China Steps Up Massive ‘Combat Readiness’ Aerial Drills Over South China Sea Tyler Durden
Tue, 08/04/2020 – 12:49
China has conducted massive aerial drills over the South China Sea at a moment of all-time high tensions with the United States.
Described as air combat readiness exercises, regional media details that three of China’s five main military regions are active as part of the drills. It comes on the heels of even larger exercises off the Leizhou Peninsula in southern China which wrapped up days ago.
“Our aim is not to push the limit or break a record. All our exercises are aimed at [preparing for] actual combat,” a state media video said of the drills, which lasted over ten hours.
Illustrative file image, via Chinese Ministry of National Defense
The aircraft made use of some of its man-made islands which have been at center of controversy with regional allies of the US, given the artificial land masses have been used to expand China’s maritime claims over the whole area.
South China Sea detailed of the new drills that “the Southern Theatre Command sent various aircraft, including an Su-30 fighter and an aerial refuelling tanker, to Subi Reef, a South China Sea atoll that China expanded into an artificial island.”
During the exercise, one foreign aircraft was said to be chased away from the area, but it’s unclear whether it was military or what nation it belonged to.
Subi Reef is in the Spratly Islands — lately an area where tensions run high, also given the significant uptick in US overhead military overflights of the past months, and especially the fact that Vietnam is locked in a territorial dispute with Beijing over the island chain.
Meanwhile, the Pentagon has plans for its own future drills in the contested South China Sea; however, some allies like the Philippines have said of late that they don’t plan to participate for fear of sparking inadvertent military conflict.
via ZeroHedge News https://ift.tt/3i4bO0A Tyler Durden
A U or V? That is the question – whether the economic recovery from the COVID-19 shutdown will be a long, drawn-out process, a wide, flattish U” or a sharp, upward-bound one, a V.
To best wrestle with this question, let us look back a bit at some economic history regarding recessions and depressions, focusing on the US. Is this of interest to those following the course of the Chinese economy? Of course. When the US sneezes, China catches a cold. And, of course, the opposite is true as well.
Right now, the political relationship between these two countries has soured. But this will not, hopefully, always be true. In any case, economic law still operates, no matter what are the diplomatic relationships between nations.
The depression in 1921 was short lived—maybe not a V, but at least a very narrow U. It was created by prior governmental monetary mismanagement, which led investors, as if by Adam Smith’s “invisible hand” to engage in more long-term capital goods investments than the voluntary saving investment decisions of the populace would warrant, based on their time preference between present and future consumption.
Happily, during the 1921 depression, the government of President Warren G. Harding did not intervene with monetary stimulus, and the entire episode was over not in a matter of weeks (the V) or years (a fattish U), but months (a narrow U).
The Great Depression, which stretched from 1929–41 (a morbidly obese U) stemmed from identical causes.
Here, I am subscribing to the Austrian analysis of Ludwig von Mises and Friedrich Hayek, not the Milton Friedman monetarist explanation of a lowered stock of money in the 1930s.
But Presidents Herbert Hoover and Franklin D. Roosevelt “fixed” this by propping up heavy industries whose extent was overblown by the previous artificially lowered interest rates, in an early “too big to fail” paroxysm.
The Smoot-Hawley Tariff added insult to injury, and put the kibosh on any early recovery.
The blunder of 2008 also stemmed from unwise governmental policy. In 1992, the geniuses at the Boston Federal Reserve implied that the banking system was racist, since banks were more likely to reject mortgage applications by blacks and Hispanics compared to whites.
Rather, in my view, their favorite color was green: the ranking in terms of credit reliability and collateral determined lending practices.
But the US Department of Housing and Urban Development contributed to the eventual crisis by diverting mortgages; billions of dollars were improperly diverted into the housing market. Only when bankruptcies were finally allowed did we escape from that debacle. Call that a fattish, but not an obese, U.
This brings us to present considerations. As an Austro-libertarian, I see government failure as the cause of virtually all depressions, and we are certainly in one now. However, I am forced to admit an exception to this general rule. The depression of 2020 is a product of some very vicious little virus critters, not the state apparatus.
I now predict the sharpest of Vs, but if and only if, all other things being equal, the Trump administration cleaves to market principles.
First, and perhaps most important, stop paying people more to stay home from work than the salaries they can garner from their employers.
It is beyond me why US President Donald Trump ever agreed to any such a scheme in the first place.
Does he not want to win the election in November? Does he not realize that a fast recovery, a V, will help him inordinately in that regard? Does he not realize that if people do not get back to work, there will be no recovery at all?
Second, do not commit the same error as the Smoot-Hawley Tariff. Trump should beware this error, because he has a natural protectionist instinct in his intellectual armamentarium. He should mightily resist it.
Third, do not give in to our friends on the left who wish to boost the federal minimum wage level to $15, or to raise it at all. This is an unemployment creator par excellence, particularly for unskilled workers.
Does Trump not realize that a large part of his success in battening down the unemployment rate for the black community, and particularly for younger, less-skilled African Americans, stems from his holding the line on this matter? The Coronavirus Aid, Relief, and Economic Security program already has provisions in this direction and they should be strongly resisted.
Fourth, in no particular order, Trump should use all his good offices to stop the maniacal US Federal Reserve from furiously pumping money into the economy. These are the seeds for the next business cycle downturn, and risk another bout of inflation, which we certainly do not need to compound our economic difficulties.
So, Mr. President, embrace the free enterprise system, attain a V, a very narrow and sharp one, and the prognostication for November will be significantly boosted.
via ZeroHedge News https://ift.tt/3i7WeB2 Tyler Durden
Gold Soars To Record Highs, Stocks Erase Gains After Pelosi Warns ‘No Deal This Week’ Tyler Durden
Tue, 08/04/2020 – 12:17
While The Dow is holding gains thanks to the insane dominance of AAPL; Nasdaq, Russell 2000, and the S&P are all tumbling into the red on the day after House Speaker Nancy Pelosi said she “doesn’t think there will be a deal this week.”
Treasury yields are tumbling to fresh record closing lows…
And Gold is soaring to new record highs…
…as Spot gold tops $2,000 for the first time…
What does gold see coming? A Democrat-driven $3 trillion stimulus that breaks the world’s confidence in any fiscal restrainst behind the world’s reserve currency?
via ZeroHedge News https://ift.tt/30pkqsL Tyler Durden
Jim Hackett Retires As Ford Appoints Its Fourth CEO Since The Great Recession Tyler Durden
Tue, 08/04/2020 – 12:10
Mired in what is likely one of the ugliest auto recessions in history, Ford has said it has tapped Jim Farley to replace a relatively still-newly appointed Jim Hackett as CEO. Hackett replaced former CEO Mark Fields and, for the most part, has failed to inspire confidence during his tenure at Ford.
Ford, like many others in the industry, continues to fight with the slowing economy and effects of the coronavirus pandemic at a time where connected vehicles and EVs are becoming the norm in the industry. Like many companies it is tasked with dealing with these issues all at the same time while vehicle sales globally have plunged.
This marks the second management change for Ford this year, according to FT. It’ll also be the fourth CEO of Ford since the 2008 financial crisis. The company also saw its former head of its automotive division retire in March. Farley was then promoted to COO and now, he will be CEO and will also join the company’s Board of Directors.
Ford is currently in the middle of an $11 billion restructuring that is supposed to help to accelerate its development of new vehicles, including hybrids and EVs. Hackett had only just started with Ford back in 2017 and has said he will retire effective October.
Hackett said on a Tuesday call with reporters: “The wind in our sails is really starting to pick up. Jim (Farley) had a big role in that, and I can feel confident that the things I was asked to do have really started to take root.”
Farley will work with Hackett to ensure a “smooth leadership transition over the next two months,” the company said.
Ford said in a statement: “Jim Farley matches an innate feel for cars and customers with great instincts for the future and the new technologies that are changing our industry.”
via ZeroHedge News https://ift.tt/2DyuYg6 Tyler Durden
Terrifying Mystery Blast Shockwave Filmed Over Beirut Tyler Durden
Tue, 08/04/2020 – 11:49
A powerful blast has just rocked the Lebanese capital of Beirut. The cause of the massive explosion is as yet unknown.
But multiple social media videos from various angles shows it happened during daylight hours Tuesday, in the late afternoon or early evening local time.
Images show that a massive shockwave flashed over the city, followed by an immense fireball that appeared several stories high.
Lebanese media is currently speculating that a large fireworks depot exploded, given it’s in the vicinity of an area where firecrackers are known to be stored.
It’s as yet unknown how many casualties have resulted as no doubt a massive emergency response is underway.
Indeed close-up images just before the larger blast shows a large complex on fire, with either ammunition or fireworks going off, followed by the intense shockwave.
Leaders in education, politics and other areas gathered in suburban Evanston Sunday to ask that the Illinois State Board of Education change the history curriculum at schools statewide, and temporarily halt instruction until an alternative is decided upon.
At a news conference, State Rep. LaShawn K. Ford said current history teachings lead to a racist society and overlook the contributions of women and minorities.
Before the event Sunday, Rep. Ford’s office distributed a news release “Rep. Ford Today in Evanston to Call for the Abolishment of History Classes in Illinois Schools,” in which Ford asked the ISBOE and school districts to immediately remove history curriculum and books that ‘unfairly communicate‘ history “until a suitable alternative is developed.”
Calls for Censorship
Who gets to decide which history books are unfair?
And what about statues?
Last night, after consultation with a variety of stakeholders, the City temporarily removed the Christopher Columbus statues in Grant Park and Arrigo Park until further notice.
— Mayor Lori Lightfoot (@chicagosmayor) July 24, 2020
Logical Solution
I came up with the logical solution to this problem on July 24.
Let’s just ban statues and be done with it.
Books too. I am sure every book ever printed offends someone.
Let’s just ban statues and be done with it. Books too. I am sure every book ever printed offends someone. Does the word Pizza offend anyone? If so, we need to ban pizzas.
I am really tired of all this nonsense.
Suitable Alternative Needed
We need a suitable alternative to state reps.
How about an outright ban on these overpaid, underworked bureaucrats who are the primary reason people leave Illinois.
It Takes 3 Weeks to Escape Illinois
We escaped Illinois and if you live here you should consider doing the same. We chose Utah.
WHO Conducted “Extensive Interviews” With Wuhan Scientists Amid Efforts To Prove Virus Didn’t Escape Lab Tyler Durden
Tue, 08/04/2020 – 11:15
The World Health Organization – which praised China’s early efforts at ‘containing’ COVID-19, parroted CCP propaganda about transmissibility, and refused to declare a pandemic until March 11 (allegedly at the request of Chinese President Xi Jinping) – has conducted “extensive discussions” with scientists in Wuhan to piece together the ‘natural’ origin of the outbreak, according to Reuters.
WHO Director-General Tedros Adhanom Ghebreyesus shakes hands with Chinese President Xi Jinping
The ‘fact finding mission’ included talks on animal health research, according to a WHO spokesman.
“The team had extensive discussions with Chinese counterparts and received updates on epidemiological studies, biologic and genetic analysis and animal health research,” said the WHO’s Christian Lindmeir, who added that the investigation included video discussions with Wuhan virologists and scientists.
The three-week advance mission comprising two specialists in animal health and epidemiology was tasked with laying the groundwork for a broader team of Chinese and international experts that will seek to discover how the virus that causes COVID-19 jumped the species barrier from animals to humans. –Reuters
The WHO’s official position is that COVID-19 crossed over from bats to humans through an unknown intermediary animal – and has ruled out the possibility that the Wuhan-based virus escaped the Wuhan Institute of Virology, whose lead bat scientist Shi Zhengli sparked an international ethics debate in 2015 over the genetic modifyication of bat coronaviruses for human transmissibility.
In mid-April, the Washington Post reported that the US State Department received two cables from US Embassy officials in 2018 warning of inadequate safety at Wuhan Institute of Virology, which was conducting ‘risky studies’ on bat coronaviruses, according to the report – which noted that the cables “fueled discussions inside the U.S. government about whether this or another Wuhan lab was the source of the virus.”
And so, the WHO’ three-week ‘advance mission’ led by two specialists in animal health and epidemiology, have been “tasked with laying the groundwork for a broader team of Chinese and international experts that will seek to discover how the virus that causes COVID-19 jumped the species barrier from animals to humans,” according to the report.
Notably – US experts have been excluded from the WHO mission, while the organization’s chief of emergencies, Mike Ryan, offered a hint as to the direction this ‘natural origin’ hunt is going – saying in a statement “The fact that that fire alarm was triggered (in Wuhan) doesn’t necessarily mean that that is where the disease crossed from animals to human.”
We wonder if the WHO asked why Beijing ordered labs across China to destroy coronavirus samples in early January?
via ZeroHedge News https://ift.tt/2DvoE9k Tyler Durden
King Dollar? Rabobank Warns “Staying On Thrones Means A Battle At Some Point” Tyler Durden
Tue, 08/04/2020 – 11:00
Authored by Michael Every via Rabobank,
“The King is dead. Long live the King!”
TikTok now has 44 days (and counting) to arrange a sale to Microsoft or be banned, which is legally known as “forced divestment”, I believe, and will naturally never be considered by China as a form of retaliation against US firms based there. At least that’s what the US firms still based there are no doubt telling themselves as they continue to say “This is fine” over and over despite all manner of worrying developments in the Chinese economy and US-China relations. Muddying the waters, the White House now wants a slice of the action for rewarding Microsoft with such a juicy deal – because when one thinks of cool kids sharing 15-second ADHD-driven mini-videos that make adults groan, one does not traditionally think of traditional firms like Microsoft. Moreover, China hawk Navarro is attacking Microsoft for being in China at all, albeit critics point out often in the form of pirated software. He’s suggesting Microsoft should divest their China business. Which is at least symmetrical. It’s also deep decoupling.
In short, you thought China was the new tech king? Perhaps it is, yet the old US king –who comes across to some like the one in the 1977 film ‘Jabberwocky’ (“King Bruno the Questionable”)– has just shown it can still take off more than a few heads too with just a wave of a hand.
Meanwhile, with US 10-year yields up only a few basis points from their year-to-date closing low, it’s worth wondering if one of the ‘kings’ of recent trades, long bond duration, is really over or not. The US tech titans who testified to Congress last week tried to portray the US as vibrant. Well, it is for them. Facebook CEO Zuckerberg in particular stressed that there is a rapid turnover among the largest US firms, like his, which proves that innovation and dynamism and competition are still there. Well, imagine a medieval peasant. He doesn’t have the best of times of it under his king. However, once every ten years or so, a new knight rides in, kills the king and takes the throne. As the peasant shovels old muck for the new king, I am sure the first thing he says to himself is “What a vibrant, dynamic, meritocratic economy we have!” It’s a structural economic problem – and we are being offered neither a structural solution nor an adequate cyclical response. There is still no white smoke on stimulus from Congress, for example.
Less muck, more brass. Do we have a dynamic recovery from the virus we can point to? No. Yes, PMIs are over 50. No, that does not mean anything at the moment, as this measures month-to-month changes in sentiment, which is obviously up, but which is still massively down year-on-year on almost any measure. Yes, you can give people 50% of the price of a burger to eat one, and they will go and do so, as the UK government now shows is the case; but, no, ask them to pay full-price to risk illness to do so and the restaurants and cafes will likely be too empty again. That’s a pretty deflationary backdrop if you ask me. At least one king is not dead.
And neither is another – the USD. King Dollar, who has seen so much talk of dethroning of late, has had a good few days, even if it is leaning on its sword breathing heavily right now. EUR/USD is currently at 1.1770 when it was over 1.19 last week; and against a wobbly EM benchmark like ZAR it is at 17.19 when it was at 16.70 last Friday. The USD is almost certainly oversold and, as our own Piotr Matys points out, at a critical technical support level. We shall see if he can keep his throne or not.
However, this is not just about lines on charts. It’s about lines on maps. Staying on thrones usually involves battle of some kind at some point.
Kings should get that: it used to be called statecraft and grand strategy: one to stay in power over internal rivals, and one to and ensure one’s power was not challenged externally either. Economics was always a subset of that world view, not the world view itself. Those not solely focused on Bloomberg or on selling cars or cheese should look at the geostrategic game playing out between the US and China from Hong Kong to the South China Sea to the East China Sea to the Indian border to Iran to Syria to Lebanon to Djibouti, and realise that this is deadly serious. Perhaps deadly weapons can be avoided, although this is the old king’s comparative advantage over the new one. However, to avoid doing so is surely still going to require usage of the “US Dollar weapon” via sanctions and access to the US market…as we already see in the case of TikTok.
In short, there is more of this to come. Much more. So tick-tock more like. Which suggests long USD and long duration is still a king of trades.
Australia’s in-no-way regal RBA have underlined this with news that their bond buying will begin again tomorrow to ensure that the Aussie 3-year yield stays where they want it at 0.25%. A pity they can’t keep the virus where they (don’t) want it; or jobs where they want them, or house prices, or retail sales (-3.4% q/q in Q2 excluding inflation); or US-China relations; although they will be happy that exports were still up 3% y/y in June, while imports were up 1%.
Oh, and Spain’s former king Juan Carlos has just had to flee the country to avoid becoming embroiled in a corruption scandal.
via ZeroHedge News https://ift.tt/2DxXIWs Tyler Durden
Lawmakers Demand Universities Produce All Foreign Donation Records Tyler Durden
Tue, 08/04/2020 – 10:45
Republican lawmakers have demanded that the nation’s top universities produce all records of donations received from foreign governments, after concerns have mounted over a growing national security threat tied to multi-million dollar gifts, according to the New York Post.
(Graphic: Clarion Project)
In a Monday letter to the presidents of six leading colleges — including Yale, Harvard and NYU, Reps. Jim Jordan (D-OH), Virginia Foxx (R-NC) and James Comer (R-KY) requested unredacted records of all gifts, contracts and agreements with foreign governments since January 2015.
The three lawmakers are the ranking members of the House Judiciary, Oversight and Reform, and House Education and Labor committees, respectively.
Lawmakers said they were troubled by the fact that governments like Qatar classified their donations to US colleges as “trade secrets” — banning the recipient from disclosing the nature or sum of the gift, as required by US law.
They said they were also briefed in May by Education Department officials who held “concerns about this level of [colleges’] dependency on foreign funding from adversarial states and the inherent national security risks,” the letters said.
“, according to DOE records, raising concerns about foreign influence and spying in the US higher education system. –New York Post
According to the report, Harvard has declared 31 gifts or contracts totaling $101 million from China, Russia, Saudi Arabia and Qatar since 2015.
NYU has received $40 million from the same countries over the same period, while the University of Pennsylvania pulled in $62 million from the group. The Universities of Chicago, Delaware and Yale each pocketed less than $30 million.
As the Post notes, the head of Harvard’s chemistry department was charged with lying to the DoD in January about his receipt of $1.5 million in connection with his work at the Wuhan University of Technology in China. He faces up to five years in prison, three years of supervised release and a fine of $250,000.
According to Reps. Jordan, Foxx and Comer, their largest concern is evidence that the donations were being used by foreign governments to “leverage their money into some type of benefit, or quid pro quo.”
One example presented by DOE investigators to Congress in May was two universities with ties to the Chinese Communist Party-aligned Jilin University publicly defending the Communist regime after reports emerged that the COVID-19 pandemic originated from a lab in Wuhan.
According to Monday’s letters, the institutions “claimed those reports were false.”
American universities under investigation by the Education Department have repeatedly tried to conceal their ties to China, refusing to hand over documents detailing cash and other gifts from the Communist nation, or aggressively labeling them “confidential,” one attorney for the department told lawmakers in May. –New York Post
Overall, an analysis by the Clarion Projectfound that some $10 billion had flowed from foreign entities into US universities between 2012 and 2019.
via ZeroHedge News https://ift.tt/2PntmbN Tyler Durden
Axios Retracts Report That Apple Has “Expressed Interest” In Buying TikTok Tyler Durden
Tue, 08/04/2020 – 10:35
Update: Well, that was fun. Moments after reporting that Apple is looking to buy Apple, Axios reported precisely the opposite, with the report author Dan Primack now backtracking and issuing what may be the fastest retraction ever.
State of play: Apple spokesperson tells Axios that there are no discussions about buying TikTok and the company isn’t interested.
One almost wonders who were the unvetted “sources” that bought… and immediately sold AAPL calls.
* * *
As the drama over the fate of TikTok – and US-China cold war relations deepens – moments ago Axios reported that Microsoft, whose stock has surged in recent days after confirming it is looking at acquiring China’s “trojan horse” TikTok, moments ago Axios reported that the world’s largest company, Apple may also be interested in entering the social media space, and has “expressed an interest” in purchasing TikTok.
Multiple sources tell me that Apple has expressed interest, albeit no sources inside of Apple, and that at least one other strategic has expressed interest. Yes, it would be an unusual deal for Apple, given that TikTok is a cross-platform app, and a bigger political headache than Tim Cook may want (both here and in China). But if anyone has the cash on hand…
The last point is valid: does Apple (or frankly Microsoft), both of which have been grilled for being too big and monopolies really need the headache of becoming even bigger, and an even more prominent political target? On the other hand who else has the cash on hand for such a sizable acquisition? Well, private equity does, and as Axios adds…
Private equity is also circling, including some firms that don’t have current stakes in ByteDance. But, I haven’t heard one that’s terribly optimistic that they can pull it off without finding an insider or major strategic with whom to partner.
Clearly it is in ByteDance’s interest to get multiple suitors when it comes to pricing, which “could help the White House secure concessions.”
For now, however, the news has sparked a fresh blast higher in AAPL stock, which is up 1.5% on the session and back to new all time highs sporting a $1.875 trillion market cap. In fact, with AAPL’s market cap jumping about $25bn on the news of a potential deal, a few more minutes and the entire purchase would be free. Of course, MSFT stock has slumped on the news.
via ZeroHedge News https://ift.tt/2XsxJGX Tyler Durden
