“Clearly A Negative Signal”: BofA Shows Thanksgiving Spending Was Biggest Dud Since Lehman

First it was Shoppertrak, then it was the National Retail Federation, then it was IBM, and now, with its own set of internal data, here is Bank of America slamming the door shut on US retail spending as a source of Q4 growth, and proving once and for all that the extended Thanksgiving-weekend, and the start to US holiday spending season, was the biggest dud since Lehman.

From BofA:

The BAC internal data showed a sluggish start to the holiday shopping season. Spending on BAC credit and debit cards over Thanksgiving and Black Friday declined 1.6% yoy. In order to restrict the sample to holiday-related spending, we are measuring “core control” sales, which nets out food services, gasoline, building materials and autos, making it a comparable sample to the Census Bureau’s data. While not as dismal as the 11% yoy decline reported by the National Retail Federation (NRF), our data supports the weak anecdotes.

 

This is how the data looks in context, courtesy of Lehman. As we said: biggest dud since Lehman.

Of course, it wouldn’t be a conflicted sell-side firm whose year end bonus is dependent on boosting confidence in a global pyramid scheme if BofA didn’t provide at least some silver lining. Which it did.

Although this is clearly a negative signal, it does not mean the overall holiday shopping season will be a bust, in our view. As Chart 1 shows, the NRF data has no correlation (actually an inverse relationship) with overall holiday sales from the Census Bureau. The BAC data historically have a better fit, since it measures actual sales unlike the surveys, but it still has fairly low forecasting power. There are a few reasons to advise caution when interpreting Black Friday sales. For one, measuring sales over a two-day period is naturally noisy, but particularly since retailers adjust the promotion schedule over the years. As we show in Chart 2, the promotions start earlier each year making the “door buster” deals of Black Friday less appealing. Moreover, the shift toward online shopping provides greater access to sales and incentives, also taking the focus away from Black Friday. The bottom line is that while we tempered our optimism, we still look for holiday sales to increase this year given the improving economic backdrop.

 

Well, at least BofA didn’t use the NRF’s idiotic “the economy is too strong for shopper to need a deal” excuse. As for the spin: yes, there is still hope. Because otherwise how would one explain spending slumping to recessionary levels at a time when the Departments of Truth would have everyone believe unemployment is the lowest in nearly a decade, while GDP is supposedly growing at a pace not seen since in years (the real story of America’s “adjusted” GDP was explained here).




via Zero Hedge //feedproxy.google.com/~r/zerohedge/feed/~3/7VEIjG8TaN8/story01.htm Tyler Durden

Occupy… the Fed?

In 2011, these dudes from Canada flew down to do a documentary on the Occupy Wall Street movement. They asked to interview me and obliged. The indy movie has launched, and it is actually pretty good. Actually, its better than pretty good. Here’s a clip of the chapter on the Fed. I urge all to rent or purchase the movie to support the director and producers. This is something that should be on Netflix!




via Zero Hedge //feedproxy.google.com/~r/zerohedge/feed/~3/qS3tv1_OxEA/story01.htm Reggie Middleton

Frontrunning: December 3

  • Fall of the Bond King: How Gross Lost Empire as Pimco Cracked (BBG)
  • Hong Kong ‘Occupy’ leaders surrender as pro-democracy protests appear to wither (Reuters)
  • Ashton Carter, Ex-Pentagon No. 2, Emerges as Obama Favorite for Defense Secretary (WSJ)
  • Oil, the Ruble and Putin Are All Headed for 63. A Russian Joke — for the Moment (BBG)
  • New U.S. oil and gas well November permits tumble nearly 40 percent (Reuters)
  • Swedish government on brink of collapse (AJ)
  • China says Britain has no moral responsibility for Hong Kong (Reuters)
  • Indian Labs Deleted Test Results for U.S. Drugs, Documents Show (BBG)
  • Norway’s sovereign wealth fund sticking with oil (FT)
  • European Shares Rise With Italian Bonds as Euro Declines (BBG)
  • London Streets Paved With Platinum in $6 Billion Push by Veolia (BBG)
  • Post-Gross Pimco Suffers $9.5 Billion Blow (BBG)
  • Budget Plan Pitched to House Republicans (WSJ)
  • China Stock Boom Has Morgan Stanley Ready for ‘Ultra-Bull’ (BBG)
  • Australian growth slows to 2.7% (FT)
  • Israel Sets Date for New Elections (WSJ)

 

Overnight Media Digest

WSJ

* Heightened tensions between Russia and the United States are hampering their cooperation in space, adding to the problems of an American space industry reeling from the crashes of two commercial spacecraft this fall. (http://on.wsj.com/1vgqj0R)

* House GOP leaders worked to build support among Republicans for a plan to avoid a government shutdown, seeking to deliver on their promise to step away from entrenched budget brinkmanship. (http://on.wsj.com/1yfCUn0)

* A Food and Drug Administration advisory panel Tuesday helped pave the way for the federal government to reverse its policy banning gay men from donating blood, a rule initially aimed at preventing transmission of HIV. (http://on.wsj.com/1FMshOx)

* Old emails may be coming back to haunt Credit Suisse over real-estate deals done before the financial crisis. The emails, which were turned over to firms suing the bank but haven’t been made public, include discussions of an appraisal method Credit Suisse used to value a dozen luxury properties such as golf communities and ski resorts during the mid-2000s. (http://on.wsj.com/1vIUgvh)

* Chief Executive Steven Murphy is stepping down from Christie’s, less than a month after the art auction house posted record fall sales and less than two weeks after rival Sotheby’s announced it would oust its boss. (http://on.wsj.com/1yHx8xc)

* Bank of New York Mellon gave Nelson Peltz’s Trian fund a seat on its board, joining a raft of companies that have recently opened the door to activists and headed off bruising public fights. (http://on.wsj.com/1vMB0M5)

* The chairman of San Francisco’s pension fund is proposing a smaller mix of hedge funds than previously discussed, the latest retirement system to rethink its approach to those investments in the wake of a retreat by the largest public pension in the United States. (http://on.wsj.com/12lUoVH)

* Takata Corp, the Japanese supplier at the center of a global air-bag recall affecting millions of vehicles, said it would form an independent review panel to investigate the company’s handling of a safety defect linked to five deaths. (http://on.wsj.com/1CDGOOr)

* Singapore Exchange Ltd on Wednesday delayed the start of trading in its securities market by over three hours to give brokerages a chance to correct any errors on behalf of clients caused by a software glitch two days earlier. (http://on.wsj.com/1wolh8S)

 

FT

* Steven Murphy, the chief executive of Christie’s, will step down at the end of this year, the London-based auction house said on Tuesday, following a record run of sales.

* British insurer Aviva Plc agreed terms on Tuesday for a 5.2 billion pound ($8.13 billion) all-share takeover of rival Friends Life, the largest deal between UK companies in more than six years.

* Lloyds Banking Group has sold a 1.6-billion-pound ($2.50 billion) portfolio of Irish mortgages to Goldman Sachs and CarVal, a private equity group, the Financial Times newspaper reported.

* Sanofi has entered exclusive talks to transfer its Toulouse research and development site to German rival Evotec, the French drugmaker said on Tuesday. Sanofi will pay Evotec a minimum of 250 million euros ($309.73 million) over the next five years.

 

NYT

* Income inequality in Chile and other parts of Latin America is narrowing, but the reason for the decline, yet to be determined, could be good news or bad. According to data from the World Bank, the richest 10 percent of Chileans capture $42 out of every $100 worth of disposable income, far in excess of the industrial countries Chile would like to see as its peers (http://nyti.ms/1zO74zR)

* As another round of fiscal brinkmanship looms with Republican control of Congress, the impact on tax policy, government programs and the overall economy could be severe. Republican leaders moved Tuesday to finesse their way around another government shutdown next week, but the fiscal gantlet extends well beyond Dec. 11, when the current stopgap spending law that funds much of the federal government expires. (http://nyti.ms/1FMzeiH)

* Just as Sony Pictures Entertainment appeared to be recovering from a crippling online attack last month, the studio found itself confronting new perils on Tuesday. The Federal Bureau of Investigation warned United States businesses of a similar threat, and additional Sony secrets were leaked online. (http://nyti.ms/1ydWS6H)

* Facing a midnight deadline to expand a recall of defective airbags, Takata Corp, the Japanese auto supplier, had not taken any action Tuesday night on the demand by United States regulators. But in a statement released Tuesday morning, Takata’s chief executive, Shigehisa Takada, offered no indication that the company would make such a move.(http://nyti.ms/1zgSEs0)

* Law firms are again paying big annual bonuses to lawyers who have put in years of working long hours on corporate deal documents, litigation papers and complex contracts. Associates working at a large law firm in New York are taking home, on average, from $15,000 to $100,000 in bonus payments, depending on their tenure. (http://nyti.ms/12lWghc)

* The early results of Black Friday sales may have been a disappointment for the nation’s retailers, but not for the automakers. Car companies on Tuesday reported the industry’s best November sales pace in years, as buyers took advantage of low interest rates and holiday promotions on new vehicles. (http://nyti.ms/1zgTlBq)

* Jimmy Iovine, the record executive who joined Apple Inc this year as part of its $3 billion purchase of Beats, has joined the board of Live Nation Entertainment, the company announced on Tuesday. (http://nyti.ms/15OoJyz)

* When the European Banking Authority, the European Union banking regulator, recently released an opinion indicating that a number of global banks had wrongly classified some of their complex new bonus structures, perhaps in violation of European law, many of the banks immediately scrambled to reach another regulator – a few blocks away. (http://nyti.ms/1FLle6S)

 

China

– Bank of China predicts the central bank would cut bank reserve requirement ratios (RRR) once or twice in 2015, the bank said in a report on Tuesday.

– The ministries of commerce and customs, and the State Administration of Taxation, would continue to implement a taxation deduction policy for the cultural industry, the newspaper said, citing the Ministry of Commerce.

21ST CENTURY BUSINESS HERALD

– China’s top trainmakers, China CNR and CSR Corp , have submitted the first draft of their merger plan that will see CSR issuing shares to absorb CNR, the newspaper said, citing sources.

 
CHINA DAILY

– Real estate developer Dalian Wanda Commercial Properties may reduce the size of its planned IPO due to disappointment over share pricing.

SHANGHAI DAILY

– Foreign funds have started withdrawing from China-focused ETFs, taking profits from a mainland stock rally.

PEOPLE’S DAILY

– China’s development cannot be isolated from the rest of the world and vice versa. The tight cooperation brings broad prospects to China’s foreign affairs, the paper which acts as a mouthpiece for the ruling Communist Party, said in a commentary.

 

Britain

The Times

FOOD PRICES SLIDE AMID DISCOUNTING WARS

The price of food in the shops has fallen for the first time in eight years as supermarkets wage a bitter discounting war and the cost of everyday ingredients plunges on the commodity markets. Food prices were down 0.2 percent in November compared with the same month a year ago, according to an index compiled by the British Retail Consortium and Nielsen. (http://thetim.es/12lvhCm)

KIER BECOMES LATEST SUITOR FOR MOUCHEL

Mouchel, the outsourcing company that manages a third of Britain’s roads, has received a 400 million pound ($626 million) takeover approach from Kier Group Plc, the builder. Kier, which maintains 35,000 kilometre of roads, confirmed that it had made an approach. (http://thetim.es/1tBiJ11)

The Guardian

AVIVA’S 5.6 BILLION POUND TAKEOVER OF FRIENDS LIFE CREATES UK’S LARGEST INSURER.

Aviva has agreed to take over Friends Life Group in a 5.6 billion pound deal that will create the UK’s biggest insurance, savings and asset management company. The combined company, retaining the name Aviva, will serve 16 million customers, or one in four households in the United Kingdom. (http://bit.ly/1zfGWhe)

JOHN LEWIS BREAKS ITS ALL-TIME SALES RECORD IN BLACK FRIDAY WEEK

John Lewis said it had sold an average of one tablet computer every second and a flatscreen 40-inch voice-command TV every minute from the moment 24 hours of promotions began at midnight last Thursday. (http://bit.ly/1zdb3pr)

The Telegraph

GEORGE OSBORNE TO DELIVER NEAR 1 BLN POUNDS PACKAGE FOR SMALL BUSINESS

George Osborne is to deliver a near 1 billion pound boost to Britain’s small and medium-sized businesses in a bid to spur the engine of the UK economy. Osborne is expected to unveil an additional 400 million pounds for the British Business Bank, as well as further funding for the Enterprise Finance Guarantee scheme. (http://bit.ly/1ydWsbv)

VICTORY FOR UK MICRO FIRMS AS HMRC TWEAKS EU VAT MOSS RULE

The government has agreed to change a controversial VAT rule that thousands of UK business owners claimed was putting their companies at risk. New EU regulation due to be introduced on Jan. 1, 2015, would have forced UK firms selling digital services in Europe to register for VAT in every country. (http://bit.ly/1ydgOq8)

Sky News

UNION SECURES JAGUAR LAND ROVER PAY DEAL

UK workers at Jaguar Land Rover, owned by Indian firm Tata Motors Ltd since 2008, are to be balloted on a new pay offer. Staff affiliated to the union Unite had reportedly demanded a bonus and a salary increase of more than 3 percent over the next three years, arguing they deserved a better reward for their contribution to the firm’s turnaround. (http://bit.ly/1Bb4nwj)

DUBAI PLOTS SALE OF UK ENGINEER DONCASTERS

One of Britain’s most advanced privately owned engineering groups is about to be put up for sale more than eight years after being acquired by Dubai’s ruling family. Investment bankers will be appointed in the coming weeks to advise on the sale of Doncasters, a Burton-upon-Trent-based company which manufactures precision components for aircraft engines and industrial gas turbines. (http://bit.ly/1yG3Izm)

The Independent

THE LEGO MOVIE BRINGS IN BIG BUCKS FOR MERLIN ENTERTAINMENT

Merlin Entertainment, the firm behind Madame Tussauds and Legoland has revealed the huge success of “The Lego Movie” had buoyed profits but it is struggling in Thailand due to the latest round of civil unrest to hit the country. (http://ind.pn/1pPSGXH)

FOUR SCANDAL-LINKED TESCO DIRECTORS LEAVE

Four of the eight directors suspended by Tesco are leaving the group in the biggest shake-up by new Chief Executive Officer Dave Lewis since the uncovering of a 263 million pound accountancy scandal. UK Managing Director Chris Bush, seen as a protege of the former chief executive, Phil Clarke, was the most high-profile dismissal, although the company refused to reveal whether he resigned or was sacked. (http://ind.pn/1ydkKHp)

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
ADP employment report for November at 8:15–consensus 225,000
Nonfarm productivity for Q3 at 8:30–consensus up 2.4%
Unit labor costs for Q3 at 8:30–consensus down 0.1%
Markit services PMI for November at 9:45–consensus 56.5
ISM non-manufacturing composite for November at 10:00–consensus 57.3

ANALYST RESEARCH

Upgrades

BP (BP) upgraded to Overweight from Equal Weight at Barclays
Boardwalk Pipeline (BWP) upgraded to Buy from Neutral at UBS
Brandywine Realty (BDN) upgraded to Buy from Neutral at BofA/Merrill
CGG SA (CGG) upgraded to Neutral from Underweight at JPMorgan
Crestwood Equity (CEQP) upgraded to Buy from Neutral at UBS
El Pollo Loco (LOCO) upgraded to Equal Weight from Underweight at Morgan Stanley
First Industrial Realty (FR) upgraded to Hold from Sell at Stifel
NTELOS (NTLS) upgraded to Market Perform from Underperform at FBR Capital
Nielsen (NLSN) upgraded to Buy from Hold at Needham
Spectra Energy Partners (SEP) upgraded to Buy from Neutral at UBS
Superior Energy (SPN) upgraded to Outperform from In-Line at Imperial Capital
TJX (TJX) upgraded to Conviction Buy from Neutral at Goldman
Telefonica (TEF) upgraded to Neutral from Reduce at Nomura
TreeHouse (THS) upgraded to Outperform from Market Perform at BMO Capital
Vale (VALE) upgraded to Buy from Hold at Canaccord

Downgrades

Avanir (AVNR) downgraded to Neutral from Buy at Mizuho
BPZ Resources (BPZ) downgraded to Sell from Buy at Wunderlich
Bob Evans (BOBE) downgraded to Underweight from Hold at KeyBanc
Burlington Stores (BURL) downgraded to Neutral from Buy at Goldman
CBOE Holdings (CBOE) downgraded to Sell from Neutral at Citigroup
Cousins Properties (CUZ) downgraded to Hold from Buy at Stifel
Cousins Properties (CUZ) downgraded to Neutral from Buy at BofA/Merrill
DISH (DISH) downgraded to Sell from Hold at Wunderlich
EastGroup Properties (EGP) downgraded to Neutral from Buy at BofA/Merrill
EastGroup Properties (EGP) downgraded to Sell from Hold at Stifel
Eclipse Resources (ECR) downgraded to Equal Weight from Overweight at Morgan Stanley
Enerplus (ERF) downgraded to Sector Perform from Outperform at Scotia Capital
J.C. Penney (JCP) downgraded to Sell from Neutral at Goldman
OmniVision (OVTI) downgraded to Market Perform from Outperform at Northland
Parkway Properties (PKY) downgraded to Hold from Buy at Stifel
Parkway Properties (PKY) downgraded to Neutral from Buy at BofA/Merrill
Paycom (PAYC) downgraded to Equal Weight from Overweight at Barclays
Penn West (PWE) downgraded to Sector Perform from Outperform at Scotia Capital
Ross Stores (ROST) downgraded to Buy from Conviction Buy at Goldman
Statoil (STO) downgraded to Equal Weight from Overweight at Barclays
TASER (TASR) downgraded to Neutral from Overweight at JPMorgan
Texas Roadhouse (TXRH) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

Aldeyra (ALDX) initiated with a Buy at Ascendiant
Baker Hughes (BHI) initiated with a Perform at Oppenheimer
Belmond Ltd (BEL) initiated with an Outperform at JMP Securities
ClubCorp (MYCC) initiated with a Buy at KeyBanc
Halliburton (HAL) initiated with an Outperform at Oppenheimer
SanDisk (SNDK) initiated with a Buy, $125 target at Citigroup
Schlumberger (SLB) initiated with an Outperform at Oppenheimer
W.P. Carey (WPC) initiated with a Neutral at Citigroup
WNS Holdings (WNS) initiated with a Buy at Maxim
Weatherford (WFT) initiated with an Outperform at Oppenheimer

COMPANY NEWS

Acacia (ACTG) subsidiaries enter into settlement, patent license agreement with HTC
Accenture (ACN) to acquire Reactive Media Pty Ltd, terms not disclosed
American Tower (AMT) raises quarterly distribution to 38c from 36c per share
BPZ Resources (BPZ) hires advisors to evaluate strategic alternatives
CME Group (CME), GFI Group announce revised offer to GFI Group stockholders
Callaway Golf (ELY) announces retirement of CFO Bradley Holiday in 2015
Cliffs Natural (CLF) to sell Logan County Coal to Coronado Coal for $175M
CytRx (CYTR) receives written notice regarding partial clinical hold for aldoxorubicin
HP (HPQ), Telecom Italia announce commercial agreement
Illumina (ILMN) and Sequenom end patent dispute with partnership in prenatal testing
Point72 Asset Management reports 5.1% passive stake in Catalyst Pharmaceutical (CPRX)
Puma Biotechnology (PBYI) delays timeline for filing PB272 NDA
TASER (TASR) CEO says every major city in U.S choosing company
Target (TGT) announces partnership with Google
Toyota (TM) Australia to reduce workforce to 1,300 from 3,900
j2 Global (JCOM) offers to buy Carbonite (CARB) for $15 per share in cash

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Leidos (LDOS), OmniVision (OVTI), Powell (POWL), Guidewire (GWRE), Ascena Retail (ASNA), Bazaarvoice (BV), Bob Evans (BOBE), Nevro (NVRO)

Companies that missed consensus earnings expectations include:
Universal Technical (UTI)

NEWSPAPERS/WEBSITES

Analysts cynical of BP (BP), Shell merger rumor, CNBC reports
Biogen (BIIB) looks like a buy, Barron’s says
Boeing (BA), Lockheed to lose if U.S. bans Russian rockets, WSJ reports
Canada set to approve Burger King (BKW), Tim Hortons deal, NY Post reports
Euro zone’s retail sales rebounded in October, Reuters reports
Potash (POT) conducting review of $4.5B of equity investments, Bloomberg says
Takata shows no sign of complying with U.S. deadline, NY Times says
U.S., Russia tensions impacting space alliance, WSJ reports

SYNDICATE

CDW Corporation (CDW) 15M share Spot Secondary priced at $33.28
City Office REIT (CIO) announces offering of 2.6M shares of common stock
MPLX (MPLX) files to sell 3M common units representing limited partner interests




via Zero Hedge //feedproxy.google.com/~r/zerohedge/feed/~3/zgQAbphFvBk/story01.htm Tyler Durden

Closing in on One Twenty

 

Three major FX pairs are closing in on rates where the big figures start with 120. The ones that have my interest are:

USDJPY = 119.40

EURCHF =1.2030

EURUSD = 1.2335

 

USDJPY looks like it wants to cross 120 in a matter of hours. The question is what happens when it does. My guess is that the folks at the Bank of Japan don't want the dollar/yen to rise much above the 120 level for the time being. The Abe snap election is just ten trading days away. An element of the election is the central bank's policy of weakening the currency. Japanese voters understand FX rates; they know they are paying more for imports and paying a ton more when they travel abroad. If the BoJ wants buy some votes by micro managing the FX rate with a temporary "lid" on USDJPY it certainly could. We shall see soon enough.

But assume that Abe gets his vote of confidence on 12/14. What does that mean? Adios 120. Another 20 big figures to 140 is a reasonable estimate. Another big move up in USDJPY will be the fuel for a currency war. Korea and China will not just sit back and let it happen.

 

EURCHF is a wild card (it might be a Black Swan). The head of the Swiss National Bank, Thomas Jordon, was drinking Kirschwasser after his big win on the gold vote last weekend. The vote was 4-1 in his favor! But where is the EURCHF today? 13 measly ticks above the close before the key vote. This lousy bounce from that vote? And Jordon felt it was necessary to issue an unusual Sunday SNB Press Statement that reaffirmed the SNB's commitment to "Do what it takes" including negative interests rates and unlimited intervention to support the 1.20 peg

I, for one, believe Mr. Jordon. I think he's willing to write an enormous check to back up his promise. I think he has enough ammo to hold the Alamo for a while longer. But I never believed that "Unlimited" was a realistic description of the powers of the Swiss Central Bank.

If Mr. Jordan's phone starts ringing over the next few months, and he's forced to put in bids for $250B Euros, he might have to blink. A 50% increase in reserves in a short period of time would force the unpleasant question, "What does unlimited really mean?"

I put a break of EURCHF 1.20 as a low probability. But, on the other hand, a 1/4 Trillion Euros is not all that much money these days – so this has fireworks potential. What is at stake is not just the Swiss peg promise. If the SNB adjusts the peg to a dirty float, then the market would, in a matter of seconds, redirect its sights on Mr. Draghi's promise of "Anything". This scenario may be unlikely, but it's a bad road to go. What could trigger a move on the SNB? A weak Euro would be the ticket to this show. How likely is that? Very!

 

At 1.2330 the EURUSD seems miles away from a break through 1.200. I think it could happen by Christmas. The best reason I can give for this is that all of the 'Deciders' (especially Draghi) want it to happen. We'll see if the markets give Draghi what he really wants for a Yule celebration. The problem comes shortly thereafter when the talk runs, "We blasted through 1.20, the next stop is 1.10, better get in now or miss it!"

 

These potential breaks of the One Twenty levels are milestones that will trigger more volatility. They are somewhat correlated as a major driver of this is the weak Yen. A cheap Yen puts pressure on the Euro, and that will influence CHF demand.

 

There is a factor in this that has me wondering. What is the status of the FX Interbank market? Is it solid?

There are thousands of FX players, but the top 50 financial institutions make up most of the volume. The big guys are market makers, the rest of the actors are price takers. Where do the top 20 players in the FX market stand today?

Many of the top spot traders have been fired or forced to resign. Others have seen the light and moved on to greener pastures. Trading desks have been thinned, position limits cut. Prop trading has been cut back. Robots do most of the pricing. Auditors look at every trade. Compliance types are peering over shoulders. All communications are monitored. I'm concerned that the 'Second String' is manning the desks.

Put that together and ask, "Is this weakened system able to absorb a spike in one-directional volume? Will it step up and keep order? Or will it back off and allow volatility to roar? "

We'll find out when the One Twenties get crossed.

 

 

rclock-01-20_34394_lg

 

 




via Zero Hedge //feedproxy.google.com/~r/zerohedge/feed/~3/L5V3VuZAjkU/story01.htm Bruce Krasting

Today’s Market-Boosting Disappointing Economic News Brought To Your Courtesy Of Euroarea’s Service PMIs

Those wondering why European stocks are higher but off earlier highs, the answer is simple: the latest Service ISM was bad but it wasn’t a complete disaster. And while RanSquawk notes that “the particularly disappointing slew of Eurozone Service PMI’s from France and Spain capped any potential upside seen across the European indices” stocks are clearly green on hopes Europe’s ongoing economic devastation accelerates enough for the ECB to finally start buying Stoxx 600 and various other penny stocks, which in turn magically “trickles down” to Europe’s record youth unemployment.

This is what happened, in Goldman’s words: the November Euro area final composite PMI came in at 51.1, 0.3pt below the flash (and Consensus) estimate. Relative to October, the composite PMI fell by 0.9pt. The weaker final composite PMI was driven by flash/final downward revisions to the German manufacturing PMI and the French services PMI. Today’s data also showed some improvement in the Italian services PMI, and a deterioration in its Spanish counterpart.

November’s final manufacturing PMI (published on Monday) came in 0.3pt below the flash reading. This was driven by a downward revision (0.5pt) to the manufacturing PMI in Germany (the French manufacturing PMI flash/final revision was positive). The final Euro area services PMI for November was 0.2pt below the flash, with the flash/final downward revision driven by the French services PMI (revised down 0.9pt).

With these revisions, relative to October, the Euro area composite PMI fell by 0.9pt (to 51.1), reflecting a 0.5pt decline in the manufacturing PMI (to 50.1) and a 1.2pt decline in the services PMI (to 51.1). The breakdown of forward-looking components was mixed. New manufacturing orders fell by 0.8pt to 48.7, while stocks edged down by 0.9pt on the month, leaving the orders-to-stocks ratio stable. The forward-looking elements of the services PMI showed ‘incoming business’ declining by another 1.1pt, while the ‘business expectations’ subcomponent rose by 2.4pt.

The Composite PMIs declined across all major countries on the month, except in Italy. The abrupt fall in the German composite PMI (by 2.2pt to 51.7) owed to sizable 2.3pt and 1.9pt declines in the services and manufacturing PMIs respectively. In France, the 0.4pt fall in the composite PMI (to a weak 47.9) was driven by a similar-sized contraction in the services PMI. The Spanish services PMI eased notably by 3.2pt to 52.7 (Cons: 55.2), leading to a 1.7pt decline in the composite PMI (to 53.8). By contrast, in Italy, while the manufacturing component was unchanged on the month (at 49.0), the services PMI recorded a 1.0pt expansion (to 51.8, Cons: 50.2), driving the composite PMI 0.9 up to 51.2.

* * *

In terms of fixed income, the Bund remains relatively unchanged but has since ebbed higher alongside the weak European data releases with some analysts also noting volumes rolling into the next contract ahead of the upcoming expiry on the 8th Dec.

In terms of the day ahead, we have ADP employment change today (consensus +222K) ahead of the all important payrolls on Friday. The US non-manufacturing ISM and the Fed’s Beige Book are the other key releases for today. On Fedspeak we have both Plosser and Brainard lined up for today. In Europe we will kick the day off with a host of services and composite PMI prints with final figures for Germany, France and the Euro-area. We will also get preliminary readings out of Spain, Italy and the UK.

To summarize:

European shares trade mixed, off earlier highs, with the basic resources and health-care sectors outperforming and oil & gas, food & beverage underperforming. Ruble touches record-low for fifth straight day. Euro-area services and manufacturing grew less than initially estimated last month. Italian 10-year yields dropped below 2% for first time. U.K. budget statement later. The Spanish and Swedish markets are the best-performing larger bourses, U.K. the worst. The euro is weaker against the dollar. Japanese 10yr bond yields rise; Spanish yields decline. Commodities gain, with wheat, natural gas underperforming and WTI crude outperforming.  U.S. ISM non-manufacturing, mortgage applications, ADP employment change, nonfarm productivity, unit labor costs, composite PMI, services PMI due later.

Market Wrap

  • S&P 500 futures down 0.1% to 2064.1
  • Stoxx 600 up 0.4% to 348.8
  • US 10Yr yield down 0bps to 2.29%
  • German 10Yr yield up 0bps to 0.74%
  • MSCI Asia Pacific down 0.2% to 139.8
  • Gold spot up 0.5% to $1204.2/oz

Bulletin Headline Summary from RanSquawk and Bloomberg:

  • European equities trade mostly in the green, although this morning’s slew of Eurozone service PMIs have done little to restore faith in the area’s growth prospects.
  • Treasuries steady before ADP report provides first look at November payrolls, est +222k; 10Y yields have risen almost 13bps this week amid $33.8b in IG issuance.
  • Euro-area services and manufacturing grew less than initially estimated last month, leaving the economy facing near- stagnation as the ECB, which meets tomorrow, considers its options on further stimulus
  • Russia’s economic pain worsened as a measure of services dropped to the lowest point since May 2009 and the central bank attempted to stem the ruble’s biggest slide in 16 years
  • Kaisa Group Holdings Ltd. halted trading in Hong Kong after the real estate developer was blocked from selling some units in the southern Chinese city of Shenzhen, sending its stock down the most in more than a year; co.’s 2017 and 2020 bonds tumbled
  • China’s services PMI rose to 53.9 last month from 53.8 in October while HSBC/Markit’s services gauge climbed to 53 from 52.9
  • Growth at U.K. service companies expanded faster than economists forecast last month as new business improved
  • Fed officials are signaling more confidence in the economy that moves them nearer to raising interest rates, and are stressing the liftoff is linked to data rather than dates to avoid unsettling markets
  • Sovereign yields fall. Asian, European stocks gain, U.S. equity-index futures fall. Brent crude and gold rise, copper falls
  • Looking ahead, today’s session sees the release of the US ADP employment
    change figure, ISM non-manf. Composite, DoE oil inventories, BoC rate
    decision and potential comments from Fed’s Plosser, Brainard and
    Fischer.

US Economic Calendar

  • 7:00am: MBA Mortgage Applications, Nov. 28 (prior -4.3%)
  • 8:15am: ADP Employment Change, Nov., est. 222k (prior 230k)
  • 8:30am: Nonfarm Productivity, 3Q final, est. 2.4% (prior 2%)
  • Unit Labor Costs, 3Q final, est. -0.2% (prior 0.3%)
    9:45am: Markit US Services PMI, Nov. final est. 56.5 (prior 56.3)
  • Markit US Composite PMI, Nov. final (prior 56.1)
  • 10:00am: ISM Non-Manf. Composite, Nov., est. 57.5 (prior 57.1)

FX

In FX markets, the USD-index continues yesterday’s strengthening theme now trading at its highest level since March 2009. Moreover, EUR/USD continued its recent descent following the disappointing Spanish and French Service PMI data with the pair breaching below the Nov. 24th & 7th reaching its lowest levels since Aug. 2012. In addition, the pair has seen some further weakness with UBS cutting their 2015 year-end EUR/USD call to 1.1500 from 1.2000, suggesting that QE from the ECB may came in March 2015. Furthermore, the RUB once again printed record lows vs. USD, however, the pair stages a fast-money move lower, with nothing fundamental behind the move, although the usual talk of central bank intervention has been doing the rounds.

COMMODITIES

In terms of the commodity complex, WTI and Brent crude futures enter the North American crossover in the green in a continuation of the move seen following yesterday’s API inventories which revealed a 6.5mln bbl drawn-down in stockpiles vs. last week’s build of 2.8mln. However, in the aftermath of last week’s OPEC decision, the Kuwait oil minister has been on the wires saying Kuwait will not sacrifice its interest to cut oil output, according to minister and it is pointless for OPEC to cut output while others increase. In terms of precious metals markets, commentary remains relatively light with price action largely dictated by movements in the USD-index after it made a technical break above 88.71, which has subsequently seen spot gold extend its move above the USD 1,200/oz level.

* * *

DB’s Jim Reid Concludes the overnight recap

All in all yesterday turned out to be a rather positive day for risk assets despite the retracement of Monday’s rally in Oil. Risk sentiment was supported by the better-than-expected auto sales for November along with what was also viewed to be a reasonably decent day for US economic releases. We’ll briefly touch on these below but in terms of specific market moves yesterday was the first up day for the S&P 500 (+0.64%) since Thanksgiving and also a fresh high for the Dow (+0.58%). Interestingly, Energy (+1.33%) was the best performing S&P 500 sector despite the weakness in Oil. As for Oil, yesterday saw WTI (-3.1%) and Brent (-2.7%) give back bulk of Monday’s gains to finish the day at around $66.9/bbl and $70.5/bbl, respectively.

Moving on to the fixed income side of things it was a reasonably firm day for Credit as well. Certainly an active day for US primary markets as investors absorbed US$12.5bn from 6 different issuers although more than half of those volumes from the TMT space. Away from new issues, IG secondary spreads were somewhat mixed (+/-2bps) although the CDX IG did manage to close just over half a basis point tighter on the day. US Treasuries weakened across the curve which saw the 10yr yield rise +6bps higher to 2.292%. The decent tone for risky assets probably didn’t help the performance in rates but investors were also reacting to comments from Fed’s Vice Chair Fischer yesterday.

Indeed speaking at a WSJ event yesterday, Fischer signaled that the FOMC is closer to removing the ‘considerable time’ language from its guidance. Although to be fair he also emphasised that policy tightening is still very much data dependent and particularly on labour market conditions as well as inflation. The next FOMC meeting on the 16-17 December will be the next key event for rate watchers but we can’t help to think that as far as inflation is concerned lower energy prices is probably giving global policy makers some breathing room for now.

Taking a brief look at the data flow, the US construction spending surprised to the upside in October (+1.1% mom vs +0.6% consensus), supported by the expected pickup in residential construction and also an improvement in government spending. The NY ISM manufacturing also came in at an impressive 62.4 versus 55.0 expected by the market. The top tier automakers in the US reported better-than-expected November sales, which points towards a seasonally adjusted annual rate (SAAR) of 17.2million light vehicles. This was ahead of what the market was looking for (16.7million) and also marks the strongest performance since 2003 (per Reuters).

It was interesting to see that lower gasoline price was cited as one of the drivers behind the auto sales strength in November. So there are sectors that are seemingly benefitting from lower cost of fuel after all but the collateral damage is still very much being felt by others such as the oil drillers. Per the FT, Schlumberger is cutting back its fleet for offshore geological surveys and taking an $800m writedown on the value of its ships. This apparently marks the first significant cutback in the industry following the recent sell off in Oil.

The company also plans to cut jobs as oil related capex is expected to slow. On a similar theme but away from Oil, the weakness in commodities has also prompted Vale focus to sell off 30-40% of its base metals business. The company said that the base metal division will probably be listed in Canada next year (where Vale’s nickel assets are concentrated) and the IPO timing could be after August 2015.

Back to markets, Asian equities are coming off their earlier highs as we type although most North Asian bourses are still in the green. The Shanghai Composite is now flat after having been up as much as 2% earlier following modest gains in China’s services sector data. The official non-manufacturing PMI rose to 53.9 in November from 53.8 in October. The HSBC variant rose to 53 from 52.9 from October. Away from China, the Nikkei is also now flat although the KOSPI and ASX is still 0.2% and +0.7%, respectively. Australia’s disappointing GDP report drove the AUD to a four year low (83.98 as we type). Asia IG credit spreads are firmer on the day with cash spreads 1-2bp tighter across most benchmark names.

Taking a quick look at Europe the Stoxx 600 (+0.50%) also had a decent day with similar gains seen in energy stocks. Credit spreads were modestly firmer with Xover closing some 4bps tighter. There was however no respite for the Russian Ruble. The currency lost another 4.5% against the US Dollar (to 53.97) to extend its most severe decline since 1998 when the country defaulted on its internal debt. The moves also coincided with a GDP downgrade from Russia’s deputy economy minister Alexei Vedez. He now expects Russian GDP to contract 0.8% next year versus a previously forecasted growth rate of 1.2%. Staying on Russia, Eastern European countries have also reacted negatively towards Russia’s decision to terminate its US$50bn South Stream Gas project. So with the weakness in the currency, flow on impact on the economy and ongoing geopolitical developments we suspect Russian headlines will likely linger well into the new year.

Wrapping up Europe and perhaps flagging another potential Q1 market driver next year, Greece’s Syriza leader Alexis Tsipras yesterday reiterated his promise to exit the bailout should he be elected. He went on to say that Greece’s access to bond markets is being hindered by high debt levels and as a result a debt haircut is needed. The comments came after discussions between Athens and Troika arriving at a standstill and with time running out before the 8th December Eurogroup meeting.

In terms of the day ahead, we have ADP employment change today ahead of the all important payrolls on Friday. For the record our US economists have a slightly more bullish view than consensus on ADP (240k v 222k expected by the market). The US non-manufacturing ISM and the Fed’s Beige Book are the other key releases for today. On Fedspeak we have both Plosser and Brainard lined up for today. In Europe we will kick the day off with a host of services and composite PMI prints with final figures for Germany, France and the Euro-area. We will also get preliminary readings out of Spain, Italy and the UK.




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Accident Took Place At Ukraine Nuclear Power Plant, Prime Minister Reveals

Several days ago we heard rumors, unsubstantiated, of an accident at Ukraine’s Zaporozhye nuclear power plant, Europe’s largest and the 5th biggest in the world. Considering Ukraine’s history with nuclear accidents, and resultant panics, we decided it would be prudent to wait for an official confirmation before proceeding with a report. We got the confirmation about an hour ago, when Ukraine’s new/old Prime Minister Arseny Yatseniuk, or “Yats” as his puppetmaster Victoria Nuland likes to call him, said “on Wednesday an accident had occurred at the Zaporizhye nuclear power plant (NPP) in south-east Ukraine and called on the energy minister to hold a news conference.”

A “minor” accident that is, which remains a rather nebulous term on the continuum of nuclear power plant “malfunctions.” So minor, in fact, the PM waited almost a week before revealing it to the world.

From Reuters:

“I know that an accident has occurred at the Zaporizhye NPP,” Yatseniuk said, asking new energy minister Volodymyr Demchyshyn to make clear when the problem would be resolved and what steps would be taken to restore normal power supply across Ukraine.

 

News agency Interfax Ukraine said the problem had occurred at bloc No 3 – a 1,000-megawatt reactor – and the resulting lack of output had worsened the power crisis in the country. Interfax added that the bloc was expected to come back on stream on Dec. 5.

Just like Fukushima is expected to come back on line in a few years ago.

So is this just another Chernobyl? According to Ukraine, “the radioactive meltdown is contained.” RT has more:

“There is no threat … there are no problems with the reactors,” Ukraine’s Energy Minister Volodymyr Demchyshyn said at briefing, adding the accident affected the power output system and “in no way” was linked to power production itself.

 

The incident was not made public until Wednesday, when PM Yatsenyuk asked the energy minister to report on what happened and how the ministry is handling the situation.

 

The accident left several dozen towns and villages without electricity, Russian media reported, citing local officials.

Of course, there is no way to actually know what is happening on the ground as the NPP is located close enough to the “fog of war”, that its status, and updates thereof, could merely be part of the fog of war. That said, if there is an unspoken message here by Ukraine, which recently handed over its gold to unknown “Western” interests, and suddenly feels neglected by its western allies (as its central bank head is about to find out personally), it is targeted directly at the IMF: “hand over more loans, or the nuclear power plant gets it.”




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Jacob Sullum on the Futility of Mandating Conspicuous Calorie Counts

The
new federal regulations requiring conspicuous calorie
counts for “restaurant-type food” not only force eateries, bars,
bakeries, grocery stores, and movie theaters across the country to
present consumers with information. They force consumers to see
that information, whether or not they want it, on the theory that
they will be grateful when they recognize the error of their
gluttonous ways. Putting aside the ethics of this paternalistic
intervention, says Jacob Sullum, there are good reasons to question
its effectiveness. 

View this article.

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Author of UVA Rape Story: ‘What Exactly Happened? I Don’t Know.’

UVAYesterday, I
reported
that
Rolling Stone‘s
bombshell story about a gang rape at
the University of Virginia was drawing some skeptical appraisals,
most notably from writer Richard Bradley. I wrote that while I had
no reason to distrust Sabrina Rubin Erdely, the author of the
Rolling Stone piece, I shared some of Bradley’s concerns
about the plausibility of the narrative.

Since then, numerous media outlets have cited my concerns while
adding their own. Far too many have weighed in to keep a proper
count, but
The New Republic
,
The Washington Examiner
,
The Federalist
,

The American Conservative
,
and
The Washington Post
all published articles worth a read,
and all have valid questions about Erdely’s reporting.

But perhaps the most serious question about the accuracy of the
story is one inadvertently raised by Erdely herself, at the
prompting of Slate‘s Hanna Rosin, several days ago. Erdely

was interviewed
 by Rosin’s Double X podcast; when
pressed for crucial details about whether she knew the perpetrators
names and sought their sides of the story, Erdely repeatedly dodged
the question. Eventually, she conceded this: “What exactly
happened? I wasn’t in that room. I don’t know.”

On Tuesday evening, Rosin
wrote a polite but critical response
to Erdely in which she
essentially said, that’s not good enough. As
she—and Slate colleague Allison Benedikt—note, there were
supposedly seven other people in that room, and Erdely didn’t
make much of an effort to contact them. Some important parts
(emphasis mine):

It could be that Erdely did try her hardest to reach the alleged
rapists. Or it could be that she didn’t, out of deference to
Jackie. We’ve interviewed many of Jackie’s friends, including some
who were quoted in the Rolling Stone story.
They verified that Jackie did get very upset when Erdely
wanted to find out more about the alleged assailants. Sara Surface,
a good friend of Jackie’s and a member of One Less, a victim
advocacy group at UVA, had the impression that Jackie’s reaction
was “extreme” when Erdely pressed her—meaning that Jackie became so
terrified that she reconsidered going public with her story, even
anonymously.
If that’s true, then Erdely was in a tough
position. Push too hard and she might lose Jackie. But not pushing
harder has created a whole new nightmare.

Various writers and media outlets have now started
to pick apart Erdely’s reporting, as well
as the details of Jackie’s story as reported
by Rolling Stone. That’s because, even by the
standards of horrific, despicable frat behavior, this story stands
out.
Jackie, who says she was sober, was allegedly led
upstairs by her date into a dark room, where seven men allegedly
raped her as others egged them on. She tells Erdely that she was
smashed into a glass coffee table and raped by a beer bottle. Drew,
who had invited her to the frat party as his date, allegedly stood
by and orchestrated the whole thing. When he later ran into Jackie,
she says that he told her he’d had a “great time.” That’s
not expected behavior even by the standards of rapists. That’s
psychotic.

Rosin and Benedikt mention that they found out who Jackie
is, contacted her, and arranged an interview, only to have Jackie
back out as the public’s skepticism of the story began to increase.
An interview between Jackie and The Washington Post
is apparently forthcoming.

I reached out to Erdely and her editor, Sean Woods, today; I had
questions about the efforts undertaken to speak with the
perpetrators. Neither responded. Instead, I was forwarded a
statement by Rolling Stone spokesperson Melissa Bruno.
It’s the same one that other journalists seeking comments from
either party are receiving at this point, but here it is,
nonetheless:

In response to your questions about Sabrina Rubin Erdely’s “A
Rape on Campus”: The story we published was one woman’s account of
a sexual assault at a UVA fraternity in October 2012 – and the
subsequent ordeal she experienced at the hands of University
administrators in her attempts to work her way through the trauma
of that evening. The indifference with which her complaint was met
was, we discovered, sadly consistent with the experience of many
other UVA women  who have tried to report such assaults.
Through our extensive reporting and fact–checking, we found Jackie
to be entirely credible and courageous and we are proud to have
given her disturbing story the attention it deserves.

Based on what Erdely has said, and what Woods told The New
Republic
previously, it seems like Rolling Stone was
positive that the rapists existed. But they only made successful
efforts to reach the fraternity, not the individuals—even though
contacting the individuals is as easy as typing a name into
Facebook’s search menu or UVA’s student directory, presuming one
knows the actual names.

Rosin and Benedikt did speak with some of Jackie’s “supporters”
on campus; what’s striking is that none of these people know the
identities of the attackers, either:

What became clear from talking to Jackie’s supporters at UVA is
that the community of victim advocates operates by a very specific
code. “The first thing as a friend we must say is, ‘I believe you
and I am here to listen,’ ” says Brian Head, president of UVA’s
all-male sexual assault peer education group One in Four. Head
and others believe that questioning a victim is a form of betrayal,
because it will make her feel judged and all the more reluctant to
ever speak about what happened. None of the people we spoke to had
asked Jackie who the men were, and in fact none of them had any
idea. They did not press her on any details about the
incident.

This undermines a claim, made by Erdely to Rosin during the
podcast, that “people [on campus] seem to know who [the
perpetrators] are.”

So we know that Erdely never spoke to the alleged perpetrators.
She hasn’t suggested that she made an effort to contact them
individually at all. We know that Jackie balked at the idea of
giving up “more” information about them. And we know that Rosin and
Benedikt couldn’t find anyone who knew who they were.

At this point, I’m skeptical that anyone other than Jackie knows
their names. To utterly clear up the confusion, my most pressing
question to Erdely was whether she learned the perpetrators’
identities. In return, I was forwarded Bruno’s statement.

Erdely told Rosin that “there’s no doubt in my mind that
something happened to her that night.” That’s more easily proven;
as The Post’s Erik Wemple
noted
, sources who were actually named in the article did
testify that something happened to Jackie that
night. But something is a far cry from the
extreme horror story that ran under Erdely’s byline.

Lastly, I should mention that I have fielded criticisms all day
from people—some of them libertarian-leaning—who think it was wrong
of me to write a story questioning a rape accusation at all. Some
believe that by expressing skepticism of Erdely’s reporting, I
risked identifying libertarianism with rape denial. Needless to
say, I disagree; anyone who gives my previous work a fair appraisal
should conclude that I treat sexual assault with the utmost
seriousness. Whatever the extent of the campus rape crisis, I am
interested in exploring potential solutions, and believe I have

pinpointed a major one
.

Still, I must go on reporting the news as it actually happens,
not the version of it that is most convenient for making
libertarianism more palatable to the social justice crowd.

Free Minds and Free Markets aren’t free! Support
Reason’s annual Webathon with a tax-deductible donation and help
change the world in a libetarian direction. For details on giving
levels and swag, go
here now
.

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How Pennsylvania Is Selling Residency To Chinese “Investors” For $500k Each

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

A major theme here at Liberty Blitzkrieg over the past year has been the creative ways in which corrupt Chinese oligarchs and government officials are maneuvering their way into the United States. To be clear, I am not anti-immigration by any stretch of the imagination. My mother was an immigrant. This is about being against corrupt and morally compromised individuals being welcomed here with open arms just because they have cash. We have enough domestic criminal oligarchs as it stands. These people have collectively captured the American political and economic system and control it to their own ends. Do we really need to import more of these types from abroad?

Did you know that there exists a federal Immigrant Investor Program that grants “EB-5″ immigration visas to foreigners who provide at least $500,000 to U.S. projects that create 10 or more American jobs? I wasn’t familiar with this, but apparently the good folks at the Pennsylvania Turnpike Commission are well aware of it, and are using it to raise $200 million.

Here’s what I’d like to know. Who are these investors and who vets them? It is a known fact that corrupt Chinese officials and businessmen are scrambling to get themselves and their money out of their homeland as the government cracks down on corruption. How many of them are going to use this program to get into the U.S., and what will be the long-term impact to our society? Important questions that must be asked, but most likely aren’t being taken seriously.

From Philly.com:

Chinese investors have begun signing up to spend $500,000 each to help pay for a long-awaited connection between the Pennsylvania Turnpike and I-95.

 

In exchange, the investors hope to get permanent residency in the United States for themselves and their families.

 

The heavily indebted Turnpike Commission is borrowing the $200 million from foreign investors under the federal Immigrant Investor Program that grants “EB-5″ immigration visas to foreigners who provide at least $500,000 to U.S. projects that create 10 or more American jobs.

 

The foreign investors and their families will get a quick path to legal residence in the United States, though they may lose money on their investment.

 

The brokers and lawyers will collect millions in commissions and fees, with each of the 400 investors paying $50,000 to the dealmakers and $15,000 to the lawyers.

At least someone’s getting paid.

The first $50 million installment from the foreign investors is due to be paid to the Turnpike Commission by April.

 

The Berwyn company created to make the deal, the Delaware Valley Regional Center, expects to meet that deadline, said Joseph P. Manheim, its managing director.

“It is going as we had planned,” he said. “We are on track.”

 

The deal was suggested to turnpike officials by Turnpike Commissioner Pasquale T. “Pat” Deon Sr., a Bucks County restaurateur, beer distributor, and Republican power broker. Deon, who also is chairman of the board of SEPTA, saw SEPTA make a similar deal to borrow $175 million to pay for its smart-card fare-payment system in 2011.

 

Similar EB-5 foreign-investor deals have provided funding for the Convention Center, the Temple University Health System, and the Comcast Center.

 

The turnpike deal was created by Manheim and other officials of the Swarthmore Group, a Philadelphia investment-management firm headed by James E. Nevels, a prominent Republican donor and fund-raiser.

As I mentioned at the top, this has been a theme on the site all year. Check out these previous posts on the topic:

Video of the Day: Ferraris, Maseratis & More – How the Children of Chinese Oligarchs Live it Up in SoCal

Welcome to Arcadia – The California Suburb Where Wealthy Chinese Criminals are Building Mansions to Stash Cash

Chinese Purchases of U.S. Real Estate Jump 72% as The Bank of China Facilitates Money Laundering

Zillow Opens the Floodgates to Chinese Buyers in Order to Keep Housing Bubble 2.0 Inflated

Corrupt Chinese Politicians are Buying Billions in U.S. Real Estate

Here’s the best part. You ready for this one…

Nevels is chairman of the board of the Federal Reserve Bank of Philadelphia and was the first chairman of the Philadelphia School Reform Commission, appointed by Republican Gov. Mark Schweiker. Nevels is also a former president of the Pennsylvania Society, the organization best known for its annual Manhattan gathering of Pennsylvania politicians, lobbyists, and business people.

Naturally, a member of the Federal Reserve System would be somehow involved in this scheme. When bankers run into trouble, these clowns don’t waste any time in coming up with trillions in backstops and bailouts. However, when American plebs need a highway, we have no choice but to get on our knees and grovel to the Chinese.

 




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