Tag: finance

S&P futures, European equities and Asian stocks all jumped as investors awaited a positive outcome from trade talks between the US and China economies, ahead of a televised address by President Donald Trump in which he is expected to use emergency powers to announce the construction of a border wall, while the US government shutdown enters its 18th day.

Chinese authorities plan to give a statement following the latest round of U.S. trade talks which ends today in Beijing, after both sides signaled progress toward resolving a conflict that has roiled markets, Bloomberg reported. “The talks are still underway and I believe we will release a detailed readout after they are concluded,” Chinese foreign ministry spokesman Lu Kang told reporters at a regular briefing Tuesday in Beijing.

While no timing was given and it wasn’t immediately clear if the U.S. would release a statement, on Monday Commerce Secretary Wilbur Ross expressed optimism, telling CNBC that “there’s a very good chance that we’ll get a reasonable settlement.” This took place after China’s Vice Premier Liu He made an unexpected appearance at the talks on Monday in a sign the Chinese were also pushing for a positive outcome.

This was enough to push futures on the Dow, Nasdaq and S&P 500 to session highs, with the Dow pointing to a 200 point gain with the S&P over 20 points higher, and nearly 11% higher from the Christmas Eve plunge when Steven Mnuchin activated the Plunge Protection Team.

China’s Foreign Ministry said Beijing had the “good faith” to work with the United States to resolve trade frictions, but many analysts doubt the two sides can reach a comprehensive agreement on all of the issues before a March deadline. “Various concerns markets had earlier are receding for now. Still, there’s no denying that U.S. (company) earnings momentum is slowing,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities. “Ultimately we need to see whether upcoming earnings reports can dispel market concerns.”

European stocks also stormed higher, led by retailers and real estate companies, with the Stoxx Europe 600 Index over 1.1% higher…

… after shrugging off a shockingly weak German industrial production drop, the biggest since the financial crisis, and worsening euro-area consumer confidence to advance.

“I think the market has been quite extreme in pricing recession risks, so I think we have value now in both the equity and bond markets,” SEB investment management’s global head of asset allocation Hans Peterson said. “The discussions between the U.S and China will take some time but I think the markets are prepared to move in the right direction on positive signals.”

Earlier, MSCI’s broadest index of Asia-Pacific shares ex-Japan reversed early gains however to end down 0.2%. It was dragged lower by falls in South Korea due to Samsung and in China where government bond yields also saw their biggest daily gain in 9 months.  Japanese shares and Hong Kong stocks closed higher, though equities slid in South Korea while China’s Shanghai Composite closed closed down after flirting with gains and losses despite renewed promises of more easing by Beijing.

Korean stocks were impacted after Samsung Electronics surprised the market on Tuesday with a 29% drop in quarterly profit, blaming weak chip demand in a rare commentary issued to “ease confusion” among investors already fretting about a global tech slowdown. The South Korean firm also said profit would remain subdued in the first quarter due to difficult conditions in memory chips, but that the market is likely to improve in the second half of the year as customers release new smartphones. Weaker earnings at the world’s biggest maker of smartphones and semiconductors adds to worries for investors already on edge after Apple last week took the rare move of cutting its quarterly sales forecast, citing poor iPhone sales in China.

Dollar bulls got a breather as Treasuries steadied before a televised address by President Donald Trump, while the dollar gained for the first time in four days as investors dialed back some of the bets taken over the past week; rising stocks damped demand for the yen and short-covering in USD/JPY also bolstered the greenback. The euro retreated after touching 1.1485 as an unexpected fall in German industrial output for the third straight month helped to weaken the euro zone currency. The pound retreated after earlier touching a one-week high against the dollar amid supportive cross flows as traders assessed chances that the European Union will offer fresh assurances to U.K. PM Theresa May on the Irish border. Elsewhere, the Canadian dollar hit one-month highs, having gained 2.7 percent in the past five days on gains in oil prices and on speculation the Bank of Canada will raise interest rates again this week. It last stood at 1.3272 per U.S. dollar. Emerging-market currencies lost steam while oil extended its advance. 

Treasuries held steady and European bonds fell. Large short positions in bunds were covered through option trades amid another set of soft data out of the euro area that kept the euro offered. Stocks traded globally in the green, while euro-area bonds drifted lower.

In the latest Brexit news, UK and EU leaders are reportedly in talks regarding possibly extending Article 50 past March 29th amid fears that a Brexit agreement will not be struck in time, according to the Telegraph. However, a UK Downing Street spokeswoman later stated that UK PM May has always said we would leave the EU on March 29th and that we would not extend Article 50. Instead, UK PM May is said to be pinning her hopes on a last-minute offer from Brussels to avoid her Brexit deal suffering a defeat at the House of Commons on the 15th January. Furthermore, UK PM will today be urged ‘play hardball’ with the EU by offering UK lawmakers a vote on her deal with the condition that they would be able to decide at a later date whether or not to enter the Irish backstop.

In the latest geopolitical developments, we reported earlier that Turkish President Erdogan said that he cannot accept US National Security Advisor Bolton’s comments on Syria, and that he has made a serious mistake, adding that he has agreement with US President Trump, but the administration are stating different things.

Oil traded near $49 a barrel in New York, with Brent (+1.6%) and WTI (+1.5%) in the green, trading within a range of around USD 1.0/bbl as there have been no new major catalysts. Positive risk sentiment is predominantly fuelled on trade talk optimism between the US and China. The Iranian Deputy Foreign Minister says he hopes India will seek another US waiver on Iranian sanctions. Separately, the Arab Petroleum Corp expects oil prices to trade between USD 60-70/bbl by the middle of the year.

Gold (-0.4%) is down as the dollar recovered lost ground overnight, alongside an improvement in risk sentiment as markets are optimistic that a deal can be reached between US and China. Separately, China have restarted their gold purchases following a two-year break; with 0.32M/oz of the yellow metal added to their reserves in December 2018. Canadian sources state that the US and Canada are not currently, or scheduled to begin, negotiating to lift metal tariffs; despite reports that discussions had been held on steel tariffs.

Expected data include NFIB Small Business Optimism Index, while the publication of trade-balance figures has been postponed by government shutdown. Helen of Troy is among companies reporting earnings.

Market Snapshot

• S&P 500 futures up 0.5% to 2,562.50
• STOXX Europe 600 up 0.7% to 345.23
• MXAP down 0.04% to 148.36
• MXAPJ down 0.1% to 478.51
• Nikkei up 0.8% to 20,204.04
• Topix up 0.4% to 1,518.43
• Hang Seng Index up 0.2% to 25,875.45
• Shanghai Composite down 0.3% to 2,526.46
• Sensex up 0.4% to 35,990.11
• Australia S&P/ASX 200 up 0.7% to 5,722.44
• Kospi down 0.6% to 2,025.27
• German 10Y yield rose 1.8 bps to 0.239%
• Euro down 0.1% to $1.1459
• Italian 10Y yield unchanged at 2.538%
• Spanish 10Y yield rose 3.0 bps to 1.53%
• Brent futures up 1.3% to $58.09/bbl
• Gold spot down 0.5% to $1,283.19
• U.S. Dollar Index up 0.2% to 95.87

Top Overnight News from Bloomberg

• The Trump administration expressed optimism it can reach a “reasonable” trade deal with China as President Xi Jinping dispatched a top aide to the negotiations. China is said to buy more U.S. soyPrime Minister Theresa May is considering a move that could water down her threat to crash Britain out of the European Union without a deal, according to a person familiar with her thinking
• President Donald Trump plans to deliver a prime-time televised address on Tuesday before he travels to the U.S.-Mexico border later in the week as he battles Democrats over his proposed border wall
• A dramatic plunge in German industrial activity late last year raised the risk that Europe’s largest economy will slip into recession. Production fell for a third month in November and posted its worst year-on-year drop since the end of the financial crisis
• Donald Trump’s national security adviser will tell Turkish leaders on Tuesday that the planned withdrawal of U.S. forces from Syria has morphed into a slower and more complicated exit with the prospect of an indefinite American footprint in the war-torn country
• Kim Jong Un is making his fourth visit to China, in a sign that the North Korean leader is seeking Chinese President Xi Jinping’s counsel ahead of a possible second summit with Donald Trump
• Declines in euro-yen hedging costs and Japan’s yields mean that investors from the Asian nation could pick up at least 10 basis points when buying currency-hedged 10-year French bonds instead of 30-year JGBs, a benchmark comparison. As recently as November, they would suffer a loss
• Former Federal Reserve economist Nellie Liang withdrew from consideration for a seat on the central bank’s board of governors, the White House said. Liang dropped out of her own accord and wasn’t pressured, said a person familiar with the matter
• Italy’s populist government has flagged its readiness to help cash-strapped Banca Carige SpA, approving state guarantees on any future bond issues and signaling its support for a possible precautionary recapitalization.
• Oil notched its longest stretch of daily gains in more than 17 months
• Samsung Electronics Co.’s quarterly profit and sales missed estimates on sputtering demand for memory chips during the last three months of 2018

Asian equity markets traded mixed as the region failed to take full advantage from the performance on Wall St where US-China trade hopes saw all US majors extend on recent gains. ASX 200 (+0.7%) and Nikkei 225 (+0.8%) got a tailwind from their counterparts stateside where focus centred on the resumption of trade talks between the world’s 2 largest economies which was surprisingly attended by Chinese Vice Premier Liu He who is a top economic adviser to President Xi, while recent currency flows were also favourable for Japanese stocks. Conversely, KOSPI (-0.6%) lagged following disappointing preliminary Q4 results from index giant and tech heavyweight Samsung Electronics, while Shanghai Comp. (-0.3%) and Hang Seng (+0.2%) were indecisive after another liquidity drain by the PBoC and with weakness seen in auto names led by Geely following a near-40% decline in December sales. Finally, 10yr JGBs were subdued amid gains in Japanese stocks although strong results at the 10yr auction, later provided a floor for prices

Top Asian News

• North Korea’s Kim Visits China Ahead of Possible Trump Summit
• SoftBank Is Said to Plan Smaller $2 Billion Investment in WeWork
• Bayer Gets Rare Monsanto Reprieve With India Cotton Seed Ruling
• Nomura to Switch to Merit-Based Pay for Japan-Based Brokers

Major European indices are in the green [Euro Stoxx 50 +0.9%] with gains generally broad-based. The FTSE 100 (+0.9%) is in the green with Ashtead Group (+3.7%) in the green after being upgraded at UBS and Tesco (+3.2%) in the green as their sales in the 12 weeks to December 30th increased +0.6% vs. Prev. -0.1% according to the Kantar update. Sectors are also in the green with some underperformance in energy and material names. Other notable movers include Morrisons (-3.4%) who are towards the bottom of the Stoxx 600 after Kantar data showed lower sales in the 12 weeks to December 30th of +0.1% vs. Prev. +0.5%; with the Co also reaffirming their 2018/19 targets. Unilever (-0.2%) are in the red after being downgraded at UBS.

Top European News

• Bang & Olufsen Shares Gain as Luxury Hi-Fi Maker Calls Bottom
• Brexit- Wary U.K. Shoppers Keep Lid on Holiday Grocery Spending
• ‘Beast From the East’ Chill May Boost Energy Demand in Europe
• Goldman Sees Three Routes to Europe Capital-Goods Outperformance

In FX, it was a choppy day for the dollar as the index recovered lost ground overnight and tested 96.000 (vs. intraday low 95.620) to the upside before pulling back to around 95.750 as markets await further details on US-Sino trade-related dialogue and US CPI later in the week. The dollar has re-gained traction in EU trade to retest the big figure ahead of US President Trump’s speech on the Southern border at 2100EST/0200GMT.

• GBP – A volatile day for the Pound as vague and contradicting Brexit reports emerge with initial upside in Sterling seen following comments from Irish PM Varadkar, who stated that the EU are willing to offer fresh written assurances on the backstop, ahead of House of Commons meaningful vote next week. Subsequently, Cable rose to levels just shy of 1.2800 shortly before retreating to around 1.2750 amid lack of clarity on the so-called assurances alongside the EU repeatedly stating that Brexit negotiations are not to be reopened and Brexiteers desiring an overhauled deal. GBP has been relatively indecisive overnight as Telegraph reports that UK and EU leaders are said to be in talks over extending Article 50 were shortly shot down by a Downing St. spokesman. Brexit Minister Barclay emerged during early EU trade to also deny the aforementioned Telegraph reports, whilst also adding that the process of the A50 extension is too complex. From a technical perspective, Cable resides just below its 50 DMA (1.2773) while options see 353mln expiring at 1.2770 at today’s NY cut.
• EUR – On the backfoot following a dollar-dominated Asia-Pac session as the single currency was slightly dented by the release of disappointing German industrial output which ING and Lloyds highlight increases the risk of a German recession. This saw EUR fall from levels just shy of 1.1450 to a low print of 1.1433. In terms of technicals, the pair’s 100 DMA lies at 1.1477 while a large 1bln in option expiries rests between 1.1425-35, potentially diluting some upside.
• AUD, NZD –The antipodeans are the marked G10 underperformers, also falling victim to the greenback, with the Aussie initially pressured upon the release of a narrower than expected trade surplus overnight. As EU trade went underway, the NZD and AUD lost more ground to the buck with the former retreating further below 0.7150 to lows in close proximity of its 50 HMA around 0.7120. Meanwhile the latter sits nearer to the bottom of a 0.6730-60 range with its 100 DMA around 0.6680.
• TRY– The Lira weakens for a second consecutive day amid comments from Turkish President Erdogan who rejected US National Security Advisor Bolton’s statement that the withdrawal of US troops from Syria depend on certain conditions, including Turkish assurances that the Kurds in Northern Syria would be safe. Given the possible repercussions on the relationship between Turkey and the States, USD/TRY rose past 5.4000 to a high print of 5.4767 (vs. low of 5.3800) ahead of the next psychological level at 5.5000.

In commodities, Brent (+1.6%) and WTI (+1.5%) in the green, trading within a range of around USD 1.0/bbl as there have been no new major catalysts. Positive risk sentiment is predominantly fuelled on trade talk optimism between the US and China; where Chinese Vice Premier Liu He unexpectedly attending the talks, which were scheduled to be held at a vice-ministerial level. Elsewhere, the Iranian Deputy Foreign Minister says he hopes India will seek another US waiver on Iranian sanctions. Separately, the Arab Petroleum Corp expects oil prices to trade between USD 60-70/bbl by the middle of the year. Gold (-0.4%) is down as the dollar recovered lost ground overnight, alongside an improvement in risk sentiment as markets are optimistic that a deal can be reached between US and China. Separately, China have restarted their gold purchases following a two-year break; with 0.32M/oz of the yellow metal added to their reserves in December 2018. Canadian sources state that the US and Canada are not currently, or scheduled to begin, negotiating to lift metal tariffs; despite reports that discussions had been held on steel tariffs.

Looking at the day ahead, we’ve got the November trade balance, JOLTS job openings and consumer credit prints. Away from all that US-China trade talks are expected to continue while the World Bank should release its latest global growth forecasts at some stage today.

US Event Calendar

• 6am: NFIB small business optimism, est. 103, prior 104.8
• 8:30am: Trade balance data postponed by government shutdown
• 10am: JOLTS job openings, est. 7,050, prior 7,079
• 3pm: Consumer credit, est. $17.5b, prior $25.4b

DB’s Jim Reid concludes the overnight wrap

Compared to the relentless barrage of headlines in the last few sessions, the past 24 hours has either been dull or a welcome breather depending on your position. The good news though is that US equities made further headway on Friday’s employment report and Powell inspired gains yesterday. The S&P 500 closed up +0.70% last night, DOW +0.42% and NASDAQ an even more impressive +1.26%. To put a bit of context around the last couple of sessions, this has been the biggest two-day percentage jump for the S&P, excluding the outsized Boxing Day rally session, since August 2015.US HY spreads also rallied another 20bps in cash terms which puts the two-day move at an impressive -60bps, the best two-day stretch since June 2009. Amazingly the range for US HY spreads in the whole of H1 2018 was just 51bps. So we’ve easily eclipsed that in just a few sessions already. Treasury yields had actually nudged lower during the European session as risk stuttered a bit (eventually culminating with the STOXX 600 down -0.15%) however then weakened as the US walked in with 10y yields back up to 2.697% (+2.7bps on the day) and 2s10s curve slightly flatter at 15.1bps. WTI Oil climbed another +1.17% which certainly helped risk while the USD index (-0.53%) hit its lowest since last October.

In all honesty, there wasn’t a huge amount to report. The US-China trade talks haven’t brought about any headlines of particular substance however are still ongoing so it’s worth seeing if anything comes out. Yesterday, US Commerce Secretary Ross said that there is a “very good chance” that a “reasonable” agreement would be reached but “the real issue is what are the enforcement mechanisms, what are the punishments if people don’t do what they were supposed to do?” On the talks, it didn’t go unnoticed that Chinese Vice Premier Liu He unexpectedly attended the discussions yesterday. It was previously expected that only mid-ranking officials would attend, so the inclusion of the top economic adviser to President Xi Jinping is significant insofar as China is attaching importance to the talks. Bloomberg reported yesterday that Liu is expected to meet with US Trade Representative Lighthizer later this month.

Relatedly, our US economists cited trade as the number one uncertainty to the US economy and Fed outlook, which they updated yesterday (link here ). They modestly lowered their 2019 growth forecast by -0.1pp to 2.3%, though they maintain their existing inflation and unemployment projections. They now see a base case for two Fed hikes this year, as the Fed responds to tighter financial conditions with a slower hiking pace. If the US-China trade dispute resolves positively, they see scope for a third hike this year. If tariffs escalate further, they think a recession and rate cuts are possible.

Continuing the Powell-induced trend toward a so-called “relent” and alongside our economists’ new projections, Atlanta Fed President Bostic talked down his rate expectations yesterday. He said that “right now, I’m at one move for 2019,” though he highlighted the possibility that he could support more or fewer hikes, depending on how trade policy develops and how the economy responds. Bostic is not a voter this year, but we’ll hear from voters Evans and Rosengren tomorrow and Bullard, Clarida, and Powell on Thursday. Perhaps equally important for risk sentiment will be President Trump’s planned address to the nation at 9pm ET tonight, where he will comment on the ongoing government shutdown. Midnight tonight is the unofficial deadline for a deal which would still enable furloughed federal employees to receive pay checks this Friday. So, barring a surprise breakthrough, the pain of the shutdown will begin to be felt soon.

Meanwhile, and just in case you’d been missing them, Brexit headlines were back yesterday. However it wasn’t particularly exciting. Speaking to the British press, PM May mostly reiterated the points made over the weekend, specifically that before the debate begins again tomorrow, government will set out further assurances from the EU on the backstop and specific measures for Northern Ireland to alleviate the need for a backstop, as well as seek a greater role for parliament in negotiations on the future relationship. A vote next Tuesday is looking likely now. Yesterday DB’s Oliver Harvey published his latest update in which he reiterated his base case that May fails to secure ratification for the agreement in parliament next week. He attaches a 60% probability to May continuing with the current agreement and losing the vote (or delaying the vote again in the face of defeat) and a 40% chance of May pivoting to a softer Brexit stance and therefore gaining parliamentary support. He sees a 35% chance that article 50 is extended to accommodate more negotiations, new elections, or a second referendum, and a 10% chance of a “crash Brexit.” See this link for the full set of Oli’s further probabilities in the face of losing the vote next week.

It’s been a busy day couple of days for DB research with our European equity strategist Sebastian Raedler arguing that current market conditions resemble the growth scare in late 2015 / early 2016. On both occasions, the rate of change in global PMIs turned sharply negative and markets priced significant further growth weakness on the back of China macro concerns and US recession worries. Back then, the worries were misplaced: PMIs rebounded, leading equities to rally by 20%+ and cyclical sectors to outperform sharply. He thinks the episode offers a good playbook for the current situation. His macro projections are consistent with 10% upside for European equities and 15% upside for cyclical versus defensives over the coming six months. See the link to the report here .

To markets in Asia now where sentiment is more mixed with the Nikkei (+1.49%) and Hang Seng (+0.35%) up fairly comfortably while the Shanghai Comp (-0.23%) and Kospi (-0.10%) are currently in the red. The declines in China and Korea appear to be partly impacted by a much weaker than expected earnings release from Samsung, which follows the latest downgraded guidance from Apple following weak demand in China. Elsewhere, futures on S&P 500 are up +0.47% in early trade today and most Asian currencies are trading weaker against the greenback this morning.

In other news, yesterday’s data wasn’t much of a market mover. The non-manufacturing ISM for December in the US mirrored the manufacturing print in coming below expectations at 57.6 (vs. 58.5 expected and 60.7 previously). However, as it came out after Friday’s employment report it lost some of its usual impact especially with the most significant employment component reading coming in just over 2pts lower at 56.3 (which ironically would have likely heightened concerns ahead of payrolls). The associated text included the usual concern about tariffs that has become more commonplace, however the overall tone indicated further cyclical strength albeit there were some building concerns over labour shortages.

Prior to this, in Europe the highlight of a quiet European calendar had been a softer than expected November factory orders report out of Germany. Orders came in at -1.0% mom (vs. -0.1% expected), albeit distorted by aircraft orders. Still, the year-on-year figure dipped to its lowest level since 2012 at -4.3%. Later in the morning we learned that investor confidence in the Euro Area wasn’t quite as bad as feared with the Sentix reading dropping to -1.5 in January from -0.3, compared to expectations for a drop to -2.0. Note also that DB’s Mark Wall lowered his 2019 euro area GDP forecast -0.2pp to 1.2% on the softer outlook for external demand. Full note available here .

As for the day ahead, early this morning in Europe the focus should be on the November industrial production report in Germany. Not long after that we get the November trade balance for France before we then get December house prices data in the UK and the final December consumer confidence revision for the Euro Area. In the US we’ve got the December NFIB small business optimism reading to look forward to along with November trade balance, JOLTS job openings and consumer credit prints. Away from all that US-China trade talks are expected to continue while the World Bank should release its latest global growth forecasts at some stage today

via RSS http://bit.ly/2TzTmRq Tyler Durden

During his first public appearance since his November arrest, former Nissan Chairman Carlos Ghosn appeared in a Tokyo courtroom on Tuesday to rebut the charges that have been levied against him by Tokyo prosecutors as speculation continues to mount that his arrest was the result of an internal coup organized by Nissan CEO Hiroto Saikawa and other restive elements within the Japanese carmaker.

Ghosn, who appeared noticeably thinner following his nearly two-month long period of detention in an austere Tokyo jail cell, offered a 10-minute point-by-point response, claiming he had acted “legally and with executives’ approval” and that he never abused Nissan’s trust and that he never unjustly shifting trading losses on to the company, according to Nikkei Asian Review.

“I am an innocent of the accusations made against me,” Ghosn said in a 10-minute statement in English. “I have been wrongly accused and unfairly detained based on meritless and unsubstantiated accusations.”

“Let me say that I have genuine love and appreciation for Nissan,” he said. “I have acted honorably, legally and with the knowledge and approval of the appropriate executives inside the company.”

Responding to allegations that he used Nissan money to pay off a Saudi Prince who had helped him duck his personal trading losses, Ghosn claimed those payments were for “critical services” rendered.

The executive is also accused of paying a Saudi acquaintance 1.6 billion yen in company funds. He asserted that Khaled Juffali was a “long-time supporter and partner” of the automaker who was “appropriately compensated” for “critical services that substantially benefited Nissan.”

Ghosn also claimed that he never received any compensation from Nissan that was not disclosed.

Ghosn also said he kept “a record of the market compensation” for his role, based on offers that he had been made to take the helm at other automakers, but this was done for his own reference and had no legal effect.

“I never received any compensation from Nissan that was not disclosed, nor did I ever enter into any binding contract with Nissan to be paid a fixed amount that was not disclosed,” he said.

Ghosn has been arrested three times by Tokyo prosecutors since the scandal erupted. He can be held in detention until Jan. 11. Though his lawyers said they do expect prosecutors to push for another round of charges. If it goes to trial, the process could continue for another six months, and the charges he is facing carry a maximum prison term of ten years.

The hearing was called by Ghosn’s attorney last week as Japanese prosecutors mull more charges or another possible extension of Ghosn’s detention. Such public proceedings are rarely called – having been exercised in just 0.6% of cases over the past year – suggesting that the hearing was intended to either delay prosecutors or possibly to offer Ghosn a platform to mount a PR defense.

via RSS http://bit.ly/2M4jVvz Tyler Durden

Turkish President Erdogan sent the lira sliding on Tuesday when he refused to meet with Trump National Security Advisor John Bolton during the latter’s trip to Turkey after Bolton successfully convinced Trump to hold off on withdrawing 2,000 US troops from Syria until it had received assurances from Turkey that the Turks wouldn’t attack US-backed Kurds in the region.

Bolton revealed the change in direction during a Sunday interview, ahead of a planned trip abroad where he will visit Turkey and Israel to discuss the terms of the US withdrawal.

Instead of meeting with Bolton, Erdogan used a prescheduled speech in parliament to criticize American proposals that the Kurdish group play a key role in Syria after the US withdraws, according to Bloomberg.

Turkey, Erdogan said, has already completed preparations for how it will combat the remnants of ISIS after the US withdraws and has already drawn up plans to neutralize “all terror threats,” Erdogan said Tuesday during a speech to members of his ruling AKP Party.

“We will very soon mobilize to eliminate terrorist organizations in Syria,” he said. “If there are other terrorists who would attempt to intervene in our intervention then it is our duty to eliminate them as well,” Erdogan added in a likely reference to Kurdish fighters on Turkey’s border, whom Erdogan views as a threat because of their affiliation with Kurdish separatist groups within Turkey.

The news sent the lira lower amid renewed tensions between the US and Turkey following hopes that the feuding NATO members might finally be setting aside their differences.

Turkey has reportedly been planning an attack on the US-backed YPG, one of the key proxy groups for the US. Henrik Gullerg, a strategist at Nomura, said Erdogan’s decision to snub Bolton is a sign that “he must be very annoyed” at the US.

via RSS http://bit.ly/2sfkNEc Tyler Durden

Just as the second day of mid-level trade talks between US and Chinese delegations in Beijing was beginning, a surprising report crossed the wire: North Korean leader Kim Jong Un had been invited to travel to China for the first time since June to meet with President Xi Jinping. News of the visit immediately provoked speculation that Beijing was trying to send a message: If the US wants peace on the Korean peninsula, China will need to be involved.

Underscoring that point, President Trump affirmed last week that Washington and Pyongyang are planning a second diplomatic summit (though Trump claimed that North Korea was showing some reluctance) to continue negotiations about denuclearizing the peninsula.

And while talks between the US and the North have hit an impasse over the US’s unwillingness to lift sanctions until the North finishes surrendering his nukes – the North, on the other hand, has been pushing for their gradual removal – South Korean news agency Yonhap reported Tuesday, citing intelligence agency reports, that the North and China might discuss the prospects for “a peace treaty” with South Korea that would formally end the Korean War – one of the loftiest goals from the thaw in inter-Korean relations this year. 

Kim is expected to remain in China until the weekend.

A special train, carrying Kim and his wife, Ri Sol-ju, arrived in Beijing earlier in the day on a four-day trip at the invitation of Chinese President Xi, according to the North’s state media.

The National Intelligence Service (NIS) told lawmakers at a closed-door briefing that Kim may discuss ways to push for a peace treaty that could involve China ahead of his possible second summit with U.S. President Donald Trump, according to lawmakers on the intelligence committee.

In a New Year speech, Kim called for multilateral talks involving the signatories to the truce that ended the 1950-53 Korean War, including China, and replacing it with a peace treaty.

Notably, Kim made his first foreign trip as leader (he traveled by train to China) ahead of the first US-North Korea summit, which suggests that another summit may in fact be in the offing.

His trip raises speculation that a second summit between Trump and Kim might be imminent amid an impasse over North Korea’s denuclearization. They held their historic first summit in June in Singapore.

The NIS said that Kim will likely seek to discuss sanctions relief and Pyongyang’s denuclearization with Xi, according to lawmakers.

Kim appears to want to reaffirm China’s role as the North’s patron and receive a security guarantee as the two countries mark the 70th anniversary of their diplomatic ties this year.

One South Korean lawmaker said Kim’s visit may have been planned to “put pressure” on the US.

The NIS also added that Kim is expected to inspect industrial facilities in the southeastern Chinese city of Tianjin.

The spy agency believes that Kim has an interest in the electricity, tourism and construction sectors.

“Kim’s visit seems aimed at coordinating stances between the North and China ahead of a potential (Kim-Trump) meeting,” a lawmaker told Yonhap News Agency.

“At the same time, he apparently seeks to put pressure on the U.S. by highlighting the North’s ties with China.”

Ironically, Chinese Foreign Ministry Spokesman Lu Kang said during a Tuesday press conference that Kim’s visit was not unusual and that North Korea would not become “a bargaining chip” in US trade talks. “China and the DPRK are friendly and close neighbors and it is also an important tradition for us to maintain friendly exchanges,” Lu said.

The timing of Kim’s China visit is clearly linked to the planned second summit between him and President Trump. As to whether this is used as a bargaining chip by China in trade talks, I believe more Americans would think so than Chinese do. pic.twitter.com/zYPp5ZRo49

— Hu Xijin 胡锡进 (@HuXijin_GT) January 8, 2019

The message is clear: If Washington wants peace on the Korean peninsula – or a completely de-nuclearized North Korea – it will need to work with Beijing.

via RSS http://bit.ly/2LVuNeS Tyler Durden

For decades, European countries have historically maintained some of the heaviest restrictions on civilian gun ownership, leaving the rate of firearms in circulation far below comparable levels in the US and South America. But following a string of high-profile terror attacks in recent years, the number of people applying for legal gun ownership in countries including Germany and Belgium has surged, as European citizens become increasingly concerned about personal security in the face of a wave of Islamic terror and an unchecked migration crisis that has led to a surge in crime.

As the  Wall Street Journal reported, in Germany, the number of legally registered weapons rose roughly 10% to 6.1 million during the five years through 2017, the most recent year for which data from Germany’s National Weapons Registry was available. Furthermore, permits to carry arms outside of shooting ranges more than tripled to 9,285 during the same period.

Meanwhile, applications for shooting licenses in Belgium almost doubled following the massacre at a Paris concert venue in November 2015, which was followed four months later by an attack in Brussels, offering “a clear indication of why people acquired them,”  according to Nils Duquet of the Flemish Peace Institute, who spoke with WSJ for its story.

Since 2016, there have been more than 16 terror attacks in Europe attributed to ISIS, according to ESRI’s terror-attack tracker.

(Courtesy of ESRI)

In Germany, where restrictions on gun ownership are notoriously strict, permits for non-lethal air-powered guns have seen an even larger surge. The number of applications for the weapons, which shoot tear gas or loud blanks, gas roughly doubled in the three years through the end of 2017, to 557,560, according to German government data.

Still, the number of illegal weapons in Europe far outnumbers legal weapons (Western European countries are among the biggest markets for weapons traffickers).

“Europe represents the largest market for arms trade on the dark web, generating revenues that are around five times higher than the U.S.,” concluded a recent Rand Corp. report.

In 2017, the estimate stood at 44.5 million to 34.2 million, with the weapons typically sourced from the former Yugoslavia or other one-time war zones. Some are even bought online from vendors in the US.

Security has been the primary reason cited by many applicants for gun-carry licenses in places like Germany. According to one woman who was quoted by WSJ, the New Years Eve assault of hundreds of women in the German city of Cologne by a gang of migrants three years ago inspired Carolin Matthie to purchase her first weapon.

When hundreds of women were sexually assaulted on New Year’s Eve in several German cities three years ago, Carolin Matthie decided it was time to defend herself. The 26-year-old Berlin student quickly applied for a gun permit, fearing many women would have the same idea and flood the application process.

“If I don’t do it now, I will have to wait maybe another half year,” she recalls thinking.

Matthie now vlogs about the importance of using firearms for self defense.

Ms. Matthie first bought an air gun, which her permit allowed her to carry with her.

She has since become a sports shooter, using live ammunition at shooting ranges, and is now applying for a firearm permit. She posts a daily video blog where she advocates armed self-defense.

Since 2006, Belgium has been tightening restrictions on gun ownership following a terror attack perpetrated by a teenager with a legally acquired rifle…

“Before 2006, you could buy rifles simply by showing your ID,” recalled Sébastien de Thomaz, who owns two shooting ranges in Brussels and previously worked in a gun store.

“They used to let me shoot with all my stepfather’s guns whenever I joined him at the range,” said Lionel Pennings, a Belgian artist who joins his stepfather at one of Mr. De Thomaz’s shooting ranges on Sundays.

Mr. Pennings recalled that in the past he could easily fire a few rounds with his stepfather’s gun. “Now it’s much stricter,” he said. “You can only use the guns you have a permit for.”

A Belgian would-be gun owner must pass almost a year of shooting and theory tests, plus psychological checks, said Mr. De Thomaz.

The gun-range owner questions the impact of that policy. “With each terror attack, the legislation gets stricter,” he said. “For the black market, everything stays the same.”

…But following a wave of attacks in Europe, membership in Belgian shooting clubs is soaring. While ownership rates still lag the US and Latin America, as the threat of terror persists and European leaders stand by their pro-migration policies, some day, legal gun ownership in Western Europe could continue to climb.

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Authored by Guy Milliere via The Gatestone Institute,

• French officials evidently understand that the terrorists are engaged in a long war and that it will be difficult to stop them; so they seem to have given in. These officials are no doubt aware that young French Muslims are being radicalized in increasing numbers. The response, however, has been to strengthen Muslim institutions in France.

• At the time President Macron was speaking, one of his emissaries was in Morocco to sign the UN Global Compact for Safe, Orderly and Regular Migration, which defines immigration as “beneficial” for the host countries. Under it, signatory states pledge to “strengthen migrant-inclusive service delivery systems.”

• A group of retired generals published an open letter, saying that signing the Global Compact was a further step towards “the abandonment of national sovereignty” and noted that “80% of the French population think that immigration must be halted or regulated drastically”.

• The author Éric Zemmour described the “yellow vests” revolt as the result of the “despair of people who feel humiliated, forgotten, dispossessed of their own country by the decisions of a contemptuous caste”.

French President Emmanuel Macron seems to hope that weariness will lead the “yellow vests” protestors to give up, but there seems no sign of it yet. On the contrary, the “yellow vests” seem dedicated to bringing him down. Pictured: “Yellow vests” protesters on December 15, 2018 in Paris, France. (Photo by Veronique de Viguerie/Getty Images)

Strasbourg, France. Christmas market. December 11th, 8pm. A man shouting, “Allahu Akbar” (“Allah is the greatest”) shoots at passersby, then wounds several with a knife. He murders three people on the spot and wounds a dozen others, some severely. Two will later die of their wounds. The murderer escapes. Two days later, the police shoot him dead.

He was known to the police. When members of the General Directorate of Internal Security and some gendarmes came to his home a few hours earlier, he had escaped. Although they knew he was an armed and dangerous Islamist ready to act, and that Christmas markets had been, and could be, likely targets, no surveillance was in place.

The murderer, Cherif Chekatt, should, in fact, have been kept off the streets. He was 29 years old, his name was on the list of people reported for terrorist radicalization (FSPRT), and he and had already been sentenced for crimes 27 times. He was nevertheless roaming around free, with no police oversight.

His case is similar to that of many jihadi terrorists in France in the last decade. Others include Mohamed Merah, who murdered Jewish children in Toulouse in 2012; Cherif and Said Kouachi, who murdered most of the staff at the satirical magazine Charlie Hebdo in 2015, and Amedy Coulibaly, who murdered people at a kosher supermarket few days later.

Successive governments have done exactly nothing to remedy the situation. Instead, they delivered speeches and stationed soldiers about the streets. “Young French people must get used to living with the threat of attacks”, then-Prime Minister Manuel Valls said in 2015. Two years later, just before the first round of the presidential elections, Emmanuel Macron, still a candidate, used almost the same words. Terrorism, he said, is “imponderable” and will constitute a “threat that will be part of the daily life of the French for the years to come”.

French laws are extremely lax. Even serial killers and terrorists are not sentenced to long prison terms. Most prisons have become jihadist recruiting stations. Currently, more than 600 no-go zones are under the control of imams and Muslim gangs. Islamists, apparently “ready to act”, number in the thousands. The police simply do not have the personnel or material resources to monitor all of them

The only political leaders who have proposed tougher laws against terrorism, or who have said that exceptional measures were needed — such as a wider use of electronic ankle-bracelets — to counter increasing threats, come from parties considered “right-wing”. The mainstream media immediately branded these leaders as “extremists” and their proposals were dismissed.

Macron and his government continue their unfortunate tradition of submitting to political correctness. It seems they prefer to appease extremists rather than confront them.

These politicians are undoubtedly aware that more riots could take place. In 2016, the head of the French General Directorate for internal Security, Patrick Calvar, spoke of a high risk of “clashes between communities”, perhaps even civil war.

These officials evidently understand that the terrorists are engaged in a long war and that it will be difficult to stop them; so they seem to have given in. These officials are no doubt aware that young French Muslims are being radicalized in increasing numbers. The response, however, has been to strengthen Muslim institutions in France.

Although these officials also presumably see that Muslim immigration into France continues, and that hundreds of thousands of illegal Muslim migrants are creating increased security concerns, they do nothing to reverse the trend. The number of deportations is rising, but are still rare: slightly more than 26,000 persons were deported in 2017. Meanwhile, more than 150,000 illegal immigrants live in Seine Saint Denis, near Paris. Macron, since becoming President, has repeatedly said that those who call on him to expel illegal immigrants are “xenophobic“.

Macron and the current government, in fact, have been encouraging more migration: all illegal immigrants in France receive financial assistance if they ask for it, as well as free health care; and they run almost no risk of being deported.

Each year, more than 200,000 residence permits are issued (262,000 in 2017), including to illegal immigrants. Many have no marketable skills, some receive for decades the minimum income paid to anyone in difficulty.

Social support for migrants, legal or not, adds to the cost of an increasingly expensive welfare system. France today is the most highly taxed country in the developed world: compulsory levies correspond to more than 45% of GDP. Unemployment is high at 9.1%. Typical salaries are both low and stagnant. A public school teacher starting out earns 1,794 euros per month ($2,052). A police officer after a year of service earns even less: 1,666 euros per month ($1,906).

Macron, when elected president, promised to boost growth and improve purchasing power. To encourage large and multinational companies to invest in France, he lowered their taxes and eliminated a tax on wealth. As he apparently did not wish to increase the French budget deficit (2.6% in 2017), he created new taxes and increased a few of the taxes paid by the entire population, including fuel taxes.

It was in this context that the “yellow vest” (“gilets jaunes”) protestors – who have been rioting throughout France for the eight weekends, came into being. They have vowed to keep on demonstrating.

The new taxes, plus the increase in existing taxes, have led many people into real financial straits. Many also saw the reduction of taxes on large companies coupled with the removal of the wealth tax for the rich as outrageously unfair. They see perfectly well that a lack of security is spreading, that immigration is exploding and that the government is not providing sufficient law and order.

Macron’s remarks, such as a comparing “those who are successful and those who are nothing” — or his assertion that “the life of an entrepreneur is much harder than that of an employee” — gave him the image of an arrogant upstart who despises the poor and knows nothing about the problems they face. Some of his utterances — such as, “there is not a French culture” or the French are Gauls“resistant to change” — led many to believe that he did not even have respect for the French or for France.

The proliferation of speed radars on the roads, and the lowering of the speed limit to 80km/h, apart from freeways, as well as a noticeable increase in speeding tickets as a result, also did nothing to help his approval ratings.

Finally, an additional increase in fuel taxes sparked a revolt that has not stopped to this day.

The first protest by the “yellow vests”, which took place on November 17, spontaneously gathered hundreds of thousands of people across the country and had the support of more than 80% of the population.

Rather than react quickly and say that he understood the difficulties of millions of French, Macron waited 10 days until a second demonstration, bigger than the first, to respond. He then delivered a speech focusing on the environment and emphasizing that fuel taxes were necessary to fight “climate change”.

His words appeared totally out of touch with the economic distress felt by the public.

Four days later, on December 1, a third demonstration drew even more people than the second. Protestors waved French flags and sang the national anthem. People who spoke on television said that Macron had made fun of them and reminded him of his promises. They demanded his resignation, new elections, and a return of sovereignty to the people.

Gangs from the suburbs looted stores and destroyed property. The police were particularly brutal to the protesters, but could not stop the looting or destruction.

Macron said nothing.

On December 8, the day of the fourth demonstration, Paris was effectively set under siege. Armored vehicles were deployed along the main avenues. Thousands of police officers sealed off access to the neighborhood of the presidential residence, the Élysée Palace. A helicopter waited in the courtyard of the Élysée Palace, in case Macron needed to be evacuated. Looting and destruction began again.

When Macron finally decided to say something, on December 10, he announced a slight increase in the minimum wage and the removal of some taxes. He promised to open a “national debate” and announced the need to review the rules for immigration. However, at the time Macron was speaking, one of his emissaries was in Morocco on behalf of France to sign the UN Global Compact for Safe, Orderly and Regular Migration, which defines immigration as “beneficial” for the host countries. Under it, signatory states pledge to “strengthen migrant-inclusive service delivery systems.” The next day, the terrorist attack near a Christmas market in Strasbourg took place, in which five people were murdered.

The public’s anger did not subside. The “yellow vest” protestors who spoke on television the following days said that Macron had evidently not taken the measureof what they were saying. They stated that talking about reviewing the rules for immigration while signing the Global Compact — without taking into account the opinion of the population — showed that Macron was a liar.

A group of retired generals published an open letter, saying that signing the Global Compact was a further step towards “the abandonment of national sovereignty” and noted that “80% of the French population think that immigration must be halted or regulated drastically”.

“In deciding alone to sign this pact,” the generals wrote, “… You are guilty of a denial of democracy, even treason, with respect the nation”.

The Minister of Defense, Florence Parly, said that the generals’ letter was “inadmissible and unworthy”, but did not dispute the arguments it set forth. Again, Macron said nothing.

On December 22, when the fifth demonstration of the “yellow vests” took place, even though the protestors were fewer, their anger seemed more intense. Calls for Macron’s resignation came from everywhere. A puppet representing Macron was symbolically beheaded by an imitation guillotine. A sculpture representing a yellow hand, resembling the logo of SOS Racism, the oldest organization fighting “racism” and “Islamophobia” in France, was burned.

Anti-Semites took the opportunity to offer their usual opinions, but were marginal. Benjamin Griveaux, the government spokesman, however, used their comments to attack the “yellow vest” protestors. He sent a tweet saying that the “yellow vests” were “coward[s], racist[s], anti-Semitic”, and of the type that stages coups. Earlier, he had said that whatever happens, Macron would not “change course”.

Macron seems to hope that weariness will lead the “yellow vests” to give up, but there seems no sign of it yet. On the contrary, the “yellow vests” seem dedicated to bringing him down. Those on television say they are determined to fight “to the end“. The economic damage is considerable; the first estimates numbered hundreds of millions of euros.

“Macron and his team,” wrote Ivan Rioufol, an editorial writer at Le Figaro, recently, “would be wrong to believe that if the mobilization weakens during the Christmas truce, it means they are out of the woods”.

The author Éric Zemmour described the revolt as the result of the “despair of people who feel humiliated, forgotten, dispossessed of their own country by the decisions of a contemptuous caste”. He concluded that he thinks that Macron has lost all legitimacy and that his presidency is over.

Radio commentator Jean-Michel Aphatie, said that the presidency and the government “hang on by a thread”, and that the letter published by the generals is a strong sign that the French institutions are deeply shaken. “If the police falter,” he stressed, “France could quickly slide towards chaos”.

On December 20, two days before the fifth demonstration of the “yellow vests,” police officers organized a protest in front of the Élysée Palace. The vice-president of an organization made up of police officers said that many members are exhausted, feel sympathetic to the revolt and are ready to join it.

The next day, the government increased police officers’ salaries and paid them millions for overtime — payments that had been overdue for months.

“The authorities are really afraid that the police could turn on them,” commentedthe journalist Jean-Michel Aphatie. “It is hard to imagine. It is where we are in France, today”.

The Macron’s popularity is in free fall; it has dropped to 18%. No French president’s popularity has dropped so low, so quickly. Flore Santisteban, a professor at the Paris Institute of Political Studies, quoted surveys showing that Macron now crystallizes “an intense hatred, and maybe more than hatred: rage”.

Many commentators are wondering how Macron will still be able to govern in the coming weeks, and ask if he could be forced to resign and call for early presidential elections.

Several news analysts have said that this time, Marine Le Pen, the leader of the right-wing, populist National Rally party, could be elected president. The themes of her presidential campaign in 2017 resembled the claims of the “yellow vest” movement.

Macron still says nothing. He is nowhere in sight. His only recent public statements were made in foreign countries: Belgium and Chad. His last public appearance in France was on December 4, in the Massif Central, late in the evening. He went to see the damage done to an official building partly burned by vandals. Although his visit was unannounced, dozens of “yellow vests” arrived, insulted him, and he quickly left.

Polls show that Le Pen’s National Rally could win the European Parliament elections in May 2019 with 24%-25% of the vote. Another right-wing, nationalist party, Debout la France! (France, Stand Up!) headed by MP Nicolas Dupont-Aignan, and allied to the National Rally party , could get 8%. The total would amount to 32%-33% percent of the vote. Macron’s La République En Marche !party, created two years ago, is expected to get only 18% of the vote.

Election to the European Parliament has no direct impact on French political life. Such a result, however, would be a scathing disavowal of Macron — if he manages to stay in power until then.

A few months ago, Macron introduced himself as the champion of an open, “progressive” and multicultural Europe and described the defenders of national sovereignty and all those hostile to immigration and multiculturalism, as “lepers” and supporters of “bellicose nationalism” extolling “the rejection of the other”. He pretended easily to triumph over them.

In July 2017, he hinted that he would rule like the Roman god Jupiter. It did not take long for him to fall from his pedestal.

On the evening of December 31, Macron offered the French people his wishes for the year 2019. He did not apologize. He ignored the grievances of the “yellow vest” protesters and their supporters. He merely said that “anger broke out” and that “order will be maintained without indulgence”. He described in positive terms all that he had done since becoming President. He added that he would “go forward” in the same direction without changing a thing: “I intend to continue to follow the line that I traced since the first day of my mandate”. He described his political opponents as “extremists”, “demagogues” and “megaphones of a crowd full of hatred”. He again said that the “fight against global warming” is an absolute priority.

Many of the “yellow vest” protestors, interviewed on television, appeared upset; some said they had decided not even to listen to the speech. Macron’s political opponents criticized him harshly. Nicolas Dupont-Aignan wrote:

“Tonight the French had the confirmation that Emmanuel Macron learned nothing from the events of 2018. While his politics brought together more than 75% of the French against him, he appeared determined to continue, in defiance of democracy.”

Laurence Saillet, of the moderate right party, The Republicans, said:

“I feel that while the ‘yellow vests’ were protesting, he was on another planet… He has not taken the measure of the country’s anger. He makes no mea culpa, he even assessed his actions positively, precisely what is rejected by the French.”

Marine Le Pen tweeted, “This president is an impostor. And a pyromaniac.”

On January 3, Eric Drouet, one of the main faces of the “yellow vests” movement was arrested by a dozen policeman on his way to the Place de la Concorde in central Paris to light candles to pay tribute to the “yellow vests” wounded or killed since the beginning of the demonstrations. He was peacefully walking on the sidewalk with 15 to 20 of his friends. None of them was shouting or wearing banners, or even a yellow vest. Drouet was indicted for organizing an illegal protest. Macron’s political opponents said that Macron was adding more fuel to the fire.

On January 4, after the first cabinet meeting of the year, Macron asked government spokesman Benjamin Griveaux to say that “those who continue to protest… are agitators who promote insurrection”, and that the government must“go further, in a stronger way”.

On Saturday January 5, thousands of “yellow vests” protested again, calling for Macron’s resignation. They broke down the doors of Griveaux’s office building as he fled. By evening, the streets of Paris and other cities looked like battlefieldsonce more.

via RSS http://bit.ly/2saPieG Tyler Durden

Russian President Vladimir Putin said last month his military would deploy its first hypersonic nuclear-capable missiles in 2019, saying the acquisition of such technology has elevated his country into a new era of high-speed weapons that can outmatch the most advanced missile defense systems in the world.

“From next year, 2019, Russia’s armed forces will get the new intercontinental strategic system Avangard … It’s a big moment in the life of the armed forces and in the life of the country. Russia has obtained a new type of strategic weapon,” Putin said.

With the immient deployment of hypersonic weapons capable of 20,000 mph will present significant arms control “challenges” as the world moves further into a new and unsettling geopolitical phase, a defense expert has warned.

The issue was also mentioned by the International Institute for Strategic Studies’ (IISS) Strategic Survey 2018 report, edited by Dr. Nicholas Redman and published in November. It warned that a hypersonic missile traveling at the speed Putin claimed (20,000 mph) would be capable of striking London – about 1,500 miles away from Moscow – in less than five minutes.

Speaking to Express.co.uk, IISS’s senior fellow for military aerospace Douglas Barrie said he was skeptical Putin would be able to deploy his system this year

But he said: “Hypersonic glide vehicles and hypersonic cruise missiles are still only in development – although operational deployment of hypersonic glide vehicles may be only a couple of years away.”

“These weapons won’t change the way war is waged – but they will cut down on the time taken to get to a target, and the decision time for any attempt to engage or otherwise respond.”

He added: “Russia, China and the USA are all actively pursuing hypersonic glide vehicles and hypersonic propulsion. Most of the work is classified.”

“Intercepting hypersonic cruise missiles is demanding but not impossible,” however, the NATO missile defense system would have much difficulty intercepting a hypersonic glide vehicle from Russia.

In the IISS’s Strategic Survey last year, the think tank’s director-general Dr. John Chipman warned that Russia and China were waging a parallel campaign of “tolerance warfare” against the West.

Chipman explained: “Tolerance warfare is the effort to push back lines of resistance, probe weaknesses, assert rights unilaterally, break rules, establish new facts on the ground, strip others of initiative and gain systematic advantage over hesitant opponents.”

“It particularly exploits weaknesses in Western democracies whose instincts for statecraft have been tempered by geopolitical failure abroad and constraints imposed by domestic opinion on hard-power international deployment,” he added

“It is becoming a favored strategy for those countries that cannot easily challenge their biggest rivals symmetrically.”

“Most obviously, President Vladimir Putin’s Russia is seeking asymmetrically to gain advantage in its weakened position by regular use of tolerance-warfare stratagems.”

Hypersonic weapons have moved the world into a new and unsettling geopolitical phase. It is not just a unipolar world, but now, more of a multipolar distribution of power, thanks to rising military forces in Russia and China.

The so-called New World Order and Washington Consensus thinking is deteriorating. This creates new risks and uncertainties: rising military tensions, economic disruptions, and destabilizing feedback loops between changing international relations and countries’ domestic political conditions. 

Hypersonic technologies are in the beginning stages of allowing countries to break free from the New World Order and Washington control, the world is evolving, and in this transition phase, the world is going to get a whole lot more dangerous. 

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Authored by Guillaume Durocher via The Unz Review,

I do not believe that GDP growth – or the pursuit of wealth in general – ought to be an end in itself. Nonetheless, the fact is that virtually all countries today do consider the production and redistribution of wealth to be a fundamental goal. In this context, GDP per capita (minus wealth from national resources) is a decent proxy for a society’s organizational capacity, which certainly is a very relevant metric in any case.

A particular concern is that heterodox and populist governments, whether leftist or nationalist, tend to be economically incompetent. This would presumably be due to populist movements’ lower human capital (intelligent, prudent, and/or conformist managers avoiding “controversial” movements) and to their emotional intensity and demagogy. One thinks of Britain’s postwar socialist economic stagnation, post-Perón Argentina’s perpetual economic mediocrity, and Venezuela’s current economic collapse.

Leonid Bershidsky has a refreshingly balanced overview in Bloomberg of the economic situation in Hungary under Prime Minister Viktor Orbán – the closest thing we have to an identitarian European leader. Bershidsky says:

When Orban took over in 2010, Hungary was near collapse. The country was soldiering through a Greek-style debt program administered by the International Monetary Fund and the European Union. He moved decisively to clean up the country’s finances, slash the budget deficit from 5.3 percent in 2011 to 2.4 percent in 2012 (it was down to 1.9 percent last year) and pay off the debts to the EU and the IMF, cutting the share of foreign currency-denominated debt. To be able to do that, Orban nationalized Hungary’s private pension funds and raided their cash stash. He introduced a flat 15 percent income tax (which greatly improved collection) and raised value-added tax to 27 percent, the highest rate in the EU. He imposed special taxes on sectors dominated by foreign-owned companies — energy, utilities, finance, telecoms, retail and media — taxing revenue and assets, not profits, to make optimization unfeasible. And he renationalized some key firms to sell them on to Hungarian investors, often to his friends and allies.

According to the latest economic forecast of the European Commission – no friend of the Orbán government – Hungary’s annual economic growth should moderate (as in the rest of Europe) from 4.3% this year to 2.6% in 2020, inflation will remain low, and already remarkably low unemployment of 3.6% will continue to fall to 3.2%. Hungary’s public debt, which peaked at 80.7% in 2011, is projected to fall to 68.6% by 2020. The country maintains healthy budget and current account surpluses.

Compared to other Central European countries such as Poland and Czechia, Hungary has slightly underperformed in recent years in terms of GDP growth. Interestingly, Hungarians’ household debt has considerably declined in recent years, from over 40% of GDP in 2011 to under 20% today, while that of the Poles and Czechs has remained steady. This suggests the frugal finances of Hungarian consumers may have reduced domestic demand and thus growth.

Overall, it would seem that Hungary’s economic performance is well in line with that of the rest of Central Europe, notwithstanding the usual kvetching about the Orbán government’s corruption (although I am in no position to judge whether that is worse than the region’s usual mediocre-to-awful standards). All this suggests that national-populist regimes are economically viable, notwithstanding globalist complaints.

As in everything else, in “patriotic economics” there needs to be an Aristotelian happy mean. Having completely open economic borders means being vulnerable to every economic dysfunction and predatory practice in the rest of the world. Being completely closed means poverty and stagnation relative to the outside world.

With the triumph of the “Washington Consensus” (not to mention what ought to be called the “Brussels Consensus”) in the 1990s, the pendulum clearly swang too heavily in favor of open borders, particularly concerning the free movement of capital. The unlimited free movement of capital means that your economy is now distorted by whatever goes through the minds of the capital-holding investors, who are by no means “rationally omniscient,” but are as prone to fashions, prejudice, and panics as the rest of us. Hence, your economy is liable to get overheated due to excess investment (which, for the investing country, also means your banking sector could now collapse because of economic problems in another country) and international capital runs. If your consumers take loans in a foreign currency, they also risk ruining themselves if the national currency’s value declines significantly, for whatever reason.

In general, increased economic “interdependence” between countries means added complexity and fragility. If anything goes wrong anywhere, it means everything collapses everywhere. Simplicity and antifragility are your friends. Do you really want the global economy to be a game of Jenga?

The recent historical record suggests a moderate regime of “national economics” is best. The Asian Financial Crisis in the 1990s was one example, in which countries resorting to capital controls to kill financial panics recovered most quickly. The more recent Eurozone Crisis has been very instructive in the same sense, stressing the benefit of having a national currency, representing and responsive to local socio-economic conditions, in order to guarantee financial confidence and adjust (devaluation) if necessary.

National currencies and relatively autonomous national financial systems are generally good, because they allow every nation-state to develop and adjust according to its own socio-economic rhythm. Faith in a currency, meaning its value, is a reflection of confidence in a society’s collective ability to redeem that money for actual goods and services. This ability is naturally often misestimated by economic actors and currency fluctuations, ideally not too erratic, are actually a pretty good way to recognize and adjust to this.

Open borders reduce national economic independence and therefore the real republican sovereignty of citizens (hence why classical republicans tended to favor economic autarky). Of course, for some the goal is to limit national sovereignty and encourage “market discipline,” which incidentally is official EU doctrine.

I am instinctively repulsed by this notion. But, to be fair, dependence on international markets is probably why smaller countries tend have more efficient economic policies, on the whole. Larger economies are big enough to maintain their own (often suboptimal) economic choices for longer. Sad but true. The Scandies, Dutch, and Irish – formerly a basket case – adjusted long ago and are thriving, and the Baltic States are probably on a similar path. (Nordicists will of course point out that being small and vulnerable has however not led southern European economies, notably Portugal and Greece, to be particularly prosperous.)

National economics means staying closer to the real economy and it means less brutal adjustments. It means maximizing real sovereignty. It also means ensuring, to the greatest degree possible, the coinciding of self-conscious socio-economic entities with political power and responsibility. A nation is a consciousness, an emotional group identity, a national conversation. Each national economy furthermore has its own socio-economic rhythm, with its labor-capital negotiations, its social norms, its economic performance, etc. A nation-state ensures that decisions are, to the extent possible, taken within a coherent socio-economic unit, rather than having decisions imposed by foreigners one does not understand, does not feel for, and who typically face different economic conditions.

Open borders means a perpetual economic mess, which can only be solved by “consensus” between governments. Therefore the usual farce of diplomatic chicanery, lowest-common-denominator “solutions,” brinksmanship, etc. All this is very inefficient and undemocratic too.

In multinational states, such as Belgium and Canada, there is no shared national feeling or conversation. The “national conversation,” such as there is, is mediated by journalists and other elites, speaking for (instead of) citizens. There is a near-infinite supply of such bug-men, willing to talk down their fellow nationals, in the name of unfeeling and arbitrary “consensus.” Politics is dominated by constant negotiations and compromises between politicians from the two nations, a highly opaque process of wheeler-dealing which favors abandoning electoral promises. Multi-nations are inevitably “governed-by-committee.” Admittedly, Canada and Belgium are very functional societies, but then again they have a high level of human capital and no one has ever expected anything from them. Under pressure, these “nations” collapse: the Québécois rioted when the Anglos tried to draft them to fight Hitler in World War II and the Flemish enthusiastically collaborated with the Third Reich in the hope of securing independence from Belgium and/or a favorable position in the Germanic-dominated New Order (the latter was a realistic ambition).

National economics is good for civic sovereignty, political responsibility, economic effectiveness, and national self-confidence. Generally, you ought to encourage local industry in every viable sector, according to what is possible given the local scale and human capital. Hungary cannot make its own Google (Europe could, if it had a will, which it doesn’t).

Bershidsky writes that many people have left Hungary in recent years: “educated, adventurous people driven out of the country as much by a stifling sense of missing opportunity under Orban’s rule as by economic considerations.” Central Europe’s low fertility means it cannot really afford much emigration and brain-drain. However, the departure of people with left-liberal and anti-national apatride inclinations may be good for the region’s survival in the long run. Anyway, emigration from Hungary is (unfortunately) about the same as elsewhere in there region, namely a bit worse than Czechia, a bit better than Poland, and remarkably better than Portugal and Greece.

Orbán’s critics claim he has brutally slashed the “education” budget in half. To which I say, if this blessed news be true: God bless Orbán! God bless the Magyars!

All this is admittedly very macro, whereas things like corruption and policy competence are granular and difficult to measure. Their negative effects may only be felt in the medium term. Nonetheless, so far, Hungary’s populist government, which has been around for a while, seems very normal in these terms.

Green squares: Eurozone. Blue: Czechia. Beige: Portugal. Brown: Hungary. Pink: Poland. Green triangles: Romania. (Source: Eurostat)

Central Europe in general will continue to slowly converge with Western European standards of living. How far they converge is a very interesting question. So far, Czechia has overtaken Portugal and looks set to enjoy Western European standards of living. I would not be too surprised if Hungary and Poland do the same, although I am more pessimistic about the Balkans.

In general, Central Europe has furthermore been converging with the West while adhering to greater fiscal discipline: Central Europeans are used to some degree of poverty, their economies are growing, and their governments still remember difficult “transitions” in the 1990s. National debt is then typically lower in these countries than in spoiled Western Europe.

If your national economics are spooking foreign investors – because your rulings are erratic or punitive – you are probably doing something wrong.

Bershidsky also writes:

Europe may be wise to finance the experiments of Orban and other nationalist governments, such as the one in Poland, just to see how their results hold up next to neighboring countries’ more orthodox policies. As long as the nationalists don’t engage in gross macroeconomic and fiscal mismanagement — and with Orban, that hasn’t been a danger — it’s useful to watch different models implemented rather than imagined by academics. Europe, with its diverse governments, provides a unique opportunity for policy competition and comparison. Orban’s experience is relevant to Trump’s U.S., too: Some of his methods might just work there if the Republicans get up the courage to try them.

I couldn’t agree more!

The rejection of borders and national economics was widespread across Western academic, media, and political circles (e.g. Bill Cliton’s notorious September 2001 comments on “the ultimate wisdom of a borderless world”). However, it was in the European Union that these doctrines were theorized and actualized most explicitly.

Innumerable second-rate academics extolled the virtues of the EU as a “post-national,” “post-political,” and even in effect post-statal entity (whatever that could mean), with a steady flow of verbose and inscrutable PoMo discourse. The Jewish-Polish academic Zygmunt Bauman dazzled students with talk of the inevitable rise of “liquid modernity.”

What all of this amounted to was an apology for and rationalization of the political impotence of contemporary Europeans in the face of the economic and political forces of globalism. The most prominent discourser in this vein was none other than one of the last living members of the Frankfurt School: Jürgen Habermas.

The Frankfurt School has become famous, being attacked by nationalists for spreading Marxism and attacking traditional values in Western universities. Wikipedia claims this is a “conspiracy theory” rather than simply an observation of historical fact, as notably documented by Kevin MacDonald (see Chapter 5 of his classic The Culture of Critique). The Frankfurt School both encouraged and was a reflection of the hard leftward shift of postwar Western culture. These academics were influential. Herbert Marcuse, a member of the School, was the guru of the 1960s student movement in the United States. Habermas, for his part, is practically the official intellectual of the European Union and the Federal Republic of Germany, with more awards than a Brezhnev-era apparatchik.

Anyway, all this is beginning to fade into the background. The state is still here. The nation is still here. The idea of republic is still here. Orbán represents a return to the reality principle, towards a world based on the realities of states and nations, rather than the fashions of the Davos set.

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Italy’s Interior Minister Matteo Salvini and his coalition partner have announced their support for France’s Yellow Vest movement, accusing French President Emmanuel Macron of being “against his people.” 

“I support honest citizens protesting against a president who governs against his people,” Salvini said in a statement – while at the same time “firmly” condemning protesters who have resorted to violence. 

Meanwhile, Luigi Di Maio, the 32-year-old Deputy Prime MInister of Italy who leads the Five-Star Movement (M5S), has told the Yellow Vests in a Monday blog post “do not give up!” De Maio offered French protesters use of the M5S “Rousseau platform” to help the Yellow Vests improve organization and “draw up an electoral programme,” according to France24. 

“This system (Rousseau) is made for a horizontal and spontaneous movement such as yours and we would be happy if you want to use it.” 

The 5 Star Movement is ready to give you the support you need. Like you, we too strongly condemn those who caused violence during the demonstrations, but we know that your movement is peaceful . We can put at your disposal some functions of our operative system for direct democracy, Rousseau , for example call to action to organize the events on the territory or the voting system to define the electoral program and choose the candidates to be presented in the elections. It ‘a system designed for a horizontal and spontaneous movement like yours and we would be happy if you wanted to use it. –Il Blog delle Stelle (translated)

In Francia, come in Italia, la politica è diventata sorda alle esigenze dei cittadini, tenuti fuori dalle decisioni più importanti che riguardano il popolo. Il grido che si alza forte dalle piazze francesi è uno: “fateci partecipare!”. https://t.co/cBJvUwEk5s

— Luigi Di Maio (@luigidimaio) January 7, 2019

Meanwhile, The Globe and Mail reports that Macron’s tough stance on the Yellow Vest movement has backfired, as French authorities struggle to maintain order. 

What began as a grassroots rebellion against diesel taxes and the high cost of living has morphed into something more perilous for Macron – an assault on his presidency and French institutions.

The anti-government protesters on Saturday used a forklift truck to force their way into a government ministry compound, torched cars near the Champs Elysees and in one violent skirmish on a bridge over the Seine punched and kicked riot police officers to the ground. –The Globe and Mail

Macron tweeted over the weekend “Once again, the Republic was attacked with extreme violence – its guardians, its representatives, its symbols.”

Une fois encore, une extrême violence est venue attaquer la République – ses gardiens, ses représentants, ses symboles. Ceux qui commettent ces actes oublient le cœur de notre pacte civique. Justice sera faite. Chacun doit se ressaisir pour faire advenir le débat et le dialogue.

— Emmanuel Macron (@EmmanuelMacron) January 5, 2019

The French President took advantage of the holidays to try and crack down on the Yellow Vest movement – however it was back with a vengeance after the New Year. 

And on Monday, French Prime Minister Edouard Philippe said that France would clamp down on unauthorized protests, stating “Following unacceptable violence across France, the government plans to respond decisively.” Philippe told LE20H television that anyone who organizes a protest without declaring it first will face harsh punishment. 

Vous êtes organisateur d’une manifestation : vous devez la déclarer. Il faut préserver la liberté de manifester en France et il faut sanctionner ceux qui ne respectent pas cette obligation simple. #Le20H pic.twitter.com/6acPjEq7ta

— Edouard Philippe (@EPhilippePM) January 7, 2019

Government spokesman Benjamin Griveaux said on Friday that the government would not cease its efforts to reshape the economy, and branded protesters agitators seeking to overthrow the Macron administration. Twenty-four hours later, Griveaux was fleeing out of the back door of his office as protesters invaded the courtyard and destroyed several cars. 

“It wasn’t me who was attacked,” he said later. “It was the Republic.”

Meanwhile, the “Republic” is crushing its citizens under the weight of the highest taxes in the world – which has fueled unrest and anger, particularly among France’s blue-collar workers whose incomes have been squeezed by a bevy of government taxes. 

It was this anger that culminated in the Yellow Vest movement, which began with blocking roads, occupying highway tollbooths – and eventually morphing into violent protests across the entire country (and beyond). 

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Via CorbettReport.com,

Each year, we lay the wreath. We hear “The Last Post.” We mouth the words “never again” like an incantation. But what does it mean? To answer this question, we have to understand what WWI was.

WWI was an explosion, a breaking point in history. In the smoldering shell hole of that great cataclysm lay the industrial-era optimism of never-ending progress. Old verities about the glory of war lay strewn around the battlefields of that “Great War” like a fallen soldier left to die in No Man’s Land, and along with it lay all the broken dreams of a world order that had been blown apart. Whether we know it or not, we here in the 21st century are still living in the crater of that explosion, the victims of a First World War that we are only now beginning to understand.

What was World War One about? How did it start? Who won? And what did they win? Now, 100 years after those final shots rang out, these questions still puzzle historians and laymen alike. But as we shall see, this confusion is not a happenstance of history but the wool that has been pulled over our eyes to stop us from seeing what WWI really was.

This is the story of WWI that you didn’t read in the history books. This is The WWI Conspiracy…

But for this cabal, 1914 was just the start of the story. In keeping with their ultimate vision of a united Anglo-American world order, the jewel in the crown of the Milner Group was to embroil the United States in the war; to unite Britain and America in their conquest of the German foe.

Across the Atlantic, the next chapter in this hidden history was just getting underway.

See Part Two tomorrow…

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