Baltic Dry Index. 1588 +02 Brent Crude 58.37
John
Kenneth Galbraith
The Great Central Bankster Campaign of free
money, ZIRP, NIRP, too-big-too-fail no consequences bailouts, 2008-2017, which
fuelled the massive stock market and bond bubble that we see today, seems to
have run out of options, like Hitler’s armies in 1942. Hitler and his murderous
criminals didn’t realise it at the time
of course, but it was the beginning of the end.
It may not yet be Napoleon’s Waterloo 1815,
but I get the impression that’s what’s coming next, as tightening takes place
across the world from America, through the EUSSR to China. A whole mountain of
unrepayable debt, and “unexpected” corporate scandal surfacing, now faces the
chickens coming home to roost.
The new incoming Fedsters will blame it on
Greenspan/Bernanke/Yellen. The
deep-state anti-Trump Obama-Clinton holdouts, will blame it on you know who.
The EUSSR and extreme left wing BBC will blame it on Brexit. Comrade Corbyn,
and his New Communist UK Labour Party will blame it on capitalism. Half of
Europe will blame it on Merkel’s migrants. China will blame it on the west. But
a sea change is now underway, with few captain’s noticing. Fake news and bubble propaganda still rule the
day.
The
only function of economic forecasting is to make astrology look respectable.
John
Kenneth Galbraith.
S&P 500, Dow log biggest drop since Sept. 5 on string of disappointing earnings
Published: Oct 25, 2017 4:57 p.m. ET
The S&P 500 and the Dow on Wednesday posted their biggest one-day
declines in more than seven weeks on a string of disappointing earnings, even
as the stock market pared early losses.Where did main benchmarks go?
The S&P 500 SPX, -0.47% dropped 11.98 points, or 0.5%, to close at 2,557.15, with all 11 main sectors finishing lower. Telecom and industrials led the decline. The Dow Jones Industrial Average DJIA, -0.48% fell 112.30 points, or 0.5%, to end at 23,329.46, a day after closing at a record. Both indexes had their worst session since Sept. 5 when the S&P 500 lost 0.8% and the Dow declined 1.1%.
The Nasdaq Composite COMP, -0.52% shed 34.54 points, or 0.5%, to 6,563.89.
What drove the markets?
Even though overall earnings have surpassed expectations, a few results disappointed investors.
Burrito chain Chipotle CMG, -14.58% and chip maker AMD AMD, -13.47% were the S&P 500’s two biggest losers. Chipotle slumped 15% after posting weaker-than-expected earnings late Tuesday, while AMD’s results beat expectations. But investors seemed more concerned about the company’s outlook, which may not have been as strong as hoped. AMD shares tumbled 14%.
A continued selloff in the Treasury market sent the 10-year note yield TMUBMUSD10Y, -0.30% to a seven-month high, leading analysts to ponder the potential impact of a continued yield rise on equities and other markets.
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No stress in markets, but some risks are building up, says government watchdog
Published: Oct 25, 2017 2:11 p.m. ET
Financial markets are far from stressed—stocks are near record levels,
credit and liquidity are abundant and volatility is historically low. But some
vulnerabilities in the system are building up and warrant investigation and
reflection, according to the Treasury Department’s Office of Financial
Research.The OFR on Wednesday unveiled two new tools designed to do that. The new gauges suggest that stock market valuations, risk appetite and credit risk are flashing warning signs. But stress levels, meanwhile, are near the lowest levels since 2007.
The S&P 500 SPX, -0.47% is trading within a percentage point of its record close at 2,555, while the cyclically-adjusted price-to-earnings ratio is at 31, well above its long-term average of 16. In other words, stocks are expensive. Implied volatility, as measured by the CBOE Volatility Index VIX, +0.63% is at about 12, near a historical low.
Read: Why rising optimism should make stock-market investors nervous
The OFR, created in 2010 in the aftermath of the financial crisis by the Dodd-Frank Act has essentially split a gauge known as the financial stability monitor into two new tools: the financial system vulnerabilities monitor and the financial stress index.
The vulnerabilities monitor is designed to track various indicators for potential vulnerabilities and prompt further investigation when they flash warnings.
It condenses 58 indicators into six distinct categories: macroeconomics, markets, credit, solvency and leverage, funding and liquidity, and contagion. The resulting color-coded heat map is an easy visualization of risks building up in the system.
The colors, ranging from dark green to red with shades of yellow and
orange in between, indicate the position of each indicator in its long-term range.
The latest reading in the monitor shows red or orange signals in a
number of areas, including key asset valuations and risk premiums, some
consumer and nonfinancial business debt ratios, and federal government debt and
deficits. While other indicators, such as inflation, funding and contagion
risks are all green.
The second tool, the financial stress index, or FSI, is a daily
market-based snapshot of stress in global financial markets.
The stress index incorporates 33 variables, each of them measuring an
element of financial stress, such as yield spreads, valuation measures and
interest rates. Financial stress can be captured by how the variables move
together through time.
The value of the index is the weighted average level of each variable
observed in the market on that day, relative to its history.
When the index is positive it indicates stress levels are above average,
while negative number reflects stress levels are below average.
A reading of negative 3.7 on Wednesday indicates very low levels of
stress, largely reflecting historically low volatility:
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Stocks in Asia Fluctuate as Earnings, ECB in Focus: Markets Wrap
By Andreea Papuc
Stocks in Asia were mixed following the biggest declines in seven weeks
on Wall Street as uneven corporate earnings keep traders on edge ahead of
reports from technology giants, banks and a European Central Bank meeting. The
dollar extended losses against G10 peers.
Electronics companies and machinery makers underpinned modest gains on
Japan’s Topix index after Fanuc Corp. and Hitachi Construction Machinery Co.
raised their full-year operating forecasts. South Korea’s won rose to a
two-month high after economic growth beat estimates, while Mexico’s peso came
under pressure after comments from U.S. President Donald Trump on terminating
Nafta. Ten-year Treasury yields were steady after reaching their highest since
March, and gold rose as investors sought havens from slumping equity market
Investors are assessing earnings and economic data for indications of
broadening growth that may sustain gains in global equities and higher bond
yields, even as the Federal Reserve and other central banks start to wind back
stimulus.
The ECB is expected to announce a reduction in the size of its monthly
bond buying at its policy meeting Thursday, the biggest scheduled event for
markets this week. U.S. orders for business equipment increased more than
forecast in September, pointing toward economic growth for the quarter.
----These are some of the key events coming up:
- Hong Kong reports on imports and exports on Thursday, while Japan updates on CPI Friday.
- The U.S. economy probably expanded at about a 2.5 percent annualized pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday.
- Norway’s Norges Bank and Sweden’s Riksbank rate decision on Thursday.
More
Next D-Day for the one-size-fits-all European Central Bank. In
continental Europe’s changed, more right wing political reality, the ECB is
dammed if they do end loose money, and damned if they prevaricate with fake
tightening. In grossly complacent Bankster Europe, the banksters expect the ECB
to keep topping up the punch-bowl forever.
I’m not sure the new political European
reality allows that as an option anymore. The rump-EU has been polarising and fracturing
with each passing month in 2017. Unfortunately, in 2018 with Brexit, Catalonia,
Italy, and a new German “odd-ball” coalition, that fracturing looks set to
accelerate.
October 25, 2017 / 11:10 PM /
Updated 7 hours ago
Beginning of the end for Europe's loose money? ECB to curb stimulus
FRANKFURT (Reuters) - The European Central
Bank is all but certain to cut back on its bond-buying stimulus on Thursday,
taking its biggest step yet in unwinding years of loose monetary policy.
It can do so because the euro zone’s
economic recovery is now well into its fifth year. It also coincides with other
major central banks - in the United States and Britain, for example - preparing
to raise interest rates.
But the ECB is still bothered about low inflation. So it is expected to
twin the cut with an extension of the program -- essentially a
less-but-for-longer move.
Policymakers from the 19 euro zone countries are seen cutting monthly
bond purchases by half in a nod to the rapid growth, a move towards dismantling
the unprecedented measures that held the currency bloc together after
back-to-back recessions.
Yet because inflation, the ECB’s single focus, remains far below target,
any move is expected to come with a lengthy extension, a signal that support,
even if diminished, could continue for years to come.
Indeed, sources close to the discussion said the debate was focusing on
extending bond purchases by nine months with volumes cut perhaps by half from
the current 60 billion euros, while at the same time reaffirming a commitment
to keep rates steady until well after the purchases end.
The biggest debate is likely to be whether the ECB should signal its
intent to exit the scheme, commonly known as quantitative easing, or keep it
open ended so its could consider yet another extension next year.
Designed nearly three years ago to stave off deflation, the ECB’s 2.3
trillion bond buying scheme has cut funding costs, reviving borrowing and
spending with the ultimate aim of generating inflation.
Hawks like Germany and the Netherlands now want a commitment to end
these buys, arguing that more purchases do next to nothing for inflation. Doves
on the bloc’s periphery meanwhile warn that a rapid exit could tighten
financial conditions, undoing years of work.
More
October 25, 2017 / 8:23 AM /
Updated 8 hours ago
German coalition talks deal early blow to Macron on Europe
BERLIN (Reuters) - German parties
exploring a coalition government have dealt an early blow to French President
Emmanuel Macron’s hopes for more expansive fiscal policies from Berlin, backing
a balanced budget and rejecting the idea of a separate pot of cash for the euro
zone.
The Greens, seen as closest to Macron on economic policy and Europe,
appeared to have caved in to demands by Chancellor Angela Merkel’s
conservatives and the Free Democrats (FDP) that a new government continue down
a path of fiscal discipline.
Merkel, whose conservatives placed first but lost seats in an election
last month, is trying to forge a coalition with the pro-business FDP and the
Greens, which requires bridging disagreements on taxes, immigration and foreign
policy.
In a joint paper agreed after late-night talks on Tuesday, the parties
said they all supported a balanced budget. A senior Greens politician who
participated in the talks also told Reuters that the parties were united in
opposing Macron’s idea for a euro zone budget.
“None of the participating parties support a euro zone budget,” said
Reinhard Buetikofer, a member of the European Parliament.
The parties are expected to reconvene on Thursday to finalise a joint
paper on Europe, after agreeing a rough blueprint for fiscal policy late on
Tuesday.
That blueprint included a pledge to respect “debt brake” legislation
enshrined in the constitution since 2009, which forces the federal government
to virtually eliminate structural budget deficits, limiting them to 0.35 percent
of GDP.
It also contained a commitment to provide relief to lower and middle
income earners, dismantle the “solidarity tax” for poor eastern states and
provide financial incentives to make German homes more energy efficient.
Cem Ozdemir, a leader of the Greens who is seen as a possible foreign
minister in the new government, highlighted a decision to re-examine plans to
raise defence spending by the outgoing “grand coalition” of Merkel’s
conservatives and the Social Democrats (SPD), who are moving into opposition.
Tax relief and investment needs would be finalised once more details on
tax revenues become available next month, Ozdemir said, suggesting that the
balanced budget commitment was not final.
More
Catalan Brinkmanship Sets Stage for Spain to Seize Control
By Maria Tadeo
Spain is set for a critical 48 hours as Catalan separatists either
succumb to the authority of Madrid or escalate their push for independence.
Regional President Carles Puigdemont faces a make-or-break decision that
could either ease tensions or see him unilaterally declare Catalonia a
sovereign republic. It risks deepening the biggest constitutional crisis in
western Europe’s fifth-largest country since an attempted coup in 1981.
The Catalan leader is due to address the regional parliament in
Barcelona on Thursday afternoon. In Madrid, the Spanish Senate begins to a
two-day vote on the implementation of Article 155, the draconian constitutional
tool that would see Puigdemont and his administration ousted from office. Prime
Minister Mariano Rajoy would have sweeping powers over Catalonia from its
budget to its police force.
“At this point, it seems the crash is almost inevitable,” said Alejandro
Quiroga, professor of Spanish history at Newcastle University. “We could get a
declaration of independence while Madrid moves in to suspend the region
simultaneously. You can get two parallel administrations competing for
control.”
El Pais and El Mundo reported that Puigdemont is leaning toward making
the declaration. Barcelona-based La Vanguardia said he feels he has no other
option, but he’s concerned that it will undermine his claim to lead a
democratic movement. The president posted a picture on Instagram of his
team meeting Wednesday with the hashtag “CatalanRepublic.”
More
Finally, Brexit’s
coming just in time. So much for a democratic Europe. Replaced by a coming
demon-cratic Europe.
October 24, 2017 / 5:40 PM
EU Commission aims move to reduce governments' veto powers on tax
BRUSSELS
(Reuters) - The European Commission will propose measures that could reduce EU
small states’ veto powers, a document showed - a move meant to overcome
resistance to tax reforms as the bloc aims to increase levies on digital
multinationals.
EU rules demand the backing of all 28 EU states to proceed to taxation
overhauls, a requirement that has long allowed low-tax states like Luxembourg,
Ireland or Malta to hamper reforms.
To overcome this hurdle, the Commission said it would present a document
next year outlining how to use a clause in the EU’s 2009 Lisbon Treaty that
allows decision-making by “qualified majority” in sectors where unanimity is
usually the rule.
The so-called “passerelle” clause, enshrined in Article 48 of the
treaty, could be used for “internal market matters,” the EU executive said in
its work programme for next year.
Commission President Jean-Claude Juncker said in September that this clause should be applied to decisions on “fair taxes of the digital industry”.
The EU is considering measures to increase taxes on Google (GOOGL.O),
Facebook (FB.O),
Amazon (AMZN.O)
and other tech giants that are accused of paying too little in Europe by
re-routing their profits to the bloc’s low-tax states.
In its 2018 work programme, the commission said that by
March it will make legislative proposals for a fair taxation of the digital
economy. The move follows the EU government leaders’ endorsement last week of a
proposal on the issue.
Although the move is likely to irk smaller, low-tax states,
it still leaves them a way out as the use of the “passerelle” clause would need
to be decided unanimously at EU summits and could be blocked by the parliament
of one member state.
Only if agreed by all 28 EU leaders, who usually hold general debates
and are more inclined to strike political deals, the clause could then be
applied to decisions by a qualified majority at councils of EU ministers who
discuss more technical issues.
Juncker, a former prime minister of Luxembourg, has so far avoided
proposing the use of another clause, based on article 116 of the treaty, which
would strip countries of their veto powers straight away.
This could be applied to solve distortions of the internal market, like
those allegedly caused by internet firms that compete unfairly with
brick-and-mortar rivals by paying less tax.
The commission’s vice president, Valdis Dombrovskis, told reporters in
September that there was a debate on whether to remove veto powers for certain
tax decisions.
First Battle of El Alamein
The First Battle of El Alamein (1–27 July 1942) was a battle of the Western Desert Campaign of the Second World War, fought in Egypt between Axis forces (Germany and Italy) of the Panzer Army Africa (Panzerarmee Afrika, which included the Afrika Korps) (Field Marshal (Generalfeldmarschall) Erwin Rommel) and Allied (British Imperial and Commonwealth) forces (Britain, British India, Australia, South Africa and New Zealand) of the Eighth Army (General Claude Auchinleck).The British prevented a second advance by the Axis forces into Egypt. Axis positions near El Alamein, only 66 mi (106 km) from Alexandria, were dangerously close to the ports and cities of Egypt, the base facilities of the Commonwealth forces and the Suez Canal. However, the Axis forces were too far from their base at Tripoli in Libya to remain at El Alamein indefinitely, which led both sides to accumulate supplies for more offensives, against the constraints of time and distance.
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Battle of Stalingrad
The German offensive to capture Stalingrad began in August 1942, using the German 6th Army and elements of the 4th Panzer Army. The attack was supported by intensive Luftwaffe bombing that reduced much of the city to rubble. The fighting degenerated into house-to-house fighting, and both sides poured reinforcements into the city. By mid-November 1942, the Germans had pushed the Soviet defenders back at great cost into narrow zones along the west bank of the Volga River.On 19 November 1942, the Red Army launched Operation Uranus, a two-pronged attack targeting the weaker Romanian and Hungarian armies protecting the German 6th Army's flanks.[13] The Axis forces on the flanks were overrun and the 6th Army was cut off and surrounded in the Stalingrad area. Adolf Hitler ordered that the army stay in Stalingrad and make no attempt to break out; instead, attempts were made to supply the army by air and to break the encirclement from the outside. Heavy fighting continued for another two months. By the beginning of February 1943, the Axis forces in Stalingrad had exhausted their ammunition and food. The remaining units of the 6th Army surrendered.[14]:932 The battle lasted five months, one week, and three days.
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"We finished the
year, and we reported that we had $17 billion of cash sitting at the bank's
parent company as a liquidity cushion. As the year has gone on, that liquidity
cushion has been virtually unchanged."
Alan Schwartz, CEO Bear Stearns,
March 12, 2008. Bust March 16, 2008.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, the real world in corporate America. Presented
without need for comment.
Merrill Lynch, Protection Rackets and the “P.R. Firm from Hell”
By Pam Martens and Russ Martens: October 20,
2017
Last week Jim Rutenberg penned a column for the New York Times titled Facing
Down the Network that Produced Harvey Weinstein. Rutenberg explored the
reasons that Weinstein’s decades of sexually harassing women and charges of assaults
had not made it to the front pages of newspapers sooner. Correctly calling it
“something akin to a protection racket,” Rutenberg defined it as a “network of
aggressive public relations flacks and lawyers who guard the secrets of those
who employ them and keep their misdeeds out of public view.”That sentence brought to mind a 2009 Rachel Maddow program on MSNBC where she enumerated the ignominious historical milestones of the monster public relations firm, Burson-Marsteller, capping the history by calling it the “p.r. firm from hell.” Among her litany of its p.r. projects, Maddow cited: “…when Blackwater killed those 17 Iraqi civilians in Baghdad, they called Burson-Marsteller. When there was a nuclear meltdown at Three Mile Island, Bobcock & Wilcox, who built that plant, called Burson-Marsteller…The government of Nigeria, accused of genocide in Biafra, Burson- Marsteller. Philip Morris, Burson-Marsteller. Silicone breast implants, Burson-Marsteller. The government of Columbia trying to make all those dead union organizers not getting in the way of the new trade deal, they called Burson-Marsteller.”
One of Burson-Marsteller’s oldest clients is, of course, Merrill Lynch, a company that has been repeatedly charged with tolerating sexual harassment of women over the same four decades that Burson-Marsteller has been shining up its image as bullish on America and vested in the human spirit.
Earlier this month, Harold Burson, a co-founder of Burson-Marsteller who served as its CEO for more than 35 years, published a book on his career, titled The Business of Persuasion. It includes a number of insights into just how cozy the firm’s relationship with Merrill Lynch was. In the book, Burson says “Burson-Marsteller’s professional relationship with Merrill Lynch was near seamless; we collaborated more as a team than as client and agency.” Burson indicates that he personally worked with six consecutive CEOs at Merrill Lynch over that almost four decade period: Don Regan, Roger Birk, William Schreyer, Dan Tully, David Komansky, and Stanley O’Neal. Paul Critchlow, who became the chief public relations officer at Merrill Lynch during that period, went to that spot directly from Burson-Marsteller according to Burson.
In the book, Burson also relates his trusted relationship with Don Regan, a CEO of Merrill Lynch who became U.S. Treasury Secretary under President Reagan and then his Chief of Staff during the President’s period of declining health. Just who was actually running the Reagan administration has been called into question by the video included in Michael Moore’s documentary, Capitalism: A Love Story. In the film, Don Regan is standing by the side of the President as Reagan is giving a speech. Regan quietly, but tersely, barks into the President’s ear to “speed it up.” The President seems to understand who is really in charge and does Regan’s bidding without any show of irritation. (See video clip below.)
In Tales from the Boom Boom Room, Susan Antilla’s seminal book on the epidemic of sexual harassment and sexual assaults of women working on Wall Street, she cites studies conducted by psychologist Louise Fitzgerald, an expert on sexual harassment and discrimination of women. Fitzgerald had contacted 915 women who had filed sexual harassment or discrimination claims against Merrill Lynch and received 643 usable responses. Among the respondents, 37 percent said they had “been touched in a way that made them feel uncomfortable,” while only 1.7 percent “said that the person about whom they complained was punished.”
Hollywood women have moved the needle now in sharing their stories of sexual assaults and harassment. But it should be noted that one of the former highest ranking women on Wall Street, Sallie Krawcheck, a former CEO of Merrill Lynch Wealth Management from August 2009 to September 2011, was effectively saying “MeToo” in August of 2016, long before the Weinstein horrors were dominating the news. In a column headlined, I Ran Merrill Lynch, And the Movie “Equity” is Soft on Sexual Harassment on Wall Street, Krawcheck reveals the following personal experiences:
“Having spent my career on Wall Street and having run Smith Barney and Merrill Lynch, I’ve been asked again and again whether the movie is representative of what it was like to work on Wall Street. The answer is no. That’s in part because I lived through worse.
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"Liquidation
sometimes is orderly, but more frequently degenerates into panic as the
realization spreads that there is only so much money, not enough to enable
everyone to get out before the new bail-ins."
With apologies to Charles P. Kindleberger, author of Manias,
Panics and Crashes
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Updates as they get reported. Is converting sunlight to usable cheap AC or DC
energy mankind’s future from the 21st century onwards?
What’s In Your Flu Shot?
An influenza expert at Johns Hopkins University explains how the cocktail for this year’s flu vaccine was developed
October 24, 2017 11:00AM
Predicting which fast-mutating influenza viruses will dominate the flu
season more than six months before it happens is notoriously difficult yet the
ponderous global vaccine production process demands maximum lead time. So,
scientists have to take their best guess based on the available data.In March, the WHO rolled out its recommended composition for flu vaccines in the Northern Hemisphere. (It announced its next Southern Hemisphere recommendations six months or so later.) For northern climes, the WHO proposes a cocktail of H1N1, H3N2 and a B virus—and for those interested in a quadrivalent vaccine, a dash of B/Phuket/3073/2013-like virus.
For an explanation on the process for making vaccines and related issues, Global Health Now spoke this spring to Andrew Pekosz, director of the Center for Emerging Viruses and Infectious Diseases at the Johns Hopkins Bloomberg School of Public Health.
Are there any surprises in WHO’s recommendations?
No surprises. The recommendation for this year’s Northern Hemisphere
vaccine turns out to be exactly the same as those made six months ago for the
Southern Hemisphere. The biggest thing was an update of the H1N1 component of
the vaccine, which had not been changed in eight years. That was updated to a
recent strain. There had been some controversy over whether or not that
[component in the] vaccine was doing a good job in terms of providing
protection against circulating H1N1 strains. So, WHO decided to update it.
Is that how the vaccine development generally flows from South to North?
The seasons [in the two hemispheres] are diametrically opposed. We pay
close attention to what happens in the Southern Hemisphere during their winter
(our summer) because that then gives us an even better idea of virus strains
that will be circulating here when winter comes around. But it doesn’t help us
with our vaccine strain choices because that has to be done earlier in the
year. That has to be decided at least six months before we want to start
vaccinating people.
For the Northern Hemisphere, the vaccine strain is picked in March based
on what’s circulating in January and February. While vaccine manufacturers make
vaccines, we see how flu goes in the Southern Hemisphere to see if our
predictions hold true there.
Any way to close that gap between predictions of the strains to include
in a vaccine and the delivery of the vaccine?
Vaccine production occupies the biggest chunk of that time. If we are
going to buy time to choose vaccine strains, we really have to find a better
and faster way to make a flu vaccine. We make the choice of vaccine in March
when we are still in the middle of flu season in the US. We’ve chosen it before
we know how the end of flu season turns out.
Are we better at predicting flu viruses to include in vaccines now than
we were a couple decades ago?
Yes. We’re better at doing things like sequencing viruses. We collect
many more influenza virus strains and characterize them during flu season and
much of this is done in a close to real time manner. At any one time, we have a
very good idea of what viruses are circulating in the human population.
So, if we know better what’s out their circulating, wouldn’t that
translate to better vaccines and fewer cases of influenza?
We have more information but that doesn’t make the prediction process
easier because at the end of day we’re often left with the choice between
several virus strains that might be good for the vaccine. Oftentimes we aren’t
sure which of those will become the dominant virus. We’re still lagging
behind—saying this is circulating now but we can’t say this one virus will be
the one dominant virus next flu season.
More
The monthly Coppock Indicators finished September
DJIA: 22,405 +223 Up. NASDAQ: 6,496 +274 Up. SP500: 2,519 +179 Up.
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