Liquidity injections and zero interest rate policies disguise risk and may give a false sense of security…
This risk could not be more evident today. Not only have we seen large downgrades to consensus growth estimates and central banks’ expectations of GDP and inflation, leading indicators also point to a much weaker economy ahead.
There are similarities with 2008 that we should not ignore.
A massive China stimulus inflates risky assets and commodities.
Poor macro and earnings data is ignored by markets assuming that all will improve in the second half of the year.
Yield curves invert. 15 economies now have 30-year yields lower than LIBOR overnight rates.
The figure of negative yield debt rises to $11 trillion.
Financial repression is at all-time highs while leading indicators point to a growing risk of recession.
In the first quarter of 2019, stocks have added $9.3 trillion in market capitalization, bonds have gained almost $2 trillion in value. Meanwhile, the Conference Board Index of leading indicators has plummeted for the major economies. The Citi Economic Surprise Index has also fallen, particularly in March, despite a small bounce in the Eurozone at the beginning of the year. Global trade growth, machine equipment orders and manufacturing indices remain poor… while debt soars to another record-high of $244 trillion according to the Bank of International Settlements and the IIF.
The difference with the Asian or the 2008 crisis is that this time the excess risk is hidden under central banks’ balance sheets and will continue to do so.
So, if risk is hidden under a perennial money supply-growth carpet, why should we worry? Because the endgame is not likely to be a 2008-style bang, but a slow, painful and unstoppable zombification of the global economy. As the evidence of stagnation rises, governments get more nervous. What do they do? Stop the monetary madness? Allow high productivity sectors to thrive? Promote deleveraging and prudent investment? No. More white elephants, massive unproductive spending at the expense of taxpayers and savers in what is likely to be yet another massive transfer of wealth from salaries and savers to governments with fancy names.
Investors are forced into riskier assets for lower returns and the crowding out of productive sectors in favour of government and crony subsidised sectors accelerates, sending money velocity lower, productivity growth collapses and mainstream economists hail the financial repression madness with the excuse that “there is no inflation”, while citizens all over the world complain and demonstrate -rightly- against the rise in cost of living. Intensifying financial repression under the “there is no inflation” excuse is the most ludicrous mantra ever. It is like running a car at full speed down a highway under the premise that “we have not crashed yet”.
Many economists defend the zombification of economies under a false social premise. The argument is the following: What is bad about following the example of Japan? It has low unemployment, its debt is cheap and the economy survives rather well. It is a social contract and debt does not matter.
Everything is wrong with this argument. Japan’s low unemployment has nothing to do with monetary and fiscal policy and everything to do with demographics and lack of immigration. Japan’s low cost of debt is not a blessing. It is the result of using the savings of citizens to perpetuate an almost-Ponzi scheme that does not prevent the country from spending more than 20% of its budget on interest expenses. The idea that it is irrelevant because the Treasury buys more bonds tells us how insane we are defending such policies. It is a massive kick-the-can policy transferring the risk to the next generations. It is no wonder that Japanese citizens don´t spend or invest as much as their central planners would want them too. They are not stupid. They know that the government is going to confiscate wealth via monetary and fiscal means at some point. This endless debt machine makes the economy less dynamic, and stagnation is guaranteed. But the strength of the Yen and the low cost of Japanese debt are only supported by the high level of international reserves and strong financial flows of the country. Japàn keeps its imbalances because it is one of the few that has undertaken this concerted policy of zombification. This cannot be transferred to the rest of the world, because the result would not be Japanese-style stagnation but Argentina-style crisis chain.
The fact that Japan has survived two decades of stagnation with the wrong Keynesian policies should not be an excuse to do the same, but an opportunity to do the opposite.
The idea that Quantitative Easing has failed to spur growth and healthy recovery of the world economy is correct. The thought that the mistakes of quantitative easing are solved by outright currency printing and more government crowding out of the productive economy is simply ludicrous. You do not correct mistakes with a bigger mistake.
via ZeroHedge News https://ift.tt/2WBHOyA Tyler Durden
Ten years after central banks launched the greatest monetary experiment in history, pushing rates to zero or lower in an attempt to reflate away an unsustainable debt load while purchasing $12 trillion in securities to prop up risk assets, we are back where we started with deflation once again emerging as the biggest threat to the world, over $10 trillion in sovereign bonds yielding below 0%, and after a disastrous attempt at renormalizing monetary policy, the market is convinced the Fed will cut rates in the next few months.
But besides the greatest roundtrip in monetary policy over the past decade, few things are as they were in 2009.
To demonstrate that, BofA’s Michael Hartnett has published its latest “Hitchhiker’s Guide to the Investment Universe”, which is a primer for investors on the size, composition, risks, returns, flows, valuations of bond & equity universe. The report also finds that, as expected, Wall Street is still “too big to fail”, “Japanification” of growth and rates is prevalent, tech is dominant, there is $175 trillion of assets, there are 536 zombie companies, tech represents 26% of market cap, analysts miss bond yield forecasts by 100bps annually, and much more.
Below we list 20 stunning facts from the report, highlighting Wall Street life, the investment universe and everything…
1. $175tn: current value of global financial assets, 2X the size of global GDP
Wall St. is still “too big to fail”: The total value of global stocks & bonds outstanding has jumped by 8x since 1990, from $23tn to $175tn today.
Global asset values are 2X the size of the global economy; Global asset values fell in 2018 from $180tn to $175tn. .
Global debt outstanding is now $100tn, up from just $13tn back in 1990; Debt represents 57% of global financial assets.
The value of global equities outstanding has similarly surged from $9tn in 1990 to $75tn today. World stocks equities tripled in value between the Global Financial Crisis (GFC) lows in Mar’09 to their most recent peak of $90tn in Jan’18.
Financial assets are now 200% of global GDP; back in 1990 they were 97%. The most recent peak in financial assets as a % global GDP in 2017 was 226%, just above the 2007 highs.
2. 26%: US tech & e-commerce as % of US equity market capitalization
The past 10 years have witnessed the 2nd great bull market in technology in the past 25 years. In 2018, tech & e-commerce sectors accounted for 26% of total market cap (21% today); rivaling prior sector extreme: in the 2000 dot.com bubble TMT was at 34%; in the 2006 housing bubble financials were 26%, and in 2008 during the China/oil bubble, energy & material sectors @ 24%.
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3. 7%: US Treasury market owned by China, largest of any country
China, the world’s second largest economy, is the world’s biggest single country foreign owner of US government debt. Pensions & Insurers (17.4%), mutual funds & ETFs (12.7%) and the Federal Reserve (12.6%) hold the most securities outright.
The US Treasury market is by far the largest government bond market in the world accounting for $18.4tn of debt securities: almost $4 of every $10 of government debt outstanding is a US Treasury. The next 4 largest government bond markets are Japan, China, UK & France.
4. 0.2%: the end-2020 consensus forecast for Japan’s 10-year JGB yield
Additionally, every year since 2014 Treasury yields have been forecasted to end each year above 3%; every year they have failed to do so. Across the Atlantic, in the past 6 years the consensus has over-predicted German bond yields by on average 100 basis points. And the forecast for the 10-year JGB yield at the end of 2020 is a pitiful 0.2%. The “Japanification” of global interest rates of the past 10-years thus continues apace.
5. Four deflationary Ds of excess Debt, bank Deleveraging, tech Disruption, and aging Demographics explain the consistent undershoot of inflation expectations.
The inability of monetarism to boost wages and income in the world’s largest economic regions is sparking a populist backlash amongst electorates.
6. There is $11 trillion in global negatively yielding bonds
One reason growth & inflation has disappointed in the past 10 years is the ever-growing level of debt, which is not “multiplying” into economic activity, but is rather leading consumers & companies to increase savings and suppress “animal spirits”. As of Q3 2018 global debt equaled $244.2tn, equivalent to 318% of world GDP.
While debt is at a record high, interest rates are close to record lows. The reason is the unprecedented intervention in debt markets by central banks. “Financial suppression” means there are $11.0tn of bonds trading with negative yields today.
7. 2747bps: the staggering drop in US CCC High Yield bond spreads since 2009
8. 2018: 1st year since 2000 that cash outperformed bonds and stocks
This table shows global cross-asset total returns since 2000, in USD terms. Annualized asset returns since QE began in 2009: US stocks 15%, global HY bonds 12%, Treasuries 2%, cash 0%, commodities -1%. In 2018, cash outperformed bonds and stocks for the first time since 2000.
9. 536: the number of zombie companies in the world, 13% of total
Ominously, low interest rates and the ability of lower-rated companies to issue debt has led to a rise in the number of “zombie” companies, i.e. companies that are extremely indebted and are unable to stay on their feet without the current backdrop of historically low interest rates. In 2018, the number of “zombie” companies, defined as companies with profits (EBIT) less than interest payments totaled 536, not far off the highs seen during the Global Financial Crisis (626).
10. $5.5tn: market cap of US tech sector, >entire market cap of Emerging Markets
he second tech bubble: US tech is now by far the biggest individual sector in the global stock market at $5.5tn market cap, larger than all EM stocks ($5.4tn) and Eurozone stocks ($4.4tn); and 3x the size of all other tech sectors combined.
The second largest equity market, Japan, is almost 8x smaller ($3.3tn) than the US ($25.0tn). Financials ($7.6tn) remain the largest outright global sector but now only account for 16.7% of global stocks, well below their prior peak of 26.1% in Jan’07.
US tech companies account for 5 of the 7 largest companies in the world by market capitalization, and 7 of the top 10 companies in the world are tech companies. Microsoft is the only company to feature in the top 10 stocks throughout the 21st century.
11. 1/3: financials as % market cap >1/3 in Canada, Spain, Italy, Australia, Brazil
Tech (14%) now plays a substantial role in Emerging Markets, but the financial sector (24%) is the main driver of EM; this is a major change from 2008 when energy & resources represented 36% of the EM index. As a result, the catalyst for EM to outperform has shifted from commodity prices to global rates. Eurozone equities are highly cyclical and disproportionately reliant on financials, notably Italy (32%) and Spain (36%). The Eurozone’s next structural bull market awaits the end of the current era of negative interest rates.
12. 4%: Global EPS growth forecast in 2019, down from 24% in 2018
The US economic cycle is set to become the longest in history in July 2019; but US, Eurozone & Chinese growth has repeatedly struggled to exceed expectations. The inability of economic growth to hit “escape velocity” helps explains why global profits have consistently missed expectations, most notably in Europe. Years of big upside surprises to EPS have typically been the results of one-off policy interventions, for example the 2018 US tax cuts.
13. 3498: the level at which the S&P 500 bull market becomes the biggest ever
This chart shows how far equities are from their all-time highs, in US dollar (green = <5% from high, white = 5-20% from high, red = >20% from high). US equity market -3% from all-time high; stark contrast to Japan (27% from high), Eurozone (33%), China (40%), Spain (52%), Italy (62%).
14. 68%: the rise in stock price needed for Eurozone banks to reach old highs
Of particular note, Eurozone banks are still 67% off their all-time highs, Korean industrials 75%, Italian financials 82%, South African materials 81%.
15. 67%: the % of the global equity market >20% away from its all-time high
10 years into the bull market, only 9% indices within 5% of all-time highs, 24% are within 20% and a 67% in “bear markets”, i.e. >20% away from highs.
16. 17bps: the CDS of the “safest” company in the world, Nestle
These tables show the largest 25 companies, ranked by market cap & credit default swap spreads, as well as the most creditworthy countries. Nestle is the creditworthy mega cap in financial markets (CDS = 17bp), Alibaba the least (CDS = 84bp). Switzerland (12bp) overtook Germany (13bp) as the most creditworthy country in May 2018; the least is Venezuela (7760bp, peak was 15559bp in Nov’17). US & European most creditworthy sectors = European & US IG healthcare; least = European discretionary HY, US staples HY (Bloomberg).
17. 2.5%: dividend yield of global equity index, below its historic average of 2.9%
This table shows dividend yields around the world: it shows that global equities currently yield 2.5%. Dividend yields in excess of 3.5% (cheap) can be found in Russia, Australia, UK, Spain, Italy, Taiwan, energy, utilities, REITs. Dividend yields below 2% (expensive): India, US, tech, discretionary, communications.
18. 15X: price-earnings ratio of the global equity index, below its 15.7X average
This table shows price/earnings ratios based on 12-month forward earnings. Global equities are currently trading on a forward P/E multiple of 15.0x. P/E multiples above 17x (expensive): India, US, REITs, staples, tech, healthcare. P/E multiples below 12x (cheap): Russia, Korea, Italy, Brazil, Spain, China, financials.
19. 100: corporate bond prices relative to commodity prices close to 100-year high
This chart shows the performance of US corporate bonds vs. commodities in the past 100 years. US corporate bonds hit an all-time high versus commodities in June 2017, exceeding the prior high set during the Great Depression in 1933; they remain close to that high today.
20. 2002: last time commodities best performing asset class (as they are in 2019)
via ZeroHedge News https://ift.tt/2COxYBI Tyler Durden
With far left candidates and policies on the rise in America, it’s no surprise that for the first time ever, more young people say they’d prefer to live in a socialist country over a capitalist one.
Whether it’s free healthcare, free college tuition, or universal basic income, students around America increasingly support higher taxes on the wealthy in order to pay for these progressive policies. But would they support similar policies if they had skin in the game?
To find out, Campus Reform‘s Cabot Phillips went to Florida International University in Miami to test the waters on a “Socialist GPA” policy in which students with higher GPAs would be forced to “spread the wealth” and give some of their GPA points to students with lower GPAs.
Despite the overwhelming number of students who initially said they’d support socialist policies, few agreed to go along with such a plan.
“I’m all for helping, but I wouldn’t give some of my points… I’ve lost a lot of sleep so I don’t know if that would be fair,” one student said…
…while another answered no because “I like, study all day for my grades.”
Yet another student, after expressing her support for socialism in America conceded, “I guess it would be kind of hypocritical for me to say no.”
Another student, trying to justify his refusal to abide by such a policy, said, “you study for your grades, and they reflect how much time you’re studying.”
What did the rest of the students have to say when asked why it was any different when it came to spreading the financial wealth?
WATCH:
via ZeroHedge News https://ift.tt/2CHhM59 Tyler Durden
Days after Trump’s Secretary of State Mike Pompeo demanded that Russia “cease its unconstructive behavior” by landing a transport plane full of Russian troops in Caracas last Saturday, the Kremlin has responded – essentially telling Washington to pound sand – and that their troops will remain in Venezuela “for as long as needed” according to the Independent.
In the latest indication the crisis in Venezuela is taking on elements of a proxy battle between the former Cold War rivals, a spokeswoman for Russia’s foreign ministry said the troops had been dispatched to fulfil “military contracts”.
“They are involved in the implementation of agreements in the sphere of military and technical cooperation,” said Maria Zakharova, according to the AFP, adding that the troops would stay there “for as long as needed”.
“Russia is not changing the balance of power in the region, Russia is not threatening anyone,” she said. –Independent
Last week we also noted that new satellite images reveal a major deployment of S-300 air defense missile systems to a key air base south of Caracas shortly after Russia arrived.
On Wednesday while meeting with the wife of opposition leader Juan Guaidó, President Trump called on Russia to pull its troops out of Venezuela, warning that “all options” were on the table to make that happen.
When asked by a reporter about the Russian troops, Trump said “Russia has to get out. What’s your next question.” When asked if that sentiment had been conveyed to the Kremlin, Trump replied: “They know. They know very well.”
President Trump, aka Putin’s puppet, on Venezuela: “Russia has to get out.” | pic.twitter.com/dIUgw2xdKO
The United States, UK and other Western nations claim that last year’s elections in Venezuela were unfair, while President Maduro and his supporters have pointed to the testimony of independent election observers who say it was legitimate. Guaidó declared himself president in January, finding the immediate support of 50 nations led by the United States.
Maduro, meanwhile, has refused to accept Western aid – suspecting it will be used as a guise to smuggle weapons to the opposition.
Last month, Mr Maduro refused to allow US aid into the country, pointing to previous incidents in Latin America when the US had smuggled weapons to anti-government forces in such shipments. His country has been working with the UN to increase the distribution of food and other supplies, amid claims of shortages of basic necessities.
On Thursday, Reuters said an internal UN report suggested about a quarter of Venezuelans were in need of humanitarian assistance.
The report painted a dire picture and estimated 94 per cent of its 28.8m people were living in poverty. It said 3.4m people had fled, with a further 1.9m expected to follow in this year. –Independent
More recently, Maduro blamed the United States for a series of power outages, claiming over Twitter that the Trump administration was engaged in an “electrical war” which was “announced and directed by American imperialism against our people.”
via ZeroHedge News https://ift.tt/2FMWrcA Tyler Durden
Friday wrapped up the first quarter of 2019, and it was the best quarterly performance since 2009. As shown in the chart below, if you bought the bottom, you are “killing it.”
However, you didn’t.
Despite all of the media “hoopla” about the rally, the reality is that for most, they are simply getting back to even over the last year.
That is, assuming you didn’t “sell the bottom” in December, which by looking at allocation changes, certainly appears to be the case for many.
If we deconstruct the ratio we can see the rotation a bit better
Not surprisingly, historically speaking, investors had their peak stock exposure before the market cycle peak. As the market had its first stumble, investors sold. When the market bounces, investors are initially reluctant to chase it. However, as the rally continues, the “fear of missing out or F.O.M.O” eventually forces them back into the market. This is how bear market rallies work; they inflict the most pain possible on investors both on the bounce and then on the way back down.
However, for the moment, we are still in the midst of a bear market rally. This will be the case until the market breaks out to new highs. Only then can we confirm the previous consolidation is complete and the bull market has been re-established.
The good news is on a very short-term basis, the market IS INDEED bullishly biased and coming off an extremely strong first quarter rally. The current momentum of the market is strong as bullish optimism has regained a foothold.
But, as we noted for our RIA PRO Subscribers last week, (Free 30-Day Trial with Code: PRO30) complacency has moved back to extremes which suggests that a further rally isn’t “risk free.”
“The graph below is constructed by normalizing VIX (equity volatility), MOVE (bond volatility) and CVIX (US dollar volatility) and then aggregating the results into an equal-weighted index. The y-axis denotes the percentage of time that the same or lower levels of aggregated volatility occurred since 2010. For instance, the current level is 1.91%, meaning that only 1.91% of readings registered at a lower level.
“Beyond the very low level of volatility across the three major asset classes, there are two other takeaways worth pondering.
The peak -to- trough -to- peak cycle over the last year was measured in months not years as was the case before 2018.
Secondly, when the index reached current low levels in the past, a surge in volatility occurred soon after that. This does not mean the index will bounce higher immediately, but it does mean we should expect a much higher level of volatility over the next few months.”
Nonetheless, the markets are close to registering a “golden cross.” This is some of that technical “voodoo” where the 50-day moving average (dma) crosses above the longer-term 200-dma. This “cross” provides substantial support for stocks at that level and limits downside risk to some degree in the short-term.
Over the next couple of weeks, you are going to see a LOT of commentary about “the Golden Cross” buy signal and why this means the “bull market” is officially back in action. While “golden crosses” are indeed bullish for the markets, they are not an infallible signal. The chart below shows the 2015-2016 market where investors were whipsawed over a 6-month period before massive Central Bank interventions got the markets back on track.
The next chart shows the longer-term version of the chart above using WEEKLY data. The parameters are set for a slightly longer time frame to reduce the number of “false” indications. I have accentuated the moving averages to have them more clearly show the crosses.
The one thing that you should notice is the negative “cross over” is still intact AND it is doing so in conjunction with an extreme overbought weekly condition and a “negatively diverging” moving average divergence/convergence (MACD) indicator. This combined set of “signals” has only been seen in conjunction with the previous market peaks.(As noted, the corrections of 2012 and 2015-16 were offset by massive amounts of Central Bank interventions which are not present currently.)
From a portfolio management standpoint, what should you do?
In the short-term the market remains bullishly biased and suggests, with a couple of months to go in the “seasonally strong” period of the year, that downside risk is somewhat limited.
Therefore, our portfolio allocations:
Remain long-biased towards equity risk
Have a balance between offensive and defensive sector positioning
Are tactically positioned for a trade resolution (which we will sell into the occurrence of.)
However, the analysis also keeps us cautious with respect to the longer-term outlook. With the recent inversion of the yield curve, deteriorating economic data, and weaker earnings prospects going forward, we are focused on risk management and capital controls. As such we are:
Continuing to carry slightly higher levels of cash
Overweight bonds
Have some historically defensive positioning in portfolios.
Continue to tighten-up stop-loss levels to protect gains, and;
Have outright hedges ready to implement when needed.
Ignore The Yield Curve…They Said
In the World War II real-time strategy (RTS) game Company of Heroes, released on September 12th, 2006, the engineer squad would sometimes say:
“Join the army they said. It’ll be fun they said.”
Since then, the statement has become a common meme on the internet to espouse the disappointment derived from various actions from doing the laundry to getting a job.
Well, the latest suggested action, which will ultimately lead to investor disappointment, is:
“Ignore the yield curve they said. It’ll be fun they said.”
“Historically, equity markets tended to produce some of the strongest returns in the months and quarters following an inversion. Only after [around] 30 months does the S&P 500 return drop below average,”
While the statement is not incorrect, it is advice that will ultimately lead to disappointment.
In 1998, for example, as the bull market was running hot. There was “no recession in sight,” and investors were repeatedly advised to ignore the yield curve because “this time was different.”
After all, at that moment in history, it was perceived to be a “new paradigm.” The internet was changing the world and making old metrics, like earnings, relics of the past. It was even suggested at the time that “investing like Warren Buffett was like driving Dad’s old Pontiac.”
Over the next two years, that advice held true as bullish optimism seemed well founded. It was in early 2000 that Jim Cramer issued his Top 10-Stock Picks for the next decade.
The problem is that no one ever said “sell.”
While it was great that gains were made during the period between the initial yield curve inversion and the peak of the market, all of those gains, plus much more, were wiped out in the ensuing decline. Values in portfolios were returned to where they were roughly a decade earlier by the time the decline was officially over.
Since the majority of mainstream financial advice never suggest selling, investors had no clue that if they had gone to cash in 1998, they saved themselves both a lot of grief and years of losses needing to be recovered.
It was just an anomaly.
That was the belief at the time. Following the “Dot.com” crash, the entire tragic event was considered an anomaly; a once-in-a-100-year event which would not be replicated anytime again soon.
But just 4-years later, in 2006, investors were once again told to ignore the yield curve inversion as it was a “Goldilocks economy” and “sub-prime mortgages were contained.” While many of the individuals who had told you to stay invested leading up to 2000 peak were mostly gone from the industry, a whole new crop of media gurus and advisors once again told investors to “ignore the yield curve.”
For a second time, had investors just sold when the yield curve inverted, the amount of damage that would have avoided more than paid off for the small amount of gains missed as the market cycle peaked.
This quad-panel chart below shows the 4-previous periods where 50% of 10-different yield curves were inverted. I have drawn a horizontal red dashed line from the first point where 50% of the 10-yield curves we track inverted. I have also denoted the point where you should have sold and the subsequent low.
As you can see, in every case, the market did rally a bit after the initial reversion. However, had you reduced your equity-related risk, not only did you bypass a lot of market volatility (which would have led to investor mistakes anyway) but ended up better off than those trying to just ride it out.
That’s just history
Oh, as we noted last week, we just hit the 50% mark of inversions on the 10-spreads we track.
This time is unlikely to be different.
More importantly, with economic growth running at less than 1/2 the rate of the previous two periods, it will take less than half the amount of time for the economy to slip into recession.
While I am not suggesting you sell everything and go to cash today, history is pretty clear that you will likely not miss much if you did.
What Can You Do?
I don’t disagree that the markets could certainly rise from here, in the short-term. I answered this question last week:
“Are we going to hit new highs you think, or is this a setup for the real correction?”
The answer is “yes” to both parts.
The mainstream media’s advice is simply:
“Since you don’t know when a bear market will start, you just have to ride it out.”
This is the problem with the mainstream media and the majority of the financial advice in the world today.
It is not required that you know precisely when one market cycle ends and another begins.
Investing isn’t a competition. It is simply a game of survival over the long-term. While it is critically important we grow wealth while markets are rising, it is NOT a requirement to obtain every last incremental bit of gain there is. Staying too long at the poker table is how you leave broke.
There are three important things worth pointing out:
The top panel is GAAP earnings (what companies REALLY earn) and nominal GDP.
The black vertical line is when the markets begin to “sniff out” something is not quite right.
The red bars are when “expectations” are disappointed.
Pay attention to these longer-term trend changes as historically they signify bigger issues with the market.
It is unlikely this time is different. There are too many indicators already suggesting higher rates are impacting interest rate sensitive, and economically important, areas of the economy. The only issue is when investors recognize the obvious and sell in the anticipation of a market decline.
The yield curve is clearly sending a message which shouldn’t be ignored and it is a good bet that “risk-based”investors will likely act sooner rather than later. Of course, it is simply the contraction in liquidity that causes the decline which will eventually exacerbates the economic contraction. Importantly, since recessions are only identified in hindsight when current data is negatively revised in the future, it won’t become “obvious” the yield curve was sending the correct message until far too late to be useful.
While it is unwise to use the “yield curve” as a “market timing” tool, it is just as unwise to completely dismiss the message it is currently sending.
via ZeroHedge News https://ift.tt/2FO8qH6 Tyler Durden
In previewing the “green shoots” catalysts to watch for the second quarter after a dismal, for the economy Q1, BofA’s Michael Hartnett listed five key data points which will set the quarterly mood early, and which included US retail sales and manufacturing ISM, South Korean export orders, February German factory orders and, last but not least, China’s manufacturing new orders PMI
Well, overnight we got the last one when China confirmed prior speculation of a rebound in the economy, when the National Bureau of Statistics reported that China’s manufacturing PMI rebounded strongly from a contractionary 49.2, and printing at 50.5, its first expansion since September 2018, and beating estimates of a 49.6 reading. The non-manufacturing PMI continued its recent improvement, rising to 54.8, also the best reading since last September, as both the services and construction PMIs strengthened, and resulted in the composite PMI rising to 54.0 from 52.4.
Almost all major sub-indexes imply better growth momentum.
While the production index was 3.2% higher at 52.7, the new orders sub-index was 1.0% higher at 51.6, just why of Hartnett’s 52.0 bullish “green shoot” cutoff. The employment sub-index edged up 0.1% to 47.6 from 47.5.
More importantly, trade indicators also strengthened – the imports sub-index rose to 48.7 from 44.8, and the new export order went up to 47.1, vs. 45.1 in February. Both trade-related indexes have recovered from the bottom seen in late 2018 and early 2019, but are still below the levels in 2017/early 2018.
Inventory indicators also rose with the raw material inventories index 2.1% higher at 48.4, and the finished goods inventory index increased by 0.6pp in March to 47.0 (both indicators remain below their long-term averages).
Price indicators continued to climb – the input price index rose by 1.6% to 53.5, and the output price index was 2.9% higher at 51.4. By enterprise type, data suggest manufacturing PMI went up for medium and small-sized manufacturing enterprises in March and declined for large manufacturing enterprises.
Curiously, the improvement in trade indicators took place even as China’s record trade surplus with the US faded in recent months:
The official non-manufacturing PMI (which according to Goldman Sachs estimates is comprised of the service and construction sectors at roughly 80%/20% weightings) also increased to 54.8 in March vs 54.3 in February. Both services and construction PMIs strengthened. The services PMI edged up by 0.1% to 53.6, and the construction PMI increased 2.5% to 61.7.
What prompted the rebound in the PMI? after an unprecedented credit injection earlier in the year, in addition to better underlying growth momentum, higher commodity prices and Chinese New Year holiday seasonality may have contributed to the rebound according to Goldman Sachs which sees a few factors contributing to a higher manufacturing PMI in March:
higher commodity prices rose in March which could add upward bias to the manufacturing PMI readings;
activities resuming after the Chinese New Year holiday could also push up manufacturing PMI in March vs February – in historical years when the Chinese New Year date was similar to this year, March NBS manufacturing PMI rebounded by an average of 1.7% vs February;
underlying growth momentum may have also improved as the previous policy easing started to show its support to overall economic growth.
On the non-manufacturing side, construction PMI was stronger partially due to the Chinese New Year seasonality, and partially also supported by stronger infrastructure investment activities. Services PMI also improved – logistics, transportation and securities industry activities were strong in March, while real estate activities stayed weak. In sum, NBS PMI data suggest better growth in Q1 compared with Q4 last year.
Whatever the reason behind the rebound, much of its has already been priced in with the Shanghai Composite, the year’s best performing major index, posting nearly double the return of the S&P in the first quarter.
More importantly, with China’s PMI now signalling an key inflection point for both the Chinese and global economy, and the early stages of an economic rebound, the Sunday print will likely serve to push Asian stocks sharply higher on the first day of the quarter.
But the biggest implication from the rebound in Chinese data, is what implications it may have on the ongoing US-China trade negotiations, because as the Global Times’ Editor in Chief wrote overnight, the Chinese are now “less worried” about the trade war, as “they feel the US is not as powerful as they had thought and the impact the trade war has on their life is not that big. This will seriously weaken psychological advantage of US side in trade talks.”
One year since the trade war started, the Chinese have been less worried about it. They feel the US is not as powerful as they had thought and the impact the trade war has on their life is not that big. This will seriously weaken psychological advantage of US side in trade talks.
To be sure, the (goalseeked) Chinese data will be used by Beijing as a bargaining chip to make more forceful demands in bilateral trade negotiations, as it can now asset that the worst consequences of the trade war are now in the rearview mirror, and as a result US leverage over China’s economy is now declining.
via ZeroHedge News https://ift.tt/2U54dqY Tyler Durden
Frustrated Brits are getting jerked around by the ham-handed rollout of the UK’s new porn blocks, which would ban anyone from watching porn until they verify that they’re an adult, according to the Independent.
The new ban has been in the works for over a year, however internal confusion over how it should be implemented has resulted in confusion and delay.
Rumours had swirled in recent weeks that the blocks could be imminent, after a series of newspapers suggested that the ban would be introduced on 1 April. But that date had never been confirmed, and appears to have emerged amid complete confusion about when they would actually be introduced. –Independent
The new rules mandate that adults prove their age via an over-the-counter card they can purchase from a shop, or uploading their ID online.
Digital Minister Margot James said last year that the age verification rules would be in force by Easter of this year.
“Age verification measures, urgently needed to help prevent children being exposed to harmful and inappropriate content, need to be brought in as soon as possible,” said Javed Kahn – CEO of Barnardo’s children’s charity.
“Accessing the internet in an age-appropriate way is important for children and young people, and can be a positive opportunity to learn, keep in touch with friends and have fun. But the risks of being exposed to age-sensitive and harmful content such as pornography needs to be acknowledged and addressed.”
A representative for the UK’s Safer Internet Centre explained that the complexity of the rollout is unsurprising.
“What they are actually proposing to do is quite a bit more difficult and a lot less simple than it has been reported as,” said the organization’s helpline manager, Carmel Glassbrook, who added “Nobody at the Safer Internet Centre is expecting it be a smooth and fast process at all.”
Privacy rights advocates are livid
“They’ve had over a year to get this right,” said Myles Jackman, a UK lawyer who specialises in obscenity law and sexual freedoms. “It was supposed to come into effect in April 2018 and we have consistently flagged privacy and data security issues along with free speech concerns.”
“The delays have been very much to do with the fact that privacy has been considered at the last minute and they’re having to try to find some way to make these services a bit safer,” said Jim Killock, executive director of the Open Rights Group.
“We should know all of the details of what they are proposing.”
via ZeroHedge News https://ift.tt/2UgDF5D Tyler Durden
On the 34th day of the recent government shutdown at 4 p.m., a huge cloud billowed out from Pad 39A at the Kennedy Space Center. It had been produced by a successful static test fire of the Falcon 9, which will ferry American astronauts to the International Space Station sometime in the next few months. It will be the first such flight since the retirement of the space shuttle in 2011, essentially marking an American return to manned spaceflight.
On the day of the test fire, about 95 percent of NASA’s workforce was on furlough, having been deemed non-essential to government functioning. How did NASA manage such a milestone with a skeleton crew?
A new bloc is emerging in the greater Middle East with the declared objectives of dominating the entire Arab world, confronting and containing the US and its allies; and controlling and benefiting from the entire hydro-carbon economy, from production to transportation.
The leading members of the new bloc are Turkey, Iran, and Qatar; with Iraq, Syria, Lebanon, and Jordan submitting to the new bloc.
Russian experts call the new bloc “the Middle Eastern Entente”.
The key to the success of the bloc is the emerging correlation of influence of the great powers in the aftermath of the wars in Syria and Iraq. Russia and the People’s Republic of China are ready to compromise with the regional powers in order to secure their vital and global interests, while the US, Saudi Arabia and, to a lesser extent, Israel, are the nemeses of the bloc.
The roots of “the Middle Eastern Entente” are in Doha. Qatar in Summer 2017 initiated a myriad of bilat-eral and trilateral discussions with Iran and Turkey after Saudi Arabia and the GCC allies imposed the siege on Qatar in June of that year. However, it was not until the second half of 2018, with the initial impact of the siege largely ameliorated, that the long-term post-war posture of the greater Middle East became a major priority.
It was then that Doha, Tehran, and Ankara started talking about forming a coherent strategic bloc.
According to Iman Zayat, the Managing Editor of The Arab Weekly, in late November 2018, the three coun-tries struck a deal in Tehran to create a “joint working group to facilitate the transit of goods between the three countries”. This was the beginning of a profound realignment of the three regional powers. “Qatar has irrevocably joined with Ankara and Tehran against its former Arab allies. It has conclusively positioned itself in a regional alliance that pursues geopolitical dominance by driving instability,” Zayat noted.
It did not take long for the three powers to realize that for such a bloc to succeed it must focus on security issues and not just economic issues.
Hectic negotiations followed. In mid-December 2018, the three foreign ministers — Muhammad bin Ab-dulrahman al-Thani, Mohammad Javad Zarif, and Mevlut Çavusoglu — signed the protocols and agree-ments for the new bloc on the sidelines of the 18th Doha Forum. In the Forum, Qatar formally called for “a new alliance that would replace the four-decade-old Gulf Cooperation Council”. Since then, specific and concrete negotiations on the consolidation of the bloc have been taking place. The final modalities for joint actions and common priorities, particularly the integration of the Arab states, were formulated in ear-ly March 2019.
Iran was the dominant force in this phase.
The last decisive push for the Arab integration took place during Bashar al-Assad’s visit to Tehran on Feb-ruary 25, 2019. There, he submitted to the demands of the Iranian mullahs and to tight supervision by Teh-ran. Significantly, during his stay in Tehran, Assad was constantly escorted by Qassem Soleimani, Mahmoud Alavi, and Ali Akbar Velayati, who attended all his meetings with Iranian leaders. In Tehran, Assad commit-ted to supporting the new bloc and to support the greater Middle East the bloc members were trying to create.
The geo-strategic and geo-economic objectives of the bloc are huge, and, as things stand in late March 2019, largely attainable.
The first objective of “the Middle Eastern Entente” was to quickly consolidate strong influence, if not he-gemony, over Iraq, Syria, Lebanon, and Jordan before the Fertile Crescent of Minorities could re-emerge as a viable geo-strategic and political entity. The primary rôle of the revived Fertile Crescent of Minorities was to constitute a buffer containing the upsurge of the Sunni Arab milieu and blocking the access of both Iran and Turkey to the heartlands of al-Jazira.
The greatest fear of the bloc members, however, was the possible ascent of the Kurds as a regional power once they internalized the US betrayal and were ready to strike deals with Moscow and Damascus. The overall susceptibility of the four Arab countries to the new regional posture was evident from their blatant disregard of the US sanctions on Iran. Hence, this region would soon become the key to a new grand-strategic and grand-economic posture for the entire greater Middle East.
Tehran emerged as the dominant power in the security posture.
The surge has been conducted under the command of Maj.-Gen. Qassem Soleimani, Commander of the Quds Force of the Iranian Revolutionary Guard Corps (IRGC: Pasdaran). Supreme Leader Ayatollah Ali Khamene’i on March 11, 2019, awarded Soleimani a unique and high State honor: the Order of Zolfaghar. [Significantly, this order, established in 1856 as The Decoration of the Commander of the Faithful by Em-peror Naser al-Din Shah, was awarded until 1925 where it was renamed as The Order of Zolfaghar by Em-peror Reza Shah I. It had not been awarded since the downfall of the Shah in 1979 until the award — pre-sumably in the highest of the three classes of the Order — to Maj.-Gen. Soleimani.]
Foreign Minister Mohammad Javad Zarif told the Mehr News Agency that Soleimani received the award on account of his leading “the fight against terrorism and extremism in the region”. Zarif stressed that So-leimani’s achievements “have prepared the grounds for creating a strong and stable region free from vio-lence and radicalization”.
On March 18, 2019, the military commanders of Iran, Syria, and Iraq convened in Damascus in order to discuss long-term strategic and operational cooperation. The delegations were led by Mohammad Bagheri (Chief of Staff of the Iranian Armed Forces), Ali Abdullah Ayyoub (the Syrian Defense Minister), and Othman al-Ghanmi (Chief of Staff of the Iraqi Military). Officially, the summit addressed coordination in counter-terrorism operations, joint securing and opening of borders, and restoring Damascus’ control over the en-tire Syrian territory.
In reality, the tripartite summit discussed the emerging regional posture now that the wars in Syria and Iraq are nearing their end. Bashar al-Assad addressed the summit and stressed long-term security and policy issues.
Bagheri explained that the objective of “the tripartite summit between Iran, Syria and Iraq with the partici-pation of their senior commanders [was] to coordinate efforts on the fight against terrorist groups in the region. … Over the last few years, excellent coordination has been achieved between Iran, Syria, Russia and Iraq, and there has been solidarity with the Resistance Axis that led to significant victories in counter-ing terrorism, and today, on the basis of these victories, the consolidation of sovereignty and progress to-wards the liberation of the rest of Syria is taking place.”
Concurrently, the initial indications of things to come were already unfolding.
In mid-March 2019, Turkish Deputy Prime Minister Muhterem Ince and his Iranian counterpart, Hussein Zulfiqari, reached “an agreement on launching a simultaneous operation against terror groups that threat-en the security of both countries” during a meeting in Ankara. If successful, this would be the first of many operations. The first joint operation was conducted on March 18-23, 2019, mainly in northern Iraq. In addi-tion to widespread bombing and shelling, around 600 Turkish and Iranian special forces carried out joint raiding operations against Kurdish “terrorist camps”. In the last days of the operation, aerial bombings were directed at all Kurdish nemeses in Syria, Iraq, Turkey, and Iran. On March 24, 2019, Ankara and Teh-ran announced that they “are determined to continue carrying out such joint counter-terrorism opera-tions”.
Meanwhile, Qatar has emerged as the dominant power regarding all issues pertaining to the regional economy.
The first priority was to build Qatar’s new oil and gas pipelines to the Mediterranean via Iran-Iraq-Syria and also connect to the pipelines in Turkey. These pipelines would substitute for the originally planned “Sunni pipelines” which were to transverse Qatar-Saudi Arabia-Iraq-Syria and which had originally led to the Qata-ri support for the Syrian jihad. The new pipelines would move to the shores of the Mediterranean — mainly the Syrian port of Latakia — gas and oil from both Qatar and Iran. The pipelines would be followed by elec-tricity lines and a fully integrated transportation infrastructure on a regional basis.
The long-term strategic infrastructure envisioned by “the Middle Eastern Entente” reflected the grand-strategic aspirations of Iran and Turkey.
The key arteries would be from Iran to the shores of the Mediterranean, and from western Turkey to the Red Sea and the Hijaz. Ultimately, these roads would be supplanted by railways. Iran and Iraq have already started constructing the railway line from the Shalamcheh border crossing to Basra in Iraq. This is the first segment of a line which would reach Latakia. Tehran is negotiating with Damascus Iranian management of the civilian port in Latakia (the Russians control the military facilities) in the next few months as a major outlet for Iran’s international trade.
Taken together, the new railroads would provide access for the New Silk Road to the eastern Mediterra-nean and the Red Sea; would connect the Russia-Iran north-south route with the Mediterranean; and would constitute an extension of the Europe-Turkey rail-line much like the old Baghdad and Persian Gulf railway. The existing Iranian railroad system connects the north-south rail-line to the Pakistani border and, thus, ultimately to western China.
Both Beijing and Moscow are most interested in the speedy completion of these rail-lines as part of the extended Belt and Road Initiative (BRI).
Taken together, the transportation cooperation agreement between the three bloc members (Qatar, Iran, and Turkey), and the transportation agreement between Iran, Iraq, and Syria, provide for a road and rail-way system linking all these states. This makes Iran the lynchpin of the regional transportation networks, and, thus, a crucial purveyor of access for the PRC. Indeed, PRC senior officials consider Iran to be “a key pivot to China’s BRI in the region”.
On March 19, 2019, PRC Minister of Commerce Zhong Shan stressed the rôle of Iran as “the strategic part-ner” in the greater Middle East for “the further development of economic and trade ties” with the entire region. “Iran is China’s strategic partner in the Middle-East and China is the biggest trade partner and im-porter of oil from Iran,” Zhong said. Ultimately, this would secure for Iran a central place in the overall PRC strategic and economic calculations.
The second objective of “the Middle Eastern Entente” was to use the Arab bloc, particularly its Sunni ele-ments, in conjunction with escalation in Yemen and growing hostility of (non-Sunni, but Ibadi) Oman, in order to smother and subdue Saudi Arabia. With Saudi Arabia already near implosion as a result of the er-ratic reign of Crown Prince Mohammed bin Salman bin ‘Abd al-’Aziz al-Saud, the leaders in Doha, Tehran, and Ankara appear convinced that it would only take little pressure in order to bring about the break-up and self-dismemberment of Saudi Arabia.
The key to the bloc’s anticipated success was in its capitalizing on heritage-based trends already growing throughout Saudi Arabia. The aggregate impact of the Turkish-Jordanian and Islamist-jihadist subversion in the Hejaz, the growing impact of the anti-al-Saud tribal and jihadist movements organizing in the Nejdi highlands, and the Iran-facilitated radicalization and militancy of the Shi’ite communities in the Saudi Ara-bian east would accelerate the self-dismemberment of Saudi Arabia along traditional lines. Even if the House of al-Saud did not lose power soon, the myriad of internal problems would prevent Saudi Arabia from playing a regional rôle against the new bloc and its allies.
A large number of intelligence officials and experts throughout the Middle East concur with this assessment.
Russia has been placed in a quandary by the emergence of “the Middle Eastern Entente”.
Russian experts explained in late December 2018 that “Turkey, Iran, and Qatar are moving in a direct course towards creating a full-fledged alliance in the Middle East, threatening to make serious adjustments to the status quo in the region.” And even though the tripartite summit in Damascus and other regional fora hailed their friendship with Russia, the Kremlin was apprehensive regarding the ascent of the bloc. Russia’s numerous tripartite summits and working groups have highlighted repeatedly the complete mis-trust of both Iran and Turkey. The huge Russian weapons sales to both countries need not confuse, as they are mainly instruments of keeping both countries beholden to Russia and on a collision course with the US.
As well, Russia has a longstanding dispute with Qatar on account of its support for jihadists from the North Caucasus (both in Qatar and in Syria-Iraq).
Most important, the Kremlin’s grand design for the future of the greater Middle East rests on the ascent of the Fertile Crescent of Minorities — where the Kurds are assigned a key rôle — as a buffer zone containing the upsurge of the Sunni Arab milieu and blocking the access of both Iran and Turkey into the heartlands of al-Jazira. Russia is cognizant that both Iran and Turkey are implacable enemies of the Kurds and would never permit the Kurds to establish a viable entity on their border despite Russian support. The Turkish-Iranian joint operations against the Kurds in northern Iraq are a harbinger of the anti-Kurdish escalation to come, an escalation which Russia cannot prevent.
At the same time, Russia is still the main great power in the region, and the facilitator of the PRC’s access and development projects.
To retain their vital interests in the context of the ascent of the bloc, Russia might have to face the impera-tive for significant compromises. Russian experts and officials acknowledge the existence of a worst-case scenario focusing on the Russian presence along the eastern shores of the Mediterranean (beyond the Aleppo-Damascus highway) while blocking US/Western encroachment. To attain this, Russia would have to forge closer alliance with the ‘Alawites, the Druze, and Syria’s urban élites, as well as shield Israel (and its huge Russia-origin population) from both Iran and Turkey. That said, holding onto the belt along the shores of the Mediterranean would also mean blocking the vital arteries of transportation which both Iran and Turkey are determined to establish.
Hence, the Kremlin concedes, confrontation might be inevitable.
As a result, on March 19, 2019, as the tripartite military summit convened in Damascus, Russia Pres. Vladi-mir Putin dispatched Defense Minister Sergei Shoigu to Damascus. The primary objective of Shoigu’s visit was to guarantee Russian interests in the context of the new regional posture.
He met first with Pres. Bashar al-Assad and conveyed a special message from Putin. Minister Shoigu held talks with Pres. Assad, the entire Syrian defense leadership, and senior Russian generals. Assad and his generals conceded that there was no substitute to the Russian military aid, and that without Russia it would be impossible to complete the defeat of the jihadists and liberate Syrian territory.
Shoigu responded that Russia “would continue to support efforts to regain the Syrian regime’s control of all the country” under the conditions of a genuine alliance. “Syria, with the support of Russia, undoubtedly achieved significant success in the fight against international terrorism,” Shoigu reminded his interlocutors. He explained that the Kremlin was most interested in “the issues related to fighting international terrorism along with various aspects of Mideast security and post-conflict settlement”.
Assad was effusive in his praise for Putin and the Russian help, but Shuigo was not convinced.
Meanwhile, the Qataris and their allies have made it clear that they do not fear a US reaction to the emer-gence of “the Middle Eastern Entente”.
Qatari senior officials attribute this to repeated threats from Doha that should the US interfere with the new bloc and its ascent to prominence, Doha would order the immediate closure of the huge US base in Al-Udeid, Qatar, and would also stop interceding with Tehran to prevent Iran-sponsored Shi’ite jihadists from attacking the US Navy base in Bahrain. As well, the growing dependence of the US Intelligence Community on Turkish Intelligence (Milli ?stihbarat Te?kilat?: MIT) for clandestine operations in Central Asia and in sup-port of the secessionist Muslim communities of both Russia and China accounts for the US muted reaction to the Turkish abandonment of NATO.
The same logic would negate US resistance to the ascent of the bloc. Similarly, the US eagerness for a Trump-Rouhani summit (tailored after the Trump-Kim summit), where Qatar and Oman were the chief me-diators, would also restrain a harsh reaction to Iran’s growing regional rôle.
The Trump Administration is cognizant of the US limitations in the greater Middle East.
At the same time, the US remains adamant on preventing the PRC and Russia from consolidating their in-fluence in the greater Middle East and bringing the New Silk Road into the region. Senior US officials, main-ly National Security Adviser John Bolton and Secretary of State Mike Pompeo, have warned repeatedly that there could be no compromise with the PRC, nor tolerance of the ascent of the PRC anywhere. “This is a very big issue, how to deal with China in this century — probably the biggest international issue we face,” Bolton said on March 21, 2019.
Since US influence in the Arab Middle East had, by 2019, become close to non-existent, despite the pres-ence of US forces in Syria-Iraq-Jordan and special relations with Saudi Arabia, the US focus has been on stifling the primary north-south and east-west arteries between Russia, the PRC, and the greater Middle East by hitting the weakest link: Azerbaijan.
Washington is convinced that if great pressure is applied, then Baku would cut the crucial transportation arteries passing through, and interlinking in, Azerbaijan to the detriment of the New Silk Road and the bloc supporting it. This, however, would only galvanize both Turkey and Iran into further anti-US actions in and around the greater Middle East, thus further empowering “the Middle Eastern Entente”.
Moreover, Washington’s logic dismisses the reality that if Azerbaijan complied, it would be substantially isolated and without the means to have its exports reach their markets.
via ZeroHedge News https://ift.tt/2THkDRu Tyler Durden
Anybody who has been following (or at least trying to follow) the interminable Brexit trainwreck has probably, from time to time, felt a twinge of muted, inchoate rage while struggling to understand exactly why the Tories and DUP have made such a big deal out of the “Irish Backstop” when the goal of the whole process is to never put it into practice – and why, nearly three years after the historic vote, MPs just can’t put their sniping and bickering aside and get on with it.
Unsurprisingly, the European bureaucrats who effectively hung their esteemed colleague Theresa May out to dry by refusing to reopen negotiations, even after a third vote on the deal failed the pass, feel the same way. And on Saturday, one senior German official decided to let it all out during a profanity-laced rant delivered during what many had probably expected would be an unremarkable meeting of party functionaries.
Deputy Foreign Minister Michael Roth, who has in the past delivered a few politely-worded exhortations that the Commons implement the withdrawal agreement before all hell breaks loose, slammed May and her cabinet as “clueless boarding school graduates” who have been setting the common man up for disaster, per BBG.
“Brexit is a big shitshow, I say that now very undiplomatically.” Michael Roth said at an event of his Social Democratic Party in Berlin on Saturday, accusing “90 percent” of the British cabinet of having “no idea how workers think, live, work and behave.”
Roth said it would not be those U.K. politicians “born with silver spoons in their mouths, who went to private schools and elite universities” that will suffer the consequences of the mess.
We imagine that will go over well in the Commons on Monday. Roth continued by saying even Shakespeare himself couldn’t have dreamed up such an abject tragedy as Brexit.
“I don’t know if William Shakespeare could have come up with such a tragedy but who will foot the bill?,” I the German diplomat said.
Before indulging in a little self-aggrandizement of his own by declaring that Europe is “life insurance” during “times of crisis,” before insulting members of the populist movement that helped make Brexit a reality.
“Europe is a life insurance in times of crisis and Europe brings the opportunity to cross borders, destroy walls, bring people together and foster solidarity,” Roth said.
“We are seeing these days how fragile that is, and how little we can take that for granted. When people give themselves up to nationalists and populists, they are betrayed.”
While Roth probably failed to pick up on the condescension and self-righteousness inherent in his comments, in the UK, MPs haven’t been doing themselves any favors on this front, either. Take for example, this snippet from a Commons debate earlier this week that went viral after Jacob-Rees Mogg taunted one of his colleagues for attending Winchester College instead of Eton.
Nick Boles says he can distinguish between confidence in the Government and its Brexit policy.
He adds: ” I have been consistently voting with the Government, in which I have confidence, to give effect to that decision and he has been voting against.”
On the 34th day of the recent government shutdown at 4 p.m., a huge cloud billowed out from Pad 39A at the Kennedy Space Center. It had been produced by a successful static test fire of the Falcon 9, which will ferry American astronauts to the International Space Station sometime in the next few months. It will be the first such flight since the retirement of the space shuttle in 2011, essentially marking an American return to manned spaceflight.
