Friday, September 2, 2016

Today's Links

"If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein.”  excerpt from the 1943 West Virginia v. Barnette Supreme Court majority opinion.

"Whether it’s standing for the national anthem, reciting the Pledge, wearing flag lapel pins, or whatever:  obligatory patriotism is no patriotism at all." Daniel Fleisher

(Washington's puppets in Germany try to block EU-Russo integration)

Germany is not ready to sign an agreement on the Nord Stream-2 gas pipeline from Russia....

An agreement on Nord Stream-2, involving the expansion of the Nord Stream gas pipeline, was signed in early-September 2014, during the Eastern Economic Forum in Russia’s Vladivostok. The new consortium was established by Gazprom, E.ON, Shell, BASF/Wintershall, OMV and Engie. Gazprom holds 50 percent of shares while the others own 10 percent each.

Last December, Gazprom said Nord Stream-2 is expected for launch in the fourth quarter of 2019. One of the main goals of the planned pipeline is to cut reliance on Ukraine in delivering Russian gas to Europe...

"First of all, Nord Stream-2 is a direct transit route from Russia to Europe. It’s reliable and the most economically efficient way for Russian gas to Europe. It’s also optimal in terms of the environment," he explained.

Mehren also said he is surprised with the political opposition Nord Stream-2 has faced from such countries as Poland and from the European Commission. "Politicians should be less emotional about the initiative because first of all Nord Stream-2 would give additional guarantees for Europe’s energy security," he said

2--Full employment, but Fed still won't raise rates (The Fed talks about rate hikes to prop up the dollar, but backs away from raising rates which would hurt Wall Street)

Most economists look past the official unemployment rate — that 4.9 percent figure, also know as the "U-3" number — to other metrics that provide their own views of the state of jobs. One of those figures is something called the U-6 rate, which has a broader definition of what unemployment means. That figure remained unchanged in August, at 9.7 percent....

Economists expected 180,000 jobs added in August as evidence of that sustained growth. The report, however, found that the market added 151,000 jobs.

One area of concern in recent months has been the labor force participation rate, which measures what portion of the population is either employed or looking for work. The participation rate has fallen since the recession, largely because of demographic shifts such as baby boomers retiring. Some economists think workers are still feeling discouraged and are not actively seeking work. Others think it's more cyclical factors or changes in the economy.

In August, the participation rate remained unchanged at 62.8 percent

3--ECB to start buying stocks?? (More stealing disguised as stimulus)

Sept 2 The ECB may soon be forced to follow the Bank of Japan's example and buy equities as part of any expanded stimulus programme, but it faces significant hurdles in helping all 19 euro zone members equally without distorting a key market for investors.

The European Central Bank could run out of eligible bonds for its 1.7 trillion euro bond-buying scheme, meaning alternative options are on the table should it decide to loosen policy further to lift growth and inflation across the bloc...

The BOJ doubled its ETF purchases in late July to an annual pace of 6 trillion yen ($58 billion). According to SPDR ETFs, the BOJ is now estimated to hold almost 50 percent of the total Japanese ETF market.

Investments in Europe-listed ETFs are worth just over $500 billion, compared with nearly $200 billion in Japan and more than $2 trillion in the United States, according to consultancy firm ETFGI.

4--Seahawks’ Jeremy Lane sits during national anthem in support of Colin Kaepernick

5--The plot revealed!  --Bond Investors Cash Out in Europe, Head to U.S.--

As European Central Bank bond buying pushes down yields, investors cross the Atlantic in search of bigger potential returns (G-Sax Draghi figured it out from the very beginning!)

The European Central Bank recently started buying corporate bonds to boost the eurozone economy. One of the big beneficiaries so far: U.S. credit markets.

Faced with dwindling returns in Europe, some investors are selling their corporate bonds to the ECB and heading across the Atlantic where yields are higher and they aren’t so vulnerable to changes in expectations around central bank buying habits.

The extra yield investors demand to hold corporate bonds over safe government debt—or credit spread—has declined more rapidly in Europe than the U.S. since the ECB announced its buying plans in March. But that trend has reversed in recent weeks, with U.S. credit markets outperforming the eurozone in August, according to Bloomberg Barclays bond indexes.

Net inflows into U.S. corporate bond funds have outpaced inflows to similar European funds by almost $2 billion since the start of the ECB’s program in early June, according to the latest available data from EPFR Global.

As a result, borrowing costs for large U.S. companies have remained near record lows even as expectations have mounted that the Federal Reserve will soon resume raising interest rates.

Mark Kiesel, chief investment officer for global credit at Pacific Investment Management Co., said he had been buying euro and sterling corporate bonds in anticipation of the European Central Bank and, more recently, the Bank of England entering these markets. Now, he’s selling and moving more into U.S. credit markets....

Given the lack of central bank interference, U.S. credit markets are “attractive relative to most things around the world,” said Mr. Kiesel, who likes sectors including health care, cable, telecommunications and nonagency mortgages.

Investors in European bonds are seeing returns shrink before their eyes. Over 30% of euro-denominated investment-grade corporate bonds trade at a negative yield, according to Tradeweb, while 84% yield less than 1%.

That comes as some big investors have sold European corporate bonds and shifted funds into the U.S. as they fan out in search of returns.

The average yield on Eurozone high-grade corporate bonds has more than halved since March, when the ECB announced its plans, to 0.6%, according to Bloomberg Barclays indexes. That compares to 2.8% in similar U.S. credit markets, down from 3.6% over the same period....

Since the ECB started buying corporate bonds in early June, Eurozone corporate bonds have outperformed. During August, though, U.S. corporate credit spreads tightened at a faster clip.
That came despite around $63 billion of new debt sales in August in U.S. investment-grade credit markets—the highest on record for the month and more than double August 2015’s total, according to Dealogic data going back to 1995....

It’s not only U.S. credit that is benefiting from the ECB’s buying. High-grade eurozone securities that the ECB can’t purchase under the program’s rules, such as bank bonds, have been outperforming those that it can in recent weeks, according to an analysis from Citigroup.
Suzanne Keane, co-head of credit research at Pioneer Investments, sees room for a further correction in ECB-eligible bonds in the coming weeks, particularly as new debt sales ramp up again after the August lull.

She has been selling ECB-eligible bonds and buying riskier parts of the market such as high-grade corporate hybrids—securities that blend aspects of both debt and equity—and junior financial debt from selected issuers.
“There is clear evidence in our view that central bank activity is causing distortions in the credit markets, as demonstrated by the rampant tightening of the ECB-eligible universe post-March this year, with little discrimination for idiosyncratic credit risk,” Ms. Keane said....

Some see limits to any underperformance in euro corporate bonds, reasoning the ECB’s roughly €1.7 billion ($1.9 billion) weekly purchases should keep the market in check.
“The ECB and the Bank of England are increasingly involved in corporate bond markets. That creates a bid and it tends to put downward pressure on spreads,” said John Stopford, head of multiasset income at Investec Asset Management.

Still, others say that markets heavily reliant on the whims of central bank buying are vulnerable. Many investors expect the ECB to extend its asset purchases beyond the current slated finish of March 2017. If the central bank surprises on that front, bond markets could be in for a rocky ride.
“There is a clearly potential for a backup in credit spreads…if expectations for ECB activity changes,” said Ms. Keane

6---Statement of Revolutionary Government of the Republic of Cuba on the Impeachment of Dilma Rousseff

The efforts made by Lula and Dilma to reform the political system and organize the funding of parties and their campaigns as well as in support of the investigations started against corruption and the independence of the institutions responsible for such investigations are too well known.

The forces that are currently exercising power have announced the privatization of deep water oil reserves and social programs curtailments. Likewise, they are proclaiming a foreign policy focused on the relations with the big international centers of power. Quite a few among those who are impeaching the President are currently under investigation for acts of corruption.

What happened in Brazil is another expression of the offensive of imperialism and the oligarchy against the revolutionary and progressive governments of Latin America and the Caribbean which threatens peace and stability of nations and is contrary to the spirit and the letter of the Proclamation of Latin America and the Caribbean as a Zone of Peace, signed at the Second CELAC Summit in January, 2014, in Havana by the Heads of State and Government of the region.

Cuba reiterates its solidarity with President Dilma and comrade Lula as well as with the Worker’s Party, and is confident that the Brazilian people will defend the social achievements that have been attained and will resolutely oppose the neoliberal policies that others may try to impose on them and the plundering of its natural resources.

7--Peak Auto? August U.S. auto sales fall; carmakers say industry has peaked

8--2nd Eastern Economic Forum kick starts in Vladivostok

9--Lavrov: US, Russia increasingly cooperating in Syria

Russian Foreign Minister Sergey Lavrov has stated that Moscow and Washington see eye to eye now after reaching an understanding on most Syrian issues.
He highlighted that there are daily contacts between the Russian and US diplomats, military and intelligence agencies. This was to continue “to develop this algorithm (of the fight against terrorism).”
Lavrov added that “virtually all components of this task are already clear, an understanding has been reached on most issues

He emphasized however that the relations cannot continue if the USA continues to associate with terrorist groups in Syria.
The most important thing is that any agreements with the Americans on practical actions, on coordination of operations against terrorists will not be implemented if our American partners do not keep their promise to dissociate themselves from terrorists, above all, the Jabhat al-Nusra,” he said.
“Many of the groups considered acceptable by the US have actually affiliated with Jabhat al-Nusra, while Jabhat al-Nusra is using them to avoid being attacked,” Russia’s top diplomat explained.

10--No doubt that Gülen was behind Turkey’s coup attempt: Former Swedish PM Bildt

“In my talks both in Turkey and with foreign experts following Turkey, I saw that nobody has any doubt that Gülen was at the center of the coup attempt,” he said.

Earlier, Bildt had also noted on Twitter that the delegation had not encountered a single person who doubted Gülen’s involvement in the coup attempt.

“We have not met a single either Turkish or foreign expert or observer who doubts that the Gülen group was the driving core of the coup,” he tweeted.

The former Swedish premier also stressed that he had long been aware of the activities of the Fethullahist Terror Organization (FETÖ) within the military, the police and judicial system but never expected a coup attempt.

11--Erdoğan: No ‘terror corridor’ inside Syria

“Those who act with the logic of ‘the enemy of Daesh is our friend’ are deluded and in a position of being a friend to other terror organizations,” Erdoğan said.

“It’s not possible to understand this situation. As Turkey, we take responsibility with our military to maintain the security of civilians in the region,” he added, vowing to continue with the operation with the cooperation of the international coalition and other actors.

“[The operation aims] to clear Jarablus and the surrounding region of terrorist organizations, especially Daesh, and aims to contribute to regional security and peace,” Erdoğan said.

Meanwhile, Pentagon spokesman Captain Jeff Davis said Sept. 1 that ISIL in Syria was about to lose access to Turkey’s porous border, which is a vital step in blocking foreign fighters from replenishing the jihadists’ thinning ranks.

According to Davis, ISIL now retains control of only about 25 kilometers of border with Turkey along an area to the east of the small Syrian town of al-Rai.

“This is the only area with which ISIL has free communication with the outside world, where it touches a border,” Davis was quoted as saying by AFP.

“This is about to be closed. We are very close to achieving this.”

ISIL has lost ground in the key region as a result of Turkish operations that began last week.

The United States is working frantically to ensure fighters from the YPG are not further attacked by Turkey, and has encouraged them to move east of the Euphrates River and away from Jarablus and another key city to the south, Manbij.

“We have not seen any action [between the Turks and YPG] in probably three days,” Davis said.

Erdoğan on Sept. 2 dismissed U.S. officials’ statements that the YPG has returned east of the Euphrates River, saying Turkey’s sources of information show that the group had not returned east of the Euphrates.

“They are saying the YPG has crossed back. We are saying, no, they haven’t, based on our own observations,” Erdoğan said

12--Lying Obama says no diminishing effect on Turkey-US security relations

13--No re-launch of PKK peace process but normalization with Syria, Egypt on agenda: Turkish PM

Yıldırım said that Turkey, which recently patched up strained diplomatic ties with Israel and Russia, now aims to normalize relations with Egypt and even rebuild ties in the future with Syria.

“Turkey has started a serious attempt for normalization of relations with Syria and Egypt. In foreign policy, our principle is to increase our friendships while reducing hostilities,” Yıldırım stated.

14--IMF issues warning on global growth to G20 summit

The tensions extend to other areas as well. Following previous statements to G20 meetings, the IMF again called for government fiscal measures, including more public investment projects, to boost the economy in conditions where interest rates are already at historically low levels.

It singled out Germany as having the capacity to finance “identified needs in public investment.” This has long been the position of the United States which, while cutting back its own government spending, has called on the European Union and particularly Germany to relax austerity measures. The US wants to see government measures to boost the European economy in order to benefit the export markets of American corporations. Germany, on the other hand, has opposed the US calls, seeing them as aimed at weakening its financial position as against the US.

The tensions were highlighted by US treasury secretary Jack Lew, who declared on the eve of the summit that a “consensus” had emerged on the US position that countries had to use all policy tools, including fiscal measures. That assertion may not be disagreed with publicly but opposition will remain just below the surface. Earlier this year, at the G20 finance ministers meeting, following a call by the IMF for co-ordinated action, German finance minister Wolfgang Schäuble pointedly remarked that the “debt-financed growth model has reached its limits.”

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