House Passes Tax-Reform Bill – 12 Republicans, All Democrats Vote Against

Here are the House Republicans who voted against the tax bill, which of course raises the question: With his NO vote, what secret message was Rohrabacher sending to Putin & Assange? pic.twitter.com/B66BY0uIZC
— Ira Goldman (@KDbyProxy) December 19, 2017

After more than six weeks of frenzied negotiations, the House of Representatives has passed the reconciled version of President Donald Trump’s tax plan, leaving only one major hurdle between Republicans and their biggest legislative accomplishment of the Trump era.
In a 227-203 vote, the House passed the tax plan over united Democratic opposition, as well as a flurry of ‘no’ votes from blue-state Republicans who spoke out against provisions in the bill that eliminate deductions for state and local taxesthat will disproportionately impact taxpayers in high-tax states like California and New York. Ultimately, 12 Republicans joined 191 Democrats in voting against the bill.
The vote followed an empassioned debate with Democrats – who labeled the bill the White House “tax scam” – slamming the bill as an attempt to establish a “permanent plutocracy.” Republicans countered that it would benefit all Americans, and evidence of its sanguine impact on the economy would emerge over the next year.
The contentious debate that preceded the vote was interrupted several times by protesters, including people who shouted “kill the bill, don’t kill us!” The Hill pointed out that one of the protesters was a woman in a wheelchair who said she relies on Medicaid and warned that the bill would “starve” the public.

This post was published at Zero Hedge on Dec 19, 2017.

The Racist Subtext Of Philly’s Ban On Bulletproof Glass In Convenience Stores

Shopkeepers in Philadelphia’s neighborhood convenience stores that serve food and beverages, locally referred to as “beer delis,” face a legal prohibition on the thick glass barriers around cashiers that protect them from stickup artists wielding guns, knives, and other weapons.
Because the shopkeepers predominately are Asian, and the customers (and robbers) are mostly black, this imbroglio looks a lot like a racist quest for vengeance against a commercially successful minority group.
Julie Shaw of the Philadelphia Inquirer provides the details:
Despite strong opposition from Asian American beer deli owners and their supporters, Philadelphia City Council voted, 14-3, Thursday to approve a bill that most members said would enhance neighborhoods, but that the merchants fear could jeopardize their safety and livelihood.
Mayor Kenney’s office said he would sign the bill.

This post was published at Zero Hedge on Dec 19, 2017.

Amtrak And Trump

It’s not looking good for the President this morning on the Amtrak wreck near Seattle.
Yesterday there was some reason to believe that there had been an obstruction of some sort on the track (possibly deliberately placed.) Today, however, it’s a bit different, aided by some pictures of course.
The cause now appears to be quite-clear — there is a 30mph zone right at the bridge. The reason is not “bad track” or “poor infrastructure”, it’s a curve.
It has been reported that the train went through there at 81mph. The “good track” speed limit for Amtrak on most modern, improved rail and roadbed is 79mph, which is right at the speed the train was traveling.
The problem is that the engineer ignored the 30mph zone, came around the corner at 80mph and physics took over.

This post was published at Market-Ticker on 2017-12-19.

A Modern Day Candlemaker’s Petition

In 1845, during a period when there was a rising tide of protectionism in France, the French economist Frederic Bastiat (pictured above) wrote a famous satirical parable known as ‘The Candlemakers’ Petition.’ In that famed economic fable, Bastiat humorously wrote to the French parliament on behalf of French candlemakers and lantern makers and lobbied the French government to enact protectionist legislation against the unfair competition of a foreign rival – the sun. I’ve taken the liberty of channeling my ‘inner Bastiat’ to revise and modernize ‘The Candlemakers’ Petition’ for today’s protectionist climate that is being advanced by a president the Wall Street Journal referred to as ‘the first authentic protectionist to win the White House since the 1920s.’
Here’s my 2017 version of ‘The Candlemakers’ Petition.’
A PETITION: From the American Lighting Association (a trade association representing the US lighting industry), US lighting and bulb manufacturers including Aero-Tech Light Bulb, American Light Bulb Manufacturing Company, LedRadiant, Morstar Electric, and LED-Green, and the International Brotherhood of Electrical Workers (the trade union representing America’s electrical workers).
An Open Letter to President Trump on behalf of the US lighting industry.
You are on the right track when it comes to international trade. You reject abstract economic theories about trade and have no time for the claims that economic abundance and ‘making America great again’ can come from low import prices. For political purposes, you correctly concern yourself with the fate of US producers and US workers, and wisely ignore US consumers. You wish to protect US producers and manufacturers from more efficient foreign rivals, that is, to rightfully reserve the American market for American producers and their American workers to ‘make America great again.’

This post was published at Mises Canada on DECEMBER 19, 2017.

Saudi Economy Contracts For First Time In 8 Years, Unveils Record Spending Spree To Boost Growth

Back when oil was at $100 and above, the Saudi economy was firing on all cylinders, and nobody even dreamed that the crown jewel of Saudi Arabia – Aramaco – would be on the IPO block in just a few years. However, with oil stuck firmly in the $50 range, things for the Saudi economy are going from bad to worse, and today Riyadh – when it wasn’t busy preventing Yemeni ballistic missiles from hitting the royal palace – said its economy contracted for the first time in eight years as a result of austerity measures and the stagnant price of oil, as the Kingdom announced record spending to stimulate growth.
OPEC’s biggest oil producer said 2017 GDP shrank 0.5% due to a drop in crude production, as part of the 2016 Vienna production cut agreement, but mostly due to lower oil prices. The last time the Saudi economy contracted was in 2009, when GDP fell 2.1% after the global financial crisis sent oil prices crashing. Riyadh also posted a higher-than-expected budget deficit in 2017 and forecast another shortfall next year for the fifth year in a row due to the drop in oil revenues: the finance ministry said it estimates a budget deficit of $52 billion for 2018.
More surprising was the Saudis announcement of a radically expansionary budget for 2018, projecting the highest spending ever despite low oil prices in a bid to stimulate the sluggish economic, saying it expects the GDP to grow by 2.7%. While we wish Riyadh good luck with that, we now know why confiscating the wealth of ultra wealthy Saudi royals was a key component of the country’s economic plan…

This post was published at Zero Hedge on Dec 19, 2017.

How That $1.4 Trillion In Repatriated Cash Might Result In U.S. Job Losses, Not Gains

Moody’s estimates that there is roughly $1.4 trillion dollars belonging to U. S. corporations that has been building up in foreign bank accounts for years now to avoid the 35% corporate tax that would be levied on them if they were brought back to the U. S. Of course, getting that $1.4 trillion back to the U. S. has been a critical component of the Trump administration’s tax reform bill as Gary Cohn and Steve Mnuchin have repeatedly argued that the money would be put to good use building factories and creating jobs for American workers.
That said, if history, math and logic are any guide, then the overwhelming majority of that money would be promptly returned to shareholders via stock buybacks and dividends immediately upon hitting U. S. shores. In fact, as University of Chicago law professor Dhammika Dharmapala told the Wall Street Journal, when a similar tax holiday was enacted in 2004 roughly $0.94 of every $1.00 was spent on buyback and dividends…something Gary Cohn apparently found out for the first time via a recent impromptu survey that yielded some ‘surprising’ results, if only to him…

This post was published at Zero Hedge on Dec 19, 2017.

Jefferies Fixed Income Revenue Plunges 37% To 2 Year Low

Once upon a time Jefferies was the country’s biggest junk bond trading shop, with a small investment banking group on the side. Now, it’s the other way around.
in its latest quarter and fiscal year ended November 30, Jefferies – which is the last public company to announce results in the old bank convention with a Nov 30 fiscal year end – reported a record $529 million investment banking advisory revenue for the quarter, up 27% Y/Y, and $1.76BN for the 12 months ended Nov. 30. This was the fourth year in a row that the firm has brought in more revenue from investment banking than from trading.
‘Our fourth quarter performance was driven by $529 million in Investment Banking net revenues. These quarterly record Investment Banking results reflect solid contributions from equity and debt capital markets, strong performance in our merger and acquisition advisory business, and broad participation across our industry groups and regional efforts… Our strategy of prioritizing expansion of our investment banking effort continues to succeed and should yield further growth over the next several years” CEO Rich Handler said in the statement.

This post was published at Zero Hedge on Dec 19, 2017.

Bank Of America: “This Is A Sign Of Irrational Exuberance”

Two weeks ago, when discussing a recent Albert Edwards piece, we said that the word that has come to define the new normal better than all others, is “paradox“, as in nothing makes sense, or rather everything makes sense if one only flips logic and reason 180 degrees. A “paradox” was on full display in the latest Bank of America Fund Managers Survey which found that once again, the percentage of respondents saying equities are overvalued hit a new record high of 45%; and yet the average cash levels continue to fall as one professional after another – whose year end bonus depends on whether they outperform the market – rush to allocate funds to equities, which most now agree are an asset bubble.
And while we call this “paradox”, Bank of America has another, more familiar name for the phenomenon: “this is a sign of ‘irrational exuberance’.”

This post was published at Zero Hedge on Dec 19, 2017.

ECB Trapped: Steinhoff Liquidity Collapses As Lenders Pull Credit Lines

When yesterday we discussed the latest troubles facing embattled retailer Steinhoff, whose bonds are owned by none other than the ECB, we said that while the company’s bonds mature in 2025, its bankruptcy is at most months away. In retrospect, and in light of the latest news, that may have been optimistic, because it now appears that a bankruptcy may be imminent and is at most just weeks away. According to Bloomberg, Steinhoff – which is facing an accounting scandal that led to the recent departure of its CEO and destroyed most of the company’s value – said lenders are starting to cut off support.
The reason why Steinhoff is suddenly facing not only a solvency but liquidity crisis is that the company which owns Conforama in France, Mattress Firm in the U. S. and Poundland in the U. K. isn’t yet able to assess the magnitude of financial irregularities disclosed two weeks ago, it said in a presentation to lenders in London on Tuesday (presentation below). The South African company also said it didn’t know when it would be able to publish audited results for 2017 and 2016, nor whether additional years will need to be restated.
Furthermore, Steinhoff also revealed that it didn’t have ‘detailed visibility’ of the cash flows of individual operating companies. The units rely on the company for working capital and ‘the forecast position for each operating company is evolving daily,’ it said. PricewaterhouseCoopers has been hired to investigate the accounts, while AlixPartners LLP is working on an analysis of the cash flow.
In short, the company is flying blind with no budgeting and no corporate overnight.

This post was published at Zero Hedge on Dec 19, 2017.

The Most Expensive Housing Zip Codes in the US

Hang on to your hat.
The winner is Atherton, a small town in Silicon Valley with just one zip code, with a median sale price (not asking price) of $4.95 million in 2017. But that’s down 8.8% from the even juicier $5.5 million in 2016.
It beat Sagaponack’s 11962 zip code. The community in the Hamptons had reigned supreme in the prior two years. But in 2017, it dropped to 15th place ‘mainly due to more sales recorded at lower price points, which slashed its median sale price in half,’ to just $2.82 million, according to Yardi’s PropertyShark. That’s quite a step down from $5.5 million last year.
In second place is New York City’s 10013 zip code, which covers TriBeCa with its luxury condo developments. It came in with a median sales price of $4.1 million, up 7.7% from last year.
In third place is 33109 in Fisher Island, ‘a small, secluded island community’ in Miami-Dade County, with a median sales price of $4.05 million, which is up nearly 20% from 2016.

This post was published at Wolf Street on Dec 19, 2017.

CalPERS Goes All-In On Pension Accounting Scam; Boosts Stock Allocation To 50%

Starting July 1, 2018 stock markets around the world are going to get yet another artificial boost courtesy of a decision by the $350 billion California Public Employees’ Retirement System (CalPERS) to allocate another $15 billion in capital to already bubbly equities. Of course, if this decision doesn’t make sense to you that’s because it’s not really meant to make sense.
As Pensions & Investments notes, CalPERS’ decision to hike their equity allocation had absolutely nothing to do with their opinion of relative value between assets classes and nothing to do with traditional valuation metrics that a rational investor might like to see before buying a stake in a business but rather had everything to do with gaming pension accounting rules to make their insolvent fund look a bit better. You see, making the rational decision to lower their exposure to the massive equity bubble could have resulted in CalPERS having to also lower their discount rate for future liabilities…a move which would require more contributions from cities, towns, school districts, etc. and could bring the whole ponzi crashing down.
The new allocation, which goes into effect July 1, 2018, supports CalPERS’ 7% annualized assumed rate of return. The investment committee was considering four options, including one that lowered the rate of return to 6.5% by slashing equity exposure and another that increased it to 7.25% by increasing the exposure to almost 60% of the portfolio.

This post was published at Zero Hedge on Dec 19, 2017.

Is Renter Nation Dead? Single-Family Housing Starts, Permits Highest Since 2007

October’s 13.7% MoM spike in housing starts was revised dramatically lower to just +8.4% which makes November’s 3.3% rise (vs expectations for a 3.1% decline) somewhat less impressive. Building Permits dipped from recent highs.
Northeast starts tumbled -39.6% and down -12.9% in Midwest, but jumped in South +11.1% and West +19.0%

This post was published at Zero Hedge on Dec 19, 2017.

Republican Tax Plan Is Headed For Final Round Of Votes

Barring some unforeseen catastrophe (or another floor-vote surprise akin to Sen. John McCain’s last minute decision to strike down the Senate’s plan to repeal and replace Obamacare), Congressional Republicans appear all but certain to pass the reconciled version of President Donald Trump’s tax-cut plan – the first time Congress has successfully passed comprehensive tax reform since 1986.
With their self-imposed Friday deadline looming, the Republicans’ Senate leadership managed to secure commitments from several holdouts, including Maine Sen. Susan Collins, Florida Sen. Marco Rubio and Utah Sen. Mike Lee.
At last count, the only Senator who hasn’t committed to a ‘yes’ vote is Arizona’s Jeff Flake. Flake famously delivered a scathing speech condemning President Trump from the floor of the Senate after announcing that he would not seek another term. He has been an outspoken Republican critic of the Trump agenda, per Reuters.
Meanwhile, Sen. Bob Corker – the only senator who voted against the Senate’s original tax bill – said late last week that he would vote for the current bill after several provisions were added that would benefit him personally, along with a handful of other Republicans.

This post was published at Zero Hedge on Dec 19, 2017.

A Nightmare Before Christmas: China Set to Launch Yuan-Denominated Oil Contracts

China wants to dethrone the dollar and it could take a step in that direction before the end of the year.
According to numerous reports, China is prepared to launch a yuan-denominated oil futures contract before Christmas. Last week, the Shanghai International Energy Exchange successfully completed a fifth round of yuan-backed oil futures testing. According to a report by RT, the organization has met all the listing requirements and is set for an official launch.
Chinese trader Yuan Quwei told Bloomberg the holiday season would be the perfect time to get oil trading in yuan off the ground.
An official launch during Christmas would be appropriate. The Western market would be quiet and allow the Shanghai exchange as well as Chinese investors to adjust in the early days.’
This could be a nightmare before Christmas for the petrodollar.

This post was published at Schiffgold on DECEMBER 19, 2017.

Global Yield Curves Are Snapping Steeper

Perhaps it is recency bias playing its tricks, but Treasury and Bund yields curves are steepening dramatically for the second day in a row, this time dragged higher by comments on longer-term issuance plans from Germany.
As always, German and US yield curves are moving in sync with a notable steepening again – the biggest 2-day steepening since Trump was elected.

This post was published at Zero Hedge on Dec 19, 2017.

The Full List Of Every GOP Senator Who Stands To Be Personally Enriched By The Tax Bill

Submitted by David Sirota of International Business Times
When the U. S. Senate takes up the final tax bill this week, more than a quarter of all GOP senators will be voting on a bill that includes a special provision that could give them a new tax cut through their real estate shell companies, according to federal records reviewed by International Business Times.
The provision was not in the original bill passed by the Senate on Dec. 1. It was embedded in the final bill by Sen. Orrin Hatch of Utah, who is among the lawmakers that stand to personally benefit from the provision.
In response to Democratic lawmakers who have slammed the provision as a lobbyist-sculpted giveaway to the rich, Republican Majority Whip John Cornyn promoted on Twitter a column by Ryan Ellis, a registered bank lobbyist who has been working to influence the tax legislation and who has defended the provision.
In all, 14 Republican senators (see list below) hold financial interests in 26 income-generating real-estate partnerships – worth as much as $105 million in total. Those holdings together produced between $2.4 million and $14.1 million in rent and interest income in 2016, according to federal records.
IBT first reported on the tax carve-out, which allows investors in ‘pass-through’ entities, including real-estate partnerships such as LLCs and LPs, with few employees to deduct part of their income that passes through those partnerships. In response to IBT’s reporting, Republican Sen. Bob Corker, who owns up to $35 million in ‘pass-through’ real-estate interests, claimed he did not know of the carve-out when he announced his support for the legislation on Friday, after previously casting the only Republican vote against the bill in the Senate, which did not then include the provision.

This post was published at Zero Hedge on Dec 19, 2017.

What to Expect From Equities in 2018

Summary: US stocks will likely rise in 2018. By how much is anybody’s guess: the standard deviation of annual returns is too wide to get even close to a correct estimate on a consistent basis. Earnings growth implies 6% price appreciation, but tax cuts could boost that to 13%. Investor psychology could push returns much higher (or lower).
While it’s true that investors are already bullish and valuations are already high, neither of these implies a likelihood of negative returns in 2018. That the stock market rose strongly this year also has no adverse impact on next year’s probable return.
A bear market is always possible but is also unlikely. That said, the S&P typically experiences a drawdown every year of about 10%; even a 14% fall would be within the normal, annual range. It will feel like the end of the bull market when it happens.
The Fed will likely continue to raise rates next year, which normally leads to higher stock prices. While political risks seem high, the stock market usually ignores these. The “Year 2” presidential cycle provides no investment edge.
This article highlights 11 key ideas to explain what to expect in 2018.

This post was published at FinancialSense on 12/19/2017.

Freedom of Religion under Attack?

The attack upon religion in Australia is not what one would call a direct assault. It is also not unique to just Australia. This is simply the way prosecutors expand the envelope of power. They look at a single issue and seek to address that issue alone. They rarely look at the implications beyond their immediate objective.
Take FACTA in the USA. The objective is to catch people avoiding taxes by putting their profits offshore. They begin with that assumption and ignore the fact that NOT everyone doing business offshore is to hide taxes. They then obstruct businesses from expanding globally. In my own case, despite the fact that we do business around the globe, because I am an American, I cannot open an account anywhere outside the USA because nobody wants to deal with the FACTA reporting back to the USA. My only solution is to go public since an American citizen can no longer own and operate a multinational business privately. Here we have a law designed to get tax evaders, but it blocks the legitimate business from operating. The only exception is the multinational corporation.

This post was published at Armstrong Economics on Dec 19, 2017.

Global Stocks Rise To Record Highs As Tax Reform Is “Priced In” All Over Again

Yesterday we joked that with the US House of Representatives set to vote for the GOP tax bill on Tuesday, markets would “price in” the same tax legislation they have been pricing in every day for the past year, all over again…
Get ready for US markets to price in tax reform all over again in just a few short hours
— zerohedge (@zerohedge) December 19, 2017

… and sure enough, that’s precisely the narrative being spun this morning to explain why US futures and global stocks are once again, drumroll, higher. To wit, from Bloomberg: “European stocks struggled to build on Monday’s jump as the common currency advanced, while U. S. equity futures edged higher as the prospects for tax cuts in the world’s largest economy continued to buoy sentiment.” Of course, US equity futures have been doing that precisely that every single day for weeks and months on end, but now that Congressional passage finally appears imminent, it may finally be time to stop buying the endless rumor and sell the news. As a reminder, on Monday Republican Senator Susan Collins of Maine said she’ll back the GOP tax bill, a move that all but clinches the votes necessary to pass the legislation. Both the House and Senate plan to vote by Wednesday on final legislation before sending it to the president.
As markets grind toward the end of a stellar year for global stocks, the biggest focus for investors still chasing gains is the progress of U. S. tax reform, which is inching toward a denouement. The House is scheduled to vote Tuesday on the tax bill following a floor debate that morning. It then goes to the Senate, where Republican leaders intend to bring it up as soon as they get it. ‘It will help sustain a very strong year of earnings growth for U. S. and for global equities,’ said Timothy Graf, State Street Bank & Trust head of macro strategy EMEA., speaking on Bloomberg TV. ‘It will keep sentiment robust.’

This post was published at Zero Hedge on Dec 19, 2017.