Category: zerohedge

The euro is weakening and Dollar Index spiking (back above pre-FOMC Minutes level) following headlines from Buba President Jens Weidmann on ECB rate-hike guidance.

When asked about prospects for ECB interest rates, Bloomberg reports that Weidmann pointed to investor expectations built on the economic situation and communication by the central bank. Given the current economic backdrop, expectations for hikes to begin in mid-2019 are “not completely unrealistic,” he said.

Weidmann’s comments come as the ECB debates how to wind down QE after September and amend language that currently includes a pledge to keep interest rates unchanged “well past” that time. With the 19-nation economy expanding strongly and confidence increasing that inflation will sustainably pick up, officials have signaled that a shift could come early this year.

“This could probably be one part of our discussion — whether to complement any decision on the asset-purchase program and on communication regarding the asset-purchase program with a bit more specificity with respect to the interest-rate guidance,” Weidmann said in an interview with Bloomberg Television in Frankfurt. “‘Well past’ is a rather vague time dimension so it could be about specifying what well past means.”

The reaction was EUR selling, USD buying…

We suspect the move is as much technical stop-hunting as fundamental shift as FX algos worldwide sharpen their headline-reading minds on Powell’s hearing.

via Zero Hedge http://ift.tt/2GO3cZo Tyler Durden

Blain’s Morning Porridge, submitted by Bill Blain of Mint Partners

February nearly behind us – where does that leave the rest of the year?

“And if the band you’re in starts playing different tunes….”

It’s a pleasure to be writing the Porridge this morning after London was hit by the vicious “Beast from the East” Whiteout last night, with nearly 2 whole snowflakes causing mass train cancellations and panic consumer buying. Thankfully the authorities had prepared us all with their “yellow snow alert”, (what’s the first thing a baby polar bear learns?), and so we were all prepared and wrapped up warm. London survived Snowmaggedon! The next Blizzard hits Thursday – we shall be wearing shorts and sunglasses. (US readers – extreme sarcasm alert..)

February looks like its closing on constructive tone. So much for the VAR/VIX Volatility Crash. It almost feels like it didn’t happen. Don’t be fooled. Markets are in “wait and see” mode rather than convinced on direction. Volumes (particularly in stocks) are suspiciously low.

This week’s key issues are the Italian Elections – where we’re effectively blind because of 2 week no-polling regulations, German coalition concerns – where we simply can’t guess how the SPD membership will vote, and what the new Fed-Hed is going to say. Its just more of the same – apparently. Most folk are breathing a sigh of relief that February’s early slides didn’t turn into market rout and ruin.

With US stocks total market capitalisation now trading right up to 143% of US GDP – the Buffet Chart (attached), a number of folk have warned the market looks unsustainable. However, the structure of the market has also changed. The stock market is more balanced across sectors (in 2000, 40% of value was in Tech, today its 27%). My macro-economist colleague Martin Malone believes the breadth of the US market means we can stop worrying and upgrade the Equity/GDP target from the 20-yr average of 100% to 150%.

The truth is we’re into a new 2 part reality. Things have changed.

There is the short-term action; what happens next on the charts. Then there is the market going through a longer-term paradigm shift as we adapt to the new reality. We have to be challenging the way we think about markets – get out of the mindset of the last few years, and into a more market driven way of thinking to reflect how things have changed. We’ve shifted gears in both bonds and stocks. Apparently over 60% of fund management professionals have less than 8 years market experience – which means they haven’t seen bond bear markets, liquidity ice-storms, or genuine fear in stocks. We can warn about them – much like the authorities did about last night’s non-blizzard.

The new fundamentals are different – stop worrying about deflation and figure out the reality that inflation might be unmeasured (especially in Europe)!. The outlook is changed – the global financial crash has given way to global synchronous growth. Central banks remain an issue – figure out how wrong they might be, and the risk they panic. And, politics will remain “fluid” and volatile – driven by increased perceptions of income inequality as a fertile breeding ground for populism. It’s a new world.. try to read it.

But taken as a whole, what’s not to like? Global Growth!

Lets start with central banks where the focus today will be on Jerome Powell’s first public comments as Fed Chairman: Will he hint a hawkish 4 hike pace, or a dovish 3 hike ramble? It’s the words that go with it that will count – what will he say about momentum, growth, etc. On the other hand, the first reference I can find to the Powell Put (thanks Ara Levonian for alerting me to the fact the market is already discussing it) came as early as Feb 5th in Marketwatch – when some Fed watcher opined the sell-off in stocks is not a concern; “don’t even think about a Powell put.” The key thing is to take a look at the 10-year Treasury chart – then try to convince yourself we’re not in bear phase.

What about politics? It feels like there is massive risk in Italy, in Germany and the UK, but these things are seldom as bad as they promise. While Brexit remains an unholy mess… just imagine how shocked you would be, and how quickly your market assessment would have to change if Theresa May was suddenly able to govern close to competently? (Sure that would require a whole fleet of No 37 buses to impact cabinet ministers with prejudice.. but, you never know..) The bottom line is politics is going to change our base line assumptions.

Which leaves growth – the real driver of value. Although large swathes of the investment community believe growth may stall later this year or early in 2019, all the global institutions are positive. Global GDP is rising, justifying higher stocks and risk assets. With that pace of growth still modest, and inflation threats limited, there might not even be so much to fear in bonds.

Hmmm.. it all sounds very positive… Yep… I’m a buyer. Buy Risk. Sell Bonds.

 

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Submitted by CoinTelegraph

Chief scientist of nChain and self-proclaimed mind behind the Satoshi Nakamoto pseudonym, Craig Wright, is being sued for $5 bln. The suit is brought to the United States District Court of the Southern District of Florida by the estate of David Kleiman.

David Kleiman was a computer scientist and cyber-security expert, whom many suspect to have been one of the developers behind Bitcoin and the Blockchain technology.

In documents which surfaced on Reddit, the plaintiff claims that Wright stole hundreds of thousands of BTC, worth over $5 bln dollars at today’s rate, from David Kleiman’s estate. The statement by the plaintiff alleges that Wright recognized that Kleiman’s friends and family were initially unaware of the wealth he accumulated.

The official complaint states that Wright took advantage of this and “forged a series of contracts that purported to transfer Dave’s assets to Craig and/or companies controlled by him. Craig backdated these contracts and forged Dave’s signature on them.”

The plaintiff continues in the document, stating that following David Kleiman’s death on April 26, 2013, Wright contacted Kleiman’s estate and disclosed that he and David had worked together to develop Blockchain and Bitcoin.

According to the estate, Wright claimed that David had signed away any rights to resulting wealth or intellectual property in exchange for a non-controlling and non-operational share in an Australian company. According to the plaintiff, Wright estimated the share to be worth “millions”., and informed the Kleiman estate that he’d be able to sell the share on the estate’s behalf within a few months.

Apparently this was a lie, as the company went bankrupt after Wright misled the Australian Taxation Office (ATO). In late 2015, Australian police raided Wright’s home, and Wright fled to the UK from Australia.

To date, the plaintiff states that Wright hasn’t returned any of the bitcoins or the intellectual property rights to the Kleiman estate. The lawsuit is “brought to rectify that injustice.”

Kleiman is seeking compensation for the intellectual property in addition to the 5 bln BTC fortune.

While Wright no longer claims he is Satoshi Nakamoto, and the lawsuit does not seek to discover or define the identity of that individual, the proceedings may require that identity to be established in order to find a definite ruling.

Wright has issued a one-word statement regarding the lawsuit via Twitter:

Greed

— Dr Craig S Wright (@ProfFaustus) February 26, 2018

The case is Ira Kleiman v. Craig Wright, No. 18-cv-80176, U.S. District Court for the Southern District of Florida, according to Bloomberg.

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After President Donald Trump last week surprised his supporters and NRA members, by saying he would support increasing the age limit for buying long guns to 21, along with a raft of other measures including supporting a bill that would strengthen background checks, Trump appears to be backing away from his call to raise the age limit, according to CNN.

“He’s obviously moving back from that,” a key GOP congressional source said.

After promising that the NRA would go along with his plan, but the influential lobby came out against the idea. Sen. John Cornyn of Texas, the No. 2 Republican in the Senate, also expressed skepticism for the idea and said it might not have enough support to pass the Senate.

Another source close to the White House said Trump signaled as much in both his remarks at the Conservative Political Action Conference on Friday and at the White House on Monday. The source asked how a soldier could be told he or she could use an assault weapon on the battlefield but not at home to protect his or her family. Last week, Sen. Jeff Flake, an Arizona Republican, said he was supportive of a bill with Democratic Sen. Dianne Feinstein of California to “raise the minimum purchase age for non-military buyers from 18 to 21.”

Another source close to the White House said Trump signaled as much in both his remarks at the Conservative Political Action Conference on Friday and at the White House on Monday. The problem, as NRA spokeswoman Dana Loesch famously articulated during a CNN town hall last week, is how do you tell an 18-year-old soldier that he or she can use an assault weapon on the battlefield but not at home.

Last week, Sen. Jeff Flake, an Arizona Republican, said he was supportive of a bill with Democratic Sen. Dianne Feinstein of California to “raise the minimum purchase age for non-military buyers from 18 to 21.”

To be sure, it isn’t clear how committed Trump is to the issue. The President tweeted his support for the idea last week, and a few Republican senators, including Sen. Marco Rubio of Florida, also voiced support for raising the age to 21.

Trump is set to meet with lawmakers on Wednesday to discuss the legislative response to the Parkland shooting. Press Secretary Sarah Huckabee Sanders wouldn’t say exactly what would be discussed. Sanders said Trump has also instructed the ATF to find a way to outlaw bump stocks.

Meanwhile, Florida lawmakers late Monday rejected a proposed assault weapons ban. They did, however, approve raising the legal age for purchasing a firearm to 21 – while also approving legislation to allow teachers to carry guns in school, the Post reported.

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The DAX legged lower, led by sliding shares of Volkswagen, BMW and Daimler after Germany’s top administrative court ruled German cities have the right to ban diesel cars, a move which could have far-reaching consequences for the 12 million vehicles in Europe’s largest auto market, the FT reported.

The national court in Leipzig upheld earlier decisions from lower courts in Stuttgart and Düsseldorf, which had allowed the bans. Those rulings had been appealed amid legal uncertainty over whether municipalities have the power to make such restrictions. Prior to the ruling, Bloomberg predicted that if the court backs the city-level diesel bans, it would likely jump-start a wave of new policies targeting the fuel

The case followed a debate triggered by Volkswagen’s diesel emissions scandal in 2015, in which the carmaker admitted to installing cheat software to trick lab tests of emissions. As a result of that admission, a wider array of older diesel cars came under scrutiny, leading some politicians at the local level to decide that older, less clean vehicles should be barred from their cities.

The case in Leipzig was brought by environmental lawyers representing ClientEarth and Deutsche Umwelthilfe, or DUH, who together have filed 10 separate cases in the country. ClientEarth lawyer Ugo Taddei called the decision “a tremendous result for people’s health in Germany” which may also have an impact abroad.

“This ruling gives long-awaited legal clarity that diesel restrictions are legally permissible and will unavoidably start a domino effect across the country, with implications for our other legal cases,” he said just after the decision. “Putting traffic restrictions on the most polluting vehicles is the quickest and most effective way to protect people from harmful air pollution.”

Last November, after car executives and politicians held a “diesel summit” to discuss the problem of older vehicles, German governments at the city, state and national level agreed to invest €1bn on environmental remediation efforts as part of a deal to avoid bans on older diesel cars.

At the time, the outcome was deemed a failure by Jürgen Resch, head of the DUH, who accused Chancellor Angela Merkel of “submitting” to the car industry, Germany’s largest. DUH said Germany experiences 13,000 premature deaths each year from nitrogen dioxide pollution. “Our aim is to prevent them,” said Mr Resch.

Following the ruling, VW preferred shares declined as much as 2%, BMW and Daimler reverse gains to drop as much as 1% and 0.7%, respectively. French carmaker Renault also fell, trading down 0.2% as of 12:22pm; Fiat -0.3%, Porsche -1.4%; Peugeot up 0.4%; Stoxx 600 Automobiles & Parts Index -0.6%

As the FT adds, a key risk for the carmakers is that bans in various cities could force them to retrofit expensive hardware solutions to reduce emissions of nitrogen dioxide in millions of cars. So far, Volkswagen, BMW and Daimler have only agreed to pay for less expensive software upgrades.

Arndt Ellinghorst, analyst at Evercore ISI, warned before the ruling that a decision in favour of diesel bans could “open Pandora’s Box” by forcing carmakers to invest billions of euros in older technology just as they try to focus their resources into new electric, autonomous and digital technologies.

That would be costly. In one government-sponsored analysis by the Technical University in Munich, the cost of retrofits designed to reduce NOx emissions by 90 per cent would be about €1,300 per vehicle. A separate calculation by Volkswagen put the cost at €2,500 per case, he noted.

Altogether, the total cost to fixing around 5.8m older diesel cars in Germany would cost between €7.6bn and €14.5bn. “Diesel might get its final kiss of death from a court ruling,” Ellinghorst said.

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After euphoric premarket spikes for two consecutive days in global stocks, this morning S&P futures point to a modestly lower open, while trading in Asia is mixed and Europe is down modestly.

Following yesterday’s closing burst in the S&P500, which was reminiscent of the late January meltup, and which resulted in the February correction, S&P futures were down 7 points, trading near sessions lows, if in a modest range after yesterday’s 33 point move higher in the cash index.

The dollar, like S&P futures, was stuck in narrow ranges as investors await Jerome Powell’s first public comments in the role of Federal Reserve chairman on Tuesday. The Bloomberg Dollar Spot Index recouped earlier losses, while the Treasury 10-year yield held steady at 2.86% after declining 9bps in the past three days.

As previewed yesterday, Fed Chair Powell will appear before the House Financial Services Committee Tuesday at 1030am ET (testimony released at 830am ET) to discuss the Fed’s Semi-Annual Monetary Policy Report and the state of the economy. Investors will look for any clues on whether four 25bps rate hikes in 2018 are likely. Back in his testimony ahead of getting confirmed as Fed Chair, Powell said that risks to the economy appeared to be balanced

The Fed Chairman should stick to the current forecast of three hikes this year as he will be cautious not to shake up expectations until the FOMC comes up with its updated projections in March, Credit Agricole strategists including David Forrester write in a note. “We don’t believe any ‘sell the fact’ attempt to sell the USD will prove lasting, especially if data continues to support higher yields.”

“Our sense is that he is unlikely to scare the horses,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “If so, the risk is that bond yields could track a bit lower and equities could remain supportive. Under such an environment, the dollar probably trades weaker.”

“The market is a little bit cautious ahead of this speech, but we think he (Powell) is likely to stress the continuity of monetary policy…because it wouldn’t be in his interest to have any major market reactions – that would make his job more difficult,” said Commerzbank currency strategist Anje Praefcke.

“What he’s likely to state is what we’ve seen in the FOMC (Federal Open Markets Committee) minutes: that the outlook for the U.S. economy has improved considerably, short-term, and that both wages and consumer price inflation have recently surprised on the upside.”

Meanwhile, stocks have already priced in a dovish (or at worst neutral) Fed, as the S&P is already back to the level where it was before the February selloff’s worst day. Though the S&P down over 2% for February, it has recovered more than two thirds of the losses sustained in the wake of a drastic selloff early this month.

Europe’s Stoxx 600 extended declines this morning to 0.3%, with 2 stocks down for every one that rises; most industry groups in the index declined, led by real estate and telecoms companies.  All but two industry groups are in the red, with telecom and chemical shares leading losses. Offsetting the drop was the Stoxx 600 Media Index which jumped 1.6% as Sky surges after the Comcast overbid. Consumer discretionary is the notable outperformer, lifted by Sky (+21%) after Comcast made an offer of GBP 12.50/shr for the Co., subsequently posing a threat to FOX’s (FOXA) offer for the Co. Elsewhere, UK homebuilders are firmer this morning following the latest earnings update from Persimmon (+11%) which has lifted some of its competitors higher in sympathy; Berkeley Group (BKG LN) +2.3%, Barratt Developments (+2.1%) and Taylor Wimpey (+1.7%).

Earlier, Asian equities edged modestly higher, with Japanese stocks climbing to the highest in more than three weeks. ASX 200 (+0.2%) and Nikkei 225 (+1.1%) were both higher with the top performers in Australia underpinned by earnings releases, while the Japanese benchmark led the region and briefly surmounted the 22500 level. Elsewhere, Chinese markets were mixed in which the Hang Seng (-0.7%) was choppy and Shanghai Comp. (-1.1%) was the laggard after the PBoC refrained from open market operations. Furthermore, press reports also noted that China is facing tight liquidity conditions in March and that the PBoC could raise rates on open market o perations next
month following an anticipated Fed hike.

Earlier in the session, the MSCI All-Country World Index, was up 0.1% and set for its third straight day of gains after hitting its highest level since Feb. 5, although if Europe continues to sink, and if futures fail to rebound, the streak will soon be broken.

Elsewhere in currencies, G10 currencies traded in narrow ranges against the dollar ahead of Powell’s appearance, with 21-DMAs seen as next hurdles for several pairs. The Sweden’s krona slides to a fresh eight-year low of 10.0903 against the euro; Sweden earlier saw a weaker-than- forecast economic tendency survey, followed by comments by Riksbank First Deputy Governor af Jochnick who expressed worry over the weak underlying inflation pressures. The USD/JPY traded in narrow 31-pip range as it continues to consolidate under 108 handle. The NZD/USD sold on disappointing trade data; nearing test of initial support at 0.7271, last week’s low. The euro traded at $1.2334, up 0.1 percent, but off its three-year high of $1.2556 hit earlier this month.

Fed funds rate futures were almost fully pricing in a rate hike at the Fed’s next policy meeting on March 20-21.

“Expectations that Powell will be sensitive to financial markets appear to be running high. But he hasn’t said he will sacrifice policy normalization for the sake of financial markets. I feel there is room for disappointment in markets,” said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

The 10-year Treasury yield edged higher after falling to a two-week low, rising to 2.870% if well below the recent four-year peak of 2.957% touched on Feb. 21, driven by month-end buying as well as position adjustments ahead of Powell’s testimony; German bunds and U.K. gilts led a retreat in European bonds.

In other overnight news, Treasury Secretary Mnuchin said US does not set policy to impact the USD, reiterates strong USD good for the economy.

ECB’s Weidmann said if economic upswing continues and prices rise there should be no reason not to end QE this year. Evidence that movements in FX are having a smaller impact on inflation than previously. Bigger QE reduction and clear end date to the bond buying programme would have been justifiable.

In the latest Brexit news, UK Foreign Secretary Boris Johnson stated that UK will not remain subject to ECJ rulings.Reports stated the EU will threaten UK PM May’s Brexit plan by rejecting British compromises and will warn that Northern Ireland must sign up to Brussels regulations; draft Brexit treaty is to be published on Wednesday. In related news, Brussels is expected to demand the UK remain under European Court of Justice oversight indefinitely post-Brexit under divorce agreement. French President Macron says a customs union agreement with the UK after Brexit is possible, however would not give full access to single market.

Oil prices erased earlier gains as investor concerns about rising U.S. oil output offset signs of stronger demand and faith in the ability of OPEC production curbs to curtail supply. U.S. West Texas Intermediate futures fetched $63.68, down 0.3 percent, after hitting a three-week high of $64.24 the previous day.

In addition to Powell’s market-moving testimony, the market is set to receive a number of macro data, including the house price index. Marriott and Live Nation are among the more than a hundred companies that will report quarterly numbers

Market Snapshot

• S&P 500 futures down 0.2% to 2,778
• STOXX Europe 600 down 0.2% to 382.36
• MSCI Asia Pacific up 0.2% to 179.65
• MSCI Asia Pacific ex Japan down 0.2% to 586.04
• Nikkei up 1.1% to 22,389.86
• Topix up 0.9% to 1,790.34
• Hang Seng Index down 0.7% to 31,268.66
• Shanghai Composite down 1.1% to 3,292.07
• Sensex down 0.2% to 34,390.05
• Australia S&P/ASX 200 up 0.2% to 6,056.86
• Kospi down 0.06% to 2,456.14
• German 10Y yield rose 1.9 bps to 0.671%
• Euro up 0.1% to $1.2333
• Brent Futures down 0.2% to $67.38/bbl
• Italian 10Y yield fell 4.9 bps to 1.748%
• Spanish 10Y yield rose 0.6 bps to 1.562%

Bulletin Headline Summary from RanSquawk

• European bourses trade with little in the way of firm direction as markets await Fed Chair Powell’s testimony
• Above average Dollar demand for end of February FX portfolios seems to be keeping the broader Usd afloat as the DXY meanders around the mid-point of a tight 89.690-830 range
• Looking ahead, highlights nation German CPI, US durables, APIs and a slew of speakers

Top overnight news from BBG

• EU Said to Stoke Brexit Tensions With 100-Page Draft Exit Deal
• Comcast Offers to Buy Sky in $30 Billion Challenge to Fox
• Traders Unfazed by Italy Election, But Some Warn of Complacency
• Federal Reserve Chairman Jerome Powell’s embrace of his predecessor’s gradual approach to tightening monetary policy is about to be tested as he delivers his first congressional testimony on Tuesday.
• The European Union will challenge Theresa May on Wednesday when it publishes a draft Brexit treaty that ignores some of the U.K. prime minister’s most important demands.
• Mario Draghi largely skirted the Latvia crisis affecting the European Central Bank and stuck to his plans to keep adding stimulus as he addressed European Parliament lawmakers on Monday.
• Xi Jinping’s decision to cast aside China’s presidential term limits is stoking concern he also intends to shun international rules on trade and finance, even as he champions them on the world stage.
• It doesn’t make sense for the U.S. to impose steel and aluminum tariffs on other NATO members in the name of national security, according to a senior European Union official.
• China plans to reduce its annual budget-deficit target to just under 3 percent of total economic output, people familiar with the matter said

Asian equity markets traded mixed following yesterday’s US gains where declining yields eased some concerns of steep rate increases and the majors rallied to their best levels in over 3 weeks. ASX 200 (+0.2%) and Nikkei 225 (+1.1%) were both higher with the top performers in Australia underpinned by earnings releases, while the Japanese benchmark led the region and briefly surmounted the 22500 level. Elsewhere, Chinese markets were mixed in which the Hang Seng (-0.7%) was choppy and Shanghai Comp. (-1.1%) was the laggard after the PBoC refrained from open market operations. Furthermore, press reports also noted that China is facing tight liquidity conditions in March and that the PBoC could raise rates on open market operations next month following an anticipated Fed hike. Finally, 10yr JGBs were relatively flat despite the upside in riskier assets, with prices contained at the 151.00 level while today’s 2yr auction results were also encouraging with b/c and accepted prices higher than previous. PBoC skipped open market operations and cited relatively high liquidity in the banking system. PBoC set CNY mid-point at 6.3146 (Prev. 6.3378). PBoC may increase Open Market Operation rates in March after an expected Fed rate hike with the increases in repo rates will likely be around 5bps, while reports added that China is to face a tight balance in liquidity during next month.

Top Asian News

• China Is Said to Plan First Budget Deficit Target Cut Since 2012
• Alibaba Said to Buy Out Baidu in China’s Top Takeout App
• Bank Fraud Fallout in India Spreads to Market for Trade Finance
• Guinigundo Doesn’t See Need to Raise Policy Rate ‘At this Point’
• Chinese Investors Yank Record Funds From Hong Kong Stocks

More European stocks fall, trading near session lows, (Stoxx 600 down -0.3%), after the Sky overbid and post-Asia-Pac opening gains were trimmed. Taking a look at the sectors, consumer discretionary is the notable outperformer, lifted by Sky (+21%) after Comcast made an offer of GBP 12.50/shr for the Co., subsequently posing a threat to FOX’s (FOXA) offer for the Co. Elsewhere, UK homebuilders are firmer this morning following the latest earnings update from Persimmon (+11%) which has lifted  some of its  competitors higher in sympathy; Berkeley Group (BKG LN) +2.3%, Barratt Developments (+2.1%) and Taylor Wimpey (+1.7%). Finally, Provident Financial (+74%) tops the Stoxx 600 after announcing its rights issue and settlement with the FCA.

Top European News

• EU Said to Stoke Brexit Tensions With 100-Page Draft Exit Deal
• World’s Biggest Wealth Fund Returned $131 Billion in 2017
• Business Gauge Picks up in Italy Shortly Before Election
• Provident Surges on Better-Than-Feared FCA Pact, Dividend Plan

In currencies, above average Dollar demand for end of February FX portfolios seems to be keeping the broader Usd afloat as the DXY meanders around the mid-point of a tight 89.690-830 range. Currency markets also erring on the side of caution ahead of Fed chair Powell’s House testimony and (potentially) any further clues about risks around the FOMC consensus for 3 hikes in 2018. Indeed, individual G10 pairs are equally restrained within narrow bands, with Eur/Usd holding between 1.2300-50 amidst mixed EZ inflation data (German states soft, so far vs firmer Spanish headline and harmonised prints) and Cable not deviating outside 1.3950-1.4000 despite some Gbp negative Brexit reports. Perhaps Sterling deriving some support from latest M&A developments and Comcast’s mega Gbp22 bn bid for Sky. Usd/Jpy looks even more tethered to the 107.00 level, with export supply capping the upside and buying interest supporting ahead of 106.50. Elsewhere, some further movement in Eur/Sek after Swedish trade data and more dovish-sounding Riksbank rhetoric with the cross inching above the circa 10.0800 high from 2016 to 10.0900.

In the commodities complex, both WTI and Brent crude futures have continued to pull back from recent highs despite the softer USD as concerns over mounting US production remains a key theme with IEA Chief Birol stating that the US is to be largest oil producer by next year and sees US output exceeding 11mln bpd by late this year. In metals markets, spot gold is relatively steady at this stage of the session with markets awaiting Fed Powell’s testimony later today. Elsewhere, Chinese steel futures saw another session of gains overnight amid speculation over further extensions to output curbs. Iraqi oil production is around 4.35mln bpd, according to Iraq oil ministry official.

US Event Calendar

• 8:30am: Advance Goods Trade Balance, est. $72.3b deficit, prior $71.6b deficit, revised $72.3b deficit
• 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 0.4%; Retail Inventories MoM, prior 0.2%, revised 0.2%
• 8:30am: Durable Goods Orders, est. -2.0%, prior 2.8%; Durables Ex Transportation, est. 0.4%, prior 0.7%
• 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.5%, prior -0.6%; Cap Goods Ship Nondef Ex Air, est. 0.3%, prior 0.4%
• 9am: House Price Purchase Index QoQ, prior 1.4%; FHFA House Price Index MoM, est. 0.4%, prior 0.4%
• 9am: S&P CoreLogic CS 20-City NSA Index, prior 204.2; CS 20-City MoM SA, est. 0.6%, prior 0.75%
• 10am: Richmond Fed Manufact. Index, est. 15, prior 14
• 10am: Conf. Board Consumer Confidence, est. 126.5, prior 125.4; Present Situation, prior 155.3; Expectations, prior 105.5

Central Banks

• 8:30am: Fed Powell’s Congressional Testimony is Released
• 10am: Fed’s Powell Testifies to House Financial Services Committee

 

DB’s Jim Reid concludes the overnight wrap

The highlight today will be German inflation (1.3% yoy expected) and new Fed Chair Powell’s testimony at 3pm GMT. Mr Powell will be speaking on behalf of the FOMC, and our economists fully expect him to reiterate that a “gradual” path of policy normalization remains the order of the day. However, he will also likely discuss emerging upside risks to the growth outlook in the wake of recent fiscal policy changes. In this respect, the minutes of the January 31 FOMC meeting provide a good template for Powell’s prepared remarks. Recall that last week’s minutes indicated that “Most members noted that recent information on inflation along with prospects for a continued solid pace of economic activity provided support for the view that inflation on a 12-month basis would likely move up in 2018 and stabilize around the Committee’s 2% objective in the medium term.” In short, Powell will likely convey the message that with an improving growth and labor market outlook, the Fed continues to gain confidence that the inflation side of its dual mandate will soon be met. Outside of this the market will be fascinating to see how he handles his first big public appearance in the new role.

Staying in the US, Mr Quarles who became a Fed Governor last October seemed reasonably upbeat last night. He noted “it has been quite some time since the (US) economic environment looked as favourable as it does now” and  that “some of the factors that have been holding back growth…could shift, moving the economy onto a higher growth trajectory”. On rates, he reiterated the Fed’s view of “further gradual increases in rates will be appropriate…”, while noting the Fed will be “looking at Volcker rule recalibrations over the next few months”.

Elsewhere, the Fed’s Bullard reiterated his dovish views that the Fed should avoid an aggressive pace of rate hikes unless incoming macro data surprise to the upside. He added “these are good times for the US economy, but not as good as they’ve been at other junctures”.

This morning in Asia, markets have broadly followed the positive US lead last night with the Nikkei (+0.95%) and Kospi (+0.21%) both up, while the Hang Seng is marginally down (-0.15%) and China’s CSI 300 -1.35% lower as we type.

Earlier the S&P was up for the third consecutive day (+1.18%) and now +7.7%  above its recent lows while only -3.2% below its all-time high. Within the S&P, all sectors but utilities were up with gains led by the telco, tech and financial stocks. In tech, an equally weighted market cap index on the FANG stocks is now back at its record highs and 12.1% higher than its recent lows. The Dow (+1.58%) and Nasdaq (+1.15%) also rallied yesterday. Back in Europe, all markets were higher, with the Stoxx 600 (+0.50%), DAX (+0.35%) and FTSE (+0.62%) modestly up. The VIX fell for the fourth straight day to 15.80 (-4.2%).

In government bonds, core 10y bond yields were little changed (UST 10y -0.5bp; Gilts -1.2bp; Bunds flat) while peripherals outperformed with yields down 4-5bp. Gains were led by Italy, in part as the governing Democratic Party leader Renzi noted “we’ll never form any government with extremists” as per the La Stempa newspaper. Turning to currencies, the US dollar index and Sterling both dipped marginally, while the Euro rose 0.18%. In commodities, WTI oil was up for the third straight day (+0.57%). Elsewhere, precious metals gained c0.5% (Gold +0.37%; Silver +0.77%) and other base metals were mixed but little changed (Copper -0.21%; Aluminium -0.70%; Zinc +0.51%).

Away from markets and onto Mr Draghi’s Parliamentary address where he seemed slightly dovish and broadly stuck to prior commentaries. On QE, he noted “the possible extension of QE has not been discussed by the Governing Council”. On inflation, he said “we’re generally more confident that it is proceeding towards our target”, but we also “have to be persistent and patient because the underlying inflation has yet to show more convincing signs of a sustained upward adjustment”. Further, “the evolution of inflation remains crucially conditional on an ample degree of monetary stimulus provided by the full set of our monetary policy measures….” On the outlook, he noted that the “…economic situation is improving constantly”, but “uncertainties continues to prevail”, so “we need the right blend” of measures. Finally on FX, he reiterated that the recent volatility in the Euro deserves close monitoring.

Tuning to Brexit headlines. The UK opposition leader Corbyn has confirmed what had been well flagged namely that the Labour party’s supports staying in a customs union with the EU post Brexit and is calling for cross party support. This is contrary to the government’s position, which issued a statement later to indicate “the government will not be joining a customs union…we want to have the freedom to sign our trade deals”. Elsewhere, Mr Corbyn reiterated there was no need for a second referendum on Brexit but does want a meaningful vote in Parliament at the end of the Brexit negotiations. Looking ahead, the EU is expected to publish a draft Brexit treaty on Wednesday and PM May will outline her vision of Brexit this Friday. Staying in Europe and delving into Italian credits a bit more, Michal Jezek in

my team published a report “IG Strategy: Credit Pricing Ahead of the Italian Elections”. He notes that sovereign credit has outperformed corporates YTD and hedging flows have turned CDS indices into major underperformers, pushing the CDS-bond basis to the extreme. The report also analyses the relative performance of Italian corporate credit. It concludes that iTraxx Europe indices now trade too cheap to be efficient hedges around the event and given the strong hedging flows, it suggests that current levels offer an attractive entry point for the strategic CDSbond basis compression trade recommended earlier. Refer to the full report here.

Finally, our US economists have built on their recent work on procyclical and acyclical inflation. Their new estimates of r-star (neutral funds rates) derived from procyclical inflation are about 20bps higher than estimates derived from core inflation, as is standard with r-star estimates. This implies that the Fed has even further to hike before getting to neutral than commonly assumed. That said, they view their analysis as evidence which makes them more confident in their current outlook for four rate hikes in 2018 and a terminal rate above 3%.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the February Dallas Fed manufacturing index was above market at 37.2 (vs. 30 expected) and the highest since December 2005. The January Chicago Fed National activity index was below expectations but still above 0 at 0.12 (vs. 0.25 expected). Elsewhere, the January new home sales fell 7.8% mom to the lowest since August (593k vs. 647k  expected). In the UK, the January Finance loans for housing was 40.1k (vs. 37k expected).

Looking at the day ahead, Germany’s flash February CPI and the Euro area’s January money supply prints are due. Then a range of February confidence indicators are due for the Euro area, France and Italy. In the US, the February Richmond Fed and CB consumer confidence index will be out. Further, a deluge of data including: January advanced goods trade balance, wholesale and retail inventories, durable and capital goods orders along with the December FHFA and S&P corelogic house price index are also due. Onto other events, the Fed’s Powell testifies in front of the House Financial services committee. Elsewhere, the ECB’s Weidmann and Mersch as well as BOE’s Sam Woods will speak. The Brookings Institution will host a conversation with the former Fed Governor Yellen and Bernanke. Finally, the EU negotiator Barnier will brief European affairs ministers.

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Amid a national debate over arming teachers to prevent or minimize the death toll in school shootings, South Carolina State Rep. Steven Long (R) announced a contest on Monday to give away three Smith & Wesson 9mm handguns; one to a K-12 teacher or staff, one to a teacher or staff in higher education, and a third to “any freedom-loving patriot who wishes to participate in the drawing.” 

I’m giving away 3 handguns!! 1 to a K-12 teacher/staff, 1 to a higher ed faculty/staff, and 1 to a freedom loving patriot!
Read all about it here: https://t.co/SDMGsdO6tT pic.twitter.com/mvAmObSHan

— Steven W Long (@StevenLongSC) February 26, 2018

Long is also offering free Concealed-Carry training towards obtaining a Concealed Weapons Permit (CWP).

 “The teachers will also be given a gift certificate to attend a class to earn their Concealed Weapons Permit (CWP). In this class they will learn about the laws surrounding the carrying of firearms and self defense, how to properly handle and fire a handgun, and they will be given a field test to ensure they can shoot accurately. All of which is required by law to obtain a CWP.”

The contest is being held in partnership with Schell Arms, South-Carolina based Federal Firearms Licensed (FFL) business.

South Carolina legislators have introduced several bills which would allow teachers to carry, including H3052, H4956, H4972, H3248, and H3262.

“We must do everything we can to ensure the safety of children in schools, both K-12 and our higher education institutions. Allowing teachers or school staff members to carry is the most efficient and most effective way to do this,” Rep Long said. “…for those who are willing and able, we need to allow them this protection. I’m open to a discussion regarding the specifics of a program that allows teachers to carry, but it is undeniable that we must take action on this issue.”

Long’s contest follows several comments by President Trump on the topic of arming teachers, who told participants at a White House “listening session” on gun control; “If you had a teacher who was adept at firearms, they could very well end the attack very quickly, and the good thing about a suggestion like that — and we’re going to be looking at it very strongly, and I think a lot of people are going to be opposed to it. I think a lot of people are going to like it. But the good thing is you’re going to have a lot of [armed] people with that.”

President Trump on concealed carry for teachers: “If you had a teacher who was adept at firearms, they could very well end the attack very quickly.” pic.twitter.com/SnKjyYH0uw

— Josh Caplan (@joshdcaplan) February 21, 2018

Earlier in the week, Butler, Ohio sheriff Richard K. Jones offered free firearms training to 50 teacher, which he posted to his department’s official Facebook page. After a flood of applicants, Jones was forced to cut it off at 300 participants. 

“We put it online, we thought we’d get 20 school teachers maybe. Within 20 minutes we had 40. Within an hour we had 100. Within four hours we had 200. By the next morning, at 300, we cut it off,” Butler County Sheriff Richard Jones said on “Fox & Friends.”

If you listen 2 media teachers do not want to carry weapons in schools. We have over 300 said want 2.

— Richard K. Jones (@butlersheriff) February 24, 2018

“We have to do something here because we can’t wait for our government to do anything. All they do is fight, they get nothing done,” said Jones.

“We can’t stop the school shootings, we can’t stop guns from being manufactured, but we’ve got to do something, we’ve got to make the schools more of a hardened target,” said Sheriff Jones – adding that the class was open to teachers, secretaries and maintenance workers.

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US cable-and-content behemoth Comcast issued a brazen challenge to News Corp. mogul Rupert Murdoch by offering a 22 billion pound ($31 billion) cash bid to buy Sky, challenging Murdoch’s Twenty-First Century Fox – which is trying to buy the 61% of the company that it doesn’t already own – and Walt Disney, which recently purchased nearly all of the entertainment assets once owned by the Murdoch-controlled 21st Century Fox.

Comcast’s bid comes out to GBP12.5 per share in cash for the UK broadcaster, a 16% premium to the GBP10.75 per share that Fox recently agreed to.

Sky shares soared nearly 20% on the news.

As Reuters points out, Sky services 23 million homes across Europe and is known for its technological innovation. Murdoch has been trying to gain 100% control of the company, but has been stymied by British regulators, who have raised concerns about his stewardship stemming from the News of the World phone-hacking scandal and his already vast influence over UK media. Murdoch already owns several of the UK’s most widely circulated print publications, as well as his 39% stake in Sky, According to Reuters.

The UK competition regulator has said the bid raises media plurality concerns because taking full control of Sky News would give Murdoch’s family too much control over UK news media. The family trust controls Fox and News Corp, the publisher of the Sun and the Times.

The Guardian reported that Comcast is also exploring a bid for 21st Century Fox’s entertainment assets, which include Sky and the 20th Century Fox film studio. Such a bid could potentially disrupt the $66 billion deal that Fox struck with Disney to purchase the entertainment assets.

Sky has 1,300 employees in the UK working in broadcasting and film and TV production, including the firm behind Downton Abbey. Comcast promised that Sky’s headquarters would remain at Osterley in southwest London. In what appears to be a Murdoch snub, the company in its press release noted that it likely wouldn’t have any trouble securing the regulatory approvals.

“Comcast intends to use Sky as a platform for growth in Europe. We already have a strong presence in London through our NBC Universal international operations, and we intend to maintain Sky’s UK headquarters,” said the Comcast chairman and chief executive, Brian Roberts.

“Adding Sky to the Comcast family of businesses will increase our international revenues from 9% to 25% of company revenues. We would like to own the whole of Sky and we will be looking to acquire over 50% of the Sky shares. We are confident that we will be able to receive the necessary regulatory approvals.”

Dissatisfied with the Murdoch bid, Sky investors have already been calling for an increase of 10% to 25%, up to £13.40 a share Following Sky’s £3.57 billion deal to secure the lion’s share of the Premier League broadcasting rights at a 14% discount earlier this month.

Analysts have already chimed in this morning, saying they don’t expect Comcast’s bid to be the last offer for Sky. Hedge fund manager Crispin Odey said the Murdochs will be furious about the bid, saying they will regard this as “tanks on their lawn.”

Mirabaud’s Neil Campling says investors can expect a counter-bid as Fox likely won’t walk away from Sky given how advanced the regulatory clearance process is. Campling added that this bid “marks a floor, not the end to this particular saga.” Sky would be a good strategic fit for Comcast because it would allow it to diversify away from the US. While Disney would clearly benefit from owning Sky’s European assets, it might conclude that it already has enough to do in the US.

An analyst at Jeffries said a counter “well above 12.5 pounds now becomes very likely.”

Now we wait for Fox and Disney to comment on the bid, and the inevitable counter offer.

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Authored by Vanand Meliksteian via OilPrice.com,

There are few issues as divisive in the EU as the planned construction of Nord Stream 2, another direct gas infrastructure connection between Germany and the Russian Federation.

With the climate of relations between Russia and the West just above the point of freezing, the agreement between Gazprom and its Western counterparts Shell, OMV, ENGIE, Uniper, and Wintershall has caused critics of closer relations with Russia to mobilize.

While supporters of the project insist that it isn’t more than a commercial deal (mostly Western European countries and companies), opponents (Central and Eastern Europe) are convinced that the deal will give Moscow more unwanted influence.

Here, we’ll discuss the arguments of opponents and proponents of the proposed gas infrastructure in order to make a modest recommendation regarding Europe’s common interest.

Currently, over almost 40 percent of the gas consumed in the EU originates from Russia, making Moscow the biggest supplier, followed closely by Norway and Algeria. Even though many policy declarations were made to diversify and several serious crises involved Russia, the export of Siberian gas to Europe increased spectacularly — from 8 percent in 2017 to a record 195 bcm.

The most important reasons behind this growth are the expanding economy of the Eurozone and domestic gas fields that are producing less. Although Europe currently possesses 208 bcm of LNG capacity, of that just 51 bcm was used in 2016. Most of the capacity was idle due to much cheaper pipeline gas, especially from Russia.

Proponents, therefore, argue that Nord Stream 2’s importance will increase over the years as demand for imported gas will do the same. Furthermore, several crises over the years between Russia and Ukraine have severely damaged Europe’s energy security (and Russia’s, opponents argue). According to supporters, Nord Stream 2 will improve Europe’s position, as transit through Ukraine can be avoided and risks decreased.

Opponents, however, argue that it is exactly these crises that have shown Russia’s real intention and the necessity to import less from Moscow. Gas is not a commodity but a tool or weapon in the eyes of the Kremlin, they argue. Increased import will provide Russia with more means to pressure Europe in case of a crisis. Furthermore, this would withhold Ukraine from approximately 3 billion euros in yearly transit fees, thus weakening the country financially and its position to negotiate new contracts with Moscow.

While some Eastern and Central European countries have made strides in reducing their dependence on Siberian gas, the financial backing of Shell, OMV, ENGIE, Uniper and Wintershall for Nord Stream 2 is important in terms of resources and reputational improvement. This also supports the argument (primarily made by Germany) that it is a commercial and not a political project.

When it comes to Nord Stream 2, Central and Eastern Europe receive the support of the European Commission. The Commission has been trying to subvert the project, but until now has failed to do so. Its own legal department has rejected the claims of the commission to extend the existing acquis on energy law to Nord Stream 2.

Also, unbundling legislation — under which the majority owner of the infrastructure cannot be the same as the producer of the energy going through it — does not adhere, as the pipeline goes through the Baltic Sea, which is outside of the jurisdiction of the EU. While Germany has already granted a permit to construct the pipeline onto its shores, other littoral states of the Baltic Sea have yet to do so. However, even if this is not permitted, Gazprom could divert the route.

Although opponents are correct in assuming that Nord Stream 2 will weaken Ukraine’s position and that it is highly likely more gas will be imported from Russia, the overall effect on the EU is rather positive than negative.

This infrastructure does not diversify, as the source of energy is the same. However, increasing the options for import strengthens Europe’s overall position, as the recent explosion at the Baumgarten gas hub in Austria shows. Due to its strategic location in central Europe, the hub has a significant influence on gas prices on the European continent. The explosion caused a major disruption in gas flows from east to west, which influenced LNG prices as far as Asia.

The massive amount of idle regasification capacity shows that in times of crisis, Europe can import from a variety of sources when necessary. This was the case in the UK, which received the first commercial LNG cargo of the Russian Yamal project. Although the project suffered under sanctions, Novatek, together with Total and Chinese investors, finished the project on time and on budget. This shows that the current gas market is truly global and those policy goals and economic fundamentals collide in some cases.  

Europe’s position vis-á-vis its energy suppliers would be much more improved when internal market restrictions are further dissolved, interconnectors built, and a truly coherent single energy market created.

Although Nord Stream 2 is majority-owned by Gazprom, all the infrastructure within the single market adheres to EU law, thus unbundling legislation. Due to this measure, Europe could receive energy for the lowest price available while maintaining a safeguard in the shape of idle LNG regasification capacity.

Finally, Ukraine should be able to purchase its gas from Europe instead of Russia for a fair price and without risking a crisis.

Maybe it’s time for a divorce between Kiev and Moscow instead of forcing cooperation on them. 

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Following approval from Germany’s conservatives to cooperate with the Social Democrats (SPD) on several political impasses, German Chancellor Angela Merkel sat down with Germany’s RTL Aktuell where she discussed a number of policy positions – including an acknowledgement of Germany’s growing “no-go” zones, and the need to do something about them.

Amid a spike in crime attributed to refugees, German officials been slowly acknowledging the negative impact of the flood of migrants taken in after the destabilization of Libya and similar regions – even going so far as to offer thousands of Euros to rejected asylum seekers. 

The scheme, which the government has dubbed “Your country. Your future. Now!” will run until February next year. Individual migrants can receive up to €1,000 ($1,185) if they voluntarily return home, while families can receive up to €3,000 to do the same. The assistance is meant to help reintegrate rejected asylum seekers in their home countries. –Quartz

While on the topic of keeping Germany safe, Merkel said “It’s always a point to me that internal security is the state’s duty, the state has the monopoly of power, the state has to make sure that people have the right to it whenever they meet and move in a public space.” (translated)

Merkel then discussed Germany’s “zero tolerance” policy of enforcement: 

“That means, for example, that there are no no-go areas, that there can be no rooms where no one dares to go, and there are such spaces, and you have to call that by name and you have to do something about it. And I think that Thomas de Maizière did a very good job as Minister of the Interior, but we also said now that we want a model police law, we can not stand by the different security standards in different states and that needs to be as unified as possible“

No Go Zones

Following the dramatic influx of primarily North African migrants, several German publications have documented the growing problem of “no-go” zones – areas in which it is unsafe for non-Muslim citizens to travel. 

The newspaper, Bild, and the newsmagazine, Focus, among others, have identified (here, here and here) more than 40 “problem areas” (Problemviertel) across Germany. These are areas where large concentrations of migrants, high levels of unemployment and chronic welfare dependency, combined with urban decay, have become incubators for anarchy.

In an article entitled “Ghetto Report Germany,” Bild describes these areas as “burgeoning ghettos, parallel societies and no-go areas.” They include: Berlin-Neukölln, Bremerhaven-Lehe/Bremen-Huchting, Cologne-Chorweiler, Dortmund-Nordstadt, Duisburg-Marxloh, Essen-Altenessen, Hamburg-Eidelstedt, Kaiserslautern-Asternweg, Mannheim-Neckarstadt West and Pforzheim-Oststadt.

The problem of no-go zones is especially acute in North Rhine-Westphalia (NRW), Germany’s most populous state. According to the Rheinische Post, NRW problem areas include:

Aachen, Bielefeld, Bochum, Bonn, Bottrop, Dorsten, Duisburg, Düsseldorf, Essen, Euskirchen, Gelsenkirchen-Süd, Gladbeck, Hagen, Hamm, Heinsberg, Herne, Iserlohn, Kleve, Cologne, Lippe, Lüdenscheid, Marl, Mettmann, Minden, Mönchengladbach, Münster, Neuss, Oberhausen, Recklinghausen, Remscheid, Rhein-Erft-Kreis, Rhein-Sieg-Kreis, Solingen, Unna, Witten and Wuppertal. –Gatestone Institute

“In Berlin or in the north of Duisburg there are neighborhoods where colleagues hardly dare to stop a car — because they know that they’ll be surrounded by 40 or 50 men.” These attacks amount to a “deliberate challenge to the authority of the state — attacks in which the perpetrators are expressing their contempt for our society,” said Rainer Wendt, President of the German Police Union.

There are plenty of other stories which seem to never make their way into the European mainstream news outlets, which have been documented by groups such as the Gatestone Institute. 

• “Once Duisburg-Marxloh was a popular shopping and residential area. Now clans claim the streets for themselves. The police are powerless. The descent of the district is nightmarish.” — N24 Television.

• Police say they are alarmed by the brutality and aggression of the clans, who are said to view crime as leisure activity. If police dare to intervene, hundreds of clan members are mobilized to confront the police.

• A 17-page report prepared for the NRW State Parliament revealed how Lebanese clans in Duisburg divide up certain neighborhoods in order to pursue their criminal activities, such as robbery, drug dealing and extortion.

• “Further data collection is not legally permissible. Both internally and externally, any classification that could be used to depreciate human beings must be avoided. In this respect, the use of the term ‘family clan’ is forbidden from the police point of view.” — Ralf Jäger, Interior Minister, North Rhine-Westphalia.

• Two police officers stopped a driver who ran a red light. The driver got out of the car and ran away. When police caught up with him, they were confronted by more than 50 migrants. A 15-year-old attacked a policeman from behind and began strangling him, rendering him unconscious.

Duisburg, which has a total population of around 500,000, is home to an estimated 60,000 mostly Turkish Muslims, making it one of the most Islamized cities in Germany. In recent years, however, thousands of Bulgarians and Romanians (including Sinti and Roma “gypsies”) have flocked to Duisburg, creating a volatile ethno-religious cauldron.

So while Europeans were tricked into accepting an army of migrants under the guise of a humanitarian effort, liberal EU leaders are finally coming to grips with the fact that the spike in crime associated with their new “neighbors” isn’t going over too well with local populations. 

And while the EU has gone so far as to criticize Poland, Hungary and Bulgaria for not accepting migrants – Germany is, at the same time, finally addressing the very “no-go” zones that have made life a living hell for German citizens who dare enter. 

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