Tag: news

Blain’s Morning Porridge submitted by Bill Blain

I’ve just seen the surest sign economic apocalypse lies around the corner: Holiday sales in the UK are up 5% on a like for like basis, confirming we are so miserable about the B-word and everything else that we’re going to collectively max out the credit cards on a few extra days in Torremolinos… Hurrah! Ole for Spain…

• A quick glance at the markets – miserable.
• A quick review of the Davos bullsh*t – miserable (although full points to David Attenborough and Mr Cambridge for daring to chat about the wretched mess we’re making of the planet… (I can guarantee a chum of mine at Morgan Stanley will send me a blistering riposte telling me Climate Change is fake..))
• US-China trade talks – miserable.
• US Housing market – miserable.
• European Elections in May – miserably populist.
• European numbers – miserable.
• IMF global growth outlook – miserable.
• Prospects for Japan – miserable.
• US Government Shutdown – miserable.
• B-Word compromise in UK – Miserable and NFC.
• Outlook for bank earnings, and Deutsche Bank as investigators sniff round Danske Bank trades – Miserable.
• Corporate earnings – miserable.
• Tech sector – suicidal.

I’m sure you get the drift. It’s January and we are all miserably miserable. And since everyone is so miserable I shall be enthusiastic – from Feb 3rd when I get back from a Ski trip. Things are probably not as bad as they look. They never are.  

On Brexit, we’ve got Angel Gurria, head of the OECD, saying a No-Deal would not be the end of the world. Gosh – that sounds like heresy! A member of the establishment saying its nothing more than a storm in tea-cup?? Surely not!

But it’s a view I’ve heard many times in recent weeks from many sensible city contacts (many of whom were remainers). They feel the panic and fear about a no-deal spelling the “end of everything” is parliamentary hysteria. They compare it to the Millenium Bug. Planes will not fall out the sky and ferries will keep running. Gurria dismissed trade fears at Davos: “A no-deal? WTO.. the whole world is running by WTO rules these days”, adding the OECD would [try] to ensure there was as little disruption as possible. Whoa – Don’t blame me for repeating what he said, but someone clearly forgot to sign up Mr Gurria for the Project Tear Team.

When it comes to the UK, my learned colleague Ronnie Alder just pointed out: “The UK has essentially been without any kind of meaningful political process for months because of that which cannot be named… but guess what? The country still works.” Or does it? I am moderately concerned about the amount of stuff politicians are not addressing. For instance; UK infrastructure is in complete meltdown – article in the FT says major infrastructure investors have declared the country uninvestible. Oops.

Or the fact everyone except the Chinese has now walked away from building Nuclear Power stations for us – if a fraction of the dosh that’s been squandered on Nuclear had been spent on perfecting tidal technology to harness the completely predictable and reliable tides around this island set in a sea of plastic, we’d be in a much better place…   (Another angry letter will be winging its way from Morgan Stanley telling me tides are irrelevant..)

I have absolutely no ideas or scenarios to apply to the Brexit mess. Apparently – according to polls – a majority of Brits now favour a no-deal Brexit, but want to remain members of the Free Trade Zone. The Europeans don’t want to extend the deadline just in case the UK sends loads of hostile MEPs to Brussels if we stay. Nigel Farage has already announced he will stand if the UK gets the opportunity!

Meanwhile, I was interested to see the leaders of the EU nations meeting in Charlemagne’s ancient capital of Aachen to approve a new “foundation of co-operation between our countries” involving initiatives in Education, foreign policy and defence. The leaders committed to strengthening the European Union.

However, the leaders in question were Merkel and Macron.

The rest of Europe’s political classes must be delighted their betters are so committed to the European dream. (For the record… French German military alliances don’t have a great track record… Aside from Nato, which France stalked out of because de Gaulle felt insulted, the only significant Franco/German alliance I can think of was during the Napoleonic Wars when German states defeated in 1806 allied themselves with the Grand Armee for the invasion of Russia six years later, although many then switched sides in 1813-14.)

via ZeroHedge News http://bit.ly/2B0KWLN Tyler Durden

Authored by Celine Ryan via Campus Reform,

An Ivy League professor bashed “the smiling face of Whiteness” in response to the recent controversy involving an interaction between a Native American man and a Catholic teenage supporter of President Donald Trump.

“Whiteness endlessly forgives its own transgressions,” University of Pennsylvania associate professor Ebony Elizabeth Thomaswrote on Sunday about the confrontation between Covington Catholic High School student Nick Sandmann and Native American Nathan Phillips.

“It rarely, if ever, gives those of us it harms and maims and kills time to process our motions [sic].”

Thomas teaches in UPenn’s Graduate School of Education.

“‘You forgive us, right? You have to forgive us! Understanding will make it better! Reconciliation! Diversity! Inclusion!’” she continued, conveying what she suggests to be the attitude of most white people.

According to Thomas, the “smiling face of Whiteness” is one that “always hides a knife behind its back.”

“That knife says this: ‘You must forgive us. You must educate us. Or else.’”

“Usually, that ‘or else’ happens anyway,” the professor adds. “But it will assuredly happen unless you kiss Whiteness’ ring.”

Thomas goes on to claim that she knows “all about Whiteness’ outrageous demands.” She reiterates that “whiteness endlessly forgives its own transgressions.”

“Time’s up for instant forgiveness, for demanding free labor of the walking wounded, and for demanding that those you’ve offended ‘make it right’ so you can feel better before they have time to mourn, grieve…and breathe,” Thomas claims.

“The focus shouldn’t be on how these people can learn from BIPOC [Black & Indigenous People of Color],” she said. “This isn’t a Hollywood movie, and we’re flesh and blood, not magical creatures you get to use and abuse on your journey toward enlightenment.”

“The focus should be on how White folks can do better *among yourselves.*”

Thomas then explains her reasoning for not sharing the highly circulated video of the confrontation between the Native and the Covington schoolboy, noting that “out of respect and solidarity,” she does not wish to reinforce such “visual trauma.”

The tweets came on the same weekend that much of the mainstream media jumped to negative conclusions of the Covington students after seeing a two-minute video clip circulating on social media. What many reporters missed, however, was the key context that was offered in two hours of additional footage. The added video shows Phillips approaching the boys, not the other way around, just before the moment that went viral.  A number of reporters later apologized for jumping to conclusions. At the time of publication, Thomas had yet to do the same. 

Campus Reform reached out to Thomas for comment but did not receive a response in time for publication. 

via ZeroHedge News http://bit.ly/2HuID9u Tyler Durden

As rumors about a possible Deutsche Bank merger with rival troubled German lender Commerzbank continue to swirl despite the seemingly never-ending investigations into a suite of alleged misdeeds by the bank, Bloomberg has given would be merger arbs weighing whether to buy the German lender’s battered shares one more reason to hold off.

In a follow-up to a report late last year that the Department of Justice had expanded its probe into what could be the largest money laundering scandal in history – that is, the infamous Danske Bank money laundering scandal, which involved some $230 billion of suspicious money flowing into Western Europe from shadowy sources in the former Soviet Union – by looking into the role played by the various correspondent banks that cleared many of these transactions (a group that included DB, BofA and JPM), Bloomberg reported on Wednesday that the Federal Reserve is examining how DB moved billions of dollars on behalf of Danske’s Estonian branch, the epicenter of the fraud.

Though this line of inquiry is said to be in its early stages, the implications are clear: US regulators are growing increasingly dissatisfied with correspondent banks and their deference on all KYC-related issues to the client banks whose transactions they are clearing.

Deutsche Bank said that month it has controls in place when acting as a correspondent for other banks, but its ability to know about their clients is limited. As a correspondent, “your only relationship is with the bank and the bank itself has the responsibility to check its own client to monitor the transaction and to do all these kinds of checks”, a company representative said at the time.

The Fed is exploring whether Deutsche “adequately monitored funds” moving through Danske’s Estonian branch.

The Fed’s probe is in an early stage as it scrutinizes whether Deutsche Bank’s U.S. operations adequately monitored funds from an Estonian branch of Danske Bank A/S, according to two people briefed on the situation, who asked not to be named because the inquiry isn’t public. Danske, which used correspondent banks such as Deutsche Bank to move money abroad, has admitted that much of about $230 billion that flowed through the tiny Estonian outpost may have been dirty.

For what it’s worth, DB denied that the Fed or other US regulators or law enforcement agencies were investigating the bank. Instead, it said they were merely asking questions.

“There are no probes,” Deutsche Bank said in an emailed statement, but the bank “received several requests for information from regulators and law enforcement agencies around the world. It is not surprising at all that the investigating authorities and banks themselves have an interest in the Danske case and the lessons to be learned from it. Deutsche Bank continues to provide information to and cooperate with the investigating agencies.”

The Fed is supposed to ensure that banks in its jurisdiction properly scrutinize their clients. One factor that may have attracted scrutiny from the Fed was testimony from a Danske whistleblower who told lawmakers in Denmark that DB moved $150 billion – the bulk of the suspected illicit cash – on behalf of Danske.

The U.S. requires banks operating under its jurisdiction to scrutinize clients and their dealings to detect potential money laundering and alert authorities to suspicious transactions. The Fed is among regulators that ensure banks have adequate systems in place to fulfill those duties.

A Danske Bank whistle-blower who outlined the illicit flow of cash through that firm has said much of it passed through Deutsche Bank in the U.S., and one of the people said the Fed is focusing on the German lender’s trust bank. Deutsche Bank has been cooperating with the Fed, the people said.

A Fed spokesman said it doesn’t publicly discuss confidential probes.

Last week, DB CEO Christian Sewing said he had launched an internal probe into the bank’s correspondent banking practices even though he hasn’t seen anything to suggest wrongdoing. Much of the illicit activity under investigation took place between 2007 and 2015.

The bank had previously reviewed its actions in the case, Sewing said at an event in Berlin. He urged people not to “prejudge” the bank or its employees, presuming their innocence unless proven guilty.

Whether the Fed probe results in financial penalties remains to be seen. But banks and investors should take note: Correspondent banks, who have previously been allowed to feign ignorance when their involvement in money laundering violations has come to light, might soon be facing a lot more scrutiny.

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

Jared Kushner is pushing a novel idea to break the Congressional deadlock and end the government shutdown according to Axios: Put green cards for DACA recipients on the table.

A new immigration idea has been circulating over the past 24 hours at senior levels inside the White House and on Capitol Hill: Give a path to green cards to the 700,000 current DACA recipients, three sources familiar with the conversations tell Axios.

Though the idea is anathema to many Republicans (as well as conservative talking heads like Anne Coulter), Kushner believes it could be a workable option for winning support from Democrats for an immigration compromise bill being pushed by his father-in-law. Over the weekend, Trump said he would be open to a three-year extension of DACA protections as part of the compromise plan – something that Democratic leaders almost immediately rejected.

Some Republican senators, including James Lankford of Oklahoma, have advocated for this idea, but White House aides worry that it could turn off President Trump’s No. 1 supporter: Fox News host Sean Hannity. Yet, there are few other workable options on the table. Few believe Trump’s current immigration plan has a prayer of gaining the 60 votes needed to pass the Senate when Mitch McConnell brings it up for a vote on Thursday. And even if it does somehow pass, it would be effectively DOA in the House.

“Trump can withstand Ann Coulter. He can’t lose Hannity and the rest,” the senator said.

One Republican involved in the negotiating process told Axios that Kushner “wants to go big.” But there’s one problem: “Now isn’t the time to go big.”

“If you throw green cards onto the table, this whole coalition will fall over on the right,” the senator told Axios on Tuesday night. “If you start putting citizenship on the table in any meaningful way, Democrats will have to give more, and they’re not ready to give more.”

Another source said Kushner was merely canvassing lawmakers about ideas that they would support, and that he isn’t committed to the green cards for DACA idea. He’s trying to “find where the market is” on immigration reform.

The source said Kushner has been trying to “figure out what bigger immigration reform looks like.”

“You need to have some idea of where you’re going…That doesn’t mean in this current context you can go bigger…because it’s not well defined what people want.”

But a third source derided the DACA green card idea as “insanity”. And that’s likely how many other White House advisors and Republican lawmakers would see it too.

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

One day after the biggest S&P drop in a month, stocks have regained their composure putting trade and global growth concerns on the backburner, and global stock indices are generally a sea of green this morning.

Trading was initially choppy overnight as hopes of more stimulus measures from China to shore up economic growth clashed with worries over progress between Washington and Beijing to resolve a trade spat between the world’s top two economies. The MSCI world equity index was down 0.1 percent, with Asian equity markets choppy as the region attempted to shrug off the headwinds from the US, where stocks slumped on Tuesday as the risk averse tone and lingering global growth concerns caught up with the major US indices on return from their extended weekend.

The FT reported that the US turned down China’s offer for preparatory trade talks, which was later denied by NEC Director Larry Kudlow helping U.S. equities pare some losses though the fresh concerns about U.S.-China relations kept share prices in check. Early trade jitters pushed the MSCI index of Asia-Pacific shares ex-Japan lower by 0.2%, stalling after climbing to a seven-week high on Monday.

“The main culprit for the risk-off tone this morning is the change in sentiment around U.S.-China trade talks …. That seeped into Asia overnight and Europe this morning,” said Edward Park, deputy chief investment officer at Brooks MacDonald.

Australia’s ASX 200 (-0.3%) was subdued with underperformance in the energy sector after crude prices slipped by over 2% and Nikkei 225 (-0.1%) was dampened by disappointing trade data including the sharpest drop in exports since October 2016.

However, sentiment in Tokyo was propped up by a weaker currency after the BOJ cut its inflationary outlook slashing 2019 core CPI from 1.4% to 0.9%, even as it kept its monetary policy, sending the USDJPY to new highs and boosting local stocks while Japan Display shares surged on reports it is in investment discussions with TPK and Silk Road Fund. 10yr JGBs traded sideways throughout most the session amid the indecisive risk tone in stocks and then saw choppy trade in reflection of sentiment in the region and following an unsurprising BoJ decision to keep policy setting unchanged.

Elsewhere, Hang Seng and Shanghai Composite confirmed trader indecisiveness after mixed actions by the PBoC as it conducted a Targeted Medium-term Lending Facility for the first time ever which was at a lower rate than MLF rates and is aimed at spurring lending to small firms, but conversely refrained from reverse repo operations which resulted to a daily drain of CNY 350bln.

A fresh batch of disappointing corporate updates from European companies further knocked confidence about fourth-quarter earnings, pushing European stocks lower for a third session at the start of trading, with the Stoxx 600 down as much as 0.5%, with bourses all across Europe losing ground as a profit warning by Ingenico sent the French payment group down over 12 percent and hit the whole European tech sector.

However, sentiment reversed sharply just after the open, with most European equities trading mostly higher [Euro Stoxx 50 +0.2%], after recovering from opening losses, taking the lead from Wall Street.

Echoing the rebound in Europe, U.S. futures pointed to a positive start for Wall Street after the S&P 500, Nasdaq and the Dow all posted their biggest one-day percentage drops since Jan. 3 on Tuesday.

Still, despite a modest return of bullish sentiment, the ride ahead will be bumpy: Justin Onuekwusi, a fund manager at Legal & General said central banks’ stimulus unwinding, China’s slowdown, the broader impact of trade wars and populist rhetoric from politicians were all keeping markets on edge. “All these issues have an impact on markets. Every time you have an increase in rhetoric, markets react. It feels like there is a greater political risk premium. The biggest near-term risk is that as you see markets fall, confidence drops and you get people not spending which becomes self-perpetuating. The near-term probability of that has increased.”

In FX, the U.S. dollar slumped to session lows having trading near a three-week high earlier after the Bank of Japan left monetary policy unchanged as expected, boosting risk appetite and sending the yen lower.  The Bloomberg Dollar Spot Index fell for the first time in seven days in a rather muted session in currencies, with short-term positioning dictating price action. The yen weakened as the BOJ lowered its inflation outlook, while the kiwi advanced as consumer-price data beat estimates. Treasuries slipped as oil prices rose, while euro-area bonds were mixed as stocks in Europe and U.S. equity futures rebounded. Sterling rose as the U.K. parliament moved closer to ruling out a no-deal Brexit. The euro was a shade lower at $1.1358 but remained in close reach of a three-week low of $1.1336 set on Tuesday, weighed by recent weakness in the euro zone economy and worries about fallout from Brexit.

In the key central bank event overnight, the BoJ kept monetary policy settings unchanged as expected with NIRP held at -0.1% and 10yr JGB yield target at around 0%. Furthermore, the BoJ extended its lending scheme for 1 year and stated that economic momentum for reaching price goal is sustained but lacking strength, while it added that risks to price and economic outlooks are skewed to the downside. BoJ reduced Real GDP forecasts for FY18 but raised Real GDP forecasts for FY19 and FY20, while it reduced Core CPI forecasts on all years through to FY20. BoJ Governor Kuroda said the downward revision to price outlook is due to the temporary decline in oil prices, Kuroda expects inflation to pick up towards the 2% target. Adding that downside risks from overseas are heightening due to US-China trade friction and European problems.

In the latest Brexit developments, PM May is reportedly set to force ministers to keep a no deal Brexit on the table despite threats of ministerial resignations. This has been seen as a defence mechanism against the Labour Party’s potential support for the Cooper-Boles Brexit delay plan.  UK Tory party Brexiteers concerned about prospects of a delay, have suggested they could be won over if UK PM May can get a serious concession from the EU on backstop. Following this, ITV’s Paul Brand tweets “Jacob Rees-Mogg will say in a speech today that the backstop remains “the one absolute obstacle” to backing PM’s deal BUT he’s “encouraged by signs of movement”. Sun’s Steve Hawkes reports “Labour has told second referendum campaigners it is backing the Cooper-Boles Amendment”. Has subsequently been confirmed by a Labour party source, stating it is ‘highly likely’ they will back the amendment.

In commodities, Brent (+0.8%) and WTI (+0.8%) prices have nursed initial losses and moved into positive territory due a turnaround in risk sentiment. Following on from Saudi Energy Minister Al Falih’s withdrawal from the WEF at Davos, Russian Energy Minister Novak has also cancelled his trip; Novak was due to speak on Friday on the Great Energy Race alongside IEA’s Birol. Separately, IEA’s Birol has stated that oil demand will grow by at least 1mln BPD. In terms of forecasting DNB have cut their 2019 Brent forecast to USD 70/bbl vs. Prev. USD 75/bbl. Of note API’s have been rescheduled to today due to Monday’s US market holiday.

Gold has marginally benefitted from the risk sentiment, with the yellow metal trading at the top of it’s narrow USD 4/oz range; currently just under USD 1285/oz. Elsewhere, China’s December scrap metals imports increased to 510k tonnes, their highest figure since May, ahead of China tightening waste imports in 2019.

Expected data include mortgage applications. Abbott, Comcast, P&G, and Ford are among companies reporting earnings.

Market Snapshot

• S&P 500 futures up 0.2% to 2,636.25
• STOXX Europe 600 down 0.05% to 354.91
• MXAP down 0.3% to 152.23
• MXAPJ down 0.1% to 494.65
• Nikkei down 0.1% to 20,593.72
• Topix down 0.6% to 1,547.03
• Hang Seng Index up 0.01% to 27,008.20
• Shanghai Composite up 0.05% to 2,581.00
• Sensex down 0.6% to 36,217.48
• Australia S&P/ASX 200 down 0.3% to 5,843.72
• Kospi up 0.5% to 2,127.78
• German 10Y yield rose 0.3 bps to 0.239%
• Euro down 0.01% to $1.1359
• Italian 10Y yield fell 1.7 bps to 2.383%
• Spanish 10Y yield fell 1.3 bps to 1.321%
• Brent futures up 0.7% to $61.94/bbl
• Gold spot little changed at $1,285.00
• U.S. Dollar Index little changed at 96.36

Top Overnight News from Bloomberg

• The European Union is prepared to hit 20 billion euros ($22.7 billion) of U.S. goods with tariffs should President Donald Trump follow through on a threat to impose duties on EU cars and auto parts, said a senior trade official for the bloc
• The European Commission is pushing the Irish government to lay out its plans for the border in the event of a no-deal Brexit, a person familiar with the matter said
• The U.K. parliament is inching toward a plan to delay Brexit to prevent Britain dropping out of the European Union without a deal, with the opposition Labour Party now increasingly likely to support the proposal
• Debt levels in the U.K. aren’t necessarily a cause for concern, according to Bank of England Deputy Governor Ben Broadbent
• Investors are seeking record amounts of bonds from Southern Europe, emerging from the sidelines after last year’s political turmoil in Italy. Sovereign bond offerings from Italy, Spain and Portugal this month have all drawn unprecedented bidding for a total of 106 billion euros ($120 billion), up 14 percent from a year ago. That has helped drive a slide in peripheral euro-area yields in the past two weeks
• The chairman of Thailand’s Election Commission says a general election is to be held on March 24

Asian equity markets were choppy as the region attempted to shrug off the headwinds from Wall St, where stocks declined as the risk averse tone and lingering global growth concerns caught up with the major US indices on return from their extended weekend. Furthermore, it was also reported that the US turned down China’s offer for preparatory trade talks, which was later denied by NEC Director Kudlow. Nonetheless, ASX 200 (-0.3%) was subdued with underperformance in the energy sector after crude prices slipped by over 2% and Nikkei 225 (-0.1%) was dampened by disappointing trade data including the sharpest drop in exports since October 2016. However, sentiment in Tokyo was later propped up by a weaker currency, while Japan Display shares surged on reports it is in investment discussions with TPK and Silk Road Fund. Hang Seng (U/C) and Shanghai Comp. (U/C) conformed to the indecisiveness after mixed actions by the PBoC as it conducted a Targeted Medium-term Lending Facility for the first time ever which was at a lower rate than MLF rates and is aimed at spurring lending to small firms, but conversely refrained from reverse repo operations which resulted to a daily drain of CNY 350bln. Finally, 10yr JGBs traded sideways throughout most the session amid the indecisive risk tone in stocks and with participants side-lined prior to the BoJ policy announcement, but then saw  choppy trade in reflection of sentiment in the region and following an unsurprising BoJ decision to keep policy setting unchanged.

Top Asian News

• China Meat Giant Surges as Founder Returns After Vanishing
• China Companies Suspected of Buying Own Bonds to Spur Demand
• Thailand to Hold First General Election Since Coup in 2014
• BOJ Leaves Stimulus Unchanged as It Cuts Inflation Outlook Again
• The January Rally Is Waning in Asia Stocks, Just Like Last Year

Major European equities are mostly higher [Euro Stoxx 50 +0.2%], after recovering from opening losses, taking the lead from Wall Street. US stocks were affected by growth concerns, alongside subsequently denied reports that the US turned down an offer by two Chinese vice-ministers to attend preparatory trade talks in the US. Sectors have strengthened somewhat from their negative opening, and are now mixed with underperformance in energy names and outperformance in utilities. Tech names have been underperforming following ASML (-1.8%) cutting Q1 sales guidance, with the likes of STMicroelectronics (-1.4%) down in sympathy. Other notable movers include Carrefour (+6.7%) are at the top of the Stoxx 600 following earnings where they confirmed all targets for their 2022 transformation plan. Separately, RPC Group (+4.6%) are firmly in the green after recommending a final cash offering of GBP 7.82/shr; with Co’s directors seeing the acquisition terms as fair and reasonable. In contrast, at the bottom of the Stoxx 600 are Ingenico (-13.2%) after reporting a FY18 EBITDA miss.

Top European News

• Still Here? Brexit Delay Might Worsen EU’s Election Headache; Fox Warns No-Deal Exit Is ‘Real Possibility’: Brexit Update
• Record Bidding for Southern Europe’s Debt Shows Pent-Up Demand
• Salvini Takes a Swing at Merkel and Forecasts Losses for Macron
• Apollo Seals $4 Billion Deal for Ketchup-to-Lotions Packager RPC
• Patisserie Valerie Collapses as Luke Johnson’s Rescue Fails

In FX, a relatively muted session for the Dollar thus far with the index hovering around the middle of a tight 96.268-378 range after NEC Director Kudlow dismissed reports that US turned down an offer from China for trade talks. The US government shutdown is now rolling onto its 33rd day, although there were reports overnight that US Senate are to vote on two separate bills on Thursday which could potentially bring an end to the shutdown. Meanwhile, BLS stated the January 2019 Employment Situation will be published as scheduled on February 1, 2019, at 1330GMT. ING noted that the 800k workers affected by the shutdown represent only 0.5% of the total US NFP, noting that the impact to the US economy will be modest but noticeable.

• JPY – On the backfoot in early EU trade following the BoJ rate decision in which the Central Bank kept the NIRP at -0.1% and the 10yr JGB yield target around 0% as expected while also reducing inflation forecasts, which was widely touted beforehand. Furthermore, Japan logged the first trade annual deficit in three years, as the cost of energy imports surged. As such USD/JPY breached its 100 and 50 HMAs (at 109.45 and 109.53 respectively) to a high of 109.73 (vs low of 109.33) with little to report on the options expiry front.
• GBP, EUR – The Pound continues on its upwards trajectory amid ongoing hopes of an Article 50 extension despite the UK Governments constant dismissal of the option, though the latest suggests that support for the Cooper amendment (to give Parliament power to extend Article 50) is stacking up, with reports of the Labour party also supporting the amendment. Lloyd’s notes that the recent Sterling strength was more than they anticipated, though a clean break through 1.3000 is still needed for “re-energised momentum” to the upside. GBP/USD  remains closer to the top of a 1.2945-1.3000 range ahead of its 200 DMA at 1.3081. Meanwhile the EUR remains flat within

In commodities, Brent (+0.8%) and WTI (+0.8%) prices have nursed initial losses and moved into positive territory due a turnaround in risk sentiment. Following on from Saudi Energy Minister Al Falih’s withdrawal from the WEF at Davos, Russian Energy Minister Novak has also cancelled his trip; Novak was due to speak on Friday on the Great Energy Race alongside IEA’s Birol. Separately, IEA’s Birol has stated that oil demand will grow by at least 1mln BPD. In terms of forecasting DNB have cut their 2019 Brent forecast to USD 70/bbl vs. Prev. USD 75/bbl. Of note API’s have been rescheduled to today due to Monday’s US market holiday. Gold (Unch) has marginally benefitted from the risk sentiment, with the yellow metal trading at the top of it’s narrow USD 4/oz range; currently just under USD 1285/oz. Elsewhere, China’s December scrap metals imports increased to 510k tonnes, their highest figure since May, ahead of China tightening waste imports in 2019.

US Event Calendar

• 7am: MBA Mortgage Applications, prior 13.5%
• 9am: FHFA House Price Index MoM, est. 0.3%, prior 0.3%
• 10am: Richmond Fed Manufact. Index, est. -2, prior -8

DB’s Jim Reid concludes the overnight wrap

Good morning from the highest city in Europe. Davos is very cold and please expect lots of Canada Goose jackets if you catch up with events on the telly over the rest of this week. I looked at buying one before I came out so as to fit in with the Davos set. When I saw how much they cost I realised I would rather not fit in. Actually, I got there late last night and the only non-restaurant places I found to eat were a kebab shop and a Co-op supermarket. I was wondering whether Bono has ever had a similar dilemma between the two choices. As I’m staying in a self-catering apartment and after much deliberation I opted for the latter and cooked myself a pizza. In nearly a quarter of a century it’s probably the first business trip that I’ve cooked for myself. I quite enjoyed it. Anyway, if you’re in town let me know, especially if you want to attend one of my sessions.

The cold air has obviously also infiltrated markets this week. US bourses reopening yesterday failed to stem the reversal of some of the new year optimism. Indeed, the latest headlines on the earnings and trade fronts weighed on sentiment. Equity markets failed to recover from heavy falls at the open with the S&P 500, DOW and NASDAQ closing down -1.42%, -1.22% and -1.91% respectively. The NYFANG index dropped -3.38% as Amazon and Netflix posted their worst days of the year.

Markets took another leg lower in the US afternoon session, after headlines broke that US negotiators declined a proposed meeting between with mid-level Chinese officials, apparently citing lack of progress on China’s industrial policies, especially the alleged forced technology transfers. The meeting would have been with Vice-Minister of Commerce Wang and Vice-Minister of Finance Liao, to lay groundwork for next week’s planned meeting between senior officials namely Vice-Premier Liu, US Trade Representative Lighthizer, and Treasury Secretary Mnuchin. Those talks are still scheduled to take place, but expectations for a breakthrough have now fallen. Late in the day, Trump Administration officials formally denied the reports however head of the National Economic Council Kudlow did add that “enforcement is absolutely crucial to the success of these talks. In any case the damage to markets had been done.

Earnings also played a part in the sogginess, as poor results from Halliburton, Johnson & Johnson and Stanley Black & Decker weighed on the industrials and consumer discretionary sectors (down -2.07% and -1.79% respectively). All three companies declined following their latest quarterly reports with the common denominator being management comments about a challenging outlook ahead, highlighted by Black & Decker CEO Loree saying “economic growth is slowing”. This more than offset gains to eBay (+6.13%) which rallied after one of its bigger shareholders, Elliot Management, proposed a five-step plan which in their view could result in eBay’s share price almost doubling. The energy sector also suffered (-2.20%), as WTI oil tumbled -1.91% however did at least pare a sharper slide earlier in the session. That move came despite there not really being an obvious catalyst aside from the various growth concerns which have been highlighted in recent days – none of which are particularly new news.

Meanwhile, here in Europe UBS also missed at both the earnings and sales lines following its quarterly report which resulted in shares falling -3.17% in Switzerland – albeit off the early lows. That weighed on the wider European Banks index which closed down -1.03% and for the fifth time in the last seven sessions while the STOXX 600 ended -0.36%. HY credit spreads widened +4bps and +12bps in Europe and the US respectively. In contrast bonds were slightly stronger, albeit only modestly so, with Bunds ending -2.0bps lower and Treasuries -4.5bps. The 2s10s curve also flattened -1.6 bps but the reality is that it still remains rooted in the 10-20bp range that it’s been in since the end of November.

Overnight the focus has turned to the BoJ where, as expected, there have been no changes to policy. Also as expected are the lower inflation forecasts in the BoJ’s outlook, the fourth consecutive quarter they have done so. For the fiscal year starting April, core CPI is expected to be 0.9% compared to 1.4% previously. With the backdrop of lower inflation and with the consumption tax looming, the hurdle to the BoJ contemplating adjusting policy continues to look high. JGBs are slightly weaker this morning post the decision with the 10y up less than a basis point to -0.004% with Kuroda due to speak shortly. The Yen has weakened -0.25% while the Nikkei (+0.04%) is broadly flat. That’s the case also for the Hang Seng (+0.06%) and Shanghai Comp (+0.07%) with the Kospi (+0.24%) outperforming. The good news is that the slide for US equity futures also appears to have come to an end with S&P 500 contracts up +0.15%. That may reflect the news that lawmakers in the Senate have agreed to hold separate votes today on rival proposals in order to reopen the government.

Moving on. There was some interest in the ECB’s bank lending survey yesterday which was softer compared to recent surveys. The net percentage of banks reporting tightening standards to enterprises was closer to even with -1 in Q4 compared to -6 in Q3. Demand for loans also continued its slowing trend from recent quarters with the net balance to enterprises falling to +9 versus +12 in Q3. It was a similar story for housing loans although demand for the latter did pick up. At a country level the softness was mostly reserved for Italy and Spain. Notably the outlook for Q1 also implies further moderation which fits in with lower growth expectations for the Euro Area this year. At a minimum the data should add to the anticipation levels for tomorrow’s PMIs and ECB policy meeting. Our economists’ preview for the meeting is available here. They don’t think any big policy changes are imminent, but think the council could shift its characterisation of the balance of risks to the downside. Apart from that, they’ll focus on any hints regarding new TLTROs and/or any discussion of a potential one-off deposit rate hike.

Here in the UK it was nice to get some rare positive news in the form of the latest labour report. Indeed there were positive surprises for the November unemployment rate (down one-tenth to 4.0% vs. 4.1% expected), average weekly earnings (up one-tenth to +3.4% 3m/yoy vs. +3.3% expected) and employment change (141k 3m/3m vs. 87k expected) prints. That of course compares to what have been weaker PMIs in the UK recently and the ongoing Brexit saga so this somewhat complicates the picture for the BoE with the supply side narrative of a tighter UK labour market very much intact. A hike by August is less than 50% priced however it will challenge the BoE not to sound overly dovish given the strength in the hard data.

The only other data worth flagging yesterday in Europe was the January ZEW survey in Germany where there was a big slump in the current situations component to 27.6 (vs. 43.0 expected) compared to 45.3 in December. However the expectations component did climb 2.5pts to -15.0 and bettered expectations for a fall to -18.5.

In the US, monthly existing home sales fell short of expectations, rising by 4.99 million in December compared to expectations for 5.25 million, the slowest pace and biggest downside miss since November 2015. Mortgage applications have picked up over the last couple weeks as long end interest rates have fallen, so there could be scope for a rebound in the near future. We’ll get the latest MBA mortgage application data later today.

In terms of the day ahead, this morning in Europe we’ll get January confidence indicators out of France followed later on by the January CBI survey in the UK. In the US this afternoon it’ll be worth keeping an eye on the January Richmond Fed manufacturing survey (-2 expected vs. -8 previously) in light of some weak regional Fed surveys so far this month, while the November FHFA house price index is also due out. This afternoon we’ll also get the January consumer confidence reading for the Euro Area. Away from that we’re due to hear from the BoE’s Broadbent while the second day of the Davos forum gets underway. Earnings wise we’re due to get quarterly reports from United Technology, Proctor & Gamble and Ford.

via ZeroHedge News http://bit.ly/2CBJn7g Tyler Durden

The Porsche Taycan is widely considered to be the “mainstream” luxury automobile market’s most potent threat to the Tesla Model S. The specs for the vehicle look to be extremely impressive, not just from an EV standpoint, but from any type of “street legal” standpoint. It is said to accelerate from 0 to 62 mph in 3.5 seconds and it’ll have a top speed of over 155 mph. Its range will come in at 310 miles and it will be chargeable up to 250 miles in just over 20 minutes at a Porsche high-voltage supercharger.

Oh, and it also happens to rather impressive. 

There has been an air of intrigue surrounding the Taycan since it was announced in late 2015 and it’ll finally be going on sale at the end of the year this year. As we get closer to that date, we’re also getting our first look at potential demand, which seems to be far exceeding Porsche’s expectations.

BGR is reporting that demand is so strong that Porsche is actually doubling production to meet it. The article reveals that Porsche is going to manufacture 40,000 units per year, which is twice its initial plan of 20,000 vehicles.

The article cites a report from Automobilwoche which states: “Porsche has doubled the planned quantities for its first purely electric sports car Taycan because of the foreseeable strong demand.”

Recall that just weeks ago, we wrote about how the Taycan was reportedly cannibalizing from Tesla with its initial set of reservations. More than half of the people that are signing up to pre-order the Porsche aren’t already Porsche owners. In fact, the number one brand owned by those who are pre-ordering the Porsche is Tesla.

Porsche North America President and CEO Klaus Zellmer told CNET at the time: “More than half of the people that are signing up for the Taycan have not owned or do not own a Porsche. Typically, if we look at our source of business, people coming from other brands, it’s Audi, BMW, or Mercedes. The no. 1 brand now is Tesla. That’s pretty interesting, to see that people that were curious about the Tesla for very good reasons obviously don’t stop being curious.”

We followed up that report by noting that Porsche was one of several brands to nail down a 3 minute charge (alongside BMW) a task that has still eluded Tesla. Porsche recently unveiled a charging station that can give electric vehicles enough power to drive about 62 miles on less than three minutes’ charge, putting it ahead of Tesla. The prototype charger is said to have a capacity of 450 kW, which is more than triple Tesla’s Superchargers. Vehicles that were tested at this power were brought to 80% capacity in 15 minutes. According to Tesla’s website, it needs about 30 minutes for a similar charge.

Look out Elon, the big boys appear to have officially made their way into your sandbox.

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

The British pound vaulted back above $1.30 Wednesday morning as it rose for a third day, returning to its highs from November, on reports that the Labour Party was on the cusp of backing a proposal put forth by one of its members that would force the government to seek a delay of Brexit until the end of the year.

With the next big parliamentary vote on Theresa May’s Brexit deal (this time, the “Plan B” iteration) coming next week, on Tuesday night, those who want to amend the government motion calling for the vote to force the government to rule out a no-deal Brexit, received some good news. Amid the crush of plans hoping to delay or derail Brexit, Labour MP Yvette Cooper put forth an amendment that would require May to seek a delay of Brexit if a deal isn’t passed by Feb. 26.

Yvette Cooper

During an interview on the BBC’s Newsnight last night, Shadow Chancellor John McDonnell all but announced that Labour would support the Cooper amendment, calling it a “sensible proposal” and adding that it was “increasingly likely” that Labour would vote for it. Given the number of rebel Tories who have said they would support the Cooper amendment, it has a high likelihood of passing if it’s called for a vote.

“Yvette Cooper has put an amendment down, which I think is sensible,” says Labour shadow chancellor John McDonnell adding “it’s increasingly likely” Labour would back her amendment@johnmcdonnellMP | #newsnight pic.twitter.com/HoeCAK7TA1

— BBC Newsnight (@BBCNewsnight) January 22, 2019

Analysts said the amendment is leading to intensifying optimism that no deal will be avoided.

The rally in GBP “reflects building optimism that a ‘no-deal’ Brexit will be avoided,” said Lee Hardman, an analyst at MUFG. “There have been some encouraging signs that the risk of delaying Brexit could prompt rebel Conservative MPs and the DUP to consider backing an amended version of PM May’s deal.”

Tories have tried to portray the amendment as unconstitutional, though the Guardian reported that there is precedent for legislation being proposed by backbenchers being called for a vote. Liam Fox, a Brexiteer and May’s international trade secretary, claimed that the amendment was constitutionally improper. He said that amendments that call for “taking control” of the “initiation of legislation” pose “a real danger.”

Sterling climbed 0.3% to $1.2986, on Wednesday after advancing 0.6% in previous two days.

As the prime minister tries to rally support for her revise deal, May will face off with Labour leader Jeremy Corbyn on Wednesday during another session of PMQs.

via ZeroHedge News http://bit.ly/2R3zN29 Tyler Durden

Authored by Nicholas Mirzoeff via The Nation,

The European country is isolating and excluding asylum seekers until they disappear from society completely…

Think of Denmark and you probably conjure up a mix of mid-century design, hygge, and people riding bikes. But as viewers of the noir TV series The Bridge know, it’s also a country marred by institutional xenophobia. Denmark has a network of camps and detention centers for asylum seekers. It has legally defined ghettoes, meaning urban areas with populations of “non-Western immigrants.”

But while something is clearly rotten in the state of Denmark, it’s far from an exception in Western politics. What’s happening in this former bastion of liberalism is the normalizing of white hostility to immigration. Denmark is building on Australian and Israeli tactics to form a new strategy: to disappear the refugee from society.

The Danish immigration minister Inger Støjberg has said that she intends to make conditions for people in the asylum system unbearable. And if my recent visit to Sjælsmark Detention Center, outside Copenhagen, is anything to judge by, she’s succeeding.

Sjælsmark contains people whose applications for asylum have been rejected but cannot be returned to their country of origin (technically “non-deportable rejected asylum seekers,” according to EU law). The upscale suburb has no shops or other amenities for the detainees. It is suitably remote from the city, nearly two hours by two buses and a train. By car, it’s just 30 minutes, but no one has a car.

Sjælsmark is administered by the Danish Prison and Probation Service. Visitors can enter the government centers only when invited by a resident. My visit was organized by Trampoline House, a community-based resource center for refugees (where I’ve also curated an exhibition called “Decolonizing Appearance,” on view until March 2019.)

Thirty-year-old Lily was born in a territory that was Ethiopia and is now Eritrea; she and her 7-year-old son, Liam, showed me around (their names have been changed at their request.) The camp is accessed through a formidable gate, which is locked every night at 10 pm, even to residents. Families live in former military barracks. The residents call it a “camp,” and it is newly surrounded by 10-foot-high security fences. Although residents can leave whenever they want, the goal is to create the effect of imprisonment.

Rejected asylum seekers are in legal limbo. Some of them are stateless and deprived of what Hannah Arendt called “the right to have rights.” They are denied as citizens by their “home” countries and the EU refuses to recognize them as refugees, so they have no legal status anywhere. Like many others, Lily was denied leave to remain in Denmark because her fingerprints were first taken in Greece. Under the EU’s Dublin Regulation, the first country where an asylum seeker is fingerprinted must process them for asylum.

If the Danish settler colony once wanted to extract labor from its colonial subjects in the Caribbean, Africa, and Asia, all it wants now from their descendants is that they go away. To that end, Sjælsmark residents cannot work or claim benefits. They are not allowed to cook, to have furniture (other than a bed, one table, and hard chairs), or to decorate their rooms. No carpets or rugs are allowed. There is no television or Internet service. Residents live in cold, spare rooms with very high ceilings. Having committed no crime, the asylum seekers are nonetheless being punished.

When I entered her room, Lily had arranged hot water to make tea or instant coffee and spread a paper plate with a packet of saltines. It was heartbreaking: Not because she had relatively little to offer, but because it made clear that the intent of the Danish state was to deny her the human impulse to hospitality.

Like many prisoners, the residents are above all concerned about food. The Prison and Probation Service provides food that is prepared off-site and reheated. It was described to me by everyone as inedible. Conditions in the cafeteria are so bad that all visitors are banned. No food is brought to people who are sick or pregnant and so cannot walk to the cafeteria. No allowance is made for dietary preference. In the Danish prison system, and the reception camps where asylum seekers are first sent, cooking is allowed. Not here.

The Jamaican sociologist Orlando Patterson coined the term “social death” to refer to enslavement. It equally applies to what the Danish state is trying to do to asylum seekers. A Palestinian visitor was sufficiently shocked by what he saw to say that conditions were worse than in the Israeli prison where he had been incarcerated.

This condition of social death even extends to the more than 100 children in the camp. They cannot play on the grass or anywhere outside but a tiny playground. They are not allowed to attend Danish schools but must go to a kindergarten-level facility organized by the Red Cross no matter what their age. The only activity offered there is coloring.

And so Lily accurately called the refugees’ situation “torture.” It is not physical torture intended to extract information; it is psychological torture designed to humiliate and produce action. Lily and other residents thought that the state wanted them either to go underground or “run”—meaning seek an inevitable rejection for asylum elsewhere. Although both actions are illegal, they would fulfill the state mission of having refugees disappear.

From within this social death, the refugees have nonetheless organized. They are holding weekly demonstrations against their conditions, including a hunger strike. At a rally in Copenhagen on December 5, Lily spoke out: “We have a right to seek asylum in Denmark and we also have the right to live a normal life until solutions are found for our cases.” Denmark seeks to deny those rights. More exactly, it denies that they exist.

There is proposed legislation to mitigate the worst of these conditions. It will require 50,000 signatures in a country of 5 million. It would still require asylum seekers to spend two years in Sjælsmark, which is unacceptable: The only way to end social death is the abolition of such camps.

In response to this opposition, the Danish government has taken more aggressive steps still. Adopting the Australian strategy of intercepting and offshoring refugees on Nauru, it now intends to house failed asylum seekers on the remote island of Lindholm. Denmark, then, is refining its psychological torture by subjecting asylum-seekers to isolation and exclusion.

From the US perspective, Trump’s clownish brutality is bad enough, but the Europeans are devising something arguably worse; abolishing detention camps completely is the only way out.

via ZeroHedge News http://bit.ly/2DsG8jY Tyler Durden