Michigan

China's Anti-Terrorism Challenge

After another, even deadlier, terrorist attack in Urumqi, Beijing must reevaluate its anti-terrorism strategy.

Congress Passes Gutted Beyond Recognition Anti-NSA Bill; Original Co-Sponsor Votes "No"

 

It’s shameful that the president of the United States, the chairman of the House Permanent Select Committee on Intelligence, and the leaders of the country’s surveillance agencies refuse to accept consensus reforms that will keep our country safe while upholding the Constitution. And it mocks our system of government that they worked to gut key provisions of the Freedom Act behind closed doors.

- Rep. Justin Amash of Michigan, original cosponsor of the USA Freedom Act

AT&T Buys DirecTV In $67 Billion Deal; Pfizer Makes "Final Proposal" To Buy AstraZeneca, Boosts Offer To $119 Billion

In what is setting up to be a scorching merger Monday, moments ago we got confirmation of news that had been leaked days in advance, namely that both the boards of AT&T and DirecTV had agreed to a transaction whereby AT&T would buy DirecTV in the latest chapter of what we dubbed several months ago the "M&A bubble", for $95/share in a $67.1 billion transaction including debt, consisting of $95/share in stock, $28.50/share in cash. According to the public announcement, the DirecTV purchase represents a 7.7x multiple of its 2014E EBITDA.  Additionally, as the press release states, "AT&T expects the deal to be accretive on a free cash flow per share and adjusted EPS basis within the first 12 months after closing." In other news, almost concurrently with the AT&T announcement, Pfizer also did what many expected it to do, when it announced that as part of its "final offer" it would boost its proposed purchase price for AstraZeneca by 15%.

Frontrunning: May 16

  • Bank of England sees 'no housing bubble' (Independent)
  • ‘If the euro falls, Europe falls’ (FT)
  • India's pro-business Modi storms to historic election win (Reuters)
  • Global Growth Worries Climb (WSJ)
  • Bitcoin Foundation hit by resignations over new director (Reuters)
  • Blackstone Goes All In After the Flop (WSJ)
  • SAC's Steinberg loses bid for insider trading acquittal (Reuters)
  • Beats Satan: Republicans Paint Reid as Bogeyman in 2014 Senate Races (BBG)
  • Tech Firms, Small Startups Object to Paying for Internet 'Fast Lanes' (WSJ) - but they just provide liquidity
  • U.S. Warns Russia of Sanctions as Ukraine Troops Advance (BBG)
  • Major U.S. hedge funds sold 'momentum' Internet names in first-quarter (Reuters)

Yen Carry Slide Drags Futures To Lows

The perfectly expected if completely irrational overnight ramp in various Yen carry pairs tried, and failed, and both the USDJPY and EURJPY were tumbling to overnight lows as we go to print. This is happening despite a rout in India in which Narendra Modi's opposition block is poised for the biggest Indian election win in 30 years, with his BJP party currently leading in 332 of 543 seat - an outcome that is seen as very pro business (and seemingly pro asset bubbles: the INR soared and the Sensex was up as much as 6% in intraday trading before paring virtually all gains following what many say was RBI intervention). And while the Nikkei (down 200 points) did not help the mood this move was mostly in response to yesterday's US selling, which means as usual the culprit for lack of algo risk-taking overnight has been the Yen carry, which moments ago hit intraday lows, and is increasingly flirting with the 101 level (after which double digits, and Abe's second resignation, come very quickly).

Key Events In The Coming Week

This week markets are likely to focus on a few important data prints in DMs, including Philly Fed in the US (expect solid expansionary territory) and 1Q GDP releases in the Euro area (with upside risks). In DMs, the highlights of the week include [on Monday] Japan’s trade balance data and Australia business conditions; [on Tuesday] US retail sales, CPI in Italy and Sweden; [on Wednesday] US PPI, Euro area IP, CPI in France, Germany and Spain; [on Thursday] US Philly Fed, CPI, capacity utilization, Euro area and Japan GDP; and [on Friday] US Univ. of Michigan Confidence. In the US, we expect Philly Fed to print in solidly expansionary territory (at 14, similar to consensus) and to inaugurate what we call the active data period of the month. We also expect CPI inflation to print at 0.3% mom (similar to consensus), and core CPI inflation at 0.18% mom (slightly above consensus).

IRS Audited Tea Party Donors Ten Times More Often Than Regular Americans

When the IRS was targeting conservative groups seeking tax exempt status for special scrutiny, they demanded the list of donors supporting those groups in 17 cases. Despite assurances from the agency that the lists had been destroyed, a search requested by Congress revealed that at least 3 lists had survived.

And of the donors on those lists, fully 10% of the individuals had been audited (the rate of audits for ordinary Americans is about 1%)

Now, the House Ways and Means Oversight Committee is demanding that the Government Accountability Office investigate the IRS to see why so many Tea Party donors were audited.

Initial Claims Drop But Alaska & New Jersey Remain Top Of "Insured Unemployed" List

The total number of people claiming benefits in all programs for the week ending April 19 was 2,832,693, an increase of 10,353 from the previous week (on an unadjusted basis) but the headlines will gloat of the drop in initial claims after last week's rather disturbing spike (which temporarily destroyed the pent-up demand post-weather meme). Initial claims dropped 26k to 319k, beating expectations. New York and Massachusetts saw the largest increase in claims while Michigan and New Jersey the largest drop.

The Shocking Increase Of College Tuition By State

Our condolences to students in Arizona, who have seen a near doubling of their college tuition in just 5 short years. In fact our condolences to students in the six states where tuition have risen by more than 60%, in the ten states where it has increased by more than 40%, and in the 29, or more than half of all states, where college tuitions have risen by more than 10 times the Fed's inflation target of 2% per year.

10 Examples Of How "Big Brother" Is Steadily Creeping Into Our Daily Lives

Virtually everything that you do is being watched.  Do you drive a car?  Do you watch television?  Do you use a cell phone?  As you do any of those things, information about you is being recorded and tracked.  We live at a time when personal privacy is dying.  And it is not just governments that are doing this.  In fact, sometimes private companies are the biggest offenders.  It turns out that gathering information about all of us is very, very profitable.  And both government entities and private companies are going to continue to push the envelope when it comes to high tech surveillance until people start objecting to what they are trying to do.  If we continue down the path that we are currently on, it is inevitable that we will end up living in an extremely restrictive “Big Brother” police state where basically everything that we do is very closely watched, monitored, tracked and controlled.  And such a day may be much closer than you think.  The following are 10 examples of how “Big Brother” is steadily creeping into our daily lives…

Will Detroit Be The First Major Chinese City In The United States?

Is Detroit destined to become a Chinese city?  Chinese homebuyers and Chinese businesses are starting to flood into the Motor City, and the governor of Michigan is greatly encouraging this.  In fact, he has formally asked the Obama administration for 50,000 special federal immigration visas to encourage even more immigration from China and elsewhere.  So will Detroit be the first major city in the United States to be dominated by China?  It could happen.  Once upon a time, Detroit was the greatest manufacturing city in the history of the world and it had the highest per capita income in the entire country.  But now it is a rotting, decaying, bankrupt hellhole that is in desperate need of a savior, and Michigan Governor Rick Snyder appears to be fully convinced that China can be that savior.

Obama Administration Launches Plan To Make An "Internet ID" A Reality

It appears the status quo may be finally making its moves to getting control over the heretofore free and open internet. As we and many others have noted previously, the internet is one of the most powerful tools humanity has ever devised. It frees information in a way that was simply unimaginable decades ago and empowers each of us to be as informed or uninformed as we desire. Just last week, we mused, that in so-called “first world” countries like the U.S. the illusion of freedom must be maintained even as civil liberties are eroded. Thus censorship must be administered surreptitiously and slowly. The following plan to implement an “Internet ID” will initially only be rolled out as a pilot program in two states (Michigan and Pennsylvania), and will only deal with government services. That said, we can see where all of this is ultimately headed, and the program, called the National Strategy for Trusted Identities in Cyberspace, should be monitored closely going forward.

David Stockman Ruins The Perennial Myth Of Crumbling Infrastructure

Whenever the beltway bandits run low on excuses to run-up the national debt they trot out florid tales of crumbling infrastructure - that is, dilapidated roads, collapsing bridges, failing water and sewer systems, inadequate rail and public transit and the rest. This is variously alleged to represent a national disgrace, an impediment to economic growth and a sensible opportunity for fiscal “stimulus”. But most especially it presents a swell opportunity for Washington to create millions of “jobs”. One thing is clear. There is no case for adding to our staggering $17 trillion national debt in order to replace the bridges of Madison county; or to fix state and local highways or build white elephant high speed rail systems; or to relieve air travelers of paying user fees to upgrade local airports or local taxpayers of their obligation to pay fees and taxes to maintain their water and sewer systems. At the end of the day, the ballyhooed national infrastructure crisis is a beltway racket of the first order. It has been for decades.

Gold Tops $1300 As Russian Rumblings Stumble Stocks

Bonds, Gold, and JPY are bid this morning as US equity futures are fading fast. The Dow and S&P futures are now back below pre-AAPL/FB levels and Nasdaq futures falling fast. Gold is back above $1300 (up over $30 from yesterday's pre-Putin lows). Treasuries, led by the long-end, are rallying as safe-haven bids appear across the whole complex. 30Y yields are down to 3.53 - the lowest since July. JPY is bid once again as USDJPY tests back to the crucial 102 level.

Frontrunning: April 25

  • Russia raises interest rates to 7.5% (FT)
  • Shanghai to Allow Raw Material Exchanges in Trade Zone (BBG)
  • US, Japan Fail to Clinch Trade Deal (WSJ)
  • 'We don't have a magic wand', says ECB's Constancio (Reuters)
  • Tokyo Inflation Quickens to Fastest Since 1992 (BBG)
  • Demand for Home Loans Plunges (WSJ)
  • EU banks urged to grasp chance to raise capital (FT)