President Trump on Wednesday asserted executive privilege over subpoenaed materials related to the House Oversight Committee’s investigation of the Census citizenship question.
The move, announced in a letter from the Justice Department, comes right before the Committee is set to vote on whether to hold Attorney General William Barr and Commerce Secretary Wilbur Ross in contempt of Congress for refusing to turn over the materials.
The committee is investigating whether the decision by the Trump administration to add a citizenship question to the 2020 census was politically motivated.
Assistant Attorney General Stephen Boyd notified Committee Chairman Elijah Cummings (D-MD) that “the Attorney General is now compelled to request that the President invoke executive privilege with respect to the materials subject to the subpoena,” and as such “the President has asserted executive privilege over certain subpoenaed documents identified by the Committee in its June 3, 2019 letters to the Attorney General and the Secretary.”
Boyd added that the DOJ has “repeatedly informed the Committee that a limited subset of the documents is protected from disclosure,” citing attorney-client privilege among the reasons.
Cummings has delayed the contempt vote until later Wednesday so that members of the committee could read the DOJ’s letter, according to Axios, though he slammed what he called was “blanket defiance” from the Trump administration.
“The DOJ’s letter says that they were prepared to produce additional documents responsive to the subpoena. But they make clear, very clear, that they will not produce the key documents that we have identified as priorities. This does not appear to be an effort to engage in good faith negotiations or accommodations. Instead, it appears to be another example of the administration’s blanket defiance of Congress’s constitutionally mandated responsibilities.” -Elijah Cummings
It is unclear what will happen after the committee’s Wednesday vote. According to CNN“House Democrats could go to the floor with both criminal and civil contempt. They could also drop criminal before going to the floor if some accommodation happens.”
via ZeroHedge News http://bit.ly/2RciNIH Tyler Durden
Three cases of cross-border Ebola transmission have been reported in Uganda since the outbreak began in eastern Congo last year, according to the Financial Times. One of the victims, a five-year-old boy, has died of the disease while two of his relatives also tested positive.
“The young patient – 5- year-old index case of #Ebola died last night. Two more samples were sent to UVRI and have tested positive. We, therefore, have three confirmed cases of #Ebola in #Uganda“- @JaneRuth_Acenghttps://t.co/oypAqpNZEW
On Wednesday, health experts in both countries were scrambling to understand how the boy’s relatives crossed the border on June 9th, and who they may have infected along the way. The boy was taken to a Ugandan hospital after vomiting blood and exhibiting other symptoms, while two relatives of the boy also tested positive for Ebola. Uganda has been heavily screening visitors from Congo for signs of fever, and has vaccinated more than 4,700 health workers against the disease according to a joint statement by WHO and Ugandan officials.
Uganda’s health ministry said the boy’s mother, who is Congolese but married to a Ugandan and living in the Kasese district of Uganda, had travelled back to Congo to nurse her sick father, who subsequently died of Ebola. On returning to Uganda, the boy had started coughing up blood and vomiting and was taken to Kagando hospital where health workers immediately suspected Ebola.
A sample of his blood tested positive for Ebola and on Wednesday two of the boy’s relatives were also confirmed to have contracted the disease. –Financial Times
Over 2,000 cases of the disease have been recorded in the Congo over the last 10 months, with over 1,400 deaths since August. It’s still the second most deadly Ebola outbreak behind the 2013-2016 West Africa epidemic which killed 11,310 people. While it took seven months for the outbreak to reach 1,000 cases – it took just three more months for that figure to double.
Via the Financial Times
Efforts to contain the spread have been hampered due to the extreme turbulence in the region. In April, doctors and nurses working in the heart of the Ebola outbreak threatened to go on strike amid threats of violence and actual assaults. Many locals also think Ebola is a Western scam brought to the country by foreigners to make money off the local population.
Health workers march in Butembo in April against violence
The World Health Organisation said an expert committee had been alerted about the possibility of a meeting at which it would have the option to declare the Ebola outbreak a global health emergency.
Mark Eccleston-Turner, a global health lawyer at Keele University, said it was essential that the WHO declared an emergency. “A declaration acts as a clarion call to the international community that this is an outbreak that requires further attention — political attention, including resources and finances,” he said.
While Mr Eccleston-Turner called the spread to Uganda “incredibly disappointing”, he added: “The expertise that Uganda has and the fact that this has been discovered quite quickly gives hope that this can be snuffed out.” –Financial Times
As the Times notes, experts had previously warned that if Ebola jumped borders into a neighboring country, it would mark a serious escalation of a crisis that has proven incredibly difficult to manage.
According to microbiologist Peter Piot who helped discover Ebola in 1976, eastern Congo is an “extraordinarily difficult environment to control an epidemic because of armed conflict and community mistrust.”
Meanwhile – guess which country the United States welcomed most of its refugees from in 2018?
via ZeroHedge News http://bit.ly/2Zi2UTO Tyler Durden
People often refer to the “perfect storm.” A perfect storm is generally understood as two or more events that are independent but converge to produce an outcome much worse than either event alone.
The term is an overused cliché, and as a writer I avoid clichés whenever possible. But though rare, perfect storms do exist. The most common example is the devastating 1991 storm popularized by the book and movie of the same name, although it was initially known as the “Halloween storm.”
In that case, three separate weather dynamics all converged in one place on one day to produce a perfect storm. The odds of all three coming together at once were less than one in 100,000. That’s less than once in 270 years. That’s a perfect storm.
Do metaphorical perfect storms happen in politics and capital markets?
The answer is yes, provided the conditions of the perfect storm definition are satisfied. The multiple events that make up the true perfect storm must be independent and rare and come to converge in an almost impossible way.
Unfortunately, a political and market perfect storm is now on the way and may strike as early as Halloween 2019, marking a new “Halloween storm.” Get ready.
Today I’ll be discussing the components making up this perfect storm, and how I see them all coming together at the same time.
In my 40-plus years in banking and capital markets, I have lived through a number of financial fiascos that arguably qualify as perfect storms. Here’s a partial list:
1970: Penn Central bankruptcy, the largest in history at that time
1973–74: Arab oil embargo
1977–80: U.S. hyperinflation
1982–85: Latin American debt crisis
1987: One-day 22% stock market crash
1988–92: Savings and loan (S&L) crisis
1994: Mexican tequila crisis
1997: Asian financial crisis
1998: Russia/Long Term Capital Management (LTCM) crisis
2000:Dot-com crash
2007: Mortgage market collapse
2008: Lehman Bros./AIG financial panic.
I was not just a bystander at these events. From 1977–85, I worked at Citibank and dealt with inflation, currencies and Latin America from a front-row seat.
From 1985–93 I worked for a major government bond dealer that financed S&Ls and traded their mortgages.
From 1994–99, I was at LTCM and dealt in all the major international markets. I negotiated the LTCM rescue by Wall Street in September 1998.
In 1999–2000 I ran a tech startup, and in 2007–08 I was an investment banker and financial threat adviser to the CIA.
That’s a lot of action for one career, but it also makes the point that financial perfect storms happen more frequently than standard models expect.
Here’s what I learned: Every one of these episodes was preceded by mass complacency or euphoria.
Before the Arab oil embargo, we expected cheap oil forever. Before the Latin American debt crisis, countries like Brazil and Argentina were “the land of the future.”
No one worried about a stock market crash in 1987 because we had “portfolio insurance.” The S&Ls could not get in trouble because they had FSLIC (Federal Savings and Loan Insurance Corp.) insurance.
Mexico could not get in trouble because it had oil. Asia could not get in trouble because it had cheap labor, high growth and “fixed” exchange rates.
Russia would not go broke because it was a “nuclear power.” LTCM would not go broke because it had two Nobel Prize winners. Dot-coms would not go broke because they attracted “eyeballs.”
Mortgages were solid because we had never seen a simultaneous nationwide decline in home values. Lehman Bros. was “too big to fail.” AIG was the Rock of Gibraltar.
In short, the fiascoes I witnessed were “not supposed to happen.” They all did. The worst panics are always preceded by a sense that nothing can go wrong.
We are there again. Stocks are approaching all-time highs again. The bond bust hasn’t happened. Mortgage interest rates are near the lows of the early 1960s. Exchange rate volatility is low.
Unemployment is at 50-year lows. Real wages are rising (at least a little). There are more job openings than job seekers. ISIS is defeated. Brexit is on indefinite hold.
It’s all good. What, me worry?
I saw a recent poll asking investors when they thought a market crash might happen. Something like 80% of the respondents answered not anytime soon.
I cannot imagine a better setup for catastrophe. No one ever sees disaster coming. That’s the point.
I believe a perfect storm is coming. It’s hard to foresee the full magnitude of it, but it will likely be dramatic. It will have a major impact on markets. How it impacts you depends on how far in advance you see it coming.
What are the three elements of the perfect political and market storm I see coming together this fall?
The first is an effort by the Democratic House of Representatives to impeach President Trump.
The second is the socialist-progressive tilt in the 2020 presidential election field.
The third is the fallout from the Mueller report and the Russia collusion hoax — what I and others called “Spygate.”
These components are independent of each other but are at high risk of convergence in the coming months.
Let’s look more closely at the individual elements of impeachment, electoral chaos and Spygate that comprise this new storm with no name.
The first storm is impeachment. Impeachment of a president by the House of Representatives is just the first step in removing a president from office. The second step is a trial in the Senate requiring a two-thirds majority (67 votes) to remove the president. Two presidents have been impeached, but neither was removed. Nixon resigned before he could be impeached.
If the House impeaches Trump, the outcome will be the same. The Senate is firmly under Republican control (53 votes) and there’s no way Democrats can get 20 Republicans to defect to get the needed 67 votes needed. So House impeachment proceedings are just for show.
But it can be a very damaging show and create huge uncertainty for markets. There are powerful progressive forces in Congress and among top Democratic donors who are fanatical about impeaching Trump and will not be satisfied with anything less. One poll shows that 75% of Democratic voters favor impeachment (including almost 100% of the activist progressive base).
Speaker of the House Nancy Pelosi and House Majority Leader Steny Hoyer have both poured cold water on impeachment talk. They feel it’s a distraction from Democratic efforts to enact their legislative agenda. But some of the party’s biggest private money donors, including Tom Steyer, are also demanding impeachment.
If Steyer does not get an impeachment process, he looks to support primary challenges to sitting Democrats who don’t join the impeachment effort. This could jeopardize Pelosi’s speakership in a new Congress. So Pelosi could come under heavy pressure to go along with impeachment.
The final outcome is irrelevant; what matters is the process itself. Impeachment fever is not likely to last long into 2020, because at that point the election will not be far away. Voters will turn their backs on impeachment and insist that disputes about Donald Trump be settled at the ballot box. That’s why you can expect impeachment fever to come to a head by the fall of 2019. And that will create a lot of uncertainty for markets.
The second storm is the 2020 election.
Trump is on track to win reelection in 2020. My models estimate his chance of victory is 63% today and it will get higher as Election Day approaches. The only occurrence that will derail Trump is a recession.
The odds of a recession before the 2020 election are below 40% in my view and will get smaller with time. Meanwhile, Trump will keep up the pressure on the Fed not to raise interest rates and will ensure that the U.S.-China trade war comes in for a soft landing.
This may sound like a rosy scenario for the economy. But it’s not so rosy for the Democrats. Every piece of good economic news will cause Democrats to dial up their political hit jobs on Trump. Each one will try to outdo the next.
There are now 24 declared candidates for the 2020 Democratic presidential nomination. That’s more than the Democrats have ever had before. Currently Joe Biden and Bernie Sanders are out in front. Biden is considered the most moderate of the candidates.
But I don’t expect Joe Biden to stay in front for long, and I don’t believe he’ll win the nomination. But the only way for a Democrat to stay in the race is to stake out the most extreme progressive positions. This applies to reparations for slavery, free health care, free child care, free tuition, higher taxes, more regulation and the Green New Deal.
If Biden does fall away, then the choices are back to Sanders, Elizabeth Warren or maybe Kamala Harris. But one is more radical than the next. So, you could have a shock effect where all of a sudden it looks like the Democratic nominee is going to be a real socialist. And that would rattle markets.
This toxic combination of infighting among candidates and bitter partisanship aimed at Trump will be another source of market uncertainty and volatility until Election Day in 2020 and perhaps beyond.
But the third storm is the most dangerous and unpredictable storm of all: Spygate. It involves accountability for those involved in an attempted coup d’état aimed at President Trump.
The Mueller report lays to rest any allegations of collusion, conspiracy or obstruction of justice involving Trump and the Russians. There is simply no evidence to support the collusion and conspiracy theories and insufficient evidence to support an obstruction theory. The case against Trump is closed.
Now Trump moves from defense to offense, and the real investigation begins.
Who authorized a counterintelligence investigation of the Trump campaign to begin with? Did surveillance of the Trump campaign by the U.S. intelligence community (CIA, NSA and FBI) begin before search warrants were obtained? On what basis? Was this surveillance legal or illegal?
These are just a few of the many questions that will be investigated and answered in the coming months.
These criminal referrals will be taken seriously by Attorney General William Barr along with other criminal referrals coming from Congress. Barr will take a hard look at possible criminal acts by John Brennan (CIA director), James Comey (FBI director) and James Clapper (director of national intelligence) among many others.
At the same time Lindsey Graham, Republican senator from South Carolina, will hold hearings in the Senate Judiciary Committee about the origins of spying on the Trump campaign and lies to the FISA court. These may be the most important hearings of their kind since Watergate.
Trump will be running for reelection against this backdrop of revelations of wrongdoing by his political opponents in the last election. Actual indictments and arrests of former FBI or CIA officials will cause immense political turmoil. Such charges may be fully justified (and needed to restore credibility). They will certainly energize the Trump base.
But they are just as likely to infuriate the Democratic base. Cries of “revenge” and “witch hunt” will be coming from the Democrats this time instead of Republicans. Markets will be caught in the crossfire.
How do these three storms — impeachment, the 2020 election and Spygate — converge to create the perfect storm?
By November 2019, the impeachment process should be well underway in the form of targeted House hearings. The 2020 Democratic debates (starting in June 2019) will be red-hot. Trump’s counterattacks on the FBI and CIA should be reaching a fever pitch based on real revelations and actual indictments.
The impeachment process and Trump’s revenge represent diametrically opposing views of what happened in 2016. The Democrats will continue to call Trump “unfit for office.” Trump will continue to complain that the Obama administration and the deep state conspired to derail and delegitimize him.
The 2020 candidates will have to take a stand (even though they may prefer to discuss policy issues). There will be nowhere to hide. The bitterness, rancor and leaking will be out of control.
Any one of these storms would create enough uncertainty for investors to sell stocks, raise cash and move to the sidelines. The combination of all three will make them run for the hills. That’s my warning to investors.
The next six months will present unprecedented challenges for investors. Markets will have to wrestle with fights over impeachment, election attacks and Spygate. Trump will be trying to improve his odds with Fed appointments and an end to the trade wars. Democrats will be trying to derail Trump with investigations, accusations and leaks.
Some of this will be normal political crossfire, but some of it will be deadly serious, including arrests of former senior government officials and revelations of an attempted coup aimed at the president.
A perfect storm with no name is coming. The only safe harbors will be gold, cash and Treasury notes. And make sure you have a life preserver handy.
via ZeroHedge News http://bit.ly/2WwPwcN Tyler Durden
“U.S. crude stocks have been rising almost uninterrupted since mid-March,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB.
API
Crude +4.85mm (-1.0mm exp)
Cushing +2.4mm (+1.97mm exp)
Gasoline +830k (+700k exp)
Distillates -3.5mm (+1.1mm exp)
DOE
Crude +2.21mm (-1.0mm exp)
Cushing +2.096mm (+1.97mm exp)
Gasoline +764k (+700k exp)
Distillates -1.0mm (+1.1mm exp)
After last week’s biggest US aggregate energy inventory build in history, hope was for some draws this week but once again that hope was dashed as EIA reported builds in Crude and Gasoline stocks (and at Cushing).
U.S. crude stockpiles rose to the highest since July 2017 as oil production hovered near record highs.
US Crude production reached a new record high the prior week, but the turn down in rig counts suggests that peak production is imminent.
WTI traded around $52 the figure ahead of the EIA data (having bounced from intraday lows in the European session) but pushed back towards the lows after the crude build…
Finally, Bloomberg Intelligence’s Senior Energy Analyst Vince Piazza sums up the current energy complex situation: Potentially slowing global demand and trade disputes underpins our reserved oil-price view. Deepening output curbs is the right strategy for OPEC and its partners, yet Russia’s commitment is in question. U.S. output growth is resilient but would diminish if WTI spent a prolonged period below $50.
via ZeroHedge News http://bit.ly/2wNxk4h Tyler Durden
President Trump’s trade war has produced a logistical nightmare for American importers at Southern California ports.
Marisa Bedrosian Kosters, an executive at an Anaheim, Calif.-based ceramic tile and stone retailer, like any other retailer when they heard trade war last year, pulled demand forward by ordering additional product to get ahead of the tariffs and other duties, reported The Gazette.
But when her new tiles, packed into 40-foot containers, from central Guangdong Province, China, reached the Port of Long Beach, she said her containers encountered a logistical difficulty.
The trade war forced American importers to pull forward all at once; this created a massive influx of containers at the Port of Long Beach. Massive bottlenecks at the port formed in 2H19, which Kosters was slapped with thousands of dollars in extra costs charged by the terminals.
The Gazette said her 389,000-square-foot tile distribution center is “overflowing” with tiles because she had to order more product to get ahead the tariffs. Now she is faced with record high inventory.
“There’s no space inside,” she said. “We don’t have anywhere to put the materials.”
Kosters said her troubled situation was all sparked by the trade war: “We’re having to bring in more because there’s so much uncertainty about what country is being hit next.”
Tariffs are having the most significant impact on Los Angeles and Long Beach ports, the nation’s busiest container ports, which both handle about 47.5% of US containerized trade with China. But it’s not just the ports that are feeling the pressure from the trade war, trucking, railroads, warehousing, construction, manufacturing, and farming, have also been impacted. About one million jobs related to international trade in a five-county region are also in question as the trade war continues to deepen.
Trade chaos has “really gummed up the operations of the supply chain,” said Eugene Seroka, executive director of the Port of Los Angeles. “We’ve got a lot of cargo coming in that just sits.”
“Containers are stacked high. Truck lines are long. And warehouses are bursting at the seams.”
There is so much inventory piling up at Southern California’s warehousing and distribution complex, the largest in the world, that it has less than a 1% vacancy, down from the average of 5-7%, he added.
The trade war has left corporate America uncertain about the future by pulling back investments, Seroka said.
“A lot of money is sitting on the sidelines,” he said. “Do you buy more trucks? Do you hire more people? Do you build another warehouse? Do you invest in digital technology?”
“Few companies want to invest at this point in time in the supply chain, not knowing where it is going in the future.”
Over the same period, exports to China collapsed by 27.4%.
Now Trump has threatened to slap tariffs on another $300 billion of Chinese exports if China’s leader Xi Jinping doesn’t meet him at the 2019 G20 Osaka summit in Japan. If the meeting doesn’t occur, this could mean a full-blown trade war would be in effect, would spark a global trade recession and lead to severe disruption at California’s ports.
“There is a lot of concern about jobs,” said Mario Cordero, executive director of the Port of Long Beach. “We have 10,000 dockworkers. If they’re not called to do work, they don’t earn money.”
“The less cargo we have, the less demand for logistics workers, for warehouse workers. Whether you’re a trucker or a clerk or you work in manufacturing, the tariffs affect the whole supply chain.”
A full-blown trade war would be absolutely devastating for the California economy.
“It won’t have a catastrophic effect on the Southern California economy,” O’Connell said. “But if you are a company struggling to do business with China, it could be devastating.”
Logistics experts told The Gazette that tariff related pressures would spread to other West Coast ports.
“The supply chain needs a lot of work,” said Weston LaBar, CEO of the Harbor Trucking Association, which represents several hundred local trucking companies. “Now we’re seeing many of the same issues we saw during the complete gridlock in late 2014 and early 2015.”
LaBar said tariffs are a threat to the complex manufacturing supply chain that the ports support.
“So, for instance, China imports scrap metal from the US and recycles it into slab steel. A steel company in Los Angeles imports it back from China and turns it into rolled steel for the aerospace industry,” he said.
“Now that LA company, because of the China tariffs, has had to source steel from Brazil. But there’s a cap on how much slab steel they can import from Brazil. And there are hundreds of manufacturers all over the country looking at layoffs because of these tariffs.”
As the trade war intensifies, the most economically unprotected workers will suffer, predicted O’Connell, the Beacon Economics trade expert.
“Truck drivers are paid by the load, and fewer loads impact their income,” he said. “And warehouse workers from Los Angeles and the Inland Empire up to the San Joaquin Valley are mostly temps.”
“They are sent to work by temp agencies on demand, and they are sent home when the number of boxes declines.”
Despite talk of reworking many supply chains from China to Vietnam, Malaysia, Bangladesh or West Africa, he said, “How fast can you build a new manufacturing facility and move all your component suppliers into a cluster in a new country? We are already starting to hit a wall in Vietnam where the transportation sector — with inadequate roads and ports — is overwhelmed.”
Trump has said his trade war will bring manufacturing back to the US. But many business executives don’t believe the president.
As the US economy cycles down into the summer with the threat of a full-blown trade war, the business cycle has become vulnerable to shocks, and shocks are what can trigger a recession.
via ZeroHedge News http://bit.ly/2wRrte1 Tyler Durden
It’s difficult not to see signs of this same trajectory in the U.S. since the fall of the Soviet Empire in 1990.
A recent comment by my friend and colleague Davefairtex on the Roman Empire’s self-destructive civil wars that precipitated the Western Empire’s decline and fall made me rethink what I’ve learned about the Roman Empire in the past few years of reading.
Dave’s comment (my paraphrase) described the amazement of neighboring nations that Rome would squander its strength on needless, inconclusive, self-inflicted civil conflicts over which political faction would gain control of the Imperial central state.
It was a sea change in Roman history. Before the age of endless political in-fighting, it was incomprehensible that Roman armies would be mustered to fight other Roman armies over Imperial politics. The waste of Roman strength, purpose, unity and resources was monumental. Not even Rome could sustain the enormous drain of civil wars and maintain widespread prosperity and enough military power to suppress military incursions by neighbors.
I now see a very obvious trajectory that I think applies to all empires that have been too successful, that is, empires which have defeated all rivals or have reached such dominance they have no real competitors.
Once there are no truly dangerous rivals to threaten the Imperial hegemony and prosperity, the ambitions of insiders turn from glory gained on the battlefield by defeating fearsome rivals to gaining an equivalently undisputed power over the imperial political system.
The empire’s very success in eliminating threats and rivals dissolves the primary source of political unity: with no credible external threat, insiders are free to devote their energies and resources to destroying political rivals.
It’s difficult not to see signs of this same trajectory in the U.S. since the fall of the Soviet Empire in 1990.
With the primary source of national unity gone, politics became more divisive. After 9/11, new wars of choice were pursued, but the claims of a mortal threat to the nation never really caught on. As a result, the unity that followed 9/11 quickly dissipated.
I have long held that America’s Deep State–the permanent, un-elected government and its many proxies and public-private partnerships–is riven by warring elites. There is no purpose in making the conflict public, so the battles are waged in private, behind closed doors.
Competing nations must be just as amazed as Rome’s neighbors at America’s seemingly unquenchable drive to self-destruct via the in-fighting of entrenched elites and the battle for supremacy between various parasitic elites who hold the power and privilege to squander the nation’s resources on needless self-destructive wars of choice and on domestic in-fighting.
I suspect this trajectory of great success leading to self-destructive waste of resources is scale-invariant, meaning it works the same on individuals, families, communities, enterprises, cities, states, nations and empires.
It reminds me of former Intel CEO Andy Grove’s famous summary of this dynamic:“Success breeds complacency. Complacency breeds failure. Only the paranoid survive.”
An empire weakened by self-inflicted internal conflicts may appear mighty, but it becomes increasingly vulnerable to an external shock. The Eastern Roman Empire (Byzantine Empire) may well have collapsed from the devastating effects of the extreme weather circa 535 AD and the great plague of Justinian in 541 AD had it been weakened by internal in-fighting. But despite the staggering losses caused by these external catastrophes, the Byzantine Empire survived.
Rome, on the other hand, burned while self-absorbed factions jockeyed for power.
President Trump on Wednesday will make an announcement concerning US troop commitments in Poland while the European country debates a new military base dubbed by President Andrzej Duda as “Fort Trump,” according to Bloomberg.
“It will be a significant announcement on the future of the security partnership,” said a senior Trump administration official in Tuesday comments, who described the move as a “new facet of our military-to-military relationship” according to the Wall Street Journal.
One U.S. official said the U.S. military plans to call for deployment of about another 1,000 troops—on a rotational rather than on a permanent basis. They wouldn’t be combat troops, but rather, “enabling forces” with jobs like manning drones and undertaking logistics, the official said. –Wall Street Journal
Duda and Trump will meet on Wednesday at the White House according to administration officials, who added on condition of anonymity that the announcement would involve a greater US commitment to NATO.
They declined to say whether the announcement will involve the permanent stationing of U.S. troops in Poland. They also declined to say whether Trump will visit Poland later this year as part of the new commitment. Andrzej Dera, a minister at Duda’s chancellery in Warsaw, confirmed that a deal would be signed. –Bloomberg
“President Duda intents to sign an agreement that substantially boosts the U.S. military presence in Poland,” Dera told Polsat News on Wednesday, adding “It will be a boost to infrastructure and troops, but it won’t be a classic base like the U.S. has Ramstein in Germany.”
Polish leaders had originally requested that America establish a permanent station with a full Army brigade, however the Wednesday announcement will undoubtedly be used by Warsaw as a sign of political success.
Polish media earlier reported the deal bolsters some 4,000 troops the U.S. now rotates in and out of Poland by over 1,000 soldiers and envisages the European Union’s largest eastern member will cover the cost of upgrades of military infrastructure and related utility bills.
“Security is priceless and we can afford it,” Dera said.
Trump and Duda plan to take questions about the announcement at a joint news conference at the White House, planned for 2:10 p.m. local time. Duda’s visit comes 20 years after Poland joined NATO. –Bloomberg
Last year, President Trump slammed NATO members – demanding that they increase their defense spending targets to at least the 2% of GDP they previously committed to.
What good is NATO if Germany is paying Russia billions of dollars for gas and energy? Why are there only 5 out of 29 countries that have met their commitment? The U.S. is paying for Europe’s protection, then loses billions on Trade. Must pay 2% of GDP IMMEDIATELY, not by 2025.
During his push, Trump held Poland up as a shining example of a country which has met its 2% goal, and has complimented the conservative Duda who has repeatedly locked horns with EU leaders over various issues – most relating to mass migration and rule of law issues.
According to Bloomberg, Trump and Duda will also discuss “trade, energy security and communications security, including U.S. efforts to block Huawei Technologies Co.’s access to 5G networks in Europe.”
Officials report that the US is also prepared to sell F-35 jets to Poland following their formal request.
Separately on Wednesday, the US and Poland announced an agreement to expand the country’s civil nuclear program, and that Warsaw had signed two LNG deals with US suppliers in October.
via ZeroHedge News http://bit.ly/31l7Toy Tyler Durden
Sun Tzu, the legendary Chinese general of the 6th century BC Zhou Dynasty, famously wrote in the Art of War:
“When you engage in actual fighting, if victory is long in coming, then men’s weapons will grow dull and their ardor will be damped. If you lay siege to a town, you will exhaust your strength.”
Modern day governments understand this principle very well. And that’s lesson #1 I want to discuss today.
If you’ve turned on a television, seen a newspaper, or casually browsed the Internet today, you probably saw some startling news about more protests erupting in Hong Kong.
I told you about this earlier in the week when I was on the ground there– over a million people took to the streets to demonstrate against a Draconian new law that the Hong Kong government is proposing which aims to make it easier to extradite political dissidents to mainland China.
People in Hong Kong are militant about their freedom, and they’re refusing to bend the knee over this proposed law.
Yet the government is still pressing ahead despite overwhelming opposition. So much for representative democracy.
Other governments around the world have spoken out about it, including even the United States, which issued a statement expressing “grave concern” about the law.
(I’m sure Julian Assange and Edward Snowden are still in disbelief that Uncle Sam has a problem with the extradition of political dissidents…)
But… China understands its Sun Tzu very well. This is a siege. Foreign governments, media, and people in Hong Kong are all attacking against this proposed legislation.
However, the attackers will eventually exhaust their strength.
All of these foreign governments will go back to minding their own problems. The people in the streets will go home. The media will grow tired of reporting on the story and turn their attention to Donald Trump’s latest Twitter rant.
China just needs to be patient and wait for its enemies to exhaust their strength. And then, one day when everyone has been worn down by life’s distractions, they’ll pass the law.
Time is on their side. Protests and demonstrations only delay the inevitable.
There’s a second lesson that’s come out of these Hong Kong protests that I want to discuss today, and it’s about the police.
People are in the streets of Hong Kong to voice their disgust over this bill… and the police are right there with them, firing tear gas into the crowds.
We like to think that the cops’ sole purpose is to catch criminals and put them in jail.
But these images out of Hong Kong are a stark reminder that, even more important than catching criminals, their ultimate fealty is to the political class and ruling elite… to protect the government from the people, instead of the other way around.
While we have grown used to panic-bids suddenly appearing as US cash markets open, this morning’s flash-smash higher across the most liquid major indices suggests all is not well (options gamma?)…
Nasdaq exploded higher before dumping…
As did The Dow..
While the rest of the market did nothing.
via ZeroHedge News http://bit.ly/2KdhDvW Tyler Durden
Former fund manager and FX trader Richard Breslow is worried. “Yesterday struck me as a potentially big deal for markets. And traders’ radars should be turned up high,” he warned in his note this morning.
His fear is that a whole host of assets are threatening to reverse their recent courses and are working in tandem to paint a new false picture. It doesn’t feel that way, at least not so far today, but keep an open mind. One cannot look at the price action without wondering which direction has been the move and which a correction.
Via Bloomberg,
The news isn’t getting any prettier. And it is impossible not to react to it. But it is hard to trade when the conflicting emotions of severe discomfort and hope seemingly reside so comfortably together. It isn’t even like we are getting risk-on and risk-off moves as the narratives shift. It’s more like, which side of investors’ brains manage to assert dominance on any given day.
The market seems to think that it will be business as usual prior to the G-20. And then we’ll see where we go from there. You can see that by looking at any number of implied volatility curves. That should be the base case for the world’s central bankers before they say anything that ends up sounding as if it was precipitous.
Citing global headwinds is a good place holder. But the real problem, and this applies all around, is that we have no way of knowing what will end up having been a bargaining chip and what a line in the sand. At the risk of making way too big a leap, which is the answer to that question kept coming to mind watching the utter mayhem in the streets of Hong Kong this morning over the extradition bill. And whether the primary actors will ultimately be able to control exactly which of their actions will end up in the intended category.
Treasury yields had been ticking up. The 10-year seemed to have convincingly rejected levels below 2.05% and, at yesterday’s high above 2.17%, looked like they wanted to try and keep going to test their breakdown level from the end of May.
That idea failed miserably and way too easily. Now traders are back to talking about what would come about should we make a new low for the cycle. And buying call options on the futures to see. The same is true for the two-year. In any case, did a market ever have more clearly defined support and resistance?
Equities, too, were doing a great imitation of looking like resistance would just be a minor irritant. And it was. Until it wasn’t. Right across the board. They certainly haven’t collapsed by any definition, but definitely have had the wind taken out of their sails. Suddenly, we are forced back to wondering whether the laggard Russell 2000 is the index that needs to be watched.
Or just keep it simple and see what the S&P 500 does with its pivot circa 2,900. It’s that close a touch. But keep in mind, they can fail here, go down a bunch and it will still qualify as a technical correction to the move since Christmas. But it won’t be fun.
The dollar seems like the odd man out. It’s offered and has no shortage of detractors. But it has been holding support every time it probes lower and its demise is prematurely declared. You would have had to be an awfully motivated seller to be selling when DXY was near its intraday lows and sitting on support. Use the moving averages for a guide. On either side of the market. They’ve been good. Fibonacci is your friend.
While Monday’s shooting star was at risk of being invalidated with yesterday’s gap up and new highs there were a number of other indicators that suggested this price advance was not sustainable.
$SPX subsequently reversed red and made new lows compared to Monday.
This produced a candle known as a bearish engulfing candle. A classic definition:
“The bearish engulfing pattern consists of two candlesticks: the first is white and the second black. The size of the white candlestick is relatively unimportant, but it should not be a doji, which would be relatively easy to engulf. The second should be a long black candlestick. The bigger it is, the more bearish the reversal. The black body must totally engulf the body of the first white candlestick”
This is kind of your classic bearish engulfing candle pattern:
And this is what we ended up getting yesterday:
What’s frankly odd here is to see two distinct bearish candles back to back, a shooting star and then a bearish engulfing candle. I don’t recall ever seeing this specific combination. Maybe some other technicians can chime in here.
The technicals are trying to tell us something, BUT these types of candlesticks are not yet a confirmation!
Further weakness is required for bearish confirmation of this reversal pattern, i.e. a down day today, and, if it confirms, then, technically speaking, we can expect a lot more downside in the price action in the days ahead. But keep in mind, this market is very headline driven as we saw again last night. We’ll know more today.
via ZeroHedge News http://bit.ly/2WybX11 Tyler Durden
