Saturday, 3 December 2016

Weekend Update 03/12/2016 – Italy The EU Up or Down.

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

The big event this weekend is Italy’s reform referendum, which has been transformed into a vote of confidence or otherwise, in Prime Minister Renzi, and by extension a vote of confidence in the EU itself and the wealth and jobs destroying, one size fits all German Euro. Since Italians don’t vote until Sunday, the outcome is likely to drive the markets on Monday.

Below Bloomberg covers the timeline.

Italy Referendum: What to Watch Into the Night on Sunday

By Marco Bertacche December 2, 2016 — 6:00 PM EST
Italians are poised to decide whether to back Prime Minister Matteo Renzi’s constitutional reform in a binding referendum with no minimum quorum on Sunday. Polling stations are open from 7 a.m. to 11 p.m. local time (1 hour ahead of U.K.).
Italy Referendum on Bloomberg:
Wherever you are following around the world, here’s what to expect, and when.

----8 p.m.

Provisional turnout results for the vote as of 7 p.m. CET could indicate whether turnout is high in the South and Sicily, where anti-establishment parties are strong, which would signal bad news for Renzi. A high turnout in the Center and Northwest, his strongholds, may not be enough for him but could narrow the final margin. Renzi has indicated he’s aiming for a 60 percent turnout.

11 p.m.

Exit polls are published by at least three TV networks (RAI, LA7, Mediaset). Exit polls have often gotten it wrong in Italy. In the 2013 and 2006 general elections they overestimated the center-left’s lead by more than 5 points, and in 2008 they underestimated Silvio Berlusconi’s lead by 7 points. In the 2014 European elections, Renzi’s Democratic Party got almost 10 points more than exit polls predicted.

11:30-11:45 p.m.

First projections on counted votes may be published on TV stations. Votes will be counted continuously and updated on the Interior Ministry’s website throughout the night. A national total as well as regional and city breakdowns will be available.

12 a.m.

First provisional results from cities usually faster at counting votes should start coming in. Before a two-week poll blackout period, the “Yes” and “No” camps polled virtually even in the Northwest (Milan, Turin) and in the Center (Bologna), with the "No" side clearly ahead in the South (Naples) and in Sicily (Palermo). Milan could give the earliest real indication of where things are going. Traditionally a Berlusconi stronghold, it swung to center-left administrations in past years and elected a center-left mayor backing Renzi’s reforms in June. A wide lead for “No” in Milan could mean Renzi loses nationally.

On other news while we await Italy. President-elect Trump, deliberately or in error, is off to a rocky start with China.

Trump Speaks to Taiwan Leader in Move Likely to Offend China

December 2, 2016 — 10:26 PM GMT Updated on December 3, 2016 — 3:21 AM GMT
President-elect Donald Trump spoke Friday by phone with Taiwan President Tsai Ing-Wen in an unprecedented move that’s sure to provoke China, which regards the country as a renegade province.

Trump’s transition team sent a statement saying that Taiwan’s president congratulated Trump on his victory and the two “noted the close economic, political and security ties” between the nations. The statement didn’t indicate if the call presaged a shift in longstanding U.S. policy against recognizing Taiwan’s sovereignty or allowing direct communication between top leaders. The call lasted more than 10 minutes, Taiwan’s presidential office said in an e-mailed statement.

“The President of Taiwan CALLED ME today to wish me congratulations on winning the Presidency. Thank you!,” Trump later said on Twitter. “Interesting how the U.S. sells Taiwan billions of dollars of military equipment but I should not accept a congratulatory call.”

The move threatens to develop into the first major foreign policy incident confronting Trump as he prepares to take office on Jan. 20. The call may have upended a delicate dance that began after the U.S. broke diplomatic ties with Taiwan in 1979, when it officially recognized the government in Beijing. The U.S. has maintained a close relationship with the island -- often to China’s anger -- in the years since, including with weapons sales.

China will have to respond because President Xi Jinping “does not want to be soft on any potential threat to China’s sovereignty, and Taiwan is and has long been the most sensitive issue in the U.S.-China relationship,” said Bonnie Glaser, senior adviser for Asia at the Center for Strategic and International Studies in Washington.

----Glaser said there had never been a publicly announced phone call between a Taiwanese leader and a U.S. president or president-elect in the almost four decades since ties were broken.

This is “unprecedented and is good news” for Taiwan, said Jean-Pierre Cabestan, director of government and international studies at Hong Kong Baptist University, who has written a number of books on Taiwan. It’s “typical Trump. Unexpected, direct, and fast.”

Wall Street’s Trump optimism comes with heavy dose of uncertainty

By Ryan Vlastelica Published: Dec 2, 2016 3:27 p.m. ET

Short interest on the S&P 500 ETF has risen 11.4% in the past month

Leading up to the U.S. presidential election, the stock market suffered nine straight down days, the longest losing streak for the S&P 500 since 1980. What were investors so worried about? In part, it was because polls were indicating that Hillary Clinton was losing her edge over Donald Trump.
While it has largely been obscured in the aftermath of Trump’s underdog victory, which sparked an equity rally that has taken major market indexes to repeated records, a win by the Republican candidate had been widely seen as negative for markets. The President-elect was viewed as a wild card, lacking a track record in government and offering few or contradictory policy details. His temperament—epitomized by an itchy Twitter finger—suggested a question mark more than a steady hand.
Clinton’s proposals had been viewed as better for the economy, or at least investors viewed their impact as easier to gauge. But while investors seem to have done an about-face on what Trump could mean for markets, the pre-election uncertainties haven’t been assuaged, suggesting that any outsized Trump effect could occur on the downside as well as the upside.

In other news, Russia says that foreign spy agencies are behind cyber attacks on its banks. Retaliation for allegedly “getting Donald Trump elected POTUS?” Who can say. But alarming, given that since August 15 1971, the whole world now operates on fiat money, communist money, with nothing but public trust in the pieces of paper and electronic computer entries backing up the modern day notion of money. We fool around with the confidence in fiat money at great peril. Fiat money is only money until one day out of the blue it’s no longer money.

Russia Says Foreign Spy Agencies Preparing Cyberattacks on Banks

by Anthony Halpin and Volodymyr Verbyany
December 2, 2016 — 5:47 AM EST December 2, 2016 — 8:36 AM EST
Russia accused foreign spy agencies of preparing cyberattacks in dozens of cities to try to undermine its banking system.

Attacks may begin on Monday with the goal “of destabilizing the financial system of the Russian Federation, including the activities of a number of major Russian banks,” the Federal Security Service, the successor body to the Soviet-era KGB, said in a website statement Friday.

The attackers plan to use servers based in The Netherlands that belong to a Ukrainian hosting company, BlazingFast, the security agency known as the FSB said. The plot involves mass distribution of text messages and social-media blogs alleging a crisis in Russia’s financial system including bankruptcies and the removal of licenses from well-known federal and regional banks, it said.

The warning follows accusations that Russia meddled in U.S. presidential elections by hacking into the Democratic National Committee and Hillary Clinton’s campaign. Russian central bank Governor Elvira Nabiullina has pointed to new financial technologies as the biggest challenge for the regulator. Banks themselves are equally at threat: A commercial bank in Ecuador said it was held up for $12 million last year, while a bank in Vietnam said criminals tried, and failed, to steal $1.1 million in what experts say may have been a practice run for Bangladesh. In February, thieves made off with $81 million from the central bank of Bangladesh.

The central bank is aware of the threat, Nabiullina told reporters Friday. The regulator is working with the FSB and the Russian banking industry to counter any attacks and “the central bank has all the tools” to assist lenders that may need help, she said.

The FSB didn’t identify the spy agencies it said are involved in preparing the attack on Russian lenders. Its announcement comes amid tensions over Ukrainian missile-defense drills taking place near Crimea, which Russia annexed in 2014. The Russian, Ukrainian, German and French foreign ministers also failed to make progress at talks in Belarus on Tuesday in implementing an accord to end the conflict in eastern Ukraine involving separatists backed by Russia.

BlazingFast has “plenty of clients leasing our servers” and the company hasn’t been contacted by law enforcement, Chief Executive Officer Anton Onopriychuk said by phone in Kiev on Friday.

“We will conduct an internal investigation, but it will take a lot of time, as it’s like looking for a needle in a haystack,” he said. “That’s why I can neither confirm nor deny this information at the moment.”

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

Murray N. Rothbard

And finally, our usual weekly update from Jason in California.

Hydrogen Fuel-Cell Long-Haul Semi-Truck Concept Arrives at Peculiar Yet Critical Time

N. Jason Jencka         December 3rd, 2016    3:30 am ET

Yesterday in Salt Lake City, Utah, a futuristic concept for a hydrogen-fuel cell truck was unveiled that, if viably brought to market, could fundamentally transform the trucking industry. The so-called NIKOLA ONE   One concept promises 1,200 miles of range, 1,000 horsepower and 2,000 ft-lb of torque delivered through six in-wheel hydrogen fueled electric motors. The trucks would be fueled by a yet-to be set up nationwide network of hydrogen fueling stations. The figure of 1,000 hp exceeds the ~ 500-700 hp norm among present diesel offerings while the torque figure roughly matches that of current long-haul diesel trucks. In terms of range, the projected 1,200 miles is equivalent to what a truck of average fuel economy would achieve on roughly 200 gallons of diesel. Given that long haul trucking accounts for 12.5% of total U.S c02 emissions as of 2013, a shift from away from diesel trucks would have a measurable impact on global emissions and on meeting the goals set forth in the 2015 Paris climate accords. 

The figures above make the Nikola One concept technically compelling, but there is as much intrigue in the timing as of the product. Recent news in the U.S. has been dominated by discussion of president-elect Trump’s cabinet appointments, most of whom are openly hostile to the concept of man-made climate change and thus to the regulations designed to address this issue. Myron Ebell, Trump’s pick to head the Environmental Protection Agency has a reputation as being a leading skeptic of climate change and indeed chairs the Cooler Heads Coalition, a group that describes its mission as being “"focused on dispelling the myths of global warming by exposing flawed economic, scientific, and risk analysis". Due to the immense power-requirements, large trucks have been generally thought of as less-than ideal candidates for battery electrification. Whether or not this hydrogen truck concept comes to market is uncertain at best, but if it does so in an economically viable manner, the impact could be immense thus it certainly bears watching.


Henry Fountain, New York Times November 11th 2016:

N. Jason Jencka is presently studying Finance and Economics at Sierra Nevada College, located near the shores of Lake Tahoe on the border of California and Nevada. His interests include the interplay between world markets and the global political sphere, with a focus on developments of both sides of the Atlantic in North America and Europe. In his leisure time he enjoys connecting with those people that have an interesting story to tell and a genuine desire to make an impact in the world.

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