Tag: finance

While the reverberations from this weekend’s western strike on Syria will dominate newsflow, if only at the start of the week, while concerns that the US trade war with China may return at any moment remain, there is still some notable data to highlight including China Q1 GDP and US retail sales. The Fedspeak diary is also packed full all week while President Trump is due to meet Japan’s Abe, the IMF/World Bank Spring Meetings kick off, and Germany’s Merkel and France’s Macron meet to discuss EU reform and trade. In addition to all that, US earnings season kicks up a notch with 61 S&P 500 companies due to report.

As Deutsche Bank’s Craig Nicol writes, for markets, the most sensitive data print next week will likely come in China when we receive Q1 GDP early on Tuesday morning. As it stands, the market consensus is for a +6.8% yoy print. That follows +6.8% readings in Q4 and Q3 last year.  It’s worth noting that we will also get March activity data on Tuesday in China with retail sales, industrial production and fixed asset investment data all due out.

In the US this week there’s not a lot of market sensitive data due out. The big release will be this morning at 830am when we get the March retail sales report. The market consensus is for a +0.4% mom headline reading, +0.4% mom ex auto and gas reading and +0.3% mom control group reading. As a reminder the latter is what goes into the national accounts. Other data due next week includes the March housing starts (+2.7% mom expected), building permits (+0.7% mom expected) and industrial production (+0.1% mom expected) data on Tuesday, and initial jobless claims and the March leading index on Thursday.

While it’s a fairly light week for data in the US, a busy week for Fedspeak should help to fill the gap somewhat with the next Fed meeting just over 2 weeks away now, particularly given the wide range of views that we should likely hear. The highlights will likely include talks on the economy and outlook from Atlanta Fed President Bostic (neutral/voter) on Monday, San Francisco Fed President Williams (hawk/voter) and Chicago Fed President Evans (dove/non-voter) on Tuesday, NY Fed President and Vice-Chair Dudley (neutral/voter) on Wednesday, Cleveland Fed President Mester (hawk/voter) on Thursday and Evans again on Friday. We also count another 6 scheduled speeches with Quarles (neutral/voter), Harker (dove/non-voter) and Bostic due on Tuesday, Quarles again on Wednesday and Thursday along with Brainard (dove/voter) on Thursday. The Fed will also release its Beige Book on Wednesday.

In Europe next week the most significant data release is Wednesday’s final March CPI report where the consensus expects a +1.0% yoy core reading and +1.4% yoy headline print (both unchanged from the flash readings). We’ll also get February and March labour market stats in the UK on Tuesday where most of the focus will be on the average weekly earnings data, before we then receive the March CPI/PPI/RPI report on Thursday (core CPI expected to hold steady at +2.4% yoy). The April ZEW survey in Germany will also be out on Tuesday. Over in Asia inflation data should also be a focus with Japan’s March CPI report due out on Friday.

Elsewhere, earnings season will ramp up with 61 S&P 500 companies scheduled to release results. The remaining US banks will likely be the highlights including Bank of America (Monday), Goldman Sachs (Tuesday) and Morgan Stanley (Wednesday). Also worth noting are earnings reports from Netflix (Monday), IBM (Tuesday), Johnson & Johnson (Tuesday), Procter & Gamble (Friday) and General Electric (Friday). A reminder that our US equity strategist Binky Chadha expects the bottom-up consensus of just over 18% S&P 500 EPS growth to be beat significantly in Q1 given the typical median beat of around 3%.

Finally, other events worth keeping an eye on next week include an EU foreign ministers meeting Monday regarding the situation in Syria, Japan PM Abe’s meeting with President Trump in Florida on Tuesday where they are expected to discuss both North Korea and the latest trade developments, the annual Spring Meetings of the World Bank and IMF commencing on Tuesday and continuing through to April 22nd, and finally Thursday’s meeting between Germany’s Merkel and France’s Macron where EU reforms and trade are expected to be high on the list of agenda items. Given the focus on President Trump’s administration, the release of former FBI Director James Comey’s book called “A Higher Loyalty: Truth, Lies & Leadership” on Tuesday perhaps shouldn’t be underestimated too.

A visual summary of global events:

A breakdown of key events by day, courtesy of Deutsche Bank:

• Monday: The big release to kick the week off comes in the US with the March retail sales report. Other data due in the US on Monday includes the April empire manufacturing print, February business inventories and April NAHB housing market index reading. There is no data due out in Europe or Asia. Away from the data the BoJ’s Amamiya speaks in the morning and the Fed’s Bostic is due to speak in the evening. EU foreign ministers are also due to meet to discuss the situation in Syria. Bank of America and Netflix are the earnings highlights.
• Tuesday: Overnight, all eyes will be on China where we are due to receive the Q1 GDP print as well as April retail sales, industrial production and fixed asset investment data. In Japan we’ll also get February industrial production. In Europe the most significant releases are UK employment stats for February and March, and Germany’s April ZEW survey. In the afternoon in the US we’ll get March housing starts and building permits as well as March industrial and manufacturing production. Tuesday is a busy day for Fedspeak with Williams, Quarles, Harker, Evans and Bostic all slated to speak. Meanwhile, President Trump is due to welcome Japan PM Abe while the IMF and World Bank Annual Spring Meetings will commence, concluding April 22nd. Goldman Sachs in the earnings highlight along with IBM and Johnson & Johnson.
• Wednesday: Another busy day for data. Overnight we’ll get March trade data in Japan and March new home prices data in China. In Europe the main highlights are the March CPI reports for the UK and Euro area. In the US there is no data due out however we will get the Fed’s Beige Book, while the Fed’s Dudley and Quarles are scheduled to speak. The BoE’s Brazier is also due to speak to lawmakers in London. Morgan Stanley will report earnings.
• Thursday: With nothing of note in Asia, the most notable data due in Europe is the February current account balance reading for the Euro area and March retail sales data for the UK. In the US we’ll get the latest weekly initial jobless claims reading, March leading index and April Philly Fed business outlook print. The Fed’s Brainard, Quarles and Mester are both due to speak. Worth noting also is talks between Germany’s Merkel and France’s Macron with EU reforms and trade conflicts with the US expected to be high on the agenda.
• Friday: A fairly quiet end to the week with March CPI due in Japan, March PPI due in Germany and April consumer confidence for the Euro area. The Fed’s Evans is also due to speak again. Procter & Gamble and General Electric are due to report earnings.

* * *

Finally, here is Goldman with a focus on US events, alongside consensus estimates: “The key economic releases this week are retail sales on Monday and industrial production on Tuesday. The Beige Book for the May FOMC meeting will be released on Wednesday. In addition, there are several scheduled speaking engagements by Fed officials this week.”

Monday, April 16

• 08:30 AM Retail sales, March (GS +0.4%, consensus +0.4%, last -0.1%); Retail sales ex-auto, March (GS +0.3%, consensus +0.2%, last +0.2%); Retail sales ex-auto & gas, March (GS +0.5%, consensus +0.4%, last +0.3%); Core retail sales, March (GS +0.6%, consensus +0.3%, last +0.1%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose at a solid 0.6% pace in March, reflecting the arrival of previously delayed tax refunds (and the continued positive impulse from tax reform). Retail spending also appears overdue a pickup following two weak reports. On the negative side, we expect unseasonably high snowfall to weigh on sales in the building materials and food services categories. Based on an increase in auto SAAR but a seasonally adjusted decline in gasoline prices, we estimate 0.4% and 0.3% respective increases in the headline and ex-auto measures.
• 08:30 AM Empire manufacturing survey, April (consensus +18.2, last +22.5); 10:00 AM NAHB housing market index, April (consensus 70, last 70); Consensus expects the NAHB homebuilders’ index to remain flat at 70 after edging down 1pt in March.
• 10:00 AM Business inventories (consensus +0.6%, last +0.6%)
• 01:15 PM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will give a speech at the Shoals Chamber of Commerce in Florence, Alabama. Audience Q&A is expected.

Tuesday, April 17

• 08:30 AM Housing starts, March (GS +1.0%, consensus +2.8%, last -7.0%); Building permits, March (consensus +0.7%, last -5.7%): We estimate housing starts rebounded 1.0% in March following a 7% drop in February that was driven by a sizeable drop in multi-family housing. We expect solid single-family construction fundamentals to be partly offset by wintry weather in March.
• 09:15 AM Industrial production, March (GS +0.9%, consensus +0.3%, last +1.1%); Manufacturing production, March (GS +0.5%, consensus +0.1%, last +1.2%); Capacity utilization, March (GS +78.2%, consensus +77.9%, last +78.1%): We estimate industrial production rose 0.9% in March, as the utilities category likely rebounded and the mining category rose further. We expect manufacturing production also increased, reflecting strength in both auto- and non-auto manufacturing.
• 09:15 AM San Francisco Fed President Williams (FOMC voter) speaks: San Francisco Fed President John Williams will give a speech at the NABE-Bank of Spain event in Madrid. Media Q&A is expected.
• 10:00 AM Vice Chairman for Supervision Quarles (FOMC voter) speaks: Vice Chairman for Supervision Randal Quarles will appear before the House Financial Services Committee to provide his semi-annual testimony on the Fed’s supervision and regulation of the financial system.
• 11:00 AM Philadelphia Fed President Harker (FOMC non-voter) speaks: Philadelphia Fed President Patrick Harker will give a speech at Saint Joseph’s University. Audience Q&A is expected.
• 01:40 PM Chicago Fed President Evans (FOMC non-voter speaks): Chicago Fed President Charles Evans will give a speech on current economic conditions and monetary policy at a Chicago Rotary Club luncheon. Audience and media Q&A is expected.

Wednesday, April 18

• 08:30 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give welcome and opening remarks at the Community Bankers Conference in New York.
• 02:00 PM Beige Book, May FOMC meeting period: The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The March Beige Book reported modest-to-moderate growth across all 12 districts. Consumer spending was reportedly mixed, and manufacturing activity was generally firmer. A few contacts noted concerns about pending trade cases and negotiations. In the May Beige Book, we look for additional anecdotes related to the state of consumption, manufacturing activity, price inflation, and wage growth.
• 03:15 PM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give a speech on the US economic outlook and monetary policy at an event hosted by Lehman College in New York. Audience Q&A is expected.

Thursday, April 19

• 08:30 AM Philadelphia Fed manufacturing index, April (GS +21.5, consensus +20.8, last +22.3); We expect the Philadelphia Fed manufacturing index to edge down 0.8pt to 21.5 in April. Our forecast reflects uncertainty around trade policy, partially offset by stronger high-frequency business sentiment data. In the March report, the headline index rose by 3.6pt, while the underlying composition looked more favorable. Overall, the index is likely to remain at levels suggestive of moderate expansion in manufacturing activity.
• 08:30 AM Initial jobless claims, week ended April 14 (GS 225k, consensus 229k, last 233k); Continuing jobless claims, week ended April 7 (consensus 1,842k, last 1,871k): We estimate initial jobless claims declined 8k to 225k in the week ending April 14, following two weeks of elevated readings around the Easter holiday. Seasonal adjustment challenges may have boosted claims in recent weeks, and we note that the level of claims appears unsustainably high in New Jersey. Continuing claims—the number of persons receiving benefits through standard programs—have rebounded in recent weeks, though this too may reflect seasonal adjustment issues as opposed to a change in trend.
• 09:30 AM Vice Chairman for Supervision Quarles (FOMC voter) speaks: Vice Chairman for Supervision Randal Quarles will appear before the Senate Committee on Banking, Housing, and Urban Affairs to provide his semi-annual testimony on the Fed’s supervision and regulation of the financial system.
• 06:45 PM Cleveland Fed President Mester (FOMC non-voter) speaks: Cleveland Fed President Loretta Mester will give a speech on the economic outlook and policy at an event jointly sponsored by the University of Pittsburg’s Joseph M. Katz Graduate School of Business and Deloitte LLP. Audience and media Q&A is expected.

Friday, April 20

• 09:40 AM Chicago Fed President Evans (FOMC non-voter speaks); Chicago Fed President Charles Evans will give a speech on current economic conditions and monetary policy at the Graaskamp Center Spring Board Conference in Chicago. Audience and media Q&A is expected.
• 11:15 AM San Francisco Fed President Williams (FOMC voter) speaks; San Francisco Fed President John Williams will take part in a fireside chat at the UC Berkeley Fischer Center for Real Estate and Urban Economies in Pebble Beach, California.

Source: Deutsche Bank, Barclays, BofA, Goldman

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After Friday’s earnings reports from JPM and Citi suggested that, unlike most hedge funds, banks profited handsomely from the surge in Q1 volatility, this morning’s results from BofA confirmed that yet another bank enjoyed bumper revenue in equity trading in the first quarter at the expense of FICC, even as the bank’s generally favorable balance sheet trends persisted.

The big picture: BofA reported adjusted Q1 revenue of $23.27BN, just above the $23.1BN expected, generating EPS of $0.62, also beating consensus estimates of $0.59.

Commenting on the results, CEO Brian Moynihan said that BofA’s “strong client activity, coupled with a growing global economy and solid U.S. consumer activity, led to record quarterly earnings.”

Then, going straight to the slide in the earnings presentation that all will focus on – Global Markets – BofA reported Q1 sales and trading revenue excluding DVA of $4.117 billion, just missing the consensus estimate of $4.14 billion. Just like with JPM and Citi, BofA too saw a dramatic surge in Equity sales and trading revenues, which soared from $1.1BN in Q1 2017 to a record $1.517BN, smashing estimates of $1.18BN.

This is what the bank said:

Record Equities revenue of $1.5B increased 38% from 1Q17, driven by increased client activity and a strong trading performance in derivatives

That was the good news: the bad is that just like with JPM, FICC disappointed, printing at $2.5 billion (ex DVA), down 13% Y/Y, “due to lower activity and less favorable market conditions in credit-related products, partially offset by improved activity in rates and currencies”, and well below the estimate of $2.96 billion.

Another disappointment: 1Q investment banking revenue tumbled 15% Y/Y to $1.35 billion, also below the estimate of $1.48 billion.

To sum up: FICC sales and trading missed, but was almost exactly offset by the rebound in Equities S&T, even as investment banking revenue slumped in a quarter that saw few marquee M&A or bond and equity issuance deals.

Some other trading highlights:

• Average total assets increased from 1Q17, primarily due to targeted growth in both Equities and FICC
• Average VaR remained low at $40MM in 1Q18

Last but not least, BofA was proud to announce it had no trading loss days recorded in the first quarter.

Stepping away from trading, where BofA surprised is that unlike Wells, its loan book continued to grow, and total loans and leases rose by $4BN sequentially, and 2% Y/Y, even as total deposits hit a new record high of $1.297TN, up 3% Y/Y. Of note: consumer banking average loans/leases of $280BN increased $22BN, or 8%, y/y driven by growth in residential mortgage, credit card debt; meanwhile Q1 average loan balances in business segments rose $45BN, or 5%, to $864BN.

Looking at the bank’s asset quality, total net charge-offs of $0.9B declined $0.3B from 4Q17, while total net charge-off ratio improved to 40 bps. As the company notes, the overall credit quality “remained strong across both the consumer and commercial portfolios,” leading to the drop in net charge-offs while the provision for credit losses remained stable at $834MM.

BofA also explains that commercial net charge-offs of $0.1B decreased $0.4B, “primarily driven by the absence of a $0.3B single-name non-U.S. charge-off in 4Q17”, which as a reminder was the bank’s exposure to Steinhoff debt, which plunged overnight in late Q4.

Meanwhile, the bank’s net reserve release decreased to $77MM from $99MM Y/Y, driven by continued improvements in consumer real estate, energy exposures, partially offset by continued seasoning in U.S. Card portfolio.

And speaking of said “seasoning” one can see the deteriorating trend in credit card charge-offs in the chart below, something we saw previously with JPM:

Another notable observation: whereas JPM saw its NIM increase, and Wells Fargo’s net interest income slumped, BofA’s remained perfectly unchanged at 2.39%, which however missed fractionally the estimate of a rise to 2.40%. According to BofA, its NIM “reflects the benefits from spread improvement offset by a reduction in the non-U.S. consumer credit card portfolio (higher-yielding asset), as well as the impact from an increase in Global Markets assets (lower-yielding).”

The bank also notes that a +100bps parallel shift in interest rate yield curve is estimated to benefit NII by $3.0B over the next 12 months, driven primarily by sensitivity to short-end interest rates. BofA did not explain how much it would be hurt by the continued sharp flattening of the yield curve.

Finally, on the expense side, BofA recorded Q1 compensation expenses $8.48 billion, above the estimate of $8.28 billion. At the same time, total noninterest expense of $13.9B declined $196MM, or 1% Y/Y, driven by lower non-personnel costs; this helped the total efficiency ratio to improve to 60% in 1Q18.

Overall, a good quarter if nothing spectacular for BofA, which like all other banks benefited from the surge in vol, which helped boost equity trading revenue to record highs, even as FICC and i-Banking declined sharply. Meanwhile, the bank continued to create loans if at a slower pace, while continued curve flattening threatens to further pressure the bank’s NIM.

Full earnings below (pdf link).

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Last night, George Stephanopoulos landed what will be remembered as one of the bigger interviews of the year when he sat down with James Comey, former director of the FBI, just days before his book “A Higher Loyalty: Truth, Lies, and Leadership” – already a bestseller on preorders alone – was set to hit the shelves.

Over the course of about 45 minutes, Comey described in detail his impression of trivial details like whether President Trump’s hair is real (it is), to whether Trump had obstructed justice, to a bizarre request to investigate certain claims made in the Steele dossier so Trump could prove to Melania that they weren’t real.

But Comey’s claims that President Trump is “untethered to the truth” and “morally unfit” for office drew perhaps the most attention. The former FBI director pushed back against the idea that Trump was somehow bumbling or an idiot and insisted that he’s a person of “above average intelligence” who can follow the plot.

However, Comey insisted that whatever had transpired between them, Trump shouldn’t be impeached – because the American people should be responsible for voting him out of office.

JAMES COMEY: I don’t know is the honest answer. That– that was th– what we were trying to investigate at the time. Was anyone aiding the Russians, conspiring with the Russians? There’s no doubt there was smoke around that. Whether there’s fire, I– I didn’t stay long enough to know.

GEORGE STEPHANOPOULOS: You write that President Trump is unethical, untethered to the truth. Is Donald Trump unfit to be president?

JAMES COMEY: Yes. But not in the way m– I often hear people talk about it. I don’t buy this stuff about him being mentally incompetent or early stages of dementia. He strikes me as a person of above average intelligence who’s tracking conversations and knows what’s going on. I don’t think he’s medically unfit to be president. I think he’s morally unfit to be president.

A person who sees moral equivalence in Charlottesville, who talks about and treats women like they’re pieces of meat, who lies constantly about matters big and small and insists the American people believe it, that person’s not fit to be president of the United States, on moral grounds. And that’s not a policy statement. Again, I don’t care what your views are on guns or immigration or taxes.

There’s something more important than that that should unite all of us, and that is our president must embody respect and adhere to the values that are at the core of this country. The most important being truth. This president is not able to do that. He is morally unfit to be president.

…

JAMES COMEY: Yeah, I’ll tell you, I’ll give you a strange answer. I hope not because I think impeaching and removing Donald Trump from office would let the American people off the hook and have something happen indirectly that I believe they’re duty bound to do directly. People in this country need to stand up and go to the voting booth and vote their values.

 

The subject of whether Trump obstructed justice also occupied a fair amount of time. While Comey didn’t accuse the president outright of obstruction, he didn’t rule it out, insinuating that the president must’ve known he was doing something improper because he asked the attorney general, vice president and several intelligence agency leaders to leave the room.

GEORGE STEPHANOPOULOS: So he says, “I hope you can let it go.” What do you say?

JAMES COMEY: He had said, “He’s a good guy, I hope you can let it go,” I think those are the exact words. But he said– and I just said, “I agree he’s a good guy,” or I said, “he’s a good guy.” And so then full-stop. And there was a brief pause. And then the meeting was over.

GEORGE STEPHANOPOULOS: Should you have said more there? Should you have said, “Mr. President, I can’t discuss this with you. You’re doing something improper?”

JAMES COMEY: Maybe. I mean, that– that’s also a fair criticism. Maybe I should have. Although, as I’ve thought about it since, if he didn’t know he was doing something improper, why did he kick out the attorney general and the vice president of the United States and the leaders of the intelligence community? I mean, why am I alone if he’s– doesn’t know the nature of the request?

But it’s possible that in the moment I shoulda– you know, another person would have said, “Sir, you can’t ask me that. That’s a criminal investigation. That could be obstruction of justice.” Again, it’s one of these deals where I’m so– even though I knew something important was going to happen, it didn’t occur to me he was going to ask me to drop a criminal investigation. And so a little bit of it is the shock of it, and part of it is just from the environment I think I had a good gut sense that he knows what he’s doing.

GEORGE STEPHANOPOULOS: With that direction, was President Trump obstructing justice?

JAMES COMEY: Possibly. I mean, it’s certainly some evidence of obstruction of justice. It would depend and– and I’m just a witness in this case, not the investigator or prosecutor, it would depend upon other things that reflected on his intent.

Stephanopoulos pressed harder, asking Comey to explain why he referred to Flynn as a “good guy” during his meeting with the president.

GEORGE STEPHANOPOULOS: I wonder if you even should have agreed at that point that Flynn is a good guy. By February 14th, did you know that Mike Flynn had lied to the F.B.I.?

JAMES COMEY: Yes. Yeah.

GEORGE STEPHANOPOULOS: So was it a mistake to even agree with the president on that point?

JAMES COMEY: Maybe. I mean, I– I actually– good people do lie, and my sense of Flynn was he was a good guy, that I sat with him and chatted with him when he was head of the Defense Intelligence Agency. And so the fact that someone lies doesn’t necessarily make them a bad person. But I think mostly it was me trying to get outta the conversation, give him a piece of what he said that’s harmless so that I cannot give him the rest.

Stephanopoulos also asked Comey to explain reports that he told members of Congress that Flynn hadn’t lied during his interview with the FBI.

GEORGE STEPHANOPOULOS: There’s been some reporting that– at– at– at one point you told the Congress that the agency who interviewed Mike Flynn didn’t believe that he had lied.

JAMES COMEY: Yeah, I saw that. And that– I don’t know where that’s coming from. That– unless I’m– I– I– said something that people misunderstood, I don’t remember even intending to say that. So my recollection is I never said that to anybody.

As he first revealed in a leaked excerpt of his book, Comey reiterated that John Kelly had called him intending to resign in protest over Comey’s firing, but that Comey had effectively convinced him to stay. ‘What would he say to Kelly if he offered to resign today?’ Stephanopoulos asked. Comey replied that Kelly has “sacrificed as much as [he] can for the country” and that “no one could blame [him].”

JAMES COMEY: Please don’t do that. Please don’t do that, John. And I knew him well and still– knew– thought highly of him then, still think highly of him, and I said, “Please don’t do that. This president needs people of character and principle around him, especially this president. Please don’t do that.” And I said, “We need you to stay and serve for the country.”

GEORGE STEPHANOPOULOS: If he called you today saying he intended to quit, what would you tell him?

JAMES COMEY: I understand. I– I think you’ve– you’ve sacrificed as much as you really can of yourself for the country. And– no one would begrudge you leaving. You’ve done your absolute best. It’s– it’s come at a cost to you, but– that no one can blame you.

In one of the interview’s more entertaining digressions, Comey describes his initial reaction to the news of his firing, his initial panic at learning he might be stranded in Los Angeles and that he’d briefly considered renting a convertible and driving the 3,000-plus miles back to Washington DC. But once he’d boarded the FBI’s private plane for the ride home, Comey says he “broke the rules” by cracking open a bottle of pinot noir and drinking it out of a paper cup during the flight back.

GEORGE STEPHANOPOULOS: Also had to find a way to get home.

JAMES COMEY: Yeah. It– ’cause I’m no longer F.B.I. director, so how do I get home? I– I actually gave thought to renting a convertible and driving almost 3,000 miles, something I’ve never done. I’ve had friends drive across country, but I’m not single or crazy so I didn’t do it. And I left it to the– who– my deputy, who immediately had become the acting director of the F.B.I., to figure that out.

And the– the head of my security detail, who’s an amazing person, said, “Sir, we’re going to figure this out. But if I have to put you in handcuffs, we’re taking you back on the F.B.I. plane.” And I said, “Well look, I want to do whatever is appropriate under the law and the regulations, so you all figure that out.” And they figured out that they had an obligation to protect me and so they would bring me back on the plane.

GEORGE STEPHANOPOULOS: So you’re in that private jet basically alone.

JAMES COMEY: Yeah.

GEORGE STEPHANOPOULOS: What did you do?

JAMES COMEY: I broke F.B.I. rules. I was no longer an employee so I wasn’t breaking the rules. So I took a bottle of red wine out of my suitcase that I was bringing back from California, a California pinot noir, and I drank red wine from a paper coffee cup and just looked out at the lights of the country I love so much as we flew home.

Early in the interview, Comey said what was perhaps the only positive comment made about the president for the entire duration: That the president’s hair is real.

COMEY: He had impressively coiffed hair … it looks to be all his. I confess I stared at it pretty closely and my reaction was ‘it must take a lot of time in the morning.”

The discussion of a certain claim in the Steele dossier that received plenty of attention after the document was leaked to Buzzfeed and CNN was perhaps the most salacious part of the interview (which is, we imagine, why ABC decided to leak that excerpt late last week).

During their discussion of the Steele dossier, Comey describes how Trump insisted the FBI prove that the allegation that he had been filmed by the Russians watching two prostitutes urinate on each other in a Moscow hotel were untrue. Trump said he desperately wanted to be able to prove to his wife that the allegations weren’t real.

JAMES COMEY: He was very defensive and started to launch into– for reasons that I don’t understand, started going into the list of people who had accused him of touching them improperly, sexual assault and how he hadn’t done this, he hadn’t done that, he hadn’t done that.

And I worried the conversation was about to crash, because I was reading that he was reacting like, “We’re investigating you and we’re going to go figure out whether you were with prostitutes in Moscow.” And– and so I said something in substance about how we don’t– it– “We’re not investigating you, sir. This is not something that we’re– we care about, except that you know that this is out there.”

GEORGE STEPHANOPOULOS: Did you believe his denial?

JAMES COMEY: I don’t– I don’t know. I don’t– the nature of an investigator is you don’t believe or disbelieve. You ask, “What’s my evidence? What is the evidence that establishes me whether someone’s telling me the truth or not. And ask this allegation–” I honestly never thought this words would come out of my mouth, but I don’t know whether the– the– current president of the United States was with prostitutes peeing on each other in Moscow in 2013. It’s possible, but I don’t know.

….

STEPHANOPOULOS: Do the Russians have something on Trump?

COMEY: I don’t know – it’s possible.

The interview touched on many other topics – far too many to recount in detail – which could be a problem for Trump. In a summary, Axios.

* * *

On Trump’s intelligence: “I don’t buy this stuff about him being mentally incompetent or early stages of dementia. He strikes me as a person of above average intelligence who’s tracking conversations and knows what’s going on.”

On investigating Hillary Clinton’s emails: “Of course, at the time, I had no idea that I could make both halves angry at us, but we’ll come to that later. But the deputy director who was a great deputy director and a longtime special agent, looked at me and said, ‘You know you’re totally screwed, right?’ And I smiled. And I said, ‘Yup. Nobody gets out alive.’

On his comment that Clinton exercised “extreme carelessness:” “I wasn’t trying to go easy on her or hard on her. I was trying to be honest and clear with the American people. What she did was really sloppy.”

On Trump’s reluctance to criticize Vladimir Putin: “I can understand the arguments why the president of the United States might not want to criticize the leader of another country…But you would think that in private– talking to the F.B.I. director, whose job it is to thwart Russian attacks, you might acknowledge that this enemy of ours is an enemy of ours. But I never saw. And so I don’t know the reason. I really don’t.”

On possible obstruction of justice: “I woke up in the middle of the night and the thought hit me like a lightening bold, like, ‘Wait a minute. If there are tapes, he will be heard on that tape in the Oval Office asking me to let it go. There is corroboration or could be corroboration for the thing we thought we’ll never be able to corroborate…’Of possible obstruction of justice. Somebody’s gotta go get those tapes.”

* * *

Given its length, it will occupy the news cycle for at least the rest of the week, giving Robert Mueller some cover before he drops his next bombshell, ensuring that the ongoing information campaign against the president continues uninterrupted until the next wave of indictments come down. 

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Global markets breathed a sigh of relief on Monday after this weekend’s Syrian airstrikes, with bond yields rising, the dollar lower, Asian and European stocks mixed, and US futures spiking, as investors assessed the prospect of escalating geopolitical tensions after a U.S.-led airstrike on Syria hit only 3 targets – instead of the rumored 8 – and with Russia failing to respond, fears of an imminent military conflict have been sharply ratcheted down, resulting in a generally bullish market reaction.

“There was a significant fear of potential escalation; that hasn’t happened so far,” said Callum Henderson, a managing director at Eurasia Group. Even so, “it remains to be seen how long this market rally lasts on the back of this specific factor, whether or not, or when, Russia retaliates,” he said on Bloomberg Television.

On Saturday, President Donald Trump declared “mission accomplished” on Twitter after 105 Tomahawk cruise missiles struck targets in Syria, further suggesting there would be no immediate escalation, and sending S&P500 futures higher by 0.7%, albeit amid muted volumes.

“There is some relief that a direct confrontation between the U.S. and Russia over Syria has been avoided,” said DZ Bank rate strategist Daniel Lenz after Russian President Vladimir Putin warned on Sunday that further Western attacks in Syria would bring chaos to world affairs.

Yet while US index futures enjoyed a relief rally, global markets were mostly mixed on Monday, with Hong Kong and Chinese markets sliding led by property taxes amid worries Chinese tightening measures including property tax could hurt home prices. Shares in Sunac China Holdings Ltd. slumped as much as 6.8 percent, China Evergrande lost 5.3 percent, while Shimao Property Holdings Ltd. fell 4.1 percent.

The MSCI’s broadest gauge for stocks listed in Asia Pacific fell as much as 0.3%, erasing an early advance, as uncertainty remained over the level of geopolitical risk in the Middle East following the U.S.-led missile strike in Syria over the weekend. In Japan, stocks pared earlier gains with the benchmark Topix index briefly dipping into the negative territory as the yen stages a rebound against the dollar in midday trading in Tokyo.

The yen rose 0.1% vs. the dollar to 107.1, after falling by as much as 0.2%, amid rising political risks surrounding Japan Prime Minister Shinzo Abe. Traders are growing concerned the series of scandals plaguing Abe could lead to his early resignation, putting the future of Abenomics, and the BOJ’s QE in jeopardy. The approval rating for Abe fell to a record low of 26.7% in a survey by Nippon TV published Sunday. He’s been forced to repeat denials of involvement in scandals as thousands called for his resignation in a protest.

“There is the possibility that Japan’s politics will become a catalyst for speculators to build fresh yen longs,” Makoto Noji and Ataru Okumura, strategists at SMBC Nikko Securities Inc., wrote in a note dated Monday, citing the falling approval.

“For markets, the question is whether this matters for economic policy,” said Paul Donovan, global chief economist at UBS Wealth Management. “A change in leadership may matter if the next prime minister has a radically different agenda.”

European bourses opened the week mixed as investors remain wary of potential escalating tensions regarding Syria. The anticipated US-led response on Syria finally took place on Saturday, which was seen as somewhat of a slap on the wrist as they decided to hit only 3 targets and with the wave of strike action already declared to be over. In terms of sectors, energy is taking a hit from the falling oil prices whilst healthcare names are outperforming with Shire (+0.9%) higher on the day amid reports Takeda Pharmaceutical heads are to meet with US investors ahead of the GBP 35bln bid for the UK-listed pharma name. Furthermore, Shire is to sell their oncology business to unlisted French drugmaker Servier for USD 2.4bln. Whitbread jumped 6.7% after hedge fund Elliot Advisors disclosed its stake in the company, while Shire Plc also rose as it agreed to sell its oncology business to France’s Servier SAS. Elsewhere, the world’s biggest ad company, WPP, tumbled -4.4% following the departure of CEO Martin Sorrell after an allegation of personal misconduct, with concerns arising over the future course of action for the company.

Meanwhile, amid relief that US-led strikes on Syria looked unlikely to escalate, there were renewed concerns at Russia’s potential reaction to new sanctions from Washington. On Sunday, UN Ambassador Nikki Haley, speaking on CBS’s “Face the Nation,” confirmed that US Treasury Secretary Steven Mnuchin would announce new sanctions against Russia today that “go directly to any sort of companies that were dealing with equipment related to Assad and chemical weapons use”. However, so far Russian assets have taken the news in stride, with RUB markets appearing to be more comfortable with the Syria situation – as a result, any further military events should not cause a new wave of risk-off unless we see a direct clash between Russian and US troops, according to various geopolitical pundits. Still, as Citi’s FX desk correctly points out, the multi-year trend of worsening US-Russia relations seems to be evolving in a faster pace now.

In other weekend news, Trump Economic Adviser Kudlow said he is optimistic US and China can avoid a broader trade spat, while he also confirmed US President Trump wants to look into entering the TPP-11 but that it was too soon to determine how long the process would take. This also comes in the context of a WSJ piece stating that the earliest the U.S. could formally start negotiations to join the TPP is sometime next year, and each of the 11 nations still in the deal have a veto.

US Special Counsel Mueller is said to have evidence Trump’s lawyer Cohen was in Prague during 2016 Presidential election, which reports state could lend credence to allegations by a former British spy that Cohen met a powerful Kremlin official. Elsewhere, it was also reported that US President Trump is said to have deep concerns on the direction Special Counsel Mueller is taking.

Late on Sunday, former FBI Director Comey described the Oval office meeting in which he said President Trump asked him to back off of Michael Flynn which he thinks is certainly some evidence of obstruction of justice. However, he added that he doesn’t think President Trump should be impeached, but instead thinks Trump should be voted out.

Moody’s raised Spain’s sovereign rating by one notch to Baa1; outlook stable. Fitch affirmed Luxembourg at ‘AAA’; outlook stable. S&P affirmed Poland at BBB+; outlook revised to positive from stable.

European and U.S. government bond yields rose across the board. That was partly as attention turned to what is expected to be a robust first-quarter U.S. corporate earnings season, which begins in earnest this week. The yield on both German and U.S. 10-year government bonds, seen as among the most liquid and safe assets in the world, were at their highest levels in three weeks.

In FX, the dollar weakened after futures data showed hedge funds are the most bearish on the greenback in five years. The ruble reversed earlier losses.

WTI oil futures dropped sharply, falling toward $66 a barrel amid concern that shale production will rise further, and after there was no immediate reprisal to the missile attack. In terms of energy specific newsflow, OPEC members continue to advocate further cooperation and reiterate that the current supply cuts are to continue to the end of the year. In the metals scope, news arising gold trades slightly softer on an improved risk appetite, and copper is uneventful following Chinese underperformance. Kuwait Oil Minister says June meeting will be a chance to review agreement, but the deal will continue until the end of 2018.

Aluminum resumed its rally, adding to its biggest weekly increase on record Friday on concerns about Rusal’s future solvency.

Economic data include retail sales and Empire manufacturing data, while Bank of America and Netflix are set to report earnings. A slew of Federal Reserve officials who are due to speak, including the incoming head of the New York Fed, John Williams.

Bulletin Headline Summary from RanSquaw

• European bourses trade mixed (Eurostoxx 50 flat) following suit from the Asia-Pac session as investors remain wary of potential escalating tensions regarding Syria
• The greenback is now softer for choice vs all G10 counterparts, albeit modestly
• Looking ahead, highlights include, US retail sales and Fed’s Bostic, Kaplan and Kashkari

Market Snapshot

• S&P 500 futures up 0.4% to 2,666.75
• STOXX Europe 600 down 0.1% to 378.69
• MSCI Asia Pacific down 0.1% to 173.61
• MSCI Asia Pacific ex Japan down 0.6% to 567.24
• Nikkei up 0.3% to 21,835.53
• Topix up 0.4% to 1,736.22
• Hang Seng Index down 1.6% to 30,315.59
• Shanghai Composite down 1.5% to 3,110.65
• Sensex up 0.2% to 34,248.01
• Australia S&P/ASX 200 up 0.2% to 5,841.34
• Kospi up 0.1% to 2,457.49
• German 10Y yield rose 2.9 bps to 0.54%
• Euro up 0.2% to $1.2359
• Brent Futures down 1.6% to $71.45/bbl
• Italian 10Y yield fell 1.7 bps to 1.542%
• Spanish 10Y yield rose 1.4 bps to 1.252%
• Brent Futures down 1.6% to $71.44/bbl
• Gold spot down 0.06% to $1,345.37
• U.S. Dollar Index down 0.2% to 89.62

Top Overnight News

• Fresh sanctions will be imposed on Russia related to Syria’s reported use of chemical weapons, as the U.S. and U.K. assess the fallout and next steps after Friday night’s strike on the Middle Eastern country, the top U.S. diplomat to the United Nations said
• The U.S. Treasury didn’t name China or any other nation a currency manipulator in its semi-annual foreign- exchange policy report, though it added India to its monitoring list
• Approval rating for Japan Prime Minister Shinzo Abe’s Cabinet fell to 31%, an all-time low since the start of his second administration as prime minister, according to an Asahi poll conducted April 14-15 via phone
• Japan and China hold their first high-level economic dialogue in almost eight years on Monday against a backdrop of trade threats from the U.S. Japanese Prime Minister Shinzo Abe meets with President Trump later this week in Florida
• Oil halted gains near $67 as the U.S. rig count rose to a three-year high, a sign of potentially higher production that may outweigh fears conflict in the Middle East threatens supply
• Donald Trump is “morally unfit” to be president, former FBI Director James Comey said in an interview on ABC News, adding that he couldn’t rule out the possibility that the Russian government has incriminating information about the president.

European bourses opened mixed this morning, following suit from the Asia-Pac session as investors remain wary of potential escalating tensions regarding Syria. The anticipated US-led response on Syria finally took place on Saturday, which was seen as somewhat of a slap on the wrist as they decided to hit only 3 targets and with the  wave of strike action already declared to be over. In terms of sectors, energy is taking a hit from the falling oil prices whilst healthcare names are outperforming with Shire (+0.9%) higher on the day amid reports Takeda Pharmaceutical heads are to meet with US investors ahead of the GBP 35bln bid for the UK-listed pharma name. Furthermore, Shire is to sell their oncology business to unlisted French drugmaker Servier for USD 2.4bln. Whitbread (+6.7%) is dominating the FTSE 100 after reports Elliott Advisors is pressuring the company to spin-off Costa in an effort to generate as much as GBP 3bln of additional value. Elsewhere, WPP (-4.4%) following the departure of CEO Martin Sorrell after an allegation of personal misconduct, with concerns arising over the future course of action for the company.

Top European News

• London House Prices Fall in Stark Division With Rest of U.K.
• Citi Says Easy Access Makes Nordic Firms Ripe for Takeovers
• Wall Street’s $6 Trillion Man Fink Is Finally Worth $1 Billion
• H&M Chairman Has Bought About 6.7m Additional H&M Shares

Asian stocks traded with a mixed tone as focus centred on air strikes on Syria over the weekend and Chinese data. The anticipated US-led response on Syria finally took place on Saturday, which was seen as somewhat of a slap on the wrist as they decided to hit only 3 targets and with the wave of strike action already declared to be over. As such, US equity futures gapped higher at the open, while ASX 200 (+0.2%) and Nikkei 225 (+0.3%) were also in the green as fears of an escalation subsided. Conversely, Shanghai Comp. (-1.5%) and Hang Seng (-1.6%) were negative following the miss on Chinese lending data last week and with tomorrow’s Chinese GDP adding to the risk factors, while the PBoC also announced to raise the 14-day reverse repo rate by 5bps which was in-line with the hikes seen in money market rates in reaction to the March Fed hike. This saw an increase in money market rates in Hong Kong, while underperformance was led by Rusal shares which tumbled over 20% after US announced to impose further Russian sanctions. Finally, 10yr JGBs are uneventful amid a subdued tone in USTs and indecisive risk sentiment in the region, while the absence of a BoJ Rinban announcement also ensured quiet trade. Finally, 10yr JGBs were uneventful and traded little changed amid the mixed risk tone and as a lack of BoJ Rinban announcement also ensured quiet trade.

Top Asian News

• Japan Scandals Drag Abe’s Support Down Toward Danger Zone
• Why Chances of India Being Named a Currency Manipulator Are Slim
• China’s Xi Is Said to Be Opposed to Life-Long Rule, FT Reports
• Hong Kong’s Currency Defense Tops $1.7 Billion to Little Effect

In currencies, the Dollar index has faded after brief attempt higher within a 89.850-600 range, and the Greenback is now softer for choice vs all G10 counterparts, albeit modestly. Moreover, the ‘reaction’ to Saturday’s US-led strikes against Syria has been relatively tame overall, with the targeted military action appeasing fears over more aggression and potential retaliation. EUR/GBP:  Outperformers, as Eur/Usd firms above the 1.2300 handle, 10 DMA at 1.2310 and 55 DMA at 1.2327, but falls just short of a key Fib at 1.2377 having failed to seriously test 1.2400 on several occasions of late. Cable remains underpinned and just posted a session high above 1.4300 (best since the YTD high of 1.4345), and perhaps buoyed by a Eur/Gbp sell recommendation from a big US bank eying 0.8475 vs a circa 0.8645 low/0.8670 high. JPY/CHF/NZD/CAD/AUD: All essentially flat vs the Usd, around 107.20, 0.9600, 0.7355 and 1.2600 respectively and awaiting further impetus. Dovish BoJ commentary has weighed on the Jpy, and similarly soft Swiss producer prices for the Franc, while the Loonie is looking for independent direction from the BoC on Wednesday and Canadian CPI on Friday. Aud/Usd is holding towards the upper end of a 0.7785-50 band, but also capped ahead of the nearest big figure after topping out just above last week. USD/RUB: The Rouble is under pressure again amidst 62.0000-63.1500 parameters vs the Dollar ahead of latest reciprocal sanctions from the US and Russia, as the latter pledges to respond forcefully, and also warning that further strikes vs Syria will not be tolerated.

In commodities, WTI and Brent futures trade lower amid an unwind of the geopolitical premium and another uptick in the Baker Hughes rig count on Friday. The unwind in risk comes following the Syrian strikes on Saturday which were not as wide-reaching as some had feared. This risk-on attitude is tempered, however, as markets await further action surrounding Russian sanctions and retaliatory effects. In terms of energy specific newsflow, OPEC members continue to advocate further cooperation and reiterate that the current supply cuts are to continue to the end of the year. In the metals scope, news arising gold trades slightly softer on an improved risk appetite, and copper is uneventful following Chinese underperformance. Kuwait Oil Minister says June meeting will be a chance to review agreement, but the deal will continue until the end of 2018.

 

US Event Calendar

• 8:30am: Empire Manufacturing, est. 18.6, prior 22.5
• 8:30am: Retail Sales Advance MoM, est. 0.4%, prior -0.1%; Retail Sales Ex Auto MoM, est. 0.2%, prior 0.2%
  • Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.3%; Retail Sales Control Group, est. 0.3%, prior 0.1%
• 10am: Business Inventories, est. 0.6%, prior 0.6%
• 10am: NAHB Housing Market Index, est. 70, prior 70
• 4pm: Total Net TIC Flows, prior $119.7b; Net Long-term TIC Flows, prior $62.1b

DB’s Jim Reid concludes the overnight wrap

The temperature has certainly been raised on the geo-political front this weekend with Friday night’s 105 ‘targeted’ missile strikes on Syrian chemical weapons facilities, which had set their program “back for years”. President Trump tweeted “mission accomplished” while the UK Foreign Secretary Johnson noted there was “no proposal on the table” for further strikes, which is consistent with comments from US defence secretary Mattis. Elsewhere, Russia’s President Putin noted that further Western attacks on Syria would “inevitably lead to chaos in international relations”. On Sunday, the UN ambassador Haley said that the US will announce new sanctions today on Russian firms that “go directly to….dealing with equipment” related to the Syrian leader and his chemical weapons.

This morning in Asia, markets are trading mixed with the Nikkei (+0.26%) and ASX 200 (+0.24%) modestly up while the Kospi (-0.03%), Hang Seng (-1.55%) and Shanghai Comp. (-1.32%) are down as we type. Elsewhere, futures on the S&P are up c0.4% while the Yen is c0.1% stronger. In Japan, the latest poll from Nippon TV showed PM Abe’s approval rating has fallen to the lowest level since late 2012 (26.7%). In the US, the latest poll by ABC news  showed President Trump’s approval rating has risen to the highest in 2018 to 40% (vs. 36% in Jan.).

As for this week it’s hard to look beyond geopolitics and trade war developments. On the former the market hope is that the fact that the Syrian air strikes were targeted and that Russia haven’t further inflamed the rhetoric so far, means that we can slowly move on. The latter is still bubbling around the surface and it was interesting that Friday saw a WSJ article suggesting a possible White House announcement about which products are on the list of $100bn of Chinese goods subject to tariffs comes to fruition this week. Elsewhere there are still some notable data to highlight including China Q1 GDP (tomorrow) and US retail sales (today). The Fedspeak diary is also packed full all week while President Trump is due to meet Japan’s Abe, the IMF/World Bank Spring Meetings kick off, and Germany’s Merkel and France’s Macron meet to discuss EU reform and trade. In addition to all that, US earnings season steps  up with 61 S&P 500 companies due to report. The full week ahead is included at the end.

As a prelude to this week’s Fed speak, the Fed’s Rosengren noted “we have to be vigilant to make sure we’re not over stimulating the economy and generating either wage and price increases that are faster than what we’re going to want in the long run”. He expects the unemployment rate will decline to 3.7% this year and “it’s possible that (it) will fall even more rapidly in the short term”. On rates, he “expects somewhat more tightening may end up being needed” than the current Fed dot plot projections of three rate hikes for 2018 (ie: 2 more) while “inflation is likely to increase a bit more than the current median forecasts” by the Fed.

Following on, our Chief international economist Torsten Slok noted that in the history of economics, it has never happened in any country anywhere in the world that inflation has hit the target and stayed at exactly that level for 12 months. Hence, the risk of an inflation overshoot is rising, and as a result, the belly and the long end of the curve will move higher, finally recognizing that the Fed is right and that higher rates are needed across the curve to cool  down inflation and the economy.

Now recapping market performance from Friday. In equities, the Stoxx 600 rose +0.10% while the S&P 500 fell -0.29% with losses led by the financials sector. While US banks’ 1Q results were broadly above market expectations, the share price for JPM and Wells Fargo both fell -2.7% and -3.4% respectively, in part as JP Morgan’s CEO Dimon noted competition is intense and lending was flat for the quarter while WFC noted a potential $1bln charge to settle with the US consumer regulator. The VIX fell for the fourth consecutive day to 17.41 (-5.84%).

Government bonds have firmed slightly with core 10y bond yields down 0.5-2bp (UST -0.9bp; Bunds -0.4bp; Gilts -2.1bp). Key currencies were marginally higher, with the US dollar index up 0.04% while the Euro and Sterling also advanced 0.03% and 0.07% respectively. In commodities, WTI oil rose for the fifth straight day to be up 8.59% last week to $67.39/bbl. Precious metals gained c1% (Gold +0.84%; Silver +1.14%) while other base metals were little changed (Copper -0.06%; Zinc +0.15%; Aluminium +0.21%).

Away from the markets and onto some weekend headlines. In France, President Macron spoke with BFM TV to highlight his desire for “deep reform” of the local tax system to divide it up between cities, departments and regions. However, he added no new taxes are planned, including local taxes during his mandate. In the UK, the Telegraph reported that the BOE has privately warned banks that the end of its £127bn cheaper term funding scheme posed a “systemic risk” to the British financial system.

Over at the Americas Summit in Lima, the US VP Pence noted he is “…hopeful that we are very close to a renegotiated NAFTA and there is a real possibility that we could arrive at an agreement within the next several weeks”. Elsewhere, the Canadian PM Trudeau spoke of “positive momentum” and would like to “see a renegotiated deal sooner rather than later”.

Before we take a look at today’s calendar, we wrap up with other data releases from Friday. In the US, the April University of Michigan consumer sentiment index fell 3.6pts from last month’s cycle high to 97.8 (vs. 100.3 expected). The survey indicated inflation expectations for 1 yr and 5-10yr both eased 10bp mom to 2.7% and 2.4% respectively. The February JOLTS job openings was slightly above market at 6,052 (vs. 6,024 expected) with the quits rate steady at 2.2%. Elsewhere, the NY Fed’s estimate of 1Q GDP growth was unchanged at 2.8%. In Europe, the final reading for Germany and Spain’s March CPI was unrevised at 1.5% yoy and 1.3% yoy respectively. The Euro area’s February trade surplus was slightly above expectations at €21bln (vs. €20.2bln).

The big release to kick the week off comes in the US with the March retail sales report. Other data due in the US includes the April empire manufacturing print, February business inventories and April NAHB housing market index reading. There is no data due out in Europe or Asia. Away from the data the Fed’s Bostic is due to speak in the evening. EU foreign ministers are also due to meet to discuss the situation in Syria. Bank of America and Netflix are the earnings highlights.

via RSS https://ift.tt/2qx1ftQ Tyler Durden

Shortly after US Ambassador Nikki Haley revealed that Russia would be slapped with a third round of sanctions on Monday for “enabling the Syrian government’s use of chemical weapons in civil war,” Russian President Vladimir Putin said that further attacks on Syria by Western forces, “in violation of the U.N. Charter,” would send international relations into “chaos.”

In a telephone conversation with his Iranian counterpart, Hassan Rouhani, Putin and Rouhani agreed that the Western strikes had damaged the chances of achieving a political resolution in the seven-year Syria conflict, according to a Kremlin statement. –Reuters

The US-led strike was denounced by Putin as an “act of aggression,” and a “war crime” by Iran’s Supreme leader Ayatollah Khamenei.

“Vladimir Putin, in particular, stressed that if such actions committed in violation of the U.N. Charter continue, then it will inevitably lead to chaos in international relations,” the Kremlin statement said.

The United States, France and Britain launched over 103 missiles on Saturday night at three Syrian facilities in retaliation for a suspected poison gas attack in the city of Douma seven days prior. While the West has conclusively blamed the Assad government for the attack, serious questions have arisen over everything from Assad’s motive, the type of nerve agent used, to the credibility of the first responders – an NGO known as the White Helmets who have a reputation for staging evidence.

France cited social media posts and YouTube evidence as justification for their participation in the strikes. 

The French services analysed the testimonies, photos and videos that spontaneously appeared on specialized websites, in the press and on social media in the hours and days following the attack.

Testimonies obtained by the French services were also analysed. After examining the videos and images of victims published online, they were able to conclude with a high degree of confidence that the vast majority are recent and not fabricated. The spontaneous circulation of these images across all social networks confirms that they were not video montages or recycled images. Lastly, some of the entities that published this information are generally considered reliable. –Daily Star

So “it looked real and went viral” is apparently all France needs before launching a military strike on a sovereign nation. 

When the former head of British Armed Forces in Iraq, General Jonathan Shaw, voiced his disbelief that Assad would gas his own people, Sky News cut him off…

Within 48 hours of the suspected April 7 nerve attack, and prior to an agreed-upon inspection of Douma by the global chemical weapons watchdog OPCW, Syria’s T4 airbase was hit with a missile airstrike blamed by Moscow on two Israeli F-15 warplanes. Five days later, the United States, UK and France (but not Germany or Italy) struck three Syrian targets;

• The Barzeh Research and Development Center – hit with 57 U.S. Tomahawk Land Attack Missiles (TLAMs) and 19 joint air-to-surface missiles, which the Pentagon’s Marine Lt. Gen. Kenneth F. McKenzie Jr. says will “set the Syrian chemical weapons program back for years.” 

• The Him Shinshar chemical weapons depot, – was struck by nine U.S. Tomahawk Land Attack Missiles (TLAMs), eight Storm Shadow missiles, three naval cruise missiles and two Scout land attack cruise missiles, according to NPR.  The Him Shinshar chemical weapons bunker facility – located over 4 miles from the chemical weapons depot, was hit with seven Scout missiles.

The third strike was on a command center. 

Of the more than 103 cruise missiles fired, Syria claims it intercepted 71 using soviet-made missile defense systems.

Many in the international community have raised concerns that there simply is not enough evidence to conclude who conducted the April 7 chemical attacks – with China even stating “The arrogant US has a record of launching wars on deceptive grounds.” 

And as we first reported last week, Germany (along with Italy) refused to be an active member of the strikes.

“This is not the role that we – in coordination with our partners – want to play in this conflict,” said Germany’s Foreign Minister, Heiko Maas – followed a statement by Angela Merkel reading “We support that our American, British and French allies, as permanent members of the UN Security Council, have taken responsibility in this way” … just not enough to take part in the strikes. 

Following the strike, President Trump proudly tweeted “mission accomplished,” despite U.S. Lieutenant General Kenneth McKenzie of the Pentagon acknowledging that elements of the chemical weapons program remain, and he could not guarantee a future attack by Assad. 

The Syrian raid was so perfectly carried out, with such precision, that the only way the Fake News Media could demean was by my use of the term “Mission Accomplished.” I knew they would seize on this but felt it is such a great Military term, it should be brought back. Use often!

— Donald J. Trump (@realDonaldTrump) April 15, 2018

As Reuters notes, Israel backed Saturday’s air strikes by Western powers (five days after their own strike on Syria’s T4 airbase). 

“Israel fully supports President Trump’s decision to act against the use of chemical weapons in Syria,” Israel’s Prime Minister Benjamin Netanyahu told his cabinet in broadcast remarks on Sunday, adding that he had commended his British counterpart, Theresa May, in a phone call.

In February, Israel intercepted and downed an Iranian drone approaching its northern border over Golan Heights, which the IDF said on Saturday was loaded with explosives and “tasked to attack.” In response to the drone, Israel attacked Syria’s T4 airbase for the first time this year, losing an F-16 pilot in the process.

ISRAEL – IRAN – SYRIA TENSION:
• Iranian drone enters Israel from Syria
• IAF shot down drone within 90 seconds
• IAF attacks drone command center
• Syria donws IAF F-16 Jet
• Pilots injured & ejected in Israel
• IAF destroys 12 Iranian sites
• Iranian soldiers killed pic.twitter.com/OB1SFgqENv

— Israel News Feed (@IsraelHatzolah) February 11, 2018

Risk of Wider Confrontation

Russia and Syria called the Western missile strikes an act of aggression, though many have noted the attacks weren’t really that devastating. Syrian President Bashar al-Assad even trolled the West – releasing a video titled “The Morning of Steadfastness” featuring him nonchalantly walking through a cavernous marbled hall with a briefcase, as if nothing happened. 

Hezbollah’s leader in Lebanon, Sayyed Hassan Nasrallah, said on Sunday that the West’s Saturday strikes on Syria had failed to achieve anything – “including terrorizing the army, helping insurgents or serving the interests of Israel.” Nasrallah said the U.S. military had kept its strikes limited because it knew a wider attack would spark retaliation from Damascus and its allies and inflame the region, according to Reuters.

“The American (military) knows well that going towards a wide confrontation and a big operation against the regime and the army and the allied forces in Syria could not end, and any such confrontation would inflame the entire region,” Nasrallah said. The heavily armed, Iranian-backed Shi’ite Hezbollah movement, allied with the Syrian army and represented in the Beirut government, has been a vital ally of Damascus in Syria’s war.

Meanwhile, a UN draft resolution circulated by France, the United States and Britain late on Saturday aims to establish an independent inquiry into who is responsible for chemical weapons attacks in Syria – which might have been advisable before Donald Trump broke virtually every campaign promise and tweet over the last five years regarding Syria, for the second time.

via RSS https://ift.tt/2IZZWem Tyler Durden

Authored by Jacob Hornberger via The Future of Freedom Foundation,

As the April 17 deadline for filing income tax returns and paying federal income taxes approaches, it is important that we all remind ourselves of an important point: Income taxation and the Internal Revenue Service are irreconcilable with the principles of a free society.

Another way to put it is this: If you’re living in a society in which the government wields the power to seize the fruits of your earnings, you are not living in a free society, no matter how convinced you are.

Americans lived without income taxation for more than a century. They also lived in a society in which there was no welfare state and no warfare state. No Social Security, Medicare, Medicaid, farm subsidies, welfare, food stamps, public housing, drug laws, immigration controls, public schooling, Pentagon, military-industrial complex, CIA, NSA, FBI, EPA, DEA, SEC, Homeland Security, ICE, or most of the other myriad agencies of the welfare-warfare state.

It was that way of life that defined an American. That’s what Americans defined as freedom. That’s what made the United States the most unusual society in history (notwithstanding the horrible exception of slavery).

Succeeding generations of Americans give it all up in favor of socialism, interventionism, and imperialism.

• They embraced and adopted the variation of socialism known as the welfare state.

• They embraced and adopted the totalitarian structure known as a national-security state.

• They embraced and adopted drug laws, which are the hallmark of tyrannical regimes.

• They embraced and adopted the regulated, controlled, and managed economy.

• They embraced foreign wars, foreign interventionism, partnerships with dictators, coups, assassinations, torture, and other practices long employed by dictatorial regimes.

• And of course they embraced and adopted the means by which all of this statism is funded — income taxation and, also, to large extent, the Federal Reserve System, which fraudulently taxes people’s income and wealth through inflation.

Today, many Americans are coming to the realization of what has happened to our country with respect to foreign wars, empire, and foreign interventions. They’re growing sick and tired of perpetual war. They’re starting to figure out that empire, interventionism, and militarism were no part of the founding principles of our nation. They are seeing what empire and foreign interventionism are doing to our rights, freedoms, and economic well-being here at home. They are beginning to think. They are beginning to question.

The same holds true on the drug war. More and more Americans are “waking up” and seeing the horrible destructiveness and immorality of this government program.

Unfortunately, however, all too many Americans have not yet come to the same realization with respect to the welfare state, the managed economy, the Federal Reserve, and, of course, the income tax and the IRS.

The fact is: You have the natural, God-given right to keep everything you earn. You also have the natural, God-given right to decide what to do with your own money. Your money belongs to you, not the government. To achieve a genuinely free society, the income tax needs to be cast into the dustbin of history, along with the immoral and destructive welfare-warfare state apparatuses that it funds.

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The decision by an influential EU Parliamentary Committee to approve what’s been described by critics and proponents alike as a robot “bill of rights” back in January has ignited a fierce backlash and prompted a group of dozens of AI researchers to write a scathing letter criticizing the EU’s approach to regulating robots.

In the open letter, 156 robotics and AI experts from 14 countries blasted the EU for trying to enforce “nonsensical” and “non-pragmatic” regulations that ultimately could violate people’s rights.

Here’s more from EuroNews:

In an open letter, more than 150 experts in robotics, artificial intelligence, law, medical science and ethics, warned the Commission against approving a proposal that envisions a special legal status of “electronic persons” for the most sophisticated, autonomous robots.

“Creating a legal status of electronic ‘person’ would be ideological and nonsensical and non-pragmatic,” the letter says.

The group said the proposal, which was approved in a resolution by the European Parliament last year, is based on a perception of robots “distorted by science fiction and a few recent sensational press announcements.”

“From an ethical and legal perspective, creating a legal personality for a robot is inappropriate”, they argued, explaining that doing so could breach human rights law.

Around the world, and in both the manufacturing and service economies, robotics is making swift gains as the number of industrial robots in circulation has climbed dramatically in recent years. According to projections published by Reuters IFR, their numbers will double again by 2020.

China has emerged as the unrivaled leader in the race to dominate AI and robotics, bringing to mind Russian President Vladimir Putin’s prediction that whichever power dominated the AI arms race would go on the “rule the world.”

Elon Musk famously warned that, if governments don’t pass responsible regulations soon, the plot of the “Terminator” Series could become a reality.

Meanwhile, in Beijing, the Communist Party is building the first entirely AI-run police station.

The crux of the debate between EU lawmakers and scientists is a paragraph in an EU-commissioned report from 2017 which suggests that robots with the ability to learn should be granted “electronic personalities”, allowing them (yes, the robots, not their owners or manufacturers) to be held liable for civil and legal penalties, according to Politico Europe.

The battle goes back to a paragraph of text, buried deep in a European Parliament report from early 2017, which suggests that self-learning robots could be granted “electronic personalities.” Such a status could allow robots to be insured individually and be held liable for damages if they go rogue and start hurting people or damaging property.

Those pushing for such a legal change, including some manufacturers and their affiliates, say the proposal is common sense. Legal personhood would not make robots virtual people who can get married and benefit from human rights, they say; it would merely put them on par with corporations, which already have status as “legal persons,” and are treated as such by courts around the world.

But as robots and artificial intelligence become hot-button political issues on both sides of the Atlantic, MEP and vice chair of the European Parliament’s legal affairs committee, Mady Delvaux, and other proponents of legal changes face stiffening opposition.

In the letter, the scientists protested the idea of giving robots rights, arguing that much more strict regulations are necessary to ensure that robots never gain the capability to harm humans (unless they’re specifically designed for that purpose, like South Korea’s “killer robots” weapons systems that have ignited a boycott by the scientific community that bears some resemblance to the situation in the EU).

They also make the case that granting robots rights like people would in itself violate human rights.

A legal status for a robot can’t derive from the Natural Person model, since the robot would then hold human rights, such as the right to dignity, the right to its integrity, the right to remuneration or the right to citizenship, thus directly confronting the Human rights. This would be in contradiction with the Charter of Fundamental Rights of the European Union and the Convention for the Protection of Human Rights and Fundamental Freedoms.

While the issue of regulating AI and robotics has only just made it to the media’s radar (and to be sure, many pundits quoted in the mainstream press have continued to advise that robots are still decades away from the type of artificial intelligence that would enable them to “go rogue,” as the scientists put it) the battle for responsible regulation is unfolding before our very eyes.

The only question is: Once humanity achieves the capability to build a real-life SkyNet, will it quickly set to work? Or will governments and corporations listen to the exhortations of the scientific community and put safety and responsibility before everything else (including profits)?

Right now, it’s difficult to say.

Read the full letter here:

 

“The European Union must prompt the development of the AI and Robotics industry insofar as to limit health and safety risks to human beings,” the letter said. “The protection of robots’ users and third parties must be at the heart of all EU legal provisions.”

 

 

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Authored by Rob Slane via TheBlogMire.com,

So the moment we’ve been holding our breaths for a week finally came. In the end, I am mighty glad that this particular strike seems more like the impotent thrashing of the neocon snake that didn’t dare to attack places where Russian servicemen were likely to be killed, than it does the start of World War III. For the moment, at least, thank God.

But the fact that it was a fairly limited strike — compared to what it might have been — in which the majority of missiles failed to hit their targets, having been eliminated by Soviet-era air defenses, does not in anyway absolve those who ordered the strike from the grave and reckless action they have taken and for which they are responsible. Not only did they authorise this action before an investigation had been carried out in Douma, and in fact hours before the OPCW inspectors were due there, they did so without consulting their respective legislative bodies, without knowing how many of their missiles would or would not hit their targets, or — and this is crucial — knowing for sure whether their actions would elicit a response from Russia.

In other words, if you live in Britain, France or America, you now know just how cheaply the leaders of your country hold your life, and the lives of your fellow countrymen. They have taken action which could have resulted — and might still result — in a direct clash with the Russian military, and while you have breath left in you, you must never forget this, and do all you can to hold these people to account for their lawless, reckless and enormously dangerous actions.

You must also remember that they did so not because they cared about ordinary Syrians, but because their diabolical attempts to topple the Syrian Government, by backing Islamic terrorist groups such as Jaysh al-Islam, has been thwarted.

But there is one more thing.

Amongst the myriad of mind-boggling and often deceptive remarks made by Theresa May during her statement after the attacks, I was particularly struck by this:

“Together we have hit a specific and limited set of targets. They were a chemical weapons storage and production facility, a key chemical weapons research centre and a military bunker involved in chemical weapons attacks. Hitting these targets with the force that we have deployed will significantly degrade the Syrian Regime’s ability to research, develop and deploy chemical weapons.”

So the response to an alleged and unproven chemical weapons incident was to attempt to blow up alleged stockpiles of chemical weapons. I confess that I am not an expert in blowing up chemical weapons stockpiles, but it does seem to me to be a reckless and insane thing to do. If there really were stockpiles of chemical weapons in those places, exactly what guarantee could Donald and Theresa give that such chemicals would not then be released into the atmosphere? As I say, I’m not an expert in blowing up chemical weapons stockpiles — I doubt that there are many in the world who are — but it does seem to me at least possible that an action such as this is potentially catastrophic.

Of course, in all probability there were no chemical weapons there at all. But if we take her at her word, it seems that Theresa May has this to answer for: Not only did she authorised an attack on a sovereign state based on unproven allegations; not only did she fail to consult Parliament; not only did she risk a confrontation with Russia; she also risked the possibly disastrous release of chemical weapons into the atmosphere.

These are just some of the many reasons why this woman needs to be impeached by Parliament. It has never happened before, but it is possible. In fact, it is absolutely needful, not just in her case, but also to ensure that no Prime Minister ever acts so lawlessly and recklessly with so many lives again.

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Back in March, we detailed how the United States Army M1 Abrams tank, an American third-generation main battle tank, was in the process of being upgraded with an invisible missile shield that will destroy all chemical energy anti-tank threats and other threats before reaching the vehicle. We even said, “that Washington is preparing their main battle tank for the next evolution of hybrid wars.”

Known as Trophy, this is the world’s first and only fully operational Active Protection System and Hostile Fire Detection System for armored vehicles. This cutting-edge technology will provide M1 Abrams tanks with 360-degree security from all threats, as advanced algorithms are continually detecting, locating, and neutralizing anti-tank threats on the battlefield.

We even noted that the Trophy system was tested thoroughly on select M1A2 tanks in Europe and the Middle East. With much of the testing classified, there were still several unanswered questions surrounding what region(s) of the world the upgrades would go.

However, in a new report on Thursday, the United States Army has decided to deploy the missile shields for M1 Abrams tanks to Europe “as part of a sweeping effort to better arm its Armored Brigade Combat Teams and counter Russian threats in the region,” said Warrior Maven, as quoted by Fox News. 

“Not only will we be fielding one set of Trophy on Abrams tanks to Europe, but also three other brigades,” Maj. Gen. John Ferrari, Director, Program Analysis and Evaluation, G-8, told Warrior Maven in an interview.

“The weapons plus-up for Europe-bound Active Protection System is woven into the 2019 budget request,” he added.

The Trophy system employs advanced algorithms that use radar to provide continuous 360-degree protection. The bolt on kit includes four antennas and two rotating launchers mounted on the turret of each tank (see below).

Once the threat is discovered, the algorithm classifies the threat, and if a direct hit is calculated, the countermeasure systems are automatically activated, and a tight pattern of explosively shaped penetrators launches at the warhead to neutralize the threat (as shown below).

Rafael Advanced Defense Systems says the Trophy system has been thoroughly tested, qualified, and is already in production for the Israel Defense Forces (IDF). The system debuted in 2009 and had proven to work exceptionally well in the Gaza Strip and other hot spots around Israel.

Warrior Maven points out that the immediate deployment of Trophy systems for American tanks in Europe is to counter new high-tech Russian technology, which has been deployed to the European Russia border.

“Trophy is the kind of armored vehicle ground-war weapon of particular value in the event of a major land combat engagement against a fortified, well-armed adversary such as Russia. Systems of this kind have been in development for many years, however the rapid technological progress of enemy tank rounds, missiles and RPGs is leading the Army to more rapidly deploy Active Protection System for its fleet of Abrams tanks deploying to Europe.”

Warrior Maven also describes the Pentagon’s biggest fear:

“APS on Abrams tanks, quite naturally, is the kind of protective technology which could help US Army tanks in tank-on-tank mechanized warfare against near-peer adversary tanks, such as a high-tech Russian T-14 Armata tank.

The 48-ton modern T-14 tank is widely reported to be able to reach speeds of 90-kilometers per hour; it is built with an unmanned turret, without a “fume extractor” and is designed for a 3-man crew surrounded by an armored capsule

While much has been made of the T-14 Armata’s cutting-edge technology, including its active protection, 12-round per minute firing range and 125mm smoothbore cannon in numerous public reports and assessments, it is not at all clear that the T-14 in any way fully outmatches current and future variants of the Abrams tank.

Army Abrams modernization efforts are without question being designed to meet and exceed any dangers posed by rival nation tanks, including the T-14. Concerns about the threat posed by the T-14 Armata are, without question, informing US tank and weapons developers.”

Essentially, Washington’s much-needed modernization efforts of invisible force fields, are to protect M1 Abrams from Russian anti-tank weapons and its new high-tech T-14 Armata, all evidence suggests — a major conflict could soon be on the horizon.  

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Authored by Pepe Escobar via The Asia Times,

In our digital age, ownership, utilization, and monetization of data raises profound questions about personal rights, state rights and the limits of freedom…

For all the raft of unanswered questions or dismissal as a nothingburger, Facebook CEO Mark Zuckerberg’s two-day grilling at Capitol Hill hopefully may unleash a serious global debate about our virtual selves.

US politicians, it seems, have discovered the merits of the European Union’s General Data Protection Regulation  (GDPR). The EU is actually at war with the GAFA galaxy (Google, Apple, Facebook, Amazon) and environs. The question for the US revolves around the immense legal twists and turns on how and what to regulate.

As much as Zuckerberg may have conceded that the industry needs to be regulated, scores of congressmen pressed him on whether Facebook would enforce GDPR for US customers. He dodged the question multiple times, promising GDPR “controls,” but never “protection.”

An army of savvy lawyers at the Facebook HQ certainly envisaged that regulation might “stifle competition,” as some congressmen did not fail to point out. And some, naively, even gave the whole game away, asking Zuckerberg directly what kind of regulation he would prefer.

Capitol Hill may not have noticed that Facebook and GAFA as a whole work pretty much like political parties disguised as companies. The founders/CEOs are major shareholders. Decisions have the imprimatur of a board working as a sort of political bureau. Congress is the shareholder general assembly. And the militants are the salaried mass addicted to a visionary movement.

The whole process runs in parallel with the decline of traditional political parties. Even top counseling comes from the political arena, like former Obama operative David Plouffe, who moved to Facebook from Uber, and Joel Benenson, Bill Clinton’s top polls specialist.

And it’s certainly very much a political issue how cyberspace trumps actual physical space. GAFA is always looking for nations that offer comparative advantages and privileges to dodge regulation and annoying redistributive fiscal obligations.

That betrays a clear ideological choice. GAFA is all about Ayn Rand-inspired Libertarianism; minimum government and maximum freedom. Surf away from the crashing waves of the state. Regulation is for losers.

Ayn Rand happens to be the supreme idol of PayPal’s Peter Thiel, Twitter co-founder Jack Dorsey and Wikipedia co-creator Jimmy Wales.

And then there’s philosophy great Martin Heidegger.

Peter Thiel, Linkedin founder Reid Hoffman, Instagram inventor Mike Krieger – they all followed the Symbolic Systems program established in Stanford in 1986 combining neurosciences, logic, psychology, AI, cybernetics and, yes, philosophy, with an emphasis on Heidegger.

Add to it the role of Pluralistic Networks, founded by Chilean Fernando Flores, a former minister of Salvador Allende and co-author, with Terry Winograd (Google’s Larry Page’s mentor) of a book about Heidegger’s influence on information science, redefining intelligence, language and the limits of biology. Here we have Heidegger as the precursor of AI.

Liberal democracy vs freedom?

One of the big shows in Brussels for years has been the debate on why GAFA refuses to pay taxes. Libertarianism is incompatible with direct tax deductions or regulations. What matters most of all is the philanthropic value of those entrepreneurs and their social importance in creating jobs.

European egalitarian cynics, on the other hand, would describe them as a bunch of moguls bloated by un-measurable hubris praying to a doctrine of sovereign egotism.

GAFA + Microsoft’s market capitalization reached a whopping $2.9 trillion last year – bigger than India’s GDP; their collected revenues are larger than Sweden’s GDP.

According to the OECD, globally, states are not collecting as much as  $240 billion a year in taxes. According to a 2015 report from the European Parliament, the EU loses as much as 70 billion euros a year because of “fiscal optimization,” due uniquely to the transfer of GAFA profits towards fiscal paradises.

So what we have is GAFA working as political parties, actively changing the world without ever submitting themselves to a vote. It’s a case of “freedom” being incompatible with Western liberal democracy. That’s exactly what PayPal founder Peter Thiel wrote in 2009; “I no longer believe that freedom and democracy are compatible.”

In The Black Box Society (Harvard University Press), Frank Pasquale stresses how the industry, facing no accountability, will end up risking the very own legitimacy of sovereign states.

Which brings us to the monopoly question. Zuckerberg was asked if he considered Facebook a monopoly. Brussels certainly does, in its drive to regulate an economic model based on systematic smashing of competition and limitless privatization of personal data (which the EU has been unable to stop). Once again Peter Thiel, one of Facebook’s earliest investors: “Competition is for losers.”

The main complaint in Brussels, as officials stressed to Asia Times, is that the EU’s “fair competition” model is being corroded. Yet the paradox is the EU – because of ferocious fiscal competition – is actually the largest tax paradise on the planet.

The EU condemns international tax evasion while the enemy inside is represented by Luxembourg, the Netherlands and Ireland – a sort of Bermuda Triangle of corporate tax. The savory combination of a single free market and a sophisticated service economy in which almost no physical goods cross borders offers unlimited opportunities for tax evasion. No wonder the digital giants have accumulated over $600 billion in tax-free profits.

The limits of ‘self-ownership’

While GAFA in the US essentially controls the politics limiting the capacity for regulation, Brussels will continue to insist the only path towards healthy regulation comes from the EU.

The other model is of course China. Beijing has domesticated its sprawling digital industry – which is a de facto extension of the state apparatus as well as a growing instrument of global influence.

When Zuckerberg was asked whether Facebook should be broken up – the monopoly issue once again – he said that would weaken the US’s competitive advantage against China, which by the way is fast disappearing.

Facebook’s customer base though is not American; it’s global. Inside the Facebook HQ, the consensus is that it is a global company. So all these issues at stake – from monopoly to regulation to privacy – are indeed global issues.

Zuckerberg dodged extremely serious questions. Who owns “the virtual you?” Zuckerberg’s response was that you own all the “content” you upload, and can delete that content any time you want. Yet the heart of the matter is the advertising profile Facebook builds on each user. That simply cannot be deleted. And the user cannot alter it in any way.

The GAFA galaxy, in fact, owns you when you click accepting those massive terms and conditions of use. As argued by philosopher Gaspard Koenig, director of the GenerationLibre think tank in France, data property should logically follow the evolution of property rights, land property, financial property and property of ideas, thus replacing the current figure of the “proletarian 2.0” at the heart of the value chain of the digital economy.

The whole debate may revolve in fact about algorithmic determinism. Every algorithmic model is influenced by economic and financial interests. “Our” data is de facto monetized by all those massive, user-friendly platforms. The four billion profiles generated every three months by Facebook are derived from content that real people produce and let Facebook use. Even Zuckerberg himself admitted he cannot lock down his own privacy settings.

Thus the key question that Libertarianism refuses to answer: If “self-ownership” is being configured as the future of our social contract in a secular world, how do we mere consumers profit from our rampant, digital marketization?

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