Speaking at a press conference after meeting Canadian Prime Minister Justin Trudeau, US VP Mike Pence warned China that US “could more than double tariffs if needed.”
His words sent stocks lower modestly but tumbled yields back to yesterday’s lows…
And crashed the yield curve to new cycle lows…
Additionally, Pence is expected to stir things even further, as CNBC reports that Pence is planning a speech around the 30th anniversary of the Tiananmen Square massacre, according to two sources familiar with the matter.
The remarks are expected to be a censure of China’s religious freedom and human rights record from one of the Trump administration’s highest ranking China hawks. They are set to come amid rising trade tensions between the world’s two largest economies.
A White House official confirmed a Pence speech is in the works – potentially in mid-June, following the anniversary – but declined to comment on its contents.
via ZeroHedge News http://bit.ly/2wwc4j7 Tyler Durden
Illinois legislators seem poised to approve marijuana legalization by the end of the day tomorrow, when the current legislative session ends, while New York legislators have revived the effort to allow recreational use there. Both bills would legalize possession by adults 21 or older and authorize the licensing and regulation of cannabis suppliers. Both also include expungement provisions for people convicted of marijuana offenses. Here are the highlights.
Possession
The Illinois bill, which the state Senate approved yesterday, allows adults 21 or older to possess up to 30 grams (a bit more than an ounce) of marijuana. The New York bill, which was re-introduced last Friday, sets a limit of three ounces.
Home Cultivation
The Illinois bill has been amended to allow home cultivation (up to five plants) only for medical use by qualifying patients. The New York bill would allow any adult 21 or older to grow up to six plants and keep the marijuana they produce at home (even if it exceeds three ounces).
Sales
Retail sales could begin as soon as January 1, 2020, under the Illinois bill. The licensing provisions of the New York bill would take effect when the law is enacted, but it’s not clear how soon retail sales would start.
Taxes
The Illinois bill imposes a 10 percent retail sales tax on marijuana with a THC concentration of 35 percent or less, a 25 percent tax on more potent marijuana, and a 20 percent tax on cannabis-infused products. That’s in addition to standard state and local sales taxes (6.25 percent and up to 4.5 percent, respectively). The taxes paid by consumers would range from about 17 percent to about 36 percent, depending on the product and the locality.
The New York bill would impose a cultivation tax of $1 per gram on marijuana flower, a 20 percent tax on sales by wholesalers or by retailers who obtain marijuana directly from producers, and another 2 percent on such sales, the revenue from which would be allocated to the county where the sale occurs. Again, that’s in addition to standard state and local sales taxes, which in New York City total nearly 9 percent, resulting in a total tax rate of 31 percent there, not including the cultivation tax.
On-Site Consumption
The Illinois bill would allow on-site consumption in businesses that sell cannabis, subject to approval by local governments. Under the New York bill, cannabis retailers could obtain state licenses to allow on-site consumption.
Expungement
Under the Illinois bill, people convicted of marijuana offenses involving 30 grams or less would receive pardons from the governor authorizing expungement of their records. People convicted of offenses involving 30 to 500 grams would have to petition a court for expungement.
Under the New York bill, the convictions of people serving sentences for marijuana-related conduct that is no longer criminal would be automatically vacated and expunged. People serving sentences for marijuana offenses that have been downgraded would be eligible for resentencing. Marijuana offenders who have completed their sentences could petition to have their records reclassified (if the offense has been downgraded) or expunged (if the offense is no longer criminal).
Impaired Driving
Illinois already has a “per se” law that makes a cannabis consumer guilty of driving under the influence if his THC blood concentration is five nanograms or more per milliliter, regardless of whether he is actually impaired. The legalization bill does not change that unscientific and unjust standard. New York’s bill likewise does not change that state’s marijuana DUI law, which requires evidence of impairment beyond THC in the blood.
from Latest – Reason.com http://bit.ly/30YlKAS
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Illinois legislators seem poised to approve marijuana legalization by the end of the day tomorrow, when the current legislative session ends, while New York legislators have revived the effort to allow recreational use there. Both bills would legalize possession by adults 21 or older and authorize the licensing and regulation of cannabis suppliers. Both also include expungement provisions for people convicted of marijuana offenses. Here are the highlights.
Possession
The Illinois bill, which the state Senate approved yesterday, allows adults 21 or older to possess up to 30 grams (a bit more than an ounce) of marijuana. The New York bill, which was re-introduced last Friday, sets a limit of three ounces.
Home Cultivation
The Illinois bill has been amended to allow home cultivation (up to five plants) only for medical use by qualifying patients. The New York bill would allow any adult 21 or older to grow up to six plants and keep the marijuana they produce at home (even if it exceeds three ounces).
Sales
Retail sales could begin as soon as January 1, 2020, under the Illinois bill. The licensing provisions of the New York bill would take effect when the law is enacted, but it’s not clear how soon retail sales would start.
Taxes
The Illinois bill imposes a 10 percent retail sales tax on marijuana with a THC concentration of 35 percent or less, a 25 percent tax on more potent marijuana, and a 20 percent tax on cannabis-infused products. That’s in addition to standard state and local sales taxes (6.25 percent and up to 4.5 percent, respectively). The taxes paid by consumers would range from about 17 percent to about 36 percent, depending on the product and the locality.
The New York bill would impose a cultivation tax of $1 per gram on marijuana flower, a 20 percent tax on sales by wholesalers or by retailers who obtain marijuana directly from producers, and another 2 percent on such sales, the revenue from which would be allocated to the county where the sale occurs. Again, that’s in addition to standard state and local sales taxes, which in New York City total nearly 9 percent, resulting in a total tax rate of 31 percent there, not including the cultivation tax.
On-Site Consumption
The Illinois bill would allow on-site consumption in businesses that sell cannabis, subject to approval by local governments. Under the New York bill, cannabis retailers could obtain state licenses to allow on-site consumption.
Expungement
Under the Illinois bill, people convicted of marijuana offenses involving 30 grams or less would receive pardons from the governor authorizing expungement of their records. People convicted of offenses involving 30 to 500 grams would have to petition a court for expungement.
Under the New York bill, the convictions of people serving sentences for marijuana-related conduct that is no longer criminal would be automatically vacated and expunged. People serving sentences for marijuana offenses that have been downgraded would be eligible for resentencing. Marijuana offenders who have completed their sentences could petition to have their records reclassified (if the offense has been downgraded) or expunged (if the offense is no longer criminal).
Impaired Driving
Illinois already has a “per se” law that makes a cannabis consumer guilty of driving under the influence if his THC blood concentration is five nanograms or more per milliliter, regardless of whether he is actually impaired. The legalization bill does not change that unscientific and unjust standard. New York’s bill likewise does not change that state’s marijuana DUI law, which requires evidence of impairment beyond THC in the blood.
from Latest – Reason.com http://bit.ly/30YlKAS
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iPhones are surprisingly active in the middle of the night, according to a report by Washington Post Technology writer, Geoffrey Fowler.
Fowler tracked his iPhone’s activity recently, finding that dozens of companies were receiving information at all hours.
On a recent Monday night, a dozen marketing companies, research firms and other personal data guzzlers got reports from my iPhone. At 11:43 p.m., a company called Amplitude learned my phone number, email and exact location. At 3:58 a.m., another called Appboy got a digital fingerprint of my phone. At 6:25 a.m., a tracker called Demdex received a way to identify my phone and sent back a list of other trackers to pair up with.
And all night long, there was some startling behavior by a household name: Yelp. It was receiving a message that included my IP address -— once every five minutes. –WaPo
Also not lost on Fowler was the irony of a January Apple advertisement which claimed “What happens on your iPhone stays on your iPhone.”
iPhone apps passing information in the middle of the night include Microsoft OneDrive, Intuit’s Mint, Nike, Spotify, The Washington Post and IBM’s the Weather Channel. “One app, the crime-alert service Citizen, shared personally identifiable information in violation of its published privacy policy,” Fowler notes.
With the help of privacy firm Disconnect, Fowler encountered over 5,400 trackers in just one week – mostly within apps, that send his information to third party companies. Over the course of a month, the unwanted trackers were on track to upload 1.5 gigabytes of data.
“This is your data. Why should it even leave your phone? Why should it be collected by someone when you don’t know what they’re going to do with it?” said former NSA researcher Patrick Jackson who is currently Disconnect’s chief technology officer. Jackson used special software to analyze Fowler’s iPhone.
Patrick Jackson, chief technology officer for Disconnect, hooked columnist Geoffrey A. Fowler’s iPhone into software so they could examine the personal data flowing out of the phone. (James Pace-Cornsilk/The Washington Post)
“I know the value of data, and I don’t want mine in any hands where it doesn’t need to be,” he said.
In a world of data brokers, Jackson is the data breaker. He developed an app called Privacy Pro that identifies and blocks many trackers. If you’re a little bit techie, I recommend trying the free iOS version to glimpse the secret life of your iPhone.
Yes, trackers are a problem on phones running Google’s Android, too. Google won’t even let Disconnect’s tracker-protection software into its Play Store. (Google’s rules prohibit apps that might interfere with another app displaying ads.)
Part of Jackson’s objection to trackers is that many feed the personal data economy, used to target us for marketing and political messaging. Facebook’s fiascos have made us all more aware of how our data can be passed along, stolen and misused — but Cambridge Analytica was just the beginning.
Jackson’s biggest concern is transparency: If we don’t know where our data is going, how can we ever hope to keep it private? –WaPo
App Trackers are akin to the cookies used on websites that monitor and report your activity around the internet. In apps, however, there’s virtually no notice that this is happening, and they’re difficult to block.
So why do the trackers activate in the middle of the night? Some appmakers set them to harvest data whenever the phone is plugged in, or they think it won’t interfere with other functions. According to Fowler, “These late-night encounters happen on the iPhone if you have allowed “background app refresh,” which is Apple’s default.”
In the case of Yelp, the company said their app’s behavior wasn’t actually a tracker, rather, an “unintended issue” that’s been mimicking a tracker. According to the company, Fowler’s discovery only affects 1% of its iOS users, especially those who have made reservations through Apple Maps. “At best, it is shoddy software that sent Yelp data it didn’t need. At worst, Yelp was amassing a data trove that could be used to map people’s travels, even when they weren’t using its app,” notes Fowler.
Popular food delivery app DoorDash is another harvesting offender – which uses a tracker called Sift Science to get a ‘fingerprint’ of your phone – including device name, model, ad identifier and memory size, as well as an accelerometer motion reading to help identify fraud (so they say). Three other trackers used by DoorDash monitor the app’s performance, including one called Segment which routes data such as the delivery address, name, email and cell carrier of the phone’s owner.
DoorDash’s other five trackers, including Facebook and Google Ad Services, help it understand the effectiveness of its marketing. Their presence means Facebook and Google know every time you open DoorDash.
The delivery company tells me it doesn’t allow trackers to sell or share our data, which is great. But its privacy policy throws its hands up in the air: “DoorDash is not responsible for the privacy practices of these entities,” it says.
All but one of DoorDash’s nine trackers made Jackson’s naughty list for Disconnect, which also powers the Firefox browser’s private browsing mode. To him, any third party that collects and retains our data is suspect unless it also has pro-consumer privacy policies like limiting data retention time and anonymizing data. –WaPo
Some of the other companies mentioned, including Microsoft, Nike and the Weather Channel, insist that their trackers are to improve performance. The Intuit-owned Mint, says it uses Adobe’s marketing tracker to better advertise to Mint users. The Washington Post (awkward) told their employee that the trackers “were used to make sure ads worked.” Spotify simply directed Fowler to their privacy policy.
Citizen, the app for location-based crime reporting, said in their privacy policy that they wouldn’t share “your name or other personally identifying information.” When Fowler ran his test, however, he found that “it repeatedly sent my phone number, email and exact GPS coordinates to the tracker Amplitude.”
It was only after Citizen was contacted about this that they removed the Amplitude tracker.
“We will do a better job of making sure our privacy policy is clear about the specific types of data we share with providers like these,” said Citizen spokesman J. Peter Donald, who added “We do not sell user data. We never have and never will.”
What does Apple have to say about all of this?
Fowler was disappointed at the orgy of data harvesting happening at all hours, and asked “isn’t Apple supposed to be better at privacy?”
“At Apple we do a great deal to help users keep their data private,” Apple said in a statement. “Apple hardware and software are designed to provide advanced security and privacy at every level of the system.”
“For the data and services that apps create on their own, our App Store Guidelines require developers to have clearly posted privacy policies and to ask users for permission to collect data before doing so. When we learn that apps have not followed our Guidelines in these areas, we either make apps change their practice or keep those apps from being on the store,” said Apple.
Except that Fowler found that very few apps using third-party trackers were actually disclosing the names of those companies, or how they protect his data.
Getting more deeply involved in app data practices is complicated for Apple. Today’s technology frequently is built on third-party services, so Apple couldn’t simply ban all connections to outside servers. And some companies are so big they don’t even need the help of outsiders to track us.
The result shouldn’t be to increase Apple’s power. “I would like to make sure they’re not stifling innovation,” says Andrés Arrieta, the director of consumer privacy engineering at the Electronic Frontier Foundation. If Apple becomes the Internet’s privacy police, it could shut down rivals. –WaPo
Disconnect’s Jackson suggested that Apple might consider adding controls built into the iOS which would give people more visibility, or require apps to clearly disclose when they’re using third-party trackers.
” If I opened the DoorDash app and saw nine tracker notices, it might make me think twice about using it,” concludes Fowler. Indeed.
via ZeroHedge News http://bit.ly/30UOb2S Tyler Durden
Oil markets remain under pressure amid economic downturn worries due to the U.S.-China trade war that shows no sign of ending. Ongoing trade war tensions are causing concern across financial markets as well. The S&P 500 has dropped over 5 percent from its recent record highs, while some analysts claim that there is even more downside potential as markets have barely priced the effects of China’s potential response in the trade war.
Some possible retaliatory moves by China, in addition to its recent tariff increase on $60 bn worth of U.S. goods, include restricting rare earth exports to the U.S., a move that would hurt many U.S. manufacturers since China holds roughly 71 percent of the global market share. Anop-ed in the Beijing-based Global Times newspaper, which often expresses the views of the Chinese Communist Party (CCP), said on Wednesday that the U.S. will rue forcing China’s hand on rare earth materials. An official of China’s National Development and Reform Commission (NDRC) said the day before that China will not tolerate foreign high-tech products made from rare earths produced in China being used to contain and suppress China’s development.
“If anyone wants to use the products made from rare earths exported by China to contain and suppress the development of China, I think the people of the old revolutionary base area in the south of Jiangxi Province and the people of China will not be happy,” said the official.
According to the Global Times, he made the remarks when asked by reporters if China will use rare earths as a countermeasure against U.S. trade moves to contain China. Obviously, the report added, the response is a strong signal from China to the U.S.
Who will blink first?
Despite Beijing’s increasingly defiant tone over the trade war, the question at the end of the day is who will blink first? Trump is hoping that he can outlast China since the U.S. imports around five times more Chinese goods than China imports from the U.S. Some analysts agree with this assertion, while others debunk it as an oversimplification. Yet, noted economist Gary Shilling predicts that not only will President Trump win the seemingly endless trade war with China, but in the long run, the U.S. will be better off.
“People say nobody wins trade wars. Yeah, in the short-run you don’t, but in the long-run…the U.S. will be better off,” Shilling recently said.
“When you’ve got plenty of supply in the world, and I think you do. It’s the buyer that has the upper hand not the seller. The buyer has the ultimate power and who’s the buyer? The U.S. is the buyer, China is the seller,” he said. Other agree, claiming that without the vast U.S. market, China will have trouble finding buyers for many of its consumer products.
China creates gas pain for the U.S.
While China could try to inflict pain on the U.S. by withholding rare earth materials, it is already creating a negative impact on U.S. LNG project development. China’s move to hike tariffs on U.S. LNG from 10 percent to 25 percent will cause a number of greenfield LNG project proposals to not go forward. These projects, unlike their project proposal counterparts that are funded by oil and gas majors with deep pockets, will not be able to strike long term off-take agreements needed to reach the all-important final investment decision (FID) before a project can be built. Moreover, many of these smaller projects which are often being promulgated by a patchwork of various companies and energy players will also need Chinese financing to go forward. The reality that China is now the second largest LNG buyer in the world and will likely pass Japan, the top current LNG buyer, in a number of years is a hard reality for the U.S. LNG sector to deal with as it seeks to compete with both Australia and Qatar as the top LNG export leader by the mid part of the next decade.
The U.S., even without a 25 percent tariff on its LNG exports to China, would struggle to vie with Qatar as the top global LNG producer. The tiny, gas-rich kingdom caught the energy world by surprise in late 2017 when it announced that it would increase its liquefaction capacity from 77 million tons per annum (mtpa) to a staggering 110 mtpa by late 2023 or early 2024 by developing more gas at its North Field, an increase in production of some 43 percent. The move will also increase Qatar’s total production capacity from 4.8 to 6.2 million barrels of oil equivalent (boe) per day.
For the U.S. to compete with Qatar on a liquefaction-to-liquefaction capacity basis it will need to see a large percentage of current LNG project proposals come to fruition. For the time being, the pain from increased Chinese tariffs on U.S. LNG has been minimized. The U.S. will soon become the world’s third-largest LNG exporter. In December, the U.S. Energy Information Administration (EIA) projected that U.S. LNG export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world behind Australia and Qatar.
via ZeroHedge News http://bit.ly/2Kd6H0t Tyler Durden
Disney CEO Bob Iger said on Wednesday that if Georgia carries out the state’s strict new abortion laws, telling Reuters that it would be “very difficult” for the company to continue filming in the state because “many people who work for us will not want to work there, and we will have to heed their wishes in that regard.”
On May 7th, Georgia governor Brian Kemp (R) signed into law banning abortion after a doctor can detect a fetal heratbeat, which occurs at approximately six weeks into pregnancy. If it survives court challenges, it will take effect on January 1st.
If that happens, “I don’t see how it’s practical for us to continue to shoot there,” said Iger. Of note, Disney filmed “Black Panther” and “Captain America: Civil War” in Georgia.
Georgia is one of eight states to pass anti-abortion legislation this year for the purpose of inducing the U.S. Supreme Court to overturn Roe v. Wade, the 1973 landmark case that established a woman’s right to terminate her pregnancy.
The state offers a tax credit that has lured many film and TV productions.The industry is responsible for more than 92,000 jobs in Georgia, according to the Motion Picture Association of America (MPAA), and some 455 productions were shot in Georgia in 2018, according to the state. –Reuters
In 2016, Disney and other major studies threatened to boycott the state if they were to strengthen protections for same-sex marriage opponents – a bill which passed through the state legislature, only to be vetoed by then Republican governor, Nathan Deal.
Dozens of celebrities and producers have already committed to no longer working in Georgia over the abortion law, while others such as JJ Abrams’ and Jordan Peele’s production companies have said that they would remain in the state, but donate “100% of our respective episodic fees” from the current season of “Lovecraft Country” to the ACLU of Georgia.
On Tuesday, Netflix said that they would have to “rethink our entire investment in Georgia” if the new law is enacted – however they will continue production there for now while working with groups opposing the legislation. The company films shows such as “Stranger Think” and “Ozark” in Georgia – the latter of which star Jason Batemen told The Hollywood Reporter he would no longer work in the state if the legislation survives court challenges.
“We have many women working on productions in Georgia, whose rights, along with millions of others, will be severely restricted by this law,” said Netflix chief content officer Ted Sarandos. “It’s why we will work with the A.C.L.U. and others to fight it in court. Given the legislation has not yet been implemented, we’ll continue to film there — while also supporting partners and artists who choose not to.”
via ZeroHedge News http://bit.ly/2WfAYTB Tyler Durden
California’s rent control advocates scored a partial victory yesterday. A bill capping rent increases statewide survived a crucial vote, but only after its author made a number of major concessions.
On Wednesday, the California Assembly approved AB 1482 by a 43-31 vote. The original version of the bill would have capped statewide rent increases at 5 percent plus inflation on buildings older than 10 years. The law would sunset, or expire, after 10 years.
California’s developers and landlords—who spent millions fending off a rent control ballot measure in 2018—opposed the bill.
According to the Los Angeles Times, the state’s Realtors association circulated memos in the state legislature last week demanding a number of changes, including shrinking the number of years the bill would be in effect.
Yesterday, Assemblyman David Chiu (D–San Francisco), the bill’s chief sponsor, agreed to increase the cap on allowable rent increases to 7 percent per year plus inflation, as well as have the bill sunset within three years, rather than 10.
“We have millions of Californians that are one rent increase away from being forced out of their homes for decades,” said Chiu to the Times. “They are our neighbors. They are our co-workers. They are our brothers and sisters. They are our grandmothers.”
The amended version of Chiu’s bill is roughly in line with Oregon’s first-in-the-nation rent control law. Passed in late February, that bill caps rent increases at 7 percent plus inflation for buildings 15 years and older.
Both AB 1482 and Oregon’s rent control law allow landlords to raise rents as much as they wish after an incumbent tenant moves out.
To prevent landlords from just evicting tenants in order to get around rental price caps, Oregon’s rent control bill also banned no-cause evictions. Landlords in the state generally have to show a government-approved reason before asking a tenant to leave.
Chiu’s bill does not ban no-cause evictions. Rather, it prevents landlords from kicking tenants out solely to avoid his bill’s price ceilings. In order to prove that they’re not doing that, landlords need only provide tenants with a written reason (other than wanting to increase the rent) for asking them to leave. Those non-rent reasons are not defined in the bill.
A separate pending bill, AB 1481, would ban no-cause evictions, and faces a Friday deadline for passing the Assembly.
Chiu’s bill now heads to the California Senate, where it faces an uncertain future. It’s unclear whether the concessions made will be enough to mollify opponents. Such a watered-down measure, meanwhile, can’t be expected to attract enthusiastic support from tenant advocates.
Oregon’s rent control bill received only lukewarm support from tenants, who considered it a decidedly compromised half-measure.
Tenants Together, a California coalition of local tenant organizations, spent most of its efforts yesterday supporting an ultimately failed Senate bill that would have made forming tenant associations easier.
According to the Times, Michael Weinstein of the AIDS Healthcare Foundation (AHF)—the primary funder of the “yes” side on the state’s 2018 rent control ballot initiative—deemed AB 1482’s provisions too weak even before they were amended. His organization is looking to put yet another rent control initiative on the 2020 ballot.
Economists generally take a dim view of rent control given its potential for reducing the construction of new housing. Capping how much developers can charge for new units reduces their incentive to build those units in the first place.
Empirical studies have found that rent control benefits tenants in price-controlled units, but also leads to a reduction in the overall supply of rental housing, as landlords are incentivized to take their properties off the market.
Rather than cap prices, free marketers generally favor lifting restrictions on building new housing supply.
A bill that would have done just that, by lifting statewide restrictions on building fourplexes and apartment buildings near transit, stalled in the California Senate earlier this month.
With efforts at goosing new supply paused for the moment, bills like Chui’s may prove more attractive. They may also make things worse.
from Latest – Reason.com http://bit.ly/2XoPCEk
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The May correction was technically well advertised in April, even before that, but the run in April stretching to new highs on $SPX and $NDX was a tricky exercise to navigate through. Extremes become more extremes as I outlined in my 2018 market lessons.
The wedge patterns I outlined in advance finally met their end with downside breaks bringing us the May correction highlighting again that technicals matter. The wedge mattered. The weekly hanging man mattered. The trend breaks mattered.
And yes historic technical extensions mattered:
$NDX:
101.988 – highest weekly MACD upside deviation ever.
Ever is a long time.
You can choose to believe this is sustainable, or you may not. pic.twitter.com/a3O7BKPixm
That deviation having gone from most positive ever to now negative:
Also mattering: The negative divergences highlighted in Lying Highs II.
All of these factors have now resulted in a technical reaction that produced a retrace to not only the daily 200MA yesterday, but also the critically important weekly 50MA, another key support pivot:
$ES has reached a key support level, the weekly 50MA.
Bulls will want to defend and rally from here.
Close the week below risks further downside. pic.twitter.com/2yK90Kcqwe
See a sustained close below these MAs and bears may be devouring bulls.
After all this H&S pattern is triggered and it has a 2640 target and bulls need to step it up here today & tomorrow into the end of May and invalidate this pattern now that we’ve seen a break of the neckline:
So let’s be very clear there are numerous critical technical concerns that very much suggest markets may be engaged in major topping patterns, the Wyckoff pattern I outlined on May 1 right near the top is still fully valid at this stage, and the ghost chart is casting a long shadow here as well. With the combined backdrop of an escalating trade war, yield curve inversions, slowing growth, trapped central banks and a toxic political climate there’s a lot that can seriously wrong for bulls here, a macro and technicals backdrop that is paving the path to intervention.
But navigating markets is a complex exercise that requires an open mind to the other side of any argument and now that May has brought the first correction of 2019 it may be worthwhile to take a look at the bull case from here.
Keep in mind that ,in context of the larger 2019 rally, the May correction has been run of the mill. A near 8.5% correction in $NDX a 6% correction on $SPX. Nothing super dramatic has happened yet and we remain inside the larger 2018 price range.
What is the bullish case then? Well, take out all the noise and all the headlines and let me highlight here a couple of interesting considerations.
As corrections unfold it’s always important to watch for potential signs of turns. I outlined one of these yesterday:
This potential pattern is by no means confirmed at this stage, but it leaves room for a bullish interpretation, at least short term if the pattern triggers.
But let’s look at 2019 from a broader seasonal perspective:
Massive ramp up for 4 months straight, then a correction in May which may or may not be over yet as mentioned above.
But guess what year it is? Yea, I know, 2019, but what is 2019? It’s a pre-election year with 2020 being the next presidential election.
Now check this out this chart on pre-election year seasonality:
Look familiar? 4 month ramp out of the gate and then a correction into the end of May. Oops.
See it’s the what happens next on that seasonality chart that should scare the hell out of bears as it implies new highs to come if it plays out this year again.
Also keep in mind the megaphone structure I first outlined in Combustion is still out there as well:
Without a fast close above 2800 this week into next this scenario may be quite moot as the H&S pattern may trigger, but it’s best to keep an open mind and an eye on a broad range of possible outcomes. Levels, patterns and signals will keep us appraised as to the next big move.
A more in depth analysis of the technical factors/signals weighing the bull versus the bear case can be read in Fire Hazard.
* * *
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via ZeroHedge News http://bit.ly/2Z1OeZ1 Tyler Durden
California’s rent control advocates scored a partial victory yesterday. A bill capping rent increases statewide survived a crucial vote, but only after its author made a number of major concessions.
On Wednesday, the California Assembly approved AB 1482 by a 43-31 vote. The original version of the bill would have capped statewide rent increases at 5 percent plus inflation on buildings older than 10 years. The law would sunset, or expire, after 10 years.
California’s developers and landlords—who spent millions fending off a rent control ballot measure in 2018—opposed the bill.
According to the Los Angeles Times, the state’s Realtors association circulated memos in the state legislature last week demanding a number of changes, including shrinking the number of years the bill would be in effect.
Yesterday, Assemblyman David Chiu (D–San Francisco), the bill’s chief sponsor, agreed to increase the cap on allowable rent increases to 7 percent per year plus inflation, as well as have the bill sunset within three years, rather than 10.
“We have millions of Californians that are one rent increase away from being forced out of their homes for decades,” said Chiu to the Times. “They are our neighbors. They are our co-workers. They are our brothers and sisters. They are our grandmothers.”
The amended version of Chiu’s bill is roughly in line with Oregon’s first-in-the-nation rent control law. Passed in late February, that bill caps rent increases at 7 percent plus inflation for buildings 15 years and older.
Both AB 1482 and Oregon’s rent control law allow landlords to raise rents as much as they wish after an incumbent tenant moves out.
To prevent landlords from just evicting tenants in order to get around rental price caps, Oregon’s rent control bill also banned no-cause evictions. Landlords in the state generally have to show a government-approved reason before asking a tenant to leave.
Chiu’s bill does not ban no-cause evictions. Rather, it prevents landlords from kicking tenants out solely to avoid his bill’s price ceilings. In order to prove that they’re not doing that, landlords need only provide tenants with a written reason (other than wanting to increase the rent) for asking them to leave. Those non-rent reasons are not defined in the bill.
A separate pending bill, AB 1481, would ban no-cause evictions, and faces a Friday deadline for passing the Assembly.
Chiu’s bill now heads to the California Senate, where it faces an uncertain future. It’s unclear whether the concessions made will be enough to mollify opponents. Such a watered-down measure, meanwhile, can’t be expected to attract enthusiastic support from tenant advocates.
Oregon’s rent control bill received only lukewarm support from tenants, who considered it a decidedly compromised half-measure.
Tenants Together, a California coalition of local tenant organizations, spent most of its efforts yesterday supporting an ultimately failed Senate bill that would have made forming tenant associations easier.
According to the Times, Michael Weinstein of the AIDS Healthcare Foundation (AHF)—the primary funder of the “yes” side on the state’s 2018 rent control ballot initiative—deemed AB 1482’s provisions too weak even before they were amended. His organization is looking to put yet another rent control initiative on the 2020 ballot.
Economists generally take a dim view of rent control given its potential for reducing the construction of new housing. Capping how much developers can charge for new units reduces their incentive to build those units in the first place.
Empirical studies have found that rent control benefits tenants in price-controlled units, but also leads to a reduction in the overall supply of rental housing, as landlords are incentivized to take their properties off the market.
Rather than cap prices, free marketers generally favor lifting restrictions on building new housing supply.
A bill that would have done just that, by lifting statewide restrictions on building fourplexes and apartment buildings near transit, stalled in the California Senate earlier this month.
With efforts at goosing new supply paused for the moment, bills like Chui’s may prove more attractive. They may also make things worse.
from Latest – Reason.com http://bit.ly/2XoPCEk
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For years, gold bulls had speculated that China has been quietly piling up physical gold, awaiting the moment to unveil a gold-backed currency, either after the dollar’s reserve status falters or before.
Today, the Malaysian Prime Minister Mahathir Mohamad took one large step in that direction when he proposed the launch of an Asian version of the euro: a common trading currency for East Asia that, unlike the euro, would be pegged to gold, describing the existing currency trading in the region as manipulative (perhaps in reference to China’s currency setting framework).
According to the Malaysian PM, the proposed common currency could be used to settle imports and exports, but would not be used for domestic transactions.
“In the Far East, if you want to come together, we should start with a common trading currency, not to be used locally but for the purpose of settling of trade,” he said at the Nikkei Future of Asia conference in Tokyo. “The currency that we propose should be based on gold because gold is much more stable.”
He said under the current foreign exchange system, local currencies were affected by external factors and were manipulated. He did not elaborate on how they were manipulated, and whether his complaint was against the dollar or the yuan. That said, Mahathir has long been a critic of currency trading, and according to Reuters, he once accused George Soros of betting against Asian currencies.
Incidentally, during the Asian financial crisis two decades ago, Mahathir pegged the ringgit currency at 3.8 to the dollar and imposed capital controls. That peg was scrapped in 2005.
Earlier this week, the Trump administration said that no major trading partner met the criteria required to be placed on the U.S. Treasury Department’s list of its currency manipulators, it named Malaysia among nine countries that required close scrutiny. In response, Malaysia’s central bank said on Wednesday its intervention in currency markets was limited to managing excessive volatility.
While it is unclear if the Malaysian PM’s proposal is serious or just jawboning, should the Asian nation truly push for a currency alternative that evades the dollar, then many of the narrative gaps in the Zoolander script will finally become self-explanatory.
via ZeroHedge News http://bit.ly/2YXTWLc Tyler Durden
