Month: January 2017

While we remain in the purely abstract, theoretical and hypothetical realm of Trump tax reform – there have been no concrete proposals floated yet, with Trump as recently as a week ago slamming the critical border-adjustment tax, only to full reverse himself on it just a few days later – Bank of America has created a useful matrix taking a deep dive into the potential (and we do underline the word potential, because at this rate Trump may spend much of his first year dealing with immigration reform and Obamacare) implications of Trump’s tax reform.

As Bank of America’s Savita Subramanian writes in a note titled “Death and Tax Reform”, the BofA strategist predicts that tax reform in its entirety could add as much as $5-6 to near-term S&P 500 EPS “as benefits are front-loaded.” Whether or not tax reform would be accretive to EPS is highly dependent on the implementation details, which it then analyzes. 

Starting at the top, according to Savita 2017 could be a watershed year from a tax reform perspective. Trump has continuously stated that tax reform is a priority, and there is evidence of widespread support in Congress. Tax reform could be enacted through reconciliation without the risk of being filibustered, suggesting the timing could be imminent. Corporate tax reform could have a significant impact on S&P 500 earnings, corporate behavior and capital markets. Much has been written on the timing, funding and process by which corporate tax reform could be enacted. In this report, we use House Speaker Paul Ryan’s Blueprint proposal as a starting point in quantifying the impact of corporate tax reform on the S&P 500, with some scenario analysis to account for differences included in the final bill (such as Trump’s proposals). The bank’s analysis is focused specifically on the impact of corporate tax reform, however we recognize that there are many other factors that can impact the sensitivity analysis (e.g. changes to household income tax rates, infrastructure spending, etc.).

BofA estimates that the Blueprint proposal would initially boost S&P 500 EPS by $5-6, assuming the end of interest expense deductions only applies to new debt, or is phased in over time. But the devil is in the details. Over time, the loss of the interest tax shield would be a significant drag on earnings as existing debt is refinanced. Additionally, the corporate tax rate is critical in determining whether or not the tax reform policies end up being accretive to earnings on a sustained basis. Savita estimates that at the 20% tax rate, the Blueprint would be modestly accretive, the benefit would triple under Trump’s proposed 15% tax rate, but at a higher 25% tax rate that would appease the deficit hawks in Congress, the benefit would turn to a negative over time (Table 2). The bank also estimates a one-time $8-9 charge to GAAP EPS that would be associated with the discounted repatriation tax.

The bank then focuss on topics that have large implications for US equity investor, but it is important to consider corporate tax reform holistically rather than drawing major implications from each measure in isolation:

• Reducing the US corporate tax rate
• Repatriation – mandatory tax on overseas profits
• Border adjustment tax
• Removal of interest expense deduction

These tax considerations summarized:

Cutting corporate tax rate could add $8-9 to EPS

 

Our starting point is the US statutory corporate tax rate. If it were lowered from 35% to 20% and the US moved to a territorial tax system (no longer taxing foreign profits), it would boost S&P 500 EPS by an estimated 12% ($17 to 2018 EPS). We assume companies would be able to retain half of the benefit ($8-9) and the remainder would be passed on to customers or competed away. For instance, a lasting impact to Utilities’ profits is unlikely, as the benefit would be passed on via regulated pricing. 

 

Repatriation: Buybacks could boost EPS by 3%

 

Both Trump and the Blueprint support a mandatory (as opposed to 2004’s optional) tax of overseas earnings of US firms’ subsidiaries at reduced rates. Non-Financials in the S&P hold at least $1.2tn (mostly Tech and Health Care). If half was used for buybacks, this could add 3% ($4) to S&P 500 EPS. A redux of 2004 where companies used 80% of cash for buybacks may be less likely, in our view. For if repatriation is accompanied by an end to interest expense deductions, companies may choose to pay down debt over buybacks.

 

Border adjustment tax (BAT) hits EPS by $5-6

 

While Trump has described the BAT as being “too complicated,” White House press secretary Spicer’s recent comments call into question his stance. This is a key component of the Blueprint and would generate significant revenue. First-order impacts could be significant, with border adjustments detracting $5-6 from 2018 EPS — nearly 80% of the drag comes from the consumer sectors. The second order impacts — product pricing, pricing within the supply chain, exchange rates, foreign policy reactions, etc.-— while harder to quantify, are important to consider.

 

End to interest deductibility could detract 4% from EPS

 

We estimate that over time, the removal of the interest expense deduction would detract about 4% from S&P 500 EPS. The ending of interest deductibility could also increase the cost of debt by an incremental 25%, which could have longer term ramifications for capital structures and funding.

The government revenue associated with each of these is included in the table below.

From a sector and industry perspective there are haves and have-nots based on each policy, but in aggregate most sectors have some puts and some takes based on tax reform. The table below shows some relevant aggregate statistics by sector that are used in the subsequent analysis.

* * *

Next, BofA breaks down the impact of the four components of tax reform starting with…

Cutting the corporate tax rate

The best starting point for analyzing corporate tax reform is the US statutory corporate tax rate, as this rate is critical in determining the impact of other proposed changes (border adjustments, interest deductibility, etc.). If the tax rate were lowered from 35% to 20% and the US moved to a territorial tax system (no longer taxing foreign profits), all else equal, we estimate an initial boost to S&P 500 EPS of 12% ($17 to 2018 EPS). However, over time, some of this benefit could be passed on to customers via lower prices — for instance, it is unlikely that there will be any major long-lasting impact from tax reform for Utilities sector profits, as any benefit/cost would likely be passed through to customers when incorporated into each company’s regulated pricing. The benefit would also be offset by some of the other changes discussed in subsequent sections. We assume that S&P 500 companies would be able to retain half of the benefit, or roughly $8 of 2018E EPS. Below, we show the estimated EPS impacts on each  sector based on a tax rate of 20%.

While the effective tax rate of the S&P 500 is generally about 28% (currently closer to 25% due to the recent commodity recession), we estimate that the tax rate for the S&P 500’s domestic operations is much higher at roughly 33% — although this includes state and local taxes. If all companies with tax rates above the proposed new tax rate of 20% were to drop to 20%, and no companies provisioned for US taxes  on foreign profits, we estimate the domestic effective tax rate for the S&P 500 would fall in line with its foreign tax rate of roughly 19%. This would represent a 9ppt decrease in the current S&P 500 tax rate and a 12% increase in EPS. We show the sensitivity to S&P 500 EPS to different assumed tax rates in the chart below, but we reiterate that these estimates exaggerate the actual impact on profits, as a significant portion of these benefits would likely be passed on to consumers via lower prices. We assume that in aggregate, roughly half of the gains from the lower tax rate would be retained (i.e. half of the amounts shown in the sensitivity analysis in Chart 2).

The market is beginning to price in the benefits of tax cuts , but we may still be in the early days – note that potential beneficiaries of fiscal stimulus (i.e. infrastructure spending) have seen an 18% multiple re-rating but de minimis fundamental support, whereas potential beneficiaries of lower corporate tax rates have seen performance driven nearly equivalently by multiples and earnings.

* * *

Repatriation

Repatriation likely under both Blueprint and Trump plans

Mandatory tax on overseas profits of 8.75% under Blueprint, 10% under Trump. The US currently operates under a tax system in which the domestic earnings of US corporates are taxed at the federal US corporate rate (35%) and any overseas earnings that are repatriated are taxed at this rate less a credit for foreign taxes paid on those same earnings. Many multinationals’ foreign earnings thus remain parked offshore, allowing corporations to avoid the tax hit associated with bringing them back to the US. Both Trump and the House (under Ryan) have proposed a mandatory tax of overseas earnings of US firms’ foreign subsidiaries at reduced rates, such that this cash can be brought back and put to work in the US. This differs from the 2004 repatriation tax holiday, which was optional.

Under the Blueprint, accumulated overseas earnings will be subject to a transition tax of 8.75% (for those held in cash/cash equivalents) or 3.5% (for all other holdings), with companies able to pay the tax liability over an eight-year period. This would be part of broader tax reform, where a proposed territorial tax system would exempt companies’ foreign income from US taxes and prevent future buildup of overseas profits as companies would be free to bring them home. Trump’s plan calls for a one-time deemed repatriation of overseas corporate profits at a 10% tax rate.

The Tax Policy Center estimates that a repatriation tax holiday would generate approximately $150bn in tax receipts under Trump’s plan (over 10 years) and $140bn under the Blueprint (over 8 years). The Tax Foundation similarly estimates that a repatriation act could drive spending amounting to $185-200bn in revenues through 2025, which could help fund infrastructure/defense spending.

S&P 500 companies could bring back over $1tn – mostly in Tech & Health Care. Our FX team has written that US corporates in aggregate (including Financials) hold ~$2tn in cash overseas, and their work suggests that nearly half is concentrated within 20 companies. Similarly, as we discuss below, half of the repatriated cash following the 2004 Homeland Investment Act came from just 15 companies, predominantly in Pharma and Tech. Our own analysis of the S&P 500 (based on filings and estimates from our analysts) suggests that non-Financials in the S&P hold approximately $1.2tn overseas, nearly three-quarters of which is in Tech and Health Care (Chart 4).

Post-repatriation cash use: will this time be different?

Valuations, investor preference, growth & leverage ratios suggest less buybacks While any potential restrictions on the use of repatriated earnings are still unknown, we suspect that a pick-up in buybacks is likely, but that a lower proportion will be used for buybacks today than during the last repatriation holiday. Valuations were generally more attractive in 2004-2005 on most metrics (Table 9), and we’ve found that buybacks tend to be more rewarded when stocks are cheap (Chart 8). Additionally, the largest buybacks have not generated alpha for the last several years, as investors have increasingly agitated for companies to use their excess cash on pro-growth investments (namely capex.) According to BofAML’s latest Global Fund Manager Survey, 60% of investors want companies to increase capex spending, vs. 17% who want companies to return cash to shareholders (Exhibit 1). This compares to a majority of investors desiring companies to return cash to shareholders when the HIA was passed in late 2004.

Companies may also feel less pressure to bolster per share metrics by reducing share count if top line is recovering and organic growth is finally materializing. And from a capital structure perspective, if leverage loses its tax benefit, given that leverage ratios are already high (see below) companies may be less likely to reduce their equity capital base, as that would marginally increase their weighted average cost of capital.

Special dividends, pay-down of debt may be other likely uses

Companies may also return the cash to shareholders by issuing a one-time special dividend: income remains in-demand, given that both interest rates and dividend payout ratios remain historically low. And if a repatriation tax holiday comes within the context of broader tax reform that includes an end to the deductibility of interest expense, companies may choose to pay down debt over other uses of cash, in an attempt to skew their balance sheets less toward debt and more toward equity. Deleveraging balance sheets may also be spurred by a demonstrable move in interest rates over the last twelve months. Leverage for S&P non-Financials has steadily been ticking up over the last few years, and, if we exclude the cash-rich Technology sector, leverage is approaching all-time highs (Chart 9).

Potential EPS impacts

$8-9 (6-7%) hit to GAAP EPS from the mandatory tax

We estimate that the tax of accumulated overseas profits of $1.2tn should result in a cash tax impact of $100-120bn (which may be allowed to be paid over 8-10 years), and a one-time hit to GAAP EPS of $8-9 (a lower $65-80bn, given that a several large multinationals such as AAPL already provision a portion of their overseas profits for US taxes and have effective US tax rates well above the US statutory rate). Our analysis assumes Trump’s/the Blueprint’s proposed rates of 8.75%/10%, and that all overseas profits are hit with this one-time tax, as suggested by their plans. See Table 10.

Note that our estimate of ~$1.2tn of cumulative profits overseas is based on estimates from us, our fundamental analysts, and company filings, where in many cases only overseas cash but not other indefinitely invested earnings are disclosed/estimated. Thus, the tax on these earnings could be slightly higher, though the Blueprint would tax earnings not held in cash at a lower 3.5% rate. (We conservatively assume our estimated $1.2tn is all cash and use the higher 8.75% rate under the Blueprint and 10% under Trump’s plan in our below analysis).

We estimate share buybacks add $4 (or as high as $6) to EPS (GAAP & non-GAAP)

If the full $1.2tn that we estimate is overseas for the S&P 500 ex. Financials & Real Estate is brought back (given the tax is mandatory and will be paid either way) and 50% is used on buybacks (~3% of S&P 500 market cap), this could add ~$4 to S&P 500 EPS. And if 80% (~4% of market cap) were used on buybacks, similar to NBER’s estimate of what occurred following the 2004 tax holiday, this could add $6 to EPS. (The difference between the Trump and Blueprint tax rates is small, leading to only cents in index EPS). If one assumed companies only brought half of their offshore cash home immediately, even though the full amount was taxed, these benefits would be cut in half.

Note that buyback programs may span several years, which could spread out some of the EPS benefit below. But if one assumes a buyback is fully executed in Year 1, this provides a one-time boost to EPS growth and a recurring benefit to future EPS given a permanently lower share count.

Cross-asset implications of repatriation

Repatriation should spur USD-buying – up to 40% may be non-USD denominated.  While few companies disclose the currency composition of their offshore cash, our FX team estimates that 60-75% is already in USD while 25-40% is non-dollar-denominated. (If we extrapolate based on the S&P 500’s geographic revenue exposure, the largest proportion could be in Europe, followed by emerging Asia). This may create USD strength via buying pressure (which they estimate could amount to $250-$400bn if half of all offshore cash, which they estimate at ~$2tn, was repatriated). Their analysis of the EUR-USD during the last repatriation holiday suggests an “announcement effect” is likely, as the dollar strengthened ahead of the bulk of the actual repatriation flows.

Repatriation could put upward pressure on bank funding costs. Our rates team’s analysis of some of the largest multinationals with offshore cash suggests ~70% of cash is invested in securities with maturities greater than one year, likely given the assumption that these funds would be indefinitely reinvested, and the remaining 30% has longer maturities. See table below. They believe repatriation could  put upward pressure on bank funding costs as firms reduce their holdings in these short-term investments. According to Crane Data on offshore money fund holdings, our rates team cites that $161bn of offshore funds are held in commercial paper and CDs, of which the majority are from financial institutions with Japan, France and Canada the largest issuers.

* * *

Border adjustment tax analysis

A new tax policy outlined in the Blueprint proposal that has been getting a lot of attention recently is the border adjustment tax, or the application of border adjustments to a company’s imports and exports. While Trump has described the proposal as being “too complicated,” it is a key component of the Blueprint plan and should not be ignored. Additionally, White House press secretary Sean Spicer’s recent reference to “…the plan taking shape right now, using comprehensive tax reform as a means to tax imports from countries…” could be a sign that Trump is not as against the proposal his other comments would indicate.

This policy would effectively result in the tax authorities recognizing all sales that take place in the US (regardless of where they are produced) and all the domestic costs incurred to produce goods and services for customers (regardless of where the sale takes place). As a result, net importers (such as many retailers) would suffer, as they would have to pay taxes on their domestic sales without being able to deduct a significant portion of their costs of production. Conversely, net exporters (companies with much of their production in the US but sales outside of the US) would stand to benefit from not having to pay taxes on their foreign sales while being able to deduct a significant proportion of production costs (Exhibit 3). Purely domestic companies would be unaffected.

Even if border adjustments are enacted, there is significant uncertainty around implementation details. For this analysis, we focus on the first-order impact of border adjustments, but we recognize there would be significant second order impacts on the pricing of products, pricing within the supply chain, foreign exchange rates as well as foreign policy reactions. (We discuss many of these second order impacts later in this report.) For the current exercise, we also ignored the cost of services as the implementation of these rules would be more complicated. See the Methodology section for more details.

We estimate that at a 20% tax rate, border adjustments would detract $5-6 from 2018 EPS, with nearly 80% of the drag coming from the Consumer Discretionary and Consumer Staples sectors (roughly evenly split). This impact includes a 50% haircut to account for offsets from alternate sourcing, currency rates and pricing power. On one hand, we may be drastically underestimating the impact because we have not included the second-order impacts on the supply chain. For example, many retailers source the bulk of their goods from domestic suppliers, who source their goods from overseas suppliers. So while the original retailer may not feel the direct tax hit from importing goods, the supplier that took the tax hit would likely pass along a significant portion of this via a higher cost. On the other hand, the supplier  or the retailer could look for alternate domestic sources for those products, but it would largely depend on whether the cost differential of production between the US and overseas exceeded the border adjustment tax. Some key components in determining the cost differential are the foreign exchange rates (more on this below) and labor costs. In the end, the net impact of the border adjustment taxes will be driven by a complex interplay between corporate tax rates, pricing power, foreign exchange moves, foreign versus domestic availability and cost differentials.

Offsetting BAT with a little math and some price increases

A company could fully offset the border adjustment tax by raising prices such that the after-tax increase in sales would exceed the drag from the lost deduction of costs. All else equal, the break-even price increase would be equivalent to the cost of goods sold as a % of sales multiplied by net % imported and the tax to after-tax ratio, which at a 20% rate is 0.25 (20%/80%). As an example, a company with a 25% gross margin that imports 30% of its goods would need to increase its prices by of 5-6% to offset the border adjustment tax.

Offsetting BAT with FX

Some of the increase in the after-tax cost of imported goods can also be offset by a strengthening dollar. For example, companies producing goods in Mexico, which stand to see a 25% increase in the cost of imported goods, should see the cost increase partially offset by the 13% devaluation of the Mexican Peso against the US dollar since the election. The net cost increase is a more digestible 9%, especially when you also consider that the Peso has devalued nearly 30% since its 2013 peak. While it may offer little consolation to corporates, the US Dollar Index is up over 25% since mid-2014, so the border adjustment tax would presumably act as a reversal of the lowered cost of overseas production over that period.

Border adjustment sensitivity analysis

The table below illustrates how the change in the tax rate and the application of the border adjustment tax would impact the domestic earnings of a hypothetical company with sensitivity to different tax rates and net export assumptions. We assumed the company has a 40% gross margin, operating expenses are 20% of sales and an initial tax rate of 35%. As you would expect, the biggest benefit would accrue to  companies with significant net exports at a high domestic tax rate (bigger tax shield) and the most negative impact to significant net imports at a high domestic tax rate (higher taxes on higher taxable income).

Below we highlight industries which could potentially benefit most / be hurt most by the BAT.

* * *

No interest tax shield

Another key offset to the lower corporate tax rate is the proposed ending of the deduction of net interest expense. We assume that this rule would apply to new debt and that existing debt would be grandfathered. This tax shield removal would increase the cost of debt by an incremental 25% (not to mention the 100bp+ rise in long-term interest rates seen since the summer of 2016). In the table below, we illustrate the impact on S&P 500 corporate profits. We estimate that over time, the removal of the interest rate deduction would detract about 4%, or $4-5 from S&P 500 2018 EPS.

Many investors assume that interest deductions would likely apply only to new debt, and if this were the case, the drag would be gradual for the overall S&P 500 as debt matures and is refinanced. Companies have shifted the composition of their debt toward longer maturities and fixed rates. We estimate an average S&P 500 debt maturity of over eight years, with just one-third maturing within the next three years. The grandfathering of existing debt is a reasonable assumption, but not a sure thing, in our view. There is a possibility that legislators apply it to all debt on the grounds that most companies are expected to be net beneficiaries of comprehensive tax reform.

There is also a possibility that this policy is phased in over a number of years, with certain portions of the existing debt losing their interest deductibility over time.

The most negatively impacted companies would clearly be the ones with the most leverage, in addition to those with depressed earnings (Metals & Mining, Energy, etc.). We have again excluded Utilities from this analysis, because although the sector has a lot of leverage, for these companies, there would likely be a pass through to customers in determining their allowed rate increase.

How will levered companies react?

Companies will likely grow comfortable with a smaller amount of debt, retain more earnings, use less cash for dividends and share buybacks, and potentially draw down cash if they have it. If a tax holiday is also granted, that might offset the loss of benefit. Companies that regularly issue long-term debt may choose to reduce that burden to offset the tax change, and find those funds elsewhere. We find it unlikely that the change would result in a surge in equity issuance, unless the change applies to existing debt, which is unlikely in our view. While this change should be taken as a line item in a wholistic bill, there are victims and beneficiaries here. Corporations that have high leverage ratios, low retained earnings, high interest expense to earnings ratios, no cash overseas offset from repatriation, and those that have recurring long-term debt needs may be most at risk.

Other implications

While some argue that companies will try to raise outsized amounts of IG capital ahead of the deadline to lock in funding with the tax benefit before the loophole is closed, there is likely to be a provision in the legislation that would treat such debt as new debt. In our Investment Grade Strategist Hans Mikkelsen’s view, demand for IG credit could materially reduce over time. The tax change could also dampen Leverage Buyout (LBO) activity, according to our High Yield strategist Michael Contopoulos, where these funds are already struggling to generate high returns – note that LBO funds are currently sitting on close to $1tn in cash looking for a home, according to Preqin’s third quarter update.

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

With a relentless barrage of corporate executives taking veiled, and not so veiled, shots at Trump’s immigration policies, moments ago Starbuck’s outgoing CEO Howard Schultz went one better, and in a letter to employees, the CEO announced plans to hire some 10,000 refugees in the 75 countries in which Starbucks does business, and furthermore added that “our Partner Resources team has been in direct contact” with employees affected by President Trump’s immigration ban.”

He outlined different plans to not only hire refugees, but also on how the company will support “Dreamers” in the country, “building bridges, not walls” with Mexico and providing healthcare for his employees as Congress prepares to repeal ObamaCare.

Schultz focused on future ties with Mexico and said that “coffee is what unites our common heritage, and as I told Alberto Torrado, the leader of our partnership with Alsea in Mexico, we stand ready to help and support our Mexican customers, partners and their families as they navigate what impact proposed trade sanctions, immigration restrictions and taxes might have on their business and their trust of Americans.  But we will continue to invest in this critically important market all the same.”

Schultz also vowed to support “Dreamers” saying that “there are nearly three quarters of a million hardworking people contributing to our communities and our economy because of this program.  At Starbucks, we are proud to call them partners and to help them realize their own American Dream.  We want them to feel welcome and included in our success, which is why we reimburse them for the biennial fee they must pay to stay in the program and why we have offered DACA-related services at our Opportunity Youth hiring fairs.”

Also, having been criticized in the past of curtailing total worker hours in order to accommodate higher minimum wages and health benefits, Schultz wrote that “our commitment remains that if you are benefits eligible, you will always have access to health insurance through Starbucks.” He added that “many have expressed concerns that recent government actions may jeopardize your ability to participate in the Affordable Care Act. If the recent Executive Order related to health care remains in place and the Affordable Care Act is repealed causing you to lose your healthcare coverage, you will always have the ability to return and can do so within 30 days of losing that coverage rather than having to wait for an open enrollment period.”

It is unclear how big of a hit to the SBUX bottom line these generous proposals will end up costing, and whether the company’s shareholders will be as delighted in sharing the CEO’s noble vision.

His full letter below.

Message from Howard Schultz to Starbucks Partners: Living Our Values in Uncertain Times

Dear partners,

I write to you today with deep concern, a heavy heart and a resolute promise. Let me begin with the news that is immediately in front of us: we have all been witness to the confusion, surprise and opposition to the Executive Order that President Trump issued on Friday, effectively banning people from several predominantly Muslim countries from entering the United States, including refugees fleeing wars. I can assure you that our Partner Resources team has been in direct contact with the partners who are impacted by this immigration ban, and we are doing everything possible to support and help them to navigate through this confusing period.

We are living in an unprecedented time, one in which we are witness to the conscience of our country, and the promise of the American Dream, being called into question. These uncertain times call for different measures and communication tools than we have used in the past. Kevin and I are going to accelerate our commitment to communicating with you more frequently, including leveraging new technology platforms moving forward.  I am hearing the alarm you all are sounding that the civility and human rights we have all taken for granted for so long are under attack, and want to use a faster, more immediate form of communication to engage with you on matters that concern us all as partners.

I also want to take this opportunity to announce specific actions we are taking to reinforce our belief in our partners around the world and to ensure you are clear that we will neither stand by, nor stand silent, as the uncertainty around the new Administration’s actions grows with each passing day:

• Support for DACA: As I wrote to Senators Graham and Durbin this week, we are enthusiastically behind their work to support “Dreamers” across our country – including those young men and women who are part of the Deferred Action for Childhood Arrivals (DACA) program. There are nearly three quarters of a million hardworking people contributing to our communities and our economy because of this program.  At Starbucks, we are proud to call them partners and to help them realize their own American Dream.  We want them to feel welcome and included in our success, which is why we reimburse them for the biennial fee they must pay to stay in the program and why we have offered DACA-related services at our Opportunity Youth hiring fairs.
• Hiring Refugees: We have a long history of hiring young people looking for opportunities and a pathway to a new life around the world. This is why we are doubling down on this commitment by working with our equity market employees as well as joint venture and licensed market partners in a concerted effort to welcome and seek opportunities for those fleeing war, violence, persecution and discrimination.  There are more than 65 million citizens of the world recognized as refugees by the United Nations, and we are developing plans to hire 10,000 of them over five years in the 75 countries around the world where Starbucks does business.  And we will start this effort here in the U.S. by making the initial focus of our hiring efforts on those individuals who have served with U.S. troops as interpreters and support personnel in the various countries where our military has asked for such support.   
• Building Bridges, Not Walls, With Mexico: We have been open for business in Mexico since 2002, and have since opened 600 stores in 60 cities across the country, which together employ over 7,000 Mexican partners who proudly wear the green apron. We have sourced coffee from Mexico’s producers and their families for three decades and last fall, we also announced the creation of a farmer support center in Chiapas to help accelerate our collective ability to grow and export some of the world’s finest coffees from this important growing region, while donating more than $2 million to support the livelihood, food security and water quality of coffee producing communities in Oaxaca.  With the support of thousands of Starbucks partners and millions of customers, we have also donated half a million coffee trees to support 70,000 families, and we will be expanding the initiative this year to generate another 4 million tree donations. Coffee is what unites our common heritage, and as I told Alberto Torrado, the leader of our partnership with Alsea in Mexico, we stand ready to help and support our Mexican customers, partners and their families as they navigate what impact proposed trade sanctions, immigration restrictions and taxes might have on their business and their trust of Americans.  But we will continue to invest in this critically important market all the same.
• Our Healthcare Commitment to You: Finally, let me restate what we have recently communicated with you about the Affordable Care Act – our commitment remains that if you are benefits eligible, you will always have access to health insurance through Starbucks.  Many of you have expressed concerns that recent government actions may jeopardize your ability to participate in the Affordable Care Act. If the recent Executive Order related to health care remains in place and the Affordable Care Act is repealed causing you to lose your healthcare coverage, you will always have the ability to return and can do so within 30 days of losing that coverage rather than having to wait for an open enrollment period. If you have any questions or concerns, please contact the Benefits Center at 877-728-9236.

In the face of recent events around the world, let me assure you that we will stay true to our values and do everything we can possibly do to support and invest in every partner’s well-being while taking the actions that are squarely within our ability to control. This is our focus: providing a Third Place of respite for those around the world who seek it, daily.

Starbucks has and will always stand for opportunity – opportunity for our young people who are working to land their first job in the 75 countries where we do business, opportunity for our farmers who care so deeply for the highest of quality coffee we offer to customers all around the globe, and yes, opportunity for those who come to America in search of their own fresh start – whether that is with Starbucks directly, or through our suppliers or our partner companies.

If there is any lesson to be learned over the last year, it’s that your voice and your vote matter more than ever. We are all obligated to ensure our elected officials hear from us individually and collectively. Starbucks is doing its part; we need you to use the collective power of your voices to do the same while respecting the diverse viewpoints of the 90 million customers who visit our stores in more than 25,000 locations around the world.

So, while we seek to understand what the new Administration’s policies mean for us and our business both domestically and around the world, I can assure you that we will do whatever it takes to support you, our partners, to realize your own dreams and achieve your own opportunities. We are in business to inspire and nurture the human spirit, one person, one cup and one neighborhood at a time – whether that neighborhood is in a Red State or a Blue State; a Christian country or a Muslim country; a divided nation or a united nation. That will not change.  You have my word on that.

Onward,

Howard

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

 

Indeed, as the following chart shows, it has been a one-way street of hope in the surveys – a very different picture to the economic view painted by 'real' data…

 

In fact, the spike in 'soft' survey data is second only in history to the exuberance experienced in early 2011…

 

That did not end well for stocks…

 

And so, as RBC's McElligott explains, "the rubber needs to hit the road" shortly as 'soft' macro data mean-reverts and needs to be covered by a resurgence in real 'hard' data.

via http://ift.tt/2k72eNz Tyler Durden

Submitted by John Sulzer via The Mises Institute,

“They’re going to have to pay a border tax — a substantial border tax,” President Trump pledged Monday morning during a White House meeting with twelve CEOs including the heads of Dow Chemical, Proctor and Gamble, and Ford. He went on to make thinly veiled threats against the businessmen, saying, “All you have to do is stay. Don’t leave. Don’t fire your people in the United States.”

The President also discussed a 75 percent regulation cut and tax cuts for both the middle class and for corporations and a “big border tax.”

This is troubling for several salient reasons, primarily because the public image of President Trump holding White House meetings with businessmen just doesn’t wash. This meeting, at least, was open to the media. However, previous meetings with high-level executives have not been. What was discussed during these back-room meetings? We don’t know. Did the president offer incentives or threats? We don’t know.

What we do know is that the president working directly with CEOs produces at least the perception of secret deal-making. 

Additionally, the narrative that all outsourcing is bad is patently incorrect. Outsourcing factors of production can allow businesses to free up money and hire more workers in the US at higher wages. Another benefit is that those foreign firms who are paid by US companies have to spend the dollars they receive back in the US or trade them in so someone else can. This results in more investment and capital at home.

Also, dumbing down the causes of the decline in manufacturing jobs, as Trump is doing, doesn’t help anyone. New technology facilitated the decline arguably more than outsourcing as US manufacturing output has risen in recent years while jobs have declined. The decline isn’t because of “crooked” or “cucked” trade deals like NAFTA. These deals don’t force firms to outsource or to automate. What forces firms to do so is overbearing tax rates and regulation.

By announcing tax cuts for corporations and a 75 percent regulation cut in the same meeting, the president has signaled he intends to implement pro-growth business policies. The “big border tax” and “renegotiation” of NAFTA won’t help. The tax cuts and deregulation, on the other hand, would.

Finally, President Trump’s reference to “fair trade” was naive and deceptive: “So I don’t call that free trade, what we want is fair trade, fair trade, and we’re going to treat other countries fairly but they have to treat us fairly,” he claimed. This seemingly was his second-worst stray into the Bernie Sanders level of economic illiteracy, after calling the free market, “the dumb market.”

In recent decades, “fair trade” has usually denoted the practice of those in wealthy countries paying inflated prices for goods in order to supposedly pay higher wages to those workers in less-developed countries who produce said product. In reality, this results in unemployment for many of the workers and those who keep their job aren’t paid all that much more. The bureaucracy involved in the deal is the primary beneficiary. It turns out folks could do a lot more good for less by buying the cheaper alternative to fair-trade boondoggles and donating the difference to charity.

The same goes for President Trump’s border tax plan. Just like proposals such as the minimum wage, this sounds altruistic, but it helps no one. The best way to bring jobs back is to make America the friendliest place in the world for innovators and job creators, not punish them for looking elsewhere for an alternative to business-killing taxation and regulation of the Obama years.

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

Submitted by John Sulzer via The Mises Institute,

“They’re going to have to pay a border tax — a substantial border tax,” President Trump pledged Monday morning during a White House meeting with twelve CEOs including the heads of Dow Chemical, Proctor and Gamble, and Ford. He went on to make thinly veiled threats against the businessmen, saying, “All you have to do is stay. Don’t leave. Don’t fire your people in the United States.”

The President also discussed a 75 percent regulation cut and tax cuts for both the middle class and for corporations and a “big border tax.”

This is troubling for several salient reasons, primarily because the public image of President Trump holding White House meetings with businessmen just doesn’t wash. This meeting, at least, was open to the media. However, previous meetings with high-level executives have not been. What was discussed during these back-room meetings? We don’t know. Did the president offer incentives or threats? We don’t know.

What we do know is that the president working directly with CEOs produces at least the perception of secret deal-making. 

Additionally, the narrative that all outsourcing is bad is patently incorrect. Outsourcing factors of production can allow businesses to free up money and hire more workers in the US at higher wages. Another benefit is that those foreign firms who are paid by US companies have to spend the dollars they receive back in the US or trade them in so someone else can. This results in more investment and capital at home.

Also, dumbing down the causes of the decline in manufacturing jobs, as Trump is doing, doesn’t help anyone. New technology facilitated the decline arguably more than outsourcing as US manufacturing output has risen in recent years while jobs have declined. The decline isn’t because of “crooked” or “cucked” trade deals like NAFTA. These deals don’t force firms to outsource or to automate. What forces firms to do so is overbearing tax rates and regulation.

By announcing tax cuts for corporations and a 75 percent regulation cut in the same meeting, the president has signaled he intends to implement pro-growth business policies. The “big border tax” and “renegotiation” of NAFTA won’t help. The tax cuts and deregulation, on the other hand, would.

Finally, President Trump’s reference to “fair trade” was naive and deceptive: “So I don’t call that free trade, what we want is fair trade, fair trade, and we’re going to treat other countries fairly but they have to treat us fairly,” he claimed. This seemingly was his second-worst stray into the Bernie Sanders level of economic illiteracy, after calling the free market, “the dumb market.”

In recent decades, “fair trade” has usually denoted the practice of those in wealthy countries paying inflated prices for goods in order to supposedly pay higher wages to those workers in less-developed countries who produce said product. In reality, this results in unemployment for many of the workers and those who keep their job aren’t paid all that much more. The bureaucracy involved in the deal is the primary beneficiary. It turns out folks could do a lot more good for less by buying the cheaper alternative to fair-trade boondoggles and donating the difference to charity.

The same goes for President Trump’s border tax plan. Just like proposals such as the minimum wage, this sounds altruistic, but it helps no one. The best way to bring jobs back is to make America the friendliest place in the world for innovators and job creators, not punish them for looking elsewhere for an alternative to business-killing taxation and regulation of the Obama years.

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

"It seems to me like a lot of people think we're in a new inflationary boom," but, warns Gluskin-Sheffs David Rosenberg, "the answer is no… that's just not gonna happen. It's not like Ronald Reagan at all in that regard."

Full podcast:

Submitted by Patrick Ceresna via Macrovoices.com,

• This time around, not only are valuations at 15-year highs but we're entering it into the eighth year of the expansion of the bull market. You have to respect where were you are in the market cycle in the business expansion and we're much more mature now than we were in that early stage of Reagan or you can argue the early stage of Bill Clinton or Barrack Obama. I mean the benefit of being elected at the bottom of the cycle, then you can just ride it up and just take credit for it. I think that the challenge for Donald Trump with all deference to the animal spirit rally they were seeing right now is that the multiples are really stretched and that maybe if were not even in the ninth inning of the game here, we're certainly somewhere in or around the seventh inning stretch. So, the answer is no. It's not like Ronald Reagan at all in that regard.
• So basically, I'm supposed to take it at face value because the markets are telling me that this is their view today, and their view today might not be the market's view 3, 6, 12 months from now or 5 years from now. But the market's telling me that one man, President Trump is gonna be able to, with fiscal policy, will be able to do what Bernanke and Yellen and Draghi and Trichet and Koroda and Carney, who actually run the printing presses, what they couldn't do in the past 8 years a president's gonna be willing to do, or be able to do, on inflation? And the answer is no. That's just not gonna happen.
• What did inflation do during this supply side Reagan era? Went from 12 percent to down below 5 percent over his 8-year term? Why anybody thinks that Trump's policies themselves are gonna create inflation, I can't build an inflation view out of that.

Excerpts of the full interview:

Erik:       Is it just me? I mean everybody's talking about the analogy to Trump is the new Ronald Reagan and I can't help but think wait a minute, first 2 years of Reagan's presidency was a massive bear market and recession. Am I missing something here Dave?

Dave:    Well, you know the other thing, I don't think you're missing anything, no. I mean the Reagan presidency is well you know, and it goes to show in those first 2 years after the honeymoon period when the market is down 25%, that really basis-point-for-basis-point, what matters you know for the market is the shift in the market multiple as oppose to earnings growth and the Fed certainly showed its hands. Volcker raised, and we had the recession starting 6 months after Reagan got elected. People looked benevolently of course and the entire Reagan regime entire 8 years and a lot of that wasn't just his pro-business stance but also the fact that the FED continued to cut interest rates that reinforced the expansion of the market multiple. But I remember that the starting point in 1982 for the bull market was a multiple that was 8, you know, not the 17 on forward and almost 20 on trailing and that point the onset of the bull market occurred in 1982 after a huge recession.

This time around, not only are valuations at 15-year highs but we're entering it into the eighth year of the expansion of the bull market. You have to respect where were you are in the market cycle in the business expansion and we're much more mature now than we were in that early stage of Reagan or you can argue the early stage of Bill Clinton or Barrack Obama. I mean the benefit of being elected at the bottom of the cycle, then you can just ride it up and just take credit for it. I think that the challenge for Donald Trump with all deference to the animal spirit rally they were seeing right now is that the multiples are really stretched and that maybe if were not even in the ninth inning of the game here, we're certainly somewhere in or around the seventh inning stretch. So, the answer is no. It's not like Ronald Reagan at all in that regard.

Erik:       And in terms of where we are and what comes next obviously as much as you and I see a lot of reason for concern here, you can't fight the tape and clearly the trend has been upward. So, are we gonna see several months do you think of exuberance over this election before reality sets in? And it seems to me like a lot of people seem to think we're in a new inflationary boom. You wrote an excellent piece back in December saying wait a minute, there's a lot of good reasons to think that Trump would bring back the disinflation trade. So, do you still see it that way and give us a little bit of background on where that viewpoint comes from?

Dave:    Well, I mean the second question is a lot easier, the inflationary boom. So basically, I'm supposed to take it at face value because the markets are telling me that this is their view today, and their view today might not be the market's view 3, 6, 12 months from now or 5 years from now. But the market's telling me that one man, President Trump is gonna be able to, with fiscal policy, will be able to do what Bernanke and Yellen and Draghi and Trichet and Koroda and Carney, who actually run the printing presses, what they couldn't do in the past 8 years a president's gonna be willing to do, or be able to do, on inflation? And the answer is no. That's just not gonna happen. There's just too many powerful secular forces a play whether it's demographics, intense global competitive pressure that aren't going away and of course with the fact that you've got tremendous excess supply of retail space net and states and Amazon creating tremendous margin pressure and price discounting in the rest of the consumer goods and services area. So, no and I'm not a buyer of the view and especially with the US dollar likely to still be a strong currency even though it's a very crowded trade, it's probably the right trade. I don't see the big inflation out there.

You know people wanna compare to Ronald Reagan, fine. I mean there's differences, there's some similarities but what did the inflation do during the Reagan era? What did inflation do during this supply side Reagan era? Went from 12 percent to down below 5 percent over his 8-year term? Why anybody thinks that Trump's policies themselves are gonna create inflation, I imagine that the wall with Mexico will create demand for cement and concrete and the likes and you'll see some commodity inflation perhaps coming out of there, infrastructure probably much the same, but that's a very small sliver of the overall inflation pie and ultimately what will matter for the markets is the extent towards any inflation at the backend of the economy comes to the frontend of the economy. And looking at the Trump's policies deregulation should reduce business costs. What is inflationary about that? Yes, the infrastructure works. The only way it's gonna work is if it ultimately improves productivity like the good old fashioned Eisenhower structure of the interstate highway in the 1950s really showed true in the 1960s in terms of increased productivity growth, well productivity growth in that itself is anti-inflationary because it brings down unit labour cost. So, what if Donald Trump reduces tax rates along with congress corporate tax rates? Well what's inflationary about lower corporate tax rates? It actually means that wages can rise without crimping margins and forcing companies to have to pass it on to consumers. So outside of cement, concrete, some base metals, the things that might go initially into the stuff that's needed to build the wall of Mexico or needed to see upgrade airports and pave bridges and roads, I don't see where the big inflationary impulse is gonna come from. If anything, if Trump is successful, it means that the potential GDP growth rate, the non-inflationary GDP growth rate of the United States is gonna be rising overtime. I can't build an inflation view out of that.

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

With 'sanctuary' cities across America furiously defiant over the new administration's threats to halt Obama's taxpayer-funded law-breaking, AP reports that President Trump is reviving a program that deputizes local officers to enforce federal immigration law.

The program received scant attention as Trump announced on the same day his plans to build a border wall and hire thousands more federal agents as he looks to fulfill promises from his campaign.

 

The program has fallen out of the favor in recent years amid complaints from critics that it promotes racial profiling.

 

More than 60 police and sheriff's agencies had the special authority in 2009.

 

Since then, the number has been halved and the effort scaled back amid complaints officers weren't focusing on catching violent offenders and instead arrested immigrants for minor violations.

Police leaders across America have already responded with LAPD chief Charlie Beck perhaps the most vocal, saying in November, he has no plans to follow Trump's demands, "we are not going to engage in law enforcement activities solely based on somebody’s immigration status. We are not going to work in conjunction with Homeland Security on deportation efforts."

Chief Beck said he planned to maintain the long-standing separation.

For decades, the LAPD has distanced itself from federal immigration policies. The LAPD prohibits officers from initiating contact with someone solely to determine whether they are in the country legally, mandated by a special order signed by then-chief Daryl Gates in 1979. During Beck’s tenure as chief, the department stopped turning over people arrested for low-level crimes to federal agents for deportation and moved away from honoring federal requests to detain inmates who might be deportable past their jail terms.

 

“I don’t intend on doing anything different,” he said. “We are not going to engage in law enforcement activities solely based on somebody’s immigration status. We are not going to work in conjunction with Homeland Security on deportation efforts. That is not our job, nor will I make it our job.”

 

In Los Angeles, officials have tried to alleviate some of those concerns by signaling their support for the city’s immigrant residents. At a meeting Friday at the Coalition for Humane Immigrant Rights of Los Angeles, Mayor Eric Garcetti said the city would question Trump’s decisions on immigration.

 

“If the first day, as president, we see something that is hostile to our people, hostile to our city, bad for our economy, bad for our security, we will speak up, speak out, act up and act out,” Garcetti said.

The mayor also said that the LAPD would continue to enforce Special Order 40, the Gates-signed directive that bars officers from contacting someone solely to determine their immigration status.

“Our law enforcement officers and LAPD don’t go around asking people for their papers, nor should they,” he said. “That’s not the role of local law enforcement.”

And now today,

"This is not our job, nor will I make it our job,” Beck said in an interview with the Los Angeles Times.

 

“We couldn’t deport 500,000 people if we wanted to, and if we did, it would be at the expense of public safety,”

As AP notes, however, the program could end up having a significant impact on immigration enforcement around the country..

Sheriff Joe Arpaio used the program most aggressively in metro Phoenix, and he became arguably the nation's best-known immigration enforcer at the local level in large part because of the special authority. In a strange twist, he was thrown out of office in the same election that vaulted Trump to the presidency, mostly because of mounting frustration over legal issues and costs stemming from the patrols.

 

 

In his executive order this week, Trump said he wants to empower local law enforcement to act as immigration officers and help with the "investigation, apprehension, or detention" of immigrants in the country illegally.

 

The move comes at a time when the country is sharply divided over the treatment of immigrants. Cities such as Chicago and San Francisco have opposed police involvement in immigration while some counties in Massachusetts and Texas are now seeking to jump in.

 

Proponents say police departments can help bolster immigration enforcement and prevent criminals from being released back into their neighborhoods, while critics argue that deputizing local officers will lead to racial profiling and erode community trust in police.

With Trump in office, the program has new life.

Even before the change in administration, two Republican county sheriffs in Massachusetts said they were starting programs. In Texas, Jackson County sheriff A. J. "Andy" Louderback said two officers will get trained to run immigration jail checks this spring and nearby counties want to follow suit. Louderback said teaming up with federal agents will cost his agency roughly $3,000 — a small price to pay to cover for officers while they're on a four-week training course, especially in an area struggling with human smuggling.

 

Once the program is underway, he said immigration agents will send a daily van to pick up anyone flagged for deportation from jail. "It just seems like good law enforcement to partner with federal law enforcement in this area," he said. "It takes all of us to do this job."

'Experts' said Trump's outreach to local law enforcement will create an even bigger split between sanctuary cities that keep police out of immigration enforcement and those eager to help the new president bolster deportations. "There is no question that in order to do the type of mass deportation that he promised, it will require him conscripting local law enforcement agencies," said Chris Newman, legal director of the National Day Laborer Organizing Network. "It is going to balkanize things … and we're going to see more of the extremes."

via http://ift.tt/2jH3rN1 Tyler Durden

In light of the only thing that matters for markets (that would be Donald Trump for those who have slept through the past three months), here are some salient thoughts from the latest weekend notes by One River Asset Management’s Eric Peters, whose uncanny ability to put a unique spin on events in third person continues to impress.

Beep Beep: “The world got caught in its own trap,” said Roadrunner, the market’s biggest equity volatility trader. “Traders got it wrong before the election, and continue to get it wrong today.” The VIX touched 10.50. “You see the tweets, the media battle, illegal voters, conspiracy theories, Mexican feuds, European taunts, border walls, fake news, and lies,” said Roadrunner, looking left, right, up. “But be careful what you watch. There is only one thing that doesn’t lie, and that’s the price,” he said. “Look where the price is, what it’s telling us.” 

 

“VIX tells you that there’s someone in charge who’s not a madman,” continued Roadrunner. “He speaks and acts like he’s crazy, but the market is wiser than all of us, it’s smarter than everyone combined.” He paused, contemplating our new surroundings. “Barnum and Bailey closed just ahead of the inauguration. How could they compete with this circus?” The wall is a show. Our world is now theatre. We’re all extras. “Of course at some point vol will explode, but for the moment the market is saying maybe America First will work.”

 

“Dollar rally doesn’t seem close to done,” said Roadrunner. “As rates head higher, they’ll hurt equities.” It won’t be Goldilocks forever. “When vols fall to these levels it’s because people got too long and slowly get squeezed out.” We’ve begun to see the first signs of animal spirits returning, but not of the intensity to signal a bull market high. Volatility is cheap, pretty much everywhere, though of course it can always go lower, for a time.

 

“What I’d like to see is a scramble for S&P calls before I get really bearish,” said Roadrunner, and darted off.

Next follows an interlude on human hypocricy:

“My wife screamed today, hysterical,” he said. “Said she’s giving a ton of money to Greenpeace. So I asked why? Said she’s going to help anyone that opposes this man. I almost asked how that’ll help, but knew better than to argue. I left for work, then a biz dinner. Told the story, and turns out I’m not alone. Everyone’s wives are wearing pink hats. They took buses to the DC March. They’re excited, angry, outraged. And I dare not tell her that no matter how much she gives to Greenpeace, we’re richer, because this man made us a fortune on our bank stocks.”

Finally, some observations on why this time may be different:

“Complete garbage,” cried the professor from Edinburgh University. “I’m appalled by what’s being published in Science,” he continued. You see, some Ivy League nerd claims to have created a miraculous super-conducting material. “It’s the first time solid metallic hydrogen has existed on Earth,” boasted the pioneering Harvard scientist. He’d inserted hydrogen atoms into a synthetic diamond anvil at a pressure of 495 gigapascals; which any moron knows is equivalent to bench-pressing 5mm earth atmospheres. Do that at -270 Celsius and magical things happen – Presto! – hydrogen atoms share electrons, creating a crystal lattice, just like a metal. But the Edinburgh propeller-heads are skeptical. They demand more proof. Rightly so. These kinds of breakthroughs are rare, they transform the economy, society. And they’re happening more often now than ever before.

 

You connect 7.48bln hungry humans, stand them atop the shoulders of giants, compress them into a shrinking planet, warm things up a few degrees, and magic happens. ISIS happens too. All sorts of unexpected things happen. Like quantum computing, the rise of robots, green energy, declining birth rates, shrinking labor forces, growing inequality, secular stagnation, rising nationalism, anti-globalism – a return to policies made famous in the 1930s, with utterly disastrous consequences. But these things we already know. Yet global equity markets continue to rise. Despite chants of America First, emerging market equities are inexplicably outperforming on the way up. The VIX index grinds to levels seen only during periods of supreme calm. Perhaps something else is happening here. Something less pernicious. Positive. It’s vital to keep an open mind. After all, it may be the first time solid metallic hydrogen has ever existed on Earth; and our countless other innovations, accelerating inexorably. “Complete garbage,” cry the economists, political scientists, appalled, with history firmly on their side.

 

But humanity has never experienced a time quite like our present.

And with that, here’s looking forward to tomorrow’s new all time highs in the S&P 500.

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

Shortly after Senators McCain and Graham issued their "joint statement on President Trump's Executive Order on immigration"…

U.S. Senators John McCain (R-AZ) and Lindsey Graham (R-SC) released the following statement today on the President’s executive order on immigration:

 

 

“Our government has a responsibility to defend our borders, but we must do so in a way that makes us safer and upholds all that is decent and exceptional about our nation.

 

“It is clear from the confusion at our airports across the nation that President Trump’s executive order was not properly vetted. We are particularly concerned by reports that this order went into effect with little to no consultation with the Departments of State, Defense, Justice, and Homeland Security.

 

“Such a hasty process risks harmful results. We should not stop green-card holders from returning to the country they call home. We should not stop those who have served as interpreters for our military and diplomats from seeking refuge in the country they risked their lives to help. And we should not turn our backs on those refugees who have been shown through extensive vetting to pose no demonstrable threat to our nation, and who have suffered unspeakable horrors, most of them women and children.

 

“Ultimately, we fear this executive order will become a self-inflicted wound in the fight against terrorism. At this very moment, American troops are fighting side-by-side with our Iraqi partners to defeat ISIL. But this executive order bans Iraqi pilots from coming to military bases in Arizona to fight our common enemies. Our most important allies in the fight against ISIL are the vast majority of Muslims who reject its apocalyptic ideology of hatred. This executive order sends a signal, intended or not, that America does not want Muslims coming into our country. That is why we fear this executive order may do more to help terrorist recruitment than improve our security.”

President Trump decided to let them have it…

The joint statement of former presidential candidates John McCain & Lindsey Graham is wrong – they are sadly weak on immigration. The two…

— Donald J. Trump (@realDonaldTrump) January 29, 2017

…Senators should focus their energies on ISIS, illegal immigration and border security instead of always looking to start World War III.

— Donald J. Trump (@realDonaldTrump) January 29, 2017

Hard to argue with that!

via http://ift.tt/2kCVK9o Tyler Durden

As markets continue to break record highs, the echelon of premier finance sites in America continues to undergo deleterious drawdowns in their traffic. Anyone who operates a finance site knows that lack of volatility is the death knell for traffic. People aren’t interested in reading about stocks, generally speaking, when markets are effervescently gliding towards new highs. They are, in fact, keenly interested in horrible news and/or rapidly declining equity prices.

According to data provided by Alexa.com, sites solely focused on finance have struggled, mightily, especially in recent months. Part of it has to do with boring markets — but another working theory is the recent news cycle dominated by politics.

And a look at an ETF representative of the VIX index.

Notice a correlation?

One my favorite market tells is the correlation between traffic spikes and market bottoms. Here is a look at the traffic at iBankCoin from July of 2015 to March of 2016. Markets bottomed, from a calamitous drop of more than 10%, which was the worst start to a new year on record, on February the 8th, 2016.

In short, we’re gonna need a market crash in order to reverse the insipid digital trends in finance

 

 

Content originally generated at iBankCoin.com

via http://ift.tt/2kIOhVb The_Real_Fly