iftttwall

Despite Amazon’s decision to halt construction on a new tower and threats to sublease space in another newly built downtown skyscraper, Seattle Mayor Jenny Durkan and the City Council have passed a controversial “homelessness tax” that will require the city’s largest companies to pay an additional $300 a year per full time employee based in the city.

And while the law has been significantly watered down from the version introduced last month by the city council, Jeff Bezos still isn’t happy about it.

To wit, the company said in an official statement that it’s still “apprehensive” about expanding the number of employees it has based in the city, as Fortune reports.

“We are disappointed by today’s City Council decision to introduce a tax on jobs,” Amazon said in a statement. “While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”

Amazon has resumed construction on its 17-storey Block 18 tower, but we imagine the company now has even more incentive to shift employees to its planned HQ2, though, as CNNMoney warned in a recent piece, Amazon’s strident reaction to the proposed tax in Seattle might give some of its suitor city’s reason to reconsider (as foolish as that might seem from an economic development perspective).

The law will require employers who generate more than $20 million in gross revenues within the city limits to pay roughly 14 cents per man hour per employee every year – which comes out to roughly $275 per employee. Roughly half of the money collected by the tax will be paid by Amazon.

So, at the end of April, the Seattle City Council released draft legislation that would force companies with revenues of over $20 million in the city to pay 26 cents for each hour worked by a Seattle-based employee, or roughly $540 per head per year. This “head tax” was to apply over 2019 and 2020, generating $86 million a year for social programs, before turning into a 0.7% payroll tax. (The annual proceeds of the tax were originally calculated at $75 million before the council revised its estimates.)

However, with Mayor Jenny Durkan threatening to veto the tax because she was concerned about its impact on employment, the measure had to be watered down to pass.

In the end, the version that passed – unanimously – will see large employers pay 14 cents per head per hour, or $275 per head per year. The tax will now generate $47 million a year, and it will run for five years, rather than turning into a payroll tax after a two-year run.

For what it’s worth, Amazon says it has independently done more to ease homelessness than the city government, touting a corporate initiative to donate space to shelter 200 homeless people in one of Amazon’s new buildings.

The company said it recently contributed $40 million to a city managed fund for affordable housing.

As Fortune points out, Amazon isn’t the only company angry about the tax, which will impact more than 500 businesses. Starbucks, which hosts its headquarters in the city, slammed the city council, calling it incompetent and incapable of taking care of the city’s homeless.

Three-fifths of the money raised will go to building new, affordable housing, while the rest will fund emergency services for the homeless.

Amazon wasn’t the only company left grumbling. Starbucks also responded, with public affairs chief John Kelley saying Seattle “continues to spend without reforming and fail without accountability, while ignoring the plight of hundreds of children sleeping outside.”

“If they cannot provide a warm meal and safe bed to a five year-old child, no one believes they will be able to make housing affordable or address opiate addiction,” Kelley said.

And while that statement should of course be taken with a grain of salt given that it’s obviously in Starbuck’s interest to do everything it can to pressure the city, the company’s spokesman may have a point.

The roughly $50 million raised by the tax would go toward affordable housing initiatives that help the homeless find permanent shelter – while some of the money would go toward an emergency response program for people at risk of homelessness.

But the city has other options that might be more effective at alleviating the city’s housing shortage, like changing restrictive zoning regulations.

Instead, by passing the tax, Seattle’s mayor and city council have only provided further proof that the city is willing to do whatever it can to combat homelessness, short of actually building more homes.

via RSS https://ift.tt/2ImmI0c Tyler Durden

Authored by Mark St.Cyr,

Over this past weekend the movie “Margin Call” (2011, Lionsgate™) made its way back into the rotation on my cablebox.

For those who have never seen this movie, regardless if you are involved in stock trading, it is a must watch on so many levels, be it general business, corporate leadership, department interactions, skullduggery, familial, as well as personal backstabbing, the list goes on. It is absolutely loaded with a plethora of take-aways of the real-life-lesson variety. I say this because I have been involved around, in, as well as been at the receiving end of the proverbial “poisoned dagger.” Not on Wall Street, but within other fields.

I can tell you with point-blank certainty that many of the situations and scenarios contained, or played out in that film, are applicable (as well as happen in-kind everywhere) to getting a condensed lesson in what happens in real-life at the top of the game of business. i.e., When you’re playing for, “all the marbles” as they say.

Margin Call was nominated for an Oscar®, in my view, not only should they have won, but swept them. But that’s just me.

I’ve written about this movie before using one or two scene constructs, then applying what was addressed to today’s “markets” or business environment.

There are many scenes within this movie that people think (as well as believe) would never happen in real life. Yet, I’m here to tell you, not only do they, but many of those scenes I’ve witnessed, near script-like, in other situations during high dollar/value negotiations or situations.

The boardroom scene played out by Jeremy Irons (John Tuld) when he addresses one of his underlings as to tell him what is concerning him and to explain it in plain english, or as if he were (paraphrasing) “…speaking to a young child, or golden retriever” is just one. And is far more true-to-life than many may realize, let alone understand at first glance.

In other words: No jargon, no formulas, no big words, no bullsh#t. i.e., “Tell me so that even my dog would understand.” Trust me when I tell you, again, there’s far more real-life contained in that entire exchange than there is movie fiction. The entire movie is an allegorical lesson for life at the “high stakes” table. And those of us that have been around a bit, and played on those higher levels, agree. (via my own conversations with others)

The ruthlessness, along with the soul-dead responses portrayed and played out in other scenes, is far more true to life than fiction. Which brings me to the reason why I felt the need to elaborate on it today.

Over the last few weeks I have been barraged from friends and colleagues asking me for my interpretation of what is currently taking place in the “markets.” The questions have all had the same underlying theme, i.e., “With all this good (earnings, tax cuts, N.Korea, and more) why are the “markets” not higher?”

When I probe them a bit what I’ve found, almost to a person, is the reason for their consternation is they’re trying to wrap their heads around what the mainstream business/financial media is propounding and what the “market” is doing. Which for all intents-and-purposes – has been nothing. i.e., We’re now in May, and the best the “market” could do after all those “fantastic!” earnings was get back to break even for 2017.

When I repeat the same answer that I’ve been trying to in grain into their reasoning for years, many of them seem to still not want to hear it. And others just don’t. After-all, if it was purely the Fed. they muse, that would mean everything is a mirage. And they just don’t want to make that leap.

It’s understandable, it’s a very hard concept to understand if one doesn’t want to undertake the due diligence themselves to incorporate all the potentialities. But that doesn’t mean those potentialities are not there!

As of late my go-to response, as to back up my assertions, has been the following:

“What you need to realize is this – If I were wrong and they were right, then the “markets” should at the least, be at, or above the previous high water mark.

But what seems to be playing out is the exact opposite, in other words, I’m correct and they have been selling you smoke-and-mirrors. And what’s really concerning you, is there are cracks forming everywhere that you seem to be aware of, yet don’t want to consider. What you seem to be asking for is another mirror, or more smoke, as to just pretend it’s not happening.

Again, what you seem to not want to ask yourself is the fundamental question, which you should, and that is: Is it not funny how this all is happening – with near precision timing – now that the Fed. has reversed course?”

Which brings me back to the movie, because it is their response that is the most troubling. That response? “Well, that just means the Fed. will step back in as they’ve always done, right?”

The answer (and I’ve given) to that question is: Yes, no, maybe. And, at what level? And, will it work? And, if not, then what?

Many (as did I when I was younger) don’t entertain, let alone fully comprehend, just how separated and detached many view their positions when it comes to the human toll that can result via those very decisions. It happens in politics, business, and yes, even families. But right now I’m speaking directly to “markets” and we have a very real-life expression taking place as to show anyone who cares to look, just how detached the people “in charge” (e.g., Federal Reserve) are with any perceived “concern” for your money, investments, et cetera. To wit:

An “Audible Gasp” Was Heard When The Chicago Fed Unveiled Its “Solution” To The Pension Problem

“An audible gasp went out in the breakout room I was in at last month’s pension event cosponsored by The Civic Federation and the Federal Reserve Bank of Chicago. That was when a speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.”

Here’s what I opined in April of last year for the possibility of what was more than plausibly on the horizon. Again, to wit:

“Are 401K Holders About To Feel A Savers Pain?”

There’s an old truism people forget all too often. It has many variations and is attributed to even more, its core meaning goes something like this:

“If the government can give it to you, than it can also take it away.”
Some of you might be wondering if I’m talking about the current “tax” advantages that have made these vehicles so popular over the years. To that I’ll say no, not at this current time. But I feel that will be the least of worries coming down the pike in the not so distant future.

No, what I’m directly addressing is what is now emanating from the one and only non-government, privately held institution, directed by a consortium of non-elected, Ivory Towered, policy wonks: The Federal Reserve.

And those emanations are anything but 401K holder friendly.

If you combine the latest discussions emanating via Fed, officials, along with current gyrations within these “markets,” what you have is the resulting amalgamation of policy wonks channelling the Sorcerer’s apprentice, tinkering with spells and devices they have no true fundamental understandings with (e.g., all academics) all seated around a “monetary caldron” known as fiscal policy. And the resulting fiascos are beginning to show.

The real trouble with all of this?

People, far too many ordinary, as well as well-intentioned business leaders think or believe – they actually care about what happens to you, your family, or your business. Hint: They don’t.

Well, not from their position of power, that is.

The above scenario that played out in Chicago, just days ago, should be signal enough to drive that point home. For some it may be their first realization, and I get that. Yet, nevertheless, for those trying to pay attention, the clues are far too obvious and blatant to be ignored.

So I’ll end here with another scene from the movie Margin Call, which I believe sums up how one should interpret precisely how the Fed. views the possible collateral damage it may wreak amongst the populace via its monetary policy decisions.

In the beginning of the movie as the firm is getting ready for what will be unannounced, immediate purge of employees, Paul Bettany (Will Emerson) makes his way to Kevin Spacey’s (Sam Rogers) office to try to console him, where Roger’s is visibly holding back tears.

The initial reaction for thinking that this sudden jettisoning of personnel, without any notice, must be troubling him to his core with what will obviously be a true gut-wrenching shock and ordeal of work, life and monetary upheaval to those being jettisoned. The obvious conclusion or assumption is that this must also be taking its toll on Spacey.

The twist comes when Bettany is told that the reason for the tears is not for the sudden human toll the company will now systematically doll-out across its employees. No, the reason for the tears are because he just got some truly bad news: His dog is dying.

Hint: Your 401K, your savings, your home, your business, your __________ (fill in the blank) are a lot of things, but one thing it is not, is this: Anything they’ll (The Fed.) shed a tear for or over.

And the proof of that statement will be made manifest in the “markets” as we continue the year. And if you want any further proof in that?

Just ask any savers, retirees, or others over the last decade how many tears the Fed. shed as interest rates were cut and held at the zero bound. Hint: 0

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

After months of speculation, David Tepper is finally closing in on a prize he has coveted for most of his career: Being the majority owner of an NFL franchise.

According to the Washington Post, as long as at least two-thirds of league owners cast their votes to approve the deal during a meeting in Atlanta next week, Tepper, who is currently a minority partner in the Pittsburgh Steelers, will take over ownership of the Carolina Panthers from Jerry Richardson, a former NFL player who has owned the team since 1993, when he was awarded the NFL’s 29th franchise. WaPo says the final details are still being hammered out, but the deal is very close to being finished.

Richardson promised to sell the team late last year after Sports Illustrated published an expose citing multiple alleged incidences of workplace misconduct. Four former Panthers employees who had negative encounters with Richardson spoke with SI for the piece. The league launched an investigation into his conduct soon after the story broke.

Tepper, who has been the front-runner since shortly after Jerry Richardson announced he’d be selling the team late last year after Sports Illustrated published a story about multiple incidences of workplace misconduct, in part because Richardson believes Tepper will keep the team in Charlotte. The story also included details about an incident where Richardson reportedly used a racial slur directed at an employee.

According to the Washington Post, the rumored sales price – a staggering $2.2 billion – would be the highest ever paid for an NFL franchise. In fact, it’s more than the $1.4 billion paid for the Buffalo Bills in 2014.

The NBA’s Houston Rockets were bought by Tilman Fertitta for $2.2 billion last year.

Of course, this news is hardly a surprise: Rumors about Tepper’s interest started circulating shortly after Richardson put the team up for sale.

However, we can’t help but wonder: Given Tepper’s noted antipathy toward President Trump, one can’t help but wonder: Would he be the first NFL owner to explicitly encourage players to kneel for the anthem?

via RSS https://ift.tt/2rIIa9j Tyler Durden

Authored by Patrick Buchanan via Buchanan.org,

For Bibi Netanyahu, Israel’s longest-serving prime minister save only founding father David Ben-Gurion, it has been a week of triumph.

Last Tuesday, President Donald Trump pulled the United States out of the Iran nuclear deal as Bibi had demanded. Thursday, after Iran launched 20 missiles at the Golan Heights, Bibi answered with a 70-missile attack on Iran in Syria.

“If it rains on us, it will storm on them. I hope we have finished the episode,” Defense Minister Avigdor Lieberman said, boasting that Israel’s raids hit “nearly all Iranian infrastructure in Syria.”

The day before, Bibi was in Moscow, persuading Vladimir Putin to cancel the sale of Russia’s S-300 air defense system to Damascus.

Yesterday, in an event televised worldwide, the U.S. embassy was transferred to Jerusalem, with Trump’s daughter Ivanka and son-in-law Jared Kushner doing the honors in what Bibi called a “glorious day.” Few can recall a time when Israel seemed in so favorable a position.

The White House and the Republican Party that controls Congress are solidly behind Israel. Egypt is cooperating to battle terrorists in Sinai.

Israel has a de facto alliance with Saudi Arabia and the Gulf royals. And the Palestinians have never been more divided, isolated and alone.

Yet, there is another side to this story, also visible this last week.

As the transfer ceremony of the Jerusalem embassy was taking place, TV split screens showed pictures of protesting Palestinians, 52 of whom were shot dead Monday, with thousands wounded by snipers. Some 40,000 had rallied against the U.S. embassy move.

Even before Monday’s body count, the Gaza Health Ministry said that, over the previous six Fridays of “March of Return” protests, 49 Palestinians had been killed and 2,240 hit by live fire from Israeli troops.

Those dead and wounded Palestinians are not likely to be forgotten in Gaza. And while Israel has never had so many Arab regimes willing to work with her in pushing back against Iran, Arab League Chief Ahmed Aboul Gheit called the U.S. embassy move to Jerusalem, a “clear violation of international law.”

Gheit added: “The fall of Palestinian martyrs by the bullets of the Israeli occupation must ring an alarm … bell to any state that does not find anything wrong with the immoral and illegal stance that we are watching.”

Last week, Hezbollah, which arose in resistance to the 1982 Israeli occupation of Lebanon, and expelled the Israeli army 18 years later, won Lebanon’s elections. A Hezbollah-backed coalition will likely form the new government in Beirut.

Michael Oren, Israel’s former ambassador to the U.S. and Bibi ally, said that any attack by Hezbollah, which fought Israel to a standstill in 2006, should bring an Israeli declaration of war — on Lebanon.

While Israel launched some 100 strikes on Syria in recent years, Syrian President Bashar Assad has survived and, with the aid of Hezbollah, Iran and Russia, won his civil war.

Assad and his army and allies are far stronger now, while President Trump, Israel’s indispensable ally, speaks of bringing U.S. troops home from Syria. In polls, a majority of Americans lines up behind Israel in its clashes, but a majority also wants no more U.S. wars in the Middle East.

Also, Sunday, the U.S. sustained another major political defeat.

Iraqi Prime Minister Haider al-Abadi lost his re-election bid. Based on early results, the winning coalition was that of Shiite cleric Moqtada al-Sadr, against whose forces U.S. troops fought a decade ago.

Running second was a ticket led by a Shiite militia general close to Iran. When a new government is formed in Baghdad, the orientation of Iraq seems certain to shift away from the United States.

While the Israelis are the most powerful nation in the region, how long can they keep 2 million Palestinian Arabs confined in the penal colony that is the Gaza Strip? How long can they keep the 2 million Palestinians of the West Bank living in conditions even Israeli leaders have begun to compare to apartheid?

Across the West, especially in universities, a BDS movement to have students, companies and consumers boycott, divest and sanction Israeli-produced products has been gaining ground.

The Palestinians may have been abandoned by Arab rulers and the wider world. Yet, history teaches that people forced to survive in such conditions eventually rise in rebellion and revolution, take revenge, and exact retribution for what was done to them and their own.

Republican leaders often say that we cannot permit “any daylight” between the U.S. position and that of Israel.

But can the country that decried for decades the panicked reaction of an Ohio National Guard that shot and killed four students at Kent State University sit silent as scores of unarmed protesters are shot to death and thousands are wounded by Israeli troops in Gaza?

Bibi and Israel appear to be on a winning streak. It is difficult to see how, over the long run, it can be sustained.

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

While Wall Street investors may be clinging to hope that central bankers won’t screw up the tightening process, i.e., commit a “policy mistake”, which as we showed earlier is the biggest tail risk on Wall Street today… 

… and won’t blow up what is by now the biggest consensus position perhaps in history, namely everyone (including the Harvard Endowment) being long FAANG+BAT…

… Wall Street has now given up on the so-called “coordinated global recovery”, and as BofA’s Michael Hartnett reveals in his latest Fund Managers Survey polling 223 respondents with $643BN in AUM, expectations for faster global growth have collapsed, with only net 1% of investors indicating in May they think the global economy will strengthen over the next 12 months.  This is down 4% from April and the lowest level since February 2016 when the S&P hit an intraday low of 1810 and when global economy was just emerging from its China-deval/Quantitative Tightening led turmoil. The fact that this is happening now when both the economy and the markets have been firing on all cylinders is especially troubling.

Looking ahead, while only 18% expect a recession in the next 12 month, (and 2% expect it in 2018), a fully 84% are now confident the next recession will hit in the next two years, either in 2019 (41%) of 2020 (43%).

Meanwhile, looking at positioning, BofA notes that the market froth is now gone, expectations have reset, cash remains high explaining the May rally, but consensus still positioned for risk-on and expects: “good” rise in rates, no recession until 2020’Q1.

To this, BofA’s response is “Buy In May And Sell The Rip” as growth and credit weakness will be the likely triggers for the next move lower. Here is Hartnett:

“This month’s survey presents good and bad news,” said Michael Hartnett, BofA chief investment strategist. “Although cash levels remain high and growth optimism is at the lowest level in over two years, a majority of investors say there is room to grow in this equity bull market and don’t see signs of recession anytime soon. Fund managers think the May rally can extend in the near-term.”

Meanwhile, here are the other notable observations from the latest Fund Manage Survey:

Average cash balance ticks down to 4.9% in May, from 5.0% in April, but still above the 10-year average of 4.5%, continuing the FMS Cash Rule contrarian “buy” signal. This also means that the near-term BofAML Bull & Bear Indicator is more neutral now at 4.8 (close to the midpoint between the 2.0 “buy” and 8.0 “sell” thresholds). This is the good news, although it the June FMS cash falls < 4.6%, that would be a sell signal.

The not so good news is that while funds still have dry powder on the side, and are looking for a near-term bounce, Hartnett notes that the bank’s proprietary Global FMS Macro Indicator has fallen for the sixth straight month, sliding into negative territory for the first time since November 2016. This comes alongside the abovementioned expectations for slowing global growth with just net 1% of investors indicating they think the global economy will strengthen over the next 12 months; this is the lowest level since February 2016.

More bad news: corporate margin expectations have also peaked, and in May slumped to the lowest level since late 2016; falling 8% to net 19% thinking operating margins will fall in the next 12 months. This explains why despite the fantastic beats in much of Q1 earnings season, stocks have failed to find new highs.

Even more bad news: FMS profits expectations slump to post-Brexit lows of just 10% expecting faster growth over the next 12 months; the historical relationship implies defensives set to outperform cyclicals in coming months.

Meanwhile, suggesting stagflation is just around the corner, higher inflation remains the consensus view, with net 79% of investors surveyed expecting core CPI to rise over the next 12 months, slightly down from 82% last month.

In keeping with the reflationary theme, BofA finds that allocation to commodities stays at net 6% overweight, the highest since April 2012 when WTI was $105/bbl. To BofA this is indicative of “Commodity chasing” and even though the allocation to commodities is at a 8-year high, the energy/materials positions is still playing catch-up with #1 “pain trade” of 2018 YTD: long commodities.

Even more bad news: 76% say equities have yet to peak -the majority say not until 2019 or beyond; only 19% think January marked the top – suggesting fundamentally-driven selloffs will be met with BTFDing dragging the market even more from fair declining value…

… while a third of respondents say companies are now too levered, the highest since Dec’09.

Meanwhile, as confidence in the economy is crumbling, the buyside is hoping that growth stocks will preserve their beating ways, and as we showed earlier, the top “crowded trade” is  long FAANG+BAT (short Treasuries is #2).

What can shake the consensus view? According to BofA, a weak Q2 GDP in the US or a “bad” rise in rates (watch US bank stocks); coupled with credit contagion from EM (watch Brazil FX).

As for the best contrarian trade, BofA recommends shorting banks, and going long utilities, driven by lower bond yields.

To summarize: the growth narrative is now officially dead, Wall Street is starting to cash out, but most remain hopeful that they have time before the next recession hits some time in 2019 or 2020, and since the market has not peaked just yet, at least according to the vast majority, most investors are hoping for “one final hit” in the market – perhaps at the next all time high in the S&P – at which point the collective dumping will begin.

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

Having thrown in the towel on his bond bear market call two weeks ago, Janus Henderson’s billionaire bond investor Bill Gross now believes that the most recent bearish bond price (rise in yields) will stop here as the economy cannot support higher yields.

As Gross said two weeks ago, yields won’t see a substantial move from here.

“Supply from the Treasury is a factor in addition to what the Fed might do in terms of a mild, bearish tone for U.S. Treasury bonds,” Gross told Bloomberg TV.

“I would expect the 10-year to basically meander around 2.80 to perhaps 3.10 or 3.15 for the balance of the year. It’s a hibernating bear market, which means the bear is awake but not really growling.”

Since then, yields have tested the upper-end of his channel and are breaking out today to their highest since 2011 (10Y)…

and back to their critical resistance levels (30Y)…

 

And now Gross is out with a pair of tweets (here and here) saying that the record bond shorts should not get too excited here…

 

Bill Gross thinks they won’t be right. He highlights the long-term downtrend over the past 30-years, which comes in a 3.22%.

“30yr Tsy long-term downward yield trendline for the past 3 decades now at  3.22%, only ~4bps higher than today’s yield.”

“Will 3.22% be broken to upside?” he asks.

“I don’t think so. The economy can’t support yields higher than 3.25% for 30s and 10s, nor 3% for 5s.

Continuing hibernating bond bear market is best forecast.”

Asa ForexLive also notes, if he’s right it doesn’t necessarily mean the US dollar will reverse right away but it would be a good sign for stocks and would limit how far the US dollar might run.

So, will Gross be right? Is this latest spike all rate-locks on upcoming IG issuance? And will this leave speculators with a record short position now wondering who will be the one holding the greatest fool bag by the end of the year…

via RSS https://ift.tt/2IKn5oI Tyler Durden

It’s a sea of red across Emerging Market FX today with the JPMorgan EM FX index suffering death cross as it tumbles to fresh 16-month lows…

And while all eyes recently have been on the Argentine Peso…it is being massively supported by BCRA today…

It is the Rand and the Lira that are getting crushed today…

The Lira is tumbling to new record lows as Erdogan threatens to take control of monetary policy…

 

And South Africa’s Rand is tumbling as it tries to market a new eurobond sale…

 

 

 

via RSS https://ift.tt/2IF2l1F Tyler Durden