Month: November 2017

Goldman Throws Up On Tesla Earnings: Reiterates Sell, Cuts Price Target To 36% As Stock Tumbles

One day after Tesla announced its worst quarter in history, in which it burned a record $1.4 billion in cash…

… Goldman has guaranteed it will not be an underwriter on the next Tesla stock offering – which at the current cash burn will take place in less than 2 quarter – by reiterating its Sell rating on Tesla, and cutting its Price Target to $205, or 36% downside. Here is the summary from Goldman's David Tamberrino who once again unapologetically throws up all over the latest TSLA earnings:

We reiterate our Sell rating on shares of TSLA. We believe the stock should continue to de-rate following 3Q17 results where the company further pushed out its Model 3 production targets for 5k/week to late 1Q18. We believe this further pushes out the potential to ramp to 10k/week production of the Model 3 to at least 2019 (though we continue to model a ramp well below both); this should weigh on gross margins through at least 1Q18 and we do not expect a return to above 20% Automotive gross margin levels until 2H18. Altogether, we believe this indicates that the company’s goal for positive OCF generation should remain elusive until the middle of 2018 — though we still forecast significant FCF burn. On that front, we now believe TSLA will need to raise capital sooner (2Q18 vs. 3Q18 previously). Lastly, we believe the company’s comments on potential China production (3 years out) will be disappointing to investors, which have been confident in TSLA entering the China market with local production in the next one to two years. Our 6-month price target declines to $205, showing 36% downside.

And some more details:

3Q17 results weaker than expected, Model 3 production targets pushed out

 

TSLA reported a weaker than expected quarter, with an adjusted EBITDA loss of $22mn vs. GSe of $145mn and FactSet consensus of $175mn. Overall, higher operating expenses than expected drove the miss. More importantly, the company pushed out expectations for its 5k/week production target for the Model 3. Altogether, we lower our estimates and believe that Street consensus figures similarly need to be tempered given lower gross margin guidance and a pushed out cadence to Model 3 production. 

 

Key points — to the negative:

  • Model 3 production target for 5k/week has been pushed out to late 1Q18: Previously the company had targeted late 4Q17, and appeared about one month behind in October when it announced 3Q17 deliveries. However, due to battery pack module issues, this ramp appears pushed out further to the end of 1Q18. That said, the company believes it can exit 4Q17 above 1k/week in production (with comments suggesting potential to be in the 1,000s per week production range).
  • 10k/week Model 3 production now looks pushed to 2019: While this is very much undetermined – as the company needs to get to 5k/week before it can determine where to add capital in order to speed up or duplicate its lines, we believe the company has softly pushed its 10k/week production target into 2019 from “at some point in 2018” previously.
  • New product cadence could be pushed out: The company has previously communicated that new product development costs are largely contingent upon internal cash generation from the Model 3. Future product launches include (1) the Tesla Semi (reveal date of 11/16), (2) the Model Y –a crossover based on the Model 3 platform, (3) a pickup truck, and (4) the second generation roadster. We see the timeline for these products as likely pushed out as (1) the Model 3 remains a drag on cash flow generation from a slower ramp, and (2) the company allocates resources on ramping Model 3 production.
  • Automotive gross margin guidance lowered to approx. 15% in 4Q17: As a result of the production ramp issues, the company has now set a guide of 15% gross margins in 4Q17 – previously we had forecast 16.8% in 4Q17 and consensus was at 19.4%; on our new estimates, we see Automotive gross margins at 13% in 4Q17. Additionally, the company expects that margins will improve sequentially in 1Q18 with (1) the Model 3 achieving breakeven at the end of 4Q17, and (2) improvements to Model S/X margins. We see sub-20% margins continuing until 3Q18 on a slower production ramp (our volumes remain unchanged from the previous forecast). Energy  storage and generation: 4Q17 revenue is expected to n be roughly flat with 3Q17 levels, implying $317.5mn vs. our $471mn, as declines at SolarCity are expected to be offset by increases at Tesla Energy. As result, the company expects gross margin to decline sequentially due to the higher mix of Tesla Energy revenue.
  • Initial guidance for 2018 capex to be flat yoy: We had previously expected a step down of approx. $1bn (from $4bn in 2017 to $3bn in 2018) given Model 3 / gigafactory capex spend in 2017 coming down. To the positive, this means the company sees further growth opportunities and is looking to deploy capital in order to drive revenue; however, when combined with the exacerbated cash burn from lower for longer gross margins, we now see a capital raise in 2Q18 (previously 3Q18).
  • Model S / X production capped by supplier: TSLA noted that its Model S and Model X production is likely constrained at the 100k level given it is sole sourcing its 18650 batteries from Panasonic; at present, TSLA and its partner have not determined if they will deploy more capital to increase capacity.
  • Investor expectations for China should be tempered: The company noted that it would likely begin to spend capex to build out capacity in China in 2019, and noted first production in the region would be around three years from now (i.e., 2020). We believe investors were looking for a more rapid deployment of capital and scaling of production. As a result, we think some of the assumed medium-term growth should be tempered.

Updating estimates — still well below consensus

We lower our 2017-2019 adjusted EBITDA estimates to $500mn/$1,569mn/$2,833 from $871mn/$1,749mn/$2,961 previously to reflect (1) lower Model S/X margins, (2) continued Model 3 margin dilution, and (3) increased operating expenses as the company ramps its sales organization. Our updated estimates are an average 38% below current Street consensus (before the print) and believe estimates need to come down given the slower ramp to Model 3, gross margin headwinds, and higher opex.

 

We are Sell-rated on TSLA shares. We decrease our 6-month price target to $205 (from $210), as our probability-weighted Automotive segment valuation declines to $171 (from $176) on lower margins and higher capex, and our SolarCity ($4) and Tesla Energy ($30) segment valuation are unchanged.

 

Meanwhile, even as stormy weather gathers in longsville…

… and the stock tumbles, there is a long way to fall for Tesla before it hits Goldman's $205 price target.

In the meantime, Tesla Bonds are crashing too.

Time for Musk to unveil his time-travel plans…

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GOP To Unveil Tax Plan (With Permanent Corporate Tax Cuts) At 11:15am: Here’s What We Know

Ahead of today’s unveiling of the GOP tax plan by the House of Representatives at 11:15 ET, a key issue is whether corporate tax cuts to 20% will be temporary, either phased in or out, or permanent. And according to a Bloomberg report this morning, Republican leaders have decided to cut the corporate tax rate to 20 percent and leave it there permanently, abandoning an earlier plan to phase out the rate cut over time.

Still there remains some confusion, as Politico said the fate of corporate tax cuts remains unknown: when asked if the corporate tax cut would be permanent Wednesday evening, Brady said: “That’s our goal and I think it’s going to take several steps through the process to achieve that,” he said, referring to “awfully funny” Senate procedural rules requiring any permanent tax changes to be paid for.

What has also been reported is that the bill would impose a tax of as much as 12% on multinational companies’ accumulated offshore earnings, a rate that’s higher than either President Donald Trump or House Speaker Paul Ryan have proposed. It would phase out the estate tax over years, more slowly than either of them would prefer. Specifically, the estate tax is now expected to be repealed on January 1, 2024.

Meanwhile, the bill is not expected to decrease the pretax contribution levels to popular 401(k) retirement plans, or to repeal the Obamacare individual mandate as Trump proposed yesterday. It would also cut individual tax rates for millions of Americans, but not for earners at the very top of the scale, those making over $1 million, who would pay the old 39.6% tax rate.

The child tax credit would be increased to $1,600 from $1,000 per child under 17, with an additional $300 credit for each parent as part of a consolidated family tax credit, according to a person familiar with the committee’s deliberations. The credit had been a priority for Ivanka Trump, who had met with lawmakers in recent weeks to discuss it.

Another open issue: limits on tax cuts for businesses organized as partnerships, limited liability companies and other pass-throughs. Currently, such companies pass their earnings through to their owners, who are taxed at their individual income rates, as high as 39.6%. The bill would reduce the top rate to 25%,  but place limits on the kind of income that would qualify. According to Bloomberg, “professional services”,  including doctors, lawyers, accountants and others, wouldn’t qualify for the rate.

Other business owners could chose one of two options: 1. Categorize 70 percent of their income as wages — and pay their individual tax rate on it — and 30 percent as business income, taxable at the 25 percent rate. Or 2. Set the ratio of their wage income to business income based on the level of their capital investment.

The guidelines are aimed at preventing abuse of the 25 percent rate – such as high-earning individuals forming themselves into corporations to get a tax cut.

Trump and others have pitched the pass-through plan as a boon for small businesses — but pass-throughs can be very large businesses in addition to mom-and-pop shops. Trump himself owns hundreds of limited liability companies, according to his federal financial disclosure. Setting limits on the pass-through rate is a touchy issue for a number of lawmakers.

It also remained unclear how many lawmakers were swayed by Brady’s offer to preserve an individual deduction for state and local property taxes. “They’re working over concerned lawmakers one-by-one at this point,” Representative Tom MacArthur, a New Jersey Republican, said of GOP leaders. The deduction would be capped — House leaders were considering a $10,000 cap on Wednesday, according to a Republican lawmaker and a person briefed on the discussions. Both asked not to be named because the talks were private.  “We are close,” said Representative Tom Reed of New York Wednesday evening. “We are going to be able to solve that problem.”

As Bloomberg notes, “the legislation won’t satisfy everyone, but it represents Trump’s last chance for a major legislative victory in his first year. To pass it by Christmas, as the president has called on Congress to do, lawmakers must prevail over a series of challenges with no real margin for error.“

As a reminder, the 2018 budget resolution approved by the House and Senate allows for tax legislation that would increase the federal deficit by $1.5 trillion over 10 years, before accounting for any growth that might result from the changes. Figuring out how to achieve the deep rate cuts that Trump, Ryan and others want while staying within that bright line has complicated the bill drafters’ task. Earlier this week, House officials postponed the legislation’s planned release by one day.

* * *

In any case, passage is not assured: Earlier Wednesday, Meadows predicted a bumpy ride for the House bill, saying it would unleash dissent “like you’ve never seen.” Still, that doesn’t mean the effort will fail, he said. “It may be a little messy, it may not be as fun as we would all have liked to have seen it be over the past few weeks,” Meadows told reporters. “But we’re going to get it done, and failure is not an option.” The first test comes Monday, as the House Ways and Means Committee is scheduled to take up the bill.

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Dance in Queens: New York City Will Repeal Prohibition Era Ban on Dancing in Bars

Kick off your Sunday shoes, New Yorkers. The city’s decades-long, nonsensical ban on dancing is finally coming to an end.

The City Council voted Tuesday to kill the 91-year old “cabaret law” requiring bars to obtain a special permit involving a comically long checklist of approvals from more than a handful of different city agencies. Only 97 of New York City’s more than 25,000 dining and drinking establishments have such a permit, according to The New York Times.

Mayor Bill Bill de Blasio support the repeal and is expected to sign the bill into law sometime later this month, the Post reports. Feels like a night for a party.

While the city has never enforced the law against couples who get swept away for a moment by chance, it has, at various times in its history, had bar owners living in fear, opponents of the law say.

The “cabaret card” appendage to the law once kept Billie Holiday, Thelonious Monk, and Ray Charles from performing in the country’s biggest music venue. Charlie “Bird” Parker, a famed 1950s saxophonist, had his cabaret card revoked at the peak of his career for questionable conviction over possession of heroin. “My right to pursue my chosen profession has been taken away, and my wife and three children who are innocent of any wrongdoing are suffering,” Parker wrote shortly after the experience, as Chris Kjorness detailed in a 2013 Reason story on the history of New York City’s cabaret law.

“For almost a century, the cabaret law has targeted specific groups, kept businesses and performers in fear, and stifled the expression of NYC’s vital culture,” said Rafael Espinal, the heroic city councilman from Brooklyn who sponsored the repeal measure after others tried, and mostly failed, to kill the dancing ban for decades.

Weirdly, New York City’s Department of Consumer Affairs granted cabaret permits only to establishments in parts of the city zoned for “commercial manufacturing.” They required a fire department and electrical inspection. Permission had to be granted by a community board, which might include owners of competing bars and restaurants on the same city block or neighbors worried about loud music.

If you managed to get past that hurdle, you still needed a security background check and proof of working security cameras. The city’s Department of Buildings needed to confirm “that your premises is suitable to operate your business.” And, of course, you had to pay the mandatory licensing fee.

But not if you owed child support. You can dance if you want to. You can leave your friends behind. But if you didn’t pay your child support you weren’t going to get a cabaret permit in New York City.

New York City’s ban on dancing wasn’t just a silly, pointless and expensive violation of free expression. Its origins were blatantly racist. Like many broad but vague statues—see: “stop-and-frisk”—the cabaret law was disproportionately used to squeeze African Americans and other minorities.

The 1926 law was passed to “prevent interracial mingling” at Harlem bars, the New York Post reports. In his book Gigs: Jazz and the Cabaret Laws in New York City, New York University law professor Paul Chevigny notes that the Board of Alderman’s Committee on Local Laws was pretty clear about the motivations for the ban:

“Well, there has been altogether too much ‘running wild’ in some of these night clubs and, in the judgment of your Committee, the ‘wild’ stranger and the foolish native should have the check-rein applied a little bit…Your Committee believes that these ‘wild’ people should not be tumbling out of these resorts at six or seven o’clock in the morning to the scandal and annoyance of decent residents on their way to daily employment.”

Chevigny is one of several people to unsuccessfully challenge the cabaret law in court. “I don’t think in this day and age we need dancing police,” he told New York Magazine in 2005. “Let’s get serious. Who cares if you dance.”

New York City certainly has. For the first decade of the law’s existence, it actually banned all music in bars. In 1936, it was updated to allow—gasp!—piano-playing in bars and restaurants. In 1943, the law was expanded to require musicians to carry a “cabaret card” if they wanted to perform in the city.

To get one, performers had to submit to being fingerprinted by the New York City Police Department and were “subjected to interrogations about their personal life—mostly focused on their potential drug use—before they could be certified as worthy and wholesome. Cards had to be renewed every two years, and the authorities were free to revoke or deny their renewal at will,” as Vice detailed in a piece looking at the history of the cabaret law published earlier this year.

“What opportunities were stymied by the cabaret card?” Jazz Times asked in 2012. “How much sooner might Monk have found recognition, and what would the effect have been on his psyche? What if Miles Davis hadn’t lost his card in 1959, after being clubbed outside of Birdland: Might he have found more work for his sextet, fresh off the release of Kind of Blue? Think of the reputations that moldered, the engagements that never came to pass.”

Rather than submit to the city government’s absurd licensing scheme, Frank Sinatra refused for decades to perform in New York. “I will not seek a cabaret card in New York because of the indignity of being fingerprinted, mugged and quizzed about my past,” Sinatra reportedly said. His public opposition to the law helped loosen some of the requirements for performers, but the law stayed on the books “as a haphazard enforcement tool to keep bar owners in line at the city’s whims,” according to the New York Post.

Every church, ballet studio, and high school dance in New York City technically violated the cabaret law, Andrew Muchmore, a lawyer and bar owner from Brooklyn, pointed out in a 2014 lawsuit challenging the law as an unconstitutional violation of the First Amendment.

City officials have always liked the cabaret law because “it gives them a way to arbitrarily shut down places they have problems with,” Muchmore told The Village Voice earlier this year. “I think it’s just one more tool in their infinite tool box to cause problems for any place they want to cause problems for.”

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NYC Terror Suspect Planned Halloween Attack To Maximize Kill Count

In a criminal complaint released last night, the FBI officially charged suspected terrorist Sayfullo Saipov, an Uzbek national who has been living in the US since 2010, with the provision of material support and resources to a designated foreign terrorist organization, as well as violence and destruction of motor vehicles.

The complaint, which mostly comprised formal language describing the nature of the criminal charges, also included previously unreleased information about how Saipov planned and executed his attack, as well as how he became radicalized.

Saipov apparently adopted his extremist political views after moving to the US in 2010.

Sayfullo Saipov

According to the comlaint, Saipov was inspired to carry out the Truck attack by ISIS videos he had watched on his cellular phone. Approximately one year ago, Saipov began planning an attack in the United States, and approximately two months ago, Saipov decided to use a truck in order to inflict maximum damage against civilians. In particular, Saipov was motivated to commit the attack after viewing a video in which Abu Bakr al-Baghdadi – who based on my training and experience I understand to be the leader of ISIS-questioned what Muslims in the United States and elsewhere were doing to respond to the killing of Muslims in Iraq.

On Oct. 22, Saipov rented a truck so he could “practice making turns” — then drove into Manhattan twice on the same day just a few days before he plowed into nearly two dozen people on the Lower West Side, according to the feds and law enforcement sources. He used his E-ZPass to drive though the Holland Tunnel twice on Oct. 28, and his car was also spotted on the George Washington Bridge the same day, law enforcement sources said.

One of Saipov’s cellphones contained approximately 90 videos of ISIS propaganda. Videos ranged from depictions of ISIS fighters killing a prisoner by running the prisoner over with a tank, a video of ISIS fighters shooting a prisoner in the face, a video of a beheading and a video that appears to show how to construct an improvised explosive device. The phone also contained nearly 4,000 images classified as ISIS propaganda, including photos of al-Baghdadi and grisly images of dead prisoners.

Another phone’s search history included queries for ‘Halloween in NYC’ as well as a search for truck rentals.

In what was perhaps the most alarming detail, Saipov said his original plan was to continue on to the Brooklyn Bridge.  However, that plan was thwarted when he crashed into a school bus carrying children from nearby Stuyvesant High School. After arriving at Bellevue hospital, Saipov reportedly appeared proud of the attack, and allegedly had asked to hang an ISIS flag in his hospital room. He said he had planned the attack on Halloween to maximize the number of casualties.

“Saipov wanted to kill as many people as he could,” the complaint said.

Police found a stun gun and three knives inside his crumpled truck at West and Chambers streets, along with a note praising ISIS.

The handwritten note, which included both Arabic and English, read, “No God but God and Muhammad is his Prophet” and declared, “Islamic Supplication. It will endure,” authorities said.

“He did this in the name of ISIS,” John Miller, deputy commissioner of intelligence and counterterrorism for the NYPD, said during a Wednesday press conference unveiling the complaint.

“He appears to have followed almost exactly to a T the instructions that ISIS has put out in its social media channels before with instructions to their followers on how to carry out such an attack,” Miller explained.

As has been previously reported, Saipov rented a flatbed pickup truck from the Passiac Home Depot an hour before attack. The rental was for two hours but he had no intention of returning it. He then drove into the city over the George Washington Bridge.  The Feds interviewed Saipov in 2015 about his possible ties to suspected terrorists, but didn’t have enough evidence to build a case against him. He was never the subject of the investigation.

Saipov told authorities that he had initially planned on hanging ISIS flags on the back and front of his truck, but figured that would attract too much attention.

President Donald Trump, who has railed against so-called “chain migration” and the US’s diversity visa lottery program, late Wednesday called for Saipov to be put to death for his crimes.

 

 

Earlier in the day, Trump appeared to criticize the criminal justice system for not acting fast enough.

“We need quick justice and we need strong justice — much quicker and much stronger than we have right now — because what we have right now is a joke, and it’s a laughingstock,” Trump said at a Cabinet meeting.

Trump also said he would consider sending Saipov to Guantanamo Bay.

Federal agents said they've located a man who associated with the Manhattan man who sped a truck down a New York City bike path, killing eight people and injuring a dozen others.

Earlier Wednesday FBI released a wanted poster for Mukhammadzoir Kadirov, but authorities said at a news conference about an hour later the man had been located by federal authorities.

"We have found him and we will leave it at that," said Bill Sweeney, the assistant director of the FBI.

Mukhammadzoir Kadirov

Law enforcement officials said that the man is known to have been in contact with Sayfullo Saipov, the man charged in Tuesday's attack. It's not clear if Kadirov knew about Saipov's plans, but they said there is nothing that indicates he may have been involved in the attack, according to NBC New York. Federal agents are also interviewing Saipov's wife, but they said the woman has been cooperating with the investigation.

However, one of Saipov’s neighbors told NBC that he had seen Saipov driving around in a rented Home Depot truck with two male passengers.

Read the full complaint below:

 

363259465 Sayfullo Saipov Criminal Complaint by zerohedge on Scribd


 

 

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A.M. Links: Trump Calls for Death Penalty for NYC Terror Suspect, Astros Win World Series, Donna Brazile Says DNC ‘Rigged’ the Race Against Bernie Sanders

  • President Trump: “NYC terrorist was happy as he asked to hang ISIS flag in his hospital room. He killed 8 people, badly injured 12. SHOULD GET DEATH PENALTY!”
  • The suspect in the New York City terror attack has reportedly told investigators that he spent a year planning it.
  • The Houston Astros beat the Los Angeles Dodgers last night to win the World Series.
  • Donna Brazile, the former interim chair of the Democratic National Committee, says that Hillary Clinton’s team “rigged the nomination process” in 2016 and undermined the Bernie Sanders’ campaign. “If the fight had been fair, one campaign would not have control of the party before the voters had decided which one they wanted to lead.”
  • Federal prosecutors are reportedly mulling charges against six members of the Russian government for their alleged involvement in hacking the Democratic National Committee.
  • National Public Radio’s senior vice president for news has resigned over sexual harassment allegations.

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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“Tick Tock”: Sean Hannity Hints At Obama Bombshell Dropping Today

Fox News host Sean Hannity sent out a rather cryptic tweet last night hinting at some new Barack Obama bombshell news that will be dropping at some point today.

“So Barack Obama news tomorrow!! Hint; Tick Tock”

While it’s unclear what news Hannity may have to share about the former President, as the Gateway Pundit points out, he has spent a lot of time of late discussing the Uranium One deal and exactly what FBI Director Mueller and President Obama knew about the Russian bribery scandal and when.

In fact, Victoria Toensing, the Washington DC lawyer representing the former FBI informant who helped Mueller nab the Russian operative who orchestrated the bribery, extortion and money laundering scandal surrounding the Uranium One deal, had this to say on Hannity’s show last week:

John Solomon: Just a little bit ago before we came on Victoria and I talked and she was able to confirm to me that her client has information that Director Mueller and President Obama and other officials were briefed on this investigation in real time as it was going on…

 

Attorney Victoria Toensing: My client was told this information, now maybe the bureau is bluffing but I don’t think so because they were very specific. They said that the briefing made it into President Obama’s daily briefing papers. So I don’t think they made that up.

Meanwhile, Hannity’s tweet has provoked a whole series of predictable, yet comical, responses from his 3 million followers.

So what say you?  Is a new “bombshell” forthcoming or is this just shameless over-hyping of an inevitable nothingburger?

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Why Switzerland Could Save the World and Protect Your Gold

Why Switzerland Could Save the World and Protect Your Gold

 – Precious metals advisor Claudio Grass believes Switzerland can serve as an example to rest of world
– Switzerland popular for gold storage due to understanding of the risks inherent in fiat money and gold’s value as a store of wealth.
– International investors opt to store gold in Swiss allocated accounts due to tradition of respecting private property.
– Country respects the importance of gold ownerships and 70% of world’s gold is refined there

Across Europe many voters and politicians are expressing their dislike at the bureaucratic and overarching approach of the European Union. There are also regions and countries pushing to break ties with others that they have long been associated with. Catalonia is just the most recent example, many in Scotland are also calling for independence.

It is not an understatement to say that the role and influence of government is currently at the forefront of many citizens’ minds. This is understandable given political upheaval but also thanks to decisions by authorities that are arguably not in the best interests of the electorate. Bail-ins are just one very important example.

This is a situation investors must consider when deciding where they would like to store their gold bullion. It is because of concerns regarding political stability, motive and financial decisions that there is a belief amongst many bullion owners that owning bullion in Switzerland is safer than owning it in many EU countries, the UK and the U.S.

Claudio Grass, an Swiss independent precious metals advisor, recently spoke to the Mises Institute about Switzerland. In the interview he explains why the country is so attractive for investors.

The introduction by the Mises Institute notes that Switzerland is attractive as its political approach differentiates it from other countries. By taking a subsidiary function, the result is major limitations being placed on central political power structures at the federal level.

Switzerland is no libertarian paradise. It has bureaucrats and a wayward central bank. But it remains an astonishing modern example of the principles of federalism and subsidiarity in action. In fact, it exemplifies Lew Rockwell’s daydream: nobody much knows or cares who is president. Its federal administrative state demonstrates humility instead of hubris. And virtually all political decisions, from taxes to welfare to immigration, are decided locally. Claudio Grass joins Jeff Deist to discuss what libertarians can learn from Switzerland, and how neutrality in two disastrous European wars shapes Swiss DNA today.

Readers can watch the full interview with Claudio Grass, below.

 

 

Investors interested in protecting their wealth and looking for ways to diversify their assets should consider holding allocated gold bullion in Switzerland

In our Essential Guide to Gold Storage in Switzerland we clearly explain why the country remains the preferred destination for many Western and international retail and institutional investors. It takes just three simple steps to create a GoldCore secure storage account in Switzerland.

The Swiss people understand the importance of gold in wealth management and preservation and the importance of storing bullion in a secure, independent and stable jurisdiction that specialises in discretion and confidentiality.

News and Commentary

Dollar Slips With Treasury Yields; Stocks Mixed (Bloomberg.com)

Gold prices up; focus on pick for U.S. Fed chair (Reuters.com)

Gold holds gains after Fed says it will leave rates unchanged (Reuters.com)

Germany fears EUROZONE MELTDOWN: German investors rush to buy gold (Express.co.uk)

Fed Signals December Hike On Track a Day Before Trump Announces Next Chair (Bloomberg.com)

Powell to Lead Fed Overseeing Trump Economy Fraught With Risks (Bloomberg.com)

What If the Bank of England Doesn’t Raise Rates? (Bloomberg.com)

The World Is Running Out of Gold, Should You Invest? (Fortune.com)

BITCOIN vs. GOLD: Which One’s A Bubble And How Much Energy Do They Really Consume (GoldSeek.com)

China’s gold consumption grows in Jan-Sept (Xinhuanet.com)

Gold Prices (LBMA AM)

02 Nov: USD 1,276.40, GBP 965.09 & EUR 1,095.92 per ounce
01 Nov: USD 1,279.25, GBP 961.48 & EUR 1,099.52 per ounce
31 Oct: USD 1,274.40, GBP 964.21 & EUR 1,095.60 per ounce
30 Oct: USD 1,272.75, GBP 966.91 & EUR 1,093.80 per ounce
27 Oct: USD 1,267.80, GBP 968.35 & EUR 1,090.18 per ounce
26 Oct: USD 1,278.00, GBP 968.34 & EUR 1,082.34 per ounce

Silver Prices (LBMA)

02 Nov: USD 17.08, GBP 12.98 & EUR 14.66 per ounce
01 Nov: USD 16.94, GBP 12.74 & EUR 14.55 per ounce
31 Oct: USD 16.82, GBP 12.72 & EUR 14.45 per ounce
30 Oct: USD 16.74, GBP 12.69 & EUR 14.39 per ounce
27 Oct: USD 16.72, GBP 12.76 & EUR 14.38 per ounce
26 Oct: USD 16.97, GBP 12.84 & EUR 14.37 per ounce


Recent Market Updates

– Invest In Gold To Defend Against Bail-ins
– Stumbling UK Economy Shows Importance of Gold
– Wozniak and Thiel Fuel Bitcoin-Gold Debate: Gold Comes Out On Top
– Russia Buys 34 Tonnes Of Gold In September
– Gold Will Be Safe Haven Again In Looming EU Crisis
– Gold Is Valuable Due to “Extreme Rarity” – Must See CNN Video
– Gold Is Better Store of Value Than Bitcoin – Goldman Sachs
– Next Wall Street Crash Looms? Lessons On Anniversary Of 1987 Crash
– Key Charts: Gold is Cheap and US Recession May Be Closer Than Think
– Gold Up 74% Since Last Market Peak 10 Years Ago
– How Gold Bullion Protects From Conflict And War
– Silver Bullion Prices Set to Soar
– Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

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US Manufacturing Worker Productivity Crashes Most In 8 Years

US worker productivity rose at 3.0% QoQ in Q3 – the best since 2014.

Unit labor costs rose at 0.5% annualized rate in Q3 (est. 0.4%) following 0.3% pace in Q2.

Output rose at a 3.8 percent rate following 3.9 percent.

Hours worked rose at a 0.8 percent pace after 2.4 percent.

The latest figure compares with a 1.2 percent average over the period spanning 2007 to 2016. Weak productivity helps explain why companies are reluctant to raise workers’ wages, even as profit margins have improved.

However, among manufacturers, productivity crashed 5% QoQ – the biggest drop since Q1 2009, when the economy was in recession – after rising 3.4% in Q2.

Let's hope that is storm-related.

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DOJ Considers Charging 6 Russians In DNC Hack: WSJ

In a bombshell early morning report, the Wall Street Journal – the same news organization that published claims about Kaspersky Labs’ international espionage efforts that were swiftly refuted by the German government – said the US Department of Justice is preparing to bring criminal charges against more than six members of the Russian government who it believes are responsible for the hacking of the DNC.

If the DOJ follows through, the charges are expected to be announced early next year.

As Democrats remember all too well, thousands of the DNC’s emails and other data, as well as emails from the personal account of John Podesta, who served as campaign chairman to 2016 Democratic presidential nominee Hillary Clinton, were made public by WikiLeaks last year, revealing a widespread effort by then-chairwoman Debbie Wasserman Schultz and her cronies to swing the Democratic country in Hillary Clinton’s favor after Sen. Bernie Sanders – who is according to some polls the most popular politician in America – mounted a surprisingly strong challenge against the party’s anointed “front-runner”.

WSJ claims that if a case is filed – and there’s still no guarantee that one will be – it would “provide the clearest picture yet of the actors behind the DNC intrusion.” US intelligence agencies have attributed the attack to Russian intelligence services, but haven't provided detailed information about how they concluded those services were responsible, or any details about the individuals allegedly involved. Of course, this conclusion has been disputed by the Russians, and by Wikileaks founder Julian Assange, who claims he has evidence to definitely prove the emails that were leaked to his organization didn’t stem from a Russian source.

As we reported over the summer, the cybersecurity firm called CrowdStrike was the only organization allowed by the DNC to inspect their email server…an inspection which quickly resulted in the very 'convenient' conclusion that Russia was the culprit of the hack…even though minimal details supporting that conclusion were ever revealed to authorities.

News of possible criminal charges is also surprising because, as we reported over the summer, the DNC had initially been reluctant to allow the bureau to scrutinize its servers, where most of the evidence of the hacking attacks would be. Not only did the DNC refuse to cooperate with the FBI, but it also rebuffed the Department of Homeland Security and Robert Mueller's independent investigation. Which begs the question: Why?

But apparently, the FBI didn’t let this obstacle impede their investigation, as WSJ claims the “pinpointing of particular Russian military and intelligence hackers highlights the exhaustive nature of the government’s probe.” Of course, the idea that Russia would ever extradite members of President Vladimir Putin’s government is laughable. Instead, filing charges would accomplish two goals: Naming – and shaming – the individuals, while also making it difficult to travel to countries that have extradition treaties with the US, which is…a lot of countries.

If the DOJ does move forward with the indictments next year, it wouldn’t be the first time the US has indicted Russian officials on hacking charges. Back in March, the US indicted four people — including two Russian FSB intelligence officers, i.e. "spies" — in a pair of computer hacks against Yahoo that we now know compromised all of Yahoo’s 1.3 billion customer accounts. One of the individuals, a Russian national living in Canada, was eventually taken into custody.

Charges would represent a significant escalation in the US’s push to hold Russia accountable for the DNC hacks. Last December, the Democratic administration of then-President Barack Obama imposed sanctions on Russia’s military-intelligence agency, which uses the acronym GRU, and Russia’s Federal Security Service, Russia’s equivalent to the Central Intelligence Agency, in response to the DNC and other hacks. One of the individuals named was eventually charged for the Yahoo hacks.

Federal prosecutors and federal agents working in Washington, Pittsburgh, San Francisco and Philadelphia have been collaborating on the DNC investigation. The inquiry is being conducted separately from Special Counsel Robert Mueller’s investigation of alleged Russian meddling in the 2016 election and any possible collusion by President Donald Trump’s associates. WSJ reported.

This, of course, begs the question: If the FBI was denied access to the DNC’s email server, where did it find the “smoking gun” to justify these charges?

Even as President Trump has blasted the intelligence community’s claim that Russian President Vladimir Putin is directly responsible for the hack – calling these accusations a hoax and an excuse by Democrats for losing an election they thought they had in the bag – high-ranking US intelligence and law-enforcement officials have consistently stood by the intelligence community’s January assessment.

In that document, the intelligence community said GRU, “probably began cyber operations aimed at the U.S. election by March 2016.” It said the GRU had exfiltrated “large volumes of data” from the DNC by May.

By the time Mueller was appointed special counsel in May, the Justice Department and FBI investigation into the DNC hack had been under way for nearly a year, by prosecutors and agents with cyber expertise, before Mueller was appointed in May.

Rather than take over the relatively technical cyber investigation, Mueller and the Justice Department agreed that it would be better for the original prosecutors and agents to retain that aspect of the case, the people familiar with the Justice Department-FBI probe said, WSJ reported.

It is unclear if prosecutors will hold back filing charges until Mueller completes his investigation or wait to identify others who may have played a role in the DNC hack. Investigators believe dozens of others may have played a role in the cyberattack, the people said.

The Russia news mirrors the charges brought by the US three years ago against five members of a clandestine Chinese military unit for stealing secrets from US companies. The US has long struggled to counteract what the intelligence community refers to as ‘economic espionage’ – efforts by the Chinese to steal technology from US companies either through spies or hacking attacks. The charges against the Chinese men apparently forced China to scale back its corporate espionage efforts.

However, as Vladimir Putin has demonstrated in the past, he’s far less willing to countenance actions against his political allies by the US. When Congress passed the Magnitsky Act, which brought withering sanctions against several Putin allies, he responded by banning adoptions of Russian children by US families.

In an amusingly ironic twist, news of the charges comes as Donna Brazile, a former Clinton ally who admitted to leaking debate questions and town-hall topics to the Clinton campaign after her activities were exposed by the hacked emails, has turned on her former ally, publishing a screed accusing the DNC and Clinton campaign of "rigging" the primary.

Circling back the possible charges, we wonder: How Putin would respond to a criminal complaint? And, since it’s already been acknowledged that the US engages cyber espionage against the Russians and other countries including its own allies, would Putin use this as an opportunity to bring reciprocal charges of his own?
 

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Frontrunning: November 2

  • What We Know About the GOP Tax Bill Ahead of Today’s Rollout (BBG)
  • How the GOP Tax Plan Would Affect Trump, Clinton Voters Differently (WSJ)
  • Powell for Federal Reserve chair could support stocks bull market (Reuters)
  • The New Fed Chair Will Watch an Economy Fraught With Risks (BBG)
  • Trump calls for death penalty for Uzbek man (Reuters)
  • 9/11 neighborhood shaken by truck attack fears it’s targeted (AP)
  • Meet the Judge Presiding Over the Manafort and Gates Case (BBG)
  • Tesla must stop overpromising, could need more finance (Reuters)
  • This Is What Wall Street Wants to See From Apple’s Earnings Report (BBG)
  • South Korea spy agency sees signs of planned new missile test by North (Reuters)
  • EpiPen Failures Cited in Seven Deaths This Year (BBG)
  • Bombardier CEO says CSeries jet engine delays are ‘short-term’ (Reuters)
  • Bank of England Raises Interest Rates for First Time in a Decade (WSJ)
  • Alibaba revenue up 61 percent, beats estimates (Reuters)
  • Facebook, Take Note: In China’s ‘New Era,’ the Communist Party Comes First (WSJ)
  • Overexposure, Not Anthem Protests, Blamed for NFL’s Ratings Woes (WSJ)
  • Alibaba Lifts Outlook as China Consumer Spending Accelerates (BBG)
  • China eyes greater U.S. access for its aircraft and parts with new deal (Reuters)

 

Overnight Media Digest

WSJ

– The White House has notified Federal Reserve governor Jerome Powell that President Donald Trump intends to nominate him as the next chairman of the central bank, according to a person familiar with the matter, a move likely to combine continuity on interest-rate policy with perhaps a lighter touch on financial regulation. on.wsj.com/2ioMgxZ

– Police said two people were killed and a third was injured in a shooting Wednesday evening at a Walmart in Thornton, Colorado, outside Denver. on.wsj.com/2inw00o

– Hudson’s Bay Co said it received an unsolicited offer for its German department store chain, Galeria Kaufhof, from its main rival in that country, but the company said the offer was incomplete and lacked financing. on.wsj.com/2int4AU

– Under Armour Inc is shedding more of its senior leadership, including its chief marketing officer and the head of its women’s business, as the sportswear company continues to grapple with declining sales. on.wsj.com/2ilulIo

– Uber Technologies Inc’s effort to close a multibillion-dollar investment by SoftBank Group Corp is in danger of derailing as co-founder Travis Kalanick tussles with fellow board members, including Benchmark Capital, over the limits of his power at the ride-hailing giant, people familiar with the matter said. on.wsj.com/2imWFKy

 

FT

* British defence minister Michael Fallon quit on Wednesday, saying his conduct had fallen below the high standards demanded of his position, the first resignation in a sexual harassment scandal in parliament.

* British lawmaker Peter Hain said on Wednesday he has asked finance minister Philip Hammond to refer an unidentified UK bank to regulators for an investigation into possible involvement in alleged money laundering involving South Africa’s Gupta family.

* U.S. President Donald Trump plans to nominate current Federal Reserve Governor Jerome Powell as the next chair of the U.S. central bank, according to two White House officials.

 

NYT

– President Trump’s bipartisan commission on the opioid crisis made dozens of final recommendations on Wednesday to combat a deadly addiction epidemic, ranging from creating more drug courts to vastly expanding access to medications that treat addiction, including in jails. nyti.ms/2in4BLV

– President Trump touched off a sharply partisan debate over some of the most divisive issues in American life on Wednesday as he cited the terrorist attack in New York to advance his agenda on immigration and national security while assailing Democrats for endangering the country. nyti.ms/2inAqEg

– Lawmakers released scores of political ads on Wednesday purchased by Russian agents on Facebook and Twitter that showed the extent of the Kremlin’s attempts to polarize the American voting public on issues like race, police abuse and religion. nyti.ms/2inx0Sc

– The Securities and Exchange Commission took a first step on Wednesday to head off the recent trend of celebrities endorsing new virtual currencies, warning that they could be breaking laws. nyti.ms/2inniiF

 

Canada

THE GLOBE AND MAIL

The Alberta government will intervene at the National Energy Board in an effort force the City of Burnaby to provide permits needed for construction of the controversial Trans Mountain pipeline expansion. tgam.ca/2z6QuSQ

Imperial Oil Ltd, the Canadian affiliate of Exxon Mobil Corp, is getting ready for another growth spurt in the Alberta deposits that could include green-lighting the new 150,000 barrel-a-day Aspen project early next year. bit.ly/2iVsPkm

Algonquin Power & Utilities Corp moved into global renewable-energy markets on Wednesday with the purchase of a portfolio owned by troubled Spanish energy company Abengoa S.A . tgam.ca/2z6ktu4

NATIONAL POST

Canada will soon flex new legal muscles created by its recent passage of Magnitsky law to sanction individuals in both Venezuela and Russia, a Canadian government official confirmed. bit.ly/2iTIjp6

 

Britain

The Times

– Littlewoods, the retailer owned by the Barclay brothers, has lost a legal battle to recover 1.25 billion pounds ($1.66 billion) in interest on overpaid VAT after five Supreme Court justices unanimously dismissed the claim. bit.ly/2gTMSeJ

– The completion of a $3 billion deal to buy fields from Royal Dutch Shell Plc has established Chrysaor as the biggest independent exploration and production company in the UK North Sea. bit.ly/2gTM6hC

The Guardian

– Sam Woods, a deputy governor of Bank of England, at an appearance before peers on the Lords EU financial affairs sub-committee on Wednesday warned that 10,000 jobs could leave the City on “day one” after the United Kingdom leaves the EU. bit.ly/2gWnpkF

– British lawmaker Peter Hain has asked for an investigation into “possible criminal complicity” by HSBC Holdings Plc in a money laundering scandal involving South Africa’s wealthy Gupta family, according to a letter sent to finance minister Philip Hammond. bit.ly/2gVtkqt

The Telegraph

– BT Group Plc has sparked government anger by “dragging its feet” over the legal separation of its network arm Openreach, amid concern that critical deadlines could be missed. bit.ly/2gUaLD1

– Spending on British television programmes will plummet by 500 million pounds a year over the next decade as Amazon.com Inc , Apple Inc and Netflix Inc seek to dominate the living room, the director-general of the BBC has warned. bit.ly/2gW3Clu

Sky News

– Thousands of BT Group Plc employees will be told later this month of proposed cuts to their pension benefits as the telecoms firm wrestles with a near 14 billion pound deficit in its retirement schemes. bit.ly/2gV7K5m

– Struggling doorstep lender Provident Financial, has appointed Rick Hunkin as its first group chief risk officer. bit.ly/2gTPM37

The Independent

– Designer furniture retailer Lombok has become the first UK company to be prosecuted and fined under illegal logging rules designed to stop the import of timber linked to widespread deforestation around the world. The company was prosecuted at Westminster Magistrates Court and fined 5,000 pounds plus costs. ind.pn/2gSCF2e

– The United Kingdom has received a damning bill of health in the World Economic Forum’s (WEF) latest gender gap report, trailing dozens of other countries in areas like primary education, economic participation and healthcare, at a time when the government is battling a slew of sexual abuse allegations. ind.pn/2gUtfTF

 

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