Month: November 2018

Google – which was exposed trying to help Hillary Clinton win the 2016 election, and who were beside themselves after she lost – discussed whether to bury conservative media outlets in the company’s search function after Donald Trump became president, according to the Daily Caller News Foundation‘s Peter Hasson. 

Internal communications obtained by the Caller reveal that The Daily Caller and Breitbart were specifically singled out for potential censorship. 

Communications obtained by TheDCNF show that internal Google discussions went beyond expressing remorse over Clinton’s loss to actually discussing ways Google could prevent Trump from winning again.

“This was an election of false equivalencies, and Google, sadly, had a hand in it,” Google engineer Scott Byer wrote in a Nov. 9, 2016, post reviewed by TheDCNF.

Byer falsely labeled The Daily Caller and Breitbart as “opinion blogs” and urged his coworkers to reduce their visibility in search results.

“How many times did you see the Election now card with items from opinion blogs (Breitbart, Daily Caller) elevated next to legitimate news organizations? That’s something that can and should be fixed,” Byer wrote.

“I think we have a responsibility to expose the quality and truthfulness of sources – because not doing so hides real information under loud noises,” he continued. 

“Beyond that, let’s concentrate on teaching critical thinking. A little bit of that would go a long way. Let’s make sure that we reverse things in four years – demographics will be on our side.” –DCNF

Not all Google employees agreed with the notion of censoring conservative outlets; engineer Uri Dekel – a self-described Clinton supporter, argued that manipulating search results was the wrong approach. 

“Thinking that Breitbart, Drudge, etc. are not ‘legitimate news sources’ is contrary to the beliefs of a major portion of our user base is partially what got us to this mess. MSNBC is not more legit than Drudge just because Rachel Maddow may be more educated / less deplorable / closer to our views, than, say Sean Hannity,” Dekel wrote Byer in a reply, adding “I follow a lot of right wing folks on social networks you could tell something was brewing. We laughed off Drudge’s Instant Polls and all that stuff, but in the end, people go to those sources because they believe that the media doesn’t do it’s job. I’m a Hillary supporter and let’s admit it, the media avoided dealing with the hard questions and issues, which didn’t pay off. By ranking ‘legitimacy’ you’ll just introduce more conspiracy theories”  

Another engineer, Mike Brauwerman, suggested that the company could avoid “accusations of conspiracy or bias” by using technology to “trace information to its source, to link to critiques of these sources, and let people decide what sources they believe.” 

“Give people a comprehensive but effectively summarized view of the information, not context-free rage-inducing sound-byte,” added Brauwerman. 

Other Google employees also advocated for providing context to sources in order to “help” users consume information. Unfortunately, the search giant’s solution was to employ fact-checking organizations with a liberal bias that “target conservative outlets almost exclusively,” according to the Caller. Google eventually pulled their fact-checkers in January, crediting an investigation by the Daily Caller in their decision. 

Google claims that the email conversation did not lead to the manipulation of search results for political purposes. 

“This post shows that far from suppressing Breitbart and Daily Caller, we surfaced these sites regularly in our products. Furthermore, it shows that we value providing people with the full view on stories from a variety of sources,” the spokeswoman told TheDCNF in an email. 

“Google has never manipulated its search results or modified any of its products to promote a particular political ideology. Our processes and policies do not allow for any manipulation of search results to promote political ideologies.” –DCNF

Right – then why does a Google search for “Idiot” return pictures of the Trump family, while the same search in DuckDuckGo is completely different: 

vs:

This isn’t the first time Google employees have sought to alter search results either: 

After Trump announced his initial travel ban in January 2017, Google employees discussed ways to manipulate search results in order to push back against the president’s order.

A group of employees brainstormed ways to counter “islamophobic, algorithmically biased results from search terms ‘Islam’, ‘Muslim’, ‘Iran’, etc,” as well as “prejudiced, algorithmically biased search results from search terms ‘Mexico’, ‘Hispanic’, ‘Latino’, etc.”

Meanwhile, President Trump suggested to the Daily Caller in September that Google and Facebook are trying to manipulate election outcomes. 

“I think they already have,” said Trump. “I mean the true interference in the last election was that — if you look at all, virtually all of those companies are super liberal companies in favor of Hillary Clinton,” he added. 

““Maybe I did a better job because I’m good with the Twitter and I’m good at social media, but the truth is they were all on Hillary Clinton’s side, and if you look at what was going on with Facebook and with Google and all of it, they were very much on her side.” 

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Having written about it for over a year, it sometimes feels like the topic of “fallen angel” bonds, and the danger they present to the broader credit market and overall economy has been beaten to death (see most recently”The $6.4 Trillion Question: How Many BBB Bonds Are About To Be Downgraded“).

But what if the market is focusing on the wrong tier when it comes to the upcoming downgrade deluge? What if instead of BBB credits, whose downgrade risk is, or should be, largely priced in by now (although the recent plunges in GE and PG&E bonds leave many questions unanswered) the real risk is just above the pre-fallen angel tier.

That’s the point made by Goldman Sachs overnight, which argues that while some of the “BBB risks” warrant close monitoring, the bank’s credit analysts “continue to struggle to see any recent developments that would make BBB-rated bonds a canary in a coal mine.“

To support their claim that BBB is not the time bomb many others claim it is, Goldman shows that BBB spreads have moved largely in line with their A-rated peers, while demonstrating that BBB bonds have not been an outsized source of weakness in IG.

The bank’s assessment is that in the absence of a full-blown recession, downgrade risk among BBB-rated issuers is likely to remain  contained to structurally and cyclically challenged sectors and firms. As a result, Goldman’s credit analysts view the risks as most pronounced in sectors including Food and Beverage, Retail/Consumer, and Autos. Meanwhile, they see value in other BBB-heavy  sectors such as Banks and Telecom.

In any case, the bottom line is that according to Goldman at least, investors should not be worried about BBB (that said, on Nov 1 Goldman told clients to buy oil; what followed next was the worst month for oil in 10 years).

So if not BBB, then where is the biggest credit risk in the investment grade space?

According to Goldman, the more pronounced risk facing IG investors, is a wave of downgrades among firms rated A and AA.

In our view, these companies are more likely to use their debt capacity for shareholder returns and/or M&A to diversify their businesses. In contrast, firms at the cusp of HY ratings should be inclined to manage their balance sheets more conservatively.

Is Goldman right this time? Who knows, but recent rating actions suggest that the bank may have a point: in the fourth quarter alone, some $90 billion worth of “pre-fallen angel” bonds have been downgraded to BBB territory from A – the highest amount since the fourth quarter of 2015 – and Goldman adds that the risk “remains skewed towards further negative actions.”

But while rating agencies are clearly adding to the pre-fallen angel camp, there is no denying that the big threat is what happens if and when the BBB downgrade deluge begins. As Deutsche Bank calculated last week, when looking at those bonds most at risk of getting junked, $150bn of the $736bn of BBB- bonds are currently on negative watch/outlook with at least one rating agency.

And while Goldman remains clearly complacent about the BBB space at least until a recession hits, as Deutsche Bank warned last week, even before we get to an economic slowdown – some time in 2020 – or even before the market start pricing the slowdown in, “it feels like the tide might be turning and we start to see fallen angels outpace rising stars over the next year.”

So there you have it: for those who believe a recession is either imminent or will soon be priced in, keep shorting the BBB space. Meanwhile, those who think it will take some more time before the rating agencies filter out the noise, the best place to be short is those “pre-fallen” A bonds who will first become BBBs, before they too join the deluge into the junk space some time around late 2019/early 2020.

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A close senior political ally of German Chancellor Angela Merkel told Reuters on Friday that the European Union and the United States should consider banning all Russian ships that originate from the Sea of Avoz from entering EU and US ports until last Sunday’s Kerch Strait crisis is resolved. 

German conservative Annegret Kramp-Karrenbauer, who is said to be most likely to succeed Merkel as leader of the Christian Democratic Union (CDU) party, told Reuters:

One answer might be, for example, to stop Russian ships coming from the region – from the Sea of ​​Azov – from entering European or U.S. ports until this situation with Ukraine is resolved.

And turning her attention to US sanctions targeting Russia and Germany’s less than eager willingness to go along, Reuters reports further:

Turning to tensions with the United States, Kramp-Karrenbauer said top executives from German carmakers Volkswagen, BMW and Daimler should be careful not to undermine the EU’s trade position when they meet U.S. officials at the White House next week.

Though this is the first time such a threat has been floated by a political official in a lead EU country, it comes amidst a series of tit-for-tat measures following the Russian Navy seizing three Ukrainian ships and 24 sailors in the Black Sea last Sunday as the crew stands accused of “dangerous maneuvers” in Russian territorial water.

Following the incident President Petro Poroshenko said during a Tuesday Ukrainian television interview that the threat of “full-scale war” with Russia could be imminent, in what appeared a telegraphed and sensationalized attempt to grab the attention of NATO.  

Poroshenko condemned what he described as a rapidly increased Russian military presence on the border with Ukraine, saying, “The number of [Russian] tanks at bases located along our border has tripled,” according to the AFP.

On Wednesday he also signed legislation introducing martial law across ten Ukrainian provinces, and on Friday a new anti-Russian travel ban was announced for Russian men ages 16-60. 

Moscow for its part has announced a series of defensive measures focused on the Crimean as tensions soar, including deploying more of its advanced S-400 surface-to-air missile systems to the peninsula and increasing its naval presence on the Black Sea. 

Meanwhile Britain has dispatched a reconnaissance vessel to the Black Sea amid calls from UK defense officials to beef up its presence in and around Ukraine through warships and increased troop deployment. 

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While investors were expecting a multitude of “tape bombs” during the G-20 summit in Buenos Aires, it appears local police in the crime-plagued capital city have turned up the real thing.

Argentina’s security minister told the Associated Press that eight makeshift gas bombs have been discovered at a site near the G-20 summit in Buenos Aires, in an area where protests against the summit are expected on Friday.

According to Security Minister Patricia Bullrich, police discovered the rudimentary bombs, made from bottles and cloth wicks, during an “operation” more than six miles from the summit’s venue. The bombs were discovered inside a burned out taxi cab. Despite the find, Bullrich said she expects a “day of peace without violence.”

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In a January email to a senior executive, Facebook COO Sheryl Sandberg ordered an investigation into whether the billionaire activist had been shorting the company’s stock while calling it a “menace to society” in a blistering speech that same month at the World Economic Forum, according to a new report by the New York Times. 

The revelation is a follow-up to a Times exposé two weeks ago which exposed Facebook’s mercenary approach to public relations – including hiring a GOP-linked PR firm, Definers, to label liberal critics of the company as Soros operatives, and to collaborate with another company to create factual-yet-damaging advertisements criticizing Apple and Google amid the Cambridge Analytica data harvesting scandal.

In particular, Facebook used Definers to target a coalition called Freedom from Facebook – which crashed a House Judiciary Committee hearing where a company executive was testifying about the Cambridge Analytica scandal. Definers labeled Freedom from Facebook organizers as anti-Semitic, and directed reporters to explore connections to Soros, after the Hungarian-American billionaire levied harsh criticism at the social media giant. 

He [Soros] was a natural target. In a speech at the World Economic Forum in January, he had attacked Facebook and Google, describing them as a monopolist “menace” with “neither the will nor the inclination to protect society against the consequences of their actions.”

Definers pressed reporters to explore the financial connections between Mr. Soros’s family or philanthropies and groups that were members of Freedom from Facebook, such as Color of Change, an online racial justice organization, as well as a progressive group founded by Mr. Soros’s son. –NYT

While Sandberg initially denied knowledge of the Definers’ work for the company – telling CBS This Morning two days after the Times story broke that she “learned of that in the paper yesterday,” it strains credulity that she would order research into Soros while Definers was simultaneously mounting a PR assault on him. Sandberg acknowledged in a Thanksgiving eve statement that some of the Definers’ work for Facebook had in fact crossed her desk. 

In a response to Thursday’s Times piece, Facebook said that the research into Soros was “already underway” when she sent the email. 

“Mr. Soros is a prominent investor and we looked into his investments and trading activity related to Facebook,” the company said. “That research was already underway when Sheryl sent an email asking if Mr. Soros had shorted Facebook’s stock.” The company said that while Ms. Sandberg “takes full responsibility for any activity that happened on her watch,” she did not personally direct any research on Freedom from Facebook, an anti-Facebook coalition whose members were among the subjects of Definers’ later work. –NYT

Freedom from Facebook spokesman Eddie Vale says he’s skeptical of the company’s story. 

“In light of Sandberg’s continuously changing story on the Soros research, there’s no way their denials about attacking other critics can be taken at face value,” Mr. Vale said. “Facebook must immediately release any emails and any research about targeting the Freedom from Facebook coalition or any member organizations.”

Facebook has defended its research into Soros as a “prudent and necessary step for any public company under attack by a high-profile figure,” according to the Times. Others, however, are spotlighting the aggressive public relations campaign amid the fallout from both the data harvesting scandal and revelations that the company sought to conceal evidence that Russia had used the platform to influence the 2016 US election. 

The Times investigation found that Ms. Sandberg and Mark Zuckerberg, Facebook’s chief executive, had ignored warnings about abuse on the platform and sought to conceal from public view evidence that Russia had used it to disrupt the 2016 presidential campaign and help elect President Trump. The Times also found that when Facebook was confronted last spring with revelations that the privacy of tens of millions of users had been compromised by Cambridge Analytica, a Trump-linked data firm, Ms. Sandberg and Mr. Zuckerberg sought to downplay the problem and deflect blame. –NYT

Some have called on Sandberg’s ouster from the company despite the former Head of Communications, Elliot Schrage, falling on his sword and taking blame for the work done by Definers. Sandberg, meanwhile, maintains that she hired Definers or directed the firm’s research. 

“She very much placed it on the now departed communications chief,” said Rashad Robinson, head of the racial-justice group Color of Change, targeted in a Definers memo about Soros. 

In a statement, a company spokesman said: “Sheryl never directed research on Freedom from Facebook. But, as she said before, she takes full responsibility for any activity that happened on her watch.”

Apparently “full responsibility” means firing a scapegoat and not stepping down. 

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Authored by Michael Snyder via The Economic Collapse blog,

Real estate, oil and the employment numbers are all telling us the same thing, and that is really bad news for the U.S. economy.  It really does appear that economic activity is starting to slow down significantly, but just like in 2008 those that are running things don’t want to admit the reality of what we are facing.  Back then, Fed Chair Ben Bernanke insisted that the U.S. economy was not heading into a recession, and we later learned that a recession had already begun when he made that statement.  And as you will see at the end of this article, current Fed Chair Jerome Powell says that he is “very happy” with how the U.S. economy is performing, but he shouldn’t be so thrilled. 

Signs of trouble are everywhere, and we just got several more pieces of troubling news.

Thanks to aggressive rate hikes by the Federal Reserve, the average rate on a 30 year mortgage is now up to about 4.8 percent.  Just like in 2008, that is killing the housing market and it has us on the precipice of another real estate meltdown.

And some of the markets that were once the hottest in the entire country are leading the way down.  For example, just check out what is happening in Manhattan…

In the third quarter, the median price for a one-bedroom Manhattan home was $815,000, down 4% from the same period in 2017. The volume of sales fell 12.7%.

Of course things are even worse at the high end of the market.  Some Manhattan townhouses are selling for millions of dollars less than what they were originally listed for.

Sadly, Manhattan is far from alone.  Pending home sales are down all over the nation.  In October, U.S. pending home sales were down 4.6 percent on a year over year basis, and that was the tenth month in a row that we have seen a decline…

Hope was high for a rebound (after new-home-sales slumped), but that was dashed as pending home sales plunged 2.6% MoM in October (well below the expected 0.5% MoM bounce).

Additionally, Pending Home Sales fell 4.6% YoY – the 10th consecutive month of annual declines…

When something happens for 10 months in a row, I think that you can safely say that a trend has started.

Sales of new homes continue to plummet as well.  In fact, we just witnessed a 12 percent year over year decline for sales of new single family houses last month…

Sales of new single-family houses plunged 12% in October, compared to a year ago, to a seasonally adjusted annual rate of 544,000 houses, according to estimates by the Census Bureau and the Department of Housing and Urban Development.

With an inventory of new houses for sale at 336,000 (seasonally adjusted), the supply at the current rate of sales spiked to 7.4 months, from 6.5 months’ supply in September, and from 5.6 months’ supply a year ago.

If all of this sounds eerily similar to 2008, that is because it is eerily similar to what happened just before and during the last financial crisis.

Up until now, at least the economic optimists could point to the employment numbers as a reason for hope, but not anymore.

In fact, initial claims for unemployment benefits have now risen for three weeks in a row…

The number of Americans filing applications for jobless benefits increased to a six-month high last week, which could raise concerns that the labor market could be slowing.

Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 234,000 for the week ended Nov. 24, the highest level since the mid-May, the Labor Department said on Thursday. Claims have now risen for three straight weeks.

This is also similar to what we witnessed back in 2008.  Jobless claims started to creep up, and then when the crisis fully erupted there was an avalanche of job losses.

And just like 10 years ago, we are starting to see a lot of big corporations start to announce major layoffs.

General Motors greatly upset President Trump when they announced that they were cutting 14,000 jobs just before the holidays, but GM is far from alone.  For a list of some of the large firms that have just announced layoffs, please see my previous article entitled “U.S. Job Losses Accelerate: Here Are 10 Big Companies That Are Cutting Jobs Or Laying Off Workers”.

A third parallel to 2008 is what is happening to the price of oil.

In 2008, the price of oil shot up to a record high before falling precipitously.

Well, now a similar thing has happened.  Earlier this year the price of oil shot up to $76 a barrel, but this week it slid beneath the all-important $50 barrier…

Oil’s recent slide has shaved more than a third off its price. Crude fell more than 1% Thursday to as low as $49.41 a barrel. The last time oil closed below $50 was in October 4, 2017. By mid morning the price had climbed back to above $51.

Concerns about oversupply have sent oil prices into a virtual freefall: Crude hit a four-year high above $76 a barrel less than two months ago.

When economists are asked why the price of oil is falling, the primary answer they give is because global economic activity is softening.

And that is definitely the case.  In fact, we just learned that economic confidence in the eurozone has declined for the 11th month in a row…

Euro-area economic confidence slipped for an 11th straight month, further damping expectations that the currency bloc will rebound from a sharp growth slowdown and complicating the European Central Bank’s plans to pare back stimulus.

In addition, we just got news that the Swiss and Swedish economies had negative growth in the third quarter.

The economic news is bad across the board, and it appears to be undeniable that a global economic downturn has begun.

But current Fed Chair Jerome Powell insists that he is “very happy about the state of the economy”…

Jerome H. Powell, the Federal Reserve’s chairman, has also taken an optimistic line, declaring in Texas recently that he was “very happy about the state of the economy.”

That is just great.  He can be as happy as he wants, and he can continue raising interest rates as he sticks his head in the sand, but nothing is going to change economic reality.

Every single Fed rate hiking cycle in history has ended in a market crash and/or a recession, and this time won’t be any different.

The Federal Reserve created the “boom” that we witnessed in recent years, but we must also hold them responsible for the “bust” that is about to happen.

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In the annals of handshake photo-ops, we just may have a new winner (much to the delight of oil bulls who are looking at oil treading $50 and contemplating jumping out of the window).

Russian President Putin and Saudi Crown Prince bin Salman embrace and laugh at the G20 in Argentina. pic.twitter.com/DtyNK6RwhI

— NBC News (@NBCNews) November 30, 2018

Meanwhile, earlier…

 

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Authored by Tsvetana Paraskova via Oilprice.com,

Tesla and other electric vehicle (EV) companies in China send as many as 61 real-time data points, typically without the drivers’ knowledge, to monitoring centers backed by the Chinese government, The Associated Press reports, raising questions whether the huge amount of data that China requires from automakers to transmit may be used for surveillance.

Tesla and more than 200 other carmakers – including Ford, General Motors, Volkswagen, BMW, Daimler, Nissan, and Mitsubishi – send location information and details about battery and engine function in EVs to government-backed monitoring centers.

While many cars in the U.S., Europe, and Japan send location information back to the car manufacturers who feed the data to car-tracking and amenities apps, the data from passenger cars stops there in those markets. Government agencies and law enforcement can access more personal data in those markets only in case of a specific criminal investigation, lawyers told AP’s Erika Kinetz.

In China, the amount of real-time data sent to and collected at the monitoring centers is much larger, which sparks concerns about privacy, whether the data is used for mass surveillance, and whether proprietary car-manufacturing data about engine/hybrid/batteries could be used to the advantage of Chinese government-backed companies.

The carmakers say that they just follow local laws to send EVs sensors data to the monitoring centers, according to the AP. China claims that the data is used for data analytics to improve infrastructure planning and public safety. But critics of the vast amount of real-time data collected fear that the data goes way beyond the Chinese aims to improve safety and infrastructure.

Carmakers have initially resisted sending so many data points to Chinese monitoring centers, but then the government bound data sharing with incentives – transmitting data is a requirement for incentives, a government consultant who helped assess the policy told AP.

Fears of government surveillance may not be unfounded, considering the Communist country’s aim to keep everyone in line and the recent media attention on China’s plan to roll out a Social Credit System to rank its citizens.

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