- The Collapse Of 'Real' Media Credibility (In 3 Simple Images)
Two words – “nailed it”
What a difference 4 months makes… From Meltdown to Total Meltdown to Man Of The Year…
h/t @insidegame
As FoxNews notes however, while President-elect Donald Trump was named Time magazine’s Person of the Year on Wednesday, the honor basically ended there.
While describing Trump as the real change-maker of 2016, the magazine also ragged on the Republican president-elect as a “huckster” and “demagogue” while reserving its most glowing praise for runner-up Hillary Clinton — whom the edition breathlessly described as “an American Moses.”
In describing Trump, Time’s article almost exclusively used backhanded compliments. For instance, while the piece said he “did what no American politician had attempted in a generation,” it added that he “magnified the divisions of the present, inspiring new levels of anger and fear within his country.”
…
The article on Hillary Clinton is much different. Subtitled “The winner of the popular vote leaves a complicated legacy,” the tone is worlds away from the fulminating darkness that permeates the Trump piece.
The opening paragraph reads more like the prologue of St. John’s Gospel than an essay on a presidential runner-up, saying of Clinton: “she became a symbol in a fight that was about much more than symbolism.”
“She’s the woman who was almost President, she is what might have been and what will yet be.”
“Like an American Moses, she was an imperfect prophet, leading women to the edge of the Promised Land. Now it’s up to another woman to enter it.”
The big question is, will TIME name Putin ‘Man of the Year’ in 2017?
- Yuan Strengthens After Rebound In China Exports, Trade Balance Disappoints
It appears that devaluing your currency against by over 10% in a year against your major trading partners does have some affect (albeit delayed). China Exports (in Yuan terms) grew at 5.9% in November (the fastest growth since March) (well ahead of the expected 1% decline). Imports, however, also soared (by 13%) in Yuan terms. However, in USD terms, Imports rose by the most since Sept 2014 (and exports managed a small rise) as China's trade surplus slipped and missed expectations. Offshore Yuan is strengthening modestly on the print.
A 10%-plus devaluation…
And in Yuan terms, China Exports are surging…
And in USD terms, Exports also managed a small improvement (as imports soared)…
Big jumps in exports to US (+6.9% YoY), Taiwan (+6.5%), and Germany (+5.1% YoY) but exports to Russia soared 26.1% and Brazil by 36.9%.
China import growth was centered on Japan (+17.2%) and Australia (+13.7%), but UK's massive 37.6% surge was the standout.
As Bloomberg notes, Exports stabilizing suggests demand remains intact for now as the world’s largest exporter faces potential headwinds and policy uncertainty as Donald Trump prepares to take office Jan 20.
Exports are getting a lift from "likely improvement in global demand," Song Yu, the Beijing-based chief China economist at Beijing Gao Hua Securities Co., the mainland joint-venture partner of Goldman Sachs Group Inc., wrote in a recent note.
China's trade balance continues to trend lower however…
And the immediate reaction is a modest strengthening in offshore Yuan…
- Rise Of The Machines: Millions Of American Jobs Will Be Wiped Out In The Next Five Years
Submitted by Mac Slavo via SHTFPlan.com,
There is a paradigm shift coming and it is about to rewrite everything we know about economics, human labor, and government dependence.
Earlier this week Amazon launched its first Amazon Go store, which allows a customer to walk in, grab the items they want, and simply walk out. Everything is tracked utilizing RFID chips, so the second you step out of the store Amazon knows exactly what you’ve purchased and automatically charges your account:
Amazon Go is a system that marries physical stores with advanced algorithms and sensors to eliminate the need for a typical store checkout. Instead of packing all the things you need into a basket or cart and then dragged it through a tedious checkout process, you just grab whatever you need and walk out of the store.
It sounds like a shaky concept at first, but only until you see just how advanced the technology really is. When you first walk into the store, you use your smartphone to open you virtual shopping cart. As you make your way around the store, a vast system of sensor tracks where you are, what you pick up, and what you take with you. The system even knows if you pick something up and then put it back, and will only charge you for things you actually intended to buy.
Amazon’s latest move is simply the next evolution designed to make human labor obsolete.
As Mike Shedlock recently pointed out at Mish Talk, the transition to automated systems like Amazon Go, as well as technologies like self-driving cars and long-haul trucks, has been fast tracked.
We’re no longer talking decades, but rather, a few years before we start to see the direct effects on the labor market:
Once again competition is the driving force that will guarantee success no later than a 2022-2024 time frame. By the end of that period, if not much sooner, long-haul truck jobs will vanish.
…
Perhaps drivers will be needed for final delivery in cities and remote locations, but the need for long-haul interstate and major state highway drivers will vanish.
…
My statement that “millions of long haul truck driving jobs will vanish in the 2022-2024 time frame” is likely way off on the low side if one counts Uber, taxi, and chauffeur driven vehicles.
Take a look at Uber’s goal once again: “replace Uber’s more than 1?million human drivers with robot drivers—as quickly as possible.”
That’s just Uber. And those jobs will vanish. All of them. What about Lyft? Taxis?
We’re talking tens of millions of jobs. And they’ll be gone within half a decade’s time.
The immediate response to such revelations is that there will be widespread societal upheaval.
How will displaced human workers feed their families or keep roofs over their heads?
The answer, according to Silicon Valley, which is driving the new paradigm full force, is quite simple and has been detailed in the highly rated documentary Obsolete from Aaron and Melissa Dykes (available free for Amazon Prime subscribers).
It’s called “universal basic income,” or UBI, and essentially means that every member of society will be given a paycheck to meet their most basic needs.
Aaron Dykes of TruthStream Media explains what’s coming in Obsolete:
Basically, a general idleness, an aimlessness of people who could become revolutionary, who could be subjected to civil unrest… who will probably be on social welfare and benefits for the rest of their lives and have nothing else to look forward to.
That’s the direction that the people in this country are actually headed towards.
…
Just a week and a half after Bilderberg’s June 2016 meeting it was reported that [Silicon Valley tech startup incubator] Y-Combinator was running a basic income experiment.
Billed as the “Social Vaccine of the 21st Century,” in Oakland, California where some 100 families were chosen to receive $1000 or $2000 a month in order to collect valuable date in the pilot on how to implement, manage and scale further UBI incentives.
Obsolete Documentary Trailer:
The trend should be clear. Bilderberg members from around the world are preparing their governments and citizens for the inevitable.
Robotics and artificial intelligence technology are advancing at a pace that will soon replace tens of millions of jobs in key economic sectors that include food service, grocery, transportation and customer service.
What the end result will be is anyone’s guess, but we suspect the transition could destabilize the global economic system, complete with violence and revolution.
- Chinese Driven Vancouver Housing Bubble Moves To Seattle – "This Is Vancouver 2.0"
Back in August we noted that the Vancouver housing market was doomed after the implementation of a 15% property tax on foreign buyers targeting the massive influx of Chinese money driving real estate prices to astronomical levels. Sure enough, within a matter of weeks home prices had plunged and so had the volume of residential real estate transactions (see “As The Vancouver Housing Market Implodes, The “Smart Money” Is Rushing To Get Out Now“).
Three weeks after we suggested that the Vancouver housing bubble had popped in the aftermath of the implementation of the July 25 15% property tax in British Columbia targeting the Chinese free for all in Vancouver real estate, we got confirmation of that last week when we reported that only one word could describe what has happened to Vancouver housing in the past month: implosion.
Zolo, a Canadian real estate brokerage, which keeps track of MLS home sales in real-time and reports prices as an average rather than the “benchmark price”, showed as of last week a major correction underway in most Metro Vancouver markets. According to the website, the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago.
The number of transactions has likewise slammed shut: while August is typically one of the slowest months for real estate transactions, MLS sales data from the first two weeks of the month shows what many have been hoping for during the last few years of escalating prices. According to MLS listing data, there were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94%.
But, of course, all that laundered Chinese money has to go somewhere…and preferably somewhere without a 15% penalty tax on foreign buyers. So, at just a hop, skip and a jump across the border, wealthy Chinese citizens looking to move hot cash offshore have set their sites on Seattle. According to Bloomberg, within days of the implementation of the new Vancouver tax, real estate brokers in Seattle saw a noticeable increase in inquiries from Chinese buyers.
Just a few days after Vancouver announced a tax on foreign property investors, Seattle real estate broker Lili Shang received a WeChat message from a wealthy Chinese businessman who wanted to sell a home in Canada and buy in her area.
After a week of showings, he purchased a $1 million property in Bellevue, across Lake Washington from Seattle. He soon returned to buy two more, including a $2.2 million house in Clyde Hill paid for with a single cashier’s check.
Shang says she’s been inundated with similar requests from China and Hong Kong after Vancouver’s provincial government enacted a 15 percent tax on foreign homebuyers in August to help cool soaring real estate values. With Chinese investors — the largest pool of foreign capital — looking for a place to put their cash, the unintended consequence of the fee has been to push demand to cities such as Seattle and Toronto.
“The tax was the trigger of this new wave of investment now coming to Seattle,” Shang said. “Why pay more for the same thing?”
“Chinese money isn’t going to sit and wait,” said David Ley, a Vancouver-based professor at the University of British Columbia’s Department of Geography, who focuses on housing. “Investors are going to find another city,” and Toronto and Seattle are the top two contenders, he said.
Home-purchase inquiries from China have jumped materially in Seattle and Toronto since the Vancouver tax was announced, according to Juwai.com, the country’s largest overseas property website.
Just like Vancouver, the biggest impact from the influx of foreign capital is on the higher end properties in Seattle with one broker pointing out that the share of homes selling for over $1mm has doubled year-over-year. And, in case there was any doubt about who was driving those high-end real estate prices higher, Sotheby’s notes that 50% of the houses it sells in the Seattle suburbs are now going to Chinese buyers, up from roughly 30% last year.
While there are no figures specifically showing purchases made by offshore buyers, brokers say demand in Seattle and Toronto has been robust, particularly for the high-end properties Chinese investors tend to favor. In Seattle, about 12 percent of all homes this year sold for at least $1 million, double the share over the last decade, according to brokerage Windermere Real Estate. Single-family home prices in King County, where the city is located, jumped almost 15 percent in October from a year earlier, data from the local Realtors association show.
The average price of a Greater Toronto home rose 23 percent in November from a year earlier to C$776,684 ($586,530), while sales soared almost 17 percent, the local real estate board reported Dec. 2. In Vancouver, meanwhile, sales have plunged since July and were down 37 percent last month compared with the prior year.
Dean Jones, chief executive officer of Realogics Sotheby’s International Realty, which specializes in high-end properties and has a unit that caters to Asian buyers, estimates that about half of the homes his firm sells in Seattle’s suburbs are going to Chinese purchasers, with many of the transactions requiring the use of interpreters, international banks and multiple escrow deposits. That’s up from about 30 percent last year, he said.
“This is Vancouver 2.0,” said Jones, who lived in the Canadian city about two decades ago, when the capital flow from Asia started to accelerate. “A lot of the same motivations and goals are being replicated in Seattle.”
Well it should be fun to track exactly how many quarters it takes for Seattle’s high-end real estate prices to bubble over and crash…any guesses?
- Trump Is Correct – Boeing Is Gouging The Taxpayer On The New Air Force One
Submitted by Duane via Free Market Shooter blog,
The designation/callsign “Air Force One” has been around since around the time of WWII, with FDR being the first president to fly while in office. Since 1943, with only a couple exceptions, the Air Force has been flying custom versions of Boeing commercial airliners for the presidential flight mission. Most recently replaced in 1990, the president currently flies in a modified 747 with the military designation “VC-25”; two copies were produced for a cost of $325 million apiece, and the callsign “Air Force One” is only used when the president is onboard.
Even though it is still extremely advanced, Air Force One is due for a replacement. Currently, the operating cost for each VC-25 is $210,877 per hour; an extremely high figure, likely because of the dated nature and high maintenance costs of both the airframe and the avionics suite.
However, with a total program cost estimated to be around $4 billion dollars, Boeing is clearly gouging the taxpayer. The newest derivative of Air Force One will end up being over six times as expensive as the last one, which was built on the same airframe. I guess Boeing just thought the higher price tag was going to slip through the cracks of a bloated DoD budget?
The older 747-200 the current VC-25s were derived from has been out of production since 1991, with the 747-8 being the current variant under production. Boeing has considered ending production of the 747 altogether, once its current backlog of 21 aircraft orders (including the VC-25 replacements) is fulfilled.
The relative inefficiency of the 747 is the top reason for its decline. It has lost the highest trafficked overseas routes to the Airbus A380, which the 747 once dominated. Also, commercial and cargo airlines have largely switched to more efficient Boeing 777s and 787s, as well as the Airbus A340 and A350, with twin engines and newer, more efficient designs cutting their costs far below that of the 747. While it could be argued that the Air Force should modify a twin-engine Boeing jet such as the 777 or 787 instead, their desire for a larger four-engine jet to transport our nation’s leader is understandable, given the dangers the jet could face.
Which one of the two pictured is “Air Force One”?
Critics have come out in force to justify the ridiculous cost of the Air Force One program, though they seem more interested in criticizing the president-elect than they do in explaining the aircraft’s price tag. In a USA Today article detailing Trump’s attack on the cost of the AF1 program, aviation analyst Richard Aboulafia didn’t provide any evidence to support an increased cost for the jets, instead choosing to criticize the president-elect for daring to mention that the aircraft is grossly overpriced.
Richard Aboulafia, aviation analyst at the Teal Group, said the current Air Force One planes were made in the 1980s and have become obsolete. The planes are equipped with state-of-the-art communications technology and defense mechanisms to survive nuclear war or terrorist attacks, he said.
Anything in the $3 billion to $4 billion range would be reasonable, and a belief otherwise is “completely ignorant,” he said.
“This is the wrong place to talk about cost control,” Aboulafia said. “People aren’t upset in Washington about a relatively small program being canceled. They’re upset we have a president who doesn’t understand what is needed to be president.”
Aboulafia wants you to believe that not only has the cost of replacing Air Force One gone up so drastically due to inflation, higher materials costs, redevelopment of an existing airframe, or whatever ridiculous expenditure he didn’t cite, he seems to be implying that the current VC-25s don’t already have similar EMP and nuclear/biological/chemical protections built into them already. Of course, AF1 has all of that and more, and it is by far the most sophisticated VVIP transport plane in the world, even at 25+ years old. Even the aircraft’s maintenance crews know that despite its age, it is anything but obsolete.
There was no mention from USA Today that even the original contract estimation of $1.65 billion dollars for the pair of VC-25s was already a significant markup upon an airframe that had been previously modified by the Air Force for the AF1 role, and should not have been nearly that expensive to do again in the first place. Bear in mind, as USA Today stated, the US Government Accountability Office (GAO) recently reappraised the program’s cost to the $4 billion dollar figure, noting it would be “including $2 billion for research and development”. How exactly is this price tag considered “reasonable”?
For reference, the other “most expensive” airplane in the Air Force’s inventory, the B-2 Spirit stealth bomber, is estimated to cost about the same $2 billion per copy as the new VC-25s. However, the high per-unit cost of the B-2 is due to the buy being cut from 132 to 21, after the end of the cold war, averaging a high R&D cost across a much smaller number of aircraft. Had the Air Force bought even another 20 of the planned units, they could have been purchased for $566 million each. Coincidentally, the Air Force’s new stealth bomber, the B-21, is estimated to cost about $511 million a copy (before the appropriate cost overruns, of course).
So the MSM, and our government for that matter, is OK with a replacement Air Force One being six times as expensive as its predecessor, and about as costly as four new copies of already ridiculously overpriced stealth bombers. And the MSM is also somehow critical of the president-elect for bring this to light. Is it any wonder they feel the need to defend their bias by calling alternative coverage “fake”?
Trump is correct to call out Boeing for this injustice they are doing to the taxpayer. Not only is he calling attention to another runaway military expenditure, he is putting all government contractors on notice. Whether the MSM believes the president should be focusing his attention elsewhere or not, he is demonstrating that he is not afraid to call out any contract size or any contractor for gouging the taxpayer.
Hopefully, Trump’s conduct will keep government contractors’ heads on swivels, and wary of the repercussions of overbilling on government contracts for as long as he is president. Still, our government spends close to $4 trillion annually, and Trump cannot be everywhere at once. Don’t be surprised when reports of more over-budget, behind schedule government programs appear during his presidency.
- Judge Dismisses Jill Stein's "Speculative Claims", Orders End To Michigan Recount
The federal judge who ordered Michigan to begin its recount on Monday effectively ended it this evening, extinguishing his earlier order, ruling that Green Party candidate Jill Stein "speculative claims" had no legal standing to request another look at ballots.
After chaos earlier in the week amid lawsuits flying back and forth in Michigan, as AP reports, the ruling tonight seals Republican Donald Trump's narrow electoral victory over Democrat Hillary Clinton in Michigan.
U.S. District Judge Mark Goldsmith agreed with Republicans who argued that the three-day recount must end a day after the state appeals court dealt a blow to the effort. Stein, who finished fourth in Michigan on Nov. 8, didn't have a chance of winning even after a recount and therefore isn't an "aggrieved" candidate, the appeals court said.
"Because there is no basis for this court to ignore the Michigan court's ruling and make an independent judgment regarding what the Michigan Legislature intended by the term 'aggrieved,' plaintiffs have not shown an entitlement to a recount," Goldsmith said of Stein and allies.
It was Goldsmith's midnight ruling Monday that started the recount in Michigan. But his order dealt with timing – not whether a recount was appropriate. More than 20 counties so far are recounting ballots, and some are finished.
Earlier Wednesday, the Michigan elections board said the recount would end if Goldsmith extinguished his earlier order.
Stein got about 1 percent of the vote in three states where she's pushed for recounts — Michigan, Pennsylvania and Wisconsin. Trump narrowly won all three.
Stein insists she's more concerned about the accuracy of the election. She alleges, without evidence, that the elections may have been susceptible to hacking.
"They present speculative claims going to the vulnerability of the voting machinery — but not actual injury," Goldsmith said.
Clinton needed all three states to flip in order to take enough electoral votes to win the election.
So Michigan is over.
A court hearing will be held Friday on a possible recount in Pennsylvania.
Wisconsin's recount, which started last week, has increased Trump's margin of victory over Clinton thus far.
As a reminder, Trump has 306 electoral votes to Clinton's 232 (270 are needed to win). Michigan has 16 electoral votes, Pennsylvania has 20 and Wisconsin has 10.
Perhaps most important/entertaining from here is that 'Electors' will convene December 19th across the country to vote for president, and then we will see just what happens when the so-called "Hamilton Electors" are called to task.
- The Ultimate "Fake News" List
Authored by Paul Joseph Watson and Alex Jones, originally posted at InfoWars.com,
Isn’t it ironic how the mainstream media has the nerve to lecture everyone else about “fake news” when they are the primary source of fake news on a consistent basis stretching back years?
Fake news stories and fake narratives put out by the mainstream media have resulted in deaths, destruction and people’s lives being ruined.
The most harmful fake news is routinely published by the mainstream media. They are the main progenitors of fake news.
– The fake news that Saddam Hussein had weapons of mass destruction and that Iraq was involved in 9/11, dutifully regurgitated without question by the mainstream media, resulted in hundreds of thousands of dead Iraqis, thousands of dead and injured U.S. troops, and the destabilization of an entire continent.
– The fake news that the rebels in Syria were “moderates” who did not have jihadist sympathies and should be supported led to the destruction of Syria, Libya and the rise of ISIS.
– The fake news narrative that the media was balanced in its coverage of the presidential election was completely obliterated when Wikileaks emails revealed that countless mainstream media reporters were in bed with the Clinton campaign, feeding them debate questions beforehand and conspiring with Hillary’s staff to portray her in a positive light.
– The fake news that George Zimmerman was obsessed with Trayvon Martin’s race before the altercation that led to Martin’s death was accomplished by means of NBC deceptively editing an audio tape. This incident stoked racial tensions across the country and laid the groundwork for the violent ‘Black Lives Matter’ movement that was to follow.
– The fake news that produced the “hands up, don’t shoot” narrative, which was proven to be completely fraudulent, led to riots, violent attacks and looting in Ferguson, Missouri, as well as numerous other U.S. cities. Even after the rioting began, the mainstream media continued to legitimize the unrest. Fake news outlets continued to parrot the “hands up, don’t shoot” narrative even after it was proven false.
– The fake news that saw innumerable people accused of rape at college campuses across America, claims that were proven wrong, ruined people’s lives and perpetuated the myth (fake news) that one in five women are raped on college campuses.
– The fake news that George W. Bush served dishonorably during his time in the Air National Guard was broadcast by CBS News with the aid of fake documents. In circulating this fake news, CBS tried to influence the 2004 presidential election but only ended up crucifying their own credibility, leading to Dan Rather’s resignation six months later.
– The fake news that NBC anchor Brian Williams faced enemy fire while helicoptering into Iraq in 2003 was exposed when soldiers who were aboard the helicopter blew the whistle on his lies. Despite admittedly putting out fake news, Williams still has a career in broadcast journalism.
– The fake news narrative that Donald Trump somehow represents the next coming of Hitler has provoked a hysterical anti-Trump hate crime wave across America, with people and property being attacked on a routine basis. The same hysterical fake news narrative was also responsible for violence and riots at Trump events throughout the campaign cycle, as well as assassination attempts on Trump’s life.
– The fake news that Donald Trump had no chance whatsoever of winning the presidential election was proudly pushed by countless mainstream media outlets, with the Huffington Post even predicting that Hillary Clinton had a 98% chance of winning the presidency. When this fake news narrative was completely demolished on November 8, it swept away trust in political polling and the mainstream media to an even greater degree, prompting the backlash that you now see with the corporate press calling everyone else “fake news” when they are the real fake news.
FULL LIST OF FAKE NEWS OUTLETS
– The New York Times
– The Washington Post
– CNN
– NBC News
– MSNBC
– CBS News
– ABC News
– Salon.com
– The Huffington Post
– Rolling Stone
– BBC News
– Sky News
– Financial Times
– Politico
– New York Daily News
– L.A. Times
– USA Today
– US News & World Report
– CBC
– Gawker
– Newsweek
– Time
– Business Insider
– Daily Beast
– VICE
– Yahoo News
– Daily Kos
– Young Turks
– Slate
– NPR
– PBS
– Raw Story
– New Yorker
– Buzzfeed
– MoveOn
– Think Progress
– Media Matters
– Wonkette
– Center for American Progress
– Little Green Footballs
– The EconomistBelow is a list of fake news reporters who colluded with the Clinton campaign to promote fake news.
This list is by no means exhaustive, and there are many reporters within these organizations who do not peddle fake news and have spoken out against the mainstream media’s effort to brand dissenting opinion as “fake news”.
For example, Matt Taibbi (no fan of Infowars), has called the Washington Post’s fake news blacklist “disgusting” and “shameful”.
Glenn Greenwald, who has worked with several of the organizations on this list in the past, also completely eviscerated the credibility of the “fake news list” being used by the Washington Post.
The entire “fake news” narrative being pushed by the mainstream media has nothing whatsoever to do with concerns over people being misled.
If that were the case, the mainstream media itself would stop habitually lying to the American people and it’s trustworthiness wouldn’t be in the toilet.
The whole “fake news” narrative is clearly part of a dirty tricks campaign to pressure governments, Google, Facebook, Twitter, YouTube and other tech giants to censor information that is inconvenient to the establishment, for which the mainstream media serves as a mouthpiece.
We are competing with the mainstream media and they’re not happy about dissident voices challenging their monopoly on reality. That’s why they’re forced to resort to underhanded and deceptive means through which to silence their ideological opposition.
By circulating this article and this fake news list, we are not calling for these outlets to be censored, we are simply drawing attention to the fact that the very same entities who cry “fake news” are the primary sources for the most damaging, harmful and woefully inaccurate fake news stories in the history of modern journalism.
- ECB Preview: The Market's All-In But "There's A Significant Chance Draghi Disappoints"
Blackrock's chief multi-asset strategist summed up tomorrow's anxiously awaited ECB meeting best by noting that "what’s priced into markets is a fully fledged extension of the [bond-buying] program," but warns that, thanks to a muted reaction to the Italy vote and recent encouraging data, "there’s a significant chance the ECB disappoints markets." As bond traders bet on a six-month QE extension, Citi warns, anything less will be seen as hawkish and send EUR surging.
The ECB has a recent history of disappointing investors expecting more stimulus, and as The Wall Street Journal reports, with the bond-buying program scheduled to end in March, the ECB is running out of time to inform investors of its plans.
Just last week, Bunds had a mini taper tantrum when rumors spread…
And, even as investors expect more stimulus on Thursday, the debate with some analysts is moving to whether the ECB could start tapering its stimulus program in March.
Like other investors, Edward Farley, head of European corporate debt at PGIM Fixed Income, expects a six-month extension to the ECB’s asset purchases. Still, he says he has been avoiding securities like southern European corporate bonds that look most vulnerable “if there is any accident with central bank policy.”
There is little sign investors expect that on Thursday. Peripheral government bonds and corporate debt has rallied this week despite the “no” vote in Italy’s referendum which outgoing Prime Minister Matteo Renzi had presented as a way to revitalize Italy’s stuttering economy.
Investors seemed unfazed by Mr. Renzi’s resignation after the vote even though it could bolster the fortunes of the populist 5-Star Movement which has called for a non-binding referendum on Italy’s membership of the euro.
The gap between 10-year Italian and German bond yields has narrowed by around 0.1 percentage point this week to around 1.54 percentage points. Media reports that the Italian government was ready to take a controlling stake in troubled lender Banca Monte dei Paschi di Siena seemed also to fuel the rally.
The spread to Germany, the bloc’s largest economy, also narrowed for Portuguese, Spanish and French bonds.
As far as the actual policy decision goes, the biggest problem for the central bank remains, as Bloomberg points out, that underlying inflationary pressure is too weak and shows no signs of picking up. Headline inflation accelerated a little in November, broadly in-line with the ECB’s forecast of 0.5% for 4Q, but it looks to have done so thanks to movements in food prices. Core and services price inflation are stuck at 0.8% and 1.1%, respectively. And even though unemployment continues to fall, the wages data bring little cause for optimism. There’s unlikely to be much movement in the core inflation forecasts, but revisions downward are more likely than upward. It will also be the first time forecasts for 2019 will be published — how the ECB marks its own homework may help with understanding risks to the policy outlook.
There remains no sign of underlying cost pressure building. Until there is, further easing looks inevitable. The Governing Council has faith in its tools — it thinks inflation would have been lower if they had not been deployed — and there is reason to keep using them. BI Economics therefore expects an extension to the program of asset purchases.
Economists seem to be split between those expecting the ECB to announce an extension by three or six months.
And with doves outnumbering hawks still on The ECB, it seems six months is more likely…
Economists highlight good reasons for the ECB to keep buying bonds. The central bank has an inflation target of close to 2% but consumer prices in the Eurozone were only 0.6% higher in November than the same month last year.
Others argue further stimulus isn’t warranted. The eurozone’s economic picture is brighter, with business activity growing at its fastest pace this year in November, according to a survey of manufacturers and service providers.
As Citi strategist Steven Englander notes, nearly half of survey respondents expect ECB to extend QE by 6 months at current EU80b purchasing pace, writing that anything less than that outcome likely to be seen as hawkish and drive an “immediate EUR buying outcome."
- 20% expect ECB to engage in “serious but limited” tapering
- Two-thirds of respondents see ECB as being unaffected by Italian referendum
Which confirms Bloomberg's consensus…
- An announcement that asset purchases will continue until June 2017, or beyond if necessary, at the present pace of 80 billion euros a month (risk: tilted to longer)
- An increase to the issue limit to address bond scarcity (risk: balanced)
- No commitment to taper asset purchases (risk: balanced).
And beyond December…
- A further three-month extension of the asset purchase program to be announced in March 2017 (risk: tilted to longer)
- Tapering of asset purchases to begin from September 2017 and for the program to end in March 2018 (risk: tilted to longer).
However, the market’s subdued reaction to the Italian referendum may show that investors have become too reliant on the central bank to smooth over the eurozone’s probelms, a factor that may concern some ECB officials.
“I don’t think that [argument] will win the day, but it’s a risk,” said Stefan Isaacs, deputy head of retail fixed income at M&G Investments. It would be “dangerous” for the ECB to pull back before it has succeeded in boosting inflation, Mr. Isaacs said.
As a reminder, last December, the euro jumped more than four cents against the dollar, stocks tumbled and the price of riskier bonds fell after the bank delivered a smaller-than-expected package of stimulus measures.
Finally, as we detailed previously, there is another problem: with the US tightening at a time when demand for US debt will have to stay constant or rise to fund Trump's fiscal stimulus, it would be up to Japan and Europe to provide the "helicopter money" to fund US economic growth as DB explained. Even a small hint that this is going away, and suddenly the Trump stimulus is looking very shaky.
Sure enough, as Reuters admits, some proponents of the extension fear an ill-timed signal about reduced buying in future could heighten market volatility, potentially undoing some of the benefits of the scheme.
To be sure, it is not a done deal yet:
Extending the asset buys would require the ECB to ease some of its self-imposed restrictions, a sensitive debate as most options on the table raise legal or political concerns, facing varying degrees of opposition within the Governing Council.
Still, ECB President Mario Draghi seemed to dismiss those concerns this week, arguing that the program was sufficiently flexible, suggesting that parameter changes would not stand in the way if policymakers opted for the extension.
However, givem the current spate of economic and political events, it just may be that a tapering announcement by the ECB is the catalyst that finally blows over the house of cards market that has soared since November 8 on nothing but hope and lack of concrete news.
- Washington Post Appends "Russian Propaganda Fake News" Story, Admits It May Be Fake
In the latest example why the “mainstream media” is facing a historic crisis of confidence among its readership, facing unprecedented blowback following Craig Timberg November 24 Washington Post story “Russian propaganda effort helped spread ‘fake news’ during election, experts say“, on Wednesday a lengthy editor’s note appeared on top of the original article in which the editor not only distances the WaPo from the “experts” quoted in the original article whose “work” served as the basis for the entire article (and which became the most read WaPo story the day it was published) but also admits the Post could not “vouch for the validity of PropOrNot’s finding regarding any individual media outlet”, in effect admitting the entire story may have been, drumroll “fake news” and conceding the Bezos-owned publication may have engaged in defamation by smearing numerous websites – Zero Hedge included – with patently false and unsubstantiated allegations.
It was the closest the Washington Post would come to formally retracting the story, which has now been thoroughly discredited not only by outside commentators, but by its own editor.
The apended note in question:
Editor’s Note: The Washington Post on Nov. 24 published a story on the work of four sets of researchers who have examined what they say are Russian propaganda efforts to undermine American democracy and interests. One of them was PropOrNot, a group that insists on public anonymity, which issued a report identifying more than 200 websites that, in its view, wittingly or unwittingly published or echoed Russian propaganda. A number of those sites have objected to being included on PropOrNot’s list, and some of the sites, as well as others not on the list, have publicly challenged the group’s methodology and conclusions. The Post, which did not name any of the sites, does not itself vouch for the validity of PropOrNot’s findings regarding any individual media outlet, nor did the article purport to do so. Since publication of The Post’s story, PropOrNot has removed some sites from its list.
As The Washingtonian notes, the implicit concession follows intense and rising criticism of the article over the past two weeks. It was “rife with obviously reckless and unproven allegations,” Intercept reporters Glenn Greenwald and Ben Norton wrote, noting that PropOrNot, one of the groups whose research was cited in Timberg’s piece, “anonymous cowards.” One of the sites PropOrNot cited as Russian-influenced was the Drudge Report.
The piece’s description of some sharers of bogus news as “useful idiots” could “theoretically include anyone on any social-media platform who shares news based on a click-bait headline,” Mathew Ingram wrote for Fortune.
But the biggest issue was PropOrNot itself. As Adrian Chen wrote for the New Yorker, its methods were themselves suspect, hinting at counter-Russian propaganda – ostensibly with Ukrainian origins – and verification of its work was nearly impossible. Chen wrote “the prospect of legitimate dissenting voices being labelled fake news or Russian propaganda by mysterious groups of ex-government employees, with the help of a national newspaper, is even scarier.”
Criticism culminated this week when the “Naked capitalism” blog threatened to sue the Washington Post, demanding a retraction.
Now, at least, the “national newspaper” has taken some responsibility, however the key question remains: by admitting it never vetted its primary source, whose biased and conflicted “work” smeared hundreds of websites, this one included, just how is the Washington Post any different from the “fake news” it has been deriding on a daily basis ever since its endorsed presidential candidate lost the elections?
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