Feb 18

Today’s News 18th February 2019

  • The Data Behind Surging NBA Team Valuations

    Submitted by Visual Capitalist

    At the beginning of this decade, the NBA was not on firm footing. More than half of the league’s teams were losing money, and negotiations on a new collective bargaining agreement were looming.

    Today, however, the NBA has undeniable momentum, buoyed by hefty broadcast agreements and superstars like LeBron James and Steph Curry. With interest in the NFL flagging in the U.S., professional basketball appears to be seizing the opportunity to win over sports fans and grow the popularity of the league.

    This momentum has pushed team valuations to new heights, with the median team now being worth a solid $1.56 billion.

    What are the exact valuations of individual franchises in the league, and how are these values derived? Let’s dig into Forbes’ annual NBA Valuations Ranking to learn more.

    Breaking down team value

    Forbes has broken down the value of an NBA team valuations into four components:

    Sport: The revenue shared equally among all teams in the league
    Market: City and market size
    Arena: Revenues from sources such as attendance and premium seating
    Brand: The actual value of the team’s brand

    Courtesy of: Visual Capitalist

    Every single team in the NBA is now valued at over $1 billion, and all but one team (the Cavaliers) were profitable last year.

    For teams like the Knicks and Lakers, it’s easy to see how their huge market size contributes to their sky-high valuations. The former is currently the second-most-valuable sports franchise in America, tied with the New York Yankees.

    While the biggest teams are worth more than double the NBA median value, the rising tide appears to be lifting all boats. The median team value has risen steadily and is up nearly 200% since 2014.

    Gold Rush

    The biggest story in basketball over recent years has been the ascension of the Golden State Warriors.

    Making the NBA finals four seasons in a row – and winning three of those match-ups – has had a massive impact on the team’s value, which has shot up 367% over the last five years. As the team moves to the brand new Chase Center next season, Golden State may even have a shot at surpassing the Knicks or Lakers in overall valuation.

    Here are the top five gainers over the past five years:

    NBA team value gainers

    Fan Power

    The teams with the highest revenue-per-fan are typically in smaller markets like Salt Lake City and Oklahoma City, though both cities are unique in that an NBA franchise is their only professional sports team.

    The struggling Chicago Bulls comes in near the bottom by revenue-per-fan, despite being the fourth most valuable team in the league.

    Shifting Gravity

    In recent years, LeBron James has been one of the most electrifying personalities in professional sports, however, his influence on the NBA is now proving to be a double-edged sword. Since LeBron moved time zones from Cleveland to Los Angeles, NBA viewership is down – a dip that is particularly pronounced during the earlier Eastern Conference time slot.

    Despite the slight dip in viewership, NBA teams are more profitable than they’ve ever been, and as the NBA turns its sights eastward to China, today’s valuations may seem modest in a few years time.

  • "The Trap Has Been Set"

    Submitted by Tuomas Malinen of GnS Economics

    The failing engines of global growth

    The global slowdown has been much discussed lately. A slowdown in Europe and China was considered to be the main reason for the December stock market rout combined with the balance sheet normalization (QT) program of the Federal Reserve. What is behind the slowdown?

    No satisfactory answer has emerged, though China’s efforts to curb excessive lending are a natural candidate, in addition to the fact that central banks have been removing stimulus. The answer, however, goes deeper into the structure of modern economies.

    We will show in the March issue of our Q-review that the world economy never actually recovered from the financial crisis, and explain the reasons why. The failure of the economic drivers of global growth, China, the Eurozone and the US, is at the heart of the non-recovery. We will delve into that here.

    Killing the spirit

    In June 2017, we noticed that something strange was going on in the global economy. The growth of total factor productivity (TFP) had stagnated starting in 2011. This is something that should not happen in a growing economy.

    TFP is the measure of that part of GDP growth that changes in the quality and quantity of investments and work force cannot explain. It’s generally thought to be the measure of technological change driving economic growth. If it stagnates, it means that production is not becoming more efficient. That is, the achieved production is just the sum of capital and labor. Stagnation thus implies that our ability to create productive innovations has halted. A serious omen, and yet this is exactly what has happened since 2011. Why?

    Figure 1. Regional and global growth rates of total factor productivity (TFP) in percentage points. Source: GnS Economics, Conference Board

    The Three Kings on a journey down

    When the global economy falters, you turn to its leaders to look for blame. At the end of 2017, China, the euro area and the United States accounted for some 51 percent of the global GDP. They were the undisputed engines of global growth.

    After the GFC, leaders of Europe, China and the United States enacted exceptional measures to “save” the global economy. These kept many insolvent banks and companies operating thus intensifying the zombification of the global economy. However, the GFC also led to a fall in the investment rate in the euro area and in the US (see Figure 2). Their gross formation of physical capital fell by several percentage points and it has never recovered.

    Figure 2. Formation of gross physical capital in China, euro area, and in the United States in constant (base year: 2010) US dollars. Source: GnS Economics, World Bank

    The capital formation in China has kept its (very high) rate. There, however, the problem is that investments have grown increasingly unproductive. Figure 3 shows the TFP growth of China, the euro area and the US. It shows that since 2011, the productivity of China has actually fallen despite heavy investment levels. This has led to an even more intractable problem, over-indebtedness, because the revenue from the investments has not been sufficient to service the debt.

    Figure 3. Growth rates of total factor productivity (TFP) in China, euro area and the United States points. Source: GnS Economics, Conference Board

    Figure 4 shows the combined private and government debt and the real GDP of China since 1995.[1] From 1995 till 2007, the overall debt in China grew only fractionally faster than GDP, as it should. However, between 2008 and 2017, the real GDP of China grew by around 7.6 trillion US dollars, but private and government debt grew by an astonishing 25 trillion US dollars. That is, during those nine years, the debt in China grew faster than GDP by a factor higher than three! There are no parallels in modern history, and it prompts an uncomfortable conclusion.

    Figure 4. Nominal gross domestic product and the total private sector and government debt in China. Source: GnS Economics, Mbaye, Moreno-Badina and Chae (2018), World Bank

    The Chinese economy has become a Ponzi.  It cannot sustain itself without a continued harrowing rise in debt. Halt the growth in debt and the real economy will tumble, and that’s what we have seen recently.

    If it’s broken, you might want to fix it

    The fact is that something has gone seriously wrong in the model of global economic governance that has been in place since the Second World War. It may have never worked the way the macroeconomists envisaged it to work, but clearly it is not working anymore.

    In the March issue, we will explain in detail, based on data and academic research, why the model of global governance has failed. It should be heeded closely, as the fragility of the global economy creates the possibility of a global crash, as we have warned since March 2017. Most likely, it’s too late to avert the global crash, but one can always prepare. We will return to that in more detail in June.

    Based on what has happened in the global economy, one should be extra careful when calling for more stimulus. It will most likely not benefit the real economy, but it is likely to propel over-valued asset markets even higher. The unfortunate fact is that when asset markets go, the fragile global economy will go with them. The trap has been set.

  • Pelosi Quietly Deletes Tweet Slamming "Racist, Homophobic" Attack On Jussie Smollett

    As the Jussie Smollett “attack” is looking more and more like a class-4 felony hoax, House Speaker Nancy Pelosi (D-CA) quietly deleted a tweet sympathetic to the Empire actor who claimed that he was assaulted, in what Pelosi uncritically described as a “racist, homophobic attack.” It had over 100,000 “likes” and 21,000 retweets. 

    Unfortunately for Nancy, the internet never forgets. 

    Pelosi is just one snowflake in an avalanche of liberals who accepted Smollett’s bizarre story without so much as questioning the logic behind two Trump supporters, who watch Empire, out at 2 a.m. in a wealthy Chicago enclave, who not only recognized Smollett – but knew he was gay, and happened to be packing a bleach-like substance and a noose (in “MAGA Country). 

    The Speaker of the House wasn’t alone in her uncritical support of Smollett – who faces up to three years in prison if charged and found guilty of filing a false police report.

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    As the Daily Caller‘s Kerry Pickett notes, 2020 Democratic contenders Sen. Kamala Harris (D-CA) and Corey Booker (D-NJ) have yet to delete their tweets. 

    Booker – another kneejerk snowflake in the avalanche of MAGA-hate, called the Smollett “attack” a “modern day lynching.” 

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    Harris parroted Booker 90 minutes later, also calling it a “modern day lynching.”

    Oddly, quickdraw Booker seems be taking his sweet time time figuring out what he thinks of the Smollett situation now that his two Nigerian friends have apparently flipped on the Empire star and accused him of paying them to stage the attack – practicing beforehand and purchasing the rope and red hats used in the “MAGA Country” attack. 

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    The “Democratic party’s rising star,” Alexandria Ocasio-Cortez has also left her Smollett tweet up, hanging there. 

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    Who else went off half-cocked over Smollett’s unbelievable encounter? 

    And many, many more. 

    Or just delete it?  

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  • Resolution To Block Border Emergency Likely To Pass, Forcing First-Ever Trump Veto

    Now that a handful of influential Senate Republicans started expressing their reservations about President Trump’s decision to call a national emergency to secure another $7 billion in funding for his promised border wall (or “barrier”…or “fence”…), it’s becoming increasingly clear that a Congressional challenge to order will likely clear both the Democrat-controlled House and the Republican-controlled Senate, provoking the president to issue what would be the first veto of his presidency, Bloomberg reported on Sunday, citing remarks made on Sunday news shows.

    Both Illinois Democratic Sen. Tammy Duckworth and Ohio Republican Rep. Jim Jordan said on ABC’s “This Week” that they expect a resolution in Congress to terminate Trump’s order would have enough votes to pass both the House and the Senate by simple majorities, thanks to Republicans who fear Trump’s order would deprive the military of essential funds.

    Trump will redirect $3.6 billion in military construction funding toward the border project, and will also take separate executive action repurposing about $2.5 billion from the Defense Department’s drug-interdiction program and $600 million from the Treasury Department’s asset-forfeiture fund. Officials said the goal is to ultimately build roughly 234 miles of barriers along the border, including bollard-style wall. The funding is on top of roughly $1.4 billion earmarked to build 55 miles of barrier as part of the border security compromise passed last week.

    Trump

    But the resolution will likely run into trouble if Trump issues the veto, because it’s doubtful that the Democrats could muster enough votes in the Senate to override it.

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    And, assuming the resolution does pass, Stephen Miller implied during an appearance on “Fox News Sunday” that President Trump would veto it, saying that the president would “protect his emergency order” and adding that the order itself wasn’t unconstitutional because Congress had passed the National Emergency Act, which enabled the president to take this step.

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    “He is going to protect his national emergency declaration, guaranteed,” Miller said. Jordan added that once a veto is issued, “I don’t think there’s any chance the veto would be overridden.”

    Of course, Trump’s national emergency declaration is also facing a challenge from several states’ attorneys general (including likely New York and California), and presumably lawsuits from interest groups will follow. To that end, Congressman Adam Schiff said on CNN’s “State of the Union” that Trump’s admission during his press conference that he “didn’t need to do this” could doom his order in the courts.

    But for now, at least, the vote to block the order could backfire on the Dems, as Trump will likely use it as blatant politicking and one more example of Democratic obstructionism which he has sought to tie to Democratic leaders Nancy Pelosi and Chuck Schumer.

  • $166 Billion In Student Debt Is Now Officially Delinquent

    According to the Federal Reserve Bank of New York’s latest quarterly household debt report, student loan delinquencies surged last year, up to $166.4 billion in the fourth quarter. The report includes the total owed and the percentage of delinquent accounts past 90 days or in default. 

    The percentage of delinquent accounts figure has stood at 11% since about mid-2012, but the total amount of debt outstanding has increased to a stunning $1.46 trillion at the end of December 2018 – and unpaid student debt rose to its highest levels ever. 

    Delinquencies rose even as unemployment fell below 4%, telegraphing that the U.S. job market simply hasn’t generated the level of wage growth necessary to deal with the country’s growing debt load. 

    Bloomberg Intelligence interest-rate strategist Ira Jersey said: “Income levels for graduates are not necessarily high enough for debt payments overall. If you have a choice to pay your student loan or for food or housing, which do you choose?”

    According to Jersey, the loans “probably won’t hurt the economy” because they are government-sponsored. Which is another way of saying taxpayers will once again come to the “rescue.”

    “But incrementally, it does mean higher federal deficits if the loans are not repaid,” he conceded. 

    Echoing what we first said back in 2012, Bloomberg notes  that the total amount in arrears is twice the amount the U.S. Treasury paid to bail out the auto industry during the last recession.

    Meanwhile, with the cost of higher education doubling over the last 20 years, even the St. Louis Fed was unsure as to whether or not “college was still worth it”, according to a blog posted on their website. 

    Another stunning observation: the age group that is transitioning to delinquency the fastest is not workers fresh out of college, but the 40 to 49 year old cohort, partly as a result of parents shouldering the load and borrowing to pay for their children’s expenses. 

    This has forced some schools to provide more support for those attending. For instance, Cornell increased tuition for 2019-2020 by “the lowest it has been in decades” and the school is “budgeting for a significant increase in financial aid”. Purdue University will also not boost room and board rates for 2019-2020, the seventh year in a row it has avoided hiking these prices.

    On average, however, in-state tuition and fees for a public four year institution has risen by 3.1% beyond inflation over the last decade. 

  • Smollett Shuffles Attorneys, Hires Crisis Management Firm As Scandal Deepens

    Update2: Smollett’s management team has reportedly retained the services of Anne Kavanaugh, whose Chicago firm MediaPros24/7 provides several media services including crisis management.

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    He is also reportedly no longer being represented by high-profile criminal defense attorney Michael Monico after an alleged disagreement about Smollett’s Saturday statement (h/t Nick Monroe). 

    Monico told Fox 32 Chicago‘s Rafer Weigel that he “was but is no longer representing” Smollett, who is now represented by Chicago attorneys Victor Henderson and Todd Pugh. 

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    Update: According to CBS Chicago, the Nigerian brothers who were arrested and then released, “Abel” and “Ola,” told detectives that they did a practice run a few days before the “attack.”

    Sources said one of the brothers held the rope and poured bleach while the other wore a plain red hat and yelled slurs at Smollett.

    The sources say the red hat was bought at an Uptown beauty supply store and that the attack was supposed to happen before Jan. 29. The brothers told detectives the three men rehearsed the attack days prior to it happening. –CBS Chicago

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    ***

    After Chicago police arrested, interviewed, and then released two Nigerian brothers whose information “shifted the trajectory of the investigation,” Empire star Jussie Smollett is doubling down on his claim that he was attacked nearly three weeks ago at 2 a.m. in an upscale Chicago neighborhood. 

    “As a victim of a hate crime who has cooperated with the police investigation, Jussie Smollett is angered and devastated by recent reports that the perpetrators are individuals he is familiar with,” reads a statement from his criminal defense attorneys Todd S. Pugh and Victor P. Henderson. 

    “He has now been further victimized by claims attributed to these alleged perpetrators that Jussie played a role in his own attack,” reads the statement given to media outlets. 

    Of note, Jussie is now pitting himself against the Nigerian brothers who reportedly told police they were paid $3,500 each to stage the attack, and promised $500 each upon their return from Nigeria after they left the country following the January 29 incident. 

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    “One of the purported suspects was Jussie’s personal trainer who he hired to ready him physically for a music video. It is impossible to believe that this person could have played a role in the crime against Jussie or would falsely claim Jussie’s complicity,” the statement continues. 

    To recap: 

    Smollett, 36, claims he was attacked on January 29 around 2 a.m. by two white men who shouted racist and homophobic slurs, doused him in a bleach-like liquid, hung a rope around his neck, and yelled “This is MAGA country,” before he was able to chase them away. He was seen on security footage entering his upscale apartment with an intact Subway sandwich and a noose around his neck (which he was still wearing when police arrived). Of note, Smollett’s manager claims he heard the “MAGA country” slur – which makes him part of this. 

    While there was no footage of the “attack” despite Chicago’s thousands of surveillance cameras, two “persons of interest” were captured on camera…

    … who turned out to be Nigerian-born brothers Abimbola “Abel” and Olabinjo “Ola” Osundairo, one of whom is Jussie’s personal trainer and was an extra on Empire. 

    After Chicago police arrested the brothers as “potential suspects,” they were later released without charges – and investigators say their interview “shifted the trajectory of the investigation.”

    “We can confirm that the information received from the individuals questioned by police earlier in the Empire case has in fact shifted the trajectory of the investigation. We’ve reached out to the Empire cast member’s attorney to request a follow-up interview,” said Chicago police spokesman Anthony Guglielmi. 

    According to ABC 7, “Two officials familiar with the Smollett investigation confirmed to ABC News that detectives confronted the two brothers with evidence that they purchased the rope found around Smollett’s neck at a local hardware store. The brothers agreed to cooperate with police, who are investigating whether Smollett made up the story, after police threatened to charge them with battery and hate crimes.“

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    Police want to speak with Smollett again, and reportedly no longer consider him a victim. 

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    Meanwhile, CNN journalists Brian Stelter and S.E. Cupp are already trying to shift blame onto “Trumpsters.”

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    Meanwhile, Smollett’s response to all of this:  

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  • The Birth Of A Monster

    Authored by David Howden via The Mises Institute,

    The Federal Reserve’s doors have been open for “business” for one hundred years. In explaining the creation of this money-making machine (pun intended – the Fed remits nearly $100 bn. in profits each year to Congress) most people fall into one of two camps.

    Those inclined to view the Fed as a helpful institution, fostering financial stability in a world of error-prone capitalists, explain the creation of the Fed as a natural and healthy outgrowth of the troubled National Banking System. How helpful the Fed has been is questionable at best, and in a recent book edited by Joe Salerno and me — The Fed at One Hundred — various contributors outline many (though by no means all) of the Fed’s shortcomings over the past century.

    Others, mostly those with a skeptical view of the Fed, treat its creation as an exercise in secretive government meddling (as in G. Edward Griffin’s The Creature from Jekyll Island) or crony capitalism run amok (as in Murray Rothbard’s The Case Against the Fed).

    In my own chapter in The Fed at One Hundred I find sympathies with both groups (you can download the chapter pdf here). The actual creation of the Fed is a tragically beautiful case study in closed-door Congressional deals and big banking’s ultimate victory over the American public. Neither of these facts emerged from nowhere, however. The fateful events that transpired in 1910 on Jekyll Island were the evolutionary outcome of over fifty years of government meddling in money. As such, the Fed is a natural (though terribly unfortunate) outgrowth of an ever more flawed and repressive monetary system.

    Before the Fed

    Allow me to give a brief reverse biographical sketch of the events leading up to the creation of a monster in 1914.

    Unlike many controversial laws and policies of the American government — such as the Affordable Care Act, the Troubled Asset Relief Program, or the War on Terror — the Federal Reserve Act passed with very little public outcry. Also strange for an industry effectively cartelized, the banking establishment welcomed the Fed with open arms. What gives?

    By the early twentieth century, America’s banking system was in a shambles. Fractional-reserve banks faced with “runs” (which didn’t have to be runs with the pandemonium that usually accompanies them, but rather just banks having insufficient cash to meet daily withdrawal requests) frequently suspended cash redemptions or issued claims to “clearinghouse certificates.” These certificates were a money substitute making use of the whole banking system’s reserves held by large clearinghouses.

    Both of these “solutions” to the common bank run were illegal as they allowed a bank to redefine the terms of the original deposit contract. This fact notwithstanding, the US government turned a blind eye as the alternative (widespread bank failures) was perceived to be far worse.

    The creation of the Fed, the ensuing centralization of reserves, and the creation of a more elastic money supply was welcomed by the government as a way to eliminate those pesky and illegal (yet permitted) banking activities of redemption suspensions and the issuance of clearinghouse certificates. The Fed returned legitimacy to the laws of the land. That is, it addressed the government’s fear that non-enforcement of a law would raise broader questions about the general rule of law.

    The Fed provided a quick fix to depositors by reducing cases of suspensions of their accounts. And the banking industry saw the Fed as a way to serve clients better without incurring a cost (fewer bank runs) and at the same time coordinate their activities to expand credit in unison and maximize their own profits.

    In short, the Federal Reserve Act had a solution for everyone.

    Taking a central role in this story are the private clearinghouses which provided for many of the Fed’s roles before 1914. Indeed, America’s private clearinghouses were viewed as having as many powers as European central banks of the day, and the creation of the Fed was really just an effort to make the illegal practices of the clearinghouses legal by government institutionalization.

    Why Did Clearinghouses Have So Much Power?

    Throughout the late nineteenth century, clearinghouses used each new banking crisis to introduce a new type of policy, bringing them ever closer in appearance to a central bank. I wouldn’t go so far as to say these are examples of power grabs by the clearinghouses, but rather rational responses to fundamental problems in a troubled American banking system.

    When bank runs occurred, the clearinghouse certificate came into use, first in 1857, but confined to the interbank market to economize on reserves. Transactions could be cleared in specie, but lacking sufficient reserves, a troubled bank could make use of the certificates. These certificates were jointly guaranteed by all banks in the clearinghouse system through their pooled reserves. This joint guarantee was welcomed by unstable banks with poor reserve positions, and imposed a cost on more prudently managed banks (as is the case today with deposit insurance). A prudent bank could complain, but if it wanted to use a clearinghouse’s services and reap the cost advantages it had to comply with the reserve-pooling policy.

    As the magnitude of the banking crisis intensified, clearinghouses started permitting banks to issue the certificates directly to the public (starting with the Panic of 1873) to further stymie reserve drains. (These issues to the general public amounted to illegal money substitutes, though they were tolerated, as noted above.)

    Fractional-Reserve Free Banking and Bust

    The year 1857 is a somewhat strange one for these clearinghouse certificates to make their first appearance. It was, after all, a full twenty years into America’s experiment with fractional-reserve free banking. This banking system was able to function stably, especially compared to more regulated periods or central banking regimes. However, the dislocation between deposit and lending activities set in motion a credit-fueled boom that culminated in the Panic of 1857.

    This boom and panic has all the makings of an Austrian business cycle. Banks overextended themselves to finance the booming industries during America’s westward advance, primarily the railways. Land speculation was rampant. As realized profits came in under expectations, investors got skittish and withdrew money from banks. Troubled banks turned to the recently established New York Clearing House to promote stability. Certain rights were voluntarily abrogated in return for a guarantee on their solvency.

    The original sin of the free-banking period was its fractional-reserve foundation. Without the ability to fund lending activity with their deposit base, banks never would have financed the boom to the extent that it became a destabilizing factor. Westward expansion and investment would still have occurred, though it would have occurred in a sustainable way funded through equity investments and loans. (These types of financing were used, though as is the case today, this occurred less than would be the case given the fractional-reserve banking system’s essentially cost-free funding source: the deposit base.)

    In conclusion, the Fed was not birthed from nothing in 1913. The monster was the natural outgrowth of an increasingly troubled banking system. In searching for the original problem that set in motion the events culminating in the creation of the Fed, one must draw attention to the Panic of 1857 as the spark that set in motion ever more destabilizing policies. The Panic itself is a textbook example of an Austrian business cycle, caused by the lending activities of fractional-reserve banks. This original sin of the banking system concluded with the birth of a monster in 1914: The Federal Reserve. 

  • “Down With Americans, Long Live Putin!” Haitian Protesters Seek Russian Help Against US "Puppet" Regime

    A French language AFP report over the weekend featured surprising photographs of Haitians burning American flags as the unrest and chaos continues especially in the Haitian capital of Port-au-Prince.

    Major cities throughout Haiti have for days essentially been on “lockdown” due to civil unrest and mass protests demanding that President Jovenal Moise step down over charges of corruption and rampant inflation under his watch — yet unlike similar unrest happening hundreds of miles due south of the small Caribbean country in Venezuela, Washington has stood in support of the president, who since 2017 has found himself facing a flood of popular anger surrounding the PetroCaribe scandal.

    A man identifying himself only as Bronson, a Haitian protester, burns the US flag on February 15, via the APF.

    Though the mass protests have multiple layers in terms of motives, stemming mostly from skyrocketing inflation and the government’s failure to hold to account leaders caught embezzling from a multi-billion dollar Venezuelan program that sent discounted oil to Haiti, or the PetroCaribe affair, a number of the protest gatherings are distinctly anti-American in their rhetoric and symbolism, while at the same time being pro-Russian. 

    Reflecting the global geopolitical divide over the crisis in nearby Venezuela, the AFP report describes some of the anti-American elements to the protests as follows (based on a rough translation from the French): 

    A group of protesters burned an American flag Friday afternoon in the heart of the Haitian capital Port-au-Prince, calling for help from Russia to solve the crisis that paralyzed the country for over a week.

    “Down with Americans, long live Putin!” the roughly 200 demonstrators in the capital Port-au-Prince chanted, some holding up printouts with the face of the Russian president.

    The protester who set the American flag on fire, calling himself Bronson, told the AFP, “We are asking Russia, Venezuela and China to take a look at the misery we live in here.” Bronson and the group of protesters said the Haitian political system had for too long been under the thumb of Washington, and appealed to Russia and China for help.

    Bronson said further, as related by the AFP: 

    “We mean that we divorce completely Americans: we took too much occupation in the hands of the United States, we can not,” said Bronson, a small group protester who set the flag on fire.

    According to some 200 participants in the rally, former Haitian President Michel Martelly and his successor, the current head of state Jovenel Moise, were placed in power by the United States.

    Indeed over the weekend the White House said it is sticking by Moise’s leadership, and called for calm in the streets. 

    Haitian protesters appealing the Russian president Putin for help, via the AFP.

    Starting weeks ago Washington began putting immense pressure on Port-au-Prince to break ties with the Maduro regime in Venezuela, in recognition of self-styled “Interim President” Juan Guaido. 

    These pressures were successful and the Haitian government caved earlier this month, fueling the rage of many Hatians in the street, many of which were already angered over the impact that Washington’s oil sanctions on nearby Venezuelea are having on Haiti.

    Thus Jovenal Moise’s government so easily succumbing to Washington against Maduro was the last straw for many in a politically complex scandal which has grown for years as a result of the Petrocaribe deal, which began in earnest when it was revealed in 2017 that almost $4bn in funds earmarked for social development went missing, widely assumed to be the result of corrupt officials still holding positions of power within the Moise government ranks skimming on a mass scale. 

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    Meanwhile the US State Department urged all American citizens out of the country over the past days, and issued a no-not-travel advisory due to “crime and civil unrest.” This was followed on Saturday by national security adviser John Bolton issuing a statement for all sides in Haiti to “respect and protect their democracy” — a bit ironic considering he spent the rest of the day tweeting regime change related messages targeting Venezuela’s Maduro.

    He revealed in the tweet that he met with Haitian Foreign Minister on Friday “to express the United States’ enduring support for and friendship with Haiti.” He further urged “all of Haiti’s political actors to respect and protect their democracy, engage in dialogue, and put an end to the political violence.”

    This is certainly unlikely to mitigate the growing anti-American sentiment present in the protests, which have also included violent clashes with police, resulting in several deaths. 

  • China's HNA Conglomerate Dumps Even More Deutsche Bank Stock

    Chinese troubled conglomerate HNA, whose Co-Chairman Wang Jian allegedly committed suicide during a business trip to France last summer, has once – again – cut its stake in Deutsche Bank by nearly a fifth to 6.3%, a new SEC filing shows. That marks the latest reduction in HNA’s holdings of the largest German Bank, which as of February 8 held 7.64% of the voting rights.

    HNA’s C-Quadrat unit exercised options to sell 26.8 million Deutsche Bank shares for 363.4 million euros ($410 million) according to an SEC filing, BBG reported. The shares were sold at prices ranging from 11.45 euros to 16.70 euros apiece, far above current market prices, because the Chinese group had hedged its investment in Deutsche Bank with put options. Deutsche Bank shares closed at 7.752 euros in Frankfurt on Friday

    Even with its reduced holdings, HNA remains the largest shareholders in Germany’s largest lender, just ahead of the Qatari royal family, which owns 6.1% while Blackrock is in third spot with 100 million shares representing 4.85% of the shares outstanding.

    Hainan-based HNA started out as a regional airline but went on to take large stakes in companies such as Hilton Worldwide and Deutsche Bank, part of a $40bn acquisition binge that made it one of China’s largest owners of overseas assets, the FT summarizes. HNA initially bought into Deutsche Bank in early 2017 as part of a sweeping global acquisition spree which led the company to acquire billions in foreign companies and US real estate, borrowing heavily to amass a stake of close to 10% with the stake gradually reducing since then as this complex financing has unwound.

    But it has since trimmed its stake in installments, following an aggressive crackdown by Beijing targeting offshore money flows,  with high debts at the conglomerate fueling speculation about the future of its Deutsche stake as it reduces or exits some of its other holdings. In parallel, HNA has put its buying spree into reverse making a series of divestments that include parts of its core aviation business, in a bid to tackle the nearly $100bn debt pile it amassed, which last year sparked concerns that China’s financial conglomerates could become ground zero for a financial crisis engulfing China.

    One year ago, HNA itself was said to be on the verge of liquidation, however aggressive asset liquidations have so far deferred the company’s day of reckoning.

    HNA holds the stock through Austrian fund C-Quadrat and a chain of offshore holding companies, while Swiss bank UBS provided a derivatives product known as a funded equity collar to help build the stake. As Reuters further notes, HNA’s interests in the bank are represented through a member sitting on Deutsche Bank’s supervisory board. Before the latest reduction, C-Quadrat held a direct stake of 1.01 per cent in Deutsche Bank, with another 6.63 per cent held through equity collars. According to the FT, the reduction in the stake was the result of the expiry of these derivatives. In July of last year C-Quadrat transferred options on more than 26 million of its Deutsche Bank shares to JPMorgan Securities.

    Equity collars originally developed as a way to hedge against a drop in a company’s share price, with Saudi Arabia recently using such a collar to slash its exposure to Tesla’s volatile share-price swings. Investment banks can also use the mechanics of this hedging to help investors discreetly build a fresh stake in a company, while deploying little of their own capital.

    Adding insult to HNA’s financial injury, shares in Deutsche Bank have lost more than half their value since HNA started building its stake, hit by worries about its recurring losses, high litigation costs and falling market share in investment banking.

    Investor have often puzzled at the logic behind China’s purchase of DB share, with HNA’s overarching strategy behind the Deutsche Bank stake never becoming clear. Meanwhile, banking supervisors in Europe have felt uneasy about the complex financing structure for a while, as it allows the group to exert corporate control while employing very little capital.

    To be sure, HNA has long been a controversial shareholder for Deutsche Bank. Former CEO John Cryan initially refused to meet with its executives; he eventually relented when the issue fueled tensions with Deutsche Bank Chairman Paul Achleitner, who was personally involved in wooing the investor.

    Shortly after the Chinese conglomerate built its stake, Austrian investor and HNA confidant Alexander Schütz joined Deutsche Bank’s supervisory board. Mr Schütz, who heads the C-Quadrat group through which HNA holds its stake, got a five-year extension of his term at Deutsche Bank’s annual shareholder meeting in May last year.

    As a reminder, HNA plans to dispose of its entire stake in Germany’s largest lender according to prior reports.

    As for Deutsche Bank whose shares continued to plumb all time lows, the fact that its largest investor has continued to trim its holdings and is now down nearly 40% from its peak, and will continue to do so until it is fully out, will hardly generate much buying interest for what was Europe’s worst major stock in 2018. Following recent earnings, and a recent dovish U-turn by the ECB which has collapse Europe’s rate hike odds not to mention the bund yield curve, 2019 isn’t looking any better.

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