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20 августа, 05:19

All Blacks rugby union legend Colin Meads dies aged 81

Meads, who has died of pancreatic cancer, played 133 games for the All Blacks, including 55 tests, from 1957 to 1971.Colin Meads, the famously tough All Blacks captain hailed as New Zealand’s greatest rugby player of the 20th century, has died after suffering from cancer. He was 81.Meads played 55 tests among 133 games for New Zealand between 1957 and 1971 – a prodigious number in an era in which the All Blacks seldom played more than four tests a year. Continue reading...

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20 августа, 02:04

Has the friendly rivalry between New Zealand and Australia been fatally injured?

A row over the dual citizenship of Barnaby Joyce, Australia’s deputy prime minister, has brought simmering tensions to the surfaceWhen Australia and New Zealand fight, rarely does it go beyond the gravity of two siblings scrapping. Conflict between the neighbours, separated by 1,300 miles across the Tasman Sea, typically takes the form of cheap jibes based on cultural stereotypes, or competing claims to the provenance of a racehorse, pop band or meringue-based dessert. Its only violent theatre is sporting clashes, such as yesterday’s first Bledisloe Cup Test. But that, for the most part, is as far is it goes.Over the last week, however, relations took an uncommon turn. The Australian prime minister, Malcolm Turnbull, denounced a “conspiracy” between his domestic opponents and their New Zealand allies. A tirade from Australian foreign minister Julie Bishop against the New Zealand Labour party prompted one newspaper headline to wonder, “Has Australia’s foreign minister accidentally declared war on New Zealand?” Continue reading...

17 августа, 21:00

Apartheid, prohibition and Midori: how cocktails went from martinis to Mesha

From London’s Hanky Panky to Melbourne’s Japanese Slipper, new book Around the World in 80 Cocktails traces the geographical origins of mixed drinksTravel has always been a part of the cocktail’s DNA. Early cocktail recipes called for American whiskey, British gin (itself a Dutch invention), Caribbean rum, French brandy, Italian vermouth, Spanish sherry and Portuguese madeira, among others. As travel and commerce have made the world smaller and better connected, the world of cocktails and mixed drinks has only become more diverse – and if you’ll excuse the pun – more cosmopolitan.The new book Around the World in 80 Cocktails traces the cocktail’s journey around the globe, from the early 19th century through the 21st. Each of the cocktails collected in the book is linked to a place – sometimes literally and sometimes more metaphorically. Continue reading...

16 августа, 15:15

Sperm Count in Western Men Has Dropped Over 50 Percent Since 1973, Paper Finds

Research that studied semen samples from nearly 43,000 men from 50 countries detected a sharp downward trend that is provoking broad health concerns.

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16 августа, 10:02

Australia v New Zealand: how they line up in the great trans-Tasman tussle test

The diplomatic incident sparked by the Australian deputy PM’s dual citizenship is the latest bout in a (mostly) friendly rivalry. So whose side are you on? The current rift/tiff between the Australian government and the New Zealand opposition Labour party has been fierce, fiery and memorable. But whether it will be significant depends if Jacinda Ardern becomes New Zealand’s next prime minister and the issue of “trust” with the Australian government is tested. Related: Australia accuses New Zealand opposition of trying to bring down government Continue reading...

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15 августа, 13:02

Australian Government Accuses New Zealand of Trying to Undermine It

Australia’s top diplomat said a New Zealand party was meddling in her country’s politics by exposing questions about the citizenship of Australia’s deputy prime minister.

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15 августа, 09:22

Australia accuses New Zealand opposition of trying to bring down government

NZ Labour denies claims it was part of ‘conspiracy’ to reveal that deputy prime minister is a dual citizen, as Malcolm Turnbull’s majority hangs in the balanceAustralia and New Zealand have become embroiled in an extraordinary diplomatic spat over claims the New Zealand opposition colluded with the Australian Labor party (ALP) in an attempt “to try and bring down the government”.During a febrile day of politics in both countries, Australia’s foreign affairs minister, Julie Bishop, said New Zealand’s opposition party was threatening the stability of a usually robust partnership between the two nations. Continue reading...

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14 августа, 12:45

The Breakdown: Barnaby Joyce, Australia’s No. 2, Can Claim New Zealand Citizenship. Too Bad for Him.

The revelation that Deputy Prime Minister Barnaby Joyce is also a New Zealander risks making him the latest Australian forced from office over dual citizenship.

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14 августа, 11:25

Australia's deputy PM Barnaby Joyce revealed to be a New Zealander

NZ confirms that the Nationals leader is a citizen – threatening Malcolm Turnbull’s one-seat majorityAustralia’s deputy prime minister, Barnaby Joyce, may be ineligible to sit in the country’s parliament after it emerged he is a New Zealand citizen. Joyce is potentially the fifth politician in recent weeks to fall foul of constitutional rules barring dual citizens from Australia’s parliament. Continue reading...

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14 августа, 07:47

New Zealand government plans army bootcamps for worst young offenders

With six weeks to go before the general election, the ruling National party floats idea for military-style disciplineThe New Zealand government has announced a crackdown on the country’s worst juvenile offenders with around 150 children to be sent on a year-long military bootcamp aimed at tackling violent and recurrent offenders.With six weeks to go before the general election, the National party says if re-elected it will tackle the country’s most serious young offenders by sending them to train alongside soldiers at a bootcamp run by the army. It will also hold “negligent parents to account” by issuing spot-fines of NZ$200 if their children aged 14 and under are found wandering the streets unsupervised between the hours of 12-5am. Continue reading...

12 августа, 20:29

How the big banks are banking off FX stupidity

We all know that the majority of people don’t know FX (Foreign Exchange) so this topic should come as no surprise.  (For those who haven't already, checkout Splitting Pennies for a quick guide on this topic) However, it’s important for traders and investors to understand how the US banks are ripping off their clients, and the only reason they do it is because clients allow them, because they don’t understand how they’re being scammed.  What we are talking about is the retail deliverable foreign exchange market.  Deliverable currencies is FX that is ‘deliverable’ to a foreign recipient, for example if you want to pay up front for a hotel in France you’ve booked in advance for your summer vacation.  It’s not only retail but for the example here it is – someone walking into a branch and asking to make a foreign payment.  We’ll use Bank of America as the example, let’s look at their FX rates from their website, available here:  https://www.bankofamerica.com/foreign-exchange/exchange-rates.go So here’s the first line of defense to this scam, which it can be fairly called (we will explain).  Only one side of the spread is displayed – this will depend when you are ‘buying’ or ‘selling’ but they will NEVER be displayed on the same time or on the same screen (then, normally intelligent people may be able to deduce they were being fleeced like a sheep).  Let’s calculate the total spread based on the above rates using simple FX math for the 2 currencies chosen for this example, Euro and Yen. FX is quoted EUR/USD that means 1 EUR = 1.1820 USD – the spot FX spread is about 1.1820 / 1.1822 according to LCG Brokers from Fortress Capital; but the market is closed now (it’s Saturday, day of rest in FX).  Now if we want to calculate the inverse price, for EUR/USD using Bank of America’s tool, we need to use the 1/x (reciprocal) function seen on most common calculators.  So if EUR/USD is 1.12 the inverse (reciprocal) is .89.  If we use the same ‘spread’ to convert 1 USD = x Euro then we subtract 1.1820 – 1.12 = .062 or 620 pips.  .062 doesn’t sound like much of a spread, but if you look in % terms it’s 5.54% of the price.  If we add the same amount of pips (or percent, however you calculate) to the other side of the spread, it would be 1.244 – for a total spread of 1240 pips.  Common spot trading spreads can run as high as 2 or 3 pips for the real shady FX brokers from Asia or aggressive IBs.  1240 pip spread is laughable.  Now of course these customers are PAYING in foreign currency not TRADING foreign currency it would be impossible to trade over 1240 pip spreads – but this is the reality for these poor retail victims.  1240 pips is substantial if you’re sending more than $50 – so now let’s look at the shocking examples.  At these prices, if you sent 100,000 to Europe, that would be about $5,540 in spread.  Where does this $5k magically disappear to?  The markets?  No – it is booked as a profit on the bank’s balance sheet.  Recently we (Elite E Services, Inc.) sent a wire payment like this for $5,000 and the banker had the audacity to say that if Bank A (not Bank of America, we won’t reveal the name) did the FX conversion we’d save $10 on the wire payment fee!  We calculated that would have been $350 in payment to Bank A to save $10. Now the critical thing for US readers to understand, this is a uniquely American practice which happens only inside the borders of USA.  If you are in virtually any other country, whether it be UK, New Zealand, Japan, Australia, Switzerland – you’re going to get rates on such transfers which are HIGH but probably something like 50 pips maybe 100 pips in extreme cases.  If you do transfers more than 100,000 that can go down to as low as 25 pips.  So how can the banks get away with it in USA?  They are simply taxing people’s stupidity, because there are alternatives.  Companies like Fortress Capital offer deliverable payment services by using payment processors like Commonwealth Foreign Exchange to get the same foreign rates and save customers up to 90% on transfers.  But they require an application and would not open an account for a single individual customer (it’s mostly for corporates who do regular transfers).  Then of course there’s Currencies Direct who has offices in USA, and a number of other companies. But the fact is that the banks have people by the short and curlies, there are not really many or any choices when you need to do a single transfer – and banks are making a small fortune from this.  Could this be considered a Monopoly?  Anti-trust issues? They settled huge claims and have since reduced the spread (whereas now it’s 5.5% it used to be 7% – 8% !!) and companies like American Express (AMEX) no longer charge a ‘foreign exchange fee’ – that’s right, on top of this horrendous spread many providers used to charge a 1% or 2% ‘fee’ on top of this!  Outrageous! The sad thing is that most in the retail market, even small retail customers with little or no investment accounts understand stock trading.  Forex is not so complex as it is sometimes presented by the banks – I’m sure they do this intentionally, they aren’t stupid.. This profit center is good for them and costs them nothing, it’s a risk-less profit that no one can complain about because ‘hey, it’s Forex.’ This is not the ONLY way the big banks are banking off people’s FX stupidity, but it’s the most petty way, and the most widespread.  Millions and millions of dollars of such transactions take place on a daily basis and the banks are happy to keep things like this. For a pocket guide to make you a Forex Genius! Checkout Splitting Pennies – Understanding Forex www.splittingpennies.com

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10 августа, 09:29

New Zealand gripped by 'Jacindamania' as new Labour leader soars in polls

Charisma and a refreshing openness are helping Jacinda Ardern close the gap on Bill English Jacindamania has gripped New Zealand, with the new Labour leader surging in the latest polls after only one week in the job. Newshub/Reid Research polling showed support for the party had leapt nine points to 33.1 in the week since Jacinda Ardern took over from Andrew Little. Labour’s internal polling company – UMR – reportedly has them on 36 points. Continue reading...

10 августа, 04:25

The Secret History Of The Banking Crisis

Authored by Adam Tooze via ProspectMagazine.co.uk, Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for? It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken our economy, our society and latterly our politics. Indeed, it has thrown into question who “we” are. It has triggered both a remarkable wave of nationalism and a deep questioning of social and economic inequalities. Politicians promise their voters that they will “take back control.” But the basic framework of globalisation remains intact, so far at least. And to keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before. In Britain the beginning of the crisis was straight out of economic history’s cabinet of horrors. Early in the morning of Monday 14th September 2007, queues of panicked savers gathered outside branches of the mortgage lender Northern Rock on high streets across Britain. It was—or at least so it seemed—a classic bank run. Within the year the crisis had circled the world. Wall Street was shaking, as was the City of London. The banks of South Korea, Russia, Germany, France, Belgium, the Netherlands, Ireland and Iceland were all in trouble. We had seen nothing like it since 1929. Soon enough Ben Bernanke, then chairman of the US Federal Reserve and an expert on the Great Depression, said that this time it was worse. But the fact that the tumult assumed such spectacular, globe-straddling dimensions had initially taken Bernanke by surprise. In May 2007 he reassured the public that he didn’t think American subprime mortgages could bring down the house. Clearly he underestimated the crisis. But was he actually wrong? For it certainly wasn’t subprime that brought down Northern Rock. The British bank didn’t have any exposure in the United States. So what was going on? The familiar associations evoked by the Northern Rock crisis were deceptive. It wasn’t panicking pensioners all scrambling to withdraw their savings at once that killed the bank. It wasn’t even the Rock’s giant portfolio of mortgages. The narrative of Michael Lewis’s The Big Short, of securitisation, pooling and tranching, the lugubrious details of trashy mortgage dealing, the alphabet soup of securitised loans and associated derivatives (MBS, CDO, CDS, CDO-squared) tell only one part of the story. What really did for banks like Northern Rock and for all the others that would follow—Bear Stearns, Merrill Lynch, Lehman, Hypo Real State, Dexia and many more—and what made this downturn different— so sharp, so sudden and so systemic, not just a recession but the Great Recession—was the implosion of a new system not just of bank lending, but of bank funding. It is only when we examine both sides of the balance sheet—the liabilities as well as the assets—that we can appreciate how the crisis was propagated, and then how it was ultimately contained at a global level. It is a story that the crisis-fighters have chosen not to celebrate or publicise. Ten years on, the story is worth revisiting, not only to get the history right, but because the global fix that began to be put in place in the autumn of 2007 is in many ways the most significant legacy of the crisis. It is still with us today and remains largely out of sight. The hidden rewiring of the global monetary system provides reassurance to those in the know, but it has no public or political standing, no resources with which to fight back if attacked. And this matters because it is increasingly out of kilter with the nationalist turn of politics. In the wake of the crash and its austere aftermath, voters in many countries have pointed the finger at globalisation. The monetary authorities, however, have quietly entwined themselves more closely than ever before—and they have done so in order to provide life support to that bank funding model which caused such trouble a decade ago. Ten years on, the question of whether this fix is sustainable, or indeed wise, is a question of more than historical interest. “To keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before” In 2007 economists were expecting a crisis. Not, however, the crisis they got. The standard crisis scenario through to autumn that year involved a sudden loss of confidence in American government debt and the dollar. In the Bush era, the Republicans had cut taxes and spent heavily on the War on Terror, borrowing from China. So what would happen, it was asked anxiously, if the Chinese pulled the plug? The great fear was that the dollar would plunge, interest rates would soar and both the US economy and the Chinese export sector would crash land. It was what Larry Summers termed a balance of financial terror. America’s currency seemed so doomed that in autumn 2007, the US-based supermodel Gisele Bündchen asked to be paid in euros for a Pantene campaign, and Jay-Z dissed the dollar on MTV. But somewhat surprisingly, like the nuclear stand-off in the Cold War, the financial balance of terror has become the basis for a precarious stability. Crucially, both Beijing and Washington understand the risks involved, or at least they seemed to until the advent of President Donald Trump. Certainly during the most worrying moments in 2008 Hank Paulson, Bush’s last Treasury Secretary, made sure that Beijing understood that its interests would be protected. Beijing reciprocated by increasing its commitment to dollar assets. In 2007, it was not the American state that lost credibility: it was the American housing market. What unfolded was a fiasco of the American dream: 8.7m homes were lost to foreclosure. But the real estate bust wasn’t limited to the US. Ireland, Spain, the UK and the Netherlands all had huge credit booms and suffered shattering busts. As homeowners defaulted some lenders went under. This is what happened early on to predatory lenders such as New Century and Countrywide. Bankruptcy also came to the Anglo Irish Bank and Spain’s notorious regional mortgage lenders, the cajas. In the fullness of time, it was—perhaps, though not necessarily—the fate that might well have befallen Northern Rock too. But before it could suffer death by a thousand foreclosures, Northern Rock was felled by a more fast-acting kind of crisis, a crisis of “maturity mismatch.” Banks borrow money short-term at low interest and lend long at marginally higher rates. It may sound precarious, but it is how they earn their living. In the conventional model, however, the short-term funding comes from deposits, from ordinary savers. Ordinarily, in a well-run bank, their withdrawals and deposits tend to cancel each other out. Fits of uncertainty and mass withdrawals are always possible, and perhaps even inevitable once in a while. So to prevent them turning into bank runs, governments offer guarantees up to a reasonable amount. Most of the Northern Rock depositors had little to fear. Their deposits were, like all other ordinary savers, guaranteed by then Chancellor Alistair Darling. The investors who weren’t covered by government backing were those who had provided Northern Rock with funding through a new and different channel—the wholesale money market. They had tens of billions at stake, and every reason to panic. It was the sudden withdrawal of this funding that actually killed Northern Rock. As well as taking in money from savers, banks can also borrow from other banks and other institutional investors. The money markets offer funds overnight, or for a matter of weeks or months. It is a fiercely competitive market with financial professionals on both sides of every trade. Margins are slim, but if the volumes are large there are profits to be made. For generations this was the preserve of investment bankers—the ultimate insiders of the financial community. They didn’t bother with savers’ deposits. They borrowed in the money markets. From the 1990s commercial banks and mortgage lenders began to operate on a similar model. It was this new form of “market-based” banking combined with the famous securitisation of mortgages that enabled the huge expansion of European and US banking that began to crash in 2007. Run for the hills: Northern Rock depositors rush to start taking out their money.  By the summer of 2007 only 23 per cent of Northern Rock’s funding came from regular deposits. More than three quarters of its operation was sustained by borrowing in capital and money markets. For these funds there were no guarantees. For a run to develop in the money market, the mortgages did not need to default. All that needed to happen was for the probability of some of them defaulting to increase. That was enough for interbank lending and money market funding to come abruptly to a halt. The European money markets seized up on 9th August. Within a matter of days Northern Rock was in trouble, struggling to repay short-term loans with no new source of funding in prospect. And it was through the same funding channel that the crisis went global. The attraction of money market funding was that it freed you from the cumbersome bricks-and-mortar branch network traditionally used to attract deposits. Using the markets, banks could source funding all over the world. South Korean banks borrowed dollars on the cheap to lend in Won. American banks operating out of London borrowed Yen in depressed Japan, flipped them into dollars and then lent them to booming Brazil. The biggest business of all was the “round tripping” of dollars between America and Europe. Funds were raised in America, which for reasons of history and the nation’s sheer scale, is the richest money market in the world. Those dollars were exported to institutions and banks in Europe, who then reinvested them in the US, very often in American mortgages. The largest inflow of funds to the US came not from the reinvestment of China’s trade surplus, but through this recycling of dollars by way of Europe’s banks. Barclays didn’t need a branch in Kansas any more than Lehman did. Both simply borrowed money in the New York money markets. From the 1990s onwards, Europe’s banks, both great and small, British, Dutch, Belgian, French, Swiss and German, made themselves into a gigantic trans-Atlantic annex of the American banking system. All was well so long as the economy was buoyant, house and other asset prices continued to go up, money markets remained confident and the dollar moved predictably in the direction that everyone expected, that is gently downwards. If you were borrowing dollars to fund a lending business the three things that you did not want to have happen were: for your own loans to go bad; money markets to lose confidence; or for dollars to suddenly become scarce, or, what amounts to the same thing, unexpectedly expensive. While the headlines were about sub-prime, the true catastrophe of the late summer of 2007 was that all three of these assumptions were collapsing, all at once, all around the world. “The Fed effectively established itself as a lender of last resort to the entire global financial system” The real estate market turned down. Large losses were in the pipeline, over years to come. But as soon as Bear Stearns and Banque Nationale de Paris (BNP) shut their first real estate funds, the money markets shut down too. Given the global nature of bank funding this produced an acute shortage of dollar funding across the European and Asian banking system. It was the opposite of what the best and brightest in macroeconomics had expected: strong currencies are, after all, meant to be built on thrift and industry, not shopping splurges and speculative debts. But rather than the world being glutted with dollars, quite suddenly banks both in Europe and Asia began to suffer periodic and panic-inducing dollar shortages. The paradigmatic case of this counterintuitive crisis would eventually be South Korea. How could South Korea, a champion exporter with huge exchange reserves be short of dollars? The answer is that in the years of the recovery from the 1997 East Asian crisis, while Korean companies Hyundai and Samsung had conquered the world, Korea’s banks had been borrowing dollars at relatively low interest rates to lend out back home in Won to the booming home economy. Not only was there an attractive interest rate margin, but thanks to South Korea’s bouyant exports, the Won was steadily appreciating. Loans taken out in dollars were easier to repay in Won. As such these loans cushioned the losses suffered by South Korean firms on their dollar export-earnings. By the late summer of 2008 the South Korean banks operating this system owed $130bn in short-term loans. Normally this was no problem, you rolled over the loan, taking out a new short-term dollar credit to pay off the last one. But when the inter-bank market ground to a halt the South Koreans were painfully exposed. Barring emergency help, all they could do was to throw Won at the exchange markets to buy the dollars they needed, which had the effect of spectacularly devaluing their own currency and making their dollar obligations even more unpayable. South Korea, a country with a huge trade surplus and a large official dollar reserve, faced a plunging currency and a collapsing banking system. In Europe the likes of RBS, Barclays, UBS and Deutsche had even larger dollar liabilities than their South Korean counterparts. The BIS, the central bankers’ bank, estimated that Europe’s mega-banks needed to roll over $1-1.2 trillion dollars in short-term funding. The margin that desperate European banks were willing to pay to borrow in sterling and euro and to swap into dollars surged. Huge losses threatened—and both the Bank of England and the European Central Bank (ECB) could not do much to help. Unlike their East Asian counterparts, they had totally inadequate reserves. The one advantage that the Europeans did have over the Koreans, was that the dollars they had borrowed had largely been invested in the US, the so-called “round-tripping” again. The huge portfolios of American assets they had accumulated were of uncertain value, but they amounted to trillions of dollars and somewhere between 20 and 25 per cent of the total volume of asset- and mortgage-backed securities. In extremis the Europeans could have auctioned them off. This would have closed the dollar-funding gap, but in the resulting fire sales the European banks would have been forced to take huge write downs. And most significantly, the efforts by the Fed and the US Treasury to stabilise the American mortgage market would have been fatally undercut. “In the 60s, swaps were about stabilising exchange rates. Now they’re all about stabilising oversized banks” This was the catastrophic causal chain that began to emerge in August 2007. How could the central banks address it? The answer they found was three-pronged. The most public face of crisis-fighting was the effort to boost the faltering value of the mortgage bonds on the banks’ books (typically securitised versions of other banks’ mortgage loans, which were becoming less reliable in the downturn), and to provide the banks with enough capital to absorb those losses that they would inevitably suffer. This was the saga of America’s Troubled Asset Relief Programme, which played out on Capitol Hill. In the case of Northern Rock this prong involved outright nationalisation. Others took government stakes of varying sizes. Warren Buffett made a lucrative investment in Goldman Sachs. Barclays has now been charged by the Serious Fraud Office with fraudulently organising its own bailout, by—allegedly—lending money to Qatar, which that state is then said to have reinvested in Barclays. Without the bailout, you ended up with Lehman: bewildered bankers standing on the pavements of the City and Wall Street carrying boxes of their belongings. The masters of the universe plunged to earth. It half-satisfied the public’s desire for revenge. But it did nothing for business confidence. With enough capital a bank could absorb losses and stay afloat. But to actually operate, to make loans and thus to sustain demand and avert a downward spiral of prices and more bankruptcies, the banks needed liquidity. So, secondly, the central banks stepped in, taking over the function, which the money market had only relatively recently assumed but was now suddenly stepping back from, of being the short-term lenders. The ECB started as early as August 2007. The Bank of England came in late, but on a large scale. The Fed became the greatest liquidity pump, with all of Europe’s banks benefiting from its largesse. The New York branches of Barclays, Deutsche, BNP, UBS and Credit Suisse were all provided with short-term dollar funding on the same basis as Citi, Bank of America, JP Morgan and the rest. But it was not enough. The Europeans needed even more dollars. So the Fed’s third, final and most radical innovation of the crisis was to devise a system to allow a select group of central banks to funnel dollars to their banks. To do so the Fed reanimated an almost-forgotten tool called the “swap lines,” agreements between central banks to trade their currencies in a given quantity for a given period of time. They had been used regularly in the 1960s, but had since gone out of use. Back then, the aim was stabilising exchange rates. This time, the aim was different: to stabilise a swollen banking system that was faltering, and yet abjectly too big to fail. At a moment when dollars were hard to come by, the new swap lines enabled the ECB to deposit euros with the Fed in exchange for the dollars that the eurozone banks were craving. The Bank of England benefited from the same privilege. Not that they were welcome at first. When the Fed first mooted the idea in the autumn of 2007, the ECB resisted. It did not want to be associated with a crisis that was still seen largely as American. If Gisele didn’t want to be paid her modelling fees in US dollars, why on earth should the ECB be interested? But as the European bank balance sheets unravelled, it would soon become obvious that Frankfurt needed all the dollars it could get. Initiated in December 2007, the swap lines would rapidly expand. By September all the major European central banks were included. In October 2008 the network was expanded to include Brazil, Australia, South Korea, Mexico, New Zealand and Singapore. For the inner European core, plus Japan, they were made unrestricted in volume. The sums of liquidity were huge. All told, the Fed would make swap line loans of a total of $10 trillion to the ECB, the Bank of England the National Bank of Switzerland and other major banking centres. The maximum balance outstanding was $583bn in December 2008, when they accounted for one quarter of the Fed’s balance sheet. It was a remarkable moment: the Fed had effectively established itself as a lender of last resort to the entire global financial system. But it had done so in a decentralised fashion, issuing dollars on demand both in New York and by means of a global network of central banks. Not everyone was included. Russia wasn’t, which was hardly surprising given that it had come to blows with the west over Georgia’s Nato membership application only weeks earlier. Nor did the Fed help China or India. And though it helped the ECB, it did not provide support to the “new Europe” in the east. The Fed probably imagined that the ECB itself would wish to help Poland, the Baltics and Hungary. But the ECB’s president Jean-Claude Trichet was not so generous. Instead, eastern Europe ended up having to rely on the International Monetary Fund (IMF). Swapsies? As a scholar of the Great Depression, the Fed’s Ben Bernanke knew the importance of swap lines. Photo: MARK WILSON/GETTY IMAGES The swap lines were central bank to central bank. But who did they really help? The reality, as all those involved understood, was that the Fed was providing preferential access to liquidity not to the “euro area” or “the Swiss economy” as a whole, but to Deutsche Bank and Credit Suisse. Of course, the justification was “systemic risk.” The mantra in Washington was: you have to help Wall Street to help Main Street. But the immediate beneficiaries were the banks, their staff, especially their highly-remunerated senior staff and their shareholders. Though what the Fed was doing was stabilising the global banking system, it never acknowledged as much in so many words, certainly not on the record, where it said as little as it decently could about the swap line operation. The Fed’s actions have global effects. But it remains an American institution, answerable to Congress. Its mandate is to maintain employment and price stability in the US economy. The justification for the swap lines, therefore, was not global stability, but the need to prevent blowback from Europe’s de facto Americanised banks—to avoid a ruinous, multi-trillion dollar fire sale of American assets. Once the worst of the crisis had passed, Bernanke would assist the European banks in liquidating their American assets by way of the Fed’s three rounds of asset purchases, known as Quantitative Easing (QE). The swaps were meticulously accounted for. Every cent was repaid. No losses were incurred—the Fed even earned a modest profit. They were not exactly covert. But given the extraordinary extension of its global influence that the swaps implied, they were never given publicity, nor even properly discussed. Bernanke’s name will be forever associated with QE, not swap lines. In his lengthy memoirs, The Courage to Act, the swaps merit no more than a few cursory pages, though Bernanke as a scholar of the 1930s knows very well just how crucial these instruments were. Is this an accident? Surely not. In the case of the swap lines, the courage to act was supplemented by an ample measure of discretion. The Fed did everything it could to avoid disclosing the full extent and range of beneficiaries of its liquidity support operations. They did not want to name and shame the most vulnerable banks, for fear of worsening the panic. But there are politics involved too. Given the rise of the Bernanke-hating Tea Party in 2009, the likely response in Congress to news headlining the scale of the Fed’s global activity was unpredictable to say the least. When asked why no one on Capitol Hill had chosen to make an issue of the swap lines, one central banker remarked to me that it felt as though “the Fed had an angel watching over it.” One other reason for the tight lips is that the story of the swap lines is not yet over. The network was rolled out in 2007 and 2008 as an emergency measure, but since then it has become the under-girding of a new system of global financial crisis management. In October 2013, as the Fed prepared finally to begin the process of normalisation by “tapering” its QE bond purchases, it made another decision which made plain that the new normal would not be like the old. It turned the global dollar swap line system into a standing facility: that is to say, it made its emergency treatment for the crisis into a permanent feature of the global monetary system. On demand, any of the core group of central banks can now activate a swap line with any other member of the group. Most recently the swap line system was readied for activation in the summer of 2016 in case of fallout from the Brexit referendum. As the original crisis unfolded in 2008, radical voices like Joseph Stiglitz in the west, and central bankers in the big emerging economies called for a new Bretton Woods Conference—the meeting in 1944, which had decided on the post-war currency system and the creation of the IMF and the World Bank. The Great Financial Crisis had demonstrated that the dollar’s exorbitant privilege was a recipe for macroeconomic imbalances. The centre of gravity in the world economy was inexorably shifting. It was time for a new grand bargain. “Central banks has staged Bretton Woods 2.0. But they had not invited the public or explained their reasons” What these visionary suggestions failed to register was that foundation of the world’s de facto currency system were not public institutions like the IMF, but the private, dollar-based global banking system. The introduction of the swap lines gave that system unprecedented state support. The Fed had ensured that the crisis in global banking did not become a crisis of the dollar. It had signalled that global banks could rely on access to dollar liquidity in virtually unlimited amounts, even in the most extreme circumstances. The central banks had, in other words, staged their Bretton Woods 2.0. But they had omitted to invite the cameras or the public, or indeed to explain what they were doing. The new central bank network created since 2008 is of a piece with the new networks for stress testing and regulating the world’s systemically important banks. The international economy they regulate is not one made up of a jigsaw puzzle of national economies, each with its gross national product and national trade flows. Instead they oversee, regulate and act on the interlocking, transnational matrix of bank balance sheets. This system was put in place without fanfare. It was essential to containing the crisis, and so far it has operated effectively. But to make this technical financial network into the foundation for a new global order is a gamble. It worked on the well-established trans-Atlantic axis. But will it work as effectively if it is asked to contain the fallout from an East Asian financial crisis? Can it continue to operate below the political radar, and is it acceptable for it to do so? With the Fed in the lead it places the resources, expertise and authority of the world’s central banks behind a market-based system of banking that has shown its capacity for over-expansion and catastrophic collapse. For all the talk of “macroprudential” regulation, Basel III and Basel IV, rather than disarming, down-sizing and constraining the global banking system, we have—through the swap lines—embarked on, if you like, a regulatory race to the top, where the authorities intervene heavily to allow the big banks in some countries to continue what they were doing before the unsustainable ceased to be sustained. And without even the political legitimacy conferred by G20 approval. Not everyone in the G20 is part of the swap line system. The Fed’s safety net for global banking was born at the fag-end of the “great moderation,” the era when economies behaved nicely and predictably, and when a “permissive consensus” enabled globalisation. Though a child of crisis, it bore the technocratic, “evidence-based” hall marks of that earlier era. It bears them still. Can it survive in an age when the United States is being convulsed by a new wave of economic nationalism? Is there still a guardian angel watching over the Fed on Capitol Hill? And with Trump in the White House, how loudly should we even ask the question?  

09 августа, 13:59

Risk Off: Global Stocks Slide As "Fire And Fury" Results In "Selling And Fear"

US futures are set for a sharply lower open (at least in recent market terms) following a steep decline in European stocks and a selloff in Asian shares, following yesterday's sharp escalation in the war of words between the U.S. and North Korea. In a broad risk-off move U.S. Treasuries rose, the VIX surged above 12 overnight, while German bund futures climbed to the highest level in six weeks. The Swiss franc gained 1.2 percent to 1.1320 per euro its biggest daily advance since February 2015, while the yen surged as much as 0.8% against per euro, its strongest level in three weeks while gold rose. "Trump's comments about North Korea have created nervousness and the fear is if the President really means what he said: "fire and fury"," said Naeem Aslam, chief market analyst at Think Markets in London. "The typical text book trade is that investors rush for safe havens." Gold was headed for it’s largest gain this month while the yen and Swiss franc were the biggest advancers among G-10 currencies after President Donald Trump ratcheted up his rhetoric against North Korea. Treasuries and most European government bonds climbed amid the shift to safer assets, while almost every sector of the Stoxx Europe 600 Index fell and emerging markets equities were poised for the biggest drop since June 15. The rand extended losses after South Africa’s president survived a no-confidence vote. Earlier on Tuesday, volatility from the U.S. to Japan rose after Trump said in response to a Washington Post report on North Korea’s nuclear capabilities that further threats from the country would be met with “fire and fury.” North Korea said it’s examining an operational plan for firing a ballistic missile toward Guam. The VIX jumped above the 200-DMA as equity markets continuously push lower. The financial sector lagged, while defensive healthcare sector outperforms; gold and crude were supported in tandem. The heightened geopolitical tensions between the US and North Korea dampened global risk sentiment, which snapped the DJIA's streak of record closes and saw nearly all Asia-Pac bourses in negative territory. This was after US President Trump warned North Korea the US would respond to any threats with an unprecedented level of "fire and fury", which spurred a response from North Korea that it was considering striking Guam with mid-to long-range missiles. “Trump in his reactions is something new for all of us,” Geraldine Sundstrom, portfolio manager at Pimco Europe, said in an interview on Bloomberg TV. “Given the nature of the threats, given the players are new, it makes the situation a little bit unusual,” said Sundstrom, who recommended safe haven trades and minimizing risks through duration.  As a result, global assets have slumped in a "classic, risk-off reaction" as Bloomberg puts it. The MSCI EM Asia Index of shares slid the most in a month. “We’re seeing a bit of risk aversion due to concerns over North Korea,” said Dushyant Padmanabhan, a currency strategist at Nomura in Singapore. “Besides the geopolitics, the market will also be focused on the Friday’s U.S. CPI print and what clues that might give us on the path for inflation.” The Nikkei 225 (-1.3%) underperformed as exporters suffered from the flows into JPY. The Nikkei Stock Average Volatility Index soared as much as 38%, most since August 2015, with the VNKY Index closing +24% at 16.00. The Korean KOSPI (-1.1%) was also, so to say, "weighed down" by the increased threat of nuclear war. In retrospect, that the South Korean market dipped just over 1% on the prospect of a mushroom cloud, is rather impressive. Hang Seng (-0.4%) and Shanghai Comp (-0.2%) were subdued following a miss on Chinese CPI and PPI data, while ASX 200 (+0.4%) bucked the trend amid gains in the metals-related stocks and with the largest-weighted financials sector buoyed after big-4 bank CBA reported an 8th consecutive year of record profits. Demand for 10yr JGBs was spurred by a flight to quality and with the BoJ in the market for JPY 770b1n of JGBs. The curve also slightly flattened amid outperformance in the long-end. Elsewhere, the Stoxx Europe 600 Index declined 0.6 percent as of 9:54 a.m. in London, the largest drop in more than a week on a closing basis. The U.K.’s FTSE 100 Index declined 0.6 percent, the first retreat in a week. Germany’s DAX Index sank 1.2 percent in the biggest tumble in almost three weeks. Futures on the S&P 500 Index sank 0.4 percent, the largest decrease in almost five weeks. The MSCI Emerging Market Index sank 0.9 percent, the biggest dip in almost eight weeks. "Heightened geopolitical risks overnight have seen the markets flip from risk-on to risk-off and we have to wait and see how long this move runs before adding some positions," said Viraj Patel, an FX strategist at ING in London. In overnight FX trading, risk aversion dominated trading as the Swiss franc and the yen led gains among Group-of-10 currencies, while the dollar index steadied as EM currencies halted a three-day rally. The yen appreciated as much as 0.8 percent to 128.61 per euro, its strongest level in three weeks. During previous occasions of political turmoil between the U.S. and North Korea, the Japanese currency over performed, yet the Swiss franc’s sharp decline in the past two weeks made for stretched positioning versus the euro, resulting in a bigger gain. The Australian dollar and New Zealand dollar both weakened.  South Korea’s won fell to a three-week low amid heightened geopolitical tensions over North Korea. CNH and CNY both rally through 6.70/USD, highest since October 2016 after another stronger PBOC fixing. Core fixed income gains sharply, curves bull flatten with heavy volume noted in USTs. VIX jumps above 200-DMA as equity markets continuously push lower. Financial sector lags, while defensive healthcare sector outperforms; gold and crude supported in tandem. Some remain skeptically optimistic: at the moment the tensions increasing around North Korea’s nuclear weapons program does remain an “exchange of rhetoric,” and under normal expectations it’s difficult to think that any “real action” will be taken from here, says Takuya Yamada, a senior money manager in Tokyo. •If something actually happens, it won’t be surprising to see the market fall 5%, 10% in no time at all. However investors are aware of the fact that if North Korea takes action it will mean self- destruction, so their premise is that this is merely “trash talking.” "We've had some competing forces play out over the past 12 hours - the U.S. dollar was stronger off economic data, but that was quickly reversed with President Trump's comments about North Korea earlier today (Wednesday)," said ANZ analyst Daniel Hynes. In rates, the yield on 10-year Treasuries decreased two basis points to 2.24 percent. Germany’s 10-year yield declined four basis points to 0.44 percent, the lowest in six weeks. Britain’s 10-year yield fell four basis points to 1.117 percent, the lowest in six weeks. France’s 10-year yield dipped three basis points to 0.73 percent. In commodities, gold gained 0.6 percent to $1,267.99 an ounce, heading for the biggest one-day increase since July 28. West Texas Intermediate crude climbed 0.4 percent to $49.36 a barrel. Looking at the day ahead, there is the preliminary 2Q nonfarm productivity (0.7% expected) and unit labour costs (1% expected) data, final June wholesale inventories (0.6% expected) as well as the MBA mortgage applications. In Asia, Japan’s PPI for July will also be out on early Thursday morning. Notable US companies reporting today include Twenty First century Fox. Market Snapshot S&P 500 futures down 0.4% to 2,463 MSCI Asia down 0.4% to 160.58 MSCI Asia ex-Japan down 0.6% to 528.93 STOXX Europe 600 down 0.8% to 379.60 Nikkei down 1.3% to 19,738.71 Topix down 1.1% to 1,617.90 Hang Seng Index down 0.4% to 27,757.09 Shanghai Composite down 0.2% to 3,275.57 Sensex down 0.5% to 31,859.44 Australia S&P/ASX 200 up 0.4% to 5,765.66 Kospi down 1.1% to 2,368.39 German 10Y yield fell 3.7 bps to 0.437% Euro down 0.2% to 1.1730 per US$ Brent Futures up 0.02% to $52.15/bbl US 10Y yield fell 2 bps to 2.24% Italian 10Y yield rose 1.1 bps to 1.714% Spanish 10Y yield fell 4.3 bps to 1.411% Brent Futures up 0.02% to $52.15/bbl Gold spot up 0.6% to $1,268.77 U.S. Dollar Index down 0.03% to 93.62 Top Overnight News President Donald Trump’s threat to hit North Korea with “fire and fury” jolted markets from New York to Seoul even as U.S. lawmakers questioned the president’s willingness to back up the heated rhetoric N. Korea can strike before any U.S. pre-emptive attack; considering firing ballistic missiles “at areas around Guam” where U.S. strategic bombers are stationed: KCNA Trump’s presidential campaign, his son Donald Trump Jr. and former campaign manager Paul Manafort have started turning over documents to the Senate Judiciary Committee as part of the panel’s expanded investigation of Russian election- meddling South African President Jacob Zuma narrowly overcame a bid by opposition parties to topple him through a no-confidence motion in parliament. The real loser may be his own party, the African National Congress Morgan Stanley beat Goldman Sachs Group Inc. to become the most profitable foreign securities firm in Japan last fiscal year after it boosted structured-product sales and managed the two biggest initial public offerings BOE Agents’ Summary of Business Conditions: some manufacturers reported that initial pass-through of weaker sterling near completion Italian June Industrial Production m/m: +1.1% vs +0.2% est. China July CPI y/y: 1.4% vs 1.5% est; PPI 5.5% vs 5.6% est. API inventories according to people familiar w/ data: Crude -7.8m; Cushing +0.3m; Gasoline +1.5m; Distillates -0.2m Disney’s Iger Sees a Future Without Netflix, Comcast or DirecTV Goldman Sells U.K. Insurer Stake to GIC, Blackstone, MassMutual Canada Mulls Nicotine Cut as New Front Opens Against Smoking British American Tobacco Is Said to Extend Debt Binge in Europe New iPhone Models Are Said to Enter Mass Production: DigiTimes U.S. FDA Is Said to Issue Form 483 to Baxter Ahmedabad Site: CNBC Fox Is Said to Have Declined to Settle Suits for $60M: NYT Novo Sees Price of Insulin in U.S Dropping Again Next Year Ford Repairs Over 50 Police Units on Carbon Monoxide Concerns In Asia, increased geopolitical tensions after a war of words between US and North Korea dampened global risk sentiment, which ensured the DJIA snapped a 9-day streak of record closes and saw nearly all Asia-Pac bourses in negative territory. This was after US President Trump warned North Korea the US would respond to any threats with an unprecedented level of fire and fury, which spurred a response from North Korea that it was considering striking Guam with mid-to long-range missiles. Nikkei 225 (-1.3%) underperformed as exporters suffered from the flows into JPY, while KOSPI (-1.1%) was also weighed on by the increased threat of nuclear war. Hang Seng (-0.4%) and Shanghai Comp (-0.2%) were subdued following a miss on Chinese CPI and PPI data, while ASX 200 (+0.4%) bucked the trend amid gains in the metals-related stocks and with the largest-weighted financials sector buoyed after big-4 bank CBA reported an 8th consecutive year of record profits. Demand for 10yr JGBs was spurred by a flight to quality and with the BoJ in the market for JPY 770b1n of JGBs. The curve also slightly flattened amid outperformance in the long-end. RBA Assistant Governor Kent states that fixed-income funding is available at favourable rates and that banks' use of wholesale debt is much lower than a few years ago. Further stating that AUD appreciation is more of a story regarding USD depreciation, adds further strength in AUD would result to slightly weaker domestic growth. South Korea Finance Minister sees limited risk impact on markets from North Korea. Chinese CPI (Jul) M/M 0.1% vs. Exp. 0.2% (Prey. - 0.2%) Chinese PPI (Jul) Y/Y 5.5% vs. Exp. 5.6% (Prey. 5.5%) Chinese CPI (Jul) Y/Y 1.4% vs. Exp. 1.5% (Prey. 1.5%) Top Asian News Morgan Stanley Tops Goldman Sachs With Biggest Profit in Japan S. Korea Official Says Tension High, But Not A Crisis: Yonhap Markets on Edge in Seoul as Trump Escalates North Korea Warnings China Remains Inflation Backstop as Mills and Smelters Close India Is Said to Tweak HPCL Share Sale Terms to Skip Open Offer Gold Imports by India Are Said to Have More Than Doubled in July Wharf Soars to Highest Since ’86 on $29 Billion Spinoff Plan Abu Dhabi’s FAB Is Said to Appoint Pant International FIG Head In European bourses, the selling persisted across virtually all markets with Trump's comments in North American trade has been the catalyst for the selling pressure seen in Global equities. US President Trump warned North Korea that a US response to any threats would be 'fire and fury the likes of which the world has never seen'. Comments followed from North Korea, with the state media stating that the US war hysteria will bring a miserable end, and also warns of operation on signs of US provocation, further saying that they are seriously mulling striking Guam. Adding to the downbeat was rather subdued inflation figures out of China. EGB yields falling to the lows amid the aforementioned escalating tensions between the US and North Korea. Peripheral bonds wider by around lbps against the German benchmark. Elsewhere, BATs have begun marketing form their multi-currency (GBP, EUR) 5 tranche after yesterday's chunky USD-denominated 8 part. Technically uncovered German Bobl auction. Top European News Brexit Will Strain BOE’s Supervisory Resources, PRA’s Woods Says Italy Industrial Production Jumps, Pointing to Faster Recovery ABN Amro Bolsters Capital as Dutch Growth Drives Profit Rise Carl Zeiss Meditec Slides as Valeant Shuts Door on Target Assets Ahold Delhaize Boosts Synergy Goal as Competition Concerns Grow Russia Readies $4 Billion Eurobond Swap in Face of Sanctions EON Plots Growth Strategy as Profit Rebounds, Debt Falls Santander Sells Control of Popular Real Estate to Blackstone In currencies, the initial mover following the exchange from the USA and North Korea was USD/JPY, breaking through August's low, however finding some bids just below this 109.80 level. USD/CHF saw similar price action, attempting to test August's low around 0.9650. Traffic was clear at these levels, becoming key support in the pair, with bids clearly stacked around 0.9650. Sterling saw some early bullish pressure this morning, as cable broke 1.30 to the upside, with GBP/USD struggling to find any real direction as Brexit concerns continue. EUR/GBP saw some selling, however, failed to attempt to test 0.90 as bids are evident ahead of this key psychological level. The geopolitical uncertainties between Australia and China did cause some suffering of AUD, as AUD/NZD fell from 1.08, further weight was put on the currency with Central bank commentary from the RBA, as Kent said AUD appreciation is more of a story regarding USD depreciation, adds further strength in AUD would result to slightly weaker domestic growth. In commodities, safe haven flow supporting precious metals with Gold prices up a modest 0.6%, while crude prices have recoup from yesterday's lows following last night's large drawdown in the API report. Saudi and Iraqi oil ministers are to hold a joint press conference on Thursday in an attempt to stabilise oil markets. US Event Calendar 7am: MBA Mortgage Applications, prior -2.8% 8:30am: Nonfarm Productivity, est. 0.7%, prior 0.0%; Unit Labor Costs, est. 1.1%, prior 2.2% 10am: Wholesale Trade Sales MoM, est. 0.0%, prior -0.5%;  Wholesale Inventories MoM, est. 0.6%, prior 0.6% DB's Jim Reid concludes the overnight wrap A bit more going on in the last 12 hours with Trump inflaming already elevated tensions between the US and North Korea late in yesterday's session and this morning we have seen Chinese inflation numbers. If that’s not enough today is a special financial crisis anniversary. More on that later but first to China. China’s July PPI was up 5.5% yoy, but a tad softer than expectations of 5.6% (5.5% previous), the National Bureau of statistics noted mom producer price growth turned positive on the back of steel and non-ferrous metal price rebounds, with ~50% of the industrial sectors seeing price gains in July. CPI was up 1.4% yoy in July (vs. 1.5% expected; 1.5% previous) with food costs decline partly offsetting gains in other consumer goods. Focus remains on the extent of economic growth in 2H, as China’s policy makers had previously indicated a preference for slower growth This morning in Asia, markets are sharply lower on the back of the North Korea story rather than the above inflation numbers. The Nikkei is -1.2%, the Kospi down -0.8%, the Hang Seng -0.8% with Chinese bourses ranging from -0.2% to +0.1%. The Korean won has also dipped 0.5% against the USD. This follows another soporific session yesterday, albeit one that awoke from its slumber in the last hour of trading following defiant comments from Mr Trump concerning North Korea. As per Bloomberg, he said the country would be "met with fire and fury and, frankly, power the likes of which the world has never seen before" if it continues to threaten the US. The VIX spiked from 9.54 just after Europe went home and around 10 when the comments were reported to a peak of 11.29 with 30mins left in the session before closing at 10.96. However even with the late shake-up the S&P 500 only lost around 0.4% after the news and (closed -0.24%) extending the record closing run of sub 0.3% moves in either direction to 14 days. Remember this record covers 90 years of daily data with the previous record being 10 days without a bigger move. Trading volumes in the S&P were again very thin, with the daily value traded at 0.15% of the index market cap, which is ~45% of the historical average. Elsewhere, the Dow dipped 0.2%, with Trump’s comments helping to break a run of 8 consecutive days of fresh all-time highs. Staying with Trump, an earlier article by the Washington post suggested North Korea’s nuclear capabilities may be more advanced than prior expectations. According to US intelligence reports the state: i) can now produce small nuclear warheads that fit inside its missiles, ii) is outpacing expectations in building missiles that are capable of striking the US mainland, and that iii) the state may have up to 60 nuke warheads, this compares to ~7,000 each in US / Russia, 260 in China and 215 in the UK. These reports coupled with increased rhetoric from Pyongyang and a flat refusal to negotiate on their nuclear program may have added to Trump’s fury. Senator McCain said Trump needs to be more cautious in his statements because he may not be able to make good on the implied threats. For now, we watch and wait. Before we review the rest of the last 24 hours, from the prospective of a research analyst that has to write something about financial markets every day, 2017 and 2018 are a great source of ongoing material given the regular 10 year financial crisis anniversaries that we'll see. Today is one of those such days as we mark a decade to the day that money markets started to seize up thus requiring heavily coordinated central bank action that marked an extraordinary period of central bank activity that is still in full flow today. The announcement by BNP Paribas that they were closing three funds linked to US mortgages was the catalyst for a complete lack of trust in money markets over the coming days and weeks. Just over a month later we had the bank run on Northern Rock. As an example of the impact BNP's announcement had, 3 month dollar Libor hadn't moved all year but over the course of two days spiked 20bps. Not a great deal but on this day 10 years ago all the major central banks were forced to inject liquidity with the ECB doing so for the first time since 9/11. One of the great ironies of the period since is that returns in major global assets have been very healthy albeit with some major exceptions. Of the 38 major global assets we usually track for this purpose 27 are higher and 11 lower in dollar adjusted terms. Top of the pack is the S&P 500 (+106%) followed by US HY (+95%) and Gold (87%). Other DM fixed income markets are generally in the 35%-80% range. The Dax (+38%) leads the way in an underperforming European equity story. The Stoxx 600 is up 22% and the FTSE 100 only 12% higher in Dollar terms largely due to a 36% fall in Sterling over the period. Of the 11 assets  that has seen negative dollar returns over the last 10 years the highlights are Greek equities (-82%), Stoxx Euro Banks (-54%), Portuguese equities (-42%), the CRB commodity index (-42%), Italian equities (-33%), and Oil (-32%). EM equities were up 29% but Chinese (-2%), Brazilian (-26%) and Russian (-32%) bourses were selective under-performers. So the huge intervention and general asset price inflation over the last decade hasn't been universally seen across the board. There have been clear winners and losers. Were you the one who during late afternoon on August 8th 2007 decided to switch out of their portfolio of Greek equities to buy the S&P 500 and then go on a 10 year sabbatical? If you were then I have nothing but respect, admiration and jealousy towards you. If you did the reverse trade then I suspect you might not be reading this now but you have my sympathies!! Back to the market’s performance, US bourses all softened ~0.2% overnight. Within the S&P, only the utilities sector was up (+0.3%), while the materials (-0.9%) and Telco sector dipped the most. After the bell, Disney traded ~4% down post its result on softer revenue trends and has said it will stop selling movies to Netflix. Back in Europe, markets broadly strengthened. The Stoxx 600 gained 0.2%, aided by the softer Euro and advances in the utilities sector (+0.6%). Regional indices were also slightly up, with the DAX (+0.3%), FTSE 100 (+0.1%), CAC (+0.2%) and FTSE MIB (+0.1%). Over in government bonds, yields were modestly higher across maturities, with the bunds (2Y: +2bp; 10Y: +2bps), Gilts (2Y: +2bp; 10Y: +2bps) and OATs (2Y: +2bps; 10Y: +2bps) all up ~2bp at the long end of the curve, while Italian BTPs (2Y: unch; 10Y: +1bp) ticked up a bit less. The UST 10Y has dipped overnight (2Y: -1bp; 10Y: -1bp) after yields rose 2-3bps yesterday. PPI/CPI data tomorrow and Friday will be key though for global yields. Currencies were little changed, the US dollar index gained 0.2%, while the Euro/ USD fell 0.4% and the sterling dipped 0.3%. Elsewhere, the Euro/Sterling was broadly flat. In commodities, WTI oil retreated 0.4%, with the EIA increasing its US output forecasts and OPEC noting they had fruitful talks and agreement on compliance (but likely shy of tangible takeaways the market may be hoping for). Elsewhere, precious metals were slightly up (Gold +0.5%; Silver 0.7%) and aluminium increased 5% following reports of China increasing efforts to curtail illegal or polluting capacity. Agricultural commodities were fairly mixed but little changed, with cotton (+0.8%), coffee (+0.5%), soybeans (flat), corn (-0.1%), wheat (-0.2%), and sugar (-0.6%). Away from the markets, Republicans are discussing some kind of compromise to get the tax reforms through, potentially involving a hybrid approach that include permanent tax revisions with temporary cuts for individuals and business. House Speaker Ryan is said to be more resistant to the idea, preferring for corporate tax rate cuts to be permanent. Back in April, the plan was for corporate tax rate to be cut from 35% to 15% and individual tax rates to be reduced from 7 bands to 3, with the top rate down from 39.6% to 35%. Elsewhere, the US treasury's $24bn three-year note sale drew a yield of 1.52%, with a bid-to-cover ratio of 3.13, the highest since December 2015. Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the JOLTS survey reported a record 6.163m job openings in June (vs. 5.75m expected), which should partly support the state of US labour demand. Elsewhere, the July NFIB small business optimism index was higher than expectations at 105.2 (vs. 103.5 expected), the best reading since February. In Europe, June trade reports in both German and France were a bit weaker than market expectations. Germany’s June export posted a -2.8% mom (vs. 0.2% expected) and imports at -4.5% (vs. 0.2% expected). However, despite these declines, exports were still solid on an annual basis, up 5.7% yoy and imports up 6.9% yoy. French’s trade deficit also widened in June, as a 2.8% mom decline in exports dominated a 2.0% mom decline in imports.  Elsewhere, Spain’s home sales rose 19.0% yoy in June. Looking at the day ahead, Bank of France’s July business sentiment indicator (103 expected) will be out early in the morning, followed by Italy’s June industrial production data (0.2% mom and 3.4% yoy expected). Over in the US, there is the preliminary 2Q nonfarm productivity (0.7% expected) and unit labour costs (1% expected) data, final June wholesale inventories (0.6% expected) as well as the MBA mortgage applications. In Asia, Japan’s PPI for July will also be out on early Thursday morning. Notable US companies reporting today include Twenty First century Fox.

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09 августа, 11:10

Another Party Leader in New Zealand Resigns as Campaign Turns Tumultuous

Metiria Turei stepped down as co-leader of the Green Party after fallout from her disclosure that she lied while on welfare.

09 августа, 06:05

"On The Beach" 2017 - The Beckoning Of Nuclear War

Paul Craig Roberts writes that the admirable and honorable truth-teller John Pilger warns us that nuclear war is closer than we think. The 1957 book, On The Beach, introduced awareness that war in the nuclear age is terminable for life on earth. This realization explains President John F. Kennedy’s rejection of the US Joint Chiefs of Staff’s recommendation to launch a nuclear strike on the Soviet Union. Today as evidenced by the behavior of the US government, its European vassal states, and neoconservative pundits, this realization no longer informs US policy.   Pilger speaks of the lobotomy performed on each generation that removes facts from history. Pilger himself is a victim when he chooses to stress that Ronald Reagan defended the Vietnam war instead of emphasizing that Reagan worked with Gorbachev to reduce the threat of nuclear war. The lobotomy that has been performed on the Western world has destroyed knowledge that the US and Russia were on peaceful terms prior to the Soviet collapse.   These peaceful terms lasted a short time, only through the administration of President George H.W. Bush. With the advent of the Clinton regime, all peaceful agreements that were made have been consistently broken by Washington for 24 years throughout the two-term presidencies of three regimes, and now Congress is set on destroying what remains of the work of 20th century US administrations to remove the specter of nuclear armageddon. The defense authorization bill currently before Congress overturns the Intermediate Range Nuclear Forces Treaty signed by Ronald Reagan and Mikhail Gorbachev. This treaty eliminated an entire class of nuclear weapons and signaled the end of the Cold War. John Pilger tells us of the certain consequences of the renewed nuclear arms race:   The US submarine captain says, "We've all got to die one day, some sooner and some later. The trouble always has been that you're never ready, because you don't know when it's coming. Well, now we do know and there's nothing to be done about it."   He says he will be dead by September. It will take about a week to die, though no one can be sure. Animals live the longest.   The war was over in a month. The United States, Russia and China were the protagonists. It is not clear if it was started by accident or mistake. There was no victor. The northern hemisphere is contaminated and lifeless now.   A curtain of radioactivity is moving south towards Australia and New Zealand, southern Africa and South America. By September, the last cities, towns and villages will succumb. As in the north, most buildings will remain untouched, some illuminated by the last flickers of electric light.   This is the way the world ends   Not with a bang but a whimper These lines from T.S. Eliot's poem The Hollow Men appear at the beginning of Nevil Shute's novel On the Beach, which left me close to tears. The endorsements on the cover said the same. Published in 1957 at the height of the Cold War when too many writers were silent or cowed, it is a masterpiece. At first the language suggests a genteel relic; yet nothing I have read on nuclear war is as unyielding in its warning. No book is more urgent. Some readers will remember the black and white Hollywood film starring Gregory Peck as the US Navy commander who takes his submarine to Australia to await the silent, formless spectre descending on the last of the living world. I read On the Beach for the first time the other day, finishing it as the US Congress passed a law to wage economic war on Russia, the world's second most lethal nuclear power.  There was no justification for this insane vote, except the promise of plunder. The "sanctions" are aimed at Europe, too, mainly Germany, which depends on Russian natural gas and on European companies that do legitimate business with Russia. In what passed for debate on Capitol Hill, the more garrulous senators left no doubt that the embargo was designed to force Europe to import expensive American gas. Their main aim seems to be war - real war. No provocation as extreme can suggest anything else. They seem to crave it, even though Americans have little idea what war is. The Civil War of 1861-5 was the last on their mainland. War is what the United States does to others. The only nation to have used nuclear weapons against human beings, they have since destroyed scores of governments, many of them democracies, and laid to waste whole societies - the million deaths in Iraq were a fraction of the carnage in Indo-China, which President Reagan called "a noble cause" and President Obama revised as the tragedy of an "exceptional people"He was not referring to the Vietnamese. Filming last year at the Lincoln Memorial in Washington, I overheard a National Parks Service guide lecturing a school party of young teenagers. "Listen up," he said. "We lost 58,000 young soldiers in Vietnam, and they died defending your freedom." At a stroke, the truth was inverted. No freedom was defended. Freedom was destroyed. A peasant country was invaded and millions of its people were killed, maimed, dispossessed, poisoned; 60,000 of the invaders took their own lives. Listen up, indeed. A lobotomy is performed on each generation. Facts are removed. History is excised and replaced by what Time magazine calls "an eternal present". Harold Pinter described this as "manipulation of power worldwide, while masquerading as a force for universal good, a brilliant, even witty, highly successful act of hypnosis [which meant] that it never happened. Nothing ever happened. Even while it was happening it wasn't happening. It didn't matter. It was of no interest." Those who call themselves liberals or tendentiously "the left" are eager participants in this manipulation, and its brainwashing, which today revert to one name: Trump. Trump is mad, a fascist, a dupe of Russia. He is also a gift for "liberal brains pickled in the formaldehyde of identity politics", wrote Luciana Bohne memorably. The obsession with Trump the man - not Trump as a symptom and caricature of an enduring system - beckons great danger for all of us. While they pursue their fossilised anti-Russia agendas, narcissistic media such as the Washington Post, the BBC and the Guardian suppress the essence of the most important political story of our time as they warmonger on a scale I cannot remember in my lifetime. On 3 August, in contrast to the acreage the Guardian has given to drivel that the Russians conspired with Trump (reminiscent of the far-right smearing of John Kennedy as a "Soviet agent"), the paper buried, on page 16, news that the President of the United States was forced to sign a Congressional bill declaring economic war on Russia. Unlike every other Trump signing, this was conducted in virtual secrecy and attached with a caveat from Trump himself that it was "clearly unconstitutional". A coup against the man in the White House is under way. This is not because he is an odious human being, but because he has consistently made clear he does not want war with Russia. This glimpse of sanity, or simple pragmatism, is anathema to the "national security" managers who guard a system based on war, surveillance, armaments, threats and extreme capitalism. Martin Luther King called them "the greatest purveyors of violence in the world today". They have encircled Russia and China with missiles and a nuclear arsenal. They have used neo-Nazis to instal an unstable, aggressive regime on Russia's "borderland" - the way through which Hitler invaded, causing the deaths of 27 million people.  Their goal is to dismember the modern Russian Federation. In response, "partnership" is a word used incessantly by Vladimir Putin - anything, it seems, that might halt an evangelical drive to war in the United States. Incredulity in Russia may have now turned to fear and perhaps a certain resolution. The Russians almost certainly have war-gamed nuclear counter strikes. Air-raid drills are not uncommon. Their history tells them to get ready. The threat is simultaneous. Russia is first, China is next. The US has just completed a huge military exercise with Australia known as Talisman Sabre. They rehearsed a blockade of the Malacca Straits and the South China Sea, through which pass China's economic lifelines. The admiral commanding the US Pacific fleet said that, "if required", he would nuke China. That he would say such a thing publicly in the current perfidious atmosphere begins to make fact of Nevil Shute's fiction. None of this is considered news. No connection is made as the bloodfest of Passchendaele a century ago is remembered. Honest reporting is no longer welcome in much of the media. Windbags, known as pundits, dominate: editors are infotainment or party line managers. Where there was once sub-editing, there is the liberation of axe-grinding clichés. Those journalists who do not comply are defenestrated. The urgency has plenty of precedents. In my film, The Coming War on China, John Bordne, a member of a US Air Force missile combat crew based in Okinawa, Japan, describes how in 1962 - during the Cuban missile crisis - he and his colleagues were "told to launch all the missiles" from their silos. Nuclear armed, the missiles were aimed at both China and Russia. A junior officer questioned this, and the order was eventually rescinded - but only after they were issued with service revolvers and ordered to shoot at others in a missile crew if they did not "stand down". At the height of the Cold War, the anti-communist hysteria in the United States was such that US officials who were on official business in China were accused of treason and sacked. In 1957 - the year Shute wrote On the Beach - no official in the State Department could speak the language of the world's most populous nation. Mandarin speakers were purged under strictures now echoed in the Congressional bill that has just passed, aimed at Russia. The bill was bipartisan. There is no fundamental difference between Democrats and Republicans. The terms "left" and "right" are meaningless. Most of America's modern wars were started not by conservatives, but by liberal Democrats. When Obama left office, he presided over a record seven wars, including America's longest war and an unprecedented campaign of extrajudicial killings - murder - by drones. In his last year, according to a Council on Foreign Relations study, Obama, the "reluctant liberal warrior", dropped 26,171 bombs - three bombs every hour, 24 hours a day.  Having pledged to help "rid the world" of nuclear weapons, the Nobel Peace Laureate built more nuclear warheads than any president since the Cold War. Trump is a wimp by comparison. It was Obama - with his secretary of state Hillary Clinton at his side - who destroyed Libya as a modern state and launched the human stampede to Europe. At home, immigration groups knew him as the "deporter-in-chief". One of Obama's last acts as president was to sign a bill that handed a record $618billion to the Pentagon, reflecting the soaring ascendancy of fascist militarism in the governance of the United States. Trump has endorsed this. Buried in the detail was the establishment of a "Center for Information Analysis and Response". This is a ministry of truth. It is tasked with providing an "official narrative of facts" that will prepare us for the real possibility of nuclear war - if we allow it.

07 августа, 15:35

Key Events In The Coming Vacation Week: All About Inflation

With the traditional post-payrolls market lull setting in, and most trading desks taking a week or two off, it will be a relatively quiet week with attention turning to inflation data with releases in the US, China, Norway & Switzerland, a key factor as central banks consider if/when to tighten in the near future. The US print will gain most attention: a strong number will validate the Fed's balance sheet unwind intentions and a potential December rate hike. The major US release for the week comes on Friday in the form of July’s CPI. As RanSquawk notes, analysts expect the headline to come in at 1.8% YY from 1.6% last time out, while the core reading is expected to rise by 1.8% YY from 1.7% last time out. The core metric has missed expectations over the last four releases. HSBC opines that “One major reason why core inflation has softened this year has been a slowdown in the pace of increase in rents.” At its most recent decision the Federal Reserve noted that it is “monitoring inflation developments closely” while it is of the belief that “inflation will remain somewhat below 2% in near term, but stabilise around 2% in medium-term.” This is of course against a back drop of limited wage growth. It is also worth noting that North American liquidity will be lower on Monday owing to a Canadian national holiday. Other releases of note during the week: Monday US Fed Labour Market Conditions Index (Jul) Tuesday US JOLTS Job Openings (Jun) Wednesday US Nonfarm Productivity (Q2) US Unit Labour Costs (Q2) US Wholesale Inventories (Jun) Thursday US PPI (Jul). There will be some July China macro data released, starting with FX reserves on Monday. Chinese trade data for July is due on Tuesday, with analysts expecting the surplus to widen to USD 46.08bln from USD 42.77bln last time out. HSBC believe that “exports growth likely remained strong in July supported by still resilient external demand.” The latest Caixin manufacturing PMI gives credence to this view, as it pointed to new export orders expanding at a faster pace. On the import front HSBC expect that “import growth remained strong, supported by the broad-based nature of the economic recovery.” In EM, there are monetary policy meetings in Mexico, Peru and the Philippines. Other releases of note during the week: Monday Chinese FX Reserves (Jul) Tuesday Japanese Current Account (Jun) Australian NAB Business Survey (Jul) Wednesday Australian Housing Finance Data (Jun) Thursday Australian Melbourne Institute Inflation Expectations (Jul) During the week: Chinese New Yuan Loans & Money Supply Data (Jul) US inflation, Fedspeak & China data After a robust NFP report, focus this week turns to US inflation prints. We expect core CPI to accelerate to a 0.2% m/m clip in July, ending a four-month streak of subdued prints. We also hear from several Fed speakers, including NY Fed President Dudley. July macro data from China will also be released over the next two weeks, starting with Monday's FX reserves data. Our economists expect the July reading of activity growth to moderate from June's strong levels. CPI likely stayed flat, while PPI may continue to ease on base effects. Meanwhile, headline new credit data have likely declined, but M2 growth may rebound modestly. The week ahead in Emerging Markets There are monetary policy meetings in Mexico, Peru and the Philippines. Sovereign rating review in South Africa In other data In the US, inflation will be the main focus, but we also have non-farm productivity and unit labor costs, the monthly budget statement and several Fed speakers. In the Eurozone, a very quiet week ahead with no key data releases. We have final CPI and industrial & manufacturing production for Germany, France, Italy and Spain. In the UK, we get industrial & manufacturing production, construction output and trade balance. In Japan, we get the current account and trade balance, money supply, machine orders and PPI. In Australia, RBA Governor Lowe is due to appear before the parliamentary economic committee and we hear a speech by Assistant Governor (Financial Markets) Kent. On the data front, we receive both consumer and business sentiment and housing finance approvals. In New Zealand, focus will be on the RBNZ, though we also get the manufacturing PMI and RBNZ Governor Wheeler will also appear before Parliament Select Committee. A detailed breakdown of the main weekly events courtesy of DB's Jim Reid Monday starts with Germany’s industrial production figures for June in early morning, followed by UK’s July Halifax house price index and then US’s consumer credit stats for July. On Tuesday, Japan’s balance of  payments and trade balance figures for June will be out in early morning. Then Germany’s June trade balance, current account, export and import stats are due. France will also report its June trade balance and current account figures. Over in the US, there is the NFIB small business optimism index for July. Turning to Wednesday, China’s CPI and PPI for July will be out in early morning. Later on, Italy’s June industrial production figures and Bank of France’s business sentiment indicator are also due. Over in the US, there is the 2Q nonfarm productivity and unit labour costs data, June wholesale inventories as well as the MBA mortgage applications. For Thursday, the June industrial production and manufacturing production figures for UK and France will be out. Further, June trade balance stats for UK and Italy are also due. Over in the US, we have the July PPI data, the monthly budget statement as well as the initial jobless claims and continuing claims figures. On Friday, the final CPI figures for Germany, France and Italy will  be released. Over in the US, CPI stats for July are also due. Onto other events, today starts with speeches from the Fed’s Bullard and the Fed’s Kashkari, followed by the OPEC/Non-OPEC joint technical committee meeting in Abu Dhabi. Then on Thursday, the Fed’s Dudley will speak. Onto Friday, the Fed’s Kaplan and Fed’s Kashkari will also speak. Finally we'll still have earnings season continuing on both sides of the Atlantic but we're now past the peak. * * * Finally, here is a table from BofA and guidance from Goldman with a breakdown of the key US events together with consensus estimtes The key economic release this week is the CPI report on Friday. There are several scheduled speaking engagements by Fed officials this week. Monday, August 7 11:45 AM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will give a speech on the U.S. economy and monetary policy at the America’s Cotton Marketing Cooperatives’ annual conference in Nashville, Tennessee. Audience and media Q&A is expected. 01:25 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a moderated audience Q&A session at an event hosted by the Sioux Falls Rotary Club in South Dakota. 03:00 PM Consumer credit, June (consensus +$15.25bn, last +$18.41bn) Tuesday, August 8 10:00 AM JOLTS job openings, June (consensus 5,700k, last 5,666k) Wednesday, August 9 08:30 AM Nonfarm productivity (qoq saar), Q2 preliminary (GS +0.6%, consensus +0.7%, last flat); Unit labor costs, Q2 preliminary (GS +1.1%, consensus +1.0%, last +2.2%): We estimate non-farm productivity increased 0.6% in Q2 (qoq ar), modestly below the 0.75% average achieved during this expansion. We expect unit labor costs – compensation per hour divided by output per hour – to increase 1.1% (qoq saar). 10:00 AM Wholesale inventories, June final (consensus +0.6%, last +0.6%) 11:00 AM Cleveland Fed President Mester (FOMC non-voter) speaks: Cleveland Federal Reserve President Loretta Mester will give the keynote speech at the Community Bankers Association of Ohio’s Annual Convention in Cincinnati, Ohio. 01:00 PM Chicago Fed President Evans (FOMC voter) speaks: Chicago Fed President Charles Evans will discuss current economic conditions and monetary policy in a closed group interview with representatives of the press in Chicago. 01:30 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President John Williams will give a speech titled "Monetary Policy's Role in Fostering Sustainable Growth" in Las Vegas, Nevada. Audience and media Q&A is expected. Thursday, August 10 08:30 AM PPI final demand, July (GS flat, consensus +0.1%, last +0.1%); PPI ex-food and energy, July (GS +0.1%, consensus +0.2%, last +0.1%); PPI ex-food, energy, and trade, July (GS +0.2%, consensus +0.2%, last +0.2%): We estimate that headline PPI was flat in July, reflecting a modest rise in core producer prices offset by a decline in gasoline margins and energy prices. We estimate PPI ex-food, energy, and trade services rose by 0.2%. In the June report, PPI exceeded expectations as higher-than-expected food and core prices excluding trade services more than offset a retracement in the volatile trade services category. 08:30 AM Initial jobless claims, week ended August 5 (GS 245k, consensus 240k, last 240k); Continuing jobless claims, week ended July 29 (consensus 1,960k, last 1,968k): We estimate initial jobless claims rebounded 5k to 245k in the week ended August 5. Initial claims can be particularly volatile around this time of year due to annual auto plant shutdowns, and we expect a rebound in these factory closures to boost claims for this week. Additionally, we expect a rebound from depressed levels of jobless claims in California. Continuing claims – the number of persons receiving benefits through standard programs – have trended up recently after falling sharply in the first four months of the year. 10:00 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give opening remarks at an “Economic Press Briefing on Wage Inequality in the Region” held at the Federal Reserve Bank of New York. Audience and media Q&A is expected. 02:00 PM Monthly budget statement, July (consensus -$55.5bn, last -$90.2bn) Friday, August 11 08:30 AM CPI (mom), July (GS +0.20%, consensus +0.2%, last flat); Core CPI (mom), July (GS +0.21%, consensus +0.2%, last +0.1%); CPI (yoy), July (GS +1.8%, consensus +1.8%, last +1.6%); Core CPI (yoy), July (GS +1.8%, consensus +1.7%, last +1.7%): We expect a 0.21% increase in July core CPI (mom sa), which would be its fastest pace since January and would produce a one tenth increase in the year-over-year rate (to +1.8%). Our forecast reflects a boost from the second California tobacco tax increase of the year – a roughly US$2 per pack increase effective July 1 – as well as stabilization in used car prices, and mean reversion in airfares, apparel, and lodging following recent weakness. We also expect a reprieve from cell phone plan disinflation in the communication category, as a price hike for some T-Mobile plans is likely to offset new discounts offered by a few smaller pre-paid carriers. We also expect an above-trend increase in education prices, reflecting firming college tuition inflation indicated by press reports and university budget summaries. We estimate a 0.2% rise in headline CPI, reflecting rising food prices but a modest decline in energy prices. This would be consistent with the year-over-year rate rising two-tenths to 1.8%. 09:40 Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Federal Reserve President Robert Kaplan will take part in a moderated Q&A session at the sixth annual CPE day hosted by the University of Texas at Arlington’s Accounting Department. Audience and media Q&A is expected. 11:30 AM Minneapolis Fed President Kashkari (FOMC voter) speaks: inneapolis Federal Reserve President Neel Kashkari will participate in a moderated audience Q&A session at the Independent Community Bankers of Minnesota’s annual convention in Bloomington, Minnesota. Source: BofA, DB, Goldman

07 августа, 13:49

World Stocks Hit Another All-Time High As Crude, Treasurys Drop

World stocks hit a new record high on Monday, as U.S. index futures followed Asian stocks on better-than-expected company earnings and strong US jobs data deflected attention from the rising geopolitical tension over North Korea's nuclear program. European stocks traded near session lows while Crude oil prices fall. The Bloomberg Dollar Spot Index was little changed ahead of speeches by the Fed's James Bullard and Neel Kashkari later Monday. Yields on U.S. and German Bunds rose off one-month lows hit at the end of last week, while the yield on China’s 10-year sovereign bonds climbs 3 bps to a two-month high of 3.67%,  after Friday’s better-than-expected jobs data brightened investors’ outlook for the U.S. economy. The Dow Jones recorded its eighth consecutive record high on Friday, with MSCI's broadest index of Asia-Pacific shares outside Japan adding 0.5% on Monday. Helping global stocks hit record highs, of the nearly 1000 companies in the MSCI world index that have reported, 67% have beaten expectations, according to Reuters data. Of the MSCI Europe companies having reported, 61% have either met or beat expectations. But focusing on industrial firms – of which many depend on exports, and are sensitive to a stronger euro – the beat ratio is just 37%. Also the U.S. dollar dipped slightly but held on to much of Friday's gains - its biggest daily rise this year - after data showed the United States created more jobs than forecast last month. As a result, the MSCI World index rose above a peak breached late last month, setting a new all-time high of 480.09 on Monday. "The US made the most noise last week ... At the start of the new week, risk sentiment improved in Asia with investors continuing to show a certain degree of risk affinity," DZ Bank strategist Rene Albrecht said. For some analysts, Monday's pull back in the dollar backs some views in markets that Friday's rally may not have legs. The dollar index, which tracks the greenback against a basket of six global peers, inched back 0.2 percent to 93.361. It rallied 0.76 percent on Friday, its biggest one-day gain this year. The dollar slipped 0.2 percent against the euro to $1.1796 per euro, after surging 0.8 percent on Friday. "The most logical view here is the moves on Friday were clearly just a sizeable covering of USD shorts, from what was one of the biggest net short positions held against the USD for many years," Chris Weston, chief market strategist at IG in Melbourne, wrote in a note. For the dollar rally to gain momentum, the market needs to change its interest rate pricing, Weston added. Despite another drain in liquidity by the PBOC overnight. which soaked up another CNY60 billion in net reverse repos, Chinese industrial commodity metal soared, led by aluminum futures while steel rebar surged as much as 6.4% higher, before closing up 3.0% as iron ore closed up 6.5%. #Steel rebar futures in #China closed 6.4% higher; #IronOre closed 3% higher after surging as much as 6.5% intraday pic.twitter.com/xbFTMQY6Ql — YUAN TALKS (@YuanTalks) August 7, 2017 In the overnight FX session, kiwi slod 0.6% against greenback to 0.7368 while the euro rose as much as 0.2% to $1.1814, approaching its highest since early 2015, despite an unexpected drop in German industrial production in June. Output fell 1.1% in June after rising 1.2% in May, far below the estimated 0.2% increase and the first drop in six months. Production was up 2.4 percent from a year earlier. Still, with strong orders pointing to a likely pickup in manufacturing, the report is unlikely to mark a turning point for the German economy. Meanwhile, business confidence is at a record high and the Bundesbank sees growth continuing, even as momentum at the start of the third quarter lagged behind that of France, Italy and Spain for the first time in more than 12 years. The common currency rebounded following a slump against the greenback in the wake of U.S. jobs data on Friday. With EUR-USD parity now long forgotten, the next "big thing" on FX traders' minds is whether and when EUR-GBP parity may be achieved (with some penciling in the end of the year). “I’m maxing on the euro at $1.20 at the moment, and I’m happy for it to be poodling along for a little while until something new and different comes long,” David Bloom, global head of currency strategy at HSBC said in an interview with Bloomberg TV. “It could be tax reform in the U.S.” As Bloomberg writes, "the euro’s continued resilience is a testament to growing investor confidence in the growth story of the European Union amid disappointment over U.S. President Donald Trump’s failure get tax reform and infrastructure spending plans off the ground." Monday’s report from Germany is unlikely to mark a turning point for either the nation’s economy or the wider bloc, which has successfully navigated a series of political challenges while expansion accelerates. Meanwhile, European stocks slumped near session lows after rising 1%  on Friday, the most since July 12, thanks to the drop in the Euro. The STOXX Europe 600 Price Index declined 0.3%, led by drop in IT, travel and real-estate shares, offsetting advances for ArcelorMittal, BHP Billiton Plc and Anglo American Plc after iron ore and steel prices climbed.  Travel and leisure shares fall 0.6%, tech retreats 0.5%' Basic resources surged 1.1%. Germany’s DAX Index sank 0.2 percent. Earlier, Japan’s Topix index ended at a two-year high, boosted by earnings at Toyota Motor Corp., while benchmarks in Australia, South Korea and Hong Kong also gained. Toyota jumped 2 percent after it beat first-quarter profit estimates and raised its full-year forecast on Friday. Australia's ASX 200 (+0.9%) was led higher by commodity names after an early surge in Chinese Iron Ore futures, and as strong Australian Construction PMI (60.5 vs. Prey. 56.0) further contributed to the sector's positivity. Nikkei 225 (+0.5%) was boosted by JPY weakness.  South Korea’s Kospi index gained 0.1 percent. In Hong Kong, the Hang Seng Index rose 0.4 percent. The MSCI Asia-Pacific Index added 0.5 percent to trade near to its highest since December 2007. The Japanese yen decreased 0.1 percent to 110.80 per dollar. Aside from a slight weakening in the Korean won, there was little financial market reaction to the news over the weekend that the U.N. Security Council unanimously imposed new sanctions on North Korea aimed at pressuring Pyongyang to end its nuclear program. Late on Sunday, Donald Trump tweeted that South Korean President Moon Jae-in agreed in a telephone call on Monday to apply maximum pressure and sanctions on North Korea, while China expressed hope that North and South Korea could resume contact soon. Elsewhere, Sir Simon Fraser has warned that Brexit negotiations have not begun well  blaming the Government's failure so state clearly its position. The Telegraph reported that the UK is prepared to pay for a Brexit separation bill of as much as €40bln in which it is likely to offer 3 annual payments of €10bn, then finalise the total alongside trade discussions, according to sources. However, later source reports in The Guardian dismissed this as inaccurate speculation. West Texas Crude futures fell away from nine-week highs hit after the strong job data bolstered hopes for growing energy demand, and dropped below $49 a barrel as producers gathered in Abu Dhabi to discuss why some of them are falling behind in pledges to reduce output.  Gold fell 0.1 percent to $1,257.80 an ounce, the weakest in a week.  Copper declined less than 0.05 percent to $2.88 a pound. In rates, the yield on 10-year Treasuries advanced one basis point to 2.27%. Germany’s 10-year yield climbed one basis point to 0.48%. Britain’s 10-year yield declined less than one basis point to 1.174%. Among the key events this week, OPEC and non-member nations will meet in Abu Dhabi today to discuss supply cut compliance, which fell to 86% in July. It’s a week of industrial data in Europe. U.K. factory output for June is due Thursday. After Monday’s industrial production for Germany, Italy is on Wednesday and France on Friday. Among a number of Fed speakers this week, keep a keen ear out for comments by New York Fed boss Bill Dudley on Thursday. South African President Jacob Zuma faces a no-confidence vote. Dutch Prime Minister Mark Rutte resumes talks to form a coalition government on Wednesday. The Fed’s inflation puzzle means Friday’s CPI data will get close attention. Economists estimate that headline picked up in July to 1.8% from 1.6%, while core stayed at 1.7%. Argentina, Mexico, New Zealand, Peru, the Philippines, Serbia and Zambia set monetary policy. Bulletin Headline Summary Most major currencies nursed some of their post-NFP losses against the greenback, in which EUR/USD attempted to reclaim 1.1800 Brexit Back In Focus With Contradicting Reports Looking ahead, highlights include Fed's Bullard and Kashkari Global Market Snapshot S&P 500 futures up 0.1% to 2,474 STOXX Europe 600 down 0.1% to 382.15 MSCI Asia up 0.5% to 161.18 MSCI Asia ex-Japan up 0.5% to 530.95 Nikkei up 0.5% to 20,055.89 Topix up 0.5% to 1,639.27 Hang Seng Index up 0.5% to 27,690.36 Shanghai Composite up 0.5% to 3,279.46 Sensex down 0.06% to 32,305.24 Australia S&P/ASX 200 up 0.9% to 5,773.56 Kospi up 0.1% to 2,398.75 German 10Y yield rose 0.6 bps to 0.474% Euro up 0.3% to 1.1803 per US$ Italian 10Y yield rose 3.3 bps to 1.73% Spanish 10Y yield fell 0.5 bps to 1.478% Brent Futures down 0.7% to $52.05/bbl Gold spot down 0.08% to $1,257.89 U.S. Dollar Index down 0.2% to 93.37 Top Overnight News North Korea condemned the latest round of United Nations sanctions and reiterated that it wouldn’t negotiate its nuclear deterrence until the U.S. ceases “hostile” policies Theresa May’s office dismissed as speculation a report that the U.K. is prepared to pay a 40 billion-euro ($47 billion) bill to leave the European Union, while leading Brexit supporters pushed back against paying anything at all German industrial production unexpectedly slipped in June as manufacturing and construction caused a temporary blip in the growth spurt of Europe’s largest economy New Chief of Staff Kelly Moves Quickly to Tame Trump’s Tweets Senate Chairman Demanding Answers Ramps Up Trump Russia Probe United Technologies Is Said to Weigh Rockwell Collins Deal Sprint Is Said to Resume Preliminary Talks on T- Mobile Merger BlackRock Real Assets Acquires Magacela Solar Project Bond Berkshire Second Quarter Operating EPS Misses Lowest Estimate Berkshire Filing Shows Further Reduction in Buffett’s IBM Stake Uber Engineer Told Kalanick of Alibi for Downloaded Files Boeing, U.S. Have Deal for Air Force One Planes Russia Abandoned Eros Said in Talks to Sell Content Library to Apple for $1B: ET SoftBank Talks Were Said to Value Uber at $45b: The Information JPMorgan to Announce Warsaw Office Investment in Sept.: Puls Asian equity markets traded mostly higher following Friday's gains on Wall Street and as the region took its first opportunity to react to the better than expected NFP release. ASX 200 (+1.0%) was led higher by commodity names after an early surge in Chinese Iron Ore futures, and as strong Australian Construction PMI (60.5 vs. Prey. 56.0) further contributed to the sector's positivity. Nikkei 225 (+0.6%) was boosted by JPY weakness, Shanghai Comp (+0.2%) was the underperformer despite a substantial liquidity injection by the PBoC, as this still amounted to a daily net outflow of CNY 60bn after expiring prior operations were accounted for. Finally, 10yr JGBs were flat with demand dampened by the upbeat tone in the region and a lack of BoJ Rinban announcement. Shanghai Stock Exchange is to increase scrutiny of M&A, transfer of control deals and other corporate actions that could lead to financial risk in the market. PBoC injected CNY 130b1n in 7-day reverse repos and CNY 120bln in 14-day reverse repos.  PBoC set CNY mid-point at 6.7228 (Prey. 6.7132). Chinese FX Reserves (Monthly) (Jul) 3.081T vs. Exp. 3.069T (Prey. 3.057T) China Q2 prelim current account USD 52.9bln vs. Prev. USD 18.4bln Top Asian News Correction May Loom for India Bank Stocks, Hedge Fund Warns China’s Foreign Reserves Rise a Sixth Month on Yuan Strength As Results Loom, Noble Group Won’t Reply to Latest Iceberg Barbs North Korea Condemns Latest UN Nuclear Sanctions, Vows Response SoftBank Profit Tops Estimates Amid Shift Into Deals, Investing European bourses trade rangebound following Friday's NFP volatility, and do maintain their highs. European bourses trade mixed, however marginally so, with Stoxx 600 sector seeing any movement greater than 1%. A large position liquidation in the German bund sparked some morning volatility, in otherwise quiet conditions. The future contract came off session highs, however, did manage to find support at the 163.00 handle. Top European News London Home Rents Fall Again After Almost Decade of Growth Halts U.K. House-Price Growth Slows to Weakest Pace in Four Years U.K. Economy Takes a Hit as Consumer Spending Slumps Further German Industrial Output Unexpectedly Falls First Time This Year Euro Climbs to Fresh Day High as Demand on Crosses Supports Paris Aims to Overtake Frankfurt in Race for Brexit Bank Jobs Taking a Long Shot on Cancer, AstraZeneca Defies the Odds Linde Forms Holding Company for Merger With Praxair: Welt In currencies, the EUR saw some early buying pressure this morning, coinciding with the Bund liquidation, as EUR pairs popped through overnight levels. No fundamental factors sparked the movement, with EUR/CHF seeing the main bullish pressure, yet resistance was found at 1.15 and we now trade at largely pre-announced levels. GBP was unmoved following contradicting reports in UK press over reports on Brexit costs and remains comfortably above 1.30. The Telegraph noted that the UK is prepared to pay EUR 40b1n for Brexit divorce bill, however source reports in the Guardian dismissed this as inaccurate speculation. In commodities, copper prices traded choppy with initial upside seen as Dalian Iron Ore and Rebar futures surged at the open of China metals trade, which was due to reduced stockpiles and firm demand. However, copper then failed to hold onto the gains and retreated amid a cautious risk tone in China. WTI futures failed to test the USD 50.00/bbl level and ran into some resistance around USD 49.60 on Friday, following the latest Baker Hughes Rig Count. Oil does continue to trade in this August; 48.50 — 50.00 range, as we are set to see an OPEC compliance meeting this week. Global demand has seemingly picked up of late however, with China now overtaking the United States as the world's largest importer of crude importing an average 8.55m1n BPD in the first half of 2017, above the 8.12mln BPD. WTI has been softer this morning, down 1.20% as we have broken through 49.00/bbl. Libya's Sharara oil field (largest in the country), is said to face stoppage due to protests, according to press reports. Looking at the day ahead, today starts with Germany’s industrial production figures for June in early morning, followed by UK’s July Halifax house price index and then US’s consumer credit stats for July. Also today we have speeches from the Fed’s Bullard and the Fed’s Kashkari, followed by the OPEC/Non-OPEC joint technical committee meeting in Abu Dhabi. US Event Calendar 3pm: Consumer Credit, est. $15.3b, prior $18.4b 10:45am: Fed’s Bullard Speaks on U.S. Economy in Nashville, TN 1:25pm: Fed’s Kashkari Speaks in Bloomington, MN DB's Jim Reid concludes the overnight wrap In theory we should now be at the start of the real summer lull that will likely last until the Jackson Hole build-up. The event starts on August 24th so we should now get two weeks of calm. If that statement is not enough to encourage a violent bout of volatility then I don't know what will! I'm hoping I'll be still here to report on the lull as my wife was 33 weeks pregnant yesterday and the consultant last week advised delivery at around 36 weeks. However she has some doubts as to whether we'll get that far though and the average pregnancy length for identical twins is 35 weeks and 2 days. So I'm on standby to panic at any moment. I was desperately hoping we could hold on into September (I say we but....) so they would have an extra year before they start school. All the evidence is that autumn children do better at school and sports than summer children. However I now accept that the mother and twin's health is more important than me being proud that my boys are the best at sport in their year by virtue of being the oldest and biggest!! Back to the summer lull. The week post payrolls is normally quiet anyway but this week could be extra so. There's only really one obvious observable candidate to create a little noise this week and that's the US CPI numbers on Friday (PPI on Thursday). Friday's slightly stronger than expected payroll number and hint of stronger wages (more detail below) did have an impact on markets as we'll see below. Inflation data is probably where the market is most sensitive to a surprise at the moment. Our economists expect gasoline prices to cause headline CPI (+0.1% vs. Unch,) to round down, while core CPI inflation (+0.2% vs. +0.1%) should finally snap its streak of four consecutive monthly misses which could be important. Our economists also remind us that as recent Fed statements have emphasized, policymakers will be monitoring near-term inflation trends closely. Hence, an in line print would provide tentative evidence that the recent downshift in core inflation may be behind us. What we also might hear about this week is the 10-year anniversary of BNP Paribas announcing that they were closing down three hedge funds specialising in US mortgages. This happened on August 9th 2007 and was the catalyst for the inter-bank market to fully shut down as no-one trusted anyone anymore which in turn set off a course of events that led to the bank run on Northern Rock just over a month later and the other nasty events culminating in the Lehman default 12 months down the line. It seems like only yesterday. Also in quieter times its fascinating to see that President Macron's approval rating has dipped sharply and as you can see from the graph in today's PDF, its now not much higher than President Trump's in the US. Our DB Europe economist Marc de Muizon published a note on Friday analysing the implications of Macron’s recent drop in popularity. He notes that while it is common for freshly elected presidents to see their popularity fall post-election, Macron's drop is still relatively large and early by historical standards. With the growth momentum in the euro-area and in France picking up, and given his electoral success, Macron now needs to avoid further controversies to ensure his reform agenda can be pushed through to the end. There could be some wider market interest in this story after the summer ends.  Onto markets and the week is generally starting on the front foot in Asia with the Nikkei +0.6%, the Hang Seng +0.4% and Kospi +0.4% all higher as we type. The Shanghai Comp is actually slightly lower (-0.2%). There's not been a lot of fresh news flow and sentiment is following the lead from Friday. Indeed Friday was a strong day for global equity markets (especially in Europe) that capped off an otherwise flat week. Over in the US the S&P 500 ticked up +0.2% following the better than expected payrolls data, with financials leading the way with gains of +0.7% on the day. The S&P 500 has now seen 12 successive closes of less than 0.3% in either direction which is a record with daily data going back to 1927. So quite remarkable really. The Dow (+0.3%) also continued to trade to new highs (+1.2% on the week but creeping up fractions every day!). European markets saw even stronger performance on Friday as the STOXX 600 rallied +1% as every sector ended the day in positive territory. The STOXX Banks index was also up +1.2% on the day. Regional indices also posted strong gains, with the DAX (+1.2%), CAC (+1.4%), FTSE (+0.5%) and FTSE MIB (+0.7%) all up on the day. Over in government bond markets the strong payrolls number led to US treasuries selling off across the curve (2Y +1bps; 10Y +4bps). Over in Europe Bunds yields also ticked up at all maturities beyond the 5Y point (10Y +2bps). Gilt yields rose across all maturities (2Y +3bps; 10Y +3bps) to retrace part of the rally that followed the BoE meeting on Thursday, but 10Y Gilt yields were still lower by -4bps on the week. Elsewhere OATs (10Y +3bps) and BTPs (10Y +3bps) were higher across maturities. Turning to FX markets, the US dollar index (+0.8%) rallied following the strong employment report to end the week higher by +0.4%. On the other side of these moves, EUR (-0.8%) and GBP (-0.8%) both posted losses to end the week roughly flat and down -0.8% respectively. Over in commodity markets the energy sector saw oil pick up gains of about +1.0% on Friday, although it ended the week lower by -0.3% due to bigger losses earlier in the week. Precious Metals were lower on Friday with Gold and Silver down -0.7% and -2.0% respectively, while the industrial metals complex saw copper flat while aluminum dropped by -0.5%. Agricultural commodities were fairly mixed on the day as Cotton (+0.4%) and Corn (+0.8%) while other segments were flat (wheat, soybeans, coffee) to lower (sugar -1.2%). Friday was a fairly quiet data day over in Europe and most of the equity rally came after payrolls. The only data points of note were German factory orders which held steady at +1.0% (vs. +0.5% expected) followed by Italian retail sales that ticked up by +0.6% in June (vs. +0.1% mom expected) following no growth the month before. However the key market moving data was over in the US with the July employment report. Payrolls beat expectations at 209k (vs. 180k expected) while June’s number was revised up to 231k (from 222k). The unemployment rate ticked down one-tenth as expected to 4.3%, while monthly average hourly earnings also came in line with expectations at +0.3% mom but the YoY growth rate was a tenth higher than expected at 2.5%. Finally we also got US trade balance data for June where the trade deficit narrowed more than expected to - $43.6b (vs. -$44.5b expected; -$46.5b previous). To the week ahead now. Today starts with Germany’s industrial production figures for June in early morning, followed by UK’s July Halifax house price index and then US’s consumer credit stats for July. Onto Tuesday, Japan’s balance of payments and trade balance figures for June will be out in early morning. Then Germany’s June trade balance, current account, export and import stats are due. France will also report its June trade balance and current account figures. Over in the US, there is the NFIB small business optimism index for July. Turning to Wednesday, China’s CPI and PPI for July will be out in early morning. Later on, Italy’s June industrial production figures and Bank of France’s business sentiment indicator are also due. Over in the US, there is the 2Q nonfarm productivity and unit labour costs data, June wholesale inventories as well as the MBA mortgage applications. For Thursday, the June industrial production and manufacturing production figures for UK and France will be out. Further, June trade balance stats for UK and Italy are also due. Over in the US, we have the July PPI data, the monthly budget statement as well as the initial jobless claims and continuing claims figures. On Friday, the final CPI figures for Germany, France and Italy will be released. Over in the US, CPI stats for July are also due. Onto other events, today starts with speeches from the Fed’s Bullard and the Fed’s Kashkari, followed by the OPEC/Non-OPEC joint technical committee meeting in Abu Dhabi. Then on Thursday, the Fed’s Dudley will speak. Onto Friday, the Fed’s Kaplan and Fed’s Kashkari will also speak. Finally we'll still have earnings season continuing on both sides of the Atlantic but we're now past the peak.

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07 августа, 08:07

Ban alcohol from supermarkets, urges New Zealand medical authority

Selling wine and beer next to food ‘normalises’ a dangerous drug and should be sold at specific outletsThe New Zealand Medical Association has called for a ban on selling alcohol in supermarkets, saying that having it next to groceries and food normalises a dangerous drug. Wine and beer have been widely available in most supermarkets around the country since 1990, although spirits can be bought only in bars and off-licences. Continue reading...

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06 августа, 01:59

New Zealand: thousands of bottles of allegedly fraudulent wine exported

Ministry of Primary Industries brings landmark case against Southern Boundary Wines under 2003 wine actThousands of bottles of allegedly fraudulent New Zealand sauvignon blanc and pinot noir have been exported overseas in what the government believes is the country’s first significant case of wine fraud.The Ministry of Primary Industries has brought a landmark case against Southern Boundary Wines – the first ever to be prosecuted under the 2003 Wine Act. Continue reading...

31 января 2015, 08:17

Новая Зеландия: Блинные скалы

 Punakaiki is a small community on the West Coast of the South Island of New Zealand, between Westport and Greymouth. The community lies on the edge of the Paparoa National Park. The Pancake Rocks are a very popular tourist destination at Dolomite Point south of the main village. The Pancake Rocks are a heavily eroded limestone area where the sea bursts through several vertical blowholes during high tides. Together with the 'pancake'-layering of the limestone (created by immense pressure on alternating hard and soft layers of marine creatures and plant sediments), these form the main attraction of the area. http://en.wikipedia.org/wiki/Punakaiki Paparoa National Park is on the west coast of the South Island of New Zealand. It was established in 1987 and encompasses 306 km².[1] The park ranges from on or near the coastline to the peak of the Paparoa Ranges. A separate section of the park lies to the north and is centered at Ananui Creek. The park protects a limestone karst area. http://en.wikipedia.org/wiki/Paparoa_National_Park zyalt: Блинные скалы, Новая Зеландия Одно из самых удивительных мест в Новой Зеландии - Блинные скалы (Pancake Rocks). Находятся на западном побережье в нацпарке Папароа. Название свое они получили из-за необычной формы. Скалы напоминают стопки сложенных блинчиков. Образовались они 30 миллионов лет назад в результате эрозии известняковых пород. Их слоистость объясняется тем, что породы, из которых сложены “блинные стопки”, имеют различную плотность. Со временем вода и ветер вытесали на поднявшихся из морских глубин скалах затейливую резьбу. Вид на скалы с моей летающей камеры ). Собственно, блинная часть справа находится.