Beijing Responds: Tells “Relevant Parties” In The U.S. That “One China” Principle Is Non-Negotiable

Following Trump’s Friday night interview with the WSJ, in which the president-elect suggested he would use any available leverage to realign the U. S.’s relationship with its two biggest global strategic rivals, China and Russia, Beijing responded promptly when China’s foreign ministry said on Saturday that its “One China” principle was the non-negotiable political basis for China-U. S. relations, and urged all “relevant parties” in the United States to recognize the sensitivity of the Taiwan issue.
‘The one-China principle, which is the political foundation of the China-U. S. relations, is non-negotiable,’ China’s foreign ministry said in a statement on its foreign ministry website.
The statement was address to “relevant parties” in the US, by which Beijing meant Donald Trump. ‘In order to avoid disruption to the sound and steady development of the China-U. S. relations and bilateral cooperation in key areas, we urge relevant parties in the U. S. to fully recognize the high sensitivity of the Taiwan question, approach Taiwan-related issues with prudence and honor the commitment made by all previous U. S. administrations of both parties on adhering to the one-China policy and the principles of the three joint communiques’
The comments, posted on the foreign ministry’s website, were a direct response to remarks by U. S. President-elect Donald Trump in an interview with the Wall Street Journal in which he said the “One China” policy was negotiable, although he also conceded that he would not label China of being a currency manipulator “on day one”, as he had stated previously.

This post was published at Zero Hedge on Jan 14, 2017.

As Wall Street Tries To Trade On Trump’s Tweets, Problems Emerge

Remember when investing was about reading financial reports, following news, anticipating cash flows, inferring the impact of monetary policy on risk prices, occasionally looking at charts (because while traders say past performance is not predictive, virtually everyone expects a chart to forecast precisely what will happen). Well, now it is about simpler things: like what asset will China’s great bubble-chasing army send into the stratosphere or, as has been the case over the past few weeks, what will Donald Trump tweet about next.
However, as Wall Street’s traders, starved for alpha, scramble to convert Trump’s tweeting into profitable trades, they have run into problems, and as the WSJ writes, “investors are grappling with the president-elect’s highly visible but capricious social-media presence, which is upending well-worn Wall Street formulas for assessing the likelihood of certain developments and baking them into market prices.” Specifically, Trump’s tweets are challenging large firms to funnel his off-the-cuff remarks into trades in an age of increasing automation, “while forcing banks to revisit restrictions on social-media use. At the same time, the tweets are creating openings for smaller investors to make money on abrupt market moves.”
The first problem, of course, is that with many Wall Street firms having banned Twitter, their traders are flying blind in an age when Trump’s tweets have become the biggest market moving event on any given day. For example, at Mizuho in New York, foreign-exchange trader Daniel Riveira said last year he began discussing with co-workers plans to get the Japanese financial firm to lift its longtime ban on Twitter after Mr. Trump’s threats to revise trade policies with Mexico prompted a sharp decline in the peso.

This post was published at Zero Hedge on Jan 14, 2017.

We Are Getting Worried About Paul Krugman

When a delicate snowflake is suddenly faced with a perceived reality so devastating as to be an existential crisis, the mind’s reaction to dealing with this cognitive dissonance can be disabling for some. Certainly for The New York Times’ flip-flopping, hate-mongering, fact-twisting, Keynesian poster-boy Paul Krugman it appears coping with “no” is not going well and his tirade last night in Twitter has us gravely concerned for his mental stability, which is ironic given how he began yesterday…

This post was published at Zero Hedge on Jan 14, 2017.

From One Scam to Another: How Banks in Spain Intend to ‘Compensate’ 1.4 Million Fleeced Homeowners

‘Poisoned offers’ to settle, backed by the government.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
Spain’s biggest banks, it seems, will never learn – not even when the highest court of the land, the European Court of Justice (ECJ), rules against their dodgy practices.
The ECJ ruled just before Christmas that Spain’s major banks would have to refund all the billions of euros they had surreptitiously overcharged borrowers as a result of the so-called ‘mortgage floor-clauses’ that were unleashed across the whole home mortgage sector in 2009 [A Nightmare Before Christmas for Spanish Banks].
These floor clauses set a minimum interest rate, typically of between 3% and 4.5%, for variable-rate mortgages, which are a very common mortgage in Spain, even if the Euribor dropped far below that figure. In other words, the mortgages were only really variable in one direction: upwards! While this is not illegal, most banks failed to properly inform their customers that the mortgage contract included such a clause.

This post was published at Wolf Street by Don Quijones ‘ Jan 14, 2017.

ETF Rankings – Non TradeDay

The most recent ETF Rankings are available through close of markets on Friday January 13, 2017. This is a non trade day for testing purposes.
The top-ranked ETF remains RSX, a Russian sector fund. Ranking second and third this week are XLK, a select technology fund, and EWG, a German sector fund.
The table to the right provides recent weeks of rankings. Orange signifies a non-trade day; blue a trade day. Multiple periods allow a look at the ebb and flow of sectors in the rankings. For a more complete overview of the movement of ETFs, a heat map is provided in the last selection below. It covers 13 weeks and all ETFs in the trading universe.
RSX has been ranked number one for several weeks now. Prior to that XLF held the top spot, also for multiple weeks. Rankings 2 and 3 are shown as well, although as shown in the ETF Rotational Trading PDF, the top-ranked ETF produced the best back-test results.

This post was published at Economic Noise on January 14, 2017.

Let Businesses Decide for Themselves Where to Make Their Products

On Monday night, Dirty Jobs host Mike Rowe joined Tucker Carlson on Fox News to discuss Ford’s and Chrysler’s respective plans to reinvest in US manufacturing. Rowe, who is a proponent of technical and skilled jobs, told Carlson, ‘Get a skill that’s in demand, that’s really in demand, that can’t be outsourced. Plumbers, steamfitters, pipefitters, carpenters, mechanics, those men and women right now … can pretty much write their own ticket.’ Rowe is right about skilled jobs. According to the Manhattan Institute, there are around a half-million US skilled jobs that aren’t being filled. Millennials are spending their time in the college safe spaces instead of doing the ‘dirty jobs’ which can pay well.
However, when Rowe talked about making things in the US he got it wrong. ‘There’s just something … larger at work here,’ Rowe said. ‘It has to do with our identity, it has to do with what it feels like when we’re actually making things as a country.’ This ‘be American, buy American’ attitude has been prevalent in the US for some time, however, making everything at home isn’t always the best route.
Take, for example, our cell phones. By outsourcing full production to China, our phones cost hundreds of dollars, not thousands. By having a low price, the phone companies attract more consumers and bring in more revenue. The jobs that would have been taken away by outsourcing are more than made up by the US based jobs in research and development, retail, sales, customer service, repairs, and any of the other jobs in the technology fields. After all, the biggest job creator in the past several decades has been the US service industry, not manufacturing. If we built our phones and tablets in Los Angeles, there would be far fewer highly skilled and creative jobs available in Silicon Valley.

This post was published at Ludwig von Mises Institute on Jan 14, 2017.

Why Millennials Are Behind: They Earn 20% Less Than Boomers Did At The Same Age

Over the past few years, as the Millennial generation has grown into its own, in 2016 surpassing Baby Boomers as the nation’s largest living generation according to the Census (Americans aged 18-34 in 2015 now number 75.4 million, surpassing the 74.9 million Baby Boomers aged 51-69), in the process becoming the fulcrum support of the US economy, it has also prompted many questions: why aren’t Millennials investing in the stock market? Why aren’t they starting families and buying houses? Why are they living in their parents’ basements well into their thirties? Why don’t they just… spend?
The latest answer to all these questions came yesterday following a new analysis of Fed data by the Young Invincibles group, according to which with a median household income of $40,581, despite being better educated, millennials now earn 20% less than boomers did at the same stage of life in 1989, who earned $50,910 some 25 years ago.
The analysis released on Friday shows other disturbing trends, which confirm that America’s troubling generational divide is all too real and helps explain much of the anxiety that defined the 2016 election. Some examples: millennials have half the net worth of boomers; their home ownership rate is lower, while their student debt is drastically higher.

This post was published at Zero Hedge on Jan 14, 2017.

Side Notes, January 14 – Red Flags Over Goldman Sachs

Red Flags Over Goldman Sachs
Just to prove that I am an even-handed insulter, here is a rant about my former employer, Goldman Sachs. The scandal at 1MDB, the Malaysian sovereign wealth fund from which it appears that billions were stolen by politicians all the way up to the Prime Minister, continues to unfold.
The main players in the 1MDB scandal. Irony alert: apparently money siphoned off from 1MDB was used to inter alia finance Martin Scorcese’s movie ‘The Wolf of Wall Street’, in which Leonardo di Caprio plays a major boiler room operator/ hustler who makes a fortune by defrauding his clients. When the WSJ contacted the people involved in 1MDB, all of them strenuously denied wrongdoing, with the exception of the only currently imprisoned one, who ‘declined to comment’. The money is gone, but it seems nobody took it. It is so to speak a Malaysian luxury miracle, proudly aided and abetted by those doing God’s work on the other side of the Pacific pond – click to enlarge.
At last count, law enforcement officials in seven countries are investigating the scandal, with the unsurprising exception of the officials whose boss did the stealing. As the slogan of the Malaysian Tourism Board puts it: ‘Malaysia, truly Asia.’

This post was published at Acting-Man on January 14, 2017.

‘Bipartisan’ Senate Intelligence Committee To Probe Russia-Campaign Contacts

Hours after WaPo reports anonymous sources claiming Trump’s national security adviser Flynn contacted Russian officials, and Politico details Hillary’s dealing with Ukrainian officials, the Senate Intelligence Committee announced in a statement that it will launch an inquiry to look at any links between Russia and individuals associated with U. S. political campaigns as part of bipartisan inquiry into Russia and cyber activity.
Full Statement: Joint Statement on Committee Inquiry into Russian Intelligence Activities
WASHINGTON – Senator Richard Burr (R-NC), Chairman of the Senate Select Committee on Intelligence, and Senator Mark Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence, today issued a joint statement regarding the Committee’s inquiry into Russian intelligence activities:
‘As part of the Senate Select Committee on Intelligence’s oversight responsibilities we believe that it is critical to have a full understanding of the scope of Russian intelligence activities impacting the United States.

This post was published at Zero Hedge on Jan 13, 2017.

Citadel Pays $22 Million Settlement For Frontrunning Its Clients

Last May we reported that, after years of railing against Citadel’s dominant position at the intersection of HFT trading and retail orderflow – Citadel was recently found to be the largest private US trading venue – Federal authorities were investigating the market-making arms of Citadel LLC and KCG Holdings looking into the possibility that the two giants of electronic trading are giving small investors a poor deal when executing stock transactions on their behalf.
As a reminder, Citadel is so big and its own private stock-trading platform is so large that, if it were an official exchange recognized by the Securities and Exchange Commission, it would one of the largest registered exchanges in the United States – bigger than Nasdaq. Citadel Execution Services, the firm’s wholesale market-making unit, recently executed 35% of all trades by retail investors in U. S.-listed stocks.

This post was published at Zero Hedge on Jan 13, 2017.

Why Ridiculous Official Propaganda Still Works

For students of official propaganda, manipulation of public opinion, psychological conditioning, and emotional coercion, it doesn’t get much better than this. As Trump and his army of Goldman Sachs guys, corporate CEOs, and Christian zealots slouch toward inauguration day, we are being treated to a master class in coordinated media manipulation that is making Goebbels look like an amateur. This may not be immediately apparent, given the seemingly risible nature of most of the garbage we are being barraged with, but once one understands the actual purpose of such official propaganda, everything starts to make more sense.
Chief among the common misconceptions about the way official propaganda works is the notion that its goal is to deceive the public into believing things that are not ‘the truth’ (that Trump is a Russian agent, for example, or that Saddam had weapons of mass destruction, or that the terrorists hate us for our freedom, et cetera). However, while official propagandists are definitely pleased if anyone actually believes whatever lies they are selling, deception is not their primary aim.
The primary aim of official propaganda is to generate an ‘official narrative’ that can be mindlessly repeated by the ruling classes and those who support and identify with them. This official narrative does not have to make sense, or to stand up to any sort of serious scrutiny. Its factualness is not the point. The point is to draw a Maginot line, a defensive ideological boundary, between ‘the truth’ as defined by the ruling classes and any other ‘truth’ that contradicts their narrative.

This post was published at Zero Hedge on Jan 13, 2017.

Surmount Impending Markets Shocker to Profit And Protect

Deepcaster has, from its founding ten years ago, aimed to provide Investors Truth about the Economy and Markets so far as we could determine it. Not an easy job given the deluge of Bogus Official Numbers and Mainstream Media Spin or outright distortion or Censorship.
Fortunately, there are Alternative Sources of Accurate Information.
Well, an examination of the Real Economic Numbers and Key Market Realities today leads to a Startling Conclusion. Soon in 2017 we expect Investors to experience a Great Shocker – a Great Profit Opportunity for the Cognoscenti, and a Great Threat to the Wealth of the Unknowing.
To consider the Great Shocker and see the Opportunities and Threats it presents we need first to summarize Key Economic and Markets Realities.
—– The International Economy is burdened with all-time-record levels of both Sovereign and Business Debt. Over $150 Trillion according to the IMF.
Thus any significant Increase in Interest Rates will cause increasing Defaults and Bankruptcies – a phenomenon already occurring in the Energy Industry.
But Interest Rates have already begun to Increase – from 1.5%ish for the U. S. 10-Year Treasury just a few months ago to 2.4%ish as we write. And Real Consumer Price Inflation has NOW shot up to 9.4% (Shadowstats Chart Below).

This post was published at GoldSeek on 13 January 2017.

Illinois Lawmakers Consider Massive, Regressive Tax Hike On Low-Income Families (a.k.a “Soda Tax”)

To our complete lack of surprise, lawmakers in the State of Illinois are considering following in the footsteps of Philadelphia by imposing a 1 cent per ounce “soda tax” on all sugary beverages.
And while it’s being done under the guise of “improving public health,” precisely zero people believe that the Nanny State of Illinois cares about the sugar intake of its residents. Of course, the real motivation behind the so-called “soda taxes” springing up in liberal bastions across the country is the $100’s of million of tax dollars than can be generated to help them grow the Nanny State even bigger.
Lets look at a quick example of how the tax dollars add up. Lets say, just for fun, that the average person consumes one, 12 ounce, sugary beverage (soda, juice, etc.) per day. That would equate to roughly a $45 annual tax per person (12 ounces x 365 days x $0.01 per ounce). Multiply that by a family of 4 and the annual tax per household is $180 or roughly 30 bps of the median Illinois household income of $60,000.

This post was published at Zero Hedge on Jan 13, 2017.

Looking at the Four “Bull Market Checks”: Trend, Momentum, Breadth, and Sentiment

The Dow is flirting with the 20,000 level, but we haven’t seen a breakout above that psychologically important number…yet.
This time on Financial Sense, we spoke with Jonathan Krinsky, chief market technician at MKM Partners, about market direction and his four bull market checks that indicate we still have room to run.
Breakout Coming?
‘After the run we had off the post-election lows, it’s not the worst thing to move sideways and work off some pretty extreme overbought conditions,’ Krinsky said.
When we first made the recent highs, we had some of the most extreme overbought conditions in 25 years, he noted. If we break 20,000, which he thinks we will, that resistance level would turn into important support on the downside.
‘What’s interesting about Brexit and the election is, those are actually the shakeouts that created the fuel to get us to new highs,’ Krinsky said.

This post was published at FinancialSense on 01/13/2017.

181 The US Economy: Back On Track?

The weekly rail traffic report published by the Association of American Railroads (‘AAR’) provides a great snapshot of US economic activity almost in real (weekly) time.
Last July we noted that we were starting to witness some signals of a trend change, now suggesting a softening. But much has happened since then, including a broadly unexpected change in the political direction of the US. Have those signals been reversed as a result?
Let’s start with some general indicators.

This post was published at Zero Hedge on Jan 13, 2017.

New York Real Estate Prices Plunge In 4Q As Listing Days and Discounts Soar

After reviewing the Elliman Report on the New York City Real Estate market at the end of 3Q 2016, we concluded that sellers had simply refused to accept the fact that the Manhattan real estate bubble had burst and rather than dropping prices had decided to simply let their apartments sit on the market unsold while hoping for a miracle. Here was our conclusion (see “NYC Real Estate Bubble Bursts As Apartment Sales Crash 20%“):
In conclusion, the lesson seems to be that the marginal New York City buyer has been priced out of the market (volume down 20%) while sellers have not yet accepted that the bubble has burst deciding instead to maintain listing prices while letting their apartments sit on the market longer amid growing inventory levels. Meanwhile, the luxury market is the only segment that seems to be holding up which only serves to prove that Chinese billionaires still have cash they would like to hide in the U. S. Alas, with the release of Elliman’s 4Q 2016 report, it has become apparent that that miracle never materialized for New York’s hedgies and i-bankers. In fact, the data from Manhattan real estate sales was almost universally bad with median pricing down 8.7% YoY, volume down 3.7%, listing days up 14.6% and discounts up to 5.5%.

This post was published at Zero Hedge on Jan 13, 2017.

Good Economics Is “Bizarre” for Minimum Wage Supporters

The BBC is running a story titled ‘Bizarre excuses for failing to pay the minimum wage’. The article follows an investigation by HM Revenues and Customs in the UK, which is organizing a government awareness campaign for underpaid workers. Some of the excuses are indeed hilarious and evidently made up on the go, such as ‘My accountant and I speak a different language – he doesn’t understand me and that’s why he doesn’t pay my workers the correct wages.’
But the majority are correct economic arguments for why a wage floor, imposed by law, goes against the natural workings of the market. For example, as one employer puts it bluntly: ‘She doesn’t deserve the national minimum wage because she only makes the teas and sweeps the floors.’ Another explained that a staff member was underpaid who ‘wasn’t a good worker,’ and another claimed that employees had to ‘prove their worth’. Indeed, what these ‘excuses’ point at is that the marginal productivity of those hired workers is lower than the salary the employer would be forced by law to pay them. This, combined with the fact that their opportunity cost and bargaining power are low – given their limited or non-existent alternative employments – means that those workers are earning the most that they are able to given present conditions.

This post was published at Ludwig von Mises Institute on 01/13/2017.