Saturday, 15 July 2017

Weekend Update 15/07/17 A Dangerous And Changing World.

As Milton Friedman once put it, if you’re spending your own money on yourself, you care about price and quality. If you’re spending someone else’s money on yourself, you only care about quality. If you’re spending your own money on someone else, you care only about price. And if you’re spending someone else’s money on someone else, you don’t care about either.
We are deep into the summer silly season for news, but this summer, the news is anything but silly, except in main stream media’s non-stop reporting of parochial party politics on both sides of the Atlantic, and in the ever bubbly stock markets.

Up first, the bubbly stock markets bubble on, but did the ECB trap itself into QE forever? If it did, the euro will turn into the modern Italian lira.

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith.

July 14, 2017 / 12:32 PM / 8 hours ago

Dow, S&P notch record closes on dimmed rate hike prospects

(Reuters) - The Dow and S&P 500 hit record highs on Friday after weak economic data dulled prospects of more interest rate hikes this year.

A decline in financial shares limited the day's gains, even though JPMorgan Chase & Co (JPM.N) and other big banks delivered quarterly results that beat Wall Street expectations.

Data showed consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation and subdued expectations of strong economic growth in the second quarter.

"The data is pointing to this continuation of fairly accommodative policy, which has obviously served the market well over the last few years. So as far as the market is concerned, it's sort of more of the same," said Lee Ferridge, head of macro strategy for North America at State Street Global Markets in Boston.

Chances of a rate hike in December fell to 48 percent after the release of data, from 55 percent late Thursday.

Earlier this week, the market rose after Federal Reserve Chair Janet Yellen said future rate hikes could be gradual in the face of persistently low inflation.

The S&P financials .SPSY, which benefit from a rising rate environment, fell 0.5 percent, and the group was the only one of the S&P 500 sectors down on the day.

----The CBOE Volatility index .VIX closed at its lowest since December 1993.

For the week, the Dow was up 1.1 percent, the S&P 500 was up 1.4 percent, and the Nasdaq rose 2.6 percent.

The Nasdaq's percentage gain for the week was its biggest so far this year.

July 14, 2017 / 10:17 AM / 15 hours ago

Exclusive - ECB wary of putting end-date on QE: sources

FRANKFURT (Reuters) - The European Central Bank is keen to keep its asset purchases open-ended rather than setting a potentially distant date on which bond-buying will stop, to retain flexibility in case the outlook sours, three sources familiar with the discussion said.

By not saying when its net bond purchases will fall to zero, the ECB hopes to underline that there is no preset course for its stimulus programme, and that any changes remain dependent on economic data, with a special focus on wages, the sources added.

They held up the Federal Reserve's exit from its asset buying in 2014 as a potential blueprint, noting the U.S. central bank's unwillingness to publicly target an end-date.

"The Fed has done the most successful exit so it's the example for us to study," said a source who asked not to be named. "The important thing is not to pre-commit and keep it very gradual."

ECB President Mario Draghi sent a shockwave through markets earlier this month when he opened the door to potential tweaks to the quantitative easing programme. That left investors scrutinizing any potential clues to the bank's next move, which is expected to come at its Sept. 7 meeting.

ECB policymakers also meet next Thursday.

July 14, 2017 / 3:23 PM / 5 hours ago

Draghi to speak softly after startling big stick at Sintra

LONDON (Reuters) - No big changes are expected from the European Central Bank when it meets on Thursday, but a bit of tweaking may be on the cards.

Policymakers are likely to calibrate the language they use as they edge towards normalising policy after years of huge post-crisis stimulus.

The bank may drop a reference to its readiness to increase the size or duration of its asset-purchase programme before announcing in the autumn how and when it will start winding down its bond-buying.

But after the reaction to his June 27 speech in Sintra, Portugal, hinting at the possibility of changes to the central bank's aggressive stimulus, ECB President Mario Draghi will be wary of sparking another "taper tantrum".

His comments in Sintra sent the euro and bond yields sharply higher, and prompted some rowing back.
"We expect the gradual adjustments in Draghi's communication to continue next week," Nordea analysts said in a note.

"So far the ECB has had an implicit bias towards increasing the size of the asset-purchase programme, but this stance could change to a more neutral one, as the ECB will try to smooth the communication path towards the next tapering announcement in the fall."

Noting the nervous response to Draghi's Sintra speech and recent adjustments to the U.S. Federal Reserve's language, they added: "It will be just as interesting to see the market reactions before and after the meeting ... Draghi will need to pave the way for a tapering announcement later on without scaring the bond markets too much."

Eurozone faces doom no matter how hard France and Germany try to save it, warns top investment bank

  • Bank of America Merrill Lynch warns that the eurozone is falling apart
  • It comes despite emergency bailouts from richer countries to those in crisis
  • London-based banker Athanasios Vamvakidis said this has driven members apart and increased inequality
The eurozone is likely to break up no matter how hard France and Germany try to save it, one of the world’s biggest investment banks is warning.

A senior employee at Bank of America Merrill Lynch says the single currency bloc has been gradually falling apart ever since it was formed almost 20 years ago.

Although several countries including Greece and Portugal received emergency bailouts during the financial crisis, richer countries like Germany have failed to redistribute wealth on a permanent basis to poorer countries in the eurozone.

London-based Athanasios Vamvakidis, who worked for the International Monetary Fund for 13 years before joining the US bank, said this has driven members apart and increased inequality.

Although that changed briefly during the global financial crisis, he said ‘divergence seems to be the norm since the eurozone was formed’.

Describing that as a ‘red flag for the sustainability of the eurozone’, he warned poorer countries may decide to break away from the bloc as they fall further into debt.

He said: ‘Wouldn’t such countries want to have their own monetary policy at some point? Wouldn’t populism find the common currency to be an easy target – which is already happening in some countries?’

He added: ‘Without growth, debt could prove unsustainable in some countries and populism against the eurozone could find support in some cases, leading to exit of a country left behind
Now back to some of the real news, the Fake News Networks barely cover, if at all. In East Asia, is a war is getting ever closer? Has North Korea already achieved a deliverable nuclear deterrent?  China toys with Japan.

July 14, 2017 / 2:04 PM / 9 hours ago

North Korea may have more nuclear bomb material than thought - U.S. think tank

WASHINGTON (Reuters) - Thermal images of North Korea's main nuclear site show Pyongyang may have reprocessed more plutonium than previously thought that can be used to enlarge its nuclear weapons stockpile, a U.S. think tank said on Friday.

The analysis by 38 North, a Washington-based North Korean monitoring project, was based on satellite images of the radiochemical laboratory at the Yongbyon nuclear plant from September until the end of June, amid rising international concerns over North Korea's nuclear and missile programs.

The think tank said images of the uranium enrichment facility at Yongbyon could also indicate operation of centrifuges that could be used to increase North Korea’s stock of enriched uranium, its other source of bomb fuel.

There were signs too of at least short-term activity at North Korea’s Experimental Light Water Reactor that could be cause for concern, 38 North said.

The images of the radiochemical laboratory showed there had been at least two reprocessing cycles not previously known aimed at producing "an undetermined amount of plutonium that can further increase North Korea’s nuclear weapons stockpile," something that would worry U.S. officials who see Pyongyang as one of the world's top security threats.

----Experts at 38 North estimated in April that North Korea could have as many as 20 nuclear bombs and could produce one more each month.

July 14, 2017 / 8:27 AM / a day ago

"Get used to it" China says as it flies bombers near Japan

BEIJING (Reuters) - China told Japan on Friday to "get used to it" after it flew six warplanes over the Miyako Strait between two southern Japanese islands in a military exercise.

Japan's defence ministry issued a statement late on Thursday describing the flyover by the formation of Xian H-6 bombers earlier that day as "unusual", while noting that there had been no violation of Japanese airspace.

The Chinese navy and air force have in recent months carried out a series of exercises in the Western Pacific, as they hone their ability to operate far from their home shores.

The Chinese defence ministry said it was "legal and proper" for its military aircraft to operate in the airspace and that it would continue to organise regular training exercises according to "mission requirements".

"The relevant side should not make a fuss about nothing or over-interpret, it will be fine once they get used to it," the ministry said in a statement.

The Miyako Strait is between Japan's islands of Miyako and Okinawa, to the northeast of self-ruled Taiwan, which China claims as its own.

Taiwan's Ministry of National Defense said on Thursday the Chinese bombers flew just outside its air defence identification zone and that it had "closely followed" the movements.

In another high rise fire news, no cladding thankfully, but a lack of sprinklers in Honolulu demonstrates just how dangerous older high rise buildings can be if a fire takes hold. We need a 21st century rethink on fire rules and regulations. Some older tower blocks might need major retro-fitting or even demolition.

3 confirmed dead, 16 injured in 5-alarm blaze at Honolulu highrise

Saturday, July 15th 2017, 2:27 am BDT

MOILIILI, OAHU (HawaiiNewsNow) 

A massive, multi-apartment blaze at the Marco Polo condominium has left three people dead and at least 16 injured.

Some 100 firefighters from 30 battalions battled the difficult fire, which raged for five hours before being declared "under control" about 7 p.m.

Officials said the fire started on the 26th floor and spread to at least the 28th floor.

With the elevators down, firefighters were using human chains to get equipment to crews on high floors.
Resident Ron Chiaritino said he lives in a unit about 30 feet from where the blaze was centered and could see black smoke billowing from affected apartments. "I heard three women screaming, screaming," he said, through tears. "And then i didn't hear them."

When the blaze was still going, a number of people were trapped in their units, told to stay put because they couldn't be evacuated safely. A special team of firefighters was going door to door to check for tenants who couldn't evacuate.

"As far as how the conditions are, we had to evacuate our firefighters about two or three times," Honolulu Fire Department Manuel P. Neves told reporters. "It's very difficult."

Fire Capt. David Jenkins said at least 12 people were treated at the scene, and four were taken to the hospital. Two were in serious condition.

----The three killed were on the 26th floor.

Residents of the building described a chaotic scene after the blaze started about 2:30 p.m.

Flames spread quickly and debris was raining down on the ground and on lower floor balconies, causing secondary fires.

"I started smelling smoke and this woman was screaming 'help' and I looked out on the lanai and even though the fire is on the mauka side, the entire floor was engulfed in smoke," said resident Mitch Silva, who lives on the 29th floor. 

The fire raged for hours, and flames and thick, black smoke could be seen for miles.

It's unclear how many units were involved in the blaze or its cause.

Building didn't have sprinklers

Neves, of HFD, did confirm that the Marco Polo does not have fire sprinklers.

With them, said Neves, the blaze could have been put out quickly.

"Without a doubt, if there was sprinklers in this apartment, the fire would be contained to the unit origin," Neves said.

Caldwell reiterated that message, saying that the blaze underscores the importance of fire sprinklers.

Marco Polo was build before sprinklers were required in Oahu highrises.

We end for the week, with more on the true cost of the Bush-Bliar disastrous, regime change, discretionary war in Iraq. A virtual wipe-out of the Christian communities that had existed in the region since the first days of Christianity. Why both men aren’t on trial at the Hague isn’t apparent.

Exodus The Uncertain Fate of Iraq's Largest Christian City

Before Islamic State invaded, Qaraqosh was home to Iraq's largest Christian community. Now liberated after three years of occupation, little remains and former residents are considering whether its worth rebuilding in a country with an unclear future.
July 13, 2017  02:28 PM
Ayouka had a pure heart and he loved his country, the priest says as he walks across a ravaged cemetery in northern Iraq, preparing to recover the dead man's body. The man was strangled by Islamic State (IS) fighters simply because he was a Christian, like the cleric.

The priest, whose name is Roni, wears his black cassock tightly over his shoulders, his eyes are lowered and he silently climbs over what's left of smashed crosses. Now and then, the thud of mortar shells can be heard from nearby Mosul, where Islamic State is still holding on.

Our route leads past graves whose inscriptions and crosses were destroyed by IS and Father Roni steps over broken vases and a destroyed Madonna statue. The dead man is lying on the left side of the cemetery, at its outer edge. The jihadists threw him into a two-meter deep burial chamber as if he were just a piece of trash.

Now Ayouka's body has been wrapped in a felt blanket. Next to him lie the bodies of a woman and a man, which are also wrapped in gray blankets. "IS killed them because they considered them to be infidels," says the priest, who knew them from Qaraqosh where they lived.

Qaraqosh was once considered the cradle of Christianity in Iraq. Located some 35 kilometers southeast of Mosul along the Nineveh plains, 40,000 people lived here until three years ago - no other city in the country was home to so many Christians. The city was built in Mesopotamia, which is traversed by the Euphrates and Tigris rivers, and its history stretches back to biblical times.

Until about eight months ago, Islamic State ruled Qaraqosh - expelling and murdering its Christians, desecrating their churches and, in the end, burning down their homes.

----With Mosul liberated, the Christians of Iraq will soon be able to return to their homeland. But who will govern the region after the IS defeat? Will Christians ever feel safe here again after some of their Muslim neighbors so brutally turned against them?

Qaraqosh currently looks like a ghost town. Islamic State bored some 30 tunnels beneath it, some ending in buildings while others are thought to stretch all the way to Mosul. There's a four-meter (13-foot) deep hole in the ground near the cemetery leading to a tunnel that snakes its way for hundreds of meters through the hills. Mattresses and crumpled blankets can still be found in the dark and cool tunnels, where IS fighters slept only a short time ago. An abandoned bomb factory is located next to the exit.

“You talk to your enemies, not just your friends.”

James Baker. US Secretary of State, President George H. W. Bush.

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