Tag: finance

Thanks to a plunge in inventory stacking for non-durable goods (which sounds admittedly oxymoronic), wholesale inventories slumped 0.7% MoM in September – the biggest decline since

 

Source: Bloomberg

This reversal mimics the hangover after 2013/2014’s inventory-stacking surge…

Source: Bloomberg

Not exactly a good sign for Q3 GDP revisions (or Q4…)

 

Bitcoin soared almost 40% over the weekend, one of its biggest daily rises in history and a massive surge given the recent break of technical support levels.

Source: Bloomberg

While many had ideas on the catalysts for the move, it appears the biggest driver came from China’s President Xi Jinping confirmed Facebook CEO Mark Zuckerberg’s big warnings to Congress last week, calling for China to accelerate its adoption of blockchain technologies as a core for innovation.

As CoinTelegraph reports, Xi made the comments at a Politburo Committee session on blockchain technology trends on Oct. 24.

Blockchain adoption promotes innovation

Xi stressed that the implementation of integrated blockchain technologies is key in promoting technological innovation and transforming industries. He told the committee:

“We must take blockchain as an important breakthrough for independent innovation of core technologies, clarify the main directions, increase investment, focus on a number of key technologies, and accelerate the development of blockchain and industrial innovation.”

But, it’s Blockchain, not Bitcoin

Xi’s push for greater blockchain adoption comes against the backdrop of China’s long-standing aversion to – and a crackdown on — cryptocurrencies. Authorities in the country first banned ICOs in 2017, quickly followed by cryptocurrency exchanges.

image courtesy of CoinTelegraph

There have even been reports that at least one government agency is considering a ban on cryptocurrency mining.

Digital currency arms race

Unsurprisingly, the one cryptocurrency that the Chinese government doesn’t seem to have an issue with is its proposed central bank digital currency (CBDC). Despite reports throughout the summer that the launch of this was imminent, officials from China’s Central Bank last month said that there was no timetable for the launch of the CBDC.

Xi’s commitment sparked a surge in China tech stocks – the biggest jump since February…

Source: Bloomberg

“Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype,” said Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management Co.

“It shows how much excitement can be triggered by something stressed as a priority by the top man himself.”

Meanwhile, Facebook’s Mark Zuckerberg has been referencing the threat of Chinese superiority in the digital currency space in an attempt to sell U.S. lawmakers his plans for the Libra stablecoin.

“China is moving quickly to launch a similar idea in the coming months. We can’t sit here and assume that because America is today the leader that it will always get to be the leader if we don’t innovate,” he argued in an official statement. 

Blain’s morning porridge, submitted by Bill Blain

“They were just discussing what kind of shampoo they use on their beards.”

Great news re England in the World Cup Final, but a shame for Wales – that would have been a game indeed!  
Welcome to another week in the fascinating global markets.

I was going to write a cracking morning comment about how the major market risk is an economic surprise to the upside in the global economy – current economic signals suggest the feared global recession isn’t actually as bad as fear.  Wow.. Is that Blain being bullish? (Blain’s Market Mantra No 8 – “Things are never as bad as you think they are..”)  Well, not quite as good news as it sounds.  If the global economy isn’t as battered as the IMF and others have been scaring us, then central banks could put their easing plans aside, sending a shiver of fear through the bond markets, and it could trigger weakness across all markets. Markets would worry about the lack of further stimulus and lock up.

I was going to expand and explain how a correction would be a great time to pick up bargains, and pile into stock fundamental stories!  Reverse the index and disruptive Tech nonsense.  I’d spice it up with comments on how you should get as far away from credit/bond markets as possible. (Why you ask? Because in bonds there is truth.  Because credit markets are a huge bubble fuelled by easing expectations and on-going QE distortions, and when they snap, they will prove a chronic illiquidity trap.)

Then I was going to do an in-depth analysis of why slaying an ISIS leader like a “dog” does nothing to change the dismal scenarios Trump has painted in the Middle East – Nature abhors a vacuum. I was going to expand on Saudi instability vs a resurgent Iran (which faces its own mounting internal problems), and move on to a rash of stories about UAE weakness, giving me the opportunity to repeat my old joke about Dubai being a desert again within 50 years.

I would then have added a quick compare and contrast about current issues in China, where my sense is a new Tech Cold War is pretty much nailed on, with the Chinese prepared to go their own way as any kind of meaningful accommodation with the US is left hanging till Trump is gone. The question is can Xi keep the country generally stable for another 5 years without having to do something “outward bound” re Hong Kong or Taiwan in order to put his “patriot” card into play? That’s a close call – and has got to figure in tech investment decisions.

Next up this morning was going to be a critique of the Mario Draghi era at the ECB – top marks for getting keeping the patient alive through the crisis – anything it takes, but less good on the next 8 years in recovery. His legacy will an unresolved crisis of direction facing Christine Legarde when she takes over this week – clue: my insights were going to draw parallels between the current efforts of Boris Johnson to heard cats in the UK Parliament. Legarde faces a board split down national lines – she will need all her diplomatic skills to resolve it. She faces the problem of building a common European consensus – but the members represent state interests which are chronically opposed.

Next up would be HSBC’s dismal results. Quel Surprise! The biggest, and certainly the most complex bank on the planet, has stumbled badly. It’s largely a crisis of its own internal management structure – the bank’s leadership failed to evolve and lacks sufficiently diverse banking DNA to thrive in this modern age.  Every other business on the planet promotes on ability.  HSBC’s approach isn’t quite Buggin’s turn or skill at polishing the handle of the big brass door, but it’s not far from it, or remotely sensible. The previous CEO drowned in the detail and was sacked. I’m told by HSBC insiders his successor would probably make a very good job of running a branch network somewhere like Birmingham. Both were HSBC management lifers will little real world flair or experience. They shows clearly the dangers of internal overpromotion.

Current HSBC CEO Noel Quinn should be on a similar intellectual/thought-leadership level as a banker like JP Morgan’s Jamie Dimon. But I’m told he’s not. He’s apparently not even in same league as the perennial regulation zone Christian Sewing of Deutsche Bank – which is why the only response is to hack more jobs. HSBC faces massive risk/reputational exposures in Asia and particularly Hong Kong, and the lack of strategy should make is a classic business-risk case study.

But I am afraid I am not going to get round to writing anything like the brilliant, insightful porridge described above this morning: As always on a Monday morning, it’s the fault of South-West Rail.  Today, the train was on time – but 5 carriages instead of 10 meant lots of people traveling to London spent over an hour standing.  Its genius – the rail company is going to hit passengers with a 8% fare increase in January to reflect the heavy demand for the service!  They call that success.  Less service and minimal investment – and we get to pay more for it!
 
While the New Forest to London line hasn’t quite reached the Guy Fawkes masks, tear gas and full scale riots stage, but we’re not far from serious passenger insurrection. On a wider scale, there is an increasing sense life is ripping us off. Pitiful politicians, greedy businesses, evil bankers and declining services dominate the news. And when voters/consumers are getting increasingly discontented and frustrated – well, that’s when we get surprises..

And a surprise in the UK over the Brexit Bollchocks might just be on the cards. Cry havoc and unleash the hamsters of despair….

S&P futures rose to a new all time high, Asian stocks advanced, while European stocks were flat amid – what else – renewed trade deal optimism, even as the busiest week of earnings season is set to confirm that the S&P500 is in an earnings recession (despite stronger than expected reporting), while the Fed will cut rates later this week. Treasuries dropped, pushing the 10-year yield to a six-week high.

Boosting trade optimism, over the weekend China said parts of the text for the first phase of a trade deal with the U.S. are “basically completed” following consensus on subjects including standards used by agricultural regulators. That followed a similar statement Friday from the U.S. side, with Presidents Donald Trump and Xi aiming to sign a pact in Chile next month.

European shares initially fell to start the week as a glum profit outlook from the region’s largest lender HSBC offset gains in trade-sensitive sectors buoyed by positive developments on the U.S.-China trade front. However, as the session progressed, the Stoxx 600 Index trimmed losses to trade little changed, with car manufacturers climbing the most among sectors on the back of trade hopes, while banking shares lead decliners; the index advanced less than 0.1% as of 11:07am in London after falling as much as 0.2% earlier.

UK-based megabank HSBC slipped 4% to the bottom of the benchmark index after it dropped its 2020 profit target, and said it would undertake a costly restructuring as the bank struggled amidst a slowing global environment. Another disappointment among banks was Spain’s Bankia, down 3%, after the state-owned lender posted a 23% drop in third-quarter net profit as it struggles to increase margins from lending because of ultra-low interest rates. “HSBC did cite weakness, but that’s not massively unexpected given what’s going on the wider growth dynamics,” said Will James, senior investment director, European equities at Aberdeen Standard Investments.

Meanwhile, leading the stock advance was the Stoxx 600 Automobiles & Parts which rose 1.8% as optimism on a trade deal increased after China signaled progress in initial agreement text with the US. Luxury stocks also ramped higher after Louis Vuitton owner LVMH made a bid to buy U.S. jeweler Tiffany for $14.5 billion acquisition offer. Shares of the French luxury goods maker rose and boosted gains in peers Swatch, Pandora and Salvatore Ferragamo

Earlier in the session, Asian stocks advanced for a third day and the fifth increase in 6 sessions, led by tech, tracking a U.S. rally that buoyed the S&P 500 Index to within a whisker of its record close. Nearly all markets in the region were up, with Shanghai shares leading gains with blockchain-related stocks climbing after Chinese President Xi Jinping hailed the technology. Markets in India, Singapore, Malaysia and New Zealand are closed for holidays. The Topix closed little changed, as Tokyo Electron climbed and Shin-Etsu Chemical retreated. Most economists expect the Bank of Japan to stand pat this week amid continued signs of resilience in the economy and stability in markets. The Shanghai Composite Index rose 0.9%, with 360 Security Technology and Jiangsu Hengrui Medicine among the biggest boosts. Leaders of China’s Communist Party are expected to gather behind closed doors Monday for the party’s first Central Committee meeting since early 2018.

Investors began the week amid nearly unanimous expectations the Fed will trim rates by another 25bps Wednesday, and then “stop to reassess”, signaling it’s done with easing for now. Fed Chair Jerome Powell has previously said the wider U.S. economy is in a good place, yet citing slowing global growth and uncertainty around trade as risk factors.

It’s not just the Fed, of course: in addition to the FOMC meeting on Wednesday, we get a first look at Q3 GDP in the US (Wednesday) and the Euro-area (Thursday) are due and China (Thursday) and the RoW PMIs and US ISM (Friday) will be closely watched before US payrolls ends the week with a bang on Friday.

Earnings season will also continue apace as a number of major global companies report on both sides of the pond, with 164 S&P 500 companies scheduled to report. In terms of releases to watch out for, today we have Alphabet, AT&T and HSBC (the latter two reported mixed results). On Tuesday, there’s Mastercard, Nomura, BP and General Motors. Wednesday sees releases from Apple, Bayer, Facebook, Total, Sony, Volkswagen, Airbus, Santander, General Electric and Credit Suisse. On Thursday there’s Royal Dutch Shell and BNP Paribas, while on Friday there’s Exxon Mobil, Chevron, AIG and Alibaba.

In FX, growing optimism about a U.S.-China trade deal spurred a mild risk-on mood in currency markets and weighed on havens such as the yen and Swiss franc, while the dollar index held steady ahead of this week’s Federal Reserve Decision; the Bloomberg Dollar Spot Index was little changed after last week’s 0.3% gain. The greenback weakened against all but three of its G-10 peers with the pound seeing the biggest advance on the Brexit-delay news, followed by the euro. The pound steadied versus the euro after the European Union agreed to a Brexit deadline extension, easing the risk of the UK leaving the bloc without a deal on Oct. 31.

The October US jobs report on Friday, sees a +90k consensus following the previous month’s +136k increase. If realized, that would be the weakest pace of monthly jobs growth since May but the recent GM strike complicates the analysis with a 46k hit expected from this. There is also a government census employment issue so private payrolls will be perhaps more closely watched (+83k expected). Later that day, we’ll also get the ISM manufacturing report, which fell to 47.8 last month, the weakest since June 2009 and below all analysts’ estimates. So Friday’s going to be an important day as markets assess the outlook for the US moving into November with the added interest of the final ISMs from around the globe.

In rates, US 10Y Treasury yields rose 4bps to 1.835%, while European bonds edged lower, and gilts were steady. Italian bonds dropped after strong performance for opposition League party in regional elections, while S&P held off on boosting nation’s rating outlook. Rest of region’s sovereign bonds whipsaw, with gilts steady after EU agrees to a Brexit extension. Core European bonds were generally under pressure, with Treasury futures initially leading losses, before Brexit extension added to weakness. Citing traders in London, Bloomberg reported that there is focus on China’s plan to sell U.S. dollar and euro-denominated bonds in November, given potential hedging which may take place.

Elsewhere, Argentine bonds tumbled after opposition candidate Alberto Fernandez secured victory in Sunday’s presidential election, with business-friendly incumbent Mauricio Macri conceding. WTI crude oil slipped after the biggest weekly advance in more than a month. Bitcoin jumped as much as 16% from Friday.

In geopolitics, US President Trump said Islamic State leader Al-Baghdadi died in a US raid in Syria, while it was also reported that the French Interior Minister instructed police to be on high alert to prevent potential revenge attacks following the death of the IS leader.

 

Market Snapshot

• S&P 500 futures up 0.2% to 3,028.50
• STOXX Europe 600 down 0.1% to 397.61
• MXAP up 0.3% to 161.65
• MXAPJ up 0.5% to 519.72
• Nikkei up 0.3% to 22,867.27
• Topix unchanged at 1,648.43
• Hang Seng Index up 0.8% to 26,891.26
• Shanghai Composite up 0.9% to 2,980.05
• Sensex up 0.5% to 39,250.20
• Australia S&P/ASX 200 up 0.02% to 6,740.71
• Kospi up 0.3% to 2,093.60
• Brent Futures down 0.3% to $61.75/bbl
• Gold spot up 0.1% to $1,506.10
• U.S. Dollar Index down 0.07% to 97.77
• German 10Y yield rose 1.2 bps to -0.35%
• Euro up 0.1% to $1.1092
• Brent Futures down 0.3% to $61.81/bbl
• Italian 10Y yield rose 4.5 bps to 0.611%
• Spanish 10Y yield rose 0.5 bps to 0.279%

Top Overnight News from Bloomberg

• The EU agreed to grant the U.K. a three-month Brexit delay to Jan. 31, removing the risk of a damaging no-deal split on Thursday. British PM Boris Johnson is pushing a vote in the House of Commons Monday to trigger an early election
• HSBC Holdings Plc is embarking on its biggest overhaul in years after profit missed estimates, warning that it will take significant write-downs in the coming year as it pares back under-performing areas
• Argentine bonds tumbled in early trading Monday after opposition candidate Alberto Fernandez swept the nation’s presidential election, ousting pro-market incumbent Mauricio Macri and tilting the nation back toward left-wing populism at a time of economic crisis; The nation’s central bank tightened currency controls — it’s chief Guido Sandleris will give a press conference Monday morning at 8:30 a.m. in Buenos Aires
• President Donald Trump scored one of the biggest successes of his presidency with the killing of an Islamic State leader, yet the battlefield victory isn’t likely to blunt the momentum of Democrats moving closer to impeaching him

Asian equity markets began the week with a positive tone after trade hopes were spurred by the recent top-level call between US and China negotiators in which the sides were said to be close to finalising some sections of the phase one deal. This lifted all US majors on Friday and saw the S&P 500 approach to within less than half a point of its record high, fuelled by outperformance in the trade sensitive sectors, although the gains in the Asia-Pac region were mostly moderate amid calm before this week’s storm of risk events. ASX 200 (Unch.) and Nikkei 225 (+0.3%) marginally benefitted from the trade optimism and as commodity-related stocks kept the Australian index afloat, while the advances in Japan were limited by the recent mixed performance in its currency. Elsewhere, Chinese markets outperform amid encouraging earnings from some of China’s Big 4 banks including ICBC and with Hang Seng (+0.8%) also underpinned by the inclusion of dual class listed stocks in the Stock Connect and amid anticipation of another 25bps rate cut at this week’s FOMC which would force the HKMA to move in lock-step with the Fed. However, the index later retraced some of the gains after weaker results from HSBC and with the Shanghai Comp. (+0.8%) somewhat restricted after a PBoC liquidity drain and the steepest contraction to Chinese Industrial Profits since 2015. Finally, 10yr JGBs are lower on spillover selling from recent declines in T-notes and as stocks mildly benefitted from the trade optimism, but with downside stemmed amid BoJ presence in the market for JPY 1.1tln of JGBs in 1yr-10yr maturities.

Top Asian News

• Xi’s Blockchain Push Triggers Frenzy in China Technology Stocks
• China MOF Plans to Sell U.S. Dollar, Euro Bonds in November
• China Bond Rout Worsens as Yield Jumps Most in Six Months
• Emerging Markets Podcast: Argentina Vote, S. Africa Budget

A choppy start to the week for European equities [Eurostoxx 50 Unch] as the region failed to sustain the positivity seen during APAC hours in which Mainland China and Hong Kong outperformed on trade optimism. Major bourses are tentative as is usually the case ahead of a risk-packed week which sees the latest FOMC/BoJ policy meetings, German Prelim CPI, EZ flash CPI, US ISM Manufacturing, US labour market report and a slew large-cap earnings. Sectors are mixed with pressure seen in Financials as heavyweight HSBC (-4.1%) slumped post-earnings after missing on adj. pretax and revenue expectations, whilst stating that it no longer intends to achieve its ROTE target and notes of “significant” restructuring charges amid a deterioration in the global outlook.  On the flip side, consumer discretionary outperform as jewellery makers benefit from LVMH’s (+0.3%) unsolicited bid to acquire Tiffany (+20% pre-market), which is poised to be rejected according to sources cited by the FT. Thus, the likes of Pandora (+1.3%), Richemont (+2.1%) and Swatch (+1.4%) are lifted in tandem. Turning to individual stocks, Bankia (-3.0%) shares fell after the Co. reported this morning. In terms of bank analysis, JPM favour Euro-area stocks and note that international shares are set to outperform those in the US. JPM also maintains a bullish outlook on global equities but also expect rotation into cyclicals and value shares benefitting non-US equities more. Elsewhere, the analysts are overweight on Japan, neutral regarding the US, underweight on the UK and neutral for EM.

Top European News

• U.K.’s Big Four Increase Market Share, Accountancy Watchdog Says
• Italian Bonds Decline After League Victory, S&P Takes No Action

In FX, the Dollar is holding the bulk of last week’s late recovery gains, with the DXY firmly above 97.500 within a 97.731-896 range and eyeing a potentially pivotal week including the FOMC policy meeting, coupon settlement day, month end, NFP and the manufacturing ISM. In the interim, preliminary trade data will overshadow wholesale inventories today after reports that the US and China are close to finalising elements of the Phase 1 pact, while Tuesday’s highlights are likely to be consumer confidence and pending home sales.

• AUD/EUR/NZD/GBP – Although the Greenback remains underpinned overall, as noted above, the Aussie, Euro, Kiwi and Pound are all marginally firmer, with Aud/Usd maintaining 0.6800+ status, Eur/Usd inching towards 1.1100, Nzd/Usd pivoting 0.6350 and Cable hovering above 1.2800 between 1.2860-10 broad parameters. Note, Asia-Pacific trade was hampered somewhat by the NZ market holiday (Labour Day), but early EU activity boosted by some demand for Sterling that saw the Eur/Gbp cross test 10 DMA support at 0.8629 amidst expectations that the EU will respond favourably to the latest UK Brextension request, which has subsequently been confirmed by EC President Tusk and leaves the Pound prone to another showdown in Westminster as PM Johnson continues to push for a GE. Meanwhile, a decent expiry option may cap Eur/Usd given 1.3 bn rolling off at the 1.1100 strike.
• JPY/CAD/CHF – All fractionally softer vs the Buck, as the Yen straddles 108.70 ahead of the BoJ and remains wary about possible policy action or more dovish guidance, while the Loonie is looking at the BoC for more independent direction having strengthened recently to breach 1.3100 and test the next line of resistance at 1.3050 that also coincides with a 1.3051 Fib retracement. Elsewhere, no looming SNB meeting to consider for the Franc, but latest weekly Swiss sight deposits suggest the Bank has been back in action as Usd/Chf hovers around 0.9950 and Eur/Chf climbs towards 1.1050.
• EM – Yet more Rand and Lira outperformance, with the former encouraged by Eskom declaring no further load-shedding for Monday or this week at this stage, while the latter continues to welcome a thawing in Turkish-US/international relations over Syria. However, the Argentinian Peso is lamenting the weekend election result revealing a win for Fernandez that has prompted the authorities to implement capital controls.
• Argentina President Macri conceded defeat following the election and congratulated President-elect Fernandez, while the Argentina central bank later tightened restrictions on USD purchases with limits for individuals lowered to USD 200 per month from USD 10000 per month and the central bank president will hold a press conference 0830 local time (11:30 GMT) on Monday.

In commodities, WTI and Brent are softer this morning but not by any significant magnitude thus far on a lack of fundamental newsflow as markets begin another packed week in a tentative fashion. Crude specific newsflow include comments from the Russian Energy Ministry; who noted that it is too early to discuss deeper OPEC+ cuts, which dampens the source reports seen last week. Further, the Ministry noted that OPEC+ will consider the US’ oil output growth slowdown in their December decision, for reference OPEC+ are expected to revise policy when they convene on December 6th. Last Friday’s Baker Hughes print for oil rigs was the lowest reading since April 2017 and therefore the oil rig count has dropped by 189 this year. Elsewhere, UBS note that recent indicators of weakness including this year’s rig decreases and a employment slowdown in Texas indicate that prices above USD 56/bbl for WTI are necessary to justify the maintenance or expansion of current oil production levels. In terms of metals – spot gold is flat and remains within relatively narrow USD 5/oz ranges above the USD 1500/oz mark heading into key risk events this week. Elsewhere, copper prices are on the backfoot amid further deterioration in China’s industrial profits which was the steepest fall in four years.

US Event Calendar

• 8:30am: Chicago Fed Nat Activity Index, est. 0.1, prior 0.1
• 8:30am: Advance Goods Trade Balance, est. $73.5b deficit, prior $72.8b deficit
• 8:30am: Wholesale Inventories MoM, est. 0.25%, prior 0.2%; Retail Inventories MoM, est. 0.1%, prior 0.0%, revised -0.1%
• 10:30am: Dallas Fed Manf. Activity, est. 1, prior 1.5

DB’s Jim Reid concludes the overnight wrap

A bumper week lies ahead so its just as well that we’ve had an extra hour in bed this weekend here in Europe after the clocks went back. I spent yesterday pumpkin picking in the muddiest field I think I’ve ever been in. The twins got stuck a few times and had to be plucked out of the mud. I think I’ve got all the dirt off me now but you’ll have a chance to see for yourself as I have a long standing appointment to appear on Bloomberg TV at 9am London time this morning. I’ve been told over the weekend that they’ve moved it to an outside broadcast in front of the UK Houses of Parliament ahead of yet another big Brexit vote today (more later). It’s pretty cold this morning so I hope they let me wear my bright blue bobble hat.

Before we review the busy week ahead in more detail, let’s first lay out the main highlights. We have the aforementioned U.K. Parliamentary vote today on whether MPs want or can tolerate/risk an election, the FOMC meets on Wednesday where the Fed are expected to cut 25bps, a first look at Q3 GDP in the US (Wednesday) and the Euro-area (Thursday) are due and China (Thursday) and the RoW PMIs and US ISM (Friday) will be closely watched before US payrolls ends the week with a bang on Friday. Earnings season will also continue apace as a number of major global companies report on both sides of the pond.

Now for more detail on a few of these. Ahead of this Wednesday’s Fed meeting, a 25bps rate cut is just about fully priced now. Given the lack of pushback against that pricing by the recent parade of Fedspeak, it’s a relative safe prediction that they deliver another cut to take the fed funds target range to 1.50-1.75%. Looking forward though, the focus will be around the tone in the policy statement and in Chair Powell’s press conference. The statement could have some dovish-leaning edits, consistent with the deterioration in data since the September policy meeting. As for Powell, he’ll likely want to maintain his optionality moving forward, committing to neither another cut nor a halt to the cutting cycle. Our economists think that he will emphasise that another cut would require further deterioration in the data, which they expect will materialise over the next few months, as opposed to a flatlining in conditions. Their full note is available here .

The Bank of Canada is also meeting that same day, though no change in policy is expected by markets. The Bank of Japan will be meeting the following day and DB’s Kentaro Koyama writes in his preview of the meeting (link here ), that we believe the BoJ “will simply extend the period of its forward guidance and forego genuine easing action such as a deepening of its negative interest rate policy”. Staying with central banks, this Friday sees former IMF managing director Christine Lagarde succeed Mario Draghi as ECB President, with his 8-year term coming to a close the day before.

As for Brexit, this afternoon we are set to see a vote in Parliament on the Government’s motion (under the FTPA) for a general election on December 12th with added time until a potential dissolution of Parliament on November 6th to debate the Government’s Withdrawal Agreement Bill (WAB). Opposition parties have so far indicated they won’t vote for this and over the weekend the Lib Dems and the SNP have proposed a counter proposal to hold an election three days earlier as long as the Brexit extension to January 31st is legally cast iron. This would be the case if the EU announce that they will agree to the Benn Act request which a report in the FT last night effectively suggests they will (including French support now). The opposition Labour Party’s position on an election continues to confuse and they are now the only main party that doesn’t have an election act or bill to put in front of Parliament or indeed support one. We’ll see if that changes today. The Government’s plan requires a 2/3rds majority (very very unlikely if reports are to be believed) but the Lib Dem/SNP plan only a simple majority but is potentially subject to amendments so could be seen as a trap to the Government. According to No. 10 sources, if their plan fails the Government would “look at all options to get Brexit done, including ideas similar to that proposed by other opposition parties”. So they might still find a way to support it.

Elsewhere this week, the first look at Q3 GDP in the US sees expectations of 1.6%, which would be the slowest pace so far this year. Indeed, since President Trump’s election we’ve only seen one quarter of growth at a rate below 2%, and analysts will be looking out for what this might mean for the economy heading into next year’s election. Turning to Europe Q3 GDP, consensus expects just +0.1% growth, which would be the weakest quarterly growth since Q1 2013. The expectation is for the year-on-year pace to fall to +1.1%, which would also be the weakest since Q4 2013. So an interesting welcome to Lagarde on Friday.

The October US jobs report on Friday, sees a +90k consensus following the previous month’s +136k increase. If realised, that would be the weakest pace of monthly jobs growth since May but the recent GM strike complicates the analysis with a 46k hit expected from this. There is also a government census employment issue so private payrolls will be perhaps more closely watched (+83k expected). Later that day, we’ll also get the ISM manufacturing report, which fell to 47.8 last month, the weakest since June 2009 and below all analysts’ estimates. So Friday’s going to be an important day as markets assess the outlook for the US moving into November with the added interest of the final ISMs from around the globe.

It’s another big week for earnings this week, with 164 S&P 500 companies scheduled to report. See Binky Chadha’s latest piece on the season so far here .In terms of releases to watch out for, today we have Alphabet, AT&T and HSBC (just out and missing expectations). On Tuesday, there’s Mastercard, Nomura, BP and General Motors. Wednesday sees releases from Apple, Bayer, Facebook, Total, Sony, Volkswagen, Airbus, Santander, General Electric and Credit Suisse. On Thursday there’s Royal Dutch Shell and BNP Paribas, while on Friday there’s Exxon Mobil, Chevron, AIG and Alibaba.

Overnight, Asian markets are trading mostly higher with the Nikkei (+0.35%), Hang Seng (+0.96%), Shanghai Comp (+0.60%) and Kospi (+0.34%) all up. Information technology stocks are leading gains with China’s Shenzhen Comp up as much as +1.29% after investors bought blockchain-related stocks post Chinese President Xi Jinping saying that China will increase investment in blockchain technology after chairing a study session last week on developing the industry. Blockchain technology stocks like Zhejiang Huamei Holding Co Ltd. and Julong Co Ltd. are some of many stocks surging by China’s daily 10% onshore limit. Meanwhile the statement from China that parts of the text for the first phase of a trade deal with the US are “basically completed” following consensus on subjects including standards used by agricultural regulators, is also aiding sentiment. Elsewhere, futures on the S&P 500 are up +0.15% at 3024.50.

In other news, Chancellor Angela Merkel’s Christian Democrats’ support has fallen 11 percentage points from 2014 to 22.5% in an election for state assembly in the eastern state of Thuringia, according to an exit poll by ARD TV on Sunday while the populist right-wing AfD more than doubled its standing and was marginally ahead of the CDU at 24%, the poll showed. Support for the Social Democrats, Merkel’s junior coalition partner, also fell away, slipping roughly four percentage points to 8.5%. The poll if comes true will leave the incumbent Left party with insufficient support to govern Thuringia with its current alliance that also include the Greens. Elsewhere, opposition candidate Alberto Fernandez won Argentina’s presidential election on Sunday by ousting pro-market incumbent Mauricio Macri. Fernandez won 48% of the vote with 95% of ballots counted, enough to avoid a runoff next month while Macri secured 40%. Fernandez will take office on December 10. Following the win of Fernandez, the central bank of Argentina said that it will restrict dollar purchases by savers to buying just $200 per month compared with the $10,000 per month previously. Central bank chief Guido Sandleris will give a press conference Monday morning at 8:30 am in Buenos Aires.

Briefly reviewing last week now, equities advanced with the S&P 500 gaining +1.21% (+0.40% Friday) on positive earnings and continued trade momentum. It’s now just 0.11% away from its all-time high. Tech stocks and financials led the rally, with the NASDAQ up +1.90% (+0.70% Friday) and an index of bank stocks advancing +3.93% (+1.00% Friday). As for the earnings results so far, around 40% of S&P 500 companies have reported their third quarter results, and overall they have exceed expectations by +4.39% on the profit front, which is around 0.9pp better than the historical average. On the trade front, Treasury Secretary Mnuchin, USTR Lighthizer, and Chinese Vice Premier Liu reportedly spoke on the phone on Friday, and they are apparently closing in on a deal.

The tone was similarly positive in Europe, with the STOXX 600 and DAX rallying +1.57% and +2.07% (+0.16% and +0.17% Friday). The dollar gained +0.56% (+0.22% Friday), as the pound and euro weakened -1.23% and -0.78% (-0.21% and -0.22% Friday) respectively, as Brexit talks stalled. In fixed income, 10-year treasury yields rose +4.4bps (+3.2bps Friday), while the moves in Europe were somewhat smaller. Bund yields rose +2.0bps (+4.2 bps Friday) and gilts rallied -2.7bps (+5.7bps Friday). In credit, cash high yield spreads tightened by -5.5bps in the US (-5bps Friday) but widened +1bps in Europe (+1.5bps Friday).

Little over one month after US newspapers published reports about a new audio message and image of ISIS leader Abu Bakr al-Baghdadi, the semi-mythical terrorist kingpin, who has reportedly been killed several times in the past, allegedly detonated a suicide vest during a raid by American special forces. The explosion killed him, and several of his children, according to the official account of the confrontation, and a DNA test was promptly conducted on location to ascertain it was indeed Baghdadi who was killed, the perplexing narrative goes.

However it happened, the killing of Baghdadi was a major PR win for Trump (who has been touting the fact that ISIS has been “99%” eliminated for months).  But according to Bloomberg, it almost didn’t happen. Baghdadi had previously evaded several American attacks in the weeks prior to his death, and there were some doubts about whether this critical tip was still good.

The CIA first started receiving “surprising” information about Baghdadi’s general location over the summer. According to the tips, he was hiding in a village deep inside a part of northwestern Syria controlled by rival fundamentalist groups. Per the NYT, Syrian and Iraqi Kurds were tremendously helpful in providing this information. But the final tip that helped inspire the raid came after the arrest and interrogation of one of Baghdadi’s wives and a courier, the NYT reported.

According to a Syrian engineer who spoke with villagers living near the raid site, Baghdadi had sought shelter in the home of Abu Mohammed Salama, a commander of another extremist group, Hurras al-Din. Salama’s fate is not yet clear.

Courtesy of the LA Times

As US forces prepared for the raid, Trump arrived at the White House by motorcade at about 4 pm on Saturday and hurried into the Situation Room, accompanied by VP Mike Pence, National Security Adviser Robert O’Brien, Defense Secretary Mark Esper and other military leaders. They watched the entire two-hour operation as helicopters landed and US special forces began their assault on the compound, eventually chasing Baghdadi down a dead-end tunnel where he “died like a dog”, President Trump said.

Baghdadi’s compound after the raid…

Trump first approved the mission Saturday morning, after being presented with “actionable intelligence.” US forces traveled through some Russian held territory during the raid, and alerted Moscow ahead of time.

Once they arrived, US forces “blew holes into the side of the building” to avoid traps and began their assault. They rescued 11 children and killed an unknown number of adults during the mission.

The planning for the raid, according to the New York Times, began this past summer, when the CIA received a surprising tip about al-Baghdadi’s whereabouts that placed him in a village deep inside a part of northwestern Syria controlled by a rival group. The critical “tip” came from one of al-Baghdadi’s wives and a courier, who were captured by US forces and questioned by the CIA.

surprising information about Mr. al-Baghdadi’s general location in a village deep inside a part of northwestern Syria controlled by rival Qaeda groups. The information came after the arrest and interrogation of one of Mr. al-Baghdadi’s wives and a courier, two American officials said.

Of course, just like with the raid on bin Laden, there’s something about the official story that just doesn’t seem…100%. The NYT insists that the successful raid came “in spite of” not “because of” Trump’s decision to pull US forces out of Syria. And many are already speculating that Baghdadi was only “hiding” with Turkey’s blessing, and that it now appears he was used as a bargaining chip in the negotiations between Trump and Erdogan. The Russians, meanwhile, are insisting that Baghdadi isn’t really dead. In other words, the decision to pull out of Syria was the “quid”, and information about Baghdadi’s whereabouts was the “pro quo.”

Following reports that the Lib Dems and SNP are preparing to support Boris Johnson’s bid to hold new elections in December, leaders of the EU27 have apparently overcome their doubts about approving another extension of Article 50 (France’s Emmanuel Macron was reportedly dragging his feet, just like he did the last time around).

In a Monday morning tweet, EU Council President Donald Tusk announced that the leaders of the EU would accept Johnson’s request (made under legal duress) for another Brexit “flextension” until Jan. 31, 2020. The decision, Tusk said, will be “formalized” by a written procedure.

The EU27 has agreed that it will accept the UK’s request for a #Brexit flextension until 31 January 2020. The decision is expected to be formalised through a written procedure.

— Donald Tusk (@eucopresident) October 28, 2019

According to the FT, the ministers agreed to the extension at a brief, 20-minute meeting Monday morning. All that’s left now is for the capitals of the EU to officially sign off on the legal procedures, which is expected to take a couple of days.

Authored by Soeren Kern via The Gatestone Institute,

A Portuguese populist party called Chega! — Enough! — has secured a seat in Parliament, after winning more than 65,000 votes in legislative elections held on October 6. It is the first time that an anti-establishment party has entered Parliament since Portugal became a democracy in 1974.

Chega leader André Ventura, a 36-year-old law professor and television sports personality, campaigned on a theme of law and order and opposition to both political correctness and the imposition of cultural Marxism. He rode a wave of discontent with traditional center-right parties, which in recent years have drifted to the left on domestic and foreign policy issues.

The Socialist Party won the election with 36.3% of the vote, far short of an outright majority. The center-right Social Democrats won 27.8%, the party’s worst result since 1983. Chega, which was founded in March 2019, won 2% of the vote in Lisbon and 1.3% of the vote nationwide.

Political observers agreed that Chega’s result was impressive for a party that is only seven months old, and that Ventura’s entry into Parliament would give Chega greater prominence and media visibility, in addition to financial support.

Ventura, who has said that the traditional parties “no longer respond to the people’s problems” and that he represents “disillusioned Portuguese,” has called for lowering taxes, strengthening borders and increasing penalties for serious crimes. He has called for a reducing by half the number of Members of Parliament, introducing term limits and implementing measures aimed at increasing transparency and reducing corruption.

Ventura has also called for a public referendum on reforming the Constitution in order to replace the existing parliamentary system with a presidential system that better guarantees the separation of powers. The existing political system, he said, was created by Marxists and fascists after the 1974 revolution in order to share the spoils after four decades of dictatorship. Indeed, the Portuguese Constitution calls for opening up “a path towards a socialist society.”

In the area of ​​foreign policy, Ventura has called for opposing European federalism, safeguarding national sovereignty from encroaching globalism and taking Portugal out of the UN’s Global Compact for Migration. He has called for reinforcing Portugal’s role in NATO, and for fighting against the “hegemonic temptations” of China, Iran and the European Union. He has also called for an “unequivocal commitment” to support the State of Israel and for transferring the Portuguese embassy to Jerusalem.

Portugal’s establishment media and left-wing parties have sought to discredit Chega by branding the party as “far right,” “extremist,” and “populist right wing.” A review of Chega’s “70 Measures to Rebuild Portugal” shows it to be a conservative party promoting classical liberal economic policies and traditional social values. These policies include:

• Promote the teaching of Portuguese history and culture.

• Overturn the Parity Law (Lei da Paridade) [Promulgated in March 2019, the law states that candidate lists for Parliament must have a minimum representation of 40% of each sex] and other positive discrimination quota policies in favor of merit-based policies.

• Increase tax benefits for large families and introduce measures to increase the birth rate. Portugal has a birth rate of 1.3 children per woman, the second-lowest in Europe, after Cyprus, with one child per woman.

• Ensure that parents have control over the moral education of their children by requiring schools to obtain express authorization from parents or guardians for any activity involving ethical, social, civic, moral or sexual values for students up to secondary education.

• Reform national adoption laws so that women with unexpected or unwanted pregnancies have information, assistance and alternatives to abortion.

• Change the Penal Code to require chemical castration for anyone convicted of sexual crimes against children under 16 years of age.

• Introduce mandatory prison sentences with no possibility of a suspended sentence for crimes involving rape.

• Introduce life imprisonment for the most serious crimes, namely crimes of homicide or terrorism. Portugal abolished life imprisonment in 1884 and many criminals are released from prison after serving short or partial sentences.

• Publish nationality and origin data in crime statistics.

• Reduce public spending, in particular by reducing the number of Members of Parliament to 100, down from 230, and by eliminating the perks of high office.

• Reduce the role of the state in the economy. Abolish inheritance taxes. Eliminate or reduce tariffs on electricity, gas and water.

• Eliminate access to free health care for illegal immigrants.

• Immediately inform the United Nations of Portugal’s departure from the Global Compact for Migration. The issue of immigration should be dealt with in accordance with the reality and the sovereignty of each country.

• Promote a new European treaty, in line with the Visegrad Group of countries, on borders, national sovereignty and respect for the values of European culture.

• Deport all illegal immigrants to their countries of origin. Deport all immigrants who, even if they have a legal status, commit crimes that lead to the sentence of imprisonment.

• Any illegal immigrants within the country will be excluded from the possibility of regularizing their situation and receiving any state support.

• For those seeking Portuguese nationality, increase the requirements in spoken and written Portuguese, as well as cultural integration.

• Loss of nationality for citizens of foreign origin who commit acts of terrorism or attacks on Portugal’s sovereignty, security and independence.

• Combat political and religious practices which violate the Portuguese legal system (especially anti-Semitism, gender ideologies, the application of Sharia law, female genital mutilation, forced marriages of minors, among others).

• Reassess Portugal’s role in the United Nations, “which has become a producer and spreader of cultural Marxism and mass globalism that we are unwilling to consume, much less pay for.”

Another document titled “Chega 2019 Policy Program” states:

“CHEGA is a Conservative party that advocates a view of the world and of life based on the values ​​of freedom and representative democracy, the rule of law, a limited state and the separation of powers.

“CHEGA fits into a current of thought that, based on an uncompromising defense of the dignity of the individual (who, as a human being, has the right to life, liberty and the pursuit of happiness), encourages the harmony of interests and rules of voluntary cooperation. All this in a society historically built over centuries, with its own cultural identity defined by a certain set of values, customs and traditions.

“This line of thought is also affiliated with respect for democracy, freedom, private property and the rule of law, against arbitrariness, the use and abuse of power…that is, against all forms of totalitarianism and ‘soft tyrannies’ that Alexis de Tocqueville so well characterized. This line of thought therefore argues for a liberal, democratic and pluralistic conservatism, committed to defending spontaneous order and promoting organic, orderly and peaceful progress in the primacy of unconditional political, economic and civic freedoms.

“For the avoidance of doubt, our political theory and practice is based on the reflections of authors such as Adam Smith and their ‘Spontaneous Order’; Montesquieu and his ‘Separation of Powers’; John Locke and his ‘Natural Rights’; Edmund Burke and Roger Scruton and their reflections on the interconnection between ‘Freedom, Free Markets, Tradition and Authority’; or Ludwig von Mises with his Treaty on ‘Human Action’ or Friedrich von Hayek and his ‘Law, Legislation and Freedom.’

A section titled “Globalization and European Federalism” reads:

“We defend a Euro-integration against a Euro-dilution, as we defend a globalized but not globalist world, against a massified and yes globalist world. Because globalization is a global interaction of different people, families, nations and civilizations; globalism is the attempt to destroy all differences by obtaining, as a result, an amorphous mass of peers who do not interact but absorb the dictates, censorship, and slavery imposed by a Big Brother, a sophisticated name for a mere foreman of global slaves who are powerless because they are castrated….

“European integration is not, and cannot be, a dilution of all European nations, and all their citizens, in a watery and indistinct solution of standardized and all equal Europeans.

“It is in the name of respect for the difference of men and peoples, and the identity of Europe, that we reject this Euro-dilution. True integration could lead Europe to reverse the path of its decay. But a dilution of all in all can only accelerate and make irreversible that same path.

“The concept of a globalized world presupposes, in our view, a world of different men, interacting, not a world of massed men, all poor in hopeless equality, unable to make an original and innovative contribution. A globalized world is life. A globalist world is death.

“If globalization is understood as a global method of the leveling and progressive de-differentiation of men, nations and cultures, the modern Right is against globalization. But if it represents a greater and more creative interaction between men and different cultures, each with its own unique and unrepeatable contribution, the modern Right is in favor of this globalization. Thus, it is important to distinguish two different concepts by using two different terms to describe them. We will call globalization the global interaction between the different, and globalism the global interaction between massified men because they are artificially equal to each other.

“Men, cultures and nations cannot be enclosed in themselves, and this is a fact that cannot be doubted; but men, cultures and nations must open themselves to the world in their unrepeatability and their difference, not accepting that they fade into a global and undifferentiated melting pot.

“Respect for difference is an essential condition for the exercise of freedom. And Freedom is the basic condition of humanity. There can be no political action that does not respect freedom, because it would be a political action against the essence of man who is, for the modern Right, the alpha and omega of all political action.

“This is why we place respect for difference as the cornerstone of the political building we intend to build. Because without respect for difference there is no freedom, and without freedom man loses his basic humanity, that is, his prime reason for existing.”

A petition is now circulating to ask the Constitutional Court to ban Chega. Ventura responded:

“It strikes me as very curious that in a democracy that has just elected a party with legitimate votes of the people, counted in a ballot box, there are groups calling for its unconstitutionality. This is to say that almost 70,000 Portuguese people are silly or have turned their backs to the Constitution.”

Livre, an eco-socialist feminist party, said that Chega has no place in Parliament, known as the Assembly of the Republic (AR). Ventura replied:

“Fortunately, it is not Livre that decides who goes to Parliament or not, it is the Portuguese people. The Portuguese people understood that they should give us this confidence and this mandate, and we will fulfill it. Labels worry us very little. We consider ourselves essentially an anti-system party and what Livre should ponder is why Chega won more votes than Livre, when Livre is six or seven years old and Chega is four months old. Livre should give some thought to why this happened. In fact, I think all parties should ask themselves how a four-month party elects a deputy to the AR.”

Much of the criticism of Ventura dates back to 2017, while he was campaigning for mayor of Loures, a municipality south of Lisbon. At the time he made the politically incorrect observation that local gypsies, also known as Roma, “live almost exclusively from state subsidies” and that some Roma think that they are “above the rule of law.”

More recently Ventura elaborated:

“I think there is a problem of ‘subsidiarity,’ [a principle that problems, including social problems, should be resolved at the local level] there is a problem of non-integration into the rule of law, some disrespect for the rule of law. We are going to propose are two things: First, that there is a national census to know where, who and how many Gypsies we have in Portugal, because right now nobody knows. If there is a problem with the community, we need to know where they are, who they are, what problems they have. And in Portugal you cannot even talk about it. The second aspect is effective control over the rule of law for the Roma community. For example, do child marriages still exist with girls aged 12 and 13? Are women still prevented from going to school? To do this one must act and not look the other way. We will do this in relation to the Roma community as we will do the same about female genital mutilation in relation to African communities that exist in Portugal, and as we will do to a number of others.”

When a journalist noted that only 50% of the Roma in Portugal live on welfare, Ventura responded:

“The studies we had available showed that only 15% of the Roma population lives on income from their work. I know people say I’m obsessed with this, but I think if we don’t solve this problem of Roma integration we will have very serious consequences. We had a judge who said this year that it was okay for Gypsy children to leave school because it was their tradition. There is a 14-year-old girl, for example, who is not entitled to her normal rights according to the rule of law because it is understood that there must be special protection here.

This special protection we give to the Gypsy community is precisely why we cannot solve the problem. We always say they are poor things, they can’t find work, that nobody wants to integrate them and then we think we have to protect them. I think we have to take this problem seriously, because it exists. The Roma community has a problem of integration. Most of this community does not want to integrate, but they have to integrate into the rule of law, otherwise it makes no sense to call this the rule of law.

“I understand there are different traditions, but we can’t have marriages at 13 years of age. We can’t have children out of school at 13 years of age. We must demand responsibility from those communities to which we give most as a state. We who pay taxes feel that we have a responsibility to others. But is there no duty from others to us? In Loures I found situations of brutal debt in social housing. This debt corresponds to 12 million euros. This means that there are people who have never paid a euro for their assigned home. If we do not demand they pay, just because they are Gypsies, Afro descendants or poor minorities, we are contributing to the worst: breeding ghettos. We have to demand responsibility from them. These people have to collaborate. Today my feeling is that the Roma do not collaborate or want to collaborate and prefer to be outside the rule of law. I think Roma leaders need to be called to accountability and to promote integration.”

Portugal’s establishment media have been apoplectic about the rise of Chega. In an article titled, “Far Right Comes to Parliament,” the newspaper Público opined:

“The far right comes to Parliament by the hand of André Ventura, who has moved into the limelight after accusing the Gypsy community of living on subsidies.

“In Chega he was able to gather party militants who came essentially from traditional right parties, who had turned to a party that claims to be ‘conservative in customs, liberal in economics, national in identity and personalist.’

In an essay titled, “We really have a problem,” commentator Paulo Baldaia warned:

“There is reason to be concerned about the arrival of Chega, a one-man extremist party that does not hesitate to exploit the fears of the weak to electoral success.

“If, at a time of low unemployment and economic growth, André Ventura was elected, one can imagine the growth potential of this party, which is openly intolerant of racial and ethnic minorities, if the unemployment rate is once again close to 18% (38% among young people), as it was in 2012/2013.”

In an opinion article titled, “The Snake’s Egg,” Paula Ferreira, the Deputy Executive Editor of Jornal de Notícias, wrote:

“Portugal is no longer an oasis in Europe. Here too, against the expectations of the most optimistic, the far right has appeared. Just like there, the discourse against immigrants and the non-acceptance of difference conquers the way. In line with the Visegrad group, made up of Poland, Hungary, Slovakia and the Czech Republic, Chega is committed to combating immigration. For the new party with a parliamentary seat, the UN ‘is a spreader of Marxist ideas,’ for which Ventura is unwilling to pay. This strategy cannot be ignored.”

Ventura has called on Portuguese citizens and media commentators to remain calm: “Chega is a democratic party. There is no reason for unusual alarm or attacks. Chega is not here to undermine democracy.” In a tweet, Ventura added:

“They have to get used to Chega and our way of doing politics. We do not want ministries, secretariats of state or senior posts. We want to be the voice of discontent for an entire people. That is why we are going to Parliament!”

Climate activist groups like Fridays for Future and the emergence of flygskram (Swedish for “flying shame”) have been leading the way in a recent backlash against flying. As Statista’s Niall McCarthy notes, travelers are being increasingly encouraged to ditch the airlines and opt for alternative modes of transportation, such as taking the train, in order to reduce their carbon footprint. Given how cheap airlines have transformed the world, should people be ashamed by how much they are flying?

According to a study carried out by the International Council on Clean Transportation, the answer in the U.S. at least is generally no. Around half of people in the U.S. do not fly and the bigger emission issue actually lies with a small group of frequent fliers as well as trying to figure out which flights are a luxury and which are a necessity.

The 12 percent of Americans who make more than six round trips by air each year are actually responsible for two-thirds of all U.S. air travel and therefore two-thirds of all its emissions. Each of those travelers emits over 3 tons of CO2 per year and if everyone else in the world flew like them, global oil consumption would rise 150 percent while CO2 from fossil fuel use would go up 60 percent. As over half of the population does not generally fly, the U.S. ranks 11th in emissions per capita from flying.

The frequent fliers have a considerable environmental impact, however, and they ensure that the U.S. is the country with the highest total carbon emissions from commercial aviation.

You will find more infographics at Statista

Last year, flights departing an airport from the U.S. and its territories accounted for 24 percent of all global CO2 from commerical aviation. China was the second-worst offender in 2018 with 13 percent while the UK came third with 4 percent. Global civil aviation produced around 918 million metric tons of carbon dioxide in 2018, higher than the total annual emissions of the UK and Canada combined.

Authored by Jack Martin via Coin Telegraph.com,

According to a senior advisor at consultancy firm McKinsey, John Straw, blockchain could make the City of London irrelevant in the near future. 

image courtesy of CoinTelegraph

He made the claim at a Computing.co.uk Live Event on Oct. 24. Straw added that this could result in a breakdown of the United Kingdom’s tax system, and ultimately the demise of the country’s National Health Service. 

The straw that breaks the camel’s back

Straw sees a huge potential for disruption if a scalable blockchain-based financial system gains popularity:

“Let’s say that somebody actually does produce a working blockchain peer-to-peer system. It’ll be a lending system that actually scales, we won’t need banks anymore.”

Without banks, there will be no need for central clearinghouses, and the whole business model of the City of London will collapse, taking with it perhaps the biggest tax contributor in the country.

So who is paying for services?

Alongside the reduction in tax revenue through the loss of the banking industry, Straw warns that anonymous payments could increase public tax avoidance.

He backs France and Germany’s calls to ban global stablecoin projects like Facebook’s Libra, calling blockchain, “the killer of democracy in many ways.”

If nobody is paying taxes then funding for institutions like the NHS grinds to a halt.

Blockchain: not all bad

Straw did, however, sing the praises of blockchain-based smart contracts, calling them, “a bit of a joy.”

The ability to carry out fast automated transactions while cutting out the need for services such as escrow and lawyers is a huge benefit, he explained.

For its part, the City of London is finally making moves to reinvent itself before its banking industry is potentially disrupted by cryptocurrencies and blockchain.

Germany’s resurgent populist, anti-immigration party, AfD scored impressive gains on Sunday in the ex-communist eastern state of Thuringia, once again at the expense of legacy parties such as Angela Merkel’s centre-right CDU.

The election result showed that centrism is again foundering at the expense of extreme political ideologies: while the far-left Die Linke party easily won with about 30%, the Alternative for Germany came second with 23%, according to early exit polls, more than doubling its result in the previous election in 2014.

Merkel’s Christian Democrats (CDU), which had always received the most votes since 1990, dipped massively on Sunday. The CDU, which ruled Thuringia without interruption from 1992 until 2014, plummeted 11% points from 2014 to 22.5%. At the same time, the populist right-wing AfD soared and looked set to narrowly surpass the CDU with 24%, the poll showed. The AfD also scored far ahead of Merkel’s coalition partners, the once powerful Social Democrats (SPD), who scored only 8%.

Welche Koalitionen wären in Thüringen möglich? https://t.co/tpXWxlj32H #ltwth #lwth2019 #lwth19

— tagesschau (@tagesschau) October 27, 2019

“Since 1945, we have not had such a result, where the parties of the democratic center in Germany are unable to form a government,” CDU candidate Mike Mohring told reporters in Erfurt Sunday night. “This is a really bitter result.”

It’s the latest sign of trouble for Merkel as her political career comes to an anticlimatic close. Europe’s largest economy has slowed sharply and will expand only a projected 0.5% this year, from 2.5% two years ago. At the same time, her designated successor, Defense Minister Annegret Kramp-Karrenbauer, has failed to gain traction in her party, while repeatedly stumbling as she seeks to win back voters from the far-right.

And while the incumbent Left party gained marginally to 29.5%, it lacks an absolute majority with its current coalition partners, the Social Democrats and the Greens.

The result, according to Bloomberg, reflects “the increasingly splintered political spectrum in Germany, where traditional centrist parties have been losing steadily. In Thuringia it could result in a political stalemate and possible fresh elections down the road.”

AfD’s strong showing came despite widespread criticism after an October 9th attack in the eastern city of Halle, where a suspected neo-Nazi gunman tried and failed to storm a synagogue then shot dead two people outside. After the bloody attack, the commissioner for combating anti-Semitism, Felix Klein, like many other critics, argued that the AfD had trafficked in incendiary anti-Jewish sentiment.

The Thuringia campaign has been marked by anger, threats and recriminations, with CDU candidate Mike Mohring labelling the AfD’s local leader, the nationalist hardliner Björn Höcke, a “Nazi.” However, it now appears that generically labeling anyone you disagree with as “Hitler” doesn’t score you virtue signalling political brownie points any more, and in fact ends up pissing off voters.

A triumphant Höcke told supporters on Sunday that the state, 30 years after the fall of the Berlin Wall, had voted for a second revolution, a “Transition 2.0”, and delivered “a clear ‘no’ to the ossified party landscape”.

As TheLocal notes, the rise of the AfD has made it harder for the other parties to form a governing coalition, boosting the likely role of smaller players with single-digit results such as the much reduced SPD and the Greens. The once powerful SPD plummeted to a new low of eght to 8.5%, compared to 12.4% in 2014. The Greens were at 5.5% (5.7 percent in 2014) and had to fear for their return to parliament. The FDP came in at 5.0 to 5.5 percent, close to the five-percent hurdle needed to enter parliament.

More ominously for Germany’s establishment, the angrier the people get, the more they are likely to vote… and not for any of the establishment parties. Overall voter turnout rose significantly to around 66%, up from 52.7% in 2014.

In Thuringia, the only state ruled by Die Linke, the post-election situation is complicated further by the CDU’s refusal to cooperate with the hard-left party, despite the relatively moderate stance of Ramelow, a folksy former trade union official.

And while the AfD has struggled to make major inroads in the more wealthy “west”, in the eastern states of Saxony and Brandenburg last month, the AfD also scored above 20% to become the second-largest force. However, in both cases the mainstream parties kept a pact not to enter into government with the far-right party, a pledge they have also made in Thuringia.

* * *

The election in the state of just over two million people was closely watched as another snapshot of the mood in the AfD heartland, especially given the role of Höcke, a former history teacher considered extreme even within his party.

Höcke, 47, has labelled Berlin’s Holocaust memorial a “monument of shame” and called for a “180-degree shift” in Germany’s culture of remembrance of the crimes against humanity committed by the Nazi regime. Signalling political ambitions at the national level, Höcke has openly challenged the AfD’s senior leadership and was accused of a “personality cult” after marching into a hall escorted by flag-waving supporters. The CDU’s Mohring recently declared that “to me, Höcke is a Nazi”.

With tensions running high on the campaign trail, police have been investigating death threats against Mohring and Greens co-leader Robert Habeck, and an arson attack on an AfD campaign truck.

The AfD started out as a eurosceptic fringe party before reinventing itself as an anti-Islam, anti-refugee movement to capitalize on anger over a massive influx of asylum seekers in 2015. In effect, the dramatic ascent of the AfD is largely the result of Merkel’s own “Open Door” policices.

Its populist message has resonated most strongly with voters in Germany’s former communist east where resentment lingers over lower wages and fewer job opportunities. Ramelow on the eve of the vote said that “the AfD claims to be the party that cares. But in reality, it is a party that knows nothing but outrage”.