Month: January 2018

It’s been more than eight months since Swedish prosecutors decided to discontinue their long-running rape probe into Julian Assange, dismissing a warrant for his arrest.

But the celebratory mood quickly dissipated, as Assange realized he would need to remain holed up in the Ecuador’s London embassy because of a UK arrest warrant that had yet to be dismissed.

But with the original charges having been dismissed, Assange’s lawyers are petitioning a UK judge to dismiss a warrant for their client’s arrest – something that would allow Assange to walk free, according to Bloomberg.

In a setback to Assange, Judge Emma Arbuthnot said no medical arguments would be considered in the case. Reports surfaced late last year that the Wikileaks publisher’s health has deteriorated dramatically.

When they dismissed the original case, Swedish prosecutors said Assange’s attempts to evade questioning made prosecution impossible.

One UK prosecutor said Assange’s case to dismiss the warrant is “absurd”.

Aaron Watkins, a lawyer for the U.K. Crown Prosecution Service ridiculed Assange’s position as “absurd.”

His argument would give a criminal “effective immunity from being dealt with” because of “having managed to evade proceedings sufficiently long that they fell away.”

There have been media reports that the Australian’s health has severely deteriorated. Ecuador granted Assange citizenship earlier this month after failed attempts at diplomacy with British officials. Furthermore, Ecuador’s push for mediation has failed amid reports that the country’s government is planning to expel Assange from the embassy.

Two years ago, a UN panel ruled that Assange was being unlawfully and arbitrarily detained by the UK authorities, and should be released.

Westminster Magistrates’ Court issued a warrant for the arrest of Julian Assange after he failed to surrender to the court in 2012, the police said in an emailed statement.

Ecuadorian President Lenin Moreno described Assange’s stay in the embassy as “untenable,” stoking speculation that – one way, or another – Assange’s days in the embassy are limited.

London police say they are obligated to enforce the warrant unless it’s dismissed by a judge.

“The Metropolitan Police Service is obliged to execute that warrant should he leave the embassy.”

As RT pointed out, Assange, 46, would “hypothetically” be free to leave the embassy following a successful appeal – though there’s still the question of him being charged in the US under the espionage act.

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Consensus expected a 3.0% GDP print, with whisper numbers well above that and some expecting a print as high as 5%. However it was not meant to be, and as the BEA reported moments ago, the first estimate of Q4 GDP came in at  2.6%, missing expectations and below last quarter’s 3.2% GDP print, and the lowest since the first quarter of 2017, largely as a result of a surging trade deficit in the fourth quarter.

 

What happened?

First the good news:  Personal consumption rose 3.8% in 4Q after rising 2.2% prior quarter. Final sales to private domestic purchasers q/q rose 4.6% in 4Q after rising 2.2% prior quarter; largest rise since Q3 2014. Spending contributed 2.58% to the bottom-line GDP print, the highest quarter since Q4 2014, however as we discussed previously, much of it was the result of a surge in credit card-funded spending while the personal savings rate dropped to levels last seen during the financial crisis.

Some more good news: nonresidential fixed investment – or spending on equipment, structures and intellectual property – rose 6.8% in 4Q after rising 4.7% prior quarter. It contributed 0.84% to the annualized Q4 GDP’s bottom line.

 

However, both of these items were offset by a bigger than expected inventory destocking, as Inventories subtracted -0.67% from the final GDP number, the biggest drop since Q1.

But most notable was the sharp drop in GDP as a result of surging imports which subtracted -1.96% from the final GDP number. This was the biggest hit from imports to GDP going back all the way to Q3 2010. Net of exports, trade resulted in a -1.14% drag on GDP. Needless to say, for a president who is focused on boosting exports and reducing the US trade deficit, this number will only provoke more speculation about boosting US exports and thus, the possibility of trade war.

The above broken down visually:

 

Some other observations: real disposable personal income—personal income adjusted for taxes and inflation —increased 1.1% in the fourth quarter after increasing 0.5% in the third quarter. Personal saving as a  percentage of disposable personal income was 2.6% in the fourth quarter, compared with 3.3% in Q3,

For inflation watchers, prices of goods and services purchased by U.S. residents increased 2.5% in the fourth quarter
after increasing 1.7% in the third quarter. Excluding food and energy, prices rose 1.9% in the fourth quarter after increasing 1.6% in the third quarter.

Finally, for the year 2017, real GDP increased 2.3% compared with 1.5 percent in 2016.

The increase in real GDP in 2017 reflected increases in consumer spending, business investment, and exports. These contributions were partly offset by a decrease in inventories. Imports increased. Prices of goods and services  purchased by U.S. residents increased 1.8 percent in 2017, compared with an increase of 1.0 percent in 2016. Excluding food and energy, prices increased 1.7 percent in 2017 after increasing 1.4 percent in 2016.

Overall, a good first year for Trump who however will surely be disappointed by the substantial drag resulting from the trade deficit.

 

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While headline durable goods orders showed a 2.9% MoM surge, but away from aircraft orders and war-spending, capital goods orders dropped 0.3% MoM in December – the most in 12 months.

 

 

But this surge was all thanks to aircraft and war-spending:

• Bookings for commercial aircraft climbed 15.9 percent
• Defense capital goods orders increased 19.5 percent

So, at the core, orders tumbled most in a year…

 

In other words, we’re gonna need more war to get that GDP up over 3.0%…

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Less than 12 hours after The New York Times reported – according to four sources – that the president ordered the firing of Special Counsel Mueller last June (but reportedly backed off after White House Counsel Don McGahn threatened to resign rather than carry out the directive), WSJ reports that Trump denies this report, slamming it as “fake news.”

Of course, it was not just NYT, as has always been the case with this particular set of FBI or NSA sources, the WaPo was right there behind the NYT, to confirm the latest Trump leak:

Confirmed that Trump wanted Mueller fired, as NYT first reported, w/@PostRoz. Story coming soon.

— Josh Dawsey (@jdawsey1) January 26, 2018

 

Within minutes of his arrival in Davos for meetings on Friday morning, President Trump dismissed the report as “fake news, fake news,” as he prepared for his big speech this morning.

This report – and Trump’s denial – come just days after Mueller’s abrupt shift from Russia-collusion fact-finder to Trump-obstructionist-hunter.

Additionally, his comments come after he said Wednesday he was willing to testify under oath in Mr. Mueller’s investigation, which he has repeatedly called a “witch hunt,” putting the timeline for such an interview within two to three weeks. “I would love to do it, and I would like to do it as soon as possible,” the president said.

As we concluded yesterday, the bottom line is that the upcoming showdown between Trump and the “deep state”, in which both sides are investigating each other, will likely be epic.

In the meantime, keep an eye on Trump’s twitter account, and whether the president decides to fire Mueller, only for real this time. After all, few are capable of getting Twitter Trump so furious like the NYT.

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Via Dana Lyons’ Tumblr,

The dropping Dollar is trying to hang onto a potentially important line of support.

There has been very intriguing action of late in financial markets across the spectrum. And whether it’s various equity markets, foreign or domestic, commodities, currencies or fixed income, much of the action can be tied to, if not attributed to, one thing – the falling U.S. Dollar. Obviously the Dollar can have a significant impact on other markets.  That fact has many market participants asking “where will the falling buck stop?” Well, from a glance at the chart of the U.S. Dollar Index (DXY), there is a technical argument for at least a halt in the pace of the Dollar’s decline right here.

On our Twitter feed (@JLyonsFundMgmt), we do a feature every week called #TrendlineWednesday (sometimes, we even get around to it on Wednesdays). Today’s edition included a trendline on the DXY that also served as our Chart Of The Day. That was due to the age of the trendline as well as its immediate relevancy to current prices.

The Down trendline in question originates at the DXY’s top back in 1985 and connects the peak in 2001-2002. The trendline was eventually broken in early 2015. Since then, the former line of resistance has served as support whenever prices have dropped back down to test the top of the line. This was the case in mid-2015 and mid-2016. And Dollar bulls are hoping it is the case now as the DXY is once again testing the top of that broken post-1985 Down trendline.

 

So will the “buck stop here”? There are no certainties. However, today’s intra-day rebound in the Dollar, presumably spurred by President Trump’s strong-Dollar comments, occurred just as the DXY was testing the top of the trendline. Now, you may think that’s a random happenstance; however, after carefully scrutinizing the charts for many decades, we’re not big on the notion of coincidences.

Perhaps price movements occur because of contact with a specific technical chart level, or perhaps the proximity of prices on a chart create the conditions and opportunity for a “news-catalyzed” move in prices. Or perhaps both. However, we have found that there is typically a sound technical reason for why prices move when and where they do.

So perhaps the trendline in question will indeed support the Dollar and put a halt to its immediate decline. If so, it still doesn’t guarantee that the Dollar will begin to rally in earnest, or at all. What it does have to offer is a potential limit on the pace of the Dollar’s decline and I think Dollar bulls will take that at this point.

*  *  *

If you are interested in the Premium version of our charts and research, check out “all-access” service, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!

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• World stocks set for 10th straight week of gains, euro jumps (Reuters)
• Trump Denies Reports He Tried to Fire Mueller (WSJ)
• Trump confronts Davos on trade abuses, talks up dollar (Reuters)
• Dollar Resumes Slide After Rallying on President’s Comments (WSJ)
• China to name Harvard-trained Liu He as vice premier overseeing economy (Reuters)
• Ranking Amazon’s HQ2 Short List (WSJ)
• North Korea exported coal to South, Japan via Russia (Reuters)
• Trump poised for clash with DOJ over classified memo (The Hill)
• Ackman’s Pershing Square Takes Stake in Nike (WSJ)
• WikiLeaks’ Assange to Ask U.K. Court to Lift Arrest Warrant (BBG)
• Tax Incentive Puts More Robots on Factory Floors (WSJ)
• Dell Technologies Considering IPO, Other Options, Sources Say (BBG)
• Spain declares Venezuela’s ambassador ‘persona non grata’ (Reuters)
• Tech firms let Russia probe software widely used by U.S. government (Reuters)
• Honeywell results beat, raises 2018 profit forecast (Reuters)
• Worthless Auto Trade-Ins Signal Riskier Loans (BBG)
• Spain appeals nomination of Puigdemont as candidate to lead Catalonia (Reuters)

 

Overnight Media Digest

WSJ

– European Central Bank President Mario Draghi criticized remarks by U.S. Treasury Secretary Steven Mnuchin that a weak dollar benefits U.S. trade, signaling a fresh economic policy rift between European officials and the Trump administration. on.wsj.com/2ncc6sf

– U.S. President Donald Trump proposed a path to citizenship for 1.8 million undocumented immigrants brought to the U.S. as children, if lawmakers agree to create a $25 billion fund to expand barriers along the Mexico border and make other changes to the immigration system. on.wsj.com/2nbVJMo

– Dell Inc is considering a range of strategic alternatives that could transform the maker of PCs and data-storage devices, according to people familiar with the matter. on.wsj.com/2nbZf9u

– The Iranian military has halted the routine harassment by its armed “fast boats” of U.S. naval vessels in the Persian Gulf, the U.S. military said, a turnabout that officials welcomed but were at a loss to explain. on.wsj.com/2nbtnlw

– William Ackman’s Pershing Square Capital Management LP has taken a passive stake in Nike Inc based on a belief in the sneaker giant’s long-term growth prospects. on.wsj.com/2nbBH4r

– Chinese internet giant Tencent Holdings Ltd is buying a piece of Skydance Media, the Hollywood company behind “Terminator.” on.wsj.com/2nbpixE

– Wal-Mart Stores Inc is joining with Japan’s largest online retailer Rakuten Inc to bolster its efforts to compete with Amazon.com Inc in both Asia and the U.S. on.wsj.com/2ng2nkX

 

FT

– European Central Bank chief Mario Draghi took a swipe at U.S. Treasury Secretary Steven Mnuchin’s remarks on Wednesday in Davos, saying they threatened a decades-old pact between the world’s leading economies not to target currencies.

– South Korea has hit back rapidly at U.S. tariffs on washing machines and solar panels, filing challenges and demands for compensation at the World Trade Organization.

– The London-based business of Interactive Brokers Group , an electronic brokerage firm, has been fined just over one million pounds ($1.4 million) for poor market-abuse controls and failure to report suspicious client transactions.

 

NYT

– Wal-Mart Stores Inc on Thursday struck a deal with Rakuten Inc to start selling digital books on its website for the first time later this year and to expand its online grocery business in Japan. nyti.ms/2FirHgs

– A federal advisory committee on Thursday recommended that the U.S. Food and Drug Administration reject a bid by Philip Morris International Inc to market a smokeless tobacco stick in the United States as safer than traditional cigarettes.

nyti.ms/2Fikltp

– Apple Inc has taken another step toward becoming a power in the entertainment business by scooping up the rights for a TV project from Damien Chazelle, the Oscar-winning writer and director of “La La Land.” nyti.ms/2DLxtu9

– Airbnb announced on Thursday it had named its first independent board member — Kenneth Chenault, the departing chief executive of American Express Co. nyti.ms/2BugUh0

 

Canada

THE GLOBE AND MAIL

** Assembly of First Nations National Chief Perry Bellegarde is urging First Nations across Canada to create their own child welfare legislation – something the federal government says it supports – to prevent more Indigenous children from entering foster care. tgam.ca/2Bu30LO

** The Canadian division of the troubled British construction giant Carillion Plc has filed for bankruptcy protection in Ontario, putting 7,500 jobs at risk and jeopardizing projects at dozens of hospitals, hotels and airports across the country. tgam.ca/2BvbzWA

NATIONAL POST
** TransCanada Corp will need to add as much as $200 million to the cost of its $8 billion Keystone XL pipeline project after regulators in Nebraska approved an alternative to the company’s preferred route through the state, according to the company’s chief executive officer. bit.ly/2BwxooW

** Iron Bridge Resources Ltd announced it would form a new subsidiary called Iron Bridge Technology in an attempt to join the cryptocurrency and blockchain craze but also to arbitrage the difference between the value of bitcoin, currently valued at $11,188 per coin, and AECO gas, currently valued at $1.98 per thousand cubic feet. bit.ly/2Bw8PZ7

 

Britain

 

The Times

– Doubts are being raised about the scale of the shortfall in the pension funds of GKN Plc, a FTSE 100 engineering giant, amid questions whether it could be used as a poison pill in the hostile takeover bid launched by industrial conglomerate Melrose Industries. bit.ly/2ndipff

– The world’s biggest drinks group Diageo Plc has revealed that sales in China have recovered from a slump caused by the government’s anti-corruption drive. bit.ly/2ndswQt

The Guardian

– MPs have asked police to investigate if crimes were committed at the men-only Presidents Club dinner, attended by billionaires, politicians and businessmen, at which hired hostesses were allegedly groped and sexually harassed. bit.ly/2GhFoxr

– Fracking companies must undergo financial health checks if they want to win a green light for their operations, the business secretary Greg Clark has said, as the industry faces another barrier to exploration in the UK. bit.ly/2DLBs9Y

The Telegraph

– Russia could cause “thousands and thousands and thousands” of deaths in Britain with an attack which would cripple the UK’s infrastructure and energy supply, Defence Secretary Gavin Williamson has warned. bit.ly/2DQyQHK

– Chelsea are losing patience with Antonio Conte’s complaints about the club’s January transfer activity and will warn the Italian that he cannot continue to imply he has no input into signings when they are working hard to recruit targets specifically requested by their manager. bit.ly/2FkfvM7

Sky News

– Pierre Moscovici, the man in charge of Europe’s economic policy, has written off the chances of Britain’s financial services sector getting its own Brexit deal. bit.ly/2DzpJrO

– Mortgage approvals by British banks fell to their lowest level for almost five years last month, industry figures show. bit.ly/2BtHYwR

The Independent

– Sky Plc’s plan to make all its channels and content available online is being sold as a way to access new customers, people who live in flats for example. ind.pn/2ncPpnG

 

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In the final speech by a world leader at this year’s Davos globalists-fest, President Trump will address The World Economic Forum (and we suspect millions around the world) this morning to remind them that ‘making American great again’ will help their global growth goals.

Having been character-assassinated yesterday by George Soros, we wonder if Trump will go off-script among the globalist crowd?

Mr Trump is the first sitting US President to attend a WEF since Bill Clinton in 2000.

 

The White House has just release excerpts of the speech:

• TRUMP TO TELL DAVOS LEADERS AMERICA `COMPETITIVE ONCE AGAIN’
• TRUMP TO TELL DAVOS U.S. WILL INSIST ON FAIR, RECIPROCAL TRADE
• TRUMP TO TELL DAVOS U.S. GROWTH WILL HELP DRIVE GLOBAL GROWTH
• TRUMP TO WARN DAVOS AGAINST IGNORING `VOICES OF THE FORGOTTEN’

Evercore ISI’s Terry Haines writes in a note that President Donald Trump’s speech is intended as both a message to world leaders about the changes the administration wants in global economic and trade systems, and as “a prominent kickoff” for Tuesday’s State of the Union address.

It seems like a full-er-est house for this speech…

SRO at @realDonaldTrump speech at #wef18. Adding chairs to room now. pic.twitter.com/F9LoybX9Tc

— Nick Dunn (@NickDunnCNBC) January 26, 2018

Live Feed (speech due to start at 8am ET)…

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Newly released text messages between controversial anti-Trump FBI agents Peter Strzok and Lisa Page reveal several leaks of confidential information to Wall St. Journal reporter, Devlin Barrett, who is now with the Washington Post.

Following the release of the timestamped texts by Senate Judiciary Committee Chairman Chuck Grassley, Conservative Treehouse compared the timing of the messages between the agents and tied them to several instances of Barrett breaking news or confirming rumors based on “sources” within the government.

Via the Conservative Treehouse: 

On October 28th, 2016 (as above), at the exact time the re-opening of the Clinton investigation hit the media news-cycle, Page and Strzok were texting.  From the released messaging we see at 5:19pm Lisa Page is on the phone with “Devlin”:

Page: 5:19pm “Still on the phone with Devlin. Mike’s phone is ON FIRE.”

Strzok: 5:29pm “You might wanna tell Devlin he should turn on CNN, there’s news on.”

Page: 5:30pm “He knows. He just got handed a note.”

Strzok: 5:33pm “Ha. He asking about it now?”

Page: 5:34pm “Yeah. It was pretty funny. Coming now.”

At 5:36pm Devlin Barrett tweets:

 ​Sources, as in Lisa Page – who Barrett was just (or still) on the phone with. 

Looking back upon the released text messages, and comparing them to reporting by Devlin Barrett, another specific article jumps out.

On October 23rd, 2016, Devlin Barrett reported on a scoop:

“Scoop: McAuliffe PAC gave $467,500 to campaign of wife of senior FBI official who oversaw Clinton email probe” (link)

(Tweet Link) and (Story Link)

This October 23rd, 2016, “scoop” aligns with the internal text messaging discussion between Agent Peter Strzok and FBI Attorney Lisa Page who were discussing James Comey’s chief-of-staff James Rybicki recommending that FBI Asst. Director Andrew “Andy” McCabe should be recused from the Hillary Clinton investigation.

From the messaging the recusal was discussed mid-through-late October 2016:

00:52am …”if it’s a matter similar to those we’ve been talking about lately”…

The Conservative Treehouse then notes that Barrett left the Wall Street Journal and joined the Washington Post, where he wrote a cover story to explain away a bizarre text between Strzok and Page referencing then-candidate Hillary Clinton: 

“So look, you say we text on that phone when we talk about Hillary because it can’t be traced” “You were just venting, [because] you feel bad that you’re gone so much but that can’t be helped right now.”

In his WaPo piece, Barrett posits that the text was in reference to the extramarital affair the FBI agents were having with each other:

The WaPo article starts off: 

Two senior FBI officials who texted each other about President Trump and Hillary Clinton relied on work phones to try to hide their romance from a spouse and made the bureau’s probe of Clinton’s private email server their cover story for being in such close contact, according to people familiar with the matter. –WaPo

We now have what appears to be evidence of an FBI official leaking information to a WSJ / WaPo reporter, who subsequently tweeted and wrote articles defending Page and Strzok, while throwing FBI deputy director Andy McCabe under the bus. 

Then again, as the Conservative Treehouse notes, former FBI Director James Comey was doing the same thing.

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