Tag: finance

On any other day, a 1.5% drop in the S&P futures would be cause for alarm; however after yesterday’s historic 5% surge in US stocks it merely prompts a shrug, because even with ES sliding -36 points, it is roughly where it was trading at 3:35pm yesterday.

Whether because we went from a near record oversold market to overbought in one day, or just because traders concluded that yesterday’s surge was nothing more than a bear market rally, the kind of which we saw on so many occasions during the depths of the financial crisis…

… nearly a third of yesterday’s rally fizzling, wiped out in overnight trading, with S&P futures sliding for the past 6 hours and after an early spike which pushed the Emini briefly above 2480, the contract has since dropped as much as 60 points and is prompting renewed concerns about the sustainability of yesterday’s bullish reversal.

That said, even with the previous session’s surge, it’s still a horrible month for American stocks, with the S&P 500 down almost 11%.

Meanwhile, even as futures dropped, world stocks bounced off a near two-year low on Thursday, lagging Wall Street’s dramatic surge, though the first fall in Chinese industrial profits in three years and renewed Italian banking worries offered a sobering reminder of the problems weighing on the world economy.

“The relentless selling which prevailed leading up to Christmas has mercifully halted as U.S. stock markets recorded significant gains,” said Stephen Innes, trader at OANDA. According to Innes, the rally was partly due to a Mastercard Inc report that sales during the U.S. holiday shopping season rose the most in six years in 2018, helping allay concerns about the health of the U.S. economy. “The surge in online purchases over the holiday season should be a reminder for the markets never to underestimate the purchasing power of the U.S. consumer.”

Stocks in Asia and Europe took their cue from the Wednesday rally and opened strongly, pushing the MSCI world equity index, which tracks shares in 47 countries, 0.4% higher. The index had already spiked 2.3% in the previous session, rising off a 22-month low hit on Christmas Eve.

However, the global rally fizzled in Europe where shares opened higher 0.5%, then erased most of the early gains and the Stoxx 600 was trading down -0.9% at last check, dragged lower by Italian stocks. Milan was hit by renewed concerns over the country’s banking sector after lender Banca Carige was denied a cash call by its largest shareholder. The news weighed on Italian government bonds too, curbing a month-long rally and pushing 10-year yields higher on the day.

Top European News

• Italian Bonds Slip as Traders Prepare for Final Auctions of 2018
• EU Won’t Allow France 2nd Deficit Overshoot: Oettinger to Funke
• ECB Sees Ongoing Economic Growth With Increased Downside Risks
• European Retail Shares Lead Gains With Tesco, Kering Rising
• Euro Zone’s Northern Tip Ends Year on a Low as Confidence Sinks

Earlier, MSCI’s index of Asia-Pacific shares ex-Japan rose 0.6% and away from eight-week lows while Japan’s Nikkei managed to pull out of bear market territory, to closing 3.9% higher while Australian shares jumped 1.9 percent. But Chinese shares did not join the rebound, with mainland shares closing at session lows as well as Hong Kong down 0.4 percent.  The Shanghai Composite Index erased morning advance and closed at session lows as China Petroleum & Chemical Corp. fell the most in more than two months, after Sinpoec shares tumbled as much as 8.6% after the company announced that Chen Bo, president of Chinese oil trading giant Unipec, and Zhan Qi, co.’s communist party secretary, have been suspended.

Also, as reported previously, earnings at China’s industrial firms dropped in November for the first time in nearly three years.

Top Asian News

• China’s Industrial Profits Drop for First Time Since End 2015
• Vietnam Economy Remains Outperformer as Growth Tops 7% Mark
• Trade Losses at China Oil Giant Said to Spur Sinopec Suspensions
• Huawei’s Revenue Growth Rebounds Despite ‘Storm- Tossed’ 2018
• NEC Pushes Deeper Into Services With $1.2 Billion Deal for KMD
• PBOC’s Ma Says Replenishing Bank Capital Key to GDP Growth: CSJ

Meanwhile, US Treasuries led advances in global bonds amid renewed skepticism about recent risk-asset gains and rekindled demand for the safety of government debt. Yields on 10-year U.S. notes fell toward the lowest level since April as the market was supported by a futures block trade equivalent to a DV01 of $717,000. As a result, the 10Y has cut its losses in half, and was yielding 2.772%, 5bps lower than where it closed Wednesday’s session.

The dollar also gave up some of its overnight gains, but losses were limited to around 0.3% against a basket of currencies. Against the yen, a perceived safe haven, it was off 0.5% at 110.82 yen. It had risen nearly 1% overnight, booking its largest single-day gain against the yen since late April. The Bloomberg Dollar Spot Index pared Wednesday’s rally with the dollar slipping against most peers; yen and euro both gained at least 0.4% while Aussie and kiwi drop on renewed China growth concerns.

Commodities were also hit, with concerns over a faltering global economy and signs of a crude oil glut pressured oil prices, sending Brent futures 2.4% lower to $53.26 a barrel and partly reversing the previous day’s 8% jump, the biggest in two years. Another safe-haven, gold, was up 0.4 percent, remaining just below a six-month peak hit earlier this week.

Market Snapshot

• S&P 500 futures down 1.6% to 2,432.50
• STOXX Europe 600 down 0.5% to 333.53
• MXAP up 1.8% to 145.41
• MXAPJ up 0.4% to 471.83
• Nikkei up 3.9% to 20,077.62
• Topix up 4.9% to 1,501.63
• Hang Seng Index down 0.7% to 25,478.88
• Shanghai Composite down 0.6% to 2,483.09
• Sensex up 0.6% to 35,853.59
• Australia S&P/ASX 200 up 1.9% to 5,597.20
• Kospi up 0.02% to 2,028.44
• German 10Y yield fell 2.4 bps to 0.226%
• Euro up 0.4% to $1.1396
• Italian 10Y yield unchanged at 2.471%
• Spanish 10Y yield fell 0.3 bps to 1.398%
• Brent futures down 1.7% to $53.54/bbl
• Gold spot up 0.5% to $1,273.46
• U.S. Dollar Index down 0.3% to 96.77

Top Overnight News from Bloomberg

• Donald Trump said that he has no plans to withdraw American troops from Iraq, speaking to reporters at Joint Base al Asad in Iraq on Wednesday, making his first visit to troops in a combat zone as commander-in-chief a week after dismissing his defense secretary in a dispute over Middle East strategy
• Japanese shares rallied for a second day, with the Topix index climbing more than 5% and poised for its biggest advance in two years
• Oil held its biggest gain in two years, after being swept up in a rebound across risk assets spurred by optimism about the global economy
• A U.S. government delegation will travel to Beijing in the week of Jan. 7 to hold trade talks with Chinese officials, two people familiar with the matter said
• President Donald Trump won’t try to fire Federal Reserve Chairman Jerome Powell, a top White House economic adviser said. Kevin Hassett told reporters “yes, of course, a hundred percent” on Wednesday after he was asked whether Powell’s job is safe
• President Trump said he won’t relent on the partial government shutdown unless Congress funds his proposed border wall, and wouldn’t say whether he’d accept less than $5 billion for the project
• Profits of Chinese industrial companies fell for the first time in almost three years, highlighting the effects of slowing economic growth, falling prices, and the trade war with the U.S.
• Replenishing capital of Chinese banks is key to boost lending growth and support the economy, People’s Bank of China adviser Ma Jun was cited as saying in a front-page report in China Securities Journal

US Event Calendar

• 8:30am: Initial Jobless Claims, est. 215,500, prior 214,000; Continuing Claims, est. 1.68m, prior 1.69m
• 9am: FHFA House Price Index MoM, est. 0.25%, prior 0.2%
• 9:45am: Bloomberg Consumer Comfort, prior 58.8
• 10am: Conf. Board Consumer Confidence, est. 133.7, prior 135.7; Present Situation, prior 172.7; Expectations, prior 111
• 10am: U.S. Census Bureau to delay New Home Sales data amid shutdown

via RSS http://bit.ly/2SlXa8z Tyler Durden

After the US government elicited outrage from the Chinese due to its attempts to convince its allies to bar the use of equipment made by telecoms supplier Huawei, President Trump is apparently weighing whether to take another dramatic antagonistic step that could further complicate trade negotiations less than two weeks before a US delegation is slated to head to Beijing.

According to Reuters, the White House is reportedly considering an executive order that would ban US companies from using equipment made by Huawei and ZTE, claiming that both companies work “at the behest of the US government” and that their equipment could be used to spy on US citizens. The order would invoke the International Emergency Economic Powers Act to order the Department of Commerce to prohibit the purchase of equipment from telecoms manufacturers that could threaten national security.

Though it wouldn’t explicitly name Huawei or ZTE, the ban would arise from Commerce’s interpretation. The IEEA allows the president the authority to regulate commerce in the face of a national emergency. Back in August, Congress passed and Trump signed a bill banning the use of ZTE and Huawei equipment by the US government and government contractors. The executive order has reportedly been under consideration for eight months, since around the time that the US nearly blocked US companies from selling parts to ZTE, which sparked a mini-diplomatic crisis, which ended with a deal allowing ZTE to survive, but pay a large fine.

The feud between the US and Huawei has obviously been escalating in recent months as the US has embarked on an “extraordinary influence campaign” to convince its allies to ban equipment made by both companies, and the arrest of Huawei CFO Meng Wanzhou in Canada has also blossomed into a diplomatic crisis of sorts.

But the real reason issuing a ban on both companies’ equipment is seen as a priority is because Huawei’s lead in the race to build 5G technology is making its products more appealing to global telecoms providers. Rural telecoms providers in the US – those with fewer than 100,000 subscribers – are particularly reliant on equipment made by both companies. They’ve expressed concerns that a ban would require them to rip out and scrap their equipment at an immense cost.

Rural operators in the United States are among the biggest customers of Huawei and ZTE, and fear the executive order would also require them to rip out existing Chinese-made equipment without compensation. Industry officials are divided on whether the administration could legally compel operators to do that.

While the big U.S. wireless companies have cut ties with Huawei in particular, small rural carriers have relied on Huawei and ZTE switches and other equipment because they tend to be less expensive.

The company is so central to small carriers that William Levy, vice president for sales of Huawei Tech USA, is on the board of directors of the Rural Wireless Association.

The RWA represents carriers with fewer than 100,000 subscribers. It estimates that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in a filing to the Federal Communications Commission earlier this month.

As Sputnik pointed out, the news of the possible ban followed questions from Defense Secretary Gavin Williamson, who expressed serious concerns over the involvement of Huawei in Britain’s 5G network, suggesting that Beijing sometimes acted “in a malign way.” But even if it loses access to the US market, Huawei’s global expansion and its leadership in the 5G space are expected to continue to bolster profits and growth. Currently, Huawei sells equipment in 170 countries.

According to a statement from the company’s rotating chairman, the company’s full-year sales are expected to increase 21% to $108.5 billion this year. The company has signed 26 contracts globally to supply 5G equipment for commercial use, leaving it well ahead of its US rivals.

via RSS http://bit.ly/2RiGSQl Tyler Durden

For the first time in almost three years, the profits of Chinese industrial companies tumbled in November, highlighting the effects of slowing economic growth, falling prices, and the trade war with the US.

“Slowdown in sales growth and factory gate inflation, combined with rising costs, led to the decline of industrial profits in November,” the NBS said in the statement on its website.

Profits contracted 1.8% year-on-year in November, vs. an expansion of 3.6% yoy in October. This is the first year-over-year contraction in industrial profits since 2015. In month-on-month terms, profits fell meaningfully after seasonal adjustment by around 7.2% (non-annualized), vs. a contraction of 0.1% in October. In absolute level terms, profits in November were the lowest of the year.

Among major sectors, profit growth turned negative in computer manufacturing, ferrous metal smelting and pressing, and chemical product manufacturing, but improved in general equipment manufacturing, electrical machinery manufacturing and automobile manufacturing.

As Goldman Sachs notes, compared with November 2017, profit margins (total profits divided by revenues from principal business) were materially lower by around 0.6pp, contributing to the fall in headline profit year-over-year growth. On a 12-month rolling average basis, both upstream and downstream industries’ margins narrowed. Revenue growth decelerated in November, with PPI inflation modestly lower in November vs. October, and the implied real industrial sales growth slowed in November, to around 4.5% yoy based on our estimate, vs. 5% yoy in October.

However, flashing red flags everywhere, Bloomberg notes that the official year-on-year growth rate for profits began diverging from the growth rate calculated from the nominal profit figures in 2017, and that continued to be an issue in November’s release.

This discrepancy has led many to question the veracity of the official data.

And more worrying still, looking ahead, industrial profit growth continues to face headwinds, as Goldman expects both industrial production growth and PPI inflation to soften next year, especially in Q1.

And before investors get all gung ho about “bad news” being “good news” for global markets – because, as the narrative goes, the worse economic data gets, the more monetary and fiscal easing Chinese authorities will unleash – they have been trying this for over six months…

And, as confirmed by today’s collapse in profits, it’s not working.

via RSS http://bit.ly/2TbjEZZ Tyler Durden

Make no mistake about it, the stock market panic and Bear Market of November-December 2018 is serious and profoundly threatens the economic and profit pictures, but after yesterday’s panic-buying in stocks (as investors front-ran pension re-allocation panic),Doug Kass (via RealInvestmentAdvice.com), take a look at what else could spark another 5% explosion higher in stocks…

“Look up and not down; look out and not in; look forward and not back, and lend a hand.” 

– Edward Everett Hale

As mentioned on Friday, a fragile domestic economy may be undermined by the negative wealth effect of lower equity prices:

“The wealth effect is a theory suggesting that when the value of equity portfolios are on the rise because of accelerating stock prices, individuals feel more comfortable and confident about their wealth, which will cause them to spend more. In 1968, for instance, economists were mystified when a 10 percent tax hike failed to put the brakes on consumer spending. Later, the sustained spending was credited to the wealth effect. Even though disposable income declined because of the additional tax burden, wealth continued to grow because the stock market persistently climbed higher.”— Investopedia

According to Wilshire Associates, the U.S. stock market fell by $2.1 trillion last week. That loss in value is more than 10% of the 2017 U.S. Gross Domestic Production (GDP) of $19.3 trillion. (Our domestic GDP represents approximately 31% of world GDP). The loss in value from the September 2018 market top is well in excess of $5 trillion, representing about 25% of projected 2018 U.S. GDP.

The fixed income’s message of slowing economic and profit growth has been resounding — and until recently has been dismissed by most who were intoxicated by rising equity prices and favorable (but lagging) economic data.

Given the steady drumbeat of disappointing high-frequency economic data that suggest consensus growth expectations are too optimistic and underscores the fragile state of the domestic economy, this is a particularly untimely period for stocks to crater.

The economy — from a rate of change standpoint — is now at a critical point. No doubt a lot of damage to forward 2019 economic growth has already occurred and will result in a reduction in consensus profit forecasts. Any further damage to the stock market will amplify the heightened and powerful headwinds of the negative wealth effect — something few have considered.

All is Not Lost – Look Up and Not Down

To many who have taken a large hit to their investment portfolios over the last six weeks, all seems lost.

As bad as things feel this morning (the worst month of December since 1928), all is not lost.

Though rising recession risks are expanding and the U.S. growth outlook will be tested in 2019, history shows that it truly is darkest before the dawn.

That said, investor sentiment – based on many measures – has now been reduced to pure fear, an ingredient that didn’t exist during the lengthy Bull Market in Complacency so apparent over the last 2-3 years. Under the weight of near unprecedented financial market volatility many of the most confident optimists prior to October are now the most confident pessimists today. (Like the panicky ETF holder community – who too often emotionally redeem at or near the bottom – and the levered risk parity boyz, they too often buy high and sell low).

“I’m astounded by people who want to ‘know’ the universe when it’s hard enough to find your way around Chinatown.”- Woody Allen

My annual Surprise List is not about predictions. Rather, my Surprise List incorporates the notion of Possible Improbables. In sports, betting my surprises would be called an “overlay”, a term commonly used when the odds of a proposition are in favor of the bettor rather than the house.

The List is the outgrowth of five core lessons I have learned over the course of my investing career:

1. How wrong conventional wisdom can consistently be.

2. That uncertainty will persist.

3. To expect the unexpected.

4. That the occurrence of Black Swan events are growing in frequency.

5. With rapidly changing conditions, investors can’t change the direction of the wind, but we can adjust our sails (and our portfolios) in an attempt to reach our destination of good investment returns.

With the S&P (cash today at 2350 and not 2930 – the September high), today’s Top Ten (surprises) take a different and more upbeat tone that my year end 15 Surprises for 2019.

Given my calculus that the S&P’s “fair market value” is approximately 2450, we should begin to look up and not down as the upside reward v. downside risk has finally shifted into positive ground.

Two quotes, one from an acquaintance (The Oracle of Omaha) and one from a friend (By) come to mind this morning:

“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” – Warren Buffett

“Disasters have a way of not happening.” – Byron Wien

And we should be considering what positive Surprises may occur that could reverse the carnage of the last few months in our markets…

My Top Ten List

Here are the Top Ten possible events that could cause stocks to rise by at least 5% in one trading session:

1. An announcement by the Federal Reserve that it plans to transition from the rigid language of “gradual increases” to a more flexible economic data and market dependent policy. Investors immediately interpret this message to mean that the Fed will (1) cease interest rate increases (in 2019) based on the tightening financial conditions, and (2) will likely slowdown the reduction in the size of their balance sheet.

2. Europe extends QE and it gets authority to buy European stocks. Mario Draghi decides not to retire next year.

3. China introduces a major easing policy that has substance, clout and power.

4. Treasury Secretary Mnuchin resigns and is replaced by Hank Paulson.

5. The U.S.China trade war ends with a full resolution.

6. Democrat Joe Biden and Republican Mitt Romney, aiming at bringing back national unity, jointly declare they are running on the same ticket for President and Vice President in 2020.

7. The Mueller investigation concludes that the President was guilty of collusion and obstruction. Trump immediately resigns and Mike Pence becomes the President of the United States.

8. The SEC initiates broad reform aimed at curbing the dominance of high frequency (quant) strategies and products and reestablishing the uptick rule. Passive investing begins to lose market share to active investing.

9. On the same day that Berkshire Hathaway (BRK.A) (BRK.B) announces a premium bid for 3M (MMM) , KKR and Blackstone announce separate $25 billion acquisitions. Apple (AAPL) follows this M&A explosion with a proposed leveraged buyout, (also) partially financed by Berkshire Hathaway.

10. On the same day, 1Q2019 earnings for Amazon (AMZN) and Alphabet (GOOGL) report substantially better than expected results.

We’ll see.

via RSS http://bit.ly/2RopZUM Tyler Durden

President Trump has been invited by to visit Turkey in 2019 by President Recep Tayyip Erdogan, the White House said on Monday night. While Trump has not accepted the offer, he “is open to a potential meeting in the future,” according to White House spokesman Hogan Gidley. 

As Bloomberg notes, the invitation was extended less than a week after President Trump announced a massive withdrawal of US troops from Syria – where they have supported Kurdish forces considered enemies of the Turkish state. Erdogan considers the US allies an extension of the PKK – deemed a terrorist group by both the EU and US. 

During a lengthy phone call on Dec. 14, Trump shocked even those in his inner circle by yielding to a suggestion from Erdogan to pull U.S. forces from the country, where eight years of civil war has forced millions of citizens to flee and established Iran and Russia as protectors of the government of Syrian President Bashar al-Assad.

The president later declared that the U.S. had won the battle against Islamic State, saying that was “my only reason for being there.” –Bloomberg

Secretary of Defense James Mattis resigned abruptly following Trump’s decision, followed by leading US diplomat Brett McGurk – a move which Trump couldn’t resist knocking over Twitter.

Brett McGurk, who I do not know, was appointed by President Obama in 2015. Was supposed to leave in February but he just resigned prior to leaving. Grandstander? The Fake News is making such a big deal about this nothing event!

— Donald J. Trump (@realDonaldTrump) December 23, 2018

For all of the sympathizers out there of Brett McGurk remember, he was the Obama appointee who was responsible for loading up airplanes with 1.8 Billion Dollars in CASH & sending it to Iran as part of the horrific Iran Nuclear Deal (now terminated) approved by Little Bob Corker.

— Donald J. Trump (@realDonaldTrump) December 24, 2018

Despite the strengthening of relations between Washington and Ankara, Turkey will not alter its plans to buy the Russian S-400 missile defense system regardless of its decision on whether or not to buy US-made Patriot missiles, according to the Turkish presidential spokesman on Monday, according to France24. 

“The US Patriot sale process does not affect the S-400 process. We don’t see one as an alternative for the other,” said Ibrahim Kalin. 

Turkish President Recep Tayyip Erdogan will convene his top defense body on Thursday to discuss a December 19 proposal to sell a package including 80 Patriot missiles and 60 PAC-3 missile interceptors to Turkey, a senior Turkish official told Bloomberg. 

Ankara’s purchase of Russian S-400s has drawn criticism from NATO allies – with the United States warning that the purchase jeopardized Turkey’s participation in the F-35 fighter jet program. 

Turkish officials have previously said it “needs” the S-400 missile defence system and repeatedly stressed that Ankara would buy systems from allies if they had sold them.

Turkish media has reported that the first delivery from Russia will be in 2019. –France24

Turkey’s S-400 order has been cited as a key symbol of Turkey’s closer relationship between Erdogan and Russian President Vladimir Putin, as the two men have also been working in concert to find a political solution to the almost seven-year war in Syria despite being on opposite sides of the conflict. 

While Turkey has supported Syrian rebels and called for Syrian President Bashar al-Assad’s ouster, Russia’s 2015 intervention helped the Damascus regime recapture large portions of the country taken over by Islamic militants.  

via RSS http://bit.ly/2SnDOQn Tyler Durden

Authored by Mark Angelides via Liberty Nation,

The people can only be controlled if they are scared…

The only way to effectively control a population without resorting to violence is to keep them subdued through fear, and this is exactly what is happening to the people of the U.K. as they try to get their democratic rights enacted.

On June 23, 2016, the British people took part in the largest ever democratic exercise in the nation’s history: They voted to leave the confines of the European Union and all of its institutions. The people voted, and the politicians acted. Unfortunately, the Westminster parliamentarians acted in none but their own interest.

More than two years later and Britain is still shackled to a supranational organization that is all too happy to punish the country as an example to others who dare to try to leave.

Project Fear

The entirety of the U.K. establishment has taken it upon themselves to carry out the greatest propaganda exercise the land of Shakespeare has ever witnessed.

Welcome to Project Fear. The poor folk of Britain who chose to turn their backs on the foreign overlords of the European Council and Presidency which cannot be unelected, cannot be voted for, and who have the sole power to make law within the European Union. These are the same institutions, along with the current U.K. government, which are now in the process of trying scare Brits out of their minds.

Here are some of the Project Fear predictions the government has made:

• No clean drinking water.

• Food shortages.

• No insulin for diabetics.

• Shortages of medicine.

• No more sandwiches (yes, really).

• Risk of “super-gonorrhea” epidemic.

• Immediate recession.

• Every family thousands of pounds poorer.

• No planes allowed through other nations’ aerospace.

• The south of England becomes a carpark for trucks that were previously engaged in barrier-free trade between nations.

All these trials and tribulations are being presented by the government and the establishment media as undisputable future events in order to terrify the poor slobs of Britain.

The Plan

The idea behind Project Fear is to get the nation so scared that when the government eventually decides to call for a second referendum on the Brexit decision – which they will – the sheep will vote in the “correct” way.

How do we know this is what is happening? Well, it has happened before, in every country that ever voted to leave the E.U. or reject a new treaty that pushed for greater integration into the European whole. In France and Ireland, the government and media launched concerted attacks against the voters, and then, quelle surprise, asked the public to vote again … just to be sure they had actually voted for what they really wanted.

To ensure a second public vote on Britain’s continued membership of the European Union, Prime Minister Theresa May has capitulated to every demand made by the European Presidency. Why? Because the people will see that May’s “deal” is actually worse than being tethered to the sclerotic union, and this has surely been done on purpose.

Britain On The Ropes

It is not as though the British public are unaware that this is what is happening. Project Fear is on the lips of all, whether down the local pub, at the supermarket, or online, everyone is talking about the British government’s plans to lock the U.K. permanently into a European customs union and single market.

Has the government gone too far? There is still time to resolve the Brexit issue without dividing the nation even further. There are groups who are willing to use violence to achieve their ends, and there are those who would prefer anarchy to order. Before either of these two forces gain traction, the prime minister must act decisively and for the good of the nation.

via RSS http://bit.ly/2QQkazZ Tyler Durden

Markets’ seeming invulnerability to fears of a trade-related slowdown in 2019 has finally dissipated, and equity markets in the US have finally caught down to the rest of the world. Amid the selloff, shares of industrial giants like manufacturers of mining equipment – Caterpillar in the US and Komatsu and Hitachi in Japan – have been hit particularly hard.

And with both the WTO and executives at the world’s largest container shipping company warning that they expect a further contraction in international trade next year, it’s perhaps hardly surprising that this trend – along with  softening of commodity prices – is expected to blunt growth in demand for excavators and other mining equipment, according to the CFO of Hitachi, a manufacturer of some of the heaviest mining equipment used by industrial giants around the world.

The WTO’s trade outlook indicator showed that trade likely neared the “below trend” level during Q4.

And global trade volume has dipped this year:

Hitachi CFO Tetsuo Katsurayama told Bloomberg that demand in the year starting April 1 will probably shrink, or remain flat, following three years of growth. He tied this to falling commodity prices, as well as tensions about the US-backed trade war, fading US stimulus, China’s worsening economic outlook, continued Fed rate hikes and even the uncertainty surrounding the UK’s chaotic Brexit negotiations.

“There’s no doubt the financial situations will somewhat put the brake on investment appetite” for both construction and mining equipment, Katsurayama said in an interview in Tokyo. “We can’t separate ourselves from the financial markets.”

Growth in North America and India may not be able to compensate for a slowdown in Western Europe, the Middle East and Africa, Katsurayama said. During the current cycle, some 229,000 excavators are expected to be sold during the year ending March 31, 2019, up 4% from a year earlier and not far from the 2010 peak. Though even if demand weakens in the year beginning in April, Katsurayama said he doesn’t expect the number of units sold to fall “substantially” below 200,000 units. And an expected wave of replacements could offer a boost.

But unless the end of a US-China trade war triggers a sharp rebound in slowing trade, industrial bellweathers like Hitachi (down 40% this year), Komatsu (down 44%) and Caterpillar (down 26%), will likely continue to take it on the chin.

 

via RSS http://bit.ly/2CA8fgF Tyler Durden

Authored by Burak Bekdil via The Gatestone Institute,

• “What Turkey is going to do is unleash holy hell on the Kurds. In the eyes of Turkey, they’re more of a threat than ISIS. So this decision is a disaster.” – U.S. Senator Lindsey Graham.

• The U.S. move also could turn out to be a death-blow on Washington’s efforts to keep Tehran from further establishing itself in Syria and threatening the security not only of Israel, but of the entire Mediterranean region.

• Potential Turkish-Kurdish conflicts would further destabilize Syria and strengthen Russia. This point cannot be ignored. Turkey’s and Iran’s dependency on Russia in Syria will increase, as the trio further teams up to have a larger role in shaping Syria’s future.

• It is understandable that abstaining from the role of the world’s policeman may look consistent with Trump’s pre-election pledge to “Make America Great Again.” Nevertheless, caution is needed here: Leaving the “policing” job in the world’s most volatile and turbulent parts to un-free regimes such as Russia, China, Iran and Turkey could also damage the quest of America and others in the free world to become great again — and to remain free. The free world simply does not have the luxury — even in remote geographical areas — of allowing security to be policed by un-free state and non-state actors.

U.S. President Donald Trump’s optimism about a potential Turkish military campaign to finish off ISIS looks woefully premature. Trump taking seriously Turkish President Recep Tayyip Erdoğan’s pledge to “eradicate whatever is left of ISIS” is also problematic. ISIS and some of its offshoots are Erdoğan’s former Islamist allies. Pictured: Trump and Erdoğan talk at the NATO Summit in Brussels, Belgium on July 11, 2018. (Photo by Sean Gallup/Getty Images)

U.S. President Donald Trump’s unexpected decision to pull U.S. troops from Syria (and Afghanistan) was music to Turkish ears. Turkish President Recep Tayyip Erdoğan called it “the clearest and most encouraging statement” from Washington.

Foreign Minister Mevlüt Cavuşoğlu welcomed Trump’s abrupt decision to withdraw all 2,000 U.S. troops from northern Syria. Defense Minister Hulusi Akar vowed that that Syrian Kurdish fighters whom Turkey considers as top regional security threat, would soon be “buried in the trenches that they dig.”

The way Trump made that decision has also given new ammunition to Turkey’s pro-Erdoğan media to portray the decision as “Erdoğan’s victory.” The media, in Turkey and abroad, widely reported that Trump decided on the pullout after a Dec. 14 telephone conversation with Erdoğan. According to Washington’s official account of the conversation, the two leaders had “agreed to continue coordinating to achieve our respective security objectives in Syria.”

Long before Trump decided in favor of troop withdrawal, Turkey had been threatening a cross-border military operation against U.S, allies, the Kurds, in Syria. Although Ankara pledged maximum care to avoid clashes with the U.S. troops some observers feared an unwanted Turkish-US military conflict. Turkey’s security services had long been supplying military HQ with loads of intelligence from Arab, Kurdish and mixed population locations in northern Syria. The Turkish Air Force conducted airstrikes on Kurdish strongholds in neighboring Iraq. The Turkish military also massed troops near a town on the Syrian border, although Erdoğan seemed to agree to a delay in his planned incursion into Syrian territory, the third such operation in two years.

Now what? In its official narrative, Ankara could eradicate the remnants of the Islamic State group from Syria with just logistical help from Washington. Erdogan has openly said that military operations would also target Syrian Kurdish militants from the People’s Defense Units YPG), the military wing of the Democratic Union Party (PYD) which Turkey says is an offshoot of the PKK, a Kurdish militant group that has been fighting Turkey for autonomy or secession since 1984. Turkey, the U.S. and European Union have long designated the PKK as a terrorist organization. With the upcoming U.S. withdrawal, Turkey has won the chance militarily to challenge YGP/PYD without the risk of clashing with the U.S. troops. It is not known yet if Erdoğan, in return for securing the U.S. pullout, pledged not to engage in an all-out war with the Kurds. But Kurds remain nervous.

Syrian Democratic Forces (SDF), the main military group that allied with the U.S. in the fight against Islamic State (and made up of mainly YPG fighters), says it would have to withdraw fighters from the battle against radical jihadists to protect its borders in the event of a Turkish attack. “Fighting [Islamic] terrorism will be difficult because our forces will be forced to withdraw from the Deir el-Zor front to take up positions on the border with Turkey to stop an eventual attack,” Elham Ahmed, the co-chair of the SDF’s political wing, said in Paris.

“What Turkey is going to do is unleash holy hell on the Kurds,” Sen. Lindsey Graham, R-S.C. said on the Senate floor.

“In the eyes of Turkey, they’re more of a threat than ISIS (IS). So this decision is a disaster.” Trump’s decision complicates the Syrian theater more than just opening up a new battleground between Kurdish fighters and Turkish troops.

In any Turkish operation Tel Abyad promises to be an imminent target. Militarily speaking Turkey will wish to divide the main block of Kurdish territory into two creating a major crevice of land between Manbij and Kobane in the West and Qamishli and Hasaka in the East. In 2011 around 70% of the population of Tel Abyad was Arab (and some 25% Kurdish). The U.S. withdrawal will mean flocks of Arab fighters who were trained at military camps in Turkey, returning to the Arab-Kurdish zone to fight as Turkish proxies, fueling an Arab-Kurdish, in addition to a Turkish-Kurdish fighting. Most Arab tribes, most notably Jamilah and Bou Jarada, remain loyal to Turkey but had in the past also supported IS. That risk highlights a major down side of Trump’s plan.

Backed militarily by Turkey and returning to northern Syria some Arab tribes may be exposed to the risk of “re-recruitment” into potentially new radical Islamist groups. IS may have largely lost its institutional identity but its fighters have not disappeared from the earth. Their tactical (anti-Kurdish) alliances with Turkey-backed Arab militants may lead to new, longer-term alliances, creating various IS-like groups with various new banners and brands. That being the new setting in northern Syria, Basher al-Assad, Syria’s Russian-backed dictator, may see it totally fit to encourage new jihadists in order to win an upper hand in the “political process” (the constitutional reform process) that will theoretically shape the future of his country.

The Syrian theatre is too complex to feature a zero-sum game. The state and non-state actors that cheered Trump’s decision to withdraw are: Erdoğan’s Turkey, which wants to build a Sunni, Islamist and pro-Turkey administration in northern Syria; Russia, whose now-augmented power in Syria will also augment Assad, and Iran, which will now gain new advances in Syria.

Potential Turkish-Kurdish and Arab-Kurdish conflicts would further destabilize Syria and strengthen Russia. This point cannot be ignored. Turkey’s and Iran’s dependency on Russia in Syria will increase, as the trio further teams up to have a larger role in shaping Syria’s future.

On December 19, foreign ministers from the three countries met in Geneva to cement their increasing convergences over Syria. Russia must be especially pleased to have a new opportunity to weaken even further Turkey’s deeply problematic ties with its Western and NATO partners. Potential Turkish-Kurdish and Arab-Kurdish conflicts would further destabilize Syria and strengthen Russia. This is a point that cannot be ignored.

The U.S. move also could turn out to be a death-blow on Washington’s efforts to keep Tehran from further establishing itself in Syria and building a Shia land bridge all the way to Lebanon and therefore threaten the security not only of Israel, but of the entire Mediterranean region.

In September, speaking on the margins of the UN convention, Trump’s National Security Advisor John Bolton said that the U.S. forces would remain in Syria until Iran and its proxies departed. With its numerous potentially serious drawbacks, Trump’s decision deeply discredits the U.S. administration, its key figures — and Trump himself.

The U.S. president said on Twitter December 23 that Turkey promised it would ensure that ISIS is defeated in Syria. He said:

“President Erdoğan of Turkey has very strongly informed me that he will eradicate whatever is left of ISIS in Syria…. and he is a man who can do it plus, Turkey is right ‘next door.’ Our troops are coming home!”

Trump’s optimism about a potential Turkish military campaign to finish off ISIS looks woefully premature. Trump taking seriously Erdoğan’s pledge to “eradicate whatever is left of ISIS” is also problematic. ISIS and some of its offshoots are Erdoğan’s former Islamist allies. The lines of alliance and hostility are blurred but always open to further change.

Erdoğan’s word is fine — but probably not good enough. First, Erdoğan’s primary motive to send the Turkish army into Syria is not to fight jihadists. He may even have less appetite to fight jihadists who may come up under non-ISIS banners. Some groups of jihadists (aspiring but not yet ISIS 2.0) are his allies and proxies. It would have been wiser if Trump got assurances that Erdoğan will finish off every Islamist/jihadist group in Syria, not just what remains of ISIS. If one can actually trust Erdoğan’s word, that is. Erdogan has a history of not being reliable.

It is understandable that abstaining from the role of the world’s policeman may look consistent with Trump’s pre-election pledge to “Make America Great Again.” Nevertheless, caution is needed here: Leaving the “policing” job in the world’s most volatile and turbulent parts to un-free regimes such as Russia, China, Iran and Turkey could also damage the quest of America and others in the free world to become great again — and to remain free. The free world simply does not have the luxury — even in remote geographical areas — of allowing security to be policed by un-free state and non-state actors.

via RSS http://bit.ly/2GREEn0 Tyler Durden

After last March’s not so shocking vote by China’s National People’s Congress to overwhelmingly pass a constitutional amendment to eliminate China’s presidential term limits, paving the way for President Xi Jinping to stay in power after his second term ends in 2023, it appears Russia is now inching toward the same scenario at a moment when, as one Moscow-based analyst put it, “The general sense is that there’s no one to replace Putin as the guarantor of the system.”

Just prior to Russian President Vladimir Putin getting elected to his final possible term allowed under the constitution last March, Newsweek announced The End of The Putin Era is in Sight — looking ahead to the end of his term in 2024 — but even this could be in doubt, perhaps predictably, as this week Russian parliament raised the possibility of altering the constitution as rumors continue to circulate that the Kremlin is seeking ways to keep the popular 66-year old multi-term leader in power.

Currently the Russian constitution prohibits a president from being elected for more than two consecutive terms, but on Tuesday during a scripted meeting with Putin the speaker of Russia’s parliament, Vyacheslav Volodin, broached the issue, saying according to Bloomberg:

“There are questions in society, esteemed Vladimir Vladimirovich,” Volodin said, addressing Putin in the respectful form, according to a Kremlin transcript. “This is the time when we could answer these questions, without in any way threatening the fundamental provisions” of the constitution, he added. “The law, even one like the Basic Law, isn’t dogma.”

Noting that the current constitution was drafted a quarter-century ago, Volodin continued, “That was a very difficult time. A time when the state stood on the edge of collapse, when social obligations weren’t fulfilled, when our citizens lost faith in the authorities.” He proposed the possibility of a formal review of the constitution overseen by Constitutional Court judges and a panel of experts to examine “how the Constitution and the norms of development of the Constitution suit the tenets that were passed.”

During the meeting Putin didn’t appear to give comment in response to the proposal, but it’s being widely viewed as the first subtle opening to a process Putin will give a quiet nod to, and analysts suggest a constitutional change could be easily accomplished with the backing of the president. 

When asked about the possibility, a presidential spokesman said Wednesday, “There’s no position on this issue yet” and further noted there’s no current amendments being worked on or considered. 

But earlier this month Putin described the constitution as “not some fossilized legal construct but a living, developing organism,” and at a press conference last week vaguely mentioned that any changes to the Basic Law “a matter for broad civic discussion,” according to Bloomberg.

Perhaps the best quote on the issue came last Spring, however, when Putin was presented with a question of his prospects after 2024 just after his reelection to a second consecutive term. He said, “At present I don’t plan any constitutional reforms.” And when asked about seeking office in 2030, as allowed by current law, he quipped, “What am I going to do, stay until I’m 100 years old? No.”

via RSS http://bit.ly/2BGyPTQ Tyler Durden

Authored by John Whitehead via The Rutherford Institute,

“There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men.”

– Ludwig von Mises

The government has shut down again. 

At least, parts of the government have temporarily shut down over President Trump’s demand for a $5 billion border wall.

Yet while these political games dominate news headlines, send the stock market into a nosedive, and put more than 800,000 federal employees at risk of having to work without pay, nothing about this government shutdown will diminish the immediate and very real dangers of the American Police State with its roadside strip searches, government surveillance, biometric databases, citizens being treated like terrorists, imprisonments for criticizing the government, national ID cards, SWAT team raids, censorship, forcible blood draws and DNA extractions, private prisons, weaponized drones, red light cameras, tasers, active shooter drills, police misconduct and government corruption.

Shutdown or not, war will continue. Drone killings will continue. Surveillance will continue. Censorship and persecution of anyone who criticizes the government will continue. The government’s efforts to label dissidents as extremists and terrorists will continue.

Police shootings will continue. Highway robbery meted out by government officials will continue. Corrupt government will continue. Profit-driven prisons will continue. And the militarization of the police will continue.

Indeed, take a look at the programs and policies that are not affected by a government shutdown, and you’ll get a clearer sense of the government’s priorities, which have little to do with serving taxpayers and everything to do with amassing money, power and control.

Not even NORAD, the North American Aerospace Defense Command that tracks Santa Claus’ route across the globe, will have its surveillance efforts curtailed one iota.

Surveillance will continue unabated. On any given day, whether you’re walking through a store, driving your car, checking email, or talking to friends and family on the phone, you can be sure that some government agency, whether the NSA or some other entity, is listening in and tracking your behavior. Police have been outfitted with a litany of surveillance gear, from license plate readers and cell phone tracking devices to biometric data recorders. Technology now makes it possible for the police to scan passersby in order to detect the contents of their pockets, purses, briefcases, etc. Full-body scanners, which perform virtual strip-searches of Americans traveling by plane, have gone mobile, with roving police vans that peer into vehicles and buildings alike—including homes. Coupled with the nation’s growing network of real-time surveillance cameras and facial recognition software, soon there really will be nowhere to run and nowhere to hide.

Government spying will continue unabated. Government shutdown or not, the National Security Agency (NSA), with its $10.8 billion black ops annual budget, will continue to spy on every person in the United States who uses a computer or phone using programs such as PRISM and XKEYSCORE. By cracking the security of all major smartphones, including iPhone, Android, and Blackberry devices, NSA agents harvest such information as contacts, text messages, and location data. And then there are the NSA agents who will continue to use and abuse their surveillance powers for personal means, to spy on girlfriends, lovers and first dates.

Global spying will continue unabated. The NSA’s massive surveillance network, what the Washington Post refers to as a $500 billion “espionage empire,” will continue to span the globe and target every single person on the planet who uses a phone or a computer. The NSA’s Echelon program intercepts and analyzes virtually every phone call, fax and email message sent anywhere in the world. In addition to carrying out domestic surveillance on peaceful political groups such as Amnesty International, Greenpeace and several religious groups, Echelon has also been a keystone to the government’s attempts at political and corporate espionage.

Egregious searches will continue unabated. Under the pretext of protecting the nation’s infrastructure (roads, mass transit systems, water and power supplies, telecommunications systems and so on) against criminal or terrorist attacks, Transportation Security Administration (TSA) task forces (comprised of federal air marshals, surface transportation security inspectors, transportation security officers, behavior detection officers and explosive detection canine teams) will continue to do random security sweeps of nexuses of transportation, including ports, railway and bus stations, airports, ferries and subways. Sweep tactics include the use of x-ray technology, pat-downs and drug-sniffing dogs, among other things.

The undermining of the Constitution will continue unabated. America’s so-called war on terror, which it has relentlessly pursued since 9/11, has chipped away at our freedoms, unraveled our Constitution and transformed our nation into a battlefield, thanks in large part to such subversive legislation as the USA Patriot Act and National Defense Authorization Act. These laws—which completely circumvent the rule of law and the constitutional rights of American citizens, re-orienting our legal landscape in such a way as to ensure that martial law, rather than the rule of law, our U.S. Constitution, becomes the map by which we navigate life in the United States—will continue to be enforced.

Militarized policing will continue unabated. Thanks to federal grant programs allowing the Pentagon to transfer surplus military supplies and weapons to local law enforcement agencies without charge, police forces will continue to be transformed from peace officers into heavily armed extensions of the military, complete with jackboots, helmets, shields, batons, pepper-spray, stun guns, assault rifles, body armor, miniature tanks and weaponized drones. Having been given the green light to probe, poke, pinch, taser, search, seize, strip and generally manhandle anyone they see fit in almost any circumstance, all with the general blessing of the courts, America’s law enforcement officials, no longer mere servants of the people entrusted with keeping the peace, will continue to keep the masses corralled, under control, and treated like suspects and enemies rather than citizens.

SWAT team raids will continue unabated. With more than 80,000 SWAT team raids carried out every year on unsuspecting Americans for relatively routine police matters and federal agencies laying claim to their own law enforcement divisions, the incidence of botched raids and related casualties will continue to rise. Nationwide, SWAT teams will continue to be employed to address an astonishingly trivial array of criminal activity or mere community nuisances including angry dogs, domestic disputes, improper paperwork filed by an orchid farmer, and misdemeanor marijuana possession.

Overcriminalization will continue unabated. The government bureaucracy will continue to churn out laws, statutes, codes and regulations that reinforce its powers and value systems and those of the police state and its corporate allies, rendering the rest of us petty criminals. The average American now unknowingly commits three felonies a day, thanks to this overabundance of vague laws that render otherwise innocent activity illegal. Consequently, small farmers who dare to make unpasteurized goat cheese and share it with members of their community will continue to have their farms raided.

The shadow government— a.k.a. the Deep State, a.k.a. the police state, a.k.a. the military industrial complex, a.k.a. the surveillance state complex—will continue unabated. This corporatized, militarized, entrenched bureaucracy that is fully operational and staffed by unelected officials will continue to call the shots in Washington DC, no matter who sits in the White House or controls Congress. By “government,” I’m not referring to the highly partisan, two-party bureaucracy of the Republicans and Democrats. Rather, I’m referring to “government” with a capital “G,” the entrenched Deep State that is unaffected by elections, unaltered by populist movements, and has set itself beyond the reach of the law.

These issues are not going away.

They are the backbone of an increasingly aggressive authoritarian government, formed by an unholy alliance between the mega-corporations with little concern for the Constitution and elected officials and bureaucrats incapable or unwilling to represent the best interests of their constituents.

When it comes right down to it, no matter how long a government shutdown lasts, it will remain business as usual in terms of the government’s unceasing pursuit of greater powers and control.

So where do we go from here?

If public opposition, outright challenges, and a government shutdown don’t stop or even slow down the police state, what’s to be done?

Do what you must to survive.

Go to work, take care of your family, pay off your debts.

All the while you’re doing those things which allow you to survive from one day to the next, plan for the future and strive for freedom.

Pay attention to the political structure that is being created in the shadows, the economic system that is chaining us down with debt, and the feudal, fascist society borne out of the marriage of government and big business.

Avoid the propaganda mills posing as news sources.

Express your outrage, loudly and tirelessly, to the government’s incursions on our freedoms.

Act locally—taking issue with any and every encroachment on your rights, no matter how minor, whether it’s a ban on goat cheese or installations of red light cameras at intersections and on school buses—because reclaiming our rights from the ground up, starting locally and trickling up, remains our only hope.

Resistance may seem futile, it will be hard, and as I make clear in my book Battlefield America: The War on the American People, there will inevitably be a price to pay for resisting the emerging tyranny, but to the extent that you are able, RESIST.

via RSS http://bit.ly/2RgzzJ7 Tyler Durden