Tech companies start to disclose possible bottom-line coronavirus impacts

logicfish Business tech companies start disclose possible bottom-line coronavirus impacts All https://go.theregister.co.uk   Discuss    Share
Disclosures to investors from Dell, DocuSign, Cloudera and MongoDB reveal not all are completely terrified

Coronavirus has started to become a staple of the Form 10-K corporate risk disclosure documents filed by public technology companies.…


Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate

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Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate

Having moved from "Not QE" (or QE4 as it was correctly called), to the $750BN QE5 which came and went with the blink of an eye, to the Fed's open-ended and unlimited QEnfinity in the span of one week, the full "shock and awe" of the Fed's money printer is now on full display, and in just the past week, from March 19 to Marc

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h 25, the Fed has purchased $587BN in securities ($375BN in TSYs, $212BN in MBS), or roughly 2.7% of the $21.4TN in US GDP.

This means that as of Wednesday close, when accounting for last week's repo operations, the Fed's balance sheet has increased by roughly $650BN, bringing it to just over $5.3 trillion, an increase of $1.2 trillion in the past two week, or roughly 5.6% of US GDP.

Some more scary statistics: if the Fed continues QE at the current pace of $625 billion per week, the Fed's balance sheet will hit $10 trillion by June, or just below 50% of US GDP. Even assuming the Fed eases back of the gas pedal, its balance sheet is almost certain to hit $7 trillion by June.

Which is hardly an accident: one look at the Treasury securities held in custody at the Fed shows that the past two weeks have seen a whopping $50BN in foreign central bank sales, a 1.7% drop which was the highest in six years since Russia pulled over $100BN in TSYs from the Fed at the start of the Crimean war in 2014.

As Bloomberg observes, the selling may have contributed to record volatility in the Treasury market and prompted the Fed’s intervention. More importantly, it also means that the biggest buyer of US Treasurys in the past decade, foreign official institutions (i.e., central banks and reserve managers) are now sellers, so now the U.S. government needs private investors to soak up the ever increasing debt issuance.

And since those are busy avoiding a deadly virus, it means that only the Fed now can fund the exploding US budget deficit... which is precisely what it is doing.

Ironically, it was back on Jan 28, just as the world was learning about the coronavirus pandemic that we showed the long-term trajectory of the Fed's balance sheet as calculated by the CBO...

... when we said when we said that "MMT will be launched after the next financial crisis, and which will see the Fed directly monetize US debt issuance from the Treasury until the dollar finally loses its reserve currency status."

We were right about the first part. Now we just have to wait for the second.

Tyler Durden

Wed, 03/25/2020 - 22:10

"They've Been Lying From The Start" - French Medics File Suit Against Prime Minister

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"They've Been Lying From The Start" - French Medics File Suit Against Prime Minister

COVID-19 has infected 328,275 people across the world and caused 14,366 deaths, according to the latest figures from Johns Hopkins. Europe has turned into the next China, with cases and deaths on an exponential curve in Italy, Spain, Germany, France, Switzerland, and the UK. 

In France, the fast-spreading virus has killed 562 and led to more than 14,400 confirme

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d cases on Sunday. The French hospital system is on the brink of being overwhelmed by virus patients, with hospital beds and ICU-treatment capacity is quickly running out. 

French hospitals are running out of protective gear, leaving medical staff susceptible to contracting the virus. 

It has become entirely evident that the European country was not prepared to fight a pandemic. This is the claim that is being made by three French medics in a new lawsuit against Minister Edouard Philippe and former minister of solidarity and health, Agnes Buzyn. 

Lawyers for the medics told RT News that the complaint alleges the two senior officials failed to prepare the country for a health crisis that has paralyzed it.

The complaint said both officials were completely aware of the virus in January but "chose not to act." 

"At some point, the truth needs to be told, which is that these people have been lying to us from the start," Fabrice di Vizio, the lawyer representing the three plaintiffs, told RT.

The complaint referenced an interview Buzyn gave the Le Monde newspaper, in which she regrets leaving her government post and running for mayor of Paris as the virus crisis was developing earlier this year:

"I knew that the tsunami wave was before us. "On January 30, I warned [Prime Minister] Edouard Philippe that the elections could probably not be held. "We should have stopped everything, it was a masquerade."

The French government has rejected any wrongdoing and has said their response to the virus has been satisfactory. 

Di Vizio told RT that the government is still unprepared and lacks critical protective gear for healthcare workers: 

"Last week the government spoke about the masks. You remember those pompous speeches by the president, who was all commander-in-chief in tone and promised the masks?" he said. "Masks are a primary tool of war since they protect the health workers. Have those masks arrived?"

It would be an absolute disaster if French medics and healthcare workers joined the anti-government "Yellow Vest" protestors out of their disgust for the failure of the government. After all, last month, French firefighters joined the protests. 

Tyler Durden

Mon, 03/23/2020 - 04:15

'Stay Indoors Or Risk A Year In Prison': Jordan Blows Sirens At Start Of Virus Lockdown

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'Stay Indoors Or Risk A Year In Prison': Jordan Blows Sirens At Start Of Virus Lockdown

Jordan has imposed an unprecedented nation-wide curfew on Saturday to combat the spread of coronavirus at a moment its official confirmed number of cases approaches 100. As of Friday health officials said Jordan has 85 confirmed infections while emphasizing they expect numbers to rise rapidly. 

"Jordan blew sirens at the start of a nationwid

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e curfew on Saturday, limiting the mobility of its 10 million citizens indefinitely to combat the spread of coronavirus, witnesses and officials said," Reuters reports.

The round-the-clock ban on residents going outside started at 7am with warning sirens literally sounding across Amman. The new curfew is being widely described as the most severe measure any country has imposed on a nation-wide level thus far in the crisis.

Jordanian soldiers in the capital Amman on March 18, 2020. Image source: AFP

As nations across the globe move to a militarized response, and with even the United States witnessing the rare deployment of National Guard units to city streets, such as in New York and Georgia, the government of Jordan is poised to impose perhaps the most draconian penalties for violating the newly announced measures.

The Jordanian Army announced Saturday curfew violators for all but authorized emergency personnel and vital services will face up to a year in jail. Thousands of soldiers have already been deployed to city streets and highways, especially in the sprawling capital of Amman.

"Anyone going outside will be subjecting themselves to punishment," Justice Minister Bassam Talhouni said in an Arabic broadcast. Already at least 400 were arrested Saturday. "Nearly 400 people have been arrested in Jordan for violating an indefinite curfew introduced on Saturday that bans people from leaving their homes even to purchase food," The Guardian reports.

The stringent measures immediately resulted in the following scene, as Reuters describes: 

Armored police vehicles roamed the streets of main cities, calling on people to heed warnings not to leave their homes, witnesses said.

Streets across the capital and main cities were deserted, with shops shuttered as police patrolled neighborhoods and the army manned checkpoints, witnesses said.

Amman officials say they had to take drastic measures due to the "recklessness" of some elements among the population who refuse to take the pandemic threat seriously.

“Unfortunately we have seen recklessness in scenes of shopping and moving around in the streets. These pose a grave danger to our efforts to contain the epidemic,” Amjad Adailah, a cabinet minister and government spokesman said.

Similar but arguably less draconian measures have been deployed in some communities and cities in neighboring Israel and the West Bank.

Also, Syria to the north is presenting an increasingly worrisome situation: the Assad government has ordered the closure of all schools, restaurants, theaters and public places, and has even sent many government workers home as of Saturday. Yet authorities in Damascus are still officially reporting zero cases. However, it could also be the case they acted quickly enough, with WHO officials looking on and administering tests, amid all but the Lebanese border being for years shutdown due to war.

The potential for an outbreak inside squalid and over-crowded refugee camps in the region is also alarming international health officials. The WHO is reportedly attempting to set up urgent testing inside camps along the Syrian-Turkish border, after a handful of cases appeared in an internally displaced persons (IDP) camp in Iraq.

Tyler Durden

Sat, 03/21/2020 - 20:55

UK Google Data Transfer To US Is Just The Start: "Possibilities For Abuse Are Enormous"

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UK Google Data Transfer To US Is Just The Start: "Possibilities For Abuse Are Enormous"

Via TruePublica.org,

Google is planning to move its British users’ accounts out of the control of European Union privacy regulators, placing them under US jurisdiction instead, the company confirmed on 19 February. The shift, prompted by Britain’s exit from the EU, will leave the sensitive personal information of tens of millions with les

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s protection and within easier reach of British law enforcement. But it won’t end there.

Alphabet Inc’s Google intends to require its British users to acknowledge new terms of service including the new jurisdiction.

Nothing about our services or our approach to privacy will change, including how we collect or process data, and how we respond to law enforcement demands for users’ information,” Google said in an emailed statement. “The protections of the UK GDPR will still apply to these users.” If that was true, they would leave it where it was and not go to the expense. This is just the start of much more to come.

Unsurprisingly, a spokesman declined to answer questions.

Mission creep

The British state is the West’s worst offender for breaches of privacy, mass surveillance and using its secretive 360-degree architecture of civilian supervision and control. For the government, more surveillance and gathered data is better, not worse. But Google’s announcement will be followed by the other big tech firms and digital startups will look upon the UK as an increased opportunity to make money from fewer safeguards.

It was only a two months ago that the Times reported that a leading British trade economist had warned that NHS patient data will be exploited by US technology companies under a trade deal with America. Alan Winters, director of the Trade Policy Observatory at Sussex University, said clauses on data sharing and algorithms that US negotiators want inserted into a deal will be used to capture the value in NHS patient records, estimated at £10 billion a year.

Last month, it was reported that the Department of Health and Social Care has been selling the medical data of millions of NHS patients to American and other international drugs companies having misled the public into believing the information would be “anonymous.”

Then just a few days ago it was reported that a US healthcare firm (praised by Donald Trump) has been handed £millions of taxpayers money to help the NHS identify its most “expensive” patients. The programme will rank people according to their risk of illness and has rightly sparked fears more could be turned down for operations because of a myriad of factors like age or weight. And, of course, it raises yet more fears the NHS could be on the table in a trade deal despite PM Boris Johnson’s claims it is not for sale.

The contract was agreed between NHS England and Optum – which assesses patients for America’s privatised insurance-led system. It divides NHS patients into high, medium and low risk groups and identifies “rising risk groups” such as those at risk of Type 2 diabetes.


Optum is part of the United Healthcare Group who was fined just last month for defrauding its insured customers. It was also fined $2.5m for ‘insurance violations.‘ So bad is United Healthcare’s fine record they have their own ‘violations tracker‘ that shows it has been fined over $200million in 35 cases it lost, just in the USA. Their crimes include false claims, consumer protection violations, price-fixing, insurance fraud, pension violations, employee discrimination to name just a few.

The company is ranked 6th on the 2019 Fortune 500.

Anything goes policy

Moving UK users’ data to the USA makes bulk surveillance easier, and data protection much harder. The US and UK have an agreement on data, whereby the UK uses the US to use data in such a way as would be illegal in the UK. In addition, it makes it much harder to locate those breaches and then prosecute them.

Jim Killock, Executive Director of Open Rights Group, said:

Moving people’s personal information to the USA makes it easier for mass surveillance programmes to access it. There is nearly no privacy protection for non-US citizens.

“We have no reason to trust a Donald Trump government with information about UK citizens. The possibilities for abuse are enormous, from US immigration programmes through to attempts to politically and racially profile people for alleged extremist links.

“Data protection rights will also become more fragile, and are likely to be attacked in trade agreements pushing ‘data flows’.

“Google’s decision should worry everyone who think tech companies are too powerful and know too much about us. The UK must commit to European data protection standards, or we are likely to see our rights being swiftly undermined by ‘anything goes’ US privacy practices.”

Tyler Durden

Fri, 02/28/2020 - 05:00

'Weak Start To The Year' - Maersk Warns Paralyzed Chinese Factories To Damage Global Economy

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'Weak Start To The Year' - Maersk Warns Paralyzed Chinese Factories To Damage Global Economy

A.P. Moller-Maersk A/S, the world's largest container shipping company, warned Thursday that the Covid-19 outbreak in China, and quickly spreading across the world, would hit earnings this year. 

Maersk said factories in China are currently operating at 50-60% of capacity because the economy has ground to a halt. 

Maersk reported an une

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xpected loss in the fourth quarter of $72 million from a profit of $46 million a year earlier. The shipper is a barometer of global trade, said revenues declined 5.6% to $9.67 billion, missing expectations of $9.4 billion, due mostly to a decline in container shipping. 

Shipping volumes in both East to West and North to South routes were lower amid several years of front-loading by corporations ahead of President Trump's tariffs. Lower demand was seen across Europe, Latin America, the US, and across Asia Pacific countries last quarter. 

The shipper said 2020 guidance is filled with many uncertainties because the deadly virus can still spread outside of China and impact the global economy. 

"As factories in China are closed for longer than usual in connection with the Chinese New Year as a result of the COVID-19, we expect a weak start of the year," Maersk warned. 

Maersk's warning comes as China's economy remains completely paralyzed, expected to slow global trade in goods in the coming months and produce increased trade uncertainties, the World Trade Organization (WTO) said this week. 

"The slow start could be dampened further," the WTO said in the report, "by global health threats and other recent developments in the first few months of the year, which are not yet accounted for in the barometer's best-available historical data."

"The latest barometer reading does not indicate a sustained recovery," it said. "Indeed, year-on-year trade growth may fall again in the first quarter of 2020, though official statistics to confirm this will only become available in June."

The decline in global trade was seen in container shipping, agricultural commodities, and automotive products index, the WTO said.

Soren Skou, Maersk's chief executive, told the Financial Times that China could be operating at 90% capacity by March 2. Still, he noted that a lot of "things could go wrong," such as labor and part shortages to logistics transportation, had been a nightmare for many factories in preventing them from a complete factory restart. There's also the problem that manufacturers are running out of capital to cover labor expenses. All of this means the timelines of factory restarts in China will continue to be pushed out.

Maersk expects global container demand to be around 1% to 3% this year. This is below the rate seen before the 2008/09 financial crisis, as well as 3.8% seen in 2018, suggesting the global economy is rapidly slowing. 

The HARPEX (Harper Petersen Charter Rates Index) reflects the worldwide price development on the charter market for container ships. Companies pulling forward goods ahead of President Trump's tariffs boosted rates for much of 2018 and 2019. However, the signing of the Phase One trade agreement has calmed trade uncertainties and declined the need for corporations to pull forward. What could happen next is the HARPEX plunges as the demand for container ships sinks as China’s economy is paralyzed.

The breakdown in the global supply chain is becoming a bigger threat by the day…

Tyler Durden

Fri, 02/21/2020 - 04:15

Sir John Redwood backs IR35 campaign, notes review would have to start 'immediately' before new off-payroll working rules kick in

logicfish Business john redwood backs ir35 campaign notes review would have start immediately before off-payroll working rules kick All https://go.theregister.co.uk   Discuss    Share
Do election promises mean anything?

The Right Honourable Sir John Redwood is supporting contractors in their battle to overturn IR35 tax rules before they hit the private sector, demanding the new Tory government meets its pledge to review the legislation.…


China's Winnti hackers (apparently): Forget the money, let's get political and start targeting Hong Kong students for protest info

logicfish Security chinas winnti hackers apparently forget money lets political start targeting hong kong students protest info All https://go.theregister.co.uk   Discuss    Share
Supply-chain hackers now taking aim at kids fighting for democracy, say researchers

A Chinese hacking crew which had previously been focusing on industrial and commercial attacks has now involved itself in efforts to suppress protests in Hong Kong.…


"Prices Start To Sink At Record Paces" - Manhattan Luxury Home Prices Plunge To 2013 Levels

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"Prices Start To Sink At Record Paces" - Manhattan Luxury Home Prices Plunge To 2013 Levels

Luxury home prices in Manhattan continue to decline, pressured by Bill de Blasio's "Mansion Tax" and the capping of SALT deductions included in President Trump's tax deal. Prices of these luxury homes, which constitute the top 20% of the market, fell to their lowest levels since 2013, according to a new report via StreetEasy. 

Luxury homes, priced at or

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above $3,816,835, dropped 6.1% in the fourth quarter over the previous year. Sellers are beginning to accept a declining market that has shifted to buyers -- where prices are being negotiated to the low end – in return, this has created downward momentum in prices. 

StreetEasy said inventory soared last quarter by 12.2% over the previous year, with at least 4,354 luxury homes sitting on the market.

"With so much new construction saturating the Manhattan real estate market, we were bound to see prices start to sink at record paces," said StreetEasy Economist Nancy Wu. 

"This is happening across all price points and boroughs, as prospective buyers wait out the market from the comfort of their rentals. Market dynamics in 2020 will continue to favor the buyer across all price tiers, and many sellers will have to face the fact that if they want to sell, it may very well be for less than their initial asking price," Wu said. 

For all homes in the borough, the StreetEasy Manhattan Price Index fell 3.7% last quarter over the prior year, to $1,086,217. Inventory for homes in the district rose 3%, with homes staying on the market for at least 96 days, ten more than the prior year. The report notes that it's a buyer's market as inventory continues to build. 

The Median Asking Price Per Square Footage (PPSF) for Manhattan homes jumped 80% from $1,000 in 2010 to $1,800 in 2015 – has since declined 14% to $1,550. 

Total Sales Inventory for Manhattan homes has been surging in the last five years. 

With a decade-long economic boom starting to wane as the Federal Reserve cuts rates three times and injects hundreds of billions of dollars in emergency funds into REPO markets, sparking potential blow-off tops in stocks-- everybody's anxieties about a persistent slowdown could continue to weigh on luxury real estate in New York and elsewhere. 

Tyler Durden

Mon, 01/27/2020 - 20:45


Business Finance


What Europe Can Do To Avoid WWIII? Say "No!" Now To Its Start

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What Europe Can Do To Avoid WWIII? Say "No!" Now To Its Start

Authored by Eric Zuesse via The Strategic Culture Foundation,

The US Government, which had lied its way into invading and destroying Iraq in 2003 (with a little help from UK and Europeans), wants Europeans to pitch-in for more US-run invasions. Europeans find this disturbing, but not repulsive enough to say, flat-out, “No!” to it. However, only that “No!” can

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stop the onrush toward a massive US war against both Iran and Iraq, which would spread ultimately into a global nuclear war between US and Russia.

On January 6th, Barbara Wessel, a columnist for Germany’s Deutsche Welle (DW), headlined a common European sentiment: “Trump has Europeans caught in a trap: Europe is suffering under the way Donald Trump makes political decisions on the fly. The only option left is to appeal to Iran’s interest in self-preservation”. But Iranians can’t stop the sanctions against itself, and can’t stop Trump’s other outrageous aggressions. Wessel’s false underlying assumption was that Europe must lecture Iranians. That’s like lecturing to Jews during WWII: “The only option left is to appeal to Jews’ interest in self-preservation.” Victims already do everything they can to stop their being victimized; they cannot stop the victimizer from victimizing them. They don’t cause it. Europe must, at last, say “No!” to US, the tyrant over the entire world — Bolivia, Venezuela, Syria, Iraq, Iran, Afghanistan, and more. Wessel, however, understood, at least, that the dangerousness actually comes far more from the US, than it does from Iran. So, she recognized that her thinking on this whole matter was confused. She stated:

Any illusions about the possibility of an even partially rational cooperation on foreign policy with the government in Washington have long been shattered. Cynical remarks by US Secretary of State Mike Pompeo, who accuses the Europeans of not giving enough support in the Middle East, underline their helplessness.


Even experienced observers of US Middle East policy have been unable to explain how this [Trump’s “bring American soldiers home”] fits in with the strike against Soleimani...

Europeans find themselves in the trap of a kind of US foreign policy that is marked by the emotional eruptions of an unpredictable president and his power-drunk neocon supporters...

Basically, their [the US Government’s] only explanation for killing Soleimani is: “Because we can.”


Granted, Europe looks weak and helpless when, in joint statements, Europeans call for de-escalation after their presumed partner, the US, has just done everything it can to escalate the situation...

The new year will quickly show how strong the current tendency to suicide is among all those involved...

The presumption on which such sentiments are based is that things must go on as before, and EU must continue to be allied with US, instead of with the rest of the Eurasian Continent - but this presumption (EU with US instead of with all the rest of Eurasia) has been false ever since the US Government went wild in its response to the mainly Saudi Arabian 9/11 assault against the US and Israel cheered that event, and Iran got blamed by the US government for 9/11 as being “The top state sponsor of terrorism” (which was yet another lie), and Obama perpetrated a coup replacing Ukraine’s democratically elected Government with a US-imposed fascist and rabidly anti-Russian government such as Obama wanted to be next-door to Russia. He even was intending to replace Russia’s largest naval base, which is in Crimea, by yet another US naval base, to be installed there. None of this is in Europe’s interest. Nor is it even discussed in Europe or in any other vassal-region of the US empire. It’s censored-out there.

Germany, France, Italy, Spain and all the rest of Europe, actually belong with all the rest of the Eurasian Continent, rather than with the formerly democratic but now fascist United States across the Atlantic Ocean. A federal Eurasia, composed of free and independent states within a wider United States of Eurasia, would have 4.618 billion population, almost half of the entire world, and wealth to match that, and economic growth which far exceeds that of what will then be left of the US-and-its-allied-countries: UK, Saudi Arabia, and Israel. All other nations would ally either with Eurasia or with that US group — American and those three core allies (Saudi Arabia, Israel, and UK). NATO is America’s aggressive alliance, which routinely invades countries that pose no threat to either US or Europe (such as Iraq). America’s plan for NATO is to expand it worldwide, so that the US will automatically have European allies for invasions in places such as Latin America. NATO needs to be replaced by a united Eurasian defense force, which will be able to counterbalance, within its sphere, the world’s largest military.

The US has around 1,000 military bases, of which around 300 are inside US. Though officially the US spends 37% of the global military budget, it actually spends around half of all global military expenditures, but hides around one-third of its annual military spending by listing those costs in other federal Departments, such as the US Treasury Department, so as not to seem as militaristic as the US Government actually is. It’s actually a global empire — the largest that the world has ever known. Europe is, and can only be, vassals in that empire. The alternative requires new thinking, and is not to spend more money on the military, but to recognize that when Russia ended the Cold War in 1991, the war secretly continued, and still does continue, on the US side — and Russia and China recognize that this is America’s intention. Europe must stop the Cold War, because only Europe can do that.

Barbara Wessel’s commentary presumes, instead, that Europe’s leaders have no ability to say no to the US. That presumed passivity is only bad habit, inherited from a Europe which was wrecked by WWII. That’s no longer the reality today. Instead, Europe, joined with Asia, will be the global superpower that can finally end America’s endless wars —simply by not joining them. Eurasia will be the world’s dominant power, if Europeans want a future that is better than the past, instead of catastrophic. Either way, the future won’t be much like the past. Europe needs to wake up now, from its vassalage since WWII ended. Simply continuing that would produce a horrible future.

Another DW columnist on January 6th, Konstantin Eggert, headlined “Opinion: Putin’s power games may get out of hand”, and he was even more supportive of Germany’s vassalage to the US regime. He presented a strong case that by murdering Soleimani, Trump had pulled the trump card in the US-v.-Russia game by eliminating the key person upon whom Putin had been relying in order to transfer dominance in the Middle East away from US and toward, instead, Russia. Soleimani was that key individual for Putin’s success in this.

“According to sources in Moscow, Putin knew Soleimani very well: He played a key role in creating the Russian-Iranian alliance that saved Bashar al-Assad’s regime in Syria from what seemed in 2015 an imminent demise.”

With Soleimani now gone, Eggert predicted that regardless of what Iraq’s Government might want, the US would refuse to terminate its occupation of that country, and Iran would be in a much weaker position than before. He said that “Putin has every reason to wish the Iranians backed off from confrontation with the United States,” so as for Russia to avoid being drawn into World War III. “Putin’s best chance to avoid this drama is to play peacemaker — not alone but in the company of German Chancellor Angela Merkel and Turkey’s Erdogan, who are rushing to meet him in the coming two days. Berlin and Ankara do not want to see the Middle East explode and will be asking Putin to use his close ties in Tehran to hatch a deal and fend off confrontation.” In this sense, the missile that hit Soleimani on January 3rd hit not only Iraq and Iran but EU and Turkey. Eggert therefore advises America’s vassals to remain America’s vassals because Russia now is trapped and Putin might not fold his hand and might not simply let Iran become ultimately swallowed-up — Merkel etc. should urge Putin to fold his hand, is the implication here. Eggert’s implication is that, in the final analysis, might makes right, and that therefore any resistance against it (for example, if Putin continues to resist) would only be harmful. Or, as he puts it:

“With the Iranian regime massively undermined or destroyed, Moscow’s position in the Middle East and Vladimir Putin’s personal prestige as the world’s topmost authority on stopping ‘regime change’ and someone who never leaves allies in the lurch, will be badly hit and revealed as much weaker than it seems.”

Eggert sees Trump’s assassination of Soleimani as, in effect, a master-stroke, which has severely weakened Putin. Of course, if Europe’s leaders will act this way, then Eggert’s might-makes-right view will be vindicated, by them.

Europe is the US regime’s indispensable ally. If EU breaks away from US and joins with the rest of the Eurasian continent instead, at least the possibility will exist for avoiding a hellish future of continued and accelerating vassalage to the US regime for the entire world. Passivity and might-makes-right slants such as “Putin’s power games may get out of hand” (instead of “America’s assassination of Soleimani places entire world in danger”) are choices — not inevitable — and Europeans will ultimately be the individuals who will be making the choices here. Europeans will decide whether the US is the world’s enemy; or, instead, whether Russia, China, Iran, and, really, all the rest of Asia, will be treated as if they were that (like the US regime wants). Ganging-up against the victims — if that is to be the European response — would be a choice, not an inevitability (such as DW implies). It will be up to Europeans whether to order all US troops to leave, and to tariff all imports from America, and to sanction and boycott US brands and increasingly replace them with Eurasian ones instead. Trump can be trumped, but only Europe has the clout to do it. The future will be decided by Europeans. The voices of passivity, such as DW, are doing the bidding of Europeans’ enemy — not of the entire world’s future: a Eurasian-led world.

Tyler Durden

Sun, 01/26/2020 - 07:00




Bitcoin Tops $9,000 With Best Start To A Year On Record

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Bitcoin Tops $9,000 With Best Start To A Year On Record

Bitcoin topped $9,000 overnight for the first time since early November...

Source: Bloomberg

Notably this latest surge in demand from crypto began after Iranian General Soleimani was killed, and is now testing its 200DMA...

Source: Bloomberg

Year-to-date, all major

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altcoins are soaring led by Bitcoin Cash...

Source: Bloomberg

And in what we were stunned to note, this is the best start to a year - ever - for Bitcoin...

Source: Bloomberg

The rally in cryptos comes as CoinTelegraph's William Suberg notes, bitcoin derivatives trading looks set to reach record levels this month as volume spikes and open interest hovers near all-time highs.

Data from CME Group shows that as of Jan. 16, open interest for its futures products alone totaled 5,328 contracts — or 26,640 BTC ($237 million).

Open interest on track for record

The figure is higher than any monthly close CME has seen since it debuted in December 2017, with July 2019 currently in the lead with 5,252 contracts.

Open interest did surpass current levels earlier in January, reaching around 5,400 according to the latest data from United States regulator the Commodity Futures Trading Commission, or CFTC, published on Jan. 7.

As Cointelegraph reported, futures offerings have received significant attention from both investors and commentators as new participants appeared to fuel a Bitcoin price rise in 2020. 

Bitcoin futures 1-month overall volume. Source: Skew Markets/ Twitter

As BTC/USD accelerated towards $9,000 this week, overall futures trading volume likewise saw a significant uptick. According to unofficial data from monitoring resource Skew Markets, worldwide volume hit $25 billion — the most since late October. 

“I think that's a strong signal indicating that we're reversing now and probably have bottomed out,” regular Cointelegraph contributor Michaël van de Poppe commented about the latest data.

2020 the year of “clear” institutional adoption

CME launched a new product in the form of options on Bitcoin futures earlier in January. The release came just days after competitor FTX did likewise.

The company said it considered the options a “success” as volumes reached 275 BTC by day two.

Catering to long-term demand from institutional investors has long been a preoccupation for cryptocurrency businesses. In its 2019 retrospective this week, venture capital giant Grayscale revealed annual investment totals of over $1 billion. 

A record for the firm, executives announced they now it was “clear” that the industry was seeing institutional adoption.

Tyler Durden

Fri, 01/17/2020 - 14:55


Business Finance


Stocks Shrug Off World War 3 Risk, But Bonds, Bullion, & Bitcoin Surge To Start The Year

zerohedge News stocks shrug world risk bonds bullion bitcoin surge start year All https://www.zerohedge.com   Discuss    Share
Stocks Shrug Off World War 3 Risk, But Bonds, Bullion, & Bitcoin Surge To Start The Year

World War 3 worries? Meh, we've got The Fed to handle that shit!!

Weakness in early going in stocks - due to the potential for global war after Soleimani's killing - were nothing but an opportunity to buy the f**king dip once again today...(as the machines used VWAP as support)...

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As the market immediately priced in a Fed rate-cut to save the world...

Source: Bloomberg

Oil prices spiked but ended only around 3% higher on the day...

Of course, defense stocks soared...

Source: Bloomberg

But bonds and bullion were bid as safe-havens...

On the week, only Nasdaq is notably higher...

And since the start of 2020, only Small Caps are red...

VIX and stocks remain decoupled...

Source: Bloomberg

Credit markets widened notably today, relatively more than equity protection...

Source: Bloomberg

Treasury yields collapsed since the start of 2020 with 30Y yields down 13bps...

Source: Bloomberg

The 30Y Yield dropped to 4-week lows...

Source: Bloomberg

The yield curve flattened dramatically...

Source: Bloomberg

The dollar rallied for the second day in a row (despite some volatility today)...

Source: Bloomberg

Cryptos were notably bid today following the Soleimani killing...

Source: Bloomberg

After another drop below $7k, Bitcoin surged today...

Source: Bloomberg

Copper tumbled today as gold and oil rallied...

Source: Bloomberg

Gold topped $1550 - back to its highest in 4 months...

And as Bloomberg reports, heightened Middle East tensions are boosting bets on further gains for gold as a haven asset. Volatility in call options giving holders the right to buy futures at a pre-set price reached the highest in almost three months against puts, which provide the right to sell the metal.

The skew shows that investors are increasingly bullish on bullion, even with prices already near a six-year high in the wake of the U.S. air strike that killed a top Iranian commander.

Source: Bloomberg

Finally, US macro data is negative and disappointing notably (today's ISM at 10 year lows) with stocks just shy of record highs...

Source: Bloomberg

And some remember what happened last time...

Source: Bloomberg


Tyler Durden

Fri, 01/03/2020 - 16:01


Business Finance


Putin Warns "Unrestrained Arms Race" Coming - Ready "At Any Moment" To Extend New START

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Putin Warns "Unrestrained Arms Race" Coming - Ready "At Any Moment" To Extend New START

Russia's President Putin has again issued an urgent warning related to the upcoming expiration of Strategic Arms Reduction Treaty, New START, set to expire in early 2021. The appeals from Moscow for Washington to enter talks "without precondition" for its extension have become more frequent of late, perhaps also realizing the February 2021 deadline would be a mere weeks after

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the next presidential inauguration — at that point it would most certainly be too late and the political climate in the US more unpredictable.

Putin emphasized at his annual year-end news conference on Thursday in Moscow that his country is ready immediately to extend the ten year arms reduction treaty, noting his willingness to enter a deal as fast as by the end of the year. The 'alternative' would be a dangerous new unfettered arms race between the two big powers, he explained.

"They can send us the [agreement] tomorrow, or we can sign and send it to Washington," he said. "Let their designated official sign it too, including the president, if they’re ready to do so."

File image via FP/Getty

“So far there’s been no answer to our proposals,” Putin added. “And if the New START treaty doesn’t exist anymore, there will be nothing in the world to curb the arms race. And that, in my view, would be bad.”

The comments came while more broadly addressing continued deteriorating relations with the United States, especially within the context of Democrats' impeachment move against Trump. 

“It’s unlikely they will want to remove from power a representative of their party based on what are, in my opinion, completely fabricated reasons,” said Putin.

“They first accused Trump of a conspiracy with Russia. Then it turned out there wasn’t a conspiracy and that it couldn’t be the basis for impeachment. Now they have dreamt up (the idea) of some kind of pressure being exerted on Ukraine.”

Thursday's year-end press conference, via TASS.

Over a month ago the Russian Foreign Ministry declared of the potentially soon to be expired pact: "The ball is now in the Americans' court." This was followed by early December statements of Putin saying, "Russia is not interested in triggering an arms race or deploying missiles where there are none." 

At that time he invited the US and European countries to join a Russian proposed moratorium on such new deployments and weapons in Europe, apparently still on the table according to the latest remarks. 

So far only France has greeted the proposal positively. Indicating the offer is conditional, he warned, "No reaction from other partners followed. This forces us to take measures to resist the aforesaid threats." 

Tyler Durden

Thu, 12/19/2019 - 17:10




"Floodgates Are Open" - German Banks Start Charging Retail Savers

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"Floodgates Are Open" - German Banks Start Charging Retail Savers

It has been over 7 years since the European Central Bank's key deposit facility rate was positive, and just a few weeks ago it was lowered to a record low of -50bps.

Source: Bloomberg

And during that time, European bank stocks have suffered greatly...

Source: Bloomberg


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Cornelius Riese, co-CEO of Frankfurt-based DZ Bank A.G. (Germany’s second-largest by assets), observed, negative rates indeed “have a huge impact on banks.” Riese ventured to offer some gentle criticism of Draghi & Co.’s grand policy experiment:

“Maybe at the end of the story, in three to five years, we will notice it was a historical mistake.”

Well, it appears we are about to reach the vinegar strokes of that 'historical mistake', as Bloomberg reports, German banks are breaking the last taboo: Charging retail clients for their savings starting with very first euro in the their accounts.

While many banks have been passing on negative rates to clients for some time, they have typically only done so for deposits of 100,000 euros ($111,000) or more. That is changing, with one small lender, Volksbank Raiffeisenbank Fuerstenfeldbruck, a regional bank close to Munich, planning to impose a rate of minus 0.5% to all savings in certain new accounts.

Another bank, Kreissparkasse Stendal, in the east of the country, has a similar policy for clients who have no other relationship with the bank; and a third, Frankfurter Volksbank, one of the country’s largest cooperative lenders, is considering going even further and charging some new customers 0.55% for all their deposits is considering an even higher charge.

“The floodgates are open,” said Friedrich Heinemann, who heads the department on Corporate Taxation and Public Finance at the ZEW economic research institute in Mannheim.

“We will soon see a chain reaction. Banks that do not follow with negative interest rates would be flooded with liquidity.”

It appears that European banks are coming around to the fact - and preparing for it - that negative rates are here to stay (especially under Lagarde who has already opined that there is nothing wrong with negative rates).

Bank CEOs across Europe have expressed their anger at the ECB's policy over the last few months.

The ECB's imposition of negative interest rates have created an "absurd situation" in which banks don't want to hold deposits, rages UBS CEO Sergio Ermotti, arguing that this policy is hurting social systems and savings rates.

Oswald Gruebel, who served as Credit Suisse CEO from 2004 to 2007 and as UBS Group AG's top executive from 2009 to 2011, has slammed ECB policy in an interview with Swiss newspaper NZZ am Sonntag.

“Negative interest rates are crazy. That means money is not worth anything anymore,” Gruebel exclaimed.

“As long as we have negative interest rates, the financial industry will continue to shrink.”

And finally, Deutsche Bank CEO Christian Sewing warned that more monetary easing by the ECB, as widely expected next week, will have “grave side effects” for a region that has already lived with negative interest rates for half a decade.

“In the long run, negative rates ruin the financial system.”

The German savings rate was around 10% in 2017, almost twice the euro-area average, but one wonders what will happen now that even mom-and-pop will have to pay to leave their spare cash in 'safe-keeping'. Will deposit levels tumble in favor of the mattress? Or, as some have suggested, gold will get a bid as a costless way of storing wealth

Tyler Durden

Thu, 12/05/2019 - 04:15


Business Finance


Hong Kong Police May Start Using Painful Wooden Bullets On Protesters

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Hong Kong Police May Start Using Painful Wooden Bullets On Protesters

Hong Kong police have threatened to use wooden bullets to disperse protesters, according to comments made by Police Commissioner Chris Tang at a Thursday tea gathering. 

Wood baton rounds. File photo: Twitter/Joey Yams.

The Hong Kong Free Press reports that the 'wooden baton rounds' cause more damage to the human body vs. rubber bullets. According to wat

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chdog group Civil Rights Watch, Hong Kong police have also been using tear gas, bean bag rounds and other nonlethal weapons, which have resulted in multiple injuries. 

Police Senior Superintendent of the Operations Branch Wong Wai-shun said at a press conference on Friday that the force had adopted rubber bullets and replaced wood baton rounds 16 years ago, owing of their effectiveness.

But Wong denied that wooden bullets would cause more damage, and said the police will use different weapons wherever it was appropriate, and will use the minimum force necessary.

The police will constantly review the effectiveness of our ammunition,” he said. -HKFP

The Civil Rights watchdog has accused police of abusing the use of crowd control weapons - in one instance blinding a reporter who was shot in the face.

"The police commissioner seeking to do more damage with non-live ammunition and non-lethal weapons is a violation to the spirit of the United Nations’s ‘Basic Principles on the Use of Force and Firearms by Law Enforcement Officials’ to avoid deaths and injuries caused by force," said the group. 

Protesters have called for an investigation into police abuses as part of their multi-pronged demands. The movement began some five months ago in response to an extradition bill which would allow suspects in Hong Kong to be removed from the country to stand trial in communist courts. 

Over 5,800 people have been arrested during the protests, according to HKFP. Meanwhile, the police are recalling over 1,000 retired officers to staff the riots. 

Tyler Durden

Fri, 11/29/2019 - 20:00


War Conflict


Trump Trounces Krugman: "He's Been Wrong About Me From The Start"

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Trump Trounces Krugman: "He's Been Wrong About Me From The Start"

President Trump has been very active on Twitter recently but time away from impeachment attacks to blast another establishment puppet - The New York Times' Paul Krugman - slamming the nobel prize winner:

"[Krugman] has been wrong about me from the very beginning. Anyone who has followed his “words of wisdom” has lost a great deal of money.

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g>Paul, just concede the game, say I was right, and lets start a brand new game!"

President Trump's comments follow David Harsani's National Review op-ed, exposing Krugman as "a stopped clock who has yet to be right about Trump."

This Thursday, Federal Reserve chairman Jerome Powell told the House Budget Committee that there was “no reason to think, that I can see, that the probability of a downturn is at all elevated.” Not every economic indicator is perfect, but wages are rising (especially on the lower end), unemployment is still at historic lows, and markets are booming.

You might remember that only a couple of months ago, there was a torrent of stories cautioning us about the imminent downturn. Some of the scary coverage, as Robert Shiller warned, consisted of “self-fulfilling prophecies.” Some seemed almost giddy about the political prospects of a downturn. Others just said what they felt. “I feel like the bottom has to fall out at some point,” Bill Maher explained at the time. “And by the way, I’m hoping for it because I think one way you get rid of Trump is to crash the economy. So please, bring on the recession.”

One of the nation’s leading doomsayers has been the New York Times’ perpetually mistaken Paul Krugman, who warned shortly after the 2016 election that Trump’s victory would trigger a global recession “with no end in sight.”

We could file that under “post-election hysteria,” but as late as April of this year he was still telling crowds that the bond-market signals predicted “a pretty good chance of a recession sometime in the next year or so.” And he has kept this going all year:

  • February 11: Paul Krugman expects a global recession this year, warns “we don’t have an effective response.”

  • August 1: “Why Was Trumponomics a Flop?”

  • August 15: “From Trump Boom to Trump Gloom”

  • September 5: “Trumpism Is Bad for Business”

  • October 3: “Here Comes the Trump Slump”

  • October 24: “The Day the Trump Boom Died”

A couple of weeks after the Trump Boom expired, CNBC reported that “October job creation comes in at 128,000, easily topping estimates even with GM auto strike.” This cycle has been going on for three years.

(My favorite Trump-era Krugmanism, though, is when the esteemed economist explains away his bad predictions by claiming that the economy’s successes are really just driven by instances of his own political preferences playing out — “Impeaching Trump Is Good for the Economy,” “The Economics of Donald J. Keynes,” and so on.)

At some point, of course, doomsayers such as Krugman are going to be right. In the past 60 years the United States has been hit with recessions in 1960–61, 1969–70, 1973–75, 1980, 1981–82, 1990–91, 2001, and 2007–09. History says we’re probably due for another one soon. When it hits, Krugman will blame tax cuts, unfettered capitalist greed, a dearth of regulations — and maybe climate change, or whatever hobbyhorse he’s riding at the time. MSNBC hosts will hail him as a seer.

Much like most economists, I have no clue what the future holds. But I do know that Barack Obama, who oversaw the slowest recovery in American history, was constantly being given credit for averting disaster by adopting smart policies (read: spending). Years after the bailouts - which is to say years of D.C. gridlock in which the former president, by his own admission, couldn’t enact any of his preferred economic policies - Democrats were still claiming that short-term first-year spending fixes were the impetus for growth.

There’s a more rational explanation: Washington stopped helping.

Voters vastly overestimate the role that presidents play in economic growth, to be sure. But Trump-era job creation was a far tougher task, since he was operating with less room for job growth than his predecessor. And considering the (self-inflicted) trade wars, political turmoil, and foreign-policy concerns that have dominated much of his first term, conventional wisdom tells us we should be struggling. Yet it’s clear that we’ve had a pretty resilient economy.

What has Trump done? The two things Paul Krugman hates most: Regulatory rollbacks and tax cuts. And yet here we are.

Tyler Durden

Sun, 11/17/2019 - 22:30


Business Finance


Old People Can Start Infusing Children's Blood Again

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Old People Can Start Infusing Children's Blood Again

Less than a year after the FDA warned old people against infusing the blood of young people, Stanford graduate Jesse Karmazin says his company, Ambrosia, is back in business despite the agency issuing a 'buyer beware,' according to OneZero.

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30b">Jesse Karmazin, the CEO and founder of Ambrosia, told OneZero in an interview that the company had resumed giving customers transfusions of plasma, the colorless liquid part of the blood, from young donors about a month ago. “Our patients really want the treatment,” he said. “Patients are receiving plasma transfusions from donors ages 16 to 25 again.” One-liter transfusions cost $8,000, and two-liter transfusions are $12,000. -OneZero

Karmazin, who isn't a licensed medical practitioner, stopped treating patients following the FDA announcement earlier this year and disabled his website.

Now, young blood is back on the market - you just have to get it "off-label," meaning a doctor can prescribe it for something other than its approved use.

Karmazin is a graduate of Stanford Medical School but does not have a license to practice medicine and does not do the transfusions himself. Instead, he contracts with doctors to do the procedures. When asked, he would not name any doctors he works with or other Ambrosia employees. He says the company does not obtain blood directly from young donors but gets it from licensed blood banks in the United States. -OneZero

"We’re a company interested in making you young again," he said at a 2017 conference. The company says that "experiments in mice called parabiosis provided the inspiration to deliver treatments with young plasma."

That said, while plasma can help blood to clot or to manage excessive bleeding during surgeries, experts say there is no basis for using it to slow or reverse aging-related diseases as Karmazin has claimed.

"There is no proven clinical benefit of infusion of plasma from young donors to cure, mitigate, treat or prevent these conditions, and there are risks associated with the use of any plasma product," read a February statement from FDA Commissioner Scott Gottlieb and Peter Marks, who leads the agency's biologics center. 

"The reported uses of these products should not be assumed to be safe or effective," the said. "We strongly discourage consumers from pursuing this therapy outside of clinical trials under appropriate institutional review board and regulatory oversight." 

"We’re concerned that some patients are being preyed upon by unscrupulous actors touting treatments of plasma from young donors as cures and remedies."

The agency told OneZero "The FDA has not licensed or approved any plasma product obtained from young donors for any use."

As of last fall, the company had performed the procedure on about 150 people ranging in age from 35 to 92, while 81% of those people participated in the company's clinical trial. The trial gave patients one and a half liters of plasma from a donor between the ages of 16 and 25 and was conducted with David Wright, a physician who has his own intravenous blood therapy center in California.

Trial participants footed the bill for their own treatments - while the results of their clinical trials have not been publicly released.

Tyler Durden

Sun, 11/10/2019 - 21:00


Health Medical Pharma


Central Bank Issues Stunning Warning: "If The Entire System Collapses, Gold Will Be Needed To Start Over"

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Central Bank Issues Stunning Warning: "If The Entire System Collapses, Gold Will Be Needed To Start Over"

It's not just "tinfoil blogs" who (for the past 11 years) have been warning that a monetary reset is inevitable and the only viable fallback option once trust and faith in fiat is lost, is a gold standard (something which even Mark Carney hinted at recently): central banks are joining the doom parade now too.

An article published by the De N

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ederlandsche Bank (DNB), or Dutch Central Bank, has shocked many with its claim that "if the entire system collapses, the gold stock provides a collateral to start over."

While gloomy predictions of a monetary reset are hardly new, they have traditionally been relegated to the fringe of mainstream financial thought - after all, as Mario Draghi stated on several occasions in recent years, the mere contemplation of a "doomsday scenario" is enough to create the self-fulfilling prophecy which materializes it. As such, it is stunning to see a mainstream financial institution open up about the superior value of limited supply, non-fiat, sound money assets. It is also hypocritical given the diametrically opposed Keynesian practices regularly engaged in by central banks and official institutions worldwide: after all, just a few months back, the IMF published a paper bashing Germany's adoption of the gold standard in the 1870s as the catalyst for instability in the global monetary system.

Fast forward to today, when the Dutch Central Bank is admitting not only did gold not destabilize the monetary system, but it will be its only savior when everything crashes.

The article, as loosely translated and titled “Goud van DNB” (“Gold from DNB”) states:

"If things go wrong, prices may fall. But, crisis or not, a gold bar always holds value." This makes it the opposite of "shares, bonds and other securities" all of which have inherent risk.

Photo of gold bars from the DNB's article "Goud van DNB."

According to the IMF's latest data, the DNB holds 615 tons (15,000 bars) of gold mainly in Amsterdam, with other stores in the U.K. and North America; the value of this gold reserve is over €6 billion ($6.62 billion). Calling gold the “trust anchor,” the article details briefly why the hard asset is so important to wealth building and the global economy, claiming: "Gold is... the trust anchor for the financial system. If the whole system collapses, the gold stock provides a collateral to start over. Gold gives confidence in the power of the central bank's balance sheet."

Why this sudden admission of what goldbugs have been saying for years? Perhaps it has to do with the fact that on October 7, the bank announced it would soon be moving a large part of its gold reserves to "the new DNB Cash Center at military premises in Zeist."

Almost as if the Netherlands is preparing for the grand reset, and is moving its most valuable asset to a "military" installation just for that purpose.

As bitcoin.com tongue-in-cheek points out, "DNB is no stranger to playing along with the Keynesian, inflationary games of the global monetary system. A system which, according to some, is now more a Ponzi scheme based on force and blind faith than sound economic principle. That notwithstanding, the centralized financial powers of the world know the real score, and that’s why hard assets like gold are hoarded and locked down while everyday, individual residents of these geopolitical jurisdictions are encouraged to spend and spend, going further into debt to prop up ultimately unsound national economies."

It is hardly a coincidence that in its preparation for monetary doomsday, the Dutsch Central Bank is also set to begin cracking down on crypto exchanges and wallets, stating that "firms offering services for the exchange between cryptos and regular money, and crypto wallet providers must register with De Nederlandsche Bank."

While the push for greater KYC/AML transparency is a growing global trend, and is hardly surprising in a world in which trillions in assets reside in "tax-evading" offshore jurisdiction, the remarkable aspect of this latest crackdown against crypto - which many see as a modern, more efficient form of "gold" - is the fact that invasive regulations and restrictions by central banks can be seen as yet another means of stockpiling precious assets. This time, not gold bars, but bitcoin and crypto.

As for the timing of the "great monetary reset", which other central banks have already quietly hinted at themselves amid massive repatriation of physical gold from the New York Fed to various European central banks such as Germany and Austria, we are confident that the trust-keepers of the current establishment - such as other central banks and the IMF - will be kind enough to provide ample advance notice to the citizens of the "developed" world to exchange their fiat into hard assets. Or, then again, perhaps not.

Tyler Durden

Sun, 10/13/2019 - 13:04


Business Finance


"It's Time To Start Hedging Election Risk": This Is How One Bank Is Doing It

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"It's Time To Start Hedging Election Risk": This Is How One Bank Is Doing It

According to BofA's derivatives strategists, if 90 years of history of US elections is to be believed, there is scant evidence that 2020 should be more volatile than 2019, as the S&P tends to be similarly volatile in election years as in the year prior. In fact, excluding 2008 when the spike in volatility had little to do with the election cycle, volatility tends to be slightly l

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ower during election years.  And yet, in light of last week's political developments, 2020 could well be an exception to the rule.

As shown in the right-hand chart above, the recent increase in President Trump's impeachment odds coincided with the simultaneous rise and fall of Senator Warren and former Vice President Biden in the market-implied probabilities for the 2020 Democratic Presidential nomination. With Biden widely regarded as a more moderate liberal/market-friendly candidate than Warren, his potential exclusion from the Presidential race could make 2020 one of the most polarized election years in modern history should Warren and Trump emerge as the two front-runners, according to BofA.

As such, the bank warns that "investors can't ignore election risk any longer."

While the investment implications of such a polarized scenario are manifold, the most straightforward of which is higher volatility, the uniqueness of this scenario also implies there is not a readily available trading playbook investors can rely upon. Below, BofA explore some of its preferred investment ideas to trade 2020 election risk.

But first things first: How much election-related risk is priced in?

Before jumping to the bank's election trading playbook, it is key to first understand how much election risk is already priced into markets. Anecdotally, the bank's strategists note that they are starting to see interest from clients in hedging both the election and its run-up, with a particular focus on the early rounds of the Democratic Party's primaries.

Iowa and New Hampshire will be the first states to vote, on February 3rd and 11th, followed by Nevada (22-Feb), South Carolina (29-Feb), and finally Super Tuesday (3-Mar, when 14 states will cast their ballots). Historically strong predictors of the eventual outcome, these early caucuses and primaries may cause the strongest market reaction if there remains significant uncertainty about who will win the Democratic nomination. Hence, any evidence of equity protection buying will be most clearly observed in Feb-Mar (S&P) option expiries. Purely from a political perspective, the risks to potentially higher vol could include the resurgence of a more moderate candidate like Biden or dominant polling numbers by Trump against the leading Democratic candidates.

The logical first place to check for election-related risks is the VIX futures market. To match the timing of Warren's recent move higher in the polls (chart below, left), BofA compared the level and shape of the VIX futures curve on 12-Sep and 30-Sep. While the entire curve shifted higher in these last 2.5 weeks, there is so far no evidence of additional premium in Jan or Feb futures (which capture S&P implied vol in Feb & Mar, peak primaries season - chart below, left). The chart below, right confirms this numerically: the cost of a "futures condor" which sells the Dec-19 and Mar-20 futures and buys Jan-20 and Feb-20 has not increased with Warren's odds. Selling the Jan-20 and Mar-20 futures to buy 2x Feb-20 futures has not gotten more expensive either.

Yet if equity markets are not yet concerned about the Democratic primaries, is this also true of the actual election? As BofA responds, unlike VIX futures (which are only listed through Jun-20 today), "S&P-based measures of equity vol allow us to look beyond the primaries to the election on November 3rd. We find that an election risk premium has emerged in the last 3 months, evident by the kink in the Dec-20 point on the S&P variance swap term structure (chart below, left)." The chart on the right plots the hypothetical cost of selling Sep-20 and Mar-21 vs. buying 2x Dec-20 S&P variance to help extract an election premium. While the size of the dislocation varies over time, we appear to have entered a new regime in which owning Dec-20 S&P vol requires a larger premium compared to owning Sep-20 and Mar-21.

Hedging Liz

Getting to the big point, should S&P 500 options markets grow more concerned about the implications of a strong Elizabeth Warren showing in the Feb/Mar-20 caucuses and primaries, strategies that sell SPX straddles expiring before the "catalyst" to fund same-strike straddles expiring afterwards stand to profit. This was the case heading into Brexit, the 2016 US presidential election, and the 2017 French elections, when such long-short straddle pairs benefited from an expansion in "event risk premium". For example, the first chart below shows the hypothetical P&L of a short SPX 4-Nov-16 2100 straddle vs. a long SPX 11-Nov-16 2100 straddle (the US election was on 8-Nov), which achieved a gross payout ratio of ~4.5-to-1. BofA would look to deploy similar strategies once S&P weekly options spanning the caucuses/primaries become listed. Owning the VIX futures fly/condor shown in the next chart below is an alternative way to benefit from a potential rise in primaries event risk premium with limited risk, though likely with less asymmetry as the VIX futures curve tends to dislocate less than the term structure of S&P weekly options in our experience.

Focus on the casualties

According to BofA, financials and health care companies will likely be the biggest "president Warren" casualties. While Warren is broadly regarded as being a less market friendly candidate than President Trump has been, Financials and Health Care are perceived to be the two sectors that stand to lose the most if Warren were to be elected, at least based on her track record and rhetoric. In particular, Financials are likely to weaken on the risk of an increase in regulation ("The real cause of the crash was not some inevitable cycle; this crash was the direct consequence of years of deliberate deregulation...", Apr 2014 - Elizabeth Warren). Arguably, Financials would also be hurt by falling yields if markets were spooked and a textbook flight-to-safety type of sell-off played out.

The Health Care sector is also at risk given Warren's push for Medicare-for-All ("I spent a big chunk of my life studying why families go broke. One of the number-one reasons is the cost of health care, medical bills. [..] Medicare for all solves that problem", Jun 2019 - Elizabeth Warren).

In terms of what is priced-in for the Democratic primaries, it is clear at the sector level that Health Care and Financials are alert to the risks, with for instance Mar-20 expiry vol showing little-to-no change since August month-end vs. a general decrease in all other expiries' vols (see below charts). Indeed, the Mar-20 minus Jan-20 ATMf implied vol spread has been on a firm uptrend over the past month for both Financials (XLF) and Health Care (XLV).

That said, since the volatility of both sectors is historically elevated, rather than recommending buying outright puts, BofA prefers financing downside protection by selling SPY puts. Here, relative value opportunities are particularly attractive between XLF and SPY, given the implied vol spread is depressed both historically and vs. trailing realized vol (the 3m realized vol ratio of XLF vs. SPY is 1.22 vs. the 6m ATM implied vol ratio of 1.13).

As an example, buying $0.85 notional of the XLF Mar-20 put (ref. 28.02, 47d) and selling $1 notional of the SPY Mar-20 put (ref. 296.98, 45d) is roughly zero cost upfront. The theoretical expiry P&L shows a highly asymmetric and favorable historical risk reward profile. For instance, the P&L was positive one-quarter of the time since Jun 09, and negative only 3% of the time. In addition, positive returns were on average 4.1%, 3.6x as large as negative returns. Importantly, the max gain of 11.9% was 4x as large as the max loss (-2.9%). Finally, while the P&L suffered some losses at the start of the 2011 and 2015 sell-offs, the trade ultimately delivered positive returns that outstripped the initial losses.

Tyler Durden

Tue, 10/01/2019 - 14:05

Silver, Part 1: The Start Of A New Gold-Silver Cycle

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Silver, Part 1: The Start Of A New Gold-Silver Cycle

Authored by Nicholas LePan via VisualCapitalist.com,

The world has experienced a decade of growth fueled by record-low interest rates, a burgeoning money supply, and historic debt levels – but the good times only last so long.

As the global economy slows and eventually begins to retract, can precious metals offer a useful store of value to investors?

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art 1: The Start of a New Cycle

Today’s infographic comes to us from Endeavour Silver, and it outlines some key indicators that precede a coming gold-silver cycle in which exposure to hard assets may help to protect wealth.

Bankers Blowing Bubbles

Since 2008, central bankers around the world launched a historic market intervention by printing money and bailing out major banks. With cheap and abundant money, this strategy worked so well that it created a bull market in every sector — except for precious metals.

Stock markets, consumer lending, and property values surged. Meanwhile, the U.S. Federal Reserve’s assets ballooned, and so did corporate, government, and household debt. By 2018, total debt reached almost $250 trillion worldwide.

Currency vs. Precious Metals

The world awash in unprecedented amounts of currency, and these dollars chase a limited supply of goods. Historically speaking, it’s only a matter of time before the price of goods increases or inflates – eroding the purchasing power of every dollar.

Gold and silver are some of the only assets unaffected by inflation, retaining their value.

Gold and silver are money… everything else is credit.

– J.P. Morgan

The Perfect Story for a Gold-Silver Cycle?

Investors can use several indicators to gauge the beginning of the gold-silver cycle:

  1. Gold/Silver Futures

    Most traders do not trade physical gold and silver, but paper contracts with the promise to buy at a future price. Every week, U.S. commodity exchanges publish the Commitment of Traders “COT” report. This report summarizes the positions (long/short) of traders for a particular commodity.

    Typically, speculators are long and commercial traders are short the price of gold and silver. However, when speculators and commercial traders positions reach near zero, there is usually a big upswing in the price of silver.

  2. Gold-to-Silver Ratio Compression

    As the difference between gold and silver prices decreases (i.e. the compression of the ratio), history suggests silver prices can make big moves upwards in price. The gold-to-silver ratio compression is now at high levels and may eventually revert to its long-term average, which implies a strong movement in prices is imminent for silver.

  3. Scarcity: Declining Silver Production

    Silver production has been declining despite its growing importance as a safe haven hedge, as well as its use in industrial applications and renewable technologies.

  4. The Silver Exception

    Silver is not just for coins, bars, jewelry and the family silverware. It stands out from gold with its practical industrial uses which account for 56.1% of its annual consumption. Silver will continue to be a critical material in solar technology. While photovoltaics currently account for 8% of annual silver consumption, this is set to change with the dramatic increase in the use of solar technologies.

The Price of Gold and Silver

Forecasting the exact price of gold and silver is not a science, but there are clear signs that point to the direction their prices will head. The prices of gold and silver do not accurately reflect a world awash with cheap and easy money, but now may be their time to shine.

*  *  *

Don’t miss another part of the Silver Series by connecting with Visual Capitalist.

Tyler Durden

Thu, 09/12/2019 - 21:45


Business Finance


Dominoes Start To Fall: Seattle Is First Major US City With Annual Home Price Decline Since Crisis

zerohedge News dominoes start fall seattle first major city with annual home price decline since crisis All https://www.zerohedge.com   Discuss    Share

The nationwide housing bust is underway with the first cracks showing up in Seattle-area home prices.

The price of a Seattle single-family home in May fell 1.2% YoY, the first negative change in a major US city in this cycle, according to new data from S&P CoreLogic Case-Shiller.

"Whether negative YOY rates of change spread to other cities remains to be seen," said S&P Dow Jones Indices Director and Global Head of Index Governance Philip Murphy, in a statement.

"For now, there is still

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substantial diversity in local trends."

Eric Basmajian, Founder of EPB Macro Research, said an industrial slowdown has moved into real estate and is now affecting some areas in services, has the potential to create "negative wealth effect," something that most Americans haven't seen since the last recession. He warned if more cities experience negative home price growth YoY, like Seattle, this will undoubtedly put downward pressure on the domestic economy in the coming quarters.

"As the deceleration in economic activity becomes increasingly pervasive, spreading from manufacturing to housing and now some areas of the service sector, the potential for a negative wealth effect has reemerged - a dynamic not seen for most of this economic cycle.

The growth rate in the national home price index has dropped to an 80 month low, falling below 3.5% year over year. While the national index continues to decelerate, holding above the zero bound, the latest data showed Seattle recording the first negative reading in year over year home price growth, falling 1.2% compared to the same month last year.

Of note is how broad-based the decline in home price appreciation has become with none of the major cities recording a rate of home price growth greater than one year ago and only one region posting a growth rate above the reading six months ago.

Should more cities continue on this path to negative home price growth, the potential for a negative wealth effect and downward pressure on forward consumption remains a strong possibility, adding to the already mounting headwinds facing the domestic economy."

But digging into local-area price trends, north and south of Seattle remained vibrant. In Tacoma and Pierce County, median house prices increased 7.3% in June YoY, according to data from the Northwest Multiple Listing Service. And prices in Kitsap and Skagit County both recorded sizeable price gains.

The Case-Shiller index identified three tiers of home prices in Seattle: over $625,000, less than $400,000, and those in between. The lowest-priced homes in the Seattle metropolitan area did the best, increased in May by 2.74% YoY. But it's the mid-tier to the luxury homes that have gone cold.

Nationwide, growth rates in home prices have been slowing in the last three quarters. Las Vegas, which passed Seattle as the nation's hottest housing market last June, saw gains of 6.4%, still experiencing declining growth rates over the last year.

As Basmajian noted, a turning point in the domestic economy could be nearing if more major cities see negative home price growth YoY. Perhaps Seattle is a leading indicator of what's to come for the national housing market.


UBS To Start Charging Rich Clients With Negative 0.75% Interest Rate

zerohedge News start charging rich clients with negative interest rate All https://www.zerohedge.com   Discuss    Share

For years, European banks were leery of passing on the ECB's negative -0.40% deposit rate to their clients for fears of deposit flight and other unintended consequences, in the process being forced to "eat" the difference and impacting their interest income.

However, after five years of NIRP, and with the ECB set to unleash even more negative rates in the immediate future, one bank has finally taken a stand: according to the FT, UBS plans to charge a negative interest rate on wealthy clients, those  who deposit more than CHF 2 million with the largest Swiss bank. 

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While several, mostly smaller, banks in Switzerland and the eurozone already pass on the cost of negative official rates to corporate depositors, most large players have refrained from doing so with individual clients. But with the ECB expected to adopt a “lower for longer” stance as soon as the next central bank meeting, starting in November, UBS Switzerland will charge -0.75% a year on individual cash balances above 2 million Swiss francs, the same rate as the SNB's rate.

The move, as the FT notes, "underscores how banks in Europe and the US are scrambling to prepare for a protracted spell of lower rates that threatens their profitability, having previously wagered that central bankers would tighten monetary policy."

Last month the Swiss National Bank said it would hold the negative rate it charges on commercial banks’ deposits at -0.75%, while the ECB deposit rate is -0.4%, but is widely expected to drop by another 10-20bps, which in turn will prompt even more negative rates in Switzerland. In a note to clients last month, UBS forecast that the SNB would lower its rate on deposits to -1% in September, approaching dangerously close to the infamous "reversal rate", below which accomodative monetary policy reverse and once again becomes contractionary for lending, i.e., the true lower bound of NIRP.

"A year ago everyone thought interest rates would go up. Now it doesn’t look like that," said one senior wealth manager at UBS quoted by the FT.

To preempt the inevitable howls of rage from wealthy clients who will soon see their total savings shrink by 1% (or more) every year just to hold their money in the bank, UBS relationship managers have started discussing the forthcoming charges with some wealthy clients and are preparing to issue a letter outlining the changes. Some of the bank’s smaller rivals, such as Julius Baer and Pictet, already charge some clients with large cash deposits.

“We assume that this period of low interest rates will last even longer and that banks will continue to have to pay negative interest rates on customer deposits at central banks,” UBS said. “Following similar moves by a number of other banks here in Switzerland, we confirm that we’ve decided to adjust cash deposit fees for Swiss francs held in Switzerland.”

The UBS announcement comes on the same day as Credit Suisse, UBS’s main rival, said it was also thinking about imposing a negative deposit rate on some wealthy clients: "In Switzerland, we are considering measures on deposits to mitigate pressure of negative interest rates,” Tidjane Thiam, Credit Suisse CEO said during a discussion of the bank’s half-year results. And like UBS, the Credit Suisse levy would be "targeted on people . . . that measure their cash balances in millions."

UBS did provide one loophole, saying that clients who want to avoid the levy can move their balances into non-cash assets or into “fiduciary call deposits” that can be transferred back to the customer’s main account within 48 hours. Such FDCs are held in third-party banks or UBS entities based outside Switzerland, meaning the lender does not have to pay negative rates to the SNB.

However, the lack of immediate access to funds - as UBS implements the effective equivalent of a 2-day certificate of deposit - raises the risk of unintended consequences, such as runs on various other assets should there be a dramatic change in financial circumstances and depositors seek access to any and all liquidity at a moment's notice.

Whether such negative rates encourage savers to spend their money as central banks have been hoping all along, remains to be seen. In any case, one thing is certain: the unintended consequences of passing on the most destructive monetary policy onto end consumers and savers, will be dire and widespread, and could potentially result in the next financial crisis which, with some luck, will also be the last one.

For now, however, keep an eye on cryptocurrencies: last we checked, there was no cost, and no way to impose punitive rates, to keeps one's savings in bitcoin and its peers, which should have obvious consequences on its price.


These Are The Best And Worst States To Start A Small Business

zerohedge News these best worst states start small business All https://www.zerohedge.com   Discuss    Share

Building a small business from inception to the point where its thriving and set up for long-term success is no small feat.

According to data from the Bureau of Labor Statistics, about 1/5th of all startups don’t survive to their first birthday. And nearly half will never make it to their fifth.

But as Wallethub points out, there are different reasons why startups fail. Among them, a bad location is one of the most commonly cited. But beyond situating the business in a popular thoroughfare, choosing the right state to launch your business

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can also make a huge difference in its odds of success.

States that offer the right conditions for success, such as access to cash, skilled workers, affordable office space and other factors, can be critical in helping a business thrive.

In a recent study, WalletHub compared the 50 states across 26 metrics for startup success, assigning each state a number in each category, then computing which states are the most business-friendly overall.

The results are hardly surprising: High-tax, Democrat-controlled states in the northeast offer some of the worst conditions for businesses, while low-tax states, Republican-controlled states in the Sun Belt have some of the best conditions.

Source: WalletHub

See the complete ranking below:

  1. Texas 

  2. Utah   

  3. Georgia   

  4. North Dakota 

  5. Oklahoma   

  6. Florida   

  7. Arizona   

  8. California   

  9. Montana   

  10. Colorado   

  11. Idaho   

  12. Washington   

  13. Mississippi

  14. North Carolina

  15. Louisiana

  16. Kansas

  17. Minnesota

  18. Michigan

  19. Nebraska

  20. Tennessee

  21. Kentucky

  22. South Dakota

  23. Maine

  24. Indiana

  25. Nevada

  26. Oregon

  27. New Mexico

  28. Alaska

  29. Alabama

  30. Wisconsin

  31. Arkansas

  32. Missouri

  33. Wyoming

  34. Ohio

  35. Illinois

  36. Massachusetts

  37. Iowa

  38. South Carolina

  39. Virginia

  40. Maryland

  41. West Virginia

  42. New York

  43. Vermont

  44. Delaware

  45. Pennsylvania

  46. Connecticut

  47. Hawaii

  48. New Hampshire

  49. New Jersey

  50. Rhode Island

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