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Promise Delivered: Macron Promised a Revolution, He Got One, Against Himself

Hundreds were arrested and fires burn as the ‘gilets jaunes’ (yellow vests) protest movement against Macron escalates.

It’s rare for politicians to deliver on campaign promises. But French president Emmanuel Macron did. He promised a revolution, and got one. Unfortunately for Macron, the revolt is against his own policies.

Bloomberg comments on France’s Dangerous Yellow Vest Protesters.

The “Yellow Vests” protests now challenging President Emmanuel Macron have exposed a widening hole in the center of French politics—created by Macron himself.

It was Macron whose election in May 2017 all but obliterated the two establishment parties that had run France for 30 years. His own political movement had been launched less than a year before and his closest opponent for the presidency was from the far-right. By positioning himself as a reformer, Macron, 40, had hoped to establish a centrist consensus.

“The ‘gilets jaunes’ movement will probably peter out, but not the anger, which is likely to go on and take new forms maybe more dangerous for Macron,” said Jim Shields, a professor of French politics at Warwick University in the U.K. “It’s hard to see how he can complete controversial reforms like pensions and unemployment insurance without yet more blood on the pavement.”

A protest Saturday in Paris exploded into violence that left over 100 injured and more than 400 arrested, as well as burned cars and looted stores in the heart of the capital. Named after the colored vests motorists must keep in their cars for emergencies, the campaign began as a protest against higher gasoline taxes to reduce emissions. It’s now expanded to other demands and has the support of three-quarters of the French public, polls show.

…click on the above link to read the rest of the article…

Competing Mortgage Headlines: Rates Barely Move vs Rates Surge Lower on Powell

Freddie Mac says “mortgage rates barely move” but Mortgage News Daily says “rates surge lower”

Mortgage News Daily and Freddie Mac offer conflicting reports on the bond market reaction Jerome Powell’s speech yesterday.

Mortgage News Daily says Mortgage Rates Surge Lower

Mortgage rates surged lower today, falling at the fastest single-day pace in more than a year. In order to see the average lender offer lower rates, you’d need to go back to October 2nd at least. For many lenders, it would be a few weeks before that. Granted, this merely restores rates to what had been 7-year highs at the time, but you know what they say about journeys of 1000 steps and what not…

Much of the improvement was driven by an ongoing reaction to a speech by Fed Chair Powell from yesterday.

Surge Defined

A surge is 9 basis points.

Freddie Mac says rates fell 13 basis points. But note the dates.

Freddie Mac posts mortgage data weekly, on Thursdays. Thus, the data is stale. After that table was posted Freddie Mac offered a different opinion.

Mortgage Rates Barely Move

Freddie Mac says Mortgage Rates Barely Move.

November 29, 2018

Mortgage rates stabilized the last couple of months as interest rate sensitive sectors such as new auto and home sales softened the outlook for the economy. Homebuyers pounced on the stability in rates as purchase mortgage applications increased, which indicates that despite higher mortgage rates this year there are buyers on the fence waiting for the right time to buy.

Ignore that galling bit of propaganda about homebuyers pouncing on rate stability as if buyers are coming back. They aren’t. Let’s step back and put this alleged surge into perspective.

Zero Reaction

…click on the above link to read the rest of the article…

European Gas Stations Out of Diesel: French Refinery Strike Deepens Crisis 

Diesel is in short supply in Europe. The situation is about to worsen as the biggest French refinery is shutting down.

Bloomberg reports Europe’s Diesel Woes Deepen as Strike Halts French Oil Refinery.

Total SA, France’s biggest refiner, is in the process of shutting its largest plant in the country, the 247,000-barrel-a-day Gonfreville facility in Normandy, due to a labor dispute, a spokeswoman for the company said on Tuesday. A few hundred miles away, in the Netherlands, retail fuel stations are running out of supplies because of shipping constraints on the Rhine, according to Royal Dutch Shell Plc.

Shell said Nov. 20 that it cut production at its Rheinland refining site, the biggest complex of its kind in Germany, due to low water levels on the Rhine. In a tweet on Tuesday, the company said that it was temporarily unable to supply some unmanned fuel stations in the Netherlands.

Gas stations in Germany had already been running dry due to the situation on the Rhine, a major petroleum product transportation corridor that runs northwest from the Swiss Alps all the way to the Netherlands. Switzerland released emergency fuel stockpiles because of the situation on the river.

The premium per barrel of diesel over Brent crude – another indicator of market strength – was at $15.96 on Tuesday, the highest for the time of year in six years.

Diesel Price Poised to Soar

This shutdown cannot possibly come at a worse time for French President Emmanuel Macron.

Macron is already reeling over a protest of his diesel tax.

Diesel Tax Turns Violent

​People from across France went to Paris to let the president know how they feel about the taxes in general and the tax on diesel. The [Diesel Tax Protests](Diesel Protests in France Turn Violent) then turned violent.

…click on the above link to read the rest of the article…

Seriously Crazy Idea: Trump Proposes US State-Run News Agency

Trump is blasting CNN again today. OK, but his alleged “solution” is seriously crazy.

Here are some counter-Tweets that I agree with:


oat on Twitter


Claude Robichaux on Twitter

Wow. All the “news” Trump wants you to hear and nothing more. This is truly crazy.

Having a state run news agency does not prove greatness. It proves the opposite.

Diesel Protests in France Turn Violent

Emmanuel Macron blames Marine Le Pen for French protests that turned violent. She wasn’t there.

People from across France came to Paris to let the president know how they feel about the taxes in general and the tax on diesel.

​Police Use Tear Gas as Thousands in Paris Defy Protest Ban

The WSJ reports Police Use Tear Gas as Thousands in Paris Defy Protest Ban.

Violence erupted Saturday between police and several thousand demonstrators who defied a protest ban and marched down the famous Parisian avenue Champs Elysées, as the country’s interior minister blamed the far-right for the unrest in the French capital.

On the Champs Elysées, some protesters sang the national anthem and waved French flags, while others carried signs urging the president to resign. Some threw stones at police, who responded by firing tear gas and water cannons. At least 130 people were detained across the nation on Saturday, including 42 in Paris, Interior Minister Christophe Castaner said.

Mr. Castaner blamed Marine Le Pen, head of the far-right party National Rally, for urging protesters to head to the Champs Elysées despite an official ban on demonstrations on the avenue.

“What justifies the fact that French people can’t protest on the Champs Elysées when many other gatherings (World Cup, New Year’s Eve…) happened there?” Ms. Le Pen tweeted on Friday. Ms. Le Pen didn’t attend the protests.

Can’t Afford to Eat

‘People are in the red. They can’t afford to eat’

Idir Ghanes, 42, Unemployed computer technician from Paris: We are here to protest against the government because of the rise in taxes [in general], not just petrol taxes, which is the straw that broke the camel’s back.

…click on the above link to read the rest of the article…

Anti-Carbon Revolt: Massive Road Blocks Against Macron’s Diesel Tax

In stunning irony, the French protest against Macron’s diesel tax, while Macron insists the UK abide by climate accord.

On Saturday, more than 282,700 people, many clad in yellow vests, took to — and, in many places, also literally took — the streets, according to the French Interior Ministry. The ministry said a network of drivers blocked roads at some 2,000 locations across the country, generating backups for miles and causing one death.

The protesters’ chief complaint: the rising cost of diesel fuel. The recent price hike is a direct result of President Emmanuel Macron’s commitment to curbing climate change, which included higher carbon taxes for 2018, the first full year of his term. But beyond the diesel issue, many turned out Saturday to voice any number of other frustrations with the “president for the rich,” who is seen as increasingly removed from ordinary people’s concerns.

The stirrings of the “yellow vest” campaign behind Saturday’s protests began this summer, with online petitions urging Macron to reconsider. But the loudest voice was that of Jacline Mouraud, a white-haired hypnotist and grandmother of three from Brittany who has become the star of the movement.

On Saturday, Mouraud was asked to explain the death of the protester. “I deplore the death of this woman,” she said, speaking to Europe 1 radio. “But who is responsible for this situation? The French government is responsible for the death of this woman.”

According to a poll published Friday by the Odoxa agency for France’s Le Figaro newspaper — albeit with only 1,000 respondents — as many as 3 in 4 French people agree.

Location of Roadblocks

…click on the above link to read the rest of the article…

Crude Down Record 11th Day

Crude is down 22% since the early October high. Comments from Trump negated expectations that OPEC would cut production.

  • Oil prices notched their longest losing streak on record Monday, as comments from President Trump negated expectations that the global oil cartel and its allies will cut production.
  • Light, sweet crude for December delivery fell 0.4% to $59.93 a barrel on the New York Mercantile Exchange, marking the 11th consecutive session of losses, the longest in data going back to 1983.
  • Brent crude, the global benchmark, also closed lower, down 0.1% to $70.12 a barrel.
  • Saudi Arabia’s Mr. Falih on Sunday also said his country would unilaterally slash its exports next month by around 500,000 barrels a day, compared with November levels. However, Russia—currently the world’s largest oil producer—sent mixed messages on whether it would pull back on supply.

Trump Calls for Lower Oil Price

Donald J. Trump on Twitter

Sanctions Not Working Out as Expected

OPEC and allied oil-producing countries will likely need to cut crude supplies, perhaps by as much as 1 million barrels of oil a day, to rebalance the market after U.S. sanctions on Iran failed to cut Tehran’s output, Saudi Arabia’s energy minister said Monday.

The comments from the minister, Khalid al-Falih, show the balancing act the U.S. allies face in dealing with President Donald Trump’s actions related to the oil industry.

Trump in recent weeks demanded the oil cartel increase production to drive down U.S. gasoline prices. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” he tweeted Monday.

…click on the above link to read the rest of the article…

How Italy Leaves the Eurozone, Step by Step

Earlier today, Italy told the EU where to go with it budget demands. Expect the EU to huff and puff.

The EU demands Italy do something about its buildup of debt. In response, Italy dismisses ‘implausible’ EU forecasts, says budget is sound.

“There are no grounds for questioning the soundness and the sustainability of our reforms,” Prime Minister Giuseppe Conte said in a statement. “For this reason we consider any other type of scenario for Italy’s public accounts to be absolutely implausible.”

If Italy does not budge, the Commission could launch an “excessive deficit procedure” that could eventually result in fines, though these have never been levied on any country in the monetary union.

“The European Commission’s forecasts for the Italian deficit are in sharp contrast to those of the Italian government and derive from an inaccurate and incomplete analysis (of the budget),” said Economy Minister Giovanni Tria.

“We regret to note this technical slip on the part of the Commission, which will not influence the continuation of constructive dialogue with (it).”

Excessive Deficit Procedures Coming Up

Mercy, that sounds ominous, but I cannot any concrete example of the EU ever doing anything.

Reuters has a Factbox List of Key Dates, five of which have already passed with no consequences. Here are the remaining steps to laugh at.

  • Nov. 19: In the event its budget were rejected by the Commission, the Italian government would have three weeks from the date of the EU opinion to submit a revised budget.
  • Dec. 3: Monthly Eurogroup meeting.
  • Dec. 10: The Commission would have three weeks, likely until Dec. 10, from the submission of Italy’s amended budget to adopt a new opinion in which it would describe Italy’s overall budgetary position and its impact on the whole euro zone.

…click on the above link to read the rest of the article…

26 Experts Weigh in On How and When the Next Financial Crisis Will Happen

Focus Economics solicited opinions from 26 economic writers on the next financial crisis. I was one of them.

Looking for opinions on the next financial crisis?

Here’s a portion of the prelude to the opinions. I was one of those quoted.

It is often stated that there is a major financial crisis every 10 years or so. Having said that, it’s been a little over a decade since the Lehman Brothers collapse sparked the last global financial crisis (GFC) and with global economic growth starting to show signs of petering out, some in the media and elsewhere in the public eye are forecasting another global financial crisis in the very near future.

There has been a variety of reports from prominent analysts lately with predictions as to when the next crisis will hit and what will spark it. Strategists at J.P. Morgan Chase recently made a splash with their announcement of a new predictive model that pencils in the next crisis to hit in 2020. Additionally, J.P. Morgan’s Global Head of Macro Quantitative and Derivatives Research, Marko Kolanovic, has highlighted a potential precipitous decline in stocks that could cause what has been termed “the Great Liquidity Crisis.” He identified the shift away from actively managed investing toward passive investing strategies such as exchange-traded funds, index funds and quantitative-based trading strategies, as well as computerized trading as the potential culprit, which could not only be the catalyst for the next crisis but could also exacerbate the fallout.

…click on the above link to read the rest of the article…

Brutally Honest: Facebook Removes then Restores Images from Yemen

A couple of questions describe the problem with censorship: Who controls the censors? What biases do they have?

For a few hours after The New York Times published an article about conflict and hunger in Yemen, Facebook temporarily removed posts from readers who had tried to share the report on the social platform.

At issue was a photograph of a starving child.

The article included several images of emaciated children. Some were crying. Some were listless. One, a 7-year-old girl named Amal, was shown gazing to the side, with flesh so paper-thin that her collarbone and rib cage were plainly visible. Tens of thousands of readers shared the article on Facebook, but some got a message notifying them that the post was not in line with Facebook’s community standards.

Facebook had addressed the issue by Friday night.

“As our community standards explain, we don’t allow nude images of children on Facebook, but we know this is an important image of global significance,” a spokeswoman said in an emailed statement. “We’re restoring the posts we removed on this basis.”

It took Facebook a few hours to realize it made a mistake in removing brutally honest images of the effects of the civil war in Yemen.

The images expose the blatant hypocrisy of the US in backing the corrupt Saudi Arabia regime in its war in Yemen.

This was not a nude image. It is not a “community standards” image. Nor was there any doubt about the authenticity of the image.

Any censor can judge “community standards” however they want, but Facebook is an international phenom, not Podunk USA.

Facebook could have and should have said “we f*ed up yet again” but never expect that.

Rather than rejecting that image, Facebook should have promoted it.

Instead, we had temporary censorship. Next time it might not be temporary.

Eight Reasons a Financial Crisis is Coming

It’s been about 10 years since the last financial crisis. FocusEconomics wants to know if another one is due.

The short answer is yes.

In the last 10 years not a single fundamental economic flaw has been fixed in the US, Europe, Japan, or China.

The Fed was behind the curve for years contributing to the bubble. Massive rounds of QE in the US, EU, and Japan created extreme equity and junk bond bubbles.

Trump’s tariffs are ill-founded as is Congressional spending wasted on war.

Potential Catalysts

  1. Junk Bond Bubble Bursting
  2. Equity Bubble Bursting
  3. Italy
  4. Tariffs
  5. Brexit
  6. Pensions
  7. Housing
  8. China

Many will blame the Fed. The Fed is surely to blame, but it is prior bubble-blowing policy, not rate hikes now that are the problem.

1. Junk Bonds

Many have labeled this an “everything bubble” which is not quite accurate. Yes, the Fed re-blew the housing bubble as well as an equity bubble. But the real standout is the bubble in junk bonds.

Companies are borrowing money to buy back shares at absurd valuations.

In the US, close to 15% of the companies in the S&P 500 only survive because they can roll over their debt. For discussion, please see Rise of the Zombie Corporations: Percentage Keeps Increasing, BIS Explains Why.

I expect a junk bond crash and that will take equities lower with it.

2. Equity Bubbles

Stock valuations are stretched almost beyond belief. The CAPE – Shiller PE was only surpassed by the DotCom bubble. The CAPE PE on October 3 when I last wrote about it was 33.49.​

There will be few places to hide. GMO Forecasts US Equity Losses for 7 Years.

​We may not see a “crash” per se, but if not, then expect a slow bleed over many years, Japanese style.

…click on the above link to read the rest of the article…

Warning! Civilization at Risk, Crisis by 2040 (And Other Nonsensical Climate BS)

The amount of climate scaremongering in the past few weeks is stunning. And it’s all pure bullshit.

Check out these headlines.

Q&A

Q.What do all of those headline have in common?

A. They are all based on the same study. The study is riddled with huge numbers of blatant errors making the study for lack of better words, pure bullshit.

Riddled With Errors

  • Almost no quality control checks have been done: outliers that are obvious mistakes have not been corrected – one town in Columbia spent three months in 1978 at an average daily temperature of over 80 degrees C. One town in Romania stepped out from summer in 1953 straight into a month of Spring at minus 46°C. These are supposedly “average” temperatures for a full month at a time. St Kitts, a Caribbean island, was recorded at 0°C for a whole month, and twice!
  • Sea surface temperatures represent 70% of the Earth’s surface, but some measurements come from ships which are logged at locations 100km inland. Others are in harbors which are hardly representative of the open ocean.

…click on the above link to read the rest of the article…

Italy Openly Defiant of Eurozone Stability Pact, Deliberately and Knowingly

Eurozone officials and the ECB are in a quandary over Italy’s deliberate defiance of budget rules.

There is a fundamental irony in Italy’s open defiance of Eurozone stability rules. Both France and Germany did the same in 2003.

It is hard to concoct a more fundamental challenge to the European Commission’s authority than a member state announcing, like Italy did yesterday, that it is going to break the rules deliberately and knowingly. Such purposeful disregard threatens the whole rules-based edifice of the Commission’s authority, and ultimately treaty-based European integration.

In the current face-off between Brussels and Rome over Italy’s budget, a look back at the years 2003-2005 is as amusing as it is instructive. Then it was France and Germany that smashed the stability pact.

France and Germany argued at the time that the breach was temporary and that growth would resume later. Thos are exactly the arguments Italy makes today.

Interested parties may wish to read the November 26, 2003 Telegraph article France and Germany Smash Euro Pact.

The lead paragraph is amusing as are some further down the line.

The eurozone’s Stability and Growth Pact was effectively killed off yesterday when EU finance ministers refused to enforce treaty law against France and Germany for persistently breaching the spending rules.

France and Germany won backing for their “flexible” interpretation of the pact after a stormy exchange with smaller states. In the formal show of hands later, only Holland, Austria, Finland and Spain voted to uphold treaty law, although Belgium, Sweden, Denmark and Greece voted for a lesser condemnation.

If you seek further irony, it was Germany that demanded the pact in return for giving up the Deutsche Mark.

…click on the above link to read the rest of the article…

“Ultra-FICO” to Boost Credit Scores Giving Millions More Access to Credit

Just in the nick of time not: Fair Isaac is launching a new type of credit score that will give millions more credit.

Just as the economy is peaking, consumers with a low FICO could get a higher “UltraFICO“, a new score that factors in bank-account activity as well as loan payments.

Credit scores for decades have been based mostly on borrowers’ payment histories. That is about to change.

Fair Isaac Corp., creator of the widely used FICO credit score, plans to roll out a new scoring system in early 2019 that factors in how consumers manage the cash in their checking, savings and money-market accounts. It is among the biggest shifts ever for credit-reporting and the FICO scoring system, the bedrock of most consumer-lending decisions in the U.S. since the 1990s.

The UltraFICO Score, as it’s called, isn’t meant to weed out applicants. Rather, it is designed to boost the number of approvals for credit cards, personal loans and other debt by taking into account a borrower’s history of cash transactions, which could indicate how likely they are to repay.

The new score, in the works for years, is FICO’s latest answer to lenders who have been clamoring for a way to boost loan approvals.

UltraFICO is the latest in a recent series of changes by credit-reporting and scoring firms that are helping boost consumers’ credit scores.

Equifax, Experian and TransUnion last year began deleting most tax-lien and civil judgment information from credit reports. They also have been removing certain accounts in collections, following settlements with state attorneys general dating back to 2015 over how they manage errors and certain negative information on credit reports.

…click on the above link to read the rest of the article…

“One Size Fits Germany” Math Impossibility, Get Your Money Out of Italy Now!

Italy, on the Euro, has a currency that is 9% too high. Germany, on the Euro, has a currency that is 11% too low.

There was much discussion yesterday about the US Treasury report that determined China was not a currency manipulator.

However, there are six countries on the manipulation watch list: China, Japan, Korea, India, Germany, and Switzerland.

  • Japan, Germany, and Korea have met two of the three criteria in every Report since the April 2016 Report having material current account surpluses combined with significant bilateral trade surpluses with the United States.
  • Germany has the world’s largest current account surplus in nominal dollar terms, $329 billion over the four quarters through June 2018, which represented its highest nominal level on record. Germany also maintains a sizable bilateral goods trade surplus with the United States, at $67 billion over the four quarters through June 2018. There has been essentially no progress in reducing either the massive current account surplus or the large bilateral trade imbalance with the United States in recent years, in part because domestic demand in Germany has not been sufficiently strong to facilitate external rebalancing and because Germany’s low inflation rate has contributed to a weak real effective exchange rate.

Try Fixing This

  1. The Euro is 11% undervalued in Germany, the largest Eurozone economy.
  2. The Euro is 9% overvalued in Italy, the third largest Eurozone economy.

The normal way central banks make adjustments to fix over-valued or undervalued situation is through interest rate policy or direct currency intervention.

No matter which the ECB does, it will impact Italy and Germany in opposite directions.

Meanwhile, interest rates are on the verge of spiraling out of control in Italy.

Italy vs Germany 10-Year Bond Spread

…click on the above link to read the rest of the article…

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