Category: zerohedge

Rwanda closed a major part of its border with the Democratic Republic of Congo on Thursday after people died of Ebola amid the second worst outbreak in history. So far the disease has killed more than 1,800 people and sickened over 2,600. 

The latest victim died just days after his case was confirmed by medical professionals in the border city of Goma, home to over 2 million people and an international airport, according to officials in Congo. 

the Congolese Health Ministry said the 1-year-old daughter of a man who had died of the disease in the border city of Goma had Ebola.

The man was Goma’s second confirmed Ebola case, and he died on Wednesday after spending several days at home with his family while showing symptoms. –NYT

Aside from the two deaths, the 1-year-old girl’s case marks the first known transmission of the disease in the city. The first confirmed case in Goma was a 46-year-old preacher who was able to successfully pass through three checkpoints on his way from Butembo, according to Fox News.

The World Health Organization, meanwhile, has recommended against travel restrictions – however warns that the risk of regional spread is “very high.” 

“The challenges to stopping further transmission are indeed considerable. But none are insurmountable,” reads a Wednesday statement from WHO. “And none can be an excuse for not getting the job done.“

According to the Congolese government, there was a “unilateral decision by the Rwandan authorities” to close the border crossing at Goma, according to the BBC. “The Congolese authorities deplore this decision, which runs counter to the advice of the WHO,” the statement continues. 

Last week Saudi Arabia stopped issuing visas to people from the DRC, citing the Ebola outbreak, shortly before the Islamic Republic’s annual pilgrimage this month. 

According to Mayor Gilbert Habayarimana of Rubavu district in neighboring western Rwanda, the Goma border was closed “to avoid unnecessary crossings,” adding “We are closely monitoring the situation at Goma, the border can be reopened anytime, when the situation improves.” 

Health officials for months feared that an Ebola case would be confirmed in the city. Just days after the first Goma case was confirmed, the World Health Organization (WHO) declared the Ebola outbreak a rare global emergency – the highest level of alarm.

The organization has used such an alarm level only four times in its history, including the Ebola epidemic that took the lives of more than 11,000 people in West Africa between 2014 and 2016.

While the alert prompted a surge of millions of dollars in new pledges by international donors, health workers say a new approach is desperately needed to combat misunderstandings in the community that lead people with Ebola not to seek medical help. –Fox News

Rwandans who regularly cross the border at Goma have also expressed their concerns. 

“The closure is terrible for me. My seven children and I get something to eat when I go to Goma for work. Yes, Ebola is a terrible thing, but living is what matters most,” said builder Ernest Mvuyekure, who works in the city. 

“I am more afraid of hunger than Ebola, they should not close the border. I would rather die of sickness than of hunger.“

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

And so we are back – bad news is great news.

A dismal ISM print followed by an even worse construction spending data has sparked a renewed hope that things are just shitty enough to force The Fed to cut cut cut more than Powell would like to admit.

Nevermind, it was terrible enoughhttps://t.co/uu2D7elrGF

— zerohedge (@zerohedge) August 1, 2019

Stocks are loving it…

Bond yields are collapsing…10Y is back at 1.94%

The yield curve is collapsing…

And the hawkish surge in the dollar is unwinding…

What a farce!!

via ZeroHedge News https://ift.tt/2Ke3LPy Tyler Durden

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

Are these really the best and brightest that the Democratic Party has to offer? 

It was going to take a monumental effort to top Marianne Williamson’s level of craziness on Tuesday night, but on Wednesday there were several Democratic contenders that gave it their best shot.  Kirsten Gillibrand and Jay Inslee were particularly unhinged, and Joe Biden “repeatedly stumbled over numbers and phrases” during an incoherent performance that will be remembered for a long time to come.  The Democrats may have more than 20 candidates running, but none of them looks like a president at this point.  Perhaps that will change, or perhaps a stronger candidate will enter the race eventually, but right now Democratic strategists cannot be feeling too good about their chances of winning the 2020 election.  Of course Republicans are facing some very serious challenges of their own, but at least they don’t have to worry about a powerhouse candidate on the other side.

After what we witnessed on Wednesday night, there are several candidates that should simply pack up and go home, because their performances were downright embarrassing.  The following are the 13 nuttiest quotes from Wednesday’s Democratic presidential debate…

#13 Kirsten Gillibrand: “The first thing that I’m going to do when I’m president is I’m going to Clorox the Oval Office.”

#12 Jay Inslee: “Our house is on fire. We have to stop using coal in ten years and we need a president to do it or it won’t get done. Get off coal. Save this country and the planet.”

#11 Joe Biden: “Obamacare is working.”

#10 Julian Castro: “I don’t want to make America anything again. I don’t want us to go backward. We’re not going back to the past. We’re not going back where we came from. We’re going to move forward.”

#9 Andrew Yang: “We need to do the opposite of much of what we’re doing right now and the opposite of Donald Trump is an Asian man who likes math.”

#8 Kamala Harris: “What we need is someone who is going to be on that debate stage with Donald Trump and defeat him by being able to prosecute the case against four more years. And let me tell you we’ve got a long rap sheet.”

#7 Cory Booker: “We have a real crisis in our country, and the crisis is Donald Trump — but not only Donald Trump, I have a frustration that sometimes people are saying the only thing they want is to beat Donald Trump. Well, that is the floor and not the ceiling.”

#6 Bill de Blasio: “If we’re going to beat Donald Trump, this has to be a party that stands for something. The party of labor unions. This has to be the party of universal health care. This has to be the party that’s not afraid to say out loud we’re going to tax the hell out of the wealthy. And when we do that, Donald Trump right on cue will call us socialists. Here’s what I’ll say to him: ‘Donald, you’re the real socialist.’”

#5 Jay Inslee: “And number two — number two, we have to make America what it’s always been, a place of refuge. We got to boost the number of people we accept. I’m proud to have been the first governor, saying send us your Syrian refugees. I proud to have the first governor to stand up against Donald Trump’s Muslim ban. I’m proud to have sued him 21 times and beat him 21 times in a row. I’m ready for November 2020.”

#4 Andrew Yang: “Raise your hand in the crowd if you’ve seen stores closing where you live. It is not just you. Amazon is closing 30% of America’s stores and malls.”

#3 Cory Booker: “There’s a saying in my community that you’re dipping into the Kool-Aid and you don’t even know the flavor.”

#2 Kirsten Gillibrand: “I think as a white woman of privilege who is a US senator running for president of the united States, it is my responsibility to lift up those voices that aren’t being listened to. And I can talk to those white women in the suburbs and explain to them what white privilege actually is.”

#1 Jay Inslee: “We have one last chance. When you have one chance in life, you take it. Think about this. Literally the survival of humanity on this planet in civilization is in the hands of the next president. And we have to have a leader who will do what is necessary to save us. That includes making this the top priority of the next presidency.”

Sadly, it is quite likely that one of these individuals will be the next president of the United States.  That is quite a depressing thought, especially when you consider the path that this country is currently on.

Perhaps the most interesting moment of the night came when a group of protesters attempted to interrupt the debate…

Protesters hit night two of the second Democratic presidential debate with a group of them removed Wednesday night after they demanded New York City Mayor Bill de Blasio fire Daniel Pantaleo, the officer who put Eric Garner, an unarmed black man, in a deadly chokehold in 2014, and a woman interrupted Joe Biden to chant about immigrants being deported.

‘Stop all deportations on Day One,’ read the large banner the woman unfurled in the hall of the Fox Theater while Biden and Julian Castro were debating immigration policy.

I think that we are going to see much more of this sort of thing in the months ahead, because anger and frustration are reaching a boiling point all over America right now.

This is likely to be the most chaotic election cycle that we have witnessed since at least 1968, and it isn’t going to be pretty.

I wanted to mention one last thing before I end this article.  Once again, we had a debate where Joe Biden got significantly more talking time than anyone else and Andrew Yang received the least.  The following comes from CNN…

The second night of CNN’s 2020 Democratic debate just wrapped, and by the end of the night, former Vice President Joe Biden had the most speaking time, with 21 minutes and 1 second.

Sen. Kamala Harris spoke for 17 minutes and 43 seconds. Meanwhile, businessman Andrew Yang had the least amount of talking time, with 8 minutes and 38 seconds.

It probably won’t ever happen, but it would be nice to see at least one debate where there is a level playing field for all the candidates.

Certain candidates are clearly being pushed to the forefront, and others are clearly being marginalized, and we are just supposed to pretend that it isn’t happening.

Our political system is deeply, deeply broken, and it is getting worse with every election cycle.

via ZeroHedge News https://ift.tt/31acppe Tyler Durden

Yesterday, when presenting Goldman’s preview  of what the Fed would likely say in its historic statement (which turned out to be spot on) we highlighted the bank’s surprising dissent with the coming rate cut, because as Goldman’s chief economist Jan Hatzius said, the bank’s own assessment “remains that the justification for rate cuts at the current juncture is tenuous in terms of the Fed’s own mandate” adding that he was “unconvinced of the need for easier policy even at the time of the June 18-19 FOMC meeting, and virtually all of the information since then has come in on the stronger side.”

Overnight, it its post-mortem of what the Fed did say, Goldman doubled down in its role as the leader of the Fed’s hawkish #resistance, and as Jan Hatzius explained, while the bank expects a second cut at the September meeting, “we continue to see little need for it.” Here’s why:

In recent research, we have shown that uncertainty is not actually particularly high and capex expectations are not particularly depressed; that the role of manufacturing in the economy is overemphasized; that cutting when financial conditions have already eased considerably does not reduce downside growth risks by much.

Goldman’s biggest criticism of what the Fed just did – in addition to crushing its credibility and eroding its “independence” as Chris Rupkey noted last night – is that “aggressive “insurance cut” policies do not actually reduce the frequency of recessions because of the risk that unnecessary easing depletes the central bank’s ability to respond to future downturns.“

Goldman’s mini rant aside, the bank goes on to note that it saw the results of Wednesday’s meeting as consistent with its baseline expectation “that easing will end with a second 25bp cut, for a total funds rate recalibration of 50bp” and sees a

• 55% chance of a 25bp cut in September,
• 5% chance of a 50bp cut,
• 40% chance of no cut.

… for an 80% cumulative probability of another cut at some point this year. To be sure, a second cut in September would provide continuity according to Hatzius, and complete the desired recalibration sooner, and would come ahead of a likely rebound in core PCE inflation in the August report that will not yet be available. However, as the Goldman economist notes, “timing the second cut later in the year would allow Fed officials to get a better sense of how the current risks will play out.”

In any case, the market saw Powell’s statement as a hawkish rate cut, and as Goldman notes, the FOMC statement introduced a bit more ambiguity about a possible second cut in September by slightly watering down its policy guidance to “act as appropriate” with the preface, “As the Committee contemplates the future path of the target range for the federal funds rate.” Moreover, it downgraded the promise to “closely monitor” developments to a weaker “continue to monitor…”

Powell also made several comments about the FOMC’s broader intentions that tempered market expectations for a deeper cutting cycle somewhat. Powell described the Fed’s strategy as “a mid-cycle adjustment to policy” and said three times that the FOMC was aiming to adjust policy “to a somewhat more accommodative stance,” adding “over time” in the last instance. He also clarified that the FOMC does not expect a rate cutting cycle that goes on for a long time because it does not see “real economic weakness” or expect “a recession or a very severe downturn.”

As a result, the new guidance about both September and the total intended recalibration of policy “came as a moderate hawkish surprise to bond market expectations” and total pricing of rate cuts through the end of 2020 in the fed funds futures market declined by about 8bp in total.

Finally, in response to the question that inspires dread among traders: “What would it take for the FOMC to not deliver a second cut at all?”, here is Goldman answer:

Like a couple of the journalists who asked questions today, we are admittedly less clear about the Fed’s reaction function than in the past. But we suspect it would likely require steady growth numbers, a sizeable move up in inflation to a level close to target, and a significant reduction in trade tensions.

So for Trump, who desperately wants more rate cuts, the playbook is clear – do everything that would ensure more rate cuts, i.e. smother the economy… but not too much.

Finally, Goldman hinted at the one wildcard that could force the Fed to cut more:

“We also see risks in the other direction, especially on a significant escalation of tariffs against China.”

So if an acceleration in the trade war with China is what the Fed will need to cut more, it’s pretty clear what that means for the chances of any trade deal between Washington and Beijing.

via ZeroHedge News https://ift.tt/2yuY6zi Tyler Durden

Authored by Mark Cudmore via Bloomberg,

July may be about as good as it gets for the S&P 500, as all of the potentially positive catalysts appear to be behind us.

So much noise and effort, and yet the S&P 500 struggles to gain much ground. The month started with trade optimism before easing hopes were added. We then got a narrative that the U.S. economic data was surprisingly resilient and corporates were still making money.

There’s a great statistic that the S&P 500 was never negative on the month for a single second of July and yet it only gained a total of 1.3%. In fact, it’s not even 1.2% above where it closed three months earlier.

That’s what happens when an already expensive asset is then priced optimistically for all the major risk events. Good news doesn’t help it much.

On Monday last week, I listed the five upcoming potential positives cited by bulls:

1. a 50 basis points cut by the Fed,

2. a surprise ECB cut,

3. a U.S.-China trade deal,

4. a surprisingly strong earnings season,

5. and investors not being sufficiently long stocks.

The first three didn’t transpire.

Earnings have been OK but forward guidance has been very negative, causing 3Q estimates to fall — it’s now expected to be the first quarter of shrinking profits for S&P 500 companies since 2015.

And the price action makes abundantly clear that few investors feel underexposed and compelled to buy the index. There’s been no threat to the top-side danger levels (3065 and 3105) outlined a few weeks ago.

The sharply flattening yield curve suggests many bond investors think the Fed is overly complacent over the economy.

That means we may be about to enter the next phase of the equities reaction function to data — where bad news is very bad for stocks, while marginal data beats don’t provide much relief.

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

With China, Europe, and Japan Manufacturing PMIs are all signaling contraction, US Manufacturing PMI dropped to its weakest since September 2009 (at 50.4 vs 50.6 prior) and ISM Manufacturing tumbled to 51.2 – the lowest since Aug 2016.

While manufacturing makes up only about 11% of the U.S. economy, the risk is that further weakness will extend to service providers and prompt those companies to reduce investment and limit hiring, endangering the record-long expansion.

Under the hood PMI is really ugly with employment contracting fore the first time since June 2013 and output expectations plunge to record lows; and ISM employment and prices paid plunged even if respondents claim prices are soaring because of tariffs (as new orders rebounded modestly).

Chris Williamson, Chief Business Economist at IHS Markit said:

“US manufacturing has entered into its sharpest downturn since 2009, suggesting the goods-producing sector is on course to act as a significant drag on the economy in the third quarter. The deterioration in the survey’s output index is indicative of manufacturing production declining at an annualised rate in excess of 3%.

“Falling business spending at home and declining exports are the main drivers of the downturn, with firms also cutting back on input buying as the outlook grows gloomier. US manufacturers’ expectations of output in the year ahead has sunk to its lowest since comparable data were first available in 2012, with worries focused on the detrimental impact of escalating trade wars, fears of slower economic growth and rising geopolitical worries.

“Employment is now also falling for only the second time in almost ten years as factories pull back on hiring amid the growing uncertainty.

“More positively, new order inflows picked up for a second successive month. Although remaining worryingly subdued compared to the strong growth seen earlier in the year, the modest improvement will fuel hope that production growth could tick higher in August.”

While US Manufacturing PMI is at its weakest in a decade, it remains in expansion unlike the rest of the world…

And cue “cleanest dirty shirt” analogies.

We give the last word to one of the ISM respondents:

“China tariffs and pending Mexico tariffs are wreaking havoc with supply chains and costs. The situation is crazy, driving a huge amount of work [and] costs, as well as potential supply disruptions.” (Computer & Electronic Products)

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

Just on the heels of new reports of a significant build-up of Chinese security forces on Hong Kong’s border, with the White House monitoring what an official called “a congregation of Chinese forces on Hong Kong’s border,” the chief of the Chinese military garrison in Hong Kong warned Thursday that the army stands ready to “protect” Chinese sovereignty. 

A military crackdown could be imminent, as we warned earlier, against the massive anti-Beijing protests which have gripped Hong Kong over the past month, and which last week escalated to vandal attacks on the central government’s liaison office in Hong Kong, as The New York Times reported.

Further upping the ante, new threatening footage showing an emergency response “drill” involving Chinese troops taking positions around the city was unveiled by the military on Wednesday at an event honoring the People’s Liberation Army’s (PLA’s) Hong Kong garrison. The footage was described as “a promotional video showing various activities and stating that troops stationed in the city were able to protect its long-term stability.”

The PLA’s Hong Kong garrison commander Chen Daoxiang firmly asserted that continuing unrest on the streets in Hong Kong would “not be tolerated” while playing the promo video which included a scene of a soldier shouting in Cantonese during an anti-riot exercise: “All consequences are at your own risk.”

The new PLA “riot control” video, which the Washington Post described as showing soldiers practicing shooting protesters:

The caption on the video says: “The PLA’s Hong Kong Garrison is an important embodiment of China’s national sovereignty, a vital force of safeguarding the ‘One Country, Two Systems,’ and a cornerstone in maintaining Hong Kong’s prosperity and stability. What we have been doing is preparing for war, training hard on enemy-killing skills, and keep our weapons ready and always ready to attack!” — The Washington Post

Daoxiang said, according to the South China Morning Post: “Recently, there have been a series of extremely violent incidents happening in Hong Kong,” and added, “This has damaged the prosperity and stability of the city, and challenged the rule of law and social order.” 

“The incidents have seriously threatened the life and safety of Hong Kong citizens, and violated the bottom line of ‘one country, two systems’,” he said, and concluded, “This should not be tolerated and we express our strong condemnation.”

SCMP’s commentary noted it was the first time the key Hong Kong PLA commander commented on the growing Hong Kong protests, which were triggered in reaction to the city’s controversial extradition bill.

PLA #HongKong garrison shows its commitment to safeguarding the country’s sovereignty and security, as well as Hong Kong’s prosperity and stability through a video released on Wednesday. pic.twitter.com/GlOI9K56Yw

— China News 中国新闻网 (@Echinanews) August 1, 2019

Last week Chinese military leaders hinted that People’s Liberation Army troops could be used to quell the protests following widespread reports of vandal attacks on the central government’s liaison office in Hong Kong, according to The New York Times. Ministry of National Defense, Senior Col. Wu Qian, said at the time, “That absolutely cannot be tolerated.”

And yesterday an unnamed White House official described to Bloomberg evidence of a Chinese security force build up on Hong Kong’s border, though few details were given: “The nature of the Chinese buildup wasn’t clear; the official said that units of the Chinese military or armed police had gathered at the border with Hong Kong. The official briefed reporters on condition he not be identified,” the source said, according to the report.

via ZeroHedge News https://ift.tt/2YBEgg0 Tyler Durden

Blain’s Morning Porridge, submitted by Bill Blain of Shard Capital

With one hand the Fed giveth, a 25 bp basis point cut, but on the other it taketh – Powell’s “mid-cycle adjustment” left markets confused. 

Where is the easing to negative-infinity they’d been promised?  The yield curve inverted (spawning a host of headlines about how the bond market again predicts a recession), the dollar strengthened (well, of course it would), and stocks did nothing till they stumbled and fell a bit – a toddler screaming that “insuring against downside risks” should mean a promise of another cut, stunned when Powell said “it’s not the beginning of a long series of rate cuts.”

Thus occurred the most pointless rate cut in Fed history – easing rates in a “healthy” economy pretty much at full employment with a “favourable” outlook, where the only real problem is massively inflated financial asset bubbles.   The effect will be to juice already distorted financial assets higher. Marvellous (US readers – sarcasm alert).

Two Fed Voting governors dissented – give them medals.

Trump tweeted: “As usual, Powell let us down.”  Helpful.  Donald wants a “lengthy and aggressive rate cut cycle which will keep pace with China, The European Union and other countries…” Predictable.  

Blain’s Brexit Watch

As Boris plans to pour billions into No-Deal Preparations, the Irish accuse him of Bullying tactics, and Labour gets ready to offer a second referendum as their response, it’s all get terribly exciting. (It also deeply depressing – just writing this makes me wonder if I am suffering PTSD?) The feelgood Boris engendered just a week ago is already wearing thin. All the bluff and bluster needs balanced by something tangible. As yet, we aren’t seeing it. This is leading to lots of questions – does Boris need to engage with Brussels and go visit.

The Answer from Downing Street will be no. Dominic Cummings will insist. Let others respond to the challenge of an agreement that Boris has laid down. No Engagement. Europe will come to us. (Seriously?)

The result is going to be further uncertainty, confustion and opportunities for Project Fear Remoaners to snipe and moan.

Pundits now see the likelihood of a No-Deal at 30% and rising, with Sterling heading lower to $1.15.

Hold onto your seats boys and girls. This is going to get rough before we land.

via ZeroHedge News https://ift.tt/336gts2 Tyler Durden

This is not what The Fed’s “insurance” rate-cut was supposed to do…

10Y Yield has just tumbled back below 2.00% (for the first time since July 5th)…

And the yield curve – wherever you look – is collapsing…

In other words – the bond market is screaming – “Policy Error!!”

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

A new report from Bloomberg shows US soybean exports to China collapsed in 1H19 to the lowest level in more than a decade.

The US exported 614,806 tons of soybeans to China in June, according to US customs data. That brought 1H19 China imports of soybeans from the US to 5.9 million tons, the lowest level since 2004, according to Bloomberg calculations.

US farmers, who harvest soybeans from September to November, have been some of the hardest hit in the trade war as Chinese buyers shift to Latin American markets for agricultural products.

Senior US officials met in China on Wednesday with the hopes of resolving trade disputes that could result in more agriculture trade between the two countries.

But the US trade delegation broke off discussions with its Chinese counterparts on early Wednesday morning and is already on its way back to Washington, a sign that no new progress was made, and that China is not likely to buy significant amounts of US agriculture products this summer.

According to Bloomberg, US delegates including Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer wrapped up talks with Vice Premier Liu He and their other Chinese counterparts on Wednesday afternoon at the Xijiao State Guest Hotel in Shanghai, according to a pool report.

The latest round of talks took place against a jarring backdrop following a fresh outburst by Trump on Twitter, who, as delegates gathered Tuesday, slammed China’s unwillingness to buy American agricultural products and said it continues to “rip off” the US.

…to ripoff the USA, even bigger and better than ever before. The problem with them waiting, however, is that if & when I win, the deal that they get will be much tougher than what we are negotiating now…or no deal at all. We have all the cards, our past leaders never got it!

— Donald J. Trump (@realDonaldTrump) July 30, 2019

What’s worse, the talks were supposed to focus on “goodwill” gestures, like the agricultural purchases promised by China, and the rollback of sanctions on Huawei promised by Trump. This could be devastating for US farmers as China is going to continue sourcing soybeans from Latin America, not the US, in 2H19.

Since the start of the trade war, most of China’s soybeans have come from Brazil. Last year, the bulk of the country’s 80 million ton export went to China, replacing market share that was once controlled by US farmers.

The Global Times on Wednesday morning said if Washington still holds the illusion that Beijing will somehow cave in and compromise on issues concerning sovereignty, “then no deal is fine.”

The Trump administration prepared for a no-deal week with the unveiling of a $16 billion farm bailout several weeks ago, that is expected to greatly benefit the wealthiest of US farmers while not providing adequate financial support for smaller ones.

With the election coming up, there’s a high probability since the trade talks collapsed Wednesday that China could abandon US agriculture markets for Brazil, Argentina, and Paraguay, which could certainly lead to increased financial hardships for President Trump’s base, the American farmer, located across the Midwest US.

via ZeroHedge News https://ift.tt/317hK0n Tyler Durden