Several mosques in northern Germany have been vandalised over the past month as someone has defiled the Islamic holy book, the Quran, tearing it apart, urinating on it, and smearing it with excrement. Although the police have warned against making hasty judgments, some have blamed right-wing forces for the acts.
US Navy Admits Leaked 'UFO Tapes' Are Real And Should Never Have Been Released

Three videos appearing to show encounters between US Navy aircraft and what the military terms "UAPs" - so-called 'Unidentified Aerial Phenomena" - have accidentally been released to the public despite the military insisting that they were never cleared.

According to RT, the clips, which have at this point been widely circulated, depict American aircraft interacting w

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ith the unidentified flying objects. Several of these mysterious dark figures demonstrated aerial maneuvers that were far beyond the capabilities of human technology.

The Navy’s Deputy Chief of Naval Operations for Information Warfare Spokesman Joseph Gradisher confirmed that the videos are genuine, but insisted that the government hadn't finished analyzing their contents, which remained unexplained. He cautioned that the public shouldn't jump to conclusions about the existence of aliens.

The videos were released to Luis Elizondo, a former military intelligence officer who claims to have been a director of the Pentagon’s UFO research arm, the Advanced Aerospace Threat Identification Program (or AATIP). He intended to use them in a database about possible aerial threats.

In the first video, titled "FLIR1", a strange pill-shaped object can be seen sitting on the horizon before darting sideways extremely fast.

In the second video, a US aircraft's sensor has locked on to an object flying swiftly across the water. The pilot and his teammates can be heard expressing their surprise at the object's speed.

In the third, an oblong object can be seen moving steadily before stopping and turning around and darting away.

The Pentagon complained about the release of the videos, saying they "should still be withheld" as they were "never officially released to the general public." But it’s a bit too late to put the UFO back in the back.

These videos have been in circulation for months, ever since the Pentagon released files from AATIP, which had been a secret government initiative that "did pursue research and investigation into unidentified aerial phenomena." The Pentagon has admitted that it shut down the AATIP in 2012, however there have been reports claiming that the department still investigates potential alien aircraft sightings.

Interviews with several pilots who encountered UFOs can be jarring. The pilots describe encountering vessels that accelerate to hypersonic speeds while making stops and turns - maneuvers that no human ship could pull off. Some pilots described the objects as an ongoing phenomenon. At first, one squad thought they were part of some top-secret drone program, but the pilots soon ruled this out.

AATIP's existence was revealed in 2017, when former Senate Majority Leader Harry Reid claimed to have arranged for the program's $22 million annual funding. It was founded at Reid's behest back in 2007 after Navy airmen had repeatedly captured footage of UAPs.

Tyler Durden

Wed, 09/18/2019 - 18:55


Human Interest

German woman kidnapped, killed during hitchhiking journey
<p>UPS announced today that its 125,000 drivers around the world are getting makeovers. </p><br /><br /><br /><p>UPS announced today that its 125,000 drivers around the world are getting makeovers.</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
The Most Profitable Business In The World?

Authored by Simon Black via SovereignMan.com,

More than 5,000 years ago on a hilltop located in modern-day Georgia (the country, not the state), a group of people from the prehistoric Kura-Araxes civilization gathered their primitive tools and began to dig.

It took years. But they eventually burrowed 20 meters deep into the earth and constructed a network of elaborate tunnels.

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Thousands of years later, archaeologists and geologists figured out why: the Kura-Araxes were digging for gold.

And that site, known as Sakdrisi-Kachagiani, is the oldest gold mine in the world. It predates Ancient Egypt and even Mesopotamia.

And it shows that, even in prehistoric times, our early ancestors valued gold.

Nearly every great civilization from every corner of the planet since then has continued to mine for gold– from Greece and Rome to China’s Zhou dynasty in the first millennium BC, to the Inca and Aztec.

Mining was so important in ancient times, in fact, that wars frequently broke out over control of the best-producing mines.

In many respects, a gold mine is the ultimate asset. Even to this day we still use the term ‘gold mine’ to refer to a fantastic investment.

And obviously gold mines themselves can be phenomenal investments.

We’ve been talking about gold a lot lately and discussing different ways to own it. I’ve encouraged you to avoid buying into a gold ETF, and instead to buy the most prominent physical coins (like Canadian Maple Leaf gold coins).

But one very interesting (and completely different) way to invest in gold is to buy shares of mining companies.

Mining companies generate profit based on the difference between their mining costs and mining revenue.

So as the price of gold increases, mining company profits tend to increase as well, pushing their stock prices higher.

Among miners, the largest are known as the ‘majors’ or ‘senior producers’, including companies like Goldcorp, Kinross Gold, Barrick Gold, Newcrest Mining, Gold Fields, etc.

Majors are typically multi-billion dollar companies that have been around for decades, similar to how Exxon-Mobil and Royal Dutch Shell dominate the oil business.

Majors also frequently pay dividends to their shareholders, which means you could profit from an increase in the gold price while also generating regular cashflow.

And while this might sound great, there’s a slightly different business model in the mining industry that I think is even more compelling.

Business is difficult, and mining is no exception. Large mining companies have thousands of employees and often operate in difficult jurisdictions. Things go wrong all the time– strikes, major accidents, political instability, etc. And these can all affect the company’s performance.

But there’s another category of businesses in the mining industry called royalty or streaming companies.

Gold streaming/royalty companies are quasi-banks; they provide capital up-front to mining companies to help build and develop mines.

And in exchange they usually receive a royalty on every ounce of gold (or silver, etc.) that’s produced from that mine, whether in the form of a cash payment, or a portion of the production itself.

Now, read this next statement very carefully:

Gold streaming is the most profitable business model in the world.

That’s because, while the major mining companies have to hire tens of thousands of people to operate their mines, the streaming/royalty companies can operate with minimal overhead.

Barrick Gold, one of the largest gold miners in the world, generated $1.765 billion in Operating Cash Flow in 2018 according to its annual report.

(Operating Cash Flow is a great benchmark to measure the real-world profitability of a company’s core operating business, without factoring in accounting gimmicks or capital investments.)

Given that Barrick Gold has more than 20,000 employees, that works out to be around $82,000 in Operating Cash Flow per employee.

Franco Nevada is the world’s largest gold royalty and streaming company. And according to its annual report, Franco Nevada had $474 million in Operating Cash Flow in 2018.

Except that Franco Nevada only has 34 employees! That means Franco Nevada generated over $13 million in cash flow per employee last year.

Franco Nevada’s business model is more profitable than:

– Apple ($629,000 Operating Cash Flow per employee)

– Google ($463,000 Operating Cash Flow per employee)

– Netflix (NEGATIVE $377,000 Operating Cash Flow per employee)

– Exxon-Mobil ($507,000 Operating Cash Flow per employee)

– JP Morgan ($56,000 Operating Cash Flow per employee)

Now, I’m not recommending that you buy shares of Franco Nevada (or any other company) right now; Franco Nevada shares sell at nearly 50x operating cash flow– and that’s pretty expensive in my opinion.

But it’s definitely an industry worth watching and potentially accumulating when valuations become more attractive.

Now, there’s one more segment of the industry that you should know about: ‘junior’ mining companies.

Unlike the major producers which operate large mines, juniors are usually tiny companies that explore for new gold deposits.

These are very high risk ventures. It’s entirely possible that a junior mining company looking for gold burns through all of its investors’ capital but comes up with nothing.

Then again, from time to time, a ‘junior’ / exploration company with a great property and solid management will discover a substantial deposit.

And its stock price can shoot up 10x, 50x, even 100x.

Within mining, this is the place where fortunes can be made (and lost).

They’re high risk and very speculative. But given how phenomenal the potential returns are, qualified investors who can bear the risk might consider allocating a small portion of their capital to speculate in juniors.

The right investment could literally be a gold mine.

And to continue learning how to safely grow your wealth, I encourage you to download our free Perfect Plan B Guide.

Tyler Durden

Wed, 09/18/2019 - 17:55


Business Finance

Blueprints for mobile apps, databases exposed in public GitHub repos

Exclusive  Scotiabank leaked online a trove of its internal source code, as well as some of its private login keys to backend systems, The Register can reveal.…


This Officer is trying to cover up a USB drive which proves that his office is part of a child grooming gang

He doesn't know that it's already been handed in, and he's just shopped himself.


These photo's show my charge sheet - the felons that I've witnessed making snuff movies, and named, are attempting to prosecute me for malicious communications, when all I've done is alert the public to their misdemeanors.

Please keep your children away from these predators!

Duterte Admits To Assassination Attempt On 'Son Of A Bitch' Politician; Spokesman Says He Misspoke

Phillipines President Rodrigo Duterte - who said he once threw a man from a helicopter - admitted to ordering an assassination attempt on a politician last year according to the New York Times

While railing against drug-related corruption in a Tuesday speech from the presidential palace in Manila, Duterte mentioned two

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mayors who were killed by police after he accused them of involvement in the drug trade; "Rolando Espinosa, who was gunned down in his jail cell in 2016, and Reynaldo Parojinog, who died in a raid on his home in 2017," according to the report. 

He then turned to mayor and former general Vicente Loot - who survived an assassination attempt last May after Duterte accused him of protecting drug rings. In 2016, confessed drug lord Kerwin Espinosa testified that he gave weekly bribes to Loot, according to ABS-CBN news. 

"General Loot, you son of a bitch," said Duterte. "I ambushed you, you animal, and you still survived."

Presidential spokesman Salvador Panelo immediately began damage control - claiming on Wednesay that Duterte had meant to say "You were ambushed," not "I ambushed you," noting that Duterte's native language is Visayan, not Filipino. 

"It is silly and absurd to conclude that he is behind the ambush just because he misspeaks the Filipino language, which is not his native tongue or first language," said Panelo. 

Mr. Duterte ran for president promising a bloody campaign to kill drug dealers, and thousands of people — many but not all of them suspected dealers or addicts — have been gunned down by police officers or vigilantes since he took office in 2016.

Mr. Loot, Mr. Espinosa and Mr. Parojinog were on a list of more than 100 politicians that Mr. Duterte read on live television soon after taking office, accusing them of being involved in drug trafficking.

In December, Mr. Duterte denied being involved in the attack on Mr. Loot, which left three of his aides and a dock worker wounded. Mr. Loot, who was unhurt in the attack, has denied involvement in drug trafficking. -New York Times

In July, the UN voted to explore an investigation of killings which have occurred during Duterte's tenure - while two complaints have been filed at the International Criminal Court in The Hague accusing Duterte of murder. According to the report, "one was filed by two men who say they were part of a “hit squad” he commanded as mayor of Davao, a city in the south." 

On Wednesday, a lawyer for those men, Jude Sabio, said that Duterte's comments about Loot's failed assassination could be used against him in court. 

"As a lawyer and a former prosecutor, he knows that admission is the queen of evidence," said Sabio. 

Tyler Durden

Wed, 09/18/2019 - 15:45


War Conflict

GCHQ offshoot says be on your guard

Cybercrims are still likely to affect universities and other educational institutions online with ransomware, reckons GCHQ offshoot the National Cyber Security Centre.…

Insecure Internet-connected devices have aided different types of cybercrime for years, most common being DDoS and spam campaigns. But cybercriminals have now shifted toward a profitable scheme where botnets do not just launch DDoS or spam—they mine cryptocurrencies as well.

Smominru, an infamous cryptocurrency-mining and credential-stealing botnet, has become one of the rapidly spreading
<p>More like, &#x201C;What&#x2019;s my (space) age again?&#x201D;</p><br /><p><strong>What:</strong> The most improbable headline you will see today, no matter what you-know-who does.</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
Bank Stocks Bounce Hard On QE4 Hints But Bonds & Bullion Rebuff Powell Promise

After two days of liquidity issues in the repo market, prompting the biggest Fed response in over a decade, Jay Powell proudly proclaimed that there was nothing to see here, move along...

The market wasn't buying it...

Until of course, Powell suddenly got the tap on the shoulder and promised "m

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“It is certainly possible that we’ll need to resume the organic growth of the balance sheet sooner than we thought.”

In other words - QE is coming, just not yet... and stocks rebounded excitedly...

By the end of the day, stocks had pushed back up to the highs of the day... (but gold, bonds and the dollar shurgged off the QE4 hint)...


S&P and Nasdaq did their best to scramble back to unchanged on the week...

S&P 500 algos were all about 3,000 once again...


Banks were the big gainers on the day as rates surged...

Source: Bloomberg

Very mixed picture across the curve today with yields rising after The Fed but on the day, the long end was lower in yield (30Y -3bps) and short-end higher (+3bps)...

Source: Bloomberg

The 2Y Yield spiked back top unchanged on the week (ignoring the QE4 hints)...

Source: Bloomberg

30Y yields rose very modestly on The Fed but ended lower on the day (again ignoring Powell's QE4 hints)

Source: Bloomberg

The yield curve flattened notably - policy errorishly...

Source: Bloomberg

The dollar spiked - on the relatively hawkish Fed statement - ignoring his more dovish promises...

Source: Bloomberg

Cryptos were mixed again with Bitcoin flat but Altcoins gaining ground

Source: Bloomberg

In commodityland, everything was lower (stronger dollar) with WTI worst (surprise build and reduction in war rhetoric) and gold actually outperformed...but on the week copper is weakest

Source: Bloomberg

Gold was monkeyhammered lower - erasing the post-Saudi-bombing gains, before bouncing...

Source: Bloomberg

Silver rebounded more aggressively...

Source: Bloomberg


Finally, to circle back to where we started, The Fed has totally lost control over its rate transmission process - we will have to see if the IOER cut today and Powell's promise of 'moar' will make any difference...The effective fed funds rate printed outside of the central bank’s target band Tuesday for the first time since the financial crisis.

Source: Bloomberg

Additionally, we note that the market is now pricing in less than one more rate cut for the rest of the year...

Source: Bloomberg

Tyler Durden

Wed, 09/18/2019 - 16:00
Living the dream.
September 2019 Sexual predator jailed for 13 years for savagely raping an 11-year-old girl A sexual predator has been jailed …

Continue reading

Semmle's flaw-finding queries can be shared and used on multiple projects

On Wednesday, Microsoft's GitHub said it has acquired Semmle, a San Francisco-based software analysis platform for finding vulnerabilities in code. No price was disclosed.…


 Yesterday, Jeffrey Augustine wondered why the Church of Scientology, which has mobilized its Volunteer Ministers to help out with Hurricane Dorian destruction in the Bahamas, can’t use its cruise ship the Freewinds to bring supplies to the islands rather than the single small pleasure yacht it had rented for the occasion.

But hey, what’s the next [...]


Powell Confirms QE4 Is Coming, Just Not Today



For all those who were wondering why Powell would leave the market - which had made its expectation for some sort of POMO announcement today very clear - hanging so badly, sending risk assets and gold tumbling and the dollar surging, Powell finally felt some pity for the world's liquidity addicts when he hinted that QE is indeed coming, just not today. To wit:







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How Are Hedge Funds Positioned Ahead Of The Fed

With just over an hour left until the Fed's latest announcement, traders are hunkering down ahead of what could be a very volatile market response


While there is certainly the possibility that the Fed will make some unexpected announcement following today's FOMC meeting, especially with consensus rapidly shifting to expect Powell to announce some form of "QE Lite", i

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n the form of bond purchases, i.e., POMO, thus leaving the door open for significant disappointment if the Fed fails to address the repo market fireworks, a just as critical factor will be hedge fund positioning headed into today's announcement. After all, if there is anything last week's quant quake showed is just how painful the unwind of extremely crowded positions can be even without a clear catalyst.

So with that in mind, what is hedge fund positioning going into the Fed meeting?

Luckily, that is the topic of the latest note from Goldman's Prime desk, which makes the following observations:

  • Trading Flows: Posture remains bullish driven by continued long buys and recent short covers.

  • Leverage Ratios: Equity L/S Gross and Net are at multi-year highs (driven in part by recent price gains).

  • Regions: All regions net bought MTD, led by rotation back into US equities.

  • Sectors: HFs are positioning for continued rally in US Cyclicals, though Banks L/S ratio is still near a multi-year low.

  • Factors: Equity LS funds are less net long Momentum, and less net short the Value factors following recent price reversals.

What this shows is that while not at absolutely extreme levels, contrary to conventional wisdom, and Marko Kolanovic's repeated claim that hedge funds are underinvested, the 2 and 20 crowd is not only tilted bullish, but is quite bullish and with multi-year high net leverage across most sectors and regions (with bank stocks perhaps the only exception), with slightly less net long exposure in Momentum and less short in Value following the recent quantastrophe.

This means that should Powell be less dovish than consensus expects, and again recall consensus now expects Powell to go so far as launch bond buying/POMO/QE (lite), the risk of a substantial market disappointment if Powell says the wrong word, is quite acute.

Here are some additional observations on this topic in visual form:

Trading Flows: Posture remains bullish anchored by continued long buys and recent short covers

Leverage Ratios: Equity L/S Gross and Net at multi-year highs (driven in part by price gains)

Regional Flows: All regions net bought MTD, led by rotation back into US equities

Sector Flows: HFs are positioning for rally in US Cyclicals, though Banks L/S ratio is still near a multi-year low

Factor Exposures: Equity LS funds less net long Momentum, and less net short the Value factors following recent price reversals


Tyler Durden

Wed, 09/18/2019 - 12:55


Business Finance

Aramco Attacks An "Act Of War" By Iran: Pompeo After Arriving In Jeddah

What's the end game here? Secretary of State Mike Pompeo has just arrived in Jeddah for talks with Saudi leaders over a response to the weekend attacks on two of the kingdom's major oil facilities. 

After a prior press conference by the Saudi Defense Ministry where it for the first time assigned public blame on Iran for the attacks which initially knocked out half of the kin

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gdom's daily oil output, saying the air attacks "unquestionably" had Iranian state sponsorship, Pompeo has announced the Aramco attacks constitute an "act of war" by Iran

And President Trump himself said Wednesday from the White House that it looks like Iran did it but that he still hopes to avoid war.

He announced via a statement on Twitter that, "I have just instructed the Secretary of the Treasury to substantially increase Sanctions on the country of Iran!" — in what appears an alternative to launching a military response. 

"I'm not looking to get into new conflict, but sometimes you have to," Trump told reporters Wednesday.

Pompeo's new "act of war" declaration indeed takes the potential for escalation right back to boiling point.

Pompeo is in Jedda where he's expected to meet with Saudi Crown Prince Mohammed bin Salman to evaluate a possible response, where the are expected to "coordinate efforts to counter Iranian aggression in the region," according to a State Department statement.

Meanwhile, if the 'military option' is being considered, it appears we could be in the beginning phases of an international coalition response. UK Prime Minister Boris Johnson announced he and Trump held a phone call to discuss the need for a "united diplomatic response from international partners" after the Aramco attacks. 

Wednesday's Saudi Def. Ministry press briefing showcasing missile and drone debris alleged "evidence" the Iranians were behind attack. 

The fact that Johnson's statement included the word "diplomatic" - along with Trump's emphasis on extending stronger sanctions - is a good sign however, that the White House is not prepping for war. 

Tyler Durden

Wed, 09/18/2019 - 13:10



Buck has close ties to prominent Democrat politicians like the Clintons and Obamas.
<p>We didn&#x2019;t think THIS is what they meant by &#x2018;Spider-Man: Homecoming.&#x2019;</p><br /><p><strong>What:</strong> A wild, Avengers-themed student assembly dance.</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
More Money Pumping Won't Make Us Richer

Authored by Frank Shostak via The Mises Institute,

Whenever a central bank introduces easy monetary policy, as a rule this leads to an economic boom - or economic prosperity. At least this is what most commentators hold. If this is however the case then it means that an easy monetary policy can grow an economy.

But loose monetary polici

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es do not generate economic growth. These policies set in motion the diversion of real savings from wealth generators to the holders of the newly pumped money. Real savings, rather than supporting individuals that specialize in the enhancement and expansion of the infrastructure are consumed by various individuals that are employed in non-wealth generating activities.

Moreover, not all consumption is a good thing. The consumption of real savings by individuals engaged in the enhancements and the expansion of the infrastructure is productive consumption. Conversely, the consumption of real savings by individuals that are employed in non-wealth generating activities is non-productive consumption.

It is non-productive consumption that sets the foundation for the weakening of the existing infrastructure thereby weakening future economic growth. In contrast, productive consumption sets the foundation for a better infrastructure, which permits stronger future economic growth. Needless to say, productive consumption leads to the increase in individuals living standards while non-productive consumption results in the lowering of living standards.

Why then is loose monetary policy seen as a major contributor towards economic growth?

Given that economic growth is assessed by means of the gross domestic product (GDP) framework — which is nothing more than a monetary turnover — obviously then when the central bank embarks on monetary pumping (i.e., loose monetary policy) it strengthens the monetary turnover in the economy and thus GDP.

After deflating the monetary turnover by a dubious price deflator one obtains the so-called real GDP. By means of real GDP, economists and various other experts are supposedly in a position to ascertain the state of economic growth, or so it is held. (Note that the increase in the monetary turnover because of the increase in the money supply is regarded as reflecting economic growth). In such a framework, it is not surprising that central bank policies are an important factor in setting in motion an economic boom.

From this, economists and various other experts conclude that the central bank by being able to grow the economy can also make sure that the economy follows the correct growth path. (The growth path as outlined by policy makers of the central bank).

Whenever the economy deviates from the path outlined by central bank policy makers and the government, this will allow them the opportunity to intervene by either raising or slowing the pace of monetary pumping.

The economy in this way of thinking is depicted as a helpless creature that must be guided by the all-knowing bureaucrats all the time. The passivity of the creature called the economy is also reflected by the fact that the output generated must be distributed by the all-knowing bureaucrats. In fact, one gets the impression that bureaucrats supervise the entire production process and individuals are just submissive entities that have hardly anything to say here.

If loose monetary policies of the central bank are able to generate through the GDP statistic so-called economic growth, then this must mean that a tighter monetary stance sets an economic bust.

"Economic bust" is here associated with the liquidation of various non wealth-generating activities. That is, the economic bust results in the curtailment of non-productive consumption.

Note that an important vehicle in setting the boom-bust cycle is the existence of the fractional reserve banking, which through the expansion of money out of thin air sets an economic boom while through the contraction of money out of thin air sets an economic bust.

Observe that in fractional reserve banking an expansion of money out of thin air emerges because of the ownerless lending. Consequently, when banks curtail the ownerless lending this leads to the contraction of money out of thin air.

Can Government Policies Grow the Economy?

While loose monetary policy, which results in an exchange of nothing for something, cannot cause economic growth, can the same be said about an increase in government outlays? Will this not result in a strengthening in economic growth?

Given that in the GDP framework one of the components is government outlays, obviously then once there is an increase in these outlays, all other things being equal, we will have an increase in the GDP and thus in so-called economic growth.

But if the government is not a wealth generating entity, how can an increase in government outlays grow the economy? Various individuals who are employed by the government expect compensation for their work. Note that the government can pay these individuals by taxing others who are still generating real wealth. By doing this, the government weakens the wealth-generating process and undermines prospects for economic growth. (We ignore here borrowings from foreigners).

Now, fiscal stimulus could “work” if the flow of real savings is large enough to fund government activities while still permitting a positive growth rate in the activities of the private sector. (Note that the overall increase in real economic activity is in this case erroneously attributed to the government's loose fiscal policy).

If, however, the flow of real savings is declining, then regardless of any increase in government outlays, overall real economic activity cannot be expanded. In this case the more the government spends (i.e., the more it takes from wealth generators) the more it weakens prospects for a recovery.

Thus when government by means of taxes diverts bread to its own activities the baker will have less bread at his disposal. Consequently, the baker will not be able to secure the services of the oven maker. As a result, it will not be possible to boost the production of bread, all other things being equal.

As the pace of government spending increases a situation could emerge that the baker will not have enough bread to even maintain the workability of the existing oven. (The baker will not have enough bread to pay for the services of a technician to maintain the existing oven). Consequently, his production of bread will actually decline.

Similarly, as a result of the increase in government outlays other wealth generators will have less real savings at their disposal. This in turn will hamper the production of their goods and services and in turn will retard and not promote overall real economic growth.

As one can see, the increase in government outlays will lead to the weakening in the process of wealth generation in general.

Many commentators are of the view that lowering of taxes could be an important catalyst for the strengthening of economic growth. This could be so if the government also curtails its outlays. It must be realized that as long as government outlays continue to grow no effective cut in taxes is possible. Remember that the expansion in government outlays implies an increase in the diversion of real savings from wealth generators to government. Hence, an effective cut in taxes can only emerge once the government curtails its outlays.

For instance, government announces that it will cut the income tax by 5% at the same time it outlays are planned to increase by 10%. What matters here is that the government will require to increase the diversion of real savings by 10% in order to support the increase in its activities.

It does not matter how the government is going to collect the required real savings – it can be by means of various forms of indirect taxes or by means of borrowings or by means of money pumping. The essence in all this is that once the government requires more real savings it will get it from the private wealth generating sector. Hence in this case rather than having a tax cut what we have here is an effective increase in the tax burden because of the increase in government outlays.


Neither loose monetary policy, nor big-spending fiscal policy can grow an economy. All that these policies can do is to redistribute a given pool of real savings from wealth generators towards non-wealth generating activities. Hence, we can conclude that both loose monetary and fiscal policies cannot set in motion an economic boom but rather an economic impoverishment.

Tyler Durden

Wed, 09/18/2019 - 12:10


Business Finance

Government gave them the deets, so not a hacking charge

The head of Novaestrat, the data analytics company at the centre of the huge leak revealed on Monday involving personal information about more than 20 million Ecuadorian citizens, has been taken into custody.…

Trump Nominates Chief Hostage Negotiator To Be Next National Security Advisor

President Trump has named his pick to succeed John Bolton as the next National Security Advisor amid burgeoning tensions with Iran over a weekend attack in Saudi Arabia.

In a Wednesday morning tweet, Trump said he planned to nominate Robert C. O'Brien, who currently serves as the special presidential envoy for hostage affairs at the State Department,

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strong>the administration's top hostage negotiator, to become the next NSA.

According to the State Department's website, O'Brien has served in multiple administrations, and even once worked closely with John Bolton after being named the US representative to the 60th session of the UN General Assembly by George W Bush.

Robert C. O'Brien

* * *

Read his full biography below:

Ambassador Robert C. O’Brien serves as the Special Presidential Envoy for Hostage Affairs at the U.S. Department of State. Working for Secretary Pompeo, O’Brien leads the U.S. Government’s diplomatic efforts on overseas hostage-related matters. He works closely with the families of American hostages and advises the senior leadership of the U.S. Government on hostage issues. O’Brien also coordinates with the interagency Hostage Recovery Fusion Cell on the development and implementation of U.S. hostage recovery policy and strategy.

O’Brien previously served as Co-Chairman of the U.S. Department of State Public-Private Partnership for Justice Reform in Afghanistan under both Secretaries Rice and Clinton. The PPJRA promoted the rule of law by training Afghan judges, prosecutors and defense lawyers and provided scholarships for young Afghan lawyers to study in the U.S. From 2008 through 2011, O’Brien was a presidentially-appointed member of the U.S. Cultural Property Advisory Committee, which advises the federal government on issues relating to the trafficking of antiquities and other cultural items. In 2005, Mr. O’Brien was nominated by President George W. Bush and confirmed by the U.S. Senate to serve as a U.S. Representative to the 60th session of the United Nations General Assembly where he worked with Ambassador John Bolton. Earlier in his career, O’Brien served as a Senior Legal Officer for the UN Security Council commission that decided claims against Iraq arising out of the first Gulf War. O’Brien was a Major in the U.S. Army Reserve.

O’Brien is the co-founding partner of Larson O’Brien LLP in Los Angeles, a nationally recognized litigation firm. His law practice focuses on complex litigation and international arbitration. In addition to his client work, O’Brien has served as an arbitrator in over 20 international proceedings and he has been appointed by the federal courts to serve as a special master in numerous complex cases.

O’Brien is a graduate of the Boalt Hall School of Law at U.C. Berkeley. He received his B.A. degree in political science, cum laude, from UCLA. He is a member of the Pacific Council on International Policy.

* * *

Like Mitt Romney, whose campaign he worked on as an advisor, O'Brien is a mormon. And after he is confirmed, will be the highest ranking Mormon in the Trump Administration.

As many federal jobs remain unfilled, Trump didn't take long to nominate O'Brien, which suggests the administration already had him in mind, and that they only needed to vet him.

O'Brien has been involved in many high-profile incidents during the Trump years, including, most recently, the negotiations with Sweden over the fate of rapper A$AP Rocky.

Back in 2017, O'Brien was reportedly considered to be Secretary of the Navy, but was instead nominated to his current position, and given the rank of ambassador one year later.

Tyler Durden

Wed, 09/18/2019 - 09:44



<p>Descript&#x2019;s &#x201C;Overdub&#x201D; can synthesize new words or phrases based on the sound of a user&#x2019;s voice. The company says it&#x2019;s practically impossible to abuse.</p><br /><p>Now that the genie&#x2019;s out of the bottle on deepfakes&#x2013;the AI technique that generates fake video or audio of a person&#x2013;Descript is putting it to use for benign purposes.</p><p>Read Full Story</p><div class="feedflare"><br /> <br /></div>
German Finance Minister Says Gov't Must Reject Facebook's Libra Coin

Authored by Joeri Cant via CoinTelegraph.com,

German Finance Minister Olaf Scholz stated that policymakers cannot accept parallel currencies such as Facebook's proposed Libra stablecoin.

image courtesy of CoinTelegraph

Prevent stablecoins from becoming alternative currencies
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r />

As reported by Reuters, on Sept. 17, German Vice Chancellor and Finance Minister Olaf Scholz said during a panel discussion in Berlin that Facebook’s planned crypto coin Libra will be clearly rejected. He said:

“We cannot accept a parallel currency. [...] You have to reject that clearly.” 

According to a document seen by Reuters, German regulators are working closely with their European and international allies to make sure stablecoins will not become alternatives to traditional currencies. The document reportedly read:

“The Federal Government will work at European and international level to ensure that stablecoins will not become an alternative to official currencies”

The German government has spoken out against Facebook’s Libra project before. On Sept. 13, German parliamentarian Thomas Heilmann stated that the government will block projects like Libra, claiming that the authorities are not planning to allow any market-relevant private stablecoins, following in France’s footsteps.

Libra is no threat to the global financial system

Meanwhile, David Marcus, head of Calibra, was attempting to defuse Libra’s perceived threat to the global financial system yesterday.

Marcus pointed out during a meeting between Libra founders and 26 global central banks in Basel that Libra’s cryptocurrency project does not intend to form a new currency but rather build a “better payment network and system running on top of existing currencies” to deliver meaningful value to users over the globe. He emphasized that there is no new money creation, which will “strictly remain the province of sovereign Nations.”

Tyler Durden

Wed, 09/18/2019 - 10:03



Despite relentless propaganda campaign about scientific "consensus."
New report after 12 forces across England and Wales trialled technology

MPs across parties have called for an immediate "stop" to live facial recognition surveillance by the police and in public places.…

Ecuador officials have arrested the general manager of IT consulting firm Novaestrat after the personal details of almost the entire population of the Republic of Ecuador left exposed online in what seems to be the most significant data breach in the country's history.

Personal records of more than 20 million adults and children, both dead and alive, were found publicly exposed on an unsecured
Frazzled Traders Fade Futures, Buy Bonds Ahead Of Repo Injection, Fed Decision

Soaring, then tumbling oil prices; soaring, then sliding repo rates; unprecedented factor volatility as crowded positions exploded - it sure has been quite a week headed into today's Fed decision which quickly lost the top spot as the most market-moving event of the week amid a barrage of six sigma, exogenous shocks.

While everyone's attention slowl

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y turned to see how much the Fed would cut today, how Powell would justify easing even as the US economy is once again rebounding, and how the US central bank would respond to the unprecedented liquidity shortage in the repo market, traders were still on edge over this week's record move in crude even as oil prices cooled further Wednesday after Saudi Arabia said full oil production would be restored by month’s end as it had already revived 41% of capacity. As a result, Brent futures dipped 0.28% to $64.34 a barrel, having conceded about 65% of its gains made after the weekend attack on Saudi Arabia’s oil facilities.

Saudi Energy Minister Prince Abdulaziz bin Salman on Tuesday sought to reassure markets, saying the kingdom would restore its lost oil production by month-end having recovered supplies to customers to the levels they were prior to weekend attacks. "I would think a spike in oil prices will likely prove to be short-term given that the global economy isn’t doing too well," said Akira Takei, bond fund manager at Asset Management One.

Still, heightened geopolitical tensions underpinned oil as well as some safe-haven assets such as U.S. bonds. A U.S. official told Reuters on Tuesday the United States believes the attacks originated in southwestern Iran, an assessment that could further increase the rivalry between Tehran and Riyadh. Adding to uncertainties in the Middle East were exit polls from Israel’s election, which showed the race too close to call suggesting Prime Minister Benjamin Netanyahu’s fight for political survival could drag on.

At the same time, now that the record barrage of investment grade issuance is finally over, as are hedging rate locks, bonds rallied globally while stocks struggled for traction ahead of Wednesday's Fed decision, as the dollar rose.

In equities, European stocks traded without direction, with the Stocks 600 index swinging from a loss to a modest gain, led by utilities and oil companies.

A similar drift was observed earlier, when Asian stocks traded little changed as investors awaited the Fed's decision. Shares rose in China, but declined in Japan and Australia. The Topix dropped for the first time in nine days, ending its longest winning streak in almost two years. Electric appliance makers slid, with Sony Corp. being the biggest drag on the benchmark. Elsewhere, China’s Shanghai Composite Index gained as much as 0.6%, boosted by consumer stocks including Kweichow Moutai Co Ltd. and Foshan Haitian Flavouring & Food Company Ltd. India’s Sensex gained as much as 0.6% as market fears of higher oil prices were assuaged on signs Saudi Arabia is restoring production. The U.S. central bank is broadly expected to cut rates by 25 basis points Wednesday.

S&P 500 Index nudged lower, once again hugging the 3,000 line as Fedex shares plunged in pre-market trading after the company slashed its profit outlook, blaming a global economy weakened by trade tensions.

Looking at today's main event, in which Fed officials are widely expected to cut their benchmark rate by a quarter-point, some investors such as DoubleLine Capital’s Jeffrey Gundlach are saying the central bank may also boost its balance sheet launching what we dubbed "QE Lite" to stabilize the volatile repo market. Traders also are keeping an eye on whether a potential oil shortage weighs on the global economy, and on preparations by the U.S. and China for top officials to meet on trade in October.

“Markets are currently almost pricing in three more rate cuts by the end of next year, including one by the end of this year, but the chances are that the Fed’s stance will be more hawkish than markets and we could see a rise in bond yields in the near term,” said Masahiko Loo, portfolio manager at Alliance Bernstein.

“Markets want to hear that the Fed is there if needed, the Fed is a backstop,” Alec Young, managing director for global markets research at FTSE Russell, told Bloomberg TV. “There is concern, obviously, from trade, manufacturing, and we’re seeing that bleed into some job-growth weakness, and these are all the big questions that Chairman Powell is going to be getting.”

Further complicating the Fed's discussions, short-term U.S. interest rates shot up this week, with overnight repo rates rising to 7%, due largely to seasonal factors such as huge payments for taxes and bond supply. That prompted the New York Fed to conduct its first repo operation in more than a decade to inject funds to stressed money markets.

The New York Federal Reserve said late Tuesday it would conduct a repurchase agreement operation early on Wednesday “in order to help maintain the federal funds rate within the target range of” 2.00% to 2.25%. Jeffrey Gundlach, chief executive of DoubleLine Capital, said on Tuesday that the repo market squeeze makes it more likely that the Federal Reserve will resume expansion of its balance sheet “pretty soon.”

In FX, the dollar gained against all peers, paring most of Tuesday's losses, as money markets remained on edge and traders awaited Wednesday’s Federal Reserve policy decision. The pound retreated from the almost two- month high reached Tuesday; the currency was hit by inflation data and increasing pessimism of the Brexit deal being reached before the Oct. 31 deadline. The Norwegian krone was at the center of attention in the G-10, given that it risks volatility around its central bank decision on Thursday. Sterling traded at $1.2483, down 0.1% so far on the day, having hit a two-month high of $1.2528 as investors reversed their bets against the currency on fear of a no-deal Brexit at the end of next month.

Gold was mostly flat at $1,502.10, while the 10-year U.S. Treasuries yield fell to 1.799%, compared with Friday’s 1-1/2-month high of 1.908% ahead of the Fed’s policy announcement on Wednesday.

Expected data include mortgage applications and housing starts. General Mills will report earnings.

Market Snapshot

  • S&P 500 futures down 0.1% to 3,003.25

  • STOXX Europe 600 up 0.08% to 389.66

  • MXAP down 0.1% to 158.87

  • MXAPJ up 0.06% to 511.04

  • Nikkei down 0.2% to 21,960.71

  • Topix down 0.5% to 1,606.62

  • Hang Seng Index down 0.1% to 26,754.12

  • Shanghai Composite up 0.3% to 2,985.66

  • Sensex up 0.3% to 36,576.19

  • Australia S&P/ASX 200 down 0.2% to 6,681.59

  • Kospi up 0.4% to 2,070.73

  • German 10Y yield fell 2.2 bps to -0.496%

  • Euro down 0.2% to $1.1053

  • Italian 10Y yield rose 7.7 bps to 0.581%

  • Spanish 10Y yield fell 1.9 bps to 0.267%

  • Brent futures down 1% to $63.91/bbl

  • Gold spot little changed at $1,501.66

  • U.S. Dollar Index up 0.2% to 98.41

Top Overnight Headlines from Bloomberg

  • The Fed bought $53.2 billion of U.S. securities on Tuesday to quell a liquidity squeeze, and said it would conduct another overnight repo operation of up to $75 billion Wednesday morning; the moves had markets reeling and underscored just how deep the structural problems in U.S. money markets have become

  • Under pressure from Wall Street and President Donald Trump, the Fed is widely expected to reduce interest rates, but its sharply divided policy panel may be reluctant to forecast further cuts

  • Saudi Arabia reassured anxious customers that crude exports will keep flowing as normal and its industry can recover quickly from the worst attack in its history; the kingdom restored about half of pre-attack capacity at the crucial Abqaiq facility

  • European Commission President Jean-Claude Juncker said the risk of a no-deal Brexit on Oct. 31 is now “palpable,” sparking a drop in the pound; he said the main sticking point continued to be the so-called backstop to avoid a hard Irish border and demanded that the U.K. provide its proposals for an alternative in written form as soon as possible

  • Benjamin Netanyahu’s gamble to hold elections for a second time this year backfired after a stunning deadlock left Israel rudderless and convulsed by a new wave of political turmoil

Asian equity markets traded tentatively following the cautious gains on Wall St amid positioning heading into a flurry of central bank activity including the FOMC decision where the Fed are expected to deliver a consecutive 25bps cut. ASX 200 (-0.2%) and Nikkei 225 (-0.2%) were indecisive ahead of the looming risk events and with Australia subdued by losses in the energy sector after an aggressive pullback in oil prices due to reports Saudi oil output will return to normal levels quicker than initially anticipated, while the Japanese benchmark remained at the whim of a choppy currency amid somewhat inconclusive data which showed Exports contracted for a 9th consecutive month albeit at a narrower than expected decline. Hang Seng (-0.1%) and Shanghai Comp. (+0.3%) conformed to the holding pattern seen across regional and global counterparts after the PBoC opted for a net neutral position in its liquidity operations and after President Trump reverted back to a blasé approach on US-China trade in which he suggested a deal could come soon, possibly before the 2020 election or after. Finally, 10yr JGBs initially continued to oscillate around the 154.00 level as the BoJ kick-started its 2-day policy meeting, although prices eventually gained traction after tripping stops through this week’s resistance levels and largely ignored the mostly weaker 20yr JGB auction results.

Top Asian News

  • An Army of Japanese Salarymen Is Rocking Global Currency Markets

  • Vietnam Becomes a Victim of Its Own Success in Trade War

  • Profiting From Trade War, China Fund Jumps 54% in First Year

  • London Trading More Rupee Than India Shows What Modi Needs to Do

  • Thai Court Rejects Petition Seeking to Disqualify Prime Minister

Major European bourses are flat (Euro Stoxx 50 +0.1%), following on from a tentative AsiaPac session, amid cautious trade ahead of this evening’s FOMC meeting. IBEX 35 (+0.2%) was mildly softer after the open, although has since turned around, amid more political uncertainty, after the King stated there was no candidate for a parliament investiture vote; meaning Spaniards will return to the polls in November for the fourth time in four years. In terms of sector performance; Energy (+0.4%) has managed to shrug off yesterday’s fall in oil prices, while Telecoms (u/c), Consumer Discretionary (-0.4%), Consumer Staples (-0.2%) and Industrials (-0.1%) are the laggards. Luxury names, including Richemont (-4.1%) and Swatch Group (-2.6%), are under pressure after UBS downgraded the sector, with downside in Moncler (-4.5%) exacerbated by cautious comments from the co.’s CEO, who expressed concern about the situation in Hong Kong. In the lead are utilities (+0.4%), with gains in EDF (+3.7%) helping to prop up the sector (the Co. reported weld issues in six reactor units relating to 16 steam generators but does not believe they pose a significant adverse effect now), while materials (+0.2%) and Tech (+0.4%) are also higher. In terms of other notable individual movers; Kingfisher (-2.4%) is lower after sales disappointed (GBP 6.0bln vs. Exp. GBP 6.02bln and like-for-like sales down 1.8%). Elsewhere, Wirecard (+3.1%) took a leg higher on the news that the co. has signed a strategic co-operation agreement with Japan’s Softbank. Finally, Beiersdorf (-1.0%) is under pressure after being downgraded at Goldman Sachs.

Top European News

  • U.K. Inflation Rate Falls to Lowest Since 2016 on Games, Clothes

  • Comcast’s Sky Moves Beyond BT’s Network in U.K. with Fiber Deal

  • Cobham’s $5 Billion Sale to Advent Sparks U.K. Security Probe

  • EDF Rises on Belief That Reactor Weld Issues Don’t Need Fixing

In FX, the DXY seems to have established a firm base above 98.000 and Fib support just above the big figure, partly due to weakness in the Greenback’s G10 counterparts, but also on the back of recent firmer than forecast US data/surveys, increased demand for short term Usd funds and a marked change in Fed rate expectations going into September’s policy meeting (odds between another 25bp hike and no change much closer to even from around 90% for +1/4 point only a few days ago). The index is currently just shy of 98.500 and considerably closer to nearest resistance (98.744 yesterday) than the aforementioned downside chart retracement level (98.034).

  • GBP/NZD/AUD - The major underperformers, with Cable already retreating after another 1.2500+ sortie and failure to sustain gains above the 100 DMA (1.2501) amidst relatively negative Brexit remarks from EU’s Barnier and Juncker, but then extending its pull-back through 1.2450 at one stage in wake of significantly softer than expected UK CPI on the eve of retail sales and the BoE rate convene. Meanwhile, the Kiwi is back under pressure alongside the Aussie after overnight releases showing a decline in Westpac’s LEI and mixed NZ Q2 current account metrics, with Nzd/Usd under 0.6350 again and Aud/Usd sub-0.6850. Note, Aud/Nzd is still pivoting 1.0800 following this week’s dovish RBA minutes and eyeing NZ Q2 GDP later today, while Aud/Usd appears capped by decent upside option expiry interest at 0.6860-65 (1 bn) and 0.6895-0.6900 (2.6 bn).

  • JPY/CAD/CHF/EUR - Also weaker against their US peer, albeit on a sliding scale as the Yen contains losses over the 108.00 mark with the aid of a narrower than anticipated Japanese trade gap and with expiries also in close proximity (1.1 bn at 108.25-40 and then 1 bn at 108.75 if Tuesday’s multi-week peak and 108.50 are breached) ahead of the FOMC and BoJ tomorrow. Meanwhile, the Loonie has regained some poise and traction having held just above 1.3300 yesterday to meander around 1.3250 awaiting some independent impetus from Canadian CPI in advance of the Fed. Elsewhere, the Franc remains anchored near 0.9950, but has weakened vs the Euro to 1.1000 into the SNB on Thursday even though the single currency has lost momentum against the Buck following another approach towards 1.1100. Indeed, Eur/Usd has pulled back below 1.1050 amidst downbeat commentary from ECB’s de Guindos and the headline pair may gravitate further given more downside option expiry interest compared to upside (1.6 bn at the 1.1000 strike and 1 bn between 1.1020-30 vs 1.7 bn from 1.1100 to 1.1115).

  • EM - The Rand is also awaiting the Fed before turning attention to tomorrow’s SARB meet, and Usd/Zar has largely taken in stride slightly firmer than forecast SA CPI ahead of retail sales within a 14.7080-6325 band, though mostly trading near the base.

In commodities, the crude complex is largely in consolidation mode ahead of key risk events (FOMC) amid a lack of fresh catalysts and following yesterday’s declines, triggered by news that Saudi oil output will return to normal levels faster than originally assumed; Energy Minister Abdulaziz said oil supply is fully back online and resumed as before after more than half the oil output was resumed in the past few days and that it will keep full oil supply to its customers this month. Losses were later exacerbated by a surprise build in API inventories. Brent Nov’19 futures sit just above the USD 64/bbl handle, just above yesterday’s USD 63.50/bbl lows, with WTI similarly lacklustre just above the USD 59.0/bbl mark. In terms of geopolitical developments, the pace appears to have slowed somewhat; the Trump administration is reportedly considering a range of options to retaliate against Iran including cyberattack or physical strike on Iran's oil facilities or Revolutionary Guards assets, meanwhile, the Saudis continue to point the finger at Iran, who have doubled down in denial. Looking ahead, IEA Birol will conduct a press conference today at 14.00BST alongside a press conference from the Saudis who are expected to show evidence of Iran’s involvement and that Iranian weapons were used in Aramco attacks. Separately, lacklustre trade in the metals complex reflects cautious sentiment, with gold holding on to the USD 1500/oz level for now and copper a touch lower.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 2.0%

  • 8:30am: Housing Starts, est. 1.25m, prior 1.19m; Housing Starts MoM, est. 4.95%, prior -4.0%

  • 8:30am: Building Permits, est. 1.3m, prior 1.34m; Building Permits MoM, est. -1.29%, prior 8.4%

DB's Jim Reid concludes the overnight wrap

I write this from Paris this morning but there’s only one place to start and that’s in Washington ahead of the Fed meeting this evening. Not long ago this FOMC was perhaps gearing up to be closer to a 50/50 call between a 25bp or 50bp cut however the latter looks a lot less likely now with markets only pricing in about a 15% chance of that happening. That fits with the view of our US economists who also expect a 25bp cut which mirrors the consensus.

The bigger focus will be on what the Fed signals about the expected policy trajectory in the coming months. Our US economists note that a continued dovish bias should be evident in the statement language, Summary of Economic Projections and Chair Powell’s press conference. The latter in particular should echo the narrative that, while the baseline outlook for the economy remains favorable, officials are attuned to significant risks emanating from softer global growth and elevated trade uncertainty. As in July, Powell should stop short of detailing the likelihood and timing of any future actions, but the signal should be that the bar is set relatively low for further rate reductions with the Committee intent to “act as appropriate to sustain the expansion”.

Our colleagues do not expect the September rate cut to be the last of this cycle though. With accumulating evidence that the economy is slowing amid greater sensitivity to the trade turmoil, they recently adjusted their call to reflect a further cumulative 75bps of rate cuts after this meeting, specifically at the October, December and January get togethers. All eyes on 7pm BST/2pm EST.

In an ideal world the Fed was probably hoping that markets would go into today in a relative state of calm however the mini sell-off across bond markets over the last couple of weeks and the biggest daily climb for oil in over a decade put an end to that. You can also add panic in the US funding market to that list after the overnight repo rate touched as high as 10% intraday yesterday and one of the highest levels on record. Notwithstanding a technical delay, the NY Fed did move to calm the market by conducting an overnight repo operation – the first in a decade – for $53bn which helped to push the rate back down however another operation is planned for today for up to $75bn.

There appeared to be various schools of thought on what caused the explosion in overnight funding rates with bulging treasury supply, a mismatch of cash liquidity tax payments, regulatory constraints, bloated dealer sheets, banking seasonals and investors selling bonds back to dealers all cited as possible reasons. We remained confused about the real cause!! Whatever created the tensions it’s not gone unnoticed that we’ve had two huge moves in different asset classes this week, in addition to the rates’ selloff of the prior two weeks.

Just on oil, WTI and Brent both sold-off around 6% yesterday – and thus gave up about half of Monday’s gains - after Reuters reported that Saudi Arabia is supposedly close to restarting 70% of the lost oil production following the weekend attack. The same story also suggested that output would be fully back online in the next couple of weeks, citing a “top Saudi source”. The Kingdom later confirmed that they will ensure this month’s supply by drawing on reserves. Aramco’s CEO also confirmed that the Abaqiq facility should be back to pre-attack levels of output by the end of September. Gasoline (-7.73%) and Heating Oil (-9.42%) also fell in tow however the end result for equities was fairly muted. Indeed the S&P 500 ended +0.26% while the DOW and NASDAQ ended +0.13% and +0.40% respectively. This was after the STOXX 600 had closed -0.05%. After the US bell, trade bellwether FedEx cut its 2020 profit outlook on a weaker global economy and trade tensions. The shares were down as much as 10% in after-hours trading potentially wiping out gains for the year.

Meanwhile US HY credit spreads finished little changed with energy spreads 4bps wider. As for bonds, 10y Treasuries finished -4.5bps lower with the 2s10s curve flattening 1bp to +7.2bps, while Bunds finished little changed. It was BTPs (+7.9bps) which stood out the most in Europe though following (an albeit expected) confirmation of the news we discussed yesterday morning that former PM Renzi was leaving the PD to form his own party, further complicating the political stability picture in Italy.

This morning in Asia, with the exception of Japan where the Nikkei (-0.13%) is a touch lower, most bourses are flat to slightly higher ahead of the Fed. That’s the case for the Hang Seng (+0.03%), Shanghai Comp (+0.39%) and Kospi (+0.44%). The yen is slightly weaker, following weak trade export data in Japan this morning (albeit not as weak as expected), and the news yesterday that South Korea had removed Japan from its list of most trusted trading partners.

In terms of the data yesterday, in the US the August industrial production print surprised to the upside at +0.6% mom (vs. +0.2% expected), as did manufacturing production (+0.5% mom vs. +0.2% expected). Given that Powell has previously flagged concerns about the manufacturing sector, this was a modest positive. The only other data release in the US was the September NAHB housing market index which rose 1pt to 68.

In Europe the only data worth noting was the September ZEW survey in Germany where the expectations component improved over 21pts to -22.5 (vs. -37.8 expected). That being said the current situation component did weaken over 6pts to -19.9 (vs. -15.0 expected). So a mixed survey.

In other news, it is worth flagging the unveiling of plans for a Dutch national investment fund for the economy. Finance Minister Hoekstra said in the budget that “we are going to investigate the possibilities for further investment in areas such as innovation, knowledge development and infrastructure” with details expected to be presented to parliament in early 2020. Various media reports in Holland suggested that the fund could be as much as €50bn (about 6% of GDP). As Mark Wall noted yesterday, this isn’t just a sign of follow through on Draghi’s plea for fiscal easing by those member states that can most afford it. With a public debt ratio close to 50% of GDP and a current account surplus of nearly 10%, the Netherlands would fit the bill. What’s more striking is that the Netherlands is one of the most fiscally conservative members of the Eurozone. So this could well put more pressure on Germany. Certainly one to watch.

Speaking of which, yesterday our economists in Germany published a report titled “A new ‘fiscal deal’ in Germany”. They note that there is talk that the climate package announced this Friday might amount to €40bn (until 2023 cumulatively). Technically, this might not be all additional spending but could also include higher climate related taxes and levies (possibly, it also includes expenditure items already earmarked elsewhere). Finally, implementation lags and bottlenecks lead the team to expect that expenditures will rise over time resulting in an amount likely below €10bn (at best 1/4 pp of GDP) for 2020. See their report here .

Looking at the day ahead, needless to say that all the focus will be on the Fed this evening. As for data, this morning the data includes August new car registrations for the Euro Area and final August CPI revisions for the UK and Euro Area. In the US the focus will be on the latest housing market data with August building permits and housing starts due. Away from that French President Macron is due to meet Italy’s Conte.

Tyler Durden

Wed, 09/18/2019 - 07:57
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