Yet another Tesla executive has left the company, marking the third high profile departure announced over the last month.
The company’s head of European operations, Jan Oehmicke, is reportedly leaving for a rival carmaker about a year after being lured away from BMW to work at Tesla, according to The Street. Oehmicke was hired last May by Elon Musk.
The news of Oehmicke’s departure comes after recent Tesla departure Peter Hochholdinger, the company’s former head of vehicle manufacturing at Fremont, also surfaced at a rival carmaker, Lucid Motors.
Hochholdinger said in a statement published by Lucid just hours ago:
“It is with great pleasure that I join Lucid at such an exciting time in the company’s history. I look forward to working with the world-class team to deliver Lucid’s incredible luxury electric vehicles in production.”
Elon Musk pondering how to keep employees for more than a year or two.
We can’t imagine why all of these executives would be leaving on the heels of the company’s expected “record” second quarter, either.
While Oehmicke was formerly of BMW, Hochholdinger had come from Audi, where he was previously in charge of production for the Audi A4, A5 and Q5. At Audi, he oversaw more than 400,000 cars being built annually. Tesla touted his hire in 2016, sending out a press release at the time and saying they were “excited” to have him join the team. He was widely regarded as a veteran manufacturing executive that would lend credibility and much needed experience to the Model 3 manufacturing process.
His tenure at Tesla lasted barely over 3 years, which is basically a lifetime compared to many other executives who have departed the company in shorter order. Even the pro-Tesla bloggers at electrek couldn’t put a positive spin on Hochholdinger’s departure, stating:
While I often defend Tesla on their highly publicized executive departures, I think it’s fair to say that they had some significant talent exodus over the last year or so and now with Passin and Hochholdinger, it’s especially true for the production executive team.
Just seven days ago we reported that the company’s former VP of Human Resources and Head of Diversity, Felicia Mayo, had also left the company. Mayo nearly made it to her two year anniversary, but like many other departing executives, had enough and packed up in relatively short order.
Mayo was described as “one of a few black women leaders to break the glass ceiling and rise to executive ranks in a large, Silicon Valley tech firm.” According to the Kapor Center, less than 0.5% of Silicon Valley tech leadership positions are held by black women.
via ZeroHedge News https://ift.tt/2xqXOZu Tyler Durden
It can be easy to take cash for granted, especially in a wealthy, developed economy. Those fortunate enough to live in a stable society usually suffer no lack of payment options. They are getting more advanced all the time, with financial technology (fintech) companies constantly developing new ways to quickly and cheaply make purchases and send money. It sometimes seems the days of old-fashioned cash, with its dormant physicality, are numbered.
The current unrest concerns a proposed change to Hong Kong’s extradition laws that would allow island fugitives to be transferred to Taiwan, Macau, and mainland China. The proposal sparked mass outrage, as many Hongkongers saw it as little more but a new way for the People’s Republic of China to erode the legal sovereignty of Hong Kong.
This week, anti-extradition protests reached another crescendo, as Hongkongers took to the streets again to commemorate the anniversary of Hong Kong’s handoff to China, highlighting the deep political dynamics at play.
Specifically, protestors fear that the Chinese judicial system, with all its attendant human rights baggage, would come to supplant Hong Kong’s. This would be no small problem. China isn’t shy about cracking down on political dissidents, even those from other states under their control. For example, in 2017, a Taiwanese pro-democracy activist was detained in China and sentenced to five years in prison for “subverting [Chinese] state power” in his home country.
So tens of thousands of Hongkongers took to the streets to protest what they saw as creeping tyranny from a powerful threat. But they did it in a very particular way.
In Hong Kong, most people use a contactless smart card called an “Octopus card” to pay for everything from transit, to parking, and even retail purchases. It’s pretty handy: Just wave your tentacular card over the sensor and make your way to the platform.
But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne’er-do-wells. Traveling downtown during the height of the protests? You could get put on a list, even if you just happened to be in the area.
So the savvy subversives turned to cash instead. Normally, the lines for the single-ticket machines that accept cash are populated only by a few confused tourists, while locals whiz through the turnstiles with their fintech wizardry.
What could protestors do in a cashless world? Maybe they would have to grit their teeth and hope for the best. But relying on the benevolence or incompetence of a motivated entity like China is not a great plan. Or perhaps public transit would be off-limits altogether. This could limit the protests to fit people within walking or biking distance, or people who have access to a private car—a rarity in expensive dense cities.
If some of our eggheads had their way, the protestors would have had no choice. A chorus of commentators call for an end to cash, whether because it frustrates central bank schemes, fuels black and grey markets, or is simply inefficient. We have plenty of newfangled payment options, they say. Why should modern first world economies hew to such primordial human institutions?
The answer is that there is simply no substitute for the privacy that cash, including digitized versions like cryptocurrencies, provide. Even if all of the alleged downsides that critics bemoan were true, cash would still be worth defending and celebrating for its core privacy-preserving functions. As Jerry Brito of Coin Center points out, cash protects our autonomy and indeed our human dignity.
We don’t even need to contemplate hypotheticals of what a digital financial surveillance system would look like. China’s ubiquitous social media and messaging service WeChat doubles as a primary payment method for millions of mainland Chinese. It’s easy, it’s effective, and it’s integrated into every facet of Chinese digital life.
Of course, Western offerings like Apple Pay and Venmo also maintain user databases that can be mined. Users may feel protected by the legal limits that countries like the United States place on what consumer data the government can extract from private business. But as research by Van Valkenburgh points out, US anti-money laundering laws afford less Fourth Amendment protection than you might expect. Besides, we still need to trust government and businesses to do the right thing. As the Edward Snowden revelations proved, this trust can be misplaced.
Hong Kong is about as first world as you can get. Yet even in such a developed economy, power’s jealous hold is but an ill-worded reform away. We should not allow today’s relative freedom to obscure the threat that a cashless world poses to our sovereignty. Not only can “it happen here,” for some of your fellow citizens, it might already have.
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The U.S. widened its threat to impose tariffs against the European Union, pending the outcome of a World Trade Organization case over the EU’s subsidies of the airplane manufacturer Airbus SE .
The Office of the U.S. Trade Representative said Monday that as part of a long-running dispute over aircraft subsidies it would consider tariffs on an additional 89 items with an annual trade value of $4 billion, including cheese, pasta and Scottish and Irish whiskies as well as chemicals and metals.
The announcement expands the USTR’s earlier threat, and now leaves items with a trade value of about $21 billion a year under consideration for tariffs, according to the statement.
The issue between the aircraft companies, however, predates President Trump by over a decade. The EU and U.S. have been tangling before the WTO for about 15 years over dueling claims that airline manufacturers are unfairly subsidized. The WTO has found that both sides unfairly subsidize their aircraft and may make a decision later this year that would allow the U.S. and EU to impose tariffs as countermeasures to these unfair subsidies. The WTO will also rule on the extent of harm caused by the subsidies, which would determine the size of tariffs that would be permissible in response.
These tariffs differ from most others pursued by the Trump administration because they would be imposed in response to an official WTO ruling, rather than being unilaterally initiated by Washington.
First Mover “Advantage”
Trump has a first mover “advantage” if you consider levying tariffs with WTO permission an advantage.
Although both sides are guilty as sin, the WTO ruled against the EU first.
What Does Trump Want?
Trump wants a comprehensive trade agreement that includes agriculture.
The EU wants an agreement that does not cover agriculture.
Specifically, Trump wants to sell GMOs, chlorinated chicken, etc., to the EU but that is impossible.
Impossible? Why?
Because Trade deals with the EU must be unanimous.
Even if 26 other nations say OK, France will say no.
That’s the end of the ag-deal story but pressure on the EU mounts in other ways.
Timing Pressure on EU
German exports and industrial production are already under serious attack over diesel and coal by the Greens.
In case of a No Deal Brexit, tariffs will hammer the EU vs the UK as the UK is a net importer of EU goods.
Next, factor in the very real threat of US tariffs on German cars.
Finally, factor in an out-of-control budget deficit in Italy against EU rules
The timing of this announcement could not possibly be worse for the EU.
The futures in question are standardized contracts that bind a party to buying or selling bitcoin at some set time after signing.
According to the post, CME Bitcoin futures hit $1.7 billion in notional value traded on June 26, a 30% increase from its last recorded high. The open interest for BTC futures now sits at 6,069 contracts, reportedly as a result of institutional interest.
A week prior, on June 21, CME bitcoin futures broke $10,000, according to data on TradingView. Just one day prior to that, on June 20, the CME Group posted another record high of 5,311 open futures contracts totalling 26,555 BTC — approximately $280 million at press time.
The value of the cryptocurrency BTC itself is hovering around $10,500 at press time. Bitcoin peaked around $13,800 last week, but failed to hold at $12,000 after temporarily trading sidewise in that range on June 28 and June 29.
As previously reported by Cointelegraph, BTC bull Max Keiser recently predicted that altcoins will go under as investors move heavily from alts to BTC due to its technical superiority. “The altcoin phenomenon is finished,” said Keiser.
via ZeroHedge News https://ift.tt/2JjApyL Tyler Durden
That seems to be the implication of Ahmad v. Univ. of Michigan, decided a week and a half ago by a Michigan appellate court: Applying Michigan law, the court held that the papers were public records and therefore were presumptively open to the public, notwithstanding the condition in the donation that some of the papers remain closed for 25 years.
I can’t speak to whether this is a sound interpretation of Michigan law, and it might be that courts in other states might reach a different result under their own states’ laws. (Indeed, it’s conceivable that on remand the trial court might find that some state law exception applies, though I don’t know of one that would.) But it seems to me that, to be on the safe side, donors who want to attach “sealed for x years” conditions should donate to private universities (if they’re willing to take the gift, of course) rather than to public ones.
Here’s the factual backstory:
Dr. John Tanton—”an ophthalmologist and conservationist,” according to the University, and “a figure widely regarded as the grandfather of the anti-immigration movements,” according to plaintiff—donated his personal writings, correspondence, and research (collectively, “the Tanton papers”) to the Bentley Library’s collection. His donation included 25 boxes of papers, but boxes 15-25 were to remain closed for 25 years from the date of accession, i.e., until April 2035, purportedly in accordance with the terms of the gift.
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The Retail Industry Leaders Association (RILA), whose members include Best Buy, Walmart and Target, demands an investigation whether Silicon Valley’s most prominent companies [Amazon and Google] are manipulating search results that disadvantage traditional retailers.
RILA is expected to present its report to the Justice Department and the Federal Trade Commission: “It’s pretty clear to us that the FTC and different relevant regulators should be taking a much closer look at these platform companies,” said Nicholas Ahrens, vice president of innovation for RILA, told Bloomberg in an interview. “We are here to help.”
The trade group has more than 200 members, which account for more than $1.5 trillion in annual sales, millions of jobs, and over 100,000, manufacturing centers, and distribution hubs across the country.
RILA sent a letter to the FTC on Sunday, asserting that the digital revolution has forced “intense competition” that stifles growth in traditional retailers. They said Amazon and Google control the majority of all internet product searchers, can create an “information bottleneck” that has the ability to manipulate markets and bypass the traditional power of price competition.
RILA also raised concerns about how Amazon and Google support their products over other retailers on their platforms, collect data about competitors, and support the spread of counterfeit goods. It should be “quite concerning to the commission that Amazon and Google control the majority of all internet product search, and can very easily affect whether and how price and product information reaches consumers,” the trade group wrote.
The Trump administration has recently increased antitrust scrutiny of Amazon and Google could have a significant impact on the sector, even if charges are not brought.
FTC has claimed oversight of probes of Facebook and Amazon, while the DOJ will examine Google and Apple. Separately, the House Judiciary’s antitrust subcommittee started an antitrust investigation into the technology industry last month.
RILA said it agrees with recommendations of 43 State Attorney Generals that have “consideration of non-price effects should be given greater priority in technology platform market mergers.”
It’s “the combination of information control and market power that should worry antitrust regulators the most,” the letter stated. “That unhealthy combination exists at the level of the internet’s pipelines, at the level of product search, in web hosting, on social media platforms and elsewhere.”
The group said Amazon dominates nearly 50% of all US e-commerce sales. Since it’s both a retailer and a marketplace for third-party sellers, Amazon uses big data to give itself an unfair competitive advantage over other retailers.
RILA ends by stating this letter isn’t a complaint against Facebook, Google, and or Amazon, but rather a concern that “competition must be on a fair and level playing field,” – not one where two companies [Amazon and Google] control the majority of all internet product searchers and have the ability to skew markets and circumvent traditional power of price competition.
via ZeroHedge News https://ift.tt/2J5Dm7i Tyler Durden
This may be the shortest post-G-20 “trade truce rally” yet, because one day after global markets jumped, with the S&P hitting record highs even though nothing material was announced in the aftermath of US-China trade talks, the rally fizzled and global stocks eked out only meager gains, while US equity futures dropped in the red, following a fresh escalation in the US trade conflict with the EU, and amid renewed worries the global economy was faltering after data showed manufacturing activity slowed last month, snuffing appetite for risk.
The MSCI All Country World Index was barely higher in early trading, up for a fourth straight day, although should the US open in the red, the rally will likely end. On Monday, stocks rallied enthusiastically after the US postponed imposing another round of tariffs on Chinese products and the two countries agreed to continue negotiations on trade.
But just one day later, skepticism of further gains emerged after discouraging manufacturing surveys in the past 24 hours and a threat of additional US tariffs on European goods. “It’s clear that the tariffs already in place will continue to take a toll on global and domestic growth and with Trump now turning his attention on Europe, the early bullish bias seems to ease again,” said Konstantinos Anthis, head of research at ADSS.
As reported last night, the U.S. Trade Rep’s office released a list of additional products – including olives, Italian cheese and Scotch whiskey – that could be subject to tariffs, on top of products worth $21 billion that were announced in April. The new U.S. tariff threats against Europe also point to a worrisome prospect of a broadening trade dispute, said Michael McCarthy, chief markets strategist at CMC Markets in Sydney, in a note to clients.
“The problem is the widening of the dispute. Europe, the U.S. and China account for almost two thirds of global GDP,” he said. “An ongoing disruption to trade between these three major economies, prosecuted for domestic political purposes, could sink global growth.”
Despite being the subject of Lightlizer’s latest wrath, the European Stoxx 600 index managed a modest 0.2% advance, although Airbus dropped 1% as the United States stepped up pressure in the long-running dispute over aircraft subsidies. The euro climbed after Bloomberg reported ECB policy makers don’t see a need to rush into a July rate cut.
European bonds advanced alongside U.S. notes, and the yield on two-year Italian debt dropped below zero for the first time since the coalition government was formed in May 2018.
Earlier in the session Asian shares gained for a second day led by communications and utilities, as Washington and Beijing prepare for a new round of trade negotiations, with the MSCI index of Asia-Pacific shares ex-Japan adding 0.28%, helped by a 1.23% gain in Hong Kong shares as investors caught up to Monday’s global rally. Markets in Hong Kong had been closed on for a holiday. Most markets in the region edged higher after Trump said new trade talks with China is underway, ending a stalemate between the two countries amid escalating tariffs. The Topix gauge rose 0.3% for its best two-day advance since February, with technology firms among the biggest boosts; Japan’s Nikkei finished up 0.11%. The Shanghai Composite Index fluctuated and closed flat, as China Shipbuilding Industry jumped on restructuring talks, countering declines in Kweichow Moutai. The S&P/ASX 200 index pared earlier gains to close 0.1% higher after Australia executed its first back-to-back rate cuts in seven years. The S&P BSE Sensex Index edged up 0.1%, driven by Housing Development Finance and Infosys
Australian shares were flat, pulling back from earlier gains after the Reserve Bank of Australia cut its benchmark interest rate by 25 basis points to a record low 1.0%, as expected, which curiously sent the AUD sharply higher. However, the RBA left limited room for more cuts, raising the possibility of unconventional policy easing.
In FX, the dollar fell against most G-10 peers, paring Monday’s rally, which was the best in more than two months. The Australian dollar led gains, climbing after the central bank cut rates as expected – its first back-to-back rate cuts in seven years – and said further policy adjustments depended on growth and inflation data. The euro rose above $1.13 after ECB policy makers were said to be not ready to rush into additional monetary stimulus at this month’s meeting. The safe-haven yen strengthened against the dollar, which fell 0.2% to 108.24 yen per dollar, and the euro was flat at $1.1288. Most Asian currencies dropped, with the won leading declines.
In debt markets, Italian government bonds rallied after Italy cut its 2019 budget deficit target to avoid European Union disciplinary action, potentially easing another major concern for markets.
In commodity markets, oil gained as OPEC agreed to extend supply cuts until next March, although prices were pressured by worries demand may ease amid hints of a slowdown in the global economy. Treasuries climbed amid mixed trading in global stocks.
In commodities, oil fluctuated as investors weighed OPEC’s extension of output cuts into 2020. Spot gold added over half a percent to $1,392.11 per ounce. Bitcoin crashed, tumbling below $10,000 after rising to $13,000 less than a week ago.
No major economic data is expected today. Acuity Brands and Simply Good Foods are reporting earnings, while Ford, Tesla, and other carmakers release their U.S. monthly sales.
Market Snapshot
S&P 500 futures down 0.1% to 2,963.50
STOXX Europe 600 up 0.09% to 388.22
MXAP up 0.3% to 162.04
MXAPJ up 0.3% to 532.45
Nikkei up 0.1% to 21,754.27
Topix up 0.3% to 1,589.84
Hang Seng Index up 1.2% to 28,875.56
Shanghai Composite down 0.03% to 3,043.94
Sensex up 0.2% to 39,778.57
Australia S&P/ASX 200 up 0.08% to 6,653.21
Kospi down 0.4% to 2,122.02
German 10Y yield fell 0.3 bps to -0.36%
Euro up 0.04% to $1.1291
Italian 10Y yield fell 13.3 bps to 1.607%
Spanish 10Y yield fell 1.9 bps to 0.317%
Brent futures down 0.3% to $64.88/bbl
Gold spot up 0.6% to $1,393.11
U.S. Dollar Index down 0.1% to 96.79
Top Overnight News from Bloomberg
While ECB Governing Council members agree that they could act on July 25 if the outlook deteriorates, they are said to be currently leaning toward the following meeting when they’ll have updated economic forecasts to back up their decision. The council might tweak its policy language this month to signal more stimulus is imminent
The U.S. added more European Union products to a list of goods it could hit with retaliatory tariffs in a long-running trans-Atlantic subsidy dispute between Boeing Co. and Airbus SE. The Trade Representative’s office in Washington on Monday published a list of $4 billion worth of EU goods to target
China will scrap ownership limit for securities, futures and life insurance companies by 2020, one year ahead of the original plan of 2021, Premier Li Keqiang says at the World Economic Forum in Dalian. China will keep yuan at a reasonable and equilibrium level and won’t resort to competitive depreciation
Jeremy Hunt said he would “100% not” suspend Parliament to force through a no-deal Brexit, drawing a dividing line with Boris Johnson as the two men entered the last days of campaigning before Tory activists start voting for the U.K.’s next prime minister.
OPEC will extend production cuts into 2020, attempting to buoy oil prices as the world’s leading exporters fret about the outlook for global demand growth and the relentless rise in output from America’s shale fields. Oil edged lower as investors weighed troubling economic data from around the world against OPEC’s extension of output cuts into 2020.
Iran said it had exceeded limits set on its enriched-uranium stockpile, a move that risks the collapse of the 2015 nuclear accord and raises concerns that a standoff with the U.S. could lead to military action
Italy’s populist government lowered its 2019 budget deficit goal to 2% in a bid to comply with European Union rules and avoid sanctions for failing to rein in debt. Market relief drove Italian bonds higher
Australia’s central bank governor signaled he’ll stand pat in coming months to observe the impact of back-to-back interest rate cuts, while standing ready to resume easing should the outlook at home or abroad take a turn for the worse
London bankers are bracing for thousands of job cuts. Nomura Holdings Inc., Japan’s biggest brokerage, let go of 30 people in April. HSBC Holdings Plc and Deutsche Bank AG are cutting jobs. In an atmosphere that may be the gloomiest since the financial crisis, some are jumping before they’re pushed
Asian equity markets traded indecisive as the euphoria from the US-China trade truce began to wane and with the region looking ahead to this week’s key risk events. ASX 200 (U/C) was underpinned by strength in mining names and amid a widely anticipated back-to-back rate cut from the RBA, while Nikkei 225 (+0.1%) was choppy and largely reflected the price action in the domestic currency. Elsewhere, Hang Seng (+1.2%) and Shanghai Comp. (U/C) were mixed with the mainland dampened after another liquidity drain by the PBoC, while Hong Kong outperformed as it played catch up on return from the extended weekend and amid declines in money market rates, with casino stocks among the biggest gainers following the strong growth in Macau gaming revenue. Finally, 10yr JGBs were subdued by the indecisive risk tone and after mixed results at the 10yr JGB auction failed to spur prices.
Top Asia News
Credit Suisse Hires UBS Veteran as Asia Head of Equity Research
Major European indices are mixed and overall largely unchanged [Euro Stoxx 50 U/C] as sentiment deteriorated overnight with the notable development being that the US Trade Representative Office has proposed increasing tariffs on EU products as a result of the aircraft subsidies; with a proposed USD 4.0bln of additional tariffs being added. The tariffs would be on-top of the USD 21bln worth of tariffs announced by the USTR in April, with the products in question encompassing a vast range including whisky, iron tubes and cheese; a public hearing on these additions is scheduled for August 5th. Airbus (-0.9%) are afflicted on these additions as they are at the center of the European aircraft subsidies. Similarly, sectors are mixed with utilities and consumer staples outperforming on the day. In terms of this mornings notable movers, Adidas (-0.4%) opened lower after a downgrade at HSBC. Separately, but still within the Dax (-0.2%), Deutsche Bank (-0.7%) have slipped into negative territory as the broader index deteriorates on the back of negative comments from the VDMA this morning; however, the Co. did open around 1.1% higher on reports that they are considering lowering their capital buffer in order to fund the Co’s overhaul. Finally, Casino (+2.0%) are higher after selling 8 stores.
Top European News
Italy Cuts 2019 Deficit Goal to 2% in Bid to Avoid EU Procedure
Salvini Seizes Economic Reins to Take on EU in Budget Battle
U.K. Construction Posts Worst Month Since 2009 on Brexit Worries
Polish Banks Warn of $16 Billion Risk From EU Ruling, Puls Says
In FX, the Aussie has staged another strong rebound from fleeting overnight lows as bears quickly seized the opportunity to book profits in wake of the RBA’s decision to cut the OCR by another 25 bp, and other short positions were covered/squeezed on the accompanying statement suggesting no rush to ease again at the next policy meeting. Subsequently, comments from Governor Lowe appear to affirm a wait-and-see stance given back-to-back moves and Aud/Usd is inching closer to 0.7000 from 0.6958 lows, while Aud/Nzd has rebounded from sub-1.0450 towards 1.0500, with the Kiwi independently hampered by a further deterioration in NZIER business sentiment and ASB’s call for 2 more RNBZ rate reductions. Consequently, Nzd/Usd is hovering closer to the bottom of a 0.6657-80 range and eyeing the latest GDT auction next.
GBP/EUR – The Pound has tumbled to the base of the G10 pile on the back of June’s UK construction PMI that confounded expectations for a modest recovery and slumped even deeper into contraction at 43.1, much worse than the manufacturing miss on Monday. Moreover, components like housing and new orders were bleak, as the former fell below zero for the first time in 17 months and the latter weakened the most in over a decade. Cable is clinging to 1.2600 and Eur/Gbp is edging up towards 0.8960 as the single currency rebounds further from daily chart support vs the Dollar ahead of a Fib (circa 1.1277 and 1.1259 respectively) on ECB sourced reports downplaying July rate cut speculation. However, Eur/Usd faded around 1.1320 and could be drawn back towards decent option expiry interest between 1.1295-1.1300 (1 bn), especially after considerably weaker than forecast German retail sales data and some bleak numbers/outlooks from the likes of the DIHK and VDMA.
JPY – The Yen retains a relatively firm underlying bid on safe-haven grounds as the initial post-G20 euphoria dissipates and attention shifts back to the global slowdown and geopolitical factors, like the ongoing US-Iran spat. Hence, Usd/Jpy remains capped around 108.50 and the 30 DMA (108.55), but also confined on the downside at 108.00 given a generally firm Greenback as the DXY has bounced further from recent lows and back over the 200 DMA (96.690) into a loftier 96.624-879 band.
RBA lowered the Cash Rate by 25bps to a record low 1.00% as expected and stated that it cut rates to support employment growth, as well as provide greater confidence on inflation. RBA noted that the economy can sustain a lower rate of unemployment and that employment growth remains strong, while it added that the outlook for the global economy remains reasonable and that there are signs house prices are stabilizing in Sydney and Melbourne. (Newswires)
In commodities, the oil complex is somewhat subdued as the G20-driven positive sentiment waned. Brent (-0.4%) and WTI (-0.4%) have failed to find much support this morning on OPEC agreeing to extend the oil output cut by 9-months; with the OPEC+ meeting commencing today and the press conference expected at around 12:00 BST. In terms of recent commentary sources indicate that Russian Energy Minister Novak has given his support to the extension, with the deal to be signed soon. Nonetheless, markets will remain on guard for any dissent at today’s meeting from the non-OPEC members, with the joint verdict on an extension not expected until the OPEC+ press conference. From a technical perspective for WTI, PVM highlight that USD 59.07/bbl and USD 58.57/bbl are the two ‘pivot points’ to keep an eye on. Looking ahead, aside from the OPEC+ meeting we have the API report which last week posted a headline draw of -7.55mln BPD. Gold (+0.5%) has reverted back towards the USD 1400/oz level after yesterday’s G20-induced decline; with today’s reversion stemming from a decidedly less-positive market sentiment than yesterday. However, the USD 1400/oz level remains elusive for the yellow metal this morning, for reference session high is currently just over USD 1397/oz. In contrast to yesterday’s gains, copper has remained largely negative throughout the session as risk sentiment turning negative is weighing on the red metal.
US Event Calendar
Wards Total Vehicle Sales, est. 17m, prior 17.3m
6:35am: Fed’s Williams Speaks on Global Economic and Policy Outlook
11am: Fed’s Mester to Speak on Economy in London
DB’s Jim Reid concludes the overnight wrap
Before the weekend we sent birthday party invites out to Maisie’s new classmates for September when she starts full time nursery. Yesterday we got over 10 acceptances from parents we don’t know yet and it makes me very worried that this is going to start an endless cycle of party invites that I’m going to increasingly find it hard to plan my weekends around. So my question to parents out there with more experience is what’s the best I can get away with in terms of party/round of golf ratio? Is 1:10 a bit optimistic? Maybe I’ll request to home school the twins to avoid the next round of this in a year or so’s time. My wife has promised a children’s entertainer but without booking one yet. So all recommendations as to what will go down well with 4 year olds are very welcome!
It wasn’t a full on risk party yesterday as markets shifted between optimism over the weekend developments on the trade war and renewed macro concerns yesterday, but ultimately the S&P 500 still closed +0.76% at a fresh all-time high. That was below its opening level of +1.23%, but is nevertheless just 35pts from the psychologically significant 3,000 level. Sentiment did fade from the early highs possibly as the aftermath of the Trump/Xi talks was light on details after deeper inspection. Indeed, China has not actually confirmed any details and markets are a little confused as to what happens next. Also the offshore yuan, a very trade war-exposed asset, has actually reversed all of its rally from Sunday night.
The NASDAQ and DOW also traded down from their opening highs of +1.80% and +1.09% to end the day at +1.06% and +0.44%, respectively. Semiconductor stocks rallied +2.65%, boosted by the trade headlines and the apparent de-escalation against Huawei, while energy stocks lagged at +0.10% as oil prices declined after the OPEC meeting (more below). European bourses also peaked at their open but held onto decent gains by the close, with the STOXX 600 rising +0.78% and DAX +0.99%. The DAX is also up +20.61% from the December lows now which means it’s entered a bull market if that’s your definition of one!
Overnight one of the main stories has been the US Trade Representative’s office publishing a list of $4 bn worth of EU goods that the US could hit with duties as retaliation for European aircraft subsides, particularly to Airbus. It adds to a list of EU products valued at $21 bn that the USTR published in April, according to the release. The USTR said a public hearing on the proposed additional $4 billion worth of products will be held on August 5th and added that, “the final list will take into account the report of the WTO Arbitrator on the appropriate level of countermeasures to be authorized by the WTO.” As a reminder, the WTO has found that the EU subsidies violate international trade rules and it’s expected to decide this summer on the amount of countermeasures the US can impose. Staying with trade, President Trump said that a new round of trade talks with China is already underway as negotiators are speaking on the phone.
This morning in Asia markets are trading mixed with the Nikkei (+0.09%) up while the Shanghai Comp (-0.06%) and Kospi (-0.27%) are down. The Hang Seng is up +1.35% as Hong Kong’s market reopened after a holiday to catch up with yesterday’s move in markets. Elsewhere, futures on the S&P 500 are up +0.12%.
In other news, China’s Premier Li Keqiang said in a speech at the WEF this morning that China will scrap ownership limits for securities firms, futures businesses and life insurance companies by 2020, one year ahead of the original target of 2021. The rule change would mean foreign entities could wholly own firms in those sectors. Li also said that China is working on deeper tax cuts for businesses and it should reach CNY 2tn while adding that China remains concerned about prohibitive financing costs for smaller and medium sized businesses and will work towards the need for more monetary and fiscal support for these companies.
Back to yesterday and credit also had a good day with HY spreads 7bps tighter in the US and -6bps tighter in Europe. EM performed well with the MSCI EM equity index climbing +1.19% and EM FX +0.15%. In bonds, the big move was BTPs which rallied -13.5bps and closed at 1.967% after catching a bid with the wider risk on move, though they were also helped by unconfirmed reports that the European Commission will not recommend an excessive deficit procedure against the country as was possible as early as today (per Bloomberg). Clemente De Lucia has a writeup on the current state of play available here . The rally pushed BTP yields below 2% for the first time since May last year and with Bunds ‘only’ -3.0bps lower (albeit to a new low of -0.357%) – the BTP-Bund spread is now at 232bps and the lowest since last September. The global stock of negative yielding debt is now at $12.83tn with yesterday’s moves in rates and remains close to recent all time high of $13.01tn.
Meanwhile Treasuries were quiet all things considered, with 10y yields rising +2.4bps and back above Italian yields. Two-year yields rose +3.2bps, as markets continued to price out the odds of a 50bps cut at the Fed’s meeting later this month. The current odds are now just 20%, from 44% last week. That caused the 2st10s curve to flatten -0.7bps. In commodities, oil prices slipped -2.40% after OPEC announced an extension of its production cuts through next March but failed to reach an agreement on deeper cuts. There were also unconfirmed reports of disagreements within the cartel as well, which caused the meeting’s press conference to be delayed and sent a negative signal about future cooperation.
Moving onto the data, the general risk on came despite what was a pretty weak set of PMIs across the globe yesterday. In fact, over Sunday and Monday we counted 35 different manufacturing PMIs of which 19 came in below 50 and a worrying 27 dropped month on month. The hope will be that a trade truce can stabilise things but there’s obviously concern that the damage has already been done and will need firmer resolution to reverse it.
Notwithstanding these numbers it was the ISM manufacturing in the US which was most anticipated and to be fair the reading was better than expected at 51.7 (vs. 51.0 consensus) even if it was down -0.4pts from May. Less positive was the new orders component which dropped -2.7pts to 50.0 – the lowest since December 2015 – although employment rather encouragingly rose 0.8pts to 54.5. A few moving parts but it’s hard to ignore the fact that this was still the lowest headline ISM manufacturing reading since October 2016.
Just coming back to the final manufacturing PMIs in Europe, the Eurozone reading was revised down -0.2pts to 47.6 from the flash print and was -0.1pts lower than May. Germany (45.0 vs. 45.4 flash) and to a lesser extent France (51.9 vs. 52.0 flash) also saw downward revisions while the biggest miss was reserved for Spain (47.9 vs. 49.5 expected) which fell -2.2pts from May and also hit the lowest level since April 2013. Italy (48.4 vs. 48.7 expected) also disappointed with output and new orders falling for the eleventh consecutive month too. That also marks the ninth successive sub-50 reading. Of the 13 EU countries that reported manufacturing PMIs yesterday, only 5 posted a reading of greater than 50 with Hungary (54.4) leading the way.
Indeed the weakness includes the UK where the manufacturing PMI slumped to 48.0 last month versus expectations for a 49.5 reading. That is also a drop of-1.4pts from May and the lowest reading since February 2013. The details showed that output fell and new orders remained in negative territory too. In fact most of the sub-indices were lower with the associated text noting that “the stranglehold of sustained Brexit-related uncertainty and disruption also weighed heavily on business confidence and employment, as optimism ebbed to one of its lowest levels in the survey history”. Our UK economists noted that current levels are now consistent with prior BoE easing so this will likely increase the scrutiny of the BoE maintaining a tightening bias in the communication. We should also note that consumer credit data for May also slipped yesterday to £0.8bn. Sterling fell -0.46% yesterday while 10y Gilts ended -1.9bps lower.
As for the remaining US data, the final June manufacturing PMI was revised up +0.5pts to 50.6 which actually means it was up 0.1pts from May. Finally construction spending in May was confirmed as falling -0.8% mom, though the April figure was revised up 0.4pp.
In other news, the ECB’s new chief economists Lane made fairly dovish comments during a speech in Helsinki. This was notable as the market is still fairly new to Lane. He said that “the effectiveness of the policy toolkit means that we can add further monetary accommodation if it is required to deliver our objective” and that “it is essential that a central bank shows consistency in its monetary policy decisions by proactively responding to shocks that might delay convergence to the target or move inflation dynamics in an adverse direction”.
Meanwhile, the ECB’s Knot, one of the more hawkish members on the Governing Council, said that it is “indisputable” that inflation is too low in the euro area. He went on to say that it’s “important to underline the Governing Council stands ready to act decisively” if necessary. This contrasts with his remarks from earlier this year, where he said that price appreciation in the Dutch housing market was “exuberant” and advocated for “doing something about this.”
To the day ahead now, where this morning we’ll get the May retail sales data in Germany, June construction PMI in the UK and May PPI reading for the Euro Area. In the US the only data due is the June vehicle sales numbers. Away from the data we’ve also got scheduled comments due from the Fed’s Williams at 11.35am BST and the Fed’s Mester at 4pm BST. The ECB’s Knot and BoE’s Carney are also due to speak today. The other event is the OPEC+ meeting in Vienna where a press conference is expected at the end, however with output cuts being extended it’s unlikely that we’ll get much new news.
via ZeroHedge News https://ift.tt/2NBGfkC Tyler Durden
One day after both we and the WSJ previewed the ECB’s next easing bazooka, which in addition to cutting rates could also include tens of billions in monthly QE in the form of both the PSPP and CSPP…
… the ECB tried to regain control of the narrative and early on Tuesday, Bloomberg reported that ECB policy makers “aren’t yet ready to rush into additional monetary stimulus at this month’s meeting”, preferring instead to wait for more data on the economy, according to euro-area central-bank officials familiar with the matter.
As Bloomberg’s source at the ECB – who asked not to be identified as he is most likely the head of the ECB – leaked, while Governing Council members agree that they could act on July 25 if the outlook deteriorates, “they are currently leaning toward the following meeting in September when they’ll have updated economic forecasts to back up their decision.” Instead of acting, the council might tweak its policy language this month to signal more stimulus is imminent.
This, of course, is precisely what Goldman said yesterday, when it wrote that it expects the Governing Council to adopt the “or lower” easing bias for policy rates in July and indicate that the ECB will analyze QE options for September.
At that point look for an easing package that closely resembles the “medium” package discussed above, including a 20bp rate cut with tiering, enhanced forward guidance and a return to QE.
Furthermore, Goldman expects the asset purchases to include corporate bonds and sovereign debt within the existing PSPP headroom, paired with a signal that the Governing Council stands ready to expand the sovereign purchase program with an increase in the issuer limit if economic conditions do not improve.
As Bloomberg adds, waiting until September meshes with investor expectations, as the market is now pricing a 10 basis-point rate cut by then, but some are looking for faster or bigger action. Commerzbank and Morgan Stanley expect 10 basis points as early as this month. HSBC forecasts 10 basis points in both September and December, and Goldman Sachs foresees 20 basis points in September. Morgan Stanley and Goldman Sachs also expect a resumption of quantitative easing.
A delay also leaves the market more exposed to shocks over the summer months when liquidity is thinner. The prospect of escalating trade tensions was highlighted on Monday when the U.S. proposed adding more tariffs to European Union goods because of a dispute between Boeing Co. and Airbus SE.
Not surprisingly, a delay in easing by the ECB was seen as bullish for the common currency, and the euro jumped to the highest level of the day, climbing as much as 0.3% to $1.1321.
via ZeroHedge News https://ift.tt/323BF1o Tyler Durden
This should surprise absolutely nobody: Bloomberg reported Tuesday that President Trump’s decision to allow some American chipmakers to continue doing business with Huawei followed an intense lobbying effort by industry group SIA – i.e. the Semiconductor Industry Association.
The argument SIA used to convince the president was simple yet effective: sanctions against Huawei would make US chipmakers appear to be undependable partners, which could crimp their competitiveness against increasingly sophisticated international rivals.
Before Trump left for Osaka, a team of lobbyists met with Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin to argue that the decision to add Huawei to the “entities list” – effectively blacklisting the firm by severely restricting what American firms are allowed to sell to Huawei – was short-sighted and could do serious harm to a critical American industry.
The lobbyists turned Trump’s national security argument – the idea that Huawei must be cut out of American markets because its products could enable Beijing to carry out mass espionage – on its head, arguing that cutting off US chipmakers from one of their largest international markets (China) would hurt long-term profitability as well as the company’s CapEx spend.
“Overly broad restrictions that not only constrain the ability of U.S. semiconductor companies to conduct business around the world, but also casts U.S. companies as risky and undependable, puts at risk the success of this industry, which in turn impacts our national security,” the group wrote last month. They added that the administration should take into account those factors when evaluating license applications from American firms.
And as it so happens, their arguments found their way to President Trump, who parroted some of these points when he unveiled his plan to give Huawei a reprieve.
Their talking points seem to have found their way to Trump. After concluding a high-stakes meeting with Chinese President Xi Jinping in Osaka on Saturday, the U.S. president said American firms weren’t pleased with his Huawei policy and announced that he has agreed to let them keep shipping some of their components and technology.
“I’ve agreed — and pretty easily — I’ve agreed to allow them to continue to sell that product so American companies will continue,” the president said during a press conference. “The companies were not exactly happy that they couldn’t sell because they had nothing to do with whatever was potentially happening with respect to Huawei. So I did do that.”
Though there are still some strings attached.
He later clarified he will only allow them to sell “equipment where there is no great national emergency problem with it,” without offering more details. Trump’s comments stoked confusion among industry and analysts and the White House has not yet announced specifics on the path forward for U.S. companies doing business with Huawei.
The success of this lobbying effort just goes to show: While Trump has frustrated corporate America with his sometimes erratic approach to protectionism, his own belligerent rhetoric can be successfully used against him.
via ZeroHedge News https://ift.tt/2xlAbld Tyler Durden
The defeat of measles in the United States was one of the great good news stories of the turn of the millennium. Prior to 1963, when a vaccine was developed, the highly contagious virus led each year to 48,000 hospitalizations and 400–500 deaths, mostly among small children, according to the Centers for Disease Control and Prevention (CDC). But immunization campaigns steadily eroded the disease’s reach, and by 2000 it was declared eliminated from American shores.
Today, the U.S. is grappling with the worst measles outbreak in a quarter-century. Some 981 cases were confirmed in 26 states between January 1 and May 31—a 26-fold increase from the total in 2004. The CDC anticipates one or two fatalities per 1,000 cases, so it looks like only a matter of time before the disease again starts claiming American lives.
The most tragic thing about the measles resurgence is how wholly unnecessary it is. Whether out of fear, out of ignorance, out of confusion, or out of religious conviction, parents choosing not to vaccinate their kids have allowed immunization rates to drop below the 95 percent threshold required to keep the virus at bay. In October, officials reported that the number of children who haven’t received vaccines for preventable diseases had quadrupled since 2001.
At the very moment we succeeded in banishing a deadly affliction from our country, in other words, people began eschewing the measures that made this medical miracle possible.
Socialism, too, is having an American renaissance. As with measles, if it’s allowed to spread, the result will be needless human suffering.
A generation after the fall of the Soviet Union, young Americans have forgotten, if they ever learned, what happens when a citizenry allows itself be enraptured by the promise of communal ownership of a national economy (page 55). Such regimes have failed whenever and wherever they’ve been tried, engendering misery, starvation, persecution, and wasted human potential on a massive scale. At this very moment, hyperinflation and desperate shortages of food, medicine, and power are ravaging Venezuela (page 75), a previously rich country that had every intention of forging a better, smarter socialist future for the 21st century.
The new wave of young American socialists are quick to insist they have a different, gentler vision—as the Democratic Socialists of America’s website puts it, one in which “working people” run things “democratically to meet human needs, not to make profits for a few.” But that is a hoped-for end state, not an implementable program. The concrete policies most modern socialists propose—high confiscatory taxes and aggressive wealth redistribution, free college, publicly provided universal health care (and, often, the abolition of private alternatives)—are far more likely to wreak devastation on the well-being of Americans than they are to finally achieve utopia.
Each of these policies does violence to the market-based system of free exchange and private property rights that has underpinned the greatest expansion of human flourishing in human history. Whatever its faults, that system has brought us everything from air conditioning and aspirin to cheap flights and Netflix, all while lifting billions out of abject poverty around the world.
If people cannot keep the fruits of their own labor, Pope Leo XIII wrote in 1891, “the sources of wealth themselves would run dry, for no one would have any interest in exerting his talents or his industry.” Socialist policies, by giving government rather than individuals control over an ever-larger share of life, move us toward that eventuality. And the ensuing social collapse, like the current measles outbreak, would constitute a man-made disaster—one rendered all the more infuriatingly tragic by the fact that we should know better by now.
But if the American left has failed to immunize its youngsters against the perils of bad ideology, the right is not faring much better. Even as America prepares to weather the coming socialist storm, a second thunderhead is forming. As Daniel McCarthy put it at First Things in March, Donald Trump’s 2016 campaign, “whether consciously or not, drew upon what has been the clear policy alternative to the elite consensus in favor of global liberalism since the early 1990s: economic nationalism, and nationalism more generally.”
There are many forms that nationalism can, in theory, take—some, like those now on the rise abroad (page 67), more troubling than others. McCarthy calls for a “mild” variety. Writing in The American Conservative, W. James Antle III insists that the new nationalism “would not be illiberal in any meaningful sense of the word.” Shortly after Trump’s inauguration, National Review‘s Ramesh Ponnuru and Rich Lowry proposed “a benign nationalism” mostly featuring “loyalty to one’s country” and “solidarity with one’s countrymen.” But as their onetime colleague Jonah Goldberg quipped, benign is doing an awful lot of work in that particular formulation.
Define it vaguely enough and nationalism becomes indistinguishable from patriotism. But this new conservative critique is not focused on a mere deficiency in the rah-rah-America spirit. To count as a “new order,” nationalism has to differ in tangible ways from the liberal status quo, with its staunch commitments to civil liberties and global commerce. In practice, that means tariffs (page 74), immigration restrictionism (page 51), and massive infusions of public money (often with government directives attached) intended to reorganize and resuscitate the American industrial sector.
In 2015, former Federal Reserve Chairmen Alan Greenspan and Ben Bernanke joined a dozen other prominent economists to ink an open letter to congressional leadership. “International trade,” they wrote, “is fundamentally good for the U.S. economy, beneficial to American families over time, and consonant with our domestic priorities.” As Harvard’s Gregory Mankiw, one of the signatories, noted in a New York Times op-ed, “Economists are famous for disagreeing with one another, and indeed, seminars in economics departments are known for their vociferous debate. But economists reach near unanimity on some topics, including international trade.”
The damage, in human terms, of an experiment in economic nationalism could very well be catastrophic. Yes, much of the burden would fall on foreign citizens whose livelihoods depend on exchange with the world’s largest economy or whose hopes and dreams for their children’s future involve starting new lives here. But higher prices first and foremost put the squeeze on working-class American consumers, and as domestic farmers and manufacturers alike have learned in the last year, trade wars—like real wars—inflict casualties on both sides.
What unites the left’s flirtation with socialism and the right’s move toward nationalism is the willful discarding of long-understood, dearly learned truths about how to make the world a better place. Like the death count when parents stop vaccinating their kids, the fallout from these developments may not be instantaneous. But bad ideas can be hard to contain once they get going, and the results are not likely to be pretty.
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