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US equity futures are higher, boosted by a bevy of better than expected earnings out of tech giants Amazon, Intel and Microsoft as Asian stocks and European shares climb amid the dovish sentiment unleashed from Thursday’s ECB update.

Asian equities rose as investors bid stocks following strong corporate results from India to Japan. The MSCI Asia Pacific Index climbed 0.3% to 167.12, on track for its fourth-straight weekly gain. India’s United Spirits Ltd. led gains, surging 22% after reporting higher margins, while Fuji Electric Co. jumped 15 percent to the highest in 26 years after raising its profit forecast.  The broad-based advance – almost two stocks in the MSCI gauge rose for every one that fell – followed gains in U.S. markets spurred by corporate profits and congressional action that could lead to tax reform.

“The earnings picture that came out overnight is definitely positive,” said Clive McDonnell, Singapore-based head of emerging market equity strategy at Standard Chartered Bank. That’s translated into more positive sentiment in Asia, he said. Japan’s Nikkei 225 Stock Average Index closed above the 22,000 level for the first time since July 1996. Shares in Hong Kong rose after China Construction Bank Corp. reported another expansion in margins, while China Life Insurance Co. said third-quarter profit more than quadrupled. Australia’s stock benchmark and currency declined after a court ruling on parliamentary eligibility threatened Prime Minister Malcolm Turnbull’s majority.

One story that has gotten little focus is China’s 10-year sovereign yield extending its weekly advance to 10 bps,  rising another 4 basis points to 3.83%, and set for its biggest increase since the first week of January. This tightening in financial conditions took place even as China’s central bank injected 63-day money into the financial system for the first time, which as Bloomberg reported reassured lenders about year-end funding availability while also intensifying a deleveraging drive by increasing costs. The PBOC offered 50 billion yuan ($7.5 billion) of 2.9% 63-day contracts, according to a statement posted on the PBOC website, as well as 90 billion yuan through one-week and 14-day contracts. This did not prevent the long-end of the Chinese bond curve from getting routed as inflation fears again rise.

European stocks climbed for a second day, poised for their biggest weekly gain in a month, amid positive corporate results and lingering bullish sentiment from Thursday’s dovish ECB update. The Stoxx Europe 600 Index rose 0.5% to 393.06, with most industry groups in the green. Miners bucked the trend, sliding 1.3% after a slump in iron-ore prices. RBS rose after posting stronger-than-expected 3Q capital ratios. Volkswagen and Linde advance on earnings that beat estimates. Meanwhile, Spanish stocks continued to underperform as Europe’s worst constitutional crisis for decades comes to head. Catalan separatists are making a last-ditch effort to win concessions from Madrid that would help persuade their increasingly agitated supporters to accept another regional election as lawmakers prepare to vote on a declaration of independence.

In overnight macro, the dollar extended its rally after the U.S. House passed a resolution that brings tax cuts a step closer and speculation mounted a hawkish candidate may become the next Federal Reserve chair. After tumbling through the start of September, the US dollar has been on a tear ever since that Friday when the PBOC announced it was inviting shorts back into the (warm) water. As a result, the 200 DMA in the Bloomberg Dollar Index is now in play again as the BBDXY hovers near a three-month high.

In the U.S., Republicans unlocked a process to cut taxes by the end of the year, while Jerome Powell and John Taylor are reportedly the only candidates left in the race to succeed Janet Yellen at the Fed. The prospect of growth-enhancing U.S. tax cuts and the probability of a hawkish turn at the Fed is attracting investment to U.S. assets, with investors pouring $6.1 billion into funds tracking U.S. stocks in the week to October 25, while pulling money from emerging-market funds.

As the dollar rose, the common currency slumped, with the euro heading for its biggest weekly loss since March after the ECB announced a “dovish taper”, extending the bond-buying program even as it plans to halve monthly purchases. Judging by the dramatic reaction in the EUR, the “open-ended” taper was clearly a surprise to many, especially with Boersen-Zeitung reporting that Bundesbank President Jens Weidmann, Executive Board member Sabine Lautenschlaeger and Dutch central bank Governor Klaas Knot opposed the decision to make quantitative easing open-ended. Other policy makers were critical, if not opposed, including Benoit Coeure.

Also overnight, the USD/JPY climbs to highest since July 11 after the U.S. House passed a budget resolution on tax reforms and as speculation rose that a hawkish candidate may lead the Federal Reserve.

In commodities, WTI dropped 0.2% to $52.56 a barrel.  Gold rose 0.1 percent to $1,267.76 an ounce.  Copper decreased 1.5 percent to $3.13 a pound, the lowest in more than two weeks.

In rates, 10Y Treasuries dipped 1bp to the critical level of 2.45%, while Germany’s 10Y yield also decreased 1 bp to 0.41% while Britain 10-year gilts rose 2 bps points to 1.384%.

Today’s economic data include the first read of US QE GDP and PCE, and University of Michigan consumer sentiment. Scheduled earnings include reported by oil companies Exxon Mobil and Chevron along with health care firms Merck & Co. and AbbVie.

Bulletin Headline Summary From RanSquawk

• European bourses remain elevated following impressive after-market US tech earnings and yesterday’s ECB announcement
• In FX, EUR remains softer post-ECB while AUD was pressured by domestic political uncertainty
• Looking ahead, highlights include US GDP and PCE

Market Snapshot

• S&P 500 futures up 0.2% to 2,567.25
• STOXX Europe 600 up 0.4% to 392.94
• Brent Futures down 0.1% to $59.26/bbl
• Gold spot up 0.1% to $1,268.28
• U.S. Dollar Index up 0.2% to 94.82
• MSCI Asia up 0.4% to 167.24
• MSCI Asia ex Japan up 0.08% to 546.58
• Nikkei up 1.2% to 22,008.45
• Topix up 1% to 1,771.05
• Hang Seng Index up 0.8% to 28,438.85
• Shanghai Composite up 0.3% to 3,416.81
• Sensex up 0.3% to 33,240.73
• Australia S&P/ASX 200 down 0.2% to 5,903.16
• Kospi up 0.6% to 2,496.63
• German 10Y yield fell 0.8 bps to 0.407%
• Euro down 0.1% to $1.1635
• Italian 10Y yield fell 8.7 bps to 1.683%
• Spanish 10Y yield fell 0.9 bps to 1.528%

Top Headline News

• Italian Prime Minister Paolo Gentiloni may make his recommendation for the post of governor of the Bank of Italy. The process was thrown into disarray after former PM Matteo Renzi attacked the incumbent, Ignazio Visco.
• Fed candidate Taylor calls for reforms that echo Trump agenda
• Catalonia’s rebel leader runs out of road as Spain closes ranks
• Tax Plan Has Lobbyists Swarming, Lawmakers Asking What’s in It
• It’s Going to Stay a Yellen Fed No Matter Who Gets the Job
• Catalans Are Said to Send Emissary to Madrid to Plead for a Deal
• On Visit to DMZ, Mattis Says Kim Threatening ‘Catastrophe’
• China’s CCCC Buys Aecon for $930 Million in Canada Push
• Komatsu Boosts FY Oper. Profit Forecast in Line With Estimates
• Apple iPhone X “Currently Unavailable” From Hong Kong Store
• Clariant, Huntsman Drop Plan to Merge Due to Activist Pressure
• Clariant Still Number One M&A Target in EU Chemicals: Baader
• Huntsman 3Q Adjusted EPS Beats Highest Estimate
• HNA Said in Talks to Buy Controlling Stake in Dangdang: Reuters
• Komatsu Boosts FY Oper. Profit Forecast in Line With Estimates

In Asia, a deluge of corporate results dominated focus in regional trade, with the region’s indices mainly in the green after a
similar close in US and where Nasdaq 100 futures rallied after-market as tech giants Alphabet, Amazon, Intel, Microsoft and
Western Digital all surpassed Q3 estimates. ASX 200 (-0.2%) and Nikkei 225 (+1.2%) both opened positive in which the energy
sector lead Australia after Brent crude rose above USD 59/bbl and printed its highest in more than 2 years, while the Japanese
benchmark outperformed on JPY weakness and with the biggest gaining stocks underpinned by earnings releases. However,
Australian stocks were later spooked after the High Court ruled now-former-Deputy PM Joyce was ineligible for his parliamentary
seat and would have to contest it again at a by-election, which meant the government loses its 1-seat majority. Elsewhere,
Shanghai Comp. (+0.3%) was higher following another firm liquidity operation by the PBoC which utilized a 63-day reverse repo
for the 1st time ever, and the Hang Seng (+0.8%) was led by gains among the Big 4 after China’s 2nd largest lender China
Construction Bank posted a 4% increase in Q3 net. Finally, 10yr JGBs were flat as a positive risk tone in Japan sapped demand for
safety, with downside also stemmed amid the BoJ’s presence in the market for long to super-long JGBs.
PBoC injected CNY 60bln via 7-day reverse repos, CNY 30bln via 14-day reverse repos and CNY 50bln via 63-day reverse repos,
for a net weekly injection of CNY 390bln vs. Prev. CNY 560bln net injection last week. PBoC set CNY mid-point at 6.6473 (Prev. 6.6288.

Top Asian News

• China’s PBOC Said to Sell 63-Day Reverse Repo for First Time
• Young Muslims Have Caught a $100 Billion Travel Bug, Report Says
• Paper Giants Rack Up Gains Amid China’s Anti-Pollution Drive
• Top China Macro Fund Shorts Commodities, Debt on Inflation
• iPhone X Wait Times Rise as Apple Device Sells Out in Hong Kong
• Najib Unveils Voter-Friendly Budget Ahead of Election Fight
• RCBC Says Not Pressured to Change Owners After $81m Cyber Heist

European equities (Eurostoxx 50 +0.6%) trade higher across the board amid the fall-out of yesterday’s dovishly perceived ECB announcement with stellar tech earnings on Wall Street also bolstering sentiment. More specifically, tech giants Alphabet, Amazon, Intel, Microsoft and Western Digital all surpassed Q3 estimates subsequently supporting the Nasdaq 100 future and Asia-Pac equities with this sentiment filtering into their EU counterparts. As such, a sector breakdown, IT names lead the charge for Europe with materials the only sector in the red. Notable post-earnings movers include RBS (+1.9%), Volkswagen (+1.8%), Total (+1.3%), Linde (+2.7%) and Electrolux (+4.7%). No hangover for Bunds and Eurozone debt overall as the ECB rally and bond yield compression continues. Further analysis of the QE recalibration and policy guidance compounded initial market perceptions that President Draghi and co handled the scale down in bond buying (or at least the announcement) extremely well. The 10 year German benchmark extended gains to 162.00+, and equivalent yield down to almost 0.4%, in stark contrast to its US Treasury counterpart that is now approaching 2.5% (on hawkish Fed and Trump tax reform/reflation impulses). UK Gilts indecisive initially, but ultimately tracking Germany higher despite the consensus still favouring a BoE rate hike on November 2.

Top European News

• ECB Is Said to See Option to End QE With Short Taper in 2018
• Ermotti Reboots UBS Buyback Expectations as Capital Level Rise
• WeWork Said in Talks to Buy $785 Million Blackstone U.K. Project
• Mediterranean Gas Bonanza Pushes Spain to Resume Exports
• UBS Will Trigger Its Brexit Contingency Plans ‘Early’ Next Year
• U.K. Government Investments Hires Ex-Deutsche Bank’s Tom Cooper
• ECB Says Forecasters Lift Longer-Term Inflation Outlook to 1.9%
• Orban Marshals Spy Agencies in Renewed Attack on Soros ‘Empire’

In FX, the euro remains on the back foot, post the dovish ECB monetary policy decision. In the Asian session EUR moved to lows of 1.1617, subsequently hovering within close proximity to option expiries situated at 1.16 (EUR 518mln). On the topside, vanilla option expiries of EUR 1bln are at 1.17, which may cap any potential rebounds. However, EUR has been granted some reprieve amid short covering in EUR/GBP lifting the cross towards 0.8900. AUD remains softer amid political concerns after a high court ruled that Ex-Deputy PM is ineligible for parliament, meaning that the coalition losses their majority.

In commodities, price action has been particularly rangebound for WTI and Brent crude futures with the only notable newsflow being reports that Libya’s Sharara oil field output has fallen to 235k bpd (Prev. around 250k bpd), according to sources.  Gold prices languish near 2½-month lows due to a firmer greenback, copper was subdued alongside broad weakness in the metals complex and 4% declines in Dalian iron ore futures. Iraqi-Kurdistan oil  flows to Ceyhan port have risen to 246k bpd, according to a port agent. Libya’s Sharara oil field output has fallen to 235k bpd (Prev. around 250k bpd), according to sources.

Looking at the day ahead, in the US the highlight will be the first estimate of Q3 GDP in the US. The final University of Michigan consumer sentiment survey for October is also due. Onto other events, the ECB’s Praet and Nowotny are also both scheduled to speak. UBS, Exxon Mobil, Chevron and Total all report results.

US Event Calendar

• 8:30am: GDP Annualized QoQ, est. 2.6%, prior 3.1%; Personal Consumption, est. 2.1%, prior 3.3%; Core PCE QoQ, est. 1.3%, prior 0.9%
• 10am: U. of Mich. Sentiment, est. 100.7, prior 101.1; Current Conditions, prior 116.4; Expectations, prior 91.3; 1 Yr Inflation, prior 2.3%; 5-10 Yr Inflation, prior 2.4%

DB’s Jim Reid concludes the overnight wrap

Today is that time of year when all rational behaviour goes out the window. I tend
to keep my plans secret from my wife for fear of a despairing look and alarm
bells go off in my local bank manager’s office. Yes I’ll be in the virtual queue at
8am this morning to order my new iPhone X. To be honest I don’t know anything
about it and have no idea whether it’s a worthwhile upgrade on my iPhone 7 Plus.
However how can I take the children to various events at the weekends ahead
without having the latest iPhone to show off? It will also take all my willpower
not to add the new iWatch to my basket. On Monday you’ll find me signed up
to AA – Apple Anonymous.

Not even viewing it through the new iPhone X could make yesterday’s ECB
meeting that interesting, which is remarkable given the magnitude of the
announcement. The move had been well flagged but there was some creeping
expectation this week that there would be a hawkish sting to the tail. That didn’t
happen as the €60bn to €30bn January 2018 taper – but out to September – was
where the ECB had guided us over recent weeks. Indeed with reinvestments,
effectively the ECB will be buying c.€45bn per month in the first 9 months of
next year. Reinvestment only became an issue from March of this year and has
perhaps added an average of €5bn per month since. So net net the ECB will be
buying a lot of bonds at least until Autumn next year. It also means ECB meetings
are going to be very dull events over the next 6 months unless the facts change
markedly. Volatility is going to have to come from elsewhere for a period if it is
going to pick up.

Markets reacted like they expected a little more hawkishness as Euro yields
collapsed and the Euro slumped. Core 10y yields in the region fell 2-7bp (Bunds:
-6.6bp; OATs -6bp; Gilts -2bp) and peripherals outperformed (Italy: -9.2bp; Spain
-11.1bp), with Spanish yields likely supported by positive developments around
Catalonia. Interestingly, 10y US yields rose 2.9bp on the day, likely helped
by the passing of the budget resolution by the House and perhaps because
Politico claimed Ms Yellen was out of the Fed Chair race. Notably, the daily yield
divergence between Bunds and UST (9.5bp) is the highest since December 2016.
The contrasting direction of yields likely contributed to the 1.7% intra-day range
in EURUSD before closing -1.37% lower for the day and now back towards late
July levels.

Delving a bit more into the ECB meeting, a “large majority” of policy makers
favoured “an open-ended stance” on when to end QE, to which Mr Draghi
confirmed asset purchases will not just stop suddenly, although we think by the
end of 2018 is still realistic. He also reaffirmed that interest rates will remain “at the present levels for an extended period of time and well past the horizon of
our net asset purchases” (our European team expect a rate hike from mid-19).
On the economy, he noted the economic expansion in the Eurozone continues
to be solid and broad-based but added that “domestic prices pressures are still
muted” and the economic outlook and inflation are conditional on (ample) support
from monetary policy. DB’s Mark Wall takes a closer look at the meeting and
implications, refer to link.

Over in the US, the House of Representatives have voted to adopt the 2018
budget that has already passed in the Senate, paving the way for some sort of tax
cuts that could increase the federal deficit by up to $1.5trln over the next 10 years.
Looking ahead, the House and Senate will release separate versions of the tax
bill, expected to be on 1 November and the week after (for the Senates own
version). Then the process of debating and negotiating tax cuts and reconciling
the two versions of the bill will step up a gear before final voting, which is expected
to be before Thanksgivings (23 November).

Staying in the US, there were more chatters on who may be the next Fed Chair.
Citing a source who talks to President Trump regularly, the Politico reported that
the two final contenders are now down to Powell or Taylor. However, a separate
source noted that things can be evolving as Mr Trump “changes his mind about
it every day”. Either way, we should hopefully find out soon, sometime before
3rd November.

Turning to Spain, there seems to be more signs that Catalan President
Puigdemont may be softening his position. His scheduled address yesterday
afternoon was cancelled without explanations, and later on he said he
has considered calling a snap regional election (rather than declaring
independence), but “didn’t get a responsible answer” from Spain, now “it’s
up to the Catalan parliament to move ahead with what the majority decides in
relation to the consequences of the application of Article 155 against Catalonia”.
Bloomberg reported Puidgemont may address the region again on Friday, which
likely coincides with the final voting by the Spanish Senate to potentially
approve the measures proposed by Spanish PM Rajoy to retake control of
the region. Yesterday, the Spanish IBEX (+1.92%) and 10y bond yields (-11bp)
both outperformed. Elsewhere, Santander’s CFO highlighted the solid economic
recovery in Spain and noted limited concern about the developments in Catalonia.

This morning in Asia, markets have followed the positive lead from the US
and are trading broadly higher. The Nikkei (+0.88%), Kospi (+0.49%), Hang Seng
(+0.83%) and Shanghai Comp. (+0.28%) are up slightly, while the ASX 200 has
fell 0.38% as we type. Elsewhere, China’s industrial profits in September were up
27.7% yoy (vs. 24% previous) – the highest since 2011. Japan’s September core
CPI was in line and steady at 0.7% yoy, our Japanese economist believes the BOJ
will have no choice but to downgrade their core inflation outlook for FY17 next
week, from 1.1% to 0.8-0.9%.

Now onto other markets performance for yesterday. US equities (S&P +0.13%,
Dow +0.31%) broadly strengthened but the Nasdaq fell 0.11%, impacted by
a softer result from Celgene (-16%). Within the S&P, most sectors were in
the green, with gains led by the materials and financials sector with partial
offsets from health care. Yesterday, both Ford (+1.9%) and Twitter (+18.5%)
rose following above consensus results. After the bell, Amazon (+8%), Microsoft
(+4%) and Alphabet (+3%) were all up after releasing their respective results, but Baidu fell 10% on weaker outlook. The VIX rose slightly and remains above
10 for the fourth consecutive day (11.30).

European markets were all higher, likely supported by the dovish ECB meeting
and weaker Euro. The Stoxx 600 gained (+1.07%) the most since mid-August,
while the DAX jumped 1.39% to a fresh record high. Across the region, the
FTSE (+0.53%) was the relative laggard while Spain’s IBEX (+1.92%) and Italy’s
MIB (+1.61%) outperformed, likely reflecting the positive developments around
Catalonia and the Italian senate passing new electoral laws that make M5S less
likely to gain power (see below). Contrary to the US, the Euro VSTOXX volatility
index fell 11.14% – the biggest one day fall since August.

Turning to currencies, as noted earlier, there was a fair bit of movement following
the US budget, Fed Chair talks and the ECB meeting, which contributed to the
US dollar index rising 0.99% while the Euro and Sterling fell 1.37% and 0.76%
respectively. In commodities, WTI oil gained 0.88%, partly supported by reports
that the Saudi Prince will back an extension of OPEC production cuts beyond
March 2018. Elsewhere, precious metals softened (Gold -0.83%; Silver -0.93%)
while other base metals were virtually unchanged (Copper -0.07%; Zinc flat;
Aluminium -0.06%).

Away from the markets and onto Brexit, one of the sticking points remains
the potential financial obligations UK owes to the EU bloc. An aide (Stefann
De Rynck) to the EU Chief negotiator spoke in London and noted “we need a
method (to determine the amount) to be able to reassure the 27 nations the
solidity of the UK’s guarantees” and that “we need to take the drama out of
that question in the UK before it becomes a drama in the EU27”. Prior reports
suggest the EU wants a settlement of c€60bn vs. UK’s offer of c€20bn. Behind
the scenes, the EU bloc is reportedly keeping its options open by continuing
preparatory work so talks on trade can begin if and when its members decide UK
has made sufficient progress as well. Conversely, preparatory work on Plan B if
talks in December did not provide a tangible breakthrough are also progressing
too (per Bloomberg).

In Italy, the Senate has voted in favour (214 vs. 61) of a new electoral law which
could potentially penalise the 5-Star Movement party (5SM). The new system
allows 36% of lawmakers elected on a first-past-the-post basis and 64% via
proportional representation. However, as per Bloomberg / Reuters, opinions polls
suggest the three contenders are virtually tied (Democrats, Five Star and possible
centre-right coalition), potentially implying the new laws are unlikely to lead to a
clear parliamentary majority. With new elections expected in either March or May
next year, we shall find out more soon.

Over in China, there was strong appetite for its first US dollar sovereign bond
issuance (unrated) since 2004. Demand was reportedly 11x higher than the offer
size, with the Ministry of Finance pricing the $1bn 5y notes at 15bp over treasuries
and the $1bn 10y note at 25bp over UST (vs. initial guidance of 40-50bp).

Finally, for those hoping for answers from de-classified materials relating to the
assassination of President Kennedy, you may have to wait longer as President
Trump had to block hundreds of records, citing “potentially irreversible harm” to
national security if all records were allowed for public viewing. The relevant files
are suppressed for another six months before further review. Intriguing.

Before we take a look at today’s calendar, we wrap up with other data releases
from yesterday. In the US, the macro data was a bit mixed. The October
Kansas City Fed manufacturing index beat expectations at 23 (vs. 17 expected)
– highest since March 2011. In the details, the new orders index jumped 17pts
to +27 (highest since March) and firms also reported increased order backlogs
and employment. Moving along, the weekly initial jobless claims (233k vs. 235k
expected) and continuing claims (1,893k vs. 1,890k expected) as well as the
September advance goods trade deficit (-$64.1bln vs. -$64bln expected) was
broadly in line. Elsewhere, pending home sales for September was flat mom (vs.
0.5% expected), partly impacted by the storm impacted region in the South, while
wholesale inventories was also a tad softer at 0.3% mom (vs. 0.4% expected).

In the ECB’s money and credit aggregates for September, M3 money supply grew
at a slightly faster pace at 5.1% yoy (vs. 5% expected). In the details, growth
in household loans was steady at 2.7% yoy while non-financial corporates loans
edged up to 2.5% yoy. In Germany, the November GfK consumer confidence was
slightly lower than consensus 10.7 (vs. 10.8). Over in Italy, both the consumer
(116.1 vs. 114.9 expected) and manufacturing confidence (111 vs. 110 expected)
indicators for October beat expectations, with consumer confidence at the
highest level since January 2016. Further, the Istat economic sentiment index
also rose to the highest level since September 2007. In the UK, after a very
strong September survey, the CBI’s distributive trade survey was much softer in
October. A net 36% of retailers reported a decline in sales from a year earlier –
the worst result since 2009.

Looking at the day ahead, in France consumer confidence data in October is
due while in the US the highlight will be the first estimate of Q3 GDP in the US.
The final University of Michigan consumer sentiment survey for October is also
due. Onto other events, the ECB’s Praet and Nowotny are also both scheduled
to speak. UBS, Exxon Mobil, Chevron and Total all report results.

via http://ift.tt/2gNIpxY Tyler Durden

After yesterday's chaotic Spanish event rollercoaster, when the Catalan leader Carles Puidgement was going to press ahead with independence only to change his mind, and propose elections, before reversing again and punting the independence decision to parliament, we hoped to get some further clarity on how he’s planning to proceed. Today, the chaos continues.

First, Bloomberg reported that Catalonia would seek approval for elections from Madrid:

The rebel government of Catalonia is making a last ditch effort to win concessions from Madrid. According to a person familiar with the matter, Catalan President, Carles Puigdemont, wants to convince supporters to accept regional elections instead of a declaration of independence. A senior Catalan official will ask the Spanish government to suspend the process of seizing direct control of the region if there is a snap election.

However, shortly afterwards, The Spain Report carried breaking news that the secessionists would debate a motion to declare independence in today’s session of the Catalonian Parliament.

MAJOR BREAKING: Separatist Parties Register Motion To Declare Independence Of Catalonia In Regional Parliament https://t.co/oa4fhhwXgc

— The Spain Report (@thespainreport) October 27, 2017

More from the report:

Catalan separatist parties—Junts Pel Sí ("Together For Yes") and the CUP (Popular Unity Candidacy)—have registered a motion to declare the independence of Catalonia in the regional parliament.

 

A copy of the document published by Spanish media included the phrase: "We constitute the Catalan Republic as an independent sovereign democratic, social state of law".

 

The text would also approve the activation of the secession bill approved by the regional chamber at the beginning of September and voided by the Constitutional Court and "begin the constituent process".

* * *

The Speaker's Committee is currently deciding on which motions to accept for the second part of the session in the Catalan Parliament on Article 155, which is due to begin at 12 p.m.

At the same time, there are unconfirmed reports that police are closing off roads around the regional parliament.  Meanwhile, the Spanish senate has been debating the implementation of Article 155 in Madrid. Rajoy told lawmakers that Spain faced an exceptional situation and asked them to support his proposal on Article 155. The Spain Report shows video of Rajoy receiving a standing ovation.

Another video of the standing ovation for Rajoy in the Senate, from the visitors' gallery.
Via @pilarportero http://pic.twitter.com/jVTl7oooYk

— The Spain Report (@thespainreport) October 27, 2017

Here are flash reports from Bloomberg on the parliamentary debate in Madrid:

• Spanish Prime Minister Mariano Rajoy speaks in Senate.
• Spain’s Rajoy Asks Senate to Support Proposal on Art. 155
• Rajoy: Nothing Substantial Happened Since Govt Approved ART.155.
• “The only talks I was invited to was to discuss terms and conditions of Catalan independence,"
• Spain confronts exceptional situation, Rajoy tells Senate
• “Exceptional measures should only be adopted when there is no other possible remedy’’:

As Bloomberg reported this morning, Puigdemont has been running out of options.

Backed into a corner by his own hardliners and Rajoy’s refusal to give him a dignified way out, Catalan President Carles Puigdemont will address the regional parliament in Barcelona as demonstrators clamor for a declaration of independence. After a day of high drama that saw Puigdemont caught between the might of the Spanish state and the anger of the street, western Europe’s worst constitutional crisis for decades may be coming to a head with the separatist leader running out of options…

 

The day of confusion saw the president make a televised address after two postponements, lawmakers quit his party and a senior Catalan official jump ship, all while Spanish ministers were repeating their mantra that the Catalans must be brought to heel. The Spanish stock market posted its biggest gain since Oct. 5 only to pare the advance as events unfolded. Puigdemont said he had considered calling the regional vote, but he didn’t get the concessions he sought from officials in Madrid. "I tried to get the guarantees to carry out these elections, but didn’t get a responsible answer,” he said.

Last night, reports from the secessionist camp implied that independence would be declared.

"We are winning," Lluis Corominas, the head of Puigdemont’s PDeCat group, told lawmakers on Thursday night. "We should materialize the effects of the Oct. 1 referendum and implement them." That’s code for declaring independence.

Maybe they are correct, but until then this remains a dangerously fluid and volatile situation.

via http://ift.tt/2xrLiXX Tyler Durden

Via AdventuresInCapitalism.com,

To see part 1, click here

Sacha Imbert (Portfolio Manager at RBC): Hey Kuppy, this receipt says we’ve just used a Bulgarian POS to pay for lunch!!!

 

Me: Whoa!!! That can’t be right.

 

Waiter: Don’t worry, it’s a famous Greek trick. Revenues go to Bulgaria, expenses stay in Athens. We also get around the exchange controls.

 

Me: Won’t the Greek government get upset?

 

Waiter: Actually, they’re pretty happy we’re screwing the Germans… How else will the economy grow?

 

Sacha: No wonder the Greek Banks have such profitable Bulgarian subsidiaries… haha

Yup, everything you’ve heard about Greek tax scams is true.

Then again, how can you blame the Greeks. Based on all the new taxes enacted by the Troika, effective tax rates are well over 100%.

If Greeks actually paid them all, there would be nothing left – so when Greeks say, “We are Greek, cheating taxes is patriotic,” they tend to mean that.

What crisis? Look at this row of yachts in Athens.

At the same time, this creates all sorts of distortions in the economy. Greek corporates are issuing bonds at a 200bps tighter spread than the Greek sovereign, Greek banks are starved of liquidity as Greeks shift capital overseas or into mattresses and government economic data is questionable at best. In fact, quite a few Greeks attributed the recent economic recovery to an increased use of credit cards which government statistics do a better job of capturing—as opposed to a true recovery.

During my dozens of meetings with Greeks, I always asked the same questions;

“What percentage of Greece’s economy is off the books?” 20 to 30%

 

“Are you hiding money offshore?” Of course

 

“How many secret Cypriot companies do you control?” At least 2

Is it any wonder that the economy has struggled recover?

When you enact excessive taxes and regulations, people will always sidestep them with high frictional costs and losses for the overall economy – particularly if the enforcement policy wavers between lax and corrupt. How Greece eventually solves these problems will tell you a lot about how far the economic recovery can actually go.

In the interim, it’s always helpful to know that paying with cash gets you a free glass of wine and when you have run out of cash; the “broken” credit card-reader will miraculously work…

via http://ift.tt/2gFiPHE Tyler Durden

Outspoken billionaire investor Peter Thiel told attendees at the Future Investment Initiative in Riyadh, Saudi Arabia, that people are "underestimating" bitcoin and that it has "great potential left," comparing the cryptocurrency bitcoin to gold.

In his remarks, Thiel said that while he is "skeptical of most [cryptocurrencies]," he believes bitcoin has a promising future depending on the trajectory it takes…

"I'm skeptical of most of them (cryptocurrencies), I do think people who criticize are a little bit… underestimating bitcoin especially because… it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments," Thiel said.

The PayPal founder and venture capitalist compared some of bitcoin's features to gold.

“If bitcoin ends up being the cyber equivalent of gold and it has a great potential left and it’s a very different kind of thing from what people in Silicon Valley focus on – companies, not algorithms not protocols, but this might be maybe one exception that is very underestimated,” the Silicon Valley elite said.

Even so, in Thiel’s opinion, like gold, it’s difficult to mine, making it more worthwhile…

“You can ask the same questions about gold. What is gold based on? Why is gold valuable?…

 

It’s a tangible asset but it’s also hard to mine. So if it was easy to mine then it wouldn’t be that valuable and we would just have way more gold.

 

So bitcoin is also, it’s mineable, like gold it’s hard to mine, it’s actually harder to mine than gold and so in that sense it’s more constrained,” he said.

In September, JPMorgan CEO Jamie Dimon famously called bitcoin a “fraud” and said it will eventually blow up.

"The currency isn't going to work. You can't have a business where people can invent a currency out of thin air and think that people who are buying it are really smart," Dimon said while speaking at an investor conference.

However, Thiel proposed a different take:

“The argument it’s based on is the security of the math which tells you it can never be diluted by government… it can’t be hacked and it’s a form of money that’s… secure in an absolute way.”

via http://ift.tt/2zI6PMM Tyler Durden

Authored by Brian Cloughley via The Strategic Culture Foundation,

Sweden’s most recent military cooperation with the US-NATO military alliance involved hosting armed forces of the many countries which participated in Exercise Aurora in September.

As noted by Euronews, “Sweden is undertaking its biggest military exercise amid fears of Russian military build up,” and NATO headquarters announced that “In the current security context with heightened concerns about Russian military activities, NATO is stepping up cooperation with Sweden and Finland in the Baltic region.”

NATO is anxious, even desperate, to justify the existence of one of the least-needed and most confrontational military alliances of modern times. In January, before he arrived in the White House, President Trump called NATO “obsolete” but in April went into reverse and said “It's no longer obsolete,” which was fair warning of what lay ahead in the erratic administration of the most vulgar and spiteful president the United States has ever had. 

The fact remains that NATO is indeed ineffective and irrelevant (the notion of Russia invading Sweden is preposterous and, as Der Spiegel observed on October 20, “to be sure, hardly anyone really thinks that Russia might attack a NATO member state”), but its nominal leader, Jens Stoltenberg (the real chief is the US General titled “Supreme Allied Commander Europe”), has assumed the air of a national head of government and whisks expensively round the world making statements that have nothing whatever to do with NATO

One of NATO’s “concerns” in its obsession with Russia is to persuade Sweden to not only increase its already substantial collaboration with the alliance, but to actually become a member – although defence minister Peter Hultqvist is not in favour of such a commitment, in spite of having increased military spending and reintroduced conscription. 

Swedish Defence Minister Peter Hultqvist and NATO Secretary General Jens Stoltenberg

There is to be a general election next year, and Britain’s Financial Times is of the opinion that “Nato membership is set to be one of the most contentious topics in Sweden’s elections in [September] 2018. The opposition Moderates and their three centre-right allies have all pledged to seek Nato membership, ending more than a century of being outside a military alliance. They lead in the polls and are flirting with the anti-immigration Sweden Democrats, which would solidify their lead further.” And according to a poll by the Pew Research Centre in May 2017, “about half of Swedes support Nato Membership.”

Given the NATO-joining aim of those likely to be in power in a year’s time, it is relevant to examine Sweden’s recent association with Russia, which is regarded as an enemy by a regrettably large number of Swedes. 

As reported by Swedish Radio, Ekot, there was an alleged incursion into Swedish waters by a Russian submarine in October 2014. The story was plastered all over the Western media, and in one example of disinformation Britain’s Daily Mail, a garbage newspaper, but with a large circulation, informed its readers of “Sweden’s History of Hunting Russian Vessels in its Waters” by recording that the most recent such incursions had taken place in 2011 when on April 13 “a possible foreign submarine is noticed in Baggensfjärden in Nacka, but later is identified as a raft frozen in moving ice” and on September 11 when the Swedish Navy had “investigated reports of an unknown object outside the harbour of Gothenburg.” 

Curiously, very few western news outlets reported later, as did Ekot, that the October 2014 alleged incursion was a load of nonsense. (Russian submarines, incidentally, are referred to as “U-Boats” in Sweden, but NATO submarines are called submarines.)

Ekot stated that “in October 2014, an intensive U-boat hunt took place in Stockholm’s archipelago” which had spurred Time magazine to speculate that the object of the hunt might be Russian because “Sweden’s military said Sunday it had made a total of three credible sightings within two days and released an image taken by a passer-by showing a partially submerged object…

 

A suspicious black-clad man was also photographed wading in the waters outside the island of Sandön.”

 

It was stated by the armed forces that “a [miniature] foreign submarine violated Sweden,” and in April 2015 Business Insider went so far as to state that “the Swedish military still believes that Russia was indeed sailing submarines around Swedish waters last year: ‘The assessment that Swedish territory was violated in October 2014 remains correct in its entirety’.” 

And so on and on went the stories, until, as reported by Ekot, “the Armed Forces suddenly announced in a press release [in September 2015] that this most important evidence [presumably the “three credible sightings”] no longer applied, but nothing was revealed about the background or what happened. And Ekot can now tell us that the Armed Forces’ deeper analysis showed that the sound did not originate from any foreign submarine… but from a Swedish source.” 

So there was collapse of an absurd allegation that had been seized upon by the West to illustrate the supposedly nefarious designs of Russia. But the propaganda machine had worked well.

The “Russian U-Boat” reporting farce was in a way similar to an incident in the Irish Sea in April 2015 when Britain’s Daily Telegraph reported that “a trawler that nearly capsized when its nets became snared near the Isle of Man may have been hit by a Russian submarine, a fishermen’s organisation has claimed . . . Naval sources said there were no British submarines in the area at the time of the incident on Wednesday afternoon. The incident took place amid concern about increasing Russian submarine operations off the Scottish coast . . .”

These dreaded Russians, again and again. Would their dreadful provocations never end? 

But there wasn’t an end, because there was never a beginning. 

On 10 June 2015 a British Member of Parliament, Margaret Ritchie, asked the defence minister “What reports he has received of submarine activity in the Irish Sea on 15 April 2015.” The reply was that “Following reports of damage to the fishing vessel Karen on 15 April 2015, Ministers were advised of the Royal Navy’s confidence that no UK submarine was responsible. We do not comment in detail on submarine operations as this would, or would be likely to, prejudice the capability, effectiveness or security of the Armed Forces.” In other words they were lying in their teeth and trying to disguise this unpleasant fact by employing the usual disguise of national security. (This happens all the time in US-NATO. It’s the best weapon they have.)

On July 13, 2015, Ms Ritchie returned to the fray and asked if the matter could be followed up because the Ministry of Defence had “confirmed that it was not a vessel belonging to the Royal Navy” that had been responsible for the incident that threatened the lives of the fishermen. She was fobbed off with the reply that “the Royal Navy takes its responsibilities very seriously.” Indeed it does, and I have the greatest regard for Britain’s Senior Service which knows exactly where its vessels are at any given moment, and doesn’t tell lies 

But politicians tell lies although sometimes these fail to stand the tests of time and truth, and eventually, five months after the incident, the UK’s defence minister was forced to admit that “I now wish to inform the House that, on the basis of new information that has become available, the Royal Navy has now confirmed that a UK submarine was, in fact, responsible for snagging the Karen’s nets. The incident, the delay in identifying and addressing the events on that day, and their consequences, are deeply regretted.”

“New information”? After five months? 

It had been known all along that it was a Royal Navy submarine that accidentally snagged the boat’s fishing nets, but the first instinct of politicians in matters like this is to try to disguise the truth until it becomes impossible to continue such trickery. If deception works, that’s fine; if it doesn’t work, then there is always the fall-back of “national security” to justify anything — especially when there’s a good chance that the blame assigned to Russia, by casual implication or calculated insinuation, will continue to stick. That is what propaganda is all about. Just as in Sweden, unfortunately, many people continue to believe that there was a Russian “U-Boat” in Swedish waters in 2014, as they were meant to do. 

Such non-incident stories are absurd – but they can’t be dismissed as amusing trivia. They are used to persuade ordinary decent citizens that there is a threat to their security, and no matter how many subsequent admissions may be made that prove the stories unfounded and ridiculous, there will be very many people who will continue to believe them. Watch how the Swedes vote next year.

Just as nobody found a submarine in the Stockholm archipelago, nobody has ever identified the “suspicious black-clad man” who was “photographed wading in the waters.” Let’s hope he’s got a vote.

via http://ift.tt/2yNGOPr Tyler Durden

Yesterday we noted the surge in cable following the stronger-than-expected Q3 GDP print of 0.4% Q/Q, above the 0.3% estimate. Afterwards, the market was calculating an 87% chance that the BoE would hike next week. Brown Brothers commented that:

The case against a hike is that inflation appears poised to peak shortly, the economy is softening, and real wages are falling. This may already be squeezing households, where an increase in the base rate is quickly passed through to households.

However, two reports from the UK retail sector might encourage some nervous MPC members to stand pat.

Bloomberg reports, U.K. retail sales are falling at the fastest pace since the depths of the recession in 2009 and worries about the housing market could exacerbate the weakness in consumer spending seen this year. The Confederation of British Industry said its measure of sales plunged to minus 36 in October – the lowest since March 2009 — from a positive 42 in September. Sales for the time of the year were slightly below the usual seasonal rates, it said.

Rain Newton-Smith, CBI Chief Economist, blamed the weakness on higher inflation.

“It’s clear retailers are beginning to really feel the pinch from higher inflation. While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”

According to Bloomberg, faster inflation has put the squeeze on shoppers this year, and a separate report on Thursday suggests a cooling housing market could further dampen consumers’ enthusiasm for spending.

YouGov and the Centre for Economics and Business Research said while their headline sentiment measure rose this month, confidence in the housing market weakened. For Bank of England policy makers, all this may play into their thinking as they prepare for a crucial meeting next week.

 

While they’ve signalled that an interest-rate increase may be needed soon, a rate hike – even a small one – could also have an impact on spending habits, particularly for those concerned about the cost of their mortgage. Most U.K. property reports point to a property slowdown, with Halifax saying annual price growth has fallen to 4 percent from 10 percent in early 2016. According to Acadata and LSL, London house prices may be falling at their fastest pace since the financial crisis.

 

“The downtick in the house value measures is a concern,” said Nina Skero, head of macroeconomics at the CEBR.

 

“One’s perception of own home value has direct implications on their future willingness to spend.”

 

The CBI survey points to continued pressure on households from the mix of stronger price increase and sluggish wage growth. Official data this month showed stores had their worst quarter in four years in the three months through September. The John Lewis Partnership, owner of a grocery and department store chain, has seen sales growth slow by more than half this year.

The second report on the UK retail sector was from the British Retail Consortium which stated that retail employment dropped at the fastest rate since 2008.

From The Independent, UK retailers cut jobs over the past three months at the fastest rate since comparable records began in 2008, due to technological change and rising employment costs, the British Retail Consortium said on Thursday.

The BRC, which represents major retailers, said its members employed 3.0 per cent fewer staff in the third quarter of this year than during the same time in 2016, and total hours worked fell by 4.2 per cent year-on-year.

Both were the steepest falls since the BRC started collecting records in 2008, when Britain was in the middle of its sharpest recession in decades. This contrasts with the picture in the broader economy, where the unemployment rate is its lowest since 1975 and job creation has been strong, albeit partly at the expense of wages. Still, the BRC report chimed with a European Commission survey last month that showed British retailers’ expectations for employment sank to their lowest since late 2011.

“The pace of job reductions in the retail industry is gathering steam,” BRC chief executive Helen Dickinson said.

 

“Behind this shrinking of the workforce is both a technological revolution in retail, which is reducing demand for labour, and government policy, which is driving up the cost of employment,” she added.

Retail, which accounts for just under 10 per cent of jobs in Britain, has a lot of low-paid jobs that have been affected by rapid rises in the minimum wage in recent years, as well as a new government training levies and pension requirements.

So while Corbyn and May continue to battle, and the central bank is threatening rate-hikes, the nation's core is collapsing. One wonders whether hard, soft, or no Brexit would make any difference now…

via http://ift.tt/2hezlip Tyler Durden

Authored by Bruce Bawer via The Gatestone Institute,

• Nor, we are told, should we associate "terms such as 'Muslim' or 'Islam'… with particular acts," because to do that is to "stigmatize." What exactly does this mean? That when a man shouts "Allahu Akbar" after having gunned down, run over with a truck, or blown to bits dozens of innocent pedestrians or concertgoers, we are supposed to ignore that little detail?
• But that is what this document is all about: advising reporters just how to misrepresent reality in EU-approved fashion.
• It is interesting to note that while many people fulminate over President Trump's complaints about "fake news," they are silent when an instrument of the EU superstate presumes to tell the media exactly what kind of language should and should not be used when reporting on the most important issue of the day.

"Respect Words: Ethical Journalism Against Hate Speech" is a collaborative project that has been undertaken by media organizations in eight European countries – Austria, Germany, Greece, Hungary, Ireland, Italy, Slovenia, and Spain. Supported by the Rights and Citizenship Programme of the European Union, it seeks, according to its website, to help journalists, in this era of growing "Islamophobia," to "rethink" the way they address "issues related to migratory processes, ethnic and religious minorities." It sounds benign enough: "rethink." But do not kid yourself: when these EU-funded activists call for "rethinking," what they are really doing is endorsing self-censorship.

In September, "Respect Words" issued a 39-page document entitled Reporting on Migration & Minorities: Approach and Guidelines. Media outlets, it instructs, "should not give time or space to extremist views simply for the sake of 'showing the other side.'" But which views count as "extremist"? The report does not say – not explicitly, anyway. "Sensationalist or overly simplistic reporting on migration," we read, "can enflame existing societal prejudices" and thus "endanger migrants' safety." Again, what counts as "sensationalist" or "overly simplistic"? That is not spelled out, either. Nor, we are told, should we associate "terms such as 'Muslim' or 'Islam'… with particular acts," because to do that is to "stigmatize." What exactly does this mean? That when a man shouts "Allahu Akbar" after having gunned down, run over with a truck, or blown to bits dozens of innocent pedestrians or concertgoers, we are supposed to ignore that little detail?

Or perhaps we should entirely avoid covering such actions? After all, the document exhorts us not to write too much about "sensationalist incidents involving migrants," as "[v]iolent individuals are found within every large group of people." If, however, we do feel compelled to cover such incidents, we must never cease to recall that the "root causes" of these incidents "often have nothing to do with a person's ethnicity or religious affiliation." What, then, are those root causes? The report advises us that they include "colonialism, racism, [and] general social inequality." Do not forget, as well, that there is "no structural connection between migration and terrorism."

When the EU-funded activists behind the document "Reporting on Migration & Minorities" call for "rethinking," what they are really doing is endorsing self-censorship.

At least the report's authors do not have the audacity to maintain that there is no connection between Islam and terrorism. But they do urge us to remember that Islam is "diverse." The notion that it is inherently violent is — what else? — a "stereotype." So is depicting Islam as "grounded in a different reality and lacking common value with other cultures" or portraying Muslim immigrants as being "fundamentally different from the citizens of the host country." And it is just plain wrong, needless to say, to encourage "the widespread perception that there is a 'cultural clash' between Islam and the West with religion at the heart of the 'problem.'" (On the contrary: Islam is, the report tells us, "a belief system that can exist alongside others.") And do not dare to suggest that Islamic culture is in any way "inferior to Western culture." Or that Muslim men are "highly patriarchal." (Repeat after me: "Many societies around the world remain highly patriarchal, independent of religion.") And do not pay too much attention to Muslim women's "clothing styles." Why? Because doing so tends to "homogenise" them. (Banish from your mind the thought that it is the clothing itself that homogenizes them.)

During the last couple of years, many countries in Europe have experienced a veritable tsunami of Islamic migration. But responsible journalists, according to "Respect Words," must never, ever put it that way: "When describing migration, don't use "phrases such as 'tide,' 'wave' and 'flood'" (or, the authors later add, "horde" or "influx") because such language can "evoke the sense of a 'mass invasion.'" It "dehumanises migrants," you see, and "constructs a false sense among the audience of being 'under siege' by an 'enemy' that must be repelled." Of course, much of Europe is "under siege"; this fact is becoming clearer by the day; to use milder terms when discussing this topic is to do nothing less than misrepresent reality. But that is what this document is all about: advising reporters just how to misrepresent reality in EU-approved fashion.

"Inform your audience," the report urges journalists, "about the reasons why people feel compelled to leave their homelands, and investigate what connections there may be to policies and practices of European states." Possibly, however, a massive percentage of the Muslims pouring into certain European states are doing so because of those states' "policies and practices" — namely, their readiness to start handing immigrant families large sums of cash the minute they arrive, to set them up with free housing, furnishings, etc., and to allow them to stay on the dole for the rest of their lives. Many of those countries are more generous to Muslim newcomers than they are to their own citizens who have fallen on hard times; immigrants often go to the front of the line, while elderly citizens of some of these countries – people who have worked hard and paid into the welfare system since the world was young – have been turned out of their homes in order to accommodate newly-arrived Muslim families.

But these obviously are not the "policies and practices" to which the "Respect Words" document is referring. Quite the opposite. The transparent implication here is that Muslim refugees and asylum seekers are fleeing conditions for which they and others in their countries of origin hold no responsibility whatsoever and that can, in fact, ultimately be traced back to Western wrongdoing, whether in the last generation or centuries ago. Never mind that Muslims took over Persia, the Byzantine Empire, all of North Africa and the Middle East, Greece, Northern Cyprus, much of Eastern Europe, and Southern Spain. Ultimately, everything that is wrong with the Muslim world is seemingly the fault of the West, so Europeans owe all incomers a new life — and perhaps even a new country — peaceably handed over to them so that they can import sharia law?

No, the report does not quite go so far as to make this argument. But the report does caution that even to touch on the question of "whether asylum seekers' claims are genuine" or "whether migrants have a right to be in the country" is thoroughly inappropriate: it places the focus on "law and order" rather than on such things as "the fundamental right of asylum." Yes, you read that correctly: "the fundamental right of asylum." Never mind that under international law not everyone is entitled to asylum — and that a huge proportion of self-styled asylum seekers in Europe today have no legitimate grounds for such a claim but are, like many of us, seeking better economic opportunities.

But such facts are inimical to the authors of the "Respect Words" document. In their view, no human being can be "illegal"; therefore, the word "illegal," they admonish, should be used to describe actions, not people.

The only surprising thing about this document is that it actually includes a brief section on anti-Semitism, in which it suggests — believe it or not — that equating Israel and Nazi Germany may not be a good idea. For the most part, however, the report is one long taxpayer-funded catalog of politically correct protocols which — if adhered to by everyone in Europe who is professionally involved in reporting on events concerning Islam and immigration — would guarantee a full-scale whitewash of the alarming developments currently underway on this unfortunate continent. It is interesting to note that while many people fulminate over President Trump's complaints about "fake news," they are silent when an instrument of the EU superstate presumes to tell the media exactly what kind of language should and should not be used when reporting on the most important issue of the day.

via http://ift.tt/2zc9amY Tyler Durden

Authored by Brandon Smith via Alt-Market.com,

There are a few important rules you have to follow if you want to join the consortium of mainstream economic con-men/analysts. Take special note if you plan on becoming one of these very "special" people:

1) Never discuss the reality that government fiscal statistics are not the true picture of the health of the economy. Just present the stats at face value to the public and quickly move on.

 

2) Almost always focus on false positives. Give the masses a delusional sense of recovery by pointing desperately at the few indicators that paint a rosier picture.  Always mention a higher stock market as a symbol of an improving economy even though the stock market is irrelevant to the fundamentals of the economy. In fact, pretend the stock market is the ONLY thing that matters. Period.

 

3) Never talk about falling demand. Avoid mention of this at all costs. Instead, bring up "rising supply" and pretend as if demand is not a factor even worth considering.

 

4) Call any article that discusses the numerous and substantial negatives in the economy "doom porn." Ask "where is the collapse?" a lot, when the collapse in fundamentals is right in front of your face.

 

5)  Avoid debate on the health of the economy when you can, but if cornered, misrepresent the data whenever possible. Muddle the discussion with minutia and circular logic.

 

6) When a crash occurs, act like you had been the one warning about the danger all along. For good measure, make sure alternative economic analysts do not get credit for correct examinations of the fiscal system.

 

7) Argue that there was nothing special about their warnings and predictions and that "everyone else saw it coming too;" otherwise you might be out of a job.

Now, if you follow these rules most of the time, or religiously, then you have a good shot at becoming the next Paul Krugman or one of the many hucksters at Forbes, Bloomberg or Reuters. A cushy job and comfortable salary await you. Good luck and Godspeed!

However, say you are one of those weird people cursed with a conscience; becoming a vapid mouthpiece for the establishment may not sound very appealing. Or, maybe you just have OCD and you can't stand the idea of "creative math" when it comes to economic data. Whatever the case may be, you want to outline the deeper facts of the economy because the economy is life — it is the structure which holds together our civilization, and if we lie about it in the short term, then we only set ourselves up for catastrophe in the long run. Welcome to another dimension. Welcome to the world of alternative economics.

Every aspect of the U.S. economy or the global economy can be presented two very different ways depending on whether you "interpret" the data to fit a preconceived conclusion, or simply relay it to the public as it really is.

Let's use oil and the petrodollar as an example…

To illustrate the mainstream establishment reaction to legitimate economic concerns on oil, I highly suggest going back and reading an article by Foreign Policy, the official magazine of the Council On Foreign Relations, titled "Debunking The Dumping-The-Dollar Conspiracy," published in 2009. The idiocy of this article was truly bewildering at the time it was released, but even more so now in retrospect.

First, it is important to note that Foreign Policy refused to even acknowledge the issue of the dollar losing petro-currency status until Robert Fisk of The Independent, someone closer to mainstream exposure, dared to broach the topic, warning that a trend was in play to dump the dollar as the petro-currency by 2018. The alternative economic community had been warning about the world moving away from U.S. oil dominance for some time beforehand.

Second, the CFR uses a typical circular fallacy when confronting the potential end of the dollar's world reserve status; the fallacy that the dollar is the world reserve currency because "the U.S. is the preeminent world economic power." Actually, the reverse is true — the U.S. is the world's preeminent economic power only because the dollar has world reserve status. It was also once an industrial powerhouse after WWII, but this was ONLY because the U.S. was one of the few manufacturing hubs in the world that wasn't demolished by years of kinetic destruction. When you are the only game in town, of course you reap huge economic benefits including massive international investment, but not forever.

Today, obviously, the U.S. is far surpassed by other nations in the area of manufacturing and production, and has also been surpassed as the largest global importer and exporter. The "preeminence" argument is unmitigated garbage.

Third, almost every danger Foreign Policy dismissed as "conspiracy" back in 2009 is now coming true. Just as Robert Fisk warned, and just as the alternative economic community warned long before him, numerous shifts in the world of oil as well as geopolitical relationships have created a spiraling nexus of anti-dollar sentiment. Is it possible that the dollar will lose petro-status by 2018? Absolutely, and here is why…

While the U.S. remains the world's largest oil consumer according to the Energy Information Administration (EIA), American consumption of petroleum products has greatly diminished over the past few years; falling demand by increasingly destitute U.S. consumers has left oil producers searching for buyers elsewhere. The World Economic Forum noted in 2015 the drastic fall in U.S. demand since the 2008 debt crisis, but this admission went largely unnoticed in the mainstream media. Interestingly, while demand was crashing, the price per barrel continued to skyrocket because of the Federal Reserve's inflationary QE policies. Almost immediately after the Fed began tapering QE, oil prices drastically declined in line with the lack of existing demand.

In 2017, the EIA claims there has been a rise in global demand since the second quarter.  And has "projected" increasing demand including higher U.S. demand going into 2018, outpacing supply.

Yet, at the same time the EIA admits a frustrating stagnation in global oil demand, with the U.S. being the primary drag on consumption since 2010.

So, which trend are we supposed to believe? The one that is right in front of us, or the one that is optimistically projected? It is clear, even according to "official" statistics on crude oil imports, that the U.S. market began sinking in 2009 to levels not seen since the 1990's and has not recovered since. Everyone knows that each new year is supposed to bring exponential demand, like clockwork. But this has not been the case at all in the U.S.

Meanwhile, China has recently surpassed the U.S. as the world's largest oil importer, even though the EIA lists the U.S. as the world's largest oil "consumer."

The argument mainstream analysts would probably make here is that imports of oil are diminishing because U.S. shale oil is filling demand domestically. This argument overlooks the overall process of declining demand, though.  The US is the largest consumer of oil NOW, but will that pace continue?  According to the data, the answer is no.   Americans are buying less petroleum products since the 2008 credit crisis, regardless of where they come from, and oil producers are seeking to diversify into other markets, and other currencies.

On top of that, even if it were true that imported oil is crumbling because US domestic oil is filling rising demand, this still begs the question – Why would oil producing nations stick with the dollar as the petrocurrency when the US has decided to take its ball and go home? 

The US has now become a COMPETITOR in the oil market with shale, so why would OPEC nations and others also continue to give the US the enormous advantage of owning petrocurrency status?

In the meantime, the geopolitical situation grows more unstable. I believe the Iranian sanctions issue has gone ignored far too long, and this has direct repercussions on the dollar's petro-status. How? Well, consider this — Europe continues its appetite for Iranian oil, with 40 percent of Iran's oil exports going to the EU. With the very oddly timed U.S.-led effort by the Trump administration to renew sanctions, Europe has been caught in a catch-22; either defy sanctions and upset relations with the U.S. or lose a significant source of petroleum imports. For now it appears that the EU will support sanctions, but this time solidarity on the issue is nowhere near as strong as it was back in 2012.

With Iran as a major supplier for Europe as well as China, and overtaking Saudi Arabia as the top oil supplier for India, Trump's latest call to put economic pressure on the nation may add more fuel to the accelerating rationale against the dollar as the primary trade mechanism for oil. The question becomes, who benefits from American influence in oil, and who suffers? The more countries that suffer because of a world reserve dollar, the more likely they will be to look for an alternative.

China has deepened ties to Russia for this exact reason. With Russia supplanting Saudi Arabia as China's largest petroleum source, and bilateral trade between Russia and China cutting out the dollar as world reserve, this is just the beginning of the shift.  In the past week it has been hinted that China will be shifting in the next two months into using its OWN currency, the Yuan, to price oil instead of using the dollar.

Saudi Arabia, America's longtime partner in the oil dominance chain, is now moving away from the old relationship. Tensions between the Saudis and the U.S. State Department over the rather surreal Qatar embargo are just part of a series of divisions. With China's influence in the region increasing, the mainstream has finally begun to acknowledge that Saudi Arabia may be "compelled" to trade oil in currencies other than the dollar.

Why is oil so important? Because energy, along with currency, is the key to understanding the state of the economy. When demand for energy goes stagnant, this usually means the economy is stagnant. When a nation has maintained a monopoly on global energy trade by coupling its currency to oil, an addiction can be formed and its financial structure becomes dependent in that addiction being continuously satiated.

Foreign Policy argued in 2009 that oil trade in dollars is "nothing more than a convention." I would actually agree with that in part; it is indeed a convention that can change dramatically at any given moment. But, Foreign Policy asserts that there would be no consequences for the U.S. if and when the change takes place and the dollar loses petrostatus. This is absurd. Trillions in dollars are held overseas and the singular function of those dollars is to fulfill international trade based on the "convention" of the dollar's world reserve status. What purpose do those dollar's serve if world reserve status is abandoned? The answer is none.

All of those dollars would come flooding back into the U.S. through various channels. Market psychology would immediately trigger a massive loss in the dollar's international value, not to mention incredible inflation would be spiking here at home. This process has already begun, and it is looking more and more like the next couple of years will bring a vast "reset" (as the IMF likes to call it) in the hegemony of certain currencies.

Some people believe this will be a wellspring, a change for the better. They think the death of the dollar will lead to "decentralization" of the global economy and a "multipolar world," but the situation is far more complex than it seems. I will go into greater detail in my next article as to why the dollar and the U.S. economy in general has actually been slated for deliberate demolition and how this will likely come about.

As far as oil and petro-status are concerned, the mainstream media is perfectly willing to report on the developments I have mentioned here in a fleeting manner, but at the same time they are completely unwilling to account for the effects that will result or the deeper meaning behind these events.  They will report on the smaller stories, but refuse to acknowledge the bigger story. It is quite a contradiction, but a contradiction with a purpose.

via http://ift.tt/2zHDTVa Tyler Durden

Multinational companies based in the United States are able to avoid paying an estimated $100 billion in federal income tax every year through the use of tax havens.

As Statista's Niall McCarthy notes, a recent report from the Institute on Taxation and Economic Policy has found that 366 of America's largest 500 companies maintain 9,755 tax haven subsidiaries holding over $2.6 trillion in accumulated profits.

You will find more statistics at Statista

Despite only having three tax haven subsidiaries in Ireland, Apple stashes the most cash off shore by far, some $246 billion which helps the company avoid $76.7 billion in U.S. taxes.

The Goldman Sachs Group maintains the most tax havens of any large U.S. company by far with 905 in total. That includes 511 in the 511 in the Cayman Islands (though the company does not have an office there), 183 in Luxembourg, 52 in Ireland and 41 in Mauritius.

Morgan Stanley is in second place with 619 tax haven subsidiaries while ThermoFisher Scientific rounds off the top three with 199.

Even though small island nations like Bermuda and the Cayman Islands are notorious for tax avoidance schemes, the Netherlands is actually the country most frequently used as a tax haven by American companies.

via http://ift.tt/2zUbQTt Tyler Durden