Tag: finance

• Donald Trump’s Win Just Latest Tremor Shaking GOP (WSJ)
• Trump Becomes Presumptive Republican Nominee as Cruz Exits Race (BBG)
• How ‘Stop Trump’ failed to halt the Republican front-runner (Reuters)
• Islamic State seeks news blackout in Mosul as Iraqi army nears (Reuters)
• U.S. gathers allies on next steps in Islamic State fight (Reuters)
• BHP, Vale Face $44 Billion Lawsuit Over Brazil Dam Disaster (WSJ)
• Euro-Area Economy Starts Quarter in a ‘Low Gear,’ Markit Says (BBG)
• Oil steadies near $45 after slide, Canada wildfire supports (Reuters)
• Despite Shale Glut, U.S. Imports More Foreign Oil (WSJ)
• ECB Urges Rigorous Debt-Reduction Rules as Low Rates Ease Burden (BBG)
• Oil Price Upheaval Finally Hits Refiners (WSJ)
• Tanker leaves east Libyan port without loading, amid stand-off with Tripoli (Reuters)
• Apple to Revamp Streaming Music Service After Mixed Reviews, Departures (BBG)
• Target gets tough with vendors to speed up supply chain (Reuters)
• Brazil’s Crusading Corruption Investigation Is Winding Down (BBG)
• Malaysia dissolves 1MDB advisory board headed by PM Najib (Reuters)
• Portugal Says No to Pessimism When It Comes to Economic Forecasts (BBG)
• Hollande Plots Return From the Dead as French Economy Heals (BBG)
• Billions Are Being Invested in a Robot That Americans Don’t Want (BBG)

 

Overnight Media Digest

WSJ

– Republican front-runner Donald Trump almost certainly snared the Republican Party’s presidential nomination by winning a sweeping victory in Indiana’s primary Tuesday and forcing his chief rival, Texas Senator Ted Cruz, from the race. (http://on.wsj.com/1NjCqu4)

– Takata Corp is preparing to recall at least another 35 million rupture-prone airbag inflators that U.S. regulators have deemed a safety risk, said people familiar with the matter, further escalating a crisis at the Japanese supplier linked to numerous deaths and injuries. (http://on.wsj.com/1rjUBpl)

– MetLife Inc, one of the best-known brands in life insurance, misled tens of thousands of customers about a product that retirees seek out for safety, according to regulators, who levied a near-record $25 million fine against the company. (http://on.wsj.com/1X7JMTL)

– CBS Corp said its first-quarter earnings rose 20 percent as the broadcast of Super Bowl 50 boosted the media giant’s advertising sales. (http://on.wsj.com/21vlJhP)

 

FT

* Commerzbank earnings more than halved in the first quarter on Tuesday, hit by volatile capital markets and the drag on earnings from low interest rates.

* Commodities group Liberty House, confirmed on Tuesday that it had sent a letter of intent covering Tata Steel UK assets. The group will compete with Excalibur, a management-led buyout team that wants to bring employees on board as investors and which also sent a letter of intent.

* UBS reported weaker earnings and capital on Tuesday, following which its shares closed down 7.5 percent. The Swiss bank also warned that global financial market turmoil had paralysed client activity across its wealth management-dominated businesses.

* Barclays has launched a 100 percent mortgage which will allow some buyers to take out a entire mortgage value without needing to pay a deposit, a first by a high street bank since the financial crisis.

 

NYT

– Regulators are expected to announce as early as Wednesday that at least 35 million additional airbags made by Takata will need to be fixed, according to a person briefed on the matter. (http://nyti.ms/1rT2l2d)

– Google on Tuesday said it would expand its testing of autonomous vehicles by installing its technology in a fleet of minivans made by Fiat Chrysler. (http://nyti.ms/1Njt2qx)

– The head of development for Porsche, Wolfgang Hatz, has left the automaker seven months after he was suspended for possible involvement in Volkswagen’s emissions cheating scandal, Porsche said Tuesday. (http://nyti.ms/1QRROIG)

– Judge Ricardo Múcio Santana de Abreu Lima overturned a lower court order and lifted the nationwide suspension of WhatsApp in Brazil on Tuesday, allowing the popular messaging service owned by Facebook to get up and running again. (http://nyti.ms/26RHMmQ)

 

Canada

THE GLOBE AND MAIL

** Canada’s Veterans Affairs Minister Kent Hehr says members of the military with mental-health issues should not fear they will be automatically discharged when they step forward for treatment. (http://bit.ly/21w1oc4)

** Agriculture Minister Lawrence MacAulay promised on Tuesday to consult with farmers and processors in the coming weeks to deal with the problem of so-called diafiltered milk, triggering a potential trade showdown with the United States. (http://bit.ly/21w1uR1)

** The entire 80,000-strong population of Fort McMurray was ordered to leave everything behind and evacuate quickly as an out-of-control wildfire veered into the city on Tuesday with little warning, creating the largest fire evacuation in Alberta’s history. (http://bit.ly/21w1RLk)

NATIONAL POST

** Gregory Wiebe, a senior partner in the global accounting giant KPMG, who has been accused of being behind a tax avoidance scheme in the Isle of Man, says a lot of international tax rules “are broken” – and they need to be fixed. (http://bit.ly/21w2g0p)

** Bombardier Inc’s decision to curtail production of its largest business jets one year ago appears to be paying off, with the aircraft holding significantly more of their value than the competition. (http://bit.ly/21w2wfM)

** A dramatic increase in expected energy-related loan losses at Canadian Western Bank has reignited concerns that the effects of the energy downturn are just beginning to be felt by the country’s biggest lenders. In a pre-announcement before second quarter financial results are released later this month, the Edmonton-based bank said it will record C$33 million ($26 million) of provisions for credit losses on its oil and gas production portfolio. (http://bit.ly/21w2TqH)

 

Britain

The Times

– Manufacturing is in a period of “deep unease” and suffered its worst month in more than three years in April, as uncertainty grows over the European Union referendum result and demand at home and abroad continues to slow. (http://bit.ly/1TksFbj)

– HSBC Holdings Plc has blamed turmoil in global markets for a drop of nearly a fifth in its profits for the first three months of the year. Despite the fall in profits, HSBC said that there would be no cut to its payouts to shareholders. (http://bit.ly/1TksLQ1)

The Guardian

– The British government has ordered the insolvency watchdog to launch an immediate investigation into the circumstances surrounding BHS’s slump into administration. (http://bit.ly/1TktnW3)

– Asda has been ordered by the advertising watchdog to ensure future sales promotions do not mislead consumers about how much they could save, just days after the supermarket chain agreed to change potentially confusing pricing after public criticism by the government’s competition regulator. (http://bit.ly/1VJdsXT)

The Telegraph

– UK factory output contracted for the first time in three years in April as concerns about the global economy and troubles on the high street exerted a drag on activity. (http://bit.ly/1VJdzT8)

Sky News

– Britain’s biggest payday lender Wonga saw losses double last year as a price cap imposed by regulators, triggered a sharp fall in revenues. Wonga Group recorded a pre-tax loss of approximately 70 million pounds in 2015, compared to 37 million pounds a year earlier. (http://bit.ly/1VJdK0N)

The Independent

– A federal judge in New Orleans Monday allowed BP to drop its bid to avoid paying the second half of $2.3 billion in compensation promised to seafood interests harmed by the blown-out well. (http://ind.pn/1VJdX4b)

 

via http://ift.tt/24xusll Tyler Durden

Two days ago, when looking at the latest “Senior Loan Officer Opinion Survey on Bank Lending Practices”, we showed that Fed lending standards had tightened for the third quarter in a row, and pointed out that in recent history this has never happened without either a default cycle, or a recession, following immediately after.

 

Today, as part of its brand new daily report “Credit Bites” titled “3 in a row…” Deutsche Bank takes on the same subject, and notes that the April survey showed that on balance, banks tightened lending standards on commercial and industrial loans during Q1, even if lending standards on loans to households were said to have eased. It then updates a couple of charts DB uses to show the correlation between the C&I Loan Standards and US HY defaults (12 months on) and also that the yield curve is a good lead indicator of the direction of lending standards around 18 months in advance.

From the note:

We’ve now seen three consecutive quarters of net tightening of C&I lending standards in the US (Figure 1, left) and previously whenever this has happened it has ultimately led to a full blown default cycle – albeit with only three cycles of data to examine. The series does tend to exhibit sweeping cyclical tendencies with momentum and is not prone to random fluctuations. So it’s a worry that we’ve entered the net tighten stage and have stayed there for three quarters now. The good news is that although it points to a continuation of the rising default trend over the next 12 months, the net tightening (+12) is still relatively mild.

 

 

The shape of the yield curve suggests more tightening to come though (Figure 1, right). A reminder that we like the yield curve as a lead  indicator as it is in our opinion a very good proxy for animal spirits. When the yield curve is steep, animal spirits should be high as the risk rewards to investing out the curve are high. The opportunity costs of being defensive at the front of the curve are potentially very high. When the yield curve flattens the risk/reward reduces and animal spirits should fade and lending standards should gradually tighten. To exaggerate to illustrate when we have an inverted yield curve animal spirits should be severely curtailed as any kind of lending/investing out the curve carries a poor risk/reward profile and potentially negative carry.

 

To date the US yield curve hasn’t yet indicated a full blown default cycle but
the momentum remains worrying. The debate still rumbles on as to whether
this cycle is different given the artificial nature of both ends of the major global yield curves. Although the last 4 US recessions have been preceded by an inverted yield curve, not all post WWII recessions saw an inversion beforehand but all saw a flattening of the curve (Figure 2). Maybe we won’t see an inversion this time round prior to the next recession due to the extremely low Fed funds rate.

 

* * *

Or maybe it is all a matter of how one looks at the yield curve: recall that as we showed 3 months ago using a BofA adjustment to the OIS curve to factor in the Fed’s interventions, the curve is already inverted:

Applying our methodology to the OIS curve, we found that the adjusted 3m5s OIS curve at -30bp is already inverted. This suggests that the curve already could be priced for a recession (Chart 12). Granted, our methodology signaled a false alarm in 2012 when the curve was also inverted but a recession did not follow (Chart 12). However, at that time the curve flattened to extreme levels because of the forward guidance, an unprecedented event in the history of US monetary policy. In contrast, this time the curve flattened following the Fed hike, which looks more like a typical curve inversion episode. In fact, the Fed was hiking in all previous historical episodes where the curve inverted ahead of US recessions (Chart 8). From this point of view, the current curve flattening may be more worrisome.

In any event, it is now up to the Fed to pull an ECB -perhaps in the form of monetizing corporate debt and/or loans- and to find a way to open up credit channels, as otherwise it will be very difficult for cash strapped companies to avoid both a default cycle and the recession that – at least bast on historical data – will follow.

via http://ift.tt/1NVnW3B Tyler Durden

While there was no unexpected overnight central bank announcement unlike yesterday’s surprise by the RBA which unleashed volatility havoc in the FX market, which promptly spilled over into all asset classes, overnight stocks around the world saw another leg lower without a tangible catalyst, while EM currencies fell to a one-month low after two Fed presidents raised concern investors had become too complacent in their belief that U.S. interest rate raises will stay on hold. Or perhaps all that is happening is that after ignoring Trump, the market is starting to finally price in the possible reality of the Donald in the White House (although as Jeff Gundlach pointed out, Trump would be a far better president for the economy and the market than Hillary or Bernie).

“Equity market sentiment seems to be rolling over globally as the wind begins to come out of the oil price rally,” said Angus Nicholson, market analyst at IG in Melbourne. “Given the move in commodity prices, the materials and energy sectors are set for a difficult session.”

The dollar has climbed against all its 16 major peers since Monday’s close as Atlanta Fed President Dennis Lockhart called a June rate increase “a real option,” while San Francisco’s John Williams said he would support such a move at the next meeting provided the U.S. economy stayed on track. While both are non-voting members of the Federal Open Market Committee, the outlook for Fed policy is under scrutiny with data on nonfarm payrolls due at the end of the week.

“While the probability of a hike next month is very low, I do think the market is underpricing the chances of a hike after that,” Michael Wang, a strategist at hedge fund Amiya Capital told Bloomberg. “And to that extent emerging markets may be vulnerable.”

As the chart below shows, the market is clearly unprepared for a rate hike and is pricing in a 90% chance of no Fed move next month.

As a result, stocks in Europe and developing nations fell for a fourth straight day while Asian shares have now fallen for the 6th session, their longest losing streak since the February lows. The dollar extended Tuesday’s recovery from the weakest level in almost a year, while Russia’s ruble tumbled the most in more than a week and Malaysia’s ringgit dropped to the lowest since March. After briefly bouncing on yesterday’s API inventory data, oil resumdes its decline before official DOE stockpile data scheduled for release Wednesday that’s forecast to show a fuel glut is expanding.

Europe’s Stoxx 600 Index was down 0.6% with all industry groups in the red. Anheuser-Busch InBev NV slid 3.1% after reporting sales and profit growth that missed estimates. BHP Billiton Ltd. tumbled after it was named in a $44 billion law suit over a dam rupture in Brazil that caused deaths and severe environmental damage. In the green were Siemens, Europe’s largest engineering company, up 0.6% and Societe Generale which rose 3.8% after both reported better earnings than analysts forecast.

The MSCI Emerging Markets Index of stocks fell 1 percent to the lowest in almost a month. Russia’s Micex Index dropped 1.1 percent as trading resumed following a two-day holiday. The Hang Seng China Enterprises Index fell 0.6%, dropping for a third day, and the Shanghai Composite Index slipped less than 0.1 percent. US equity futures were down 0.7%, after dropping 0.9% in the last session.

Market Wrap

• S&P 500 futures down 0.7% to 2042
• Stoxx 600 down 0.5% to 334
• FTSE 100 down 0.6% to 6147
• DAX down 0.4% to 9883
• German 10Yr yield up less than 1bp to 0.21%
• Italian 10Yr yield up 5bps to 1.5%
• Spanish 10Yr yield up 5bps to 1.61%
• S&P GSCI Index down less than 0.1% to 348.2
• MSCI Asia Pacific down 0.9% to 128
• Nikkei 225 closed
• Hang Seng down 0.7% to 20526
• Shanghai Composite down less than 0.1% to 2991
• S&P/ASX 200 down 1.5% to 5271
• US 10-yr yield down less than 1bp to 1.79%
• Dollar Index up 0.12% to 93.06
• WTI Crude futures down 0.1% to $43.60
• Brent Futures down less than 0.1% to $44.95
• Gold spot down 0.6% to $1,279
• Silver spot down 0.5% to $17.33

Global Top News

• JetBlue and Bombardier Said to Resume Talks on C Series Order: Agreement would follow recent purchase of 75 jets by Delta
• Aeropostale Files for Bankruptcy in Latest Retailer Meltdown: Changing tastes, fast-fashion rivals prove too much for chain
• Takata Survival Seen Getting Harder With Wider Air-Bag Recalls: Co.’s talks with U.S. regulators could lead to recall of millions of additional vehicles
• Altice Gets Approval From FCC to Acquire Cablevision Systems: Co. is pleased with decision, sticks with plans to complete deal in 2Q
• Trump Nomination All But Certain After Indiana Win, Cruz Quits: Sanders surprises Clinton with defeat in Democratic race
• Pfizer Said to Approach Medivation on Potential Buy: Reuters
• Hellman & Friedman Said Near $7.5b Purchase of MultiPlan: WSJ
• Target to Overhaul Rules, Fines to Quicken Supply Chain: Reuters
• TSMC to Make Processors for New Apple Products: Comm. Times

Looking at regional markets, Asia stocks traded lower following Wall St.’s losses as growth concerns and commodity weakness dampens sentiment. ASX 200 (-1.5%) saw losses in energy and basic materials after WTI crude futures fell below USD 44/bbl and iron ore decline over 4%, while index heavyweight BHP Billiton also underperformed after Brazil filed a USD 43b1n civil lawsuit against Co.’s Samarco JV. Chinese markets were also weighed by the commodity declines, although the Shanghai Comp (-0.1 %) has fared better than its peers after the PBoC continued to provide liquidity into the interbank market with another CNY 100bIn injection. As a reminder, Japanese markets remain closed for Greenery Day

Asian Top News

• PBOC Opens Taps to China Policy Banks in Bid to Sharpen Stimulus: Lending for policy banks now approved at start of each month
• Indonesia Growth Fails to Pick Up in Setback to Jokowi Reforms: 1Q GDP increases 4.92% y/y vs est. 5.07%
• Hong Kong Bank Funds Said Frozen for Some Tangled in 1MDB Probe: Individuals affected probed by authorities outside Malaysia
• Xi’s Silk Road Dream for China Hits a Speed-Bump in Thailand: S.E. nation rejects offer of financing for rail project
• Mobius Says Buy Commodity Stocks as Rebound’s Just Beginning: Templeton Emerging Markets adding holdings of China producers
• Ayala Land Says 1Q Profit Rose 14% Y/y, Spent 23.4b Pesos: 1Q sales +8% to 26.97b pesos

In Europe, equities trade modestly in the red after a slew of earnings updates from notable large caps dictated the state of play. The underperformer of the morning has been the FTSE 100 with shares of mining heavyweight BHP Billiton tumbling after reports that Brazil have filed a USD 43b1n lawsuit against the Co., while the DAX moved south of 9950 having tripped below yesterday’s low.

From a fixed income perspective, Bunds initially edged lower with yields rising and as such the curve notably bear steepened. Additionally, German paper underperformed relative to USTs given the large amount of supply expected hitting the market with government bond auctions from France, Germany and the UK totalling around EUR 14bIn. However, with the auctions now out the way, Bunds have pared much of their opening losses to head into the North American open around the 163.00 level.

European Top News

• Shell Quarterly Profit Beats Estimates on Refining Earnings: Company cuts billions more dollars from capital spending plan
• AB InBev First-Quarter Sales Miss Estimates on Brazil: U.S. sales to retailers fell 0.3% on adjusted calendar basis
• Credit Suisse Sells Debt Assets to TPG Arm for $1.27 Billion: Sale results in charge of about $100m for Credit Suisse
• Societe Generale Beats Profit Estimates, Plans Deeper Cuts: Bank announces additional cost cuts of EU220m
• Siemens Quarterly Profit Beats Estimates on Power Orders: Cost-savings goal lifted to as much as EU950m this year
• Adidas Decides to Sell Golf Division to Focus on Clothing: Talks planned for disposal of TaylorMade, Adams and Ashworth
• Euro-Area Economy Starts Quarter in a ‘Low Gear,’ Markit Says: Composite PMI at 53 in April, services gauge at 53.1

In FX, the dollar appreciated 0.1 percent to $1.1486 per euro and advanced 0.2 percent to 106.79 yen. Japanese Finance Minister Taro Aso said Tuesday, when the currency reached an 18-month high, that the government is monitoring speculative foreign-exchange trades and will respond if needed. The yen has strengthened more than twice as much as any other major currency in the past week as the Bank of Japan unexpectedly refrained from adding to stimulus at a policy review.

The MSCI Emerging Markets Currency Index fell for a third day, sliding 0.7 percent. Malaysia’s ringgit dropped 1.4 percent, the most since September, and South Korea’s won weakened 1.2 percent. “The market is grasping the view that the dollar probably fell a little too much, and a rebound could be ahead, and this seems to have deteriorated sentiment towards emerging-market assets including the won,” said Jeon Seung Ji, a currency analyst in Seoul at Samsung Futures Inc.

Risk sentiment is steady as a result, and enough to keep the JPY pairs in tight ranges for now. USD/JPY tested 107.50 higher up, but clearly rejected this, but on the downside, the recent USD revival means there is no rush to test the mid 105.00’s again just yet. EUR/USD buyers from 1.1470 — previous resistance, but no convincing come-back as yet. Data-wise, EU services were a touch off expectations, more so retail sales. UK construction PMIs were also below forecasts, but to limited effect.

In commodities, WTI and Brent have both traded flat for the session after falling in recent days. The level to look for in WTI on the downside would be USD 43.28/bbl as this could provide some support, and if this level breaks, the next notable level is USD 41.80/bbl. Also in the commodities sector Gold prices retreated further away from the USD 1300/oz level and on a technical note the key support level to look out for is the USD 1272.00 level, Silver has also come off highs and now resides at the 23.6 fib level at USD 17.27/oz also the RSI is showing a slight bullish divergence which could mean a brief relief move to the upside. Elsewhere copper and iron ore also saw lacklustre trade amid global growth concerns and also weighed as USD recovered from near 16-month lows.

On the US calendar,  it is a busy session kicked off by the April ADP employment change print (195k expected) which will be closely watched ahead of payrolls on Friday. The March trade balance is then due to be released, followed by Q1 nonfarm productivity and unit labour costs data. Later on today we’ll then get those services and composite PMI’s, followed imminently by the ISM non-manufacturing reading for April. Expectations are for a modest pick-up to 54.8 which if true will confirm the biggest spread between the ISM series since January. March factory orders data is also due along with any final revisions to the durable and capital goods orders data.

Bulletin Headline Summary from RanSquawk and Bloomberg

• European equities have spent much of the session in the red, while Bunds have pared much of their opening losses in the wake of a slew of European auctions
• USD-Index continues to grind higher ahead of the North American crossover, paring some of the recent heavy losses
• Today’s highlights include US ADP Employment, Services PMI, US Factory Orders and ISM Non-Manufacturing and DoE crude oil inventory report
• Treasuries steady in overnight trading as global markets and precious metals sell off; U.S. Treasury will release quarterly refunding announcement at 8:30am ET.
• Low interest rates are helping to reduce euro-area public debt, but rigorous enforcement of European Union fiscal rules is also needed to bring the burden down by a “sizable” amount, the European Central Bank said
• Chinese debt investors are turning bearish at just the wrong time for the nation’s corporate borrowers, which face a record 3.7 trillion yuan ($571 billion) of local bond maturities through year-end
• China’s central bank is turning on the credit taps to its policy banks as it seeks to support the economy by channeling credit to designated areas of the government’s choosing
• Record-low interest rates and wild market swings are eroding profit at Europe’s banks, with no end in sight. From UBS’s wealth-management unit to Commerzbank’s consumer-lending business, income is shrinking as margins get squeezed and clients avoid trading
• Societe Generale SA reported an unexpected increase in first-quarter profit, boosted by consumer banking, and announced plans to deepen cost cuts at its investment bank. The shares jumped
• Donald Trump became the presumptive Republican presidential nominee on Tuesday after driving his top challenger, Texas Senator Ted Cruz, from the race with a crushing Indiana primary win
• Sovereign 10Y yields mixed; European and Asian equity markets drop (Japan closed); U.S. equity-index futures fall. WTI crude oil drops, metals lower

US Event Calendar

• 7am: MBA Mortgage Applications, April 29, no est. (prior -4.1%)
• 8:15am: ADP Employment Change, April, est. 195k (prior 200k)
• 8:30am: Trade Balance, March, est. -$41.2b (prior -$47.1b)
• 8:30am: Nonfarm Productivity, 1Q P, est. -1.3% (prior -2.2%)
  • Unit Labor Costs, 1Q P, est. 3.3% (prior 3.3%)
• 9:45am: Markit US Services PMI, April F, est. 52.1 (prior 52.1)
• 10am: ISM Non-Mfg Composite, April, est. 54.8 (prior 54.5)
• 10am: Factory Orders, March, est. 0.6% (prior -1.7%)
  • Factory Orders Ex Trans, March, no est. (prior -0.8%)
  • Durable Goods Orders, March F, est. 0.8% (prior 0.8%)
  • Durables Ex Transportation, March F, est. -0.1% (prior -0.2%)
  • Cap Goods Orders Non-defense Ex Air, March F, no est. (prior 0%)
  • Cap Goods Ship Non-defense Ex Air, March F, no est. (prior 0.3%)
• 10:30am: DOE Energy Inventories
• 6:30pm: Fed’s Kashkari speaks in Rochester, Minn.

DB’s Jim Reid concludes the overnight wrap

Small ash clouds gathered over markets yesterday as it was back to risk-off mode as investors contemplated a number of variables all of which contributed to a distinctly weaker tone through the session. FX volatility has been a big theme of late and yesterday was case in point with some sharp and wild moves across key currencies. Indeed the intraday ranges for the Euro, Yen and Sterling were 1.04%, 1.07% and 1.63% respectively. The Euro in fact touched 1.162 yesterday matching the highs of August last year, while the Yen was as strong as 105.55 at one stage and the strongest in 18-months. As a result the Dollar index broke below 92 in early trading (and so nearing 2014 levels) before swinging back to a late session gain (of +0.34%) before the close of play. Still, the range topped 1.20% and if we look further afield at EM currencies there were losses of at least 1.50% for currencies in Turkey, Brazil, Mexico, South Africa and Colombia. The RBA rate cut also contributed to a near 2.5% decline for the Aussie Dollar.

Also not helping was a weaker session for commodities. WTI continued its slide after falling -2.52% and is now back below $44/bbl having traded as high as $46.78 intraday at the back end of last week. That earlier softer than expected manufacturing data in China also contributed to a poor day for base metals with the likes of Copper (-2.57%), Aluminium (-2.74%) and Iron Ore (-4.27%) all falling heavily. Even Gold (-0.39%) went against its usual safe haven status. So that saw mining and energy names get heavily hit, while banks stocks also had a day to forget after disappointing earnings reports out of UBS and Commerzbank saw their share prices tumble 8% and 10% respectively and so lead the sector broadly lower.

By the close of play the Stoxx 600 was down -1.66%, while the S&P 500 closed out the day with a -0.87% loss and so more than wiped out Monday’s gains. The index has now retreated on three out of the last four sessions and it appears that the rally which has essentially been going since mid-February is losing momentum. Credit markets mirrored the weaker performance for risk. In Europe the iTraxx Main and Crossover indices ended 3bps and 10bps wider (with financials indices hit harder) while in the US the CDX IG index closed over 3bps wider. Rates markets were the biggest beneficiaries yesterday. 10y Treasury yields were nearly 8bps lower and closed back below 1.80% for the first time in two weeks, while similar maturity Bund yields rallied to the tune of nearly 7bps.

This morning in Asia we’ve seen bourses largely follow that weak lead from the US last night and trade in the red for the most part. The Hang Seng (-1.19%), Kospi (-0.62%) and ASX (-1.05%) in particular are down the most, while losses for bourses in China have generally been more modest. The Shanghai Comp is down -0.22% currently. Markets in Japan are still closed for a public holiday, although the Yen is actually half a percent weaker this morning and bucking the recent trend.

With no data released overnight, the other big focus this morning is the US Presidential Election race. After Trump secured the Indiana primary, the big news since is the announcement that Ted Cruz has decided to withdraw from the Republican race and so all but confirms Trump as the Republican nominee. Sanders defeated Clinton in the Indiana primary for the Democratic race, but it looks unlikely to stop Clinton now likely facing off against Trump.

Moving on. Despite the still lowly probability (12%) being priced into a rate hike by the Fed in June, some attributed yesterday’s reversal in the US Dollar off the lows to the comments from Fed officials yesterday. Both San Francisco Fed President Williams and Atlanta Fed President Lockhart stuck to the Fed script by not ruling out the possibility of a move next month. Lockhart said specifically that ‘I would put more probability on it being a real option’ and the ‘communication of committee participants and members between now and mid-June obviously should try to prepare the markets for at least a realistic range of possibilities’. Meanwhile, Williams went as far as to say that should inflation continue to rise towards the Fed’s target and growth rebounds towards his 2% target for the year, then ‘it would be appropriate’ to ‘go that next step’ in hiking in June.

In fact we’ve heard from Lockhart again overnight and while the bulk of his comments reinforced those made during the day, he also added that the uncertainty stemming from the Brexit referendum ‘has some potential to loom large as we approach the June meeting’. June is all of a sudden looking like a big month for markets and it’s worth highlighting that in the time between June 15th and June 26th, we’ll have the FOMC meeting (on the 15th), BoJ meeting (on the 16th), BoE meeting (on the 16th), UK EU referendum (on the 23rd) and a possible Spain election on the 26th. In the background we’ll also have the ECB starting their corporate bond purchases, with their success likely to be a big factor in credit markets in June and beyond.

Elsewhere, despite the weaker day for markets yesterday the economic data out of the US was actually fairly reasonable. The IBD/TIPP economic optimism reading in May firmed 2.4pts to 48.7 (vs. 46.5 expected) and so reaching the highest level in a year. Meanwhile vehicle sales rose last month. Total vehicle sales increased to an annualised rate of 17.3m (vs. 17.4m expected) having plummeted to 16.5m in March. Domestic vehicle sales printed at 13.5m (vs. 13.4m expected), a rise of 500k. Finally the ISM NY was up a fairly robust 6.6pts to 57.0.
In Europe the main data of note was out of the UK where the April manufacturing PMI came in at a disappointing 49.2 – the first sub 50 reading for 3 years. That represented a decline of 1.5pts from March after expectations had been for a rise to 51.2. Elsewhere the Euro area PPI reading printed higher than expected last month at +0.3% mom (vs. 0.0% expected).

Looking at today’s calendar, this morning in Europe the calendar is dominated by the release of the April services and composite PMI’s. We’ll get the final revisions for the Euro area, Germany and France as well as the data for the peripheral countries. Euro area retail sales are also worth keeping an eye on today. Meanwhile it’s a packed calendar across the pond this afternoon. Kicking things off will be the April ADP employment change print (195k expected) which will be closely watched ahead of payrolls on Friday. The March trade balance is then due to be released, followed by Q1 nonfarm productivity and unit labour costs data. Later on today we’ll then get those services and composite PMI’s, followed imminently by the ISM non-manufacturing reading for April. Expectations are for a modest pick-up to 54.8 which if true will confirm the biggest spread between the ISM series since January. March factory orders data is also due along with any final revisions to the durable and capital goods orders data. Away from the data we’re due to hear from the Fed’s Kashkari, while the ECB’s Weidmann is also scheduled to speak today. Earnings wise we’ve got 38 S&P 500 companies scheduled to report with the highlights being Kraft Heinz and Metlife. In Europe we’ll get earnings reports from 29 Stoxx 600 companies including Royal Dutch Shell. So plenty to keep us busy.

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Submitted by Mike “Mish” Shedlock

License To Steal: Italy’s Highest Court Rules “Theft Not A Crime If Hungry”

In a ruling sure to heighten migration tensions in the EU, Italy’s highest court rules “Theft Not a Crime if Hungry“.

Stealing small amounts of food to stave off hunger is not a crime, Italy’s highest court of appeal has ruled.

 

Judges overturned a theft conviction against Roman Ostriakov after he stole cheese and sausages worth €4.07 (£3; $4.50) from a supermarket.

 

Mr Ostriakov, a homeless man of Ukrainian background, had taken the food “in the face of the immediate and essential need for nourishment”, the court of cassation decided.

 

Therefore it was not a crime, it said.

 

In 2015, Mr Ostriakov was convicted of theft and sentenced to six months in jail and a €100 fine.

 

However, his case was sent to appeal on the grounds that the conviction should be reduced to attempted theft and the sentence cut, as Mr Ostriakov had not left the shop premises when he was caught.

 

Italy’s Supreme Court of Cassation, which reviews only the application of the law and not the facts of the case, on Monday made a final and definitive ruling overturning the conviction entirely.

 

“The condition of the defendant and the circumstances in which the seizure of merchandise took place prove that he took possession of that small amount of food in the face of an immediate and essential need for nourishment, acting therefore in a state of necessity,” wrote the court.

Given that theft is no longer a crime, I expect an enormous outbreak of theft from Italian grocery stores.

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By EconMatters

 

People don`t realize the magnitude of all the Oil Producing Countries with declining Production Rates, and trending the wrong direction compared with the consistent and steady rise in Global Oil Demand Growth.

The Oil Market is going to ‘unbalance’ in the opposite direction over the next 12 months, and start heading south fast over the next five years. The US probably needs to increase Oil Production to 12 Million Barrels per day in five years just to keep up with global oil demand, as the US is one of the few countries globally capable of increasing capacity given the resource requirements, political stability, and technological requirements necessary to invest in these capital intensive projects.

But it is going to take a much higher price for a sustained duration to get the US all the way to 12 Million Barrels per day, as much of the low hanging fruit has already been taken out of the ground so to speak.

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle   

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The ‘odd’ regime shift in the relationship between USDJPY and US equities continues overnight. Following some visible-handedness and follow-through momentum, Yen is weakening against the USD – normally a big flashing green sign for risk-on pajama traders but China’s biggest Yuan devaluation in 9 months (since the August turmoil) seems to have stolen the jam out of the bull’s donut as US equity futures extend losses, AsiaPac credit risk jumps, and USD strength is weighing on crude prices.

China sent another strong message tonight…

 

Weighing on US equities…

 

Despite Yen weakness…

 

As the Correlation regime has shifted in Yen Carry…

 

It seems the message is loud and clear – Stop with the hawkish tone or else August happens again!!

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Apparently, Europeans need to do ‘studies’ to show that markets are rigged.  See the study here.  Readers of Splitting Pennies understand Forex and how central banks control Forex markets, which is a superset of all other markets.

Although their conclusion is probably correct, their methodology is ridiculous.  Their proof that there’s insider trading going on is based on ‘price drift’ which accounts for about 50% of the post-data move.

The European Central Bank published a working paper — which means it hasn’t been peer reviewed as yet — arguing that seven out of 21 market-moving announcements show evidence of “substantial informed trading” before the official release time.The paper identified seven indicators that they said showed “strong” evidence of pre-announcement drift: The Conference Board’s consumer confidence index; the National Association of Realtors’ existing-home sales report and pending-home sales report; the Commerce Department’s preliminary GDP report; the Federal Reserve’s industrial production report; and the Institute for Supply Management’s manufacturing and nonmanufacturing index.

The accused, has a more reasonable answer for ‘price drift’ – it’s because the market expects the numbers to be as expected:

A spokesman for the National Association of Realtors says they take any allegations seriously. He points out that the existing-home-sales report is released from a secure location, that reporters are instructed not to communicate outside of the room, and that the organization monitors the media to make sure data is not disseminated early. He’s said on occasion media organizations have accidentally released data early, apologized to the group and not done so subsequently.  The spokesman also suggested, however, that traders may be making educated guesses. The pending-home-sales release tracks closely what the existing-home-sales report eventually shows.  A Federal Reserve spokesman declined to comment. Messages left with the Commerce Department’s Bureau of Economic Analysis and The Conference Board weren’t returned.

Maybe these Eurodemics didn’t know that Reuters sells data front running as a service, it’s now called “Low Latency News” – See the brochure here.

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Submitted by Mike Krieger via Liberty Blitzkrieg blog,

In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot.

 

The only rational patriotism, is loyalty to the nation all the time, loyalty to the government when it deserves it.

 

– Quotes by Mark Twain

Every time I hear from Edward Snowden I’m immediately reminded of how thoughtful, courageous and patriotic he is, and how fortunate we are that he followed his conscience and spilled the beans on a multitude of unaccountable and unconstitutional actions routinely committed by America’s deep state government.

Earlier today, The Intercept posted a piece written by Edward Snowden pulled from the recently published book Inside the Assassination Complex. It’s a short piece, but extremely powerful and to the point. I saw it as a whistleblower’s manifesto in which Mr. Snowden explains why he felt he had no other choice but to come forward, and why others in similar positions should consider doing the same should they find themselves in a position to defend the U.S. Constitution and inform the general public. We all know that the deep state will never voluntarily work to protect “we the people,” as such, leaking on behalf of the public interest is now a matter of national survival.

So without further ado, here are excerpts from Snowden’s latest piece, Whistleblowing is Not Just Leaking — It’s an Act of Political Resistance:

I’ve been waiting 40 years for someone like you.” Those were the first words Daniel Ellsberg spoke to me when we met last year. Dan and I felt an immediate kinship; we both knew what it meant to risk so much — and to be irrevocably changed — by revealing secret truths.

 

One of the challenges of being a whistleblower is living with the knowledge that people continue to sit, just as you did, at those desks, in that unit, throughout the agency, who see what you saw and comply in silence, without resistance or complaint. They learn to live not just with untruths but with unnecessary untruths, dangerous untruths, corrosive untruths. It is a double tragedy: What begins as a survival strategy ends with the compromise of the human being it sought to preserve and the diminishing of the democracy meant to justify the sacrifice.

 

A single act of whistleblowing doesn’t change the reality that there are significant portions of the government that operate below the waterline, beneath the visibility of the public. Those secret activities will continue, despite reforms. But those who perform these actions now have to live with the fear that if they engage in activities contrary to the spirit of society — if even a single citizen is catalyzed to halt the machinery of that injustice — they might still be held to account. The thread by which good governance hangs is this equality before the law, for the only fear of the man who turns the gears is that he may find himself upon them.

 

Hope lies beyond, when we move from extraordinary acts of revelation to a collective culture of accountability within the intelligence community. Here we will have taken a meaningful step toward solving a problem that has existed for as long as our government.

 

Not all leaks are alike, nor are their makers. Gen. David Petraeus, for instance, provided his illicit lover and favorable biographer information so secret it defied classification, including the names of covert operatives and the president’s private thoughts on matters of strategic concern. Petraeus was not charged with a felony, as the Justice Department had initially recommended, but was instead permitted to plead guilty to a misdemeanor. Had an enlisted soldier of modest rank pulled out a stack of highly classified notebooks and handed them to his girlfriend to secure so much as a smile, he’d be looking at many decades in prison, not a pile of character references from a Who’s Who of the Deep State.

In the above paragraph, Snowden highlights the most corrosive aspect of modern American society, the institutionalization of a barbaric and un-American two-tierd justice system. For more on the Petraeus angle referenced, see: Some Leaks Are More Equal Than Others – Hypocritical D.C. Insiders Line up to Defend General Petraeus from Prosecution.

Now back to Snowden.

This dynamic can be seen quite clearly in the al Qaeda “conference call of doom” story, in which intelligence officials, likely seeking to inflate the threat of terrorism and deflect criticism of mass surveillance, revealed to a neoconservative website extraordinarily detailed accounts of specific communications they had intercepted, including locations of the participating parties and the precise contents of the discussions. If the officials’ claims were to be believed, they irrevocably burned an extraordinary means of learning the precise plans and intentions of terrorist leadership for the sake of a short-lived political advantage in a news cycle. Not a single person seems to have been so much as disciplined as a result of the story that cost us the ability to listen to the alleged al Qaeda hotline.

 

If harmfulness and authorization make no difference, what explains the distinction between the permissible and the impermissible disclosure?

 

The answer is control. A leak is acceptable if it’s not seen as a threat, as a challenge to the prerogatives of the institution. But if all of the disparate components of the institution — not just its head but its hands and feet, every part of its body — must be assumed to have the same power to discuss matters of concern, that is an existential threat to the modern political monopoly of information control, particularly if we’re talking about disclosures of serious wrongdoing, fraudulent activity, unlawful activities. If you can’t guarantee that you alone can exploit the flow of controlled information, then the aggregation of all the world’s unmentionables — including your own — begins to look more like a liability than an asset.

 

At the other end of the spectrum is Manning, a junior enlisted soldier, who was much nearer to the bottom of the hierarchy. I was midway in the professional career path. I sat down at the table with the chief information officer of the CIA, and I was briefing him and his chief technology officer when they were publicly making statements like “We try to collect everything and hang on to it forever,” and everybody still thought that was a cute business slogan. Meanwhile I was designing the systems they would use to do precisely that. I wasn’t briefing the policy side, the secretary of defense, but I was briefing the operations side, the National Security Agency’s director of technology. Official wrongdoing can catalyze all levels of insiders to reveal information, even at great risk to themselves, so long as they can be convinced that it is necessary to do so.

 

Reaching those individuals, helping them realize that their first allegiance as a public servant is to the public rather than to the government, is the challenge. That’s a significant shift in cultural thinking for a government worker today.

 

At the heart of this evolution is that whistleblowing is a radicalizing event — and by “radical” I don’t mean “extreme”; I mean it in the traditional sense of radix, the root of the issue. At some point you recognize that you can’t just move a few letters around on a page and hope for the best. You can’t simply report this problem to your supervisor, as I tried to do, because inevitably supervisors get nervous. They think about the structural risk to their career. They’re concerned about rocking the boat and “getting a reputation.” The incentives aren’t there to produce meaningful reform. Fundamentally, in an open society, change has to flow from the bottom to the top.

 

And when you’re confronted with evidence — not in an edge case, not in a peculiarity, but as a core consequence of the program — that the government is subverting the Constitution and violating the ideals you so fervently believe in, you have to make a decision. When you see that the program or policy is inconsistent with the oaths and obligations that you’ve sworn to your society and yourself, then that oath and that obligation cannot be reconciled with the program. To which do you owe a greater loyalty?

 

As a result we have arrived at this unmatched capability, unrestrained by policy. We have become reliant upon what was intended to be the limitation of last resort: the courts. Judges, realizing that their decisions are suddenly charged with much greater political importance and impact than was originally intended, have gone to great lengths in the post-9/11 period to avoid reviewing the laws or the operations of the executive in the national security context and setting restrictive precedents that, even if entirely proper, would impose limits on government for decades or more. That means the most powerful institution that humanity has ever witnessed has also become the least restrained. Yet that same institution was never designed to operate in such a manner, having instead been explicitly founded on the principle of checks and balances. Our founding impulse was to say, “Though we are mighty, we are voluntarily restrained.”

For more on the judicial system as the “limitation of last resort,” see: Can You Say ‘Rubber Stamp?’ FBI and NSA Requests Never Denied by Secret Court.

When you first go on duty at CIA headquarters, you raise your hand and swear an oath — not to government, not to the agency, not to secrecy. You swear an oath to the Constitution. So there’s this friction, this emerging contest between the obligations and values that the government asks you to uphold, and the actual activities that you’re asked to participate in.

 

By preying on the modern necessity to stay connected, governments can reduce our dignity to something like that of tagged animals, the primary difference being that we paid for the tags and they’re in our pockets. It sounds like fantasist paranoia, but on the technical level it’s so trivial to implement that I cannot imagine a future in which it won’t be attempted. It will be limited to the war zones at first, in accordance with our customs, but surveillance technology has a tendency to follow us home.

 

Unrestrained power may be many things, but it’s not American. It is in this sense that the act of whistleblowing increasingly has become an act of political resistance. The whistleblower raises the alarm and lifts the lamp, inheriting the legacy of a line of Americans that begins with Paul Revere.

 

The individuals who make these disclosures feel so strongly about what they have seen that they’re willing to risk their lives and their freedom. They know that we, the people, are ultimately the strongest and most reliable check on the power of government. The insiders at the highest levels of government have extraordinary capability, extraordinary resources, tremendous access to influence, and a monopoly on violence, but in the final calculus there is but one figure that matters: the individual citizen.

 

And there are more of us than there are of them.

Amen and perfectly said. We can only hope a handful of government employees and contractors with a conscience and a real dedication to the U.S. Constitution will read this and act accordingly.

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Based on the world risk index, which takes into account not only the frequency of natural disasters in each country (known as exposure) but also how well equipped the country is to cope with and recover from the effects of a disaster, The Guardian reports Vanuatu is the riskiest country to live in, with natural disasters on average affecting more than a third of the population each year. If you want to be safe from natural disasters, move to Qatar (the lowest disaster risk country in the world)…

 

Source: The Guardian

More than one-third of Vanuatu’s population at risk every year

 As a small Pacific island nation with a population of only 260,000 people, a disaster risk of 36.72% places almost 95,000 people at risk from natural disasters each year.

In 2015 Vanuatu was hit by an earthquake, volcanic eruption and Cyclone Pam in the space of a few weeks, but it’s not just the frequency of disasters that causes problems for the tiny nation. Unlike in larger countries such as the Philippines, a single storm can cause widespread destruction, including in the capital, Port Vila, meaning relief efforts have to be spread across the entire country. Cyclone Pam left 75,000 people in need of emergency shelter and destroyed 96% of food crops.

If you want to be safe from natural disasters, move to Qatar

 With no reported disasters in EM-DAT, a database of more than 11,000 disasters since 1900, Qatar has the lowest disaster risk of any country, at only 0.08%. It enjoys this status mostly because of its location away from the disaster hotspots in Oceania, south-east Asia and Central America.

North America and Europe generally rank as significantly low on the list. The United States had a risk level of 3.87% while Canada had a level of 3.14%.

*  *  *

Of course – these are just the 'natural' disasters… this does not account for the potential for policy-maker-created catastrophe.

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Submitted Op-Ed via RT.com,

The current economic system is designed to fail, but so was socialism. That’s according to former GOP Congressman Ron Paul, who told RT’s Boom Bust show that we need to go toward a system of property ownership, voluntary contracts and individual liberty, while getting rid of central banks.

Ron Paul begins at 14:35…

A new Harvard University poll shows that 51 per cent of young adults aged 18-29 oppose capitalism in its current form.

RT: Do you think this poll is just politics, or do you agree that there is something wrong with the US economic system as it operates today?

Ron Paul: I think the problem is all in semantics. When they say they oppose today’s capitalism, I oppose today’s so-called capitalism. I don’t even like the world “capitalism,” I like “free markets.” But if you say “free markets” and “capitalism” together, we don’t have that. We have interventionism. We have a planned economy, we have a welfare state, we have inflationism, we have central economic planning  by a central bank, we have a belief in deficit financing. It is so far removed from free-market capitalism that it’s foolish for people to label it free market and capitalize on this and say: “We know it’s so bad. What we need is socialism.” That is a problem.

That is a problem in definitions and understanding of what kind of policies we have. I am a champion of free markets, but not of the current system that we have today. I am highly critical of it, because it is designed to fail. It is designed to reward the rich; it is designed inevitably to destroy the middle class, and also to finance some of the worst things in government: all the deficits with the welfare state and for the warfare state. So yes, it’s failing. People should reject what we have, but they shouldn’t reject liberty and freedom and sound economic policies, because that is not the problem. The problem is we don’t have enough free markets.

RT: In the same poll it is said that Senator Bernie Sanders, a self-described democratic socialist, has been the most popular candidate for America’s 18-29 year olds. Despite the fact that he is now losing steam, as we’ve seen on the campaign trail, what does it really say to you about what’s driving this voting pattern?

RP: He’s tapped into something, something that I’ve talked about for years and tapped into when I was a candidate. And that is to describe the frustrations, the evil, and the nonsense of what we have. The problem with Bernie and myself is that he sees it quite differently. He thinks that it’s too much freedom and too much capitalism. And I see it as too much government; it’s too much of interventionist planned economy, which leans itself to fascism. But the young people might not understand the economics and what free markets are really all about, and they don’t understand central banking. And Bernie doesn’t understand that we have to get rid of central planning – from the Central Bank – if we want to help these people.

The current economic system is designed to fail, but so was socialism. What we need to go toward is property ownership, voluntary contracts and individual liberty in getting rid of the central bank.

But yes, I am not a bit surprised – it is a good sign that they are upset and they ought to be. What I have in mind is to show them the difference between what we have and what we should have. And believe me, it is not going toward this ancient tradition of government and socialism. We’ve tested socialism. Socialism has been a complete failure. That is what the 20th century was all about, whether it was a fascist system in Germany, or the Soviet system of communism – this all has been a failure. So you don’t want to go toward socialism, you have to go toward property ownership, volunteer contracts and individual liberty in getting rid of the central bank. Then you might talk about a real alternative. But the young people have a justification; they are justified in detesting what we have, because it has served the rich and has really hurt the poor and the middle class.

RT: Some would argue that the data does signal a generational shift is under way here, in which more young people are receptive to bigger government, rather than smaller government right now. And the issues that young people care at this moment are low wages, jobs, student debt, income inequality, etc. You would probably argue that libertarianism can still best tackle those problems. How so?

RP: I don’t think the young people would. They might be sucked into believing that the government can give them a temporary benefit by raising a wage, but they just need a better understanding. But they are not for the big government when it comes to their personal liberties, their sexual habits, the civil liberties that they like. They like their privacy. So I don’t think they are looking for bigger government. The young people that I talked to – they are not looking for a bigger government and more militarism; they are not championing the person that wants to spend a lot more money on military and rebuild the military – that’s all big government. 

But yes, they are tempted because of this lack of understanding to go along with bigger government, when it comes to trying to have a better economic system. This is a result of a hundred years of teaching our young people that government is necessary to redistribute wealth. And they do – they redistribute wealth –  the more they try, the more the wealthy get wealthier. It redistributes it upward, and it ruins the middle class. That is what they have to understand. But they’re onto something and they should be justified in looking at this. But, as a group of people, the millennials are not looking for more government. Only in that economic sphere are they tempted to look at this. There are many others who declare themselves libertarians. They want less government in their lives and they want more privacy and they want [fewer] wars.

RT: When you ran for president four years ago, you had a message that resonated with young people. Your comments that fixing the economy should start with fixing foreign policy were very popular. Do those voters still exist and where did they go?

RP: I think a lot of them are sitting on their hands and rightfully so. How could they pick somebody that would champion those same views? But some who are just loosely connected, not well-informed and get led into believing that we have to have a super military force to rule the world, and police the world, and be occupying these countries – yes, they get tempted to go along with this. But the true believer in a free society – they are not champing at the bit to champion the cause of any of these candidates right now…

RT: Some of those voters might have gone over to Donald Trump. He is the frontrunner on the GOP side. The economy is still the most important issue for voters, and he has been most vocal about amending NAFTA, reducing taxes, building a wall between the US and Mexico, and so on. What is it really do you think at the end of the day? What is so appealing here to his voters?

RP: He has a personality, he has a megaphone, and he is getting the attention, and you don’t have anybody in particular out there talking about the real economic issues. But he is regressive… he is falling backward. He is going to the dark ages of thinking that he can go into mercantilism, protect natural resources, put on tariffs, and just bash and blame everybody else: The Mexicans, the Chinese. That is going to be devastating to the economy – it has nothing to do with freedom. It has to do with the opposite – it is an exaggeration of economic planning that we already have. So he is going in the wrong direction, just as Bernie is, even if they are both tapping into the disenchantment that… a lot of people have with what is happening.

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