Tag: finance

Our economy’s journey to becoming Japan will take one giant step forward if former IMF chief economist Olivier Blanchard has his way. His “outside the box” solution for our next recession? The Fed should buy stocks, finance the federal deficit and buy goods. He detailed this thought provoking idea at the Boston Fed’s monetary policy conference that took place this past weekend.

This thinking comes as a result of a “general sense [that] the Fed has to re-think its approach to combating recessions,” according to a new MarketWatch article.

Why must it re-think its approach? Because the Fed itself has eliminated most of its tools used to fight recessions by keeping the United States in a lower interest rate environment for too long, instead of raising rates as the market roared. Now we have a stock market at all time highs and record debt levels yet again – but this time with a Federal Reserve that has far fewer options to combat the next recession than it ever has had in the past and with a neutral rate of interest that is lower than it has ever been in the past.

Fascinatingly enough, economists are only now starting to realize that this lack of firepower could be a detriment to the Federal Reserve in the future. Blanchard stated over the weekend that the Fed could probably handle a small recession, but a more major recession, like the one we experienced in 2008, should prompt the Fed to resort to “previously unheard of policies”.

When interviewed by MarketWatch, Boston Fed President Eric Rosengren stated that he wasn’t sure there would be support for this type of monetary policy, as Blanchard was describing it. We’d be interested in revisiting his answer in the midst of a crisis. 

Rosengren went on to say “We definitely have tools. The question is whether we have the sharpest tool in the shed and whether we’re going to be able to deploy them.”

Allow us to be the first to guess that they do not have “the sharpest tools in the shed”, in more ways than one. 

Apparently convinced that two wrongs do in fact make a right, Rosengren then stated he would be “a strong advocate” of QE the way that we know it best: asset purchases and rate cuts. Such a cavalier attitude about this type of damaging monetary policy belies the larger problem of the Fed’s balance sheet, which stands at over $4 trillion with no signs of lightning up in any material way.

But Blanchard doesn’t seem to think that this $4 trillion dollar balance sheet is even a problem. “If we need it, we could clearly double it and nothing terrible would happen,” Blanchard reportedly said.

He concludes that he is not sure why people believe the Fed should only buy assets, but not goods.

“We have this notion that it is only OK for the central bank to buy assets and not goods. But that’s a restriction we imposed on ourselves,” Blanchard is quoted as saying.

Yes, how bizarre that the Fed doesn’t buy, say, baseball cards to boost the “wealth effect” at the card collector level, or maybe Tesla Model 3s, just because.

Of course, Neither Blanchard nor Rosengren seem to realize that the reason we are in a place where central banks had to buy $15 trillion in assets to begin with is because the Fed and this type of thinking has put us in to begin with. What will this discussion look like in another 10 years, after the next crisis? We don’t know, though we are sure every problem we’ll be dealing with by then will be exactly what we deserve.

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For the last few months of summer, amid dwindling volumes and the deafening roar of event risks around the world, US equity markets have meandered higher on a bed of ever-decreasing volatility as machines (and corporate share-buy-backers) bought every headline dip, sold every vol rip, and generally confirmed Trump’s narrative that everything is awesome.

Even as the economic data is dismal…

But as former fund manager and FX trader Richard Breslow warns, algorithms aren’t investors. They are very aggressive day traders. Nothing more than that.

They key off of market depth, flows and momentum. They interpret the world strictly in the moment. Humans shouldn’t try to emulate that behavior. It doesn’t pay off over any meaningful time period. You may be able to get away with it for a day or two.

Via Bloomberg,

The calendar is conspiring to make this a day where in Europe and North America, participation is going to be light and interest in events even less so.

It’s quiet.

That doesn’t mean all the pressures that have been roiling markets are suddenly spent and it’s time to get the party started again. But that seems to be the recommendation of the day.

We are all aware of the amusing comments from a gathering on the banks of Lake Como in Italy. They were followed by a slew of commentators gushing over the attractiveness of the BTP market. I know people like to tout the nice risk reward of a trade by saying the stop is only half as far away as the objective. Actual flesh and bones investors should require the fundamental story to carry the same sort of profile. Especially if they are going to execute another bunch of trades, or even re-handicap the ECB’s intentions, based upon it.

Carry is a powerful narcotic. Most efficaciously pursued when there is a reasonable expectation of some semblance of calm. A majority of the people I talk to don’t think volatility is suddenly preparing to resume its gloriously delicious slumber. Stop watching the e-mini futures. Yet, I’ve got an inbox with oodles of folks telling me things are “overdone”, luscious opportunities are beckoning and all we have to do is winnow out the wheat from the chaff.

That may be true and I’m being overly cautious. But dismissing the concept of “contagion” as a momentary, panicky phenomenon may equally be overly bold. Especially as I’m staring at a launchpad view that reminds me that the MSCI Emerging Markets Index made a new low on the year just this morning. And their EM Currency Index, at least on my charts, isn’t screaming, “quick, catch my falling knife.”

I detest the concept of purchasing power parity. But I understand its potential allure. If it does have any usefulness, it is over a long period of time. The same is true, on both counts, trying to analyze currency movements in terms of correcting for, or exacerbating trade flows and current account deficits. It’s risky, and not very nice, to talk to traders as if they are economists.

It’s probably a good day to take a deep breath and see how prices play out. It won’t be the last chance you’ll have to get involved. Aside from basking in some feel-good comments and getting excited by the lull, you need to ask, what, if anything, has changed.

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One of the oddities of the ongoing trade war between the US and China, is that while Beijing has been hammered with a stock market now deep in bear market territory, sliding commodity prices and an economy which may soon stumble as a result of a collapsing credit impulse resulting from the crackdown on shadow banking and P2P online lenders, the US has been mostly spared from the consequences of this trade feud, with stocks near all time highs and with consumer and company confidence at euphoric levels.

Which brings us to the biggest question on investor minds today: when will the US be finally feel the pain from trade war?

In a recent note, Deutsche Bank offers an answer: as soon as the $200BN in additional tariffs proposed by Trump goes live.

As the bank’s strategist Zhiwei Zhang notes, the coming round of tariff targets 200bn Chinese exports (not including the latest proposal of an additional $267bn in tariffs floated last Friday) is four times larger than the tariffs already charged on the 50bn Chinese exports. But the actual “damage” to the US economy and consumers is likely to be a lot more than four times bigger. Deutsche Bank reached this conclusion by analyzing the US government’s decisions on tariffs announced so far.

According to the analysis, it turns out there are a lot of interesting details from the US announcements that can help to gauge the coming “pains” from the trade war.

The first $50bn list contains 1,333 tariff lines of products. It was based on “extensive interagency economic analysis”, and would “target products that benefit from China’s industrial plans”, such as Made in China 2025, while “minimizing the impact on the U.S. economy”. The second $200bn list share the same considerations on US economy and consumers, though China’s industrial policy was no longer a focus. All finalized lists also took into account public comments received.

What do these criteria mean in practice? Zhiwei built a model to explore what Chinese exports the US government has preferred to target for tariff, and what they have preferred to avoid. The US government has so far made four rounds of decisions related to tariffs on China’s exports, as illustrated in the chart above. Thousands of tariff lines were considered and 1097 lines (50bn) were eventually picked in the first three rounds of decisions, and the 6031 lines (200bn) now under review for the fourth round of announcement. A number of explanatory variables seem to fit the official claims which could actually explain these tariff choices. Two factors appear critical to their choices:

1. Current tariffs largely avoided consumer products. This is in line with the US government’s goal to limit the impact on US consumers. Among the 50bn of goods currently being tariffed, only 3.7bn are consumer products.
2. Reliance on China exports is important too. This is measured by China’s share in total US imports of the same product. If China’s share is low, it shouldn’t be too difficult for the US to switch to suppliers in other countries. The higher China’s share is, the more difficult it would be to find substitutes, and the more disruptive the tariff would be on the US economy. Average China import share was only about 20% in the 50bn list.

So far the US have carefully avoided consumer and China dependent products. As a result, the trade war so far has had little impact on US economy and consumers.

But this is becoming harder as the tariff list expands to the next 200bn. Within the currently proposed 200bn list, about 78bn are consumer products (Figure 7). These include different types furniture (24bn), travel bags(2.2bn), vacuum cleaners (1.8bn), vinyl flooring(1.7bn), window/wall air conditioners (1.3bn), etc. Similarly, reliance on China increases sharply for the 200bn products in tariff pipeline. China import shares are above 20% for most of the products, and for about half of them, China’s share are more than 50% ( Figure 8).

Furthermore, many of the consumer products subject to tariff also happen to have very high China import share. China’s import share is about 93% for air conditioners, 78% for vacuum cleaners, and 60-90% for various types of furniture. Therefore, we believe each dollar of tariff imposed on this 200bn list is a lot more painful for the US than one dollar of tariff imposed on the first 50bn list.

Not surprisingly, US domestic resistance on the latest $200bn list appeared stronger than before. The majority of the  industry representatives were against it during the six-day public hearing. Will the US be able to accommodate their complaints by exempting these products and finding other products to tariff instead?

Meanwhile, despite Trump’s insistence of taxing virtually all (in fact more than all) Chinese imports, the scope for finding more product to tariff is very limited. This is because the rest of the products—240bn or so that have not yet been included in any tariff lists – generally appear more prone to tariff increases. To be specific, (1) they are mostly consumer goods. among the 240bn, 200bn are consumer goods. These include big items such as cell phones (43bn), personal computers (37bn), and toys (12bn); and (2) they are also difficult to substitute from other countries. China import accounts for, on average, 70% of total imports from the world.

In other words, while so far US consumers – and capital markets – have been spared from the tit-for-tat escalation, once Trump greenlights the next round of $200BN in tariffs, US purchasers of cheap Chinese imports will find them not so cheap anymore, hitting not only the pocket book of the US consumer, but also downstream corporations who will see their profit margins shrink rapidly, and which also explains the recent panic in various Fed and private sector surveys about the growing threat of ever greater tariffs.

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Somewhere out there, a cadre of dedicated contrarians convinced they’d found the next great distressed play were thrilled when brick-and-mortar retailers from JC Penney to Macy’s to the Home Depot posted Q2 earnings that soundly beat expectations, largely thanks to resurgent consumer spending, most of it with the help of a trusty credit card…

…which helped sooth anxieties tied to President Trump’s embrace of protectionism.

The pervasive optimism this inspired lifted the entire sector, cementing consumer discretionary as the second-best performer for the month of August (behind tech, of course). But unfortunately for traders hoping for some short-term gains, this bout of enthusiasm is already proving short-lived. Retailers have given back some of those gains already this month as the myriad long- and short-term risks facing the sector drifted back into view.

And apparently, analysts at the big Wall Street banks foresee more pain in the immediate future. To wit, the Financial Times reports that Wall Street has slashed its profit forecasts for Q3 for 52 of the 89 US retailers in S&P’s retail index.

Wall Street has taken an axe to forecasts for dozens of US retailers, renewing questions about their profitability even as consumer spending buoys sales.

Projected profits for the current quarter have been reduced for 52 — almost three-fifths — of the 89 companies in S&P’s retail index over the past three months, according to a Financial Times analysis of figures collated by Bloomberg.

The downward revisions come even though a humming economy has encouraged Americans to splash out on products from skirts to games consoles.

As one analyst explained, after years of store closures, staff cuts and bankruptcy filings, the outlook for American retailers had become so bleak that investors were discounting the fact that some retailers will inevitably adapt and survive the e-commerce onslaught. In other words, “the pendulum had swung too far.”

“The pendulum swung too far: retail never died, but it’s likely not as healthy as people think, either,” said Simeon Siegel, analyst at Instinet. “After a very strong first half, it would seem management teams feel the need to reset the bar, to bring hype back to reality.”

Meanwhile, as analysts slashed expectations for retailers…

…They hiked expectations for the nemesis of everything “brick and mortar”: Amazon.

Analysts even slashed profit expectations for companies like Tiffany’s amid concerns that a growing number of retailers might reinvest their profits in capital expenditures (instead of returning it to shareholders in the form of buybacks).

Jay Sole, analyst at UBS, said investments by the companies partly explained the lowered third-quarter forecasts across the sector.

“There’s been a lot of cutbacks in retail over the past 10 years,” he said. “This year, profits have been bigger than expected, with the consumer shopping more. Companies are taking the opportunity to reinvest these extra profits into their businesses.”

Mr Sole also highlighted cost pressures. “Despite the consumer being healthy, companies are not seeing a ton of relief from cost inflation. In particular, the costs of online operations continue to rise.”

And apparently the first stirrings of sustained consumer-price inflation weren’t enough to satisfy analysts’ concerns.

Drew Wilson, portfolio manager at Fenimore, said: “The fact is that even though Amazon is not going to kill every retailer, online is going to take some capacity away. It’s still going to be a painful transition away from brick and mortar.”

“It’s a stock story, not a sector story. There’s been a lot more optimism about the sector, which for a value investor means there’s a lot less opportunity than there was.”

Of course, these concerns are nothing new. American retailers have struggled for years as e-commerce behemoths like Amazon have gobbled up market share, leaving the landscape of American cities and towns dotted with the hollowed-out husks of bankrupt big-box chains.

At any rate, the culling of the retail heard, which we have dubbed the ‘retail apocalypse’, is expected to continue. As we pointed out a few months back, more than 12,000 stores are expected to close this year, compared with last year’s 9,000. If these projections prove correct, 2018 will beat out 2017 for the highest number of store closures in a single year.

The bottom line: Some chains will inevitably endure – but retail will continue to be a sector where only the strong survive.

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Authored by Charles Hugh Smith via OfTwoMinds blog,

A funny thing happens on the way to stabilizing things by doing more of what’s failed: the system becomes even more unstable, brittle and fragile.

A peculiar faith in pushing extremes to new heights has taken hold in official circles over the past decade: when past extremes push the system to the breaking point and everything starts unraveling, the trendy solution in official circles is to double-down, pushing even greater extremes. If this fails, then the solution is to double-down again. And so on.

So when uncreditworthy borrowers default on stupendous loans they were never qualified to receive, the solution is to extend even more stupendous sums of new credit so the borrower can roll over the old debt and make a few interest payments for appearance’s sake (also known as “saving face.”)

A funny thing happens on the way to stabilizing things by doing more of what’s failed: the system becomes even more unstable, brittle and fragile.

Central banks and states have latched onto a solution akin to a perpetual-motion machine: the solution to all problems is simple: print or borrow another trillion. If the problem persists, repeat the print/borrow another trillion until it goes away.

Consider China, a nation (like many others) dependent on a vast, never-ending expansion of credit. So what happens when defaults start piling up in the shadow banking system? The central bank/state authorities conjure up a couple trillion yuan (a.k.a. liquidity) so defaults go away: here, Mr. Bad-Risk-Default, is government-issued credit so you can pay off your defaulted private-sector loan. Everybody saves face, private losses have been transferred to the public sector/state, problem solved.

Small banks over-extended and technically insolvent? Solution: print or borrow another trillion and give the insolvent bank the dough. Problem solved!

Here in the U.S., the solution to student loan debt hitting an astronomical $750 billion was to double the student loan debt to $1.5 trillion. When faced with an extreme that’s blowing up, double-down and do more of what’s failing.

Once $1 trillion of that soaring student loan debt is in default, the solution will be for the Federal Reserve/Treasury to print or borrow another trillion dollars and hand it to the debtors so they can pay off their private-sector student loans. Problem solved!

There is literally no extreme that can’t be doubled down. Tens of millions of disenfranchized folks getting restless and voting for the wrong candidates? Solution: print or borrow another trillion and distribute it as Universal Basic Income: problem solved. Repeat annually, and if it’s still not enough to quell revolt, double-down: print or borrow $2 trillion more every year to double everyone’s UBI bribe, oops, I mean entitlement.

In terms of system structure, extremes are not stable. They beg for a reversion to the mean. Extremes in finance, credit and debt are akin to monoculture crops: flood the fields with fertilizers, herbicides and insecticides, and the apparent stability of the monoculture is preserved (at great expense, but who cares? Just print or borrow another trillion.)

But the system isn’t stable. It’s brittle and fragile. Eventually some non-linear dynamic manifests: a blight that’s resistant to the herbicide destroys the crop, an insect that’s resistant explodes out of nowhere and eats the crop, etc. Pushing the system to an extreme only made it more vulnerable to an increasingly broad range of disruptors.

Systems made to appear stable by brute-force application of extremes will never be stable. Stability arises from all the features erased by brute-force application of extremes.

Debt at an extreme? Double-down. (Student loan version)

Debt at an extreme? Double-down. (China version)

Debt at an extreme? Double-down. (U.S. version)

Extremes beget extremes. Extremes of financialization lead to extremes of wealth which lead to extremes of class disparity which lead to extremes of political polarization which lead to destabilization and collapse.

By all means, double down again in the next crisis, Leadership Elites. That should destabilize the status quo for good and your privileges will go the way of all the other extremes: into the dustbin of history.

*  *  *

My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free in PDF format. 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.

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Following the recent rout in emerging markets, the biggest threat that has emerged to this bloc of nations is neither their slumping currencies – after all, this is a self-correcting mechanism which makes their exports more attractive and following a period of correction which bolsters trade and current account balances, the EM economies should see a rebound in output – neither the sharp drop in local asset prices, which while painful should also rebound once the underlying economy stabilizes. Instead, what is of highest concern to emerging markets is that with local debt at nosebleed levels, and with dollar-denominated indebtedness at all time high levels and in need of being periodically rolled over, a domino effect of defaults could emerge if the countries find themselves locked out of global capital markets.

That’s exactly what is happening now, because after a record 2017, emerging-market debt issuers issued less money abroad in June, July and August than in any summer since 2013’s taper tantrum, when fears that the U.S. was rolling back monetary stimulus triggered a broad selloff across bond markets.

As the WSJ writes, “the current falloff underscores the changing dynamics for emerging markets, which benefited from years of central bank stimulus and a recent period of synchronized global growth.” Now, with U.S. interest rates rising and with the dollar surging, making debt more expensive at a time of heightened concern over trade protectionism and domestic problems in giants like Turkey and Argentina. Incidentally, as we have shown before, it is these two nations that have some of the highest current account deficits as a % of GDP, and are in greatest need of finding foreign investors who will keep injecting capital into their economies, or else risk a sharp economic contraction if not outright depression.

Some numbers: emerging-market companies raised $28 billion in bonds outside their home market, mainly in dollars, this summer, a fall of more than 60% from last year, according to Dealogic. At the same time, governments raised $21.2 billion, a drop of more than 40%.

Today, after a year of unbridled emerging market investor euphoria, the new issuance market appears to ground to a halt: new deals are being postponed or canceled and issuers coming to market are paying far more to generate interest for their dollar debt.

Some can’t afford what investors demand: in early August, Indonesian property developer Intiland Development pulled an up to $250 million three-year bond deal despite offering a juicy yield of 11.5%. Theresia Rustandi, the company’s corporate secretary, said they withdrew the deal because of unfavorable market conditions.

Others are still finding willing investors but this comes at a price: higher interest rates. Last week, Chinese petrochemical giant Sinopec, set out to raise $3 billion in debt but ended up with $2.4 billion as investors demanded a higher return from China’s largest oil refiner.

No imminent change in sentiment is expected, as investors and bankers expect issuance to stay subdued for the rest of the year as the turmoil raging across emerging markets continues:

“You would expect volumes to be lower than in 2017, when all the stars aligned,” said Samad Sirohey, head of debt capital markets for central and Eastern Europe, the Middle East and Africa at Citigroup . But “the last four months have been really subpar,” he said.

Making matters worse, in a toxic feedback loop, the lack of funding leads to fears about defaults, and even slower economic growth. The concern is that a falloff in credit growth will impact economic growth while making it more difficult to pay off outstanding debt. Asian companies, for instance, have $38 billion worth of publicly issued dollar-denominated debt coming due this year, according to Dealogic.

The good news is that most emerging market countries and government still have a significant buffer – either in the form of cash or reserves – to weather a relatively brief storm. But what about a protracted one?

To be sure, most bankers and economists the WSJ spoke to believe it’s still too early to say that the tougher lending conditions pose an acute risk for any but the most troubled economies. Issuance in some developing countries has held up well, including parts of Asia. Some of the more prudent companies and countries raised their money at the start of the year, expecting rates to rise, which may have front loaded issuance in 2018, bankers say.

However, as noted above, the risk is what happens should the EM turmoil persist, and with Trump engaging in a lengthy tit-for-tat trade war with China, this appears inevitable, resulting in a bear market in the MSCI Emerging Market stock index and some outright currency crashes, with Turkey’s lira and Argentina’s peso down 41% and 50% respectively against the dollar since the start of the year.

Meanwhile, in the bond market yields on hard-currency emerging-market debt have risen from 4.5% to 6% this year. And what has spooked investors is that after years of carry-funded profits, USD-denominated emerging-market debt has  recorded a negative return of 3.7% this year.

Making matters worse, emerging-market companies are more exposed to the international bond market than they were during the financial crisis, when risk appetite also dried up and emerging markets struggled to raise cash according to Charles Robertson, global chief economist at Renaissance Capital.

That is because banks in developed economies have scaled back syndicated-loan operations outside their home markets, forcing some firms in poorer countries to turn to public bonds instead.

That, and of course, the sheer amount of dollar-denominated debt that emerging markets are currently saddled with.

What happens next? Keep an eye on investor appetite, in some cases in the most obscure of locations. This week, Papua New Guinea hopes to issue a bond that will be a key test of investors’ appetite for risk in emerging markets. If it fails, the pain for emerging markets – increasingly locked out of capital markets – may get much worse before it gets better. 

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The latest report from the National Hurricane Center (NHC) indicates that Hurricane Florence is on the verge of becoming a monster storm, which strengthened rapidly overnight as it continued to gain strength over the Atlantic, 625 miles southeast of Bermuda.

Florence had maximum sustained winds of 105 mph and was moving west-northwest at nine mph, making it a Category 2 hurricane, the NHC said. An increase in maximum sustained wind speed is expected over the next several days, as government officials from the Carolinas to the Mid-Atlantic on Monday were preparing for a direct hit later this week.

“Rapid strengthening is forecast, and Florence is forecast to become a major hurricane this morning and is expected to remain an extremely dangerous major hurricane through Thursday,” the NHC said.

Over the weekend, South Carolina Governor Henry McMaster declared a state of emergency in anticipation of a direct hit. The declaration allows the state to use the National Guard for preparations and to aid in search and recovery operations in the aftermath. North Carolina and Virginia have taken similar measures.

Hurricane #Florence update
• Increasing risk of life-threatening impacts: storm surge at coast, flooding inland
• Dangerous winds could down trees & cause power outages
• Landfall may be Thurs. If slows after landfall may cause heavier rain & winds.
Stay tuned for #ncwx pic.twitter.com/YIN6OLA1KC

— NC Emergency Managem (@NCEmergency) September 10, 2018

Chuck Watson, a disaster researcher at Enki Research in Savannah, Georgia, told Bloomberg that the northern coast of South Carolina and the Outer Banks of North Carolina are likely to be the areas most impacted by the storm, which could cause $15.32 billion in damage if it stays on its current trajectory.

Watson said the Gulf Stream is driving warm water past Cape Hatteras, which could create a “nightmare scenario” that could lead to as much as $25 billion in damages.

“Somebody is going to suffer devastating damage if this storm continues as it is currently forecast,” Dan Miller, a meteorologist with the National Weather Service in Columbia, told The State newspaper.

Meteoroglists have said it is still too early to predict Florence’s path exactly but warned that many computer models point to a direct hit in the Carolinas by Thursday.

Hurricane Florence Model Track Guidance

What are meteorologists tweeting?

“The leftward solution from the most reliable ECMWF model for Hurricane Florence is centered just south of SC|NC border. The actual landfall point will matter but large size of storm means coast from Charleston, SC to NC Outer Banks should prepare for hurricane conditions,” said Ryan Maue, meteorologist @weatherdotus.

The landfall location of Hurricane #Florence is still uncertain to 100-200 miles. Complicating will be very SLOW movement Thurs-Fri exacerbating extreme rainfall.

GFS model (reliable thru 5-days) is a rightward solution over NC.

(GIF: https://t.co/XcmEbEJxko) pic.twitter.com/uUN2E85SYu

— Ryan Maue | weathermodels.com (@RyanMaue) September 10, 2018

 “Florence is heading for the Carolinas. Florence will likely be a major hurricane. This is happening folks. If you or anyone you know is in the path of this storm, preparations need to be completely finished by Wednesday,” said Ed Valle, meteorologist Vallee Wx Consulting.

#Florence is heading for the Carolinas. Florence will likely be a major hurricane. This is happening folks. If you or anyone you know is in the path of this storm, preparations need to be completely finished by Wednesday. pic.twitter.com/VX2xVJy9eJ

— Ed Vallee 🌽 Vallee Wx Consulting 🌾 (@EdValleeWx) September 10, 2018

“Hurricane Florence is still on track to make landfall in North Carolina on Thursday as a Category 4 — becoming the strongest hurricane to ever make landfall north of South Carolina,” said meteorologist Eric Holthaus.

OK you guys, my intention is not to scare anyone with this message.

But Hurricane #Florence—the storm bound for North Carolina—is going to be about the size of North Carolina when it arrives.

This is what it will look like, according to the latest high-res model prediction: pic.twitter.com/B8vCm3FDi6

— Eric Holthaus (@EricHolthaus) September 10, 2018

As shown above, the spaghetti model projections are unanimously showing the storm will be unusually intense and slow-moving — two attributes that indicate its destructive potential, said Axios. While Florence is a Category 2 storm Monday morning, forecasters expect the storm to rapidly intensify to a Category 4 or possibly even Category 5 hurricane as it moves toward the East Coast.

Hurricane Florence may end up being the worst natural disaster in recorded history for the Carolinas and Virginia. 3 to 4 feet of rain, IF predictions hold! BIG news week developing…

— MATT DRUDGE (@DRUDGE) September 10, 2018

“This storm will bring a wide array of hazards to the East Coast, and residents of the Carolinas and mid-Atlantic region, including the Washington, D.C., area, are being urged to prepare for a potentially life-threatening event featuring damaging winds that could last for a long duration along with coastal and inland flooding. Florence has the potential to be a large hurricane, with impacts felt hundreds of miles from the landfall location,” said Axios.

Two other hurricanes are in the Atlantic Basin and will need to be closely monitored this week. According to Philip Klotzbach (Colorado State University), as per Meteorologist Paul Dorian Perspecta, Inc., this is the 11th year on record that the Atlantic Ocean has had 3+ hurricanes simultaneously (Other years were 1893, 1926, 1950, 1961, 1967, 1980, 1995, 1998, 2010, and 2017).

Florence could very well be the “worst natural disaster in recorded history for Carolinas and Virginia,” as many Trump supporters hope the storm shifts a tad north into Washington, D.C. and if not drains the swamp, then at least floods it.

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Apparently, including even one conservative voice on Facebook’s roster of approved “fact checkers” is too much for liberal partisans in Silicon Valley. Case in point: As the Guardian reports, the social media giant’s decision to formally include conservative magazine the Weekly Standard (a magazine best known in recent years for its staunch #NeverTrump stance) on its roster of fact checkers has prompted an outcry from liberals who have accused the site of bending to criticism from right-wing groups. 

In other words, the outcry is because Facebook, a platform with roughly 2 billion users that has been called out for suppressing conservative views, has incorporated the concerns of roughly half the American electorate into an initiative that will greatly impact how content is displayed and shared on the social network.

What’s more, Alexios Mantzarlis, director of the International Fact-Checking Network at the Poynter Institute of Media Studies (the organization that’s responsible for approving Facebook’s fact checkers), gave the WS his organization’s stamp of approval, claiming that the magazine had demonstrated adherence to the IFCN code of principles. The magazine has an internal fact-checking operation and has committed to not writing opinion pieces. The Standard was founded in the mid-1990s by Bill Kristol, Fred Barnes and John Podhoretz with support from Fox News owner Rupert Murdoch. It was initially intended to be an opinion magazine with a conservative bent meant to counter the popularity of liberal magazines like the Nation.

While the magazine distinguished itself during the run up to the 2016 vote due to its opposition to Trump, it has consistently angered liberals and members of progressive “watchdog” groups, as the Guardian explains.

Though the Weekly Standard is distinct from far-right publications like Breitbart that are known for publishing propaganda and misinformation, some have questioned whether it was an appropriate partner for Facebook given its ideological bent.

“I’m really disheartened and disturbed by this,” said Angelo Carusone, president of Media Matters for America, a progressive watchdog group that published numerous criticisms of the Weekly Standard after the partnership was first rumored in October. “They have described themselves as an opinion magazine. They are supposed to be thought leaders.”

Calling the magazine a “serial misinformer,” Media Matters cited the Weekly Standard’s role in pushing false and misleading claims about Obamacare, Hillary Clinton and other political stories.

In recent years, the magazine also faced backlash for giving a platform to a contrarian climate scientist and for sending an anti-gay marketing email warning of the “homosexual lobby” and its “perverted vision for a homosexual America.”

[…]

Brooke Binkowski, managing editor of the Facebook fact-checking partner Snopes.com, said she didn’t have specific concerns about the Weekly Standard, but was worried about the broader implications of Facebook choosing to rely on a partisan conservative outlet.

“If you’re going to be politicizing facts, no good can come of that,” she said. “What they are saying is we consider you to be liberal. It doesn’t give us a lot of credit for being trained, being transparent.”

To qualify for the fact-checking role, the Standard hired an “incredibly sharp” fact-checker, according to the magazine’s editor-in-chief.

Stephen Hayes, the Weekly Standard’s editor-in-chief, told the Guardian in an email that the publication had been “formally” doing fact-checking for six months and had hired “an incredibly sharp” fact-checker, Holmes Lybrand. He added: “The work really does speak for itself.”

Hayes praised Facebook for working with rightwing journalists: “I think it’s a good move for [Facebook] to partner with conservative outlets that do real reporting and emphasize facts. Our fact-checking isn’t going to seek conservative facts because we don’t believe there are ‘conservative facts’. Facts are facts.”

In an attempt to assuage the concerns of angered liberals, a Facebook spokesperson told the Guardian that the fact-checking team is only “one tool” for combating misinformation on Facebook.

A Facebook spokesperson declined to comment on the Weekly Standard, but told the Guardian: “We continue to believe that objective facts are objective facts. The political provenance of a given source is irrelevant if their reporting is factual … At Facebook, providing access to authentically fact-checked content is one of our top priorities and is just one of the tools we use to fight fake news.”

Of course, as the Media Research Center has repeatedly demonstrated, so-called “objective” fact-checkers like Snopes and Politifact have done a poor job of keeping their own biases in check. But that doesn’t matter to the progressives quoted in this article for the simple fact that they’re also pushing an agenda – and on some level, they know it.

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After it was revealed in a weekend New York Times piece that the Trump administration held multiple meetings with “rebellious officers” inside Venezuela’s army to consider launching a military coup against the country’s socialist dictator Nicolás Maduro, we cited a former Latin America diplomatic official quoted in the Times who aptly described, “This is going to land like a bomb” in the region.

The astounding revelation — though perhaps familiar-sounding when considering the historical string of coups and CIA covert interventions across the 20th century from Cuba to Nicaragua to Chile — comes just over a month after a bizarre assassination attempt involving two C-4 explosive laden drones which detonated near Maduro as he gave a televised speech during a military parade in Caracas.

In the aftermath of the story, Venezuela has announced plans to hold a massive march on Tuesday against Washington’s now confirmed attempts to meddle in the country’s internal affairs. 

Sure enough, over the weekend the NYT revelation was the focus of Venezuela’s parliament: The United States “acknowledges having met at least three times with military coup leaders to carry out a coup,” said Diosdado Cabello, speaker of the ruling Constituent Assembly, according to the AFP. 

“The presidential assassination that was stopped was led by the United States. Is there anyone who has any doubt?” Cabello posed before an angry assembly. And at a separate event hosted by the ruling United Socialist Party of Venezuela (PSUV), Cabello asserted the August 4th drone attack in Caracas was the result of American-backed coup attempts against the country’s leadership. 

Cabello further described this week’s upcoming march as a huge “anti-imperialist demonstration” which will send a united signal to Washington. 

Making an official statement on Twitter, Foreign Minister Jorge Arreaza condemned what he described as “absolutely unacceptable and unjustifiable that US government officials participate in meetings to encourage and promote violent actions of extremists.”

The NYT report detailed several secret meetings between the Trump administration and Venezuelan military officers to talk about potential coup plans, but according to Times sources “the coup plans stalled”. The meetings were reportedly spearheaded by someone simply described as a “career diplomat”.

Eleven current and former American officials spoke to the NYT for the story, which also involved interviews with a top former Venezuelan military commander that took part in the plotting. 

The White House has not responded to the bombshell report and allegations, only saying in a statement it continues to seek to engage in “dialogue with all Venezuelans who demonstrate a desire for democracy” in order to “bring positive change to a country that has suffered so much under Maduro.”

The country has suffered from hyperinflation and severe shortages of basic staples amidst general economic collapse and several rounds of US sanctions to boot. 

Last May Nicolas Maduro won a second six-year term in an election that Washington officials slammed as a “sham” and “neither free nor fair”. 

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The British pound surged, the euro hit session highs and the dollar slumped following a comment from the EU’s chief Brexit negotiator Michel Barnier, speaking at conference in Bled, Slovenia, who said it’s “realistic” and “possible” to get a Brexit deal within eight weeks.

Quoted by Bloomberg, Barnier, who was  speaking at a conference in Bled, Slovenia, said an agreement is needed to be reached by the start of November. He also warned that several issues were still outstanding, including measures to prevent the re-emergence of a hard Irish border and protection of the names of food and agriculture products.

With the pound spiking, the FTSE 100 promptly erased all session gains, pressured by the stronger currency.

The potentially good news comes in the aftermath of the latest Brexit developments, in which a draft Brexit plan proposed by Eurosceptics in the Conservative party included significant tax cuts, a new military expeditionary and a domestic-built missile defence system, thus confirming expectations for the proposal of a “Canada-style” trade deal. This would go against the proposals made in Theresa May’s “Chequers” agreement, with media reports suggesting that if the new proposals were rejected, Eurosecptics would prefer to leave with EU without a deal, on WTO terms, making a hard Brexit an increasingly likely possibility.

Meanwhile, amid the confusion, there are seven months to go until the UK formally leaves the EU, and there are a number of big questions still unanswered. The biggest of them all, of course, is whether a deal will be agreed in time to avoid the UK crashing out of Europe on World Trade Organisation terms? But even if a deal is reached, will the UK parliament vote in favour of it – and when will we know for sure that ‘no deal’ has been averted?

Here’s a guide to the timeline of negotiations between now and March 2019, courtesy of ING.

And below are the four potential scenarios for Brexit talks in early 2019.

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