Month: November 2018

S&P futures slumped into the red, following a drop in European stocks while Asian shares traded mixed in a subdued day of trading thanks to Thanksgiving holiday; the big moves were in FX where the pound jumped, the euro strengthened and the dollar slumped after a draft deal on post-Brexit ties was tentatively agreed.

US cash markets may be closed, but futures are open, and overnight the Emini slumped to Wednesday’s session lows before rebounding modestly.

Europe’s bourses dropped back into the red on Thursday as investor worries mounted about slowing global growth in the face of rising U.S. interest rates and trade tensions. The Stoxx Europe 600 Index dropped as much as 0.9%, giving up much of Wednesday’s gains as almost every sector fell, led by basic resources and banking shares. The biggest decliners include BAT -1.9%, Total -1.1%, HSBC -1%, AstraZeneca -1.1%, although trading volumes were lethargic.  Italy was under pressure in both stock and bond markets as sparring resumed over its budget plans. Some disappointing big-name earnings added to the gloom.

Europe’s tech sector lost another 1.2 percent, but it wasn’t the worst performer. Banks were 1.6 percent weaker and mining companies and other resources firms were down nearly 2 percent and approaching a one-month low, reflecting the bitter Sino-U.S. trade war, encouraging investors to take money off the table before U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, meet in Argentina next week.

The pound soared, rising sharply above 1.29 and gilts fell as a draft Brexit deal pointing to deep ties between the U.K. and European Union as well as a solution to the Irish border question was agreed at a “political level,” according to the EU. Enthusiasm was dented however after Reutrers reproted that Spain will vote against the current Brexit draft proposal because of a lack of clarity on Gibraltar.

Earlier, Asian indexes swung between gains and losses before turning higher, with Japanese stocks getting an end-of-session boost on a report about a possible government rebate. MSCI’s broadest index of Asia-Pacific shares outside Japan had ended little changed after recovering from an initial wobble. The index has managed to hold up so far in November after three straight monthly declines, but is on track for its worst annual performance since 2011. Japan’s Nikkei had finished almost 0.7 percent higher but Chinese shares closed 0.4 percent in the red.

“Investors are still wary about whether they’ll see further lows, given none of the issues that drove the recent correction have dissipated,” said Shane Oliver, Sydney-based head of investment strategy at AMP.

Trading volumes in the region were also depressed. Singapore became the latest to warn about the potential impact on Thursday. The city state is considered as a bellwether for international trade.

“Risks in the global economy are tilted to the downside,” said Loh Khum Yean, Singapore’s permanent secretary for trade and industry.

Elsewhere, Bitcoin steadied, emerging-market assets were broadly stable and gold nudged upward. Treasuries didn’t trade because of the U.S. holiday. In commodities, China-sensitive metals like copper fell and oil prices reversed early gains, although they were still above one-year lows touched earlier this week. U.S. crude futures were last down 8 cents at $54.55 a barrel after hitting a one-year low of $52.77 on Tuesday. Brent eased 15 cents to $63.33, off Tuesday’s low of $61.71.

The US is closed today for Thanksgiving holiday.

Top Overnight News from Bloomberg

• E.U., U.K. see free-trade area and deep regulatory cooperation; state “determination” to replace backstop: Draft
• U.K. and European negotiators are working through the night to hammer out the final part of the Brexit deal as Theresa May fights to keep a crunch summit on Sunday on track. After meeting EU Commission President Jean-Claude Juncker Wednesday, PM Theresa May announced that she will return to Brussels for last minute talks on Saturday, just a day before EU leaders are due to sign off on the deal. That wasn’t expected: Brexit update
• Technology stocks rose Wednesday, posting a partial rebound from a bruising three-day decline, though analysts said further volatility and losses are likely
• Federal Reserve Chairman Jerome Powell and his colleagues are likely to turn more wary about marching interest rates higher after delivering a widely anticipated quarter percentage-point increase in December. Fed may pause cycle of rate hikes as early as spring: MNI
• The Republican chairman of the U.S. Senate committee overseeing trade rebuffed a call by a dozen GOP senators to vote on a revised a U.S.-Canada-Mexico trade agreement this year, a move that likely will doom their effort
• U.S. consumers will be hit hard if President Donald Trump goes ahead with tariffs on the remaining imports from China, worth about $260 billion in 2017. That’s because China has an “exceptionally large” market share in goods that have so far escaped the tariffs, according to Deutsche Bank AG. They note that 93 percent of U.S. laptop imports came from China in 2017 while 80 percent of mobile phone imports came from China
• Italy PM Conte confident spread will narrow; acting responsibly on budget; Italy’s Di Maio sees margins for dialogue with EU; infringement procedure would be unfair; Salvini/Di Maio say won’t change a comma on budget: Repubblica
• BTP Italia total placement closed at EU2.16b: Treasury
• WSJ: Apple to offer Japan carriers discount to up iPhone XR sales

DB’s Jim Reid concludes the overnight wrap

Happy Thanksgiving to all our US readers. Apparently Americans will consume up to 4,500 calories each over the course of today, although I read that us Brits consume around 7,000 on Xmas Day so our friends stateside are lightweights. For those working in financial markets both these numbers might be eclipsed this year after the stresses of the last couple of weeks. However, ahead of the holiday, there were some healthier markets yesterday to raise a glass to. In addition to that, we ran the numbers yesterday and the Friday after Thanksgiving has seen a ratio of positive to negative days for the S&P 500 of just under 2 to 1. This long-term daily average is 1.13 to 1.

Anyway, back to the present, where the rout which plagued just about every risk asset on Tuesday reversed to some degree yesterday with the NASDAQ (+0.92%), S&P 500 (+0.31%) and NYSE FANG (+0.51%) all closing higher. These indexes pared their peak intraday gains (S&P 500 up just over 1% at highs) though amid thin afternoon liquidity ahead of today’s US holiday. The DOW closed flat, while in Europe the STOXX 600 (+1.14%) and DAX (+1.61%) both rallied before the US dipped after Europe went home. HY spreads in the US and Europe were both around -7bps tighter, and WTI and Brent rallied +1.97% and +1.34% respectively. The climb for oil was fairly steady during the day helped partly by a drop in the latest API inventories data and also President Trump’s early morning tweet in which he thanked Saudi Arabia for lower oil prices. Inventories data out of the EIA later in the session didn’t really move the dial.

There were seemingly a few reasons for the turn in sentiment. One was the decent rally for BTPs, where two- and 10-year yields fell -23.3bps and -14.6bps respectively, for their best day in over a month. As expected, the European Commission rejected the latest Italian draft 2019 plan, with Commissioner Moscovici warning against Italy adopting free-rider behaviour in comments with the press. The EC confirmed that they are not yet opening the EDP but suggested that they see this as the path which is opening ahead. Moscovici confirmed yesterday that Italy will have two weeks to answer queries put forward by the EC. After that, the EC will have to make the decision whether or not to recommend opening an EDP to the Eurogroup. The hope for Italy might be that Moscovici sounded willing to keep a dialogue open, rather than shutting the door completely. Our economists rightly noted that the ball is now back with Italy. On that, Deputy PM Salvini initially said yesterday that the Government is open to a dialogue on spending revisions but wouldn’t stretch to discussing the budget deficit or pension reform. A potential sign of compromise appeared to be enough for the market though with the FTSE MIB also climbing +1.41% and an index of Italian banks up +2.35%, both snapping a five-day losing run.

Also attracting some interest yesterday was an MNI article quoting ‘senior Fed sources’ as suggesting that the Fed is considering a pause in hiking rates and may also consider ending its tightening cycle as soon as spring next year. The article went on to say that Fed officials appear to be converging around 3% for the neutral rate and that policymakers see inflation as peaking around the current 2% level before falling lower. A couple of comments are worth making on this. The first is that MNI isn’t seen as the most reliable source for Fed news, and the second is that this story broadly repeats commentary we have already heard from Clarida and Powell in recent days. So not particularly groundbreaking in our view. Treasuries didn’t move much on the article and 10y  yields ended flat, while two-year yields sold off +1.0bps by the close of play and the Dollar index edged down -0.11%.

Overnight Asian markets are mixed in thin trading due to today’s Thanksgiving holiday in the US and a holiday in Japan tomorrow. The Nikkei (+0.61%) and Hang Seng (+0.06%) are up while the Shanghai Comp (-0.55%) and Kospi (-0.39%) are down. Elsewhere, crude oil prices both WTI and Brent are down c. -0.35% this morning. On the data front, Japan’s October CPI printed in line with consensus at +1.4% yoy and core at +1.0% yoy while core-core CPI stood at +0.4% yoy.

Yesterday’s Brexit newsflow was fairly thin on the ground again, though Prime Minister May did meet with EU Commission President Juncker in Brussels. The two leaders made “good progress” according to a spokesman. More talks are planned for Saturday which is cutting it fine for Sunday’s summit, especially with some reports (BBC) suggesting that Friday is the key deadline to have things ready for the summit. Negotiators are working through the night to hammer out more on the agreement. Earlier in the session Gilt yields rose +1.3bps and the pound traded -0.09% weaker, as markets remain in a holding pattern ahead of the EU summit and the eventual UK Parliament vote, which is due sometime over next few weeks.

Meanwhile, the latest in the trade debate was the announcement by the WTO yesterday that they intend to launch a dispute investigation into the US allegations about China continuing a state-backed campaign of IP and technology theft. A decision is expected next year. In Germany Economy Minister Altmaier also announced that Germany planned to increase regulatory barriers to foreign investors by the end of this year, in effect making it harder for Chinese companies to launch takeovers of German companies. All this before the G20 meeting in just over a week now which will include a meeting between Trump and Xi Jinping on the sidelines. On that the FT reported yesterday that the draft communique made no explicit comment on fighting protectionism – language which has in essence been a mainstay of the statement since 2008.

The OECD released updated macroeconomic forecasts yesterday, and revised down its global growth projection for 2019 -0.4pp to 3.5% from the last May edition. The forecast for euro area growth was revised down -0.3pp to 1.8%, the US down -0.1pp to 2.7%, and China down -0.1pp to 6.3%. In their first projections for 2020, the OECD expects global growth to remain steady as faster growth in most EMs balances a further slowdown in developed markets and China.

It was a busy day for US economic data ahead of the Thanksgiving holiday, headlined by somewhat soft durable goods orders which fell -4.4% mom, the sharpest drop in over a year. Durables ex-transportation were soft as well, up +0.1% mom versus the expected +0.4%. Core capital goods orders were flat after a revised -0.5% mom drop in September. Our economists had highlighted their expectations for capex to slow over the medium term, so this data does not change their baseline forecasts. Separately, initial jobless claims ticked higher to 224,000 from 216,000 last week, which presents some downside risks to the  November nonfarm payrolls report due two weeks from Friday. Finally, the University of Michigan consumer sentiment index moderated slightly to 97.5, though 5-10 year inflation expectations ticked up to 2.6% from 2.4%, matching their highest level since March 2016.

As far as the day ahead is concerned, with it being a holiday in the US and markets subsequently closed, we’re extremely sparse on data releases with November confidence indicators in France and the November consumer confidence print for the Euro Area the only readings of note. That being said it’s a packed day for the ECB with Angeloni, Weidmann, Knot, Visco and Mersch all due to speak. The ECB’s October meeting minutes are also out today with Italian Finance Minister Tria due to face questions in the Upper House this afternoon.The BoE’s Saunders then speaks tonight.

via RSS https://ift.tt/2zoaTnR Tyler Durden

Via Platts’ ‘The Barrel’ blog,

In the first part of this double feature, Katherine Dunn investigates an emerging security risk for the shipping industry, as maritime authorities report a rising number of GPS failures

Early one Sunday in mid-March, a ship in Port Said, the northern gateway to Egypt’s Suez Canal, suddenly and inexplicably lost all connection to GPS on board.

“All of them affected,” the vessel’s crew wrote in a March 18 report to the US Navigation Centre of Excellence (NAVCEN), after a total of seven receivers lost connection to GPS. “Disturbance still continuous.”

The cause of disruption, after an investigation by NAVCEN, was listed as “unknown interference.”

In the following days, vessels in and around Port Said and the Suez Canal reported sudden and unexplainable outages in their GPS, some lasting days, and referenced dozens of vessels in the area experiencing the same problem.

The disruptions were concentrated around the Canal, but also extended north along a strip of sea, from just east of Cyprus to the Lebanese coast. NATO has also reported disruptions off the south coast of Turkey. While the GPS mostly just disappeared, the reports noted, sometimes it placed the vessels somewhere they were not: in one case, a vessel in Port Said appeared on GPS to be west of Alexandria, more than 150 nautical miles to the west.

US and NATO officials were paying attention, with good reason. The region has seen military tensions escalate in recent years, particularly off the coast of Syria. It is also a vital trade route: in March, 1,450 vessels of all sizes transited the waterway, about a third of which were oil tankers or LNG ships, according to data from the Suez Canal Authority. Those vessels were carrying about 61 million barrels of crude oil alone, or nearly 2 million b/d.

By March 23, just five days after the first report, the US Maritime Authority (MARAD) released an alert warning vessels of possible GPS interference in the East Mediterranean. By the summer, the incidents had drawn an alert from NATO’s Allied Maritime Command (MARCOM).

“In recent months, several electronic interferences have been detected, particularly GPS and AIS interference, as well as possible GPS jamming in the East Mediterranean,” a July 31 advisory warned.

Altogether, 16 individual reports of GPS interruptions were made between March 18 and November 4, all with the cause listed as unknown. In October, a NATO official from MARCOM said they were still investigating.

Cheap tricks

The Global Positioning System, or GPS, underpins most of the world’s digital systems for determining location, time, and communication — on everything from your mobile phone, to the world’s largest commercial vessels.

“For so many years we were used to using [only] GPS,” says Chronis Kapalidis, an expert in maritime security and the East Mediterranean at Chatham House.

It has always been possible to disrupt GPS, but doing so is now easier and cheaper than ever, experts say.

That has meant an explosion of both GPS “jamming” — when GPS is interrupted — and “spoofing” — when a receptor is tricked into believing it is somewhere it is not.

Disruption can come from civilians, who can now buy cheap jammers on the internet. It also comes from states, appearing in geopolitical hot spots alongside a new wave of cyber conflict.

Experts say many large vessels have no back-up to GPS, and crew often lack awareness that it is even vulnerable to disruption. Without back-up, an increasingly digital generation of commercial vessels risks getting caught in the crosshairs.

States or rogue elements?

There is no official explanation for why GPS is being disrupted in the East Mediterranean, but a patchwork of military operations in the region is likely to be a major cause of the interruptions. That itself is a result of rapidly rising tensions north of Egypt and off the coast of Syria.

“The eastern Mediterranean is extremely busy militarily,” MARCOM officials wrote in a report in October. “There are numerous warships operating in the region all with high powered transmitting devices.”

In fact, the East Med disruptions began before March, according to a specialist on the region, citing NATO intelligence.

Reports of disruption were heard in 2017, says Hans Tino Hansen, the CEO of Copenhagen-based maritime risk consulting firm Risk Intelligence, who published a report on GPS disruptions based on anecdotal reports from clients.

Those disruptions are likely a result of both military operations by the Egyptian army, who are fighting militants in the Sinai, and Russian warships off the coast of Syria.

“The GPS spoofing and jamming in [Port] Said and Suez is a byproduct … from a military operation that has nothing to do with the ships,” says Hansen.

GPS jamming technology is now accessible enough for jamming to be the work of “rogue” individuals, says Todd Humphreys, director of the Radionavigation Laboratory at the University of Texas at Austin.

But experts agree that in the East Med, the location and sheer scale of the interruptions points towards the work of nation states.

As a result, the potential risks of a vessel losing the ability to navigate, or drifting off course without realizing, are countless.

“The political situation in the East Med is so tense, everyone is at each other’s throats,” says Sebastian Bruns, head of the Center for Maritime Strategy and Security at the University of Kiel. “Just imagine if a Turkish freighter ran aground and spilled oil all over the Israeli coast.”

Geopolitical tensions

The Eastern Mediterranean is just one of the latest hot spots in an expanding list of regions that have seen interruptions rise alongside geopolitical tension.

Last year, the US-based Resilient Navigation and Timing Foundation reported that hundreds of vessels in the Black Sea saw their GPS locations disrupted. Many saw their locations at an inland Russian airport. Anecdotal reports of interruptions in the Black Sea date to at least 2016, multiple experts say.

Recurring, large scale disruptions have been reported off the Korean peninsula, in Lapland in northern Finland, and on the northern Norwegian border with Russia during NATO military drills, which Norway’s Foreign Ministry blamed on Russian forces in a comment to the Associated Press. Russian officials denied involvement.

In October, one report was logged in the Strait of Hormuz, off Iran, and two more were logged at the Saudi Arabian port of Jeddah, in the Red Sea, prompting another advisory from MARAD.

GPS disturbances are just one element in an expanding list of threats to cyber infrastructure, affecting everything from banks to social media websites and consumer utility grids. Cyberattacks have already affected the shipping industry. Last year, Maersk suffered an attack to its central networks that disabled the company for 10 days and cost the company an estimated $250-$300 million.

Meanwhile, GPS interruptions have continued in the East Med. In November, interruptions were reported at the Israeli port of Haifa, and from near the eastern tip of Cyprus.

“We have encountered more severe than normal GPS interference tonight,” read the November 4 report. “Thank goodness for paper charts.”

via RSS https://ift.tt/2R5mfDV Tyler Durden

The story of British graduate student Matthew Hedges has been largely out of international headlines for the six months of his confinement in a UAE prison on spy charges — much of that including solitary confinement — while the more well-known case of recently released American pastor Andrew Brunson, previously held in Turkey for two years on similar charges, held the world’s attention. 

That changed today after a UAE court sentenced the 31-year old PhD student at Durham University to life in prison after he was found guilty of spying in the United Arab Emirates. He was arrested last May while attempting to leave the country at Dubai’s international airport after what he said was a research trip related to his studies in Middle East politics and history. Both his family and the UK government have consistently decried the accusation as false and trumped-up, while British diplomats have consistently pressured Dubai to release Hedges. 

Specifically the Abu Dhabi court found him guilty of “spying for or on behalf of” the UK government based on a confession he was forced to sign in Arabic — a language his family says he doesn’t speak. Hedges wife says he was repeatedly interrogated without a lawyer or consular access during his first months of confinement, during which time he signed the Arabic document. 

In the UAE a “life sentence” is 25 years, after which Hedges is to be deported. News of the verdict initiated a flurry of diplomatic activity, with British PM Theresa May weighing in saying the foreign secretary was “urgently seeking a call with [UAE] Foreign Minister Abdullah bin Zayed,” according to the BBC. Foreign Secretary Jeremy Hunt said he was “deeply shocked and disappointed” by the verdict.

Meanwhile Hedges’ wife, Daniela Tejada, who was present for the sentencing said she was in “complete shock” and issued the following statement to reporters:

Matthew is innocent. The Foreign Office know this and have made it clear to the UAE authorities that Matthew is not a spy for them.

This whole case has been handled appallingly from the very beginning with no-one taking Matthew’s case seriously.

She’s urged UK authorities to “take a stand now” and condemned the UAE court, saying it “should feel ashamed for such an obvious injustice”. Tejada added, “I don’t know where they are taking him or what will happen now. Our nightmare has gotten even worse.” 

Hedges’ family had previously expressed concern for his mental health after lengthy stints and solitary confinement and being fed a “cocktail of medication” by guards. International reports suggest his mental state has rapidly deteriorated amidst poor treatment and the shock of the charges against him. 

Meanwhile some UK officials have gone so far as to question the close security and defense relationship Britain has the UAE as the pro-Saudi GCC state is a major buyer of UK arms. 

Tory MP Crispin Blunt told PM May during a Prime Minister’s Questions parliament session that she should make clear to the UAE that “if he is not released, I don’t see why we should be committed to their defense”.

Foreign Minister Hunt said he’s pursued getting the charges dismissed with “highest levels of the UAE government” and the verdict “is not what we expect from a friend and trusted partner of the United Kingdom and runs contrary to earlier assurances”.

However, we doubt that a single weapons contract will actually be canceled, despite the hollow threats of British officials. Of course, there’s also the possibility that the UAE government has more evidence than it’s revealing to the public, and that UK intelligence officials and political leaders know this.

But we expect that if Hedges really were a spy he likely would have been quietly released long ago because London would have actually brought the heat down, rather than meager and minimal statements of “urgently seeking a call” with Abu Dhabi.

via RSS https://ift.tt/2FzDnk3 Tyler Durden

Authored by Malcolm Lowe via The Gatestone Institute,

Theresa May presented her Brexit deal to her cabinet on November 14, 2018 and to the House of Commons the next day. It consists of two documents, the “Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community” (585 pages) and the “Outline of the political declaration setting out the framework for the future relationship between the European Union and the United Kingdom of Great Britain and Northern Ireland” (8 pages). The documents were released to the public only after the conclusion of that cabinet meeting.

The Problematic Protocol

The Members of Parliament hardly had time to read the Draft Agreement in its entirety. Instead, they rushed to read the “Protocol on Ireland/Northern Ireland” because they knew that this had been the most controversial element in the negotiations between the United Kingdom and the European Union.

The Protocol recalls in its preamble that “the Withdrawal Agreement… does not aim at establishing a permanent future relationship between the Union and the United Kingdom” while noting that both parties recognize the need to maintain the “soft border” that exists between Northern Ireland, as an integral part of the United Kingdom, and the Irish Republic. Although it is hoped that that “permanent future relationship” will have been negotiated by the end of the “transition period” during which the United Kingdom completes its withdrawal from the EU, this may not happen. The aim of the Protocol, therefore, is to serve, if necessary, as a “backstop” arrangement to preserve the soft border even after the transition period while negotiations on the permanent future relationship are completed.

The mechanism of the Protocol is to define a certain kind of “customs union” between the United Kingdom and the European Union in lieu of a permanent relationship. Both Theresa May and her EU counterparts have expressed their firm belief that the Protocol will never need to be activated.

What Members of Parliament noted, however, was that the Protocol does not give the United Kingdom the right to withdraw unilaterally from the operation of the Protocol. Article 20 of the Protocol merely permits the United Kingdom to make a claim, sometime in the future, that the Protocol is no longer needed and to request that the EU agree to end the application of the Protocol. If the EU refuses, Article 20 permits the case to be taken to arbitration, which may rule against the United Kingdom. Thus the Protocol could go on forever and the United Kingdom would never escape from the grip of the EU.

Conservative Opposition to May

Although both Theresa May herself and probably a considerable majority of the Conservative MPs are prepared to risk that danger, two groups within the Conservative parliamentary faction do not agree with her. Moreover, the Conservatives are a few MPs short of a majority in the House of Commons and rely on the support of the Democratic Unionist Party of Northern Ireland (DUP), which is intensely suspicious of the Protocol. May’s hope of nevertheless obtaining a majority for her Brexit deal in the Commons, which she is pursuing with impressive vigour, is surely in vain.

The one group styles itself the European Research Group (ERG). It claims some 60 MPs, most of whom are currently determined to vote against the deal. Conservative MP Jacob Rees-Mogg, leader of the ERG, has requested a vote of no-confidence in Theresa May, in a formal letter to the Conservative Party’s parliamentary group. If 48 MPs (namely, 15% of the Conservative MPs) make such formal requests, an election for party leader must be called. May seems likely to win reelection, but the process would take some weeks as March 29 looms — the date on which the United Kingdom is due to leave the Union and the transition period will begin. Reelection would also bring May no closer to getting her Brexit deal through the Commons.

The second group consists of five senior ministers who decided not to resign alongside others on November 15, but to stay on in the hope of persuading May to seek modification of the Protocol, although both she and her EU counterparts insist that it is too late to do so. The members of this “Gang of Five” are (in alphabetical order) Liam Fox, Michael Gove, Chris Grayling, Andrea Leadsom and Penny Mordaunt. If May is intransigent in refusing their request and they resign, her prospects of gaining a parliamentary majority for her Brexit deal — or even surviving as leader of the Conservative Party — will be all the slimmer.

The One-Sentence Solution

The problem is that neither the ERG nor the Gang of Five has explained what would persuade it to support the Brexit deal.

The ERG is simply content that on March 29, 2019 the United Kingdom should leave the European Union and that trading relations should switch to World Trade Organization terms.

Overnight, therefore, all sorts of tariffs would be imposed on the vast number of individual goods, components and spare parts, etc., that currently flow in both directions tariff-free, while all means of transport and communications would themselves be disrupted, along with police and judicial cooperation, etc. In short, all those detailed issues would spring up which half of the Withdrawal Agreement is devoted to preventing. That is, the half of the text — diligently and conscientiously compiled by experts — that MPs did not have time to read before the Commons debate, There is no need to describe the disastrous impact on industry, agriculture, the 66 million population of the United Kingdom and a larger number of residents of the EU; others have already eloquently spelled it out.

As for the Gang of Five, they are reported to be demanding “a unilateral exit mechanism from the so-called ‘backstop’ arrangement over Northern Ireland,” but they have not specified what form that would take. But it would doubtless be, like Article 20 of the Protocol, a procedure in which the United Kingdom would have to submit an application and negotiate the timetable of its implementation. In short, a tedious process, however assured its outcome.

What is needed is rather not “a unilateral exit mechanism” but a “self-termination mechanism” — an automatic expiry date. We have carefully studied the terminology of the Protocol and the whole Withdrawal Agreement and discovered that the addition of a single sentence to the Protocol would suffice.

Article 20 of the Protocol on Ireland/Northern Ireland should be supplemented by a sentence of the form:

“If not earlier, this Protocol shall cease to apply [x] years after the end of the transition period unless both the Union and the United Kingdom agree to extent its application in whole or in part.”

Here “[x]” should be a number (of years) that is sufficiently large to convict the European Union of bad faith if it refuses to countenance such a sentence, but sufficiently small not to be absurd. We think that “three” would be a suitable number of years, but even “five” would establish the principle that the United Kingdom must have a guaranteed prospect of liberty.

By refusing to permit that modification to the Protocol, the EU’s negotiators would demonstrate that they do intend to submit the United Kingdom to indefinite captivity. Repudiation of the deal in the UK would be justly overwhelming. If the EU accepts the sentence, the biggest obstacle to obtaining a majority in the Commons for the Brexit deal would be removed. Even many ERG members, as well as the DUP, might reconsider their intention to vote against the deal. The prospect of an election for leader of the Conservative Party would likely vanish.

via RSS https://ift.tt/2PKh2VM Tyler Durden

Though he has been in custody of Tokyo prosecutors since his arrest on Monday, Carlos Ghosn is fighting for his future as one of the world’s most respected industrial captains of industry. And from the looks of it, he may have more leverage than many investors initially assumed.

Following reports last night that Renault wouldn’t dismiss Ghosn as CEO – at least not yet – Bloomberg reported Wednesday morning that some Nissan board members are resisting CEO Hirohito Saikawa’s push to oust Ghosn as chairman. The board is expected to decide Ghosn’s fate during a board meeting on Thursday. The Nissan board members’ objections sound similar to those voiced by the France’s Finance Minister Bruno Le Maire, who said Tuesday that the French government would wait until it learns more about the charges that Ghosn is facing before it decides whether to take action. Despite the fact that the investigation into Ghosn was said to have been initiated internally, board members say they have been given too little information about Ghosn’s alleged financial improprieties.

As CNN reported, Renault’s board stopped elevated COO Thierry Bollore temporarily, but said it couldn’t comment further about its plans until it learns more about the allegations against Ghosn from Japanese authorities.

The company said in a statement that it would elevate chief operating officer Thierry Bolloré on an interim basis, giving him the same powers that Ghosn enjoys as CEO. It said independent director Philippe Lagayette would chair board meetings “during this period.”

[…]

“At this stage, the Board is unable to comment on the evidence seemingly gathered against Mr. Ghosn by Nissan and the Japanese judicial authorities,” Renault said in its statement, adding it was asking Nissan to share all information related to the investigation into Ghosn.

As rumors that Ghosn was ousted in a palace coup percolate, and Saikawa has insisted that Ghosn would soon be ousted, it appears that several Renault loyalists who serve on Nissan’s board (the French automaker owns 43% of Nissan) could be Ghosn’s saving grace.

But one of Nissan’s directors told Bloomberg News that not enough information had been provided about the investigation for them to be able to decide how to vote on Thursday. Securing a unanimous decision to oust Ghosn as chair will likely be difficult because Nissan directors that used to work at Renault may not back the dismissal until the allegations against Ghosn are made clear, according to people familiar with board members’ deliberations.

The director and other people Bloomberg News spoke to asked not to be named, citing company policy.

The board’s decision Thursday will do little to clear the allegations against Ghosn and Kelly that are still being pursued by the Tokyo prosecutor’s office. The men will be detained for a further 10 days, Japanese broadcaster NHK said on Wednesday.

A Nissan spokesman didn’t comment specifically on the board deliberations.

“The directors are meeting tomorrow and a proposal will be made to the board to remove the directorships of Mr Ghosn and Mr Kelly,” the spokesman said.

Nissan’s board includes Ghosn, Saikawa and Kelly, as well as two external board members. Votes at Thursday’s meeting will be cast one-by-one on an anonymized basis. The outcome will be determined by a simple majority. This means there must be four votes in favor for the motion to oust Ghosn and Kelly to pass. No new directors will be named between Wednesday and Thursday’s meeting.

Ghosn famously rankled the Japanese establishment when he arrived at Nissan in 1999 and implemented radical changes that disrespected Japan’s deep-seated respect for seniority. He also imposed painful cost cuts that further horrified the Japanese press. So the notion that Ghosn loyalists might take the view that his imprisonment – which has been extended by 10 days as prosecutors finalize the filing of charges – is more about vengeance than justice. If he avoids being ousted, we imagine investors could take this as a positive for Nissan and Renault shares, which were hammered after the news broke.

But if he does manage to hang on, he’s facing a long legal fight to clear his name and avoid a possible prison sentence.

via RSS https://ift.tt/2qZWKIP Tyler Durden