Category: zerohedge

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• German 10-Year Government Bond Yields Dip Below Zero for First Time (WSJ)
• U.K. Moves Closer to Brexit as The Sun Backs ‘Leave’ Vote (BBG)
• Global Stock Selloff Deepens as Investors Seek Safer Assets (WSJ)
• Futures tread lower for fourth day; Fed meet awaited (Reuters)
• Oil falls as Brexit threat rattles markets (Reuters)
• Polls show increasing support for Brexit; Murdoch’s Sun backs ‘Leave’ (Reuters)
• U.K.’s Upstart Lenders Face Brexit Shock in First Downturn (BBG)
• Clinton and Sanders to meet as DC marks the final primary (AP)
• Trump Faces New Challenges Testing Terror Playbook Against Clinton (BBG)
• Netanyahu, Facing Trump or Clinton, Urged to Take Obama Aid (BBG)
• Thousands converge on Paris to protest against changes to labor law (Reuters)
• Muslim leaders condemn Florida massacre, brace for backlash (Reuters)
• EU Envoy to Turkey Resigns as Tensions Threaten to Derail Migration Deal (WSJ)
• Yellen Faces Rate Dilemma as U.S. Economy Runs Short of Workers (BBG)
• Italian ex-PM Berlusconi’s heart surgery went well: source (Reuters)
• South Korea probe into Lotte Group widens with more raids (Reuters)
• Giant Wildfire Is No Longer the Canadian Oil Industry’s Biggest Problem (BBG)

 

Overnight Media Digest

WSJ

– Microsoft agreed to buy LinkedIn for $26.2 billion, marking the largest deal in the software giant’s history, in a bet the professional social network will give a jolt to its widely used Office portfolio of productivity applications. (http://on.wsj.com/1Pqnaa8)

– The U.S. Supreme court struck down Puerto Rico’s effort to restructure its public utility debts, ruling Congress precluded the territory from enacting its own bankruptcy law. (http://on.wsj.com/1PqltcT)

– Libya’s sovereign-wealth fund, in a long-awaited trial that started Monday, alleged Goldman Sachs took advantage of its lack of financial sophistication to draw it into losing trades. (http://on.wsj.com/1PqlRZ1)

 

FT

* TransCanada and IEnova consortium have won a tender to build an 800-km sub-sea pipe from southern Texas to the Gulf of Mexico. The pipeline is expected to commence operations by October 2018.

* Privately owned bank Berenberg is looking to double its employees in the United States by the end of 2017. The bank opened an equity-trading desk in New York last year.

* JIC Group and Wise Road Capital are buying Standard Products, a unit of NXP Semiconductors for about $2.8 billion.

* Airbus said it would use China-based manufacturers to assemble its helicopters as a part of a deal to supply 100 helicopters for 700 million euros

 

NYT

– Microsoft Corp’s blockbuster $26.2 billion takeover of LinkedIn Corp might be an attempt to travel through time. Specifically, to the heady heights of yesteryear’s technology valuations. (http://nyti.ms/1ZMVZME)

– With sales sluggish and stiffening competition from rivals like Google and Facebook, Apple announced on Monday coming improvements to the software that runs its devices, including a revamped Music app, an easier login process and better information-sharing across devices. (http://nyti.ms/1U6dUdo)

– Donald Trump said his campaign would revoke the press credentials of The Washington Post, effectively prohibiting journalists from one of the nation’s largest newspapers from joining the traveling press corps of the presumptive Republican nominee. (http://nyti.ms/28AA80Z)

– The Supreme Court rejected an effort in Puerto Rico to allow public utilities there to restructure $20 billion in debt, striking down a 2014 Puerto Rico law. (http://nyti.ms/1U9iRHD)

 

Britain

The Times

Mounting fears that Britain will vote to leave the European Union this month have sent the cost of insurance against a collapse in the pound to an eight-year high. (http://bit.ly/1VW1N7q)

Andy Clarke, chief executive of Asda, has been ousted from his role managing one of Britain’s “Big Four” grocers after a steep fall in sales and market share. He will be replaced by the head of Walmart’s Chinese business, Sean Clarke. (http://bit.ly/1VW2ei5)

The Guardian

Hermes Investment Management is spearheading an effort to break with the City’s notorious short-termism and push fund managers to focus on the social, environmental and economic consequences of investment decisions. (http://bit.ly/1VW1kSB)

FIFA has welcomed the decision by its financial auditor KPMG to resign. The break in a decade-long relationship was announced Monday, months after KPMG said it would review its work with football’s scandal-hit world governing body. (http://bit.ly/1VW0xkO)

The Telegraph

Barclays is the British bank most exposed to the referendum on the UK’s membership of the EU, as its international operations will be hit the most by Brexit according to analysts. (http://bit.ly/1VW0LbI)

Schneider Electric has resuscitated tie-up talks with software company Aveva, six months after abandoning plans for a 1.3 billion pounds ($1.85 billion) merger. (http://bit.ly/1VW2MV4)

Sky News

Goldman Sachs has rejected a demand from members of Parliament to probe into the collapse of BHS, that would drag its executives deeper into their inquiry. (http://bit.ly/1VW0Z2j)

Two directors of the vehicle which owned BHS until it plunged into administration in April discussed the payment of a 250,000 pounds ($355,150) bonus despite the retailer’s ongoing cash flow problems. (http://bit.ly/1VW2Kwv)

The Independent

Mike Ashley, the founder of Sports Direct, has written to administrators to confirm that he is still interested in buying parts of collapsed retail chain BHS. (http://ind.pn/1VW1jye)

Libya’s sovereign wealth fund will go head-to-head with Goldman Sachs in London’s High Court over claims that the U.S. investment bank exploited the fund by encouraging it to make risky and ultimately worthless investments. (http://ind.pn/1VW2625)

 

via http://ift.tt/1UsbmKa Tyler Durden

In the aftermath of the Euro 2016 fan violence between supporters of the Russian and English teams, moments ago UEFA announced that it has given Russia a suspended disqualification from the tournament, which means the Russian team will be expelled from the tournament in case of repeated violence. The Russian soccer federation will also be fined €150,000.

#BREAKING Football: Russia given ‘suspended disqualification’ from Euro 2016 over crowd trouble

— AFP news agency (@AFP) June 14, 2016

Oddly enough, as the NYT’s Sam Borden reports, England, whose fans were also involved in the altrecation, is not punished and was not investigated because “UEFA saw English fans as victims in the in-stadium violence.” In other words, this may be the first time in soccer hooliganism history when English fans were on the receiving end. This punishment came from UEFA Disciplinary Comm. UEFA Executive Committee, a different body, can still punish further.

The silver lining for Russian fans: the threat of DQ is related to any more incidents “inside the stadium.” Fighting on streets doesn’t count.

As Borden notes, “the acid test is this: If one flare goes off in the Russian section tomorrow v Slovakia, is Russia bounced?” The answer: most likely yes, as UEFA clearly wants to send a message to not just football holligans, but also to Russia.

More importantly, at this point, these incidents, and even an ejection, have no bearing on Russia hosting the World Cup in 2018 as UEFA isn’t FIFA, which may also explain the bias in favor of UK fans.

via http://ift.tt/1ttT3un Tyler Durden

The Fed’s June rate hike decision is due in just over 24 hours, but at this moment nobody cares for two reasons: the market implied probability of a rate hike announcement is 0% (technically, less than zero), and, as DB puts it, “the UK EU referendum is suddenly totally dominant in financial markets” – the increased focus comes as the leave campaign has gathered steam as 4 polls yesterday afternoon/evening put the ‘leave’ campaign ahead.

• ICM phone and online poll showed 53% would vote to leave EU and 47% to remain. (Guardian)
• YouGov/Times poll showed 46% would vote to leave EU and 39% to remain. (The Times)
• ORB/Telegraph poll showed 49% would vote to leave EU 48% to remain. (The Telegraph)

But it’s not just the volatile polls this time: overnight Britain’s biggest selling daily newspaper The Sun has backed the campaign for the UK to leave the European Union, delivering a major boost to the Brexit camp just nine days before the EU referendum. In a front-page article headlined “BeLEAVE in Britain” the Rupert Murdoch owned tabloid declared that remaining in the EU would be “worse for immigration, worse for jobs, worse for wages and worse for our way of life”.

 

This has boosted concerns which emerged over the weekend, that a major shift in UK public sentiment toward Brexit is underway, which in turn proceeded to slam global risk markets yesterday, and continued to do so today. In fact, increasing odds of a U.K. exit from the European Union boosted demand for havens, sending Germany’s 10-year bond yields below zero for the first time.

 

The risk off move was widespread: US treasuries rallied for a sixth day, with the yield falling four basis points to 1.57%, having reached the lowest since Feb. 11; Treasury yields fell to records in Australia and Japan, stocks in Europe slid for a fifth day, while the yen rose against its 31 major peers. U.S. oil slipped toward $48 a barrel. Naturally, the pound fell to two month lows as Brexit implied odds hit a new record high.

 

The shift in investor sentiment in just the past week has been phenomenal: from sheer complacency, there is now downright tangible panic just below the surface. Case in point: “Nobody buys bunds at these yield levels thinking they are attractive,” said Jussi Hiljanen, head of European macro and fixed income strategy at SEB A/B in Stockholm. “Demand for haven assets are being driven by fear of Brexit and growth concern. Investors are buying bunds as a hedge against uncertainty.”

Others piled on: “people are now insulating portfolios against the worst-case scenario as polls indicate some momentum for the Brexit camp, but the European policy response is underestimated,” said William Hobbs, head of investment strategy at the wealth-management unit of Barclays, from London. “It doesn’t mean the sentiment can’t swoon after, but the contribution of the U.K.’s economy to world’s capital markets is, in the end, limited. Europe looks better equipped than before to handle such a risk.”

And just like yesterday, European stocks are getting slammed the most, with the Stoxx Europe 600 Index sliding over 1% , heading for its biggest five-day decline since February, amid investor concern that the tide has turned in favor of Britain seceding from the EU; all 19 groups on the Stoxx 600 fell, with miners and carmakers sliding the most. Among shares active on corporate news, GAM Holding AG tumbled 18 percent after the Swiss asset manager said first-half profit will probably halve as performance fees dry up.

Futures on the S&P 500 slipped 0.2%, indicating equities will extend losses after falling for a third day Monday, their longest losing streak in a month. The MSCI Emerging Markets Index fell 0.8 percent, losing 4.7 percent in four days. Equity benchmarks in Russia, South Africa, Poland, Turkey and the Philippines declined at least 1.3 percent.

Investors will look to an advance report on retail sales Tuesday for indications of the health of the world’s largest economy.

Market Snapshot

• S&P 500 futures down 0.3% to 2063
• Stoxx 600 down 1.4% to 322
• FTSE 100 down 1.2% to 5970
• DAX down 1.2% to 9537
• German 10Yr yield down 5bps to -0.03%
• Italian 10Yr yield up 2bps to 1.48%
• Spanish 10Yr yield up 3bps to 1.53%
• S&P GSCI Index down 1% to 377.4
• MSCI Asia Pacific down 0.7% to 126
• Nikkei 225 down 1% to 15859
• Hang Seng down 0.6% to 20388
• Shanghai Composite up 0.3% to 2842
• S&P/ASX 200 down 2.1% to 5203
• US 10-yr yield down 4bps to 1.57%
• Dollar Index up 0.49% to 94.83
• WTI Crude futures down 1.5% to $48.15
• Brent Futures down 1.3% to $49.70
• Gold spot down 0.3% to $1,280
• Silver spot down 0.9% to $17.29

Global Top News

• 4 Polls Put U.K. on Course to Leave EU as ‘Sun’ Backs Brexit: Leave campaign ahead in both phone and online polling; biggest-selling newspaper uses front page to support leaving; Pound Falls Toward Two-Month Low on Brexit Vote Concern
• Fed Grip on $2.5 Trillion Treasury Stash Seen Firm for Years: Traders now see less than a 50% chance of the next increase coming this year
• NXP Selling Products Unit for $2.75b to Chinese Group: Buyers are Jianguang Asset Management and Wise Road Capital; Nexperia business had $1.2b in revenue in 2015
• Goldman Tied to Rival Bidder as Morgan Stanley Wins on Microsoft: Morgan Stanley won the role as Microsoft’s adviser on its agreement to buy LinkedIn, climbs to No. 1 dealmaker for tech this year
• BofA CEO Eyes Market-Share Gains as Europe Peers Sound Alarm: U.S. banks against tough rules, markets are still stronger than many overseas rivals, will take their business: CEO Moynihan
• Apple Opens Siri to Developers in Effort to Catch Up With Rivals: Apple unveiled software that will allow its voice- activated personal assistant Siri to order pizza, call for a cab or check a bank balance
• Redstone’s Ex-Girlfriend Seeks New Trial Over Mental Capacity: Manuela Herzer claims she has new evidence to prove her case

Looking at regional markets, we start in Asia which traded mostly lower following the losses in the US, where declines in energy dragged US stocks to 2-week lows, while the looming FOMC decision and Brexit concerns further added to the cautious tone. Nikkei 225 (-1.0%) fell below the 16,000 level as JPY broke below the 106.00 handle, while ASX 200 (-2.1%) is the laggard as it tracks the weakness across global equity markets on its return from its extended weekend. Elsewhere, the Shanghai Comp (+0.3%) shook off the negative tone after the PBoC upped its liquidity injection, while participants are also tentative ahead of the MSCI decision on whether to include Chinese A-shares. Finally, 10yr JGBs traded higher amid weakness seen in Japanese stocks, with yields across the curve pressured as 5yr, 10yr and 20yr yields all printed fresh record lows.

Top Asian News

• Yuan Approaches Five-Year Low Amid Concern Over Economy, Brexit: Currency impact from any MSCI inclusion to be marginal, SocGen says
• MSCI Is About to Make Its Big Call on World’s Worst Stock Market: Index clearing house to announce whether to add Chinese equities
• Best-Performing Asian Stock Market May Get Extra MSCI Boost: Pakistan has 70% chance of upgrade to EM, says Tundra Fonder
• India Wholesale Inflation Rate Exceeds Estimate to 19-Mo. High: WPI rate rises 0.79% in May, highest since Oct. 2014
• Disney Plays by China Rules With Shanghai Park, Media Strategy: Content ambitions hemmed in by piracy, government push-back
• Baidu Reduces Revenue Forecast on Ad Restrictions: Rules follow death of student who used results to treat health

In Europe markets continue to remain gripped by the global uncertainty surrounding the EU referendum and the Fed with more polls overnight leaning to the leave camp, subsequently adding fuel to the fire regarding Brexit fears.

• ICM phone and online poll showed 53% would vote to leave EU and 47% to remain. (Guardian)
• YouGov/Times poll showed 46% would vote to leave EU and 39% to remain. (The Times)
• ORB/Telegraph poll showed 49% would vote to leave EU 48% to remain. (The Telegraph)

As such, credit markets have yet again soared with global bond yields plummeting to record lows in the past couple of weeks, with Bunds now yielding negative for the first time on record, while Gilts also drop to all-time lows. Elsewhere, equities continue to find no reprieve with broad based weakness across Europe (Euro Stoxx -1.6%). In turn, the aforementioned global uncertainty, coupled with the fall in crude prices in which WTI has tested USD 48/bbl to the downside has seen pressured the FTSE 100 to break below 6,000 for the first time since February.

Top European News

• Germany’s 10-Year Bond Yield Declines Below Zero for First Time: The nation joined Japan and Switzerland in having 10- year bond yields of less than zero
• Daetwyler to Buy Premier Farnell for About $1.1b: Premier Farnell investors to get 165p/share in cash; offer represents a premium of about 51% from Monday’s close.
• France Braces for New Street Demonstrations Against Labor Bill: labor union CGT maintains opposition to government plans.
• Allianz Buying U.K. Stocks That Brexit Concern Makes Attractive: company fundamentals seen the same regardless of outcome
• GAM Holding Plummets After Saying 1H Profit to Drop 50%

In FX, the pound continued to weaken, dropping 0.9% versus the dollar, approaching a two-month low. Four opinion polls from three separate companies have put the campaign for Britain to leave the EU in front of the “Remain” camp. A gauge of the pound’s anticipated volatility over the next two weeks — a period that includes the June 23 referendum — climbed to the highest on record. “Risk sentiment has taken a beating with volatility up partly on latest Brexit polls still showing the U.K. is on course to quit the European Union,” said Ray Attrill, co-head of currency strategy at National Australia Bank Ltd. in Sydney. “Amid all of this, the yen continues to demonstrate its preeminent safe-haven characteristics.” Japan’s currency strengthened 0.5 percent, nearing its highest level since 2014. Against the euro, Japan’s currency rose for a sixth day, gaining 1 percent. China’s yuan weakened in Shanghai to within 0.2 percent of a five-year low reached in January, when a slide in the currency heightened concern about the health of the nation’s economy and spurred a selloff in global stocks and commodities. The MSCI Emerging Market Currency Index dropped 0.5 percent and is down 1.5 percent in four days. Russia’s ruble and South Africa’s rand led declines, declining at least 1.2 percent.

In commodities, commodities followed equity markets lower. Oil fell for a fourth day, with West Texas Intermediate crude sliding 1.6 percent to $48.08 a barrel and Brent dropping 1.5 percent to $49.61. The global oil market surplus is shrinking more quickly than expected and the market will be almost balanced next year as demand rises faster than production, the International Energy Agency said Tuesday. Zinc led a decline in industrial metals, falling 1.7 percent to $2,042.50 a ton. Copper lost 0.4 percent while aluminum gained 0.5 percent after Chinese smelters reached an agreement that could to cut production. Gold dropped 0.4 percent to $1,279.43 an ounce.

On the US calendar today, we have the retail sales number for May that is expected to clock in at +0.3% mom (+1.3% previous) and will likely be the most closely watched release since payrolls. Aside from that we will also see the import price index number for May which is expected to come in at +0.7% mom (+0.3% previous).

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

• Fixed income markets continue to extend, with Bund yields falling below 0% for the first time
• Equities tumble amid the risk off sentiment, which sees USD/JPY fall below 106.00
• Highlights Include US Import price index, Business Inventories and Retail sales advance as well as API Crude Oil Inventories

• Treasuries higher in overnight trading as recent polls in U.K. show “Leave” campaign ahead of “Remain” and that nation’s largest paper comes out in support of a Brexit; Germany’s 10-year government bond yields tumbled below zero for the first time on record.
• There’s no road map for European authorities facing the prospect of a British exit from their 28-nation union — by design. Officials in Brussels are under orders not to commit any scenarios to paper to avoid alarmist leaks
• The pound fell toward a two-month low as concern grew that the U.K. will vote to leave the European Union. A gauge of the pound’s anticipated volatility over the next two weeks climbed to the highest on record
• Banks took 2.46 billion pounds ($3.5 billion) in the first of three extra liquidity operations the Bank of England is holding this month to shore up funding as the U.K. considers its future in the European Union
• U.K. inflation unexpectedly held at 0.3% in May as rising transport costs were offset by falls in the price of clothing and food. Core inflation, which excludes volatile food and energy prices, remained at 1.2% 
• Spanish and Italian banks scoop up more than half of the money the European Central Bank provides in its regular refinancing operations, signaling that borrowing in financial markets remains difficult or unattractive for them
• Japan and Australian 10-year yields fell to record lows, extending a global bond market rally. Japan’s benchmark dropped to minus 0.17%. Australia’s slid to 2.05%
• The Federal Reserve’s liftoff from near-zero interest rates in December sparked angst over how quickly the central bank would start whittling down its $2.5 trillion hoard of Treasuries. It turns out that investors had little cause for concern

US Event Calendar

• 06:00am: NFIB Small Business Optimism, May; 93.8 vs est. 93.6 (prior 93.6)
• 8:30am: Import Price Index m/m, May, est. 0.7% (prior 0.3%)
  • Import Price Index y/y, May, est. -5.9% (prior -5.7%)
• 8:30am: Retail Sales Advance m/m, May, est. 0.3% (prior 1.3%)
  • Retail Sales Ex Auto m/m, May, est. 0.4% (prior 0.8%)
  • Retail Sales Ex Auto and Gas, May. est. 0.3% (prior 0.6%)
  • Retail Sales Control Group, May, est. 0.3% (prior 0.9%)
• 10:00am: Business Inventories, April, est. 0.2% (prior 0.4%)

DB’s Jim Reid concludes the overnight wrap

The UK EU referendum is suddenly totally dominant in financial markets. The increased focus comes as the leave campaign has gathered steam as 4 polls yesterday afternoon/evening put the ‘leave’ campaign ahead.

First the Guardian/ICM polls late yesterday afternoon UK time (after the close) reported a six point lead in their phone and online polls. The big story with this poll is that the lead was fairly consistent in both their phone and online polls. The former have tended to favour the ‘remain’ side. Recent polls showing ‘leave’ in the lead were mainly online polls only so this is a major development. Then at around 10pm BST two more polls continued to show a similar trend. A YouGov online survey showed ‘leave’ at 46% with ‘remain’ at 39%, and an ORB phone poll had ‘leave’ at 49% and ‘remain’ at 48% among those certain to vote. If there was a silver lining for ‘remain’ then it can be found in ORB suggesting a 49%/44% split in favour of ‘remain’ amongst all voters.

Events appear to be starting to mirror the Scottish referendum a touch (but perhaps more extreme) where markets were suddenly roiled by a shock poll suggesting ‘leave’ had moved into the lead. In the end this may have motivated those wanted to stay in the Union to vote. One wonders whether such recent polls will have a similar impact. Impossible to tell at this stage.

Asian equities are weak but the polls don’t seem at this stage to have accelerated the downward momentum seen yesterday. The Nikkei is around -1.5% lower as we type. Chinese equities are only around 0.25% lower as they await news tomorrow as to whether they get included in MSCI global indices. US equity futures are flat at the moment but expect the polls to be the focus of attention this morning in Europe and perhaps also that the front page of this morning’s Sun newspaper (the largest circulation in the UK) which has backed the ‘leave’ campaign.

Into the US close we only had the two ICM polls and equities again out-performed stateside but the S&P500 still fell -0.81%. However the real stunner was the 22.78% climb in the VIX from 17.03 at Friday’s close to 22.97 last night. US Equities rarely see such sanguine performance when the VIX climbs by that amount in a day. At least half of the rise followed the two ICM polls and could probably be seen as investors hedging their risk.

Before this European equity markets posted their fourth consecutive day of losses with the STOXX dropping by -1.84%. Every industry group was in negative territory again, with the losses once again led by Banks (-2.93%), Insurance (-2.66%) and Financial Services (-2.52%) sectors as Brexit concerns continued to mount even before the latest poll. The sell-off was once again broad based as only 19 out of the 600 companies in the index ended the day in the green. European credit markets followed suit with iTraxx Main and Crossover widening by +4.2bps and +16.2bps as both spreads hit their widest levels in three months.

At the other end of the risk spectrum, German 10Y yields inched marginally higher to 0.024% (+0.3bps) after touching all time lows yesterday. Meanwhile UK 10Y Gilt yields continued to drop, falling to 1.21% (-2.3bps) on the day.

Sterling faced a roller coaster ride on the day, swinging from an early low of 1.4116 to an intraday high of 1.4302 as speculation in the market falsely anticipated a ‘remain’ lead in the latest ICM poll before declining again to 1.4230 (-0.19%) after the actual correct ICM poll results were released. We’re at $1.4187 this morning after the additional polls.

Our Chief UK Economist George Buckley examines some of the latest issues surrounding the vote while also discussing some of the logistics of the actual day of the vote.

Staying with Europe I wanted to highlight a hard hitting piece by our Head of Research and Chief Economist David Folkerts-Landau suggesting that the ECB has seen policy gone awry with the need for them to change direction. He suggests that after seven years of ever-looser monetary policy there is increasing evidence that following the current dogma, broad-based quantitative easing and negative interest rates, risks the long-term stability of the eurozone. David believes that it is already clear that lower and lower interest rates and ever larger purchases are confronting the law of decreasing returns but they still push policy to further extremes. This causes mis-allocations in the real economy that become increasingly hard to reverse without even greater pain. Worse, by appointing itself the eurozone’s “whatever it takes” saviour of last resort, the ECB has allowed politicians to sit on their hands with regard to growth-enhancing reforms and necessary fiscal consolidation. Thereby ECB policy is threatening the European project as a whole for the sake of short-term financial stability. The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics. The piece argues that in its fight against the spectres of deflation and unanchored inflation expectations the ECB’s monetary policy has already become too loose. Hence, they believe the ECB should start to prepare a reversal of its policy stance. The expected increase in headline inflation to above one per cent in the first quarter of 2017 should provide the opportunity for signalling a change. A returning to market-based pricing of sovereign risk will incentivise governments to begin growth-friendly reforms and to tackle fiscal stability. He thinks flagging the move should dampen adverse reactions in financial markets. David concludes by suggesting that normalising rates would be seen as a positive signal by consumers and corporate investors. The longer the ECB persists with unconventional monetary policy, the greater the damage to the European project will be.

On the subject of ECB purchases yesterday we learnt that they purchased €348mn on their first day of corporate bond purchases last Wednesday. They were the only day’s purchases that would have settled before Friday’s reporting cut-off and only includes secondary. Obviously one has to be cautious about extrapolating one day of data, especially as they probably knew this one particular day would be a focal point until more data was collected. Having said this, the high number helps confirm our expectations that the ECB plans to conduct meaningful corporate bond purchases making us more confident that our ‘over €5bn/month’ forecast (average with big ranges over the holiday season) is achievable in the early stages at least, notwithstanding anomalies around the upcoming summer months. We probably won’t know until later in the year if they are starting to struggle to maintain a high initial run rate.

After a quiet day yesterday in terms of data, we have some interesting numbers due today. We’ll see the latest May inflation data for the UK with the CPI (expected +0.3% mom; +0.1% previous), RPI (expected +0.3% mom; 0.1% previous) and PPI (expected +0.3% mom; +0.4% previous) numbers due – all of which should be watched closely ahead of the BoE meeting on Thursday. We will also get the final May CPI numbers for Spain (expected +0.5% mom; +0.5% previous). Following that we also have the April industrial production numbers out for the Euro area (expected +0.8%; -0.8% previous).

Over in the US, we will see the NFIB Small Business Optimism index for May which is expected to be unchanged over the previous month (expected 93.6). Following that we have the retail sales number for May that is expected to clock in at +0.3% mom (+1.3% previous) and will likely be the most closely watched release since payrolls. Aside from that we will also see the import price index number for May which is expected to come in at +0.7% mom (+0.3% previous).

However everything is starting to be overshadowed by Brexit fears.

via http://ift.tt/1YpcyQr Tyler Durden

Submitted by Ralph Benko via The Pulse2016.com,

About a year ago, Stan Sorscher, Labor Representative, Society for Professional Engineering Employees in Aerospace, published a frighteningly important blog at The Huffington Post (where I also blog on a regular basis) headlined “Inequality — “X” Marks the Spot — Dig Here.”

It was as important for what it gets right as for what it misses.

Sorscher writes:

In 2002, I heard an economist characterizing this figure as containing a valuable economic insight. He wasn’t sure what the insight was. I have my own answer.

 

Figure 1. Something happened in the mid-70’s

The economist talked of the figure as a sort of treasure map, which would lead us to the insight. “X” marks the spot. Dig here.

 

This figure tells three stories.

 

First, we see two distinct historic periods since World War II. In the first period, workers shared the gains from productivity. In the later period, a generation of workers gained little, even as productivity continued to rise.

 

The second message is the very abrupt transition from the post-war historic period to the current one. Something happened in the mid-70’s to de-couple wages from productivity gains.

 

The third message is that workers’ wages – accounting for inflation and all the lower prices from cheap imported goods – would be double what they are now, if workers still took their share of gains in productivity.

 

[…]

 

This de-coupling of wages from productivity has drawn a trillion dollars out of the labor share of GDP.

 

Economics does not explain what happened in the mid-70s.

 

It was not the oil shock. Not interest rates. Not the Fed, or monetary policy. Not robots, or the decline of the Soviet Union, or globalization, or the internet.

 

The sharp break in the mid-70’s marks a shift in our country’s values. Our moral, social, political and economic values changed in the mid-70’s.

The author is exactly right regarding “X” and exactly wrong in getting cause and effect backwards. At “X” Marks the Spot, he notes “[s]omething happened,” and the wages of goods-producing workers flatlined, never to recover. He is right and perceptive in this too little appreciated fact.

Yet he attributes this to some kind of mystical “shift in our country’s values. Our moral, social, political and economic values changed in the mid-70’s.”

As it happens, “X” correlates with Nixon shutting down the Bretton Woods gold standard in 1971 and the epic failure to get it fixed and restored in 1973. The drag, after a modest lag, filtered into the working economy. The rest is persistent stagnation for median families.

It was the destruction of the (dilute) gold standard which precipitated the death, or at least long coma, of the American Dream. That, in turn, caused the ensuing degradation “in our moral, social, political and economic values” as America turned Hobbesian.

Keynes, the great economic icon of the left, understood how subtle and insidious the processes at work during an earlier instance of monetary disorder. In his 1919 classic The Economic Consequences of the Peace, Keynes wrote:

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

 

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Copernicus, who kind of invented (or anticipated) the gold standard — and really was a pretty bright guy, earning the grudging respect even of right wing Flat Earther geocentrists — made a comparable point in his Essay On The Minting of Money (whose modern translation I commissioned and served as lead co-editor):

ALTHOUGH THERE ARE COUNTLESS MALADIES that are forever causing the decline of kingdoms, princedoms, and republics, the following four (in my judgment) are the most serious: civil discord, a high death rate, sterility of the soil, and the debasement of coinage. The first three are so obvious that everybody recognizes the damage they cause; but the fourth one, which has to do with money, is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way.

The GOP is beginning to come around to the gold standard. The academic (though not the ethnic or labor) left remains resistant.

Getting the gold standard wrong could be catastrophic. In getting the gold standard back in place the right way — a way that will be at least, and preferably more, beneficial to labor than to capital — it would be invaluable for the left to begin to come to terms with the crucial role the gold standard played, and again can play, in restoring a climate of equitable prosperity.

Therefore, I respectfully ask that progressives open their hearts to exploring the possibility, just the possibility, that the gold standard would go a long way toward restoring both economic prosperity and economic justice for all — the American Dream. America, and the world, greatly would benefit from participation from the Donks in making sure that the Pachyderms don’t do a wrongheaded pro-Ebeneezer Scrooge version of the gold standard.

Help us write a wonderful pro-Bob Cratchit version that will restore justice as well as prosperity. God bless us every one! (Including you, atheists!)

If we get this right, afterward there still will be much to argue about. We can have merry and spirited arguments as to whether all the extra tax money pouring in from all those new great jobs and businesses should be spent on family leave or abolishing the estate tax.

The thing is… if we get the gold standard right there will be plenty of money to do both. And more. According to a grounded assessment I made a few years ago at Forbes.com there’s probably at least $6 trillion (with a T!) of new federal tax revenues hidden in there, without raising tax rates. Visualize federal surpluses!

And there will be maybe 10X that for the private economy. Win-win!

“X” indeed marks the spot! By following Mr. Sorscher’s invitation to “Dig Here” one discovers that therein lies a buried, and lost, treasure chest of gold that can be leveraged to the common good rather than a mysterious “shift in our country’s … moral, social, political and economic values.”

Putting that gold — and yes, Uncle Sam has plenty of it, the most, by far, in the world — back to work in the right kind of way is highly likely, perhaps even certain, to restore wage growth, end privilege-based inequitable income inequality, and restore our moral, social, political and economic values like nothing else possibly could.

This isn’t partisan. Historically, progressive Democrats like Grover Cleveland were as committed to gold as were Republicans like William McKinley. The left is invited to participate.

So, my progressive friends, let’s grab our shovels, and let’s dig together. “X” marks the spot.

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Between the fact that central banks have created an environment in which over $10 trillion in government debt trades at negative yields, and the threat of the UK actually leaving the European Union becoming more of a reality, some bizarre things are starting to happen in the world.

For example, investors now have to load up on 3x the risk just to achieve the same portfolio return as 20 years ago, and negative mortgage rates have started to show up across Europe.

And now, between the search for yield due to Draghi's policies, and the perceived safety of Danish mortgage backed securities, mortgage borrowers in Denmark can borrow at a cheaper rate on a 30-year loan than the US government.

As Bloomberg notes, mortgage backed securities are attracting investors in search of a perceived safe haven that still has some liquidity and yield attached to it.

Denmark’s $450 billion bond-backed mortgage market has already gone through several extremes since the central bank four years ago first resorted to negative rates to defend the krone’s peg to the euro. Most strikingly, rates on short-term mortgages dropped below zero. Now, with the risk of a so-called Brexit looming, investors trying to get their hands on Denmark’s top-rated assets are finding that its mortgage bonds offer more liquidity than government debt, making the securities a magnet for safe-haven flows.

 

“It’s a Brexit hedge case,” said Jan Weber Oestergaard, senior analyst at Danske Research. “We’re seeing a lot of interest from foreign clients.”

And so we now find that we live in a world where markets are so upside down, that individual borrowers in Denmark have a lower credit risk than the United States government over a thirty year horizon. Don't think about it too long, or blood will start shooting out of your eyes.

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Submitted by Jim Quinn via The Burning Platform blog,

The left wingers are spouting gibberish about this having nothing to do with Islam or Muslim beliefs. Bullshit. Muslims hate gays and think they should die for their lifestyles. It’s their law.

Source: WaPo

10 nations where the penalty for gay sex is death

By Colin Stewart

Ten nations with large Muslim populations have laws providing for the death penalty for same-sex activity.

Only a few actually impose the death sentence. Exactly how many is a difficult question.

The 2016 State-Sponsored Homophobia report from ILGA, the International Lesbian, Gay, Bisexual, Trans and Intersex Association, lists 13-14 places that threaten the death penalty for homosexuality, including the basic 10 plus several specific variations:

• One where executions occur — and go unpunished — despite the fact that there is no death-penalty law (Iraq);
• One that has approved a death-penalty provision but has not yet incorporated it into the nation’s laws (Brunei);
• One that conducts executions but is not recognized as a nation (the Islamic State, also known as Daesh, ISIS and ISIL);
• One where, in theory, a particular interpretation of its laws would provide for the death penalty but, in practice, no executions have been reported (United Arab Emirates)

The ILGA list is quite similar to this blog’s list of those 14 countries, printed below:

A best-information-available list of countries/regions where executions for homosexual activity are carried out or are provided by current or future law:

Nations with such laws on the books; executions have been carried out

1. Iran
2. Saudi Arabia

 

Nations with such laws on the books; no recent executions reported

3. Sudan
4. Yemen

Nations with such laws on the books in part of the country; no verified executions for homosexual activity

5. Nigeria
6. Somalia

Nations with such laws on the books; no executions reported

7. Afghanistan
8. Mauritania
9. Pakistan
10. Qatar

Those are the “ten nations with large Muslim populations” mentioned in this article’s first paragraph.” In addition, executions and possible executions are an issue in four other places:

Nation with no such a law on the books; executions are carried out by militias and others

11.  Iraq

Not recognized as a nation; carries out executions

12. Daesh/the Islamic State (ISIS/ISIL)

Nation where such a law was scheduled to take effect in 2016 (but might not)

13. Brunei Darussalam

Nation where some interpretations of existing law would provide for the death penalty, but no executions have been reported

14. United Arab Emirates

News coverage in all of those nations is unreliable at best, so specific evidence of executions for same-sex intimacy is rare.  What’s known about some specific countries is cited below.

In Somalia,  a gay teenager was reportedly stoned to death in 2013, but those reports have not been verified.

In Nigeria, the BBC reported in 2007, “More than a dozen Nigerian Muslims have been sentenced to death by stoning and for sexual offences ranging from adultery and homosexuality. But none of these death sentences have actually been carried out as they were either thrown out on appeal or commuted to prison terms as a result of pressure from human rights groups.”

In Sudan, the death penalty is in frequent use, but there are no recent reports of executions for same-sex intimacy.  In 2014, Sudan ranked at No. 6 worldwide in number of executions (23+) for various offenses, just below the United States, with 35, according to Amnesty International.

Similarly, Yemen is No. 7 in frequency of executions overall, but the death penalty apparently has not been imposed recently for homosexual activity.   Researchers for Canada’s Immigration and Refugee Board reported more than 10 years ago, “Information on whether such sentences have been carried out was not found.” More recently an article on Yemen’s gay community in The Tower magazine stated, “Traditionally, that death penalty is not enforced, but citizens have been imprisoned for their sexual orientation.”

Saudi Arabia is  No. 3 among the world’s most avid executioners, with 90+ in 2014.  At least in the past, beheadings were imposed for homosexual behavior, including three men in 2002. Imprisonment and lashings are a more common punishment for same-sex activity.

Iran is No. 2 in the world for frequency of executions, behind China.  Those include executions for homosexual activity, although the facts are often unclear or misrepresented in such cases. (See, for example, “Bogus hanging in Iran, bogus tweets in Egypt” and “Series of public hangings in Iran, including 2 for sodomy.”)

Evidence is a bit clearer about two war-torn areas — Iraq and the territory controlled by  Daesh/the Islamic State (ISIS/ISIL).  The ILGA report of 2015 noted that “Iraq, although [the death penalty is] not in the civil code, clearly has judges and militias throughout the country that issue the death sentence for same-sex sexual behaviours. … We are also aware that in the Daesh(ISIS/ISIL)-held areas the death penalty is implemented (although a non-State actor, it is listed in the report). ” For examples, see:

• Iraq has become a death trap for gay men (September 2012)
• ‘Islamic State’ has reported 15 LGBTI executions (May 2015)

In some nations, the death penalty is on the books but is not imposed. ILGA in 2015 stated:

Brunei Darussalam is due to activate the death penalty for same-sex sexual acts in 2016, but it seems likely that like Pakistan, Afghanistan and Qatar although it is on the statute, it will not be implemented.

ILGA reported in 2016 about Brunei: “there is no sign that the threatened death penalty is to be implemented.”

According to the U.S. Department of State, Mauritania belongs in this category too.  A U.S. Department of State cable from 2009, released by WikiLeaks in 2011, indicated that Mauritania has never imposed the death penalty for homosexual activity or any other crime.

ILGA reported in 2016 that “although is understood that the United Arab Emirates has not implemented [the death penalty] under the Sharia code, it remains a possibility under interpretations current in the Emirates.”

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Submitted by Michael Snyder via The End of The American Dream blog,

America is in shock.  On Sunday, a 29-year-old Islamic terrorist named Omar Mateen shot 102 people at a gay club known as Pulse in the heart of Orlando, Florida.  49 of those that were shot died, and 53 were wounded.  So how in the world did this happen?

Well, when you combine radical political correctness with extreme government incompetence and the dramatic growth of radical Islam inside the United States, you create an environment which is absolutely primed for Islamic terror. 

The truth is that the FBI knew about this guy well in advance.  In fact, they had even interviewed him three separate times over the years.  And at one point the government had been investigating the mosque that he had been attending, but that investigation was shut down by Hillary Clinton’s State Department.  Mateen had told the FBI that he hoped to be a martyr someday, and those were not just idle words.  His twisted ideology fueled his actions, and so the choices that he ultimately made should not have come as a surprise to law enforcement authorities.  But now that this has happened, will it change the way that the government approaches Islamic terror? 

The following are 17 facts about the Orlando shooter that every American should know…

#1 According to the Director of the FBI, Mateen had “links to al-Qaida, Hezbollah, and the Islamic State“.

#2 Mateen’s father has openly expressed support for the Taliban on YouTube.

#3 Despite those links to terror organizations, Mateen was allowed to work “as a security guard at a local courthouse“.

#4 Mateen wasn’t directly hired by the courthouse.  Instead, he was officially an employee of the largest security services company in the world…

The Orlando nightclub terrorist who pledged allegiance to ISIS worked almost a decade for a major Department of Homeland Security contractor, raising alarms that ISIS sympathizers and agents have infiltrated the federal agency set up after 9/11 to combat terrorists.

 

Officials say Omar Mir Seddique Mateen, an Afghan-American who held two firearms licenses and a security officer license, was employed by the security firm G4S Secure Solutions USA Inc. since Sept. 10, 2007. The Jupiter, Fla.-based company merged with the Wackenhut Corp. after 9/11 and assumed federal contracts.

#5 It turns out that this U.S. subsidiary of G4S is a company that works very closely with “the Department of Homeland Security, the US Army, and federal and local law enforcement.”

#6 Mateen’s ex-wife says that he would repeatedly beat her while they were married.

#7 He started to become radicalized after separating from his first wife.  While they were together, she said that he didn’t show much interest in religion.

#8 He made pilgrimages to Saudi Arabia in 2011 and 2012.

#9 He claimed to personally know the Boston Marathon Bombers.

#10 According to the FBI, Mateen has “been on the radar before“, he was interviewed by them three separate times, and they conducted a 10 month investigation of his activities in 2013.

#11 He is being described as “unhinged and unstable” by his former coworkers.

#12 Mateen once declared that he hoped to martyr himself someday, and the FBI knew all about this.

#13 Despite everything that the federal government knew about Mateen, he was still permitted to legally buy guns just last week.

#14 In an odd twist, it also turns out that Mateen was a registered Democrat.

#15 A respected Islamic scholar was urging Muslims in Orlando to “get rid” of homosexuals just a couple of months before this shooting took place…

Farrokh Sekaleshfar – a British-born doctor and Muslim scholar – has gained a following by urging Muslims to ‘get rid of’ homosexuals.

 

And in April, he took his speech titled ‘How to deal with the phenomenon of homosexuality’ to the Husseini Islamic Center in Sanford, just outside Orlando, Florida.

 

Two months later, 29-year-old Omar Mateen carried out the worst massacre in US history by opening fire on a gay club in the same city.

#16 Hillary Clinton’s State Department shut down an investigation of the mosque that Mateen attends because it “unfairly singled out Muslims“.

#17 Just moments before the attack, Mateen reportedly called 911 to swear his allegiance to ISIS.

When is it going to finally sink in for our politically correct politicians that Islamic terror is a major threat?

There are lots of other Omar Mateens out there.  And as radical Islam continues to spread both inside and outside this country, the threat is only going to get a lot worse.

Barack Obama is a perfect example of just how clueless many of our top politicians are about all of this.  During his speech to the nation, he did not connect this act of terror with radical Islam in any way, shape or form.  But the only reason why Mateen did what he did was because of his worldview.  He felt perfectly justified in picking up a weapon and gunning down dozens of people, and martyrdom was a reward in his eyes.  If he had not been immersed in the world of radical Islam for years, he never would have done such a thing.

Wrong beliefs lead to wrong actions.  We see this in action all around us every day, but most of the time the consequences are not as dramatic as we just witnessed in Orlando.

As I have been warning about for some time now, Islamic terror attacks inside the United States are going to continue to get worse.

If you think what happened in Orlando was bad, just wait until these terrorists get their hands on chemical, biological or nuclear weapons.

The detonation of a single weapon of mass destruction in one of our major cities would instantly change life as we know it for every man, woman and child in this entire nation.

The ideology that fuels these terrorists continues to grow, and over time it is inevitable that they will acquire increasingly more powerful weapons.

So yes, gunning down dozens of people in a crowded nightclub is an atrocity that is so evil that it is hard to find words to describe it.

But someday we will see far, far worse in this nation, and at this point we are completely unprepared to deal with that reality.

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Standard Chartered CEO Bill Winters is fighting the battle to right the ship at the bank on two fronts. First, Winters needs to figure out a way to deal with plunging revenues and billions in NPLs. On the other front, the CEO is working to change a culture in which he is finding many bankers consider themselves "above the law."

Since taking over as CEO in the middle of 2015, Winters has replaced much of the senior executive team and initiated a probe into employee conduct and ethics. The result of the probe into misconduct has led Winters to add significant firepower to the bank's internal investigation team, including former detectives from the FBI, Scotland Yard, Hong Kong police and the New Zealand intelligence agency Bloomberg reports.

Winters said that he has encountered "a looseness" in the way the bank was managed since coming in as CEO, and said he's uncovered a culture where senior managers felt they were "above the law." In a memo to employees titled #knowtherules, Winters wrote "I am concerned that a small number of employees, including some senior managers, have willfully disregarded our policies – sometimes for personal gain – and set a poor example for their peers and teams. I am deeply disappointed and angry at some of the examples we are finding."

Still licking its wounds from a 2012 deferred prosecution agreement in which the bank was fined $667 million for violating US sanctions by engaging in $250 billion in transactions with Iran, Winters is on high alert when it comes to ethics violations and employee misconduct because as Bloomberg notes, the bank could potentially lose its US banking license if it slips up again.

In one memo, Winters described a culture where managers felt they were "above the law" and was very clear on the fact that there would be a zero tolerance policy going forward for anyone not taking bank policies seriously.

"I want this to be clearly understood – we have zero tolerance for any employee that deliberately flouts and circumvents our rules and policies, without regard for their seniority or role."

At the moment, it appears as though Winters is putting some bite behind the bark. In the memos, Winters is providing real examples of rule breaking, and what has happened to those employees. One memo cites three senior employees who didn't disclose their investment in an unlicensed money lender that charged high interest rates, and they were all subsequently dismissed.

The risk and controls committee will dock bonus if compliance or risk officers report that policies aren't being taken seriously enough, and General Counsel David Fein who is heading the effort has made sure that the new rules have been communicated clearly to the staff of 84,000 and excuses such as "I didn't know what the policy was" will no longer fly. "They are not going to have the same mitigating factors, that stuff's gone." Fein said.

Everything is being scrutinized at the bank, along with the big things, "smaller" things such as expense reports are now being controlled more diligently. Pam Walkden, new HR chief says "we've done a lot of training around what is the right way to submit your expenses and what are legitimate expenses. You cannot go and spend $1,000 on a fancy dinner with champagne. If you accidentally charge an orange juice from the mini bar, that's not the end of the world. But if you take out 20 people and make the most junior person pay for it, that's big trouble."

Winters has a lot of ground to make up in order to make shareholders happy. The bank spent $243 million on regulatory costs alone in Q1 of this year, which is 10.8% of the entire operating costs of the bank, and the effort is something that Winters feels important, even as the bank trades at a significant discount to book value according to Bloomberg.

* * *

While we are skeptical that any bank CEO is truly cleaning house, on the surface it appears as though Winters is actually trying to so so, which is a positive. However as usual, its a deeds not words type of thing, so whether or not the CEO can get the misconduct under control remains to be seen. One final observation, and most importantly, how are bankers supposed to survive if they're unable to spend $1,000 on fancy dinner and champagne?

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Submitted by Carey Wedler via TheAntiMedia.org,

In the wake of yet another terrorist attack, a former CIA counterterrorism agent has shared her insight into what causes such tragic, intentional carnage. Amaryllis Fox spoke for the first time publicly with Al Jazeera Plus (AJ+) about terrorism, misguided narratives on why it happens, and the underlying motivators driving it — ultimately urging  Americans and those in power to adopt a different approach in comabating the ongoing violence.

“If I learned one lesson from my time with the CIA, it is this: everybody believes they are the good guy,” says Fox, who is currently “in the process of getting her CIA cover rolled back,” AJ+ reports. She is now a peace activist and runs Mulu, “an e-commerce company supporting at-risk communities around the world.”

Fox worked as a counterterrorism and intelligence official for the clandestine services during the 2000s. In her first public statement on her time there, she discussed the limitations on the American public’s perception of the war on terror:

 

“The conversation that’s going on in the United States right now about ISIS and about the United States overseas is more oversimplified than ever. Ask most Americans whether ISIS poses an existential threat to this country and they’ll say yes. That’s where the conversation stops.”

Indeed, while a majority of Americans fear terrorism, reaching a consensus on how to tackle ISIS has proved contentious. Fox explained the simplicity of the way the conflicts are viewed on both sides:

“If you’re walking down the street in Iraq or Syria and ask anybody why America dropped bombs, you get: ‘They were waging war on Islam.’”

In America, the question is: “Why were we attacked on 9/11?”

Fox says if you pose this question, “You get: they hate us because we’re free.”

However, she contests the validity of these assumptions, pointing to the powerful forces that drive conflict in the first place:

“Those are stories manufactured by a really small number of people on both sides who amass a great deal of power and wealth by convincing the rest of us to keep killing each other.”

Indeed, both sides of the conflict expend significant effort campaigning to prove their crusades are justified. In the United States, after decades of prolonged conflict, the populace is largely desensitized to war and often ignorant of its current manifestations.

Fox challenges this paradigm:

“I think the question we need to be asking, as Americans examining our foreign policy, is whether or not we’re pouring kerosene on a candle. The only real way to disarm your enemy is to listen to them. If you hear them out, if you’re brave enough to really listen to their story, you can see that more often than not, you might have made some of the same choices if you’d lived their life instead of yours.”

Of course, as Americans mourn the most recent mass shooting, it is doubtful many citizens are well-versed in the U.S. foreign policy that provokes such terrorism. Rather, they focus, understandably, on the wrong done to their nation. But Fox offered a unique perspective that lends insight to the “enemy.”

“An Al-Qaeda fighter made a point once during debriefing,” she recounted. “He said all these movies that America makes — like Independence Day, and the Hunger Games, and Star Wars — they’re all about a small scrappy band of rebels who will do anything in their power with the limited resources available to them to expel an outside, technological advanced invader. ‘And what you don’t realize,’ he said, ‘is that to us, to the rest of the world, you are the empire, and we are Luke and Han. You are the aliens and we are Will Smith.’”

However, she also challenged the Al-Qaeda fighter’s take, arguing that on both sides of  conflict, those fighting on the ground often provide the same reasons for doing so:

“But the truth is that when you talk to people who are really fighting on the ground, on both sides, and ask them why they’re there, they answer with hopes for their children, specific policies that they think are cruel or unfair,” she says.

 

“And while it may be easier to dismiss your enemy as evil, hearing them out on policy concerns is actually an amazing thing, because as long as your enemy is a subhuman psychopath that’s gonna attack you no matter what you do, this never ends. But if your enemy is a policy, however complicated — that we can work with.”

As terror attacks become an increasingly normal occurrence in the West — and as Western intervention trudges ahead unabated — hearing out enemies’ concerns may, at this point, be the most effective counterterrorism gesture the United States can make; that is, if it is truly determined to bring an end to the violence.

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