The global risk-off mood accelerated overnight on Trump "stability concerns", coupled with fallout from the Spain terrorist attack and lingering North Korea tensions, even if the VIX is off its latest highs, trading just above 15. Investors fled into German and U.S. Treasury bonds and bought gold for the third day in a row, as the appeal of such top-notch assets grew further due to a deadly attack that killed at least 13 people in Barcelona. "In a week where we started by worrying about nuclear war, markets have quickly moved on from this, with yesterday's weak session more of a response to fears that Mr Trump's strategy for the economy and business is falling apart and later the terrible terrorist attack in Barcelona," is how DB's Jim Reid summarized the week's psychedelic events. Concerns that Trump’s stimulus is in peril spiked following speculation that his top economic advisor, former Goldman COO Gary Cohn, was set to resign roiled markets on Thursday until reports that he’d opted to stay on board steadied the ship, however heightened terror fears added to the risk off sentiment after at least 13 people died when a van plowed into pedestrians in Barcelona. The terror attack was a reminder of lingering geopolitical risks, with nerves still raw after last week’s escalation of tensions on the Korean peninsula. USD/JPY dropped below 109.00 and EUR/JPY 128.00; EUR/USD and GBP/USD both run upside stops as USD weakens across the board. Core fixed income markets rally, curves bull flatten with 10Y bund yield falling below 40bps. Spot gold hits YTD high just below $1300/oz, while a strong close for Dalian iron ore futures once again lifts China industrial metals. ING Bank analysts predicted the dollar would remain pinned near current levels, at the expense of the yen. "Tail risks such as geopolitics, protectionism and the unwind of easy central bank money all provide valid reasons to remain cautious in chasing risk," they told clients. "Dollar/yen continues to capture this nervousness and could move down towards the 109.00 level." European stocks tumbled, with Spanish shares leading losses, as two Spanish terrorist incidents added to investor worries about U.S. policy chaos under the Trump administration. The Stoxx Europe 600 Index dropped 1% percent, reducing the weekly rebound to just 0.3%. In the US, S&P futures were largely flat while Asian dropped with the dollar on rising US political turmoil. Gold, yen and oil gained despite another weekly increase in US shale production. Credit spreads widen, iTraxx Crossover touches widest level seen during North Korea troubles. Travel and hospitality shares led the 1% drop in the Stoxx Europe 600 along with banks, while industries across the board were caught in the downturn. Spain’s IBEX index dropped more than 1 percent. Equities fell from Tokyo to Sydney earlier after the S&P 500 Index on Thursday tumbled 1.5 percent, its second-biggest drop for 2017. The VIX soared higher for the second time in one week, while core bonds across the euro region advanced. In Asia, Japan’s Topix fell 1.1% at the close, down 1.2% over the week, while Australia’s S&P/500 Index ended 0.6% lower. The seemingly impervious to anything, including nuclear war Kospi index ended barely changed 0.1 percent lower. Hong Kong’s Hang Seng Index fell 0.6%. The MSCI Asia Pacific Index lost 0.5 percent, paring gains for the week. “The terror attacks in the U.S. and Spain just add to all the other geopolitical mess,” Simon Quijano-Evans, a strategist at London-based Legal & General Investment Management Ltd., said in a note to clients. “At some stage that is likely to culminate into a more extreme market reaction.” In rates, yields have fallen in recent days following the ECB comments and amid the dash for defensive assets, with 10-year Bunds at a one-week low of 0.41 percent while 10-year Treasuries traded just off one-week lows hit on Thursday; 10Y Gilts fell one basis point to 1.075%. The turmoil also benefited gold, with spot prices for the metal rising 0.4 percent to the highest in more than two months and on track for its second week of gains. Brent crude futures rose 0.35 percent, rising off three-week lows hit on Thursday as the dollar continued to weaken and signs appeared that supply is becoming tighter in the world's biggest energy consumer, the United States. Today's data include August Michigan consumer sentiment. Deere, Estee Lauder, Foot Locker and Ascendis Pharma are among companies reporting earnings. Market Snapshot S&P 500 futures down 0.01% to 2,427.25 STOXX Europe 600 down 0.9% to 373.47 MXAP down 0.5% to 159.06 MXAPJ down 0.6% to 522.83 Nikkei down 1.2% to 19,470.41 Topix down 1.1% to 1,597.36 Hang Seng Index down 1.1% to 27,047.57 Shanghai Composite up 0.01% to 3,268.72 Sensex down 1.1% to 31,438.75 Australia S&P/ASX 200 down 0.6% to 5,747.11 Kospi down 0.1% to 2,358.37 Gold spot up 0.4% to $1,293.58 U.S. Dollar Index down 0.07% to 93.55 German 10Y yield fell 1.9 bps to 0.407% Euro up 0.1% to $1.1738 Brent Futures up 0.3% to $51.17/bbl Italian 10Y yield fell 1.8 bps to 1.737% Spanish 10Y yield rose 10.4 bps to 1.543% Top Overnight News European Union officials accepted the U.K.’s request to delay the start of the next round of Brexit talks to enable British officials to have time off on Britain’s Aug. 28 “summer bank holiday,” according to two people familiar with the plans Yellen speech at Jackson Hole confirmed for Friday, Aug. 25 at 10 a.m. New York time, topic will be financial stability; Draghi speech same day at 3 p.m. New York time Trump: advisory council for infrastructure will not move forward, according to a White House spokesperson China govt. to further limit outbound investments in foreign property, hotels, sports and gambling Barcelona: five suspected terrorists killed by police; Islamic State claims responsibility Five suspected terrorists killed by police following Barcelona attack China home prices rise in 56 cities vs 60 prev as property market cools Energy Capital Is Said to Plan $5.5 Billion Calpine Takeover Ping An Undervalued Even After 50%-Plus Gain, President Says Gap’s Old Navy Chain Keeps Retailer’s Turnaround Hopes Alive Roche, Sanofi May Move on House Democrats MS Drug Price Probe Guangzhou Auto Says No Plans to Buy Fiat Chrysler: Reuters Fed’s Kashkari repeats there’s no rush to raise rates; Kaplan urges patience, would like ’more progress on inflation’ before next hike JPMorgan Hires Chen From Deutsche Bank For Senior China Role James Murdoch to Donate $1m to Anti-Defamation League: Yahoo July U.S. Total Video Game Sales Up 19% to $588m: NPD Gap CEO Says Gap Brand ‘Stable and Steady,’ Not Yet Satisfying Bunge Expands Soy Crush in Brazil, Cites Long-Term Positive View Holidays on Hold as Bond Market Defies Usual August Slowdown Quants Deliver Swift 10% Gain on Iron Ore From New BNP Model Five Suspected Terrorists Killed After Twin Attacks on Spain Elliott Is Said to Signal Backing for $6.3 Billion Stada Buyout Merkel Jeered by Immigration Foes in Biggest Campaign Unrest Yet Applied Materials Machines in Demand as Data Use Explodes ROST Boosts FY EPS View, Midpoint Beats Est.; Shares Rise 8.4% Bulletin Headline Summary from RanSquawk European equities enter the North America crossover amid yesterday's terror incident and further turmoil in Washington JPY has been the main beneficiary in FX markets with macro newsflow otherwise relatively light Looking ahead, highlights include: Canadian CPI, Uni. Of Michigan and Kaplan In Asian trading, all major Asia-Pac indices traded in negative territory as the risk averse tone triggered by terror incidents in Spain and resignation rumours related to Trump's chief economic advisor Cohn, rolled over to the region. ASX 200 (-0.56%) dampened from the open with the largest weighted financials sector leading the declines as all big 4 banks traded with firm losses, while Nikkei 225 (-1.18%) exporters felt the brunt of the safe-haven flows into FY. Hang Seng (-1.08%) and Shanghai Comp. (+0.01%) also mirrored the global risk averse tone, although downside was stemmed in the mainland after the PBoC switched to net weekly injection in its operations vs. last week's drain and as participants mulled over the latest property price data which suggested the effectiveness of curbs to cool the over rampant sector. 10yr JGBs were marginally higher with mild support seen amid the negative backdrop in global equities, while the BoJ were also in the market for JPY 1.05fin of JGBs with maturities of up to 10yrs. Top Asian News Malaysia GDP Growth Beats Forecasts as Economy Expands 5.8% After Alibaba Bonanza, Manager Said to Plan New Asia Hedge Fund Company Founders Find Fighting Back Has a Cost in India Japan Stocks to Watch: JT, Kyoei Steel, NGK Insulators, Tosoh Iron Ore in China Ends Week With Bang as Demand Seen Holding Up Ping An’s Tech Push Undervalued by Investors, Ren Says: Q&A Conflict With Infosys’ Founders Prompts CEO Sikka to Quit U.S. Equities See Further Outflows, Europe Sees Inflows: BofAML Falling House Prices in Shenzhen Don’t Bode Well for Steel Kingsgate Surges as Thailand Lifts Gold Mine’s Suspension Across European markets sentiment has soured with the Eurostoxx falling over 1%, sector wise the losses are broad based with travel stocks among the worst performers following yesterday's terror attacks in Barcelona. Financials also taking a hit this morning after reports that banks are being sued by the FDIC over the Libor-rigging scandal. Flight to quality flow keeping EGBs afloat, the German curve is slightly bull flattening while the 10Y yield is approaching 0.4%. Peripheral debt spreads wider with the Italian 10Y yield edging higher. Top European News Commerzbank Early Retirement Offers Accepted by Almost 40% City of London Only Sign of Brexit Weakness, Kingspan CEO Says Straumann Stopped Share Sale as Investors Wanted Bigger Discount Sistema Requests Break in Hearing After New Documents Submitted Czechs Move to Strip Election Favorite of Immunity Before Vote In currenices, JPY firmer across the board amid the fall seen across equity markets and as such USD/JPY is eying 109.00 to the downside, while support in the short term is situated at 108.70-80. USD softer against its major counterparts, EUR and GBP higher by 0.25% with the later making a move to breach 1.29. However, the backdrop of Brexit continues to weigh on GBP/USD and curb the upside. CAD: Today will see the release of the Canadian CPI figures where expectations are for a slight pick-up in inflation. Although, a miss on this could see USD/CAD make a push through 1.27. In commodities, safe-haven commodities supported with gold prices moving to intra-day highs. Elsewhere, the softer USD also sees crude prices ticking up as Brent crude breaches USD 51. Another day of gains for base metals, Zinc rising near 2%. Looking at the day ahead, in the US, the University of Michigan sentiment index (94 expected) will be released. Further, the Fed’s Kaplan will speak again today. US Event Calendar 10am: U. of Mich. Sentiment, est. 94, prior 93.4; U. of Mich. Current Conditions, est. 112.9, prior 113.4; U. of Mich. Expectations, est. 81.5, prior 80.5 U. of Mich. 1 Yr Inflation, prior 2.6%; U. of Mich. 5-10 Yr Inflation, prior 2.6% DB's Jim Reid concludes the overnight wrap In a week where we started by worrying about nuclear war, markets have quickly moved on from this with yesterday's weak session more of a response to fears that Mr Trump's strategy for the economy and business is falling apart and later the terrible terrorist attack in Barcelona. The S&P 500 (-1.54%) fell sharply for its 2nd worst day of the year with the VIX surging 32.5% to 15.55, the fifth highest close of the year. We've now gone through last week's 'fire and fury' lows. The hits kept coming yesterday with speculation that Trump's key economic advisor Gary Cohn was about to resign sending an early US session shock to markets. He is seen as the glue holding Trump's pro-business agenda together. The fears are that if he goes you take a further step back from tax cuts and deregulation. Notably the VIX moved from just over 12 to nearly 13.74 in 25mins as the news swept through the markets. The story was denied and markets calmed a little but sold off sharply into the close as the shocking news broke from Barcelona that terrorists killed 13 people as a vehicle rammed into pedestrians. This morning in Asia, markets are following the negative leads from the US and are lower. The Nikkei (-1.33%), Hang Seng (-0.71%) and Chinese bourses (c.-0.2%) are all down. Elsewhere, the annual military drills between US and South Korean troops starting Monday seem to be having little impact on the markets, with the Kospi down 0.20%. Now onto the ECB minutes. They noted that “concerns were expressed about the risk of the (Euro) overshooting in the future” and that policy makers discussed making “incremental” changes to their forward guidance. Later on, Draghi told reporters that the incoming data confirmed the strength of the Eurozone economy, but on inflation “we need to be persistent and patient, because we’re not there yet…” and “a very substantial degree of monetary accommodation is still needed for underlying inflation pressure to gradually build up”. Members have retained their pledge to the asset purchase program and Draghi noted later that “the last thing that the council may want is an unwanted tightening of the financing conditions”. Given the focus on the Euro and Draghi, DB’s Mark Wall has just published a report highlighting the spectrum of Draghi’s comments on the exchange rate since becoming the President of the ECB. Draghi will speak at the Jackson Hole meeting but is not now expected to set expectations for the timing of a decision on QE. That said, Mark argues that Draghi’s view on the macro should be no more cautious than he was back at the July ECB council meeting. Across the pond, the Fed has confirmed that Yellen will speak on the topic of financial stability at next week's Jackson Hole symposium. Back to the market’s performance yesterday. US equities have all weakened, with the S&P (-1.54%), the Dow (-1.24%) and the Nasdaq (-1.94% and marking the third largest daily decline in 2017). Within the S&P, all sectors were in the red, with the financials hit harder (BAC -2.27%; WFC -1.69%), in part as nervousness around Cohn hit the sector as he is expected to help deliver tax cuts, an easing in bank regulations and drive bond yields higher. European markets were also down, the Stoxx 600 fell -0.6%, with all sectors excluding utilities in the red. Similarly, financials were also more impacted, with large banks down -1.5% to -2.5%. Across the region, the DAX (-0.49%), FTSE 100 (-0.61%), CAC (-0.58%) and the Italian FTSE MIB (-0.89%) all fell. Bond yields also fell in both US and Europe, with the UST10y down 4bps and core European yields down 2bps. Across the region, the decline in bond yields were fairly uniform at the long end of the curve, with bunds (2Y: +1bp; 10Y: -2bps), Gilts (2Y: -1bp; 10Y: -2bps) and OATs (2Y: +1bp; 10Y: -2bps) all lower i yield even if at the 2y part of the curve, changes were a bit more mixed, but little changed. This morning, UST10y has reversed a little, with yields back up 1.6bps. Turning to currencies, earlier in the day the USD had strengthened against the euro, with EUR/USD down as much as -1%, but the aforementioned developments in the US saw the dollar retreat and allow the Euro to close down -0.4% for the day. Elsewhere, Euro/Sterling and Sterling/USD both dipped 0.2%, while the US dollar index finished +0.1% higher for the day. In commodities, WTI pared back from three consecutive days of losses to be up +0.7% yesterday. Precious metals were little changed (Gold +0.4%; Silver -0.5%), while industrial metals increased on the back of traders speculation of tighter supply (Copper +2.3%, Zinc +4.6%, Aluminium +2.5%), although some of the gains were offset this morning. Away from the markets and the Gary Cohn story, tension continues to grow in US politics and may add to doubts on Trump’s pro-growth reforms. Republican senator Corker has told reporters that “..the president needs to….move away beyond himself…move to a place where daily he’s waking up thinking about what is best for the nation.” Further, another Republican senator Scott said “what we want to see from our president is clarity and moral authority.” Elsewhere, Trump was also busy himself, twitting “publicity seeking (Republican senator) Graham falsely stated that I said….such a disgusting lie.” and that Republican senator Flake is “toxic” and a “non-factor in the senate”. Elsewhere, the German Constitutional Court has raised concerns that ECB’s public sector purchase program (PSPP) might violate the prohibition of monetary financing in EU law. The highest German court has referred the complaint to the European Court of Justice (ECJ) for "preliminary ruling". DB’s Boettcher does not expect an ECJ decision on the motion before Q1 2018. This could push a final verdict by the GCC into late 2018, thus into a period when we expect the ECB to have progressed on winding down QE. Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, data was mixed but broadly in line. The July industrial production was a tad lower at 0.2% mom (vs. 0.3% expected), whilst manufacturing output fell 0.1% mom (vs. 0.2% expected), with the 3.6% mom decline in auto production (the third consecutive monthly decline) being the biggest weight in the month. Elsewhere, the Philadelphia Fed business index was higher than expected at 18.9 (vs. 18) and the July conference board leading index was in line at 0.3%. Employment indicators remain solid, with initial jobless claims at 232k (vs. 240k) and continuing claims at 1.953m (vs. 1.955m). Across the pond, UK’s July retail sales was higher than expectations at 0.5% mom for exauto (vs. 0.1% expected) and 1.5% yoy (vs. 1.2%). Elsewhere, the Eurozone’s July inflation was in line at -0.5% mom, while the final inflation reading was unchanged at 1.2% yoy (core inflation). The French unemployment rate edged down to 9.2% in 2Q, meeting market expectations. Looking at the day ahead, the German PPI’s will be out as this note is published, then the Eurozone’s June current account stats and construction output data are due. In the US, the University of Michigan sentiment index (94 expected) will be released. Further, the Fed’s Kaplan will speak again today.
Submitted by Gary Evans of Global Macro Monitor We’re baaaccck!. We warned in our last post before leaving on holiday, “Look for some large sigma event, which is always the case when we are off the desk.” How about a vol spike caused by worries over a nuclear exchange? Nuclear war! The potential implosion of a presidency? We think yesterday’s presidential presser has a relatively high probability of being a (or the) structured criticality event that we could look back to as the tipping point that leads to a very volatile autumn. Structured criticality is a property of complex systems in which small events may trigger larger events due to subtle interdependencies between elements. This often gives rise to a form of stratified chaos where the general behavior of the system can be modeled on one scale while smaller- and larger-scale behaviors remain unpredictable. For example: Consider a pile of sand. If you drop one grain of sand on top of this pile every second, the pile will continue to grow in the shape of a cone. The general shape, size, and growth of this cone is fairly easy to model as a function of the rate at which new sand grains are added, the size and shape of the grains, and the number of grains in the pile. The pile retains its shape because occasionally a new grain of sand will trigger an avalanche which causes some number of grains to slide down the side of the cone into new positions. These avalanches are chaotic. It is nearly impossible to predict if the next grain of sand will cause an avalanche, where that avalanche will occur on the pile, how many grains of sand will be involved in the event, and so on. – Wikipedia We love applying the conceptual framework of physics and dynamic systems models to economics and the markets, but think the obssession with the math has perverted the analysis and will someday lead to a doozy of a market meltdown when the algos collide and short circuit on a day to be named later. In the hypothetical worlds of rational markets, where much of economic theory is set, perhaps. But real-world history tells a different story, of mathematical models masquerading as science and a public eager to buy them, mistaking elegant equations for empirical accuracy. As an extreme example, take the extraordinary success of Evangeline Adams, a turn-of-the-20th-century astrologer whose clients included the president of Prudential Insurance, two presidents of the New York Stock Exchange, the steel magnate Charles M Schwab, and the banker J P Morgan. To understand why titans of finance would consult Adams about the market, it is essential to recall that astrology used to be a technical discipline, requiring reams of astronomical data and mastery of specialised mathematical formulas. ‘An astrologer’ is, in fact, the Oxford English Dictionary’s second definition of ‘mathematician’. For centuries, mapping stars was the job of mathematicians, a job motivated and funded by the widespread belief that star-maps were good guides to earthly affairs. The best astrology required the best astronomy, and the best astronomy was done by mathematicians – exactly the kind of person whose authority might appeal to bankers and financiers. – Aeon Hat Tip: Jose Cerritelli We have have repeatedly warned our readers of potential political instability and to watch “the American street.” See here and here. Our sense is we are headed for some heated political instability in the United States. How will it affect the markets? Depends on trajectory of events, but unless inflation or interest rates spike providing competition for risk assets, don’t expect a bear market to start tomorrow. We have always lived our financial career by Bagehot’s dictum: “John Bull can stand many things, but he cannot stand 2.0 , [-1.5 or 1.25] percent” – Bagehot We still maintain yield and return chasers will not retreat to their caves, with, the exception of short-term bouts, such as last week, unless policy rates move up another 100-200 basis points and the monetary bases in the G3 shrink by double digit percentage points though quantitative tightening (QT). That is how much liquidity (potential buying firepower) is still in the global system, in our opinion, folks. What we are looking for? We still have high conviction the risk markets will experience a swift, short, and steep sell-off in October – 5 to 10 percent – based on: 1) seasonality; 2) the Fed balance sheet should, or could be shrinking ; 3) China’s Party Congress may have concluded, removing the country’s implicit policy put, and thus increasing the risk of a China policy or economic shock; 4) the new U.S. Federal government fiscal year begins October 1 and if the Trump administration has not passed any significant economic legislation, the markets may begin to throw in the towel; 5) there will be more clarity on ECB tapering; 6) even more elevated asset prices as the risk markets grind higher through the rest of summer as we suspect, setting up for a potential blow-off by the end of September; 7) nervousness over the debt ceiling; and, finally, 8) by then, the markets should be sufficiently overbought, overvalued and very vulnerable to event risk. – GMM Add to that possible key White House resignations. What do you think the markets will do if Gary Cohn resigns? That’s at least worth a 5 percent haircut off the S&P500, in our opinion, and a spike to 20 in the VIX, triggering another round of structured criticality. The exodus of executives sparked talk that Gary Cohn, Trump’s top White House economic adviser and a key liaison to the U.S. business community, might resign in protest as well. Cohn, who is Jewish, was upset by Trump’s remarks, though he is remaining with the administration for now, sources said. – Reuters, August 16, 2017 Cohn may also come to the conclusion that after the August Congressional recess he is wasting his time as he perceives that the Trump administration has lost all credibility on Capitol Hill and none of his policies has any chance of being implemented. If rumors begin to spread in mid-September, market will begin to wobble, bigly. If Chief of Staff, John Kelly, goes? Get shorty, big time. The 1987 Analog Since we know crash talk is surely coming, we’ve put together a two-year trading analog of the S&P500 from end of December 1985/2015 to December 1987 and August 16, 2017. First, over the 20-month trading period, the 1987 S&P500 outperformed the current 2017 S&P500 by over 31 percent as of today’s close. Not much of an analog. Second, the yield on the 2-year increased 287 bps (45 percent) from the beginning of 1987 to the eve of the crash with the 10-year up 252 (33 percent), peaking over 10 percent. The 2-year is up only 13 bps (11 percent) this year with the 10-year down 22 bps (-9 percent). Third, the 1987 S&P500 peaked on August 25th and banged around until October 5th, where it was only down 2.6 percent from the peak. It then fell 13.6 percent from October 5th to Friday, October 16, the trading eve of the crash. On Black Monday, October 19, 1987, the S&P500 closed down 20.47 percent, almost double the 1929 crash. Similarly, the 1929 stock market peaked on September 3, 1929 and fell sharply to close down 32 percent on the eve of Black Tuesday, October 29, 1929. That crash sliced 11.7 percent off Dow Jones Industrial in one day. In both cases, 1929 and 1987 the markets sent a loud signal and warning of an imminent crash as, a matter of fact, the markets were crashing before the big crash. The major difference of the two markets is the Dow didn’t regain the September 3, 1929 peak until November 23, 1954, more than 25 years later. The 1987 S&P500 reclaimed its August 25, 1987 high on July 26, 1989, less than two years. Compliments of easy monetary policy and the circumvention of a great depression. Upshot? It’s probably time to buckle up. We expect volatility to begin to pick up; for the markets to start banging around until October; then experience a Tower of Terror sell-off sometime in October. Though the sell-off may be the day the algos go rogue, there is no doubt, the full firepower of the PPT and the Fed will be put to work. Can they beat this new technology gone wild? Gotta be quick on the draw as it could be over in the blink of an eye. Could be wrong. fter all, isn’t this astrology, folks?
Российский «Темпбанк» отключили от международной системы обмена финансовыми данными SWIFT из-за санкций, веденных против топ-менеджмента...
1)Темпбанк отключили от SWIFT из-за работы с Сирийскими банками и банками Ирана.2)Расистский майдан в США: бурлит уже 50 городов
One American Reflects: "The Idiots In Charlottesville... Don't Represent What Most Of Us Think Or Do"
Authored by Joey Clark via Medium.com, The top story yesterday (and today) - showcased on the Drudge Report, Google News, all the cable news networks, and many social media feeds - is simply an idiotic parade of self-important and domineering busybodies. A petite horde of white nationalists and their brethren are at odds with their over-zealous anti-fascist opposition in Virginia. They are so at odds Virginia’s governor declared a state of emergency due to the violent clashes at the “Unite the Right” rally in Charlottesville. The images coming from the scene are so provocative and full of savagery even President Donald Trump saw fit to send out a tweet calling for unity: “We ALL must be united & condemn all that hate stands for. There is no place for this kind of violence in America. Lets come together as one!” Yet, what most Americans need to do right now isn’t to appeal to some sense of ‘national unity’ against hate or to “come together as one.” Fine sentiments—if you’re into that sort of thing—but excuse me, pardon me for saying I don’t need this President, or any other, to tell me and most of my fellow Americans that “this kind of violence” has no place in America (which makes me wonder, what other kinds of violence do have their place in the USA?) Most Americans, most people, already know this sort of stupidity and violence on the march in Charlottesville is unacceptable and a waste of time. The people assembled in Virginia do not represent what most Americans think or wish to do with their precious little free time on a Saturday. The brouhaha from the political media surrounding this event is at best overblown by good intentions and at worst being purposely stoked for website hits, TV ratings, and political agendas. Rather than heeding the hollow calls for peace and unity from ‘our’ dear political leaders or the foolish pleas from left/right activists on the ground in Virginia, what most Americans need to do right now is keep right on doing what they’re already doing - enjoying what little freedom they still have in so many ways too numerous to list completely. Keep in mind, while a few hundred deluded racists and hysterical ‘anti-fascists’ clash in Virginia, thousands of Americans are attending baseball, football, and soccer events while millions watch from home. Do not forget, while the despairing political boobs clash in Charlottesville, millions of Americans are attending pop concerts, cheerleading competitions, neighborhood BBQ’s, jazz festivals, movie showings, yoga classes, college classes, dog-training seminars, baby-showers, weddings, funerals, and pool parties. Just remember, while political nincompoopery reveals its ugly face in one tiny place on the map, millions of Americans are relaxing at home, reading books and guzzling down champagne mixers, sharing high school memories with old friends and smoking hookah pipes, texting the sexy boy or girl they met last night, or emailing a lost love they haven’t seen 10 years. Americans are shopping. Americans are putting on fundraisers in fun ways. Americans are eating junk food and health food, cheese puffs and brown butter asparagus. Americans are curling their toes in the white sands of the beaches along the Gulf of Mexico or kayaking along little rivers and creeks across this rich and plentiful land. Americans are driving their sports cars or riding their bikes or hiking through the plentiful forests from sea to shining sea. The point is most Americans don’t give a damn about what’s happening in Charlottesville, VA. And they especially aren’t stupid enough to participate in such a festival of buncombe and blood. I’m happy they don’t give a damn. And I can only wonder why people with political motives want everyone to pay attention to these petty tyrants in Virginia who would sap Americans’ freedoms in the name of blood and soil or the next great culminating clash of class and racial conflict. Maybe, just maybe, most Americans would be just fine without political conflict. Maybe, most Americans already realize enjoying their freedom doesn’t require being a sheep swift to follow the latest, edgy shepherd who says there is something terribly wrong with world. Call it apathy or quietism if you like, but if more Americans acted like most Americans who simply enjoy their free time and hard-earned dime, politics would seem very stupid and small indeed - an utter waste of time and energy on something already very stupid and small as it stands. That said, I’ve wasted enough of my own time and energy by simply writing this. Time to go enjoy my liberty while I still have it.
Following the media's brouhaha around President Trump's apparent decision not to specifically call out and condemn the white supremacists and neo-Nazis who gathered in Charlottesville this weekend, The White House has issued a statement confirmingthat the president "does not condone violence, bigotry, and hatred... from any extremist groups." As The Hill reports, Trump took bipartisan heat on Saturday for not directly calling out hate groups in his remarks, and for blaming "many sides" for the violence. "We condemn in the strongest possible terms this egregious display of hatred, bigotry and violence on many sides, on many sides," Trump said at a press conference from his New Jersey golf course. "It's been going on for a long time in our country. Not Donald Trump. Not Barack Obama. This has been going on for a long, long time," he continued, before highlighting his administration's accomplishments. And so, as WaPo reports, in interviews on Sunday morning news shows, national security adviser H.R. McMaster and homeland security adviser Tom Bossert echoed the vague comments that the president made in a statement at his private golf club in New Jersey on Saturday, signaling that Trump does not plan to heed calls from fellow Republicans to bluntly confront and condemn white supremacy. "What the president did is he called out anyone, anyone who is responsible for fomenting this kind of bigotry, hatred, racism and violence," McMaster said on ABC's "This Week" on Sunday morning. "I think the president was very clear on that." On CNN, Bossert repeatedly praised the president for not naming the groups that were involved and instead focusing on an overarching call for Americans to love one another. He said that people "on both sides" showed up in Charlottesville "looking for trouble" and that he won't assign blame for the death of a counterprotester on either group, although he said the president would like to see "swift justice" for the victim. After repeated questioning, Bossert did say that he personally condemns "white supremacists and Nazi groups that espouse this sort of terrorism and exclusion." He did not say whether the president agrees with him on that. "The president not only condemned the violence and stood up at a time and a moment when calm was necessary and didn't dignify the names of these groups of people, but rather addressed the fundamental issue," Bossert said on CNN's "State of the Union." "And so … what you need to focus on is the rest of his statement." But apparently that was not clear enough and so The White House issued a brief statement: "The President said very strongly in his statement yesterday that he condemns all forms of violence, bigotry, and hatred," the White House said in a statement. "Of course that includes white supremacists, KKK Neo-Nazi and all extremist groups," a spokesperson added. "He called for national unity and bringing all Americans together." Trump's eldest daughter, Ivanka Trump, took to Twitter on Sunday morning to write two short messages: "There should be no place in society for racism, white supremacy and neo-nazis," and "We must all come together as Americans — and be one country UNITED. #Charlottesville."
Authored by Pepe Escobar via The Asia Times, Alarm bells ringing as rampant speculation breaks out over Pyongyang’s ‘possible’ miniaturized nuclear warheads. Beware the dogs of war. The same intel “folks” who brought to you babies pulled from incubators by “evil” Iraqis as well as non-existent WMDs are now peddling the notion that North Korea has produced a miniaturized nuclear warhead able to fit its recently tested ICBM. That’s the core of an analysis completed in July by the Defense Intelligence Agency (DIA). Additionally, US intel believes that Pyongyang now has access to up to 60 nuclear weapons. On the ground US intel on North Korea is virtually non-existent – so these assessments amount to guesswork at best. But when we couple the guesswork with an annual 500-page white paper released earlier this week by the Japanese Defense Ministry, alarm bells do start ringing. The white paper stresses Pyongyang’s “significant headway” in the nuclear race and its “possible” (italics mine) ability to develop miniaturized nuclear warheads able to fit on the tips of its missiles. This “possible” ability is drowned in outright speculation. As the report states, “It is conceivable that North Korea’s nuclear weapons program has already considerably advanced and it is possible that North Korea has already achieved the miniaturization of nuclear bombs into warheads and has acquired nuclear warheads.” Western corporate media would hardly refrain from metastasizing pure speculation into a “North Korea has miniaturized nuclear weapons” frenzy consuming the cable news cycle/ newspaper headlines. Talk about hearts and minds comfortably numbed by the fear factor. The Japanese white paper, conveniently, also escalated condemnation of China over Beijing’s actions in both the East and South China seas. So let’s look at the agendas in play. The War Party in the US, with its myriad connections in the industrial-military-media complex, obviously wants/needs war to keep the machinery oiled. Tokyo, for its part, would much appreciate a pre-emptive US military attack – and damn the inevitable, massive South Korean casualties that would result from Pyongyang’s counterpunch. It’s quite enlightening that Tokyo, for all practical purposes, considers China as a “threat” as serious as North Korea; Defense Minister Itsunori Onodera went straight to the point when he said, “North Korea’s missiles represent a deepening threat. That, along with China’s continued threatening behavior in the East China Sea and South China Sea, is a major concern for Japan.” Beijing’s response was swift. Kim Jong-Un, demonized ad infinitum, is not a fool, and is not going to indulge in a ritual seppuku unilaterally attacking South Korea, Japan or US territory. Pyongyang’s nuclear arsenal represents the deterrent against regime change that Saddam Hussein and Gaddafi could not count on. There’s only one way to deal with North Korea, as I’ve argued before; diplomacy. Tell that to Washington and Tokyo. Meanwhile, there’s United Nations Security Council Resolution 2371. It does target North Korea’s major exports – coal, iron, seafood. Coal accounts for 40% of Pyongyang’s exports, and arguably 10% of GDP. Yet this new sanctions package does not touch imports of oil and refined-oil products from China. That’s one of the reasons why Beijing voted in favor. Beijing’s strategy is a very Asian attempt to find a face-saving solution – and that takes time. UNSC resolution 2371 buys time – and may dissuade the Trump administration, for now, from going heavy metal, with horrible consequences. Chinese Foreign Minister Wang Yi cautiously stated the sanctions are a sign of international opposition to North Korea’s missile and nuclear weapons programs. The last thing Beijing needs is a war right on its borders, also bound to negatively interfere with the expansion of the New Silk Roads, a.k.a. Belt and Road Initiative (BRI). Beijing could always work on re-building trust between Pyongyang and Washington. That’s an order taller than the Himalayas. One just needs to look back at the 1994 Agreed Framework, signed during Bill Clinton’s first term. The framework was supposed to freeze – and even dismantle – Pyongyang’s nuclear program and was bound to normalize US-North Korea relations. A US-led consortium would build two light-water nuclear reactors to compensate for Pyongyang’s loss of nuclear power; sanctions would be lifted; both parties would issue “formal assurances” against the use of nuclear weapons. Nothing happened. The framework collapsed in 2002 – when North Korea was enshrined in the “axis of evil” by the Cheney regime. Not to mention that the Korean War is still, technically, on; the 1953 armistice was never replaced by a real peace treaty. So what next? Three reminders. 1) Beware of an engineered false flag, to be blamed on Pyongyang; that would be the perfect pretext for war. 2) The current narrative is eerily similar to the usual suspects blaring since forever that Iran is a heartbeat away from “building a nuclear weapon”. 3) North Korea holds trillions of US dollars in unexplored mineral wealth. Watch the shadowplay by candidates bound to profit from such juicy loot.
Yesterday, the rand soared on the unexpected announcement by the national assembly speaker (and purported Zuma replacement) Baleka Mbete that a no-confidence vote for president Jacob Zuma would take place in secret. The vote is set to take place shortly. For those willing to take a sizable gamble, here is what to expect. Superficially, a secret vote increases the odds of Zuma’s ouster - a market friendly event and one which would send the rand surging even more - because members of the ruling party can vote him out without risking party alliances; motion requires the backing of a majority of the 400 lawmakers to pass. However, some have speculated that while Mbete, Zuma's likely successor, has every incentive to allow a secret ballot to happen, it is rarely a good idea to be the one seen to be doing the ousting. And, as Citi notes, "she stands more to gain from being loyal to Zuma if she wants to keep her party onside." Thus, the cynical view would perhaps be that the ANC has been whipping votes and believe they have the necessary numbers for Zuma to survive – he would be absolved and allowed to continue as leader, and Mbete, by allowing the secret ballot, would look like a paragon of truth and justice, putting country above party. “We are not convinced that the opposition, the ANC and the market are adequately prepared for a successful vote, which would require 201 of the 400 MPs to vote in favor of the motion irrespective of how many abstain from voting,” Rand Merchant Bank says in note to clients Nonetheless, Bloomberg reports that opposition parties reported to have identified more than 50 ANC MPs who have indicated their willingness to vote in favor of the motion; if correct “market reaction will be a swift rally.” At the same time, RMB expects both the rand and bonds to give back all of yesterday’s gains and end a little weaker if vote fails. “If the vote succeeds, the immediate reaction will be a further rally in markets, followed by weakness due to potential instability and politically-driven conflict.” Here is ING's Chris Turner with the comprehensive vote preview: A no-confidence vote in the Presidency of Jacob Zuma is scheduled at around 1430GMT today – to be precise a debate on the vote should start around 13GMT and is tabled to last 85 minutes. The ZAR rallied yesterday on the news that today’s ballot would be secret, making it slightly more likely that 50 of Zuma’s ANC MPs could defy their boss, join the 151 opposition MPs and secure the 201 votes required to win the vote. We see the Rand’s reaction to the vote as binary – USD/ZAR potentially testing 12.85/90 on a rejection of South Africa’s president since 2009 or alternatively rallying to 13.55/60 should the noconfidence vote fail. The balance of risks probably favours an insufficient number of ANC MPs defecting, the vote failing and the ZAR weakening. Finally, here are the mechanics of the vote: Starts at around 14:00 local time (13:00 BST/ 08:00 EDT) Full South African Assembly: 400 members (of which the ANC bloc makes up 249 MPs) Votes needed: 50% (or 201 votes) are needed in favour of the no confidence motion. Opposition holds just 151 seats, so assuming all opposition vote for the no confidence motion, then a further 50 of the 249 ANC MPs need to vote for it. That is one in five ANC MPs. Watch the vote live below:
The United States is preparing for all options to counter the growing threat from North Korea, including launching a “preventive war,” national security adviser H.R. McMaster said in an interview that aired Saturday on MSNBC. The comments come after North Korea carried out two tests of intercontinental ballistic missiles in the past month and after the president said he has been clear he will not tolerate North Korea's threats to attack the U.S. with nuclear weapons. The key excerpts (full transcript): H.H.: Let me switch if I can to North Korea, which is really pressing. And– and remind our audience, at the Aspen Institute ten days ago, Chairman of the Joint Chiefs, Joe Dunford, said, “There’s always a military– option. It would be horrific.” Lindsey Graham on Today Show earlier this week said– “We need to destroy the regime and their deterrent.” Secretary of State Rex Tillerson said on Tuesday, I believe, to North Korea, “You are leaving us no choice but to protect ourselves.” And then the Chairman of the Chief of Staff of the Army said, “Just because every choice is a bad choice doesn’t mean you don’t have to choose.” Are we looking at a preemptive strike? Are you trying to prepare us, you being collectively, the administration and people like Lindsey Graham and Tom Cotton for a first strike North Korea? H.R.M. Well, we really, what you’re asking is– is are we preparing plans for a preventive war, right? A war that would prevent North Korea from threatening the United States with a nuclear weapon. And the president’s been very clear about it. He said, “He’s not gonna tolerate North Korea being able to threaten the United States” if they have nuclear weapons that can threaten the United States; It’s intolerable from the president’s perspective. So of course, we have to provide all options to do that. And that includes a military option. Now, would we like to resolve it short of what would be a very costly war, in terms of– in terms of the suffering of mainly the South Korean people? The– the ability of– of that North– North Korean regime to hold the South hostage to conventional fire’s capabilities, artillery and so forth, Seoul being so close. We’re cognizant of all of that. And so what we have to do is– is everything we can to– to pressure this regime, to pressure Kim Jong-un and those around him such that they conclude, it is in their interest to denuclearize. And there are really I think three critical things, came out of the president’s very successful summit with– President Xi of China that were different– that were different from past efforts to work with China, which has always been, you know, the– the desire, right, to work with China– on the– on the North Korean problem. How many casualties will there be: HH: In 1994, when the first North Korean deal with signed, the people who executed it, Gallucci, Dan Poneman, Joe Wit wrote a book. And they quoted a general saying, “If there is a conflict,” called Going Critical, “there will be a million casualties.” A million casualties. Is that still a good estimate of what happens if– preemptive strike unfolds in North Korea, General? HRM: You know, one thing about war. It’s impossible oftentimes to predict. It’s always impossible to predict the future course of events. Because war is a continuous interaction of opposites, a continuous interaction between your forces and those of the enemy. It involves not just the capability to use force, but also intentions and things that are just unknowable at the outset. And so I think it’s important to– to look at– range of estimates of what could happen, because it’s clear that at war, it’s unpredictable. And so you always have to ask the question, “What happens next? What are the risks? How do you mitigate those risks?” And– and obviously, you know, war is– is– is the most serious decision any leader has to make. And so what can we do to make sure we exhaust our possibilities and exhaust our other opportunities to accomplish this very clear objective of denuclearization of the peninsula short of war? Should Americans be concerned: HH: How concerned should the American people be that we are actually on the brink of a war with North Korea? HRM: Well, I think it’s impossible to overstate the danger associated with this. Right, the, so I think it’s impossible to overstate the danger associated with a rogue, brutal regime, I mean, who murdered his own brother with nerve agent in an airport. "I mean, think about what he’s done in terms of his own brutal repression of not only members of his regime but his own family," McMaster added. On Tuesday, Sen. Lindsey Graham said that the president told him there would be a war with North Korea if the regime continues to try to hit America with an ICBM. Appearing on the Today Show, the South Carolina Republican Senator said that President Trump has indicated to him that the administration is prepared to strike North Korea to prevent an attack against the U.S. Pushed on by Matt Lauer on whether a viable military option exists in the region, Graham responded: "They're wrong. There is a military option to destroy North Korea's program and North Korea itself." The Hwasong-14 ICBM seen during its test in this undated photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang, July 5 2017. As reported last Friday, North Korea claimed that its latest missiles can now strike anywhere in the United States, delivering nuclear warheads. Experts have said that the country’s missile program has greatly accelerated in recent months putting it far ahead of previous predictions about when it could launch reliable long-range missiles. Speaking to Newsweek in recent days, several experts said that an attack would be the deadliest the U.S. has ever received and potentially kill more than 100,000 people if it struck in large population centers like New York City or Los Angeles. “I’m not going to confirm [whether the latest ICBM could reach anywhere in the U.S.] but whether it could reach San Francisco or Pittsburgh or Washington, I mean how much does that matter? It’s a grave threat,” McMaster said. He added: “It’s impossible to overstate the danger associated with a rogue, brutal regime." McMaster cautioned that he was aware of the fact that any strike against North Korea could bring about a “very costly war” that would cause immense “suffering of mainly the South Korean people.” Last month, CIA Director Mike Pompeo floated another option for dealing with the North Korea threat, saying that he was “hopeful we will find a way to separate that regime from this system.” North Korea responded by threatening swift and brutal consequences for any attempt to topple Kim. “Should the U.S. dare to show even the slightest sign of an attempt to remove our supreme leadership, we will strike a merciless blow at the heart of the U.S. with our powerful nuclear hammer, honed and hardened over time,” a foreign ministry spokesman said. Still, McMaster did not rule out such an attempt when asked whether it could be a legitimate tool. “I think it depends on the legal justifications for that. And this goes back to just war theory. And what is the nature of the risk? And does that risk justify acting in defense of your people and your vital interests?” Last week, the local press reported that South Korea's military is preparing a "surgical strike" scenario that could wipe out NOrth Korean command and missile and nuclear facilities following an order by S.Korea's president Moon Jae-In.
Gamblers Laundered $50M In Stolen Bangladesh Reserves For "Elite North Korean Hackers" By Playing Baccarat
More than a year after a mysterious group of hackers infiltrated the SWIFT system for interbank payments and stole $100 million from the Central Bank of Bangladesh’s custody account at the New York Fed, Filipino authorities have been unable to recover $81 million that seemingly disappeared into the Manila air. After being transferred to four accounts set up with fake credentials at the Jupiter Street Makati City, branch of Rizal Commercial Banking Corp (RCBC) in the Philippines, the money eventually found its way to an FX broker called Philrem, which split $50 million between two casinos and the remaining $31 million was delivered to a “Weikang Xu” in cash. Not much is known about what happened to the $31 million after it was moved to Manila. But after receiving unreleased documents from the Philippines Senate investigation, Bloomberg has published the most comprehensive account to date explaining how two casino junket operators helped launder $50 million in the VIP rooms of Manila’s casinos by betting on games of Baccarat. According to Bloomberg’s anonymous sources, North Korea and its “elite” hacking squad “the Lazarus Group” are believed to be behind what was the largest cyberheist in history. The two men were Chinese nationals Ding Shizue and Gao Shuhua, who ran a business bringing high-roller clients to casino VIP rooms in Manila and Macau. Once the money was transferred into accounts at the two casinos, the two men led a group of “gamblers” whose only job was to make bets, declare their winnings, and take the newly laundered money away in a briefcase. According to the Filipino Senate report cited by Bloomberg, the men were allowed to play on for weeks even after Bangladeshi authorities had asked their counterparts in Manila for help. All the money was withdrawn before authorities could make a single arrest. “Just a few days after the theft, Bangladesh Bank officials asked their Philippine counterparts for help. Yet the gamblers were allowed to play on for weeks, according to reports by the casino’s parent company, Bloomberry Resorts Corp., and the Philippine Senate Committee on Accountability of Public Officers and Investigations. Even after the remaining funds were frozen, no charges were filed against Ding, Gao, or the players with them, so Philippine police didn’t make any arrests, says Sergio Osmeña III, a former senator who last year was a member of the inquiry panel. “They waited until it was too late,” he says.” What happened next is a mystery. The Senate investigators were unable to trace the cash; and Ding and Gao reportedly left the Philippines without a trace, though Gao was later arrested by Chinese authorities. “What Ding and Gao did with the loot remains unknown. That’s the point, of course: You want to conceal the money’s criminal origins and then stir it into the rivers of legitimate cash that course around the world every day: $60-odd million here, a few million there. It adds up. PricewaterhouseCoopers LLP says money laundering may total $2 trillion a year worldwide—an amount roughly equivalent to the market for online shopping. Like the money, Ding and Gao left the Philippines without a trace. (Osmeña says customs authorities have no record of the duo’s departure.) Gone too, it seemed, was any chance that Bangladesh, the Philippines, or the U.S. would find the funds.” Authorities believe the money is probably sitting in the North Korean central bank. Because the North conducts 90% of its trade with China, it frequently suffers from shortages of hard currency. US intelligence agencies believe it occasionally dabbles in cybercrime to help pad its reserves. “Some or all of it may have found its way to North Korea. The FBI is examining the totalitarian state’s link to the hack, according to two officials with direct knowledge of the investigation.” One plausible scenario is that Ding and Gao somehow traveled undetected to Macau and deposited the cash in accounts secretly controlled by the North Korean government. “Ding and Gao’s familiarity with Macau would have been useful to North Korean hackers, says Steve Vickers, a former head of the Hong Kong Police Force’s Criminal Intelligence Bureau who now runs an eponymous risk consulting company. That, he says, is because Macau was traditionally one of the few locations where the Pyongyang government has managed to maintain covert bank accounts and interact with the global financial system. (Priscilla Fong, a spokeswoman for Macau’s Financial Intelligence Office, declined to comment on this case or to respond to questions about the region’s links to North Korea.)” The documents reviewed by Bloomberg revealed that the perpetrators began planning for the cyberheist months in advance. “Months before Ding, Gao, and their baccarat players showed up in Manila, several bank accounts that would later receive the Bangladeshi funds appeared on the books at the Jupiter Street branch of Rizal Commercial Banking Corp. in MetroManila, according to testimony at the Senate hearings. At the hearings, Kim Wong, president of Eastern Hawaii Leisure, which operates a number of VIP rooms in Manila-area casinos, including the Solaire, testified that he’d set up the RCBC accounts along with Ding’s business partner, Gao, and the Jupiter branch manager at the time, Maia Deguito.” "According to the Senate committee report, Ding, Gao, and Deguito ginned up the accounts using fake names, fake addresses, and fake declarations that Deguito had met the account holders in person and confirmed their identities. Assuming the Senate report got the facts right - there was contradictory testimony - the stage was set for laundering what the hackers hoped would be almost $1 billion. “If you have a bank employee who is in connivance with creating these nonexistent people in the first place, it’s easy to launder,” says Vencent Salido, head of investigations at the Philippine government’s Anti-Money Laundering Council, which is leading the local investigation into the theft.” Maia Deguito, the branch manager responsible for opening the accounts, says she was instructed to do so by her superiors. Her superiors, in turn, have sued her for defamation and accused her of willfully opening fraudulent accounts. Maia Deguito “For her part, Deguito said she’d been acting on instructions from RCBC bosses. That assertion netted her a libel claim by Lorenzo Tan, the former chief executive officer of RCBC, who also sued Deguito’s lawyer. “Based on our investigation, Ms. Deguito acted alone with the help of some of her co-workers and subordinates at the Jupiter Branch which she headed,” RCBC said in an emailed statement. “Her actions were inimical to her job and against RCBC’s policies, which resulted in her termination and the filing of cases against her.” The bank said it’s confident the Philippine Department of Justice investigation will find that senior executives had no knowledge of Deguito’s actions.” The Philippines investigation into Ding and Gao is ongoing, and authorities in the US and elsewhere are investigating a “China connection” as well. Meanwhile, the Philippines justice department has indicted Deguito and the owners of FX broker Philrem for their involvement, but dropped the case against another individual who says he was tricked into helping Ding and Gao move some of the stolen funds. But now that more than a year has passed, and the evidence trail has probably gone cold, finding definitive proof to substantiate the claims about North Korea’s involvement is unlikely – even if the operation was supervised by Kim Jong Un himself.
Authored by Pepe Escobar via Asia Times, A situation in which the US military feels 'unhampered' has precedent – and, as General MacArthur's endeavors in Korea prove, it's something to be afraid of... The current collapse of the unipolar world, with the inexorable emergence of a multipolar framework, has enabled a terrifying subplot to run amok – the normalization of the idea of nuclear war. The latest exhibit comes in the form of a US admiral assuring everyone he’s ready to follow President Trump’s orders to launch a nuclear missile against China. Forget about the fact that a 21st century nuclear war involving great powers will be The Last War. Our admiral – admirably named Swift – is simply preoccupied by democratic minutiae, as in “every member of the US military has sworn an oath to defend the constitution of the United States against all enemies foreign and domestic and to obey the officers and the president of the United States as commander and chief appointed over us.” So it’s all about loyalty to the President, and civilian control over the military – irrespective of the risk of incinerating untold masses of said civilians, Americans included (as there would be an inevitable Chinese response). Swift, once again, to the rescue: “This is core to the American democracy and any time you have a military that is moving away from a focus and an allegiance to civilian control, then we really have a significant problem.” It doesn’t matter that the proverbial spokesman on behalf of the US Pacific Fleet – in this case, Charlie Brown (an apt name?) – swiftly engaged in damage control, deriding the premise of the (nuclear) question as “ridiculous.” Both the question and the answer are in fact quite revealing. MacArthur’s park is melting in the dark To shed extra nuances on “civilian control of the military,” a flashback to September 1950 and the Korean War, with some help from Bruce Cumings and John Halliday’s Korea: The Unknown War, may be far from “ridiculous.” Especially now that factions of the War Party in Washington have been pressing the case for nuking not China but North Korea itself. It’s key to remember that by 1950 President Truman had already issued a “civilian control of the military” order to drop two atomic bombs over Japan in 1945 – a historical first. Truman had become Vice-President in January 1945. FDR treated him with the utmost disdain. He was clueless about the Manhattan Project. When FDR died he had been Vice-President for only 82 days, and became POTUS knowing absolutely nothing about foreign policy or the new military/nuclear equation. Truman and MacArthur on Wake Island, 1950. Photo: Wikimedia Commons Truman had five years after bombing Japan to learn all about it, on the job. Now the action was on the Korean front. Even before an amphibious landing in Inchon, led by General MacArthur – the greatest since D-Day in Normandy, in 1944 – Truman had authorized MacArthur to advance beyond the 38th parallel. There’s substantial historical debate that MacArthur was not told exactly what to do in detail – as long as he was winning. Fine for a man who was fond of quoting Montgomery: “Generals are never given adequate directives”. Still, MacArthur did receive a top secret memorandum from Truman stressing that any operations north of the 38th parallel were authorized only if “there was no entry into North Korea by major Soviet or Chinese Communist forces, no announcements of intended entry, nor a threat to counter our operations militarily”. And then, MacArthur received an eyes-only message from Pentagon head George Marshall: “We want you to feel unhampered tactically and strategically to proceed north of the 38th parallel.” MacArthur kept going. He was sure China would not intervene in Korea: “If the Chinese tried to get down to Pyongyang there would be the greatest slaughter.” Well, he was wrong. US forces captured Pyongyang on October 19, 1950. Exactly the same day, no fewer than 250,000 soldiers of the 13th Army Group of the Chinese People’s Volunteer Army crossed the Yalu river and entered Korean territory. US intel was clueless about what military historian S.L.A. Marshall described as “a phantom which cast no shadow”. The North’s industry and infrastructure was totally destroyed. It’s impossible to understand the actions of the leadership in Pyongyang over these past decades without considering how this human and physical destruction is still very much alive in their minds MacArthur progressively ran amok, including calling for nukes to be used on North Korea. He had to go. The question was how. The civilians – Dean Acheson, Averell Harriman – were for it. The Generals – Marshall, Bradly – were against it. But they were also worried that “if MacArthur were not relieved, a large segment of our people would charge that civil authorities no longer controlled the military”. Truman had already made up his mind. MacArthur was replaced by Lt. Gen. Ridgway. But the war folly still raged, hostage to the Sino-Soviet “threat” of “communist world domination”. Over two million North Korean civilians were killed. And what General Curtis LeMay – a real- life Dr. Strangelove – later said about bombing Vietnam “back to the stone age” actually was inflicted by the US on North Korea. The North’s industry and infrastructure was totally destroyed. It’s impossible to understand the actions of the leadership in Pyongyang over these past decades without considering how this human and physical destruction is still very much alive in their minds. So what Admiral Swift actually said, in code, is, if a civilian order comes, the US military will start WWIII (or WWIV, if one counts the Cold War), duly applying the Pentagon’s first-strike doctrine. What Swift did not say is that President Trump also has the power to pull a Truman and fire any run-amok, aspiring MacArthur clone.
Despite US threats of “strong and swift economic sanctions” that the WSJ reported overnight could cut off a crucial source of revenue for Venezuela’s financially distressed state oil company, PDVSA, the socialist state’s leader Nicolas Maduro is claiming victory in a vote to create a new “constituent assembly,” a vote that US government officials have labeled a "sham." The ruling Socialist party's candidates purportedly won all 545 seats in the vote. Venezuela electoral council head Tibisay Lucena said more than 41% of the country’s registered voters participated, a number that is being widely discreditr by outside sources. Per press reports, the assembly will now replace the opposition controlled Congress, which was annulled by the Maduro-allied Supreme Court in March, allowing Maduro to rewrite the country's constitution, cementing his hold on power as his favorability rating with the public falls below 30%. The U.S., Colombia, Spain, Peru, the EU and Argentina have already said they will not recognize the results of the vote, which was boycotted by the country's opposition parties. According to Bloomberg, opposition leader Henrique Capriles claimed the real participation in the vote was closer to 15% of registered voters. An unofficial referendum held by the opposition several weeks ago received more than 7.6 million votes against the current regime. Torino Capital’s Francisco Rodriguez said the firm’s exit polls recorded 3.6 million votes. Counting of the ballots was said to begin Sunday night, after the vote was extended by an hour as opposition protests across the country turned violent. As has become all too common in Venezuela, where daily antigovernment protests are frequently marred by government killings, several fatalities have been recorded as supporters of Maduro’s government headed to the polls, according to Al Jazeera. Ten people, including an election candidate, were killed on the day of the vote as protesters tried to shut down polling stations by erecting barriers in the street. During clashes with masked protesters, soldiers fired into crowds, sometimes with live ammunition, according to AFP. Opposition activists have promised to continue the daily protests that have seen more than 120 deaths since mid-April as clashes between soldiers and the opposition threaten to explode into a "war in the streets," according to AFP. Among other, an opposition leader was killed as scuffles broke out between soldiers and masked protesters: “Shootings at protests killed a 13-year-old and a 17-year-old in the western state of Tachira. A soldier was also shot dead there. The death toll also included a 30-year-old regional leader of a youth opposition party in the northeast town of Cumana and two protesters in the western state of Merida. Anti-Maduro activists wearing hoods or masks erected barricades on roads and scuffles broke out with security forces who moved in quickly to disperse the demonstrators. Al Jazeera's Lucia Newman, reporting from the capital Caracas, said that it was a "sad and bloody day in Venezuela". She said that half a dozen protesters with bullet wounds were rushed to neighboring Colombia for treatment.” The State Department released a statement in response to the "flawed election," saying it would soon "take action" against the "architects of authoritarianism" in Maduro's government, according to Fox. "The United States stands by the people of Venezuela, and their constitutional representatives, in their quest to restore their country to a full and prosperous democracy," the State Department said in a statement, according to Reuters. "We will continue to take strong and swift actions against the architects of authoritarianism in Venezuela, including those who participate in the National Constituent Assembly as a result of today’s flawed election.” UN Ambassador Nikki Haley called the vote a “sham" on Twitter. Maduro’s sham election is another step toward dictatorship. We won't accept an illegit govt. The Venezuelan ppl & democracy will prevail. — Nikki Haley (@nikkihaley) July 30, 2017 The European Union has also condemned the results, according to Reuters. "We will not recognise this election," said European Parliament head, Antonio Tajani. "It is very clear that the current regime is clinging to power. The will of the people is to change the regime. It is necessary to go to elections now." Meanwhile, members of the Socialist party are celebrating their "victory," according to Reuters, as Venezuelan media broadcast footage of Maduro voting at a polling station in Caracas. "The constituent assembly will start its work right away," Diosdado Cabello, deputy head of the Socialist Party, told a post-election rally in Caracas that featured singers, dancers and culminated after midnight in the announcement of the official vote count and a fiery speech by Maduro. "Good morning Venezuela. We have a constituent assembly!" he shouted. "I ask our countrymen to close ranks so that the assembly can be a place of dialogue." Agence France Presse published footage of the violence that broke out near one polling station. The crackdown on protesters began before the vote as the government issued a ban on protesting during the vote. Meanwhile, traffic across Venezuela’s border with Colombia came to a standstill on Sunday, according to AFP.
Authored by James Rickards via The Daily Reckoning, With the U.S. preparing to confront China and go to war with North Korea, Russia is an indispensable ally for the U.S. There are huge implications on capital markets as these hegemonic powers continue to edge toward war. Here’s an overview of some of the financial implications of improved relations with Russia… 1: The End of OPEC and the Rise of the Tripartite Alliance On energy, a new producer alliance is being created to replace the old OPEC model. This new alliance will be far more powerful than OPEC ever was because it involves the three largest energy producers in the world — the U.S., Russia, and Saudi Arabia. This Tripartite Alliance is being engineered by former CEO of Exxon and Secretary of State Rex Tillerson, with support from Trump, Putin and the new Crown Prince of Saudi Arabia, Mohammad bin Salman. This alliance is perfectly positioned to enforce both a price cap ($60 per barrel to discourage fracking) and a price floor ($40 per barrel to mitigate the revenue impact on producers). Supply cheating by outsiders, including Iran and Nigeria, can be discouraged by directing order flow to the alliance members, which denies the cheaters of any revenue. As a result, energy will trade in the range described. Traders can profit by buying energy plays when prices are in the low 40s and selling when prices hit the mid-to-high 50s. 2: Improved U.S. Relations with Russia and Sanctions Relief Following Russia’s annexation of Crimea and intervention in eastern Ukraine, President Obama imposed stringent economic sanctions on Russia, its major banks and corporations, and certain political figures and oligarchs. The EU joined these sanctions at the behest of the U.S. Russia responded by imposing its own sanctions on Europe and the U.S. in the form of banning certain imports. The sanctions have been a failure. They have had no impact on Russian behavior at all. Russia still acts freely in Crimea, eastern Ukraine, and in other spheres of influence such as Syria. This failure was predictable. Russian culture thrives on adversity. Russians understand that their culture is distinctly non-western and has its roots in Slavic ethnicity and the Eastern Orthodox religion. The benefits to Europe from sanctions relief would amplify what is already solid growth and monetary policy normalization there. This paints a bullish picture for the euro and the ruble as trade and financial ties expand beginning in 2018. A review of Russia’s place in the world and its prospects would not be complete without an analysis of its monetary policies and positions. Russia’s hard currency and gold foreign exchange reserves have been on a roller coaster ride since mid-2008, just before the panic of 2008 hit full force. Reserves were $600 billion in mid-2008 before falling to $380 billion by early 2009 at the bottom of the global contraction. Reserves then expanded to over $500 billion by mid-2011, and remained in a range between $500 billion and $545 billion until early 2014. Russia’s reserves nosedived beginning in mid-2014 due to the global collapse of oil prices, which fell from $100 per barrel to $24 per barrel by 2016. The Russian reserve position fell to a low of $350 billion by mid-2015, about where they were at the depths of the 2008 crisis. Reserves then began a second recovery in late 2015 and today stand at around $420 billion. This recovery is a tribute to the skill of the head of the Central Bank of Russia, Elvira Nabiuillina, who has twice been honored as the “Central Banker of the Year.” When U.S.-led sanctions prohibited Russian multinationals, such as Gazprom and Rosneft, from refinancing dollar- and euro-denominated debt in western capital markets in 2015, those giant companies turned to Nabiullina. They requested access to Russia’s remaining hard currency reserves to pay off maturing corporate debt. Nabiullina mostly refused their requests and insisted that the reserves were for the benefit of the Russian people and the Russian economy and were not a slush fund for corporations partially controlled by Russian oligarchs. Nabiullina’s hard line forced the Russian energy companies to make alternative arrangements including equity sales, joint ventures, and yuan loans from China (which could be swapped for hard currency) to pay their bills. As a result, Russia’s credit was not impaired and its reserve position gradually recovered. 3: Watch Russia’s “Gold-to-GDP” Ratio Another critical aspect of Russia’s reserve management under Nabiullina is that, even at the height of the oil-related drawdown in mid-2015, the Central Bank of Russia never sold its gold. In fact, it continued expanding its gold reserves. This meant that gold reserves as a percentage of total reserves continued to grow. The Russian reserve position today consists of approximately 17% gold compared to only about 2.5% for China. (The U.S. has about 70% of its foreign exchange reserves in gold; a surprisingly high percentage to most observers who never hear any positive remarks about gold from U.S. Treasury or Federal Reserve officials). More important as a measure of Russia’s gold power are gold reserves as a percentage of GDP. If we take GDP as a metric for the economy, and gold as a metric for real money, then the gold-to-GDP ratio tells us how much real money is supporting the real economy. It is the inverse of leverage through government debt. For the United States, that ratio is 1.8%. For China the ratio is estimated at 1.5% (China’s ratio is an estimate because China is non-transparent about the amount of gold in its reserves. The actual ratio is likely in a range of 1% to 3%). For Russia, the gold-to-GDP ratio is a whopping 5.6%, or three times the U.S. ratio. The only other economic power that comes close to Russia is the Eurozone. It consists of the 19 nations that use the euro and they collectively have just over 10,000 metric tonnes of gold. The gold-to-GDP ratio for the Eurozone is 3.6%; not as high as Russia, but double the U.S. ratio. On the whole, Russia is the strongest gold power in the world. Russia is one of the five largest gold producers in the world. Currently Russian gold mining output is sold on the open market and the Russia central bank buys gold for its reserves on the open market. This stands in contrast to the situation in China, the world’s largest gold producer, where gold exports are banned, and are partly diverted to government reserves at below market prices. However, Russia could easily flip to the China model in a financial crisis. This would rapidly increase Russian gold reserves at low cost, while drastically reducing global physical supply. Russia and China are well-positioned to execute the greatest gold short squeeze in history. Of course, they have no interest is doing so right now because both are still buyers who favor low prices. At some point, they will flip to hoarders who favor high prices, but not yet. Russia’s strong gold position combined with a very low amount of external debt leaves Russia in the best position to withstand economic distress without default or a funding crisis in the future. This is one reason U.S. economic sanctions have been relatively ineffective at hurting the Russian economy despite a slowdown and recent recession. This trend in gold as a percentage of total reserves is highly revealing. It is part of a long-term effort by Russia and China (among others) to abandon the dollar-based international monetary system. They’d prefer a system less congenial to the United States and more accommodating to rising gold powers such as Russia, and rising geopolitical powers such as China. Gold is not the only factor in the Russian plan to abandon the dollar-based system. Russia has actively promoted the ruble (RUB) as a regional reserve currency. The ruble has no prospect of becoming an international reserve currency for decades, if ever. Yet it is in wider use in bilateral trading payments in eastern Europe and central Asia where Russia is trying to reestablish local economic hegemony along the lines of the former Soviet empire. 4: Russian Relations and Blockchain Technology Will Challenge U.S. Dollar Dominance Russia is also exploring the use of blockchain technology and crypto-currencies as a medium of exchange and as a payments platform. Recently, Putin met with Vitalik Buterin, the inventor of crypto-currency ethereum. Buterin was born in Kolomna, Russia and was able to converse casually with Putin in their native Russian language. Here’s how Bloomberg reported the meeting on June 6, 2017: Ethereum, the world’s largest cryptocurrency after bitcoin, has caught the attention of Vladimir Putin as a potential tool to help Russia diversity its economy beyond oil and gas… ‘The digital economy isn’t a separate industry, it’s essentially the foundation for creating brand new business models,’ Putin said at the event, discussing means to boost growth long-term after Russia ended its worst recession in two decades… Russia’s central bank has already deployed an Ethereum-based blockchain as a pilot project to process online payments and verify customer data with lenders including Sberbank PJSC, Deputy Governor Olga Skorobogatova said at the St. Petersburg event. She didn’t rule out using Ethereum technologies for the development of a national virtual currency for Russia down the road. Last week, Russia’s state development bank VEB agreed to start using Ethereum for some administrative functions. Steelmaker Severstal PJSC tested Ethereum’s blockchain for secure transfer of international credit letters. (Emphasis added). Left unsaid in this report is the fact that the blockchain technology on which ethereum is based has unbreakable encryption. Its message traffic is routed through an infinite number of internet pathways that the U.S. cannot interdict. Any blockchain-based payment system offers a way to run a global payments system independent of existing systems controlled by the U.S. such as FedWire and SWIFT. Bitcoin and ether boosters were quick to shout about the Putin-Buterin meeting as evidence of Russian support for bitcoin or ether. That’s not exactly right. Putin’s interest is in the blockchain technology, not any particular crypto-currency. With the right technology platform, Russia could launch its own crypto-currency. This could be a digital-RUB or a jointly issued currency with China and other members of the Shanghai Cooperation Organization. Whichever platform or direction Russia chooses, they all point in the same direction — the displacement of the dollar as a dominant transaction and reserve currency, and the creation of payments systems that the U.S. cannot sanction. This project will continue on a gradual basis in the years ahead and then suddenly be unleashed in the equivalent a gold and digital Pearl Harbor sneak attack on the dollar. What Does This All Add Up To? Absent the phony scandals that have impeded the Russian–U.S. relationship for the past eight months, a substantial improvement in that relationship would have occurred already. As it is, the relationship will improve either because the scandals abate or because Trump pushes the relationship forward despite the scandals. This is a simple matter of balance-of-power politics. With the U.S. preparing to confront China and go to war with North Korea, Russia is an indispensable ally-of-convenience for the U.S. This emerging U.S.–Russia condominium has implications far beyond China, including common interests in Syria, energy markets, and toward sanctions relief. Notwithstanding the prospect of improved relations, Putin remains the geopolitical chess master he has always been. His long game involves the accumulation of gold, development of alternative payments systems, and ultimate demise of the dollar as the dominant global reserve currency. It is up to the United States to defend that monetary ground. However, the likelihood of that is low because the U.S. does not even perceive the problem it’s facing, let alone the solution. This evolving state of affairs creates enormous opportunities in the months and years ahead.
After both Brent and WTI rose above their respective 50DMAs on Friday, capping 2017's best weekly rally for oil, the rising tide is accelerating as the latest CFTC COT data confirmed, when net specs boosted bullish Nymex WTI crude oil bets by 27K net-long positions to 423K, the highest in two months, as producers continued to cover short hedges, sending their net position to the most bullish since the summer of 2015. Meanwhile, oil started the Sunday session jumping out of the gate, with WTI rising above $50 for the first time since May in early Asian trading, following the usual non-material weekend chatter and "noise" out of OPEC (which to exactly nobody's surprise "can't stop pumping"), however what has attracted traders' attention, is a WSJ report that following last week's latest round of sanctions, and after today's vote to overhaul Venezuela's constitution further entrenching Maduro's unpopular regime, US government officials are considering announcing sanctions against Venezuela's oil industry as early as Monday, although as the WSJ notes, a full-blown "embargo against Venezuelan crude oil imports into the U.S. is off the table for now." In its latest escalation, last Wednesday the U.S. government levied additional sanctions on 13 high-ranking Venezuelan officials for alleged corruption, human-rights violations and undermining democracy in the South American country. On Friday Mike Pence vowed “strong and swift economic actions” if the vote goes ahead. While Maduro's government has responded defiantly, "dismissing sanctions and warnings from Washington", with Maduro insisting the government would notch a triumph in Sunday’s vote, the potential collapse in oil trade between Venezuela could crippled the country even more, while sending the price of oil sharply higher. In fact, in a note from last week posted here, Barclays Warren Russell explains just what will happen should Trump expand Venezuela's sanctions to impact its oil sector: "a sharper and longer disruption (eg, exceeding three months) could raise oil prices at least $5-7/b and flatten the curve structure despite an assumed return of some OPEC supply, a more robust US shale response, and weaker demand. It may be just the opportunity OPEC needs to exit its current strategy. US producer hedging activity would pick up if WTI moves to $50-55, limiting price upside potential." Furthermore, among the downstream consequences, is that refining margins should deteriorate if Venezuelan crude oil supply is curtailed. US refiners will be negatively affected by any sanctions related to trade constraints. On the other hand, China and India could benefit if Venezuelan oil is offered at a discount to comparable grades, Barclays suggests. Finally, looking at Venezuela from a longer-term perspective, this is how Barclays estimates the local investment climate: It is too early to assess the investment appetite in Venezuela in a post-Maduro environment. Though Venezuela’s assets are large, they are not short-cycle. Companies with deep connections to the country are likely to maintain a presence, but wait for the political landscape to stabilize before making incremental investments. Either way, it looks like Venezuela’s production trend is down over the near term. Of course, the higher the price of oil goes, the more profitable shale will be, the more oil it will produce and so on, in the diabolic feedback loop that will assure oil does not go too far above $50 for the foreseeable future, as Goldman explained efficiently in just three bullet points last Thursday: Oil prices have rebounded over the past month on large inventory draws, a declining US rig count and strong demand data, suggesting that the rebalancing is accelerating. We remain, however, cautiously optimistic on prices from the current level with the recent improvements in fundamentals needing to be sustained for oil prices to rally meaningfully further. In fact, too large a price recovery now would only increase the downside risks to our year-end $55/bbl WTI price forecast given the fast velocity of shale’s supply response. At which point it's back to square one. For now, however, the bulls get to enjoy the next few days until the momentum reverses once again. * * * For those who are eager for more reasons to buy oil, there are more details in the full Barclays excerpt below and posted here first last week: Looming risk of sanctions against Venezuela The Trump administration is considering a wide variety of sanctions against the Venezuelan regime, which could range from sanctions on several senior government officials to targeting PDVSA’s ability to transact in US dollars, according to Reuters. This would not be the first time the Trump administration has taken action against Venezuela. The US already imposed sanctions on Venezuela’s vice president (February 2017), eight members of the Supreme Court (May 2017), and other military and government officials. The most recent Supreme Court sanctions were in response to the court’s decision to disband the democratically elected congress. The administration’s recent discussion of potential new sanctions would aim to keep elections “free and fair” and prevent President Maduro from being able to establish a dictatorship, which could occur as early as July 30. The Trump administration is likely to proceed cautiously and incrementally with any sanctions. In contrast to the energy-related sanctions imposed on Russia and Iran, the more entrenched connections between US companies and consumers and the Venezuelan oil industry lead us to believe that the US administration will take a cautious approach. Venezuela produces around 2.2 mb/d of oil and NGLs, which represents roughly 2% of the global petroleum market. Its Orinoco heavy oil plays a critical role as a feedstock for complex refineries around the world, particularly along the US Gulf Coast. Close to half of its 1.8 mb/d of oil exports go to OECD countries, with Asia consuming most of the remainder. Venezuela is the third largest exporter of oil to the US (?750 kb/d), behind Canada (3.2 mb/d) and Saudi Arabia (1.1 mb/d). As a guide to potential outcomes, we examine US sanctions on Iran and Russia and their impact on the oil market. We find that the sanctions on Russia have not had a noticeable effect on its production or the oil market, while sanctions against Iran lowered its production and exports and supported oil prices. For more on sanctions on Russia and Iran, see the Appendix of this report. We see several important differences between the situation in Venezuela and those in Iran and Russia. Unlike Russia and Iran, Venezuela is at significant risk of political and economic collapse. Low oil prices have greatly reduced the government’s ability to pay its outstanding debts while funding imports of basic goods. As a result, President Maduro has taken decisions that have resulted in a deteriorating quality of life for Venezuelans in recent years. Amid the current instability, even limited sanctions are likely to have an outsized effect on the oil market. A collapse in Venezuela could turn it into a regional crisis. More than 1.5mn Venezuelans have already fled the country because of the current crisis, this number could increase exponentially, affecting neighboring countries, particularly Colombia. The international community will need to support the region in a refugee crisis. In the case of Colombia, the situation could have additional implications because there are nearly 2mn Colombian and Colombian descendants living in Venezuela. Those people would likely be the first to cross the border and the Colombian government cannot deny them their rights as Colombian citizens. This could become significant fiscal burden for the Colombian government.Venezuela needs to import oil and refined products to produce oil. Roughly 50% of Venezuelan production is heavy oil, which is typically blended with diluent for transportation purposes. Without access to diluent imports from the US and elsewhere, certain Orinoco projects may be at risk of being shut-in. A trade embargo, sanctions that affect PDVSA, or a sovereign default could be catalysts for heavy oil shut-ins in the Orinoco. We estimated earlier this year that a default could take around 300 kb/d of heavy oil production offline (Commodities special report: The black swans of 2017, January 2017). The current state of Venezuela’s refinery sector necessitates fuel imports, which have been met in part by imports from the US. Plagued by underinvestment, Venezuela’s refineries have been running well below nameplate capacity, with Bloomberg recently reporting that the Puerto La Cruz refinery is running at 15% utilization. Restricting fuel shipments to Venezuela would result in increased dependency on the PDVSA’s dilapidated plants and imports from other origins to prevent the country coming to a standstill. Venezuela’s oil sector is much more intricately connected to the North American energy system, due to CITGO’s presence in the US and the dependence of other US refineries on Venezuelan feedstock. This interdependency with the US and the lesser connection with other OECD countries, mean Venezuela’s position in the international energy system is quite different to that of Russia or Iran. If the US does impose further sanctions on Venezuela, it would likely take into account these differences. The use and timing of various sanctions will likely depend on how much the conflict escalates in the coming days and whether other factors (such as the potential for default on sovereign debt payments due in October and November), might be a catalyst for political change in the near future. In our view, if the Trump administration decides to issue sanctions, it would proceed conservatively and become increasingly restrictive only if its goals are not being achieved. One of the stated goals of the Trump administration is for Venezuela to hold “free and fair elections,” according to the White House press statement on July 17, 2017. Before implementing more aggressive sanctions, the administration is likely to seek multilateral support from other nations. The EU recently expressed a willingness to impose sanctions on Venezuela as well. We believe sanctions could turn out to be a double-edged sword. Multilateral sanctions implemented after having exhausted negotiations are most likely to be successful. Nonetheless, history shows that sanctions alone are not enough to trigger political change, eg, Cuba, North Korea, and Syria. This finally depends on the level of internal pressure, which in Venezuela seems high. Sanctions against individuals Additional US-imposed sanctions against government officials may be the next step. Such sanctions are likely to cause some inconvenience but probably would have only a limited impact on Venezuela’s oil industry, in our view. Sanctions on Venezuela’s energy sector Sanctions could take several forms, ranging from sanctions similar to those imposed on Russia to more disruptive ones that could completely halt existing operations. Sanctions that prohibit or limit investment in new exploration and production activity would not likely have an immediate direct impact on Venezuelan production. Many of the companies with equity stakes in Venezuela’s new greenfield developments are headquartered in non-OECD countries. Furthermore, due to the current upstream investment environment and the increasing political risk within Venezuela, we believe upstream spending on greenfield projects is limited, with many projects shelved for future reconsideration. Sanctions prohibiting businesses from operating in Venezuela would be much more disruptive to Venezuela’s current contribution to the oil market. A policy that would limit US producer and service company operations and further investment in Venezuela, would require PDVSA and other international companies to step in to maintain operations. This scenario is likely to exacerbate Venezuela’s declining production profile. Sanctions against PDVSA The US could take an even more drastic approach by issuing direct sanctions against PDVSA. In an extreme scenario, if the NOC is banned from banking activity in the US and from trading with US entities, the impact would likely be swift and very damaging to Venezuelan oil production. Directly targeting PDVSA will also likely lead to a sovereign debt default in 2017. This action would affect Venezuela’s petroleum imports and exports. PDVSA would have to find new destinations for nearly half of its oil exports, assuming production does not collapse. Currently, Venezuela ships more than 700 kb/d of oil to the US and nearly 100 kb/d to the EU. China and India would likely be alternative destinations for some of this crude. PDVSA would also need to find a new source for some of its diluent needs. Algerian and Nigerian crude and condensates were previously used for diluent purposes and could substitute for shipments of US crude and products used in the transport of heavy oil. PDVSA could ask it JV partners to import diluent, but the capacity to do this would depend on the extent of sanctions and other countries’ participation. Even if possible, this could also increase the production cost of these fields to levels that are not financially viable, which could ultimately result in shut-ins. We believe the US would implement such measures only as a last resort. In addition, the US would likely seek multilateral support from other nations before taking this route. Such an action is likely to be severely disruptive to Venezuela as well as the oil market and its participants. Sanctions against PDVSA would likely also mean that US producers and service companies conducting business in Venezuela would have to cease operations, which would have an outsized effect on oil production compared to the effect of the US-imposed sanctions on Russia. Compared with Russia, Venezuela is much more reliant on foreign oilfield service companies for oil extraction. Discussions of broader sanctions likely limits Venezuela’s access to capital Regardless of whether new sanctions are imposed, discussion of broader sanctions could limit the Venezuelan government’s ability to raise financing and to make debt payments coming due in October and November. Moreover, it could change the government’s willingness to pay. If the current government wants to remain in control and not negotiate, it may be unwilling to use the few assets left to service its debt. As mentioned above, default alone would have a significant impact on oil production and the domestic economy. The US could sell oil from the SPR to steady the market We believe the US would consider the sale of oil from the strategic petroleum reserve (SPR) in order to smooth any price volatility that may result from a disruption to supply from Venezuela. The previous US administration was willing to tap the SPR to steady markets after the Libyan supply disruption, and we believe the current administration would consider this option as well. The US did not sell oil from the SPR during the 2002-03 Venezuelan supply disruption and prices rose by more than 40% during that period, although other factors also contributed. We doubt a disruption will result in a 40% price increase in the event of a supply disruption, but we think prices will rise nonetheless. For this reason, we think the US government would consider using the SPR as a backstop. At present, we believe the price response to a disruption would be more muted than previous disruptions due to the apparent increased willingness of the US to use its SPR, the fact that OPEC could raise quotas, and US producers would begin to respond to sustained higher prices.
The disturbances in north-east London are a reflection of longstanding frustration over police conduct towards people of colour• Franklyn Addo is a youth worker, journalist and rapper from HackneyConcerns about the mistreatment of people of colour by police in the UK are legitimate. The deaths of Oluwashijibomi Lapite in 1994, Mark Duggan in 2011, Edson Frederico Da Costa last month and Rashan Charles last weekend, to name just a few examples, show the severity of the problem. In all of these cases, the individuals died following police contact and all were black. Related: The police need to provide swift answers after the death of Rashan Charles | Seyi Akiwowo Continue reading...
TEHRAN, Iran (AP) — Iran's communications and information technology minister was quoted Sunday as saying the widely used Telegram messenger service has transferred some of its servers into the country, but the encrypted application's founder swiftly denied the claim.
Iran’s communications and information technology minister was quoted Sunday as saying the widely used Telegram messenger service has transferred some of its servers into the country, but the encrypted application’s founder swiftly denied the claim.
One day before Venezuelans vote as part of a controversial effort to rewrite the nation's constitution -- what opponents see as a dictatorial power grab -- the question is whether President Trump will follow through with his threat to take "strong and swift economic sanctions" if the vote is held.
Vice President Mike Pence spoke today with Venezuelan political prisoner and political activist Leopoldo López to address the dire situation in Venezuela. On behalf of President Trump, the Vice President firmly stated that the United States stands with the Venezuelan people, and praised Mr. López for his courage and outspoken defense of Venezuelan democracy despite his current detention under house arrest. Vice President Pence once again called for the full and unconditional release of all political prisoners in Venezuela, free and fair elections, restoration of the National Assembly, and respect for human rights in Venezuela. The Vice President also reiterated President Trump’s pledge that if the Maduro regime imposes its Constituent Assembly on Sunday, July 30, the United States will respond with strong and swift economic actions.
Apple (AAPL) removed iPod Nanos and iPod Shuffles from its website and online store on Thursday, discontinuing its last two devices that didn't run the iOS software system.
Не могла пройти мимо статьи в Ведомостях: На чем заработали и сколько потеряли инвесторы в 2014 году. Судя по этой статье, самый высокий доход показывает т.н."инвестиции в доллар" или долларовые депозиты или наличные. Это и понятно- за счет резкого обесценения рубля против доллара , как нам говорится в статье," долларовые депозиты оказались самыми доходными (+78,7%)". Иными словами, в статье как бы намекают,что лучше доллара вы ничего не найдете,чтобы сберечь свои накопления. Я уже как-то говорила о том,что доллар - это не деньги, вот сейчас всем нам эту разницу- разницу между деньгами и финансовым иструментом- мы и узнаем. Деньги помимо расчетной функции обладают функцией накопления капитала, финансовый инструмент обладает "инвестиционной возможностью" , являясь "инвестицией". Инвестиция в финансовый инструмент- это спекуляция, риск неизвестности получения дохода и возможной полной его потери вместе с "инвестицией", который берет на себя обладатель "инвестиции",т.е. это предпринимательский риск, который вы берете на себя, оперируя теми же валютами. Пример такого риска нам показал только что банк Швейцарии и валютные брокеры. Читаем Зерохедж Numerous FX Brokers Shutter After Suffering "Significant Losses" Following SNB Stunnerили на русском это ВестифинансШторм от Банка Швейцарии. Есть пострадавшие "Большое количество клиентов с позициями в швейцарском франке оказались в проигрышной ситуации и понесли потери намного большие, чем объем их депозитов.Брокер также сообщает, что тем клиентам, которые не смогли вовремя закрыть позиции из-за отсутствия ликвидности, он не может компенсировать потери. В Excel Markets обращают внимание на то, что даже на межбанковском рынке франк был неликвидным в течение нескольких часов после решения Банка Швейцарии". Разница валютного депозита с валютной спекуляцией на рынке форексе будет заключатся в том,что вы участвуете в этом ввиду полной интеграции российской банковской системы в валютную расчетную систему SWIFT- Россия на втором месте по интеграции банков в эту систему, поэтому все общания ЦБ РФ в том,что они подготовят альтернативу SWIFT так и останутся обещаниями. Напомню,что глава ЦБ РФ входит в американский долларовый институт Бреттон-Вуда- МВФ, поэтому ничего удивительного нет в том,что ЦБ РФ тупо выполняет все инструкции МВФ- ЦБ РФ- это одна из марионеток американской системы.МОСКВА, 16 января. /ТАСС/. "Период резких изменений курса рубля завершается, правительственные меры по поддержке национальной валюты заработали, сказал ТАСС глава российского представительства Международного валютного фонда Бикас Джоши". Десятка стран, лидирующих по числу кредитных организаций, подключенных к SWIFT (по данным SWIFT, 2013) по факту Россия слишком глубоко интегрирована в западную систему, зависима от нее. У страны нет возможностей создать собственную альтернативную сеть (разве только на двусторонней основе с Китаем), а разговоры о переходе расчетов на внутреннюю систему, как и в случаях других предложений власти, останутся разговорами. Вчера было озвучено,что европарламентарии требуют от Совета ЕС распространить уже действующие санкции на предприятия атомной промышленности России, а также ограничить все международные финансовые транзакции РФ. Сегодня продолжили: БРЮССЕЛЬ, 16 января. /Корр. ТАСС Александр Шишло/. Действующие санкции Евросоюза против России могут быть усилены в случае значительного ухудшения ситуации на востоке Украины. Об этом заявил в пятницу высокопоставленный чиновник ЕС, близкий к руководству институтов сообщества. Давление усиливается и разговор идет уже о полной капитуляции России перед США. Как это принято у бандитов, клиента "поставили на счетчик", например, это дело ЮКОСА МОСКВА, 16 января. /ТАСС/. С сегодняшнего дня начинается начисление процентов за несвоевременное исполнение арбитражных решений о выплате РФ $50,1 млрд бывшим акционерам ЮКОСа. Но наездом на государство дело не ограничивается. Уже против Лукойла возбудили дело о "коррупции в рамках финансирования терроризма":КИЕВ, 16 января. /ТАСС/. Служба безопасности Украины (СБУ) возбудила уголовное дело по статье "Финансирование терроризма" против бизнес-структур, входящих в группы компаний ЛУКОЙЛ и ВЕТЭК. Если внимательно смотреть за происходящим во Франции, то можно увидеть,что Франция на этот раз выполнила роль этакого подопытного кролика, где начинают претворяться идеи будущей Европы- будущего фашизма- зомбированные марионеточные европейские чиновники и послушное население, готовое быть рабом и идти в этом на все. Все,кто мог более-менее осмыслить происходящее, были жестоко не только подавлены, но и наказаны за "инакомыслие", включая несовершенолетних. Или еще можно так сказать,что фашизм начинается с Франции и с Великобритании. В целом,на мой взгляд, глава Raiffeisen прав, говоря, что Америка не пойдет на уступки и «будет сражаться с Путиным до последнего европейца». При этом можно обратить внимание на очень похожие случаи в Армении и в Германии. В Германии, в Дрездене, активно выступала PEDIGA против мусульманской колонизации Европы. Недавно там был зарезан чернокожий юноша на фоне вот этого антиисламского движения,что послужило обвинением антиисламского движения в экстремизме. В Армении произошел очень странный случай в Гюмри, закончившийся беспорядками, при этом мы читаем: ЕРЕВАН, 16 января. /Корр.ТАСС Тигран Лилоян/. Европейский союз предоставил Армении 77,5 млн евро на продолжение реформ, проводимых при его помощи.В правительстве республики состоялась церемония "запуска" восьми соглашений, которые были заключены месяц назад по различным направлениям сотрудничества - от сельского хозяйства до территориального развития. Иными словами, похожие процессы на Украине ,с высокой вероятностью, будут запущены в Армении. Поэтому, никакого разговора не может быть ни о каком ЕВРАЗЭС- это пустышка, если никто всерьез этим не собирался заниматься. Все это фантазии россиянской элиты, которая сама никогда ничего не создавала. Военная обстановка, к которой прибавится Казказ и Азия: Сегодня США оказывают жесткое давление на Россию по трем направлениям: северному – из Прибалтики, центральному – из Польши и южному – через Румынию. То есть мы с вами наблюдаем то,как США защищают собственные интересы- вполне себе бандитскими способами, не чураясь никаких угроз и шантажа, используя в своих приемах гражданское население, убив его , запугав террором, превратив послушных в своих рабов, чтобы получить желаемое. А что Россия? Вопрос уже всем понятный- дни нынешней России уже сочтены, поэтому нам с вами стоит приготовиться к разным вариантам. Например, это отключение банков от SWIFT и попыткой переключения на внутреннюю систему. Я не исключаю невозможности работать банкам в стандартном режиме, поэтому запас наличности должен быть дома- у каждого по возможностям. Скорее всего, в этом случае вклады получить будет проблематично. Далее. Очень вероятно,что появится натуральный обмен и бартер. Например, вспоминаем, всем известную валюту- водку. Значит, делаем запасы этой натуральной валюты. В общем, вспоминаем советское время и готовимся к сложным временам.
Китайский юань обошел евро в рейтинге самых торгуемых мировых валют, следует из отчета Международной межбанковской электронной системы платежей (SWIFT). Коэффициент использования юаня поднялся с 1,89% в январе 2012г. до 8,66% в октябре 2013г. Опережает китайскую национальную валюту лишь доллар США, который лидирует с коэффициентом 81,08%. Между тем доля евро упала с 7,87% в январе 2012г. до 6,64% в октябре 2013г.: сейчас единая европейская валюта занимает третье место в рейтинге самых торгуемых. По данным на октябрь 2013г., больше всего в финансовой торговле юанем пользовались Китай, Гонконг, Сингапур, Германия и Австралия. Так, на долю КНР приходится 59% сделок с юанем, на Гонконг - 21%, Сингапур - 12%, Германию и Австралию - по 2%. http://top.rbc.ru/economics/03/12/2013/892600.shtml _______________________________________ РБК, мягко говоря, отжигает .... Если реально SWIFT очень любит юань и публикует ежемесячно отчеты о расчетах в нем (надеясь на активный рост роли юаня). Собственно сам отчет на основе которого и появился материал. Читаем внимательно: RMB now 2nd most used currency in trade finance, overtaking the Euro, with a activity share of 8.66%. Что именно имеет ввиду SWIFT смотрим здесь "traditional trade finance - Letters of Credit and Collections" Торговое финансирование, конкретно инкассо и аккредитивы ...как бы это далеко не "рейтинг самых торгуемых валют". 59% из них - сам Китай, ещё 21% - Гонконг, ещё 12% - Сигнапур и только оставшиеся 8% - остальные страны из которых по 2% Германия и Австралия. Причем бурный рост, скорее всего, обусловлен во многом более корректным учетом операций самого континентального Китая. Доля Китая в международных платежах в отчете на 6-й странице и составляет в октябре0.84%. Она выросла с 0.25% в январе 2012 года, до 0.63% в январе 2013 года (когда юань обогнал рубль), после этого рост несколько затормозился: март - 0.74%, июнь - 0.87%, сентябрь - 0.86%, октябрь - 0.84%. По-хорошему, с лета экспансия юаня в общем объеме платежей прекратилась ... но все ищут сенсации. P.S.: В перспективе доля юаня в платежах, конечно, должна существенно вырасти (при либерализации рынка юаню есть куда расти), но только в перспективе. P.P.S.: Кому интересно: ссылка на раздел с отчетами SWIFT