Rabo: “Stocks Are Trading As If Cain Has Already Been Appointed – Everybody Wants A Slice”

Submitted by Michael Every of Rabobank

An offer he can’t refuse

More than a few news agencies are now reporting that President Trump intends to nominate former CEO of Godfather’s Pizza, Herman Cain, for a seat on the Federal Reserve Board of Governors. Mr. Cain did serve for one year as Chairman to the Federal Reserve Bank of Kansas City. Other than that he has a proven track record in food, restaurants, retail and, more recently also being a contributor to Fox News. In 2011/12 Mr. Cain even made a bid for becoming President of the United States, calling for a much simplified US tax-code, where a flat tax rate of 9% would be the key feature in corporate, income and sales taxes. Although he did well during the campaign, he was forced to abandon his bid following allegations of sexual harassment.

According the NY Times, Mr. Cain used to be a proponent of a return to the gold standard (which would actually suggest he is an inflation hawk), but that he has changed his mind and has now embraced the notion that the risk of deflation outstrips that of inflation. So whether Mr. Cain is truly the best candidate out there remains to be seen (and the Senate has to confirm Mr. Trump’s nominees), but President Trump clearly appreciates Mr. Cain’s qualities (pizza, Fox News and a proponent of low interest rates). Indeed, Mr. Trump has already called Mr. Cain “a truly outstanding individual”. Did Trump make him an offer he cannot refuse?

So picture this: everyday could be “pizza day”! Surely equities are trading as if Mr. Cain has already been appointed – everybody wants a slice! The S&P500 made a y-t-d high yesterday, although bond investors, again, showed their more bearish nature with a flattening of the German curve (3m Bills +3bp, 30y -4bp) as well as the US Treasury curve.

In addition to Trump’s dovish nominees, the conviction of sitting hawks is also slowly fading. While Ms. Mester reiterated that she doesn’t see rate cuts yet, she did admit that “it is possible” that the hiking cycle may be over. So on balance, the FOMC is starting to get more dovish, as also radiated from the March meeting.

And as we’ve noted before, the Fed isn’t alone in that respect. Yesterday’s accounts of the March ECB meeting showed no urgent concerns, but whichever way they slice or dice it, there is clearly increasing unease among the Council members. Against this background, there was support for the broad measures announced in March. In fact, some had called for a longer extension of forward guidance, into 2020Q1. This suggests that the Council isn’t yet very convinced that it will be able to hike rates early in 2020, and adds to the risk that the ECB may need to postpone its guidance at a later date.

Additionally the accounts note that “concerns were voiced” over the potential effects of persistent low rates. No conclusions were drawn, however, and thus no policy measures to address any potential effects were discussed either. As we concluded in our earlier note on tiered rates, these concerns and potential measures suggest that the Council sees rates on hold for a longer period than their guidance suggests. This also chimes with the abovementioned calls for a longer extension of guidance.

In other words, risks are clearly skewed to low(er) rates for longer, and notwithstanding the implications this may have for the economic outlook, equities are enjoying this prospect.

Day ahead

Data from Germany this morning seemingly contradicted the downside risks highlighted above, but when you dig deeper, a different picture emerges. In contrast to yesterday’s astonishingly weak German factory orders for February, industrial output for that same month actually rose 0.7%, largely offsetting the drop in production in the first month of the year. At least this takes the sharp edges of yesterday’s numbers, although we need to bear in mind that whilst the orders data tend to be more volatile, the causality usually runs from orders to output rather than the other way around. Moreover, digging deeper into the details shows that it was the construction sector that saved the day, reporting a 6.8% m/m increase in output. Since the average daily temperature in Germany was 5.8 degrees higher than in the same month last year, this probably goes quite some way in explaining the boost in construction output. Excluding the construction sector, output fell by 0.4% m/m and this seems to be a better fit with the recent data on orders as well as purchasing managers’ indices. In other words, don’t get too excited yet.

Today’s Non-Farm Payrolls in the US for March is one of the key reports to watch. The ADP figures released earlier this week surprised to the downside, but given the recent distortions due to the partial government shutdown, there is additional uncertainty surrounding the March figures. Following a slow 20K jobs gain in February, the consensus is looking for a 177K gain in March, basically re-establishing monthly jobs growth at the lower end of the range of previous years. More important perhaps are the average hourly earnings data. Last month, earnings growth reached 3.4% y/y, its highest level since April 2009 and – given the tightening labour market – providing some support for the view that the tightening labour markets is slowly but surely starting to exert upward pressure on wages. Although it would require a fairly strong monthly 0.3% gain to maintain the annual growth rate at its February rate, one can only assume that – against the backdrop of the Fed’s recent U-turn – it is the assumption among policy makers that the labour market recovery is in its final stages and will soon reverse. If not, expect an interesting debate to develop at some point.

Happy – Pizza – Friday!

via ZeroHedge News http://bit.ly/2Kbp3Rd Tyler Durden

Global Stocks Rise On, What Else, “Trade Talk Optimism”

Another day, another round of “US-China trade talk optimism.”

Global stocks continued their drift higher to close the week, with the MSCI World Index on track for a second straight week of gains while emerging-market stocks extended their winning streak to seven days, the longest stretch in more than a year, as both China and the U.S. claimed progress in trade talks.

“Buy algos” were encouraged after both China and the US claimed progress in talks to end their trade war, with President Xi Jinping pushing for a rapid conclusion and President Donald Trump talking up prospects for a “monumental” agreement that might be announced within four weeks, although he warned that it would be difficult to allow trade to continue without an agreement. Benchmark bond yields ground higher and the dollar reached a three-week high against the yen before U.S. job data. Better-than expected industrial output data out of Germany and receding fears of a disorderly Brexit also helped perk up sentiment.

While Chinese markets were closed, US equity-index futures advanced alongside Asian stocks, European bourses and Chinese stock futures after a Xinhua report that President Xi Jinping said substantial progress had been made on the text for a trade deal. “The main overnight news, which is positive if not very substantial, is around the U.S.-China trade deal,” said Mizuho strategist Antoine Bouvet. “German industrial orders yesterday added to worries in the manufacturing sector, but industrial production today actually surprised to the upside.”

“There’s a little bit of a risk that it’s a sell-on-the-news event,” Ann Miletti, a fund manager at Wells Fargo Asset Management, said of U.S.-China trade talks. “The devil is really in the details – how good is this deal going to look?”

Europe’s Stoxx 600 traded sideways, shrugging off trade optimism and Brexit news ahead of today’s U.S. payrolls. Eurostoxx 50 is little changed, Markets in Paris and London added 0.1%. German stocks were treading water, with modest gains in basic resources and autos sectors offset by weakness in real estate and telecoms, though the index was on track for its best week since December 2016. German industrial output rose by 0% percent in February, better than the 0.5% expected, as mild weather helped a surge in construction activity. But manufacturing production dipped as Germany continues to suffer from trade friction with China and Brexit angst after narrowly avoiding recession last year. Leading economic institutes slashed their forecasts for 2019 growth on Thursday and warned a long-term upswing had come to an end.

Earlier in the session, trading volumes throughout Asia were muted, with cash markets in China and Hong Kong shut for a holiday.

S&P futures pointed to modest gains for stocks on Friday, with S&P 500 edging up 0.16% to 2,887, only 1.75% away from its Sept 2019 closing high, which is prompting some caution: “Share markets have run hard and fast from their December lows and are vulnerable to a short-term pullback,” said Shane Oliver, head of investment strategy at AMP Capital. “But valuations are okay, global growth is expected to improve into the second half of the year, monetary and fiscal policy has become more supportive of markets and the trade war threat is receding.”

Attention now turns to the March payrolls report, which is forecast to rebound to 180,000 in March, following February’s surprisingly low 20,000 rise. In focus will be hourly earnings, which climbed to 3.4% in February, the fastest pace since April 2009. Hopes for a solid number were boosted by data on jobless claims, which fell to a 50-year low last week. With traders betting that the next Fed move will be to lower interest rates, not raise them, the fixed-income market could be affected by any signs of wage strength in today’s report.

In other overnight news, President Trump commented that there would be a 25% tariff on car imports from Mexico if he decides to apply tariffs but also said that Mexico has done good regarding the border during past 4 days, while he added that he did not say the border would stay open for a year but that he would place tariffs first. Trump also confirmed he has recommended Herman Cain to the Fed board.

In the latest Brexit news, UK PM May sent a letter to EU’s Tusk proposing an extension for Brexit until 30th June 2019 with potential to terminate early should a deal be ratified before then. Letter states that the UK will begin to prepare to host European elections and that the UK needs to provide a clear plan by Tuesday (the day before the EU Council meeting). Separately, there were reports EU’s Tusk is preparing to offer the UK a 12-month flexible extension, according to a senior EU source; which has since been confirmd by a Senior EU Official.  EU Council President Tusk’s proposal of a year long extension to Brexit would permit the UK to leave as early as 1st July if the UK has passed with Withdrawal Agreement by that point, according to a senior EU official.

The optimistic mood again weighed on safe-haven debt, with government bond yields in Europe and the United States rising in early trade. 10 Year US and German bond yields climbed to a two-week high, the latter just above zero, the former rising to 2.535%.

In currencies, the progress on trade was enough to keep the safe-haven yen under pressure and lift the dollar to a three-week high of 111.79. The dollar steadied before the release of U.S. payrolls data, while sterling initially advanced after the U.K. asked the EU to kick the Brexit can down the road once again, only to sink below Thursday lows after.

An index of developing-nation currencies was little changed, with Indonesia’s rupiah leading gains versus the dollar along with South Africa’s rand and Mexico’s peso. President Xi Jinping reportedly said substantial progress had been made on the text for a trade deal, raising hopes of a swift end to the dispute that has weighed on the global economy

In commodities, Brent crude futures were off 23 cents at $69.17 after touching $70 a barrel for the first time since November, as expectations of tight global supply outweighed rising U.S. production. WTI priced at $62.16 a barrel. Spot gold dipped to $1,291.61 per ounce but held above a near 10-week low hit overnight.

Market Snapshot

  • S&P 500 futures up 0.2% to 2,887.00
  • STOXX Europe 600 unchanged at 387.88
  • MXAP up 0.02% to 162.40
  • MXAPJ down 0.1% to 538.85
  • Nikkei up 0.4% to 21,807.50
  • Topix up 0.4% to 1,625.75
  • Hang Seng Index down 0.2% to 29,936.32
  • Shanghai Composite up 0.9% to 3,246.57
  • Sensex up 0.3% to 38,802.54
  • Australia S&P/ASX 200 down 0.8% to 6,181.26
  • Kospi up 0.1% to 2,209.61
  • German 10Y yield rose 1.5 bps to 0.009%
  • Euro up 0.05% to $1.1227
  • Brent Futures down 0.5% to $69.08/bbl
  • Italian 10Y yield fell 2.1 bps to 2.165%
  • Spanish 10Y yield rose 0.7 bps to 1.117%
  • Brent Futures down 0.1% to $69.35/bbl
  • Gold spot down 0.2% to $1,289.19
  • U.S. Dollar Index little changed at 97.27

Top Overnight News

  • Through a message passed to U.S. President Donald Trump via Chinese Vice Premier Liu He, President Xi called for an early conclusion to trade negotiations, the official Xinhua News Agency said. Liu, who took part in talks this week in Washington, said the two sides had “reached new consensus on such important issues as the text” of a trade agreement, according to Xinhua
  • A potential U.S.- China trade agreement could face challenges from other World Trade Organization members depending on the details and whether other nations feel it unfairly hurts them, the group’s chief said.
  • May’s request for another Brexit postponement sets up a battle with the EU ahead of a key summit next week. Tusk favors a 12-month extension that could be ended early if a withdrawal deal is approved before the year is up, according to an EU official
  • German Chancellor Angela Merkel reiterated her vow to do everything she could to avoid a no-deal Brexit, while maintaining solidarity with Ireland
  • Cleveland Fed President Loretta Mester, answering a question about the likelihood the next policy move will be a cut rather than a hike, says “I’m biased to either keeping rates where they are or moving them up a little bit”
  • President Trump intends to nominate Herman Cain, the former pizza company executive who ran for the 2012 Republican presidential nomination, for a seat on the Fed Board, according to people familiar
  • China has drafted rules to regulate the nation’s $109 billion peer-to-peer lending sector as part of a plan to clean up the market by 2020, according to a document seen by Bloomberg
  • Norway’s $1 trillion sovereign wealth fund got the go-ahead to cut emerging markets from its fixed income holdings as part of an overhaul of its $310 billion bond portfolio
  • Italy’s cabinet approved a series of measures to boost the economy, even as the Treasury prepares to slash growth forecasts for the year and raise its projected budget deficit

Asian equity markets traded slightly mixed following a similar indecisive lead from Wall St. as US-China trade optimism was partially offset by pre-NFP caution and holiday thinned conditions from closures across the Greater China region. ASX 200 (-0.8%) was the laggard and extended on its pullback from 7-month highs, with the declines led by tech which mirrored the underperformance of the sector stateside. Nikkei 225 (+0.4%) was positive with the index underpinned by favourable currency moves and trade-related hopes, while the KOSPI (+0.1%) remained afloat as index giant Samsung Electronics weathered a miss on its Q1 earnings guidance. Chinese markets were shut for national holidays although there was certainly no lack of relevant news flow with trade talks remaining in the limelight, in which leaders from both sides noted substantial progress was made and President Trump suggested that a deal could be announced in the next 4 weeks. Finally, 10yr JGBs were pressured amid spill-over selling from T-notes and as stocks in Japan remained afloat, while the BoJ were only present in the market today for T-bills. US President Trump said rapid progress is being made in trade discussions with China and we’re getting very close to trade deal, but added it is not yet made and could be announced in the next 4 weeks, maybe more or less. Furthermore, US President Trump said he will hold a summit with Chinese President XI in Washington if there is a deal and that he will discuss tariffs with Chinese Vice Premier Liu He, while he cited tariffs as well as IP theft when asked about sticking points.

Top Asian News

  • Jokowi Gambles on Rural Voters as Discontent Grows in Cities
  • India Didn’t Shoot Down Pakistan’s F-16, U.S. Magazine Says
  • Energy Tycoon $1 Billion Richer as Vietnam Bet Boosts Stock
  • Lucrative Coal Trade Beckons Those Bold Enough to Test China

A cautious start for European equities [Euro Stoxx 50 Unch] after a relatively mixed Asia-Pac session, as is usually the case ahead of US jobs data. Italy’s FTSE MIB (+0.4%) modestly outperforms its peers as Saipem (+3.0%) rose to the top of the Stoxx 600 on the back of a positive JP Morgan broker move. Sectors are mixed with no clear standout.

Top European News

  • May Writes to Tusk Seeking to Delay Brexit to June 30
  • France Backs Banking Consolidation Amid German Merger Talks
  • Swedbank Chairman Quits as Scandal Rips Through Top Ranks
  • There Is an Art to Issuing a ‘Good’ Profit Warning, RBC Argues

In FX, AUD/NZD/GBP/EUR all bucked the broader trend of consolidation and sideways trading into NFP and Canada’s latest employment report, albeit not by much in terms of moves vs the Greenback. However, the Aussie has extended its rebound from post-RBA lows and outperformance vs the Kiwi in the process. Aud/Usd has retested recent 0.7100+ peaks as Aud/Nzd advances through 1.0550 towards 1.0575 and Nzd/Usd declines to new early April lows below 0.6740. The catalysts, more momentum towards a US-China trade agreement, per latest reports from Beijing especially, another rise in iron ore prices and a supportive Aussie note from GS that Is going against the grain with an unchanged RBA policy call to support its revised forecasts for Aud/Usd over 3 and 6 month horizons (0.7400 and 0.7500 from 0.7200 and 0.7300 respectively). Recall, the US bank also went long of Aud/Nzd yesterday and decent option expiry interest sits at the 0.7100 strike (1.6 bn). Elsewhere, Cable remains volatile and fixated on Brexit headlines around the 1.3100 handle amidst latest reports about a potential lengthier A 50 extension to mid-year or end March 2020 with a flexible early termination option. Eur/Usd is still rangebound between 1.1200-50 after topping out not far above a 1.1246 Fib again on Thursday, but deriving some underlying support from better than expected German IP data and Italy’s ISTAT suggesting that its leading economic indicator points to signs of a recovery or base. Note also, hefty option expiries may be keeping the headline pair in check, as 2 bn resides between 1.1185-1.1200 and 2.5 bn from 1.1240-50.

  • CHF/CAD/JPY – Minimal deviation against the Usd that is equally restrained pre-US and Canadian labour updates, with the DXY firm, but confined between 97.177-331. The Franc is pivoting parity and Loonie straddling 1.3350, while Usd/Jpy is just off a marginal new wtd high of 111.80 having breached its 200 DMA (111.49).
  • EM – Contrasting fortunes for regional currencies as the Lira continues to lick wounds amidst the ongoing political contention following local Turkish elections and wrangling with the US over its S-400 order from Russia. Moreover, Usd/Try remains elevated near 5.6000 ahead of next week’s Economic Plan and the next CBRT policy meeting, in contrast to Usd/Zar below 14.1000 and not far from the 100 DMA (14.0625) in wake of SA’s ratings reprieve for the Rand by Moody’s earlier this week.

In commodities, tentative trade in the energy complex as WTI (Unch) and Brent (-0.3%) gear up for this week’s US jobs data.  WTI rests just above its 200 DMA at 61.38, whilst its global counterpart straddles just below its 200 DMA at 69.54. Oil is on track for its longest weekly winning streak since the back-end of 2017, overall supported by the output decline in Venezuela coupled with growing hope of a US-Sino trade truce. Crude has advanced around 40% this year thus far as OPEC+ supply curbs counter record high US shale production. As a reminder, tonight will see the release of the Baker Hughes rig count, although price-action may be muted amidst macro-newsflow. Not much price action in the metals complex (thus far) with gold (U/C) treading water around yesterday’s close after briefly breaching its 200 DMA (1283) to the downside yesterday, whilst copper (-0.1%) remains tentative amidst the cautious risk-tone. Finally, Australia’s Port Hedland’s iron ore shipments to China declined by 8% M/M, totalling 30.7mln tonnes vs. 33.5mln tonnes in February after the port was shut for almost 4 days due to cyclones hitting Western Australia.

US Event Calendar

  • 8:30am: Change in Nonfarm Payrolls, est. 177,000, prior 20,000
    • Unemployment Rate, est. 3.8%, prior 3.8%
    • Average Hourly Earnings MoM, est. 0.3%, prior 0.4%; YoY, est. 3.4%, prior 3.4%
    • Average Weekly Hours All Employees, est. 34.5, prior 34.4
  • 3pm: Consumer Credit, est. $17.0b, prior $17.0b

DB’s Jim Reid concludes the overnight wrap

Good morning from Munich, one of my favourite cities in Europe and not just because Liverpool beat them in the Champions League last month. It always brings back memories when I pass the Bayerischer Hof in Munich as when I was staying there in 2002 on a work trip unbeknown to me Liam Gallagher of Oasis was also there at the same time and evidently required some major dental work after a fracas in the hotel nightclub. It was all over the newspapers on my return. Fortunately I was long tucked up in bed when it happened.

Markets were certainly waiting for something to get their teeth stuck into for most of yesterday as everyone awaited the news of the Trump-China VP Liu He meeting and also held fire ahead of today’s payrolls. The former ended after the US markets closed last night. The officials announced no major breakthrough on trade talks but the direction of travel seems to continue to be positive. Trump did float a potential timeline: four more weeks of talks, then two weeks to schedule and attend a summit with President Xi. He said that IP protections, certain tariffs, and enforcement are all still being negotiated. In the meantime, Chinese President Xi Jinping said that substantial progress has been made in trade talks with the US and called for an early conclusion of the US-China trade text.

Equity markets in the US were already shut by the time those headlines hit however sentiment overnight in Asia is slightly on the positive side with the Nikkei (+0.41%) up and Kospi (+0.04%) flatish. Markets in China and Hong Kong are closed for a holiday. Elsewhere futures on the S&P 500 are up +0.15% and 2y and 10y treasury yields are up c. 1bps this morning.

How markets fare today will likely be dictated by the March employment report in the US this afternoon. A reminder that last month we had that huge plunge in payroll growth to just +20k which was the lowest since September 2017 and the third lowest since January 2011. Expectations are for a bounce back 177k print however that is still below the average of the last three (186k), six (190k) and twelve (212k) months. To be fair there is a decent range on the Bloomberg survey at 110k to 277k. Our US economists have a 165k forecast and they note that the hostile weather in mid-March also raises the risk of another downside miss. As for earnings, the consensus is for a solid +0.3% mom reading (DB at +0.2% mom) which should keep the annual rate at +3.4% yoy. The unemployment rate is also expected to hold steady at 3.8%. So lots to look out for as ever.

Back to yesterday and it wasn’t an overly exciting day in markets with the S&P 500 (+0.21%) advancing a bit as gains for energy and materials were offset by losses for utilities and tech. The index has traded in a tight 0.93% range over the last three sessions, its second tightest of the year. The NASDAQ closed -0.05% to leave the winning run behind at five days with Tesla (-8.23%) doing some of the damage, however the DOW (+0.64%) did outperform helped by gains for Boeing (+2.89%). In Europe the STOXX 600 (-0.27%) faded to a small loss. WTI oil remained tame (-0.58%), capping its narrowest three-day trading range since last September. The moderate risk off lifted bonds with 10y Treasuries down -1.1bps and Bunds (-0.6bps) back into negative territory again. At my Munich dinner last night of 10-15 clients, I asked who thought Germany should take advantage of ultra low yields and borrow 50yr or 100yr money and invest it in their economy. Everyone raised their hands. I thought there would be a more conservative balanced response and was therefore pleasantly surprised.

Elsewhere the USD (+0.20%) was firmer which weighed on some EM currencies. The Turkish lira outperformed, advancing +0.64% (down -0.48% this morning) after Bloomberg reported that the European Bank for Reconstruction and Development as well as the World Bank’s International Finance Corporation are looking at increasing their Turkish NPL portfolios. It wasn’t clear if this was a policy change or just consistent with their standard operating procedure, but the currency rallied sharply on the headlines.

The fact that it’s taken this many paragraphs to get to Brexit suggests that there’s been a dip in the newsflow. Indeed, perhaps fitting of the current state of affairs in Parliament, the most entertaining story was a water leak forcing a debate on tax legislation in the Commons to be suspended yesterday. So a rare chance for MPs to discuss a non-Brexit topic was scuppered by rusty pipes. The only notable Brexit news was the suggestion that any more votes on Brexit proposals might not take place before PM May travels to Brussels next week. That raises the risks that Mrs May goes to Brussels next Wednesday and asks for an extension with no firm plan. That will increase the risks of a hard Brexit a week from today. I still think that’s unlikely but it will put the EU in a difficult position if no progress has been made. Talks between May and Corbyn are ongoing with Tories saying they were “productive” whereas Labour didn’t offer up any descriptive word about them. One gets the sense that both sides realise they have a lot to lose by agreeing a grand bargain however both BBC’s Laura Kuenssberg and ITV’s Robert Peston tweeted last night that their sources suggested the talks are credible and could result in something. It’s possible we’ll learn more this afternoon. Sterling closed -0.62% yesterday as the stakes were raised.

In other news, it’s worth flagging another ECB deposit tiering story yesterday, this time from the FT. The article suggested that the arguments in favour of tiering are building within the ECB camp. The story made the point that the key argument is the increasing likelihood of rates remaining at current low levels for an extended period of time. As such, tiering could be part of a package in which the ECB adjusts its forward guidance to endorse market pricing, which is no hikes until at least later in 2020.

Speaking of the ECB and tiering, the minutes from the March meeting which were out yesterday didn’t offer much in the way of new hints. The text revealed that “concerns were voiced that over time the effects of persistently low rates could depress banks’ interest margins and profitability with negative effects on bank intermediation and financial stability in the longer run. It was recalled that the consequences of low rates differed across the maturity spectrum and across banks, depending on their business models and the structure of their assets and liabilities”. Crucially, there was no direct reference to tiering.

As a final point on Europe, there were a couple of GDP downgrade headlines which hit the screens early yesterday. The first was Germany where “institutes” revised down their 2019 growth forecast to 0.8% from 1.9%. However it turned out that the 1.9% was from back in September so it wasn’t all that surprising given the six months of slowing data since then, and compares to the IFO forecast at 0.6%. Shortly after, Bloomberg reported that the Italian Treasury is set to slash its 2019 growth forecast to 0.1% from a 1.0% forecast previously. Again though, this is closer to where the market is. So both headlines were really more noise than anything else.

Turning quickly to yesterday’s Fedspeak, where the overall message was consistent with the existing policy stance. NY Fed President Williams said that “policy is in the right place” and that growth should slow to around 2% this year. Separately, two of the more hawkish committee members, Cleveland’s Mester and Philadelphia’s Harker, maintained their positions for a pause in policy for now, with Mester arguing for “no urgency to change our policy stance” and Harker saying “I continue to be in wait-and-see mode.” They both left the door open for future hikes though. Mester said if the economy evolves as she expects, then “rates may need to move a bit higher” and Harker said “my outlook for rates remains, at most, one hike for 2019 and one for 2020.” Finally, Bloomberg reported that President Trump plans to nominate former presidential candidate Herman Cain for one of the vacant Fed Governorships. He would need to be confirmed by the senate.

Wrapping up the few data prints that were out yesterday. In the US claims continued their trend of reversing the Q4 spike, dropping 10k to 202k (vs. 215k expected) and in fact to a new 49-year low. The four-week moving average is now down to 214k and the lowest since October. Prior to this, we had another disappointing factory orders print in Germany where orders fell -4.2% mom versus expectations for a +0.3% mom lift.

Finally to the day ahead now, where this morning we’ve got more data out of Germany with the February industrial production print, followed by the February trade balance print and March house price data and Q4 labour costs data in the UK. The aforementioned March employment report in the US is the highlight today while late this evening we’ll get the February consumer credit print for the US. Away from that, the Fed’s Bostic speaks this evening while the big US banks will today submit their capital plans with stress test results announced in June.

via ZeroHedge News http://bit.ly/2UlkKYb Tyler Durden

Experts Say Ethiopian Air Pilots Failed To Do One Thing That Could Have Prevented Deadly Crash

Now that air-traffic security experts have had some time to peruse Ethiopian Airlines preliminary report on the deadly crash of flight EET302, a few are coming forward to dispute its central claim: Namely, that the pilots followed the manufacturer’s safety protocols and did everything in their power to right the plane, but were unable to counteract the automated MCAS system, which effectively doomed everybody on the flight.

Though the report acknowledged that the pilots abandoned the safety procedures after they failed to wrest power back from MCAS, Roger Cox, a former accident investigator at the National Transportation Safety Board, who has flown earlier models of the 737, said the two pilots made one critical oversight: They left the engines set to maximum thrust, Bloomberg reports.

Pilots

“The thrust was full bore the whole way,” said Roger Cox, a former accident investigator at the National Transportation Safety Board, who flew earlier models of the 737 while working as an airline pilot. “That is extremely curious.”

Ethiopian Transport Minister Dagmawit Moges said in a press conference Thursday that the pilots followed proper procedures issued after the October crash of a Lion Air jet, and EA CEO Tewolde Gebremariam defended the pilots during an interview on CNN, saying they did everything they were expected to do, and then some.

But Cox said the plane’s high speed made it impossible to recover during the final seconds of the crash as it spiraled toward the ground. Another former FAA director blamed the pilots for aggravating the situation.

At near-maximum thrust, the plane became more difficult to fly, multiplying the problems created by the flaw in the 737 Max’s software, according to pilots who reviewed a preliminary report issued Thursday by Ethiopia’s Aircraft Accident Investigation Bureau. High speed also made it impossible to recover in the final seconds when the plane’s nose pointed downward into their final, high-speed dive.

“They exacerbated it,” said Jeffrey Guzzetti, the former director of the FAA’s Accident Investigation Division.

Still, there’s no question that an erroneous reading from a faulty sensor set the tragedy in motion by incorrectly initiating MCAS with a warning about an impending stall.

Sensors in the aircraft that report how high its nose is pointed relative to oncoming air varied by almost 60 degrees. One of the “angle-of-attack” gauges read 15.3 degrees, likely an accurate reading for a plane taking off. The other erroneously read 74.5 degrees – which would suggest a plane pointing almost straight skyward.

Other pilots disagreed with the report’s main conclusion, saying the pilots had actually failed to follow the procedures, likely a factor of the chaotic situation inside the cockpit.

Pilots interviewed by Bloomberg didn’t agree completely about the factors.

Some took issue with Ethiopia’s transport minister, saying the Ethiopian Airlines pilots had actually failed to properly follow the procedures. Other pilots said the flight crew’s actions were understandable given the chaotic situation.

All of the pilots interviewed by BBG agreed that the failure to pull back on the throttle was critical, and eventually made it impossible for the pilots to pull the plane’s nose back up manually.

The plane took off at 94 percent of full power, according to the report. That is normal for liftoff, but pilots then typically pull back the power soon afterward. Even though the captain called for setting the speed at 238 knots, or 274 miles per hour, about a minute after takeoff, the engine thrust remained at the same level for the entire short flight, according to the report.

Before it picked up speed in its final dive, the plane was flying as fast as 365 knots, or 420 miles an hour – almost twice the usual top speed at that low altitude. In addition to the multiple warnings prompted by the MCAS failure, the pilots were also getting audible alerts indicating they had exceeded the safe flying speed, according to the report.

That isn’t to say that Boeing doesn’t need to update its system. Pilots shouldn’t be put in situations where a string of split-second decisions can mean the difference between life or death for everybody on board. Boeing, ultimately, is still culpable for the crash, most agreed.

via ZeroHedge News http://bit.ly/2YR6l4A Tyler Durden

May Request Another Brexit Extension Until June 30

Theresa May has formally requested another short-term Article 50 extension in a letter to Donald Tusk, asking the EU27 to delay Britain;’s exit date until June 30 on the condition that the UK would participate in the upcoming EU parliamentary elections, while leaving open the possibility that the UK could leave earlier if it manages to pass her deal. 

May

When May first requested a short term extension last month, the EU27 rejected her proposed date of June 30, and instead countered with an offer for a two-week extension, with a longer delay contingent on whether Parliament would manage to pass the withdrawal agreement. At the time, observers whined that a two-week extension wasn’t long enough, and…well…

As analysts scramble to read the tea leaves, a team from Credit Agricole reasoned that the EU probably wouldn’t accept a short-term delay, citing the stated preference for a longer extension by some key officials.

“We will have to wait until next week to see whether we will get an extension at all,” said strategist Valentin Marinov.

“GBP is a bit weaker on the back of that potentially because the request for a lengthier extension is seen as a recognition that May may not be able to get the Withdrawal Agreement through Parliament next week as hoped.”

According to Buzzfeed, Brussels suspects May’s talks with opposition leader Jeremy Corbyn are likely to fail, and that the PM will instead be forced to hold another series of ‘indicative votes’ to try and suss out a plan that would actually have a chance of passing in the increasingly divided commons.

The extension could be until the end of the year – or even as late as March 2020.

Ultimately, whether to accept May’s request must be decided by the EU27 at next week’s summit.

The decision on whether to grant a long extension and its terms will ultimately be one for the 27 leaders when they meet in Brussels on 10 April. However, in the lead up to next week’s summit, some governments, including France, have adopted a tougher stance than others on the prospect of granting the UK a long extension to simply keep debating its options, an EU27 leader told BuzzFeed News.

One senior official, quoting Tusk, said the UK needs a “long but flexible extension” – or “flextension.”

A senior EU official quoted Tusk saying: “The only reasonable way out would be a long but flexible extension. I would call it a ‘flextension’.

How would it work in practice? We could give the UK a year-long extension, automatically terminated once the Withdrawal Agreement has been accepted and ratified by the House of Commons.”

The EU official added: “And even if this were not possible, then the UK would still have enough time to rethink its Brexit strategy. Short extension if possible and a long one if necessary. It seems to be a good scenario for both sides, as it gives the UK all the necessary flexibility, while avoiding the need to meet every few weeks to further discuss Brexit extensions.”

Still, according to reports earlier in the week, the EU wants another extension to be accompanied by commitments and a “gentleman’s agreement” with the UK that it will hold the parliamentary vote, and that May would continue to push for her thrice-rejected withdrawal agreement.

As the bloc debates May’s proposal, it’s worth remembering that any extension would need to be approved by the entire EU27. That leaves plenty of room for one reluctant party to send Britain crashing out of the EU at the end of the summit.

via ZeroHedge News http://bit.ly/2Vkr4vk Tyler Durden

Brexit: “The People Have Spoken – The Bastards”

Authored by Frank Lee via Off-Guardian.org,

The whole brouhaha around Brexit has amply demonstrated the under-hand tactics used by the losing side post-2016 referendum. There seems no dirty trick that the PTB and their useful idiots will not employ in their ongoing campaign to keep the UK in the prison of the EU and keep the sinking ship of the EU afloat.

The counter-revolution campaign contained of 4 discrete but interconnected segments.

  1. Project fear: This was successfully used in the Scottish Independence Referendum and has been rolled out again in an attempt to reverse the Leave vote in UK’s EU referendum campaign. After the Leave vote result, media immediately went into (hysterical) overdrive with its tales of woe and chaos regarding the ‘inevitable’ collapse of the UK economy. Visions were conjured up of empty super-market shelves, mass unemployment, capital flight, food riots etcetera. The end of civilization as we know it. A notable example of conjecture and scare-mongering being presented as hard ‘facts.’

  2. Disinformation: The ‘experts’ from the political and media class assured us that life in the EU was wonderful and full of promise and if we only gave it a little more time it would become a veritable Shangri la.

  3. Enter stage left: the great and the good from the pseudo-left, social-democratic establishment, overwhelmingly in the case of the Labour party, who have assured us that the EU could be transformed – when all the evidence pointed to the contrary – and become an instrument of progress, prosperity and enlightenment. This policy was given broader exposure with Diem2025 the brainchild of one Yanis Varoufakis. According to the theory, nation states no longer existed, and reforms should start at the supra-national level. But as a matter of fact, the nation-state is precisely the arena which meaningful politics can and does take place. According to the Remain and Reform school, we apparently need a Europe-wide supra-national strategy – based upon what policies exactly? We must assume, according to the party line, that the nation-state is either dead or dying, this being an article of faith of the globalist left and the Washington Consensus. Strange bedfellows?

  4. Confusion: When the population has been softened-up and generally addled by the non-stop propaganda offensive waged by the media – private and state – they will tend to opt for the status quo. Clinging on to the wet-nurse in fear of something new and untested. A second vote is to now been mooted by the PTB, spuriously designated the ‘peoples’ vote, as if the first Referendum somehow wasn’t – and this has been massively endorsed by the Labour party membership and pretty much universally by the PLP. Ergo, the policy the ‘left internationalists’ is one of inter alia ‘strengthening democracy’ – all very noble.

However, the crucially important issue of the neo-liberal policy tripod: the three freedoms of movement – capital, labour, commodities – remains in place, political change will not take place. And provided the institutional infrastructure of globalized capitalism – the IMF, WTO, World Bank, the EU – are overseeing and enabling the EU’s neoliberal project, economic and political change will not take place.

It is not the shackles of nationalism that give rise to the bureaucratic monstrosity which is the EU but precisely the opposite. The neo-liberal imperatives of open borders, liberalized commodity markets, liberalized capital accounts, abandonment of exchange rate controls, flexible labour markets and freedom of movement of labour, provide the theoretical and political under-pinning of the whole structure. Unless these political/ideological roadblocks are addressed the status quo will continue and continue to deteriorate.

In terms of alliance building, political convergence between states cannot be constructed at regional (for example the EU) or even less so at global levels even if it is not achieved firstly at the level of nations. Because whether we like it or not, nations define and manage concrete realities and challenges, and it is only at these levels that changes in the social and political balance of forces to the advantage of the popular classes will or will not occur. Changes at the regional and global level may reflect national advances and certainly facilitate them – but nothing more. In short the move is from local to national and finally to supra-national, not the other way around.

In order to stop the onward march of globalist neoliberalism governments and states must regain control of their economies and politics. There is no single way to achieve this critical goal, but without it hemispheric co-operation will remain little more than an empty rhetorical flourish. Moreover, everywhere electorates are looking to governments to be a counterweight to footloose corporations. It is this intuitive perception to rein-in markets that will increasingly occupy centre-stage between pro and anti the coming decade. For social-political movements the nation-state continues to be the chosen instrument for the organization of society. It cannot be any other way. However much social institutions will have to adapt to new global pressures, what is not in doubt is that the nation-state remains the crucible for equality seeking movements the world over. Efficiency, profitability and competitiveness have not won the hearts and minds of the peoples worldwide, nor are they likely to do so; precisely the opposite in fact.

Reform of the EU, which I understand to be the goal of the campaign of pro-EU aligned leftist faction fails to take into consideration the fact that the EU cannot be reformed since its whole ideological structure and constitution is built upon neo-liberal technocratic assumptions which can clearly be identified in the interior belief-systems of the bureaucracy, and consequently the daily practise and deliberations of internal institutions explicitly designed on a neoliberal model and cemented by legal statutes have made such changes impossible.

But such reasoned arguments were ignored by the Remainer berserkers, as they screeched: ‘’Smash the whole EU referendum farce with a second referendum.” The ‘farce’ meaning of course an outcome which the Remainers didn’t like. Well of course this is pretty much par for the course for EU electoral practise: If at first you don’t succeed, then simply repeat the playbook instructions until you get the right result, which is to say the result which suits the political/economic status quo.

Regardless of the pros and cons of EU membership I don’t think I have ever seen such a blatant attempt at the repudiation of universal suffrage as this. It seems to have now become fashionable and acceptable to question the whole basis of democratic electoral practise with the soi-disant elite – the elite which leads from the rear – actually openly questioning the validity of what it took a hundred years to establish, from 1832 until 1928.

I didn’t particularly like it when the Tories were elected in 1979, 1983,1987, 1992 and 2015 but I never and ceteris paribus, never would have questioned the legitimacy of their electoral triumph. Perhaps we should have staged a coup, Ukrainian style, and overthrown the democratically elected government and then had another election, come to think of it why bother with elections at all, after all you might lose.

There seems to be a real problem with left Remainers, including the soft-lefts which incidentally didn’t even allow a discussion on the issue. But democracy is not a la carte. Mess with the system and you open up a Pandora’s Box of baleful possibilities. Possibly and at some future date an election which returns a candidate/party to their liking may also be repudiated. In which case where do you go from there? Answer nowhere since it was always a possibility after the initial precedent had been established; and when election results become merely provisional or advisory, then genuine democracy is hollowed out and becomes a ritual, part of the political spectacle which in no way challenges the structures of power and privilege.

Universal suffrage and electoral practise are not conditional they are absolute. Democracy is table d’hôtel or it is nothing. The Remainer bloc seem to have undergone three identifiable ‘moments’ (see below) in their fury of not getting their own way.

Moment 1. Bertolt Brecht made the point after the East Germany rising in 1953, that the Communist government complained that they had done so much for the people and how ungrateful the people were. Brecht’s acerbic reply was that “the people should be dissolved and another elected.” That was the Remainers Brechtian moment. Bronze medal.

Moment 2 came the Augustian moment. St. Augustine who intoned: “Lord give me chastity and celibacy but not yet.” Translated into Remainerspeak it would read: Lord give me invocation of article 50, but not yet. Silver Medal.

Moment 3. Finally, there was the Richard Tuck moment: “The people have spoken, the bastards.” –Dick Tuck and American politician’s concession speech following his loss in the 1966 California State Senate election “The people have spoken, the bastards.” Gold Medal.

Gold medal therefore to be awarded to the Remainers for their characterisation of the Leave vote – some 17.4 million of the electorate – as ‘bastards’.

via ZeroHedge News http://bit.ly/2YR5P6p Tyler Durden

Vessel Carrying At Least Four New 911 GT2 RSs Sinks, Porsche To Resume Production Model 

The roll-on/roll-off cargo ship, Grande America, caught fire and sank off the coast of France on March 12 from Hamburg to Casablanca. An estimated 2,000 luxury vehicles were lost, including Audis and Porsches.

Audi Brazil confirmed the vessel was carrying hundreds of A3, A5, Q7, and dozens of RS4, and RS5 models.

Porsche, however, hasn’t made a public statement about the incident, but thanks to an anonymous tip from Carscoops, a letter sent by Porsche Brazil to a customer shows their $300,000 911 GT2 RS was lost in the Grande America accident.

Carscoops translated the letter:

”We are sorry to inform you that, due to a fire, a Grimaldi group ship, that was transporting your vehicle, sank on March 12, 2019. And for that reason, your GT2 RS can not be delivered.

As you may know, Porsche ended the 991 GT2 RS production on February 2019 and under normal circumstances, it wouldn’t be possible to give you another car. But, due to the nature of the situation, and considering that you’re a loyal and highly valuable customer for our brand, Porsche has decided to resume the GT2 RS production in Germany, and your vehicle will be produced in April, with delivery scheduled for June.

We recommend that you contact your local Porsche Center for further information.”

Brazilian sources told Carscoops that the vessel carried at least four Porsche 911 GT2 RS, worth about $1.2 million, along with other models, including Boxsters, 718 Caymans, and Cayennes.

A Porsche Brazil spokesperson confirmed 37 of its luxury cars were aboard the doomed vessel. The carmaker even said it would reopen production lines in the next several months to replace the lost 911 GT2 RS units.

“In a special decision and to uphold its commitment to its valued Brazilian customers, Porsche has ensured that those units will be reproduced in the order in which they were originally confirmed”, the spokesperson added.

The cause of the fire is unknown at the moment; French authorities believe it started on the car deck and quickly spread to the container part of the vessel.

via ZeroHedge News http://bit.ly/2WKHFc7 Tyler Durden

“Globalist Warning Signs Are There” – BIS Boss Outlines Central Bank Digital Currencies Vision

Authored by Steven Guinness,

The behaviour of central bankers is rarely (if ever) given sustained coverage in the national press. Outside of prominent economic channels, developments from within institutions such as the International Monetary Fund and the Bank for International Settlements are seldom remarked upon. Instead, attention is restricted to the latest round of political theatrics which serve to disguise the actions and intentions of globalist planners.

As the furore of Brexit gained in intensity last month, BIS General Manager Agustin Carstens gave a speech at the Central Bank of Ireland 2019 Whitaker Lecture. Under the heading, ‘The future of money and payments‘, Carstens mapped out what has been a long standing vision of globalists – namely, to acquire full spectrum control of the international financial system through the gradual abolition of what Bank of England governor Mark Carney has called ‘tangible assets‘ i.e. physical money.

The ‘future of money‘ narrative is one that both the BIS and the IMF have been actively promoting since the advent of Brexit and Donald Trump’s presidency. Here are some links to speeches made by both Christine Lagarde and Agustin Carstens:

Central Banking and Fintech—A Brave New World?

Winds of Change: The Case for New Digital Currency

Money and payment systems in the digital age

Money in the digital age: what role for central banks?

Central to the vision for a fully digitised global economy is the intent to reform national payment systems. The UK uses the Real-time gross settlement (RTGS) system, which the majority of payments in Britain are facilitated through. The Bank of England’s Victoria Cleland has emphasised on numerous occasions that the ‘fundamental renewal‘ of the system is being carried out through choice rather than necessity. This would indicate that RTGS works fine in its current manifestation, but the BOE (along with the European Central Bank) have been tasked with assuming more control over their respective payment systems.

As Cleland has confirmed via several speeches, tests on a renewed RTGS have demonstrated that distributed ledger technology (DLT) has the capability to connect to it in the future. Blockchain is a form of DLT, and by extension blockchain works in conjunction with cryprocurrencies like Bitcoin. In February 2019, Cleland intimated that the previous intention to have finalised the RTGS reform by 2020 had been pushed back to 2025.

We are looking at 2025 for completion, with a number of transition states as we head to that. What we want to achieve is more ambitious now, and we are doing some exciting work around innovation and looking at ways of bringing in participants.

The year 2025 is potentially significant as we will later look at.

Returning to Carstens speech at the Central Bank of Ireland, here he spoke of how the reform of payment systems have been ‘infrequent‘ over the decades, with wholesale changes to the nature of money ‘even rarer‘.

But now, attempts to create new forms of money or to engineer new ways to pay appear almost weekly.

The ‘new ways to pay‘ is in part a reference to services such as TransferWise, who have pioneered the introduction of borderless accounts that allow people to hold up to forty currencies at once with the ability to convert them whenever desired. New methods of payments such as this, which grew out of the 2008 financial crisis, bypass banknotes and coins altogether. Money can only be sent, received or converted electronically, unlike at high-street banks or travel bureaus which still offer physical cash. TransferWise describe their service as showcasing ‘bank-level security, minus the banks‘.

When it comes to ‘new forms of money‘, Carstens explains that the current system of central banks issuing banknotes, and commercial banks providing electronic money, is being targeted for reform – in the shape of central bank digital currencies (CBDC’s).

A CBDC would allow ordinary people and businesses to make payments electronically using money issued by the central bank. Or they could deposit money directly in the central bank, and use debit cards issued by the central bank itself.

It becomes apparent that two tranches of reform – to payment systems and to how money is used – are in the process of being carried out simultaneously.

In previous articles I have talked about how globalists invariably utilise the vehicle of gradualism when it comes to implementing changes within the financial system. The BIS themselves raised the subject in their final quarterly report of 2017. When seeking to centralise economic power further, central banks work by stealth. It can take many years, even decades, for a plan to become reality.

In relation to CBDC’s, it is no surprise to see Carstens speak of banks opting to ‘tread cautiously into new territory‘.

The monetary system is the backbone of the financial system. Before we open up the patient for major surgery, we need to understand the full consequences of what we’re doing.

Hackneyed metaphors aside, it is no secret that the only thing that preserves the current system of fiat currencies is the level of trust that you and I place in them. But trust is not a physical construct. Rather, it is underpinned by belief. As Carstens mentions, in an economic sense trust can be compromised by ‘currency devaluations, hyperinflation, wide-scale payment system disruptions or bank defaults.’

The bigger picture begins to emerge when Carstens declares that the debate around CBDC’s is not to do with the technology involved, but ‘partly about the potential decline in the use of cash.’ This is an exercise in perceptual management. He wants the focus to be on the demise of physical assets rather than the digital transformation of how money functions. The idea is that the decline of cash be perceived as organic rather than premeditated.

Two variations of a CBDC are cited. The first is a wholesale variant that would be used primarily for interbank payments. The second is a retail CBDC which would be accessible to the public.

This could be based either on digital tokens or on accounts. That would mean that you and I could open bank accounts directly with the central bank.

As is often the case when powerful heads of institutions speak, the underlying agenda gradually finds its way through the flannel.

Like cash, a CBDC could and would be available 24/7, 365 days a year. At first glance, not much changes for someone, say, stopping off at the supermarket on the way home from work. HE OR SHE WOULD NO LONGER HAVE THE OPTION OF PAYING CASH. ALL PURCHASES WOULD BE ELECTRONIC.

This is confirmation that if CBDC’s are rolled out in the future, it would result in the abolition of physical money. Every penny you possess would be held within the financial system.

It does not end there:

From here, differences start to emerge. A CBDC is not necessarily anonymous, like cash. And unlike cash, it could pay or charge interest.

Let’s deal with each of those in turn. For globalists to gain full control of the financial system, the ability of citizens to hold their money anonymously must end. The strawman arguments in favour of this happening have already been planted within the media – from illicit financing of terrorism to money laundering. Concerted efforts are being made to encourage people to look upon those who prefer to deal in cash with suspicion. When you narrow it down, being able to trace and track every single payment, which is currently not possible if you opt to pay with cash, is the goal here. Therefore, eliminating the choice of using banknotes and coins is essential.

Equally disturbing is the use of interest rates under a CBDC system. Right now, if you hold physical money, it is not vulnerable to a fluctuation in rates. Money held in a bank account, however, is susceptible. Even so, it can easily be transferred to one that offers a better rate, or can ultimately be withdrawn altogether in favour of holding the money in your hand. With CBDC’s, you would be locked in. Positive rates would continue to pay you interest. But what about if rates turned negative throughout the banking system? In this scenario you would be charged for holding your money with the bank, with no way of counteracting such measures.

In short, the loss of anonymity and exposure to negative rates would mean servitude to the banking system. Short of transferring assets into precious metals, it would leave citizens with no means of escape.

Carstens goes on to suggest that central banks could one day offer deposit accounts, bypassing traditional commercial banks.

If bank deposits shift to the central bank, lending would need to shift as well. The central bank would be taking on the lending business.

Using the scenario of customers opting to put money in a digital currency of a central bank, or directly into a deposit account, Carstens said:

It is not far-fetched to imagine that a premium would open up, where one euro of deposits in the commercial bank buys less than one euro’s worth of central bank digital currency.

Gauging the speech as a whole, these eventualities are dependent on the successful implementation of CBDC’s. For that to happen, physical cash must gradually be eroded. Whilst central banks are working on concepts for a CBDC’s, they do not yet appear to be in a position to introduce them. According to Carstens, ‘very few central banks think it is likely that they will issue a CBDC in the short to medium term.’ One of the reasons for this is that ‘there is not yet a noticeable and widespread fall in the demand for cash.’

As I have documented elsewhere, cash usage is declining year on year but remains a popular form of payment. How long before we reach an inflection point is unknown. What we do know is that the BIS measure the short term plans for central banks at one to three years, with the medium term at one to six years.

Six years from now takes us to 2025 – the year that the Bank of England are targeting for the completion of reforms to the RTGS payments system. As for the BIS, in a speech Carstens gave last month titled, ‘The new role of central banks‘, the institution is focused on a new BIS medium-term strategy called Innovation BIS 2025.

One element of this plan is for the establishment of ‘a multidisciplinary Innovation Hub at the BIS in order to foster collaboration in innovation-related work, as well as a new unit which will undertake policy analysis and research on how key innovations and increased data availability should inform policy and shape central banks’ responses.’

Clearly, they are preparing for major changes to the financial system. Rapped up in this BIS 2025 initiative is to process all ‘relevant implications of technological innovation‘, such as distributed ledger technology. CBDC’s would inevitably be part of such innovation.

The warning signs are there for what globalists are planning. What Carstens outlined is where they want to take the financial system over the next decade. But as the geopolitical climate becomes increasingly fractious, how many of us are listening?

via ZeroHedge News http://bit.ly/2UjZ26C Tyler Durden

Even The Machines Can’t Comprehend Brexit: ‘Blizzard’ Of Headlines Renders Pound Untradeable For Algos

Since June 23, 2016, trading the British pound has been fraught with peril for both carbon-based and mechanical counterparts. Though it outperformed most other G10 currencies during Q1 (even as the risk of a disorganized ‘no deal’ Brexit appears to have risen), the currency has shed 13% from its pre-Brexit highs, and traders have had to contend with extreme bouts of intraday volatility, not to mention the occasional flash crash.

But as the Brexit drama has intensified over the past few weeks, with critical votes being held almost every day followed by an endless stream of commentary, speculation and conflicting reports, parsing all of this data has rendered the pound practically untradeable for algos designed to read and react to newswire headlines.

According to Reuters, “as a divided government battles a divided parliament over a way forward, the chorus of characters who can now influence events has grown, flummoxing news-reading algorithms…which are designed to parse phrases from recognized speakers before executing a trade.”

Brexit

This “blizzard” of Brexit-related headlines has been one of the biggest challenges for algorithmic traders in their short existance. Reuters has pumped out as many as 400 Brexit-related headlines a day in recent weeks, up from just 15 on average before Brexit, while Bloomberg has published as many as 1,000 on particularly busy days, like on March 12, when MPs rejected Theresa May’s withdrawal agreement for the second time.

After Prime Minister Theresa May decided to pursue talks with the opposition, we saw a surge in conflicting Brexit headlines, presumably because the fractious interest groups within the government and the opposition have engaged in a chaotic battle royal to try and wrest control of the narrative. Just look at the news flow since the beginning of the week: news wires have reported that the PM will pursue talks with the opposition, that she might endorse a vote on Brexit-deal alternatives, that she might call for a general election, request a long Brexit delay, request a short Brexit delay, possibly consider another referendum etc. etc. And that’s not even factoring in the reports from Brussels.

While machine learning has made serious strides over the past ten years, trading algos still don’t have the capacity to understand the mechanics of obscure British parliamentary procedures like how Speaker John Bercow was able to declare that May couldn’t bring her withdrawal agreement back for a third vote unless strict conditions had been met.

Brexit

Courtesy of Reuters

Machines also don’t possess the ability to process visual cues.

On November 6, Britain’s then Brexit Minister Dominic Raab, pushed the pound up simply by giving a “thumbs up” after a cabinet meeting – a visual cue that would outfox machines programmed to analyze words.

Raab’s market-moving gesture came after the pound had fallen on a tweet warning of a no-deal Brexit from Jeffrey Donaldson, one of 10 Democratic Unionist Party lawmakers whose support May needs.

The fact that traditional market drivers like economic data and central bank forecasts have been lost amid this storm of political speculation has compounded the frustration for some quant-driven macro hedge funds (though American equity bears can probably sympathize with this). Some have stopped trading sterling altogether.

Some hedge funds have opted out of trading sterling altogether because the usual models they rely on don’t work in the current climate, according to one FX trader at a major UK investment bank.

Their models are based around economic data and expectations for Bank of England rate changes, but those have become secondary drivers compared with political news, he said.

But the buy side aren’t the only ones struggling thanks to Brexit. Since roughly 70% of trades on some of the most popular FX trading platforms are executed by algorithms, market makers are widening the spread they’re demanding for facilitating trades to compensate for any losses due to volatile trading aggravated by poor liquidity conditions.

That is driving up costs for everybody who trades sterling, either for speculative for commercial purposes

But a wider spread makes it more expensive to deal in pounds. Rob Turner, a quantitative trader at RBC Capital Markets said the average cost of trading, by taking into account the spreads, for sterling in a usual 10 million ticket jumped last week to 2.9 pips from 1.9 pips in October.

“That shows that the price at the very best moment for executing a sterling trade last week was still a lot worse than the worst moment in a normal week,” Turner said.

Meanwhile, most currency dealers that take risk on to their own books are now reluctant to leave the machines unsupervised.

Some banks are ensuring that trading the pound is not left completely to the machines while other banks are using tiny orders within narrow trading ranges to prevent large losses.

“If it was your job and given the complexity of the Brexit story, do you really want to precode something to automatically infer and put material risk on the back of that,” said David Leigh, global head of FX spot and electronic trading at Deutsche Bank.
“Probably not.”

The result has made sterling an outlier. As volatility in G10 FX – and stocks, and bonds – has plunged, for sterling, volatility has surged to its highest level in two years.

And if May and Europe decide to kick the can once again, this pattern will probably persist for the foreseeable future. If this happens, a lot of people will be unhappy, but we could think of two organizations that just might benefit.

via ZeroHedge News http://bit.ly/2K8CtgO Tyler Durden

Paul Craig Roberts: Where Is The World Headed?

Authored by Paul Craig Roberts,

Since 2016 the United States has been in the Russiagate box, a hoax created by the US military/security complex to prevent President Trump from normalizing relations with Russia.  Normalized relations would devalue THE RUSSIAN THREAT, an orchestration that protects the $1,000 billion annual budget of the military/security complex.  

The Democratic Party, which most certainly is not democratic, supported the hoax hoping to do Trump in for their own reasons and pulled the presstitute media into the conspiracy against Trump.

Now that all the assurances from the Establishment that Trump was a traitor to America who conspired with Russian President Putin to steal the election from the killer-bitch in order that America could serve Russian interests have been exposed as lies by the Mueller report, American attention is free to take up some other nonsensical campaign. The succession of these stupidities is destroying America’s reputation.

True, some of the most crazed of the Democrats and media whores cannot let go of Russiagate.  The presstitutes are saying that Trump would be impeached for his non-crime except the unworthy Democrats had rather go back to the business of spending other people’s money.  A crazed professor or two have declared that Mueller was part of the “Trump coverup” and that Mueller needs to be investigated.  But these claims simply underline that the United States wasted three years of its existence.

Meanwhile, other countries moved on. 

 The Russians, for example, discovered that Washington’s sanctions had a silver lining.  Russia became more self-sufficient economically and moved out of the box of being an exporter of raw materials to the West, a box into which the Americans and the American-brainwashed Russian economics profession had put the Russian government.

The fulminations and threats from Washington against Russia brought forth new Russian weapon systems for which the US has no match or defense, weapons that demote the US to a second-rate military power.

On an adjusted basis, China now has the world’s largest economy and increasingly ignores Washington’s blustering.  As does Iran.

Even Venezuela stands up to Washington.

The world is concluding that Washington is not the power it thinks it is.

Washington’s abuse of its reserve currency role and violations of international law have encouraged a movement away from the use of the dollar in international transactions. This is perhaps even a more serious threat to Washington’s power than Russia’s superior military capabilities. 

President Franklin D. Roosevelt was happy to see World War II because he understood that it would leave Britain bankrupt and without an empire.  Roosevelt understood that the gain would be America’s, because the US would take over the reserve currency role.  The reason this is important is that the reserve currency country can pay its bills by printing money.  Thus, the government has no budget constraints.  

For a country as indebted as America, to lose this role would be a crushing blow.  It is this blow that Washington faces as a result of its idiotic policy of sanctions and disrespect of international law.

And there is another blow. Just as the Roman Empire fell to invaders who crossed the frontiers of the empire, so is Washington’s empire falling.  Europe, the crown jewel of the empire, is now overrun with millions of unassimilable peoples to the extent that Europe is no longer European. The President of the US has so far been powerless to defend the borders of the United States.  Indeed, the Democratic Party and the presstitute media are totally opposed to any defense of American borders.  Why does a government unwilling to defend its borders spend $1,000 billion annually on defense?

The American Neoconservative Zionists, who have controlled US foreign policy in Israel’s interest since the Clinton regime, continue to operate as if we still live in an unipolar world.  For some reason the National Security Advisor to President Trump has poor sources of information.  He speaks as if he rules the world, but even Washington’s pathetic European vassals did not go along with Trump’s gift of the Syrian Golan Heights to Israel.  

As for moral authority, after, Afghanistan, Iraq, Libya, Somalia, Syria, Yeman, Ukraine, Honduras, and now Venezuela, all moral authority has vacated the West.  

Washington is not only losing its economic and military power but also its soft power that rested in Washington’s propaganda about making the world safe for democracy.  Democracy is not even safe in the United States as Democrats and the presstitutes have done their best to overturn democracy and to drive the elected president from office, which is precisely what the Trump regime is trying to do to Venezuela.

All of the lies and propaganda that have portrayed the West as God’s gift to humanity have fallen away as the result of Washington’s irresponsible use of power, leaving the West morally naked.

The world no longer thinks that the West is something to look up to and to emulate.  Instead, the world sees a great evil, in the words of Matt Taibbi, “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

A great promise was betrayed by those trusted with the promise.  A government accountable to law and to the people requires a united people, not the disunity of multiculturalism and Identity Politics.  With the indigenous ethnic base of all of the Western countries under attack as “white supremacists,” the West can no longer defend its culture from the immigrants who do not share the culture. 

The tension between an indigenous culture and imported cultures can be seen in the tensions between Hungary and the EU and Italy and the EU.  Hungary has refused to accept its quota of non-European immigrants and faces punishment by the EU.  In Italy the government is in the hands of a coalition of leftwing and rightwing parties that are united in their opposition to the EU and non-European immigration.  In Europe the situation is one in which the EU government, as well as the governments of member states such as France and Germany, have taken the side of immigrants against the indigenous people.  In other words, the governments of Europe are not committed to their own cultures.  This is the unmistakable sign of a dead culture.  

In the United States there is so much disunity that to call the states united is a misuse of words.  Hillary voters hate Trump voters, and vice versa.  The presstitute media and universities are uniformly anti-white.

Countries without unity are not strong.  Consequently, the Western world is losing its leadership of the world.

Of course, the rest of the world also suffers from disunity.  The Sunni and the Shiites cannot unite, with the consequence that the Muslim world is weak.  The tribes in Africa cannot unite.  India and Pakistan stay at each other’s throats. Animosities exist among Asians.  Russia herself is a federation.  China has a Muslim province.  But the disunities are different from those in the West.  Japan and China have differences but the population of Japan is homogeneous and China largely is.  Arabs are Arabs whether Sunni or Shiite. The Russian Federation is the remains of an old empire, largely assimilated, not the result of recent immigrations.  

The consequence of disunity perhaps precludes any leadership.  But the collapse of the West into diversity and multiculturalism definitely means that Western leadership has been lost to the weakness of disunity.  

Is it chaos that awaits?

via ZeroHedge News http://bit.ly/2uP3NpU Tyler Durden

Army Seeks Future Attack Helicopter To Replace Apache Fleet

The U.S. Army is considering whether it should purchase Future Attack Reconnaissance Aircraft (FARA) to replace its aging fleet of Boeing AH-64 Apache and Bell OH-58D Kiowa Warrior copters, reported Task & Purpose.

“The FARA will only replace Apaches in our heavy attack reconnaissance squadrons and this represents about half of the Apache fleet,” a spokesperson for Army Chief of Staff Gen. Mark Milley told Aviation Week.

“There have already been serious questions about whether the AH-64 platform will be able to remain relevant, especially in a high-end conflict environment, through 2048, when the Army plans to retire the very last of the gunships,” Joseph Trevithick at The War Zone explained.

The Army expects to be integrating significant upgrades into its latest AH-64E Guardian variants through 2026. These include updates to its fire control and targeting systems, improved data sharing and fusion capabilities, better sensors, a more robust ability to work directly with unmanned aircraft and more,” Trevithick added.

In 2018, the Army selected several FARA candidates. Sikorsky is currently in the running with the S-97 Raider high-speed scout and attack helicopter. Bell is developing a V-280 Valor tiltrotor that was also selected.

Video: Sikorsky S-97 Raider flight test

Video: Bell V-280 Valor flight test

“We’re looking for an aircraft that, without going into specific requirements or classifications, essentially goes further, can see further, can acquire specific targets further and can engage at greater ranges than current exist and has greater legs – can fly further with a greater payload of weapon systems,” Milley told Congress on March 26, 2019.

The Army could purchase hundreds of FARA helicopters within the next ten years. If a new helicopter replaces the AH-64 and OH-58D, then the service could be looking at 700 new aircraft – a contract worth tens of billions of dollars.

via ZeroHedge News http://bit.ly/2TX7Ryb Tyler Durden