by ilene - March 24th, 2017 11:20 am
Spanish essayist George Santayana once wrote, “Those who cannot remember the past are condemned to repeat it,” but there is a problem with this famous and witty line. Studying history has little practical utility in averting past outcomes. We are doomed to repeat history whether we know it or not.
The value in knowing history is not that one might prevent its recurrence. Its value is that it allows you to identify those things that don’t change and that shape events… no matter the year on the calendar. It is not quite as clever a turn of phrase, but it would be more accurate to say: To predict the future, one must understand the past.
Geopolitical Futures, unsurprisingly, focuses on the future. But part of what gives GPF analysis such insight into the future is its grounding in history. This is not always obvious, as most of our writing stays focused on the future. But today, in This Week in Geopolitics, we thought we might pull back the curtain slightly and showcase four maps that highlight what parts of the world looked like in the past… and that point the way toward what may come in the future.
The map above simplifies a great deal of China’s ancient and imperial history. It identifies seven states that fought for control of the historic Chinese heartland during the Warring States period (475–221 BC).
Two observations can be made from this map. First and most important, China has always been a land power. Its control has never extended beyond the mainland in a serious way. Taiwan is the only notable exception—and Sinic civilization only came to Taiwan after the Ming Dynasty (not shown on the map) collapsed in 1644. Some Ming loyalists fled to Taiwan to use it as a base of operations. When GPF talks about China not having a tradition as a maritime power and being confined to the mainland, these facts often are not mentioned in the analysis, but that makes them no less important.
by Market Shadows - March 24th, 2017 10:27 am
Financial Markets and Economy
Oil prices are down nearly 10 percent over the past month, leading some to wonder if we're set for a resumption of the plunge seen between 2014 and early 2016. Executives at oil companies, however, are optimistic.
Let’s begin by stating the obvious: My priorities are different than yours or Paul Ryan’s or the president’s. We all have a different agenda, motivated by different issues.
Canadian Finance Minister Bill Morneau released his 2017-18 budget Wednesday in Ottawa. Documents show the Liberals aren’t going any deeper into the red than they’d forecast in November.
Should America adopt a universal basic income? Philippe Van Parijs, co-author of “Basic Income: A Radical Proposal for a Free Society and a Sane Economy,” said yes during a recent Salon Talks interview.
India is betting big on renewable energy and solar companies are taking notice.
SunPower CEO Tom Werner said India is about to become the biggest market for solar energy, primarily because of Prime Minister Narendra Modi's interest in growing the sector.
This Gold Rally Has Recent History on Its Side (Bloomberg)
Gold has staged an impressive rebound since the Federal Reserve raised interest rates last week and reiterated that the pace of increases will accelerate. But is a rally logical?
The Fed caused it, but it won’t do much to contain it.
Last year, Boston Fed President Eric Rosengren — considered a “dove” on the Fed’s policy-setting committee — started warning about the commercial real-estate bubble in the US and what its demise could do to banks.
Are investors too optimistic about Amazon? (The Economist)
Every chief executive hopes to lead his company
by phil - March 24th, 2017 8:25 am
As noted by the GOP leadership: "There is no Plan B" to the TrumpDon'tCare Act. Either the GOP guts health care and takes insurance away from 24M Americans and begins to defund Medicaid or, as Trump now states "Obmacare Stays." I know – WTF? Is it possible that the GOP has purposely put forth an unpassable bill BECAUSE they realize Obmacare is too good to kill?
Keep in mind this is just the House Vote on Health Care, which was supposed to be easy, the Senate vote is next and the changes they made in the bill could cause it to fail simply under the parliamentary rules (because they changed it to a simple majority, which caused other rules to kick in).
If 3 GOP Senators defect, the Bill dies and, even if it passes, the Dems can tie it up in court for a long time. Since they have a 44 vote advantage in the House (10%) and can't get them in line, it's reasonable to assume they are going to have trouble with at least 5 Senators and Senators have to Represent whole states – this is a suicide mission for Republican Senators from Democratic states. It's very possible this battle will cost the GOP the Senate next year and the Senate gets to do all those fun investigations. So that's the upside on the Bill – the downside is TOTAL CHAOS!
Of course, that may be exactly what the White House wanted because, clearly, they did not have a real Health Care plan but, much more importantly, you forgot all about Trump's false accusations that Obama tapped his phone and, even though Devin Nunes jumped on a grenade for Trump and tried to convince the American People that mentions of the Trump team in some investigations justified Trump's paranioa (destroying his own reputation in the process) - no one really fell for it but, suddenly, Health Care distracted us – how convenient!
Yesterday, I was on the Benzinga Pre-Market Report at 8:30 and they asked me how to play the Dow and I told them (20 minutes in): "Figure…
by Market Shadows - March 24th, 2017 1:32 am
Financial Markets and Economy
SEC May Regret the Day It Allowed Leveraged ETFs (Bloomberg)
That bit of truism is all you need to understand the rapid rise in leveraged exchange-traded funds, which were created in 2006 as a way for investors to double their exposure to stock indices.
Why was the Great Depression so deep, and why did it drag on for so long? According to impressive research by Robert Higgs of the Independent Institute, it was because President Roosevelt abandoned his campaign promises of 1932: to cut federal spending, to balance the budget, to maintain a sound currency, and to rein in Washington’s bureaucracy. Instead, Roosevelt switched gears.
Federal Reserve Bank of San Francisco President John Williams said that three or “maybe even more” interest-rate increases this year make sense, depending on how the central bank is doing on its employment and inflation objectives.
Federal fuel economy standards may be easier and less expensive to comply with than previously projected, according to a new study. The finding could undermine the argument by automakers and the Trump administration that the fuel standards increase costs and would lead to prohibitively expensive vehicles and job losses.
When the European Central Bank announced its targeted lending program back in 2014, policy makers including President Mario Draghi held out great hopes that it would finally get financial institutions extending credit to companies and households again.
Renters Now Rule Half of U.S. Cities (Bloomberg)
Just 49 percent of Motor City households were homeowners in 2015, down from 55 percent in 2009 and the lowest percentage in more than 50 years. Detroit isn’t alone, of course: The rate of U.S. home ownership fell steadily for a decade as the foreclosure crisis turned millions of owners into renters and tight housing markets made it hard for renters to buy homes.
by ilene - March 23rd, 2017 7:26 pm
Courtesy of Joshua M Brown
If President Trump announces that North Korea launched a missile that landed within 100 miles of Hawaii, would most Americans believe him? Would the rest of the world? We’re not sure, which speaks to the damage that Mr. Trump is doing to his Presidency with his seemingly endless stream of exaggerations, evidence-free accusations, implausible denials and other falsehoods.
Did Rupert Murdoch order the code red? This is tough stuff from the right-leaning editorial board of the Wall Street Journal. And it’s important that it be said by someone on the right, quite frankly. Nothing penetrates the mental force field between the two ends of the spectrum these days.
Bottom line: You can be the President of the United States or you can tweet bullshit from Fox & Friends or Alex Jones.
But you can’t do both.
by ilene - March 23rd, 2017 2:30 pm
Oil prices are heading down again on swelling U.S. crude oil inventories, with Brent dropping below $50 per barrel for the first time this year.
The OPEC deal that has taken more than 1 million barrels per day of oil off the market has not succeeded in reversing this bearish trend for inventories. And with the deal at its midway point, focus is shifting towards an extension of the cuts through the end of the year.
But OPEC’s usual strategy of jawboning the market back up ahead of these negotiations seems to be wearing thin amid record high crude oil inventories. "OPEC has used up most of its arsenal of verbal weapons to support the market. One hundred percent compliance by all is the only tool they have left and on that account they are struggling," said Ole Hansen, head of commodity strategy at Saxo Bank.
"OPEC's market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience," investment bank Jefferies said in a research note.
Although projections from Wall Street banks tend to vary quite a bit, there is a growing chorus warning about another slide in crude prices. At this point, the big variable is whether or not OPEC decides to extend the deal when it meets in May – an extension would likely stabilize prices and might even push them back up into the mid-$50s or higher. No extension and oil could fall much further into the $40s.Related: The Oil Market Is At A Major Turning Point
Looking out a bit further, things get much more complicated. Even if the supply/demand imbalance is taking a long time to correct itself, rising demand and tepid supply growth suggest that the glut will ease over time. At least that is the general consensus.
However, Goldman Sachs warns that another downturn could come over the next three years, sparked by a new wave of supply stemming from megaprojects planned years ago. These projects cost billions of dollars and take many years to bring online, and many of them were initiated back when oil prices…
by ilene - March 23rd, 2017 1:48 pm
Why Big Insurance Adores the American Health Care Act
Courtesy of Wendell Potter
This post first appeared on BillMoyers.com.
There's been a lot of talk about just who was hurt and helped by Obamacare and who will profit or be imperiled by the next phase of health care legislation. Yet health insurance executives have been curiously silent about the House GOP plan to repeal and replace Obamacare. While the American Medical Association and the American Hospital Association, among many others, have come out against it, insurers have clearly made a strategic decision not to show their hand.
But know this: They love it. Their fingerprints are all over what the Republicans are calling the American Health Care Act. Arguably the only thing they don’t like about House Speaker Paul Ryan’s Ayn Randish creation is the way the plan would slash funding for the Medicaid program. That’s not because insurance executives are more compassionate for the poor than they’ve been in the past; it’s because a growing percentage of their profits now comes from Medicaid. In fact, more than half of the big insurers’ revenues is now coming from the government, not the private sector. And they’re fine with that.
Make no mistake, health insurance lobbyists also helped shape the Affordable Care Act. Most notably, they were able to get a provision stripped from the bill that would have created a government-run insurance plan (the “public option”) to compete with private insurers. But they didn’t get everything they wanted.
It gets rid of those pesky new rules on consumer protection
Over insurers’ objections, the ACA was enacted with important consumer protections. Thanks to the ACA, insurers can no longer charge older people more than three times as much as younger people for the same policy, and they can’t allocate more than 20 percent of what we pay in premiums to profits and administrative activities like sales and marketing. It’s also now illegal for insurers to deny people coverage because of a pre-existing condition. And policies sold now must cover several “essential benefits,” a provision that outlawed junk insurance.
by Market Shadows - March 23rd, 2017 8:33 am
Financial Markets and Economy
U.K. retail sales rose more strongly than expected in February but the outlook for the British consumer remains weak.
European stocks were little changed, with advances in mining companies countering declines in food and beverage producers.
Next Plc held its profit forecast and said it can mitigate a tough U.K. clothing market by improving ranges and switching suppliers, reassuring investors worried about the retailer’s price pressures and product challenges.
10 things you need to know before the opening bell (Business Insider)
Here is what you need to know.
The House is set to vote on Trumpcare. President Donald Trump and House Republican leaders are making a last-minute push to secure the votes needed to move the GOP's bid to overhaul the US healthcare system onto the Senate; 218 votes will be needed for the bill pass.
Sterling gained versus all of its 16 major peers, while government bonds fell as sales rose 1.4 percent after sliding a revised 0.5 percent in January, the Office for National Statistics said Thursday. The median forecast in a Bloomberg survey of economists was for an increase of 0.4 percent.
Indian sovereign bonds climbed for a third day as foreign funds boosted holdings amid expectations of more economic reforms after Prime Minister Narendra Modi’s party won elections in a key state.
UK retail sales had a huge month in February, confounding the forecasts of economists who had predicted stuttering growth in the month, according to the latest data from the Office for National Statistics.
by phil - March 23rd, 2017 8:10 am
Big vote tonight.
If the TrumpDon'tCare Plan is approved (the CBO says it can no longer be called a health plan since the overall goal is to kill as many people as possible), then Trump's agenda is winning and the markets could leg higher. If, on the other hand, the GOP revolts against The Donald, all Hell could break loose so ignore the politics if you want to but we're paying very close attention!
Interestingly, the main GOP objection to TrumpDon'tCare is that it still cared about forcing Health Insurance Companies to provide minimum benefits to their customers. That has now been removed by the White House and now the Insurance Companies don't have to do anything for anyone at any time – isn't that great? As noted by Politico, however:
While altering the coverage requirements could help win over the Freedom Caucus members, it could drive away moderates — another coalition that House leaders need to build upon in the final 24 hours before the planned vote on Thursday. House leaders are still short of the 215 votes they need.
It's going to be hard to bridge the gap because the bill still is not Draconian enough for the "Freedom Caucus":
Freedom Caucus members, led by Meadows, want at least some parts of Title One of the bill removed. Included in Title One are many of the Affordable Care Act's benefits, like a prohibition on insurers denying coverage over pre-existing conditions and a prohibition on lifetime and annual limits.
That's right, your pre-existing conditions can now stop you from getting coverage and, even if you are covered, there can be a cap – so don't get too sick or you'll be on your own! Aside from leading to a great unwinding in the Health Care, Pharma and Biotech sectors, TrumpDon'tCare will put a huge burden on the bottom 99% and eat into their disposable income…