Monday, July 10, 2017

Treasury Secretary Mnuchin throws cold water on Bannon's reported tax hike on the wealthy

Treasury Secretary Mnuchin throws cold water on Bannon's reported tax hike on the wealthy

Mnuchin said Sunday: "I have never heard Steve mention that."
Speaking on ABC News' "This Week," Mnuchin said the administration aims to release its full tax plan by September and to pass it into law by the end of the year. So far, the administration has issued a one-page summary of broad principles for tax reform, but few details.
The administration says it wants to reduce the top income tax bracket from 39.6% to 35% and lower tax rates for the middle class.
Jonathan Swan of the news website Axios reported last Sunday that chief strategist Steve Bannon wanted to get the top tax bracket, which stands at 39.5%, into the 40s. The top bracket applies to individuals making $418,400 or higher and couples making $470,700 or higher.
While this may not please many large Republican donors or political action groups, it is a popular message for tax reform. According to a Morning Consult/Politico poll in May, 62% of Americans believe that "upper-income people" pay too little in taxes.

Goldman Sachs doesn't think the Bank of Canada will hike rates this week

Goldman Sachs doesn't think the Bank of Canada will hike rates this week

In an otherwise quiet week for financial markets, the Bank of Canada’s (BoC) July monetary policy decision on Wednesday will be the undisputed headline act.
In the space of just a few weeks, expectations of a rate hike have moved from highly unlikely to highly probable, fuelled by a series of hawkish comments from leading BoC officials and strong Canadian economic data.
Another strong jobs report for June, released last week, revealed a robust lift in employment of 45,300, and helped to cement those views.

However, while financial markets now put the probability of a 25 basis point hike on Wednesday at around 90%, not everyone shares the view that a rate hike, the first from the BoC since late 2010, will arrive in just a few days.
Michael Cahill, strategist at Goldman Sachs, is one who thinks that the BoC will refrain from hiking rates on this occasion, suggesting in a note released late last week that market pricing at this point “looks like an oversteer”.
“While certainly a close call, we expect the BoC to hike rates for the first time in October, not next week,” he says.
“Our view is that the decidedly hawkish BoC communications were a direct response to the lack of market reaction to the incremental hawkish changes at recent meetings.
“When markets did not pick up on subtle hints, the BoC decided to be blunt. But that does not necessarily mean that a hike is days away.”
So rather than signaling that a rate increase is coming in July, hawkish remarks from the BoC delivered in June were designed to prepare markets for higher rates in the medium-term, in Cahill’s opinion.
As seen in chart below from Goldman, it’s clearly been successful on that front. Expectations for the BoC’s policy rate — currently 0.5% — have lifted substantially in recent weeks.
And while he admits that recent data has been strong, the one area of concern remains tepid inflationary pressures, something that Cahill suggests could see the bank hold off hiking on this occasion.
“The weakness in inflation data should give the BoC pause,” he says.
“The recent inflation miss is a mark in that direction.
“The BoC — and governor Poloz in particular — have a reputation for being strict inflation targeters, and that should still matter now.”
However, while Cahill thinks that interest rates will be left unchanged this week, he still thinks that hikes are coming, admitting that they are “completely warranted”.
“The economy has improved, the risk of the oil shock spilling over to a larger disinvestment cycle has subsided, and the economy should further benefit from stronger global growth,” he says.
“Whether this week or a bit further down the road, the message is clear: rate hikes are coming.”
Cahill says that whenever the bank delivers its first hike, a second is likely to follow soon after, helping to reverse the two rate cuts delivered by the bank in 2015 in response to tumbling crude prices at the time.

NOW READ: The Bank of Canada looks set to hike and that could send the loonie significantly higher


Read more at https://www.businessinsider.com.au/goldman-sachs-doesnt-think-the-bank-of-canada-will-hike-rates-this-week-2017-7#dYi10t0RAUXkVXtc.99

Friday, July 7, 2017

Saudi bloc expresses "surprise" that Qatar has rejected its demands

Saudi bloc expresses "surprise" that Qatar has rejected its demands

A view shows buildings in Doha, Qatar, June 9, 2017. REUTERS/Naseem ZeitoonBuildings in Doha Thomson Reuters
LONDON – The Saudi-led group that imposed sanctions on Qatar has expressed surprise at the country's rejection of its list of demands.
Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed sanctions after accusing Qatar of supporting terrorism and undermining the security of the Gulf region.
The bloc said in a statement that Qatar's response "reflects" its links to terrorism, and expressed its "deep surprise" that the "legitimate list and logical demands" had not been accepted. 
"The Qatari government has thwarted all efforts and diplomatic good offices to resolve the crisis," the statement said, "reflecting its intention to continue its policy aimed at destabilising security of the region."
The four countries cut diplomatic ties with Qatar on 5th June, including closing the country's land, air and sea links. However, Turkey has sent food to Qatar, and Qatari officials are in talks with Turkey and Iran over securing further supplies. On 23rd June, the Saudi-led bloc issued Qatar with 13 demands, including shutting down media giant Al-Jazeera, as a prerequisite for lifting sanctions.
Qatar rejects the allegation that they are supporting terrorism. Doha's foreign minster said last week that the list of demands was "made to be rejected," according to Reuters
The natural gas rich country has said it can withstand sanctions given its huge reserves and wealth funds. However, on Wednesday credit rating company Moody's lowered the outlook on Qatar's debt sustainability from "stable" to "negative," citing concerns that the diplomatic crisis would continue into 2018.
Qatar's stock exchange also plummeted after sanctions were imposed at the start of June, and has continued on a broadly downward trajectory.
Here is the chart as of 09:01 a.m. BST (04:01 EST):
Qatar Stock ExchangeQatar Stock Exchange Investing.com

'Putin will eat President Trump's lunch': Experts weigh in on how Trump should approach Putin

'Putin will eat President Trump's lunch': Experts weigh in on how Trump should approach Putin

Donald TrumpPresident Donald Trump gives a public speech in front of the Warsaw Uprising Monument at Krasinski Square in Warsaw, Poland.REUTERS/Kacper Pempel
  • President Donald Trump has his first high-stakes meeting with Russian President Vladimir Putin on Friday.
  • The meeting comes amid crumbling relations between the two countries.
  • Experts stressed that Trump must bring up Russia's meddling in the US election.
President Donald Trump is set to meet Friday with Russian President Vladimir Putin at the G-20 summit in Hamburg, Germany — a full, bilateral sit-down with high stakes.
The meeting will take place amid crumbling US-Russia relations and as Trump weathers investigations by Congress and the FBI into Russia's interference in the 2016 election and whether the Trump campaign played a role in it.
White House aides are aware of the high-stakes nature of the meeting, which comes after the former presidents Bill Clinton, George W. Bush, and Barack Obama were unable to cultivate stronger ties with Russia.
Issues on the table for discussion include Russia's military aggression in Ukraine, Russia's US election meddling, continued nuclear weapons threats from North Korea, the ongoing fight against the Islamic State and extremism, and the brutal Syrian civil war.
It is unclear which topics will be discussed. Trump's homeland security adviser, Thomas Bossert, told ABC's "This Week" on Sunday that an agenda had not been set, and his national security adviser, H.R. McMaster, told reporters that "there's no specific agenda."
"It's really going to be whatever the president wants to talk about," McMaster said, in a statement that has drawn alarm from some national-security experts.

'Putin will eat President Trump's lunch'

Not having a set agenda for any meeting with foreign interlocutors can place American interests in jeopardy from the outset, said Glenn Carle, a CIA veteran and former spy.
"Whoever sets the agenda shapes the discussions," and if the US doesn't go in with a prepared set of talking points, "it means from the get-go that the US is on the defensive, responding, but not driving," Carle said. He said that without an agenda, the US government and Russia hawks in the White House, like adviser Fiona Hill, could not prepare for and advance US interests.
Vladimir PutinRussian President Vladimir Putin. Pool/Getty Images
Ned Price, a former CIA analyst who served as the senior director of the National Security Council under Obama, was more blunt. If the White House goes into the meeting without a set agenda, "Putin will eat President Trump's lunch," Price said.
"There's no better way to ensure we don't get what we want out of a bilateral meeting — especially one as delicate as with Putin — than by not going in with a fully cooked and fire-roasted plan," he said.
When meeting with Trump, Putin will bring up common enemies like the American "deep state" and "fake news," a former US ambassador to Russia, Michael McFaul, wrote in The Washington Post. "Putin wants the readout of this meeting to be 'we had a very good meeting.' Your objective is different."
"Your goal is not a friendly chat — diplomacy is not a popularity contest — but a clear statement of US national security and economic objectives and an exploration of what issues the United States and Russia could pursue together," McFaul wrote. "Don't expect any breakthroughs in this first meeting. Your task is to demonstrate to Putin that you are a tough negotiator committed to pursuing American interests, and one that is not willing to offer concessions simply to win Putin's praise."

'You can bet Putin has an agenda up his sleeve'

Though Putin had a rocky relationship with Trump's predecessor, Trump has so far appeared to be open to warmer US-Russia relations, and his administration has frequently taken steps that seemed to echo Putin's criticisms of the US and its objectives.
During a February interview on Fox News, for instance, host Bill O'Reilly asked Trump whether he respected Putin.
bill o'reilly donald trumpBill O'Reilly interviewing Trump. Fox News/screenshot
"I do respect him," Trump replied. "I respect a lot of people, but that doesn't mean I'm going to get along with him. He's a leader of his country. I say it's better to get along with Russia than not."
O'Reilly followed up and said, "Putin's a killer."
Trump replied: "You got a lot of killers. What, you think our country's so innocent?"
Trump has also been slow to acknowledge Russia's election meddling, even though the US intelligence community concluded with high confidence that Russia interfered in 2016 in an effort to help Trump and advance Russian interests.
On the eve of his first meeting with Putin, Trump on Thursday questioned the intelligence community's findings and argued, during a press conference in Poland, that Russia may not have been the only country that intervened.
"Nobody really knows for sure," Trump said.
The Kremlin seized on Trump's characterization following his speech. Spokesman Dmitry Petrov told Bloomberg News that Trump had highlighted "equally the possibility that it could have been other countries."
"Please note the nuances," he said.
The Trump administration is also weighing whether to return two seized diplomatic compounds in Maryland and New York to Russia, a key demand from Moscow. The facilities were shuttered as part of Obama's response to Russia's election interference, and Putin is likely to bring up the compounds on Friday.
"You can bet Putin has an agenda up his sleeve," said Robert Deitz, a former top lawyer at the National Security Agency and the CIA. Russia, he said, "is in effect a second-rate power."
"Everything Putin has obtained — and it is a remarkable list — has been through wiles and chutzpah," Deitz added. "This requires great planning," and Putin will most likely have done that in preparation for the bilateral meeting, he said.
Vladimir PutinAdam Berry/Getty Images
On the other hand, Trump has a known aversion to dense briefings and lengthy preparations. He frequently relies on in-person briefings to bring him up to speed, and he prefers shorter sentences and "killer graphics" as opposed to heavier notes.
In keeping with that, intelligence officials condensed the main points Trump could bring up with Putin into "tweet-length sentences," the Los Angeles Times reported.
But Trump may need more than that when he meets the Russian strongman. Former Obama aides told The Post that Putin often began meetings by running through a list of grievances he had against the US. Aides said that while they tried to direct less substantive complaints through lower-level channels so they could keep the focus on bigger problems like Ukraine and Syria, "those topics got him even more animated."

A focus on Ukraine, Syria, and Russian election meddling

To drive the conversation, experts said ,the US must focus on topics vital to its own interests, which include addressing the crises in Ukraine and Syria and especially Russia's election hacking.
Trump should emphasize that Russia's interference in the US election was a casus belli, Carle said — an action that justifies a war. He said Trump should outline steps the US would take if Russia continued its aggression, including "going to the Security Council, freezing all assets of Russian banks and individuals, expelling all Russian diplomats," and possibly deploying US forces to the Baltics.
"Russia's actions were that significant," he said.
Deitz said it would be "truly awful" if the issue of Russia's election interference was not brought up.
Price said Trump needed to clearly signal to Russia that US sanctions related to Russia's actions in Ukraine would not be lifted until Moscow lived up to its obligations outlined in the 2014 Minsk Protocol. The agreement, which called for Russia to cease its military aggression in Ukraine, was put in place after Russia annexed the territory of Crimea in March 2014.
U.S. President Donald Trump shakes hands with Ukraine's President Petro Poroshenko in the Oval Office at the White House in Washington, U.S. June 20, 2017.  REUTERS/Jonathan ErnstTrump with Ukrainian President Petro Poroshenko in the Oval Office.Thomson Reuters
The agreement has been violated from both sides since. In recent years, Ukraine has also turned into a testing ground for acts of cyberwar, many of which are believed to have come from Russia. Most recently, Russia is thought to have been behind a colossal cyberattack that crippled countries and corporations across the globe — and Ukraine was by far the hardest hit.
The US must stress that the Baltics and Ukraine are sovereign states, Carle said, adding that "any further actions taken to destabilize them can be considered an escalation of tensions" to which NATO could respond.
The experts argued the ongoing crisis in Syria should also be addressed, with the US taking a strong stance against continued aggression by Syrian President Bashar Assad and chemical attacks against civilians. The US and Russia support opposing sides in the conflict, which has contributed to crumbling relations between the two countries since the war erupted in 2011.
Russia is one of Assad's most stalwart international allies. It has frequently intervened to block UN resolutions critical of Syria and also supplied military assistance to Assad's forces. In 2015, Russia began carrying out airstrikes against Syrian rebels, though it said it was targeting terrorists. The US, on the other hand, supports Syria's main opposition group, the National Coalition, and provides military assistance to rebels and Syrian Kurds fighting the Islamic State and Assad's regime.
Putin AssadPutin with Syrian President Bashar Assad during a meeting at the Kremlin in 2015. Kremlin/Reuters
Tensions between the US and Russia in Syria escalated after scores of civilians were killed in April following a chemical attack believed to have been carried out by Assad and backed by Russia.
Though the US and Russia have not reached a consensus on how to address the crisis in Syria, both have conceded that only a political solution and a negotiated settlement will end the war.
Trump should certainly "bring up potential areas of broader cooperation — including in Syria — but he mustn't focus on that at the exclusion of our significant areas of disagreement," Price said.
He added that Trump also needed to clearly signal to Putin that the US government was unequivocally committed to Article 5 of NATO and that "any aggression — in whatever form — against a NATO ally will not be tolerated." Trump has frequently criticized the coalition in the past, but he reaffirmed the US's commitment to NATO and Article 5 during his speech in Poland on Thursday.
Most important, experts say, Trump must be careful not to concede anything to Putin.
Trump "should present our goals and listen to the Russians," Carle said. "He should agree to pursue our goals if that's possible." Trump should also recognize that "personal relationships are irrelevant — Putin will charm and make nice," but that bears no importance, he added. "Only national interests matter here. The Russians are astute, prepared, and clear in their objectives," he said, and the US must come similarly prepared.

Thursday, July 6, 2017

Microsoft employees are bracing for layoffs to be announced Thursday

Microsoft employees are bracing for layoffs to be announced Thursday

Satya Nadella delivers keynote addressMicrosoft's CEO, Satya Nadella. Justin Sullivan/Getty Images
Word among employees at Microsoft is that the layoffs that have been rumored lately will begin Thursday.
Conference rooms are booked, and some employees are being scheduled for 15-minute meetings with their managers, according to several postings on the anonymous chat app Blind that were shared with Business Insider.
Business Insider does not have access to Blind. Only verified employees at a company can access communications on Blind for that company. The app is popular at Microsoft; some 25,000 of the software giant's employees use it, according to Blind.
Microsoft has not confirmed the layoff, but the company did send an email to employees on Monday saying it planned to make wide-ranging changes to its sales organization, GeekWire reported.
The employees who commented on Blind did not know how many total jobs would be cut. Not everyone with a meeting scheduled Thursday expects to be laid off. Some think they will be transferred to new roles within Microsoft.
Even so, it's possible the cuts will amount to a small percentage of the company's workforce. As of March, Microsoft employed 121,567 people worldwide with about 52,000 employees in its global sales, marketing, and worldwide business units.
July has become the classic month for Microsoft to announce layoffs, coming right after its fiscal year ends June 30. Last year the company announced it would cut 2,850 positions. Those layoffs were dragged out over a period of months, with the final 700 cut in January.
Although layoffs can be painful for the people who lose their jobs, not everyone thinks this reorg would be a bad idea. The changes would be intended to make it easier for Microsoft to sell subscriptions to its all-important cloud computing services.
In the current sales structure, too many deals have to go through the hands of too many different sales and marketing people, employees say. CEO Satya Nadella is systematically getting rid of layers of management and reducing bureaucracy, one former Microsoft employee told us.
For all the changes, Nadella has a 95% approval rating on Glassdoor, one of the highest in 2017 for a tech CEO.
Microsoft did not immediately respond to a request for comment.
Get the latest Microsoft stock price here.

Wall Street is boldly ignoring stock market history

Wall Street is boldly ignoring stock market history

traders ignoreA trader ignores an animated colleague, much as Wall Street strategists are ignoring stock market history. Reuters
If Wall Street strategists are to be believed, the US stock market has already peaked for the year.
That doesn't match up with history, which says stocks should have plenty further to climb.
With the S&P 500 surging by an impressive 8.1% in the first six months of 2017, the benchmark could be looking at a similarly strong second half, according to Strategas Research Partners. Since 1950, when the index has risen by more than 8% in the first six months of the year it has increased by an additional 7.2% through year-end, on average, according to the firm's data.
Wall Street forecasts that the S&P 500 will finish the year at 2,439, less than half a percent higher than the gauge's closing price on Monday, according to a Bloomberg survey of 20 strategists.
Even the most bullish strategist, Jonathan Golub from RBC Capital Markets, has a year-end price target of 2,600, which would mark a gain of just 7% for the benchmark over the next six months. The biggest bear, Tom Lee of Fundstrat Global Advisors, sees the S&P 500 dropping to 2,275 from current levels.
So the stock market will either buck history, or it'll prove the most trusted stock analysts on Wall Street wrong. In other words, as we push deeper into the bull market's eighth year, something's got to give.
Screen Shot 2017 07 05 at 2.11.15 PMThe S&P 500 has historically followed up strong first-half performance with robust second-half returns.Strategas Research Partners
To be fair, the stock market as it stands today should be viewed through a lens unique to history, since it's dealing with some unprecedented circumstances.
While valuations may look to be at their loftiest since the dot-com bubble, the S&P 500 is also enjoying much stronger earnings, which is helping to underpin continued positive sentiment. Further, the bull market has entered its eighth year, making it the second-longest on record.
And while there's not a great deal of pessimism across Wall Street, there are some serious doubts that the S&P 500 can continue at its torrid pace. Remember, strategists aren't calling for the bottom to drop out. They're simply forecasting a standstill.
With that laid out, let's take a look at the tale of the tape.
On one hand, if you look at earnings growth — historically the biggest driver of equity market gains — stocks appear headed for even greener pastures.
The S&P 500 is expected to see profit expansion of 12% in 2017 as it recovers from a five-quarter period of contraction. The benchmark's first-quarter earnings growth of 14% was its best in more than five years, according to Bloomberg data. And the two most heavily weighted groups in the index — financials and tech — are expected to see the biggest expansion, excluding energy.
On the other hand, some cracks are starting to emerge in what appears on the surface to be among the calmest markets of all time. While the CBOE Volatility Index, or VIX, remains stuck roughly 40% below its bull-market average, a separate measure of market fragility has been climbing steadily over the past six months, according to Bank of America Merrill Lynch.
At the same time, economic conditions in the US are the worst since 2011, at least according to one measure. The Citigroup Economic Surprise Index, which measures the extent to which data exceeds expectations, has been in negative territory since the end of April and sits at its lowest level in six years.
Wall Street strategists are betting that these counteracting forces will cancel each other out, leaving us with a stationary market.
It's a compelling argument, but as many lifelong market experts will tell you, everything you need to know about the market can be derived from past occurrences.
So who wins — Wall Street or history? We'll just have to wait and find out.

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