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Venezuelan assembly demands probe and trial of ‘traitors’

Wed, 2017-08-30 03:00

CARACAS: The all-powerful constitutional assembly passed a decree Tuesday ordering authorities to investigate and try Venezuelans believed responsible for supporting new US economic sanctions.
The decree declares all those who promoted the latest US response to the socialist government’s handling of the country’s political conflict as “traitors of the patria” and directs the chief prosecutor’s office to immediately initiate a probe.
“Those who call for treason leave us no option but to treat them as enemies of their own country,” said Diosdado Cabello, a delegate and leader of the ruling socialist party.
The move came just days after President Nicolas Maduro vowed to prosecute for treason opponents he accused of being behind the US financial sanctions.
Maduro singled out Julio Borges, president of Venezuela’s opposition-controlled congress, but Borges said Tuesday that he bore no responsibility for Venezuela’s growing economic peril. “The only one responsible is Maduro,” Borges said.
The sanctions announced last week prohibit American financial institutions from providing new money to the government or the state oil company, PDVSA. They also ban trading in two bonds that the government recently issued to circumvent its increasing isolation from Western financial markets.
In addition, the sanctions restrict the Venezuelan oil giant’s US subsidiary, Citgo, from sending dividends back to Venezuela — moves that Maduro has said will be damaging to this nation’s beleaguered economy.
US officials contend the sanctions were crafted to avoid causing harm to ordinary Venezuelans and punish a government that US President Donald Trump now brands a dictatorship.
France’s president, Emmanuel Macron, echoed that assessment Tuesday, saying Maduro’s administration is “a dictatorship” that is “trying to survive at the cost of an unprecedented humanitarian distress.”
The sanctions are certain to cause further strife in a country where food shortages are common. The average Venezuelan lost 19 pounds last year, according to one study.
Former corrections minister Iris Varela, now a constitutional assembly delegate, received a resounding applause Tuesday when she said Venezuela can’t allow “traitors” to get away without punishment. Those who betray Venezuela and take advantage of US aggression “will have to be shot,” she said.
The assembly, which is supposed to write a new constitution, was installed in early August following a disputed election of delegates. The assembly trumps all other branches of Venezuela’s government and is ruling with virtually unlimited power.

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Malaysia sets boat ablaze as it turns up heat on illegal fishing

Wed, 2017-08-30 09:15

KUALA LUMPUR: Malaysia on Wednesday for the first time set fire to a foreign boat for fishing illegally in its waters as it turns up the heat on trespassing trawlers.
Porous maritime borders are a constant problem for Malaysia and its Southeast Asian neighbors, which struggle to keep foreign fishing vessels from operating illegally in their waters.
In early 2016, more than 100 Chinese fishing vessels were detected off the Borneo state of Sarawak, while in April Indonesia sank 81 mostly foreign boats caught illegally fishing in its waters.
The boat was set fire at sea off the coast of the northern state of Kelantan, the first time Malaysian authorities have resorted to such action, according to the Malaysian Maritime Enforcement Agency (MMEA).
The MMEA did not specify the boat’s country of origin.
“This method shows how seriously the MMEA views incursions by foreign fishing boats in Malaysian waters,” the MMEA’s Deputy Director-General of Operations, Mohd Taha Ibrahim, said in a statement.
Mohd Taha said Malaysian authorities had so far sunk 285 foreign fishing vessels nationwide to create artificial reefs, but said the method has not made a “deep impact” on foreign fishermen operating illegally in Malaysian waters.
“The MMEA will continue to ramp up our surveillance and patrols to clamp down on crimes committed out at sea,” Mohd Taha said.

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Bill Blain: “Apparently There Is Nothing To Worry About In Europe Anymore”

Submitted by Bill Blain of Mint Partners

Blain’s Morning Porridge – August 30th 2017

“Did anyone ever comment on what Obama wore, or what shoes Michelle was wearing?””

And the September bond rush has started! Traditionally the first week of September heralds the start of the new funding season, but many deals are out already. Billions upon billions of dollars, Euros and GBP will be raised in coming weeks with investors and issuers tumbling over each other to see who can issue the most before the market inevitably snaps shut, is stuffed on mispriced oversupply, a Ukrainian Chicken Farm Moment happens, or something worse is occuring…

What could be worse you ask?

How about the much anticipated Global Bond reversal? Yeah, yeah.. we’ve been havering about it for years and it hasn’t happened.. But, but and but again… We’re seeing bond yields right back down to the lows – the Trump Jump is most definitely over – but for how long can it continue? “Normalisation” is the theme that does not speak its name among central bankers: rate hikes, taper and unwinding balance sheets are on the cards.

Is it any wonder that investors shunned a new bank fixed rate deal in favour of the Floating Rate tranche yesterday?

It’s a holiday in the US on Monday and the new issue deluge will increase next week. I expect the new funding season to face a number of challenges. Not least is the growing perception the dollar is undervalued, and the possibility the political agenda in the US is changing towards actually happening..

And… just what is going on in Europe….?

Apparently there is nothing to worry about in Europe. Finally it’s all going to plan. Even Spain is showing 3% yoy growth (don’t mention Italy..) Now’t to worry about. Nope, I’m reliably informed the problem isn’t Europe… (which in my mind means it very much is..)

Europe sees the problem as the UK.

I was surprised at the volume of comment on Brexit from European clients yesterday responding to y’day’s Porridge about how the EU is likely to play a mean poker hand against the UK through the Brexit talks.

My correspondents include friends across Europe I’ve dealt with and known for many years. I respect their opinions, and consider them broadly representative of “smart” financial thinking. I’m not saying these collectively represent the European polity, but they are worth considering.

If I sound like a “Remoaner” below, please forgive me.  If you want a Remoaner comment, how about what one Anglo-Saxon client wrote me: “It was always hard Brexit, it is Hard Brexit, It will be a Hard Brexit. The teams of negotiators are a rank side show.”

I happen to believe the UK should leave the EU as a favour to Europe. We are a distraction holding back Europe from achieving its very laudable goals of Political and Economic Union. I also happen to reject the economics of the Euro and the ECB. The UK is unlikely to ever be part of the United States of Europe, but I wish them well with the project and I’d like us to remain very close to it.


Almost all of my European chums are convinced the UK has utterly underestimated i) the difficulties we’re likely to face leaving the EU and ii) the economic damage we’re doing to ourselves. Their consensus is the UK has created a crisis of our own making. We are likely to face mounting economic and political headwinds in coming months/years that will have an increasingly negative effect on UK asset prices, jobs and growth. They believe these are likely to force a reassessment of our current negotiating position.

All Europe has to do is wait. There is something of the Prodigal Son to their thinking…

We’ve chosen the route we wish to follow. There is little understanding or support for it across Europe, so don’t expect any help from Europe during the Brexit negotiations. 

Among my European chums I can detect a clear expectation and hope the UK is going to “repent” of Brexit and undo the damage we’re doing to ourselves by agreeing to remain within Europe. Their view is UK was bounced into an ill-considered Brexit as a result of a very well run negative populist anti-European campaign, while the positive arguments for Remain were extremely badly presented. As a consequence, it’s only natural that we be given time to reconsider the error of our ways, think about our position and agree with the European consensus. (Voting again and again until you get the right answer is a very European solution to political dissent.)

Many Europeans still cling to a hope we will be forced into a second “more sensible” referendum as economic conditions swing against the UK. Unlikely, but doesn’t change the fact many facets of the European polity still don’t think we will go… (Which means they aren’t seeing the obverse of the UK problems – what does Europe look like without the UK, where will the political balance to a Franco/German axis come from, and who then pays the bills?)

In terms of what the EU will offer the UK, the European consensus is pretty bleak. If the UK expects the benefits of membership without being a member, then we must pay and accept our position within the whole. If not, we shall be excluded. This view is hardening – fuelled by the current cyclical uptick across Europe while the UK is now mired in economic downturn. It’s easy to blame declining economic sentiment on Brexit (it’s the favourite pastime of the remoaners) – hence the growing perception the current political slide towards some kind of transition period is a manifestation of Brexit remorse.

Here in the UK we believe the EU is an anti-UK political monolith, while European countries still love us – that Germany, Denmark, Holland et al will see sense and support a pragmatic Brexit. How wrong we are…. 
Don’t expect European nations to support us. Ill-considered thuggish anti-European sentiment – effectively racism towards our fellow Europeans – has been widely reported across Europe. Whether its Norfolk ‘tato-heads telling Polish nurses to go home, or the Home Office telling a Finnish professor he has 30 days to leave Britain because he doesn’t qualify for residency, the UK looks to be the aggressor. Europe doesn’t see us a “cool Britannia” anymore – we’re perceived by many as a nest of racists. 

The economic implications of losing millions of European workers in the UK will be immense: the demographic negatives could turn the UK’s future economic position profoundly negative, while the immediate effects of skill shortages and labour outages will exacerbate immediate economic crisis! The first thing the UK should have said post Brexit is something along the lines of “all Europeans will always be very welcome in the UK and will retain full citizenship rights.” (That would not preclude us shutting our borders if required.)

As for our perception of an Anglophobic EU presidium in Brussels hell-bent on punishing us for our temerity – we might just be right. As former Greek finance minister Yanis Varoufakis said.. “It’s just the Eagles’ Hotel California – you can check out any time you like, but you can never leave”

Oh dear.. the above all sounds profoundly negative.. things are never as easy as you hope or expect.. Having experienced the financial devastation of divorce… the only upside is at least you eventually come out of it..

Out of time and back to the day job..

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100 Israeli violations against Al-Aqsa Mosque every month

Muslim places of worship in Jerusalem are subjected to 100 Israeli violations every month, the Palestinian Minister of Waqf and Religious Affairs, Youssef Ideiss, said yesterday. According to Quds Net, the minister said there had been 700 violations against places of worship since the start of the year. The violations are represented by the daily raids by Jewish settlers, theft of artefacts and continuous excavations under Al-Aqsa’s foundations. Ideiss said that the Ibrahimi Mosque, the most prominent Islamic site in the occupied West Bank city of Hebron, was also subject to repeated Israeli violations. Muslims were prevented from making the call to prayer from the mosque 50 times and it was fully closed for one day this year. The minister […]

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Iran: Saudi Arabia should stop backing terrorists in Yemen

Iranian President Hassan Rouhani accused the country’s Sunni rival Saudi Arabia of backing terrorists in Yemen’s war, state TV reported yesterday. “Saudi Arabia’s intervention in Yemen and their support of terrorists in Yemen and Syria are main hurdles to improve ties between Tehran and Riyadh. Saudi Arabia should stop backing terrorists,” Rouhani told state TV. Saudi Arabia and Shia-led Iran compete for influence in the Middle East, where they support rival groups in Yemen, Syria, Iraq and Lebanon. Read: Yemen PM claims victory is near against Houthis In Yemen, Iran backs the Houthi militias who are supported by forces loyal to ousted President Ali Abdullah Saleh, while Saudi Arabia backs the internationally recognised government of President Abd Rabbuh Mansur Hadi which […]

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Lebanon calls on UN to renew peacekeepers’ mandate

Lebanon’s foreign minister said yesterday that he supported renewing the mandate of UN peacekeeping forces in the country for another year. “Preserving the mandate of @unifil is necessary for peace and stability, otherwise will jeopardize efforts of @UN,” Foreign Minister Gebran Bassil said on Twitter. Preserving the mandate of @unifil is necessary for peace and stability, otherwise will jeopardize efforts of @UN. — Gebran Bassil (@Gebran_Bassil) August 29, 2017 The United Nations Interim Force in Lebanon (UNIFIL) patrols Lebanon’s southern border with Israel. Its annually renewed mandate was expanded from the original 1978 mission following a 2006 war between Israel and Lebanon’s Iran-backed Hezbollah group. This tasked UNIFIL with making sure southern Lebanon was “free of any armed personnel, assets […]

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Zionism’s ongoing love-in with neo-Nazis

While most right-thinking people were condemning Donald Trump’s coddling of the American neo-Nazi movement in Charlottesville, the son of the Israeli Prime Minister was backing him all the way. Even more alarming than the fact that Trump took two days to issue a statement condemning “both sides” when it came to Nazis and anti-fascists, was that soon after he backed down and basically disowned what he had said. There were, claimed Trump, “very fine people” among all the protesters. That was the President of the United States, remember, calling fascists “very fine people.” Not all of them are Nazis, he said as he blamed the “alt-left” for the violence. This is truly alarming stuff. In reality, the white supremacist protesters […]

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Israel: Administrative detention for French-Palestinian rights workers

An Israeli court sentenced Salah Hamouri, a human rights defender and field researcher for Palestinian prisoners’ rights group Addameer, to six months of administrative detention yesterday, in what Addameer said was “part of a systematic policy of disempowerment”. According to the organisation’s statement, the court’s initial decision had been to place Hamouri under house arrest in Al-Reineh, a Palestinian village in Israel, for 20 days. He would then be banned from entering Jerusalem or traveling abroad for three months. The decision also included bail of 10,000 shekels ($2,800). However, when his family went to Israel’s Russian interrogation compound, where Hamouri has been held, to pay the bail they were told by Israeli officials that Hamouri would not be released. Thirty-two-year-old […]

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Big Bank Bosses Are Dumping Their Stocks As “Credit Risk Ricochets Back”

“Credit risk is ricocheting back as a legitimate concern after years of hibernation…” warns David Hendler, founder and principal at Viola Risk Advisors, who considers recent share sales by executives at the big retail banks, in particular, to be smart, as consumer portfolios are showing signs of strain.

Wall Street analysts have been urging investors all year to buy stocks in the big US banks, but, as The FT reports, Wall Street itself is not listening.

We noted at the start of the year that executives of the biggest TBTF banks were dumping their shares as a post-Trump rally took their stock prices higher


And now, as The FT reports, it continues to gather pace. Insiders at the big six banks by assets — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley — have in total sold a net 9.32m shares on the open market since the turn of the year. Even excluding Warren Buffett’s big dumping of shares in Wells in April, to avoid tripping over rules capping ownership by a non-bank, sales by insiders outnumber purchases by about 14 to one.

That is an unusually long streak of net sales, across each of the big six.

Last year, for example, insiders at JPMorgan, Citigroup and Bank of America bought more shares than they sold.

Buying and selling of shares by bank insiders can have a powerful signalling effect.

Last year Jamie Dimon, chairman and chief executive of JPMorgan, seemed to call an end to a mini-rout in bank stocks when he bought half a million shares in his own bank in mid-February.

But there have been no similar demonstrations of faith by senior insiders this year, suggesting they fear that the big gains under Mr Trump have come to an end.

Insiders at Goldman and Morgan Stanley have made no open-market purchases this year, according to the Bloomberg data.

So who is the sucker at this table?

Dick Bove gets it… “banks won’t be able to hold on to the earnings boost they get from higher interest rates. The hole in the bottom of the piggy bank, as he described it, would be that higher rates would also hurt the value of financial assets held by the bank, thus leaking out any benefits from increasing borrowing costs.

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Sticker Shock: Small Hedge Funds Seen Ditching I-Banking Research Under MiFID

For the past several months we’ve discussed many theories about how the new MiFID II rules in Europe might drastically change the investment banking research business model.  For those who haven’t followed this narrative, MiFID II is a new set of regulations in Europe that requires investment banks to charge separately for research as opposed to just lumping it into an asset manager’s trading fees. 

Here are a couple of our thoughts/predictions:

  1. Investment banks will find that there just might be a very large bid/ask spread between what they think their research is worth and what their clients are willing to pay for it.
  2. Exorbitant research fees will create even higher barriers to entry for upstart hedge funds and cause existing small funds to ditch research vendors altogether.
  3. Large asset managers will be forced to cut back their research vendors leaving smaller, independent research shops doomed.

So far, it looks like 2 out of 3 of our predictions have come true. 

Just last week our first prediciton seemingly came true when Deutsche Bank announced plans to slash the price of their fixed income research in half due to a “lack of demand” (see: Deutsche Bank Forced To Slash Fixed-Income Research Price By Half On Lackluster Demand). 

Now, as Bloomberg points out today, small hedge funds are seen ditching pricey research packages because they simply can’t afford it.

“The numbers I’ve heard in terms of what’s going to be paid looks completely impossible for smaller managers,” said Samuel Gruen, who started Lightfield Capital last year and whose his firm manages $20 million from London. The rules will force people to “rethink the investment process when launching a hedge fund.”


Theron de Ris, who oversees less than $10 million at Eschler Asset Management, said he plans to stop getting outside research altogether because of the new rules.


“I’m not going to consume sell-side research for the foreseeable future,” said de Ris, Eschler’s London-based managing partner. “It’s not going to change my world if they stop coming.”

Equity Research


Of course, in the end, MiFID II’s new research rules only serve to reinforce the advantages that larger and wealthier asset managers have always had over smaller funds.  Since 2009, over 80% of hedge fund failures have come from small funds with under $100 million in capital to manage and that’s likely to only get worse.

Hedge Funds


Meanwhile, even Tony Chedraoui, founder of Tyrus Capital which has $2.3 billion in AUM, tells Bloomberg that his firm is evaluating what research is essential and what it can safely “scrap.”  All of which means that prediction number 3, on our list above, is well on it’s way to coming to fruition.

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