en Mnuchin: "Extraordinary" If Tax Reform Gets Done This Year; "No Question" Market Drops If Bill Fails <p>Barely a day after Gary Cohn told an audience at the annual meeting of the American Bankers Association that Congress has a &ldquo;unique opportunity&rdquo; to pass tax reform by the end of the year, Treasury Secretary Steven Mnuchin &ndash; who shares responsibility for the administration&rsquo;s tax agenda alongside Cohn &ndash; acknowledged the truth about Trump&rsquo;s No. 1 legislative priority: namely, <strong>that it would be &ldquo;extraordinary&rdquo; if the Republicans could pass tax reform by year&rsquo;s end.</strong></p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p>At a Tuesday press conference, Mnuchin borrowed a line from his boss and reminded his audience that it took a couple of years for Ronald Reagan to pass tax reform, in the process risking the end of the bull run that yesterday carried the Dow above 23,000, a rally that has largely been predicated on investors&rsquo; hopes for tax reform, according to the <a href="">Hill</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;It took Ronald Reagan over two years on a bipartisan basis to get tax reform done,&quot; </strong>Mnuchin said during an interview on Fox News&#39; <em>Special Report with Bret Baier.</em><strong> &quot;If we get it done this year, it will be extraordinary.&quot;</strong></p> <p>&nbsp;</p> <p><strong>&quot;Our objective is to get it on the President&rsquo;s desk by December to get him to sign it this year,&quot;</strong> Mnuchin added, but cautioned that there&#39;s &quot;no artificial deadline.&quot;</p> <p>&nbsp;</p> <p>&quot;We are going to work on it as fast as we can,&quot; the Treasury secretary added.</p> </blockquote> <p>Mnuchin called the GOP plan to reform the tax code critical to creating a &quot;competitive&quot; environment for American businesses.</p> <p>On Monday, Trump made similar remarks at a press conference with Mitch McConnell that was, somewhat ironically, intended to address concerns that the fractured Republican leadership might bungle tax reform like they bungled Obamacare repeal. At the conference, Trump surprised reporters by admitting that Congress still has a &quot;long way&quot; to go on tax reform.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;I would like to see it be done this year,&rdquo; </strong>Trump said.<strong> &ldquo;But don&rsquo;t forget it took years for the Reagan administration to get taxes done &mdash; I&rsquo;ve been here for nine months.&rdquo;</strong></p> <p>&nbsp;</p> <p><strong>&ldquo;We could have a long way to go but that&rsquo;s okay,&quot; </strong>he added.</p> </blockquote> <p>To be sure, the urgency of tax reform hasn&rsquo;t been lost on the Republican leadership. House Speaker Paul Ryan has threatened to keep Republican representatives &ndash; who are on vacation this week but have just 28 voting sessions left in the year - in Washington over the December holiday break if they don&rsquo;t manage to write and pass a bill before then. Of course, it&rsquo;s far more likely that reform will hit a wall in the Senate, where the Republicans&rsquo; razor-thin majority has allowed a handful of senators to effectively obstruct the Trump agenda.</p> <p>Oddly, in a <a href="">Politico </a>interview published this morning, Mnuchin &ndash; already a master of mixed messaging &ndash; warned that passing tax reform by year end is &ldquo;essential&rdquo; and that, if it doesn&rsquo;t happen, markets could tank.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done,&rdquo; Mnuchin said in the interview. &ldquo;To the extent we get the tax deal done, the stock market will go up higher. <strong>But there&rsquo;s no question in my mind that if we don&rsquo;t get it done you&rsquo;re going to see a reversal of a significant amount of these gains.&rdquo;</strong></p> </blockquote> <p>Mnuchin had promised earlier this year that tax reform would be done by August. Then it was year-end. Now, it appears the only concrete &ldquo;deadline&rdquo; for reform is some time just before the 2018 mid-term election. And once again, market implied odds have proven correct, while many market strategists &ndash; like the team at Goldman with its 65% odds of a deal by Q1 &ndash; have been far too optimistic.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 264px;" /></a></p> <p>In a breakthrough for the Trump administration, <a href="">Sen. John McCain</a> said last night he&rsquo;d vote yes on a budget bill that the Senate is rushing to pass by the end of the week. That bill would unlock the reconciliation process, allowing Republicans to pass tax reform with a simple majority and circumvent a Democratic filibuster.</p> <p>Still, it&rsquo;s unclear if Republicans have the votes to pass that legislation, which is expected to be brought to a vote Thursday morning. &nbsp;<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="558" height="314" alt="" src="" /> </div> </div> </div> American Bankers Association Business Congress Donald Trump Economic policy of Donald Trump Economy of the United States Finance First 100 days of Donald Trump's presidency Fox News Gary Cohn John McCain Obamacare Politics Presidency of Donald Trump Presidency of Ronald Reagan Reagan Administration Republican Party Senate Steven Mnuchin Tax reform Trump Administration United States Wed, 18 Oct 2017 11:18:45 +0000 Tyler Durden 605535 at Dow Futures Over 23,000: Dollar, Global Stocks Jump As China Congress Begins <p>World stocks stayed near peaks and currencies moved in tight ranges on Wednesday as China’s 19th Communist Party Congress opened while focus in Europe turned to speeches from top euro zone central bankers before next week’s key policy meeting, as well as Catalonia's ultimatum due on Thursday. S&amp;P futures are solidly in the green as usual, with Dow futures jumping above 23,000, driven higher by IBM as investors looked for new reasons to extend gains after hitting new all-time highs Tuesday. The dollar continues to strengthen, buoyed by speculation that the next Federal Reserve chair will be more hawkish, as volatility in major currencies fell to a three-month low, while Treasury yields rose.&nbsp; </p> <p><a href=""><img src="" width="500" height="281" /></a></p> <p>Among the factors contributing to today's burst of risk on buying is the continued bid in USD, which has forced markets into hybrid risk-on mode according to Bloomberg. EUR/USD and GBP/USD push through yesterday’s session lows, which consequently supports domestic equity markets via exporters and multinationals. Rally in USD/JPY pressures USTs, dragging down core fixed-income markets; UST/bund spread wider by 1.6bps. U.S. equity futures also supported, Dow futures test 23,000; crude futures hold small gains after bullish API data.</p> <p>European stocks are on fire, with the Stoxx 600 heading for its biggest rise in 2 weeks as the euro weakened for a fifth day on speculation the ECB will remain accommodative even as it tapers asset purchases, while volatility slid; the Stoxx 600 gained 0.4% while euro falls back to $1.1750 and VStoxx hits intraday record low. Technology, food and beverage best performers among industry groups, all 19 sectors in green; DAX hit another record high. The European vol index, the VStoxx dropped as much as 8% to 10.7, the lowest level on record. bond yields fell ahead of a series of speeches from top European Central Bank officials before next key policy meeting on Oct. 26. </p> <p>Looking at European stocks, BNP Paribas Wealth Management CIO Florent Brones said that “there are many positive elements supporting the euro-area stock market at this point, and while the market has been rallying, we’re not yet seeing double-digit gains.” </p> <p>European Central Bank chief Mario Draghi, Chief Economist Peter Praet and Executive Board Member Benoit Coeure are among those officials scheduled to speak. First remarks from Draghi at a conference in Frankfurt had limited initial market impact. “Today, bond market investors will probably concentrate exclusively on the various ECB speakers, who could influence market expectations for the last time ahead of next week’s meeting,” said &lrm;BayernLB rate strategist Alexander Aldinger.</p> <p>The MSCI’s Asia-Pacific index ex Japan was flat, near its late 2007 peak after China President Xi Jinping kicked off the twice-a-decade party congress with a wide-ranging speech, in which he warned of “severe” challenges while laying out a road map to turn the country into a leading global power by 2050. Investors are watching to see whether Xi will push through tough reforms as the world’s second-largest economy faces structural challenges over the next five years. Jinping said the market would be allowed to play a decisive role in allocating resources but also said the role of the state in the economy had to be strengthened. </p> <p><strong>“His speech offered nothing to move the markets in Asia,</strong>” &lrm;Bayern LB’s Aldinger also said. Investors are looking for clear direction on economic and financial market reform over the next five years, but as has been the case in history, the actual speech was light on detail.</p> <p>China's CSI300 index added 0.8 percent in reaction, while Shanghai stocks rose 0.3 percent. “Market participants are paying much more attention to the party congress this time, as they are watching if any surprise reforms will emerge amid concerns over economic growth,” said Yan Kaiwen, analyst with China Fortune Securities.</p> <p>Still in Asia, <strong>Japan's Nikkei rose for a 12th consecutive day, </strong>getting a lift from hopes that this weekend's election will produce political stability and continuation of loose monetary policy even as technical indicators suggest the gauge is overheating. An opinion poll by Kyodo showed Japanese Prime Minister Shinzo Abe’s coalition was on track for a roughly two-thirds majority in Sunday’s general election there. The 14-day relative strength index stood above 70 - a level frequently seen as overbought - for an eighth day, <strong>while the Toraku Index, a barometer of momentum, climbed to 128, far higher than the 120 level that signals the Topix is poised to fall.</strong> </p> <p>“The Japanese stock market may be on alert for high prices and stay in a narrow range,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. in Tokyo. “Yet business sentiment is on a firm footing not only in the U.S. but also globally.” Pharmaceutical stocks and automakers were among the biggest boosts to the benchmark gauge, while banks and services companies weighed the most. About two stocks fell for every one that rose. The Nikkei 225 Stock Average extended its winning streak, the longest since June 2015, boosted by Fast Retailing Co. and Astellas Pharma Inc. The Topix has gained 2.5 percent in an 8-day rally, boosting its advance this year to almost 14 percent. It trades at 15.3 times estimated profits for the next year, well below the high of 20.5 reached in March 2013 and compared with the S&amp;P 500 Index’s 19.4 times. “Valuations are low, both compared to other global markets and particularly so when taking account of the 0% yield on 10yr government bonds,” said Nicholas Smith, a strategist at CLSA Ltd. in Tokyo. “Sure, over the short-term it might have a pullback, but I think the fundamentals are excellent and the market is pricing in the decreased uncertainties that go with Abe stronger for longer.”</p> <p>In currencies, the dollar edged up amid speculation President Trump could chose a more hawkish leader to replace Federal Reserve Chair Janet Yellen, while investors awaited for any news on progress on U.S. tax reforms.The dollar index rose 0.07 percent to 93.54, extending a rebound from Friday’s 2 1/2-week low of 92.749. It rose as high as 93.729 on Tuesday. The onshore yuan predictably strengthened against the dollar as the 19th Party Congress began in Beijing while the U.S. Treasury’s twice-yearly report softens China FX criticism. The PBOC injected a net 270 billion yuan of liquidity helping the Shanghai Composite 0.3% higher. Australian 10-year yield drops to a one-month low of 2.72% as the curve extends bull-flattening; Treasuries steady. Canadian dollar outperforms G-10 peers after Nafta negotiators agree to extend talks into next year; kiwi slips following weaker Fonterra milk price auction. WTI crude holds above $52; Dalian iron ore futures gain 2.2 percent</p> <p>In Europe, the euro was holding at $1.17, still some way above the recent low and major chart support at $1.1667, as dealers awaited speeches by several policymakers from the European Central Bank due later on Wednesday, which includes President Mario Draghi. Some risks linger: <strong>Catalonia has until Thursday to back down from its secession push. </strong>Investors were reminded of the economic cost of the crisis when Spain, the euro-region’s fourth-biggest economy, cut its growth forecasts for next year. The Catalan standoff is one of several political risks facing investors in Europe, including high-stakes coalition talks that began Wednesday in Germany between Angela Merkel’s Christian Democrats and potential partners to lead Europe’s biggest economy.</p> <p>Overnight, the biggest mover was the Mexican peso which boasted its biggest rise in over four months after trade ministers from the United States, Canada and Mexico extended the deadline on a contentious round of talks.</p> <p>In commodity markets, talk the next U.S. Federal Reserve chief may be a policy hawk kept gold pinned down $1,283.01 an ounce. Oil prices were lifted by a fall in U.S. crude inventories and concerns that tensions in the Middle East could disrupt supplies. Brent crude futures were at $58.31, up 0.4 percent from their last close - and almost a third above mid-year levels.</p> <p>Rates markets remain paralyzed with barely any moves across the bond complex: the yield on 10-year TSYs rose 3 bps to 2.33% , the highest in a week; Germany’s 10-year yield gained two basis points to 0.39 percent, while Britain’s 10-year yield advanced two basis points to 1.276 percent.</p> <p>The Fed’s Beige Book and earnings from American Express, EBay and Alcoa will be in focus today. </p> <p><strong>Bulletin headline summary from RanSquawk</strong></p> <ul> <li>European equities higher, with IT outperforming</li> <li>CAD and MXN notably firmer after NAFTA ministers agreed to extend negotiations into 2018.</li> <li>Looking ahead, highlights include US Housing Starts and comments from Praet and Coeure.</li> </ul> <p><strong>Market Snapshot</strong></p> <ul> <li>S&amp;P 500 futures up 0.1% to 2,559.50</li> <li>VIX Index trading 0.3% lower at 10.28</li> <li>STOXX Europe 600 up 0.4% to 391.35</li> <li>MSCI Asia down 0.01% to 167.44</li> <li>MSCI Asia ex Japan up 0.01% to 552.36</li> <li>Nikkei up 0.1% to 21,363.05</li> <li>Topix up 0.07% to 1,724.64</li> <li>Hang Seng Index up 0.05% to 28,711.76</li> <li>Shanghai Composite up 0.3% to 3,381.79</li> <li>Sensex up 0.1% to 32,656.28</li> <li>Australia S&amp;P/ASX 200 up 0.01% to 5,890.48</li> <li>Kospi down 0.06% to 2,482.91</li> <li>WTI Crude up 0.3% to $52.05</li> <li>Brent futures up 0.68 to $58.35/bbl</li> <li>Gold spot down 0.2% to $1,282.88</li> <li>U.S. Dollar Index up 0.1% to 93.60</li> <li>German 10Y yield rose 0.6 bps to 0.371%</li> <li>Euro down 0.06% to $1.1759</li> <li>Italian 10Y yield fell 3.4 bps to 1.732%</li> <li>Spanish 10Y yield rose 2.8 bps to 1.575%</li> </ul> <p><strong>Top Overnight News</strong></p> <ul> <li>Xi Jinping warned of “severe” challenges while laying out a road map to turn China into a leading global power by 2050. The nation will continue opening its doors to foreign businesses and strengthen financial sector regulation</li> <li>The U.S. softened FX criticism for China, lauded it for acting to avoid a “disorderly” depreciation and then allowing the yuan to rise against the dollar this year. The Treasury Department said no major trading partner is manipulating its currency to gain an advantage in trade</li> <li>Senators from both political parties said a bipartisan deal was reached to stabilize Obamacare, just two weeks before Americans start signing up for 2018 coverage</li> <li>Nikki Haley, the U.S. ambassador to the United Nations, will use a Wednesday Security Council meeting to seek world attention on Iran’s actions in the Middle East in an early test of whether President Donald Trump’s toughening position on the Islamic Republic is alienating allies and leaving the U.S. isolated internationally</li> <li>The SEC is preparing to provide formal assurances to Wall Street by telling financial firms they won’t have to overhaul their operations to comply with sweeping new European rules on investment research, three people familiar with the matter said</li> <li>With monetary policy being accommodative, there is a window of opportunity for economic reforms, European Central Bank President Mario Draghi said as he spoke on Wednesday</li> <li>Dollar continued to strengthen helped by speculation that the next Federal Reserve chair will be more hawkish; Trump’s choice will be unveiled before he leaves Nov. 3 for an 11-day trip to Asia and Hawaii, a person familiar with the process said Tuesday</li> <li>Spanish Deputy PM: Spanish government will take control of Catalonia unless the regional leader withdraws his claim to independence by 10 a.m. on Thursday</li> <li>Housing starts and building permits for Sept. will be announced and the U.S. Federal Reserve releases its Beige Book</li> </ul> <p><strong>Asia equity markets traded marginally positive </strong>following a similar picture in the US where all indices extended on record levels, in which the DJIA briefly surmounted the 23,000 milestone for the 1st time ever. The mild momentum from the historical feat in US carried over to Asia which saw ASX 200 (+0.1%) briefly above 5,900 and at its highest in almost 6 months, while Nikkei 225 (+0.1%) also eked minor gains. Hang Seng (Unch) and&nbsp; Shanghai Comp. (+0.3%) were kept afloat after a continued substantial liquidity operation by the PBoC, although upside was capped as focus remained on the 19th CPC National Congress which opened today. Finally, 10yr JGBs were flat amid a lack of drivers and with demand restricted by a mildly positive tone in Japan and a tepid BoJ Rinban announcement for JPY 400bln of JGBs. Chinese President Xi delivered address at the opening of the 19th CPC National Congress in which he said China will continue to reduce overcapacity and that China will deepen interest rate and FX reform. President Xi also commented that China will lower barriers of entry for foreign businesses and that GDP is to increase to CNY 80tln from CNY 54tln over the next half-decade. </p> <p><em>Top Asian News</em></p> <ul> <li>Topix Holds Near 10-Year High as Indicators Signal Overheating</li> <li>Japan Equity Movers: Ichiyoshi Securities, Matsuya, Toho Zinc</li> <li>Espenilla Vows Philippines Won’t Overheat, Peso Is Under Control</li> <li>Xi Imagines China in 2050: Highlights From His Three-Hour Speech</li> <li>Europe Aviation Agency Warns on Kobe Steel as Scandal Deepens</li> <li>China Sells Bonds at Cost Lower Than Forecast as PBOC Adds Cash</li> </ul> <p><strong>European bourses were relatively directionless early in the session, although they have since picked up some upward momentum, with the Stoxx 600 up 0.4%. </strong>Focus this morning has been on the latest batch of earnings releases, particularly from the some of the Dutch large caps, with Akzo Nobel announcing a second profit warning this year, while ASML Holding also announced a weak earnings update. EGBs softer across the board, the belly of the German curve noticeably underperforming with the yield up 2bps. Focus will be on the German auction in the long-end.</p> <p><em>Top European News</em></p> <ul> <li>U.K. Jobless Rate Stays at 42-Year Low Amid Strong Labor Demand</li> <li>ECB Bond Program Survives Another Challenge at German Court</li> <li>ECB’s Draghi Sees ‘Window of Opportunity’ for Economic Reforms</li> <li>ECB Set-Up in Euro Bonds Underway as Market Sees QE for Longer</li> <li>Bond Calls Clash at JPMorgan, Morgan Stanley Before ECB Tapering</li> <li>Saenz Says Spain Will Apply Art. 155 if Catalans Don’t Comply</li> </ul> <p><strong>In FX, </strong>the dollar index caught a bid overnight and throughout the morning session, trading back above 93.50. This comes off the back of yesterday’s reports that the US President could be swaying towards, noticeable hawk, John Taylor as Janet Yellen’s successor, with the announcement expected before Trump’s department for Asia on November 3rd. NAFTA reports were a theme of yesterday’s US session, as early source reports indicated that Canada and Mexico were said to reject US NAFTA proposals. However, as the story developed, later comments took focus, stating that ministers had agreed to extend negotiations into 2018. Following the initial reports, USD/CAD hit 1.2590, however, over the following hours, the move was reversed, as the pair broke through 1.25, hitting lows through 1.2490. USD/MXN saw similar price action, after firstly moving to highs of 19.1500, the pair came back to trade at lows of 18.7300. Sterling trades subdued, following the bearish BoE commentary seen yesterday. GBP/USD took a slight move higher following the release of the UK jobs reports, however this was quickly pared given that wages had slowed from the prior month. GBP/USD has consolidated through 1.32, with EUR/GBP running into a slowdown at 0.8930, now behaving as the weekly high.</p> <p><strong>In commodities, </strong>West Texas Intermediate crude increased 0.3 percent to $52.04 a barrel, the highest in three weeks.&nbsp; Gold dipped 0.4 percent to $1,280.13 an ounce.</p> <p><strong>Looking at the day ahead, </strong>data will likely play second fiddle with the most notable releases being August/September employment data in the UK and September housing starts and building permits data in the US. The Fed’s Beige Book is also due out in the evening. Corporate earnings results on Wednesday include eBay and American Express</p> <p><strong>US Event Calendar</strong>:</p> <ul> <li>7am: MBA Mortgage Applications, prior -2.1%</li> <li>8am: Fed’s Dudley and Kaplan Discuss Economic Development</li> <li>8:30am: Housing Starts, est. 1.18m, prior 1.18m;&nbsp; Building Permits, est. 1.25m, prior 1.3m</li> <li>2pm: U.S. Federal Reserve Releases Beige Book</li> </ul> <p><strong>DB's Jim Reid concludes the overnight wrap</strong></p> <p>China’s 19th Party Congress is front and centre today with headlines developing as we type. In his opening speech, President Xi Jinping started with the opening remark that “the prospects are bright while the challenges are also grave”, before reminding his audience of his achievements over the past five years, which included: poverty reduction, strengthening the one party rule, national security, cutting down pollution and the Belt and Road infrastructure initiatives. Further, his anti-graft drive has achieved an “important and irreversible’ momentum and he insisted that China has ‘zero tolerance” on corruption. On the long term, he wants to set the agenda for the country to be “a modern, socialist power” by 2050. On the economy, he says the liberalisation of both interest rate exchanges will continue as "the door China opened will not close but will open wider and wider". Elsewhere, he wants China to make the "quality and efficiency" of growth a priority and deepen supply side reforms as well as insisting on the need to reduce excessive capacity and debt ratios. On housing, he said "houses are for people to live in, not for speculation" and he promised to provide more homes through a variety of different channels. Before his formal address, Deputy central bank chief Pan also noted that he expects that the Yuan will have a more secure foundation after the congress allowing the central bank to push exchange rate market reforms.</p> <p>This morning in Asia, markets are trading marginally higher. The Nikkei (+0.12%), Hang Seng (+0.01%) and Chinese bourses (+0.2% to 0.5%) are up slightly, while the Kospi is down -0.12% as we type. For those who have missed it, our China Chief Economist Zhiwei Zhang published a prior note previewing the 19th National Congress meeting. Zhiwei notes that this week-long event actually kicks off a six-month process that continues with the Central Economic Working Conference (CEWC) in December and the National People’s Congress (NPC) in March next year. He notes that the current event is more about politics than setting economic policies, as the representatives will elect a group of leaders. Based on the age rule, five of seven incumbent members of the Politburo should retire as they are older than 67. Other important things to look out for include the CEWC setting GDP growth targets, while finally, the NPC will see a reshuffle of cabinet ministers and government posts.</p> <p>Over to the US, and the search for the next Fed Chair is apparently very close, with an announcement potentially as soon as 3 November according to sources familiar with the selection process (per Bloomberg). Earlier, Trump told reporters that “within those five (candidates) you’ll get the answer” and that “honestly I like them all”. The five candidates he is referring to are Mrs Yellen, Kevin Warsh, John Taylor, Jerome Powell and Gary Cohn. Elsewhere, Trump continued to rally support for his tax reforms, this time speaking at the Heritage Foundation and reiterating the need for lower corporate tax rates and that “let’s give our country the best Christmas present of all – massive tax relief”. </p> <p>Turning to the UK, Gilts outperformed yesterday with 10y yields down 6.1bp (Bunds -0.8bp, OATs -1bp; UST -0.3bp) but GBPUSD fell 0.46% following the combination of Brexit headlines and a slightly less hawkish tone from&nbsp; central bankers. Firstly, in BOE Governor Carney’s testimony to UK lawmakers, he has reiterated that the “majority of the committee (believe) some raise in rates over the coming months may be appropriate”, in part as the UK economy is running out of spare capacity. However, other new MPC members seem a bit less hawkish, with Deputy Governor Ramsden saying “I still think there is some slack in the economy” and noted he was not part of the majority of MPC members pushing for a rate increase. Elsewhere, Tenreyro noted that “we’re approaching a tipping point at which it would be necessary to remove some of that stimulus” but her decision on rates in the coming months will depend on how the economy evolves. Finally, Carney noted the “very limited amount of time” between now and March 2019 and that the Bank was preparing for the possibility of a “hard Brexit” without a transition period, although he conceded that an “agreement is in everyone’s interests”. The next BOE meeting is on 2 November and the odds of a rate hike fell 1.5ppt to 80.6% (per Bloomberg).</p> <p>Over to Brexit talks, where the stalemate has continued with rhetoric suggesting a reduced chance of a breakthrough at the EU Summit later this week. The EU negotiator Barnier noted Monday’s dinner with UK PM May has&nbsp; yielded little and that “we are ready to accelerate the rhythm, but to accelerate you need two”. On the other side, UK negotiator Davis has signalled his side is unlikely to make more offers until after the EU Summit, noting “let’s wait and see what they are before we make the next move” and that “we’re reaching the limits of what we can achieve without considerations of the future relationship”. That said, there is still hope, with the Council of the EU reportedly working on preparatory work on the future relationship with UK and aim to have a roadmap ready by December, although this is contingent on the EU deciding that UK has made sufficient progress on the divorce bill issue. Elsewhere, perhaps the Irish PM summed it up well, saying “it’s quite a difficult negotiation when people who want to leave EU in the UK don’t really seem to agree among themselves with what that actually means”. So for now, we continue to wait and see which side blinks first. </p> <p>Onto yesterday’s market performance, the Dow edged (+0.18% to 22,997) higher and touched an intraday high of 23,002, which was the sixth time the index passed a 1,000 increment in the last 12 months. Elsewhere, Nasdaq was broadly flat while S&amp;P 500 rose +0.07%. Within the S&amp;P, the healthcare sector rebounded (+1.31%) following a bipartisan deal to allow insurance subsidies for Obamacare to resume, while modest losses were led by the consumer staples and financials sector (-0.55%). Both Goldmans and Morgan Stanley’s results beat consensus with weaker trading income mainly offset by stronger revenue from investing and lending units (GS) and wealth management (MS) respectively. However, the share price performance diverged slightly with MS +0.37% and GS -2.61% on the day. Notably, the VIX rose above 10 yesterday (+0.4pts to 10.31). </p> <p>European bourses were broadly softer, with the Stoxx 600 (-0.25%), DAX (-0.07%) and FTSE (-0.14%) down slightly, while Spain’s IBEX was the one of the few higher (+0.35%). Turning to currencies, the US dollar index&nbsp; strengthened 0.20% while the Euro and Sterling fell 0.25% and 0.46% respectively. In commodities, WTI oil was broadly flat (+0.02%) yesterday but is trading slightly higher this morning, as tensions between Iraqi and Kurdish forces have reduced. Precious metals softened for the second consecutive day (Gold -0.82%; Silver -1.11%), while Copper retreated (-1.14%) from its 3 year high and other base metals (Zinc -3.07%; Aluminium -0.82%) also fell. </p> <p>Turning to other central bankers commentaries. In the US, the Fed’s Harker told the WSJ that he thinks one more rate hike is appropriate this year, but warned “we just have to be prudent and take our time” with his view dependent on the inflation readings. The Fed’s Kaplan reiterated his views, noting that softer inflation readings recently “may well be transitory” and that “it’s likely we’ll see greater evidence of this progress (rising inflation), so “as a consequence, it will be appropriate to continue the process of gradually removing monetary accommodation”. Elsewhere, he pointed out that the change in fiscal policy and structure reforms “could provide upside” for US economic growth.</p> <p>In Europe, ECB VP Constancio noted that the euro area is "more resilient" than last year", but that "in the present configuration of risks….(we) will have to take macro prudential policy much more seriously or they will face the risk of other financial crises that monetary policy cannot prevent.” Elsewhere, he noted that monetary policy, even when recalibrated, “will continue to keep a very accommodative stance”.</p> <p>Finally, back onto a topic that has gone quiet for a while. As per the Politico, special counsel Mueller’s team has interviewed President Trump’s former press secretary (who left in August) Sean Spicer back on Monday. He has been previously tasked with investigating potential Russian interference in the 2016 US Presidential election. For now, we await what eventually comes out from these investigations.</p> <p>Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the September IP was in line with market expectations at 0.3% mom (up for the first time since June), but the prior month reading was revised upwards by c0.2ppt. Elsewhere, the capacity utilization was slightly softer at 76% (vs. 76.2% expected). The September import price index came in higher at 0.7% mom (vs. 0.6% expected) but was partly offset with the export price index at 0.8% mom (vs. 0.5% expected). Finally, the NAHB housing market index was stronger than expectations at 68 (vs. 64).</p> <p>In the UK, the macro data was broadly in line with consensus. The September CPI was in line at 0.3% mom and 2.7% yoy (for core CPI) – steady on August and the joint highest since December 2011. The PPI was also in line at 0.2% mom and 3.3% yoy. Elsewhere, the RPI was slightly lower than expected at 0.1% mom (vs. 0.3%) and 3.9% yoy (vs. 4.0% expected), along with the house price index at 5% yoy growth (vs. 5.4% expected). Across Europe, the final reading of the Eurozone September CPI was unchanged at 0.4% mom and 1.5% yoy. Germany’s ZEW survey of the current situation was slightly lower than expected at 87 (vs. 88.5) along with expectations at 17.6 (vs. 20 expected). Finally, the October Eurozone ZEW survey on expectations continued to weaken from the recent peak back in June (37.7) to a still reasonable level of 26.7.</p> <p>Looking at the day ahead, the ECB’s Draghi, Coeure and Praet are all taking part at a Conference in Frankfurt. The Fed’s Dudley and Kaplan are also due to speak in the afternoon. Data will likely play second fiddle with the most notable releases being August/September employment data in the UK and September housing starts and building permits data in the US. The Fed’s Beige Book is also due out in the evening. Corporate earnings results on&nbsp; Wednesday include eBay and American Express.</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="800" height="450" alt="" src="" /> </div> </div> </div> 10yr government American Express Asia-Pacific ASX 200 Bank of England Bayern LB Beige Book BOE Bond Business CAD Canadian Dollar China Christian Democrats Communist Party Congress Copper Core CPI Corruption CPC National Congress CPI Crude Currency Department of the Treasury Deutsche Börse DJIA Dow 30 Economic growth Economy Equity Markets Euro European Central Bank European Central Bank European Union European Union Eurozone Eurozone federal government Federal Reserve Futures contract Germany Gilts Hang Seng 40 headlines Heritage Foundation Housing Market Housing Starts IBEX 35 Janet Yellen Japan Jim Reid Kospi Mario Draghi Mexico Middle East Middle East Monetary Policy Morgan Stanley MPC MSCI World NAHB NASDAQ national security Nikkei Nikkei 225 Obamacare People's Bank of China Precious Metals Price Action Prudential Renminbi S&P S&P 500 S&P/ASX 200 Security Council Spanish government SSE 50 STOXX Stoxx 600 Technical Indicators Testimony Topix Treasury Department U.S. Dollar Index U.S. Securities and Exchange Commission U.S. Treasury United Nations US Dollar Index US Federal Reserve VIX Volatility Warsh West Texas Yuan Wed, 18 Oct 2017 11:00:16 +0000 Tyler Durden 605534 at Xi Jinping's Speech: "Housing Is For Living Rather Than Speculation" <p>Xi Jinping delivered a <a href="">three and a half-hour speech </a>at the opening of China&rsquo;s 19<sup>th</sup> Party Congress, the once in five years mega-Communist Party gathering (<a href="">previewed here</a>), to herald a &lsquo;new era&rsquo; of power (a term he used 36 times), consolidating his position as perhaps the most influential Chinese leader in decades. While he did lay out&nbsp; guidelines to develop China in this &lsquo;new era&rsquo;, bottom line: Heavy in superlatives, light on specifics.</p> <p>It was the year&#39;s most carefully politically-staged global event, best understood by the related trivia gleaned from party officials. The drafting process involves 4,700 individuals, 59 organisations, reports from 25 think tanks, nine research committees and 6 discussion forums, hosted by Xi, to hear suggestions. Xi walked into the Great Hall of the people to marching band music with delegates clapping in time. When highlighted the role of Marxism in 21<sup>st</sup> century China, he was greeted by lots of applause from delegates.</p> <p><iframe allowfullscreen="" frameborder="0" height="281" src="" width="500"></iframe></p> <p>A room where everyone agrees, and nobody argues. In short: Marxism in action.</p> <p><img alt="" src="" style="width: 500px; height: 260px;" /></p> <p>Anyway&hellip;what about policy, economics and China&rsquo;s credit bubble?</p> <p>Obviously, not everything is said explicitly, so we are forced to employ the dark art of interpreting both what&rsquo;s said and what&rsquo;s not said. On that note&hellip;there has been speculation that Xi will take further action to contain the credit bubble after he&rsquo;s solidified his own position at the Congress. Xi vowed to continue to work to reduce the debt load and make further capacity cuts. This follows the head of the People&#39;s Bank of China, Zhou Xiaochuan&rsquo;s comment this week that Chinese companies have too much debt. Perhaps the most interesting question is how much significance should be attached to Xi&rsquo;s comment&nbsp; <strong>&quot;housing is for living rather than speculation&#39;&#39;</strong>&hellip; a soundbite which he reiterated.</p> <p>Talking of what was not said, there has been some discussion regarding the prominent place given to Jiang Zemin. Some journalists noted that Jiang implemented difficult economic reforms in the 1990s, unlike Xi&rsquo;s immediate predecessor, who was the architect of the credit boom. Maybe there&rsquo;s something in it, but it&rsquo;s very tenuous.</p> <p>Xi stated that China will &ldquo;deepen interest rate and exchange rate reform&rdquo; &ndash; which was directionally unhelpful for traders &ndash; and will boost the strength of state companies to defend against systemic risks. The Yuan gapped higher as Xi started speaking, but it probably &ldquo;had to.&rdquo;</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 281px;" /></a></p> <p>While the Yuan strengthened, the PBoC was undertaking its largest open market operation since 18 September 20177, injecting RMB 270 billion into the financial system. Xi repeated the government&rsquo;s mantra that (obviously) economic growth is not balanced, or efficient, innovation is poor and the real economy needs to be improved.</p> <p>There was no reference to economic growth targets, although Xi stated that quality of growth, rather than speed, is the priority. Most commentators are taking this to mean no change to 6.5% annual GDP growth. Maybe... but it&rsquo;s not certain.</p> <p>From an overseas perspective, Xi outlined the need to reduce entry barriers for foreign businesses by &ldquo;large scale&rdquo;, which made us wonder whether he&rsquo;s concerned about too little growth going forwards. In a truly bizarre claim, he stated that China wants to &ldquo;contribute to global ecological security&rdquo;, and complimented his nation for leading the global debate on climate change. Debating is one thing, we suppose.</p> <p>Corruption was, unsurprisingly, a major theme in the speech and is the biggest threat for the Communist Party, according to Xi. Having said that, progress has been made &quot;We have taken out tigers, swept flies and hunted down foxes&quot; and the Party will &ldquo;continue to purify, improve and reform itself.&rdquo; The Party members were encouraged &ldquo;resists pleasure seeking, inaction, sloth and problem avoidance.&rdquo;</p> <p>In the wake of Brexit and Catalonia, Xi made the veiled threat that &ldquo;opposing behaviors&rdquo; must be prevented from &ldquo;splitting the motherland.&#39;&#39; China would not allow any separation from China&rsquo;s territory, which obviously includes Taiwan.</p> <p>The longer-term plan is divided into periods. Between now and 2020, Xi said that China would complete the building of a moderately prosperous society. The realization of socialist modernization will be achieved after 15 years of hard work in 2035, with the &ldquo;golden era&rdquo; (our term) of prosperity by 2050. &quot;Socialism with Chinese characteristics is now flying high and proud for all to see.&quot; Xi claimed.</p> <p>Finally, Xi promised that female and ethnic minorities will be elevated in Chinese society, which seemed &ldquo;prescient&rdquo; given the observations of Bloomberg&rsquo;s Pete Martin in the auditorium. &ldquo;`Twelve women in red coats and four men in black coats fanning out to serve tea on stage -- perfectly synchronized. The four men are serving the leaders in the front row and the 12 women are serving those seated behind them.&#39;&#39;</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="625" height="341" alt="" src="" /> </div> </div> </div> China China Chinese communists Chinese people Communist Party Communist Party of China Congress Corruption Crown Prince Party Jiang Zemin Moderately prosperous society National Congress of the Communist Party of China People's Bank of China Renminbi Xi Xi Jinping Yuan Wed, 18 Oct 2017 10:07:50 +0000 Tyler Durden 605533 at CIA Urges Trump To Delay Release Of 3,000 Never-Before-Seen Documents On JFK Assassination <p><a href=""><em>Authored by Alex Christoforou via,</em></a></p> <p>More than 3,000 never-before-seen documents from the FBI, CIA, and Justice Department on the assassination of&nbsp;John F.&nbsp;Kennedy are scheduled be released, with <strong>many experts&nbsp;fearing that such a large release of secret JFK assassination documents will spur &ldquo;a new generation of conspiracy theories.&rdquo;</strong></p> <p><a href=""><img height="339" src="" width="600" /></a></p> <p>According to Roger Stone, <strong>the CIA is urging President Donald Trump to delay disclosing some of the files for another 25 years.</strong></p> <p>Roger Stone said in a post on his website&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;They must reflect badly on the CIA even though virtually everyone involved is long dead.&rdquo;</strong></p> </blockquote> <p><a href="">Newsmax</a>&nbsp;reports:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>More than 3,000 never-before-seen documents from the FBI, CIA, and Justice Department are set to be released, along with 30,000 that have only been partially released in the past. The document dump &ldquo;will simply fuel a new generation of conspiracy theories,&rdquo; write Philip Shenon and Larry J. Sabato.</p> <p>&nbsp;</p> <p>Sabato is the director of the University of Virginia Center for Politics and author of&nbsp;<a href=";ie=UTF8&amp;qid=1508196042&amp;sr=1-1&amp;linkCode=as2&amp;tag=newsmedi9a-20&amp;linkId=JWQX7Q4SOSP2L6BP"><strong>&ldquo;The Kennedy Half-Century&rdquo;</strong></a>&nbsp;and Shenon is a former reporter for the New York Times and author of,&nbsp;<strong><a href=";linkCode=as2&amp;tag=newsmedi9a-20&amp;linkId=JWQX7Q4SOSP2L6BP">&ldquo;A Cruel and Shocking Act: The Secret History of the Kennedy Assassination.&rdquo;</a></strong></p> <p>&nbsp;</p> <p><strong>The CIA is urging President Donald Trump to delay disclosing some of the files for another 25 years according to friend and political adviser Roger Stone but the National Archives would not say whether any agencies have appealed the release of the documents.</strong></p> </blockquote> <p><a href="" rel="noopener" target="_blank">According to The Gateway Pundit</a>&nbsp;Roger Stone and Gerald Posner, two&nbsp;<em>New York Times</em>&nbsp;bestselling authors who are polar opposites about who killed JFK, have joined together to urge Donald Trump to release all the remaining classified files on Kennedy&rsquo;s assassination.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>About 3,100 files are still sealed in the National Archives. Under the 1992 JFK Records Act, the Archives have until&nbsp;<span>October 26</span>&nbsp;to decide which of those files to publicly disclose.</strong></p> <p>&nbsp;</p> <p>Some of the classified documents include a CIA personality study of Oswald, top-secret testimony of former CIA officers to congressional committees, transcripts of interrogations with Soviet defector and Oswald handler Yuri Nosenko, letters about the case from J. Edgar Hoover and Jackie Kennedy, the CIA file on Jack Wasserman, the attorney for New Orleans mob boss Carlos Marcello, and the operational file of E. Howard Hunt, career spy and Watergate burglar.</p> <p>&nbsp;</p> <p><strong>Roger Stone, in his bestselling 2013&nbsp;<em>The Man Who Killed Kennedy: The Case Against LBJ,&nbsp;</em>set forth the case that LBJ was the mastermind of plot that included the CIA, the Mob and Big Texas Oil to kill Kennedy.</strong></p> <p>&nbsp;</p> <p>Gerald Posner, in his 1993 bestselling finalist for the Pulitzer for History,&nbsp;<em>Case Closed: Lee Harvey Oswald and the Assassination of JFK</em>, concluded that the Warren Commission conclusions are correct and Oswald acting alone had killed Kennedy.</p> <p>&nbsp;</p> <p><strong>While they might not agree on who killed Kennedy, Stone and Posner are longstanding advocates for the release of all the government files on the assassination.</strong></p> <p>&nbsp;</p> <p>&ldquo;These files should have been released long ago,&rdquo; says Posner. &ldquo;The government does this all the time, over classified documents and then holds on to them for decades under the guise of &lsquo;national security.&rsquo; <strong>All the secrecy just feeds people&rsquo;s suspicions that the government has something to hide and adds fuel to conspiracy theories.&rdquo; </strong>Posner is convinced the case will still be closed when the last document is made public.</p> <p>&nbsp;</p> <p><strong>&rdquo;I know CIA Director Pompeo is urging the President to delay release of these records for another 25 years,&rdquo; said Stone. &ldquo;They must reflect badly on the CIA even though virtually everyone involved is long dead.&rdquo; Stone believes the evidence supporting the case in his book is still hidden somewhere in government files.</strong></p> <p>&nbsp;</p> <p>Both authors called on President Trump &ndash; who is empowered to make the final decision should the National Archives or CIA balk on releasing all the files &ndash; to opt for transparency.</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="743" height="420" alt="" src="" /> </div> </div> </div> Assassination of John F. Kennedy Central Intelligence Agency Central Intelligence Agency Department of Justice Donald Trump E. Howard Hunt FBI Federal Bureau of Investigation Films Gerald Posner JFK John F. Kennedy Lee Harvey Oswald national security New Orleans New York Times Politics President John F. Kennedy Assassination Records Collection Act SPY Testimony Transparency United States University of Virginia Center for Politics Warren Commission Warren Commission Yuri Nosenko Wed, 18 Oct 2017 09:25:00 +0000 Tyler Durden 605522 at Marc Faber Racist Diatribe Costs Him CNBC, Fox Slots; Sprott Board Seat <p><em><strong>Update: </strong></em>as previewed earlier, Sprott announced that at the request of the Board of Directors and Sprott management, <strong>Marc Faber has resigned as a director of the Company effective immediately.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“The recent comments by Dr. Faber are deeply disappointing and are completely contradictory with the views of Sprott and its employees,” said Peter Grosskopf, CEO of Sprott. “We pride ourselves on being a diverse organization and comments and behavior of this sort will neither be condoned nor tolerated. We are committed to providing an inclusive workplace for all of our employees and we extend the same respect to our clients and investors.”</p> </blockquote> <p>Separately, both CNBC and Fox Business Network, cable channels where he had appeared in the past, said they won't invite him on in the future.</p> <p>* * * </p> <p>Marc "Dr. Doom" Faber is in trouble, only this time it's not for yet another doomsday forecast which hasn't come true, but for launching into a racially charged diatribe telling subscribers to his newsletter that he was glad that “white people populated America, and not the blacks.”</p> <p>The eccentric veteran investor and former Drexel director, who predicted the 1987 stock market crash and has been a fixture on financial television, claimed in his October 3 monthly newsletter that “<strong>the U.S. would look like Zimbabwe</strong>” if the country had been settled by black people instead of whites. In the latest edition of his 15-page investor letter, "The Gloom, Boom &amp; Doom Report," Faber argued against the removal of confederate statues, saying the only crime of the men those monuments honored was to defend slavery and that the controversy distracts from more important <a href="">debates, according to Bloomberg</a>. There, inbetween quotes from George Orwell and historian Edward Gibbon and his opinions on universal basic income, Faber wrote the following:</p> <p>"<strong>And thank God white people populated America, and not the blacks. Otherwise, the US would look like Zimbabwe, which it might look like one day anyway, but at least America enjoyed 200 years in the economic and political sun under a white majority</strong>."</p> <p>He then added that <strong>"I am not a racist, but the reality — no matter how politically incorrect — needs to be spelled out."</strong></p> <p><a href=""><img src="" width="500" height="245" /></a></p> <p><em>Source: @<a href="">Beardedmiguel</a></em></p> <p>In the newsletter, Faber's comments also address the confrontation in Charlottesville, Virginia, where violence sparked a national debate over race and monuments that honor prominent Confederate figures that Faber decided to weigh in on. Faber called the monuments "statues of honourable people whose only crime was to defend what all societies had done for more than 5,000 years: keep a part of the population enslaved."</p> <p>Asked for a comment by the WSJ Faber responded in an e-mail: “I am naturally standing by this comment since this is an undisbutable (SIC) fact.”</p> <p>Reached for <a href="">comment by CNBC</a>, Faber similarly did not back away from his statements: "If stating some historical facts makes me a racist, then I suppose that I am a racist. For years, Japanese were condemned because they denied the Nanking massacre." In addition to the brief statement, he sent a link to a USA Today story titled, "Banned in Biloxi, 'To Kill a Mockingbird' raises old censorship debate," focusing on the Harper Lee classic.</p> <p>His comments drew an immediate reaction, and as <a href="">Bloomberg reports</a>, Sprott CEO Peter Grosskopf said will ask the board to demand the immediate resignation of Marc Faber, who is a director on Sprott's board. Grosskopf added that he had already spoken to the company chairman about Marc Faber.</p> <p>Grosskopf also said that the company is “deeply disappointed” and shocked by Faber’s comments. </p> <p>“We take pride in the fact that we are a global organization with a racially inclusive employee, client and investment base. Our policies in that regard are crystal clear and well known. As such these comments and thinking are completely unacceptable and we will be taking immediate steps to distance ourselves from Mr. Faber and request his resignation from our board."</p> <p><a href="">According to the WSJ</a>, the comments sparked a broad backlash from investors and market commentators Tuesday. <strong>CNBC and Fox Business Network, cable channels where he had appeared in the past, said Tuesday they don’t intend to book him in the future.</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="800" height="431" alt="" src="" /> </div> </div> </div> Board of Directors and Sprott CNBC Faber Finance Fox Business George Orwell Marc Faber Market Crash Reality Social Issues Surname Television in the United States Wed, 18 Oct 2017 09:10:13 +0000 Tyler Durden 605493 at "If Catalonia Fails, We All Fail..." <p><a href=""><em>Authored by Mike Krieger via Liberty Blitzkrieg blog,</em></a></p> <p><em>While I&rsquo;ve touched on the Catalan independence movement in several recent posts, I want to make one thing clear from the start. I don&rsquo;t have a strong opinion on whether or not independence is the right move for the region and its people. It would be completely inappropriate for me, a U.S. citizen living in Colorado, to lecture people 5,000 miles away on how they should organize their political lives.</em></p> <p><a href=""><em><img alt="" src="" style="width: 559px; height: 288px;" /></em></a></p> <p><strong>While I don&rsquo;t have an opinion on how Catalans should vote, I unwaveringly support their right to decide the issue for themselves. When it comes to the issue of voting and referendums, we&rsquo;ve entered a topic far bigger than Catalonia, Spain, or even Europe itself. When it comes to the issue of political self-determination, we&rsquo;re talking about an essential human right which should be seen as inherent to all of us, everywhere.</strong></p> <p><a href=""><img alt="" src="" style="width: 560px; height: 332px;" /></a></p> <p><strong>The Catalan push for a right for vote on independence should be seen as part of a much larger push toward greater self-determination that humans will demand in increasingly large numbers in the years ahead. The time is ripe for us as a species to insist on a transition toward a more voluntary, sane, peaceful and decentralized process of political organization. </strong>This is an idea whose time has come, and I thank the Catalan people from the bottom of my heart for brining it to the fore, and also for conducting themselves in such a noble, courageous and thoughtful manner. You are leading the way for the rest of us.</p> <p><strong>The key reason Madrid is wrong on this issue relates to its insistence that Spain must sustain itself in its current form forever.</strong> Since Spain is a manmade political creation, this is the modern equivalent of claiming a &ldquo;divine right of kings,&rdquo; but rather than bestowing this archaic conception on individual rulers, it&rsquo;s bestowed upon a nation-state. This is not just an absurd position, it&rsquo;s patently anti-human. As I discussed in the post,<strong>&nbsp;<a href="" rel="bookmark noopener" target="_blank" title="Permanent Link to It’s Time to Question the Modern Nation-State Model of Governance">It&rsquo;s Time to Question the Modern Nation-State Model of Governance</a></strong>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>As things stand today, humans essentially have two choices when it comes to political life. We either accept the nation-state we&rsquo;re born into and play the game to the best of our advantage, or we try to become citizens of another country with values that more align with our own. The only way to really shatter existing political power structures and form new ones is through violent revolution or war, which is an insane way of reorganizing matters of human governance.&nbsp;One of Spanish Prime Minister Mariano Rajoy&rsquo;s key arguments in casting the Catalan referendum as illegal is that Spain is an indivisible nation under the 1978 constitution. Let&rsquo;s think about what this means in practice.</em></strong></p> <p>&nbsp;</p> <p><strong><em>Anyone who&rsquo;s spent any time in Spain understands how culturally and linguistically distinct many of the regions are when compared to Madrid. These are differences that go back centuries and can&rsquo;t be brushed off by a constitution created a few decades ago. The idea that these various regions must be part of a centralized Spain even if the people within the regions want political autonomy is ethically preposterous, as well as authoritarian and evil in every sense of the word. If done properly, human governance should always be a voluntary arrangement. If an overwhelming majority of culturally distinct people within any nation-state decide the super state is no longer working for them, they should have every right to leave. Anything else is bondage.</em></strong></p> </blockquote> <p>If humans are going to evolve into better forms of political organization rooted in voluntary associations, we must first reject the clear authoritarian nature of our current political environments. All of us are randomly born into nation-states which we never chose in the first place and told to accept them as eternal structures. The people of Catalonia have realized the absurdity of this and are taking a brave stand on the issue. Anyone who genuinely believes in human rights must stand with the people of Catalonia and support their right to a referendum should they choose to have one.</p> <p>With political philosophy out of the way, I want to move on to a discussion of strategy and why I think those leading the push for Catalan independence have played their hand brilliantly thus far.</p> <p>First, leadership&rsquo;s emphasis on a peaceful movement in the face of thuggish violence and aggression by the Spanish state is of the utmost importance. For an independence movement to succeed and create a better, more free society afterwards, things must be done in a conscious way. <u><strong>As I&rsquo;ve said many times before, ends never justify the means. The means are everything.&nbsp;</strong></u>Moreover, by exposing the opposition as goons, you foster increased solidarity amongst your neighbors who may have been on the fence when it comes to independence. You also create passionate allies across the world. The Catalan people have succeeded remarkably on all these fronts.</p> <p>Immediately following the October 1st referendum, I was concerned that Catalan President Carles Puigdemont would make a mistake by prematurely declaring independence. This would&rsquo;ve been a huge error since while 90% voted for independence, only 40% or so voted. While such a lopsided result certainly makes the case that Catalans deserve a vote for self-determination, it&rsquo;s not a clear mandate given the low turnout. If the people of Catalonia want to succeed in their push, Madrid must be seen as the unreasonable &mdash; and very public &mdash; aggressor in virtually every move on the chessboard. By not prematurely declaring independence Catalonia pushed the move back into Madrid&rsquo;s court, which is wise since the government there has a habit of making really stupid decisions.</p> <p><strong>Unsurprisingly, it didn&rsquo;t take long for Spain to make yet another blunder with yesterday&rsquo;s imprisonment without bail of two of Catalonia&rsquo;s independence leaders.</strong></p> <p><a href=";feedName=worldNews&amp;utm_source=Twitter&amp;utm_medium=Social&amp;utm_campaign=Feed%3A+Reuters%2FworldNews+%28Reuters+World+News%29" rel="noopener" target="_blank"><em>Reuters</em></a> reported:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Spain&rsquo;s biggest political crisis in decades worsened on Monday night when Madrid&rsquo;s High Court jailed the heads of Catalonia&rsquo;s two main separatist groups pending an investigation for alleged sedition.</em></p> <p>&nbsp;</p> <p><em>The Catalan government accused Madrid of taking &ldquo;political prisoners&rdquo; and one of the groups has called for peaceful demonstrations around Catalonia on Tuesday, with the biggest expected to begin in Barcelona in the evening.</em></p> <p>&nbsp;</p> <p><em>Catalan leader Carles Puigdemont, in a tweet following the detentions, said: &ldquo;Sadly, we have political prisoners again.&rdquo;</em></p> <p>&nbsp;</p> <p><em>The phrase was an allusion to the military dictatorship under Francisco Franco, when Catalan culture and language were systematically suppressed. It carries an emotional resonance given fascism is still a living memory for many Spaniards.</em></p> </blockquote> <p><strong>Knowing that jail was a possibility,&nbsp;Omnium chief Jordi Cuixart had prerecorded a video message. It&rsquo;s short, powerful and inspiring.</strong></p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p><strong>If you think you&rsquo;ve seen enough, brace yourselves because it may get far more chaotic in the days ahead. If Spain&rsquo;s Prime Minister Mariano Rajoy goes through with his threat to invoke Article 155 on Thursday should Catalonia refuse to clarify its position on independence (it won&rsquo;t), it&rsquo;ll be the equivalent of a political nuclear bomb going off in Europe.</strong></p> <p>From the <a href=";utm_source=Twitter&amp;utm_medium=AP" rel="noopener" target="_blank"><em>AP</em></a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Spain&rsquo;s deputy prime minister says that Catalonia&rsquo;s leader didn&rsquo;t give an adequate response in his letter about the region&rsquo;s independence and has until Thursday to comply with the country&rsquo;s laws.</em></p> <p>&nbsp;</p> <p><em>Carles Puigdemont&rsquo;s letter, issued two hours before a Monday deadline, didn&rsquo;t clarify whether he in fact declared Catalonia&rsquo;s independence from Spain. He called for talks with Spain&rsquo;s government.</em></p> <p>&nbsp;</p> <p><em>Spain&rsquo;s central government wanted a simple &ldquo;yes&rdquo; or &ldquo;no&rdquo; answer from Puigdemont, something that Spanish Deputy Prime Minister Soraya Saenz de Santamaria said that he didn&rsquo;t provide.</em></p> <p>&nbsp;</p> <p><em>Saenz de Santamaria said in an address to reporters that &ldquo;it wasn&rsquo;t very difficult to say yes or no. That was the question that was asked and the response shouldn&rsquo;t be complicated.&rdquo;</em></p> <p>&nbsp;</p> <p><em>She said he has until Thursday morning to fall in line, or faces the possibility of Spain activating Article 155 of the Constitution which would allow the central government to take over parts of Catalonia&rsquo;s self-governance.</em></p> </blockquote> <p><strong>Should the Spanish government activate Article 155, it&rsquo;ll mark the culmination of a perfectly played independence movement by the Catalans. </strong>This isn&rsquo;t to say that the road to independence, or more autonomy, will be smooth or easy from that point forward, but it will create a sense of increased solidarity amongst the Catalan people that wasn&rsquo;t as widespread before October 1st. Many of those who opposed independence before, or were on the fence, will come around to standing with their friends and neighbors in the face of unacceptable aggression from Madrid. The road may be a long one, but invoking Article 155 will mark the beginning of the end for Madrid.</p> <p>As I mentioned at the beginning of this post,<strong> the issue of political self-determination is much bigger than Catalonia and Madrid. </strong></p> <p><a href=""><img alt="" src="" style="width: 560px; height: 303px;" /></a></p> <p><strong>The Catalan struggle represents just one battle in an overall human push for freedom and voluntary associations. It&rsquo;s a fight in a much larger war that absolutely must be won for liberty and progress to blossom on this planet.</strong> A battle between decentralization, freedom and voluntary action, against centralization, authoritarianism and coercion.</p> <p>You know where I stand.</p> <p>*&nbsp; *&nbsp; *</p> <p><strong><em>If you liked this article and enjoy my work, consider becoming a&nbsp;monthly&nbsp;<a href="" rel="noopener" target="_blank"><span style="color: #ff6600;">Patron</span></a>,&nbsp;or visit our&nbsp;<a href="" rel="noopener noreferrer" target="_blank">Support&nbsp;Page</a>&nbsp;to show your appreciation for&nbsp;independent content creators.</em></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="703" height="362" alt="" src="" /> </div> </div> </div> Autonomous communities of Spain Carles Puigdemont Catalan government Catalan independence Catalan independence movement Catalan independence referendum Catalan language Catalan self-determination referendum Catalonia Fail Generalitat de Catalunya Government of Catalonia Independence referendums Madrid’s court Madrid’s High Court Politics Politics of Catalonia Reuters Spain’s government Spanish government Wed, 18 Oct 2017 09:00:00 +0000 Tyler Durden 605530 at "It's Sad As Hell" - Swedish Ambassador Admits, We're "In The Process Of Dismantling Democracy" <p>Sweden&#39;s new ambassador to Iceland has sparked a major controversy after warning that <strong>Sweden is &quot;in the process of dismantling democracy&quot; </strong>and could be on a <strong>slippery slope towards technocracy or a dictatorship.</strong></p> <p><a href=""><img height="304" src="" width="600" /></a></p> <p>Håkan Juholt, a former leader of the centre-left Social Democrat party and <strong>ambassador to Iceland since September, </strong>made the comments in an interview with the&nbsp;<a href="" target="_blank">Svenska Dagbladet </a>newspaper.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&quot;How old is your son? Four?&quot; </strong></em>he asks the reporter.</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;"><strong>&quot;When he is old he won&#39;t be living in a democracy but in a technocracy, or a dictatorship. It&#39;s sad as hell. I am sorry to say it, but I am 100 percent sure. We are in the process of dismantling democracy.&quot;</strong></span></em></p> </blockquote> <p>Later in the interview, he says:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;I don&#39;t think the threat is a dictatorship with tanks rolling on Sergel&#39;s Square (a well-known square in central Stockholm), but an expert rule where we do not let the citizens&#39; values govern the country.</strong> Democracy is slipping through our fingers. Fewer people want to be elected, the parties are toning down their ideology.</p> <p>&nbsp;</p> <p><strong>Sure, I see a risk that it may become a dictatorship in the long run.&quot;</strong></p> </blockquote> <p>His brutal honesty in a diplomatic role appears to have ruffled more than a few feathers...</p> <p><a href=";utm_medium=twitter"><em>As The Local reports</em></a>, Juholt did not elaborate on the comments, which have sparked criticism in Sweden.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;It&#39;s remarkable. It is the role of ambassadors, and the role of the government, to deliver an accurate image of our country and promote our country in the world,&quot; </strong>Culture and Democracy Minister Alice Bah Kuhnke told the TT newswire, but said it was up to the Foreign Minister to comment further.</p> <p>&nbsp;</p> <p>Margot Wallström responded she <strong>would not &quot;argue with one of my ambassadors&quot; in public.</strong></p> <p>&nbsp;</p> <p><strong>&quot;He will probably have to explain his thoughts himself,&quot; </strong>she said, speaking to TT at a meeting of EU foreign ministers in Luxembourg.</p> <p>&nbsp;</p> <p><strong>&quot;He will probably also soon learn, I would think, what it means to be an ambassador.&quot;</strong></p> </blockquote> <p>All of which is very odd because the establishment told then-candidate-Trump how utopian Sweden was when he criticized 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="634" height="321" alt="" src="" /> </div> </div> </div> Alice Bah Kuhnke Democracy European Union Government Government of Sweden Iceland Margot Wallström Newspaper Politics Politics Social Democrat party Technocracy Wed, 18 Oct 2017 08:15:00 +0000 Tyler Durden 605472 at The Countries Most (& Least) Satisfied With 'Democracy' <p>Across the globe, the spread of right- and left-wing populism and authoritarian politics have<strong> shaken the very foundations of democracy.</strong><a href=""> </a></p> <p><a href="">As Statista&#39;s Niall McCarthy notes,</a> a new survey from&nbsp;<a href="" target="_blank">Pew Research</a>&nbsp;has found that <strong>people across the globe are generally unhappy with the functionality of their political systems, though levels of satisfaction with democracy vary hugely between countries</strong>.</p> <p>As can be seen from the following infographic which shows a selection of countries from the survey, <strong>people in&nbsp;<a href="" target="_blank">India</a>&nbsp;have tremendous faith in democracy</strong>. 79 percent of those polled said they are satisfied with the way democracy is working in India compared to 11 percent who are dissatisfied.&nbsp;<strong><a href="" target="_blank">Germany</a>&nbsp;also recorded a high level (73 percent) of satisfaction with democracy. </strong></p> <p><a href="" title="Infographic: The Countries Most &amp; Least Satisfied With Democracy | Statista"><img alt="Infographic: The Countries Most &amp; Least Satisfied With Democracy | Statista" height="428" src="" width="600" /></a></p> <p><em>You will find more statistics at <a href="">Statista</a></em></p> <p><strong>In many other developed countries, however, faith is waning.</strong></p> <p>In the United Kingdom and Japan, 47 percent of people are not satisfied with how democracy is working in their countries while in the U.S., that rises to 51 percent. France, South Korea and Brazil all recorded dissatisfaction levels of 65 percent or higher... <strong>but Greece tops the charts with only 21% of its citizenry &#39;satisfied&#39; with the weay democracy is working.</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="734" height="401" alt="" src="" /> </div> </div> </div> Brazil Classical Greece Democracy Elections France Germany Greece India Japan Political philosophy Politics Politics Populism Thought United Kingdom Wed, 18 Oct 2017 07:30:00 +0000 Tyler Durden 605529 at Carney Reveals Europe's Potential Achilles Heel in Brexit Talks <p>This morning, BoE Governor Mark Carney discussed the risks of a hard Brexit during his testimony to the UK Parliamentary Treasury Committee. There was renewed weakness in Sterling during his testimony.</p> <p><a href=""><img alt="" height="208" src="" width="454" /></a></p> <p>Ironically, given the fall in Sterling, Carney explained why Europe&rsquo;s financial sector is more at risk than the UK from a &ldquo;hard&rdquo; or &ldquo;no-deal&rdquo; Brexit. <strong>We wonder whether Juncker and Barnier appreciate the threat that a &ldquo;no-deal&rdquo; Brexit poses for the EU&rsquo;s already fragile financial system?</strong></p> <p>When asked does the European Council &ldquo;get it&rdquo; in terms of potential shocks to financial stability, Carney diplomatically commented that &ldquo;a learning process is underway.&rdquo; Having sounded alarm bells about clearing in his last Mansion House speech, he noted &ldquo;These costs of fragmenting clearing, particularly clearing of interest rate swaps, would be born principally by the European real economy and they are considerable.&rdquo;</p> <p>Calling into question the continuity of tens of thousands of derivative contracts, he stated that it was &ldquo;pretty clear they will no longer be valid&rdquo;, that this &ldquo;could only be solved by both sides&rdquo; and has been &ldquo;underappreciated&rdquo; by Europe. Moving on to the possibility that there might not be a transition period, Carney had a snipe at Europe for its lack of preparation &ldquo;We are prepared as we should be for the possibility of a hard exit without any transition&hellip;<strong>there has been much less of that done in the European Union.&rdquo;</strong></p> <p>Maybe it&rsquo;s Europe, not the UK, that needs the transition period most.</p> <p>In Carneys view &ldquo;It&rsquo;s in the interest of the EU 27 to have a transition agreement. Also, in my judgement given the scale of the issues as they affect the EU 27, that there will ultimately be a transition agreement. There is a very limited amount of time between now and the end of March 2019 to transition large, complex institutions and activities&hellip;If one thinks about the implementation of Basel III<strong>, we are alone in the current members of the EU in having extensive experience of managing the transition for individual firms of various derivative and risk activities from one jurisdiction back into the UK. That tends to take 2-4 years</strong>. Depending on the agreement, we are talking about a substantial amount of activity.&rdquo;</p> <p>Returning to the theme of financial stability, he stated &ldquo;As a general thing, in an uncooperative outcome, at least initially, the UK will be long financial services. We will have more capacity, capital, individuals, collateral in the UK. The EU will be short of financial services because not all of that capacity will be able to go across. The entire economic impacts are greater for the UK but, from a financial stability perspective, they are greater for the EU.&rdquo;</p> <p>On further questioning, Carney outlined the other two major issues, along with derivatives and wholesale banking, which would be affected, i<strong>.e. cross-border provision of insurance (UK domiciled entities would be unable to pay out) and data protection and transfer (there is more data in the UK which is relevant to the EU than vice versa). </strong></p> <p>Summing up, Carney stated &ldquo;<strong>These issues are bigger for Europe than they are for us, but they&rsquo;re material for us</strong>.&rdquo; That comment prompted the following question <strong>&ldquo;In which case we have much more leverage in order to get a deal</strong>?&rdquo; The diplomatic reply was &ldquo;I wouldn&rsquo;t want to use financial stability issues as leverage. I wouldn&rsquo;t want them to be addressed in a bloodless technocratic way in the interests of all the citizens.&rdquo; Didn&rsquo;t he just describe Juncker&rsquo;s modus operandi.</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="780" height="468" alt="" src="" /> </div> </div> </div> BOE Brexit Brexit negotiations Currency Derivative Euro Europe European Council European Union European Union European Union Euroscepticism in the United Kingdom Mark Carney Testimony UK Parliamentary Treasury Committee Withdrawal from the European Union Wed, 18 Oct 2017 06:43:33 +0000 Tyler Durden 605520 at Could the Next Fed Appointment Crush the Housing Market? <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">As the end of Federal Reserve Chairwoman Janet Yellen’s first term approaches, financial markets are beginning to digest the increased likelihood that US President Donald Trump will opt to appoint a more hawkish individual to the position.&nbsp; Even though the Federal Reserve is largely expected to continue tightening monetary policy over the coming months as it pares down the balance sheet and contemplates a dovish hike, Trump’s appointment could send shockwaves through the housing market.&nbsp; </span></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">One of the nastier side effects of operating at or near the zero-bound for interest rates has been the rapid expansion of asset valuations.&nbsp; Lower interest rates encourage individuals and companies to finance their purchases and then reinvest for more aggressive returns. However, this rapid valuation expansion has not been limited strictly to financialized assets, but also physical assets like real estate.&nbsp; When seen in the context of the more hawkish leanings of Trump’s recent Fed Chair interviewees, the Administration’s next Fed appointment could pose the risk of a serious correction across asset classes.</span></p> <p class="MsoNormal" style="line-height: 150%;"><strong><span style="font-size: 14.0pt; line-height: 150%;">Fed Frontrunners Exhibit More Hawkish Bent</span></strong></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">Financial news outlets have been rife with reports covering the potential picks for Fed Chairman, with two of the leading candidates including Economist John Taylor and former <a href="">Federal Reserve Governor Kevin Warsh</a>.&nbsp; Taylor, who currently serves as an economics professor at Stanford University, received high marks from Trump according to a Bloomberg report on the matter.&nbsp; Trump was purportedly very impressed with his credentials, though unlike other candidates, Taylor is among the fiercest advocates of having policy measures closely reflect economic conditions.&nbsp;&nbsp; </span></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">The “Taylor Rule”, titled after the economist, stipulates rates should rise when inflation is running at an elevated pace or unemployment is below the “full employment” threshold and should fall in the opposite scenario.&nbsp; Applying this set of rules to current economic conditions indicates that the key <a href="">Fed Funds rate should be 3.74%</a> to reflect high levels of employment and rising prices.&nbsp; At nearly 3 times the present rate, a selection of John Taylor to chair the Fed could rapidly dampen overextended valuations in equities and the housing market.&nbsp; Already his interview with Donald Trump caused a palpable dip in gold prices considering his overtly hawkish stance.</span></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">By comparison, Kevin Warsh has also advocated for a tighter monetary policy regime, greater deregulation, and a general makeover of the Central Bank.&nbsp; His attitude towards reform has won him positive mentions as well.&nbsp; However, his overall degree of hawkishness and stated desire to overhaul the inflation target could put him at the epicenter of a dramatic policy shift that departs from the more cautious approach of current Chair Janet Yellen.</span></p> <p class="MsoNormal" style="line-height: 150%;"><strong><span style="font-size: 14.0pt; line-height: 150%;">Factors Outside the Fed’s Control</span></strong></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">While easy to label the rebuilding efforts in Texas and Florida as positive for the overall housing market, this deals more with the supply angle than demand.&nbsp; On the buy side, a Fed determined to raise interest rates will assuredly presage rising mortgage costs which could in turn subject buyer interest to some downside as financing costs climb.&nbsp; Though it is tempting to cite the <a href="">foreclosure rate</a> at an 11-year low as a sign of strength, it does not necessarily imply that the housing market is on stable footing, especially as prices reach past the realm of affordability.</span></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">Considering income growth has kept nowhere near the same pace as price growth for homes according to the monthly Case-Shiller home price index, the lack of affordable solutions may be another factor that hurts demand and concurrently weighs on pricing.&nbsp; For the year through July, average hourly earnings climbed by 2.50% while housing prices of 20 major US metropolitan areas increased by 5.80% over the same period. With price growth outpacing wages by such a significant margin, the surge in values should be a worrying sign for prospective buyers thinking about diving in while <a href="">mortgage rates</a> remain not far from record lows.</span></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">However, a more concerning indication apart from unaffordability is the degree to which flipping has reemerged.&nbsp; The move is eerily reminiscent of the years leading up to the last financial crisis as lending standards are relaxed.&nbsp; House flipping reached the <a href="">highest point since 2007</a> during the second quarter of 2017 and nearly 35% of the transactions were accompanied by mortgages.&nbsp; Even Goldman Sachs is getting into the flipping game with its recent <a href="">acquisition of Genesis Capital</a> LLC, a move designed to help the institution build a bigger presence in the lending sphere.&nbsp; Should mortgage rates rise in tandem with interest rates, it could spell doom for this substantial portion of residential real estate activity.</span></p> <p class="MsoNormal" style="line-height: 150%;"><strong><span style="font-size: 14.0pt; line-height: 150%;">The Fed as the Deciding Factor</span></strong></p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">With the shortlist for the next Federal Reserve Chair realistically narrowed down to 5 candidates, those under consideration for the job have significantly more hawkish leanings than current Chair Janet Yellen and her predecessor Ben Bernanke.&nbsp; While ultimately housing prices are a function of the interaction of supply and demand, demand largely behaves inverse to interest rates.&nbsp; As rates climb, mortgage costs will echo the gains, potentially reducing interest.&nbsp; Should demand fall, housing prices are likely to experience a correction as well after a near 8-year unabated rise in values.&nbsp; Considering the unaffordability aspect and the degree of house flipping, the approaching Fed appointment has a higher propensity to cause a downturn compared to another leg of the ongoing housing market rally.</span></p> <p class="MsoNormal" style="line-height: 150%;">&nbsp;</p> <p class="MsoNormal" style="line-height: 150%;"><span style="font-size: 14.0pt; line-height: 150%;">&nbsp;</span></p> Ben Bernanke Ben Bernanke Business Case-Shiller Donald Trump Economy Federal funds rate Federal Reserve Federal Reserve System Fellows of the Econometric Society Finance Florida goldman sachs Goldman Sachs Great Recession Housing Market Housing Prices Interest rates Janet Yellen Janet Yellen Kevin Warsh Monetary Policy Money Mortgage loan Real estate Stanford University The Economist Unemployment United States housing bubble US Federal Reserve Warsh Wed, 18 Oct 2017 06:10:01 +0000 financedude85 605532 at