by ilene - December 5th, 2016 1:18 am
Courtesy of Robert Reich
Last Thursday President-elect Donald Trump triumphantly celebrated Carrier’s decision to reverse its plan to close a furnace plant and move jobs to Mexico. Some 800 jobs will remain in Indianapolis.
“Corporate America is going to have to understand that we have to take care of our workers,” Trump told The New York Times. “The free market has been sorting it out and America’s been losing,” Vice President-elect Michael Pence added, as Trump interjected, “Every time, every time.”
So what’s the Trump alternative to the free market? Bribe giant corporations to keep jobs in America.
Carrier’s move to Mexico would have saved the company $65 million a year in wages. Trump promised bigger benefits. The state of Indiana will throw in $7 million, but that’s just the start.
Carrier’s parent company, United Technology, has military contracts that just last year generated $6.8 billion of its $57 billion in revenue – creating a yuge Trump card that makes $65 million look like peanuts. If Trump comes through with the military buildup he’s promising, United Technologies could reap a bonanza. You can bet that figured into the deal.
In addition, United Technologies has more than $6 billion parked abroad where tax rates are low. It will make a bundle if Trump follows through with a plan to allow global corporations to bring that money home and pay a rock-bottom tax rate.
In other words, Trump will get corporate America to take care of “our workers” by bribing them with government contracts, tax cuts, and relief from regulations. The art of the deal is to Increase corporate profits, and assume that corporations will reciprocate with good American jobs.
It’s “trickle-down” economics dressed in populist garb.
But it won’t work. As long Wall Street continues to push corporations to maximize shareholder returns, American workers will continue to lose good-paying jobs to foreign workers or to homegrown robots.
Payrolls are the biggest single cost on most companies’ balance sheets, so cutting jobs and wages will continue to be the easiest way to boost profits and share prices.
If Donald Trump were serious about reviving good jobs in America, he’d give workers
by Market Shadows - December 4th, 2016 10:24 pm
Financial Markets and Economy
Italian prime minster Matteo Renzi went down in flames in a crushing defeat of a referendum he sponsored.
Sergio Mattarella, Italy’s president, has a choice. President is largely a symbolic position but what happens next is up to Mattarella.
The president may ask Renzi to hang on in a caretaker role, there could be snap elections, there could be a fourth technocrat government. Renzi was the third consecutive appointed technocrat prime minister.
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.
The euro retreated with riskier assets, while bonds advanced, amid concern the failure of Italy’s referendum on constitutional reform will destabilize the country, emboldening anti-Europe and nationalist forces.
South Africa’s chances of repeating its escape from a junk credit rating in 2017 are in the balance as focus intensifies on tepid economic growth and simmering political tensions.
A hot new hedge fund just had a monster month (Business Insider)
A hot new hedge fund had a great November.
President-elect Donald Trump has placed himself in staunch opposition to environmentalists by denying climate change and threatening to dismantle the EPA. But there’s one area in which the two sides agree: both oppose the Trans-Pacific Partnership.
Here's what Wall Street's top performers expect from their bonuses this year (Business Insider)
Fixed income, currencies, and commodities traders are back in the ascendancy on Wall Street.
The FICC business is expected to
by ilene - December 4th, 2016 8:18 pm
Courtesy of Joshua M Brown
The guys at Bespoke Investment Group ask the question “Is this as good as it gets?” regarding the unemployment rate in this past week’s November Non-Farm Payrolls. It’s the lowest level for the indicator in 9 years.
They note that what went on economically, immediately following that August 2007 print, was not especially fun.
One dimension worth considering is the fact that Labor Force Participation is still much lower than is typical at this stage in an expansion. Wage growth, while good, is also not great yet. This leaves room for the economic recovery to continue beneath the surface, even while the headline unemployment rate doesn’t drop much lower than where it is today – which is pretty low.
by clarisezoleta - December 4th, 2016 10:04 am
Financial Markets and Economy
One of the Nordic region’s biggest asset managers is adjusting its portfolio to reflect a lack of confidence in Europe and a growing faith in the prospects of a U.S. boom.
Dubai stocks were the biggest gainers across Gulf markets after oil, the region’s main source of revenue, capped its best week since 2009.
It’s only a matter of time before Australia loses its AAA credit rating as the nation’s budget falls further into deficit, according to John Hewson, a former Liberal Party leader and central bank economist.
The Philippines asked Bangladesh for the results of its investigation into a $81 million cyber heist as it commits to help the Bangladesh central bank recover stolen reserves, Finance Secretary Carlos Dominguez said in a statement.
(CNN) - More than two-thirds of total investment in infrastructure in the next 15 years will be made in cities. It's no wonder, as people are flocking to cities around the world. By 2050, around 66% of the global population likely will live in urban areas. In Africa alone, there will be nearly 800 million more people living in cities than today.
The Bank of Russia confirmed the cyberattacks and the extent of the losses to CNNMoney on Friday.
Hackers had tried to steal 5 billion rubles, but the central banking authority managed to stop them and redirect the funds, according to central bank security executive Artiom Sychev.
One group of traders is looking forward to a big bump in bonuses (Business Insider)
The rates business has been the standout performer on Wall Street in 2016, with revenue at $21 billion for the first nine months of the year,
by ilene - December 3rd, 2016 1:34 am
Courtesy of John Mauldin, Mauldin Economics
“Move to Italy. They know about living in debt: They don’t care.”
– John Lydon
“Italians were eating with a knife and fork when the French were still eating each other.”
– Mario Batali
Italians are headed to the polls this Sunday (and thus this letter is reaching you a little earlier than usual) – but no one is quite sure what is on the ballot. On the surface, the voters are considering whether to approve constitutional reforms that should make the government operate more effectively (or not, depending on your point of view). But many people think the real question is whether the current government should stay in power and whether Italy should remain yoked to the Eurozone.
Coming up with an answer isn’t necessarily helpful when you can’t even agree on the question. However Italians vote, it may take some time to figure out exactly what the result means to Italy, the Eurozone, the EU, and the global economy. I am fairly confident that the ultimate outcome won’t be good, no matter what they choose. The problems are deeper than simple structural reform can cure.
Before we wade into the weeds on this topic, please understand, I love Italy. I love the culture, the people, the food, the beautiful art and architecture, and the heritage the country has bestowed on all of Western civilization. Some of the best moments of my life happened in Italy. I wish nothing but joy to the country and all its people. But politically and economically, Italy is an ungovernable mess heading straight for a Greek-style banking and debt crisis – but with an Italian flare.
Viewed from a historical perspective, this prospect shouldn’t surprise anyone. The territory we now call Italy was a shifting collection of smaller city-states for centuries. They came together as a Republic only after World War II, so they still have some issues to sort out. Creating a stable banking system is high on the list. But Italy can’t have that until it has a stable political system, which has been elusive: Italy has had 65 different governments in the postwar era. They last just over a…
by ilene - December 2nd, 2016 9:01 pm
Courtesy of George Monbiot
Donald Trump’s staff are drawn from an opaque network of corporate-funded thinktanks and fake grassroots campaigns
By George Monbiot, published in the Guardian 30th November 2016, Frightened by Donald Trump? You don’t know the half of it.
Yes, Donald Trump’s politics are incoherent. But those who surround him know just what they want, and his lack of clarity enhances their power. To understand what is coming, we need to understand who they are. I know all too well, because I have spent the past 15 years fighting them.
Over this time, I have watched as tobacco, coal, oil, chemicals and biotech companies have poured billions of dollars into an international misinformation machine, composed of think tanks, bloggers and fake citizens’ groups. Its purpose is to portray the interests of billionaires as the interests of the common people, to wage war against trade unions and beat down attempts to regulate business and tax the very rich. Now the people who helped run this machine are shaping the government.
I first encountered the machine when writing about climate change. The fury and loathing directed at climate scientists and campaigners seemed incomprehensible until I realised they were fake: the hatred had been paid for. The bloggers and institutes whipping up this anger were funded by oil and coal companies.
Among those with whom I clashed was Myron Ebell of the Competitive Enterprise Institute (CEI). The CEI calls itself a think tank, but looks to me like a corporate lobbying group. It is not transparent about its funding, but we now know it has received $2 million from ExxonMobil, $5 million from a group called the Donors Trust (which represents various corporations and billionaires), $800,000 from groups set up by the tycoons Charles and David Koch, and substantial sums from coal, tobacco and pharmaceutical companies.
For years, Ebell and the CEI have attacked efforts to limit climate change, through lobbying, lawsuits and campaigns. An advertisement released by the institute had the punchline “Carbon dioxide: they call it pollution. We call it life.”
It has sought to eliminate funding for environmental education, lobbied against the Endangered Species Act, harried climate scientists and campaigned in favour of mountaintop removal by coal companies. In
by ilene - December 2nd, 2016 8:11 pm
Courtesy of Joshua M Brown
Prior to Nov. 8, analysts were issuing dire warnings about what could befall markets across the globe should Donald Trump pull off a surprise upset in the U.S. presidential election.
Fast forward to three weeks after the election, and the U.S. stock market is continuing to hit record highs. And even while analysts are scrambling to decode the impact the President-elect’s campaign promises will have on their respective sectors, they’re assuming a vastly different tone.
The media is interested in the question of how The Street’s chief strategists can now be selling President Trump as a reason to be so bullish after telling us that President Trump was likely to lead to a crash or correction.
The answer to this question is sentiment, which always follows price. Prices went up, so sentiment changed. What once was bearish and scary is now bullish and exciting.
Animal spirits have been awoken in the US stock market. It may not last long, but it’s undeniable. The initial burst of re-certainty after the election consolidated, and in its wake, a new leg higher emerged – mostly predicated on the idea of massive tax cuts and stimulus plans. If only the President had the ability to wave a wand and make both things happen all at once…
But Wall Street’s seers are pumped. Part of it is the fact that it’s so nice to have a new story to tell that doesn’t involve the Fed or stock buybacks and dividends. Part of it the same old fear of being left behind. And part of it is wishful thinking. Which is not necessarily a negative.
Savita Subramanian’s Equity and Quant research team at BAML note that we’ve just seen the biggest jump in sell-side sentiment in a year:
In November, the Sell Side Indicator — our measure of Wall Street’s bullishness on stocks — jumped by 1.6ppt to a six-month high of 51.5, its biggest increase in over a year. As a result, the indicator is close to breaching the threshold that would trigger a “Neutral” signal, after spending the last six months