iftttwall

When President Trump proclaimed that “The Fed has gone crazy,” the elites were stunned. When President Trump exclaimed, The Fed “is making a big mistake with ridiculous rate-hikes,” the establishment was dumbfounded. And when President claimed that The Fed was his “biggest threat, because rates were rising too fast,” the deep state lashed out with 25th Amendment headlines and “Democracy and independence under threat” byelines.

So isn’t it just a little ironic that The Wall Street Journal – that bastion of free market capitalism and oracle of financial opinion should admit in its Editorial Board’s latest opinion that Trump is right and The Fed needs to slow down on the rate-hikes.

Via The Wall Street Journal Editorial Board,

America Is Not An Island

As the world economy slows, Trump and the Fed need to adapt.

President Trump’s biggest achievement has been the revival of faster U.S. economic growth, but past performance is no guarantee of future results. The White House should be worried about growing economic strains in the rest of the world, and policy makers need to prepare. The U.S. is not an island.

For now the American economy and especially the labor market seem strong as tax reform and deregulation unleash animal spirits. But the German economy shrank 0.2% in the latest quarter, the first contraction since 2015. Europe’s largest economy will still grow this year, but a trade surplus and negative interest rates aren’t a growth tonic. Europe in general seems to be reverting back to its post-crisis mean of meager growth.

Japan contracted 0.3% in the last quarter, perhaps ending its modest growth spurt. Beijing last month said China’s economy grew a surprisingly slow 6.5% year-on-year in its latest quarter, and that official figure is usually an overstatement.

Some of this is due to such one-time factors as bad weather, but anxious markets are signaling larger concern. German auto exports are weak, and China is trying to sustain growth without adding to its debt overhang. The high-yield bond market has the jimmy legs, and oil prices are down on weaker demand. Even Federal Reserve Chairman Jerome Powell, the insouciant one, on Wednesday called events “concerning.”

Add currency shifts to those worry beads, as the U.S. dollar soars. Beijing is trying to stem flight from the yuan, and the pound fell another 1.5% against the dollar on Thursday on Brexit woes. The euro’s decline against the dollar needs particular watching because it’s the world’s most important price and contributes to investment uncertainty. Sharp changes in the euro-dollar rate contributed to the global financial panic in 2008.

European political risks may increase, as Germany could soon gain a new leader and the European Union tries to bludgeon Italy into an anti-growth budget. Prime Minister Theresa May’s government in London is hanging by a thread as she struggles to sell a European Union divorce deal to Parliament.

The world’s fifth-largest economy could crash out of its most important trading relationship with no alternative in place. A disorderly Brexit could also usher in a socialist Labour government led by Jeremy Corbyn, and watch the pound fall if that happens.

All of this is a warning for Mr. Trump and others in Washington: No moat can protect the U.S. economy, and they need to adapt.

Start with the Fed, which should rethink its December rate increase. No other major central bank is likely to raise its rates soon. The Fed needs to weigh whether it should expand the gulf between U.S. and foreign monetary policies at a fragile moment as global investors demand more dollars.

Mr. Powell will be wary of seeming pliable amid Mr. Trump’s demands for lower rates, but tighter credit conditions and low inflation support a pause independent of Mr. Trump’s bluster. Now is not the time for a doctrinaire march toward “normalcy,” which the Fed can resume in 2019 if the data warrant.

Mr. Trump should also settle his trade tempests. He wants Germany to export less, and look at the result after a quarter of soft auto sales abroad. Trade uncertainty is weighing on business investment much as Barack Obama’s regulatory assaults did. If you’re a CEO and don’t know how global supply chains will be affected by tariffs or new trade deals, you delay investment.

Mr. Trump’s steel tariffs are still hitting Mexico and Canada even after the revised Nafta deal, and his 25% car tariff reappears now and again like Freddy Krueger. Adviser Peter Navarro suggested a long trade war with China last week, and stocks promptly sold off.

***

Mr. Trump claims the U.S. economy is strong enough to ride out his trade wars. Well, how lucky does he feel? Last week the President suffered a bruising midterm election defeat even with a strong economy. If the U.S. starts to slow like its major economic partners, he’s going to lose the 2020 election before anyone has time to “win” a trade war.

This month’s G-20 summit is a chance for Mr. Trump to show some economic statesmanship and look for a trade truce. This needn’t be a show of weakness as he can continue negotiations to press market reforms abroad on China’s intellectual-property theft or Europe’s tax assaults on American tech companies. But he needs to signal that the U.S. won’t continue punitive tariff attacks on allies.

With his polarizing political style, Mr. Trump even more than most Presidents will succeed or fail based on economic results. He should appreciate that a recession in the rest of the world is a threat to the U.S. economy and his Presidency.

*  *  *

How long before WSJ is demonized and slandered for such heresy?

via RSS https://ift.tt/2zXn4Yi Tyler Durden

Blain’s Morning Porridge, submitted by Bill Blain

“Reversion to the mean is the iron rule of markets..”

Let’s have a Brexit Free morning.. see how the dust settles, who kills who, and who is left standing on Monday morning..

Two of the most important of Blain’s Trading Mantras are:

“THE MARKET HAS NO MEMORY”

“THE MARKET’S ONLY OBJECTIVE TO INFLICT THE MAXIMUM AMOUNT OF PAIN ON THE MAXIMUM NUMBER OF PARTICIPANTS”

Bearing these in mind, and what’s going on globally, I’m wondering if its time to set up for the big corporate bond buying moment. There is nothing to be fearful about when it comes to volatility. Just be ready for it. For bond markets to be an opportunity… prices have to move dramatically lower. And I think they will as the market wakes up to smell the proverbial coffee.

Long ago, in a galaxy far far away…

There once was a company in far-off Texas that grew and grew its energy and commodities business into a AAA rated behemoth hailed as “American’s Most Innovative Company” year after year. Everyone was happy. They all got massive bonuses right up to the moment Enron went bust on the back of massive accounting fraud, and bond holders were hosed.

17 years later there is another former AAA corporate darling on the cusp of being downgraded to Junk. After reporting $30 bln of unexpected charges and a shortfall in insurance reserves in October, GE’s bond spreads have ballooned as investors start to panic about accounting probes, crashing demand for its products, worries about its $115 bln debt mountain, and the perception of a liquidity meltdown.

Investors are right to be scared. The last few years has seen a bond binge with spreads dramatically tightening on the back of free money. Now its reversing. Investment-grade bond spreads have widened across the board as the bond market wonders who else might be swimming without their bathing suits…

You have to ask what credit analysts do all day…

Nearly half the $6 trillion investment grade bond market is now rated within a single notch of being downgraded to Junk. Not that ratings actually mean that much – another lesson investors seem to have conveniently forgotten just 10-years after they swore they’d never trust ratings again. It’s just too easy to forget they are just expensive opinions.

Over the last 8 years US corporates have gorged on cheap debt – and used it all to buy-back their own stock or payout the Leveraged buyout funds that own them. Debt has risen while profitability has declined. Converting equity into debt to give cash to owners means they haven’t built new plant to make stuff that will repay debt. That multiplies their vulnerability to rising interest rates. 

Bond covenants have become progressively softer and less onerous even as US corporates have binged on ultra-low rates selling bonds to investors desperate to buy anything yielding half-a-tad more than Treasuries. (For readers unfamiliar with bond market terms like a tad, smidge or a bit, its dead simple; a tad is bit more than a smidge, or is it smidge is tad less than a bit?)

Once again Ratings lie at the centre of the problem. Fund managers still have rules like “only buy investment grade bonds”, so they do – assuming a rating is the guinea stamp (guarantee) of investment quality, and that attaching a slew of As to a bond somehow justifies buying stuff they just don’t really understand.

Another unintended consequence of QE is yield tourism – investors who were safe in the shallow-risk toddler pond of Government bonds found themselves forced into deeper more dangerous waters of high-risk BBB and Hi-Yield Junk in search of meaningful yields. As the default-sharks gather, the inevitable feeding frenzy is about to start….

Yet another consequences of the crash of 2008 are pages of regulatory overkill and rules that have killed bond market liquidity by constraining banks from doing stuff like making markets or acting as brokers. Markets are dramatically less efficient. Bond markets in the most difficult sectors are trading a massively wider bid/offers and become “distressed” at the first sign of trouble. That’s a long way of saying there will be zero liquidity when fear becomes flight. (And that’s why anyone trying to sell illiquid bonds today is discovering they are a distressed seller!)

(Nor has it helped that banks have seen fit to dismiss most of the experienced sales staff who might have understood underlying value and how to trade difficult debt, and replaced them with young graduates who can just about navigate themselves around the daily sales sheet, but understand nothing about providing liquidity.)

In short, GE’s credit meltdown is coming at just the right time to ruin everyone’s day. Its not as if thing aren’t bad enough already…  

When I was a lad, the trip upstate to see the Treasurer of GE was one of the most fearsome of tasks for a young debt origination banker. I’d try to explain demand and the success of the fantastic deals we’d just completed for Ford and GM, and have these dismissed as irrelevant as they had nothing in common with GE. I was unsubtly told If I wanted GE’s debt funding business, I better be prepared to “pay to play” by providing lots of cheap MTN funding before I’d get a public bond mandate from them.

20 years later and GE still has $115bln of outstanding debt. Prices on the benchmark GE 4.4% 2035 bond longer-dated bonds have crashed from near par to near 82% in recent weeks. I imagine I’d get my arm bitten off if I offered them new funding today. Or maybe not.. I read a comment yesterday: “GE does not plan to raise new debt until 2020, so the recent increase in bond yields will not increase current interest expenses.. the company plans to pay down debt through asset sales before returning to bond markets.”  Am I convinced? That sounds like a company facing a classic liquidity squeeze. What is Plan B if asset sails don’t work fast enough?

Its spread will likely widen further. Banks and other lenders are buying credit default protection. A few weeks ago, the Commercial Paper market effectively slammed shut to the name. If the rating is further cut to junk, then there will be a wave of enforced bond sales from buyers who can only hold Investment Grade Paper – further widening the pain.

Corporate defaults are a fact of life – a fact many US bond pundits are now waking up to. Recent new deals across the Investment Grade sector have struggled to achieve much market excitement. I can’t help but be amused by bond analysts writing stuff about how attractive bond spreads look at these levels. It feels to me like a crisis is brewing…

Very simple question… why would you buy mega risky high yield debt at 6% when I can sell you absolutely solid secured asset backed alternative debt at 7-8% that’s uncorrelated to the coming debt debacle?

Meanwhile….

Fed Head Jerome Powell is warning the Fed’s rising rate campaign may stall next year on the back of slowing demand overseas, the likelihood of fading fiscal stimulus next year, and the effects of the Fed’s previous hikes now being felt across the economy.

That could mean we’re looking at any big bond correction on credit fundamentals being capped by a slow down in rate rises – the new normal economy of lower growth and constrained inflation?

When bond prices do correct they are going to look very good value if we are into a new normal. Which is why I’m wondering if its time to go bottom fishing on a crash – but in very selective names..

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Stocks in Europe faded early gains and S&P futures fell after a mixed session in Asia as chip stocks were taken to the woodshed on poor guidance from Nvidia and Applied Materials sparked fears that the chip bull run is over, while investors wondered whether China and America can de-escalate their trade war after mixed signals by US officials just days before the G-20 summit.

The euro failed to rebound while the sterling halted its biggest drop in 2 years after some of the most dramatic 24 hours yet in the Brexit process and another turbulent week for world markets. With reports of a UK leadership coup still rife and fear that the country could crash out of the EU without an agreement, cable struggled to rise above $1.28.

Meanwhile traders around the world were waiting for an outcome from the ongoing Brexit saga: “If and when a vote on the withdrawal agreement occurs is uncertain. Whether the withdrawal bill is passed by both houses of Parliament is uncertain,” Joseph Capurso, a senior currency strategist at CBA, said in a note. “Whether the Prime Minister resigns or is challenged for the leadership is uncertain. And, whether there is a second referendum and/or an election is uncertain.”

Fears over political turmoil in the UK and Italy dragged Europe’s Stoxx 600 back into the red, set for its first weekly drop in three, trimming Friday’s gain as AstraZeneca’s drop weighed on the gauge after a cancer-drug setback while telecom names were outperforming. Utilities started the session lower in the wake of yesterday’s ECJ decision which deemed the UK’s scheme for ensuring power supplies during the winter months as a violation of state aid rules. Other individual movers include Vivendi (+4.2%) sit at the top of the Stoxx 600 after posting impressive Q3 sales metrics and announcing a potential sale of part of their Universal Music Group division. Elsewhere, AstraZeneca (-2.3%) and Shire (-1.3%) have been seen lower throughout the session after both posting disappointing drug updates.

Not helping sentiment, ECB head Mario Draghi said the bank still plans to dial back its stimulus at the end of the year, but acknowledged the economy had hit a soft patch and inflation may rise more slowly than expected. “If firms start to become more uncertain about the growth and inflation outlook, the squeeze on margins could prove more persistent,” Draghi told a conference.

Earlier in the day, Asian shares ended the session in the red (MSCI Asia -0.2% to 151.52), led lower by declines in Japan, even as China and Hong Kong rose after initial reports the United States might pause further China tariffs were denied by Commerce Secretary Wilbur Ross who damped hopes of any imminent trade deal with China. The Nikkei fell 0.6% pressured by a drop in the USDJPY after China Mofcom began an investigation into alleged dumping of machine tools by Japanese firms. The Hang Seng (+0.3%) and Shanghai Comp. (+0.4%) swung between gains and losses after continued liquidity inaction by the PBoC which skipped Reverse Repos for a 16th consecutive occasion.

S&P futures were hit on fresh slowdown concerns, this time out of the semiconductor/chip space, after Nvidia gave a dire sales forecast, projecting a 20% drop in revenue while a disappointing outlook from Applied Materials indicated the chip industry is holding off on expansion plans in the face of a murky outlook for electronics demand. The chipmaking sector saw another bout of selling in Asia, wiping at least $11.2 billion in market value amid signals that demand for servers, personal computers and mobile is falling.

Also falling after hours were shares of AMD and Intel, dragging Nasdaq futures lower.

“It started with Apple, then Nvidia … Since performances of these companies set the tone for the global tech and chip industries, related Japanese stocks will likely be sluggish for a while,” said Takatoshi Itoshima, a strategist at Pictet Asset Management.

The Bloomberg Dollar Spot Index was little changed after Fed Chairman Powell flagged his concern over potential headwinds for the U.S. economy, while the pound staged a modest rebound on reports that some pro-Brexit ministers decided to stay in their governmental posts. The pound gained as U.K. Prime Minister Theresa May defied demands to quit and amid reports her environment secretary wouldn’t resign, following the resignation of several ministers Thursday. The yen rallied as trade stress simmered, with investors trying to gauge whether China and the U.S. can de-escalate their dispute.

Also under water was the cryptocurrency Bitcoin, which hit a one-year trough overnight. It had tumbled 10 percent early in the week when support at $6,000 gave way. It was last changing hands at $5,500 on the Bitstamp platform.

Treasuries were steady while 10-year yields on German bonds were set for their biggest weekly fall in three weeks, in a sign that the Brexit uncertainty and worries about Italy’s finances, continued to support demand. Italian bonds edged higher even as European Commission Vice President Valdis Dombrovskis said in an interview with Il Sole 24 Ore that the country’s government was openly defying EU budget rules. Emerging-market currencies consolidated recent gains while oil prices extended their rebound.

Oil prices rose, helped by a decline in U.S. fuel stockpiles and the possibility of a cut in OPEC output. Brent (+1.3%) and WTI (+1.1%) are both in the green and continuing their rebound seen yesterday with WTI hovering around USD 57.00bbl. Energy newsflow remains light, post-yesterday’s DoE report, however, Iraq’s North Oil Co. have announced that they have resumed Kiruk oil exports heading towards the Turkish port of Ceyhan. Looking ahead, the main highlight on the calendar will be the Baker Hughes rig count. Elsewhere, natural gas futures are relatively steady after their 19% decline yesterday which came in the wake of a 20% increase the day before.

In geopolitical news, US Republican and Democrat Senators filed a bipartisan bill seeking to suspend arms sales to Saudi Arabia in response to war in Yemen and killing of journalist. North Korean Leader Kim inspected test of new high-tech tactical weapons, according to Yonhap citing North Korean state media

Today’s data include October industrial production and capacity utilization. Viacom is among companies reporting earnings

Market Snapshot

• S&P 500 futures down 0.3% to 2,725.25
• STOXX Europe 600 down 0.01% to 358.38
• MXAP down 0.2% to 151.52
• MXAPJ up 0.2% to 486.84
• Nikkei down 0.6% to 21,680.34
• Topix down 0.6% to 1,629.30
• Hang Seng Index up 0.3% to 26,183.53
• Shanghai Composite up 0.4% to 2,679.11
• Sensex up 0.5% to 35,446.11
• Australia S&P/ASX 200 down 0.1% to 5,730.55
• Kospi up 0.2% to 2,092.40
• Brent futures up 1.2% to $67.41/bbl
• Gold spot up 0.3% to $1,216.36
• U.S. Dollar Index little changed at 96.93
• German 10Y yield rose 0.8 bps to 0.368%
• Euro up 0.2% to $1.1346
• Italian 10Y yield rose 0.3 bps to 3.12%
• Spanish 10Y yield fell 1.4 bps to 1.617%

Top Overnight News

• Fed Chairman Jerome Powell has laid out a scenario for a pause in the central bank’s interest-rate hiking campaign sometime next year by highlighting potential headwinds to the U.S. economy.
• British Prime Minister Theresa May is defying demands to quit as she battles to keep control of her fractious government long enough to deliver a Brexit deal that’s drawn ire from across the political spectrum.
• Pro-Brexit ministers Michael Gove, Liam Fox, Chris Grayling, Penny Mordaunt and Andrea Leadsom have decided together not to quit the government, Times reporter Tim Shipman said on Twitter.
• ECB’s Draghi sees no reason for expansion to come to abrupt end, he said at an event in Frankfurt, Germany.
• PG&E Corp. rallied as much as 49 percent in extended trading Thursday after the head of the California Public Utilities Commission said he can’t imagine allowing the state’s largest utility to go into bankruptcy as it faces billions of dollars in potential liability from deadly wildfires
• Deutsche Bank AG and Bank of America Corp. have been contacted by U.S. criminal investigators for information about transactions they handled for a small bank branch in Estonia that’s at the center of one of the biggest money-laundering investigations in history, according to two people familiar with the matter.

Asia-Pac stocks traded indecisively as the region lacked fresh catalysts and as uncertainty regarding Brexit and US-China trade played on investor’s minds. ASX 200 (-0.1%) and Nikkei 225 (-0.6%) were choppy with outperformance of tech and mining names in Australia overshadowed by a lacklustre broader market, while the Japanese benchmark was subdued by mild flows into the JPY and after China Mofcom began an investigation into alleged dumping of machine tools by Japanese firms. Elsewhere, Hang Seng (+0.3%) and Shanghai Comp. (+0.4%) swung between gains and losses after continued liquidity inaction by the PBoC which skipped OMOs for a 16th consecutive occasion, while participants were also tentative amid ongoing trade uncertainty after conflicting reports regarding the next round of China tariffs being placed on hold which USTR Lighthizer later denied. Finally, 10yr JGBs were mildly higher with prices underpinned amid an indecisive tone seen in stocks and with the BoJ also present in the market for JPY 680bln of JGBs in the belly to super-long end.

Top Asian News

• China’s Kindergarten Crackdown Is the Latest Disaster for Stocks
• Modi Is Said to Enlist Tata for Jet Airways Rescue Ahead of Vote
• Philippines Shuts 3 Miners, Suspends 9 Others After Review
• Indian Central Bank Board to Discuss Surplus Funds Transfer

European equities trade relatively flat (Eurostoxx 50 +0.2%) in the wake of mixed trade headlines overnight for the US and China. Performance across European indices is relatively equal whilst focus once again falls on the FTSE 100 (U/C) which remains at the whim of Brexit-inspired fluctuations in the GBP. Once again, potential upside for the index is being capped by losses in domestically focused banking names (RBS -3.0%, Lloyds -2.1%) as Brexit uncertainty continues to dampen investor sentiment. In terms of sector specifics, most sectors are trading higher with mild outperformance seen in telecom names. Utilities started the session lower in the wake of yesterday’s ECJ decision which deemed the UK’s scheme for ensuring power supplies during the winter months as a violation of state aid rules. Other individual movers include Vivendi (+4.2%) sit at the top of the Stoxx 600 after posting impressive Q3 sales metrics and announcing a potential sale of part of their Universal Music Group division. Elsewhere, AstraZeneca (-2.3%) and Shire (-1.3%) have been seen lower throughout the session after both posting disappointing drug updates.

Top European News

• Finnish Software Company Basware Is Said to Explore Sale
• Vauxhall Owner Said to Weigh Closing a Factory Post-Brexit
• Amid Brexit Gloom, Deutsche Bank Sees Frankfurt as Next London
• Nyrstar Surges on Hopes Over Trafigura Refinancing Talks

Currencies:

• GBP – The Pound is not the biggest net mover for a change, but still one of the most volatile and vulnerable as Cable pivots 1.2800 and Eur/Gbp trades between 0.8850-80. The fall-out from Wednesday’s Cabinet meeting continues as UK PM May strives to sell the Brexit draft, but facing a rising rebellion within the Conservative Party that appears to have reached the critical mass required to trigger a no confidence vote. However, some positive news with a key Minister deciding not to follow others out of the Government, as Gove opts to stay rather than go. In terms of technical impulses, Cable is holding above yesterday’s 1.2725 low, ahead of chart support around 1.2710-00 that protects mtd and ytd troughs at 1.2696 and 1.2662 respectively, while near term resistance is seen around 1.2836 before 1.2850, but 1 bn option expiries at 1.2800 could well exert more influence into the NY cut. For Eur/Gbp, several MAs form support blow 0.8850 and the 100 DMA at 0.8910 may hamper further gains if 0.8900 is breached.
• JPY – Maintaining a firm underlying safe-haven bid as broad risk sentiment remains fragile and China is reportedly investigating machine dumping by Japan – Usd/Jpy near the bottom of a 113.20-65 range.
• EUR/CAD/CHF – All narrowly mixed vs the Greenback, with the single currency keeping afloat of 1.1300 and eyeing a Fib at 1.1358, while the Loonie is holding recent recovery gains through 1.3200 as oil prices continue their rebound and the Franc meanders between 1.0075-50 vs 1.1000+ earlier this week when the broad Dollar and DXY were in the ascendency (index well above 97.000 vs just below the figure presently).
• EM – The Lira is off best levels, but still relatively bid after reports that the US could Turkish cleric Gulen in an attempt to assuage President Erdogan to adopt a less aggressive stance against Saudi Arabia over the Khashoggi killing. Usd/Try now near the middle of a 5.3240-3940 band.

In commodities, gold (+0.2%) is trading relatively flat after hitting new weekly highs of USD 1218.39/oz earlier in the session; following uneventful overnight trade. Elsewhere, Shanghai Zinc prices have risen due to London Metal Exchange stockpiles falling to decade-low levels. Brent (+1.3%) and WTI (+1.1%) are both in the green and continuing their rebound seen yesterday with WTI hovering around USD 57.00bbl. Energy newsflow remains light, post-yesterday’s DoE report, however, Iraq’s North Oil Co. have announced that they have resumed Kiruk oil exports heading towards the Turkish port of Ceyhan. Looking ahead, the main highlight on the calendar will be the Baker Hughes rig count. Elsewhere, natural gas futures are relatively steady after their 19% decline yesterday which came in the wake of a 20% increase the day before.

US Event Calendar

• 9:15am: Industrial Production MoM, est. 0.2%, prior 0.3%; Manufacturing (SIC) Production, est. 0.2%, prior 0.2%
• 11am: Kansas City Fed Manf. Activity, est. 11, prior 8
• 4pm: Total Net TIC Flows, prior $108.2b, Net Long-term TIC Flows, prior $131.8b

via RSS https://ift.tt/2Fog5h1 Tyler Durden

Mere hours after the Wall Street Journal reported that the DOJ was preparing to indict Wikileaks’ founder Julian Assange, the Washington Post discovered that Assange has already been charged under seal by the Eastern District of Virginia, which has been handling the yearslong probe into Wikileaks’ disclosures of classified government information.

The revelation was apparently the result of a copy-and-paste error in another, unrelated, court filing, according to Seamus Hughes. That case involved Seitu Sulayman Kokayi, a 29-year-old who had been charged with both enticing a 15-year-old girl into sex by sending him pornographic i mages while also having “substantial interest in terrorist acts.”

You guys should read EDVA court filings more, cheaper than a Journal subscription pic.twitter.com/YULeeQphmd

— Seamus Hughes (@SeamusHughes) November 16, 2018

Assistant US Attorney Kellen S. Dwyer, urging a judge to keep the matter sealed, wrote that “due to the sophistication of the defendant and the publicity surrounding the case, no other procedure is likely to keep confidential the fact that Assange has been charged.” Later in the filing, Dwyer wrote that the charges would “need to remain sealed until Assange is arrested.”

That Kokayi case involved previously classified information and prosecutors were planning to use information obtained under the FISA act. Kokayi was indicted last week and is set to be arraigned on Friday. His case has been sealed since September.

Since the revelation was made in error, no other details about the charges against Assange were revealed.

Dwyer is also assigned to the WikiLeaks case. People familiar with the matter said what Dwyer was disclosing was true, but unintentional.

Joshua Stueve, a spokesman for EDVA, said “the court filing was made in error. That was not the intended name for this filing.”

Assuming he is charged, it’s still not clear whether Assange would wind up in a US courtroom to face trial. He has been living in the US embassy in London since 2012, fearing he would be arrested if he steps outside. While the relationship between Assange and his Ecuadorian hosts had deteriorated significantly this year – he sued the government in an Ecuadorian court after the embassy cut off his Internet access and took other punitive measures reportedly in response to his slovenly habits and penchant for food-mooching. But he lost the suit, and is now appealing.

Even if he is charged, Assange’s coming to the United States to face trial is no sure thing. Since June 2012, Assange has been living in the Ecuadoran Embassy in London, afraid that if he steps outside he will be arrested.

When he first sought asylum in the embassy, he was facing possible extradition to Sweden in a sex crimes case. He has argued that case was a pretext for what he predicted would be his arrest and extradition to the United States.

In the years since, the Swedish case has been closed, but Assange has said he cannot risk leaving the embassy because the United States would attempt to have him arrested and extradited for disclosures of U.S. government secrets. Throughout that time, the United States has refused to say whether there are any sealed charges against Assange.

If Assange were to leave the embassy and be arrested by British authorities, he would likely still fight extradition in the British courts.

The DOJ has for years refused to reveal whether charges have been pending against Assange under seal, though it was widely believed that they were. But. seeing as filings like Dwyer’s are probably vetted by multiple readers, the fact that an error of such magnitude was allowed to be made is almost suspicious in and of itself, particularly considering the timing with other reports about the DOJ’s efforts to indict Assange (before leaving office, Attorney General Jeff Sessions had confirmed that arresting Assange remained “a priority”).

It’s almost as if somebody had tried to warn him (Assange and Wikileaks have also been cited as unindicted co-conspirators in indictments against a Russian troll farm handed down by the Mueller probe.

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After what was presumably a “long night of the soul” for Environment Secretary Michael Gove, the Tory cabinet minister has decided to split the difference in terms of decisions that would disappoint and delight his boss, Prime Minister Theresa May. He won’t take the Brexit Secretary post vacated on Thursday by Dominic Raab. But – for now, at least – the “tortured” Gove won’t be resigning, according to the London Times.

Gove is NOT resigning – source close to him says ‘Michael is staying at Defra. He thinks it is important to continue working with Cabinet colleagues to ensure the best outcome for the country’

— Laura Kuenssberg (@bbclaurak) November 16, 2018

Though some sources said he could still quit by the end of the weekend.

Michael Gove is ‘tortured’? Finally some news about him I like hearing! pic.twitter.com/VXa0AoG2E9

— Tiernan Douieb (@TiernanDouieb) November 16, 2018

But that was about all of the good news for May, who is facing another brutal day of trying to rally fractured Tories behind what she firmly insists is the ‘best deal possible.’ Shortly after former culture secretary John Whittingdale became the latest Tory to announce he had submitted a letter of no-confidence in May, the embattled prime minister did the next logical thing: She sat for a 30-minute radio interview where she continued to try and sell her deal and insisted she would carry on as prime minister.

Following the interview, which received mixed reviews and which ended with a question comparing May with Neville Chamberlain, the prime minister was confronted with reports that the 1922 committee (the private committee for the Conservative Party in the House of Commons) had received the requisite 48 letters to call for a ‘no confidence’ vote in May. According to media reports, the vote could happen in the coming days (though, in a repeat of the drama from Thursday, those reports were swiftly refuted).

Circling back to Gove, looked chipper this morning as he confronted the horde of reporters lurking outside his London home.

The scrutiny was understandably intense, with CNN offering this trenchant analysis of the ‘breakfast indicator’.

It appears that Michael Gove is carrying a paper bag from Patisserie Valerie, a British cafe chain that’s in deep financial trouble. Is this a subtle message? Its chief executive resigned on Thursday. His name? (Paul) May.

And as one reporter noted: “stranger things have happened.”

Gove not resigning. Well stranger things have happened

— Robert Peston (@Peston) November 16, 2018

And although May has insisted that a “People’s Vote” on the deal (which would function as effectively a second Brexit referendum) won’t happen, Labour MPs insist that such a vote is growing increasingly likely (as their chances of seizing power grow). Tom Watson, Labour’s deputy leader, has said a fresh referendum on Brexit is now “more likely,” according to the Independent.

With Gove sticking around, reporters are turning their attention to another restive senior member of May’s government: International Development Secretary Penny Mordaunt. Approached about her resignation plans this morning, Mordaunt insisted: “I’ve got nothing to say.” Expect more resignations to follow on Friday.

With UK markets still recovering from the brutality of Wednesday and especially Thursday, Bloomberg has published a handy guide that functioned more like a warning: All of those analysts who projected a drop in the pound below $1.25 if May’s deal is ultimately defeated might be conservative. They even invoked the memory of the October 2016 ‘flash crash’.

But if lawmakers reject the deal, the currency vigilantes may re-emerge en masse over the low-liquidity Christmas period, ratcheting up pressure on a divided Parliament. Remember the 6% flash crash in October 2016 when the pound was pummeled in just one minute in thin Asian trading?

But it wouldn’t even take an outright rejection of the deal to reawaken the ‘currency vigilantes’. Indeed, as anybody who has been watching the tape probably could guess, they are already with us.

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Authored by Marie Huillet via CoinTelegraph,

Executive Board member of the European Central Bank (ECB) Benoit Coeure considers Bitcoin (BTC) to be the “evil spawn of the [2008] financial crisis,” Bloomberg reports Nov. 15.

image courtesy of CoinTelegraph

Coeure reportedly made his acid remarks at the Bank for International Settlements (BIS) in Basel. The BIS’ general manager Augustín Carstens has likewise previously made a spate of crypto-skeptical remarks, notably characterizing Bitcoin as a “combination of a bubble, a Ponzi scheme and an environmental disaster.”

Explicitly recalling Carstens’ characterization, Coeure framed his criticisms of the ten year oldinnovation with a reference to the aftermath of the Lehman Brothers bankruptcy in fall 2008 – the tipping point for economic turmoil, global recession, and, subsequently, the controversial “too big to fail” rationale for state intervention:

“Few remember that Satoshi [Nakamoto, the inventor of Bitcoin] embedded the genesis block with a Times headline from January 2009 about U.K. banks’ bailout. In more ways than one, Bitcoin is the evil spawn of the financial crisis.”

After this historical overture, Coeure continued to address international monetary authorities’ present-day pursuit of cryptocurrency tokens and distributed ledger technology (DLT) initiatives. While acknowledging the widespread interest, he claimed that “there is broad agreement that a central bank digital currency, in whatever form, is unlikely to be issued within the next decade.”

The ECB official’s stance is at odds with remarks from International Monetary Fund (IMF) managing director Christine Lagarde just yesterday. Speaking at the the Singapore Fintech Festival Nov. 14, Lagarde urged the international community to “consider” endorsing central bank-issued digital currencies (CBDC), arguing they “could satisfy public policy goals,” specifically “financial inclusion.”

Coeure’s argument is also directly contrary to that of Stanley Yong, Chief Technical Officer (CTO) of IBM’s Blockchain for Financial Services, and a veteran of Singapore’s central bank, the Monetary Authority of Singapore.

Yong stated this week that CBDCs are “the only way” to mitigate the “kinds of risks that came about during the Lehman crisis of 2008,” and could specifically prevent a settlement system freeze – a systemic failure that affected financial systems across multiple countries during the Lehman fallout.

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“The security and well-being of the United States are at greater risk today than at any time in decades. America’s military superiority… has eroded to a dangerous degree. Rivals and adversaries are challenging the United States on many fronts and in many domains. America’s ability to defend its allies, its partners, and its own vital interests is increasingly in doubt. If the nation does not act promptly to remedy these circumstances, the consequences will be grave.”

The warning above is the first paragraph of the executive summary of the National Defense Strategy Commission’s report, which was published on Tuesday. The commision was established by the 2017 Defense Authorization Act to evaluate the health of the nation’s defense.

The report’s bottom line is grim: “The US military could suffer unacceptably high causalities and the loss of major capital assets in its next conflict. It might struggle to win, or perhaps lose, a war against China or Russia. The United States is particularly at risk of being overwhelmed should its military be forced to fight on two or more fronts simultaneously.”

It went on to warn that the Defense Department is not financially or strategically positioned to fight two simultaneous wars and there is a strong possibility, a war against China or Russia could result in a humiliating defeat.

The commission’s co-chairmen, Eric Edelman, who was undersecretary of defense in the Bush years, and retired Adm. Gary Roughead, a former chief of naval operations officer for Bush and Obama administrations, are set to testify before both Armed Services committees later this month, said NBC News.

Johnny Michael, a Spokesperson at the Office of the Secretary of Defense, said they welcomed the report, describing it as “a stark reminder of the gravity of these issues, and a call to action.”

“The department will carefully consider each of the recommendations put forward by the commission as part of continuing efforts to strengthen our nation’s defense, and looks forward to working with the commission and the Congress to do so,” he said.

Edelman, who also wrote an article for the Atlantic Council, an American think tank in the field of international affairs, said Wednesday that “China and Russia, seeking regional hegemony and global power projection, are pursuing military buildups aimed at neutralizing US strengths.”

Edelman also said, “At home, the United States has significantly weakened its own defense due to political dysfunction and decisions made by both Republicans as well as Democrats.”

“This has played out in the effects of the Budget Control Act (BCA) of 2011 and years of failing to enact timely appropriations. Defense spending was cut substantially under the BCA, with pronounced detrimental effects on the size, modernization, and readiness of the military,” he said.”

Earlier this year, President Trump signed into law one of the most massive military budgets on record, now the administration is planning to cut $16 billion next year, which currently is at $716 billion — a 2.25% reduction.

By 2019, it is forecasted that President Trump’s budget request for military spending would make up about 60% of the federal discretionary budget, compared to 54% in 2018. Nonmilitary discretionary spending would collapse as the war economy is preparing for the next military conflict with new investments in critical industries including fifth-generation fighter jets, hypersonic technologies, laser weapons, low earth orbit satellites, air/land/sea drones, sensors, and artificial intelligence. 

However, there is a significant problem. America is broke. US National Security Adviser John Bolton called the national debt a “threat to the society” that requires substantial cuts to the government’s discretionary spending.

Bolton told the audience Wednesday at an event hosted by the Alexander Hamilton Society in Washington that he expects military spending “to flatten out” in the near term. 

“It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society,” Bolton said. “And that kind of threat ultimately has a national security consequence for it.”

The remedy to win a war against China and Russia is more defense spending, something that could trigger a fiscal crisis if the deficit continues to expand. So, will the Trump admin reign in the deficit and face a dual world: Russia/China and the US, or will the deficit explosion continue until something breaks?

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