Category: zerohedge

Less than a year after Saudi Arabia’s unprecedented monetary shakedown of wealthy princes and other Saudi oligarchs in November 2017, which among others ensnared Prince Alwaleed bin Talal who was an involuntary “guest” at the Riyadh Ritz-Carlton for months – until he emerged a free man after an undisclosed settlement – and also eliminated potential threats to the ruling family including close family members, Reuters is out with a fascinating report according to which new splinters may be appearing inside Saudi society, in this case involving a schism between the Saudi King Salman, and his 32 year old son and de facto ruler, Crown Prince Mohammed bin Salman.

As was first reported in early 2016, for the past two years Saudi Arabia had been preparing to place up to 5% of its national oil company, Saudi Aramco, on the stock market. Officials talked up the Aramco initial public offering with international exchanges, global banks and President Donald Trump.

The planned listing was supposed to be the cornerstone of the kingdom’s promised economic overhaul and, at a targeted $100 billion, the biggest IPO ever. More importantly, it was the brainchild of 32-year-old Crown Prince Mohammed bin Salman, heir apparent of the world’s largest oil exporter and the effective head of OPEC.

However, after months of setbacks, the deal came to a crashing halt after the international and domestic legs of the IPO were pulled earlier this month.

The reason, according to Reuters: King Salman – the prince’s father – stepped in to shelve it.

The decision came after the king met with family members, bankers, and senior oil executives, including a former Aramco CEO, said one of the sources, who requested anonymity. Those consultations took place during Ramadan, which ended in the middle of June.

Having been seemingly asleep for the prior two years, The king’s interlocutors told him that the IPO, far from helping the kingdom, would undermine it. Their main concern was that an IPO would bring full public disclosure of Aramco’s financial details, something we knew from prior reports on why the IPO was problematic.

Then, in late June, the king sent a message to his administrative office, demanding that the IPO be called off: the king’s decision is final, a Reuters source said.

“Whenever he says ‘no’, there is no budging,” the source said, although it wasn’t clear just what the King was so afraid would be discovered as part of the IPO due diligence.

Unwilling to telegraph the confusion, if not chaos, between the two top Saudis, Energy Minister Khalid al-Falih said the government was still committed to conducting the IPO at an unspecified date in the future. A senior Saudi official referred Reuters to that statement and repeated that the government, Aramco’s shareholder, was working towards an IPO when conditions were right.

“We are surprised that despite this statement, that the Government continues actively to plan for the IPO, Reuters persists in asking questions alleging that plans are halted.”

“Aramco’s shareholder is the Government of Saudi Arabia. His majesty, King Salman, has delegated management of the IPO to His Royal Highness the Crown Prince, and a Committee which includes the Ministers for Energy, Finance and Economy. Therefore, decisions around the nature and timing of the IPO, will be decided by the Committee for the Government’s approval,” the official said.

Logistics aside, the unspoken message here is the implicit criticism by the King of his son’s decision: the shelving of the Aramco IPO is a major blow to the prince’s Vision 2030 reform programme, which aims to fundamentally transform Saudi Arabia’s oil-dependent, state-driven economy.

And the punchline: the king’s unilateral decision to pull the Aramco IPO suggests the king is keeping the new unilateral power of the young prince – accrued soon after his father’s accession to the throne in January 2015 – in check, i.e. teaching him a lesson who is in charge.

To be sure, King Salman initially delegated enough power to his son that to many international community, MBS was the effective rulers of Saudi Arabia:

While King Salman has the final say on policy, he has given great authority to his son, who is known as MbS. After assuming powers as defence minister and chief of the royal court in January 2015, MbS launched a war in Yemen, adopted a more assertive stance towards arch-rival Iran, and implemented a diplomatic and trade boycott of Qatar.

Taking the reins of a powerful new economic council, he set out to tighten state spending, grow the private sector and win foreign investment.

The king also allowed him to push through high-profile social reforms including ending a ban on women driving and opening cinemas in the deeply conservative Muslim country.

MbS entered the line of succession in April 2015, replacing an uncle as deputy crown prince. Two years later, he was elevated to crown prince in a palace coup that removed his cousin Prince Mohammed bin Nayef, the interior minister.

That said, MBS has made prior mistakes, most notably vis-a-vis Saudi entanglement with the Trump administration. When the young prince gave the impression last year that Riyadh endorsed the Trump administration’s still nebulous Middle East peace plan, including U.S. recognition of Jerusalem as Israel’s capital, the king made a public correction.

At the Arab League summit in April, he reaffirmed Riyadh’s commitment to the Arab and Muslim identity of Jerusalem following an uproar in the Islamic world. “The king is obsessed with the idea of how history will judge him. Will he be the king who sold Aramco, who sold Palestine?” the second source said

Meanwhile, Saudi interest in the Aramco IPO started to wane, and by April, Aramco stopped paying some of the banks working on the deal their retainer fee, Reuters reports.

Then, while the king was deliberating, in mid-June, the banks, including JP Morgan and Morgan Stanley, were invited to pitch for something different. As we reported last month, banks were were instead asked to present proposals for Aramco’s acquisition of a stake in petrochemicals giant SABIC from the sovereign wealth fund PIF.

That was an initial sign that plans for the listing were stalling and that Riyadh was looking to raise funds elsewhere, the banking sources said.

The King’s shelving of the Aramco IPO has various consequences, not the least of which is that a major source of new capital is now gone. And while Saudi Arabia can still generate cash from other sources and move ahead with reforms, MbS had promised the listing would help create a “culture of openness in the secretive kingdom.”

Not anymore.

In addition to raising concerns about that commitment to transparency, the shelved IPO added to the sense of unpredictability after scores of top royals, ministers and businessmen were rounded up in an anti-corruption campaign last November.

But the biggest question is whether the Aramco IPO fiasco is an indication of a fallout between the Alzheimerish King and the man most had – until now – considered the true Saudi leader.

According to Reuters source, the answer is, at least for now, no: the sources said that even though the king’s decision was a blow to the prince’s agenda, he is still the favorite son and heir with a major influence on policy. Rather, they say, it suggests the king wants to show that he will be the deciding voice for the foreseeable future.

“I’m not sure that I would see it as an undermining of the rule of the crown prince. It’s much more likely ensuring that he doesn’t go off the deep end,” said James Dorsey, a senior fellow at Singapore’s S. Rajaratnam School of International Studies.

Of course, as last November’s events showed, when it comes to family ties in Saudi Arabia, which along with its oil deposits is legendary for its extended, constantly shifting intra-family feuds, the King’s affectation with MbS could turn on a dime following another flawed decision.

via RSS https://ift.tt/2PHP499 Tyler Durden

Authored by Chris Whalen via TheInstitutionalRiskAnalyst.com,

Last week Federal Reserve Board Chairman Jerome Powell confirmed that the Federal Open Market Committee intends to keep raising short-term interest rates based upon the strength of the US economy.  Powell gave no indication that he is concerned about the rapidly approaching inversion of the Treasury yield curve or what this portends for banks and leveraged investors of all stripes, including the housing finance sector.

Also last week, the Federal Deposit Insurance Corporation released the Q2 ’18 data for the US banking industry, allowing us to update readers of The Institutional Risk Analyst on the increasingly dire situation in the credit markets.  Spreads are as tight as they’ve been in decades and behavior by issuers grows more absurd by the day.

Bank interest income rose 15.7% year-over-year but interest costs rose 61% between Q2’17 and Q2’18.  We’ll be updating our projections for the impending peak and decline in bank net interest margins after Labor Day in The IRA Bank Book.

Even though the costs of funds for US banks is rising four times faster than bank interest earnings, the degree of financial subsidy — aka “financial repression” — to the US banking system c/o the FOMC remains massive.  As the chart below illustrates, 83% of bank net interest earnings is still going to bank equity investors vs just 17% to depositors and bond holders. 

Or to quote Barry Ritholtz over the weekend: “I always translate the phrase ‘financial repression’ as ‘God damn, I just missed a hell of an equities rally.’”

Banks have benefited enormously from “quantitative easing” (QE). “Net interest income totaled $134.1 billion, an increase of $10.7 billion (8.7 percent) from 12 months earlier and the largest annual dollar increase ever reported by the industry,” notes the FDIC.  But strangely our favorite prudential regulator fails to note that bank funding costs rose $5 billion in Q2’18 and, by year end, interest expenses will be rising as much or even faster than are bank asset returns.

The same curve flattening dynamic that is threatening bank profitability will also severely impact REITs and other leveraged investors, which may be forced to liquidate leveraged positions.  Unless and until the Fed liquidates its own portfolio down to pre-crisis levels (~ $3.2 trillion), the return on bank assets is unlikely to rise very quickly.  Under the baseline scenario released by the Federal Reserve Bank of New York in April 2017, the FOMC would push bank reserves down from $2 trillion today to ~ $500 billion in 2021 in a “normalized” Fed balance sheet.

Of note, there is currently a debate inside the Fed as to whether the FOMC should slow its portfolio reduction plans in order to maintain a higher level of excess reserves.  In an excellent August 14 research report entitled “The Fed’s USD1.0tr question,” Kevin Logan of HSBC writes:

“[R]ecent money market developments suggest that the demand for bank reserves in a normalized Fed balance sheet could be USD1trn or more, at least twice as large as the USD500bn in the New York Fed’s baseline scenario. New bank regulations imposed after the 2008/2009 financial crisis have increased the amount of high quality liquid assets (HQLA) that banks are now required to hold. Reserves held at the Fed are the ultimate in HQLA for banks. They are completely liquid and, from a credit risk standpoint, are of the highest quality.”

Logan argues that the FOMC may end its portfolio reduction program sooner than expected, perhaps by the end of 2019 because regulatory changes have made a larger excess reserve position necessary.  But he also notes that:

“[S]everal academics and former Fed officials have argued that the Fed should return to a small balance sheet, one in which reserves are scarce. They argue that a large balance sheet distorts capital markets by putting unnecessary downward pressure on longer-term interest rates. A large balance sheet could also impede market functioning and the price signals coming from an active federal funds market that reflects the credit worthiness of banks involved in the market.”

Put us on the side of the academics and former Fed officials who understand that the FOMC’s expansion of excess reserves to fund its purchases of trillions of dollars in securities for QE did enormous damage to the US money markets – damage yet to be undone. Instead of encouraging banks to again buy US Treasury debt to fund liquidity requirements, the FOMC apparently prefers to further subsidize the banking industry by indefinitely providing a ready supply of risk-free assets in the form of excess reserves.  But doing so also suggests that bank interest income will not rise along with the FOMC’s increase in short-term interest rates, as shown in the chart below.

We all need to remember that QE was not a form of economic “stimulus,” but rather a backdoor subsidy for the US Treasury.  The bonds owned by the FOMC that created the excess reserves ought to be in private hands.  The Fed (and other central banks) are suppressing long-term interest rates by holding $10 trillion worth of securities, positions that are entirely passive, not financed in the private markets and also unhedged.  These large portfolios of securities held by central banks are not only keeping long-term rates down, but are also responsible for tight credit spreads and low levels of secondary market activity. The only beneficiaries of QE are the growing number of governments among the G-10 nations that are headed for debt problems.

Some economists worry that providing banks with risk free reserves discourages lending, but we think the damage to the money markets is a far more grave concern.  QE and “Operation Twist” have forcibly crushed credit spreads and loan profitability.  Large US banks, for example, lost almost 1% net on residential production in Q2’18, according to the Mortgage Bankers Association.  As in 2006, banks in the residential mortgage sector are fighting over conforming loans to put into private label securitization deals, this as lending volumes fall.

Only by gradually forcing banks to shed excess reserves and replace these risk free assets with Treasury and agency securities will the money markets again begin to operate.  Of course, as excess reserves run off, the real debt load on the Treasury will grow.  Do Jay Powell and the other FOMC members have the political courage to end the subsidies for the US Treasury and banks, and thereby end financial repression?

If the FOMC sticks to its guns and pushes excess reserves down to $500 billion as now planned, long term rates will rise, the functioning of private money markets will return and savers will see an increased share of the interest rate pie.  Banks will trade and hedge and finance larger Treasury positions, and this private market activity will put upward pressure on long-term Treasury yields.  Dealers will earn additional income from an increase in trading and hedging activity.  Lenders may even start to see expansion of spreads for credit products.  Then and only then, when the functioning of private markets have been restored, can the FOMC truly declare victory.

via RSS https://ift.tt/2whF8v4 Tyler Durden

It’s quickly coming to the end of summer, the U.K. is shuttered for a bank holiday and volumes are reportedly pitiful.

It would be difficult to take anyone to task for writing today off as just another day to get through. And then we’ll see where things adjust. It doesn’t bolster the ‘get in there and trade up a storm’ camp, that a week from today it’s the turn of U.S. markets to enjoy a long weekend.

But, as former fund manager and FX trader, Richard Breslow notes, at the risk of making more of things than they deserve, there are still things to be learned by this price action. Such as it is.

Via Bloomberg,

Equities simply want to go up. If you want to trade them, try to avoid getting into debates about why, how far, or is it right. It’s just proven too difficult to sort out the conflicting fundamentals. Someone said to me on Friday that it all boils down to supply and demand. And that struck me as a very good way of thinking about it. It’s become a technical trade and should be treated as such. Pick your levels and go from there.

Shares aren’t ignoring troubling news. It would seem that traders need to figure a way to get in. Benchmarks remain as cruel a set of competitors as they have been the entire ride up. Here we sit at all-time highs in the S&P 500, and it trades like people are short. It’s been so much easier to navigate this market without an opinion. Just a chart. This past February really shook people up, but it was after we revisited those lows in early April that many never recovered.

On the flip-side, the dollar acts like traders remain long. The pluses and minuses ledger is long and valid on both sides. But the hard facts, as we know them, are keeping investors stubbornly bullish. And analysts, with their forecasts, steadfastly bearish. That’s a recipe for making no one satisfied. Which is why we keep lurching back into the range.

It’s often easiest to understand a day’s price action, by looking at the mirror image from the day before. Check out last Thursday and Friday before concluding the Fed Chairman Powell broke new ground at Jackson Hole.

Currency traders like to debate what is a safe haven and why. It’s been a tough answer to come by and then monetize. Primarily because we have serially had very different, and often rapidly changing, sources of worry. One medicine doesn’t cure all afflictions and in some cases is adamantly contra-indicated.

The German Ifo report may be enough to make groggy traders forget Italian politics for the day. But that doesn’t forgive not keeping an eye on the Turkish lira.

Have you ever experienced another time with so many moving parts? Or when news, such as tariffs and sanctions, can be simultaneously positive and negative for the dollar? How can such a deadly dull market, be so captivating?

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

Authored by Marie Huillet via CoinTelegraph,

The World Bank and the Commonwealth Bank of Australia (CBA), the country’s largest bank, have issued a public bond exclusively through blockchain technology, Reuters reports August 23. The World’s Bank official mandate for the project was first unveiled August 10.

image courtesy of CoinTelegraph

The A$100 million ($73.16 million) deal entails two-year bonds that will settle August 28 and have been been priced to yield a 2.251 percent return, according a CBA statement.

The prototype — dubbed “Bondi” (Blockchain Operated New Debt Instrument, and a pun on Australia’s most well-known beach) — is being hailed by the participants as a milestone in automating decades-old bond issuance and sales practices. Reuters cites CBA executive general manager, James Wall, as saying that:

“You’re collapsing a traditional bond issuance from a manual bookbuild process and allocation process, an extended settlement then a registrar and a custodian, into something that could happen online instantaneously.”

As Reuters notes, Word Bank bonds are classified with an AAA rating — the highest possible rating that indicates a high level of creditworthiness. The bank reportedly issues between $50 and $60 billion in bonds annually to foster economic progress in the developing world.

As Cointelegraph has reported, this May, Sberbank CIB — the corporate and investment banking arm of Russia’s largest bank Sberbank — conducted the first blockchain-based commercial bond transaction in Russia.

The transaction was completed in partnership with leading local telecoms firm MTS and the National Settlement Depository (NSD), and entailed the smart-contract enabled issuance of MTS corporate bonds for the value of RUB 750 billion ($12 million) with 6-month maturity.

In Australia, major initiatives are underway to integrate blockchain across both the government and the financial sector. This July, IBM signed a five-year AU$1 billion ($740 million) deal with the Australian government to use blockchain and other new technologies to improve data security and automation across federal departments, including defense and home affairs.

As of December last year, the Australian Securities Exchange (ASX) has been working to implement blockchain technology to replace its current system for processing equity transactions, a project that Reuters today notes is slated to be completed by 2020.

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

In the aftermath of a report that Germany was working on a global payment system that is independent of the US and SWIFT, on Monday Germany and France said they’re working on financing solutions to sidestep U.S. sanctions against countries such as Iran, including a possible role for central banks, Bloomberg reported.

“With Germany, we are determined to work on an independent European or Franco-German financing tool which would allow us to avoid being the collateral victims of U.S. extra-territorial sanctions,” French Finance Minister Bruno Le Maire said Monday during a meeting with press association AJEF. “I want Europe to be a sovereign continent not a vassal, and that means having totally independent financing instruments that do not today exist.”

The discussions, which also involve the U.K., are a signal that European powers are trying to get serious about demonstrating a greater level of independence from the U.S. as President Donald Trump pursues his “America First” agenda.

After the US reimposed sanctions on Iran, making funding to Iran projects virtually impossible, European companies including Daimler and Total halted activity or backtracked on investment plans to avoid U.S. punishment, but France and Germany and their European Union partners want business with the Islamic Republic to continue.

Le Maire said using the European Investment Bank, which has exposure to the U.S., as a “financial channel” would be “very complicated” and that the French and German governments are talking to their respective central banks about their involvement. “If we want to build a truly independent instrument we must open up all the options,” he said.

Separately, Germany’s Foreign Minister Heiko Maas again weighed in on the topic of European financial independence on Monday, saying the EU is working to protect economic ties with Iran and keep payment channels open.

Maas said Europe has started work on creating a system for money transfers that will be autonomous from the currently prevailing Society for Worldwide Interbank Financial Telecommunication (SWIFT).

“That won’t be easy, but we have already started to do that,” Maas said at the annual Ambassadors Conference in Berlin on Monday, as quoted by RIA Novosti. “We are studying proposals for payment channels and systems, more independent from SWIFT, and for creating European monetary fund.”

Maas also announced plans to reveal a new foreign policy strategy towards the US.

“We have to react and strengthen Europe’s autonomy and sovereignty in trade, economic and finance policy,” Maas said in a speech in Berlin. “It’s high time to recalibrate the Transatlantic Partnership – rationally, critically, and even self-critically,” the FM added.

Maas echoed his comments from last week when he called for European autonomy to be strengthened by creating payment channels that are independent of the United States, establishing a ‘European Monetary Fund’.

Europe’s desire to create its own system is connected to Washington’s recent withdrawal from the Iran nuclear deal, and the re-imposition economic sanctions against the Islamic Republic. As Brussels stays committed to the pact signed in 2015 between Tehran and the world powers, the EU had to enforce the ‘Blocking Statute’ in order to safeguard European businesses operating in Iran from US sanctions against the country. However, the measure failed to keep European majors like Total, Maersk, Mercedes in Iran, as they cannot function independently of the US-dominated international banking system and international financial markets.

SWIFT, which is short for the Society for Worldwide Interbank Financial Telecommunication, is the financial network that provides high-value cross-border transfers for members across the world. It is based in Belgium, but its board includes executives from US banks with US federal law allowing the administration to act against banks and regulators across the globe. It supports most interbank messages, connecting over 11,000 financial institutions in more than 200 countries and territories.

Ironically, it was Russia who took the first initiative, after its Central Bank governor, Elvira Nabiullina, said that the country had created a national system for money transfers that could protect its banking from a potential cut off from SWIFT transfer services. The step was triggered by the constant anti-Russia penalties introduced by Washington since 2014 for various reasons, including the reunification with Crimea, alleged involvement in the military conflict in eastern Ukraine, alleged US election meddling, and the alleged poisoning of former double-agent Sergei Skripal in the UK. The result was also a near complete liquidation of Russian holdings of US Treasuries and their conversion into gold and other non-US foreign reserves.

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

Authored by Charles Hugh Smith via OfTwoMinds blog,

Here is the result of America’s neofeudalism: soaring wealth and income inequality.

Let’s spin the time machine back to the late Middle Ages, at the height of feudalism, and imagine we’re trying to get a boatload of goods to the nearest city to sell. As we drift down the river, we’re constantly being stopped and charged a fee for transiting one small fiefdom after another. When we finally reach the city, there’s an entry fee for bringing our goods to market.

Note that none of these fees were payments for improvements to transport or for services rendered; they were simply extortion. This was the economic structure of feudalism: petty fiefdoms levied extortionate fees that funded the lifestyles of nobility.

This is why I have long called America’s economy neofeudal: we pay ever higher fees for services that are degrading, not improving. This is the essence of extortion: we don’t get any improvement in goods and services for the extra money we’re forced to pay.

Consider higher education: costs are soaring while the value of the “product”–a college diploma–declines. What extra value are students receiving for the doubling of tuition and fees? The short answer is “none.” College diplomas are in over-supply, and studies have found that a majority of students learn remarkably little of value in college.

As I explain in my book The Nearly Free University and the Emerging Economy, the solution is to accredit the student, not the institution. If the student learned very little, he/she doesn’t get credentialed.

Were students to have access to the best classroom lectures online (nearly free), and on-the-job apprenticeships in the workplace, (nearly free or perhaps even paid), learning would be significantly improved and costs reduced by 80% to 90%.

In this structure, there’s no need for costly campuses or administration; the entire structure of higher education could be largely automated with software, except for the workplace apprenticeships which focus on case studies and real-world projects that are creating value in the here and now.

Consider healthcare: has the quality of healthcare doubled along with costs?Are Americans significantly healthier as the costs of healthcare have tripled? The aggregate health of Americans has arguably declined, while the stresses placed on frontline care providers by the ever-heavier burdens of compliance and paperwork have increased.

What about the $200 hammers and $300 million F-35 aircraft of the defense industry? Once again, as costs have soared, the quality and effectiveness of the products being supplied has arguable declined.

How about state and local government services? Are they improving as taxes and junk fees rise? Once again, government services are often declining in quality as taxes and fees increase by leaps and bounds.

In sector after sector, the quality of the goods and services has declined while costs have soared. This is the acme of neofeudalism: insiders and the New Nobility are skimming fortunes as prices skyrocket and the quality of the goods and services provided plummet.

Look at the cost increases in higher education, healthcare and childcare and ask yourself if the quality of those services have risen in lockstep with price increases.

This is nothing but neofeudal extortion. The cartels raise prices and we’re forced to pay them, just as feudal commoners were forced to pay.

Here is the result of America’s neofeudalism: soaring wealth and income inequality. 

Insiders and the New Nobility are getting richer while debt-serfs are getting poorer.

*  *  *

Back to School Book Sale: 57% off the Kindle edition and 25% off the print edition of The Nearly Free University and the Emerging Economy ($2.99 Kindle, $15 print). My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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

Speaking to reporters on a flight returning to Rome from an official visit to Dublin on Sunday, the Pope indicated he will not respond to explosive charges from a top Vatican official that the pontiff knowingly covered up widespread sexual abuse.

The Pope dismissed a bombshell document containing the charges which emerged Saturday night, saying simply that the allegations “speaks for itself” and that he would “not say one word” on the matter. 

According to Reuters, “The pontiff said journalists should read the document carefully and decide for themselves about its credibility”.

The extraordinary 11-page written testament, one which the NYT’s Ross Douthat called a “truly historic bombshell”, contains former Vatican ambassador to the US Archbishop Carlo Maria Viganò’s detailed allegations concerning “who in the hierarchy knew what, and when,” about the crimes of Cardinal Theodore McCarrick.

McCarrick was stripped of his office last month by Pope Francis over claims he routinely sexually abused seminary students and an eleven-year old altar boy, something which one New York City priest told CBS News, “virtually everyone knew”. Viganò’s testimony implicates a host of high-ranking churchmen on up to the pope himself. 

The Pope responded to reporters accompanying him on Sunday: “I read that statement this morning. I read it and I will say sincerely that I must say this, to you (the reporter) and all of you who are interested: read the document carefully and judge it for yourselves.”

And further: “I will not say one word on this. I think the statement speaks for itself and you have sufficient journalistic capacity to reach your own conclusions,” Pope Francis said.

Annnnnd in the evening’s *other* news, this document is quite possibly a truly historic bombshell in the life of the Roman Catholic Church. https://t.co/cxY3xNi76g

— Ross Douthat (@DouthatNYT) August 26, 2018

Meanwhile Vigano said that he told Pope Francis in 2013 about allegations of sexual abuse against a prominent priest — and that Francis took no action. Now 77-year old Archbishop Viganò is calling for Francis to step down.

It is extraordinary and somewhat unprecedented that the Pope should so quickly be on the defensive in front of reporters, the way a politician would; however, the allegations are coming from the top of the American hierarchy and arguably the single most powerful and in-the-know figure concerning the goings-on in the American church: the very man who served as apostolic nuncio in Washington D.C. from 2011 to 2016.

Viganò made the allegations in a lengthy statement that concludes with a call for Francis’ resignation:

“In this extremely dramatic moment for the universal Church, he must acknowledge his mistakes and, in keeping with the proclaimed principle of zero tolerance, Pope Francis must be the first to set a good example to Cardinals and Bishops who covered up McCarrick’s abuses and resign along with all of them.”

The former Vatican official said Benedict had “imposed on Cardinal McCarrick sanctions similar to those now imposed on him by Pope Francis” and that Viganò personally told Pope Francis about those sanctions in 2013.

Also contained in the letter are accusations against a long list of current and past Vatican and U.S. Church officials charging that they too covered up case of the 88-year old former McCarrick.

Likely, the Pope will continue being under fire until he takes on some of the specific allegations. His official visit to Dublin, where he addressed Catholics at an outdoor mass and begged for the forgiveness of the laity for recent scandals facing the Church, was marred by protests as he passed by crowds. 

 

via RSS https://ift.tt/2MPyE07 Tyler Durden

A Mexican official told CNBC on Monday that Nafta trade talks with the U.S. have wrapped up, and President Donald Trump has signed off on a bilateral agreement with Mexico to revamp the North American Free Trade Agreement; an announcement is expected later on Monday, according to Bloomberg.

“A big deal looking good with Mexico!” President Donald Trump tweeted earlier on Monday.

A big deal looking good with Mexico!

— Donald J. Trump (@realDonaldTrump) August 27, 2018

As the Mexican Economy Minister Ildefonso Guajardo entered the Washington office of the U.S. Trade Representative’s office where negotiations are going, he told reporters that there is one bilateral difference left to iron out. He declined to identify the issue.

And while Mexican negotiations may effectively be over, there is no deal reached yet with Canada. As has been the case over a year of intense and sometimes fractious negotiations to update the decades-old Nafta, it’s not the end of the road. But optimism is running high of salvaging the pact that Trump has threatened to scrap, Bloomberg adds.

The Mexican official also told CNBC the U.S. and Mexico have “reached understanding on key issues,” adding that Canada will now “re-engage” in the negotiations. Canada has remained on the sidelines of trade talks recently while the U.S. aimed at first striking a deal with Mexico.

“Once the bilateral issues get resolved, Canada will be joining the talks to work on both bilateral issues and our trilateral issues,” Chrystia Freeland, Canada’s foreign minister, said on Friday. “And will be happy to do that, once the bilateral US-Mexico issues have been resolved.”

Significant breakthroughs between Mexico and the U.S. came during the past several days on automobiles and energy.  Officials had hoped to wrap up last week but that was before the distraction caused by the guilty plea entered Tuesday by President Trump’s former lawyer, Michael Cohen, and the guilty verdict handed down against Trump’s former campaign manager Paul Manafort.

* * *

Still, there are risks: as Bloomberg’s Benjamin Dow writes, with a long time to go until Canada’s sign-off – and Trump likely having to get a new deal through Congress – there are a few scenarios that could slow or alter a deal and hurt the MXN.

• One is if Republicans lose control of the House in November, then are forced to try to pass a new tripartite deal with one half of Congress possibly hellbent on obstructionism. Another, “minibus” spending bills, involves shutting down the government, and involves border-wall funding and more money for immigration enforcement.
• Another unknown is GOP leaders’ partnership with Trump. The elaborate packaging of bills was undertaken after the president said he wouldn’t sign another omnibus into law. None of the bills that leaders plan to send him in September address his top priority: money for the wall along the U.S.-Mexico border.’

The friction that could come from U.S. and Mexican leadership over non-tariff disagreements makes the BBVA analysts’ call of 18.4 pesos per dollar sound like a best-case. For now, however, the Mexican peso has jumped 1% higher against the dollar at 18.7, but is modestly fading its gains.

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

As we said last night, three weeks after Musk’s stunning “going private” announcement, the soap opera is finally over.

On Friday night the “funding secured” tragicomedy came to a halt after Musk announced the company would remain public after all following discussions with investors. And while shares initially tumbled as much as 5%, they pared earlier losses to almost unchanged amid an algo ramp, but have again reversed and may extend declines as investors try to sort out the confusion.

Below, courtesy of Bloomberg, are the hot takes of some of the company’s most notable sellside analysts.

Cowen, Jeffrey Osborne (Underperform, price target $200)

• “The key question is whether investors will continue to support a CEO who may potentially be involved in market manipulation and/or securities fraud as well as a company under SEC investigation.”
• “We see mounting obstacles for the company, notably shareholder lawsuits, SEC investigation, cash burn, competitive environment and spotty profits.”
• “While investors in the past may have been willing to invest in the compelling story of saving the world provided by a visionary CEO, the recent episodes and his new focus on profitably lead us to believe that the stock is likely to begin to reflect the financial realities that the price has long been divorced from should it be unable to reach profitability in 2H18 as we are currently modeling.”

Jefferies, Philippe Houchois (Hold, price target $360)

• “The only tangible results so far from that episode seem to be an SEC investigation, lawsuits and more damage to the standing of management and board.”
• “Shares may be hit today as a result of more erratic corporate behavior at Tesla, However, we wonder if the ‘going private’ tweet has effectively put Tesla in play and may lead to additional discussions with other investors, mainly corporates, that value Tesla’s vision and can help bridge gaps in growth and execution skills.”
• “Tesla needs new capital to fund midterm growth or risk a de-rating of its valuation multiples.”

RBC, Joseph Spak (Sector perform, price target $315)

• “With a potential bid of $420/share out of the way, we’d like to say the stock will return to trading on fundamentals, but the truth is the stock trades on sentiment.”
• “Bulls will likely be happy because they can participate in potential value creation. However, to us the bears have more ammo on the near-term sentiment move.”
• “It has become clear to us that funding was not secured or there was not sufficient interest to take the company private at $420/share. And we think credibility has taken a hit.”
• “While the stock may be volatile over the coming weeks, ultimately we think the story will come back to the Model 3 ramp – not just the units but the profitability.”

Baird, Ben Kallo (Outperform, price target $411)

• “We expect shares to appreciate over the intermediate term as the focus shifts back to fundamentals, which we believe may be underappreciated. We are buyers on weakness as we expect shares to move higher ahead of third-quarter deliveries and results.”
• “A potential SEC penalty will remain an overhang; while it is extremely difficult to predict the outcome of an investigation, historical settlements may demonstrate perceived risks could be overblown…. Additionally, we think any penalties will likely be borne by Musk.”
• “Concerns about potential funding needs will return to the forefront, despite management’s confidence the company will not issue equity in 2018.”

Oppenheimer, Colin Rusch (Outperform)

• “This removes a large distraction that had significant chance of failure and the potential to severely limit Tesla’s access to capital while attempting to execute on its ambitious product strategy.”
• “It is premature to speculate on specifics, but do expect this situation will help set SEC precedent on public communication of corporate strategy.”
• “We would not be surprised to see an incremental hire of a senior operationally focused executive.”

New Street Research, Pierre Ferragu (Buy, price target $530)

• “The SEC will leverage the threat of barring Elon Musk from being an officer of a listed company in the negotiations and will be in a good position to get Elon Musk to accept a settlement including some forms of controls. We would view positively some controls imposed on Elon Musk’s communication.”
• “We are confident Tesla will suffer very limited competitive pressure in the next 2-3 years, but we will have to convince investors and wait for news flow to prove us right.”

Loup Ventures, Gene Munster

• “We expect class-action lawsuits against Musk around ‘funding secured’ could linger for a year.”
• “We believe Tesla will be insulated from any claims given the company has made it clear that ‘go private’ is an Elon Musk initiative.”

Source: Bloomberg

via RSS https://ift.tt/2wcDE5p Tyler Durden

Authored by Michael Snyder via The American Dream blog,

Is the social media crackdown on conservatives about to get even worse? 

On Friday, representatives from Facebook, Google, Twitter, Microsoft, Snapchat and other major social media companies gathered to discuss “strategy” for the 2018 election.  Supposedly they were going to discuss how to combat the flow of “misinformation”, but we know what that means.  Every time the social media giants pledge to do more to crack down on “fake news”, more conservatives get censored.  In recent months we have witnessed the greatest purge of conservative voices in the history of the Internet, and as you will see below, even more prominent voices have been hit with bans in recent days.  Of course the social media companies are pledging that their censorship efforts are being implemented in an even-handed manner, but obviously all of their meddling has greatly enhanced the probability that Democrats will emerge victorious in November.

According to Breitbart, this gathering of social media executives was initiated by Facebook, and it was held at Twitter’s headquarters in San Francisco…

Facebook is reportedly meeting with multiple other Silicon Valley Masters of the Universe Friday to discuss how to prevent the spread of “misinformation” across their platforms ahead of the 2018 midterm elections.

Business Insider reports that Silicon Valley tech giants including Facebook, Twitter, Google, Microsoft, and Snap will be holding a meeting at Twitter headquarters in San Francisco Friday to discuss the 2018 U.S. midterm elections. According to emails obtained by BuzzFeed News, Facebook’s head of cybersecurity policy Nathaniel Gleicher invited 12 representatives from the companies to the meeting.

But this isn’t the first time a gathering like this has taken place.

In fact, we now know that executives from many of the largest tech companies met with representatives from the deep state back in May…

In May, representatives from Amazon, Apple, Google, Facebook, Microsoft, Oath, Snap and Twitter met with Christopher Krebs, an undersecretary at the US Department of Homeland Security, and Mike Burham from the FBI’s foreign influence taskforce.

Since that meeting, we have seen social media censorship get much, much worse.

Could it be possible that there is a connection?

And we have also just learned that Facebook will now be rating all users (that means you too) for “trustworthiness”…

The social media giant plans to assign users a reputation score that ranks them on a scale of from zero to one, according to the Washington Post.

It marks Facebook’s latest effort to stave off fake news, bot accounts and other misleading content on its site.

But the idea of a reputation score has already generated skepticism about how Facebook’s system will work, as well as criticism that it resembles China’s social credit rating system.

Yes, this is almost exactly like China’s new “social credit rating system”.  In fact, I wouldn’t be surprised if Facebook actually got that idea from them.

We are seeing the rise of a tyrannical Big Brother technocracy, and it is getting worse with each passing month.  Just check out some of the big name conservatives that have been censored by social media in recent days…

-The Hagmann Report was just slapped with a 90 day ban by YouTube.

-Verity Baptist Church was just completely banned by YouTube.

-The David Horowitz Freedom Center just had the processing of their donations blocked by Visa and Mastercard.

-“Activist Mommy” Elizabeth Johnston was recently banned by Facebook.

In addition, Facebook’s censorship of PragerU has resulted in a drop of engagement of more than 99 percent…

Conservative non-profit group PragerU also recently appeared to be the latest victims of Facebook censorship, as many recent posts from the group’s Facebook paged suffered a 99.9999 percent drop in engagement based on Facebook’s own dashboard. The social media giant also pulled down two PragerU videos, which it labeled “hate speech.”

The social media giants seem determined to try to kill off the conservative movement in this country, and in my latest book I discuss how political correctness has gotten completely and utterly out of control in America.  These elitists don’t believe in free speech, because on some level they understand that their ideas would not win in a free and open marketplace of ideas.

In order to win, they must censor us.  And the more tyrannical they become, the more Americans will start turning against them.

Fortunately, there are signs that the tide is starting to turn.  Facebook’s web traffic in the U.S. is way, way down, and conservatives are beginning to abandon other repressive social media platforms as well.

The Internet is supposed to be a free and open forum where all ideas are freely discussed.  If we do not stand up now, we could lose control of the Internet forever, and we must not allow that to happen.

via RSS https://ift.tt/2LvOGY4 Tyler Durden