Rickards On China’s Plan To Tank Its Own Stock Market

Authored by James Rickards via The Daily Reckoning,

When I say the fix is in for FXI that’s not meant to be mysterious. FXI is the ticker symbol for a U.S. exchange-traded fund (ETF) composed of the largest Chinese stocks.

The phrase “the fix is in” simply refers to government-backed manipulation. When you combine the two into a government plan to tank their own stock market, at least to a point, you’re as close to a sure thing as stock market indexes allow these days. That’s exactly what’s going on in China right now.

A currency devaluation will likely lead to a stock market collapse, but it’s a trade-off China is willing to accept because a cheaper currency will stimulate exports and support jobs.

China’s motives in market manipulation are about social stability more than profit and loss. Of course, the Chinese have nothing against making money; they’re good at it. But China is controlled by a Communist Party dictatorship that is most concerned about its self-perpetuation.

That self-perpetuation can involve prison camps, thought control and torture if needed, but on a day-to-day basis it’s more likely to involve avoidance of inflation, unemployment and market panics (versus slow, steady declines).

Investors with vague or no recollection of the 1989 Tiananmen Square protest and massacre in Beijing have been taught to recall the event as a “pro-democracy” student rally complete with a 33-foot-tall papier-mâché statue called the Goddess of Democracythat was destroyed as the military cleared the square. That’s a highly selective and misleading portrait of the overall protest.

It’s true that student demonstrators placed demands for more freedom of the press and freedom of speech in their petitions. Yet the origins of the protest were economic. Rapid economic growth in the 1980s had resulted in large gains for some but had marginalized and disgruntled many others.

Inflation was a real tax on those with limited resources and an easily avoided inconvenience for the rich. It was these economic grievances — inequality and inflation — that gave rise to the protests. The pro-democracy aspects were tacked on in the later stages as the crowds grew.

Initially the Communist Party leadership was divided between moderates, like Zhao Ziyang, who favored some dialogue with the protesters, and hard-liners, like de facto leader Deng Xiaoping, who favored a forced breakup of the protest and the arrest of its leaders.

In the end, the hard-liners got the upper hand and the result was a violent military attack on the demonstration. Death estimates vary widely and cannot be verified but range from 1,000 to 10,000 dead protesters. Communist Party leadership itself was thrown into chaos in the aftermath of Tiananmen with Zhao Ziyang being purged and Jiang Zemin being installed as the new hard-line party leader.

This statue, located at the University of British Columbia in Vancouver, is a replica of the Goddess of Democracy first displayed during the Beijing Tiananmen Square protests in April–June 1989.

The ghosts of Tiananmen still haunt the Communist Party leadership almost 30 years later. Economic warfare between China and its trading counterparties is not mainly about economics. It’s mainly about social stability in China, which means avoidance of new mass protests and suppression of widely voiced political dissent.

This econo-political history brings us to the ongoing trade war between China and the U.S. A superficial account of the trade war says it was started by President Trump last winter with his imposition of tariffs on Chinese (and other) goods imported into the U.S. including steel, aluminum and certain appliances.

China retaliated with tariffs on U.S. imports. Trump doubled down with U.S. tariffs on a much longer list of Chinese goods and imposed penalties for Chinese theft of U.S. intellectual property.

China retaliated again, and Trump doubled down again. These tit-for-tat tariffs were rising in $10 billion bumps. Suddenly the happy talk about posturing and empty threats was swept aside. A full-scale, red-hot trade war was underway.

This recent outline is accurate as far as it goes. Yet it leaves out a much longer and more complicated backstory. On Dec. 11, 2001, China was formally admitted to the World Trade Organization, WTO, the legal successor to the General Agreement on Tariffs and Trade, GATT, one of the original Bretton Woods institutions from 1944.

China’s admission to the WTO was the result of years of negotiations and substantive concessions on the part of China. Despite those perceived concessions, China secretly pursued the same policy it has used at the U.N. Security Council, the IMF and other multilateral organizations it has joined in recent years.

Here’s an easy metaphor that captures Chinese behavior: Imagine you’re on the admissions committee at an exclusive club. Your club has a strict dress code that involves jackets, ties and leather shoes even on casual occasions.

A new potential member has applied. They go through the interview process, bring recommendations are informed about the dress code and agree to strict adherence. The new member is admitted. The next day the new member shows up at the bar in cutoffs, flip-flops and a T-shirt.

Your club has a problem.

China’s the same way. They go through rigorous vetting. The organization rules and procedures are carefully explained. China agrees to play by the rules and is formally admitted. The next day, China proceeds to break every rule in the book and, in effect, dares the leadership to sanction them. The sanctions never arrive.

The group has a problem.

From this perspective, the trade war did not begin in 2018; it began in 2001. It was not started by President Trump; it was started by China through rule breaking, theft of intellectual property, export dumping and slow-rolling open markets.

When China joined the WTO, its trade surplus with the U.S. was about $100 billion per year. Today China’s trade surplus with the U.S. is about $400 billion per year and rising. This surplus is in addition to the theft of over $600 billion of intellectual property. The 17-year wealth transfer from the U.S. to China now exceeds $3 trillion. 

Viewed this way, Trump’s 2018 tariffs on China were not the start of a trade war. They were a desperate effort to stop one before the U.S. is looted further by the Chinese.

In the short run, China has been able to see Trump’s ante every time Trump increases tariffs. Yet China is crucially weak on this front. The U.S. imports about $500 billion per year in goods from China and exports about $100 billion to China. The difference is the $400 billion per year trade deficit the U.S. runs with China.

China is getting close to tariffs on 100% of U.S. imports. The U.S. can still impose tariffs on another $400 billion of Chinese imports. This is what Trump referred to when he said the U.S. cannot lose the trade war with China because “we already lost.”

Trump’s hope is that China will see it’s playing a losing hand, meet Trump for negotiations and settle on lower tariffs all around. This could expand bilateral trade and be a boost to the global economy.

So far, China has not sought reconciliation. Instead it has injected a currency war tactic into the trade wars to give it more leverage than would otherwise exist. Here’s a chart that shows the radical devaluation of the Chinese yuan, CNY, against the dollar, USD, in the past four months:

Chart 1

In the past four months, the Chinese yuan (CNY) has collapsed 8.5% against the U.S. dollar (USD). From 6.28 to 6.88 per dollar. This is a greater collapse than the August 2015 3% “shock” devaluation that triggered an 11% U.S. stock market collapse. This new devaluation will continue as part of China’s play in the trade wars. This time a Chinese stock collapse is a more likely result.

This currency devaluation is China’s reply to Trump. If the yuan dropped 20% against the dollar, Chinese export costs would drop by about the same amount because yuan unit labor costs are a huge part of Chinese manufacturing costs.

If Chinese export costs are $100 per unit, a 20% devaluation will lower those costs to $80 per unit. A 25% U.S. tariff on the new $80 baseline will raise the export cost to $100 — exactly where it started.

China has discovered that devaluation is a near-perfect offset to tariffs. The devaluation tactic not only lowers Chinese export costs; it increases U.S. export costs, as shown in Chart 2 below.

Chart 2

With the trade wars and currency wars now commingled, what are my predictive analytic models telling us about the prospects for Chinese stocks in particular and China more broadly?

Right now, they’re telling us that China is not backing down from its aggressive response to Trump’s tariffs. The Trump team shows no inclination to back down either. The result will be constricted bilateral trade and slower growth at the margin for both countries.

A declining Chinese stock market, as reflected in the FXI price, will be collateral damage in this escalating struggle. It’s not a result that China wants, but it’s a price they will pay in order to keep Chinese citizens employed and assembly lines humming.

Lower unit labor costs combined with higher U.S. tariffs will shift wealth from Chinese enterprises to U.S. importers, but there should be little change in the local currency earnings and job security of Chinese workers. That’s the line in the sand the Communists will defend.

The combined trade and currency wars are like a perfect storm aimed at FXI. Wall Street is misreading these developments, but you don’t have to.

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

Tesla Whistleblower Releases VIN Numbers Of Model 3s With Punctured Battery Modules

One month ago, we reported that Martin Tripp – the former Tesla engineer who on June 20 was sued by Tesla for allegedly trying to “sabotage” the company – and who subsequently turned out to be a whistleblower who was fired in retaliation for his disclosures, was alleging several egregious safety violations that, if true, would likely destroy what remains of Musk’s tattered credibility, which the SEC is currently subpoenaing.

As part of his now public whistleblowing effort to bring attention to glaring lapses in Tesla’s safety and quality control process, Tripp alleged that Tesla made misstatements to investors about placing batteries with puncture holes into vehicles which proceeded to the end of the assembly line – a process known internally at Tesla as “Containment AR622” -to help pad out its Model 3 production numbers in pursuit of Musk’s goal of producing 5,000 Model 3s a week. 

Tripp made some other striking accusations, among which that Tesla:

  • Overstated to investors the number of Model 3 vehicles being produced each week by as much as 44%. The whistelblower alleges that the famed factory board which reflects a daily Model 3 production count and often referred to by Tesla is inflated;
  • Lowered vehicle specifications impacting upon safety such as placing battery cells too close to one another and which were not properly affixed, risking future combustion; and
  • Systematically reused parts already deemed scrap/waste in vehicles without regard to safety.

He also accused Tesla of placing battery cells too close together and not properly securing them, raising the risk of future combustion, as well as “systematically” reusing parts that had been deemed to be scrap or waste.

A few days after Tripp’s allegations emerged,we reported that in a surprising public address on Twitter, Stuart Meissner, who was retained as Tripp’s counsel to defend against Tesla’s lawsuit against him and to countersue, tweeted in response to a Forbes article “Will Tesla Be ‘Tripp’ed’ Up By A Whistleblower“, that it was “time for the @SEC_Enforcement to act. Not an accident @elonmusk has been silent on the allegations. Let sunshine be the cleanser for $TSLA”

Well, with Musk doing most of Tripp’s work for him, and now that the SEC is investigating Tesla for an entirely different matter altogether, namely Musk’s seemingly fraudulent tweet that he had “secured funding” to take Tesla private, just after 5pm EDT, on his twitter account, Martin Tripp tweeted “are you ready”…

… and proceeded to release a list of VIN numbers that allegedly have a battery “module(s) that IS punctured/dented/damaged.”




Tripp then released information on what Tesla’s “Containment AR622” process looks like, described as “Puncturing of cell due to “training pin” being left in picker robot. Qty 1,173 battery modules affected- 723 Model 3’s currently affected.“

There was more. In the next series of tweets, Tripp accused Tesla of lying that all the “scrap/waste is being stored in climate controlled warehouses”, saying “this be true?! Let these pics speak for themselves:”




He then lays out details of what appears to be module scrap data by part:

Tripp wasn’t finished, and next revealed screengrabs of internal emails, showing orders from above to strop tracking of parts… …

… as well as an email in which he complains directly to Musk about the quality process at Gigafactory 1, as well as communication with a supervisor who demands to see Tripp’s complaints as he is “the one getting fired”:

Tripp also shows a photo from GF1 of cooling tubes that “should” be straight, yet appear to have bends in them:

In a detour, Tripp then said that “These fucking idiots at Tesla $TSLA $TSLAQ @elonmusk were saying I was upset I didn’t get a promotion. Here’s the truth: I was planning on retiring in TWO years! I wanted young kids out of college to take my job and just tear stators down all day!”


And while Tripp’s revelatory tweeting continued – much to Musk’s chagrin – even just the allegations so far presented are damning, and if confirmed by third parties and regulators that Tesla knowingly sold cars with defective battery modules and other parts, would result in not only giant fines but potentially prison time for those involved in the decision process.

Conveniently, this is all hitting just as the SEC has finally woken up and is looking into what really takes place at Tesla.

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

Trump Says Tariffs Helped ‘Build America.’ He’s Missing Some Important Context.

After the ratification of the Constitution, the very first law passed by the new Congress was the Tariff Act of 1789. It imposed an 8 percent tax on pretty much all imports into the United States, with the revenue from the tariffs used to fund the new national government and to pay down debts accumulated during the Revolutionary War.

This bit of early American history seems to be what President Donald Trump was gesturing towards with a Wednesday tweet declaring that America “built on tariffs.”

And, indeed, Trump has suggested that the tariffs could help pay off the national debt. The math doesn’t really work out on that one—the tariffs have generated about $1.4 billion so far, which is hardly even a drop in the bucket against a $21 trillion national debt, as I’ve pointed out before.

But set aside those technicalities, and the fact that America’s economy in 2018 is literally nothing like the nation’s economy in 1789. Today, we have more wealth—in large part because of the benefits reaped from trade—but also far more debt than the Founders could fathom.

Still, there’s something to be learned by contrasting the Tariff Act of 1789 with Trump’s tariffs of 2018. The key difference between today’s tariffs and America’s first experiement with import taxes is that those old-timey tariffs were used to raise revenue, rather than as protection for domestic industires. This distinction was hard-won, as northern industrial interests tried to use their influence—through their avatar, Treasury Secretary Alexander Hamilton—to impose higher tariffs that would have served as protectionist measures.

Hamilton’s argument wasn’t all that different from Trump’s. He wanted tariffs for what basically amounts to national security reasons—as a way to protect America’s nascent industries, without which the country would struggle to survive as an independent nation. Even though he lost that argument to the Jeffersonians, Hamilton’s proposed tariffs were a least more closely connected to a legitimate national security concern than Trump’s are.

While they weren’t protectionist policies, those early tariffs did solve a very practical revenue problem for the early United States government. In those days before H&R Block (indeed, before income taxes) collecting taxes was a difficult prospect. It was much easier to post-up customs officials at every port and collect taxes on the physical stuff that came ashore than to send tax collectors to every town and borough across 13 states to collect taxes from the populace—espescially since many of those would-be taxpayers weren’t entirely sold on the idea of a powerful central government, and had a recent history of armed rebellion against excessive taxation.

The tariffs-for-revenue versus tariffs-for-protectionism distinction is an important one, though Trump seems to struggle with grasping the difference. Today, tariffs have fallen out of favor with virutally all governments around the world as means to raise revenue because there are many alternative ways for governments to collect tax revenue from the general public that are considered to be less damaging to the economy than tariffs—though, of course, all taxes have a distorting effect on how goods, services, and investments are allocated.

But tariffs can still be a tool of protectionism. Indeed, explicitly protectionist tariffs were enacted by Congress in 1815 and again in 1828. On both occasions, they imposed economic costs, failed to achieve their policy goals, and fostered political dysfunction that pushed America closer to the Civil War. Another round of protectionist tariffs enacted during the 1930s is now widely credited with worsening and extending the Great Depression.

Pretty much all of Trump’s justification for tariffs—ranging from the ridiculous claims about national security to the possibly illegal suggestion that he’s using them to gain leverage in trade negotiations—recognize this function of tariffs. That he’s lately begun trying to shoehorn some sort of revenue argument into the debate over taxes is either a misdirection or a signal that the president is woefully uninformed about the economic issues at play. Choose for yourself which it is.

If Trump wants to make the argument that America should use tariffs to raise revenue, like we did in the 1790s, he better have a plan to abolish all federal taxes on income, investments, and labor. If he wants to have that discussion, well, I’ll listen.

from Hit & Run https://ift.tt/2nEBDKz
via IFTTT

Turkey And Russia May Ditch Greenback For Direct Lira-Ruble Trade

Moscow and Ankara may circumvent the US Dollar amid an exploding currency crisis and trade directly with each other using the Russian ruble and Turkish lira, according to Kremlin spokesman Dmitry Peskov.

“The issue of using national currencies in bilateral trade operations is a topic that has been raised by the Russian side for a long time and consistently at various levels, including at the top level,” said Peskov, adding “This is what we are striving for in our bilateral trade and economic relations, and what has been repeatedly mentioned at the bilateral Russian-Turkish talks.”

The Lira has been on a rollercoaster of late, surging after Turkish regulators imposed new “soft capital controls” – and boosted by a $15 billion direct investment in Qatar on Tuesday. The Turkish Capital Markets Board regulator also announced that they set the leverage ratio in the Lira FX market has been set at 1:1 until Sept. 3. The regulator cites “serious price moves” in such pairs recently that are devoid of a rational economic or financial reason, and notes that the step targets to prevent grievances that may occur after Feast of Sacrifice holiday, during which Turkish markets will be closed.

Both the Lira and the Ruble haver been crushed under the weight of US sanctions – with Ankara drawing sharp rebuke over the detention of American pastor Andrew Brunson in Turkey – who faces 35 years in a Turkish prison. An appeal by the United States for Brunson’s release from house arrest and a release on his travel ban was rejected on Wedensday, according to Turkish media. 

Bunson was arrested in October 2016 in a government crackdown following an attempted coup in July 2016. Brunson was shifted from jail to house arrest in July 2018. The 50-year-old pastor is being tried on terror and espionage-related charges, which Brunson and the US government vehemently deny. 

The US also slapped Russia with new sanctions last week over the unproven poisoning of former Russian double-agent Sergei Skripal. The Ruble fell to its lowest level against the greenback since 2016 on the news. 

via RSS https://ift.tt/2w8vSbY Tyler Durden

America’s “Prosperity” Is Now Dependent On Predatory Globalization

Authored by Charles Hugh Smith via OfTwoMinds blog,

Nowadays, trade and “prosperity” are dependent on currencies that are created out of thin air via borrowing or printing.

So here’s the story explaining why “free” trade and globalization create so much wonderful prosperity for all of us: I find a nation with cheap labor and no environmental laws anxious to give me cheap land and tax credits, so I move my factory from my high-cost, highly regulated nation to the low-cost nation, and keep all the profits I reap from the move for myself. Yea for free trade, I’m now far wealthier than I was before.

That’s the story. Feel better about “free” trade and globalization now? Oh wait a minute, there’s something missing–the part about “prosperity for all of us.” Here’s labor’s share of U.S. GDP, which includes imports and exports, i.e. trade:

Notice how labor’s share of the economy tanked once globalization / offshoring kicked into high gear? Now let’s see what happened to corporate profits at that same point in time:

Imagine that–corporate profits skyrocketed once globalization / offshoring kicked into high gear. Explain that part about “makes us all prosperous” again, because there’s no data to support that narrative.

What’s interesting about all this is the way that politicians are openly threatening voters with recession if they vote against globalization. In other words, whatever “prosperity” is still being distributed to the bottom 80% is now dependent on a predatory version of globalization.

Let’s rewind to the era of truly free trade, from the late Bronze Age up to the Roman Era. In the late Bronze Age (circa 1800 to 1200 B.C.), vigorous trade tied together the ancient empires and states of the Mideast and the Mediterranean. In the Roman Era, trade in silk and other luxuries tied China, India, Africa, the Mideast and the Roman Mediterranean together in a vast trading network.

In the good old days, merchants paid for goods in gold or silver, as the value of the precious metals were known to all and relatively easy to transport and verify.

Nowadays, trade and “prosperity” are dependent on currencies that are created out of thin air via borrowing or printing. The problem with gold, in the view of predatory globalization, is that it can’t be printed or conjured out of thin air. That won’t do, because predatory globalization’s primary export is newly printed currencies: dollars, euros, yen and yuan.

This puts every nation that can’t print a global reserve currency at an extreme disadvantage. While the U.S. can conjure “money” out of thin air and trade it for goods, other nations must cough up resources and goods in exchange for the “money,” and borrow it at hefty rates of interest if they want to use the global “money” for development or investment.

That leaves them highly vulnerable to foreign exchange fluctuations which can raise the cost of their interest due in dollars, etc. to punishing heights while devaluing whatever they built with the dollars, etc. they borrowed.

Then there’s a financial crisis of loan defaults and those who created and loaned out their global reserve currency demand the debtor nation sell all its assets and resources at bargain prices. Being a member of the European Union didn’t save Greece from this fate; no peripheral nation can protect itself from the predatory powers who can create currency at zero cost and send the value higher by restricting its issuance after other nations have loaded up on loans denominated in the reserve currency.

This is how “free” trade works in predatory globalization: The only thing that’s free is the cost of issuing trillions in global reserve currency. Everything else will cost you dearly.

*  *  *

My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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

Cars Could Be the Latest Instrument of Assault to Be Banned in London

In the aftermath of a car attack outside the Houses of Parliament in London, U.K. officials have proposed making the area a car-free zone.

On Tuesday, the driver of a silver Ford Fiesta hit multiple pedestrians and cyclists, injuring at least three people, before crashing into a security barrier. Metropolitan Police Assistant Commissioner Neil Basu says authorities are treating the incident as an act of terrorism.

Now some politicians and police officials are suggesting that parts of Westminster, where the attack took place, should be closed to cars. Transport Secretary Chris Grayling told Sky News it’s important not to “take an on-the-hoof response to what was a very disturbing incident.” But he said “there may well be a case for pedestrianization” of parts of Parliament Square.

London Mayor Sadiq Khan agrees. “I’ve been an advocate for a while now of part-pedestrianizing Parliament Square, but making sure we don’t lose the wonderful thing about our democracy, which is people having access to parliamentarians, people being able to lobby Parliament, visitors being able to come and visit Parliament,” he said, according to The Telegraph.

Nigel Evans, a Conservative member of Parliament, told TalkRadio that “filtering traffic” in the area could add an extra layer of security. “I suspect this will reignite the debate on whether the whole of Parliament Square should be pedestrianized to ensure that anybody can’t weaponize a vehicle and disrupt and indeed destroy our democracy,” he said.

Metropolitan Police Commissioner Cressida Dick doesn’t want Londoners to let terrorists “completely change our way of life.” At the same time, she told the London radio station LBC it’s important to take “reasonable measures” to protect the public. “Whether that area outside should be pedestrianized further is a matter that will be discussed, no doubt, between the parliamentary authorities, us, the intelligence agencies, the local authorities, and the mayor,” she said.

London has a history of banning any sort of weapon that criminals could use to attack civilians. For decades, restrictive gun laws have kept the vast majority of Londoners (and all U.K. citizens) from legally obtaining firearms. But gun laws haven’t stopped criminals from killing. In February and March, London’s murder rate even exceeded New York City’s.

Khan’s solution was to launch a knife control campaign, even though carrying a knife in public without “good reason” has been banned in the city for years. But prohibiting people from carrying guns or knives did not stop Tuesday’s car attack. And banning cars, even if it’s only a partial ban in certain parts of London, probably won’t do the trick either. People who really want to commit crimes will find a way, bans be damned.

from Hit & Run https://ift.tt/2vLQWFP
via IFTTT

Can a Baker Be Forced to Make a Transgender Celebration Cake?

CakeMasterpiece Cakeshop is back in the news with a lawsuit, but this time it’s not about gay wedding cakes. Instead, it’s a brand new fight over whether the government can force a baker to produce a cake celebrating a transgender person’s new identity.

Masterpiece Cakeshop in Lakewood, Colorado, was the focus of a Supreme Court ruling earlier this year. After its owner, Jack Phillips, refused to make a wedding cake for a same-sex couple, the state’s civil rights commission ruled that he had violated Colorado’s public accommodation law, which forbids discrimination based on sexual orientation. Phillips said he wasn’t discriminating against gay people but objected to doing work that violated his religious beliefs by implying support for same-sex marriage.

The Supreme Court ruled, 7-2, in Phillips’ favor. But it did so in a carefully worded ruling that did not address the issue of whether a wedding cake is a form of artistic expression or whether Phillips could be compelled to make wedding cakes for all couples. Rather, the Court ruled that the Colorado’s Civil Rights Commission had violated the First Amendment by approaching the case with a clear animus against Phillips’ religious beliefs.

Judging from a new federal lawsuit filed by the bakery, the commission is not backing down. On the same day that the Supreme Court agreed to hear Phillips’ case, he says he got a call from a lawyer named Autumn Scardina, who asked if he would make a custom cake with a “blue exterior and a pink interior” to reflect Scardina’s transition from male to female.

Just as Phillips has religious objections to recognizing same-sex marriages, he has religious objections to embracing sex changes. He declined to make the cake for Scardina, and she complained to the commission, which is coming after him again. According to Phillips’ lawsuit, the commission is ignoring his explanation that he objects to the message Scardina wants him to express with the cake and is instead claiming that he is refusing to serve Scardina due to her transgender status. The lawsuit also notes that Scardina’s web page says she handles LGBT discrimination cases, suggesting this call was more than a strange coincidence.

Phillips, represented again by the Alliance Defending Freedom, argues that the commission is still singling him out because of his religious beliefs. Colorado generally does not force bakers to promote messages with which they disagree. A baker could refuse to make a cake with an anti-gay or anti-transgender message, for instance. The lawsuit even cites a case where the same commission ruled in favor of a baker who refused an order for cakes with anti-gay messages. Phillips says the commission is denying him the same right out of anti-religious prejudice.

If anything, this dispute seems even more clear-cut than the wedding cake case, where one of the central issues was whether producing the cake was a form of expression. In this case, Scardina specifically asked for a cake that expressed how she felt about being transgender. It clearly was intended to communicate a message.

Phillips claims the commission is violating his religious freedom and his freedom of speech, which includes protection against compelled speech. He is asking for an injunction to stop Colorado from enforcing its law in this fashion and seeking $100,000 in damages.

Read the lawsuit here.

from Hit & Run https://ift.tt/2nH8gax
via IFTTT

Turkey Joins Russia In Liquidating US Treasurys

Last month, when we reported that Russia had liquidated the bulk of its US Treasury holdings in just two months, we said that “we can’t help but wonder – as the Yuan-denominated oil futures were launched, trade wars were threatened, and as more sanctions were unleashed on Russia – if this wasn’t a dress-rehearsal, carefully coordinated with Beijing to field test what would happen if/when China also starts to liquidate its own Treasury holdings.”

As it turns out, Russia did lead the way, but not for China. Instead, another recent US foreign nemesis, Turkey, was set to follow in Putin’s footsteps of “diversifying away from the dollar”, and in the June Treasury International Capital, Turkey completely dropped off the list of major holders of US Treasurys, which has a $30 billion floor to be classified as a “major holder.”

According to the US Treasury, Turkey’s holdings of bonds, bills and notes tumbled by 52% since the end of 2017, dropping to $28.8 billion in June from $32.6 billion in May and $61.2 billion at the recent high of November of 2016.

Meanwhile, as we showed earlier, Russia – which first fell off the list last month after being a top-10 foreign creditor to the US just a few years ago – saw its Treasury holdings remain unchanged at an 11 year low of just $14.9 billion.

The selloffs took place well before a diplomatic fallout between the US and both Turkey and Russia resulted in new sets of sanctions and tariffs imposed on both nations. The Trump administration last week imposed new sanctions against Russia in response to the nerve agent poisoning in the U.K. of a former Russian spy and his daughter.

Meanwhile, the Turkish selloff certainly continued into July and August as U.S. relations with Turkey deteriorated this week after President Trump doubled steel and aluminum tariffs to pressure the nation to release a jailed American pastor. Turkey increased the tensions by announcing new tariffs on American products such as cars as President Recep Tayyip Erdogan called for a boycott of iPhones and other U.S. electronics.

And with the anti-US axis started to solidify, with first Russia now Turkey dumping US paper, the question once again is: when, and under what conditions, would China – or others – join the all too symbolic selling of US government debt?

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

After Suspending Personal Account Of Alex Jones, Twitter Restricts Infowars As Well

Following the suspension of Infowars founder Alex Jones, Twitter has restricted the Infowars account as well. 

The account will be restricted from tweeting, but will still be able to browse Twitter and send direct messages to other users, while users will still be able to view the account, reports BuzzFeed News. 

The move, which essentially puts the account in read-only mode, comes less than a day after Twitter temporarily limited Infowars proprietor Alex Jones for a week after he tweeted a link to a video in which he called on his supporters to get their “battle rifles” ready. That video, which was shared on Twitter-owned live streaming service Periscope, was also shared by Infowars earlier on Wednesday.

A Twitter spokesperson confirmed that Infowars’ account, which has more than 430,000 followers, will be prevented from tweeting, retweeting, liking or following other users during a seven-day window. The account will stay online, allowing users to view it during that period. –BuzzFeed News

On Tuesday, Twitter suspended the conspiracy theorist and blogger for violating the social media company’s policies, in a stark reversal for Jack Dorsey who previously bucked the trend by other tech giants to muzzle the Infowars creator.

As CNET first reported, Jones’ account was put in “read only” mode and will be blocked from posting on Twitter for seven days because of an offending tweet, the company said. While Twitter declined to comment on the content that violated its policies, a Twitter spokesperson told CNN the content which prompted the suspension was a video published Tuesday in which he said, “now is time to act on the enemy before they do a false flag.”

As a result: 

A Twitter spokesperson wouldn’t say what would get Jones or Infowars permanently suspended, however they noted “We look at [the] volume and nature of violations before suspending an account,” according to Buzzfeed.

Dorsey, meanwhile, tweeted that in general he hope that timeouts will change people’s behavior:

Last week after Jones was banned on other platforms, Dorsey said “We’re going to hold Jones to the same standard we hold to every account, not taking one-off actions to make us feel good in the short term, and adding fuel to new conspiracy theories.”

Dorsey sat down with NBC News‘ Lester Holt this week, where he defended the company’s decision to put Infowars’ Alex Jones under a seven-day timeout over an offensive tweet linking to a video in which Jones encourages his audience to “act on the enemy before they do a false flag,” and to get “battle rifles” ready. 

Dorsey said that despite calls to ban Jones last week amid a seemingly coordinated multi-platform blacklisting, he resisted until now. 

“We can’t build a service that is subjective just to the whims of what we personally believe,” Dorsey told Holt, while saying he believes a suspension can be an effect deterrent which can change user behaviors. 

“I feel any suspension, whether it be a permanent or a temporary one, makes someone think about their actions and their behaviors,” Dorsey added – though he admitted he has no idea if Jones’ timeout will result in any changes in behavior. 

Meanwhile, Infowars.com was allegedly hacked yesterday, in what Jones called a cyber attack. 


Without a website, the Jones empire collapses.  

via RSS https://ift.tt/2vJ63ja Tyler Durden

Foreigners Dumped US Treasurys In June: Japan Holdings Drop To 7 Year Lows

With Russia no longer even figuring among the top holders of US Treasurys following two straight months of liquidations in April and May, which brought Moscow’s holdings of US government bonds to virtually nil amid a major push to diversify away from the dollar…

… bond traders were looking to see if the example set by Putin would be copied by another nation in the month of June.

The answer is that, indeed, the month of June saw aggressive selling of long-term US Treasurys, with foreign official (central bank, reserve fund managers) and private investors selling $48.6 billion in Treasurys, the largest one month total since October 2016.

Who were the sellers?

Continuing its trend of gradual divestment, Chinese holdings of US Treasurys dropped by $4.4BN from $1183.1BN to $1178.7BN, a modest drop following last month’s $1.2BN increase.

Perhaps the most notable seller of US paper was Japan, which dumped $18.4BN, bringing its total from 1048.8BN to 1030.4BN, the lowest since October 2011 as Japanese investors sold off US paper as a result of rising hedging costs which made holding European, or even Japanese bonds, more economical.

German holdings also dipped, fro $78.3BN to $71.2BN, with few other notable sellers.

Meanwhile, on the other side, the most aggressive buyer of US paper in June was the Cayman Islands, which is another designation for hedge funds, which increased from $185.5BN to $197.2BN, the highest since November 2017.

Also, the recent “Belgian” buying continued, with custody holder Euroclear adding $4.2BN from $150.5BN to $154.7BN, while the UK added $9BN, bringing its total from $265BN to $$274BN.

In total, total foreign official holdings of US paper dropped in June from $3.991 trillion to $3.988 trillion, the lowest in over a year.

Finally, broken down by total assets, foreigners were net sellers of $45.5 billion in US securities in the month of June – the bulk of which was US Treasurys and Equities – the biggest monthly sale since September 2016.

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