Category: zerohedge

Via EIA.gov,

The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the world’s most important oil chokepoint because of the large volumes of oil that flow through the strait. In 2018, its daily oil flow averaged 21 million barrels per day (b/d), or the equivalent of about 21% of global petroleum liquids consumption.

Chokepoints are narrow channels along widely used global sea routes that are critical to global energy security. The inability of oil to transit a major chokepoint, even temporarily, can lead to substantial supply delays and higher shipping costs, resulting in higher world energy prices. Although most chokepoints can be circumvented by using other routes that add significantly to transit time, some chokepoints have no practical alternatives.

Volumes of crude oil, condensate, and petroleum products transiting the Strait of Hormuz have been fairly stable since 2016, when international sanctions on Iran were lifted and Iran’s oil production and exports returned to pre-sanctions levels. Flows through the Strait of Hormuz in 2018 made up about one-third of total global seaborne traded oil. More than one-quarter of global liquefied natural gas trade also transited the Strait of Hormuz in 2018.

Source: U.S. Energy Information Administration, based on Short-Term Energy Outlook (June 2019), ClipperData, Saudi Aramco bond prospectus, Saudi Aramco annual reports, Saudi Ports Authority, International Group of Liquefied Natural Gas Importers, and U.N. Conference on Trade and Development
Note: LNG is liquefied natural gas; Tcf is trillion cubic feet

There are limited options to bypass the Strait of Hormuz.

Only Saudi Arabia and the United Arab Emirates have pipelines that can ship crude oil outside the Persian Gulf and have the additional pipeline capacity to circumvent the Strait of Hormuz. At the end of 2018, the total available crude oil pipeline capacity from the two countries combined was estimated at 6.5 million b/d. In that year, 2.7 million b/d of crude oil moved through the pipelines, leaving about 3.8 million b/d of unused capacity that could have bypassed the strait.

Source: U.S. Energy Information Administration, based on ClipperData, Saudi Aramco bond prospectus (April 2019)
Note: Unused capacity is defined as pipeline capacity that is not currently used but can be readily available.

Based on tanker tracking data published by ClipperData, Saudi Arabia moves the most crude oil and condensate through the Strait of Hormuz, most of which is exported to other countries (less than 0.5 million b/d transited the strait in 2018 from Saudi ports in the Persian Gulf to Saudi ports in the Red Sea).

EIA estimates that 76% of the crude oil and condensate that moved through the Strait of Hormuz went to Asian markets in 2018. China, India, Japan, South Korea, and Singapore were the largest destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for 65% of all Hormuz crude oil and condensate flows in 2018.

Source: U.S. Energy Information Administration, based on tanker tracking data published by ClipperData, Inc.

In 2018, the United States imported about 1.4 million b/d of crude oil and condensate from Persian Gulf countries through the Strait of Hormuz, accounting for about 18% of total U.S. crude oil and condensate imports and 7% of total U.S. petroleum liquids consumption.

via ZeroHedge News http://bit.ly/2RByedB Tyler Durden

Authored by Paul Craig Roberts,

According to news reports, the validity of which cannot be ascertained by the general public, a crazed US government came within 10 minutes of igniting a general conflagration in the Middle East, the consequences of which could have been catastrophic for all. 

The moronic warmongers in high office – Bolton, Pompeo, and Pence – and their Israel Lobby masters are determined, and they have not abandoned their campaign for war with Iran.  Of course, the liars say that Iran will just accept its punishment for defending its territory and there will be no war.  But this is not what Iran says.  I believe Iran.

Some of the tiny percentage of people in the Western World who are still capable of thought regret that Trump called off the insane plan.  They think the consequences would have been the destruction of the Saudi and Israeli governments—two of the most evil in history—and the cut-off of oil to the US and Europe, with the resulting depression causing the overthrow of the Western warmonger governments.  They believe that catastrophic American defeat is the only way peace can be restored to the world.  

In other words, it is not clear whether Trump calling off the attack saved us or doomed us.  The Israel Lobby and their neoconservative agents have not been taught a lesson.  Trump has not fired Bolton and Pompeo for almost igniting a conflagration, and he has not dressed down his moronic vice president.  So, it can all happen again.  

And likely will.  The lesson that Bolton and Israel have learned is that the fake news about an Iranian attack on a Japanese freighter, denied by the Japanese, was not sufficient to lock Trump into “saving face” by attacking Iran.  So be prepared for a larger orchestrated provocation. Bolton and Israel know that the Western presstitutes will lie for them.  Watch for a provocation that allows Trump no alternative to an attack.

Washington’s use of fake news and false flag attacks to launch military attacks goes back a long way.  In the 21st century we have had a concentrated dose—Saddam Hussein’s weapons of mass destruction, Assad’s use of chemical weapons, Iranian nukes, Russian invasions, Maduro starving his own people, the endless lies about Gaddafi.  Yes, I know there are more.  I am writing an article, not an encyclopedia.

Washington has grown accustomed to attacking countries on false pretenses and getting away with it.  Therefore, there is nothing to discourage the Israel Lobby and its Washington puppets from continuing to set-up Iran for an attack.  Success breeds incaution.  The attack on Iraq was stage-managed by a credible US Secretary of State before the UN.  The attack on Libya was stage-managed by a UN resolution that a deceived Russia and China failed to block.  In situations such as these, Washington arranged a green light for its war crimes.  However, Washington has failed to stage-manage a green light for an attack on Iran. Moreover, Iran is a more powerful military force than Iraq and Libya, and the extent of the depth of Russian and Chinese support for Iran is unknown to Washington.

If Israel succeeds in having its Washington puppet attack Iran, Israel and its neoconservative agents will not welcome failure of their objective.  They will fight against failure with more dangerous moves.  I can easily imagine the fanatics having Trump “save face” by destroying the world and issuing some kind of ultimatums to Russia and China or resorting to the use of nuclear weapons against Iran.  

The insouciant American – indeed, Western – people are kept unaware by design.  It is the function of the presstitutes to control the explanations given to the people.  The US Congress is bought and paid for by the Israel Lobby, as are most important politicians in the UK and Europe.  What I am telling you is that it is very easy for fanatics to produce Armageddon.

Stephen Cohen and I, and a few surviving others, lived through the 20th century Cold War. In recent years we both have reported on numerous occasions that the threat of nuclear war today is far higher than during the Cold War.  One reason is that during the Cold War US and Soviet leaders worked to defuse tensions and to build trust.  In contrast, since the Clinton regime the US has worked consistently to build tensions.  Both Cohen and I have listed on many occasions the tension-building activities pursued by all post-Reagan/George H.W. Bush administrations.

The Russians no longer trust Washington, and neither do the Chinese.  Washington has lied to, and about, Russia so often in the 21st century that Russian trust of Washington is exhausted.  No matter how earnestly the Russian government wants to trust Washington, it dare not do so.

Therefore, it takes very little miscalculation for the morons in Washington to cause a threat-ending response from Russia as Washington has convinced the Russian government that the US intends to destroy them.  

The orchestration of Russiagate by the Democratic Party, military/security complex, and their media whores has, as Stephen Cohen has emphasized, forced President Trump in an act of self-preservation to adopt the neoconservative attitude toward Russia and other “non-compliant” governments.  This attitude is dangerous enough in the best of times.  It is extremely dangerous after trust has been destroyed by years of lies and false accusations.  

Perhaps there is someone in the Trump administration who has the intelligence to understand the dangerous situation and who has Trump’s confidence.  But I do not know who that person is.

We have to face the fact that as we face Armageddon the Western World is leaderless.

*  *  *

Please contribute to the success of the June quarterly appeal by donating to Paul’s website.

via ZeroHedge News http://bit.ly/2ZM95Qh Tyler Durden

While it may not yet be the sequel to the GAM Absolute Return Fund or the more recent Neil Woodford investment fiasco, which saw the “investing legend” gate his clients from redeeming money following a serious of terrible investments, the grotesquely named Natixis H20 funds, which we profiled last week as the latest example of how quickly investor panic can escalate once it is discovered how illiquid most fixed income fund investments truly are.

To be sure, the H20 Asset Management fund – yes, the fact that it is named for liquidity when the reason it is about to collapse it that there is none is not lost on us, or anyone else for that matter – refuses to go away quietly and in recent days its parent, troubled French bank Natixis went into crisis-fighting mode to stem a wave of outflows by selling €300 million euros of its unrated private bonds. It then unveiled an ingenious way to halt redemptions without actually imposing gates: according to Bloomberg, it marked down the balance of its holdings “to remove incentives for investors to pull even more.”

You see, when times are great and when funds are happy to demonstrate their performance and portfolios to the world, they tend to “accidentally” mismark their portfolios rather high to appear even more skilled at generating alpha (than they are). However, should the scene flip 180 and the fund finds itself in mortal danger of a redemption avalanche, the first thing the fund’s creative managers do is suddenly reprice all the holdings in the fund sharply lower, forcing those investors who demand their money back to take huge losses.

Truly odd how mark-to-“market” works, when the market for illiquid securities in question does not exist. Perhaps one day regulators will actually look into that.

For now however, we will observe just how successful the anti-H20 fund is in curbing investor enthusiasm to recoup their money, even if they know full well that the longer they wait, the less they will recover.

As Bloomberg explains, the move cut the aggregate market value of the bonds, which were issued by companies linked to German scandal-ridden financier Lars Windhorst, to less than 2% of assets under management, H2O said in a statement on Monday.

So in an attempt to crush investor enthusiasm to pull money, H2O’s funds, whose assets doubled since 2017 to $37.6 billion before last week’s tumult, will be priced at a discount between 3% and 7% – with the thinking here being that anyone who liquidates will be forced to take a major hit – and the company will remove all entry fees across its funds, it said.

Will this plan work? That’s the question as fund managers hope to reverse outflows from a group of H2O funds that saw their assets drop by 1.1 billion euros on Thursday as analysts questioned their holdings.

By moving swiftly and having fund investors take valuation losses now, H2O is seeking to avoid the fate of famed U.K. stock picker Neil Woodford and Swiss asset manager GAM Holding AG, which both froze funds over the past year amid concerns about whether they’d circumvented investment restrictions. Of course, by admitting just how overvalued its “assets” were until now, it risks accelerating the redemptions as investors in other funds seek to recovery as close to par as possible before they too are steamrolled.

As reported last week, Morningstar questioned the “liquidity and appropriateness” of some of H2O’s corporate-bond holdings as well as potential conflicts of interest, and suspended its recommendation on Wednesday, while research firm Autonomous said the notes are akin to loans, which aren’t permitted.

Meanwhile, in an attempt to halt its tumbling stop price, Natixis brought forward a periodic audit of the unit to start June 21. Its shares rose slightly on Monday, halting the two-day slump that followed Morningstar’s move. The bank lost almost 12% last week, falling to the lowest level in nearly three years on Friday.

Additionally, H2O sold about 300 million euros worth of private placements on Friday, according to a letter seen by Bloomberg. The money manager also said it planned to appoint an independent auditor to reassure investors about its investment process and valuation policy regarding non-rated private bonds in their funds, according to the note.

So how did the fund justify the valuation cuts of its illiquid holdings?

According to Bloomberg, the fund said it depreciates all portfolio assets in line with market prices and that it started marking down net asset values as of Wednesday. This is why “our funds have overall posted daily negative performances, despite the good showing of our main investment strategies,” H2O said in the letter. In other words: anything you want to sell will be priced sharply lower.

Separately, a fund spokesman said the aggregated value of the non-corporate bond holdings across H2O’s range of funds was 500 million euros as of Monday, although these numbers tend to magically increase over time.

“The long-term performance drivers of H2O funds, which have been proven over numerous years to the benefit of our clients, remain unaffected as they are not related to this type of investment,” Natixis said in statement on Monday.

“The liquidity of the securities is ensured and will allow it to face potential additional withdrawals” it concluded, although by that point nobody believed it because as has emerged in recent years, starting with Third Avenue and the UK property funds following the Brexit vote, and continuing through GAM, Woodford and now, Natixis, all it takes is for one seller to emerge before everyone else realizes just how illiquid the investments truly are, creating a self-fulfilling prophecy of selling which in turn results in more selling, until the fund itself is forced to liquidate at massive losses.

That this is happening in broad daylight and before the eyes of regulators is stunning because this is also a blueprint of how the next crash will play out, not only for bonds but stocks as well, once the overall market goes bidless.

For now, the only questions that have emerged is whether Natixis and other fund managers, most notably Woodford have faced questions over whether they’ve circumvented liquidity restrictions by re-packaging assets. The question now, as we asked last week, is whether the illiquid investments that have caused trouble for H20, GAM and Woodford represent a wider trend in the fund-management industry. Jacob Schmidt, CEO of Schmidt Research Partners, a global investment firm, argues that they are, drumroll, “isolated incidents.” And yes, we are not the only ones to find that an investment firm would argue that all investment firms aren’t liquidity Ponzi schemes.

 

via ZeroHedge News http://bit.ly/2LeDbrF Tyler Durden

Authored by Tom Luongo,

It is clear that Iran is sending the U.S. a stern message. And that message is we can hurt you asymmetrically as much as you hurt us.

Over the weekend Iran’s leadership made it clear there was no mistake in their actions last week. They purposefully shot down one of our most advanced drones to send the U.S. a very clear warning.

‘Our capabilities far exceed your tolerance for withstanding them.’

The more we learn about this incident the more the initial story concocted by the U.S. looks specious. Drone in international airspace? Most likely not.

Trump said someone made a mistake? No, completely deliberate.

The drone that was shot down, an RQ-4A Global Hawk, was the cream of our surveillance drones. It was flying in tandem with an anti-submarine Poseidon P-8 spy plane, which, according to Elijah Magnier was carrying far more than its normal crew of 9.

Try 38.

That was not reported at first either in the initial flush for war. Iran then revealed just how loose with the truth the U.S. turned out to be and that forced a complete rethink of the situation.

There was no mistake involved. No IRGC officer panicked. Iran deliberately targeted the Global Hawk after it failed to respond to hails to leave Iranian airspace and turned off its GPS, lights and digital systems.

It was acting as a hostile and Iran treated it as such. After sparing the Poseidon P-8 and its crew and passengers Iran shot down the drone.

That said Iran made this decision only after getting confirmation that the U.S. ruled out going to war with them. So, they stood down from shooting the Poseidon, which was the initial target, according to Magnier’s sources within the IRGC.

“Iran was about to hit and destroy the US Navy P-8 Poseidon spy and anti-submarine Boeing that was flying in the area when we received confirmation that the US had decided not to go to war and not to bomb any control and command or missile batteries positions, cleared or non-cleared, along the Straits of Hormuz. Had Trump decided otherwise, we had orders to hit several US and US allies’ targets and the Middle East would have been the theatre of a very destructive war with huge losses on all sides”, said an Iranian IRGC General.

But even after that confirmation came down Iran still chose to shoot down the drone. This was a clear message that actions speak far louder than words.

The Iranian leadership decided it was time to test Donald Trump’s mettle. They didn’t have to shoot down the drone. But if they didn’t it would give the U.S. carte blanche to violate Iranian airspace without fear of reprisal solely because back-channel communications say, for now, the U.S. has stayed its hand.

This is likely why Trump was so angry at the presser the other day with Justin Trudeau when asked about the incident. He made what he thought was a gesture of good faith to Iran and, to him, Iran spit in his eye.

And this is where Trump’s fundamental character flaws come to the fore. He’s simply not able to see things outside of his own personal costs. A classic narcissist. And this is why he wanted desperately to bomb Iranian targets in response.

Because of his fundamental flaws he had to be talked off the ledge by, reportedly, Tucker Carlson. Good on Tucker if this is even remotely true, but should it have come to this?

If this is what passes for the decision-making flowchart of the Trump administration then we should all be really worried.

In the end, this was just a drone and one that was 1) somewhere it shouldn’t have been and 2) acting in a very suspicious manner, if the Iranian side of the story is to be believed.

And given the potential costs for Iran if they were wrong, the onus of proof, in my mind, lies with the U.S., which it will not provide. That’s a clear signal that we don’t have the evidence to back up our story.,

Then Trump floats this nonsense about killing 150 Iranians wouldn’t be “proportionate.” So people who starve or are denied a better life because of sanctions and threats aren’t casualties, Don? Only those killed by bombs?

Again, this is the position of a sick and dangerous narcissist. And don’t think I would only say this about Trump. No, this goes for all of this country’s leaders going back decades.

Sanctions are acts of war. Embargoes are immoral. Just because you can’t tie deaths to it directly doesn’t mean the effects of them aren’t real.

So Trump sends out two signals today.

First, he tells everyone in the region they are on their own to protect their regional assets, i.e. oil tankers. This is a clear message that he’s done escalating this stand-off with Iran and is looking for ways out of this.

Because if he were truly serious about taking all of Iran’s oil off the market he would be pledging 5th fleet escorts today rather than complaining that China should pay for securing their oil shipments.

Trump started this fight now he doesn’t know how to get out of it. I expect Putin and Xi will sit him down at the G-20 and work through his options. These men always allow Trump to save face. Iran can’t. The only way they win here is to beat him thoroughly such that everyone knows it.

But as I said over the weekend, Iran isn’t interested in allowing Trump to save face here without him giving up something yuge. He started this fight and it’s up to him to put something tangible on the table. And saying, “I won’t bomb you back to the stone age over a drone” is not an olive branch.

The second thing he did today, confirming his impotence, was putting ineffectual and idiotic sanctions on Iran’s political leadership.

I’m sure they are shaking in their turbins now!

The war-gaming after this incident was clear, however. Any retaliation by the U.S. would be catastrophic for the world economy. It would unleash a regional conflict on multiple fronts which would not be any kind of controlled theater. I’m sure even the biggest hawks on the Joint Chiefs of Staff would have been uncomfortable with fighting those battles.

In the end, it looks like Iran’s message was sent and delivered. Trump found out that no amount of external direct pressure will get the Iranian government to fold.

That for all the might of the U.S. military and financial empire, its weaknesses are deep enough that even a relatively weak military and economy like Iran’s can stop it all dead cold because of basic things like geography, logistics and simple human resolve.

*  *  *

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via ZeroHedge News http://bit.ly/2WWN1R7 Tyler Durden

One Month after the US Department of Homeland Security warned that Chinese-made drones may be sending sensitive flight data to their manufacturers in China, DJI – which makes 80% of the drones used in the US and Canada, plans to build them in the United States according to Reuters.  

DJI said it will assemble its Mavic 2 Enterprise Dual drones in Cerritos, California, after the U.S. Customs and Border Protection determines that the U.S. produced value of its drones will qualify under the U.S. Trade Agreements Act. That designation should make it easier for some U.S. government agencies to buy the drones, the company said. –Reuters

“This new investment will expand DJI’s footprint in the U.S. so we can better serve our customers, create U.S. jobs, and strengthen the U.S. drone economy,” the company said in a Monday statement. 

DHS’s Cybersecurity and Infrastructure Security Agency said on May 20 that DJI drones are a “potential risk to an organization’s information,” and “contain components that can compromise your data and share your information on a server accessed beyond the company itself.” 

“The United States government has strong concerns about any technology product that takes American data into the territory of an authoritarian state that permits its intelligence services to have unfettered access to that data or otherwise abuses that access,” reads the May alert. 

“Those concerns apply with equal force to certain Chinese-made (unmanned aircraft systems)-connected devices capable of collecting and transferring potentially revealing data about their operations and the individuals and entities operating them, as China imposes unusually stringent obligations on its citizens to support national intelligence activities.” 

In 2017, the US Army banned DJI drones, alleging that critical law enforcement and infrastructure data was being passed along to the Chinese government. Another report that year an internal intelligence assessment by the Immigrations and Customs Enforcement agency (ICE) in Los Angeles concluded that DJI was “selectively targeting government and privately owned entities within (the US. critical infrastructure and law enforcement sectors) to expand its ability to collect and exploit sensitive US data.”

Users are warned to “be cautious when purchasing” drones from China, and to take precautionary steps like turning off the device’s internet connection and removing secure digital cards.

“Organizations that conduct operations impacting national security or the Nation’s critical functions must remain especially vigilant as they may be at greater risk of espionage and theft of proprietary information,” the alert states. –CNN

Senator Rick Scott (R-FL) asked at a Senate Commerce subcommittee hearing if Congress should outlaw the US sale of Chinese-made drones, stating “I think we’re crazy to do business with the Chinese.” 

“We ought to be buying American products in every way we can…. They are not our friend,” Scott added. 

Democrat Ed Markey added that Americans who own Chinese-made drones have privacy concerns, claiming that “Chinese animate (drones) with their values, which are inconsistent with ours,” said Markey. 

Meanwhile, President Trump said in a June 10 memo that “the domestic production capability for small unmanned aerial systems is essential to the national defense,” while National Defense University faculty member Harry Wingo told the Senate panel that “the US is over-reliant” on DJI drones, which have captured over 70% of the market by some estimates. 

“The glaring gap between U.S. and Chinese companies like DJI in the (drone) platform market should be a wake up call,” said Wingo, suggesting that the issue “presents a national risk, similar to that highlighted by President Trump in calling out the risk of using 5G equipment from Huawei in U.S. telecommunications networks.” 

On Monday, DJI introduced Government Edition, a package of hardware and software controls to create a data firewall for the photos, videos and flight logs created by a drone. The company said it is currently available on some of its products but not yet on Mavic 2. Those drones “cannot access the internet and only stores information on the device.”

The company’s drones are used by many U.S. government agencies, including the New York Police Department. Police in Fremont, California in February used a DJI drone to find an emotionally troubled deaf boy, and last week game wardens in Coleman County, Texas used a DJI drone to find two kayakers missing along a rural river after dark. –Reuters

According to DJI, the company is “deeply concerned that, left unchecked, the unsubstantiated speculation and inaccurate information presented during your subcommittee hearing will put the entire U.S. drone industry at risk, causing a ripple effect that will stunt economic growth and handcuff public servants who use DJI drones to protect the public and save lives.” 

via ZeroHedge News http://bit.ly/2Fwg6x3 Tyler Durden

Authored by Adrian Zmudzinski via CoinTelegraph.com,

Ethereum co-founder Joseph Lubin said that Facebook’s Libra token is like “a centralized wolf in a decentralized sheep’s clothing” in an article published on tech news outlet Quartz on June 21.

image courtesy of CoinTelegraph

The social media giant released the white paper for a its cryptocurrency dubbed Libra earlier this month to mixed reviews from experts in the cryptocurrency and blockchain industries and concern from government regulators.

In his article, Lubin notes that Libra’s white paper describes feelings common among many in the cryptocurrency community. It states that “sending money across the globe should be as simple and inexpensive as sending a message on your phone,” and “financial infrastructure should be globally inclusive and governed as a public good.”

While noting the white paper’s claim that “People will increasingly trust decentralized forms of governance,” Lubin pointed out the need for users to trust Libra’s fiat currency and government bond backing, and merchants to trust that the network be responsibly run. Furthermore, Lubin also noted its centralized infrastructure:

“Perhaps most importantly, it requires our trust that Libra will eventually transition to a more ‘permissionless,’ decentralized system, whereby anyone can validate the network, rather than the restrictive member evaluation criteria keeping control in the hands of the initial 28 firms.”

Still, Lubin admits that he sees some good in the project. He says that in a few years there could be two billion Libra users, and cryptocurrency user experience (UX) could be vastly improved in the process:

“In one fell swoop, talented UX designers could reduce the current friction of using cryptocurrency. Managing private keys, understanding ‘gas payments,’ and installing crypto browser plugins could be as simple as pressing ‘send’ in WhatsApp, another Facebook-owned entity.”

Lubin also claims that developers at Ethereum-centric development company ConsenSys already analyzed the code and noticed that the project borrows a lot of ideas from Ethereum. Lastly, he notes that he expects Libra to be well-executed from a technical point of view.

As Cointelegraph reported yesterday, the governor of the Reserve Bank of Australia, Philip Lowe, cautioned that Facebook’s announced Libra currency may not attain mainstream usage in the near future.

Also, earlier this week a G7 taskforce was created to examine how central banks can regulate cryptocurrencies.

via ZeroHedge News http://bit.ly/2Y92kI1 Tyler Durden

Having stayed off of Twitter for a brief period as his car-making company’s stock collapsed, Tesla CEO Elon Musk is back… but perhaps regrets it… again!

On Sunday, Musk (with his SpaceX CEO hat on) touted his Starship project, a multibillion-dollar rocket that one day might take people to Mars. “Accelerating Starship development to build the Martian Technocracy,” Musk stated in a tweet, then followed up with the following…

pic.twitter.com/yUUSNdWMEw

— Elon Musk (@elonmusk) June 23, 2019

There’s just one thing wrong… the tech ‘genius’ used an image of the moon, not Mars, in the promotional photo.

Although one may argue that the Moon in Musk’s tweet resembles Mars due to its reddish tinge, the twitterati were quick to pounce on Musk’s egregious error, and started educating Musk on the Moon’s looks, shaming him for allowing the mix-up.

That’s the moon 😏 pic.twitter.com/JkrbrL422v

— 📸Trevor Mahlmann (@TrevorMahlmann) June 23, 2019

Are we occupying Mars during a lunar eclipse or did you not realize that’s the moon?

— Dave Hogg (@stareagle) June 23, 2019

First you need to be able to identify a picture of it dude

— jon rosenberg🌮🌯 (@jonrosenberg) June 23, 2019

I fixed it. pic.twitter.com/PktsDiDafS

— Steven Baumann (@StevenDJBaumann) June 24, 2019

Maybe it’s time to take another Twitter break?

via ZeroHedge News http://bit.ly/2X61K19 Tyler Durden

Authored by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media

Iran averted all-out war in the Middle East at the last moment when the Central command and control operational room of its Army and the Iranian Revolutionary Guard Corps (IRGC) ordered not to shoot down a US Navy anti-submarine warfare, Intelligence, surveillance and reconnaissance Poseidon P-8 . 

Unusually, there are 38 on board the P-8 aircraft which requires a crew of 9. There were a minimum of 6-8 officers on board (2-3 Col, 3-4 Lt) and the remaining crew likely held grades under Lieutenant. The plane was flying within range of Iranian missiles over Iranian waters when Iran’s central command and control received confirmation that the US would not go to war or hit any target in Iran. This took place following the Iranian downing of one of the most advanced US drones last Thursday. The drone had been violating Iranian airspace, according to Tehran authorities, who later presented the debris of the unmanned drone to the media. Iran had received confirmation through a third country that President Donald Trump would refrain from bombing any Iranian positions. 

“Iran was about to hit and destroy the US Navy P-8 Poseidon spy and anti-submarine Boeing that was flying in the area when we received confirmation that the US had decided not to go to war and not to bomb any control and command or missile batteries positions, cleared or non-cleared, along the Straits of Hormuz. Had Trump decided otherwise, we had orders to hit several US and US allies’ targets and the Middle East would have been the theatre of a very destructive war with huge losses on all sides”, said an Iranian IRGC General.

But how did war almost break out on the morning of June 20^th, and how did Iran decide to down a US drone?

An IRGC high ranking officer said “the Rules of Engagement are agreed to by the Central command and control of the army and the IRGC. These are communicated to the thousands of air defense forces positions spread throughout the country. Decisions are not independently and unilaterally taken by a lone wolf General or the commander of a particular position, as Trump embarrassingly believes.”

“Iran has received detailed information and mission objectives, via reconnaissance and other intelligence means, related to the types of the mission of the last batch of US forces sent by Trump (the Pentagon announced it was sending 1000 personnel) to the area. These have the task of monitoring the air and the sea (both above and under), command several drones and have task forces ready to engage immediately any potential target. All this is under the auspices of protecting oil tankers navigating in the Gulf of Oman and the Persian Gulf. This move took place following the attacks on oil tankers at al-Fujairah and the last attacks on two tankers. These attacks are the result of Trump’s decision to sanction Iran and prevent any country from buying its oil. Iran made it clear that no oil will be exported from the region if Iran cannot… Therefore, whatever the US military procedure, it will not enable oil to reach the rest of the world, particularly not in the aftermath of the downing of the drone”, said the source.

According to the military officer, the “Iranian Central command and control issued a protocol to be followed by all command and control spread throughout the country, giving instructions to stop any violations of Iran’s sea, land and air territories. A warning is issued when the violation is identified, whether intentional or unintentional. The local IRGC command also informs the central command of the violation and, simultaneously, orders the intruder to adjust the course of its trajectory and identify itself.” 

This is exactly what happened on the morning of the 20^thof June, the equivalent of the 30^thof Khordad in the Persian calendar. This is when the US drone was spotted leaving the Emirates and flying towards the Iranian coast, exploring the Gulf for around 4 hours. On its way back, when violating Iranian airspace, the base communicated with the drone and gave the usual warning. The drone responded by turning off its digital system, lights and GPS, indicating that it was a military object with either an intelligence gathering or battle mission. It was thus immediately classified as hostile and therefore a potential target. When it ignored repeated calls for identification, the central command of the air-defense position followed mission instructions and, in this case, decided to down the drone. Our radars could see the drone and the heat it was producing. A ‘Third of Khordad’ missile was launched to destroy the target immediately”.

The military commander confirmed that the “political and military leadership coordinate decisions given to the command center and weigh carefully the consequences and implications of any orders given. These orders are clear: firmly engage with any threat. An economic war is being waged on Iran, and this war is equivalent to the most violent military action. This is why the thousands of air-defense positions spread in the country will decisively act accordingly: they are on a permanent state of alert and ready to follow the orders and training they have already received in case the US decided to go to war”.

“We decided not to down the P-8 Poseidon because we received confirmed information that no war is expected. Otherwise, we would not have hesitated to hit any US objective in the area, in the air, US military bases or the sea if the US military decides to hit us. The consequences would be irrelevant, and the blame for who started it and who is responsible will no longer matter. We will be at war”, said the general. Unusually the P-8 Poseidon, which normally has a crew of 9, was carrying 38 crew and officers on board. 

Iran plans to adopt a strategy of progressive hits in case of war: “our allies will be an essential part of our battle so the front will be enlarged beyond Iran and the nearby US military bases. The allies are ready to run into battle and are giving signals of their readiness. We have noticed that no Israeli drone has been identified above Lebanon for a couple of days. Obviously, Israel is trying to avoid provoking a message from Lebanon, similar to the downing of the US drone. It looks like the US doesn’t want to receive more than one message from another front. This doesn’t mean Israel will stop violating Lebanese airspace, but Israel is now aware that its air movement is monitored and the sky will no longer be safe when the time comes for a confrontation”.

The US was surprised by the capability of the “Third of Khordad” missile. Its name commemorates the 24^thof May 1982, the day when the city of Khorramshahr was liberated after 578 days of Iraqi occupation during the Iraq-Iran war. Sayyed Ali Khamenei called that day, the Third of Khordad, “the day of the resistance and victory”.

The “Third of Khordad” missile – originally a SAM 6 – had been domestically modified in 2013 when Russia refused to develop it. Special modifications were introduced, optimising its electronic equipment, improving detecting sensors including thermal sensors and developing a lock option for its GPS to protect heavy jumping interferences. The missile was given the coordinates and launched against the thermal trace of the US drone, and it destroyed the target.

“We shall not stand idly by if signatory countries will not find a way out for Iran to regain its trade, energy and commercial position in the international market. If sanctions are not lifted one way or another, we are only at the beginning of the crisis. Much more can be expected. Iran will never accept to be disarmed of its missiles because they are a guarantee for its security and that of the region. Today Iran is much stronger, enjoying the support of the population and harmony between the political and military leadership. We shall not submit and no negotiation with Trump can be expected as long as sanctions are hovering over our heads. The world should expect more surprises in the coming days because Iranians refuse to starve. Therefore, we are no longer afraid of any war, even more significant against a superpower country”.

The US drone was downed in the same area where in July 1988 the USS Vincennes guided missile cruiser downed Iranian civilian flight 655 with 290 people onboard. Over 100 bodies are still lying on the seabed of the Straits of Hormuz. On social media members of the families of the victims expressed happiness at seeing an Iranian missile strike a blow to US pride in the Straits of Hormuz. This may have been some consolation to the families, but Trump’s decision to respond by imposing further sanctions on Iran starting Monday means the risks of a wider war and many more dead are looming ever over the region and the world. 

via ZeroHedge News http://bit.ly/2IHsL24 Tyler Durden

There must be something in the Dallas water that makes its Fed presidents immune to the general dogma and brainwashing that emanates from the Marriner Eccles building.

Several years after former Dallas Fed president Dick Fisher repeatedly warned that the Fed’s continued “unconventional” policies (which in the past decade have become boringly conventional) and meant simply to push stocks higher (as the Fed “gamble” replaced the Fed “put“) would result in ruin, his replacement former Goldman banker Robert Kaplan, has picked up where his predecessor left off, and in an essay released on Monday by the Dallas Fed, Kaplan said that “monetary accommodation is not “free.” I am concerned that adding monetary stimulus, at this juncture, would contribute to a build-up of excesses and imbalances in the economy which may ultimately prove to be difficult and painful to manage.”

For those unfamiliar, “excess and imbalances” is central banker speak for “bubble”, and is traditionally frowned upon in polite econohack circles as it reminds the Fed that every time it forceefully intervenes in the market the result is disaster.

Kaplan is weary because his base case is for “solid” economic growth this year and for the labor market to remain at or past full employment – conditions that in no way require a rate cut at this moment, a moment incidentally where the S&P is trading at all time highs. “In addition, financial conditions – the cost and availability of credit – are particularly robust by historical standards,” he said, hence the confusion: with the rest of the Fed seeing a similar benign environment, why the need for a rate cut now, especially since inflation for the common man is well higher than that hedonically adjusted and calculated by the Fed as discussed recently.

Kaplan’s cautious tone contrasts with expectations in the financial markets that a July rate decrease by the Fed is all but a done deal, which of course makes perfect sense – the only winner from a rate cut, NIRP and QE is, drumroll, financial markets. Which is why investors, having pushed Powell to “throw in the towel”, now see an almost 100% probability of a cut next month, with some even looking for a half-percentage-point drop. Some, such as another former Goldman banker, Minneapolis President Neel Kashkari, who last week came out publicly for a 50 basis point move, in what is a clear move at replacing Powell once Trump demotes or fires the Fed chair.

To be sure, Kaplan did not eliminate any possibility of a rate cut and instead focused on the pre-emptive, “insurance” rate cut scenario, acknowledging that “trade tensions and uncertainty have increased significantly over the past two months,” dampening business investments and possibly slowing manufacturing output according to Bloomberg. “Downside risks to the outlook have increased,” said Kaplan, who this year is not a voting member on the FOMC.

Ok great, Kaplan believes in a precautionary rate cut… but the problem is that as JPMorgan noted over the weekend, a precautionary move would meant cutting last week, not waiting until the economy deteriorates even further, an admission that the Fed is behind the curve – arguably the worst case scenario the Fed, its credibility, the economy, and capital markets.

Which is probably why Kaplan made clear he was not ready to ease borrowing conditions.

“It would be wise to take additional time and allow events to unfold as we consider whether it is appropriate to make changes to the stance of U.S. monetary policy,” he said.

Addressing what the biggest threat was, Kaplan focused on debt-funded buybacks and M&A– activities which we warned all the way back in 2012 are the biggest threat to the proper functioning of the economy, and the clearest indication of asset bubbles, to wit:

I have spoken about the level of corporate debt as potentially one of those excesses that is likely to be a “burden” on the economy in the event of a downturn. Persistently low interest rates make borrowing for share repurchase and merger transactions highly accretive to a company’s earnings per share. In a world where businesses have less and less pricing power and managing costs is essential, debt-financed activity becomes harder to resist. Debt-financed share repurchase and merger activity may help fuel growth in earnings per share when times are good, but in a downturn, increased debt levels will mean that a higher percentage of cash flow will be necessary to service interest and principal repayments. This is just one example of the type of excess that may seem innocuous when times are good but can become more troublesome in a downturn.

Kaplan also said he was worried about the continued inversion of the yield curve:

As I have said before, I would be concerned about an inversion of the curve—either three-month to 10-year or one-year to 10-year—of some size and duration. My concern emanates from my belief that an inverted curve ultimately makes it more difficult for financial intermediaries to borrow short and lend long—and, if the inversion persists, it would likely begin to impede the creation of credit and lead to a tightening of financial conditions. I will continue to watch this carefully.

When the Fed dropped its “patience” last week, saying they would closely monitor incoming information and “act as appropriate to sustain the expansion, one data point they’re likely to closely watch according to Bloomberg is the June employment report, due out July 5. Growth in U.S. payrolls unexpectedly tumbled in May to 75,000, from 224,000 in April. In his essay, Kaplan played down the significance of the drop.

“We believe that job growth in the range of 60,000 to 120,000 jobs per month will be consistent with a ‘strong’ jobs market for the remainder of 2019,” Kaplan said, noting that the labor market is so tight, making it hard for employers to fill open positions.

Kaplan sounded less worried than some of his Fed colleagues about below-target inflation, saying he expected price rises to accelerate over the next year. Kashkari and St. Louis Fed President James Bullard have made the case that a cut in rates would help bolster inflation, confirming for yet another year that the former Goldman IT banker who is unable to “find” inflation anywhere he looks, has not spent his own money in the past decade on, well, anything.

Inflation has run below the Fed’s 2% target for most of the past seven years and sat at 1.5% in the year through April.
At the same time, Kaplan doubted the tight labor market would produce problematically high inflation because of the inability of firms to raise prices. As companies are forced to pay higher wages, that’s “just as likely to lead to business margin erosion as” higher prices, he said.

Kaplan’s conclusion: don’t do anything with rates until there is an actual, tangible change in the economy:

 I intend to be highly vigilant with regard to the persistence of heightened trade tensions and indications that slowing global growth is spilling over into a material deterioration of the economic outlook for the U.S. In the meantime, I believe it would be wise to take additional time and allow events to unfold as we consider whether it is appropriate to make changes to the stance of U.S. monetary policy.

The market took one look at these comments, and not only did it not ease back on rate cut expectations, but with a July rate cut now in the bag, it pushed up rate cut odds for a second rate cut in July – or a total 50bps in rate cuts – up 38% next month.

via ZeroHedge News http://bit.ly/2Lc6TNW Tyler Durden

Just a few short days after a Chicago judge approved a special prosecutor to review how Cook County State’s Attorney Kim Foxx handled the Jussie Smollett case, body camera video of Chicago Police Department officers entering Smollett’s apartment the night attack was reported has been released.

While it is not known how long after Smollett’s “attack” this footage took place, there is one thing that stands out… He still has rope around his neck!!!

Body camera video of CPD officers entering Jussie Smollett’s apartment the night attack was reported.

He still has rope around his neck. @cbschicago pic.twitter.com/Fnp0jmo8Ra

— Charlie De Mar (@CharlieDeMar) June 24, 2019

While the audio quality is not great, one officer can clearly be heard asking Smollett in a somewhat shocked way, “you want to take it off or anything?”

Perhaps Smollett liked the look of the dreadfully racist necklace that had been placed around his neck by Trump supporting bad guys?

Additionally, CPD has released footage of the Osundairo brothers on their way to meet Smollett on the night of the “attack”…

Video from inside taxi of Osundairo brother’s on their way to meet Jussie Smollett night of reported attack..according to CPD@cbschicago pic.twitter.com/kYbUcoiwi5

— Charlie De Mar (@CharlieDeMar) June 24, 2019

We wonder what Michelle Obama would make of all this?

pic.twitter.com/f9b6Moew8H

— Cocoa (@DunkingNinja) March 26, 2019

via ZeroHedge News http://bit.ly/2WYFdOV Tyler Durden