In The News Today

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Jim Sinclair’s Commentary

This will cause market upset.

Kurt Volker, Trump’s Envoy For Ukraine, Resigns

September 27, 2019

WASHINGTON — Kurt D. Volker, the State Department’s special envoy for Ukraine who got caught in the middle of the pressure campaign by President Trump and his lawyer, Rudolph W. Giuliani, to find damaging information about Democrats, abruptly resigned his post on Friday.

Mr. Volker, who told Secretary of State Mike Pompeo on Friday that he was stepping down, offered no public explanation, but a person informed about his decision said he concluded that it was impossible to be effective in his assignment given the developments of recent days.

His departure was the first resignation since revelations about Mr. Trump’s efforts to pressure Ukraine’s president to investigate former Vice President Joseph R. Biden Jr. and other Democrats. The disclosures have triggered a full-blown House impeachment inquiry, and House leaders announced on Friday that they planned to interview Mr. Volker in a deposition on Thursday.

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Jim Sinclair’s Commentary

Whatever Trump wants is going to be blocked bringing more discomfort to the marketplace.

U.S. Judge Blocks Trump Rule On Migrant Child Detention
September 27, 2019

LOS ANGELES (Reuters) – A U.S. judge on Friday blocked a Trump administration rule that would have allowed indefinite detention of migrant families, saying it was inconsistent with a decades-old court settlement that governs conditions for migrant children in U.S. custody.

The 1997 settlement agreement, which originated in 1985 with a complaint brought on behalf of 15-year-old Salvadoran immigrant Jenny L. Flores, set standards for humane treatment of children in detention and ordered their prompt release in most cases.

The Trump administration had hoped a new rule issued on Aug. 23 would replace the settlement, which had been modified over the years to prevent the long-term detention of families. The administration had said its rule would allow families to be held in humane conditions while their U.S. immigration court cases were decided.

The judge disagreed.

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Jim Sinclair’s Commentary

Interference by countries in each other’s markets is, in today’s world, an act of war. No one understands the Chinese but the Chinese making their reaction to any serious move as problematic. Play brinkmanship with the Chinese can prove suicidal. Trump delisting Chinese businesses from the market will only result in China doing the same. Accomplishing nothing. In fact, the whole idea of tariff wars accomplishes nothing positive whatsoever.

White House Weighs Blocking Chinese Companies From U.S. Exchanges
September 27, 2019

WASHINGTON — The Trump administration is discussing whether to block Chinese companies from listing shares on American stock exchanges, the latest push to try to sever economic ties between the United States and China, according to people familiar with the deliberations.

The internal discussions are in their early stages and no decision is imminent, these people cautioned.

The talks come as senior officials from both countries are scheduled to resume trade negotiations in Washington early next month. President Trump, who has continued to give mixed signals about the prospect of a trade deal with China, said earlier this week that an agreement could come “sooner than you think.” His decision to delay an increase in tariffs until mid-October and China’s recent purchases of American agricultural products has fueled optimism that the talks could produce an agreement.

But the prospect of further limiting American investment in China underscores the challenge that the two sides will continue to face even as they try to de-escalate a trade war that has shaken the global economy. The administration has already increased scrutiny of foreign investment with a particular eye toward China, including expanding the types of investments that can be subject to a national security review.

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Jim Sinclair’s Commentary

Tariffs are always a tax on a country that levies the tariff.

Wall Street Week Ahead: Data Will Show Damage Of Tariffs, Strong Dollar On U.S. Goods Exporters
September 27, 2019

NEW YORK (Reuters) – It’s no longer a probability, it’s a reality: the escalating U.S.-China trade war and the strengthening dollar appear to be inflicting measurable damage on U.S. goods makers that rely on global markets.

Market participants will get a picture of the extent to which trade tensions and currency have hurt U.S. manufacturers when the Institute for Supply Management (ISM) releases its purchasing managers index (PMI) USPMI=ECI for September on Tuesday.

Its August report showed the manufacturing sector, which accounts for about 12% of the U.S. economy, contracting in for the first time in 3-1/2 years, and more worryingly, its export component hit a more than 10-year low.

“The exporters are at least a half a step or full step closer to the predicted recession,” said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.

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Jim Sinclair’s Commentary

A repo is a short term loan of cash from the central bank to a financial institution. Many excuses have been given for this problem. They range from a new cashless economy to various other commercial means for money. In truth, the need to place as much money as more than $50B per day suggests a financial failure somewhere in the global economy.

The Fed Is Girding For Repo Trouble Monday Even As Market Calms
September 27, 2019

The repo market has calmed down, but the Federal Reserve is gearing up its safeguards seemingly to prevent turmoil from resurfacing on Monday.

Last week’s craziness was not the first time in recent memory that U.S. money markets have shown signs of stress. It’s tended to happen around quarter-end, most notably in late December.

The third quarter ends Monday. So, for the past two days, the New York Fed has run $100 billion overnight repo operations — bigger than the $75 billion daily liquidity injections that began early last week — plus separate 14-day operations. Neither of Friday’s actions were fully subscribed and short-term lending rates are well below the peak seen last week, a sign order has been restored for now.

But on Monday, that larger $100 billion size will be repeated and the overnight operation will run from 7:45 a.m. to 8 a.m. New York time, earlier than prior morning actions. Both signal the Fed is getting ready in case rates spike again.

“I wouldn’t be surprised to see some volatility,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. “The Fed has provided enough liquidity for now, but there are some large Treasury settlements so you’ll have large pressures.”

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Jim Sinclair’s Commentary

That is a fig leaf amongst many thorns.

British Tanker Docks In Dubai After Detention By Iran
September 28, 2019

DUBAI/STOCKHOLM (Reuters) – A British-flagged tanker that was detained by Iran for 10 weeks, docked in Dubai on Saturday, after a standoff that has stoked tensions along a vital global shipping route for oil.

The Stena Impero, which sailed out of Iranian waters on Friday, was seized by Iran’s Revolutionary Guards on July 19, shortly after British forces detained an Iranian tanker off the territory of Gibraltar. The Iranian ship was released in August.

The Stena Impero docked at Dubai’s Port Rashid, a Reuters photographer reported from the harbor.

Erik Hanell, the chief executive of Sweden’s Stena Bulk, which owns the ship, told Reuters in Stockholm in a text message earlier in the day that the tanker was “finally approaching berth in Dubai.”

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Jim Sinclair’s Commentary

This type of event is predictable in the marketplace where the Federal Reserve is revealing significant problems short-term money market. These two events spoken about most this weekend are not causes, they are the effect of the money market confusion.

After Wework Debacle, IPO Market Slams Brakes On Unprofitable Companies
September 27, 2019

NEW YORK (Reuters) – Companies making their debut on the U.S. stock market are getting a rough welcome, especially if they are losing money, casting a shadow over the calendar for initial public offerings for the rest of the year.

The surprise postponement of the WeWork IPO has underscored how confidence is eroding in the market both for companies looking to raise capital and investors.

A more discerning market for initial public offerings continued to punish Peloton Interactive Inc PTON.O on Friday, a day after it began trading. Shares of the fitness startup closed down 2% at $25.24 and are now off 13% from their IPO price. The company is now trading 15% below its Wednesday IPO price.

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