http://www.zerohedge.com/fullrss2.xml/fullrss2.xml/component/option%2Ccom_docman/Itemid%2C200023/gid%2C397/BoomBustBlog/BoomBustBlog/BoomBustBlog/Is-this-the-Breaking-of-the-Bear.html en IceCap: Most Investors Aren't Prepared To See What Is Behind Draghi's Scheme To Delay The Inevitable http://www.zerohedge.com/news/2017-06-25/icecap-most-investors-arent-prepared-see-what-behind-darghis-scheme-delay-inevitable <p><em>From Keith Decker of <a href="http://www.IceCapAssetManagement.com">IceCap Asset Management</a></em><a href="http://www.IceCapAssetManagement.com"></a></p> <p><strong><span style="text-decoration: underline;">“The Beautician”</span></strong></p> <p>In 1888, Martha Matilda Harper became the world’s first professional beautician. In addition to inventing the first reclining shampoo chair, Ms. Harper became famous for opening the first ever, stand alone beauty salon. </p> <p>Next up to dominate the industry was Elizabeth Arden. Her success was founded upon expanding the salon concept to 1000s of stores around the world, and for the distribution of her self made products, most notably lipstick. </p> <p>Today’s top beautician is breaking the mold. His product and distribution are light years ahead of anything dreamed of by both Harper and Arden, and best of all he truly believes if he applies just the right amount of foundation, concealer and lipstick (especially lipstick), then he can make anything beautiful and attractive. </p> <p>Up to this point, his business has been a self-declared, resounding success. His salon is in Frankfurt, Germany. His company has gathered over $5 billion in assets, and his clients total over 340 million people. </p> <p>Yet recently, more and more people are realising that all isn’t as beautiful as meant to be. Cracks are building in the foundation, mascaras are running long, and worst of all, the lipstick has been smeared. </p> <p>Mario Draghi’s days as both Beautician and President of the European Central Bank are starting to show their wear. While the headline news celebrates the outcome of France’s election, Europe’s governments and banks remain burdened in a financial struggle that even the very best lipstick cannot hide. </p> <p><strong>Two things are for certain. </strong></p> <ul> <li><strong>One, underneath all the financial make-up applied by Mario Draghi remains a fractured, unworkable Eurozone system. </strong></li> <li><strong>Two, the majority of investors around the world are not prepared to see what is truly behind Draghi’s scheme to delay the inevitable.</strong></li> </ul> <p>* * * </p> <p><em><span style="text-decoration: underline;">Darwinism</span></em></p> <p>Chart 1 below details the evolution of the global financial system since the 2008-09 credit crisis. </p> <p>The good news is that after 7 years of financial oppression, those who have not benefitted from extreme monetary stimulus, the playing field will once again be level for all players. </p> <p>The bad news is that after 7 years of financial oppression, those who cannot recognise the risks that have accumulated, are about to be red carded right off the field. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%201.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%201_0.jpg" width="500" height="312" /></a></p> <p>Let us explain. </p> <p>For a number of reasons, the vast majority of investors around the world solely look at the stock market. Everything good and everything bad always comes from and away from the stock market. </p> <p>In truth – the grease that keeps the world’s mighty economy and debt eating machine chomping through the night is ladened with interest rates. </p> <p>Yet, few are able to see, speak or even dream about interest rates. The big banks are especially unable to articulate their importance. </p> <p>Instead, their compliance-approved, snooze-worthy market commentaries occasionally dare to mention everyone’s favourite financial axiom – <em>valuation</em>. And even then, the trained eye can see the rather lack of conviction in the use of the word.</p> <p>To better grasp the vital importance of this discussion, just know that long-term interest rates are to the bond market as oil prices are to the energy market. </p> <p>From 2003 to 2008, oil prices shot to the moon dragging along every investment with even the slightest positive linkage. </p> <p>The same also occurred in 2014 – but with a negative reaction when oil prices crashed from $100 to $50. </p> <p>Yes, prior to the most recent devastating oil correction, people couldn’t get enough real estate in Alberta and Texas. And they couldn’t get enough energy stocks and their high paying dividends. </p> <p>In both cases, the perceived risk was non-existent. Oil prices would only go in one direction – up, and that was the end of story. Well, we all know now that it wasn’t the end of the story. In fact, it was only the beginning of another story, one in which turned into a nightmare for all of those riding the great oil express. </p> <p>Today, the exact same story is playing out. </p> <p>Instead of it occurring in the oil patch and affecting a smaller segment of the investment universe, the story today is occurring in a field that covers the world from east to west, north to south and every nook and cranny in between. </p> <p>This field of course, is the interest rate field and the entire bond structure used by investors everywhere.</p> <p><span style="text-decoration: underline;"><em>As easy as 1-2-3</em></span></p> <p>Returning to Toronto – understand that when the long-term interest rate bubble pops, two things happen:</p> <ol> <li>bond investments lose a lot of money</li> <li>piles of jobs are lost from the many companies dependent upon interest rates which so happens to include practically every bank, insurance and financing company. </li> </ol> <p>So, from a pure fundamental, aggregate income and valuation perspective; the breaking of the bond market will have a serous downward impact on salaries, bonuses and perks in Toronto. That alone creates heavy pressure on house prices. </p> <p>But, the other simultaneous whammy is the surge in mortgage rates which makes the amount qualified to borrow to decline as well. In other words, there will be less money available to buy houses and the money that is available, will not be able to borrow as much as it could before. </p> <p>The result: prices go down, way down. </p> <p>Understanding why this is about to occur is really the key to happiness. </p> <p>The happiness occurs as there are several ways to prosper significantly once the crisis begins. </p> <p>The process of why it will occur is explained in 3-easy steps.</p> <p><strong>Step 1: &gt;$14 Trillion in QE</strong></p> <p>The foundation of the current bubble in the Toronto housing market (and the bubble in bond markets) was firmly established in 2008-09. Recall, that was the year the Americans and their Wall Street financial assassins created deathly lending products which eventually went boom in the middle of the night. It was the response to this boom that sowed the seeds for the next crisis, which just so happens to be manifesting itself today in Toronto’s housing market, and even more concerning – in the world’s bond market. </p> <p>The chart next page, shows collectively, central banks of USA, Japan, Eurozone, and Britain created over $14 trillion out of thin air. Top government economists swore printing money would stimulate the economy, creating new jobs, raising taxable income which would pay down debt everywhere. But, instead of actually printing money and mailing a cheque to everyday average people to actually spend, economists decided to make an easy stimulus plan a complicated stimulus plan. It became complicated when the money was instead use to buy government bonds. The thought was that by buying government bonds, interest rates everywhere would decline which would benefit everyone.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%202_0.jpg" width="500" height="455" /></p> <p>In effect, this entire money printing or Quantitative Easing (QE) experiment was really one arm of the government lending to the other arm of government. </p> <p>The intentions were good – after all, the thought was that this $14 trillion would be swished around the global economy faster than the speed of light. Instead, it actually had the opposite reaction as seen in Chart below that shows the Velocity of Money actually declining.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%203.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%203_0.jpg" width="500" height="382" /></a></p> <p>Now, just in case this $14 trillion wasn’t enough to heal the wounds, all of the world’s central banks agreed to add an extra layer of stimulus. Which brings us to Step 2.</p> <p><strong>Step 2: 672 interest rate cuts</strong></p> <p>Simultaneous to printing $14 Trillion, government economists also announced they would cut interest rates to the bone. And when we say bone – we mean 672 interest rate cuts over 7 years.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%204.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%204_0.jpg" width="500" height="297" /></a></p> <p>The thought was that 672 interest rate cuts would stimulate the global economy by making money super cheap to borrow, which would creates jobs and create more tax revenues for governments. </p> <p>But central banks still weren’t done. Just to ensure their plan would work the ultimate cherry on top was added in the form of NEGATIVE INTEREST RATES.</p> <p><strong>Step 3: Negative Interest Rates</strong></p> <p>Just in case the $14 trillion of new money + 672 interest rate cuts were not enough, 5 of the world’s central banks played the sneakiest card of them all by creating NEGATIVE interest rates across Europe and Japan.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%205.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/icecap%205_0.jpg" width="500" height="285" /></a></p> <p>Whereas the thought that $14 trillion of money printing and 672 interest rate cuts would encourage people to borrow and spend, the thought was that the use of NEGATIVE interest rates would force people to spend. </p> <p>Either way – savings and savers would really going to struggle. </p> <p>In the end, the combination of steps 1 + 2 + 3 didn’t provide nearly the amount of global stimulus as thought.</p> <p><strong>The Bottom Line</strong></p> <p>Instead, it lowered short term, medium term, and long term interest rates to never before seen levels, merely encouraging borrowing from 2 groups of investors:</p> <ol> <li><strong>Home buyers</strong></li> <li><strong>Governments </strong></li> </ol> <p>Which of course squares the peg as follows: </p> <p style="padding-left: 30px;">$14 Trillion money printing </p> <p style="padding-left: 30px;">+ 672 interest rate cuts </p> <p style="padding-left: 30px;">+ Negative interest rates </p> <p style="padding-left: 30px;">= record low interest &amp; mortgage rates </p> <p>What investors must realize and understand today is that interest rates are the key cog in the global money wheel. </p> <p>And over the past 7 years, this wheel has been flattened, pushed around and outright forced to look, feel and behave in a certain way. </p> <p><em>However, where this becomes the most important foresight to hear – interest rates (and especially long-term interest rates) cannot remain in its current, forced/coerced/manipulated state forever. </em></p> <p>Eventually it will change. The change will be abrupt. And it will definitely be the shock that breaks the housing market in Toronto and it will certainly be the shock that forces the Eurozone to restructure.</p> <p>* * * <br /><strong>The Majority are always wrong </strong></p> <p>IceCap is a global macro manager, and like other global macro managers, we see the risks and imbalances in the world today have very clearly been created by governments and their central banks. We know this. Governments know this. And the central banks especially know this.</p> <p> Yet, just about everyone else doesn’t know this. And since the risks and imbalances created have reached astronomical levels, it has become very important to the central banks to ensure those that don’t know what is happening remain in the dark and are unable to see these risks and imbalances. </p> <p>This is where all kinds of make-up, mascara and lipstick is needed to make everything look pretty and beautiful. </p> <p>And when it comes to lipstick, no one in the financial world is better at applying it than the President of the European Central Bank. And, no one is better at wearing it than Italy. </p> <p>Let us explain.</p> <p><strong>Chart 2 </strong>next page shows the interest rate Italy had to pay to borrow money for 10 years.</p> <p>Everyone ought to know that the less you pay in interest the better – it means you can borrow more, your interest payments take up less of your income, and more importantly, it means lenders view you in a favourable light. When lenders do not view you in a favourable light – bad things happen, with the worst being no one will lend you any money at all. When this happens, you are shut out of the loan market. And when you are a government and sovereign state, you cannot ever be shut out of the lending market. </p> <p>Once this happens – it is game over and out. As a country, being unable to borrow, means you are unable to pay policemen, the military, nurses, doctors, teachers, and garbage collectors. You are also unable to pensioners, engineers, social workers, and snow plough operators. And of equal importance, you are unable to repay old debt that is coming due. In other words – you’re in deep doo. </p> <p>And, this is exactly what happened to Italy in 2011.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/pig%20lipstick.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/pig%20lipstick_0.jpg" width="500" height="308" /></a></p> <p>* * *</p> <p><em>Continue reading in the slideshow below (<a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/2017.6%20IceCap%20Global%20Market%20Outlook.pdf">link</a>)</em></p> <p> <iframe src="https://www.scribd.com/embeds/352207184/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-PTxHpZZiGe9MDZHlyd7Z&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></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="1200" height="833" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/draghi%20satan_0.jpg?1498414475" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/icecap-most-investors-arent-prepared-see-what-behind-darghis-scheme-delay-inevitable#comments Bond Business Central bank Central Banks Credit Crisis Economy Economy of the European Union Euro European Central Bank European Central Bank Eurozone Eurozone Finance Germany Global Economy Housing Market Inflation Interest rate International finance Italy Japan Monetary policy Money Quantitative Easing Quantitative easing Real estate Mon, 26 Jun 2017 02:00:00 +0000 Tyler Durden 598626 at http://www.zerohedge.com Key Senate Republicans Say No Healthcare Deal This Week http://www.zerohedge.com/news/2017-06-25/sens-collins-paul-johnson-health-care-bill-wont-pass-week <p>A handful of Republican senators took to the morning talk shows on Sunday to explain their reservations about the latest version of the Republicans&rsquo; bill to repeal and replace Obamacare. Sens. Susan Collins (R, Maine), Rand Paul (R Ky.) and Ron Johnson (R Wis.) all said they believe the bill won&rsquo;t pass this week.</p> <p>As <a href="http://www.zerohedge.com/news/2017-06-22/trumpcare-doa-least-3-republican-senators-plan-oppose-bill-nbc">we noted Thursday, </a>at least five Republican lawmakers said they couldn&rsquo;t support the bill &ndash; more than the two maximum defections that Republicans could afford, assuming none of the 46 senate Democrats and neither of the two independent candidates who caucus with them break ranks to vote for the bill. NBC&rsquo;s Chuck Todd says that number <a href="http://www.nbcnews.com/meet-the-press/meet-press-june-25-2017-n776481">could actually be as high as eight.</a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/06/10/collins.JPG"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/06/10/collins_0.JPG" style="width: 500px; height: 354px;" /></a></p> <p>Two themes appear to have emerged. Moderates like Collins and Nev. Sen. Dean Heller fear backlash from their constituents related to cuts to Medicare that would reduce coverage for senior citizens, who typically vote in larger numbers than younger cohorts of the population.</p> <p>Conservatives like Paul and Texas Sen. Ted Cruz believe the bill doesn&rsquo;t go far enough to eliminate regulations that they say have helped drive up the cost of health care, and are rapidly pushing the US insurance market into a &ldquo;death spiral&rdquo; &ndash; a situation where most healthy people opt out of insurance markets because premiums have risen to unaffordable levels.</p> <p>* * *</p> <p>Appearing on<a href="http://abcnews.go.com/ThisWeek?cid=marketing_search_brandedprograms_ThisWeek"> ABC&#39;s &ldquo;This Week,&rdquo;</a> Susan Collins told host George Stephanopoulos that she was worried about the impact on elderly voters in her state who depend on Medicaid, though she hasn&rsquo;t officially come out against the bill.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo; For my part, <strong>I&#39;m very concerned about the cost of insurance for older people with serious chronic illnesses, and the impact of the Medicaid cuts on our state governments, the most vulnerable people in our society,</strong> and health care providers such as our rural hospitals and nursing home, most of whom are very dependent on the Medicaid program. So threading that needle is going to be extremely difficult.&rdquo;</em></p> </blockquote> <p><u><strong>You can watch the rest of Collins&#39; appearance below:</strong></u></p> <p><iframe height="360" scrolling="no" src="http://abcnews.go.com/video/embed?id=48264717" style="border:none;" width="640"></iframe><br /><a href="http://abcnews.go.com/">ABC Breaking News</a> | <a href="http://abcnews.go.com/Video">Latest News Videos</a></p> <p>Paul, who was also on <a href="http://abcnews.go.com/ThisWeek?cid=marketing_search_brandedprograms_ThisWeek">&ldquo;This Week,&rdquo;</a> said the bill doesn&rsquo;t do enough to prevent a death spiral, and instead tries to combat it by offering a $100 billion handout to the insurers.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<em><strong>The Republican plan acknowledges that we&#39;re going to still have this death spiral, which is sicker and sicker people in the individual market and the healthy people don&#39;t buy insurance, they acknowledge this by putting over $100 billion of insurance bailout money to try to say, oh we&#39;re going to tamp down prices.</strong> We&#39;re going to fix the problem, we&#39;re going to acknowledge the will continue forever and we&#39;re just going to pile taxpayer money into it. That is just not a conservative notion to add a new federal program to bailout insurance programs.&quot;</em></p> <p>&nbsp;</p> <p><em>&ldquo;&hellip; if they cannot get 50 votes, if they get to impasse, I&#39;ve been telling leadership for months now I&#39;ll vote for a repeal. <strong>And it doesn&#39;t have to be 100 percent repeal. So, for example, I&#39;m for 100 percent repeal, that&#39;s what I want. But if you offer me 90 percent repeal, I&#39;d probably would vote it. I might vote for 80 percent repeal.&rdquo;</strong></em></p> </blockquote> <p><u><strong>You can watch the rest of Paul&rsquo;s remarks below:</strong></u></p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/YK_JaG8FKhE" width="560"></iframe></p> <p>In an appearance on <a href="http://www.nbc.com/meet-the-press/video/meet-the-press-june-25-2017/3540844">NBC&#39;s &quot;Meet the Press,&quot;</a> Johnson told Todd that he&rsquo;s taken issue with the rushed nature of the process, saying constituents and health-care industry types haven&rsquo;t had enough time to weigh in with their input.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;<strong>&hellip;what I&#39;d like to do is slow the process down, get the information, go through the problem-solving process, actually reduce these premiums that have been artificially driven up because of Obamacare mandates. So let&#39;s actually fix the problem. But in the end, I come from manufacturing base. </strong>I will look at whatever I&#39;m forced to vote on, and I&#39;ll ask myself, &quot;Is this better tomorrow than where we are today? Is it continuous improvement?&quot; And that&#39;s what will guide my decision.&rdquo;</em></p> </blockquote> <p><u><strong>You can watch Johnson&#39;s remarks in full below: </strong></u></p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="http://www.nbcnews.com/widget/video-embed/975658563589" width="560"></iframe></p> <p>* * *</p> <p>Despite the mutiny in the ranks, Sen. John Cornyn, the GOP whip, said that the Senate leadership is working to turn the holdout senators over the weekend. He said he expects procedural votes on the bill will start Wednesday, <a href="http://www.latimes.com/politics/washington/la-na-essential-washington-updates-top-gop-leader-says-senate-on-track-for-1498419675-htmlstory.html">according to the Los Angeles Times. </a></p> <p>Then again, President Donald Trump said in March that a vote on the House version of the bill would proceed, <strong>before ultimately deciding to delay the vote <a href="http://www.zerohedge.com/news/2017-03-24/trumps-obamacare-ultimatum-vote-today-or-im-done-healthcare">after Speaker Paul Ryan failed to turn enough members. </a></strong></p> <p>* * *</p> <p><u><strong>Here are some initial takeaways from the draft bill, which <a href="http://www.zerohedge.com/news/2017-06-22/senate-reveils-details-trumpcare-bill-vote-expected-next-week">was unveiled earlier this week:</a></strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><ul> <li>Ends ACA mandates for individuals AND employers</li> <li>Funds the ACA&#39;s cost-sharing subsidies through 2019 but then only provides tax credits for people with incomes up to 350% of the federal povery level</li> <li>Tax cuts largely similar to those in the House bill. That includes repealing a 3.8% tax on investment income retroactively to January 2017 and delaying the repeal of a 0.9% payroll tax until 2023</li> <li>Contributes $62 billion to a &quot;State Innovation Fund&quot;</li> <li>Seeks funding for insurers through 2021</li> <li>Allows &#39;children&#39; to stay on parental plans until the age of 26</li> <li>Bill suspends &#39;Cadillac Tax&#39; on employer health plans through 2025</li> <li><strong>Medicaid:&nbsp;</strong> The plan would roll back the Affordable Care Act&rsquo;s Medicaid expansion more gradually than the House version would, but would ultimately make deeper cuts to the program. While states&#39; funding from Washington would be capped for the first time in the history of the Medicaid program, states would be given a choice of the formula used -- &#39;block grants&#39; or &#39;per capita caps&#39; -- to curb it under the bill.</li> <li><strong>Planned Parenthood:</strong> The bill would strip federal funding from Planned Parenthood Federation of America for one year. It also prohibits tax credits from being used to purchase plans that offer abortion coverage.</li> </ul> </blockquote> <p><strong>You can read the full text of <a href="http://www.zerohedge.com/news/2017-06-22/senate-reveils-details-trumpcare-bill-vote-expected-next-week">the bill here.</a></strong><br />&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="628" height="444" alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/collins.JPG?1498424280" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/sens-collins-paul-johnson-health-care-bill-wont-pass-week#comments 111th United States Congress American Health Care Act Donald Trump Efforts to repeal the Patient Protection and Affordable Care Act Federal assistance in the United States Health Healthcare reform in the United States Internal Revenue Code John Cornyn Medicaid Medicare Medicare Medicare Meet The Press NBC None Obamacare Patient Protection and Affordable Care Act Planned Parenthood Federation of America Presidency of Barack Obama Presidency of Lyndon B. Johnson Republican Party Senate Social Issues State Innovation Fund Statutory law United States Mon, 26 Jun 2017 01:30:00 +0000 Tyler Durden 598633 at http://www.zerohedge.com The Hidden Motives Of The Chinese Silk Road http://www.zerohedge.com/news/2017-06-25/hidden-motives-chinese-silk-road <p><a href="http://oilprice.com/Energy/Energy-General/The-Hidden-Motives-Of-The-Chinese-Silk-Road.html"><em>Authored by YaleGlobal Online via OilPrice.com,</em></a></p> <p>China&rsquo;s Belt and Road Forum, hosted with great fanfare, signals the priority of this flagship connectivity initiative while also<strong> underlining its credentials as the new &ldquo;shaper&rdquo; of global trends and norms. </strong>Exhorting all countries to participate, Chinese President Xi Jinping suggested that <em><strong>&ldquo;what we hope to create is a big family of harmonious co-existence.&rdquo;</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_silk.jpg"><img height="269" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_silk.jpg" width="575" /></a></p> <p><strong>But India, an emerging economy that shares a contested border with China, worries about containment and new pathways for aggression from Pakistan. </strong>Other nations wonder if hegemonistic designs are hidden behind the rationality of connectivity and trade. The policy initiative aims to enhance China&rsquo;s centrality in the global economic unilateral approach in how the project is conceived and implemented so far belies the rhetoric of multilateralism emanating from Beijing.</p> <p>Taking inspiration from the ancient Silk Road trading route, <strong>China&rsquo;s One Belt One Road initiative, or OBOR, hopes to link more than 65 countries, encompassing up to 40 percent of global GDP. </strong>Xi&rsquo;s signature foreign paradigm &ndash; linking China to Asia, Europe and Africa via an ambitious network of ports, roads, rail and other infrastructure projects. Beginning in China&#39;s Fujian province, the projected Maritime Silk Route passes through the Malacca Strait to the Indian Ocean, moving along the Red Sea and the Mediterranean, ending in Venice.</p> <p><strong>The scale and scope of OBOR is huge, with at least $1 trillion in investments. </strong>At the Shanghai summit, Xi announced an additional $124 billion in funding for OBOR, including $8.7 billion in assistance to developing countries. China, desperate to deflect criticism that OBOR is primarily an instrument for Chinese expansionism, managed to convince heads of 29 states and governments to participate in the summit, including Turkish President Recep Tayyip Erdo?an, Italian Prime Minister Paolo Gentiloni, Russian President Vladimir Putin and United Nations chief Antonio Guterres. Most western leaders sent representatives.</p> <p><strong>The West views this as a Chinese bilateral project being touted a multilateral venture. </strong>The <a href="http://www.cnn.com/2017/05/13/asia/china-belt-and-road-forum-xi-putin-erdogan/index.html">outgoing president</a> of the<strong> EU Chamber of Commerce in China complains that the OBOR has &ldquo;been hijacked by Chinese companies,</strong> which have used it as an excuse to evade capital controls, smuggling money out of the country by disguising it as international investments and partnerships.&rdquo;</p> <p><strong>The rest of the world is more receptive.</strong> Lavishing praise on China for the OBOR initiative while targeting the U.S., Putin warned at the summit that &ldquo;protectionism is becoming the new normal,&rdquo; <a href="http://www.cnn.com/2017/05/13/asia/china-belt-and-road-forum-xi-putin-erdogan/index.html">adding</a> that the &ldquo;ideas of openness and free trade are increasingly often being rejected (even) by those who until very recently expounded them.&rdquo;</p> <p><strong>South Asia also welcomes OBOR, </strong>and most of India&rsquo;s neighbors attended.</p> <p><u><strong>India refused to participate, </strong></u>maintaining opposition to China&#39;s investment in the China-Pakistan Economic Corridor, or CPEC, which passes through Pakistan-occupied Kashmir. India, boycotting the event, announced in an official statement: &ldquo;No country can accept a project that ignores its core concerns on sovereignty and territorial integrity.&rdquo; Indian Foreign Secretary S Jaishankar articulated this position at the 2017 Raisina Dialogue: &ldquo;China is very sensitive about its sovereignty. The economic corridor passes through an illegal territory, an area that we call Pak-occupied Kashmir. You can imagine India&rsquo;s reaction at the fact that such a project has been initiated without consulting us.&rdquo; <strong>Prime Minister Narendra Modi reinforced this point, asserting that &ldquo;connectivity in itself cannot override or undermine the sovereignty of other nations.&rdquo;</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_silk1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_silk1_0.jpg" style="width: 575px; height: 318px;" /></a></p> <p><em>New Silk Roads: China, with about 60 other nations, pursue ambitious plans to connect three continents with infrastructure investments (Source: The Economist)</em></p> <p><strong>The advantages for India of joining China&rsquo;s multibillion dollar OBOR initiative are apparent, and the economic logic is compelling. </strong>With bilateral trade of $70.08 billion in 2016, China remains India&rsquo;s largest trading partner. Last year also saw record Chinese investments into India reaching close to $1 billion. Compared to this, China&rsquo;s economic ties with Pakistan remain underwhelming with bilateral trade volume reaching $13.77 last year.</p> <p><strong>Yet against the backdrop of deteriorating Sino-Indian ties, India cannot feasibly join the OBOR project without challenging the very foundations of its foreign policy.</strong> The $55 billion CPEC would link China&rsquo;s Muslim-dominated Xinjiang Province to the Gwadar deep-sea port in Pakistan. Despite the rhetoric, Beijing&rsquo;s priority in pumping huge sums into a highly volatile Pakistani territory is not to provide economic relief for Pakistan&rsquo;s struggling economy or to promote regional economic cooperation.</p> <p><strong>The development may not subdue restive Muslims in either country.</strong> The challenges are huge as underscored by the related militarization. Pakistan has deployed more than 15,000 troops to protect the CPEC, and is raising a naval contingent for protection of Gwadar; China will also station part of its growing naval forces at Gwadar. Concerns are already being expressed that Pakistan could become a Chinese colony once the corridor is operationalized. For the Chinese, security in the province of Balochistan is the biggest concern. Economic conditions in Balochistan remain dire with over two-thirds of its inhabitants living in poverty, and local opposition to the project is mounting by the day. Baloch separatists, especially those from the Baloch Liberation Army, are reported to have abducted and killed foreigners, particularly the Chinese. <strong>Such turmoil could have regional consequences.</strong></p> <p><strong>The long-term strategic consequences of OBOR for India could also allow China to consolidate its presence in the Indian Ocean at India&rsquo;s expense. </strong>Indian critics contend that China may use its economic power to increase its geopolitical leverage and, in doing so, intensify security concerns for India. CPEC gives China a foothold in the western Indian Ocean with the Gwadar port, located near the strategic Strait of Hormuz, where Chinese warships and a submarine have surfaced. Access here allows China greater potential to control maritime trade in that part of the world &ndash; a vulnerable point for India, which sources more than 60 percent of its oil supplies from the Middle East. What&rsquo;s more, if CPEC does resolve China&rsquo;s &ldquo;Malacca dilemma&rdquo; &ndash; its over-reliance on the Malacca Straits for the transport of its energy resources &ndash; this gives Asia&rsquo;s largest economy greater operational space to pursue unilateral interests in maritime matters to the detriment of freedom of navigation and trade-energy security of several states in the Indian Ocean region, including India.</p> <p><strong>More generally, the Maritime Silk Road reinforces New Delhi&rsquo;s concerns about encirclement. </strong>Beijing&rsquo;s port development projects in the Indian Ocean open the possibility of dual-use facilities, complicating India&rsquo;s security calculus.</p> <p>India has its own set of connectivity initiatives such as Myanmar&rsquo;s Kaladan project, the Chabahar port project with Iran, as well as the north-south corridor with Russia which could be potentially leveraged. The proposed 7200-kilometer International North South Transportation Corridor is a ship, rail and road transportation system connecting the Indian Ocean and Persian Gulf to the Caspian Sea via Iran to Russia and North Europe. <strong>The Indian and Japanese governments are working on a &ldquo;vision document&rdquo; for developing an Asia-Africa Growth Corridor largely meant to propel growth and investment in Africa, in part a response to China&rsquo;s ever-growing presence on the continent.</strong></p> <p>The Belt and Road Initiative is a highly ambitious undertaking in line with China&rsquo;s aspirations to emerge as the central economic power at a time when the United States makes plans to step back from global affairs.<strong> Its success depends on China&rsquo;s ability to move beyond the bilateral framework and allowing a truly multilateral vision for the project to evolve. Otherwise, China can expect to contend with opposition from more countries than India.</strong></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="575" height="269" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170625_silk.jpg?1498418134" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/hidden-motives-chinese-silk-road#comments Baloch Liberation Army Belt and Road Initiative Caspian Sea Chabahar Port China China–Pakistan Economic Corridor China–Pakistan relations Economy EU Chamber of Commerce in China Foreign relations of China Gwadar Gwadar District Gwadar Port India Indian Ocean International relations Iran Mediterranean Middle East Middle East New Normal North Europe Persian Gulf Silk Road South Asia The Economist Trade routes United Nations Vladimir Putin western Indian Ocean Mon, 26 Jun 2017 01:00:00 +0000 Tyler Durden 598630 at http://www.zerohedge.com Japan's Bond Market Grinds To A Halt: "We'll Go Days When No Bonds Trade Hands http://www.zerohedge.com/news/2017-06-25/japans-bond-market-grinding-halt-well-go-days-when-no-bonds-trade-hands <p>The Bank of Japan may or <a href="http://www.zerohedge.com/news/2017-05-16/both-ecb-and-boj-are-months-away-running-out-bonds-buy">may not be tapering</a>, but that may soon be moot because by the time Kuroda decides whether he will buy less bonds, the bond market may no longer work. </p> <p>As the <a href="http://asia.nikkei.com/Markets/Capital-Markets/Japan-s-government-bond-market-grinding-to-a-halt?n_cid=NARAN012">Nikkei reports</a>, while the Japanese central bank ponders its next step, the Japanese rates market has been getting "<em><strong>Ice-9ed"</strong></em> and increasingly paralyzed, as yields on newly issued 10-year Japanese government bonds remained flat for seven straight sessions through Friday while the BOJ continued its efforts to keep long-term interest rates around zero.&nbsp; </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/20170625_10YJGB.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/20170625_10YJGB_0.jpg" width="500" height="261" /></a></p> <p>The 10-year JGB yield again closed at 0.055%, where it has been stuck since June 15m and according to data from Nikkei affiliate QUICK, <strong>this marks the longest period of stagnation since 1994, </strong></p> <p>Because what comes after record low volatility? Simple: market paralysis. And that's what Japan appears to be experiencing right now as private bondholders no longer dare to even breathe without instructions from the central bank.&nbsp; Meanwhile, the implied volatility of JGBs tumbled to the lowest level since January 2008 for the same reason <a href="http://www.zerohedge.com/news/2017-05-20/simplest-reason-behind-collapsing-volatility-hedge-funds-are-barely-trading">we recently speculated </a>may be the primary driver behind the global collapse in volatility: nobody is trading. This means that <strong>trading in newly issued 10-year debt has become so infrequent that broker Japan Bond Trading has seen days when no bonds trade hands.</strong></p> <p>It's not just cash bonds that find themselves in trading limbo: trading in short-term interest rate futures has also thinned and on Tuesday of last week the Nikkei reports that <strong>there were no transactions in three-month Tibor futures - the first time that has happened since such trading began in 1989.</strong></p> <p>The three-month Tibor, or Tokyo interbank offered rate, has not moved in the nine months since the end of September 2016. There were just a few trades last Friday, and it was only a matter of time until the number hit zero. The absence of volatility makes it hard to profit from bets on the direction of interest rates. <strong>Alternatively, the death of trading means volatility has crashed to all time lows.</strong></p> <p>Trading in even shorter-term contracts is also ebbing. The Tokyo Financial Exchange announced on Thursday that starting at the end of July it will suspend trading of futures based on Japan's uncollateralized overnight call rate, the interest that financial institutions charge each other for loans with a one-day maturity. The exchange will consider restarting trading if it can confirm demand.</p> <p>As more market participants throw in the towel on a rigged, centrally planned market, the result will - no could - be a further loss of market function, and a guaranteed crash once the BOJ and other central banks pull out (which is why they can't). As the Nikkei politely concludes, "if the bond and money markets lose their ability to price credit based on future interest rate expectations and supply and demand, the risk of sudden rate volatility from external shocks like a global financial crisis will rise."</p> <p>Translation: in a world where only central banks trade, everyone else is destined to forget forget what trading, and certainly selling, means. </p> <p>Meanwhile, the "grinding halt" in the market is not just a Japanese phenomenon. As we showed a month ago, <a href="http://www.zerohedge.com/news/2017-05-20/simplest-reason-behind-collapsing-volatility-hedge-funds-are-barely-trading">quarterly portfolio turnover among hedge funds just dropped to the lowest ever</a>.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/HF%20turnover%20q2%202017_0.jpg" width="500" height="422" /></p> <p>And yet, in a world which no longer wants, or even remembers how to trade, central banks jawbone with threats that they are soon pulling the training wheels off the market. Somehow we very much doubt it.</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="273" height="184" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/kuroda%20eyes_8.jpg?1498431786" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/japans-bond-market-grinding-halt-well-go-days-when-no-bonds-trade-hands#comments Bank of Japan Bank of Japan Bank of Japan Bond Bond Business Central Banks Economic history of the Netherlands Economy Finance Financial market Fixed income market Futures contract Japan Japanese government Mathematical finance Money Nikkei Technical analysis Volatility Volatility Mon, 26 Jun 2017 00:29:12 +0000 Tyler Durden 598639 at http://www.zerohedge.com Epic Pictures From Arizona's Heatwave: "Everything Is Literally Melting" http://www.zerohedge.com/news/2017-06-25/epic-pictures-arizonas-heatwave-everything-literally-melting <p>Ask any Arizonan whether their summers are more tolerable because <strong>"it's a dry heat" </strong>and you're likely to be asked to <strong>turn your oven to 150 degrees, stick your head inside for 20 minutes and report back as to whether or not the humidity within the oven ever crossed you mind.</strong>&nbsp; Probably not. </p> <p>And while Arizonans have learned to cope with the "dry heat," this summer has been particularly brutal for people living in the Southwest as temperatures have already soared to over 120 degrees in certain areas.&nbsp; <strong>What's worse, it's only June.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25 - AZ5.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25%20-%20AZ5_0.JPG" style="width: 600px; height: 461px;" /></a></p> <p>And while the heatwave may not be that fun for the people living through it, it does making for some amazing pictures of stuff melting.</p> <p>Perhaps that <strong>plastic mailbox post wasn't such a great idea in retrospect.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25 - AZ1.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25%20-%20AZ1_0.JPG" style="width: 600px; height: 450px;" /></a></p> <p>&nbsp;</p> <p>On the bright side, you can get all your baking done outside in mother nature's free oven.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">"arizona isn't that hot"</p> <p>BET <a href="https://t.co/BjX2Me0Ezm">pic.twitter.com/BjX2Me0Ezm</a></p> <p>— antonihoe (@confuzzledteen3) <a href="https://twitter.com/confuzzledteen3/status/878049519161688064">June 23, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p><strong>Plastic fences...also not a great idea</strong>.&nbsp; Come on Arizona...you're better than this.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25 - AZ2.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25%20-%20AZ2_0.JPG" style="width: 600px; height: 366px;" /></a></p> <p>&nbsp;</p> <p>Meanwhile, this Tempe resident (undoubtedly an ASU student judging by all the cheap alcoholic beverages) was just trying to do his part to fight climate change by recycling his beer bottles...<strong>it seems that ManBearPig won this round.&nbsp; </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25 - AZ3.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25%20-%20AZ3_0.JPG" style="width: 600px; height: 605px;" /></a></p> <p>&nbsp;</p> <p>Breakfast is served...</p> <blockquote class="twitter-video"><p dir="ltr" lang="en">You already know whats going on in Arizona <a href="https://t.co/Pztyd03Vx3">pic.twitter.com/Pztyd03Vx3</a></p> <p>— ? ??c??d? ? (@Finessegawd3000) <a href="https://twitter.com/Finessegawd3000/status/877306917541994496">June 20, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>Meanwhile, even the road signs are melting down...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25 - AZ4.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25%20-%20AZ4_0.JPG" style="width: 600px; height: 393px;" /></a></p> <p>&nbsp;</p> <p>...which is going to make it even harder for this guy to get around town...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25 - AZ6.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/2017.06.25%20-%20AZ6_0.JPG" style="width: 600px; height: 415px;" /></a></p> <p>&nbsp;</p> <p>Al Gore is going to have a field day with these pics.</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="652" height="98" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.06.25%20-%20AZ%20Tease.JPG?1498405454" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/epic-pictures-arizonas-heatwave-everything-literally-melting#comments Chemistry Environment Matter Twitter Twitter Mon, 26 Jun 2017 00:20:00 +0000 Tyler Durden 598616 at http://www.zerohedge.com First India Bans Cash, Now It's Targeting Gold http://www.zerohedge.com/news/2017-06-25/first-india-bans-cash-now-its-targeting-gold <p><a href="http://www.activistpost.com/2017/06/first-india-bans-cash-now-begins-regulating-new-gold-tax.html"><em>Authored by Jeff Paul via ActivistPost.com,</em></a></p> <p><strong>In November of last year, <a href="http://www.activistpost.com/2016/11/cashless-society-india-bans-currency-notes-sparking-chaos-at-banks.html">India banned certain cash notes</a>&nbsp;in a bold move to force businesses into the banking system to better harvest more taxes from its livestock. </strong></p> <p>Now, under the guise of &ldquo;improving transparency&rdquo; and forming a &ldquo;common market,&rdquo; <strong><em>India has begun targeting gold with new taxes, regulation, and incentives for citizens to turn over their undeclared gold&nbsp;to the financial sector.</em></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_gold.jpg"><img height="270" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_gold_0.jpg" width="600" /></a></p> <p><strong>Roughly <a href="http://www.bbc.com/news/world-asia-india-37974423">86% of India&rsquo;s economic activity happened in cash</a> at the time much of it was banned.</strong> Presumably that includes the $19-billion-per-year retail gold industry. Again, it appears that India&rsquo;s government (central bankers) wants a bigger cut of the action and to better track the private assets of citizens.</p> <p><em>Bloomberg</em> has been&nbsp;reporting that India&rsquo;s government is teaming up with crony gold dealers to plan a complete revamp of its gold policy &ndash; which is always code for &ldquo;control, regulate and tax.&rdquo;</p> <p><em>Bloomberg</em> <a href="https://www.bloomberg.com/news/articles/2017-06-15/india-said-to-plan-gold-policy-overhaul-for-19-billion-sector">reports</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>India, which vies with China as the top consumer of bullion, is working on new policies to improve transparency and help expand its $19 billion gold jewelry industry, according to people with knowledge of the matter.</p> <p>&nbsp;</p> <p>The plans being worked out by the finance and commerce ministries along with industry groups should be finalized by the end of March, the people said, asking not to be identified because they aren&rsquo;t authorized to speak publicly&hellip;.</p> <p>&nbsp;</p> <p>The <strong>start of a spot bullion exchange</strong>, to make gold supply more transparent and help enforce purity standards, is under consideration, the people said. An <strong>import tax of 10 percent <em>could</em> also be reduced</strong> as the government seeks to eliminate smuggling, they said. The plans also include a <strong>dedicated bank for the jewelry industry</strong>, according to one of the people.</p> <p>&nbsp;</p> <p>The overhaul of India&rsquo;s <strong>disorganized and fragmented gold jewelry industry</strong> is meant to bolster confidence among consumers, where the gifting of gold at weddings and festivals or its purchase as a store of value are deeply held traditions. Ensuring quality standards and <strong>allowing supply chains to be easily tracked are ways to enhance trust</strong>.</p> </blockquote> <p><strong>In addition to a 10% import tax on gold, which authorities admit causes smuggling, India recently placed a 3% nationwide goods and services tax on gold that goes into effect on July 1st. </strong>Grateful slaves celebrated the event as a &ldquo;lower than expected rate&rdquo; and as creating a &ldquo;common market,&rdquo; <em>Bloomberg</em> <a href="https://www.bloomberg.com/news/articles/2017-06-05/jewelers-rally-as-india-sets-gold-tax-that-s-lower-than-expected">reported</a> when the tax passed:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>India fixed the duty at 3 percent over the weekend, lower than the 5 percent expected, Ketan Shroff, joint secretary at the India Bullion and Jewellers Association Ltd., said Monday. The goods and services tax, to be implemented from July 1, will replace more than a dozen domestic levies including excise tax and state tariffs, drawing India for the first time into a common market.</p> </blockquote> <p><u><em><strong>ProTip to wannabe dictators</strong></em></u>: <em>If you&rsquo;re a tyrant who wants to centralize power over an industry, first frighten large businesses into your cartel protection racket. Then, eliminate local sovereignty over markets while imposing your own regulations and taxes. But call it &ldquo;drawing into a common market&rdquo; and &ldquo;improving transparency to protect them.&rdquo; Works every time. The final step is to prosecute non-compliance using men with guns.</em></p> <p>The creation of a spot market and special bank for gold jewelers (as rumored above) seems like a function that doesn&rsquo;t require government at all. Yet if your goal was to track, trace and database your citizens&rsquo; undeclared gold assets, it makes perfect sense.</p> <p>Bloomberg makes clear that the new policies aim to encourage citizens to turn over their &ldquo;idle gold&rdquo; to the financial system:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The government is also <strong>keen to get the public to recycle its jewelry</strong> to reduce the nation&rsquo;s reliance on imports. After a slow start to its <strong>plans to monetize the precious metal held in households</strong> and institutions, the government is looking to <strong>tweak the scheme and attract more participants</strong>, the people said, without giving details. The initiative, launched in November 2015, was <strong>aimed at returning an estimated 20,000 metric tons of idle gold to the financial system</strong>.</p> </blockquote> <p><u><strong>It&rsquo;s reminiscent, albeit a softer version, of Franklin D. Roosevelt&rsquo;s <a href="https://en.wikipedia.org/wiki/Executive_Order_6102">Executive Order 6102</a> &ldquo;forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States&rdquo; which criminalized the possession of monetary gold.</strong></u> Citizens were forced to turn over their gold for a set amount of government currency. We&rsquo;ll have to wait and see how India &ldquo;tweaks the scheme.&rdquo;</p> <p>Credit Suisse confirmed the latest moves in India are designed to force the gold trade onto the banking system in partnership with the central government to better track and tax the industry.</p> <p>Credit Suisse Group AG told <em>Bloomberg&nbsp;</em>&ldquo;<strong>the (gold) sector will find it tougher to evade taxes as legal imports go through the banking system</strong>, and a <strong>full trail will now be established</strong> by the <strong>new nationwide tax</strong> compared with previous duties which were levied at the state level only.&rdquo;</p> <p>This echoes what&nbsp;Credit Suisse Group AG analysts Arnab Mitra and Rohit Kadam previously said of the coming changes to the Indian gold industry: &ldquo;Over the next two to three years, the new tax should <strong>gradually force smaller, unregulated players to become tax compliant</strong> and take away their price advantage, <strong>increasing market share for bigger, organized businesses</strong>.</p> <p>There you have it. The cashless agenda of control laid bare. There shall be no economic activity outside of State control. Cartels that play nice will be rewarded with more market share.</p> <p><strong>It remains to be seen if an already angry Indian citizenry can be persuaded to gift up their tradition of storing and gifting gold.</strong></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="758" height="341" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170625_gold.jpg?1498417823" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/first-india-bans-cash-now-its-targeting-gold#comments Business Central bank China Credit Suisse Economy Finance fixed India Market Share Money Transparency Mon, 26 Jun 2017 00:00:00 +0000 Tyler Durden 598629 at http://www.zerohedge.com UCLA Releases 'Resistance' Handbook; Defines Trumpism As "White Supremacy, Misogyny, Xenophobia..." http://www.zerohedge.com/news/2017-06-25/ucla-releases-resistance-handbook-defines-trumpism-white-supremacy-misogyny-xenophob <p>There is little doubt that America's bastions of higher indoctrination (a.k.a. "Universities") have become nothing more than training grounds for future generations of social justice warriors.&nbsp; The war for America's college campuses has become so heated that liberal administrators, the same people who used to pride themselves on challenging their students to step outside their comfort zone and open themselves up to dissenting opinions, have taken to shutting down free speech when it doesn't perfectly align with their 'enlightened' world view.</p> <p>That said, the <a href="https://challengeinequality.luskin.ucla.edu/">Institute on Inequality and Democracy</a> at the University of California Los Angeles, a publicly funded institution mind you, seems to be stepping things up a notch with their recently released 'Resistance' handbook for America's snowflakes.&nbsp; Among other things, the handbook specifically defines "Trumpism" as a movement that <strong>"consolidates power through white supremacy, misogyny, nationalism, xenophobia, corporatism, and militarism."</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"This resource guide outlines the first steps the UCLA Abolitionist Planning Group has taken to understand Trumpism as a moment in United States politics. Building on long-standing exclusions, <strong>Trumpism consolidates power through white supremacy, misogyny, nationalism, xenophobia, corporatism, and militarism. </strong>Committed to a philosophy of abolitionism, the <strong>Abolitionist Planning Group seeks to understand how urban planning, as discipline and professional practice, can analyze and address the systematic oppressions expanded and institutionalized by the new administration."</strong></p> </blockquote> <p>The organization calls on urban planners to abide by 4 simple rules:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>1.&nbsp; “Refuse to design, plan, or build systems that divide and oppress communities, including the proposed wall between the US and Mexico."</p> <p>&nbsp;</p> <p><strong>2.&nbsp; "Declare [your] spaces ‘sanctuaries’ to undocumented immigrants, while planning sanctuaries for all victims of injustice.”</strong></p> <p>&nbsp;</p> <p><strong>3.&nbsp; “Commit to abolishing mass incarceration and the prison-industrial complex,</strong> while expanding ‘abolition’ to all systems that promote racial and social exclusion."&nbsp; </p> <p>&nbsp;</p> <p><strong>4.&nbsp; "Reflect critically and historically on the political economy of planning to understand and resist our complicity in systems of racial capitalism and patriarchy.”</strong></p> </blockquote> <p><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/06/25/Triggered_0.JPG" alt="Triggered" width="500" height="316" /></p> <p>&nbsp;</p> <p>But, as the <a href="http://dailycaller.com/2017/06/25/ucla-institute-trumpism-consolidates-power-through-white-supremacy/">Daily Caller</a> points out, the organization's goals go well beyond setting up snowflake-inspired urban centers.&nbsp; They're also extremely triggered by bathroom bills and <strong>will not stop until Facebook appoints a poor, minority woman as it's CEO</strong>...because anything less is simply racist and sexist.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>UCLA insists that the <strong>Trump administration’s “harmful and divisive rhetoric” “is fueling an open war of bigotry and hate towards nonwhite populations, </strong>mainly targeting people from Latin American and Muslim-majority countries.” The school cites President Donald Trump’s wall, executive order on immigration, and mass deportations as examples of such a war.</p> <p>&nbsp;</p> <p>The institute proceeds to<strong> bash “corporate feminism,”</strong> which it sees comprising Facebook executive Sheryl Sandberg and TV/magazine writer Neil Scovell’s book “Lean In.” Instead, <strong>UCLA advocates “collective social action,” which it implies supports minority and poor women.</strong></p> <p>&nbsp;</p> <p><strong>“[Bathroom bills] seek to limit the public mobility of transgender individuals and institutionalize efforts to exclude trans, gender non-conforming, or genderqueer individuals from public view,”</strong> says UCLA in another section of the pamphlet.</p> <p>&nbsp;</p> <p>Elsewhere, the institute describes its conception of “the Sanctuary City,” a city which, moving beyond protection for illegal immigrants, also provides a guarantee of federal employment, a living wage, unionization of day and domestic laborers, and protection against climate change.</p> <p>&nbsp;</p> <p><strong>“We call on our fellow students, planners, and city dwellers to build this new Sanctuary City with us,”</strong> said&nbsp; the institute. <strong>“We can begin by calling hateful ideologies by their proper names and working to delegitimize and eliminate them.”</strong></p> </blockquote> <p>American tax dollars hard at work...</p> <p>&nbsp;</p> <p><em><strong>The full Resistance guide can be read <a href="https://challengeinequality.luskin.ucla.edu/wp-content/uploads/sites/4/2017/05/AboPlan_Pub_FINAL_online-v2-1.pdf">here</a>:</strong></em></p> <p><iframe src="https://www.scribd.com/embeds/352206084/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-xiloVML1JOdhzK4B4ezM&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></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="768" height="427" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.06.25%20-%20Resistance.JPG?1498410406" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/ucla-releases-resistance-handbook-defines-trumpism-white-supremacy-misogyny-xenophob#comments Anthropology Corporatism Economic ideologies Fascism Institute on Inequality and Democracy Mexico Misogyny Nationalism Nationalism Political philosophy Politics Social Issues Thought Trump Administration University of California University of California, Los Angeles Sun, 25 Jun 2017 23:30:00 +0000 Tyler Durden 598623 at http://www.zerohedge.com "It's A Virtual Bloodbath" - Cryptocurrency Carnage Continues http://www.zerohedge.com/news/2017-06-25/its-virtual-bloodbath-cryptocurrency-carnage-continues <p>Early this morning, <strong>cryptocurrencies were all simultaneously hit by selling pressure</strong> and as the day has worn off, it has accelerated with one witty trader noting &quot;it&#39;s a virtual bloodbath.&quot;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO4_0.jpg" style="width: 600px; height: 731px;" /></a></p> <p><a href="https://coinmarketcap.com/"><em>Source: CoinMarketCap.com</em></a></p> <p><strong>29 of the Top 30 cryptocurrencies (by market cap) are in the red</strong> and while there remains no immediat catalyst, chatter is focused on uncertainty surrounding SegWit (another potential fork in the codebase) and some looming large ICOs...</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="en">IMO this is all a shakeout before the &quot;excited-about-SegWit&quot; rally<br />Or I&#39;m completely misreading the situation!<a href="https://twitter.com/hashtag/bitcoin?src=hash">#bitcoin</a></p> <p>&mdash; Alistair Milne (@alistairmilne) <a href="https://twitter.com/alistairmilne/status/879097494529028097">June 25, 2017</a></p></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script><p>As a reminder <strong>SegWit (or Segragated Witness) is a proposed update to the Bitcoin software, designed to fix a range of serious issues</strong>. <a href="https://cointelegraph.com/explained/segwit-explained">As CoinTelegraph reports, </a>originally, the update was aimed at solving transaction malleability, a well-known weak spot in Bitcoin software. Although this vector of attack is not the most damaging to the users, it has been exploited in several instances already, highlighting the need to patch it. However, SegWit offers a range of other advantages and by now the focus of attention has shifted from fixing the transaction malleability to <strong>solving the problem of Bitcoin scaling.</strong> As we have explained in the eponymous article, and in many others, <strong>Bitcoin is currently experiencing massive scaling problems, which are only getting worse with time.</strong></p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/OFfBRzh9HmU" width="560"></iframe></p> <p>However, some are noting today&#39;s moves are perhaps reflective of pre-positioning for some big Initial Coin Offerings (ICOs) rumored to be on the horizon.</p> <p>Still others have speculated that it&#39;s a technical move as Bitcoin broke below its 20-day moving average...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO5_0.jpg" style="width: 600px; height: 450px;" /></a></p> <p>Either way, the biggest players are suffering but the drops are not the magnitude that some recent 20%-plus retreats have been...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO1.jpg"><img height="350" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO1_0.jpg" width="600" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO2_0.jpg" style="width: 600px; height: 224px;" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/06/22/20170625_CYRPTO3_0.jpg" style="width: 600px; height: 217px;" /></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="897" height="523" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170625_CYRPTO1.jpg?1498430732" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/its-virtual-bloodbath-cryptocurrency-carnage-continues#comments Alternative currencies Bitcoin Bitcoin Bitcoin Core Cryptocurrencies Finance Free software Money United Nations Sun, 25 Jun 2017 23:01:22 +0000 Tyler Durden 598638 at http://www.zerohedge.com Russia Said To Recall Ambassador At Center of Trump Controversy: Report http://www.zerohedge.com/news/2017-06-25/russia-said-recall-ambassador-center-trump-controversy-report <p>According to <a href="https://www.buzzfeed.com/johnhudson/moscow-is-finally-recalling-russian-ambassador-sergey?utm_term=.ayvq87mo8X#.hdyov8A2vj">BuzzFeed, </a>which cites three anonymous sources, Russia is reportedly recalling Ambassador Sergey Kislyak, the man who dared to do his job and talk to US politicians and visible public figures, and who <a href="http://thehill.com/policy/international/russia/339401-russia-is-recalling-ambassador-at-center-of-trump-campaign">according to The Hill </a>had "emerged as a focal point in the FBI probe into Russia’s election meddling."&nbsp; While the Kremlin has not confirmed the report, BuzzFeed adds that Kislyak is scheduled to leave Washington next month, following a July 11 going-away party at the St. Regis Hotel, two blocks away from the White House. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/kislyak.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/25/kislyak_0.jpg" width="600" height="338" /></a><br /><em>Trump speaking with Sergey Lavrov and Russian ambassador Sergey Kislyak during a <br />White House meeting.</em></p> <p>Kislyak, 66, had been <a href="https://www.usatoday.com/story/news/politics/2017/06/25/russian-ambassador-kislyak-recalled/427056001/">reported to be heading to New York to lead Russia's delegation at the United Nations</a>. If confirmed, his return to Russia will mark the end of his 10-year tenure as Russia's leading diplomat to the United States and makes him another casualty of the growing controversy over the Russian activity.</p> <p>As readers are well aware, Kislyak has been a key figure in the growing investigation by a special counsel and multiple congressional committees into Russia's interference in the 2016 presidential election that put President Trump in the White House. Two key Trump administration officials, Attorney General Jeff Sessions and adviser Jared Kushner, had meetings with Kislyak last year that they failed to disclose to congressional and federal officials. Sessions recused himself in March from any Justice Department investigation into the Russian interference, in part because of his unreported contacts with Kislyak.</p> <p>Ironically, all Kislyak was doing was, well, his job which is to meet with people like Sessions, Kushner and yes, even Trump. </p> <p>In May, the Associated Press reported that Kushner and Kislyak tried to set up a secret back-channel communications line with Russia that would have used Russian equipment. </p> <p>On May 10, Trump met with Kislyak and Russian Foreign Minister Sergey Lavrov in the Oval Office. During that meeting, <a href="https://www.usatoday.com/story/news/politics/2017/06/25/russian-ambassador-kislyak-recalled/427056001/">Ray Locker reminds </a>us that Trump reportedly shared classified intelligence information with the Russians and bragged about firing FBI Director James Comey, whom he called a "nut job."</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="534" height="301" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/kislyak.jpg?1498429683" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/russia-said-recall-ambassador-center-trump-controversy-report#comments Business Department of Justice Donald Trump FBI Federal Bureau of Investigation Federal Bureau of Investigation James Comey Jared Kushner Jeff Sessions Kislyak Politics Presidency of Donald Trump Russian interference in the 2016 United States elections Russia–United States relations Sergey Kislyak St. Regis Trump Administration United Nations United States White House White House Sun, 25 Jun 2017 22:31:06 +0000 Tyler Durden 598637 at http://www.zerohedge.com Dan Loeb Is Now Nestle's 6th Largest Shareholder; Goes Activist On World's Biggest Food Company http://www.zerohedge.com/news/2017-06-25/dan-loeb-now-nestles-6th-largest-shareholder-goes-activist-worlds-biggest-food-compa <p>Dan Loeb has returned to his earthshaking activist roots, and in a letter <a href="https://t.co/vQOLSCjkL5">released moments ago, </a>Third Point announced it is now targeting the world’s largest food company, with its biggest bet on a public company in its history, amounting to $3.5 billion.</p> <p>In the letter, Third Point announced that it currently owns roughly 40 million shares of Nestle, and that its stake, which is held in a special purpose vehicle raised for this opportunity including options, <strong>currently amounts to over $3.5 billion. </strong>Putting this number in the context of Nestle's market cap of $264 billion, Loeb may have an uphill battle though that never stopped him before.</p> <p>Loeb's stake of 40 million shares makes him the 6th largest holder of Nestle, above Credit Suisse Asset Management with 38 million shares and below Massachusetts Financial Services Company with 56.8 million. The Top 4 holders are BlackRock, CapRe, Norges Bank, and Vanguard.</p> <p>Third Point writes that "despite having arguably the best positioned portfolio in the consumer packaged goods industry, <strong>Nestlé shares have significantly underperformed most of their US and European consumer staples peers on a three year, five year, and ten year total shareholder return basis</strong>. One year returns have been driven largely by the market’s anticipation that with a newly appointed CEO, Nestlé will improve."</p> <p>While the problems are clear, why did Third Point go activist? To maximize value of course, as It explains:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Third Point invested in Nestlé because we recognized a familiar set of conditions that make it ripe for improvement and change: a conglomerate with unrealized potential for margin improvement and innovation in its core businesses, an unoptimized balance sheet, a number of non-core assets, and a recent history of meaningful under-performance versus peers. It is rare to find a business of Nestlé’s quality with so many avenues for improvement.</p> </blockquote> <p>As to how it could achieve this, Third Point lays out 4 specifics recommendations:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Third Point intends to play a constructive role to encourage management to pursue change with a greater sense of urgency. We have offered our views in productive conversations with management, which we expect will continue. We believe Nestlé is positioned to create enormous value for shareholders over the next several years if the company focuses on: <strong>1) Improving Productivity; 2) Returning Capital to Shareholders; 3) Re-shaping the Portfolio; and, 4) Monetizing its L’Oréal Stake. We discuss each of these in more detail below.</strong></p> </blockquote> <p>Loeb's conclusion:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>As demonstrated by our significant capital commitment, we are enthusiastic about Nestlé’s prospects. The situation reminds us of similar conditions that existed when we first invested in Baxter in 2015. Some market observers scratched their heads, as they thought the company looked “expensive” and thus underestimated the uplift that is possible when a new leader dedicates himself to better capital allocation, portfolio optimization, and margin improvement with strong shareholder support. </p> <p>&nbsp;</p> <p>We recognize that even with new leadership and clear options for value creation, change at a company like Nestlé can be complex. <strong>It is for this reason that Third Point intends to be an engaged, long-term shareholder and offer our assistance to the management team and Board as they pursue improved performance for all stakeholders. We are confident that by following the path we have outlined, Nestlé will be able to revive its iconic slogan, with a twist: Nestlé makes the very best returns for its shareholders.</strong></p> </blockquote> <p>For the full breakdown of Loeb's recommendations, see the full letter below. </p> <p>As <a href="https://www.bloomberg.com/news/articles/2017-06-25/nestle-said-to-be-targeted-by-activist-dan-loeb-s-third-point">Bloomberg notes</a>, the Third Point move comes as Nestle’s new Chief Executive Officer Mark Schneider aims to boost the company’s health strategy as well as focus on the businesses that are growing fastest, such as coffee and pet food. Food companies are under pressure to reduce costs after Kraft Heinz Co.’s unsuccessful bid for Unilever earlier this year showed that even the largest players could become targets.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Chocolate makers especially are grappling with weak U.S. consumption as Americans increasingly turn their backs on sugar. Nestle said this month it may sell its U.S. sweets unit, which includes brands such as Butterfinger and BabyRuth.</p> </blockquote> <p>Third Point has targeted European companies before. Vitamin maker Royal DSM NV also attracted the activist, and went on to sell its majority stake in a basic plastics and resins unit to CVC Capital Partners after facing calls to break up.</p> <p><em>Full Third Point letter below (<a href="http://www.thirdpointpublic.com/wp-content/uploads/2017/06/Third-Point-Nestle-Letter.pdf">pdf link</a>)</em></p> <p><iframe src="https://www.scribd.com/embeds/352220358/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-9PZsKLKKh4MPok3Wymkb&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></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="553" height="369" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/dan%20loeb_7.jpg?1498427909" /> </div> </div> </div> http://www.zerohedge.com/news/2017-06-25/dan-loeb-now-nestles-6th-largest-shareholder-goes-activist-worlds-biggest-food-compa#comments Blackrock Business Business Credit Suisse Daniel S. Loeb Finance Food and drink Kraft Medical food Nestlé Norges Bank Norges Bank pdf Third Point Third Point Management Vevey Sun, 25 Jun 2017 22:03:50 +0000 Tyler Durden 598636 at http://www.zerohedge.com