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ChartBrief 150 – Passive Quantitative Tightening

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As expected the Fed held interest rates unchanged and announced that it would commence its balance sheet normalization plan in October.
As expected (by me and pretty much everyone else) the Fed held interest rates unchanged and announced that it would commence its balance sheet normalization plan in October. The balance sheet normalization plan involves gradually ceasing reinvestment of principal from maturing bonds, and will result in a passive/automatic run-down of the Fed’s asset holdings from the large scale asset purchase programs aka Quantitative Easing or QE. This is a monetary policy tightening measure, hence my calling it Quantitative Tightening or QT – specifically passive QT. For clarity, active QT would involve the outright selling of asset holdings – an unlikely course of action.
[REITs]
Note: the Fed basically recognizes that this is a tightening measure as they have noted that balance sheet normalization will be deactivated and full reinvestment of principal will recommence should economic conditions deteriorate. In other words, the balance sheet remains an important and actively used part of the monetary policy tool kit for managing the cycle in both directions.
As I have previously noted, this move is US dollar positive, and bearish for bonds, and will at the margin tighten financial conditions, and by definition will present a headwind to stocks. The initial market reaction reflects this view and is more or less as expected. Thus I retain a bearish bias on bonds, bullish tactical view on the US dollar, and underweight view on US equities (in preference of global/emerging markets).
This chart shows the projected Fed balance sheet run-down based on the caps of reinvestment cessation ($10B per month initially, rising to $50B per month ongoing in 12 months time). Note: the Fed has mentioned it will recommence reinvestment if the economic outlook warrants (i.e. this is a tightening measure and can be reverted to an easing measure if needed).
Initial market reaction to the announcement: stocks down, bond yields up, US dollar up (all makes sense).
Here’s the history of the US 10-year bond yield vs some of the major QE actions and announcements. The experience has been that QE announcements often coincide with market bottoms, whereas the actual commencement of taper coincided with a top in yields. QT could have a counter-intuitive impact of resulting in lower bond yields if it resulted in materially tighter financial conditions and slowed growth/inflation expectations.
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© Source: https://www.valuewalk.com/2017/09/chartbrief-150-passive-quantitative-tightening/
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半導体、日米韓連合に売却=「近日中」契約、買収額2兆円-上場維持へ前進・東芝

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東芝は20日、 取締役会を開き、 半導体子会社「東芝メモリ」 を、 米投資ファンドの ベインキャピタルを軸とする「日米韓連合」 に売却する方針を決議したと発表した。 近日中に契約するとしている。 売却価格は2兆円で、 日米韓連合の 資金拠出額は設備投資負担を含めると、 計2兆40
東 芝 は20日、取締役会を開き、半導体子会社「東 芝メモリ」を、米投資ファンドのベインキャピタルを軸とする「日米韓連合」に売却する方針を決議したと発表した。近日中に契約するとしている。売却価格は2兆円で、日米韓連合の資金拠出額は設備投資負担を含めると、計2兆4000億円規模となる予定。提携先の米ウエスタンデジタル(WD)とも交渉したが、将来の経営関与の問題で折り合えなかった。 来年3月末までに半導体子会社の売却を完了させ、上場廃止となる2年連続の債務超過を回避する。売却により、約7400億円の資本改善が見込まれ、今年3月末で5529億円だった債務超過を解消できる。米原発事業の巨額損失を受け、1月に半導体事業への外部資本導入を表明後、交渉が二転三転した売却先がようやく決まった。上場維持と経営再建へ一歩前進した形だ。 契約締結後、10月24日開催で調整している臨時株主総会に半導体子会社売却を諮る方針。 日米韓連合は、ベインのほか、韓国半導体大手SKハイニックス、米アップルや米デルなどで構成。東 芝も3505億円を再出資する。 H O Y A など複数の日本企業も参加を検討しており、当初は東 芝を含む日本勢が過半の議決権を握る見通しだ。 SKハイニックスは議決権のない融資の形で資金を拠出する。来年3月末までに独占禁止法の審査が終わるかどうかが焦点となる。(2017/09/20-22:47)
【経済記事一覧へ】 【アクセスランキング】

© Source: https://www.jiji.com/jc/article?k=2017092000153&g=eco
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Trooper killed in motorcycle crash remembered for quick wit, called 'class act'

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Trooper Timothy O’Neill died Wednesday, Sept. 20
ROCKFORD, MI — Those who knew the state police trooper killed in a motorcycle crash are remembering him as a « class act, » calling him quick-witted and funny.
Trooper Timothy O’Neill died at Spectrum Butterworh Hospital following a 7:50 a.m. crash at Wolvering Boulevard and Belding Road, south of Rockford.
He was on duty, riding a state police motorcycle, when the cycle collided with a pickup truck. So far, police have not released other details of the crash.
The 28-year-old O’Neill, who enlisted with the state police in January 2014, was to be married next month.
State police First Lt. Kevin Sweeney of the Lakeview post said a state police accident investigation specialist, Trooper Brandon Davis, has been assigned to look at the crash.
Sweeney said he didn’t know where O’Neill was headed at the time of the collision.
He said funeral arrangements will be announced later.
« We appreciate all of the thoughts and prayers we’ve been receiving from the public, » he said.
In the hours after the crash, as friends learned of his death, several posted messages on Facebook.

© Source: http://www.mlive.com/news/grand-rapids/index.ssf/2017/09/trooper_killed_in_motorcycle_c.html
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Ливень в Киеве: Певица Руслана показала свой дом, в который попала молния

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Последствия происшествия опубликовала сама Руслана в Facebook. Она пишет, что молния попала в ее столичный дом во время грозы около 16:00. В результ…
После сильного дождя и грозы в Киеве 20 сентября пострадал дом певицы Русланы (Лыжичко), в который ударила молния.
Последствия происшествия опубликовала сама Руслана в Facebook.
Она пишет, что молния попала в ее столичный дом во время грозы около 16:00. В результате – обгорела конструкции здания, в электрических щитках перегоревшие шины заземления, также из строя вышла вся электрика.
В среду, 20 сентября, жители столицы стали свидетелями ливня. Местами осадков было так много, что пешеходы были по щиколотку в воде.

© Source: http://nv.ua/ukraine/events/liven-v-kieve-pevitsa-ruslana-pokazala-svoj-dom-v-kotoryj-popala-molnija-1885260.html
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Highlights from Milan Fashion Week 2017

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The fashion festivities continue at Milan Fashion Week, and the collections are already electric. See more from the week’s best runway shows, including the unforgettable Gucci spring/summer 2018 presentation on Sept. 20.
The fashion festivities continue at Milan Fashion Week, and the collections are already electric. See more from the week’s best runway shows, including the unforgettable Gucci spring/summer 2018 presentation on Sept. 20.

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Boy recalls escape from Mexico City school _ and those lost

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Boy recalls escape from Mexico City school _ and those lost
A favorite teacher, a janitor always friendly with the kids, the two women who patrolled the halls and greeted children at the school’s gates, a best friend’s little sister. These people feared or confirmed dead Wednesday were top on the mind of 12-year-old Luis Carlos Herrera Tome.
The Enrique Rebsamen school, the Mexico City private school he attended for eight years, had fallen around him less than 24 hours earlier amid a magnitude 7.1 earthquake. The only thing he wanted to do was go back, to help somehow.
His mother, Norma Tome, said he wouldn’t be allowed into the site, it was too dangerous. But they went to the school anyway. It took them an hour to go three blocks because they kept bumping into people they knew. With each encounter came a halt to exchange information about names, hospitals, funeral plans, even the school’s layout.
When a couple asked Luis Carlos to describe for the umpteenth time what he saw and how he escaped, he hugged his arms tightly across his chest and turned away when he began tearing up.
Luis Carlos and his mother scanned handwritten lists of the missing and those taken to hospitals, wincing at names they recognized.
The earthquake, centered in nearby Puebla state, killed at least 223 people across Mexico, including 21 children and four adults in the school. A dramatic operation continued Wednesday as searchers pried into the rubble looking for three people still missing. Federal Education Secretary Aurelio Nuno said 11 people have been rescued.
Hugs were offered and accepted, but Luis Carlos felt helpless outside the security barriers playing the events of the previous day back.
He said he was in English class Tuesday when everything started moving. He headed for the door leaving his backpack, books, pencils and everything behind.
First he turned to the school’s main staircase, a concrete structure toward the front of the building.
« I saw that the ceiling started to break apart so I turned around, » he said.
« I grabbed my friends and we took off running, » he added, showing how they linked arms.
They ran together for another staircase. The building continued shaking violently and one friend fell on the stairs.
« It moved a lot. I braced myself and cleared like five stairs in one jump, » he said.
Dust falling from walls and the ceiling made it hard to see but he could make out students with cut and bleeding arms. Everyone was crying and screaming, he said.
The students who exited with Luis Carlos quickly realized they were trapped even once outside. Residents of a neighboring apartment building broke through a fence atop a tall wall separating the properties and lowered a ladder so the students could climb out.
On his way out, Luis Carlos saw his favorite janitor with rubble on his back apparently dead. In the street, ambulances were arriving and teachers stained with blood were crying.
« It was chaos, » he said. But Luis Carlos had only one thought looking back at the collapsed school: Where was his little brother?
The brother — 7-year-old Jose Raul Herrera Tome — had been in a classroom in a building right next to his brother’s.
The younger boy told his mom later that a classmate was the first to scream: « It’s shaking! »
He said the students heard no alarm even though it occurred only two hours after their school, and every other one in Mexico, had done an evacuation drill to mark the 32nd anniversary of the 1985 earthquake that killed thousands in Mexico City.
« That’s what makes me mad, » the older brother said of not hearing an alarm. « How many seconds were lost there? »
Jose Raul also ran first for the big staircase at the front of the school, but stopped when he saw it beginning to crumble. He ran back to his classroom and waited there with his classmates until the shaking stopped.
The boys’ mother said a multipurpose room near the school’s front staircase was where most of the dead had been recovered.
« ‘Mom, I saw a girl go down because she was crushed,' » Tome recalled her younger son telling her after he escaped the building. « He cried a lot for that and said, ‘I couldn’t save her.' »
When Jose Raul made it to the street he looked back at the school and said, « My brother, my brother, » Tome said.
The brothers hugged when they found each other across the street.
« We cried. He was my biggest worry, » Luis Carlos said.
On Wednesday, Luis Carlos helped pass water and bandages for an hour, and answered frantic parents asking if he had seen their kids. He never let go of his brother.
The family planned to go later in the day to a wake for Claudia Ramirez, the second-grade teacher who Jose Raul adored.
Ramirez was « one of those rare exceptional teachers — unique ones who leave their imprint on the lives of the children and the parents, » Tome said.
Later, Luis Carlos returned to the terrifying moments during the earthquake, which occurred just a few minutes before he was supposed to move to his biology class. He had remembered that they hadn’t finished their lab on Friday and were scheduled to be back in the lab Tuesday in the part of the school that collapsed.
« I don’t know if I would be here, » he said, suddenly feeling the weight of the quake’s timing.

© Source: http://abcnews.go.com/International/wireStory/rescuers-wriggle-collapsed-school-mexico-quake-49971274
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Japan Deploys Missiles on Island After North Korea Launch

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Japan on Tuesday deployed another missile system on its northern island of Hokkaido—after North Korea launched two missiles over the territory. « As part
Japan on Tuesday deployed another missile system on its northern island of Hokkaido—after North Korea launched two missiles over the territory.
“As part of measures to prepare for emergencies, we will today deploy a PAC-3 unit” in the southern tip of Hokkaido, Defence Minister Itsunori Onodera told the AFP news agency. The Patriot Advanced Capability-3 system arrived at the Hokkaido base later on Tuesday, an official said.
North Korea “may take further provocative actions including launching ballistic missiles that would fly over Japan again in the future,” Onodera said. He added that his ministry “would take appropriate measures to protect people’s safety.”
Japan already deployed another PAC-3 system to another part of the island.
According to the Japan Times:
North Korea launched missiles over Hokkaido on Aug. 29 and last Friday before landing 600 to 1,200 miles in the Pacific Ocean off Hokkaido, according to the Times.
“To prepare for an emergency, we would like to make every effort possible to protect the people’s safety,” Onodera told the Japan Times on Tuesday.
The PAC-3 was brought from another base in Yakumo located on Hokkaido, some 50 miles northeast of Hakodate. The anti-missile battery has a range of about 12 miles.
Pyongyang threatened to “sink” Japan into the sea and claimed it wanted military “equilibrium” with the United States.
Japanese Prime Minister Shinzo Abe stated that he will “never tolerate” the “dangerous provocative action” of North Korea.
President Donald Trump, meanwhile, in his United Nations speech Tuesday, said the U. S. would “totally destroy North Korea” if provoked. He previously warned North Korea of “fire and fury” should North Korea attack. “Rocket Man” — his new nickname for North Korean leader Kim Jong-Un — “is on a suicide mission.”
The U. N. Security Council condemned the recent missile launch as “highly provocative” and will hold a meeting Thursday, focused on sanctions on the country’s communist regime.

© Source: http://www.theepochtimes.com/n3/2300652-japan-deploys-missiles-on-island-after-north-korea-launch/
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Trump administration considering even lower refugee limits

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The Trump administration is considering a further reduction in the number of refugees allowed into the United States.
President Donald Trump is considering a further reduction in the number of refugees allowed into the United States as the administration works to re-shape American immigration policy, officials said Wednesday.
Trump, who has already slashed refugee admissions once since taking office, is now weighing limiting even further the number of refugees allowed into the country in the next fiscal year.
But as is often the case with the Trump administration, Cabinet officials are divided as they weigh the costs and potential security risks associated with the program.
The Department of Homeland Security has been pushing for a reduction beyond the 50,000 mark set by Trump earlier this year as part of his travel ban executive orders — a number that is already the lowest in modern American history. In a proposal submitted late last week, the department called for a reduction to 40,000 refugees in the next fiscal year, citing concerns about its workload and ability to adequately vet those seeking entry.
The State Department, which oversees the program, has formally recommended that the number be kept at 50,000, according to Trump administration officials who spoke on condition of anonymity in order to discuss internal deliberations. Agencies had been given until the close of business Wednesday to submit formal recommendations for consideration.
State Department officials would have been inclined to set their recommendation higher, several of the people said, but were taking their cues from the president’s executive order and felt that 50,000 was the highest number that would be palatable to him.
Trump has until Oct. 1, the start of the new fiscal year, to determine how many refugees to admit under the Refugee Act of 1980. Trump is expected to consider the issue over the weekend, after he finishes up at the U. N. General Assembly in New York, one White House official said.
The U. S. welcomed 84,995 refugees in fiscal year 2016, and former President Barack Obama had wanted to raise that number to 110,000 in 2017.
Trump has made limiting immigration the centerpiece of his agenda. He temporarily banned visitors from a handful of Muslim-majority nations, has revoked an Obama-era executive action protecting young immigrants from deportation and insists he’ll build a wall along the southern border.
During his campaign, Trump pledged to « stop the massive inflow of refugees » and warned that terrorists were smuggling themselves into naive countries by posing as refugees fleeing war-torn Syria.
« Thousands of refugees are being admitted with no way to screen them and are instantly made eligible for welfare and free health care, even as our own veterans, our great, great veterans, die while they’re waiting online for medical care that they desperately need, » Trump said last October.
Instead, Trump has advocated keeping refugees closer to their homes.
In a speech to the United Nations on Tuesday, Trump thanked Jordan, Turkey and Lebanon for taking in hundreds of thousands of refugees from the Syrian conflict, and described the United States as a « compassionate nation » that has spent « billions and billions of dollars in helping to support this effort. »
« We seek an approach to refugee resettlement that is designed to help these horribly treated people, and which enables their eventual return to their home countries to be part of the rebuilding process, » he said, arguing that, for the cost of resettling one refugee in the United States, the U. S. can assist more than 10 migrants in their home regions.
Advocates say that misses the point.
« I think that these comments show a basic misunderstanding of the refugee crisis, » said Jen Smyers, who helps run the immigration and refugee program at Church World Service, one of nine organizations that work to resettle refugees in the U. S. She said the safe re-integration of refugees into their home countries is always the preferred outcome, followed by integration in a nearby country that shares a refugee’s language and culture. Resettlement is a last resort when those options are impossible.
Refugees already face an extensive backlog and waiting periods that can take years. Smyers said that after Trump’s executive order, she had to tell refugees in the pipeline they’d be waiting even longer.
« It’s devastating for refugees who are overseas, » she said.
Stacie Blake, of the U. S. Committee for Refugees and Immigrants, said the proposed cutbacks were especially concerning given the migrant crises affecting so many parts of the word, including the Rohingya Muslim refugees fleeing Myanmar. She said Trump’s move could prompt other nations to « back out » as well.
White House spokeswoman Kelly Love said in a statement that the administration’s approach to refugee resettlement « is unwavering » and would be « guided by the safety and security of the American people, the protection of U. S. taxpayers, and the application of U. S. resources in a manner that stretches our dollars to help the most people. »
DHS spokesman David Lapan said that in setting the admissions ceiling, the agency would take into account the « workload capacity of all program partners, including the vetting agencies » as well as national security interests.
Simon Henshaw, the top State Department official for refugees, said the decision was ultimately Trump’s.
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© Source: http://www.charlotteobserver.com/news/politics-government/national-politics/article174464996.html
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Fed set to reduce bond portfolio – Twin Cities

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The Federal Reserve announced Wednesday that it would start slowly reducing the trillions of dollars in bonds it bought to try to stimulate the economy, another milestone in the central bank’s effo…
The Federal Reserve announced Wednesday that it would start slowly reducing the trillions of dollars in bonds it bought to try to stimulate the economy, another milestone in the central bank’s efforts to return to a normal monetary policy after the Great Recession.
The long-awaited reduction in the Fed’s $4.5 trillion balance sheet comes amid great uncertainty at the central bank. There are several vacancies on the Fed board, and there could be a change in leadership early next year if President Donald Trump decides not to renominate Chair Janet Yellen.
On top of that, the devastation caused by recent severe hurricanes could make it difficult for Fed policymakers to get a solid read on the economy in the coming weeks as they decide whether to enact another small hike in a key interest rate.
The actions by Fed policymakers Wednesday demonstrated their confidence that the hurricanes will not cause long-term economic damage in the U. S.
As expected, central bank officials voted to hold the benchmark federal funds rate steady at between 1 percent and 1.25 percent.
Fed policymakers actually revised up their forecast for economic growth this year to 2.4 percent from a 2.2 percent projection in June.
Fed officials have been signaling for months that they planned to start reducing the Treasury bonds and mortgage-backed securities the central bank began buying in 2008 to try to stimulate growth by pushing down mortgage and other long-term interest rates.
On Wednesday, the Fed announced it would begin the reductions next month based on a plan approved in June. Related Articles
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The Fed plans to gradually allow an increasing amount of proceeds from maturing securities to be run off the central bank’s books each month. As the bonds mature, the government pays the face value to the Fed. The Fed would keep some of the proceeds instead of reinvesting them in new bonds.
Yoplait yogurt is spoiling General Mills’ sales.
The Golden Valley-based packaged-foods company said Wednesday its U. S. yogurt sales fell 22 percent, pushing it to a ninth straight quarter of revenue declines.
Yoplait Light and Yoplait Greek 100 have suffered the most over the past year, as Americans shifted away from low-calorie diets in favor of more natural, wholesome ingredients.
General Mills shares fell 5.8 percent on Wednesday — for a 15 percent drop so far this year— as the company’s results for the quarter ended Aug. 27 were below Wall Street expectations.
General Mills’ overall retail sales in North American fell 5 percent in its recently ended fiscal first quarter. U. S. yogurt contributed more than half of that decline.
Global sales fell 3.5 percent to $3.77 billion. On a comparable basis, which excludes such factors as currency fluctuations, revenue dropped 4 percent, worse than the 1 percent to 2 percent decline the company has projected for the full fiscal year.
General Mills’ profit of $408.6 million was down 2.6 percent from the year-earlier quarter. Excluding one-time items, adjusted earnings per share came to 71 cents, below the FactSet consensus of 76 cents.
Travelers who check at least one bag when flying domestically are paying more overall than they did before airlines began unbundling fares in 2008 and charging separately for checked baggage, a government watchdog said Wednesday.
A report by the Government Accountability Office said airline officials told GAO investigators that base air fares are now lower than before airlines began separately charging passengers for checked bags, reservation changes, priority boarding and other services. But the GAO’s review of studies that have examined the effect of bag fees on ticket prices shows that charging separately for bags reduced fares by less than the new bag fee itself.
One study found that airlines with bag fees lowered fares to appear more competitive and then made up the lost revenue in bag fees. Another study found that declines in airfares amounted to less than the bag fee, so on average the combined total of the fare and bag fee increased.
United Parcel Service Co. said Wednesday that it plans to hire about 95,000 workers to handle the surge in packages from late November through January. That’s about the same number as the last two years.
Rival FedEx Corp. said earlier this week that it would hire about 50,000 people for the holiday season, the same as last year.
U. S. home sales fell 1.7 percent in August, pulled down by the effects of Hurricane Harvey and a worsening shortage of available properties.
The National Association of Realtors said Wednesday that sales of existing homes sank last month to a seasonally adjusted annual rate of 5.35 million.

© Source: http://www.twincities.com/2017/09/20/business-briefing-fed-set-to-reduce-bond-portfolio/
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Allowing advertisers to target ‘Jew haters’ was ‘totally inappropriate and a fail’ – Silicon Valley

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Facebook Chief Operating Officer Sheryl Sandberg outlined what changes the company is making to ad targeting after ProPublica discovered users could target ads at “Jew haters.”
MENLO PARK — Facebook Chief Operating Officer Sheryl Sandberg said Wednesday that the tech firm is keeping a closer eye on who advertisers reach through the social media site after ProPublica discovered that users could target ads at “Jew haters.”
“Seeing those words made me disgusted and disappointed – disgusted by these sentiments and disappointed that our systems allowed this,” she wrote in a Facebook post. “Hate has no place on Facebook – and as a Jew, as a mother, and as a human being, I know the damage that can come from hate.”
The fact that the tech firm even had this option for ad targeting was “totally inappropriate and a fail on our part,” she said.
When Facebook learned of the offensive categories, it removed them. Facebook users were filling out offensive content in the education or employer fields of their profiles, which allowed advertisers to target those audiences.
The tech firm then temporarily removed the education and employer fields from ad targeting as it reviewed the issue.
While the tech firm noted that targeting ads at “Jew haters” was rare, it also shouldered the blame for not catching the option sooner.
“We never intended or anticipated this functionality being used this way – and that is on us,” Sandberg said. “And we did not find it ourselves – and that is also on us.”
The latest controversy over Facebook’s ad targeting comes as the tech firm faces criticism over the type of ads that run on the social media site.
This month, Facebook revealed that fake accounts and pages that likely have ties to Russia spent $100,000 in divisive political ads before the U. S. presidential election.
Meanwhile, the tech firm has vowed to do more to combat fake news and hate speech.
Facebook is beefing up its enforcement of ads that run afoul of its online rules, Sandberg said. Human reviewers will evaluate new ad-targeting options to make sure that offensive terms do not appear.
The tech firm reinstated about 5,000 commonly used terms for ad targeting such as nurse, teacher or dentistry after reviewing the ad-targeting categories.
Facebook, which has more than 2 billion users worldwide, is also working on a program to encourage users to report ads that violate the tech firm’s rules.
The Anti-Defamation League, an organization that fights anti-Semitism and hate, applauded Facebook’s response.
“We spoke to Facebook last week to understand what happened and asked for detailed steps they’d take to prevent this sort of hateful ad-targeting,” said ADL CEO Jonathan Greenblatt in a statement. “We are glad that they are taking immediate, meaningful action, and ADL will continue to hold tech companies accountable for following through on these actions.”

© Source: http://www.siliconvalley.com/2017/09/20/facebooks-sheryl-sandberg-allowing-advertisers-to-target-jew-haters-was-totally-inappropriate-and-a-fail/
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