Category: zerohedge

Following dismal PMIs across Europe yesterday, the region’s equity market rebound is rolling over today and has triggered the dreaded ‘death cross’, last seen in September 2015 before stocks legged notably lower.

The 50-day moving-average has crossed below the 200-day moving-average just as the dead-cat-bounce in European stocks rolls over…

Notably, while US equities managed to retrace around 61.8% of its drop…

European equities only managed around 38.2%…

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

After its 100% bounce off the early Feb lows, Bitcoin has slipped back below $10,000 this morning…

Catching down to Nasdaq’s flatline from Friday…

 

Bitcoin is back to unchanged for February…

 

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There were two distinct reactions in the Euro to today’s ECB Minutes, released this morning.

At first, the EUR jumped following initial headlines that the ECB acknowledged that revisiting the guidance would be “part of a the regular reassessment” going forward, but noting that any changes are premature at this stage.

 In this context, it was remarked that communication on monetary policy would continue to develop according to the evolving state of the economy in line with the ECB’s forward guidance, with a view to avoiding abrupt or disorderly adjustments at a later stage. However, changes in communication were generally seen to be premature at this juncture, as inflation developments remained subdued despite the robust pace of economic expansion.

* * *

The language pertaining to the monetary policy stance could be revisited early this year as part of the regular reassessment at the forthcoming monetary policy meetings. In this context, some members expressed a preference for dropping the easing bias regarding the APP from the Governing Council’s communication as a tangible reflection of reinforced confidence in a sustained adjustment of the path of inflation. However, it was concluded that such an adjustment was premature and not yet justified by the stronger confidence.

Predictably, this hawkish take prompted a kneejerk move higher in the EUR as algos bought the EUR.

However, what traders focused on next was a rather explicit ECB concern over the weakness of the dollar, as the statement once again highlighted fears that the US administration was deliberately trying to engage in currency wars, something which Mario Draghi famously remarked on during the Q&A in the last ECB press conference, when asked for his response to Mnuchin’s statement.

Recall that toward the end of Draghi’s Q&A on January 25, the head of the ECB took a direct swipe at recent US dollar jawboning, accusing Mnuchin, Ross, and essentially the entire Trump administration of verbally manipulating the USD, for not “complying” with the “agreed terms” which have led to euro gains due to comments from “someone else.”

As Citi said at the time, it is “fairly remarkable for a central banker of Draghi’s standing to speak out like this to criticize another bloc’s foreign exchange policies or practices.”

Fast forward to today, when the minutes of the January ECB meeting showed Draghi’s fears were widely shared among the bank’s decision makers.

“Concerns were also expressed about recent statements in the international arena about exchange rate developments and, more broadly, the overall state of international relations,” the ECB said. “The importance of adhering to agreed statements on the exchange rate was emphasised.” Those agreements explicitly rule out competitive devaluations.

And then this:

It was also pointed out that the bilateral exchange rate of the euro against the US dollar had changed more than the euro’s nominal effective exchange rate. This had led market participants to attribute recent exchange rate volatility more to the weakness of the US dollar than to the strength of the euro. However, explaining the US dollar weakness was not straightforward, given the strength of recent data releases and the fiscal and monetary policy outlook in the United States. This also had to be taken into account when considering the consequences of the exchange rate appreciation for the euro area economy. In addition, an appreciation relative to an invoicing currency such as the US dollar could be more important for the strength of the pass-through than suggested by its weight in the effective exchange rate.

The volatility in the euro was, the account concluded, “a source of uncertainty which required monitoring”.

And so, after all that, the EUR first spiked, then slumped, and was last seen trading just off session lows.

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

Originally posted at iBankCoin.com

A Marjory Stoneman Douglas High School student said he was approached by CNN to ask a question at Wednesday night’s town hall, but declined after the network gave him a “scripted question” instead of allowing him to ask his own question.

Colton Haab, a member of the Junior ROTC who shielded students while shots rang out, Local 10 news that he was going to ask a question about hiring veterans as armed security guards.

“CNN had originally asked me to write a speech and questions and it ended up being all scripted,” Haab told WPLG-TV.  “I don’t think that it’s going get anything accomplished. It’s not gonna ask the true questions that all the parents and teachers and students have.”

CNN conducted the town hall on the Florida school shooting with Senators Marco Rubio (R-FL) and Bill Nelson (D-FL), along with Broward County Sheriff Scott Israel and the NRA’s Dana Loesch. Students and parents took turns asking questions about gun control and ensuring school safety.

“I expected to be able to ask my questions and give my opinion on my questions,” Haab said.

 “Colton Haab, a member of the Junior ROTC who shielded classmates in the midst of terror says he did not get to share his experience,” WPLG’s Janine Stanwood explained.

“Colton wrote questions about school safety, suggested using veterans as armed school security guards but claims CNN wanted him to ask a scripted question instead so he decided not to go,” reported Stanwood.

“CNN had originally asked me to write a speech and questions and it ended up being all scripted,” Haab said. “I don’t think that it’s going get anything accomplished. It’s not gonna ask the true questions that all the parents and teachers and students have.”

In response CNN released the following statement Thursday morning:

CNN did not, and does not, script any questions for town hall meetings, ever.

Someone is lying.

via Zero Hedge http://ift.tt/2CDMI3p Tyler Durden

While most of the world saw regional equity markets covered in red overnight, China’s Shanghai Composite rebounded, rising 2.2% for two reasons: i) a delayed reaction to global equity prices after the country’s 5-day Lunar New Year holiday and ii) China’s latest crackdown on anything that can precipitate a selloff, like a high VIX for example.

And so, just like on August 24, 2015 when the US market crashed so hard in the pre-market, the VIX briefly “went offline” as input signals went haywire, China also decided to stop updating its local version of the VIX Index, taking its latest step to discourage speculation in equity-linked options after authorities tightened trading restrictions last week.

As Bloomberg first reported, China’s state-run Securities Index Co. didn’t publish a value for the SSE 50 ETF Volatility Index on its website Thursday. An employee who answered a Bloomberg phone call said the company stopped updating the measure to work on an upgrade, however according to “people familiar”, the move was designed to curb activity in the options market.

It’s unclear when the index will resume.

Just like the US VIX, the SSE 50 volatility index is the most widely-followed indicator of Chinese investor anxiety. Which is a problem because also just like the VIX, the index doubled in the span of a few days earlier this month. And the last thing Beijing wants is nervous investors thinking that other investors are nervous… and selling in a blind panic. 

So what to do? Why shut it down of course, just like all global equity markets will be shut down once the real selling begins.

According to Bloomberg, the decision to stop publishing the index forms part of a broad effort by Chinese officials to contain market turbulence.

Other measures this month have included volume limits on active options traders and informal directives encouraging some major stockholders to purchase more shares. Chinese leaders have in the past faced criticism for meddling too much in markets, particularly during the nation’s 2015 equity crash.

The VIX blackout follows tighter curbs on options traders unveiled from Feb. 12, people familiar with the matter said last week, in part because they were alarmed by a gain of as much as 2,250 percent in the price of one bearish contract on the SSE 50 ETF (also known as the China 50 ETF). The fund is China’s only equity-linked product with options.

Demonstrating surprising wisdom, unlike the U.S., China has avoided approving derivatives and funds tied to its volatility gauge. And while it won’t have its own homegrown XIV collapse, China has more than enough potential candidates that will unleash the next crisis: just last night we reported that while China may not have inverse VIX ETFs, it has another, far more serious problem – pervasive stock loans, hundreds of which have seen margin calls in recent days, forcing dozens of companies to simply halt trading.

In fact, a pattern is emerging in China: any time there is a problem with any one asset, or any one indicator… why, just turn it off.

For now these “solutions” are working: volume in the SSE 50 ETF options was about 40% lower than the 20-day average on Thursday, according to data compiled by Bloomberg. What traders are more interested in is what happens when the volume hits 0% and nobody trades anymore, and – tied to that – what happens when China’s creeping admission that its capital markets are broken finally seeps through.

via Zero Hedge http://ift.tt/2HEgZ5R Tyler Durden

Yesterday, what many strategists had believed would be a quiet release of minutes from the Fed’s Jan. 31 meeting was, in reality, anything but. Once the market had deemed that the Fed had released another batch of neutral “goldilocks” minutes, the Dow powered higher, climbing 300 points before, upon closer reading, investors abruptly changed their minds and decided that four interest-rate hikes in 2018 (with Goldman even saying 5 are possible) – one more than the central bank had anticipated in December – was the most likely scenario. This sent stocks spiraling lower during the last 90 minutes of trading, forcing another close in the red.

So perhaps it’s unsurprising, given the events of yesterday, that St. Louis Fed President (and FOMC non-voter in 2018) James Bullard appeared on CNBC’s Squawk Box this morning to try and talk the market back from the ledge. Bullard is one of the most – if not the most – dovish regional Fed presidents, and is best known for casually hinting that QE4 is just around the corner any time stocks suffer a sharp selloff.

Granted he could not do that this time, but he did push as far as he could, and futures traders, desperate for good news after Goldman Sachs anticipated last night that the Fed could even hike rates five times this year, bid the market higher after the regional Fed president said that “everything would need to go perfectly” for the central bank to hike rates four times this year.

Bullard told CNBC that the central bank needs to be careful raising interest rates this year, lest a policy mistake choke off economic growth and trigger the beginning of the next (long overdue) downturn. He cautioned that the Fed must continue to take its cues from the economy, which, despite the inflation furor triggered by signs of rising wages earlier this month, is still exhibiting only minimal price gains.

The Fed should shift from “reactive” to “proactive” only if inflation reaches or surpasses its 2% target with further price gains expected. The inflation story still has “a way to go”, Bullard added.

Market-implied expectations for the number of rate-hikes in 2018 surged to new cycle highs (2.82 hikes) shortly before yesterday’s minutes were released.

To Bullard’s credit, the Fed still is completely clueless why wages aren’t rising faster, as the excerpt from yesterday’s minutes revealed:

During their discussion of labor market conditions, participants expressed a range of views about recent wage developments. While some participants heard more reports of wage pressures from their business contacts over the intermeeting period, participants generally noted few signs of a broad-based pickup in wage growth in available data. With regard to how firms might use part of their tax savings to boost compensation, a few participants suggested that such a boost could be in the form of onetime bonuses or variable pay rather than a permanent increase in wage structures. It was noted that the pace of wage gains might not increase appreciably if productivity growth remains low. That said, a number of participants judged that the continued tightening in labor markets was likely to translate into faster wage increases at some point.

And judging by all US equity futures turning green after Bullard’s appearance, it appears that mission was again accomplished.

via Zero Hedge http://ift.tt/2EJH4mq Tyler Durden

Global stocks took another leg down during the early part of Thursday’s session, sliding to one-week lows in the wake of Wednesday’s unexpectedly market-moving FOMC minutes which confirmed the Fed was on track to raise interest rates several times this year, sending bond yields to new multi-year highs amid prospects for 4 rate hikes on deck (and according to Goldman, even 5 possible).

However, after sliding initially, S&P futures have since staged a rebound, rising as much as 20 points from session lows, and are currently back in the green, modestly above 2,700.

The rebound was helped by the end of the USD rally, as the dollar’s boost following the Fed minutes proved short-lived as the U.S. currency struggled to gain for a fifth day. Meanwhile, the euro was unfazed by a miss in German IFO data, finding support from broad dollar selling after the London open in a rather slow session. The dollar weakness sent EURUSD back to 1.23, while GBP underperforms after a disappointing GDP revision and the ongoing Brexit saga

 

In other key FX pairs, per BBG:

• USD/JPY declines 0.4% as a slide in local stocks spurs demand for haven assets
• EUR/USD edges up; premium to hedge political risks rising, with two-week smile flattening as demand for low-delta puts remains strong amid higher volatility in the front end
• GBP/USD resumes its slide, trades 0.2% lower, after data showed that the U.K. economy expanded less than previously estimated in 4Q as consumers and businesses absorbed faster price increases

Three rate rises are now almost fully priced in for 2018, compared with two as recently as December, and some analysts are even contemplating the possibility of as many as five rate hikes in 2018.

And while 10Y TSY yields have traded rangebound within 2 bps of 2.93%, German bunds have unwound the sell-off seen post-FOMC Minutes, following disappointing German IFO data after Wednesday’s weaker-than-forecast European PMIs.  The “transatlantic spread” between German and U.S. 10-year borrowing costs widened to near a year high at 220 bps, reflecting the diverging monetary policy expectations between the two countries.

The 3% level on 10Y TSY yields is seen as a huge psychological milestone for bulls and bears alike. In the meantime though the yield, which hit four-year highs around 2.96 percent after the minutes, retreated to 2.93%. Two-year yields touched new nine-year peaks.

A break in the U.S. 10- year treasury above the psychological level of 3% may prove sufficiently attractive to spur demand among foreign investors. This would support the dollar against CEEMEA currencies, Rabobank EMFX strategist Piotr Matys writes in a note to clients.

The next hurdle for markets will be minutes from the European Central Bank’s last meeting at 1230 GMT, with investors keen to see if there was more talk of an eventual unwinding of stimulus. One school of thought says that shifting perceptions about the ECB’s policy outlook had a significant role to play in the surge in U.S. Treasury yields that began in September and picked up speed last month, roiling global stocks.

European equities followed Asia peers lower: the Stoxx Europe 600 Index slid as all the major national equity gauges in the region fell. In terms of sector specific moves, material names modestly lag their peers following price action in the complex as well as a disappointing earnings update from Anglo American (-4%) which has sent their shares near the bottom of the FSTE 100; with the index also hampered by lacklustre earnings from the likes of British American Tobacco (-4.6%), Barratt Developments (-4.0%) and BAE systems. However, losses for UK stocks have been capped by a well-received earnings report from Barclays (+5.1%) which allied with upside in AXA shares (+1.2%) post-earnings has also supported the financial sector.

Earlier in Asia most shares retreated, though China’s market bucked the trend as it reopened after a holiday. The Nikkei (-1.1%) and Hang Seng (-1.5%) saw losses of over 1%, while ASX 200 (+0.1%) saw initial 0.4% gains trimmed, with price action in Australia largely dictated by the slew of earnings.

“The market is pricing in the possibility of a tighter Fed over time,” Evan Brown, director at UBS Asset Management, who previously worked on the open market trading desk at the New York Fed, told Bloomberg TV in New York. On a day-to-day basis “you’re going to see volatility, you’re going to see equities get a little skittish when yields are rising, but as you look over the long term, fundamentals on the economy are very strong.”

However, for now Bloomberg notes that markets remain fragile as February is shaping up as one of the worst months for global equities in more than a year as concerns about a pick-up in inflation and expensive stock prices outweigh evidence of a buoyant U.S. economy. With recent data underpinning the view that inflation is no longer lagging, the OIS space shows traders pricing in just shy of three U.S. rate hikes over the next 12 months.

Elsewhere, gold retreated alongside most commodities.  WTI and Brent crude trade lower albeit off worst levels after falling victim to the firmer USD despite last night’s unexpected build in the API report. As a reminder, due to the President’s Day Holiday on Monday the weekly DoE report will be released today. In metals markets, gold prices have also been hampered by the firmer USD, however, the move to the downside has perhaps been contained due to the price action seen in EU stocks this morning. Elsewhere, steel prices were seen lower during Asia-Pac trade as Chinese participants slowly returned from holiday, with a bulk of the market not expected to fully return until next week.

Bulletin headline summary from RanSquawk

• European equities (-1%) have kicked the session off on the back-foot as European participants digest the fall-out of yesterday’s FOMC minutes
• The DXY has nailed 90.000 with the aid of hawkish FOMC minutes, but Usd/Jpy continues to buck the broader trend amidst the ongoing global stock market retracement
• Looking ahead, highlights ECB minutes, US weekly jobs, DoEs and a slew of speakers

Market Snapshot

• S&P 500 futures down 0.3% to 2,691.50
• MSCI Asia Pacific down 0.8% to 175.69
• MSCI Asia Pacific ex Japan down 1% to 575.54
• Nikkei down 1.1% to 21,736.44
• Topix down 0.9% to 1,746.17
• Hang Seng Index down 1.5% to 30,965.68
• Shanghai Composite up 2.2% to 3,268.56
• Sensex unchanged at 33,846.31
• Australia S&P/ASX 200 up 0.1% to 5,950.88
• Kospi down 0.6% to 2,414.28
• STOXX Europe 600 down 0.9% to 377.57
• German 10Y yield fell 0.9 bps to 0.712%
• Euro up 0.02% to $1.2286
• Brent Futures down 0.6% to $65.00/bbl
• Italian 10Y yield fell 2.0 bps to 1.78%
• Spanish 10Y yield fell 1.2 bps to 1.501%
• Brent Futures down 0.6% to $65.00/bbl
• Gold spot down 0.1% to $1,322.89
• U.S. Dollar Index up 0.07% to 90.06

Top Overnight News

• Fed’s Quarles says the natural rate of interest is increasing in the U.S. and that the economy is in the best shape that it has been since the crisis
• U.K. GDP growth in 2017 was revised down to 1.7% from 1.8%, the weakest since 2012, as price rises led to household budgets being squeezed leading to slowing growth in a number of consumer-facing industries
• U.K. Prime Minister Theresa May will shut her most senior cabinet ministers away in a room until late Thursday night in an effort to force them to agree what kind of Brexit they want. But officials warn in private that the most divisive decisions may get kicked down the road
• The U.S. Treasury Department sold $35 billion of five-year notes at a yield of 2.658 percent. Bid/cover ratio fell to 2.44 from 2.48, indicating weaker demand
• U.S. central bankers sent a strong message Wednesday that an expansion with “substantial underlying economic momentum” could sustain more rate hikes; Treasuries sold off aggressively into the 3pm ET settlement as gains sparked by minutes of FOMC’s Jan. 31 meeting were quickly faded
• Federal Reserve Bank of Minneapolis President Neel Kashkari said the central bank’s symmetric approach to its 2% inflation target means “the math says we should be able to tolerate 2.5 percent for five years,” after running at 1.5 percent for five years
• Euro bulls are struggling to push the currency above $1.25 this year, just as the $1.20 level proved a blocking point in 2017
• Do 10-year Treasury yields hit 3 percent and retreat, or does positioning signal a sharp move higher? Open interest on 10-year Treasury futures suggests 3 percent may not be the crucial level after all

Asian markets trading broadly in the red with exception of the Shanghai Comp (+2.2%) which outperforms are  participants plays catch up from their elongated break. The prospect of ‘further’ gradual rate hikes as noted in the most recent FOMC minutes boosted speculation that 4 rate hikes could be on the table particularly that these minutes were before the strong wage data in the most recent NFP and inflation data last week, which had subsequently pushed bond yields higher with the US 10yr yield hitting 2.95%, while equities slumped late in the US session. This transpired in Asia, with the Nikkei (-1.1%) and Hang Seng (-1.5%) seeing losses of over 1%, while ASX 200 (+0.1%) saw initial 0.4% gains trimmed, with price action in Australia largely dictated by the slew of earnings. In credit markets, the belly of the curve underperformed, with JGB 10yr yields tracking UST yields higher, while a firm 20yr JGB auction supported longer dated debt. Japan PM Abe Adviser Hamada says the BoJ should consider buying foreign bonds.  PBoC sets CNY mid-point at 6.3530 (Prev. 6.3428).

Top Asian News

• China’s VIX Stops Updating Amid Government Scrutiny of Options
• Indonesia Sees Jump in 10-Year Bond Yield as ‘Temporary’
• India Releases Plan to Strengthen State Telecom Cos; MTNL Surges
• China Junk Bonds Show More Resilience on Local Investor Support
• Sembcorp Marine Extends Loss by Most Since 2008 After Earns Miss

European equities (-1%) have kicked the session off on the back-foot as European participants digest the fall-out of yesterday’s more hawkish than anticipated FOMC minutes which saw rate-setters take a confident view on the growth and inflation outlook. In terms of sector specific moves, material names modestly lag their peers following price action in the complex as well as a disappointing earnings update from Anglo American (-4%) which has sent their shares near the bottom of the FSTE 100; with the index also hampered by lacklustre earnings from the likes of British American Tobacco (-4.6%), Barratt Developments (-4.0%) and BAE systems. However, losses for UK stocks have been capped by a well-received earnings report from Barclays (+5.1%) which allied with upside in AXA shares (+1.2%) post-earnings has also supported the financial sector.

Top European news

• Neo-Fascist Beaten to a Pulp in Sicily: Italy Campaign Trail
• HSBC Chairman Is Said to Prepare Board Reduction: Sky
• Fosun Buys Controlling Stake in Lanvin
• FCA Probing Barclays Bank’s Treatment of Clients in Default
• German Business Confidence Slips as Companies Face Bottlenecks

In currencies, the DXY has nailed 90.000 with the aid of hawkish FOMC minutes, but Usd/Jpy continues to buck the broader trend amidst the ongoing global stock market retracement and heightened volatility. Flow-wise, heavy supply at and just ahead of 108.00 is still capping the pair, while 108.02 represents Fib resistance and the headline looks increasingly toppy given lower peaks since the recent 107.90 high. Hence, the broader Dollar and index is struggling to maintain gains and mount a challenge of the next upside technical objective at 90.886 despite reclaiming more lost ground vs other G10 rivals. Eur/Usd has lost grip of the 1.2300 handle and could see more downside on the back of a significantly weaker than expected German Ifo survey, especially as the technical picture also looks bearish below its 1.2319 Fib level and with little in the way of support until 1.2206. Cable is testing bids under 1.3900 amidst latest Brexit-related UK political accusations aimed at PM May, but holding above chart support seen around 1.3830. As per the single currency, Sterling may be prone to further losses in wake of a data miss as UK Q4 GDP was downgraded on zero business investment during the quarter (again likely as a result of Brexit). Elsewhere, Usd/majors fairly flat as the DXY hovers just above the 90.000 level.

In the commodities complex, WTI and Brent crude trade lower albeit off worst levels after falling victim to the firmer USD despite last night’s unexpected build in the API report. As a reminder, due to the President’s Day Holiday on Monday the weekly DoE report will be released today at the rescheduled time of 1600GMT. In metals markets, gold prices have also been hampered by the firmer USD, however, the move to the downside has perhaps been contained due to the price action seen in EU stocks this morning. Elsewhere, steel prices were seen lower during Asia-Pac trade as Chinese participants slowly returned from holiday, with a bulk of the market not expected to fully return until next week.

US Event Calendar

• 8:30am: Initial Jobless Claims, est. 230,000, prior 230,000; Continuing Claims, est. 1.93m, prior 1.94m
• 10am: Leading Index, est. 0.7%, prior 0.6%
• 11am: Kansas City Fed Manf. Activity, est. 18, prior 16
• 10am: Fed’s Dudley to Speak at New York Fed Briefing on Puerto Rico
• 12:10pm: Fed’s Bostic Speaks at Banking Conference in Atlanta
• 3:30pm: Fed’s Kaplan Speaks on Trade Panel in Vancouver

DB’s Jim Reid concludes the overnight wrap

The main thing that jumped yesterday was US yields after the FOMC minutes. Not long after the release yields were actually flat and the S&P 500 up around 1%. However then 10 yr US yields reacted and rose 6bps to 2.951% and the S&P 500 closed -0.55% – the lowest level in a week.

The minutes indicated that “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate”. On the economy, it noted that “a number of participants indicated that they had marked up their forecasts for economic growth in the near term relative to …the December meeting” and that “several others suggested that the upside risks to the near-term outlook for economic activity may have increased.” On inflation,”almost all participants who commented agreed that a Phillips curve type inflation framework remained useful…”. Elsewhere, some participants said that they saw an appreciable risk that inflation would continue to fall short of the Fed’s objective, but overall inflation is expected to “move up” this year and stabilise around 2% over the medium term. On wage gains, “a number of participants judged that the continued tightening in labour markets was likely to translate into faster wage increases at some point”.

Notably, the relatively hawkish minutes was before the January wage growth and CPI / PPI prints, so it seems reasonable to assume that if the Fed was getting more confident in their growth and inflation outlook at their meeting,  the subsequent data releases would have only added to their views.

Staying in the US, the flash February PMIs were all above market, with the composite PMI at 55.9 (vs. 53.8 previous), services at 55.9 (vs. 53.7 expected) and manufacturing PMI at 55.9 (vs. 55.5 expected). Conversely, Europe’s flash PMIs were a fair bit below expectations but remain at solid levels. The Euro area’s composite PMI came in at 57.5 (vs. 58.4 expected), while the services PMI was 56.7 (vs. 57.6 expected) and manufacturing PMI at 58.5 (vs. 59.2 expected).

Across the region, Germany’s composite PMI was 57.4 (vs. 58.5 expected) and France’s composite PMI was 57.8 (vs. 59.2 expected), with both countries’ services and manufacturing PMI also lower than expectations.

Given the weaker European PMI numbers yesterday I made a point of speaking to our head Euro Economist Mark Wall last night about his views on them. He was relatively relaxed as his forecasts always assumed some moderation in growth which the PMIs would have to eventually acknowledge if he were to be correct. He said that the momentum in recent months was implying 0.9% qoq GDP growth compared to a DB forecast of 0.6% qoq in H1. Yesterday’s numbers narrows these upside risks in H1. In H2 he continues to see a loss of momentum as capacity bites, credit conditions get capped and competitiveness erodes, etc.

He does think the recent financial conditions shock was too fleeting to believe it was the obvious culprit for the weaker numbers though. Even at 0.6%, GDP growth is above trend and despite the weaker PMIs, Mark believes that capacity will continue to be absorbed and the economy tighten. In fact he cited the fact that PMI delivery times lengthened in February, implying a further acceleration in underlying PPI inflation over the next 6-9 months and potential upside risks to inflation in H2.

Turning to news on the Brexit transition period where the EU had previously suggested an end date of December 2020. However, according to a draft UK government legal proposal obtained by Bloomberg, it suggests the actual date may be up for some debate. The document indicated “the UK believes the period’s duration should be determined simply by how long it will take to prepare and implement the new processes….that will underpin the future partnership” and that “the UK agrees this points to…around two years, but wishes to discuss with the EU the assessment that supports its prosed end date”. Later on, the Chief of Staff for Brexit Secretary Mr Jackson noted the UK has not changed its transition plans, which is “around two years”. Elsewhere, the EC’s Juncker “still believes that (both sides) should be able to agree (on the withdrawal agreement) by October and agree on the final terms…”

Staying in the UK, the December unemployment rate edged up from its c42 year low and rose for the first time since July last year to 4.4% (vs. 4.3% expected), while the average weekly earnings growth was in line and steady mom at 2.5% yoy. Speaking in front of the Treasury Committee, the BOE’s Haldane noted “…the pick-up in wages is starting to take root” and that “intelligence from our agents suggests wage settlements this year were going to pick up, perhaps  with a number with a three in front of it….” Further, he added risks for the UK economy were “to the upside”.

Elsewhere, the BOE Governor Carney reiterated that cash rates need to rise in the “coming months” but it would be ‘gradual and limited” and refrained from providing guidance on potential timing. The implied Bloomberg odds of a May rate hike rose c4ppt to 61.5%.

This morning in Asia, markets are broadly lower with the Nikkei (-1.25%), Hang Seng (-0.98%) and Kospi (-0.58%) all down as we type. Elsewhere, UST 10y yield is down c1bp while the three key Chinese bourses are up 1.8%-2.1% after trading resumed following the New Year holidays.

Now recapping other market performance from yesterday. US bourses reversed earlier gains to close modestly lower (S&P -0.55%; Dow -0.67%; Nasdaq -0.22%). Within the S&P, all sectors fell with losses led by the real estate, energy and telco stocks. European markets were mixed but little changed as they closed well before the FOMC minutes were released. The Stoxx 600 edged up 0.16% while the FTSE rose 0.48% but the DAX dipped 0.14%. The VIX fell for the first time in three days to 20.02 (-2.8%).

Over in government bonds, core European 10y bond yields fell 1-3bp (Bunds & OATs -1.3bp; Gilts -3.1bp), with the latter partly impacted by the unemployment print. In the US, the treasury sold $35bn of five year notes at a yield of 2.658% with a bid-to-cover ratio of 2.44x (vs. 2.48x previous). Elsewhere, the UST 2y, 5y, 10y yields rose 4.7bp, 4.1bp and 6bp respectively. Turning to currencies, the US dollar index rose for the third trading day (+0.47%), while the Euro and Sterling fell 0.43% and 0.56% respectively. In commodities, WTI oil rose 0.39% to $61.79/ bbl while precious metals were little changed (Gold -0.34%; Silver +0.36%).

Away from the markets and onto three Fed speakers overnight. The Fed’s Kashkari said “Wall Street overreacts to everything….we can’t make policy based on market blips up and down”. On rates, he noted, “we debate each word change in the (FOMC) statement…a lot of debate goes into those…and I think (the word) “further” (in the last statement) was intended to say continuing the current path we’re on”. Elsewhere, the Fed’s Harker reiterated his views of two rate hikes in 2018 and unemployment falling to 3.6% by mid-2019 while the Fed’s Kaplan reaffirmed his call for “gradual and patient” tightening and expects an unemployment rate of 3.6% by year end. Notably, none of the three speakers are policy voters this year.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the January existing home sales was below expectations at 5.38m (vs. 5.6m) and down 4.8% yoy. Notably, the number of homes available for sale fell 9.5% yoy, partly continuing the upward pressure on home prices where the median selling price was up 5.8% yoy. Elsewhere, the UK’s January public sector net borrowing was broadly in line at -£11.6bln (vs. – £11.4bln expected).

Looking at the day ahead, the February confidence indicators and the final January CPI report in France are due, followed by the Germany’s IFO survey for February and the second estimate of Q4 GDP in the UK. In the US, data releases include initial jobless claims, the January leading indicators index and the February Kansas City Fed manufacturing activity index print. Japan’s CPI report for January will be out in the late evening. Away from the data, the Fed’s Dudley and Bostic are due to speak.

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In a bombshell development, the former head of Israel’s Communications Ministry has agreed to turn state’s witness in one of several ongoing corruption investigations against Prime Minister Bibi Netanyahu, local media reports.

Schlomo Filber – appointed by Netanyahu to head the Communications Ministry, finalized the agreement to testify against his former boss in a Tuesday night agreement – making him the first member of the Prime Minister’s inner circle to testify against the Israeli leader. 

Filber was arrested on Sunday on suspicion of bribery, fraud, breach of trust and obstruction of justice in connection with an investigation into ties between Israel’s largest telecom company, Bezeq, and senior government officials. Filber is suspected of granting financial and other benefits to Shaul Elovich, who owns a controlling interest in Bezeq, in exchange for favorable coverage towards Mr. Netanyahu and his wife, Sara on the Walla news website.

As part of the agreement made late Tuesday night, Filber offered police a detailed account of everything he knows about Netanyahu’s part in the so-called Case 4000, as well as others involved in the affair. According to the deal, Filber will not receive jail time.

Filber’s testimony is likely to establish the nature of the compensation given by the prime minister for the slanted coverage he received on Walla. –Haretz

Bibi and Sara Netanyahu have been embroiled in several ongoing corruption investigations, with some of the Prime Minister’s critics claiming he is now a political corpse. 

Netanyahu ousted the former Director of the Communications Ministry, General Avi Berger – replaceing him with Filber, who had been a close confidant for years. On his first day in office, Filber met with Elovich where the two were said to have reached a mutual understanding over the relationship between Bezeq and the Netanyahu administration. After the matter was investigated by the State Comptroller, Filber was considered a de-facto agent of Bezeq within the ministry. 

While under investigation by the Securities Authority in August of last year, Filber said he wouldn’t testify against Netanyahu – and told Channel 2 News that the Prime Minister had “never talked to him” about discussing positive news coverage with Bezeq. “The subject never came up in our conversations.” 

Investigators subsequently recommended Filber for prosecution. As part of his deal to turn state’s witness, he is likely to testify that he was “simply following orders” from his old pal Bibi. 

More alleged favors

In a second claim against Netanyahu, the Prime Minister is suspected of offering the position of Attorney General to a retired judge in return for her expeditious closing of the case against his wife, Sara Netanyahu, in which she is accused of improprieties over household expenses at their official residence.

Netanyahu is accused of offering the job to retired Israeli judge Hila Gerstl through an intermediary, Nir Hefetz – a former personal spokesman for the Netanyahus. The case has been ongoing for several years, with details of Hefetz’s involvement revealed on Tuesday over the alleged attempt to shut it down. 

Netanyahu responds

“What has happened over the last two days is simply that the world has gone mad. It’s a scandal,” said Netanyahu. “They’ve brought two delusional, false allegations as part of a campaign of persecution against me and my family that has been going on for years already.”

“First, regarding Bezeq: All decisions on Bezeq were made by professional committees, by the professionals, under close legal supervision. There’s no Wild West here. There are no private decisions. All decisions are transparent and subject to oversight. Therefore, the claim that I worked to benefit Bezeq at the expense of substantive considerations is simply and fundamentally absurd.

“As for the second claim, which is no less delusional and no less malicious, regarding the appointment of the attorney general: I never spoke to Nir Hefetz on this issue, he never proposed anything to me on this issue, and you know what? I don’t believe he raised this possibility with anyone.”

Some have suspected that Netanyahu will now call a snap election in the next few months to try and stall the legal proceedings, however Haretz reports that it’s unlikely he’ll be the head of the Likud party by the time they would occur – and even less likely that he would win. 

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Authored by Jonathan Cook via The Strategic Culture Foundation,

Behind the scenes, Sweden wanted to drop the extradition case against Assange back in 2013. Why was this not made public? Because Britain persuaded Sweden to pretend that they still wished to pursue the case.

In other words, for more than four years Assange has been holed up in a tiny room, policed at great cost to British taxpayers, not because of any allegations in Sweden but because the British authorities wanted him to remain there.

On what possible grounds could that be, one has to wonder? Might it have something to do with his work as the head of Wikileaks, publishing information from whistleblowers that has severely embarrassed the United States and the UK.

In fact, Assange should have walked free years ago if this was really about an investigation – a sham one at that – into an alleged sexual assault in Sweden. Instead, as Assange has long warned, there is a very different agenda at work: efforts to extradite him onwards to the US, where he could be locked away for good. That was why UN experts argued two years ago that he was being “arbitrarily detained” – for political crimes – not unlike the situation of dissidents in other parts of the world who are supported by western liberals and leftists.

According to a new release of emails between officials, the Swedish director of public prosecutions, Marianne Ny, wrote to Britain’s Crown Prosecution Service on 18 October 2013, warning that Swedish law would not allow the case for extradition to be continued. This was, remember, after Sweden had repeatedly failed to take up an offer from Assange to interview him in London, as had happened in 44 other extradition cases between Sweden and Britain.

Ny wrote to the CPS: “We have found us to be obliged to lift the detention order … and to withdraw the European arrest warrant. If so this should be done in a couple of weeks. This would affect not only us but you too in a significant way.”

Three days later, suggesting that legal concerns were far from anyone’s mind, she emailed the CPS again: “I am sorry this came as a [bad] surprise… I hope I didn’t ruin your weekend.”

In a similar vein, proving that this was about politics, not the law, the chief CPS lawyer handling the case in the UK, had earlier written to the Swedish prosecutors: “Don’t you dare get cold feet!!!”

In December 2013, the unnamed CPS lawyer again wrote to Ny: “I do not consider costs are a relevant factor in this matter.” This was at a time when it had been revealed that the policing of Assange’s detention in the embassy had cost Britain at that point £3.8 million. In another email from the CPS, it was noted: “Please do not think this case is being dealt with as just another extradition.”

These are only fragments of the email correspondence, after most of it was destroyed by the CPS against its own protocols. The deletions appear to have been carried out to avoid releasing the electronic files to a tribunal that has been considering a freedom of information request.

Other surviving emails, according to a Guardian report last year, have shown that the CPS “advised the Swedes in 2010 or 2011 not to visit London to interview Assange. An interview at that time could have prevented the long-running embassy standoff.”

Assange is still holed up in the embassy, at great risk to his physical and mental health, even though last year Sweden formally dropped an investigation that in reality it had not actually been pursuing for more than four years.

Now the UK (read US) authorities have a new, even less credible pretext for continuing to hold Assange: because he “skipped bail”. Apparently the price he should pay for this relatively minor infraction is more than five years of confinement.

London magistrates are due to consider on Tuesday the arguments of Assange’s lawyers that he should be freed and that after so many years the continuing enforcement of the arrest warrant is disproportionate. Given the blurring of legal and political considerations in this case, don’t hold your breath that Assange will finally get a fair hearing.

Remember too that, according to the UK Foreign Office, Ecuador recently notified it that Assange had received diplomatic status following his successful application for Ecuadorean citizenship.

As former British ambassador Craig Murray has explained, the UK has no choice but to accept Assange’s diplomatic immunity. The most it can do is insist that he leave the country – something that Assange and Ecuador presumably each desire. And yet the UK continues to ignore its obligation to allow Assange his freedom to leave. So far there has been zero debate in the British corporate media about this fundamental violation of his rights.

One has to wonder at what point will most people realise that this is – and always was – political persecution masquerading as law enforcement.

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One of President Trump’s earliest campaign staffers who was fired in August 2015 is expected to meet with Special Counsel Robert Mueller’s team in Washington DC on Thursday, according to ABC News.

Sam Nunberg, who was fired over racially charged Facebook posts and later sued by Trump for $10 million over a breach of confidentiality agreement, will be accompanied by defense attorney Patrick Brackley. Nunberg received an invitation to meet with the Special Counsel following the publication of Michael Wolff’s book “Fire and Fury: Inside the Trump White House,” in which the former staffer is reported to have called President Trump an “idiot,” in a conversation with former Trump strategist Steve Bannon. 

The book quotes the former Trump aide describing everything from his allegiance with ex-strategist Steve Bannon to Trump’s decision to run for president and attempts to explain the Constitution to the rookie political candidate. –Politico

“I got as far as the Fourth Amendment before his finger is pulling down on his lip and his eyes are rolling back in his head,” wrote Wolff of Nunberg’s account.

Despite being fired from the campaign, Nunberg has remained a close Bannon ally and a loyal supporter of President Trump. Last December, he called for the President to fire White House attorney Ty Cobb over what he described as an unrealistic expectation over when the Russia investigation will end. 

“In my humble opinion and many others believe that Cobb is not very competent and he’s not an asset to the president,” Nunberg told Politico.

Trump sued Nunberg in May 2016, alleging he was involved with leaking the details of a verbal altercation between former Trump campaign manager Corey Lewandowski and White House communications director Hope Hicks. 

Nunberg fired back, calling the allegations baseless, and retaliation for his subsequent suport for Trump challenger Ted Cruz during the GOP primary. 

“The Trump Campaign is attempting to bring a frivolous and retaliatory arbitration proceeding against me essentially to punish me and shut me up,” Nunberg stated at the time.  

Three months later, Trump and Nunberg settled the lawsuit “amicably,” according to CNN. 

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