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At long last, the government shutdown, now in its 35th day, may finally be coming to an end.

According to the Drudge Report, President Trump is planning to announce that a deal has been reached to temporarily reopen the federal government during a hastily organized 1 pm press conference. The press conference was announced mere minutes before Drudge broke the news about the announcement, and follows a hint from Sen. Tim Kaine from earlier on Friday that a breakthrough might finally be imminent.

 

via ZeroHedge News http://bit.ly/2FOoRUL Tyler Durden

As the international community splits along governments who continue to back embattled Venezuelan ruler Nicolas Maduro and governments, led by the US, who have officially recognized opposition leader Juan Guaido as the country’s legitimate head of state, Reuters reported that a group of Russian mercenaries with ties to the Kremlin have been sent to Venezuela to provide security for Maduro as he struggles with the biggest threat to his rule in his six years in power.

The contractors are believed to be from the Wagner Group, a group of private contractors who have performed secret missions on behalf of the government, including fighting in Syria and the Ukraine (which brings to mind this incident from last February when US-backed forces killed 100 Russian mercenaries in what was the closest thing to a direct proxy conflict between Russia and the US in Syria). It’s unclear when the contractors arrived, or when they intend to leave. Russia has offered to mediate the conflict between Maduro and Guaido, while joining with China to criticize the US for interfering in Venezuelan affairs.

Russia, which has invested billions of dollars in the Maduro regime, pledged to stand by the embattled socialist leader this week. Yevgeny Shabayev, leader of a local chapter of a paramilitary group told Reuters he had heard the number of security contractors in Venezuela is roughly 400. Russia’s defense ministry and Venezuela’s information ministry haven’t responded to requests for comment. Kremlin Spokesman Dmitry Peskov said we have “no such information” when asked about the contractors.

The contractors traveled to Venezuela on private chartered flights that first landed in Cuba. The contractors have been charged with stopping opposition sympathizers or members of Maduro’s own forces from detaining him.

“Our people are there directly for his protection,” Shabayev said, in light of the attempted revolt staged by rogue military officers earlier this week.

One source said a group of contractors had arrived in Venezuela before elections last year where Maduro won a second six year term, but another group had arrived “more recently.”

Public flight tracking data suggests the latest batch of contractors arrived some time betwee mid-December and this past week.

Asked if the deployment was linked to protecting Maduro, the source said: “It’s directly connected.” The contractors flew to Venezuela not from Moscow but from third countries where they were conducting missions, he added. The third source, who is close to the private military contractors, said there was a contingent in Venezuela but he could not provide further details. “They did not arrive in a big crowd,” he said. Publicly-available flight-tracking data has shown a number of Russian government aircraft landing in or near Venezuela over past weeks, though there was no evidence the flights were connected to military contractors. A Russian Ilyushin-96 flew into Havana late on Wednesday after starting its journey in Moscow and flying via Senegal and Paraguay, the data showed.

The aircraft, a civilian jet, is owned by a division of the Russian presidential administration, according to a publicly-available procurement contract relating to the plane.

Between Dec. 10 and Dec. 14 last year, an Antonov-124 heavy cargo aircraft, and an Ilyushin-76 transport aircraft, carried out flights between Russia and Caracas, flight-tracking data showed. Another Ilyushin-76 was in Caracas from Dec. 12 to Dec. 21 last year. All three aircraft belong to the Russian air force, according to the tracking data. 

Since Guaido declared himself the acting president, Maduro has sought to expel US diplomats while vowing not to step aside. He has threatened violence against those who back the opposition. Maduro still retains control of the levers of power, including the country’s energy industry and its military, though while military commanders have largely backed him, the allegiance of the troops on the ground remains somewhat less clear. Maduro has accused the US of agitating for the Venezuelan opposition to move against him.

via ZeroHedge News http://bit.ly/2ReUYym Tyler Durden

Authored by Victoria Snitsar via Campus Reform,

Students at Lewis and Clark College’s Graduate School of Education can take a course in spring 2019 that will teach them to combat toxic masculinity in the classroom.

The course, which is intended for educators, will encourage participants to “analyze the effects of toxic masculinity and how they play out in our classrooms, communities, and lives,” according to the course description. Participants will walk away from the course with  “a lesson plan based on an idea or strategy presented during sessions, and will return to their classrooms with strategies to combat toxic masculinity.”

Students can receive one semester hour by taking part in the course.

The course will be taught by Chris Kelly and Jayme Causey. Causey is a 2016 graduate of nearby Portland State University and of the Lewis and Clark College Graduate School of Education Oregon Writing Project. He has also presented workshops at the Northwest Teaching for Social Justice Conference in both 2017 and 2018.

Prices for the course are $350 per hour for current students, $250 for those choosing to take the class not for credit, and 20 percent off for alumni of Lewis and Clark College who are also not taking the class for credit.

With the release of Gillette’s “toxic masculinity” ad earlier in January, the topic of toxic masculinity has dominated public discourse across the country. For their own part, colleges have tried to address the perceived problem through workshops and other initiatives.

Campus Reform interviewed Georgetown University students after the GIllette ad debuted, finding that while students opposed the concept, they were not sure what exactly “toxic masculinity” even was.

via ZeroHedge News http://bit.ly/2DAAjkR Tyler Durden

In the span of a day, China has gone from threatening to crash US markets if President Trump doesn’t agree to a trade deal to helping the US rebut reports that trade talks weren’t going as smoothly as President Trump and the Wall Street Journal had let on. During a press conference on Thursday, Ministry of Commerce Spokesman Gao Feng denied reports that a meeting involving high-level trade officials in Washington had been cancelled (the FT had cited US frustrations with China’s reluctance to cave on demands relating to curbing IP theft and certain structural reforms) – backing up Larry Kudlow, who sparked a brief rally just before the close on Wednesday when he appeared on CNBC to deny these reports.

Kudlow said yesterday that the most important meeting, between a Chinese delegation led by Vice Premier Liu He, the country’s top economic official, was still slated to take place in Washington next week.

But in the latest sign that the simmering tensions over the US’s dispute with Huawei continue to spill over into trade talks, RT reported on Thursday that Beijing might cut off all Chinese funding to Silicon Valley after the US slapped an export ban on a Huawei subsidiary based in Silicon Valley.

The comments were made by Former PBOC Deputy Governor Zhu Min, who sat for an interview with CNBC.

His message was clear: The US’s push to drive Huawei out of Western markets would have a negative impact on the trade negotiations. In addition to his former role at the PBOC, Zhu is also a former official at the IMF.

“I can tell you, after the Huawei events, all the Chinese money into Silicon Valley stops. And no US money will want to invest into China either,” Zhu Min told CNBC on the sidelines of the World Economic Forum (WEF) on Tuesday. He did not elaborate on what should happen to bring about such an outcome.

Min’s comments followed remarks from Huawei Chairman Liang Hua, who told world leaders gathered in Davos that his company could shift away from Western countries if it continues to face restrictions.

Asked if it was possible for China to abruptly pull money from Silicon Valley, John Zhao, founder and chief executive of Hony Capital, said “by numbers, that seems to be the case.”

“But it really suggests something that is much deeper than the number has started to show. First of all, it shows the interdependency that the world has built with each other…But it also suggests that while there are some short-term pains to be resolved, we need to have a long-term view,” Zhao said, while speaking to CNBC’s Nancy Hungerford in Davos on Wednesday.

And just like that, Silicon Valley has once again found itself at the center of the trade war.

via ZeroHedge News http://bit.ly/2RRW9ZN Tyler Durden

Authored by Tad Rivelle via TCW,

See You On The Dark Side Of The Moon?

Life comes so much easier when you learn to swim with the tides, and not against them. But tides are not fixed: they come and they go, controlled by the gravitational pull of the moon. So, too, do investment cycles come and go. And, so too, are they governed by forces that can be likened to our physical moon.

Perhaps somewhere in a classroom long ago and far away, you, me – many of us – were taught that there is a cycle to the economy. The so-called “business cycle” was understood as an immutable feature of capitalism. The high tide booms were followed by low tides busts which were followed by booms and so on. If any cause for this regularity were given, it was generally done with a wave of the hands: businesses simply went loony with enthusiasm, which led to excesses in capacity and production. Of course, these excesses would then be cured by shuttering assembly lines and furloughing the workers. Like hulking ships stranded by an ebb tide, all a business could do would be to wait for the waters of commerce to rise again. Great narrative. Yet, has anyone actually seen any such cycle play out, say, any time in the last 40 years? Indeed not! If such a model for the cycle once held water, it has now long since withered.

Anyone think they have a better model with which to understand the ebbs and flows of capitalism? Well, we do. Rather than think of business as disembodied from the financial economy as the “old” model did, consider that capital markets long ago ceased being mere “passive” semaphores for the economy. The growth and maturation of capital markets mean that the influence of the financial economy is as powerful as it is pervasive. The availability of credit – or lack thereof – is not so much a reflection of business conditions as it is a cause of business conditions. Cheap and available credit is the straw that stirs the drink: lowered cap rates power the bull market. The rising tide of asset prices then incentivizes risk taking and investment, pushing production higher. So call it not a “business cycle” – understand it rather as an integrated credit, asset price, and business cycle.

But how is the investor to stay in sync with the tides? By examining the financial moon, of course! Problem is, many investors look only to one side of the moon. During the re-leveraging, optimists focus their attention on the ”light side” and marvel at the luminous glow of high asset prices, a glow that waxes brighter the more credit and leverage is piled on. Meanwhile, the pessimists remind us that a nearly “invisible” build of leverage is occurring on the “dark side” of the financial moon, a build that threatens the sustainability of the glow from the light side. Both perspectives are right. And both perspectives are wrong. Successful bond investing comes not from embracing one or the other side of the moon, but rather from knowing which side is going to be in control of the next tidal flow. Strategies that work when only one or the other side of the moon is running the show will not work holistically over the journey of the entire cycle.

I’d like to illustrate this perspective by describing what we believe to be the two traditional philosophies for fixed income. We’ll begin with the first of the two and personify it as your crazy Uncle Henry’s approach to fixed income investing (note: our terms are meant descriptively only, I have no desire to impugn either the Henrys of the world nor their sponsors!). By the way, have you ever met Henry in person? Well, if you haven’t, let me summarize a (very simplified) version of his pitch:

“Bonds – now, they’re your anchor to windward. Don’t take any risk with your bonds! They’re your Rainy Day asset.”

Now there’s a manager in touch with the dark side! Indeed, Henry’s pitch actually sounds pretty sensible to the Investment Committee that managed its way through a financial meltdown. But, of course, Henry’s philosophy eschews levered asset classes and so his portfolio of Treasuries and agency mortgages ends up looking and tasting like day-old oatmeal. What’s worse is that five or more years into the re-leveraging phase of the cycle, Henry’s returns start to look, well, a bit crazy. Henry’s 1, 3, and 5- year returns are at the bottom of the deck and the same Committee who thought his approach sensible now wonder if Henry just doesn’t understand that, well, maybe, it’s different this time. But then a funny thing happens: it turns out that it is never fundamentally any different this time – it’s a cycle. And, so, the dark side takes over from the light and in the flip of the tides, risk assets experience epic drawdowns, and Henry’s portfolio – now in sync again with cyclical forces–is the star of the show. Henry wasn’t so much “out of it”, as he was “out of step” – until he wasn’t!

Then, there is the second traditional approach to fixed income. We’ll call it the “all risk, all the time” philosophy (again, all due respect to those who practice and subscribe to this philosophy; there are and will always be more than one way to earn a dollar in bond world). These managers systemically overweight their exposures to high yield, downthe- capital-structure tranches in structured finance, levered finance in the emerging markets – basically anything that carries a boatload of yield. And, this approach actually makes pretty good sense – for the 80% of the cycle controlled by the light side. Late into the cycle, these managers’ returns sparkle! But cycles are cycles because they are recurrent. And when the credit de-leveraging comes to pass – as inevitably it must – manager returns which had been best in class for 1, 3, and 5 years, now look dismal. That yield that buoyed returns when the credit tide was high becomes the bane of capital preservation as the de-leveraging advances. Ex ante yields turn into ex post losses.

Is there no way then to manage through a complete cycle? I am glad you asked because we at TCW would offer that there is a third way to approach fixed income. It begins by acknowledging that the tides are immutable and ungovernable. Market forces rule. But if you can understand the tides – even if that understanding is rough and approximate – then, you can purposely choose when to position like Henry and when to position like the systemic risk taker. Neither side of the moon controls the credit tides forever, and adapting your strategies accordingly is necessary so that the portfolio swims with the tides for most of the cycle. As a practical matter, to us this means that active fixed income investing is almost synonymous with actively managing portfolio risk budgets. And, so, we have striven to execute the following principles in the service of securing investor performance over the cycle, and from one cycle into the next:

Credit/Asset Price/Business Cycle

In the early stages of the investment cycle, risk should be taken freely and abundantly in the portfolios. Following a credit de-leveraging, opportunity abounds, and the underwriting of risk is much like participating in one great “risk-on” beta trade.

In the middle years of the cycle, the risk budget needs to be adapted to the remediation in credit that would have, by now, already taken place. Take risk, for sure, but it is no longer an indiscriminate beta trade. Underwrite the “right” risks and in “right-sized” proportions.

Before entering the late-stage of the cycle, take your cue from crazy Uncle Henry. It will look like the “wrong” strategy or appear to some that the manager no longer “gets it”, but Rainy Day assets are essential so as to have the necessary liquidity to pile on the risk once blood is running in the streets.

While we have been preparing for the late stage dynamic to unfold, we have relied on Henry’s playbook, at least in part, these past couple years. Now that opportunity is presenting itself anew, our risk budgets are already expanding. The de-leveraging “dark side of the moon” will be painful; it always is. But, excesses of leverage and misdirection of labor and capital resources have to be corrected. And, as risk assets inevitably fall in price, we will continue to reposition portfolios to reap strong returns in anticipation of that eventual day when the moon shines clear and bright over the credit markets yet again.

via ZeroHedge News http://bit.ly/2B5Kkob Tyler Durden

Like the old saying goes: Mo’ money, mo’ problems.

In the latest sign that times are getting tougher for finance professionals, UBS’s army of wealth managers might need to forgo buying that new sports car or – god forbid – consider moving their kids to slightly less prestigious private schools this year as the bank has reportedly informed some of its bankers in Asia and Europe that they could see their bonuses cut by as much as 20%, according to Bloomberg.

The cuts come amid a rash of layoffs and compensation cuts in the financial services industry as the explosion of volatility in Q4 did the industry no favors from a profitability standpoint (contrary to the conventional wisdom that volatility is good for the bottom line). 

CEO Sergio Ermotti, who has been struggling to meed bank-wide profitability targets, reportedly told the bankers that the shrinking bonus pool for the wealth management unit – which is seen as a key profit center for the Swiss bank – is due to a slight miss on the unit’s profitability targets for 2018. As the bank revealed in its “very poor” earnings report earlier this week, clients pulled some $8 billion out of the wealth management unit (and another $5 billion from the bank’s more plebeian-friendly asset-management unit) during Q4.

UBS’s private bankers pulled in 40% less new money in 2018 than a year ago in the APAC region, with the total falling by about half in the Europe Middle East and Africa region, while AUM fell across the board.

It might be hard to gin up sympathy for UBS’s wealth managers given that in the US, federal employees are reportedly lining up at soup kitchens and sleeping in their cars because they can’t afford gas to get them home from work. But trying putting yourself in their shoes.

“Total compensation (salary and bonus) for the average material risk taker at UBS in 2016 was $1,810,538. In 2017, it was $1,970,100.”

HOW WILL THEY EVER SURVIVE??

— Tucker Carlson’s Stunt Double (@olensisukas) January 25, 2019

Final compensation figures will be included in the bank’s annual report, set to be released in March.

via ZeroHedge News http://bit.ly/2FOWaan Tyler Durden