Month: October 2016

European, Asian stocks fell while S&P futures rebounded as investors assessed a mixed batch of earnings reports while the dollar strengthened to 9 month highs versus most of peers on rising confidence that the Fed will raise rates this year, pushing global bond yields higher.

Top overnight news included the surprising profit by Deutsche Bank as well as the 35% jump in Barclays earnings on rising bond trading revenue; in macro the biggest overnight event was the UK Q3 GDP report which rose 0.5% handily beating expectations of 0.3% rise in the first quarter of Brexit. Yields on Britain’s gilts jumped to the highest since the Brexit vote. 2Y gilts rose four basis points  to 0.31% in early trading and touched 0.33 percent, the highest since June 23. Germany’s 10-year bund yield climbed seven basis points to 0.15 percent, a fifth-straight increase, and Treasury 10-year note yields added three basis points to 1.82% as a December rate hike looking increasingly likely.

Norway’s krone surged after the central bank kept its benchmark interest rate unchanged for a fourth meeting. Crude oil traded below $50 a barrel amid doubts that OPEC will implement its first output cuts in eight years, further pressured by rising oil. The Bloomberg Dollar Spot Index was 0.1 percent higher. Europe’s Stoxx 600 fell 0.3 percent after rising as much as 0.5 percent.

Markets are now pricing in a 74-percent chance that the U.S. Federal Reserve will raise interest rates at its December meeting following a series of hawkish comments from Fed policymakers. Bets that the Fed will hike rates have driven the dollar to nine-month highs against a basket of currencies this week and have supported U.S. 10-year Treasury yields.

The “steepening of the US yield curve works as a magnet for capital coming at this point in particular out of low yielding environments such as Japan and Switzerland,” said analysts at Morgan Stanley, adding that these flows will continue to support the dollar.

An overnight slide in oil prices and underwhelming results from Apple soured the mood in Asian stocks where technology sectors led losses in Japan. Europe’s STOXX 600 was up 0.3 percent, however, though defensive sectors such as healthcare and utilities provided the biggest boost to the index, reflecting investor caution. Banks among the worst performing sectors in Europe this year, rose 0.5 percent helped by a surprise third-quarter profit at Deutsche Bank and forecast-beating numbers from Barclays which, like its U.S. rivals, enjoyed a significant pick-up in bond trading revenue.

Data from the European Central Bank showing lending growth to euro zone companies and households grew at a steady pace last month was also seen helping the sector.

On the earnings front it’s another busy day with 62 S&P 500 companies scheduled to release their latest quartiles including Ford Motor, ConocoPhillips and UPS either prior or at the open, and Alphabet after the close.

Bulletin Headline Summary from RanSquawk

• European equities have traded in a relatively choppy manner all morning before turning lower ahead of the US open with earnings continuing to dictate sentiment.
• A busy morning in FX, heightened by the usual month end flow — which is said to favour the USD — with the Riksbank and Norges bank rate decisions preceding the key Q3 UK GDP number which exceeded expectations
• Looking ahead, highlights US Durable Goods Orders, Weekly Jobs and Pending Home Sales

Market Snapshot

• S&P 500 futures down 0.2% to 2130
• Stoxx 600 down 0.3% to 341
• FTSE 100 down 0.2% to 6942
• DAX down 0.3% to 10674
• German 10Yr yield up 5bps to 0.14%
• Italian 10Yr yield up 5bps to 1.5%
• Spanish 10Yr yield up 5bps to 1.18%
• S&P GSCI Index up 0.4% to 372
• MSCI Asia Pacific down 0.6% to 139
• Nikkei 225 down 0.3% to 17336
• Hang Seng down 0.8% to 23132
• Shanghai Composite down 0.1% to 3112
• S&P/ASX 200 down 1.2% to 5296
• US 10-yr yield up 3bps to 1.82%
• Dollar Index down 0.03% to 98.6
• WTI Crude futures up 0.3% to $49.34
• Brent Futures up 0.6% to $50.27
• Gold spot up 0.2% to $1,269
• Silver spot up 0.1% to $17.65

Global Headline News

• Deutsche Bank Posts Surprise Profit on Trading Jump, Costs: Litigation, restructuring costs lower than analysts forecast
• Barclays Posts 35% Jump in Profit on Bond Trading Revenue: Fixed-income unit reports highest revenue in more than 2 years
• VW Struggles to Emerge From Crisis as Audi Takes Profit Hit: Audi return on sales will be ‘considerably below’ target range
• Treasury Selloff Is About to End If Consensus Forecast Is Right: Rate hike has been priced in, says Mitsubishi UFJ Kokusai
• Verizon, Danone Pushing Company Bond Sales to Six-Week High: Borrowers rush in as borrowing premiums close to 18 month low
• Tesla Posts Rare Quarterly Profit as Musk Readies for SolarCity: Earnings surprise aided by cost-cutting, zero- emission credits
• Viacom Said Close to Naming International Chief Bakish CEO: Choice fills leadership void as company weighs deal with CBS
• Apple Delays AirPods Wireless Headphones Announced With IPhone 7: Didn’t provide a technical reason for the delay or indication as to when the product will be shipped

Looking at regional markets, we start in Asia where it has been a subdued session as equities fell albeit mildly so with earnings continuing to dictate much of the price action. In light of the negative sentiment, safe-haven flows into the JPY hindered Japanese exporters and the Nikkei 225 (-0.3%). The 1st of the large banks in Australia provided their financial results with NAB (+1.8%) announcing that cash earnings rose 4%, while they maintained their dividend. However, this failed to lift the ASX 200 (-1.2%), as the index was dragged lower by energy names. The Shanghai Comp (-0.1%) and the Hang Seng (-0.8%) were also softer in the wake of industrial profits rising at a slower pace than the prior month. In credit markets, focus in JGB’s has been in the short end, with the 2-yr outperforming post the strong 2-yr auction, resulting in an unwind of the recent curve flattening. BoJ Governor Kuroda said the BoJ may not need to purchase JPY 80trl to keep zero goal in the future, although it doesn’t plan to lower JGB holdings at this stage. Kuroda further commented that the yield curve is moving inline with what was desired at prior policy meeting. Chinese Industrial Profits in September rose Y/Y 7.7% declining from a multi-year high of 19.5%.

Top Asian News

• China Steps Up Yuan Rhetoric as Currency Tumbles to Six-Year Low: Volatility gauge most muted in year as officials show support
• Nomura’s Second-Quarter Profit Climbs 31% on Trading Income: 2Q net income 61.2b yen vs est. 45b yen
• OCBC Quarterly Profit Beats Estimates on Wealth, Insurance: Non-interest income climbs 25%, interest income falls 6%
• Samsung Scion’s Reign Begins Amid Note 7 Smartphone Crisis: Lee gains corporate power with Samsung Electronics board seat
• Ousted Tata Chief Warns Group Faces $18 Billion in Writedowns: Cyrus Mistry defends his record in letter to Tata’s board

European equities have traded in a relatively choppy manner all morning before turning lower ahead of the US open with earnings continuing to dictate sentiment. Stocks were initially led higher by pre-market earnings, with the likes of Deutsche Bank (flat) and Barclays (+1.8%) initially impressing investors to trade in the green before investor sentiment turned less receptive to Deutsche Bank with many concerns seemingly persisting around the company and a broader move lower in stocks also hampering sentiment. Finally, the likes of T-Notes and Bunds followed the lead from Gilts, which took out last week’s lows in the wake of UK GDP. As such the German benchmark has fallen over 50 ticks, slipping back below 162.50 and taking out 163 in the process. T-Notes also printed fresh lows in the wake of the report, consolidating below the psychological 130 level with the 10yr yield hitting its highest level since Brexit.

Top European News

• Brexit Likely to Cost Banks Easy Access to EU, Trade Chief Says: Inflation is ‘inevitable’ side effect of depreciation, Mark Garnier says
• Telefonica to Cut Dividend After Failing to Sell 02 in U.K.: Carrier continues to battle with high debt load, deal flops
• ABB Tumbles After Quarterly Orders Decline More Than Forecast: Swiss company names ex-Nokia executive Ihamuotila as new CFO
• Swedish Central Bank Prepares for More Easing to Spark Inflation: stands prepared to extend bond purchases into next year and will keep interest rates lower for longer
• BBVA Third-Quarter Profit Beats Estimates on Asset Sale, Trading: makes 94 million-euro provision for restructuring costs
• U.K. Power Reserve No Cure for Biggest Price Surges Since 2008: French nuclear outages to influence market volatility

In FX, it has been a busy morning with the Riksbank and Norges bank rate decisions preceding the key Q3 UK GDP number which exceeded expectations coming in at +0.5% vs +0.3 consensus. The YoY rate was 2.3% vs 2.1% expected, but so much negativity over the expectations in the EU negotiations ahead, GBP is struggling for traction on the upside. In the Scandies, the SEK saw a minor bid after the Riksbank held rates unchanged, but maintaining the prospect of prolonged QE at the Dec meeting while keeping further rate cuts on the table, we saw a marked turnaround. This was exacerbated by the neutral stance at the Norges bank, keeping their outlook unchanged. NOK/SEK was the major move, pushing up into the upper 1.0800’s to erase some of the modest clawback seen in the SEK in recent sessions. Elsewhere, USD/JPY continues to probe higher levels, unrelenting in the push for 105.00. EUR/USD is struggling for upside traction also, but despite dovish comments from ECB sources late yesterday regarding QE extension, the lead spot rate is finding firm bids below 1.0900. AUD and CAD remain under the cosh in the meantime, with .7700+ sellers in the high(er) yielder looking past the headline rise in inflation yesterday and sending the pair down close to a cent so far. USD/CAD is still grappling with sellers ahead of 1.3400, but refuses to give up on a break higher as Oil prices have also slipped in recent sessions.

In Commodities, WTI and Brent futures both found support during European hours to move higher towards USD 49.50 and USD 50.50 respectively, albeit below yesterday’s post-DOE highs with the report overshadowed by persisting concerns over the likelihood of OPEC and non-OPEC producers being able to strike a meaningful production cut. Elsewhere, price action across the metals complex has been relatively continued with just a modest bid for gold alongside the recent downtick seen in equities

Looking at the day ahead, the big data in the US this afternoon is the preliminary durable and capital goods orders data for September, which could still have an impact on Q3 GDP forecasts this Friday. The market is expecting no change in headline durable goods order, while core capex orders are expected to decline very modestly. Other data this afternoon includes initial jobless claims, the Kansas City Fed’s manufacturing survey and pending home sales. Away from the data comments from the ECB’s Mersch are expected this evening. There’s also some central bank focus with policy decisions due from Norway and Sweden (no changes expected). On the earnings front it’s another busy day with 62 S&P 500 companies scheduled to release their latest quartiles including Ford Motor, ConocoPhillips and UPS either prior or at the open, and Alphabet after the close.

* * *

US Event Calendar

• 8:30am: Durable Goods Orders, Sept. P, est. 0.0% (prior 0.1%)
• 8:30am: Initial Jobless Claims, Oct. 22 (prior 260k)
• 9:45am: Bloomberg Consumer Comfort, Oct. 23 (prior 41.3)
• 10am: Pending Home Sales m/m, Sept., est. 1.0% (prior -2.4%)
• 10am: Freddie Mac mortgage rates
• 10:30am: EIA natural-gas storage change
• 11am: Kansas City Fed Manufacturing Activity, Oct., est. 3 (prior 6)

* * *

DB’s Jim Reid concludes the overnight wrap

Bond yields continue to rise like an oven baked Victoria sponge at the moment. Yesterday’s selloff started in Europe where yields were up anywhere from 5bps to 7bps with 10y BTP’s in particular finishing up 7.5bps at 1.457% and the highest yield since June 27th. The finger of blame was pointed at the busy day for new issuance with auctions for Gilts, Bunds and BTP’s in particular contributing, while a busy day for corporate issuance including the announcement of a near €4bn deal for Verizon also played a part. That weakness spread to Treasuries where 10y yields ended the day up 3.7bps and near the top end of the recent range at 1.794%. It’s continued this morning in Asia too where yields in the antipodeans are up 4-5bps, while 10y JGB’s have crept up a basis point too.

While those moves for bonds helped financials yesterday (European Banks +0.23% and S&P 500 Banks +0.88%), broader equity markets succumbed to another fairly mixed day for earnings and also another leg lower for Oil. The S&P 500 finished -0.17% and the Stoxx 600 ended -0.38%. While Apple (-2.25%) pared losses of over -4% at the open, the move still weighed on the wider tech sector while there were also some disappointing results in the healthcare sector from Edwards Lifesciences which resulted in shares tumbling over 17% and the most in three years. On the flip side Boeing surprised to the upside with its latest quarterly, while Coca-Cola largely met expectations. During the European session Lloyds Bank, Vinci and Bayer disappointed.

In terms of Oil, WTI finished last night down -1.56% and a shade above $49/bbl for its lowest closing level since September 30th. It was actually quite a volatile day for the complex. Prices jumped back above $50/bbl midway through the afternoon after the latest EIA data showed that stockpiles unexpectedly declined last week in the US. However once the details were digested it was revealed that the decline mainly came about due to a big drawdown in stockpiles along the West Coast which is seen as a bit isolated from the rest of the country. WTI is hovering around that closing level this morning.

Elsewhere this morning, bourses in Asia are generally trading with a softer tone too with results also starting to ramp up in the region. The Nikkei (-0.29%), Hang Seng (-1.01%), Shanghai Comp (-0.22%) and ASX (-0.60%) are all in the red, with the Kospi (+0.26%) the only market currently up. US equity index futures are also tracking lower, while EM currencies are generally weaker. There’s also been some data released in China this morning. Industrial profits were reported as increasing +7.7% yoy in September, down from that bumper +19.5% reading in August. The latest print means that for the nine months through September, profits are up +8.4% yoy.

Moving on. There were a few other interesting stories which attracted a bit of attention yesterday. Late last night after the US close Bloomberg ran a story suggesting that global lenders and insurance companies would probably lose their passporting rights to provide services in the EU following Brexit. The story was based on the outline of a plan from UK trade minister Mark Garnier. Interestingly the article went on to suggest that an alternative system, known as ‘equivalence’, was being floated however with the drawback that the UK may have to accept all future EU regulations as handed down from Brussels. One to keep an eye on.

Meanwhile, another story which attracted some brief attention was a Reuters report suggesting that the ECB is ‘all but certain’ to extend QE beyond March and at the same time ease the rules around purchases. The details were a little less impressive though. The article quoted ‘central bank officials’ rather than governing council members and so in our view raises credibility questions again much like the tapering story. The story also went on to say that ‘whether the current monthly volume of purchases will be maintained or reduced after March has not been decided and will depend on incoming economic data’. The Euro chopped around a bit with the story but there wasn’t ultimately much of a reaction in markets to it.

Staying with the ECB, board member Praet was fairly downbeat in his comments yesterday. He said that ‘although the euro-area recovery is showing signs of resilience, material downside risks remain, mainly stemming from the external environment and significant uncertainties following the outcome of the UK referendum’. Praet also said that underlying inflation has ‘yet to show clear signs of a more dynamic upward movement’ and that it’s ‘imperative that decisive action is taken now in order to propel the on-going cyclical recovery into a structural recovery’. He did however also add to this that ‘such reforms are outside of the scope of monetary policy and fall under the remit of other national and European policy makers’,

Away from this, yesterday evening hopes seemed to have been on the rise for a last minute reprieve of the trade deal between Canada and the EU, known as CETA. The President of the European Commission, Juncker, said that he expected Belgium’s French-speaking southern region of Wallonia to sign up imminently and so allow Belgium to endorse the pact. All other 27 EU members states are ready to sign the agreement according to the FT. While talks are due to resume this morning, overnight the press secretary to the Canadian International Trade Minister has said that the Canada delegation won’t be travelling to Europe today, so it remains to be seen what the outcome will be.

Before we look at today’s calendar, the largely second tier data in the US yesterday was generally a little better than expected. The flash services PMI for this month printed at 54.8 which was up 2.5pts from September and also well above market expectations of 52.5. It is also the highest reading since November last year and, combined with the manufacturing print, puts the composite reading at 54.9. Elsewhere, the usually volatile new home sales were up an unexpected +3.1% mom in September (vs. -1.5% expected) and wholesale inventories rose +0.2% mom in September. The other data yesterday was the advance goods trade balance for September which revealed a shrinking of the deficit to $56.1bn from $59.2bn after expectations were for a slight widening. We’ve yet to see any changes to Q3 GDP trackers following that. There wasn’t much to report from the data in Europe other than a modest decline in Germany consumer confidence (9.7 from 10.0).

Looking at the day ahead now, this morning in Europe the main highlight is the advance Q3 GDP report in the UK. The market consensus is for a +0.3% qoq print which follows the +0.7% qoq reading in Q2. Our Economists are also pegging a +0.3% qoq growth forecast. While the Brexit vote should show up more clearly in the Q3 GDP data there may be some upside risks given the resilience of short term data post the referendum. Elsewhere in Europe this morning the M3 money supply reading will also be released for the Euro area. The big data in the US this afternoon is the preliminary durable and capital goods orders data for September, which could still have an impact on Q3 GDP forecasts this Friday. The market is expecting no change in headline durable goods order, while core capex orders are expected to decline very modestly. Other data this afternoon includes initial jobless claims, the Kansas City Fed’s manufacturing survey and pending home sales. Away from the data comments from the ECB’s Mersch are expected this evening. There’s also some central bank focus with policy decisions due from Norway and Sweden (no changes expected). On the earnings front it’s another busy day with 62 S&P 500 companies scheduled to release their latest quartiles including Ford Motor, ConocoPhillips and UPS either prior or at the open, and Alphabet after the close. VW is also due to report in Europe.

 

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After serving much drama to its shareholders – and global markets – over the past couple of months, when its stock tumbled to all time lows following the news of the bank’s $14 billion DOJ settlement ask, Deutsche Bank provided some relief when earlier this morning it reported a modest, unexpected profit of €256 million for the third quarter on lower litigation and restructuring costs, beating consensus estimates of a €394 million loss, and a far better number than the €6 billion loss reported one year ago. Revenues were also a modest improvement to consensus expectations of €7.19BN, coming in at €7.49BN as a result of a 14% jump in fixed income trading revenues.

The bank’s closely watched core tier one capital ratio rose from 10.8% at the end of June to 11.1% at the end of September, as Deutsche cut its risk-weighted assets by €18bn to €385bn. CFO Marcus Schenck said that the ratio would get a further boost of 40 to 50 basis points once the sale of its stake in Chinese lender Hua Xia was completed.

CEO John Cryan repeated that Deutsche was making “good progress” on its restructuring, but admitted that results had been “overshadowed” by its negotiations with the DOJ. “This had an unsettling effect. The bank is working hard on achieving a resolution of this issue as soon as possible.”

The failure to provide some additional guidance on the bank’s settlement process as well as on its recapitalization status is why the shares have undone the entire 3% gap higher, and were trading fractionally in the red. Raising a red flag, Deutsche Bank also said that it saw €9BN in outflows from its new business for private, wealth and commercial clients in the third quarter.

In its Q3 interime report the bank revealed that it had suffered reduction in business volumes as result of “negative perceptions” concerning business and prospects amid talks tied to RMBS settlement with the DoJ, and added that it saw business reductions and asset outflows particularly in parts of global markets, wealth management business.

In a letter to employees, CEO Cryan said that Deutsche Bank’s end-3Q liquidity reserve was ~€200b, down €23 billion from a quarter earlier, and said that the bank’s situation will remain tough for some time. He also said that while talks with DOJ advancing, and it was working to resolve matter as soon as possible, the environment worsened in some important areas.

On the conference call Cryan said that the bank needs to “restructure and modernize the bank faster and with higher intensity,” and added the following remarks:

• “We are taking steps now particularly to achieve additional cost savings and RWA reductions”
• “We are also addressing the more challenging outlook in our planning to ensure we achieve our financial goals”
• “We aim to be more ambitious in headcount reduction” and “give preference to internal candidates”

Finally, when looking at the results, Wall Street analysts said that that while the positive surprise is a relief, it’s was also mostly irrelevant because of potential impact from DOJ settlement.

Below, courtesy of Bloomberg, is a summary of sellside opinions on the earnings:

CITI (neutral/high risk) says adj. pretax of EU1.1b that excludes revamp, litigation and other charges exceeds market expectation almost by 3x

• Statutory pretax profit of EU0.6b also beat consensus est for a loss of EU0.6b
• Beat driven by revenue, lower costs
• Most of beat is from Global Markets; CIB and AM also beat
• Capital ratios are in line
• Litigation provisions rise to EU5.9b vs EU5.5b
• Lack of update on litigation, plan to improve capital may weigh on stock today
• Adj. costs for 2016 now expected to be lower vs 2015

UBS (neutral) says Deutsche’s 3Q is a relief, was beat on every line

• Revenue, costs, pretax, net all significantly above consensus and UBS ests
• FICC and CIB were strong
• Beat mostly due to FICC in GM and NCOU in CIB
• Capital and leverage ratios in line
• Focus remains on litigation, HuaXia stake sale

KEEFE, BRUYETTE & WOODS (underperform) says 3Q results are irrelevant even if they are better than expected

• Results do not indicate a turnaround even as they seem to signal healthy balance sheet, better profit metrics
• NII revenue may halve if interest rates remain low for long period, could result in losses by 2020
• Deutsche’s challenge is to generate sustainable Free Cash Flow in current rate environment

GOLDMAN SACHS (neutral) says market should see this as a “constructive” set of results, view it with relief

• P&L highlight is net income vs GS est for loss of EU269m; consensus est for loss of EU610m
• Costs were also lower, adj. beat to consensus is EU560m
• CET1 gained 30bp to 11.1% on drop in RWAs
• Liquidity reserve remains generous at EU200b
• Deposits were broadly stable with exception of other customers, unsecured wholesale deposits

COMMERZBANK (hold) says 3Q profit was boosted by lower than expected litigation expenses, better than expected sales & trading revenue

• Net income EU256m compares to Commerzbank est. loss EU765m
• Litigation expenses were EU501m vs est. EU1b
• Debt sales & trading revenue EU2.07b vs est. EU1.56b

MORGAN STANLEY (equal-weight) says 3Q beat is strong, shows progress on revamp

• Revenue is stronger, costs down for 4th consecutive quarter
• Performance was especially good at Global Markets, CIB which both beat consensus
• Retail banking looks a bit challenged in Germany
• NCOU managed to reduce RWAs by EU10b with only a EU538m loss

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Submitted by Mike Krieger via Liberty Blitzkrieg blog,

We are not here to gain power, we are here to distribute power.

 

– Ásta Guthrún Helgadóttir Pirate member of Iceland’s Parliament

While there are all sorts of populist political movements gaining traction across the West, the only one I find genuinely revolutionary and distinctly interesting and productive is Iceland’s Pirate Party.

I’ve covered the upstart party in the past, most recently earlier this year in the post, “The Pirates Are Coming” – Iceland’s Pirate Party Polls at 43% Following the PM’s Resignation. Now, with the Icelandic election just days away (October 29th), the party is back in the news due to an expected strong performance.

The Washington Post explains:

REYKJAVIK, ICELAND — The party that could be on the cusp of winning Iceland’s national elections on Saturday didn’t exist four years ago.

 

Its members are a collection of anarchists, hackers, libertarians and Web geeks. It sets policy through online polls — and thinks the government should do the same. It wants to make Iceland “a Switzerland of bits,” free of digital snooping. It has offered Edward Snowden a new place to call home.

 

And then there’s the name: In this land of Vikings, the Pirate Party may soon be king.

 

To Jónsdóttir and other Pirate true believers — who define their party as neither left nor right, but a radical movement that combines the best of both — the election here could also be the start of the reboot that Western democracy so desperately needs.

 

“People want real changes and they understand that we have to change the systems, we have to modernize how we make laws,” said Jónsdóttir, whose jet-black hair and matching nail polish cut a distinctive profile in a country where politics has long been dominated by paunchy blond men.

 

The sticker affixed to the back of her chrome-finish laptop stands out, too: an imitation seal of the U.S. government, the familiar arrow-bearing eagle encircled by the words “National Security Agency Monitored Device.” At the Pirates’ tech-start-up-esque office in an industrial area of Reykjavik’s seafront, a Guy Fawkes mask hangs from the wall and a skull-and-crossbones flag peeks out from a ceramic vase.

 

The Pirates have spelled out their positions on issues from fishing quotas to online pornography to Snowden. (Party leaders offered him Icelandic citizenship if he can find a way to get here.) But on some of the biggest questions facing the country, the official party position is to punt to the voters.

 

To party devotees, that’s fine. The Pirates, they say, are less about any specific ideology than they are about a belief that the West’s creaking political systems can be hacked to give citizens a greater say in their democracy.

 

“We are not here to gain power,” said Ásta Guthrún Helgadóttir, a 26-year-old Pirate member of Parliament. “We are here to distribute power.”

Like everything else, the Pirate Party cannot be seen in a vacuum. A total implosion of the Icelandic economy was necessary to clear the path.

As The Nation notes:

Iceland’s political status quo—a Nordic-style parliamentary democracy, dominated for decades by pro-NATO conservatives—was shattered when the country went bust in the 2008 financial crisis, pitching Iceland into its deepest crisis since full independence and the republic were declared in 1944. This year, Iceland was rocked again when the Panama Papers leak exposed corruption among top politicos, including the prime minister, who resigned under fire. “People here are angry and frustrated,” says Karl Blöndal, deputy editor of the center-right Morgunbladid. “In the minds of many voters, the Pirates are the only untainted party, and with them Birgitta carries authority. She’s been the face of the opposition since the crash.”

 

Iceland’s Pirates, though they currently hold only three spots in the 64-seat parliament, are among the highest-profile of Europe’s Pirate parties. The anarchic hacker-led movement, global in scope, focuses on privacy rights and freedom of expression in the digital age. Born a decade ago in Sweden, and since turbo-charged by WikiLeaks’ and Edward Snowden’s disclosures about NSA surveillance, the Pirates have dozens of chapters worldwide, from Australia to Canada, and a headquarters in Geneva. Iceland’s Pirates were the first in the world voted into a national legislature.

 

Indeed, Jónsdóttir and Iceland’s Pirates see themselves as part of something greater than the direct-democracy uprising they’re leading in the chill North Atlantic. They understand Iceland as the “test grounds for radical progressive changes,” and they stand for an international legalization of WikiLeaks, asylum for Edward Snowden, and legalizing drugs across Europe. They say they’ll turn diminutive Iceland (a country so small its citizens are listed in the phone book by first names) into an international digital safe haven where data, such as whistle-blower revelations, can be securely transmitted and stored.

 

In contrast to Europe and the United States, however, Iceland refused to rescue the banks with taxpayer money; instead, the failed banks were renationalized. Iceland chose instead to protect its citizens, first by imposing capital controls so that money couldn’t leave the country and, second, by expanding the social safety net. “Iceland did the right thing…creditors, not the taxpayers, shouldered the losses of banks,” said economist and Nobel laureate Joseph Stiglitz in 2011. The bankers were eventually sent to jail: 26 financiers received sentences totaling 74 years.

The possibilities are endless once you start jailing bankers.

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As Prospect Theory explains, humans hate losses than we like gains, by about twice as much…

 

The "Buy and Hold" narrative spewed by every asset-gatherer and commission-taker is perhaps far better understood as "buy and hold on tight" as the following chart shows, for many, equity exposure is simply inappropriate (or too scary)!

Simply put, it's not the 'volatility' that people see as risk… it's the drawdown, and as SocGen's chart above shows that drawdown is practically impossible to bear unless you are lucky, blind, or ignorant.

Add to that the fact that US valuations have seldom been more expensive…

In today's over-inflated, over-leveraged, over-manipulated markets, why on earth would a rational person not be prioritizing protecting their financial wealth?

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Submitted by Soeren Kern via The Gatestone Institute,

• Despite the mounting human toll, most of the crimes are still being downplayed by German authorities and the media, apparently to avoid fueling anti-immigration sentiments.
• "The police are not interested in stigmatizing but rather in educating the public. The impression that we are engaging in censorship is devastating to the public's confidence in the police. Sharing information about suspects is also important for developing prevention strategies. We must be allowed to talk openly about the problems of this country." — Arnold Plickert, director of the GdP Police Union in North Rhine-Westphalia.
• "The Press Council believes that editorial offices in Germany should ultimately treat their readers like children by depriving them of relevant information. We think this is wrong because when people realize that something is being concealed from them, they react with mistrust. And this mistrust is a hazard." — Tanit Koch, editor-in-chief of Bild, the most-read newspaper in Germany.
• On October 24, a YouGov poll found that 68% of Germans believe that security in the country has deteriorated over the past two or three years. Also, 68% of respondents said they fear for their lives and property in German train stations and subways, while 63% feel unsafe at large public events.

A group of Serbian teenagers in the northern German city of Hamburg were handed suspended sentences for gang-raping a 14-year-old girl and leaving her for dead in sub-zero temperatures.

The judge said that although "the penalties may seem mild to the public," the teens had all made confessions, appeared remorseful and longer posed a danger to society.

The October 24 ruling, which effectively allowed the rapists to walk free, provoked a rare moment of public outrage over the problem of migrant sex crimes in Germany. An online petition calling for the teens to see time in prison has garnered more than 80,000 signatures, and prosecutors are appealing the verdict.

Thousands of women and children have been raped or sexually assaulted in Germany since Chancellor Angela Merkel welcomed into the country more than one million mostly male migrants from Africa, Asia and the Middle East.

Germany's migrant rape crisis — which has continued unabated day after day for more than a year — has now spread to cities and towns in all 16 of Germany's federal states. Despite the mounting human toll, most of the crimes are still being downplayed by German authorities and the media, apparently to avoid fueling anti-immigration sentiments.

The German Press Council (Presserat) enforces a politically correct "code of media ethics" that restricts the information journalists can use in their stories. Paragraph 12.1 of the code states:

"When reporting on criminal offenses, details about the religious, ethnic or other background information of the suspects or perpetrators is to be mentioned only if it is absolutely necessary (begründeter Sachbezug) to understand the reported event. Remember that such references could foment prejudices against minorities."

On October 17, the Press Council reprimanded the weekly newspaper, Junge Freiheit, for revealing the nationality of three Afghan teenagers who raped a woman at a train station in Vienna, Austria, in April 2016. The press council said the nationality of the perpetrators is "not relevant" to the case, and by revealing this information the newspaper "deliberately and pejoratively represented the suspects as second-class persons."

In the interests of "fair reporting," the council demanded that the newspaper remove the offending item from its website. The newspaper refused to comply and said it would continue to publish the nationalities of criminal suspects.

Lutz Tillmanns, the Press Council's managing director, said that self-censorship is necessary to avoid discrimination:

"An essential human rights-related principle is not to discriminate. When we refer to an individual we do not want to harm the entire group. This is, of course, a bigger issue for minorities than for the majority."

According to Hendrik Cremer of the German Institute for Human Rights, the Press Council's code of ethics also applies to German police, who often censor the information they release to the media:

"The police are not to provide information about the skin color, religion, nationality or national or ethnic origin of a suspect to the media or to the public. They may only do this if it is absolutely necessary, which is the case, for example, when they are searching for a suspect."

Arnold Plickert, director of the GdP Police Union in North Rhine-Westphalia, said self-censorship by the police is counterproductive:

"The police are not interested in stigmatizing but rather in educating the public. The impression that we are engaging in censorship is devastating to the public's confidence in the police. Sharing information about suspects is also important for developing prevention strategies. We must be allowed to talk openly about the problems of this country. This includes talking about the clear over-representation of young migrants in our crime rosters."

An example of how the Press Council's restrictions distort reporting on migrant crime can be found in the October 2 rape of a 90-year-old woman outside a church in downtown Düsseldorf. The Hamburger Morgenpost reported that the perpetrator was a "homeless 19-year-old" (obdachlosen 19-Jährigen). Düsseldorf Police described the suspect as "a Southern European with North African roots." The newspaper Bild later revealed that he is actually a Moroccan with a Spanish passport who is well known to German police as a serial shoplifter and purse-snatcher.

Another example: On September 30, a 28-year-old migrant sexually assaulted a 27-year-old woman on a Paris to Mannheim express train. Local media initially reported the nationality of the perpetrator but then deleted the information. A statement explained:

"This article initially included the nationality of the offender. The reference was subsequently removed because it did not correspond to our editorial guidelines — that is, there is no connection between nationality and action."

The German Press Council has rejected calls to rescind Paragraph 12.1. "This regulation is not a muzzle, but merely a guide for ethically appropriate behavior," said council spokesman Manfred Protze.

Tanit Koch, the editor in chief of Bild, the most-read newspaper in Germany, said:

"The Press Council believes that editorial offices in Germany should ultimately treat their readers like children by depriving them of relevant information. We think this is wrong because when people realize that something is being concealed from them, they react with mistrust. And this mistrust is a hazard."

The Press Council argues that the aim of voluntary self-regulation is to prevent the government from regulating the media. The council, which has so far limited its activities to the print media and associated websites, is now drafting an "online code" to regulate blogs, videos and podcasts.

Gatestone Institute first reported Germany's migrant rape crisis in September 2015, when Merkel opened up the German border to tens of thousands of migrants stranded in Hungary. A follow-up report was published in March 2016, in the aftermath of mass attacks against German women by mobs of migrants in Cologne, Hamburg and other German cities. In August 2016, Gatestone reported that the suppression of data about migrant rapes is a Germany-wide practice.

An angry crowd of German protestors in Cologne repeatedly yell "Where were you New Year's Eve?" at police on January 9, 2016, referring to the mass sexual attacks perpetrated in the city by migrants on New Year's Eve, in which more than 450 women were sexually assaulted in one night.

The mainstream media's failure to report the true scope of Germany's migrant rape crisis may explain why — after more than a year of daily sexual assaults — there has been very little public outrage over the calamity that has befallen so many Germans. Censorship has effectively become a national security problem.

Public spaces in Germany have become increasingly perilous. Migrants have assaulted German women and children at beaches, bike trails, cemeteries, discotheques, grocery stores, music festivals, parking garages, playgrounds, schools, shopping malls, taxis, public transportation (buses, trams, intercity express trains and subways), public parks, public squares, public swimming pools and public restrooms. Nowhere is safe.

On October 1, two migrants raped a 23-year-old woman in Lüneburg. She was walking in a park with her young child when the two men ambushed from behind. The men, who escaped and remain at large, forced the child to watch while they took turns attacking the woman.

October 8, a 25-year-old migrant from Syria groped a 15-year-old girl in Moers. The girl responded by slapping the man in the face. The man called police and complained that the girl had mistreated him. The man was arrested for sexual assault.

On October 18, Sigrid Meierhofer, the mayor of Garmisch-Partenkirchen, in an urgent letter (Brandbrief) to the Bavarian government, threatened to close a shelter that houses 250 mostly male migrants from Africa if public safety and order could not be restored. The letter, which was leaked to the Münchner Merkur, stated that local police had responded to more emergency calls during the past six weeks than in all of the previous 12 months combined.

On October 24, a YouGov poll found that 68% of Germans believe that security in the country has deteriorated over the past two or three years. Also, 68% of respondents said they fear for their lives and property in German train stations and subways, while 63% feel unsafe at large public events.

Meanwhile, the Federal Criminal Police Office (Bundeskriminalamt, BKA) has offered advice to German women on how they can protect themselves from rapists: "Wear tennis shoes instead of high heels so that you can run away."

via http://ift.tt/2exZEQg Tyler Durden

While Facebook and Google have been repeatedly accused of media bias and manipulating public opinion, especially during the US presidential campaign, an unexpected attack on the two media giants came today not from the US but from Germany, when Chancellor Angela Merkel launched a full-on attack at the two companies, accusing them of “narrowing perspective,” and demanding they disclose their privately-developed algorithms. Merkel previously blamed social media for anti-immigrant sentiment and the rise of the far right.

“The algorithms must be made public, so that one can inform oneself as an interested citizen on questions like: what influences my behavior on the internet and that of others?” said Merkel during a media conference in Berlin on Tuesday cited by RT.

What she said next echoed similar complaints lobbed at the media giants by those considered less than mainstream: “These algorithms, when they are not transparent, can lead to a distortion of our perception, they narrow our breadth of information.”

Angela Merkel speaks with Mark Zuckerberg Eric Schmidt at the G8 Summit in 2011

In a tech-driven world, Google uses an algorithm to decide which search results are first shown to a user (and which are not, for example when one searches about Hillary’s health), while Facebook arranges the order of the news feed, and decides to include certain posts from a user’s liked pages and friends, at the expense of others. Both sites also promote links to news articles, often based on a user’s own media interests.

However, it is still a human’s job to write and calibrate these algorithms which are at the core of the intellectual property of any social media or search website, and comprise some of the most highly-protected trade secrets in the world, potentially worth billions. No internet giant has ever revealed its inner workings.

Merkel did not specifically name Facebook, Google or Twitter, but implied that the large platforms are creating “bubbles” of self-reinforcing views, and squeezing out smaller news providers. One could also call it propaganda.

“The big internet platforms, via their algorithms, have become an eye of a needle which diverse media must pass through to reach users,” warned Merkel. “This is a development that we need to pay careful attention to.” In their defense, Google and Facebooks have retorted that the so-called social media bubble is largely a “myth”, and that online users have a wider access to differing views than under a pre-internet model, where most news would be acquired from just a handful of newspapers and one or two TV channels.

This is not the first attack on social media by Merkel and her Grand Coalition government. Curious, while the German politician advocates diversity of views, she has previously accused it of perpetrating opinions that are most at odds with those of the establishment and traditional media.

In other words, instead of seeking to cripple the informational monopoly of Facebook and Google, Merkel was merely pursuing her own, ulterior motives. Last month, the chancellor accused AfD, the recently-established anti-immigrant and anti-Muslim party, which receives overwhelmingly negative coverage in most newspapers, of “spreading their lies” through social media, as it achieves breakthroughs in regional elections around the country.

As RT adds, a year ago, at the height of the refugee influx into the country, Merkel, who was first elected in 2005, was caught on a hot mic personally pressing Facebook CEO Mark Zuckerberg to clamp down on anti-migrant posts during a UN session in New York.  Then, several weeks ago, the leader of Merkel’s parliamentary CDU faction, Volker Kauder, said that social media should be fined €50,000 for failing to remove “hate speech,” saying that a “Sword of Damocles” has to hang over social media. Kauder also called for warnings, similar to those on cigarette packs or before entering pornographic websites, to be given to those about to go on social media.

In other words, the Germans want to tackle the biased information and “distorted perceptions” with state censorship. Somehow that strikes us as ironic.

In the end, it turns out Merkel’s mini crusafe is nothing more than an attempt at scapegoating her own immigration policy failures on the web giants. Justice Minister Heiko Maas – who said that there had been a 77 percent increase in hate crimes following the arrival of 900,000 asylum seekers – has given internet media companies until February next year to comply with EU directives on xenophobia and racism, or face legal action.

More than anything, this little anecdote reveals that the greatest weapon in a “developed society’s” arsenal remains information, and the fight is to control not just the content, but more importantly, the distribution. Incidentally, if it does come to a showdown between a sovereign nation and an internet media giant, our money will always be on the latter.

via http://ift.tt/2eIv72q Tyler Durden

Submitted by Mac Slavo via SHTFPlan.com,

Suffice to say, though children are at play, this is not a game.

Those who have been toying with outright war against Russia, and an escalation of the conflict in Syria, are putting the lives of all Americans at risk.

Of course, the threat of nuclear annihilation has been with us since the earliest days of the Cold War, but Russia has now positioned itself with the largest and most destructive nuclear arsenal of any country in the world.

Economist and political critic Dr. Paul Craig Roberts explains how diplomatic relations have broken between Russia and the United States, after the U.S. knowingly attacked pro-Assad Syria forces… that, of course, was the cherry on top of a host of insults, deliberate antagonism and a strategy that could only result in further chaos and war.

The end of negotiations is unfortunately, given that fighting it out could mean thermonuclear war that would make Hiroshima and Nagasaki look trivial in comparison.

After a period of some patience, Russia is now warning that the United States is dangerously close to turning a proxy war into a direct world war – and they are deadly serious about defending the motherland and their sworn allies – namely Assad.

Any further attack could result in immediate destruction.

Putin is a formidable opponent and Russia a powerful enemy. At present time, they have the capability of wiping the entire East Coast of the United States off the map – where more than 100 million people live. Will the ranking misleaders in Washington continue to gamble with all of our lives?

via the Express:

VLADIMIR Putin’s nuclear stockpile could completely destroy the east coast of the US in one clean swipe should the Russian leader launch an attack on the West, an expert has warned.

 

A staggering 112.6million people could be at risk of extermination from the deadly missiles.

 

 

Russia has the largest haul of nuclear weapons of any country in the world and reportedly has the most powerful bomb named the SS-18 – menacingly nicknamed the Satan.

 

 

Experts estimate Russia has 55 of the deadly weapons, but only five would be needed to destroy the East Coast of the US.

 

[…]

 

“Five or six of these ‘Satans’ as they are known by the US military, and the East Coast of the United States disappears.”

 

Dr Roberts said: “The atomic bombs that Washington dropped on these helpless civilian centres while the Japanese government was trying to surrender, were mere popguns compared to today’s thermo-nuclear weapons.

What’s more, the Russian have hinted strongly at the possibility that they would be able to disable electronics, communications and defense shields in the U.S. via electromagnetic warfare – perhaps an EMP.

Worst of all, the American misleaders haven’t even got a good reason for putting the population at such a risk – strategy in the middle east is muddied at best, and prodding for war with Russia doesn’t carry a clear narrative either.

The world could change, and American power could end in a few decisive minutes.

Hopefully it would never come to that, but we shouldn’t live in a false world where we pretend these situations can’t harm us.

via http://ift.tt/2exRjMk Tyler Durden