Tag: news

With Bridgewater’s Ray Dalio yesterday and Fed vice chair Richard Clarida this morning the latest voices to join the chorus of warnings about the slowing US economy as Trump’s fiscal stimulus fades and turns into a tailwind, it is only a matter of time before the historic growth decoupling between the US and the rest of the world finally converges.

Meanwhile, Wall Street consensus now unanimously expects the global economy to slow next year (in Goldman’s case from 3.8% in 2018 to 3.5% in 2019) led by deceleration in the US and further softening in China.

Growth to slow in 2019E: Real GDP growth forecast, %

Beyond 2019 it gets worse: as Goldman writes in its 2019 Macro Outlook, “the risk of a global recession is likely to rise as more and more DM economies move beyond full employment.”

But while a recession in 2020 is increasingly priced in, with the market now expecting a rate cut in 2020 – if not Q4 – the question is what happens in 2019. As the following chart from Merk Investments shows, the global growth backdrop based on various PMI indexes may be even worse than consensus holds. The good news: most major PMIs remain above 50, i.e. in expansion. The bad news: at the current pace, contraction is inevitable for most developed economies.

One doesn’t need PMIs however: in many cases GDP tells the full story, and in just the past week we saw what BofA called “flash recessions” in three key economies: Japan GDP -0.3%, German GDP -0.2%, and Italy GDP 0.0%. Meanwhile China is also cracking, as its auto sales plunge -12% YoY.

To Bank of America’s Michael Hartnett, who has been bearish for much of the past several years, this means that the resilience of US data, and US credit spreads will soon to be tested.

Which brings us back to the always engaging debate about what is the level of the “Fed Put”?

The answer, according to BofA, is threefold: SPY <$250, HYG <$80, ISM new orders < 50 would trigger the Fed.

And it’s not just the Fed: China export growth would panic PBoC, while US payroll <50K would panic Trump on trade, according to BofA. Why is this important? Because as Hartnett’s Axiom 1 about markets is thatr “markets stop panicking the moment central banks start panicking.“

For now markets are still panicking, perhaps as a result of being massively wrong-footed by their capital allocation YTD: in 2018, there have been $122BN flows equities, $35BN into money market fund, and $24BN into bonds, when in reality investors should have just put it all in 3M Bills as cash outperforms stocks & bonds for 1st time since 1992.

What – to BofA – is the ultimate tell for the Fed to start panicking? The answer: rhe fall of the last bull standing. Following oil collapse, final bear dominoes to drop…HY corporate bonds…

…and after a Q4/Q1 overshoot, the US dollar.

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With traders’ expectations for sterling volatility remaining anxiety-inducingly high…

And cable unable to rebound from yesterday’s drop, amid a new onslaught of establishment fearmongery…

Bloomberg’s Macro Strategist Mark Cudmore has an answer (or a process) to the multi-billion pound question everyone is asking: what’s priced in for sterling and where’s the next big move?

Don’t try to answer. Instead, think of a framework for assessing the situation.

1. Make things as simple as possible

There are multiple scenarios but they can essentially be divided into a binary decision of either

• Chaos: a hard Brexit or no-deal Brexit starting next March (or at least that result looking likely until near the March deadline); or…

• Relief: no major change of economic status quo, either because the current Brexit deal passes, Brexit is cancelled via a second referendum, or the negotiation period is extended

2. Set a baseline

Estimate where we were at Wednesday’s close — when an agreement was in place and the Cabinet had signed off, and before any ministers had resigned. Let’s say we were pricing 50% chaos / 50% relief then.

Next, estimate how those probabilities had shifted by Thursday’s close. It looks more fraught, but not blind panic. Say 65% chaos / 35% relief.

The Bloomberg British Pound Index fell by ~2% in that period. So, based on the input probabilities, that indicates that a 15% shift toward the chaos scenario caused a 2% reaction in sterling.

But bear in mind the gyrations may be bigger, the closer we get toward 100% likelihood of one outcome or the other.

3a. Identify the next major event risks.

PM Theresa May has given no indication that she will resign, so the next major catalyst could be a confidence vote on her leadership.

Until a confidence vote is declared, sterling should slowly grind higher as the gap between the probabilities narrows.

If a confidence vote is declared, it may shift the probabilities again — to, say, a 75% chance of our chaos outcome — within just a couple of hours. A 10% probability move (rather than the earlier 15% probability shift), but at a higher-beta part of the curve, may lead traders to expect something like another ~2% drop in the Pound Index.

3b. Break those risks into a decision tree

If May loses the confidence vote, we get closer to a chaos outcome (maybe 85%), which could trigger another negative reaction in the Pound Index, again larger relative to the change in probabilities as we’re still further along the curve. Sterling could be another 2.5% weaker and still falling, though with the risk of occasional rallies on any headlines that change the narrative

If May wins the confidence vote, the relief scenario gains a bit of ground (back to, say, 40%), so the pound should strengthen. And by the time of the parliamentary vote, there’s a chance the equation could be more like 55% chaos / 45% relief as May works with a tailwind to campaign for the deal. That’s 10% better than we are now, so the pound could probably be ~1.5% higher than we currently trade

4. Weigh everything up and wait for the opportunity

Having assigned a probability that there’ll be a confidence vote, and then also whether May survives such a vote, then it’s possible to probability-weight the likelihood of where sterling will trade under the various outcomes. When it looks misaligned versus expectations of how the drama plays out — that’s the moment to pounce.

This process can obviously be extended to the parliamentary vote and all the other major steps on the way.

 

 

 

 

 

 

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A federal judge has ordered Hillary Clinton to respond to further questions, under oath, about her private email server. 

Following a lengthy Wednesday court hearing, Judge Emmet G. Sullivan (who is also presiding over fmr. National Security adviser Michael Flynn’s case), ruled that Clinton has 30 days to answer two additional questions about her controversial email system in response to a lawsuit from Judicial Watch. 

Hillary must answer the following questions by December 17 (via Judicial Watch)

• Describe the creation of the clintonemail.com system, including who decided to create the system, the date it was decided to create the system, why it was created, who set it up, and when it became operational.
• During your October 22, 2015 appearance before the U.S. House of Representatives Select Committee on Benghazi, you testified that 90 to 95 percent of your emails “were in the State’s system” and “if they wanted to see them, they would certainly have been able to do so.” Identify the basis for this statement, including all facts on which you relied in support of the statement, how and when you became aware of these facts, and, if you were made aware of these facts by or through another person, identify the person who made you aware of these facts.

Sillivan rejected Clinton’s assertion of attorney-client privilege on the question over emails “in the State’s system,” however he did give Clinton a few victories: 

The court refused Judicial Watch’s and media’s requests to unseal the deposition videos of Huma Abedin, Cheryl Mills and other Clinton State Department officials. And it upheld Clinton’s objections to answering a question about why she refused to stop using her Blackberry despite warnings from State Department security personnel. Justice Department lawyers for the State Department defended Clinton’s refusal to answer certain questions and argued for the continued secrecy of the deposition videos. –Judicial Watch

Wednesday’s decision is the latest twist in a Judicial Watch Freedom of Information Act (FOIA) lawsuit targeting former Clinton deputy chief of staff, Huma Abedin. The case seeks records which authorized Abedin to conduct outside employment while also employed by the Department of State. 

“A federal court ordered Hillary Clinton to answer more questions about her illicit email system – which is good news,” said Judicial Watch President Tom Fitton. “It is shameful that Judicial Watch attorneys must continue to battle the State and Justice Departments, which still defend Hillary Clinton, for basic answers to our questions about Clinton’s email misconduct.”

 

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Via TechZim.co.zw,

Following a spate of recent price hikes that had a 2008 feel and even included price control threats from the government it comes as no surprise that Zimbabwe’s year to date inflation figure has ballooned. According the ZimStat the year to year inflation rate stood at 20.85% in October up from 5.39% in September.

That is a shocking 15% jump. Inflation is measured by tracking changes in a predetermined basket of basic commodities that most people consume in a typical household. This is also known as the Consumer Price Index (CPI).The CPI for the month ending October 2018 stood at 118,73 compared to 101,97 in September 2018 and 98,24 in October 2017.

Given the composition of the basket used to measure CPI, the surge in the inflation rate can easily be explained by the massive panic buying, hoarding and universal price hikes that followed the policy announcements by the Fiscal and Monetary authorities which were all not received. Social medial played its role as the negative portions of these policies were sometimes taken out of concept and went viral.

Expect inflation to continue to grow in November

Although for the most part the panic buying is not as bad as it was in October prices are still on an upward trend in most shops. Bread prices was officially increased from $1.10 to $1.40. Mazoe Orange crush another family favourite product also saw its price increased to around $4. In the ICT world ZOL increased their internet prices in the face increased cost of doing business. KFC who had closed citing shortage of raw materials came back with eye popping prices of up to $70 fore a meal.

Even the current inflation figure is an understatement

ZimStat no doubt relied on the official prices in coming up with the inflation figures. The truth however is that a number of basic goods such as sugar and cooking oil are now hard to find at official prices. They are sill subject to rationing in most shops but are freely available at the black market at even higher prices. Cooking oil sells at close to $7 from $4 dollars in October at the black market.

In all likelihood the real inflation rate is even higher than the officially cited rate. The next budget is due on 22 November, hopefully therein will be measures that will tame inflation.

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The battle over Jim Acosta’s press pass has been temporarily won by CNN after a federal judge ordered the White House to immediately restore the journalist’s access, following a Nov. 7 White House altercation which resulted in the revocation of the CNN anchor’s credentials. 

Judge just ruled in favor of @Acosta: Cnn TRO is granted and press pass must be restored

— ErikWemple (@ErikWemple) November 16, 2018

Kelly acknowledged that the White House credentialing process has a First Amendment component, and that the government must give Acosta due process before revoking his press pass. 

Judge Kelly now saying that process of White House credentialing essentially concedes that there is a First Amendment interest at stake

— ErikWemple (@ErikWemple) November 16, 2018

Judge says that under Sherrill precedent, government must give Acosta due process to revoke press pass

— ErikWemple (@ErikWemple) November 16, 2018

Kelly then criticized the Justice Department’s defense of how it revoked Acosta’s pass, and said that the White House’s account of Acosta “placing hands” on a White House intern was of “questionable accuracy.” 

Judge criticizes government’s defense of its procedures in revoking @Acosta press pass.

— ErikWemple (@ErikWemple) November 16, 2018

Judge now saying that the whole thing about @Acosta “placing hands” on intern was of “questionable accuracy”

— ErikWemple (@ErikWemple) November 16, 2018

CNN sought “emergency relief” from the court on the grounds that Acosta’s First Amendment rights are being violated every day he is banned from the White House grounds. 

The network, pointing to instances where Trump has criticized Acosta and CNN, also sought “permanent relief,” or a declaration from Judge Kelly that President Trump’s revocation of Acosta’s press pass violated the constitution. If successful, this legal conculsion could have wide ranging implications for other White House reporters. 

CNN, represented by Gibson, Dunn & Crutcher partner Theodore Boutrous, pointed to instances where Trump publicly criticized Acosta and CNN as “fake news.” Kelly appeared to question whether the decision to revoke Acosta’s credentials was driven by the content of his coverage—raising First Amendment issues—or instead by his conduct at a press conference on Nov. 7, which the White House cited as the reason.

“Why now,” after previously criticizing Acosta’s coverage, was the White House revoking Acosta’s press pass? Kelly asked Boutrous.

Boutrous recalled that Trump described Acosta as “rude” for refusing to hand over a microphone and yield to other reporters at last week’s press conference. “‘Rudeness’ is really a codeword for ‘I don’t like you being an aggressive reporter,’” said Boutrous, who was joined in court by a Gibson Dunn team including Theodore Olson, a partner at the firm and former solicitor general under the George W. Bush administration.

Justice Department attorney James Burnham defended the White House’s decision, saying the move was based on Acosta’s conduct and not content. He told Kelly: “A single journalist’s attempt to monopolize a press conference is not a viewpoint.” Burnham said CNN has about 50 other employees with so-called “hard passes” to access the White House. –law.com

Earlier this month while asking Trump about a northbound migrant caravan making its way to the southern US border, Acosta challenged Trump’s characterization of the group as an “invasion.” 

Acosta asked “Why did you characterize it as such?” to which Trump replied “because I consider it an invasion. You and I have a difference of opinion.” 

“Do you think that you demonized immigrants?” Acosta shot back. 

“Not at all, no – not at all,” Trump replied. “I want them to come into the country, but they have to come in legally. You know, they have to come in Jim through a process. And I want people to come in, and we need the people.”

Acosta then questioned Trump on an midterm advertisement showing “migrants climbing over walls and so-on,” to which Trump fired back: “They weren’t actors.” 

After more barbs were exchanged between the two, Trump said: “Honestly, I think you should let me run the country, you run CNN, and if you did it well, your ratings would be much better.” 

Acosta then refused to sit down, leading to a standoff in which a White House aide tried to take his microphone.

Acosta’s press pass was pulled shortly thereafter, while controversy erupted over whether or not White House press secretary Sarah Huckabee Sanders had released a doctored version of a video showing Acosta brushing a White House aide’s arm away.

I’ve just been denied entrance to the WH. Secret Service just informed me I cannot enter the WH grounds for my 8pm hit

— Jim Acosta (@Acosta) November 8, 2018

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Authored by Patrick Buchanan via Buchanan.org,

Last week, the White House revoked the press pass of CNN’s chief White House correspondent, Jim Acosta, and denied him access to the building.

CNN responded by filing suit in federal court against the president.

Acosta’s First and Fifth Amendment rights had been violated, said CNN. The demand: Acosta’s press pass must be returned immediately and his White House press privileges restored.

“If left unchallenged,” CNN warned, “the actions of the White House would create a dangerous chilling effect for any journalist who covers our elected officials.”

A dozen news organizations, including The New York Times and The Washington Post, are filing amicus briefs on CNN’s behalf.

On Thursday, the Trump administration raised the stakes.

Justice Department lawyer James Burnham declared in court:

“If the president wants to exclude all reporters from the White House grounds, he clearly has the authority to do that.”

After all, whose house is it if not the “President’s House,” the home of Donald Trump as long as he serves in the office to which he was elected by the American people?

The West Wing contains the Oval Office and the offices of senior staff. As for the West Wing briefing room, it was built by President Richard Nixon in 1969, when White House passes were regarded as privileges.

When did they become press rights or press entitlements?

Is Trump obligated to provide access to whomever CNN chooses to represent the network in the West Wing, even if the individual assigned routinely baits the press secretary and bashes the president?

Whence comes this obligation on the president?

White House aides can be fired, forced to surrender their passes and be escorted out of the building.

Whence comes the immunity of White House correspondents?

The First Amendment guarantees CNN reporters and anchors the right to say what they wish about Trump. It does not entitle Acosta to a front-row seat in the White House briefing room or the right to grill the president at East Room press conferences.

Why was he expelled from the White House?

Says press secretary Sarah Sanders, “The First Amendment is not served when a single reporter, of more than 150 present, attempts to monopolize the floor.”

Acosta baits the president, argues, refuses to yield the floor, manifests a hostility to Trump and trashes him regularly on-air.

Such conduct has made him a champion to Trump haters. But to others, it makes him a biased witness to the Trump presidency who has no legal or constitutional claim to a chair in the West Wing briefing room.

When this writer entered the White House in January 1969, a reporter who had traveled in the 1968 campaign came by to explain that I had to understand that he was now part of “the adversary press.”

What we had done to be declared an adversary, I do not know. I had assumed that the opposition party would become the adversaries of a Nixon White House.

But if the press declares itself an adversary of the White House and if it acts as an adversary — as it has a First Amendment right to do — such members of the media are no more entitled to the run of the West Wing than would be a member of Congress who regularly attacks the president.

Theodore White wrote in “The Making of the President 1972” that the real enemies of Nixon’s White House were not Democrats such as Senate Majority Leader Mike Mansfield and House Speaker John McCormack but CBS News, The Washington Post and The New York Times.

This holds true for Trump. If the media are not “the enemy of the people,” the major media are certainly – and proudly – the enemy of Trump.

Trump’s most visible and persistent adversaries are not Nancy Pelosi or Chuck Schumer. And it is Trump’s attacks on CNN and “fake news” that bring his loyalists to their feet. With his use of Twitter, Trump has found a way around an overwhelmingly hostile media.

Former FBI Director Robert Mueller gets a favorable press, as he is seen by the media as the instrument of their deliverance from Trump.

But should the special counsel bring in a report that says, “Donald Trump did not collude with Russia in the 2016 election, and we could find no obstruction of justice in how he dealt with our investigation,” Mueller’s indulgent press would turn on him overnight.

CNN says that if Trump succeeds in pulling Acosta’s press pass, it could have a “chilling” effect on other White House correspondents.

But if it has a chilling effect on journalists who relish confronting the president and reaping the cheers, publicity and benefits that go with being a leader of the adversary press, why is that a problem?

The White House should set down rules of conduct for reporters in the briefing room, and if reporters repeatedly violate them, that should cost them their chairs and, in cases like Acosta’s, their credentials.

This confrontation is healthy, and the republic will survive if the press loses this fight, which the press itself picked.

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