Cable Soars After UK, Ireland Agree On Brexit Border Deal

As several sellside desks have summarized, today will be a binary one for GBP: either deal or no deal. And following an early swoon in cable after speculation rose that a deal would be elusive, the pound soared above 1.35 following a report that EU chief brexit negotiator Barnier told MEPs that a breakthrough is likely today. This was confirmed moments ago by the FT which said that “Britain is heading for a breakthrough on Brexit talks after reaching a compromise with Ireland on the border between the Republic and Northern Ireland, the issue that threatened to derail the negotiations.”
The draft refers to maintaining ‘regulatory alignment’ between Northern Ireland and the Republic after Brexit – a form of words that, according to a senior official involved in the talks, appears to meet Dublin’s deep concerns about a possible hard border on the island and has not raised objections in London. The wording is more comfortable for Britain than previous draft formulations that insisted on ‘no regulatory divergence’.
The BBC confirmed as much after its political editor Laure Kuenssberg said that ‘May and Juncker about to appear together – with a deal seeming to be on the table.”

This post was published at Zero Hedge on Dec 4, 2017.

“It Could Reshape The Global Trading System For Decades” – US Rejects China’s Bid For “Market Economy” Status

The US has filed a legal submission to the WTO as a third party, intervening in a case that China has brought against the European Union. The US rejects China’s argument that under the 2001 agreement, which confirmed China’s WTO status, it would should automatically be considered a ‘market economy’ fifteen years after joining. The dispute could affect both America’s and China’s future within the international body and, as the New York Times contends, ‘shape the global trading system for decades to come.’ It goes without saying that this will only ratchet up the current tensions between the US and China over trade, which has been a cornerstone of Trump’s rhetoric since he launched his election campaign.
Briefly, the US submission sets out the legal arguments explaining why China should not be designated as a market economy, which would give it preferential treatment under existing WTO rules. China is currently designated a ‘nonmarket economy’ which allows the US, EU and other countries to decide whether China is dumping products at unfair prices under a WTO framework. If they decide that China is dumping, countries can add an extra duty to protect domestic manufacturers.
According to the Financial Times, “the Trump administration has opposed China’s bid for recognition as a ‘market economy’ in the World Trade Organization, citing decades of legal precedent and what it sees as signs the country is moving in the opposite direction under Xi Jinping. The US opposition to China’s efforts to be recognised as a market economy in the WTO came in a legal submission due to be released on Thursday in a case brought by Beijing against the EU. Market economy status would make it more difficult for the US to prove anti-dumping cases against Chinese companies at the WTO.”

This post was published at Zero Hedge on Nov 30, 2017.

29/11/17: China vs U.S. – the WTO Fight

“The Trump administration has lambasted China’s bid for recognition as a market economy in the World Trade Organization, citing decades of legal precedent and what it sees as signs that China is moving in the opposite direction under Xi Jinping. The US move to oppose China’s longstanding efforts to be recognised as a market economy in the WTO came in a legal submission filed last week and due to be released publicly on Thursday in a case brought by Beijing against the EU.”
Here are background slides to the dispute from my recent lecture @MIIS :
First, what’s behind the WTO dispute: the fight between the U. S. and the EU against China and other emerging economies in core Bretton Woods institutions – the IMF and the World Bank

This post was published at True Economics on Thursday, November 30, 2017.

EU Concern Rising About Italian Debt

The EU Commission is deeply concerned that Italy is under pressure to spend frivolously because of the upcoming elections. The EU is apply more scrutiny for Italy’s huge sovereign debt. Because of the vast size of the Italian economy, the high level of total debt is a major cause for the Eurozone as a whole. The EU Commission sent a letter to the Italian government warning them not to deviate from the course of fiscal consolidation before the parliamentary elections in the spring.

This post was published at Armstrong Economics on Nov 24, 2017.

UK Cabinet Poised To Increase Brexit Divorce Payment By Another 20 Billion Euros

Theresa’s May’s government is poised to concede an improved Brexit settlement offer to gain EU approval to move the negotiations on to the next stage.
May reportedly has the backing of senior ministers ahead of a critical cabinet meeting on Monday afternoon. The list of senior ministers is thought to include chancellor, Philip Hammond, Brexit secretary, David Davis, environment secretary, Michael Gove and weakened foreign secretary, Boris Johnson, who famously said in July that the EU could ‘go whistle’ over a divorce settlement. Hammond said at the weekend ‘we’ve always been clear it won’t be easy to work out that number, but whatever is due, we will pay’. Press reports suggest that the UK will formally offer about 40 billion Euros, versus the previous 20 billion. The news caused Sterling to rise more than half a percent to a two and a half week high of 1.3272, its strongest level since 2 November 2017. According to Bloomberg.
The U. K. could be about to improve its financial offer to the European Union ahead of a crucial meeting of the bloc’s leaders in December. Members of Prime Minister Theresa May’s divided cabinet will consider Britain’s divorce from the EU at a meeting Monday afternoon of the Brexit sub-committee that could be key to unlocking the most controversial matter in the negotiations — money. Britain is ‘on the brink of making some serious movement forward’ and starting to break the ‘logjam,’ Chancellor of the Exchequer Philip Hammond told the BBC on Sunday. While Hammond is among the most pro-European members of cabinet, his suggestion follows Brexit Secretary David Davis’s hint from Berlin on Friday that more details on a financial settlement would be presented within weeks. With businesses clamoring for clarity and the departure just 16 months away, pressure is mounting to break the impasse.

This post was published at Zero Hedge on Nov 20, 2017.

18/11/17: ECB Induces Double Error in the EU Policy Markets

In economics, two key market asymmetries/biases lead to the severe reduction in markets efficiency often marking the departure from theoretical levels of efficiency (speed, with which markets incorporate new relevant information into pricing decisions of markets agents) and the practical outcomes. These asymmetries or biases are: information asymmetry and agency problem.
For those, uninitiated into econospeak, information asymmetry (sometimes referred to as information failure), is a situation, in which one party to an economic transaction possesses greater knowledge of facts, material or relevant to the decision, than the other party. For example, a seller may know hidden information about a car on offer that is not revealed to the buyer. In more extreme example, a seller might actively conceal such information from a buyer. This can happen when a seller ‘prepares’ the car for sale by cleaning the engine, thus removing leaks and accumulations of oil and / or coolant that can indicate the areas where the problems might be.
The agency problem, also referred to as principal-agent problem, arises when an agent, acting on behalf of the principal, has distinct set of incentives from the principal. The resulting risk is that the agent will act in self-interest to undermine the goals and objectives of the principal. An example here would be a real estate agent contracted by the seller, while taking a commission kickback from the buyer. Or vice versa.

This post was published at True Economics on Saturday, November 18, 2017.

EU Preparing for the Banking Crisis

Subtly, the EU is looking to establish preparations for the coming banking crisis and how to protect the banks from massive withdrawals. The solution? The EU wants to be able to temporarily free up credits for the banks and at the same time to freeze bank deposits, In other words, like Greece, you just won’t be able to withdraw funds. Obviously, everything will be frozen. The current EU plan envisages blocking account disbursements for five working days and with the authority to extend any suspension to up to 20 days. They may need longer!

This post was published at Armstrong Economics on Nov 16, 2017.

Internet Shutdowns Show Physical Gold Is Ultimate Protection

– Internet shutdowns (116 in two years) show physical gold is ultimate protection
– Number of internet shutdowns increased in 2017 as 30 countries hit by shutdowns
– Democratic India experienced 54 internet shutdowns in last two years; Brazil 2
– EU country Estonia, a technologically advanced nation, experienced a shutdown
– Gallup poll shows Americans more worried about cybercrime than violent crime
– Governments use terrorist threat as reason for internet kill switch powers
– Own physical coins and bars rather than digital gold on a single platform
Editor: Mark O’Byrne
***
UNESCO is warning that the number of internet shutdowns is increasing worldwide. According to Statista.com when reporting data provided by digital rights platform accessnow.org, ‘internet access has been curbed 116 times in 30 countries since January 2016.’
‘Internet shutdown: An intentional disruption of Internet or electronic communications, rendering them inaccessible or effectively unusable, for a specific population or within a location, often to exert control over the flow of information.’ – Access Now.

This post was published at Gold Core on November 13, 2017.

Global Banks, City of London Raise ‘Disorderly Brexit’ Alarm

Shifting trillions of euros of derivatives positions could be hugely disruptive.
The growing prospect of a hard or disorderly Brexit is sending jitters through the global financial community. This week the Financial Times reported that a group of ‘large financial institutions with big London operations’ had met with US Commerce Secretary Wilbur Ross to express their dissatisfaction with the lack of progress in Brexit negotiations.
‘The fears over a potential Brexit no-deal are rising, as we move within 16 months of the UK’s exit from the EU,’ said Joshua Mahony, market analyst at IG.
While New York stands to benefit from some of the disruption caused by the UK’s separation from the EU, there is rising concern that Brexit could set off global ripples. That fear was compounded on Friday after Teresa May announced plans to set the UK’s departure date and time (March 29, 2019 at GMT 23:00) from the EU in law, warning she will not ‘tolerate’ any attempt to block Brexit.
‘[The banks] are becoming nervous,’ said City of London Corporation’s policy chief Catherine McGuinness after meeting representatives of US banks earlier this week. ‘It wasn’t just curiosity, it was concern at the lack of progress that we have been making, and nervousness that it had implications beyond Europe’s borders in terms of causing disruption to markets.’

This post was published at Wolf Street by Don Quijones ‘ Nov 11, 2017.

Sicily votes 81% against the EU Status Quo – It Begins!

The contagion from Catalonia is indeed spreading to Italy. The Democratic Party (PD) led by former Italian Prime Minister Matteo Renzi has suffered a severe defeat in Sicily. The Eurosceptic parties have won the election sending yet another warning sign to Brussels that they refuse to accept demand reform.
The Democratic Party has lost the regional elections in Sicily in a very DRAMATIC way. Renzi’s party came in third place with just 19% of the vote. The candidate, supported by Silvio Berlusconi, has won around 40%. I have written before that RELIABLE sources revealed that the EU had staged a coup in Italy to overthrow Berlusconi because he was proposing back then to exit the Euro.

This post was published at Armstrong Economics on Nov 10, 2017.

Cable Dumps’n’Pumps As EU Official Says No Brexit Talks Breakthrough

Brexit talks yielded no breakthrough on the financial settlement, and discussions focused on the issue of citizens’ rights, where the two sides are hoping for progress, an EU official told reporters.
Bloomberg notes that the anonymous official added that no breakthrough was expected on the bill, as that would require high-level political input, and as Citi notes, this meeting was meant to be more of a discussion anyway, with no expectations of an overall proposal being finalized.
The EU is piling the pressure on the UK to agree the divorce settlement as Brexit negotiations resumed in Brussels. In EU parlance, it appears that the term for this is the ‘moment of clarification’, which only makes us despise EU bureaucrats even more. Our suspicion is that, with the UK keen to settle the money issue and move on to trade talks, the EU sees an opportunity to take advantage of political turmoil in the UK, as the talks reaching their most critical stage. According to AFP.

This post was published at Zero Hedge on Nov 9, 2017.

Bill Blain: “The UK Vs Europe, The Best Comedy Show Ever!”

The UK vs Europe, the best comedy show ever!
‘Hold tight, wait till the party’s over, hold tight, we’re in for nasty weather…’
You really can’t make this stuff up. Get out the blunted spoons as the EU demands UK pays to play or forget a December start to real talks. The UK government in disarray. Global investors shaking their heads asking WTF and getting a bit bored and disinterested by it.
It could be a top class comedy.
Imagine the scene… A wood panelled office in Downing Street; Theresa Maybemight is trying to rebalance her cabinet. After carelessly losing a remainer last week, she has to sack a Brexiteer this week. Howls of hysterical studio laughter as cosmic balance is restored by chucking another one to the wolves.. Till tomorrow… as a blonde chubby bloke winks to camera…
Back in Brussells (actually Berlin, cos let’s be honest about it) a group of German experts have reviewed the situation and concluded Brexit might be bad for Germany (in comedy German accents) so therefore it can’t happen. End of discussion. Crashing minor chords. Their stooges in Brussels read out a demand for ‘One Gizillionbillion dollars’ in a passable Dr Evil impersonation (comedy Belgian accents) and give poor little Theresa six weeks to pay. Or else…

This post was published at Zero Hedge on Nov 9, 2017.

Technical Scoop – Weekend Update Nov 5

Weekly Update
To the moon, Alice!
Ralph Kramden, The Honeymooners
And at the current rate it might not be too long before it’s actually there. The moon, that is. No, not Alice – Bitcoin. Yes, Bitcoin crossed $7,000 this week. It was less than a month ago Bitcoin passed $5,000. The riches are dazzling as Bitcoin is up 640% this year alone. Bitcoin now has a market cap of $100 billion. How much longer before it’s bigger than Amazon or Apple or worth more than the entire gold stock market? But the question continues to beg – is Bitcoin an historic bubble? Until it bursts, the question is strictly academic. And don’t forget, not only is there Bitcoin but there are now over 1,000 other cryptocurrencies. And Bitcoin has forks as well called Bitcoin cash and Bitcoin gold.
Okay, we are not going to get into a huge discussion of Bitcoin and how it is structured and what blockchains are all about. It is mind boggling enough trying to figure all of that out. We will have further comments on our weekly ‘Bitcoin Watch!’ commentary.
The stock markets made new all-time highs again this past week. That comes against the backdrop of the terrorist attack in New York City, indictments in the Russia investigation including former top aides of President Donald Trump, and possible brewing trouble in the Mid-East. There is also the escalating crisis in Catalonia in the heart of the EU, ongoing trouble between Kurds and Iraq/Iran/Turkey, and continued moves afoot to lessen the use of the US$ in world trade. As well, a new Fed chairman has been proposed. But all the stock market cares about is the potential to pass the tax bill that could put billions into corporations and the 1% even as it could create deficits estimated at up $1.5 trillion over the next decade.
Maybe the stock markets are also headed for the moon, albeit at a much slower pace. Still, the records just keep on falling and there seems to be little in the way of stopping it. We may wring our hands over the alleged terrorist attack that killed 8 and injured many more but largely ignore an attack in a Walmart in Colorado that left 3 dead that occurred not long after the NYC attack. And I might add as we prepare this for distribution another attack in some small Texas town in a church that has left multiple fatalities.

This post was published at GoldSeek on 5 November 2017.

The Brexit chicken game

At last, there are signs a sense of reality is dawning on the EU’s negotiators about the futility of trying to force the UK to agree to a divorce settlement before talking about trade. However, there are still vestiges of a hope that Britain won’t leave the EU after all. Donald Tusk, the current European Council President, indicated it was still an option as recently as this week, but these hopes are wishful thinking.
It has taken thinly-veiled threats from the UK to leave without a deal, unless actual trade talks commence by next month. You can be certain the point has been made more forcefully to EU leaders in private, as well as at the negotiating table, than admitted in public. The EU’s problem is Brussels desperately needs Britain’s annual net contribution of 8bn, which is almost the entire annual cost of running the Brussels establishment. Brexit is nothing short of a disaster for the EU’s finances, and the EU is desperate for Britain’s money. Therefore, negotiations from the EU’s side have been frozen and unable to move onto the subject of trade. Impasse. A game of chicken, to be lost by the first to panic.
The British negotiators have deliberately presented themselves as willing to be helpful. They have insisted Britain will meet her legal requirements, though they must be itemised and justified. And that will not include funding the broader EU budget, amounting to 238bn on commitments incurred but not paid for, which is the basis of Brussels’ claim on Britain. Nor will it fund Brussel’s own budget shortfall, which is most likely where any money paid over will go first.

This post was published at GoldMoney By Alasdair Macleod.

The Rising Separatist Movements in Europe-Eastern Europe

There are many in Spain who just outright disagree with any right of Catalonia to be independent. History, culture, language, nothing really matters. Some have said it is the Spanish Constitution and all of Spain should vote to let Catalonia leave or stay. All of that said if Madrid had just allowed a fair referendum then whatever the vote was should have stood.
This is all about saving the EU and not Spain. It was the oppression that probably made others vote to leave. All of Spain cannot vote against one region. London did not vote on Scotland and neither did Toronto against Quebec. California has people pushing to separate and that is not a right to be decided by me in Florida.

This post was published at Armstrong Economics on Nov 1, 2017.

Invest In Gold To Defend Against Bail-ins

– Italy’s Veneto banking meltdown destroyed 200,000 savers and 40,000 businesses
– EU bail-in rules have wiped out billions for savers and and businesses, with more at risk
– Bail-ins are not unique to Italy, all Western savers are at risk of seeing savings disappear
– Counterparty-free, physical gold bullion is best defence against bail-ins
One of Italy’s twenty regions is calling for more autonomy from the state following a nonbonding referendum. Why? Because a government supported ‘rescue package’ caused the lifesavings of 200,000 savers to be wiped out during the implosions of Popolare di Vicenza and Veneto Banca.
Since then the banks have been rescued in one way or another yet the impact of the collapse on individuals and small businesses is only just becoming clear.
As in Spain’s Catalonia the region of Veneto is wealthier than the average Italian region, with its own industries and language yet it has been left with a pile of ash when it comes to its banking sector.

This post was published at Gold Core on November 1, 2017.

“Sacre Beurre” – Global Butter Prices Triple As Shortages Hit France

It’s not received much attention, but global butter prices have roughly tripled since Summer 2016 as production cuts have hit supply…
According to Bloomberg, global butter prices have almost tripled to 7,000 euros ($8,144) a ton from 2,500 euros in 2016, according to Agritel, an Paris-based farming consultancy. In Europe, prices peaked at about 6,500 euros a ton in September, the highest since the European Commission began collecting such data in 2000… The problem can be traced to the end of (EU) milk-production quotas in April 2015 that led to a glut early last year in Europe, and a drastic drop in prices. This prompted production cuts by spring this year. The reduction coincided with other global milk products exporters curbing their own output: the U. S. stopped selling abroad to address higher domestic demand while New Zealand, the world’s biggest dairy exporter, experienced lower production due to droughts, Pierre Begoc, an Agritel analyst, said in a phone interview.

This post was published at Zero Hedge on Oct 30, 2017.

Quantitative Easing Lives on in the EU

Central bank quantitative easing is a little like a zombie. It dies – but it never really dies.
There’s been a lot of focus on the Federal Reserve raising interest rates and unwinding its balance sheet. Sometimes it’s easy to forget the Fed isn’t the only game in town. While most people consider QE dead and buried in the US, it remains alive and kicking in other parts of the world.
Yesterday, the European Central Bank (ECB) announced it would extend its bond-buying program deep into 2018, continuing the flow of easy money into the European Union. ECB President Mario Draghi said the central bank would cut its bond purchases in half beginning in January, a faint hint at eventual normalization. But the central bank president left the door open to backtracking.
Draghi said the EU’s economy is improving, but still needs support.
Domestic price pressures are still muted overall and the economic outlook and the path of inflation remain conditional on continued support from monetary policy. Therefore, an ample degree of monetary stimulus remains necessary.’

This post was published at Schiffgold on OCTOBER 27, 2017.

UBS CEO On Brexit – “More And More Unlikely” It Will Move 1,000 Jobs Out Of London

With Brexit negotiations still at a delicate stage, here’s the first bit of good news for the City of London in some time…

As The Telegraph reports, the boss of Swiss bank UBS has said plans to move 1,000 jobs from London as a result of Brexit are now looking “more and more unlikely”.
Chief Executive Sergio Ermotti said the banking giant’s fear of losing a fifth of its 5,000-strong UK workforce in the wake of the vote to leave was now unlikely to materialise following some “regulatory and political clarification about what we need to do”. The bank joined some of its rivals in predicting a mass exodus from the City earlier this year over concerns that a so-called hard Brexit in March 2019 would mean thousands of UK-based firms reliant on ‘passports’ to service clients in the EU would lose that right overnight.

This post was published at Zero Hedge on Oct 28, 2017.