Month: July 2024

Via SchiffGold.com,

While the cost of fireworks is down compared to last year, prices of just about everything else are way up.

That means individuals are still buying fireworks to light off themselves, but the size and scope of municipal fireworks shows are being downgraded in many towns and cities across the country – and in some areas, have been canceled entirely. 

By and large, fireworks are cheaper now than a year ago, but they’re still vastly more expensive if you go back a few years farther, to pre-covid. And a reduction in demand since then hasn’t fully stifled the cost increase, especially as fireworks produced in China still need to be shipped across the ocean to American buyers.

For towns and cities used to putting on extravagant displays, the costs are many. There’s a need for practical additions like portable bathrooms, shuttle buses, and trained pyrotechnicians. Some towns hire DJs to play music. But one of the largest costs is insurance, which every official fireworks display is required to have, and which has skyrocketed in cost.

Insurers know that if something goes awry and a claim is filed, the cost of dealing with it will be much higher than during previous years: fixing or replacing damage, handling medical emergencies, and planning for other externalities take much more fiat money than it did just a few years ago, and nothing is expected to change for the better. As Peter Schiff said earlier this year:

“The Fed printed an absurd quantity of money during the pandemic, and government deficits went through the roof. What has fundamentally changed since then?”

That’s even truer when you need specialized insurance coverage which has to cover a wide variety of things, as is the case for municipal fireworks shows. Towns don’t just need personal and property liability insurance to protect technicians and the public, but also insurance for transporting the fireworks, protection in case of event cancellation or inclement weather, and other aspects.

That’s why premiums for home, health, and car insurance have also gone way up, along with liability insurance and other types. Insurers know it’s going to cost way more to fix what breaks, whether it’s your home, your car, or a glitchy municipal fireworks demonstration going haywire and blowing up a public park.

Home Insurance Premiums, 2019-2024

Source

The problem will only get worse, so expect to see even more downscaling next year, especially if Trump wins the election and imposes tariffs on Chinese imports, and further pushes up the cost of fireworks themselves.

Municipalities are going to have to deal with those higher costs and adjust their shows — and the expectations of residents — accordingly. On the bright side, your dogs and cats may get a break from all the noise. But on the downside, goods and services for Americans will be less affordable than ever before as Americans try to spend their devalued dollars.

It appears that Biden’s apparatchiks refuse to give up on the myth of a “strong labor market” just yet even as they admit to anyone who reads between the lines just how ugly things are getting.

Moments ago the BLS reported that in June the US added 206K jobs, above the 190K expected.

Not bad, especially with Goldman expecting 140K. Of course, a quick glance reveals where the “beat” came from: both previous months were revised sharply lower:

• May jobs revised from 272K, to 218K
• April jobs revised from 165K to 108K

With these revisions, employment in April and May combined is 111,000 lower than previously reported. So yes, it is easy to “beat” when you have a pool of 111K jobs that never existed to push into this month. And course, next month when the June data is revised lower, the 206K beat will be revised to a sub 190K miss but by then it will be too late.  And as shown in the chart below, 4 of the past 5 months have seen payrolls revised lower.

Not only that but the composition of jobs was once again dismal and followed the same gimmick the BLS used for its “strong” JOLTS report this week: private sector workers came in at 136K, well below the 160K expected and down from a downward revised 193K (was 229K). The gap was filled by – what else- deep stater and other government workers, as government payrolls jumped from 25K to 70K!

The good news is that unlike last month when the number of employed workers actually plunged again leading to a a record gap between the Establishment and Household Surveys, in June at least the number of employed workers rose by 116K. Which however means that the gap between the two series rose by another 90K!

Turning to the unemployment rate, there was a big surprise here because contrary to expectations of a flat print, the number rose to 4.1%, up from 4.0% in May and the highest print since November 2021!

Among the major worker groups, the unemployment rates for adult women (3.7 percent) and Asians (4.1 percent) increased in June. The jobless rates for adult men (3.8 percent), teenagers (12.1 percent), Whites (3.5 percent), Blacks (6.3 percent), and Hispanics (4.9 percent) showed little or no change over the month.

Some more stats from the latest jobs report:

• The number of long-term unemployed (those jobless for 27 weeks or more) rose by 166,000 to 1.5 million in June. This measure is up from 1.1 million a year earlier. The long-term unemployed accounted for 22.2 percent of all unemployed people in June.
• The labor force participation rate changed little at 62.6 percent in June, and the employment-population ratio held at 60.1 percent. These measures showed little or no change over the year.
• The number of people employed part time for economic reasons, at 4.2 million, changed little in June.
• The number of people not in the labor force who currently want a job declined by 483,000 to 5.2 million in June. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.
• Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force, at 1.5 million, was essentially unchanged in June. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, edged down to 365,000 in June.

Turning to hourly earnings, here too there was continued slowing with the average hourly earnings number rising 3.9% YoY, down from 4.1% in May and in line with expectations. On a monthly basis, the print also slower to 0.3%, down from 0.4% in May.

In keeping with the BLS’ other favorite gimmick of representing part-time jobs growth as the primary driver of the US labor market, in June, the number of part-time workers rose 50K to 28.1 million while full-time workers dropped by 28K. This means that since June 2023, the US has added 1.8 million part-time jobs and lost 1.6 million ful-time jobs.

Finally, looking at the various industries, we find that the bulk of jobs growth in June was on the back of government workers, which as is well-known, do not actually produce anything but are a drain of US wealth and merely serve to redistribute income.  Here is the full breakdown:

• Government employment rose by 70,000 in June, higher than the average monthly gain of 49,000 over the prior 12 months. Over the month, employment increased in local government, excluding education (+34,000) and in state government (+26,000).
• Health care added 49,000 jobs in June, lower than the average monthly gain of 64,000 over the prior 12 months. In June, employment rose in ambulatory health care services (+22,000) and hospitals (+22,000).
• Employment in social assistance increased by 34,000 in June, primarily in individual and family services (+26,000). Over the prior 12 months, social assistance had added an average of 22,000 jobs per month.
• Construction added 27,000 jobs in June, higher than the average monthly gain of 20,000 over the prior 12 months.
• Retail trade employment changed little in June (-9,000), after trending up earlier in the year. Furniture, home furnishings, electronics, and appliance retailers lost 6,000 jobs over the month, while warehouse clubs, supercenters, and other general merchandise retailers gained 5,000 jobs.
• Employment in professional and business services changed little in June (-17,000) and has shown little change over the year. And the best leading indicator for jobs: temp-help services employment declined by 49,000 over the month and is down by 515,000 since reaching a peak in March 2022.

Commenting on the jobs report,  Rubeela Farooqi, chief US economist at High Frequency Economics said that “Overall, a moderation in payrolls in Q2 coupled with a rise in the unemployment rate and a slower growth path suggested by recent data bolster the case for rate cuts this year. We think the Fed could certainly start the discussion about cutting rates at the upcoming FOMC meeting, and lower the policy rate in September, if the data continue to show moderation.”

And here is Seema Shah, chief global strategist at Principal Asset Management:“The equity market may be a little conflicted how to respond to today’s jobs report. On one hand, the downward revisions to prior months and the rise in the unemployment rate raises the odds of a September Fed rate cut – bond markets are certainly celebrating this. But those same figures cannot help but prompt a twinge of concern about the direction of the US economy. The broad host of economic data all point to a softening – today’s report adds to that picture.”

However, the bigger take home message here besides the timing of the next Fed cut which will come – just a matter of when – is that the Biden BLS is now clearly expecting to dump the mother of all disastrous job report realities on the Trump admin, which will come in just in time to have to revise the actual number of jobs lower by several million.

Authored by Steve Watson via Modernity.news,

A major donor to the Democratic Party has torched Joe Biden, declaring that “we are in fuck city,” and noting that other prominent donors are moving their money into the Congress and Senate races.

Ari Emanuel, the CEO of Endeavor, which owns the UFC and WWE, made the comments during the Aspen Ideas Festival, noting that Biden “said he was gonna run for one term and he was doing it to restore democracy. He now runs for a second term. That’s the first bit of malarkey, as he would say.”

NEW: Hollywood Democratic megadonor Ari Emanuel torches President Joe Biden

“I talked to a bunch of big donors, and they’re moving all their money to Congress and the Senate.”

“He gave us a bunch of malarkey, and I’m really pissed. We all should be really pissed.”

“He is not… pic.twitter.com/mKF8VuDVxz

— KanekoaTheGreat (@KanekoaTheGreat) July 3, 2024

Emanuel continued, “His cohorts have told us that he’s healthy for over a year, and I think it was two weeks ago, there was an article in the Wall Street Journal.”

“I had a father who died at 92 but at 81, I took away his car. It’s a very simple test for me. If you were driving from downtown Beverly Hills to Malibu, would you want Biden to do it at night?” he further posited.

Emanuel further charged that Biden is “telling us malarkey, his people are telling us malarkey, and we’re in a very bad problem.”

Then came the kicker.

“I talked to a bunch of big donors, and they’re moving all their money to Congress and the Senate,” the CEO stated, adding “He gave us a bunch of malarkey, and I’m really pissed. We all should be really pissed.”

“He is not the candidate anymore. This is a legal issue now,” Emanuel insisted, adding that removing Biden is tricky legally in some states, and suggesting that it could be done if the campaign money dries up.

Emanuel concluded by declaring “It’s a legal issue now… but we’re in fuck city.”

Another prominent donor, Netflix’s billionaire co-founder Reed Hastings, has also called for Biden to drop out of the race, telling the New York Times that “Biden needs to step aside to allow a vigorous Democratic leader to beat Trump and keep us safe and prosperous.”

Reed Hastings, co-founder of Netflix, told the New York Times that President Biden needs to step aside to “allow a vigorous democratic leader to beat Trump and keep us safe and prosperous.”

Hastings and his wife have donated more than $20 million to Democrats in recent years. pic.twitter.com/Eis98ab278

— Scripps News (@scrippsnews) July 4, 2024

As we highlighted earlier, the Times has also reported that Biden told a “key ally” that he may be forced to drop out of the race if upcoming appearances do not go well.

*  *  *

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US equity futures are unchanged for two days in a row – having gone nowhere during the July 4th holiday – erasing an earlier attempt to break out to all time highs. At 8:00am ET, S&P futures were flat while Nasdaq futures rose 0.1% as global stocks traded at all-time highs before crucial US jobs data that’s expected to show some moderation in hiring. The US dollar dropped for fourth day to its lowest level in three weeks while the pound notched its longest winning streak in four years as Labour swept to power in the UK’s general election. Bond yields are modestly lower ahead of NFP. Commodities are mixed: oil and base metals are lower; precious metals are higher. Today, the key focus today will be NFP release and any further updates on the US election (our full NFP preview is here). Consensus sees 190k jobs being added, with Goldman calling for a street low 140K; unemployment is expected to hold at 4.0% while average hourly earnings are expected to rise 0.3%, down from last month’s 0.4%.

In premarket trading, tech are once again in the lead: TSLA rose 2.2%, on track to turn positive for 2024 after a seven-day winning streak that’s added about $200 billion in market value. Other techs also rose: GOOGL +39bp, AMZN +23bp; Semis are mixed: NVDA -16bp, AMD +20bp, MU -42bp. Macy’s rallied after the Wall Street Journal reported that Arkhouse Management and Brigade Capital Management have raised their buyout offer to about $6.9 billion.

In contrast with the positive tone for equities, Bitcoin sank to the lowest since February without any actual incremental news, as a “motivated seller” took advantage of the liquidity vacuum of July 4th and the lack of ETF buying to dump several billion in hopes of pushing prices lower. And succeeded: bitcoin dropped for a fourth session as part of a wider crypto selloff. Crypto-related shares fell.

Turning back to equities, a series of soft US economic readings has revived hopes that the Federal Reserve will start cutting interest rates as soon as September, pushing MSCI Inc.’s world index of equities to a record.

“Given other evidence of a cooling economic backdrop — weaker ISM Manufacturing PMI and ISM Service Sector PMI reports — the payroll report could be increasingly decisive for the Fed as it seeks a rationale to signal an easing of rates,” said Quincy Krosby, chief global strategist for LPL Financial.

As previewed overnight, the focus during today’s skeleton crew session (where most traders are away from the office), will be the US jobs figures. Payrolls probably rose by 190,000 in June, a step-down in hiring from the previous month, according to the median estimate in a Bloomberg survey.  Average hourly earnings likely increased 3.9% from a year earlier, the least in three years. The unemployment rate is seen holding at 4%, the highest level in more than two years.

“The US data will be very interesting for a couple of reasons — you see signs of a bit of a slowdown in the labor market, and the market appears for now to have taken that in stride because it does raise the possibility of an easier monetary policy going down the track,” said Richard Flax, chief investment officer at European digital wealth manager Moneyfarm.

On the policy front, New York Fed President John Williams said Friday that while inflation has cooled recently toward the central bank’s 2% target, policymakers are still some distance from their goal. “Inflation is now around 2-1/2%, so we have seen significant progress in bringing it down. But we still have a way to go to reach our 2% target on a sustained basis,” Williams said in prepared remarks for an event at the Reserve Bank of India in Mumbai. “We are committed to getting the job done.”

European stocks climbed, led by the tech sector. In the UK, domestically focused stocks and government bonds rose and the pound strengthened for a seventh day after the landslide victory for Labour, which handed Keir Starmer’s party 412 of the 650 seats in the House of Commons and a clear mandate to deliver on a pledge of greater economic stability.

“A clear majority could bring some much-needed stability to the UK political landscape at a time of heightened global uncertainty,” said Samuel Zief, head of global FX strategy at J.P. Morgan Private Bank. That “could provide a bit of a kicker for the pound,” he said.

France’s CAC40 advanced for a third day, following indications that Marine Le Pen’s National Rally party will likely fall short of an absolute majority in second-round elections this weekend. Still, no matter which party comes out on top in the French parliamentary vote, some investors are betting it marks the beginning of a more turbulent period for the country’s stock and bond markets. The CAC 40 has been the worst performer among major European stock indexes since the snap election was called last month, while at the height of the selloff a metric of bond-market risk soared to its highest since the sovereign debt crisis.

Earlier in the session, Asian equities were little changed as advances in South Korea and Taiwan were tempered by a continued selloff in Chinese shares. The MSCI Asia Pacific Index is steady for the day, though the gauge was still on track for its best weekly gain since mid-May. A measure of regional tech stocks climbed to a record high, propelled by Samsung Electronics showing its fastest pace of profit growth in years. Chinese shares in Hong Kong and mainland were the worst performers in the region, with the CSI 300 Index erasing its year-to-date gains. Chinese stocks extended their decline to a seventh straight week — the longest losing streak since early 2012 — as investor sentiment continues to weaken ahead of the Third Plenum later this month. About 800 stocks on the Shanghai and Shenzhen bourses closed below their book value on Friday, surpassing the number during the market trough in February and underscoring the pervasiveness of bearish sentiment, according to Bloomberg-compiled data.

China’s central bank took the next step toward selling government bonds to cool a record-breaking rally, saying it now has “hundreds of billions” of yuan of the securities at its disposal through agreements with lenders. “The domestic economy is really weak with May-Jun macro data and feedback from companies mostly turning south,” said Xin-Yao Ng, director of investment at abrdn. Plus, there are “low expectation for economic support from the Third Plenum.”

In FX, the US dollar dropped for a 4th straight session to a 1 month low. A disappointing US monthly jobs report could push down the dollar, Philip Wee, a senior FX strategist at DBS Bank Ltd. in Singapore, writes in a research note. “Once considered exceptional, the US economy has witnessed a significant downgrade in its growth outlook.” Sterling rose for a seventh straight day against the greenback, its longest winning streak in four years. The Japanese yen strengthened for a second day against the greenback to rebound further from the lowest level since 1986 reached on Wednesday. Most currencies traded within narrow ranges amid the wait-and-see mode following a US holiday on Thursday.

In rates, treasuries are richer across the curve in a slight bull-steepening move, following wider gains across European rates market after digesting Labour’s landslide UK election win, which broadly matched projections. Front-end yields are lower by more than 2bp with 2s10s, 5s30s spreads steeper by 0.5bp and 1.5bp on the day. 10-year TSY yields are around 4.34% is 2.6bp richer vs Wednesday’s close, in line with bunds while gilts outperform by 1.5bp in the sector

In commodities, oil traded near a two-month high as Hurricane Beryl portended a potentially worse storm season, while shrinking US crude stockpiles hinted at improved demand. Gold headed for a back-to-back weekly gain.

In crypto, Mt. Gox has begun repaying Bitcoin (BTC) and Bitcoin Cash (BCH) to creditors, according to Cointelegraph. Furthermore, Crypto exchange Mt Gox creditors “may need to wait up to three months to receive their bitcoin or bitcoin cash repayments depending on which crypto exchanges they made the claims with”, according to a trustee document cited by The Block. Crypto has been pressured across the session given the above reports. BTC falling over USD 5k on the session to a USD 53.56k base.

US economic data slate includes June jobs report at 8:30am New York time.

Market Snapshot

• S&P 500 futures little changed at 5,593.75
• STOXX Europe 600 up 0.4% to 519.36
• MXAP little changed at 184.57
• MXAPJ little changed at 576.72
• Nikkei little changed at 40,912.37
• Topix down 0.5% to 2,884.18
• Hang Seng Index down 1.3% to 17,799.61
• Shanghai Composite down 0.3% to 2,949.93
• Sensex down 0.4% to 79,731.19
• Australia S&P/ASX 200 down 0.1% to 7,822.26
• Kospi up 1.3% to 2,862.23
• German 10Y yield little changed at 2.59%
• Euro up 0.1% to $1.0827
• Brent Futures up 0.1% to $87.54/bbl
• Gold spot up 0.4% to $2,366.25
• US Dollar Index down 0.15% to 104.97

Top Overnight News

• Keir Starmer’s Labour won a landslide victory in the UK general election after Rishi Sunak’s Conservatives imploded, a result that dramatically reshapes the political landscape while still falling short of a ringing endorsement of the party’s plan for government.
• Global stocks traded at all-time highs before crucial US jobs data that’s expected to show some moderation in hiring. The pound added to its longest winning streak in four years as the Labour Party swept to power in UK elections.
• President Joe Biden is embarking on the most consequential weekend of his political career, knowing that he must restore the faith of voters, donors, and party officials deeply skeptical of his acuity — and that any misstep will prove fatal to his reelection campaign.
• China’s central bank took the next step toward selling government bonds to cool a record-breaking rally, saying it now has “hundreds of billions” of yuan of the securities at its disposal through agreements with lenders.
• Currency traders face a long and nail-biting wait this month until the Bank of Japan’s policy decision on July 31, when a potential interest-rate hike and cut to bond purchases may finally bring some relief to the embattled yen.
• Iran’s presidential runoff on Friday will see the election’s only reformist candidate, Masoud Pezeshkian, face off against anti-Western Islamist Saeed Jalili in the race to run the country’s government.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded somewhat mixed in the absence of a lead from the US owing to the Independence Day holiday, while there was also a lack of fireworks from the UK election exit polls which showed the Labour Party are on course for a landslide victory. ASX 200 was contained amid weakness in miners and the top-weighted financial sector. Nikkei 225 traded indecisively and initially climbed to fresh record highs but then failed to sustain the momentum as the yen began to strengthen and as participants also digested weak Household Spending data which showed a surprise contraction. KOSPI was boosted amid gains in index heavyweight Samsung Electronics following its preliminary Q2 earnings. Hang Seng and Shanghai Comp. were pressured with weakness seen in automakers after the EU confirmed it is to move ahead with planned tariffs on Chinese EVs with provisional duties effective today, while China is to continue the anti-dumping probe into EU port imports and will hold an EU brandy probe hearing on July 18th.

Top Asian News

• PBoC has hundreds of billions of yuan of medium- and long-term bonds at its disposal to borrow and signed agreements with several major financial institutions regarding bond borrowing, according to Bloomberg.
• China officially sets up a special fund for revitalisation of state firms’ land assets worth CNY 30bln, according to state media.
• China’s MOFCOM confirmed it is to hold an EU brandy probe hearing on July 18th.
• Japanese Finance Minister Suzuki warned of inflation concerns despite recent wage rises and noted that a weak yen is pushing up costs for imports and impacting prices, while he said they are to monitor stocks and FX trends urgently.
• BoJ report is to reportedly reveal broadening wage rise trend, according to Reuters sources; report likely to show increasing number of small and mid-sized firms raising wages.

European bourses have been tilting higher throughout the morning with the region benefitting from a continuation of recent broad gains and as political risk is removed in the UK (election), Germany (2025 budget) & France (polls erode chance of a RN majority), Stoxx 600 +0.5%. DAX 40, +1.0%, outperforms despite dismal industrial output metrics for May with tech names bolstered after Samsung’s update and the index generally benefitting from the German coalition government coming to a draft deal on the 2025 budget framework. UK’s FTSE 250 (+1.2%) outperforms the FTSE 100 (+0.3%) as the domestic economy welcomes the return of a Labour government, with housebuilders in particular benefitting. Stateside, futures have been pivoting the unchanged mark with specifics light on the return from Independence Day into a docket which is dominated by the monthly jobs report, ES +0.1%, NQ +0.1%. Foxconn (2317 TT) June revenue +16.1% Y/Y, Q2 +19.1% (-9.6% in Q1). Samsung Electronics (005939 KS) – The world’s largest memory chip, smartphone and TV maker sees a better than expected increase in Q2 profits, as the AI boom lifts chip prices. Sees Q2 profit rising to KRW 10.4tln (exp. 8.8tln; prev. 670bln in Q2 2023), and sees Q2 sales of KRW 74tln (exp. 74.5tln).

Top European News

• ECB’s Lagarde said officials are in no hurry to cut rates again after June’s move and the central bank requires additional reassurance that inflation is headed back towards 2% before it cuts rates further, according to an interview with RTP.
• German coalition government agreed on a 2025 draft budget after months of negotiations, according to a government source.
• Thereafter, German Finance Minister Lindner says the 2025 budget deal is EUR 481bln in size, incl. EUR 57bln in investments. Chancellor Scholz says they will fully meet the 2% NATO spending goal every year; high billion-EUR sum is planned for housing construction. Growth package to be presented on 17th July

UK Election

• UK election exit polls showed the Labour Party is set to win 410 seats for a 170-seat majority, Conservatives 131, Lib Dems 61, SNP 10, Reform 13, Greens 2. This suggested the Labour Party will win the most seats by any party since 2001 and the Conservatives are to win the fewest seats since the party was founded in 1834. The latest results show Labour has won for majority.
• UK Labour Party leader Starmer won his seat and said the people have spoken, while he added that people are ready for change and it is now time for them to deliver. Starmer said in his victory speech “country first, party second” and vowed a transformed Labour Party, while he added that he doesn’t promise it will be easy and they will have to move immediately
• UK PM Sunak won his parliament seat in Richmond and Northallerton, while he conceded defeat in the general election and stated that the Labour Party has won and the British people have delivered a sobering verdict. Furthermore, Sunak said he will continue to serve as a Member of Parliament and he takes responsibility for the loss. It was separately reported that Sunak is expected to resign as Conservative party leader on Friday morning, according to Times’ Shipman
• UK Reform Leader Farage won his parliament seat and said there is no enthusiasm for Labour, while he added they are coming for Labour votes and this is just the first step that will stun everyone.
• Goldman Sachs raises UK’s GDP growth forecast by 0.1ppts in 2025 and 2026 after the UK election; says Labour Party’s fiscal policy agenda to provide a modest boost to demand growth in the near-term.

FX

• A slightly softer start for the USD with the index weighed on by the EUR and GBP as election risk fades and passes respectively. DXY down to a 104.93 base with the 100- & 200-DMAs below and potentially in focus into Payrolls.
• GBP deriving some modest benefit from the passing of any election risk, though the outcome has been nailed on for weeks and Cable itself was unreactive to the exit poll and updates since; at the top-end of a 1.2755-1.2783 bound.
• EUR edging higher into Sunday’s second round of the French legislative elections and benefitting from the main market risk of a RN absolute majority being removed in the latest polls, single currency finds itself in a slim range and holding above a cluster of DMAs.
• JPY outperforms with USD/JPY below 161.00 and testing 160.50. No real move to comments from the Finance Minister or thereafter from a Reuters sources piece regarding a report next week which is set to reveal a broadening wage trend
• PBoC set USD/CNY mid-point at 7.1289 vs exp. 7.2704 (prev. 7.1305).

Fixed Income

• Benchmarks generally modestly firmer but very much in a holding pattern into payrolls.
• No move from Fed’s Williams who noted of progress in bringing inflation back to target, with the line echoing Powell earlier in the week who said they have made quite a bit of progress on inflation.
• USTs a touch firmer with the US yield curve mixed but slightly steeper into Payrolls.
• OATs steady into Sunday’s second round; Bunds unreactive to dismal German data this morning with no real or sustained move on the fiscal related updates before or since, with Bunds in a relatively narrow 130.53-130.78 band.
• Gilts gapped higher on the open but initially stalled shy of Thursday’s best before extending modestly but stopping within reach of Wednesday’s 97.78 WTD peak.

Commodities

• Crude benchmarks near the unchanged mark. Initially lifted alongside an uptick in stock performance in the early European morning before benefitting further on a steady flow of hurricane and geopolitical developments.
• WTI and Brent around USD 84.00/bbl and USD 87.40/bbl respectively, towards the mid-point of parameters.
• Metals generally firmer; spot gold picking up as the USD slips and as yields having a very slight negative bias into NFP. XAU at a fresh WTD peak of USD 2367/oz, stalling just shy of the 21st June high at USD 2368/oz.
• Base metals similarly supported with 3M LME Copper inching towards USD 10k/T, though iron ore was pressured in APAC trade with profit taking from recent gains seemingly the driver.
• Qatar set August Marine crude OSP at Oman/Dubai plus USD 0.15/bbl and land crude OSP at Oman/Dubai minus USD 0.40/bbl.
• Chevron (CVX) announced it was removing non-essential personnel from its Gulf of Mexico facilities due to approaching Hurricane Beryl but noted that production from its Gulf of Mexico assets remains at normal levels. It was also reported that Shell (SHEL LN) said is evacuating all personnel at its Perdido asset due to Hurricane Beryl, according to Reuters.
• Russian Energy Ministry says gasoline export supplies to “friendly countries” now 70% lower than average daily level in July 2023; Russia has ample fuel reserves for stable supply of domestic market.

Geopolitics

• Israeli PM Netanyahu told US President Biden he has decided to send a delegation to continue negotiations on hostages but reiterated that Israel will only end the war after achieving all of its objectives.
• US senior administration official said President Biden and Israeli PM Netanyahu walked through the draft Israel-Hamas agreement in a 30-minute call and the US believes there is a significant opening for a hostage deal, while the official stated that the Hamas response moves the process forward and could provide basis for closing a deal on hostages and ceasefire. Furthermore, the US official said outstanding issues relate to the implementation of an agreement in which there is significant work to be done and a deal is not likely to be closed in a period of days but they have had a breakthrough on the critical impasse in Israel-Hamas talks.
• Israel’s Mossad chief Barnea is travelling to Doha to resume Gaza ceasefire and hostage talks which will likely take place on Friday and will meet with Qatar’s PM in an effort to bring Israel and Hamas closer to a Gaza peace deal, according to a source cited by Reuters.
• Israeli official confirmed that the Mossad chief will lead a hostage negotiations delegation and another official said there is a real chance for a deal, while it was also stated that the proposal put forward by Hamas includes a very significant breakthrough and the official stated that they can proceed with a deal but it depends on PM Netanyahu.
• Hamas said it did not drop the condition of a ceasefire in Gaza, while it added that Israeli PM Netanyahu did not want a permanent ceasefire in Gaza and requires the movement to lay down arms, according to Al Arabiya.
• Hamas leader said they are waiting for a positive response from the Israeli side to start negotiations on the details of the deal, according to CNN.
• “There are some obstacles before reaching an agreement, including demanding that Hamas not have the right to object to the Palestinian “security” prisoners who will be released”, according to Sky News Arabia citing Israeli press Yedioth Ahronoth.
• “The army is making progress in Rafah But the fighting is expected to last at least another month.”, according to Israeli press Yedioth Ahronoth cited by Al Jazeera.
• Russia’s Defence Ministry said it is carrying out drills involving mobile nuclear missile launchers, according to Interfax.

US Event Calendar

• 08:30: June Change in Nonfarm Payrolls, est. 190,000, prior 272,000
• 08:30: June Change in Private Payrolls, est. 160,000, prior 229,000
• 08:30: June Underemployment Rate, prior 7.4%
• 08:30: June Unemployment Rate, est. 4.0%, prior 4.0%
• 08:30: June Labor Force Participation Rate, est. 62.6%, prior 62.5%
• 08:30: June Average Hourly Earnings YoY, est. 3.9%, prior 4.1%
• 08:30: June Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
• 08:30: June Average Weekly Hours, est. 34.3, prior 34.3

DB’s Jim Reid concludes the overnight wrap

After 31 all time highs in H1, last night saw the first in H2 for the S&P 500 (+0.62%) after a steady rally once Europe went home. Meanwhile yields on 10yr Treasuries (-3.0bps) fell back after a bit of a two-way battle with some dovish-leaning comments from Fed Chair Powell initially sending yields lower, before this was outweighed by a more hawkish JOLTS report as he was speaking. However, after Europe went home US Treasury yields drifted back to near the pre-JOLTS levels. Market may wind down later ahead of tomorrow’s US Independence Day. However remember payrolls on Friday in what will be a lightly staffed US market. It seems like the year for such occurances as payrolls was released on Good Friday only three months ago.

Back to yesterday, one of the main highlights was a panel at the ECB’s forum in Sintra, in which both Fed Chair Powell and ECB President Lagarde were speaking. Powell sounded positive about disinflation, saying that “inflation now shows signs of resuming its disinflationary trend”. That reassured investors that the Fed was becoming more confident about the path of inflation, although Powell also pointed out that given the strength of the economy and the labour market “we have the ability to take our time and get this right”.

However, Powell’s optimistic remarks on disinflation were countered by the latest JOLTS report of job openings, which showed a tighter labour market than expected. For instance, the number of job openings unexpectedly rose in May to 8.140m (vs. 7.946m expected), and the hires rate also ticked up a tenth to 3.6%. In addition, the quits rates held steady at 2.2% for a 7th consecutive month, so there was little sign of a further deterioration in the labour market that we’ve seen in other recent data.

On balance, the more dovish tones won out though, and investors became a bit more confident in the prospect of rate cuts this year. Indeed, investors dialled up the chance of a cut by the September meeting from 69% to 75%, even though Powell said that “I am not going to be landing on any specific dates” when he was asked about September. We also saw similar moves in the yield curve, with the 2yr yield coming down -1.45bps to 4.741%, whilst the 10yr yield fell -3.0bps to 4.432%. Intraday the 2s10s curve reached its steepest level since January before re-flattening a bit and closing at -31.4bps. The intra-day highs were just a week after hitting the most inverted since December. The 23.4bps range over the last week shows both the scale of the move in the last few days and also how narrow the range has been since January. This morning in Asia, yields on 10yr USTs are edging back up less than a basis point across the curve.

Meanwhile in the Euro Area, ECB President Lagarde didn’t provide too much news on the policy path, but we did get the flash CPI release for June yesterday, which saw headline inflation fall by a tenth to +2.5% as expected. Even so, core CPI was a bit stronger than expected, coming in at +2.9% (vs. +2.8% expected). In light of that, investors further priced out the chance of a cut at the next meeting in a couple of weeks’ time, which is now down to just 7%. But they still think there’s a strong chance of a cut by the September meeting, which is now priced as a 72% chance from 70% on Monday.

Over in France, all eyes are on Sunday’s election, and yesterday saw Marine Le Pen say that the National Rally would still try and form a government even if they didn’t achieve an overall majority. But other parties have been seeking to stop them reaching a majority, and over 200 candidates have now dropped out from the second round. In most cases, they’ve been withdrawals by Macron’s centrist group or the left-wing alliance in order to stop the National Rally from winning. So there are now less than a hundred three-way contests on Sunday. In terms of the market reaction, yesterday saw the Franco-German spread tighten for a third consecutive day, which is the first time that’s happened since the snap election announcement. That took it down by -2.7bps to 71.4bps, and the moves came in the context of a broader sovereign bond rally across Europe, which saw yields on 10yr bunds (-0.4bps), OATs (-3.2bps) and BTPs (-5.0bps) all move lower.

When it came to equities, Europe saw declines across the continent, with the STOXX 600 (-0.42%), the DAX (-0.69%) and the CAC 40 (-0.30%) all moving lower. Meanwhile the US continued to diverge from Europe, especially with the late rally, as the S&P 500 (+0.62%) closed at a record high, powered by the Magnificent 7 (+1.00%) own record high which included a +10.20% rise for Tesla on better Q2 delivery numbers. Small caps rallied as well with the Russell 2000 gaining a more subdued +0.19%.

Asian markets are mostly trading higher this morning with the exception of mainland China . The Hang Seng (+0.93%) is outperforming with the Nikkei (+0.88%) breaking back above the 40,000 level for the first time in three months. Elsewhere, the KOSPI (+0.40%) is also edging higher but Chinese stocks are falling following a disappointing reading on service sector activity (more on this below). S&P 500 (-0.14%) and NASDAQ 100 (-0.11%) futures are seeing minor losses but European ones are up around half a percent after missing out on the US late rally.

Coming back to China, service sector activity decelerated in June dragged down by slower growth in new orders. The Caixin services PMI fell to 51.2 (v/s 53.4 expected) from 54 in May, marking the lowest reading since October 2023 thus raising concerns over a broader slowdown. Meanwhile in Japan services activity contracted for the first time in nearly two years in June as the final estimate of the Jibun Bank services PMI slipped to 49.4 from 53.8 in May, ending 21 straight months of expansion.

Elsewhere, retail sales in Australia advanced +0.6% m/m in May (v/s +0.3% expected) as against a +0.1% increase in April, reinforcing the case for an interest-rate hike. Following release, yields on 3yr government bonds extended their rise, edging up by +2.3bps to trade at 4.16% as we go to print.

Here in the UK, attention is also shifting to politics ahead of tomorrow’s general election. Today we should get a lot of final opinion polls, including an MRP poll from YouGov at 5pm London time that will have seat projections for the different constituencies. As it stands, all opinion polls still give the opposition Labour Party a decisive lead that’s consistent with them reaching a majority in the House of Commons. For instance, Politico’s polling average gives them a 20-point lead on 41%, ahead of the governing Conservatives on 21%. They’re followed up by the right-wing Reform UK led by Nigel Farage, who are currently in third on 16%.

To the day ahead now, and data releases include the final services and composite PMIs for June from around the world, and in the US there’s also the ISM services index for June, the ADP’s report of private payrolls for June, the weekly initial jobless claims, along with the trade balance and factory orders for May. From central banks, we’ll get the minutes from the Fed’s June meeting, and hear from ECB President Lagarde, ECB Vice President de Guindos, the ECB’s Cipollone, Lane and Knot, and the Fed’s Williams.

Seemingly crumbling under immense pressure to undo the damage from a debate performance that showcased his plummeting mental acuity, President Biden’s Fourth of July was a veritable fireworks show of bewildering statements and derailed trains of thought — that saw Biden calling himself a black woman who was elected president as a child. The grand finale to the destructive holiday-weekend display could come at 8pm ET tonight, when Biden appears in a primetime, sit-down interview on ABC News. 

Thursday’s dark comedy started with an appearance on Philadelphia’s WURD radio, which features a format categorized as “urban talk.” Having already boasted about appointing the first black woman to the Supreme Court and selecting the first black woman as vice president, Biden short-circuited and said, “I’m proud to be, as I said, the first vice president…the first black woman to serve with a black president.”

“I am the first black woman to serve with a black president” – Biden just declared

Source: Philadelphia radio (WURD) pic.twitter.com/rKB9zGipPl

— End Wokeness (@EndWokeness) July 4, 2024

In the same interview, Biden completely garbled his reminiscing about John F. Kennedy, Jr serving as a barrier-breaking inspiration to Biden’s younger self:

“I remember, as a Catholic kid growing up up in an area where we didn’t like, Catholics didn’t get — I’m the first president to be elected statewide in the state of Delaware when I was a kid. Well, you know, I was, I looked at John Kennedy and said, ‘Well, he got elected. Why can’t I get elected?

BIDEN: “I’m the first president that got elected statewide in the state of Delaware when I was a kid.” pic.twitter.com/YpFEM8GJhx

— RNC Research (@RNCResearch) July 4, 2024

Later, in remarks to military families at the White House, Biden twice showcased another of his chronic symptoms, as he started a train of thought, only to quickly abandon it. The first example came as he attempted to trot out the disputed allegation that then-President Trump called dead American soldiers in a French World War I cemetery “losers” and “suckers.” After his anecdote stalled, Biden tried recovering with one of his all-purpose rhetorical crutches, shouting, “We gotta just remember WHO IN THE HELL WE ARE…We’re the UNITED STATES OF AMERICA!”

DISGRACEFUL: A heavily slurring Biden starts to stumble through the debunked “suckers and losers” hoax at the White House Independence Day celebration — in front of our great military families pic.twitter.com/57O54Gt8zZ

— RNC Research (@RNCResearch) July 4, 2024

Another dead-end sentence came as he seemed to be making an exaggerated claim about putting himself in danger alongside service members in foreign conflicts:

BIDEN to the troops: “I’ve been all over the world with you. I’ve been in and out of battles, anyway…” pic.twitter.com/vXo4muna89

— RNC Research (@RNCResearch) July 4, 2024

In another radio interview meant to reach black audiences, Biden appeared on the nationally syndicated Earl Ingram Show. “Despite the low-pressure nature of the interview, the president at times spoke haltingly as he delivered his rapid-fire answers,” the New York Times reported. “In the 17-minute interview, he sometimes stopped himself in the middle of an answer.” For example, in the middle of a sentence about Trump’s proposed tariffs, Biden abandoned the venture, saying, “…anyway, just, I don’t want to get too wrapped up in it, really.”

With his flub-filled Fourth in the books, Biden’s next major opportunity to shore up voters’ perception of this mental soundness comes tonight, when appears in his first sit-down interview since last week’s debate disaster. The interview with ABC‘s George Stephanopoulos will be recorded during the day amid Biden campaign stops in Wisconsin and then aired in an 8pm ET “primetime special.”

To counter suspicions that the network will edit the interview to Biden’s benefit, ABC has committed to releasing a transcript of the entire interview sometime today or this evening. As we noted yesterday:

“Readers will naturally view the idea of a Stephanopoulos interview with justifiable wariness of soft-pitch questions and friendly editing. However, we’re in a different political world than last week…

Given the debate-triggered earthquake that’s altered the leftist landscape, Stephanopoulos will likely feel significant pressure to act something like a real journalist, for once.”

As Biden staggers from one risky public appearance to the next, a white-knuckled Team Biden is surely sweating next week’s schedule: Biden will host a three-day NATO summit in Washington that starts on Tuesday. As part of that event, he will conduct a rare solo press conference, which could well prove the most treacherous challenge he’s faced since last week’s debate — and perhaps even more so.

Biden: “Ho, ho, ho! Happy Independence Day!”

The rehab tour is not going at all well.

pic.twitter.com/VDUAtFgFyQ

— Western Lensman (@WesternLensman) July 5, 2024

Authored by Michael Snyder via TheMostImportantnews.com,

Are we on the verge of an apocalyptic global war in which billions of people could die?  Very few people anticipated that World War I would erupt, but it happened anyway.  And very few people anticipated that World War II would erupt, but it happened anyway.  All throughout human history, there have been wars.  Ever since the very beginning, it has just been a matter of time before major powers collide.  Unfortunately, even though very alarming warning signals are flashing all around us, most of the population of the western world seems absolutely clueless about what is really going on out there.  Leaders all over the planet seem to have come down with a really bad case of “war fever”, and preparations for apocalyptic showdowns are being made. 

The following are 10 signs that global war is rapidly approaching…

#1 Politico is reporting that Israel and Hezbollah have both “drafted battle plans”, and the Biden administration is convinced that “intense fighting is likely to break out”…

Meanwhile, the Israel Defense Forces and Hezbollah have drafted battle plans and are in the process of trying to procure additional weapons, according to two senior U.S. officials briefed on the intelligence.

Both sides have publicly said they do not want to go to war, but senior Biden officials increasingly believe that intense fighting is likely to break out despite efforts to try and prevent it.

The risk is higher now than at any other point in recent weeks, according to another senior U.S. official, who, like others in this story, was granted anonymity to speak freely about sensitive intelligence.

#2 Iran is warning that there will be an “obliterating war” if the IDF enters southern  Lebanon…

Israel will face an “obliterating war” if it embarks on “full-scale military aggression” against Hezbollah in  Lebanon, Iran’s Permanent Mission to the UN warned on Friday.

The announcement was made on Twitter.

“Albeit Iran deems as psychological warfare the Zionist regime’s propaganda about intending to attack Lebanon, should it embark on full-scale military aggression, an obliterating war will ensue. All options, incl. the full involvement of all Resistance Fronts, are on the table,” the post reads.

By “all Resistance Fronts,” Iran means not just Hezbollah and Hamas, but also the Houthi rebels in Yemen as well as other groups in Syria and Iraq.

#3 Israeli Prime Minister Benjamin Netanyahu is convinced that a major with Iran is inevitable because he believes that the Iranians have plans to conquer the entire Middle East…

Netanyahu emphasized that the fight against Iran’s terror proxies is critical for other nations in the Middle East, as Iran aims to dominate the rest of the region, including Sunni Muslim nations.

“We also have to deter the other elements of the Iran terror axis. But we have to deal with the axis,” Netanyahu explained. “The axis doesn’t threaten only us. It threatens you. It’s on the march to conquer the Middle East.”

“That means, actually, conquer. Conquer Saudi Arabia, conquer the Arabian Peninsula. It’s just a question of time,” he warned.

#4 According to NBC News, the U.S. is moving military assets into position so that they can be “ready to evacuate Americans” once an all-out war erupts between Israel and Hezbollah…

The Pentagon is moving U.S. military assets closer to Israel and  Lebanon to be ready to evacuate Americans as fighting between Israel and Hezbollah intensifies, according to three U.S. defense officials and a former U.S. official familiar with the plans.

The USS Wasp, an amphibious assault ship, and Marines from the 24th Expeditionary Unit, which is special operations capable, moved into the Mediterranean on Wednesday to join the dock landing ship USS Oak Hill and another ship in their amphibious ready group, according to the Marine Corps. The Wasp will operate in the eastern Mediterranean to be ready for a Military Assisted Departure and other missions, the officials said.

#5 On Thursday, Hezbollah sent approximately 40 rockets into northern Israel…

Hezbollah launched a barrage of some 40 rockets at northern Israel on Thursday afternoon, in what the terror group said was a response to recent Israeli airstrikes in  Lebanon, including the killing of one of its operatives earlier in the day.

#6 On Saturday, Israeli aircraft bombed several Hezbollah targets in southern Lebanon…

On Saturday afternoon Israeli fighter jets struck a building in southern  Lebanon’s Houla where a group of Hezbollah operatives were gathered, the military said. The IDF said the operatives were spotted by troops of the 869th Combat Intelligence Collection Unit, and a short while later the airstrike was carried out.

Another building used by Hezbollah in Houla was also struck, the IDF added. It published footage of the strikes.

#7 I know that I wrote about this last week, but I couldn’t leave this particular item out of this article.  Apparently Joe Biden is thinking about approving a plan that would “allow US military contractors to deploy to Ukraine”…

President Joe Biden’s administration is moving toward a plan that would allow US military contractors to deploy to Ukraine for the first time in a limited capacity, CNN reported.

Four US officials familiar with the matter told the outlet that a policy is being worked on to allow the Pentagon to issue private contracts to send troops for the maintenance and repair of US-supplied systems in Ukraine.

#8 Russian President Vladimir Putin is reportedly interested in developing a coalition of nations that would “rival the West and NATO”…

Rhetoric from Vladimir Putin about a Eurasian security coalition is part of a Kremlin plan to create a group of Moscow-friendly countries to rival the West and NATO, the Institute for the Study of War (ISW) has said.

The assessment by the Washington, DC think tank follows Putin’s visit to North Korea which, one international security expert told Newsweek, has “deepened an already intensifying relationship of convenience” between Moscow and Pyongyang.

#9 Putin is also warning that Russia will need to begin production of intermediate-range nuclear weapons systems…

Russia must respond to the actions of the United States and it seems that it is necessary for the country to start the production of intermediate-range nuclear forces (INF) strike systems, Russian President Vladimir Putin said on Friday.

“We need to respond to this and make decisions about what we will have to do in this direction next. Apparently, we need to start manufacturing these systems and then, based on the actual situation, make decisions about where – if necessary to ensure our safety – to deploy them,” Putin said at an operational meeting with the permanent members of the Russian Security Council.

Of course the Russians already have more tactical nuclear weapons than anyone else in the world by a large margin, and they have developed brand new Sarmat intercontinental ballistic missiles which are so advanced that they aren’t even worth comparing to the Minuteman missiles that the U.S. is depending on which first went into service in the 1970s.

#10 A very influential figure in Russian foreign policy circles is suggesting that the Russians should actually detonate a nuclear device in order to show the world how serious they are…

Dmitry Suslov, a top figure at the Moscow-based Council for Foreign and Defence Policy, has put forward the idea of Russia carrying out a “demonstrative” nuclear detonation, a move that could prompt the start of World War 3. This alarming suggestion arises as tensions with the West intensify due to Ukraine’s use of Western-supplied weaponry against Russian forces.

Suslov’s think tank, known to occasionally sway government policy, made this proposal public shortly after President Vladimir Putin delivered a grave warning to NATO countries. Putin warned that if Ukraine were to employ Western arms for attacks on Russian soil, it could spark a worldwide crisis, reinforcing his point with threats of severe repercussions.

Unfortunately, all of this is happening at a time when 72 percent of U.S. voters believe that the guy with his finger on the nuclear button does not have “the mental or cognitive health to serve as president”…

A sweeping section of registered voters do not believe President Joe Biden has the mental and cognitive health to serve a second term as president after his unsteady debate performance last week, according to a new poll.

The CBS/You Gov national survey conducted in the days after the debate found that 72% of voters do not believe Biden has the mental or cognitive health to serve as president, as well as nearly half of his own party. That’s up seven points from the beginning of June.

We are in far more trouble than most people realize.

And it is far later than most people think that it is.

I just wish that we could get more people to wake up.  We are literally stumbling into an apocalyptic global war, and once we are in the middle of it there will not be any way to go back and get a second chance to do things over.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

Despite what can only be described as a host of looming unanswered questions about its mRNA technology and its Covid vaccines, the U.S has awarded Moderna a new $176 million contract to advance development of its bird flu vaccine.

Stop us if you feel like you’ve seen this movie before…

The U.S. government has granted Moderna $176 million to develop its bird flu vaccine amid rising concerns over the H5N1 virus outbreak in dairy cows and infections among dairy workers.

The funds, provided by the Biomedical Advanced Research and Development Authority, will support the late-stage development and testing of an mRNA-based vaccine for H5N1 avian influenza, according to The Globe and Mail/Reuters. 

Moderna’s agreement with the government also includes options to prepare for future public health threats. The first outbreak in dairy cattle was reported in March, and the virus has since spread to over 130 herds in 12 states.

The report says that scientists worry that the virus could mutate and spread among humans, though the current risk remains low. (We’re guessing this risk could grow in size as we move closer to Election Day…but what do we know?)

Moderna began a study of its bird flu vaccine, mRNA-1018, in healthy adults last year, with results expected this year. Late-stage trials are planned for 2025. Moderna’s mRNA technology, also used in its COVID-19 vaccine, offers rapid development and scalability advantages.

U.S. officials are preparing 4.8 million doses of a similar vaccine for at-risk workers, and the FDA confirms pasteurization inactivates the virus in dairy products.

The best part is they don’t even need to compete with ivermectin or hydroxychloroquine this time. 

Now, what’s next on the public health agenda, awarding the EcoHealth Alliance another contract?

Submitted by Alastair Crooke,

Is not President Putin’s purpose in visiting North Korea and Vietnam now clear in the context of the Eurasian security architecture project?

There perhaps was a momentary shrugging-off of slumber in Washington this week as they read the account of Sergei Lavrov’s démarche to the U.S. Ambassador in Moscow: Russia was telling the U.S. – “We are no longer at peace”!

Not just ‘no longer at peace’, Russia was holding the U.S. responsible for the ‘cluster strike’ on a Crimean beach on last Sunday’s Pentecost holiday, killing several (including children) and injuring many more. The U.S. thereby “became party” to the proxy war in Ukraine (it was an American-supplied ATACM; programmed by American specialists; and drawing on U.S. data), Russia’s statement read; “Retaliatory measures will certainly follow”.

Evidently, somewhere an amber light flashed hues of pink and red. The Pentagon grasped that something had happened – ‘No going around it; This could escalate badly’. The U.S. Defence Secretary (after a pause since March 2023) reached for the phone to call his Russian counterpart: ‘The U.S. regretted civilian deaths; the Ukrainians had full targeting discretion’.

The Russian public however, is plain furious.

The diplomatic argot of ‘there now being a state of betweenness; not war and not peace’ is but the ‘half of it’.

The West has ‘lost’ Russia much more profoundly than is understood.

President Putin – in his statement to the Foreign Ministry Board in wake of the G7 sword-rattling – detailed just how we had arrived at this pivotal juncture (of inevitable escalation). Putin indicated that the gravity of the situation demanded a ‘last chance’ offer to the West, one that Putin emphatically said was to be “No temporary ceasefire for Kiev to prepare a new offensive; nor a freezing the conflict – but rather, needed to be about the war’s final completion”.

It has been widely understood that the only credible way to end the Ukraine war would be a ‘peace’ agreement emerging through negotiation between Russia and the U.S.

This however is rooted in a familiar U.S.-centric vision – ‘Waiting on Washington …’.

Lavrov archly commented (in paraphrase) that if anyone imagines we are ‘waiting for Godot’, and ‘will run for it’, they are mistaken.

Moscow has something much more radical in mind – something that will shock the West.

Moscow (and China) are not simply waiting upon the whims of the West, but plan to invert completely the security architecture paradigm: To create an ‘Alt’ architecture for the ‘vast space’ of Eurasia, no less.

It is intended to exit the existing bloc zero-sum confrontation. A new confrontation is not envisaged; however the new architecture nevertheless is intended to force ‘external actors’ to curtail their hegemony across the continent.

In his Foreign Ministry address, Putin explicitly looked ahead to the collapse of the Euro-Atlantic security system and to a new architecture emerging: “The world will never be the same again”, he said.

What did he mean?

Yuri Ushakov, Putin’s principal Foreign Policy adviser (at the Primakov Readings Forum), clarified Putin’s ‘sparse’ allusion:

Ushakov reportedly said that Russia increasingly has come to the view there is not going to be any long-term re-shaping of the security system in Europe. And without any major re-shaping, there will be no ‘final completion’ (Putin’s words) to the conflict in Ukraine.

Ushakov explained that this unified and indivisible security system in Eurasia must replace the Euro-Atlantic and Euro-centric models that are now receding into oblivion.

“This speech [of Putin at the Russian Foreign Ministry], I would say, sets the vector of further activities of our country at the international stage, including the building of a single and indivisible security system in Eurasia,” Ushakov said.

The dangers of excessive propaganda were apparent in an earlier episode where a major state found itself trapped by its own demonisation of its adversaries: South Africa’s security architecture for Angola and South-West Africa (now Namibia) too had fallen apart by 1980 – (I was there at the time). The South African Defence Forces still retained a residue of immense destructive capacity to the north of South Africa, but the use of that force was not yielding any political solution or amelioration. Rather, it was taking South Africa to oblivion (just as Ushakov described the Euro-Atlantic model today). Pretoria wanted change; It was ready (in principle) to do a deal with SWAPO, but the attempt to implement a ceasefire fell apart in early 1981.

The bigger problem was that the South African apartheid government had so succeeded with their propaganda and demonisation of SWAPO as being both ‘Marxist AND terrorist’ that their public recoiled at any deal, and it was to be another decade (and would take a geo-strategic revolution) before a settlement finally became possible.

Today, the U.S. and EU Security ‘Élite’ have been so ‘successful’ with their equally exaggerated anti-Russian propaganda that they too, are trapped by it. Even if they wanted to (which they don’t), a replacement security architecture may simply prove ‘unnegotiable’ for years to come.

So, as Lavrov has underlined, Eurasian countries have come to the realization that security on the continent must be built from within – free and far from American influence. In this conceptualisation, the principle of indivisibility of security – a quality not implemented in the Euro-Atlantic project – can and should become the key notion around which the Eurasian structure can be built, Lavrov specified.

Here, in this ‘indivisibility’, is to be found the real, and not the nominal, implementation of the provisions of the UN Charter, including the principle of sovereign equality.

Eurasian countries are pooling efforts together to jointly counter the U.S. claims on global hegemony and the West’s interference in other states’ affairs, Lavrov said at the Primakov Readings Forum on Wednesday.

The U.S. and other Western countries “are trying to interfere in the affairs” of Eurasia; transferring NATO infrastructure to Asia; holding joint drills and creating new pacts. Lavrov predicted:

“This is a geopolitical struggle. This has always been; and will perhaps, last for long – and maybe we will not see an end to this process. Yet it is a fact that the course towards control from the ocean of everything that occurs everywhere – is now countered by the course towards uniting the efforts of Eurasian countries”.

The start of consultations on a new security structure does not yet indicate the creation of a military-political alliance similar to NATO; “Initially, it may well exist in the form of a forum or consultation mechanism of interested countries, not burdened with excessive organisational and institutional obligations”, writes Ivan Timofeev.

However, the “parameters” to this system, explained Maria Zakharova,

“… will not only ensure long-lasting peace, but also avoid major geo-political upheavals due to the crisis of globalization, built according to Western patterns. It will create reliable military-political guarantees for the protection of both the Russian Federation and other countries of the macro-region from external threats, create a space free from conflicts and favourable for development – by eliminating the destabilizing influence of extra-regional players on Eurasian processes. In the future, this will mean curtailing the military presence of external powers in Eurasia”.

Honorary Chair of Russia’s Council for Foreign and Defense Policy, Sergei Karaganov, (in a recent interview) however, inserts his more sober analysis:

“Unfortunately, we are heading for a real world war, a full-blown war. The foundation of the old world system is bulging at the seams, and conflicts will break out. It is necessary to block the way leading to such a war … conflicts are already brewing and taking place in all areas”.

“The UN is a dying breed, saddled with the Western apparatus and therefore unreformable. Well, let it remain. But we need to build parallel structures … I think we should build parallel systems by expanding BRICS and the SCO, developing their interaction with ASEAN, the League of Arab States, the Organization of African Unity, Latin American Mercosur, etc.”.

“In general, we are interested in establishing a multilateral nuclear deterrence system in the world. So, I am personally not worried by the emergence of new nuclear powers and the strengthening of old ones simply because reliance on people’s reason doesn’t work. There must be fear. There must be greater reliance on a “nuclear deterrence-fear, inspiring-sobering up””.

The nuclear policy aspect is a complex and contentious issue today in Russia. Some argue that an overly restrictive Russian nuclear doctrine can be dangerous, should it cause adversaries to become overly blasé; that is to say, that adversaries become unimpressed or indifferent to the deterrence effect, so as to dismiss its reality.

Others prefer a posture of very last resort. All agree however that there are many stages of escalation available to an Eurasian security architecture, other than nuclear.

Yet the capacity for a continent-wide nuclear ‘security lock’ versus a nuclear-equipped NATO is evident: Russia, China, India, Pakistan – and now North Korea – are all nuclear weapons states, so a certain degree of deterrence potential is baked-in.

Other ‘steps of escalation’ no doubt will be at the centre of discussions at the Khazan BRICS summit this October. For a security architecture is not conceptually just ‘military’. The agenda embraces trade, financial and sanctions issues.

The simple logic of inverting the NATO military paradigm to yield an ‘Alt’ Eurasian security system would seem through force of logic alone, to argue that if the security paradigm is to be inverted, then the western financial and trading hegemony be inverted too.

De-dollarisation, of course, is already on the agenda, with tangible mechanisms likely to be unveiled in October. But if the West now feels free to sanction Eurasia at whim, the potential is also there for Eurasia reciprocally to sanction both the U.S. or Europe – or both.

Yes.

We have ‘lost’ Russia (not forever). And we may lose much more. Is not President Putin’s purpose in visiting North Korea and Vietnam now clear in the context of the Eurasian security architecture project? They are part of it.

And to paraphrase CP Cavafy’s celebrated poem:

Why this sudden bewilderment, this confusion? (How serious people’s faces have become).

Because night has fallen, and the [Russians] haven’t come.

 And some of our men just in from the border say

 there are no [Russians] any longer…

“Now what’s going to happen to us without [the Russians]”?

“They were a kind of solution”.

Cautious optimism is creeping back into the cobalt metal market as hedge funds move to physical purchases of the battery metal as prices slump to seven-year lows. With oversupply conditions and slumping electric vehicle demand, the market could soon find balance, given cobalt’s critical role in the energy transition toward a net-zero future. 

According to Bloomberg, citing people familiar with the matter, Anchorage Capital Advisors and Squarepoint Capital LLP have quietly purchased physical cobalt. 

Squarepoint has been buying cobalt metal from traders, according to people familiar with the matter, while Anchorage has been buying both cobalt metal and cobalt hydroxide — an intermediate product in the production of cobalt sulphate that goes into EV batteries. Anchorage has also been active in trading on CME, said some of the people, who asked not to be identified as the information is private. -BBG

Both hedge funds have been buying physical cobalt as spot prices hover at seven-year lows, oscillating between $15 and $12.5 a pound for much of this year. Prices peaked at $40 a pound during the EV mania in 2022. 

“Surging supply and weaker-than-expected sales in the EV sector have contributed to a record surplus in the market this year, and many in the industry are pessimistic about the prospects for a rebound. The rise in popularity of lithium-iron phosphate batteries, which don’t require cobalt, also poses a threat to demand,” Bloomberg explained. 

However, Bloomberg noted that China’s strategic stockpiling agency has been soaking up surplus inventories of the metal in record volumes this year “in a trend that underscores the metal’s strategic value both in electric vehicles and defense.” 

A look at the ProShares S&P Global Core Battery Metals ETF (ION), which includes companies generating positive revenue and production value from mining lithium, nickel, or cobalt, shows it has been trading sideways since peaking in 2022.

A recent International Energy Agency report showed how cobalt will expand 7-fold by 2030 and 10-fold by 2050 to over $400 billion as it plays a critical role in reaching the global net zero target in the decades ahead. 

Carbon Credits noted in April, “Although the bottom for cobalt prices is uncertain, some analysts anticipate a gradual improvement in prices over the next few quarters.” 

Authored by Andrew Korybko via substack,

Russian Permanent Representative to the UN Vasily Nebenzia warned Israel of “certain political consequences” should it send some of its Patriots to Ukraine via the US like CNN recently reported is presently being negotiated between them.

This comes amidst the gradual deterioration in their ties since Hamas’ sneak attack last year in spite of President Putin’s proud lifelong philo-Semitism that can be learned about more here. The following five pieces document the lead-up to this latest development:

* 25 January: “Russia Is Worried That Israeli Strikes Risk Drawing Syria Deeper Into The West Asian Conflict”

* 6 February: “The New Israeli Ambassador To Russia Is Totally Wrong About Moscow’s Regional Policy”

* 7 March: “Israel’s Partial Compliance With The US’ Anti-Russian Demands Risks Ruining Ties With Moscow”

* 19 April: “Russia’s Request For UNSC Sanctions Against Israel Is A Principled Soft Power Move”

* 7 June: “Who Might Russia Arm As An Asymmetrical Response To The West Arming Ukraine?”

To summarize, Israel began misportraying Russia’s balancing act in the latest conflict (the details of which can be read here) and flirting with the idea of sending early warning systems to Kiev, which prompted Russia to escalate its rhetoric against Israel and flirt with arming its Resistance Axis foes. Thus far, their spat has remained within the realm of mutual perceptions and rhetoric, but Israel’s potential arming of Ukraine with air defense systems could lead to a reciprocal Russian arming of the Resistance Axis.

The prerogative rests with Israel since it’s easier for it to indirectly arm Ukraine than it is for Russia to indirectly arm the Resistance Axis. Moreover, Netanyahu might calculate that sending defensive weapons there won’t cross Russia’s political red line but might earn him some relief from US pressure, which readers can learn more about here. It’s unclear whether he’ll go through with what CNN recently reported, but if he does, then Nebenzia hinted that Russia’s initial reaction will be political.

What he probably meant to signal was that his country might either host more Hamas delegations in the future, but this time to discuss bilateral ties instead of hostage releases like during prior visits since the latest conflict erupted, and/or order its media to decisively promote anti-Israeli narratives. They’ve been pretty balanced till now, but that could change if the decision is made. Another possibility is to let Syria finally use the S-300s to defend itself despite thus far denying it that right for de-escalation purposes:

* 10 October 2023: “Russia Is Unlikely To Let Syria Get Involved In The Latest Israeli-Hamas War”

* 22 October 2023: “Russia Isn’t Expected To Stop Israel’s Strikes In Syria”

* 27 October 2023: “Here’s Why Russia Didn’t Deter Or Respond To The US’ Latest Bombing Of Syria”

* 11 February 2024: “The Latest Israeli Bombing Of Syria Proves That Russia Won’t Risk A Wider War To Stop Tel Aviv”

* 11 April 2024: “Russia’s Syrian-Based Air Defenses Won’t Help Iran If Israel Responds To Its Retaliation”

Russia is unlikely to reverse course on this ultra-sensitive issue right away after having already provoked so much wrath from many of its supporters in the Alt-Media Community by keeping it in place for so long. Nevertheless, it still remains an appropriate reciprocal measure if Israel arms Ukraine, albeit one that it’s expected to hold off for now since there’s no going back once this authorization is given. In that event, bilateral ties wouldn’t recover for years, thus negating all of President Putin’s hard work on this.

That said, Russia does indeed seem to be losing patience with Israel, and the argument can be made that it has much more to gain by making this long-overdue move and solidifying its strategic ties with the Iranian-led Resistance Axis than it has to lose by clinging to hopes of a regional partnership with Israel. This school of thought was practically non-existent inside Russia’s policymaking communities prior to the latest conflict, but that just goes to show how much everything has changed since then.

The rise of a pro-Resistance policymaking faction parallels the rise of the pro-BRI one, which readers can learn more about here, and they’re practically one and the same due to their overlapping worldviews. Their respective rivals are the pro-Israeli and balancing/pragmatist faction, who are also practically one and the same in this regional context since they want to avert potentially disproportionate regional dependence on Iran by maintaining strategic ties with Israel, even though these are to Iran’s detriment.

While Russia is recalibrating its Asian strategy as explained here and thus appears to be putting a check on the pro-BRI faction’s hitherto astronomical expansion of influence, the pro-Resistance one could receive a pivotal boost if Israel sends its Patriots to Ukraine via the US. That might be the straw that proverbially breaks policymakers’ backs and gets them to throw their support behind this group’s policy recommendations, which could see Russia authorizing Syria to use the S-300s against Israel as explained.

To be clear, the pro-Resistance faction mostly exists only in Russia’s publicly financed international media and among their associates (including informal ones), with barely any influence within its think tanks although some there are warming up to their views. The pro-Israeli/balancing/pragmatist faction remains predominant and that’s why the current policy has remained in place for so long despite Israel’s repeated provocations that could have led to a policy change long ago if the political will was present.  

This state of affairs could decisively change, however, if Israel indirectly arms Ukraine with its Patriots. Netanyahu and those around him might not realize what a game-changer that could be in terms of drastically changing Russia’s regional policy considering the way in which everything is increasingly being perceived by the Kremlin given the evolving context of the New Cold War. Israel should therefore think twice about this lest it risk catalyzing the worst-case scenario in relations with Russia.