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Via Global Macro Monitor…

Sorry to be such a downer, folks.

We have to stress test the macro scenarios versus current market conditions by looking at worst case events, then calculating expected values based on the most likely probabilities. Especially after such a huge run in stocks and with the “buy the dippers” still pounding the table.

Still Expensive

If stocks were in the tank and you could not give them away, we would be looking for green shoots to justify upping investment positions.   That is a long way off, in our opinion. Trading decisions are a different story, however.

Just take a look at the monthly S&P chart.  It looks like we are in a speed wobble in a topping and overbought market which could easily flip us over the handlebars.

China Will Target The Stock Market

In addition to the nuclear option of using its portfolio of U.S. Treasury securities to retaliate against trade tariffs, we believe the Chinese government could target the U.S. stock market.

We wrote last week how the U.S. is in a weaker negotiating position as the result of increased market volatility.

Here is the Washington Post quoting the China Daily, the government newspaper.

“China’s response should follow the principle of a precision strike,” Mei Xinyu, a researcher at a Commerce Ministry think tank wrote in an opinion piece for China Daily. “China should first take measures to deal a blow to the industries in U.S. states that helped Trump win the 2016 presidential election and those states whose political leaders are still backing him in this year’s midterm election.”

But, Mei also recommended selling U.S. Treasury bonds and undermining the U.S. stock market to make Trump “feel the pain.”  – Washington Post

Feel the pain, indeed.

Target Apple

What more efficient way to take the U.S stock market down than to hit its largest stock by threatening market access to the Chinese consumer?   Apple’s market cap is over $800 billion, the world’s largest, and such a scenario would certainly take the overall market down.

The following chart illustrates Apple derives around $50 billion of its annual revenues from greater China, which is about 20-25 percent of its total revenues.

Furthermore, Apple assembles most of its iPhones and gadgets in China.  A disruption to Apple’s supply chain would further disrupt the stock.

U.S. iPhone Imports Distort Trade Imbalance With China 

We have not heard much about it during the recent uptick in trade rhetoric, but U.S. consumption of iPhones distorts the China-U.S. Trade imbalance.  China primarily assembles the iPhone, which accounts for only about 3-6 percent of its value added, yet the full value of iPhones are counted in the bilateral trade numbers.

Take a look at the iPhone X. IHS Markit estimates its components cost a total of $370.25. Of that, $110 goes to Samsung Electronics in South Korea for supplying displays. Another $44.45 goes to Japan’s Toshiba Corp and South Korea’s SK Hynix for memory chips.

Other suppliers from Taiwan, the US and Europe also take their portion, while assembly, done by contract manufacturers in China like Foxconn, represents only an estimated three to six percent of the manufacturing cost.

Current trade statistics, however, count most of the manufacturing cost in China’s export numbers, which has prompted global bodies like the World Trade Organization to consider alternative calculations that include where value is added.

…Apple shipped 61 million iPhones to the US last year, data from researchers Counterpoint and IHS Markit show, spending $258 on average to make each iPhone 7 and 7 Plus.

Using a rough calculation, that implies the iPhone 7 series added $15.7bn to the US trade deficit with China last year, about 4.4 percent of the total. That’s also about 22 percent of the $70bn in mobile phones and household goods the US imported from China.  –  Al Jazeera

Here is a good illustration and further explanation of calculating trade based on value added rather on a gross basis from the OECD,

It is important to keep the above in perspective.  But, hey, it’s politics.  Throw out all rationality, no?

Upshot

Stocks are expensive and though cyclical factors remain relatively positive – earnings and growth — we are looking below the surface at potential structural shifts in the macro environment.    Movements of the tectonic plates, such as shifts in long-term capital flows, valuation, and sentiment;  the erosion of the  liberal world economic order; secular political trends, and the long-term trajectory of interest rates, among others.

We give our worst case scenario in the tariff dispute about a 33 percent probability and believe the market has only priced in a 5 percent probability.   There is much more going on than just the trade rift between the U.S and China, including growing tensions over Taiwan,  the East China Seas,  North Korea, and the appointment of John Bolton as the new National Security Adviser.   Any or all of these could move south and feedback into trade negotiations blowing up market volatility.

Bigger picture, and more important, is the Thucydides Trap.

Thucydides’s Trap teaches us that on the historical record, war is more likely than not. From Trump’s campaign claims that China is “ripping us off” to recent announcements about his “great chemistry” with Xi, he has accelerated the harrowing roller coaster of U.S.-China relations. If the president and his national security team hope to avoid catastrophic war with China while protecting and advancing American national interests, they must closely study the lessons of the Cold War.  – Graham Allison

Stay tuned.

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With its long-anticipated petroyuan contract only hours old, senior government officials in Beijing are reprotedly working with the US to try and reach an agreement that would stave off a tit-for-tat trade war between the world’s two largest economies, according to the Financial Times and Wall Street Journal.

Treasury Secretary Steve Mnuchin along with trade representative Robert Lighthizer on one side,  and Vice Premier Liu He, effectively China’s economy czar and President Xi Jinping’ “real second-in-command” on the other, have been negotiating behind the scenes, according to the FT.

And although nothing has been finalized, Liu has assured Mnuchin that China would cave on several US demands, including allowing foreign investment in Chinese securities firms and offering to buy more semiconductors from US semiconductor firms, the FT reported. There’s also been talks that China could loosen restrictions on foreign investment in manufacturing, telecom, medical and education.

Mnuchin, who is reportedly considering whether he should plan a trip to Beijing to expedite the negotiations, said Sunday after the US and South Korea reached a trade deal to exempt the South from US aluminum and steel tariffs that he was optimistic the US might reach a similar agreement with China. The Treasury secretary has reportedly handed Liu a list of US priorities, including loosening restrictions on US auto imports.

Late last week, President Trump announced that he planned to impose $60 billion in tariffs on Chinese industrial exports to reduce China’s nearly $400 million merchandise trade surplus with the US. Beijing subsequently announced it would retaliate with sanctions on a just $3 billion of US imports, with threats of more sanctions to come.

Chinese officials had initially been working to allow foreign majority control of securities companies by June 30, but Liu is now aiming for formal State Council approval as early as May. The liberalization would raise the 49% foreign ownership ceiling for securities firms to 51%. It was first outlined by China’s finance ministry in November. At the time, Zhu Guangyao, vice-finance minister, also said the cap would be lifted within three years.

Furthermore, more moves to ease foreign ownership limits in China’s commercial banking and insurance sectors could be revealed next week when President Xi addresses the Boao Forum for Asia, an annual meeting modeled on the World Economic Forum and hosted by the Chinese government on the southern island province of Hainan.

It’s also unclear how Washington might react to Beijing’s proposal that Chinese firms buy more semiconductors from the US because that would disadvantage South Korea and Taiwan, two of the US’s most important allies in the region.

“The US would basically be stealing from their surpluses with China,” one person said.

In an interview with Chinese media published Monday, Liu emphasized that there was no point in a trade war between the US and China, and that the two sides would come to a reasonable solution. Liu added that China would cease its practice of forcing foreign firms to turn over valuable intellectual property by partnering with China firms in “joint ventures.”

US plans to impose more tariffs on Chinese goods have rattled the global community. As WSJ points out, farm-belt Trump voters, whose exports face possible retaliatory tariffs by China, decried the tariff plans, and in foreign capitals from Canberra to Brussels, US allies nervously weighed diplomatic options as tensions mounted between Washington and Beijing.

But China is hoping it’s launch of the petroyuan contracts will help speed up the internationalization process – and the ascendance of the yuan as a reserve currency. For now at least, it needs to appease the US.

The MSCI World Equity Index turned positive on the news of a trade war truce, and as reported moments ago, the S&P has soared over 1% to start the holiday-shortened week.

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It seems that “Black Monday” has been averted, with global risk sentiment making a full reversal to start the week, and the precipitous selloff from Thursday and (Black) Friday turning into a furious rally on Monday, starting in Asian markets and proceeding to Europe and US stock futures, which are up 1.4%, and back over the key 2,610 support level.

In other words, once again the 200DMA at 2,585 has proven a key support for the S&P500.

“It was the week when one bad thing led to another, it was a perfect storm,” said Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management. “You took the starch out of the FANGs, you saw banks, industrials, discretionary companies reacting to negative news. What investors are not pricing in is a potential impact on companies’ profit margins.”

On Monday, the perfect storm had faded, although it remained to be seen if this was just the eye of the hurricane.

What prompted the surge: the most commonly cited reason is that jitters over brewing trade tensions between the U.S. and China have again eased, after Treasury Secretary Steven Mnuchin told Fox News that he’s “cautiously hopeful” the U.S. can reach a trade  deal with China that will avert the need for Trump to impose up to $60BN in tariffs on China – of course, what else would he say?

There was also renewed optimism that the United States and China are set to begin negotiations on trade, following reports in both the FT and WSJ, further easing fears about a trade war between the world’s two largest economies. MSCI’s world equity index turned positive on the day, having earlier hit its lowest level since February 9, after a Wall Street Journal report that Treasury Secretary Mnuchin was considering a visit to Beijing to begin negotiations.

“I don’t think that long-term the tariffs will continue to be enforced,” Scot Lance, managing director at California-based Titus Wealth Management, said by phone. “They’ll pull them off the table at some point, I just don’t know if that will be a week, a month, a quarter? Could it last a whole year? I don’t necessarily think it’ll last for a long time.”

All of the uncertainty has kept the once-reliable dip buyers on the sidelines this time. Consider: as Bloomberg notes, the S&P 500 has closed lower than the midpoint of its daily range for 10 straight days, the longest stretch since at least 1982. That suggests traders are finding reasons to dump shares in the afternoon rather than buy dips.

That sentiment may have reversed this morning, however: “It appears that the market is not expecting a full-blown trade war, and a currency war for competitive advantage is not a likely option at this moment,” said Mizuho’s Ken Cheung, who will clearly retract and say the opposite should futures reverse their gain and slump. “Risk sentiment, as being reflected by Asian equities, and further responses from the Chinese authorities to the trade war will drive the market.”

Also overnight, as we reported previously, the U.S. and South Korea reached an agreement on revising their trade deal, with South Korea avoiding steel tariff, which was also to be expected, as the target of Trump’s trade war – it has become especially obvious by now – is not Europe, and not all of Asia, but simply China. As a result, S&P futures are sharply higher in early trade, and the S&P trying to undo all of its 2.1% losses from Friday, although it may have a harder time to offset last week’s 6% loss, which was the biggest weekly drop since early 2016.

European shares headed for their first gain in four days as investors assess the latest developments in a trade conflict between the world’s two largest economies.  European bourses are higher across the board (Eurostoxx +0.4%) with the exception of the FTSE MIB (-0.3%), shrugging off Friday’s negative sentiment. Sectors are making broad gains, healthcare is outperforming after a positive drug update from Roche (+1.6%) and energy is underpinned despite slightly softer oil prices.

Asian markets also stabilized, with the ASX 200 down -0.5% led lower by its largest-weighted financials sector after the harsher losses seen in its US counterparts, while the Nikkei 225 fell to a near 6-month low, before staging a late rally back into positive territory, closing 0.6% higher after dropping -1.3%. Elsewhere, Shanghai the Shanghai Composite dropped -0.6%, weighed by trade tensions and rising Chinese money market rates (HKD 12-month HIBOR at 9-year high), while the KOSPI (+0.8%) bucked the trend after news that US and South Korea agreed in principal to a revised FTA and with South Korea to be exempted from US tariffs.

In macro and FX, the risk on sentiment sent the yen sliding from a 16-month high as calm returned, if only for the time being, to world markets amid signs U.S.-China trade frictions may be easing.  The USD/JPY rose 0.3% to 105.10 after earlier falling to 104.56, lowest since November 2016. 

“Risk aversion seems to have come a full circle with the first reaction to U.S.-China trade tensions last week, and it may be difficult to buy up the yen further without additional negative factors,” said Koji Fukaya, CEO at FPG Securities.

On the other side, Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo said that “markets are now in the phase of waiting for Nikkei stock average to fall below 20,000 and USD/JPY to drop towards 100, so it’s meaningless to give specific projections before those levels.”

Meanwhile, bond markets this week will see another deluge of issuance, and bond traders will be tested this week as the Treasury will auction about $294 billion of bills and notes, the largest slate of supply ever. China last week did not rule out scaling back its purchases of U.S. debt as part of its response to proposed tariffs. The 10-year yield held near 2.84%.

Concerns over the formation of a new anti-establishment government in Italy weighed on Southern European debt on Monday, though this was counterbalanced to an extent by a ratings upgrade for Spain late on Friday. Italian bonds underperformed, with 10-year yields rising as much as 4.5 basis points in early trade, on further signs the anti-establishment 5-Star Movement and the anti-migrant League might explore an alliance to form a government. But the euro was still on a positive trajectory, hitting a 10-day high of $1.2393 at one stage.

In commodities, international Brent crude futures opened above $70 per barrel for the first time since January but the gains could not be sustained as the ongoing trade disputes weighed on global markets. Spot gold had hit five-week highs early but turned negative as the session wore on and was marginally lower on the day at $1,345.

In M&A, Smurfit Kappa rejected International Paper’s revised takeover bid, while the U.K.’s JD Sports Fashion agreed to buy Finish Line in a $558 million deal. Red Hat and Paychex are among companies reporting earnings today.

Bulletin Headline Summary from RanSquawk

• European bourses shrug off trade concerns with China looking to step up efforts in trade negotiations with the US
• A softer USD has seen EUR/USD and GBP/USD reclaim 1.2400 and 1.4200 to the upside respectively
• Looking ahead, highlights include ECB’s Weidmann, Fed’s Dudley and Mester

Market Snapshot

• S&P 500 futures up 1.35% to 2,632.50
• MSCI Asia Pac up 0.4% to 172.60
• MSCI Asia Pac ex Japan up 0.5% to 567.49
• Nikkei up 0.7% to 20,766.10
• Topix up 0.4% to 1,671.32
• Hang Seng Index up 0.8% to 30,548.77
• Shanghai Composite down 0.6% to 3,133.72
• Sensex up 1% to 32,924.47
• Australia S&P/ASX 200 down 0.5% to 5,790.47
• Kospi up 0.8% to 2,437.08
• STOXX Europe 600 up 0.4% to 367.17
• German 10Y yield rose 0.9 bps to 0.536%
• Euro up 0.3% to $1.2388
• Italian 10Y yield fell 0.9 bps to 1.622%
• Spanish 10Y yield fell 1.0 bps to 1.259%
• Brent Futures down 0.2% to $70.30/bbl
• Gold spot little changed at $1,347.94
• U.S. Dollar Index down 0.2% to 89.28

Top Overnight News

• China and the U.S. are said to quietly have started negotiating to improve U.S. access to Chinese markets, the WSJ reported, with talks being led by Chinese President Xi Jinping’s top economic aide, Liu He, U.S. Treasury Secretary Steven Mnuchin, and U.S. trade representative Robert Lighthizer
• Mnuchin says he is ‘hopeful’ that a truce can be reached with China on trade; WSJ reports that China and U.S. quietly started negotiating to improve U.S. access to Chinese markets, according to sources
• China is conducting research on second and third lists of U.S. imports subject to the tariffs, China Daily reports; likely to cover airplanes, computer chips and tourism industry
• SF Fed’s Williams is the leading candidate to become next president of the Federal Reserve Bank of New York, WSJ reports, citing sources
• Italy’s Northern League leader Salvini says that he’s ready to start govt. talks with everyone including Five Star
• Trump is preparing to expel dozens of Russian diplomats from the U.S. in response to the nerve-agent poisoning of a former Russian spy in the U.K; likely to be announced today according to people familiar
• Guo Shuqing, a high-profile banking regulator and ally of Jinping in cleaning up the financial system, is said to have been appointed as Communist Party secretary of the People’s Bank of China
• China launched its first ever crude-futures contract as the world’s biggest oil buyer seeks to wield greater power over pricing and challenge benchmarks in the U.S. and Europe
• New Zealand’s central bank agreed to target maximum employment alongside price stability in anticipation of a dual mandate being enshrined in law later this year
• League leader Matteo Salvini said he would start talks with Luigi Di Maio of the anti-establishment Five Star Movement and other party leaders on forming Italy’s next government, with pension reform, tax cuts and curbs on immigration as his priorities
• U.S. President Donald Trump is poised to take his most aggressive actions yet against Russia on Monday, when he’s likely to announce the expulsion of dozens of diplomats in response to the nerve-gas attack on a former Russian spy living in the U.K.

Asian stocks began the week mostly negative as trade concerns remained at the forefront of market focus and following last week’s losses on Wall St where stocks posted their worst weekly performance in over 2 years and the DJIA slipped into correction territory. ASX 200 (-0.5%) was negative with the index led lower by its largest-weighted financials sector after the harsher losses seen in its US counterparts, while Nikkei 225 (+0.6%) fell to a near 6-month low, before staging a late rally back into positive territory. Elsewhere, Shanghai Comp. (-0.6%) was weighed by trade tensions and rising Chinese money market rates (HKD 12-month HIBOR at 9-year high), while KOSPI (+0.8%) bucked the trend after news that US and South Korea agreed in principal to a revised FTA and with South Korea to be exempted from US tariffs. Finally, 10yr JGBs were subdued as prices failed to benefit from a risk-averse tone with demand dampened amid a lack of Rinban announcement by the BoJ, while a tier-1 US firm was said to be
cautious on 2yr JGBs amid expectations for an increase in auction supply. 

Top Asian News

• The Builder of One of the World’s Largest Airports Revives IPO
• TPG Said to Near Deal for $1.2 Billion Indian Hospital Chain
• In Xi’s China Even the Central Bank Has a Party Boss at the Helm
• Thailand’s Red Bull Rival Slumps From Top to Bottom of World

European equities are higher across the board (Eurostoxx +0.3%) with the exception of the FTSE MIB (-0.3%), shrugging off the negative sentiment on Wall Street and Asia dictated by looming trade disputes between China and the US. Sectors are making broad gains, healthcare is outperforming after a positive drug update from Roche (+1.6%) and energy is underpinned despite slightly softer oil prices. In terms of individual movers, Fresnillo (+5.5%) is the outperformer in the FTSE100 after an upgrade from Goldman Sachs whereas Smurfit Kappa (-4.3%) is the laggard following its refusal of the takeover offer from International Paper.

Top European News

• Catalan Separatists Face Reality Check After Puigdemont Detained
• Givaudan Taps Organic Food Trend With $1.6 Billion Naturex Deal
• Murray & Roberts Jumps by Record on Unsolicited Takeover Bid

In FX, Nzd/Usd nudging back up towards the 0.7300 level on a surprise NZ trade surplus and broader uptick in risk sentiment overnight as global trade war fears wane somewhat, with market contacts also reporting some decent buy orders in Nzd/Jpy as Usd/Jpy bounces off new recent lows not far off 104.50 to just over 105.00. Note, however, the headline pair has been capped amidst hefty option expiry interest at the big figure today and on Tuesday (around 2.5 bn in total). Aud/Usd is back above 0.7700 and approaching 0.7750 despite a couple of short trades of the week via crosses (vs Jpy and Cad), while Cable has breached the 1.4200 level on a mixture of hawkish BoE impulses and Brexit transition deal optimism. On that note, contacts also note some stopsales in Eur/Gbp from circa 0.8730 to 0.8723, which is the low of the range up to 0.8743. Nevertheless, Eur/Usd remains firm and has popped above 1.2400 on extended gains from trend-line support (1.2349) and its 30 DMA (1.2337). Usd/Cad looking at bids near and under 1.2850 amidst a broadly soft Greenback as the DXY remains sub-89.500 and trade/protectionism concerns continue to weigh.

In commodities, oil futures are modestly lower, albeit remaining in close proximity to recent highs, as price action is centred around China with WTI crude futures failing to hold above USD 66/bbl with demand sapped as the debut of  CNY-denominated oil futures contracts stole the limelight and rose 6% in early trade. In the metals bloc, gold is range-bound at around 5-week highs as a subdued greenback and risk-averse tone kept the safe-haven afloat, while copper weakened alongside losses in Chinese metals prices in which Shanghai Rebar dropped to its lowest since July.

 

US Event Calendar

• 8:30am: Chicago Fed Nat Activity Index, est. 0.2, prior 0.1
• 10:30am: Dallas Fed Manf. Activity, est. 33.5, prior 37.2
• 12:30pm: Fed’s Dudley Speaks on the Future of Financial Regulation
• 4:30pm: Fed’s Mester Speaks on Monetary Policy
• 7:10pm: Fed’s Quarles to Speak in Atlanta

DB’s Jim Reid concludes the overnight wrap

Well that was a week that most won’t forget in a hurry. For anyone that was lucky enough to escape to a desert island last week, switched your phone off and only returned this morning then this is a 125-word summary of what you’ve missed:

The seeds for the opening salvo of a trade war appear to have now been sown with President Trump and China trading blows, and it feels like it’s only the start with China signaling a willingness to go toe-to-toe. This transpired in a week in which the Fed showed that it remained committed to staying on a gradual rate hike course, concerns that global growth could be starting to roll over following the latest flash PMIs, the centre of the bull market – the tech sector – roiled by data leakage accusations at the hands of Facebook, and finally the White House revolving door continuing with the appointment of John Bolton – a man who had strongly supported an invasion of Iraq – as the national security advisor.

That perfect storm of events resulted in some of the worst weeks for risk assets in years. Using the S&P 500 as an example, the index fell -5.95% last week, the biggest weekly decline since January 2016. Every sector closed lower so there was nowhere to hide although tech fell a fairly staggering -7.88%. The broader index is now easily in the red again for the year (-3.19%) and it also means that we have seen three separate 5% dips for the index in the last two months. What perhaps stood out the most about the price action last week was that any buy the dip mentality appeared to just disappear. In fact, that has been the case for the last two weeks with the S&P closing lower than the midpoint of its intraday range every single day. That’s the longest streak since at least 1982.

Across other markets, the Nasdaq 100 – which bore the brunt of the Facebook news – fell -7.29% and the most since August 2015. The export heavy Nikkei and DAX fell -4.88% and -4.06% respectively. The Shanghai Comp was down -3.58%. Indeed, it’s now difficult to find a market which is positive YTD, although the FTSE MIB is one which can still just claim that. Meanwhile, it might not have been the volatility spike of early February but the VIX still rose over  9pts last week and closed just below 25 on Friday which is the highest since February 13th. Remember that the VIX average through the whole of 2017 was about 11. Elsewhere, credit certainly wasn’t immune. Moves for CDS indices are complicated by the rolls however CDX IG was still 15bps wider last week and is now at the widest since December 2016, while iTraxx Main and Crossover were 12bps and 41bps wider last week, respectively. Cash European and US  high yield spreads were 21bps and 14bps wider.

Given all the above, you might have thought that Treasury yields would be markedly lower. However, 10y yields were just 3bps lower last week having closed at 2.814%, and in fact they have closed with a 2.8% handle for 21 straight days which is fairly remarkable all things considered. Bunds were ‘only’ 4bps lower last week however it’s worth noting that they are now 24bps off their YTD yield highs.

Unsurprisingly, the weekend news flow is filled with reaction to last week’s trade war developments. China’s Vice Premier Liu He, following a phone call with US Treasury Secretary Steven Mnuchin, said that “China is prepared and has the ability to defend its national interests”. China has also suggested that it may issue an official complaint to the WTO about Trump’s steel and aluminum tariffs, with China not exempt from the levies. Remember that Trump has  already threatened to remove the US from the WTO. Interestingly, Mnuchin has also been reported as saying that he is hopeful that the US and China can come to an agreement that will “forestall the need to impose the tariff’s that Trump has ordered on at least $50bn of goods” according to Bloomberg. The article quotes an interview Mnuchin had with Fox News, with the Treasury Secretary also quoted as saying that the US will proceed with the tariffs “unless we have an acceptable agreement that the President signs off on”. So perhaps some signs of a softening stance.

This morning, the US and South Korea have reached an agreement on the principles of amending their bilateral trade deal, which includes the US permanently exempting South Korea from the steel tariffs. In return, South Korea will set quotas for steel exports to the US and will be more flexible on imposing safety / environment regulations on US made cars. In Asia, the Kospi is up +0.34% while other bourses have pared back steeper losses with the Nikkei (-0.33%), Hang Seng (-0.57%), ASX 200 (-0.45%) and Shanghai Comp. (-1.64%) all down as we type. There’s better news for US equity futures with the S&P 500 currently up +0.55%, while Treasury yields are also up close to 2bps.

There’s also been some non-tariff talk over the weekend with the newly appointed PBOC Governor Yi noting that China has three major tasks for the financial system – “i) implement prudent monetary policy, ii) push forward financial reforms and opening up and iii) win the battle against financial risks”. He added that the “opening up of the financial sector must be accompanied by the development of financial regulations” and it will proceed in coordination with reforms in China’s FX rate mechanism and capital account convertibility. Elsewhere, the WSJ has reported John Williams is the front runner to succeed William Dudley as the Head of the NY Fed.

So, while it’s hard to see anything other than trade war developments really dominating markets this week, it’s worth noting that we do also have some inflation data due out in the holiday-shortened four days ahead. Specifically, Thursday’s PCE report in the US is scheduled. In terms of what to expect, the consensus is for a +0.2% mom core and deflator reading for February. The former would imply a jump of one-tenth in the annual rate to +1.6% yoy. Our economists also expect a +0.2% core print and they note that the report should take on a little more focus given the recent upgrade in the Fed’s forecast to above 2% core PCE for 2019. As a reminder too, the March data is when we see the wireless services print annualized which should add about 20bps and 10bps to the annual core CPI and PCE prints, respectively.

Away from that we also have some flash March CPI data due in Europe this week with Germany on Thursday and France and Italy both reporting on Friday. Other than that, there is a decent flow of Fedspeak this week which if anything could help shape where FOMC participants’ median dots are now. Dudley (neutral) and Mester (hawk) kick things off today, followed by Quarles (neutral) and Bostic (neutral) on Tuesday, Bostic again on Wednesday and then Harker (dove) on Thursday. So expect the market to be looking out for where their rate expectations lie.

Quickly recapping Friday, in terms of central bankers speak, the Fed’s Bostic and Kaplan both noted their base case was three rate hikes for this year (i.e. 2 more), but are “open minded and we’ll see how the year unfolds”. Elsewhere, the Fed’s Kashkari noted he supports the recent rate hike because it “represented continuity” at Powell’s first meeting, but added that the data does not support a rate hike at this point. In the UK, BOE’s Vlieghe noted “the current central outlook is….consistent with one or two 25bp rate increase per year over the forecast period”.

Datawise, in the US, the February core durable goods orders (+1.2% mom vs. +0.5% expected) and core capital goods orders (+1.8% mom vs. +0.9% expected) were both above consensus. The February new home sales print fell -0.6% mom to 618k (vs. 620k expected) while the final reading for France’s 4Q wages growth was slightly higher at +0.2% qoq (vs. +0.1% expected).

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Submitted by Robbie Travers,

Would you want your government to decide who can and cannot enter your country based on how popular their political views?

Would you trust any individual to police on your behalf what speakers are “conducive to the public good?”

The UK Home Office feels it is absolutely the organisation to fulfill this role. It also apparently feels there are certain opinions that you are far better never hearing.

Like those of Lauren Southern, who on the 12th of March was “banned for life” from entering the United Kingdom, after being detained under Schedule 7 of the Terrorism Act (2000).

Southern was told that “by her own admission” she had distributed “racist material.” It is important to note that actually, Southern, however, did not at all admit to the material being distributed being “racist” in nature, she simply admitted to distributing it.

But she, of course, was forbidden to dispute whether her material was truly racist, the mere suggestion that Southern was racist proved ample enough for her right to speak freely being expunged.

What material led to Southern being banned from entering the United Kingdom? A UK Home Office official explained that Southern was “refused [entry] on policy grounds that their presence in the UK was not conducive to the public good.” It leaves anyone who believes in free discourse, without the trappings of state oversight with the question: Should the state really be the arbiter of what is “conducive” to the public good? No, is the answer most sensible individuals will conclude.

You may like the idea of a state you agree with having this power, but what happens when it becomes a state you disagree with?

This decision is far better left to the people of the United Kingdom and any other nation.

But this isn’t just censorship, this is using the potent force of counter-terrorism legislation to silence. An examination is needed. We must inspect the alleged possible ways in which Miss Southern could potentially have posed a terrorist threat and breached the Terrorism Act of (2000).

Southern was served a notice that she was detained under counter-terrorism laws, specifically under Schedule 7 of the Terrorism Act (2000). A reminder: when detained under this serious counter-terrorism tool, it is a serious offence to remain silent.  Does this really seem like a fitting use of counter-terrorism legislation when we have IS fighters returning in their 100s to the UK? Only 54 of said fighters have even been prosecuted.

The alleged breach of Schedule 7 is not made perfectly clear in the dubious material handed to Southern, although the official Home Office notice claims that “distribution of racist material” in Luton was enough to warrant a refusal of entry.

The material in question appears to be that Southern in February of this year distributed material emblazoned with the slogan “Allah is a Gay God.”

Oh dear. Quelle horreur! How will the omnipotent Allah recover from such a “sick burn.” It appears the state is now censoring individuals who dared have the audacity to offend Islam by saying something mischievous!

OK Magazine will be asking: How will Islam cope? Oprah may give Allah a tearful interview. But on a more serious note: should the UK Border Force really be trying to enforce Islamic blasphemy laws? We have enough regressive Islamists constantly asserting to suggest who we can and cannot criticise, and intimidating those who do dare to criticise Islam a little more forcefully. Do we really need our state joining in?

Voltaire once noted: “To learn who rules over you, simply find out who you are not allowed to criticize.” Islamic theology, it seems, is off limits to rational thinkers.

Regardless, consider what is so offensive about calling Allah gay? Unless, Islamic individuals would have a problem with Allah being homosexual?Could that be down to regressive opinions and intolerance of homosexuality amongst Islamic individuals?

True, perhaps Southern’s leaflet is not the sharpest or most intelligent criticism of Islam, and it certainly won’t mortally wound Allah, even if his acolytes seem to think so, but should the UK Government now in the role of policing criticisms of Islam? This is the next logical step. The UK Government now seems to be the theological arbiter of what is acceptable when criticising Allah.

Interestingly, this doesn’t seem to have been an offence that has previously seen arrests, or even action taken. Or even been illegal. The Council of Ex-Muslims of Great Britain at the 2017 London Pride Parade held placards inscribed with the apparently deeply damaging slogan “Allah is Gay.” Despite outrage from the East London mosque who felt this was Islamophobic, no police action was taken. So how can it be a terrorist offence for an individual to distribute material with this opinion when others can march with it on placards? The implementation of the law here, at best, seems inconsistent.

It seems like all individuals have free speech, but certain individuals have more free speech than others.

Surely, calling Allah a “gay god,” a theological and not racial criticism, is not enough to merit detention of Southern alone? So, an important question is what other parts of the Terrorism Act (2000) would merit the detention of and refusal of entry for Southern?

Section 11 notes that “A person commits an offence if he belongs or professes to belong to a proscribed organisation.” Lauren Southern obviously does not belong to any proscribed terrorist organisation, so this ground for arrest can be swiftly ruled out. Lauren Southern, if anything, has repeatedly criticised terrorist organisations, and fought to defend those who have been censored for doing so and brought attention to actions of these organisations and human rights abuses. You may disagree with her politics and find her even personally repugnant, but she has not engaged in support for international or national terrorism.

Section 12 of the Terrorism Act (2000) notes: “A person commits an offence if— (a) he invites support for a proscribed organisation,” which clearly does not apply to Southern. She does not support any organisation that could be considered terrorist in nature, the opposite would seem to be true. This charge can also be dismissed out of hand.

Section 12 also states: “(2) A person commits an offence if he arranges, manages or assists in arranging or managing a meeting which he knows is (a) to support a proscribed organisation, (b) to further the activities of a proscribed organisation, or (c)to be addressed by a person who belongs or professes to belong to a proscribed organisation.”

Again, there seems to be no evidence that Lauren Southern supports or has supported any organisation on the UK’s proscribed list of organisations. There is additionally no evidence that Lauren Southern was planned to meet any terrorist organisation.

Regardless, alarm bells of hypocrisy should be overwhelming, if not certainly ringing, dear reader.

What about the Al-Quds rally in London, where thousands rallied, flying flags of a terrorist organisation and making spurious allegations about the Jews? This author isn’t recommending these people be prosecuted, but recommends that if one can stand with terrorist material promoting anti-Semitic conspiracies in British streets with police protection, someone who called Allah “Gay” in a leaflet should be able to enter the country.

Furthermore, returning to Section 13 of the Terrorism Act (2000), which declares: “A person in a public place commits an offence if he (a)wears an item of clothing, or (b)wears, carries or displays an article, in such a way or in such circumstances as to arouse reasonable suspicion that he is a member or supporter of a proscribed organisation,” we see more of this blatant inconsistency. Again, Southern has not been charged for her clothing or for wearing the insignia of any terrorist organisation? Even if one argues that her leaflets were “offensive,” they were not in support of terrorism or emblazoned with such insignia.

Sections 15 and 18 of the Terrorism Act (2000) pertain to the other possible offences, that are “fund-raising” and “money laundering,” of which it is perfectly clear did not justify Southern’s Schedule 7 detention, and Southern is not guilty of.

What appears to be the case is that Southern was arrested, detained and refused entrance to the United Kingdom because her political opinions were deemed to be a little too inappropriate and obviously exceedingly dangerous… for British people to hear.

Silencing the opposition isn’t a sign of strength, and it is a sign of weakness and ultimately totalitarianism. If the Home Office’s ideas of stability can stand the test of time and fierce logical criticisms, then they can stand a moderately famous blonde youtuber and her critiques.

Sadly, the Southern incident is one of many, in which individuals who have been deemed to have thought “wrongly” have been detained, and their ability to enter or leave the UK restricted. Activists Brittany Pettibone and Austrian politician Martin Sellner have also been detained for a period of 3 days and then deported from the United Kingdom.

Pettibone’s offence was arranging to interview Tommy Robinson, former leader of the English Defence League. Her crime was going to be interviewing a man who holds opinions that are unfashionable. It was not even her own opinions that saw Pettibone deported, but her daring to possibly inquire about, challenge and probe those of another person. Regardless of what you think of Robinson, or Pettibone, should another individual be held accountable for asking him about his opinions? This censorship would fit well in the world of Orwell’s 1984.

Selner’s alleged crime that warrants removal from the UK, according to a Home Office spokesperson is to belong to Generation Identity, designated “a far-right group” that “intend[s] to incite racial hatred.”

Generation Identity, which Selner allegedly belongs to, is not a proscribed organisation under existing counter-terrorism laws, but it is apparently too dangerous for you to hear from. They do not seem to advocate violence or promote terrorism, even if you have disagreement with their political goals.

Generation Identity seem to wish to defeat the ideology behind terrorism, however, not support it, they have publicly stated that “London Mayor, Sadiq Khan, believes that the threat of terror attacks are “part and parcel of living in a big city”. On the contrary, we think that the source of islamisation lies in mass immigration, which must be stopped.”

Believing that immigration should be restricted, a legitimate policy opinion, is now enough to see you rejected from entering the United Kingdom? This is a legitimate policy concern, which polling appears to vindicate, as it suggests that 7 in 10 Brits want reductions in immigration. But apparently wanting to promote this, in a peaceful manner through demonstrations including displaying non-violent banners, is to be deemed enough to see you rejected entry from the UK.

Sadly, it seems that frequently individuals in the UK face being arrested and detained for having the “wrong opinions.”

Take the case of Kellie-Jay Keen-Minshull, who has been arrested and questioned for daring to disagree with allowing young transgender individuals to transition. Keen-Minshull was “told she will be arrested if she tries to leave the country.”

You may not agree with a single one of these individuals or their politics, and that is well within your right to do so. You do not have to like or laud them, or view them as particularly helpful, but what you should support is the individual citizen’s ability to decide whether they agree with you. And their freedom to make a case without state intervention.

Orwell warned us about the dangers of policing what is and isn’t acceptable. In effectively censoring these individuals, the UK Home Office has decided that you cannot be trusted to make up your own opinion, and that it should decide for you. And that should be enough to terrify any individual who thinks all in our society must have the fundamental right to unfettered discourse.

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If you’ve studied the history of markets, you know that sentiment can turn on a dime.

Whether it is an unexpected wake-up call like the collapse of Lehman Brothers, or simply the popping of a bubble that’s blown too big, the tides can shift in a matter of hours or days.

As Visual Capitalist’s Jeff Desjaridns notes, no one knows this better than the world’s most elite investors – and that’s why billionaires like Warren Buffett, Ray Dalio, Bill Gross, Paul Tudor Jones II, and Carl Icahn take the necessary precautions available to protect themselves from these big and unexpected market swings.

5 RISKS THAT KEEP BILLIONAIRES UP AT NIGHT

Today’s infographic comes to us from Sprott Physical Bullion Trusts and it highlights some of the potential market risks that could move markets, as well as how these elite investors are hedging to protect their fortunes.

Courtesy of: Visual Capitalist

While these are all market risks that billionaires are concerned about, it’s worth mentioning that these kinds of events are almost impossible to predict or forecast.

Despite the unlikelihood of them occurring, they all have the potential to impact markets – and that’s why elite investors are always active in hedging their investments.

A NOTE ON NET WORTH

Why are billionaires so concerned – after all, don’t they have lots of cash to protect themselves?

It’s worth noting that on a relative basis, billionaires often aren’t very liquid at all. In fact, the majority of their net worth is usually tied up in business interests or other investments, and the value of these assets fluctuate with the market.

That means a big market movement could wipe out millions or billions of dollars in the span of hours. For an extreme example of this, just look at Mark Zuckerberg, who saw his net worth plunge $6 billion in just one day in the wake of his company’s most recent privacy crisis.

THE 5 BIG MARKET RISKS

Here are the risks keeping the world’s most elite investors up at night:

1. The Return of Inflation
Have central banks mastered monetary policy- or is there a chance that inflation could come back with a vengeance? After trending down for decades, billionaire Carl Icahn says that creeping inflation could lead to higher interest rates, which he thinks would be “difficult to deal with for the market”.

2. Record High Debt
The most recent number for global debt is at $233 trillion, and about $63 trillion of that is central government debt.

Bill Gross, the “Bond King”, says that our system is dependent on leverage, and the critical values that affect this are debt levels, availability, and the cost of leverage. He said in a recent interview that “When one or more of these factors deteriorates, the probability of the model’s success and stability go down”.

3. Bond Market Worries
Last year, 84% of investors said that the corporate bond market was overvalued – and 82% said that the government bond market was overvalued.

In a recent interview, hedge fund billionaire Paul Tudor Jones II predicted a price plunge, saying that “Bonds are the most expensive they’ve ever been by virtually any metric. They’re overvalued and over-owned.”

4. Geopolitical Black Swans
Elite investors continue to worry about geopolitical surprises that could impact markets, such as a trade war with China. We looked at this broad topic in depth in our previous infographic on geopolitical black swans.

5. Overzealous Central Banks
Lastly, many world-class investors are also concerned about the unintended aftereffects of massive central bank programs in recent years. With $13 trillion in total QE pumped into global markets since 2008, investors are worried about how much room that central banks have left to maneuver in a situation where the central bank “tool kit” is needed.

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Authored by Judith Bergman via The Gatestone Institute,

The UK is accelerating its Islamization at an ever-increasing speed. The desire of the British establishment to submit to Islam appears to be overwhelming.

In a recent report, the Henry Jackson society exposed how the UK used taxpayer funds to support Islamist charities working against British society to the tune of more than six million pounds in 2017 alone. According to the report, “As the case studies in this report are illustrative rather than comprehensive, it is likely that this sum represents only the tip of the iceberg”. The report concludes, “Until more comprehensive action is taken, a network of Islamist extremists operating in the UK will continue to use charities and taxpayer money to fund the spread of divisive, illiberal and intolerant views within our communities”.

Among the charities detailed in the report, are several Islamic charities involved in dawa [outreach, proselytization], such as the Islamic Education and Research Academy (iERA), as well as several charities connected to Hamas and the Muslim Brotherhood, such as the Muslim Charities Forum (MCF) and Islamic Relief.

Deploying taxpayer money to support Islamic charities is not the only way in which the UK embraces Islamization.

St. Stephen’s Primary School in Newham, London, was recently forced to change its ban on hijabs for girls under the age of eight, even though, in Islam, girls are not obliged to cover themselves before they reach puberty.

This reversal happened after a massive coordinated backlash by Islamic organizations, such as the Muslim Council of Britain — which the UK government believes to be linked to the Muslim Brotherhood — and MEND. The campaign against the ban included a petition, signed by more than 19,000 people as well as local councilors. Ten Newham councilors protested that, “To attack an article of faith and clothing in this manner is an outrage and is simply wrong. The argument against allowing school children of whatever age, to wear a hijab actually goes against our fundamental values as a progressive, tolerant and inclusive society. We therefore call upon the school to overturn this decision immediately…” During the coordinated campaign against the hijab ban at the school, teachers were subjected to bullying and abuse, and the head teacher responsible for introducing the ban was compared to Hitler.

The school’s chair of governors, Arif Qawi, who had written in a social media post that he was trying to “limit the Islamisation process, and turn these beautiful children into modern, British citizens”, also had to resign. Miqdaad Versi, the assistant secretary general of the Muslim Council of Britain, said his organization welcomed Qawi’s resignation, because of his “appalling” statements in support of the ban. “Yet serious questions remain unanswered as to the school leadership’s attitude towards Muslims, which are potentially discriminatory…We hope that future decisions are made carefully and with full consultation with local communities.” Versi said.

This is how Islamization occurs and is made permanent: Other schools will think carefully of the risks before they even attempt to “limit the Islamization process”. According to the former head of the Office for Standards in Education, Children’s Services and Skills (Ofsted), Sir Michael Wilshaw, the lack of a national policy on wearing hijabs in schools is due to political correctness, which leaves teachers “alone, isolated and vulnerable”.

“There’s something like 150 schools… which in short make it compulsory for youngsters to wear a hijab — so what’s happening about those schools?”, Sir Michael asked recently , “The country has enormously changed. When heads want to change things, they have now to take into account deep-seated and sincere feeling of communities, some of whom who have conservative views”.

The British state evidently cares less about Islamization — and the oppression of little girls — than about political correctness.

The clerical establishment is also pressing Britons to accept and accommodate the ongoing Islamization more readily. Archbishop Welby cautiously admitted in November 2016 that dealing with the religiously motivated violence in Europe “requires a move away from the argument that has become increasingly popular, which is to say that ISIS is ‘nothing to do with Islam’… Until religious leaders stand up and take responsibility for the actions of those who do things in the name of their religion, we will see no resolution.”

Since then, however, he appears dutifully to have returned to the submissive fold and in February 2018, he was once more preaching the politically correct gospel of “Welcoming strangers to our country and integrating them into our culture… We must be generous and allow ourselves to change with the newcomers and create a deeper, richer way of life”. One year ago, in February 2017, Welby suggested that Brexit and the election of Trump were both “in the fascist tradition”.

Britain’s security establishment also seems longing to submit to Islam. Scotland Yard recently warned that hate crimes (“Islamophobia”, in other words, as no other hate crime is taken as seriously) are “hugely underreported”. Chief Superintendent Dave Stringer, Scotland Yard’s head of community engagement said: “The Met has seen a steady increase in the reporting of all hate crime, particularly racist and religious hate crime. Despite this rise, hate crime is hugely underreported and no one should suffer in silence.”

It is virtually impossible for “Islamophobia” to be “underreported” in London. The UK is nothing, if not clinically obsessed with “Islamophobia”. In 2016, London mayor Sadiq Khan’s Office for Policing and Crime announced it was spending £1.7 million of taxpayer money policing speech online. Less than six months ago, London police teamed up with Transport for London authorities to encourage people to report hate crimes during “National Hate Crime Awareness Week”, which ran from October 14-21. The events were mainly targeted at Muslims, with officers visiting the East London Mosque to encourage reporting hate crimes. British police have even been taking lessons about Islam and “Islamophobia” from radical Islamist groups such as Mend. One of the most active Mend figures, Azad Ali, has said that he has “love” for Anwar Al-Awlaki, an influential US-born Islamic terrorist, who was killed by a US drone strike in Yemen in 2011.

Meantime, while the police obsess over “Islamophobia”, regular crime in London is exploding. The latest statistics from the London Mayor’s Office for Policing and Crime show that in the past year, homicides have increased 27.1%, knife crimes have increased 31.3%, and there were 2,551 incidents of gun crime, representing a rise of 16.3%. Police recorded 7,613 rapes in the 12 months through January 2018 compared with 6,392 for the previous year, a rise of almost 20%. As reported by the Evening Standard, the figures also show an 8% increase in other sexual offences in the past year, bringing the total number of reported rapes and sexual assaults in London to almost 20,000. Campaigners have suggested the real figure could be “significantly higher” once unreported attacks are taken into account. British police, meanwhile, say they are at a loss to explain what is causing the rise in rapes.

The Metropolitan Police Deputy Commissioner Sir Craig Mackey was recently asked if he had any idea what was behind the surge. His answer: “No, is the honest answer… there is something going on with sexual offending in London that we don’t fully understand, the causes of it. We see the end of it, [but] we don’t understand the causes.”

Meanwhile, 65,000 cases of child sex abuse reached a record high in 2017, or 177 every day: up 15% from 2016.

In Rotherham alone, after 16 years of dismissing the problem, the number of child abuse cases rose to 1,510. The National Crime Agency (NCA) inquiry, “the biggest of its kind in the UK, has identified 110 suspects, of whom 80% are of Pakistani heritage”, officers said.

In its seeming eagerness to submit to Islam, the security establishment even appears to be willing to compare people responding to Islamization and Islamic terrorism with the Islamic terrorists themselves. In a recent lecture, one of the UK’s top counterterrorism officials, Assistant Commissioner Mark Rowley, outgoing head of counter-terrorism policing, compared Tommy Robinson, an anti-Islamist activist, often described as “far-right,” to Anjem Choudary, a radical terrorist-linked Islamist cleric who has advocated sharia in the UK and is now serving a prison sentence for urging support for ISIS.

Pictured: Anjem Choudary, a radical terrorist-linked Islamist cleric who has advocated sharia in the UK and is now serving a prison sentence for urging support for ISIS. (Photo by Oli Scarff/Getty Images)

“Robinson also became a regular fixture in our media, giving him the platform to attack the whole religion of Islam by conflating acts of terrorism with the faith, often citing spurious claims, which inevitably stirred up tensions” Rowe said, “Each side feeds into each other’s extremist rhetoric with the common goal of increasing tensions and divisions in communities”.

Rowe also said,

“The right-wing threat was not previously organized. Every now and then there’s been an individual motivated by that rhetoric who has committed a terrorist act, but we’ve not had an organized right-wing threat like we do now”.

Perhaps Rowley might stop to consider why there is now an organized right-wing threat. The British establishment — people such as Rowley — have categorically embraced the “Islam is peace” narrative. The establishment has even let itself and its police be lectured by radical Islamist organizations such as Mend on what Islam is — and has doggedly refused to listen to any dissident voices. Large parts of the British population, therefore, have nowhere to turn with their frustrations at the rapid Islamization of British society, apart from anti-establishment or far-right organizations. No other organizations appear willing to have an open discussion about the ongoing Islamization. Rowley and other establishment figures, especially political ones, continue to evade responsibility for this upheaval — a situation that seems bound to continue, unless or until the British establishment — political, security, educational, clerical and cultural — begins to address, openly and honestly, the rapidly increasing speed of Islamization into British society.

Unfortunately, that enquiry appears unlikely to happen.

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According to a recent Eurobarometer survey, at least seven in ten respondents in all 28 EU member states perceive fake news to be a problem in their country.

You will find more infographics at Statista

The share was highest in Cyprus with 91 percent saying “yes, it is definitely a problem” or “yes, it is a problem to some extent”.

 Greece came second, followed by Italy.

In the UK, 84 percent of people said that fake news is a problem in their country.

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Authored by Rob Slane via TheBlogMire.com,

There are a lot of issues surrounding the case of Sergei and Yulia Skripal which, at the time of writing, are very unclear and rather odd. There may well be good and innocent explanations for some or even all of them. Then again there may not. This is why it is crucial for questions to be asked where, as yet, there are either no answers or deeply unsatisfactory ones.

Some people will assume that this is conspiracy theory territory. It is not that, for the simple reason that I have no credible theory – conspiracy or otherwise – to explain all the details of the incident in Salisbury from start to finish, and I am not attempting to forward one. I have no idea who was behind this incident, and I continue to keep an open mind to a good many possible explanations.

However, there are a number of oddities in the official narrative, which do demand answers and clarifications. You don’t have to be a conspiracy theorist or a defender of the Russian state to see this. You just need a healthy scepticism, “of a type developed by all inquiring minds!”

Below are 30 of the most important questions regarding the case and the British Government’s response, which are currently either wholly unanswered, or which require clarification.

1. Why have there been no updates on the condition of Sergei and Yulia Skripal in the public domain since the first week of the investigation?

2. Are they still alive?

3. If so, what is their current condition and what symptoms are they displaying?

4. In a recent letter to The Times, Stephen Davies, Consultant in Emergency Medicine at Salisbury NHS Foundation Trust, wrote the following:

“Sir, Further to your report (“Poison exposure leaves almost 40 needing treatment”, Mar 14) may I clarify that no patients have experienced nerve agent poisoning in Salisbury and there have only ever been three patients with significant poisoning.”

His claim that “no patients have experienced nerve agent poisoning in Salisbury” is remarkably odd, as it appears to flatly contradict the official narrative. Was this a slip of the pen, or was it his intention to communicate precisely this — that no patients have been poisoned by a nerve agent in Salisbury?

5. It has been said that the Skripals and Detective Sergeant Nick Bailey were poisoned by “a military grade nerve agent”. According to some claims, the type referred to could be anywhere between five and eight times more toxic than VX nerve agent. Given that just 10mg of VX is reckoned to be the median lethal dose, it seems likely that the particular type mentioned in the Skripal case should have killed them instantly. Is there an explanation as to how or why this did not happen?

6. Although reports suggested the involvement of some sort of nerve agent fairly soon after the incident, it was almost a week before Public Health England issued advice to those who had visited The Mill pub or the Zizzi restaurant in Salisbury on the day that the Skripals fell ill. Why the delay and did this pose a danger to the public?

7. In their advice, Public Health England stated that people who had visited those places, where traces of a military grade nerve agent had apparently been found, should wash their clothes and:

“Wipe personal items such as phones, handbags and other electronic items with cleansing or baby wipes and dispose of the wipes in the bin (ordinary domestic waste disposal).”

Are baby wipes acknowledged to be an effective and safe method of dealing with objects that may potentially have been contaminated with “military grade nerve agent”, especially of a type 5-8 times more deadly than VX?

8. Initial reports suggested that Detective Sergeant Bailey became ill after coming into contact with the substance after attending the Skripals on the bench they were seated on in The Maltings in Salisbury. Subsequent claims, however, first aired by former Metropolitan Police Commissioner, Lord Ian Blair on 9th March, said that he came into contact with the substance at Sergei Skripal’s house in Christie Miller Road. Reports since then have been highly ambiguous about what should be an easily verifiable fact. Which is the correct account?

9. The government have claimed that the poison used was “a military grade nerve agent of a type developed by Russia”. The phrase “of a type developed by Russia” says nothing whatsoever about whether the substance used in the Salisbury case was produced or manufactured in Russia. Can the government confirm that its scientists at Porton Down have established that the substance that poisoned the Skripals and DS Bailey was actually produced or manufactured in Russia?

10. The former ambassador to Uzbekistan, Craig Murray, has claimed that sources within the Foreign and Commonwealth Office (FCO) have told him that scientists at Porton Down would not agree to a statement about the place of origin of the substance, because they were not able to establish this. According to Mr Murray, only under much pressure from the Government did they end up agreeing to the compromise wording, “of a type developed by Russia”, which has subsequently been used in all official statements on the matter. Can the FCO, in plain and unambiguous English, categorically refute Mr Murray’s claims that pressure was put on Porton Down scientists to agree to a form of words and that in the end a much-diluted version was agreed?

11. On the occasion that the FCO did attempt to refute Mr Murray’s claims, the wording they used included a straightforward repetition of the same phrase – “of a type developed by Russia”. Is the FCO willing and able to go beyond this and confirm that the substance was not only “of a type developed by Russia”, but that it was “produced” or “manufactured” in Russia?

12. Why did the British Government issue a 36-hour ultimatum to the Russian Government to come up with an explanation, but then refuse their request to share the evidence that allegedly pointed to their culpability (there could have been no danger of their tampering with it, since Porton Down would have retained their own sample)?

13. How is it possible for a state (or indeed any person or entity) that has been accused of something, to defend themselves against an accusation if they are refused access to evidence that apparently points to their guilt?

14. Is this not a clear case of the reversal of the presumption of innocence and of due process?

15. Furthermore, why did the British Government issue an ultimatum to the Russian Government, in contravention of the Organisation for the Prohibition of Chemical Weapons (OPCW) rules governing such matters, to which both Britain and Russia are signatories, and which are clearly set out in Article 9, Paragraph ii of the Chemical Weapons Convention (CWC)?

16. Given that the investigation, which has been described by the man leading it as being “an extremely challenging investigation” and as having “a number of unique and complex issues”, and given that many of the facts of the case are not yet known, such as when, where and how the substance was administered, how is it possible for the British Government to point the finger of blame with such certainty?

17. Furthermore, by doing so, haven’t they both politicised and prejudiced the investigation?

18. Why did the British Government feel the need to come forward with an accusation little more than a week into the investigation, rather than waiting for its completion?

19. On the Andrew Marr Show on 18th March, the Foreign Secretary, Boris Johnson, stated the following:

“And I might just say in response to Mr Chizhov’s point about Russian stockpiles of chemical weapons. We actually had evidence within the last ten years that Russia has not only been investigating the delivery of nerve agents for the purposes of assassination, but it has also been creating and stockpiling Novichok.”

Where has this intelligence come from and has it been properly verified?

20. If this intelligence was known before 27th September 2017 – the date that the OPCW issued a statement declaring the completion of the destruction of all 39,967 metric tons of chemical weapons possessed by the Russian Federation – why did Britain not inform the OPCW of its own intelligence which apparently contradicts this claim, which they would have had a legal obligation to do?

21. If this intelligence was known after 27th September 2017, why did Britain not inform the OPCW of this “new” information, which it was legally obliged to do, since it allegedly shows that Russia had been lying to the OPCW and had been carrying out a clandestine chemical weapons programme?

22. Also on the Andrew Marr show, Mr Johnson made the following claim after a question of whether he was “absolutely sure” that the substance used to poison the Skripals was a “Novichok”:

“Obviously to the best of our knowledge this is a Russian-made nerve agent that falls within the category Novichok made only by Russia, and just to get back to the point about the international reaction which is so fascinating.”

Is the phrase “to the best of our knowledge” an adequate response to Mr Marr’s request of him being “absolutely sure”?

23. Is this a good enough legal basis from which to accuse another state and to impose punitive measures on it, or is more certainty needed before such an accusation can be made?

24. After hedging his words with the phrase, “to the best of our knowledge”, Mr Johnson then went beyond previous Government claims that the substance was “of a type developed in Russia”, saying that it was “Russian-made”. Have the scientists at Porton Down been able to establish that it was indeed “Russian-made”, or was this a case of Mr Johnson straying off-message?

25. He also went beyond the previous claim that the substance was “of a type developed in Russia” by saying that the substance involved in the Skripal case “falls within the category Novichok made only by Russia”? Firstly, is Mr Johnson able to provide evidence that this category of chemical weapons was ever successfully synthesised in Russia, especially in the light of the OPCW’s Scientific Advisory Board stating as recently as 2013, that it has “insufficient information to comment on the existence or properties of ‘Novichoks‘“?

26. As Craig Murray has again pointed out, since its 2013 statement, the OPCW has worked (legally) with Iranian scientists who have successfully synthesised these chemical weapons. Was Mr Johnson aware that the category of “Novichok” chemical weapons had been synthesised elsewhere when he stated that this category of chemical weapons is “made only by Russia”?

27. Does the fact that Iranian scientists were able to synthesise this class of chemical weapons suggest that other states have the capabilities to do likewise?

28. Is the British Government aware that the main plant involved in attempts to synthesise Novichoks in the 1970s and 1980s was based not in Russia, but in Nukus in Uzbekistan?

29. Does the fact that the US Department of Defence decontaminated and dismantled the Nukus site, under an agreement with the Government of Uzbekistan, make it at least theoretically possible that substances or secrets held within that plant could have been carried out of the country and even back to the United States?

30. The connection between Sergei Skripal’s MI6 recruiter, Pablo Miller, who also happens to live in Salisbury, and Christopher Steele, the author of the so-called “Trump Dossier”, has been well established, as has the fact that Mr Skripal and Mr Miller regularly met together in the City. Is this connection of any interest to the investigation into the incident in Salisbury?

*  *  *

If there are any journalists with integrity and inquisitive minds still living in this country, I would be grateful if they could begin doing their job and research the answers to these sorts of questions by asking the appropriate people and authorities.

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