en Muddy Waters Proved Right As Huishan Dairy Prepares For Liquidation <p>On March 2017, we discussed the sudden 90% drop in the share price of China&rsquo;s largest dairy farm operator, the Hong Kong-listed China Huishan Dairy Holdings. The collapse occurred the day after its creditors convened an emergency meeting to discuss the company&rsquo;s cash shortage and was three months after Muddy Waters&rsquo; Carson Block questioned its profitability and said the company was &ldquo;worth close to zero.&rdquo; After the collapse in the share price we joked that &ldquo;it suddenly almost is.&rdquo; <strong>Now we have confirmation that Block was correct, as Huishan is entering provisional liquidation, citing liabilities of $1.6 billion.</strong> From Bloomberg.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>China Huishan Dairy Holdings Co., the Hong Kong-listed company targeted by short sellers including Muddy Waters Capital LLC, is preparing for provisional liquidation in a move that could protect its assets as it negotiates with creditors. The firm had told its Cayman legal advisers to make the preparations, it said in a Hong Kong stock exchange filing Thursday.</p> <p>&nbsp;</p> <p>Huishan&rsquo;s board earlier found that the net liabilities of its units in China &ldquo;could have been&rdquo; 10.5 billion yuan ($1.58 billion) as of March 31, the company said. <strong>A provisional liquidation generally is used to safeguard a company&rsquo;s assets before a court rules what action to take.</strong></p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 281px;" /></a></p> <p>In the Muddy Waters report, Block alleged that Huishan mislead investors by overstating its sales, making an undisclosed transfer of a subsidiary to a company controlled by Chairman Yang Kai and lying about its self-sufficiency in alfalfa. Following its publication, Huishan accused his firm of making allegations which were &ldquo;groundless, malicious and false&rdquo;. Apparently not, however. Speaking to Bloomberg, Block, who exited its short position, said.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;The most interesting part is the statement by the directors that net liabilities of the company could be 10.5 billion yuan and I compare that to the last published financials from September 2016 and the company was showing net assets of 12.9 billion yuan,&quot; he said. &ldquo;That&rsquo;s a clear affirmation that Huishan was a fraud.&quot;</strong></p> </blockquote> <p>In the filing with the Hong Kong Stock Exchange, Huishan stated that it will &ldquo;take into account, as far as possible, options available to the company to preserve the assets of the group.&rdquo; Chinese law will apply to the liquidation as Bloomberg explains.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>With the majority of its assets held through units in China, any debt restructuring will be subject to Chinese law, Huishan Dairy said.The provisional liquidation could lead to liquidation potentially, or some form of restructuring, according to Keith Pogson, a managing partner at Ernst &amp; Young in Hong Kong. The group&rsquo;s estimated total indebtedness was about 26.7 billion yuan as of March 31, including about 18.7 billion yuan of bank loans and 4.25 billion yuan of non-bank loans, it said in June. A liquidation would still need approval by shareholders or creditors, according to Shen Meng, Beijing-based director of the boutique investment fund Chanson &amp; Co. Huishan&rsquo;s move may be aimed at forcing creditors to accept its restructuring plan, which would result in only some repayment of debt, he said.</p> <p>&nbsp;</p> <p><strong>&ldquo;Huishan published this stock exchange statement in order to apply pressure on creditors to come to its terms,&quot; Shen said. &ldquo;It is likely that unhappy creditors will now take action, perhaps through legal routes, to protect their interests.&rdquo;</strong></p> </blockquote> <p>What&rsquo;s noteworthy in respect of the Huishan filing is how quickly it followed a statement the company made to the HKSE on 1 November 2017 when it said that it was on track to post positive cash flow from its core operations by the end of March 2018. Furthermore, it said that more than half of its mainland creditors, representing more than two thirds of the debt associated with Huishan and Yang group companies, were backing a debt restructuring plan.</p> <p>Accounting irregularities aside, Huishan&rsquo;s performance also suffered, to some extent, from the downturn in the global market for dairy products, as Bloomberg notes.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>China&rsquo;s dairy industry, which imports about a fifth of its milk supply, is recovering from a worldwide raw milk price slump that&rsquo;s weighed on the profits of producers including China Modern Dairy Holdings Ltd. that&rsquo;s controlled by China Mengniu Dairy Co. But Huishan&rsquo;s troubles are largely due to its own capital entanglements and not to wider market trends, said Guangdong Dairy Association Director Wang Dingmian. The company&rsquo;s milk supply largely goes to manufacturing dairy products under its own brand, according to Wang. Huishan&rsquo;s existing farms are operating normally, he said.</p> <p>&nbsp;</p> <p><strong>&ldquo;It is a very small supplier in the overall market and its troubles will not affect the supply of milk in China,&rdquo; he said. China&rsquo;s dairy farming landscape is dominated by smaller-scale farmers, which means that Huishan was one of the bigger industrial farms while still accounting for only a small portion of nationwide milk supply.</strong></p> </blockquote> <p>So, hat-tip to Carson Block and food for thought from Charles Macgregor, as Bloomberg relays.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Huishan&rsquo;s troubles should be a cautionary example for investors, said Charles Macgregor, head of emerging markets research at Lucror Analytics.</p> <p>&nbsp;</p> <p><strong>&ldquo;There is very likely more Huishans out there, this type of behavior is hardly isolated to a few bad apples.&rdquo;</strong></p> </blockquote> <p>This is China&hellip;damn right.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="233" height="146" alt="" src="" /> </div> </div> </div> Bankruptcy Business China Creditors Dairy Farm International Holdings Debt restructuring Economy Finance Guangdong Dairy Association Hong Kong Huishan National Forest Park Insolvency Jardine Matheson Group Liquidation Mengniu Dairy Money Yuan Fri, 17 Nov 2017 17:42:06 +0000 Tyler Durden 607444 at Manhattan Retail: The New Rust Belt <p><a href=""><em>Via Global Macro Monitor,</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>Bleecker Street,</strong> said Faith Hope Consolo, the chairwoman of the retail group for the real estate firm Douglas Elliman, <strong>&ldquo;had a real European panache. People associated it with something special, something different.&rdquo; </strong>Ms. Consolo, who has negotiated several deals on the street, added:<strong> &ldquo;We had visitors from all over that said, &lsquo;We&rsquo;ve got to get to Bleecker Street.&rsquo; It became a must-see, a must-go.&rdquo;</strong></em></p> <p>&nbsp;</p> <p><em>Early on, Ms. Consolo said, rents on the street were around $75 per square foot. By the mid-to-late 2000s, they had risen to $300. <strong>Those rates were unaffordable for many shop owners</strong> like Mr. Nusraty, who was forced out in 2008 when, he said, his lease was up and his monthly <span style="color: #ff0000;">rent skyrocketed to $45,000, from $7,000.</span>&nbsp;</em></p> <p>&nbsp;</p> <p><em><strong>&ndash; <a rel="noopener" target="_blank">NY Times</a></strong></em></p> </blockquote> <p>Retail is not just being Amazoned in Manhattan,<strong> retailers are being priced out of business by&nbsp;exorbitant rents. </strong></p> <p>Note to commercial landlords:&nbsp; Lower your rents!&nbsp; But,&nbsp; God forbid, that would be deflationary!</p> <h3>Empty Retail Storefronts &ndash; Midtown &amp; Upper Manhattan</h3> <p><img alt="EmptyStores_MidMan" class="alignnone size-full wp-image-50377" src="" style="height: 606px; width: 600px;" /></p> <h3>Empty Retail Storefronts &ndash; Lower Manhattan</h3> <p><img alt="EmptyStores_Lower Man" class="alignnone size-full wp-image-50378" src="" style="height: 601px; width: 600px;" /></p> <p><em><strong>Source:</strong>&nbsp; <a href="" rel="noopener" target="_blank">Donut Shorts</a></em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>One response to the neoclassical argument is that, in fact, prices are not perfectly flexible (they exhibit &ldquo;stickiness&rdquo;). For this reason, the economy is not self-correcting, at least not in the short run. <strong>Wages and prices may be &ldquo;too high&rdquo; (and, therefore, result in suppliers offering larger quantities for sale than demanders are able and willing to buy), but not come down quickly and eliminate the market surplus. </strong>This view has been widely attributed to John Maynard Keynes, and is, in fact, a key argument in what is known as &ldquo;New Keynesian&rdquo; economic theory. </em></p> <p><em><strong>&ndash;&nbsp;</strong></em><em> <a href="" rel="noopener" target="_blank">Dollars &amp; Sense</a></em></p> </blockquote> <p><a href=""><img alt="" src="" style="width: 600px; height: 358px;" /></a></p> <p><em><strong>During its incarnation as a fashion theme park, Bleecker Street hosted no fewer than six Marc Jacobs boutiques on a four-block stretch,</strong> including a women&rsquo;s store, a men&rsquo;s store and a Little Marc for high-end children&rsquo;s clothing. Ralph Lauren operated three stores in this leafy, charming area, and Coach had stores at 370 and 372-374 Bleecker. Joining those brands, at various points, were Comptoir des Cotonniers (345 Bleecker Street), Brooks Brothers Black Fleece (351), MM6 by Maison Margiela (363), Juicy Couture (368), Mulberry (387) and Lulu Guinness (394).</em></p> <p><strong><em>Today, every one of those clothing and accessories shops is closed.</em></strong></p> <p><em>Mr. Sietsema, the senior critic at Eater NY, has watched with mild schadenfreude but greater alarm as his neighborhood has undergone yet another transformation from a famed retail corridor whose commercial rents and exclusivity rivaled Rodeo Drive in Beverly Hills, Calif., to a street that <span style="color: #ff0000;">&ldquo;looks like a Rust Belt city,&rdquo;</span> with all these empty storefronts, as a friend of Mr. Sietsema&rsquo;s put it to him recently.</em></p> <p><em><strong>In the heart of the former shoppers&rsquo; paradise &mdash; the five-block stretch running from Christopher Street to Bank Street &mdash; more than a dozen retail spaces sit empty. </strong>Where textured-leather totes and cashmere scarves once beckoned to passers-by, the windows are now covered with brown construction paper, with &ldquo;For Lease&rdquo; signs and directives to &ldquo;Please visit us at our other locations.&rdquo;<br /><strong>&ndash; <a href="" rel="noopener" target="_blank">NY Times</a></strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="613" height="366" alt="" src="" /> </div> </div> </div> Bank Street Bleecker Bleecker Street East Village, Manhattan Greenwich Village John Maynard Keynes Manhattan Maynard Keynes New York City Subway stations Real estate Sixth Avenue SoHo, Manhattan West Village Fri, 17 Nov 2017 17:25:17 +0000 Tyler Durden 607457 at Bitcoin Nears $8000 After SegWit2x Fork <p>Despite <strong>miner support dropping to a mere 7% the SegWit2x fork is being attempted</strong> and for now there is no major impact aside to note that Bitcoin is rising on the day - <strong>testing $8000 for the first time</strong>.</p> <p>Bitcoin is now up 45% from its lows last weekend...hitting $7997 this morning...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 436px;" /></a></p> <p>As <a href="">Spencer Bogart (@CremeDeLaCrypto) notes</a>, <strong>today&#39;s Bitcoin rally looks like a rotation out of other crypto-assets and into Bitcoin to make sure they receive coins on both sides of the Segwit2x fork,</strong> which has seen a small resurgence of interest. Most detrimental to BCH.</p> <p>It&#39;s been quite a ride...</p> <ul> <li>$0&nbsp;&nbsp; - $1000: 1789 days</li> <li>$1000- $2000: 1271 days</li> <li>$2000- $3000: 23 days</li> <li>$3000- $4000: 62 days</li> <li>$4000- $5000: 61 days</li> <li>$5000- $6000: 8 days</li> <li>$6000- $7000: 13 days</li> <li>$7000- $8000: 14 days</li> </ul> <p><a href=""><em>Source: JackFru1t</em></a></p> <p><a href=""><em>As Cryptovest reports</em></a>, <strong>the relative date of the SegWit2X hard fork came on November 17, at 2:50 GMT+2 time.&nbsp;</strong></p> <p>Block 494,784 and the next block was mined by AntPool, a miner that did not signal support for SegWit2x. No peculiarities were seen in the <a href="" rel="noopener" target="_blank">new blocks</a>.</p> <p><img alt="" src="" style="width: 598px; height: 100px;" /></p> <p>After the block was passed, there were no immediate news on performing a fork from any known entity. <strong>But a few hours before the block, some expected the event would go through and a minority chain would appear, supported by a fraction of miners</strong>.</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="en"><a href=";ref_src=twsrc%5Etfw">#Segwit2x</a> is happening and that is the truth. Fork at Block number 494784. Stop telling yourselves that is not happening. <a href=";ref_src=twsrc%5Etfw">#bitcoin</a> <a href=";ref_src=twsrc%5Etfw">#bitcoin2x</a> <a href=";ref_src=twsrc%5Etfw">#b2x</a> <a href=";ref_src=twsrc%5Etfw">#bt2</a> <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$btc</a></p> <p>&mdash; Crypto Examiner (@CryptoExaminer) <a href="">November 17, 2017</a></p></blockquote> <script async src="" charset="utf-8"></script><p><strong>At least 48 hours may be needed to see if mining is happening and at what hashing power and speeds. </strong></p> <p>According to CoinDance, the new chain could not survive:&nbsp;</p> <p>At the same time, an entity called <a href="">Bitcoin2X</a> may be the force behind the new chain. Yet it is unknown if actual blocks would manage to appear.&nbsp;</p> <p><img alt="" src="" style="width: 603px; height: 68px;" /></p> <p><strong>At the very least, the hard fork day may have frozen some resources on Coinbase, GDAX or other exchanges around the time of the potential network split, to avoid problems with moving the coins in conditions with unknown replay protection.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p>Specifically, with regard the SegWit2x fork, <a href="">Coinbase issued a statement </a>clarifying some of the details:</p> <p><strong>There have been a number of developments with Bitcoin Segwit2x</strong> since our&nbsp;<a href="" target="_blank">last update</a>.</p> <p><strong>Coinbase is actively monitoring this situation and will make every attempt to allow customers to benefit from this fork if it results in a safe and functioning network</strong>. No action is required and all funds stored on Coinbase remain safe.</p> <p>Last week, the Segwit2x development team announced they would no longer continue with the project.</p> <p><em><strong>In addition, a significant portion of miners and other community leaders withdrew their support for the fork. However, despite these developments, a small number of miners may attempt to go forward with a fork.</strong></em></p> <p id="c6b5">We wanted to provide clarity about the potential outcomes of the fork and what Coinbase will do in each scenario.</p> <p>To protect customer funds, Coinbase will disable Bitcoin sends and receives at 2 am Pacific Time on November 17th, and disable buys and sells an hour before the fork, which is currently predicted to occur between 6am to 8am Pacific Time on November 17th. All functionality will be re-enabled shortly afterwards.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><strong>Scenario 1: network is&nbsp;unusable</strong></u></p> <p>If support for the fork remains at current levels, or decreases, the Bitcoin2x network will be unusable. Coinbase will not support withdrawals or trading as it will not be possible to move these assets.<strong>&nbsp;Currently we believe this is the most likely scenario. </strong>If the network gains support at a later date, we will enable Bitcoin2x withdrawals from the platform.</p> <p>&nbsp;</p> <p><u><strong>Scenario 2: network is&nbsp;usable</strong></u></p> <p>If transactions are being confirmed at a reasonable speed, and miner support is strong, we will allow Coinbase customers to withdraw Bitcoin2x. We will not immediately enable buys and sells as previously stated, but we may enable them at a later date.</p> </blockquote> <p>We operate by the principle that our customers should benefit to the greatest extent possible from hard forks or other unexpected events. We have invested significant resources to make sure we can prepare for each scenario, and if there is a stable and functioning network we will give customers access to Bitcoin2x funds.</p> <p>We continue to work on Bitcoin Cash and are on track for January 1, 2018.</p> <p>*&nbsp; *&nbsp; *</p> <p>Finally, Jeroen Blokland provides an excellent chart summarizing reality for &#39;Bitcoin&#39; as it forks...</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="en"><a href=";ref_src=twsrc%5Etfw">#SegWit2x</a> is &#39;live&#39;! The total price of &#39;all&#39; of <a href=";ref_src=twsrc%5Etfw">#bitcoin</a> in one chart! <a href=""></a></p> <p>&mdash; jeroen blokland (@jsblokland) <a href="">November 17, 2017</a></p></blockquote> <script async src="" charset="utf-8"></script><p>So the full value of the original Bitcoin is approaching $9,500.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="283" height="152" alt="" src="" /> </div> </div> </div> Alternative currencies Bitcoin Bitcoin Bitcoin Cash Bitcoin scalability problem Coinbase Cryptocurrencies Cryptography Currency Foreign exchange market Money SegWit SegWit2x Fri, 17 Nov 2017 17:10:28 +0000 Tyler Durden 607472 at Argentine Navy Loses Contact With Submarine <div> <p>The<strong> Argentine Navy has launched a search mission</strong> for the diesel-electric submarine ARA San Juan (S-42) after <strong>losing <a href="">contract</a> with it on Wednesday.</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 283px;" /></a></p> <p><strong>The 66-meter TR-1700 submarine has been in service since 1986 and carries a crew of about 40-44.</strong> Reports from the military indicate the vessel disappeared in the waters of Madryn, northern Patagonia, Argentina about 400km (250 miles) off the coast.</p> <p><strong>The last registered position of the vessel was on November 15 at 07:30 </strong>in latitude 46 &deg; 44 &lsquo;south and longitude 59 &deg; 54 West, at the height of Puerto Madryn.</p> <p><strong>This is the <a href="">internal</a> radiogram about the disappearance of the ship:</strong></p> <p><a href=""><img src="" style="width: 600px; height: 337px;" /></a></p> <p><a href="">Urgent 24</a>, a local media outlet in Argentina reports military officials have not spotted the vessel on radar nor with any of the search vessels.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In a press conference, the spokesman of the Navy, Enrique Balbi , cleared doubts and rumors that transcended in the last hours: <strong>&ldquo;Still we have not been able to have visual contact or radar with the submarine.</strong></p> <p>&nbsp;</p> <p>&ldquo;It has been 48 hours since it disappeared. It is following an internationally approved plan, which after a time of not having contact. <strong>The bad weather conditions and the night they did not let us do an optimal search.&quot;</strong></p> <p>&nbsp;</p> <p>Balbi stressed: &ldquo;<strong>Officially, we have no news of the fire or electrical problems or sinister in the area of ??batteries.</strong> It can also be a matter of equipment or antennas. I want to bring tranquility to family. Today with the clarity of the day we are going to power (improve the search) &ldquo;.</p> </blockquote> </div> <p>ARA San Juan (S-42) (undated) at the Naval Base in Ushiaia Pier</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="es">Este es el ARA San Juan, el submarino perdido. Algunas fotos que saqué hace unos días cuando estaba, por maniobras, en el muelle de la Base Naval de Ushuaia <a href=""></a></p> <p>&mdash; Nico Tamborindegui (@tambonic) <a href="">November 17, 2017</a></p></blockquote> <script async src="" charset="utf-8"></script><p>ARA San Juan (S-42) diagram of the vessel</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="es">Recién me desayuno con esto &iquest;alguien sabe algo? INMENSO OPERATIVO PARA DAR CON LOS 37 TRIPULANTES DEL SUBMARINO ARA SAN JUAN DESAPARECIDO ESTA NOCHE <a href=""></a></p> <p>&mdash; ALICIA (@AliciaVery) <a href="">November 17, 2017</a></p></blockquote> <script async src="" charset="utf-8"></script><p>Official version of the Navy: &ldquo;The submarine ARA San Juan has not yet been found&rdquo;</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="es">? Versión oficial de la Armada: &quot;Aún no se ha encontrado el submarino ARA San Juan&quot; <a href=""></a> <a href=""></a></p> <p>&mdash; MDZ online (@mdzonline) <a href="">November 17, 2017</a></p></blockquote> <script async src="" charset="utf-8"></script><p>*&nbsp; *&nbsp; *</p> <p>Developing...</p> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="743" height="351" alt="" src="" /> </div> </div> </div> ARA San Juan Argentine Navy navy northern Patagonia Shipbuilding TR-1700-class submarine Twitter Twitter Watercraft Fri, 17 Nov 2017 16:56:10 +0000 Tyler Durden 607471 at How Tax Reform Can Still Blow Up: A Side-By-Side Comparison Of The House And Senate Tax Plans <p>To much fanfare, <a href="">mostly out of president Trump</a>, on Thursday the House passed their version of the tax bill 227-205 along party lines, with 13 Republicans opposing. The passage of the House bill was met with muted market reaction. The Senate version of the tax reform is currently going through the Senate Finance Committee for additional amendments and should be ready for a full floor debate in a few weeks. While some, like Goldman, give corporate tax cuts (if not broad tax reform), an 80% chance of eventually becoming law in the first quarter of 2018, others like UBS and <a href="">various prominent skeptics</a>, do not see the House and Senate plans coherently merging into a survivable proposal.&nbsp; </p> <p>Indeed, while momentum seemingly is building for the tax plan, some prominent analysts believe there are several issues down the road that could trip up or even stall a comprehensive tax plan from passing the Congress, the chief of which is how to combine the House and Senate plans into one viable bill. </p> <p><strong>How are the two plans different?&nbsp; </strong></p> <p>Below we present a side by side comparison of the two plans from Bank of America, which notes that the House and the Senate are likely to pass different tax plans with areas of disagreement (see table below). This means that the two chambers will need to form a conference committee to hash out the differences. There are three major friction points: </p> <ol> <li>the repeal of the state and local tax deductions (SALT), </li> <li>capping mortgage interest deductions and </li> <li>the delay in the corporate tax cut. </li> </ol> <p>The House seems strongly opposed to fully repealing SALT and delaying the corporate tax cuts and the Senate could push back on changing the mortgage interest deductions. Finding compromise on these issues without disturbing other parts of the plan while keeping the price tag under the $1.5tn over 10 years could be challenging.</p> <p><a href=""><img src="" width="500" height="261" /></a></p> <p>Here are the key sticking points per <em>BofA</em>:</p> <ul> <li><strong>Skinny ACA repeal</strong>: The repeal of the individual mandate is back on the table. It would free up approximately $300bn in revenue to pay for the tax plan. But this likely means no Democratic Senator will support the bill. This could prove costly as the Republicans can only afford to lose 2 votes and several Republican Senators are already on the fence on the tax plan.</li> <li><strong>Byrd Rule means tax plan might not hatch: </strong>Reconciliation directives allow the tax plan to add $1.5tn to the deficit in the first 10 years (See appendix for breakdown of the cost of each plan). However, rules in the Senate state that any bill passed under reconciliation has to be revenue neutral beyond the 10 year budget window. Given that the Republicans are hoping to make the corporate tax cuts permanent, it would mean that they would need to find additional revenue in the out years while sunsetting all other tax cut provisions (e.g. personal tax cuts). This will mean the personal tax code at best will revert back to current law or at worst roll back the cuts and preserve the repeal of the deduction which would amount to a tax increase on households after ten years. Currently, the Senate plan would let reduction in the personal tax rates, expansions of the standard deduction and child tax credit and other provisions expire after 2025. The court of public opinion could threaten the tax plan.</li> </ul> <p>And while it remains to be seen if tax reform will pass the Senate, or like Obamacare repeal, it will get shot down by the like of McCain (and perhaps Corker), another key question, <strong>is whether the US even needs tax reform at this point - the Fed certainly could do without the added inflationary pressure - </strong>and whereas former Goldman COO and Trump's econ advisor, Gary Cohn certainly thinks so, his former boss, Lloyd <a href="">Blankfein disagrees. </a>So does Bank of America, which maintains that at this stage of the business cycle, tax cuts are not needed to sustain the current expansion. Nevertheless, BofA concedes the passage of a comprehensive tax plan would likely lead to a short term boost to growth which would translate to further declines in the unemployment rate and higher inflation. </p> <p>Then, as the economy begins to heat up, the Fed will likely lean against the economy by implementing a faster hiking cycle than currently projected, which will ultimately spark the next market crash, recession and financial crisis. Ironically, the seed of Trump's own destruction would be planted by his biggest political victory yet (assuming tax reform passes, of course).</p> <p>* * * </p> <p>As a bonus, here is a simulation BofA ran using the Fed's FRB/US model to calculate the potential costs of the tax plans. BofA ran its simulations assuming model consistent expectations for all sectors of the economy and using the inertial Taylor rule to set the path of the federal funds rate: "o simulate the impact of the fiscal stimulus brought on by the tax cuts, we make the fiscal setting exogenous during the first 10 year period and adjust the path for corporate and personal income taxes to take into account the government revenue effects from the tax plan."</p> <p><a href=""><img src="" width="503" height="729" /></a></p> <p>Costs aside, to get a sense of the economic impact from the two tax plans, BofA similarly models the two plans' outcomes using the FRB/US macroeconomic model. The simulation results suggest under the House plan, the US would see a boost to aggregate demand as growth would be approximately 0.4pp higher relative to baseline in 2018 and 0.3pp higher in 2019. Better aggregate demand would reduce the unemployment rate by 0.3pp by 2019 and put upward pressure on inflation. <strong>These growth and price dynamics would lead the FOMC to raise rates an additional 1 to 2 hikes over the next two years. </strong>The economic impact from the Senate plan would be slightly more modest but in the same ballpark as the House plan. Under the Senate plan, the model predicts growth to be approximately 0.3pp higher in both 2018 and 2019 and similar dynamics for the unemployment rate and inflation as seen in the House plan, <strong>leading the FOMC to tighten quicker than the current baseline path.</strong></p> <p>There is also an "alternative" scenario where we a watered down version of the tax plan passes (i.e. modest tax cuts for middle-income households and a corporate tax cut near 25-28% that is deficit increasing by $600bn-$800bn on a static basis). Under the "alternative" scenario, we would see approximately half the economic impact that is seen under the House plan. Given that such a plan would likely only generate modest inflationary pressures, the Fed's response likely would be relatively muted and it would likely stay on its baseline path.</p> <p><a href=""><img src="" width="500" height="198" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1172" height="611" alt="" src="" /> </div> </div> </div> Bank of America Bank of America Bush tax cuts Business Congress Economy of the United States Income tax Income tax in the United States Lloyd Blankfein Market Crash Obamacare Patient Protection and Affordable Care Act Personal Income Politics Presidency of Barack Obama Recession Senate Senate Finance Committee simulation Statutory law Tax UN Court Unemployment United States fiscal cliff US Federal Reserve Fri, 17 Nov 2017 16:41:35 +0000 Tyler Durden 607469 at Attendance At Baltimore City Schools Crashes To 13 Year Low Just As Juvenile Crime Spikes <p>Project Baltimore, an investigative reporting series conducted by a <a href="">local Fox affiliate in Baltimore City</a>, has sifted through over a decade of high school records and discovered that attendance at city high schools in 2017 suddenly dropped to a 13-year low of just 76%.&nbsp; Just to state the obvious, the average high school in Maryland has around 1,200 students so that means that, on an average day, nearly 300 of them don't bother to show up.</p> <p>Adding insult to injury, Baltimore City Police Spokesman T.J. Smith told Fox 45 that it's no coincidence that violent crime is spiking in the city just as more and more teenagers are opting to skip class.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>From violent attacks on Halloween night, to a terrifying carjacking and a man pushed into the Inner Harbor. Baltimore City is under siege by criminals that, police say, are teenagers.</p> <p>&nbsp;</p> <p><strong>“Every single one of them involve juveniles, who are all walking the streets today because they are probably not in school, where they belong.”</strong></p> </blockquote> <p><a href=" - Baltimore 1.JPG"><img src="" style="width: 600px; height: 308px;" /></a></p> <p>Meanwhile, Project Baltimore found that<strong> 39% of Baltimore City high school students were technically considered "chronically absent," a threshold that should result in fines or even jail time for parents</strong>...that is, if school administrators actually fulfilled their reporting requirements.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>As we kept digging, we discovered this: In Baltimore City, 39 percent of high school students are considered chronically absent, or truant, by missing more than 20 days. That’s 8,400 teenagers who regularly are not going to school.</p> <p>&nbsp;</p> <p>“Hearing that number, that’s a lot of young people who could have something to do during those hours that might be on the street doing something they shouldn’t be doing,” said Smith.</p> <p>&nbsp;</p> <p><strong>If a child between 5 and 18-years-old doesn’t go to school, state truancy laws hold parents accountable with up to $500 in fines or jail time.</strong></p> </blockquote> <p>Of course, as we noted previously, another Fox 45 investigation found that truant kids are being routinely passed through Baltimore City schools even if they don't bother to show up for a single day of class during an entire school year (see: <a href="">"It's Very Common": Baltimore Teacher Admits To Passing Students That Never Showed For A Single Day Of Class</a>)</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>But this teacher says grade changing at Calverton goes much further than just taking a failing grade and making it a 60. Some students who pass, according to this educator, don’t even have grades because they’ve never showed up to class.</p> <p>&nbsp;</p> <p><strong>“There were students on my roster all year that I had never met, had never seen. On paper they passed my class and passed onto the next year.”</strong></p> <p>&nbsp;</p> <p>“I love my job and I love my students,” concluded the teacher. <strong>“I want to see the students at Calverton and other schools across the city, get a fresh start. And it’s going to be hard because the students are used to this now. But the students deserve better and our city deserve better.”</strong></p> </blockquote> <p>And, lest you think a 76% attendance rate is 'normal', surrounding counties were found to be over 90%.</p> <p><a href=" - Baltimore 2.JPG"><img src="" style="width: 600px; height: 334px;" /></a></p> <p>Not surprisingly, when asked about the excessive absences, <strong>a local high school in Baltimore City responded with nothing more than a generic sentence, undoubtedly drafted by an expensive, taxpayer-funded attorney, regarding the importance of regular attendance.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>With nearly 40 percent of all city high schoolers truant, Fox45 asked North Avenue if it’s enforcing state law by reporting parents to police. We didn’t get an answer. Instead, we got a statement:</p> <p>&nbsp;</p> <p><strong>“Strong attendance is essential for students’ success, and the district has a longstanding commitment to ensuring that barriers to attendance are removed.” </strong>– Baltimore City Public Schools</p> <p>&nbsp;</p> <p>The statement lists steps the District has taken to get kids to school, which include fostering strong relationships, providing laundry services, on-site childcare and running a re-engagement center to recruit dropped outs.</p> </blockquote> <p>Of course, despite their poor attendance records, we're almost certain that Baltimore City students will have unlimited access to $1,000 of dollars worth of student loans to attend whatever institution of higher indoctrination their hearts desire upon graduation in just a few short years...</p> <p><iframe src="" width="600" height="337" frameborder="0"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="718" height="368" alt="" src="" /> </div> </div> </div> Baltimore Baltimore City Police East Coast of the United States Education Fresh Start Geography of the United States Maryland Middle States Commission on Secondary Schools Student Loans Truancy Fri, 17 Nov 2017 16:20:51 +0000 Tyler Durden 607418 at As Oil Heads For Down-Week, Crude Stakes Are Huge <p>After five straight weeks higher - <em>read by many as confirmation of how awesome the global coordinated recovery must be</em> - WTI and Brent dropped this week as inventories rose, demand outlooks dimmed, and OPEC hope faded.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 352px;" /></a></p> <p>As <a href="">Alhambra Investment Partners&#39; Jeffrey Snider notes</a>, <strong>there is a titanic struggle going on right now in the oil market.</strong></p> <p><span style="color: #000000;"><strong>On the one side of the futures market are the usual pace setters, the money managers.</strong> Last week, the latest COT data available, they went the most net long since March. If it continues, it will close in on the most positive futures position since the record long they established back in February.</span></p> <p><span style="color: #000000;">Normally that would be insanely bullish for oil prices. But just as in February/March another part of the futures market has intervened on the other side. Back then it was the oil producers who rising inventory forced into a larger and larger offsetting net short (hedge).</span></p> <p><span style="color: #000000;"><strong>This time, however, it is the swap dealers who are short for reasons that aren&rsquo;t really clear.</strong> The weekly COT report for the last week in October showed a record net short for dealers, just beating their most extreme position from the middle of 2013 at -424k contracts. In the first week and November, they blew away that record at -470k.</span></p> <p><img alt="" class="aligncenter size-full wp-image-48414" src="" style="width: 600px; height: 394px;" /></p> <p><span style="color: #000000;"><strong>It clearly matters because in 2017 the oil market has changed.</strong> It may be the inventory story, or it may be the exit of producers from hedging that inventory and other products. Whatever the case, money managers just aren&rsquo;t setting the price like they used to. And it could be that managers have changed their market activities, too, where other parts of the futures market are now cueing off (shorting) this possible difference. I honestly don&rsquo;t know <em>what</em> it is, but I can safely point out <em>where</em> it is.</span></p> <p><img alt="" class="aligncenter size-full wp-image-48413" src="" style="width: 600px; height: 394px;" /></p> <p><strong><span style="color: #000000;">Now with swap dealers apparently showing very, very strong conviction on the short side, oil prices can&rsquo;t gain any traction beyond the $57 established by in all likelihood geopolitical risk.</span></strong></p> <p><span style="color: #000000;">The fundamentals of oil continue to favor the dealers over the managers, with oil inventories remaining at the same crisis &ldquo;rising dollar&rdquo; levels. Being slightly better than 2016 is not a real achievement toward clearing the leftover physical imbalance, not when oil inventories are instead still consistent with late 2014. With 2017 nearly over, there should have been much more progress toward 2013 levels of stock long before now if there was ever going to be a realistic chance to balance the oil market next year (at the most optimistic).</span></p> <p><strong><span style="color: #000000;">Instead, it indicates yet again a demand problem, as in lack of materializing upside demand due to, as always, economic constraints that in the mainstream aren&rsquo;t ever considered real (like when the oil crash was called repeatedly a &ldquo;supply glut&rdquo;). Pushing the expected rebalancing date into 2019 or even (more realistically) 2020 creates greater downside not upside risks.</span></strong></p> <p><img alt="" class="aligncenter size-full wp-image-48415" src="" style="width: 601px; height: 357px;" /></p> <p><img alt="" class="aligncenter size-full wp-image-48411" src="" style="width: 600px; height: 338px;" /></p> <p><span style="color: #000000;">That may be why dealers have jumped all over the shorts;<strong><em> if it is geopolitical risks driving oil prices higher, and maybe what managers are betting on now, then if or when they fade the negative fundamentals of oil will be re-imposed on the price.</em></strong> That seems to be what the futures curve is saying, too.</span></p> <p><img alt="" class="aligncenter size-full wp-image-48412" src="" style="width: 600px; height: 338px;" /></p> <p><span style="color: #000000;"><strong>Backwardation indicates expected balance, but at a very low price rather than a rebounding one. </strong>In the latest oil pullback since last week, the curve has moved lower in unison, with the same almost identical indicated backwardation rather than toward any serious rewind toward contango.</span></p> <p><span style="color: #000000;">One additional factor to consider is those record and near-record opposite futures positions. What happens if the oil price starts to move in either direction? There may need to be <em>a whole lot</em> of covering by whichever side ends up on the losing end, perhaps turbocharging the price as it begins to move whatever way it decides to go.</span></p> <p><u><em><strong><span style="color: #000000;">There is right now a lot at stake in the crude market, and it&rsquo;s not just about oil.</span></strong></em></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="609" height="390" alt="" src="" /> </div> </div> </div> Backwardation Business Business Contango Contango Crude Economy Futures contract Futures market Futures markets Hedge Marketing Normal backwardation OPEC OPEC Organization of Petroleum-Exporting Countries Petroleum politics Price of oil Pricing recovery Fri, 17 Nov 2017 16:06:35 +0000 Tyler Durden 607464 at Traders Puzzled After Chinese Media Warning Triggers Market Selloff <p>Overnight <a href="">we highlighted </a>that despite a massive weekly net liquidity injection by the PBOC (which ended on Friday when the PBOC drained a net 10bn in liquidity) Chinese stocks failed to hold on to Thursday's gains, and resumed their slump... </p> <p><strong>&nbsp;</strong> </p> <p><a href=""><img src="" style="width: 600px; height: 314px;" /></a></p> <p>... headed for their worst week in 7 months.</p> <p>&nbsp;</p> <p><a href=""><img src="" style="width: 600px; height: 305px;" /></a></p> <p>However, it was more than the simply a question of liquidity flows, because it once again appears that Beijing is involved in micromanaging daily stock moves, only unlike the summer of 2015 when China blew a huge stock bubble in a few months, which then promptly burst leaving China scrambling for the next year to figure out how to avoid contagion, this time Xinhua had a different message: <strong>sell</strong>. </p> <p>According to Bloomberg, the reason why Chinese stocks - led by Shenzhen shares - slumped on Friday, is due to a warning by state media that one of the nation’s hottest stocks was climbing too fast, which in turn triggered a selloff. And while the SHCOMP closed down 0.5%, the Shenzhen Composite Index closed down more than 2%, with liquor makers and technology companies that had outperformed this year among the biggest losers. </p> <p>The catalyst that sparked the selloff? China's biggest liquor maker, Kweichow Moutai, which plunged 3.9% - after tumbling as much as 5.8%, its largest decline since August 2015 - <strong>after <a href="">Xinhua News Agency </a>said its China’s biggest "should rise at a slower pace."</strong> Other liquor makers fell in sympathy, Wuliangye Yibin slid as much as 5.3% in Shenzhen, the most since July 2016, and Luzhou Laojiao fell 4.7%, although the stocks, which have more than doubled this year, pared their losses by the close. </p> <p>In commentary published in the state-owned newspaper, the author said <strong>"short-term speculation in Kweichow Moutai shares will hurt value investing and long-term investment will deliver best returns</strong>."</p> <p>The bizarre and unusual critique - traditionally China's media mouthpieces have only urged stocks to go higher, never lower - capped a week that saw a rout in Chinese sovereign bonds spill into the equity market amid concern about a government deleveraging campaign and faster inflation. For the week, the Shenzhen gauge fell 4.2%, its worst loss since May 2016. The Shanghai benchmark declined 1.5 per cent.</p> <p>“The Xinhua warning was the last straw,” said Ken Chen, a Shanghai-based analyst with KGI Securities Co. “Expectations of worsening liquidity conditions are also hurting stocks.”</p> <p>In retrospect, perhaps the Xinhua warning was not so strange: after China's debt-fueled stock market bubble burst in 2015, wiping out $5 trillion of value, Chinese policy makers have acted to restrain excessive speculation in equities. </p> <p>“<strong>Xinhua is concerned that a runaway rally in a heavyweight like Kweichow will hamper the stability of the overall market</strong>,” said Hao Hong, chief strategist at Bocom International Holding Co in Hong Kong.</p> <p>And while one can wonder why China is suddenly so concerned about even the hint of potential vol spike in the stock market - suggesting that even a modest selloff could have dramatic consequences for the Chinese financial sector - it is certainly strange that whereas even China is acting to restrain the euphoria of its citizens over fears of what happens during the next bubble, in other "developed" countries, the local central bankers, politicians and TV pundits have no problem in forcing retail investors to go all risk assets when the market is at all time highs. </p> <p>As for China, it will have truly gone a full "180", if in a few months time instead of arresting sellers as it did in the summer of 2015, Beijing throw stock buyers in prison next.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="512" height="342" alt="" src="" /> </div> </div> </div> Baijiu Business Business cycle China Distilleries Economic bubble Economy Hong Kong Kweichow Moutai Luzhou Laojiao Maotai Market liquidity Newspaper People's Bank of China Provinces of China Shenzhen Shenzhen Composite SSE 50 Subdivisions of China SZSE Component Index Value Investing Wuliangye Yibin Fri, 17 Nov 2017 15:37:50 +0000 Tyler Durden 607466 at Is America Really 'Up' For A Second Cold War? <p><a href=""><em>Authored by Patrick Buchanan via,</em></a></p> <p><strong>After the 19th national congress of the Chinese Communist Party in October, one may discern Premier Xi Jinping&rsquo;s vision of the emerging New World Order.</strong></p> <p><a href=""><strong><img alt="" src="" style="width: 500px; height: 279px;" /></strong></a></p> <p><strong>By 2049, the centennial of the triumph of Communist Revolution, China shall have become the first power on earth. </strong></p> <p>Her occupation and humiliation by the West and Japan in the 19th and 20th centuries will have become hated but ancient history.</p> <p><strong>America will have been pushed out of Asia and the western Pacific back beyond the second chain of islands.</strong></p> <p>Taiwan will have been returned to the motherland, South Korea and the Philippines neutralized, Japan contained. China&rsquo;s claim to all the rocks, reefs and islets in the South China Sea will have been recognized by all current claimants.</p> <p>Xi&rsquo;s &ldquo;One Belt, One Road&rdquo; strategy will have brought South and Central Asia into Beijing&rsquo;s orbit, and he will be in the Pantheon beside the Founding Father of Communist China, Mao Zedong.</p> <p><strong>Democracy has been rejected by China in favor of one-party rule of all political, economic, cultural and social life.</strong></p> <p>And as one views Europe, depopulating, riven by secessionism, fearful of a Third World migrant invasion, and America tearing herself apart over politics and ideology, China must appear to ambitious and rising powers as the model to emulate.</p> <p>Indeed, has not China shown the world that authoritarianism can be compatible with national growth that outstrips a democratic West?</p> <p><strong>Over the last quarter century, China, thanks to economic nationalism and $4 trillion in trade surpluses with the United States, has exhibited growth unseen since 19th-century America.</strong></p> <p>Whatever we may think of Xi&rsquo;s methods, this vision must attract vast numbers of China&rsquo;s young &mdash; they see their country displace America as first power, becoming the dominant people on earth.</p> <p><u><em><strong>What is America&rsquo;s vision? What is America&rsquo;s cause in the 21st century? What is the mission and goal that unites, inspires and drives us on?</strong></em></u></p> <p>After World War II, America&rsquo;s foreign policy was imposed upon her by the terrible realities the war produced: brutalitarian Stalinist domination of Eastern and Central Europe and much of Asia.</p> <p><strong>Under nine presidents, containment of the Soviet empire, while avoiding a war that would destroy civilization, was our policy. In Korea and Vietnam, Americans died in the thousands to sustain that policy.</strong></p> <p><a href=""><img alt="" src="" style="width: 500px; height: 293px;" /></a></p> <p><strong>But with the collapse of the Soviet Empire and the breakup of the USSR, it seemed that by 1992 our great work was done. Now democracy would flourish and be embraced by all advanced peoples and nations.</strong></p> <p><u><strong>But it did not happen.</strong></u> The &ldquo;end of history&rdquo; never came. The New World Order of Bush I did not last. Bush II&rsquo;s democracy crusade to end tyranny in our world produced disasters from Libya to Afghanistan.</p> <p><strong>Authoritarianism is now ascendant and democracy is in retreat.</strong></p> <p><em>Is the United States prepared to accept a world in which China, growing at twice our rate, more united and purposeful, emerges as the dominant power? Are we willing to acquiesce in a Chinese Century?</em></p> <p><em>Or will we adopt a policy to ensure that America remains the world&rsquo;s preeminent power?</em></p> <p><em>Do we have what is required in wealth, power, stamina and will to pursue a Second Cold War to contain China, which, strategic weapons aside, is more powerful and has greater potential than the Soviet Union ever did?</em></p> <p>On his Asia tour, President Trump spoke of the &ldquo;Indo-Pacific,&rdquo; shorthand for the proposition that the U.S., Japan, Australia and India form the core of a coalition to maintain the balance of power in Asia and contain the expansion of China.</p> <p>Yet, before we create some Asia-Pacific NATO to corral and contain China in this century, as we did the USSR in the 20th century, we need to ask ourselves why.</p> <p><em><strong>Does China, even if she rises to surpass the U.S. in manufacturing, technology and economic output, and is a comparable military power, truly threaten us as the USSR did, to where we should consider war to prevent its expansion in places like the South China Sea that are not vital to America?</strong></em></p> <p><u><strong>While China is a great power, she has great problems.</strong></u></p> <p>She is feared and disliked by her neighbors. She has territorial quarrels with Russia, India, Vietnam, the Philippines, Japan. She has separatists in Tibet and Xinjiang. Christianity is growing while Communism, the state religion, is a dead faith. Moreover, the monopoly of power now enjoyed by the Communist Party and Xi Jinping mean that if things go wrong, there is no one else to blame.</p> <p><em><strong>Finally, why is the containment of China in Asia the responsibility of a United States 12 time zones away?</strong></em></p> <p>For while China seeks to dominate Eurasia, she appears to have no desire to threaten the vital interests of the United States. China&rsquo;s Communism appears to be an ideology disbelieved by her own people, that she does not intend to impose it on Asia or the world.</p> <p><u><em><strong>Again, are we Americans up for a Second Cold War, and, if so, why?</strong></em></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="591" height="330" alt="" src="" /> </div> </div> </div> 19th national congress Afghanistan Australia Central Asia Central Europe China China containment policy China–United States relations Chinese Communist Party Cold War Communist Party of China Eastern Europe Foreign relations of China Global politics India International relations Japan Nationalism New world order North Atlantic Treaty Organization Politics Politics South Asia South China Soviet Union–United States relations Fri, 17 Nov 2017 15:11:24 +0000 Tyler Durden 607458 at Turkish Lira, Bonds Plunge After Erdogan Tells Central Bank "It's On The Wrong Path" <p>Turkish<strong> lira plunged near record low 3.9/USD</strong> this morning and bond <strong>yields spiked over 12.5% for the first time in history</strong> as investor anxiety escalated following President <strong>Erdogan&#39;s attack on the nation&#39;s central bank, decrying it&#39;s &quot;wrong path.&quot;</strong></p> <p>Currency crisis...</p> <p><a href=""><img height="319" src="" width="600" /></a></p> <p>And bond market panic...</p> <p><a href=""><img height="312" src="" width="600" /></a></p> <p><a href=""><em>As Bloomberg reports,</em></a> Turkish President Recep Tayyip<strong> Erdogan signaled an end to his uneasy truce with the new central bank chief, </strong>attacking the institution now run by Governor Murat Cetinkaya for its repeated revisions to economic targets and &ldquo;wrong path&rdquo; to tackle soaring inflation.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;They say central banks are independent so we shouldn&rsquo;t interfere. This is the end result because we haven&rsquo;t interfered,&rdquo;</strong> Erdogan said in a speech on Friday in Ankara.</p> <p>&nbsp;</p> <p>&ldquo;Results speak for themselves.&rdquo;</p> </blockquote> <p><em><strong>&ldquo;We will solve this, things can&rsquo;t go on like this,&rdquo; </strong></em>Erdogan said, vowing to step up a <strong>fight against what he calls the &ldquo;interest rate lobby,&rdquo; an alleged cabal of financiers and lobbyists that he says is conspiring to keep Turkey&rsquo;s interest rates artificially high.</strong></p> <p>&ldquo;We can&rsquo;t make this a taboo,&rdquo; he said, <strong>rejecting the idea that central bank independence </strong>means he shouldn&rsquo;t comment on interest rate policy.</p> <p>The comments come as a slew of economic stimulus measures implemented in the wake of a 2016 coup attempt have helped push growth up while<strong> driving core inflation to 11.8 percent in October, the highest since 2004.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;We&rsquo;re back at Erdoganomics 101,&rdquo; </strong>said Cristian Maggio, head of research at TD Securities in London.</p> <p>&nbsp;</p> <p>&ldquo;I would have expected him to start shouting at the central bank only once the lira was on a more solid footing versus the U.S. dollar and euro. We&rsquo;re clearly not there yet,<strong> so that makes me think that he&rsquo;s more concerned about growth, a concern that we share</strong>.&rdquo;</p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="963" height="500" alt="" src="" /> </div> </div> </div> Bond Business Central bank Central Bank of the Republic of Turkey Central Banks Economy of Northern Cyprus Economy of Turkey Europe Middle East Recep Tayyip Erdo?an Turkey Turkey Turkish lira Fri, 17 Nov 2017 14:49:39 +0000 Tyler Durden 607461 at