Is SCOTUS a Good Reason to Support Trump? Libertarian and Conservative Legal Experts Weigh In

Donald Trump is hoping to pitch himself as the conservative legal movement’s last best hope for securing the future of the U.S. Supreme Court. Trump says that if he’s elected president he will name committed constitutionalists to the bench and will replace the late Justice Antonin Scalia with “a person of similar views and principles.” He insists that non-liberals have “no choice” but to support him in order to prevent Hillary Clinton from packing the Court. Trump has even released a list of potential SCOTUS picks that’s chock full of Federalist Society favorites and at least one libertarian legal hero.

But is that reason enough to support Trump in the 2016 election? I wanted to hear what the key players in the libertarian and conservative legal movements had to say about it, so I asked a group of them, including Alan Gura, the ace Second Amendment lawyer who argued and won District of Columbia v. Heller before the Supreme Court in 2008, Randy Barnett, one of the architects behind the 2012 legal challenge to Obamacare in NFIB v. Sebelius, Jonathan Adler, one of the architects behind the 2015 legal challenge to Obamacare in King v. Burwell, and Glenn Reynolds, the respected law professor who runs the popular political blog Instapundit.com. Their opinions range from denouncing Trump as “beyond the pale” to arguing that Trump’s judicial appointments “would almost certainly be better” than those of Hillary Clinton. Here are their thoughts on whether the future of the Supreme Court is a good reason to support Donald Trump.

Jonathan Adler
Johan Verheij Memorial Professor of Law at Case Western Reserve University

The future of the Supreme Court is of tremendous importance, particularly given the number of likely retirements in the next several years. Concern for the Court, and lower federal courts, is often a good reason to ignore a Republican presidential candidate’s other inadequacies. A sound court appointment far outweighs a few silly spending programs. Many say this justifies supporting Trump. Not me. Trump is beyond the pale and there’s no guarantee Trump’s nominees will be any good anyway.

Randy Barnett
Carmack Waterhouse Professor of Legal Theory at Georgetown University and author of Our Republican Constitution

Despite my lack of confidence in his actually appointing the engaged judges that I would like—rather than judicial restraint judges—I think the Supreme Court may well be the only good reason to support Trump. Whether that reason outweighs all the other negatives is a much tougher judgment. I respect people who have reached either conclusion. And the rest of the campaign has yet to play out, so we don’t know the full extent of the variables that will contribute to any such assessment.

Alan Gura
Attorney at Gura PLLC and adjunct Professor of Law at Georgetown University

Donald Trump has effectively identified the horrific prospect of Hillary Clinton appointing at least one and perhaps several Supreme Court justices, to say nothing of the lower courts. But shall we entrust that task to an insecure lunatic, a fascist caudillo, an autarkist, a proud ignoramous and conspiracy theorist, the aspiring leader of a “Workers’ Party” who plays footsie with racists and anti-Semites and might well be a Russian agent? I have no illusions about what Hillary would do to the federal bench. Sad! But there is something deeply contradictory about the notion of electing a power-hungry strongman on the theory that he’ll appoint judges that respect and enforce constitutional limits on government. Did Hugo Chavez appoint great judges? Did Putin, Mussolini, or Erdogan? Would it have mattered had they sort-of kinda suggested that they would?

As much as I care about the courts, worrying about jurisprudential doctrine is a luxury for people living under basically free and stable governments, for people who have access to food and toilet paper. And absolutely nothing in Trump’s history suggests that he’d honor his proposed judge list or otherwise pick decent judges, while each of his proclamations indicates that the Supreme Court would be among the least of our concerns under his regime. True, the Trump gamble—that he’d be a figurehead who’d delegate authority to responsible people, or be resisted by the bureaucracy and media (or, laughably, by that stiffest-spined creature, the Republican Congress), while hewing to a judicial selection principle anathema to his personal brand—might pay off. Should Trump win, I’d at least delight in Hillary’s loss, and fervently hope that he’d prove me wrong on every count. But I wouldn’t bet my country on it.

Orin Kerr
Fred C. Stevenson Research Professor of Law at George Washington University

No, it’s not a good reason. Judges are important, but the Constitution gives the president much greater powers elsewhere. The president controls the military, sets foreign policy, and controls federal law enforcement. Trump’s statements about how he would exercise these executive powers are frightening. He expresses admiration for Vladimir Putin. He advocates war crimes. He wants to use presidential powers to go after his critics. He sees limited government as for the weak and “politically correct.” Even if we assume that Trump Supreme Court nominees would be somewhat better than Clinton Supreme Court nominees, the damage that Trump would do to constitutional governance and the rule of law directly through the executive branch greatly outweighs any positive impact on the courts. And I think it’s hard to say who Trump would actually nominate to the Supreme Court. He has a list, but there’s no reason to think he would follow it.

David Kopel
Research Director at the Independence Institute

We know from experience that Hillary Clinton’s appointments to the Supreme Court, and to the federal appellate courts, would generally be hostile to constitutional limits on government, including federalism and the separation of powers. That record is clear enough from her husband’s appointments. On the whole, her nominations would probably be worse than his, since there is now a powerful Marxist wing of her party which she will need to placate. Although Clinton is a woman of few enduring convictions, one principle to which she had adhered throughout her long public career is implacable enmity to the Second Amendment. She would very likely impose an anti-Second Amendment litmus test for all of her appellate court appointments.

Donald Trump’s appointments would almost certainly be better. We would not expect him to devote the same attention to the issue as would a constitutionally minded person, such as Ted Cruz. However, I believe that Trump’s nomination for the Scalia vacancy would be drawn from the list of 16 which he has made public. More generally, there is a good chance that he would view judicial appointments as a necessary means of maintaining a good relationship with the significant fraction of the conservative base that does care deeply about the issue. I expect that Senator Jefferson Sessions would exert strong influence on judicial appointments, which would be salutary.

Roger Pilon
Director of Constitutional Studies at the Cato Institute

Assuming Trump were to follow through on his list of possible Supreme Court nominees, that would be a reason to support him, but there are countervailing reasons to oppose him that are, I believe, far more important. The Court will correct itself in time, I hope, but it is the character of the Republican Party and, more broadly and crucially, of our very nation that is at stake in this election. Hillary Clinton is a deeply flawed candidate, to be sure, but the election of Donald Trump would so defile the party of Lincoln and America itself that it must be resisted. He is an aberration that we must get past, and quickly.

Michael B. Rappaport
Director of the Center for the Study of Constitutional Originalism at the University of San Diego School of Law

I certainly believe that the future of the Supreme Court is “a reason” to support Trump. There are no assurances, but I do believe it is likely that he will choose someone from the list he issued previously (or someone similar). Is it strong enough reason to overcome the other reasons not to vote for him?

To me, it depends on one’s perspective. If one is simply voting for the candidate whose views are closest to your own, then most libertarians will vote for Gary Johnson. Trump’s Supreme Court appointments are unlikely to affect that.

But if you are (for some reason) choosing between Trump and Clinton, then Trump’s likely appointments are important. Both Trump and Clinton are so flawed that any significant chance that one of them will do something good is pretty important. So I would say that if one is choosing between Trump and Clinton, then Trump’s likely appointments are a strong reason for preferring him. Of course, that strong reason might be outweighed by other considerations, depending on your views of the two candidates.

Glenn Reynolds
Beauchamp Brogan Distinguished Professor of Law at the University of Tennessee, Knoxville, and proprietor of Instapundit.com

The future of the Supreme Court under Hillary is clearly dreadful: appointees would be to the left of Ruth Bader Ginsburg and probably corrupt to boot. Under Trump it’s unclear: His list of potential appointees actually looked pretty good, but with Trump you never know what he’ll actually do. So I’d say it’s a choice between certainly awful, and possibly awful.

Timothy Sandefur
Vice President for Litigation at the Goldwater Institute and author of The Conscience of the Constitution

There is no basis for believing that Donald Trump will make better picks for the Supreme Court than Hillary Clinton will. While Trump has released what he claims is a list of judges he’d consider for nomination, there’s no reason in the world to think he’d actually stick to it. It’s a pie-crust promise, easily made, easily broken. Nor does it show that he has any idea what he’s doing. One could easily make that list by simply scrolling through the Federalist Society’s website for 10 minutes. Trump is ignorant of virtually all of the critical legal disputes of the day, and has no idea which judges are best positioned to resolve those disputes (except that he doesn’t want “Mexican” judges). Nor is Trump pro-liberty when it comes to the Supreme Court. He’s enthusiastically praised the infamous Kelo eminent domain decision, for instance—a decision the Republican Party once claimed to despise. So no, there’s no reason to think Trump will make good judicial picks. And there’s also no reason to assume that anyone Clinton would name would be a disaster. Her husband nominated Ginsburg and Breyer, who are certainly not a libertarian’s dream, but are highly competent justices and have been on the right side on many important cases. In fact, the best strategy at this point would be to confirm Judge Garland, because he’s very likely to be better than anyone that either Trump or Clinton would nominate. In fact, Americans would be better off—as usual—if the White House and Congress were in the hands of different parties, so that nominees would have to clear both hurdles.

Carrie Severino
Chief Counsel and Policy Director of the Judicial Crisis Network

Hillary has basically promised to nominate justices who would gut the First and Second Amendments. She would create the most prolonged period of judicial lawlessness since the Warren era.

Trump, on the other hand, continues to reiterate his interest in nominating justices like Scalia and Thomas, and his list of potential nominees was widely praised by conservatives. If there is a non-zero chance that he keeps his promise, it is hard to see how Hillary is a better choice.

Many of the people who will vote in this election were not even born when Justice Kennedy, the swing justice, was appointed. So you’re not just voting for a president, you are voting on the trajectory of the Court for the next several decades.

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Trump Accuses Clinton of Rigging Debates, ISIS Calls for Jihad in Russia, Candy Charms Goes to Iran: A.M. Links

  • Donald Trump accused Hillary Clinton of rigging the presidential debates because two are scheduled during NFL games.Wikileaks founder Julian Assange says the organization has “even more material” on the Clinton campaign. WWE legend Goldust says he’s voting for Gary Johnson.
  • There has been an attack directed or inspired by ISIS every 84 hours since June 8. The terror group has called on its members to wage jihad in Russia. Meanwhile, five people were killed when a Russian military helicopter was shot down over Syria.
  • The supreme leader of Iran complains that the average Iranian hasn’t benefited from the Iran nuclear deal.
  • The prime minister of Cambodia filed a defamation suit against the leader of the opposition.
  • At least 16 people died in a hot air balloon crash in Texas.
  • British porn star Candy Charms revealed she traveled to Iran for a deal on a nose job.

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Preview Of Key Events In The Coming Week

After last week’s central bank and GDP fireworks, we have another busy week on deck culminating with Friday’s jobs report.

This morning in Europe the early focus is on the final revisions to those July manufacturing PMI’s, along with a first look at the data for the periphery. Shortly we will provide a full breakdown of global PMI by country. Today we’ll also get the manufacturing PMI in the US which is then closely followed by the ISM manufacturing for July, along with construction spending data.

Early on Tuesday morning there’s some central bank focus in the Asia session with the RBA decision (a 25bps cut is expected). It’s possible that we also get the Japan Cabinet decision on the stimulus package announced by PM Abe last week. In Europe the only data is the June PPI report for the Euro area. In the US there’s important data in the form of the personal spending and income reports (both expected to increase +0.3% in June), while the PCE core and deflator readings for June will also be released. July vehicle sales data follows this in the evening.

In Asia on Wednesday we’ll get the Caixin services and composite data for July in China. The European session will then see the remainder of those July PMI’s (services and composites) along with Euro area retail sales data. In the US the ADP employment change print will be important to watch in light of Friday’s employment report. The ISM services reading will also be released, along with the rest of the PMI’s.

With a lack of data on Thursday morning in either Asia or Europe, it’s all eyes on the BoE at midday where a 25bps cut is expected. The inflation report will also be released. In the US session we’ll get initial jobless claims, factory orders data and the last revisions to the June durable and capital goods orders data.

Closing the week on Friday in Europe will be Germany factory orders and UK house price data. In the US it’s all about the July employment report where payrolls expectations are for a 175k print. The June trade balance reading is also due along with the June consumer credit data.

* * *

BofA previews the week’s key events:

BoE: we expect a 25bp cut and £50bn QE

Our base case for next week’s Bank of England meeting is a 25bp cut to Bank rate, £50bn QE and some broader credit easing measures. With BoE inaction in July disappointing expectations we see the risks skewed to an under-delivery next week, although the capitulation of MPC member Martin Weale this week gave us more confidence in our call. On QE we expect it to include some private sector asset purchases, but with our credit analysts estimating a maximum of £2bn per month available to the BoE, we see at least £40bn of this being gilt-based. With the scale of the shock currently hitting the UK economy post-Brexit unknown, our economists see the best course of action as acting early and ‘over-egging’ stimulus, given the downside risks faced when monetary policy is close to the zero lower bound.

NFPs to adjust downwards

Nonfarm payroll growth likely slowed to a still healthy 165,000 for the month of July, down from the robust 287,000 clip in June. Our forecast would leave the 3-mo moving average at 154,000, indicating progress in the labor market, albeit at a slower pace. An employment report that indicates job growth above the 150,000 3-month moving average and expansion of the labor force participation rate should sustain the Fed’s narrative that continued economic improvements will warrant a further interest rate increase later this year.

RBA could cut 25bp

The Reserve Bank of Australia Board meets on Tuesday 2nd August. We expect a 25bp rate cut to 1.50%, not only to support inflation but also to improve future growth prospects in light of a weak labour market. We then expect the Bank to remain on hold for the rest of 2016, as it steps back to observe how the easing this year flows through to the data. Easing in August looks more likely in New Zealand, in light of recent developments there, which should underline a AU NZ spread compression.

* * *

Here is just a summary of the key events in the US in the coming week, courtesy of Goldman Sach:

Monday, August 1

  • 09:45 AM Markit Flash US Manufacturing PMI, July final (consensus 52.9, last 52.9)
  • 10:00 AM ISM manufacturing, July (GS 53.0, consensus 53.0, last 53.2);  Manufacturing surveys were mixed in July, and we expect ISM manufacturing to stay roughly flat. The Philly Fed survey weakened (-7.6pt to -2.9) more than expected, but most components looked stronger on net. The Kansas City Fed (-8.0pt to -6.0) and Empire State (-5.5pt to +0.6) surveys saw declines in the headline number and underlying components as well. The Richmond Fed survey rebounded in July (+20.0pt to +10.0), and the Dallas Fed survey strengthened for the second month (+17.0pt to -1.3), but remained in slightly negative territory. On net, our manufacturing survey tracker—which is scaled to the ISM index—edged up to 52.4.
  • 10:00 AM Construction spending, June (GS +0.4%, consensus +0.5%, last -0.8%); We expect construction spending to improve in June following a modest decline in the May report.
  • 2:00 PM Senior Loan Officer Opinion Survey

Tuesday, August 2

  • 06:15 AM Dallas Fed President Kaplan (FOMC non-voter) speaks; Federal Reserve Bank of Dallas President Robert Kaplan will speak on economic conditions and the implications for monetary policy at an Official Monetary and Financial Institutions Forum City Lecture in Beijing, China. Media Q&A is expected. Last Friday, President Kaplan suggested that the soft Q2 GDP report was not surprising given sluggish global demand. At the same time, he added that the Fed should not overreact to just one data point and must “look for opportunities to hike, but can’t force it.”
  • 8:30 AM Personal income, June (GS +0.3%, consensus +0.3%, last +0.2%); Personal spending, June (GS +0.4%, consensus +0.3%, last +0.4%); PCE price index, June (GS +0.15%, consensus +0.20%, last +0.20%); Core PCE price index, June (GS +0.12%, consensus +0.10%, last +0.20%); PCE price index (yoy), June (GS +0.9%, consensus +0.9%, last +0.9%); Core PCE price index (yoy), June (GS +1.6%, consensus +1.6%, last +1.6%):  We expect personal income to rise by 0.3% and personal spending to rise by 0.4% in June, consistent with the solid retail sales report. We also expect core PCE prices to edge up by 0.12% in June following a 0.17% gain in the June core CPI. The core PCE price index likely rose by 1.6% over the past year.
  • 4:00 PM Total vehicle sales, July (GS 17.8mn, consensus 17.1mn, last 16.6mn): Domestic vehicle sales, July (GS 14.3mn, consensus 13.0mn, last 12.8mn); Our auto analysts expect total vehicle sales to move up in July.

Wednesday, August 3

  • 09:45 AM Markit flash US services PMI, July final (consensus 51.0, last 50.9)
  • 10:00 AM ISM non-manufacturing, July (GS 56.5, consensus 56.0, last 56.5): Service sector surveys mostly improved in July, and we expect ISM non-manufacturing to stay flat at 56.5. The Philly Fed survey strengthened further (+18.0pt to +28.8), the Richmond Fed survey picked up as well (+6.0pt to +8.0), and the New York Fed survey—still a relatively new and not seasonally adjusted series—also increased (+2.3pt to +5.4). The Markit Services PMI declined a bit in June (-0.5pt to 50.9). Last month, the ISM non-manufacturing index rose +3.6pt to 56.5.

Thursday, August 4

  • 06:15 AM Dallas Fed President Kaplan (FOMC non-voter) speaks: Federal Reserve Bank of Dallas President Robert Kaplan will give a second speech on economic conditions and implications for monetary policy at an Official Monetary and Financial Institutions Forum City Lecture in Shanghai, China. Media Q&A is expected.
  • 08:15 AM ADP employment report, July (GS +180k, consensus +170k, last +172k): Based on our understanding of how ADP filters its own proprietary data with other publicly available information, we expect a 180k gain in ADP payroll employment in July.
  • 08:30 AM Initial jobless claims, week ended July 30 (GS 250k, consensus 264k, last 266k): Continuing jobless claims, week ended July 23 (consensus 2,130k, last 2,139k):  We expect initial jobless claims to edge down to 250k from 266k last week, near post-crisis lows. We continue to read the trend in claims as consistent with low layoff activity nationally.
  • 10:00 AM Factory orders, June (GS -1.6%, consensus -1.9%, last -1.0%): Factory orders likely declined further in June, following a weaker-than-expected durable goods report.

Friday, August 5

  • 8:30 AM Nonfarm payroll employment, July (GS +190k, consensus +180k, last +287k); Private payroll employment, July (GS +180k, consensus +170k, last +265k); Average hourly earnings (mom), July (GS +0.3%, consensus +0.2%, last +0.1%); Average hourly earnings (yoy), July (GS +2.5%, consensus +2.6%, last +2.6%); Unemployment rate, July (GS 4.9%, consensus 4.8%, last 4.9 %): Employment data have been mostly positive this month. Initial jobless claims have trended down, including in states not affected by auto plant shutdowns, and the Consumer Confidence survey’s labor differential measure improved. We anticipate a June payroll gain of 190k, following a 287k increase in June. While there were no strikes during the July survey period, we see a slightly lower trend pace of payroll growth compared to last year. We expect the unemployment rate to stay steady at 4.8% and average hourly earnings to rise at a pace of +0.3%.
  • 08:30 AM Trade balance, June (GS -$41.8bn, consensus -$42.8bn, last -$41.4bn): We expect the trade balance to be a touch wider in June. The Census Bureau’s inaugural Advance Economic Indicators report showed a slightly wider trade deficit, primarily due to a boost in industrial supplies imports, a volatile component. Inventories showed less inventory accumulation than anticipated. Overall, we expect the total trade deficit to be -$41.8bn.
  • 3:00 PM Consumer credit, June (consensus $16.0bn, last $18.6bn)

* * *

The same but in table format.

And finally, a recap of all the main global events in the next 5 days.

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The Best And Worst Performing Assets In July And YTD

After a volatile end to June in the aftermath of the Brexit vote, markets in July bounced back from the initial post-Brexit fallout. As DB notes, the majority of equity markets in particular are either back to or above pre-Brexit levels with the sole exception to that still being European banks, where Italian bank and general profitability concerns have been at the forefront.

While the STOXX Banks index gained by +6% this month and was one of the top five performers, it still remains in negative territory since Brexit (-12%). Much of the general rebound elsewhere can be attributed to the renewed hopes of central bank policy remaining accommodative. In the case of the BoE and ECB, expectations are high for further easing despite remaining on the sidelines in July and instead waiting for the post-Brexit data. Despite what was a relatively disappointing BoJ meeting on Friday, markets are waiting for fiscal stimulus.

As we look at our winners and losers for the month, the resilience of risk assets is made even more impressive given the 14% slide for WTI which in the process has seen it fall into a bear market. In fact commodities occupy the bottom five places in our sample with Brent (-13%), Corn (-7%) and Wheat (-5%) joining the broader commodity market index (-6%). At the other end, equity markets dominate the notable leaders this month. In local currency terms the Bovespa (+11%) sits atop, while the DAX (+7%) and Nikkei (+6%) follow closely. European equity markets were up 4-7% with banks at the upper end of that range after a decent last day of the month ahead of the stress tests. The S&P 500 was also up 4% while the FTSE 100 rose 3%. Silver (+9.5%) gets an honorable mention for a second consecutive strong month of gains and holding its spot as the best performing asset this year (+46% YTD). Meanwhile returns for credit markets were positive once again, with European credit marginally outperforming US credit in July. High beta EUR and US HY and fin subs were up 2-3% while IG corps, IG non-fins and fin senior sat in a 1-2% return range. Sterling credit however was a particularly strong performer this month with IG non-fins and fin subs posting returns of 6% while HY gained by +3.5%. A Gilt rally, bargain credit hunting post the Brexit sell off and hopes of BoE corporate bond buying helped. Sovereign bond market returns were a lot more subdued. Treasuries and Bunds were flat on the month, Spanish and Italian sovereigns rose about 1% while Gilts were 2% higher. Weak US GDP numbers on Friday also erased earlier monthly gains in the USD with the dollar index ending the month down -0.6%. Overall though the tone was overwhelmingly positive in markets though. In our sample of 42 assets, 36 finished with a positive total returns in local currency terms as well as USD hedged terms.

On a YTD basis, while various equity markets continue to struggle with outperforming the Y-axis, and European banks remain the worst performers in both local and USD-terms, the surprise is the strong performance of both gold and silver, ranking #1 and #3 in local currency terms, and also among the top three asset classes in all 2016 when rebased to USD, with Brazil remaining the surprising outlier in top position despite an economy which continue to implode in a depressionary supernova, one which is sure to get even worse following the giant money-hole that is the Summer Olympics.

As DB’s Jim Reid concludes, “Augusts have a habit of throwing up some nasty surprises while markets are on holidays. Let’s see if this year is more peaceful.”

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For All The F**king Uncertainty, Why Is The Stock Market At All Time Highs?

Submitted by Michael Shedlock via MishTalk.com,

Every day day of the another economist yaps about uncertainty.

 

There’s uncertainty over the US election, over Brexit, over interest rates, over the strength of the US economy, and over over global trade.

Will the Bank of China devalue the yuan? Will the Bank of Japan aggressively target deflation? What will ECB president Mario Draghi do when he fails to hit his 2% inflation target?

Will Austria vote for an anti-immigration president? Will Italy’s prime minister Matteo Renzi get the  constitutional reforms for Italy that he seeks? If not, will he resign as promised? What about the rise of euroskeptics in France and Italy?

A Financial Times survey says White House Battle Set to Chill US Economy.

“There is more uncertainty around US economic policy now than there has been for quite a while,” said Lewis Alexander, economist with Nomura. “You look at what Donald Trump proposes in particular and it raises all sorts of questions, the threats around trade, the threat of the costs to move jobs overseas. It raises the degree of uncertainty . . . around investment.”

Market Hates Uncertainty

I did a quick search for the phrase “the market hates uncertainty”. The results are amusing.

Protect Against Uncertainty

Market Hates Uncertainty

S&P 500 vs. Rising Uncertainty

S&P Uncertainty

Uncertainty Ass Backwards?

Looking at the above chart, one might wonder if the phrase “the market hates uncertainty” is ass backwards.

It’s not quite that simple either.

  • Perhaps the market is reacting to the near certainty that central banks want to keep the party going.
  • Perhaps people were so certain that Brexit would kill the market that it rallied after the initial shock subsided.
  • Perhaps there are still more greater fools willing to be sucked into the notion that central banks have everything under control.
  • Perhaps Trump will not be as bad for the economy as everyone expects.

There are a huge number of possibilities in play. All of them are uncertain.

I Am Certain of Three Things

  1. Uncertainty will continue.
  2. The more certain economists and market participants are about things, the more likely they are to be wrong.
  3. I don’t know, and no one else does either.

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Frontrunning: August 1

  • Global stocks hit highest in a year but banks take shine off Europe (Reuters)
  • Fed’s Dudley Warns It Is Premature to Rule Out an Interest-Rate Increase This Year (WSJ)
  • Fed’s Kaplan Says September ‘On the Table’ If Data Support (BBG)
  • Europe’s stress tests fail to ease investors’ bank sector worries (Reuters)
  • Trump’s Attacks on Khan Family Roil Race But May Not Alter It (BBG)
  • Father of Slain Soldier Volleys Back at Donald Trump (WSJ)
  • Clinton says Russia behind DNC hacking, draws line to Trump (Reuters)
  • Russia says accusations it was behind DNC email hack are insulting (Reuters)
  • Islamic State calls on members to carry out jihad in Russia (Reuters)
  • Celgene Accused of Using Charities in ‘Scheme to Gain Billions’ (BBG)
  • Hunt for Returns Reaches Pakistan (WSJ)
  • A $400 Billion Influx Squeezes U.S. Bond Market’s Safest Asset (BBG)
  • Abe’s Japan Spending Package Likely to Come Up Light  (WSJ)
  • More Companies Are Choosing a Sale Over an IPO (WSJ)
  • The Fragile U.S. Economy Now Facing a Slowdown in Building Boom (BBG)
  • China stakes a strong claim in the Greek electricity landscape (Kathimerini)
  • Goldman Bond Deals With 1MDB Under Singapore Central Bank Review (BBG)
  • U.S. judge to weigh halt to North Carolina transgender bathroom law (Reuters)
  • Britain’s scientists are freaking out over Brexit (WaPo)
  • Turkey captures 11 involved in bid to seize Erdogan during coup attempt (Reuters)

 

Overnight Media Digest

WSJ

– Federal Reserve Bank of New York President William Dudley argued for continued caution over the path of U.S. interest rates, given uncertainty over the global outlook, but warned that traders who have been ruling out an interest-rate increase later this year are growing too complacent. http://on.wsj.com/2ar4Y5E

– China’s homegrown ride-hailing champion, Didi Chuxing Technology Co, has reached a deal to acquire Uber Technologies Inc’s China operations, people familiar with the deal said, marking an end to their bruising competition for passengers. http://on.wsj.com/2ar5O2o

– Pope Francis said the inspiration for terrorism wasn’t Islam but a world economy that worshiped the “god of money” and drove the disenfranchised to violence. “Terrorism grows when there is no other option, and as long as the world economy has at its center the god of money and not the person, “the pope told reporters late Sunday as he returned to the Vatican from a five-day visit in Poland. “This is fundamental terrorism, against all humanity.” http://on.wsj.com/2akIL7H

– A hot-air balloon hit at least one electrical transmission line before all 16 people on board died in a fiery crash in Central Texas on Saturday, prompting accident experts to delve into weather conditions, pilot actions and equipment issues, according to the first official release of information by federal investigators. At a Sunday press conference in the middle of a rural pasture bisected by power lines and towers about 30 miles south of Austin, Robert Sumwalt, the on-scene member of the National Transportation Safety Board, said preliminary indications pointed to some type of collision between a portion of the balloon and part of that electrical grid. http://on.wsj.com/2aVmihm

 

FT

* High-profile British Treasury Minister Jim O’Neill, a former Goldman Sachs chief economist, could quit his post over Prime Minister Theresa May’s new approach to Chinese investment, the Financial Times reported, citing a friend of O’Neill.

* Ride-hailing service Uber will invest $500 million in an ambitious global mapping project to wean itself off dependence on Google Maps and pave the way for driverless cars, the Financial Times reported on Sunday.

* U.S. bank Goldman Sachs was asked to provide details of any paid work it has done for Tina Green, the wife of retail tycoon Philip Green, as British Members of Parliament continue to evaluate the banks involvement in Green’s decision to sell BHS for 1 pound.

 

NYT

– Didi Chuxing, the largest ride-hailing service in China, plans to buy Uber China, the Chinese arm of the American ride-sharing giant, in a deal that values the new company at about $35 billion. http://nyti.ms/2aBWKH9

– HBO’s new president of programming Casey Bloys said that “Game of Thrones” would conclude after its eighth season, and he acknowledged that next season’s summer premiere date would mean the show would not be eligible for the 2017 Emmys. http://nyti.ms/2aBXZq3

– A consortium of Chinese investors led by the game company Shanghai Giant Network Technology said it would pay $4.4 billion to Caesars Interactive Entertainment for Playtika, its social and mobile games unit. http://nyti.ms/2aBYgck

 

Britain

The Times

British taxpayers could bear the burden of 2.5 billion pounds ($3.30 billion) even if the Hinkley Point bill is dropped. EDF, the French energy giant, has already invested 2.5 billion pounds in developing the site for the nuclear plant. (http://bit.ly/2aUwzdM)

A three-member International Olympic Committee (IOC) panel will have the final say on which Russian athletes can compete at the Rio Games, reviewing all decisions taken by the international federations. The IOC earlier this month set criteria for Russians to be eligible to compete in Rio after revelations of state-backed doping in the country. (http://bit.ly/2aUx5ID)

The Guardian

The Bank of England is almost certain to cut benchmark borrowing costs when it sets policy on Aug. 4. This kind of quantitative easing could be used by policymakers to give an extra boost to the economy after the Brexit vote. (http://bit.ly/2aUxpaj)

Bernard Hogan-Howe, the Metropolitan Police commissioner, said Britain is well-equipped to prevent terror attacks, but it remained a question of ‘when, not if’ there would be an attack. His comment came in light of the recent Islamic State attacks on European countries. (http://bit.ly/2aUyiQt)

The Telegraph

A large number of workers could be denied flexible access to their final salary pension funds if a bill to allow companies to ditch their pension promises is passed by the government.(http://bit.ly/2aUyPSl)

Sky News

British Prime Minister Theresa May’s first important order of business was meeting the bosses of four companies subject to inquiry by the Serious Fraud Office. She met with the chiefs of Barclays, GlaxoSmithKline, Rolls Royce and Tesco – each of which is being investigated for alleged wrongdoing. (http://bit.ly/2aUyQpu)

The deal worth 79 billion pounds ($104.32 billion) between SABMiller and Anheuser-Busch InBev remains to be voted on by shareholders of SABMiller. The board of SABMiller intends to persuade shareholders to approve the terms of the deal. (http://bit.ly/2aUzNxM)

The Independent

Former British Prime Minister David Cameron has reportedly offered knighthoods and other such titles to prominent campaigners from the Remain camp. Four cabinet members – Michael Fallon, David Lidington, Philip Hammond and Patrick McLoughlin – could be awarded knighthoods as well. (http://ind.pn/2aUCEXK)

The recent surge in anti-immigration hate crimes in Britain after the Brexit vote has occurred mostly in areas that strongly voted to leave the European Union. Statistics show hate crimes are on the rise in Eurosceptic areas of Britain. (http://ind.pn/2aUDaVr)

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Uber Sells Its Money Losing Chinese Operation To Didi Chuxing

Concluding a vicious, money-losing ridesharing price war in China, overnight Didi Chuxing, the dominant ride-hailing service in China, announced it would acquire Uber’s operations in the country, ending a battle that cost the two companies billions as they competed for customers and drivers.

As reported early in the overnight session, Didi said it would Uber’s brand, business and data in the country. Uber will receive 5.89% of the combined company with preferred equity interest equal to 17.7 percent of the economic benefits. According to the Didi statement, Uber China’s other shareholders, including search giant Baidu Inc., will get 2.3% of the economic interest in Didi Chuxing. Didi founder Cheng Wei and Uber Chief Executive Officer Travis Kalanick will join each other’s boards.

After the merger, Uber will become the largest shareholder in Didi. The Chinese ride-hailing company will also invest $1 billion in Uber as part of the deal, a person familiar with the matter said.

As Bloomberg reports, “the truce brings to an end a bruising battle between the two companies for leadership in China’s fast-growing ride-hailing market. Uber has been spending at least $1 billion a year to gain ground in China, while Didi offered its own subsidies to drivers and riders to build its business.”

“Didi Chuxing and Uber have learned a great deal from each other over the past two years,” said Cheng, who is also CEO, in the statement. “This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level.”

Bloomberg adds that Didi’s valuation after the deal will be $35 billion.

The deal is the latest consolidation in China’s critical ridesharing industry. Last year, China’s ride-hailing leaders Didi and Kuaidi joined forces, creating a homegrown juggernaut to fight off Uber. The merged company Didi Chuxing brought together backers Alibaba Group and Tencent Holdings, the country’s most valuable internet businesses. In 2016, Apple also joined the ownership structure with a $1 billion investment in Didi, in a round that valued the company at about $28 billion.

As the WSJ summarizes, Didi has been a formidable fundraising machine, refusing to back down as Uber poured billions in subsidies into China. Didi raised $7.3 billion in its latest fundraising round in June, which included a $1 billion investment from deep-pocketed Apple. For Didi, Uber’s global stretch could help the Chinese firm grow its business overseas. When Uber announced a partnership with Ant Financial’s Alipay mobile payment system earlier this year, it propelled Alipay into 69 countries; previously it was only in a handful of markets.

The Chinese government passed a new rule last week that legalized ride-hailing services, paving the way for further expansion of these businesses, and a move that many expected would be beneficial for Uber. However, realizing that growth upside in China is futile as a result of the government’s eagerness to promote home-grown business, Uber’s investors had been clamoring for the company to sell off its China assets and focus on more promising opportunities.

“China is such a tough market, in terms of regulation, competition and culture; they faced challenges on so many fronts,” said Li Yujie, an analyst at RHB Research Institute Sdn in Hong Kong. “Cooperating with rather than fighting Didi might not be such a bad idea.”

Uber has lost more than $2 billion in the country. Meanwhile, Uber was profitable in developed markets in the first half of 2015, the people said.

“As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart,” Kalanick wrote in a blog post obtained by Bloomberg before publication. “I have no doubt that Uber China and Didi Chuxing will be stronger together.”

As a result of the deal, Uber’s cash burn will drop substantially, although it will largely cede the potential growth associated with the largest global ridesharing market.

Still, while Uber will walk away from operations in China, it is taking a significant stake in the largest player there. By shedding its massive losses in China, the move could help Uber clear the path for an eventual initial public offering.

“Uber and Didi Chuxing are investing billions of dollars in China, and both companies have yet to turn a profit there,” Kalanick wrote in the blog post. “Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.”

Bloomberg adds that the deal is subject to government approval. While the combination of the top two players in a market would often raise regulatory scrutiny, officials will have to determine the range of competition. “The ministry of commerce has to define the size of the market and see if the car-hailing business Didi and Uber are offering can be replaced by similar services,” said Deng Zhisong, senior partner at Beijing-based law firm Dentons. “If you count taxi services and public transportation, the car-hailing sector will not have a market share that significant.”

Meanwhile, as reported last week, ridesharing in China is becoming a critical interim industry as it has soaked up millions of recently laid off lower skilled workers.

Recall that according to South China Morning Post, Didi Chuxing is claiming to have given more than a million jobs to former heavy industry workers across China, according to new research from the firm. Its study shows there are now 3.89 million full-time and part-time drivers from 17 heavy-industry provinces including Heilongjiang, Shanxi and Sichuan who work for the firm’s private car and chauffeur services.

 

Out of the drivers it employs who used to work in heavy industry, 530,000 came from those that are undergoing massive restructure, including the coal and steel sectors, the report said. It claims the number represents 60.2 per cent of the Chinese government’s one-year re-employment target for heavy industry workers who have been made redundant, and 29.4 per cent of the five-year target.

“As China undergoes sweeping economic restructuring, Didi is in a unique position to help drivers find flexible work opportunities and better livelihoods with the power of technology as we work together to create more sustainable cities,” he said.

Having become a systemtically important industry, it was clear why the Chinese government was eager to maintain domestic dominance over the increasingly more important industry, which has now  become critical in preserving social stability by providing part-time jobs to all those who have been recently fired. 

That said, with a main competitor out of the way, and the deflationary “race to the bottom” seemingly over, one wonders if prices won’t go up as a result, and lead to lower demand for a service that is now so important to keeping millions of unskilled workers busy.

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Why Are Race Relations Worsening? New at Reason

Black Lives MatterThe election of Barack Obama was a unique moment in the long and complicated history of race relations in America. A huge symbolic barrier had collapsed. Never before was there so much optimism about escaping the grim clutches of the past. We had made a new start that would lead to new heights.

Hope was infectious. Most whites voted against Obama, but on the eve of his inauguration, 55 percent of whites, as well as 75 percent of blacks, thought his presidency would improve race relations. The profound symbolism of a black man in the nation’s highest office could hardly be overstated.

That was then. This is now: Fox News star Bill O’Reilly, whose show has had the highest ratings in cable news for over a decade, responded to Michelle Obama’s speech noting that the White House was built with slave labor by saying those slaves were “well-fed and had decent lodgings.” When that comment drew criticism, O’Reilly accused critics of “lies and deception and propaganda.” Steve Chapman laments the situation.

View this article.

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Tesla, SolarCity Merge In $2.6 Billion Transaction

Concluding a transaction that surprised the world when it was announced one month ago, and which we hope the regulators are poring over as a result of a myriad of “related party transactions” and shared top shareholders…

… moments ago SolarCity (whose stock is currently halted) announced that Tesla and SolarCity would combine in all-stock deal; in which SCTY stockholders will receive 0.110 Tesla common shares per SCTY share, valuing SCTY common stock at $25.37 per share.

SCTY announced that “after comprehensive due diligence in consultation with independent financial and legal advisors, the independent members of the Tesla and SolarCity boards of directors approved this transaction”, and added that it that expects to achieve cost synergies of $150 million in the first full year after closing.

SolarCity will now have a 45-day “go-shop” period, which runs through September 14, 2016. “This means that SolarCity is allowed to solicit alternative proposals during that time.” It is assured that no overbid will emerge.

From the press release on SCTY’s blog:

Tesla and SolarCity to Combine

Just over a month ago, Tesla made a proposal to purchase SolarCity and today we are announcing that the two companies have reached an agreement to combine, creating the world’s only vertically integrated sustainable energy company.

Solar and storage are at their best when they’re combined. As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.

Now is the right time to bring our two companies together: Tesla is getting ready to scale our Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions. By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.

We expect to achieve cost synergies of $150 million in the first full year after closing. We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs. We will also be able to leverage Tesla’s 190-store retail network and international presence to extend our combined reach.
Here are some key terms of today’s announcement: this is an all-stock transaction with an equity value of $2.6 billion based on the 5-day volume-weighted average price of Tesla shares as of July 29, 2016. Under the agreement, SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share, valuing SolarCity common stock at $25.37 per share based on the 5-day volume weighted average price of Tesla shares as of July 29, 2016. 

After comprehensive due diligence in consultation with independent financial and legal advisors, the independent members of the Tesla and SolarCity boards of directors approved this transaction. Tesla’s financial advisor was Evercore, and Wachtell, Lipton, Rosen & Katz was its legal advisor. The financial advisor to the special committee of SolarCity’s board of directors was Lazard and its legal advisor was Skadden, Arps, Slate, Meagher & Flom.

As part of the agreement, SolarCity has a 45-day period known as a “go-shop”, which runs through September 14, 2016. This means that SolarCity is allowed to solicit alternative proposals during that time. Each company today filed a Form 8-K with the SEC that provides additional details regarding the transaction.

While today’s news is a big step, it isn’t the finish line – we expect the transaction to close in the fourth quarter of 2016. Before then, the deal must be approved by a majority of the disinterested shareholders of both Tesla and SolarCity voting at each shareholder meeting. We also need to obtain regulatory approval and meet other closing conditions.

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Austrian Mint sells 41 tonnes of gold coins and gold bars in 2015

Earlier this year, the director of marketing and sales at the Austrian Mint confirmed to Bloomberg in an interview that the Mint’s combined gold bar and gold coin sales in 2015 had totalled 1.32 million troy ounces, a 45% increase on 2014, while the Mint’s silver sales in 2015 had reached 7.3 million ounces, a figure 58% higher than in 2014.

Since Münze Österreich, or the Austrian Mint in English, only publishes its annual report in July of each year, we had to wait a few months to see the granular details behind these sales numbers. Now that the Austrian Mint’s 2015 Annual Report has been published, the detailed sales figures are as follows.

Gold Philharmonics – 23.5 tonnes

In 2015, the Austrian Mint sold 756,200 troy ounces (23.52 tonnes) of Vienna Philharmonic gold coins, of which 647,100 troy ounces (20.18 tonnes) were in the form of its flagship 1 oz Vienna Philharmonics, with the remainder comprising ½ oz, ¼ oz, 1/10 oz and 1/25 oz gold Philharmonic coins, as well as a handful of the Mint’s very large 20 oz gold Philharmonics. Gold Philharmonic sales in 2015 were 56% higher than comparable sales of 483,700 ozs in 2014, and were also higher than 2013’s figure of 652,600 ozs.

Sales of the Vienna Mint's flagship 1 oz gold Philharmonic accounted for the majority of gold coin sales

Sales of the Vienna Mint’s flagship 1 oz gold Philharmonic accounted for the lion’s share of gold coin sales

Philharmonic gold coin sales in 2015 were the third best year on record, just slightly lower than 2008’s total sales of 795,000 ozs, but still well short of 2009’s bumper sales total of 1,036,000 ozs, when that year’s financial crisis was in full flight. Remeber that gold Vienna Philharmonic coins are legal tender coins in Austria, and so can be carried throughout the Eurozone as legal tender coins. The 1 oz gold Philharmonic has a face value of €100. Since they are legal tender coins, Philharmonics can also be carried out through customs in Eurozone countries based on there face value, i.e. up to the maximum Euro limit of carrying cash through customs, in much the same way that US citizens can carry gold American Eagles and Buffalos through US customs based on their US Dollar face values. 

Source: http://ift.tt/1pNpyKx

Gold Bars – 16.3 tonnes

Turning to gold bars, the Mint sold 524,722 troy ounces (16.32 tonnes) of its branded gold bars in 2015, over half of which comprised sales of 1 kg, 500 gram and 250 gram gold bars. The 2015 gold bar sales were nearly 28% higher than 2014 gold bar sales of 410,300 ozs, but slightly less than 2013’s comparable sales of  711,200 ozs.

The Mint’s larger bars were the most popular in terms of total gold output

In addition to gold Philharmonic coins and gold bars, the Austrian Mint also produces a series of historic re-strikes of original Austrian circulation gold coins in the form of gold ducats, gold guilders and gold crowns. In 2015, sales of these gold re-strike coins, mostly ducats, accounted for 37,700 troy ounces of gold (1.17 tonnes), which was a 128% increase on the previous year’s sales of 16,500 ozs.

Overall, in 2015, the Austrian Mint sold gold coins (Philharmonics and historic coins) and gold bars containing 1,318,700 ozs (41 tonnes) of gold. In 2015, the gold Vienna Philharmonic’s largest markets were Europe followed by Japan and North America, and notably the gold Philharmonic was the best-selling major gold bullion coin in both the European and the Japanese markets.

Source: http://ift.tt/1pNpyKx

Looking at the long-term chart above, you can see that total gold sales (by volume) at the Austrian Mint during 2015 were noticeably higher than in 2014 and approached the gold sales figures of 2013, however they were still below the multi-year high sales figures from 2008, 2009 and 2011. Notice also that for the last 8 years there has been a trend of the Austrian Mint’s gold sales following a high one year, lower the next year pattern, possibly due to risk on / risk off sentiment among gold investors depending on how the general financial markets were performing.

Silver Philharmonics – Strong North American sales

As the Austrian Mint does not fabricate silver bars, the Mint’s silver bullion sales are exclusively from the silver coins it produces, specifically the 1 ounce silver Vienna Philharmonic coin. In 2015, the Mint sold 7.3 million silver bullion coins containing 227 tonnes of silver. The largest markets for the Mint’s silver coin sales in 2015 were North America, followed by Europe. Silver sales in 2015 were also notable in that it was the first time that the Mint’s silver coins sales in the North American market surpassed those in Europe. Looking at a long-term chart of Austrian Mint silver sales, you can see that 2015 was a year of recovery following relatively low sales in 2014, which was partially due to an increase in VAT on silver sales in Germany in 2014.

Source: http://ift.tt/2aovNUu

The Mint’s silver coin range also includes historic re-strikes of a Maria Theresa Taler coin in uncirculated and proof editions. These coins contain 23.39 grams of pure silver (approximately 0.2 tonnes). These coin sales are classified separately from silver bullion coin sales and their sales are quite minimal. In 2015, sales of these Taler coins reached 9,777 pieces, slightly down on 2014’s sales of 11,470 pieces.

Gold Bullion Sales Drove Total Revenues

In terms of Austrian Mint revenues, gold bullion coins (gold Philharmonics) generated revenues of  €788.9 million in 2015, up 70% on 2014’s €464.2 million. Gold Philharmonics were also 48.5% of total Mint revenues in 2015. Gold bar revenues of €547.3 million were 40% higher than in 2014, and accounted for another 34% of all Mint revenues. Silver coin sales in 2015 reached €111.3 million, 58% higher than in 2014. Adding revenues from gold coin re-strikes of €40.4 million, the total revenues from gold and silver coin products reached €1.37 billion, which was 84.7% of total Mint revenues for 2015.

Gold coin and gold bar revenues account for over 80% of  the Mint’s total revenues

In terms of revenues, annual gold sales at the Austrian Mint are far higher than its silver sales. In volume terms, the Austrian Mint also produces more gold products than its counterparts but far less silver products than its counterparts. So the Austrian Mint could be said to be a gold specialist.

For example, in 2015, and just looking at bullion coin sales, the US Mint sold gold bullion coins (American Eagles and American Buffalos) containing 31.8 tonnes of gold, but silver bullion coins (predominantly American Eagles) containing 1,495 tonnes of silver. Likewise, in 2015, the Royal Canadian Mint sold gold bullion coins (gold Maple Leafs) containing 29.6 tonnes of gold, and silver bullion coins (silver Maple Leafs) containing 1067 tonnes of silver.

Based on 2015 volumes sold of 227 tonnes of silver coins and 24.69 tonnes of gold coins, the Austrian Mint had a silver coin sales to gold coin sales ratio of only 9.19, whereas comparable ratios for the US Mint and Royal Canadian Mint were 47 and 36, respectively.

Austria hosts a strong domestic gold market 

Non-bullion revenue at the Austrian Mint is generated by activities such as producing Euro circulation coins, and producing semi-finished products and medals. Non-bullion revenues accounted for €248 million or approximately 15% of total Mint revenues during 2015. Interestingly though, although the Mint does not report the geographic origin of its revenues on a segmented basis, it does report the share of revenue derived in Austria vs derived outside Austria. For 2015, €1.258 billion in revenue was generated in Austria vs €360.6 million internationally, meaning that international markets contributed only 22.3% of Mint revenues.

Therefore, the domestic Austrian market is still the Mint’s primary market in terms of bullion sales. In one way this is not surprising because the Austrian population has a very strong appetite for gold coin and gold bar products, especially gold products from the Austrian Mint in Vienna. The Mint’s gold coins and bars are sold widely throughout Austria in banks such as Bank Austria, the Raiffeisen banks, the Steiermärkische Sparkasse savings banks and through the Erste Bank und Sparkassen group, as well as through the retail branches of gold bullion wholesalers such as Schoeller Muenzhande, which is a fully owned subsidiary of the Austrian Mint. See BullionStar Gold University’s profile of the Austrian Gold Market for more details on the vast network of Austrian bank and wholesalers that sell physical gold coins and bars.

For further information on the sales patterns of the world’s largest precious metals mints, please see BullionStar blog “Bullion coin sales boost revenues of world’s largest Mints“.

 

 

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