Italy Vows To Veto EU Budget Over Migrant Clash

Europe’s migrant deal that was announced to much fanfare in late June, is now history.

At least that is the interpretation of Italy, which on Sunday announced it would start the process of opposing the EU’s next budget after Deputy Prime Minister Luigi Di Maio accused European member states of failing to follow through on the deal reached in June for redistributing the flood of migrants.

In a video message on his Facebook page, Di Maio said that “we will look at all measures in discussions regarding the European budget and will block what doesn’t work for us”, noting that “the other states are not doing what’s not convenient for them,” referring to the refusal of other countries to accept migrants who arrive in Italy by sea.

Luigi Di Maio

Italian officials have repeatedly clashed with the EU over migration, most recently over the future of 177 migrants on a coast guard vessel, the Diciotti, which docked in Sicily’s Catania port a week ago and was unloaded only over the weekend after Albania offered to accept 20 of the migrants and Ireland 20-25, while the rest would be housed by Italy’s Catholic Church “at zero cost” to the Italian taxpayer.

Italian Premier Giuseppe Conte “did well” to say on Saturday that the nation can’t follow EU budget rules as long as the issue remains unresolved, Di Maio said, quoted by Bloomberg. Migration is “just one of the battles” the government in Rome is ready to wage with the EU, he said in the video.

In a Monday interview with La Stampa, Di Maio raised the stakes when he warned that Italy is ready to “veto the budget and any dossiers where it’s possible” calculating that “between 2020 and 2027 there is 1.14 trillion in the balance.”

Deputy Premier and Interior Minister Matteo Salvini – who was the first to attack the EU back in June during another standoff with a migrant ship – told Il Messaggero that there is no intention of leaving the EU. ““We’re there, but we want to re-discuss the costs of being there, given that services are ever more limited.”

Discussions about the bloc’s next long term budget running from 2021 through 2027 are still at an early stage and Italy wouldn’t be the only country objecting to the proposals of the European Commission. Disagreements on the so-called multiannual financial framework wouldn’t have any implications at this stage.

As for next year’s budget, Bloomberg notes that Italy alone can’t block it, as decisions are taken by an enhanced majority of the EU’s 28 member states. If Italy withholds monthly payments for the execution of this year’s budget, that would constitute an infringement of the bloc’s laws and result into legal action by the European Commission.

Meanwhile, representatives from EU member states which failed to reach a deal at a meeting Aug. 24 in Brussels called to discuss a common approach on migration. The Brussels meeting “was only the first step” and representatives discussed a mechanism for migrants disembarking and a fast solution for the Diciotti, EU Commissioner for Migration Dimitris Avramopoulos said in an interview with La Repubblica on Sunday. “Italian politicians must put an end to the game of accusations.”

“Attacking the EU means shooting yourself in the foot,” Avramopoulos added, apparently unable to grasp that Italy was happy to do just that, especially with growing support from “core” Europe”: Austrian Chancellor Sebastian Kurz called for a change to Europe’s policy of “unlimited hospitality” that has increased the number of migrants arriving, he said in an interview with Il Messaggero.

Echoing Trump, the Austrian said that Europe has a duty to save migrants but those who come illegally should be sent back to their home countries, he said.

Following the Italian threat, the EUR dipped modestly in early trading, while Italian 10Y yields initially slumped only to give reverse the entire move and trade up to 3.16%

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Martin Armstrong Dashes “Global-Warming Fanatics” Fears: The ‘Hunger Stones’ Have Appeared

Authored by Martin Armstrong via ArmstrongEconomics.com,

While the Global Warming fanatics are out in force saying “see” the heat in Europe is caused by humans driving their cars around, they continue to ignore history…The extreme heat in Europe this year is part of a cycle.

The swings from extreme heat to extreme cold are also not unheard of. Another piece of historical evidence they ignore is known as the Hunger Stones.

Pictured above is a Hunger Stone from 1616 which has been exposed by the low level of water in the Elbe River.

This is at Decin, in the Czech Republic. Throughout the centuries, there have been these cycles of extreme heat followed by extreme cold. Such events have been recorded when drought has resulted in the low level of water in the Elbe river.

This year’s drought in Europe has exposed once again the Hunger Stones that have been used for centuries to commemorate historic droughts which warn of their consequences when you see these stones again. The Hunger Stones are visible in the Elbe River once again. This is a major river which begins in the Czech Republic and flows through Germany. There are more than a dozen Hunger Stones that serve as records of previous droughts establishing that the extreme heat and drought of this year is by no means unique to history.

The various Hunger Stones record droughts that resulted in famine and soaring prices for food. The droughts that have been recorded on the stones date to 1417, 1616, 1707, 1746, 1790, 1800, 1811, 1830, 1842, 1868, 1892, and 1893, which covers a period of 476 years. This produces an average of 39.6 years. Just applying that average would bring you to 2012. However, we have to look closer. Note that two years 1892 and 1893 are back-to-back. This does not reflect two separate droughts, but the peak in intensity. Instead of there being TWO separate droughts, it is the same even just extended. That means there were really 11 events within this 476-year span of history and low and behold this alters the average to 43.27 years. This actually conforms to our Economic Confidence Model frequency of 8.6 years /2 = 4.3.

In fact, additional evidence that is being ignored by the Global Warming crowd who seem intent upon leading society to its doom by ignoring the past entirely. Extensive research has also been done on tree-rings in north-central Europe. This study has discovered that there has been a pattern of “megadroughts” in the 15th through 19th centuries. They classified 1893 as the “Great Drought of 1893” where rainfall decline between 30 to 90% throughout various regions in Europe. They also found that the Irish famine of 1740–1741 was the result of a cooling period they pointed out resulted in unusually low winter and spring temperatures in 1740 that produced in crop failures and a massive subsequent famine. They point out that there were five major “megadrought” that took place in 1540, 1590, 1616, 1718, and 1719. Once again, we see back-to-back events in 1718 and 1719 which in our analysis reflect a build up in intensity rather than two separate events. Reducing this to 4 evens once again gives us an average of 44.75 years which is very close to the Pi frequency. If we plot this serious out, we arrive at 2020.

It appears that instead of a back-to-back event in 2019, this can become the worst period of intensity and produce three years of drought into 2020. The greater the number of volcanos erupting can also produce an increase in intensity for this period. What we must be concerned about is volcanic activity appearing in the West Indies, which includes Soufriere on St. Vincent. It is the stratovolcano type event that can change the weather. These are volcanoes that are known as a composite volcano, which is a conical volcano built up by many layers (strata) of hardened lava, tephra, pumice, and ash. When they erupt, this sends a tremendous amount of material into the atmosphere which reduces sunlight and cools the temperatures.

When we ran the drought data through our models, not only did it correlate with the ECM, it also coordinated with the first historical eruption of the volcano which took place during 1718 and a subsequent eruption 1812. Now, look at the drought records of megadroughts – 1718/1719. When we ran the model, out comes the year 1816 which s known as the Year Without a Summer. The climate turned extremely cold and it was snowing in July in New York City. This resulted in major food shortages across the Northern Hemisphere. Note that the second eruption was 1812.

When we correlated this entire period, what emerged was a dramatic increase in volcanic activity which also correlated with the decline in the energy output of the sun. Our model warned that volcanic activity would rise beginning here in 2018 correlated with a decline in the energy output of the sun which should have begun in 2015.  Note that the Hunger Stones also mark the year 1811. While this is one year prior to the eruption in the West Indies in 1812, there is what has been called the 1808/1809 Mystery Volcanic Eruption which seems to have set in motion a Mini Ice Age during the early 1800s. This was a monumental volcanic eruption in the VEI 6 range which appears to have taken place in late 1808. This event preceded the 1815 eruption of Mount Tambora (VEI 7) which produced the Year Without a Summer in 1816.

There was the period climatologists called the Little Ice Age they believed took place starting around 1650. This was the result of primarily the decline in the energy output of the sun reflected in the drastic decline in sunspot activity. What we are looking at here is a drastic correction in market-terminology which took place during the early 1800s. A study of Greenland and Antarctic ice cores in the 1990s revealed evidence that pointed to a massive volcanic eruption that had occurred in early 1809. The problem that everyone face was there were not human records of such an event. This meant that it must have been in a region where humans did not record the event. Additional research revealed from tree-ring data that there was also a major eruption in 1808. Now two independent sources were pointing to a mystery eruption – but where?

The mystery was simply that such a catastrophic eruption of that magnitude should have been noticed by someone. They began to scour the records around the world hoping that someone somewhere recorded the event. Finally, in 2014 a Ph.D. student Alvaro Guevara-Murua and Dr. Caroline Williams of the University of Bristol discovered an account of atmospheric events consistent with such an event by Colombian scientist Francisco José de Caldas who recorded a massive transparent cloud that obstructed the sunlight at Bogotá, Columbia in early 1809. The further investigation revealed that the cloud was first been observed by him on December 11th, 1808. De Caldas reported conditions consistent with a volcanic cloud that altered the weather turning it unusually cold, with even bitter frosts in Columbia.

Further investigations to the south in Peru produced another observation by a physician named Hipólito Unanue of Lima. Combining these two observations led to the conclusion that the window of the eruption was sometime within 14 days of December 4th, 1808. The only area in the tropics to the west of Colombia and Peru with possible volcanoes was also located in the South Western Pacific Ocean between Indonesia and Tonga. At the time, there was hardly any reporting coming from this region lacking European settlements. The Rabaul area has had such major VEI 6+ eruptions but records only date back to the mid-1800s.

However, this one catastrophic VEI6+ eruption is NOT the only volcano that erupted. This is why we have warned that the cyclical period for volcano eruptions turned upo with 2018. In 1808 there were major additional eruptions in Urzelina, the Azores during May (1st to 4th), as well as the Taal Volcano, in the Philippines during March that year.  There was also the Chilean Putana volcano which had a major eruption during of 1808-1810 (records are not precise) This period is then followed by the truly massive 1815 eruption of Mount Tambora in the Dutch East Indies. This one is attributed with creating the Year without a Summer because it was the largest eruption in at least 1,300 years that has been recorded. This event was followed by the 1814 eruption of Mayon in the Philippines, which appears to have contributed to the weather changes of cooling creating an accumulative event.

Our models have pinpointed yet another such period that perhaps sent human civilization into the Dark Ages. There was a similar period with volcanos and extreme weather events of 535–536. Researchers from Los Alamos Laboratory published a thesis (LA-UR 004608) in this study these researchers developed a model recreating a volcanic eruption of such proportion that it staggers the human mind. This eruption is known as the Proto-Krakatau eruption. It occurred in the year 536 AD in the present day country of Indonesia. This predecessor or the 18 15 AD eruption of Krakatau of the same name and place was many times greater. The evidence these scientists present is that this resulting blast of this super volcano with its caldera (magma chamber) collapsing beneath it formed the Strait of Sunda between the islands of Sumatra and Java. Before this explosive eruption, these two islands were one land mass. The bathymetry data indicates this caldera is about 40 to 60 km in diameter. Michael the Syrian: “The Sun became dark and its darkness has lasted eighteen months. Each day it shone for about four hours, and still, this light was only a feeble shadow the fruits did not ripen, and the wine tasted like sour grapes.”

This appears to be the eruption of the volcano Krakatoa is located on Rakata, in the Pacific between Java and Sumatra, Indonesia. We know the name from the major eruption on August 26th, 1883 which was one of the most catastrophic ever witnessed in recorded in modern history. Previously, we knew of a more moderate eruption that took place back in 1680. Contemporary historians recorded events. Procopius wrote in 536AD: “during this year a most dread portent took place. For the sun gave forth its light without brightness … and it seemed exceedingly like the sun in eclipse, for the beams it shed were not clear.” John the Lydian, or John Lydus, was a 6th-century Byzantine administrator and a historian who wrote also in 536AD: “The sun became dim … for nearly the whole year … so that the fruits were killed at an unseasonable time.”

In Mesopotamia, a source quoted by Michael the Syrian (ca. 1166-1 199 AD) and Bar-Hebraeus1246-1286 records that: “In the year 848 of the Greeks [536 A.D.]. the Sun was dark and its darkness lasted for eighteen months, each day it shone for about 4 hours, and still, this light was only a feeble shadow,. , the fruits did not ripen and wine tasted like sour grapes”

Flavius Magnus Aurelius Cassiodorus Senator (c. 485 – c. 585),  was a Roman statesman and a historian. He wrote of this period: “The sun … seems to have lost its wonted light, and appears of a bluish color. We marvel to see no shadows of our bodies at noon, to feel the mighty vigor of the sun’s heat wasted into feebleness, and the phenomena which accompany an eclipse prolonged through almost a whole year. We have had … a summer without heat … the crops have been chilled by north winds … the rain is denied …”

The ice core samples clearly show actually two very large sulfate peaks that occur with volcanos. The first took place during 537AD and the second follows in 541—542AD. Therefore, once again we may be dealing with multiple volcanic eruptions. Both peaks are approximately the same size. It is the first event that has been recorded as the catastrophe. Contemporary historians mention above have provided contemporary accounts of this dramatic decrease in the Sun’s brightness during 536 and 537 AD. We have yet another contemporary account of a historian from Constantinople (Hamilton and Brooks, 1899, p. 267), believed to be Zacharius of Mytilene, who describes: ‘”In the year 14 [536 AD], the Sun began to be darkened by day and the Moon by night… from the 24th of March in this year until the 24th of June in the following year 15.” Because the dimming was less severe and shorter in duration, it is generally assumed that the atmosphere was filled with fine volcanic ash or dust from this event. (Rigby et al., 2004; Larsen et al., 2008), There is no question that SO2 emissions from volcanos produce a cooling trend in weather. However, it has also been shown that there is a time lag between 6 and 18 months that will vary depending upon how far up the ash is thrust into the atmosphere. Thus, there can be a delayed effect from when the eruption actually takes place.

Yet there is still another theory that strangely comes into play this October/November. The argument is that we pass through a particularly dense section of the Taurid Meteor path around every 2500 years and this has contributed to legends and climate change. Every year there are as South Taurid Meteor shower which will peak overnight on Oct. 9-10 for the Southern Hemisphere and then in the Northern Hemisphere, the North Taurid Meteor shower peaks Nov. 11-12.

This has provided the foundation for love stories and wishing upon a shooting star. However, there have been intense Meteor storms that led to legends of dragons fighting in the sky breathing fireballs at each other. Chinese historical records from 540AD describe: “Dragons fought in the pond of the K’uho, They went westward … in the places they passed, all trees were broken.” Ice core sample also contain extraterrestrial dust from this period as well. It is argued that a larger meteor struck the Earth about this time and this is what is described as dragons fighting in the sky.

The one major known meteor even is that of Tunguska which was a large explosion that occurred in Russia, on the morning of June 30th, 1908. The explosion flattened 770 square miles (2,000 square kilometers) of the forest. The explosion is classified as an impact event, even though no impact crater has been found. The meteor is believed to have exploded above ground and thereby disintegrated at an altitude of 3 to 6 miles before it actually struck the ground.  This is the largest impact event on Earth in recorded history, not geological history.

Meteorite impacts are by far perhaps among the most destructive forces in the solar system. It is believed that such events have resulted in mass extinctions. However, there are others who suggest that they may have also delivered the seeds of life soon after Earth was born. The oldest impact crater on Earth is also the largest and it is located in South Africa. It is known as the Vredefort Crater for it was originally 185 miles in diameter which struck some 2.02 billion years ago (pictured here). There is another major impact known as the  Chicxulub crater located in the Yucatan peninsula of Mexico which is 93 miles in diameter that some argue may have wiped out the dinosaurs with a blast that was equal to the estimated energy of 10 billion Hiroshima A-bombs which took place about 66 million years ago.

Sodom and Gomorrah which are most likely located at the Dead Sea may have been destroyed by debris from a comet, startling new archaeological and astronomical research suggests. The Dead Sea is famous for is extreme salinity (34% salt, or almost 10 times as salty as the ocean), and for having the lowest elevation on Earth, at 1,407 feet (429 meters) below sea level. The argument remains that there was a simultaneous fall of the Old Kingdom of ancient Egypt, the Sumerian civilization in Mesopotamia and the Harrapin Civilisation of the Indus Valley. In total, some 40 cities are thought to have disappeared, in a series of catastrophes. Many astronomers believe that the Earth was bombarded by a particular dense storm of meteorites over a couple of centuries every 2,500 years. The last two occurrences were around 2200-2000BC and 400-600AD. Part of the evidence is that three Middle Eastern regions all contain a calcite material found only in meteorites. They argue that the Biblical account found in Genesis describes how “the Lord rained upon Sodom and upon Gomorrah brimstone and fire from the Lord out of Heaven” which is a description of a meteorite storm.

When all is said and done, we may be as insignificant as a pebble lying at the bottom of the ocean with no understand what lies above our heads.

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Key Events In The Coming Week: Inflation And GDP

Inflation (PCE) and GDP data in the US and European CPI highlight another fairly quiet week for data next week. OPEC meeting, the Nafta negotiations on Monday and comments from various European leaders and EU delegates will also be a focus throughout the week according to DB’s Craig Nicol. Clearly any developments concerning the US political drama of last week will also be closely watched by markets.

The highlight of another fairly quiet week for data next week is likely to be the July PCE report in the US on Thursday. Consensus expectations is for a +0.2% mom core reading which should help to push the annual rate up one-tenth and to  the Fed’s target of +2.0% yoy. Released alongside that data will be the July personal income (+0.4% mom expected) and spending (+0.4% mom expected) reports. The other potentially interesting data point in the US next week is the July advance goods trade balance reading on Tuesday which will be one of the first updates since the imposition of tariffs on China. Other data worth flagging in the US next week is the August consumer confidence print on Tuesday (a small decline in confidence expected), second reading of Q2 GDP (expected to be revised down one-tenth to +4.0% qoq) on Wednesday, and final August University of Michigan consumer sentiment survey revisions on Friday.

In Europe inflation data should also be the focus with the preliminary August CPI report due for the Euro area on Friday (core reading of +1.1% yoy expected to remain unchanged). Country level CPI reports are also due in Germany and Spain on Thursday and France and Italy on Friday. Outside of that we’ll get the August IFO survey for Germany on Monday, and confidence indicators for the Euro area and money and credit aggregates data for the UK on Thursday. In Asia next week the highlight is the release of the official August PMIs for China on Friday.

Other potentially interesting things to keep an eye on next week include the German government’s annual open house on Sunday which will include news conferences from Finance Minister Scholz, Economy/Energy Minister Altmaier and Chancellor Merkel. On Monday France President Macron is due to make his annual foreign policy speech in Paris while the Joint Technical Committee of OPEC and its allies also meet in Vienna to discuss compliance with the production accord. On Tuesday European Commissioner Oettinger is scheduled to discuss the EU budget at a conference in Brussels while on Wednesday EU Trade Commissioner Malmstrom is due to speak at an international trade event in Stockholm. Wednesday is also the deadline for when prosecutors for President Trump’s former campaign manager Manafort must decide whether or not to retry him on ten unresolved counts. On Thursday it could be worth watching the two-day EU foreign affairs ministers’ meeting with the group due to discuss the Middle East, trans-atlantic relations, the Iran nuclear deal and North Korea amongst other topics.

Lastly, it’s worth flagging that markets in the UK will be closed on Monday for the bank holiday.

Courtesy of Deutsche Bank, here is a breakdown of key events by day

  • Monday: It’s a quiet start to the week for data on Monday. Overnight we’ll get July industrial profits data in China while the only release of note in Europe is the August IFO survey in Germany. In the US we’ll get the July Chicago Fed national activity index and August Dallas Fed manufacturing activity index prints. Away from that, France President Macron will make his annual foreign policy speech in Paris. It’s worth also adding that markets in the UK will be closed for a bank holiday on Monday.
  • Tuesday: There is no data of note in Asia on Tuesday. In Europe we’ll get August consumer confidence data for France and July M3 money supply data for the Euro area. Data in the US on Tuesday includes the July advance goods trade balance, preliminary July wholesale inventories report, August Richmond Fed manufacturing index print and the August Conference Board consumer confidence survey. Away from the data we’ll also hear from ECB board member Peter Praet when he speaks around lunchtime in Germany. European Commissioner Gunther Oettinger will also discuss the EU budget at a conference in Brussels.
  • Wednesday: Much of the focus on Wednesday will be on the second revision to Q2 GDP in the US. Outside of that there is nothing of note in Asia while in Europe September consumer confidence data in Germany and the second revision to Q2 GDP for France are due. Also due in the US is July pending home sales data and the latest weekly mortgage applications data. Away from this the BoJ’s Suzuki will speak in Japan overnight, while EU Trade Commissioner Malmstrom is scheduled to speak at an international trade event in Stockholm. Wednesday is also the deadline for when prosecutors for President Trump’s former campaign manager Paul Manafort must decide whether or not to retry him for ten unresolved counts.
  • Thursday: It’s a busy day for data releases on Thursday with the highlight coming in the afternoon with the July PCE report in the US. Overnight we’ll also get July retail sales data for Japan while in Europe we’ll get the preliminary August  CPI report for Germany as well as the August unemployment rate, along with July money and credit aggregates data for the UK and August confidence indicators for the Euro area. Meanwhile in the US, along with the PCE report we’ll also get the July personal income and spending numbers, as well as the latest weekly initial jobless claims print. Away from this EU foreign affairs ministers are due to meet at a conference (continuing into Friday) to discuss topics including the Middle East, trans-Atlantic relations, the Iran nuclear deal and North Korea.
  • Friday: The calendar remains fairly busy into the end of the week on Friday. Overnight we’ll get July industrial  production for Japan, August PMIs for China and the GfK consumer confidence print for the UK. During the European session much of the focus will be on the August CPI report for the Euro area, while we’ll also get CPI prints from France and Italy as well as the July unemployment rate for the Euro area. Finally in the US we get the August Chicago PMI and the final August University of Michigan survey revisions. Late in the evening, ECB board member Luis Guindos will speak in Spain.

Focusing just on the US, here is a summary preview from Goldman, which notes that the key economic releases for the coming week are the second estimate of Q2 GDP growth on Wednesday, and core PCE on Thursday. There are no scheduled speaking engagements by Fed officials this week, following last week’s Jackson Hole Economic Symposium.

Monday, August 27

  • There are no major economic data releases scheduled.

Tuesday, August 28

  • 08:30 AM Advance goods trade balance, July (GS -$70.7bn, consensus -$69.0bn, last -$67.9bn): We estimate that the goods trade deficit increased $2.8bn in July to $70.7bn, reflecting a likely decrease in soybean exports following a sharp increase in June ahead of Chinese retaliatory tariffs.
  • 08:30 AM Wholesale inventories, July preliminary (consensus +0.2%, last +0.1%)
  • 09:00 AM S&P/Case-Shiller 20-city home price index, June (GS +0.2%, consensus +0.2%, last +0.2%): We expect the S&P/Case-Shiller 20-city home price index increased 0.2% in June, following a 0.2% increase in May. Our forecast of a modest increase reflects a slowdown in the pace of home price appreciation in other measures such as the June FHFA house price index.
  • 10:00 AM Conference Board consumer confidence, August (GS 126.6, consensus 126.5, last 127.4): We estimate that the Conference Board consumer confidence index decreased by 0.8pt to 126.6. We expect the index to remain close to its post-crisis highs, reflecting both the high level of other consumer sentiment measures and strong recent stock market performance.
  • 10:00 AM Richmond Fed manufacturing index, August (consensus +18, last +20)

Wednesday, August 29

  • 08:30 AM GDP (second), Q2 (GS +3.9%, consensus +4.0%, last +4.1%); Personal consumption, Q2 (GS +3.8%, consensus +3.9%, last +4.0%): We look for Q2 GDP to be revised down by two tenths to +3.9% in the second vintage of Q2 GDP, due to potential downward revisions in consumption, housing, and inventories. We expect personal consumption to be revised down by two tenths to 3.8%, reflecting softer consumer spending results of the Quarterly Services Survey.
  • 10:00 AM Pending home sales, July (GS flat, consensus +0.3%, last +0.9%): We estimate that pending home sales were flat in July, following a 0.9% increase in the June report, due to mixed regional home sales data so far in July. We have found pending home sales to be a useful leading indicator of existing home sales with a one- to two-month lag.

Thursday, August 30

  • 08:30 AM Personal income, July (GS +0.3%, consensus +0.4%, last +0.4%); Personal spending, July (GS +0.4%, consensus +0.4%, last +0.4%); PCE price index, July (GS +0.12%, consensus +0.1%, last +0.10%); Core PCE price index, July (GS +0.15%, consensus +0.2%, last +0.11%); PCE price index (yoy), July (GS +2.30%, consensus +2.3%, last +2.23%); Core PCE price index (yoy), July (GS +1.96%, consensus +2.0%, last +1.90%): Based on details in the PPI and CPI reports, we forecast that the core PCE price index rose 0.15% month-over-month in July, or 1.96% from a year ago. Additionally, we expect that the headline PCE price index increased 0.12% in July, or 2.30% from a year earlier. We expect a 0.3% increase in July personal income and a 0.4% gain in personal spending.
  • 08:30 AM Initial jobless claims, week ended August 25 (GS 210k, consensus 214k, last 210k); Continuing jobless claims, week ended August 18 (consensus 1,730k, last 1,727k): We estimate that initial jobless claims stayed at 210k in the week ended August 25. Initial jobless claims continue to decline steadily, and we believe there is additional scope for this trend to continue.

Friday, August 31

  • 09:45 AM Chicago PMI, August (GS 63.5, consensus 63.0, last 65.5); We estimate that the Chicago PMI moved down 2pt to 63.5 in August. While recent releases of regional manufacturing surveys have generally shown slower growth, industrial sales commentary remains solid.
  • 10:00 AM University of Michigan consumer sentiment, August final (GS 95.7, consensus 95.5, last 95.3); We expect the University of Michigan consumer sentiment index to edge up 0.4pt from the preliminary estimate for August, reflecting a sharp rebound in stock prices in mid-August. The report’s measure of 5- to 10-year inflation expectations stood at 2.5% in August.

Source: DB, Goldman, BofA

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Peso, Futures Jump On NAFTA Talks Conclusion Headlines

As we have headlined numerous times in the last week, NAFTA talks between US and Mexico were nearing coimpletion and according to CNBC have now “concluded,” with an announcement due today.

This sparked buying pressure in US stocks and the Mexican Peso and dollar weakness.

While Trump has floated the idea of negotiating bilateral trade accords – finalizing one with Mexico before moving on to Canada – Bloomberg notes that both Mexico and Canada have said they want to keep a three-nation deal.

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Averages Lie – Shocking Look At Mean Vs Median Household Savings In America

Authored by Mike Shedlock via MishTalk,

I have been on a rampage about average vs median income. Here’s a report about average vs median savings.

Magnify Money asks How Much Does the Average American Have in Savings?

The question is irrelevant. The story is how unprepared the median person is prepared for retirement. On that score, the article does explain.

Stats

  1. The average American household has $175,510 worth of savings in bank accounts and retirement savings accounts as of June 2018.

  2. The median American household currently holds about $11,700 across these same types of accounts.

  3. The top 1% of households (as measured by income) have an average of $2,495,930 in these various saving accounts. The bottom 20% have an average of $8,720.

  4. Roughly 83% of savings are in located in retirement accounts like IRAs and workplace-sponsored retirement savings plans like 401(k)s.

  5. Millennials, who have just started their savings journey, have currently socked away an average of $24,820. Gen Xers have $125,560 in retirement savings. Baby boomers and those born before 1946 have an average of $274,910.

  6. 29% of households have less than $1,000 in savings.

Point number 2 is the most relevant point. 50% of household have less than $11,700 in savings.

Averages Lie

What’s wrong with averages? The Skew!

Average and Median Savings by Income Level

The top 1% of income earners have an average savings of $2.53 million and a median savings of $1.16 million.

That average affects people with no savings.

The median savings for 40% of households is zero. The “average” varies by income group but it is much higher.

The “middle” (40-60% of wage earners) median savings is $34,020 but the average is $65,830.

Age Level

This is where the stats get truly depressing.

The average “boomer” headed into or in retirement has $274,910 in savings.

What’s wrong with that?

Well, 50% of boomers have less than $24,280 saved up.

Averages lie.

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Tesla Tumbles After Musk Pulls Going Private Deal

After Musk’s surprising Friday night announcement to pull the Tesla deal, investors were not sure whether the stock would tumble (after Musk appeared to sabotage his own deal as we discussed last night), or rise as the bulls suggested, with upside no longer “capped” by the $420 take out price.

The answer was the letter, with RBC analyst Joseph Spak writing that Musk’s latest reversal on plans to go private – less than three weeks after he disclosed his intention to take the company private – was a hit to the carmaker’s credibility, while leaving the company open to “potential ramifications from an SEC investigation and shareholder lawsuits.” 

As a result, Tesla stock tumbled as much as 5% in pre-market trading, dropping from the mid-$320 to just above $300 which has emerged as a key support level for the stock. If the stock dips below $300, watch out below.

According to RBC, the announcement that Tesla will remain public may embolden both bulls and bears on the stock, although sentiment that the “whole episode was not planned or fully thought out” leaves the bears better positioned on near-term trading, and the stock is currently reflecting just this outcome.

Spak also cautioned that potential legal concerns could become another weight on the company’s weak balance sheet and cash position.

The RBC analyst, who has a $315 price target on TSLA, sees investors demanding improved governance, and could push for a second-in-command with a strong operational background to help Musk moves from ideas to execution.

Then again, with Musk recently vowing that changing the way he works is “not an option”, even the smallest changes in the company’s operational profile will likely be an uphill battle.

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Turkish Lira Plunges After Week-long Holiday

After a week of public holidays in Turkey, the Turkish lira tumbled as traders returned with selling on their minds, realizing that nothing of substance has changed in the past 7 days. The currency tumbled over 4.0% against the dollar, sliding as low as 6.2974 before rebounding modestly to 6.23 as the U.S. trading day got underway, while one-month implied lira volatility jumped back toward 50%.

Turkey’s 10-year bond yield slipped 12bps to 22%, after touching a record high earlier this month.

As Bloomberg notes already poor sentiment remains crippled by double-digit inflation, a deepening current-account deficit and central banker reluctance to raise interest rates. While Turkey has raised rates by 500 basis points since April, it needs to boost them further by more than 600 basis points to stabilize markets, according to Societe Generale SA.

Turkey is also facing a potential recession, with JPMorgan revising its forecast for Turkey’s growth next year to 1.1% from 2.8%, as a result of “worsening financial conditions and tighter liquidity conditions… Coordinated policy action by the policy makers could put Turkey on a soft landing path where rebalancing is achieved with manageable collateral damage.”

* * *

Bloomberg’s Mark Cudmore explains why Lira’s problem are only set to grow as the country returns from its week-long holidays.

Turkey has only addressed the symptoms, not the cause, of its currency crisis. Efforts to shore it up notwithstanding, the lira is likely to see renewed pressure. Aggressive rate hikes are needed to attract inflows to fund the Turkish current-account deficit, estimated at 6.35% of GDP. And those don’t seem to be on the table right now.

True, the deficit should start to narrow given the lira’s depreciation, a slowdown in growth and an expected boost to tourism. But, it will be hard to build any enthusiasm toward the rebalancing story until the inflation/lira depreciation spiral is broken — and that requires significantly tighter monetary policy.

So far, there’s been a stealth increase in rates, brought about by reverting to the 19.25% overnight lending rate from the 17.75% one-week repo rate. This amounts to an unofficial tightening, which could be extended by moving to the late- liquidity rate, currently at 20.75%.

That looks high, until you remember that July CPI printed at 15.85% y/y, and the lira is trading almost 20% weaker versus the basket since the end of that month. Inflation looks set to head north of 20%, implying the benchmark rate may be offering a negative real yield soon.

Negative real yields won’t attract the bond inflows needed to fund the current-account deficit and prevent the currency from weakening further.

Add to that the lack of liquidity, which has been exacerbated by capping banks’ swaps and non-swaps derivatives exposure to 25% of shareholder capital. The measure limits speculators’ ability to short the lira and has contributed to some stabilization of the currency. Unfortunately, it also drastically curtails the hedging abilities of long-term investors. This will discourage portfolio inflows for a long time to come.

Tensions with the U.S. show no sign of resolution. More sanctions will accelerate the currency crisis, though they won’t be the primary driver.

Some have pointed to the IMF as part of the solution, but it’s not necessarily required. Public sector debt to GDP is low and there’s unlikely to be a sovereign default — although FX reserves at only $79 billion creates an extra concern.

According to IMF purchasing-power-parity metrics, the lira is now as cheap as the Indian rupee (which doesn’t have all the other economic problems.) But, until the inflation spiral/currency crisis is broken so that the country can roll its debt, any talk of “cheap valuation” for the lira is futile. Fix the underlying problems, and Turkey and the lira will be a great EM story again.

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S&P To Open At New All Time High Amid Easing Trade War Tensions, Stable Yuan

It has been a quiet overnight session as UK markets are closed for holiday, with last Friday’s post-Jackson Hole surge that sent the S&P to a new all time high pushed risk momentum higher, and sent world stock markets to their highest level in more than two weeks on Monday as reassuring comments from Fed chief Powell, an easing in trade war jitters and a bid by China’s central bank to stabilize the yuan lifted risk appetite.

Still, the yuan failed to hold onto gains as the market took into account the possibility of an escalation in the U.S.-China trade war, while the peso rose as the U.S. and Mexico are said to be close to resolving their Nafta differences. President Trump tweeted that a trade deal with Mexico could be reached soon, while there were separate reports which noted that US and Mexico were said to be poised for an agreement on NAFTA as soon as this Monday. In addition, there were comments from Mexico Economy Minister Guajardo that sides were practically in the final hours of negotiations. Conversely, Mexico Foreign Minister Videgaray said work on NAFTA with US has not finished and there had been source reports on Friday that Mexican President Elect Lopez Obrador’s stance on oil was said to be keeping US and Mexico from securing a NAFTA deal.

Comments from Powell at the Jackson Hole symposium on Friday affirming that the U.S. central bank was sticking with its strategy of gradual rate hikes to protect economic growth sparked a rally in stocks that gathered pace as a new week swung into gear. Helping to brighten the mood, U.S. and Mexican trade negotiators were reprotedly on the verge of reaching a deal in bilateral trade agreement as part of NAFTA, with Mexican Economy Minister Ildefonso Guajardo saying on Sunday talks have “continued to make progress”. The talks will resume on Monday and a positive outcome is expected to ease concerns about an escalation in global trade tensions.

“The (NAFTA) talks add to the sense that while the U.S. is still bogged down in its trade conflict with China, it is perhaps more willing to compromise elsewhere such as with Mexico and the EU,” said Ulrich Leuchtmann, head of FX and emerging market research at Commerzbank in Frankfurt. “It’s decreasing the risk of a global trade war.”

U.S. futures were set to open at a new all time high, with European equities rising across the board following big gains for most Asian gauges. A British holiday overshadowed the European session, and trading activity was depressed.

Europe’s Stoxx 600 Index climbed as almost every industry sector advanced, despite abysmal volumes were about one-third of the 30-day average. A stronger-than-expected German business sentiment survey added to the upbeat mood in Europe, with stock markets in Paris and Frankfurt up 0.4 percent each. Britain is closed for a public holiday.

Germany’s Ifo business index rebounded back to 103.8, far stronger than the 101.8 expected. A surprisingly strong Ifo index suggesting that concerns about a global trade war among company executives in Europe’s largest economy have eased, and implying substantial upside potential to German GDP. “The growth party is all set to continue,” ING says. The euro pared an earlier drop after the Ifo report.

“We have low volumes today, but the biggest risks the market were discounting were trade wars, so any reduction in trade war risk such as NAFTA talks or even Trump trying to find bilateral deals with everyone, has pushed U.S. shares to new records and will support markets,” said Angelo Meda, head of equities and a portfolio manager at Banor SIM in Italy. “The global economy is on track, there’s less trade war risk, the only cloud on the horizon is Italy,” Meda added, referring to upcoming budget talks in the weeks ahead.

The biggest movers on Monday were in Asia, with shares in Hong Kong, China and Japan all surging after recent efforts by the Chinese central bank to shore up the yuan culminated with Friday’s announcement by the PBOC that the Yuan “counter-cyclical factor” will be revived in its daily fixing to support the currency. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.1 percent and Japan’s blue-chip Nikkei closed at a 10-week. That left the MSCI All-Country World index at its highest level since Aug. 9.

A strengthening in the Chinese yuan, one causality of heightened trade tensions, also boosted sentiment in world markets. The onshore yuan hovered near the strongest level in more than two weeks after China said Friday a change in the daily fixing process has been reintroduced this month, lending support to the currency. The onshore yuan was little changed at 6.8206 per dollar at 4:57pm in Shanghai, after rising as much as 0.19% earlier. The PBOC strengthened the daily reference rate by 0.29% to 6.8508, far stronger than the average estimate of 6.8563. The offshore, CNH, dropped 0.04% to 6.8083 per dollar after rising 1.3% Friday, most since January 2017.

“China just seems to be stabilizing its currency and we’re getting used to that fact now, so we’re not looking at an ever-weaker CNY, which could raise issues,” said Robert Carnell, chief economist and head of research, Asia-Pacific at ING, adding that “it reduces the scope for outflows”.

In currency markets, the dollar steadied against its peers: the Bloomberg Dollar Spot Index initially fell as Powell said Friday that the “gradual process of normalization remains appropriate” given the pace of U.S. expansion. He added there were no clear signs of inflation accelerating above 2%.

“It looks like the dollar bulls were a bit disappointed, even more so given that positioning was slightly long USD heading into Powell’s speech,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda Corp. “It’s not like he was dovish, he just wasn’t hawkish enough to move the Fed rate hike dial. This sitting Fed is not about to overreact to cyclical strength in the economy.”  And sure enough, after some early weakness, the BBDXY rebounded, erasing all losses, and was mostly unchanged as of 6am ET.

The Yen rose, with the USDJPY flirting with 111.00, after Japan Chief Cabinet Secretary Yoshihide Suga was asked at his regular press conference about comments he made last week in Hokkaido on Japan’s expensive mobile phone bills. Suga said there’s a need to swiftly consider and implement solutions on mobile bills given the various issues surounding them; he said that steps are needed to provide an easy-to- understand, acceptable service for users, through promoting competition among providers. The comment sent Japanese telecom stocks sharply lower, with shares in Docomo, KDDI and SoftBank tumbling after the remarks with KDDI falling as much as 1.5%.

The Euro was initially weaker, after Italy’s Prime Minister Giuseppe Conte said his nation can’t adhere to EU budget rules amid the clash with European partners over migration. He said that the government will start the process of blocking the next EU budget. Turkey’s lira dropped with volatility rebounding, ending a week of relative calm as Turkish markets opened after public holidays.

Elsewhere, bund futures sold-off aggressively after the far stronger than expected German IFO report, with curve bear steepening, while US Tsys were mixed in low volume trading.

Commodities felt the pressure from a strengthening dollar, WTI (-0.4%) and Brent (-0.4%) continue to retreat from Friday’s advances. Gold is subdued following the largest percentage gain in 15-months on Friday. Elsewhere, Shanghai base metal prices rose, while zinc rose for a sixth consecutive day as Chinese inventories languish at their lowest in a decade. The threat of tariffs in US crude is said to have spurred some buyers in China to purchase more crude from Libya, according to Platts.

It’s a quiet Monday session, with the only expected data the Dallas Fed. American Woodmark and Heico are among companies reporting earnings.

Market Snapshot

  • S&P 500 futures up 0.2% at 2,882.75
  • STOXX Europe 600 up 0.2% to 384.31
  • MXAP up 1.1% to 165.46
  • MXAPJ up 1.1% to 535.91
  • Nikkei up 0.9% to 22,799.64
  • Topix up 1.2% to 1,728.95
  • Hang Seng Index up 2.2% to 28,271.27
  • Shanghai Composite up 1.9% to 2,780.90
  • Sensex up 1.2% to 38,695.31
  • Australia S&P/ASX 200 up 0.3% to 6,268.87
  • Kospi up 0.3% to 2,299.30
  • German 10Y yield rose 1.1 bps to 0.356%
  • Euro down 0.04% to $1.1617
  • Italian 10Y yield rose 6.2 bps to 2.878%
  • Spanish 10Y yield unchanged at 1.394%
  • Brent futures down 0.3% at $75.61/bbl
  • Gold spot down 0.1% at $1,204.02
  • U.S. Dollar Index up 0.04% at 95.19

Top Overnight News from Bloomberg

  • Federal Reserve Chairman Jerome Powell said the strength of the U.S. economic expansion justifies gradually raising interest rates, paving the way for a hike in September and possibly another this year
  • The U.S. and Mexico are poised to resolve their bilateral Nafta differences as soon as Monday, creating an opening for Canada to rejoin talks covering $1.2 trillion in annual trade
  • German business confidence rose for the first time in nine months as companies’ concerns about rising trade tensions seem to have bottomed out
  • The U.S.’s trade war with China is about to get uglier. After a long, hot summer spent weighing risks and firing warning shots, the hawks in President Donald Trump’s administration have gained the upper hand — and they’re set to unleash a fall offensive
  • Italy will start the process of opposing the EU’s next budget after the bloc’s member states failed to follow through on a deal reached in June for handling the flood of migrants, Deputy Prime Minister Luigi Di Maio said
  • The greenback’s decline may disappoint speculators, who boosted net long positions to the highest since January 2017 in the week ended Aug. 21, the latest data from the Commodity Futures Trading Commission show
  • Prime Minister Shinzo Abe launched his bid for a historic third-straight term as ruling party president, attempting to put months of scandal behind him and become Japan’s longest-serving premier
  • Indonesia’s central bank, faced with a deepening currency rout, won’t let an upcoming presidential election prevent it from raising interest rates if necessary

Asian equity markets began the week positive across the board following the record closes for the S&P 500 and Nasdaq Comp on Friday in US, where Fed Chair Powell reiterated a gradual approach at the Jackson Hole symposium and with sentiment also underpinned by hopes of a looming NAFTA-related agreement between US & Mexico. ASX 200 (+0.4%) and Nikkei 225 (+0.9%) were positive from early trade although gains in Australia were capped as financials lagged, while Tokyo stocks coattailed on early currency moves to reclaim the 22800 level where it eventually peaked. Elsewhere, Hang Seng (+2.2%) and Shanghai Comp. (+1.9%) led the broad heightened-risk appetite after the PBoC’s currency stability efforts and with the Hong Kong benchmark the outperformer as nearly all its constituents traded in the green. Finally. 10yr JGBs were flat with demand kept subdued amid gains in riskier assets and with a lack of Rinban operations by the BoJ.

Top Asian News

  • China’s Top Regulator Has Its Eye on Share Pledges, Online Loans
  • Noble Group’s Shareholders Vote in Favor of Restructuring at SGM
  • ZTE Leads Telecom Rally After Report on 5G Spectrum Distribution
  • Mahathir Bans Foreigners From $100 Billion Property Project

European equities are mostly higher (Eurostoxx 50 +0.2%) with the exception of the FTSE MIB (-0.4%) weighed on by domestic financial names. UK is away on bank holiday while German and French equities are performing well with the DAX supported by German auto names. Over in France, heavyweight Kering (+2.1%) lifts the index. All sectors are currently in the green while consumer discretionary outperforms on auto strength. Volkswagen (+1.7%) was reportedly one of the investors Tesla’s bankers had lined up in the event Tesla went private. Elsewhere, Bayer (+0.3%) shares shrugged off reports that its (and J&J’s) drug Xarelto did not meet its main goal.

Top European News

  • Italy Vows to Veto EU Budget After Nations Ignore Migrants’ Deal
  • Merkel’s Call for Assertive Europe Sets Up Busy EU September
  • Metro Edges Closer to Takeover as Investors Build Stake
  • Brilliance Jumps as Bernstein Fuels BMW Venture Optimism

Currencies:

  • EUR – The single currency has rebounded from sub-1.1600/129.00 lows vs the Usd and Jpy respectively, while cementing gains above 0.9035 vs the Gbp in wake of Germany’s August Ifo survey that beat consensus on all counts and was accompanied by upbeat comments from the institute’s economist. However, the Eur still looks top heavy around chart resistance levels, like the 55DMA at 1.1615 and with big option expiry interest at 1.1625 (2.4 bn) also capping the upside.
  • TRY – Little respite for the Lira after the Turkish holidays as a fleeting glance above 6.0000 vs the Usd only seemed to give sellers additional psychological volition to flog the currency anew. Indeed, Usd/Try rallied to just shy of 6.2000 before the CBRT ‘intervened’ via its daily FX depo to stem the tide, as investors re-establish bearish positions on all the well documented and still prescient negative factors.
  • JPY – Also relatively constrained, albeit back under 111.00 vs the Usd and hemmed in by the 55 DMA (circa 111.01) and offers ahead of 111.50.
  • MXN – The EM outperformer as NAFTA talks are said to be nearing a conclusion and deal could be announced as soon as later today, Peso just off peaks vs its US counterpart around 18.7625.

Commodities are feeling the pressure from a strengthening dollar, WTI (-0.4%) and Brent (-0.4%) continue to retreat from Friday’s advances. Gold is subdued following the largest percentage gain in 15-months on Friday. Elsewhere, Shanghai base metal prices rose, while zinc rose for a sixth consecutive day as Chinese inventories languish at their lowest in a decade.

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, est. 0.5, prior 0.4
  • 10:30am: Dallas Fed Manf. Activity, est. 30, prior 32.3

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Greece’s Problems Are Far From Over

Authored by Daniel Lacalle via DLacalle.com,

Greece has exited bailout territory and the European Union is making a strong case of the success of the program.

While Greece has obviously ended its bailout process, the real issues of the Greek economy remain largely intact.

The real drama is that none of the measures implemented have solved Greece’s real problems. No, it’s not the euro or the austerity plans. It’s not the cost or maturity of its debt. Greece pays less than 2.3% of GDP in interest expenses and has 16.5 years of average maturity in its bonds. In fact, Greece already enjoys much better debt terms than any sovereign re-structuring seen in recent history.

Greece´s problem is not one of solidarity either. Greece has received the equivalent of 214% of its GDP in aid from the Eurozone, ten times more, relative to the gross domestic product, than Germany after the Second World War.

Greece’s challenge is and has always been one of competitiveness and bureaucratic impediments to create businesses and jobs.

Greece ranks number 81 in the Global Competitiveness Index, compared to Spain (35), Portugal (36) or Italy (49). In fact, it has the levels of competitiveness of Algeria or Iran, not of an OECD country. On top of that, Greece has one of the worst fiscal systems, with a very high tax wedge that limits job creation with a combination of agressive taxation on SMEs and high bureaucracy. Greece ranks among the worst countries of the OECD in ease of doing business (Doing Business, World Bank) at number 61, well below Spain, Italy or Portugal.

No, it’s not the euro. Greece’s average annual déficit in the decade before it entered the euro was already 6%, and in the period it still grew significantly below the average of the EU countries and peripheral Europe.

Between 1976 and 2012 the number of civil servants multiplied by three while the private sector workforce grew just 25%. This, added to more than 70 loss-making public companies and a government spend to GDP figure that stands at 48%, and has averaged 49% since 2004, is the real Greek drama, and one that will not be solved easily.

One thing is sure, the Greek crisis will not finish by raising taxes to businesses, nor making small adjustments to a pension system that remains outdated and miles away from those of other European countries.

The inefficacy of subsequent Greek governments and Troika proposals is that they never tackle competitiveness and help job creation, they simply dig the hole deeper raising taxes and allowing wasteful spend to go on.

From a market perspective, the risk is undeniably contained, but not inexistent. Less than 21% of Greek debt is in the hands of private investors. Most of the country´s debt is in the IMF, ECB and EU countries’ hands.

The main risk for the Eurozone, which is already showing signals of slowdown, comes from a prolongued period of no-solutions.

Greece still shows the highest non-performing loan figure relative to total loans of the eurozone

While deficits have been contained -mostly by raising taxes-, public debt has not fallen.

The tax wedge is one of the highest in the eurozone and the OECD, making Greece and uncompetitive country in terms of job creation and attraction of capital.

While unemployment has fallen, it is still the highest in the eurozone, and unlikely to be solved with such high tax wedge.

Greece’s problem is not the euro or austerity. It is a problem of a system that penalizes job creation and private enterprise to subsidize a monstruous bureaucracy and political spending.

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Russia Attached 12 Flamethrowers To A “Battle Bot” And Set It Loose In Syria

Russia has created a 12-ton “battle bot” with 12 multi-purpose rocket launching tubes that can be fitted with destructive incendiary and thermobaric warheads, reports state-owned news agency Tass

The “Uran-9” battle bot can also be configured with the standard armament of four “Ataka” anti-tank missiles, as well as 7.62mm and 30-millimeter guns. 

The 12-tonne vehicle has also retained its main armament, allowing it to take on tanks and light fortifications. Uran-9 has a 30mm 2A72 automatic gun, a 7.62mm PKTM machine gun, as well as four Ataka anti-tank guided missiles. The robot can be also fitted with Igla MANPADs, boosting the anti-aircraft capabilities of the unit it’s deployed with. –RT

While Russia says it has tested the bot in Syria and it “showed itself well,” according to Defense Blog – citing a presentation at a February Russian security conference, the battle bot performed poorly. In addition to losing contact with ground control stations, the Uran-9 reportedly suffered from an unreliable gun and suspension system, and had difficulty targeting while in motion. 

Uran-9 is a tracked vehicle, with tracks instead of road wheels. The rollers and suspension that keep the vehicle running smoothly were rated of low reliability and required field repairs. This is surprising considering that Russia has a large armored vehicle force using tracks, including the new T-14 Armata tank, T-90MS tank, and BMP series combat vehicles. However the contractor, JSC 766 UPTK, largely sticks to unmanned systems–including an unmanned version of the new “Tigr-M” armored vehicle. 

The remote fire control system is also a problem, with the 2A72 experiencing a lag before firing six times and an outright failure once. Another problem with the Uran is that the armament, optics, and sensors aren’t stabilized for firing on the move, requiring the vehicle to stop first. –Popular Mechanics

If that assessment is accurate, maybe they can iron out the kinks and ship a few to South African farmers? Flame-throwing battle bots and mech suits with giant claws ought to do the trick.

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