 

“The SPLC is not a member of Twitter’s Trust and Safety Council or a partner the company has worked with recently,” a Twitter source told the Daily Caller News Foundation. Twitter had previously listed the SPLC as a “safety partner” they worked with to combat “hateful conduct and harassment,” according to a June DCNF report.

And now, the SPLC is fighting alone in its battle against Gavin McInnes.

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

Less than a month ago, Bridgewater founder Ray Dalio was warning the world that there would be a “revolution” unless the country could fix its income inequality problem. He’s also been repeatedly claiming that capitalism is broken. 

Broken, that is, for everyone other than Ray Dalio, who was last year’s best paid hedge fund manager, according to DealBook; and since hedge funders generate the highest current income of all “workers”, he was effectively the highest paid American in 2018 (this, of course, excludes capital gains and other non-current income), when it is estimated that Dalio earned $2 billion over the last 12 months, up from a reported $1.3 billion in 2017.

Dalio beat out other big names like Jim Simons of Renaissance Technologies, who earned $1.5 billion, Ken Griffin of Citadel, who earned $870 million, David Shaw of D.E. Shaw, who earned $500 million, Chase Coleman of Tiger Global Management, who earned $465 million and Steve Cohen of Point72, who earned a tiny, by his standards, $70 million. 

Of course, this raises the obvious question of whether or not Dalio is doing enough to reform a system that he rails against. 

“As most of you know, I’m a capitalist, and even I think capitalism is broken,” Dalio wrote on Twitter in early April. He then defended the hedge fund business model to NPR last week, stating: “If you were to ask the pensioners and you were to ask our clients, who are teachers or firemen, whether we’ve contributed to their well-being, they would say that they, we, contribute.”

Andrew Ross Sorkin questioned whether or not Dalio is putting his money where his mouth is: “…the magnitude of the hedge fund managers’ compensation raises a very basic question about whether capitalism is ‘broken’. Even if Mr. Dalio took home $500 million, the rest of his income could pay 10,000 families $150,000 each.”

But in his latest 18-page treatise entitled “Why and How Capitalism Needs To Be Reformed (Part 1)”, published – as per usual – on LinkedIn, Dalio kicks his fearmongering approach up to ’11’, surpassing redistributive rhetoric of Bernie Sanders and Alexandria Ocasio-Cortez and going straight for Vladimir Lenin.

According to Dalio, the flaws in the American capitalist system are breeding such horrific inequality between the wealthy and the poor that at some point in the not-too-distant future, the only sensible recourse for the unwashed masses will be a bloody revolution.

To support this theory, Dalio points to statistics showing that the bottom 60% of Americans are lagging further and further behind the top 40% in the areas of education, social mobility, assets, income and – crucially – health. American men earning the least will likely die ten years earlier than those making the most.

In previous essays, Dalio has warned about the threat of economic populism (the anti-establishment trend that helped deliver both Brexit and President Trump’s stunning upset victory over Hillary Clinton). Now, he’s apparently identifying with populists of a different stripe (namely, those on the left). All of these sources of inequality, Dalio argues, represent an “existential threat” to the American economy, that will only be exacerbated by falling competitiveness relative to other nations and the “high risk of bad conflict.”

Conveniently absolving himself and his fellow billionaires of any blame for this sad state of affairs, Dalio claimed that the cause of this sad state of affairs was simply a poorly designed system that can, with a little effort, be corrected.

“These unacceptable outcomes aren’t due to either a) evil rich people doing bad things to poor people or b) lazy poor people and bureaucratic inefficiencies, as much as they are due to how the capitalist system is now working,” Dalio said.

Maybe we’re just conservative old fashioned pragmatists, but isn’t there a bit of extremely convenient hypocrisy in calling for socialism in the year that capitalism made you the best paid person in America? And, if we’re mistaken, why isn’t Dalio shelling out his billions for the cause he so loudly has been advocating for?

via ZeroHedge News http://bit.ly/2UR7vd9 Tyler Durden

Not long after Acting Chief of Staff Mick Mulvaney told Maria Bartiromo that he believed USMCA (the Nafta 2.0 trade deal that the Dems have promised to obstruct) had a better chance of passing than a long-hoped for bipartisan infrastructure plan, Nancy Pelosi and Chuck Schumer emerged from a lengthy meeting with President Trump with some interesting news.

The leaders said the talks had gone well, and that the two sides had agreed on a $2 trillion figure for a forthcoming plan to rebuild American bridges, roads railways and other vital infrastructure. Schumer told reporters that another meeting about financing will be held in three weeks.

Amusingly, Republican leaders in the House have told reporters in recent days that there’s no appetite for such a large plan among Republicans in Congress.

In a letter delivered to Trump ahead of the meeting, the Democratic leaders advised Trump that a bipartisan deal must include new sources of financing, considerations for clean energy, and protections for labor, women and minority business owners.

New letter from Speaker Pelosi and Senator Schumer outlining the priorities they want for infrastructure talks tomorrow with President Trump at WH meeting. pic.twitter.com/zBExjhZWaW

— Yamiche Alcindor (@Yamiche) April 29, 2019

Judging by the bond market’s reaction (which was pretty subdued), the market agrees with Mulvaney and expect that an infrastructure deal likely won’t happen. Yields remained anchored near sessions lows, suggesting that investors have shrugged off the prospects for an even wider budget deficit.

via ZeroHedge News http://bit.ly/2VGrvn0 Tyler Durden

Authored by Mac Slavo via SHTFplan.com,

In this day and age when most people have everything they could possibly need and then some, the world is sadder and angrier than ever before. The standard of living around the globe has never been higher, but neither has the discontentment.

According to a major analysis of global well-being, the world really is getting more miserable. Human beings worldwide are sadder, angrier and more fearful than they have ever been before.  Something just isn’t right on Earth. In Gallup’s annual Global State of Emotions report, all three emotions (sadness, anger, and fear) rose to record levels in 2018, for the second consecutive year.

Chad took the undesirable honor of being the world’s most negative country. Wrought with war, political crisis, and human rights violations, the country is the world’s worst in terms of emotional health, according to CNN.

Gallup charted humanity’s prolonged slump by holding 151,000 interviews in 2018 with adults in more than 140 countries. It has measured emotions annually since 2006.

In 2018, about 4 in 10 people said they experienced a lot of worry the day before the interview, while a third said they were stressed and nearly 3 in 10 said they felt a lot of physical pain. A quarter experienced sadness, and 22% were angry. –CNN

Futurism reported that the researchers who conducted this study found that the number of people who said they’d experienced anger increased by two percentage points over the previous year, while both worry and sadness increased by one percentage point which is setting new record highs for all three negative emotions.

Research has noted the impact negative feelings can have on a person’s physical health — studies have linked angerto an elevated risk of heart attack and stroke, while chronic worry and sadness can be signs of anxiety disorders and depression, which carry an increased risk of heart disease.

If people continue to experience these negative emotions in greater numbers, we could be headed toward a future in which the global population is increasingly unhealthy — a situation that carries its own troubling side effects. –Futurism

Research has indicated that stress and other negative emotions can wear on the body and even manifest in the form of health problems. According to the people living on the Earth, the world is just not that happy of a place. But there are ways to improve our happiness.

Alcoholism and other addictive behaviors and suicides are also on the rise in the United States. Feelings of hopelessness and despair are overwhelming far too many in the U.S. So much so, that people are turning to alcohol, drugs, and suicide to numb the pain of their lives.  Government enslavement and the stranglehold on the economy are making life even more difficult on those already struggling to get by. And this is seen in new “death” numbers released.

This isn’t the best news for any of us, but there are things we can do about it.

via ZeroHedge News http://bit.ly/2V3rFFI Tyler Durden

New video, uploaded onto Youtube on Monday, offers a rare glimpse inside the cockpit of the Northrop Grumman B-2 Spirit stealth bomber for the first time in the thirty-year history of the Air Force’s most secretive stealth program.

FIlmed by Dallas-based film producer Jeff Bolton, the Air Force allowed him to become the first civilian to fly and film aboard the highly classified jet.

 

Bolton is currently producing a twelve-part television series called the “Guardians: A Mission For Peace,” which examines the role and mission of American nuclear forces in the 21st century.

The video was taken in 2018, shows Bolton aboard a B-2A with the 509th Bomb Wing out of Whiteman Air Force Base, Missouri. The short, seven-second video, gives viewers the first-ever look inside the cockpit.

“In an era of rising tensions between global nuclear powers — the United States, China, Russia, and North Korea — this timely video of is a vivid reminder of the B-2’s unique capabilities,” Bolton said in a statement. “No other stealth bombers are known to exist in the world.”

Another video from Bolton shows internal and external footage of the B-2’s refueling sequence.

“The workload in there for two people is just outrageous. The systems and processes that you have to understand to operate the jet are enormous. The teamwork and coordination involved between the ground and the pilots and between the pilots themselves, between the planners and the pilots – I’ve never seen anything like it,” he said in a Defense News interview.

The B-2 Spirit is a heavy strategic bomber, featuring low observable stealth technology designed to penetrate regions that are defended by advanced missile defense systems. The bomber can carry conventional and nuclear payloads. The advanced aircraft is a cornerstone of America’s nuclear deterrence capabilities.

Watch the full reveal video: 

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

The simmering feud between Ottawa and Beijing that erupted after Canadian authorities arrested Huawei CFO Meng Wanzhou may have disappeared from the headlines…but it’s far from over. To wit, on Tuesday, the Jiangmen Intermediate People’s Court sentenced another Canadian to death on drug trafficking charges, making him the second Canadian national to receive a death sentenced in the past year.

According to the Globe and Mail, the Chinese court, in Guangdong province, accused Fan of leading what it called the “extraordinarily serious transnational trafficking and manufacturing of narcotics.” The case dates back to 2012.

In January, Canadian Robert Schellenberg saw his sentence of 15 years hard labor on drug trafficking charges switched to a death sentence (China frequently sentences convicted drug traffickers to death). Both Schellenberg and Fan Wei, the Canadian sentenced on Tuesday, were convicted of trafficking methamphetamine.

The court sentenced another conspirator to death, but it didn’t disclose his nationality. Several others, including American Mark Swiden and four Mexicans, were also sentenced on drug charges Tuesday. Swiden was given a suspended death sentence, an effective life sentence, but the sentences for the others weren’t disclosed – though the court said the minimum sentence was life imprisonment, according to Reuters.

Between July and November of 2012, the court said, the group manufactured 63.83 kilograms of methamphetamine and 365.9 grams of dimethyl amphetamine. However, most of the details on the case available in the West have come through Swiden’s family, who have proclaimed his innocence. The businessman was arrested despite the fact that no drugs were found on him or in his hotel room; police said they found drugs on an interpreter, who implicated Swiden in the scheme.

Following Meng’s arrest in Vancouver on Dec. 1, Chinese police arrested two other Canadian nationals, including a former diplomat and a businessman who organized trips to North Korea, and is charging them with threatening national security. Both men remain in custody even as Ottawa has demanded their release.

Meng, who is currently out on bail in Vancouver, has denied allegations that she misled banks about Huawei’s business in Iran, violating US sanctions. President Trump once said that Meng’s case could be used as a “bargaining chip” in trade negotiations.

China, which through its English-language press had threatened “severe” retaliation against Canada for the arrest of Meng, who in addition to being Huawei’s CFO is also the daughter of its founder, a Chinese business luminary, has also apparently retaliated against Canada by cancelling Richardson International’s license to ship canola to China.

China has previously executed at least two Canadian citizens for drug crimes.

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

Nothing quite says “things are great” in your business and industry more than an absolute blowout fire sale of all of your inventory. This is what Tesla is set to announce regarding its solar panels and related equipment on Tuesday, according to the NYT.

Tesla plans to announce that it has started selling its solar panels and related equipment for up to 38% less than the national average price by standardizing systems. Customers are going to need to order the equipment online and Tesla will be offering systems only in 4 kilowatt increments or 12 panels.

The drop in price is stunning: not unlike the auto business, the solar business is a capital intensive industry with tight margins, where companies perform intense analysis to find even the smallest synergies and cut off pennies per watt in cost. To undercut the national average by 38% is a nearly unthinkable strategy, assuming Tesla still strives to make money from this segment.  

Meanwhile, the company’s solution to make this happen is about as novel of an idea as building a production tent.

Tesla is going to be asking customers to do some of the work for them. Customers will be asked to do some of the installation basics, such as taking photos of their own electric meters and other equipment to provide to the company. Customers could then pay $1.75 to $1.99 per watt after all of these changes, according to the company. The average residential solar customer pays $2.85 per watt, including $1 for permitting and inspections, according to the Solar Energy Industries Association.

Sanjay Shah, who runs Tesla’s solar business said: “We spent hours and hours and days and days on the process. It adds cost. It adds time. We needed to have a very streamlined process.”

Ever since Tesla’s “strategic” bail out purchase of Solar City, the energy portion of the business has been volatile and trending toward a decline. Back in February 2018, the company said it would sell panels in 800 Home Depot stores – that idea lasted until June, only 4 months later, when they ended the partnership. Solar’s decline was confirmed again by Tesla’s 10-Q, filed just days ago, showing an anemic number for its Solar MW Deployed. 

The solar roof shingles that Tesla pitched to the public about 2 years ago have also not come to fruition yet. Finally, Tesla faces additional pressure from its Buffalo factory where, due to taking on significant subsidies, it needs to rush to meet certain hiring and investment requirements. Musk was recently spotted in Buffalo. 

In a thread from one Twitter user, they noted that “hospitals don’t cut costs by asking their patients to set up their own X-Rays”: 

5/ Thats not how to solar industry works folks. You cant cut corners and pass off to a customer what needs to be done by a professional.

Hospitals do not cut costs by asking their patients to set up their own X-Rays.$TSLA $TSLAQ

— Mr. Generic (@OffBrandCapital) April 30, 2019

They also asked important questions like whether or not these new changes could wind up being more trouble than they’re worth:

6/ In the end how much will this actually save? How much time will be wasted instructing the customer, waiting for the customer to provide the measurements, and asking to redo/send additional info?

Will this give Tesla the proper info to bring the right materials/equipment?

— Mr. Generic (@OffBrandCapital) April 30, 2019

And finally, despite Tesla’s spin, they noted what we believe is the obvious: “this is a liquidation”.

THIS IS A LIQUIDATION:

A Thread.

Congratulations to Mr. Musk for finding a 38% cost reduction from the national average in his back pocket overnight?

Tesla Looks to Regain Its Luster in Solar Energy by Slashing Prices

1/$TSLA $TSLAQhttps://t.co/kUQ5S3pf9h

— Mr. Generic (@OffBrandCapital) April 30, 2019

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