Tech Review | What the Uber IPO Says About Investors State of Mind

Tech Review (TR 2019-05-18)--Domain Mondo's weekly review of tech investing news: Feature • 1) What the Uber IPO Says About Investors State of Mind, 2) Investing: The Week & Investor Notes: Macroview | EU Elections, 3) ICYMI Tech News:  Apple & Antitrust, Amazon, Facebook, Google, Microsoft, Oracle, China, and more.

1) What the Uber IPO Says About Investors State of Mind 

Financial Times (ft.com) U.S. managing editor Peter Spiegel and markets reporter Nicole Bullock discuss why Uber's stock traded below the $45 IPO price at the New York Stock Exchange on Friday, May 10, 2019. Video above published May 11, 2019.

Stock Exchange & Symbol: NYSE: UBER:

$UBER

See also:

• Morgan Stanley Clients Saddled With Massive Losses After Disastrous Uber IPO.

• Uber’s Future Looks Troubling: "Uber’s current $70 billion valuation seems difficult to justify. To reach profitability, both Uber and Lyft probably will be forced either to raise prices or to increase the cut they take from their drivers ... its core riding hailing business is faltering. Having faced a number of setbacks, Uber also is lagging in the longer term race to develop autonomous technology ..."

• Uber’s "adjusted net revenue has started to decline.This points to a fundamental challenge with Uber’s business model that it has not yet figured out: How to keep prices low enough to attract riders while paying drivers enough to keep them from defecting — and still make a profit. Competition from Lyft, which is willing to suffer similar losses, makes this particularly hard."--cnbc.com.

2) Investing

The Week: NASDAQ Composite -1.3% | S&P 500 Index -0.8% | DJIA -0.7%

U.S. stocks bounced back from deep losses Friday but still closed lower as trade-related jitters overshadowed strong economic data--MarketWatch.com.

U.S. consumer sentiment rose to a 15-year high of 102.4 in May, well above the 97.1 expected by economists polled by MarketWatch.com and April’s reading of 97.2, according to the University of Michigan’s consumer sentiment index.

The Conference Board’s estimate of leading economic indicators for the U.S. (pdf) rose for the third straight month in April to 112.1, up 0.2% from March. The survey of economic conditions is a collection of forward-looking data that attempts to predict future economic growth.

"We think that China represents 15% of global GDP, yet less than 1% of all cross-border currency settlement is in their currency. It's important for us to realize that the joke is on us--if they were to open their capital account and let Chinese invest abroad--their [China's] currency would depreciate 40% in a day. I think we're making the right moves here in taking a little bit of market pain to maintain our national security in the long run. Just so you can hear from me, I don't have a vested interest in China's currency any more. It's such an important moment in time for US national security that most of my interest has been moving toward the political sphere. If you can get over the fact that there's no rule of law there, and they don't respect human rights ... then maybe you should invest money in China."--Kyle Bass

Shocked Traders Respond To Trade War--"The biggest problem is the huge disconnect with what markets have been hoping for and what is transpiring now. Markets had priced the best-case scenario and odds are shifting towards the worst-case scenario."--zerohedge.com May 13, 2019

Long View

Investor Notes: Macroview | EU Elections (May 23-26):

Brexit Party Surges: after parting ways with the increasingly irrelevant UK Independence Party (UKIP), Nigel Farage co-founded the Brexit Party [domain: thebrexitparty.org], which is now polling above the Labour and Conservative parties put together ahead of the European Parliamentary elections May 23rd:

source: statista.com

France: "The 'yellow vest' demonstrations against Macron are basically the demonstrators who, more or less, voted for Trump here [U.S.]. It’s people coming from small cities, from rural areas, lower-middle-class, saying, 'We have been left behind.' And, on the right, our conservative party is moving in the same direction as the Republicans are here."--Gérard Araud, French Ambassador to the U.S., from 2014 until retiring 19 Apr 2019.

European Elections 2019:

source: europarl.europa.eu

Editor's note: the Brexit Party also has Annunziata Rees-Mogg (twitter: @zatzi). Watch her in this YouTube video. She is the sister of well-known Conservative Party Brexiteer Jacob Rees-Mogg. For the Conservative Party, the problem is Theresa May: "For the Conservatives to go into a General Election without having delivered Brexit and with Theresa May as leader would be electoral suicide."

3) ICYMI Tech News:

Apple $AAPL move downward accelerates after losing SCOTUS antitrust case:

$AAPL

Apple and tech-industry allies said before the ruling that a decision allowing the lawsuit could lead to expensive antitrust claims against other companies that run online marketplaces, potentially affecting Alphabet Inc.’s Google, Amazon.com Inc. and Facebook Inc. See also: Apple Releases iOS 12.3 With New TV App and Channels Feature--macrumors.com.

Will Amazon Put UPS Out Of Business?--zerohedge.com. See also Amazon Butts in on Google-Facebook “Duopoly” in the Huge Business of Internet Advertising. Publishers Hung Out to Dy--wolfstreet.com.

Microsoft or Google? $MSFT "has a bigger share in my portfolio ... because of its dividends, growth in cloud, improving margins, visionary leadership, and the improving FCFs"--seekingalpha.com.

Oracle is shutting down its R&D arm in China, laying off 900+ employees--zdnet.com.

Online markets have grown 10X in the last two decades, more $1B-$10B+ software startups will exist, and startups can grow faster than ever--blog.eladgil.com.

Quicktakes:

• Italy's watchdog investigates Google for alleged antitrust abuse;
• Amazon backing for UK food app Deliveroo;
• Samsung Electronics undecided on further investment in its China NAND plant.
• German finance minister expects OECD deal on digital tax in 2020;
• Consumer bodies seek to force Alibaba portal to honor EU shoppers' rights;
• Baidu swings to net loss for first time since listing, shares fall;
• Nvidia revenue forecast beats as demand for gaming chip rises

Personal Tech: Death by PowerPoint: the slide that killed seven people.

-- John Poole, Editor, Domain Mondo  

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Tech Review | Semiconductor Chip Wars: China vs U.S. (video)

Tech Review (TR 2018-12-15)--Domain Mondo's weekly review of tech investing news: Features • 1) Semiconductor Chip Wars: China vs U.S., 2) Why Netflix $NFLX Is Struggling In India, 3) Investing: The Week, Investing Notes: The Macroview, 4) ICYMI Tech News: Apple $AAPL, ParkJockey, Qualcomm $QCOM, Amazon AWS Robomaker, $TME IPO, Huawei CFO.

1) Semiconductor Chip Wars: China vs U.S. 

The Economist.com video above published Dec 11, 2018: The trade war between China and the U.S. is not just about traditional products like steel and cars. A battle for dominance is under way in semiconductor chips, as the two superpowers fight to control this vital industry.

2) Why Netflix $NFLX Is Struggling In India

Netflix has 137 million subscribers and a majority of them are international. But the streaming giant is still struggling to break into India, the world's second-largest internet market. CNBC's Alex Sherman explains why.

Netflix is currently valued much higher than other media companies. Despite a share pullback in recent months from more than $400 to about $285, Netflix has a trailing price-to-earnings ratio of more than 100 and an enterprise value-to-EBITDA ratio of about 70. For comparison, Disney has a P/E ratio of about 14 and an EV-to-EBITDA ratio of about 11. Viacom's valuation ratios are both around 7.

This gaudy valuation is largely predicated on its international growth forecast. Breaking into India is critical for the company to double or triple its subscribers over the next 10 to 15 years, as many analysts have estimated. But Netflix hasn't had an easy time spreading through India since it launched there in 2016. Faced with competition from local players and Amazon Prime Video, Netflix is facing an uncertain future in a country with more than 1.3 billion people. CNBC.com video above published Dec 11, 2018.

3) Investing

The Week: NASDAQ Composite -0.8 | S&P 500 Index -1.3 | DJIA -1.2.

Slowing growth in China, growing disarray concerning UK, Brexit, & the EU.

Investing Notes: The Macroview

“It is quite possible there will be a global recession”--Jeffrey Gundlach, Dec 11, 2018.  The U.S. is stronger than the rest of the world, according to Gundlach, with real growth at 3.0%. U.S. leading economic indicators (LEIs) remain strong, and are not close to turning negative, which would signal a recession. But global LEIs are much weaker, Gundlach said, and approaching zero. As central banks tightened their monetary policies, equity returns have been hit. 75% to 80% of global markets are in a “death cross” pattern, where 50-day moving average has fallen below the 200-day moving average. Europe is “absolutely horrible” in terms of economic growth, according to Gundlach. More here.

Top 10 Risks For 2019 include Eurozone crisis 2.0.

4) ICYMI Tech News:

• Apple $AAPL plans to build a new $1 billion campus in Austin, Texas, adding thousands of jobs, and also setting up new large offices in Seattle, San Diego and the Los Angeles area.--Axios.com.

• SoftBank Group reportedly has invested hundreds of millions of dollars in Miami parking tech startup ParkJockey (parkjockey.com) making it Miami's most valuable startup with a valuation now above $1 billion.

• Qualcomm's $QCOM Challenges May Only Get Worse--SeekingAlpha.com.

• Robots rising: 5 trends driving the robotics sector in 2019--zdnet.com. For robot-based automation, check out Amazon's AWS RoboMaker. 

• China-based music streaming Tencent Music Entertainment Group raised close to $1.1 billion in its U.S. initial public offering (IPO) after pricing its $TME shares at the bottom of its targeted range.

• Canada frees China's Huawei CFO on bail.

• Russiagate Hyperbole: Google CEO Sundar Pichai revealed this week that the “full extent” of so-called Russian meddling activity that took place on the platform during all of 2016 was $4,700 spent on some digital advertisements.

-- John Poole, Editor, Domain Mondo  

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MacroView: US Trade Policy and US Interest Rates Impact Global Markets

US may prefer separate trade deals with Canada and Mexico

Financial Times (ft.com) video above published Jun 4, 2018: US President Donald Trump says he may prefer separate trade deals with Canada and Mexico rather than the North America Free Trade Agreement.

Editor's note: various factors may be differentiating the U.S. from global markets affected  by the Trump trade policy and Federal Reserve rate hikes--“The economic effect of a global trade war may be worse on Europe, Japan and China than they are on the U.S., and global equity investors have to put their money somewhere”--Why tech stocks give ‘an insulating force field’ to this market | MarketWatch.com: "The trade uncertainty also has helped squelch the 10-year Treasury yield supporting equities [U.S. stocks], according to Colas. And his fourth factor is that we [U.S.] might weather whatever comes better than other countries do."

Raghuram Rajan Says The U.S. Federal Reserve Will Stick To Its Pace Of Rate Of Hikes

BloombergQuint video published Jun 4, 2018: Former Reserve Bank of India (RBI) Governor Raghuram Rajan* on emerging markets, U.S. Fed Reserve hikes and more: "unfortunately accidents can happen ... my worry is what you may think of as bargaining employees working out the art of the deal soon becomes hardened positions which become very difficult to back off and then you enter actual conflagration and that combined with the high degree of leverage and asset prices which are you know price to perfection that's the potent volatile combination."

*Dr. Rajan is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. He received his PhD from the MIT Sloan School of Management (1991).

He was the 23rd Governor of the Reserve Bank of India between September 2013 and September 2016. Between 2003 and 2006, Rajan was the Chief Economist and Director of Research at the International Monetary Fund. In 2015, during his tenure at the Indian Reserve Bank he also became Vice-Chairman of the Bank for International Settlements.

At the Federal Reserve annual Jackson Hole conference in 2005, Rajan warned about the growing risks in the financial system and proposed policies that would reduce such risks. Former U.S. Treasury Secretary Lawrence Summers called the warnings "misguided" and Rajan himself a "luddite". However, following the 2008 economic crisis, Rajan's views came to be seen as prescient and he was extensively interviewed for the Oscar-winning documentary Inside Job (2010).

Transcript (auto-generated)
00:00 [higher US interest rates] is my guess
00:03 unless something really untoward happens
00:05 in the global economy or in the US
00:08 economy which in the U.S. certainly
00:10 there's no sign that something is bad is
00:12 going to happen we will have a couple
00:15 more rate hikes after which the Fed will
00:18 look around and see well are we getting
00:20 close so round two point seven five [2.75] --
00:22 three [3.0] is approximately where it will
00:24 stop maybe one more next year and and
00:26 perhaps pause at that point say we're
00:28 closer to neutral than before and maybe
00:31 we have to see the consequences because
00:32 monetary policy has lags we've seen
00:36 around recently in emerging markets and
00:39 your successor Dr. Patel has come out
00:42 to say that you know the tapering pace
00:44 of the Fed is to blame for what receive
00:47 recently do you agree with the view well
00:49 I don't know that
00:53 these the liquidity in the financial
00:56 markets has disappeared as of now I
00:59 think Dr. Patel is raising a question
01:03 about going forward if there is a
01:04 substantial withdrawal of liquidity
01:06 whether in fact it causes markets to
01:09 tighten overly but my guess at this
01:11 point is the U.S. is focused on growth
01:15 of itse domestic economy and thinks that
01:18 inflation is pretty much where it wants
01:20 it to be and with labor markets below
01:23 what it thinks is consistent with full
01:25 employment that is at three point seven
01:28 this is a historic low [unemployment] that really
01:31 they're focused inwardly and unless
01:33 there's something big outside that
01:35 happens to knock them knock their sense
01:38 of what is going to happen in the US you
01:52 know you know in a world where countries
01:55 take full cognizance of the
01:56 international responsibilities one of
01:59 the things that I have been pressing for
02:01 is really the sense that the big central
02:04 banks should look at the consequences of
02:06 their actions also on other countries
02:08 that said I think emerging markets are
02:11in a much better situation today with a
02:14 few exceptions where you know finances
02:16 as well as politics or creating some
02:19 uncertainty amongst international
02:21 investors but I think broadly they're in
02:23 a much better situation than they were
02:25 say around
02:26 time of the people tantrum that is not
02:28 to say accidents cannot happen that's
02:30 agreed with a view of Jerome Powell who
02:32 said that emerging markets are in a good
02:35 position to navigate the shifts in US
02:37 policy when you talk about they are
02:39 exceptions which countries I would say
02:43 they're in a better position I think
02:45 there will be still stress for the
02:47 emerging markets and they will have to
02:48 cope with the rising dollar as well as
02:50 rising international interest rates as
02:52 well as the flow back of capital flows
02:55 which always happens at times like this
02:57 so there will be stresses of course if
03:00 you look around the world and you ask
03:01 which countries are already stressed you
03:03 would say Argentina is stressed and of
03:06 course Turkey is undergoing some stress
03:08 the central bank has raised interest
03:10 rates considerably as well as simplified
03:12 the interest rate structure I think in
03:15 countries looking forward because Italy
03:18 depending on what the government does
03:20 and how much it wants to break the
03:22 fiscal constraints that the [European] Union puts
03:26 on it and the euro area that's going to
03:29 be a place to watch Brazil where
03:31 elections are coming up and of course
03:34 Brazil has a medium-term fiscal problem
03:36 which needs to resolve by dealing
03:39 primarily with the pensions of public
03:42 sector employees that is going to face
03:44 the next presidents not going to happen
03:45 before there's going to be something the
03:47 next president will have to opine on
03:48 very quickly and that's something to
03:50 watch out for so there are countries
03:53 issues that they have to deal with as we
03:56 go forward
03:56 you didn't mention any of the emerging
03:58 markets in Asia well I think Asian
04:00 emerging markets are in a healthier
04:03 situation than in the past because of
04:06 fairly narrow current account deficits
04:10 very small fiscal deficits as well as
04:13 moderate inflation so there is more
04:16 confidence their currencies many of them
04:18 have moved to inflation targeting
04:19 regimes and there is a sense that you
04:22 know they're not gonna let inflation get
04:24 out of control so they are in a
04:26 different position again I would say
04:28 that Southen can get stressed at this
04:31 point I would say you know amongst the
04:34 big ones no clear and present danger you
04:37 talked about Italy and we saw the fall
04:39 out of Italy throughout the world
04:41 two months ago I met chief Christine
04:44 Lagarde did say that she was confident
04:46 the eurozone was on a sustainable path
04:48 of growth does Italy changed prospects
04:51 for eurozone well I think certainly the
04:54 advent of a populist government in Italy
04:57 we'll raise the questions that have been
04:59 raised and have been sort of have quiet
05:01 down which is what is the periphery
05:03 getting now in truth the periphery has
05:06 got a lot in terms of inheriting
05:09 credible monetary policy much lower
05:12 interest rates than they were used to
05:13 but at this point in a relative sense
05:16 when they look at the past they feel
05:20 that the exchange rate is stronger than
05:22 they would like and the benefits of low
05:25 interest rates are being subverted to
05:27 some extent by fears about the these
05:31 countries and the spreads are widening
05:34 so on the one hand we don't have as
05:36 flexible and exchange rate as we would
05:38 want on the other hand interest rates
05:40 are higher for us than we would like
05:42 relative to what they were in the past
05:45 and so our [Italian] firms are paying these higher
05:47 interest rates are not being able to
05:49 match competition from say Germany or
05:52 the Netherlands and so the core
05:54 periphery sort of divide is growing
05:57 again
05:57 I mean there is a dialogue to be had but
06:01 it is going to be a tough one
06:02 Italy is one challenge the other
06:04 challenge is trade US and after US and
06:08 China and of course US and its US steel
06:12 and aluminium tariffs is Asia most at
06:16 risk when it comes to concern about
06:18 protectionism well unfortunately
06:20 accidents can happen
06:22 and the world is not well prepared for
06:25 the entity at the center of the global
06:28 financial and monetary order and trade
06:31 order turning around and saying I don't
06:33 believe in all this I want to change
06:35 things now the system has been built by
06:38 the U.S. around the U.S.. and now the
06:40 U.S. actually doesn't believe in using
06:43 the multilateral system this is a very
06:46 big change and we're not prepared for it
06:48 now you would hope that good sense
06:51 prevails and some of what we see are
06:53 bargaining tactics rather than actual
06:57 threats which should be carried out the
06:59 problem of course is positions hardened
07:01 you make a threat somebody else makes
07:04 the counter threat soon you find you
07:06 cannot back off and then we get into
07:08 this is true of war it's true of trade
07:11 war and one of the big worries is that
07:13 threat something made left right and
07:15 center by so strong I would say largely
07:20 been strong men who want to be seen as
07:23 strong and the rule to back off is far
07:28 more limited
07:29 and every country with a democratic or
07:31 authoritarian essentially the
07:34 governments want to look strong so my
07:36 worry is what you may think of as
07:40 bargaining employees working out the art
07:43 of the deal soon becomes hardened
07:46 positions which become very difficult to
07:49 back off and then you enter actual
07:52 conflagration and that combined with the
07:55 high degree of leverage and asset prices
07:59 which are you know price to perfection
08:01 that's the potent volatile combination

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MacroView | Forget Brexit, Fear of Italy Doing a EURO Exit Shakes Markets

UPDATE: Wall Street Climbs as Worries Over Italy's Politics Ease | NYTimes.com: May 30, 2018 12:32pm EDT.

Original post:
If you're in the U.S. and got back from your Memorial Day weekend late, you may be wondering, what happened to cause markets to tumble Tuesday? Here's a recap:

Italian president rejects nomination of Eurosceptic minister

Financial Times (ft.com) video above published May 27, 2018: Leaders of Italy's leading populist parties have dropped their bid to form a government after President Sergio Mattarella rejected their nomination of a Eurosceptic finance minister.

Dow Tumbles Nearly 400 Points; S&P 500 and Nasdaq Also Decline | TheStreet.com May 29, 2018: "Stocks fall sharply Tuesday as a political crisis in Italy rocks markets across the globe." Also: Investors are dumping Italian government debt | ft.com.


Italian bond yields are rising rapidly because the country is laden with debt and in political turmoil. TheStreet.com's Tracy Byrnes enlisted London Bureau Chief Martin Baccardax to help explain how it will affect the rest of us.

Germany's DAX

Who  is  was Carlo Cottarelli?

Financial Times (ft.com) video above published May 28, 2018: As newly appointed prime minister, the former IMF official will focus on improving Italy's finances ahead of new elections, but many think he will immediately face a vote of "no confidence" and some now think new elections may be scheduled as early as July, 2018--major parties in Italy say Cottarelli’s mission is 'all but dead' and parliament will soon be dissolved --Italy may return to polls in July, sources say, amid market rout | Reuters.com.

BREAKING: Dow falls more than 2%, or more than 500 points, to session low as worries about Italy and Spain ripple through the markets https://t.co/Bpl38EW7eE pic.twitter.com/08gHOdsm5q

— CNBC Now (@CNBCnow) May 29, 2018

The MacroView:
Italy's new election could become a referendum on the European Union and the euro--President readies Italy for snap polls to be fought on EU, euro | Reuters.com--the far-right League and anti-establishment 5-Star Movement may unite for an upcoming new election in Italy. League leader Matteo Salvini said on Monday, May 28: “Today Italy is not free; it is occupied financially by Germans, French and eurocrats ... if there’s not the OK of Berlin, Paris or Brussels, a government cannot be formed in Italy. It’s madness, and I ask the Italian people to stay close to us because I want to bring democracy back to this country.” When? New elections in Italy 'by start of 2019' at the latest or as early as autumn: Italy's president named a former IMF economist Carlo Cottarelli as caretaker prime minister to lead the country into new elections, possibly as soon as the autumn in the eurozone's third largest economy.  Mr Cottarelli, 64, was director of the IMF's fiscal affairs department from 2008 to 2013 and became known as "Mr Scissors" for making cuts to public spending in Italy--rte.ie.

Most Exposed to Italy’s Sovereign Debt? (Other than Italian Banks): BNP Paribas, France’s largest bank, with €16 billion of Italian sovereign debt holdings, Dexia (French-Belgian) holds €15 billion of Italian debt, and Banco Sabadell has €10.5 billion invested in Italian bonds (40% of its entire fixed asset portfolio, worth €26.3 billion, and 110% of its tier-1 capital)--WolfStreet.com.

ECB & Eurozone: Banque de France to pursue efforts to spur consolidation of Europe's financial sector: Villeroy | Reuters.com--Editor's note: if consolidation is "encouraged," Europe may end up with a few (5 or 6?) large banks (mostly German or French) controlling the EU/eurozone financial sector. The five largest commercial banks in the U.S. had 44 percent of total assets in the banking system as of 2014 (most likely even more now). Unlike the U.S., however, Europe still has a lot of large "troubled" banks with underlying financial problems--consolidation now could exacerbate a situation the ECB has failed to remediate.

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MacroView: Hard Brexit or Else? When Will The EU and UK Face Reality?

UPDATE: Theresa May's Brexit speech March 2, 2018

UPDATE March 2, 2017: UK Prime Minister Theresa May delivers her Brexit speech on Friday, March 2, 2018. “We all need to face up to some hard facts ... Neither of us can have exactly what we want, so we need to strike a new balance. But we will not accept the rights of Canada and the obligations of Norway”--UK Prime Minister Theresa May. See May pitches mixture of concession and detail in Brexit vision | Reuters.com.

So Far, Brexit Negotiations Have Been Going Nowhere Fast:

• May to set out Brexit wishes; EU says ideas so far are 'pure illusion' | Reuters.com Feb 23, 2018
• EU's Donald Tusk says 'frictionless trade' impossible after Brexit (unless it remains in customs union);
• Tony Blair: Theresa May has no hope of achieving Brexit aims | TheGuardian.com
• EU European Parliament says UK Government's concessions not enough;
• Brexit today: Donald Tusk tells Theresa May EU leaders 'not happy' with her negotiating stance after Downing Street meeting | independent.co.uk March 1, 2018.

Unclear Brexit vision from a divided cabinet

Financial Times (ft.com) video above published Feb 15, 2018: Political columnist Janan Ganesh and FT editor Lionel Barber discuss how Boris Johnson's call for national unity comes at a time when the Conservative cabinet remains divided on Brexit.

Boris Johnson’s Brexit Speech at Policy Exchange (video)

Jacob Rees-Mogg on Boris's speech and the transition period (video)

At best, the UK may not be able to strike anything other than an ordinary trade deal with the EU in its Brexit negotiations. Late last year, the EU produced a graphic which warned that the UK is heading for a hard Brexit. The  infographic below is based on that, and shows how Theresa May's demands may be incompatible with the current relationship Norway (a non-EU nation) enjoys with the EU, or  Iceland and Liechtenstein. Included in UK's previous demands were to be free of European courts, trade rules, migration, regulation and financial contributions, which would mean it could not use Switzerland as a future template, or the Ukraine and Turkey deals with the EU. So the UK-EU deal may reflect the same type of relationship as that agreed upon by the EU with Canada and South Korea, or if there is no deal, the UK and EU would be left with the WTO rules to govern trade with each other. Why the UK hasn't already opened up trade negotiations with the U.S., Canada, and others, is shortsighted, if it is serious about Brexit. Unfortunately, the EU is also being shortsighted as a "hard Brexit" will actually hurt the EU countries, particularly Germany, harder--the UK imports more than it exports to the EU.

The current trajectory of Brexit negotiations, in the short term, with the delay and uncertainty, is hurting the UK economy, and in the long term, the EU is "cutting off the nose to spite the face."

Statista.com

Related links:

• U.K. Has a Secret Plan to Hold Brexit Cash If EU Refuses to Trade | Bloomberg.com

• Exclusive: EU scraps border projects as 'Ukraine fatigue' grows | Reuters.com

• UK's pre-referendum Brexit forecasts no longer valid: finance ministry admitted forecasts of a big hit to the UK economy from Brexit, made shortly before the June 2016 EU membership referendum, were no longer applicable. Brexit supporters have always said the projections were flawed and part of “Project Fear” led by former prime minister David Cameron and his finance minister George Osborne. See also How to make sense of those pesky Brexit forecasts | BBC.com.

Tweets by Brexit

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Political Economics: Technocracy, President Trump, and the Next Fed Chair

The MacroView from Three Perspectives:

Hawks and Doves: The Five Fed Chair Candidates. On Oct 23, 2017, President Trump said he was 
"very very close" to a decision on who would be the next Chair of The Federal Reserve.

1. Next Fed Chair (videos)
Powell Is a Force at the Federal Reserve, Says Wallace

Bloomberg.com video published Oct 23, 2017: Kim Wallace, head of Washington policy at Renaissance Macro Research (domain: renmac.com), examines the leading contenders to be Federal Reserve Chairman and the warning from Billionaire Ray Dalio for the Fed to watch a U.S. economic divide. He speaks on "Bloomberg Markets" on October 23rd.

DomainMondo.com's prediction: Trump will pick Powell to be Fed Chair. Trump's Treasury Secretary Steven Mnuchin has reportedly recommended Powell privately to Trump.

A Powell, Taylor Fed Hawkish to Markets, Says Zentner

Bloomberg.com video above published Oct 23, 2017: Ellen Zentner, chief U.S. economist at Morgan Stanley and Steve Barrow, head of FX strategy at Standard Bank, examine what a combination of John Taylor and Jerome Powell on the Federal Reserve could mean to markets. They speak on "Bloomberg Daybreak: Americas."

What's at stake?

"Whereas Janet Yellen, Bernanke’s successor, ended the Fed’s Q.E. program in 2014, the European Central Bank Chairman Mario Draghi’s version of it is still going, which has led to the “manipulation” that so concerns Jeffrey Gundlach. European interest rates “should be much higher than they are today,” Gundlach has said, “. . . [and] once Draghi realizes this, the order of the financial system will be turned upside down and it won’t be a good thing. It will mean the liquidity that has been pumping up the markets will be drying up in 2018 . . . Things go down. We’ve been in an artificially inflated market for stocks and bonds largely around the world.”"

2. Political Economics by Jeffrey P. Snider | AlhambraPartners.com 20 Oct 2017, excerpt: "Who President Trump ultimately picks as the next Federal Reserve Chairman doesn’t really matter. Unless he goes really far afield to someone totally unexpected, whoever that person will be will be largely more of the same .... Trump’s candidacy, as Bernie Sanders’, as an ideal was a grave threat to the status quo because it started with the premise that, no, this isn’t as good as it can be and that we need to look for real solutions. Whether he forwards that ideal as President is and has been another matter, and who he picks as Fed Chair might be some small indication of where he currently stands consistent with that idea, or perhaps having second thoughts about it. The technocracy doesn’t work because it isn’t technically competent (thus 2008).

"That’s the real political debate in 2017 and going forward; technical incompetence where the defense of the technocracy refuses to even allow the suggestion that this might be true. I go back to Weimar Germany not because I expect a global hyperinflationary breakdown, but in how that one particular form of systemic breakdown exposed timeless flaws inherent in all economic and financial systems. They all run to some extent on trust and (good) faith:

"In other words, German monetary officials, particularly Reichsbank head Rudolf von Havenstein and Minister of Finance Karl Helfferich, denied that Germany had an inflation problem at all – right up until the end. Minister Helfferich declared that Germany had better gold coverage after the war than before it, despite that more than quadrupling of currency volume. One economics professor, Julius Wolf, wrote in 1922 that, “in proportion to the need, less money circulates in Germany now than before the war.”

"As much as the easy-to-see Versailles excuse played a part, there can be no doubt that beyond 1921 the German people themselves began to recognize that authorities had no idea what they were doing; worse, they came to see that even though policymakers were inept and incompetent, officials themselves would never admit as much and thus nothing would prevent Germany from its fate. That awakening meant an increase in danger that French occupation could never have unleashed on its own."

Hat Tip: ZeroHedge.com

3. QT: Quantitative Tightening and the Fed:
Investors Ignore What May Be The Biggest Policy Error In History | Mauldin Economics (excerpt):

"... The chart ... shows the growing uncertainty over the future direction of monetary policy, is both terrifying and enlightening. The Federal Reserve, and indeed the ECB and the Bank of Japan, went to great lengths to assure us that the massive amounts of QE that they pushed into the market would help turn the markets and the economy around. Now they are telling us that as they take that money back off the table, they will have no effect on the markets. And all the data that I just presented above tells us that investors are simply shrugging their shoulders at what is roughly called “quantitative tightening,” or QT. I simply don't buy the notion that QE could have had such an effect on the markets and housing prices while QT will have no impact at all. In the 1930s, the Federal Reserve grew its balance sheet significantly. Then they simply left it alone, the economy grew, and the balance sheet became a nonfactor in the following decades. I don’t know why today’s Fed couldn’t do the same thing. There really is no inflation to speak of, except asset price inflation, and nobody really worries about that. We all want our stocks and home prices to go up, so there’s no real reason for the central bank to lean against inflationary fears; and raising rates and doing QT at the same time seems to me to be taking a little more risk than necessary. And they’re doing it in the midst of the greatest bull market in complacency to emerge in my lifetime. Do they think that taking literally trillions of dollars off their balance sheet over the next few years is not going to have a reverse effect on asset prices? Or at least some effect? Is it really worth the risk?..."

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MacroView: Kyle Bass Says China Will Be Forced to Recap Banks (video)

Is Xi Jinping, the President of China, the world's most powerful man?

The Economist (economist.com) published the above video on Oct 17, 2017: Is Xi Jinping the world's most powerful man? The world's balance of power is shifting. For the past five years president Xi Jinping, China's leader, has ruled with an iron fist and has been pursing a new model of great power relations. But his power may be fragile, watch the video and find out why.

Kyle Bass Says China Will Be Forced to Recap Banks

Bloomberg.com video above published Oct 17, 2017:  Kyle Bass, founder and chief investment officer at Hayman Capital Management (domain: HaymanCapital.com), discusses the Chinese banking system in an interview with Bloomberg's Erik Schatzker taped on Oct. 6, 2017.

US Markets Oct 17, 2017:

Dow touches 23,000 for the first time, closes at record https://t.co/M6mMzpugks pic.twitter.com/2hArVHq33Z

— CNBC (@CNBC) October 17, 2017

#BREAKING Dow tops 23,000 for the first time but closes just shy of the milestone https://t.co/dJxUQFdLQe

— USA TODAY (@USATODAY) October 17, 2017

Tweets by Jkylebass
See also:

• Kyle Bass Says ICO Investors Will Get Wiped Out in Crypto ‘Mania’ | Bloomberg.com
• Kyle Bass: China's $40 Trillion Banking System Has "Largest Imbalances I've Ever Seen" | ZeroHedge.com
• This Hedge Fund Investor Says China Bears Are Missing Something | Bloomberg.com: "Bass’s flagship Hayman Capital master fund returned almost 25 percent last year on bets placed across global rates, currencies and commodities, Bloomberg reported in January. “Look, Kyle’s really smart, and Kyle could be right,” Yusko said. “But we’re just going to disagree on this right now.”"

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MacroView: Next Three Flash Points for the European Union (video)

The Next Three Flash Points for the European Union

Despite centrist or mainstream wins in elections in Germany, France and the Netherlands, support remains strong for nationalist, anti-immigrant and anti-EU parties across the bloc. Three critical issues could determine the future of the debate over Europe and the union: 1) immigration; 2) Eurozone; 3) defense. WSJ.com's Niki Blasina reports. Wall Street Journal (wsj.com) video above published Sep 26, 2017.

EU vs Ireland and Apple (NASDAQ: AAPL)

After over one year, Ireland still hasn't recovered up to €13 billion in illegal benefits from Apple, so we now refer Ireland to EU Court. pic.twitter.com/H1Aemtc7L2

— European Commission (@EU_Commission) October 8, 2017

Brexit: EU vs UK

#Brexit negotiations next week should continue to advance. EU27, EP are united, as I said @Europarl_EN on Tuesday https://t.co/9iK60ji1Oz pic.twitter.com/XeUal9KfUK

— Michel Barnier (@MichelBarnier) October 6, 2017

ECB Extends Quantitative Easing

We went out onto the streets of Frankfurt to ask people about their concerns over low interest rates and to explain why they are necessary pic.twitter.com/HbQfjUOVSj

— ECB (@ecb) October 4, 2017

See also:

• Account of the monetary policy meeting of the Governing Council of the European Central Bank, held in Frankfurt am Main on Wednesday and Thursday, 6-7 September 2017 | ecb.europa.eu: "... the Governing Council decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility would remain unchanged at 0.00%, 0.25% and −0.40% respectively. The Governing Council expected the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases. Regarding non-standard monetary policy measures, the Governing Council confirmed that the net asset purchases, at the current monthly pace of €60 billion, were intended to run until the end of December 2017, or beyond, if necessary ..."

• European Central Bank To Extend Quantitative Easing? What Will This Do To Other Nations?  | SeekingAlpha.com: "... It seems that there is an underlying rationale for the ECB extending its program of quantitative easing. The underlying rationale seems to be connected with the amount of bad loans that are on the books of eurozone banks ... This means that the Fed’s policy rate may be around 2.00 percent while the policy rates of the ECB continue to be where they are until early 2019. What will this do to exchange rates?..."--Professor John M. Mason

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MacroView: Election in Germany (video), ECB, EU, Spain, IMF & Greece

Germany election 2017 UPDATE 24 Sep 2017: Far-right AfD stuns German establishment by finishing third with 13.5% and will enter parliament for the first time, but Merkel wins fourth term--"Of course we had hoped for a slightly better result." said Angela Merkel, who must now form a coalition government, a potentially difficult task that could take months trying to woo unwilling potential coalition partners.

The Latest: German election: Merkel vows to form stable govt | The Washington Post: "Center-left challenger Martin Schulz, whose Social Democrats were the junior partners in Merkel’s outgoing government, said shortly after exit polls showed his party headed for a historic election defeat Sunday that it would go into opposition. In a television discussion involving major party leaders, he accused Merkel of conducting a “scandalous” campaign that avoided debate and created “a vacuum” that the nationalist Alternative for Germany party filled."

The German Election Explained

Wall Street Journal (WSJ.com) video published Sep 18, 2017: German voters head to the polls this Sunday in an election that determines whether Chancellor Angela Merkel remains at the helm of Europe’s biggest economic power. WSJ.com's Niki Blasina explains how the election will be won and why the race for third place is all important. See also: German election polls 2017 | FT.com

Germany's AfD Tests Merkel's Leadership, Says Posen

Bloomberg.com video published Sep 19, 2017: Adam Posen, president at Peterson Institute for International Economics, previews the upcoming German election. He speaks with Bloomberg's Francine Lacqua on "Bloomberg Surveillance."

How German Elections Can Influence the ECB's (European Central Bank) Future:

Video above published Aug 18, 2017, by Bloomberg.com: Themis Themistocleous, head of European investments at UBS Wealth Management, explains how choices made by voters in the German election on 24 Sept 2017, can impact the European Central Bank (ECB). He speaks on "Bloomberg Markets: European Close." See also:

• Merkel quashes hopes of ambitious eurozone reform | POLITICO.eu Aug 29, 2017: "... the comments suggest Merkel will continue to push the current German strategy for the eurozone, placing emphasis on economic reforms in member countries rather than pooling financial risk through common debt issuance and other measures ..."
• Why 'More Europe' Won't Solve Europe's Fiscal Quandary | Bloomberg.com Aug 31, 2017.

• France's Debt Is Euro-Zone's Largest | Bloomberg.com Aug 30, 2017

• Greece hopes for debt relief as bailout program enters final 12 months | cnbc.com: "Greece's debt isn't manageable in the long-run without being either extended or forgiven, according to the IMF."
• Spain-Catalonia split: Here’s how bad economically it could really be | cnbc.com and Catalonia’s Defiance of Spanish Authority Turns into Rebellion--WolfStreet.com.

• ECB Tightens Noose Around Bank Accounts | WolfStreet.com: "Locking up the money of unsuspecting depositors to prop up collapsing banks. The European Central Bank (ECB), arguably the European Union’s most powerful and least accountable institution, apparently needs more power, according to Daniele Nouy, the ECB’s top supervisor. Chief among the fresh powers it seeks is the power to temporarily prevent people from withdrawing their money from their accounts at banks that are in distress, including by electronic fund transfers." and The Next Spanish Bank Teeters, at Worst Possible Time | WolfStreet.com.

"It's been a lost decade for investors in the world's banks. For Europe's lenders in particular, the wounds are far from healed."--Bloomberg.com

"The IMF remained upbeat about the soundness of the European banking system ... this lapse was largely due to the IMF’s readiness to take the reassurances of national and euro area authorities at face value"--IEO report, infra

IMF admits disastrous love affair with the euro and apologises for the immolation of Greece | telegraph.co.uk: "The three main bailouts for Greece, Portugal and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000pc of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the fund between 2011 and 2014 ... “Before the launch of the euro, the IMF’s public statements tended to emphasise the advantages of the common currency," ... Some [IMF] staff members warned that the design of the euro was fundamentally flawed but they were overruled." (emphasis added)

The IMF and the Crises in Greece, Ireland, and Portugal | ieo-imf.org executive summary excerpt:

"The IMF’s handling of the euro area crisis raised issues of accountability and transparency, which helped create the perception that the IMF [International Monetary Fund] treated Europe differently. Conducting this evaluation proved challenging. Some documents on sensitive issues were prepared outside the regular, established channels; the IEO faced a lack of clarity in its terms of reference on what it could or could not evaluate; and there was no clear protocol on the modality of interactions between the IEO and IMF staff. The IMF did not complete internal reviews involving euro area programs on time, as mandated, which led to missed opportunities to draw timely lessons." (emphasis added)

Press release (highlighting added):

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MacroView Aug 2: Contagious Investor Confidence But Euro Stocks Fall

Contagious investor confidence

Low volatility encourages risk taking, as does rising prices. The FT.com's capital markets editor Dan McCrum says confidence is contagious and most of the world seems to have it. Published Aug 1, 2017, by FT.com.

Apple pushes Dow past 22K

Video above published Aug 2, 2017, by FoxBusiness.com: H Squared Chief Research Officer Hitha Herzog and Tech Analyst Russ Frushtick on Apple’s strong earnings report and its future production in the U.S.

European Stocks Fall for the Fourth Day in Five

Aug 2, 2017: European stocks moved lower as the Stoxx 600 fell 0.47 percent. Bloomberg.com's Mark Barton breaks down the day's trading on "Bloomberg Markets: European Close."

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