iftttwall

When it comes to the future of the US economy, capital markets, the strength of the dollar, and tax policy in general, few proposals are likely to have as much of an impact as the border adjustment tax, or BAT, which as we profiled before, could have a significant impact on the value of the dollar, pushing it as much as 15% higher, and leading to dramatic changes in global trade patterns. As a reminder, House speaker Paul Ryan is the primary advocate of the BAT, arguing this effective $1.2 trillion tax on imports is the only way Congress can pay for Trump’s proposed massive tax cuts.

Since the BAT stands to greatly benefit exporters, who would pay no taxes on exports, thereby dramatically boosting their bottom line, it is obvious why export-focused US businesses are heavily for the proposal. Among them are the “American Made Coalition,” a coalition of more than 25 American businesses. Two corporate titans playing a leading role in the push for BAT are GE, which has hosted coalition partners at its D.C. offices recently, as well as Boeing, which also has much at stake in this fight. Other industries include manufacturing, high tech, software, medical device production, agriculture, energy production, biopharmaceuticals and information services.

Furthermore, in addition to Paul Ryan and the House GOP leadership, Steve Bannon has also opined in favor of the border tax and, in recent days. Trump himself has dismissed the cornerstone of the House GOP plan as “too complicated” and has been touting a 35% levy on imports as an alternative. Yet his spokesman appeared to put the tax back in play last week by proposing a 20% tax on goods from Mexico and “other countries we have a trade deficit with” to pay for a border wall. So far, Trump’s position on BAT is “fluid.”

Meanwhile, as AP reports, a powerful lobbying force has emerged on the other side of the argument, and assures a war in the coming months as the fate of the border tax adjustment is determined in Congress.

Meet the “Americans for Affordable Products”, a coalition of more than 100 retailers including Wal-Mart and Target as well as key trade associations, aimed at fighting a Republican proposal on how imports get taxed, a measure they believe would harm their businesses.

The National Retail Federation, along with the American International Automobile Dealers Association, the National Grocers Association and others are joining forces to form Americans for Affordable Products, which will run a campaign to educate consumers and show lawmakers that the so-called Border Adjusted Tax plan would lead to higher prices of as much as 20 percent on everyday items including clothing, food and even gas. The diversified group, which also includes such companies as Nike, Best Buy, luxury conglomerate LVMH and Dollar General, is trying to make their opposition heard even while Congress and the president try to sort out exactly what adjustments to put forth.

“There’s a rush to get this done in Congress. We want to make sure our voices are heard,” said David French, chief lobbyist for the National Retail Federation, which has been dispatching members to meet with different levels of the new administration as well as lawmakers. Details of the consumer campaign are still being worked out, according to a spokeswoman at the retail trade group.

Since nearly all retail items bought by U.S. shoppers are either wholly or partly produced overseas, as companies have sought the cheapest way to make goods, the risk of an inflationary shock as prices are ultimately passed through to consumers is all too real. And with online competition and shoppers trained to find the best deals, U.S. retailers haven’t had the power to raise prices on many goods for several years.

“I’m losing sleep. I am scared out of my mind,” said Rick Woldenberg, CEO of Learning Resources, which has signed on to the coalition. It is a family-owned company based in Vernon Hills, Illinois that makes educational toys and employs 150 people in the U.S.  He estimates that under the GOP plan his federal tax rate would soar to 165 percent from 39.6 percent, he would have to raise prices by 10 percent to 15 percent to stay viable, and would have to lay off employees.

Retail industry leaders have gone so far as to “describe it as an existential threat,” said Stephen Lamar, executive vice president at the American Apparel & Footwear Association, another member of the  coalition. “When they crunch the numbers, it really affects things like solvency and profits.”

Lamar said companies would likely have to pass along higher prices to shoppers, who wouldn’t tolerate it. Companies say they also would have to try to squeeze suppliers for more savings and fear they might even have to lay off workers or close stores. He also said a shirt label saying “Made in China,” doesn’t tell the whole story. Seventy percent of the value of the garment supports U.S jobs in areas like design and logistics, he said.

More improtantly, other groups also oppose the border-adjusted tax, including Americans for Prosperity, a conservative organization backed by billionaires Charles and David Koch, who typically donate generously to Republican campaigns. And with such wealthy backers, it is only logical that this particular war will be waged where it counts: in Congress, and it is there that a problem for the Border Tax emerges.

While both sides of the fight have gamed it out the same way: they think Ryan and the House Ways and Means chair Kevin Brady can probably squeeze the plan through the House, the Senate is a different ball game. As Axios notes, even if Trump loudly supports border adjustability — and that’s a big if — he’ll have a tough time convincing Senators who fear him far less than House members do. And senators from states home to big box retailers, those with the most to lose should the law pass, have compelling reasons to oppose border adjustability.

GOP Senators being targeted by opponents of border adjustability:

• Arkansas Senators Tom Cotton and John Boozman (Walmart)
• Georgia Senator Johnny Isakson (Home Depot)
• North Carolina Senators Richard Burr and Thom Tillis (Lowe’s)

GOP Senators who have already said they don’t like border adjustability:

• Senator David Perdue of Georgia is a former CEO of Dollar General who has a deep understanding of the effects of border adjustment on retail. He said on CNBC: “In my view, it’s regressive. It just hammers low-income and middle-income consumers, and it really doesn’t foster growth.”
• Senator Mike Lee of Utah told Koch network donors: “This ends up becoming a VAT-like substance and I think it would end up having a lot of the negative characteristics of both a VAT and a tariff … I really don’t like it.”
• Senator John Cornyn of Texas is known to be concerned about border adjustment’s effect on gasoline prices. Last week he tweeted: “Many unanswered questions about proposed “border adjustment” tax.”

Since tax reform will likely be done through reconciliation, which requires a majority vote, Republicans can only afford to lose two senators on border adjustability.

Ultimately, the biggest question for both sides of this fight is whether Trump will weigh in forcefully on behalf of border adjustment. Trump’s chief strategist Steve Bannon is on board and believes it’s an American nationalist tax, however Trump has expressed less interest in the past. And the House GOP — supported by an outside coalition — is wisely making their pitch in nationalist terms. Axios cites a source, who favors border adjustment, as saying: “It is safe to say that the retail giants and the Koch brothers have jumped out to a head-start in this debate, but the political environment is tailor-made for the manufacturers and a strong ‘American jobs’ message.”

* * *

Finally, if the BAT does ultimately pass, leading to major changes for US trade and tax policy, its adverse impact on the rest of the world would be far greater. In a new note by Deutsche Bank’s George Saravelos and Robin Winkler, the economists have calculated the amount of trade with the U.S. that countries stand to lose if they face a 20% penalty at the border. Mexico is the obvious biggest loser, but Canada and Asian manufacturing economies including Vietnam, Malaysia and Thailand would also be in line for a big hit. In fact, anyone who exports to the US would see a major hit to their GDP almost immediately.

For those who are unfamiliar with the basis, Bloomberg explains that a border tax essentially places a levy on imported goods with the aim of narrowing the trade deficit and making the exports of domestic producers more competitive. The extent to which a country’s trade with the U.S. would be impacted is partly determined by how elastic demand for their products in the U.S. is. If the elasticity is higher, they suffer more. In other words, if Taiwanese-made electrical machinery sold in the U.S. suddenly becomes, say, 10 percent more expensive — after suppliers absorb some of the tax themselves — and potential buyers can find a domestic substitute easily, then price becomes the defining factor. Bad luck for the Taiwanese, in this example.

While the program would help the U.S. cut its trade deficit and on its own terms would likely be successful, it may not play well with trading partners.

For one, U.K. Prime Minister Theresa May should take an interest, as without a special deal the U.K. stands to suffer a serious reversal, according to Winkler and Saravelos. As demand for the U.K.’s exports to the U.S. is highly elastic, a border tax could turn a surplus of around $1 billion into a deficit of around $19 billion, almost a fifth of gross trade between the two countries.

And, as DB explained back in December, what would all this do to the dollar? Push it up, through increased demand for U.S. products and reduced American demand for goods from the rest of the world, although not immediately and not in a predictable way, the report argues.  Even if a rise in the U.S. currency were to offset some of the competitive advantages that domestic exporters were to gain through the tax, the policy would still “severely undermine bilateral trade relations,” Winkler and Saravelos write.

In short, BAT would lead to a trade war due to a deterioration in terms of trade, even if Trump never actually launched a trade war.

As DB concludes, “while currency adjustment would be gradual and incomplete, even a fraction of the theoretically implied 25% adjustment would be material for the dollar and would leave ample scope for border tax adjustments to severely undermine bilateral trade relations. Mexico, Canada and Asia would be most severely hit by US border taxes while commodity exporters, Latam, and most of Europe would be less affected. The magnitudes of the damage would be enormous in our view.”

* * *

To summarize: two wars are about to, or have already broken out, over the Border Adjustment Tax: one is domestic, and involves exporter (GE and Boeing) vs importer (WalMart and Koch Brothers) alliances and trade groups; this war will shift into the Senate, where Republicans can afford to lose at most 2 Senators, yet where as many as 6 are on the fence already (with 3 voicing a negative opinion toward BAT). The second war is one which would break out after the BAT is passed, and it would hammer – at least in the first few years – America’s biggest trading partners. And since the impact of the latter would be to force prices of the vast majority of retail goods sold in the US to soar, leading to a big jump in core inflation, eventually leading to a surge in the US Dollar – even if one ignores the diffuse effects and pervasive on global trade – the BAT would have an immediate impact on Fed policy, interest rates, and ultimately, prices of risk assets.

via http://ift.tt/2jD66sW Tyler Durden

By Chris at http://ift.tt/12YmHT5

Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.

Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all its glorious insanity.

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Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.

Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.

Join our Insider membership and find out what we’re doing with our own money… targeting asymmetric investment opportunities

In this week’s edition of the WOW we’re covering the US withdrawal from TPP and the repercussions

There’s always something new.

Take US presidents. Americans have had old codgers, young bucks, white men, a black man, dark haired, light haired, even red-haired, and now there’s one with a fox’s hair. Nobody is surprised by this and yet they’re surprised by what “the Donald” has done in his first few days in that ugly looking office that is clearly decorated by an avid fan of the antiques road show.

He promised to be a wrecking ball and now that he’s in that ugly-as-sin chair (who decorates that place, really?) he’s actually doing what he promised and people’s jaws are grazing the floor.

This is the consequence of decades of politics.

Recall the story of the boy that cried wolf?

The podium donuts get up there promise warm milk and cookies, bunnies and rainbows, and chickens in every pot; the largely illiterate electorate play their part, liking what they hear, hoping and praying that it won’t be them that has to pay for it all, and deep down not fully expecting all that is promised.

They can’t pin the feeling down so I’ll do it for them. It’s called experience. Recall Trump’s long line of predecessors and the promises they made on the campaign trails? Point proven.

Now, along comes the ginger ninja who promises all manner of things, many outrageous, and in his first few days of office sets to work delivering them. WHOAH!

Today we’ll cover just one: the Trans-Pacific Partnership (TPP), which is now toast.

To be clear, even though I repeatedly stated that Trump would win and pointed out why (here, here, here, and here) this doesn’t make me a Trump supporter. You can play the probabilities of a horse race without having any “favourite horse”. Heck, I carry 3 passports and none are blue.

My job isn’t to opine on what should or shouldn’t happen. Markets don’t give a rat’s furry behind about my opinion (or yours for that matter). My job is to allocate capital according to the best probabilities and continue to profit regardless.

So who benefits and who loses – short-term and long-term?

Firstly, let’s be clear: This is a big deal.

Consider that even though congress never ratified former President Obama’s deal, the signatories to the TPP together represent 40% of world GDP and about a third of world trade. Not insignificant.

Short-Term: The Losers

Vietnam, Mexico, and Malaysia have been beneficiaries as low cost manufacturing hubs. The market has long ago woken up to the stresses the Trump administration puts on Mexico and it’s gotten a lot cheaper as a result. I spoke just last week about Mexico and previously featured Mexico in an edition of World Out of Whack.  

Vietnam index in green, Mexican in orange, and Malaysian in purple.

As you can see both Malaysia and Mexico have been punished by the markets. Strangely elevated and sticking out like a leg in a cast sits Vietnam. Considering that Vietnam’s largest export partner is in fact the United States ($29.9b) I think the market has yet to fully digest this information. When it does I’d rather not be long.

Here’s Vietnam’s breakdown of export destinations:

Vietnam trading partners in terms of exports

You’ll notice that China ($17.5b) sits in second place in terms of exports. Also, let me remind you that China is grappling with a ginormous credit problem and the most appropriate release valve is its currency. And right now China is enjoying rising liquidity problems but this is a topic for another day.

Suffice to say the odds of a nasty surprise coming from China are elevated and there will be secondary trades to be made as they attempt to deal with the confluence of exploding NPLs (non-performing loans) and continued credit expansion. Bullish Vietnam? Not that I can see.

The US?

Bullish. Capital moves like water and Trump’s likely to torch a lot of really idiotic bureaucratic red tape as well as lowering corporate tax rates. Capital will continue to move to the US.

So that’s the quick and nasty on the short term.

The Long Game: Winners and Losers

It was interesting to see Chinese President Xi Jinping denouncing Trumps populism, protectionism, and de-globalization, likening it to “locking oneself in a dark room.” 

Is Trump planning on starting a trade war with China? I don’t know what’s on the man’s mind and annoyingly he’s failed to brief me.

What we do know is that even though China has some serious problems in the immediate future, its long-term prospects are undeniably attractive.

At the end of the day, America has nowhere to go. It’s a fully developed economy that will struggle to grow and it is suffering from a decaying education system, falling living standards, and a crippling military budget. And I’ve not even mentioned the debt…

China, on the other hand, has a billion hungry, and increasingly educated workforce with high rates of growth. Much of Asia is like this. Despite my reservations in the shorter term you can’t ignore this.

So while the west turns inward RCEP is taking shape.

RCEP?

The Regional Comprehensive Partnership will simply get a further boost from partners. Now that TPP is off the table expect the “disenfranchised” to do what humans do in such situations. React. I just got of the phone with a friend whose firm provides economic advisory to governments in Asia and this is definitely happening. Now!

Economic, political, and military ties will be strengthened as a result. Russia, Iran, and China are already moving closer together. This is a force to be reckoned with.

The Consqeuences

So America closes its doors. Now, what if China does the opposite?

When one ally shuts their doors to you, isn’t it in your interests to strengthen ties with those who aren’t?

China, the forerunner for the establishment of the 16-country Regional Comprehensive Economic Partnership, is punching forward. The RCEP would be the 10 ASEAN nations and their six FTA partners: Australia, China, India, Japan, New Zealand, and South Korea.

Interestingly, Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam would all see trade ties weaken with the U.S. due to America’s withdrawal from the TPP. Human nature will be kicking in and RCEP will likely gain greater support and participation.

Once RCEP goes through, American manufacturers are likely to find that breaking through supply chains between these regions, especially as China strengthens its trade ties with low-cost havens such as Philippines and Malaysia, is not going to be easy. Regional deals offering more favorable terms of trade via RCEP could well help these emerging markets grab additional market share from US’s exports to Japan. Slow at first, but watch.

Losing Control

America can’t afford to lose control of Europe’s governments, which is bound to happen as European trade with China increases and decreases with America. This is a natural thing.

Last week something happened which went largely unreported in the tabloids MSM.

The first direct freight train from China to London arrived.

This isn’t completely new but it is a significant sign. Take a look at what China’s access directly into Europe looks like:

Students of history (of which I stand accused) understand that as goods flow and as trade increases so follows influence. China understands this.

This is bad news for Washington. Their influence in Europe will decline and China’s will increase. Watch for it.

The West has routinely underestimated China. Why, I can’t fathom. We’ve had 30 years to witness one of the greatest economic miracles the world’s ever seen as scrawny little brown people clinging to their rice bowls clawed their way out of poverty, amassing increasing wealth – to the extent that they’ve now almost single handedly fuelled bubbles in Vancouver, Sydney, and Hong Kong real estate.

“Illiterate peasants producing plastic garbage” is what a friend, a patriotic American, suggested to me. I suggested a stiffer drink and some education.

Consider the following:

Medicine:

Tu wins China’s first Nobel Prize for medicine

“Chinese scientist Tu Youyou, 84, was awarded the 2015 Nobel Prize in Physiology or Medicine for her contribution in fighting malaria. She won the prize for her work using artemisinin to treat malaria based on a traditional Chinese herb treatment, making her China’s first medicine Nobel laureate.”

Technology:

Beidou system extends its reach to global users

“A new-generation satellite of China’s Beidou Navigation Satellite System was launched in March, enabling the Beidou system to expand its coverage out of the Asia-Pacific area.”

“The Beidou system, named after the Chinese term for the Big Dipper constellation, is a domestic alternative to the United States-operated GPS. The first Beidou satellite was launched in 2000. By 2012, a regional network of the Beidou system had been formed, providing positioning, navigation, timing and messaging services in China and several other Asian countries.”

China launches its first dark-matter satellite

“China successfully launched its first dark-matter satellite at a launch centre in Gansu province on 17 December. The satellite, nicknamed “Wukong”, is named after the heroic Monkey King in the Chinese classic novel Journey to the West. Designed in a one-cubic-metre box weighing two tons and with four probes aboard, in the next three years Wukong will search for dark matter, which is believed to make up a large part of the cosmos.”

Already the leader in supercomputers, China plans to introduce the first exascale supercomputer by 2018.

Recent PISA scores paint a pretty clear picture. This is an OECD ranking of students’ performance in math, science, and reading. The top countries:

You’ll notice China isn’t all thicko in math and science. USA, on the other hand, doesn’t even feature and is in fact below average.

It’s University professors suggest that “algebra is too hard and schools should drop it.” (no, really!)

You can’t make this stuff up. America increasingly leads the world in gender studies, safe spaces, and trigger warnings. Snowflakes rejoice. Watch out Beijing.

Trump, a bully with the manners of an ill-tempered and badly trained shitzu, tells Americans that China needs America much more than America needs China. Apart from being ridiculous, you may recall the same thing being said of Iran, Cuba, Russia, and a host of others. How’d that work out?

The taco eating neighbours to the south make for an easy punchbag. China is not that.

Empires typically last for roughly 100 years. Check your calendars.

A Question

2016 was a year of the “unthinkable”, Brexit and Trump to name just two.

Why should 2017 be any different?

Cast your vote here and also see what others think

– Chris

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” — Benjamin Graham

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via http://ift.tt/2k6qW2j Capitalist Exploits

Submitted by Duane via Free Market Shooter blog,

I’m on record as stating how unproductive, foolish and dangerous the recent liberal protests have been, and that’s before you even bring the hypocrisy factor into play.  But a liberal protest against Senator Chuck Schumer (D-NY)?  That is taking hypocrisy and idiocy to a whole ‘nother level.

In spite of their previous relationship and the money Trump has donated to Schumer in the past, Schumer has opposed Trump at every turn since he became the Republican nominee for President.  Schumer has used his position as Senate Minority Leader to stump against Trump at every possible opportunity, starting on the very day Trump took office:

Senate Majority Leader Charles Schumer, the most powerful Democrat in nation’s capital under the new GOP order sworn in today, used his address at the inauguration ceremony to celebrate a number of groups President Donald Trump has attacked in the past—immigrants, the disabled, religious minorities and the free press.

 

Assuming the podium at the West Front of the Capitol moments before Trump’s swearing-in, the senior senator from New York acknowledged the “challenging and tumultuous” nature of the present moment. He even at times echoed the anti-elitist sentiments that fired the GOP nominee‘s populist campaign.

 

But he seemed to disparage the tone of Trump’s bid for the White House, and his proposals to create a registry of Muslim citizens, to “open up the libel laws” to make it more difficult for journalists to publish critical articles, to appoint Supreme Court justices who might reverse the recent gay marriage decision and—of course—to deport millions of undocumented immigrants

 

“A rapidly changing economy that benefits too few while leaving too many behind. A fractured media. A politics frequently consumed by rancor. We face threats foreign and domestic. In such times, faith in our government, our institutions and even our country can erode,” he said. “Whatever our race, religion, sexual orientation, gender identity, whether we are immigrant or native-born, whether we live with disabilities or do not, in wealth or in poverty, we are all exceptional in our commonly held yet fierce devotion to our country.”

Since then, Schumer has basically done everything he possibly can to oppose Trump.  Whether it’s Trump’s picks for cabinet, Trump’s recent nomination of Neil Gorsuch to the Supreme Court (both before and after anyone knew who the nominee was), the Trump Executive Orders regarding immigration from terrorist states, or basically anything else Trump has done since he took office… there has been one Democratic leader who has been front and center every single time in opposition, and that is none other than Chuck Schumer.

For the record, I cannot stand Chuck Schumer.  I can’t stand basically his entire political platform, in particular his positions on gun control, financial reform, tax increases, and (the failure that is) Obamacare.  Not only that, he’s never held any job outside of politics, but has still gotten rich as a result of his corruption and pay-to-play politics, and it wouldn’t surprise me in the slightest if he used knowledge gleaned from his political position to engage in insider trading.  And this is before you even get me started on his opposition to everything Trump does, which is essentially a hyperpartisan play to his voter base.

But, at least in some ways, I have to respect this man.  He has done everything possible to oppose Trump at every turn.  You have to at the very least acknowledge that Schumer has (and is) working to the best of his ability to subvert Trump, and his powerful position and years of experience as a politician make him perhaps the best possible person to stand lockstep in opposition to Trump.  Perhaps no other Democrat knows the game better and has a better plan in place to oppose Trump, and even Schumer knows he can’t oppose everything the President does. Sooner or later, he has to at least allow Trump to put a staff in place, even if he still appears to be working to block it.  Were he not to, such conduct will be not only be used against him in his next election, it will (obviously) be detrimental to career.

Which is why it is so shocking that people are protesting him for not doing enough, when there’s perhaps nothing else he could do, short of demanding that he be the one to replace Gorsuch as Supreme Court nominee.

“Senator Schumer needs to know we’re watching him,” fumed Brad Wolchansky, a 40-year-old soccer coach from Flatbush who was carrying a cardboard cutout of a giant eye on Tuesday night.

 

“He works for us. We need him to be bold. We need him to stand up to Trump and oppose his picks,” Wolchansky said.

 

He and roughly 3,000 others gathered at Grand Army Plaza around 6 p.m. before eventually making their way over to Schumer’s building at 9 Prospect Park West, between Carroll and President streets.

 

As they marched, the anti-Trump demonstrators waved signs saying “Resist Trump” and “Show Some Spine Schumer” — while also chanting things like “Stay strong, Chuck” and “Shut it down, shut it down, New York is an immigrant town.”

This is so far out of my realm of comprehension, there’s almost no way to respond.  I suppose if you’re a Trump supporter, you have to be happy with this latest development?

In the bigger picture, it just confirms one fact that we knew all along: the protesters have no end goal, aren’t accomplishing anything, and people are starting to get sick of them.  They’re basically blowing their protest load in the first weeks of Trump’s Presidency, before he’s even had the chance to push for and enact any legislation from a Congress controlled by Republicans in both chambers.  By the time Trump does something that might actually be worth them protesting, “fatigue” from these non-stop pointless protests will have set in, and they will end up being a negative for their own cause.

I can’t help but laugh at the irony.

via http://ift.tt/2l29VEg Tyler Durden

In the ongoing effort to identify trading tweaks that might be helpful in navigating these confusing times, Bloomberg's Richard Breslow suggests major changes to two old memes…

I’m modifying “buy the rumor, sell the news” to “go with the rumor and get out before the news”.

 

The other change is assuming that “bad news is good news” no longer applies. Bad news is bad.

As Breslow notes, we used to say that when this happened it would mean the world was normalizing. A lot of people have been looking at the uptick in global growth and inflation and are arguing that that’s in fact what’s happening. Others have concluded that there’s just a great deal of bad news out there that monetary policy can’t cure.

Given the uncertainty over the long-term outlook, there’s been an increase in short-term positioning, looking to catch the mood of the moment. But also ready to cut and run without a lot of provocation. This has led to what seems like everyone serially being caught on the same side of things.

 

 

Anyone who’s playing, has it, looking for the same thing. The marginal buyer quickly becomes nowhere to be seen. And on the news, you get what looks like a violent reaction in the opposite direction. But at the end of the day, the reaction signifies little other than what it takes to clear the market. A situation not helped by every algorithm in the world understanding this is prime front-running fodder.

Yesterday, Breslow explains, it was clear that the bet was to hope for the Fed to do the right thing, and point a spotlight on March. They didn’t. Analysts were able to maintain that the “as expected” statement doesn’t shift their odds of a hike. And that’s a reasonable stance to take. To the short-term leveraged trader it felt like a knee to the solar plexus.

Suddenly, no one was talking March — until they could get square.

 

The risk-reward just wasn’t there to stick around for a maybe that was priced as a probably.

 

The most interesting immediate reaction to the dovish result came from equities.

 

They gave up their tidy gain on the day. Didn’t collapse, but the animal spirits evaporated.  

 

 

Their initial take wasn’t “oh goody, lower for longer”, but “given everything they’ve said and the numbers we’ve seen, what do they know that we don’t?”

Simply put, Breslow concludes "more and more of the old rules don't apply" – trade accordingly.

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

It’s different this time…

 

Source: Townhall.com

via http://ift.tt/2l003M7 Tyler Durden

After weeks of protest over the CEO of Uber’s decision to join President Trump’s advisory board, and after his own CTO’s flagrant missive against the President, Trevor Kalanick informed the President that he was removing himself from the economic council.

“Earlier today I spoke briefly with the president about the immigration executive order and its issues for our community,” Kalanick wrote in an internal email obtained by the Times. “I also let him know that I would not be able to participate on his economic council. Joining the group was not meant to be an endorsement of the president or his agenda but unfortunately it has been misinterpreted to be exactly that.”

Radical leftist groups have been protesting Uber on social media, under the hashtag DELTEUBER.

The creator of the hashtag, Dan O’Sullivan, was quoted saying “let this be a warning: if you are a corporation who thinks you will ride out Trump, and quietly make money at his side, you will be made to pay a price.”

When protesters took to JFK and the yellow cabbies ceased service, in solidarity with the protesters, Uber served the public. This caught the ire of said O’Sullivan, prompting a most acrimonious tweet.

congrats to @Uber_NYC on breaking a strike to profit off of refugees being consigned to Hell. eat shit and die https://t.co/19gbpIc9m9

— HUNTER S. FAILSON (@Bro_Pair) January 29, 2017

What else is this O’Sullivan up to, you ponder? Oh, I don’t know, how about DELETELYFT and DISNEY too?

Delete Disney? sure why not https://t.co/2FabBLSGW1

— HUNTER S. FAILSON (@Bro_Pair) February 2, 2017

Please don’t – they are a kinder, not gentler, @Uber. They continue to steal wages from their employees. #DeleteLyft https://t.co/lC5OQVvvIT

— HUNTER S. FAILSON (@Bro_Pair) February 2, 2017

In case you’re still pondering, all mighty O’Sullivan is leading the path towards protesting more than a 18 other companies in total.

1 down, 18 to go. Trump’s Strategic & Policy Forum is a not-so-subtle means of Big Business influence-peddling. #DeleteUber http://pic.twitter.com/ixZXo0GZWJ

— HUNTER S. FAILSON (@Bro_Pair) February 2, 2017

Here is the CEO of Uber’s internal memo to employees, explaining his actions.

Dear Team,

Earlier today I spoke briefly with the President about the immigration executive order and its issues for our community. I also let him know that I would not be able to participate on his economic council. Joining the group was not meant to be an endorsement of the President or his agenda but unfortunately it has been misinterpreted to be exactly that.
 
I spent a lot of time thinking about this and mapping it to our values. There are a couple that are particularly relevant:
 
Inside Out – The implicit assumption that Uber (or I) was somehow endorsing the Administration’s agenda has created a perception-reality gap between who people think we are, and who we actually are.
 
Just Change – We must believe that the actions we take ultimately move the ball forward. There are many ways we will continue to advocate for just change on immigration but staying on the council was going to get in the way of that. The executive order is hurting many people in communities all across America. Families are being separated, people are stranded overseas and there’s a growing fear the U.S. is no longer a place that welcomes immigrants.
 
Immigration and openness to refugees is an important part of our country’s success and quite honestly to Uber’s. I am incredibly proud to work directly with people like Thuan and Emil, both of whom were refugees who came here to build a better life for themselves. I know it has been a tough week for many of you and your families, as well as many thousands of drivers whose stories are heartfelt and heart-wrenching.
 
Please know, your questions and stories on Tuesday, along with what I heard from drivers, have kept me resilient and reminded me of one of our most essential cultural values, Be Yourself. We will fight for the rights of immigrants in our communities so that each of us can be who we are with optimism and hope for the future.

 
The left is really pushing the envelope this time, aren’t they?

Content originally generated at iBankCoin.com

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In what may be the biggest firestorm set off by a Trump executive order to date, surpassing even the widespread angry response to the Trump immigration order, a draft of an executive order circulating in the Trump administration would dramatically expand the legal protections for individuals, organizations and employers on the grounds of their religious beliefs, and as the WSJ reports, would potentially allow the denial of services to gay and transgender people, and contraception coverage for employees.

The draft is titled “Establishing a Government-Wide Initiative to Respect Religious Freedom.” While it hasn’t been signed and may never make it to President Donald Trump’s desk, advocacy groups see the draft order as a broad statement of intent from a president who courted conservative Christian voters during the campaign by promising to expand the role of religion in public life. As the WSJ adds, the draft order lays out many of the proposals that conservative Christians have been requesting for years, including legal protections for organizations that claim religious objections to providing a wide range of services. It also directs federal agencies to “avoid potential violations of Religious Freedom”, instructing officials not to “coerce” religious entities or individuals into “participating in activities that violate their conscience.”

If this order or a similar one were signed, it would immediately plunge Mr. Trump into a debate over religious freedom, gay rights and reproductive rights, which has churned through states and courts for years—most recently with the disputes over transgender people’s use of bathrooms. Some religious groups have argued that they should not have to violate their beliefs in business, education or as civil servants. Corporations and sports leagues have largely sided with civil-rights groups and threatened to cancel events over legislation viewed as discriminatory.

Gay and transgender rights groups have already pounced on the draft order, calling it a “license to discriminate” that would effectively gut many existing protections for LGBT people by allowing those who claimed religious objections to ignore them. “If the White House did even a fraction of the things that are in this draft executive order, that would be an unprecedented rollback of LGBT equality and rights,” said David Stacy, director of government affairs for the Human Rights Campaign. “This would provide a blanket exemption for religious organizations not to have to follow any statute that they say violates their religious beliefs.”

Perhaps hinting at the order, while speaking at the National Prayer Breakfast on Thursday morning, Trump reiterated his commitment to expanding the role of faith in the public square, vowing to repeal a law known as the Johnson Amendment that bars churches from engaging in political activity. Those deemed in violation risk losing their tax-exempt status. “I will get rid of and totally destroy the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution,” Mr. Trump said.

The WSJ adds that it wasn’t immediately clear on Thursday exactly what the effects of the order would be if it were enacted as written. But all sides agreed its implications would be far-reaching, affecting the health-care industry, employment regulation and policy about who could receive government grants and contracts.

Many of these subjects are currently being litigated, like whether Catholic hospitals are required to provide hormone therapy or hysterectomies to transgender people. Conservative groups argued that the order simply makes explicit protections for religious expression that are already enshrined in law and in the constitution, following an administration that they considered hostile to religion. “Many Americans voted for Donald Trump based on concerns about what the other candidate might do with regard to religious liberty,” said Greg Baylor, a lawyer with the Alliance Defending Freedom, a conservative legal organization. The draft order, he said, “reflects a very different attitude by the new administration toward respecting the conscience of religious organizations.”

As the WSJ points out, “the draft order reveals a political tension for Mr. Trump, who has tried to position himself as both a champion of religious freedom and a friend to gays and lesbians—two political constituencies who have frequently squared off in court in recent years.”

On Tuesday, the Trump administration announced that a 2014 Obama administration executive order, which established new workplace protections for gay, lesbian, bisexual and transgender people, would remain in place—prompting complaints from some Catholic and Protestant leaders. But Mr. Trump hardly won any plaudits from LGBT groups, which continued to castigate him through the week, assailing his executive orders on immigration and expressing doubts about his commitment to their causes. They said the draft order on Thursday better reflected the president’s priorities.

“Freedom of religion doesn’t mean private businesses and government officials providing public services have the right to turn people away because of who they are,” said Harper Jean Tobin, director of policy for the National Center for Transgender Equality. “That would really be out of step with some core values.”

Conservatives, naturally, saw things in a different light: “This is conceptually in keeping with what I anticipate from this administration,” Tony Perkins, founder of the Family Research Council, a conservative advocacy group, said of the draft order. “We’ve seen policies in the last eight years that have sought to marginalize and intimidate people of orthodox Christian faith. This simply says the government can’t bully you. The IRS can’t be used to silence you.”

In short: Trump continues to do what he vowed to do during his campaign and it is infuriating his opponents, although should this order pass, it would have the most profound social response yet from liberals around the nation. For now, the executive order remains in the trial balloon stage, but should enough grassroots support for it emerge, it is possible that Trump will ultimately sign it, in the process undoing a big part of Obama’s progressive agenda over the past 8 years, unleashing a social firestorm of angry protests.

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