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Nationalists, Patriots, & Former Rothschild Bankers

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

If and when a former Rothschild banker starts telling us what the words in our respective languages actually mean, beware. Even if he has dozens of professional speech writers and spin doctors to do it for him. And even if the meaning and interpretation of words, though they may seem easily translatable, differ between English, French, German, Russian, Chinese to such an extent that Lost in Translation may appear to be an understatement.

But if you’re that Rothschild banker who became president of France through a process that nobody will ever understand, and you host the 100th commemoration of perhaps the worst war ever in history, to be ‘celebrated’ with ‘leaders’ none of whom have exhibited any memory through their actions of the ‘This must never happen again’ that the war ended with, you can expect to get away with bending both history and language.

Macron’s entire audience was ready for, and willing to absorb, a message that seemed so benevolent and sincere and loving, and that perhaps most of all was yet another jab at one of his guests, the American president. They were eating it up. As long as they can appear to stand together against Trump, they can make their people, their voters, and perhaps even each other forget how divided they themselves are.

It was nothing but one more circus, one more theater piece, albeit this one extremely carefully scripted for many months and by many of the finest directors and script writers France has to offer. The underlying theme: the EU is good, so is the UN, NATO is good etc. The list would include the IMF, World Bank and on and on. Big global institutions are good, the bigger the better, and criticism of them is not.

Macron’s spin doctors had come up with a few choice lines to express these sentiments. And since I couldn’t find anyone who had looked at those lines with anything but silent and blind admiration (undoubtedly only due to the solemn occasion) , please allow me. Here’s some of the things Macron said, the way they were translated into English, according to Anglo media:

“The old demons are rising again, ready to complete their task of chaos and of death.”

“Patriotism is the exact opposite of nationalism. Nationalism is a betrayal of patriotism.

“In saying, ‘Our interests first, whatever happens to the others’, you erase the most precious thing a nation can have, that which makes it live, that which causes it to be great and that which is most important: its moral values.”

Well, yes, the old demons are rising again. Or rather, they have been for years. French arms sales to countries and their often dictatorial leaders who one could classify as ‘nationalists’ have never really abated in the past 100 years. As a country, as a society, at least on the leadership level, nothing has been learned. The only ‘excuse’ Paris could provide for this is that all the other countries who sent away their young and strong to be slaughtered never learned a thing either.

But the spin doctors’ finest hour comes after this: “Patriotism is the exact opposite of nationalism. Nationalism is a betrayal of patriotism.” I’m not a linguist, but I know enough about languages -and so do you- to know this is utter nonsense. You may attempt to find some differences between nationalism and patriotism, if you want, but they will never be each other’s opposite. Unless you either are Macron looking for a catchy line or you write his speeches for him.

Obviously, Macron said this because Trump declared himself a nationalist recently. And Macron could now claim that this means Trump is not a patriot. Which we all know is hollow talk. Because Trump said it while speaking about trade, about the US economy. Which does nothing to ‘prove’ he doesn’t love his country. But that is what Macron suggests. He claims patriots love their country, and since nationalism is the opposite of patriotism, Trump does not love America.

Also, and again referring to Trump without mentioning him (if only he had the guts), Macron alleged that nationalists don’t care one bit about what happens to anyone who’s not a citizen of their country. Whereas it is much more likely to mean -I’m treading softly here- that there are people who look out for their own people first, and others after, and they expect all countries to do the same. Macron does the same. A long way away from “whatever happens to others”.

Trump was elected because many Americans feel shortchanged, because jobs have disappeared, because they can’t make ends meet. Macron was elected for largely similar reasons: the existing political system failed to protect people. In many other countries, the exact same dynamics are playing out. Macron’s answer to this is to emphasize -make that celebrate- the importance of the exact institutions that have been instrumental in making it all happen.

Ergo: Macron is a globalist. Or maybe I should say he believes in globalism, before someone chimes in to link this to Judaism. Macron believes in global economies and global institutions, whereas Trump does not. The Donald recognizes that global banks and multinationals are responsible to a large extent for the loss of American jobs to low-wage countries. His tariffs, especially on China, address exactly that. Even if he’s clearly conflicted when it comes to US companies who profit from the exact same thing.

Still, that doesn’t mean Trump is not a patriot. But that is precisely what Macron insinuated on Sunday. According to him, one can’t be both a nationalist and a patriot. He might have done better to let the millions who died a 100 years ago, and whom he commemorated, have their own say on that. Did the unfortunate frail forms bleeding to death in the trenches see themselves as nationalists or patriots? Wouldn’t that have been the last thing on their minds? And doesn’t that question tell the entire story?

Doesn’t it put into perspective Macron’s veiled attacks on Trump while the latter was sitting right there? The wonderboy banker trying to gain some sort of moral superiority over the real estate mogul over the heads and rotten bodies and memories of the French and British AND American troops who died deaths the western world can no longer even imagine (while they actively help inflicting them on Yemen) ? And then the entire media run with how beautiful Macron’s words, nay dedications, were?

100 years after the ‘Never Again’, France, Britain, Germany, Russia and the US are still selling billions worth of arms to regimes they know will abuse them. As long as they get their cut, right? The suggestion that Trump is somehow worse than the rest is ludicrous. If anything Trump is a little better on the warmonger front. He still has to prove that, true. The rest have proven their role already though.

Last thought: Xi Jinping is going out of his way to claim China is opening up its economy. That makes him a globalist, right? And globalists can only be nationalists, according to Macron, never patriots? Can we get someone to ask Xi how he sees this? And what about Vladimir Putin? Russia’s been bounced off the global stage through sanctions and allegations, but perhaps he would still like to be a globalist. So is Putin a nationalist or a patriot? Asking for a friend.

Again, according to Macron, you can’t be both. You think about that. What are you?

A Robot Now Runs AllianceBernstein’s Fixed Income Trading

Three things are certain: death, taxes, and that the already thin gap between human trader and algo is narrowing ever further.

AllianceBernstein’s new virtual assistant can now suggest to fixed income portfolio managers what the best bonds may be to purchase using parameters such as pricing, liquidity and risk, according to Bloomberg. The machine has numerous advantages to humans: “she” can scan millions of data points and identify potential trades in seconds. Plus she never needs to take a cigarette or a bathroom break.

The new virtual assistant, dubbed Skynet 2.0 “Abbie 2.0”, specializes in identifying bonds that human portfolio managers have missed. She can also help spot human errors and communicate with similar bots like herself at other firms to arrange trades, making humans redundant. This is the second iteration of AllianceBernstein‘s electronic assistant which debuted in January of this year, but could only build orders for bonds following precise input from humans.

Sourcing bonds that are easy to trade is done by Abbie 2.0 reaching out to another AB system called ALFA, which stands for Automated Liquidity Filtering and Analytics. The AFLA system gathers bids and asks from dealers and electronic trading venues to work out the best possible trades.

For now, humans are still required: Jeff Skoglund, chief operating officer of fixed income at AB told Bloomberg that “humans and machines will need to work closer than ever to find liquidity, trade faster and handle risks. Our hope is that we grow and use people in ways that are more efficient and better leverage their skills.”

What he really means is that his hope is to fire as many expensive traders and PMs as possible to fatten the company’s profit margins. Which is why the virtual assistant already helps support a majority, or more than 60% of AllianceBernstein‘s fixed income trades. The “upgrades” that are coming for the new assistant will help it include high-yielding investment grade bonds, before expanding to other more complex markets in the coming months. AB says that they will still rely on humans to make the final decisions on trades. For now.

While the original version of the assistant had to be told how much a portfolio manager wanted of a specific bond, the new version now mines data pools to be proactive, making sizing suggestions to portfolio managers. Among other things, the assistant looks at ratings of companies, capital structure and macro data such as social and geopolitical risks.

This is just another step in the industry becoming machine oriented in order to help cut costs, save time and avoid errors, especially in relatively illiquid bond markets. Liquidity could become even more of a factor if the economy slips into recession over the next couple of years.

Electronic trading in general is becoming more pronounced in fixed income as banks act more like exchanges instead of holding bonds on their balance sheet. All the while, regulations have encouraged the shifting of bond trading to exchanges. More than 80% of investors in high-grade bonds use electronic platforms, accounting for 20% of volume, according to Bloomberg.

Skoglund concluded, “We expect to be faster to market and capture opportunities we otherwise would not have caught by using this system. There’s a liquidity problem right now that could become significantly more challenging in a risk-off environment.

China ‘Consumption’ Slumps As Trade War Weighs On Sentiment

Following another month of contraction in the shadow banking system and the recently resumed downtrend in Chinese stocks and yuan, investors are bracing for the monthly deluge of economic data (ex-GDP) to judge just how much impact Trump’s trade wars are having (or just what Xi is allowing the world to see).

As we detailed earlier, despite Beijing’s desperation to inject more credit into its financial system and failing that, to at least give the impression it is doing that – and while October is typically a slow month for Chinese credit – growth in key gauges such as total social financing and money supply fell to record lows, reinforcing views that policymakers will need to step up efforts to revive flagging investment.

In fact, China’s outstanding total social financing (TSF) slowed to 10.2 percent from a year earlier, another all-time low  suggesting the increased lending barely compensates for shrinking “shadow” loans.

But, while the continued contraction of China’s credit impulse would suggest economic slowdown, one can never be so sure when it comes the managed minutia in the red ponzi’s macro data:

China’s September activity data didn’t show any meaningful pick-up in government spending, but infrastructure remains one important area of policy support and is expected to rise in the coming months, said Bloomberg Economics’ Chang Shu.

And as we detailed above, credit data released late yesterday is clouding the outlook of today’s numbers. All of the major money supply indicators (M2, new yuan loans and aggregate financing) are underperforming compared to market consensus.

So here is the October data:

  • China Retail Sales MISS +8.6% YoY (+9.2% YoY exp, +9.2% YoY prior)

  • China Industrial Production BEAT +5.9% YoY (+5.8% YoY, +5.8% YoY prior)

  • Fixed Asset Investment BEAT +5.7% YoY (+5.5% YoY exp, +5.4% YoY prior)

And the newly added property investment annual growth, given the fact that real estate sector is a key driver to China’s economy growth. It doesn’t have a median estimate, just like surveyed jobless rate.

  • Property Investment SLOWED +9.7% YoY (+9.9% YoY prior)

  • Surveyed Jobless Rate MEET 4.9% (4.9% prior)

As a reminder, China’s economy grew at 6.5% in 3Q – the slowest since the aftermath of the global financial crisis in 2009 – and this data suggests Q4 is not starting off so well.

For a nation transitioning to a consumptive economy, the tumble in Retail Sales growth is bad news (near the weakest since May 2003 and below all economists’ estimates) but Industrial production is holding up, as is investment spending – so there is an indication there that the old standby, infrastructure, is supporting growth.

Natixis Asia’s Senior Economist for Emerging Asia Trinh Nguyen tweets on China retail sales slowdown:

“Consumption has been a key anchor to the economy & its slowdown means that it isn’t just investment that is slowing.”

Bloomberg’s Enda Curran points out that the consumer slowdown builds on a narrative that the trade war is starting to have a material impact on sentiment. It’s worth noting, even as Alibaba’s singles day extravaganza hit another record, the pace of growth slowed, prompting some economists to say it’s evidence of softening demand.

That may explain why China’s Internet censors have been cracking down. The Financial Times reported that media have been ordered not to use “trade war.”

It seems the slowing economy is “Made in China” due to domestic consumption, rather than the questionable trade war, as Bloomberg’s Chris Anstey notes, the big takeaway for me is that the worries over consumer spending that have emerged from corporate earnings reports in recent weeks have been validated in the official monthly data here.

Looks like a broad based slowdown on the retail side of things. Sales of cars and office supplies contracted and there were big tumbles in demand for tobacco/alcohol, food and other daily used items.

Not much reaction in Yuan but China bonds rallied, pushing the yield down to its lowest since April 2017,…

Social Media Linked To Loneliness And Depression, New Study Finds

Authored by Mac Slavo via,

Social media use has once again been linked to loneliness and depression. Research has been hinting at the connection for several years, but scientists from the University of Pennsylvania say that this new study is the most comprehensive and rigorous to date.

Social media is not all bad, as not much really is, but most people tend to have a difficult time using their social media accounts in moderation.  That, according to the new study, can leave a person’s mental state a little lacking. There are even therapies and rehabilitation for those who have an addiction to social media.

Ever since sites like Facebook and Instagram became part of daily life, scientists have wondered whether or not they could contribute to mental health problems. In fact, research has hinted at a connection between social media use and depression for several years, according to This InsiderWe have reached a point where people have a hard time tearing away from their social media accounts.

 Published in the Journal of Social and Clinical Psychology, the most recent study linking poor mental health conditions to social media use has added even more evidence to back up the theory. The researchers from the University of Pennsylvania intentionally designed their experiment to be more comprehensive than previous studies on the topic. Rather than relying on short-term lab data or self-reported questionnaires, they recruited 143 undergraduate students to share screenshots of their Phone battery screens over a week to collect data on how much they were using social media apps including Facebook, Snapchat, and Instagram.

According to an in-depth report on the study done by This Insider, subjects of the study were told either to maintain their typical social media behavior or limit it to 10 minutes per day. Alongside the screenshot data, the researchers also looked at how much the participants experienced fear of missing out, anxiety, depression, and loneliness.

“Here’s the bottom line,” said Melissa G. Hunt, a psychologist at the University of Pennsylvania and lead author of the study.

“Using less social media than you normally would lead to significant decreases in both depression and loneliness. These effects are particularly pronounced for folks who were more depressed when they came into the study,” said Hunt.

“It is a little ironic that reducing your use of social media actually makes you feel less lonely,” she added.

“Some of the existing literature on social media suggests there’s an enormous amount of social comparison that happens. When you look at other people’s lives, particularly on Instagram, it’s easy to conclude that everyone else’s life is cooler or better than yours.”

“If you spend most of your time scrolling through your newsfeed checking out other people’s lives and compare them to your own, you become more at risk of developing (or having worsening) symptoms of depression or anxiety,” psychologist Allison Abrams told Business Insider. 

“This is especially so in those with low self-esteem.”

There are definitely physical and mental health benefits to a technology detox. The results suggest social media and screens should both be used in moderation; just like most things.

 “When you’re not busy getting sucked into clickbait social media, you’re actually spending more time on things that are more likely to make you feel better about your life,” Hunt said.

“In general, I would say, put your phone down and be with the people in your life.”

Banks Warn Fed Inverted Yield Curve Would Tighten Lending Conditions

Today the Fed released the Q3 edition of the Federal Reserve’s Senior Loan Officer Opinion Survey (SLOOS), which confirmed that lending standards remained accommodative irrespective of the flatter UST yield curve, and reported a modest easing in lending standards and terms for C&I loans, but also weaker demand for those loans. Banks also reported weaker demand for both commercial and residential real estate loans, echoing the softer housing data in recent months.

The details:

  • The net percentage of banks reporting easier standards on loans to large- and medium-sized firms stayed flat at 16%, while standards for small firms were basically unchanged on net.
  • Terms on C&I loans eased somewhat for large- and medium-sized firms, as 27% of banks surveyed (in net terms) reportedly narrowed spreads of loan rates over the cost of funds; other terms, such as premiums charged for riskier loans, loan covenants, and collateralization requirements, all eased somewhat.

Despite the easier conditions, however, demand for C&I loans weakened somewhat, with “somewhat weaker” demand reported from both large and small firms. The net percentage of banks reporting decreased new business loan inquiries was 15%.

At the same time, demand for CRE loans across a broad range of categories reportedly also weakened even as lending standards on CRE loans were largely unchanged.

The same pattern was observed for residential mortgage loans, where banks reported that lending standards also eased on net in Q3 across most residential loan categories, even as demand was moderately weaker across all surveyed residential loan categories, including home equity lines of credit.

One place where banks saw modest tightening in lending standards in Q3 in comparison with the beginning of 2018, was in credit card and auto loan applications: banks were less likely to approve loans for borrowers with FICO scores of 620; they were more likely than in Q1 to approve such consumer loans for borrowers with FICO scores of 720.

The Fed also included several rather topical special question, asking how banks are being affected by the shape of the yield curve. Banks reported that their C&I lending standards or prices were unaffected by the flattening in the slope of the yield curve so far this year. Other special questions in the survey asked banks how their policies would change in response to a hypothetical yield curve inversion next year.

“Those banks that indicated they would tighten their lending policies because of an inversion of the yield curve were asked to provide reasons for their response.

Major shares of banks indicated that their bank would interpret this scenario as signaling a less favorable or more uncertain economic outlook and as likely being followed by a deterioration in the quality of their existing loan portfolio.

In addition, major shares of banks reported lending would become less profitable and their bank’s risk tolerance would decrease in this scenario.”

In other words, the Fed’s concerns about curve inversion are justified as a prolonged, moderate curve inversion would cause banks to tighten standards and price terms for C&I and commercial real estate (CRE) loans. A significant share of banks said that should the yield curve invert, they would tighten lending standards, as they would view a moderate yield curve inversion both as signaling a “less favorable or more uncertain” economic outlook and as likely to reduce the profitability of lending.

One look at the chart below showing just how flat the yield curve currently is relative to easy lending conditions, it is perhaps most surprising that bank loans aren’t far more tight.

As for the banks’ response, it is important because despite the occasional arguments from random FOMC members, especially those in the “this time it’s different” camp, that an inverted yield curve is irrelevant, with bank officers confirming they would tighten financial conditions should the curve invert, then the Fed does need to take a curve inversion seriously. And, as Bloomberg’s Ye Xie writes, “from that perspective, a curve inversion may actually be good news as it suggests that the Fed would need to pause and re-assess once the curve flips.”