Month: January 2017

Biotech Stocks Slide As Trump Slams “Astronomical Prices”, Tells Drug CEOs To “Get Prices Down”

If anyone was wondering what Trump would tell Pharma CEOs in an ad hoc meeting scheduled for 9 am today, here is the answer:

  • TRUMP TO DRUG CEOS: YOU HAVE TO GET PRICES DOWN
  • TRUMP ON MEDICARE, MEDICAID WE NEED PRICES WAY DOWN.  PRICING HAS BEEN ASTRONOMICAL
  • TRUMP SAYS NEED TO MAKE DRUG PRODUCTS IN THE US
  • TRUMP WILL OPPOSE REGS FOR SMALLER COMPANIES

And of secondary importance:

  • TRUMP: GOING TO ANNOUNCE `FANTASTIC PERSON’ FOR FDA SOON

The result: the Nasdaq biotech index is down -0.7% to open and likely going lower if Trump indeed plans to micromanage pharma P&Ls.

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Dollar Dumps After Trump Accuses Other Countries Of “Devaluation”

It appears America's 'strong dollar policy' is over. President Trump just commented that "other countries take advantage of America by devaluation," and then Trump directly named China and Japan as "planning money markets," presumably implying manipulation.

And the reaction in the dollar is clear…

 

Erasing all the post-ECB, post-Fed gains…

 

The Dollar Index has broken a key trendline…

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The Art Of The New Deal: How Trump Is Using Mexican Company Cemex’s Concrete To Build The Wall And Profit Both Countries

The press has been ablaze with reports that Mexico is stonewalling against Trump’s demands that they pay, in one form or another, for the wall. Some speculate that the wall will not be built at all. But research by Disobedient Media indicates that not only will the wall be built, but that it has strong support among certain Mexican business interests such as cement producer Cemex who has been actively lobbying to ensure that Trump and his allies take office and begin construction.

I. Cemex Is Best Positioned To Benefit From The Wall, And Does Not Have A Major Competitor In The United States

According to information published by the Global Cement Directory, Cemex is the largest producer of cement in North American and does not have any American competitors of equal size. It has been described in a diplomatic cable released by Wikileaks as being one of “Mexico’s monopolists” with a market share of 87.6%. Data collected using the installed capacity of companies’ integrated cement plants shows that the US does not even break the top ten list of cement producers globally. Cemex, however, ranks fifth, far ahead of their only Western competitor in Brazil.

Source: Global Cement Directory

Cemex is a major producer, with plants and operations in over 50 countries worldwide. It has acquired a number of assets in the United States. With quarries on both sides of US-Mexico border it is positioned better than any other firm to act as the main supplier of raw materials for Trump’s wall. The map below shows the location of quarries belonging Cemex and other corporations on the border.

Source: Financial Times

The logistical and economic nightmare of having to move cement further than 200 miles means that Cemex is ideally positioned to be the primary supplier for Trump’s wall. Additionally, contracting with dozens of American companies to provide cement would greatly complicate the building process. Trump, a man who prides himself on completing projects under budget and ahead of schedule, is unlikely to shun Cemex when seeking materials.

While Trump has made the creation of American jobs the central selling point of his Presidency, he has also stated that the wall will “help” Mexico. In the case of Cemex, it becomes clear how the wall will, at least in part, help Mexico: no matter which country pays for it, some of the funds will return to Mexican firms who help the United States with construction. Contracting with Cemex for the concrete used to build the wall is a win-win situation for both Cemex and Trump. Cemex employs thousands of Americans in their U.S. operations. By contracting with Cemex, Trump is able to deliver on his promise not just to benefit Mexico financially, but to also help ensure that American jobs are retained and possibly more created by Cemex as it ramps up operations to meet American textile demands for the wall.

II. How Cemex And Trump Mutually Benefit From The Wall

Donald Trump’s presidential victory signals a new direction in the relationship between the United States and Mexico. Beyond the wall, both states stand to fare well from Trump’s plans to overhaul the U.S. economy and renegotiate America’s trade deals. Financial sources are already beginning to speculate that Mexico could help the United States return a greater percentage of its trade deficit to North America. At the moment, over 90% of America’s trade deficit is held by countries outside the continent.

At the same time, companies such as Cemex will benefit from the weakening Peso, which has dropped since Trump’s election. The dropping Peso has been held out by some as a sign that Trump’s Presidency is having a negative effect on Mexico. However, the weakened currency actually makes the products sold by companies such as Cemex more attractive to foreign buyers. Not only will the weak Peso make a better deal for Trump and the United States, but it also gives added assurance to Cemex that their concrete will be used to build the wall. The payout, estimated to be over $700 million for concrete and $240 million for cement, would be greatly welcomed by Cemex in the aftermath of their first reported quarterly profit in over seven years as they ride a surge in their company’s valuation on the stock market.

Source: seekingalpha.com

Cemex is one of many building material companies who have seen a major rise in the aftermath of Trump’s reiteration of his desire to build the wall. Beyond operations on the border, the wall’s construction would signal a general increase in infrastructure investment.

Source: Bloomberg

III. Cemex Provided Political Support For Trump Allies

In what appears to be a political game of deal making, a Cemex affiliated PAC run by Executive Vice President Frank Craddock was found to have engaged in a campaign of support for political candidates who were most likely to help ensure that the wall would become a reality. Information compiled by the Center for Responsive Politics from data provided by the Federal Election Commission shows that the Cemex Inc. Employee Political Action Committee donated more than 80% of its funds during the 2016 cycle to Republican candidates. The majority of the Republican recipients listed as having received donations from Cemex have either expressed political support for Donald Trump or for the policy of building a security wall on the border with Mexico. This revelation clearly indicates that Cemex sought to help ensure that Trump would have a Republican majority both in the House and Senate to make certain that construction of the wall would proceed.

Aside from the political boost Cemex’s donations have given to Trump in the long run, there is no indication that the favor was returned in any type of pay for play arrangement. However, it is interesting to note that Newt Gingrich, who supported a tariff which negatively Cemex in the 1990’s, was not offered a senior position on Trump’s staff.

The relationship between Cemex and the United States is the perfect illustration of Donald Trump’s dealmaking diplomacy. With a shrewd eye for business, Trump is able to pick out valuable regional players and encourage partnerships which will not only benefit the United States and deliver on his campaign promises, but also help inject capital into foreign firms and boost employment rates across their nations. The media on both sides of the border will likely continue to cast shadows on the likelihood of a wall and a Mexican-American agreement on how it will be funded. But as evidenced by Cemex’s rising fortunes and willingness to reach out and assist Trump financially and politically, Trump’s New Deal is one that nobody wants to refuse.

This article was originally posted at http://ift.tt/2joxaf2

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The $USD Bulls Are Going to Get Taken to The Cleaners

The $USD is about to collapse.

This is not fear mongering, nor is it just a bold statement. The $USD has peaked and is about to breakdown in a BIG way.

See for yourself, the greenback has taken out critical support. The spike higher that occurred starting election night is looking more and more like a bullish headfake.

This means the $USD will reverse this entire move and THEN some.

Why is this?

Inflation is about to hit in a big way. Globally inflation measures are spiking up. And the $USD will be collapsing as a result.

Anyone who bought into the $USD bull story has failed to realize, that they were not in fact $USD bulls, but Yen bears.

The entire rally in the $USD has been driven by the Bank of Japan using the brief window of time between Trump winning the election and Obama leaving the Whitehouse to devalue the yen by an incredible 18%.

This is a once in a decade type intervention. And it is now over. The Trump Administration has sent out numerous warning shots that the $USD is too high.

Those who are betting on a Trump $USD bull market are going to be getting ANNHILITED in the coming weeks and months.

If you’re looking to profit from the REAL impact Trump’s Presidency will have on the market (and the massive opportunities this situation presents), we’ve put together a Special Investment Report outlining three investment strategies that will produce major returns as a result of Trump’s economic policies.

It’s titled How to Profit From the Trump Trade and we are giving away just 1,000 copies for free.

To pick up your copy, swing by

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

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Amherst Student Expelled for Sexual Misconduct Can’t Defend Himself—It Would ‘Impose Psychological Trauma’ on Accuser

AmherstRemember Amherst College student “John Doe,” who was expelled for sexual misconduct, even though he had good reason to believe that his accuser had actually assaulted him? A judge recently blocked Doe’s attempt to subpoena his female accuser’s text messages on grounds that re-litigating the matter “would impose emotional and psychological trauma” on her.

Consider the implications of this decision. According to Seattle District Judge James Robart, a student who believes Amherst violated his due process rights, wrongfully expelled him, and ignored subsequent evidence that his accuser, “Sandra Jones,” was the actual violator of the college’s sexual misconduct policies, does not deserve the opportunity to make his case because someone else’s feelings are more important.

Whatever happened to believing the victim?

The incident in question took place years ago, during the late night / early morning hours of February 4-5, 2012. Jones was Doe’s girlfriend’s roommate at the time. Jones went to Doe’s dorm room and sexual activity ensued: Jones performed oral sex on Doe.

But Jones was blackout drunk at the time—a detail that Amherst administrators deemed “credible,” on subsequent review. Of course, it’s questionable whether a blackout drunk student can actually provide the level of consent that Amherst’s sexual misconduct policy requires.

Other factors cast doubt on the idea that Jones was the victim and Doe the perpetrator. After leaving Doe’s dorm room, Jones texted another male student and asked him to come to her dorm room for sex. She also texted a residential advisor about her “stupid” decision to engage in sexual activity with her roommate’s boyfriend. In these text messages, Jones admitted that she was “not an innocent bystander.” She also complained about how long it was taking this second male student to do anything sexual with her. She did not file a complaint against Doe until two years later.

It’s certainly possible that Jones was forced by Doe to give him oral sex without her consent, left the encounter with a fervent desire for another hookup, mischaracterized her own level of responsibility in a message to the RA, and didn’t realize she had been sexually assaulted for another two years (after befriending a number of victims’ advocates). It just doesn’t seem like the most probable explanation for what happened. But, based on a preponderance of the evidence presented to Amherst administrators, Doe was expelled.

Keep in mind that administrators never reviewed the text messages, and when Doe asked the administration to re-open the case in light of this error, Amherst refused. Doe was given just seven days to appeal the finding of responsibility, but he didn’t find out about the texts until months later.

Doe has filed suit against Amherst for mistreating him. He has not sued Jones, although maybe he should have. As part of his case against Amherst, Doe’s legal team subpoenaed Jones to testify at the trial and turn over certain documents and records of statements she made about the alleged assault. Jones refused to cooperate.

And, according to Judge Robart’s ruling, she doesn’t have to:

An in-person deposition of boundless scope would impose a substantial burden on Ms. Jones. (Subpoena at 1; see also Resp. at 7 (“Until a deposition begins, it is very difficult to know where it will lead and impossible to predict all the topics that may be explored with a witness.”).) The deposition would force Ms. Jones to relive a night in which she asserts Mr. Doe sexually assaulted her. (See, e.g., Clune Decl. ¶ 3, Ex. 4; Resp. at 6-7.) It would also reraise the subsequent investigation, hearing, and period of publicity that Ms. Jones has endured. (Id. ¶ 3, Ex. 5 at 11-12; Am. Compl. ¶¶ 54, 56.) It takes no leap of logic to reason that a live deposition would impose emotional and psychological trauma upon Ms. Jones.

Robart essentially argues that since Doe isn’t suing Jones directly, he has no right to involve her in his case against Amherst. He also argues that Amherst is in possession of the relevant documents, and thus Jones’s involvement is unnecessary. But, as KC Johnson explains, that isn’t quite right:

Yet much of the requested material couldn’t come from Amherst employees. For instance, a critical aspect of the accused student’s case is the basic unfairness of an adjudication that went forward under the false premise that A.S. had not reduced anything about the incident to writing. So the subpoena asked A.S. for “all communications, including text messages or emails, between you and anyone else on February 5, 2012.” The only conceivable source of this material would be A.S., not any Amherst employees.

Johnson notes that this decision might actually represent a setback for victims’ rights organizations, since it incentivizes accused students to sue their accusers in addition to their colleges:

Ironically, whatever minor assistance the ruling might have to frustrating the Amherst student’s quest for justice, the victory might be a Pyrrhic one for the accusers’ rights movement as a whole. Judge Robart sent a message that the only way an accused student can obtain relevant evidence involving his accuser is—as a handful of accused students have done—to sue his accuser as well as the college. Expect more accusers to be added to future lawsuits as a result.

Johnson is a co-author of The Campus Rape Frenzy, a new book about the death of due process on college campuses. He calls the Amherst case “perhaps the most egregiously unfair” one he has covered. Who could disagree?

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Thousands Of Google Employees Protest Trump Order; Top Tech Companies To Join Legal Action

The US tech industry “resistance” to Trump is growing louder, and on Tuesday a group of top technology companies including Google, AirBnB and Netflix, plan to meet on Tuesday to discuss filing an amicus brief in support of a lawsuit challenging President Trump’s order restricting immigration from seven Muslim-majority countries, said a spokesperson for a company organizing the gathering cited by Reuters. The meeting is being called together by GitHub, which makes software development tools.

For those unfamiliar, amicus, or “friend of the court”, briefs are filed by parties who are not litigants in a case but want to offer arguments or information to the judge. In other words, tech companies do not want to burn all bridges with the president, but they don’t want to lose their liberal clients either by being perceived as doing nothing, something which impacted Uber adversely over the weekend, leading to the #DeleteUber social media meme.

As Reuters adds, some of the companis invited to the meeting are Alphabet’s Google, Airbnb and Netflix. 

As reported yesterday, the technology sector has become the clearest corporate opponent to the ban announced last week, however not due to a genuinely altruistic reason, but because Trump’s crackdown on H1-B visas threatens to cutoff a key labor supply. The industry depends on talent from around the world, and companies have been considering the best way to muster their resources, with efforts so far including statements condemning the move and financial support for organizations backing immigrants, such as the American Civil Liberties Union.

According to Michal Rosenn, general counsel for fundraising company Kickstarter, which will be involved in a filing, the “effort” – which at places like Bloomberg has already been dubbed the “resistance” – began on Monday. “We’re all very shaken. We’re shaken to see our neighbors and our families and our friends targeted in this way,” Rosenn said. “All of us are trying to think about what we can do.”

The discussions among the tech companies come after Amazon.com and Expedia filed declarations in court on Monday supporting a lawsuit filed by the Washington state attorney general. Amazon and Expedia said Trump’s order adversely impacts their business.

A separate lawsuit challenging Trump’s order as unconstitutional was filed on Monday by the Council on American-Islamic Relations. Additionally, Microsoft said it would aid the Washington AG lawsuit against the Trump executive order. If the tech companies decide to file an amicus brief as a group, it is unclear which case they would weigh in on.

Other companies invited to meet, according to Reuters, include Adobe Systems Inc, AdRoll, Automattic Inc, Box Inc, Cloudera Inc, Cloudflare Inc, Docusign, Dropbox, Etsy Inc, Evernote Corp, Glu Mobile Inc, Lithium, Medium, Mozilla, Pinterest, reddit, Salesforce.com Inc, SpaceX, Stripe, Twilio, Yelp Inc, and Zynga Inc, the source said.

Meanwhile, as Bloomberg adds, thousands of Google employees staged protests on Monday over Trump’s executive order on immigration. More than two thousand employees of Google parent Alphabet Inc. participated across several offices. At Google’s Mountain View, California, headquarters, Chief Executive Officer Sundar Pichai and co-Founder Sergey Brin — both immigrants — spoke to the crowd, voicing concerns over Trump’s order that limits travel to the U.S. from seven Muslim-majority countries.

Many tech companies criticized the order, which was signed late Friday. Pichai sent a note to Google staff that day, saying 187 employees were potentially affected. Google asked those employees overseas to return immediately, pledging to help with the logistics and handle the costs.

 

Pichai told the assembled employees on Monday that the issue is “at the core of the founding of this company,” according to a Google employee there. “We spent two hours this morning talking about all of this. There is large work that remains to be done.” 

 

Brin talked about his refugee past. Part of a Russian Jewish family, he emigrated to the U.S. because of anti-Semitism in that country. 

 

Some of the Google employees affected by the immigration order also addressed the crowd. Soufi Esmaeilzadeh, a Google product manager, was one of them. An Iranian-born Canadian who has lived in the U.S. for 15 years, she was preparing to travel from Switzerland to the U.S. when news of the coming executive order first arrived.

As Bloomberg concludes, “the disruption comes at a delicate time for Google. The company, which had close ties to the Obama Administration, is determining its broader policy approach to Trump on a myriad of issues, including net neutrality, taxes and competition law.” Indeed, and since tech companies realize they are dealing with an unpredictable president, one wonders what their reaction will be if Trump actually targets the tech sector in his next crackdown, either on Twitter or elsewhere.

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Case-Shiller Home Prices Reach Record High In November (Right Before Rates Exploded Higher)

The good news – US home prices have never, ever, been higher according to Case-Shiller.

“With the S&P CoreLogic Case-Shiller National Home Price Index rising at about 5.5% annual rate over the last two-and-a-half years and having reached a new all-time high recently, one can argue that housing has recovered from the boom-bust cycle that began a dozen years ago,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

 

“The recovery has been supported by a few economic factors: low interest rates, falling unemployment, and consistent gains in per-capita disposable personal income. Thirty-year fixed rate mortgages dropped under 4.5% in 2011 and have only recently shown hints of rising above that level. The unemployment rate at 4.7% is close to the Fed’s full employment target. Inflation adjusted per capita personal disposable income has risen at about a 2.5% annual rate for 30 months.

The bad news – that was November’s data.

 

The ugly news – mortgage rates have exploded higher since then…

 

Probably Nothing…

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A.M. Links: Trump SCOTUS Nomination Coming Today, Trump Fires Acting Attorney General Sally Yates, Senate Judiciary Committee to Vote on Jeff Sessions

  • President Donald Trump is expected to announce his Supreme Court nominee today.
  • Acting Attorney General Sally Yates has been fired by President Trump for refusing to defend his executive order on immigration.
  • The Senate Judiciary Committee is expected to vote today on Jeff Sessions’s nomination for attorney general.
  • An executive order on LGBTQ workplace rights signed by President Barack Obama will still be enforced by President Trump, the White House said today.
  • “The U.N. Security Council will hold an emergency meeting Tuesday, at the request of the United States, to discuss Iran’s latest ballistic missile test.”

Follow us on Facebook and Twitter, and don’t forget to sign up for Reason’s daily updates for more content.

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Gartman No Longer Bullish After Seeing Barron’s Cover

On Saturday morning, we noted that in what has become an market-timing tradition, Barron’s released its “Next Stop Dow 30,000” issue, which promptly raised red flags among traders that the market may have peaked.

Convictions that the next leg was lower were substantiated on Monday morning, when Dennis Gartman announced he was turning more bullish, saying “Our Propensity Is To Find Modest Long Exposure Today”, because – well – stocks were higher… just hours before the biggest market drop of 2017.

So, in the aftermath of yesterday’s drubbing, we were wondering if Gartman would flip-flop once again. We got the answer earlier this morning, when indeed the famous momentum chaser did just that. His excuse? Not getting the Barron’s edition until late on Monday. No really: here is the “explanation in his latest letter”

We were concerned about the stock market when we opened the latest edition of Barron’s and saw the front page cover announcing DOW 30,000! In the past, it has always been magazine and/or newspaper headlines that marked the highs and lows of the equity markets. Hence, when we opened our mail yesterday morning [Ed. Note: We sometimes don’t receive Barron’s in our post-office box until Monday morning; the rest of the world receives it on Saturday. This was one of those days!] and saw the front cover we thought: Has it happened again? Has a nation-wide publication once again marked the highs?  Have we learned nothing at all from history?

 

The jubilation over Dow 20,000 was disturbing enough, but to have had Dow 30,000 touted on the front page of Barron’s revisited historical precedents that spoke very loudly to us. We would very much like to believe that the bull market shall continue and we would very much like to think that Dow 30,000 shall eventually be upon us, and we very, very much would like to believe that any further weakness in  stocks is to be bought, but at the moment we have very serious doubts to that effect…. Very, very serious doubts. Tops of consequence are made in this fashion, with front page articles touting new highs. Attention then must be paid:

And the climax:

In our retirement funds here at TGL we came into yesterday modestly… very, very modestly… long of equities for we were long of the shares of a high-yielding business development company listed on the NYSE that had been bought in order to capture the dividend as the stock went “ex-“ late last week. We’ve brought a stop up behind that position that shall take us out at break-even, including the dividend,  but we’ve no intention at this point of buying anything else and if we are taken out we’ll stand wholly aside and watch further developments.

It may be time to cover those shorts.

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Merkel Responds To Trump Trade War Charge

Following Peter Navarro’s accusations of German manipulation of the euro (and the surge in the EUR relative to the USD), Angela Merkel has responded by explaining implicitly ‘it’s not my fault. Noting that she “can’t change the situation with respect monetary policy” (so blame Draghi), Merkel added she “doesn’t want to influence the euro exchange rate.” EURUSD is dropping a little on her headlines.

Chancellor Angela Merkel, asked about the euro’s exchange rate, says Germany has always supported an independent European Central Bank “which is why we won’t seek to exert influence over the ECB.”

“I neither want to nor can I do something to change the situation.”

The reaction was a modest drop in EURUSD…

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