Tag: news

The last time we checked in on Steinhoff – the scandal-plagued South African retailer laid low by an accounting scandal and which many have called the next Enron – the company admitted that  its lines of credit were being withdrawn or suspended, while the company’s largest shareholder and former Chairman, Christo Wiese, was caught in a vicious margin call, forcing him to sell increasingly more shares in various related entities as both the stock price of Steinhoff – and his net worth – continued to disintegrate.

Christo Wiese: largest Steinhoff shareholder and 4th richest South African

The Amsterdam-registered retailer also said it would restate earnings for 2015, 2016 and 2017, with figures for prior years also “likely” to need restating.

Meanwhile, the liquidity crunch that emerged over the past month, has accelerated and has forced the company to resort to dramatic “high-flying” liquidations to keep itself alive.

On Thursday, Steinhoff warned it’s seeking “significant near-term liquidity” for some of its business units. And, as Bloomberg reports, among the first casualties is the company’s private jet:

Steinhoff said it took delivery of the jet in April last year. It was advertised by Global Jet, an operator of business aircraft, for $24.75 million in 2016. The sale brochure shows the interior fitted out in cream-colored leather seating, wood paneling and a marble-and-brass bathroom.

The owner of U.K. discounter Poundland and bedding supplier Mattress Firm in the U.S. – at least for now, soon both assets will soon be either sold or liquidated in bankruptcy court – is in discussions with a potential buyer of a 2006 Gulfstream G550 private jet that’s shuttled company executives around the world, according to Bloomberg.

The luxuriously appointed craft previously had a price tag of about $25 million, although it is unlikely Steinhoff will get anything remotely close for it. As Bloomberg adds,  the plane, certified for 16 passengers, left Frankfurt on Dec. 3 to fly to South Africa and was last tracked in Cape Town on Dec. 7, according to online flight logs. The jet also made stops in Johannesburg, Vienna and Dublin last year. It’s registered with the U.S. Federal Aviation Administration.

So for those who have $25 million lying around – a mere 1,600 bitcoin – here is what could be yours (link). Or just wait around for the Stalking Horse auction in bankruptcy court where a €1,000 starting bid may go a long way…

 

 

 

 

 

 

 

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A man wearing an ISIS face scarf posted a chilling selfie outside New York’s Metropolitan Museum of Art with the caption: “We are in your home, O slaves of the cross” 

 

The photo was uploaded to a pro-ISIS channel on the messaging app Telegram, reports the Mail Online, which was provided the photo by terror-monitoring group MEMRI, which said it could not verify the authenticity of the image. 

The image is eerily reminiscent of a photo posted days before the deadly Manhattan truck attack, killing eight and wounding eleven.

In late October, 29 year old Uzbecki immigrant Sayfullo Saipov drove a Home Depot rental truck into a Manhattan crowd, killing eight and injuring eleven – including children.

 

After the attack, Sayfullo was shot in the stomach by police and arrested. An ISIS flag and a document pledging allegiance to the terror-group was found in the truck.

 

Sayfullo, who says he acted alone, proudly told investigators how he had rented a truck and used it to fatally run down cyclists and pedestrians on a New York City bike path, all in the name of the Islamic State.

UPDATE: Reports, Terrorist has a girlfriend and 3 children in Paterson, NJ. SEE ANOTHER PHOTO OF THIS TERRORIST. http://pic.twitter.com/Bex48uTRe5

— NYC Scanner (@NYScanner) November 1, 2017

Days before the truck attack, an image of West Street in Manhattan appeared online:

 

Meanwhile, over the holidays ISIS released a video featuring shots of New York, while calling for more bomb and knife attacks – saying “IT’S CHEAPER THAN A CHAINSAW!”

The video provides a list of recommended targets, including nightclubs, stadiums and churges.

 

In December, Bangladeshi immigrant and Staten Island cab driver Akayed Ullah, 27, attempted to detonate a suicide pipe bomb at the 42nd Street Subway station. The bomb was a dud, and the only serious wounds were to the Ullah.

 

As The Daily Mail reports:

The attack sent terrified commuters fleeing through a smoky passageway, and three people suffered headaches and ringing ears from the first bomb blast in the subway in more than two decades.

The suspect had looked as Islamic State propaganda online and told investigators he acted alone in retaliation for U.S. military aggression in the Middle East.

What Sayfullo and Ullah’s truck attack and attempted suicide bombing suggest is an increase in “lone wolf” attacks in the name of ISIS – apparently not connected to any sort of “official” arm of the organization. While that is up for debate, we can only hope that this latest online image of a New York tourist attraction is nothing more than a sick joke.  

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Authored by MN Gordon via EconomicPrism.com,

People are hard to please these days.  Clients, customers, and cohorts – the whole lot.  They’re quick to point out your faults and flaws, even if they’re guilty of the same derelictions.

The recently retired always seem to have the biggest axe to grind.  Take Jack Lew, for instance.  He started off the New Year by sharpening his axe on the grinding wheel of the GOP tax bill.  On Tuesday, he told Bloomberg Radio that the new tax bill will explode the debt and leave people sick and starving.

“It’s a ticking time bomb in terms of the debt.

“The next shoe to drop is going to be an attack on the most vulnerable in our society.  How are we going to pay for the deficit caused by the tax cut?  We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security.  One could not have made up a more cynical strategy.”

The tax bill, without question, is an impractical disaster.  However, that doesn’t mean it’s abnormal.  The Trump administration is merely doing what every other administration has done for the last 40 years or more.  They’re running a deficit as we march onward towards default.

We don’t like it.  We don’t agree with it.  But how we’re going to pay for it shouldn’t be a mystery to Lew.  We’re going to pay for it the same way we’ve paid for every other deficit: with more debt.

A Job Well Done

Of all people, Jack Lew should know this.  If you recall, Lew was the United States Secretary of Treasury during former President Obama’s second term in office.  Four consecutive years of deficits – totaling over $2 trillion – were notched on his watch.

Did he ever mention the debt ticking time bomb when he had the opportunity to do something about it?  We don’t remember ever hearing this debt bomb allusion from Lew while he was Treasury Secretary.  Do you?

We do remember, however, that as part of his job he had to place his autograph on the face of the Federal Reserve’s legal tender notes.  Did it ever occur to Lew that, in so doing, he was publicly endorsing and personally ratifying unconstitutional money with his very signature?

Most likely, it never crossed his mind.  And if it had, the illegality of the paper dollar certainly didn’t bother him enough to prompt his resignation and the pursuit of honest employment.  He did none of these things.

Instead, Lew played his part to perfection.  That is, he rolled over year after year in his quest for the expedient.  He did the job everyone wanted him to do.  He did a job well done.

Likewise, now that he’s off the clock he’s sounding the alarm on the nation’s debt problem.  According to Lew, it’s all Trump’s fault.  Not his.

As an aside, we don’t necessarily take issue with Lew’s assessment of the tax bill and ticking time bomb metaphor.  What we take issue with is the timing of his two faced utterances.

Why You Should Embrace the Twilight of the Debt Bubble Age

In truth, no one really cares about deficits and debt.  Not former Treasury Secretary Jack Lew.  Not current Treasury Secretary Steven Mnuchin.  Not Trump.  Not Obama.  Not your congressional representative.  Not Dick Cheney.

Plain and simple, unless there are political points to score like Lew was aiming for this week, no one gives a doggone hoot about the debt problem.  That’s a problem for tomorrow.  Not today.

Quite frankly, everyone loves government debt – DOW 25,000!  Aging baby boomers know they need massive amounts of government debt to pay their social security, medicare, and disability checks.  On top of that, many employed workers are really on corporate welfare.  They’re dependent upon the benevolence of government contracts to provide their daily bread.

What’s more, in this crazy debt based fiat money system, the debt must perpetually increase or the whole financial system breaks down.  Specifically, more debt is always needed to keep asset prices inflated and the wealth mirage visible.

By providing a quick burst to the rate of debt increase, President Trump expects to get a quick burst to the rate of GDP growth.  We suspect President Trump and his followers will be underwhelmed by what effect, if any, the tax cuts have on the economy.  Time will tell.

In the meantime, don’t fret about government deficits and debt.  The political leaders may say deficits don’t matter.  But they do matter.  In fact, soon they’ll matter a lot.

We’re in the twilight of the debt bubble age.  Embrace it.  Love it.  What choice do you have, really?  There’s nothing Jack Lew – or anyone else – can do about it.

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Representative Devin Nunes (R-Ca), chair of the House Intelligence Committee, is expanding his committee’s investigation into the FBI and DOJ’s handling of an ongoing probe into alleged collusion between the Trump campaign and Russia, according to a letter  sent yesterday to Deputy Attorney General Rod Rosenstein.

According to the letter, Rosenstein has finally agreed to comply with a subpoena issued by the House Intelligence Committee last August and produce fully unredacted records of conversations that could shed light on accusations the FBI pursued the investigation in a partisan and unfair manner.

As agreed, designated Committee investigators and staff will be provided access to all remaining investigative documents, in unredacted form, for review at DOJ on Friday, January 5, 2018. The documents to be reviewed will include all FBI Form FD-I 023s and all remaining FBI Form FD-302s responsive to the Committee’s August 24, 2017 subpoenas. The only agreed-upon exception pertains to a single FD-302, which, due to national security interests, will be shown separately by Director Wray to myself and my senior investigators during the week of January 8,
2018.

You further confirmed that there are no other extant investigative documents that relate to the Committee’s investigations into (a) Russian involvement in the 2016 Presidential election or (b) DOJ/FBI’s related actions during this time period. This includes FD-302s, FD-1023s, and any other investigatory documents germane to the Committee’s investigations, regardless of form and/or title. If, somehow, “new” or “other” responsive documents are discovered, as discussed, you will notify me immediately and allow my senior investigators to review them shortly thereafter.

Moreover, Nunes has demanded an all-star lineup of witness interviews for the month of January, including FBI Supervisory Special Agent Peter Strzok and his mistress FBI Attorney Lisa Page, which should provide hours of entertainment. 

With respect to the witness interviews requested by the Committee, you have agreed that all such witnesses – namely, former DOJ Associate Deputy Attorney General Bruce Ohr; FBI Supervisory Special Agent Peter Strzok; former FBI General Counsel James Baker; FBI Attorney Lisa Page; FBI Attorney Sally Moyer; FBI Assistant Director Greg Brower; FBI Assistant Director Bill Priestap; and FBI Special Agent James Rybicki – will be made available for interviews to be conducted in January.

Lastly, as to the remaining approximately 9,500 text messages between FBI Supervisory Special Agent Peter Strzok and his mistress, FBI Attorney Lisa Page, it is my understanding based on your representations that another search is being conducted and all relevant messages will be provided. Accordingly, the Committee requests production of these messages by no later than close of business, Thursday, January 11, 2018. Similarly, I understand that your office is researching records related to the details of an April 2017 meeting between DOJ Attorney Andrew Weissman (now the senior attorney for Special Counsel Robert Mueller) and the media, which will also be provided to this Committee by close of business on Thursday, January 11, 2018.

Interestingly, the one key witness which seems to be missing from Nunes’ list is former Deputy FBI Director Andrew McCabe.

Of course, as you’re undoubtedly aware by now, Strzok is the same FBI agent who was removed from Special Counsel Mueller’s team after his own text messages revealed an “insurance policy,” apparently crafted in Andrew McCabe’s office, to prevent a Trump presidency.

“I want to believe the path you threw out for consideration in Andy’s office – that there’s no way he [Trump] gets elected – but I’m afraid we can’t take that risk.” writes FBI counterintelligence officer Peter Strzok to FBI lawyer Lisa Page, with whom he was having an extramarital affair while spearheading both the Clinton email inquiry and the early Trump-Russia probe, adding “It’s like a life insurance policy in the unlikely event you die before you’re 40.” 

Text-from Peter Strzok to Lisa Page (Andy is Andrew McCabe): “I want to believe the path u threw out 4 consideration in Andy’s office-that there’s no way he gets elected-but I’m afraid we can’t take that risk.It’s like an insurance policy in unlikely event u die be4 you’re 40”

— Bret Baier (@BretBaier) December 13, 2017

Peter Strzok and Lisa Page

 

The letter is the second in an escalating effort by the House Intelligence Committee to unearth information pertaining to allegations that the Russia probe was spearheaded by anti-Trump elements in the FBI and was mishandled at various junctures.

So grab your popcorn…January is shaping up to be an interesting month…

Here is the  full letter from Nunes:

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December was expected to be a weaker month than October and November, as a result of the double-whammy of the post-hurricane rebound ending and an adverse winter storm effect, but virtually nobody on Wall Street expected the 3-sigma outlier December payrolls report to be as poor as it was.

So which sectors were responsible for the sharp slowdown in the December jobs growth rate, in which only 148K jobs were added, far below November’s 252K, and the estimate of 190K?

As has been the case for nearly a decade, much of the job growth in December took place among minimum-wage job categories, although, in December somewhat surprisingly, construction was the best performing category, adding some 30,000 jobs and a continuation from the strong performance last month, with most of the increase among specialty trade contractors (+24,000); at the same time, some 25,000 high-paying manufacturing jobs were also added.

At the same time the low-wage staples of leisure & hospitality and education and health both added 29K and 28K respectively. Employment in health care increased by 31,000 in December; employment continued to trend up in ambulatory health care services (+15,000) and hospitals (+12,000)

Employment in professional and business services rose by 12,000 while temp-help jobs increased by 7,000, a big jump from November’s 1,000.

That old faithful – waiters and bartenders – added a solid 25,000. Over the year, employment in food services and drinking places added 249,000 jobs, about in line with an increase of 276,000 in 2016.

But the biggest surprise of all took place in December, however, was the big drop in retail trade, which tumbled by over 20,000 jobs.

 

 

Finally, as Bloomberg shows, below are the industries with the highest and lowest rates of employment growth for the most recent month: monthly growth rates are shown for the prior year.

 

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Last summer, BofA’s Michael Hartnett was predicting a grizzly death to the most surreal stock market rally in history, expecting a violent tumble some time in the late fall, early winter. That did not happen, as the market – no longer a discounting mechanism but merely a manifestation of how much money retail investors dump into ETFs – refused to trade based on news flow, fundamentals or any other metric known to man, and proceeded to accelerate into what Jeremy Grantham earlier this week dubbed a melt up.

So what does the BofA CIO – who in December said “he was so bullish, he’s bearish” anticipating a 10% or more correction in 2018 – think now?

Well, according to his just released latest Flow Show report, Hartnett points out that based on the latest weekly flows data, “it ain’t over“, and specifically “the Icarus trade ain’t over until rates a lot higher and big redemptions in “yield” plays.

The specifics: in a week in which the S&P surged to new all time highs once again, there was paradoxically another $4.5bn outflows from equities vs $14.4bn inflows last week; This was offset by $9.2bn inflows to bonds this week, adding to $1.2bn inflows last week. As usual, it remains a mystery how stocks can rise when investors pull funds from the market.

It’s not just flows that say it ain’t over: so does Positioning. According to BofA’s proprietary Bull & Bear Indicator, data does not show Peak Positioning…”is 6.2 not >8, BofAML FMS institutional cash levels are 4.7% not <4%, BofAML private client allocation to stocks is 60.8% not >63%.”

So are there any risks? Hartnett believes that “flows show overshoot risk”, i.e. the risk of asset overshoot rational conclusion to long period of irrational excess liquidity policies; biggest 2017 inflow winners were tech, financials, EM debt (all saw inflows >20% AUM – Chart 2);

Meanwhile, tech, EM debt & volatility-selling strategies seem most vulnerable to 2018 excess…note 10-year Treasury volatility has fallen to lowest since Feb 1966 (Chart 1 shows bond vol back to 1790).

 

So until Icarus flies too high, here is an update of BofA’s targets and trades for Q1:

• BofAML Q1 targets are bullish: SPX 2860, CCMP 8000, GT10 2.85%, EUR 1.10…risk assets should rally until they induce higher yields & US dollar.
• BofAML Q1 trades = risk-on barbell: long US/EM internet, long US homebuilders, long Japan banks, long Russian equites, long CDX HY & iTraxx XOVER (link); in anticipation of a. big GDP upward revisions, b. jump in inflation & Fed/ECB/BoJ rate expectations, c. steeper yield curves, higher dollar, wider credit spreads.

Not surprisingly, BofA’s bearishness appears to have evaporated away. Instead of a crash, BofA now sees a “massive bullish Q1 growth catalyst” in the form of US surveys consistent with >5% US real GDP growth in Q1/Q2 (Chart 3); Dec ISM consistent with >20% US EPS growth (Chart 4); yes very close to Peak Profits but spike in oil price likely first.

 

Finally, for those wondering what if anything can end the party, here is Hartnett’s answer: a bearish Q1 inflation catalyst, which is still missing: “wage inflation (e.g. US Avg Hourly Earnings >3%) needed to a. cause bond vol to surge/tighten financial conditions via higher global rate expectations & stronger US$, b. cause flash crash a la ’87, ’94, ’98…’94 redux most relevant should payroll/AHE surprise tomorrow…

Hartnett’s parting words of caution remind us what happened the last time we had a Goldilocks market, and how it ended:

“Goldilocks” bull market ended dramatically in March 1994 with a payroll print of 464K, aggressive Fed hikes (100bps in 3 months); a rout in bonds (Jan-Nov’94 yields jumped 200bps) & a 10% drop in SPX.

Will this time be different?

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Confirming the mixed picture from Markit (Manufacturing PMI up, Services PMI down), ISM Services printed a disappointing 55.9 (57.6 exp), dropping to a 4-month low (as ISM manufacturing rises).

 

Perhaps most notably, New Orders have utterly collapsed in the last 2 months post-Hurricanes…

 

Additionally, Business Activity fell, as did backlogs…but there is quite a difference between manufacturing and services surveys…

 

 

Respondents remain mixed:

“Many suppliers are proposing price increases, but few are being implemented. Increases in volume and efficiencies seem to be outperforming commodity pricing.” (Accommodation & Food Services)

“December is slowing, as is seasonally expected after a strong fall. Business in general is strong [and] within the normal pattern of seasonal fluctuation.” (Management of Companies & Support Services)

“Lumber prices are increasing due to product [being] damaged in the recent wildfires. Duties on steel from Vietnam is expected to cause an increase in steel prices. Ongoing shortages in construction related [to] labor continue to be a problem.” (Construction)

“Ending the year with profits and business levels on track. 2018 is projected to be as productive with an optimistic outlook.” (Finance & Insurance)
“IV solutions are still on national manufacturer back order. Hospital gauze back orders are also causing issues in the industry.” (Health Care & Social Assistance)

“We are seeing a resurgence in the business activity of our oil and gas customers, in a positive direction that is impacting our sales.” (Other Services)

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Wheels appear to be in motion across D.C. on several fronts. 

• The DOJ is “taking a fresh look” into the Hillary Clinton email ‘matter.’ 
• The FBI has launched a new investigation into the Clinton Foundation the day after the Clinton’s Chappaqua property catches fire. 
• Former FBI Director James Comey’s full Clinton memo was released, revealing felony evidence of changes which “decriminalized” Hillary Clinton’s behavior. Oh, and every one of the memos he leaked to his Cornell professor buddy was classified, per a sworn statement by the FBI’s “chief FOIA officer” in a sworn declaration obtained by Judicial Watch.
• The House Intelligence Committee will be granted access to “all remaining investigative documents,” unredacted, along with all witnesses sought per a deal reached between Deputy Attorney General Rod Rosenstein and Nunes. 

The letter, from Nunes to Rosenstein, summarizes an “agreement” reached on a phone call Wednesday evening and also says key FBI and Justice Department witnesses in the probe will be provided for interviews later this month.

The agreement comes after the DOJ and FBI faced a Wednesday deadline to comply, under the threat of new subpoenas and even contempt citations. Under deadline pressure, FBI Director Christopher Wray and Rosenstein met Wednesday with House Speaker Paul Ryan, R-Wis., to discuss the demands from the intelligence committee. –Fox News

And now, days after Fusion GPS penned a vigorous self-defense in the New York Times, a Federal Judge struck has down a request by Fusion to block the House Intelligence Committee from obtaining complete banking records in relation to their activities during 2016. Fusion sought to invalidate a subpoena issued by Committee chairman Devin Nunes (R-CA), which they tried to claim was issued illegally as well as a violation of the 1st Amendment. U.S. District Court Judge Richard Leon struck down all four of Fusion’s request in his order, which is a great read.

 

Didn’t Fusion GPS’s founders just write an op-ed about how transparent they are? https://t.co/8vB7J4hnG3

— David B. Cohen (@DavidBCohen1) January 5, 2018

A few highlights from the order:

Judge Leon addressed each aspect of Fusion’s request and why he so disagreed, which is why it takes Judges forever to write these things: 

1. Fusion asserted that Nunes went rogue and issued the subpoena by himself, “pursuant to no resolution” by the committee, and he recused himself when he had Rep. Mike Conway temporarily take charge of the investigation, therefore Nunes had no authority to request Fusion GPS bank records. 

Judge Leon shut that down immediately:

“Nowhere in this press release did Chairman Nunes “recuse” himself” from the Russia investigation. Instead, he simply designated another Committee member to take charge of the investigation, as permitted by Committee Rules. 

2. Fusion then requested that Judge Leon narrow the scope of the release to exclude 10 law firms on the grounds that  “[n]one of the law firms about which Intervenor seeks information (other than Perkins Coie and Baker Hostetler) contracted with Fusion GPS to perform work related to Russia or Donald Trump, in any way.

Fusion also alleges that transactions with certain media companies, journalists, and businesses are “not pertinent.”

Judge Leon responds, telling Fusion that the mere fact that two law firms paid Fusion GPS for work related to Trump provides a “reasonable basis to believe that Fusion’s transactions with other law firms during the same time frame may reveal similarly relevant information,” adding “The Committee also has intelligence suggesting that Fusion directed Steele to meet with at least five major media outlets to discuss his work on the Trump Dossier. It is thus reasonable for the Committee to pursue records containing Fusion’s transactions with various media companies and journalists to determine whether they, too, had involvement with the Trump Dossier or with Russian active measures.” 

the Committee possesses intelligence that links these businesses to Russia and Russian operatives, and thus the transactions between Fusion and these businesses could potentially enable the Committee to investigate the nature of these relationships.” -Judge Leon

3. Next, Fusion tried to suggest that if their bank hands over their records, it would infringe on Fusion’s first amendment rights to engage in free political speech, free political activity, and free association – as it would reveal the identity of its clients, and thus would hinder them from contracting anonymously with Fusion in the future. 

In other words: our other clients are going to be really pissed and we’ll lose business because of it. 

Judge Leon responds: “Unfortunately for the plaintiff, I cannot agree” – on the basis that Fusion’s commercial relationship with its clients does not provide Fusion with “some special First Amendment protection from subpoenas,” since it would allow “any entity that provides goods and services to a customer who engages in political activity to resist a subpoena on the ground that its client engages in political speech.” 

Surely, to recase a line from the great Justice Robert H. Jackson, the First Amendment is not a secrecy pact! –Judge Leon 

4. Lastly, Fusion tried to argue that turning bank records over to Congress would violate 12 U.S. Code § 3401 – Right to Financial Privacy statute which “prohibits banks from releasing customer records to a Government authority,” along with “nonaffiliated third party” personal information. 

Leon responds: “Ultimately, I find both of plaintiff’s arguments to be without merit. How so?”

First, because Fusion “has no rights under the RFPA because it is not a “person” who may qualify as a “customer” for the purposes of that statute, adding “Unfortunately for the plaintiff, the text of the statute equally forecloses Fusion’s claim of rights.” under the nonaffiliated third party statute. 

* * *

In conclusion, Judge Leon rules that the Devin Nunes’ subpoena “was issued pursuant to a constitutionally authorized investigation by a Committee of the U.S. House of Representatives with jurisdiction over intelligence and intelligence-related activities — activities designed to protect us from potential cyber-attacks now and in the future,” adding “Thus, because I find all of Fusion’s objections to the Subpoena to be unavailing, Fusion cannot satisfy the first factor of its burden for obtaining a preliminary injunction – a likelihood of success on the merits – and I need go no further. 

“Plaintiff’s motion must therefore be DENIED.” 

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