Category: zerohedge

It’s irresistible, enticing and addicting.  And, as News10.com reports, it’s available 24-hours a day all over the world to billions of people. Facebook beckons to users seemingly with a two-prong approach – both the pressure and pleasure to post. We share stories, photos, triumphs and tragedies. It is ingrained into our daily lives so deeply that studies show people check Facebook, on average, 14 times a day.  With all those eyes all over the globe dialed in and the purchasing power available, the online giant has tapped into a controversial delivery of data into its intelligence gathering.  It all starts with something that you may not even realize is enabled on your phone.

A little-known feature deeply embedded in Facebook's privacy settings is causing users to think twice aboutnot just what they write but what they say. As TheAntiMedia.org's Clarice Palmer explains…

The debate over Internet privacy and the responsibility social media companies should carry in protecting user privacy never ceases to spark controversy — among both users and tech insiders. But while Facebook, one of the most popular social media networks, struggles with accusations of news suppression and even fraud, a new report on the network’s microphone settings is reigniting past fears of surveillance that were never fully addressed.

 

According to University of South Florida Professor Kelli Burns, Facebook is a huge part of the lives of smartphone users. Due to this widespread addiction, Burns explains, “Anytime you’re using your phone, any kind of information that you’re putting into your phone, looking at on your phone, Facebook can access that.” But details regarding what you’re doing or what you’re browsing while on Facebook are not the only type of data the Silicon Valley giant can access. The social media’s microphone feature, which can be enabled by the user via Facebook’s settings, is also listening.

 

A few months back, a Facebook user took their concerns over the microphone settings to Reddit. The post quickly went viral, prompting Facebook to issue a statement on the matter. According to the social media network, the company does not “record your conversations.” Instead, the statement claimed, if the user chooses to turn the microphone feature on, Facebook will “use your microphone to identify the things you’re listening to or watching based on the music and TV matches we’re able to identify. If this feature is turned on, it’s only active when you’re writing a status update.”

 

But According to ABC’s WFLA, Burns might have been able to prove Facebook isn’t telling the whole story behind this technology.

 

From the publication:

 

“We tested the theory with Kelli, and even we were surprised by what we found and saw.

 

“Kelli enabled the microphone feature and talked about her desire to go on safari, right down to her mode of transportation. ‘I’m really interested in going on an African safari. I think it’d be wonderful to ride in one of those jeeps,’ she said aloud, phone in hand.

 

“Less than 60 seconds later, the first post on her Facebook feed was a safari story that seemed to pop up out of nowhere. Turns out, it was a story that had been posted three hours earlier. And, after mentioning a jeep, a car ad also appeared on her page.”

 

This test, the news organization contended, demonstrates how Facebook picks up “buzz words” in order to show that particular user ads and posts matching their interests. The fact the professor made those comments after turning the feature on may serve as an example of how easily Facebook can trick users into giving the company access to their private conversations.

 

Though Facebook claims it does not store or share user information, the very existence of the technology may give hackers, including government-backed security experts, a reason to explore private data further, putting the privacy — and even safety — of Facebook users in danger. What’s more concerning about this issue is the company’s previous association with the U.S. National Security Agency’s PRISM program, which gave federal agents access to users’ private data, including, emails, photos, and instant messages, among other things. While Facebook’s more recent claims concerning user privacy regarding the microphone feature might be legitimate, the company’s former cooperation with NSA officials could indicate the feds may seek to explore the microphone feature — whether Facebook agrees with them or not.

 

Smart TV manufacturers like Samsung have recently been forced to publicly address privacy concerns after news broke the technology was listening to users’ conversations. As the same users learn Android Smart TVs may also present vulnerabilities that give hackers the ability to record what they do, other members of the tech industry, like Facebook, might also face growing obstacles and skepticism from users.

 

In contrast, though Apple has aligned with the federal government in at least one case, the company was widely praised for standing for privacy rights in a legal standoff involving the FBI over the San Bernardino shooter’s iPhone. But unlike Apple, whose hesitation regarding lobbying practices has earned negative attention from Congress in the past, Facebook has a relatively cozy relationship with Washington. Whether this relationship is mutually beneficial to both parties — and whether Facebook will respond like Apple has — remains to be seen.

But Market-Ticker's Karl Denninger rages further – demanding an answer to "how is this legal?"

…the article Facebook appears to confirm that it does indeed use your microphone — which means it listens to and uploads the contents of speech and other sound around you when you are using the app.

 

Explain to me, if you would, why you'd ever allow such a device in your pocket?  Further, please explain to me exactly why you believe Facebook would only use this for "ad targeting"….. when there is literally nothing to prevent them from doing otherwise.

 

And finally, please explain why this is legal and Facebook and its officers are not under criminal indictment, particularly when you consider that people other than you may well speak within the listening range of your microphone, and while you may have given consent they did not and further, they had no idea they were being recorded!

 

So you want to have a conversation with me, eh?  Well I don't consent to being recorded, and in many states (including Florida) unless said recorder is either openly and notoriously present and thus obvious (giving me the clear option to refuse to talk to you in its presence) or you have my consent it's a felony to make that recording in any situation where I reasonably believe I'm not being taped or overheard.

 

Oh by the way, the use to which you put the recording is immaterial; it is not legal in this state to do so for "purely" advertising purposes; any such use is unlawful and in fact it is a felony in this state.

 

Heh Zuckerpig — your ass ought to be indicted for this crap, and Florida is not alone in criminalizing this activity.

*  *  *

And finally, here is a media design professor exposing how his Facebook provacy settings were opted back in without notice or consent…

Check your Facebook Ads privacy settings. They opted you back in without notice or consent. https://t.co/7gJx8UcXZc http://pic.twitter.com/McffGfTRQo

— David Carroll (@profcarroll) May 29, 2016

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Spending rose (thanks to higher costs for energy) and everything else was dismal… and then Brexit moved into the lead – Inconceivable…

 

Following the flash crash in China overnight…

 

From Friday's close, things went a little turbo with crude crumbling and gold and bonds bid…

 

Which left "Sell In May" working for Trannies.. but the late-day panic bid (sparked by USDJPY) saved the month for The Dow…

 

PMs were May's laggard (Silver was worse than gold), Crude oil the big winner…

*  *  *

On The Month:

• USD Index Up 3% – best month since Nov 15
• AUD Down 4.9% – Worst month sine Jul 15
• WTI Up 4.8% – 3rd monthly gain in a row
• Gold Down 5.9% – Worst month since Nov 15
• Silver Down 10.4% – Worst month since Sept 14

30Y Treasuries were the only part of the complex lower in yield on the month as 2Y yield soared 15bps (before plunging today)…

 

The USD Index rose over 3% on the month led by AUD weakness offset by Cable strength…

 

Silver notably underperformed gold on the month but crude was the biggest winner…

*  *  *

Since Friday, Treasury yields tumbled as a slew of weak data this morning suggested the rebound is not there…

 

And stocks began to leak yesterday (futures) then accelerated lower today…before melting up to VWAP

 

As 17,773.64 was all that mattered today – Getting The Dow green for May… (note 17,740 is the 50-day moving average)

 

Since Friday, it was chaos as the rebalance meltup managed to get the S&P green for a second before the last minute dump…

 

Cable was the big loser today as Brexit polls showed a pickup in "leave" support…but the USD remains marginally higher on the week…

 

Gold drifted higher all day as silver dropped. Crude and Copper tumbled as Europe closed…

 

Crude algos seemed to run out of stops to churn above $50 and puked it all back…

 

Charts: Bloomberg

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Submitted by Simon Black via SovereignMan.com,

Shocking. Astonishing. Jaw dropping.

There’s just no other way to describe how cheap South Africa is right now.

Between the worldwide decline in commodities prices, and a major crisis of confidence in the national government here, the local currency (South African rand) remains at the lowest level it’s been… ever.

And that’s made nearly EVERYTHING here dirt cheap if you’re spending foreign currency… especially US dollars.

Just doing something simple like eating out at a restaurant or going to the grocery store can be startling.

Once you do the math and convert the prices back to US dollars, it almost seems like you’re missing a zero.

This also carries over into many asset prices, including certain areas in the property market.

Here in Johannesburg, I saw an amazing home for sale in one of the nicest, upscale neighborhoods with an asking price of about $515,000 US dollars.

Now, half a million bucks might not sound terribly cheap– until you find out what you’re getting for the money.

The house is an enormous seven-bedroom compound of nearly 13,000 square feet.

Pool. Courtyard. Fountains. Private chef’s kitchen. Parking for eight. Separate home for live-in staff. Wonderful neighborhood with top schools, shops, and restaurants.

Something like this would go for at least 20 times that price in Los Angeles, and 40 times the price in London.

Much of this price mismatch is due to the currency anomaly– that the South African rand is so undervalued, AND that the US dollar is so overvalued.

Perhaps this is most obvious when looking at the travel package I just bought.

Longtime readers know that I’m a big fan of special “round the world” fares that major airline alliances offer.

I’ve written about this before— all three of the major global airline alliances offer special fares for passengers when you travel completely around the world.

A typical journey might be, for example, Los Angeles to London to Singapore to Sydney and back to Los Angeles again.

That itinerary takes you all the way around the world, and you’ll pay one simple fare that’s usually quite attractive.

Typically the round-the-world fare is calculated based on the country where you depart.

So if your journey starts and stops from London, your fare will be quoted and priced in British pounds.

But if your journey starts and stops in Los Angeles, your fare will be quoted and priced in US dollars.

The strange thing is that when you convert the currencies, the amounts won’t match even though the journey is essentially the same.

In other words, LA-London-Singapore-Sydney-LA costs $11,400, while Sydney-LA-London-Singapore-Sydney costs AUD 13,600, or about $9,875 USD.

That’s more than a $1500 difference.

This doesn’t make any sense since both itineraries are comprised of the exact same flights, i.e. Sydney to LA, LA to London, London to Singapore, Singapore to Sydney.

The flights are simply in a different order. That’s all. The price should be more or less the same.

And yet, due to these major anomalies in the currency markets, there are major differences in the fares.

Here in South Africa, I’ve just booked a business class ticket that goes from Johannesburg to Asia, then the US, Chile, Madrid, London, and back to Johannesburg.

The price I paid was 70,000 South African rand.

But due to the rand being near it’s all-time low, that’s the equivalent of just $4,500.

To put this in perspective, the same itinerary starting and stopping in the US costs about $12,500 in business, and over $6,600 in economy class.

Crazy. I paid 30% less to fly in business class for the exact same flights that someone would pay in US dollars to fly in economy class.

Clearly this makes no sense (but I’m happy to take the deal).

The reason is obvious: the rand is undervalued relative to the US dollar.

Ten years ago it was the opposite: the US dollar was deeply undervalued relative to other currencies.

Oil was expensive, and major commodities exporters from Brazil to Australia, and even here in South Africa, had overvalued currencies.

Now the pendulum has swung in the other direction.

Commodities prices have plunged, and those same exporters are experiencing major economic slowdowns. Their currencies have all been punished.

Undoubtedly the right equilibrium is somewhere in the middle.

But markets rarely find the equilibrium. They almost always overcorrect.

So now the rand has plummeted and become absurdly weak, while it’s the US dollar that has become extremely expensive.

Sure, it’s possible that the dollar becomes even stronger (and the rand weaker).

But these things routinely go in cycles, and there will be a correction. There always is.

So anyone who owns US dollars has an opportunity right now to trade overvalued pieces of paper for undervalued real assets… as long as you look abroad.

Part of being a Sovereign Man is having a global view– expanding one’s thinking to the entire world.

I’ve written before about how our company is acquiring or has already purchased productive farmland in central Chile, deeply undervalued, profitable businesses in Australia, and real estate in Colombia.

These are all REAL assets. And as long as central bankers continue to print paper money without restraint or regard for the consequences, it’s critical to own something real.

Gold and silver are also real assets, and both are historically inexpensive relative to the US dollar.

Bottom line: take advantage of this opportunity to trade your paper for something of value. It won’t last.

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With the S&P500, seemingly unable to break decisively above 2090, investors are wondering what are the main catalysts that can push the market higher, and are asking questions. To help with the confusion, Deutsche Bank has laid out the top five recurring questions asked by investors who are trying to figure out what will push stocks higher. Among these are whether European (and global) equities will rally as Brexit fears are being priced out; is there scope for earnings upgrades and will value stocks finally start outperforming.

However, the two most important questions by far, those whose answer will determine not only the near term return of the S&P, but also global equity markets as well as that all-important commodity, oil, are the following:

• Can the oil price hold up even as the dollar rises?

and

• Can the CNY depreciate without hurting asset prices?

Let’s take a look at these in sequence; first: will the recent disconnect between rising oil and a rising dollar persist? This is Deutsche Bank’s answer:

Can the oil price hold up even as the dollar rises? The oil price has risen above $50/bbl this week, despite a number of negative catalysts: a) the broad dollar TWI is up 3% since the start of May on increased market expectations for a Fed rate hike – consistent with oil below $40/bbl, according to historical correlations; b) iron ore has already dropped by 30% from its late April peak as the China rebound has faded (historically the correlation with the oil price has been very strong at around 60%); and c) the oil price has rallied far ahead of what sluggish global economic momentum would have suggested. Oil remains crucial, given that it has been the key driver of US high-yield credit spreads in this cycle, with the risk premium for European equities in turn moving in line with credit spreads.

• The benign scenario: the positive price impact of the tightening in the oil market continues to outweigh the negative catalysts – pushing the oil price higher or keeping it at least stable. This allows US high-yield credit spreads to remain at current tight levels, thus preventing a renewed outbreak of credit stress.
• The risk scenario: the oil price drops again as the USD rises further and the slowdown in China becomes more pronounced, putting renewed upward pressure on credit spreads and hurting equity performance.

Adding some literal color to the answer, DB then goes on to layout some of the key considerations, including the 74% probability of a rate hike by December, the rise in WTI above $50 despite the 3% rise in the USD TWI in the past month and the resulting 25% overvaluation of oil relative to its regression to the US Dollar, all of this in light of the strong correlation between the USD and crude.

 

DB then points out the recent weakness in China-supported commodities and asks if oil can maintain its levitation even as the latest Chinese bubble has burst, while at the same time not only has oil overshot recovery expectations but spec positioning is at two-year highs, suggesting there is a risk for a sharp selloff should the momentum reverse:

 

DB does point out that US crude oil production appears to have peaked for now, and that according to the IEA the market should be in balance in H2, but it also notes that historically this particular fundamental relationship has been irrelevant for the price of oil.

 

And then, if oil does correct, what will it impact: most likely HY bond spreads.

 

That covers DB’s thought on oil; what about that other critical factor, the Chinese Yuan, namely “Can the CNY depreciate without hurting equities?” DB’s response:

Can the CNY depreciate without hurting equities? The Chinese currency has depreciated by 1.6% against the dollar since mid-April, against the backdrop of a broad dollar rebound. CNY weakness is a function of Fed tightening expectations, and is therefore likely to intensify as Fed hikes become more likely. Chinese authorities face difficulty in supporting their currency through higher rates given high private sector debt and weakening growth momentum. DB forecasts a weakening of over 6% in CNY by the end of the year (to USD/CNY 7.0). This points to downside to European equities, which have tracked USD/CNY closely since the middle of last year.

• The benign scenario: the fact that the PBoC’s CNY basket is already below the target level of 100 and that authorities have managed to stop capital outflows suggests both, that depreciation risk is lower than it was in mid-2015 and early-2016 (when the CNY basket was clearly above 100) and that a depreciation against the dollar could be less problematic for global risk assets this time round (if it does not translate into renewed capital outflows). Furthermore, the upcoming G20 Summit in September hosted by China means they are unlikely to rock the boat in the near-term.
• The risk scenario: the PBoC’s basket is merely a reference rate rather than a hard peg, as our China economist argues, and CNY weakness driven by Fed tightening triggers more capital flight since leakage through trade channels in particular have not been fixed. This sparks concerns of a) renewed capital outflows and FX reserve draw-downs, leading to tighter global financial conditions; b) weaker commodity prices, as a lower CNY depresses Chinese commodity imports; c) the renewed risk of a sharp one-off devaluation in China to stem reserve losses

As we have documented here before, the biggest reason why the market is focused on the Chinese currency is because CNY weakness is a function of Fed tightening expectations, and therefore likely to continue as Fed hikes become more likely; needless to say, the natural response to a stronger currency (due to its USD peg) would be to raise rates, however as a result of an unprecedented debt load, China can not afford to do this.

 

Here, DB anticipates further Yuan weakness, and forecasts that the year-end value of the USDCNY will be 7.00; It also points out that so far equities have not reacted to the CNY weakness over the past month – unlike during the depreciation episodes in August and January.

Why is this the case? One possible explanation is that capital outflows have been stopped and that the PBoC’s RMB basket is already below its target level – this would explain the lack of selling of various US-denominated assets. However, DB adds, “capital still has the potential to escape through trade and our China economist argues that the index is used as a reference rather than a hard peg”

 

* * *

What are DB’s conclusions? In one word: skeptical.

First, on the question of whether oil can continue rising alongside the dollar, DB says that its commodity analysts expect Brent crude to finish the year close to current levels, at $50/bbl, but chief strategist Sebastian Raedler notes that he is worried about downside risks relative to this scenario, given that the USD, a potentially negative catalyst, has been a more reliable determinant of the oil price over the past ten years (R2 of 80%) than the balance in the oil market, the potentially positive catalyst (R2 of 40%). He adds that “any weakness in the oil price would likely have a negative impact on credit and equity markets.”

As for whether the recent devaluation in the onshore Yuan to levels not seen since February 2011 will impact equities, DB is “not convinced by the argument that Chinese FX vulnerability has been reduced significantly. 6% downside to our FX strategists USD/CNY target of 7.0 by year-end would weigh significantly on the European equity market.” Also, on the US and global stock markets.

For now, it remains to be seen if these pessimistic forecasts play out: oil continues to trade around $50 with the USD rising, which in turn is pressuring the Yuan lower, however so far risk assets have not felt the brunt of it.

Ultimately, the answer is in the hands of none other than Janet Yellen: perhaps a main reason why the stocks and crude have not reacted forcefully to the recent rise in the dollar is because there is little conviction that Yellen will actually follow through with her warning of a June or July rate hike. However, the closer we get to these important dates, should the Fed not relent as it did in March, it is very possible that those who are betting Yellen will chicken out will do so themselves, and the reaction that was observed in August and again in December will recur.

Which is why for anyone seeking answers to these two most important for the market questions, should just ask Yellen. We can only hope that she knows the answers.

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Submitted by Patrick Buchanan via Buchanan.org,

In his op-ed in The Washington Post, Chris Grayling, leader of the House of Commons, made the case for British withdrawal from the European Union — in terms Americans can understand.

Would you accept, Grayling asks, an American Union of North and South America, its parliament sitting in Panama, with power to impose laws on the United States, and a high court whose decisions overruled those of the U.S. Supreme Court?

 

Would you accept an American Union that granted all the peoples of Central and South America and Mexico the right to move to, work in, and live in any U.S. state or city, and receive all the taxpayer-provided benefits that U.S. citizens receive?

This is what we are subjected to under the EU, said Grayling.

And as you Americans would never cede your sovereignty or independence to such an overlord regime, why should we?

Downing Street’s reply: Prime Minister David Cameron says leaving the EU could cost Britain a lot of money and a loss of influence in Brussels.

The heart versus the wallet. Freedom versus security.

While Barack Obama, Cameron and Angela Merkel are pulling for Britain to vote to remain in the EU, across Europe, transnationalism is in retreat, and tribalism is rising.

As Britain’s Independence Party and half the Tory Party seek to secede from the EU, the Scottish National Party is preparing a new referendum to bring about Scotland’s secession.

The strongest party in France is the National Front of Marine Le Pen. In Austria’s presidential election, Norbert Hofer of Jorg Haider’s Freedom Party came within an eyelash of becoming the first European nationalist head of state since World War II.

The Euroskeptic Law and Justice Party is in power in Warsaw, as is the Fidesz Party of Viktor Orban in Budapest, and the Swiss People’s Party in Bern. The right-wing Sweden Democrats and Danish People’s Party are growing stronger.

In 2015, Merkel, Time’s Person of the Year, admitted a million Middle East refugees. This year, Merkel flipped and paid a huge bribe to Turkey’s Recep Tayyip Erdogan to keep Syrian refugees from crossing the Aegean to the Greek islands and thence into Europe.

In Germany, too, nationalism is resurgent as opposition grows to any new bailouts of the La Dolce Vita nations of Club Med. The populist AfD party has made major strides in German state elections.

While the rightist parties in power and reaching for power are anti-EU, anti-Islamic and anti-immigrant, the secessionist movements roiling Scotland, Spain, Belgium and Italy seek rather the breakup of the old nations of Europe along ethnonational lines.

By enlisting in these parties of the right, what are the peoples of Europe recoiling from and rebelling against? Answer: The beau ideal of progressives — societies and nations that are multiracial, multiethnic, multicultural and multilingual.

Across Europe, the tribalists are rejecting, in a word, diversity.

And what are they seeking?

God-and-country, blood-and-soil people, they want to live with their own kinfolk, their own kind. They do not believe in economics uber alles. And if democracy will not deliver the kind of country and society they wish to live in, then democracy must be trumped by direct action, by secession.

This is the spirit behind Brexit.

The is the spirit that drove the Irish patriots of 1919, who rose against British rule, though they were departing the greatest empire on earth in its moment of supreme glory after the Great War, to begin life among the smallest and poorest countries in all of Europe.

What is happening in Europe today was predictable and predicted.

At the turn of the century, in “The Death of the West,” I wrote,

“Europe has begun to die. The prognosis is grim. Between 2000 and 2050, world population will grow by more than three billion to over nine billion people, but this 50 percent increase in population will come entirely in Asia, Africa and Latin America, as one hundred million people of European stock vanish from the earth.”

Europeans are vanishing, as the peoples of the Maghreb and Middle East, South Asia and the sub-Sahara come to fill the empty spaces left by aging and dying Europeans whose nations once ruled them.

Absent the restoration of border controls across Europe, and warships on permanent station in the Med, can the inexorable invasion be stopped? Or is “The Camp of the Saints” the future of Europe?

An open question. But if the West is to survive as the unique civilization it has been, its nations must reassume control of their destinies and control of their borders.

Britain ought not to go gentle into that good night the EU has prepared for her. And a great leap to freedom can be taken June 23.

Trooping to the polls, the cousins might recall the words of Vera Lynn, 76 years ago, as the Battle of Britain was engaged:

“There’ll always be an England,

 

“And England shall be free,

 

“If England means as much to you

 

“As England means to me.”

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Now that the market’s fascinated dream with the regime of Brazil’s new president Michel Temer is quickly turning into a nightmare, following two immediate resignations of his closest ministers over the ongoing Carwash corruption scandal, including ironically that of the country’s anti-corruption minister, Fabiano Silveira, attention is gradually returning to what is truly the cause of Brazil’s woes: an unprecedented economic depression, although only for the people – certainly not for the political elite.

And unfortunately, Brazil’s depression – which is what we first defined it here all the way back in December 2014 – is getting worse with every passing month. The latest economic news metely confirm this. Here is Goldman’s take on today’s disastrous unemployment numbers

The labor market continues to deteriorate: The unemployment rate continues to climb and is now at 11.2% with the ranks of the unemployed reached 11.4 million (up from 8.0 mn a year ago).

 

 

Employment declined 1.7% yoy in the 3-month period ending in April, while the active labor force grew 1.8%. Average real wages declined 3.3% yoy. We expect labor market conditions to deteriorate further given the expectation that the economy will remain weak for the remainder of 2016.

The national unemployment rate printed at a higher than expected 11.2% in the 3-month period ending in April, up from 10.9% in March, 8.0% a year ago, and 7.1% two years ago. In seasonally adjusted terms the unemployment rate climbed to 10.8% in April from 10.4% in March and 7.6% a year ago.

Formal salaried employment in the private sector shrank 4.3% yoy, and employment in the informal sector dropped 0.6% yoy. On the other hand, self-employment grew 4.9% (a reflection of increasingly limited salaried employment opportunities). By sector of economic activity, industrial employment shrank by a large 11.8% yoy.

Average real wages declined 3.3% yoy in April, with average real wages of the self-employed and those working in the informal sector down 5.1% yoy and 1.4% yoy, respectively.

Here is a better representation of Brazil’s unemployment problem:

 

Goldman’s conclusion: “We expect the labor market to deteriorate further. Exigent credit conditions, weak consumer and business confidence, and restrictive overall financial conditions are expected to lead to rising unemployment in 2016 and negative real wage growth.“

But while until recently the market could care less about Brazil’s economy, enthralled instead by the “bullish” political fight at the top which replaced one corrupt leader with another just as corrupt leader, this time investors – out of near-term catalysts – are once again paying attention. And the result, as Bloomberg writes, “this month marked a reversal of fortune for Brazilian stocks.”

The Ibovespa is the world’s worst performer in May as investors seek signs that acting President Michel Temer will be able to rescue the economy even as members of his administration get caught up in the same type of political turmoil that encircled Dilma Rousseff before she was removed from office to face impeachment proceedings. Brazil’s stock gauge was the third-best performer in the first four months of the year on optimism the new government would shore up the budget and restore growth.

 

“The market faced a reality check this month,” said Adeodato Volpi Netto, the head of capital markets at Eleven Financial Research in Sao Paulo. “The process of fixing the economy will be a bumpy road. I just hope that investors don’t go away.”

 

The Ibovespa has dropped 8.7 percent this month, its worst performance in more than a year and a half and the biggest decline among more than 90 gauges tracked worldwide by Bloomberg. It gained 0.4 percent to 49,140.63 at 11:23 a.m. in Sao Paulo on Tuesday after falling as much as 0.6 percent earlier in the day.

Which remind us of what we wrote back on May 12, namely that the time has come to exit Brazilian risk assets:

… if markets believe that the Brazilian political situation will stabilize following the Rousseff “coup” as she calls it, we would be sellers for one simple reason. As AP puts it, the man who may become Brazil’s next president is almost as unpopular as the leader facing impeachment now, and stained by scandals of his own.

In retrospect, we make have ticked the high Brazilian print for 2016.

 

And as investors are left with nothing but Brazil’s economic depression to look forward to, punctuated perhaps with the occasional bout of social violence and a disastrous bout of Summer Olympics to boot, the decline in Brazil assets is set to accelerate, unless somehow the narrative changes and now the return of Dilma Rousseff, suddenly looking all too possible, is spun as bullish.

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Submitted by Michael Krieger of LibertyBlitzkrieg

Now regulators from Bern to Washington are examining evidence first reported by Bloomberg News in June that a small group of senior traders at big banks had something else on their screens: details of each other’s client orders. Sharing that information may have helped dealers at firms, including JPMorgan Chase & Co., Citigroup Inc., UBS AG and Barclays Plc, manipulate prices to maximize their own profits, according to five people with knowledge of the probes.

 

At the center of the inquiries are instant-message groups with names such as “The Cartel,” “The Bandits’ Club,” “One Team, One Dream” and “The Mafia,” in which dealers exchanged information on client orders and agreed how to trade at the fix, according to the people with knowledge of the investigations who asked not to be identified because the matter is pending. Some traders took part in multiple chat rooms, one of them said.

 

“Some of these problems developed over many years without anybody speaking up,” said Andrew Tyrie, chairman of Britain’s Commission on Banking Standards and Parliament’s Treasury Select Committee. “This is remarkable. It suggests something very wrong with the culture at these institutions.”

–  From the 2013 post: Meet the “Bandits’ Club” – The TBTF Wall Street Cartel Rigging the FX Market

Serious question: Is there any illegal activity that someone at Barclays hasn’t been accused of engaging in?

Bloomberg reports:

A former Barclays Plc director was accused by the U.S. of giving tips about future mergers and acquisitions to a plumber friend in exchange for cash and home renovations.

 

Steven McClatchey, 58, who worked in the investment-banking division, told the plumber about 11 impending mergers and acquisitions from March 2014 to August 2015, the government said. The plumber wasn’t named.

 

McClatchey and the plumber met in 2011 or 2012 at the Long Island marina where both dock their boats, according to the complaint. By 2013, they spent most Saturdays at the marina or, in cold weather, playing pool and watching sports in McClatchey’s garage. The plumber used tips from McClatchey to make $76,000 trading stocks including Questor Pharmaceuticals Inc., PetSmart Inc., Emulex Corp. and Omnicare Inc., the government said.

The WSJ adds:

Steven McClatchey, 58, was a former employee at Barclays, the bank confirmed. Prosecutors said he worked for seven years at the Manhattan office of Barclays, where he was responsible for tracking the bank’s involvement in potential mergers and acquisitions. He distributed a weekly document to select Barclays employees called “M&A Global Weekly Business Update,” which included deals that were likely to become public the following week.

 

Government officials allege Mr. McClatchey gave tips to his friend who worked as a plumber ahead of more than 10 separate mergers and acquisitions before they became public, including deals involving PetSmart Inc., CVS Health Corp. and Duke Energy Corp.

 

The plumber allegedly paid Mr. McClatchey, in part, by providing “home renovation” services free of charge.

* * *

The two men became friends about four years ago, when they met at the Long Island marina where they both docked their boats. They began to spend most Saturdays together, the complaint said. The first tip Mr. McClatchey gave Mr. Pusey came around 2013 or 2014, when Mr. McClatchey allegedly told the plumber to “keep an eye on a particular company because something good was going to happen,” according to the complaint. Based on the tips, Mr. Pusey bought securities in at least 11 companies, prosecutors said.

Barclays said. that “we have rigorous and extensive conduct and compliance training at Barclays which we underpin with a steadfast commitment to acting with integrity and respect.”

Of course you do.

For related articles, see:

• Meet the “Bandits’ Club” – The TBTF Wall Street Cartel Rigging the FX Market
• Epic Video: “The Intruders” Crash Banker Award Ceremony and Give Barclays the Libor Rigging Award!
• “Bank Lives Matter” – Obama Administration Makes Another Move to Protect Profits of Criminal Mega Banks

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Having tried (and failed) twice to hold $50, WTI Crude futures plunged back into the red as machines ran out of stops to churn. This triggered another notable leg lower in stocks, slamming The Dow into the red for May… Gold and bond are best since the Friday close.

 

 

Which slammed The Dow into the red for the month..

 

As gold is once again the best performer since the close before the long weekend…

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Following media machinations over his donations to Veterans, Donald Trump struck back today in a press conference, raging that the liberal media "should be ashamed," and singling out ABC's Tom Llamas as a "sleaze." The Donald then turned the microphone over briefly to Al Baldasaro, a veteran from New Hampshire who skewered the news media, saying reporters should ''get your head out of your butt – focus on the real issues…stop using veterans as political pawns."

"What I don’t want is when I raise millions of dollars, have people say– like this sleazy guy right over here from ABC, he’s a sleaze in my book," Trump exclaimed.

Forward to 25 seconds…

 

Trump explains his $1 million donation to veterans, and $5.6 million in total from fundraiser…

 

Republican presidential candidate Donald Trump turned the microphone over briefly to Al Baldasaro, a Trump supporter and a veteran from New Hampshire who skewered the news media…

"First of all, for the record, I’m a state representative from New Hampshire, ten years on the veterans affairs committee, 22 years in the marine corps, retired first sergeant. What I want to clarify here, first of all, I would never, ever in a million years put my name on a candidate that did not from his heart look me in the eye and tell me he’s concerned about veterans. That’s Donald Trump. I met him over a year ago. I’ve been involved with many fund-raisers. There are many scam artists out there. He did the right thing by vetting these groups there. If you look at some of the groups giving 20 cents, 40 cents on the dollar and spending the rest for their nice lavish trips.

“He gave 100 percent. The liberal media is the only ones that have been calling me on the foundation. I’m the former chairman. I’ve been dealing with this stuff for years as a veterans activist. Stop using veterans as political pawns. You got a guy outside, McCoy, go do a google search on his Facebook. He’s out there, his picture is with Clinton. They are using veterans as political pawns, it must stop Donald Trump is doing this from the heart. You’re all focused on the way he’s raising money and you’re not looking at the 22 veterans that are killing each other every day. You’re not concerned about the thousands of veterans that are on wait lists. Look at his plan on this Trump website. He talks about medical cards, he talks about fixing the VA, he talks about competition. I think the liberal media, and I’ve been dealing with you a long time, need to get your head out of your butt, focus on the real issues. Thank you."

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In April we pointed out that due to an already abundant supply of condos on the market, luxury real estate developer Extell Development Co couldn't sell luxury condo's at its One57 tower, in the heart of New York's premier ultra luxury destination.

Extell decided that instead of leasing luxury apartments, it would sell the units as higher end apartments in order to fill vacancies and generate cash. As a reminder, Bill Ackman paid $91.5 million for a condo in One57 in April of 2015 just "for fun" in hopes of flipping the unit at some point. 

As luck would have it, Ackman now has an even bigger investment opportunity in One57.

Extell Development filed documents in April with the state attorney general's office which revealed that there is a "trophy apartment" (prices ranging from $10 million to $45 million) for sale in the complex, with a price tag of a cool $250 million.

The $250 million price tag obliterates the previous high-profile sale of a $88 million penthouse just a walk away at 15 Central Park West in 2012 to a Russian mogul by Sanford Weill, the American financier and philanthropist, who had purchased the apartment four years earlier for half that. Jonathan Miller, an independent appraiser said:

“That $88 million sale triggered the sense that there was this yet-to-be-harvested, nine-digit New York housing market. We started to see a frenzy of $100 million listings – what I call aspirational pricing.”

For the $250 million, the owner would receive 16 bedrooms, 17 bathrooms, and a massive terrace. Monthly common charges would be more than $45,000 and annual taxes estimated to be $675,000.

Who is going to purchase the apartment for such an insane price remains to be seen, but if we had to guess the owners behind the purchase will reside in China.

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