Tesla Bonds Hit Record Low, Stock Spikes On ‘Consumer Reports’ Flip-Flop

Rabid investors are piling back into Tesla shares this morning following a flip-flop from Consumer Reports that now recommends the Model 3  after an over-the-air software update improved braking by almost 20 feet.

As Bloomberg reports, the influential magazine had refused to recommend the electric-car maker’s more-mainstream model after testing showed it took longer to stop than a Ford F-150 pickup. The new software pushed by Chief Executive Officer Elon Musk addressed variations in braking styles and environmental conditions, a company spokeswoman told Consumer Reports.

There’s just one thing… Tesla Bonds are being whacked with the ugly stick (and this is despite a massive bid for bonds overall)…

Just one more thing to ignore!! Like yet more auto-pilot crashes…

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Israel Warns That “Threshold Of War” Will Be Crossed If Hamas Doesn’t Stop Firing Rockets

Authored by Michael Snyder via The American Dream blog,

Over the past 24 hours, Hamas and Islamic Jihad have fired approximately 70 rockets and mortars into Israel, and the IDF has responded by conducting at least 60 airstrikes in Gaza.  Even as I write this article, there are reports that the fighting has continued all through the night. 

If the hostilities continue, we could very well see a full blown war erupt, and such a war could ultimately draw in the Palestinians in the West Bank, Hezbollah and more of Israel’s neighbors as well.  To say that things are tense in the region would be a major understatement.  On Tuesday, it was reported that there was a full moon over Jerusalem that was “almost red”, and some are taking that as an ominous sign.  This is also the Islamic holy month of Ramadan, and that certainly adds an extra dimension to the events that are unfolding right in front of our eyes.  This is the worst violence that we have seen between the Israelis and Hamas since 2014, and many are extremely concerned about what we may see next.

Randomly firing rockets and mortar shells toward civilian population centers is a great act of cowardice, and these recent attacks by the Palestinians are being condemned all over the world.  The following comes from Time Magazine

Palestinian militants bombarded southern Israel with dozens of rockets and mortar shells Tuesday, while Israeli warplanes struck targets throughout the Gaza Strip in the largest flare-up of violence between the sides since a 2014 war.

The Israeli military said most of the projectiles were intercepted, but three soldiers were wounded, raising the chances of further Israeli retaliation. One mortar shell landed near a kindergarten shortly before it opened.

In Israel, this kind of thing is simply accepted as a part of life, and despite the attack the school day continued as scheduled

“We are lucky the children weren’t in the kindergarten yet, and that they didn’t hear the explosion. It was just a stroke of luck that nobody was injured,” said Gadi Yarkoni, head of the Eshkol Regional Council.

Danny Cohen, community coordinator at the kibbutz, said that despite the incident, nearly all of the 20 students in the kindergarten came to school as scheduled.

“The parents are used to these kind of events. We’ve experienced them in the past,” Cohen told TPS. “The parents know that the building of the kindergarten is reinforced and that the staff knows how to handle this kind of situation.”

Needless to say, Israel was going to have a very strong response to these attacks.  According to Fox News, Israeli Prime Minister Benjamin Netanyahu believed that Hamas was responsible from the very beginning…

“Israel will exact a heavy price from those who seek to harm it and we see Hamas as responsible for not preventing such attacks,” Prime Minister Benjamin Netanyahu said following the barrage.

And later on we did get word that Hamas and Islamic Jihad had issued a joint statement in which they both took responsibility for the rocket and mortar attacks.

Not since the 2014 Gaza war has Hamas claimed responsibility for rocket attacks into Israel.  They had to know that there would be a high price to pay, and so what was their goal?

Do they actually want to start another war?

If both sides keep firing, that is precisely what is going to happen.  In fact, Israel’s defense minister is warning that “the threshold of war” is about to be crossed…

Israel Katz, the Israeli intelligence minister, said: ‘We are the closest to the threshold of war since Operation Protective Edge.

‘We don’t want it, and the other side doesn’t either, but we have our red lines.’

If we do see a war, the only way that Hamas can hope for any sort of a victory is to draw in as many of Israel’s neighbors as possible.  The last time that Hamas and Israel went head to head, Hamas was handed a crushing defeat

The last war in 2014 was especially devastating, with over 2,000 Palestinians killed, including hundreds of civilians, and widespread damage inflicted on Gaza’s infrastructure in 50 days of fighting. Seventy-two people were killed on the Israeli side.

Hamas cannot win a war against Israel by themselves.

So what do they possibly hope to achieve?

Today, the unemployment rate in Gaza is close to 50 percent and communities there are plagued by constant power outages.  These people desperately need to rebuild their communities, and a new war with Israel would be absolutely crippling.

Hopefully cooler heads will prevail.  The United States has called for an emergency session of the Security Council, and outside parties are trying to negotiate an end to the violence.

Meanwhile, hostilities between Israel and Syria continue to heat up as well.  Let us pray for peace, because we are closer to a major war in the region than we have been in a very long time.

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Trump’s Tariffs Are the Equivalent of Iran-Style Trade Sanctions on the U.S.: New at Reason

Donald TrumpIn early May President Donald Trump announced the U.S. was withdrawing from the Iran deal. Among other things, this means the re-imposition of sanctions—the “highest level” of sanctions, as he put it, which he said would be “crippling.” Those sanctions include efforts to block Iranian oil sales, limits on Iran’s ability to access international banking systems, and measures to prevent Iran from trading with other countries.

That last provision would “have a swift effect on some big companies,” Fortune reported. Among them: Boeing and Airbus, which “had been planning to start selling aircraft to the Islamic Republic for the first time.” General Electric also will be hit hard: “Not only is it one of the U.S. companies making parts for Airbus, but it has also received big parts orders for oil and gas facilities in Iran.” Volkswagen had started selling cars in Iran, and might have to stop. Ditto for the French company that makes Peugeots.

Reimposing sanctions, as Trump wants to do—including sanctions that limit imports—therefore will hurt Iran’s economy and put pressure on the company’s leaders to change their ways.

But that is the precise opposite of what Trump says about the United States. When it comes to America, the president claims limiting imports will help the country. A. Barton Hinkle explains why this makes no sense.

View this article.

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S&P Erases Yesterday’s Losses As Rate-Hike Odds Plunge

Bad news is great news again…

A downgrade to US economic growth and a constitutional crisis in one of Europe’s biggest economies prompted a plunge in the odds of The Fed hiking rates three more times this year…

And that sparked a panic-bid in US equities…

 

However, credit markets ain’t buying it…

 

 

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Euro Spikes, Italian Yields Slide After 5-Star Calls On Savona To Withdraw His Candidacy

Just as European markets were closing for the day with the Italian 2Y yield ominously back above 2% and the EURUSD trading in a tight range around 1.6130, a Reuters headline spiked the EUR and sent Italian yields quickly lower, when the newswire reported that in an attempt at compromise, the 5-Star party, the League coalition partner, called on the controversial euroskeptic candidate to head the economy ministry, Paolo Savona, to withdraw his candidacy to a government could be formed.

  • ITALY’S 5-STAR CALLS FOR SAVONA TO WITHDRAW CANDIDACY FOR ECONOMY MINISTRY TO ALLOW GOVT TO BE FORMED

As a reminder, it was Savona’s candidacy that president Mattarella vetoed over the weekend, launching the latest bout of Italian political crisis.

And while it was unclear if League leader Salvini would balk at the proposal, or continue insisting that Savona be the country’s next economy minister, the latest confirmation that a rift is forming between the Lega and the 5-Star was enough to send Italy’s 2Y yield 23 bps lower…

… while the EURUSD spiked to session highs, just shy of 1.1680 and nearly 140 pips higher on the day.

We now wait for an additional comment from either Salvini or Savona, and until then here is the latest soundbite from the League leader:

  • ITALY’S SALVINI SAYS IN ROME `IT’S COMPLETE CHAOS’: ANSA
  • ITALY’S SALVINI SAYS HOPES CAN GOVERN WITH CENTER-RIGHT OR 5S

So was Oettinger right all along, and is Italy about to fold to the whims of the market? Find out shortly.

 

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Eighteen Is Old Enough for War But Not Sexting, Say Ohio Lawmakers

Young love is confusing. In Ohio, legislators want to make it criminal—at least when it’s mediated through modern technology. Last week, members of the House Criminal Justice Committee voted unanimously in favor of a bill to ban teen sexting, even for some teenagers who are legally adults.

Under the proposed measure (H.B. 355), teens could still have sex with each other without the state stepping in. But a teen who sends sexualized imagery of him- or herself to another teen would be guilty of a first-degree misdemeanor. And the same goes for kids on the receiving end of sext-messages.

The ban would apply to Ohioans ages 13 to 18.

That’s right: Ohio lawmakers apparently think that age 18 is old enough to marry, vote, or join the Army, but not old enough to control naked images of your own body.

Teens found guilty of sexting could be sentenced to a “sexting educational diversion program,” to be developed by county courts, upon completion of which they would see the sexting charge dismissed. But judges would be free to overlook this program, and minors with previous sex-related offenses on their records would not be eligible.

Outside the diversion program, a sexting charge could lead to a sentence o eight hours of community service—a light punishment that the bill’s supporters have brandished to make their proposal more palatable. But of course, community service is just the immediate punishment. The real harm comes from saddling these kids with criminal records for the rest of their lives.

“The stigma behind any criminal conviction is severe, but to tar these kids as sex offenders could quite literally ruin their lives,” writes Celine Coming, communications manager for the American Civil Liberties Union of Ohio. “This charge could make it impossible for young people to access opportunities for education, housing, and employment for years to come.”

The bill’s sponsors have argued that theirs is a compassionate plan because it gives prosecutors an option to avoid charging teen sexters with more serious child pornography charges. But there’s nothing requiring the state’s cops to crack down on teen sexting to begin with, and even when they do, prosecutors could use their discretion to not bring child porn charges. And if legislators think overzealous prosecutors are the problem, they could always pass legislation prohibiting juvenile sexters from being charged as child-porn producers.

Instead, they’re simply adding on another possible charge for law enforcement to slap onto texting teens. As H.B. 355 explicitly states, “prosecution of a person for a violation of” the teen sexting ban “does not preclude prosecution of that person for a violation of any other section” of Ohio criminal law and “an act that can be prosecuted under this section or any other section of the Revised Code may be prosecuted under this section, the other section, or both sections.”

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Bill Gross’ Bond Fund Just Had Its Biggest Daily Loss Ever

On the same day as Italian bond yields spike by the most ever, Bill Gross’s bond fund was suffering a similar fate. The Janus Global Unconstrained Bond Fund crashed over 3% – its biggest drop ever – despite zero exposure to the Italian fiasco

 

This was a major outlier, as WSJ reports, similar funds have returned, on average, a 0.22% decline in 2018, Morningstar said.

“Even for unconstrained bond funds, it’s rare for such a sharp decline,” said Todd Rosenbluth, director of ETF & Mutual Fund research at CFRA.

While it is simple enough to assume that Gross’s fund was impacted by the collapse in Italian bond prices, it turns out the fund has zero exposure to Italy in at least its Top 20 holdings

The largest positions are overwhelmingly short-duration US corporate debt… (though we do note the holdings of Aetna and Time Warner stock – since the unconstrained fund can hold non-debt instruments)

 

So was Gross Short US Treasuries (despite his recent towel-throwing-in as a bond bear)?

Or was he short Bunds (again)?

European investors had “piled into the region’s safe havens, namely German Bunds,” earlier this year after stocks declined sharply, Mr. Gross wrote. German bond yields, which had been on the rise as the nation’s economic picture improved, also plummeted, he said.

“Given these conditions, it is difficult to find the rationale for 10-Bunds to be yielding just 0.50% and yields on German government debt up to six years in maturity to be negative,” he wrote.

Or was it simpler… he was long US HY debt…

 

 

 

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“Assassinated” Anti-Putin Journalist Shows Up Alive At Kiev News Conference With Remarkable Story

A 41-year-old former Russian soldier-turned-journalist reported to have been assassinated on Tuesday, faked his own death as part of an elaborate sting operation by Ukraine to bust an actual hit planned by Russia, according to the head of the SBU, Ukraine’s national security service. 

According to Tuesday’s media “reports”, the Journalist, Arkady Babachenko, was shot three times in the back in his apartment building in the Ukrainian capital of Kiev last Tuesday after going out to buy bread – his wife finding him in a pool of blood after she came out of the bathroom following the “murder.” He was pronounced dead in an ambulance on the way to the hospital. 

A photo of Babachenko taken by his wife, which was staged, was posted online. 

Then, in a remarkable “recovery”, on Wednesday, Babachenko showed up to a press conference, reporting that the SBU had intelligence about the actual assassination scheme and that he helped them to derail the plot. The assassin who received the real order to kill Babachenko along with the person who organized the hit, have reportedly been detained. 

Babachenko fled to Ukraine in February 2017 after he says he received threats and could be arrested following his work as a presenter for Ukraine’s ATR TV. He has been one of Russia’s most recognizable war correspondents, and has spoken out about Russia’s actions in Syria and Ukraine in recent years.  

Following his “death,” Ukrainian officials confirmed Babachenko had been shot and said it was believed he had been targeted due to his work as an anti-Putin journalist. Ukrainian lawmaker Anton Gerashchneko told the BBC that the killer waited for Babachenkon near his Kiev apartment and then shot him from behind. 

When Arkady opened the door of his flat, the killer cowardly shot him in the back, firing several shots,” wrote Gerashchneko on Facebook – however it is unclear if he knew about the ruse. He added that investigators were looking into “Russian spy agencies” as “Putin’s regime takes aim at people whom it’s impossible to break or intimidate.” 

“The suspect”

A neighbor told local media that the assassin had probably used a silencer, since they didn’t hear any shots. 

The reaction to Babachenko’s assassination was to condemn Russia. The Guardian described it “as the most recent murder of a high-profile dissident in Kiev, a city that has become a refuge for some of Moscow’s most vehement critics, as well as the scene of targeted assassinations that have remained unsolved for years.”

On Facebook, Gerashchenko wrote (translated): 

Arkady Babchenko is alive!

As a result of the brilliant special operation carried out by Ukrainian law enforcers, the killer who received the order for the murder of Arkady and the organizer of the murder were detained.

Gerashchenko went on to describe the sting operation – which he likened to Sherlock Holmes faking his own death (Google translated): 

In order to better document the customers and organizers of the crime – representatives of the Russian special services, they had to be assured that the hired killer had successfully completed the order.

The fact that in fact the murder of Arkady Babchenko is a dramatization, he knew a very limited circle of people.

This was done in order to prevent the slightest possibility of information leakage.

To do this, law enforcement officers had to go to a large-scale information security operation.

It was for this that the production photo of the allegedly murdered Arkady Babchenko was made and published, and the photo-robots of the alleged killer with Caucasian appearance were distributed.

To create a picture of full reality, statements were made by the official representatives of the National Police about the death of Arkady.

Law enforcers could not fail to understand that the news of the murder of Arkady Babchenko would be a pain in thousands of hearts around the world. But they had no other choice.

In order to trace and document the chain from the killer to the organizers and customers it was necessary to create in them full confidence that the order was executed and force them to take a number of actions that will be documented by the investigation.

After all, the hero of Arthur Conan Doyle Sherlock Holmes successfully used the method of staging his own death for the effective investigation of complex and intricate crimes. No matter how painful it was for his family and Dr. Watson.

Babachenko was born in Moscow in 1977. While studying law, he was conscripted into the Russian army and served during the Chechen wars from 1994 to 2000. Following his service, he became a war correspondent, and worked for Moskovsky Komsomolets and Zabytiy Polk according to Heavy. He also wrote a memoir in 2006, “One Soldier’s War,” in which he chronicled his experiences. He has a degree in international law from the Modern Humanitarian University.

Babachenko became a taxi driver for several years after he had stopped work as a journalist – returning to the profession in 2009 for the newspaper Novaya Gazeta where he covered the South Ossetia war. He is the founder of “Journalists Without Middle-men,” and has since written several award-winning books about his experience. He has also been a freelance writer for several foreign publications, including the BBC and The Guardian.

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Steam Pulls Video Game Active Shooter—and Permanently Bans the Developer

Say farewell to Active Shooter. The video game, which was to be released on June 6, was going to offer players a chance to shoot up a (virtual) school. But last night the online game store Steam pulled it from its platform and permenantly banned the game’s publisher, the Russian company Acid, following intense anger and disgust from pretty much every corner of the internet.

Acid’s cheery promotion of its controversial title was bound to ruffle more than a few feathers. “Be the good guy or the bad guy. The choice is yours!” read the game’s description, which stressed that gamers could play either the shooter or a police officer in this “dynamic SWAT simulator.” Typical stuff for Acid, which has had a number of poorly reviewed, trollishly titled games on Steam, all of which have now been removed. (Sample title: Tyde Pod Challenge.)

Neither Acid’s obscurity nor its request that people “not take any of this seriously” endeared people to Active Shooter.

“I have seen and heard many horrific things over the past few months since my daughter was the victim of a school shooting and is now dead in real life. This game may be one of the worst,” tweeted Fred Guttenberg, whose daughter died in the Parkland massacre. “Everyone that cares about school & public safety should be OUTRAGED,” tweeted Parkland survivor Jaclyn Corin, who launched a Change.org petition demanding that Valve—who owns Steam—shelve the game.

Elected officials on both sides of the aisle were quick to weigh in. Texas Lt. Governor Dan Patrick, whose state experienced its own mass shooting earlier this month, sent a letter to Valve asking that the game be pulled. Sen. Bill Nelson (D-Fl.) called the game “inexcusable.”

Games of this type are hardly unprecedented. Indeed, trollish releases mocking obscenely violent or horrific historical events are almost as old as the video game industry itself.

Take the 1982 release Custer’s Revenge. Later renamed Westward Ho, the primitive side-scroller puts the player in the shoes of a naked, visibly aroused General Custer who must dodge arrows in an attempt to get to the other side of the screen where awaits a ready and unwilling Native American woman. Charming.

Then there’s the 2004 game JFK Reloaded, a “historical simulation” that lets you relive the Kennedy assassination from the perspective of Lee Harvey Oswald.

Indeed, Active shooter is not even the first school shooting simulator. That honor, as far as I can tell, goes to 2005’s Super Columbine Massacre RPG, where you play one of two perpetrators of the Columbine massacre.

Even some mainstream games give players the chance to commit acts of terroristic violence. The second installment of Call of Duty: Modern Warfare has a playable (albeit skippable) level where players massacre unarmed civilians in a Russian airport. The Grand Theft Auto franchise gives you any number of opportunities to run over, mow down, stab, beat, burn, or blow up a whole city just going about its day.

So tasteless video game violence isn’t new, and it is not even obviously getting worse. If anything, games have maintained a steady amount of obscenity while society as a whole has gotten safer.

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Meanwhile, In Spain…

With Italian assets seeing some modest relief today, attention has drifted across the border to Spain where 2Y bond yields have burst back above 0.00% amid uncertainty surrounding a looming confidence vote on PM Rajoy’s government.

While the market has already begun to price in this uncertainty – seeing a significant chance that Rajoy will be defeated – Bloomberg, citing unknown sources, reports the same predictions

  • *SPANISH OPPOSITION SEEN CLOSE TO SECURING VOTES TO TOPPLE RAJOY

  • *BASQUE NATIONALISTS ARE SAID TO BE READY TO BACK RAJOY’S OUSTER

  • *CATALAN SEPARATISTS SEEN HIGHLY LIKELY TO VOTE AGAINST RAJOY

And 10Y Spanish yields are notably underperforming Italy today…

If Rajoy loses, he will be replaced by the PP leader with PSOE’s Pedro Sánchez, who has promised to call fresh elections “in a few months”.

Citi Economics notes that PSOE has 84 seats and will have the backing of Podemos (67 seats) and the Valencia regional party Compromís (4 seats) and would therefore required is 176. That means he’ll need a string of other parties to help out.

Regardless the outcome, instability in Spain will likely remain and lead to snap elections. Regular elections were scheduled for July 2020. 

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