• Tag Archives Regulation
  • Pound Tumbles Amid Brexit Chaos, “Headline Havoc”

    Uh oh, hold your fire. A DUP source: "No deal this week". Hopes now fading fast in No10 of Theresa May going back to Brussels on Thursday too. — Tom Newton Dunn (@tnewtondunn) December 6, 2017

    Cable traders are suffering through a news overload this morning, with the optimism and euphoria which sent the pound to two month highs as recently as 2 days ago fading fast on speculation whether UK PM Theresa May will be able to engineer a Brexit breakthrough in time. And following overnight speculation that her cabinet may revolt, and what one desk dubbed “headline havoc” this morning in which DUP sources saying that there will be no deal this week, it’s looking increasingly in jeopardy.
    Overnight the Telegraph and Bloomberg reported that Theresa May is facing a revolt from inside her Cabinet over her plan to keep U. K. regulations aligned with the European Union after Brexit, “a split that threatens to undermine her chances of breaking the deadlock in negotiations.” Foreign Secretary Boris Johnson and Environment Secretary Michael Gove “will lead a Cabinet revolt against Theresa May over fears she is forcing a soft Brexit” the Telegraph reported. While this is hardly the first time we’ve heard this sort of speculation, considering the closeness to the EU Council Summit next Thursday/Friday, the clock is ticking for May to come up with a solution.

    This post was published at Zero Hedge on Dec 6, 2017.


  • California Residents Increasingly Ditching Their Massive Tax Bills And Unaffordable Housing For Las Vegas

    Los Angeles residents have apparently had just about enough of their city’s excessive home prices, unaffordable rents, crushing personal and corporate tax rates, overly burdensome regulations, polluted air, etc. and are increasingly leaving for a better life in Sin City. As Los Angeles Times columnist Steve Lopez puts it, “the rent steals so much of your paycheck, you might have to move back in with your parents, and half your life is spent staring at the rear end of the car in front of you.”
    As Jonas Peterson points out, his family made the move from LA to Las Vegas in 2013 and were able to double the size of their house while lowering their mortgage payment all while enjoying the added benefits of moving from one of the most over-taxed states in America to one of the lowest taxed.
    Las Vegas is one of the most popular destinations for those who leave California. It’s close, it’s a job center, and the cost of living is much cheaper, with plenty of brand-new houses going for between $200,000 and $300,000.
    Jonas Peterson enjoyed the California lifestyle and trips to the beach while living in Valencia with his wife, a nurse, and their two young kids. But in 2013, he answered a call to head the Las Vegas Global Economic Alliance, and the family moved to Henderson, Nev.

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


  • Minimum Wage Laws Have Many Victims

    Minimum wage laws are often put forward as regulations that help everyone. If anyone is hurt, it is wealthy capitalists who can afford to lose a little money. Unfortunately, this is rarely the reality. In order to decode the impact of minimum wage laws, one has to examine the effects on multiple levels, examining both the seen and the unseen consequences. Increases in wages have to be paid for somehow, and given the interdependent relationship of a market, there are three major players who are impacted by minimum wages: employers, employees, and the consumers.
    1. Employers Employers are faced with the increased costs of the factors of production without any corresponding increase in value. Although minimum wages are argued by pointing at multinational companies and the profits they are raking in, MacDonald’s and Wal-Mart are not the only ones paying minimum wages. Indeed, they are the least affected, since their enormous profits enable them to cope with the increase in wages.
    It is the small emerging businesses that are harmed the most, the local businesses that provide employment in their neighborhood to people who would have otherwise remained unemployed. Minimum wages punish small time entrepreneurs by decreased profits – especially when profit margins are razor thin, as is usually the case. This fact helps to deter entrepreneurs from opening businesses, and this is doubly unfortunate when we consider the fact that minimum wages are often a legislative reaction to an excess labor supply in the first place. When wages are low is precisely the time when we need new entrepreneurs the most.

    This post was published at Ludwig von Mises Institute on Dec 1, 2017.


  • Bitcoin Soars After CFTC Approves Futures Trading: First Trade To Take Place Dec.18

    Bitcoin is back over $10,000 after the the CFTC confirmed what had been previously reported, namely that it would allow bitcoin futures to trade on two exchanges, the CME and CBOE Futures Exchange, also granting the Cantor Exchange permission to trade a contract for bitcoin binary options.
    The CFTC announced that through a process known as “self-certification,” CME and Cboe stated that their contracts comply with U. S. law and CFTC regulations. The US commodity regulator also said that the it held ‘rigorous discussions’ with the exchanges that resulted in improvements to the contracts’ designs and settlement.
    As to when the first bitcoin futures will cross the tape, the CME said it has self-certified the initial listing of its bitcoin futures to launch Monday, December 18, 2017.
    ‘Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,’ said CFTC Chairman J. Christopher Giancarlo. ‘As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets. In working with the Commission, CME, CFE and Cantor have set an appropriate standard for oversight over these bitcoin contracts given the CFTC’s limited statutory ability to oversee the cash market for bitcoin.’
    ‘Market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority. There are concerns about the price volatility and trading practices of participants in these markets. We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts’ price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages. Nevertheless, investors should be aware of the potentially high level of volatility and risk in trading these contracts.’

    This post was published at Zero Hedge on Dec 1, 2017.


  • The End Of The Car?

    There is circulating a “note” making the claim that we are basically at the end of the car era, much like we wound up at the end of the horse era.
    That of course doesn’t mean there are no horses. There are; the moderately (and more-so) wealthy still own them for sport and pleasure, but other than the Amish nobody owns them for basic personal transportation whereas they were essentially the only means of same decades ago.
    The argument is that driverless “cars” (really a box that moves people and can be called on demand) will appear and basically take over. First slowly, like cars did, and then more-or-less all at once.
    In other words not long from now (months, really, if you’re in parts of Arizona!) you will start to be able to hail what amounts to a robotic taxi — with no driver in it at all. As the technology improves and expands people will start to voluntarily eschew owning a car in favor of hailing rides in driverless vehicles; arguably mostly for economic reasons.
    Oh by the way, if you’re one of the half-million or so who currently drive for Uber, Lyft, or a conventional “taxi” or “black car” service — you’re all out of a job the that transition really starts to accelerate. Keep that in mind as you continue to read onward….
    At some point the accident rate disparity between the choice of car ownership and driverless “hail and get in” vehicles will cause the government to either ban driving or it will get so prohibitively expensive, either by insurance regulations or outright government taxation in some form, that only the very wealthy will retain the option (as is the case now for horses.)
    You may see benefits here.
    I see grave danger.

    This post was published at Market-Ticker on 2017-11-29.


  • US Futures, World Stocks, Bitcoin All Hit Record Highs

    US equity futures continued their push higher into record territory overnight (ES +0.1%), and the VIX is 1.5% lower and back under 10, after yesterday’s blistering surge in US stocks which jumped 1%, the most since Sept. 11, following Powell’s deregulation promise, ahead of today’s 2nd estimate of U. S. Q3 GDP which is expected to be revised up. U. S. Senate Budget Committee sent the tax bull to the full chamber to vote, and on Wednesday Senators are expected to vote to begin debating the bill. It wasn’t just the S&P: MSCI’s all-country world index was at yet another record peak after all four major Wall Street indexes notched up new highs on Tuesday. Finally, completing the trifecta of records, and the biggest mover of the overnight session by far, was bitcoin which topped $10,000 in a buying frenzy which saw it go from $9,000 to $10,000 in one day, and which is on its way to rising above $11,000 just hours later.
    In macro, the dollar steadies as interbank traders and hedge funds fade its rally this week; today’s major event will be testimony by outgoing Fed chair Janet Yellen after Powell said there is no sign of an overheating economy; the euro has rallied on strong German regional inflation while pound surges on Brexit bill deal news; yields on 10-year gilts climb amid broad bond weakness; stocks rise while commodities trade mixed.
    In Asia, equity markets were mixed for a bulk of the session as the early euphoria from the rally in US somewhat petered out as China woes persisted (recovered in the latter stages of trade). ASX 200 (+0.5%) and Nikkei 225 (+0.5%) traded higher. Korea’s KOSPI was cautious following the missile launch from North Korea, while Shanghai Comp. (+0.1%) and Hang Seng (+-0.2%) initially remained dampened on continued deleveraging and regulatory concerns before paring losses into the latter stages of trade. Notably, China’s PPT emerged again with Chinese stock markets rallied in late trade, with the CSI 300 Index of mainly large-cap stocks paring a drop of as much as 1.3% to close 0.1% lower. The Shanghai Composite Index rose 0.1%, swinging up from a 0.8% loss, with property and materials companies among the biggest gainers on the mainland. The Shanghai Stock Exchange Property Index surged 3.8%, the most since August 2016. The Shenzhen Composite Index was little changed, after a 1.2% decline, while the ChiNext gauge retreated 0.4%, paring a 1.5% loss. In Hong Kong, the Hang Seng Index was little changed as of 3 p.m. local time, while the Hang Seng China Enterprises Index fell 0.3%Stocks in Europe gained, following equities from the U. S. to Asia higher as optimism over U. S. tax reform and euro-area economic growth overshadowed concerns about North Korea’s latest missile launch. The Stoxx 600 gained 0.8%, reaching a one-week high and testing its 50-DMA. Germany’s DAX, France’s CAC, Milan and Madrid were all up between 0.5 and 0.7% and MSCI’s all-country world index was at yet another record peak after all four major Wall Street indexes notched up new highs on Tuesday. ‘It seems to me markets are still trading on the theory that the glass is half full,’ said fund manager Hermes’ chief economist Neil Williams.

    This post was published at Zero Hedge on Nov 29, 2017.


  • Watch Live: Senate Banking Committee ‘Grills’ Trump’s Fed Chair Nominee Jerome Powell

    Update (11:45 am ET): As Powell’s testimony draws to a close, analysts at Stone & McCarthy noted that – as expected – the future Fed chair’s comments were “generally dovish”.
    The hearing was largely free of surprises. As it neared its close, Powell offered his thoughts about the blockchain and digital currencies (one day they could impact the Fed’s policies, but right now they’re too small to matter), and the mysterious roots of low inflation (the Fed is still struggling to determine if it’s due to transitory factors, or some kind of fundamental shift.
    Here’s Stone & McCarthy:
    In his confirmation hearing before the Senate Banking Committee, Powell fielded questions mainly on the topics of raising interest rates, shrinking the balance sheet, and his views on “tailoring” regulation. Powell maintained the view that it is appropriate to gradually increase short-term rates against a backdrop of healthy, consistent growth with a strong labor market. He did not address inflation issues. He said GDP growth should be about 2.5% in 2017, and looking forward to “something pretty close to that” next year. Powell declined to specifically say if he would vote for another rate hike at the December 12-13 FOMC meeting. He did say “conditions are supportive” for another rate hike and “the case for raising rates at the next meeting is coming together”.

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


  • Net Neutrality: Government Can’t Know the “Correct” Price for Internet Service

    The motives of net neutrality advocates differ. But the common thread among them is a general belief that internet service providers (ISPs) face no serious competition, and therefore overcharge both their supply-side (i.e., Netflix) and demand-side (internet users) customers and generally treat customers poorly.
    In other words, ISPs have ‘natural monopolies’ that allow them to rake in profits without improving service to customers or dealing with different customer-types in an equitable manner.
    This perspective gave rise to ‘net neutrality,’ which the Trump administration soundly condemned last week. This measure would have essentially transformed the internet into a public utility by regulating ISPs like other utilities (electricity, water, etc.). For convoluted reasons, regulators believe this will ensure internet service is distributed equitably among all who are willing to pay the going rate – no more up-charging big bandwidth-eaters (like Netflix), even at mutually-agreeable prices.
    Underlying this perspective is the belief that we can decipher, in some way, the level of service that ought to be offered on the ISP market. To implement net neutrality, regulators would allegedly examine the ISP market and decide, on some grounds, that what exists ought to be different, and that such a change can only come about through government regulation.

    This post was published at Ludwig von Mises Institute on Nov 27, 2017.


  • China’s Bike-Share Startup Frenzy Turns into Money-Suck

    Fresh startups with millions of dollars in funding run out of cash and collapse. Bike-sharing companies – with their capital-intensive, cash-burning, ride-subsidizing business model – were among the hottest startups in China. They’ve attracted $2 billion in venture funding over the 18 months of the frenzy. They now count over 40 platforms, though the industry is dominated by huge piles of mutilated, stolen, and abandoned bicycles and by two unicorns (valued over $1 billion), Mobike and Ofo, that kicked off the frenzy and carve up 95% of the market.
    But this is how quickly a frenzy can deflate.
    On Thursday, Chinese media reported that Mingbike, with operations in major cities, had laid off 99% of its staff, after consumers had complained that they’d been unable to get their deposits of 199 yuan (about $30) back. Some of the laid-off employees ‘posted complaints on social media saying their salary had been withheld for several months,’ according to the South China Morning Post:
    Calls by the South China Morning Post to Mingbike’s main phone line were not answered. The last post on the company’s Weibo account was in earlier October and its WeChat account has not been updated since November 10.
    In response to the latest closure and growing risk of deposit refunds, Chinese authorities have stepped in, with Ministry of Transport spokesman Wu Chungeng saying on Thursday that local governments would play a major role in ensuring protection of consumer rights. He added that regulations for the industry were being drawn up by authorities.

    This post was published at Wolf Street on Nov 26, 2017.


  • Positive Feedback Loops, Financial Instability, & The Blind Spot Of Policymakers

    ‘Learn how to see. Realize that everything connects to everything else.’ – Leonardo da Vinci
    A Dangerous Market Structure is More Worrying than Expensive Asset Valuations and Record Debt Levels
    Macro-prudential regulations follow financial crises, rarely do they precede one. Even when evidence is abundant of systemic risks building up, as is today, regulators and policymakers have a marked tendency to turn an institutional blind eye, hoping for imbalances to fizzle out on their own – at least beyond the duration of their mandates. It does not work differently in economics than it does for politics, where short-termism drives the agenda, oftentimes at the expenses of either the next government, the broader population or the next generation.
    It does not work differently in the business world either, where corporate actions are selected based on the immediate gratification of shareholders, which means pleasing them at the next round of earnings, often at the expenses of long-term planning and at times exposing the company itself to disruption threats from up-and-comers.
    Long-term vision does not pay; it barely shows up in the incentive schemes laid out for most professions. Economics is no exception. Orthodoxy and stillness preserve the status quo, and the advantages hard earned by the few who rose from the ranks of the establishment beforehand.
    Yet, when it comes to Central Banking, and more in general policymaking, financial stability should top the priority list. It honorably shows up in the utility function, together with price stability and employment, but is not pursued nearly as actively as them. Central planning and interventionism is no anathema when it comes to target the decimals of unemployment or consumer prices, yet is residual when it comes to master systemic risks, relegated to the camp of ex-post macro-prudential regulation. This is all the more surprising as we know all too well how badly a deep unsettlement of financial markets can reverberate across the real economy, possibly leading into recessions, unemployment, un-anchoring of inflation expectations and durable disruption to consumer patterns. There is no shortage of reminders for that in the history books, looking at the fallout of dee dives in markets in 1929, 2000 and 2007, amongst others.

    This post was published at Zero Hedge on Nov 22, 2017.


  • “This Just Feels Like Death”: Analysts Flee Research Positions Amid MiFID II Changes

    For the past couple of months, we’ve frequently shared our views that Europe’s MiFID II regulations, which force investment banks to charge for equity research instead of “giving it away” in return for trading commissions, could be a wake up call for 1,000’s of highly paid research analysts who were about to have their true ‘value add’ subjected to a market bidding test. Here are just a couple of examples:
    Deutsche Bank Forced To Slash Fixed-Income Research Price By Half On Lackluster Demand New European Regulations Set To Crush Equity Research Budgets By $300 Million Macquarie Identifies The Winners And Losers Of MiFID II Sticker Shock: Small Hedge Funds Seen Ditching I-Banking Research Under MiFID Now, per a note from Reuters, it seems that a growing number of equity research analysts are finally waking up to the fact that hedge funds don’t really have a burning desire to drop $400,000 per year on reports drafted by a 23-year-old recent college grad that do little more than summarize free SEC filings. Who could have known?

    This post was published at Zero Hedge on Nov 17, 2017.


  • Optimistic Signs in Indian Gold Market Despite Q3 Demand Drop

    If you saw the headlines last week, you know overall global gold demand fell steeply in the third quarter of this year. But as we reported, there was a lot of good news for gold buried beneath the gloomy headlines.
    Slumping Q3 gold demand in India was a big driver in the overall global decline, but even there, we see some signs of optimism. Indian gold-buying dropped off primarily due to new taxes and regulations imposed by the Indian government over the summer. There are already signs the market is adjusting
    On July 1, the Indian government replaced a labyrinth of taxes with a nationwide 3% Goods & Services Tax (GST). New anti-money laundering legislation also impacted the jewelry market.
    After three consecutive quarters of growth, gold demand in India fell 24% year-on-year in Q3 to 146 tonnes compared with 192.8 tonnes in Q3 2016. The drop in jewelry demand was most significant, likely a byproduct of the new taxes and regulations. Jewelry demand fell by 25% to 115 tons in the third quarter compared to 152.7 tons in the previous year.

    This post was published at Schiffgold on NOVEMBER 13, 2017.


  • SWOT Analysis: Turkish Demand for Gold Near a Four-Year High

    Strengths
    The best performing precious metal for the week was palladium, 0.41 percent. CenterraGold is set to buy Aurico Metals for $1.80 per cash share for a 38-percent purchase price premium on the Toronto Stock Exchange. Centerra currently holds more than $350 million in cash and has now secured a $125 million acquisition facility, according to Bloomberg. Gold prices rose after Saudi Arabia said a recent attempted missile strike at Riyadh’s airport could be an act of war by Iran. Additionally, Turkish investors are continuing to buy gold with demand expected to reach the highest since 2013. According to Google Trends, global searches for ‘buy bitcoin’ have overtaken ‘buy gold’ demonstrating a surge in popularity of the cryptocurrency. However, the BullionVault Gold Investor Index edged slightly higher to 54.6, demonstrating the number of buyers is higher than sellers. Weaknesses
    The worst performing precious metal for the week was platinum, down 0.82 percent. Due to platinum’s primary use in internal combustion engines, the metal could be among the biggest losers from electrical vehicle growth, reports Mining Review. The World Gold Council said it’s a tough quarter for gold as prices weakened in September and October. Global gold demand fell 9 percent in the third quarter as investor buying slowed and regulations in India tightened, reports Eddie van der Walt.

    This post was published at GoldSeek on 13 November 2017.


  • Morgan Stanley: “If Central Banks Push Back, Asset Prices Face A Severe Challenge”

    As increasingly more analysts and Fed-watchers have suggested in recent months, the one catalyst that could send the market into a tailspin is for the Fed to get what it has so long wanted: a sudden spike in inflation. From Albert Edwards (who looks at record U. S. vacation plans as an ominous sign of rising wages), to Eric Peters (who warned that pent up inflation could unleash a “nightmare scenario” for the next Fed chair), to Aleksandar Kocic (who yesterday explained why the market is vulnerable to bear steepening of the curve with the Fed “massively negatively convex to inflation risk”), on Sunday Morgan Stanley’s chief cross-asset strategist, Andrew Sheets joins the warning and observes that at a time when things are finally starting to look up for the global economy, “this puts central banks in a challenging position. Inflation remains below target. But current policy means some of the easiest financial conditions ever observed, just as growth is picking back up, regulation is backing down and memories of the last crisis fade.”
    As a result, Sheets believes that “current policy rates and financial conditions look unsustainably easy relative to the strength of global growth.” Which means that the response is once again in the hands of Central banks, who hold the key to determining when to push back. “If they do, asset prices face a severe challenge” Morgan Stanley warns, but maybe not yet: “until they do, we should be willing to accept that prices can persist above ‘fair value’.”
    Andrew Sheets’ full note is below:

    This post was published at Zero Hedge on Nov 12, 2017.


  • Sam Zell Is Stumped: “For Amazon’s Value To Be Justified, It Has To Be Worth 25% Of The US Economy In 5 Years”

    When it comes to the last financial crisis, few timed the peak quite as well as Sam Zell, who sold his Equity Office Properties Trust, the largest office REIT, to Blackstone in 2007, literally days before the bottom fell out of the market. So, with Goldman dying to know when the next crash will take place, it is no surprise that it picked Zell as one of the people to ask. Unfortunately, Zell was unable to provide the much desired answer, and instead when Goldman’s Allison Nathan asked him “how much longer do you think the current economic expansion can last?” His answer was anticlimatic: “Frankly, I don’t have any idea. If I knew the answer to that, I would be rich. A year and a half ago, I said we were in the eighth or ninth inning of the expansion. But I think the election of Trump has changed that. There is more optimism in the business sector now, which has given us extra innings. So this expansion may last a little longer than everybody thinks.”
    (Indicatively, when Zell says he “would be rich”, it is unclear just what number he envisions besides “more”: his current net worth is $5 billion according to Forbes.)
    What, according to Zell is the cause for this “business sector optimism”? Surprisingly, his answer – as has been the case for a while – is Donald Trump:
    Allison Nathan: Has your initial optimism post the election waned given the challenges Trump has faced in making progress on his legislative agenda?
    Sam Zell: No, just the opposite. Despite all of the public tweeting and noise surrounding our president, the reality is that the steps he’s taken on deregulation, reversing executive orders, and so forth are confidence-building and very positive. The possibility of changing Dodd-Frank to increase lending to small businesses, for example, could have a very big impact. And I think that’s why the economy is responding in the same positive manner as is the stock market.
    Allison Nathan: If tax legislation doesn’t pass, would that make you more pessimistic?

    This post was published at Zero Hedge on Nov 10, 2017.


  • Perpetual Notes – China’s New Way To Hide Debt (Call It Equity)

    The legacy of the soon-to-retire PBoC governor, Zhou Xiochuan, will be that in sharp contrast to his western brethren, he warned that China’s credit bubble would burst before the fact. Two weeks ago, Zhou warned during the Party Congress that China’s financial system could be heading for a ‘Minsky moment’ due to high levels of corporate debt and rapidly rising household debt (see here).
    ‘If we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we call a ‘Minsky moment’. That’s what we should particularly defend against.’
    Perhaps sensing that nobody in the Middle Kingdom was paying attention, we noted two days ago his lengthy essay published on the PBoC website. It contained another warning that latent risks are accumulating in the Chinese system, including some that are ‘hidden, complex, contagious and hazardous.’ He also highlighted ‘debt finance disguised as equity’ as a concern. Talking of which, there’s a new growth market in the gargantuan Chinese corporate debt market – we are referring to perpetual notes. Are you ready for the clever part about perpetual notes – they are debt but it’s permissible under Chinese accounting regulations to classify them as ‘equity’ – et voila, corporate gearing has fallen. According to Bloomberg.

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


  • The Stock Market Has Gone Up More Than 5 Trillion Dollars Since Donald Trump Was Elected

    One year ago we witnessed the greatest miracle in political history, and since that time we have also witnessed one of the greatest miracles in financial history. On November 8th, 2016 the Dow closed at 18,332.74. On Wednesday, it closed at 23,563.36. U. S. stocks have increased in value by about 5.4 trillion dollars since Donald Trump was elected, and I don’t think that we have seen anything quite like this ever before. So does Donald Trump deserve the credit for this unprecedented stock market run? Many experts are at least giving him part of the credit…
    Greg Valliere, chief global strategist at Horizon Investments, says outgoing Federal Reserve chair Janet Yellen deserves ‘much of the credit’ because the Fed’s policy of low interest rates has helped maintain a good economy and ‘favors stocks over other investments.’
    But Trump, he adds, ‘gets some credit for establishing a pro-business climate in Washington.’ Trump also gets kudos for rolling back business regulations and pushing for a big tax cut for U. S. corporations, which investors say will boost corporate profitability.
    Without a doubt, a Trump victory was a good thing for the financial markets, but politicians need to be careful not to take too much credit for soaring stock prices.
    Because if they take credit when stocks go up, then they also have to be willing to take the blame when they go down.

    This post was published at The Economic Collapse Blog on November 8th, 2017.


  • Stop Canada’s War on “Passive” Investment

    While an unhampered market remains elusive in both countries, government policies are more anti-business in Canada than in the United States, and the gap appears to be widening. As state governments in the U. S. are trying to attract business investment, Canadian governments seem intent on granting their wishes.
    As an example, Ontario’s Liberal government is responsible for high electricity costs, new labour laws (including a huge increase in the minimum wage), a cap-and-trade program, and other regulations which are prompting many businesses, including Magna International, to reconsider their plans. A report published by the Fraser Institute on October 12th tells us:
    In July 2017 Magna testified at a government hearing on the proposed overhaul of labour legislation that the high cost of operating in Ontario had led it to reconsider future investments and production in the province, especially as neighboring states in the US are pursuing policies to attract investment.
    Bill Morneau, Canada’s Minister of Finance, is preparing to impose further restrictions on business investment. His proposed policy will limit ‘passive investment’ within a small business, because in his view this money should only be invested in ‘active business’ i.e. the actual business conducted by the small business corporation.

    This post was published at Ludwig von Mises Institute on November 4, 2017.


  • BofA Has Two Questions For Ex-Carlyle Partner And Multi-Millionaire Fed Chair, Jay Powell

    On Thursday afternoon, around 3pm, Donald Trump will officially nominate Jerome Powell to be the next Chair of the Federal Reserve, replacing Janet Yellen when her term is up on February 1st. According to virtually every financial analyst, the former Carlyle Partner, Jay Powell, represents “continuity” on the Federal Reserve and would conduct monetary policy in a similar fashion as Yellen. As a result, Powell will proceed with the current balance sheet normalization schedule and continue to guide markets toward the “dots”. He is also expected to put a greater priority on scaling back financial market regulation, working with Randy Quarles who is the newly appointed Vice Chair for Supervision.
    While we presented key recent soundbites from Powell speeches yesterday, here is some more background:
    Jerome Powell is a trained lawyer and not an economist. Powell has been a Fed Governor since 2012 and was involved in the decision-making behind QE3 and then policy normalization in recent years. Prior to joining the Board, he was a visiting scholar at the Bipartisan Policy Center, a partner at the Carlyle Group, and worked at the Treasury under the GWH Bush administration.
    Powell is a Republican who built a vast wealth as a partner at Carlyle. Powell’s latest financial disclosure from June lists his net worth between $19.7 million and $55 million. If he gets the job, Powell would be the richest Fed chair since banker Marriner Eccles, who held the position from 1934 to 1948, according to the Washington Post.

    This post was published at Zero Hedge on Nov 2, 2017.


  • Fed Candidate Taylor Courts Trump And Downplays His Rule (Again)

    Conveniently, since he remains a front runner (admittedly well behind Powell) to become the next Fed Chairman, John Taylor was able to inject a few soundbites into the media-sphere yesterday.
    As Bloomberg reports, John Taylor, the Stanford professor who is among the finalists that President Donald Trump is considering to lead the Federal Reserve, argued Thursday that faster U. S. economic growth is possible if policy makers focus on reforms that encourage investment and hiring.
    ‘I would go back to the basic principles, that incentives matter, that tax rates matter, and apply those principles,’ Taylor told an audience at the University of Wisconsin in Madison.
    ‘You want to have the supply of the economy increasing more rapidly and you can do that with new policies.’
    Talk about hitting the right notes… Taylor thinks he can solve the productivity conundrum, in part by cutting… regulation.
    As Bloomberg continues, Taylor compared growth and productivity growth in the U. S. over the past decade to rates before the financial crisis, when they were substantially higher. He said tax reforms and efforts to roll back regulation could help bring back those higher levels of growth. He also made a specific reference to the post-crisis reforms of the 2010 Dodd-Frank Act, designed to make banks safer and limit risk-taking on Wall Street, which the Trump administration aims to roll back. ‘As you look back at that, maybe there’s too much micro-managing of financial institutions,’ he said.
    The report suggests Trump would have lapped it up.

    This post was published at Zero Hedge on Oct 27, 2017.