With the apparent goal of 'protecting civilians' from ISIS and Syria's al-Assad, the US and Turkey appear to be close to agreeing on the creation of a no-fly-zone along a portion of the Syrian border. As WSJ reports, U.S. and Turkish officials have narrowed their differences over a joint military mission in Syria that would give the U.S. and its coalition partners permission to use Turkish air bases to launch strike operations against Islamic State targets across northern Syria. The no-fly-zone would provide sanctuary to Western-backed opposition forces and refugees. As Bloomberg notes, this is a significant reversal of Obama's earlier policy (fearing it would be a significant strain on the U.S. Air Force and put fliers in mortal danger) pushing US closer to outright proxy war with Russia via direct confrontation with al-Assad's airforce.
- Moody’s Downgrades Japan’s Credit Rating (WSJ)
- China Factory Gauge Drops as Shutdowns Add to Slowdown (BBG)
- Euro zone factory growth stalls in November as new orders sink (Reuters)
- Espírito Santo Faces Money-Laundering Investigations (WSJ)
- Oil at $40 Possible as Market Transforms Caracas to Iran (BBG)
- Hong Kong warns protesters not to return after clashes close government HQ (Reuters)
- Bond Secrets Decoded 9,539 Miles From Wall Street in Lot (BBG)
- Ruble Rally Turns to Rout as Fortunes Tied to Sinking Oil (BBG)
- Loans Made in Blink as Banks, Funds Vie for LendingClub Clients (BBG)
The precipitous decline in the price of oil is perhaps one of the most bearish macro developments this year. We believe we are entering a “new oil normal,” where oil prices stay lower for longer. While we highlighted the risk of a near-term decline in the oil price in our July newsletter, we failed to adjust our portfolio sufficiently to reflect such a scenario. This month we identify the major implications of our revised energy thesis. The reason oil prices started sliding in June can be explained by record growth in US production, sputtering demand from Europe and China, and an unwind of the Middle East geopolitical risk premium. The world oil market, which consumes 92 million barrels a day, currently has one million barrels more than it needs.... Large energy companies are sitting on a great deal of cash which cushions the blow from a weak pricing environment in the short-term. It is still important to keep in mind, however, that most big oil projects have been planned around the notion that oil would stay above $100, which no longer seems likely.
While the media continue to just about exclusively paint a picture of recovery and an improving economy, certainly in the US – Europe and Japan it’s harder to get away with that rosy image -, in ordinary people’s reality a completely different picture is being painted in sweat, blood, agony and despair. Whatever part of the recovery mirage may have a grain of reality in it, it is paid for by something being taken away from people leading real lives.
The executive actions on immigration announced last week look likely to have only a modest economic effect, because, as Goldman Sachs explains, most of the individuals eligible for the programs are already in the US and, in most cases, are likely already working. That said, Goldman estimates that the changes should increase the labor force by about 300k over the next couple of years and that possible wage gains among those gaining work authorization would increase average wages by less than 0.1%.
It has been half a year since it was first revealed that the US has been sending non-lethal aid to the Ukraine: recall that it was in early June when Obama announced he had approved $5 million in body armor, night vision goggles and additional communications equipment for the Ukrainian military. However, as lately has been a recurrent theme, the Obama administration may not have been exactly forthright with the public or the facts. At least that is the conclusion based on hacked documents released earlier today by the Ukrainian hackers group CyberBerkut, which reveal that despite assurances to the contrary, the US has in fact been providing substantial lethal aid to Ukraine's armed forces. As Sputniknews reports, "according to the hackers, the information was obtained during the visit of US Vice President Joe Biden to Ukraine last week, when they were able to access confidential State Department documents via a mobile device of a US delegation member."
- Ferguson in Flames (Reuters)
- Ferguson Cop Told Grand Jury He Feared for His Life (BBG)
- Sharpton: Grand Jury Announcement ‘An Absolute Blow’ (Daily Caller)
- Gunshots echo as violence returns to Ferguson, protests across U.S. (Reuters)
- BoJ members warned on costs of more easing (FT)
- Hagel Exit Shows Obama Has Taken Power Away From Pentagon (BBG)
- Ukraine leader, under pressure from West, pledges new government soon (Reuters)
- Eurozone Stagnation Poses Major Risk to Global Growth, OECD Warns (WSJ)
- ECB’s Coeure Says Officials Won’t Rush as They Debate All Assets (BBG)
It appears some folks might be scapegoated... As NY Times reports, Defense Secretary Chuck Hagel is stepping down, under presssure. President Obama made the decision to ask his defense secretary — the sole Republican on his national security team — to step down last Friday, as a recognition that the threat from the Islamic State would require a different kind of skills than those that Mr. Hagel has, and that his team has struggled to stay ahead of an onslaught of global crises.
The Mystery Of America's "Schrodinger" Middle Class, Which Is Either Thriving Or About To Go ExtinctSubmitted by Tyler Durden on 11/24/2014 09:05 -0500
On one hand, the US middle class has rarely if ever had it worse. At least, if one actually dares to venture into this thing called the real world, and/or believes the NYT's report: "Falling Wages at Factories Squeeze the Middle Class." In short, it says that America's manufacturing sector, and thus middle class, is being obliterated: "A new study by the National Employment Law Project, to be released on Friday, reveals that many factory jobs nowadays pay far less than what workers in almost identical positions earned in the past. And then, paradoxically, at almost the same time, there's this from Bloomberg: "Lower-wage workers saw bigger pay gains over the past year than the highest earners, reversing the trend from earlier stages of the recovery." In short: the state of the US middle class is truly in the eyes of the beholder.
"In a tense confrontation with President Obama’s closest adviser on Thursday, a group of Senate Democrats accused the White House of trying to censor significant details in a voluminous report on the use of torture by the Central Intelligence Agency."
Having been shunned by all the major broadcast networks (unlike his predecessor 8 years ago), President Obama's 'prime time' address to the nation - which will be seen by dominant Spanish-language channel Univision viewers (and CNN and PBS) - will lay out the new steps he (and he alone in his executive order) is taking "to fix our broken immigration system." As Politico comments, Obama appears to be going all-in as he speaks from Las Vegas, as the cooperation talk has disappeared - “Make no mistake. When the newly elected representatives of the people take their seats, they will act,” warned incoming Senate Majority Leader Mitch McConnell.
"While the general population is aware something is seriously wrong, people remain extremely confused about the root of the problem. This is because what’s happening all around us isn’t socialism and it isn’t free market capitalism. It is actually a return to something much more ancient and much more oppressive. It is a return to serfdom, neo-fedualism and oligarchy."
Two months ago, to much fanfare by the progressive community, HHS, if not Dr. Jonathan Gruber, were delighted to report that as of August 15, Obamacare enrollment had hit 7.3 million sign ups, well above the 7.0 million goal. Then a week ago we learned that "projection mistakes were made" after the "Obama administration revised its estimate for Obamacare enrollment, now saying - with the bruising midterms safely in the rearview mirror - that it expects some 9.9 million people to have coverage through the Affordable Care Act’s insurance exchanges in 2015, millions fewer than outside experts predicted." Fast forward to today when moments ago Bloomberg reported, that "the Obama administration included as many as 400,000 dental plans in a number it reported for enrollments under the Affordable Care Act, an unpublicized detail that helped surpass a goal for 7 million sign-ups."
In a nation in which 1 out of every 3 homes is unaffordable, you’d think the primary goal of public policy wouldn’t be to ensure real estate becomes even more out of reach for the average citizen. It’s bad enough that American financial oligarchs have leveraged free money polices of the Federal Reserve to purchase tens of billions of dollars in real estate only to rent it back to people who were kicked out of their homes during the 2008 crisis, but the government is now going out of its way to allow Chinese (and other foreign criminals) to launder money via U.S. property.
While what normally happens in Vegas, stays in Vegas; President Obama's decision to dictate his Immigration Executive Order from sin city will likely have repurcussions across the entire nation. As NY Times reports, Obama is preparing to use his executive authority to provide work permits for up to five million people who are in the US illegally, and to shield them from deportation. But these new arrivals will not receive one key benefit: government subsidies for health care available under Obamacare. The immigrants would also be unlikely to receive benefits like food stamps, Medicaid coverage or other need-based federal programs offered to citizens and to some legal residents. "The costs of extending these programs to millions of low-wage illegal immigrants would be enormous," said Senator Jeff Sessions "this is yet another danger posed to Americans by the president’s unconstitutional action."