The Mexican peso is plunging (down over 1% today) to its weakest against the dollar since March after a former deputy in the ruling party in Mexico was arrested as part of a graft inquiry. As Bloomberg reports, political uncertainty continued to weigh on the most-traded currency in emerging markets.
This post was published at Zero Hedge on Dec 21, 2017.
When commenting on the Flynn plea deal with Mueller, we said that while hardly evidence of collusion between Trump and Russia, especially since all events took place after the election, the real question is who was the “senior member of the transition team” that instructed Flynn to call Russia. Now, according to Bloomberg’s Eli Lake we may have the answer: none other than Jared Kushner, who as Lake says, “could be one of the next dominoes to fall.” According to the Bloomberg report, “one of Flynn’s lies to the FBI was when he said that he never asked Russia’s ambassador to Washington, Sergey Kislyak, to delay the vote for the U. N. Security Council resolution. The indictment released today from the office of special prosecutor Robert Mueller describes this lie: “On or about December 22, 2016, Flynn did not ask the Russian Ambassador to delay the vote on or defeat a pending United Nations Security Council resolution.” At the time, the U. N. Security Council resolution on Israeli settlements was a big deal. Even though the Obama administration had less than a month left in office, the president instructed his ambassador to the United Nations to abstain from a resolution, breaking a precedent that went back to 1980 when it came to one-sided anti-Israel resolutions at the U. N. This was the context of Kushner’s instruction to Flynn last December. One transition official at the time said Kushner called Flynn to tell him he needed to get every foreign minister or ambassador from a country on the U. N. Security Council to delay or vote against the resolution. Much of this appeared to be coordinated also with Israeli prime minister Benjamin Netanyahu, whose envoys shared their own intelligence about the Obama administration’s lobbying efforts to get member stats to support the resolution with the Trump transition team. As Lake correctly notes, “for now it’s unclear what to make of all of this” especially since th most important part of a case is missing: motive.
This post was published at Zero Hedge on Dec 1, 2017.
When commenting on the Flynn plea deal with Mueller, we said that while hardly evidence of collusion between Trump and Russia, especially since all events took place after the election, the real question is who was the “senior member of the transition team” that instructed Flynn to call Russia. Now, according to Bloomberg’s Eli Lake we may have the answer: none other than Jared Kushner, who as Lake says, “could be one of the next dominoes to fall.” According to the Bloomberg report, “one of Flynn’s lies to the FBI was when he said that he never asked Russia’s ambassador to Washington, Sergey Kislyak, to delay the vote for the U. N. Security Council resolution. The indictment released today from the office of special prosecutor Robert Mueller describes this lie: “On or about December 22, 2016, Flynn did not ask the Russian Ambassador to delay the vote on or defeat a pending United Nations Security Council resolution.” At the time, the U. N. Security Council resolution on Israeli settlements was a big deal. Even though the Obama administration had less than a month left in office, the president instructed his ambassador to the United Nations to abstain from a resolution, breaking a precedent that went back to 1980 when it came to one-sided anti-Israel resolutions at the U. N. This was the context of Kushner’s instruction to Flynn last December. One transition official at the time said Kushner called Flynn to tell him he needed to get every foreign minister or ambassador from a country on the U. N. Security Council to delay or vote against the resolution. Much of this appeared to be coordinated also with Israeli prime minister Benjamin Netanyahu, whose envoys shared their own intelligence about the Obama administration’s lobbying efforts to get member stats to support the resolution with the Trump transition team.
This post was published at Zero Hedge on Dec 1, 2017.
If there is anything that gets demagogic politicians and pundits riled up, it’s the closing of tax loopholes, and the tax-hike demagogues might just be getting one of their wishes come December. Bloomberg reports that most online consumers will pay sales taxes in some shape or form in the next few months. Currently, consumers pay taxes on goods purchased straight from Amazon, but they can avoid paying taxes on goods if they purchase them through Amazon’s third-party merchants. By the start of December this could all change, as several merchants are expected to start collecting taxes in return for partial amnesty from alleged back taxes. No stranger to inciting controversy, Donald Trump has even jumped into the fray by stating in an earlier tweet that Amazon has brought ‘great damage to tax paying retailers.’ Those in favor of closing sales-tax loopholes contend that retailers such as Amazon are supposedly responsible for tax-base erosion and other fiscal imbalances in the states that they operate in. Although well intentioned, calls for closing tax loopholes miss the mark. The underlying problems that are overlooked in this discussion are the burdensome tax policies and profligate spending programs already present in many states. Unbeknownst to many pro-tax politicians, tax hikes not only hurt the businesses themselves through lagging production, they also hurt consumers as companies pass the costs onto consumers via higher prices on goods and services.
NewsDay, the privately-owned Zimbabwe newspaper, is reporting that all the provincial branches of President Mugabe’s party have passed votes of no confidence in his leadership. In a dramatic twist of events, all the ten Zanu PF provinces have passed a vote of no confidence on President Robert Mugabe, and declared the 93 year-old leader – who has been in office for 37 years – too old and incapacitated to lead both Zanu PF and government. The move, which comes at the height of a drama-filled week that saw the military taking control of the country, is a huge knock on the veteran’s leader’s prospects of retaining his presidency for much longer. It’s not clear where NewsDay got this information, although other sources are saying the central committee of Zanu PF could meet as early as Sunday to decide on Mugabe’s fate. In the meantime, Mugabe is reported to have resisted pressure to step down in negotiations with the Zimbabwe military and could face impeachment. The possibility of impeachment is being discussed by Zimbabwe politicians who are loyal to Mugabe’s former deputy, Emmerson Mnangagwa, whose dismissal precipitated the crisis. The grounds for impeachment might include the wealth accumulated by the Mugabe family, corruption amongst his wife’s allies and the collapse of the Zimbabwe economy (now half the size it was in 2000). According to Bloomberg.
This post was published at Zero Hedge on Nov 17, 2017.
One of the key changes in the House GOP tax bill was to implement a cap on home interest deductions to the first $500,000 worth of mortgage debt and eliminate interest deductions from second homes. Of course, given active opposition from some very powerful realtor and homebuilder lobbying groups, it’s unclear whether the changes will find their way into the final tax bill. But, at least according to Bloomberg, New York’s “millionaire, billionaire, private jet owning” hedge fund managers aren’t waiting around to find out and are already taking steps to game any potential tax changes. Out in the Hamptons, Wall Street’s favored beach resort on Long Island, brokers and buyers already have a workaround for a tax-plan provision under consideration in Congress that would take away the mortgage-interest deduction for second homes. A client of Brown Harris Stevens broker Jessica von Hagn who works at a hedge fund decided to turn the vacation home he’s buying into an investment property by setting up a limited liability company. That will allow him to deduct the interest and earn rental income at the height of the season from the modern home on Bridgehampton’s Lumber Lane, with four bedrooms, three baths and a swimming pool on an acre of land.
This post was published at Zero Hedge on Nov 10, 2017.
This just might spoil what has so far been a strong year for Carl Icahn. Bloomberg is reporting that the FBI has issued subpoenas for information on Carl Icahn’s possible lobbying to change biofuel policy while serving as an informal adviser to President Donald Trump, according to regulatory filings. Icahn, who briefly served as an adviser to the president and who was once suspected of being a possible pick for Treasury, announced in August that he was no longer serving as an adviser to the president regarding regulatory reform. In his curiously worded letter, he specified that he ‘never had a formal position’ in the White House. The Attorney’s office for the Southern District of New York is ‘seeking production of information’ pertaining to Icahn’s activities regarding the Renewable Fuel Standard, according to a Form 10-Q that Icahn Enterprises LP filed on Friday with the U. S. Securities and Exchange Commission. The investigators also want information on Icahn’s role as an adviser to the president, the document says.
This post was published at Zero Hedge on Nov 8, 2017.
Having sworn themselves to secrecy, Republicans on the House Ways and Means committee are scrambling to put together a tax bill by next week. But not knowing anything about the details of the plan, as it stands right now, hasn’t stopped an army of lobbyists from mobbing Capitol Hill with one overweening mission: To threaten, cajole or otherwise coax lawmakers into preserving loopholes that benefit their clients. Here’s Bloomberg: The stage was set with the House’s adoption Thursday of a budget resolution designed to speed the course of tax legislation and kick off a three-week sprint toward a House bill. Now, lobbyists representing every corner of the economy are poised to first devour, then attack what may be hundreds of pages of legislation that Brady says he’ll release Nov. 1. Special interests from realtors to dairy farmers will be trying to save their industry-specific tax breaks, said Tim Phillips, president of Americans for Prosperity. His group, which is backed by billionaire industrialists Charles and David Koch, supports ending such breaks. ‘It’s pretty fierce,’ Phillips said. ‘We met with Brady on Tuesday and he was saying their offices are swamped with all the special interest groups swarming in asking to be protected.’ The immense pressure to find a source of revenue to compensate for the sweeping cuts to corporate and individual rates has already nearly derailed the tax reform process. Yesterday, House Republicans narrowly approved the Senate version of a $4 trillion federal budget over the objections of 20 blue-state Republicans who oppose the elimination of the state and local tax deduction, which they say would disproportionately raise taxes on middle-class taxpayers in blue states, which tend to have higher taxes. Yet, Ways and Means Chairman Kevin Brady has said the elimination of the SALT deduction will stay in the bill – for now, at least.
This post was published at Zero Hedge on Oct 27, 2017.
Twenty-three years after former Drexel Burnham Lambert executive Michael Milken finished a 22-month minimum-security prison sentence, one fund manager is lobbying President Donald Trump to pardon his past convictions, arguing that Milken’s prosecution was an example of anti-banker hysteria run amok. Wealth-management executive David Bahnsen told Bloomberg that he sent a plea to Trump asking that he pardon Milken, an innovator who is widely lauded in the financial world for helping to popularize junk bonds among a broader set of investors during the 1980s. Bizarrely, Bahnsen says he’s never met the man. Milken pleaded guilty to securities fraud charges in 1992, and was initially sentenced to 10 years in prison, though he only served 22 months.
This post was published at Zero Hedge on Sep 1, 2017.
Libor, the nearly 50-year-old global borrowing benchmark that became a byword for corruption, is headed for the trash heap of history. The U.K. Financial Conduct Authority will phase out the key interest-rate indicator by the end of 2021 after it became clear there wasn’t enough meaningful data to sustain the benchmark that underpins more than $350 trillion in securities, Andrew Bailey, the head of the regulator, said in a speech Thursday at Bloomberg’s London office. The end of the London interbank offered rate, or Libor, is welcome on many levels for regulators. It was tied to some of the banking industry’s biggest scandals, leading to about $9 billion in fines and the conviction of several bankers for manipulating the rate. Relying on the opinions of industry insiders to set the daily estimates based on interbank lending — some in markets that saw fewer than 20 transactions annually — was unacceptable, Bailey said. “Libor is trying to do too many things: it’s trying to be a measure of bank risk and it’s trying to substitute for interest-rate risk markets where really it would be better to use a risk-free rate,” said Bailey in an interview with Bloomberg News before the speech. “It’s had to come to a conclusion.”
David Stockman joined Bloomberg Markets to discuss President Donald Trump’s latest budget projections. After the White House and current Office of Management and Budget director Mick Mulvaney released various statements on the budget proposal viability conversations already began within the GOP and Congress. When prompted by host David Gura over his thoughts, even reflecting on former Treasury Secretary Summers comments that the budget is ludicrously optimistic, David Stockman did not mince words speaking on Washington.
This post was published at Zero Hedge on Jun 15, 2017.
One year after Och-Ziff Capital settled a bribery case that led to jump in redemption requests and an exodus in high profile executives, on Tuesday the hedge fund reported that it suffered record net withdrawals in the first four months of the year, extending several straight quarters of outflows. The firm reported net redemptions of $4.8 billion in the first quarter and an additional $2.1 billion from April 1 and May 1. At the same time, assets under management declined from $37.9 billion as of December 31, 2016 to $32 billion as of the beginning of May, a record $5.9 billion decline, and a 24% drop from a year earlier. As discussed at the time, and as Bloomberg reminds this morning, the redemption wave started when the hedge fund settled a five-year bribery probe and saw founder Dan Och singled out by regulators for ignoring red flags and corruption risks. Och-Ziff agreed to pay more than $400 million in September to settle U. S. charges that it paid bribes to gain business in Africa. Its OZ Africa Management GP unit pleaded guilty to conspiring to bribe officials of the Democratic Republic of Congo.
This post was published at Zero Hedge on May 2, 2017.
Growth in U. S. personal consumption expenditures in the first quarter of 2017 was slowest since 2009, according to data released Friday by the Commerce Department. A big reason for that was the second-largest contraction in spending by non-profits (i.e. election-related lobbying/spending) in 57 years of data. As Bloomberg details, according to monthly consumption data through February, the drag seems to owe to a sharp decline in spending by professional advocacy groups, which always surges during U. S. presidential elections, and hit a record high in November.
This post was published at Zero Hedge on May 1, 2017.
This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission. Bloomberg has nice piece on the battle between JPMorganChase’s Jamie Dimon and the Minneapolis Fed’s Neel Kashkari. (Bloomberg) Jamie Dimon is America’s most famous banker, and Neel Kashkari is its most outspoken bank regulator, so it’s not a shock that they would eventually come to blows. What’s interesting is that their contretemps is over an acronym that most Americans have never heard of, but one that may be central to preventing another recession. TLAC, which is pronounced TEE-lack, is something you need to know about if you want to judge the sparring between Dimon, the well-coiffed chief executive of JPMorgan Chase & Co., and Kashkari, the very bald man who ran for governor of California on the Republican ticket and is now president of the Federal Reserve Bank of Minneapolis. On April 6, Kashkari went after Dimon in a way that circumspect central bankers ordinarily don’t. In an essay published on Medium and republished on the Minneapolis Fed website, he challenged Dimon’s assertion in his annual letter to shareholders that 1) there’s no longer a risk that taxpayers will be stuck with the bill if a big bank fails, and 2) banks have too much capital (meaning an unnecessarily thick safety cushion). Wrote Kashkari: ‘Both of these assertions are demonstrably false.’
Noah Smith, writing in Bloomberg, says that middle class America has indeed been fleeced by our national economic policies. We agree. But which policies have been responsible? Smith mentions and immediately dismisses trade, immigration, economic regulation, and welfare policies. The real villain in his view is an alleged turn toward managing the economy on free market lines: ‘Your prosperity was taken by the very people who promised to ensure and enhance it. The decades from 1980 through 2008 were the age of neoliberalism — the ideology of the free market.’ This is a story that we hear more and more. Neoliberals, the favorite new epithet on the left for free market exponents, have ruled the roost for decades ( note how the Obama administration is simply ignored in the preceding quote), and have left the poor and middle class far worse off than they were. The truth is that the Bush-Clinton-Bush-Obama era had much in common, and it was not free market principles. It was an era of unrestrained crony capitalism, in which special interests formed stronger and stronger alliances with government in order to secure economic monopolies and other privileges.
Literally no one knows the true ‘value’ of equity research, not even the investment banks that are selling it. Up until now, equity research has been treated as a ‘freebie’ given away to institutional clients in return for trading commissions but that is all about to change thanks to the European Union’s MiFID II regulations, which require asset managers to separate trading commissions from investment-research payments. Unfortunately, at least for the Investment Banks of the world, while the cost of generating equity research may be substantial, it turns out that the true ‘value’, as defined by institutional clients’ maximum willingness to pay for reports, may be much less. Which is shocking given the creativity required to constantly generate new variations of daily reports politely suggesting that you “Buy The Fucking Dip.” As Bloomberg notes today, the regulatory change slated to take effect next January could cost the I-banks $300 million in fees. Asset-managers in Europe and the U. S. will probably cut more than $300 million from research budgets in anticipation of regulations aimed at rooting out conflicts of interest in the market for investment information. That’s according to a survey of 99 fund managers and traders conducted by consulting firm Greenwich Associates, which assessed the shake-up coming to the multi billion-dollar market for investment research over the next year. The European Union’s MiFID II regulations, which require asset managers to separate trading commissions from investment-research payments, will have a ‘clearly negative’ impact on the amount of commission money that is spent on research and advisory services, according to the Stamford, Connecticut-based firm’s findings released Tuesday. While the budget cuts will be ‘relatively modest’ at individual asset-managers, research providers across the board fear the new law will prompt ‘a substantial decrease’ in buy-side spending.
This post was published at Zero Hedge on Mar 15, 2017.
One of the world’s largest, public hedge funds, Och Ziff, gave active managers around the globel more reasons for concern this morning, when it reported results today which showed distributable earnings of $7.5 million, or one cent a share, in the quarter compared to a loss of $36.1 million, or 7 cents, a year earlier. For the full year, the company reported a loss of $121.3 million from a profit of $251.9 million in 2015. Revenue tumbled from $342.8mm to $281.3mm. However, the flashing red headline is just how much AUM the recent underperformance and legal problems by Daniel Och’s investment vehicle have cost him. As Bloomberg reports, Och Ziff suffered withdrawals of about $13 billion over the last 13 months as the company settled a five-year bribery probe and saw its founder Dan Och singled out by regulators for ignoring red flags and corruption risks.
This post was published at Zero Hedge on Feb 15, 2017.
Two days after democratic senators Elizabeth Warren and Tammy Baldwin sent a letter to Goldman CEO Lloyd Blankfein, asking if Goldman effectively runs the country through its extensive alumni links at the Trump administration, and requesting details on “lobbying” activities in the bank related to review of the Dodd-Frank Act and the Obama-era fiduciary rule on financial advice, as well as asking for any communication between the bank’s employees and Cohn, Mnuchin, nominee for the SEC chair Jay Clayton and chief strategist Steve Bannon, Bloomberg reported overnight that yet another Goldman banker, Jim Donovan, was under consideration for the No. 2 job at the Treasury Department, however it appears he has “got one big thing working against him.” That “thing” is the overdue realization by the new president that his cabinet openly appears to have been created and staffed by populism arch nemesis #1, Goldman Sachs. Besides Steven Mnuchin, Trump’s pick for Treasury Secretary, former Goldman officials working for the new administration include former president Gary Cohn, now director of the National Economic Council; Stephen Bannon, the chief White House strategist; and Dina Powell, formerly the bank’s head of philanthropic investment, who’s an assistant to the president and senior counselor for economic initiatives. So just like Goldman would staff every central bank’s core positions prior to Trump, after the US election, the world’s most influential investment bank has shifted all of its attention on just one person, and he is finally starting to realize that that may not be a good thing.
This post was published at Zero Hedge on Feb 12, 2017.
While President Trump chose not to attend the elite extravaganza in Davos last week, choosing instead to lambast the great-est and good-est of the world’s executives in their crony capitalist safe space, the cognitively dissonant CEOs reassured each other by saying ‘ignore the tweets’, confident that “if [Trump] knows the facts, he’ll respond according to the facts.” It depends whose ‘facts’ those are, of course. As Bloomberg so eloquently noted, executives gathered in the Swiss resort for the World Economic Forum this week keep repeating, like a soothing mantra, that Donald Trump is at heart a pragmatist who will avoid trade wars and regulations that make it harder to do business. Everywhere you looked, and everything you were told confirmed that nothing has changed in the minds of the world’s elite community organizers… (as Bloomberg summarizes)
This post was published at Zero Hedge on Jan 22, 2017.
It has been a good day for Trump advisor Anthony Scaramucci. First, he was named by Bloomberg as this year’s surprise Davos star (recall that he is the only member of the Trump team participating unofficially at the Swiss boondoggle. ‘I brought a food taster,’ Scaramucci joked in an interview on Bloomberg Television when asked about his solo mission). As a reminder, Scaramucci was recently named an assistant to the president and further told Bloomberg Television Tuesday that he will serve as a liaison between the White House and the business community, and work with local, state and foreign governments and trade associations. Which brings us to the second reason why Anthony is smiling. Today, as part of his shedding of potential conflict of interest, Scaramucci sold a majority stake in his SkyBridge Capital fund of funds, which has had prominent cameos in such movies as Wall Street 2, to HNA Capital U. S., which is controlled by Chinese billionaire Chen Feng, and RON Transatlantic EG. While terms of the deal were not disclosed, the deal, which includes the SkyBridge Alternatives Conference, or SALT, is said to be valued at about $200 million according to Bloomberg, and could increase to about $230 million if certain conditions are met. SkyBridge’s senior management and investment teams will remain intact while Scaramucci will step down.
This post was published at Zero Hedge on Jan 17, 2017.