Tag: finance

S&P futures tumbled, European stocks slumped to a three week low, 10Y Treasury yields dropped near all time lows (where the 5Y already was at 0.2374%, the lowest yield on record), and the EUR slid from near a 22-month high after the market reassessed that Powell’s message could have been even more dovish, and as German GDP crashed the most on record, alongside a surge in Covid-19 cases. Meanwhile, today’s US GDP report is expected to show shortly that the US economy contracted by a record 34.5%. The dollar strengthened against most Group-of-10 peers, with Scandinavian currencies leading losses.

German GDP contracted by 10.1% Q/Q in the second quarter of 2020, the biggest drop on record and worse than the 9% expected drop. The good news: this print is consistent with a relatively fast rebound of both the industrial and services sectors through May and June. That said, the below-consensus performance of Germany points to downside risks to consensus expectations for the Euro area Q2 release published tomorrow. It also means that the narrative of a faster European recovery than the US has just come to a screeching halt.

In US pre-market trading, UPS jumped on a surge in delivery demand during the pandemic. Qualcomm jumped 11.5% after forecasting fourth-quarter revenue largely above expectations, powered by sales of its chips used in 5G devices and reaching a settlement with Huawei Technologies Co Ltd. Eastman Kodak extended yesterday’s 319% surge from winning a government loan to assist in the production of a coronavirus treatment.

European stocks tumbled as much as 1.7%, dropping to the lowest since July 1, as the prospects for stimulus is weighed against the quickening spread of the coronavirus. Among the biggest decliners, SAP fell 2.6%, HSBC loses 3.4%, Allianz retreats 3.6%. Danone was down 5.6% after sales fell more than expected last quarter, dragged down by its water business. Lloyds Banking Group Plc slumped as much as 9% after profit was wiped out by bad loans charges.  Volkswagen tumbled 5.6% after posting 2Q figures that included what MainFirst called a “clear miss” at the heavy- trucks division and worse-than-expected performance at some car brands.

“A vacuum on EU positive news could now be in store as the recovery fund ratification process begins” and European equities start to struggle, Dankse Bank strategists write in a note. Meanwhile, Germany’s covid infection rate remains above the threshold of 1.0, and recorded the highest number of new cases in around six weeks.

Asian stocks also fell, wiping out earlier gains, with shares in Japan and China under pressure even as the Kospi stayed modestly firmer following upbeat Samsung outlook. The drop was led by finance and utilities; markets in the region were mixed, with Singapore’s Straits Times Index and Thailand’s SET falling, and Taiwan’s Taiex Index and Jakarta Composite rising. The Topix declined 0.6%, with Gurunavi and Kushikatsu Tanaka falling the most. The Shanghai Composite Index reversed Wednesday’s rally and retreated 0.2%, with Hangzhou Electronic Soul Network and Shanghai Material Trading posting the biggest slides.

“Markets are nearing their limits without further stimulus and a much stronger recovery,” said Andrew McCaffery, the global CIO of asset management at Fidelity International, citing the failure to get the outbreak under control in some countries. “The third quarter is likely to be much more challenging and markets could see renewed volatility.”

While markets are bracing for a slew of earnings from the tech giants, they will also get economic data that’s will show the biggest contraction in U.S. GDP on record. Thursday marks the first time the four of the biggest U.S. tech companies — Apple, Amazon.com, Alphabet and Facebook — will post financial results on the same day, with expectations running high as their valuations soared over the past three months. Shares of the companies, which have a combined market value of about $5 trillion, fell between 0.6% and 0.9% premarket. On Wednesday, the CEOs of the four companies took jabs from lawmakers for antitrust issues.

“Tonight could be a pivot for markets with four of the big tech companies reporting earnings,” said Berndt Maisch, a senior portfolio manager at Tresides Asset Management. “Their stocks are so super expensive and hence offer very little room for any disappointment. Should they miss the high expectations that could lead to a significant market shake up. We can already see that nervousness within European markets today.”

While signs of a pickup in activity have fueled a stellar rally in U.S. stocks, the momentum of economic has slowed recently amid a resurgence in new infections, especially in southern and western U.S. states, leading to a pause in reopening plans. The S&P 500 is about 4% below its Feb. 19 record high after coming within 3% of that level last week. The backward looking GDP print is due at 8:30 a.m. ET when we will also get the Labor Department’s latest jobless claims data which is expected to show another ominous an uptick in newly fired workers.

On Wednesday, the Federal Reserve acknowledged the surge in COVID-19 cases is likely stalling economic recovery. The central bank also pledged to support the economy as long as necessary, lifting Wall Street’s three main indexes at the end of the session. Also dampening the mood was a deadlock in negotiations in the U.S. Congress over a pandemic relief plan, before a $600-per-week unemployment benefit lapses on Friday.

In FX, the dollar reversed Wednesday’s losses and climbed from the lowest since September 2018 as rising coronavirus cases worldwide supported demand for haven assets; the euro retreated against the dollar from the high it touched on Wednesday after news that Germany’s economy fell the most since records began in the second quarter.  Investors sought refuge in the greenback after nations from Australia to Vietnam reported a fresh spike in infections and Federal Reserve Chair Jerome Powell warned of the most severe economic downturn “in our lifetime.”

Among the G-10, the Norwegian krone saw the biggest losses, making it this year’s worst performer; it was followed by the krona and kiwi, which also extended declines versus the Aussie as data showed a further drop in New Zealand’s consumer confidence. Sterling snapped a nine-day rally against the dollar, yet outperformed the euro.

The Australian dollar slipped as leveraged funds initiated short positions after Victoria state registered a record number of cases, according to a trader. The yen halted a five-day gain as traders weighed Japan’s tally of infections which rose to an all-time high.

“The virus story is shifting away from being just a U.S. story with now many hot spots around the globe,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. “The dollar’s decline is starting to look stretched, particularly if more containment measures are reintroduced in other parts of the world”

In rates, two-year Treasury yields are two basis points away from falling below the record set in May and the 5-year yield fell to a record low 0.2374%. The US Treasury curve bull-flattened, extending a move that followed Wednesday’s FOMC meeting and anticipating month-end index-extension flows Friday that may further support long end. U.S yields were lower by 1bp to 3bp across the curve with long-end- led gains flattening 2s10s by ~1bp, 5s30s by ~2bp; 10-year yields around 0.555%, richer by 2bp vs Wednesday’s close and within 2bp of its record low close on March 9.  German bonds rallied on demand for the safety of sovereign debt, driving benchmark yields to a two-month low and widening the differential with Italian equivalents.

In commodities, gold fell for the first time in 10 days as the dollar rebounded.

Looking at the day ahead, the focus for data will be the advanced Q2 GDP reading for the US which is expected to show an annualized contraction of -34.5% qoq. Other data includes weekly jobless claims while in Europe we’ve got preliminary July CPI and Q2 GDP in Germany. As highlighted earlier, expect earnings to be a big focus with Alphabet, Amazon, Facebook and Apple reporting along with Nestle, P&G, Shell, MasterCard, Total, ABInBev and Volkswagen.

Market Snapshot

• S&P 500 futures down 0.9% to 3,222.50
• STOXX Europe 600 down 0.8% to 364.50
• German 10Y yield fell 2.7 bps to -0.525%
• Euro down 0.3% to $1.1754
• Italian 10Y yield fell 1.6 bps to 0.866%
• Spanish 10Y yield fell 1.6 bps to 0.332%
• Brent futures down 1.4% to $43.12/bbl
• Gold spot down 0.8% to $1,955.55
• U.S. Dollar Index up 0.2% to 93.61
• MXAP down 0.2% to 166.87
• MXAPJ down 0.01% to 553.40
• Nikkei down 0.3% to 22,339.23
• Topix down 0.6% to 1,539.47
• Hang Seng Index down 0.7% to 24,710.59
• Shanghai Composite down 0.2% to 3,286.82
• Sensex down 0.4% to 37,915.38
• Australia S&P/ASX 200 up 0.7% to 6,051.08
• Kospi up 0.2% to 2,267.01

Top Overnight News from Bloomberg

• Germany’s economy plunged into a record slump in the second quarter, when virus restrictions slammed businesses and households across Europe, destroying jobs and prompting an unprecedented policy response
• Germany also reported the highest number of new coronavirus cases in about six weeks. In the U.K., almost 10,000 people have been given an experimental Covid-19 vaccine, a key step toward finding a shot that will help control the pandemic
• Hong Kong’s government barred 12 pro-democracy activists including Joshua Wong from running in September elections
• The early signs are that bond investors agree with Federal Reserve Chairman Jerome Powell that the coronavirus still warrants extreme caution from policy makers

Asian equity markets were mostly kept afloat as the region took advantage of the post-FOMC tailwinds from Wall Street and as focus was centred on a deluge of earnings releases. ASX 200 (+0.7%) was led by outperformance in the tech sector and with mining names underpinned by Rio Tinto earnings. Nikkei 225 (-0.2%) also began positively although gains were later reversed amid recent currency strength and after Retail Sales Y/Y topped estimates but remained in contractionary territory. Furthermore, notable movers have been driven by corporate updates with Nomura Holdings the biggest gainer, while Isetan Mitsukoshi, TEPCO and Sumitomo Mitsui Financial Group are at the other side of the spectrum on dismal results. KOSPI (+0.3%) began the session on the front foot to print its best level since October 2018 after encouraging earnings from Samsung Electronics although some of the gains were later pared after shares of the tech and index behemoth stalled around the KRW 60,000 level. Elsewhere, Hang Seng (+1.1%) and Shanghai Comp. (+0.1%) were varied with indecision seen in the mainland following the prior day’s outperformance and after the PBoC opted for a neutral position in its latest liquidity operations. Finally, 10yr JGBs were subdued amid the flimsy sentiment in Tokyo and mostly weaker results at the 2yr JGB auction.

Top Asian News

• Herd Immunity May Be Developing in Mumbai’s Poorest Areas
• Thailand Sees 8.5% GDP Contraction as Virus Ravages Economy
• Hong Kong’s Dollar Peg Is ‘Unassailable’, StanChart CEO Says

European equities (Eurostoxx 50 -1.7%) trade lower across the board with selling pressure continuing to pick up throughout the session amid a backdrop of light macro newsflow and a particularly busy earnings slate. Despite selling pressure in equity index futures becoming more prominent throughout the session, equity-specific focus has largely been centred around individual pre-market earnings reports from a vast number of large-cap names from across the region. Sector-wise, auto names are a notable laggard amid earnings from Volkswagen (-5.7%) and Renault (-5.7%) with the former reporting a H1 loss of EUR 1.4bln (prev. profit of EUR 9.6bln) and the latter posting a EUR 7.4bln loss; Renault CEO noting that results have acted as a “disturbing wake up call”. For the banking sector, Lloyds (-7.4%) trade lower after posting a GBP 602mln loss (prev. profit of GBP 2.9bln), Standard Chartered (-3.6%) and BBVA (-7.9%) are also down on the day post-earnings, whilst some reprieve for the sector has been presented by Credit Suisse (+0.2) after the Co. posted a 24% increase in net income whilst also announcing some structural changes in its operations. Large-cap energy names Shell (-1.7%) and Total (+1.3%) have both come to market with Q2 earnings today in which the former posting a USD 16.8bln writedown on its assets and the latter managing to avoid entering the red after recording a net income figure of USD 126mln during the quarter. Elsewhere, AstraZeneca (+2.8%) are a notable outperformer after reporting an increase in H1 profits and revenues with performance boosted by new medicines with the Co. continuing to focus on developing a vaccine for COVID-19. Swiss heavyweight Nestle (+0.4%) are firmer this morning after H1 organic sales rose 2.8% vs. Exp. 2.3% despite the fallout from the pandemic. Airbus (+3.0%) are another outperformer post-earnings despite posting a H1 loss of EUR 1.9bln with the Co. vowing to stem its sizable cash outflows. AB InBev (+5.4%) sit near the top of the Stoxx 600 after Q2 sales figures exceeded expectations during the pandemic. To the downside, Casino (-15.8%) reside at the bottom of the Stoxx 600 after posting a drop in sales and trading profits

Top European News

• Euronext Rejects Shorter Hours After Some Investors Resist
• Lazard Banker Among Suspects in German Insider Trading Probe
• BBVA’s Miss in Mexico Overshadows Quick Return to Profit
• Casino Shares Collapse to 24-Year Low as 1H Seen as ‘A Disaster’

In FX, the Greenback continues to regroup after a knee-jerk slide in wake of the dovish/downbeat FOMC, as broad risk sentiment sours on heightened 2nd wave COVID-19 prompted by the latest daily updates showing increases in infections and deaths to new record levels in several cases. As such, the Buck has bounced across the board with the DXY pivoting 93.500 within 93.308-685 bounds compared to a low of 93.169 at one stage on Wednesday and now eyeing 2 top-tier US data points for near term direction (weekly initial claims and Q2 GDP) before remaining month end rebalancing kicks in.

• AUD/NZD/CAD/NOK – No big surprise that the high beta, cyclical and commodity currencies have been hit hardest by renewed aversion and the mini or partial US Dollar revival, as the Aussie also laments another rise in virus cases in Victoria and retreats further nigh on 0.7200 peaks towards 0.7125, while the Kiwi fails to glean any lasting traction from improvements in ANZ business sentiment or an even bigger rebound in the outlook, with 0.6600 more tangible than 0.6700 that seemed reachable at one stage. Similarly, the Loonie has reversed sharply from multi-week highs around 1.3330 to sub-1.3400 against the backdrop of waning crude prices and the Norwegian Krona is back below 10.7000 vs the Euro even though the latter has unwound gains elsewhere.
• EUR/SEK/CHF/JPY/GBP – All backing off amidst the downturn in risk appetite and Greenback recovery, with the single currency testing bids under 1.1750 having rallied just above 1.1800 late yesterday, but not quite far enough to probe the bottom end of a resistance zone stretching from 1.1815 to 1.1851 that includes a key Fib retracement (1.1822). However, the Swedish Crown has slipped through 10.3000 against the Euro in contrast to the Franc that is straddling 1.0750 and only handing back a portion of its gains vs the Buck between 0.9151-21 parameters in keeping with the safe-haven Yen that is holding a tight range either side of 105.00. Last, but not least, the Pound is actually confounding normal conventions, to a degree, and retaining sight of 1.3000, albeit capped ahead of Wednesday’s 1.3014 pinnacle and a chart hurdle just a few pips above (1.3018).
• EM – General depreciation on overall risk factors, but the Rand also losing ground with GOLD, Rouble alongside Brent, Lira on a lack of Turkish reserves to arrest the slide and Mexican Peso ahead of Q2 GDP that is expected to extend the recessionary run to 5 quarters and by record margins.

In commodities, WTI and Brent are in the red this morning following the general downturn in sentiment this morning which features European & US equity bourses firmly in negative territory on the busiest earnings session of the season for both European & US Co’s. For crude explicitly there hasn’t been anything fundamentally new for the complex since yesterday’s EIAs and as such it is once again tracking sentiment generally. Albeit, we did see updates from Total and Shell this morning who both highlighted strong oil trading results for the quarter which acted to mitigate some of the declines from energy prices. Additionally, on the mid-term supply front Shell CEO Beurden noted that they will only be drilling 22 exploratory wells this year which is some way below the originally guided 77. Moving to metals, spot gold is subdued this morning as the USD continues to grind higher; although, the precious metal is still in proximity to the USD 1950/oz mark a level which it was in proximity to around this time yesterday as well. Separately, for the metal ING believe it surpassing the USD 2000/oz mark is just a matter of time and forecast prices to be at USD 2100/oz by year-end. Elsewhere of note for cobalt and key miners of the metal such as Glencore where Panasonic are to launch cobalt free Tesla batteries in 2-3 years and have reduced the amount of cobalt used to below 5%.

US Event Calendar

• 8:30am: GDP Annualized QoQ, est. -34.5%, prior -5.0%
• Personal Consumption, est. -34.5%, prior -6.8%
• Core PCE QoQ, est. -0.9%, prior 1.7%
• 8:30am: Initial Jobless Claims, est. 1.45m, prior 1.42m; Continuing Claims, est. 16.2m, prior 16.2m
• 9:45am: Bloomberg Consumer Comfort, prior 44.7

DB’s Jim Reid concludes the overnight wrap

As expected yesterday’s Fed meeting was fairly light on new information with the baton instead passed to the meeting in September. Indeed the only change to the statement was a reference to include the importance of the evolution of the virus for the economic outlook which was something that was reinforced by Powell during the press conference. Beyond that, Powell highlighted the need for further support, both from fiscal and monetary policy.

Our US economists, in their summary last night (see here), noted that Powell suggested the Committee aims to wrap up the policy review in the “near future” which is consistent with their expectation that the results will be released at the September meeting. The team continues to anticipate that the Fed will adopt an average inflation target when that occurs, and that ultimately they will commit to providing additional accommodation through outcome-based forward guidance and more aggressive balance sheet expansion. However, they also continue to believe that these tools could be insufficient, and that alternative tools, such as frontend yield curve control (YCC) or more active use of credit facilities, could prove necessary.

In terms of markets, the sun had been shining on risk assets going into the meeting and the lack of any new significant information did little to spoil the party with the S&P 500, NASDAQ and DOW eventually closing +1.24%, +1.35% and +0.61% respectively. Meanwhile, 10yr US Treasuries were mostly unchanged with yields dropping just -0.4bps to 0.576%. The USD continued its decline, falling -0.26%, for the 12th losing session of the last 14. Conversely Gold rose for the tenth session in a row, rising +0.63% to $1971/oz.

Away from the Fed the other event of note was the antitrust panel in front of Congress including the CEOs of the biggest tech companies in America. Though the industry leaders were met with varied criticism from both parties yesterday, Republicans took umbrage with Google and Facebook over alleged liberal bias, while the Democrats aimed their critique at the companies’ market power. Apple, Amazon, and Google saw questions from both sides over their use of consumer data, and whether they have an unfair advantage due to their place as gatekeepers to operating systems and environments.

Speaking of tech, it’s a big day for earnings in the sector with Apple, Amazon, Facebook and Alphabet all set to report today. We’ll have to wait until tonight for the numbers however with the releases due after the close, although there’s no shortage of other companies reporting which should dictate the direction of travel with 62 S&P 500 companies reporting in all, while this morning in Europe we’re expecting numbers from Credit Suisse, Shell, Nestle, Total and Volkswagen amongst others. So expect a busy day of headlines.

In terms of the latest overnight, the Hang Seng (+1.05%), Kospi (+0.31%) and ASX (+0.72%) are all trading up while the Nikkei (-0.05%) and Shanghai Comp (+0.09%) are more or less unchanged. Meanwhile, futures on the S&P 500 are down -0.12% while Gold has retraced -0.33%. In terms of earnings, Samsung reported quarterly net income of KRW 5.5tn, beating estimates of KRW 4.9tn while also providing a cautiously optimistic outlook, predicting that new smartphones and gaming consoles will boost demand for memory chips in the second half of the year. Shares are up slightly on the news. Elsewhere, Qualcomm also gave a strong sales forecast for the current quarter yesterday and announced a new licensing deal with China’s Huawei which has seen shares trade up as much as +12% in extended trading.

Back to yesterday, where unlike the US, European equities traded without any clear direction. The Stoxx 600 (-0.06%) ended in the red having passed between gains and losses a total of 15 times during the session with autos and chemicals the worst performing industries. The latter was partly due to BASF, the world’s biggest chemical company falling -4.24% after reporting a loss and painting a slightly bleak picture for Q3. Meanwhile, peripheral bonds tightened slightly to bunds with spreads on Italian and Spanish bonds -2.6bps and -1.8bps tighter respectively.

In other news, Sanofi and GlaxoSmithKline penned a deal with the UK for as many as 60 million doses of their coronavirus vaccine, after having already agreed last week to buy 90 million doses of potential vaccines from the partnership of Pfizer and BioNTech. The US and other wealthier nations have taken similar steps in ensuring they are diversified among the top vaccine contenders as they seek to put the pandemic behind them.

On a related note, London Heathrow airport is aiming to have Covid-19 testing for arrivals by September if it can get government approval, with officials pushing that this would allow for more confidence amongst travelers and some respite for the battered airline industries. This comes even as the EU pulled back on plans to reopen the greater region to international travelers, citing the resurgence in global cases. Half a world away, Australia’s Queensland state announced they would be closing its borders to all visitors from Sydney from Saturday. Overnight, Australia’s Victoria state reported 723 new cases, a daily record, and Vietnam’s capital Hanoi further rolled back the reopening by halting public gatherings of more than 30 people. China added a further 105 cases while, India, Japan and Hong Kong also remain on a concerning trajectory. The Nikkei has reported this morning that the Tokyo government will ask restaurants and karaoke establishments to shorten operating hours by closing no later than 10pm JST due to a surge of coronavirus cases adding that the restriction will be in place form August 3 to August 31.

Meanwhile in the US, cases grew by 76,339 in the past 24 hours, higher than the recent observed growth of c. 60,000 per day. Overnight, Texas (418,995) has pipped New York (413,593) to become the third most infectious state in the US in terms of total infections recorded. Further, Texas (280), California (204) and Florida (216) all posted high and in some cases record fatalities in the past 24 hours, even as cases appear to be rolling over in the three most populous US states. Elsewhere in the US, Maryland issued a travel advisory for residents against going to hard hit states in the South, while New Jersey has followed New York City’s lead and paused reopening by keeping indoor dining and gyms closed.

Sticking with the US, Congress appears to be further apart than expected on a new round of fiscal stimulus spending. Last night leading Democrats and Republicans met just before the market closed in New York, but White House Chief of Staff Mark Meadows said the sides are nowhere close to a deal and that the extra $600 unemployment benefit is expected to expire. The base case remains that the sides will reach a compromise somewhere between the Senate and House bills, but the timeline is getting pushed further out.

Wrapping up, we did get some positive, albeit largely expected, fiscal news out of Europe. The Spanish government has extended the deadline for corporates to apply for loan guarantee schemes from the end of September to 1 December. Similarly, Austria’s government has agreed to extend its furlough program for an additional 6 months in to protect jobs as the economic impact of the virus is still felt in many industries.

Finally, in terms of the day ahead, the focus for data will be the advanced Q2 GDP reading for the US which is expected to show an annualized contraction of -34.5% qoq. Other data includes weekly jobless claims while in Europe we’ve got preliminary July CPI and Q2 GDP in Germany. As highlighted earlier, expect earnings to be a big focus with Alphabet, Amazon, Facebook and Apple reporting along with Nestle, P&G, Shell, MasterCard, Total, ABInBev and Volkswagen.

Summary:

• China reports another 105 new cases
• Hong Kong suffers new COVID record
• Japan reports another 1,200+ cases
• Melbourne suffers new record
• Germany sees cases at 6 week high
• Dutch gov’t declines to advise face mask wearing
• Local lockdowns reported in parts of UK
• Poland suffers new daily record

* * *

We kicked off yesterday’s COVID-19 live blog with the latest alarming numbers out of Asia: Mainland China reported its biggest daily cluster since mid-April, and Hong Kong, which adopted its more restrictive social distancing measures yet last week, reported 100+ new cases for a fifth straight day.

The last 24 hours have seen both outbreaks intensify, in keeping with the general pattern exhibited by SARS-CoV-2 (that is, it spreads, and quickly). On the mainland, public health officials reported 105 new cases Thursday morning. 102 of these cases were domestically transmitted, while only 3 were imported. Of the domestic cases, 96 were recorded in Xinjiang, the far-flung western province occupied by China’s Muslim Uiyghers, a minority ethnic group that has been subjected to unimaginable brutality by the government in Beijing, which has herded more than a million of them into concentration-camp-like settings. All cases were allegedly recorded over the last 24 hours, according to official data reported by Xinhua.

Hong Kong, meanwhile, reported 145 locally-transmitted coronavirus cases, marking a new daily record. 61 of the 145 cases were of unknown origin. The city also reported four imported case. While Hong Kong tightened restrictions on late-night dining and bar-hopping, it is also allowing restaurants to serve dine-in breakfast starting Friday.

Japan also reported more than 1,200 new cases on Thursday one day after shattering its daily COVID-19 record. 

Japan Covid-19 daily cases +1264 today pic.twitter.com/VdX3bnbA3N

— Sunchartist (@sunchartist) July 30, 2020

Tokyo Governor Yuriko Koike wants bars and karaoke parlors to limit their hours to close at 2200 local time.

But perhaps the most alarming numbers (at least as far as the west is concerned) are being reported out of Australia, where the southern-hemisphere winter is in full swing.

As Bloomberg reported Thursday morning, the chilly weather and attendant surge in virus cases (just as epidemiologists had anticipated) could offer a preview of what’s in store for the US and Europe once Winter arrives. Then again, it could also explain the explosion of cases across the Sun Belt as more Americans sought shelter from the elements indoors.

At any rate, Australia’s second-most populous city Melbourne is experiencing a virus resurgence that – like the outbreak seen in the Sun Belt – has dwarfed the case tallies it reported back in March. The state of Victoria on Thursday reported yet another record high of 723 new infections, early 200 more than the previous record, which it had reported only a few days earlier.’

hadn’t realized the extent to which cases had really picked up in Australia. https://t.co/5uFNEoSFnb pic.twitter.com/lEduVe0rIj

— Joe Weisenthal (@TheStalwart) July 30, 2020

Moving on to the US, the biggest news over the last day was the US passing the 150,000 death threshold, propelled by a surge in deaths across the Sun Belt, as Florida, California and Texas have all reported record daily death totals in recent days. The US yesterday reported its largest daily tally for deaths since May 27, according to worldometer.

More vaccine news hit Thursday morning, but surprisingly, it wasn’t enough to ease the malaise gripping equity markets across the globe. According to BBG, J&J’s vaccine candidate has proven to be safe…on monkeys.

The reaction to the news suggests investors might finally be tiring of “pre-clinical” data. Though the notion that JNJ’s vaccine might be successful with just a single dose is probably notable, considering all the hubub over Moderna’s pricing plans.

Johnson & Johnson’s experimental coronavirus vaccine protected a group of macaques with a single shot in an early study, prompting the U.S. drugmaker to start trials in humans this month.

All of the animals that were exposed to the pandemic-causing pathogen six weeks after the injection were immune except one, who showed low levels of the virus, according to a study published in the medical journal Nature. The health-care behemoth kick-started human trials on July 22 in Belgium and in the U.S. earlier this week.

The data “show our SARS-CoV-2 vaccine candidate generated a strong antibody response and provided protection with a single dose,” Paul Stoffels, the drugmaker’s chief scientific officer, said in the statement. “The findings give us confidence as we progress our vaccine development and upscale manufacturing.”

J&J aims to embark on the last phase of tests in September, compressing the traditional timeline as it races against others such as GlaxoSmithKline and AstraZeneca for a shot to end the pandemic. Although others have been faster in development, with Astra having already administered its experimental vaccine to almost 10,000 people in the U.K. alone, eliciting protection with a single dose could prove to be an advantage in the logistical challenge of rolling out massive vaccination programs around the globe.

JNJ received a $456 million from the US government’s Biomedical Advanced Research and Development Authority via project warp speed and has already started talks with the US, the EU, and governments around the world about supplying its vaccine.

Finally, over in Europe, fears of a ‘second wave’ are intensifying as the UK has reported rising daily infection totals for a week now. What’s more, the infection numbers appear to be rising beyond the ‘hot spots’ in Catalonia and elsewhere. Germany and Poland are just two countries seeing a comeback.

Germany reported its highest daily number of new coronavirus cases in roughly six weeks on Thursday. While the country’s infection rate remained just above the key threshold of 1 (the point beyond which the virus is considered to be “spreading”), there were 839 new cases in the 24 hours through Thursday morning, bringing Germany’s total to 208,546, per data from JHU (these disheartening German numbers followed a record contraction in German GDP in Q2 which was reported on Thursday). Notably, the Dutch government, which memorably was the first in Europe to send students back to classrooms, has decided not to advise the wearing of masks in public spaces. Nearby Poland also reported a record daily jump in new cases (though it wasn’t alone)…

The #COVID19 #pandemic is worsening.

Within the last 24 hours ALL of these countries/territories have posted all-time record high daily number of new infections.#India#Brazil#Colombia#HongKong#Australia#Ukraine#Poland#Japan#Morocco #Lebanon #secondwave #coronavirus

— Tim White (@TWMCLtd) July 30, 2020

Poland reported 615 new cases, bringing its total to 45,031.

Record number of new Covid-19 cases in Poland announced: 615 (conf. by swab tests).

Prev biggest:
May12: 595
Jun06: 576
Jun07: 575
Jun08: 599
Jul25: 584

The 7-day rolling avg also high.

7-day avg daily deaths around 7

Daily cases per 1M ppl still better than USA / World avg pic.twitter.com/tMBAy4MLhn

— Vector Of Basis (@VectorOfBasis) July 30, 2020

While the number of daily cases have continued to steadily decline in the UK from the peak in April, some areas are recording more infections than others, leading to local lockdowns in Leicester and Oldham, which we reported earlier this week. Still, nationwide, the UK reports fewer than 1,000 cases per day.

 

Update (7/31 (6:31ET)): Tropical Cyclone 9 became Tropical Storm Isaias in the overnight hours on Wednesday. It has become the ninth named storm of a very active 2020 hurricane season. 

As of 5:00 ET, the latest announcement from the National Hurricane Center (NHC) said Isaias was on track to strike South Florida on Saturday. The storm was moving northwest at 21 mph. It was approximately 100 miles west-southwest of Puerto Rico and roughly 160 miles southeast of Dominican Republic with maximum sustained winds of about 60 mph – or about 14 mph shy of being classified as a Category 1 hurricane. 

A Tropical Storm Warning is in effect for:

• Puerto Rico, Vieques, Culebra
• U.S. Virgin Islands
• The British Virgin Islands
• Dominican Republic entire southern and northern coastlines
• North coast of Haiti from Le Mole St Nicholas eastward to the northern border with the Dominican Republic
• Turks and Caicos Islands
• Southeastern Bahamas including the Acklins, Crooked Island, Long Cay, the Inaguas, Mayaguana, and the Ragged Islands
• Central Bahamas, including Cat Island, the Exumas, Long Island, Rum Cay, and San Salvador 

A Tropical Storm Watch is in effect for:

• Northwestern Bahamas including Andros Island, New Providence, Eleuthera, Abacos Islands, Berry Islands, Grand Bahamas Island, and Bimini

As Isaias moves northwest on Thursday, “interests in Cuba and the Florida peninsula should monitor the progress of this system,” NHC said. 

After South Florida, spaghetti models show the storm could traverse up the East Coast early next week. 

*  *  *

A weather disturbance is churning through the Atlantic Ocean that could strengthen into a tropical storm Wednesday, threatening South Florida by the weekend. 

The National Hurricane Center’s (NHC) 5:00ET advisory on Potential Tropical Cyclone 9 shows the disturbance was located about 385 miles east-southeast of San Juan, Puerto Rico, with winds of 45 mph and was moving west-northwest at 23 mph. 

“Tropical storm conditions are likely across portions of the Leeward Islands, the Virgin Islands, and Puerto Rico today and spreading westward to portions of the Dominican Republic and Haiti on Thursday,” NHC said.

The disturbance is expected to strengthen today as tropical storm warnings have been posted for Puerto Rico, Vieques, Culebra, the U.S. and the British Virgin Islands, Antigua, Barbuda, Montserrat, St. Kitts, Nevis, Anguilla, Guadeloupe, Martinique, St. Martin, St. Barthelemy, Saba, St. Eustatius, St. Maarten, and parts of the Dominican Republic and north coast of Haiti, said NBC Miami. 

Here is the latest update on Potential Tropical Cyclone Nine! Watch @juliedurdawplg for more. pic.twitter.com/CiBjYBnREq

— Julie Durda (@JulieDurdaWPLG) July 29, 2020

NHC’s five-day weather model tracker shows the tropical storm could make landfall in South Florida by early Sunday morning. 

If the storm does track towards South Florida, this could be problematic for the state, already dealing with an explosion of COVID-19 cases and recently recorded a record number of virus-deaths.

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

Dyin’ ain’t much of a livin’, boy

– The Outlaw Josey Wales

The Davos Crowd is desperate.

That much has been clear to me for months.

From the moment they tied COVID-19 to the breaking of the oil markets back in March they have worked like no other time in history to convince us the world we knew was gone.

The latest iteration of this big lie is the all-out assault on the U.S. dollar. Now for months a few analysts like me have been steadfast in reminding everyone that no matter how much money the U.S. prints in the short run, it is only doing so because of the extreme levels of latent and active dollar demand in the world.

So, there is narrative and there is reality. And reality is that today there is huge demand for the U.S. dollar regardless of what the headlines tell you.

That said, that doesn’t mean that demand doesn’t ebb and flow. And now that we’re on the other side of the first wave of this crisis period, marginal dollar hoarding has slacked off.

This is most evident in the dramatic rise in the euro back above $1.17 and the British pound breaking back to challenge $1.30. But in the grand scheme of things these are just relief rallies within primary bear markets.

But in the past couple of weeks, coinciding nicely with a massive rally in the precious metals, there’s been a deluge of talk about the end of the dollar.

It’s easy to dismiss the perma-bears like Peter Schiff who has become a parody of himself at this point. But it’s not easy to dismiss it when all of a sudden Schiff is everywhere, taking the bait to be the guy who will tell everyone that the dollar is going to fail because, you know, money printing.

And, as an Austrian economist kinda guy, I agree with Peter, I just don’t agree that the dollar is going anywhere anytime soon.

It may gall him and other Austrians that the dollar can still be so thoroughly debased and still make up 62% of total foreign exchange reserves the world over or still dominate global trade (latest SWIFT Data).

But with China keeping its capital account closed and the European Central Bank holding rates below zero destroying any possibility of anyone diversifying their capital reserves into euros, where else can the big pool of capital go at this point?

And just don’t tell me gold.

Because while I love gold, own gold, advocate for gold, gold cannot and will not resume a central place in our monetary system until the day the dollar fails.

And no one who matters right now really wants the dollar to fail. And that includes the villain-of-the-day, China.

But it’s not just guys like Schiff or Alistair McLeod who are calling the tune right now. They were joined this week by none other than members of the the International Monetary Fund , the mouthpiece of the Council on Foreign Relations and Goldman Sachs…

… but I repeat myself.

Goldman’s call is certainly reasonable, based on the idea that real interest rates have plummeted sending gold higher as the argument against holding it fails.

But when you have this many big stories planted in the media at the same time just ahead of an FOMC meeting, something is up.

They have all now called into question the U.S.’s central role in the global economy. This is a concerted effort to push this narrative during a period of extreme dollar weakness. They have tied it to the extraordinary measures taken by the Fed and the U.S. Treasury dept. earlier this year and the likelihood of another massive stimulus bill and/or bailout package between now and the election.

And it’s not even that I disagree with them, because I don’t. I just don’t agree that 2020 is the Year the Dollar Failed, no matter how tempting that title is to write.

Because, as always, you have to ask yourself the questions, “Why this? Why Now?”

The answer to those questions, in my opinion, is simple. They are timing this with the fundamental change to the European Union via the EU’s bright new shiny budget and COVID-19 relief plans which were agreed upon by the EU Council last week.

It’s a simple enough narrative that also neatly coincides with everything else we’re being bombarded with daily. And it goes something like this.

The EU is Fixed, The U.S. is Fucked.

So given that gold and silver are the most manipulated markets on the planet doesn’t anyone think it’s strange that silver, of all assets, explodes more than $8 per ounce over a three-week period? Climaxing into the end of a delivery month on the COMEX?

Really? After nearly twenty years of watching the silver market I can tell you that when we see behavior this out of the ordinary it’s because the people who wag the tail of the market dog want it to happen not because they’ve lost the script.

But I digress.

Everywhere we look there is another instance of U.S. lawmakers fighting among themselves, like the fiasco hearing with Attorney General William Barr or the pathetic grandstanding over the size and scope of the next massive stimulus bill which will rob savers and future generations of even more wealth.

It’s Mayor Jenny Durkan in Seattle throwing out the Federal troops there while issuing orders to her police chief to not escalate the violence as the violence on the streets escalates.

It’s the relentless propaganda trying to create a ‘second wave’ of COVID-19 to scare us all into staying home, canceling elections, and screaming obscenities at people who won’t wear a useless mask.

Europeans will play soccer but the baseball games are cancelled because a few players tested positive for COVID-19.

Meanwhile in Europe, everything is fixed now that they’ve given the European Commission tax and spend powers they don’t legally have.

But Trump is shredding the Constitution by sending Federal troops to defend Federal property after 50+ days of rioting, looting and trying to set the Federal Courthouse on fire in Portland, Oregon.

Am I the only one who sees the game here?

A rising euro, a falling dollar, gold touching $2000, Merkel’s “Alexander Hamilton” moment, U.S. cities burning and the ones not on fire are under siege from his incompetence in handling the virus.

Economic depression mixed with incompetent leadership is supposed to lead you to lose faith in the currency of that government. That’s the big lie.

It’s like that scene in Minority Report where they find the guy who supposedly kidnapped Anderton’s son. There was a quote, “orgy of evidence.”

The sheer volume of it is supposed to make you believe a lie because how can you argue with such a vast array of evidence, right?

And in the curious case of the collapsing dollar I’m Tom Cruise. I’m not throwing the dollar out the window to its death. I’m calling bullshit and saying, “Nope I’m not buying what they are selling.”

I’ll buy that story in a couple of years but I won’t today.

Just like I’m not buying that I’ll die from the Corona-chan, that hydroxychloroquine and zinc won’t protect me from it or that the EU doesn’t have a whole lotta real work to do before anything in Europe can be reasonably described as ‘fixed.’

Look, not to be too blunt about it but the U.S. is approaching screwed in the long run. And that’s nothing but a shame because when I look around the world and I’m not seeing a whole lot of rule of law or even nods to constitutionally-protected individual rights.

When I talk with readers they uniformly weep for what’s happening in the U.S.

So, while we may be at a low ebb in this cycle, there’s still a way back from which doesn’t involve complete collapse. That choice has yet to be made.

But forces have been unleashed to make that choice for us, to destroy the United States and its most productive people, of that I have zero doubt. But not all forces are irresistible. Some objects are immovable and when your currency dominates 86% of all global trade that’s not something moving.

So, ignore the big lie of The Davos Crowd because when there’s this amount of pressure to manufacture a false reality it is more indicative of desperation than omnipotence.

And there’s a lot more distance along this road to travel.

*  *  *

Join My Patreon if you want help navigating the road to the end of the road. Download and install the Brave Browser if you don’t think Google should be directing where that road leads.

Which countries count the most foreigners among their prison populations?

According to data from the World Prison Brief, 100 percent of prisoners held in the tiny principality of Monaco are foreigners.

But, as Statista’s Niall McCarthy notes, the explanation for that seemingly staggering figure is that Monégasques are actually a minority population in their own country, accounting for just 21.6 percent of its 38,400 inhabitants in 2015.

You will find more infographics at Statista

The trend is generally similar in smaller countries with large foreign populations and Andorrra and the UAE come second and third with an 88.5 and 87.8 percent foreign share of inmates respectively. By comparison, just 5.5 percent of the US prison population is foreign.

Authored by Steve Watson via Summit News,

UN officials have pointed to a study that reveals lockdowns and school closures are doing more harm to children than the coronavirus itself, with many more deaths expected to come from the reaction to the outbreak, rather than the pandemic itself.

In a presentation seeking extra funding for coronavirus efforts, UNICEF director Henrietta H Fore said Monday, “The repercussions of the pandemic are causing more harm to children than the disease itself.”

UNICEF nutrition program chief Victor Aguayo noted that the most harm is being done “by having schools closed, by having primary health care services disrupted, by having nutritional programs dysfunctional.”

The officials pointed to a study published in The Lancet that notes “physical distancing, school closures, trade restrictions, and country lockdowns” are worsening global child malnutrition.

The study estimates that an extra 6.7 million children will be at risk, and that lockdowns and other coronavirus responses could lead to more than 10,000 additional child deaths every month.

The UNICEF officials noted that would mean 128,000 more deaths among children within the next year.

Study: Global Lockdowns Killing 10,000 Children Per Monthhttps://t.co/GG9DWHZpeY

— Dan Bongino (@dbongino) July 28, 2020

The study complies research from the Washington-based International Food Policy Research Institute (IFPRI) and the Johns Hopkins Bloomberg School of Public Health.

It concludes that shut down strategies could lead to “life-long impacts on education, chronic disease risks, and overall human capital formation,” in addition to “intergenerational consequences for child growth and development.”

The estimates are said to “likely to be conservative, given that the duration of this crisis is unknown, and its full impacts on food, health, and social protection systems are yet to be realized.”

The study dovetails with other research that has concluded lockdowns will conservatively “destroy at least seven times more years of human life” than they save.

The German government has concluded that the impact of the country’s lockdown could end up killing more people than the coronavirus due to victims of other serious illnesses not receiving treatment.

As we have previously highlighted, in the UK there have already been up to 10,000 excess deaths as a result of seriously ill people avoiding hospitals due to COVID-19 or not having their hospital treatments cancelled.

A data analyst consortium in South Africa also found that the economic consequences of the country’s lockdown will lead to 29 times more people dying than the coronavirus itself.

Hundreds of doctors are also on record as opposing lockdown measures, warning that they will cause more death than the coronavirus itself.

While globalists have urged that lockdowns need to continue, medical and economic experts across the board in multiple countries are warning that the loss of life will be much greater than that caused directly by the virus itself, if lockdowns are not scrapped.

The latter half of Trump’s first term has witnessed the unraveling of late Cold War-era deals and treaties meant to prevent the US and Russia from ever stumbling toward nuclear standoff and war, including the collapse of both the Intermediate-Range Nuclear Forces Treaty (INF) and Open Skies after US withdrawal from both, and even New START has remained hanging in the balance. 

The most significant nuclear arms reduction treaty, New START, will expire in February 2021 if the two sides don’t agree to renew it. So far ongoing talks between Moscow and Washington have failed to extend it by up to five years, despite pressure to strike an extension by America’s allies. 

Currently less than a year remains for a breakthrough. The last talks in late June reportedly led nowhere. “The Wall Street Journal on June 23 quoted an unnamed U.S. official who said that the topics for the working groups would be nuclear warheads, especially Russia’s unconstrained stockpile of nonstrategic nuclear weapons, and doctrine; verification; and space systems. But a June 24 report in Kommersant cited Russian officials saying Moscow did not necessarily agree to discuss nuclear warheads,” wrote the Arms Control Association.

However, the US and Russia have returned to the negotiating table in Vienna on this week. At least three days of negotiations are expected to run through the end of the week.

Washington’s position has remained that New START and others remain somewhat obsolete given they fail to account for new leaps in missile technology, but especially because China is not involved. Pompeo’s State Department has been pushing for a new treaty that accounts for China, something increasingly looking to be unrealizable given US-China relations this summer have fallen off a cliff. 

While it’s as yet unclear if current Vienna talks have resulted in any progress, there are other “new” issues to be dealt with apart from whether it can include China, namely space security, after both sides have lately charged the other with turning space into “a war-fighting domain”. 

Both Russia and China have signaled they would like to see an agreement that would prevent the militarization of space. At least one entire day in Vienna is to be focused on space. 

Washington has condemned the Kremlin’s anti-satellite weapons testing over the past years, while the Kremlin issued a statement this week that, “Russia has always been and remains a country that is committed to the aim of fully demilitarising outer space and non-deployment of any kinds of arms in outer space,” according to TASS.

ViaAlmasdarNews.com,

The Islamic Revolution Guards Corps (IRGC) fired ballistic missiles from underground platforms during the second day of the massive ‘Great Prophet-14’ military drills in the southwestern part of the country on Wednesday.

The successful firing of ballistic missiles fully hidden in camouflage deep under the ground is an “important achievement” that could “pose serious challenges” to enemy intelligence agencies, the Fars News Agency reported.

In the final stage of the IRGC’s drills, which took place in the waters of the Persian Gulf and the Strait of Hormuz, the IRGC Aerospace Force’s drones attacked a mock enemy aircraft carrier and targeted its command tower and bridge.

Also, the IRGC’s Sukhoi-22 fighters bombed and destroyed pre-determined targets in Faror Islands with winged bombs.

Wednesday’s hugely provocative test launch of an underground ballistic missile:

The IRGC Aerospace and Naval Forces’ joint exercises played an important part of the drills and demonstrated surprising tactics, including the establishment of joint command systems, joint control, combined tactics and combat methods.

Successful missile combat operations were carried out by firing two surface-to-surface Hurmoz and Fateh missiles, and a ballistic missile at specific targets, as well as launching precision-striking air defense missiles.

Iran Touts Vast Underground “Missile Cities” Along Coast As “Nightmare For Enemies” https://t.co/0gpFJS56uL

— zerohedge (@zerohedge) July 6, 2020

Also, Shahed 181, Mohajer and Bavar drones successfully attacked and destroyed hypothetical enemy targets and positions at this stage of the drills.

Iran’s state media has over the past few years touted that it has vast ‘underground missile cities’ prepared in the event of an Israeli or US attack:

Video shows missiles being prepared in an unknown Iranian underground missile city before their launch against U.S. military bases in #Iraq.#DecisiveResponse #Iran #SoleimaniAssassination pic.twitter.com/8p4iGujggZ

— Press TV (@PressTV) January 8, 2020

Meanwhile, Iran’s air and naval military drills in the strait have put US forces in the region on high alert. A US Navy statement on Tuesday slammed the drills as “irresponsible and reckless”. 

Much of the basis for concern pushed by climate change alarmists has hinged on estimates of the global population (and its corresponding carbon footprint) expanding to between 9.4 billion and 12.7 billion by the year 2100. These estimates were based on the 2019 United Nations World Population Prospects report.

Now, a new study published in The Lancet on July 14, 2020 flips those population estimates – and the corresponding climate change alarmism – on its head. According to the study, highlighted in a WSJ op-ed called “Snooze The Climate Alarms”, the global population is now being estimated to be as low as 6.29 billion by 2100; about 33% lower than current U.N. projections.

The new study suggests that the global population will peak at 9.7 billion in 2064 and will then fall to as low as 6.29 billion, if the U.N.’s Sustainable Development Goals for education and contraceptive are met in full. If those goals are not met, the study suggests the population could still drop to 8.8 billion by 2100. 

Even under the 8.8 billion population scenario, the difference is profound. China would fall to third in world population rankings behind India and Nigeria. Places like Japan, South Korea, Italy, Portugal and Spain could all see their populations decline 50% from their highs. America would be estimated to have a population of 336 million, only slightly more than today.

The economic growth that is expected to take place globally would be a positive in keeping the population under control, the report says, as it would drive future improvements in health care and education for women around the world – including information about contraception and urbanization – and would result in declining fertility rates. 

The impact on climate emissions, from the same economic growth and population declines, would also be profound. More important, the study shows a link between economic progress and combating climate change that most parts of the “green” movement ignore.

The WSJ op-ed then talks about the importance of policy makers in realizing these links. “Conventional strategies for combating climate change are too narrowly conceived,” author Walter Mead writes. “A focused global effort to ensure that the education and contraceptive SDG targets are fully met could have a significantly greater long-term impact on emissions than more-expensive and unpopular policy choices like carbon taxes or the mandated use of expensive renewables.”

Reproduction is put into focus as one of several human behaviors that changes with greater wealth and better education. Those with access to both also are more inclined to preserve their natural surroundings, Mead says. Poor countries may be more likely to cash in on the natural resources they have available to them, but rich countries invest in repairing such damage, he argues.

Mead also argues in favor of factory farming, which often draws the ire of the “green” movement:

The transition from traditional agriculture to more-intensive “factory farms” offends green sensibilities but can achieve green goals. Factory farms produce more food on less land and are often more carbon-efficient than the small-scale organic farms beloved by hipsters. The U.S. today produces far more food than in the 19th century, but as marginal land is taken out of production, the forests return. In America, forests have been expanding for more than 50 years, and even though population has more than tripled, there is more forested land in the country today than there was in 1910. In Europe, forested land expanded by an area the size of Portugal between 1990 and 2015.

He concludes: “If economic development spreads the blessings of greater freedom and greater education to more of the world, popular demands for cleaner air, cleaner water and the protection of nature will only grow.”

Via GEFIRA,

If we were to paint the current situation with a broad brush, we would receive the following simplified picture.

• The European Union is split into two camps: the old and new member states.

• The West is split across the Atlantic: it is – roughly – Washington against Paris and Berlin.

• The world is split into three rivalling superpowers: the United States (strong military and strong economy), Russia (strong military, weak economy) and China (weak military, strong economy).

Western Europe gravitates more to Russia than Eastern Europe does; Eastern Europe in turn gravitates more to the United States than Western Europe does.

The state of affairs on the Old Continent is as follows.

[1] Germany wants a stable energy supply in the form of natural gas and from among a number of providers it has decided on Russia because

[2] Russia has large natural gas deposits and being in need of hard currency is willing to sell its energy resources to any bidder.

[3] Germany and Russia countries entered a commercial agreement which resulted in the construction and completion of one pipeline laid on the bottom of the Baltic: NordStream 1.

[4] Since the capacity of one pipeline was not sufficient to satisfy the needs of Germany and other West European states, another agreement was concluded to build a second pipe along the bottom of the Baltic – NordStream 2 – which is now near completion.

[5] Both pipelines sidetrack eastern European countries – Ukraine, Poland, Czechia and Slovakia – which makes them alarmed because soon Russia will be able to cut off its gas supplies to and through those countries – the Yamal (Poland, Belarus) and Brotherhood (Czechia, Slovakia, Ukraine) pipelines – while continuing the provision of gas to Western Europe, thus breaking the economic solidarity of the European Union.

[6] The United States helped Western Europe out of trouble during (a) the First World War (against Germany), (b) The Second World War (against Germany) and – (c) the Cold War (against the Soviet Union) and so feels entitled to continue in this role.

[7] The United States perceives itself as the equivalent of the ancient Roman Empire in guarding the Pax Americana (its national and imperial interests) throughout the world but especially Europe; like the Roman Empire it has its military bases (legions) deployed to many parts of the world, including Europe and in particular Germany. Washington feels threatened by Russian economic inroads in Europe.

[8] Western Europe has long striven to emancipate itself from American guardianship, while Eastern Europe (in particular Poland as of now) has been looking to the United States for protection against Russia, the successor to the Soviet Union, because some Eastern European countries have had bitter historical experiences connected with Russia and the Soviet Union: (a) Poland (where anti-Russian sentiment is the strongest) was under Russian rule throughout the 19th century and under Soviet dominance for almost half a century after the Second World War; (b) two Hungarian national uprisings were suppressed respectively by Russia in 1849 and the Soviet Union in 1956; (c) Romania lost to the Soviet Union the whole north-eastern province of Moldova (whose inhabitants are Romanians) in 1940. The United States can therefore rely on Eastern European countries and use them as bridgeheads against Western Europe (Germany in particular) and its dealings with Russia.

[9] The European Union is split over the issue of the two pipelines connecting Russia and Germany. This split resulted in passing Directive 2009/73/EC, which is aimed against Russian commercial dominance as it requires the so called ownership unbundling, which means that (a) energy generation, (b) energy supply and (c) energy transmission must belong to different legal persons. This measure is said to have been designed to (a) guard against Europe’s dependence on one external supplier of energy, (b) counteract monopoly and (c) provide European customers with a choice. The requirement of split ownership of energy generation, supply and transmission is going to make life difficult for Russia or – to be precise – Russian Gazprom.

[10] In turn the United States in a glaringly patronising way passed the Protecting Europe’s Energy Security Act, which envisages punitive sanctions against any entity taking part in the construction of NordStream 2. The act is supposed to protect Western Europe – obviously against its will – against Russian dominance and ensure for the United States customers for its natural gas.

Source: BiznesAlert.pl.

The question arises why the United States wants to defend Western Europe and especially Germany against its will? Is it possible that German leaders do not see that the two pipelines pose a threat to the independence of their country?

The answer is many-faceted.

• It may be that the German leaders prefer Russian rather than American dependence.

• It may be that they have no choice: the North Sea sources are for one reason or another not an option, nor is the gas from the Middle East.

• It may also be that the German elites are much more interested in their own income than in the condition of their country, still less their nation to which they feel little commitment. Former Chancellor Gerhard Schröder, for one, was very much involved with the NordStream project.

• The German investors may view both NordStream pipelines as sources of private and corporate stable income. To this end they may be playing a double game: on the one hand encouraging Russians to continue with the construction of the pipe, while on the other shedding crocodile tears over Europe’s growing dependence on the eastern gas provider and thus allowing for the European Union to pass the said directive that will also enable them – if they create energy transmission companies that will take over some of the income from Gazprom – to draw larger benefits from the NordStream project.

Some Eastern European countries, while remaining ardent member-states of the Union, are doing their best to disrupt the German-Russian deal, which overlaps with Washington’s plans. This does not mean that we are facing any new exits from the European Union: far from it. The eastern member-states are firmly committed to their participation in it. Rather, the Union is going to be somewhat weakened because it is divided against itself, so to say. The eastern EU member-states are perhaps oversensitive when it comes to their dependence on Russia. Their leaders tend to think that it is Russia which wants to have control over them. They seem to be overlooking the fact that the NordStream deal has two parts to it: Russia and Germany. If Berlin cared about the sovereignty of the eastern member-states, it would not have entered into the agreement with Moscow. Yes, bypassing Poland, Ukraine, Czechia and Slovakia Russia can exert economic pressure on these countries by curtailing gas supplies to them without at the same time having to endanger its relations with Germany, the Netherlands or Great Britain. Yet, the two NordStream pipelines are as much an advantage to the Western members of the Union because they do without transit money that would otherwise have to be paid to Belarus, Poland, Ukraine, Slovakia and Czechia, thus making the gas cheaper and because – if the ownership unbundling principle is effected – the West may also have a larger share in the gas supply.

New member states seem to be left to their own devices by their older partners. Washington is their only hope, but Washington is merely acting in defence of its own interests, eying suspiciously Berlin and Moscow. Germany has built the present equivalent of the old project of Mitteleuropa – Middle Europe Project – which meant creating a ring of economically dependent states in Central Europe. At present Berlin to a larger degree than Moscow controls the destiny of its eastern and southern, close and farther neighbours. Germany’s agents of influence operating in Eastern Europe will make every endeavour to eventually bring to power in Warsaw, Prague, Bratislava, Budapest, Bucharest and Kiev people who will take into account German interests. American agents of influence with do the same. If Berlin prevails, then Germany will strengthen its grip on the European Union; if America prevails, then the EU is going to be weakened.