Tag: news

Authored by Lance Roberts via RealInvestmentAdvice.com,

Stocks Hug The Bullish Trend

As discussed previously in “The Cobra Effect,” we noted the market remained confined to its consolidation channel.

“Unfortunately, the market failed to hold its breakout, which keeps it within the defined trading range. The market did hold its rising bullish uptrend support trend line, which keeps the “bullish bias” to the market intact for now. “

That remained the case again this week and keeps our allocation models primarily on hold at the moment. 

While the market has not been able to push above the recent July highs., support is holding at the rising bullish trend line. With the short-term “buy signals” back in play, the bias at the moment is to the upside. However, as we have discussed over the last couple of weeks, July held to its historical trends of strength. With a bulk of the S&P 500 earnings season behind us, we suspect the weakening economic data will begin to weigh sentiment in August and September. 

Such is why we are keeping our hedges in place for now. 

The Gold / Dollar Battle

Speaking of hedges, we began to accumulate a long-dollar position in portfolios this past week. There are several reasons for this:

1. When the financial media discusses the dollar’s demise, such is usually a good contrarian signal. 

2. The dollar has recently had a negative correlation to stocks, bonds, gold, commodities, etc.

3. The surging exuberance in gold also acts as a reliable contrarian indicator of the dollar.  

4. The dollar is currently 3-standard deviations below the 200-dma, which historically is a strong buy signal for a counter-trend rally. 

Given our portfolios are long weighted in equities, bonds, and gold currently, we need to start hedging that risk with a non-correlated asset. We also trimmed some of our holdings in conjunction with adding a dollar hedge. 

Our friends at Sentiment Trader also picked up on the same idea and published the following charts supporting our thesis. As shown, hedge fund exposure to the dollar has reached more bearish extremes. 

As noted previously, the dollar has a non-corollary relationship to gold. Whenever there is extreme negative positioning in the dollar, forward returns are negative across every time frame. 

The vital thing to note here is that opportunity generally exists as points of extremes. When stocks, gold, and bonds are stretched beyond normal bounds (200-dma), reversions tend to occur. The only question is timing. 

However, with that said, the disconnect between the economy and the market remains a conundrum.

The GDP Crash

On Friday, we got the first official estimate of GDP for the second quarter. It many ways it was just as bad as we had feared. As shown in the chart below, the print of a nearly 38%, inflation-adjusted decline was stunning. 

However, the “return to economic normality” faces immense challenges. High rates of unemployment, suppressed wages, and elevated debt levels, make a “V-shaped” recovery unlikely. Nonetheless, the current estimates for Q3 forward suggest record-setting rates of GDP growth. 

Such is where the “math” becomes problematic. A 38% drawdown in Q2, requires about a 67% recovery to return to even. In the more optimistic recovery scenario detailed above, three-quarters of record recovery rates still leave the economy running in a deep recession.

Even if the economy achieves high recovery rates, it won’t change the recession. The resulting 2.7% economic deficit will remain one of the deepest in history. While we would welcome such a recovery, it is not enough to support more substantial employment, wage growth, or corporate earnings.

A Whole New (Lower) Trend

Here is the issue missed by the majority of mainstream economists.

Before the “Financial Crisis,” the economy had a linear growth trend of real GDP of 3.2%. Following the 2008 recession, the growth rate dropped to the exponential growth trend of roughly 2.2%. Instead of reducing the debt problems, unproductive debt, and leverage increased.

The “COVID-19” crisis led to a debt surge to new highs. Such will result in a retardation of economic growth to 1.5% or less. As discussed previously, while the stock market may rise due to massive Fed liquidity, only the top-10% of the population owning 88% of the market will benefit. Going forward, the economic bifurcation will deepen to the point where 5% of the population owns virtually all of it.

“That is not economic prosperity. It is a distortion of economics.”

All Hat, No Cattle

Importantly, these are all extremely optimistic assumptions based on massive interventions by the Federal Government. While the economic plunge was terrible, had it not been for the massive infusions of Government stimulus, it would have been far worse. 

The chart below shows the annual percentage change in Federal expenditures and the rate of GDP growth less Fed expenditures. Essentially, there was ZERO economic growth, ex-federal expenditures. 

However, that is also why the stock market has done so well. 

The problem is the Government’s ability to continue spending at increasing rates to support economic growth and the markets. 

As they say in Texas, the current rally has been “all hat and no cattle.” 

Such is the most significant risk for the bulls.

Insanely Stupid

This past week, we discussed with our RIAPro Subscribers (Try Risk-Free for 30-days) the dangers of chasing markets, which have deviated extremely from their long-term means. The risk, of course, is that markets always, without exception, revert to the mean. The only question is the “timing” of the event. 

Such was a point recently discussed by Sarah Ponczek and Michael Regan at Advisor Perspectives:

“People buying bubble assets will make money until they don’t. If they don’t have a view of what it will take for me to say, ‘OK, enough already, I’m going to get out,’ then they are doomed to ride the roller coaster over the top and down. So without a sell discipline, buying bubble assets is insanely stupid.” – Rob Arnott, Research Affiliates

As we have discussed in this missive previously, you can’t have a stock market that remains detached from fundamentals indefinitely. 

Reversions Happen Fast

Importantly, throughout history, it is not fundamentals that catch up with the market, but the opposite. The only question is, what causes that reversion?

Unfortunately, we don’t, and won’t, know what the catalyst will eventually be. It won’t be COVID, bad economic data, or even weak earnings. All those issues have been factored into the market and “rationalized” by investors using earnings 3-years into the future. 

While that is also insanely stupid, investors will get away with it until some exogenous, unexpected event catches the market off-guard. When it happens, like it did in March, it will take investors by surprise and the damage will be just as consequential. 

There are a tremendous number of things that can go wrong in the months ahead. Such is particularly the case of surging stocks against a depressionary economy. While investors cling to the “hope” that the Fed has everything under control, there is more than a small chance they don’t.

Regardless, there is one truth about stocks and the economy.

“Stocks are NOT the economy. But the economy is a reflection of the very thing that supports higher asset prices – corporate profits.”

Such is why we continue to manage risk, adjust exposures, and hedge accordingly. 

Is it “insanely stupid” to chase stocks here? Probably. But as Keynes once quipped, “the markets can remain irrational longer than you can remain solvent.”

We understand the risk we are taking in this market, and we have a risk management discipline we follow. Or rather, as Rob Arnott suggests, a rigorous “sell discipline.” 

Will it absolve us of any downside risk in portfolios?

Absolutely not.

But it will definitely reduce the risk to our capital more than not having one at all.

Managing Into The Unknown

As discussed above, we are heading into seasonally two of the weakest market months of the year. Such comes at a time when Congress is battling over the next relief bill, the Federal Reserve is slowing weekly bond buying, and the economic recovery is faltering. There is also the risk of a Presidential election that goes completely awry. 

With the market currently extended, overbought, and overly bullish, we suggest the following actions to manage portfolios over the next couple of months. 

• Re-evaluate overall portfolio exposures. We will look to initially reduce overall equity allocations.

• Use rallies to raise cash as needed. (Cash is a risk-free portfolio hedge)

• Review all positions (Sell losers/trim winners)

• Look for opportunities in other markets (The dollar is extremely oversold.)

• Add hedges to portfolios.

• Trade opportunistically (There are always rotations which can be taken advantage of)

• Drastically tighten up stop losses. (We had previously given stop losses a bit of leeway due to deeply oversold conditions in March. Such is no longer the case.)

The Risk Of Ignoring Risk

There remains an ongoing bullish bias that continues to support the market near-term. Bull markets built on “momentum” are very hard to kill. Warning signs can last longer than logic would predict. The risk comes when investors begin to “discount” the warnings and assume they are wrong.

It is usually just about then the inevitable correction occurs. Such is the inherent risk of ignoring risk.

In reality, there is little to lose by paying attention to “risk.”

If the warning signs do prove incorrect, it is a simple process to remove hedges and reallocate back to equity risk accordingly.  

However, if these warning signs do come to fruition, then a more conservative stance in portfolios will protect capital in the short-term. A reduction in volatility allows for a logical approach to making further adjustments as the correction becomes more apparent. (The goal is not to get forced into a “panic selling” situation.)

It also allows you the opportunity to follow the “Golden Investment Rule:” 

 “Buy low and sell high.” 

So, now you know why we are looking for a “sellable rally.”

As crime on the streets of American cities surges as Democratic mayors shift funds way from police departments and officers fear a dangerous confrontation with the public every time they try to enforce the law, a brutal prison riot broke out Saturday night inside the Ware State Prison near Waycross, Georgia.

Two guards were stabbed, forcing officers to deploy “non-lethal ammunition” while firing on inmates.

The situation erupted around 2240ET, and was under control with the facility on lockdown by 0100ET Sunday morning. The Department of Corrections of the state gave a statement to the AJC.

“Two staff members received minor, non life-threatening injuries,” the Georgia Department of Corrections said in a statement Sunday morning. “A golf cart was set on fire and several windows were broken, but no major damage to the facility has been reported. Officers deployed non-lethal ammunition, and the incident was brought under control.”

Three inmates received non life-threatening injuries during the incident,” according to the statement.

Two weeks ago, a Ware State inmate was killed during a fight with another inmate, authorities said.

Multiple inmates at the prison have recently told the AJC that tensions inside the prison have been running high due to the outbreaks of COVID-19 – particularly the outbreaks at California’s San Quentin and prisons in Louisiana and across the country. At least 2 inmates at the prison have succumbed to the disease, while 22 inmates and 32 employees have tested positive.

Late Saturday night, multiple Facebook Live videos went out from men purporting to be inmates at the prison. One video shows inmates covered in blood.

Prison riot In South Georgia HAPPING NOW! pic.twitter.com/F2TCOkPf0V

— KEEM 🍿 (@KEEMSTAR) August 2, 2020

Other grainy videos show inmates walking freely.

Ware Prison Riot Waycross Georgia

Violent riot reported at South Georgia prisonhttps://t.co/4GEAf7PkVyhttps://t.co/iWRqG5zUiV @YouTube

— fabriq (@LISTEN_NEW_YORK) August 2, 2020

Prison riots have erupted around the world, from South America to Italy to China, as wardens crack down on discipline amid the outbreak.

We suspect this won’t be the last we read about in the US.

 

The infamous cryptocurrency dash-and-smash was on full display overnight, when shortly after midnight ET, bitcoin hit a one year high of $12,112 – rising 20% in just the past week when it hit $10,000 on July 27…

… before it was hit by a furious wave of selling that sent the price as low as $10,550. The catalyst: more than $1 billion worth of futures were sold in seconds, sparking the now familiar weekend liquidation waterfall, which also dragged other notable cryptos such as Ethereum and Litcoin lower, after both had seen outsized gains in recent days.

According to CoinTelegraph, there were two main reasons behind the sudden cascade of liquidations.

• First, the volume in the cryptocurrency market tends to drop during weekends.
• Second, the market was heavily swayed to longs or buyers.

Mass liquidations become more likely during the weekend because one large liquidation could trigger a cascade of liquidations. As Bloomberg wrote this morning, the notable crypto moves both last weekend and this one recall a similar phenomenon in 2019, “when outsized gains took place numerous times during Saturday and Sunday trading as the price rose from a few thousand dollars into five-digit range.”

And sure enough, as hundreds of millions of dollars worth of long contracts began to get liquidated, Bitcoin and Ether dropped rapidly. Bitcoin declined from $12,000 to $10,600 within 15 minutes, while ether declined from $417 to $300.

Needless to say, such a furious selloff is not in the best interest of the seller, who would be much better served with a measured selling strategy instead of taking out the entire bidstack in one transaction, a move which traditionally has been linked with price manipulation (a la “banging the close”) and repricing a security to a far lower level. If it unclear who or what may have been behind tonight’s furious liquidation.

Tonight’s mass liquidation was strikingly similar to comparable moves observed in the past five months, most notably, on the so-called “Black Thursday” on March 13, when $1 billion worth of liquidations occurred. Similarly, right before the halving on May 11, the price of Bitcoin dropped to $8,100 resulting in mass liquidations.

As CoinTelegraph adds, in the last week as Bitcoin soared 20%, the cryptocurrency market was heavily swayed to the side of the buyers and the funding rates of Bitcoin and Ether were nearing levels that are not sustainable over a prolonged period.

Meanwhile, futures exchanges, like BitMEX and Binance Futures, utilize a mechanism called “funding” to implement balance in the market. When the overwhelming majority of market participants are holding long contracts, then short holders are incentivized with a fee and vice versa.  Prior to the drop, the funding rate of Bitcoin was hovering at around 0.0721%. Since the average funding rate of BTC is at around 0.01%, the market was dominated by long contracts.

The market imbalance was even worse for Ether. The ETH funding rate was at 0.21%, which indicates significant bullish bias. After the liquidations, the predicted funding rate of ETH is at 0.19%, which means some more pain may be coming for longs.

Michael van de Poppe, a trader at the Amsterdam Stock Exchange, previously anticipated Ether to drop to $300 as a result. He said: “Let’s see $ETH at $300-320.”

For now, some traders anticipate sideways action for the days ahead as Bitcoin has rebounded to a key support level at $11,300 and a CME futures gap will likely emerge on Monday given Friday’s close price of $11,630.

“Clearing resistance at $10,000-$10,500, which coincided with the downtrend line from the late 2017 highs and first-quarter 2020 highs, established a higher high for Bitcoin confirming a new tactical uptrend,” said Rob Sluymer, technical strategist at Fundstrat Global Advisors LLC. “In the short-term Bitcoin’s daily momentum indicators are overbought (as they are for gold), but beyond some very near-term choppy trading, Bitcoin is likely to continue to trend to its next resistance level at $13,800.”

“The bullish scenario depends on the crucial threshold of $11,300-11,400 as the pivot to hold for the price of Bitcoin,” Van de Poppe explained in his latest BTC technical analysis.

In the medium-term, there is increasing optimism about the price trend for Bitcoin as many Korean traders appear to have jumped on the upward momentum bandwagon, similar to what happened in late 2017 when a frenzy of Asian buying bushed bitcoin to its all time high price just shy of $20,000.

When asked whether BTC will hit a new all-time high, Spartan Black’s Kelvin Koh said: “Without a doubt. BTC hit a new ATH in each of the last 3 cycles and this one will be no exception. The scarcity effect, the halving and more capital coming into crypto will ensure that.”

Across the Sun Belt, the number of coronavirus cases reported daily has continued to decline, but the outbreak is intensifying across Europe, and – most alarmingly – in Melbourne, which is becoming a new global symbol of SARS-CoV-2’s intransigence, as one of the most restrictive lockdowns in the world has failed to squelch the latest outbreak.

Although the alarmism peddled in some corners of the media probably isn’t warranted, Melbourne has seen its daily confirmed totals climb to new records day after day. With the public pressure mounting three weeks after the new lockdown began (with no progress having been made), state officials have tightened restrictions and declared a state of disaster on Sunday.

The decision comes as Victoria State Premier Daniel Andrews announced 671 new cases in the past 24 hours with seven deaths. More than 380 people were being treated in the hospital, with 38 in intensive care.

Andrews’ state of disaster will begin at 6pm Sunday, and allow police the added powers to enforce social distancing restrictions.

Metropolitan Melbourne will be under a curfew limiting movement between 8 pm and 5 am. These new restrictions will be in place for (at least) six weeks.

Australia has recorded about 17,000 infections and 200 deaths so far, with the majority of these in Victoria.

In North America, the number of new US cases rose by 58,908 (+1.3%), the smallest daily jump in at least five days, according to data maintained by Johns Hopkins & Bloomberg.

That’s less than the 1.6% average for the past 7 days. Deaths have increased by 946, coming in below 1,000 for the first time in five days.

Of course, some of this pullback could be due to the closings of testing centers in Florida in areas threatened by hurricane Isaias.

South of the border, Mexico’s soaring death toll has become the third largest in the world (though that’s not yet reflected in this chart).

Only the US and Brazil have recorded more deaths. Mexico has now suffered at least 46,688 deaths during the pandemic, with a total of 424,637 infections.

India has seen the number of new cases finally start to wane, yet the country’s COVID-19 caseload passed 1.75 million on Sunday after another spike of 54,735 in the past 24 hours. That’s down from 57,118 on Saturday. The Health Ministry on Sunday also reported 853 deaths for a total of 37,364.

Days after Texas Rep Louie Gohmert tested positive for the virus, Democratic Rep. Raul Grijalva announced late yesterday that he had become infected, and unsurprisingly, is already jumping to conclusions.

“While I cannot blame anyone directly for this, this week has shown that there are some Members of Congress who fail to take this crisis seriously…Numerous Republican members routinely strut around the Capitol without a mask to selfishly make a political statement at the expense of their colleagues, staff, and their families.”

Vietnam reported two more deaths from the coronavirus on Sunday, raising the country’s death toll to five, all in the last few days.

As Sunday begins in the US, will the number of new cases continue to fall? Thanks to a series of ‘teenage house parties’, Connecticut and New Jersey have reported “mini-boomlets” of the virus over the past week or so.

Russia’s health ministry has announced that it expects to begin mass anti-coronavirus vaccinations by October, with the first rounds to be administered to front line medical workers as well as teachers.

“We plan wider vaccinations for October,” Health Minister Mikhail Murashko said Saturday after he described that Moscow-based state research facility, the Gamaleya Institute, has completed clinical trials of an effective vaccine.

Since the crisis began impacting countries outside of China at the start of this year, the international race has been on to produce a vaccine, which most officials have estimated would likely take 18 months, but it appears Russia — currently the fourth most infected country in the world with 843,900 cases — is pushing to the be first out with a vaccine for its population.

Reuters reports local regulatory approval could be fast-tracked and be completed as early by sometime mid-August. 

“Now, the package of documents for the procedure of registration [of the vaccine] is being prepared,” Murashko said Saturday in his statement. But international reports have also noted the ambitious timeline is raising questions: 

“Yet the speed at which Russia is moving to roll it out has prompted some Western media to question whether Moscow is putting national prestige before science and safety,” Reuters comments.

Its earliest rounds of testing was done on soldiers, Russian officials have said.

In 14 days time…Russia will officially release the world’s first covid 19 vaccine…Putin means business… pic.twitter.com/LwMHru4QdS

— Ahmednasir Abdullahi SC (@ahmednasirlaw) July 31, 2020

The WSJ noted last week that “The vaccine, which has gone through two phases of testing, is expected to be registered with the Health Ministry by August 14,” according to  Kirill Dmitriev, head of Russia’s Direct Investment Fund, or RDIF.

“We have very strict procedures and they will follow all of them,” Dmitriev was cited in WSJ as saying. “I am so confident in the vaccine I injected it myself.”

Currently another vaccine developed in Russia, by Novosibirsk-based infectious diseases lab Vector, is also undergoing clinical trials, and is soon expected to be tested on volunteers.

The urgency stems in part from Russia being among the earliest hit countries with a large population. At one point it had the second highest infection rate in the world, which strained hospitals and the health system to breaking point.

Traders on the main gold futures exchange in New York just issued the largest daily physical delivery notice on record.

In the latest sign of how the market’s norms have been upended by the price disconnect that struck in March, Bloomberg reports that traders on Thursday declared their intent to deliver 3.27 million ounces (over 100 tonnes) of gold against the August Comex contract, the largest daily notice in bourse data going back to 1994…

Source: Bloomberg

While millions of ounces of gold trade on the futures market every day, typically only a tiny fraction of that goes to delivery. But in recent months, huge amounts of bullion have flowed into New York and the COMEX has seen record deliveries.

Source: Bloomberg

As Jan Nieuwenhuijs of Voima Gold explains, three elements cause physical delivery on the COMEX to have reached record highs this year:

1. strong demand for futures in New York,

2. a persisting spread between the price of futures in New York versus spot gold in London,

3. and arbitrage.

Physical delivery on the largest gold futures exchange in the world, the COMEX in New York, has reached all time highs this year. Usually, delivery is “negligible.” What has changed?

An important change in the global gold market occurred on March 23, 2020. On that day the price of gold futures in New York started drifting higher than the price for spot gold in London. Ever since, the spread has persisted, though it continuously widens and narrows. The reason for this disturbance in the market can be read in my previous article “What Caused the New York vs. London Gold Price Spread and Why it Persists.”

To understand the shift in deliveries, first let’s have a look at how the global gold market operated before March 23, when things still ran smoothly.

The Global Gold Market Before March 23, 2020

The world’s most dominant gold spot market is the London Bullion Market, where mostly “loco London” gold is traded. Meaning the metal is physically settled within the environs of the M25 London Orbital Motorway. The most dominant gold futures market is located in New York, where metal can be physically delivered within a 150-mile radius of the City of New York.

Before March 23, the price in London (spot) and the price in New York (near month futures contract) always traded in tight lockstep because of arbitrage. If, for example, the futures price would trade above spot, arbitragers would “buy spot and sell futures” until the spread was closed. Arbitragers would hold their positions—long spot, short futures—until maturity of the futures contract, because at expiry the price of the futures contract was guaranteed to converge with the spot price. In this example we can see that strong demand in New York would be translated into spot buying in London.

Worth noting is that when a futures trader rolled its position into the next month, and his initial futures buying was translated into spot buying in London by an arbitrager, on a systemic level the arbitrager would roll its position as well.

Of course, the opposite happened as well. When futures traded below spot, arbitragers would “buy futures and sell spot” until the spread was closed.

So far, a simplified version of the market before March 23.

The Global Gold Market After March 23, 2020

Since March 23 of this year, futures have persistently been trading above spot, though the spread isn’t constant. As a result, arbitragers aren’t assured the futures price in New York will converge with the spot price in London. An arbitrage trade as described above, through a position in both markets, incurs risk.

What arbitragers currently do to profit from the spread is buy spot, sell futures, fly the metal to New York, and physically deliver the gold. This is how the profit is locked in. If the spread between spot and futures is $40 per ounce, the arbitrager’s profit is $40 minus costs for transport, insurance, storage, etc.

Now you can see why the persistent spread between New York and London has increased physical delivery on the COMEX through arbitrage.

Conclusion

Physical delivery on the COMEX is elevated because of the current unusual situation in the global gold market. The gold delivered in New York has been imported from spot markets such as Singapore, Switzerland and Australia. U.S. imports directly from the U.K. are rare, because in London 400-ounce bars are traded and the main futures contract in New York requires smaller bars for delivery.

If anything, when gold futures trade higher than spot, the futures market pulls the price of gold upward.

— Jan Nieuwenhuijs (@JanGold_) April 22, 2020

You might wonder who takes delivery from arbitragers that make delivery on the COMEX. Possibly, these are arbitragers, too. In the chart below you can see the spread between the “near month futures contract” and the “next near month futures contract.” This spread has also blown out on March 23. Arbitragers can buy the near month, and sell the next near month for a higher price. Subsequently, they take delivery of the near dated contract and make delivery of the further dated contract.

At the time of writing the near month (August) is trading at $1,973, while the most active month (December) trades at $1,994 dollars.

Arbitragers can buy long August and sell short December to collect $21 dollars per ounce.

One reason I can think of why the spreads persist, is because bullion banks are currently less active on the COMEX. Previously, bullion banks—having access to cheap funding—often performed the arbitrage trades.

*  *  *

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Thousands of Germans took to the streets of Berlin on Saturday to protest the country’s coronavirus measures – including wearing facemasks – which the protesters refer to as a “muzzle.”

Meanwhile, hundreds of thousands protest peacefully in Berlin against #COVID19 restrictions in Germany. Protesters chant “We are the people. We are fed up. Stop with the lies. Today marks the end of the pandemic.” pic.twitter.com/K9gtTtqPd7

— Disclose.tv 🚨 (@disclosetv) August 1, 2020

#BREAKING: Huge protest now in #Berlin, #Germany. They demonstrante against #Corona and against the government and they refuse to wear masks. Also no distance rules!#protests2020 #COVID #Covid_19 #COVIDIOTS #COVIDIOT #CoronaVirusDE #lockdown #ZweiteWelle #1agosto #1agustos pic.twitter.com/xbL1DaEYhn

— Faruk Firat (@FarukFirat1987) August 1, 2020

“Our demand is to go back to democracy. Away with these laws that have been imposed on us, away with the masks that make us slave,” said one woman, according to the BBC.

Restrictions in Germany include the wearing of face-coverings in shops and on public transport, social distancing rules and hygiene requirements apply throughout the country. Mandatory testing has been introduced for holidaymakers returning from high-risk areas. –BBC

The protesters are a mix of ‘far right’ and ‘ordinary people who simply object to the government’s approach to the pandemic,’ according to the BBC‘s Damian McGuinness, who added that hardly anyone was wearing a face-covering or social distancing during the demonstration.

Germany has had over 210,000 cases of COVID-19 and over 9,000 deaths linked to the disease since the beginning of the pandemic. Despite recording 900 new cases on Friday, Germany remains one of the least affected European countries.

Authored by John Helmer via Dances With Bears blog,

Austria officially confirmed this week that the British Government’s allegation that Novichok, a Russian chemical warfare agent, was used in England by GRU, the Russian military intelligence service, in March 2018, was a British invention.

Investigations in Vienna by four Austrian government ministries, the BVT intelligence agency, and by Austrian prosecutors have revealed that secret OPCW reports on the blood testing of Sergei and Yulia Skripal, copies of which were transferred to the Austrian government,  did not reveal a Russian-made nerve agent.

Two reports, published in Vienna this week by the OE media group and reporter Isabelle Daniel, reveal that the Financial Times publication of the cover-page of one of the OPCW reports exposed a barcode identifying the source of the leaked documents was the Austrian government. The Austrian Foreign Ministry and the Bundesamt für Verfassungsschutz und Terrorismusbekämpfung (BVT), the domestic intelligence agency equivalent to MI5 or FBI, have corroborated the authenticity of the documents.

The Austrian disclosures also reveal that in London the Financial Times editor, Roula Khalaf, four of the newspaper’s reporters,  and the management of the Japanese-owned company have fabricated a false and misleading version of the OPCW evidence and  have covered up British government lying on the Skripal blood testing and the Novichok evidence.

On Wednesday afternoon this week, OE24, a news portal of the OE media group in Vienna, broke the first story (lead image, right) that the barcode found on the OPCW document photograph published in London had been traced to several Austrian state ministries. The next day, OE political editor Isabelle Daniel reported the Austrian Foreign, Defence and Economics Ministries had received copies of the barcoded OPCW dossier, and that the Justice Ministry and prosecutors were investigating “potential moles”.

Daniel also quoted  a Foreign Ministry source as saying its copy of the documents had been securely stored in its disarmament department safe, and that there were “no tips” the leak had come from there. Daniel also quoted a BVT spokesman as confirming the authenticity of the OPCW file had been verified. “We have checked it recently. Officially it has not come to us.”

Left: Isabelle Daniel of OE, Vienna. Right, Roula Khalaf Razzouk, editor of the Financial Times since her recent appointment by the Nikkei group, the newspaper’s owner. Her full name and concealment of her Lebanese political and business interests can be followed here.  The names of the four Financial Times reporters who have participated in the misrepresentation and cover-up are Paul Murphy, investigations editor; Dan McCrum, a reporter; Helen Warrell, NATO correspondent; and Max Seddon of the Moscow bureau.  

The leak had been an “explosive secret betrayal” and a criminal investigation was under way,  OE24 reported. OE is a privately owned Austrian media group, based in Vienna. It publishes a newspaper, the news portal OE.at, radio and television.  

The Financial Times report first exposing the OPCW documents appeared on July 9.  Details of how the newspaper fabricated the interpretation the OPCW had corroborated Russian involvement in the Novichok attack can be read here. For the full Skripal story, read the book.

At an OPCW Executive Council meeting on April 14, 2018, five weeks after the Skripal attack, the British Government confirmed that a few days earlier “all States parties” had received copies of the OPCW dossier. This included Austria, as the Viennese sources now acknowledge.

Source: https://www.opcw.org/

“The OPCW responded promptly to our request to send their experts to the United Kingdom,” declared Peter Wilson, the British representative to the OPCW on April 14, 2018.

“They conducted a highly professional mission. The OPCW’s designated laboratories have also responded professionally and promptly. What the Director-General said was really important on this, and the Technical Secretariat’s presentation shows how professional that work was. The report the Technical Secretariat presented to us on 11 April was thorough and methodical. The Technical Secretariat responded quickly to our request to share that report with all States Parties. All have had the chance to see the quality of that work.”

Wilson went on to say:

“As you know, on 4 March Yulia and Sergei Skripal were poisoned in Salisbury, the United Kingdom, with a chemical weapon, which United Kingdom experts established to be a Novichok. OPCW has now clearly verified those findings.”

The Austrian copy of the OPCW file now confirms this was a misrepresentation of the chemical formula and other evidence the OPCW had gathered.

Wilson went on to conclude:

“the identification of the nerve agent used is an essential piece of technical evidence in our investigation, neither DSTL’s [Defence Science and Technology Laboratory at Porton Down] analysis, nor the OPCW’s report, identifies the country or laboratory of origin of the agent used in this attack. So let me also set out the wider picture, which leads the United Kingdom to assess that there is no plausible alternative explanation for what happened in Salisbury than Russian State responsibility. We believe that only the Russian Federation had the technical means, operational experience, and the motive to target the Skripals.”

The first qualifying sentence was the British truth; the conclusion was the British lie. The Austrian evidence now verifies there was no evidence of a Russian source in the blood and other test samples; no evidence of Novichok; and no evidence to corroborate the British allegations of a Russian chemical warfare attack.

In its report, the Financial Times displayed a partial photograph of the cover-page of one of the OPCW documents in its possession (lead image, left). A classification stamp appears to be showing through the title page, but no barcode is visible. The London newspaper appears to have cropped the published picture so as to hide the barcode. That concealment — proof of the Austrian source – allowed the newspaper reporters to claim the source of the document was unknown, probably Russian, as the headline implied: “Wirecard executive Jan Marsalek touted Russian nerve gas documents.”

A British military source was reported as claiming “the documents were ‘unlikely’ to have come from OPCW member states in western Europe or the US.”  Khalaf and her reporters added: “The OPCW, which is based in The Hague, said this week that it was investigating the matter, but declined further comment. The Kremlin did not immediately respond to a request for comment.” With the barcode in their possession but hidden, they knew they were publishing a combination of disinformation and lies.

The disclosure of the barcode to the Austrians appears to have followed after they had requested it from Khalaf. She checked with her superiors in the newspaper management before handing it over. They believed they were doing so in secret.

It is not known if Motohiro Matsumoto, the Nikkei executive responsible for the London publishing company,  was alerted and gave his authorization; he refuses to answer questions.  Matsumoto, one of the five directors of Financial Times Ltd., is the general manager of Nikkei’s global business division. He takes his running orders from Nikkei’s chairman and a long-time media executive, Tsuneo Kita. Matsumoto replaced Hirotomo Nomura at the head of the Financial Times on March 25, 2020.  When Nikkei bought the newspaper from Pearson Plc in 2015, Nikkei became its sole proprietor.

The Austrian press has yet to report how the barcode was obtained from the newspaper. Because the BVT and state prosecutors in Vienna are involved in their search for the “moles”, it is likely they contacted their counterparts at MI5 and the Home Office, and that the newspaper agreed to hand over its copy of the OPCW file to the latter. The collaboration of the journalists with the secret services to falsify evidence against Moscow in the Novichok story remains a sensitive secret.

Source: https://m.oe24.at/

Khalaf has refused repeated requests for comment. Max Seddon, the newspaper’s Moscow reporter, was also asked for additional information about the photograph of the cover-page. He will not answer.

If you’re holding your pension with the Bank of Ireland, you are now officially being charged to do so. 

In a move that we’re sure is going to have absolutely no consequences, the bank is starting to impose negative interest rates on cash held in pensions, according to The Irish Examiner. The bank is applying a rate of 0.65% on pension pots, which means customers will now pay the bank $65 on every $10,000 held. 

The bank commented: “European Central Bank interest rates have been negative since 2014. Since then banks have been subject to negative interest rates for holding funds overnight and market indications are that rates will remain low for some time.”

It continued: “As a result, we have applied negative rates on deposits for large institutional and corporate customers since 2016. We recently wrote to 14 investment and pension trustee firms to inform them about a rate change to their accounts, which is reflective of the negative interest rate environment.”

“The average amount held on deposit by investment and pension trustee firms is in excess of around €100m, therefore it is no longer sustainable for the Bank to continue with the current rate of interest. We provided 3 months’ advance notification of this rate change to our investment and pension trustee firm customers,” the bank concluded.

Ulster Bank is also considering similar rates in the future. The bank’s CEO, Jane Howard, said: “In terms of Ulster Bank, we did introduce negative rates earlier this year and we’ve introduced it for larger businesses with balances of over €1m.”

She continued: “As I sit here today we have no plans to charge negative interest rates for our personal customers but given the way everything happens, like Covid, so unexpectedly, it is not something I can rule out forever.”

By now, it feels like it is only a matter of time before the U.S. follows suit. And to think, none of this “prosperity” would be possible without the miracle of modern central banking.

Thanks, Christine.