Month: April 2019

Twitter Blocking Users From Following Anti-Abortion Film In Second Recent ‘Glitch’

After temporarily suspending the Twitter account of a Christian-focused production company’s anti-abortion film with no explanation, some Twitter users are now reporting that they can’t follow the account for the movie Unplanned – as Twitter automatically “un-follows” them upon a refresh. 

Unplanned is based on the 2009 memoir of former Planned Parenthood clinic director Abby Johnson, who became a pro-life activist after witnessing an abortion at 13 weeks. 

US Ambassador to Germany Richard Grenell posted video evidence of the very liberal Twitter automatically un-following the account – asking Twitter CEO Jack Dorsey on Sunday “What is going on @jack? This is outrageous.” 

Of note, the ‘un-following’ may be random, or only apply to accounts with a lot of followers, as some users with small Twitter followings have reported being able to successfully follow the account, @unplannedmovie. 

Many conservative social media influencers have reported an inability to follow the film’s official account. 

R rating, no ad space

The left’s suppression of Unplanned extends far beyond just Twitter. Not only did the movie earn an “R” rating that many say never should have been handed down, TV networks have reportedly refused to sell ad time for the film. 

In short, an underage girl can get an abortion in many parts of the United States without her parents’ permission, yet can’t legally watch this movie about abortion without a parent. 

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Cross-Asset Volatility Positioning “Is Now Worrisome Again” – Time For A New Explosion?

Authored by Andreas Steno Larsen via Nordea Bank,

The short positioning in VIX is heavier than prior to the February and October sell-offs, which is why we are on alert to a new potential squeeze of volatility positions. From the current levels, we see the best risk/reward in long vol across assets

Intraday volatility in equity markets temporarily peaked over Christmas, when Steven Mnuchin released his now almost famous “everything is under control” statement. It ultimately proved to be the exact trough in equities and following peak in volatility, as Mnuchin promised that “liquidity would remain OK”. Either he anticipated that the Fed would end QT before the market expected them to or he simply referred to the liquidity influx in USDs caused by debt ceiling technicalities.

No matter the real reason, Mnuchin was right that liquidity would be better in Q1 – one of the reasons why equities have rallied, and volatility faded. It seems as if the market has bought almost aimlessly into Mnuchin’s promises, but is the liquidity outlook as benign as markets put it? Colour us doubtful. At least not benign enough to justify record short positioning in equity vol.

Chart 1: Mnuchin said that everything would be OK, and then equities boomed!

Dovish central banks have led volatility lower, but are they dovish enough?

Many, if not all, major central banks have taken dovish steps through Q1, but will they prove dovish enough to keep volatility from the door for the rest of the year? The Fed has moved to end QT by October, but liquidity will still dwindle month after month in the meanwhile. The ECB has offered a new TLTRO-III on what are (probably) tougher terms than TLTRO-II. Both argue for a lukewarm liquidity development at best.

If we look at the 6-month change in central bank asset ownership, it doesn’t look supportive of a further multiple expansion. Rather the opposite. Central banks won’t directly support asset valuation over the next 6-9 months either (the asset base will still shrink).

Chart 2: Central bank assets versus forward P/E

The broader liquidity trend as judged by M1 growth is also still worrisome, likely as a side effect of less benign central bank liquidity trends. Our global M1 growth indicator is also still pointing towards increasing quarter-on-quarter volatility, as slowing M1 growth and central bank liquidity leave a continuously smaller credit-cushion for markets.

Chart 3: M1 growth slows globally, usually a sign that volatility can increase

Positioning is now worrisome again …

Meanwhile positioning in short VIX has turned super short. Shorter than prior to both the February and October-December sell-offs. While a stretched short positioning in itself is not necessarily a trigger for higher volatility, it takes fewer and less severe surprises to wrong-foot market participants, when “everyone” seems to agree on a direction of lower volatility. What if the trade war or the Brexit situation suddenly explodes in a way that brings tail risks back into play? Then markets will be extremely wrong-footed.

Chart 4: Positioning is super short in VIX. A worrisome signal of (too) uniform market thinking

In the yield curve we trust

As is the case every time the US yield curve inverts (10yr-3months), economists start discussing with each other whether or not to trust the recession signal of the inversion. This time is no different in that regard, as several papers on why not to trust the yield curve have already been published.

If we allow the yield curve to be the sole “objective” judge on the timing of the next US (read potentially global) recession, then it is only 6-7 months away. It is hard to see how almost record-low volatility can persist in such an environment; at least if the yield curve recession hint is right. We don’t find convincing evidence why we shouldn’t trust the yield curve at all this time around either.

And even if the yield curve is wrong, then talk of whether the yield curve signal is right or not in the coming quarters could be enough to spur a spike in volatility.

Chart 5: The next recession is only 6-7 months away according to the USD yield curve

The yield curve is not only a decent forecaster of recessions; it is also a more than decent forecaster of volatility. The 10-2yr spread on the US treasury curve usually leads the average volatility by up to 3-years, and given the recent flattening of the USD curve, we only have even more volatile periods coming up, according to this relationship.

Chart 6: The USD yield curve suggests that average volatility will continue to rise over the next 1-2 years

The drop in volatility in FX space due to the above-mentioned liquidity reasons from dovish central banks has been further boosted by the anticipated progress in the trade war. China and USA allegedly discussed a “cap” on USD/CNY or even a target lower than today’s spot as part of the trade deal.Calm is hence restored in USD/CNY, and CNY devaluation fears have abated. If USD/CNY is stable, then USD/ASIA pairs are usually fairly stable as well, which is why progress in the trade talks has worked to further dampen FX volatility.

FX volatility tends to follow roughly the same road map as equity volatility. Hence the current CVIX (broad FX volatility) also looks too low compared to the USD yield curve. Volatility in one asset class usually triggers volatility in other classes as well. A trade deal could help to keep FX volatility low (due to the stabilisation of USD/CNY), but probably not as low as now.

Chart 7: The yield curve also predicts higher CVIX (broad FX volatility)

EUR/USD volatility looks cheaper than Scandi-vol compared to historical levels currently, but we often get the largest reactions in USD/SEK and USD/NOK volatility, when a cross-asset volatility spike hits the market. Across G10, volatility levels in 9-12-month tenors are 1-1.5 z-scores below a running historic mean. It would be unusual to see both USD/JPY and EUR/USD volatility cheapen further from current levels (see chart 8). We find 9-12-month volatility cheaper relative to shorter maturities.

Chart 8: USDJPY and EURUSD volatility is 1.5 z-scores below averages

It is less certain that “contagious” effects from higher volatility in other asset classes will show up in rates volatility. A potential renewed equity sell-off and consequently further slowdown in Europe and the US will probably only fuel the “Japanification” pricing of the ECB – i.e. low rates for much longer. Rates volatility is hence also the volatility class that shows the biggest resilience to the global slowdown predicted by the USD yield curve.

Chart 9: Rates volatility not as “easily” predicted by the USD yield curve

One way to play the volatility bet in rates space could be to buy a EUR receiver swaption 1y1y as a combined bet on i) higher cross-asset volatility, ii) a two-tier system from the ECB that would allow them to cut the depo-rate even deeper than the current -0.40%, subsequently opening the door for new historic lows in EUR rates (ECB Watch: Could tiering save bank profitability?).

Chart 10: A EUR receiver swaption could be a way to bet on higher volatility and lower rates

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Radioactive Fukushima Particles Found In Alaska’s Bering Strait

Radioactive particles from Japan’s Fukushima Daiichi nuclear power plant have drifted as far north as a remote Alaskan island in the Bering Strait, according to scientists at the University of Alaska in Fairbanks. 

Seawater collected last year near St. Lawrence Island contained a slight elevation in levels of cesium-137, a man-made radioactive isotope formed during nuclear fission. 

According to Reuters, the levels of cesium found in Alaska are far too low to pose a health hazard – as humans have been “cleared” to consume levels some 3,000-times higher than those found in the Bering Sea, according to the Environmental Protection Agency. 

Water was sampled for several years by Eddie Ungott, a resident of Gambell village on the northwestern tip of St. Lawrence Island. The island, though part of the state of Alaska, is physically closer to Russia than to the Alaska mainland, and residents are mostly Siberian Yupik with relatives in Russia.

Fukushima-linked radionuclides have been found as far away as Pacific waters off the U.S. West Coast, British Columbia and in the Gulf of Alaska.

Until the most recent St. Lawrence Island sample was tested by the Woods Hole Oceanographic Institution, the only other known sign of Fukushima radiation in the Bering Sea was detected in 2014 by the National Oceanic and Atmospheric Administration. –Reuters

In 2014, trace-amounts of Fukushima radiation was found in the muscle tissue of fur seals on Alaska’s St. Paul Island in the southern Bering sea, however there was no testing of the water at the time, according to Gay Sheffield, a Sea Grant marine advisory agent based in Nome, Alaska. 

Three of the six reactors at the Fukushima Daiichi plant melted down in March 2011 after a 9.0-magnitude quake and subsequent tsunami knocked out the plant’s backup generators, disabling the pumps required to cool the reactors. 

Since then, radiation has been detected on the West Coast – including California wine, the coast of Oregon, and bluefin tuna which migrate from waters near Japan to the west coast of California and Mexico. 

And while virtually every report on Fukushima fallout on the West Coast notes that ‘the dose is measurable but extremely low’ – it’s hard to predict the long-term effects of even low levels of exposure over a lifetime.

Those who were closer to the disaster, such as several of the first responders on the USS Ronald Reagan, have subsequently been diagnosed with various forms of cancer and other illnesses. 

Via The Nation:

For Piekutowski, the lance corporal from the Essex, he didn’t feel particularly sick until over a year after Operation Tomodachi. He was back stateside in the fall of 2012, and felt fatigued and had lost weight, and in November of that year, his ankles swelled up to the size of his calves. “I’m an in-shape and slim guy, and usually have pretty good definition,” he told me. His doctor thought it might be gout, though Piekutowski was skeptical. “I told him, I drink as much as the next 21-year-old, but I don’t drink that much.” Then, on Christmas Day, he lost the sight in his left eye. “That’s when I knew I should probably get to the hospital,” he said.

In the ER, Piekutowski said the doctors seemed to recognize right away what a blood test and bone-marrow biopsy later confirmed: He had leukemia. “They were honestly surprised I was still walking,” he said. Medical staff put him in a gown and rushed him to a bigger hospital.

Piekutowski was diagnosed with acute myelogenous leukemia (AML), an aggressive form of blood cancer most often seen in men over age 65. It is rare to see it in an otherwise healthy 21-year-old. He began treatment in Arizona, where he’d been living, but then moved to Chicago to be closer to his parents and what Piekutowski called “some pretty amazing doctors.”

From Christmas 2012 to Valentine’s Day 2014, Piekutowski figures he spent eight months in hospitals. He first went through a year of chemotherapy, but after four months in remission, his leukemia returned. He had radiation and a stem-cell transplant at the start of 2014, which has so far kept him cancer-free. But Piekutowski is still struggling to rebuild his immune system, and battling stiffness and stomach problems. “I feel like I’m 60,” he said.

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Johnstone: Leaked ‘401’-Page Mueller Report Proves Barr Lied, Collusion Theorists Vindicated

Authored by Caitlin Johnstone via Medium.com,

An unredacted copy of the Robert Mueller report has been leaked to theWashington Post, who published the full document on its website Monday.

The report contains many shocking revelations which prove that Attorney General William Barr deceived the world in his summary of its contents, as astute Trump-Russia collusion theorists have been claiming since it emerged.

For example, while Barr’s excerpted quote from the report may read like a seemingly unequivocal assertion, “[T]he investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities,” it turns out that the full sentence reads very differently:

“It is totally not the case that the investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities.”

The following sentence is even more damning: “It definitely did establish that that happened.”

The report goes on to list the evidence for numerous acts of direct conspiracy between Trump allies and the Russian government, including a detailed description of the footage from an obtained copy of the notorious “kompromat” video, in which Trump is seen paying Russian prostitutes to urinate on a bed once slept in by Barack and Michelle Obama, as well as other documents fully verifying the entire Christopher Steele dossier which was published by BuzzFeed in January 2017.

Other evidence listed in the report includes communication transcripts in which Russian President Vladimir Putin is seen ordering President Trump to bomb Syria, stage a coup in Venezuela, arm Ukraine, escalate against Russia in America’s Nuclear Posture Review, withdraw from the INF treaty and the Iran deal, undermine Russia’s fossil fuel interests in Germany, expand NATO, and maintain a large military presence near Russia’s border.

These things were done, according to Putin, in order to “keep things interesting.”

Mueller told reporters Monday morning that there would indeed be mass indictments of large numbers of Trump associates revealed in the near future, including Jared Kushner and Donald Trump, Jr, just as the diligent journalism of MSNBC and other respected news media outlets have been assuring. Mueller said the delay in the arrests, and the mountain of evidence which will surely lead to Trump’s impeachment, was due to the need to “cross a few ‘t’s and dot a few ‘i’s.”

When asked why he didn’t reveal to the public that Barr was misrepresenting the contents of his report, Mueller responded with a mischievous grin, “I didn’t want to spoil the surprise.” He then put on a pair of sunglasses and rode off on a motorcycle due east into the rising sun, while the smooth notes of a single saxophone resounded through the D.C. cityscape.

Needless to say, this completely vindicates the many alert reporters who rightly pointed out that Barr’s assertions about the Mueller report could be gravely dishonest, and that there was no way to know whether or not it had determined collusion between Trump and the Russian government. In a greater sense, it vindicates everyone who has spent the last three years focusing all public attention on the suspicion that the Kremlin could possibly have infiltrated the highest levels of the US government. In an even greater sense, it vindicates America, and it vindicates our very souls.

I feel a bit sheepish writing all this, because I’ve been a very vocal critic of the Russian collusion narrative from the very beginning. It turns out that by voicing skepticism and demanding evidence for a news story that dominated political discourse to the near exclusion of all else, I was actually assisting the Russian government in its war against democracy, truth, and justice.

Obviously I owe the world a very big apology. I’m sorry for calling the Russiagaters idiots, morons, drooling imbeciles, stupid, gullible sheep, foam-brained human livestock, tinfoil pussyhat-wearing delusional conspiracy theorists, demented cold war-enabling McCarthyite bootlickers, oafish slug-headed slime creatures, energy-sucking, CIA-coddling wastes of space and oxygen, and an embarrassment to the human species. Clearly, because of their indisputable vindication this April the first 2019, they are definitely none of these things.

*  *  *

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Can Journalists Drop the Political Shenanigans and Get Back to Scrutinizing the Powerful? New at Reason

In favoring political games over covering the news, too many journalists have badly blown their reputations along with a lot of stories, writes J.D. Tuccille.

If abandoning real work in favor of political shenanigans only cost some journalists their professional reputations, you could just break out the popcorn and watch the show, he adds. But journalists, when we do our jobs right, serve an important role by keeping people informed and scrutinizing the powerful.

When we drag our own credibility into public view and shoot it in the head, that deprives the public of an important service while also empowering bottom-dwellers who should be subject to constant observation.

View this article.

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Millennial Gamblers On Robinhood ‘BTFD’ In Boeing Stock For 3rd Week

Millennials using the Robinhood financial app have been “buying the f*cking dip” in Boeing for the third straight week since the jet maker’s 737 MAX narrow-body aircraft was involved in its second deadly crash in five months, according to Bussiness Insider.

Boeing’s stock corrected 14.29% in 80 hours following the crash, bottoming at $362 per share the day President Trump grounded the aircraft across the U.S. That was the moment when thousands of Millennials, disregarded all risks associated with the downed airliner(s) and added Boeing stock to their portfolios.

Last week, Boeing was one of the hottest stocks on the mobile app, with almost 3,000 more users holding a position than a week earlier. The two weeks prior saw 6,528 additional users and 11,167 additional users with the stock added to their portfolios.

On Wednesday, Boeing unveiled the fixes to the controversial MCAS anti-stall software on its 737 MAX 8 jets – software that is suspected of having contributed to two plane crashes that left more than 350 people dead.

Later in the week, a family of a passenger who died on Ethiopian Airlines flight ET302 filed a lawsuit against the aerospace company in a US federal court.

While Millennials focused solely on “buying the f*cking dip” – neglecting to understand any future risks associated with the lawsuits, nor glancing at the warning signs in Boeing’s debt and credit markets, they have put their trust in the $20 billion stock buyback program authorized by the company in late 2018.

The risks are not abating. Boeing is still dealing with a lawsuit filed by the family of a man who was killed aboard the Lion Air crash, which took place on Oct. 29 when a 737 MAX owned by Lion Air plunged into the Java Sea just minutes after takeoff. The suit alleges that the 737 was “unreasonably dangerous” and is calling for what would be an embarrassing jury trial in Chicago, per Reuters.

The lawsuits have not been the only disappointing headlines. The WTO ruled on Thursday that the US had failed to comply with an earlier ruling calling for it to end illegal subsidies for Boeing, setting the stage for potentially damaging retaliatory damage from the EU, according to WSJ.

Since Millennials started piling into the stock – disregarding the risk/reward ratio is somewhat out of their favor, the stock has inched up 5.32% in 40 hours to 381.42, still a long ways away from the 444 per share seen before the crash. 

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New York’s $175 Billion State Budget Includes Spending Hikes, ‘Mansion Taxes,’ and Plastic Bag Bans

The New York legislature passed a $175 billion state budget for the upcoming fiscal year over the weekend. It bumps spending on schools and health care, cuts spending on welfare and transportation, and includes several tax and regulatory measures, many of which will make libertarians cringe.

The state’s economic development efforts are the biggest beneficiary of the new budget, getting a 10 percent funding bump. (Spending as a whole, by contrast, went up a smaller 2 percent.) Much of that is earmarked for the Empire State Development Corporation, which distributes various state tax credit and grant programs. Last year it spent $1.4 million grant on a theater project that created a whole six jobs.

Health and school spending, which together make up some 60 percent of the budget, got small increases of 3.7 and 2.5 percent, respectively. Social welfare and transportation spending both saw cuts of about 5 percent.

Alongside the new spending are a number of new regulatory policies.

Top of the list is a congestion pricing scheme that charges drivers a toll for entering Manhattan’s central business district. How much these tolls will be, and who they’ll apply to, will be determined by the state’s Metropolitan Transportation Agency and a new transportation mobility commission—a setup that’s sure to be fraught with political considerations.

In theory, congestion pricing is a sensible policy. Several cities, including London and Stockholm, have used it successfully to reduce gridlock in their downtowns. Ideally, the revenue would be spent on repairing roads or building new lanes, so that drivers gain some benefit from the tolls they’ll end up paying. New York’s version insteads earmarks funds for subway repairs and regional rail spending.

Also included to help fund New York’s crumbling transit system are new rules for collecting internet sales taxes and a new “progressive mansion tax” on the sale of properties valued over $25 million, which together are supposed to raise nearly $700 million for the subway.

The budget also creates a new state commission that will have the power to award up to $100 million a year to political campaigns.

On the regulatory side of things, the 2020 budget includes new rules for limousines, passed in response to a deadly limo crash in upstate New York last year, that left 20 people dead.

The new budget also bans plastic bags, and it allows counties to impose a 5 cent fee on the paper bags. Money from the fee will be spent purchasing reusable bags for low-income shoppers or will otherwise be deposited in the state’s Environmental Protection Fund. This makes New York the second state in the union, after California, to ban plastic bags.

On the bright side, the budget includes several criminal justice reforms—we’ll have more on those in an upcoming post—and a 2 percent cap on property taxes. The latter two items are some of the few bright spots in a budget that manages to shift even more money from New York taxpayers to an already bloated state government.

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Here’s why the Federal Reserve rejected the safest bank in America

In the spring of 1692, an energetic young Scotsman named John Campbell started a new business in central London.

Campbell was a goldsmith, and his business sold jewelry and other crafted metals like plates and silverware.

But Campbell’s new company had another business line as well: banking. And the company he started eventually became Coutts & Co., a bank that still exists today in the UK.

Since the dawn of the Bronze Age thousands of years ago, metal workers (‘smiths’, from the word ‘smite’– to strike) were prominent, highly valued members of society.

Smiths were instrumental in construction, architecture, science, warfare, and art.

And they also provided some of the world’s earliest banking services.

For most of human history, money was metal– primarily gold and silver. And people knew that storing large quantities of gold and silver in their homes made their wealth prone to theft.

Goldsmiths already had tight security in their shops due to their significant inventories of precious metals.

So it was commonplace for other residents in town to store their own gold with the local smith, piggybacking on his security, in exchange for a nominal fee.

This was banking in its most traditional form: customer paid a fee to store wealth at a goldsmith’s shop.

By the time John Campbell set up his bank in the late 1600s, however, times had changed. Goldsmith-bankers had begun making loans… keeping only a small portion of their customers’ gold on reserve in the vault, and loaning out the rest at interest.

This is essentially the same model of banking that still exists today.

Giant institutions control trillions of dollars that we depositors dutifully provide to them.

Banks keep a tiny portion of this capital on reserve– often as little as 1%. And with the other 99% of your money, they make loans, or occasionally wild speculations, with very little transparency.

Here’s a great example:

Just over a decade ago, Wachovia was one of the largest banks in the world. The company’s 2007 annual report showed billions in profit, and a balance sheet of nearly $800 billion.

That same report from 2007 showed that Wachovia had $461 billion worth of ‘loans’ and $115 billion worth of ‘investments’.

But there was very little additional detail. What types of investments? What types of loan terms? What risks had the bank taken with its customers’ money?

It was all a giant black box. Just like every other bank, Wachovia provided almost no detail about what it was doing with customers’ savings.

It turned out, of course, that most of those loans and investments were extremely high risk, and the company did not have sufficient capital to pay back its depositors.

Within ten months Wachovia would no longer exist.

This is a far cry from the days of traditional goldsmith banking where reputations were built on integrity and security.

Today hardly a month goes by without some major banking scandal– whether a massive data breach, or a breach of trust.

Some time ago I wrote to you about one bank in particular that is trying to go back to the days of traditional banking.

It’s called TNB Bank. And its model is very simple.

TNB plans to keep 100% of its customers’ funds on deposit with the Federal Reserve. They will make no loans, no investments. They will not gamble away their depositors savings on the latest financial fad.

And they’ll actually pay interest.

(TNB does not work with individual customers– they only deal with other banks.)

One little known fact is that commercial banks actually receive interest on the ‘reserve balances’ they maintain at the Federal Reserve.

It’s called the IORR (interest on required reserves), and it’s currently 2.4% as of today, April 1, 2019.

So TNB’s business model is to keep ALL of its deposits at the Fed and share a portion of that 2.4% with its customers. Safe. Simple. And even better than the original goldsmith banks.

You’d think the Federal Reserve would be jumping for joy. Finally! A bank that doesn’t risk its customers’ deposits. No more bailouts, no more financial crisis.

But you would be wrong. The Fed wants no part of this and has rejected TNB’s proposal.

Here’s where it gets really interesting: TNB filed a lawsuit, forcing the Federal Reserve to explain itself. And their response has been truly bewildering.

According to court documents, the Fed is slamming TNB’s business model, stating the bank plans to “park funds of its wealthy, institutional depositors in the [Fed] account and pass on [the interest] to them, after taking a cut for itself.”

Come again? The Federal Reserve is now a Social Justice Warrior, belittling a bank for wanting to pay interest to wealthy depositors (other financial institutions) and taking a cut for itself?

EVERY bank takes a cut for itself. Banks today pay as little as 0.01% interest to depositors… so they’re literally keeping 99% of the interest for themselves. That’s a sizable cut.

The Fed doesn’t have a problem when Wells Fargo does that. But for TNB to make a profit while providing risk-free deposits? Preposterous.

Perhaps most notably, though, the Fed states that “TNB’s novel business model could interfere with [the Fed’s] ability to . . . maintain financial stability and promote a healthy economy”.

That’s extraordinary: the Fed actually believes that risk-free banking is (a) “novel” and (b) bad for the economy.

Debt and risky speculations, on the other hand, are good for the economy.

Unreal. In a world full of so many bank scandals, the system is deliberately trying to exclude new participants who value safety.

Personally, I’m following this story because the business model that I’ve been striving for with my own bank is similar to what TNB is trying to do.

But I think this highlights a much bigger theme: the financial system does not value safety or transparency… which makes a very good case for holding physical precious metals and cash.

More on that another time.

Source

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Why One Bank Isn’t Buying The Chinese PMI Bounce

Stocks around the globe are surging on the first day of the second quarter, following what we reported over the weekend were solid prints from both the Chinese official and the Caixin manufacturing PMIs (even as the disappointing US retail sales print this morning showing continued weakness behind the biggest drive of US GDP growth, consumption, was roundly ignored). The former, as a reminder, jumped to 50.5 in March from 49.2 in February, much higher than consensus expectations of 49.6, after remaining in below-50 contractionary territory for three consecutive months. The rise was mainly driven by production (to 52.7 in March from 49.5 in February; average in 2018: 52.7) and new orders sub-indices (to 51.6 from 50.6; average in 2018: 52.0). The new export orders sub-index rose to 47.1 in March from 45.2 in February (average in 2018: 49.1).

As this jump has already provided a big boost to both local (the Shanghai Composite closed 2.6% higher) and global stock markets, the recovery in Chinese data will likely delay a reserve requirement ratio (RRR) cut. However, as Nomura’s Ting Lu writes this morning, there may be less than meets the eye in China’s impressive data: critically, the rise in the March PMI and incoming activity data could be partly the result of the lunar new year (LNY) holiday distortion and the anti-pollution campaign.

Some additional caveats from the report according to Nomura:

  • PMIs for smaller enterprises remained below 50 despite the March rise. By enterprise size, the PMI for small enterprises rose to 49.3 in March from 45.3 in February (2018: 49.2) while the PMI for medium-sized enterprises also rose to 49.9 from 46.9 (2018: 49.6). Despite the rises, the PMIs for small and medium-sized enterprises remained below 50.0, suggesting smaller enterprises remain under stress. The PMI for large enterprises fell to 51.1 from 51.5 (2018: 52.0).
  • Higher non-manufacturing PMI boosted by the construction sector. The official non-manufacturing PMI rose to 54.8 in March from 54.3 in February (Consensus: 54.3; 2018: 54.4), led mainly by the construction sector, the sub-index for which jumped to 61.7 from 59.2 (2018: 60.7), likely boosted by an acceleration of infrastructure investment. The sub-index for the services sector edged up to 53.6 in March from 53.5 in February (2018: 53.4). The official non-manufacturing PMI remains well above the manufacturing one, which suggests growth continues to rebalance towards the tertiary sector amid the economic slowdown

More importantly, final demand exports, new home sales and passenger cars remain weak, and could limit the upward momentum of the PMI. As a result, Nomura maintains its view that “a stabilization could take place in mid-year followed by a moderate recovery in H2”, however a key factor is a property market recovery in Tier 1 and Tier 2 cities driven by an easing of property tightening measures. 

Looking ahead, the incoming activity data could also be upwardly biased: Nomura explains that March activity data in year-on-year terms (to be released in mid-April) could also rebound on two factors: (1) Beijing significantly eased its anti-pollution campaign (note the Chinese government launched an aggressive anti-pollution campaign from November 2017 to March 2018; see China: The anti-smog campaign likely less in force this winter, 19 Sep 2018); (2) Due to the special timing of LNY holiday, the Lantern Festival (the 15th day of the LNY) was on 2 March last year, but was on 19 February this year.

Putting these together, Nomura “remains cautious” on China despite the March PMI rebound: while the Japanese bank concedes that sentiment has improved and Beijing’s stimulus has been gradually kicking in, it remains cautious in interpreting the 50.5 PMI reading for two reasons.

  • First, the official PMI has occasionally been poor gauge of growth momentum over the past five years, especially in spring. For example, in spring of 2014 and 2015, amid slowing growth, the manufacturing PMIs actually rebounded in March. One factor behind these false signals from the manufacturing PMI in spring is the LNY holiday distortion, which make applying an appropriate seasonal adjustments challenging.
  • Second, the jump in new credit in January this year could indicate some restocking activity, as evidenced by the jump in the raw material inventory sub-index (up to 48.4 in March from 46.3 in February). However, real final demand could remain weak as growth in exports, new homes and passenger cars remain in negative territory.

As a result, Nomura believes “there is limited room for a further rise in the manufacturing PMI and see a substantial likelihood that the PMI dips again” and notes that there are no changes to its views on China’s recovery, to wit: “We believe there is limited room for a further rise in the manufacturing PMI and see a substantial likelihood that the PMI could dip again. We maintain our view that a stabilization could take place in mid-year followed by a moderate recovery in H2, and that the key factor is a property market recovery in Tier 1 and Tier 2 cities driven by an easing of property tightening measures. “

via ZeroHedge News https://ift.tt/2JUPzhn Tyler Durden

Information Warfare: Trump PAC To Crush Trash-Talking Journos With Their Own Russiagate Reporting

Snarky liberal journalists beware; The RNC and a Trump super PAC have all of your Russiagate conspiracy tweets, which might be used against you for trash-talking the president and spreading misinformation before, during and after the Mueller investigation. 

With the redacted 300-page Mueller report weeks away and a four-page summary by AG William Barr revealing they found no collusion between the Trump campaign and Russia, the president plans to take full advantage of what he called his ‘total exoneration‘ 

And while Trump and Congressional Republicans have put Obama officials and holdovers alike on notice that there will be an investigation to get to the bottom of the ‘hoax,’ journalists who peddled the Russiagate narrative will be subject to a montage of their journalistic malpractice over Twitter. 

“The media made a critical mistake concerning the Mueller investigation coverage,” Keystone College political science professor Jeff Brauer told the NY Post. 

“Their major sin was the wrong assumption that Mueller’s professional silence about the probe was an indication that he was holding all his cards close to his chest. In the end, it was the opposite. Mueller made all his moves openly during the investigation. When they found something, they simply indicted and prosecuted.

When he was finished playing his last card, he wrapped up the probe and wrote the account. He did not keep a treasure trove of evidence and charges on Russian collusion from the public spotlight only to be released in a bombshell report.” –NY Post

To that end, the Republican National Committee and the pro-Trump super PAC America First are “geared up for any nonsense to come” from reporters covering the 2020 election. 

“Any reporter who tries that will be hit with 30-second spots of all their ridiculous claims about collusion,” one source told The Atlantic on condition of anonymity. 

“Their tweets have all been screencapped. It’s all ready to go.” (“It’s the same thing we’ve been doing the last two years. We’re going to hold the media accountable when we see fit,” an RNC official clarified, adding that this would include digital clips shared on social media.)

Pundit alert

The Trump campaign, meanwhile, has sent a letter to various TV producers cautioning them against booking anti-Trump guests who have pushed – and in some cases continue to push, the Trump-Russia conspiracy theory. Named individuals include; Democratic Senator Richard Blumenthal of Connecticut, Democratic Representative Adam Schiff of California, and Democratic National Committee Chairman Tom Perez.

“It’s not hard to figure where we’re going to go with this,” said a current campaign official. “We’re still in victory-lap mode, but it will turn into a message that [Democrats] will say or do anything to stop us from making America great again, including making up lies about the president and ruining a lot of people’s lives.”

While some Democrats won’t let go, others want to run the other way

According to The Atlantic, White House officials aren’t going to move on from the Mueller findings because Democrats aren’t moving on either – “doubling and tripling down” in fact, according to White House spokesman Hogan Gidley. 

At some level, letting go would be out of character. From the first, Trump has personalized the presidency. He still obsesses over the crowd size at his inauguration, along with perceived betrayals from Senator John McCain of Arizona, who died last summer. The Mueller investigation shadowed Trump for nearly two years. Now that it’s over, he is indulging in a bit of triumphalism. –The Atlantic

Some Democrats, however, want their party, and the MSM, to let it go.

“They just harp on the same thing, and you would think there’s nothing else Trump’s done wrong,” said 73-year-old Democrat Jim Henry of Gettysburg, Pennsylvania. “That’s the only thing they have on him? Come on, talk about the other stuff.” 

Pennsylvania coffee shop pals Jim Paddock (from left), Roger Jewell, Jim Henry, Philip Schindel and Richard Sawyer agree it’s time to stop talking Mueller.

Henry is kibitzing with his morning crew — friends Richard Sawyer, Philip Schindel, Roger Jewell and Jim Paddock — at two tables pushed together at the Ragged Edge coffee house in this Civil War battleground town. Sections of the New York Times and the Gettysburg Times are spread out on the table alongside a plate of muffins and several cups of coffee.

None of them had a problem with the special counsel probe, all are Democrats and all vehemently dislike the president — an unusual trait for people in this ruby-red county. But they do think the day-in-day-out speculation over Mueller’s findings wore the public down to the point of giving the president an advantage heading into the 2020 election. –NY Post

“I don’t think we need to forget about Russia. And I think that needs to be reported one way or the other,” said 76-year-old Jim Paddock, supervisor of a nearby township “But because other big issues like health care and infrastructure aren’t being talked about, it gives him momentum.” 

via ZeroHedge News https://ift.tt/2I4Kbps Tyler Durden