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If the global trade war was merely a race between the US and China whose stock market will slide into a bear market first, then Trump could take a victory lap today.

Also, if it was Peter Navarro’s intention to halt the market selloff with his last hour appearance on CNBC on Monday, in which he toned down investor concerns by saying that the US restrictions on foreign investment won’t be as sweeping as markets are anticipating, he succeeded, and this morning calm has returned to European markets which suffered their biggest one-day drop since the start of March, while US equity futures halted their slump and were stable in another relatively quiet session, trading fractionally in the red one day after the Dow Jones slid below its 200DMA for only the first time since June 2016, while Treasuries were flat even as the dollar regained all of yesterday losses after four days of declines.

Stocks stabilized despite escalating trade war rhetoric and fears that the tit-for-tat tariffs and protectionist measures lobbed between Trump and Xi could pass a point of no return.

Some commentators were surprised it took stocks this long to respond to what could potentially become a global trade war: “It’s taken a long time for the markets to feel like the trade commentary that’s been coming, particularly out of the U.S., had some meaning and so what we are seeing investors doing is finally taking a look at this and saying something might actually happen,” said Sheila Patel, CEO of Goldman Sachs Asset Management ’s international division, in a Bloomberg Television interview. “We’ve turned more cautious as have our investors.”

And while the markets were gripped by a furious selloff yesterday – at least until Navarro’s soothing appearance – stability has returned to Europe’s Stoxx 600 Index where modest gains were led by miners and utilities while earlier in Asian trading Japanese shares reversed early losses to finish slightly higher tracking the rebound in the USDJPY. 

The mood was more subdued in China, where stocks entered an official bear market amid fears the country may not be prepared to wage a full-blown trade war with the US. Having closed on the verge of a -20% drop on Monday, the Shanghai Composite Index fell 0.5% at the close, taking its loss since a January high to more than 20%, officially entering its 4th bear market in 3 years. Airlines extended a rout as a slumping yuan boosted the cost of their dollar-denominated debt, while property developers also sank.

In addition to being down 20% from its January highs, the Shanghai Composite is also down 14% for the year, the worst performance among major benchmarks, while valuations have fallen to the lowest in more than two years.  The rout which comes three years after China’s equity bubble burst, has now wiped out $1.8 trillion in market cap since January’s high according to Bloomberg.

The escalating trade tensions have come at a bad time for the government in Beijing, with deleveraging efforts tightening liquidity and threatening to slow economic growth. The collapse in China’s credit collapse has also hurt sentiment as China’s Total Social Financing, the broadest measure of new credit, slumped in May to the lowest in almost two years.

Worse, there is little hope of a sharp rebound, as investors brace themselves for secondary effects from the rout: “Pessimism will keep growing as many companies are on the edge of margin calls and bond defaults,” said Sun Jianbo, China Vision Capital president in Beijing. “The benchmark Shanghai Composite Index will fall at least 10 percent from the current level.”

At the same time, China’s yuan continued its stealth devaluation, and weakened 0.3% against the dollar to a fresh six-month low, while the offshore exchange rate slid for a ninth day, its longest losing streak in more than four years, now down to levels last seen in December 2017.

To be sure, commentators were almost uniformly bearish: “I don’t see the bottom,” said Qian Qimin, a strategist at Shenwan Hongyuan Group Co. in Shanghai. “The weakening yuan is hurting companies with high levels of dollar debt.”

“Fundamentals in China are very bad,” said Hao Hong, chief strategist at Bocom International Holdings Co. “The market started to correct even before the trade war flared up.”

And while China has dramatically underperformed US markets this year, judging by the last two days, perhaps the global trade war contagion has finally washed ashore in America…

In FX, the dollar reversed an earlier drop, undoing all of yesterday’s losses and halting – for now – a streak of 4 consecutive declines.

Most G10 were rangebound in an otherwise quiet session as the latest bout of doom-and-gloom headlines lost traction in the markets; the euro retreated from its strongest level since last week’s ECB meeting as the dollar advanced after the London open; the yen rose a fourth day even as it trimmed gains on the back of the dollar’s rise

As Bloomberg notes, the pound fell to a day low after the Bank of England’s Jonathan Haskel, appointed to its Monetary Policy Committee to replace Ian McCafferty, said he sees risks if the bank raises rates too quickly.

In rates, the US 10Y yield traded within 2 bps of Monday’s 2.88% close, while Italy’s 10-year yield broke above 2.85%, triggering a selloff in BTP futures. Greek bonds bucked a selloff in European sovereign debt after a ratings upgrade.

In commodities, metals retreated, with zinc leading declines and gold trading near the weakest in six months. Brent crude rose above $75 per barrel after U.S. Energy Secretary Rick Perry suggested a planned production hike isn’t enough to stop a price spike. Gold continued to slump on the back of the stronger dollar, the decline accelerated after the precious metal recently hit its death cross.

Today’s calendar includes Conference Board Consumer Confidence while IHS Markit and Lennar are among companies reporting earnings.

Market Snapshot

• S&P 500 futures little changed at 2,722.50
• STOXX Europe 600 up 0.3% to 378.33
• MXAP down 0.1% to 167.07
• MXAPJ down 0.2% to 541.10
• Nikkei up 0.02% to 22,342.00
• Topix up 0.2% to 1,731.07
• Hang Seng Index down 0.3% to 28,881.40
• Shanghai Composite down 0.5% to 2,844.51
• Sensex up 0.3% to 35,559.48
• Australia S&P/ASX 200 down 0.2% to 6,197.61
• Kospi down 0.3% to 2,350.92
• German 10Y yield rose 1.7 bps to 0.344%
• Euro down 0.3% to $1.1674
• Italian 10Y yield rose 13.0 bps to 2.557%
• Spanish 10Y yield rose 3.3 bps to 1.383%
• Brent futures up 0.4% to $75.02/bbl
• Gold spot down 0.6% to $1,257.60
• U.S. Dollar Index up 0.3% to 94.52

Top Overnight News

• White House trade adviser Peter Navarro sought to ease investor concerns about U.S. trade policy, indicating that a Treasury Department report later this week on American restrictions on foreign investment won’t be as sweeping as markets are anticipating.
• Chinese President Xi Jinping told a group of mostly U.S. and European multinational CEOs on Thursday that China plans to strike back at U.S. trade measures, WSJ reports, citing unidentified people briefed on the Global CEO Council event
• Chinese stocks fell, with the benchmark gauge poised to enter a bear market, amid growing concern about the country’s resilience to a trade war with the U.S. Prominent academics have begun to question if China’s slowing, trade-dependent economy can withstand a sustained attack from Trump
• The gap between 2- and 10-year yields reached a fresh year-to-date low Monday, underscoring the Federal Reserve’s dilemma over what Chairman Jerome Powell has called the real perplexing question in the collapsing curve: how low long-term yields are
• Goldman Sachs Group Inc. said it’s reducing an overweight position in developing-nation currencies, preferring a more “defensive” stance as China and Europe warned the escalating trade war could trigger a global recession

Asian stocks were negative across the board on spill-over selling from the US where sentiment was dragged amid trade concerns following Trump’s trade threats over the weekend and potential investment restrictions on China. This was also exacerbated after Treasury Secretary Mnuchin suggested this was not just specific to China but to all countries trying to steal US technology, which raised fears of widespread action and saw the tech sector bear the brunt of the increased protectionist views. ASX 200 (-0.3%) and Nikkei 225 (-0.1%) traded lower with losses in Australia led by commodity related sectors amid trade uncertainty and OPEC+ overhang, while a firmer JPY weighed on the Japanese benchmark. Hang Seng (-0.2%) and Shanghai Comp. (-0.8%) underperformed their peers with China dampened by trade tensions, as well as a net liquidity drain by the PBoC. Finally, 10yr JGBs were uneventful with prices stuck within Monday’s tight range and after the 20yr auction failed to spur demand despite firmer results.

Top Asian News

• Mizuho’s Online Trading Platform Crashes as IPO Stock Debuts
• Erdogan’s Hot Election Economy Risks a Meltdown After His Win
• China Policy Banks Said to Tighten Shanty-Town Loan Approval
• Freeport Seeks Six Month Extension to Grasberg Mining Permit

European equities take a breather (Eurostoxx 50 +0.5%) as the major bourses crawl back up from the sell-off experienced in the previous session as US Trade Advisor Navarro provided relief to markets when he stated the US has no plans to impose investment restrictions (but will defend itself against threats). The sectors which experienced the heaviest losses yesterday rebound today with materials, oil and tech names recovering while utilities outperforms.  In stocks specifics, Eutelsat (+2.3%) said they do not intend to make an offer for London-based Inmarsat (-7.5%) following reports yesterday the French company was considering a possible bid for Inmarsat. Elsewhere, BMW’s (-1.9%) special representative Robertson said the company is not looking to actively relocate production out of the UK amid reports plants would have to be closed post-Brexit.

Top European News

• SNB’s Maechler Says Franc ‘Remains Highly Valued’
• Eutelsat Won’t Bid for Inmarsat, Clearing Way for EchoStar

In FX, major USD pairings remain relatively choppy and rangy, but the Greenback has regrouped after Monday’s US-China trade related downturn to trade firmer vs most G10 peers bar the Jpy (again). Hence, the DXY has nudged back above 94.400 from a marginal new pull-back low just under 94.200, awaiting more tariff and investment news in the absence of anything else market moving. JPY: As noted, still outperforming or resilient amidst latest global protectionist posturing, with 110.00 proving a formidable barrier and 109.50 protecting a deeper retracement and the 55 DMA at 109.39, all vs the Dollar. EUR/GBP: Both holding decent recovery gains vs the Usd from recent lows, but struggling to rebound further through big figure levels (1.1700 and 1.3300 respectively) that are in close proximity to technical resistance (ie 1.1721 Fib and 1.3308 DMA), and with hefty option expiries also in the mix (3 bn in Eur/Usd between 1.1650-90 tomorrow and 1.1 bn in Cable at 1.3250 today). Note also, the Eur/Gbp cross continues to respect its 200 DMA around 0.8821 and is hovering near 0.8800 amidst comments from pending member of the BoE’s MPC Haskel that featured some hawkish elements, but do not indicate that he will directly replace rate hike advocate McCafferty when he joins. In fact, the Pound has lost momentum even though the latter has underlined his stance with another call for no further delay on more tightening.

Commodities are relatively mixed with WTI (+0.2%) and Brent (+0.3%) higher as oil is supported from limited Libyan crude exports in June compared to May after oil exporting facilities seem to be removed out of the control of Libya’s NOC (the only entity permitted to sell the country’s crude oil). Elsewhere, in Canada, 360k bpd of production capacity has gone offline due to production issues at the Syncrude faciliy in Alberta, one of the largest oil sands facilities in the country. The outage is expected to tighten supplies in and potentially reduce flows into the Cushing, OK, hub. Production is not expected to return until through July. Meanwhile, the Iranian Oil Minister said that the OPEC agreement did not contain some increases members expected. Metals are lower on the day with gold (-0.8%), silver (-0.7%) and platinum (-0.9%) pressured by the firmer dollar. Copper dipped to near its weakest level in almost 3 months as risk appetite is dampened by the ongoing US-Sino trade tensions. Zinc fell to the lowest since early August 2017 as rising inventories subdue the metal.

Looking at the day ahead, the most significant data due out is the June CB consumer confidence reading while the June Richmond Fed manufacturing index and April S&P CoreLogic house prices index data are also due. Away from that the ECB’s Hansson and De Guindos, the BOE’s McCafferty, Haskel and Fried as well as the Fed’s Bostic and Kaplan will speak at separate events. Elsewhere, German Chancellor Merkel is also due to hold private talks with her coalition partners on refugee policy and euro area reform.

US Event Calendar

• 9am: S&P CoreLogic CS 20-City MoM SA, est. 0.4%, prior 0.53%; YoY NSA, est. 6.8%, prior 6.79%
• 10am: Richmond Fed Manufact. Index, est. 15, prior 16
• 10am: Conf. Board Consumer Confidence, est. 128, prior 128;

DB’s Jim Reid concludes the overnight wrap

Global financial markets wouldn’t be recording a particularly friendly message to Mr Trump at the moment as the Trade War escalations created a big risk off yesterday with the S&P 500 -1.37% but at least closing off the -2.04% lows an hour before the bell. Meanwhile the Dow was down for 9th time in last 10 sessions (-4.22% in total over that period), the DAX was down -2.46% – worst day since 8th February (around the vol shock) and is now off c6.4% from midmonth highs and down -5.01% YTD. Indeed virtually all Euro indices are negative YTD now. Vol spiked with the VIX and V2X both up c26% to 17.33 (intraday high 19.61) and 17.87 respectively. Meanwhile Credit was notably weaker  with Europe and US IG credit indices 2-3bp wider while iTraxx sub-financials widened 10.2bp with the weakness led by Italian banks.

Overnight in Asia markets are extending losses but have recovered from the session lows with the Nikkei (-0.08%), Kospi (-0.40%), Hang Seng (-0.22%) and Shanghai Comp. (-0.82%) all down but recovering. However if losses for China hold into close, it would represent a c20% decline from its January highs and c12% fall since mid-May. Meanwhile key Chinese airline stocks are down for the eighth straight day as concerns for higher costs from a lower  Yuan continue to build. This morning, the Yuan is down c0.2% to another fresh 6 month low.

Datawise, Japan’s May PPI services was steady mom and in line at 1% yoy. The story which we mentioned yesterday about the US Treasury preparing rules to potentially block Chinese investments in certain US industries through the implementation of an emergency law appeared to be the early trigger for yesterday’s sell off. It’s worth noting that we may know more about this story on Friday when Treasury Secretary Steven Mnuchin releases a report that supposedly recommends administering such a law according to Bloomberg, although the early suggestion is that it could be a two-tier approach and it’s not entirely clear if it’ll be specific to China. Indeed Mnuchin did call the report “fake news” in the context of it applying only to China although Politico also reported that “Trump appears to have sided with more aggressive actions”. Later in the US session, White House adviser Navarro sought to calm investors as he noted “there’s no plans to impose investment restrictions on any countries that are interfering in any way with our country….the whole idea that we’re putting investment restrictions on the world – please discount that”. He added that “all we’re doing here…is trying to defend our technology when it may be threatened”.

Anyway that’s one to watch. China’s Foreign ministry spokesman Geng noted the US should view Chinese commercial activities “objectively” while the Vice Premier Liu He warned that “China and the EU firmly oppose trade unilateralism and protectionism and think these actions may bring recession and turbulence to the global economy”. Meanwhile the WSJ reported that China’s President Xi met with a group of US / European multinational CEO last Thursday and told them that re trade measures, “if somebody hits you on the left cheek…in our culture, we punch back”, while also suggesting that for companies whose countries that are not involved in a trade dispute with China, then “if one door closes, another will open”. As a reminder our China and US economists believe the measures announced so far (10% tariff on $200bn) will have a fairly negligible impact on growth in China and the US (0.2% to 0.3% hit to GDP) but clearly this is an incredibly fluid situation and it’s hard to argue against the view that risks appear to be firmly placed to the downside given the rhetoric of late.

Indeed we’re starting to see more comments at a company level too and with Q2 earnings not far away this should become more of a talking point. Yesterday it was interesting to see Harley Davidson announce that they intend to move some production out of the US to ramp up production in international plants to serve the EU, which on the face of it surely goes against Trump’s intentions. Industrials (-1.52%) certainly took much of the brunt in the Dow yesterday although to be fair there were very few places to hide with only the utilities and consumer staples sectors finishing with a positive return. It was actually tech which struggled the most with the Nasdaq down as much as -2.80% before closing at -2.09% lower – the largest daily fall since April. The Stoxx 600 saw a full house of sectors closing in the red (-2.04%).

As far as other markets were concerned yesterday, you were probably kept busy if you were trading any Turkey assets post the election with an early rally giving way to a near full reversal for the Turkish Lira. Indeed the currency was as much as +3.06% stronger in the morning but was back to broadly flat a few hours later, while Turkey’s main equity markets closed down -1.92% and traded in an incredible 6.46% intraday range while local currency 10y bonds were 17bps higher in yield. Our EM economist believes that for Turkish assets to perform sustainably, markets would look for: (1) political clarity (in either way, i.e. full AKP or opposition win); (2) explicit commitment to a policy mix steering the Turkish economy towards a more sustainable macro path that would keep worries over external financing at bay; and (3) some tailwinds from the global backdrop. Our colleagues highlight that we have more or less ticked off the first prerequisite after the election outcome, yet any outcome short of satisfying the second domestic prerequisite and some support from global backdrop may lead to renewed market strain, despite CBT’s welcome support on TRY.

Elsewhere Italian BTPs were sharply higher in yield again yesterday with 2y and 10y yields finishing 12.5bps and 13.3bps higher respectively. This came following the second round of municipal voting in Italy where the League in particular put in a strong performance, notably beating the 5SM in Terni, as well as taking left-wing Tuscan cities.

Over in Germany, the latest Forsa poll showed Chancellor Merkel leading in support levels in the state of Bavaria compared to her coalition partner – CDU’s Soeder who has taken a stronger view to migration issues (Merkel 43%; Soeder 38%). Notably, 75% of those polled noted that there are other problems “that are just as important or more important” than migration.

Elsewhere in markets yesterday, core government bonds firmed slightly (UST 10y yields -1.5bp; Bunds -1bp) while Gilts reversed much of their underperformance from Friday (-2.8bp). The US 2s10s spread also nudged down 0.6bp to another fresh post GFC low (34.7bp). Meanwhile the oil complex gave back some of its gains from Friday, as Saudi Arabia signalled higher than expected oil output over the weekend (Brent -1.09%; WTI -0.73%).

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the June Dallas Fed manufacturing index jumped 9.7pt mom to 36.5 (vs. 24.9 expected) – the highest since February. In the details, pricing indices continued to firm with the prices paid index at the highest level since November 2011 while the prices received index rose to the highest level since July 2008. Meanwhile the May Chicago Fed activity index was below market at -0.15 (vs. 0.3 expected). Elsewhere, the May new homes sales grew the fastest in 6 months, up 6.7% to 689k (vs. 667k expected), while sales in the South increased at the fastest rate in c11 months (+18%). In Europe, Germany’s June IFO business climate index softened 0.5pt to an in line print of 101.8 while the IFO expectations index was above market at 98.6 (vs. 98 expected) and steady mom after having declined for the past six months in a row.

Looking at the day ahead, the UK’s June CBI retail sales report is due. In the US the most significant data due out is the June CB consumer confidence reading while the June Richmond Fed manufacturing index and April S&P CoreLogic house prices index data are also due. Away from that the ECB’s Hansson and De Guindos, the BOE’s McCafferty, Haskel and Fried as well as the Fed’s Bostic and Kaplan will speak at separate events. Elsewhere, German Chancellor Merkel is also due to hold private talks with her coalition partners on refugee policy and euro area reform.

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

Authored by Alistair Crooke via The Strategic Culture Foundation,

The beginning of the end of the Bilderberg/Soros vision is in sight. The Old Order will cling on, even to the last of its fingernails. The Bilderberg vision is the notion of multi-cultural, international cosmopolitanism that surpasses old-time nationalism; heralding the end of frontiers; and leading toward a US-led, ‘technocratic’, global economic and political governance. 

Its roots lie with figures such as James Burnham, an anti-Stalin, former Trotskyite, who, writing as early as 1941, advocated for the levers of financial and economic power being placedin the hands of a management class: an élite – which alone would be capable of running the contemporary state – thanks to this élite’s market and financial technical nous. It was, bluntly, a call for an expert, technocratic oligarchy. 

Burnham renounced his allegiance to Trotsky and Marxism, in all its forms in 1940, but he would take the tactics and strategies for infiltration and subversion, (learned as a member of Leon Trotsky’s inner circle) with him, and would elevate the Trotskyist management of ‘identity politics’ to become the fragmentation ‘device’ primed to explode national culture onto a new stage, in the Western sphere. His 1941 book, “The Managerial Revolution,” caught the attention of Frank Wisner, subsequently, a legendary CIA figure, who saw in the works of Burnham and his colleague a fellow Trotskyite, Sidney Hook, the prospect of mounting an effective alliance of former Trotskyites against Stalinism.

But, additionally, Wisner perceived its merits as the blueprint for a CIA-led, pseudo-liberal, US-led global order. (‘Pseudo’, because, as Burnham articulated clearly, in The Machiavellians, Defenders of Freedom, his version of freedom meant anything but intellectual freedom or those freedoms defined by America’s Constitution. “What it really meant was conformity and submission”).

In short, (as Paul Fitzgerald and Elizabeth Gould have noted), “by 1947, James Burnham’s transformation from Communist radical, to New World Order American conservative was complete. His Struggle for the World, [converted into a memo for the US Office of Strategic Services (OSS, the forerunner of CIA)], had done a ‘French Turn’ on Trotsky’s permanent Communist revolution, and turned it into a permanent battle plan for a global American empire. All that was needed to complete Burnham’s dialectic was a permanent enemy, and that would require a sophisticated psychological campaign to keep the hatred of Russia alive, “for generations”.

What has this to do with us today?

A ‘Burnham Landscape’ of apparently, ‘centrist’ European political parties, apparently independent think-tanks, institutions, and NATO structures, was seeded by CIA – in the post war era of anti-Sovietism – across Europe, and the Middle East – as part of Burnham’s ‘battle plan’ for a US-led, global ‘order’. It is precisely this élite: i.e. Burnham’s oligarchic technocracy, that is facing political push-back today to the point at which the Liberal Order feels that it is struggling for its very survival against “the enemy in the White House”, as the editor of Spiegel Online has termed President Trump.

What has caused this?

Well, like him or hate him, President Trump has played a major part, if only by saying the unsayable. The rationality or not inherent in these Eckhart-style ‘unsayings’, or apophasis, is beside the point: Trump’s intuitive ‘discourse of saying the unsayable’ has taken most of the bolts out of the former Burnham-type, ideological structure. 

But in Europe, two main flaws to the Burnham blueprint have contributed, possibly fatally, to the blueprint crisis:

Firstly, the policy of populating Europe with immigrants, as a remedy for Europe’s adverse demographics (and to dilute to the point of erasure, its national cultures): “Far from leading to fusion”, writes British historian, Niall Ferguson, “Europe’s migration crisis is leading to fission. The play might be called The Meltdown Pot … Increasingly … the issue of migration will be seen by future historians as the fatal solvent of the EU. In their accounts Brexit will appear as merely an early symptom of the crisis”. 

And secondly, the bi-furcation of the economy into two unrelated, and dis-equal economies, as a result of the élite’s mismanagement of the global economy, (i.e. the obvious the absence of ‘prosperity for all’).

Trump evidently has heard the two key messages from his constituency: that they neither accept to have (white) American culture, and its way-of-life, diluted through immigration; and, neither do they wish – stoically – to accommodate to America’s eclipse by China.

The issue of how to arrest China’s rise is primordial (for Team Trump), and in a certain sense, has led to an American ‘retrospective’: America now may only account for 14% of global output (PPP – Purchasing Power Parity basis), or 22%, on a nominal basis (as opposed to near half of global output, for which the US was responsible, at the close of WW2), but American corporations, thanks to the dollar global hegemony, enjoy a type of monopoly status (i.e. Microsoft, Google and Facebook, amongst others), either through regulatory privilege, or by marketplace dominance. Trump wants to halt this asset from decaying further and to leverage it again as a potent bargaining chip in the present tariff wars. This is clearly a political ‘winner’ in terms of US domestic grass-roots, politics, and the upcoming November mid-term elections.

The second strand seems to be something of a Middle East ‘retrospective’: to restore the Middle East to the era of The Shah, when ‘Persia’ policed the Middle East; when Israel was a regional ‘power’ implementing the American interest; and when the major sources of energy were under US control. And, further, when Russian influence was being attenuated, by leveraging radical Sunni Islam against Arab socialism, and nationalism.

Of course, Trump is savvy enough to know that it is not possible to revert wholly to that Kissinger-esque world. The region has changed too much for that. But Kissinger remains an influential adviser to the President (together with PM Netanyahu). And it is easy to forget that US dominance of the Middle East brought America not just control of energy, but the re-cycling of petrodollars into Wall Street, and the necklace of US military bases in the Gulf that both surround Iran, and give to the US its military muscle, reaching into Asia.

We have therefore Trump’s hugging of MBS, MBZ and Netanyahu, and a supporting narrative of Iran as a ‘malign actor’ in the region, and a facilitator of terrorism.

But, it is just a ‘narrative’, and it is nonsense, when put into a broader understanding of the regional context. The history of Islam has never been free from violent conflict (going back to earliest days: i.e. the Wars of the Ridda, or apostasy 632-3 etc.). But – lest we forget – this present era of Sunni radicalization (such as has given birth to ISIS) reaches back, at least, to the 17th and 18th Centuries, with the Ottoman disaster at the Gates of Vienna (1683); the consequent onset of the Caliphate dissolution; growing Ottoman permissiveness and sensuality, provoking Abd-el Wahhab’s radical zealotism (on which basis Saudi Arabia was founded); and finally the aggressive westernizing secularism in Turkey and Persia, which triggered what is called ‘political Islam’ (both Sunni and Shi’a that initially, were united, in a single movement).

The MBS narrative that Saudi Arabia’s ‘fundamentalism’ was a reaction to the Iranian Revolution is yet another ‘meme’ that may serve Trump and Netanyahu’s interests, but is just as false. The reality is that the modern Arab (Sunni) system, a holdover from the Ottoman era, has been in a long term channel of decline since WW1 – whereas Shi’i Islam is enjoying a strong revival across the northern tier of the Middle East, and beyond. Put rather bluntly: the Iranians are on the upside of history – it’s as simple as that.

And what Trump is trying to do is Iranian capitulation, in the face of the American-Israeli-Saudi siege, the key to undoing Obama (again), by trying to reassert US Middle East dominance, energy dominance and an Israeli resurgence of regional power. Subjugating Iran thus has emerged as the supreme litmus for re-establishing the unipolar global order.

It is so iconic precisely because, just as much as Trump would like to see Iran, Iraq and Iranian allies everywhere, fall to the unipolar hegemony, Iran is as central to the multipolar vision of Xi and Putin as it is iconic to Trump’s putative Middle East ‘makeover’. And it is not just symbolic: Iran is as pivotal to both Russian and Chinese geo-political strategies. In a word, Iran has more leverage to ensure survival than Trump may have anticipated.

America will leverage its dominance of the financial system to the limit to strangle Iran, and China and Russia will do what is necessary financially, and in terms of trade, to see that Iran does not implode economically – and remains a pillar of the multipolar alternative world order.

And it is here that the paradigm shifts in Europe come into play. It is not, I repeat not because Europe can be expected to show leadership or to ‘do’ much, but rather because the apophatic discourse of ‘saying the unsayable’ is spreading to Europe. It has not, so far, changed the paradigm of power, but may soon (i.e. with Merkel’s possible political demise). Germany may be more staid in its politics than Italy, but the voice of Italy’s new Interior Minister, Matteo Salvini, saying ‘no’ to the ‘Burnham’ proxies in Berlin is echoing across Europe, and beyond. It acts like a slap in the face.

Let us be absolutely clear: We are not suggesting that Europe will expend political capital in defending the JCPOA.

That is not likely.

We are saying that America’s dollar hegemony has proved toxic to the rest of the world in very many ways, and Trump – in leveraging that hegemony so gangsterishly: “We’re America, Bitch”, as one official described America’s approach – is fueling antagonism towards dollar hegemony (if not yet towards America per se). It is pushing all of non-America into a common stance of rebellion against America’s unipolar financial dominance.

This ‘revolt’ is already giving leverage to Kim Jong Un, as the Washington Post reports:

“With U.S.-China trade ties on the rocks, Kim is well-positioned to play both powers, talking sweet to Trump while pursuing a closer relationship with Xi…Kim understands the hierarchy. He knows that Xi is the Asian Godfather,” said Yanmei Xie, a China policy analyst at Gavekal Dragonomics, an economic research firm in Beijing. “He is making a pragmatic calculation that China can provide economic assistance to integrate North Korea diplomatically and economically into Northeast Asia …

“There is a regional effort, a sort of Northeast Asia coalition of make-believe, to maintain the fiction that the North Korea will de-nuke as long as Americans keep talking to it,” Xie said.

China is less focused on getting Kim to give away his weapons than on getting him to fall into line. It may eventually use trade and investment to keep him onside, experts said.

“With North Korea still struggling under U.N. sanctions, “China’s political and economic support is still highly important,” said Zhao Tong, a North Korea expert at the Carnegie-Tsinghua Center for Global Policy in Beijing. Zhao said the question now is: “How can China help North Korea develop its economy?”

“China can also help Kim normalize North Korea’s diplomatic status. That starts with treating him less like a rogue dictator and more like a visiting statesman.”

The same goes for Iran — in spades. China and Russia know how to play this game of ‘chicken’.

via RSS https://ift.tt/2MY7wZW Tyler Durden

Commerzbank is hoping that computers will soon be able to do at least as good a job writing its equity research reports as the armies of junior analysts that the big banks are no doubt looking to trim thanks to expensive MifidII regulations and restrictions that have cut funding costs for research departments.

Even as its captured the attention of bank executives, automated and computerized equity analysis has, for the most part, been a disaster over the last couple of years. While some larger firms may use algorithms and some automation to crank out macro economic reports, and while computers may be getting better at scraping and reporting data (without actually analyzing it), performing equity analysis requires a deeper look behind the numbers and its simply not a task optimized for automation.

However, we are apparently at that stage in the cycle where cutting costs becomes far more important then being productive or effective, particularly since MiFid II is forcing a race to bottom as investment banks seek out deep cuts in their research departments, driven by a drop in revenue that has accompanied being forced to charge a separate, optional, rate for research instead of bundling those costs with trading fees.

One of these competitors, Germany’s second largest bank has decided that the time has come to automate some of its equity analysis, and according to the Financial Times “Commerzbank is experimenting with artificial intelligence technology that automatically generates sports reports to see if it can write basic analyst notes, as Mifid II forces banks across the world to trim research costs.”

The German bank is working on the project with Retresco, a content automation company in which it invested two years ago through its fintech incubator unit. The project is still at an early stage and could take years to produce reports that banks would be happy to send to their clients, but the notion of AI replacing human research analysts is already attracting attention from senior bankers.

“There’s definitely work that can be done, parts of the [research] process that can be enhanced by algos and AI tools,” the head of one investment bank told the Financial Times, describing earnings reports as something that “should be robo-written.”

Research into AI and automation solutions that can lessen the burden of data-intensive research will likely soon be a theme across the big banks, as they scramble to reduce one of their biggest cost-centers in a time of declining revenues.

The Europe head of another investment bank said research was an area that was rife for automation over time, while analysts at several other banks said their managers were experimenting with AI and automation applications.

Banks are under fierce pressure to cut the costs of producing research on stocks and bonds following the implementation in January of European investor protections known as Mifid II. The measures force investors to pay for research explicitly instead of bundling its costs into trading commissions. Some firms say their implied research revenue has fallen by as much as 30 per cent as a result.

Possibly ignoring the fact that almost everybody (in the U.S.) reports in Non-GAAP numbers now and that any and all addbacks to earnings generally need to be looked at and analyzed on their own, a Commerzbank executive is confident that the venture would ultimately be successful.

Michael Spitz, head of Commerzbank’s R&D unit, Mainincubator, said the area showed promise because “equity research reports reviewing quarterly earnings are structured in similar ways” and the source documents are often prepared under common reporting standards. “That makes it easier for a machine learning program to extract and contextualise relevant data, which can be then framed in a report using natural language processing tools.” Retresco’s original business uses similar technology to write soccer reports in Germany, in other words if it works for sports it should work for the market.

Mr Spitz said the technology was already advanced enough to provide around 75 per cent of what a human equity analyst would when writing an immediate report on quarterly earnings. “If it is related to much more abstract cases, we feel that we are not there yet — that we can or maybe will ever replace the quality of a researcher,” he added. Bankers say regulatory demands for oversight on research publication could also protect humans in research jobs.

Recall, it was less than a year ago that we wrote about the first AI-controlled ETF. At the time, its creators said it “has the ability to mimic an army of equity research analysts working around the clock, 365 days a year, while removing human error and bias from the process.“

Last year, EquBot LLC, in partnership with ETF Managers Group (ETFMG) launched the world’s first ETF powered by artificial intelligence, the AI Powered Equity ETF (NYSE Arca: AIEQ). According to Business Wire, the new ETF uses “cognitive and big data processing abilities of IBM Watson™ to analyze U.S.-listed investment opportunities.”

Business Wire explained how EquBot makes investment decisions “EquBot’s approach ranks investment opportunities based on their probability of benefiting from current economic conditions, trends, and world- and company-specific events, and identifies those equities with the greatest potential for appreciation. EquBot and ETFMG expect the fund’s portfolio to typically consist of 30 to 70 of U.S. equities only and volatility comparable to the broader U.S. equity market…the fund’s underlying technology is constantly analyzing information for approximately 6,000 U.S.-listed equities, including company management and market sentiment, and processes more than one million regulatory filings, quarterly results releases, news articles, and social media posts every day.”

The moving of all financial services – including equity analysis – into AI, feels like it could become a major error not only as real human analysts will possibly be needed to reverse work that computers will likely do poorly, at least at first. 

A bigger problem is that this “revolution” will come just as the paradigm that has defined markets for the past decade: central bank largesse pushing risk assets higher, fades, and neither AI nor unmanned algos will be able to trade in the “newer normal.” Ironically this is precisely the time when humans will be most needed.

But that bridge has yet to be crossed, and until then the main prerogative is to keep costs low.

With that said, it seems unlikely that any bank has the artificial intelligence or automation on the level necessary to effectively dissect the story and the narrative that are behind the numbers yet. Consider every time trading algorithms have misinterpreted a headline, only to be kneejerked back and forth until human traders intervene to “discover” the price.

For banks looking for a quick revenue saver, this option will almost certainly prove to be more trouble than it’s worth.

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Authored by Tom Luongo,

The more I think about a Trump-Putin summit, the more I believe that it should focus on Syria.  If reports this morning are true (which they likely are not), that Trump doesn’t want to run in 2020 but would rather get the job done, whatever that means, in one term, then this is absolutely the topic of highest priority between him and Putin.

And up until this weekend that was simply my personal wish.  There was no supporting evidence for it.  Now, there may be.

Over the weekend an apparent letter from the U.S. Embassy in Amman was posted by Sam Heller stating that the Syrian rebels in the deconfliction zone in Dara’a should no longer expect any support from the U.S.

This letter, if real, comes at the same time as the Syrian Arab Army launched its offensive to retake the region.  Most notably, we haven’t heard one peep out of Israel in protest over this, other than the boilerplate stuff about Iran not being involved.

But, with Hezbollah forces on the ground there and still no airstrikes by the Israelis, I’d say that the campaign to regain the area up to the Golan Heights and the Jordanian border has everyone’s blessing.

This, to me, would signal why Trump is pushing for a summit with Putin in July.  No other matter is pressing in this time frame that requires the two to talk.  And like Kim Jong-un’s displays of good faith ahead of his summit with Trump, Trump is giving Putin some peace of mind over Syria.

It also shows that no matter how much he bloviates and thinks he sets policy in the region, Israeli Prime Minister Benjamin Netanyahu is at the mercy of both his U.S. and Russian benefactors.

And this letter tells him all he needs to know about the limit of the U.S.’s support for Israeli regional ambitions.

The Dara’a campaign is a perfect opportunity for both leaders to show their willingness to lead and guarantee the behavior of their proxies to each other.

At the same time, however, things are getting complicated in Deir Ezzor where the SAA is now openly probing areas around the U.S. base at Al-Tanf.  According to Elijah Magnier thousands of Russian troops are massing in Palmyra as a pressure move to get the U.S. to give up its base at Al-Tanf.

 Moreover, Russia is not aiming for a partial victory in the Levant now that the useful part of Syria (the most populated geographic area of the country) is liberated, with the exception of the north. This is why the south becomes a necessity that must be liberated.

Russia has bigger plans in the Levant: during my visit to the city of Palmyra and its surroundings, the presence of thousands of Russian troops is striking, indicating that Moscow is sending new infantry and special forces in very large numbers. This large presence has not been announced.

Courtesy: Moon of Alabama

At the same time there was a major strike on Iraqi PMU forces which killed at least 20 soldiers at the Al Qa’im border crossing (far right of map) that was claimed by the Israelis, but Iraq doesn’t believe that for a second.  The U.S. has been very aggressive in defending its position in Deir Ezzor as a bargaining chip in negotiations over Syria’s future and to pressure Iran directly.

The problem with that is now that the Kurds, under the SDF, know the U.S. cannot secure an independent future for them came to the bargaining table with the Assad government recently.  This is undermining the U.S. position east of the Euphrates.

Assad and Putin tried to get the U.S. to give up Al-Tanf in exchange for removing Hezbollah from the Dara’a campaign, but to no avail.  So, now it looks like Putin is engaging in a little brinksmanship of his own with those troops in Palmyra to back up the SAA as it pushes against the U.S.-imposed boundary around Al-Tanf (green area).

I expect that force is there to contain any desperate counter-attack by recently trained militants by the U.S. at Al-Tanf.  And their presence ups the probability that the red line of direct U.S./Russian conflict is crossed.

With Assad’s Tiger forces making quick work of the militants in Dara’a the need for Trump to negotiate a settlement for U.S. forces in Syria becomes acute before it spirals out of control.

Remember what I always say, the U.S. is only willing to negotiate when it’s losing.  The situation in Syria is slowly grinding towards the inevitable conclusion that the U.S. will be pushed out of Syria eventually, both through the active advances of the SAA and its allies and/or the further defection of the U.S.’s allies there, i.e. The SDF Kurds.

Turkey has already jumped ship and with Erdogan winning re-election there is little doubt that relations with Turkey will improve after first a coup attempt and then a hybrid war attack on Turkey’s currency and financial infrastructure.

Trump needs to walk away with a win from any meeting with Putin and in Syria there is one.  He can Declare victory over ISIS in Dara’a and the Southwestern Syrian desert.

Negotiating a withdrawal of troops from Al-Tanf is the first part of a deal towards a new multi-party reality which lessens Iran’s future threat to Israel, which is what this is all about now anyway.

I don’t think there’s much more on the table than this officially at the moment, unfortunately.  Trump is still fully committed to trade and tariff wars to force substantive change to the way the world trades goods.  So, he’ll offer up concessions on Nordstream 2 and sanctions on Rusal, the State owned Russian aluminum company, to get Putin to give up his support of Iran and its ‘nuclear ambitions.’

This Kissinger-esque approach of offering nothing for something will not work since Putin holds all the cards on these issues.  The more likely scenario is a Singapore-like agreement to begin draw downs of U.S. troops in Central Asia, including Afghanistan and Iraq, in exchange for a security guarantee from Putin on Iran’s presence in Syria.

Eventually that can move towards a new discussion of Iran’s nuclear ambitions.  But, make no mistake, Trump has a weak hand here, just like he had with North Korea.  It looks like with Russiagate receding he may have enough room to begin playing some cards.

*  *  *

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The amount of global offshore wealth held in 2017 was around $8.2 trillion – 6% higher than in the previous year in US dollar terms (a growth rate considerably lower than that of onshore wealth).

According to the Boston Consulting Group, Switzerland is still the prime destination for offshore wealth worldwide domiciling 2.3 trillion dollars in 2017.

You will find more infographics at Statista

However, as proximity remains a key factor in determining where investors choose to seek offshore financial services, the biggest growth was recorded in Hong Kong and Singapore due to wealth created in Mainland China.

 

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Authored by Peter Korzun via The Strategic Culture Foundation,

On June 19, the Senate passed a draft defense bill for FY 2019 that would halt the transfer of F-35 Joint Strike Fighter (JSF) aircraft to Turkey, until the secretary of state certifies that Turkey will not accept deliveries of Russian S-400 Triumf air-defense systems. It paves the way for Ankara’s expulsion from the program if it does not bow to this pressure. The support for the measure (85-10) is too strong to be overridden.

Turkey has been one of six major partner nations in the JSF project since 2002. It is responsible for the production of certain components and for providing maintenance services in Europe to other operators of the aircraft. About a dozen Turkish companies are involved in the manufacturing, in accordance with the deal that was reached 16 years ago (2002). Ankara has placed an order to buy more than 100 F-35A Lightning IIs. It has already paid $800 million, so any restrictions that are imposed now will be an illegal breach of obligations by the US.

On June 21, the Senate Appropriations Committee added an amendment to the foreign-aid bill that would put a stop to future deliveries, if Ankara does not cancel the S-400 deal already concluded with Moscow. One of the arguments for blocking the F-35 transfer is the fear that Russia would get access to the JSF, enabling Moscow to detect and exploit its vulnerabilities. It would learn how the S-400 could take out an F-35.

The House version contains even more limits on arms transfers to Turkey. In May, the bill passed the House with a provision mandating a temporary hold on all major defense sales to Turkey, including F-35s, due in part to its impending purchase of the S-400. Almaz-Antey, the company that manufactures the Triumf, is on a State Department list of banned entities. Any deal with that firm could result in sanctions. Rep. John Sarbanes (D-Md.) has introduced an amendment to the FY 2019 Defense Appropriations bill (H.R. 6157) that would bar the planned transfer of the aircraft to Turkey. So, there may be some changes to the wording but that won’t significantly alter the final result — the F-35 transfer will remain blocked after the reconciliation process.

The bill is expected to become law this summer. The administration will have no choice but to exclude Turkey from the F-35 program, to remove any parts of the plane produced in that country, and to ban the Turkish F-35s from leaving the territory of the United States.

Despite the proceedings on Capitol Hill, officials from the government and Lockheed Martin held a ceremony on June 21 in Fort Worth, Texas, to mark the “roll out” of the first F-35A Lightning II jet under its Turkish program. It was an imposing ceremony, but it disguised some sleight of hand. The US government will retain custody of the aircraft while the Turkish pilots and service technicians are undergoing training at Luke Air Force Base in Arizona. This is a long process that will take several years, but the bill will become law soon. Turkey may be denied access to the cloud-based Autonomic Logistics Information System (ALIS) computer network, depriving it of software updates and other data. The US could insert some malicious code to disable the aircraft even if they are transferred and based in Turkey in 2020 as planned.

US officials don’t shy away from open statements about their intentions to exert pressure and prevent other countries from buying Russian weapons.

“I would work with our allies to dissuade them, or encourage them, to avoid military purchases that would be potentially sanctionable,” said David Schenker, the nominee for assistant secretary of state for Near Eastern affairs, at his Senate confirmation hearing on June 14.

“In other words, I would tell Saudi Arabia not to do it,” he explained. Saudi Arabia and Qatar are in talks with Moscow to buy the S-400.

According to UAWire, The US State Department’s Office of Cooperative Threat Reduction has announced a tender for the monitoring of open-source information about arms deals involving the Russian Federation and the CIS countries. That data will be collected in Russian, English, Arabic, Chinese, Farsi, Urdu, and several other languages. The information will be used for decision-making and planning sanctions against foreign states.

So far, the policy of twisting arms has failed. Demand for Russian arms is booming in the Middle East and Africa. Just a few days ago, one of Iraq’s armored brigades swapped out its American-made M1 Abrams tanks for new Russian T-90s. Last year, Russia and Iraq signed a huge arms deal.

Unfazed by the US lawmakers’ stance, Ankara remains all set to go ahead with the purchase of the S-400 from Moscow. If the deal is blocked it will find an alternative, such as Russia’s Su-57 jet, or Turkey could produce an aircraft of its own, as part of its indigenous TFX stealth fighter program.

India has recently been warned against buying the Russian S-400. If it does, a ban will be put in place on sharing sensitive American military technology with Delhi, which is refusing to back down under pressure.

A deal is not always what one may think it is. A deal signed with the US is a special case because there are strings attached, which cannot be found in the text and are not mentioned during the negotiations. All of a sudden a partner finds out that there is a caveat that goes without saying. One may sign a deal and be naive enough to take it at face value, only to find out later that it will not be valid if certain unwritten conditions are not met. If you cooperate with another country without US approval, like Turkey does, you don’t get what you are entitled to under the terms of that agreement. Buy American, they say, but if you make a deal with Russia, like India wants to do, the access to the best technology the US has is going to be cut off.

Congress has offered a lesson to those who cooperate with America. They should remember that whatever they may sign with Washington cannot be taken for granted. US lawmakers can change everything to their heart’s content at any time they wish. There is nothing worse than an unreliable partner. And that’s what America is.

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Forget the WTI-Brent spread in oil – the best commodity arb in the market today might instead center around the global marijuana trade.

As the chart below (courtesy of Statista) shows, prices of cannabis differ wildly around the world and these differences are intensifying as more countries and regions (particularly in North America and South America, where Canada just became the second country to legalize weed sales) remove the legal restrictions from a product that was for decades confined to the black market.

Whereas Latin American countries (like, say, Colombia, for example) tend to have low prices per gram of marijuana, countries in the Far East – where penalties for possession and sale of the drug remain among the stiffest in the world – still sport incredibly high prices, as smugglers demand “hazard pay” for the fact that being caught smuggling illegal drugs can earn one a death sentence in Singapore and a multi-decade prison term in Seoul.

All of this begs the question: Would it be worthwhile to smuggle marijuana from Quito, the capital of Ecuador, where marijuana prices are among the lowest in the world, to Tokyo, where the price-per-gram is among the highest?

Clearly, smugglers, who move drugs like marijuana and cocaine from South America to far-flung regions of the world, are more than happy with the risk-reward profile.

The annual ABCD Cannabis Price Index offered a city-by-city price breakdown, which can be viewed in full here.

Shown: Marijuana being cultivated in a US lab.

For enterprising drug dealers, there are plenty of arb opportunities within the US, as prices between states where weed has been legalized or decriminalized diverge from states where prohibition remains unchallenged. The price-per-gram in Denver is just $7.79, compared with $18 in Washington, DC – more than twice as much.

So while ‘exporting’ your Colombian weed to the United States may be ‘simple’ – it is four times more profitable to ‘export’ it to Japan…

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Authored by Matthew Rojansky and Audrey Kortunov via The National Interest,

The history of relations between the United States and Russia demonstrates that there is no substitute for personal contacts between the leaders of the two countries…

Presidents Trump and Putin appear set to hold a summit meeting in July. This will be their third in-person meeting even though both leaders have made statements about how they have a positive working relationship and that they have spoken often by phone.

The U.S. domestic political climate on Russia is especially fraught at present. The White House is at odds with the Justice Department “Russia investigation” team led by Special Counsel Robert Mueller, who has reportedly sought to question President Trump. At the same time, momentum is building ahead of November’s midterm elections, with leaders from both parties warning about the risks of further “Russian meddling.”

In Russia there is widespread skepticism about any Trump-Putin meeting. Pundits and opinion-makers raise doubts about whether Trump can deliver on any significant matters important to Moscow. The predominant mood is that the U.S. president remains a hostage to the unanimously anti-Russian Washington establishment and that any agreement with him can be overruled by the U.S. Congress or even by his own administration.

Yet what should be in the forefront of the minds of both presidents is the dangerous state of U.S.-Russia relations, and its consequences for the interests of both countries and for global security.

Since the end of the Cold War, and perhaps even since the early 1980s, Moscow and Washington have never been closer to direct military confrontation, a consequence of increasing deployments, exercises, and operations by air, sea, and ground forces from the Baltic region to the Middle East. In some cases, Russian and NATO forces have nearly come into hostile contact, and escalation has been avoided by only the narrowest of margins.

Both Russia and the United States are set to invest billions in modernizing their nuclear arsenals, which, although positive from a safety and reliability standpoint, create the impression of a new “arms race,” as the presidents acknowledged in a March phone call. An especially worrying new dimension to the nuclear risk is the possibility that cyber attacks by states or non-state actors could lead either party to raise its nuclear alert level, thus triggering a matching response from the other side, and possibly touching off a dangerous escalatory cycle.

The forthcoming Trump-Putin meeting cannot resolve fundamental problems between Washington and Moscow. Neither leader would or should make unilateral concessions on matters he views as critical to his country’s national security. However, the meeting might open a path toward stabilizing the relationship, which under the circumstances, would be an important accomplishment in itself.

A simple but vital step toward such de-escalation could be for the two presidents to reiterate the joint view of Presidents Reagan and Gorbachev from their 1986 Reykjavik summit, that “a nuclear war cannot be won, and so should never be fought.” In fact, thirty-two years ago the U.S. and Soviet leaders discussed the possibility of eliminating nuclear weapons altogether, a goal which then Presidents Obama and Medvedev confirmed and supported in 2009.

Yet with the 1987 Treaty on Intermediate Nuclear Forces practically defunct thanks to reciprocal alleged violations, and the New START treaty limiting overall strategic nuclear arsenals under stress, an optimistic long-term goal like nuclear zero is hardly on the agenda for Moscow or Washington. Instead, both must now confront the urgent negative consequences of stalled U.S.-Russian bilateral arms control for global nuclear nonproliferation.

This is especially true after the U.S. withdrawal from the Joint Comprehensive Plan of Action on Iran’s nuclear program, and given the real chance that Iran is determined to develop a weapon, which would trigger cascading nuclear breakouts across the Middle East. If the upcoming 2020 Review Conference of the Nuclear Nonproliferation Treaty is to be anything but a last gasp for the half-century old nonproliferation regime, Presidents Trump and Putin will have to offer some hope that Washington and Moscow take their own responsibilities to reduce and disarm under the treaty seriously.

The wars in Syria and Ukraine have cost hundreds of thousands of lives, and displaced millions of people across the Middle East, Europe and beyond. Washington and Moscow each control resources and levers of influence vital for managing and ultimately resolving these conflicts. Although officials have sought to negotiate small steps, such as implementation of the Minsk agreements in Ukraine and getting the Syria talks in Geneva back on track, political will is lacking, and a meeting between the U.S. and Russian presidents is by far the best opportunity for each to signal their commitment to progress.

Finally, in the aftermath of years of sanctions and counter-sanctions, policies of mutual isolation have atrophied relations between ordinary Americans and Russians to an unacceptable degree that does not serve the interests of either side. Basic embassy and consular services have been severely constrained by expulsions of diplomats on both sides, and by the closure of U.S. and Russian diplomatic facilities.

As a result, tourism, trade, scientific, cultural and educational exchanges are all plummeting for the first sustained period in the fifty years since the General Agreement on Exchanges was signed at the height of the Cold War in 1958. Even while sanctions remain in place, the two presidents should clearly signal that contacts between diplomats, legislators, businesses, scholars and civic groups are foundational to peaceful, productive relations, and thus are especially important when official ties are strained.

Despite a deep crisis in the state-to-state relationship, Americans and Russians are still interested in each other, and they largely reject the current paradigm of battling official narratives. Russians still line up at the U.S. Embassy in Moscow, eager for U.S. visas, and Americans constituted the largest cohort of foreigners visiting Russia for the World Cup this month. It is simply unfair and shortsighted to make ordinary citizens pay the price for conflict between their governments.

Disagreements between Moscow and Washington are extensive, and the two presidents will not find common ground on many issues. The point of meeting is not for them to overlook these differences or to strike a grand bargain. Rather, it should be to send a clear message and create the space necessary for the two governments to restart a cooperative engagement that is in the clear interest of both sides.

The history of relations between the United States and Russia demonstrates that there is no substitute for personal contacts between the leaders of the two countries. This was the case with Richard Nixon and Leonid Brezhnev, Ronald Reagan and Mikhail Gorbachev, Bill Clinton and Boris Yeltsin. These historical examples are especially important now, when official contacts at lower levels are hampered.

The current conflict is not a new Cold War, nor will it become one. But attention should be paid to the vital lesson from that conflict, which is that summit diplomacy is not just for celebrating big victories – it is for giving momentum to the small steps and everyday interactions that kept that war from turning hot.

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In most cases, switching cities is a lot easier than switching professions. But if you’re thinking of moving (perhaps away from a crowded, expensive urban center like New York City of San Francisco and to somewhere more affordable) it might make sense to pick somewhere where you can live comfortably and have some money left over at the end of the year. To that end, RentCafe crunched data from the Bureau of Labor Statistics to find out which are the best and worst metro areas for each professionals in the management, legal, computer and mathematical, health, education, protective services and community and social services fields. Overall, RentCafe discovered that managers make the most on average annually – with a national average of $89,500. Legal follows with $80,7000. At the bottom of the list is food preparation and service related jobs, with $20,500.

Even though it has been ranked one of the most expensive places in the country, RentCafe found that San Jose, Calif. is a city where educated workers can save the largest chunk of their income at the end of the year. Meanwhile, Jackson, Mississippi, with its paucity of jobs requiring advanced degrees, is one of the worst cities for lawyers and computer scientists.

Of course, places like San Jose suddenly become much more inhospitable for construction workers and food-service workers. There is a middle ground, however. With its tourism-centric economy, Las Vegas is more affordable for people working in food service. Still, food-service workers are left with only $500 at the end of the year.

Looking at the metros where people are left with the lowest amount of money, one city stands out: McAllen, Texas, is the worst choice for people working in six different fields measured by RentCafe. Workers in each field are left with little money after paying for basic expenses.

Hartford, Conn. is the best place for most professionals

High atop the list of the10 best metro areas for professionals is Hartford, Conn.: Though the city might be drowning in debt, it’s the best area to live for 12 out of 21 professions. People in these fields are, on average, left with more than $11,000 a year:  Business & Financial Operations, Computer & Mathematical, Life, Physical & Social Science, Community & Social Services, Education, Training & Library, Arts, Design, Entertainment, Sports & Media, Protective Service, Office & Administrative Support, Installation, Maintenance, & Repair and Production.

We wanted to find out which are the best and worst metros to live in according to each profession and turned to the Bureau of Labor Statistics for more information. From the average net income per professional field we substracted the average cost of living per metro to calculate the average amount of money left each year. It’s important to point out that for the cost of living we used MIT data which includes the minimum cost of food, health insurance, housing, transportation and other living expenses, plus income taxes.

Meanwhile, in Honolulu, the area where basic goods are among the most expensive in the country thanks to the fact that everything must be imported, personal care and food-service professionals are, on average, unable to afford their basic living expenses, thanks to low salaries and a high cost of living.

What metros have the narrowest and widest gender pay gaps?

According to Census data, on a national scale, women earn a median amount of $41,554 annually while men earn $51,640. According to RentCafe’s calculations, the metro area where women earn the highest percentage of their male peers’ earnings is Las Vegas-Henderson, Paradise, Nev. – where women earn 83.9% of what men earn, on average.

What’s the region with the highest gender pay gap? It happens to be Provo-Orem, Utah., where women earn just 44% of what men do.

 

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