Tag: news

After months of waffling about the prospects of another summit between North Korean leader Kim Jong Un and President Donald Trump, the White House announced Friday afternoon that a meeting has finally been tentatively scheduled for late February, following a series of meetings involving North Korea’s chief negotiator that culminated in meeting the president at the Oval Office.

Following the announcement, the White House said that it has continued to make progress with North Korea, though sanctions will remain intact.

According to the Associated Press, Gen. Kim Yong Chol, the lead negotiator for North Korea and a former spy chief, met with Secretary of State Mike Pompeo Friday after previously scheduled talks between the two had been abruptly canceled in November. After meeting with Pompeo at a hotel in DuPont Circle – a meeting for which Stephen Biegun, the US special representative to NK, was also in attendance, Kim traveled to the White House to meet with Trump. A State Department spokesman said that Kim had a “good discussion” with Pompeo and Biegun.

None of the parties responded to questions about the location of the summit, which will follow a historic Singapore summit between the two leaders that took place back in June.

WH Press Secretary Sarah Sanders said Trump met with Kim for 90 mins to discuss denuclearization and the possibility of a second summit, and that Trump looks forward to meeting with the North Korean leader again.

However, it’s unclear whether any material progress has been made on the biggest sticking point between the US and NK: That is, the US’s demands that the North complete the denuclearization process before any sanctions are lifted. The North has been pushing for a gradual schedule of sanctions relief whereby it surrenders some nukes in exchange for some sanctions being lifted. The US has repeatedly said this is out of the question.

via RSS http://bit.ly/2R14mWl Tyler Durden

On Friday the US Defense Department identified three out of the four Americans that were killed this week as a result of an ISIS suicide bombing in the northern Syrian city of Manbij.

According to an official DoD press release, the three US. military personnel were identified as Army Chief Warrant Officer Jonathan R. Farmer, 37, Navy Chief Cryptologic Technician Shannon M. Kent, 35 and Scott A. Wirtz. The fourth American that was killed, whose name has yet to be released, is believed to be a military contractor that was working inside Syria.

The terrorist attack which targeted a street-side restaurant killed over 20 people, including four Americans that were present in the area at the time. The restaurant had been known to host meetings of US and French soldiers, and local Kurdish leaders, and was reputed as a favorite spot for the Americans based in Manbij who’ve been advising Kurdish forces.

A source had told Turkey’s TRT World in the immediate aftermath of the blast, “The explosion took place inside a restaurant where US, French troops, and YPG militants were meeting.”

The New York Times has described the location, Palace of the Princes restaurant, as a well-known and highly visible place “frequented” by American personnel. American troop patrols would routinely stop at the location, per the NYT report: “They stop here for chicken and shawarma whenever they have a patrol in the city,” Jassim al-Khalaf, a local produce seller, said. “People here are used to it, so it’s not a new thing to see them.”

Residents told the Times that it was common to see the Americans park their vehicles in front of the establishment to dine-in as well as get take out.

The accounts described by the locals stands in real contrast to the US military’s advice for troops who deploy into active war zones. — Business Insider

Also alarming in what was clearly an overly lax security situation is that US lawmakers who made prior visits to US-occupied parts of Syria, including Republican Sen. Lindsey Graham of South Carolina and Democratic Sen. Jeanne Shaheen, visited the establishment and nearby outdoor marketplace in July while wearing no body armor.

On the same day of the attack, an Islamic State-affiliated web site, Amaq, boasted of a successful suicide attack targeting a “foreign military patrol,” describing a lone attacker on foot wearing a suicide vest.

Manbij has been held by US-backed Kurdish forces since the YPG Kurdish militia took it back from ISIS in 2016. It has for the past two years seen a significant US troop, special forces, and patrol presence, and has at least one known small American base. 

Meanwhile, Syria hawks on both sides of the aisle have used the tragedy to slam President Trump’s decision to pull out, saying his statements that “ISIS has been defeated” have been proven wrong.

However, it appears that the remnants of ISIS, which over the past year has been largely driven underground, also wants the Americans to stay, given they chose to conduct the attack at the very moment American troops were set to exit the country. 

via RSS http://bit.ly/2U2xYV8 Tyler Durden

In what had otherwise been a strong day for US tech stocks, the Washington Post  sent shares of Facebook reeling on Friday afternoon when it reported that the FTC is preparing to follow through with a “record-breaking” fine against the social media giant for violating an agreement with the regulator to safeguard the data privacy of its users.

The fine, which would be the first penalty Facebook has faced since the Cambridge Analytica scandal broke nearly one year ago, won’t be anywhere near the trillion-dollar penalty that some speculated Facebook could face at the hands of the FTC, but it will be more than the $22.5 million that the FTC hit Google with back in 2012.

Facebook shares slumped on the news:

via RSS http://bit.ly/2FKYu1d Tyler Durden

Earlier this week, we presented an ominous  for the world economy chart: namely the collapse of global money supply which has been declining rapidly over the last year and a half. In fact, global money supply growth (using M1) is now flirting with the lows seen in mid-2008. And while some economies, such as China, are now desperately trying to pivot back to supportive measures, BofA’s Barnaby Martin recently warned that high global debt will constrain enthusiasm for engaging in further rounds of stimulus. Meanwhile, as the chart below suggests, lower money supply growth has always pointed to weaker global economic momentum going forward. In fact, if one uses Global Industrial Production growth as a proxy for the global economic expansion, or contraction, the World is now almost certainly in a recession; the only question is when will economists acknowledge it.

The message from the chart above has also been heard loud and clear in high frequency economic indicators (at least in those countries where the government is not shut down and where data is still being reported), with the number of consecutive days of negative global data surprises now approaching the longest since the financial crisis.

And just to confirm that the collapse in Global M1 growth is a major problem – perhaps the biggest for the global economy – Morgan Stanley showed the following chart which confirms that every time M1 has dipped negative – as central bank liquidity injection either slowed or went into reverse – there has been a financial crisis: whether the 2015 EM and Manufacturing Commodity Recession, the Sovereign Debt Crisis of 2011, the Global Financial Crisis and US Housing bubble burst of 2007/2008, the Tech Bubble burst of 2000 and so on.

So yes, there is little doubt that global growth is slowing the only question is how forcefully. Today, courtesy of BMO, we present another chart which shows that the world economy is as of this moment almost certainly in a recession.

As economist Douglas Porter observes, the OECD’s leading indicator is a good guide post of what is coming just around the corner, although it doesn’t lead broad GDP trends by much (perhaps a month or so). It was just released Monday, and dipped for the 11th month in a row—it peaked in December 2017—clearly signaling a cooldown.

What the chart clearly shows is that the last three cycles all ended when the leading indicator dropped to where it is now (even though there have also been two false signals in that timeframe—during the Asian crisis in 1998, and during the Euro crisis in 2012).

So the question what happens next, will have to be answered by policymakers who have no choice but to try and push higher the blue line in the chart above. In other words, the fate of this cycle will be determined by how policymakers now respond, and how markets and consumer/business sentiment hold up in coming weeks.

And since it is all up to central banks once again to boost liquidity, something they won’t be doing during the current QT phase unless something drastically changes over the next 12 months…

… the above charts confirm that the key variable for the global economy is not whether the Fed stops hiking or starts cutting rates (although any further rate hikes will surely have an adverse impact on global liquidity), but whether the Fed – and other central banks – pause their balance sheet shrinkage, and once again start actively injecting liquidity into the global system, or soon enough we will be looking for the best description of “[insert here] crisis of 2019.“

via RSS http://bit.ly/2T24Pcy Tyler Durden

The slump in the upper tiers of the Manhattan real-estate market is already having a knock-on impact in some of the toniest tri-state area real-estate markets – most notably that of Greenwich, Conn., known for being a leafy suburban haven for hedge fund titans and other MOTUs.

To be sure, sales of luxury homes in Greenwich have been falling for a while now, prompting many sellers to pull their homes from the market in the hopes that conditions might improve. But in a sign that wealthy New Yorkers looking to trade their two-bedroom UES apartments for a sprawling Fairfield County estate are being forced to scale back their budgets after their apartments didn’t fetch as high a price as they had hoped, Bloomberg reported that the median home-sale price in Greenwich fell 17% during the last three months of 2018 to $1.5 million. Overall purchases continued to slip, falling 2.2% during the quarter.

Real estate brokers told BBG that the weakness in the NYC market was largely to blame.

“The weakness in New York City has definitely played a role in some of the weakness that we’ve felt here,” said David Haffenreffer, brokerage manager of Houlihan Lawrence’s Greenwich office. Sellers who got less than they wanted for their city apartments “are in turn then dialing down their budgets when they get here to look at homes. Or, it’s just flat-out delaying their ability to buy here.”

And just as New York led Greenwich on the way down, sellers in Greenwich will be looking to New York City to determine when the market equilibrium has shifted back into the seller’s favor.

“As New York City finds its footing, so too will our markets,” Haffenreffer said. “We’re just waiting for those indications.”

And sellers in the high-end of the market have already largely pulled their inventory off the market, as weakness first surfaced in the market for homes selling for $10 million or more (a trend that some brokers blamed on a shift in tastes away from estates and toward more centrally located homes closer to down town and public transit like the train station).

In a town known for its $10 million-plus estates, most purchases in all of 2018 were for less than $2 million, according to a report by Houlihan Lawrence. There were 335 single-family deals in that price tier, up 4 percent from 2017.

Condos continued to be an appealing option for buyers looking to keep city-style living and amenities even after moving to the tony suburb. Purchases jumped 23 percent in the fourth quarter from a year earlier to 48 deals, Miller Samuel and Douglas Elliman said. The median price was $746,250, down 3.1 percent.

Lately, weakness that was initially confined to hot urban markets has been seeping into the broader US housing market, as data showed sales slumped by double-digits during Q4, one of the worst quarterly showings since the housing recovery began.

via RSS http://bit.ly/2R0aaz4 Tyler Durden

Reviving an age-old debate whether the insolvent, bailed-out zombies GSEs, Fannie and Freddie will emerge from conservatorship, the shares of Fannie Mae and Freddie Mac soared Friday amid reports that the Trump Administration is working on proposal that would likely recommend that the mortgage-finance giants be released from government control as part of a broader plan for U.S. housing finance.

According to Bloomberg, Joseph Otting, acting director of the Federal Housing Finance Agency, commented on the administration’s plans at an internal gathering to introduce himself to staff and “establish open lines of communication,” an FHFA spokesperson said in a statement.

The statement by Otting, who is serving as interim FHFA director in addition to heading the Office of the Comptroller of the Currency, corroborates earlier reports that the administration is working on a plan. Still, the FHFA spokesperson didn’t offer details on what might be included in any proposal, such as whether Treasury would call for releasing the companies without Congress passing legislation.

As a result, shares of Fannie rose more than 31% to $2.36 and Freddie surged nearly 25% to $2.26 just after noon. The jump was the biggest since November 30, 2016, when then-Treasury Secretary nominee Steven Mnuchin first said getting the companies out of the government’s grip was a priority.

The report will be welcome news to both casual retail investors and activist hedge fund involved with the two companies, which have been under U.S. control since the 2008 financial crisis, as a result of optimism that President Donald Trump’s appointees at the Treasury Department and FHFA will allow them to reap a windfall by ending the conservatorship.

Any potential release from conservatorship of the two bailed out mortgage giants would come at a time when many investors are convinced the US is headed into a recession, which the cynics would say likely means that Fannie and Freddie would be “unbailed out” just in time for them them be rescued by taxpayers all over again when the next financial crisis strikes some time over the next 12-24 months.

via RSS http://bit.ly/2szqflN Tyler Durden

Earlier this week we reported that, according to Nomura’s calculations, CTAs were about to cover their recent S&P short positions and turn increasingly longer the higher the market rose. And sure enough, the US stock market has only risen higher, with the latest two upside catalysts being the positive WSJ headline related to US-China trade talks on Thursday and today’s Bloomberg report that China would seek to reduce its trade surplus with the US.

As a result, Nomura’s Masanari Takada writes, the bank’s quant models suggest CTAs continued short-covering on major stock index futures like the S&P500 or Russell 2000 and adds, somewhat redundantly, that “US equity markets seem to have enjoyed such mechanical purchasing pressure by algo investors.”

Additionally, there has been some modest improvement in recent economic data (at least that which is released) and the US economic surprise index (which is missing a lot of recent components) which Nomura views as one of the most important indicators in gauging the sustainability of the current market rally, improved to -3 yesterday (although it tipped back down to -6.90 after today’s big miss in the UMich Sentiment) which more importantly was followed by a gradual increase in overall exposure to US equity markets by hedge funds.

Indeed, this stacked waterfall effect of investors following other bullish investors into risk assets, which some call simply FOMO, is what Nomura defines as the “histeresis effect” on hedge fund behavior, and is as follows:

1. Trend-followers’ systemic buying pushes US stocks up
2. Other hedge fund start to buy the market, chasing CTAs buying programs
3. As buying pressure gets “overheated”, upward momentum of the market becomes unstable
4. US market sharply drops as such crowded long become rapidly liquidated.

This is shown schematically in the chart below:

And yet with stocks surging to new one-month highs, as the brief Christmas Eve S&P500 bear market has been cut in more than half, what Nomura is carefully monitoring at this moment is whether its gauge of US equity market sentiment is leveling off slightly after having rapidly improved over the past few days.

What is surprising, according to the Japanese bank, is that a recovery in sentiment into positive territory (i.e., risk-seeking phase) “appears so close yet so far away.” Specifically, unlike CTAs and other systematic funds, many US equity investors – especially macro hedge funds and risk parity funds – remain hesitant to impatiently begin following an equity market rally that is not sufficiently justified in the context of fundamentals.

Going back to the “histeresis example”, Takada  notes that we experienced a similar situation in which algo investors, mainly in trend-following programs, led the significant upturn of the market last January, March and September. What happened next is that other investors – including major hedge funds – rushed to jump in the stock market uptrend, such “crowded” buying pressures caused an over-heating of momentum and overall market positioning became very unstable with outsized reactions to insignificant headlines and small volatility shocks before subsequently experiencing sharp drops.

So going back to the question we asked in the headline, why do investors – or rather human investors – refuse to buy into this rally, the reason according to Nomura is that most investors – except algo players – now seem to be wary of the future “pitfalls” of such a machine-led stock rebound because of past experiences, are maintaining a conservative approach at present.

What this means, somewhat ironically, is that while everyone was blaming the algos for the December meltdown, even though nobody has “accused” the algos of creating the ongoing meltup, investors and traders know very well that the move higher is not organic, but is purely the result of systematic, algo and various other quant traders forcibly buying as a result of key technical market levels being hit. Unfortunately for the few humans left trading stocks, this is not a buying signal, which likely means that just like in January of 2018 when retail investors finally capitulation and rushed into stocks just ahead of the February 2018 correction, so this time too it is likely that the algos will keep buying until everyone else jumps into the pool… at which point the market will once again take the elevator down.

via RSS http://bit.ly/2TWYQpm Tyler Durden