Tag: finance

In what has become a perennial exercise before every debt-ceiling showdown since at least Obama’s first term (when S&P did the unthinkable and cut the US’s coveted AAA credit rating, exposing itself to extensive abuse by Tim Geithner), ratings agencies are starting to beat the credit-rating downgrade drum, with Fitch getting a jump on the competition Wednesday when its head of sovereign ratings warned that an enduring shutdown battle could negatively impact the negotiations over the debt ceiling, which could prompt Fitch to join S&P in eliminating its AAA rating for the US.

During an interview with CNBC and a separate appearance in London (where his comments were recorded by Reuters), Fitch’s global head of sovereign ratings James McCormack warned of a possible cut to its AAA rating for the U.S. sovereign should the shutdown continue to March, noting that the shutdown and debt ceiling battle are adding to anxieties triggered by President Trump’s tax cuts and spending hikes, which have blown out the budget deficit and led to a “meaningful fiscal deterioration.”

“I think people are looking at the CBO (Congressional Budget Office) numbers. If people take the time to look at that you can see debt levels moving higher, you can see the interest burden in the U.S. government moving decidedly higher over the next decade,” James McCormack, Fitch’s global head of sovereign ratings told CNBC’s “Squawk Box Europe” on Wednesday.

“There needs to be some kind of fiscal adjustment to offset that or the deficit itself moves higher and you’re essentially borrowing money to pay interest on the debt. So there is a meaningful fiscal deterioration there, going on the United States.”

Watch his interview with CNBC below:

McCormack added later that Fitch would need to seriously consider a cut if the shutdown continues: “If this shutdown continues to March 1 and the debt ceiling becomes a problem several months later, we may need to start thinking about the policy framework, the inability to pass a budget…And whether all of that is consistent with triple-A.”

“From a rating point of view it is the debt ceiling that is problematic.”

A partial shutdown affecting roughly one-quarter of the federal government, and which has delayed paychecks for 400,000 workers while another 400,000 have been furloughed as Republicans and Democrats battle over funding for President Trump’s border wall.

The last ratings agency to cut its credit rating for the US was S&P, which famously revoked the US’s coveted long-term AAA credit rating back in 2011, citing political risks and a rising debt burden in the wake of the financial crisis. Here’s what they said at the time:

We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.

We have also removed both the short- and long-term ratings from CreditWatch negative.

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

The last ratings agency to warn of a sovereign credit rating cut was Moody’s, which warned back in January 2018 that the Trump tax cuts were a “credit negative” because they would add $1.5 trillion to the federal budget deficit over 10 years.

via RSS http://bit.ly/2AyX4DC Tyler Durden

In the latest batch of bad news for Apple and its suppliers, Nikkei reported late Tuesday that, for the second time in two months, the world’s formerly biggest company has cut production on its newest batch of smartphones (which it unveiled during a widely panned product launch back in September) as slowing demand for iPhones in China continues to take a toll on Apple’s sales.

The news came one week after Apple triggered a broad-based market rout complete with FX flash crashes, when it lowered its quarterly revenue guidance for the first time in 16 years.

Apple has cut its production plan for the new iPhones by roughly 10% over the next three months, in the latest sign that the US smartphone maker is expecting an even bigger slowdown than previously believed. The request was made before Apple lowered its revenue guidance.

A source cited by Nikkei said that the plan called for an overall cut in planned production volume of both old and new iPhones to about 40 million to 43 million units for the January-March quarter from an earlier projection of 47 million to 48 million units. This drop is equivalent to a yoy contraction of more than 20% from the 52.21 million units Apple sold between January and March 2018. To be sure, the size of the actual decline could diverge somewhat as deviations in inventories and demand are factored in.

Apple upset investors during its last earnings call by revealing that it would stop breaking out iPhone shipments beginning in the October-December quarter,  a decision that the company tried to spin as an effort to shift the focus on its other products and software offerings.

Apple is struggling with a global smartphone market that has largely plateaued, as well as falling sales in China that many have attributed to the rise of domestic handset makers (like No. 2 global smartphone maker Huawei) and a widening boycott of US products. A BofA chart from earlier this week demonstrated the impact of this boycott by showing that Chinese consumers are staying away from US products due to the trade war (a boycott that hasn’t been reciprocated in the US).

With all of this in mind, it’s hardly surprising that Apple CEO Tim Cook tried to shift the investing public’s focus away from the iPhone and toward Apple’s sales of other products and services during an interview with CNBC, with Cook touting $100 billion in revenue not from the iPhone.

“In this last quarter, if you take everything outside of iPhone, it grew at 19 percent, 19 percent on a huge business,” Cook said.

Whether or not the market will manage to swallow this narrative will ultimately be the deciding factor behind whether Apple retakes the $1 trillion market cap threshold any time soon.

Meanwhile, maybe – just maybe – it’s time for Apple to consider cutting prices on its iPhones instead of continually increasing the ASP as the world draws closer to a recession with every passing day.

via RSS http://bit.ly/2SFqyH6 Tyler Durden

Global stocks rose, and US equity futures extended their longest winning streak since November, rising for a 4th day as the US and China concluded three days of trade talks on what Bloomberg reported was an “optimistic note”.

World stocks extended gains to hit a near-four week high, WTI crude oil rose above $50 and most industrial metals advanced on Wednesday on optimism that the United States and China may be inching toward a trade deal, soothing fears an all-out trade war could hit a slowing global economy, while China stepped up measures to spur consumption. Reuters reported that a senior Chinese official said Beijing plans to introduce policies to boost domestic spending on items such as autos and home appliances this year.

“The positive news around the trade talks is giving a boost to risk assets – it’s what the global economy needs to see,” said Chris Scicluna, head of economic research at Daiwa Capital Markets in London. “There are also reports of new initiatives by China to boost spending and that’s desirable from the perspective of Chinese and global growth.”

As reported earlier, delegations from China and the U.S. ended talks that had lasted longer than expected in Beijing on Wednesday amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased access to China’s markets. Officials said details will be released soon with Global Times editor Hu Xijin tweeting that “the trade talks, though arduous, were conducted in a pleasant and candid atmosphere. Neither side has made the briefing, because the US delegation is on the plane now. The two sides will release message at the same time on Thursday morning Beijing time.”

Trade developments between the U.S. and China have remained a focal point for traders after a report that Trump was eager to strike a deal to help revive the flagging stock rally he was happy to take credit for. While concerns linger about the impact of protectionist tensions on global growth, a favorable outcome would set up a potential Goldilocks scenario for markets after Fed Chair Powell’s apparent dovish shift last week eased fears about tightening financial conditions.

As a result of growing trade optimism, MSCI’s all-country index rose another 0.4% in a fourth straight day of gains. Asian bourses saw a strong finish with Japan’s Nikkei and China’s blue-chip CSI 300 closing up 1% while the tech-heavy South Korean KOSPI jumped nearly 2%.

European bourses then picked up the Asian baton, with the pan-European STOXX 600 rising more than 1% with German and French benchmarks leading the way.

U.S. equity futures also rose, set for another strong day on Wall Street after the S&P 500 gained nearly 1 percent on Tuesday; US futures are now higher for 4 consecutive days – the longest stretch since November.

Not everyone was optimistic however: Kate Moore, chief equity strategist at BlackRock told Bloomberg that “we could get some more stabilization and a floor in the market if we make strides towards an agreement” on trade, but “this is going to be an issue overhanging markets I believe for multiple years.”

Meanwhile, stocks got another boost overnight after Trump demanded in his televised address that Congress provide billions for a border wall with Mexico, but stopped short of declaring a national emergency or making any other dramatic announcements. In Trump’s first-ever prime-time address, he said there is an increasing security crisis at the US southern border and that Americans are hurt by uncontrolled, illegal migration, while he also said they requested USD 5.7bln for a border wall which will be a steel barrier. Following the speech, US House Speaker Pelosi responded that President Trump is rejecting bipartisan deal to reopen government and has chosen fear over shutdown impasse, while Senate minority leader Schumer called for the government to reopen while debate over border continues. At the same time, the government shutdown continues, now in its 19th day, thanks to the impasse over funding.

Curiously, and in another sign of subsiding worries about the U.S. economic outlook, Fed funds rate futures show traders are now pricing in a small chance of a rate hike in 2019, a change from late last week when futures markets had priced in a cut by the end of the year. “Slowly but surely, the numerous headwinds that contributed to the market sell-off in the final quarter of 2018 are becoming less gale force and more strong breeze,” Craig Erlam at OANDA wrote in a note. “There is a clear risk that conditions could deteriorate quickly but at the moment, the storm is passing and investors are seeing opportunities in the wreckage.”

In currency markets, the dollar consolidated recent losses before a series of Fed speakers and the minutes of FOMC’s latest decision, while Treasuries were little changed. Commodity currencies and stocks traded in the green on renewed trade hopes, with emerging-market currencies edging north.  The dollar index eased 0.2% to 95.69 against a basket of currencies, hovering close to a 2-1/2 month low hit on Monday. The euro traded at $1.1464 while the dollar stood at 108.90 yen. Theresa May’s Brexit deal returns to Parliament while one-week volatility in the pound rallied on the Jan. 15 vote risk.

In Asia, the yuan led gains, rising in offshore trading by 0.4% to its strongest level in five weeks. Asian currencies as rising on optimism the U.S. and China will be able to defuse their trade war outweighed a worsening global growth outlook. “With little by way of domestic economic data to provide any guidance for Asian currencies, the focus remains on the ongoing U.S.-China trade talks,” says Khoon Goh, head of Asia research at ANZ in Singapore. Expectations some sort of deal could be reached have buoyed regional assets, but foreign investor equity flows into the region remain muted, suggesting there’s still some caution, he said. EM Asian currency prospects have improved owing to factors including the better-than-expected China services PMI and U.S. jobs data, says Christopher Wong, a senior FX strategist at Maybank in Singapore. Still, risks remain as growth momentum is easing and there’s concern over the corporate earnings outlook, Wong said.

Elsewhere, oil prices extended their gains, rising nearly 1% with U.S. WTI crude oil futures rose above $50 per barrel overnight for the first time in 2019, after 9 consecutive days of gains.

U.S. bond yields also climbed, with the benchmark 10-year Treasuries yield rising as high as 2.7404%, compared with its one-year low of 2.543% hit just before Friday’s strong payrolls data.

Looking ahead to today, the FOMC minutes this evening will likely be the highlight and with the Brexit debate resuming in parliament any headlines there will also be closely watched. The minutes will provide more color on the Committee’s thinking around several key issues for market participants—namely, their views about headwinds from slowing global growth, progress on the Fed’s balance sheet strategy, and the debate around the neutral policy rate. After Powell’s early-year semi U-turn, the minutes could be slightly dated though. Other expected data include mortgage applications, while the Fed is scheduled to release FOMC meeting minutes, ahead of Powell’s speech at to the Economic Club of Washington D.C. on Thursday. Constellation Brands and Lennar are among companies reporting earnings

Market Snapshot

• S&P 500 futures up 0.2% to 2,577.75
• STOXX Europe 600 up 1% to 349.14
• MXAP up 1.4% to 150.53
• MXAPJ up 1.6% to 486.48
• Nikkei up 1.1% to 20,427.06
• Topix up 1.1% to 1,535.11
• Hang Seng Index up 2.3% to 26,462.32
• Shanghai Composite up 0.7% to 2,544.34
• Sensex up 0.5% to 36,158.62
• Australia S&P/ASX 200 up 1% to 5,778.29
• Kospi up 2% to 2,064.71
• German 10Y yield rose 7.7 bps to 0.303%
• Euro up 0.2% to $1.1469
• Italian 10Y yield rose 5.4 bps to 2.592%
• Spanish 10Y yield rose 0.4 bps to 1.517%
• Brent futures up 1.7% to $59.73/bbl
• Gold spot down 0.3% to $1,281.08
• U.S. Dollar Index down 0.1% to 95.85

Top Overnight News from Bloomberg

• President Donald Trump is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations
• The two countries wrapped up three days of trade talks, with people familiar saying their positions were closer on areas including energy and agriculture but further apart on harder issues. The one-day extension of the talks shows both sides are serious about negotiations, Chinese foreign ministry spokesman Lu Kang says
• A rare flurry of schedule changes by regional legislatures across China suggests that President Xi Jinping may be clearing the calendar for a long-awaited Communist Party gathering later this month
• China’s Finance Ministry is set to propose a small increase in the targeted budget deficit for this year as officials seek to balance support for the economy with the need to keep control of debt levels
• The yen’s spectacular start to 2019 has been a case of too much, too soon for two influential investment firms that between them manage about $1 trillion in assets. AllianceBernstein Ltd. sold the currency as it surged 4 percent last week amid the dollar’s flash crash. Manulife Asset Management cut its holdings of the yen against the Australian dollar that day

Asian equity markets were higher across the board as sentiment remained underpinned by trade hopes after US-China discussions were extended into a 3rd day and with progress said to have been made on issues including purchases of US goods, while US President Trump also provided encouragement as he stated that talks were going well. As such, ASX 200 (+1.0%) and Nikkei 225 (+1.1%) were positive as they benefitted from the trade-related optimism which had inspired a 3rd consecutive gain amongst the US majors, with notable strength also seen in Australia’s energy names after WTI reclaimed the USD 50/bbl level to the upside. Hang Seng (+2.3%) and Shanghai Comp. (+0.7%) were also in the green as focus centred on trade while reports suggested that US President Trump wants a China trade deal soon to boost markets. Finally, 10yr JGBs tracked the downside in T-notes as the broad gains in stocks sapped safe-haven demand, while the BoJ’s Rinban announcement was also somewhat trivial with the central bank only in the market for around JPY 450bln concentrated in the belly.

Top Asian News

• Philippine Bulls on a Roll as Overseas Stocks Funds Trickle Back
• China Is Said to Propose Wider 2019 Fiscal Deficit Amid Slowdown
• BlackRock Sees Rally in Asia Credit After Losses Last Year
• Rare China Schedule Changes Suggest Major Policy Meeting Is Near

Major European indices are in the green [Euro Stoxx 50 +0.8%] as market sentiment remains fixated around the recently concluded US-China trade talks, with China’s foreign ministry indicating that they are taking the talks very seriously. Germany’s DAX (+0.9%) is outperforming its peers, with auto names such as Volkswagen (+2.9%) and BMW (+1.5%) in the green on the aforementioned trade talk sentiment; Daimler (+3.7%) lead the German auto’s with Mercedes-Benz selling 2.31mln cars in 2018 likely to make them that year’s best-selling premium auto. Sectors are broadly in the green, with consumer discretionary the outperforming sector with luxury names such as Kering (+3.8%) and Burberry (+2.8%) up as US-China talks conclude. Other notable movers include Ted Baker (+11.3%) after announcing a 12% increase in retail sales for the 5 weeks to January 5th. Elsewhere, Taylor Wimpey (+6.9%) after Co report good trading performance, with 2018 total home completions +3%. At the bottom of the Stoxx 600 are ADP (-4.7%) after reports that the French government are considering delaying privatisation until 2020.

Top European News

• Deutsche Bank Drops as UBS Sees a Challenging Fourth Quarter
• Autos Lead Gains in Europe on Trade Optimism, China Stimulus
• Future Daimler CEO Sees Record Year Despite Global Auto Slowdown
• Sainsbury’s Holiday Sales Fall as Cautious Consumers Hold Back

In FX, the dollar eases further below 96.000 following a rangebound Asia-Pac session amid trade optimism with the third day of trade talks giving off somewhat of an upbeat vibe. China’s Foreign Ministry stated that the longer talks signified the country’s seriousness, while the China Global Times Editor also took note of the positive sentiment surrounding the dialogue. As such the DXY remains closer to the bottom of a 95.925-660 range ahead of the FOMC Minutes later today (full preview available on the Research Suite).

• GBP, EUR – The Pound extended on gains before paring a bulk of the move with fears of a no-deal Brexit receding as the UK Government seems to be losing more power in Parliament. To recap recent events, the Government was defeated in a vote regarding the Finance Bill which limits the scope for tax changes in the event of a no-deal. Additionally, if Labour and Tory rebels vote down the business motion (due at around 1300GMT), then Parliament will take control of the timing of the meaningful vote debate from the Government, i.e. PM May will not have room to further delay it. Furthermore, Business Insider also reported that UK businesses will make urgent public interventions about the perils of a no-deal Brexit should MPs vote down the deal on the 15th. Subsequently, Cable retreated to near the bottom of a 1.2712-77 range with resistance seen at 1.2790 (yesterday’s high) and support at 1.2712 (7th Jan low). Meanwhile, the EUR is marginally firmer, mostly on the back of a softer USD as an EZ upbeat unemployment rate and wider-than-expected German trade surplus did little to budge the single currency as exports fell more-than-expected.
• SEK,NOK – The Scandi Crowns are mixed with the SEK marginally softer following the release of the Riksbank Minutes from the December meeting which initially saw a firmer Crown as several Board Members noted that even though the inflation forecast for the next few years has also been revised downwards slightly, the conditions are still good for inflation to remain close to the 2% inflation target. Nordea notes that the release was marginally dovish given the risks surrounding the repo path downgrade. As Such EUR/SEK pared back the initial move lower to test 10.2400 to the upside (vs. low of 10.1967) ahead of its 200 HMA at 10.2428.
• AUD, NZD, CAD – The non-US dollars are on the front foot amid commodity price action with the Kiwi leading the gains. AUD was briefly hampered by the release of disappointing Australian building approvals overnight while AMP Capital’s Chief Economist said he sees the RBA cutting rates to 1.00% this year (currently 1.50%) due to a fall in building approvals and negative wealth effects from declining house prices dragging on economic growth. In terms of technical, AUD/USD sees clean air to the downside until the psychological level at 0.7000, while NZD/USD is capped at its 50 DMA 0.6782 and trading just above its 20 DMA 0.6744. Meanwhile USD/CAD sits near the bottom of a 1.3223-79 range with the rise in oil supporting the Loonie ahead of the BoC interest rate decision (full preview available on the Research Suite), looking at technicals, the pair’s 50 HMA (to the upside) sits at 1.3284 with clean air seen to the downside until 1.3200 the figure.
• JPY – The marked G10 underperformer as the safe-haven currency unwinds risks premium given the positivity around US-Sino trade talks with USD/JPY residing just below 109.00, having already tested the psychological level. On a technical front, past the 109.00 psychological level, 109.16 is a reported Fib level ahead of resistance at 109.73 (2nd Jan high).

In commodities, Brent (+1.7%) and WTI (+1.9%) prices are higher, with WTI breaching the USD 50/bbl level to the upside, and approaching USD 51/bbl, on hopes that a resolution can be achieved between the US and China. Alongside Brent testing, and briefly crossing, USD 60.00/bbl. Prices garnered further support from yesterday’s API crude inventories, which showed a larger than expected draw of -6.127mln vs. Exp. -2.7mln. Markets will be looking ahead to EIA data later on in the session, where expectations for weekly crude stocks are for a -3.3mln draw. UAE Energy Minister Mazrouei stated that the volatility in oil prices last year was counterproductive, and OPEC have stopped chasing an illogical or impractical price. Elsewhere, Berenberg have cut their 2019 Brent price forecast from USD 82.5/bbl to USD 65/bbl; and Morgan Stanley have updated their Brent forecast to USD 61.00/bbl vs. Prev. USD 69.00/bbl. Gold (-0.3%) prices have remained subdued by the positive risk sentiment from the US-China trade progress. Elsewhere, US plans to remove sanctions on Rusal, the Russian aluminium Co, are suggested to be of limited benefit to US consumers as aluminium import tariffs mean produces would require significantly greater prices in order to incentivise shipments.

US Event Calendar

• 7am: MBA Mortgage Applications, prior -8.5%
• 2pm: FOMC Meeting Minutes
• 8:20am: Fed’s Bostic Speaks in Chattanooga on Economic Outlook
• 9am: Fed’s Evans Speaks on Economy and Monetary Policy
• 11:30am: Fed’s Rosengren Speaks on the Economic Outlook
• 2pm: FOMC Meeting Minutes

DB’s Jim Reid concludes the overnight wrap

May I be the 150th person to wish you a Happy New Year. It’s my first day back at work today and I’m writing this en route to Switzerland. Over the last two weeks in the Alps I’ve had numerous hot chocolates, bottles of red, tartiflettes, pizzas, burgers, portions of chips, hot marshmallows, ice creams and fondues. To balance this I’ve skinned up the mountain 12 times, done 20-odd snowy and hilly dog walks and looked after three excitable children. On balance there has still been more input than output though and am therefore relieved to be back at work so my body can have a rest from all angles. We nervously put 3 year old Maisie into ski school and thankfully she seemed to enjoy it. If you want to see what a three year old skiing with irresponsible parents looks like (post ski school) click on my Bloomberg header this morning to see.

If the end of 2018 was all uphill for risk, 2019 has so far seen the market wax up its skis, sharpen its edges and point them downhill. A reminder that our forecasts for 2018 and 2019 were both bearish based on the withdrawal of central bank liquidity and the lagged impact on global volatility and risk of the Fed tightening cycle. However we turned tactically bullish for Q1 2019 in the latter half of November which in timing terms proved to be too early (or wrong depending on where we end up!). We would stand by this prediction and think the early months of this year will be the best as the risks of a near-term recession and worse case trade scenarios are eventually seen to be overdone. However after that we will still live in a world of less central bank liquidity after years of excess and a period where the lagged impact of the prior Fed hikes will resonate. We still think the US yield curve (2s10s) will be the best indicator of the probability of a recession in 2020 (see our Yield Curve 101 note here from late last year for more). For us it needs to invert to suggest one is coming over the following 12-18 months. In turn, whether it inverts depends on the interplay between the Fed and the market. The worst case scenario is a Fed that ploughs through and continues to hike when the market disagrees with them (rightly or wrongly, and 10-year yields fall) or the data doesn’t justify it. A Fed at odds with the market is still very possible, especially after last Friday’s strong payroll and earnings data. However Powell’s speech last week indicated a more dovish approach than his pre-Xmas musings which is largely why 2019 has started well. So overall, all to play for, but the Fed and market interplay is likely to be the key battleground this year. Today’s Fed minutes (possibly a bit dated since Powell has already spoken since the meeting), multiple Fedspeak today (Evans, Bostic, and Rosengren) and tomorrow (Powell, Clarida, Bullard, Evans, Barkin, and Kashkari) and Friday’s US CPI will be the next major landmarks on this.

So momentum continues to favour those who point the skis straight down the mountain even if US markets did experience some intraday volatility, opening up +1% before fading back into the red around lunchtime, and ultimately rallying back to end the session near the highs. The S&P 500, DOW and NASDAQ each notched up a third day of consecutive gains. That means that if we exclude the impact of the Boxing Day surge then this three-day run (+5.17%) for the S&P is the strongest since August 2015 and sits in the top 3 since the start of 2010. The 4 out of 5 ‘up’ days to start the year is something that’s happened 11 times out of 92 including this year. We’ve had a perfect start (5 out of 5) 6 times.

On a sector basis, the gains were somewhat mixed. There was no clear outperformance by either cyclicals or defensives, as buying was broad-based. 81% of S&P 500 companies advanced, the third consecutive session with over 77% of stocks in the index gaining. That’s the best such streak since July. One soft spot was semiconductors, which fell -0.48% as Samsung announced soft demand for its chips business and missed consensus fourth quarter earnings expectations.

Credit continues to make headway with US HY spreads another 16bps tighter yesterday (and 76bps tighter over the last 3 sessions). Euro HY also started to catch up with spreads 9bps tighter while the STOXX 600 notched up a +0.87% gain. Autos were up +1.41% and +1.23% in Europe and the US, respectively, seemingly on the news that China was looking to boost auto purchases this year. Oil also played a part in yesterday’s risk on moves with WTI Oil up +2.47%, placing it up +9.49% YTD already. EM equities gained +0.33% while currencies fell -0.12%. Oil importers were pressured, with the Indian rupee and South African rand down -0.74% and -0.65%, though Turkey underperformed heavily (-1.75%) as President Erodogan escalated his rhetorical battle with US National Security Advisor Bolton, saying “Bolton made a serious mistake (…) we will not compromise.”

There was also a bit of a lift in sentiment from President Trump’s comments on the US-China trade negotiations, specifically saying that “talks with China are going very well”. On the other hand, he also tweeted a quote from a steel union official supporting his tariffs, so it’s not clear what the takeaway message should be. Dow Jones also reported later that trade progress was being made although the two sides were (unsurprisingly) not ready to conclude a deal. It now confirmed that the US delegation is to remain in Beijing for a third day of talks today and China has confirmed that they will release a post-meeting statement once talks are concluded although it’s not entirely clear if the US delegation will release a statement themselves. The more important talks are likely to come later this month in any case. Elsewhere, Bloomberg reported (citing sources) that President Trump is increasingly keen to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war. In the meantime, the White House has crafted a bill which seeks to give the president broad authority to increase US tariffs if he considers other countries’ tariff and non-tariff measures to be too restrictive and President Trump is expected to urge Congress in his State of the Union address later this month to pass the new legislation.

Moving onto Trump’s first televised national address overnight. It was fairly low on substance for markets as he said more of same while discussing the ongoing US government shutdown and immigration policy. He reiterated that he considers the situation on the US’s southern border to be a crisis and called on Congress to authorize $5 bn for increased border security and a wall. Congressional Democrats subsequently gave no indication that they will meet his demands. So for now, the shutdown is set to continue and around 800,000 federal employees will miss their pay checks on Friday. Nevertheless, S&P 500 futures rallied into and during the address and are trading +0.47% higher this morning. President Trump is set to meet with the congress leaders today at 3pm (New York time) to further discuss the issue.

This morning in Asia risk has continued to rally hard with the Nikkei (+1.43%), Hang Seng (+2.46%), Shanghai Comp (+1.59%) and Kospi (+1.88%) all up. Besides the positivity around the ongoing US-China trade negotiations, sentiment is also getting aided by the overnight news (per Bloomberg) that China’s Finance Ministry is set to propose an annual fiscal deficit target of 2.8% of GDP for 2019, marking a small budget expansion from the deficit target of 2.6% in 2018. The target isn’t final though and is subject to approval at a meeting of the National People’s Congress, China’s legislature, in March. Meanwhile, Japan’s November real cash earnings data also came in strong at +1.1% yoy (vs. +0.4% yoy expected). Elsewhere, crude oil prices (WTI +1.59% and Brent +1.35%) are continuing their upward move this morning.

In other news, former Fed economist Nellie Liang withdrew her nomination for a seat on the Fed’s board of governors possibly giving an opportunity to President Trump to nominate someone whose views on interest rates are more streamlined with his own. Elsewhere, the World Bank lowered its growth projections in 2019 for the global economy by 0.1pp to 2.9% largely by shaving off 0.5pp growth for emerging markets to 4.2% while also downgrading its growth forecast for the Euro area slightly and keeping the growth forecast for the US at 2.5%.

As for Brexit, the parliament vote appears to now be confirmed for January 15th. Much of the newsflow ahead of the debate yesterday centred around PM May seeking EU assurances on the backstop provision however there didn’t appear to be any meaningful progress. Indeed, France’s Europe Minister said “there is nothing more we can do” to adjust the deal. A spokesman for PM May also denied that UK officials were talking to the EU about an Article 50 extension. Elsewhere the government lost a vote on funding a no-deal Brexit last night which complicates things a little for them as Parliament tries to stop a no-deal Brexit. Sterling faded in the afternoon yesterday to close down -0.46% while Gilts were a touch weaker (+2.0bps).

That wasn’t out of line with other bond markets however with Treasuries +3.2bps higher at 2.728% and the 2s10s curve at 14.0bps (-1.1bps), while in Europe Bunds nudged up to 0.226% (+0.5bps). BTPs (+5.5bps) stood out after coming within a couple of basis points of 3% again (closed 2.954%) after the recent (post-budget drama) 6 month low of 2.67% on January 2nd. Supply appeared to weigh with Bloomberg reporting that Italy’s Treasury was preparing a 15y bond deal, while yesterday we also had deal announcements from Ireland and Portugal, likely to price today.

The headline grabber data release in Europe yesterday came in the form of another soft print out of Germany, this time with the November industrial production report. Production was reported as falling -1.9% yoy compared to expectations for +0.3% mom, resulting in the annual figure dropping to -4.7% yoy and the lowest since 2009. Issues related to the auto sector, the timing of public holidays and, believe it or not, low water levels on the river Rhine (my favourite excuse ever) were all highlighted as negatively impacting the data. That appeared to filter through to weaker confidence readings for the broader Euro Area yesterday with the December releases out while in the US there wasn’t much excitement from yesterday’s releases. The December NFIB small business optimism reading fell 0.4pts in December to 104.4 but was well ahead of expectations while the November JOLTS report showed a steady quits rate at 2.3% and a modest tick lower in the hiring rate to 3.8% from 4.0%. These point to continued improvement in the wage outlook.

Looking ahead to today, the FOMC minutes this evening will likely be the highlight and with the Brexit debate resuming in parliament any headlines there will also be closely watched. Our team expect that the minutes will provide more colour on the Committee’s thinking around several key issues for market participants—namely, their views about headwinds from slowing global growth, progress on the Fed’s balance sheet strategy, and the debate around the neutral policy rate. After Powell’s early-year semi U-turn, the minutes could be slightly dated though.

As for other data that’s due out, we’ll get November trade stats out of Germany this morning followed by Q3 unit labour costs data for the UK and the November unemployment rate for the Euro Area. In the US we’ll also get the latest MBA mortgage applications data. There should be plenty of eyes on today’s Fedspeak also in light of Powell’s comments last week with Bostic (1.20pm GMT), Evans (2pm GMT) and Rosengren (4.30pm GMT) all on the cards. The BoE’s Carney is also due to participate in an online Q&A this afternoon. Finally it’s worth noting that US Trade Representative Lighthizer is due to meet EU Trade Commissioner Malmstrom today to discuss bilateral trade liberalization. It’s expected that both will also meet Japan’s trade and industry minister Seko to discuss China’s trade practices.

 

 

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After the ‘mid-level’ talks between US and Chinese delegations in Beijing were extended for a third day on Wednesday, the negotiations have reportedly wrapped up, with both sides touting that they are “serious” about coming to an agreement, and that significant progress has been made, according to CNBC.

With the US delegation on its way back to Washington, China’s Foreign Ministry hinted that the talks had been a success and said it would soon release a statement on the outcome.

The Editor-in-Chief of China’s Global Times said that “though arduous” the trade talks were productive and that both sides were waiting for the US delegation to arrive back in Washington before delivering official statements on the outlook for a deal.

China-US trade talks have ended. Based on what I know, the situation is quite positive. The two sides are still in consultation on the wording of the message, so the two versions can be coordinated.

— Hu Xijin 胡锡进 (@HuXijin_GT) January 9, 2019

From what I know, the trade talks, though arduous, were conducted in a pleasant and candid atmosphere. Neither side has made the briefing, because the US delegation is on the plane now. The two sides will release message at the same time on Thursday morning Beijing time.

— Hu Xijin 胡锡进 (@HuXijin_GT) January 9, 2019

Meanwhile, US Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs Ted McKinney told a group of reporter’s at the delegation’s hotel that he thought negotiations “went just fine.”

“It’s been a good one for us,” he said.

US markets climbed on Tuesday even as traders priced in a slightly more hawkish Fed as many apparently bought in to the narrative that both sides are doing everything in their power to come to an agreement (with equities moving higher after Bloomberg reported that Trump is desperate for a deal because he hopes it might send stocks back toward ATHs).

Though there were some reports that the two sides were further apart than some of the headlines let on.

However, people familiar with the talks told Reuters on Tuesday that the two sides were further apart on Chinese structural reforms that the Trump administration is demanding in order to stop alleged theft and forced transfer of U.S. technology, and on how Beijing will be held to its promises.

In another sign of confidence, China has approved another large order of US soybeans while also approving five GMO crops for import – its latest effort to boost imports from the US in accordance with one of Trump’s key demands.

In what is widely seen as a goodwill gesture, China on Tuesday issued long-awaited approvals for the import of five genetically modified crops, which could boost its purchases of U.S. grains as farmers decide which crops to plant in the spring.

On Monday, Chinese importers made another large purchase of U.S. soybeans, their third in the past month.

Trump and other White House officials have insisted that the US has leverage because of China’s rapidly cooling economic growth and the fact that its market dropped 25% last year (though Chinese stocks have slightly outperformed the US since the US imposed its first round of China-specific tariffs in July) . However, China has insisted that the trade strife harms both countries equally, and that it would not yield to any “unreasonable concessions.”

China is keen to put an end to its trade dispute with the United States but will not make any “unreasonable concessions” and any agreement must involve compromise on both sides, state newspaper the China Daily said on Wednesday.

The paper said in an editorial that Beijing’s stance remains firm that the dispute harms both countries and disrupts the international trade order and supply chains.

Setting the meeting off to an auspicious start, Liu He, China’s top economic official, dropped in and greeted the US trade delegation – led by Deputy U.S. Trade Representative Jeffrey Gerrish – on Monday. We now await confirmation that Liu and a delegation of more-senior officials will travel to Washington next week for the next round of talks.

The US and China have agreed to a “hard” deadline for an agreement of March 2.

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Authored by Global Risk Insights via OilPrice.com,

The EastMed gas pipeline between Cyprus, Greece and Israel will revolutionise the economies and geo-politics of the region. The project comes from an emerging alliance between the three countries who must move forward cautiously in the face of neighbouring States’ opposition.

Eastern Mediterranean: the Bigger Picture

On December 20th, the Prime Ministers of Cyprus, Greece and Israel converged on the southern Israeli city of Beersheba. All three parties publicly committed to signing a high-level agreement in the near future. Such an agreement would solidify one of the longest and deepest underwater gas pipeline in the world.

It is expected to deliver approximately 10 billion cubic meters (BCM) of natural gas to the European Union (EU) through Greece and Italy. The EU is keen to support the project and diversify its natural gas imports away from the heavily sanctioned Russian Federation and declining North Sea gas production. The EastMed project would fulfil roughly 10-15% the EU’s projected natural gas needs. The United States is also supporting the project as it sees the growing trilateral alliance as a bulwark of democracy and stability in a largely authoritarian and war-torn region.

A New Regional Alliance

This development is also the culmination of an alliance that has been years in the making. The last decade has seen growing cooperation between Cyprus, Greece and Israel as all three countries have been supporting one another in various strategic areas. This includes deepening military ties in the face of an increasingly unstable and conflict prone Eastern Mediterranean. These developments are specifically aimed at Turkey, a neighboring state that has become increasingly aggressive and authoritarian. Turkey is threatening to derail the project within the context of ongoing Cypriot Conflict.

The project will be the culmination of a strategic alliance between three smaller countries who are faced with increasingly more aggressive competitors and crisis’s in the region. Turkey, Russia and Iran are all increasingly active in the region looking to forward their own interests. As the United States continues to play less of a role on the ground Cyprus, Greece and Israel will be able to create positive reinforcement through bilateral relations or the newly created secretariat economically, politically and militarily.

Who Stands to Benefit?

The domestic economies of the individual states within the trilateral alliance stand to benefit immensely from the project. Cyprus is estimated to have roughly 4.5 BCM of natural gas in the Aphrodite Field which is currently being developed within its Exclusive Economic Zone (EEZ), a huge sum. Israel is estimated to have significantly larger amounts within its EEZ in the form of the Leviathan and Tamar fields. Both of these small countries will benefit immensely from being able to export to the massive EU market through Greece. The latter’s own economy will likely see a boost from the investment needed to support the infrastructure of the pipeline. There is also the possibility of linking the pipeline to the operational Egyptian Zohr Field.

The EU will benefit from being able to diversify its energy sources. It would allow the EU to guarantee some energy security to its Member States as North Sea production falls. An over reliance on Russian natural gas also places the EU in a difficult position, because it continues sanctioning Russia over its activities in Ukraine and the meddling in the democratic processes of EU Member States. The EU will likely try to lower market prices on natural gas which have been steadily rising the last few years. In the long run, the EastMed Pipeline may provide nearly double the expected output of 10 BCM for export if ongoing offshore exploration provides positive outcomes.

Who is Missing Out?

Turkey and Russia are both set to lose out given current developments. Greece and Turkey have a historically difficult relationship which has recently flared up within the context of the 2016 Coup and Refugee Crisis. Cyprus and Turkey continue to butt headsover the northern half of the island following the 1974 War. Israel and Turkey were once close allies. The rise of Erdogan and the AK Party over a decade ago made Turkey a major patron of Hamas. The Mavi Marmara Incident has contributed to the deterioration in ties between the two sides. Turkey would have been the natural route for the Pipeline, but the ongoing disputes show why this will never happen.

Russia is the main supplier of natural gas to the EU and a historical ally of Greece. If the EU is able to continue to diversify its energy needs away from the Russian gas giants – of which the EastMed is a small but important first step – Russia will lose leverage over the EU within the context of both gas prices and geopolitical issues between the two sides. The historically close relationship between Russia and Greece is also in jeopardy. The pipeline project is heavily supported by the United States; when we couple this with Russia and Turkey’s warming ties, Russia appears to be losing a historically important relationship in an increasingly strategic region.

Possible Obstacles

Two major obstacles to the project are present in the form of the Lebanese based Hezbollah and Turkey. Hezbollah is Israel’s arch-foe, the two sides fought an all-out war in 2006, a conflict neither side wishes to repeat. This is something Hezbollah is attempting to use for its own advantage threatening to strike at Israel’s sea-based gas fields. Israel is preparing for this outcome, but Hezbollah’s missile arsenal is vast and powerful; any escalation in conflict, especially given the ongoing Operation Northern Shield may lead to disruptions in the project.

President Erdogan has made it very clear that he is vehemently against any development of the Cypriot gas fields within the EEZ without some form of resolution to the conflict. This has materialized with Turkish naval action in the past and with the beginning of own explorations in the EEZ. Turkey has used military force in the past and ongoing developments in the region -specifically the US withdrawal from Syria following a phone call with Erdogan – has emboldened Turkey. Aggressive action by Turkey to safeguard its own interests cannot be discounted.

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In late December 2018, a highly modified Russian commercial aircraft acted as a flying laboratory, completed its first test flight after an upgrade to perform flight test of new avionics, cameras, and sensors for the next-generation strategic bomber.

State-run Russian news media reported that a heavily modified Tu-214LMK (tail number 64507) aircraft completed its first test flight at the Gorbunov Kazan Aviation Plant on 29 December, said the Defense Blog. 

According to the official statement from the Tupolev aerospace company,  “the purpose of the upgrade of the Tu-214LMK testbed is to create a flying lab for testing in-flight onboard equipment complexes of the Tu-160.”

The Tu-214LMK flying lab has been retrofitted to perform flight-test with highly advanced avionics developed for the next-generation strategic bombers.

Tu-214LMK’s modifications include installation of a Tu-160M2 radar system housed in the nose cone of the aircraft. 

Defense Blog said the flying lab would significantly reduce the risk as well as future flight test hours by enabling extensive in-flight testing and evaluation before much of the avionics are installed on the new bombers. 

Russia’s Ministry of Defence (MoD) ordered ten of the new bombers from United Aircraft Corporation (UAC), in a deal worth RUB160 billion ($2.7 billion), the ministry said in early 2018. 

“In its upgraded version, it [the engine] will be 10% more efficient, which will make it possible to increase the flight range of the strategic bomber by about 1,000 km,” Russian News Agency TASS said in a prior report.

During the upgrade, the new strategic bombers will get new avionics suite and the onboard integrated data control system. The Tu-160M2 will also feature satellite navigation systems, the short-range radio-technical navigation systems, the air signal systems, the defensive aids suite, and electronic warfare systems. 

The older, Tu-160s have been recently in the news. Last month, two of these bombers crossed the Atlantic for deployment in Venezuela. The bombers flew a 10-hour patrol over the Caribbean Sea from a base in Venezuela. Shortly after their visit, the bombers returned to their airbase in Russia. 

With new, advanced avionics and sensors currently in test, the next-generation strategic bomber is slated to enter series production in the second half of 2019. Maybe, with these new bombers, Moscow is planning to deploy them in America’s backyard, a move that would infuriate Washington. 

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Authored by Emma R. via VoE,

Head of online hate speech monitoring group “Näthatsgranskaren” Tomas Åberg receives tax funds for mass reporting pensioners and others who write critically about migration on Facebook.

And now he claims that his reports to the police have resulted in almost 150 hate speech convictions.

“1,218 police reports 2017-2018. 144 hate speech sentences, from 214 notifications. Many are waiting for prosecution!”, writes “Näthatsgranskaren” (The Online Hate Speech Monitor) on Twitter.

👮‍♀️1 218 polisanmälningar 2017-2018.
⚖️ 144 näthatsdomar, från 214 anmälningar. Många väntar på åtal!
✔ 10x ökning av fällande domar.

Följ, rekommendera, retweeta, gilla, kommentera, stöd oss!

Swish: 123 501 44 28
Bli månadsgivare: https://t.co/QakeZbAN5c
Bankgiro: 5232-9026

— Näthatsgranskaren.se (@Nathatgranskare) January 1, 2019

The group also states that its state-financed operations have led to a tenfold increase in the number of hate speech convictions in Sweden, reports Fria Tider.

Over the year, they further “researched, collaborated, and lectured on, among others, the Council of Europe’s conference on criminal online hate speech”, they claim.

The authority MUCF, which finances left-wing extremist organisations such as Expo, has so far granted just over €150.000 in contributions to the Online Hate Speech Monitor.

The group is run by Tomas Åberg, who a few years ago was investigated for extensive animal cruelty but escaped charges by avoiding being served the lawsuit.

Most of the contribution from MUCF goes to paying his salary.

Last spring, Åberg was nominated for the “Swedish Hero” award by one of Sweden’s major newspapers Aftonbladet.

However, the nomination was withdrawn when it was discovered that he had tortured his own animals to death.

The fact that the “Swedish Hero” event was sponsored by the pet insurance company Agria, probably had something to do with the decision to disqualify him.

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France is signaling it’s making preparations for a massive new crackdown on the gilets jaunes or “yellow vests” anti-government protests that have gripped the country for seven weeks. A new law under consideration could make any demonstration illegal to begin with if not previously approved by authorities, in an initiative already being compared to the pre-Maiden so-called “dictatorship law” in Ukraine.

In the name of reigning in the violence that has recently included torching structures along the prestigious Boulevard Saint Germain in Paris, and smashing through the gates of government ministry buildings, the French government appears set to enact something close to a martial law scenario prohibiting almost any protest and curtailing freedom of speech.

Prime Minister Edouard Philippe presented the new initiative to curtail the violence and unrest while targeting “troublemakers” and banning anonymity through wearing masks on French TV channel TF1 on Monday. He said the law would give police authority crack down on “unauthorized demonstrations” at a moment when police are already arresting citizens for merely wearing a yellow vest, even if they are not directly engaged in protests in some cases. 

PM Philippe said the government would support a “new law punishing those who do not respect the requirement to declare [protests], those who take part in unauthorized demonstrations and those who arrive at demonstrations wearing face masks”.

Philippe’s tone during the statements was one of the proverbial “the gloves are off” as he described the onus would be on “the troublemakers, and not taxpayers, to pay for the damage caused” to businesses and property. 

“Those who question our institutions will not have the last word,” he added. 

However, if anything the protests have grown fiercer in response to any police crackdown or violence against demonstrators. Should all protests be banned under the new law, it could be the start of more violent riots gaining steam, as what began Nov. 17 as anger over fuel tax hikes has now turned into rage at President Emmanuel Macron and policies that seem to favor the urban elite. 

Other yellow vest inspired protests previously broke out across Europe, and in perhaps a sign of things to come a video from The Netherlands of a woman pushing her baby in a stroller being arrested by police apparently for merely wearing a yellow vest is going viral. 

Shocking Video of police brutality in The #Netherlands of a Women being arrested yesterday, because she was wearing an Yellow Vest, and did not wanted to take it off. while walking with her baby in the streets. #YellowVests SHAME ON YOU DUTCH POLICE OFFICERS! RT this to the world pic.twitter.com/vL99D1ThW0

— Sotiri Dimpinoudis (@sotiridi) January 6, 2019

In the video, police confront the woman in what appears a quiet neighborhood far away from any visible protest. Police were photographed alongside the baby on the street as the mother was dragged away. 

With the French prime minister now announcing coming draconian measures banning all protest, this is precisely the horrific scene that could begin to be repeated across France and the EU. 

In total at least six people have died and over 1,400 people injured during the French protests, with thousands arrested weekly, according to international reports. Over the weekend some 50,000 protesters continued demonstrating in multiple cities, leading to significant clashes in Paris, Bordeaux and Rouen. A number of commentators have noted that though there appear fewer demonstrators compared to December, there appears a serious uptick in violent acts on the part of both demonstrators and police response. 

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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.

See “Part 1 – To Start A War” here…

Part Two – The American Front

The election of Woodrow Wilson once again shows how power operates behind the scenes to subvert the popular vote and the will of the public. Knowing that the stuffy and politically unknown Wilson would have little chance of being elected over the more popular and affable William Howard Taft, Morgan and his banking allies bankrolled Teddy Roosevelt on a third party ticket to split the Republican vote. The strategy worked and the banker’s real choice, Woodrow Wilson, came to power with just forty-two percent of the popular vote.

With Wilson in office and Colonel House directing his actions, Morgan and his conspirators get their wish. 1913 saw the passage of both the federal income tax and the Federal Reserve Act, thus consolidating Wall Street’s control over the economy. World War One, brewing in Europe just eight months after the creation of the Federal Reserve, was to be the first full test of that power.

But difficult as it had been for the Round Table to coax the British Empire out of its “splendid isolation” from the continent and into the web of alliances that precipitated the war, it would be that much harder for their American fellow travelers to coax the United States out of its own isolationist stance. Although the Spanish-American War had seen the advent of American imperialism, the thought of the US getting involved in “that European war” was still far from the minds of the average American…

All along the Western front, the Allies rejoiced. The Yanks were coming.

House, the Milner Group, the Pilgrims, the Wall Street financiers and all of those who had worked so diligently for so many years to bring Uncle Sam into war had got their wish. And before the war was over, millions more casualties would pile up. Carnage the likes of which the world had never seen before had been fully unleashed.

The trenches and the shelling. The no man’s land and the rivers of blood. The starvation and the destruction. The carving up of empires and the eradication of an entire generation of young men.

Why? What was it all for? What did it accomplish? What was the point?

See Part 3 here…

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Authored by Danny Haiphong via BlackAgendaReport.com,

The U.S. military state overthrows democratically-elected governments that it deems to be a threat to corporate interests.

“There is plenty of evidence that the United States is the most depraved and dangerous “meddler” in the affairs of other nations that history has ever known.”

Dan Kovalik is a labor and human rights lawyer, but most of all he is an anti-imperialist and an author of three books. Kovalik’s first two books tackled the specific US war drives against Russia and Iran. His third installment, The Plot to Control the World: How the US Spent Billions to Change the Outcome of Elections Around the World, addresses the broad scope of US election meddling abroad. The book provides much needed political and ideological life support to an anti-war movement in the U.S that has been rendered nearly invisible to the naked eye.

The Plot to Control the World is as detailed in its critique of U.S. imperialism as it is concise. In just over 160 pages, Kovalik manages to analyze the various ways that the U.S. political and military apparatus interferes in the affairs of nations abroad to achieve global hegemony. He wastes no time in exposing the devastating lie that is American exceptionalism, beginning appropriately with the U.S. imperialist occupations of Haiti and the Philippines at the end of the 19thcentury and beginning of the 20th. The U.S. would murder millions of Filipinos and send both nations into a spiral of violence, instability, and poverty that continues to this day. As Kovalik explains regarding Haiti, “While the specific, claimed justifications for [U.S.] intervention changed over time- e.g., opposing the end of slavery, enforcing the Monroe Doctrine, fighting Communism, fighting drugs, restoring law and order — the fact is that the interventions never stopped and the results for the Haitian people have been invariably disastrous.”

“Kovalik wastes no time in exposing the devastating lie that is American exceptionalism.”

US expansionism has relied upon the ideology of American exceptionalism to silence criticism and weaken anti-war forces in the United States. American exceptionalism claims that the U.S. is a force for good in the world and completely justified in its wars of conquest draped in the cover of spreading “democracy and freedom” around the world. Kovalik challenges American exceptionalism by showing readers just how much damage that US expansionism and militarism has caused for nations and peoples in every region of the planet. Russia, Honduras, Guatemala, the Democratic Republic of the Congo, Vietnam and many other nations have seen their societies devastated by U.S. “election meddling.” In Honduras, for example, a U.S.-backed coup of left-wing President Manuel Zelaya in 2009 made the nation one of the most dangerous places in the world to be a journalist, indigenous person, or trade-union/environmental activist. Thousands of Hondurans have been displaced, disappeared, or assassinated since the coup.

Another important aspect of The Plot to Control the World is its exposure of U.S hypocrisy surrounding the subject of “election meddling.” Since the end of the 2016 Presidential elections, the U.S. military, political, and media branches of the imperialist state have accused Russia of virtually implanting Donald Trump into the Oval office. The U.S. public has been fed a steady dose of anti-Russia talking points in an apparent effort on the part of the elites to beat the drums of war with the nuclear-armed state. No evidence has been presented to prove the conspiracy, as a recent National Public Radio (NPR) analysis states plainly. However, there is plenty of evidence that the United States is the most depraved and dangerous “meddler” in the affairs of other nations that history has ever known.

“The author shows readers just how much damage that US expansionism and militarism has caused for nations and peoples in every region of the planet.”

Just ask the much-vaunted Russians. Kovalik devotes an entire chapter to the 1996 Presidential election in Russia that re-elected the wildly unpopular Boris Yeltsin. The fall of the Soviet Union in 1991 began an era of “shock therapy” in the newly erected Russian Federation, a euphemism for the wholesale theft and transfer of socialized wealth into the hands of oligarchs and multinational corporations. Millions would perish in Russia from an early death due to the sudden loss of healthcare, housing, jobs, and other basic services. In 1996, President Bill Clinton ensured that Yeltsin maintained his near total grip on state power in Russia by providing the Russian President with a team of U.S. political consultants and over a billion dollars’ worth of IMF monies directly to the campaign. U.S. political and monetary support allowed Yeltsin to rig the election in his favor despite his dwindling popularity. Kovalik shows that if anyone should worry about election meddling, it should be the people of Russia and not the US elites that control Washington.

The Plot to Control the World takes readers into the Democratic Republic of Congo, where the CIA’s coup of revolutionary Patrice Lumumba continues to haunt the resource rich nation in the form of endless US-backed genocide. It travels to Guatemala, where the CIA overthrow of Jacobo Arbenz led to a U.S.-backed slaughter of a quarter million Guatemalans under the auspices of several military dictatorships. Kovalik shows us that the election of the fascistic Jair Bolsonaro in Brazil was no aberration, as the U.S. was primarily responsible for the rise in fascism in Brazilthrough its direct role in placing the nation under the control of a military dictatorship in 1964. The military dictatorship predated the CIA’s ouster of Chile’s Salvador Allende in 1973, which handed the once socialist state to Augusto Pinochet’s murderous and repressive leadership.

“The mission is always the same: to destabilize independent nations that refuses to bow down to the dictates of U.S. imperialism.”

The entire skeleton of the U.S. military state is on full display in The Plot to Control the World. The U.S. military state utilizes an array of tools to overthrow democratically-elected governments that it deems to be a threat to corporate interests. These tools include the U.S. intelligence agencies, so-called Non-governmental Organizations (NGOs) such as the National Endowment for Democracy, and the various branches of the military itself, to name a few. Regardless of the tools employed, the mission is always the same: to destabilize independent nations that refuses to bow down to the dictates of U.S. imperialism.Thus, while Nicaragua, the Democratic Republic of Congo, and Vietnam may possess unique histories, their economic and political development has been shaped by the destructive interference of the United States.

Dan Kovalik is not likely to be reviewed in the New York Timesor other corporate outlets. That’s because Kovalik unapologetically speaks out against U.S. empire and all that upholds it. In doing so, Kovalik’s The Plot to Control the World walks in the footsteps of anti-imperialists such as Michael Parenti and William Blum. Blum, a former State Department employee, spent his post-State Department life providing humanity with knowledge about how US imperialism operates on the global stage. The New York Timeswasted no time in slandering Blum in their obituary . This showed the great lengths that the ruling elites will go to discredit, defame, and condemn critics of the military industrial complex and how important it is for those who oppose war let go of any expectation that the corporate media will cover Kovalik’s work or anyone else who speaks out against war.

“White supremacy is the biggest lie of all and is completely embedded in the ideology of American exceptionalism.”

With that said, one of the reasons that the left in the U.S. is so weak is because it has been numerically and politically isolated by the lies of the Empire. White supremacy is the biggest lie of all and is completely embedded in the ideology of American exceptionalism. Despite the ruthlessness of the austerity and incarceration regimes, many Americans continue to be convinced that the U.S. is the most exceptional nation in the world and do not balk when its military wages wars abroad at the expense of U.S. tax dollars and civilian lives. U.S. imperialism has made sure that Americans feel that they are special colonizers who see the victims of the U.S. military state as savages worthy of slaughter. The Plot to Control the World is based on a different premise: internationalism. The book links the struggle against US imperialism to the needs of the oppressed and working class living in the heart of empire, making it an essential read for those who are sick and tired of the prevailing narrative of American exceptionalism and want to be armed with knowledge that is essential toward changing it.

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