- 58% of Americans Don’t Think Russian “Hacking” Changed Election … 56% Believe U.S. Should Improve Relations with Russia
Despite the evidence–free drumbeat of propaganda and hysteria, a new CNN/ORC poll finds that Americans are remaining level-headed about the Russian hacking allegations:
Majorities say that … that the outcome of the election would have been the same regardless of the information released (58% say that). Further, 56% say that despite this situation, the US ought to continue its efforts to improve relations with Russia rather than take strong economic and diplomatic steps against Russia.
It’s almost enough to restore my faith in my fellow Americans …
- "Dull Draghi" – What Wall Street Expects From The ECB Tomorrow
While ECB President Mario Draghi may sound slightly hawkish at tomorrow’s press conference after an unexpectedly strong acceleration in CPI in December and European economic growth modestly picking up, the ECB is set to argue on Thursday that its extra-easy policy stance is still needed to keep the recovery on course. As a result, it is all but certain to leave current monetary policy in place and maintain a promise for lengthy stimulus, having extended its bond-buying program just last month coupled with the tapering (just don’t call it a taper) of its bond purchases this year.
ECB President Mario Draghi can argue the bank has done its part to mend growth, but he will also note the recovery is not self-sustaining, underlying inflation is weak and political risk from key elections weighs on the outlook. So turning down the ECB taps now is inappropriate, he is expected to say.
According to Reuters, on the face of it, Draghi should be relaxed. Inflation hit a three year high of 1.1% last month (the ECB expects it to hit 1.7% in 2019), manufacturing activity is accelerating and confidence indicators are firming, all pointing to solid growth at the end of last year. Additionally, euro zone business growth was the fastest in more than five years in December, order books are surging on export demand, and consumption is holding up, despite rising energy costs, all pointing to the sort of resilience not seen since before the bloc’s debt crisis. Of course, it could all be transitory as the “Trump” effect shifts to Europe, but the answr won’t be known for a few more months.
So what does Wall Street expect? According to a Bloomberg survey, the ECB will wait until at least its meeting on Sept. 7 to announce any new policy measures As a result, Bofa strategists expect Draghi to sound “as dull as possible” to keep the message sent at the previous meeting intact. Confirming this, ECB’s Yves Mersch said on Jan. 6 that improving euro-area economic numbers and a faster-than-forecast inflation pickup aren’t enough to warrant an immediate shift in the policy.
Here is a summary breakdown of select outlooks:
BofAML (Athanasios Vamvakidis, Gilles Moec)
- Draghi will endeavor to be as dull as possible, so as not to generate too many expectations on any further change in stance any time soon
- Any deviation from the December message on the inflation outlook and/or further delay in the implementation of the new QE parameters would create scope for bonds to underperform current forwards
- Risk for euro small and balanced; any hawkish statements that strengthen the euro during the Q&A could be an opportunity to sell EUR/USD again
JPMorgan (strategists including Fabio Bassi)
- Don’t expect the ECB meeting to break much new ground; ECB will likely express satisfaction at the improvements in the growth and inflation outlook, at the same time stressing that there is no reason to think about tapering more quickly than the Dec. announcement
NatWest Markets (Anna Tokar, Giles Gale)
- Unlikely to give significant new clues to the ECB’s reaction function
- Since the Dec. meeting, data has been solid; expect the Council’s economic assessment may be slightly more optimistic, in line with the assessment of the Eurozone growth outlook
- However, policy debate should be unchanged and simply reference the decisions taken in Dec
Citi (strategists including Harvinder Sian)
- Meeting is too close to the policy moves enacted last month to warrant a material shift in ECB tone, even if data has been more buoyant than expected
- Any change to the reference of growth risks being to the downside will have to await more data and perhaps even clarity on the new U.S. administration’s policies
- Think that any further tapering risk starts from June meetings onwards, but the rise in oil prices and a drop in euro could see markets re-price from the March staff forecasts
- Expect some focus on the 33% issue limit, with Draghi likely to repeat that there are legal issues in up- sizing the issuer limit on legal grounds; many investors don’t believe the limit is a hard line in the sand –- despite the fact Portuguese and Irish bond valuations already reflect a less supportive ECB backdrop
UniCredit (economist Marco Valli)
- ECB President Draghi will sound constructive, but dovish
- He will probably acknowledge that risks in the short term are moving toward faster-than-expected headline inflation and more balanced growth assessment
- Also expects Draghi to emphasize that uncertainty remains elevated and the medium-term outlook hasn’t changed much from last month
- ECB still wants financial conditions to remain very loose
Deutsche Bank (strategists including Francis Yared)
- Next step for the ECB should be to shift to a neutral stance by removing reference that rates may go lower in the introductory statement; may be too early to do so in Jan. meeting, but the overall tone of the press conference should suggest that the policy stance is evolving in that direction
ING (Carsten Brzeski)
- The December decision has put the ECB on autopilot at least until the summer and until after the Dutch and French elections. This autopilot should also immunize the ECB against short-term volatility in macro data.
Commerzbank
- The lending channel is no longer clogged up, but it is not completely free either and progress has only been possible thanks to massive measures by the ECB. If monetary policy were to be tightened again, and the burdens from existing loans were to increase once more, the lending channel would close and the economic picture would worsen considerably again.
- Nothing Is Real: When Reality TV Programming Masquerades As Politics
Submitted by John Whitehead via The Rutherford Institute,
“There are two ways by which the spirit of a culture may be shriveled. In the first – the Orwellian – culture becomes a prison. In the second – the Huxleyan – culture becomes a burlesque. No one needs to be reminded that our world is now marred by many prison-cultures…. it makes little difference if our wardens are inspired by right- or left-wing ideologies. The gates of the prison are equally impenetrable, surveillance equally rigorous, icon-worship pervasive…. Big Brother does not watch us, by his choice. We watch him, by ours…. When a population becomes distracted by trivia, when cultural life is redefined as a perpetual round of entertainments, when serious public conversation becomes a form of baby-talk, when, in short, a people become an audience, and their public business a vaudeville act, then a nation finds itself at risk; culture-death is a clear possibility.”— Professor Neil Postman
Donald Trump no longer needs to launch Trump TV.
He’s already the star of his own political reality show.
Americans have a voracious appetite for TV entertainment, and the Trump reality show—guest starring outraged Democrats with a newly awakened conscience for immigrants and the poor, power-hungry Republicans eager to take advantage of their return to power, and a hodgepodge of other special interest groups with dubious motives—feeds that appetite for titillating, soap opera drama.
After all, who needs the insults, narcissism and power plays that are hallmarks of reality shows such as Celebrity Apprentice or Keeping Up with the Kardashians when you can have all that and more delivered up by the likes of Donald Trump and his cohorts?
Yet as John Lennon reminds us, “nothing is real,” especially not in the world of politics.
Much like the fabricated universe in Peter Weir’s 1998 film The Truman Show, in which a man’s life is the basis for an elaborately staged television show aimed at selling products and procuring ratings, the political scene in the United States has devolved over the years into a carefully calibrated exercise in how to manipulate, polarize, propagandize and control a population.
Indeed, Donald Trump may be the smartest move yet by the powers-that-be to keep the citizenry divided and at each other’s throats, because as long as we’re busy fighting each other, we’ll never manage to present a unified front against tyranny in any form.
This is the magic of the reality TV programming that passes for politics today.
It allows us to be distracted, entertained, occasionally a little bit outraged but overall largely uninvolved, content to remain in the viewer’s seat.
The more that is beamed at us, the more inclined we are to settle back in our comfy recliners and become passive viewers rather than active participants as unsettling, frightening events unfold.
Reality and fiction merge as everything around us becomes entertainment fodder.
We don’t even have to change the channel when the subject matter becomes too monotonous. That’s taken care of for us by the programmers (the corporate media).
For instance, before we could get too worked up over government surveillance, the programmers changed the channels on us and switched us over to breaking news about militarized police. Before our outrage could be transformed into action over police misconduct, they changed the channel once again to reports of ISIS beheadings and terrorist shootings. Before we had a chance to challenge what was staged or real, the programming switched to the 2016 presidential election.
“Living is easy with eyes closed,” says Lennon, and that’s exactly what reality TV that masquerades as American politics programs the citizenry to do: navigate the world with their eyes shut.
As long as we’re viewers, we’ll never be doers.
Studies suggest that the more reality TV people watch—and I would posit that it’s all reality TV—the more difficult it becomes to distinguish between what is real and what is carefully crafted farce.
“We the people” are watching a lot of TV.
On average, Americans spend five hours a day watching television. By the time we reach age 65, we’re watching more than 50 hours of television a week, and that number increases as we get older. And reality TV programming consistently captures the largest percentage of TV watchers every season by an almost 2-1 ratio.
This doesn’t bode well for a citizenry able to sift through masterfully-produced propaganda in order to think critically about the issues of the day, whether it’s fake news peddled by government agencies or foreign entities.
Those who watch reality shows tend to view what they see as the “norm.” Thus, those who watch shows characterized by lying, aggression and meanness not only come to see such behavior as acceptable and entertaining but also mimic the medium.
This holds true whether the reality programming is about the antics of celebrities in the White House, in the board room, or in the bedroom.
It’s a phenomenon called “humilitainment.”
A term coined by media scholars Brad Waite and Sara Booker, “humilitainment” refers to the tendency for viewers to take pleasure in someone else’s humiliation, suffering and pain.
“Humilitainment” largely explains not only why American TV watchers are so fixated on reality TV programming but how American citizens, largely insulated from what is really happening in the world around them by layers of technology, entertainment, and other distractions, are being programmed to accept the brutality, surveillance and dehumanizing treatment of the American police state as things happening to other people.
The ramifications for the future of civic engagement, political discourse and self-government are incredibly depressing and demoralizing.
This not only explains how a candidate like Donald Trump with a reputation for being rude, egotistical and narcissistic could get elected, but it also says a lot about how a politician like Barack Obama—whose tenure in the White House was characterized by drone killings, a weakening of the Constitution at the expense of Americans’ civil liberties, and an expansion of the police state—could be hailed as “one of the greatest presidents of all times.”
This is what happens when an entire nation—bombarded by reality TV programming, government propaganda and entertainment news—becomes systematically desensitized and acclimated to the trappings of a government that operates by fiat and speaks in a language of force.
Ultimately, as I make clear in my book Battlefield America: The War on the American People, the reality shows, the entertainment news, the surveillance society, the militarized police, and the political spectacles have one common objective: to keep us divided, distracted, imprisoned, and incapable of taking an active role in the business of self-government.
If “we the people” feel powerless and apathetic, it is only because we have allowed ourselves to be convinced that the duties of citizenship begin and end at the ballot box.
Marching and protests have certainly been used with great success by past movements to foment real change, but if those marches and protests are merely outpourings of discontent because a particular politician won or lost with no solid plan of action or follow-through, then what’s the point?
Martin Luther King Jr. understood that politics could never be the answer to what ailed the country. That’s why he spearheaded a movement of mass-action strategy that employed boycotts, sit-ins and marches. Yet King didn’t march against a particular politician or merely to express discontent. He marched against injustice, government corruption, war, and inequality, and he leveraged discontent with the status quo into an activist movement that transformed the face of America.
When all is said and done, it won’t matter who you voted for in the presidential election. What will matter is where you stand in the face of the injustices that continue to ravage our nation: the endless wars, the police shootings, the overcriminalization, the corruption, the graft, the roadside strip searches, the private prisons, the surveillance state, etc.
Will you tune out the reality TV show and join with your fellow citizens to push back against the real menace of the police state, or will you merely sit back and lose yourself in the political programming aimed at keeping you imprisoned in the police state?
- DOJ Ordered To Preserve Gmail Records Of Clinton-Colluding Assistant AG Peter Kadzik
A Judicial Watch lawsuit seeking records related to potential collusion between the Justice Department and Hillary Clinton operatives during her email investigation has resulted in a federal judge issuing a rare order instructing the DOJ to preserve the Gmail records of the now infamous Assistant Attorney General Peter Kadzik. The order came from U.S. District Court Judge Emmet Sullivan, a Clinton appointee, and gave the DOJ until this morning to report back on steps taken to preserve the personal email accounts of Kadzik. Per Politico:
“Defendant shall take all necessary and reasonable steps to ensure the preservation of all agency records and potential agency records between the dates of December 1, 2014 and November 7, 2016 in any personal email account of Assistant Attorney General for Legislative Affairs Peter Kadzik. Any question about whether a record is an agency record shall be resolved in favor of it being an agency record.”
Of course, as we pointed out back in the fall, various emails provided by WikiLeaks exposed Kadzik repeatedly colluding with the Clinton campaign by providing campaign manager, and long-time friend, John Podesta with inside information on the DOJ’s investigation of Hillary’s email scandal. Moreover, proving just how close they were, in a Sept. 2008 email, Podesta emailed an Obama campaign official to recommend Kadzik for a supportive role in the campaign saying that Kadzik was a “fantastic lawyer” who “kept me out of jail”…now that’s a bond that lasts.
Of course, in response to Judge Sullivan’s order, the DOJ promptly noted that Mr. Kadzik was unable to locate any work-related emails on his Gmail account…well how convenient.
“It is the government’s understanding that Mr. Kadzik has located no agency records or potential agency records in his Gmail account and that, therefore, there are no such documents to preserve. Nevertheless, out of an abundance of caution and consistent with the preservation order that Judicial Watch seeks, the government has instructed Mr. Kadzik to preserve any potential agency records in his Gmail account, should any exist, and Mr. Kadzik has agreed to do so,” the Justice Department filing said.
And since we have no doubt that Kadzik performed a thorough, impartial scan of his Gmail account while resisting the urge to delete “inconvenient” records, we assume that he simply overlooked this email which provided a very timely “Heads up” to John Podesta regarding confidential information about DOJ hearings and FOIA requests. Simple, honest mistake, no doubt.
How long can this farce continue on before government officials are finally forced to do what private corporations have been forced to do for years, namely requiring that their employees use secured, archived email systems for official communications and impose stiff penalties for non-compliance. Seems simple enough.
- China On Alert For "Death Of Night" Trump Tweets
Submitted by Saxo Bank's Martin O'Rourke via TradingFloor.com,
- Donald Trump's inauguration to take place on Friday
- China's relationship with president-elect off to difficult start
- Trump angered China by fielding call from Taiwanese counterpart after victory
- Trump's anti-supranationalism might favour China if TPP is abandoned — Wei Li
- Currency manipulation attacks not borne out by long term — Wei Li
- Anti-trade rhetoric difficult to sustain in intricate global trade chain — Wei Li
- Trumpflation trade may boost commodity exporters out of China
- Geopolitical risk possible but markets have been adept at absorbing pain — Wei Li
Read more on Saxo's page dedicated to Trump's inauguration
Chinese investors will keep a close eye on developments around Donald Trump's inauguration on Friday.
Among many strands that are worrying investors in the run up to the inauguration of Donald Trump on January 20, the president-elect's foreign policy pivot towards Moscow and intensely confrontational stance towards China lurks as a deeply disturbing seismic-shift in geopolitics.
Trump's been going after China for some time now. If that looked like just a good bit of old-fashioned scapegoating in the US presidential campaign designed to create sweet music with his highly disaffected hinterland, there has, if anything, been a ratcheting up of the rhetoric ever since his victory was confirmed on November 8.
When he fielded that call from Taiwanese president Tsai Ing-wen in December, Beijing offered him a diplomatic path out of the maze by trying to suggest Tsai had lured the president-elect into a trap. Trump not only snubbed the lifeline, he reinforced the point a few days later by questioning the whole One-China approach that has defined US policy since 1979 and then lambasting China for the seizure of a US drone in disputed waters before Christmas.
The tone mirrors Trump's pre-election mantra that China manipulated its currency to help its export sector and stole US manufacturing jobs and has seemingly set Washington on a collision course with Beijing that could emerge as one of the fundamental themes of the next four years. We are, after all, talking about the two biggest economies in the world.
It's certainly got Beijing on red alert, says Wei Li, iShares head of investment strategy EMEA, in interview with TradngFloor this week.
"There are some really unexpected things happening with the Trump administration and there are no doubt a lot more people paying attention to Twitter at 2am in the night," Wei Li says, in reference to Trump's liking for an unguarded tweet or two in the dead of night. "We are operating in a very different environment where markets are reacting and adapting to changes that have not been seen for a good decade or more."
Wei Li says that it is important to put Trump's criticisms under the microscope and see if they stand up to scrutiny. The currency manipulation charge is once such hotspot.
"It's actually quite difficult to say where the Chinese offshore yuan should be trading so labelling it as 'currency manipulation' is quite a statement," she says. "The Chinese yuan devaluation fear started becoming a mainstream rhetoric in the past couple of years but in years prior to that the Chinese yuan had been appreciating."
USDCNH at the end of 2016 came within a whisker of breaking through the key 7.0 handle before concerted efforts including intervention by the People's Bank of China and slowing capital outflows stabilised dragging the pair back to the 6.800 zone.
USDCNH was at 6.8575 at 1341 GMT, January 16, according to SaxoTraderGO.
USDCNH came within a whisker of breaking 7.0 at the end of 2016 and the steady devaluation of the offshore yuan has given Trump fuel for a pernicious campaign
Source: SaxoTraderGO
"The choice in China was seen as one in which you are either dealing with a businessman like trump where the focus is around profit and figures and the alternative of Hillary Clinton, the continuation effectively of the status quo and a more classic and experienced politician," says Chinese-native Wei Li. "There are still a lot of details as to how the relationship will pan out…but if the anti-trade rhetoric were to continue, you could see that hitting growth potential."
"But it's hard to see the rhetoric continuing on the same scale because of the very intricate nature of the global supply chain," says the London-based analyst. "You can't just write off one aspect of the chain and not consider the impact on the rest so there are a lot of nuanced factors at play and it is probably too early to say what the impact will be on the Sino-US trade relationship."
Wei Li: 'If the US walks away from TPP, then this could create an opportunity for China.'
China, says Wei Li, could even benefit from Trump's clear anti-internationalism stance if he sees through his promise to abandon the Trans-Pacific Partnership.
"It's clear that if the US walks away from TPP, then this could create an opportunity for China in the global trade picture if it leaves a gap," she says. "TPP was a deal that included many countries but [not] China so if that deal does not happen in its original scale, then it may not be a bad thing for China in terms of its market share of global trade."
"There has to be more room to go in the reflation trade, which could also provide quite a stimulus to Chinese commodity exports if consumer goods come under demand," she adds. "We track US data and factor in other content through our in-house GPS growth monitor and we were ahead of consensus in 2016 and continue to be for 2017 even though there has been some catch up recently."
The monitor still points to upside growth."
Certainly, the run up in global equities in the last two months that took the Dow Jones Index to within a point of cracking 20,000 seems to indicate that markets are relatively benign about the ongoing Sino-US relationship.
"The way that markets have reacted and investor positioning seems to show that any tailrisk of a political nature is not fully priced in," says Wei Li.
"Investors have found selling volatilities via Vix futures has been profitable because they have seen vols spikes don't last and this has been a good strategy," she adds.
""Markets have already shown they are adept and resilient at handling Brexit, Trump's election and the Italian referendum."
"The nature of geopolitical tail risk is it is hard to predict ahead of when it happens but what we have seen is that risk volatility has not been prolonged."
China – mysterious, inscrutable and beyond Donald Trump's grasp.
- Lockheed Agrees To Cut F-35 Price Below $100 Million In Latest Victory For Trump
Less than a month after president-elect Trump first tweeted about the F-35's high costs, and a week after he brought up the F-35 in his first press conference, Reuters reports that The U.S. Department of Defense and Lockheed Martin are close to deal for a contract worth almost $9 billion as negotiations are poised to bring the price per F-35 below $100 million for the first time.
The Washington Post notes that in recent months, the president-elect has not been shy about taking to social media to criticize or heap praise on individual companies and military programs.
A Dec. 6 tweet bashed Chicago-based Boeing for what he referred to as the “out of control” cost of the Air Force One presidential airplane. Weeks later he turned in Boeing’s favor at the expense of Lockheed, tweeting that he had asked the company to “price out a comparable F-18 Super Hornet” because of the F-35’s high costs.
Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!
— Donald J. Trump (@realDonaldTrump) December 22, 2016
He also briefly brought up the F-35 in a Wednesday news conference intended to clarify his business conflicts, saying he would “do some big things” with the program and find a way to trim costs and improve the plane.
And then, after emerging from a meeting with President-elect Donald Trump at Trump Tower in New York last Friday, Lockheed Martin chief executive Marillyn Hewson told reporters that the Bethesda, Md.-based defense giant is close to a new contract deal that would cut the cost of the F-35 Joint Strike Fighter program and also create jobs.
“We had the opportunity to talk to [Trump] about the F-35 program, and I certainly share his views that we need to get the best capability to our men and women in uniform and we have to get it at the lowest possible price,” Hewson said.
“So I’m glad I had the opportunity to tell him that we are close to a deal that will bring the cost down significantly from the previous lot of aircraft to the next lot of aircraft and moreover it’s going to bring a lot of jobs to the United States.”
Which leads to tonight's news, via Reuters, that they are close to deal for a contract worth almost $9 billion as negotiations are poised to bring the price per F-35 below $100 million for the first time, people familiar with the talks said Wednesday.
Talks are still ongoing for the tenth batch of stealthy fighter jets with a deal for 90 planes expected to be announced by the end of the month, three people said on condition of anonymity.
A Lockheed representative declined to comment and a representative for the fighter program said negotiations are ongoing.
The U.S. Defense Department expects to spend $391 billion in the coming decades to develop and buy 2,443 of the supersonic warplanes. Though the F-35 program has been criticized by Trump as too expensive, the price per jet has already been declining. Lockheed, the prime contractor, and its partners have been working on building a more cost-effective supply chain to fuel the production line in Fort Worth, Texas.
The overtures from the incoming administration may have had some effect, but Lockheed's F-35 program manager Jeff Babione said last summer that the price of the F-35A conventional takeoff and landing version of the jet would drop to under $100 million per plane in this contract for the 10th low-rate production batch.
* * *
Another victory for Trump? Or as John Harwood would say, this would probably have happened anyway…
- Pittsburgh Mall Once Worth $190 Million Sells For $100
We have frequently noted the precarious state of the U.S. mall REITs (see “Myopic Markets & The Looming Mall REITs Massacre” and “Is CMBS The Next “Shoe To Drop”? GGP Sales Suggest Commercial Real Estate Crashing“), but the epic collapse of the Galleria at Pittsburgh Mills paints a uniquely horrific outlook for mall operators. The 1.1 million square foot mall, once valued at $190 million after being opened in 2005, sold at a foreclosure auction this morning for $100 (yes, not million…just $100). According to CBS Pittsburgh, the mall was purchased by its lender, Wells Fargo, which credit bid it’s $143 million loan balance, which was originated in 2006, to acquire the property.
Pittsburgh Mills mall auctioned off for a hundred bucks. Bid by Wells Fargo which is holding 149 Mill. Debt on mall.
— PAUL D. MARTINO (@PMARTKDKA) January 18, 2017
Like many malls around the country, Pittsburgh Mills has suffered the consequences of weak traffic amid tepid demand from the struggling U.S. consumer resulting in massive tenant losses. According to the Pittsburgh Tribune, the mall is only 55% occupied and was last appraised for $11 million back in August.
The value of the mall has been plummeting since it opened in July 2005. Once worth $190 million, it was appraised at $11 million in August.
The mall has lost a number of key tenants over the years, including a Sears Grand store. The mall’s retail space is nearly half empty, with about 55 percent occupied.
Of course, New York Fed President Bill Dudley laid out a very compelling case for retailers yesterday if he can just convince American homeowners to commit the same mistakes they made back in 2006 by repeatedly withdrawing all of the equity in their homes to fund meaningless shopping sprees. So it’s probably safe to keep buying those mall REITs…afterall those 3% dividend yields are amazing alternatives to Treasuries and you’re basically taking the same risk…assuming you overlook the billions of property-level debt that ranks senior to your equity position.
- China Central Bank Injects A Record 1.035 Trillion In Bank Liquidity This Week
Heading into the Chinese Lunar New Year, local banks are suddenly starved for liquidity like never before. On Tuesday China’s benchmark money-market rate jumped the most in two years, with unprecedented cash injections by the central bank being overwhelmed by demand before the Lunar New Year holidays.
Demand for cash in China tends to increase before the Lunar New Year holidays, when households withdraw money to pay for gifts and get-togethers. Month-end corporate tax payments are adding to the pressure this time, with the break running from Jan. 27 through Feb. 2. At that point the PBOC usually steps in with liquidity “injections” in the form of reverse repos. However, what it has done this year is literally off the charts.
On Wednesday, the People’s Bank of China put in a net 410 billion yuan ($60 billion) through open-market operations, the biggest daily “injection” on record. Despite this massive boost in liquidity, the interbank seven-day repurchase rate still jumped 35 basis points, the most since December 2014, to 2.76 percent, according to weighted average prices. Yesterday, the overnight repo rate rose 10 basis points to 2.50 percent, the highest since April 2015, according to weighted average prices.
So, with liquidity still scarce, moments ago on Thursday morning, the PBOC added another net injection of 190 billion consisting of 100Bn in 7-day repo and 150BN in 28-day repos, offset by 60bn yuan in previous loans maturing.
As a result, the PBOC has injected a net of 1.035 trillion yuan via reverse repos so far this week, an all time high.
It was unclear if the rise in 7-day interbank repo rate had continued to rise.
“The PBOC aims to ensure that the liquidity situation remains adequate, while the 28-day reverse repo is apparently targeted at covering the holidays,” said Frances Cheung, head of rates strategy for Asia ex-Japan at Societe Generale SA. “There could also be preparation for any indirect tightening impact from potential outflows.”
Liquidity conditions are under pressure also because loans are due to mature under the Medium-term Lending Facility, according to Long Hongliang, a trader at Bank of Hebei Co. in Beijing. There are 216.5 billion yuan of MLF contracts maturing this week, data compiled by Bloomberg show. The PBOC offered 305.5 billion yuan of loans to lenders using the tool on Jan. 13, compared with 105.5 billion yuan due that day.
As Bloomberg notes, China’s central bank has been offering more 28-day reverse repos than one-week loans in the past two weeks, while curbing the injection of cheaper, short-term funds amid efforts to lower leverage in the financial system. It drained a net 595 billion yuan in the first week of January, before switching to a net injection of 100 billion yuan last week as the seasonal funding demand started to emerge. However, this week’s injection so far of over CNY 1 trillion suggests that there may be something more to the banks’ liquidity needs than simple calendar action.
- Neither Intelligent Nor Wise, But Definitely Dangerous
Submitted by Robert Gore via StraightLineLogic.com,
The one adjective that best describes the Deep State is “soulless.”
If you stay up with current events and read widely enough, especially non-mainstream media, you can often detect the Deep State and its works. Precise delineation is impossible, but the Deep State is the top ranks of the intelligence agencies, military, Departments of State, Homeland Security, Defense, Treasury, and Justice, the Federal Reserve, a myriad of banks, corporations, law firms, foundations, universities, and powerful behind-the-scenes string-pullers. When SLL talks about the Deep State, it is from the same vantage point as the blindfolded Indians describing the elephant: an admittedly limited and ignorant view of an amorphous entity that does its best to obscure itself to outsiders. Deep Staters often hide what they’re doing even from other Deep Staters.
The Deep State may have had its genesis in the late 1800s, when powerful business, financial, and political figures came together to push passage of the income tax amendment and the Federal Reserve Act, essentials for their desire to dramatically expand the power of the federal government. By the end of the second world war, it had coalesced around two unwavering convictions: the Deep State should run the United States government, and the United States government should run the world. These were not the whispers and murmurs of a super-secret cabal, they were openly discussed by policy makers, the media, and academia in the United States and Great Britain, the junior member of a world-dominating Anglo-American axis.
For over four decades, the Deep State depicted the Soviet Union as an existential threat, justifying their consolidation of power, US government global intervention, and repression at home. It gave itself a moral Get Out of Jail Free card: dastardly Soviet tactics had to be fought with dastardly American tactics. Despite ritualistic expressions of regret: “It’s a damn shame we have to do this, but such is the nature of our enemy,” many in the military and intelligence services relished that aspect of their jobs. Few were called to account for their reprehensible deeds, many of which will remain forever unexposed.
While it was Republican Dwight Eisenhower who warned of the “military-industrial complex” in his farewell address, most of what little public opposition that complex and the intelligence agencies have received since then has come from Democrats. After the Bay of Pigs fiasco, President Kennedy fired CIA chief Allen Dulles, reportedly vowing to shatter the agency into a thousand pieces and scatter it to the winds. The debate rages as to whether his vow had anything to do with his assassination, but the possibility cannot be dismissed. (Oddly, Dulles was on the Warren Commission and by most accounts stage-managed its investigation.)
Democratic senator Frank Church led a Senate select committee investigation on intelligence in 1975. His investigation gave most Americans their first glimpse into the CIA’s dirty laundry, notably assassinations and attempted assassinations of various foreign leaders. (The practice was supposedly outlawed by an executive order issued by President Gerald Ford, which was replaced by one issued by President Ronald Reagan. That order didn’t prevent US acquiescence to and complicity in the murder of Muammar Gaddafi. “We came, we saw, he died!”) Also revealed was the CIA and FBI’s interception, opening, and photographing of domestic mail. Senator Church publicly expressed grave misgivings about the government’s nascent electronic surveillance capabilities. He must be rolling in his grave over what it does now.
It was also the “Democratic” press, primarily the New York Times and The Washington Post, that took the lead in exposing scandals with intelligence angles and opposing some of America’s military interventions, notably Vietnam. Unfortunately, in the aftermath of the 9/11 attacks the Democratic-dominated mainstream media climbed into bed with the Republican administration. The weapons of mass destruction and the Saddam Hussein-al Qaeda stories, based on doctored and phony intelligence, were sold to the American people as the justifications for the regime-change invasion of Iraq. There were almost no editorial objections to that or subsequent regime-change operations, the Patriot Act’s assault on the Bill of Rights, or to the muddled, impossible to define or limit concept of a global, preemptive war on terror. Although that war has been a predictable failure, the mainstream press will not even acknowledge it’s two most obvious consequences: the further spread of terrorism and the refugee flows from Middle Eastern and Northern African war zones.
The problem at the heart of intelligence agencies and their oversight is the information they collect. It invariably includes dirt that can be used against those who might question or oppose them. There is not a person on the planet who doesn’t have some aspect of his or her life they want to remain private. It’s no mystery why a former KGB agent runs Russia, why all the retirement rules were waived so J. Edgar Hoover could stay on as head of the FBI until his death, how a former head of the CIA and then his son acquired the power base that got them both elected president (and they were trying for number three). Threatened or actual blackmail is a powerful weapon, except for that .000000001 percent who lead unblemished, exemplary lives. That weapon renders a secret intelligence function incompatible with civil liberties and popular control of the government.
The recent election was a revolt by the electorate against their incompetent, corrupt rulers. Hillary’s Clinton’s nomination was the exclamation point on the Democratic party’s moral bankruptcy, a final repudiation of the party and its aligned media’s attempts, however incomplete and compromised, to check the Deep State. Given that abdication, its embrace of the intelligence agencies’ perpetration of fake news, support of an increasingly confrontational stance with Russia in hopes of provoking a war, and tacit endorsement of violence during Donald Trump’s inauguration come as no surprise. Grasping for the power they’ve been denied, they’ll try anything.
There has been much talk of a Deep State “coup” during its battle against Donald Trump, but how can those who control the government stage a coup? What they are doing is taking action against an opponent who has ripped away the facade of popular control and may pose a threat to their power and position. Deep State rule has been neither intelligent nor wise. However, it would be unintelligent and unwise to therefore conclude it’s not dangerous. That it would try to deny the duly elected choice of the American people the presidency bespeaks arrogance completely disconnected from morality. That it would try to provoke violence from nuclear-armed Russia and inauguration “demonstrators” in American cities bespeaks a disregard of extreme risks and potentially catastrophic consequences, not just to the citizenry they despise, but to themselves as well.
They must be opposed, stopped, and scattered to the winds (which would, in a perfect world, blow some of them into prison). Donald Trump may be the last, best hope. The intelligent and wise will be on full alert, prepared for the risks and dangers…should he fail or succeed.
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