For the two decades that he’s edited the scabrous and insightful U.K.-based web magazine Spiked, Brendan O’Neill, an occasional Reason contributor, has described himself—perhaps with a wee bit of provocation—as a “libertarian Marxist.” That is, until the populist uprisings in Europe last year.
“The thing that’s different now than it would have been six months ago,” O’Neill told me during a February episode of the Fifth Column podcast, “is that I’ve increasingly gone off the word libertarian.” The Brexit vote in England, the Yellow Vest protests in France, various anti-elitist spasms across the globe—these have packed more of a punch in two short years than four decades’ worth of classical liberal think-tank thumbsucking, he said: “I think other things more interesting than libertarianism are happening in the world right now.”
Individualists fond of Enlightenment rationalism do not generally hasten toward the excitement of street mobs or even electoral majorities. But the global rise in nationalist politics, from Viktor Orbán’s Hungary to Donald Trump’s America, has tempted many commentators with the thrills of revolution and machinations of power. Unsurprisingly, they are shedding their libertarianism along the way, writes Matt Welch.
“The eggs chase the bacon round the frying pan.. ”
News over the weekend leave me un-enlightened:
The denouement of the Brexit crisis on Thursday? Who knows..?
Kudlow saying its “closer” gives us no reason to think China and the US will actually sign a trade deal – it seems to be wallowing. Does it matter?
Saudi Arabia’s Aramco attracting a $30 bln book for its new bond. How quickly we forget..
Earnings kick off this week in the US – some say lower numbers will likely to test the stock market’s resolve and the current high valuations. Test, but unlikely to break?
How much are consumers over-levered across global housing, and personal lending? Lots, but rates are lower for longer.. until.
The global economy continues to look like its slowing..
Politics remains febrile (what a great word..) around the globe: a Salvini Le Pen love in, Trump vs Democrats, Trump losing Homeland chief, and the AfD.
Is the great Asset Reset button about to be pressed? What ARB?
Hilarious article on Zerohedge has a senior Blackrock exec calling for ECB to start buying European equities as next stage of boosting Europe’s recovery and inflation. Really? Because it’s worked so well in Japan?
Despite all the above, markets feel unconcerned. Speaking to clients there is a distinct “been here before” mood. Is it complacency, or is it an understanding that uncomfortable news might be hyped and fake, and signals often mislead? Despite all the negativity – investment managers tend to discount the known bad news. It’s the unknowns that sink markets. This is the last full week before the Easter break.
There are three things I’ve got on my watch list for the coming week:
FED Minutes on Wednesday – what do they think?
European banking – ECB lower for longer rates, further slowdown in Europe, (German industrial orders slipping by nearly 5%), money laundering, competition policy, and competition; just how dismal are prospects for the sector?
Boeing – stock price actually bounced on the back of the pilots not being to blame for Ethiopian Airlines crash. But long-term?
European Banks
European Bank stocks are among the worst performing asset class – only cars are worse. Low rates, margin pressure and the deepening downturn in Europe don’t help. A host of names are trading below asset value – which tells you one of two things: either they are cheap, or the market doesn’t believe where the banks have marked their assets. (I go with the latter.)
Who is comfortable with European banks? While they might not be the trigger they will be part of the next European crisis. But now? I’m just trying to rationalise them. There are really three big negatives when it comes to European banking: i) the banks themselves, ii) the European economy and iii) the who needs banks anyway argument.
When it comes to European banks, I’m struggling to come up with a single name I could point to and say: “that’s a great bank: well managed, sound business, and meets the dream “dull and predictable” investor nirvana.” None of them pass – but I’m willing to stand corrected if readers think I’m missing something and there are names to buy.
Sentiment towards European banks is coloured by the current tumble of fines against them. They have paid out over $16 bin in money laundering and regulatory fines over the past 10years. (And that number excludes the UK banks who are well over $10 bin themselves.) Although I’d split UK banks out as separate from Europe, Standard Chartered faces a multi-hundred million fine for Iranian sanctions breaking just as their current “deferred prosecution agreement” with the US authorities expires- under which it has promised to be good – ends.
The StanChart fines relate to activities between 2007-2014, but since then I’ve met many Iranians, (another story), who are clearly well banked and in possession of multiple credit cards, so it’s pretty clear Iran sanctions remain an open book for the SEC and guess who they are looking at. Oh? The rest of the world wants to deal with Iran? Better not say anything more… but I’d start in Paris..
Then there is the slew of Baltic money laundering charges engulfing Scandinavian banks (and maybe Deutsche). Despite the fact European banks have paid over $12 bln to Uncle Sam in Money Laundering fines, the EU has proved unable to agree on a list of money laundering jurisdictions and doesn’t even check money laundering at an EU level. Why? Some counties (including one beginning with G), enable their banks to not disclose fines (for reputational reasons). Neither can the EU agree on Banking Union or a single European Deposit Insurance Scheme; the French are in favour, everyone else who matters is against.
Meanwhile, you really can’t make up the current headlines about the political driven merger between Deutsche and Commerzbank, and the lack of progress (some would say reversal) towards European Banking Union. While banks are expected to work under the rules of the ECB, no one has agreed common rules, while ECB policy means banks struggles with margins, returns and profitability, and the legacy of broken bank lending practices essentially still unfixed since 2007. Season with economic downturn, and overlay with a layer of ECB bureaucracy and regulation to the mix and it doesn’t get any better.
The “successes” of European Banking Union has been extraordinary (US Readers: Sarcasm Alert): cross border banking isn’t happening (actively opposed by many), banks are being dragged down to the lowest common denominator, bad lending is unresolved, too-big-to-fail remains strongly entrenched as domestic vs European banking policy remains in the ascendant. When the Germans say they are against cross-border banking in order to create a German banking champion by merging Deutsche and Commerz, I can’t help but giggle.
Why bother with European banks? What is the purpose and goal of banking? It’s difficult to say anymore… banks don’t fill the same irreplaceable niche they once did in our financial ecosystem. (Global regulators can probably claim a minor success in that regard.)
Effectively banks have either become brands – with franchises in private banking (whatever that means), wealth management, less so in retail banking where actually meeting a bank clerk is less likely than meeting the tooth fairy, or they are processors of cash flows like mortgages or credit cards. Many SMEs complain their banks don’t understand their business needs, and are slow to address them. That’s particulary true when banks are in trouble, under the regulatory cosh and distrusted.
The future of banking is unclear. There are many routes: one is to optimise capital to make returns as efficient as possible, but that doesn’t neccessarilly work as it means cutting out extraneous risks, activities and services based on capital charges – not on the business case. Customers don’t respond well to organisations that drop them. Or the bank might claim to be client centric – which basically means: find them, grab them and retain them – something that’s about service, which is generally poor across Europe – especially in UK!
While Europe’s banking dinosaurs continue to cut costs and respond to regulatory fiat, we’ve got serious competition on the horizon. It’s about competing direct with the bright new service and cost focused FinTecs, reaching their market through digitisation (which financials seem genetically incapable of doing well…), and simple to use digital systems – which in many banks despair of. (We are all aware most banks are held together by slew of antique systems held together by “Dave from IT” who has been wearing the same T-shirt for over a month, but is the only person in the bank who speaks Klingon and archaic programming languages from 1986. Sorry Dave.)
My point on European banks boils down to dinosaurs trying to survive in an environment that’s moving against them, and is under competitive threat.
Boeing
Interesting to note how the Boeing stock price has performed – up then flat – since the preliminary investigation into the Ethiopian Airlines flight concluded it wasn’t pilot error and pointed to a fail on the MCAS anti-stall system – clearly Boeing’s problem.
The costs we’d expect investors to ask about Boeing’s potential future liabilities from a plane that’s proved dangerous seem to have been discounted. The effect on profitability of cutting 20% of production (the Boeing 737 Max series produces 1/3 of Boeing profits), and questions to management about the long-term policy towards developing new aircraft rather than simply updating old ones, aren’t at the forefront.
Instead, it seems the market has decided the 5000 plane 737 Max order book is too large a future income stream to be worried about. They assume the company is set to deal with any costs relating to the two crashes, that the MAX series will soon be cleared for flight operations again, and that there will be no long-term repetitional damage to the aircraft maker.
I do hope the market is right – Boeing, by default is a major part of any tracker fund. But, there are risks – including what is thrown up in the full investigation and in subsequent litigation. I heard it suggested Boeing will seek to make cases “go-away” by offering swift settlements, but we really do need to find out if they compromised on the design of the plane, investigate the claims no training was required, the complexity of the systems and how they explained these systems to crew.
I ask because I fly…. So should you!
via ZeroHedge News http://bit.ly/2YWWWbH Tyler Durden
Dealing another blow to public confidence in Boeing’s ability to swiftly reassure regulators that its 737 MAX 8 can be made safe for passenger travel, the South China Post on Monday reported that China Aircraft Leasing Group Holdings has put an order for 100 new 737s on hold, until it can be assured of the aircraft’s safety.
China was the first country to ground the 737s after Ethiopian Airlines flight ET302 crashed just minutes after takeoff – the second deadly incident involving the planes in just 5 months. A preliminary report from investigators found that the pilots followed Boeing’s safety procedures, but were still unable to right the plane.
Boeing is working on an update of its MCAS anti-stall software, which is believed to have contributed to both the crash of ET302 and a deadly Lion Air crash that occurred just five months earlier, but the fix is taking longer than anticipated.
Per its original delivery schedule, the first 737 was supposed to be delivered to the aircraft lessor in Q3 of this year. Originally, the lessor signed its contract with Boeing in June 2017, ordering 50 aircraft, then increasing it by 25 with an option for another 25. The order for the initial 50 aircraft was valued at $5.8 billion.
The company said it has stopped paying installments on the planes it has ordered.
The Hong Kong-listed lessor, controlled by the state-owned conglomerate China Everbright Group, placed an order for 50 aircraft in June 2017. CALC then increased it by another 25 in December with an option for 25 more as part of its plan to grow its overall fleet from 133 in 2018 to 232 by 2023. According to the original schedule, the first MAX jet was expected to be delivered to CALC in the third quarter of this year and continue up to 2023.
“The purchase has been suspended and we have stopped paying the installments,” said Chen Shuang, chairman of CALC and chief executive of China Everbright, the financial arm of China Everbright Group.
Airlines around the world have grounded the 737s, and last week, the FAA set up a joint review task force that is expected to include other aviation regulators, including possibly China’s, which has been invited to join.
Most of the deliveries weren’t expected until 2021, so the hold won’t impact the lessor’s operations, its spokesman said.
A CALC spokeswoman said that since most of the deliveries to the company were to be made from 2021, “so we see little or no impact on our operations.”
Chen said that they have received assurances from Boeing that “a better solution will be submitted to CALC within two months”, adding that they have not yet discussed compensation.
Chen said both sides are actively seeking a solution to the problem.
“One option being considered is to replace it with other aircraft. But there aren’t too many options,” said Chen.
Of course, the last thing Boeing shareholders wanted to hear after last week’s string of negative headlines was more bad news. And following the revelation that Boeing might soon have a second large cancellation on its hands, its shares – already lower – have sunk even further in premarket trading, weighing on the Dow.
via ZeroHedge News http://bit.ly/2Vwn0Iq Tyler Durden
If Boeing thought it could sweep its Boeing 737 MAX production cut under the rug with a late Friday announcement it failed: the company’s decision to cut 737 production by 20% sent BA shares 4% lower in pre-market trading with a BofA downgrade to Neutral not helping, and hit the shares of its suppliers including Meggitt, Melrose and Safran, which all fell between 1 percent and 2.5 percent. More importantly, since Boeing is the biggest component of the Dow, futures on the ‘industrial average’ were lower, with the implied open down more than 100 points, while global market and government bonds also drifted lower as progress toward a trade deal between America and China continued to drag. Oil rose as fighting in Libya raised the risk of supply outages.
As a reminder, on Friday Boeing announced that 737 production will be cut to 42 airplanes per month from 52 starting in mid-April, without giving an end date. Investment bank Cowen said Boeing’s decision to cut the production of the 737 was the right thing to do. “The 737 rate cut to 42/month should help resolve the MAX crisis but with a large 2019 cash hit,” wrote Cowen in a note.
Boeing’s latest woes did not help equity markets around the world, as last week’s global stock rally hit the pause button with MSCI’s world equity index flat as potential flashpoints including a crucial Brexit summit and central bank meetings loomed, and investors began to look ahead to an earnings season that would usher in an earnings recession according to Morgan Stanley.
While Dow futures took the brunt of the hit due to Boeing’s dominant position in the index, S&P 500 futs were also lower after the biggest US benchmark rounded out last week with gains that took it to a six-month high, while the Stoxx Europe 600 also nudged into the red. A rally in Shanghai fizzled out, and equities fell in Tokyo as the yen pushed higher.
China equity markets reopened after Friday’s holiday with handsome gains, but they were wiped out by midday with traders awaiting more “optimism” from U.S.-China trade talks; as a result the Shanghai Composite closed 0.1% lower after rising as much as 1.3% earlier; ChiNext index slides 2.1% while the MSCI Asia Pacific index was little changed. Early optimism emerged after a document was published on the central government’s website late on Sunday, in which Beijing said it would step up a policy of targeted cuts to banks’ required reserve ratios to encourage financing for small and medium-sized businesses. Shares rose in Sydney and saw modest gains in Hong Kong.
Early trading in Europe was also muted, with German exports and imports both falling more than expected in February, the latest sign that Europe’s largest economy will likely have meager growth in the first quarter amid increased headwinds from abroad. European stocks slipped 0.2% in early trading, as the weak German data and investor caution ahead of a string of political and monetary policy events held the market back. However, since then the Stoxx 600 index has pared losses and turns slightly positive, as the euro climbs against the dollar ahead of the EU summit. Healthcare (+0.5%) and oil & gas (+0.5%) lead gains, while Travel (-0.5%), construction (-0.5%) and financial services (-0.5%) the main laggards.
Euphoria was also muted due to lack of new trade deal developments, even though Trump’s top economic adviser Larry Kudlow said the two sides are “closer and closer” to a deal, and that top-tier officials would be talking this week. A strong U.S. jobs report Friday didn’t stop President Trump from suggesting the Fed should cut interest rates and stop shrinking its balance sheet.
“Today’s very minor move down has to be seen in light of recent developments,” said Britta Weidenbach, head of European equities at DWS. “We’re back at the levels where the correction started last year. So now the question certainly is, what’s next?”
Quite a few things are next, in fact, as Wednesday is a blockbuster day. We have the EU emergency Brexit summit where they will decide whether to grant the U.K. a further extension and on what terms, an ECB meeting a day earlier than normal, the US CPI report and FOMC minutes all slated for that day. That should be the highlight of the week ahead however we’ve also got a busy week for data out of China, as well as a number of scheduled Fed speakers, the annual IMF and World Bank Spring Meetings and a China-EU Summit. If that wasn’t enough, US banks also kick off earnings season at the end of the week. Oh and Friday also marks the revised point that the U.K. leaves the EU if no extension is given this week.
Investors will also focus on the upcoming earnings season, which kicks off at the end of this week with U.S. banks reporting, and which will be a reality check for markets as analysts now expect a roughly 4% drop in EPS Y/Y, the first such drop since 2016.
“Q1 will definitely not be a good quarter for corporates, and it might well be that the market turns back to fundamentals whereas a lot of hope on China/U.S. trade deals and developments on the interest rate front had driven markets up year-to-date,” said DWS’ Weidenbach.
Bond markets were being squeezed by investors’ search for yield after benchmark German Bunds fell into negative territory. Greece’s 10-year government bond yields were within a shade of their lowest level in over 13 years as a cocktail of positive headlines boosted sentiment towards the country and zero percent Bund yields push investors to riskier investments. German bund yields traded at 1 basis point, just holding in positive territory, while US Treasuries and the dollar were steady after President Donald Trump stepped up pressure on the Federal Reserve to sustain growth.
Looking ahead, though, optimism persists: “Valuations are OK, global growth is expected to improve into the second half of the year, monetary and fiscal policy has become more supportive of markets and the trade war is receding,” said Shane Oliver, investment strategist at AMP Capital Investors Ltd. This “should support decent gains for share markets through 2019 as a whole,” he said.
In the latest Brexit news, UK PM May could offer the Labour Party a post-Brexit customs union today, prior to this The Times reports that PM May is set to offer Jeremy Corbyn a legally binding soft Brexit deal with a “Boris lock” that would make it difficult for a future Eurosceptic prime minister to tear up after she leaves No 10. (Newswires/Times) Separately, UK Labour party want a firm indication that the government is prepared to reopen the political declaration, there may be some movement later (either talks or a new offer), according to BBC’s Nick Eardley. Conservative MPs are warning that they will move to remove UK PM May within weeks if the UK is forced to partake in EU elections and extend membership beyond the end of June.
In FX, we saw some more risk-aversion, as the dollar slipped 0.1% to 97.269 against a basket of currencies, while the euro inched up 0.1%, but hovered near a one-month low at $1.1229 ahead of the ECB meeting later this week. The pound edged higher as British Prime Minister Theresa May appealed to both the public and politicians in search of support for a compromise Brexit plan; whe needs to come up with a new plan to secure a delay from EU leaders at a summit on Wednesday as a deadline of this Friday draws ever closer. In Turkey, President Recep Tayyip Erdogan cited “widespread irregularities” in local elections in Istanbul, sending the lira lower.
In commodities, crude extended gains as an escalation of fighting in OPEC producer Libya overshadowed the biggest increase in U.S. active rigs since May. WTI and Brent prices are revisiting levels last seen in November 2018 (USD 63/bbl and USD 70/bbl respectively). Gains are spurred as conflict in Libya escalates, with Hafta ordering his troops to march towards Tripoli. The fight has not yet effected oil supply, with Port Zawiya closely monitored by oil traders as it is the closest to the conflict. In metals, London copper prices rose as much as 1 percent on Monday, snapping two days of declines.
Expected data include factory orders and durable-goods orders. Kenon Holdings is reporting earnings.
Market Snapshot
S&P 500 futures down 0.2% to 2,891.75
STOXX Europe 600 down 0.2% to 387.57
MXAP up 0.08% to 162.65
MXAPJ up 0.2% to 540.47
Nikkei down 0.2% to 21,761.65
Topix down 0.4% to 1,620.14
Hang Seng Index up 0.5% to 30,077.15
Shanghai Composite down 0.05% to 3,244.81
Sensex down 0.5% to 38,652.54
Australia S&P/ASX 200 up 0.7% to 6,221.35
Kospi up 0.04% to 2,210.60
German 10Y yield unchanged at 0.008%
Euro up 0.2% to $1.1234
Italian 10Y yield fell 4.1 bps to 2.124%
Spanish 10Y yield fell 0.4 bps to 1.101%
Brent futures up 0.7% to $70.81/bbl
Gold spot up 0.4% to $1,297.25
U.S. Dollar Index down 0.2% to 97.24
Top Overnight News
U.S. President Donald Trump’s frustration over his inability to fulfill his signature 2016 campaign promise to curb illegal immigration led him to oust his second homeland security chief, as the president eyes his re-election prospects next year; Homeland Security Secretary Kirstjen Nielsen resigned at Trump’s request after meeting with him Sunday, according to people familiar with the matter
A long but flexible extension to the Brexit process proposed by the European Union was denounced as “like purgatory” by a leading U.K. lawmaker, as Prime Minister Theresa May sought to gain support for a compromise departure plan
Larry Kudlow says the U.S. and China are “closer and closer” to a trade deal, and that top-tier officials would be talking again this week via “a lot of teleconferencing”
Bank of Japan Governor Haruhiko Kuroda says the economy is expanding moderately though weakness in overseas economies is weighing on exports and production
Oil extended its rally to a five-month high as conflict in major producer Libya increased the risk of new supply outages. Libya’s internationally-recognized government vowed to counterattack against forces loyal to strongman Khalifa Haftar
Japanese investors turned net buyers of German sovereign bonds in February, ending a four-month selling streak, according to balance-of-payments data
China’s foreign-currency holdings rose as lower government bond yields in developed markets lifted valuations. Reserves increased by $8.58b to $3.0988t in March, the People’s Bank of China said
Theresa May is hoping to re-start stalled Brexit negotiations with her chief political rival Jeremy Corbyn, in her search for a compromise plan she can sell to European leaders at a crucial summit this week
Japanese investors bought German and French bonds in February, when deepening concern over Europe’s economic slowdown spurred speculation the region’s central bank would join the Federal Reserve in turning dovish on monetary policy
Turkish President Recep Tayyip Erdogan urged the country’s election board to investigate “widespread irregularities” in local elections in Istanbul, where a partial recount is already underway after the ruling party contested its defeat. The lira declined on the remarks
According to a BOE survey released Monday, 47% of people see rates going up in the next 12 months, compared with 53% in November. Markets are also increasingly pessimistic of a hike amid increased Brexit uncertainty, and see a less than 10% chance of a move in the next year
Asian equity markets began the week mixed as the region somewhat failed to sustain the initial momentum from last Friday’s gains on Wall St, where all majors edged higher and the S&P 500 notched a 7-day win streak after the latest NFP data. ASX 200 (+0.6%) and Nikkei 225 (-0.2%) both opened higher with commodity-related sectors among the biggest gainers in Australia due to strength in metal prices and after WTI crude rallied to fresh YTD highs above the USD 63.00/bbl level, while risk appetite in Japan was less decisive and eventually waned as exporters contended with flows into JPY. Hang Seng (+0.4%) and Shanghai Comp. (U/C) were initially buoyed on return from their extended weekend as they played catch up to the optimism from last week’s US-China trade talks in which both sides noted significant progress was made and with discussions to continue via teleconference this week, while China also plans to ease the burden on businesses in which it will reduce companies’ social insurance contributions by CNY 300bln. However, the mainland gradually deteriorated as some were kept cautious by reports that plans for a US-China joint statement hit a stalemate due to differences regarding access to China’s market. Finally, 10yr JGBs were mildly higher with prices supported as the initial positive momentum in the region waned and with the BoJ present in the market for JPY 280bln in JGBs, while prices also tracked the rebound seen in T-notes in the wake of the US jobs data where weak wage growth subsequently saw the probability of a Fed rate cut this year increase to 75% before paring back to 50%.
Top Asian News
China Steps Up Gold-Buying Spree as PBOC’s Hoard Rises Again
UniCredit China Employee Said to Allegedly Embezzle $15 Million
India’s Cash Crunch Is Weighing on Financial Health of Firms
Lira Falls as Erdogan Demands Probe Into Lost Istanbul Vote
A subdued start to the week for European equities [Stoxx 600 unch] following on from a mixed Asia-Pac session as Friday’s NFP optimism waned ahead of another week filled with risk events. Broad-based losses are being experienced across major indices, whilst sectors are relatively mixed with energy names outperforming after WTI and Brent crude rallied to fresh YTD highs. In terms of individual movers, BMW (-0.4%) shares have nursed some losses after opening lower in excess of 2% amid reports that its Q1 results will be impacted by the EU fines into antitrust proceedings. This initially pressured its fellow German peers in sympathy [Daimler (-0.2%), Volkswagen (+0.4%)] who later climbed back above break-even. Sticking with Germany, Dialog Semiconductor (+1.1%) shares were bolstered amid news that the company closed a deal with US tech giant Apple (-0.4% pre-market), ahead of schedule. Finally, Fiat Chrysler (+1.3%) rose to the top of the FTSE MIB following reports the Co. signed a deal with Tesla to bypass EU emission rules. Elsewhere, Boeing (BA) CEO says they plan to cut their 737 Max monthly production by just under 20%. As such Co. are lower by 2.6% in the pre-market.
Top European News
Swedbank’s Debt Headache Reveals a ‘Remarkable’ Bond Outlier
Fiat to Pool Cars With Tesla to Meet EU Emissions Targets on CO2
Ashley Floats New Plan to Stave Off Debenhams Equity Wipeout
In FX, the Dollar continues to drift down from initial post-NFP highs as global stocks wobble and oil climbs to fresh ytd peaks. The DXY remains relatively rangebound, however, and ‘comfortably’ above the 97.000 handle within 97.230-384 parameters.
JPY/GBP – The Yen has regained a safe-haven bid and rebounded from circa 111.80 lows through 111.50 and close to the 200 DMA (111.495) vs the Greenback, while technical buying was also noted during the Asia-Pacific session in several Jpy crosses including Eur/Jpy and Nzd/Jpy that tested psychological/round number levels at 125.00 and 75.00 respectively. Meanwhile, Sterling retains an underlying bid vs the Buck above 1.3000 and is straddling 1.3050, as Eur/Gbp pivots 0.8600 in the run up to Wednesday’s EU Brexit Summit when UK PM May will present the case for another A 50 extension backed by a withdrawal plan or at least a strategy to avert no deal on April 12. On that note, she will resume talks with the Labour Party in an effort to find a compromise amidst reports that the opposition want a firm commitment to re-opening the PD rather than additions to the existing document.
EUR – The single currency is also holding above a big figure mark vs the Dollar and 2019 lows not far below 1.1200, but chart resistance around 1.1250 and a key Fib is still capping the upside, while hefty option expiry interest at 1.1225 (1.4 bn) is also weighing on the headline pair.
NZD/CAD/AUD/CHF – All relatively flat and narrowly mixed vs the Usd, as the Kiwi meanders between 0.6723-37 and also has expiries close by to exert some influence into the NY cut (1 bn at 0.6725). Elsewhere, another upturn in oil prices has helped the Loonie reverse some post-Canadian jobs data losses within a 1.3390-70 band, and is also supporting the NOK vs the Eur with the cross back down through 9.6500. Note, Barclays has shorted Eur/Nok and is looking for a move to 9.5908 with a 9.7100 stop. Elsewhere, the Aussie is hovering around 0.7100 and Franc is sitting tight near parity.
EM – The Lira has weakened even further vs the Dollar as municipal election results are recounted in Istanbul and Turkey mulls military action in Syria, while the CBRT has cut its FX swap rate by 150 bp and decided to restart 1 week refunding operations. Usd/Try up over 5.7000 and 5.7100+ at one stage.
In commodities, further supply-side woes have bolstered the energy complex to YTD highs with WTI and Brent futures revisiting levels last seen in November 2018 (USD 63/bbl and USD 70/bbl respectively). Gains are spurred as conflict in Libya escalates, with Hafta ordering his troops to march towards Tripoli. The fight has not yet effected oil supply, with Port Zawiya closely monitored by oil traders as it is the closest to the conflict. The port is scheduled to load 6mln barrels of crude in April which is subject to change if shipments are delayed. Amidst this, the oil complex last week saw speculators adding to their net long positive positions, with managed money positions in ICE Brent rising by just under 27k to result in net long speculative positions at almost 350k lots, the largest since the end of October 2018. Elsewhere, Saudi Energy Minister noted that he does not believe the Kingdom needs to cut output below its target, whilst a key architect of Russia’s OPEC+ deal said that the members could raise oil output in its June meeting. On the Aramco front, Saudi Energy Minister Al-Falih stated that the Aramco bond could attract demand north of USD 30bln (vs. touted USD 10bln) which will be used as part of a payment for the 70% purchase of Sabic (valued at USD 6.9bln). In the metals complex, gold prices are underpinned as the Greenback softened overnight and continues to pull back during the European session thus far. Demand for the yellow metal was also reflected in an increase in China’s gold reserves which showed the fourth consecutive month of gold purchases. Elsewhere, copper benefitted amid overnight gains across Chinese commodity prices in which Dalian iron ore futures extended on record highs, while Shanghai rebar and hot rolled coil rallied over 3% shortly after the open.
US Event Calendar
10am: Factory Orders, est. -0.5%, prior 0.1%; Factory Orders Ex Trans, prior -0.2%
10am: Durable Goods Orders, est. -1.6%, prior -1.6%; Durables Ex Transportation, est. 0.1%, prior 0.1%
10am: Cap Goods Orders Nondef Ex Air, prior -0.1%; Cap Goods Ship Nondef Ex Air, prior 0.0%
DB’s Jim Reid concludes the overnight wrap
This week is set to be busy but get an early night on Tuesday (I can’t due to Champions League football. Exciting!) as Wednesday is a blockbuster day. We have the EU emergency Brexit summit where they will decide whether to grant the U.K. a further extension and on what terms, an ECB meeting a day earlier than normal, the US CPI report and FOMC minutes all slated for that day. That should be the highlight of the week ahead however we’ve also got a busy week for data out of China, as well as a number of scheduled Fed speakers, the annual IMF and World Bank Spring Meetings and a China-EU Summit. If that wasn’t enough, US banks also kick off earnings season at the end of the week. Oh and Friday also marks the revised point that the U.K. leaves the EU if no extension is given this week.
We may also see more US/China trade headlines this week and as a start over the weekend, President Trump’s economic adviser Larry Kudlow said that the US and China are getting “closer and closer” to a trade deal, and that top-tier officials would be talking again this week via “a lot of teleconferencing.” He added that “we’ve made great progress on the IP theft. We’ve made good progress on the forced transfer of technology,” the Chinese have acknowledged their problems, which was a very big hurdle, and “what wasn’t on the table, is on the table.” However, China’s state run news agency Xinhua had said on Friday that “the remaining issues are all hard nuts to crack” while the White House official statement post last week’s trade talks suggested that “significant work remains, and the principals, deputy ministers, and delegation members will be in continuous contact to resolve outstanding issues.” At the moment though it still seems like we are slowly inching towards a deal.
Asian markets have started the week on a mixed note with the Hang Seng (+0.30%) up while the Nikkei (-0.21%) and Kospi (-0.05%) are down erasing early gains. China’s Shanghai Comp was up as much as +0.76% in early trading but is now down (-0.09%) with semiconductor and chip makers stocks weighing on the index (down -3.30%). Elsewhere, futures on the S&P 500 are down -0.17% while the Japanese yen is up +0.31% this morning. Oil prices (WTI +0.54% and Brent +0.51%) are also extending gains this morning as an escalation of fighting in Libya is threatening further supply cuts. In terms of data releases, we saw China’s March foreign reserves at $3.099tn (vs. $3.090tn expected). China’s onshore yuan is trading -0.17% this morning.
In other news, Italian daily Il Sole 24 Ore reported that Italy will make use of a contingency fund of €2bn to ensure its structural deficit target is met amid lower-than-forecast economic output and tax revenue. The media report follows earlier comments from Italian Deputy finance minister Massimo Garavaglia where he said that any shortfall in tax revenue would be offset by the ad hoc funds set aside in the budget following the comments from the EC Vice President Valdis Dombrovskis that weakening growth may force the country to freeze spending.
Moving onto Brexit, EC President Donald Tusk continues to push for a Brexit delay by as long as a year to allow time to forge a new consensus with an option to leave earlier once the withdrawal agreement is ratified by UK Parliament. As a reminder, PM May has asked for an extension up to June 30. Illustrating the tensions in her party, one of the leading Conservative lawmakers, Chief Secretary to the Treasury Liz Truss, warned on Sunday in a BBC radio interview that accepting a long, flexible extension would be “like purgatory” for Britain. Sterling is trading up +0.22% this morning.
Back to the week ahead. For the ECB it’s a chance for them to correct their messaging after disappointment expressed by the market after their last outing. Expect there to be plenty of questions directed at Draghi both on the TLTRO details and also the impact of negative rates. Newsflow on tiering has picked up in recent days including an acknowledgement in the latest meeting minutes. So markets will particularly be looking for clues as to where the internal debate on persistent low rates on bank margins, profitability and the transition mechanism now lies.
Shortly after the ECB on Wednesday we’ll get the March CPI report in the US. The consensus is for a +0.2% mom core reading (it usually is) which would be enough to hold the annual rate at a relatively solid +2.1% yoy. In the evening we then get the FOMC minutes from the March meeting. A reminder that the message from this meeting was undeniably dovish. The median dot moved to no rate hikes this year with seven officials also seeing the Fed on hold at least through the end of 2020.
In Europe the data highlight might be the February industrial production reports with data due for the UK and France on Wednesday and the Euro Area on Friday. However with the recent slight pick up in China manufacturing maybe it’s too early to see any decent turn in data that will be from February. Meanwhile in Asia it’s a busy week for data out of China with March CPI and PPI due on Thursday and March trade data due on Friday. We’re also expecting to get the latest money and credit aggregates data covering March at some stage.
At a more micro level, this week will also see an early drip feed of Q1 earnings in the US including the banks with both JP Morgan and Wells Fargo due to report on Friday. Our US equity strategists noted in their preview report that the consensus and their top-down earnings model points to near flat earnings for Q1 for the S&P 500.
Finally, other things to potentially watch out for this week include China Premier Li Keqiang travelling to Brussels for the five day China-EU Summit today, the annual week long Spring Meetings of the World Bank/IMF kicking off today/tomorrow, Israel’s general election tomorrow, the IMF’s latest World Economic Outlook update tomorrow, the US Congressional Committee holding a hearing on Wednesday with the chiefs of the biggest US banks on “Holding Megabanks Accountable”, the OPEC monthly oil market report on Wednesday, South Korea President Moon Jae-in meeting President Trump on Thursday, and India heading to the polls also on Thursday (albeit voting in phases with results in late May).
Ahead of all this, global equities performed well last week, with numerous major indexes advancing to multi-month highs. Friday’s nonfarm payrolls report didn’t do anything to damage the momentum but China’s PMI the preceding weekend and Europe’s generally better than expected PMIs in the first half of the week were the main catalysts. The S&P 500 gained +2.06% (+0.46% on Friday) to reach a fresh 6-month high, while the Stoxx 600 advanced +2.41% (+0.09% Friday). The DAX also reached a 6-month high, gaining +4.20% on the week (+0.18% Friday). Emerging markets outperformed, gaining +3.45% (+0.77% Friday) to reach their highest level since last August, with the Shanghai Composite pacing gains at +5.04% (closed Friday) to reach a 12-month high.
The positive sentiment pushed core bond yields higher, with treasuries and bunds ending the week +9.4bps and +7.7bps higher (-1.6bps and +1.3bps Friday), respectively. Peripheral European spreads tightened and corporate credit rallied. HY cash spreads in the US and Europe tightened -17bps and -22bps (-2bps and -3bps Friday), respectively. WTI oil advanced +5.20% (+1.88% Friday), boosted by the signs of strong US growth and by data from OPEC which showed a further decline in the cartel’s production.
Recapping Friday’s nonfarm payrolls report, we generally saw a continuation of the “goldilocks” environment, as the headline number beat expectations but wage growth fell short. The US economy added 196,000 jobs in March (177k expected) and the previous two months were revised higher by a net +14,000, with the unemployment rate staying steady at 3.8%. Average hourly earnings rose +0.1% mom, down from 0.4% mom in Feb and short of expectations for 0.3%. This led to the yoy rate dropping from 3.4% to 3.2% – 0.2% lower than expected.
Separately, President Trump made headlines on Friday by treading new ground in his war-of-words with the Fed. He said that “the Fed should drop rates” and that instead “of quantitative tightening, it should actually now be quantitative easing.” He cited the lack of inflation to support his view. Ten-year treasury yields fell a few basis points and the curve flattened slightly after his comments.
via ZeroHedge News http://bit.ly/2OVHQhW Tyler Durden
In Beijing and then Washington, senior trade delegations have been working to hammer out a trade deal for the past few weeks, offering few details other than a stream of optimistic, if vague, headlines. But on Friday, both sides offered some positive signals, with China’s Xinhua touting ‘progress’ made at talks in Washington, while President Trump said the two sides were roughly ‘four weeks out’ from a deal.
With the administration desperate to keep the seven-day S&P 500 winning streak alive heading into this week (as Marko Kolanovic’s target of S&P 500 3,000 is looking like it could feasibly be reached in the not-too-distant future), Larry Kudlow took to Face the Nation to try and talk the administration’s book.
Kudlow told his interviewer that talks would continue this week ‘via teleconferencing’ and that the talks so far “have been productive”. But in keeping with the administration’s mantra that ‘vague is good’, Kudlow refused to directly confirm the Xinhua reports from Friday about a deal being reached on IP theft and forced technology transfers, saying only that “great progress” has been made on IP and “good progress” has been made on forced transfer of technology.
“We’re closer than we ever have been before. A lot of very difficult topics for the first time are on the table and being resolved.”
Still, the thorny issue of enforcement remains a sticking point, Kudlow said.
MARGARET BRENNAN: On China, president says we’re four weeks out from a possible epic trade deal with them. What has actually been agreed upon?
KUDLOW: Well you know, all these negotiations we just get closer and closer. It’s really interesting. We made good headway last week when Vice Premier Liu He was here. This coming week, there’ll be a lot of teleconferencing among the top tier people to continue the discussions. We’re closer than we ever have been before. A lot of very difficult topics for the first time are on the table and being resolved. I think that’s terribly important. The talks have been productive. I think the president here too expressed- I was in the room, whatever Thursday- guarded optimism, may- maybe more than guarded optimism so we’re- we’re gaining on it.
MARGARET BRENNAN: Chinese say there’s an IP agreement, intellectual property agreement. Is there?
KUDLOW: I can’t go into details on this but we’ve made great progress on the IP theft. We’ve made good progress on the forced transfer of technology, on the ownership. There are issues outstanding, not least of which are going to be enforcement related issues. But in each and every place, (A) they’ve acknowledged their problems. That was a very big hurdle. And (B) what wasn’t on the table is on the table, and (C) we’re getting closer and closer.
With US stock futures pointing to a lower open following weak trading sessions in Asia and Europe, we imagine the next batch of optimistic trade headlines will hit in the not-too-distant future (our money’s on 20 minutes before the open).
Watch the interview below:
via ZeroHedge News http://bit.ly/2Umprkl Tyler Durden
Apparently, investors have learned from Lyft’s disastrous trading debut, which saw the company’s shares drop below their IPO price just a day later as investors finally questioned the wisdom of handing a company with no clear path to profitability a $25 billion valuation. To wit, following a leak published in WSJ last night, Pinterest, which is due to be the next ‘hot’ unicorn IPO, has set its IPO price range at $15 to $17 a share (or around $11 billion at the upper end). That’s below its last private valuation of $21.54 a share – meaning that those who invested during the company’s last fund-raising round will instantly lose money the moment the company goes public (barring an immediate run-up in the share price).
By contrast, the price range for Lyft’s heavily oversubscribed IPO was repeatedly raised due to demand, setting the stock up for an embarrassing drop that triggered widespread ridicule in the financial press and might even lead to shareholder lawsuits. Of course, as was later revealed, Lyft’s best-known backer, Carl Icahn, sold his $550 million stake before the IPO.
During its last private fundraising round, Pinterest was valued at $12 billion.
Last month, Pinterest sped up the timing of its IPO timing to try and tap into the market while the “conditions” – that is, the torrid rally – last. The social network has more than 250 million active users who visit it to browse through billions of images.
It generates most of its revenue from ads. In recent years, the company has been growing its revenue and narrowing losses, with its net loss narrowing to $63 million last year from $130 million. Though it remains unprofitable.
Of course, as the valuation sugar high that pumped up Lyft’s pre-IPO valuation fades, we imagine Pinterest’s underwriters are looking into options for protecting their shareholders.
After Pinterest, this year’s next big unicorn IPO is expected to be Uber Technologies, Lyft’s vastly larger rival, could debut as soon as April, unless we see a stunning reversal in market conditions that prompts a rethink of the timing.
Pinterest Is Expected to Set IPO Price Range Below Last Valuation: WSJ
After giving $100 million for Connecticut’s public schools and publishing a lengthy treatise entitled “Why And How Capitalism Needs To Be Reformed”, Bridgewater Associates founder Ray Dalio took his battle to encourage bipartisan though still-radical ‘reform’ of American capitalism to an even broader audience: that of CBS’s long-running television news magazine ’60 Minutes’, where he invited the program’s journalists to interview him aboard his yacht near the Bahamas, and to the rarefied offices of Bridgewater, to hear about how the American system must either change, or die.
The interview included plenty of red meat for Dalio’s journalist guests, as the billionaire illustrated his point with bombastic quotes like the one below:
“I think the American dream is lost…for the most part we don’t even talk about it.”
But what’s not working?
“It’s not redistributing opportunity…there’s a growing wealth gap and a growing income gap.”
Dalio – whom ’60 Minutes’ claimed avoids extensive interviews despite his borderline pathological lust for publicity – reiterated many of the ‘solutions’ he proposed in his essay, included the notion that a ‘national emergency’ should be declared to deal with economic inequality.
“If I was president of the United States what I would do is recognize that this is a national emergency.”
Either that, or we risk allowing America’s longstanding Democratic institutions being thrown into upheaval, because the economic inequality will be resolved eventually. The question is whether the solution will involve practical reforms or a descent into authoritarianism.
“If you look at history, if you have two groups of people with very different economic conditions, and you have an economic down turn…you get conflict. If you look at the 1930s, you had 4 countries that were democracies that chose not to be democracies to bring order to the conflict.”
Channeling Warren Buffet, who pays very little in taxes due to the fact that most of his wealth is in stock, Dalio says ‘of course’ taxes should be raised on wealthy people like him. But the key is to take money raised by the government and use it “productively.” According to Dalio, the notion that tax cuts stimulate growth “doesn’t make any sense at all.”
But in response to all of the young people who believe socialism is the answer to America’s problems, Dalio would like them to know one thing: It definitely isn’t.
“Capitalism needs to be reformed…it doesn’t need to be abandoned. it needs to be reformed in order to work better. American capitalism isn’t sustainable.”
But what are the odds that the reforms of which Dalio speaks actually happen. If e had to assign probabilities, he said ’60-40′ that the inequality issue will be dealt with ‘badly’ – implying either a violent revolution like he warned about in his essay, or the election of an authoritarian leader to “restore order”, as he put it.
Dalio, as CBS reminds us, bought his first stock when he was 12 with money he made as a golf caddie. However, the program’s description of Bridgewater’s army of analysts was slightly antiquated, depicting them as the drivers of the firm’s investment decisions (rather than a marketing tool. At Bridgewater, it’s well known that the machines make most of the investment decisions.) More humorously, ’60 Minutes’ sat in on one of Bridgewater’s staff meetings, and gently reported that “there’s a bit of a Big Brother vibe”…and humorously pointed out that a camera visible in one of the company’s meetings “wasn’t ours, it’s theirs”).
Though one fact that’s not up for debate: Bridgewater has made money for its clients during 25 of the last 28 years. And last year, when the S&P 500 sank 4.5%, Bridgewater posted a double-digit gain.
The interview closes with an apt metaphor for differentiating Dalio’s approach with tech billionaires like Jeff Bezos: Traveling near the ocean floor in a machine built for marine biologists to explore the Ocean floor, Dalio says he finds deep-sea exploration to be far more important than exploring space. “If I come down here and see the coral reefs are dying…it doesn’t take a genius to know that the something is out of balance.”
Watch the full interview below:
via ZeroHedge News http://bit.ly/2uQ4W0h Tyler Durden
Turkish troops and armored units are massed along Turkey’s southern border awaiting orders to invade northern Syria. Turkish President Recep Tayyip Erdogan wants to clear a ten mile-deep swath of land east of the Euphrates River in order to remove terrorist-linked militants (YPG) currently occupying the territory. The proposed offensive would put US Special Forces in the line of fire which significantly increases the likelihood of US casualties. If American troops are killed or wounded by the Turkish operation, Washington will respond in force leading to a potentially catastrophic face-off between the two NATO allies. The possibility of a violent clash between Turkey and the United States has never been greater than it is today.
On Wednesday, U.S. Secretary of State Mike Pompeo warned Turkey that any unilateral action in Syria would have “devastating consequences.” Pompeo’s comments were intended to intimidate Erdogan who stated on Tuesday that the military offensive would begin shortly after last weekend’s elections. If Erdogan proceeds with his plan, Pompeo will undoubtedly give the military the go-ahead for retaliatory attacks on the Turkish Army. This will either lead to a speedy retreat by Turkey or asymmetrical strikes on US strategic assets across the region. In any event, the fracas with Turkey is bound to widen the chasm between the two former allies forcing Erdogan to reconsider his commitment to the western alliance. Any further deterioration in relations between the US and Turkey could result in a dramatic shift in the global balance of power.
Washington’s problems with Erdogan began years before the current dust-up. The Turkish leader has always steered an independent foreign policy which has been a constant source of frustration for the White House. During the war in Iraq, Erdogan refused to allow the US to use Turkish air bases to conduct their operations. (Erdogan did not support the war.) Presently he is purchasing air defense systems from Russia (S-400), (which VP Mike Pence has strongly condemned), he has attended summits in Sochi with Moscow and Tehran in order to find a political settlement for the war in Syria, he has signed contracts with Gazprom that will make his country the energy hub of southern Europe, and he has been harshly critical of US support for the its Kurdish proxies in east Syria (the SDF) which is an offshoot of the Kurdish Workers Party (PKK), a group that is on the US State Department’s list of terrorist organizations.
Most of the friction between Erdogan and the US has been brought on by Washington’s flagrant disregard for Turkey’s security concerns. The current crisis is just another self inflicted wound, like the failed coup in 2016 which backfired spectacularly strengthening Erdogan’s grip on power while fueling widespread distrust of the United States. Check out this excerpt from an article in the New York Times dated August 2, 2016:
“A Turkish newspaper reported that an American academic and former State Department official had helped orchestrate a violent conspiracy to topple the Turkish government from a fancy hotel on an island in the Sea of Marmara, near Istanbul. The same newspaper, in a front-page headline, flat-out said the United States had tried to assassinate President Recep Tayyip Erdogan on the night of the failed coup.
When another pro-government newspaper asked Turks in a recent poll conducted on Twitter which part of the United States government had supported the coup plotters, the C.I.A. came in first, with 69 percent, and the White House was a distant second, with 20 percent.
These conspiracy theories are not the product of a few cranks on the fringes of Turkish society. Turkey may be a deeply polarized country, but one thing Turks across all segments of society — Islamists, secular people, liberals, nationalists — seem to have come together on is that the United States was somehow wrapped up in the failed coup, either directly or simply because the man widely suspected to be the leader of the conspiracy, the Muslim cleric Fethullah Gulen, lives in self-exile in the United States.” (Turks Can Agree on One Thing: U.S. Was Behind Failed Coup – The New York Times)
Let’s cut to the chase: Was the United States behind the plot to remove Erdogan from office in 2016?
Probably, just as the United States was behind more than 50 other regime change operations since the end of WW2.
And is the US currently harboring the mastermind of the Turkish junta in a sprawling compound in rural Pennsylvania?
Yes, this is probably true as well. But, even though Turkey has provided the US with mountains of evidence identifying Gulen as the coup-leader, and even though Turkey has cooperated in the extradition of numerous terror suspects sought by the United States, the US simply doesn’t feel any obligation to return the favor by treating Turkey with respect and fairness. Why is that? Why is there one standard for the United States and a completely different standard for everyone else?
Erdogan has repeatedly asked the Trump administration to respect Turkey’s legitimate security concerns by removing terrorist-linked militants (YPG) from the area around Turkey’s southern border. In mid December, Trump discussed the issue with Erdogan over the phone and agreed to meet the Turkish president’s requests. Four days later (December 19) Trump announced that all US troops would be withdrawn from Syria within 30 days. Since then, the administration has failed to meet any of its prior commitments. It has increased its troop levels in east Syria, bolstered its military hardware and weaponry, and reinforced its positions along the border.
The US has also failed to fulfill its obligations under the terms of the Manbij Roadmap which requires the US to remove all YPG fighters in and around the city and assist Turkey in establishing security in Manbij. There has been no movement on this front at all. If anything, the situation has gotten worse. This suggests that the Trump team has no intention of lifting a finger to address Turkey’s security concerns or of following through on its clearly stated commitments. It suggests that Washington is actually trying to provoke Erdogan in taking matters into his own hands and doing something that he might later regret.
While Ankara’s designs on Syrian territory have no legal basis, they have been consistently reiterated (without change) from the earliest days of the war. As far back as 2012, Turkey insisted on a “safe zone” which would establish a buffer between itself and YPG militants operating in east Syria. The Obama administration agreed to assist Erdogan in the creation of a safe zone in exchange for the use of the strategically-located airbase at Incirlik. Here’s a clip from another article at the New York Times dated July 27, 2015 which explains:
“Turkey and the United States have agreed in general terms on a plan that envisions American warplanes, Syrian insurgents and Turkish forces working together to sweep Islamic State militants from a 60-mile-long strip of northern Syria along the Turkish border, American and Turkish officials say.
The plan would create what officials from both countries are calling an Islamic State-free zone controlled by relatively moderate Syrian insurgents, which the Turks say could also be a “safe zone” for displaced Syrians.
While many details have yet to be determined, including how deep the strip would extend into Syria, the plan would significantly intensify American and Turkish military action against Islamic State militants in the country, as well as the United States’ coordination with Syrian insurgents on the ground. …
“Details remain to be worked out, but what we are talking about with Turkey is cooperating to support partners on the ground in northern Syria who are countering ISIL,” a senior Obama administration official said, using another term for the Islamic State. “The goal is to establish an ISIL-free zone and ensure greater security and stability along Turkey’s border with Syria.” (“Turkey and U.S. Plan to Create Syria ‘Safe Zone’ Free of ISIS”, New York Times)
Repeat: “Turkey and the United States have agreed in general terms on a …safe zone” In exchange, the US would be allowed to use the Incirlik airbase. This is the deal that Obama made with Erdogan, but the United States never kept up its end of the bargain. Of course, the facts related to Incirlik have been swept down the memory hole in order to demonize Erdogan and make it look like he is the one creating all the problems. But that’s simply not the case. It wasn’t Erdogan who scotched the safe-zone deal, it was Obama.
By the way, the announcement that Turkey had struck a deal with Obama on Incirlik turned out to be the trigger for Russia’s entry into the war. This little known fact has escaped the attention of historians and analysts alike, but the truth is clear to see. Shortly after the above article was published (July 27, 2015), Russia began hastily clearing airfields and shipping its warplanes to Syria. Two months later, Russia began its momentous air campaign across Syria.
Why the hurry?
Mainly because of the information that appeared in the NY Times article, particularly this:
“Turkish officials and Syrian opposition leaders are describing the agreement as something just short of a prize they have long sought as a tool against Mr. Assad: a no-fly zone in Syria near the Turkish border.”
“No-fly zone”? Is that what Obama had up his sleeve?
Once Putin realized that the US was going to use Incirlik to establish a no-fly zone over Syria, (the same way it had in Libya) the Russian president quickly swung into action. He could not allow another secular Arab leader to be toppled while the country was plunged into chaos. This is why Russia intervened.
What Trump’s Neocons Want
So now Turkey and the United States are at loggerheads, the Turkish Army has completed its preparations for a cross-border operation east of the Euphrates, while Pompeo, Bolton and Pence continue to exacerbate the situation by issuing one belligerent statement after the other.
Is this the administration’s strategy, to lure Turkey into a conflict that will force Washington to get more deeply involved in the Middle East? Is that why the US has shrugged off its commitments to Ankara, dug in along the border, created a Kurdish state at the center of the Arab world, and is now thumbing its nose at Erdogan?
What is it the neocons (Pompeo, Bolton and Pence) really want?
They want to intensify and expand the fighting so that more US troops and weaponry are required. They want a wider war that forces Trump to go “all in” and deepen his commitment to regional domination. They want America’s armed forces to be bogged down in an unwinnable war that drags on for decades and stretches across borders into Lebanon, Turkey and Iran. They want Washington to redraw the map of the Middle East in a way that diminishes rivals and strengthens Israel’s regional hegemony. They want more conflagrations, more bloodletting, and more war.
That’s what the neocons want, and that’s what their provocations are designed to achieve.
via ZeroHedge News http://bit.ly/2WOsfDu Tyler Durden
One of Poland’s top former military commander’s who led the country’s Land Forces until 2009, General (ret.) Waldemar Skrzypczak, has made stunning remarks on the nature of the “Russian threat” to Europe and the readiness of western allies to deploy nuclear weapons in any future conflict.
Alarmingly, his recent remarks during an interview with Polish media conglomerate Wirtualna Polska this week likely reflect powerful and hawkish elements of the Polish military establishment who along with Skrzypczak now see Poland as a bulwark against “aggression from the East.” The retired general imagined a future scenario of conflict where a US nuclear strike would be welcomed and necessary as “the most reasonable response”.
Retired General Waldemar Skrzypczak, formerly Poland’s Land Forces Commander
As part of his remarks the former land forces commander laid out a scenario where he sees Poland as a future ground zero for clashes between NATO and Russia.
He advanced the eastern European country as “an extremely important state from a strategic point of view” to prevent encroachment of “the Russian war machine” on the west, which further presents “the greatest concern of the free world.”
According to a translation of the interview by Russia’s RT, Skrzypczak actually mused that Russian invasion of Poland would be the likely catalyst for US first strike scenario involving nuclear weapons:
“It is true that the Americans vowed nuclear attacks to stop the Red Army in Poland,” Skrzypczak said, in an apparent reference to the days of the Cold War.
“Now there are plans like this if Putin hits. Not only that, in a military sense, this is the most reasonable [response].”
Such an outcome is “unacceptable” for Poland but if an all-out war breaks out,“nobody will ask our opinion,”the former general said. Going back to reality, he acknowledged that the worst thing that could happen to Poland is its isolation “as a result of our own political mistakes.”
Poland was a Warsaw Pact country from 1955 to 1991, and is now a full NATO member since 1999, and has thus always been at the geopolitical center of rivalry between the Kremlin and the West. Though itself not a nuclear armed power, it’s grown increasingly reliant on western partners like the United States for defense against its powerful neighbor.
“To say that Poland alone will be able to resist the aggression of Russia is a cheap populism that none of our allies treat seriously,” Skrzypczak noted, arguing that Poland must both lead and stick with its western allies against Russia, which he said by far has the continent’s most powerful military.
It must be remembered following Romania, Poland is set to host the US-built Aegis Ashore land-based missile defense system, which can reportedly reach all of western Russia.
Moscow for its part has long warned against continued NATO build-up in Eastern Europe, citing figures showing NATO’s military assets deployed to the region have tripled and amidst increasingly frequent war games.
Just this week, for example, the ‘Sea Shield 2019’ NATO military exercises are set to run from April 5 to April 13 and involve “14 Romanian warships and six warships from Bulgaria, Canada, Greece, the Netherlands, Turkey with 2,200 troops will carry out joint combat tasks in the Black Sea region,” according to Ukraine’s Mission to NATO and the Romanian Ministry of National Defense.
The Kremlin slammed the multi-national naval drills which kicked off in the Black Sea on Friday and will include limited Ukrainian defense forces as yet another provocation. The Russian Ministry of Foreign Affairs (MFA) said upon the games’ beginning, which also happens to mark NATO’s 70th birthday: “Having militarized NE Europe, NATO has decided to increase its military presence in the Black Sea.”
via ZeroHedge News http://bit.ly/2G72jgV Tyler Durden
The Illinois House of Representatives has voted to require the boards of all publicly traded corporations headquartered in the state to have at least one female and one black member starting in 2021. Those that fail to comply faces fines of up to $300,000.
For the two decades that he’s edited the scabrous and insightful U.K.-based web magazine Spiked, Brendan O’Neill, an occasional Reason contributor, has described himself—perhaps with a wee bit of provocation—as a “libertarian Marxist.” That is, until the populist uprisings in Europe last year.
The Illinois House of Representatives has voted to 