Tag: finance

President Trump and Congressional Republicans have already abandoned two previous attempts to secure funding for the president’s promised border wall after forcing two brief partial government shutdowns. But with Democrats preparing to take control of the House in January, the president is ready to give it one last shot.

At least that’s what he told Politico during an interview published Wednesday morning. The president said he would veto any funding bill that doesn’t include $5 billion in appropriations to start building his wall on the border. To avert a shutdown, Congress must pass – and the president must sign – seven appropriations bills that have already been negotiated before midnight on Friday Dec. 7.

President Trump apparently still believes that Republicans wouldn’t suffer any political fallout from a shutdown (particularly if it’s done in the name of border security); instead, Democrats would shoulder most of the blame. And given the increasingly violent confrontations between border patrol agents and members of a caravan of migrants from Central America, Trump believes the political winds right now are particularly favorable for approving the wall.

Sitting at the Resolute Desk in the Oval Office, with a stack of papers, magazines and a soda at the ready, Trump said he now believes that a pitched battle over the border is a “total winner” politically for his party, and a loser for Democrats.

“I don’t do anything…just for political gain,” Trump said. “But I will tell you, politically speaking, that issue is a total winner. People look at the border, they look at the rush to the police, they look at the rock throwers and really hurting three people, three very brave border patrol folks – I think that it’s a tremendous issue, but much more importantly, is really needed. So we have to have border security.”

His insistence on $5 billion for the wall — “I am firm,” he said — does suggest a real risk of a partial government shutdown. Congress must pass seven appropriations bills by next Friday, or risk a lapse of funding that would interrupt operations at the Department of Homeland Security, Justice Department, State Department and other federal agencies. Democrats will take control over a slice of Washington in 37 days, the first time they’ve controlled any lever of power in Trump’s Washington.

A December shutdown would be the third under Trump, and the 20th in the past 40 years.

Trump’s insistence that he won’t accept anything less than the full $5 billion contradicts a statement he made to the Washington Post on Tuesday, when he said that he would be open to a compromise on border security with Democrats. Asked if he would be open to a compromise on DACA, Trump said he’d prefer for the courts to rule on the legality of the Obama-era policy. If they rule “properly” Trump said, the US will be able to keep the Dreamers, and he wouldn’t see any further issues. But while Democrats will almost certainly oppose Trump’s demands, the real questions is whether he’ll be able to win support from Republican “deficit hawks” like Rand Paul, who have previously balked at allocating the money for such a massive infrastructure project. For what it’s worth, Republican Whip Steve Scalise said Republicans must back Trump’s plan. “We need to be there for him,” he said.

But whether his colleagues in the leadership, who have spent months negotiating the seven funding bills, would be willing to start over remains to be seen.

If Trump doesn’t easily win support for the wall funding – a scenario that looks extremely likely – he would risk provoking another drawdown in markets, because with interest rates expected to rise in December and few expecting meaningful progress in China-US trade talks later this week, another anxiety inducing shutdown battle is the last thing the market needs.

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Authored by Vitaliy Katsenelson via RealInvestmentAdvice.com,

Our firm bought Apple shares for clients’ portfolios in 2013, and we are used to being a contrarian voice when it comes to the stock (read here and here) – we loved it when it was hated. Now we are contrarian again – this time going against the company’s faithful.

Here are key reasons why we sold our entire Apple stake just last week:

The iPhone, though indispensable, is a mature product. Since introduction of the iPhone X, as been raising prices on iPhones. For instance, last quarter iPhone sales jumped 24% despite the number of iPhones sold not changing — all growth came from higher iPhone prices. Smartphone penetration is high globally, and thus most of the growth currently comes from replacement phones. Higher prices and lack of significant incremental improvements will likely lead to elongation of the replacement cycle from two years to three (or possibly four).

Recently Apple announced that it will stop disclosing iPhone and iPad shipments. There is only one way to read this news: The iPhone is a mature, middle-aged product with a wife and two kids. Apple’s management is desperately trying to create the narrative that it is becoming a service company. The second line of Apple’s quarterly press release says, “Services Revenue of $10 Billion Reaches New All-Time High.” Apple is trying to monetize its enormous installed base of iPhones, iPads, and Macs by selling digital goods and services to their owners.

This is where we lost optimism further. Apple has done a good job of selling digital goods (apps, movies, music, space) in its digital store, but so far it has proved to be a lousy services company. Its iCloud (email, calendar, data storage) and Apple Maps have been either outright failures or much-inferior products. Apple’s email (originally known as MobileMe) and iCloud data-storage service were basically rendered irrelevant by Google’s Gmail and Google Drive (and Dropbox). Apple Maps is only in business because it is the default map software in the iPhone. Google is light years ahead in accuracy when it comes to maps — just ask anyone who ever tried using Apple Maps.

In addition to Google, Apple competes in services with another giant, Amazon.com, which is spending hundreds of millions of dollars on movies and music. Apple’s streaming music service was initially a disaster. In all fairness, it has improved, but today it is fighting an uphill battle because Apple’s walled-garden approach doesn’t allow Apple Music to work on Amazon’s and Google’s speakers. This gave plenty of breathing room for competitors, who otherwise would not have had a chance.

Then there is Siri. In the beginning it was the smartest digital voice assistant, but not anymore. Not to be disrespectful to Siri, but its IQ has been dropping rapidly in comparison to Amazon’s and Google’s assistants. Google and Amazon opened the APIs (application programming interfaces) of their digital voice assistants to other developers, and soon every appliance in your house will be responding to “Hey Google” and “Alexa.”

There are several reasons why Apple has done so poorly in services. First, it’s a product company. Macs, iPhones, and iPads are incredibly complex devices that, though they are packed with software, are released every year or every few years. Services are software — they almost require gradual, even daily improvement. You release an imperfect product and then keep improving it with continual releases. This approach seems to go against Apple’s DNA.

The second and even more important point is that Apple is facing innovator’s dilemma: Today two-thirds of Apple revenues come from the iPhone, and for that beast to survive it requires a walled garden. This is why Apple’s music doesn’t work on Amazon’s or Google’s speakers. Oh, and what about Apple’s speakers? Apple predictably took a “premium” strategy with its speakers, a strategy that worked great with Macs, iPhones, and iPads. However, the strategy has failed in the case of speakers because Apple’s product is several times more expensive than the “good enough” offerings from Google and Amazon. Moreover, the walled-garden strategy has backfired here. For instance, Apple speakers will not play Spotify, an incredibly popular music service with 75 million paying users and 150 million active users that competes with Apple’s Music. Thus, to protect its iPhone cash cow, Apple services is fighting with one arm tied behind its back.

As shareholders, we became concerned about future sales of the iPhone and not highly confident that Apple’s service strategy will bear fruit, and herein lies the biggest problem for Apple: It needs a new huge product category. (The Apple Watch was a mildly successful product, but in the context of $265 billion of sales, it was a rounding error.) A car was supposed to be that category — it’s the largest product category globally — but, according to the New York Times, Apple has changed its car strategy several times and has basically given up on that category.

When Apple stock was lower, we did not have to worry as much about slower growth, but now we do – so we got out.

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President Trump made his frustration with GM abundantly clear on Tuesday when he threatened to cut all EV subsidies to the Detroit carmaker. But on Wednesday both the president, this time joined by Treasury Secretary Steven Mnuchin, took the administration’s attacks on GM to their next logical endpoint: Demanding that the federal bailout recipient return the $11.2 billion loss eaten by taxpayers from the federal bailout that the company received during the depths of the financial crisis.

“If GM doesn’t want to keep their jobs in the United States, they should pay back the $11.2 billion bailout that was funded by the American taxpayer,” read a tweet from a Trump fan account that the president and Mnuchin retweeted. Trump also retweeted two tweets about illegal immigration.

If GM doesn’t want to keep their jobs in the United States, they should pay back the $11.2 billion bailout that was funded by the American taxpayer.

— The Trump Train 🚂🇺🇸 (@The_Trump_Train) November 28, 2018

GM shares slid after Trump’s tweets Tuesday afternoon, but GM stock futures showed little immediate reaction to Trump’s threat. GM received billions in bailout money to shore up its troubled financial arm GMAC in 2008. After spinning off the subsidiary (which now trades as Ally Financial), GM paid back the bailout money several years later, saddling the Treasury with a more than $11 billion loss.

After meeting with GM CEO Mary Barra, Larry Kudlow told reporters on Tuesday that he had conveyed the president’s anger to Barra, and explained that Trump feels betrayed by GM, and that he believes the carmaker “turned their back on him” by announcing the layoffs and plant closures, particularly after the Trump tax cuts handed billions of dollars back to corporations and allowed them to repatriate overseas cash.

Politicians on both sides of the US-Canada border were outraged by GM’s Monday announcement that it would close 5 North American plants (and two foreign plants) and fire nearly 15,000 workers in the US alone. Trump blasted the company for opting for layoffs and closures in the US while plants in Mexico and China remained open.

While we await a response from GM management, shareholders are a little nervous:

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Having surged back to 2018 highs in the last few days, dollar bears are hoping for a signal from Fed chair Powell today that a pause in its interest-rate hiking cycle is looming in 2019.

However, as Bloomberg’s David Finnerty warns, they shouldn’t get their hopes up, even if the Fed delivers.

• All eyes will be on Chairman Jerome Powell Wednesday and minutes of the November Fed meeting Thursday for validation of the idea that a slower path for growth, plunge in oil prices and rise in financial-market volatility mean the quarterly pace of rate hikes will be due for a pause in the foreseeable future.

• A pause is certainly priced in – while the Fed’s September dot plot signaled four more rate hikes through end 2019, investors have currently only discounted just over two over that period.

• Given that expectation, it’s questionable how much damage official confirmation of a pause would do to the greenback.

• What might be more important over the near-term is the direction of U.S. equities, which have been negatively correlated with the currency recently. Another slump on Wall Street could well spur dollar gains.

• The logic here is that carnage in equities — starting in the U.S. and spreading wide — spurs investors to the dollar as the ultimate haven because of its status as the world’s dominant reserve currency.

• Rather than the Fed, the upcoming meeting between Presidents Donald Trump and Xi Jinping may prove the pivotal event in coming days. Any failure to get at least a cease-fire in the U.S.-China trade war could see equity turmoil surging anew — in turn spurring haven demand for the dollar

• Bloomberg’s Dollar Spot Index is hovering ominously close to this year’s high. Don’t be surprised if its rally continues before year-end if equities can’t stabilize.

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With the US economy firing on all four cylinders heading into the 3rd quarter, largely thanks to the latent effects from Trump’s fiscal stimulus, the BEA released its second estimate of Q3 GDP which confirmed what we learned one month ago, namely that the US economy grew at an annualized rate of 3.5%, in line with both expectations and the first estimate released a month ago.

Combined with the 4.2% GDP growth in the second quarter,, the results capped the best back-to-back quarters since 2014. At the same time, growth is projected to moderate this quarter. Furthermore, just like last month, a quick look at the internals reveals some ugly details below the surface.

While household spending remained strong, rising 3.6% after 3.8% in Q2, the largest increase since Q4 2014, it shrank from the first estimate of 4.0%, and missed expectations of 3.9%, contributing 2.45% of the bottom line 3.500% GDP print (below the 2.69% in the first estimate), the main reason why the US economy grew as fast as it did in the third quarter was a build up in inventories, which contributed even more than was previously estimate, or some 2.27%, or 65% of the bottom line number. This was the biggest quarterly inventory stocking since the last quarter of 2011.

The biggest change from the prior report on GDP came from stronger business investment offsetting the decline in personal spending, while most other categories were in line with earlier readings.

Other revisions included an improvement in equipment spending which was revised up to a 3.5% rise from a 0.4% gain, while investment in structures showed a 1.7% drop compared with a previously reported decline of 7.9%.

Net exports subtracted 1.91 percentage point from growth, while inventories added provided a 2.27 point boost.

All other components of GDP were ugly, with nonresidential fixed investment, or spending on equipment, structures and intellectual property shrinking to 2.5% in 3Q after rising a blistering 8.7% in the prior quarter. Government spending increased at a 2.6 percent rate, revised from 3.3 percent. That added 0.44 point to growth.

Housing posted a third consecutive drag on GDP growth and reaffirmed that the industry has entered a broad slowdown. Residential investment fell 2.6% compared with an initially reported contraction of 4% .

Here is a breakdown of the less than stellar components:

• Fixed Investment added 0.25% from the bottom line number
• Exports subtracted -0.55% from the bottom line number
• Imports subtracted -1.36% from the bottom line number

In other words, between CapEx and Net Trade, the US economy actually contracted by 1.7%.

The final offset was government consumption which added 0.55% in Q3, resulting in the following breakdown

Today’s report also showed that corporate pretax earnings rose 10.3% annualized from a year earlier, the most in six years, after a 7.3% advance in Q2:

• Profits of domestic nonfinancial corporations increased 5.1% after increasing 4.2%.
• Profits of domestic financial corporations decreased 1.7% after increasing 3.7%.
• Profits from the rest of the world increased 3.7% after decreasing 0.9%.

Gross domestic income rose 4%, the most since 2014.

Other details from today’s GDP report showed that the economy may have indeed peaked, with core PCE rising just 1.5% in 3Q after rising 2.1% prior quarter, missing expectations of a 1.6% print. The GDP price index came in line at 1.7% in 3Q after rising 3.0% prior quarter.

Separately, final sales to private domestic purchasers q/q rose 3.1% in 3Q after rising 4.3% prior quarter.

Meanwhile, rising risks to the outlook include the escalating trade war with China, a slowing global demand (see today’s Tiffany’s results) and rising borrowing costs, while the boost from President Donald Trump’s fiscal stimulus is expected to end next year.

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The October advanced trade balance (deficit) of goods worsened to $77.2 billion ($77.0 billion expected) from $76.3 billion in September.

• Imports rose 0.1% in Oct. to $217.764b from $217.554b in Sept.

• Exports fell 0.6% in Oct. to $140.517b from $141.303b in Sept.

This is a new record high deficit for Trump’s America…

In December 2016, the US goods trade deficit was $63.485 billion.

In October 2018, the US goods trade deficit is $77.2 billion.

A dramatic rise of almost $14 billion since Trump’s election and trade war started.

Since this is an advance print, there is no color on China trade data.

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Predictably the crisis that began on Sunday between Russia and Ukraine in the Kerch Strait is quickly worsening as Russia has announced plans to deploy more of its advanced S-400 surface-to-air missile systems to Crimea. 

Adding to tensions, Reuters has further reported that a Russian warship has been dispatched to the Sea of Azov — waters used by both countries and near where the Russian Navy seized Ukrainian vessels and crew for what Moscow condemned as “maneuvering dangerously” and illegal entry into Russian territory. 

The warship was seen departing a Crimean port by a Reuters correspondent on Wednesday and was described as the Russian navy minesweeper ship, the Vice-Admiral Zakharin, going in the direction of the Sea of Azov.

This comes a day after Ukraine’s President Petro Poroshenko issued provocative statements during a televised interview on Tuesday that his country is “under threat of full-scale war with Russia” while seeking to justify martial law.  

The Ukrainian president added that “the number of units that have been deployed along our border – what’s more, along its full length – has grown dramatically.” He referenced unspecified intelligence reports pointing to Moscow tripling its forces along the border since Crimea joined Russia in 2014. 

Though likely the plans were already in motion, the timing of the S-400 deployment announcement is designed to send a strong message to the West, which is also building up its forces as both the UK and US are reportedly injecting more military hardware and troops into Ukraine. 

According to TASS:

A division set of Russia’s S-400 Triumph air defense system has undergone tests and will soon be put on combat duty in Crimea, the Southern Military District’s press service said on Wednesday.

The personnel of the air defense missile unit of the 4th army of the Air Force and the Southern Military District deployed to Crimea has started preparing the equipment to be transported by rail to a permanent base. “In the near future, the new system will enter combat duty to defend Russia’s airspace, replacing the previous air defense system,” the spokesman explained.

The other deeply interesting aspect to the timing of the entire crisis, made more alarming for the Ukrainian population in particular after Poroshenko’s announcing the implementation of martial law until at least January to combat “growing aggression” from Russia, is that it’s occurring just days ahead the planned meeting between Presidents Donald Trump and Vladimir Putin at the G20 in Argentina later this week. 

This is 2014/15 redux. Back then, the Kiev authorities, and their media supporters, used to claim almost every week that a full-scale Russian invasion was imminent. It never came. Now, a few months out from an election he’s poised to lose, Poroshenko is at it again. https://t.co/A1jpfyMlaf

— Bryan MacDonald (@27khv) November 28, 2018

Even Reuters can’t help but observe the following crucial timing of this week’s crisis in the Kerch Strait: 

The episode risks derailing a meeting between U.S. President Donald Trump and Russian President Vladimir Putin at the G20 in Argentina later this week. Trump said on Tuesday that he might cancel the meeting due to the incident, but the Kremlin said on Wednesday it thought it was still on.

And there’s further this likely more than just rumor: “Citing sources in Ukraine’s ruling circles, Russia’s Izvestia newspaper reported that Kiev had been trying to persuade Washington – so far unsuccessfully – to open a military base in Ukraine“, according to Reuters, which noted could not be independently confirmed. 

Much about the question of whether more dramatic escalation is to follow, or if tensions will calm will likely be determined by the question of if the Trump-Putin meeting will proceed.

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While it is certainly premature to say ‘the bottom is in’, buying pressure across cryptos has been strong in the last 24 hours – raising total market cap by over $11 billion for the biggest jump since July.

Down, but not out…

image courtesy of CoinTelegraph

Bitcoin is back above $4000…

 

But it’s not just Bitcoin – the cryptospace is a sea of green this morning…

Source: Coin360

Notably, Litecoin has erased the weekend’s carnage and the rest of the cryptospace is getting close…

 

In news for institutional crypto exposure, CoinTelegraph reports the world’s second largest stock exchange Nasdaq and U.S. investment firm VanEck yesterday announced a partnership to jointly launch a set of “transparent, regulated and surveilled” digital assets products. The announcement echoes yesterday’s report from Bloomberg, citing “two people familiar with the matter,” that Nasdaq would be rolling out a Bitcoin (BTC) futures contract as early as Q1 2019.

The chairman of the world’s largest stock exchange, New York Stock Exchange (NYSE)’s Jeffrey Sprecher has also this week said he believes the survival of digital currencies as an asset class is “unequivocal.”

It appears – for now – that Michael Moro was right.

The CEO of cryptocurrency trading companies Genesis Trading and Genesis Capital Trading, said that the Bitcoin (BTC) price could bottom at $3,000 in an interview with CNBC Nov. 23. Speaking on CNBC’s “Squawk Box,” Moro suggested that the leading cryptocurrency will lose another 30 percent before bottoming at $3,000. Moro said, “You really won’t find [the floor] until you kind of hit the 3K-flat level.”

Moro addressed small resistance levels, saying that he does not think the BTC price can stabilize in “the mid-3s,” also noting that the $4,000 level was tested twice in the previous days.

The crypto trader said that long-term investors are more poised to handle BTC’s slump and wait until the price rebounds, while at the same time advising not to buy the cryptocurrency at the dip:

“This is about the fifth or sixth 75 percent-plus drawdown that we’ve seen in the 10-year history of Bitcoin. And so if you have that [long-term] lens, I don’t believe institutional investors really ultimately care where the price of Bitcoin ends in 2018, simply because they’re looking at things three to five years out.”

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In the latest confirmation that the global aspirational consumer has hit a spending wall, Tiffany’s stock plunged this morning after the company’s latest earnings confirmed that its revitalization efforts hit a pothole in Q3 as the luxury jewelery retailer’s new designs and marketing failed to lure enough shoppers entering the critical holiday period. The shares fell as much as 13% in the pre-market.

While Tiffany reported Q3 EPS of 77 cents that matched consensus estimates, net sales of $1.01 billion missed estimates of $1.05 billion, but what disappointed traders was the miss in Q3 same-store sales which rose just 3% on a constant currency basis, falling far short of the average estimate of 5.6%, and a significant slowdown from the last two quarters’ growth rate.

Broken down by region, the growth slowdown was pervasive:

• 3Q Japan comp sales constant currency +2%, estimate +9.2%
• 3Q Europe comp sales constant currency 0%, estimate +3%
• 3Q Asia Pacific comp sales in constant currency +4%, estimate +3.6%
• 3Q Americas comp sales in constant currency +5%, estimate +6.8%

Tiffany cited “mixed results” in parts of Asia, and noted “lower-than-expected spending in the third quarter attributed to Chinese tourists in the U.S. and Hong Kong and lower wholesale travel-retail sales in Korea.”

The comments were similar to those made over the last couple of months by European luxury companies like Kering, Moncler, and will heighten already rising concerns in the luxury industry about the health of Chinese spending amid reports of a customs crackdown on unauthorized imports, which one month ago led to a near record plunge in share of LVMH.

As Bloomberg notes, the jeweler enters the crucial holiday season in need of a boost, with CEO Alessandro Bogliolo and head designer Reed Krakoff seeking to re-imagine the 181-year-old jeweler to appeal to younger shoppers, but the results show work remains to be done.

Meanwhile, in an attempt to boost its appeal, the company ramped up marketing spend heading into the holidays with selling, general and administrative expenses rising 15% in the quarter as Tiffany brought on younger celebrities, such as Elle Fanning and Maddie Ziegler, to represent the brand in its advertising.

That was not enough, however, and this morning the stock tumbled over 13%, dropping the lowest level since April.

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The Brexit-related chaos of the past month sent European stocks reeling and made the pound “untradeable” (at least, for a brief time). But traders could have avoided these headaches if they had simply looked past the squabbling to understand a larger truth: Most of the squabbling between May, the Tory Brexiteers and the EU was essentially political theater orchestrated to make a revised Brexit plan where the UK achieves something closer to the “Norway-plus” model politically palatable.

And after markets were given their first peek behind the curtain earlier this week after reports that the EU wouldn’t consider a renegotiation until Parliament rejects the deal, Bloomberg has followed up with the latest indication that May’s insistence on her deal being the “best and only” deal on the table was just an example of the prime minister saying what needed to be said.

Believing that her deal stood any chance of passing would border on delusional, so any practical tactician – and by all accounts, May is nothing but practical – would, accepting this, pivot toward the next-best thing: doing “everything in their power” to strengthen the UK’s negotiating position to win more favorable terms. And it appears May has done just that.

Because, according to Bloomberg, just days after her Brexit plan was “finalized” during a meeting of EU states over the weekend, the prime minister is reportedly ready to public acknowledge a longstanding reality: That, ultimately, Parliament must be allowed to write their own deal if anything is expected to pass. And to that end, May has reportedly dropped her resistance to parliamentary rewrites, and is instead moving toward holding a “meaningful vote”, which would allow Parliament to propose amendments to her deal before voting on which amendments to accept, and which to deny, before approving the revised agreement.

Traders welcomed the news, as the pound climbed back above $1.28 to just below its highs from Tuesday.

Given the EU’s intransigence on the issue, this appears to be the best course for ensuring that the UK isn’t trapped in the trade bloc by the “Irish backstop.”

The plans were disclosed by a U.K. official who asked not to be identified, because the plans are private. Parliamentary business managers from the different parties are still hammering out the details of how the vote will be held, but the government’s aim is to produce a plan that its opponents, internal and external, can’t object to.

Officials believe that no alternative to May’s option will command a majority in the Commons either, and a series of votes on the amendments could demonstrate that. Labour members are likely to be ordered not to support a second referendum, for example.

If other options are indeed voted down, it will add force to May’s argument that hers is the only way to avoid crashing out of the EU with no deal.

For those who aren’t intimately familiar with parliamentary proceedings in the UK, here’s a rundown of how the “Meaningful Vote” would play out:

• Starting Tuesday Dec. 4, there will be five days of eight-hour debates, with a break from Dec 7-9.
• Each day’s debate will be led by a different Cabinet minister, focusing discussion on their brief.
• Voting will start at 7 p.m. on Tuesday Dec. 11.
• The Commons will vote on a series of amendments to the government’s motion, likely to include calls for another referendum, or for the government to seek a customs union with the European Union.
• Each vote will take around 15 minutes.
• Finally, the Commons will vote on the government’s motion, including any amendments that passed.

But just as May must maintain the perception that she is doing everything she can to pass the deal in its current form, the EU can’t be seen giving the UK a pass. So shortly after Bloomberg published its report, the Guardian, a British newspaper, followed up with what sounded like a warning: If the Commons doesn’t accept the deal in its current form, the EU will start preparing for a “no deal” Brexit scenario. EU leaders quoted in the story insisted that negotiations have been closed, and that the notion the deal could be changed or reopened is “completely unrealistic.”

Brussels will also plough on with the ratification process of the withdrawal agreement in the European parliament to ensure the bloc is prepared for whatever British politics throws up in the coming months.

“Everyone needs to take their own responsibility,” an EU source said, in an echo of comments recently made by the EU’s chief negotiator, Michel Barnier.

The EU is rallying around Jean-Claude Juncker’s insistence that the deal on the table is the “only one possible” given the UK’s decision to leave the single market and customs union.

The idea that the bloc would revise the withdrawal agreement, including the contentious backstop solution for avoiding a hard border on the island of Ireland, is described as “completely unrealistic.”

But the objections of the other EU states would likely do little to dampen support for a “pivot” toward a plan that would lay the groundwork for “Norway plus”, an alternative that has been gaining traction in recent days.

The possibility of the British government pivoting towards membership of the European Economic Area (EEA) and the European Free Trade Association following a rejection in parliament of the prime minister’s deal is gathering momentum in the Commons.

Under the plan, known as “Norway-plus,” with reference to the Nordic country’s arrangements with the bloc, the UK would also stay in a customs union with the EU.

And as if they needed one more reason to oppose the deal, the Financial Times reported Wednesday that May’s own government has forecast that her Brexit plan would shrink the UK’s GDP by 4 percentage points over the long term. But this forecast is essentially a garnish for Brexiteers’. They already have all the leverage they need to ensure that their preferred deal wins out.

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