Archive for May 2018
Canada Unleashes "Dollar-For-Dollar" Retaliatory Tariffs On US

Canada Unleashes "Dollar-For-Dollar" Retaliatory Tariffs On US

And so, the trade wars have begun...

In slightly more than a strongly-worded email  Canadian PM Justin Turdeau exclaimed his indignance at the Trump administration's decision to impose tariffs on Canadian steel and aluminum imports, saying it is an "affront":

“Let me be clear, these tariffs are totally unacceptable,”

Trudeau noted that US has a $2billion steel trade surplus with Canada and said it was "inconceivable" that Canada could be seen as a security threat to US.

With that he announced retaliatory tariffs against the US.

Canadian Foreign Affairs Minister Chrystia Freeland announced “dollar-for-dollar tariffs for every dollar levied against Canadians by the U.S.,” starting July 1 that will remain in place as long as U.S. tariffs do.

Canada is set to publish a list of tariffs - one set at 25% and one at 10%

As Goldman explains, the decision to impose tariffs on Canada and Mexico (and now seeing Canada's response) suggests that prospects for a NAFTA agreement in the near-term are fading.

The Administration’s negotiating stance is often unpredictable so there is a risk of over-interpreting any single event. That said, this represents another signal that prospects for a near-term NAFTA deal are fading, just a few weeks after it had appeared fairly likely that a “skinny” agreement involving the auto sector might be reached.

However, Goldman note that the incremental inflation effect of these tit-for-tat tariffs should be small. We estimate that adding Canada, Mexico, and the EU to the countries facing a tariff of 25% on steel and 10% on aluminum could boost core PCE by roughly 1bp. Imports from NAFTA and EU countries make up just under half of steel and aluminum imports.

Finally, in his Q&A Trudeau made it clear that "Canada's relationship with US is deep and complex" but warned that "US will harm its own people with such measures."

Marquette Doubles-Down On Campaign Against The "I"-Word

Marquette Doubles-Down On Campaign Against The "I"-Word

Authored by Zachary Petrizzo via Campus Reform,

Marquette University has elaborated on its guidance urging students to “drop the ‘i-word’" when referring to illegal immigrants, saying the term “illegal” violates a cherished legal principle.

As Campus Reform recently reported, a page on Marquette’s Diversity and Inclusion website admonishes students to use terms like “undocumented” or “unauthorized” because referring to someone as an “illegal immigrant” is “inaccurate” and “dehumanizing.”

Shortly after the original report, and without issuing a formal statement, the university proceeded to edit the webpage and expand upon its “undocumented student terminology.”

Under the revised “Undocumented” section of the webpage, the school reinforces its criticism of the term “illegal immigrant,” asserting that it “eschews one of our most fundamental and cherished legal principles of innocent until proven guilty in a court of law.” 

“Moreover, about half of all undocumented people entered the country legally and overstayed their visas, and their presence in the United States while being out of status is not a criminal violation of the law,” the school adds, drawing a distinction between “unlawful” presence in the country and violation of a criminal statute.



In another edit, the university added a reference to “Catholic social teaching” when justifying its consistent recommendation to drop the “i-word.”

“Grounded in Catholic social teaching, we are called to uphold the inherent dignity of every person and we encourage our campus community to avoid using language that strips others of their humanity,” the page now explains before stating that

“When referring to an individual who is residing in the United Stated without authorization from the federal government, we would encourage you to drop the ‘i-word’ in favor of terms such as ‘undocumented’ or ‘unauthorized’ immigrant.”

In addition to the Diversity and Inclusion website, the school’s College of Education website likewise suggests that students create a “safe space” for illegals and “deal directly with any derogatory language or behaviors from peers that are rooted in condescending attitudes towards immigrants and use these as teachable moments.”

That website, which does not appear to have been modified, also encourages instructors to “be sensitive in their use of language, favoriting terminology such as ‘undocumented/ unauthorized immigrants’ and making known that use of the terms ‘illegals’ or ‘illegal immigrants/aliens’ will not be tolerated in their classrooms.”

Marquette has not responded to Campus Reform’s request for comment on the revisions.

Goldman Vice President Charged With Insider Trading Scheme

Goldman Vice President Charged With Insider Trading Scheme

Having avoiding the insider trading spotlight for years, this morning Goldman Sachs finally succumbed to the greatest of indignities, when one of its employee was busted with insider trading.

Woojae "Steve" Jung, 37, a Goldman TMT Vice President who is a Korean citizen and resides in San Francisco, was charged with securities fraud for using inside information about the investment bank’s clients to make $140,000 in illicit profits on 12 deals mostly involving Goldman tech company clients, while using a co-conspirator in South Korea to execute the trades.

Jung, who had worked at Goldman since 2012, was charged with one count of conspiracy and six counts of securities fraud, for running the scam from 2015 to 2017 according to the SEC lawsuit filed in Manhattan Southern today (case 18-cv-04811).

While Goldman Sachs wasn't identified by name in the complaint (where it is instead simply listed as the "Investment Bank") Jung’s LinkedIn page says he’s worked at the bank since 2012 after graduating from Wharton Business School.


According to the complaint, Jung traded in the securities of at least 12 publicly traded companies identified below "in advance of announcements of the involvement of these Companies in transactions advised by the Investment Bank. Those transactions primarily concerned actual or contemplated mergers, acquisitions, and tender offers." These included:

  • CA, Inc.
  • FEI Company
  • Fairchild Semiconductor
  • Foresight Energy
  • Gigamon
  • KLA-Tencor
  • Microsemi
  • Nimble Storage
  • NXP Semi
  • SanDisk
  • WebMD
  • WR Grace

According to the SEC, Jung obtained access to material nonpublic information about impending business transactions involving companies advised by the Investment Bank through his direct involvement working on these transactions, through his access to the Investment Bank's files, or through contact with co-workers staffed on the transactions

Using this non-public info of upcoming deals and transactions, Jung traded in the respective entities, while attempting to conceal his connection to the trading by purchasing the securities in a brokerage account held in the name of a friend living in South Korea, Sungrok Hwang.

Over the course of the scheme, Jung generated illegal profits of more than $140,000. By engaging in this misconduct, Jung violated the antifraud provisions of the federal securities laws.

As the SEC further details, Jung joined Goldman in July 2012, at which time he held a trading account in his own name at Interactive Brokers but as mandated by the Personal Trading Policy, Jung began the process of closing his Interactive Brokers account in September 2012. Jung then opened a new brokerage account at Fidelity Brokerage Services which was an outside brokerage firm approved by Goldman. The Investment Bank directly received copies of Jung's Fidelity account statements, reflecting his trading in that account. However, on August 8, 2012, a second Interactive Brokers trading account was opened in the name of Jung's friend, relief defendant Hwang.

While Jung was not registered as a financial adviser, or other person authorized to access the Hwang Account, he nonetheless left his electronic fingerprints on the Hwang Account.

So how was he caught? Here are the details from the complaint:

In the months leading up to and during the course of the insider trading scheme alleged in this Complaint, Jung exercised control over the Hwang Account, accessed the account on hundreds of occasions, and used the account to, directly or indirectly, place illegal trades.

Trades in the Hwang Account were placed through Interactive Brokers' electronic trading system. In order to place a trade through the Interactive Brokers electronic trading system, a user must first log in to the system using a unique login name and password associated with the account. And when a user successfully logs in to an Interactive Brokers account, the firm's computer server records the internet protocol address ("IP address") used by the user.

Jung was the registered Verizon internet subscriber for the IP address

Jung was the registered Verizon internet subscriber for the IP address

Jung was the registered AT&T internet subscriber for the IP address

In many instances, including those detailed in Section C. below, Jung accessed the Hwang Account on the very same days that the account placed the illicit trades at issue in this action. Jung's three IP addresses collectively accessed the Hwang Account more than 600 times.

In addition to directly or indirectly placing trades in the Hwang Account, Jung was also involved in arranging for transfers or attempted transfers of money into and/or out of the Hwang Account. For example:

  • In February 2014, an apparent relative of Jung who lived at Jung's residential address in New York, New York deposited $7,000 into the Hwang Account.
  • In May 2015, one of Jung's former co-workers, for whom Jung had posted a professional recommendation on the Linkedln platform, deposited $19,000 into the Hwang Account. The day after this transfer, Jung, using an IP address  with a history of logging in to Jung's Fidelity account, logged in to the Hwang Account.
  • In early July 2016, an attempt was made to transfer $5,600 out of the Hwang Account to a bank account held by a friend of Jung. Interactive Brokers rejected that request as an improper transfer to a third-party account. Then, on July 10, an individual purporting to be Hwang called Interactive Brokers to inquire about the failed transfer. That call was placed from a cell phone number registered to Jung.

What is surprising about this whole affair is that Goldman traditionally hires relatively intelligent people, whereas Jung acted like he wanted to get caught, typically buyiung either stock or worse, calls, of target companies - all of which were also Goldman clients - ahead of their acquisition.  What is more surprising is that the total profit from all the individual deals was only $140,000.  What is even more surprising is that it took the SEC no less than 2 years to put the case together.

What is most surprising is that somehow we are expected to believe that "Steve" was acting alone at Goldman, although that's what happens when you piss of the wrong people.

The full details of the bust are in the pdf below

Ukraine Faces International Fury Over Staged "Fake News" Murder Of Russian Journalist

Ukraine Faces International Fury Over Staged "Fake News" Murder Of Russian Journalist

On Tuesday, headlines were filled with reports out of Ukraine - which not a single journalist decided to fact-check - that a prominent anti-Putin journalist, Arkady Babachenko, had been murdered in his Kiev apartment - "shot three times in the back" after returning from the store to buy bread. Immediately, the echo chamber shouted "Putin's fault."

The next day, Babachenko showed up at a press conference, where Ukrainian authorities announced that his death had been an elaborate hoax in order to catch his actual assassins who they claim are now in custody. 

The scheme has received massive international backlash - from horrified journalist colleagues who were kept in the dark and thought, to the Kremlin, to the International Federation of Journalists (IFJ) - which called the staging "intolerable" and "inadmissible."

“Arkady Babchenko is still alive and can continue to do his job as a critical journalist: the news is excellent,” said Philippe Leruth, the president of the IFJ, in a statement

But in falsely spreading the news of his murder, the Ukrainian authorities have gravely harmed the credibility of information, and their brief communication risks being seen as a propaganda operation,”

Journalist Sophie Pinkham writes in The Guardian of the rollercoaster of emotions she and fellow journalists experienced over their friend, concerns they had for their own safety, and the damage this has done to Ukraine's credibility

No one had trouble believing this story; no one even considered questioning it. It was gruesomely familiar, similar to the many horrifying stories we’d already heard from Russia, Ukraine, and other countries where journalists are killed for their reporting.


Would they be killed, too? We agreed that it was unlikely that the Ukrainian government would find Babchenko’s killer. If anyone would discover the truth, it would be journalists. And by investigating the killing, they might very well be risking their own lives.


For me, for my visiting friend, and for many others, relief soon gave way to doubts about the ethics and the wisdom of this “special operation. On Facebook, the Ukrainian MP Anton Herashchenko tried to explain why it had been necessary to disseminate an artist’s sketch of a supposed killer “with a Caucasian appearance”.


Ukraine has an increasingly serious problem of ultranationalist attacks on ethnic and other minorities, as well as journalists.)


In its endless one-upmanship against Russia, Ukraine has once again cut off its nose to spite its face, severely undermining its own credibility and that of journalists. This stunt also seems a gratuitous blow to what is left of public sincerity, compassion, and trust. Next time a journalist is killed in Ukraine (and, unfortunately, it seems certain that there will be a next time), even the least cynical observers, the kinds of people who wept all night over Babchenko’s supposed death, will likely wonder whether they should believe in a tragic death until they’ve inspected the corpse themselves. -The Guardian

According to Tuesday's media "reports", the journalist, Arkady Babachenko, was shot three times in the back in his apartment building in the Ukrainian capital of Kiev last Tuesday after going out to buy bread - his wife finding him in a pool of blood after she came out of the bathroom following the "murder." He was pronounced dead in an ambulance on the way to the hospital. 

Following his "death," Ukrainian officials confirmed Babachenko had been shot and said it was believed he had been targeted due to his work as an anti-Putin journalist. Ukrainian lawmaker Anton Gerashchneko told the BBC that the killer waited for Babachenko near his Kiev apartment and then shot him from behind. 

A neighbor told local media that the assassin had probably used a silencer, since they didn't hear any shots. 

Ukrainian authorities patted themselves on the back during Wednesday's press conference, while Gerashchneko likened it to a spy novel. 

"After all, the hero of Arthur Conan Doyle Sherlock Holmes successfully used the method of staging his own death for the effective investigation of complex and intricate crimes. No matter how painful it was for his family and Dr. Watson," he wrote on Facebook.

And in doing so, Ukraine has significantly damaged its credibility when it comes to making sweeping claims of aggression by Vladimir Putin. What's more, as we noted earlier, the number of Russian journalists killed under Putin has actually dropped from an average of 5 per year to between 1 and 2 per year.

Still not great, but it certainly dispels the notion that the problem has worsened under Putin. Meanwhile, Ukraine also continues to be a deadly place for journalists - though who knows if anyone will believe it the next time one goes down. 

Comedian Wins Award For "Social Change", Calls Ivanka Trump A "Feckless C**t"

Comedian Wins Award For "Social Change", Calls Ivanka Trump A "Feckless C**t"

On the same day as President Trump (and Sarah Sanders) highlight the utter hypocrisy of the liberal media, TBS comedian Samantha Bee 'jumped the shark'.

On the night before she is set to receive an award from the Television Academy for "advancing social change," The Daily Caller's Derek Hunter reports that the so-called comedian called presidential adviser (and first daughter) Ivanka Trump a "feckless c**t" in her show's monologue.

“You know, Ivanka, that’s a beautiful photo of you and your child," Bee said,

“but let me just say, one mother to another, do something about your dad’s immigration practices you feckless cunt!”

The crowd then screamed and cheered.

“He listens to you,” Bee continued.

“Put on something tight and low-cut and tell your father to fucking stop it,” she said.

And here is the icing on the cake...

Bee will be receiving an award from the Television Academy Thursday night for “advancing social change.”

The White House has issued a statement in response to this (via Jack Posobiec):

"The language used by Samantha Bee last night is vile and vicious.

The collective silence by the left and its media allies is appalling.

Her disgusting comments and show are not fit for broadcast, and executives at Time Warner and TBS must demonstrate that such explicit profanity about female members of this administration will not be condoned on its network."

- Sarah Sanders

Leaked Military Report: UFO "Rendezvoused" With Something Big Under Ocean

Authored by Mac Slavo via SHTFplan.com,

An in-depth government report “prepared by and for the military” and obtained by a Nevada newsroom, details a 2004 incident involving an alleged “UFO” sighting recorded by the US military off California’s coast 14 years ago. Dubbed the “Tic Tac” incident, the unidentified flying object “rendezvouses” with a huge underwater object.

So named for the white, fast-moving, mint-shaped object that was involved, the video’s release made waves last year when it was first revealed by the New York Times. Over the course of two weeks in 2004, a 13.7-meter-long (45-foot-long) Anomalous Aerial Vehicle (AAV) defined as “aerodynamic” with “no visible means to generate lift” was detected by US naval ships in short glimpses.

According to IFLScience, based on the recently leaked report, the undated document suggests there may have been something in the water as well. F-18 aircraft were called into the area after the USS Princeton wasn’t able to lock on to the AAV (Anomalous Ariel Vehicle.) The report details the moment a pilot noticed a disturbance under the surface of the water resembling a “barely submerged reef or island”. As the pilot flew away, the object reportedly disturbed the water underneath it in “frothy waves and foam” resembling water that was “boiling.” The unidentified flying “Tic Tac” object was potentially rendezvousing with the massive underwater one, according to the report.

Earlier this year, the Department of Defense released three separate videos showing an encounter between a Navy fighter jet and an unknown object. For years, the department’s Advanced Aerospace Threat Identification Program was kept secret until last year when the Pentagon announced its then-defunct program never gained evidence of alien life visiting Earth.

“The AAVs would descend ‘very rapidly’ from approximately 60,000 feet down to approximately 50 feet in a matter of seconds,” the report noted.  Pilots also indicated there may have been something in the water as well. One pilot detailed a disturbance up to the size of a football field:

The disturbance appeared to be 50 to 100 meters in diameter and close to round. It was the only area and type of whitewater activity that could be seen and reminded him of images of something rapidly submerging from the surface like a submarine or a ship sinking.

A submarine in the vicinity did not detect anything unusual underwater.

If an object was indeed in the Pacific Ocean, “it would represent a highly advanced capability given the advanced capability of our sensors.”

WTI/RBOB Jump After Surprise Crude Draw

WTI/RBOB Jump After Surprise Crude Draw

WTI rolled over (but RBOB rallied) this morning ahead of the EIA data which showed the biggest (surprise) crude draw since March but the biggest (surprise) build in distilates since Feb. US crude production rose once again to a new record high.

Bloomberg Intelligence's Energy Analyst Fernando Valle noted that the summer driving season will provide its customary demand jolt for crude, yet a counterweight will be the unexpected might of production in the U.S. while price differentials are wider across regions. Exports offer a relief valve amid wide discounts, which should also instigate greater utilization on views of constructive crack spreads. Crude oil differentials blowing out to more than $9 a barrel and domestic production estimated above 10.7 million barrels a day set the tone.

U.S. crack spreads are on a high despite economic and political headwinds in Europe and Latin America threatening economic activity. Tight gasoline inventories and strong demand have pushed cover back down to the lowest since 2014, while supply disruptions, even if not as dramatic as last year's hurricane season, could lead to a blowout in margins.


  • Crude +1.001mm (+450k exp)

  • Cushing -132k

  • Gasoline -1.682mm

  • Distillates +1.466mm - biggest build since Feb


  • Crude -3.62mm (+450k exp) - biggest draw since March

  • Cushing -556k

  • Gasoline +534k

  • Distillates +634k - biggest build since Feb

EIA data showed almost the exact opposite to API with a big crude draw and notable builds in products...


And it's another record for crude production, rising 44,000 barrels per day to 10.77 million bpd. A 24,000 bpd rise in production from Alaska erased the declines from last week's report. The Lower 48 also rose 20,000 bpd.


“You had the API showing a strong build in crude oil and nothing fantastic on the products,” says Olivier Jakob, managing director of consultant Petromatrix GmbH. “Going back above $80 is going to be difficult.”

WTI was weaker but RBOB rallied into the EIA print but both rallied after the unexpected crude draw...

CNN Audience Plunges 25% As Fox News Dominates Prime Time

CNN Audience Plunges 25% As Fox News Dominates Prime Time

In a new TV ratings report published Wednesday by Nielsen Media Research, Fox News Channel continues to reign supreme in the cable news wars, while CNN’s primetime audience has collapsed by a shocking 25%.

” Fox News extended its run of consecutive months at number one to a staggering 197, while building hitting another impressive milestone: Fox News has now beaten every other network in basic cable for 23 months straight, based on total day ratings, with an average total day audience in May of 1.4 million viewers,” said Forbes.

“In prime time, Fox News destroyed its competition, with an average total audience of 2.381 million viewers, compared to MSNBC’s 1.384 million and CNN’s 835,000. Among viewers 25-54, the group most coveted by advertisers, Fox News shook off a challenge in recent months from MSNBC to claim a clear victory: 461,000 viewers, well ahead of MSNBC (329,000) and CNN (265,000).”

Nielsen reported that Fox News secured an impressive ten of the top fifteen shows in all of the cable news, with Fox News’ Sean Hannity finishing in the top most-watched cable news show in May. Aside from ESPN and the NBA playoffs, Hannity had more viewers than any other show on cable.

In total viewers, “Hannity” had 3.261 million, followed by MSNBC’s “The Rachel Maddow Show” (2.627 million), and Fox News’ “Tucker Carlson Tonight” (2.617 million), “The Ingraham Angle” (2.617 million) and “The Five” (2.153 million).

On a year-over-year basis, Fox News viewership increased +6 percent to 2.381 million viewers during primetime. MSNBC declined -2 percent to 1.654 million viewers, and CNN collapsed -25 percent in viewers to 888,000.

Regarding demographics, the prime working age American (25- to 54-year-old) coveted by corporations for advertising purposes, Hannity gained the top spot with 650,000 of these viewers. A handful of companies late last year dropped their advertisement programs with Hannity over the Roy Moore interview. Reflecting on that decisions, well, it seems like those companies made a terrible advertising mistake. Maddow secured second, with 513,000 prime age working Americans, while Laura Ingraham finished in the third slot, with 523,000.

When it comes to financial news, most Americans have now gravitated to Fox Business for their daily dose of mainstream economics. Fox has been leading the financial segment of news for twelve consecutive months in a row over its rival CNBC. “Lou Dobbs Tonight” has been a grand slam for the network — now ranked most-watched cable business program, with 319,000 total viewers. “Varney & Co.” with Stuart Varney placing second, with 232,000, and “Countdown to the Closing Bell with Liz Claman” was third, with 178,000.

Wrapping up the top five were “After the Bell” on Fox Business, with 176,000 viewers, and CNBC’s “Squawk on the Street/Squawk Alley,” with 172,000. Mad Money with Jim Cramer was nowhere to be found.

In total views during market hours of 9:30 a.m. to 4 p.m., Fox Business had an average of 187,000 viewers to CNBC’s 165,000. However, CNBC did surpass Fox Business in the total views for the prime working age cohort, but not by much - possibly due to CNBC’s crypto trader segment.

Americans who get their daily dose of news, politics, and economics from mainstream news outlets appear to have received the message blasted by President Donald Trump that "liberal media" is fake news, and nowhere is it more obvious than in the ratings collapse of Trump's nemesis: CNN. Which begs the question: is the Fourth Estate indeed collapsing as many believe, or is it just shifting increasingly to conservative media?

Welcome To Debt Serfdom: 'Real World' Costs Triple Since 2001

Welcome To Debt Serfdom: 'Real World' Costs Triple Since 2001

Authored by Charles Hugh Smith via OfTwoMinds blog,

Welcome to debt-serfdom, the only possible output of the soaring cost of living.

Long-time readers may recall the Burrito Index, my real-world measure of inflation. The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016). The Burrito Index tracks the cost of a regular burrito since 2001. Since we keep detailed records of expenses (a necessity if you’re a self-employed free-lance writer), I can track the cost of a regular burrito at our favorite taco truck with great accuracy: the cost of a regular burrito has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016.

It's time for an update: the cost of a regular burrito has now reached $7.50, triple the 2001 cost. That's a 200% increase in 17 years. According to the federal government, inflation since 2001 has risen about 40%: what $1 bought in 2001 now costs $1.43, according to the BLS Inflation calculator.

The Burrito Index is five times the official inflation rate. As I noted in The Disaster of Inflation--For the Bottom 95% (October 28, 2016) and Inflation Isn't Evenly Distributed: The Protected Are Fine, the Unprotected Are Impoverished Debt-Serfs (May 25, 2017), the gross under-reporting of inflation (i.e. the loss of purchasing power of "money" and labor) is only part of the distortion: some of the populace is protected by subsidies from the real ravages of inflation, while those exposed to the unsubsidized real-world costs are being savaged by supposedly benign inflation.

Lest you reckon only burritos have tripled in cost since 2001--have you checked out college tuition or rents lately? Consider a typical public university:

University of California at Davis:

2004 in-state tuition $5,684

2018 in state tuition $14,463

So tuition at a state university soared 2.5 times while official inflation rose by a mere 35% since 2004. If UCD tuition had only risen by 35%, it would total $7,673, not $14,463. The cost above and beyond what we would expect had tuition tracked official inflation adds up to $27,000 per four-year bachelor’s degree per student. Now multiply that by millions of college students, and you get a sense of the enormity of the gulf between real-world inflation and the official inflation rate of 2.5% annually.

In regions with hot job markets, rents have doubled since 2001. As for the unsubsidized costs of healthcare insurance: many of those paying the unsubsidized costs would be happy if their premiums had only doubled since 2001:

Why Your Health Insurer Doesn’t Care About Your Big Bills (via Maoxian)

But the cost of health care is a growing burden for MCS and its 170 employees. A decade ago, Master said, an MCS family policy cost $1,000 a month with no deductible. Now it’s more than $2,000 a month with a $6,000 deductible. MCS covers 75 percent of the premium and the entire deductible. Those rising costs eat into every employee’s take-home pay.

And here's how the bottom 95% of American households pay for soaring tuition/fees: with borrowed money:

Welcome to debt-serfdom, the only possible output of the soaring cost of living for the unprotected who are ruled by a hubris-soaked, Protected Elite. Our job is to shoulder the higher prices by taking on more debt--debt which is immensely profitable for the Protected Elite.

Here's what you're supposed to swallow: big-ticket expenses such as rent, healthcare and higher education cost tens of thousands of dollars more, but TVs cost a few bucks less, and as a result, official inflation is 2.1% annually.

As long as we accept this travesty of a mockery of a sham, we deserve what we get.

*  *  *

My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

EU Rages At "Unacceptable" US Tariffs, Vows Retaliation "In Coming Hours"

EU Rages At "Unacceptable" US Tariffs, Vows Retaliation "In Coming Hours"

Confirming expectations, Wilbur Ross announced the steel, aluminum tariffs exemptions were lifted on EU, Mexico, and Canada. This prompted angry responses from the head of the EU bloc's executive Jean-Claude Juncker who said that the European Union will impose counter measures immediately.

"This is a bad day for world trade," Juncker said in a speech in Brussels. "So we will immediately introduce a settlement dispute with the WTO and will announce counter balancing measures in the coming hours."

"It is totally unacceptable that a country is imposing unilateral measures when it comes to world trade." 

Juncker also said that he is "concerned by this decision" which he defined as "protectionism, pure and simple." The European head with a penchant for alcohol said that steel overcapacity remains at the heart of the problem, and "the EU is not the source of but on the contrary equally hurt by it", clearly referencing China.

He also said that the EU has consistently indicated openness to discussing ways to improve bilateral trade relations with the US "but have made it clear that the EU will not negotiate under threat" and added that "by targeting those who are not responsible for overcapacities, the U.S. is playing into the hands of those who are responsible for the problem."

"The U.S. now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US. We will defend the Union’s interests, in full compliance with international trade law."

Needless to say, the export-heavy Germans were furious too:


In response, some were quick to point out the facts:

US Stocks slumped on the news.

In an amusing twist, Wilbur Ross told CNBC shortly after the tariffs announcement that "we don't know why the stock market is going down." Maybe because more sellers than buyers?

Meanwhile, the opposite took place in Treasuries, where yields are sliding once again:

And the safe-haven dollar is bid:

As Italian bond yields are rising once again...



Goodbye Rajoy: Basques To Vote Against Prime Minister, Assuring New Spanish Government

Goodbye Rajoy: Basques To Vote Against Prime Minister, Assuring New Spanish Government

Mariano Rajoy became prime minister of Spain on December 20, 2011 and barring some miracle, his political career will end on June 1, 2018, because moments ago it appears that the required number of votes to ouster the premier in tomorrow's vote of no-confidence was reached.

As we reported earlier, Socialist leader Pedro Sanchez who is spearheading the vote against the unpopular premier, already had the backing of the anti-establishment group Podemos, and Catalan separatists Esquerra Republicana and PdeCat. He only needed the support of Basque Nationalists to clinch it.

Moments ago the Basques officially sided with Sanchez, when the Basque Nationalists informed both Rajoy’s People’s Party and the Socialists that they’ve decided to vote against the prime minister, according to state broadcaster Television Espanola. With the Catalans of PdeCat also expected to support Sanchez, that would be enough to defeat Rajoy, as there are now 177 votes against Rajoy with 176 needed.

Being the decisive vote against Rajoy must be a welcome revenge for the various Basque and Catalan separatist groups following the unprecedented crackdown that Rajoy unleashed against the various parties last fall when in the aftermath of the Catalan referendum, Spain cracked down on all separatists in the region.

And while markets had been largely prepared for the possibility of Rajoy's ouster, Bloomberg's Paul Dobson points out some potential complications, noting the possibility for the socialists to try to govern without a new election, or that they could find a way to form a government after a new election (with Catalan separatists and Basque nationalists). According to Dobson that would be bad for bonds (and stocks) because:

  • The socialists governing with a minority and the current parliamentary line-up would be very unstable and struggle to get anything done, adding to uncertainty.
  • They may also take a conciliatory approach to the Catalans, raising the prospect of releasing separatists from jail and putting the issue of independence in Catalonia back on the agenda -- that's the biggest risk scenario, as our local expert Ben Sills puts it.
  • The Socialists also want to tax the banks more heavily, another market negative.

In other words, while Italy remains the top risk for euro-area markets, "and the longer-term view with Ciudadanos gaining traction may still be more favorable, it may pay to be alert to the Spanish risks."

Housing Rebound Dies: Higher Rates Spark New, Existing, & Pending Home Sales Slump

Housing Rebound Dies: Higher Rates Spark New, Existing, & Pending Home Sales Slump

After disappointment in new- and existing-home-sales, pending home sales in April tumbled 1.3% MoM (missing expectations of a 0.4% gain - and well below the lowest analysts estimate).

Contract signings to purchase previously owned U.S. homes unexpectedly declined in April, underscoring the housing market’s challenge centered around a persistent inventory shortage, according to data released Thursday from the National Association of Realtors in Washington.

Signings dropped in three of four regions, led by a 3.2 percent decline in the Midwest; fell 1 percent in the South and 0.4 percent in the West, while sales agreements were unchanged in the Northeast. Pending home sales index for West was lowest since June 2014.

A limited number of for-sale properties is keeping prices elevated at a time when mortgage rates have climbed to an almost seven-year high.

“The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels,” Lawrence Yun, NAR’s chief economist, said in a statement.

At the same time, “demand for buying a home is very robust,” Yun said. “Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.”

As a reminder, economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later

And housing does not look like it's going to get a bounce anytime soon...


Chicago PMI Survey Rebounds Despite Slump In 'Hard' Data

Chicago PMI Survey Rebounds Despite Slump In 'Hard' Data

After tumbling through March and stabilizing in April, Chicago PMI rebounded in May printing a better-than-expected 62.7, despite the ongoing slump in 'hard' actual economic data.

May's PMI print was above the highest analyst forecast (forecast range 56.6 - 62 from 30 economists surveyed)


Under the hood, everything is awesome:

  • Prices paid rose at a slower pace, signaling expansion

  • New orders rose at a faster pace, signaling expansion

  • Employment rose at a faster pace, signaling expansion

  • Inventories rose at a faster pace, signaling expansion

  • Supplier deliveries rose at a faster pace, signaling expansion

  • Production rose at a faster pace, signaling expansion

  • Order backlogs rose and the direction reversed, signaling expansion

  • Business activity has been positive for 12 months over the past year.

  • Number of components rising vs last month: 6



Trump Imposes Steel, Aluminum Tariffs On EU, Canada And Mexico

Trump Imposes Steel, Aluminum Tariffs On EU, Canada And Mexico

As widely leaked over the past few days and as confirmed earlier this morning, moments ago Commerce Secretary confirmed that the Trump administration is imposing steel and aluminum tariffs on the EU, Canada and Mexico, with the tariff set to begin at midnight tonight to help protect America’s manufacturing base:


Canada, Mexico and Europe were exempted from import duties of 25% on steel and 10 per cent on aluminum when they were first imposed in March, but those exemptions will expire at midnight.

Ross told a conference call with media this morning that he is looking forward to continuing negotiations. But in the case of Canada and Mexico, he said the decision was based on making progress in the ongoing North American Free Trade Agreement talks, and there is no resolution in sight. "The talks are taking longer than we had hoped."

Ross also said he’s looking forward to “continued negotiations" with Canada, Mexico and EU “because there are other issues" that need to be resolved. There’s potential “flexibility” in the future because the president has the power to increase or cut tariffs, remove them, or enact quotas, he said.

President Donald Trump has justified the metals duties by invoking a national security provision under Section 232 of a 1960s trade law.

US Steelmakers were delighted with the news, as Alcoa, the largest U.S. aluminum producer, rose over 2% to $49.60 while Nucor, the biggest US steelmaker, also rose more than 2% percent to $65.50 a share.

Meanwhile, as noted earlier, both the CAD and MXN continued selling off on the news, with the  Loonie erasing yesterday's BOC hawkish language-driven gains...

... while the Peso slumped to one-week lows...

Bye-Bye Benz: Trump Planning Ban On Luxury German Autos

Bye-Bye Benz: Trump Planning Ban On Luxury German Autos

Having cornered his European allies over the Iran sanctions, and tightened his grip on the EU economy over metals tariffs, an exclusive report by German magazine WirtschaftsWoche claims that President Trump is taking direct aim at Merkel and is preparing to impose a total ban on German luxury carmakers from the U.S. market.

Citing several unnamed U.S. and European diplomats, the weekly business magazine reported that Trump told French President Emmanuel Macronlast month he would maintain his trade policy with the aim of stopping Mercedes-Benz models from driving down Fifth Avenue in New York.

WiWo reports that Trump's grudge against the German automaker - and especially against Mercedes models in New York - is not new

In January 2017, prior to his inauguration, he said in an interview, "When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house." But that's not reciprocity. "How many Chevrolets do you see in Germany? Not too many, maybe none at all, you do not see anything over there, it's a one-way street," said the real estate billionaire. 

Although he is for free trade, but not at any price: "I love free trade, but it must be a smart trade, so I call him fair."

The report comes less than two weeks after the U.S. Department of Commerce launched an investigation into automobile imports to determine whether they "threaten to impair the national security" of the U.S. That could lead to tariffs of up to 25 percent on the same "national security" grounds used to impose metal imports charges in March.

WiWo also points out that an import duty of 25 percent would also have a significant economic impact - the Ifo Institute comes in own calculations alone in the German carmakers at the cost of about five billion euros. That would depress German GDP by 0.16 percent.

"No country would fear higher absolute losses through such an inch than Germany," says Gabriel Felbermayr, director of the Ifo Center for Foreign Trade.

Is it any wonder Der Spiegel did this?

As European Council President and former Prime Minister of Poland, Donald Tusk, raged:

" Looking at latest decisions of @realDonaldTrump someone could even think: with friends like that who needs enemies....

But frankly, EU should be grateful. Thanks to him we got rid of all illusions. We realise that if you need a helping hand, you will find one at the end of your arm. "

Tesla Model S Crashes Into Parked Cars After Starting On Its Own

Tesla Model S Crashes Into Parked Cars After Starting On Its Own

Another day, another mysterious Tesla vehicle crash...

Bloomberg reports that a Tesla vehicle crashed into five parked cars in the Brussels borough of Saint-Gilles Tuesday, with the driver reportedly having said he was outside the car, with the engine running, as it drove away.

Police said it received a call for an incident involving a Tesla and other cars in the early evening of May 29, but did not intervene as the owners decided to handle the case through their insurance companies, Kathleen Calie, a spokeswoman for Brussels South police, said by phone.

As Le Soir reports, according to the police, the owner of the vehicle was outside the car, busy closing the gate of his agency while the engine was running. The Tesla then set off on its own, crashing into other cars parked nearby before finishing off at a Dacia Logan across the street.

Tesla has denied the driver's version of events...

“We have investigated the facts of the incident and we can confirm that the customer was driving and operating his car himself, without using Autopilot, which is a level 2 driving assistance system that doesn’t make a Tesla a self-driving car,” a Tesla spokesperson said in an emailed response to questions.

But still, Tesla stock is sliding - not helped by the Softbank snub...


But bonds are the real signal here as they languish near record lows...