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Pete Buttigieg’s question to woman who shook RFK’s hand takes awkward turn



Presidential candidate and South Bend, Ind., Mayor Pete Buttigieg had an awkward campaign trail encounter Tuesday with a woman in Iowa who told him she once met the late-Robert F. Kennedy.

The Democrat was campaigning at the Iowa State Fair when a woman approached him and said she met Kennedy in 1968, according to a tweet from a CNN producer.

“I shook Robert Kennedy’s hand in 1968,” the woman told him.


Buttigieg responded: “So you’re good luck?”

“Not really— he was shot a month later,” the woman said.

Kennedy, the former senator and attorney general beloved by liberals, was assassinated in California in 1968 while seeking the Democratic nomination for president. His brother, President John F. Kennedy, was assassinated in 1963.

Buttigieg is among the Democratics who have been campaigning over the last few days at the Iowa State Fair.


“I’m running for president because it’s time to have somebody in the Oval Office who will stick up for American values,” Buttigieg said during a speech at the fair Tuesday.

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Negative-yielding debt poses major risks for investors




Government bonds aren’t the only instruments producing negative yields these days, with corporate debt recently passing the $1 trillion mark in a continuing sign of global financial displacement.

Investors these days are facing huge amounts of fixed income instruments that carry no yield. Various estimates of sovereign debt in that category put the total in excess of $15 trillion, a number that has been escalating over the past several years while central banks drive interest rates to zero and below.

Negative-yielding corporate debt, though, is a relatively new thing, rising from just $20 billion in January to pass the $1 trillion mark recently, according to Jim Bianco, founder of Bianco Research.

The trend poses a potentially dangerous threat especially if market winds shift and bond holders looking for price gains rather than yield get stuck holding too much risk.

“The interest rate risk that these bonds carry is huge,” Bianco said in a recent interview. “The financial system doesn’t work with negative rates. If the economy recovers, the losses that investors would take are unlike anything they’ve ever seen.”

Negative yields thus far have been confined to places outside the U.S., though some Federal Reserve officials have toyed with the idea at least in a hypothetical sense. Former Fed Chairman Alan Greenspan recently jolted some investors when he said there was nothing actually standing in the way of negative U.S. rates.

Most of the negative-yielding corporate debt is in Switzerland, while some also is in Japan, Bianco said.

Investors don’t actually pay to borrow money, but the negative yield is symbolic of how much above par investors are willing to pay for these bonds.

That’s because those who buy negative-yielding bonds are essentially making a bet that rates will stay low and prices will rise, which is the traditional relationship when it comes to fixed income. Should rates start to rise even a little, that will start to eat into the capital appreciation that bond holders have been enjoying.

For instance, Bianco said, if yields on Swiss bonds go up just 2 percentage points, it would amount to a 50% loss for holders. While some individual investors might be able to absorb such losses, they would be catastrophic for institutions.

‘A wall of money’

On the sovereign side, Germany is the starkest example of negative rates, with yields all along the curve there trading below zero. That has pushed prices up dramatically. In Thursday trading, buyers were paying the equivalent of $195.87 for every $100 in 20-year German bunds, all for a technical yield of minus-0.386%.

Bianco attributes the negative-yield trend to entities including the European Central Bank pumping money into the financial system and pulling investors along for the ride.

“They’ve so flooded their financial system with money that there’s not enough alternatives,” he said. “That’s why you have people paying such astronomical prices that you wind up with negative yields.”

On the corporate side, the picture isn’t much prettier outside the U.S.

The $27.8 trillion of non-U.S. dollar investment grade global debt is collectively yielding just 0.11%, according to Hans Mikkelsen, credit strategist at Bank of America Merrill Lynch. Of all global IG debt delivering any yield, 95% is from the U.S.

“We continue to think there is a wall of new money being forced into the global corporate bond market,” Mikkelsen said in a recent note to clients. “The trigger is lower interest rate volatility or simply the passage of time, as a lot of foreign investors are being charged (negative yields) for being underinvested.”

Traders work on the floor at the New York Stock Exchange.

Brendan McDermid | Reuters

Mikkelsen said there’s investment opportunity at both the front and back ends of the yield curve. Investors worried more about recession should be taking on U.S. investment grade debt with short duration, while those more confidence in the economy should focus on longer-term instruments. He said he prefers investments “out the curve” as he sees lower recession probability than what is currently being priced in.

U.S. credit quality remains good, despite the influx of corporate bonds into the market.

Nonfinancial business debt was at $6.4 trillion at the end of the first quarter, a 73% increase from mid-2009 when the current expansion began. However, as a portion of equity it’s only 33.7%, from its recession peak of 69% in early 2009.

Covenant protections, or the buffers investors demand in case of default, are at record lows, according to Moody’s Investors Service. However, default rates are projected to remain low — 2.9% for the year ahead, compared to the long-term average of 4.7%.

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Trump and Maduro confirm high-level talks between officials




Venezuela’s President Nicolas Maduro delivers a speech during a pro-government rally against US sanctions in Caracas on August 10, 2019.


The leaders of the U.S. and Venezuela have confirmed high-ranking officials from their respective governments have been engaged in talks “for months.”

It comes less than three days after both Axios and the Associated Press reported that the U.S. had opened secret communications with top members of Venezuela’s socialist administration.

Speaking at the White House during a meeting with his Romanian counterpart on Tuesday, President Donald Trump said: “We are talking to various representatives of Venezuela … I don’t want to say who but we are talking at a very high level.”

Shortly thereafter, Venezuela’s embattled President Nicolas Maduro said during a televised address: “I can confirm that for months that we have had contact.”

Maduro said the aim of discussions was to “normalize and resolve this conflict” between the two countries. However, like Trump, Maduro did not wish to disclose which officials had been engaged in the talks, citing: “various contacts through various channels.”

“Just as I have sought dialogue in Venezuela, I have sought a way for President Donald Trump to really listen to Venezuela,” he added.

The South American nation is currently in the midst of one of the worst humanitarian crises in recent memory, with more than 4 million people having fled since 2015 amid an economic meltdown.

‘An effort to gain time’

In late January, Maduro broke diplomatic relations with the U.S. after the White House recognized opposition leader Juan Guaido as the country’s rightful interim president.

Officials from the U.S. and Venezuela had not previously confirmed contact before Tuesday.

Washington has imposed sanctions on a number of high-level officials and Venezuelan state entities to ramp up the pressure on Maduro — and ultimately try to oust him as leader of the OPEC country.

More recently, Maduro and a delegation representing Guaido have been meeting in Barbados to try to resolve a political stalemate.

Maduro is using “the same tactic that he has used with the opposition, opening backchannels in an effort to gain time,” Diego Moya-Ocampos, principal political analyst for Latin America at IHS Markit, told CNBC via telephone on Wednesday.

He is trying to show that his administration is “engaging with different international actors in an effort to exhaust them,” so that the Venezuelan topic loses momentum and regime change is no longer on the agenda, Moya-Ocampos said.

What is going on in Venezuela?

A protracted political stand-off has thrust the oil-rich, but cash-poor, country into uncharted territory — whereby it now has an internationally-recognized government, with no control over state functions, running parallel to Maduro’s regime.

Guaido assumed a rival interim presidency in January, citing Venezuela’s constitution, and denounced Maduro’s government as illegitimate after he secured re-election last year in a vote widely criticized as rigged.

However, Maduro has refused to cede power. And, crucially, he still has the broad support of the military.

The minimum wage for the average citizen in Venezuela, which is estimated to be roughly $7 a month, would not be enough to cover even 5% of the basic food basket for a family of five people, the UN said in a report last month.

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Louisiana Says ‘Oui’ to French, Amid Explosion in Dual-Language Schools




MAMOU, La. — On the first morning of school on the Cajun prairie last week, Alice Renard marched her third graders outdoors and under the sheltering arms of a live oak, speaking to them in a language that used to be beaten out of Louisiana schoolchildren.

Ms. Renard’s Parisian French seemed at once at home and out of place in Cajun country, like the voice of Édith Piaf emanating from a zydeco club. She told her students they had come outside “pour apprendre à travailler ensemble” — to learn to work together — by learning a few new playground games: L’oiseau silencieux, the silent bird. Douaniers et contrebandiers, customs agents and smugglers. Pingouins sur la banquise. Penguins on ice.

Ms. Renard, 27, was one of roughly 65 French-speaking teachers imported by Louisiana this year to help bolster its growing roster of dual-language French immersion schools, part of an international recruitment program that dates to 1972. Most of her students bore Cajun or Creole surnames — Desormeaux, Guillory, Martel, Thibodeaux — and the summer break had rendered their language skills rusty.

But the fact that they were soon running and chasing and tagging each other according to Ms. Renard’s French-only instructions was a small but important victory for those who fear that French, so emblematic of South Louisiana culture, may be inexorably dying out.

This fall, more American students than ever will start their first day of school learning in a language other than English. Robert Slater, a senior fellow at the American Councils for International Education, said there had been a “growth explosion” over the last several years of dual-language immersion programs, including in Spanish, Russian and Mandarin Chinese.

Though exact numbers are difficult to come by, Mr. Slater estimated there were now at least 3,000 such programs in the United States, up from an estimated 2,000 cited in a 2017 study published by the RAND Corporation, and a significant upsurge from about 260 cited by the Department of Education in 2000.

Some of the schools exist not only to broaden horizons, but to shore up languages and cultures. In Hogansburg, N.Y., near the Canadian border, students at Akwesasne Freedom School started their school year last week speaking Mohawk. In Hawaii, a State Supreme Court ruling last week could force more school districts to expand the state’s existing network of Hawaiian-language immersion programs.

Louisiana French is the legacy of early settlers and later arrivals, among them the Cajuns, 18th-century exiles from eastern Canada. But the language was nearly smothered in the 20th century by laws and customs that encouraged assimilation with the Anglophone world.

In the late 1990s and early 2000s, some states banned bilingual education. (More recently, Massachusetts and California lifted those bans.) In Louisiana, a stern knuckle-rapping was for many years the punishment for speaking French in school. Some parents discouraged their children from learning it, seeing English as the best route to economic and social success, decisions that were made in immigrant households across the country.

She admitted she was not prepared to teach the Cajun French dialect, with which she had only a passing familiarity. But she was ready in other ways.

She had spent the last five years in the classrooms of Paris’s outer arrondissements, mostly teaching the children of immigrants. Her English is almost flawless, honed by school, television and the internet.

“I’m fascinated by this culture,” she said of America generally. She called it a jewel. She found it exotic, and found Louisiana to be “the exotic inside the exotic.” She praised the forward-leaning state of feminism in the country and marveled at Americans’ religiosity.

She arrived on campus on the first day of school last week at around 7 a.m. with a couple of bags slung over her shoulders, moving briskly past signs declaring the rules of the hallway (“Marchez en ligne droite,” walk in a straight line), and the whiteboard lunch menu (coleslaw was “salade de chou”). She was more stressed than nervous. In the teachers’ lounge she grumbled at the bulky photocopier.

Her classroom was adorned with an American flag and the lockdown rules for an intruder scare. Parisians have those rules, too, she said, since the terror attacks of 2015.

Her 16 students trickled in, most of them in pristine first-day sneakers. Nekol Henderson, 38, dropped off her son Ethan Harris, 8, one of three African-American students in the class. Ms. Henderson said her family’s multigenerational tradition of French speaking had dwindled by the time she was born.

“I sit down with my elders and they talk,” she said, “and I don’t understand what they’re saying.”

Class began at 7:40 a.m. Ms. Renard asked her students what her surname meant. Yes, she affirmed: fox. She told them about where their notebooks would go, which ones to leave and which ones to take home. She gave them a photocopy of famous Parisian sights to color.

There is something universal in the way a seasoned elementary school teacher commands a classroom: loving but stern, largely dictatorial but open to democracy within reason and rules. A boy named Abram wiggled in his chair. Ms. Renard chided him without breaking her flow, and as if she had taught him for years. “Abram est-ce que tu peux t’asseoir correctement?

Kim Manuel, the assistant principal, stepped in for a moment. Like Ms. Henderson, she never learned the language from her French-speaking family, though she learned to understand French while working at her family’s combination service station and dress shop. “Bonjour,” she said to the children, adding, almost apologetically, “Now, Ms. Manuel, that’s as far as she goes.”

Darwan Lazard, the superintendent of the Evangeline Parish school system, also made a cameo. He said his African-American grandmother had spoken Creole French. He made a glancing reference to studies that suggest dual-language immersion students outperform their peers academically. “We can still be wonderful, loyal, patriotic Americans without erasing our various cultural backgrounds,” he said.

Soon Ms. Renard and her class were under the oak tree, and then on the swing sets for a brief recess. Her students had been learning in French since the first grade but this year would face their first state standardized tests.

With the emphasis on testing, she worried that she would be asked to follow rigid guidelines and lose sight of what she loved about her job — imparting the tools for thinking freely, tools that would allow her students, she said, “to be intellectuals.”

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