Month: January 2019

The total capitulation by the Federal Reserve which confirmed all it cares about is the stock market, propelled world stocks to their best January on record on Thursday, although in a deja vu of last January, when stocks similarly soared only to flop spectacularly, traders were trying not to get too carried away.

An overnight rally in global markets, helped by a dovish capitulation by the Fed which sent the S&P 1.55% higher on Wednesday as well as strong results from Facebook that sent the stock 11% higher premarket, faded overnight following another contractionary print in China’s official manufacturing PMI (49.5, up from 49.4 in Dec and above the 49.3 estimate), and the latest GDP print out of Italy which confirmed that the country had entered a recession for the first time in 6 years.

Even with the modest fade in sentiment, the MSCI world stocks index rose 0.5% and for the 20th day out of the last 23.  For January it is up more than 7.2% which is its best January since the index began in 1988 and the best performance in any month since December 2015. “The rally really does lift all boats,” said Pictet emerging market portfolio manager Guido Chamorro.

S&P futures and European stocks traded mixed on Thursday following catch up gains in Asia as investors took a pause in the wake of mixed corporate earnings despite now open support from the Federal Reserve which signaled an extended rate hike pause and announced it will be flexible on the path for reducing its balance sheet, sending the S&P to an 8-week high even as Nasdaq contracts stayed in the green, helped by better-than-expected results at Facebook. Meanwhile, Treasury yields and the dollar extended Wednesday’s declines. As a result, S&P futs were unchanged before President Trump was set to meet top China trade negotiator Chinese Vice Premier Liu He in the second day of the US-China trade talks.

Europe’s Stoxx 600 Index trimmed early gains of as much as 0.6%, dragged lower by banks and telecos as energy companies rose following strong results from Shell. Italy’s FTSE MIB index dropped on data showing the country fell into recession at the end of 2018, its first in 6 years.

Germany’s DAX drifted 1% off session high, as Deutsche Bank weighs on the index following news the German lender could be forced to merge with Commerzbank by mid-year if its results dont improve. FTSE-100 up 0.6%

MSCI’s index of Asia-Pacific shares rose to its highest since October helped by a 1% jump on Japan’s Nikkei which shrugged off the normal headwind of a higher yen. The main emerging market index skipped to a more than 8 percent January gain while the Shanghai Composite Index climbed 0.3 percent despite data showing China’s factory activity contracted for a second straight month.

Emerging-market stocks were poised for their best monthly gain in almost three years and while Powell’s dovish turn boosted currencies for a seventh day as the dollar extended its decline. The MSCI emerging-market equity index added to yesterday’s advance to head for a four-month high. The currency gauge was set for its longest winning streak in more than a year, with South Africa’s rand, Turkey’s lira and Brazil’s real leading gains since the U.S. central bank’s statement on Wednesday.

In FX, the Bloomberg Dollar index slipped to the the lowest since Sept. 27 as focus turned to US payrolls data due Friday; the greenback fell versus all G-10 peers, while the yen and risk-sensitive currencies led gains following the dovish Fed remarks; Treasuries rallied, outperforming Bunds. The euro reversed gains to trade below the 1.15 handle; the common currency initially shrugged off weaker-than-forecast German retail sales (-4.3% m/m in Dec. vs est. -0.6%) before edging lower despite euro-area growth in the three months through December matching estimates at 1.2% y/y, pressured by Italian GDP data.

With Wednesday’s statement the Fed helped ease fears that it would continue with plans to tighten policy even in the face of cooling economic data. The Fed said it would be “patient” about any future rate hikes and signaled flexibility in reducing its bond holdings, adding fuel to the emerging-market rally that began as 2018 drew to a close.

Investors now have a wary eye on meetings between Chinese negotiators and their counterparts in Washington as talks to resolve the trade dispute continue.

“I suspect the Fed news will trump everything, and people will look at the news, whatever comes in these earnings, against the backdrop of what the Fed is doing,” Gavin Friend, senior market strategist at National Australia Bank in London, said in a podcast. “It could be the catalyst for a breakthrough in key levels in the dollar index against major currencies.”

Looking at today’s key event, President Trump will meet with Chinese Vice Premier Liu He at 15:30 EST today. Trump also said it is highly unlikely he would be willing to include ‘Dreamers’ in negotiations regarding border security and government funding, while there were separate reports that the White House is said to prepare an emergency wall plan. US Democrats reportedly suggested openness for a compromise with President Trump, despite unveiling initial proposal for border security which doesn’t include a physical barrier.

In the latest Brexit news, the EU stands ready to take Brexit to a last-minute summit rather than bend the knee to demands from UK PM May, according to diplomats citing the scheduled summit on March 21-22. UK PM May is also said to be putting together a series of measures in an attempt to woo Labour MPs to support her Brexit deal; measures include cash injections into leave-supporting deprived areas.

In the commodity markets, oil prices rose for a third day, pushed up by lower imports into the United States amid OPEC efforts to tighten the market, and as Venezuela struggles to keep up its crude exports after Washington imposed sanctions on the nation. U.S. West Texas Intermediate crude futures were at $54.47 per barrel, up 24 cents, or 0.4 percent, from their last settlement. Brent was up 36 cents, or 0.6 percent, at $62.01 per barrel.

Expected data include jobless claims and new home sales. Blackstone, Conoco, Ferrari, GE, Mastercard, UPS, and Amazon are among companies reporting earnings.

Market Snapshot

• S&P 500 futures little changed at 2,684.25
• STOXX Europe 600 up 0.1% to 358.96
• MXAP up 1.2% to 156.58
• MXAPJ up 0.8% to 510.49
• Nikkei up 1.1% to 20,773.49
• Topix up 1.1% to 1,567.49
• Hang Seng Index up 1.1% to 27,942.47
• Shanghai Composite up 0.4% to 2,584.57
• Sensex up 1.8% to 36,246.18
• Australia S&P/ASX 200 down 0.4% to 5,864.65
• Kospi down 0.06% to 2,204.85
• Brent futures up 0.4% to $61.90/bbl
• Gold spot up 0.2% to $1,321.92
• U.S. Dollar Index little changed at 95.31
• German 10Y yield fell 2.3 bps to 0.165%
• Euro up 0.06% to $1.1487
• Italian 10Y yield fell 3.4 bps to 2.243%
• Spanish 10Y yield fell 3.7 bps to 1.217%

Top Overnight News from Bloomberg

• U.S. President Donald Trump will meet China’s top trade negotiator in the Oval Office on Thursday for high-level talks, with little indication that Beijing will bend to American demands to deepen economic reforms
• Italy fell into recession at the end of 2018, capping a year of political turmoil, higher borrowing costs and fiscal tensions that took their toll on the economy. The contraction will put further pressure on the coalition government, which already appears to be fraying
• The European Union is prepared to take Brexit down to a last-minute, high-stakes summit rather than cave into U.K. Prime Minister Theresa May’s demands over the next few weeks, diplomats said
• The number of Chinese companies warning on earnings is turning into a flood as a deadline looms on Thursday, with no industry spared from worsening demand

Asian stocks were mostly higher across the board as they took impetus from their counterparts in US where sentiment was lifted on the back of earnings and a dovish Fed, while the region also digested better than expected Chinese PMI data. ASX 200 (-0.4%) and Nikkei 225 (+1.1%) both initially benefitted from the rising tide in the aftermath of the FOMC, although weakness in Australia’s largest weighted financial sector later dragged on the local bourse, while a slew of corporate updates shared the focus for Japan. Hang Seng (+1.1%) and Shanghai Comp. (+0.4%) conformed to the positive tone following better than expected Chinese Manufacturing PMI and Non-Manufacturing PMI data, while another PBoC liquidity injection ahead of next week’s Lunar New Year and ongoing US-China trade talks also contributed to the optimism. Finally, 10yr JGBs were initially higher as they tracked the upside in T-notes post-FOMC and as the BoJ Summary of Opinions unsurprisingly reiterated the need to persistently continue powerful monetary easing, although gains were later pared despite stronger 2yr auction results as upside was restricted by the firm risk sentiment.

Top Asian News

• Ship Giants to Join Forces in Korea to Fend Off China Threat

All Major European indices initially opened higher [Euro Stoxx 50 -0.3%] continuing the overnight gains seen in Asia which benefited from a dovish Fed alongside strong earnings from Facebook, who were up 11.5% after-market; although European indices have since reverted much of this following an earnings dominated open. FTSE 100 (+0.5%) is benefitting from Shell (+4.1%) and Diageo (+4.0%) due to both companies’ earnings beating on expectations; Shell’s strong performance has subsequently led to outperformance in the energy sector (+2.3%). The SMI (U/C) is the underperforming sector, weighed on by Swatch (-5.4%) who are at the bottom of the Stoxx 600 after their FY group sales missed expectations; although losses are capped by strong performance in Roche (+2.2%) following their earnings. Other notable movers include, Unilever (-3.7%) who anticipate 2019 underlying sales growth at the bottom of their 3-5% range; and as such are down on the day. Elsewhere, Wirecard (+1.8%) have recouped some of the losses seen in the previous session due to an FT article reporting that an executive has been accused of using forged contracts. And BT (-2.6%) are down despite reiterating EBITDA guidance at the top end of expectations for FY18/19, as Philip Jansen is to take over as CEO from Gavin Patterson on Friday.

Top European News

• Spain’s Economy Remains Bright Spot Amid Euro-Area Slowdown
• Shell Pledges to ‘Do It All’ as Cash Surge Underpins Returns
• As Wirecard Gets Bigger, So Does the Target on Its Back
• Nestle Chairman Signals He’s Open to a Full Sale of Skin Health

In FX, odds looked stacked against the Greenback following an arguably even more dovish twist from the FOMC than many or most were looking for (effectively announced a pause in the tightening cycle, with patience going forward and not necessarily further hikes at this stage, or much more balance sheet reduction). This, coupled with some ‘strong’ sell signals for month end portfolio rebalancing saw the Buck slump to new recent lows vs G10 peers, while the DXY slipped under its 200 DMA (95.290) at one stage to 95.127 before stabilising and perhaps benefiting from early SOMA-related positioning (front-running ahead of the usual flow window).

• JPY – The main beneficiary of post-Fed Dollar weakness and pronounced US Treasury curve bull-steepening, as Usd/Jpy reversed sharply from 109.50+ peaks into the FOMC to circa 108.50. Note, however, option expiries between 108.90-109.00 in 1 bn may limit further downside in the headline pair ahead of the NY cut.
• AUD/NZD – Also revelling in the broadly bearish Usd hue, plus a revival in risk appetite, which partly Fed induced and underscored by improvements in China’s manufacturing and services PMIs overnight. Aud/Usd is consolidating off fresh multi-week highs circa 0.7275 having blasted through daily tech resistance around 0.7207 that had been containing advances ahead of the FOMC, while Nzd/Usd is pivoting 0.6900 with the Kiwi drawing additional momentum from S&P’s NZ rating outlook upgrade to positive from stable.
• GBP/CHF/CAD – All firmer vs the US Dollar, albeit marginally, as Cable continues to trade heavily around 1.3150 amidst the ongoing Brexit hiatus, while the Franc remains in a 0.9900-50 range and Loonie meanders between 1.3120-55 awaiting some independent impetus from looming Canadian GDP and PPI data before a speech from BoC’s Wilkins.
• EUR – The single currency finally breached its 100 DMA around 1.1443, and 1.1450 on its way to a 1.1515 peak vs the Usd, but has been undermined by more poor Eurozone data in the shape of German retail sales and Italian GDP (both negative and worse than forecast). Note, the aforementioned SOMA interests also have a tendency to weigh on Eur/Usd more than other Usd/major pairings.

In commodities, it was a mixed session in the commodities complex thus far, as the energy benchmarks pare back a bulk of yesterday’s Fed-induced gains with WTI (-0.2%) drifting into negative territory and Brent (+0.5%) off best levels. Oil prices have been on a downwards trajectory for most of the EU session with a brief Brent dip below USD 61.50/bbl, coinciding with the Iraqi oil ministry stating 40 oil wells are to be drilled in the Southern Manjoon oilfield. As reference the Manjoon oil field is estimated to have reserves of almost 12.6bln barrels. Otherwise, new-flow has been light in the complex with traders keeping a close eye on US-Sino trade developments with Vice Premier Liu He due to meet US President Trump at the Oval office around 20:30 GMT. On the Venezuelan front, Chinese energy giant PetroChina is reportedly planning to drop Venezuelan state-owned PDVSA amid the US oil sanctions on the company in the backdrop of Venezuela’s political turmoil. The sanctions seem to have a muted impact in the oil market thus far as US already stated that any shortfalls in output will be countered with the use of the US Strategic Petroleum Reserve. Meanwhile, prices are somewhat underpinned by the OPEC production cuts with figures stating output amongst the members fell 900k BPD, (vs. 800K planned at the latest meeting); as according to JBC.

Elsewhere, metal prices are supported by the still-subdued dollar with spot gold poised to end the month with a fourth consecutive monthly gain, prices reached levels last seen in May 2018 as the yellow metal advances above USD 1320/oz. Citigroup notes that the precious metal is benefitting from a weaker buck alongside safe-haven buyers hedging against the outcome of the US-China trade talks. Moving on, nickel and steel prices are expected to be weighed on by a soaring output of the raw material in China and Indonesia and as such, BMO analysts expect the nickel deficit to narrow to 96k tonnes in 2019 vs. current 129k tonnes.

Looking at the day ahead, we’re due to get Q4 ECI (+0.8% qoq expected), latest weekly initial jobless claims, November new home sales and the January Chicago PMI (2.3pt drop to 61.5 expected). Away from the data the ECB’s Coeure, Mersch and Weidmann are due to speak at separate events while earnings highlights include Amazon, Royal Dutch Shell, Unilever, DowDuPont, General Electrics, Diageo and ConocoPhillips.

US Event Calendar

• 7:30am: Challenger Job Cuts YoY, prior 35.3%
• 8:30am: Employment Cost Index, est. 0.8%, prior 0.8%
• 8:30am: Initial Jobless Claims, est. 215,000, prior 199,000; Continuing Claims, est. 1.72m, prior 1.71m
• 9:45am: Chicago Purchasing Manager, est. 61.5, prior 65.4
• 10am: New Home Sales, est. 570,000, prior 544,000; MoM, est. 4.78%, prior -8.9%
• 4pm: Total Net TIC Flows, prior $42.0b

DB’s Jim Reid concludes the overnight wrap

If you’re in the U.K. I hope you’ve met today’s tax return deadline. I still haven’t quite finished mine and I’m a little stressed as to when I’ll get the chance. This is the most complicated of my life as during the last tax year I sold all my worldly possessions (apart from my family and my golf clubs) to buy our new house. I’ve had to go through 24 years of files to work out what I’d originally paid for all the assets that I subsequently sold. Surprisingly some were actually sold higher than where I’d bought them. Others less so! At least next year’s will now be easy as pretty much all I own is tied up in a vastly overpriced U.K. house in a post Brexit era.

On the positive side this last day of January will be greeted with more enthusiasm than the last day of the previous two very poor months for performance. The Fed helped supercharge this last night with US markets advancing to their highest levels since early December after delivering a surprisingly dovish policy statement at yesterday’s meeting. It marked the first Fed meeting day in which the S&P 500 rallied since Chair Powell’s tenure began, snapping a streak of seven straight losses on Fed meeting days. Has Mr Powell now yielded to the desires and moods of financial markets? Indeed, yesterday was the best “Fed day” performance since December 2014, when then-Chair Yellen struck a similarly dovish tone and the committee inserted a reference to being “patient” into the statement.

The p-word was again a key factor at yesterday’s meeting, as its re-introduction marked one of several notably dovish changes that supported yesterday’s market reaction. As a reminder, yesterday was the first of the previous “off” meetings with a press conference. There was also the normal policy statement, but no update to FOMC participants’ macro and interest rate forecasts.

The new policy statement had four notable changes that all leaned in a dovish direction: theyi) removed the “further gradual increases” description of the policy path, ii) added “market-based measures of inflation compensation have moved lower,” iii) added a reference to “muted inflation pressures,” and iv) added a sentence saying “the Committee will be patient as it determines what future adjustments” to rates will be appropriate. Taking items i and iv together, the committee therefore removed its tightening bias, and looking at ii and iii this indicates that incoming hard data and market pricing on the inflation front are the key variables to watch before the fed returns to its tightening track. The policy statement was accompanied by a separate note which committed to using the fed funds rate as the main policy tool and to maintaining enough excess reserves moving forward to maintain the “floor” system. That was consistent with our economists’ expectations, but still represents an official confirmation.

Our economists now believe that the risk to their call for two more rate hikes later this year and another one next year has shifted a bit further to the downside, though the substantial further lift to financial conditions resulting from yesterday’s announcement somewhat limits this downside risk. See here for their full summary of the meeting.

Now to recap the strong day of market rallies. Yields on two-year Treasuries rallied -6.5bps while 10-year yields fell a more modest -3.2bps, leading the yield curve to bull steepen +3.2bps. The dollar dropped -0.50%, with the euro gaining +0.41% and emerging markets outperforming, up +0.65%. The NASDAQ advanced +2.20%, while the S&P 500 and DOW rallied +1.57% and +1.77% respectively, though to be fair the major indexes were already around 1 percent higher on the session before the Fed gave the rally an extra boost. The main factor during morning trading in New York was positive earnings reports (more details below).

After the close markets also had to contend with a couple of bellwether numbers in the tech space, with Facebook and Microsoft highlighting results. Thesocial media giant beat expectations on profits, revenue, and active users, and shares rallied over 11% overnight. Microsoft’s earnings and sales figures were slightly below analysts’ expectations, and shares slid -4%. Qualcomm’s revenues were a touch soft as well, but a healthy beat on profits helped shares rally over 2%. Net-net, NASDAQ futures are up +0.42% while the rest of Asia is taking the lead from Wall Street with healthy gains for the Nikkei (+1.16%), Hang Seng (+1.06%), Shanghai Comp (+0.69%) and Kospi (+0.36%).

We haven’t heard any sound bites to come from the US-China trade talks as of yet with talks continuing today however sentiment overnight has also partially been helped by the January PMIs in China where both the manufacturing (54.7 vs. 53.8 expected) and services (49.5 vs. 49.3 expected) prints came in higher than expected. The manufacturing reading also rose 0.9pts from December and it leaves the composite 0.6pts higher at 53.2, and therefore the highest since September last year.

Back to yesterday, where the earnings highlights included a +6.83% rally for Apple (post the numbers after the close on Tuesday), Boeing (+6.30%), AMD (+19.95%) and Anthem (+9.12%). The Boeing numbers were notable insofar as the company reported $100bn of annual sales for the first time in its 102-year history, while also forecasting further revenue growth for this year. Management also eased some of the recent concerns over China’s outlook, saying “we continue to see strong demand in China.”

Closer to home, Italy is starting to creep up on people’s radars again. Yesterday there was some focus on a Bloomberg story suggesting that Deputy PM Salvini is facing internal pressure to force early elections due to frustration over the League’s coalition partner 5SM. Cabinet Undersecretary Giorgetti is one who has publically voiced frustration. This story is also having legs given the rising support for the League based on a weekly average of opinion polls (Bloomberg) which puts their support at 32% (from 20% in April 2018) versus 25% for the 5SM (from 35%). The same article does however go on to say that Salvini is not looking at early elections and is supposedly talking down such expectations within the party. That said we’ve become more than accustomed to elections in Italy with 65 governments since 1946, equivalent to a new government every 1.1 years and 91 in the last 117 years.

Markets are also well versed on recessions in Italy with 5 since the adoption of the euro (equivalent to an average real GDP growth rate of +0.12% qoq). This morning we get a first look at Q4’18 GDP with the consensus expecting a -0.1% qoq reading. As a reminder this follows -0.1% qoq in Q3 and so assuming the consensus is correct, a negative reading will push Italy into another technical recession. For all the above BTPs outperformed yesterday with 10y yields -3.4bps lower compared to -1.1bps for Bunds and -1.5bps for OATs. At 2.596%, yields are now rivalling July levels from last year. It’s worth adding that the FTSE MIB (+0.36%) also outperformed the DAX (-0.33%) yesterday and performed in line with the STOXX 600 (+0.36%).

As for Brexit it was another day of swings and roundabouts for Sterling which traded as high as $1.315 and as low as $1.306. The newsflow mainly centered around the EU side yesterday with Juncker saying that a “disorderly Brexit is now more likely” and that the “withdrawal accord won’t be renegotiated”. That’s not a great surprise as it’s a reiteration of what Juncker has said previously. Ireland PM Varadkar also said that the “EU is not offering a renegotiation of a deal” and there are “no plans to organize an emergency summit”. Ireland’s Foreign Minister Coveney also said that he’s skeptical that there are workable alternatives to the backstop, a view reinforced by Angela Merkel’s spokesman who said “the opening of the exit deal is not on the table”. Comments then that hardly fuel much confidence that the stalemate will be broken. Over to Mrs May. My personal view is that there is scope for a deal but that the EU and Irish might conclude that Parliament is so anti no-deal and slowly gaining more control that if they hold off long enough the chamber will find a way of forcing the government to commit to this. This weakens the UK’s negotiating position in my opinion. As bad as no-deal might be, if you’re negotiating you need the genuine threat of it to strengthen your hand.

Back to the continent, where yesterday in Germany, the Economy Ministry officially slashed its forecast for 2019 growth to 1.0% compared to the 1.8% forecast made in October. That would be the weakest since 2013. It’s worth noting that Bunds are back to within just 3.5bps off the early January closing lows, which at the time were the lowest since 2016.

As far as yesterday’s data was concerned, in the US the ADP employment change report for January surprised to the upside at 213k (vs. 181k expected) ahead of payrolls tomorrow while pending home sales for December printed at -2.2% mom (vs. +0.5% expected). In Germany consumer confidence for Germany ticked up 0.3pts to 10.8 while for the Euro Area, economic, business and services confidence indicators all weakened marginally. Here in the UK net consumer credit was slightly weaker than consensus in December (0.7bn vs. 0.8bn expected) while mortgage approvals fell slightly to 63.8k (vs. 63.1k expected).

To the day ahead now, where the early data this morning comes from Germany with the December retail sales report. January house price data in the UK follows before we get the preliminary January CPI print in France (-0.6% mom expected) and a first look at Q4 GDP for the Euro Area. The consensus is for +0.2% qoq which would have the effect of lowering the annual rate to +1.2% yoy (from +1.6%). At the same time we’ll also get the aforementioned Q4 GDP for Italy which is expected to come in at -0.1% qoq and therefore confirm two consecutive negative quarters and a technical recession. Across the pond today we’re due to get Q4 ECI (+0.8% qoq expected), latest weekly initial jobless claims, November new home sales and the January Chicago PMI (2.3pt drop to 61.5 expected). Away from the data the ECB’s Coeure, Mersch and Weidmann are due to speak at separate events while earnings highlights include Amazon, Royal Dutch Shell, Unilever, DowDuPont, General Electrics, Diageo and ConocoPhillips.

 

via ZeroHedge News http://bit.ly/2UsG1KV Tyler Durden

One day after shares of German online payments company Wirecard shed more than one-quarter of their value following an explosive report in the Financial Times that raised questions about the company’s accounting practices, analysts are warning that Wirecard may have become the latest victim of “fake news” propagated by short sellers in violation of securities laws.

Commerzbank analyst Heike Pauls (who has a buy rating on the stock with a price target of 230 euros) blasted the FT article as “fake news” and pointed to “the usual coincidence with rising short interest” which he said was indicative of market manipulation. Because the allegations have “no substance”, Pauls said the selloff was a “buying opportunity.”

Helping spur the rally, Munich prosecutors told BBG that they saw no indication of any crime by Wirecard under German law, according to a spokesperson for the Munich prosecutors’ office.

The allegations rocked a company that has seen its value quintuple in recent years. Wirecard recently surpassed Deutsche Bank in market capitalization, and replaced Commerzbank in Germany’s DAX 30 index. Wirecard has vehemently denied the report.

The FT report purported to cite an internal presentation delivered by an executive charged with running the company’s Asian operations that described potentially fraudulent money flows at the lender.

But other analysts offered a more nuanced take. Some argued that, regardless of whether the allegations are true, the selloff is a sign that Wirecard’s shares were clearly overvalued.

“In a large organization, there is always the possibility that some individual does something wrong,” said Robin Brass, a Frankfurt-based analyst at Hauck & Aufhaeuser.

“It is the same as we have seen before,” said Markus Friebel, an analyst at Independent Research. “Allegations come out, and we don’t know if they are true or not. The share price reaction confirms our view that the company is overvalued.”

And doubts were magnified by the company’s “hard to understand” business model.

“Wirecard’s business model can be hard to understand at times, and it’s easier to criticize a company whose sales are difficult to pin down,” said Mirko Maier, an analyst at LBBW. “Wirecard is not an automaker where you see cars leaving the factory each day.”

As Bloomberg pointed out, this isn’t the first time the company has had to defend its reputation: reports about accounting issues sent shares reeling in 2008 and again in 2016. In 2016, a fake research report was circulated by a shady UK-based research shop has led prosecutors to bring tens of thousands of euros in fines against one of the suspects.

via ZeroHedge News http://bit.ly/2sZxaVy Tyler Durden

The Italian government’s decision to cut its growth forecast for 2019 to just 1% during the most heated period of the populist government’s budget battle briefly rattled investors in the country’s bondholders. As it turns out, even that number may have been too optimistic.

In a report that could once again test the market’s confidence in Europe’s third-largest economy, official data from Italy’s Istat revealed that Italy’s economy fell into a technical recession during Q4, as economic output shrank 0.2% in the three months through December, following a 0.1% decline during the previous quarter.

News of the recession will further strain the relationship between M5S and the League, the two parties which make up the populist coalition that has been running the country since elections in March 2018. The populists had been riding high after striking a budget deal with the EU that allowed Italy to blow out its budget deficit far beyond the 0.8% of GDP that Brussels had initially demanded. Lately, Deputy Prime Minister Matteo Salvini, the leader of the League, has been facing internal pressure to call for early elections as the League’s poll numbers climb – largely thanks to the party’s anti-immigrant stance. The goal would be to push out the increasingly unruly M5S, allowing the League to take unilateral control, potentially in coalition with Silvio Berlusconi.

In a rapid response to the numbers, analysts at Goldman Sachs said they believe there’s room for even more pessimism than the official numbers would suggest:

1. Italian GDP growth was -0.2% (non-annualised) in Q4, weaker than consensus expectations of -0.1% and the pace of growth seen in Q3 of -0.1%. The print confirms that the Italian economy is in a technical recession.
2. The breakdown of the GDP components is not available and will be released on 5 March. 
3. With Q4 data in hand, calendar-year growth for 2018 was +0.9%, down from +1.6% in 2017. Today’s GDP print takes calendar-year growth for 2019 to 0.2%.
4. The balance of risks to our GDP growth forecast for Italy is to the downside. Our 0.2% calendar-year growth forecast for 2019 is based on a sizeable acceleration in activity in 2019H2. But given falling business confidence, tightening bank credit standards and continued political uncertainty, this looks less likely than we thought a few months ago. 
5. The weak economic outlook poses a challenge for the government to meet its public finance targets. We remain more pessimistic than the official forecast on the outlook for the government deficit and public debt, and expect another volatile year for the Italian economy and Italian asset prices.

There are other signs that the government’s official forecast from its budget model might be unreasonably positive: both the Bank of Italy and the IMF project 0.6% growth in Italy this year, less than half the forecast pace of the 19-nation euro zone.

Unfortunately for Mario Draghi and his hopes for unwinding the European Central Bank’s massive stimulus program, Italy isn’t the only major European economy experiencing a marked slowdown. Fears of recession have also been dogging Germany following a plunge in industrial production last month.

via ZeroHedge News http://bit.ly/2G117gt Tyler Durden

In the clearest sign yet that a tie-up between struggling German lenders Deutsche Bank and Commerzbank appears to be almost inevitable, despite the protests of executives from both banks, Bloomberg reported on Thursday that senior officials at both banks are bracing for a government-brokered merger as soon as mid-year.

Talks between the two lenders have been intensifying, as was implied by reports about meetings with senior German Ministry of Finance officials in recent weeks.

DB’s inability to reverse its slump in revenue has apparently led the German state to the conclusion that the only way to save both banks is a merger that will allow them to cut costs amid a search for synergies.

And DB investors, while still supportive of CEO Christian Sewing, are growing uncomfortable with their mounting on-paper losses. Though a merger, as one analyst pointed out, would be no panacea.

“If this is true, the economic situation at Deutsche Bank must be worse than seen by the outside,” said Andreas Plaesier, an analyst with M.M. Warburg. “A merger with Commerzbank at this point doesn’t make sense because it offers few possibilities to achieve client growth.”

But with the German economy flirting with a recession, government officials worry that a merger would be the only way to protect the banks from the additional strain of a downturn. The report also notably follows the German government’s decision to slash economic growth forecast for this year to just 1%.

The negative reaction of DB stock – shares slumped more than 3% on the news – notwithstanding, substantive reports of a possible merger are welcome news for at least one firm: Cerberus Capital Management. Back in 2017, the private equity firm sank nearly $2 billion into Commerzbank and Deutsche, believing that “basic blocking and tackling”, like exiting lagging businesses, could help the banks earn their cost of capital and trade closer to their book value (they’re both currently trading at some of the steepest discounts to book value), as Bloomberg’s Elisa Martinuzzi argued in a column published earlier this week. 

The private equity firm’s interest in German lenders hasn’t stopped at Deutsche and Commerzbank. a consortium led by Cerberus recently bought state-backed lender HSH Nordbank. Cerberus is also bidding on a minority stake in NordLB, another regional bank. In keeping with Cerberus’s secretive nature, almost nobody stands to benefit more from a merger of the two banks than Cerberus – even if that’s not what the firm has been saying.

The viability of the two lenders isn’t under immediate threat after years of restructuring and capital raising. In betting the two banks can now achieve sustainable profitability, Cerberus will have calculated that its small holdings would give it the ear of management and that the adjustments required would probably not need to be too radical.

It appears to be scoring on one point. Deutsche Bank has appointed Cerberus’s advisory arm to consult on implementing its strategic plan. As part of that engagement, Cerberus has helped sway Deutsche Bank to deploy funds to higher-yielding assets, Bloomberg News has reported.

Meantime, Cerberus representatives have met with German finance ministry officials at least four times in the past six months. The government remains Commerzbank’s biggest shareholder with a stake of about 15 percent.

But since the fund’s 2017 wagers, the outlook for both the industry and German banks in particular has worsened markedly. Deutsche Bank has been dragged into yet another money laundering scandal. It is being scrutinized like no other lender in the U.S. for its dealings with President Trump. And police raids at home in November weighed on revenue in what was already torrid fourth quarter for many banks.

Over at Commerzbank, its core business of serving mid-sized corporate clients – the backbone of the German economy – is struggling as trade wars dent exports and competition from foreign rivals intensifies.

But both banks’ recovery has become fundamentally more complicated. While the European Central Bank has suspended QE, record-low rates are unlikely to move higher any time soon as economic growth sputters, prolonging the squeeze on net interest margins. At Deutsche Bank, cutting costs has so far proved tricky, eroding revenue more than desired, while funding has become more expensive.

In public, DB CEO Christian Sewing has vehemently denied merger speculation (likely because, given the erosion in DB’s share price, any merger would likely leave Sewing as the junior partner). To be sure, Sewing, who was brought in to run the bank less than a year ago, still has its cheerleaders, including Hudson Executive Capital, led by a former JPM banker, who has shared his confidence in Sewing’s plan to cut costs and exit unprofitable businesses during appearances on CNBC.

But at this point, with at least two more criminal probes gathering pace, one of which appears to directly implicate the bank in deliberately ignoring its own AML controls, a tidy merger with Commerzbank appears to be what the German Ministry of Finance wants. Given the prospect of billions of euros in fines – on top of the $20 billion the bank has already paid since the crisis – a merger is increasingly looking like the sensible option.

And we haven’t even gotten into the risks posed by DB’s massive (though not quite as massive as it used to be) derivatives exposure.

via ZeroHedge News http://bit.ly/2B9g1wY Tyler Durden

Authored by Whitney Webb via MintPressNews.com,

The pressure will now grow to disperse the Yellow Vest movement while also attempting to use the Red Scarves to manufacture support for draconian government policies and police crackdowns aimed at finally ending the establishment-threatening protests.

As the “Yellow Vest,” or Gilet Jaunes, protest in France continues to perplex and concern the French government and European elites, a new “counter-protest” has emerged in response to the popular protest movement now entering its 12th week.

Protesters branding themselves as the “Red Scarves,” or Foulards Rouge, descended on Paris this past Sunday in order to protest the “violence” of some Gilet Jaunes protesters and a desire to see the country return to “normalcy.” The French government, which has sought to weaken and disperse the Yellow Vests movement since its inception, stated that the Red Scarves numbered around 10,500 in Paris, while other reports claimed that the demonstration was significantly smaller than the government-supplied figure.

The group has been described as “diverse” — much like the Yellow Vests, who have drawn support from across the French political spectrum — and “apolitical,” as its leadership have stated that the Red Scarves are not necessarily supportive of French President Emmanuel Macron, whose ouster is being sought by Yellow Vests demonstrators. Some participants who were interviewed on Sunday stated that they were not protesting against the Yellow Vests but instead in favor of protecting the integrity of France’s political institutions. This has led the Red Scarves themselves, as well as subsequent media reports, to portray the group as representing France’s “silent majority” that – until now – had refrained from demonstrating.

According to reports from mainstream outlets, the Red Scarves movement – which was joined by another pro-government counter-protest group, the “Blue Vests” — was a direct response to violence from some members of the large Yellow Vests protest movement that has resulted in the destruction of property and clashes with police. Yellow Vest organizers have disavowed the use of violence and have blamed “black bloc” groups for using the movement as a pretext for committing violent acts.

Notably, reports of such clashes largely declined to mention the role of French police in causing and fomenting violence, despite the abundance of video evidence documenting hundreds of instances of police brutality against unarmed and even prone protesters, as well as innocent bystanders. The Red Scarves themselves have also overlooked this aspect, both by “urging respect for French authorities” and by chanting pro-police slogans, as well as by asserting that French policemen have acted responsibly in response to the Yellow Vests despite the fact that the vast majority of injuries suffered since the protests first began last November were caused by the actions of militarized riot police. Over 2,000 have been injured and 10 have been killed since the protests began.

6/ elderly men getting hit and his wife started to go on a screaming rant “Pease don’t hit him” I am begging you, please stop please please please. The elderly men was taken into custody but got released earlier today. The wife of the elderly men has filled an police complaint. pic.twitter.com/KwGRCZGBBi

— Sotiri Dimpinoudis (@sotiridi) January 15, 2019

Organic or synthetic?

Given their relatively sudden appearance and sympathetic media coverage within France and throughout the Western world, the Red Scarves have drawn skeptical scrutiny from Yellow Vest members, some of whom have described them as “pro-Macron stooges.” While it is difficult to know if the origins of the Red Scarves are as organic as has been portrayed in mainstream reports, there are certain aspects of the movement that have raised suspicion among journalists reporting from France and other observers.

For instance, evidence reported on by French media and journalists who have been closely covering the protests has shown thatat least half of the Red Scarves who participated in Sunday’s demonstrations had been bused into Paris for the demonstration. This has led to speculation about the movement’s actual extent of popular support, both in Paris and nationwide, as well as speculation that some Red Scarves had been paid to travel to Paris to participate in the demonstration.

There is also the fact that the Red Scarves is a formal, state-recognized association, as opposed to the Yellow Vest movement, which is a grassroots entity. According to investigative journalist Vanessa Beeley, who lives in France, the fact that the Red Scarves is a formal association shows that it was planned long before the Yellow Vest movement was accused of fomenting violence. Beeley told MintPress News that, because of the length of the process needed to navigate French bureaucracy, in order for the Red Scarves to have been created on December 21st, the three directors of the group would have had to have initiated the process soon after the Yellow Vests protests began in mid-November.

A red scarf protester stands next to a police van in Paris, France, Jan. 27, 2019. Kamil Zihnioglu | AP

If this is the case, it greatly undercuts the prevailing narrative that the Red Scarves movement is a response to recent acts of violence associated with the Yellow Vests protests. Indeed, even the founder of the Red Scarves – Fabien Homenor, a computer scientist – told French media that he would have “donned a Yellow Vest” during the first weeks of the protest because he agreed with their initial concerns — i.e., the controversial fuel tax that Macron’s government has since scrapped following the success of the protests. This raises the question, why would Homenor create an association to counter the Yellow Vests at a time when he claims he supported their efforts?

Playing up, playing down, the numbers

An examination of mainstream reports on Sunday’s demonstration suggests an effort to inflate the Red Scarves’ importance and to build their image as “non-violent” and diminish the comparative significance of the Yellow Vests movement. For instance, the Washington Post stated that “Approximately 10,500 people marched in Paris [as part of the Red Scarves demonstration] on Sunday, according to police figures. That was more than twice the number that donned yellow vests in the capital the day before, when about 4,000 marched in Paris and 69,000 marched nationwide, according to the Interior Ministry.”

Thus, while the Post notes the available statistics, it claims that the Red Scarves demonstrations, which occurred only in Paris, were larger than Yellow Vests protests a day prior in the same city — but conflates Saturday’s Paris protest with the nationwide Yellow Vests protest in which a combined 73,000 people participated. A more accurate portrayal of the situation may have noted that, when both are examined from the national perspective, the Yellow Vests in their 11th week saw nearly seven times more participation than the Red Scarves in their first demonstration. The Post also failed to mention that the Red Scarves protesters were largely bused into Paris from other French cities.

The Post also called the demonstration “the long-awaited intervention in a story line that, until now, had featured just one side of a national conversation on social inequality,” even though the Red Scarves were not explicitly protesting against the Yellow Vests’ demands relating to inequality, but instead focusing on the alleged methods of some of their members.

Notably, the Post’s article barely mentions the horrific wounding of Jerome Rodrigues, a key figure in the Yellow Vest movement, whom witnesses have said was deliberately targeted by French police with a flashball grenade launcher at close range. As a consequence, Rodrigues suffered a horrific injury to his right eye and will now be disabled for the rest of his life, according to his lawyer. Other mainstream reports similarly focused on the Red Scarves movement and relegated mention of Rodriques’ injuries to the final paragraphs.

Jérôme Rodriguez blessé lors du #acteXI des ##GiletsJaunes11 pic.twitter.com/BhBlQf5esC

— Xenia__Sputnik (@XseniaSputnik) January 26, 2019

Exploiting, or manufacturing, the backlash

Whether or not the Red Scarves movement is an establishment-backed effort to divide the highly successful Yellow Vest protests remains to be seen. However, it ultimately matters little if the Red Scarves’ motives are genuine or not, as the French government and a sympathetic international press have already shown they are all too eager to push to divide the Yellow Vests movement, or at least weaken it, by playing the two groups off of each other.

While the French government and well-known media outlets had already been busy demonizing the group despite strong popular support across France, with a new group having emerged as its apparent antithesis, the pressure will now grow to disperse the Yellow Vest movement while also attempting to use the Red Scarves to manufacture support for draconian government policies and police crackdowns aimed at finally ending the establishment-threatening protests.

via ZeroHedge News http://bit.ly/2MIu2Gr Tyler Durden

After a series of embarrassing Parliamentary defeats (and still more embarrassing triumphs over a series of no-confidence votes), Theresa May is we imagine reveling in what was a rare win for on Tuesday: MPs backed an amendment that calls for removing the backstop from her Withdrawal agreement and replacing it with a commitment to find something better after the prime minister vowed to ask the EU to reopen negotiations (something she has reportedly been trying to persuade the block to do behind the scenes for weeks now with little apparent success).

Now that she’s won what her cabinet believes is enough support for a modified version of the deal, having finally corralled a majority for something resembling her current deal, the hard work truly begins: Convincing the EU to reopen negotiations on the withdrawal agreement, something officials have publicly insisted will not happen (though there have been whispers that they have been slowly coming around to the idea).

In a speech on Wednesday, European Commission President Jean Claude Juncker blasted the vote as irresponsible and once again insisted that removing the backstop from the agreement is out of the question.

“This is not a game,” he said, according to Bloomberg.

If there’s anything new to take away from the developments of the past two days, it can be found in a Bloomberg report published Wednesday afternoon that effectively confirmed what many have long suspected: That there won’t be any movement on the deal – either from the EU or, likely, the UK, until the last possible minute. According to BBG, EU diplomats have pointed to a last-minute summit set for March 21 and March 22 – just a week before Brexit Day – as the likely time when a deal may finally be struck.

The European Union is prepared to take Brexit down to a last-minute, high-stakes summit rather than cave into U.K. Prime Minister Theresa May’s demands over the next few weeks, diplomats said.

Although May is getting ready to head back to Brussels to reopen the Brexit deal that she negotiated over the past 18 months, the EU isn’t planning to give her any concessions before she returns for a vote in the British Parliament on Feb. 14, according to the diplomats. Behind closed doors, European officials are sticking to their well-coordinated public line that they won’t rework the deal.

The EU is in no rush to convene an emergency meeting of EU leaders, which would be necessary for any changes to the deal or for a Brexit-day delay. Diplomats point to a scheduled summit on March 21-22 — just seven days before the U.K. is due to leave the bloc — as the moment when the two sides could be forced to act. Some senior figures in the EU believe the U.K. needs to be all but out of options before accepting the deal, diplomats said.

May met with Labour Leader Jeremy Corbyn on Wednesday and the two reportedly sparred over Labour’s demands that the UK commit to permanently remain a part of the EU customs union – an idea that’s anathema to Tory Brexiteers. She’s also due for a phone call with Donald Tusk Wednesday night (he has already publicly reiterated that he won’t budge on the backstop).

Ireland’s prime minister and his cabinet remain committed to the idea that Parliament must cave and accept May’s deal as-is, having warned that a return to a hard border in Ireland will not happen (a ‘no-deal’ Brexit would likely lead to a hard border returning), while simultaneously insisting that the backstop is an integral part of May’s deal.

In an interview with RTE Wednesday morning, Irish Foreign Minister Simon Coveney said the notion the UK could leave the bloc without a deal amounts to a threat to “jump out the window”, adding that Ireland wouldn’t cave to threats. He also offered a few unkind words for the Brady amendment, saying it was “wishful thinking:” to replace the backstop with a vague call for something better.

“We are being asked to replace the backstop with wishful thinking,” he said, adding there are no obvious ‘magic’ solutions out there to reopen the withdrawal agreement. Instead, he said that the focus might be on the non-binding political declaration, which would be tweaked in an effort to calm U.K. concerns.

Irish Prime Minister Leo Varadkar released a statement after speaking with May via phone on Wednesday where he “set out once again the unchanged Irish and EU position on the withdrawal agreement and the backstop.” It added that the latest developments “reinforced the need for a backstop which is legally robust and workable in practice” and said the two leaders “agreed to stay in touch over the coming period,” per the BBC.

If there’s any clarity to be found in the Brexit process, it’s in the markets: The pound has sunk since the Brady amendment was adopted on Tuesday (and two amendments calling for a delay of Brexit Day were rejected) based on the idea that the UK is inching closer to a ‘no deal’ Brexit scenario. Because of this, Goldman Sachs has upped its “no-deal” Brexit probability to 15% from 10%, and cut the chance of Brexit not happening at all to 35% from 40%.

But has anything really changed? A look past the headlines reveals that the basic facts on the ground haven’t. UBS perhaps put it best in a laconic recap of Tuesday’s vote, that still applies after Wednesday’s outraged squawking from EU officials in Brussels.

The interminably tedious EU-UK divorce continues. The UK government must renegotiate with the EU. The EU says it will not renegotiate. The UK parliament does not want a no-deal exit. There is no automatic delay mechanism, but there are votes in two weeks which might impose an automatic delay mechanism.

And it looks like that’s how things are going to stay for another month or so. But even as the reality that nothing will happen until the last possible minute dawns on markets, we doubt that will put a stop to the endless firehouse of Brexit-related headlines.

via ZeroHedge News http://bit.ly/2BbbTwk Tyler Durden

Authored by David Brown via The Gatestone Institute,

• Much of the coverage of the same problem in Great Britain said that Jay had accused the Rotherham council and police of failing to tackle sexual exploitation because of misplaced “political correctness.” Yet Jay says those are not the words she would use: “I have an aversion to phrases like that,” she said. Instead, she believes the Labour-dominated council turned a blind eye to the problem because of “their desire to accommodate a community that would be expected to vote Labour, to not rock the boat, to keep a lid on it, to hope it would go away.”

• What hits hardest in the little town of Oulu in Finland is a disturbing sense that history is repeating itself here and nothing has been learned from the well-documented lessons of the past. Instead there seems to be a hope that with a few overdue statements this problem will go back underground and the noise will go away.

• Despite bold assertions that action would be taken and the laws regarding asylum seekers would be tightened, in recent conversations regarding the numbers of migrants to be accepted from the EU quota system, politicians such as the interior minister were still campaigning to increase the refugee quota tenfold.

• In January, the Andalus Islamic Center of Kastelholm in Helsinki’s Puolinharju area, published a message to its followers on Facebook. It featured a picture of two lollipops. One was unwrapped, dirty and covered with insects; the other was not. “This is why the Hijab plays an important role in Islam,” it said.

In December 2018, police in Oulu, Finland reported the arrest of seven migrant men accused of repeatedly raping a ten-year-old girl. The police say the girl has allegedly been subjected to multiple sexual assaults over several months in the suspects’ homes. (Image source: Pixabay)

Finland is a curious place. Tucked up under the arm of its celebrity sister Sweden and with Russia as a neighbour, it is one of the world’s most northern and geographically remote countries. It takes a hardy kind of European to withstand the severe climate. The Finns in Oulu, the most populous city in northern Finland, go about their lives as normal in -25 degrees Fahrenheit.

With a national population of just over 5.5 million, trees easily outnumber people; two-thirds of this country is blanketed in thick woodland, making it the most densely forested country in Europe.

Yet, this strange, seemingly forgotten land has a hideously metropolitan problem: Finland’s daughters are the target of grooming gangs.

In December 2018, Oulu police reported the arrest of seven men accused of repeatedly raping a ten-year-old girl. The police say the girl has allegedly been subjected to multiple sexual assaults over several months in the suspects’ homes.

The men, aged 20 to 40, all arrived in Finland as migrants or refugees in recent years (32,000 sought asylum here during the migrant wave in 2015) and are thought to have made contact with the victim on social media.

Locals in Oulu told Gatestone that many have observed the majority-Muslim migrant gangs in action in the local shopping mall; they send out their best-looking, nicely-scented friends to hook in young Finnish girls. Parents here are fearful for their children.

Finland’s Prime Minister Juha Sipilä took to Twitter to express his shock and anger, writing that “a sexual offence against a child is an inhumane act, and its wickedness cannot be comprehended.”

His naïveté seems startling. Internationally acknowledged studies on grooming gangs in the UK clearly evidence that this is a “wickedness” well-documented and well understood. There is no reason for it to come as a surprise.

His country’s official statistics from 2017 reveal that — nationally — Iraqi and Afghan migrants were represented up to 40 times more amongst sexual assault suspects than native Finns.

In Britain, the 2015 Jay Report into child sexual exploitation in Rotherham was an independent report into how child sexual exploitation (CSE) cases were handled by social services and police. It clearly identified how these grooming gangs operate, the brutality endured by their victims, and the “blatant” failure of police and politicians to act to protect the girls.

The findings in Professor Alexis Jay’s report clearly suggest that the numbers of victims and aggressors in Finland will keep rising as networks are uncovered and more girls have the courage to come forward.

Sure enough, Oulu’s police now suspect 16 foreign-born men of rape or other sexual abuses of girls aged between the ages of 10 and 15, and have added another four men to their investigation.

In addition, police in Finland’s capital, Helsinki, have acknowledged that they have arrested three foreign-born men on similar charges.

It seems cruel to reduce such violations to mere statistics or probability, but the truth can be unkind. Helsinki has a population of 630,000. Oulu’s population is just 200,000. There are two other cities of a similar size in this fridge cabinet of Europe: Turku and Tampere. The UK’s experience teaches us that it is a statistical probability that these cities will not be immune to having their children being targeted by the gangs.

It is a barbaric cruelty these children face. Professor Jay sets it out in black and white in her report:

“In just over a third of cases, children affected by sexual exploitation were previously known to services because of child protection and neglect. It is hard to describe the appalling nature of the abuse that child victims suffered. They were raped by multiple perpetrators, trafficked to other towns and cities in the north of England, abducted, beaten, and intimidated. There were examples of children who had been doused in petrol and threatened with being set alight, threatened with guns, made to witness brutally violent rapes and threatened they would be next if they told anyone. Girls as young as 11 were raped by large numbers of male perpetrators.”

It was evidently the “blatant” failings of police and politicians that allowed these men to continue raping and abusing these children; the authorities reportedly remained silent either for political gain or to avoid professional damage.

Much of the coverage of the same problem in Great Britain said that Jay had accused the Rotherham council and police of failing to tackle sexual exploitation because of misplaced “political correctness.” Yet Jay says those are not the words she would use:

“I have an aversion to phrases like that,” she says. Instead, she believes the Labour-dominated council turned a blind eye to the problem because of “their desire to accommodate a community that would be expected to vote Labour, to not rock the boat, to keep a lid on it, to hope it would go away.

What hits hardest in the little town of Oulu in Finland is a disturbing sense that history is repeating itself here and nothing has been learned from the well-documented lessons of the past. Instead there seems to be a hope that with a few overdue statements this problem will go back underground and the noise will go away.

Initial reports suggest that the abused girls and their parents were not necessarily believed; the police responded only after the strong intervention of the father and step-father of one victim, who set a trap for one of the groomers online. It was this intervention that led a local councilman to uncover the fact that in a two-day period, “a total of 8 men with migrant names had been incarcerated for child sexual abuse, aggravated child sexual abuse and aggravated rape.”

Only after this information became public did the local police finally issue a warning to parents about the threat faced by their children:

“Recently, in the Oulu region, cases have emerged that foreign-born, often non-Finnish men have attracted minors to get in contact with them. At worst, contacts have led to serious sexual offences.”

The Oulu police say they have recently been informed of dozens of cases where adult men tried to lure young girls online. “That’s the reason for our warning,” said Detective Superintendent Markus Kiiskinen.

All of this uproar comes at a politically awkward time for Finnish politicians, just three months before parliamentary elections scheduled for April 14. Prime Minister Juha Sipilä, who maintained a firm silence on the matter during all of December 2018, has now changed course to appear concerned and action-oriented.

He expressed “grief and disgust” at the spate of sexual crimes, and claimed that he understood the worry and anxiety that many people are feeling. In a statement, he stressed that everyone who comes to Finland should respect Finland’s laws and the principle of personal integrity. He also emphasised that Finland’s asylum system cannot protect criminals, and called the assaults “completely inhumane and reprehensible.”

It would be generous to describe ordinary Finns as skeptical of his stance. Most sneer openly at the hypocrisy of a man who was hugely afflicted by the migrant madness of 2015, welcoming 32,000 migrants to this tiny country, and even telling the state’s media that his exclusive family home in Kempele, located 500km north of the capital Helsinki, could be used to accommodate asylum seekers.

“We should all look in the mirror and ask ourselves how we can help… My house is not being used much at the moment. My family lives in Sipoo and the prime minister’s residence is located in Kesaranta,” he told Finnish state television. Al Jazeera TV ensured that news of his offer was shared widely.

Despite bold assertions that action would be taken and the laws regarding asylum seekers would be tightened, in recent conversations regarding the numbers of migrants to be accepted from the EU quota system, politicians such as the interior minister were still campaigning to increase the refugee quota tenfold. There is stark contrast between words and actions here in this country.

As well as the hypocrisy of this position, there is also a grating apathy prevalent in the administration. In Oulu’s City Hall, the Administrative Director, Ari Heikkinen, said that he has not heard the details of the problem and could not be certain of any action that might need to be taken, but acknowledged there was a problem with “online communications.”

Maddeningly, there is no sense of urgency here; more a sense that Finnish authorities are sitting on a problem the potential scale and seriousness of which they have yet to comprehend. Perhaps the habitual Finnish talent for understatement is working overtime.

A brave few have broken cover to address the problem head-on. Seida Sohrabi’s Kurdish family sought asylum in Finland when she was five years old. Her interview for Ilya Sanomat, one of the two main tabloid newspapers in Finland, was so keenly observed that the emotionally cool Finns, from both the political left and right, took a sharp collective intake of cold breath.

Her words are chillingly familiar to the experiences of victims of grooming gangs in the UK. One British victim described her ordeal:

“As a teenager, I was taken to various houses and flats above takeaways in the north of England, to be beaten, tortured and raped over 100 times. I was called a “white slag” and “white c***” as they beat me. They taught me; ‘Muslim girls are good and pure because they dress modestly, covering down to their ankles and wrists, and covering their crotch area. They stay virgins until marriage. They are our girls.

“White girls and non-Muslim girls are bad because you dress like slags. You show the curves of your bodies (showing the gap between your thighs means you’re asking for it) and therefore you’re immoral. White girls sleep with hundreds of men. You are the other girls. You are worthless and you deserve to be gang-raped.”

This is something taught in mosques in Finland, too. Anter Yasa , the founder and co-chair of Secular Immigrants of Finland says he has been black-listed from appearing in TV interviews because of his honesty about the problem — a problem perpetuated by imams in Finnish mosques.

In January, the Andalus Islamic Center of Kastelholm, in Helsinki’s Puolinharju area, published a message to its followers featuring a picture of two lollipops. One was unwrapped, dirty and covered with insects; the other was not.

“This is why the Hijab plays an important role in Islam,” it said. The evident message to their Muslim and non-Muslim followers is that an uncovered woman is dirty, literally, and can be used by anyone.

Perhaps the danger to our daughters is not hackneyed phrases like “online communications” or a “lack of integration.” It is that this thinking — the thinking of the grooming gangs — is being taught and pushed in mosques, today, in our own towns and cities.

For now, the fight back is being led by the Finns Party, a nationalist party leading the conversation on this matter in the country, and which — unlike the others — has been consistent in its message on asylum-seekers and the dangers of Islam in Western society. Somewhat controversially in these liberal lands, it seeks to put Finns first. Unsurprisingly since speaking out, the Twitter account of the leader of the Finns Party — Jussi Halla-aho — has been locked for a period.

Whatever the politicians say, it is clear that we are not learning the lessons of our past. Evidence from other countries has shown, repeatedly, the link between a conservative branch of Islam and sexual aggression. While the police and politicians remain keen to keep the problem under wraps, and the media and digital giants censor voices speaking openly about it, the gangs will continue to flourish.

Oulu and Helsinki are at least arresting and sentencing the wrongdoers. In addition, other Finnish cities are unlikely to be immune from the grooming gang problem. Yet there is a real feeling that the country’s leaders and population are still hoping that the whole subject, or at least the noise around the subject, will simply go away.

Alarmingly for the daughters of Finland, this veritable unknown compared to its Swedish sister, hope and silence will not keep them safe.

via ZeroHedge News http://bit.ly/2GhrGNs Tyler Durden

Yesterday, Transparency International released its 2018 Corruption Perceptions Index with the organization stating that the continued failure of most countries to control corruption is contributing to a crisis in democracy around the world.

Statista’s Niall McCarthy notes that the index ranks 180 countries and territories on perceived public sector corruption with 0 meaning “highly corrupt” and 100 meaning “very clean”. This time around, more than two-thirds of countries scored 50 or below which means they have serious problems preventing foul play in their public sectors. The average global score was 43.

You will find more infographics at Statista

Denmark came first with 88 out of 100 with Finland, Singapore, Sweden and Switzerland following with 85.

Somalia was rock bottom of the index with a score of just 10, followed by Syria and South Sudan who both had 13. Transparency International said that only 20 countries saw a significant improvement in their scores over the past seven years including Argentina, Guyana and the Ivory Coast. During the same time frame, 16 countries recorded a significant decrease with Australia, Malta, Hungary and Turkey among their ranks.

The U.S. had a disappointing score of 71 this year, four points down on 2017. That means it has dropped out of the top-20 countries for the first time since 2011.

via ZeroHedge News http://bit.ly/2HHFRxW Tyler Durden

Authored by Steven Guinness,

A couple of weeks ago I published an article about the deception surrounding a prospective ‘no deal‘ Brexit outcome, and how political figureheads and campaigners who support a second referendum are also advocating for a ‘hard‘ Brexit option on a future ballot paper.

Whilst nothing has changed on this front, what has developed is the gradual process of elimination in regards to alternatives to a second vote. This week in parliament MP’s tabled seven amendments in the wake of Prime Minister Theresa May’s meaningful vote defeat a fortnight ago. Five of these were voted down, including one by Labour MP Yvette Cooper and Conservative Nick Boles which called for Article 50 to be extended for up to nine months and for the prevention of a no deal exit. A separate amendment put forward by Labour’s Rachel Reeves that championed an extension to Article 50 in the event of no agreement on a deal was also rejected.

Two amendments gained majority support. The first was from Conservative MP Graham Brady’s, who called for the Irish backstop to be eliminated from the withdrawal agreement between the UK and the EU, and for ‘alternative arrangements‘ to be made instead. The second was tabled by Conservative Caroline Spelman, which stated that the UK should not leave the EU without a deal.

Let’s quickly address each one in turn and weigh up how both may ultimately benefit the likelihood of a second referendum.

Prior to and immediately after Graham Brady’s amendment was approved, the EU rejected all possibility of the withdrawal agreement that was finalised last year being reopened. Assuming their stance remains intransigent, the next two weeks will yield no progress on dropping the Irish backstop from the official text. This would mean Theresa May returning to parliament around Valentine’s Day to inform MP’s that no ‘alternative arrangements‘ have been agreed. In short, it is most likely a dead end.

Caroline Spelman’s amendment is more interesting. Whilst MP’s voted in favour of the UK remaining in the EU should no agreement be ratified, this was not binding on the government – meaning it was purely an advisory measure and carries no legislative force.

However, as pointed out by The Spectator:

The defeat demonstrates the possibility that, as the end of March approaches, parliamentary opposition to no deal could prove enough to prevent Britain crashing out of the EU.

What this suggests is that in the end MP’s will require a specific vehicle – one that can gain majority support – to prevent parliament sanctioning a no deal. It will not simply be enough for politicians to disavow the option.

At this stage readers should be aware that last week a proposed amendment that would have called for a second referendum on Brexit was withdrawn before a vote could take place. The reasoning given was that MP’s campaigning for another vote did not yet have sufficient cross party support to legislate for it.  This, along with defeated amendments calling for Article 50 to be extended, were pounced upon by ‘leavers‘ as the death knell for any chances that a ‘People’s Vote‘ could be held. In my view this is premature.

Caroline Spelman’s amendment, whilst not binding, was the first indication from parliament that a majority does not support a no deal Brexit. Running counter to that is Brady’s amendment, which has created the false impression that a non-negotiate withdrawal agreement is in fact negotiable within a two week window. I believe what we are seeing now is the final vestiges of hope that the EU will back down and renege on an Irish back stop. When the realisation hits that they will not, a further avenue towards a deal will have been closed.

Had the amendment calling for a second referendum been carried, it would have been defeated. Right now, it remains the one alternative option that has yet to be explored in parliament. That moment will come. It is just a question of timing and under what circumstances it is brought to the commons.

As yet, a ‘people’s vote‘ is not the official policy of the opposition Labour party. I suspect that if this stance shifts in the next couple of weeks, the route towards a second referendum will open up. As all alternatives are gradually whittled away, it will soon come down to a straight choice. Back a second vote or allow the UK to leave the EU with no deal. A majority already supports not leaving without a deal.

This choice, however, is a false dichotomy. Should parliament end up legislating for another vote, it will be under the pretext that this is now the only option left to avoid a ‘cliff edge‘ no deal. Except, this is not true. If Theresa May’s deal is not put to the British public, the only alternative would be for leaving the EU on World Trade Organisation terms. In other words, the same no deal scenario that a majority of MP’s reject.

Even if May’s deal made it onto a ballot, it’s emphatic rejection in the House of Commons means that almost certainly a no deal option would also be included. Remember that proponents for a second referendum have gone on the record as supporting a hard Brexit choice.

Anti Brexit groups, such as Best for Britain and Our Future Our Choice, either fail to understand the psychology behind a ‘People’s Vote‘ or are deliberately deceiving people. Every day they promote how the only way to avoid no deal is to give the electorate the final say. Their fixation on securing a remain option on the ballot masks what a second vote has the ability to facilitate, which in essence is the ‘hard‘ Brexit they are opposed to.

And, crucially, how many are giving consideration into the role of central banks in the Brexit process? At Davos last week, the IMF took the opportunity to again warn about the dangers of a no deal exit. My feeling is that the next level of warnings against no deal will come in the midst of a referendum campaign. What was dismissed as ‘Project Fear‘ in 2016 would likely be dismissed again.

This is a sentiment I could support, were it not for the fact that given the prominent role of sterling throughout this process, the Bank of England and fellow globalist institutions would ultimately have full economic control of the fallout from the UK leaving the EU with no agreement.

Globalists are openly agitating to transform the global financial system, and history dictates that transformations on this scale require significant bouts of crisis to achieve what are predetermined goals. From their perspective, Brexit is a crisis that will not go to waste.

via ZeroHedge News http://bit.ly/2SlzMeq Tyler Durden