Category: zerohedge

Rebel MPs Reportedly Attempting To Force Another Brexit Delay

A cross-party group of MPs who are opposed to leaving the EU without a deal on Oct. 31 have settled on their plan to stop PM Boris Johnson from running down the clock: They’re reportedly planning to pass legislation that would force Johnson to seek a three-month delay of Brexit Day, according to Bloomberg.

If the legislation passes, Johnson would either need to secure a new withdrawal agreement with the EU by mid-October, or press the EU27 to grant the UK another extension, something that the bloc would likely support.

Here’s more from BBG:

Details of the rebel plans to stop a no-deal Brexit on Oct. 31 by pushing legislation through Parliament are beginning to emerge.

Two people familiar with the draft law told Bloomberg it would compel Johnson to seek a three-month delay if he’s been unable to get a new Brexit deal through the House of Commons by Oct. 19 or to persuade lawmakers to back a no-deal departure.

That would set Jan. 31 as the new deadline for Brexit.

This legislative approach to stop Johnson from ‘prorogueing is one of the alternatives set forth in a recent Deutsche Bank note outlining the alternative paths for Brexit.

DB assigned this ‘legislative’ route for stopping a ‘no deal’ Brexit combined odds of just 10%. Johnson has repeatedly threatened to call for snap elections if Tory MPs don’t fall into line and support leaving the EU with or without a deal on Oct. 31 (the threat is a cudgel intended to make MPs worried about losing their seats fall into line…it’s tantamount to a game of chicken since snap elections would risk throwing control of Parliament to Labour). Johnson would effectively treat a vote to block no deal as a vote of no confidence in his government.

Goldman Sachs believes there’s still a high likelihood that Johnson calls for a snap election on or around Oct. 17 if the PM “decides this week that a pre-Brexit general election is his best response to a legislative lock on “no deal.” DB sees this as one possible outcome, though they believe the overall odds of Johnson choosing this route are just 5%.

And with good reason. Calling for a snap vote would require 100 opposition MPs to vote with the PM to win the necessary two-thirds majority. Goldman believes they could be swayed if Johnson shows them “concrete evidence” that he’s already sought permission from the EU27 to call for another Article 50 extension.

“Traditionally, the date of a general election is in the gift of the prime minister,” the note said. “In our view, it would be suboptimal for Labour MPs to allow the Conservative government to call an October election that characterizes the Labour front-bench as a Brexit saboteur. That said, the Labour leadership would certainly find itself in a difficult position.”

Meanwhile, a ‘draft legal text’ that would function as Johnson’s latest ‘alternative’ to the Irish Backstop was reportedly discussed by his cabinet on Monday. Irish PM Leo Varadkar, meanwhile, said Monday that he’d be willing to consider some alternatives to the backstop proposed by the Ulster Unionists, which he described as “interesting.”

This begs the question: Is this Europe’s first tentative step toward caving on the widely hated (in the UK, at least) backstop? Johnson has called Europe’s bluff on the backstop. Will Brussels finally stop pretending that it has the legal authority to impose arbitrary physical borders between two sovereign nations?

For now, judging by cable’s demise today…

Source: Bloomberg

…the  market is not buying the new plan as anything but high hopes for the remainers.

via ZeroHedge News https://ift.tt/2NMaC60 Tyler Durden

Wall Street’s Worst Nightmare For 2020 Is Coming True

Authored by Norman Solomon via TruthDig.com,

For plutocrats, this summer has gotten a bit scary. Two feared candidates are rising. Trusted candidates are underperforming. The 2020 presidential election could turn out to be a real-life horror movie: A Nightmare on Wall Street.

“Wall Street executives who want Trump out,” Politico reported in January, “list a consistent roster of appealing nominees that includes former Vice President Joe Biden and Sens. Cory Booker of New Jersey, Kirsten Gillibrand of New York and Kamala Harris of California.”

But seven months later, those “appealing nominees” don’t seem appealing to a lot of voters. Biden’s frontrunner status is looking shaky, while other Wall Street favorites no longer inspire investor confidence: Harris is stuck in single digits, Booker is several points below her, and Gillibrand just dropped out of the race.

Meanwhile, Bernie Sanders and Elizabeth Warren are drawing large crowds and rising in polls. In pivotal early states like Iowa and especially New Hampshire, reputable poll averages indicate that Biden is scarcely ahead.

“Bankers’ biggest fear” is that “the nomination goes to an anti-Wall Street crusader” like Warren or Sanders, Politico reported, quoting the CEO of a “giant bank” who said:

“It can’t be Warren and it can’t be Sanders. It has to be someone centrist and someone who can win.”

But the very biggest fear among corporate elites is that Warren or Sanders could win — and then use the presidency to push back against oligarchy. If Biden can’t be propped up, there’s no candidate looking strong enough to stop them.

Biden, Warren and Sanders, as the New York Times reported on Wednesday, are “a threesome that seems to have separated from the rest of the primary field.” In fourth place, national polling averages show, Harris is far behind.

Biden’s distinguished record of servicing corporate America spans five decades. He is eager to continue that work from the Oval Office, but can he get there? A week ago, a Times headline noted reasons for doubt: “Joe Biden’s Poll Numbers Mask an Enthusiasm Challenge.” Enthusiasm for Biden has been high among Democratic-aligned elites, but not among Democratic-aligned voters.

While corporate news organizations — and corporate-enmeshed “public” outlets like NPR News and the PBS NewsHour —evade primary contradictions, Sanders directly hammers at how huge corporations are propelling media bias and undermining democracy.

Even though he has inspired media onslaughts — such as the now-notorious 16 anti-Sanders articles published by theWashington Post in a pivotal 16-hour period during the 2016 primary contest — the Sanders campaign is so enormous that even overtly hostile outlets must give him some space. In an op-ed piece he wrote that the Post published seven weeks ago, Sanders confronted Biden’s wealth-fondling approach.

Under the headline “The Straightest Path to Racial Equality Is Through the One Percent,” Sanders quoted a statement from Biden:

“I don’t think 500 billionaires are the reason why we’re in trouble.”

Sanders responded,

“I respectfully disagree” — and he went on to say: “It is my view that any presidential candidate who claims to believe that black lives matter has to take on the institutions that have continually exploited black lives.”

Such insight about systemic exploitation is sacrilege to the secular faith of wealth accumulation that touts reaching billionaire status as a kind of divine ascension. Yet Sanders boldly challenges that kind of hollowness, shedding a fierce light on realities of corporate capitalism.

“Structural problems require structural solutions,” Sanders pointed out in his Post article, “and promises of mere ‘access’ have never guaranteed black Americans equality in this country. . . . ‘Access’ to health care is an empty promise when you can’t afford high premiums, co-pays or deductibles. And an ‘opportunity’ for an equal education is an opportunity in name only when you can’t afford to live in a good school district or to pay college tuition. Jobs, health care, criminal justice and education are linked, and progress will not be made unless we address the economic systems that oppress Americans at their root.”

Like many other progressives, I continue to actively support Sanders as a candidate who bypasses euphemisms, names ultra-powerful villains – and directly challenges those in power who’ve been warping and gaming the economic systems against working-class people.

Those systems are working quite nicely for the ultra-rich, like the giant bank CEO who told Politico that “it can’t be Warren and it can’t be Sanders.” That’s the decision from Wall Street. The decision from Main Street is yet to be heard.

via ZeroHedge News https://ift.tt/32ig4BC Tyler Durden

Yuan, Stocks Plunge On US-China Trade Talks Headlines

Having managed to scramble back up to almost unchanged, headlines confirming that US officials rejected China’s request to delay Sept 1st tariffs and, more importantly, that US and China are now struggling to set a September meeting for trade talks, have sparked a plunge in US equity futures and offshore yuan.

Bloomberg reports that Chinese and U.S. officials are struggling to agree on the schedule for a planned meeting this month to continue trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend, according to people familiar with the discussions.

The immediate reaction is a kneejerk back to last night’s opening lows…

And yuan is tumbling…

Source: Bloomberg

As Gold spikes…

“China is moving along, we’re doing very well,” Trump told reporters over the weekend.

“We are talking to China, the meeting is still on as you know, in September. That hasn’t changed — they haven’t changed it, we haven’t. We’ll see what happens. But we can’t allow China to rip us off anymore as a country.”

It appears he may have been exaggerating a little.

via ZeroHedge News https://ift.tt/2ZFGHPv Tyler Durden

China’s Xinhua Issues Ultimatum: “End Is Coming” For Hong Kong Protesters

Following what many have described as the most violent weekend yet after 86 days, or 13 weeks of pro-Democracy protests in Hong Kong, which have led to the arrest of at least 1,117 residents, where the local police is now deploying water cannon in response to “rioters” using petrol bombs, China appears to have finally had enough and on Sunday, Beijing issued a stern ultimatum to not only Hong Kong protesters, but also the West on Sunday, reiterating that it will not tolerate any attempt to undermine Chinese sovereignty over the city.

“The end is coming for those attempting to disrupt Hong Kong and antagonize China,” stated a commentary piece published by the state’s Xinhua News Agency.

According to the Nikkei, the ultimatum was directed at “the rioters and their behind-the-scene supporters” – which should be interpreted as China’s latest accusation of Western meddling, with the article warning that “their attempt to ‘kidnap Hong Kong’ and press the central authorities is just a delusion,” adding, “No concession should be expected concerning such principle issues.”

The commentary said three red lines must not be crossed:

  • no one should harm Chinese sovereignty,
  • challenge the power of the central authorities 
  • use Hong Kong to infiltrate and undermine the mainland.

“Anyone who dares to infringe upon these bottom lines and interfere in or damage the ‘one country, two systems’ principle will face nothing but failure,” the piece declared. “They should never misjudge the determination and ability of the central government… to safeguard the nation’s sovereignty, security and core interests.”

With the protests attracting global attention, the demonstrators and the authorities are also fighting a PR battle. On Saturday, the Chinese Foreign Ministry took an unusual step of distributing images of alleged protester vandalism to the international press, in an apparent attempt to discredit the movement.

The warning came just hours after tens of thousands of people blocked roads and public transport links to Hong Kong’s airport. The demonstrations, which started in response to a proposed bill that would have allowed extradition to the mainland, have mutated into a broader rejection of Beijing’s growing control over the semi-autonomous city, with China – and even Russia – accusing the CIA of being behind the ongoing protests.

Despite recently linking his view of the trade war with Beijing to the ongoing Hong Kong protests, Trump has refused to sternly condemn the growing possibility of a Chinese crackdown, leading some to suggest that China has cobbled a behind the scenes deal with Trump, whereby it lets the US president give the impression of a modest win in the trade war in exchange for being given a carte blanche to deal with the HK protesters as it sees fit when the time comes, and with the Chinese National Day holiday coming on Oct. 1, it is almost certain that Beijing will have to regain control over Hong Kong in the coming weeks if not days.

via ZeroHedge News https://ift.tt/2MN5m2F Tyler Durden

OPEC Abandons “Whatever It Takes” Strategy, Boosts Production

Submitted by Julianne Geiger of OilPrice.com

OPEC’s production increased in August thanks to Iraq and Nigeria a Reuters survey found on Friday.

OPEC’s August production has been estimated at 29.61 million barrels per day, which is 80,000 barrels per day over July’s production level.

The production increase is surprising, given that Iran and Venezuela are producing less not by choice, and continue to face uphill battles when it comes to maintaining their oil production. Saudi Arabia, too, over complied with the production cut deal again as expected, but it raised production for August slightly over July. Overall, the group is still over complying with the production quotas.

OPEC’s compliance for August is now estimated at 136%, no thanks to Iraq and Nigeria, who lifted production by 80,000 barrels per day and 60,000 barrels per day, respectively. And even though Saudi Arabia is still over complying, it lifted production in August to produce 9.63 million barrels per day.

While Iraq, Nigeria, and Saudi Arabia increased production in August, Iran’s production fell further—experiencing a 50,000 barrels per day loss for the month. US Secretary of State Mike Pompeo last week said it had successfully removed 2.7 million barrels of oil per day off the oil market since it first sanctioned the country.

Iran’s July oil and condensates exports for July fell to 120,000 barrels per day, Reuters said last week.  Iran’s production for July was 2.21 million bpd. This compares to an average daily production rate of 3.55 million barrels for all of 2018.

Oil prices fell sharply on Friday, and news that OPEC’s production increased this month may press further down on prices.

And extended losses in late Sunday, early Monday trading.

via ZeroHedge News https://ift.tt/2zGfktU Tyler Durden

Reinsurers Face Insolvency Risk As Analysts Fear Dorian’s Insured Losses Could Top $40 Billion

Insurances companies could be in serious trouble now that Hurricane Dorian has spent a full day dragging across the Bahamas, according to a team of analysts at UBS. After battering the Caribbean island nation with gusts of up to 220 mph, the unprecedented Category 5 storm looks to be one of the most damaging storms in recent memory.

Now that Dorian has officially cemented its position as the second-strongest storm to form in the Atlantic in modern history, UBS analysts have updated their models to reflect a broader swath of losses. It’s now believed the storm could cause total insured losses in the range of $5 billion to $40 billion, with a ‘base case’ of $25 billion, up from $15 billion a few days ago.

This could put solvency capital at risk for some firms, the team of analysts said, according to Sputnik.

The analysts estimate the 2019 hurricane season could cause about $70 billion of natural catastrophe losses, which could erode excess capital and lead to higher premiums.

Though they got some relief last year, insurers faced record bills from hurricanes, earthquakes and wildfires in 2017, as Hurricanes Maria, Harvey and Irma hammered Puerto Rico and the Continental US…

…and wildfires in California led to the most destructive season on record.

Of the big reinsurance names, UBS named Swiss Re as its least preferred stock to hold during the 2019 hurricane season, adding that a second buyback was unlikely. Meanwhile, Lancashire, Beazley and SCOR were set to see the biggest gains from an increase in premiums across the industry.

Mandatory evacuation orders are expected to be issued in several counties in Florida, as well as the Carolinas, later Monday evening. Dorian’s eye had finally reached Great Bahama, though officials warned residents who had opted to remain in the area to remain wary. Even under the eye, meteorologists still expect wind speeds of around 165 mph.

Fortunately, as of Monday morning, a ‘direct’ hit in Florida was seen as less likely, thought it’s impossible to say with any degree of certainty how the storm will make landfall in the US.

via ZeroHedge News https://ift.tt/2ZCLlS7 Tyler Durden

When Losing Is Winning In Germany For AfD

Authored by Tom Luongo,

Germany held the first two of three important state elections over the weekend. And the results were striking. Leading up to the elections polls had the current opposition party in the Bundestag, Alternative for Germany (AfD), neck and neck with the ruling parties in both Saxony and Brandenburg.

Chancellor Angela Merkel’s ruling coalition was battered by the results but not beaten. In Brandenburg, her partners, the Social Democrats (SPD), beat AfD by 5 points, 26.3% to 23.5%, while in Saxony Merkel’s Christian Democratic Union (CDU) held onto 32% of the vote while AfD took 27.5%.

Both of these results represent more than a doubling of support for AfD in these states and bodes very well for a party that is was only formed in 2013.

And both of these results portend very well for the election in Thuringia at the end of October as well as the next general election in 2021.

So while AfD failed to win either Saxony or Brandenburg and both states will put together cartel-style governments standing for nothing, it wasn’t going to rule if they had anyway.

None of the other parties would form a coalition with them on principle and pathetic virtue signaling. And that leaves AfD’s hands clean for the future.

The preliminary seat projections in Saxony have the CDU having to partner with at least two other parties to form a government which excludes AfD.

Being the official opposition party in the Bundestag and having strong but neutered representation in these important states puts AfD exactly where it needs to be on the eve of a political and financial crisis in Europe, especially as Germany slides further into recession.

It further highlights the undemocratic means by which people like Merkel hold onto power. For a clear example of that, simply cross the Alps to Italy.

It is those in power that get the blame, and rightly so, for economic downturns and social upheaval. They’ve had the gavel and the bully pulpit and they failed to use them wisely to govern with an eye ahead on the real problems rather than their pet agendas.

In Merkel’s case that is further EU integration. She’s had sincere struggles passing on power within the CDU as she tries to exit the scene. So have the SPD.

It’s clear that both the CDU and the SPD have future leadership vacuums that will not be able to 1) hold their parties together and 2) navigate what will be the most tumultuous period of German history since the end of World War II.

So, today, if I’m Drs. Jorge Meuthen or Alice Weidel, the leadership of AfD, I’m ecstatic at the vote totals, which were in line with projections, but I’m even happier not to be in charge when the worst of the financial crisis hits the European Union next year.

Being the opposition when the world comes crashing down around your political opponents is the best position to be in.

And AfD are that today. Slowly, they are rebranding themselves as the solution for all of Germany. It’s a slower process than in, say, Italy, where the cultural identity and its relationship to political ideologies are less fraught with guilt.

Speaking of Italy. With last week’s coup, Matteo Salvini and The League are in now in the same position in Italy. Having won the battle to push Salvini out of government the Brussels’ loyal technocrats and weak-willed reformers in Five Star Movement will now bear the full wrath of the Italian people as their sell out occurs and the incipient financial crisis engulfs them.

Many Germans today are loathe to identify with anything seen as fascist. And this has hampered the growth of AfD as the wholly subservient German press has done nothing but hound them as Neo-Nazis and the rest.

But it isn’t working. Here’s the demographic breakdown of the Saxony vote.

Note even EuropeElects can’t write a tweet without lying for the establishment. The Greens are not the most popular with young people, AfD is (black bars). In fact, this chart right here is what will have Merkel shaking uncontrollably this morning.

The post-WWII social-democratic state is under severe attack at a generational level and it won’t change. There has been a break in the generational identity along party lines across most of Europe. The Brexit Party’s vote in the U.K. in May is a prime example of that. A party five weeks old beat parties entrenched at the top of British politics for more than a century.

FYI, the same dynamic is occurring in Greece with Golden Dawn. If not for the patently absurd ballot access laws here in the U.S. we would see a similar shift away from the Repuglicans and Demoncrats.

German politics will not change tomorrow with these results. But they will change. Be it in 2021 or later.

The trend is in motion. The older generation, the Baby Boomers, have failed to make their case to the younger ones. They have lost the moral legitimacy to rule and the thread of history.

They have simply grasped onto the reins of power and will hold on to the bitter end because their lack of humanity, being post-modernist, secular humanist Marxist scum, tells them to.

The best way to beat them is to hand them the rope they so willingly grasp for while drowning and let them tie it around their own neck. They created the mess that’s in motion.

They should be in power when the bills come due.

*  *  *

Join my Patreon and join those that see the failure in motion and Install Brave to ensure we can still talk to each other while it happens.

via ZeroHedge News https://ift.tt/2ZrDzLP Tyler Durden

Argentine Peso Soars Amid Zero Liquidity Despite “Very Concerning” Capital Controls Plan

Thanks to zero liquidity (US holiday) and some repo’d reserves, the Argentine Peso has exploded higher this morning (biggest jump in over 17 years) after unveiling a new capital control plan over the weekend to stall its collapsing…everything.

As Bloomberg’s Jorgelina do Rosario and Philip Sanders note, Sunday’s move shows how the crisis has moved beyond international bond investors to affect ordinary Argentines, who may choose to save in dollar bank accounts.

In the aftermath of the Aug. 11 primary elections that showed Fernandez on course for victory in October, Argentine depositors withdrew hundreds of millions of dollars from their accounts – cash the central bank counts as part of its gross foreign reserves. These withdrawals, coupled with policy makers’ sale of dollars to shore up the peso, has led to a dramatic fall in the country’s stock of reserves.

Around $3 billion drained out of the foreign-currency reserves on Thursday and Friday alone after the government changed the terms for its short-term debt. The country risks exhausting its net reserves, which stand at under $15 billion, within weeks if it keeps losing money at this pace.

Source: Bloomberg

Having lost so much last week trying to stabilize the currency, we wonder how much today’s move took…

Source: Bloomberg

But while the currency is panic-bid, bonds are getting dumped… The 2022 bonds are down another 5 points in early trading!

Source: Bloomberg

The return of populism in Argentina is scaring the “dickens out of emerging-market investors,” said Stephen Innes, an Asia-Pacific market strategist at AxiTrader in Bangkok.

If the resurgent currency surprises you, you’re not alone as insiders tell us that black-market USDARS is trading around 64/USD – a new collapse to a new record low.

via ZeroHedge News https://ift.tt/2HGAaxF Tyler Durden

Blain: “We’re Heading Towards A Tragedy That Will Widen The Divisions Between East And West”

Blain’s Morning Porridge, submitted by Bill Blain

I’m wondering if the political breakdown we’re currently seeing develop across nation states is something inevitable in terms of economic evolution – a response to new technology and the changing demands societal change creates.  It’s not necessarily a disastrous outlook… but its challenging to find the right investment responses to how our economies are developing.

In terms of global markets, I’ve come to the conclusion we’re currently passing through the end of one cycle – the Era of Globalisation. We’re likely to see more turmoil as the current economic and political foundations continue to crumble. The next cycle is going to be very different in terms of implications of trade, growth, utility, and the way in which society works – or doesn’t.  A new form of capitalism perhaps?  A new society?  I have some ideas – which make me some kind of Neo-Keynsian…  Happy to discuss anytime.

What did I miss in markets?  For a whole week I didn’t open the FT, trawl Bloomberg, sneak a look at Zerohedge, or open any emails with attachments.  I’ll spend today playing catch up – but the main issues remain the same:

  • Where does China vs US Trade War take us in the short-term?
  • What are the long-term implications of the end of the Globalisation Era – who will be winners and losers? (This is a massive topic – I will put some thots out later this week.)
  • What is the outlook for Europe – and is it relevant?
  • When does the UK become investible again?
  • What’s the right portfolio mix for a market is flux?
  • And, most immediately – How noisy will be the bursting of the current bond bubble be? (Some of the recent central bank comments surprised me, and inflation is on the horizon.)

Answers to these questions and a billion more will be written on the cold dead pages of financial history, but today we can only guess and offer opinions on what they might be.  

I suspect the China story is about to become more complex because of Hong Kong.  I reckon we’re heading towards a tragedy that will only widen the divisions between East and West.  If the UK was truly smart we’d be offering the 170,000 Hong Kong people hold British Overseas passports UK residency rights.

Realistically, the protestors have zero chance of achieving democracy, and they must know that.  The protests are impressive, but poking a hornet’s nest is never smart. Eventually China will clamp down or the Hong Kong economy becomes irrelevant.  The cynical position for the US is a win/win: Pro-democracy protests will ultimately undermine Xi’s authority, while precipitous action by China will allow the US to claim the moral high-ground.  But the protestors will be very mistaken if they expect the US to bail them out.  Hong Kong isn’t on the US list.  But is full of smart, well educated UK passport holders who could be of great use here in the UK.  (Years ago someone proposed the UK gives Hong Kong 100 square miles of otherwise empty land, and 50 years later it would be the richest city in Europe!)

I have no opinion on Boris’s constitutional shenanigans – if we have to destroy democracy to achieve it, well I guess that’s what it takes.  It looks to be more of the same.  Let’s wait and see what happens.

via ZeroHedge News https://ift.tt/32kGRNL Tyler Durden

34 Reported Dead In Ventura County Boat Fire

A boat fire off the Ventura County coast in California has left 34 people dead, according to KTLA, citing Ventura County fire department officials. 

A Google Maps satellite image shows Santa Cruz Island. Via KTLA

According to the US Coast Guard, a rescue operation on the 75-foot boat near Santa Cruz island was still underway as of 5:43 a.m., however they did not confirm any fatalities. 

In a Monday morning tweet, the USCG Los Angelessaid that “a group of crew members has been rescued (one with minor injuries) and efforts continue to evacuate the remaining passengers.”

 Developing…

via ZeroHedge News https://ift.tt/2zL3gru Tyler Durden