Category: zerohedge

Palantir Technologies, a big-data company that was co-founded by Peter Thiel and received some of its initial financing from the CIA’s venture-capital firm, has found much more impactful applications for its technology than helping electioneering firms like Cambridge Analytica gain an edge over their rivals. 

To wit, the company’s secretive technology – which purportedly can analyze 400 million digital “objects” to perform “predictive analysis” that can identify terrorists and other criminals (or determine how individuals might vote in an upcoming election) – is also being used by the International Atomic Energy Agency in a way that has countries like Brazil and others worried that the information collected by the IAEA could be shared with intelligence agencies. 

According to Bloomberg, Palantir’s technology has become instrumental in IAEA’s inspections and other efforts to certify Iran’s compliance with the deal.

Palantir has spent years modifying its predictive-policing software for inspectors at the Vienna-based IAEA, which was founded in 1957 to promote the peaceful use of nuclear energy. The tool is at the analytical core of the agency’s new $50 million Mosaic platform, turning databases of classified information into maps that help inspectors visualize ties between the people, places and material involved in nuclear activities, IAEA documents show.

The company’s software is used to plan inspections, which are supposed to occur randomly. In recent years, the amount of data available for processing to Palantir has jumped 30-fold. Of course, while the data is supposed to be stewarded by the IAEA and the IAEA alone, the world’s intelligence agencies would love to get their hands on it.

Palantir’s software helps the IAEA plan and justify unscheduled probes, which have totaled 60 in Iran since the agreement came into force in 2016. The amount of information available to inspectors that Palantir can process has jumped 30-fold in three years to some 400 million “digital objects” around the world, including social media feeds and satellite photographs inside Iran.

These enhanced investigative abilities, which are inextricably linked with the Iran deal, have raised concern that the IAEA may overstep the boundary between nuclear monitoring and intelligence-gathering.

Members of the non-aligned group, which includes Brazil and India, have raised concerns about Palantir’s technology – particularly about the “false data” that “predictive analysis” systems like Palantir’s can produce.

Of equal concern is the false data that “predictive-analysis” systems like Palantir’s can generate — either by accident or design, according to Andreas Persbo, who runs Vertic, a London-based company that advises governments on verification issues.

“You will generate a false return if you add a false assumption into the system without making the appropriate qualifier,” Persbo said. “You’ll end up convincing yourself that shadows are real.”

And with the US, Germany and others calling on Israel to turn over to the IAEA the trove of documents that Prime Minister Benjamin Netanyahu presented to the world last week, critics see this as a prime opportunity to “stress test” Palantir’s algorithm, given the “dirty” (another word for raw) intelligence that Israel has gathered. Palantir’s software in a way that could expose how easily its algorithms can produce a false outcome, given a false or misleading input.

Scrapping the accord, as Trump is threatening to do as early as Tuesday, would not only anger the other signatories – China, Russia, Germany, France and Britain – it would also hamstring the IAEA’s increasingly sophisticated ability to track the use of uranium in Iran and around the world, according to Ernest Moniz, who helped negotiate the deal as U.S. secretary of energy.

“We have a completely unique and unparalleled intrusive verification regime that was not there before the agreement,” Moniz said on PBS. If Trump kills the deal, “the No. 1 downside is that we lose this regime.”

[…]

Palantir has spent years modifying its predictive-policing software for inspectors at the Vienna-based IAEA, which was founded in 1957 to promote the peaceful use of nuclear energy. The tool is at the analytical core of the agency’s new $50 million Mosaic platform, turning databases of classified information into maps that help inspectors visualize ties between the people, places and material involved in nuclear activities, IAEA documents show.

That sets up Palantir, which Thiel and his partners built with CIA funding, as the platform of choice for assessing the documents Israel claims to have detailing Iran’s secret efforts to build a bomb. Prime Minister Benjamin Netanyahu of Israel, Iran’s arch foe, announced the trove just days before Trump’s May 12 deadline to either make good on pledges to scrap the deal or extend sanctions relief.

President Trump’s European partners are rushing to put together a plan that would allow the Iran deal to remain intact even if the US pulls out (which it’s widely expected to do at 2 pm ET today). But Palantir’s involvement with the IAEA could be enough of a reason for the Trump administration to find a workaround that would allow inspections to continue while the parties to the agreement work toward a compromise.

After all, the ROI that the CIA is looking for from its early investment in Palantir isn’t evaluated strictly in monetary terms. Palantir’s involvement with IAEA could give the CIA unparalleled insight into the world’s rogue regimes.

And that’s not something the CIA is likely to pass up.

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

Over the weekend, when commenting on the ongoing rout in emerging markets, Bloomberg published an article titled “Rattled Emerging Markets Say: It’s Over to You, Central Bankers.” Well, overnight the most important central banker of all, Fed Chair Jay Powell responded to these pleas to “do something”, and it wasn’t exactly what EMs – or those used to being bailed out by the Fed – wanted to hear.

As Powell explained, speaking at a conference sponsored by the IMF and Swiss National Bank in Zurich on Tuesday the Fed’s gradual push towards higher interest rates shouldn’t be blamed for any roiling of emerging market economies – which are well placed to navigate the tightening of U.S. monetary policy. In other words, with the Fed’s monetary policy painfully transparent, Powell’s message to EM’s was simple: “you are on your own.“

Arguing that the Fed’s decision-making isn’t the major determinant of flows of capital into developing economies (which, of course, it is especially as the Fed gradually reverses the biggest monetary experiment in history) Powell said the influence of the Fed on global financial conditions should not be overstated, despite Bernanke taking the blame five years ago for the so-called taper tantrum.

“There is good reason to think that the normalization of monetary policy in advanced economies should continue to prove manageable for EMEs,” Powell said, adding that “markets should not be surprised by our actions if the economy evolves in line with expectations.”

Powell’s comments were enough to propel the dollar to new highs…

… in the process slamming the EM complex, which as shown below has been a bloodbath over the past month and explains the escalating rout among emerging markets. Powell’s remarks came amid growing concerns about emerging markets and ongoing dollar strength. As shown above, the dollar has soared against most developing-nation currencies in the past month.

As discussed previously, the FX rout has spread to EM bond markets, as debt sales from countries such as Russia and Argentina have been canceled or postponed recently as potential buyers have balked at the prospect of faster inflation and widening budget deficits.

Meanwhile, as the Fed refuses to change course, other policy makers have started to act, with Argentina’s central bank abruptly raising rates three times, to 40% to halt a sell-off in the peso.

Russia has also put the brakes on further monetary easing. Turkey, which is a unique basket case in that Erdogan is expressly prohibiting the central bank from doing the one thing it should to ease the ongoing panic, i.e., raise rates, is seeking to bring down its current account deficit. Overnight, we learned that Indonesia was burning reserves to prop up its currency.

Meanwhile, also overnight, JPM CEO Jamie Dimon said it’s possible U.S. growth and inflation prove fast enough to prompt the Fed to raise interest rates more than many anticipate, and it would be wise to prepare for benchmark yields to climb to 4%. Such a scenario would be a disaster for EMs:

A sustained move higher would pressure local currencies and lure away foreign investors. The International Monetary Fund warned last month that risks to global financial stability have increased over the past six months.

“Central banks may have to respond with interest rate hikes if the sell-off intensifies,” said Chua Hak Bin, a senior economist at Maybank Kim Eng Research in Singapore. Those most vulnerable include Ukraine, China, Argentina, South Africa and Turkey according to the Institute for International Finance.

Needless to say, hiking rates just as the global economy is starting to slide is just the catalyst needed for a global recession.

Meanwhile, there are capital markets to think of: if and when the contagion begins, and the selling spills over from EMs to development markets, the Fed will have no choice but to step in, something Powell himself hinted at:

I do not dismiss the prospective risks emanating from global policy normalization. Some investors and institutions may not be well positioned for a rise in interest rates, even one that markets broadly anticipate. And, of course, future economic conditions may surprise us, as they often do.

He was referring to the following divergence between hedge fund and “Real Money” positioning on EMs, where as JPM noted over the weekend, the “smart money” is well ahead of the curve.

As for the indicator that markets should keep an eye on to decide when it’s time to panic, we reported yesterday that Bank of America is keeping an eye on one specific catalyst for imminent contagion: “EM FX never lies and a plunge in Brazilian real toward 4 versus US dollar is likely to cause deleveraging and contagion across credit portfolios.”

 

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

With the world’s attention squarely focused on Trump’s 2pm ET Iran nuclear deal announcement, early on Tuesday morning the US president upped the ante by tweeting that in addition to sending the price of oil and gasoline for US consumers higher (an inevitable outcome of withdrawing from the Iran deal, if only initially), Trump will also talk to China’s president, to wit: “I will be speaking to my friend, President Xi of China, this morning at 8:30.”

And in what some have seen as an encouraging twist, Trump added that “the primary topics will be Trade, where good things will happen, and North Korea, where relationships and trust are building.“

I will be speaking to my friend, President Xi of China, this morning at 8:30. The primary topics will be Trade, where good things will happen, and North Korea, where relationships and trust are building.

— Donald J. Trump (@realDonaldTrump) May 8, 2018

The talk takes place shortly after news emerged that China’s president Xi had met with North Korea’s Kim in the Chinese seaport of Dalian, where according to Xingua the topic was the ongoing de-nuclearization of the peninsula.

In a separate tweet, Trump also gave another hint on what the main event today will be, when he once again slammed Obama’s Secretary of State, and the author of the Iran Nuclear Deal, saying “John Kerry can’t get over the fact that he had his chance and blew it! Stay away from negotiations John, you are hurting your country!”

John Kerry can’t get over the fact that he had his chance and blew it! Stay away from negotiations John, you are hurting your country!

— Donald J. Trump (@realDonaldTrump) May 8, 2018

Finally, Trump reiterated his support for “torture queen” Gina Haspel as the new head of the CIA, tweeting “Gina Haspel, my highly respected nominee to lead the CIA, is being praised for the fact that she has been, and alway will be, TOUGH ON TERROR! This is a woman who has been a leader wherever she has gone. The CIA wants her to lead them into America’s  bright and glorious future!”

Gina Haspel, my highly respected nominee to lead the CIA, is being praised for the fact that she has been, and alway will be, TOUGH ON TERROR! This is a woman who has been a leader wherever she has gone. The CIA wants her to lead them into America’s bright and glorious future!

— Donald J. Trump (@realDonaldTrump) May 8, 2018

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Having perplexed traders for months with their honey badger-like gains even as Italy exhibited its traditional political chaos and demonstrated a delightful inability to form a coalition government pushing the country to the verge of new elections, overnight Italian bonds were finally rattled, as the risk of a fresh Italian vote as soon as July was finally appreciated by traders, sending the yield on 10Y BTPs 10bps higher to 1.87%, set for biggest selloff since December, and rising to the the highest level since March 28.

Traders are also keenly watching the 10Y Italy-Germany spread, which recently hit the narrowest level in two years. Meanwhile, as Bloomberg notes, there’s room for Italy to further underperform its periphery peers too, especially with largely positive catalysts still in place for Portugal and Spain. Will today’s rout impact demand in the primary market? Watch Friday’s sale of 3- and 7-year bonds for signs of a potential buyer’s strike.

As Bloomberg adds, the weakness in BTPs has also spilled over to other peripherals: Spanish, Portuguese 10y are both 3-4bps wider, though move is met with dip-buying demand, a London trader told Bloomberg; the long-end Austria under pressure as concession builds into supply, helping core curves edge steeper.

The contagion also hit Italian stocks, with Italy’s FTSE MIB benchmark sliding as much as 2.4% after leaders of the Five Star Movement and the League rejected the idea of a non-partisan prime minister and called for elections.  The drop accelerated after Finance Minister Pier Carlo Padoan told lawmakers that a lingering period of political uncertainty in Italy could become a brake for a widespread recovery in investments; this sent the FTSE MIB to session lows, and was down 2.1% as of 7:20am ET…

… the worst performer among major European markets on Tuesday, which have pushed the Euro Stoxx 600 down 0.3%.

via RSS https://ift.tt/2FVCQ6L Tyler Durden

U.S. futures and European stocks are modestly lower, following a mostly green Asian session, amid growing jitters over today’s 2pm announcement by President Trump in which he will unveil the fate of the Iran nuclear deal.

Ahead of Trump’s much anticipated announcement this afternoon, it has been a case of sell the rumor and the news (for reasons Barclays explained overnight), with oil prices retreating from three-and-a-half year highs as investors weighed competing views on whether the U.S. will reimpose sanctions on OPEC producer Iran and the potential consequences of such a decision: as Bloomberg recaps, while foreign officials and analysts say Trump is likely to remove the U.S. from the pact, the president may also surprise allies by agreeing to stay in the accord a while longer as American and European diplomats forge side deals aimed at addressing his concerns.

As a result, there was some profit-taking as WTI dipped back under $70.00/bbl level following reports that European powers are close to a package deal to try and persuade Trump not to withdraw from the Iran deal; however, subsequent reports suggest that Trump may be inclined to dropping out of the agreement when he announces his decision at 2pm ET today.

Complicating matters, the potential fallout from a US withdrawal in the oil market is unclear. While consultant FGE is among industry watchers who have said renewed U.S. measures may cut production from OPEC’s third-largest member, Barclays Plc sees Iran’s output little changed in 2018, while RBC notes that “Iran’s exports could be cut by 200K bpd to 300K bpd” if the US restores sanctions. How European and Asian oil buyers deal with possible American action, as well as the effect on OPEC’s output curbs aimed at shrinking a global glut, will also be watched.

“Reaching the $70 milestone gave investors a sense of accomplishment and triggered profit-taking,” Satoru Yoshida, a commodity analyst at Rakuten Securities Inc., said by phone from Tokyo. Still, “oil is trading around $70 as the market is factoring in the possibility that the U.S. will unilaterally terminate the Iran deal and reimpose sanctions.”

Overnight Barclays published the following timeline of how we got here, and what happens next:

There was less confusion about the dollar, which continued its torrid surge since the April 17 PBOC RRR cut, rallying steadily for most of the overnight session across G-10 with the DXY hitting another high for 2018; meanwhile no fresh comments from Fed Chair Powell who spoke early in Zurich and hinted that EMs are on their own, led to a continuation of recent trend. The dollar climbed after erasing an earlier decline. The Bloomberg Dollar Spot Index rose for a third day to reach its highest level since December.

Across other G-10 currencies, the biggest slide was seen in the Canadian dollar, followed by fellow commodity currency the Australian dollar. Sterling headed for its lowest level versus the dollar since January on dismal U.K. house price data. The euro felt the heat from Italian politics, dropping to 1.1874, a new year-to-date low, while Sweden’s krona saw the biggest daily advance as the Riksbank’s minutes and policy maker comments were taken as more hawkish than markets had expected.

Meanwhile, as Bloomberg macro commentator and former Lehman trader Mark Cudmore writes, “all bullish biases neutralize amid widespread EM weakness, even PHP despite it having best overall long-term fundamentals.” Not helping ease concerns about growing turmoil among emerging markets, was Fed Chair Jerome Powell who warned that the Fed’s gradual push towards higher interest rates shouldn’t be blamed for any roiling of emerging market economies, which are well placed to navigate the tightening of U.S. monetary policy.

In a speech delivered in Zurich, the Fed chair argued U.S. decision-making isn’t the major determinant of flows of capital into developing economies, and that the influence of the Fed on global financial conditions should not be overstated, despite being blamed five years ago for the so-called taper tantrum.

“There is good reason to think that the normalization of monetary policy in advanced economies should continue to prove manageable for EMEs,” Powell said at a conference sponsored by the International Monetary Fund and Swiss National Bank in Zurich on Tuesday. “Markets should not be surprised by our actions if the economy evolves in line with expectations.”

The result: another “sea of red” day in today’s EM FX monitor.

Global equities largely followed these two concerns, with Europe’s Stoxx 600 down 0.5% amid broad risk aversion ahead of Trump’s decision on the Iranian nuclear deal later in the day. The FTSE (+0.1%) currently outperforming as UK traders return to their desks post-bank holiday, as well as being given a boost by Takeda’s GBP 46bln approach for Shire (+4.1%). FTSEMIB (-2.2%) is the worst performer due to election concerns, with the DAX (-0.4%) also underperforming, following an earnings miss for Deutsche Post (-6.1%).

Earlier, Asian equity markets traded mostly in the green, catching up with a strong Monday close on Wall Street where all 3 majors indexes closed in the green but off best levels after a late retreat in crude, while mixed Chinese trade data and a looming Trump announcement on the Iran agreement has also kept upside in the region contained. ASX 200 (+0.1%) is positive with gains led by strength in the largest weighted financials sector. Elsewhere, Nikkei 225 (+0.2%) shrugged off a firmer currency and conformed to the overall risk appetite, while Hang Seng (+1.4%) and Shanghai Comp. (+0.8%) outperformed with healthcare and financials front running the gains despite further liquidity inaction and another consecutive net neutral position by the PBoC.

The latest Chinese trade data confirmed that the March export plunge was largely a Chinese new year calendar-driven outlier:

• Chinese Trade Balance (CNY)(Apr) 182.8B vs. Exp. 189.15B (Prev. -29.8B).
  • Chinese Exports (CNY)(Apr) 3.7% vs. Exp. 4.0% (Prev. -9.8%)
  • Chinese Imports (CNY)(Apr) 11.6% vs. Exp. 10.4% (Prev. 5.9%)
• Chinese Trade Balance (USD)(Apr) 28.78B vs. Exp. 27.80B (Prev. -4.98B).
  • Chinese Exports (USD)(Apr) Y/Y 12.9% vs. Exp. 8.0% (Prev. -2.7%)
  • Chinese Imports (USD)(Apr) Y/Y 21.5% vs. Exp. 16.0% (Prev. 14.4%)

Meanwhile, political fears are once again returning to Europe, where Italian BTPs sold off with the spread to bunds wider by ~8.5bps as early Italian elections are now the most likely scenario, sending the Italian bank index -2.8%.

As Italy underperformed heavily, USTs hold in a very tight range, and were barely changed for the session trading at 2.95%.

In overnight key central bank news, Fed Chair Powell said the market is “reasonably well aligned” with the Fed dot plot, adds markets should not be surprised with the Fed’s actions. Elsewhere, Fed’s Kaplan (non-voter, neutral) said the base case remains at 3 hikes total for this year.

The Riksbank minutes were released and showed several members expressing concerns about development of inflation going forward, as well as pointing out that it is important the Krona exchange rate develops in a manner compatible with inflation stabilizing close to the target. Riksbank’s Skingsley added that he is likely to back a hike in either October or December, and that as the Krona is expected to strengthen again over the forecast period, the effects of inflation can be seen as moderate.

In the latest Brexit news, UK PM May is reportedly facing renewed turmoil regarding Brexit options and is said to be under pressure from MPs across different parties to accept EEA membership or risk defeat in Commons. Furthermore, Dozens of Eurosceptic MPs in the UK’s Conservative party are expected to express their frustration today regarding  a lack of direction for the UK’s future post-Brexit.

Disney is set to report earnings after market close, while JOLTS job openings data is in the macro calendar

Bulletin Headline Summary from RanSquawk

• WTI crude futures continue to retrace from three-and-a-half year highs
• Dollar index firming up again after another bout of consolidation, with the Dollar bid against all major counterparts bar the Jpy and Chf.
• Looking ahead, highlights include APIs, President Trump (Iranian announcement at 1400ET/1900BST) and a 3yr note auction

Market Snapshot

• S&P 500 futures down 0.3% to 2,661.50
• STOXX Europe 600 down 0.2% to 388.60
• MXAP up 0.5% to 173.62
• MXAPJ up 0.4% to 564.59
• Nikkei up 0.2% to 22,508.69
• Topix up 0.4% to 1,779.82
• Hang Seng Index up 1.4% to 30,402.81
• Shanghai Composite up 0.8% to 3,161.50
• Sensex up 0.05% to 35,227.42
• Australia S&P/ASX 200 up 0.1% to 6,091.89
• Kospi down 0.5% to 2,449.81
• German 10Y yield unchanged at 0.532%
• Euro down 0.3% to $1.1887
• Italian 10Y yield fell 3.7 bps to 1.505%
• Spanish 10Y yield rose 1.7 bps to 1.293%
• Brent Futures down 1.1% to $75.36/bbl
• Gold spot down 0.3% to $1,310.03
• U.S. Dollar Index up 0.3% to 93.04

Top Overnight News

• President Donald Trump says he will announce his decision on Iran Tuesday at 2 p.m. in Washington Geopolitical jitters — along with the start of the summer driving season and positive jobs data — had helped push oil above $70 a barrel for the first time since November 2014.
• Takeda Pharmaceutical Co. reached an agreement to buy larger rival Shire Plc for about 46 billion pounds ($62 billion) in a deal that transforms it into a top drugmaker in the lucrative business of rare diseases and boosts its heft in the U.S.
• Emerging market central banks are facing their stiffest test since the 2013 taper tantrum. Investors are increasingly betting the Federal Reserve will keep raising interest rates into 2019, sending the dollar soaring against most developing-nation currencies in the past month
• Italy’s Five Star Movement has abandoned its efforts to form a government and is gearing up for fresh elections. Italian bonds slid after Luigi Di Maio, head of the anti-establishment party, declared the campaign open
• Foreign Secretary Boris Johnson attacks Theresa May’s customs plan as crazy, as the House of Lords reminds the U.K. Prime Minister that she doesn’t have the final say on Brexit
• The Federal Reserve’s gradual push toward higher interest rates shouldn’t be blamed for any roiling of emerging-market economies, which are well placed to navigate the tightening of U.S. monetary policy, Fed Chairman Jerome Powell said
• Opposition lawmakers and rebels in Theresa May’s Conservative Party aim to push through two changes to the premier’s flagship Brexit legislation Tuesday, continuing its bruising passage through the House of Lords
• HSBC Global AM, Legal & General Group Plc are among 250 wealth managers in a group known as the Climate Action 100+ that are asking the companies they own to bring their investment programs in step with the Paris Agreement on limiting global warming, even as Trump tries to unpick the deal
• Treasury officials say they have no concern about demand for the ever-increasing slate of U.S. government debt. Bond investors are about to render their verdict

Asia equity markets traded mostly positive following a similar performance on Wall St where all 3 majors closed in the green but off best levels after a late retreat in crude, while mixed Chinese trade data and a looming Trump announcement on the Iran agreement has also kept upside in the region contained. ASX 200 (+0.1%) is positive with gains led by strength in the largest weighted financials sector. Elsewhere, Nikkei 225 (+0.2%) shrugged off a firmer currency and conformed to the overall risk appetite, while Hang Seng (+1.4%) and Shanghai Comp. (+0.8%) outperformed with healthcare and financials front running the gains despite further liquidity inaction and another consecutive net neutral position by the PBoC. Finally, 10yr JGBs were lacklustre as focus centred on riskier assets, while the 10yr JGB auction also failed to impact prices with the results somewhat inconclusive in which the b/c printed higher than previous and accepted prices declined.

Top Asian News

• China April Exports Climb, Imports Jump on Solid Global Demand
• Alibaba Buys Rocket Internet’s Daraz; No Terms

Stoxx 600 is down 0.5% amid broad risk aversion ahead of the US decision on the Iranian nuclear deal later in the day. The FTSE (+0.1%) currently outperforming as UK traders return to their desks post-bank holiday, as well as being given a boost by Takeda’s GBP 46bln approach for Shire (+4.1%). FTSEMIB (-2.2%) is the worst performer due to election concerns, with the DAX (-0.4%) also underperforming, following an earnings miss for Deutsche Post (-6.1%).

Top European News

• U.K. Home Prices Post Biggest Monthly Drop in Almost Eight Years
• German March Ind. Production Rises 1% m/m; Est. +0.8% m/m
• Takeda Clinches $62 Billion Deal to Buy Drugmaker Shire
• Folli Follie Group Launches Share Buyback Program

In FX, the DXY has again firmed up after another bout of consolidation, with the Dollar bid against all major counterparts bar the Jpy and Chf. The index has now printed above 93.000 vs 92.974 at best yesterday, with little reaction to latest comments from Fed Chair Powell who merely stressed the need for clear policy communication to avoid market turbulence, He also claimed that EMs can cope with US normalisation, but the Try for one continues to struggle at new record lows vs the Greenback circa 4.3000. CAD: A relatively sharp pull-back in crude prices amidst speculation that the UK, France and Germany are on the cusp of a plan that might tempt US President Trump not to abandon the Iranian nuclear treaty, plus ongoing NAFTA uncertainty as negotiations resume are weighing heavily on the Loonie, as Usd/Cad spikes through the top of recent ranges and more convincingly above 1.2900. In fact, the pair is testing the water above 1.2950 at fresh multi-week peaks, with early March highs around 1.3000 next on the  upside. SEK: Extending gains vs the Eur (to sub-10.5000 levels) and Nok (also undermined by the retreat in oil) in wake of Riksbank minutes reaffirming year end rate hike guidance and the broad Swedish Central Bank view that the Krona will rally over time after a temporary period of weakness. JPY/CHF: Both showing relative resilience vs the Usd around 109.00 and within a 1.0000-50 band respectively, with perhaps some underlying safe-haven demand evident ahead of Trump’s eagerly-awaited Iran deal or no deal announcement (14.00ET/19.00BST). AUD: Another laggard on broadly weaker commodity prices and softer than forecast Aussie retail sales data overnight, with Aud/Usd back under the 0.7500 mark and Aud/Nzd losing 1.0700+ status again. GBP: Volatile as UK participants return from May Day to confirmation of a mega M&A deal that lifted Cable towards 1.3600 at one stage, and Gbp/Jpy up through 148.00, but the Pound now beating a retreat to retest 1.3500 vs the Usd and back below its 200 DMA (1.3542).

In Commodities, WTI crude futures continue to retrace from three-and-a-half year highs, back below the USD 70.00/bbl level following reports that European powers are close to a package deal to try and persuade Trump not to withdraw from the Iran deal. That said, later reports suggest that Trump may be inclined to dropping out of the agreement when he announces his decision at 1900BST today, a move that can disrupt global oil supply. “Iran’s exports could be cut by 200K bpd to 300K bpd” says RBC if the US restores sanctions. Elsewhere, gold prices have been choppy, tracking fluctuations in the USD, while 3-month copper on the LME was up 0.3% and zinc climbed 1.5% on expectations for strong Chinese data in the coming weeks. Iran has set June’s light crude official price for Asia USD 2/bbl above Oman/Dubai quotes.

US Event Calendar

• 3:15am: Fed’s Powell to Speak at SNB/IMF Event in Zurich
• 6am: NFIB Small Business Optimism, est. 104.5, prior 104.7
• 10am: JOLTS Job Openings, est. 6,100, prior 6,052

DB’s Jim Reid concludes the overnight wrap

As the UK felt like the Middle East yesterday it was apt that Oil stole the headlines. Originally WTI futures traded above $70 (around 1.61% higher for the day at the peak – $70.84) for the first time since November 2014. However another market moving Trump tweet late in the US session led to a reversal as he suggested that he would make a statement at 2pm today Washington time as to whether the US will remain in the Iran nuclear accord. The fact that he didn’t slam the deal again seemed to encourage thoughts that he might stay in the agreement to some degree and some risk premium disappeared. At the close WTI dipped back near $70 but still +0.40% higher on the session.

The recent run up in commodity prices is interesting for inflation which this week’s sees the all-important US CPI print on Thursday as its next major signpost. We’ll preview fully on Thursday. Elsewhere this week, EM will continue  to take some focus, in particular events with regards to Argentina. As a reminder, interest rates were hiked a further 675bps to 40% on Friday – the third hike in eight days which brings the cumulative increase to 12.75ppt from 27.25% over that period. The Peso weakened 0.4% against the Greenback yesterday, while the Turkish Lira fell 0.9%, as concerns for potential US sanctions on Iranian oil exports seemed to outweigh initiatives by the Turkish central bank to shore up the currency as it lowered the upper limit for foreign exchange. So another market that will look at Trump’s announcement today quite closely.

This morning in Asia, markets have followed a positive US lead from yesterday and are trading higher, with the Hang Seng (+1.17%), Nikkei (+0.16%), Kospi (+0.15%) and Shanghai Comp. (+0.91%) all up. The yield on UST 10y are little changed while WTI oil is down c1% as we type. Elsewhere on trade, following last week’s visit by the US delegation to Beijing, China’s Vice Premier Liu is expected to visit the US next week for more trade talks. Datawise, China’s April trade surplus was stronger than expected at US$28.8bn (vs. US$27.8bn) as growth in imports outpaced exports (21.5% yoy vs. 12.9%)

Now recapping markets yesterday. European bourses were all higher, buoyed  by the lower Euro, M&A activity and higher oil prices, as the latter traded before President Trump’s tweet. Across the region, the Stoxx 600 (+0.64%) and DAX (+1.0%) were both higher, with gains led by the energy and tech sectors. The S&P pared back earlier gains but was still up for the second consecutive day (+0.35%), while the Dow (+0.39%) and Nasdaq (+0.77%) also advanced. The VIX dipped 0.1% to the lowest since early March (14.75).

Over in government bonds, core 10y bond yields were little changed with UST 10y flat at 2.951% while Bunds and OATs both fell c1.3bp. Conversely, peripherals outperformed with 10y yields down 1.5-3.5bp, partly reversing Friday’s losses. In FX, the US dollar index firmed for the second day (+0.20%) while the Euro fell to the lowest since early January (-0.32%). Elsewhere, precious metals softened slightly (Gold -0.02%; Silver -0.34%) while other base metals were little changed.

Away from the markets and moving onto central bankers speak now. In Europe, the WSJ noted the ECB’s Smet said the ECB is likely to phase out its QE program over the summer, possibly announcing a decision after its July policy meeting. Elsewhere, the ECB’s Praet noted that the recent economic softening is to be expected after a strong 2H17, albeit the “slowdown has come sooner than anticipated”. However, he added “there is so far no evidence that the moderation….reflects a durable softening in demand”. On rates, he said it will “evolve in a data-dependent and time consistent manner” while reaffirming that ample degree of monetary stimulus remains necessary.

Following on, the Fed’s Bostic echoed his peers’ comments on inflation, he said “we’re fluctuating around the 2% target, I’m comfortable with that….some overshoot is fine”. On the stronger oil price, he believe it should have a “less dramatic” impact on the US economy than before, in part as he is “not hearing from anybody right now that they are expecting this trend in oil prices to fundamentally change the trajectory of the economy”. Elsewhere, the Fed’s Kaplan’s base case for rates is still “three rate hikes for this year” and added that the path of raising rates should be “flatter than what we’re historically accustomed to”. Then he also noted that wage pressures are building and “it wouldn’t surprise me to see more wage pressure in the coming months”. Finally, Mr Barkin has made his inaugural speech after taking the helm as the Richmond Fed President. He said that US monetary policy is still accommodative and “it’s hard to argue that accommodation is appropriate when unemployment is low and inflation is effectively at our target”. Further, he said “you probably ought to go to neutral in that environment”.

Over at Italy, c2 months after the general election, efforts to form the next government are still in a gridlock. Bloomberg has cited an unnamed senior state official who noted that fresh elections in July is “probable” if a new Premier (yet to be appointed) fails to win a parliamentary confidence vote.

Before we take a look at today’s and the rest of the week’s calendar, we wrap up with other data releases from yesterday. In the US, the March consumer credit was weaker than expected at $11.6bln (vs. $16bln), in part as credit card debt fell the most since the end of 2012. Notably, annual growth for consumer credit was steady at 5% yoy, Elsewhere, the Euro area’s May Sentix investor confidence edged down 0.4pt mom and was below expectations at 19.2 (vs. 21). Germany’s March factory orders was below market and fell for the third consecutive month, leaving growth at 3.1% yoy (vs 5% expected).

Looking at today’s calendar, the early focus today will be in Germany with March trade data due along with the March industrial production print. In the UK the April Halifax house price index is due while in the US the NFIB small business optimism reading for April is due along with March JOLTS data. Away from the data Fed Chair Powell is due to speak in the morning in Zurich at a SNB/IMF event while the ECB’s Liikanen and the Riksbank’s Deputy Governor Jansson will also speak. EU27 envoys are also due to gather in Brussels to discuss the state of play in Brexit talks.

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Continuing the torrid pace of M&A in 2018, which in the first quarter had already set a record for announced merger activity, overnight the board of rare-diseases specialist Shire unanimously recommended its shareholders accept the takeover offer from Japan’s pharma giant Takeda which values the company’s equity at £46BN ($62BN) after the Japanese company raised the amount of cash in its offer to secure a recommendation.

After months of foreplay, the Dublin-based Shire had spent the past two weeks conducting due diligence on an offer from Takeda of £49.01 per share, after rejecting four previous offers, due to concerns not only about the offer price but the proportion the Japanese company was proposing to pay in stock, rather than cash.

The proposed offer represents a 59.6% premium to Shire’s March 27 closing price of £30.70 , before Takeda revealed its interest in the company.  The final deal is approximately 46% cash and 54% stock, leaving Shire shareholders owning around half of the combined group.

Shire investors will receive $30.33 in cash and either 0.839 new Takeda shares or 1.678 Takeda American depositary shares for each share, the companies said, valuing the offer at 48.17 pounds a share based on the latest price and exchange rate.

The deal, if backed by shareholders, will be the largest overseas acquisition by a Japanese company and propel Takeda, led by Frenchman Christophe Weber, into the top ranks of global drugmakers. The tie-up would also be one of the largest ever in the pharmaceuticals sector, crowning a hectic few months of deal-making as big drugmakers look to improve their pipelines by bringing in promising medicines developed by younger companies, and creating a pharma giant whose $31BN in revenue would place it among the industry’s Top 10, just behind Glaxo.

Takeda, which has seen its market value slide to $34 billion since announcing its interest, is taking over a much bigger rival. Shire’s shares have soared 31 percent, giving the company a market capitalization of about $50 billion. The resulting company will be a leader in treatments in gastroenterology, neuroscience, oncology, rare diseases and blood-derived therapies, used for serious conditions such as hemophilia.

“Shire’s highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda,” Weber said in the statement.

Shire’s shares, which had been trading about 10 pounds below the value of Takeda’s offer, traded 4% higher at just over 40 pounds, still well under the agreed price and indicating that shareholders still have reservations.

According to Jefferies analysts, the large discount to the offer prices is due to the large stock component and the fact that the deal is not expected to close until the first half of 2019. And although the deal must get the support of 75 percent of Shire’s voting shareholders, some of whom do not want to hold Takeda paper, Weber told reporters he believed investors would back the transaction.

“Their board and our board is confident that both shareholders will see the benefit of the acquisition,” he said.

As Bloomberg adds, with few late-stage experimental drugs in its own pipeline, Takeda needs lucrative new therapies. A Shire takeover brings Takeda treatments forrare diseases such as hemophilia – a field that’s luring a growing number of drugmakers who can charge more for unique life-saving drugs than for routine treatment.

The deal increases Takeda’s exposure to the U.S., the world’s biggest pharmaceutical market. Shire, based in Lexington, Massachusetts, gets more than two-thirds of its revenue from North America. Takeda generates only 30 percent of its sales from the region.

The bidding war ended up being a nailbiter until the last minute as Takeda increased its bid for Shire multiple times over the past month. The companies indicated in late April they had reached a preliminary deal valued at 46 billion pounds, or $64 billion based on a stronger exchange rate for the pound at the time.

Takeda faced a deadline Tuesday set by U.K. regulators to make a firm offer for Shire, walk away or extend the deadline.

The Japanese company said the deal will save about $600 million in duplicated research and development costs. The company expects $1.4 billion in overall savings by the third year. “The cost synergies seem to be much bigger than expected in the next three years,” Credit Suisse analyst Fumiyoshi Sakai said.

This means that jobs will go, with the group’s combined 52,000 workforce likely to be reduced by 6-7 percent. The companies have a number of commercial, research and manufacturing overlaps, particularly in the United States, where both have a large presence in Boston.
* * *

Putting the deal in context, a completed merger would dwarf SoftBank Group Corp.’s $40 billion purchase of Sprint in 2013, which ranked as the biggest takeover by a Japanese company. Takeda’s largest previous purchase was a $13.7 billion takeover of Nycomed A/S in 2011. Last year, the company expanded its footprint in the U.S. oncology market with the $4.7 billion purchase of Ariad Pharmaceuticals Inc.

Takeda’s announcement comes amid a flurry of transactions in the pharmaceutical sector, marked by GlaxoSmithKline Plc’s agreement in March to buy out Novartis AG’s stake in their consumer-health joint venture. Merck KGaA has agreed to sell its over-the-counter unit to Procter & Gamble Co., while Sanofi plans to sell its European generic-drug business to buyout firm Advent International Corp.

Takeda said it will maintain its headquarters in Japan and will evaluate consolidating Shire’s operations into Takeda’s in the Boston area, Switzerland and Singapore.

To help fund the cash portion of the deal, Takeda said it has secured a bridge loan facility of $31 billion with JPMorgan Chase Bank NA, Sumitomo Mitsui Banking Corp. and MUFG Bank Ltd., among others.  Weber argued Takeda would be able to maintain its investment grade credit rating with a target of achieving a net debt to EBITDA ratio of 2.0 times or less in the medium term.

Finally, courtesy of Bloomberg, here are some sellside reactions to the deal:

JEFFERIES (buy)

• Says expect Shire to trade at a 10%-15% spread to the Takeda offer due to the sizable stock component of the offer, and the length of time till the deal completes
• Owning ~50% of the enlarged Takeda with a Japanese/U.S. listing may be unattractive or problematic for some shareholders
• Offer is reasonable, representing ~60% premium to the unaffected Shire price

LIBERUM (hold)

• Offer is $30.33 in cash plus 0.839 Takeda shares per Shire share, so same as the previous proposal, values Shire at GBP48.17/share based on FX and Takeda share price per the announcement
• Says the deal likely to be subject to shareholder votes by both sides
• Estimate post-close leverage of >4x net debt/Ebitda

STIFEL (buy)

• Offer represents a substantially greater proportion of cash versus previous offers, which was needed to get the deal across the line
• The fact that a large amount of cost synergies are to be derived from the R&D line may trouble some investors
• How the deal is funded longer term remains “somewhat murky”, notes that Takeda has reiterated it is committed to retaining investment grade debt, and a ND/Ebitda ratio of 2x is targeted in “medium term” from ~5x post-deal

UBS (neutral)

• Says approval from both Shire/Takeda shareholders is likely, despite the lack of precedent of this kind of deal by a Japanese co.

BERENBERG (buy)

• Takeda’s GBP49/share offer for Shire looks “about right” on valuation, but shareholders may balk at the high equity component
• Adds that one way to increase the cash part would be to sell one or more product franchises
• Disposal of Haematology or Immunology would be keeping with Takeda’s strategy, could also attract higher valuation from buyers

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Authored by Viktor Katuna via OilPrice.com,

Although some companies have learned to ride the waves of geopolitics quite efficiently, still in most cases political tensions only complicate the dealings of energy companies. The Skripal poisoning case has driven a massive political wedge between the United Kingdom and Russia (nations whose relations are historically strained already) and is on the verge of blighting their energy ties. The UK Government’s threats to ban Russian gas imports altogether would be a very short-sighted step, the harm of which would take many years to undo. As opposed to the usual rhetoric of ‘‘safeguarding energy security“ and ‘‘countering Russian influence“, both London and Moscow have a lot to win from a good energy relationship.

The Skripal case is slowly turning into a whodunnit where no one will tell you what really happened and you have to reconstruct everything by yourself – why was the allegedly lethal nerve agent not that lethal, who perpetrated the poisoning and how exactly. Usually when analyzing foreign affairs‘ scandals, it is imperative to look at who could benefit from such a deterioration. One thing is for sure – energy companies only stand to lose. Firstly, British companies might see their maneuvering space narrowed down, especially against the background of Brexit jeopardizing Britain’s adherence to the internal energy market (IEM) of Europe. Although the May government wishes to remain in the IEM, so as not to risk the potential $700 million per year expenses it could bear in a worse-case scenario breakup.

Even if a disaster can be averted and the United Kingdom would stay, regardless if in a limited or full-fledged manner, in the IEM, infrastructure funding from EU funds will almost certainly evaporate. This could be one of the Brexit’s most serious energy consequences, since 16 EU projects of common interest are UK-related, without funding from Brussels, many fall into the risk category of not being implemented. Continental Europe might turn out to be more resolute vis-à-vis UK Brexit demands than expected, for instance, it might justifiably ask whether the €9 billion invested in British electricity and gas projects in 2012-2017 under EIB auspices could have been allocated someplace else. But the risk of relinquishing on Paneuropean trade preferences and investment is not the only specter haunting the UK’s energy specialists.

Concurrently with the trends above, the UK North Sea gas production entered the phase of terminal decline after a temporary rebound in 2013-2017. Thus, imports will inevitably play a more significant role in the UK gas matrix as the rate of production decline will outpace that of a forecast demand decline (expected to balance out at around 60 BCm per year). Adding insult to injury, the UK’s largest gas storage facility, Rough, closed down last Summer, wiping out a hefty part of the nation’s potential storage capacity (3.31 BCm). As things stand currently, UK can sustain only 2 percent of its annual consumption from its storages, which necessitates a thorough rethinking of its gas imports. In such an intricate situation, flexibility of supply should be the paramount aim of the UK political establishment.

Many self-proclaimed energy experts claim that Russia might use its gas supplies as an energy weapon, yet in the case of the United Kingdom there is virtually no risk of seeing that happening. Russia supplies 7 percent of UK crude oil imports and 13 percent of its products intake, in both cases trailing significantly to Norway (56 percent) and the Netherlands (20 percent), correspondingly. Yet crude was never really the crucial issue, gas has been boggling the minds of energy wonks ever since LNG from the recently launched Yamal LNG project hit the terminals of Isle of Grain and Milford Haven. Yet the situation with Britain’s gas imports is even more clearcut as it is with crude – 75 percent of its gas imports are fed via pipeline from Norway, with an additional 13 percent supplied from Qatar in the form of LNG.

Russia’s energy footprint in the United Kingdom has been anything but significant – a fitting example is Gazprom Export, which according to its statistics, supplied 16.3 BCm of gas last year to the UK (34 percent of its import volumes), without specifying the origins of the above gas or disclosing whether the volumes in question were physically delivered to Britain or were swapped elsewhere. Keeping in mind that Norway and Qatar satisfy between themselves 90 percent of UK gas imports (and in both cases Russian companies are not part of the transaction), one can easily assume that any talk of a serious energy clout is a wild overstatement. Which brings us to a key assumption – Russian oil and gas cargoes can be of massive help to the UK to keep their supplies, especially in winter months, as flexible as possible.

While it‘s very difficult in the current political climate to advocate free trade with Russia and not be labelled a propagandist, energy issues are best kept out of politicians‘ direct sphere of influence. Supervision is one thing, obstructionism is an entirely different one. For instance, when Britain needed gas on short notice late February, two 164 000 m3 LNG cargoes were delivered from the Russian Yamal LNG. Everyone was glad about it, except for the political elite. Yet Yamal LNG is just a tiny part of the whole equation – with Baltic LNG expected to come on stream mid-2020s, it would be the closest source of LNG for UK consumers if one is to exclude Norway. Let’s not forget initial plans for the Nord Stream pipeline included a subsea extension to Britain – even without it, Gazprom can bring in more of that cheap pipeline gas via the Balgzand-Bacton Line (BBL), now that Groningen is being wound down.

Last but not least, unilateral trade restrictions rarely lead to results that the initiator anticipates. For instance, do UK legislators promoting the Russian energy ban examine the ways Moscow might respond? Keeping in mind that BP owns 19.75 percent of Rosneft, they can potentially be very painful (and genuinely unsettling after the 2017 BP-Rosneft gas supply deal). Hence ‘‘keep your options open and talk to everyone“ is a good motto, whilst ban the unsympathetic and make the customers pay for your foreign policy decisions is a slow economic suicide. Five-year term politicians might want to choose the latter, but it just demonstrates their ignorance of rules energy markets live by.

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With Moscow–Washington tensions approaching a boiling point, Russia has increasingly debuted a wide array of next-generational weapons to defend itself against Western aggressors.

According to Russian News Agency TASS, Russia will showcase its newest Kinzhal hypersonic missile and other high-tech military weapons during the upcoming May 09 Victory day parade based in Moscow.

“I want to remind you that less than a week has been left before the most important and revered holiday in Russia – Victory Day. Preparations for the military parade are in full swing,” Defense Minister Army General Sergei Shoigu said last week.  

Back in March, Russian President Vladimir Putin used his state-of-the-nation speech to showcase six superweapons that would supposedly revolutionize the game of geopolitics for Russia, and give the country a significant military advantage over the United States. In particular, Putin revealed to the world that his newest hypersonic missile could travel upwards of ten times the speed of sound and overcome all existing missile defense systems operated by the West.

As quoted by TASS, “upgraded MiG-31K fighter jets armed with the Kinzhal hypersonic missile system will take part in the Victory Day parade in Moscow on May 9.” General Sergei Shoigu said.

New photos surfaced last Friday on social media of the Russian Aerospace Forces’ Mikoyan MiG-31 (NATO codename “Foxhound”) carrying the Kinzhal hypersonic missile during Victory Day rehearsals.

A MiG-31 Foxhound with the Kinzhal hypersonic missile was photographed over Moscow on Thursday. (Source: ВКС России/Facebook)

Two MiG-31 Foxhounds carrying Kinzhals were photographed over Moscow on Thursday. (Source: ВКС России/Facebook)

“Apart from advanced Su-57, Su-30SM and MiG-29SMT aircraft, upgraded MiG-31K fighters armed with the cutting-edge Kinzhal hypersonic missile systems will take part in the parade’s air component,” General Sergei Shoigu added.

A prototype Su-57 jet made an appearance during the rehearsal. Russia’s first fifth-generation fighter jet is expected to become the core of its air force. (Source: Vladimir Sergeev / Sputnik)

Su-30s and Su-35s rehearsed late last week over the skies of Moscow. (Source: Grigory Sysoev / Sputnik)

“I want to draw the attention of the personnel involved in the events to the need to comply with safety measures and the rules of hardware operation,” the defense minister pointed out.

The military parade will also feature “advanced weapon systems, including Tor-M2 air defense missile complexes, Terminator combat vehicles, Uran-6 and Uran-9 robotic systems, modern drones, off-road buggies, and snowmobiles,” said General Sergei Shoigu

Mil Mi-28N attack helicopters were also seen above Moscow rehearsing for the military parade this Wednesday. (Source: Ilya Pitalev / Sputnik)

An S-400 Triumf long-range anti-aircraft system was spotted on the streets of Moscow during the rehearsal. (Source: Ramil Sitdikov)

A Korsar strike drone. (Source: Vladimir Astapkovich / Sputnik) 

A BMPT Terminator. (Source: Evgeny Biyatov / Sputnik)

An Arctic variant of the Tor-M2DT anti-aircraft missile system. Source: (Aleksandr Vilf / Sputnik) 

A TTM 1901-40 snowmobile being carried by a Kamaz truck. (Source: Aleksandr Vilf / Sputnik)

A clear consensus is emerging between Moscow–Washington: a new Cold War is developing, with many uncertainties ahead. While Moscow is eager to show off their modern weaponry this Wednesday, President Donald Trump is expected to have a military parade of his own on November 11, in Washington, D.C.

Is it time to get bullish on war?

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Authored by Wayne Madsen via The Strategic Culture Foundation,

Five NATO members continue to possess colonies. These NATO states have no intention of granting their territories independence any time soon. Not only does France, the United Kingdom, the Netherlands, Denmark, and the United States insist on maintaining vestiges of their colonial pasts, but their colonies have been interwoven into NATO’s military infrastructure.

The continued presence of French, British, Dutch, Danish, and American colonies around the world extends what is officially called the “North Atlantic Treaty Organization” to the South Atlantic, the Caribbean Sea, the Pacific Ocean, and the Indian Ocean. If there was ever an organization guilty of blatantly deceptive advertising practices, it is NATO.

Recent attempts to secure more political autonomy in the French Caribbean territories of Guadeloupe, Martinique, and French Guiana, the latter the home of a French space launch facility having strategic importance, have been met with everything from indifference in Paris or extreme hostility. A January 26, 1968 SECRET Central Intelligence Agency report warned against Soviet attempts to establish space tracking facilities in French Guiana. That same year, the Guiana Space Center was established at Korou in the French colony. NATO ordered the suppression of independence moves by the people of Guiana to keep the center solely in the hands of France and the European Space Agency. In March and April 2017, populist tempers flared when Guianese protesters took over the Korou space facility over charges that France was ignoring the people of the colony. Youth unemployment, for example, is at a staggering 55 percent.

Moves by Britain to curb the financial independence of its Caribbean-Atlantic territories of the Cayman Islands, Turks and Caicos Islands, Bermuda, Anguilla, and the British Virgin Islands (BVI) have faced charges in those territories of Britain’s re-imposition of colonialism on the self-governing territories. The Dutch have been the most blatantly neo-colonialist in rolling back self-government in St. Maarten, Bonaire, St. Eustatius, and Saba. The Dutch totally ignored the results of a 2015 referendum in Bonaire that rejected the island’s incorporation into the Netherlands by 65 percent. A 2014 referendum in St. Eustatius also rejected incorporation into the Netherlands. The Dutch colonizers have moved to impose direct rule on both islands with a wink and a nod from NATO.

NATO treats its member states’ Caribbean and Atlantic territories as military “terra firma,” where air and naval bases either currently exist or could be ramped up for military actions. Attempts at independence or a strong degree of autonomy are not in NATO’s interests. NATO, through its surrogates in Copenhagen, has deterred any move toward independence by the Faroes and Greenland, both Danish territories that, on paper, enjoy self-government. NATO wants to ensure its continued presence at the U.S. airbase in Thule and deter China from mining operations in rapidly-warming Greenland that target known major deposits of rare earth minerals. Recent elections in Greenland resulted in a victory for Prime Minister Kim Kielsen and his four-party coalition that favors independence from Denmark. One of the parties, Nunatta Qitornai, favors immediate independence from Denmark. A scheduled referendum on a new constitution in the Faroes was postponed for six months. The referendum, which could lead to independence from Denmark, may have been delayed as a result of NATO interference directed through surrogates in Copenhagen and the Faroese capital of Torshavn.

The Dutch have ignored requests for more autonomy in the Caribbean territories of Aruba and Curacao, both sites of U.S. and NATO military and intelligence aerial and naval assets targeting the government of Venezuela and leftist groups in Colombia. The U.S. 12th Air Force, based at Davis-Monthan Air Force Base in Arizona, operates two “Cooperative Security Locations” at Hato International Airport in Curacao and Reina Beatrix International Airport in Aruba.

A 2012 Status of Forces Agreement (SOFA) between the United States and the Netherlands grants access until 2021 to U.S. military forces for “training” and other purposes to Bonaire, Saba, St. Eustatius, and Saint Maarten. It was after this agreement was signed that the special autonomy enjoyed by these territories began to be rolled back by the governing cliques in The Hague and Amsterdam.

Recent moves by the British government to require its Caribbean and other territories to adopt public ownership registers prior to the end of 2020 or risk having their financial affairs taken over directly from London has resulted in a revolt among the British colonies, especially those in the Caribbean. London maintains that the public ownership registers are necessary to stem the flow of “dirty money” and secret corporate ownership in the wake of the “Panama and Paradise Papers” offshore tax haven financial records’ disclosures. The British territories argued that after the imposition of public ownership records, offshore firms and their money will simply move to other locations where corporate secrecy will continue to be maintained.

Of course, to avoid dictates from London, some British territories are already floating the idea of independence. BVI Premier Orlando Smith said London’s move to infringe on BVI’s self-government calls into question the constitutional relationship between the United Kingdom and the people of the BVI. BVI has moved to establish direct links with the Caribbean Community (CARICOM) of independent nations, without the interference of the London colonial authorities. BVI is now represented at CARICOM and Association of Caribbean States meetings by its own External Affairs Secretary. Likewise, Cayman Islands Premier Alden McLaughlin has demanded more control over his islands’ affairs, including national security and membership in the World Trade Organization. British authorities have not only refused but are making moves to impose British financial regulations on the popular offshore business haven.

Caribbean territorial leaders point out that the requirements imposed on them do not apply to the Isle of Man or the Bailiwicks of Jersey and Guernsey, which, as crown dependencies of Queen Elizabeth, are not subject to the whims of the British Parliament. If London attempts to impose its will on the crown dependencies, they have let it be known that they will move to cut their links with the British Crown and opt for independence.

NATO, of course, does not want to see any moves toward independence from islands within the Irish Sea, English Channel, or Caribbean. The Trump administration has re-established the U.S. Navy’s Second Fleet, which was disbanded by President Obama in 2011 and will have responsibility for the North Atlantic, including Bermuda and Greenland, the latter also seeking independence from its Danish colonial masters. The U.S. Navy’s Fourth Fleet continues to dominate the American Caribbean territories of the U.S. Virgin Islands and Puerto Rico; the British territories of the Caymans, Turks and Caicos, Anguilla, BVI, and Montserrat; the Dutch territories of Aruba, Curacao, Bonaire, Saint Maarten, Saba, and St. Eustatius; and the French territories of Guadeloupe and St. Barthelemy, Martinique, and French Guiana. U.S. Southern Command, based in Miami, exercises an almost viceroy-like political domination over the entire Caribbean region.

NATO is also keeping a wary eye on the French colony of New Caledonia in the Pacific. Neither NATO nor Australia want New Caledonia voters to opt for independence in the upcoming referendum in November of this year. French mainlanders who colonized the island territory are pushing for a “no” vote and French President Emmanuel Macron recently visited the colony to emphasize the importance of retaining the colonial link with France. A major psychological operations campaign is being waged to convince the indigenous Kanaky people that the French colonialists already have the votes to defeat independence. Another psychological campaign is being waged that falsely claims that China is moving in to establish a naval base in nearby Vanuatu.

NATO, while still using the “North Atlantic” designator, does not want to lose its colonial footprints around the world, from Mayotte in the Indian Ocean and Wallis and Futuna in the South Pacific to St. Helena in the South Atlantic and Guam in the West Pacific. NATO has long been accused of waging neo-colonial wars in Africa, the Middle East, and Asia. However, when it comes to basic garden-variety colonialism, NATO is intent on maintaining control over of its member states’ territorial toeholds in the seven seas.

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In the case of a no deal Brexit, in which the country must resort to WTO rules for international trade, the negative effects on the UK car industry could be devastating. The current uncertainty surrounding the type of deal that will be struck with the EU is already having an effect on production output and leading major investors such as Toyota and PSA (Vauxhall) to assess their future in the region.

It’s not just investors that need to be reassured in these times of uncertainty, though.

If the industry is to prosper, demand for cars also needs to remain high among consumers. As Statista’s Martin Armstrong shows in the infographic below, the Brexit effect is also starting to take hold of new registrations.

You will find more infographics at Statista

As with production, new registrations peaked in 2016 at 2.69 million. Last year though, this fell by 150,000 to 2.54 million.

Looking ahead, forecasts by SMMT are less than optimistic, with the trend expected to continue down to 2.35 million by 2019.

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