“Optically Quite Dramatic” But Officials Confirm No US Casualties From Iranian Missile Strike
Senior White House reporter for Bloomberg News Jennifer Jacobs has reported there were “no American casualties from last night’s Iranian missile strikes that targeted two airbases in Iraq that host U.S. troops.”
BREAKING: There were no American casualties from last night’s Iranian missile strikes that targeted two airbases in Iraq that host U.S. troops, sources tell me.
With no American casualties, President Trump tweeted late Tuesday that “All is well! Missiles launched from Iran at two military bases located in Iraq. Assessment of casualties & damages taking place now. So far, so good! We have the most powerful and well-equipped military anywhere in the world, by far! I will be making a statement tomorrow morning.”
All is well! Missiles launched from Iran at two military bases located in Iraq. Assessment of casualties & damages taking place now. So far, so good! We have the most powerful and well equipped military anywhere in the world, by far! I will be making a statement tomorrow morning.
Iranian Foreign Minister Javad Zarif said the attack on American airbases in Iraq “took & concluded proportionate measures in self-defense.” He added that “we do not seek escalation or war, but will defend ourselves against any aggression.”
It appears Iran has taken President Trump’s playbook in Syria: launch missiles and purposely miss their intended targets.
Iran has superior missile technology that can hit whatever they want – this could be in an attempt to save face as a public relations event for its citizens while attempting to de-escalate the situation and avoid war.
Pentagon saying that Iran intentionally missed US troops at bases.
“The live situation was optically quite dramatic but the important thing to focus on is the no-human-casualty dimension, which gives ample space to de-escalate the situation,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers.
“The Trump factor is the random factor but what’s visible is that no one wants war and that’s what markets are focusing on.”
As Craig Murray concludes, there is this morning a chink of light to avoid yet more devastation in the Middle East.
Iran’s missile strikes last night were calibrated to satisfy honour while avoiding damage that would trigger automatically the next round. The missiles appear to have been fitted out with very light warhead payloads indeed – their purpose was to look good in the dark going up into the night sky. There is every reason to believe the apparent lack of US casualties was deliberate.
Even more important was the Iraqi statement that “proportionate measures” had been “taken and concluded” and they did not seek “further escalation”.
…
Wars are easy to start but hard to stop. Trump appears to have calmed, but we cannot rule out a stupid “last word” attack bu the USA. It is to be hoped that Iran now concentrates on using the immense political leverage it has gained to get western troops out of Iraq, which would be a tremendous result for all of us after 17 years. But we cannot rule out hotter heads in the Iranian government insisting on further attacks, or attacks from regional forces whose Tehran authorisation is uncertain. On either side this could yet blow up badly.
I am a sucker for hope, and the best outcome would be for the US and Iran to start talking directly again, and a deal to be made from this break in the logjam that is wider than, and Trump can portray as better than, “Obama’s” nuclear deal and would enable the lifting of sanctions. I am sure Trump will be tempted by the chance to go for this kind of diplomatic coup under the political cover provided him by Soleimani’s assassination. But the US is now so tied in to Saudi Arabia and Israel, and thus tied in to irrational hostility to Iran, that this must be extremely unlikely.
For now, it appears markets believe the worst is over.
Watch Live: Ghosn Speaks For First Time Since Arrest & ‘Great Escape’
Speaking from his hideout in Beirut, former auto executive and infamous fugitive from justice Carlos Ghosn is preparing to deliver his first press conference since his Nov 2018 arrest and subsequent “great escape” from house arrest in Tokyo.
Some reporters joked that they couldn’t see Ghosn, who is relatively short of stature, over the heads of hundreds of journalists gathered to hear him out.
Iran Refuses To Hand Over Crash Data, Stoking Speculation Plane Was Accidentally Shot Down
Iran will reportedly refuse to hand over black box data from the Boeing 737 that crashed over Tehran last night to Boeing, stoking speculation that the aircraft was shot down by an Iranian missile.
Video of wreckage from the crash, which shows shattered bodies and debris spread over a wide area, has surfaced on social media.
As we reported overnight, the 737 800, which is very different from the 737 MAX and has an excellent safety track record, crashed over Tehran just minutes after takeoff, killing all 176 people onboard.
Ukraine International Airlines said in a statement that the plane that crashed was in excellent condition, adding that it was “one of the best planes” in UIA’s fleet, and had undergone necessary maintenance just days before the crash, RT reports.
The Boeing 737-800, which was delivered to UIA in 2016, was “in excellent condition” before its last flight from Tehran to Kiev, Evgeny Dykhne, the company’s president, told reporters in Kiev, also describing the aircraft as “one of the best.”
Overnight, the rumor mill pointed to mechanical errors, which caused Boeing’s shares, already under pressure from the 737 MAX fallout, to slide.
The crash happened shortly after the plane departed Tehran’s airport Wednesday morning
UIA flight director Ihor Sosnovsky even ruled out pilot error as a potential cause of the crash, explaining that the ill-fated flight was manned by a “reinforced crew,” including Captain Volodymyr Yaponenko, Pilot Instructor Oleksiy Naumkin and First Officer Serhiy Khomenko.
All of this makes Iran’s rumored decision not to fork over the black box data more suspicious. Was the plane accidentally struck by an Iranian missile? The timing sure seems suspicious, given that the plane crashed over Iran during the same timeframe that the country was lobbing missiles at American bases in Iraq.
All 176 passengers and crew on board the plane died in the crash, officials said. (AP)
To us, if the plane just happened to crash over Iran just as the country was firing off missiles, well, that certainly would be one hell of a coincidence, wouldn’t it?
As one analyst claimed, there was “absolutely no way” the crash was due to mechanical difficulties, offering an explanation that sounds fairly convincing.
There is absolutely no way that the Ukrainian plane crash in Iran is due to mechanical difficulties.
Which mechanical failures immediately drop all ADS-B transmissions on a new plane in a conflict zone? None.
So how does a trader exploit this? The most obvious play would be to take a look at Boeing shares. If it’s confirmed the manufacturer and airline aren’t to blame for the crash, we imagine Boeing shares will rebound.
Most of the passengers on board were making connecting flights via Kiev’s Boryspil airport, the main hub for UIA. Among the dead were citizens of Iran, Canada, Germany, the UK, Sweden and Afghanistan.
Ukrainian President Volodymyr Zelensky directed the government to launch an inquiry and to “consider all possible versions [of the crash].”
Boeing has launched an investigation into the crash, while Iran has launched a criminal investigation – or what might be more accurately described as a hunt for a scapegoat.
In other news, a complete list of passengers has been released by the airline:
Stock Futures Stage Tremendous Rebound From Overnight Crash On Optimism Worst Of Iran Crisis Over
S&P500 index futures erased their earlier crash, after tumbling more than 50 points following news Iran launched ballistic missiles at US airbases in Iraq, as investors turned optimistic and looked past the missile strikes focusing instead on Iran’s comments that the country isn’t “seeking escalation or war” and Trump’s tweet that “all is well.” As a result, S&P 500 e-mini futures up around 0.1%, after earlier sliding as much as 1.7%, with global markets broadly in the green too.
Following the targeted strikes, both Iran and U.S. President Donald Trump left the door open for lowering tensions: Iran’s Foreign minister Javad Zarif said the country had “concluded proportionate measures” and didn’t seek war, while Trump tweeted “All is well!” and plans to make a statement later Wednesday.
Oil had surged above $70 a barrel, while gold held at new seven-year highs after the missile attack on the Ain Al-Asad air base and another in Erbil in Iraq, hours after the funeral of an Iranian commander who was killed by a U.S. drone strike last week. But with no human casualties from the attack, the dash for safe-haven assets petered out, allowing S&P500 futures, down almost 2% at one point, to trade around flat.
The Japanese yen, which surged almost 1% to three-month highs after the attacks, also eased back to trade flat on the day at 108.450. Brent crude futures slipped off highs to below $69 a barrel.
“The live situation was optically quite dramatic but the important thing to focus on is the no-human-casualty dimension, which gives ample space to de-escalate the situation,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers. “The Trump factor is the random factor but what’s visible is that no one wants war and that’s what markets are focusing on.”
Separately, Boeing shares slipped in pre-market trading after one of its 737s crashed after take-off in Iran, with early assessments suggesting the incident was caused by a technical issue.
In Europe, the Stoxx Europe 600 Index erased most of an earlier decline after opening 0.5% lower, while all major Asian equity markets fell earlier as they closed before the wave of “optimism” spread across markets. The MSCI Asia Pacific Index declined for a third time in four days, with regional markets a sea of red. Japanese shares were some of the biggest losers, with Toyota Motor Corp. and Mitsubishi UFJ Financial Group Inc. leading the drop in the Topix index. The Shanghai Composite Index fell the most in two weeks, with Industrial and Commercial Bank of China Ltd. and China Life Insurance Company Ltd. down. World leaders have urged restraint and moved to recall their citizens after Iran fired the missiles in its first counterattack since the killing of General Qassem Soleimani by American forces. U.S. President Trump said in a tweet that “all is well,” and he will be making a statement. Get Used to the Swings
A gauge of high-yield credit risk in Europe rose to the highest in about a month. Gold punched above $1,600 an ounce for the first time since 2013 before the move eased.
MSCI’s index of global equities pulled back 0.2% but remained less than 1% off recent record highs.
That said, some are stunned at the market’s reaction, pointing out that there is no reasonable argument why stocks should be higher than their Tuesday close.
The idea of futures being green is the market literally saying “things are better off since yesterday’s close”
Since yesterday’s close Iran has fired a dozen missiles at a US base without a response from Trump & an airliner that’s a major Dow component suffered another crash
Wednesday’s swings mark the latest bout of volatility sparked by U.S.-Iran tensions, as investors tried to assess how far the situation will escalate. As Bloomberg notes, the nervousness is denting optimism spurred by the improving outlook for global commerce, with a Sino-American trade deal expected to be signed next week.
The missile attacks “triggered a short period of market volatility overnight but FX and bond moves have largely been reversed,” Kit Juckes, the chief currency strategist at Societe Generale SA in London, wrote in a note. “The consensus view is still that major escalation is unlikely.”
Some argue it will take a hawkish statement from Trump or more attacks by Iran to drive the next phase of the risk selloff.
“We are looking out for whether the U.S. is going to retaliate, so it’s going to be a big wait-and-see mode until we hear from Trump,” Ashley Glover at CMC Markets in Sydney. “We are seeing that ‘buy the dip’ mentality creeping in as big long-term investors like to buy into these weaknesses.”
Bond-buying also faded, with yields on benchmark 10-year U.S. Treasury notes at 1.81%, down one basis point on the day but well off session lows around 1.705%. The 10-year German government bond yield was unchanged on the day at -0.284% after earlier falling to -0.299%. U.S. 10-year Treasury futures had earlier peaked at their highest level since November, and were last up 0.18%.
On currency markets, the attacks had sent the yen spiralling to three-month highs beyond 107.7 per dollar but gave up all those gains to trade flat at 108.4. Another safe-haven currency, the Swiss franc, also gave up knee-jerk gains. “If the market was really worried that the end of the world was nigh, dollar/yen would have collapsed, and that’s clearly not been the case,” said Stuart Oakley, global head of flow FX at Nomura in Singapore. The euro was 0.2 weaker, buying $1.1129 and the dollar index was up 0.1% at 97.10.
The buying of gold and oil also eased as the trading session wore on – Brent crude futures which had shot to $70 per dollar, were last up 0.5% at $68.1 per barrel. Gold, which earlier brushed through $1,600 an ounce, eased to $1,582.
Lombard Odier’s Ahmed said he had not reduced equity holdings overall but had increased exposure to energy stocks. “We adopted a long oil hedge to portfolio and we are maintaining that… Oil may be one market that’s not reflecting geopolitical risks.”
Economic data include mortgage applications, ADP jobs report. Walgreens, Constellation Brands are due to report.
Market Snapshot
S&P 500 futures little changed
MXAP down 0.8% to 169.90
MXAPJ down 0.6% to 551.59
Nikkei down 1.6% to 23,204.76
Topix down 1.4% to 1,701.40
Hang Seng Index down 0.8% to 28,087.92
Shanghai Composite down 1.2% to 3,066.89
Sensex down 0.1% to 40,811.86
Australia S&P/ASX 200 down 0.1% to 6,817.63
Kospi down 1.1% to 2,151.31
STOXX Europe 600 down 0.2% to 416.67
German 10Y yield rose 4.5 bps to -0.24%
Euro down 0.1% to $1.1137
Brent Futures up 0.5% to $68.62/bbl
Italian 10Y yield rose 1.6 bps to 1.207%
Spanish 10Y yield rose 0.7 bps to 0.404%
Gold spot up 0.5% to $1,581.82
U.S. Dollar Index unchanged at 97.01
Top Headline News from Bloomberg
President Donald Trump tweets “All is well! Missiles launched from Iran at two military bases located in Iraq. Assessment of casualties & damages taking place now. So far, so good! We have the most powerful and well equipped military anywhere in the world, by far! I will be making a statement tomorrow morning”
The Islamic Revolutionary Guard Corps claimed responsibility for the barrage, which the Pentagon said was launched from Iran. A total of 15 rockets were launched, 10 of which hit the Ayn al-Asad base in western Iraq and another facility in Erbil, according to two U.S. officials. Another struck the Taji air base near Baghdad while four fell out of the sky. Iranian Foreign Minister Mohammad Javad Zarif said on Twitter that the government took “proportionate measures in self-defense” after the Soleimani strike
Iranian Foreign Minister doesn’t have any statistics on fatalities in the Iranian attacks on U.S. targets in Iraq, he told reporters in comments broadcast on TV. Zarif said he’s sent a message to the Americans “immediately after the attack” but did not elaborate on its contents; both Iran and Trump left the door open for lowering tensions after the Islamic Republic’s retaliation for the killing of General Qassem Soleimani last week
U.S. aviation regulators issued new restrictions barring civilian flights over Iraq, Iran, the Persian Gulf and the Gulf of Oman, the agency said Tuesday night in an emailed statement. A Boeing Co. 737 jet carrying at least 170 people crashed in Iran due to technical problems shortly after taking off, according to a local media reports
Global crude markets are well supplied, and OPEC and allied producers will respond if necessary to spiking tensions in the region, U.A.E. Energy Minister Suhail Al Mazrouei told reporters in Abu Dhabi
Currency traders in Asia were left nursing losses after algorithmic programs exacerbated a whipsaw session caused by Iran’s response to the U.S. attack
Riksbank Governor Stefan Ingves signaled that the Swedish central bank’s decision to raise its main rate to zero last month won’t be followed by more tightening for a very long time. German manufacturing orders unexpectedly fell in November, adding to signs that Europe’s largest economy is still struggling to overcome its worst industrial downturn in a decade
Boris Johnson will tell European Union Commission President Ursula von der Leyen on Wednesday that his government is only interested in negotiating a free trade agreement with its largest market, and that he’s determined to achieve it by the end of the year
House Speaker Nancy Pelosi said she wants to see the resolution that Senate Majority Leader Mitch McConnell plans to put forward setting out the rules for Trump’s impeachment trial. McConnell says Republicans have votes to set Trump trial terms
Asian equity markets traded lower across the board, albeit well off lows – as sentiment took a hit after Iranian forces carried out multiple attacks on Iraqi bases housing US personnel and allies, as part of the IRGC’s operation to avenge its commander’s assassination. Nikkei 225 (-1.6%) initially plumbed the depths and underperformed amid headwinds from a geopolitically bid JPY and with the index briefly dipping below the 23k level as almost all its stocks traded in the red. ASX 200 (-0.1%) fared better as downside was cushioned by the large-cap miners and energy names benefitting from price action in the respective complexes. Elsewhere, Hang Seng (-0.9%) and Shanghai Comp (-1.2%) conformed to the risk aversion, with losses in the mainland initially mitigated to an extent by the anticipated US-Sino Phase One trade deal signing next week. Finally, KOSPI (-1.1%) failed to glean support Samsung Electronics’ (+2.3%) prelim earnings – which flagged a smaller-than-forecast fall in quarterly operating profits, with some analysts noting it indicates that memory chip prices have bottomed out quicker than anticipated. APAC bourses climbed off lows after reports that US President Trump will not be addressing the nation – seen as a positive at the time as it indicates the US may not immediately retaliate. Furthermore, sentiment showed a slightly more pronounced turnaround after President Trump acknowledged the missile attack and noted that “all is well”.
Top Asian News
China’s 58 Home Is Said to Seek U.S. IPO of Online Services Arm
Why in India, 5% GDP Growth Is Cause for Alarm: QuickTake
EF Education First Is Said to Shortlist Bidders for Chinese Unit
Ghosn Nearly Crossed Paths With Japan Prime Minister as He Fled
European bourses are softer this morning, as sentiment has switched from yesterday’s cautious optimism back into a firm risk-off frame of mind. Losses across indices are not too pronounced, recovering from overnight price action in futures, as we await the response from US President Trump; further analysis available in the Commodity section and the Newsquawk headline feed. In terms of sectors, this has also switched from yesterday with energy names now the only sector in positive territory; although, similarly to bourses, losses across the remaining sectors are relatively modest. As such, energy names are leading the Stoxx 600 while Co’s which are typically afflicted by higher prices are holding up relatively well roughly unchanged on the day e.g. easyJet (EZJ LN). Elsewhere, its comparatively quiet on the European stock stories front. Although, the situation is significantly different in the US where focus is on Boeing (BA), -1.9% in pre-market trade, after a 737-800 craft crashed in Iran shortly after take-off. This is reportedly due to technical issues and is not, at present, believed to be linked to the ongoing Middle-East tensions; interestingly, reports note that the Iranian Civil Aviation Chief will not be returning the black box from the craft to Boeing.
Top European News
Knot Says Brexit Deal Should Sort Out Financial Services Role
Jefferies Keeps Aston Martin Covenants Call After Clarification
Abu Dhabi Sovereign Fund Sells $947 Million Stake in UniCredit
Danske Bank Fixed Income Sales Veteran Claezon Leaves
In FX, the Dollar’s broad recovery from post-Iran retaliatory strike lows is fairly representative of the overall retracement in currency and other financial markets amidst a relatively rapid turnaround in sentiment from aversion bordering on a scramble out of risk assets into safe-havens, albeit less pronounced. The DXY has reclaimed 97.000+ status and eclipsed yesterday’s high even though US Treasuries retain an underlying bid and the curve is marginally flatter awaiting the official US response after a full inspection of the bases hit in Iraq, and ahead of the next pre-NFP proxy for Friday in the form of ADP, assuming attention returns to fundamentals at some point.
EUR – The G10 laggard after yet another shallower rebound vs the Greenback and what looks like a fix-related run against the Pound that tripped stops in the cross through 0.8465, but stopped short of testing 0.8450 or last week’s low. The single currency now appears vulnerable to Eur/Usd sell orders said to be residing near/on Tuesday’s circa 1.1125 low that could then expose decent option expiry interest at 1.1120 and even between 1.1100-05 (in 1 bn and 1.2 bn respectively).
CHF/JPY/XAU – Very volatile trade given the aforementioned risk-off flows followed by a sharp/abrupt unwind of safe-haven premiums, as the Franc reverses from around 0.9665 back below 0.9700, Yen rotates more than a full big figure either side of 108.00 where there is a 1 bn expiry and Gold slides to circa Usd1573/oz compared to over Usd1610 at one stage.
NZD/GBP/AUD/CAD – All narrowly mixed vs the Buck, or holding up better amidst its revival, as the Kiwi keeps tabs on 0.6650, Aussie holds off fresh 0.6850 lows, with the aid of some welcome better news on the data front via building approvals, Sterling maintains 1.3100+ status and Loonie pares some of its losses around the 1.3000 handle. However, price action remains choppy/fluid across the board, and the Pound may be prone to more Brexit headlines in wake of UK PM Johnson’s date with new EC President von der Leyen to discuss the post-January 31 transition period and Britain’s relationship with the EU thereafter.
NOK/SEK – Some Norges Bank and Riksbank diversions for the Scandi Crowns to ponder, but not a lot new in comments from Governor Olsen or the December policy meeting minutes in truth. Hence, Eur/Nok and Eur/Sek are both largely tracking wider developments and the much improved risk tone, with the former lagging as crude prices come off the boil.
EM – Most regional currencies are benefiting from the considerably calmer mood, bar those with close commodity links that are underperforming/hampered by the retreat in oil, bullion etc.
In commodities, another tumultuous day for markets, particularly the commodity complexes, due to the magnitude of news-flow and in the interest of time, a full briefing on recent events, including what’s next, responses so far and market reaction, is available on the Newsquawk feed. To briefly surmise the main points, overnight Iran launched missiles at two Iraqi bases (Al-Asad and Erbil), currently reports indicate that no US troops were killed but we await official confirmation of this. Markets took a firm risk-off tone, with WTI and Brent experiencing significant upside; high prints of, USD 65.65/ bbl and USD 71.75/bbl respectively. Subsequently, much of this move has pared back, with WTI now below the USD 63/bbl handle, given that comments have pointed towards a de-escalation in tensions between the US and Iran; notably, from POTUS himself. Looking ahead, focus is almost entirely on the announced press conference from US President Trump at some point today; the timing of this is currently unclear. Middle-East updates aside, we do have the weekly update from the EIA where headline crude is expected to print a draw of 3.572mln barrels which, if correct, would be a smaller draw than the 5.9mln barrels reported via API. Although, it is worth caveating that the release may draw less attention than normal given the Middle-East developments. Moving to metals, where spot gold overnight printed a fresh six-year high surpassing Monday’s just above the USD 1610/oz mark. However, similarly to crude, the yellow metals prices have drifted to reside within proximity to the USD 1580/oz figure.
US Event Calendar
7am: MBA Mortgage Applications
8:15am: ADP Employment Change, est. 160,000, prior 67,000
3pm: Consumer Credit, est. $16.0b, prior $18.9b
DB’s Jim Reid concludes the overnight wrap
Morning from Copenhagen for my first trip in a busy month that will take me to 11 European cities before January ends and not one of them coincides with a Liverpool game! Shame but anything to get away from the germs at home.
While I’ve slept Iran has retaliated to the killing of General Qassem Soleimani by American forces last week by firing a series of missiles at two US-Iraqi airbases. A total of 15 missiles were launched, 10 of which hit the Ayn al-Asad base in western Iraq and another facility in Erbil, while another struck the Taji air base near Baghdad and four fell out of the sky, according to US officials. Iranian Foreign Minister Mohammad Javad Zarif said after the attack on twitter that the government “concluded proportionate measures in self-defense” after the Soleimani strike. He further said that, “We do not seek escalation or war, but will defend ourselves against any aggression”. However, the Islamic Revolutionary Guard Corps (IRGC) said that further responses will be on the way while, calling the attack as the start of its “Martyr Soleimani” operation. The IRGC also said in a statement on its Sepah News website that any US response “will be met with much more pain and destruction.” There were also some unconfirmed reports that there were no US casualties in the attacks (Iranian TV says the opposite) which might be an important part of whether they feel the need to respond. Meanwhile the Pentagon said in a statement post attacks that “As we evaluate the situation and our response, we will take all necessary measures to protect and defend U.S. personnel, partners, and allies in the region.” President Trump refrained from making a statement right away after the attack and subsequently tweeted that “All is well!” and “So far, so good!” while adding that battle damage assessments continued. He said that he will make a statement this morning Washington time. It’s also of note that in the past President Trump has shown restraint in previous attacks in the region blamed on Iran which didn’t kill any US citizens. This gives a glimmer of hope that this might not lead to an all-out escalation in the conflict. There are already some commentators saying that if the US doesn’t ratchet up tensions further this could be good news for risk as it might be spun by Iran as a big response and the world can move on for now. In what seems like a tragic coincident a Boeing 737 has crashed in Iran after take off killing all on board. Usually the aircraft manufacturer will be involved in the investigations but given the tensions between the countries this story may have an unusual outcome.
The price action in the financial markets post the attack also gave a feeler that markets might not be expecting an all-out confrontation, with the futures on the S&P 500 paring losses to -0.35% after being down as much as -1.7% immediately after the attack. Similarly, Gold initially advanced +2.35% to 1611.42/ ounce, the highest since 2013 and is currently trading up +1.12% to 1591.96/ ounce while brent crude oil prices jumped to 71.75 before settling at 69.18 this morning.
Elsewhere in Asia, equity markets are seeing losses but are off their lows with the Nikkei (-1.68%), Hang Seng (-1.11%), Shanghai comp (-1.22%) and Kospi (-1.15%) all down alongside almost every index in the region. Elsewhere, yields on 10y USTs are down -4.4bps this morning while those on 10y JGBs are down -1.1bps. As for overnight data releases Japan’s November real cash earnings came in at -0.9% yoy (-0.7% yoy expected) and December consumer confidence stood at 39.1 (vs. 39.5 expected).
Back to yesterday and markets were in a bit of a stalemate before the overnight attacks with investors still cautious on geo-politics but remembering that it was only three business days ago that everyone was discussing a January melt-up for markets after the first day of NY trading. Maybe the most notable development was the first decline of this calendar year for oil, with Brent ending the session down around -1% at $68.4. As we discussed above we’ve had a bit of a round trip overnight but as we discussed yesterday our oil analysts doesn’t think that oil infrastructure is as obvious target as people might think for Iranian retaliation if it comes. So he therefore doesn’t think the elevated oil risk premium will be long-standing. Here is a reminder to his piece and reasoning (link here).
US equities did fall though making the 2020 S&P 500 count even at two sessions up and two down. It fell -0.28% mirroring moves in the Dow Jones (-0.42%) and the NASDAQ (-0.03%). Market were probably a bit nervous about Iran’s comments that it was considering 13 scenarios for retaliation. They may have also been slightly concerned at the chaos around the Soleimani funeral procession that saw 50 dead (plus over 200 injured) in a stampede and pictures of hundreds of thousands, if not millions, of Iranians take to the street these past few days. This US action has certainly stoked feelings/emotions in the Middle East.
European equities were stronger than the US though, with the STOXX 600 up +0.25%, while the DAX outperformed to advance +0.76% but is still one of the few Western equity markets down in the early stages of the year.
In sovereign debt markets, Treasuries edged higher into the close (+1.2bps) after a relatively quiet day. Meanwhile in Europe, gilts underperformed again, with 10yr yields up +2.4bps, while both Germany (+0.3bps) and France (-0.2bps) were fairly flat. In FX, the dollar performed strongly with the dollar index being up +0.35% yesterday.
In terms of economic data releases yesterday, things were more positive in the US, with the ISM non-manufacturing index for December rising to a better-than-expected 55.0 (vs. 54.4 expected), its strongest level since August. This contrasts with the ISM manufacturing index out on Friday, which fell to 47.2, its lowest level since June 2009. The gap between the two (7.8) is the highest since late 2015 and close to the highest levels of the last couple of decades.
We also got data on the US trade deficit, which fell to $43.1bn in November (vs. $43.6bn expected), its lowest level since October 2016 before President Trump’s election. Data also showed the goods deficit with China fell to $25.6bn, which was the lowest since April 2013. Reducing the US trade deficit has been a key policy goal for President Trump, and it comes ahead of next week’s expected signing of the Phase One US-China trade deal, which is taking place on the 15th.
There were a number of data releases out in Europe as well. The main one was the Euro Area inflation reading for December, with the flash estimate in line with expectations at +1.3%, and its highest level since April. That said, there doesn’t seem to be a great amount of confidence that inflation over the medium term is going to rise much higher than this, with Euro five-year forward five-year inflation swaps trading at 1.311%. Over in Italy meanwhile, data showed inflation was lower still, at just +0.5%, though this was up from +0.2% in the prior 3 months. In more positive news, Euro Area retail sales rose by +1.0% in November (vs. +0.7% expected), while the German construction PMI came in at 53.8 in December, a 9-month high.
Turning to Spain now, and Prime Minister Sánchez’s coalition government received the narrow backing of the Spanish parliament yesterday, with a vote of 167-165 in favour, thanks to 18 abstentions. The country has experienced sustained political gridlock over the last year, having gone to the polls twice in 2019 after no government could be formed following the first election in April. The subsequent election in November then saw the formation of a new coalition between Sanchez’s Socialist party and the left-wing Podemos, but they still only have a minority of seats in Parliament, having relied on the abstention of Catalan separatists in order to win yesterday’s vote.
Now to the day ahead, and the data highlights include German factory orders for November, the Euro Area’s final consumer confidence reading for December, as well as French consumer confidence also for December. From the US, we’ll get the MBA’s weekly mortgage applications and the ADP’s employment change for December. On central bank speakers, we’ll hear from ECB Vice President de Guindos along with the Fed’s Brainard. Finally, European Commission President von der Leyen and chief Brexit negotiator Michel Barnier will be visiting Prime Minister Johnson in London.
Tanker Operators Suspend Travel Through Strait Of Hormuz
Following Iran’s decision to lob missiles at US-Iraqi bases last night, several major tanker operators have suspended sailing through the Straits of Hormuz, the site of several tanker attacks last year.
Petrobras, Bahri – Saudi Arabia’s state-run tanker operator – and other tanker companies have suspended sailing through the Straits of Hormuz, WSJ reports, citing unidentified people familiar with the matter.
Meanwhile, Gulf officials are already trying to convince the world that there’s nothing to worry about in what’s essentially a tinderbox inside another tinderbox. United Arab Emirates’ Energy Minister Suhail al-Mazrouei said on Wednesday he saw no immediate risk to oil passing through the critical gateway through which 20% of the global supply of crude travels. al-Mazrouei made the comments on the sidelines of a conference in Abu Dhabi, the UAE capital.
The source of their concerns is clear: Iran carried out its “retaliation” for the killing of General Suleimani last night – though the Pentagon has confirmed that there have been no American casualties from Iran’s strikes. However, many fear that Iran isn’t finished with its retaliation.
Mazrouei added that OPEC was not discussing any precautionary steps at the moment, but would re-evaluate the situation if a supply shortage emerged, according to Reuters. He said earlier that the global oil market was well supplied.
Oil prices initially moved higher after last night’s attacks, but prices have since settled, and the market largely ignored the news about the tanker suspensions, as it was already largely priced in.
On Tuesday, Washington warned about “the possibility of Iranian action against US maritime interests” in the Middle East.
“U.S. commercial vessels are advised to exercise caution and coordinate vessel voyage planning for transits of the Persian Gulf and nearby waterways,” the U.S. Maritime Administration said in a statement on its website.
UK Defense Secretary Ben Wallace over the weekend sent two warships to the Strait of Hormuz to prevent attacks on British-flagged tankers.
The cancellations mark an apparent about face after WSJ reported earlier on Tuesday that tanker operators in the region didn’t expect their ships to be targeted in the near term as part of any tit-for-tat escalation between Iran and the US.
“The Middle East is like a powder keg, but we don’t expect any attacks on tankers, at least for now,” said an executive at a Europe-based operator of more than two dozen tankers. “We’ve had some verbal assurances [from Iran] that ships won’t be hit, so we keep our fingers crossed.”
It’s understandable that the industry is on edge: Ship insurers have already paid out more than $100 million in compensation over last year’s attacks. Meanwhile, daily tanker freight rates soared in September from $18,500 to more than $200,000 after Trump slapped sanctions on tankers run by a unit of Chinese state-owned Cosco Shipping Energy Transportation Co., one of the world’s largest tanker companies, for allegedly violating sanctions.
Freight rates have since settled between $80,000 and $120,000, depending on the ship. But with the region set to remain turbulent, analysts expect rates to remain “elevated” for the foreseeable future.
Ayatollah Proclaims Missile Strikes A “Slap In The Face” Against “Corrupt” US
During his first comments since last night’s series of rocket attacks coming from the Iranian regime, Ayatollah Ali Khamenei described Iran’s sand-pounding counterattack as a “slap in the face” delivered against the US.
The last time we heard from the Ayatollah, he vowed “severe revenge” against the US for the killing of General Suleimani, who was finally laid to rest on Tuesday after a stampede during his funeral procession on Monday delayed his burial.
Khamenei said that the strikes served as a “slap in the face” for the United States, but were not “sufficient” to remove “the corrupting presence of America in the region.”
The Ayatollah again stated unequivocally that Tehran views Washington as its enemy.
Iran’s IRGC claimed responsibility for last night’s barrage, which the Pentagon claimed was launched from Iran. The attack, which started around 5:30 ET, involved firing some 15 missiles, 10 of which hit the Ayn al-Asad base in western Iraq and another facility in Erbil. Another missile struck the Taji air base near Baghdad, and another four fell out of the sky. No Americans were killed during the attacks.
In a comment that sounded like he could be hinting at future attacks, the Ayatollah asked “what is our duty now?”
“One important issue is what is our duty now?” following Soleimani’s assassination, said the supreme leader.
“An important incident has happened. The question of revenge is another issue,” said Khamenei.
“Military actions in this form are not sufficient for that issue,” he said, referring to the assassination.
“What is important is that America’s corrupt presence must come to an end in this region.”
In a separate statement, Iranian President Hassan Rouhani said that while the US may have “cut off the arm” of assassinated Quds Force commander General Qassem Soleimani, Iran will respond by severing America’s “leg” in the region.
“Almost Inconceivable” That Attacks In Iraq Will Mark End Of Iranian Retaliation, Experts Say
Following a message from President Trump claiming “all is well”, and another comment from Iranian Foreign Minister Javid Zarif claiming that Iran had “concluded” its reprisals for the killing of General Suleimani, markets have latched on to the belief that perhaps Iran is finished with its retaliation, while Trump appears to have found the “off ramp” that he was looking for.
But traders aren’t the only ones betting on peace: Following the events of last night, journalists and regular people on the street have apparently started to realize that this isn’t the beginning of WWIII after all.
But according to several analysts and Iran experts, anybody who thinks this is the end of it is being tragically naive.
Let’s start with one of the most well-known journalists in the US, Iranian-American Yashar Ali, who delivered the following tweet thread warning the US that, if history is any guide, Iran’s true reprisal will come in the form of a terror attack on civilians, likely carried out via proxies.
1. I want to express this carefully cause I don’t want to minimize anything that results in loss of life. But missiles flying back/forth in Mid East is all too common (something US can handle) & not what makes me nervous about the Soleimani situation
2. What makes me nervous is illustrated in the WSJ story. The Iranian government has always operated on its own timeline. If you think Iran lobbing missiles over the border is the kind of revenge they ultimately have in mind, you’re wrong. https://t.co/qeL7jkzQhd
5. Those examples are pretty tight timelines for Iranians. The Iranian gov sees revenge as almost a generational thing…their timeline can be in months/years. Revenge always doesn’t come via a show of force they take PUBLIC credit for.
6. So what I’m saying is all these people with their chest thumping, I would be cautious about what you see as Iranian revenge and unfortunately prepare yourselves for the kind of attacks that are unexpected, that don’t follow a tight timeline, and show up where you least expect
7. If people think that this is it…that Iran has chosen to retaliate against the US for killing the second most powerful man in Iran, by lobbing some missiles across the border that didn’t result in US casualties then I have a bridge to sell you https://t.co/urRMsYhZji
8. I can’t believe I’m seeing people saying that this was a face saving move by Iran and now that there haven’t been any US casualties, that we should move on.
The level of naivety is astonishing.
Do people really think this is how Iran is going to retaliate?
9. Read Jake’s tweet…for those of you thinking this is just a weak response from Iran & that they’re terrified of the US mil, ask yourself if this how a nation that has funded attacks globally would respond to the killing of its most important Generalhttps://t.co/Tg8Ra6YLRghttps://t.co/aSDXWQquHv
10. That may very well be true, but if people think this is the only way Iranians will respond then they’re unaware of the reality. So while POTUS is taking the off ramp, the Iranians will sit and wait and do what they want and when they want to do it. https://t.co/Ff4xhBHo88https://t.co/lKdGyEKMA5
11. The problem is so many people have thought about this situation through the lens of conventional warfare. So they believe if there is no conventional warfare that the situation has deescalated.
But conventional warfare should have never been the concern!
Indeed, CNBC adds that blowback from Iran could continue for years, and could come in the form of covert diplomatic action, cyberterrorism or even a more conventional attack.
If President Trump is suitably respectful during his expected address to the nation on Wednesday, then Iran might deliver another “overt response” in the coming days. Jarrett Blanc, a senior fellow at the Carnegie Endowment for International Peace, warned of such a response in an interview with CNBC.
But if Trump gloats about how the US killed one of their top generals, and all they did was blow up a bunch of rockets in the desert, then it’s possible that a furious Tehran could ratchet up the conventional weapons response.
Blanc said: “If he gloats that, you know, we’ve killed a top Iranian general and all they’ve done is hit the desert, he greatly increases the chances that there will be a further, overt response from Iran and again, increase the chance of a rapid escalation toward a really large scale conflict in the region.”
If Trump doesn’t gloat, then it’s possible that could help defuse the situation, at least in the short term.
“If he manages to keep the gloating to a minimum, it’s possible that the large scale, overt response has been satisfied and we move again into the more covert responses which, while terrible and potentially very damaging, don’t quite pose the same risk of war in the short term.”
But even if Trump doesn’t say anything to offend the Iranians, Blanc believes that it’s “almost inconceivable” that this is the last of Iran’s retaliation.
“I think it is almost inconceivable that this is the end of Iran’s reaction,” he said. “It might be the end of Iran’s short-term reaction, it might be the end of Iran’s overt reactions, but I think that there will continue to be blowbacks from Iran from the Soleimani assassination, whether that’s covert action or certainly diplomatic action over the mid to long term,” Blanc said.
Looking ahead, there’s a “huge number” of directions that Iran can take, Blanc said. “They can certainly have their own assassination attempt. There could be a covert or terrorist attacks against US interests in the region, or elsewhere.”
Among the most likely scenarios is that Tehran will continue to push the Iraqi government to expel US troops, even as Trump sends reinforcements to the region.
“If they go through that entire process and make that decision, I think the United States is going to have to leave despite President Trump’s bluster,” he said. “My instinct is that, the end of U.S. military involvement, U.S. military presence in Iraq is in sight.”
“The Iranians have an opportunity now to force us out and, though it is of mixed interest from their perspective, they’ll probably take advantage of that opportunity,” he added.
Setting aside what’s next for Iran, Commentary’s Noah Rothman points out that Iranian-linked rocket attacks on US positions in Iraq are nothing new. As of late December, there had been 11 Iran-linked rocket attacks on US positions in Iraq, including in the green zone, over 2 months, some of which produced American casualties.
This is retaliatory, asymmetric, and destabilizing. It is a response to Solemani. But it’s also not new. As of late Dec, there had been 11 Iran-linked rocket attacks on US positions in Iraq, including green zone, over 2 months producing American casualties https://t.co/9N1HPJO8Y8https://t.co/3c0AaiFwcB
Meanwhile, Iran’s IRGC warned last night that any more attacks on Iran will result in “more painful and crushing responses,” including possibly against Israel.
“We warn the Great Satan, the bloodthirsty and arrogant regime of the US, that any new wicked act or more moves and aggressions [against Iran] will bring about more painful and crushing responses.”
For now, investors will simply need to wait to hear from President Trump to learn what might come next.
Hungarian police recently discovered two tunnels used to smuggle migrants into Hungary from Serbia. The tunnels were found at the same time that Hungarian police reported a five-fold increase in the number of migrants attempting to enter Hungary.
Hungary is not alone: Border authorities in countries across the European Union are struggling to stanch renewed flows of illegal migration.
More than 126,500 migrants from Africa, Asia and the Middle East illegally entered the EU during 2019, according to the International Organization for Migration.
On November 29, Hungarian police detained 44 migrants who were found walking along a highway near Ásotthalom, a village in southern Hungary. Police later learned that the migrants had crossed into Hungary from Serbia by crawling through a 34-meter (112-foot) hand-dug tunnel.
The oval tunnel, only 50 cm (20 inches) wide and 60 cm (24 inches) high, had been dug as deep as six meters (20 feet) underground. It had gone undetected because of thick foliage in the area and because the soil that was dug out of the tunnel was dumped into a nearby canal.
A second tunnel was found in the village of Csikéria, around 40 km from Ásotthalom. That tunnel was 21.7 meters (70 feet) long. No migrants were found there. Police said they were deploying drones to search for other possible tunnels.
At the height of the migration crisis in 2015, Hungary built two razor-wire fences on its southern borders to stop or divert the flow of migrants making their way to Western Europe. The newly-discovered tunnels were built underneath those fences.
The number of migrants trying to enter Hungary illegally from Serbia increased significantly in late 2019. Of the 11,808 people who attempted to enter Hungary illegally during the first eleven months of 2019, 2,418 of those attempts were made during just the month of November, according to Gergely Gulyás, Prime Minister Viktor Orbán’s chief-of staff. By comparison, 5,400 attempted to enter Hungary illegally during the first eleven months of 2018.
On December 1, Szilárd Németh, a senior official at the Defense Ministry, warned that current conditions in Hungary were ripe for a repeat of the migration crisis in 2015 and that the country is now in a “state of crisis.” Németh said that more than 100,000 migrants are now gathered in the Western Balkans and although “the situation is still under control,” it is “beginning to look like the big crisis in 2015.” He added that if the migrants are “let loose” on the Hungarian border, “there could be big trouble, and we must prepare for that possibility.”
On January 5, 2020, Németh announced that the Hungarian government would double the number of soldiers patrolling the borders “in light of increasing migration pressure.”
Illegal immigration throughout Europe continues unabated. In France, for instance, nearly 20,000 migrants were arrested in 2019, according to the police website France Bleu, which also reported that 189 people smugglers were arrested.
In Britain, The Telegraph newspaper reported that Albanian people smugglers were posting advertisements on social media platforms, including Facebook, promoting their ability to get people into Europe. The ads are accompanied by TripAdvisor-style feedback comments from “satisfied” customers.
The Telegraph, citing police sources, also reported that people smuggling gangs generate profits of up to £6 billion (€7 billion; $8 billion) a year, with migrants often paying more than £10,000 (€12,000; $13,000) to secure illegal entry into the UK.
In Italy, the newspaper Il Giornalereported that people smugglers were charging up to €10,000 to bring Asian migrants to Europe on luxury yachts. The phenomenon was described as “‘first-class immigration’: with no inflatable boats, no dinghies, no people crammed and crowded en route to Lampedusa,” but on real yachts “in conditions considered decent.”
Elsewhere in Europe:
Belgium
November 20. A dozen African migrants with spears and machetes attacked a Romanian truck driver at a rest stop on the E40 motorway in Walshoutem. The driver was sleeping in his truck when he was awakened by noise coming from the back of his truck. When he went to investigate, the migrants attacked him. The migrants had been trying to stow away in the truck in an effort to reach the United Kingdom.
October 29. In Antwerp, 28 migrants were arrested at the Berchem railway station after they failed to produce valid residence papers. Federal Police said that the action was directed against illegal immigration and people smuggling and the nuisance in and around the station that goes with it. Police said they were focused on trains moving between Antwerp and Brussels. The arrested persons were from Sudan (17), Eritrea (10) and Ethiopia (1). Eleven were minors.
Britain
December 31. At least 1,892 migrants successfully crossed the English Channel in 2019, according to the BBC. This represents a six-fold increase over 2018, when 283 migrants successfully crossed the Channel, according to the Home Office, which also revealed that 130 people were convicted of people smuggling in 2019.
December 26. Approximately 50 migrants were rescued in the English Channel. The migrants were intercepted while crossing towards the coast near Kent in four small vessels at around 1.30 am. Two other boats were stopped by French authorities and turned back. The migrants were said to be from Afghanistan, Iran and Iraq.
December 5. Nineteen migrants were stopped while trying to cross the English Channel on an inflatable boat. The migrants — eleven men, four women and four children — were from Iraq and Iran.
December 4. Seventy-nine migrants crossed the English Channel in five small boats. Three boats, carrying 48 people, were intercepted off the coast of Kent, while eleven people were rescued from a fourth vessel. A fifth dinghy was found abandoned on the beach in Kingsdown and 20 people were detained. It was believed to be the second-highest number of migrants to cross the Channel in a single day; 86 arrived on September 10.
November 26. Two people were arrested after ten migrants were found hidden in the back of a truck while it was parked at a gas station on the A14 motorway. Motorists watched on as the group were led out of the back of a truck by police near a main road in Godmanchester, Cambridgeshire. At one point a swaddled baby could be seen being cradled by its mother in the back of the vehicle.
November 25. Maurice Robinson, a 25-year-old truck driver from County Armagh in Northern Ireland who is accused in the deaths of more than three dozen migrants in Essex, pleaded guilty to conspiring with others to assist in illegal immigration. The charges relate to the deaths of 39 Vietnamese people, including children, who were discovered in the back of a refrigerated truck being driven Robinson in what appeared to be a botched people-smuggling operation. One of the victims, 26-year-old Pham Thi Tra My, sent distressed messages to family on the evening of October 22. “I am dying, I can’t breathe,” the text read. Her family said that they paid £30,000 (€35,000; $38,000) to people smugglers. Her last known location was Belgium.
November 25. Three men were charged with using a camper to smuggle Albanian migrants into the United Kingdom. Border Force officers at Dover said that they found four migrants hidden inside the vehicle when it was stopped after crossing from Dunkirk in France.
November 24. Thirteen migrants were rescued from a small boat crossing the English Channel. The migrants were taken to Folkestone in Kent.
November 17. Four boats carrying 39 migrants arrived in Dover within three hours of each other. The migrants claimed to be Iranian nationals.
November 10. Twenty-two migrants were intercepted off the coast of Dover.
November 9. Eight migrants were found on the back of a truck on the A14 motorway near the village of Spaldwick.
November 8. Samyar Ahmadi Bani, a 35-year-old people smuggler, was sentenced to six years in prison for attempting illegally to bring six Iranians into the United Kingdom.
November 7. Mohammed Asif, a 34-year-old British-Pakistani from Oldham, was sentenced to four years and nine months in prison for illegally obtaining British passports for 11 migrants by using the stolen identities of deceased people.
November 6. Fifteen migrants from Iraq and Iran were found leaving a refrigerated truck on the A350 motorway near Chippenham. The driver, a man in his 50s from Ireland, was arrested but later released on bail.
September 10. Border authorities intercepted 86 people in what was believed to be the highest number of migrants arriving in a single day. The arrivals came after warnings that the closure of a migrant camp in France could prompt a spike in the number of attempted Channel crossings.
Cyprus
November 12. Cypriot authorities rescued 120 Syrian migrants from a boat adrift off the island’s southeastern coast. The Syrians were brought ashore in the Cape Greco region after their vessel was sighted six nautical miles (11 km) off the coast of Cyprus. Those on board said they had paid $4,000 each for the journey to the smugglers, who managed to get away.
Finland
October 30. Two Iraqi residents in Finland were suspected of organizing the illegal entry of individuals into the country. Finnish border guards found in the men’s possession several photographs of passports that had either been reported stolen or missing. The offenses came to light when Russian border officials barred an Iraqi man carrying a forged French passport from travelling from St. Petersburg to Helsinki. Russian authorities later discovered that the man had arrived in Moscow a day earlier, on an Iranian passport with an authentic Russian visa. A preliminary investigation by the Finland Border Guard unit determined that the Iraqi man had paid €4,500 euros ($5,000) for the French passport.
France
December 31. At least 2,358 migrants were intercepted in the English Channel while attempting to reach Britain in 2019, according to French police. This was a four-fold increase compared to 2018, when 586 migrants were intercepted. In 2019, French police recorded a total of 261 crossings or attempted Channel crossings, mostly involving small inflatable boats that were overloaded with people. Approximately 45% of the crossings were successful, according to police.
December 30. Nineteen migrants were rescued off the coast of Dunkirk in the north of France who were trying to reach Britain on a small pleasure boat.
December 29. A total of 31 migrants were rescued in two boats, one off the coast of Calais and another near Dunkirk.
December 17. Ten migrants were intercepted off the coast of Cap Blanc-Nez. November 24. Eleven migrants were rescued after their boat faced trouble nearly seven miles west of Boulogne. They were suffering from hypothermia.
November 19. Four Iraqis and one Iranian were found in the back of a truck on the A20 motorway near Argenton-sur-Creuse.
November 13. Three Syrians and a Sudanese were found in the back of a truck at a Leroy Merlin depot in Valence.
November 6. Seven migrants in a vehicle were intercepted at a toll booth on the A64 motorway in Hautes-Pyrénées. The driver, a West African with Spanish residency, was also arrested on people smuggling charges.
November 2. Thirty-one Pakistani migrants were found in the back of a truck on the A8 motorway during a police check at a toll booth near Nice. The migrants were sent back to Italy.
October 31. Ten migrants, including from Eritrea, Pakistan and Somalia, were found in the back of a truck at a rest stop on the A9 motorway in Fabrègues. They had been trying to travel from Italy through France to reach Spain.
October 28. Eight Afghan migrants, including two children, were found with hypothermia in a refrigerated truck at the port of Calais.
October 19. Thirteen migrants, including one child, were found in the back of a cattle truck at the port of Calais. The British driver was detained by French authorities. Four others were arrested by the UK’s National Crime Agency (NCA) in a string of raids in Romford, London and Brentwood in Essex.
Greece
November 4. Greek police found 41 migrants, mostly Afghans, hiding in a refrigerated truck at a motorway in northern Greece. Police stopped the truck near the city of Xanthi for a routine check, arresting the driver and taking him and the migrants to a nearby police station for identification.
Ireland
November 21. Sixteen migrants, believed to be from Iraq and Iran, were found in the back of a truck travelling from France to the Irish port of Rosslare. They were found in a “sealed trailer” on a Stena Line ferry ship sailing from Cherbourg to Rosslare in County Wexford. The migrants reportedly believed they were going to the United Kingdom.
Italy
December 10. Italian police dismantled an Asian migrant smuggling gang that illegally brought thousands of Pakistanis, Indians and Bangladeshis into Italy and other European countries. Eight people were arrested in Italy and one in France. It is estimated that in two years the group managed to move more than 1,000 migrants and made profits of over one million euros.
December 4. Italian authorities allowed two migrant rescue ships carrying a total of 121 migrants to dock at ports in Sicily.
November 24. Italian authorities allowed the Spanish migrant rescue ship Open Arms to disembark 62 African migrants at the southern Italian port of Taranto.
November 23. Five migrants died and 149 were rescued after their boat capsized between Libya and the Italian island of Lampedusa.
November 3. An Italian offshore supply vessel Asso Trenta brought 151 migrants to Sicily after rescuing them in waters off Libya.
November 1. A humanitarian rescue ship with 88 migrants aboard entered Italian waters off Sicily to shelter from strong wind and waves. Sea-Eye said its vessel Alan Kurdi was awaiting assignment of a safe port by Italy.
Slovenia
November 28. Two Syrians hidden in the trunk of a car died when the vehicle carrying eight migrants crashed on a stretch of highway between Slovenia and Italy.
Netherlands
November 19. Dutch authorities found 25 migrants stowed away in a refrigerated container on a truck aboard a cargo ferry bound for Britain shortly after it left the Netherlands. The vessel returned to the Dutch port of Vlaardingen. Two of the migrants were taken to a hospital for treatment while the other 23 received a medical check-up at the port before being taken away by police for processing. The Romanian truck driver was arrested and questioned for possible involvement in people smuggling.
Macedonia
November 27. Twenty-five migrants, including seven minors, were injured when a Bulgarian-registered truck in which they were riding overturned on a highway in the northern town of Kumanovo. Police said 15 Afghans, nine Pakistanis and one Iraqi were transferred to a local hospital. Police said that the migrants entered Macedonia illegally from Greece.
Spain
November 30. Twenty-four migrants landed at Águila beach in the south of Gran Canaria, in Spain’s Canary Islands. The migrants had spent five days at sea.
November 29. Two Guinean migrants, aged 19 and 17, were found in a hidden compartment of a vehicle that attempted to cross into the Spanish exclave of Melilla from Morocco. Two Moroccan people smugglers were arrested.
November 27. Four migrants died and at least 10 more were missing after attempting a sea crossing to Spain. The boat was found around 30 nautical miles north of Melilla, a Spanish exclave city located on the northern coast of Africa. Rescuers saved around 55 people, three of whom were in serious condition.
November 18. A van carrying 52 migrants rammed at full speed a border fence at the Spanish exclave of Ceuta. The driver, a 38-year-old Moroccan people smuggler, was detained by Spanish police.
October 7. A Court in Teruel sentenced seven members of a people smuggling gang to a cumulative total of ten years in prison. The group was found guilty of trafficking persons between Iraq and the United Kingdom through Spain. The scheme was discovered when police found 14 migrants inside two refrigerated trucks on the A-23 motorway corridor between Sagunto near Valencia, Teruel and Zaragoza. The ringleader, a 36-year-old Iraqi named Shwana Rafiq, was sentenced to four years in prison; prosecutors had requested 14 years. His wife, Esperanza Martínez, was sentenced to two years in prison; prosecutors had requested 12 years. The others involved were sentenced to six months each; prosecutors had requested five years for each. The light sentences reflect the leniency of the Spanish justice system, which appears to encourage, rather than deter, people smuggling gangs.
Hard-Partying Culture At London’s Elite Law Firms Is Ruining Lawyers’ Mental Health, Study Finds
What do you do with a drunken lawyer? Advise them to seek professional help.
Or at least that’s what one recent study from the UK’s professional body for UK lawyers determined.
According to the FT, law firms’ hard-charging, hard-drinking culture is having a negative impact on the mental health of many attorneys by encouraging harassment and bullying.
For who aren’t familiar with the legal world in the UK, this is probably the most important thing to remember: Five massive multinational London-headquartered firms dominate the landscape. The firms – Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May – are collectively referred to as the “magic circle”.
These insanely profitable white-shoe law firms set the tone for the practices and culture of the legal world in the UK, and after a series of high-profile sex scandals rocked the industry last year, the industry has become somewhat more introspective.
Reports about an event that portrayed Freshfields’ drinking culture and featured an event involving drinking champagne at 10:30 in the morning.
In October, former Freshfields’ partner Ryan Beckwith was asked whether the “magic circle” firm had a “drinking culture” following revelations about an event which began with lawyers drinking champagne at 10.30am.
Last month Baker McKenzie’s former London head Gary Senior was also forced to discuss his consumption of alcohol at a work event during the course of an ongoing hearing into allegations against him.
Mr Beckwith and Mr Senior denied any allegations of misconduct.
In response to this finding, the UK’s Junior Lawyers Division of the Law Society of England and Wales on Monday released guidelines on how firms can foster a less permissive climate that prohibits harassment of both the sexual and physical nature.
On Monday, the young lawyers’ division of the Law Society, which surveyed almost 2,000 junior lawyers last year, said unhealthy approaches to alcohol consumption had a potentially negative impact on health, bullying, harassment, diversity and productivity, and argued firms needed to come up with inclusive alcohol policies.
Recommendations included offering better low-alcohol or alcohol-free alternatives at firm events instead of “a warm jug of orange juice or something fizzy”, and considering other times of day for networking and social events, as well as alternative activities such as sports.
In the survey, which stemmed from an annual mental health survey, 93% of lawyers reported feeling stressed in their roles, and turning to alcohol and other unhealthy coping methods because of it.
The guidelines stem from an annual survey examining the mental health and wellbeing of junior lawyers, launched three years ago in response to fears over the levels of stress suffered by lawyers and conducted most recently last year.
Of the young lawyers surveyed between January and March 2019, more than 93 per cent reported feeling stressed in their role, and many said they used alcohol as a coping mechanism and that it was a contributing factor to mental health issues.
The report said it was “often reported that juniors or those at recruitment events particularly feel pressure to consume alcohol to show that they can fit in with the team, socialise well and secure their future career progression”.
The same study in 2018 found that of almost 1,000 junior lawyers, more than 82 per cent of respondents had experienced stress in their role and 26 per cent experienced extreme stress and anxiety.
It’s only January, but we have a funny feeling that this year’s round of holiday parties will leave a little something to be desired…
Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks and some of their economists, who start with a wrong diagnosis: the idea that economic agents do not take more credit or invest more because they choose to save too much and that therefore saving must be penalized to stimulate the economy. Excuse the bluntness, but it is a ludicrous idea.
Inflation and growth are not low due to excess savings, but because of excess debt, perpetuating overcapacity with low rates and high liquidity, and zombifying the economy by subsidizing the low-productivity and highly indebted sectors and penalizing high productivity with rising and confiscatory taxation.
Historical evidence of negative rates shows that they do not help reduce debt, they incentivize it. They do not strengthen the credit capacity of families, because the prices of nonreplicable assets (real estate, etc.) skyrockets because of monetary excess, and the lower cost of debt does not compensate for the greater risk.
Investment and credit growth are not subdued because economic agents are ignorant or saving too much, but because they don’t have amnesia. Families and businesses are more cautious in their investment and spending decisions, because they perceive, correctly, that the reality of the economy that they see each day does not correspond to the cost and the quantity of money.
It is completely incorrect to think that families and businesses are not investing or spending. They are only spending less than what central planners would want. However, that is not a mistake from the private sector side, but a typical case of central planners’ misguided estimates, which come from using 2001–7 as a “base case” of investment and credit demand instead of what those years really were: a bubble.
The argument of the central planners is based on an inconsistency — that rates are negative because markets demand them, not because they are imposed by the central bank. If that is the case, why not let rates float freely if the result is going to be the same? Because it is false.
Think for a moment what type of investment, company, or financial decision is one that is profitable with rates at –0.5 percent but unviable with rates at 1 percent. A time bomb. It is no surprise that investment in bubble-prone sectors is rising with negative rates and nonreplicable and financial assets skyrocketing.
Public debt trades at artificially low yields and, instead of strengthening economies, negative rates make governments more dependent on cheap debt. Politicians abandon any reformist impulse and prefer to accumulate more debt.
The financial repression of central banks begins with a misdiagnosis, assuming that low growth and below-target inflation is a problem of demand, not of the previous excess, and ends up perpetuating the bubbles that they sought to solve.
The policy of negative rates can only be defended by people who have never invested or created a job, because no one that has worked in the real economy can believe that financial repression will lead economic agents to take much more credit and strengthen the economy.
Negative rates are a huge transfer of wealth from savers and real wages to the government and the indebted. A tax on caution. They are the destruction of the perception of risk that always benefits the most reckless. The bailout of the inefficient.
Central banks ignore the effects of demography, technology, and competition on inflation and the growth of consumption, credit, and investment, and with the wrong policies they generate new bubbles that become more dangerous than the previous ones. The next bubble will again increase the fiscal imbalances of the countries. When central banks present themselves as the agents that will reverse the effect of technology and demographics, they will be creating a greater risk and bubble.
Sweden launched its failed negative rate plan almost five years ago and has now reversed it due to the financial risks that are created. The most interesting thing is that it reversed the policy of negative rates precisely because of the risk of an economic slowdown, because the evidence shows that investment and consumption decisions do not increase with financial repression.
In Sweden, with negative rates, the real estate price index has increased 50 percent (from 160 points to 240), the average residential index has risen 27 percent, nonreplicable assets have risen between 30 and 70 percent (infrastructure, etc.), and the stock market has risen more than 20 percent. In that period, household consumption and investment (gross capital formation) have increased very little and real wages have remained stagnant.
Monetary policy has gone from being a support for structural reforms to an excuse to avoid them. Now, governments are delighted to read that “fiscal measures” must be implemented. And when a government hears “fiscal measures,” it translates it into “spending.” And when the eurozone governments start spending, the result is always the same: more debt and higher taxes.
In the eurozone, the economic aberration of negative rates continues despite the evidence of the collateral risks they generate. Meanwhile, you and I are blamed for not spending and borrowing more. What can go wrong?
