Newly surfaced text messages between Former FBI Deputy Director Andrew McCabe and his counterpart at MI-5, the UK’s domestic security service, have cast new light on Britain’s role in the FBI’s 2016 ‘Russiagate’ investigation, according to The Guardian.
Two of the most senior intelligence officials in the US and UK privately shared concerns about “our strange situation” as the FBI launched its 2016 investigation into whether Donald Trump’s campaign was colluding with Russia, the Guardian has learned.
Text messages between Andrew McCabe, the deputy director of the FBI at the time, and Jeremy Fleming, his then counterpart at MI5, now the head of GCHQ, also reveal their mutual surprise at the result of the EU referendum, which some US officials regarded as a “wake-up call”, according to a person familiar with the matter. –The Guardian
McCabe and Flemming’s texts were “infrequent and cryptic,” but “occurred with some regularity” after the June 2016 Brexit referendum.
In his text message about the August 2016 meeting, Fleming appeared to be making a reference to Peter Strzok,a senior FBI official who travelled to London that month to meet the Australian diplomat Alexander Downer. Downer had agreed to speak with the FBI about a Trump campaign adviser, George Papadopoulos, who had told him that Russia had dirt on Hillary Clinton, the Democratic nominee in the race. –The Guardian
In 2017, The Guardian reported that Britain’s spy agencies had played a key role in alerting their American counterparts of communications between members of the Trump campaign and “suspected Russian agents,” which was passed along to the US in what was characterized as a “routine exchange of information.”
UK begged Trump not to declassify
In May, President Trump issued a sweeping declassification order on materials related to the DOJ/FBI Russia investigation – leaving it in the hands of Attorney General William Barr to determine exactly what happened to Trump and his campaign before and after the 2016 US election.
“For over a year, people have asked me to declassify. What I’ve done is declassified everything,” said Trump, adding “He can look and I hope he looks at the UK and I hope he looks at Australia and I hope he looks at Ukraine.”
via ZeroHedge News https://ift.tt/2Zn9WHo Tyler Durden
I oft get accused of being too bearish, too miserable, and too gloomy. That’s not true! I’m a very happy, smiley, even jovial chap. I’ve learnt it’s better to look at the facts, assume the worst and not be surprised. 30 plus years in markets also teaches me no matter how awful it looks, it’s never as bad as it might be, and it always gets better. So being aware of just how bad it might get, rather than fooling ourselves how good we hope it might be, seems the best plan.
And, on the subject of self-delusional behaviour, from today “Blain’s Brexit-Watch” will be a regular part of the daily porridge – at the bottom, after the Fun-Stuff.
The Fun Stuff today will be the Fed decision. Just how will the Fed frame a 25 basis point ease? Regular readers will know my view is a Fed ease is a pointless sop. The Feb will ease because they expect a now pretty-much unavoidable trade war and global slowdown, and really ought to be seen to be prepared for it.
The real issue isn’t even why we’re heading for global slowdown. These include Donald Trump’s tweets y’day accusing the Chinese of reneging on their “agreement” to buy more US agricultural products – effectively scuppering the resumed trade talks before they started. (Serious question to my US Republican friends: are you even remotely concerned about Donald’s increasing randomness?)
The real threat is China’s response. Thus far they have avoided saying anything that might overtly damage the current meetings, but equally they made clear they are not going to respond to threats. Yesterday’s responses were coded, but re Trade they effectively asked what “agreement to buy US agricultural products” is Trump talking about? At the Osaka G20 Trump demanded China bought more from US Farms, but they simply agreed to enter into a new round of talks. While Trump accuses the world’s second largest and fastest growing economy of lying, Xi is talking about how China must now rely on domestic demand to manage current “risks and challenges”. Xi is making clear he has no intention of pandering to Trump, and sending a clear signal Beijing is prepared for trade war if Trump presses the button.
Or does China now take the initiative? They are sounding increasingly confident. Yesterday they accused the US of provocation in “creating” the Hong Kong protests. This gets dangerous. Tensions are building over Hong Kong – which I warned could become a flashpoint. Bloomberg reported The White House monitoring a “congregation of Chinese forces” (Military or Armed Police) on the Hong Kong Border. Speaking to a former colleague yesterday, he confirmed a very nervous mood and a general exodus of risk capital to Singapore. If China intervenes, they are betting Trump the Bully will stomp and shout, but stop short of a meaningful response.
With the election coming up, the risk is Trump feels he can’t afford to not to act. Then it potentially gets very messy.
Trump is acting like he holds all the cards. He doesn’t. He needs to understand who does. Watch Hong Kong
Interesting results from Apple y’day as they beat expectations. They are managing the process of switching revenues from the increasingly commoditised mobile phone space into services rather well. They are retaining the allure of the Apple ecosystem, which ensures customer loyalty. The prices of cheaper models may fall, but they will retain the must have buyers who will pay premium new model prices, and continue to attract wearables and services. It’s interesting Cook declined to say much of commoditising Apple services or wearables by making them more compatible with other operating services. Disclosure: I am an Appleholic. I can’t resist.
Blain’s Brexit Watch
As the Sterling Time Bomb ticked down to $1.22, yesterday’s Brexit highlights included the threat of insurrection in the Valleys if the Welsh find it difficult to export Lamb to Europe. “Come home to a real fire… buy a cottage in Wales!” Folk are getting nervous about weakening sterling, hence the BBC interviews with pensioners in France complaining they can’t go on holiday on their state pension because everything is so expensive. Wait till import inflation really hits…
Today, Boris is in Norn Iron and about as welcome as a Lannister in Winterfell.
More hopeful were Boris’ comments about staying in the customs union for a time if a Brexit Deal can be struck. It’s a clear signal to Europe. He’s confirming his position clearly – give me some compromise and a deal Parliament can accept, and we can agree a Brexit agreement that benefits everyone.
But yesterday showed Europe aint for turning…
The secret of good comedy is timing.. I was talking to a client about Sterling weakness. We were wondering if Sterling weakness was overplayed, and my chap asked what would be the most obvious buy-signal? I suggested Boris Johnston’s refusal to pick up the phone to Leo Varadkar, the Irish Taoiseach, was telling – I opined the moment to buy Sterling would be Varadkar calling him, a clear sign Ireland, and therefore the EU, understood the dangers of No-Deal and would be willing to compromise on the backstop.
Little did we know that Boris has already called Leo, and the two of them were having a “frank exchange”. Boris politely asked for a renegotiation. Leo said no (actually I suspect it was blunter than that). “Uncompromising” was the official view.
A No Deal causes massive problems if the border is “closed/slowed” for customs. The political dimensions for the UK are enormous; risking the Good Friday peace agreement, encouraging Sinn Fien and its associated Thugocracy to reopen “operations” against the crown, and general distraction. Nasty, but containable.
For Ireland a No-Deal is a nightmare. Aside from the freight going across the Norn Iron border, the real issue is 88% of Ireland’s freight goes from Dublin to Hollyhead in Wales then onto Europe. (2017 numbers). The ports with direct links to the continent are too small to handle Ireland’s trade with the EU – and take double the time of direct UK access to Europe, which is critical for agricultural exports. There are solutions. New ships would take time to arrange. Logistical solutions are possible, such as “Authorised Economic Operators” to allow closed truck access through the UK – it works for Switzerland. But will an angry UK let them work for Ireland, when Europe won’t let work for the UK?
A deal is much better than no deal.. what’s the current betting Boris can get a deal? 20/1 on a No Deal at the bookies does not equate to the 1 million to one Boris thinks likely….
Oh, what fun…
via ZeroHedge News https://ift.tt/2Yvk13D Tyler Durden
Two days after the Treasury announced that in the aftermath of the debt ceiling deal reached last week between Trump and democrats, it would rapidly rebuild its cash balance back up to $350 billion by borrowing a whopping $433 billion in debt in the current quarter…
… a massive $274 billion higher – or more than doubling – its prior forecast announced in April 2019…
… in the process significantly tightening up liquidity in the banking system and potentially resulting in turmoil in funding and money markets as the world is flooded with an issuance of T-Bills…
… the Treasury issued its quarterly refunding statement in which it revealed that it will keep its auctions of nominal coupon and floating-rate debt at a record this quarter as the US budget deficit continues to grow.
Specifically, the Treasury will offer $84 billion of Treasury securities – matching the amount sold in each of the last two quarters – to refund approximately $57.3 billion of privately-held Treasuries maturing on August 15, 2019, which will raise new cash of approximately $26.7 billion. The securities are:
A 3-year note in the amount of $38 billion, maturing August 15, 2022;
A 10-year note in the amount of $27 billion, maturing August 15, 2029; and
A 30-year bond in the amount of $19 billion, maturing August 15, 2049.
The 3-year note will be auctioned on August 6, 2019, the 10-year note will be auctioned on August 7, 2019, and the 30-year bond will be auctioned on Thursday, August 8, 2019. All of these auctions will settle on Thursday, August 15, 2019.
The balance of Treasury financing requirements over the quarter will be met with the weekly bill auctions, cash management bills, the monthly note auctions, the August 30-year Treasury Inflation-Protected Securities (TIPS) reopening auction, the September 10-year TIPS reopening auction, the new October 5-year TIPS auction, and the regular monthly 2-year Floating Rate Note (FRN) auctions.
The US government is scrambling to finance a soaring budget deficit that is set to surpass $1 trillion in coming years as President Donald Trump is set to approve a bipartisan deal to suspend the debt limit until mid-2021 and boost spending. As a result, Wall Street analysts are predicting that auction sizes will need to be lifted again within about a year’s time. The deficit was $779 billion in fiscal 2018.
Meanwhile, commenting on the recent latest debt ceiling deal, members of the Treasury Borrowing Advisory Committee wrote to Steven Munchin that they were “pleased that you were able to negotiate a debt limit suspension bill with Congress well in advance of the deadline and are optimistic that the bill will become law in short order. It was noted, however, that this would mark the 7th debt limit suspension in less than 7 years.” and added that as debt limit suspensions expire, “Treasury has been required to employ extraordinary measures – increasing market volatility, operational risk and ultimately taxpayer cost.” And since the Committee strongly believes that “discussions on total borrowing are more appropriately considered when making appropriations rather than when funding previously approved appropriations”, the Committee “urged Congress to consider a repeal of the debt limit well ahead of the proposed 2021 expiration of the suspension.” Of course, that will never happen and instead there will be yet another debt limit suspension in due course, now that the debt limit has become nothing more than a farce.
Going back to the refunding announcement, the Treasury said it currently anticipates no further changes in issuance sizes for nominal coupon and floating-rate securities for the rest of the calendar year. The department also detailed changes to sales of Treasury Inflation-Protected Securities, or TIPS, over coming months as it continues plans it originally laid out last year to bolster its use of the securities.
Specifically, as Bloomberg notes, the Treasury said that it expects to increase the August TIPS 30-year reopening auction size to $7 billion, raise the September 10-year TIPS reopening auction size to $12 billion, and introduce the new October five-year TIPS at an auction size of $17 billion. The overall increases are consistent with the department’s prior guidance, the Treasury said.
Also of note was the discussion on potential turmoil to the money market as a result of the accelerated Bill issuances to rebuild cash balances, to wit:
A trimmed mean of primary dealer responses indicated that Treasury is anticipated to increase the supply of Treasury bills outstanding by $178 billion over the eight-week period following resolution of the current debt ceiling impasse. In comparison, primary dealers estimated market capacity to digest bill issuance without a significant price adjustment or deviation from fair value over the same period to be $210 billion. Furthermore, the primary dealers generally expected Treasury to resume meeting its cash balance policy at some point between September mid-month, related to the receipt of corporate taxes, and the end of the month. Committee members discussed the Treasury’s cash management policy, noting both the policy’s benefits related to risk management as well as the potential market disruptions that could occur if bill supply were increased too rapidly. Smith emphasized that Treasury carefully balances these considerations when making its issuance decisions. The Committee generally agreed that Treasury’s projected measured increases in bill supply balanced these factors well.
In other words, the Treasury doesn’t expect any disruption in money markets as a result of the planned increase in bill sales aimed at reaching the cash-balance goal. The net amount of bill sales at about $160 billion is seen as within the limits of what primary dealers have indicated the markets can handle and is less than what was issued following the previous suspension of the debt limit, according to an official who spoke to Bloomberg.
Finally, there was no mention of how the coming end to QT, or the Fed’s drawdown of its bond holdings, will affect debt sales. The Treasury also said it “continues to evaluate the possibility” of issuing a floating-rate security linked to the Secured Overnight Financing Rate, and here too no decision has been made. The government is interested in adding new securities that would bring in incremental demand for Treasury debt, Bloomberg reported.
via ZeroHedge News https://ift.tt/2ypea5B Tyler Durden
If anyone knows where the skeletons are buried contradicting the official 9/11 narrative then it’s none other than alleged terror mastermind Khalid Sheikh Mohammed. The Wall Street Journal and others report that he’s ready to spill the beans on Saudi Arabia’s involvement in the worst terror attack to ever take place on American soil as part of a victims’ lawsuit seeking damages from the kingdom as a state sponsor.
A letter filed in the US District Court in Manhattan disclosed an offer to spare Mohammed the death penalty in exchange for his willingness to be deposed by the victims, who are seeking billions of dollars in damage from the kingdom, making it extremely politically sensitive regarding both embarrassing secrets of Riyadh’s role in 9/11 and the potential to severely damage US-Saudi economic ties.
Khalid Sheikh Mohammed, the self-described mastermind of the 9/11 attacks. Red Cross/US government photos.
As Al Jazeera noted, however, it’s as yet“unclear if US President Donald Trump, who is close to the leaders of Saudi Arabia, would allow a plea deal for Mohammed to give evidence.” Furthermore, Bruce Fein, former US associate deputy attorney general, explained of the high stakes that, “If the plaintiffs win in this case, it could be hundreds of billions of dollars.” He added, “You have over 3,000 plaintiffs, compensatory plus punitive damages and a jury very hostile to Saudi Arabia, it could virtually bankrupt Saudi Arabia. All their assets in the US and elsewhere could be seized.”
The victims’ lawsuit has been slowly moving forward for years, especially after Congress in 2016 passed the Justice Against Sponsors of Terrorism Act (JASTA), allowing US citizens for the first time to sue a foreign state if that state sponsored international terrorism which harmed the victims.
Notably the declassification of the famous “28 pages” also in 2016, a secret document part of a 2002 congressional investigation of the Sept. 11 attacks, but which had remained hidden from public view since the report’s completion and was the only section to deal with the question of a state sponsor, was a huge milestone in further uncovering Saudi complicity.
“While in the United States, some of the September 11 hijackers were in contact with, and received support from, individuals who may be connected to the Saudi Government…”
It’s believed that Khalid Sheikh Mohammed’s crucial testimony could fill in key details surrounding what Saudi Arabia knew of the plot beforehand, and in what ways its intelligence facilitated it. Or his testimony could also open up entirely new avenues previously undiscovered.
Smoke billows from the twin towers of the World Trade Center in New York on Sept. 11, 2001. AP photo.
However, as Reuters notes, we could still be a long way out from that point:
According to the letter, the plaintiffs’ lawyers have been in contact with lawyers for five witnesses in federal custody about their availability for depositions.
The lawyers said three, including Mohammed, are housed at the Guantanamo Bay, Cuba detention camp, where they face capital charges, while two are at the “Supermax” maximum security prison in Florence, Colorado.
According to the letter, Mohammed would not agree “at the present time” to be deposed, but that could change.
Ultimately, a lot of delicate issues, not the least of which is the Trump administration’s approval of a plea deal to spare the death penalty, would have to fall in line before Mohammed starts testifying.
9/11 ringleader Khalid Sheikh Mohammed accuses the Saudi government of helping to coordinate the 2001 terrorist attacks. https://t.co/PO0Nrj5e60
One person familiar with the case, but who remained unnamed, cited in the WSJ report said the families hope to gain the alleged terror mastermind’s cooperation: “One of the main things that the 9/11 defendants have to offer is closure, particularly closure for the victims.” He added: “With capital charges gone, there is an opportunity to tell the story of 9/11 once and for all.”
However, we doubt the US government and specifically the US-Saudi intelligence nexus and ‘deep state’ has the least bit of interest in doing this. But this is precisely what’s motivating the 9/11 victim’s families to press on — to expose the ugly truth.
via ZeroHedge News https://ift.tt/2SRAP3Q Tyler Durden
It’s Fed day and I honestly can’t bring myself to repeat what was already said on Monday and Tuesday other than “Yes, the Fed will cut but it won’t be enough”. Instead, let us take a moment to contemplate several laws that seem pertinent to our current situation.
First, Gresham’s Law: that bad money drives out good. That used to be the measure of how far a government or a central bank could debase money before everyone hoarded the good stuff and circulated only less valuable coinage. Yet as we contemplate everyone slashing rates again, the opposite appears to be true: everyone is piling into bad and/or directly money-losing assets as benchmark rates decline! One could make the argument for gold, of course, given there is a clear desire to see currencies go lower on the part of central banks, even if they can’t openly say so. (They now leave that to the politicians, of course.) But USD is still, for now, a modern version.
Second, Say’s Law: supply creates its own demand. This is the “Just build and they will come!” hope as we re-embark on monetary policy previously reserved for extreme crisis: Of course, first you have to get them to build, not speculate on money-losing assets. And even then Say’s Law doesn’t hold true – you can and do get over-supply of goods relative to demand both in one market and in aggregate. Then we end up with all vs. all as sluggish economies parasite the consumers of others – all the more so if the central banks nudge-nudge wink-wink their currencies lower too.
Consider those laws and is it any surprise that as the US and China sit down to talk trade we see US President Trump tweet: “China is doing very badly, worst year in 27 – was supposed to start buying our agricultural product now – no signs that they are doing so. That is the problem with China, they just don’t come through. Our Economy has become MUCH larger than the Chinese Economy is last 3 years. My team is negotiating with them now, but they always change the deal in the end to their benefit. They should probably wait out our Election to see if we get one of the Democrat stiffs like Sleepy Joe. Then they could make a GREAT deal, like in past 30 years, and continue to rip-off the USA, even bigger and better than ever before. The problem with them waiting, however, is that if & when I win, the deal that they get will be much tougher than what we are negotiating now…or no deal at all. We have all the cards, our past leaders never got it!”
Meanwhile, a Bloomberg editorial today argues “Hong Kong is running out of time. Signs are building that the city’s political crisis is starting to affect its financial and business prospects…Hong Kong’s reputation for political stability, reliable institutions and effective governance was won over decades. Once lost, it will be hard to regain.” This, as it appears protestors arrested Sunday night are to be charged with rioting (maximum sentence: 10 years) whereas the ‘white-shirts’ who violently attacked protestors the previous Sunday have been released without charge or face much less serious offenses. Bloomberg also reports: “White House Eyeing Chinese Forces Gathered on Hong Kong Border”. That carries implications here that I don’t need to go in to.
But let me now bring in the third law – Godwin’s Law: as an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1. Indeed, nowadays it usually takes no more than two Tweets to get to that accusation in most online interaction. What’s the relevance? There is a growing swell of anti-China opinion in US policy circles. Seasoned pro-China journeymen have been elbowed aside by younger, hawkish experts who sound even more confrontational that Trump: and some of them use Godwin-esque language. Yes, there are still voices in markets lobbying or pricing for US-China free trade winning out. But let’s rewind the clock and see what the economic debate looked like in the mid-1930s before Godwin.
As a recent Jerusalem Post editorial shows, US President F.D. Roosevelt–the progressive champion of the New Deal–had a pre-WW2 policy to maintain trade and diplomatic relations with Nazi Germany; the Treasury Department even permitted the Nazis to forego a “Made in Germany” label and instead mark goods as having been made in a particular city or region to confuse US consumers. The liberal establishment also shared that stance. Smith College’s president visited Nazi Germany in 1933 and found “no cases of mistreatment” of Jews; Barnard College’s dean toured Germany in 1935 and announced Hitler’s desire to acquire “new land” was “legitimate”; Vassar College’s president saw the boycott as a step toward war, and in 1934, organized a tour of Nazi Germany; and a Bryn Mawr professor similarly denounced the boycott as “simply war without bloodshed.”
Let me make myself abundantly clear: I AM NOT MAKING ANY COMPARISONS OF ANYONE TO HITLER! There is no Godwin goin’ on.
What I am trying to show is that Gresham’s Law matters for markets even in a world without coinage; Say’s Law is a nonsense that will make central banks ignoring Gresham’s Law create worse global imbalances that lead to geopolitical tensions; and hence as US policy hawks start to circle those who think we can avoid a trade rift between the US and China using highfalutin free trade arguments overlook the chequered history of such a principled stance. Anyway, something to think about while we wile away the hours waiting for the Fed.
via ZeroHedge News https://ift.tt/2LTVeoa Tyler Durden
While The Fed has clearly veered from any data-dependence (aside from the level of The Dow), some still care about the state of the nation’s ‘real’ economy and today’s ADP was expected to rebound from dismal May and June data and its did with a better-than-expected 156k print for July.
“While we still see strength in the labor market, it has shown signs of weakening,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
“A moderation in growth is expected as the labor market tightens further.”
Goods-producing jobs rose 9k while Services dominated once again, rising 146k in July, but notably very small businesses (1-19 employees) have seen job losses for three straight months…
Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth is healthy, but steadily slowing. Small businesses are suffering the brunt of the slowdown. Hampering job growth are labor shortages, layoffs at bricks-and-mortar retailers, and fallout from weaker global trade.”
Goldilocks? Or enough bad data for Powell to cut?
via ZeroHedge News https://ift.tt/2KhPYr0 Tyler Durden
One word – “Racism” – dominated the first night of the second round of Democratic Party Presidential Nominee debates…
Former Democratic Colorado Gov. John Hickenlooper came in last with 8 minutes, 49 seconds of speaking time. The debate lasted for more than two hours. Here is a complete list of the totals:
Democratic Massachusetts Sen. Elizabeth Warren: 18:33
Independent Vermont Sen. Bernie Sanders: 17:45
Democratic South Bend, Indiana, Mayor Pete Buttigieg: 14:07
Democratic Montana Gov. Steve Bullock: 10:59
Former Democratic Texas Rep. Beto O’Rourke: 10:58
Democratic Minnesota Sen. Amy Klobuchar: 10:49
Former Democratic Maryland Rep. John Delaney: 10:31
Democratic Ohio Rep. Tim Ryan: 9:47
Author Marianne Williamson: 8:52
Former Democratic Colorado Gov. John Hickenlooper: 8:49
And despite having almost the least time and at one point appearing to almost yodel while warning of ‘dark psychic forces’…
Ten of the remaining Democratic Party presidential contenders faced off July 30 on the first night of the second primary debate. A definite split in ideology has emerged between those candidates who believe government should take a greater role in American life and those who believe government should take complete control of American life.
Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) are defining themselves as candidates who oppose any policy that would result in a single cent of profit for the private sector. They believe that government – and only the government – should provide solutions to every problem. Health care dominated the evening’s discussion, and Sanders, in particular, became clearly irate when others on the stage spoke about solutions which involved private insurance companies.
Health Care Issue Reveals A Deep Divide
Montana Governor Steve Bullock, Ohio Representative Tim Ryan, Former Colorado Governor John Hickenlooper, and Senator Amy Klobuchar of Minnesota all acknowledged that the private sector has a role to play in providing coverage for health care. Each of these candidates recognized the numerous and significant negative consequences of doing away with private insurance.
It was John Delaney – the former Maryland representative – who really went after Sen. Sanders on the latter’s wildly idealistic proposals for universal health care. Like every other Democrat in the race, Delaney claims to support the idea that health care is a right but disputed the idea that the government should simply deprive 180 million Americans of their private insurance – most of those policies subsidized by employers.
As usual, Sanders came over as angry, strident, and completely intolerant of any idea that involved private citizens and corporations making money without government approval. His entire platform appears based on the idea that the government should provide everything and that any private enterprise generating a profit is, by definition, greedy and evil.
To the senator’s credit, he was the only Democrat on the stage advocating single-payer health care who admits that Americans will pay more in taxes to finance the system. Warren, Robert O’Rourke, and South Bend Mayor Pete Buttigieg all dodged the question, despite the moderators’ best efforts to get a straight answer.
The most hilarious moment of the debate, possibly, was the claim by Sanders that, under his universal health care system, hospitals would save money by not having to deal with the bureaucracy of the insurance companies. While it is certainly true that insurance companies put their policyholders through the wringer when it comes time to settle a claim, the notion that handing over the nation’s entire health care system to the federal government would reduce paperwork is not only laughable, it is patently untrue. If there is one thing governments excel at, it is creating pointless bureaucratic nightmares.
Who Goes Big, Who Goes Home?
Pete Buttigieg
As is par for the course in any primary debate – Democrat or Republican – there was a lot of rhetoric and little substance. On immigration, gun violence, and foreign policy, this was particularly true. It is certainly clear that, as a whole, the Democratic Party has decided health care is the one issue upon which it can effectively campaign. Every other issue seems to be nothing more than dressing.
The split between moderates (relatively speaking) and the hardcore progressive/socialist wing is becoming ever more apparent. Of the former group, Delaney and Ryan obviously tried to make their mark – possibly because they saw this debate as their last chance to stake their claim to the nomination on a national stage. Of the latter faction, Sanders and Warren commanded the spotlight.
Sen. Klobuchar may have done just enough to keep her nomination run afloat for a while longer, as did Hickenlooper, but O’Rourke, Buttigieg, and the author Marianne Williamson did little to move the needle on their respective campaigns.
For the first time, the Democratic Party’s extreme left came under fire from some of its own, but the question is whether any of those more moderate candidates – who tried to present alternative, more realistic policy options – will even survive long enough to take the stage for the next round of primary debates.
via ZeroHedge News https://ift.tt/2MupG7Q Tyler Durden
The unexpectedly early end to the latest round of trade talks in Shanghai, indicating that any goodwill to restore US-China trade is now dead and buried, weighed on global stocks on Wednesday ahead of the highly anticipated Fed meeting, even as US equity futures levitated higher on the back of strong results and even stronger guidance from Apple (which is expected to surpass a $1 trillion market cap again today), with Treasury rates unchanged, the dollar holding firm and Britain’s pound subdued amid rising fears of no-deal Brexit.
Combative warnings from President Trump cast a shadow over the day’s other main event, as the Sino-U.S. trade talks concluded in Shanghai on Wednesday, with Beijing attributing the lack of progress to Washington’s flip-flopping.
“Trade talks have finished without an agreement,” said Justin Onuekwusi, fund manager at Legal & General Investment Management. “Of course, it doesn’t help that almost as a prelude to the conversation you get tweets that are quite antagonistic,” he said, referring to a tweet by Trump warning China against waiting out his current presidential term before finalizing a trade deal.
The fresh trade tensions come ahead a FOMC meeting which is expected to see interest rates reduced by 25 basis points in its first rate cut in more than a decade. Yet the focus is on whether this will be a “one and done”, or Powell will leave the door open for further easing to shore up the world’s largest economy in the face of slowing global growth and the fallout from trade conflicts.
A 25bps rate cut is certain as is another 25 basis point reduction by September – with the market pricing in a 20% chance of a 50bps rate cut today – but what will matter is whether this is seen as a recessionary cut (validated by a 50bps cut), or an “insurance”, or precautionary easing. How Powell frames today’s move will determine if stocks will rise or fall before the end of the day. Expectations for Fed easing helped lift the S&P 500 index 2.4% so far this month.
“Exactly what happens today is far from a foregone conclusion,” said Deutsche Bank’s Jim Reid. “Although the Fed have given no real encouragement to the notion of a 50 basis point (bps) cut it’s worth noting that the last time the Fed began a series of rate cuts, in September 2007, their opening move was a 50 bps cut, and a similar 50 bps cut happened when the Fed began cutting in January 2001.”
Trump on Tuesday reiterated his call for the Fed to make a large interest rate cut, saying he was disappointed in the U.S. central bank and that it had put him at a disadvantage by not acting sooner.
“The bond and equity markets have fully priced in a cut,” Paul Brain, head of fixed income at Newton Investment Management, said in a note. “On balance, there may be some that are disappointed by the size of the cut and the subsequent messaging, but once that is out of the way there will be a realization that rates are heading lower.”
Until the 2pm FOMC announcement, global stocks were biding their time, with the MSCI world index and Europe’s pan regional Stoxx 600 slipping 0.1%, the latter flirting with a fresh one-month low and decidedly underperforming the S&P500, as worries over trade wars and Brexit offset encouraging signals from the earnings season. The Stoxx Europe 600 index struggled for direction amid mixed company reports, with personal and household-goods shares among the biggest losers as L’Oreal dropped after posting disappointing sales figures. Construction companies led gains after upbeat results from Vinci. London’s FTSE fell 0.3% while Frankfurt stocks gained 0.2% and Paris was treading water.
In focus were banks, with strong results from French lender BNP Paribas and Switzerland’s Credit Suisse countering a poor report from British bank Lloyds. Also of note is the sharp rebound in German retail sales, which surged 3.5% M/M, smashing expectations of a modest 0.5% increase, and the biggest monthly increase since 2006.
Asian stocks ex-Japan fell to a six-week low with China mainland stocks down nearly 1% and Hong Kong tumbling 1.3% as China and the U.S. concluded their Shanghai trade talks without signaling any progress and disappointment among investors with corporate earnings. The MSCI Asia Pacific Index fell as much as 0.8% to the lowest level since June 19. Technology was the worst-performing group Wednesday, mainly dragged by Samsung Electronics as the company reported lower profit and said it faces uncertainty due to growing macroeconomic issues. Hong Kong market closed early Tuesday as a storm struck the city. Philippines’ PSEi Index fell 1.3%, led by basic materials companies. Elsewhere, India’s Sensex traded little changed.
Overnight, Chinese data showing factory activity shrank for the third month in a row in July added to the somber mood.
Seemingly oblivious to the global equity woes, US futures pointed to main indexes opening higher as General Electric delivered strong results. On Tuesday, major Wall Street stock averages ended slightly lower with the S&P 500 losing 0.26%, however, momentum reversed after the closing bell when Apple shares soared 4.2% as its Q3 earnings beat estimates and CEO Tim Cook cited “marked improvement in Greater China”.
In currency markets, the dollar index traded flat around 98.064 after pulling back from a two-month high of 98.206 touched on Tuesday. The dollar index was set for a monthly gain of 1.4%, its best since last October. The greenback was also steady against the yen and the euro, with the former undermined on Tuesday by the BOJ’s decision to refrain from expanding stimulus though it committed to doing so “without hesitation” if required. Most other currencies traded in narrow ranges before the Fed meeting.
Meanwhile the British pound hovered near a 28-month low hit the previous day on growing concerns about a disorderly Brexit. GBPUSD recovered from the drop seen in the past two sessions but was still set for a 4% decline this month, its worst showing since 2016. The Australian dollar climbed against all its major peers as headline inflation was higher than the estimate.
Treasuries were modestly higher, led by front-end ahead of the Fed’s expected rate cut. Volumes were light during Asia session and European morning with several additional key events ahead including July ADP employment change, quarterly refunding announcement and month-end. The 10-year yield was at 2.05% after a 3bps decline since July 25. The TSY curve had a small steepening bias, with yields richer by 1.2bp to 2bp across the curve with 10-year ~2.047%, lower by 1bp; Around the world, gilts underperformed, cheaper by 1.5bp vs. Treasuries, as sterling stabilizes following recent sell-off, while bunds keep pace.
In geopolitics, North Korea fired multiple projectiles early on Wednesday which was said to be 2 short-range ballistic missiles and a different type of weapon than previous launches, Following the launch, South Korea convened a national security meeting, while Japan Defense Ministry said no ballistic missiles reached Japan’s territory or exclusive economic zone and sees no immediate impact on Japan’s security from the North Korea launch.
In commodity markets, crude oil futures rose for the 5th straight day, buoyed by a bigger-than-expected drop in U.S. inventories. U.S. WTI crude gained 28 cents to $58.34 per barrel while Brent crude futures LCOc1 added 48 cents to $65.2. Three-month copper on the London Metal Exchange (LME) CMCU3 was almost unchanged at $5,950 a ton.
Expected data include mortgage applications. CME Group, Carlyle Group and Spotify are among companies reporting earnings.
Market Snapshot
S&P 500 futures up 0.2% to 3,019.50
STOXX Europe 600 up 0.06% to 385.36
MXAP down 0.6% to 158.48
MXAPJ down 0.7% to 519.26
Nikkei down 0.9% to 21,521.53
Topix down 0.7% to 1,565.14
Hang Seng Index down 1.3% to 27,777.75
Shanghai Composite down 0.7% to 2,932.51
Sensex up 0.06% to 37,418.69
Australia S&P/ASX 200 down 0.5% to 6,812.56
Kospi down 0.7% to 2,024.55
German 10Y yield fell 0.7 bps to -0.406%
Euro down 0.08% to $1.1146
Brent Futures up 0.7% to $65.16/bbl
Italian 10Y yield rose 8.7 bps to 1.308%
Spanish 10Y yield fell 2.8 bps to 0.324%
Brent Futures up 0.9% to $65.16/bbl
Gold spot down 0.02% to $1,430.53
U.S. Dollar Index up 0.06% to 98.11
Top Overnight News
China and the U.S. concluded a new round of trade talks in Shanghai on Wednesday following a hiatus of almost three months, with little immediate evidence of progress being made toward ending their year-long dispute
The talks come at a time when President Trump lashed out at China for what he said is its unwillingness to buy American agricultural products and said it continues to “rip off” the U.S.
A tropical storm shut Hong Kong’s financial markets for the first time in almost two years, adding chaos to a city which has been wracked by protests for weeks
German unemployment rose and demand for new workers dwindled, a sign that weakening economic momentum is starting to affect the labor market. Spanish economic growth slowed more than expected in the second quarter, adding another layer of gloom to an increasingly fragile situation in the euro region
“We now have a fresh approach to negotiating a deal and are well prepared to leave the EU,” U.K. Brexit Secretary Stephen Barclay said on Twitter, adding that he was confident as two new Brexit committees “are now up and running”
The White House is monitoring what a senior administration official called a congregation of Chinese forces on Hong Kong’s border
North Korea fired multiple unidentified projectiles off its east coast early Wednesday, Yonhap reports, citing the South Korean Joint Chiefs of Staff
Asian equity markets followed suit to the negative performance seen across global peers amid trade concerns following US President Trump’s Twitter rant regarding China, while the looming FOMC decision, mixed Chinese PMI data and earnings deluge added to the cautious tone. ASX 200 (-0.5%) was dragged lower by losses in utilities and financials but with downside stemmed by strength in the energy sector after a rally in oil prices, while Nikkei 225 (-0.9%) suffered the ill-effects of a firmer currency with the best and worst performers in Tokyo driven by their quarterly results. KOSPI (-0.7%) weakened after North Korea conducted another launch which was said to be a new type of weapon and with earnings also in focus including index heavyweight Samsung Electronics which showed final Q2 oper. profit and revenue topped preliminary results but still suffered a 56% Y/Y drop in profits. Conversely, its main rival Apple saw a different fate with the US tech giant gaining around 4.5% after-hours due to a beat on both top and bottom lines and although it missed on iPhone sales its revenue forecast for next quarter surpassed Street estimates. Elsewhere, Hang Seng (-1.3%) and Shanghai Comp. (-0.7%) conformed to the wide risk averse tone after President Trump’s recent criticism on China and warning of a much tougher deal if China holds out until after the next US elections, with participants also digesting mixed Chinese PMI data in which the headline Manufacturing PMI beat expectations but remained below the 50 benchmark level and Non-Manufacturing PMI missed forecasts. Finally, 10yr JGBs traded relatively flat and were only marginally supported by the risk averse tone as well as the BoJ’s presence in the market for JPY 1.24tln of JGBs with 1yr-10yr maturities.
Top Asian News
China, U.S. Trade Talks End Early in Shanghai
Hong Kong Rioting Charges Signal Harsher Line Against Protesters
Hintze’s CQS Strikes Deal With Asia Managers in Regional Push
Major European indices are mixed [Euro Stoxx 50 Unch], as this morning saw the early finish of US-China trade talks with initial reports indicating that the talks ended with no sign of a breakthrough after an earnings dominated morning for indices. Sectors are also mixed with no standout sector at present. In terms of this mornings earnings, L’Oreal (-3.8%) are under pressure after missing on sales growth in-spite of the Co’s CEO noting that H1 was the strongest in terms of like-for-like growth in decades; notably the Co. also announced a EUR 750mln share buyback. Sticking with the CAC 40 (+0.1%) this morning also saw earnings from Airbus (+0.8%) who beat on Q2 revenue and confirmed FY guidance; recently, the Co. also benefitting recently from WSJ reports indicating that internal risk analysis at Boeing (BA) showed the likelihood was high of further cockpit emergencies following the first crash. Elsewhere, of note for banking names Credit Suisse (+4.2%) are firmer after beating on Q2 net revenue and net income as are BNP Paribas (+3.5%) post earnings where the Co’s Q2 revenue beat on consensus.
Top European News
Salvini Weighs Early 2020 Vote, Govt Breakup in Fall: Repubblica
Polish Inflation Unexpectedly Surges to Highest Level Since 2012
Next Surges as E-Commerce Sales Boost Fuels Guidance Upgrade
DUP’s Foster Says Ireland Must ‘Get Real’ on Deal: Brexit Update
In FX, AUD, NZD – The Aussie stands as this morning’s G10 winner amid promising domestic inflation data which follows the RBA’s back-to-back rate cuts since June. CPI Y/Y rose to 1.6% (Prev. 1.3%) in Q2 but remains below the Central Bank’s 2-3% target. In terms of implications on monetary policy, the CB is likely to stand pat on rates for now in order to examine further effects of its recent rate cuts and the government’s tax cut package. AUD/USD trades closer to the top of the intraday range thus far, after testing 0.6900 to the upside. Elsewhere, the Kiwi is lacklustre after the ANZ business confidence further deteriorated alongside the activity outlook. NZD/USD hovers just above the 0.6600 mark having visited a current intra-day low of 0.6590.
DXY, CNY – Relatively side-ways trade for the DXY (for now) heading into the FOMC’s latest policy decision (full preview available in the Research Suite) and with little impetus from the fallout of US-China talks in Shanghai. The initial reports/commentary on the meeting provided little substance. Although no breakthrough was reached (as expected), discussions are said to have been constructive and future talks between the nations will happen. DXY remains flat above 98.00 having earlier tested the figure to the downside. Meanwhile, the CNH also remains tentative and within a narrow range vs. the Buck after having visited its 50 DMA (6.8967) at the European open.
GBP, EUR – Overall little changed thus far with the Pound capped amid fears of a Halloween no-deal crash and tomorrow’s BoE policy decision and QIR (full preview available in the Research Suite). GBP/USD continues to meander sub-1.2200, and as a reminder, the following support levels are still in play: 1.2110 (March 17 low), 1.2085 (Jan 17 low), 1.2000 (psychological) and 1.1841 (2016 flash crash low). Elsewhere The EUR remains flat within a 20-pip intraday range as mostly in-line inflation, growth and unemployment metrics failed to spur a reaction ahead of the FOMC’s policy decision. EUR/USD trades just below 1.1150 ahead of minor support levels at 1.1133/14/21/01, although large option expiries (1.3bln at 1.1145 and 1.2bln at 1.1100-05) may keep the pair contained heading into today’s NY cut.
EM – Another day of gains for the Lira as traders anticipated the CBRT’s QIR to signal further normalisation in its domestic economy, in which it delivered. The Central Bank cut its 2019 year-end inflation forecast mid-point to 13.9% from 14.6% whilst its 2020 figure was maintained at 8.2%, adding that the economic outlook has brightened compared to the April release. USD/TRY breached its 200 DMA (5.5600) to the downside and took out a support level at 5.5500 to print a low of 5.5150 ahead of a Fib support at 5.4172.
In commodities, the oil complex has held onto most of its API-induced gains with WTI futures hovering just below USD 58.50/bbl and Brent north of USD 65/bbl. The report showed that crude inventories fell by 6.02mln barrels over the last week, a larger decline than the expected 2.60mln barrel drawdown. Traders today will be eyeing two events as catalysts: 1) The weekly EIA report for confirmation of the decline in stocks, 2) the FOMC’s policy decision for any Dollar or sentiment-induced action. Elsewhere, sources stated that Libya’s El-Sharara oilfield (300k BPD) has halted production amid a valve closure on a pipeline, although it is not clear how long the closures could last. Of note, WaPo reported that the Trump administration is set to announce that it will waiver five difference nuclear related sanctions on Iran, although it is currently unclear whether the waivers will be oil related. Looking at metals, gold and copper remain flat, as usually the case ahead of the FOMC’s decision.
US Event Calendar
8:15am: ADP Employment Change, est. 150,000, prior 102,000
8:30am: Employment Cost Index, est. 0.7%, prior 0.7%
9:45am: MNI Chicago PMI, est. 51, prior 49.7
2pm: FOMC Rate Decision
DB’s Jim Reid concludes the overnight wrap
So today is the long-awaited Fed decision day, where markets are fully pricing in what is expected to be the first rate cut since December 2008. But exactly what happens today is far from a foregone conclusion, as the question still on investors’ minds is by how much the Fed will cut, and whether there’ll be any messages about the future path of rates going forward. The market currently fully prices a 25bp cut and implies an 16% chance of a larger 50bp cut. Although the Fed have given no real encouragement to the notion of a 50bps cut it’s worth noting that the last time the Fed began a series of rate cuts, in September 2007, their opening move was a 50bp cut, and a similar 50bp cut happened when the Fed began cutting in January 2001. Rates were higher back then though. The last time the Fed started an easing cycle with a 25bps cut was in September 1998, when they ultimately cut rates 3 times and successfully prolonged the expansion until the recession in 2001.
In their preview last Friday (link here ), our US economists predict a 25bp cut, but they say that “the key question is how Chair Powell and the Committee frame the narrative for further easing through year end.” With this in mind, investors will be paying close attention to Chair Powell’s press conference. Our economists write that they “do not expect the Committee to pre-commit to another cut in September”, but instead the amount of further easing is going to be data dependent. Will a market hungry for stimulus accept this?
Indeed we’re at a fascinating juncture in markets. It feels like the global macro risks are building for late summer/autumn (hard Brexit, US/China trade uncertainty, US/EU trade issues to come before year-end and global manufacturing effectively in recession) but all of us are reluctant to fight the central banks. Is this a trap? Indeed even our traditionally bullish Binky Chadha has some reservations about the risk/reward from this starting point. In his piece last week ( link ) he suggested that there have been 19 Fed easing cycles since the 1950s and this one fits almost exactly inline timing wise with the average slowdown in ISMs and LEIs through history. However, where it differs markedly is that only once (in 1995) has a rate cut occurred when the S&P 500 was around record highs. On average, the market has peaked 4 months before the cutting cycle started and was down a median -12% in between the two points. Also, he pointed out that 9 of the 19 rate cutting cycles failed to avert a recession. The recessions typically saw a -27% peak to trough drawdown in the S&P (mostly after the first cut) and on average bottomed 5 months after the Fed started cutting. Of the 10 that didn’t end in recessions, growth rebounded quickly – on average after 2-3 months – and although the S&P still fell around -7%, within 6 months of the first cut they had gained 12% from the lows and sat comfortably above pre-cut levels. So history would suggest quite a binary outcome from here and based on this alone one would have to say that the risk/reward doesn’t look particularly compelling especially as we’re at record highs. So don’t fight the Fed is a famous refrain but nearly 50% of the time they’ve been powerless to stop negative economic and market momentum in a growth slowdown.
Ahead of today’s FOMC decision, President Trump said yesterday that “I would like to see a large cut” in rates, maintaining his calls for easier monetary policy from the Fed. Separately, comments via Twitter from the President sent S&P futures lower before the US open, as he said that “China is doing very badly, worst year in 27 – was supposed to start buying our agricultural product now – no signs that they are doing so. This is the problem with China, they just don’t come through.” In response, The People’s Daily – the official paper of the Communist Party, said overnight that China has no motive to “rip off” the US and has never done so, and China won’t make concessions against its principles on trade. All this is occurring as the US and China have kick started a new round of trade talks in Shanghai. Watch this space for any headlines.
After this set back pre-market, US equities didn’t fall any further during the actual session but failed to get back to flat after trading in a relative narrow band through the day. The S&P 500 (-0.26%), NASDAQ (-0.24%), and DOW (-0.09%) all ended lower, though US bank stocks did gain +0.47% in contrast to their European cousins (more below). Fixed incomes moves were also muted, with 2- and 10-year treasury yields -1.4bps and -0.9bps lower, while HY credit spreads mirrored the moves in equities, widening +3.5bps. Earnings news was again mixed, with Under Armor (-12.28%) underperforming after signaling for a revenue decline from its core North American market. Procter and Gamble (+3.82%) and Merck (+0.96%) both gained after beating analyst expectations. After markets closed, Apple reported better-than-expected revenue and traded +4.42% overnight. Though iPhone sales and revenue disappointed, the company performed better via its mac, iPad and wearable business lines. Apple also reported gross margins at the top end of analyst estimates, illustrating that they continue to generate growth without lowering prices.
Meanwhile in Europe it was a gloomy day for equities, with the STOXX 600 falling -1.47%, its worst fall in 12 weeks and the index’s lowest close in a month. The continent’s indexes were lower across the board, with the DAX (-2.18% and worst day for 6 months), CAC 40 (-1.61%) and the FTSE MIB (-1.99%) all losing ground. Banks in particular suffered, with the STOXX Banks down –2.90%, bringing the index’s falls over the last two days to -3.77%, the biggest two-day fall since May. It’s not 100% clear to me why yesterday was such a bad day but weak Euro area data (see below), disappointing earnings, and perhaps worries about US/China trades talks may have weighed.
Bonds advanced for the most part, with ten-year bund yields matching their record low from earlier this month at -0.399% after falling -0.8bps yesterday. Spreads widened however, with Italian ten-year spreads over bunds up +2.1bps, while European HY spreads were up +6bps. Gilts rallied -1.9bps as fears of a hard Brexit continued to build.
The FTSE 100 outperformed again, only down -0.52%, although as before this was due to sterling’s continued slide, with the currency down -0.52% (trading largely unchanged this morning) against the dollar as it fell to fresh two-year low (only 0.89% off 34 year lows) as investor’s concerns over a no-deal Brexit outcome continued. The falls came as Prime Minister Johnson spoke to the Irish Taoiseach, Leo Varadkar, with a press release from Downing Street saying that “the Prime Minister made clear that the UK will be leaving the EU on October 31, no matter what”. He is also making it quite clear that he won’t sit down with EU leaders unless they agree to re-open the Withdrawal Agreement – something they have shown no appetite in doing. So unless someone blinks, or Parliament finds a way (including an election) to reverse course, then we are heading for a hard Brexit.
Overnight in Asia we have seen China’s July PMIs with manufacturing printing at 49.7 (vs. 49.6 expected), marking it the third consecutive month in contractionary territory. There was improvement in conditions for large enterprises (at 50.7 vs 49.9 last month) while small (at 48.2 vs 48.3 last month) and medium (at 48.7 vs. 49.1 last month) enterprises continued to deteriorate. The new export orders component rose to 46.9 (vs. 46.3 last month) but continues to remain well below 50. The services PMI came in at 53.7 (vs. 54.0 expected) bringing the composite PMI to 53.1 (vs. 53.0 last month). After the official PMIs, the focus is likely to turn to China’s Caixin manufacturing PMI tomorrow which focuses more on private sector/SME and is expected to print at 49.5. Meanwhile, China’s political leadership has announced its priorities for 2H 2019 by pledging to tackle ongoing tensions over trade “effectively” while offering incremental additions to stimulus policies.
Staying with Asia, Hong Kong’s Chief Executive Carrie Lam said yesterday that there is “no room for optimism for the second quarter and the entire year,” on GDP growth given the US-China trade war and other “uncertainties,” while pledging to “spare no efforts” to deal with anti-government protests that risk harming the city’s growth. Hong Kong’s GDP data is due today at 4:30 pm (Hong Kong time). Elsewhere, this morning North Korea fired two short-range ballistic missiles off its east coast, conducting its second such test in a week ahead of US Secretary of State Michael Pompeo’s visit to Asia. South Korean Defense Minister Jeong Kyeong-doo said in remarks after the launch that “If they threaten us and provoke us, North Korea’s regime and the North Korean military is with no doubt defined as our ‘enemy.’” This suggests that such actions could cause Seoul to reconsider its decision to downgrade the threat level of its neighbour.
This morning in Asia markets are following Wall Street’s lead with the Nikkei (-0.74%), Hang Seng (-1.11%), Shanghai Comp (-0.53%) and Kospi (-0.15%) all down. Elsewhere, futures on the S&P 500 are up +0.23% while WTI crude oil prices are up +0.67% on a report from the American Petroleum Institute that US crude inventories dropped by 6.02 million barrels last week.
In terms of data yesterday, the Conference Board’s consumer confidence came in well-above expectations at 135.7 in July (vs. 125.0 expected), the highest level in 8 months. The present situation reading also rose to 170.9 while the expectations measure rose to 112.2. Also encouragingly, the prior month’s readings on each of those metrics were revised several points higher. The closely-watched labour differential, which is a good leading indicator for the labour market, rebounded +5.2pts after last month’s sharp drop, approaching again its highest level of the expansion. Separately, the core PCE inflation figure for June came in at 1.6%, consistent with DB econ’s forecast but 0.1pp below consensus. Our economists also noted that, as a function of revisions, the trend over the last few months has weakened while 2017-2018 looks even stronger. This gives further ammunition to the FOMC’s doves at today’s meeting.
In Europe however, ahead of today’s Q2 GDP and July inflation release for the Eurozone, the releases only added to concerns over the economic slowdown. French GDP in Q2 grew by a smaller-than-anticipated 0.2% qoq (vs. 0.3% expected), while the Swedish economy actually contracted by -0.1% (vs. 0.3% growth expected). The European Commission’s economic sentiment indicator for the Eurozone fell to 102.7 in July, down from 103.3 in June and its lowest level since March 2016, and the sectoral breakdowns didn’t offer much hope either, as the industrial confidence reading fell to -7.4, its lowest since July 2013, and services confidence fell to 10.6, its lowest since September 2016. And to finish off the gloomy picture, Germany’s GfK consumer confidence reading fell to 9.7, the lowest figure in over two years, while German HICP inflation fell to 1.1% in July, the lowest since November 2016. The ECB and market tends to focus on the HICP, which is used for German inflation-linked bonds, though it has different weights from CPI (which surprised to the upside at 1.7%).
Turning to the day ahead, the outcome of the much-anticipated FOMC meeting is obviously the highlight for investors. It’s also a very big day for data releases, with the highlights being the advance reading of Eurozone GDP in Q2, along with the June unemployment rate and July CPI. In addition, there are German retail sales for June and the unemployment change for July, Italian Q2 GDP and unemployment for June, French CPI inflation for July, Canadian GDP for May, and from the US the MNI Chicago PMI for July. In terms of earnings, the main releases tomorrow include General Electric, Airbus and Lloyds Banking Group, and we have the second night of Democratic primary debates.
via ZeroHedge News https://ift.tt/2Yx0AaI Tyler Durden
After roughly half-a-day of negotiations, the US trade delegation has broken off talks with its Chinese counterpart and is already on its way back to Washington, a sign that no new progress was made, and that trade talks between the US and China remain at an impasse.
According to Bloomberg, US delegates including Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer wrapped up talks with Vice Premier Liu He and their other Chinese counterparts on Wednesday afternoon at the Xijiao State Guest Hotel in Shanghai, according to a pool report.
As the talks ended, China’s Ministry of Foreign Trade issues a response to President Trump, who has been warning the Chinese not to keep stalling on the talks.
In response to a question about Trump’s tweets, Chinese Foreign Ministry spokeswoman Hua Chunying said that although she was not aware of the latest developments during the talks, it was clear it was the US that continued to “flip flop.”
“I believe it doesn’t make any sense for the US to exercise its campaign of maximum pressure at this time. It’s pointless to tell others to take medication when you’re the one who is sick,” Hua said.
This week’s meetings, the first in-person trade talks since a G20 truce last month, amounted to a working dinner on Tuesday at Shanghai’s historic riverfront Fairmont Peace Hotel and a half-day of negotiations on Wednesday, Reuters reports. Neither team commented publicly.
Liu He bid farewell to his US counterparts as their motorcade pulled away from the Guest Hotel following a group photo. The talks concluded at around 1:45 pm local time – roughly 30 minutes before they were scheduled to begin.
The Chinese apparently didn’t make any new concessions to the US, despite last night’s PMI report which showed that China’s factory activity continued to shrink in July, a sign that the trade dispute is taking a serious toll on the Chinese economy.
What’s worse, the talks were supposed to focus on “goodwill” gestures, like the agricultural purchases promised by China, and the rollback of sanctions on Huawei promised by Trump. Apparently, the two sides are still at an impasse regarding these two issues. These issues, as Reuters reports, are “somewhat removed” from the more core US complaints in the trade dispute, including US demands surrounding forced technology transfers and state subsidies.
Of course, few analysts expected this week’s talks – the first round of live talks since the second trade truce was struck between Trump and President Xi in Osaka – to yield much progress. But now that they’ve collapsed, does the Fed have the green light to deliver a 50 bp rate cut?
via ZeroHedge News https://ift.tt/2Ore6wO Tyler Durden
There’s no hiding place down here
You know, there’s no hiding place down here
I went to the rock to hide my face
But the rock cried out, no hiding place, now No Hiding place down here
–Gospel Standard
I really like Dwayne “The Rock” Johnson. His work ethic, attitude and humility are an inspiration.
In an age when it seems every third person attached to the entertainment industry is a pedophile at worst and a scumbag at best, Johnson’s superhero persona on and off screen is exactly what this society needs.
And no one knows this better than Dwayne Johnson himself.
“Breaking: PM Boris Johnson is in fact my cousin [though we clearly look more like twins],” the Hollywood actor tweeted. “Jokes aside, PM did say something in his speech I liked – ‘the people are our bosses’. 100% agree. The people/audience/consumer will always matter most. #ourboss.”
DWAYNE “THE ROCK” JOHNSON — DELETED TWEET 7/29/2019
Johnson knows that everyone goes to see his movies. His latest movie exists because he won’t work with Vin Diesel who Johnson feels takes his job for granted.
And, despite holding very strong opinions, he is always inclined to look for the positive in everything. It’s refreshing for a cynic like me to see that.
It’s also good PR. Conservatives watch movies. So do Marxists.
I don’t begrudge him that. It’s his business, his brand and his choice.
Taken at face value Dwayne Johnson said nothing objectionable. Taken cynically Dwayne Johnson said nothing objectionable.
But that’s no reason to let him off the hook by the perpetually offended Twitterati.
If anything, it’s the main reason he had to be attacked by a rabid and, frankly, insane Remain twitter mob who are so triggered, so ideologically possessed they can’t bear to hear someone they like condone something said by someone they despise, Boris Johnson.
Even if what was said was a basic tenet of polite and decent society: that if we have to suffer the indignity of government, that government should be our servant not our master.
It was particularly galling that it was said by a Prime Minister ‘elected’ by a super-minority of the British People. I get that.
But some things, like the Magna Carta, should transcend even Brexit.
And it shows just how deeply scarred our political life is. We’re to the point where Thomas Jefferson could come back from the dead and recite the Declaration of Independence. It would be decried as racist because Jefferson was a slave-owner.
And then he’d have a milkshake thrown on him before being hauled off to jail for spouting hate speech. Snopes would then ‘fact-check’ his words and declare it ‘fake news.’
Facebook would ban people for sharing the video.
Because who says something today is far more important than what they said. In today’s internet culture wrongthink is forever.
How far have we sunk in our political cynicism that founding tenets of what we’re supposed to be fighting for are stifled because the wrong person uttered them?
You don’t have to like Boris Johnson to agree with the sentiment. But in the world of ideological possession, purity of essence trumps all other considerations.
It’s a sad and pathetic state of the times that someone as obviously conscientious and well-meaning as Dwayne Johnson can’t express a political thought that should be non-partisan.
All Dwayne Johnson did was remind everyone that the key to success is hard work and humility. Because that’s what good government, if there is such a thing, demands. Being humble enough to do right by the people even if it is at odds with your personal beliefs.
Dwayne Johnson should not have deleted the tweet. He should have let it stand. It’s what he believes. It’s who he is. Anyone who follows him even obliquely knows this.
Once it’s out there it won’t go away. There’s no hiding from this once it starts. And no halfway competent Hollywood publicist should have advised Johnson to do so.
The box office for Hobbes and Shaw is immune to this tweet. But it may not be by his deleting it.
By backing down Johnson empowers the ugly people who don’t embody any of what he stands for and alienates those who do.
And it shows me that Dwayne Johnson isn’t ready to lead.
Because leadership means having the moral courage to be vilified. To have principles means being lambasted for them. No matter how good or positive a person you are, someone will throw shade on you simply because you highlight how ugly they are.
People throw shade at the Dalai Lama for pity’s sake.
This admittedly minor incident is however indicative of where we are headed culturally. People feel so dis-empowered they take to Twitter to vent their spleens at anyone who sports any deviance from their ideological purity.
It speaks to exactly what the Johnson bros were saying. There’s something wrong with our politics that is deeper than the issues du jour.
The way back from the brink of societal collapse is remembering who the true bosses are, empowering ourselves to rise above petty partisan politics and stop tweeting about how unfair it all is.
Lesson to Dwayne: No matter how much you try to couch something in non-confrontational terms someone is looking to be offended. There are whole squads of people paid to be so offended, shape the narrative and drown out rationality.
For this reason and so many others Twitter is a terrible form of communication. It’s also a worse mechanism for societal change.
In fact, it’s the opposite of that. Sitting on your ass decrying Tory corporatism on your iPhone over your Vodaphone connection at a Starbucks is not a revolutionary act.
In fact, it’s the exact opposite. And it doesn’t matter if you’re the people who hate Boris Johnson and Brexit or the ones decrying Dwayne Johnson for deleting the tweet.
You’re all ineffectual narcissists trapped in the Matrix; doing the bidding of the worst people in the world who are supposed to work for you.
And that’s the thing everyone is searching for a hiding place from, their own lack of humanity and, more importantly, humility.
“And when the sinners gonna be runnin’
At the knowledge of their fate
They’re gonna run to the rocks and the mountains
But their prayers will be too late
I went to the rock to hide my face
But the rock cried out, no hiding place, now No Hiding place down here “
