Month: August 2024

Authored by Susan Crabtree via RealClearPolitics,

Former Secret Service Director Kimberly Cheatle and others in top agency leadership positions wanted to destroy the cocaine discovered in the White House last summer, but the Secret Service Forensics Services Division and the Uniformed Division stood firm and rejected the push to dispose of the evidence, according to three sources in the Secret Service community.

Multiple heated confrontations and disagreements over how best to handle the cocaine ensued after a Secret Services Uniformed Division officer found the bag on July 2, 2023, a quiet Sunday while President Biden and his family were at Camp David in Maryland, the sources said.

At least one Uniformed Division officer was initially assigned to investigate the cocaine incident. But after he told his supervisors, including Cheatle and Acting Secret Service Director Ron Rowe, who was deputy director at the time, that he wanted to follow a certain crime-scene investigative protocol, he was taken off the case, according to a source within the Secret Service community familiar with the circumstances of his removal.

Secret Service spokesman Anthony Guglielmi did not immediately return RCP’s request for comment.

The discovery of the bag of cocaine posed an unusual problem for Cheatle, who resigned in the face of bipartisan pressure after the July 13 assassination attempt against Donald Trump.

Hunter Biden had a well-documented addiction to cocaine, crack cocaine, and other substances for many years but repeatedly claimed to be sober since 2021, an assertion that has prompted President Biden to often proclaim how “proud” he is of his son. While neither Joe nor Hunter Biden were at the executive mansion when the cocaine was found, it was discovered after a period when Hunter had been staying there.

Cheatle became close to the Biden family while serving on Vice President Joe Biden’s protective detail – so close that Biden tapped Cheatle for the director job in 2022, in part because of her close relationship to first lady Jill Biden.

When the cocaine was first discovered, Cheatle apparently knew it would spark a media firestorm. The incident prompted viral memes about Hunter Biden’s addictions and accusations from Republican political figures, including Nikki Haley, that the Secret Service knew whose cocaine it was and was trying to cover it up.

Normally, the discovery of cocaine or another illegal narcotic in the White House complex or in and around the first family and their staff wouldn’t come to light at all.

That’s because the president’s and first lady’s, as well as family members’ protective Secret Service details, the inner-most ring of protective agents assigned to the first family, would simply dispose of illegal drugs or other “contraband” found in the White House, personal residences, or other private areas of the president, his family, and White House staff, according to three sources in the Secret Service community.

But it wasn’t a member of President Biden’s regular detail who found the bag of cocaine just two days before the July 4 holiday last year. Instead, a member of the agency’s Uniformed Division, which is charged with protecting the facilities and venues for presidents and other agency protectees, discovered the substance in the White House complex while conducting routine rounds of the building.

The exact location where the officer found the bag changed several times during the first weeks of media reports on the incident. Initial reports said the cocaine was found in a reference library. Later reports indicated it was in a “work area” of the West Wing, which is attached to the mansion that houses the president and his family, the Oval Office, the cabinet room, the press briefing room, and offices for staff. CBS News, citing law enforcement sources, then reported it was found in a facility used by White House staff and guests to store phones.

An official Secret Service statement, issued at the conclusion of the agency’s internal investigation into the cocaine discovery, said a Uniformed Division officer found the bag in a “vestibule leading to the lobby area of the West Executive Avenue entrance to the White House,” a well-trafficked area used on the weekend for White House tours. That statement was released on July 13, eleven days after the cocaine’s discovery.

The officer who first found the bag with a white substance immediately flagged it as a potentially hazardous substance, worried that the bag of white power could contain deadly anthrax or ricin.

A Technical Security Division, or TSD, investigator would normally be deployed to the scene. These investigators, sometimes wearing hazmat suits, can identify different types of hazardous substances and explosives and work to quickly remove or defuse them. However, the TSD investigator was not called in on a Sunday evening of a holiday weekend. Instead, a Secret Service officer or agent called in the District of Columbia Fire and Emergency Medical Service Department, who evacuated the White House complex while they tested the white substance on site, determining it was cocaine.

Because the press was part of the evacuation, there was no way to hide the information about the discovery, and the Secret Service leaders quickly shifted to crisis communications mode. Meanwhile, the substance and packaging were treated as evidence and sent to the U.S. Department of Homeland Security’s National Biodefense Analysis and Countermeasures Center, which again analyzed it for biothreats. Those tests also came back negative for hazardous material.

Then, the Secret Service sent the plastic bag and its contents to the Federal Bureau of Investigation’s crime laboratory for fingerprint and DNA analysis. While there were no latent fingerprints detected, the FBI lab found some DNA material, according to three sources in the Secret Service community. Several sources, citing private statements by a special agent in the Forensics Services Division who supervised the vault containing the cocaine evidence, said the agency ran the DNA material against national criminal databases and “got a partial hit.” The term “partial hit” is vague in this context, but in forensics lingo usually means law enforcement found DNA matching a blood relative of a finite pool of people.

“The Congressional oversight committees need to put White under oath and confirm the ‘partial hit,’” a source told RCP. “Then the FBI needs to explain who the partial hit was against, then determine what blood family member has ties to the White House or what person matching the partial hit was present at the White House that weekend.”

Other sources familiar with the investigation and Cheatle’s alleged push to destroy the cocaine didn’t know if anyone at the Secret Service ran the DNA material found on the cocaine against a national criminal database.  In January, federal prosecutors urged a judge to reject Hunter Biden’s efforts to dismiss gun charges against him, revealing that investigators last year discovered cocaine residue on the pouch the president’s son used to hold his gun. In June, a 12-member jury found Hunter Biden guilty on charges related to his purchase and possession of the firearm while he was addicted to crack cocaine. 

But Secret Service leaders, under pressure from Cheatle and other top agency officials, chose not to run additional searches for DNA matches or conduct interviews with the hundreds of people who work in the White House complex.

“That’s because they didn’t want to know, or even narrow down the field of who it could be,” a source stated. “It could have been Hunter Biden, it could have been a staffer, it could have been someone doing a tour – we’ll never know.”

During the feverish speculation in the days and weeks after the cocaine’s discovery, the White House refused to answer whether the cocaine came from a Biden family member and labeled as “irresponsible” reporters who asked about a possible link to Hunter or another Biden family member.

In announcing the conclusion of its investigation into the cocaine incident, Secret Service spokesman Anthony Guglielmi said the agency determined that interviewing all 500 people could be a strain on resources, might infringe upon civil liberties, and would likely be fruitless without corresponding physical evidence tying any person to the drugs.

“On July 12, the Secret Service received the FBI’s laboratory results, which did not develop latent fingerprints, and insufficient DNA was present for investigative comparisons,” Guglielmi said. “Therefore, the Secret Service is not able to compare evidence against the known pool of individuals.”

“There was no surveillance video footage found that provided investigative leads or any other means for investigators to identify who may have deposited the found substance in this area,” Guglielmi continued. “Without physical evidence, the investigation will not be able to single out a person of interest from the hundreds of individuals who passed through the vestibule where the cocaine was discovered.”

“At this time, the Secret Service’s investigation is closed due to a lack of physical evidence,” the spokesman added. “The U.S. Secret Service takes its mission to protect U.S. leaders, facilities, and events seriously, and we are constantly adapting to meet the needs of the current and future security environment.”

Over the last month as the agency has come under fire for a series of mistakes leading to an assassination attempt against Trump, Guglielmi has been forced to correct a previous press statement that the agency did not deny repeated requests for additional security assets from the former president’s staff in the months leading up to the assassination attempt.

It’s unclear exactly when Cheatle and other top officials tried to persuade the Forensics Services Division to destroy the evidence. At some point during the investigation, Matt White, the vault supervisor, received a call from Cheatle or someone speaking on her behalf asking him to destroy the bag of cocaine because agency leaders wanted to close the case, according to two sources in the Secret Service community.

“Protocol is, whether you act on the [DNA] hit or not, we still have to maintain evidence for a period of up to seven years,” a source told RCP. “It became a big to-do.”

White’s boss, Glenn Dennis, the head of the Forensics Services Division, then conferred with the Uniformed Division, which first discovered the cocaine.

“A decision was made not to get rid of the evidence, and it really pissed off Cheatle,” a source in the Secret Service community said in an interview.

At the time of the cocaine’s discovery, Richard Macauley was serving as the acting chief of the Uniformed Division after the recent retirement of Alfonso Dyson Sr., a 29-year veteran of the agency. When Dyson left his position, Macauley, who is black, became the acting director. Despite Cheatle’s push to hire and promote minority men and women, Macauley was passed over for the job of Uniformed Division chief in what many in the agency view as an act of retaliation for supporting those who refused to dispose of the cocaine, according to several sources in the Secret Service community.

In 2018, Macauley was named the Secret Services Uniformed Division Officer of the Year. In an interview with Federal News Network, a news talk show focused on issues of interest to federal government workers, a host lauded Macauley for receiving the award and credited him with tightening operations, increasing diversity, boosting officer training, and improving working conditions, “all while taking care of his own shift operations.” Macauley would go on to serve one year, from February 2022 to January 2023, as deputy assistant sergeant at arms at the U.S. House of Representatives.

Susan Crabtree is RealClearPolitics’ national political correspondent.

In what could be a ground-breaking victory for the Justice Departments, a federal judge ruled Monday that Google’s payments to make its search engine the default on smartphone web browsers violates US antitrust law.

As Bloomberg reports, Judge Amit Mehta in Washington said that the Alphabet Inc. unit’s $26 billion in payments effectively blocked any other competitor from succeeding in the market

The Justice Department and states had sued Google, accusing it of illegally cementing its dominance, in part, by paying other companies, like Apple and Samsung, billions of dollars a year to have Google automatically handle search queries on their smartphones and web browsers.

“Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta said in his ruling.

“The importance and significance of this case is not lost on me, not only for Google but for the public,” he added.

Having recovered some of the losses overnight, this new DoJ headline has smacked GOOGL shares back down near the lows of the day (down around 6%)…

The case is the first antitrust trial pitting the federal government against a US technology company in more than two decades.

Today’s ruling is likely to influence other government antitrust lawsuits against Google, Apple, Amazon and Meta, the owner of Facebook, Instagram and WhatsApp.

Not exactly the news that dip-buyers were hoping to hear.

By John Kemp, Senior Energy Analyst

U.S. electricity generators consumed a record amount of gas in the first four months of the year as prices slumped to the lowest level in real terms for more than half a century. Ultra-low prices encouraged more power production from some of the least-efficient single-cycle gas and steam turbines at the expense of coal.

But record combustion by generators made little impact on swollen gas inventories amid continued growth in gas production and sluggish exports.

Generators produced a record 1,334 billion kilowatt-hours (kWh) between January and April, according to the latest data from the U.S. Energy Information Administration.

Generation was up by 47 billion kWh (4%) compared with the same period a year earlier and by about the same compared with the prior 10-year average.

Two-thirds of the extra output came from gas-fired units (30 billion kWh) with most of the rest from solar farms (13 billion kWh).

As a result, generators boosted their gas consumption by 213 billion cubic feet (6%) compared with a year earlier to a record 3,941 bcf.

 
BLOATED STOCKS
 
Despite record power burn, gas stocks remained abnormally high, with inventories 671 bcf (+36% or +1.46 standard deviations) above the prior 10-year seasonal average at the end of April.

The surplus had swelled from 261 bcf (+14% or +0.58 standard deviations) a year previously thanks to a mild winter in 2023/24.

By April, the actual cost of gas received by electricity generators had slumped to an average of just $2.05 per million British thermal units.

After adjusting for inflation, power generators’ gas acquisition costs had fallen to the lowest level on record in data going back to 1973.

MAXIMIZING RUNS
 
Exceptionally cheap fuel encouraged gas-fired generators to run their units for more hours, including the least-efficient, most fuel-hungry plants that normally operate mostly during the summer and winter peak periods.

Single-cycle gas turbines and gas-fuelled steam generators are much less efficient than combined-cycle units and usually operate only in peak periods of electricity demand.

With fuel so cheap, however, gas turbines operated with a record seasonal capacity factor of more than 14% in April 2024 up from 12% in April 2023 and 10% in April 2022.

Gas-fired steam turbines generated more than 15% of their maximum theoretical output, up from 13% in 2023 and 10% in 2022, and the highest for more than a decade.

PERSISTENT SURPLUS
 
Record gas-fired generation has helped prevent surplus inventories swelling even further but has not yet reduced bloated stocks to more normal levels.

Recurrent problems with the operation of the Freeport LNG export terminal have also delayed the normalisation of stocks.

Gas generation spiked to an all-time record early in July 2024, owing to high temperatures across much of the Lower 48 states, slow wind speeds, and the impact of low gas prices themselves.

Even so, inventories were still the second-highest on record for the time of year on July 19 and 479 bcf (+17% or +1.35 standard deviations) above the prior ten-year seasonal average.

After bouncing a little in May and June, futures prices have slumped in July towards the trough earlier this year, returning near to multi-decade lows in real terms.

Such extraordinarily low prices are sending the strongest possible signal to gas producers on the need to cut drilling and output even further after an initial round of cuts announced in February.

They are also sending a signal to generators to offer their units to the grid as much as possible, with gas generation records likely to be smashed this summer.

Prices will remain lower for longer until the inventories start to converge with the long-term seasonal average, most likely by the end of winter 2024/25.

By Michael Every of Rabobank

The end of the beginning

“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” – Churchill

Last week saw pure market panic. Rates markets are now pricing in 50bps cuts from the Fed at multiple 2024 meetings, or even intra-meeting: it’s not higher for longer, but when we see zero rates and QE again, apparently.

July payrolls were weak (114K vs. 175K expected) with a surprise rise in unemployment to 4.3% triggering the so-called Sahm ‘recession’ rule –suddenly a thing– after initial jobless claims had also risen more than expected. However, there might have been distortions to data from Hurricane Beryl: if so, August’s data will be better. True, there are also issues over the BLS births/deaths model’s ‘assumed’ jobs, and revisions, and payrolls stripping out demographic change, whether official or unofficial – but they didn’t appear Friday. In short, the labor market is cooling, but not collapsing, which is what the Fed wants.

We also saw a plunge in tech stocks. Few in markets or financial media had much bad to say when that bubble(?) was blowing, but when things flip, they demand rate cuts: heads I win, tails I don’t lose. But taking the froth off stocks is also what the Fed wants.

A few months ago, USD/JPY chatter was 170 or 180, because the BOJ couldn’t hike much without blowing itself and the Japanese economy up, while the Fed couldn’t cut much. Regardless of the 15bp BOJ rate hike and hawkish rhetoric from Governor Ueda last week, driving markets to talk of 140 in USD/JPY, that remains true. We already have a plunge in Japanese stocks which hardly backs demand-side inflation there; and we know services-demand and supply-side inflation pressures still lurk in the US. Short covering alongside unwinding the Yen carry trade that’s lifted US (and other) stocks surely doesn’t have much further to run; then huge rate differentials will kick in again – unless the Fed is going back to Covid-era monetary policy.

Even if so, it’s still just the end of the beginning.

With populism surging, can Western society take a deep recession? And we would start with huge fiscal deficits and post-WW2 levels of public debt. More austerity would create chaos, so, we’d surely see massive state spending backed by the central bank instead. That would make bond bulls happy; but it would also make the case to the public –and the parts of the world that *makes the things we buy*– that our system is broken. We can push yields down and hold them there, as post-2008: but only with weaker currencies vs. hard assets, key EM FX, and commodities – which means supply-side inflation.

Moreover, beware more populist anger. This is already a problem in the EU, and even the UK just saw violent country-wide riots against mass migration and “Two-Tier” policing. PM Starmer was head of the Crown Prosecution Service during the last riots in 2011, and cracked down hard: yet, as a journalist asked him, will another hardline approach, with no change to other policies, resolve this issue or pour oil on troubled waters? Won’t ‘vanilla’ rate cuts and QE just allow house prices and stocks to rise further, with that inequality leading to more anger?

So, the West still might have to adopt protectionism and/or more closed borders to reflate and recycle capital internally, as already proposed in the US. In which case, it’s the 1930s redux or 1930’s lite: that’s not the bullish ending markets foresee when they shout, “rate cuts!” and “QE!” in a political vacuum.

From seas of red to the Red Sea: geopolitics is risk-off bids for bonds, but also with an inflationary tail risk. As soon as today, say some, or symbolically on August 12-13, the Jewish fast of Tisha B’Av mourning past calamities, Iran and its Axis of Resistance will launch another missile and drone barrage at Israel. US and European forces will again help shoot these down, but many are expected to get through, and Israel is prepared to strike back hard. Its government has set up a secure bunker, and across the political spectrum there is a view that full war with Hezbollah and/or Iran is required to break the strategic encirclement Tehran has spent years creating around it (and which the US and EU haven’t stopped because they don’t want any more regional confrontation.) Meanwhile, other reports have Iran telling all those entreating it to hold back that will attack hard regardless of whether this causes a war or not; and that Hezbollah was told by Tehran to deliberately target civilian populations. It seems war looms.

Israel will be hit hard if so; but Lebanon far harder; and the US has reportedly warned Iran that Israel could bomb its key energy infrastructure, as it did to the Houthis. Indeed, with Israel (deliberately) lacking US bunker-buster bombs needed to hit Iran’s nuclear sites under mountains, perhaps only oil infrastructure is left to aim for. In a larger war, Axis forces may strike Gulf energy to try to force the West to stay Israel’s hand. In short, we could see the start of a violent oil-shock ahead, with no idea of how it then ends.

One can understand Western reticence about doing anything offensive rather than defensive, especially if Russia and China support Iran, forcing the US to either divert from Ukraine and Taiwan or cede an ally’s security and its own regional influence. Kuwaiti newspaper Al-Jarida has claims from a senior Iranian source, which may be disinformation, that the US is desperate to find a way out and back to the 2015 JCPOA deal, and blames Israel for this all, not Iran. However, rapprochement takes two or it’s just retreat, and certainly no deterrent to further violence. On which note, major US non-NATO ally Qatar, which houses Hamas leaders, has reportedly banned any military use of the US Al-Udeid airbase located there vs. Iran.

Meanwhile, other headlines underline how much the market misses on geopolitics in general:

• Astoundingly, the UK Ministry of Defence hired BELARUSSIAN coders to write the software for its nuclear submarines – because ‘they were cheap’? That’s neoliberalism for you, if so.
• The recent Russian-US spy swap incentivizes future hostage taking, and revealed deep agent children growing up abroad unaware they were even Russian until exchanged back to Moscow – how many more are out there? You think none?

Having started with Churchill, I end this Daily warning we have only seen the end of the beginning on multiple fronts with the words of the Bolshevik revolutionary Trotsky:

“You may not be interested in war, but war may be interested in you.”

Hurricane Debby made landfall as a Category 1 hurricane on Florida’s Big Bend today, missing ‘Wall Street of the South’—otherwise known as South Florida. 

Besides watching main equity indexes around the world crash—such as Japan’s Nikkei, which closed down 12.4%—the largest single-day percentage decline since 1987—some folks are also watching radar maps and forecast models of Debby, with tropical threat risks emerging up and down the East Coast this week. 

The National Hurricane Center wrote on X that Debby made landfall near Steinhatchee in Florida’s Big Bend around 0700 ET, moving north-northeast at 10 mph. 

After landfall, Debby is expected to dump 20-30 inches of rain across northern Florida and other surrounding states, including areas still recovering from Hurricane Idalia in August 2023. NBC News’ Marissa Parra called Debby “Idalia 2.0.” 

As the storm approached, evacuation orders were issued or planned for Monday in areas where the storm surge could be over ten feet. 

As noted by Epoch Times, several governors have issued emergency declarations across the Southeast:

Georgia Gov. Brian Kemp, Florida Gov. Ron DeSantis, and South Carolina Gov. Henry McMaster have declared emergencies for their respective states ahead of the storm’s landfall. DeSantis issued an emergency order on Aug. 1 for 54 counties but expanded it on Aug. 2 to include seven more counties.

Kemp’s emergency declaration will be in place though Aug. 8 and impacts all 159 counties in Georgia.

“As the state prepares for a major storm system early this coming week, we urge all Georgians to take precautions to keep their families and property safe,” Kemp said in a statement on social media.

On Sunday afternoon, McMaster said in a news release that his office, too, declared an emergency ahead of the storm. The order did not say how many of South Carolina’s counties are impacted.

NHC’s potential storm track shows Debby is set to hammer Georgia and the Carolinas early this week. 

Other weather models show the storm’s potential track is set to ride up along the East Coast through the end of the week. 

Tropical threats are a welcome sign for parts of the Southeast, Mid-Alantic, and Northeast plagued by droughts this summer. 

In other related weather events, peak summer in the Lower 48 has ended, and temperatures, on average, should soon begin to trend lower. 

Keep an eye on Debby’s track, East Coasters—the storm could disrupt travel plans to the beach or elsewhere in the cone of uncertainty.  

President Joe Biden will convene his national security team in the situation room on Monday afternoon as the US has warned its top Middle East ally Israel that an Iranian attack is imminent. The defense chiefs of both countries – Gallant and Austin – are also discussing a “series of scenarios and corresponding defensive, offensive capabilities.” Biden also plans to speak with Jordan’s King Adbullah, the White House has confirmed.

Axios has reported Sunday that the message being conveyed abroad by Secretary of State Antony Blinken is that while Washington doesn’t know the exact timing of the the attacks, they could start as early as the next 24-48 hours, which would mean as soon as Monday.

Separately a Wall Street Journal was particularly alarming given it said that Iran has told Arab diplomats that “it didn’t care if the response triggered a war” when they tried to urge deescalation and calm. Foreign ministers from Lebanon and Jordan have been in Iran trying to talk officials down from initiating a major attack.

Tehran in a fresh statement has said its intent is not to escalate, but to ‘punish’ Israel for the Wednesday killing of Hamas political leader Ismail Haniyeh on Iranian soil, and that it won’t be dissuaded. 

“Iran seeks to establish stability in the region, but this will only come with punishing the aggressor and creating deterrence against the adventurism of the Zionist regime,” according to the words of Iranian Foreign Ministry spokesman Nasser Kanaani.

Kanaani further blasted the United States and international community for providing continued support and cover to Israel, saying instead all countries should back pursuing the “punishment of the aggressor.”

Also, Islamic Revolutionary Guards Corps (IRGC) chief Hossein Salami has warned that Israel was “digging its own grave” and that it “will receive punishment in due time.” He indicated that this was not just due to the Haniyeh killing, but a string of covert killings and sabotage actions against the Islamic Republic.

Iran on Monday reportedly began clearing out its airspace by issuing NOTAM alerts (Notice to Air Missions alert):

“Iran has issued a NOTAM, a notice alerting an aircraft of dangers en route, for the center, west, and northwest of the country, advising aircraft to change their routes.”

Iran has issued NOTAM’s over their airspace (see link below).

Flights over Iran are thinning out. Air traffic over Iraq seems to have increased heavily.

Nothing Follows. https://t.co/4aAqbbDcnO pic.twitter.com/m5A452L6dv

— Matt Tardio (@angertab) August 5, 2024

“Israel is the cradle of terrorism and it has been created out of killing and murder,” the IRCG’s Salami charged. “They think they can kill the nuclear scientists of another country and impede that country’s path toward peaceful nuclear technology. They think that by killing the leader of a resistance group… in another country will give them more time to live.”

A wave of major airline cancelations at both Beirut and Tel Aviv airports have meanwhile left foreigners and others seeking to exit these countries on the brink of war scrambling and in some cases stranded. But things at Ben Gurion still appear somewhat normal in terms of activity. A Sunday assessment of the situation at Ben Gurion is as follows:

For the time being, Tel Aviv’s Ben Gurion Airport is working as normal, and Israel’s airspace remains open. The Civil Aviation Authority of Israel said in a statement “The security situation allows flights to and from Israel. Some of the foreign airlines have suspended or reduced their flights to Israel, for their own internal reasons. Travelers should take into account that their return to Israel may be delayed, and should keep in touch with the airlines and update themselves about their flights.”

Unverified reports say that Beirut’s international airport is currently more chaotic and crowded (also as it is smaller than Tel Aviv’s) after a spate of foreign and Western embassies issued alerts telling their citizens to immediately get out while there are still tickets available.

A G7 statement is pleading for peace…

On August 5 (local time August 4), #G7 Foreign Ministers’ Statement on the situation in the Middle East was issued.#G7Statement #MiddleEasthttps://t.co/vhcbfp20AD pic.twitter.com/OzrxZLnFs5

— MOFA of Japan (@MofaJapan_en) August 5, 2024

As for the potential big Iran attack, this time it is expected that Hezbollah in southern Lebanon will play a bigger role this time (compared to the April 13th ballistic missile and drone strikes), with Axios writing that “Blinken stressed that the US believes Iran and Hezbollah will both retaliate.”

Authored by Luis Cornelio via Headline USA,

Supreme Court Justice Neil Gorsuch issued a stern warning about President Joe Biden’s proposals to reform the court system, which many have described as a desperate effort to thwart the conservative majority.

Justice Gorsuch, appointed by President Donald Trump in 2017, declined to comment on specific proposals like age limits but cautioned against hindering the judiciary’s independence during a Sunday interview with Fox News Sunday with anchor Shannon Bream.

“You are not in a bubble here at the courts. There are real world events happening. … How does the court feel about potential changes, term limits, ethics codes that are enforced by someone in ways that it isn’t now?” Bream asked.

In response, Gorsuch said, “Shannon, you’re not going to be surprised that I’m not going to get into what is now a political issue during a presidential election year. I don’t think that would be helpful.”

He added, “I have one thought to add, it is that the independent judiciary … means that when you’re unpopular, you can get a fair hearing under the law and under the Constitution.”

Gorsuch emphasized that the judiciary’s role is to protect Americans’ rights against government persecution.

“Don’t you want a ferociously independent judge and a jury of your peers to make those decisions? Isn’t that your right as an American? And so, I just say be careful,” Gorsuch concluded.

Gorsuch appeared on Fox News to promote his new book, Over Ruled: The Human Toll of Too Much Law, where he scolds the unprecedented growth of laws and regulations in the U.S.

His remarks came less than a week after Biden and Vice President Kamala Harris announced a “bold plan” to reform the Supreme Court and “ensure no president is above the law.”

The proposed changes include abolishing presidential immunity, imposing term limits on justices and radically reforming ethics codes.

These changes are seen as a direct challenge to President Donald Trump and the six conservative justices currently on the bench.

Last month, the court ruled that Trump enjoyed presidential immunity from prosecution, reaffirming long-standing legal theories and angering the Democratic Party.

The proposed ethics code appears to target Justice Clarence Thomas, who faced criticism from ProPublica for allegedly failing to disclose gifts from friends. ProPublica is a leftist organization claiming to be a news organization.

If levying more than 100% tariffs on Chinese-made electric vehicles wasn’t enough, the Biden administration is now gearing up to propose a ban on Chinese software in autonomous and connected vehicles on US highways, citing national security risks.

Reuters reports the new rule would prohibit Chinese software with Level 3 automation and above on all US roadways. This would also ban all testing of Chinese autonomous vehicles in the US. 

The administration, in plans first reported by Reuters, will also propose barring vehicles with Chinese-developed advanced wireless communications abilities modules from US roads, the sources added.

Under the proposal, automakers and suppliers would need to verify that none of their connected vehicle or advanced autonomous vehicle software was developed in a “foreign entity of concern” like China, the sources said. -RTRS 

A Commerce Department spokesperson told Reuters that the department “is concerned about the national security risks associated with connected technologies in connected vehicles.”

Last month, the Commerce Department said it was planning to issue the new proposed rules on connected vehicles in August and impose software limits on vehicles produced in China and other countries deemed adversaries. 

The department’s Bureau of Industry and Security said the rule “will focus on specific systems of concern within the vehicle. Industry will also have a chance to review that proposed rule and submit comments.”

Earlier this year, President Biden said, “Connected vehicles from China could collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China.”

Besides the spying car threat, Chinese EVs imported into the US have been deemed an existential threat to the American auto industry, with the Biden administration proposing more than 100% tariffs. Remember, Biden is controlled by unions, such as the ones in the auto industry, so he must cater to their demands. 

US Senator Sherrod Brown (D-OH) wrote in a letter to the president in April:

“The US must ban Chinese electric vehicles now, and stop a flood of Chinese government-subsidized cars that threaten Ohio auto jobs, and our national and economic security.”

Looking ahead this week, the White House and State Department will host a meeting with allies and industry leaders to “jointly address the national security risks associated with connected vehicles” on Wednesday. Sources informed Reuters that additional details about the new rule should be unveiled at this week’s meeting.

Good morning and welcome to a global market meltdown, sparked by last week’s catastrophic BOJ decision to hike rates by 0.15bps which in turn crushed the $20 trillion yen carry trade, sent the yen exploding higher and wiping out trillions in highly levered investments, leading to a cascade of selling and forced liquidations which has resulted a historic market crash in Japan and a rout everywhere else. 

In the US, futures are sharply lower with tech plunging as the global AI/Semis trade – itself a byproduct of the carry trade – is sold and small-caps are re-shorted. The Nasdaq 100 is set for its biggest opening drop in more than four years, as investors bracing for days of volatility amid rising concerns over a slowing US economy and overheated gains in the tech sector. Nasdaq 100 futures fell as much as 6.5% before paring losses to about 4.5%. That puts the tech-heavy index on track for its worst open since the pandemic days of March 2020.

The Nasdaq dropped into a correction Friday as investors freaked out over elevated valuations and the high cash outlay for investments in artificial intelligence. The Philadelphia Semiconductor Index is already in a bear market, tumbling 22% from a peak, even before Monday’s open.

Meanwhile, S&P 500 futures were down 3.0% while those tracking the Dow Jones Industrial Average declined 1.6%.

While both Nasdaq and Russell futures have pared their largest overnight losses, brace for more waves of selling as the VIX spikes above 62 and forces margin call after margin call, and volatility sellers are carted out…

… the highest print since the Covid crash when it peaked just over 80.

While US futures are a bloodbath, nobody had it as bad as Japan whose benchmark Nikkei 225 index recorded its worst-ever daily sell-off on Monday, losing 4,451.28 points from the previous day’s closing amid panic selling triggered by fears of a possible U.S. recession and the yen’s strength.

The sell-off was the largest ever in history and worse than in the Black Monday crash of October 1987, when it lost 3,836.48 points. The average closed down 12.4% to 31,458.42. On a percentage basis it wasn’t much better, with the Nikkei’s peer, Topix, tumbling -12.2%, its biggest one day drop since the 1987 stock market crash and the second worst day since data begins in 1949; the index is poised for its biggest three-day drop on record.

Turbulence in Japan, where the central bank started to raise interest rates as the Fed looks to cut in a historic mistake that has already wiped out trillions in value, is also having ripple effects across global markets of various asset classes. This is due to moves to reverse carry trades, in which investors had borrowed at lower rates in Japan to fund purchases of higher-yielding assets elsewhere, and nowhere has this been felt more than the yen: the USDJPY is down a record 20 big figures from 162 just a few weeks ago to 142 this morning, tumbling more than 3% since Friday.

The constant selling has pushed the USDJPY RSI to the most oversold level since 1995.

“With yen carry trades now being unwound quickly, not only has the Japanese currency notably broken its depreciation trend against all major units, but risk assets that those trades were financed with are also being sold off,” wrote Asymmetric Advisors strategist Amir Anvarzadeh, in a note to clients.

Back to the US, looking at the premarket, it’s a tech rout for understandable reasons: many of the best performing stocks were direct beneficiaries of the leverage afforded by the carry trade and sure enough, all the Mag 7 names are crashing: NVDA -9.3%, AAPL -8.6%, TSLA  -7.4%, MSFT -4.5%, AMZN -3%, META -6%, GOOG -5% and Semis are under pressure. Here are all the most notable premarket movers:

• Nvidia falls 12% as megacap technology stocks are bearing the brunt of the selloff as investor brace for days of volatility amid rising concerns over a slowing US economy and overheated gains in the tech sector.
  • Apple -7%, Meta Platforms -5% Microsoft Corp. -4%, Tesla -9%
  • Nvidia shares are also down following a report that the company’s upcoming artificial intelligence chips will be delayed due to design flaws.
  • Apple’s stock is also being hurt after Berkshire Hathaway reported on Saturday that it had slashed its stake in the company by almost 50% as part of a massive second-quarter selling spree
• Cryptocurrency-linked companies tumbled as Bitcoin added to a 13% drop last week that was the worst since the period when the FTX exchange imploded. The weakness in the digital token comes amid a broader selloff in global stock markets
• Coinbase Global -15%, Riot Platforms -14%, Marathon Digital  -14%
• Kellanova rises 20% after Reuters reported Mars was exploring an acquisition of the snack maker, citing people familiar with the matter.
• Moderna drops 5% as RBC cut its rating to sector perform, noting an “increasingly uncertain outlook.”

“In these sorts of scenarios, investors need to be careful,” said Ben Barringer, an analyst at Quilter Cheviot. “When sentiment begins to sour, the falls become more extreme than perhaps they should be. The next few weeks is likely to be a volatile one for tech stocks as this new environment plays out.”

While the US may have just hit $35 trillion in debt for now that is of secondary concern amid a global flight to safety, and bond yields are lower with the yield curve bull steepening and 2s/10s ~4.5bps from being fully dis-inverted as the 10Y tumbles to 3.72%. Today’s macro focus is ISM-Srvcs (51.0 survey vs. 48.8 prior), Senior Loan Officer Survey, and 2x Fedspeakers.

“With the summer low liquidity, the still heavy trend plays that need unwinding and the VIX sky-high, this selloff move could go on for a few days,” said Florian Ielpo, head of macro research at Lombard Odier Asset Management. Still, “the macro picture itself is not as bad as the market seems to think.”

Concerns over health of the US economy took center stage after Friday’s data pointed to rising unemployment levels in July, triggering a closely watched recession indicator and stoking fears that the Federal Reserve hasn’t moved quickly enough to cut interest rates. Investors bid up haven assets such as the yen, while Cboe VIX August futures spiked.

“The key point is the current shift in narrative, from no landing to soft landing,” said Florian Ielpo, the head of macro research at Lombard Odier Asset Management. “That risk was poorly priced and investors shifting gears fast explains the extent of the move.”

Elsewhere, Treasuries climbed as traders boosted bets on aggressive monetary policy easing by the Federal Reserve this year, with odds of an emergency meeting rising to 25%. US two-year yields fall 11bps to 3.77%.

In FX, we already covered the main highlights: the yen soared 3.2% against the greenback, pulling USDJPY down to ~142.05. The Swiss franc also outperforms, rising 1%, while the euro adds 0.4%. Bitcoin slumps over 10%.

In rates, Treasuries retained about half of their steep, front-end-led gains during Asia session and European morning, with 2-year yields richer by 13bp at around 3.75% after falling nearly 27bp Friday. US yields remain richer by 13bp to 4bp across the curve in an aggressive bull-steepening move that has 2s10s spread wider by almost 8bp and approaching dis-inversion for the first time since July 2022. US 10-year yields trade around 3.75% after reaching lowest since June 2023. Investors continue to price in aggressive rate cuts by the Federal Reserve, with about 55bp of easing now priced in for September FOMC meeting, 100bp by November’s. In other words, there is about 20% odds of an emergency rate cut already priced in. Similar gains seen in core European rates, where 2-year German yields are lower by around 11bp on the day. US session includes ISM services data at 10am New York time.

In commodities, oil prices decline, with WTI falling 1.9% to trade near $72.10 a barrel. Spot gold falls $18 to around $2,425/oz.

US economic data slate includes July S&P Global US services PMI (9:45am) and ISM services index (10am), and Fed’s Senior Loan Officer Opinion survey (2pm). Scheduled Fed speaker slate includes Goolsbee (8:30am) and Daly (5pm).

Market Snapshot

• S&P 500 futures down 3.6% to 5,184
• STOXX Europe 600 down 2.3% to 486.40
• MXAP down 6.0% to 166.21
• MXAPJ down 4.1% to 530.79
• Nikkei down 12.4% to 31,458.42
• Topix down 12.2% to 2,227.15
• Hang Seng Index down 1.5% to 16,698.36
• Shanghai Composite down 1.5% to 2,860.70
• Sensex down 2.6% to 78,911.70
• Australia S&P/ASX 200 down 3.7% to 7,649.56
• Kospi down 8.8% to 2,441.55
• German 10Y yield -3 bps at 2.14%
• Euro up 0.5% to $1.0970
• Brent Futures down 1.0% to $76.06/bbl
• Gold spot down 0.7% to $2,425.51
• US Dollar Index down 0.72% to 102.46

Top Overnight News

• Japan’s Nikkei Stock Average closed down 12.4% in its biggest single-day percentage fall since 1987, a historic drop triggered by disappointing U.S. jobs data and a further rise in the yen. Highest turnover day ever for tpx >8trln YEN, 2nd largest drop index drop since 1987, tpx had 131 stocks close limit down, Nky had 20.   Retail margin length is at highs. Mkt Underestimated CTA selling, overestimated Domestic support levels at 38, and 34…. maybe 25. WSJ / GS GBM
• China is successfully bypassing US export controls to obtain high-end AI chips. China’s gov’t reiterated its intent to bolster consumer spending (the government has been beating this drum for a VERY long time, but efforts thus far have failed to yield tangible results).  NYT / BBG
• Goldman increased its 12-month recession odds by 10pp to 25%. The bank continues to see recession risk as limited not only because the data look fine overall and does not see major financial imbalances, but also because—as Chair Powell emphasized last week—the Fed has 525bp of room to cut the funds rate and would surely be quick to support the economy if necessary. The bank changed its Fed forecast after the employment report to include an initial string of three consecutive 25bp rate cuts in September, November, and December (vs. quarterly cuts previously). GIR
• Berkshire Hathaway slashed its Apple stake by almost 50%, while its cash pile soared to a record $277 billion. Suppliers to the iPhone maker slumped amid the broader selloff even as some analysts said Warren Buffett may simply be taking profit. BBG
• Iran rejected U.S. and Arab efforts to temper its response to the killing in Tehran of Hamas’s top political leader, as authorities were investigating the security breaches that led to the attack. Iranian prosecutors said Saturday that they had opened a formal investigation into the killing of Ismail Haniyeh, which came hours after an Israeli strike killed a senior Hezbollah commander in Beirut. The two attacks, following a rocket strike on a soccer field in the Israeli-controlled Golan Heights, escalated a recent cycle of violence and threatened to push the region to the brink of war. WSJ
• The traditional playbook when it comes to extrapolating economic data may not be relevant in the post-COVID era (the creator of the “Sahm Rule” about how a 50bp increase in the unemployment rate signals a recession expressed skepticism about applying that benchmark in the present landscape). Barron’s
• AI spending spree creating anxiety for tech investors as shareholders want more tangible proof that all the expenditures will drive profits in the future (but tech mgmt. teams suggest they won’t be dialing back anytime soon as they fear having inadequate capacity to capitalize on the AI opportunity). FT
• PE firms accelerate dealmaking activity as they prepare for the start of Fed easing (Ares, Apollo, Blackstone, and KKR deployed ~$160B in CQ2). FT
• GS PB on Friday’s flow: We saw broad-based net selling across all major regions, led by DM Asia (Japan saw the largest 1-day net selling since Mar ’20).   While there was significant performance degradation on Friday as Marco pointed out, there was no further de-grossing by HFs per Prime data.  Worth noting both Prime + franchise flows in the US were orderly and relatively modest on Friday. GSPB

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly slumped following last Friday’s continued sell-off on Wall St owing to disappointing jobs data which sparked recession concerns, while heightened tensions in the Middle East linger as markets await Iran’s retaliation. ASX 200 declined with tech, financials and real estate leading the broad retreat seen across all sectors. Nikkei 225 continued its aggressive slide and dipped beneath the 33,000 level for the first time since early January, while the index entered into a bear market along with the Topix. Hang Seng and Shanghai Comp. showed early resilience with the mainland initially kept afloat after Caixin Services PMI topped forecasts, while China recently laid out its priorities to spur consumer spending and the  State Council designated 20 key steps to expand basic consumption. However, the bourses later conformed to global losses. Nikkei 225 unofficially closes at 31458, -12.4%; closes with a record daily points fall, exceeding the drop on Black Monday in  October 1987

Top Asian News

• China issued guidelines to promote high-quality development of service consumption, according to Bloomberg. China’s government on Saturday laid out its priorities to spur consumer spending as weak domestic demand continues to weigh on growth in which the State Council designated 20 key steps including exploring the potential to expand basic consumption in areas such as catering, home services and elderly care, according to a statement posted on the central government’s website.
• EU capitals are set to back tariffs on Chinese electric cars with member states likely to support the imposition of proposed tariffs on Chinese EVs in November, according to FT citing the bloc’s trade commissioner Dombrovskis.
• BoJ Minutes from the June 13th-14th meeting stated that a few members said import prices are rising due to the recent yen fall, creating upside inflation risk, while a member said cost-push inflation could heighten underlying inflation if it leads to higher inflation expectations and wage increases. Furthermore, one member said the BoJ must raise rates at appropriate timing without delay although another member said a rate hike must be done only after inflation makes a clear rebound and data confirms heightening in inflation expectations, while members agreed recent weak yen pushes up inflation and warrants vigilance in guiding monetary policy.
• Japanese Finance Minister Suzuki says stock price is determined by the market; expects economy to gradually recover; Cooperating with BoJ and FSA and closely monitoring markets with a sense of urgency. Highly interested in the current stock market situation.
• Japan’s Chief Cabinet Secretary Hayashi says they are monitoring financial situations both abroad and domestic with a sense of urgency, says it is important for the gov’t to make a judgement on the market calmly.
• Thai Finance Minister says the stock market fall is being driven by external factors, should be supported by gov’t measures

European bourses opened with marked downside, following the APAC pressure post-NFP with sentiment hit further by updates concerning Apple and Nvidia; since, benchmarks have lifted slightly off worst but remain under marked pressure, Euro Stoxx 50 -2.3%. In brief, APAC pressure was pronounced with circuit breakers triggered in Japan and South Korea while the Nikkei 225 closed with a record daily points fall. Sectors in the red, Energy lags as crude benchmarks come under renewed pressure with Tech hit on sentiment and AAPL/NVDA while Banks slump as yields fall and pricing for central bank easing lifts. Infineon opened as the DAX 40 laggard after missing forecasts, narrowing guidance and announcing layoffs.
Stateside, futures in the red given the above but have begun to consolidate just off worst levels with newsflow light and as we await ISM Services & Fed speak for direction; ES -2.4%, NQ -3.9%. Bloomberg headlines this morning suggested that traders are pricing a 60% chance that the Fed will cut rates by 25bps in the next week.

Top European News

• UK PM Starmer vowed that those responsible for the disorder and chaos that’s spreading across UK towns and cities will be punished for what he described as “far-right thuggery”, according to Bloomberg.
• Infineon (IFX GY) – Q3 (EUR): Revenue 3.7bln (exp. 3.8bln), Net 403mln (exp. 447mln), adj. Gross Margin 42.2% (exp. 40.3%), adj. EPS 0.43 (exp. 0.42). Further improvement to revenue and earnings seen in Q4, FY forecasts are well within the prior guided range. It is anticipated that revenue will increase in all four segments Q/Q. Q4 Guidance: Revenue 4bln (exp. 3.9bln). CEO says they are to cut around 1.4k jobs globally and will move an additional 1.4k. 3.6% weighting in the DAX 40

FX

• Hefty losses to begin the week for the USD with the DXY down to a 102.41 base as pricing for Fed easing ramps up considerably and as JPY strengthens significantly.
• USD/JPY down to a 141.70 base vs. a brief high-point of 146.56, action which comes as yields globally slump and differentials become more favourable following the BoJ’s hike in addition to its typical haven status amid the broad sell off.
• EUR benefitting from the USD’s pressure but with upside for the single currency capped/hampered by strength in the JPY and CHF; EUR/USD holding around 1.0950 just shy of the 1.0975 peak.
• Cable more contained and somewhat torn between USD pressure and EUR strength with yields not providing as much direction for GBP given the extent of last week’s moves around the BoE.
• Antipodeans lag on the risk tone, AUD and NZD down to lows of 0.6350 and 0.5851 respectively.

Fixed Income

• Fixed benchmarks bid as the post-NFP sell-off reverberated into and was exacerbated during APAC trade. The odds of Fed easing have ramped up even more with a 50bp cut almost entirely priced for September and implied pricing for a 25bp cut in the next week at 60%.
• USTs at highs, yields lower across the curve with just the 20yr & 30yr remaining above 4.0% at lows of 4.08% and 4.01% respectively.
• EGBs and Gilts in-fitting, Bunds up to a 136.28 peak and on track for a 10th consecutive session of gains while Gilts are also at highs but slightly more modest after last week’s action.
• No real move to the session’s Final PMIs and EZ Sentix, though both PMIs and Sentix remain downbeat on Germany with the latter noting that “recession bells are ringing again in Germany”.

Commodities

• Crude is conforming to the broader risk aversion after the US jobs data on Friday stoked fears of a recession against the backdrop of sluggish Chinese demand; though, downside has at times been cushioned by ongoing geopolitical tensions.
• WTI and Brent at the low-points of session parameters, below USD 72.00/bbl and nearing USD 76.00/bbl respectively.
• Precious metals lower across the board as the USD managed to pick up slightly from worst levels and with XAU being outshone by marked JPY and Fixed bids; holding around USD 2430/oz after being as high as USD 2458/oz overnight.
• Base metals are lower across the board given the mentioned risk tone and despite better-than-expected Chinese Caixin Services PMI.
• Saudi Arabia raised its official selling price for Asia in September by 20 cents to USD 2.00/bbl above the Oman/Dubai average, while it set the OSP to NW Europe to + USD 1.25/bbl vs ICE Brent and to the US at + USD 4.10/bbl vs ASCI.
• NHC said Tropical Storm Debby is strengthening over the southeastern Gulf of Mexico, while it later stated Debby has strengthened to a hurricane and is expected to make landfall in the Florida Big Bend area on Monday which will bring a major flood threat to the southeastern United States.

Geopolitics: Middle East

• Israel conducted strikes targeting two schools sheltering the displaced near Gaza City which killed at least 25 Palestinians, while the Israeli military said the strikes on Gaza schools targeted militants operating there. Israel also conducted a strike in the West Bank which killed a Hamas commander.
• Israeli PM Netanyahu on Sunday warned “Iran’s axis of evil” against attacking Israel amid expectations that Tehran and the militant groups it supports are readying retaliatory strikes, according to dpa.
• Iran-led retaliatory assaults are “expected imminently” and will likely be simultaneous, coming from Hezbollah in Lebanon, the Houthis in Yemen and Iran itself, according to Israeli officials cited by Bloomberg and Iran International.
• Iran’s Revolutionary Guards said the terrorist act of killing Hamas chief Haniyeh was designed and executed by Israel with the support of the criminal US government, while it added that the adventurous and terrorist Zionist regime will decisively receive the response to this crime. Furthermore, the IRGC said Tehran’s revenge will be severe and at the appropriate time, place and manner, according to Reuters.
• US Secretary of State Blinken told his G7 counterparts on a conference call on Sunday that an attack by Iran and Hezbollah against Israel could begin within 24 to 48 hours, according to Walla News.
• IRGC sources told iNews Britain that Iran’s response to Israel could come no later than Tuesday or Wednesday.
• Egypt’s Foreign Minister held a call with Iran’s Foreign Minister and stressed that recent developments are unprecedented, very dangerous and threatening to the region’s stability.
• US President Biden will speak to Jordan’s King on Monday and will convene the national security team on Monday in the situation room to discuss Middle East developments, according to the White House.
• US Secretary of State Blinken spoke with Iraqi PM Al-Sudani and emphasised the importance of all parties taking steps to calm regional tensions and avoid escalation, while Iraq’s PM told Blinken in the phone call that preventing regional tensions is tied to stopping Israeli aggression on Gaza. It was separately reported that Blinken told G7 ministers that Iran and Hezbollah may attack Israel within the next 24 hours, according to Axios
• White House’s Finer said the US is trying to prepare for any scenario in the Middle East by warning citizens to leave Lebanon and the US is moving an aircraft carrier to the Middle East purely for defensive reasons, while Finer said the overall goal is to turn the temperature down in the region, according to a CBS interview.
• UK Foreign Office said Britain temporarily withdrew the families of officials working at the British embassy in Beirut due to a highly volatile security situation in Lebanon.
• US Central Command forces said they successfully destroyed an Iranian-backed Houthi missile and launcher in the Houthi-controlled area of Yemen. It was separately reported that Yemen’s Houthis said they targeted MV Groton in the Gulf of Aden with ballistic missiles.
• Israel could reportedly pre-emptively strike Iran in the scenario that intelligence was to show that an attack was imminent, via Times of Israel.
• US is reportedly willing to guarantee to Israel that it will be able to renew fighting against Hamas in Gaza after the first phase of a potential ceasefire and hostage deal, via Times of Israel.

Geopolitics: Other

• Ukrainian President Zelensky announced the arrival of F-16 fighter jets and said they are already in use in Ukraine’s skies, while he said Ukraine does not have enough F-16 pilots or jets and hopes training will be expanded. Furthermore, he plans to discuss at the Ukraine-NATO council the use of neighbouring countries’ aviation for air defence work.- Ukrainian military said it struck a Russian submarine and anti-aircraft system in Crimea, while it also struck Russia’s Morovosk airfield, as well as oil fields and fuel facilities in three Russian regions.
• Russian Defence Ministry said Russian forces captured a settlement in the Donetsk region.
• North Korean leader Kim said they will have a more improved level of nuclear readiness in the near future to respond to any challenges, while he added that stockpiling and improving nuclear weapons is the best way to counter the US, according to KCNA.
• Philippines and German Defence Ministers committed to concluding a broader defence agreement, while the Philippines Defence Minister said they invited German ships to participate in exercises.

US Event Calendar

• 09:45: July S&P Global US Services PMI, est. 56.0, prior 56.0
• 10:00: July ISM Services Index, est. 51.0, prior 48.8
• 14:00: Senior Loan Officer Opinion Survey on Bank Lending Practices