…..But suddenly, right when everything looked so wonderful, there are indication of “Money” on the Move. And the issues appear to go beyond delays in implementing U.S. corporate tax cuts. The S&P500 declined only 0.2%, ending eight consecutive weekly gains. But the more dramatic moves were elsewhere. Big European equities rallies reversed abruptly. Germany’s DAX index traded up to an all-time high 13,526 in early Tuesday trading before reversing course and sinking 2.9% to end the week at 13,127. France’s CAC40 index opened Tuesday at the high since January 2008, only to reverse and close the week down 2.5%. Italy’s MIB Index traded as high as 23,133 Tuesday before sinking 2.5% to end the week at 22,561. Similarly, Spain’s IBEX index rose to 10,376 and then dropped 2.7% to close Friday’s session at 10,093.
We called it the Party Congress put. Every person in China knew that the economy would be kept on track this year because the leadership couldn’t afford any problems in the run-up to the Congress in October. But you’re potentially looking at a much different 2018. They were able to hit this level of economic performance in 2017 because there were no internal or, surprisingly, external shocks. There was no aggressive tightening by global central banks, no strong dollar. In fact, you had a very weak dollar through most of 2017. There were no major geopolitical tensions, nothing percolating negatively for them in the South China Sea. And most importantly, there were no Trump trade tensions, none. But we think most of these factors will reverse in 2018.
People are no longer investing, they’re speculating,” said the CIO. “Is that wrong?” he asked, not waiting for an answer. “Depends on what you’re speculating in.”……Paying a lot for everything is quite obviously foolish, but that’s where we are today. The only truly cheap asset class left is implied volatility….. We are investing as if 1987 will happen tomorrow, because it will,” said the CIO. “But we need to be long, or we’ll be out of business,” he explained, under pressure to perform.
….As the 1977 law suggests, Congress for decades has been using the tax code to stash subsidies that could never get in through the front door of the budget process. Thanks to both Democrats and Republicans worried about being tagged as spendthrifts, the U.S. tax code has grown into a vast shadow budget, a massive law stacked with social programs, incentives for economic growth, and even special subsidies for sports stadiums and rum manufacturers.
A dramatic geo-political realignment by Saudi Arabia is in full swing this month. It’s upending many decades of established strategic relationships among the world’s superpowers and, in particular, is throwing the Middle East into turmoil. So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.
Putting this in perspective, Lapthorne calculates that while on average interest cost as a % of EBIT remains very healthy (as you would expect with record low interest rates) “once you peel away the biggest and strongest US companies, the picture is entirely different.” As shown in the chart below, and as Lapthorne notes, “interest coverage for the smallest 50% of US companies is near record lows, at a time when interest costs are extremely depressed and when profits are at peak.”
Hamid Karzai, the former president of Afghanistan, has accused the US of working with the Islamic State of Iraq and the Levant (ISIL) group in his country. In an exclusive interview with Al Jazeera’s UpFront aired on Friday, Karzai said the US government had allowed ISIL, also known as ISIS, to flourish inside Afghanistan. “In my view under the full presence, surveillance, military, political, intelligence, Daesh [ISIL] has emerged,” he said.
Hypocrisy may be the only consistent guiding principle of US foreign policy. Here’s a prime example of the “do as we say, not as we do” that is the core of how Washington does business overseas: In the same week that the US Justice Department demanded that the Russian-backed RT America network register as a foreign propaganda entity or face arrest, the US State Department’s Bureau of Democracy, Human Rights and Labor (DNL) has announced that it is launching a program to massively interfere in NATO-partner Hungary’s internal media.
Saudiised Sunni Lebanese prime ministers – they have to be Sunni according to the constitution – have always combined their financial interests in Saudi Arabia where they made their fortunes with being prime ministers in Lebanon. They held dual nationality and operated freely in two countries……Saudi Arabia will only be able to destabilise Lebanon if it works with Israel, the only country with the military capabilities to threaten Lebanon’s fragile peace. Will Mohammed bin Salman go as far as striking a deal with Israel in which he offers full normalisation in return for Israel destroying Hezbollah and Iran in Lebanon?
Fact: Native Americans have the highest poverty rate of any minority group in our country. That comes as a result of having been controlled by the federal government since the early 1800s. Their lands are held in “trust” for them by the Bureau of Indian Affairs, or BIA (which most Native Americans refer to as “Bossing Indians Around), and which has a budget of $3 billion per year. The Bureau of Indian Education spends $850 million of that money per year on educating 42,000 students, which comes out to more than $20,000 per student per year – while the national average is about $12,500 per student. So money is not the problem. Those two government agencies have about 9,000 employees, which pencils out to one bureaucrat for every 111 Native Americans still on a reservation.