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Sometimes, being too trusting can be a fatal mistake – especially in diplomacy – as one member of the Australian delegation at the United Nations learned early Wednesday morning, when he plunged to his death from his Manhattan balcony during a night of boozing with friends and his wife. The circumstances of Julian Simpson’s death are bizarre, considering that he died during a “trust game” gone wrong, according to the New York Post.

Julian Simpson, 30, fell from the seventh floor to a second-floor landing at the Clinton Street building where he lived on the Lower East Side around 1:35 a.m., the sources said. Simpson was playing a “trust game” with a male pal when he accidentally took the fatal fall, a source said.

 

“I will prove it that you can trust me. Let’s play the trust game,” Simpson said to the 24-year-old man just moments before he slipped and fell, sources said.

Simpson and his wife were out with friends for dinner and drinks before the group returned to their Clinton Street residence, where they enjoyed views of the Empire State building from their building’s wraparound roof deck. The New York landmark was lit up in the colors of the Australian flag to celebrate the country’s same-sex marriage vote.

But things quickly took a dark turn as an apparently drunken Simpson climbed onto a higher roof with the wife of another party guest, and started dangerously swinging her around, according to the New York Post. Upon returning inside, the woman’s husband confronted Simpson, and the two stepped on to his balcony.

The details of what happens next are even stranger:

While on the roof, the diplomat, who serves as the second secretary to the UN for Australia, then climbed to a higher roof landing where he began swinging a female friend around, sources said. Once he put her down, everyone decided to go back inside.

 

While inside, the 24-year-old man, who is the husband of the woman Simpson had been swinging, confronted Simpson over the gesture, sources said. The two men then stepped out onto Simpson’s balcony, where Simpson told the husband that he meant no harm, according to sources.

 

To prove to the husband that he could trust him, Simpson suggested playing the “trust game” — in which Simpson would lean back on the ledge and trust the man to catch him before he would fall.

 

Simpson jumped up onto the balcony railing and sat on it facing the apartment before he fell backward, sources said.The man told investigators that he put his arm out to catch him, but Simpson slipped and fell to his death, according to sources.

 

Simpson was rushed to Mount Sinai Beth Israel hospital where he was pronounced dead.

 

Investigators say foul play is not suspected, sources said.

Simpson, a deputy secretary for the Australian delegation to the UN, was 30 at the time of his death. The Australian consulate has so far not commented on the strange circumstances surrounding his death. However, Police said excessive drinking likely played a role in the fatal accident, noting that the apartment reeked strongly of booze when they arrived.

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After five consecutive daily losses on the MSCI world stock index and seven straight falls in Europe, there was finally a bounce, as investors returned to global equity markets in an optimistic mood on Thursday, sending US futures higher after several days of losses as global stocks rebounded following a Chinese commodity-driven rout. 

The House is poised to vote, and pass, on tax legislation although what happens in the Senate remains unclear. European shares rebounded for the first time in eight sessions, following Asian stocks higher as the global risk-off mood eased. The euro, Swiss franc and yen all weakened as the dollar edged higher. “After five or six days of steady selling you have got people coming back in looking for bargains,” said CMC Markets' Michael Hewson. “I think it’s temporary though. We haven’t had a significant sell off this year and the fact of the matter is that equity markets have done so much better than anyone dared to envisage.”

As Bloomberg echoes, "investors seem to be regaining their appetite for risk after several days of global declines in stocks and high-yield credit that had many questioning whether the selloff could become a rout."

Still, investor concern over the progress of a massive U.S. tax reform plan showed no sign of abating as two Republican lawmakers on Wednesday criticized the Senate’s latest proposal. U.S. President Donald Trump hit back, tweeting that “Tax cuts are getting close!”

“If we look at what the markets are focusing on, it’s still very much the tax cut debates in the U.S., and how much progress there’s going to be on this front,” Barclays' Mitul Kotecha told Reuters.

Indices in Tokyo, Shanghai and Hong Kong and Seoul all rallied overnight, while London, Frankfurt and Paris started 0.3-0.4% higher as cyclical stocks which had driven the sell-off made a comeback. In Japan the Topix index ended its longest losing streak in a year, rising 1% with technology stocks providing the biggest boost, and the Nikkei 225 advances 1.5%. The ASX (+0.2%) also managed to shake off its early losses, closing higher with the energy sector outperforming as consumer staples and utilities weighed. Chinese stocks edged lower despite a massive cash injection by the PBOC, while the Hang Seng moved higher. Hong Kong stocks rebounded from their worst day in four weeks, as insurers led by Ping An Insurance Group Co. jumped on optimism that rising bond yields will boost investment income. Tencent Holdings climbed after posting its fastest revenue growth in seven years.

China’s sovereign bonds finally rebounded, advancing after the central bank boosted cash injections by the most in 10 months, fueling speculation that the authorities are looking to stabilize sentiment after a debt selloff. Having flirted with 4% in recent days, the yield on 10-year government notes dropped 3 basis points to 3.95%; the 5-year yield fell 1 basis point to 3.95%. The 10-year yield surpassed 4% this week for the first time since 2014. The People’s Bank of China added a net 310 billion yuan ($47 billion) through reverse-repurchase agreements on Thursday, bringing this week’s open-market operation additions to 820 billion yuan, also the most since January.

European stocks bounce back from a seven-day rout – the longest losing streak of the year – that had erased almost 400 billion euros ($471 billion) from the value of the region’s benchmark. The Stoxx Europe 600 Index adds 0.7%, following gains in Asia and climbing from a two-month low. All national benchmarks in the region are in the green, except those in Italy and Greece. Most industry groups also rise, with automakers rebounding from an eight-day slump on data showing European car sales grew in October. Financial services firms and builders were among the biggest gainers in the broad advance of the Stoxx Europe 600 Index.

There was some relief too that oil prices had pulled out of what had been a near 5 percent drop and that upbeat U.S. data on Wednesday had helped the dollar halt the euro's sharp recent rise.

In currencies, the pound fluctuated as Brexit rhetoric rumbled on, and data showed U.K. retail sales barely rose in October. Concerns about Brexit continue to mount: an article in 'The Sun' newspaper, stated that UK PM May, could increase her divorce bill offer to the EU in December; deal would add GBP 20bln to the GBP 18bln said to already be on offer. Source reports indicate that EU is said to reject UK bid for `bespoke' trade deal, according to Politico. BoE's Carney states that the Bank will do whatever they can to support the UK economy during the Brexit transition period. Chancellor Hammond said to stick to fiscal rules and resist demands for spending surge in upcoming UK budget. Michael Gove is reportedly facing a Conservative party backlash as he is accused of using the cabinet to audition for UK Chancellor

The dollar index was slightly higher on the day at 93.828 having hit four- and five-week lows against the yen and euro. The euro was down around 14 ticks at $1.1760 retreating from a one-month top of $1.1860 on Wednesday. Havens underperformed on Thursday, with gold trading little changed, and the yen and Swiss franc among the worst-performing major currencies. The Swiss franc decreased 0.3 percent to $0.9918, the largest dip in more than two weeks.

Commodities largely stabilized as China’s central bank boosted the supply of cash in the system by the most since January, though oil eventually reversed a gain. Gold edged 0.1% lower to $1,277.29 an ounce. It reached $1,289.09 overnight, its highest since Oct. 20. Oil prices gained despite pressure after the U.S. government reported an unexpected increase in crude and gasoline stockpiles. They had lost ground to this week’s International Energy Agency (IEA) outlook for slower growth in global crude demand.

European government bonds took their cue from the U.S. benchmark, turning lower as the yield on 10-year Treasuries increased. Bond markets saw a broad rise in yields after mostly upbeat U.S. economic news on Wednesday had added to expectations the Federal Reserve will hike interest rates again next month as well as multiple times next year. Two-year Treasury yields US2YT=RR crept to fresh nine-year peaks in European trading, though significantly the U.S. yield curve remained at its flattest in a decade. European yields nudged higher too but the standout there was a fall in the premium investors demand to hold French debt over German peers to its lowest in over two years, almost to record lows.

Wal-Mart, Viacom, Best Buy and Applied Materials are among companies due to release results. Economic data include initial jobless claims, Philadelphia Fed Business Outlook.

Market Snapshot

• S&P 500 futures up 0.4% to 2,574
• STOXX Europe 600 up 0.7% to 384.61
• MSCI Asia up 0.8% to 169.14
• MSCI Asia ex Japan up 0.7% to 555.93
• Nikkei up 1.5% to 22,351.12
• Topix up 1% to 1,761.71
• Hang Seng Index up 0.6% to 29,018.76
• Shanghai Composite down 0.1% to 3,399.25
• Sensex up 1% to 33,095.23
• Australia S&P/ASX 200 up 0.2% to 5,943.51
• Kospi up 0.7% to 2,534.79
• German 10Y yield rose 1.3 bps to 0.389%
• Euro down 0.1% to $1.1779
• Brent Futures down 0.03% to $61.85/bbl
• Italian 10Y yield rose 0.7 bps to 1.57%
• Spanish 10Y yield rose 1.1 bps to 1.561%
• Brent Futures down 0.03% to $61.85/bbl
• Gold spot down 0.02% to $1,277.91
• U.S. Dollar Index up 0.1% to 93.91

Top Overnight News

• After a month of discussions, German Chancellor Angela Merkel faces a self-imposed end-of-week deadline to unlock coalition negotiations
• British PM Theresa May saw some support from officials of her German counterpart Merkel
• Manfred Weber, who leads Merkel’s Christian Democrats in the European Parliament and is a self-proclaimed skeptic on Brexit, changed his tone dramatically after meeting May saying the U.K. had a “credible” position and there was a “willingness to contribute to a positive outcome”
• Sterling came under pressure after a Politico report said the EU’s Chief Brexit Negotiator Michel Barnier’s team flatly reject May’s bid for a “bespoke” trade deal
• Fed officials are pushing for a potentially radical revamp of the playbook for guiding U.S. monetary policy. With inflation and interest rates still low, the central bank has little room to ease policy in a downturn
• U.S. Treasury Secretary Steven Mnuchin is trying to persuade businesses and the Republican faithful to get behind a proposed tax overhaul from the Trump administration that so far lacks broad public support
• The tax plan has provisions that may affect coverage and increase medical expenses for millions of families
• President Robert Mugabe’s refusal to publicly resign is stalling plans by Zimbabwe’s military to swiftly install a transitional government after seizing power on Wednesday
• Tax overhaul update: President Donald Trump is scheduled to head to the House, rallying Republican members before vote on tax bill
• German Chancellor Angela Merkel meets heads of her Christian Democratic-led bloc, Free Democrats and Green party to kick coalition talks into gear
• Cisco Sees First Revenue Growth in Eight Quarters; Shares Up
• Koch Brothers Are Said to Back Meredith Bid to Buy Time Inc.
• Health Care for Millions at Risk as Tax Writers Look for Revenue
• Cerberus’s Feinberg Switches Strategy to Shake Up German Banking
• Mattel Drops on Report That It Rebuffed Approach From Hasbro
• New SUVs at Peugeot, Ford Offset U.K. Drag on Europe Car Sales
• Google Sued for Using ‘Bait and Switch’ to Hook Minority Hires
• Santos Seen Luring More Bids After Rejecting $7.2 Billion Offer
• AT&T’s Clash With America Movil Slows Nafta Telecom Talks
• Mobileye’s $15 Billion Deal Masks Drop in Israel Tech M&A
• Mugabe’s Refusal to Resign Is Said to Stall Zimbabwe Transition

In Asian markets, a modest uptick in US stock index futures helped the Nikkei 225 stem some of its recent losses, with financials and retailers leading the way; as a result, he Japanese blue-chip index closed up 1.5%. The ASX (+0.2%) also managed to shake off its early losses, last closing up, with the energy sector outperforming (although this was on the back of confirmation of a rebuffed Santos takeover offer) as consumer staples and utilities weighed. Chinese stocks edged lower, while the Hang Seng moved higher Treasuries operated in a narrow range throughout the APac session, while JGBs were relatively listless, with a solid 20-year auction the highlight of the session. Aussie bond yields moved to session highs in the wake of the aforementioned labour market release, where they consolidated.

In European markets, equities kicked off the session on the front-foot in a continuation of some of the sentiment seen overnight during Asia-Pac trade (Nikkei 225 +1.5%). Some slight underperformance has been observed in the FTSE 100 with gains capped by a slew of ex-dividends which have trimmed 14.56 points off the index. Notable ex-dividends include both of Royal Dutch Shell’s listings, with the oil-heavyweight subsequently hampering the energy sector as WTI and Brent crude have failed to make any meaningful recovery from Thursday’s losses. Elsewhere, the likes of Fiat Chrysler (+2.5%) and Volkswagen (+2.4%) have been giving a help hand by the latest EU new car registration data. In fixed income, a limited reaction to better than forecast UK consumption data, and clear reservations about retail activity over the key Xmas and New Year period based on bleaker signals from anecdotal surveys and non-ONS data. Hence, Gilts dipped to 124.72 (-15 ticks vs +8 ticks at best), while the Short Sterling strip reversed pre-data gains to stand flat to only 1 ticks adrift before stabilising again. In truth, core bonds were already on the retreat from early highs (ie Bunds down to 162.43 vs 162.71 at best) in what appears to be a broad  retracement within recent ranges rather than anything more meaningful.

In FX, GBP has once again been a key source of focus with GBP/USD hit early doors amid reports in Politico that the EU are leaning towards rejecting the UK’s request for a bespoke trade deal. However, sentiment saw a mild recovery after reports in the Sun suggested that PM May could be on the cusp of upping her Brexit settlement offer in an attempt to kick-start trade talks. The main data release of the session thus far came in the form of UK retail sales which painted a less dreary picture of the UK economy than some had feared, although gains were short-lived as Brexit remains the focus. Marginal sterling buying was seen in EUR/GBP, trading around session lows, helped by a stop hunt through yesterday’s lows. Cable too saw a bid later in the session, benefiting from the weaker USD. Elsewhere, EUR/USD is back below 1.1800 vs the USD after topping out just ahead of October’s 1.1880 high, and now in a fresh albeit higher range flanked by big option expiries between 1.1795-1.1800 (913mln) and 1.1815-25 (4.8bln). Another roller-coaster ride for the Antipodeans, with AUD choppy on mixed labour data (headline count miss, but jobless rate and full employment upbeat) and pivoting the 0.7600 handle vs the USD.

In the commodities complex, as mentioned above, WTI and Brent crude futures have failed to make any noteworthy recovery from the sell-off seen on Tuesday with energy newsflow particularly light during today’s session thus far with markets looking ahead to the November 30th OPEC meeting which is set to give nations the instruction to extend oil production cuts. In metals markets, gold prices have traded in a relatively similar manner with prices unable to be granted any reprieve from their latest tumble. Elsewhere, Nickel and Copper have been weighed on, sending prices to multi-week lows as concerns around Chinese growth prospects continue to linger.

Looking at the day ahead, weekly initial jobless claims, Philly Fed PMI for November, import price index for October, industrial production for October and NAHB housing market index for November will be released. The BoE Carney’s, Broadbent and Haldane will all participate at a public plenary session while the ECB’s Villeroy de Galhau and Constancio are due to speak, along with the Fed’s Williams, Mester and Kaplan.

US Event Calendar

• 8:30am: U.S. Initial Jobless Claims, Nov. 11, est. 235k (prior 239k); Continuing Claims, Nov. 4, est. 1900k (prior 1901k)
• 8:30am: U.S. Philadelphia Fed Business Outl, Nov., est. 24.6 (prior 27.9)
• 8:30am: U.S. Import Price Index MoM, Oct., est. 0.4% (prior 0.7%); U.S. Export Price Index MoM, Oct., est. 0.4% (prior 0.8%);
• 9:15am: U.S. Industrial Production MoM, Oct., est. 0.5% (prior 0.3%); Capacity Utilization, Oct., est. 76.3% (prior 76.0%)
• 9:15am: U.S. Bloomberg Consumer Comfort, Nov. 12, no est. (prior 51.5); Economic Expectations, Nov., no est. (prior 47.5)

Central Bank speakers:

• 9:10am: Fed’s Mester delivers keynote address at Cato Conference
• 1:10pm: Fed’s Kaplan speaks to CFA society in Houston
• 3:00pm: ECB’s Constancio speaks in Ottawa
• 3:45pm: Fed’s Brainard delivers keynote at OFR FinTech Conference
• 4:45pm: Fed’s Williams speaks at Asia Economic Policy Conference

DB's Jim Reid concludes the overnight wrap

There has been a lot of noise around the HY market in the past week or so as a combination of macro factors along with some notable earnings misses have weighed on the market. iTraxx Crossover and CDX HY have widened by around 25bps and 30bps respectively from their most recent tights, while the price level of the largest USD HY ETF (HYG US) is basically back to the same level as where it started the year, however this overstates the move in the US cash market and even more so in Europe. Looking in more detail at the cash market US HY has widened by around 60bps and EUR HY is 46bps wider from the  recent cycle tights only a few weeks back but both are still around 25bps and 100bps tighter on the year respectively.

In a broad historic context the recent moves hardly register but in the context of a year that has been headlined by extremely low levels of volatility they are certainly significant. For EUR HY there were two other periods where we saw some sort of correction this year. In March/April (ahead of the French elections) the index widened 27bps in 42 days and then in August/September (after the North Korean escalation) we saw a 29bps widening over 30 days. So the current 46bps of widening in just 12 days has been somewhat more aggressive than anything else we’ve seen this year.

Looking at similar data for the US we have also seen two previous corrections. In March spreads widened 61bps in 20 days and then in July/August we saw 45bps of widening in 15 days. So the current c.60bps widening over 22 days is actually of a similar magnitude to this year’s previous corrections. The moves look even more stark when we focus on single-Bs though. EUR single-Bs have widened by more than 100bps from the most recent tights, more than halving the YTD tightening we had seen. For USD single-Bs the recent widening (65bps) has actually reversed more than 80% of the YTD spread tightening we had seen to the recent tights.

The question from here is whether this recent back-up in spreads is simply going to lead to a fresh buying opportunity or whether it will lead to something more significant. Despite some of the recent profit warnings we think that it is more likely to be the former at the moment. But at the very least the pace of this turn around highlights how quickly market sentiment can change, especially when spreads are so tight. HY was looking very very stretched relative to IG in Europe and this corrects some of that. Overall it certainly provides us with some food for thought as we look to publish our 2018 outlook in the next 10 days.

Even though US HY has been one of the weaker markets of late there’s no doubt that the recent global equity sell off has struggled to gather momentum as the US session has progressed over the last week. Following through on this, Asia has been weak since the Nikkei sudden sell-off last week and Europe has followed with yesterday seeing the 7th successive daily fall in the Stoxx 600 (-0.49%) – the longest losing streak since October/November 2016. Meanwhile yesterday the US (S&P 500 -0.55%) again closed off the early session lows showing that this equity sell-off isn't really being US led. For the record since last Wednesday's close the S&P 500, Stoxx 600 and Nikkei are down -1.15%, -3.17% and -3.86% respectively which helps illustrate this.

Volatility has been on the way up though even in the US over this period. The VIX spiked to 14.51 intraday which was the highest since August 18th. It closed at 13.13 (+13%) which is still the highest since the same period. Meanwhile the VSTOXX index was up +2.25% and is now at the highest level since early September.

This morning in Asia, markets have stemmed losses and are trading higher. The Nikkei (+1.24%), Kospi (+0.52%), Hang Seng (+0.53%) and ASX 200 (+0.30%) are all up as we type. WTI oil is trading marginally higher and after the bell in the US, Cisco was up c6% after guiding to its first revenue gain in eight quarters.

On now to the big data of the yesterday and possibly the month. US Core CPI inflation surprised modestly to the upside in October, rising 0.225% in month-on-month terms (a firmer 0.2% print than DB expected). This raised the year-overyear rate to 1.8% (1.7% expected). The data provide additional evidence that the core inflation trend is firming after a string of very weak prints earlier this year. According to our economists, the three-month annualised change in core CPI inflation is now at 2.4%, the strongest since February 2017. We think inflation is turning a corner and regular consistent misses vs expectations will not be a feature of markets in 2018.

Staying in the US, the House’s version of the tax plan is reportedly on track for a vote on Thursday (local time). In terms of the Senate’s version, rhetoric appears to be heating up as the mark up process continues. The Democrats were reportedly not impressed with the last minute change to add in the repeal of the Obamacare individual mandate, to which Republican Senator Collins partly agrees on, noting that it “gravely complicated our efforts to combine tax reform and changes”, although she has not decided whether to vote against the bill or not. Elsewhere, Republican Senator Johnson has publicly confirmed that he is opposed to the revised GOP plan as it stands, in part as it does not do enough to help partnerships relative to the larger tax cuts for corporates.

Quickly recapping other markets performance from yesterday. Bond markets were firmer with core bond yields down 2-5bp (UST 10y -5bp; Bunds -2.1bp; Gilts -3.5bp) while peripherals underperformed with Portugal bonds leading the softness (+2.5bp). Key currencies were little changed, with US dollar index marginally higher, while Euro dipped -0.06% but Sterling rose 0.05%. In commodities, WTI oil fell another -0.70% (-3.2% for the week), in part following reports that Russia believes it’s too early to announce a potential extension of production cuts at OPEC’s meeting at end of the month. Notably, WTI is still up c18% from late August. Elsewhere, precious metals softened a little (Gold -0.16%; Silver -0.14%) and other base industrial metals were little changed (Copper -0.45%; Zinc -0.54%; Aluminium +0.36%).

Away from the markets, there were a deluge of Fed and ECB central bankers commentaries yesterday but overall contained minimal market moving information. In the details, the Fed’s Evans noted he was open-minded regarding policy action at the December FOMC ahead of discussions with fellow colleagues and sounded dovish on inflation, noting “I feel we are facing below target inflations” while reiterating the US labour market is “vibrant” and unemployment rate “could go below 4%”.

In Europe, the ECB’s Hansson was upbeat on the demand side of the economy and “feel more confident that inflation will eventually reach the levels consistent with our aim”. Elsewhere, the ECB’s Praet pointed to the importance of interest rates post QE, noting that “policy rates will eventually regain their status as the main instrument of policy, and our forward guidance will revert to a singular approach”. Finally, the ECB’s Coeure noted that it’s important for the ECB “to ensure that our own measures do not adversely affect the intermediation capacity of repo markets”.

Over in China yesterday, there were more signs that the government may tolerate slower economic growth in 2018. The Economic Daily reported that the deputy head of the Research Office of the State Council Ms Han has flagged that GDP growth at 6.3% in 2018-2020 would be sufficient to achieve the Party's 2020 growth target. As a reminder, our Chinese economists expect GDP growth to slow to 6.3% yoy by 1Q.

Finally, over in Zimbabwe, President Mugabe’s c40 years of power may be coming to an end with Bloomberg reporting the 93 year old was confined to his home, with military forces taking control of state owned  media outlets and sealing offthe parliament and central bank’s offices.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the core retail sales for October (ex-auto & gas) was in line at 0.3% mom, but with the prior reading upwardly revised by 0.1ppt. Elsewhere, the September business inventories was flat and in line for the month. Finally, the November empire manufacturing index fell from a c3 year high of 30.2 to a still solid reading of 19.4. After the recent economic data, the Atlanta Fed’s GDPNow estimate of 4Q GDP growth has edged 0.1pp lower to 3.2% saar.

In the UK, the September unemployment rate was in line and steady at 4.3% – still at a 42 year low, while the average weekly earnings remains low but was slightly above expectations at 2.2% yoy (vs. 2.1% expected). Elsewhere, jobless claims (1.1k vs. 1.7k previous) and claimant count rate (2.3% vs. same as previous) were broadly similar to prior readings. The Eurozone’s September trade surplus widened to EUR$25bln (vs. EUR$21bln expected), while the final reading for France’s October CPI was unrevised at 0.1% mom and 1.2% yoy.

Looking at the day ahead, the final October CPI report for the Euro area will be out. UK retail sales data for October and Q3 employment data for France will also be released. In the US weekly initial jobless claims, Philly Fed PMI for November, import price index for October, industrial production for October and NAHB housing market index for November will be released. The BoE Carney’s, Broadbent and Haldane will all participate at a public plenary session while the ECB’s Villeroy de Galhau and Constancio are due to speak, along with the Fed’s Williams, Mester and Kaplan.

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By Vassilis Karamanis, an FX and rates strategist who writes for Bloomberg.

Brexit Ructions May Mean Sustained Pound Volatility: Macro View

This week’s spike in the volatility of the British pound could prove longer-lasting than the bouts of instability seen so far in 2017.

One-month implied volatility for GBP/USD is on course for the biggest weekly gain since January after Conservative Party lawmakers were seen willing to challenge May’s leadership and talk of a 60 billion-euro Brexit bill resurfaced.

On Wednesday, demand for low-delta options hit a three-month high. EU officials were said to be bracing for failure as both sides seek a breakthrough in negotiations before a crunch meeting next month.

The jump in pound swings is nothing new, though previous episodes were neither prolonged nor sustained. Traders tend to respond in a late fashion to political risks, and adverse market outcomes have been avoided in the end. Volatility has actually been in a steady downtrend since January, as forward guidance by the central bank made sure investors faced as few surprises as possible.

This time, however, BOE Governor Carney has stressed the importance of the divorce talks to monetary policy. And the turmoil in Westminster means the current impasse in negotiations may continue into 2018, making sure sterling remains very sensitive to Brexit headlines.

Investors may need to keep rolling over their long-volatility positions to stay hedged if a no-deal outcome is back in the cards.

via http://ift.tt/2zPt1Gp Tyler Durden

Authored by Nikolas Gvosdev via The Strategic Culture Foundation,

Will a future, formal Trump-Putin summit be a game changer?

Last week, I noted that any encounter between Donald Trump and Vladimir Putin that would take place at the Asia-Pacific Economic Cooperation summit in Da Nang, Vietnam, would have to address two critical questions if there was to be any clarity in U.S.-Russia relations.

We’ve now gotten a first draft of answers.

I argued that, for the Russian side, the overarching issue is whether or not Donald Trump is calling the shots on U.S. policy. Seven days ago, the White House press operation was signaling that there would be a formal encounter between the two presidents, a scheduled meeting with a defined agenda. As the week progressed, the United States began to back away from those announcements. By the end of the week, the encounter was a far less structured event, essentially folded in around an informal stroll to a photo opportunity and brief chats in between APEC sessions – nothing at all like the meeting that took place at the G-20 summit in Hamburg in July. What happened? And does it suggest that Donald Trump has a George W. Bush problem – the apparent inability to take a personal rapport with Vladimir Putin and transform it into concrete policy directives?

Because of the way the United States geographically boxes Russia in as only a “European” state, Trump’s “Russia hands” were not scheduled to join his delegation to APEC. Thus, there were concerns that any substantive meeting between Trump and Putin would occur without the U.S. officials who would be most likely to provide necessary expertise (and who would wind up implementing any results). Linked to that were fears that, if another meeting followed the Hamburg precedent (of just the two presidents and their chief diplomatic officers), Putin might convince Trump to accept a series of compromises: trading Russian support of Trump’s initiatives in return, for instance, for concrete sanctions relief and acceptance of Russian preferences for Syria and Ukraine. There had already been some advance warning of this, such as, when Saudi Arabia’s King Salman visited Moscow last month in an historic summit, the Saudi delegation seemed to suggest that a Russia playing a more constructive and stabilizing role in the Middle East would outweigh the logic of maintaining the full raft of U.S. sanction, imposed after the 2014 incursions into Ukraine and after the 2016 elections.

But then we have Trump’s comments to the press following the Da Nang summit. Much of that coverage has focused on Trump’s willingness to accept Putin’s denials of Russian interference in the 2016 election at face value, but two other items deserve greater attention.

The first is that the president, having been convinced, guided, or maneuvered into not having a formal sit-down with Putin in Vietnam, is apparently committing to a full-fledged summit meeting of the two presidents and their respective “teams” at some indefinite point in the future. If so, then how the agenda for that meeting is set, and what parameters are established for the negotiations, will be critical.

 

The second is what role Trump himself intends to play in Russia policy. What struck me at times about his comments on Air Force One was how he seemed to view himself, as “the president,” as something separate and distinct from the executive branch as a whole. As chief executive, Trump is in charge of the U.S. intelligence community, the diplomatic corps and the military. Yet his comments seem to suggest that, at times, the government is pursuing a policy towards Russia that he personally disagrees with but somehow has little power to change.

So while we’ve gotten a first set of answers, the questions still remain unresolved. Sideline encounters at the G-20 and at APEC were not successful in changing the dynamic of the U.S.-Russia relationship. So will a direct Trump-Putin summit be a game changer? Only if those original questions can be answered definitively.

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As we detailed previously, the foreign and defense secretaries of 23 EU countries (out of 28 in total) agreed on Monday to take further steps towards forming a European defense force.

Five countries opted out: The United Kingdom (that's is leaving the EU), Denmark, Ireland, Portugal and Malta.

The defense union has been on the agenda for a long time and is called the Permanent Structured Cooperation, or PESCO.

This chart shows the EU countries with the largest standing armies, according to data provided by GlobalFirePower.com.

You will find more statistics at Statista

It counts in all active military personnel, so-called "ready-to-fight" elements, but not civilian employees or reservists.

France has the biggest standing army, counting 204,000 Soldiers, followed by Germany and the relatively small Greece.

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Was Brexit also Putin’s fault?

The simmering anti-Russia hysteria that has emerged in the UK recently has finally boiled over, and it appears last night’s story in the        Times of London claiming that a swarm of Twitter bots reportedly created by a troll farm possibly linked to Russian intelligene (sound familiar?) posted more than 45,000 messages about Brexit in 48 hours during last year’s referendum to try and “so discord” among the public was the grain of rice that tipped the scale.

Details that will sound familiar to anybody who’s been following the ongoing hysteria surrounding the multiple investigations into Russian influence in the US election, the suspicious twitter accounts shared messages that promoted both the ‘Remain’ and ‘Leave’ campaigns, purportedly a “sophisticated” ploy to confuse and bewilder voters.

Most of the tweets seen by this newspaper encouraged people to vote for Brexit, an outcome which Russia would have regarded as destabilising for the European Union. A number were pro-Remain, however, suggesting that the Russian goal may have been simply to sow division.

 

“This is the most significant evidence yet of interference by Russian-backed social media accounts around the Brexit referendum,” said Damian Collins, the Tory MP who chairs the digital, culture, media and sport select committee.

 

“The content published and promoted by these accounts is clearly designed to increase tensions throughout the country and undermine our democratic process. I fear that this may well be just the tip of the iceberg."

According to the Times, more than 150,000 accounts based in Russia, which had previously confined their posts to subjects such as the Ukrainian conflict, switched attention to Brexit in the days leading up to last year’s vote, according to research for an upcoming paper by data scientists at Swansea University and the University of California, Berkeley.

In other words, after months of tweeting about pro-Russian forces in Ukraine, these bots started firing off messages amplifying the voice of the ‘Leave’ campaign into the void.

The researchers said Russian activity spiked on June 23, the day of the referendum, and on June 24 when the result was announced. From posting fewer than 1,000 tweets a day before June 13, the suspicious accounts posted 39,000 tweets on June 24 before dropping off almost entirely.

The Swansea and Berkeley paper says that a “massive number of Russian-related tweets was created a few days before the voting day, reached its peak during the voting and the result and then dropped immediately afterwards”. Tho Pham, one of the paper’s authors, said that “the main conclusion is that bots were used on purpose and had influence”.

Of course, the Times report neglected to explain the Swansea researchers methodology. Facebook, Twitter and Google used the inadequate standard of having one’s browser language set to Russian. It’s unclear whether these researchers something that, like browser language, can be easily changed or mimicked by other groups.

On Monday, Theresa May accused Moscow of using fake news to “sow discord” and of meddling directly in elections. Her remarks followed a brief, impromptu meeting between President Donald Trump and Russian President Vladimir Putin at an Asian economic summit in Vietnam.

In what appeared to be an attempt to deflect attention away from a challenge to her leadership, UK Prime Minister Theresa May blasted Russia Monday evening, using her speech at the Lord Mayor’s Banquet to accuse them of interfering in foreign elections.

May accused Moscow of attempting to "weaponize information" as part of a "sustained campaign of cyberespionage and disruption." Russia's actions were "threatening the international order," she said.

"We know what you are doing. And you will not succeed. Because you underestimate the resilience of our democracies, the enduring attraction of free and open societies, and the commitment of Western nations to the alliances that bind us," May said.

May listed off a litany of ills she ascribed to Russia since its annexation of Crimea, including fomenting conflict in eastern Ukraine, violating the airspace of European countries, and hacking the Danish ministry of defense and the German Parliament. Russia has also been accused of interfering in elections in the US, the Brexit referendum in the UK, and the independence vote in Catalonia.

Following May’s speech, reports emerged that individuals working on behalf of the Kremlin tried to set up meetings with conservative MPs, including Foreign Secretary Boris Johnson.

Last night, one of the UK's cyber-defense chiefs adding to the anti-Russia sentiment by accusing Russian intelligence of attacking Britain's media, telecommunications and energy sectors over the past year.

Ciaran Martin, chief executive of GCHQ's National Cyber Security Centre (NCSC), echoed May’s claim that Russia was "seeking to undermine the international system."

Of course, there were at least two prominent British polls who decided to question the dubious accusations of interference.

Jeremy Corbyn wants to “see more evidence” that Russia is trying to undermine Western democracy, his spokesman said Wednesday.

And of course, as we noted yesterday, Nigel Farage pointed out during a speech at the European Parliament that financier George Soros has spent billions of dollars to push his political agenda across Europe, the US and the UK.

“How many of you have taken money from Open Society?” He asked his peers, referring to Soros’s Open Society foundation.

While the Russian hysteria has been raging for a year in the US now, in the UK, it’s only just beginning. In time, we will see of May’s government will continue to use Vladimir Putin as a boogeyman on which they can blame their failure to successfully negotiate amenable Brexit terms for the UK.

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Content originally published at iBankCoin.com

A half-naked woman whose theft of an Uber driver’s tips was caught on video is complaining of online harassment after footage of the brazen incident went viral.

Scantily clad 18 year old Gabrielle Canales – a horrible human being, was caught on surveillance video reaching into the Uber driver’s tip jar after she and two other passengers reached their destination in Brooklyn, New York.

After posting a now-deleted Instagram response in which Canales showed little remorse, the Crown Heights woman finally admitted she was “completely wrong” for stealing the money – $5.00 by her count – which she says she paid back.

“I understand I’m completely wrong and I’m not denying it,” Canales told BuzzFeed. “The lesson was learned that same day. That’s why the gentleman was paid back.”

Watch:

After the video went viral, Canales told Buzzfeed she’s been subject to harassment and mocking.

“I didn’t need this video to go viral to teach me a lesson. I learned the lesson that same day. Before the video went viral, the man was paid back,” Canales said. “I apologize on the matter once again.”

Canales then doubled down on her self-righteous half apology and played the woman card, saying “I’m wrong for taking $5, and according to the world, I need to die,” she said. “I understand I’m going to get hate from a lot of people and that’s something I accepted, but I don’t think it’s okay to disrespect me as female.”

Uber bans woman, ignores driver

Following the incident, Uber banned the woman from the platform, stating “What’s been shown has no place on our app and the rider’s access to the app has been removed.” The driver, meanwhile, told the Daily Mail that he was “too busy working to file a police report after the video was filmed.”

When he reached out to Uber, they sent him a canned response:

We understand your frustration with this experience. We’ve attempted to contact the rider by phone and email, but haven’t been able to resolve this issue. The rider responded to us and advised us that she didn’t steal your cash from the tip jar. If you believe the rider has your cash as captured from your dash cam and is refusing to return it, you may want to initiate a formal investigation via the police.

Uber drivers raping passengers, passengers robbing Uber drivers – some of whom were then shortchanged by the company … I bet the ridesharing behemoth can’t wait to replace those pesky human drivers with self-driving cars.

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On 2 November 2017, the Bank of England raised rates for the first time in a decade and Sterling’s initial rise was promptly sold off by forex traders as we discussed.

The 7-2 vote by the Monetary Policy Committee was not the unanimous decision some had expected, while Cunliffe and Ramsden saw insufficient evidence that wage growth would pick up in line with the BoE’s projections from just over 2% to 3% in a year’s time. Ben Broadbent, MPC member, deputy governor and known to be a close confidant of Governor Carney, gave a speech today at the London School of Economics (LSE) in which he warned markets that Brexit issues didn’t necessarily mean that interest rates have to remain low.

Bloomberg reports that Broadbent stated that the Brexit impact on monetary policy depends on how it affects demand, supply and the exchange rate.

"There are feasible combinations of the three that might require looser policy, others that lead to tighter policy."

Which sounds alot like he doesn't know, although he stuck to the central bankers trusty tool, reassuring LSE students the Phillips Curve "still seems to have a slope".

According to the FT.

The deputy governor of the Bank of England has warned that financial markets have underestimated the chance of further interest rate rises. In a speech at the London School of Economics on Wednesday, Ben Broadbent said markets had placed too much emphasis on the idea that interest rates needed to be kept low in the face of Brexit uncertainty. The deputy governor said it was “uncertain” and “complex” to anticipate how Brexit would affect inflation. But he rejected the assertion that Brexit “necessarily implies low interest rates”.

 

“Even as inflation rose, and the rate of unemployment fell further, interest-rate markets continued to under-weight the possibility that (the) bank rate might actually go up this year,” he said.

 

The BoE’s Monetary Policy Committee announced its first interest rate rise in more than a decade earlier this month. But the central bank has struggled to convince financial markets that it is likely to raise rates further.

 

BoE officials were taken aback when sterling sold off on the day it announced the rate rise, and two-year gilt yields remain below the BoE base rate, suggesting markets are sceptical that the MPC will raise rates further while there is still considerable uncertainty around the UK’s economic future outside of the EU.

Broadbent acknowledged that there is a risk that Brexit uncertainty could adversely impact UK demand. However, he sees the potential for other factors, a reduction in trade, for example, which could crimp UK capacity and necessitate a rise in rates. While Broadbent’s thinking is flawed, and his barley field example plainly ridiculous, the FT continues.

Brexit-related uncertainty could weigh on demand and motivate the MPC to keep interest rates low to support the economy, but other factors could push the central bank to raise rates.

 

For example, if Brexit reduced the UK’s openness to trade, the country’s output capacity could suffer, which would require the BoE to raise rates to temper inflation.

 

“Economists often presume that changes in an economy’s underlying productivity occur only slowly,” Mr Broadbent said. However, he added: “A sharp reduction in the degree of openness (to trade) could have a more immediate impact. “A field currently producing barley, sold into the European market, can’t easily or as fruitfully be replanted with olive trees”. He said the challenge for monetary policymakers was that “reductions in supply can add inflationary pressure even as they lower aggregate (gross domestic product)”.

So, let’s consider Broadbent’s example…

The UK suffers a drop in aggregate demand due to a contraction in trade, the BoE raises rates in an over-leveraged economy to stem the inflation and…undoubtedly makes the contraction in GDP much worse. That makes no sense and is the kind of one dimensional thinking that we’ve had to put up with from central bankers. What’s worse is that Broadbent has specific responsibility for monetary policy and a c.v. as long as your arm – Cambridge, Harvard PhD, Fulbright Scholar, Columbia University, Goldman Sachs and UK Treasury.

It’s no wonder we are in such a mess with people like this pulling the levers of policy in the central banks. Crazy ideas aside, Broadbent and his BoE colleagues might be unhappy with market projections for the future path of interest rates, but they can hardly blame investors for being sceptical.

Which way are rates going, Ben?

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Authored by Andrei Akulov via The Strategic Culture Foundation,

The EU on Nov.13 officially launched a new era in defense cooperation with a program of joint military investment in equipment, research and development, known as permanent structured cooperation, or PESCO.

Foreign and defense ministers gathered at a signing ceremony in Brussels to represent 23 EU governments joining the pact, which is to become legally binding when signed by heads of state at EU summit in mid-December. 

With so many ministers signing, approval seems a given. From now on, the EU will have a more coherent role in tackling international crises, while reducing the reliance on the United States.

The UK, which is scheduled to leave the EU in 2019, is not part of PESCO.

Until Brexit, London had opposed the idea of European Defense Union or European Army, saying it would undermine NATO and the UK alliance with the US. Denmark, which has a special opt-out status, is not expected to participate. Ireland, Portugal and Malta are still undecided whether or not to join.

This is the first time ever EU member states legally bind themselves into joint projects as well as pledging to increase defense spending and contribute to rapid deployment. Member countries will submit an action plan outlining their defense aims. EU foreign policy chief Federica Mogherini, EU military chiefs and the European Defence Agency will evaluate whether the plans agreed on are being respected. Those not living up to their commitments could be kicked out of the group.

PESCO is intended to reduce the number of different weapons systems in Europe and to promote regional military integration. It is also intended to establish joint training of military officers. The jointly developed European military capabilities will enable the EU to conduct operations separately or in coordination with NATO. Formally, the North Atlantic Alliance backs the project, aiming to benefit from stronger militaries.

Federica Mogherini called the deal a “historic moment in European defense.” According to her, PESCO is complimentary to NATO, in which 22 of the EU's 28 countries are members. The EU, she said, has tools to fight hybrid warfare — the use of conventional weapons mixed with things like propaganda and cyber-attacks — that the military alliance does not have at its disposal. German Foreign Minister Gabriel praised the agreement as "a great step toward self-sufficiency and strengthening the European Union’s security and defense policy – really a milestone in European development."

Under PESCO, EU countries will commit to increase military spending. The pact is to be backed by a 5-billion-euro defense fund for buying weapons, a special fund to finance operations and money from the EU’s common budget for defense research. Joint efforts will reduce duplication and waste. More than 50 joint projects in the fields of defense capabilities and military operations have already been submitted. The UK and other states, which have not become parties to PESCO, can take part in some if they are of benefit to the entire EU.

The European Commission also proposed on Nov.10 a series of measures often called a "military Schengen" to facilitate the movement of forces and defense equipment between member states. The moves dovetail with the goals set by the EU strategy document titled European Union Global Strategy that the bloc should look to create greater military autonomy from NATO. «As Europeans we must take greater responsibility for our security. We must be ready and able to deter, respond to and protect ourselves against external threats», the paper reads.

An independent EU military capability will weaken NATO and put an end to Europe’s dependence on the United States. Sweden and Finland, EU members outside NATO, might find an EU alliance preferable to the North Atlantic alliance. After all, European states got entangled in the military conflicts in Iraq and Afghanistan due to solidarity with the United States, not because the European interests were involved. These two examples alone are enough to give precedence to European, rather than transatlantic, security interests. Quite often these interests do not coincide. Today, a joint border force to keep away refugee flows, not forces deployed to counter Russia, is the real priority for Europeans.

The US views Europe’s migrants’ crisis as a far-flung problem that doesn’t affect its direct interests. It has other priorities, such as containing China and opposing Iran, the country where European businesses have great economic interests. Many common Americans question the need to pay for European «free riders». They strongly believe that the Europeans should do much more to enhance their own security. It’s only natural that the EU, a powerful international entity with 28 members accounting for more than 20% of global GDP, strives to acquire the capability to conduct independent military operations.

The idea of creating an independent European defense potential has its pros and cons but one thing is indisputable – only a truly European force – not an assortment of national armies operating under the auspices of US-led NATO – can really protect European interests. Europe has just made a big stride towards moving away from the reliance on the United States to its greater independence and ability to set its own priorities.

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