Singapore GDP Surges Over 9% In Q4 – Most Since 2012

Following Q3’s 2% contraction, and with analysts’ highest expectation at +5.1% (StanChart), Singapore GDP grew at a shocking 9.1% in Q4 QoQ…


This was four standard deviations above average estimates.

These are preliminary numbers based on the fuirst two minths of the quarter butthe rebound was broad based…

  • Manufacturing +14.6% q/q;
  • Construction -4.7% q/q;
  • Services +9.4% q/q

Year-over-year, Singapore’s 4Q GDP grew 1.8% according to Ministry of Trade and Industry, smashing expectations of +0.3%. As The FT reports, Manufacturing experienced a big jump, growing 6.5 per cent in the fourth quarter from a 1.7 per cent year-on-year rate in the three months to September 30.

“Growth was primarily driven by the electronics and biomedical manufacturing clusters, even as the transport engineering and general manufacturing clusters continued to contract”, MTI said.

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JPM: “Central Banks Have Created Unprecedented Distortions In Government Bond Markets”

As part of his just released 2017 outlook, JPM’s Michael Cembalest, chairman of markets and investment strategy, notes that while “political upheavals and unorthodox central bank actions persist” he prdictes “more of the same in 2017: single digit returns on diversified investment portfolios as the global economic expansion bumps along for another year.” Of course, the alternative is a recession call, which considering the current expansion will be the third longest in US history by the time Trump is inaugurated in less than three weeks, is probably not too farfetched.

Something else, however, caught our eye: the same observation that was considering “fake financial news” less than a decade ago, and is now part of the mainstream jargon – the following statement by the JPM strategist:

“True Believer” central banks have created unprecedented distortions in government bond markets. Bond purchases and negative policy rates by the ECB and Bank of Japan led to negative government bond yields. Whatever their benefits may be, they also resulted in profit weakness and stock price underperformance of European and Japanese banks. The poor performance of European and Japanese financials was a driver of lower relative equity returns in both regions in 2015/2016.

We agree, and now that these “True believes” are being phased out – at least in mental models, and if only for the time being – replaced by hopes that Trump’s still undetermined fiscal policies and a global push for reflation will somehow bootstrap the global economy groaning under trillions in excess debt, and swamped by a demographic picture that is massively deflationary, we are far less sanguine about the “single-digit gains” forecast by JPM.

In any case, here is the Executive Summary from JPMs “Eye on the Market” outlook for 2017, a preamble to a far longer piece noted below.

* * *

Political upheavals and unorthodox central bank actions persist, but it looks like more of the same in 2017: single digit returns on diversified investment portfolios as the global economic expansion bumps along for another year.

How we got here. By the end of 2014, central bank stimulus lost its levitating impact on markets, GDP and corporate profits, all of which have been growing below trend. Proxies for diversified investment portfolios generated returns of just 1%-3% in 2015 and 6%-7% in 2016

The biggest experiment in central bank history ($11 trillion and counting as of November 2016) helped employment recover in the US and UK, and more recently in Europe and Japan. Across all regions, however, too many of the benefits from this experiment accrued to holders of financial assets rather than to the average citizen. As a result, the political center of a slow-growth world has begun to erode, culminating with the election of a non-establishment US President with no prior political experience, and the UK electorate’s decision to leave the European Union. The market response to Trump’s election has been positive as investors factor in the benefits of tax cuts, deregulation and fiscal stimulus and ignore for now potential consequences for the dollar, deficits, interest rates, trade and inflation (see US section on the “American Enterprise Institute Presidency”).

True Believer” central banks have created unprecedented distortions in government bond markets. Bond purchases and negative policy rates by the ECB and Bank of Japan led to negative government bond yields. Whatever their benefits may be, they also resulted in profit weakness and stock price underperformance of European and Japanese banks. The poor performance of European and Japanese financials was a driver of lower relative equity returns in both regions in 2015/2016.

For the last few years, I have written about a preference for an equity portfolio that’s overweight the US and Emerging Markets, and underweight Europe and Japan. This has been one of the most consistently beneficial investment strategies I’ve seen since joining J.P. Morgan in 1987 (see chart below, right). It worked again in 2016, and despite the negative consequences of rising interest rates and a rising dollar for US and EM assets, I think it makes sense to maintain this regional barbell for another year as Europe and Japan once again snatch defeat from the jaws of victory.

We had a single digit portfolio return view for 2015 and 2016 (which is how things turned out), and we’re extending that view to 2017 as well. There are some positive leading indicators which I will get to in a minute, but first, the headwinds:

  • While global consumer spending has held up, global business fixed investment remains weak, in part a consequence of the end of the commodity super-cycle and slower Chinese growth
  • We expect the emerging market recovery to be gradual, particularly if Trump policies lead to substantially higher interest rates and a higher US dollar
  • We expect a near-term US growth boost (amount to be determined based on the composition of tax cuts, infrastructure spending and deregulation), but trend growth still looks to be just 1.0% in Japan and 2.0% in Europe
  • The global productivity conundrum continues, leaving many unanswered questions in its wake
  • Even though private sector debt service levels are low, high absolute amounts of debt may constrain the strength of any business or consumer-led recovery

  • And finally, even before Trump takes office, we’re already seeing a rise in protectionism as global trade stagnates. The degree to which Trump follows through on campaign proposals on trade is a major question mark for 2017

So, with all of that, why do we see 2017 as another year of modest portfolio gains despite the length of the current global expansion, one of the longest in history? As 2016 came to a close, global business surveys improved to levels consistent with 3% global GDP growth, suggesting that corporate profits will start growing at around 10% again after a weak 2016. More positive news: a rise in industrial metals prices, which is helpful in spotting turns in the business cycle (see Special Topic #8).

Furthermore (and I understand that there’s plenty of disagreement on the benefits of this), many developed countries are transitioning from “monetary stimulus only” to expansionary fiscal policy as well. Political establishments are aware of mortal threats to their existence, and are looking to fiscal stimulus (or at least, less austerity) as a means of getting people back to work. The problem: given low productivity growth and low growth in labor supply, many countries are closer to full capacity than you might think. If so, too much fiscal stimulus could result in wage inflation and higher interest rates faster than you might think as well. That is certainly one of the bigger risks for the US.

So, to sum up, here’s what we think 2017 looks like:

  • A modest growth bounce in the US from some personal and corporate tax cuts, deregulation and infrastructure spending, with tighter labor markets, rising interest rates and a stronger dollar eventually taking some wind out of the US economy’s sails. If I’m underestimating something, it might be the potential increase in confidence, spending and business activity resulting from a slowdown in the pace of government regulation
  • A little better in Europe and Japan in 2017, but no major breakout from recent growth trends
  • China grows close to stated goals, supported by multiple government bazookas firing at once
  • Emerging markets ex-China continue recovering after balance of payments adjustments; while countries with high exposure to dollar financing will struggle, overall risks around a rising dollar have fallen markedly since 2011
  • The world grows a little faster in 2017 than in 2016, but as shown above, a lot of that is already in the price of developed market equities. So, another single digit portfolio year ahead

* * *

Much more in the full forecast below (link)

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The Russian Hacking Frenzy (Summed Up In 200 Words)

Authored by’s Bill Blunden,

The New York Times has published an interactive piece which encapsulates, in all of 200 words, the alleged campaign by Russian hackers to influence the outcome of the 2016 election. Yet the media’s framing of events eschews basic facts – the actual content of the leaks – in favor of screaming “thief” at the top of its lungs.

And so the following 200-word summary is presented as an antidote to the establishment’s clumsy post-election messaging

Someone delivers exact copies of emails written by Democratic Party mandarins into the public record. These messages are subsequently posted online. Thank you WikiLeaks!

Several email threads demonstrate that the Democratic National Committee (DNC) secretly ganged up on Bernie Sanders to undermine his campaign.

Hillary Clinton, who made over a hundred million in speaking fees with her husband, furtively reassures American oligarchs that her “private position” on economic issues won’t threaten their bottom line. In one related email which highlights big money in politics, a wealthy donor jokes “I guess it takes a study to point out the obvious.”

Voters learn that the DNC leveraged its extensive contacts with the media to manipulate coverage in an effort to elevate Trump. The DNC’s strategy document includes a list of Republican “Pied Pipers” which the media was told to “take seriously.”

The Democratic elites become desperate. Rather than accept their party’s role in Trump’s victory and their betrayal of the working class, they decide to blame Russian Hackers.

The Washington Post hyperventilates about Russian Hackers “penetrating” a utility in Vermont. The headline is exposed as a shameless distortion.

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3 Killed, 27 Wounded As Chicago Opens 2017 With A String Of Murders

A few days ago we noted that 2016 marked Chicago’s most violent year in 2 decades as homicides soared nearly 60% YoY and shootings spiked 46% (see “Chicago Violence Worst In 20 Years: ‘Not Seen This Level Of Disrespect For Police Ever’“).  And while many would like to hope that the 2016 violence was a temporary phenomenon, 2017 looks to be getting off to a similar start.

As the Chicago Tribune points out, three people were killed and another 16 were shot and wounded just in the opening hours of the new year.

Three people were killed and 16 others were wounded during the first six hours of the year as the city ended a year that brought levels of violence that had not been seen in the city since the 1990s.


In total, four people were killed and 24 other people were wounded in separate shootings from New Year’s Eve to early Sunday.


Around 2:30 a.m. an unnamed man was shot by a Chicago police officer, authorities said at a news conference Sunday, about 12 hours after the shooting. They reported that a man led cops on a car chase and physically resisted once he was finally stopped. The man, who is in critical condition, was shot after a scuffle, police said.


About two hours later, two men were killed in the year’s first fatal shooting, which took place at 4:25 a.m. Sunday in the 4600 block of North Broadway in the city’s Uptown neighborhood on the North Side.

Meanwhile, Trump acknowledged Chicago’s bloody 2016 in a tweet posted earlier this morning criticizing Mayor Rahm Emanuel for his failure to curb the violence.  Of course, the reference to federal help is likely a retort to Emanuel’s vow to have Chicago remain a sanctuary city for illegal immigrants even if it means losing federal funding under a Trump administration (see “Chicago And Boston Join Cali In Refusing Assistance To Trump’s Deportation Efforts“).

Chicago murder rate is record setting – 4,331 shooting victims with 762 murders in 2016. If Mayor can’t do it he must ask for Federal help!

— Donald J. Trump (@realDonaldTrump) January 2, 2017


Data from HeyJackAss! reveals that New Year’s Day was the most violent day of the past month as a total of 30 people were shot, 3 of which died from their injuries.

Chicago Murders


And now that all the data from 2016 has been officially tallied, we find that a total 795 homicides and 4,378 shootings occurred during the year which equates to roughly 12 shootings and just over 2 homicides per day.

Chicago Murders


The 795 homicides recorded in 2016 marked a staggering 56% YoY increase.

Chicago Murders


Finally, as we reported throughout the year, the overwhelming majority of Chicago’s violence occurred in the city’s south and west side neighborhoods.

Chicago Murders

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NYT Reporter Writes: “If Donald Trump Targets Journalists, Thank Obama”

In an oddly self-reflective moment of realization, The New York Times’ investigative reporter James Risen, writes an oddly un-liberal op-ed pointing out the hypocrisy of Obama administration proclamations with regard ‘free press’ and transparency and the awkwardly dismal facts on the ground.

If Donald J. Trump decides as president to throw a whistle-blower in jail for trying to talk to a reporter, or gets the F.B.I. to spy on a journalist, he will have one man to thank for bequeathing him such expansive power: Barack Obama.

Mr. Trump made his animus toward the news media clear during the presidential campaign, often expressing his disgust with coverage through Twitter or in diatribes at rallies. So if his campaign is any guide, Mr. Trump seems likely to enthusiastically embrace the aggressive crackdown on journalists and whistle-blowers that is an important yet little understood component of Mr. Obama’s presidential legacy.

Criticism of Mr. Obama’s stance on press freedom, government transparency and secrecy is hotly disputed by the White House, but many journalism groups say the record is clear. Over the past eight years, the administration has prosecuted nine cases involving whistle-blowers and leakers, compared with only three by all previous administrations combined. It has repeatedly used the Espionage Act, a relic of World War I-era red-baiting, not to prosecute spies but to go after government officials who talked to journalists.

Under Mr. Obama, the Justice Department and the F.B.I. have spied on reporters by monitoring their phone records, labeled one journalist an unindicted co-conspirator in a criminal case for simply doing reporting and issued subpoenas to other reporters to try to force them to reveal their sources and testify in criminal cases.

I experienced this pressure firsthand when the administration tried to compel me to testify to reveal my confidential sources in a criminal leak investigation. The Justice Department finally relented — even though it had already won a seven-year court battle that went all the way to the Supreme Court to force me to testify — most likely because they feared the negative publicity that would come from sending a New York Times reporter to jail.

In an interview last May, President Obama pushed back on the criticism that his administration had been engaged in a war on the press. He argued that the number of leak prosecutions his administration had brought had been small and that some of those cases were inherited from the George W. Bush administration.

“I am a strong believer in the First Amendment and the need for journalists to pursue every lead and every angle,” Mr. Obama said in an interview with the Rutgers University student newspaper. “I think that when you hear stories about us cracking down on whistle-blowers or whatnot, we’re talking about a really small sample.


“Some of them are serious,” he continued, “where you had purposeful leaks of information that could harm or threaten operations or individuals who were in the field involved with really sensitive national security issues.”

But critics say the crackdown has had a much greater chilling effect on press freedom than Mr. Obama acknowledges. In a scathing 2013 report for the Committee to Protect Journalists, Leonard Downie, a former executive editor of The Washington Post who now teaches at Arizona State University, said the war on leaks and other efforts to control information was “the most aggressive I’ve seen since the Nixon administration, when I was one of the editors involved in The Washington Post’s investigation of Watergate.”

When Mr. Obama was elected in 2008, press freedom groups had high expectations for the former constitutional law professor, particularly after the press had suffered through eight years of bitter confrontation with the Bush administration. But today, many of those same groups say Mr. Obama’s record of going after both journalists and their sources has set a dangerous precedent that Mr. Trump can easily exploit. “Obama has laid all the groundwork Trump needs for an unprecedented crackdown on the press,” said Trevor Timm, executive director of the nonprofit Freedom of the Press Foundation.

Dana Priest, a Pulitzer Prize-winning reporter for The Washington Post, added: “Obama’s attorney general repeatedly allowed the F.B.I. to use intrusive measures against reporters more often than any time in recent memory. The moral obstacles have been cleared for Trump’s attorney general to go even further, to forget that it’s a free press that has distinguished us from other countries, and to try to silence dissent by silencing an institution whose job is to give voice to dissent.”

The administration’s heavy-handed approach represents a sharp break with tradition. For decades, official Washington did next to nothing to stop leaks. Occasionally the C.I.A. or some other agency, nettled by an article or broadcast, would loudly proclaim that it was going to investigate a leak, but then would merely go through the motions and abandon the case.

Of course, reporters and sources still had to be careful to avoid detection by the government. But leak investigations were a low priority for the Justice Department and the F.B.I. In fact, before the George W. Bush administration, only one person was ever convicted under the Espionage Act for leaking — Samuel Morison, a Navy analyst arrested in 1984 for giving spy satellite photos of a Soviet aircraft carrier to Jane’s Defense Weekly. He was later pardoned by President Bill Clinton.

Things began to change in the Bush era, particularly after the Valerie Plame case. The 2003 outing of Ms. Plame as a covert C.I.A. operative led to a criminal leak investigation, which in turn led to a series of high-profile Washington journalists being subpoenaed to testify before a grand jury and name the officials who had told them about her identity. Judith Miller, then a New York Times reporter, went to jail for nearly three months before finally testifying in the case.

The Plame case began to break down the informal understanding between the government and the news media that leaks would not be taken seriously.

The Obama administration quickly ratcheted up the pressure, and made combating leaks a top priority for federal law enforcement. Large-scale leaks, by Chelsea Manning and later by Edward J. Snowden, prompted the administration to adopt a zealous, prosecutorial approach toward all leaking. Lucy Dalglish, the dean of the University of Maryland’s journalism school, recalls that, during a private 2011 meeting intended to air differences between media representatives and administration officials, “You got the impression from the tone of the government officials that they wanted to take a zero-tolerance approach to leaks.”

The Justice Department, facing mounting criticism from media organizations, has issued new guidelines setting restrictions on when the government could subpoena reporters to try to force them to reveal their sources. But those guidelines include a loophole allowing the Justice Department to continue to aggressively pursue investigations into news reports on national security, which covers most leak investigations. In addition, the guidelines aren’t codified in law and can be changed by the next attorney general.

More significantly, the Obama administration won a ruling from the Fourth Circuit Court of Appeals in my case that determined that there was no such thing as a “reporter’s privilege” — the right of journalists not to testify about their confidential sources in criminal cases. The Fourth Circuit covers Virginia and Maryland, home to the C.I.A., the Pentagon and the National Security Agency, and thus has jurisdiction over most leak cases involving classified information. That court ruling could result, for example, in a reporter’s being quickly jailed for refusing to comply with a subpoena from the Trump administration’s Justice Department to reveal the C.I.A. sources used for articles on the agency’s investigation into Russian hacking during the 2016 presidential election.

Press freedom advocates already fear that under Senator Jeff Sessions, Mr. Trump’s choice to be attorney general, the Justice Department will pursue journalists and their sources at least as aggressively as Mr. Obama did. If Mr. Sessions does that, Ms. Dalglish said, “Obama handed him a road map.”

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