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I keep mentioning the blimp hangars on the old MCAS Tustin base, so here's a picture of one of them. (The other one is identical.) They were built during WWII as housing for blimps used to patrol the West Coast, and according to the American Society of Civil Engineers they are the biggest wooden frame structures in the world. You can read a book about them here. Or watch a 25-minute video about them here. Every year or two I read a story about how we've finally decided what to do with them, but nothing ever happens. At the moment, they're still behind fencing around the old base and closed to the public.
However, I was invited inside one of them once. Back when the base was still open, Goodyear used the hangars to do maintenance on their local blimp based in Carson. In my senior year in college I was interning at the Orange County bureau of the LA Times when a storm drove a tailfin through the blimp and it was hauled out to Tustin for repairs. The Marine Corps invited the press to come out and see it, and I got the assignment to go. In a preview of Twitter days to come, I wrote a snarky story about how there was nothing to see, really, except a huge piece of flat polyester. Surprisingly, my editor thought it was great even though I offered to write a straight version of the story if he wanted it. The Marine Corps was not so excited. One of their press folks called the next day, reminding me that they had only offered the tour because the press itself asked for it. That was true enough. Live by the snark, die by the snark.
BONUS PHOTO: Here's the interior of the blimp hangar from the 2009 movie Star Trek, where it served as the set for the shuttle bay sequence. Orange County film commissioner Janice Arrington describes the shoot: "The entire Starfleet was built in the north blimp hangar in 2008," she said—not quite accurately, but close enough for government work I suppose. "It was overwhelming to see endless rows of space vehicles lined up and stretching to the ends of the 300,000-square-foot hangar."
The 69-year-old passenger who was dragged off a United Airlines flight bloodied and disheveled on April 9 has agreed to a settlement with the airline, according to his attorneys. Dr David Dao, whose experience became part of a viral video after passengers filmed him being dragged away by police officers, has reached "an amicable settlement," attorneys Thomas Demetrio of Corboy & Demetrio and Stephen Golan of Golan Christie Taglia said in a statement. The terms of the settlement are to remain confidential, they said. "[United CEO Oscar] Munoz said he was going to do the right thing, and he has," said Demetrio. Earlier Thursday, United announced "10 substantial changes to how it flies, serves and respects its customers," saying the shifts come after scrutiny of its policies in the wake of the incident. These include offering up to $10,000 to passengers who volunteer to give up their seats when a plane is too full. Shares of United parent United Continental Holdings Inc. were down 1.1% late Thursday and are down 3% in 2017, while the S&P 500 has gained 6%.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
Yeah, I know. He calls himself a Republican.
But we all know, he has to go!
Molina Healthcare Inc. said in a letter to Congressional leaders Thursday that if cost-sharing payments that are part of the Affordable Care Act aren't funded it has "no choice" but to pull out of the health law's marketplaces immediately. "That would result in about 650,000 to 700,000 people losing insurance coverage in 2017, and we would not participate in Marketplace in 2018, resulting in over 1 million Americans losing health insurance coverage," the letter -- first reported by news outlet Axios -- said. The subsidies allow health insurers to provide health plans with lower cost-sharing to low-income individuals, and have become a point of contention in a government spending measure that would avert a shutdown. Molina, which described itself as one of the largest participants in the ACA's marketplaces, is one of the few health insurers to make money on the exchanges. In the Thursday letter, the company directly refuted a claim made by President Donald Trump that the payments amounted to "bailing out insurance companies." The payments reduce co-pays and deductibles for eligible low-income members and are used directly to pay the provider, Molina Chief Executive Officer J. Mario Molina said. "Thus, this is not a bail-out or windfall to the insurance company," he said. Molina shares have declined 15.3% over the last three months, compared with a 4.1% rise in the S&P 500 .
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
The Wall Street Journal has an intriguing story today on its front page:
When stocks rose after last year’s presidential election, DryShips Inc. left the market far behind. The little-known Greek dry bulk carrier’s epic one-week rally pushed its shares up by 1,500% for no apparent reason. The rally quickly unwound after the shares were briefly suspended by Nasdaq, but the run-up appears to have made possible a flurry of financial maneuvers that may earn the company’s founder a huge windfall, according to calculations by The Wall Street Journal, while small investors suffered hundreds of millions of dollars in losses. Since they peaked, DryShips’s shares are down by 99.9%.
The Journal provides a handy timeline of events surrounding DryShips. I've added the line in red:
Somebody was sure excited about the prospects for bulk shipping in the Trump era. This is especially mysterious since DryShips announced that it was defaulting on its loans ("suspending principal and interest payments") right before the huge price runup.
Oddly enough, when I went looking for the performance of other dry bulk carriers at around the same time—fully expecting to find that DryShips was indeed unique—I found another carrier with a very similar profile. Right after the election, stock in Globus Maritime skyrocketed 900 percent for a day or two:
Very strange. I guess the dry bulk market is not a place for amateurs.
Despite the rough start to the year, Bank of America had maintained its tactically bullish stance on US small cap equities on the idea that small caps are the best-positioned to benefit from increasing optimism around stimulus and tax reform. And it has been right: as we showed earlier, Russell hit a fresh all time high...
... facilitated by the recent influx of bears who brought net specs positioning to the shortest on record, and have been once again squeezed.
Yet even BofA's optimism ended overnight when the bank officially capitulated on its bullish call.
In a note released overnight by BofA's Dan Suzuki tited "Back to bearish on small caps", the bank's equity strategist writes that with the failure to repeal Obamacare and the intensifying opposition to some of the key revenue raising policies of the Blueprint tax reform proposal (i.e. border adjustment taxes), there have been growing doubts on the probability of getting tax reform done this year.
As a result, while the bank still shares many of those same doubts, "we recently highlighted Policy as one of the three catalysts (along with Profits and Positioning) that could drive near-term small cap outperformance. On the back of the news around tax reform, the Russell 2000 closed at an all-time high yesterday, and small caps have returned nearly 19% (vs. 13% for large) since the election with 5% coming in just the last nine trading sessions (double the S&P 500)."
So what changed? In short BofA "thinks the small cap run is finally over." Below are the key highlights on why BofA capitulates:
In our view, this last bout of optimism is likely to signal the end of the Trump Put, as friction arises over the funding the bill. Our economists recently made the case for why tax reform was likely to be smaller and later than the politicians have been communicating to the public. We now prefer large caps over both small caps and mid caps, and we see four key reasons to be cautious on small caps:
- Valuations: US equity market remains broadly expensive vs. history, with every size segment trading at double-digit premiums to their historical median valuations since 1985 on all five of our metrics. On forward P/E, small caps and mid-caps currently trade at the 98th percentile of their historical valuation range (since 1979) vs. the 87th percentile for large caps. Given that small caps now trade at Tech Bubble-like valuations, in our view it does not bode well for future long-term returns.
- Growth and confidence: The risk today is that, just as the Trump Put begins to fade, data could grow choppier. With positive economic surprises coming off of five-year highs, the math alone makes it difficult for data to accelerate from here. Already, second derivatives for various indicators are rolling over and measures of real activity are lackluster. Although small caps have less exposure to China than large caps, our EM strategy team’s recent view that peaking Chinese nominal growth will have negative implications for risk assets could weigh on small caps if investors begin to question the global growth trajectory.
- Credit: Small caps generally have a greater sensitivity to higher credit costs. High yield and investment grade spreads are within 35bp and 15bp of the lows for the cycle despite elevated levels of leverage, an increasingly hawkish Fed and pockets of stress within certain segments of the market.
- Volatility: The VIX has plummeted below 11, just as we see the big drivers of the rally beginning to lose steam. Indeed, our derivatives strategy team recently noted that several asset classes were pricing a “world almost free of risk.” There is a tendency for small caps to underperform when volatility picks up, and vice versa.
Judging by today's market and/or reaction to BofA's capitulation, the Trump put is still alive and very much well; either that or BofA's note has still not been translated into binary for the benefit of the "traders."
House aides participating in a conference call with reporters on Thursday said that Platte River “flatly refused” to honor two subpoenas for documents
Supporters of the movement "For The Common Macedonia" stormed the Macedonian parliament and attacked the deputies of the parliamentary majority, following a vote for a new speaker. In addition, journalists were detained in the press center of the Parliament.
Demonstrators forced their way into the building after the Social Democrats and the parties representing ethnic Albanians elected a parliament speaker in a vote that Gruevski’s party didn’t recognize, MIA said.
As Bloomberg reports, the former Yugoslav state of 2 million people has struggled to find a way out of political deadlock after former Prime Minister Nikola Gruevski failed to for a coalition government following an inconclusive snap vote five months ago. Gruevski’s ally, President Gjorge Ivanov, has refused to give a mandate to the opposition Social Democrats, which say they can form a majority-backed government with parties representing ethnic Albanians.
Award-winning journalist Barrett Brown was re-arrested and taken into custody Thursday, the day before he was scheduled to be interviewed for a PBS documentary. Brown quickly became a symbol of the attack on press freedom after he was arrested in 2012 for reporting he did on the hacked emails of intelligence-contracting firms. Brown wrote about hacked emails that showed the firm Stratfor spying on activists on behalf of corporations. Brown also helped uncover a proposal by intelligence contractors to hack and smear WikiLeaks defenders and progressive activists.
HUNGARIAN prime minister Viktor Orban this afternoon gave eurocrats and MEPs an extraordinary verbal battering as he let rip over the bloc’s “absurd” meddling in his country’s internal affairs.
The firebrand leader tore into Brussels during a jaw-dropping speech to the EU parliament in Brussels, in which he accused euro representatives of being “prejudiced” against his country.
Ever wanted to ride a flying drone? Well, if you’ve got the money, you might get the chance to by the end of the year.
ABC News reported Monday that a Google-backed Silicon Valley startup has just completed testing on an “octocopter” that’s all-electric, can seat one person, and fly up to 15 feet in the air.
The company, Kitty Hawk, says all the necessary legal steps have been taken, and the Kitty Hawk Flyer — designed only for use over water — is just about ready for production. The company says it will begin selling the Flyer this year.
“You don’t need a pilot’s license, and you’ll learn to fly in minutes,” the company said in a statement, adding that the machine is “safe, tested and legal to operate in the United States in uncongested areas.”
On its website, Kitty Hawk says life for human beings will fundamentally change when people have the ability to freely travel at will:
“We believe when everyone has access to personal flight, a new, limitless world of opportunity will open up to them.”
Last year, Peter Diamandis, founding board member of Hyperloop One — a company leading the way into the future on the subject of mass transportation — described for Business Insider what a world with millions of flying cars and self-driving cabs might look like.
“Imagine if there’s a dozen ports or buildings,” he said. “You’ll fly from New Jersey to a rooftop on 5th (Avenue) and there will be an autonomous car waiting to take you to your final destination. It’s new routing capability for humans.”
Kitty Hawk isn’t alone in its endeavors. Another company, Zee.Aero — also backed by Google — is working on an electric plane that can take off and land vertically. Another in Dubai, Ehang, says it hopes to have a passenger-carrying drone ready for service by summer.
Though the Flyer isn’t exactly a flying DeLorean, the future of human travel appears to be arriving.
Three people were killed in California in yet another mass shooting.
The mayor of Amatrice, a small town in central Italy which was practically destroyed by last year’s earthquake, has called on tourists to stop flocking to the rubble.
A massive anti-deportation infrastructure has emerged to try to protect illegal immigrants from President Trump’s crackdown, with advocacy groups coaching potential deportees on how to massage encounters with police, and lawyers and judges working to shield them from charges that would make them priorities for deportation.
A video released Monday by a coalition of advocates instructs illegal immigrants not to open the door to federal agents, what proof to demand if they are being arrested and what to say if accosted outside their homes.
Meanwhile, attorneys are working to lower charges from some illegal immigrant criminals, hoping to blunt their crimes so they don’t show up as high-priority deportation targets.
If the Prime Minister is made to testify, all bets are off.
timing of the president’s trip — Jerusalem Day — is no coincidence
After two days of back to back triple digit gains in the Dow for the first time since the election, overnight the torrid rally has faded, with European shares and U.S. stock futures little changed ahead of Trump’s big unveil of his much anticipated tax cut plan as investors seek new impetus for a flagging relief rally. And, if as some traders expect, the rally is likely to be reignited no matter what Trump announces today (although a less hyperbolic plan may in fact be more favorable for risk, as it makes Trump’s plan more likely instead of being shot down by Congress).
Earlier today, Vladimir Putin warned that "the situation in Korea is deteriorating" and joined China in urging all sides to "avoid belligerent rhetoric." It was not clear what spooked the Russian president to escalate the rhetoric over North Korea, however in a move that will hardly help deescalate tensions, a North Korean propaganda outlet released a video clip on Thursday, which showed a simulated attack on the White House and declaring that “the enemy to be destroyed is in our sights.”
The video was released just days after North Korea conducted large-scale artillery drills, showing off conventional weaponry that can easily reach South Korea’s capital, Seoul. It also comes one day after the entire Senate was gathered at the White House to receive a briefing from Trump's top generals on the situation in North Korea. At the same time, the US sub, USS Michigan, which carries Tomahawk cruise missiles, docked in the South Korean port of Busan this week. The USS Carl Vinson aircraft carrier, along with the destroyers and cruiser that make up its strike group, will arrive in the Korean Peninsula area this weekend.
The clip was released by a North Korean website (Meari, or Echo) showing photos of the White House and aircraft carriers with a target on them, as if they are in the crosshair, the WaPo reported earlier. It then showed simulated footage of an aircraft carrier exploding into flames, with the caption: “When the enemy takes the first step toward provocation and invasion.”
The 2½ -minute video included scenes from the huge military parade that North Korea organized April 15 to mark the anniversary of the birth of the state’s founder, Kim Il Sung. It also showed footage of North Korean artillery and missile launches.
Against the backdrop of missile launches, the caption read: “We will show you what a strong country that leads the world in nuclear and missile technology is capable of.”
A similar video, showing missiles arcing over the Pacific and leaving a U.S. city in flames, followed by images of a burning American flag and a cemetery filled with white crosses, was shown during a concert held April 16 and attended by Kim.
While North Korea is best known for its bombastic rhetoric and exaggerated propaganda, in recent weeks it has ramped up its output as tensions have risen. On the other hand, the country has abstained from engaging in more missiles tests (either successful or otherwise) or nuclear bomb tests, prompting some to speculate whether the recent intervention by China may have impacted Kim's behavior.
On the other hand, if indeed the US has managed to sabotage North Korea's missile technology as the NYT alleged several months ago, and has launch control, what Kim wants may no longer be relevant and the only variable is having all key US military assets in place before a simulated war with North Korea becomes all too real.
Evidence of ministerial decision-making that led to a Royal Air Force (RAF) drone strike targeting a British citizen fighting with jihadists in Syria has been hidden from an inquiry into the attack, possibly skewing its findings.
The FCC has announced that they will vote on overturning net neutrality rules that require internet providers to treat all web traffic equally. If passed, ISPs would be allowed to give or sell access to “fast lanes” and block traffic to others.
Journalist Barrett Brown quickly became a symbol of the attack on press freedom. Now he has been re-arrested.