Tag: finance

With ‘hard’ real economic data slumping to its weakest since Nov 2017, ‘soft’ survey-based views of the economy have once again surged, ever-hopeful that the real recovery is right around the corner and stagnation in real wages (as inflation lowers the quality of American-dreamers’ lives) is about to end…

And building on that rising ‘soft’ survey data is today’s Chicago Purchasing Managers Index which, despite dropping from July’s 65.5 level, beat expectations of 63.0 and printed 63.6 (only lowest since April)…

Chicago PMI printed near the middle of the forecast range of 61 – 66.2 from 25 economists surveyed.

The number of components rising vs last month was only 3.

• Business barometer rose at a slower pace, signaling expansion

• Prices paid rose at a slower pace, signaling expansion

• New orders rose at a faster pace, signaling expansion

• Employment rose at a slower pace, signaling expansion

• Inventories rose and the direction reversed, signaling expansion

• Supplier deliveries rose at a slower pace, signaling expansion

• Production rose at a faster pace, signaling expansion

• Order backlogs rose at a slower pace, signaling expansion

So production and new orders accelerated BUT employment and prices paid slowed? ok…

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In what some have called the greatest exhibition of fake ‘virtue signaling’, the “feel good story” of late last year that went really, really bad; now has a silver lining…

As we detailed previously, homeless veteran Johnny Bobbitt Jr. served as an ammunition technician in the U.S. Marine Corps.  After leaving the Marines, Bobbitt worked as a fireman and a paramedic before eventually falling on hard times. 

Last October, Bobbitt came across Kate McClure after she had become stranded on the side of I-95 in a bad section of Philadelphia.  Even though he was living on the streets, he used his last 20 dollars to buy her some gasoline so that she could get home.  To thank him, McClure and her boyfriend Mark D’Amico created a GoFundMe campaign to raise money to help Bobbitt get off the streets.  The original goal was to raise $10,000, but the story went mega-viral and the campaign ultimately raised a total of $403,000.

It was the “feel good story” of the holiday season, and it was covered extensively by the mainstream media.  McClure and Bobbitt even made a joint appearance on Good Morning America, and it appeared that this was one news story that truly had a happy ending.

But it didn’t… McClure and D’Amico never gave Bobbitt the money.  Instead, they took charge of it and bought him the things that they thought he “needed”.

The Philadelphia Inquirer later reported that Bobbitt had only received about half of the funds raised.

And so, as The Hill reports, Bobbitt sued the couple claiming that they had mismanaged the funds, but the couple said they would not give Bobbitt the money because Bobbit had reportedly become drug addicted again.

Bobbitt accused the couple of fraud, alleging that the two committed fraud and conspiracy by taking large amounts of the donations to “enjoy a lifestyle they could not afford” and using the account as “their personal piggy bank,” and asked a judge to appoint a supervisor to manage the money in the fundraising account.

And overnight the verdict came down and a judge on Thursday gave a South Jersey couple less than a day to hand over what’s left of the $400,000 they raised through a GoFundMe campaign for Johnny Bobbitt Jr.

The Inquirer reports that Superior Court Judge Paula T. Dow in Mount Holly ordered Kate McClure, 28, and Mark D’Amico, 35, to transfer the money into an escrow account by Friday afternoon and hire a forensic accountant to review the financial records within 10 days.

“The funds should be removed from [D’Amico’s and McClure’s control] and frozen,” Dow said during a one-hour hearing.

The filing also asks for an injunction that would prevent more of the money from being spent.

Given that the New Jersey couple has until this afternoon to turn over the money, and has already blown through it “enjoying a lifestyle they could not afford,” perhaps they should set up a GoFundMe page for that? If Lanny Davis can do it, and receive cash from people, anyone can.

Good luck raising the cash to pay Bobbit back!

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For the second day in a row, the “weakest link” among G-10 bond markets, Italy, is getting hit hard, with the 10Y Italy government bond sliding, sending its yield to session highs of 3.24%, which also is above the highest yield hit during the May mini crisis, is now the highest going back to 2014.

“Lo spread” is similarly getting blown up, with the 10Y Italy-German spread now the widest since 2013…

… meanwhile the short-end is also moving higher, flattening the curve sharply.

The move has erased earlier gains, after reports in the Italian media that Finance Minister Tria is seeking a deficit/GDP ratio of 1.5% in the new budget law, well below the 3% feared by investors.

However, this favorable take was quickly erased following the latest blow out in emerging market bonds, where Argentina bonds took the lead and are being dumped en masse, and contagion is once again starting to emerge. And while US equities remains in a range, the move higher in Italy is being noticed by US Treasurys, whose yields are now down to session lows, just above 2.83%.

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Authored by Molly Prince via The Daily Caller,

A private Wisconsin college banned students from exhibiting a Sept. 11 memorial fearing that it could foster an anti-Muslim environment on campus.

Ripon College ruled against a display by Young America’s Foundation (YAF) to honor the memory of those killed in the 2001 attacks and to help prevent the events from being forgotten, reported The Washington Examiner. It was part of an annual “Never Forget” project on college campuses around the nation.

The administration claimed that the memorial would create an atmosphere where “students from a Muslim background would feel singled out and/or harassed.”

“There is nothing that this poster, in particular, adds to the conversation about 9/11, or about the politics of terrorism, or about national security or responses to it that couldn’t be done easily and more constructively without it,” said Ripon’s Bias Protocol Board, according to the Examiner.

In addition to images of the Sept. 11 attacks, the exhibit also displayed subsequent radical Islamic extremist events such as Islamic State beheadings and the USS Cole bombing.

The college further claimed that Muslim terrorists only “represent a small percentage of the terrorist attacks that happen to this country” and that YAF is only showing “a very small picture of a specific religion or nationality instead of the larger viewpoint.”

YAF quickly refuted the aforementioned claim calling it false and fired back with a fact-check stating “from 1992 to 2017, Islamists were responsible for 92% of deaths caused by terrorism in the United States, and are ‘far and away the deadliest group of terrorists by ideology’.”

“This attempt by Ripon College’s ‘bias protocol board’ to sanitize the truth out of remembering the anniversary of September 11 proves the necessity of YAF’s iconic 9/11: Never Forget Project, as well as the need for bold YAF activists,” said YAF’s spokesman Spencer Brown.

“The administrators’ reliance on feelings rather than facts betrays their intention to cower from the truth rather than highlight the scourge of radical Islamist terror for what it is: evil.”

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Official newspaper China Daily launched a scathing attack on President Trump in an op-ed, considered a Beijing-by-proxy mouthpiece, blasting his repeated accusations against China on Twitter, proclaiming that his messages are from an alternative universe. 

Claiming that Trump is casting China as a “scapegoat,” after accusing them of hacking Hillary’s e-mail server:

“that will not deter the US president from smearing China’s image as he desperately needs a scapegoat in the run-up to the midterm elections, so he can divert public attention from the troubles the White House has become mired in”. 

The relatively strongly-worded editorial also took aim at Trump directly, commenting:

“To the thinking person, there are few things more disconcerting than a tweet by the US President, as they initially seem to accord to reality but then quickly turn into messages from some alternative universe.“

As The Economic Times reports, The Daily also expressed displeasure with another tweet where Trump blamed the Chinese communist regime for the lack of progress in the rapprochement with North Korea, and underlined that:

“China, against whom he is launching a trade war, is an easy candidate for that role, since it has long been demonised by US politicians.”

The article further notes that Trump indiscriminately uses his Twitter account to unleash his anger at his ‘enemies’

“…there is method behind his twittering… to be fair, it is not just China that Trump is maligning. The Federal Bureau of Investigation and Department of Justice have also had their integrity impugned.”

The straight-from-officials ‘opinion piece’ concluded with a jab at the deplorables:

“Since his supporters have shown a willingness to suspend disbelief, we can no doubt look forward to more such tales.”

As Reuters notes, state media in China have in recent weeks adopted an increasingly aggressive stance against Trump as the world’s two biggest economies have become engaged in an increasingly bitter trade war. That marks a shift from their previous approach of tempering any direct criticism against the U.S. president.

Read the full editorial here…

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It has been a while since we checked in with our friend, momentum chaser extraordinaire Dennis Gartman, so with the S&P at 2,900, the Nasdaq at all time highs, and US traders blissfully ignoring the tempest that rages across the Emerging Markets, here is the punchline from the latest Gartman Letter:

STOCK PRICES HAVE DONE ONE OF THE RAREST OF THINGS: THEY HAVE FALLEN… UNIVERSALLY; that is, from the levels marked here yesterday, all ten of the markets incumbent in our International Index have fallen. This is a rarity and when it happens it often markets turning points in the markets generally; that is, after sustained bear markets when a day happens that all ten markets turn higher that has very often markets the very day or the week of the low, and when it has happened after long, sustained bull runs it has marked the day or the week of the high.

We are not prepared to say that of a sudden the bull market has ended, but we find it at least worthy of note that this rare circumstance is taking place at precisely the same time as the CNN Fear & Greed Index had made its way to 78… extreme “greed” territory… earlier this week and has turned lower. This, in the past, has also marked market peaks. Finally, an anecdote: the public is “in” the markets in manners not seen in years. We know this after listening to a local  restrauteur tell us of his young son’s decision to “trade” stocks “to make a little extra money.” We were reminded of  Joseph Kennedy’s admonition that the top was in the market in ’29 when the gentleman who shined his shoes began offering him stock tips!

It is far too early to suggest being short of equities, for we’ve tried that before and it proved unwise, but it is time for us to reiterate our admonition that one must absolutely refrain from adding to long positions. Even more certainly one must refrain from buying new positions!

Well, at least it’s not another “watershed” call for a multi-year top. So yes, more good news for the equity bulls. As for gold bulls, our condolences.

As for the precious metals, again we suggest that with each passing day we are more and more convinced that the panic lows of two weeks ago when spot gold traded down to $1160 were THE lows and are likely not to be revisited.

This just a few weeks ago after Gartman gave up on gold.

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Despite outwardly optimistic appearances from Canada’s Freeland, talks between Canadian and U.S. trade negotiators reportedly turned sour last night and Trudeau government officials are now expressing concern that a final NAFTA deal will not be concluded on Friday.

“That was a long, intensive conversation with Ambassador Lighthizer and his team. The atmosphere remains constructive. …We are making progress,” Ms. Freeland said after a session that ended at 8:30 p.m.

She returned at 10:15 p.m. for another meeting that lasted just five minutes. Ms. Freeland told reporters that she had “a couple things to say” to Mr. Lighthizer and she would meet him again Friday.

According to The Globe reports, USTR Lighthizer has refused to budge on eliminating Chapter 19 – which allows Ottawa to challenge punitive American tariffs on imports before binational panels – and refusing to keep current cultural protection provisions in a redrafted North America free-trade agreement.

Ms. Freeland, who said on Thursday a deal is possible, had offered the Americans concessions on increased U.S. dairy exports to Canada U.S. and on intellectual property, but Mr. Lighthizer was unwilling to offer any concessions of his own on the two key Canadian demands.

As The Globe reports so ominously:

There is now deep concern within the Canadian negotiating team that the talks which continue this morning will end in failure. 

However, on the back of The Globe’s ‘sources’, the loonie is slipping lower – erasing all the early week hope-filled gains…

1.3050 seems like a line in the sand for the Loonie for now, any further negative headlines and a break of that level will push the canadian dollar notably lower.

Finally, we note that Citi points out that sources have been saying all sorts of things, with some suggesting there’s been enough progress.

 

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On Friday, the Bank of Japan tweaked its monthly government bond buying plan, sparking bond market fears that it may further reduce its massive bond buying, with the news pushing down the price of 10-year Japanese government bond futures as much as 10 ticks.

The BOJ announced it would reduce the frequency of its buying in one to three, three to five, and five to 10-year bonds to five times in September from six times in August.

At the same time, it increased the maximum amount of its buying in each operation in these maturities: it raised the upper buying limit for one- to three-year bonds and three- to five-year bonds to 400 billion and 450 billion yen from 300 and 350 billion yen, respectively according to Reuters.

While the change seems technical on the surface – and may be calendar-driven as there are fewer business days in September when the BOJ can conduct its buying operations – traders have grown highly sensitive to any changes in the BOJ’s massive QE program amid growing uncertainty over how much longer it can sustain its current ultra-easy policy.

The BOJ said it would conduct its first buying in the five to ten year zone on Thursday.

As a reference, in August the BOJ bought 400 billion yen, the mid-point of its target buying amount, of 5 to 10-year maturities in each of its six scheduled operations, for a total of 2.4 trillion yen. Doing the math, assuming the BOJ sets its buying in September at 450 billion yen, also the midpoint of the new range, it would amount to monthly buying of 2.25 trillion yen, another indication the BOJ is engaged in not so stealth tapering.

By the same logic, the BOJ’s buying in 3-5 year bonds will be reduced to 1.75 trillion yen from 1.8 trillion yen if the BOJ sets its buying at the middle of the range at 350 billion yen.

Commenting on the shift, Mizuho’s Toru Suehiro told Bloomberg that the decrease in the frequency of the Bank of Japan’s bond-buying operations in September suggests the central bank is willing to reduce purchases.

He also said that “the higher upper limit of bond-buying ranges suggests BOJ would be wiling to buy more if necessary, given it’s unclear how the market will respond to the reduced frequency” but added that “some market participants may be thinking the reduced frequency is due to holidays in September.”

In other words, unless the BOJ increases purchases at the first operation next month, the lower frequency will be taken as a plan to cut overall purchases.

Which will hardly be a surprise: the BOJ has been gradually slowing the pace of its bond buying as its bond holdings reached more than 40 percent of the entire market, leading to shortage of bonds available for investors and fall in the market liquidity.

Last month the BOJ said it would allow the 10-year JGB yield to move in a wider range than before but the market’s volatility has quickly dwindled since then.

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Despite four rate hikes by the Bank of Indonesia since May, the Indonesia’s rupiah slid to a two-decade low, falling to 14,750 per dollar, a level last hit during the Asian Financial Crisis of 1998, and just shy of an all time low, spurring yet another intervention from the central bank as the contagion from the collapse in Argentina and Turkey has turned the market’s attention on emerging markets with current account deficits.

Indonesia’s benchmark bond yields rose 10 basis points to the highest level since 2016, while the Jakarta Composite Index slipped as much as 1.3%.

The plunge took place despite a notice from the central bank that it was intervening in the foreign exchange and bond markets, according to Nanang Hendarsah, executive director for monetary management.

As a reminder, after Argentina and Turkey, Indonesia is next to be hit on this chart from JPM we first showed at the start of June, which plotted countries with a current account deficit and rising external debt.

The rupiah is down 7.8% this year, and first came under pressure from a resurgent greenback and climbing U.S. Treasury yields. The escalating trade war between the U.S. and China, followed by the Turkey turmoil then added to its woes. It’s the second-worst performing major Asian currency this year, after the Indian rupee.

Meanwhile, over in India, the rupee also fell to a new record low, trading 71.035 against the dollar, set for the biggest monthly decline in three years, although so far India’s capital markets excluding FX have barely been affected, with the Nifty trading just shy of all time highs.

As Bloomberg notes, as investors liquidated Turkish and Argentinian assets, countries with large current-account deficits such as Indonesia and India have also seen their currencies and bonds come under selling pressure. The rout in the Argentinian peso and Turkish lira end the recent stability bought by Bank Indonesia’s four rate hikes since mid-May, which has led to a return of foreign funds into its debt market.

The collapse in the currency prompted various comments from FX strategists:

• “The rupiah’s underperformance relative to the rest of emerging markets stems from Indonesia’s weak external payments position, especially the current account deficit,” said ING economist Prakash Sakpal. Still, “things now are far different than 20 years ago when the crisis originated in Asia and rupiah’s external creditworthiness was much weaker.”
• “The spillover from the resurfacing emerging-market turmoil in the Argentina peso and Turkish lira is weighing on EM Asia currencies,” said Ken Cheung, senior FX strategist at Mizuho Bank Ltd. in Singapore. “There was no solid relief sign for the China-U.S. trade tensions, and the upcoming U.S. tariff plan on $200 billion of Chinese goods, after the public-comment period due next week, could jeopardize sentiment.”
• The recent sell-off will put more pressure on the central bank to raise rates again, according to Bank of America: “Just goes to show the external environment remains tough for Indonesia as we had anticipated,” said Mohamed Faiz Nagutha, an economist at Bank of America Merrill Lynch in Singapore. “We continue to expect more hikes for sure, with the exact magnitude to be determined by external rather than domestic fundamentals.”

Meanwhile, the pressure on the rupiah continued to rise as Indonesia’s current-account deficit rose. The shortfall increased to $8 billion in the second quarter, or 3% of GDP, from $5.7 billion in the previous three months, according to the latest central bank data.

“For Indonesia, it’s the current-account deficit that we need to manage,” said Suahasil Nazara, head of fiscal policy office at the Finance Ministry. “The ultimate fix is through our structural reforms, allowing better and more conducive business environment especially for manufacturing and upstream industries.”

Of course, it is those structural reforms that are so unpopular, which is why every EM chooses to use monetary policy first – or in the case of Turkey, nothing at all.

Still, it was not all bad news: despite the rupiah’s selloff, investors can take heart in “some underlying improvement in the Indonesian economy” since the 1998 Asian crisis, said Michael Every, head of financial markets research for Rabobank Group in Hong Kong. “I don’t think there’s as much downside risk to the rupiah until we see China devalues its currency significantly.” That in turn depends entirely on Trump.

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During his latest campaign-style rally in Indiana, President Donald Trump warned on Thursday that the Justice Department and the FBI must “start doing their job and doing it right” or “I will get involved.” Trump, who has repeatedly criticized the department over its handling of a probe into alleged Russian interference in the 2016 election campaign, suggested its leadership was biased against Republicans and that “people are angry.”

“Our Justice Department and our FBI – at the top of each, because inside they have incredible people – but our Justice Department and our FBI have to start doing their job and doing it right and doing it now,” Trump said. “I wanted to stay out, but at some point if it doesn’t straighten out properly … I will get involved and I’ll get in there if I have to.”

The president’s comments echoed his tweet from this past Saturday, and also comments he made in May, when he threatened to “get involved” in a rolling dispute between conservative House Republicans and the top DOJ official overseeing the Russia probe.

Trump has frequently attacked the DOJ and Attorney General Jeff Sessions over the federal investigation into Russian interference in the 2016 presidential election. The president’s feud with the DOJ has escalated since last week, when he said during an interview on “Fox & Friends” that Sessions “never took control of the Justice Department.”

“The Dems are very strong in the Justice Department,” Trump said. “And I put in an attorney general that never took control of the Justice Department, Jeff Sessions. Never took control of the Justice Department. It’s sort of an incredible thing.”  Sessions fired back, saying in a statement that the DOJ “will not be improperly influenced by political considerations.”

As The Hill notes, the president’s attacks against Sessions have continued to fuel speculation that he could move to fire the attorney general at some point. Senators Bob Corker and Lindsey Graham both predicted last week that Trump will eventually fire Sessions.

Earlier in the day, Trump told Bloomberg News that Sessions would remain in his job until at least the November midterm elections, but declined to say whether he would keep Sessions after the elections.

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