Gold Data Science, Report 28 May, 2017

The price of gold went up $12 this week, and that of silver $0.50. That’s not bad for gold and silver owners, and not good for the vast majority who are all-in on the dollar (though they don’t think of it that way).

Since we began publishing this Supply and Demand Report four and a half years ago, there have been several constants. One, we have focused on the supply and demand fundamentals, and the mechanics of the market.

Two, we have tried to show that short-term price moves are usually random. For example, we have documented many spike ups followed by let-downs whenever the Fed Chairman went on TV. And we all know that the long-term price trend is up (the mirror of the falling dollar). However, neither random short-term bursts nor the long-term trend is actionable for trading. In between, there is the fundamental which tends to pull the market price either up or down, depending on market conditions.

Three, there is no gain when the gold price goes up. This is because gold is not going anywhere. If you bought 100oz of gold 20 years ago, then you still have 100oz of gold now (minus storage costs). Sure, it’s worth more dollars but those dollars are worth proportionally less (and if you sell, the tax man will take a big chunk).

This may seem like mere semantics, but it’s an important principle. It’s the dollar which is volatile. And its gyrations can only get worse.

Therefore, wealth should be measured in gold ounces or grams. We recommend you periodically take the dollar value of your assets, and divide it by the current price of gold. If the dollar value goes up, but the gold value is down, which are you going to believe? One is the numeraire extraordinaire that man has valued for thousands of years, and the other is the elastic dollar managed by a central bank whose stated policy is devaluation at two percent per annum (a target they cannot accurately hit).

You can make gains in gold if you bet successfully on the price moves in both directions. If you buy when the price is lower and sell when it’s higher, you will end up with more gold. The trick is to make sure you buy the gold again, otherwise you will have given up your gold and got only paper in exchange.

And you can make gains in silver, as silver goes up and down as measured in gold terms. Most people call this the gold-silver ratio.

Four, we have included charts generated from software developed by Keith. The data was the highest quality possible in that environment, and the best available.

The first three will remain the same, but number four is changing. We are now launching a software platform that is the culmination of Keith’s development of the arbitrage theory of markets since 2010, his model of the gold market, and four generations of software (two by him, and two by our VP of Software, Rudy Mathieu).

We had to solve some Big Data problems, as we licensed 21 years of tick history data from Thomson Reuters. It is over 2 terabytes—big enough that you can’t handle it with a conventional database. We had to solve some Data Science problems too. Data from the real world is messy (and in some historical time periods, incomplete).

We believe we now have the cleanest data, and hence the best signal, bar none. Our software platform makes it possible for us to see the full breadth of the market dynamics and to drill deep as well. We will be showing many new graphs, including the Gold Forward rate (GOFO) with both bid and offer.

In this Report, we include the new graphs, generated by the new software. You will notice that we show the bid prices of the metals. There is no such thing as a single price (except in the case of a fix, like the gold fix). There are always two prices in a live market. We believe that the bid is a better measurement of what a thing is worth. It is the price you would be paid, if you sold it.

letter-may-28-prices

Click here for 3 year and 21 year versions of the chart above.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It moved down 1.5 points this week.

In this graph, we show both bid and offer prices. If you were to sell gold on the bid and buy silver at the ask, that is the lower bid price. Conversely, if you sold silver on the bid and bought gold at the offer, that is the higher offer price.

letter-may-28-ratio

Click here for 3 year and 21 year versions of the chart above.

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

letter-may-28-gold-near

Click here for 3 year and 21 year versions of the chart above.

The bid price of the dollar is calculated from the offer price on gold (as buying gold is just selling the dollar).

We see a small rise in the basis (i.e. abundance) and drop in cobasis (i.e. scarcity), while the dollar dropped 2mg (i.e. the price of gold went up).

Our calculated fundamental price fell a few dollars (you can view the chart here) although our new software platform calculates a higher value than the old. It’s important to look at why.

The reason is on this graph of the continuous basis both from the old software (with the old data provider) as well as the new.

letter-may-28-gold-comparison

The new basis (abundance) is a bit lower and the new cobasis (scarcity) is a bit higher, compared to the old. That’s why our calculated fundamental price is higher.

Which is more accurate? While we still have more work to do validate the new, we would bet an ounce of fine gold against a soggy dollar bill that the new values are more accurate for two reasons. One, the raw data is better. Two, the new software is better. Is it possible there is a bug? Of course, but we would not expect a bug to result in a tighter spread.

The absolute value of the fundamental prices of the old and new software/data are different. However, the direction (and approximate size) of the move this week is the same.

Now let’s look at silver.

letter-may-28-silver-near

Click here for 3 year and 21 year versions of the chart above.

In silver, there is almost no change in the July basis or cobasis.

However, the market price is up. And so it’s not surprising that our calculated fundamental price is up as well (both old and new).

Here is the corresponding graph comparing the old and new continuous silver bases.

letter-may-28-silver-comparison

The difference is even more pronounced in silver. Whereas in gold, the basis came down 10bps and the cobasis up 13bps (on May 26). In silver, the basis came down 34bps and the cobasis up 45bps. The cobasis is now much closer to a mirror image of the basis. It will never be perfect, which is just how the math works out.

Recall that basis = future(bid) – spot(ask), and cobasis = spot(bid) – future(ask). If there is a bid-ask spread (and there is), then the cobasis will be more negative than the basis is positive. On Friday, the old basis and cobasis are 1.44% and -1.74%, respectively. The new are 1.10% and 1.30%, which are closer both in absolute and percentage terms.

What is the new silver fundamental saying? Well, remember that technical analyst we’ve been writing about since the beginning of May? Well let’s just say that the new silver fundamental calculation definitely does not suggest that one ought to have shorted silver or ought to be shorting it now.

Keith will be speaking at the Mining Investment Europe event in Frankfurt in mid-June. He will be in London the week of June 19, and in New York the week of June 26. If you’re interested in attending a Monetary Metals seminar on GOFO and transparency in the gold market in either city, or to meet with Keith to discuss gold investment, please click here.

© 2017 Monetary Metals

via http://ift.tt/2rf8d8F Monetary Metals

Global Markets Wrap: Stocks Flat In Quiet Session With US, UK And China Closed For Holiday

U.S. markets are closed for the Memorial Day holiday, and with UK and Chinese markets also closed for various holidays, it has been a quiet start to the week, with S&P futures essentially unchanged, trading at  2,415, up 0.06%, a new all time high.

European stocks opened marginally lower in quiet trading but have since erased the dip to trade little changed, while shares in British Airways owner IAG dipped in early Spanish trading as the airline pushed to recover from a massive technology failure that disrupted hundreds of flights. The Stoxx Europe 600 Index was flat at 391.24, down 0.03%. Italian assets underperformed after Renzi comments on early elections, with banks selling off and bund/BTP spread widening

In Asia, South Korea’s Kospi fell for the first time in seven sessions, slipping from an all time high. North Korea tested another missile although the launch had little impact on risk assets.

Australian bonds pare opening gains and slip into negative after sluggish 20-year auction; 10-year yield rises two basis points; ASX 200 down. Nikkei little changed; Chinese developers surge in Hong Kong. Chinese developers lifted the Hang Seng Index, with China Evergrande Group surging to a record in Hong Kong.

Bunds have meandered through the session with a speech from the ECB president Mario Draghi at 2:00pm BST in focus, but volumes are also especially light.

The EUR has drifted higher against the USD, paring back some of the losses seen in the Asia-Pacific region after the Fed’s Williams said three highes in 2017 made sense and balance sheet normalization should begin this year. The pound posted the biggest gain among G-10 currencies, though the bounce wasn’t enough to erase Friday’s plunge when polls showed the coming election may be closer than expected. South Africa’s rand reversed a rally after President Jacob Zuma survived a bid by some members of his party to remove him from office.

Oil trades back under $50/bbl as boost in U.S. drilling activity threatens OPEC’s efforts to reduce a global supply glut. On Friday Baker Hughes revealed U.S. explorers added 2 rigs to 722, highest level since April 2015. After the market was unimpressed with accord Thursday to prolong output limits, Saudi Arabia’s Energy Minister Khalid Al-Falih said the strategy is working, global stockpiles will drop faster in 3Q

“It’s huge inventories around the globe that are really keeping a lid on prices, combined with the ability of those agile U.S. producers who scramble back into action should the oil price rise,” says Michael McCarthy, chief market strategist at CMC Markets in Sydney .

As Bloomberg notes, despite the longest winning streak for U.S. stocks since February and record highs posted by equities globally, the ongoing bond rally hints at an undercurrent of investor caution. With the fate of the Trump administration’s pro-growth stimulus plans uncertain, the dollar is one of the weakest-performing major currencies this year, even as the Federal Reserve prepares for more rate hikes. Gauging the ability of the global economy to withstand rising borrowing costs will be key for traders.

“The U.S. economy is about as close to the Fed’s dual-mandate goals as we’ve ever been,” Federal Reserve Bank of San Francisco President John Williams said in Singapore on Monday. “With the attainment of our dual-mandate goals close at hand, it’s more important than ever for monetary policy to work toward what I like to call a ‘Goldilocks economy’ -– an economy that doesn’t run too hot or too cold.”

Key overnight/weekend highlights

  • In the US, the Trump Twitter-feed has been active on the Russian question. German Chancellor Merkel, whose country was described as “bad, very bad” by US President Trump, has suggested that Europe may not be able to rely on the US. North Korea has fired a ballistic missile. Markets basically have ignored it all.
  • US Fed President Williams believes three is a magic number when it comes to rate increases this year (in total). A June rate hike is widely expected, but it is the nature of the quantitative policy plan that offers the most interest.
  • North Korea fires a ballistic missile into Sea of Japan; neighbors protest
  • G-7 pledges to keep markets open, fight protectionism
  • South Africa’s Zuma said to survive ANC proposal to remove him
  • ECB President Draghi is due to speak today, and it seems rather unlikely that his addiction to easing will be challenged. However, it is not necessarily clear whether Draghi’s dovishness represents the ECB’s views, and the central bank may shift tone this summer.
  • In the UK, the weekend opinion polls showed the Conservative Party’s lead reduced, but not as drastically as some of last week’s polls had suggested. The prime minister and the leader of the opposition are being interviewed today

Top Market News

  • Merkel Signals New Era for Europe as Trump Smashes Consensus
  • Payment Delays Soar as EU’s Small Businesses Offer Reality Check
  • Draghi’s Riddle of Missing Inflation Makes Case for ECB Patience
  • Greece needs clear roadmap for the debt, SYRIZA MEP Papadimoulis
  • Rio Tinto Hires At Least 5 Metals Analysts in Singapore: Reuters
  • Hang Seng Bank, Bank of East Asia Lift H.K. Mortgage Rates: HKEJ

In global markets, the Stoxx Europe 600 Index was little changed as of 11:29 a.m. in London. IAG dropped 2.2 percent. S&P 500 futures rose by less than 0.1 percent after the underlying gauge closed at a record high on Friday. The Korean Kospi fell for the first time in seven sessions, slipping from a record, after North Korea tested yet another ballistic missile, its 9th for the year.

In currencies, the GBP rose 0.3% after the biggest weekly decline since November. The euro was little changed at $1.1184. The Bloomberg’s Dollar Spot Index edged lower by less than 0.1 percent. The rand fell 0.5 percent after erasing a gain of 1.8 percent. The yen was little changed at 111.35 per dollar.

In rates, the yield on 10-year Treasuries was 2.25 percent at the end of last week. Cash trading on the securities is closed for the day. The yield on 10-year Italian bonds jumped seven basis points after former Prime Minister Matteo Renzi raised the prospect of an early election.

West Texas oil fell 0.4 percent to $49.61 a barrel. OPEC underwhelmed investors with its production-cut extension deal last week, while Baker Hughes said Friday that U.S. explorers added two oil rigs to take the count to 722, the highest level since April 2015. Gold edged higher by less than 0.1 percent to $1,267.33 an ounce.

* * *

Jim Reid concludes the overnight wrap

A happy long weekend to all our readers in the UK and US today. It’s been an extended weekend made all the better by Arsenal lifting the FA Cup on Saturday. A rare moment of joy in what has otherwise been a fairly depressing season for Arsenal fans. So with a number of markets closed today it’s likely to be a fairly quiet day ahead with Mario Draghi’s speech this afternoon being the highlight but there are a few interesting releases to look forward to over the remainder of the week. In terms of data we’ll be able to test the European inflation pulse this week with May CPI reports scattered over the next few days. The US calendar is slated with a number of releases which should help to sharpen up Q2 GDP forecasts and it’ll conclude with the May employment report and all-important payrolls print on Friday.

All that to look forward to but before we get there we’ve got a couple of important snippets to note from the weekend. The first is the G-7 meeting which finished on Saturday and appears to be best remembered for an unusually short sixpage final statement which was less than a third of the length of last year’s statement. Discussions over climate change and specifically the Paris accord appears to have been the main talking point with the US taking a separate stance and Merkel saying after the meeting that discussions with Trump had been “very unsatisfying” and that there “was no indication that the US will stay in the Paris agreement”. Trump has since said that the US will make a final decision on the Paris accord this week. The discontent and lack of common ground between the G-6 and US has perhaps been even further exaggerated by comments from Merkel since. Speaking at a campaign rally in Munich yesterday the Chancellor said that “the times in which we can fully count on others are somewhat over, as I have experienced in the past few days” and that “we Europeans must really take our destiny into our own hands”.

The other story to highlight is here in the UK where opinion polls continue to show a tightening gap in the race for next month’s General Election between the Conservative and Labour parties. After a YouGov/Times poll last Thursday revealed that the gap for the Tories had shrunk to just 5% at 43%-38%, the same pollster yesterday showed the gap as widening back, albeit modestly, to 7% at 43%-36%. Still, that is down from as high as 19% earlier this month. It is however worth noting that we are seeing some reasonable divergence between pollsters now. Indeed since the YouGov/Times poll last week, we have had 5 further opinion polls (including the aforementioned one yesterday) with the lead for the Tories ranging anywhere from 5% to 14%. Those polls have the Conservatives between 43% and 46%, and Labour between 32% and 38%. It does appear that methodological differences can mostly explain the wide ranging forecasts.

For those polls with narrower leads, namely YouGov and ORB, the polls assign probabilities based wholly or primarily on the self-reported likelihood of casting a ballot. Those showing a bigger lead, namely ICM and ComRes polls, based turnout on historical figures for demographic groups. As the FT highlights this would have improved accuracy in most previous elections but does risk coming unstuck if voter behaviour changes significantly.

That all said there is no doubt that these polls are being closely watched especially with there being just 10 days until the election now. The possibility of a hung parliament through the loss of a Tory majority, or a Tory majority that fails to dilute the hard Brexit wing are outcomes seemingly not out of reach. Sterling took a knock on Friday (-1.07%) and was down -1.78% over the week for its worst weekly performance since November. It’s worth noting that PM May and Labour’s Corbyn are due to take part in a live TV Q&A tonight at 8.30pm BST so that should be one to watch given the political weather of the last week.

In FX markets this morning the impact from Merkel’s comments and the G-7 meeting over the weekend has been fairly muted with the Euro down only -0.15% as we go to print. Meanwhile Sterling (+0.15%) is actually a little stronger in the early going versus the Dollar. In equity markets, with China out it’s been fairly quiet with the Nikkei (+0.16%), Hang Seng (+0.10%) and Kospi (+0.44%) a little higher, but the ASX (-0.56%) in the red. Unsurprisingly volumes are well below the usual daily average. It’s worth also adding that North Korea conducted another missile test early this morning however it appears to have been largely ignored in markets.

Quickly recapping Friday’s session now where, with markets already mostly packed up for the long weekend, the focus was largely on the economic data in the US. Most significant was the second release of Q1 GDP which saw growth revised up more than expected to +1.2% qoq (vs. +0.9% expected) from +0.7% in the initial flash estimate. That pushed the YoY rate up to +2.0% from the +1.9% previously reported. The core PCE reading was also revised up to +2.1% qoq. Growth in capex was revised up while both government purchases and inventories made a less negative contribution than first predicted. We also got a first look at corporate profits which revealed a -1.9% qoq decline, although the YoY rate of +3.7% still appears fairly solid. The BEA also cited special factors impacting the corporate profits figure in Q1 including legal settlements and that stripping these out, profits would have been flat in QoQ terms.

Away from that other data in the US and particularly indicators for Q2 growth appeared less encouraging. While headline durable goods declined less than expected in April (-0.7% mom vs. -1.5% expected), ex-transportation orders fell -0.4% mom (vs. +0.4% expected) following a big upward revision to the March reading while core capex orders were reported as being unchanged in April versus expectations for a +0.5% mom uplift. The Atlanta Fed revised down their Q2 growth forecast by four-tenths to 3.7% while the NY Fed’s measure is at 2.2% from 2.3%. Finally the University of Michigan consumer sentiment reading for May was revised down to 97.1 from 97.7 following downward revision to both current conditions and expectations. However 1y inflation expectations were left unchanged at 2.6% while 5-10y inflation expectations were revised up one-tenth to 2.4%.

Closer to home there was very little data of significance in Europe although it is worth highlighting that manufacturing confidence in Italy slipped from a near 10- year high, while consumer confidence also tumbled 2pts in May and to the lowest in over 2 years. European sovereign bond markets were actually fairly well bid on Friday although that was largely attributed to a bit of month end positioning with yields down anywhere from 2bps to 5bps generally. On the other hand 10y Treasury yields ended just 0.9bps lower at 2.247%. There was a bit of Fedspeak to note but it didn’t move the dial with Williams reiterating the need for a gradual and well communicated balance sheet unwind.

Meanwhile in equity land European bourses mostly finished in the red, albeit on very low volumes. The Stoxx 600 ended -0.20% to finish the week pretty much unchanged. The FTSE 100 (+0.40%) did however get a boost from the weaker Pound, while over in the US the S&P 500 (+0.03%) eked out another record high and in doing so rose for the 7th consecutive session which matches the longest streak this year set back in February. Amazingly the S&P 500 has now gone 231 sessions without retracing 5% from the peak. That is the longest run since 1996 and the sixth longest since the 1950s. The record is 394 consecutive sessions set back in the mid 90s so there is still some way to go to match that.

To this week’s calendar now. As noted before, with markets closed in both the UK (Bank Holiday) and US (Memorial Day) today it’s an unsurprisingly quiet start to the week with M3 money supply growth for the Euro area in April the only data due. We kick off Tuesday in Japan where the April retail sales and employment data is due. In Europe tomorrow we get Q1 GDP in France, CPI in Germany in May and confidence indicators for the Euro area in May. Over in the US tomorrow we’ll get personal income and spending for April along with the PCE core and deflator readings, followed by the March S&P/Case-Shiller house price index reading, May consumer confidence reading and May Dallas Fed manufacturing activity index print. Turning to Wednesday, the overnight data in Asia comes from China where the official May PMIs are due. In Japan we’ll get industrial production and housing starts. In Europe on Wednesday we get May CPI in France, Germany unemployment in May, April money and credit aggregates in the UK and the May CPI report for the Euro area. In the US on Wednesday we’ll get the Chicago PMI for May and April pending home sales print. Thursday kicks off in Japan again where Q1 capex data will be released along with the final manufacturing PMI revision. Manufacturing PMIs dominate the European session on Thursday with final readings due in the Euro area, Germany and France along with a first look at the periphery and UK. In the US we’ll also get the manufacturing PMI along with Q1 unit labour costs and nonfarm productivity, May ADP report, initial jobless claims, May ISM manufacturing and April construction spending. It’s a quiet end to the week in Europe on Friday with PPI for the Euro area in April the only data due. In the US it’s all eyes on the May employment report, while we’ll also get the April trade balance print.

Away from the data we’re light on Fedspeak this week with Williams (today), Brainard (Tuesday), Kaplan (Wednesday) and Williams and Powell (Thursday) the only scheduled speakers. Over at the ECB we’ll hear  from Nowotny and Draghi (today), Liikanen (Tuesday) and Villeroy (Thursday). The BoJ’s Harada also speaks on Thursday. Other things to note this week are UK PM May’s televised Q&A tonight with opposition leader Jeremy Corbyn and the China-EU summit beginning on Tuesday in Brussels.

via http://ift.tt/2qrH96W Tyler Durden

Manchester Innocence Lost – “Torture One Day, Passports The Next”

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

There are times when you have to talk about things when it appears most inopportune to do so, because they’re the only times people might listen. Times when people will argue that ‘this is not the right moment’, while in reality it’s the only moment.

A solid 99% of people will have been filled, and rightly so of course, with a mixture of disgust, disbelief and infinite sadness when hearing of yet another attack on civilians in Europe, this one in Manchester. An equally solid 99% will have failed to recognize that while the event was unique for the city of Manchester, it was by no means unique for the world, not even at the time it happened.

Though the footage of parents desperately trying to find their children, and the news that one of the dead was just 8 years old, touches everyone in more or less the same place in our hearts, by far most of us miss out on the next logical step. In a wider perspective, it is easy to see that parents crying for missing children, and children killed in infancy, is what connects Manchester, and the UK, and Europe, to parents in Syria, Libya, Iraq.

What’s different between these places is not the suffering or the outrage, the mourning or the despair, what’s different is only the location on the map. That and the frequency with which terror is unleashed upon a given population. But just because it happens all the time in other places doesn’t make it more normal or acceptable.

It’s the exact same thing, the exact same experience, and still a vast majority of people don’t, choose not to, feel it as such. Which is curious when you think about it. In the aftermath of a terror attack, the mother of a missing, maimed or murdered child undergoes the same heartbreak no matter where they are in the world (“I hope the Russians love their children too”). But the empathy, the compassion, is hardly acknowledged in Britain at all, let alone shared.

Not that it couldn’t be. Imagine that our papers and TV channels would tell us, preferably repeatedly, in their reports in the wake of an attack like the one in Manchester how eerily similar the emotions must be to those felt in Aleppo, Homs and many other cities. That would change our perception enormously. But the media choose not to make the connection, and the people apparently are not capable of doing it themselves.

None of that changes the fact, however, that British lives are not more valuable than Syrian and Libyan ones. Not even when we’ve gotten used to ‘news’ about bombings and drone attacks executed for years now by US-led coalitions, or the images of children drowning when they flee the area because of these attacks.

The overall theme here is that 99.9% of people everywhere in the world are innocent, especially when they are children, but their governments and their societies are not. That doesn’t justify the Manchester attack in any shape or form, it simply lays equal blame and condemnation for western terror attacks in the Middle East and North Africa, perpetrated by the people we elect into power.

This is something people in the west pay no attention to. It’s easier that way, and besides our media with great enthusiasm pave the way for our collective ignorance, by calling some other group of people ‘terrorists’, which while they’re at it is supposed to justify killing some other mother’s child.

There’s another thing that is also different: they didn’t start. We did. The British and French terrorized the region for many decades, since the 19th century, even way before the Americans joined in. The presence of oil, and its rising role in our economies, caused them to double down on that terror.

Yes, it’s awkward to talk about this on the eve of a deadly attack, and it’s easy to find arguments and rhetoric that appear to deflect responsibility. But at the same time this truly is the only moment we can hope that anyone will listen. And lest we forget, the UK carries an outsized share of the responsibility in this tragedy, both historically and in the present.

You can say things about the city coming together, or the country coming together, or “not allowing terrorists to affect our way of life”, but perhaps it should instead really be all the mothers who have children missing or dying, wherever they live, coming together. They all see their ways of life affected, and many on a daily basis.

Those mothers in Syria and Libya, who have been through the same hellhole as those in Manchester, are a lot closer to you than the politicians who send out jet fighters to bomb cities in the desert, or sell arms to individuals and organizations to control these cities for their own narrow personal gain, such as the governments of Saudi Arabia and Turkey.

The traumatized mothers in the desert are not your enemies; your enemies are much closer to home. Still, most of you will tend to react to fear and panic by looking for protection in exactly those circles that are least likely to provide it. The UK government under Theresa May, like those of Tony Blair, Gordon Brown and David Cameron before, is as cynically eager as their predecessors to send bombers into the desert, and sell arms to those living there.

We can illustrate all this with a few bits of news. First, the US-led coalotion, of which the UK is a substantial part, killed more civilians in Syria than at any time since they started bombing the country almost 3 years ago. They keep saying they don’t target civilians, but to put it mildly they don’t appear to go out of their way not to hit them. For instance, a single attack on Mosul, Iraq in March killed over 105 civilians. ‘Collateral damage’ in these cases, and there are hundreds by now, is a very disrespectful term. Moreover, the files released by Chelsea Manning show US soldiers killing people ‘with impunity’.

Deadliest Month For Syria Civilians In US-Led Strikes

US-led air strikes on Syria killed a total of 225 civilians over the past month, a monitor said on Tuesday, the highest 30-day toll since the campaign began in 2014. The Syrian Observatory for Human Rights said the civilian dead between April 23 and May 23 included 44 children and 36 women. The US-led air campaign against the Islamic State jihadist group in Syria began on September 23, 2014. “The past month of operations is the highest civilian toll since the coalition began bombing Syria,” Observatory head Rami Abdel Rahman told AFP. “There has been a very big escalation.” The previous deadliest 30-day period was between February 23 and March 23 this year, when 220 civilians were killed, Abdel Rahman said.

And it’s not as if the British didn’t or couldn’t know what was going on. That was clear as early as 2003, when Tony Blair couldn’t wait to join the Bush coalition to invade Iraq on the false premise of weapons of mass destruction. Before Libya was invaded, which led to Hillary’s disgusting ‘we came we saw he died’, Gaddafi, the one who did die, warned Blair about what would happen. It indeed did, which makes Blair a guilty man.

Gaddafi Warned Blair His Ousting Would ‘Open Door’ To Jihadis

Muammar Gaddafi warned Tony Blair in two fraught phone conversations in 2011 that his removal from the Libyan leadership would open a space for al-Qaida to seize control of the country and even launch an invasion of Europe. The transcripts of the conversations have been published with Blair’s agreement by the UK foreign affairs select committee, which is conducting an inquiry into the western air campaign that led to the ousting and killing of Gaddafi in October 2011. In the two calls the former British prime minister pleaded with Gaddafi to stand aside or end the violence. The transcripts reveal the gulf in understanding between Gaddafi and the west over what was occurring in his country and the nature of the threat he was facing.

 

In the first call, at 11.15am on 25 February 2011, Gaddafi gave a warning in part borne out by future events: “They [jihadis] want to control the Mediterranean and then they will attack Europe.” In the second call, at 3.25pm the same day, the Libyan leader said: “We are not fighting them, they are attacking us. I want to tell you the truth. It is not a difficult situation at all. The story is simply this: an organisation has laid down sleeping cells in north Africa. Called the al-Qaida organisation in north Africa … The sleeping cells in Libya are similar to dormant cells in America before 9/11.”

 

Gaddafi added: “I will have to arm the people and get ready for a fight. Libyan people will die, damage will be on the Med, Europe and the whole world. These armed groups are using the situation [in Libya] as a justification – and we shall fight them.” Three weeks after the calls, a Nato-led coalition that included Britain began bombing raids that led to the overthrow of Gaddafi. He was finally deposed in August and murdered by opponents of his regime in October.

What they are guilty of is no more and no less than Manchester. No hyperbole, but a warning from Blair’s own intelligence services back in 2003. The real weapons of mass destruction were not in Iraq, but in the White House and Downing Street no. 10. The CIA issued warnings similar to this.

British Intelligence Warned Tony Blair Of Manchester-Like Terrorism If The West Invaded Iraq

Before the 2003 invasion of Iraq led by the U.S. and U.K., he was forcefully and repeatedly warned by Britain’s intelligence services that it would lead to exactly this type of terrorist attack — and he concealed these warnings from the British people, instead claiming the war would reduce the risk of terrorism. We know this because of the Chilcot Report, the seven-year-long British investigation of the Iraq War released in 2016. The report declassifies numerous internal government documents that illustrate the yawning chasm between what Blair was being told in private and his claims in public as he pushed for war.

 

On February 10, 2003, one month before the war began, the U.K.’s Joint Intelligence Committee — the key advisory body for the British Prime Minister on intelligence matters — issued a white paper titled “International Terrorism: War With Iraq.” It began: “The threat from Al Qaida will increase at the onset of any military action against Iraq. They will target Coalition forces and other Western interests in the Middle East. Attacks against Western interests elsewhere are also likely, especially in the US and UK, for maximum impact. The worldwide threat from other Islamist terrorist groups and individuals will increase significantly.”

 

And it concluded much the same way: “Al Qaida and associated groups will continue to represent by far the greatest terrorist threat to Western interests, and that threat will be heightened by military action against Iraq. The broader threat from Islamist terrorists will also increase in the event of war, reflecting intensified anti-US/anti-Western sentiment in the Muslim world, including among Muslim communities in the West.”

Not long behind Blair came David Cameron, a man after Tony’s heart:

Cameron Brags Of ‘Brilliant’ UK Arms Trade As EU Embargoes Saudi Arabia

European ministers have embarrassed David Cameron by voting to impose an arms embargo on Saudi Arabia on the same day the British prime minister praised the UK for selling “brilliant” arms to the country. Speaking at a BAE Systems factory in Preston, the prime minister said the UK had pushed the sale of Eurofighter Typhoons to countries in the Middle East, including Oman and Saudi Arabia. [..] Cameron’s speech in Preston came at the same time the European Parliament voted to impose an EU-wide ban on arms exports to Saudi Arabia, citing criticism from the UN of its bombing in Yemen.

 

Asked at the talks how he was helping to export the planes, Cameron said: “With the Typhoon there is an alliance of countries: the Italians, Germans and ourselves. We spend a lot of time trying to work out who is best placed to win these export orders. We’ve got hopefully good news coming from Kuwait. The Italians have been doing a lot of work there. The British have been working very hard in Oman.” The vote will not force EU members to comply with the ban, but will force the government to examine its relationship with Saudi Arabia.

 

In the last year the British government has sold £3 billion (US$4.18 billion) worth of arms and military kit to the Gulf state, as well as providing training to Saudi forces. A report released by Amnesty International on Friday called the ongoing trade with Saudi Arabia “truly sickening,” and urged governments to attend meetings in Geneva on Monday to discuss the implementation of the Arms Trade Treaty (ATT). The report names the UK, France, Germany, Italy, Montenegro, the Netherlands, Spain, Sweden, Switzerland, Turkey and the US as having issued licenses for arms to Saudi Arabia worth more than £18 billion in 2015.

 

The arms sold include drones, bombs, torpedoes, rockets and missiles, which have been used by Saudi Arabia and its allies for gross violations of human rights and possible war crimes during aerial and ground attacks in Yemen, the campaign group said. Control Arms Director Anna Macdonald said: “Governments such as the UK and France were leaders in seeking to secure an ATT – and now they are undermining the commitments they made to reduce human suffering by supplying Saudi Arabia with some of the deadliest weapons in the world. It’s truly sickening.”

British MPs from Cameron’s own party didn’t like it either, but what meaning does that have if it takes 5 years to issue a report, and moreover he can simply refuse to give evidence?

MPs Deliver Damning Verdict On David Cameron’s Libya Intervention

David Cameron’s intervention in Libya was carried out with no proper intelligence analysis, drifted into an unannounced goal of regime change and shirked its moral responsibility to help reconstruct the country following the fall of Muammar Gaddafi, according to a scathing report by the foreign affairs select committee. The failures led to the country becoming a failed a state on the verge of all-out civil war, the report adds. The report, the product of a parliamentary equivalent of the Chilcot inquiry into the Iraq war, closely echoes the criticisms widely made of Tony Blair’s intervention in Iraq, and may yet come to be as damaging to Cameron’s foreign policy legacy.

 

It concurs with Barack Obama’s assessment that the intervention was “a shitshow”, and repeats the US president’s claim that France and Britain lost interest in Libya after Gaddafi was overthrown. Cameron has refused to give evidence to the select committee. In one of his few reflections on his major military intervention, he blamed the Libyan people for failing to take their chance of democracy.

 

The committee, which has a majority of Conservative members, did not have Chilcot-style access to internal papers, but took voluminous evidence from senior ministers at the time, and other key players such as Blair, the chief of the defence staff, Lord Richards, and leading diplomats. The result of the French, British and US intervention, the report finds, “was political and economic collapse, inter-militia and inter-tribal warfare, humanitarian and migrant crises, widespread human rights violations, the spread of Gaddafi regime weapons across the region and the growth of Isil [Islamic State] in north Africa”.

It seems obvious that if there were an impartial international body with the power to prosecute, Bush, Cheney, Blair, Cameron, Hillary etc. etc. (don’t forget France) would be charged with war crimes. And Obama too: his ‘shitshow’ comment must be seen in light of the ‘we came we saw he died’ comment by Hillary Clinton, his Secretary of State. Think he didn’t know what was happening?

Another person who should be charged is Theresa May, Cameron’s Home Secretary from May 2010 till July 2016, and of course Britain’s present PM, who sells as much weaponry to Saudi Arabia as she possibly can while the Saudi’s are shoving the few Yemeni’s they leave alive back beyond the Stone Age. And then May has the gall to talk about humanitarian aid.

Theresa May Defends UK Ties With Saudi Arabia

Theresa May has defended her trip to Saudi Arabia, saying its ties with the UK are important for security and prosperity. The prime minister is facing questions about the UK’s support for the Saudi-led coalition which is fighting rebels in neighbouring Yemen. Labour Party leader Jeremy Corbyn said UK-made weapons were contributing to a “humanitarian catastrophe”. [..] Mrs May said humanitarian aid was one of the issues she would be discussing on her trip. “We are concerned about the humanitarian situation – that’s why the UK last year was the fourth largest donor to the Yemen in terms of humanitarian aid – £103m. We will be continuing with that,” she told the BBC.

 

[..] Mr Corbyn called for the immediate suspension of UK arms exports to Saudi Arabia. He criticised the “dictatorial Saudi monarchy’s shocking human rights record” and said the PM should focus on human rights and international law at the centre of her talks. “The Saudi-led coalition bombing in Yemen, backed by the British government, has left thousands dead, 21 million people in need of humanitarian assistance and three million refugees uprooted from their homes,” he said. “Yemen urgently needs a ceasefire, a political settlement, and food aid, not more bombing. “British-made weapons are being used in a war which has caused a humanitarian catastrophe.”

The one person who would probably not be in front of such a court is Jeremy Corbyn, opponent of May’s in the June 8 elections. Though there is the issue that he never protested in much stronger terms as an MP. Still, if you have to pick one of the two, what is not obvious?

Theresa May Claims Selling Arms To Saudi Arabia Helps ‘Keep People On The Streets Of Britain Safe’

Theresa May has staunchly defended selling arms to Saudi Arabia despite the country facing accusations of war crimes, insisting close ties “keep people on the streets of Britain safe”. Jeremy Corbyn called on the Prime Minister to halt those sales because of the “humanitarian devastation” caused by a Saudi-led coalition waging war against rebels in Yemen. The Labour leader spoke out after the Parliamentary committee charged with scrutinising arms exports said it was likely that British weapons had been used to violate international law.

 

The Saudis stand accused of bombing multiple international hospitals run by the charity Médecins Sans Frontières, as well as schools, wedding parties and food factories. In the Commons, Mr Corbyn linked weapons sales to the ongoing refugee crisis, which he said should be Britain’s “number one concern and our number one humanitarian response”. He added: “That is why I remain concerned that at the heart of this Government’s security strategy is apparently increased arms exports to the very part of the world that most immediately threatens our security.

 

The British Government continue to sell arms to Saudi Arabia that are being used to commit crimes against humanity in Yemen , as has been clearly detailed by the UN and other independent agencies.”

 

But, in response, Ms May pointed out she had called on Saudi Arabia to investigate the allegations about Yemen when she met with the kingdom’s deputy crown prince at the recent G20 summit in China. The Prime Minister dismissed Mr Corbyn’s suggestion that “what happened in Saudi Arabia was a threat to the safety of people here in the UK”. Instead, she said: “Actually, what matters is the strength of our relationship with Saudi Arabia. When it comes to counter-terrorism and dealing with terrorism, it is that relationship that has helped to keep people on the streets of Britain safe.”

May’s, and Britain’s, utterly mad stance in this is perhaps best exemplified, in one sentence, by her comments during the speedy trip she made to Turkey, again to sell more arms to an at best highly questionable regime. Why do it, why drag your entire nation through the moral gutter for $100 million or a few billion? The military industrial complex.

Theresa May Signs £100m Fighter Jet Deal With Turkey’s Erdogan

Theresa May issued a stern warning to Turkish president Recep Tayyip Erdogan about respecting human rights yesterday as she prepared to sign a £100m fighter jet deal that Downing Street hopes will lead to Britain becoming Turkey’s main defence partner.

And once again, no, none of this justifies the Manchester bombing. Neither a government nor an extremist movement has any right to kill innocent people. But let’s make sure we know that neither does.

There’s another aspect to the story. MI6 had close links to the Libyan community in Manchester.

‘Sorted’ by MI5: How UK Government Sent British-Libyans To Fight Gaddafi

The British government operated an “open door” policy that allowed Libyan exiles and British-Libyan citizens to join the 2011 uprising that toppled Muammar Gaddafi even though some had been subject to counter-terrorism control orders, Middle East Eye can reveal. Several former rebel fighters now back in the UK told MEE that they had been able to travel to Libya with “no questions asked” as authorities continued to investigate the background of a British-Libyan suicide bomber who killed 22 people in Monday’s attack in Manchester.

 

Salman Abedi, 22, the British-born son of exiled dissidents who returned to Libya as the revolution against Gaddafi gathered momentum, is also understood to have spent time in the North African country in 2011 and to have returned there on several subsequent occasions. Sources spoken to by MEE suggest that the government facilitated the travel of Libyan exiles and British-Libyan residents and citizens keen to fight against Gaddafi including some who it deemed to pose a potential security threat.

 

One British citizen with a Libyan background who was placed on a control order – effectively house arrest – because of fears that he would join militant groups in Iraq said he was “shocked” that he was able to travel to Libya in 2011 shortly after his control order was lifted. “I was allowed to go, no questions asked,” said the source. He said he had met several other British-Libyans in London who also had control orders lifted in 2011 as the war against Gaddafi intensified, with the UK, France and the US carrying out air strikes and deploying special forces soldiers in support of the rebels.

 

“They didn’t have passports, they were looking for fakes or a way to smuggle themselves across,” said the source. But within days of their control orders being lifted, British authorities returned their passports, he said. Many Libyan exiles in the UK with links to the LIFG [Libyan Islamic Fighting Group ] were placed on control orders and subjected to surveillance and monitoring following the rapprochement between the British and Libyan governments sealed by the so-called “Deal in the Desert” between then-British Prime Minister Tony Blair and Gaddafi in 2004.

 

According to documents retrieved from the ransacked offices of the Libyan intelligence agency following Gaddafi’s fall from power in 2011, British security services cracked down on Libyan dissidents in the UK as part of the deal, as well as assisting in the rendition of two senior LIFG leaders, Abdel Hakim Belhaj and Sami al-Saadi, to Tripoli where they allege they were tortured.

Torture one day, passports the other. Lovely. And it still gets better: MI6 didn’t just have close contacts with Libyans in Manchester, it knew the alleged perpetrator’s family, and used his father multiple times as on operative:

Manchester Attack as MI6 Blowback

According to Scotland Yard, the attack on the crowd leaving the Ariana Grande concert at Manchester Arena, 22 May, has been perpetrated by Salman Abedi. A bankcard has been conveniently found in the pocket of the mutilated corpse of the ‘terrorist’. This attack is generally interpreted as proof that the United Kingdom is not implicated in international terrorism and that, on the contrary, it is a victim of it.

 

[..] In 1992, Ramadan Abedi [Salman’s father] was sent back to Libya by Britain’s MI6 and was involved in a British-devised plot to assassinate Muammar Gaddafi. The operation having been readily exposed, he was exfiltrated by MI6 and transferred back to the UK where he obtained political asylum. He moved in 1999 to Whalley Range (south of Manchester) where there was already resident a small Libyan Islamist community. In 1994, Ramadan Abedi returned again to Libya under MI6’s direction. In late 1995 he is involved in the creation of the Libyan Islamic Fighting Group (LIFG), a local branch of Al-Qaeda, in conjunction with Abdelhakim Belhadj.

 

The LIFG was then employed by MI6 again to assassinate Gaddafi, for a payoff of £100,000. This operation, which also failed, provoked heated exchanges within British Intelligence, leading to the resignation of one David Shayler. Other former members of the LIFG have also lived at Whalley Range, including Abedi’s friend Abd al-Baset-Azzouz. In 2009, this last joined Al-Qaeda in Pakistan and became a close associate of its chief, Ayman al-Zawahiri. In 2011, al-Baset-Azzouz is active on the ground with the NATO operation against Libya.

 

On 11 September 2012, he directs the operation against the US Ambassador in Libya, Christopher Stevens, assassinated at Benghazi. He is arrested in Turkey and extradited to the US in December 2014, his trial still pending. Nobody pays attention to the fact that Ramadan Abedi has linked LIFG members to the formation of Al-Qaeda in Iraq and, in 2011, he takes part in MI6’s ‘Arab Spring’ operations, and in LIFG’s role on the ground in support of NATO. In any event, Abedi returned to Libya after the fall of Gaddafi and moves his family there, leaving his older children in the family home at Whalley Range.

 

According to the former Spanish Prime Minister José Maria Aznar, Abdelhakim Belhadj was involved in the assassinations in Madrid of 11 March 2004. Later, he is secretly arrested in Malaysia by the CIA and transferred to Libya where he is tortured not by Libyan or American functionaries but by MI6 agents. He is finally freed after the accord between Saif al-Islam Gaddafi [Gaddafi’s son] and the jihadists.

Luckily, perhaps the Brits are not that stupid:

Half of Britons Blame UK’s Foreign Wars for Terror Attacks at Home

Slightly over a half of people in the UK agree that the nation’s involvement in wars abroad has increased the terror threat to the country, a poll out Friday has showed. The survey found that 53% of 7,134 UK adults sampled by YouGov said they believed wars the UK supported or fought were in part responsible for terror attacks at home. [..] Labour leader Jeremy Corbyn, who made a speech earlier in the day to mark his return to general election campaigning, said UK’s war on terror had not worked. He cited intelligence experts who said foreign wars, including in Libya, threatened the country’s security.

If that is true, Theresa May obviously should have no chance of winning. May can and will try to use the horror of Manchester, and the subsequent pause in the campaign, to strengthen her position in the upcoming election, by playing on people’s fear and making them believe she’s in control. Even if the very attack itself makes clear that she’s not. The Tories have already attacked Corbyn for saying their policies have failed; it was the wrong time to say that, according to them.

But it’s not. It’s the very best time. This is when people pay attention. And having this discussion doesn’t disrespect the victims of Manchester. If anything, it shows more respect than not having the discussion. Because you want to make sure this doesn’t happen again, neither here nor there. And to achieve that, you have to look at why these things happen.

An 8-year old child in Manchester, just like one in Mosul or Aleppo, is innocent. Yourself, perhaps not so much. The politicians you vote into power, and the media you read and watch to inform you, not a chance. Guilty as hell.

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“How Does This Ever End?” An Interview With Lacy Hunt

The US economy is struggling with too much debt at every level. A debt jubilee isn’t going to solve it; and shifting demographics will likely make it worse. So, is America headed for two decades of lost growth like Japan? Dr. Lacy Hunt, who was interviewed by Erik Townsend on the latter's MacroVoices podcast, considers the endgame for the US economy… Well, we could get lucky, Hunt says.

"The US economy could experience a modern equivalent of the California gold rush. In the 1820's and 1830's, we took on a lot of debt to finance the early canals, steamship lines railroads – it was over-investment, over consumption. The panic year was 1838. Martin Van Buren was president, he didn't know what was going on. By this, the country languished very badly for 11 years, and then gold was discovered it California, led to a huge surge in national income, people were very careful how they spent their income.

"We paid off the debt of the 1820's, 1830's, and the economy recovered. In 1873, we had another panic year brought on by too much debt that financed the railroads – remember we built the central line first and then the northern and southern routes, a lot of feeder road industries that supplied the railroads over-expanded and it was over-investment, over-consumption.The panic year hit. Grant was no more knowledgeable of what was going on than Van Buren had been in 1838. We had no central bank, the government continued to balance its budget. We had a prolonged period of austerity, but by the early 1890's, the problem had been solved, and we began to go on our merry way."

"Irrational behavior" on the part of US policy makers means our economy will grow to increasingly resemble Japan's over the long term…

“I think that our results will mirror Japan over time, certainly not on a quarter to quarter or annual basis, but they’re public and private debt is just under 600% of GDP. Our total public and private debt is about 373%. They've tried to solve an indebtedness problem by taking on more debt. There are many many examples of what has happened to extremely over-indebted economies."

 

Hunt notes that there has been important recent work by Allen Taylor, also by a number of people in Europe. There is also work that’s been done historically. For example, the leader of The Enlightenment, David Hume- his famous paper on public finance, written in 1752 reaches the conclusion that:

…when a state has mortgaged all of its future liabilities, the state, by necessity, lapses into tranquility, languor, and impotence.

And there was Irvin Fisher’s 1933 paper on the consequences of extreme over-indebtedness, including pointing out that

"one of the factors that will happen will be that the velocity of money will be very weak, and so there has been a tremendous amount of work. It’s just generally speaking been ignored."

 

Hunt points to an excellent summary was published in 2010 by McKinsey Global Institute…

"They looked at 24 advanced economies that became extremely over-indebted. The indebtedness brought on a panic year, such as 1929, 1873, 2008, and they followed the process through to completion.

 

It’s a very long process, and what it shows is that an indebtedness problem cannot be solved by taking on additional debt.

 

McKinsey says specifically that multi-year sustained rise in the savings rate, what they term austerity, is needed to solve the problem, and of course, as we all know, in modern democracies, that option doesn’t seem to exist.

 

So, we try to continue to use what has failed, and while we get transitory improvement in economic activity, the longer-term trend is to weaker and weaker economic performance."

Moving on, Townsend asks, is the secular bull market in bonds really over?

"My view is that the secular low in long treasury bonds is not at hand – doesn’t mean that rates cannot go up, they have gone up quite a number of times since 1990 when this bull run started, but they’re not going to be able to stay up. The economy is too fundamentally weak."

 

"The main consideration for believing that the trough is not at hand, is that nominal GDP growth and also the inflation rate is not yet at its secular low. There have been many transitory swings that will continue to be transitory swings, but thecritical factors that determines the nominal GDP of both working lower experiencing considerably slower growth and money supply, and at the same time the velocity of money is in a major downtrend."

"In 1997, $1 of new M2 growth increased GDP by $2.20, and the first quarter of this year, it was down to $1.42. This reflects the fact that we have too much of the wrong type of debt. There are many other influences in velocity, but that’s the critical factor.

 

I think it’s important to remember that the velocity of money is very volatile.

 

The old secular low was reached at 1.2 in 1946, and that was the year in which we saw the daily, weekly, and monthly lows in the 30 year bond yield. Now, if that is the key factor, not the only factor, but the key factor, which is driving the velocity of money downward, then velocity is going lower because in Europe, which has debt to GDP ratio 100 percentage points higher than the U.S., velocity is at one and in China and Japan, which are also more indebted than the United States, velocity is around 0.5 to 0.6."

So, Dr. Hunt explains, the US debt load willl continue to climb and velocity will continue to slow – unless, of couse, "we get lucky."

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Seth Klarman On ‘Trumptopia’: “Investors Are Being Too Trusting”

Via RealInvestmentAdvice.com,

Baupost Group’s Seth Klarman laid out his concerns with the market in a recent client letter…

“Risk, Klarman wrote, is the most important consideration when investing, and investors are being too trusting.

 

When share prices are low, as they were in the fall of 2008 into early 2009, actual risk is usually quite muted while perception of risk is very high. By contrast, when securities prices are high, as they are today, the perception of risk is muted, but the risks to investors are quite elevated.”

The problem with overvaluation and investor exuberance is they are clear hallmarks of historical bull market peaks. This is particularly the case when there is a central asset, or asset class, that investors are piling headlong into without regard to the consequences. As I addressed recently:

“When it comes to investing, ALL investors, individual and professionals, are subject to making “stupid” decisions. As I discussed recently:

 

At each major market peak throughout history, there has always been something that became “the” subject of speculative investment. Rather it was railroads, real estate, emerging markets, technology stocks or tulip bulbs, the end result was always the same as the rush to get into those markets also led to the rush to get out. Today, the rush to buy “ETF’s” has clearly taken that mantle, as I discussed last week, and as shown in the chart below.”

As noted in the NYT, Seth is a little more realistic about the effect of “Trumptopian” policies on the markets and the economy. To wit:

“Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers.

 

President Trump may be able to temporarily hold off the sweep of automation and globalization by cajoling companies to keep jobs at home, but bolstering inefficient and uncompetitive enterprises is likely to only temporarily stave off market forces. While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.”

Markets have rallied since Trump was elected in November, as Wall Street took confidence in the president’s plan to cut taxes, roll back on regulations, and boost infrastructure spending. As I have penned in this missive many times, the RISK TO INVESTORS is what happens if those expectations either DO NOT materialize OR fall well short of expectations.

The risk of disappointment is exceptionally high. 

While we currently remain long-biased in portfolios, we do so with stops and hedges in place, risk management controls active, and a focus on capital preservation.

While you may not agree with our positioning, we have managed money through these exact cycles in the past and survived.

That is why we remain a slave to our discipline and our rules.

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Visualizing The Possible City Of London ‘Brexodus’

The EU in Brussels has now given official powers to its top Brexit negotiator, but former French diplomat Michel Barnier is not expected to begin talks until after the UK general election in June. As Statista's Dyfed Loesche notes, Banks and financial institutions are already preparing for the world after Brexit and planning to pull some of their staff from the finance hub in the City of London…

Infographic: The Possible City of London Brexodus | Statista

You will find more statistics at Statista

Most banks want to keep a foothold in the EU common market. The exact details are still evolving but Deutsche Bank for example is planning to relocate some 4,000 jobs to someplace else in the EU or Eurozone.

Locations which could profit from the banker's Brexodus are Frankfurt and Paris but also Dublin, according to a report by Bloomberg.

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These Powder Kegs Are About To Blow: “Trump Needs To Halt The Downward Spiral That Obama Orchestrated”

Authoreed by Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com,

President Trump just took a trip to Saudi Arabia in an effort to obsequiously “shore up” the ties.  Expected.  It is expected for any U.S. president to “recertify” the Petrodollar and the commitments to protect the House of Saud that were initiated by Kissinger and Nixon almost five decades ago.  Times change, and administrations change; however, the systems in place are very slow and resistant to modification.  The BRIC nations are shoring up their interests as the U.S. continues to send more naval “support” for South Korea in the form of another aircraft carrier.

In order to keep the MIC (Military Industrial Complex) happy, defense contracts have to be on the rise: A Republican administration is the foundation for this.  The creation of a threat is ongoing.  The creation of a threat (whether viable or not) is essential to justify the defense contracts and the ongoing deployments of U.S. troops that were initiated under Obama and are continuing under President Trump.  The MIC is too deeply lodged within the framework of the government to extricate in one fell swoop.  It is inexorably intertwined with the fragile (almost skeletal) domestic industrial base of the U.S. economy, as well as all of the foreign policy instituted at home and carried out abroad.

Europe is redefining itself with Britain’s exit from the EU, and NATO is trying to maintain ties and commitments with Britain even as she dumps the Eurodollar and cuts the economic ties to the other nations.  Yes, the three super-states as outlined in Orwell’s “1984” are well on their way to taking shape: Eurasia, Eastasia, and Oceania (North American and Great Britain).  The sides are posturing themselves both economically and militarily, with several “loose ends” to ties up.  Those loose ends are none other than Syria and North Korea, around which there are two different lines forming: The U.S. and Western allies, and Russia with its Asian and Middle-Eastern alliances.

The U.S. Congress and the MIC want to invade Syria, and then Iran.  They also want to “clear things up” in Korea.  These nations are in the way of the establishment of a U.S.-controlled hegemony in the areas and a face-off with Russia.  The first part of it is economic in nature: to attempt to stalemate Russia and China with sanctions and interference in trade (such as the maneuver previously mentioned in other articles to run a natural gas pipeline from Qatar into Eastern Europe).

The Russians have pretty much taken over the Arctic in terms of exploration and mining.  This was enabled to be brought about by none other than Obama, along with the islands off the coast of Alaska that he magnanimously “gave away.”  Obama has left us in very dire straits in our position with the rest of the world: The Middle East is still in a shambles from the “Arab Spring” and all of the debacles in Egypt and Libya; the Eastern European question is not yet solved in relation to Ukraine and the tug-O’-war over it between the U.S. and Russia; Syria and Iran are “powder kegs” about to blow; and the potential for war with North Korea is far from exhausted.

The President is going to need to take the initiative in order to halt the downward spiral that Obama orchestrated and began prior to his departure.  To avert at (the minimum) a new Cold War, he’ll have to sit down and do a face-to-face with Putin instead of dispatching Tillerson to play ping-pong periodically with Lavrov.  The time is now to head off these alliances between other nations that exclude the U.S. to a detriment.  Such economic alliances eventually always turn into military alliances…based on the need to preserve the flow of money between the nations involved.

We do not need another Cold War to materialize.  The way to stop it from occurring is through sound diplomacy and strength of position, not through imperialism and posturing.  Therein lies the challenge: the restructuring of iron-clad policies and institutions so as to make a better deal and position for the U.S. and really “draining the swamp” of Washington.  Saudi Arabia, eh?  Well, why don’t we start out the “new deal” by going into all of that untapped oil that we have domestically?  What are we waiting for?  Or is it just a matter of not wanting to tick off the Saudis and changing the status quo of our worthless fiat Petrodollars?  Only time will tell whether true actions will be taken and not another dog-and-pony show to enable the President to be reelected.

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How America Could End Up In An Unexpected War With China

Authored by Doug Bandow via The National Interest,

Three decades ago the People’s Republic of China was an economic backwater. Today the PRC sports the world’s second-largest economy. Shanghai most dramatically illustrates the country’s transformation. The city is filled with stylish office buildings, five-star hotels, luxury stores and foreign visitors.

Reflecting their success, the Chinese are increasingly confident as well. If not yet a great power, the PRC seems destined to eventually share global leadership with the United States. And its people know that.

Which means future U.S.-China relations could be rocky.

Ties turned confrontational under the Obama administration, which announced a “pivot” or “rebalance” to Asia. Washington officials unconvincingly claimed that the policy was not directed against Beijing. The Chinese may be many things, but they are not stupid.

Candidate Donald Trump sounded like he intended to pursue an even more truculent course, upgrading relations with Taiwan, launching a trade war, blockading Chinese possessions in the South China Sea and pressuring the PRC to “solve” the North Korea problem. But then came the bilateral summit and the president’s one-way love-fest with Chinese president Xi Jinping. All suddenly became sweet and light in Trumpland.

However, in the long-term the president’s pleasant words backed by an offer of unspecified trade concessions won’t go far in buffering relations between a unipower determined to preserve its dominance and a rising power equally determined to assert itself.

First, the Trump administration yielded Pacific economic leadership to the PRC. Beijing is likely to find new commercial opportunities, limiting Washington’s ability to do trade harm.

 

Second, nationalist passions are not easily cooled. The issue is not just a few obstreperous officials who don’t know their country’s proper place. The real challenge is posed by a population that believes in a much greater China.

So far North Korea has dominated discussions between the two governments. Even if cooperative efforts fail, any damage to the bilateral relationship likely will be contained. At most, application of secondary sanctions against Chinese financial institutions would lead to economic turbulence, not military confrontation.

Territorial disputes throughout the Asian-Pacific region pose a far tougher test. The Philippines’ unpredictable Rodrigo Duterte has been sparring with Beijing over Scarborough Reef. Tokyo has refused to even acknowledge a dispute over the status of the Senkaku Islands. But that has not prevented China from using air and naval patrols to challenge Japan’s claim.

America’s primary interest is navigational freedom, which so far the PRC has not attempted to impede. Washington has no territorial claims in the region. But both Manilla and Tokyo are treaty allies, their security guaranteed by America, which means any confrontation between them and China could draw in the United States. At his confirmation hearing Secretary of State Rex Tillerson suggested an even more active American role, barring PRC access to its claimed possessions. That would set up a clash at sea, guaranteeing a naval arms race and creating a trigger for war.

As pleasant memories from the Mar-a-Lago summit fade, deep disagreements likely will reappear. And the Chinese aren’t likely to back down. For the United States, dominance of a region so far from home is a convenience, an added benefit to America’s almost absolute security in its own hemisphere. For the PRC, preventing Washington’s encroachments along its border is a “core” interest, similar to what Americans have essentially claimed for their entire hemisphere for two centuries.

Last weekend I attended a conference on maritime issues in Shanghai. Participants were largely academic and policy, not political. However, the Chinese interlocutors were in no mood to compromise. They defended their government’s claims, advocated active measures to assert them, and disdained criticism of Chinese aggressiveness. No one wanted war, but none of them recommended that their nation back down if Washington chose confrontation.

Indeed, the participants well demonstrated the disparity of interest and intensity which disadvantages America. No one doubts that the U.S. possesses the stronger military. Nor is there any question that Washington would use its superior power if necessary to defend important interests closer to home.

But it would be far harder for America to use force to ensure its control of the waters along China’s borders and oversight of territorial disputes in which America has no serious stake—who gets to raise their flag over one or another set of barren rocks. And the price of doing so will only rise. It costs the PRC far less to threaten a U.S. carrier than it costs America to protect one. Just how much are Americans prepared to spend to assert what amounts to the convenience of empire rather than essentials of security?

Moreover, at a time when North Korea tops Washington’s Asian agenda, how much is the Trump administration willing to pay for Beijing’s assistance? According to President Trump, President Xi already has emphasized the limitations of China’s control. The PRC can hardly be expected to dismantle its one military ally if the United States is actively pushing military containment elsewhere in the region.

Indeed, while Americans tend to view themselves as being Vestal Virgins, attempting to do good in an evil world, citizens of other nations typically take a more cynical view. In Shanghai, as elsewhere, they see Washington speaking of principle while promoting interest, and refusing to apply to itself norms it seeks to impose on others. The Chinese are prepared to yield before superior force, but are not prepared to concede that America always will possess that edge.

Washington officials should reconsider their approach to China. Military confrontation would be a losing game. No victory would be permanent. An American success would be an invitation for the PRC to rebuild and expand its armed forces for a rematch. And conflict would aid the authoritarian regime in maintaining and expanding its control. A liberal, democratic China would be unlikely to emerge from any war.

The U.S. needs to prioritize its objectives vis-à-vis China. Washington wants Beijing to democratize, respect human rights, reduce trade and investment barriers, forswear cyberattacks, pressure North Korea, sanction other pariah regimes, abandon territorial claims, and accept permanent U.S. hegemony. No serious state, let alone a nationalistic rising power, could concede such a laundry list. American officials should decide what they most want and how much they are willing to pay.

Washington also should recalculate what is worth defending. For instance, there is a difference between preserving Tokyo’s and Manila’s control over territories contested by China and the two nations’ independence, which Beijing does not threaten. Indeed, while resolute backing of the former might deter China from acting, it also would ensure Washington’s involvement should an errant sea captain on one side or the other start shooting. Moreover, issuing blank defense checks would encourage friends to be more intransigent and prepare less for trouble.

Most important, American officials need to separate the objectives of defending America and containing China. The former is relatively easy and inexpensive. It is likely to be long into the future before the PRC is capable of projecting power against America’s Pacific possessions, let alone the homeland.

In contrast, it will grow ever more expensive for the United States to overcome the far more modest PRC build up necessary to deter outside intervention. How much are Americans prepared to spend to ensure that Washington can contest Chinese influence along China’s borders? The issue is not whether doing so has value. The issue is whether a highly indebted liberal republic can afford to continue doing so, especially when that responsibility more appropriately falls on other nations in the region.

Even after the ongoing campaign against Western influence, the PRC remains a far more open society than in the early days of the Communist revolution. Hope that political liberalization would follow economic liberalization has been stillborn, but Xi Jinping’s China remains very different from Mao Zedong’s China.

As such, the PRC might not be an ally, but there is no reason it should be an enemy. Yet attempting to dominate and contain China risks turning it into an angry and well-armed adversary. Instead, Washington should prepare to share global leadership. Far better to yield thoughtfully while shaping the future than to be forced to concede even more under pressure. Just as Great Britain successfully—if not always happily—accommodated the emerging United States of America.

 

via http://ift.tt/2qqOMe9 Tyler Durden

Does America Need A Northern Border Wall?

Keeping track of people legally entering and leaving the United States is a formidable task. Nevertheless, the Department of Homeland Security (DHS) has released figures on people who overstay their visas and other legal forms of admissions. Total overstays for 2016 stood at close to 740,000 people, of which up to 630,000 were suspected to still be in the country.

Infographic: Which Foreign Citizens Overstay Their Visas Most Often? | Statista

You will find more statistics at Statista

As Statista's Dyfed Loesche notes, Canadians and Mexicans are the biggest groups of people with non-immigrant admissions to the United States that overstayed their lawfully authorized time period. However, the DHS only counts in arrivals and departures by sea and air as stated in its report.

Unlike all other countries, the overwhelming majority of visitors from Canada or Mexico enter the United States by land. "The collection of departure information in the land environment is more difficult than in the air and sea", the DHS writes. While many Canadians or Mexicans could fly in ore arrive by boat they might leave the U.S. across the land border.

So, there's always a degree of uncertainty in the data.

While Canada and Mexico are the United States' direct neighbors the figures for the rest of the countries shown in the below above probably are more accurate. This overview includes countries that are taking part in the so-called visa waiver program (VWP) and those who don’t. It only shows data for leisure and business visas, not for students.

The DHS admits that there is a level of uncertainty in how accurate these numbers are and calls them a snapshot. For the air and sea arrivals and departures the department relies on data that commercial and private carriers need to provide.

Also, the figures include suspected in-country and out-of-country overstays. This means that some of the people who initially overstayed might have already left.

All of which raises the question – does America need a northern border wall also?

via http://ift.tt/2rvVcsw Tyler Durden