Month: May 2024

By Frank Fang of Epoch Times

Taiwan’s new president has been sworn into office, calling on the Chinese regime to stop its military and political intimidations in a speech unlikely to deter the communist regime’s ambition to seize control of the self-ruling island.

In his 30-minute inaugural speech on May 20, Lai Ching-te, from the Democratic Progressive Party (DPP), said that Taiwan is a “sovereign and independent country,” and that the island nation and the communist regime in mainland China “are not subordinate to each other.”

“I also want to call on China to cease their political and military intimidations against Taiwan, and share with Taiwan the global responsibility of maintaining peace and stability across the Taiwan Strait, as well as the greater region, and to ensure the world is free from the fear of war,” Mr. Lai said.

Mr. Lai said his administration aims to “further entrench Taiwan’s democracy” and “maintain peace in the Indo-Pacific.”

“I have always believed that if the leader of a country puts people’s welfare above all, then peace in the Taiwan Strait, mutual benefits, and prosperous coexistence would be common goals,” he said. “I hope that China will face the reality of the Republic of China’s existence.”

Mr. Lai won January’s presidential election by a margin of about 7 percentage points over second-place Hou Yu-ih, a candidate of the Kuomintang Party (KMT). His victory gave the DPP an unprecedented third consecutive term, after eight years with Tsai Ing-wen at the helm.

The DPP’s win is considered a setback for the CCP, which has traditionally favored KMT political candidates because of their friendly view of the communist neighbor. In contrast, the Chinese regime has labeled Mr. Lai as a “troublemaker” and “separatist.”

The CCP often slaps the “separatist” label on any Taiwanese who defends the island’s sovereignty and rejects the communist regime’s territorial claim over the island. China’s communist regime is preparing its military to seize Taiwan, even though the island is a de facto independent nation with its own military, constitution, and currency.

Mr. Lai reminded the Taiwanese people that they shouldn’t harbor any delusions about China.

“So long as China refuses to renounce the use of force against Taiwan, all of us in Taiwan ought to understand that even if we accept the entirety of China’s position and give up our sovereignty, China’s ambition to annex Taiwan will not simply disappear,” he said.

Strengthening Democratic Resilience

As for international affairs, Mr. Lai said he will work with “other democratic nations to form a democratic community,” working together on issues such as combatting disinformation and strengthening democratic resilience.

China’s efforts to influence Taiwan’s elections have been well-documented, with tactics including promoting disinformation via social media platforms and using financial incentives to sway Taiwanese voters.

A declassified U.S. intelligence report has shown that China interfered in the U.S. 2022 midterm elections, and there are increasing concerns that the CCP will try to influence the outcome of the November elections.

Before his speech, Mr. Lai accepted congratulations from about 200 foreign politicians and delegates at Taiwan’s Presidential Office on May 20. The visiting dignitaries included those from the nations that currently maintain diplomatic ties with Taiwan, as well as those from Japan, Australia, Canada, the United States, and several European nations.

Former Deputy Secretary of State Richard Armitage and former top White House economic aide Brian Deese were among a U.S. bipartisan delegation that met with Mr. Lai on May 20. Former Secretary of State Mike Pompeo also made the trip to Taiwan to congratulate Mr. Lai.

Secretary of State Antony Blinken issued a statement congratulating Mr. Lai, while applauding Ms. Tsai for “strengthening ties between the United States and Taiwan over the past eight years.”

“We look forward to working with President Lai and across Taiwan’s political spectrum to advance our shared interests and values, deepen our longstanding unofficial relationship, and maintain peace and stability across the Taiwan Strait,” Mr. Blinken stated.

Sen. Ben Cardin (D-Md.), chairman of the Senate Foreign Relations Committee, said he looks forward to “working with the Lai Administration to continue strengthening the U.S.–Taiwan relationship through expanding our economic, security, and people-to-people ties,” according to a statement.

The Inter-Parliamentary Alliance on China, a global coalition of lawmakers, issued a statement on X, formerly known as Twitter, to congratulate Mr. Lai on his inauguration.

‘Trusted Industry Sectors’

Mr. Lai also spoke about the importance of Taiwan’s tech industries to the world.

“Taiwan has already mastered advanced semiconductor manufacturing, and we stand at the center of the AI revolution,” he said. “We are a key player in supply chains for global democracies.”

Taiwan produces about 90 percent of the world’s most advanced semiconductors, which are tiny chips that power everything from computers and smartphones to missile systems. As a result, China’s ambition to seize Taiwan is also driven in part by the goal of taking control of the island’s semiconductor sector.

Under his administration, Mr. Lai said he aims to develop “five trusted industry sectors”: semiconductors, artificial intelligence (AI), military, security and surveillance, and next-generation communications.

Before the May 20 inauguration, China was already taking steps to put pressure on Mr. Lai.

Continue reading at Epoch Times

As the Bitcoin and Ethereum prices exploded toward new all-time highs, the recently piled-on shorts have suffered the brunt of the liquidations. In the last day alone, over $360 million was liquidated from the crypto market with the majority hitting short traders.

Coinglass data shows that the last 24 hours have been brutal for crypto shorts, with almost 90,000 crypto traders seeing their positions liquidated, the vast majority of them short, leading to hundreds of millions of dollars in losses.

In total, there have been $365 million in liquidations. Out of this figure, the vast majority, or 80%, were positions belonging to short traders, meaning they made up $290 million of the total figure. Long traders only made up $75 million in the liquidations.

Bitcoin did not lead liquidations this time around, with the pain instead focusing on Ethereum, as its price soared more than 20% in the 24-hour period, following media reports suggesting that contrary to previous expectations, the SEC was actually prepared to greenlight an Ethereum ETF.

Ethereum liquidations accounted for around 35% of the total figure, coming out to $122 million at the time of writing. The largest single liquidation event also happened on an ETH-USDT pair on the Huobi exchange, costing the trader $3.11 million.

In contrast, Bitcoin liquidations came out to $98 million, but just like Ethereum, the figure was made up by a majority of short traders.

Following behind Bitcoin is Solana with liquidations of $23.3 million. Other coins which saw substantial liquidations include Dogecoin with $9.3 million, PEPE and others.

Two days following the death of Iranian president Ebrahim Raisi and several of his top officials in a helicopter crash in the country’s northeast, Tehran has announced the date of presidential elections: June 28.

State-run IRNA announced an official election campaign window of June 12-27, followed by a day of national voting. Candidate registration is set to occur between May 30 and June 3. Raisi’s sudden death is expected to kick off a high-stakes power struggle while Shia clerical authorities are urging a smooth process.

Starting Monday the Islamic Republic’s Vice President Mohammad Mokhber was appointed as Interim President, while Iran’s nuclear negotiator, Ali Bagheri, was named acting foreign minister. 

Tuesday marks the second of five days of national mourning, which will include a large Wednesday memorial ceremony in Tehran and overseen by Supreme Leader Ayatollah Ali Khamenei with foreign dignitaries present.

However the funeral for Raisi will be in Mashhad where the deceased president was born and raised. Iran’s second largest city, it is often called the “holiest city” in the country given its many religious pilgrimage sites.

As for the upcoming election at the end of June, which follows statements by Khamenei vowing that stability of leadership and government will not be interrupted, The New York Times has previewed:

Ayatollah Ali Khamenei, the country’s supreme leader, has two options, each carrying risks.

He could ensure that the presidential elections, which the Constitution mandates must happen within 50 days after Mr. Raisi’s death, are open to all, from hard-liners to reformists. But that risks a competitive election that could take the country in a direction he does not want.

Or he can repeat his strategy of recent elections, and block not only reformist rivals but even moderate, loyal opposition figures. That choice might leave him facing the embarrassment of even lower voter turnout, a move that would be interpreted as a stinging rebuke of his increasingly authoritarian state.

Of the question of turnout, the same report continues, “Voter turnout in Iran has been on a downward trajectory in the last several years. In 2016, more than 60 percent of the country’s voters participated in parliamentary elections.”

It notes that “By 2020, the figure was 42 percent. Officials had vowed that the result this March would be higher — instead it came in at just below 41 percent.”

The bodies of Ebrahim Raisi and his accompanying delegation in the helicopter crash are being transferred to Tehran so that they can be sent to Qom for the second leg of the five-city funeral procession.pic.twitter.com/F3BaFDeHPL

— Iran International English (@IranIntl_En) May 21, 2024

The Times has concluded that “Low turnout in recent years has been seen as a clear sign of the souring mood toward clerics and a political establishment that has become increasingly hard-line and conservative.” And Bloomberg has underscored, “Raisi was an ultraconservative cleric distrustful of the West.”

The investigation into the helicopter crash is ongoing, but authorities are rejecting any suggestion that it was an act of sabotage. Officials have emphasized the extreme weather conditions and citing likely technical failure over difficult mountainous terrain.

Authored by Jonathan Turley,

Below is my column in the New York Post on the meltdown of Michael Cohen on the stand in the Manhattan trial of former President Donald Trump.  In a trial careening out of control, Judge Juan Merchan seemed to be furiously working to just get the matter to the jury as fast as possible. Judge Merchan seems in open denial of the legal farce playing out in his courtroom. He is only the latest person pulled into the vortex of the swirling corruption around Michael Cohen.

Here is the column:

The completion of the testimony of Michael Cohen left the prosecution of Donald Trump, like its star witness, in tatters.

In the final day of cross-examination, Cohen admitted to committing larceny in stealing tens of thousands of dollars from his client.

Even more notably, he admitted to the larceny on the stand — after the statute of limitations had passed. There will be no dead felony zapped back into life against Cohen, as it was for Trump.

Cohen clearly has found a home for his unique skill as a convicted, disbarred serial perjurer. 

It was not the first time that prosecutors looked the other way as Cohen admitted to major criminal conduct: In a prior hearing, Cohen admitted under oath that he lied in a previous case where he pleaded guilty to lying.

If that is a bit confusing, it was just another day in the life of Michael Cohen, who appears only willing to tell the truth if he has no other alternative.

The result is truly otherworldly. You have a disbarred lawyer not only casually discussing lies and uncharged crimes, but prosecutors who proceeded to get him to remind the jury that he is not facing any further criminal charges.

If any one of those jurors had stolen tens of thousands of dollars, they would be given a fast trip to the hoosegow.

Yet Cohen then matter-of-factly said he plans to run for Congress due to his “name recognition” — the ultimate proof that it does not matter whether you are famous or infamous, so long as they spell your name right.

As a legislator, Cohen would have the unique ability to say he will not be corrupted by Congress — because he came to Congress corrupted.

While most members wait to take office to commit felonies, Rep. Cohen would show up with a self-affirming criminal record.

He could then take one of the few oaths that he has not previously violated as the Honorable Rep. Michael Cohen.

At the end of the day, Cohen is the ultimate shining object for prosecutors to use as a distraction from the glaring omissions in their case.

Prior witnesses testified that Trump’s payments to Cohen were  designated as “legal expenses” not by Trump but by his accounting staff.

Moreover, Cohen admitted that he worked for Trump for years in his murky capacity as a fixer. References to payments as a retainer were approved by Allen Weisselberg, a retired executive with the Trump Organization.

The “legal expense” label was a natural characterization for a lawyer who was paid monthly and was on-call as Trump’s personal counsel.

In any other district, this case would never have been allowed in trial. It certainly now should be facing a directed verdict by the court.

Indeed, with any other defendant, a New York jury would be giving a Bronx cheer in derision.

Even CNN hosts and experts have admitted that this case would never have been brought against another defendant or in another district.

That is what Manhattan District Attorney Alvin Bragg is counting on.

The biggest problem facing the defense is not the evidence, but the judge: Judge Juan Merchan seems to be channeling George Patton’s warning, “May God have mercy upon my enemies, because I won’t.”

Merchan has not given any indication that he is seriously considering a directed verdict, which he should clearly grant before this goes to the jury.

Merchan’s rulings have largely favored the prosecution, including some rulings that left some of us mystified.

Judge Merchan continues to allow the jury to hear references to campaign-finance violations that do not exist.

After gutting any use of a legal expert to testify on the absence of any such violations, the judge allowed the jury to hear Michael Cohen state that the payments to Stormy Daniels were clearly campaign violations.

All that Merchan would offer is a weak instruction telling jurors not to take such statements as proof of a violation.

The alleged campaign-finance violations allowed Cohen to try to implicate Trump. However, it is doubtful that Trump could have been convicted on such a charge in any other venue.

It is precisely what the Justice Department tried and failed to do with John Edwards, a Democratic candidate.

After that unmitigated failure, the Justice Department dropped this theory of hush money as a campaign contribution.

Indeed, after reviewing the Trump payments, not only did the Justice Department decline any charges but the Federal Election Commission did not even seek a civil fine.

On Monday, Judge Merchan’s orders became even more inexplicable when Cohen’s former attorney Robert Costello took the stand.

Merchan immediately started to sustain a flurry of prosecutors’ objections as Costello basically accused Cohen of multiple acts of perjury.

At one point, Costello — one of the most experienced lawyers in New York and a former prosecutor — exclaimed that one of the judge’s rulings was “ridiculous.”

The judge chastised Costello and even challenged him:

“Are you staring me down?”

In fact, it was hard not to stare.

What is happening in the courtroom of Judge Juan Merchan is anything but ordinary.

‘You’ll own nothing in retirement and be happy’…

Wit the organization he founded 50 years ago bringing in nearly $500 million in revenue in the year ending March 2023 (and sitting on a neat pile of 200 million Swiss francs cash), Klaus Schwab will own some things as he reportedly steps back from his role running the World Economic Forum has has headed since 1971.

Semafor reports that Schwab announced his intentions to step down as executive chairman in an email to staff on Tuesday that was shared with Semafor by a person connected to the organization.

The change in his role is pending approval by the Swiss government but should be finalized ahead of the WEF’s annual meeting in 2025.

Schwab, now 86, will be transitioning to a role as non-executive chairman.

But Globalists should not worry about their agenda as Semafor reports that Schwab has seeded his organisation with various family members to take up the tyrannical new world order torch – Schwab’s children appointed to high-ranking positions and his wife Hilde heading the organization’s foundation and awards ceremonies in Davos.

Will Schwab and Soros retire on a deserted island together to watch the end of the chaotic world they enabled from a distance?

US futures are flat, reversing earlier losses, with European bourses and Asian markets all lower as the international risk-off tone carries over to the US pre-mkt, likely driven by a desire to see the NVDA print before determining near-term direction. Until then, markets are hunting for catalysts and drifting as they wait, with US stock futures unchanged as of 7:00am, and Nasdaq futures down 0.1%. Bonds caught a bid with yields down 2-3bps across the curve, pressuring USD. Commodities are also lower with weakness across all three complexes but with some safety being found in base metals: oil prices are a little lower, while copper and gold prices have slipped a little from the records they notched up.The macro focus will be on Fedspeak with yesterday’s batch of Fed speakers, not market-moving. From a micro perspective, Day 2 of the JPM TMT Conference will be the focus.

In premarket trading, NVDA was +36bps higher ahead of its earnings tomorrow, while Mag7 names are mostly lower and Semis are trading slightly lower. Palo Alto Networks shares dropped 7.9% after the security software company issued a disappointing forecast for 4Q billings. The company also reported 3Q results, which were in line with consensus, but below the higher buyside expectations, according to Morgan Stanley. Here are some other notable premarket movers:

• Global-e Online shares gain 2.3% after the application software company was upgraded to overweight from equal-weight at Morgan Stanley, which expressed optimism on the firm’s ability to execute on a planned acceleration in the second half of the year.
• Larimar Therapeutics shares jump 18% after the biotech company said the FDA has removed a partial clinical hold on its nomlabofusp program. The drug is a treatment for patients with Friedreich’s ataxia, a neurological disorder. William Blair analysts called the removal “great news.”
• Zoom Video Communications shares decline 2.0% after the video-conferencing software company gave a second-quarter forecast for adjusted earnings that was weaker than expected. Additionally, the firm also reported first-quarter results that beat expectations.

Before tomorrow’s Fed minutes – which will be the day’s other main event aside from Nvidia – there are still plenty of speakers from the central bank to come. Yesterday, Loretta Mester said that three interest rate cuts in 2024 is no longer appropriate and reiterated that policymakers need more data before making a decision, even adding she’d be open to a rate hike if warranted. Raphael Bostic, Thomas Barkin, John Williams and Christopher Waller continue the run of speakers on Tuesday.

And speaking of inflation, investors continued to monitor commodity prices, after the Bloomberg Commodity Spot Index reached its highest level since January 2023, while gold, silver and copper changed hands near records. However, the commodity surge has so far failed to derail conviction that inflation will keep easing, allowing the Federal Reserve and other major central banks to cut interest rates this year.

“The latest batch of growth, inflation, and Fed data has provided the macro support for the markets to keep grinding higher. Nvidia’s 1Q24 earnings this week could boost the micro AI tailwind,” Jason Draho at UBS Financial Services Inc. said in a note.

European equities dropped Tuesday, pulling back from recent record highs, as investors retreated to the sidelines to await results this week from Nvidia Corp. The Stoxx 600 index slipped 0.4%, with drugmaker GSK Plc among the losers as it faced a whistleblower lawsuit that could cost it billions of dollars.

Earlier, Chinese shares slipped and a broader Asian equity gauge fell after seven days of gains with Hong Kong stocks leading declines as Tencent suspended a new game within hours of its China debut. Hong Kong’s tech subindex slides more than 3% while the benchmark gives up 2%. Data also showed little sign of a turnaround in China’s debt-plagued property sector, with local governments reaping the least revenue in eight years through land sales.

In FX, the Bloomberg Dollar Spot Index erases an earlier advance to fall about 0.1% with NOK and SEK outperforming; investors are focusing on the US interest-rate differential relative to the rest of the developed world. “This may have to do with lackluster trading in the absence of fresh catalysts — some dollar shorts were taken off the table,” said Christopher Wong, strategist at Oversea-Chinese Banking Corp. “Further USD weakness would require softer US data and there isn’t much tier-1 data this week.”

In rates, bonds rise, with 10-year gilts outperforming comparable Treasuries and bunds. US yields richer by 1.5bp to 2.5bp across the curve with belly-led gains steepening 5s30s spread by almost 1bp on the day; 10-year yields around 4.425% with bunds lagging slightly and gilts mildly outperforming in the sector. US sales this week include $16b 20-year bonds Wednesday and a $16b 10-year TIPS reopening Thursday. US session lacks scheduled data, leaving focus on another heavy dose of Fed speakers.

Commodities consolidate with gold and copper trading lower after recent highs; the Bloomberg Commodity Spot Index reaches highest level since January 2023. Spot gold falls roughly $7 to trade near $2,418/oz. Brent and WTI test support from short-term moving averages as they decline. Base metals are mixed; LME nickel falls 0.4% while LME aluminum gains 1.5%.

In crypto, Crypto prices surged on signs of momentum toward US approval of exchange-traded funds investing directly in second-largest token Ether. CoinDesk reported that exchanges that want to list spot Ether ETFs are abruptly being asked by regulators to update key filings related to these products, according to three people familiar with the matter which suggests regulators may be moving to approve these applications ahead of Thursday’s deadline.

Looking to the day ahead, US economic data this session includes May Philadelphia Fed non-manufacturing activity at 8:30am. Central bank speakers include ECB President Lagarde, the Fed’s Barkin, Waller, Williams, Bostic, Barr, Collins and Mester, along with BoE Governor Bailey.

Market Snapshot

• S&P 500 futures little changed at 5,331.25
• STOXX Europe 600 down 0.4% to 521.77
• MXAP down 0.7% to 181.07
• MXAPJ down 0.9% to 566.85
• Nikkei down 0.3% to 38,946.93
• Topix down 0.3% to 2,759.72
• Hang Seng Index down 2.1% to 19,220.62
• Shanghai Composite down 0.4% to 3,157.97
• Sensex up 0.1% to 74,081.70
• Australia S&P/ASX 200 down 0.2% to 7,851.68
• Kospi down 0.7% to 2,724.18
• German 10Y yield little changed at 2.51%
• Euro little changed at $1.0861
• Brent Futures down 0.9% to $82.99/bbl
• Gold spot down 0.4% to $2,416.23
• US Dollar Index little changed at 104.59

Top Overnight News

• Alibaba Group Holding Ltd. slashed prices for a clutch of artificial intelligence services by as much as 97%, spurring an immediate response from Baidu Inc. in potentially the start of a price war in China’s nascent AI market. BBG
• ASML and TSMC reassured US officials they have ways to disable the world’s most sophisticated chipmaking machines remotely should China invade Taiwan, people familiar said. The Dutch company can activate a shut-off that would act as a kill switch for its EUVs. BBG
• Apple challenged a €1.8 billion fine levied by the EU for thwarting fair competition from music-streaming rivals including Spotify, people familiar said. BBG
• UK grocery inflation fell to near its historical average in May, bringing some relief to consumers hit by the cost of living crisis since 2021, according to sector data. Grocery price annual inflation dropped to 2.4 per cent in the four weeks to mid-May, down from 3.2 per cent last month and the lowest since October 2021, research company Kantar said on Tuesday. The figure was also only 0.8 percentage points higher than the average of 1.6 per cent in the 10 years to 2021, which is just before prices began to climb. FT
• Iran’s aerospace infrastructure has been hobbled by decades of sanctions, making its helicopters increasingly precarious. FT
• Fed officials acknowledged the progress in Apr’s CPI but warned against reading too much into a single number and said the battle against elevated inflation still has a ways to go. RTRS  
• The Trump campaign and RNC reported that they jointly raised $76 million in April, about $25 million more than the Biden campaign said it raised across all its committees over the same period. Trump’s reported fundraising haul came as the former president was personally contacting high-dollar donors and encouraging them to give the maximum amount of more than $800,000 to the Trump 47 Committee, which he formed in March to merge fundraising forces with the RNC. WaPo
• Tencent suspended its hotly anticipated Dungeon & Fighter Mobile game within an hour of its China debut due to server glitches. Nintendo bought Shiver studio to help add games for its next Switch console. BBG
• MSFT may be closely aligned with ChatGPT, but the software giant is working on myriad AI initiatives both internally and with a slew of non-OpenAI external partners because at the end of the day it doesn’t necessarily care which model customers select, so long as they’re being run on Azure. Fortune

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were subdued following the somewhat indecisive performance on Wall St where price action was choppy amid a lack of catalysts and as participants await this week’s key risk events. ASX 200 was lower as losses in materials and mining stocks offset the tech outperformance. Nikkei 225 was lifted at the open owing to recent currency weakness but then steadily gave back all of its initial gains alongside the downbeat risk appetite across most of its regional peers. Hang Seng and Shanghai Comp declined with underperformance in Hong Kong amid tech losses and with Li Auto shares down nearly 20% on weak earnings, while the mainland also conformed to the risk-averse mood albeit with downside limited by quiet newsflow.

Top Asian News

• Japanese Finance Minister Suzuki said a weak yen has positive and negative aspects, while he noted that at this point, they are concerned about the negative aspects of a weak yen and closely watching FX moves. Furthermore, Suzuki said they will deal appropriately as needed on forex and that it is desirable for forex to move in a stable manner, according to Reuters.
• RBA Minutes from the May 6th-7th meeting stated they considered whether to raise rates but judged the case for steady policy was the stronger one and the Board agreed it was difficult to either rule in or rule out future changes in the Cash Rate. RBA stated the flow of data had increased risks of inflation staying above target for longer and the Board expressed limited tolerance for inflation returning to target later than 2026, while a rate rise could be appropriate if forecasts proved overly optimistic and risks around forecasts were judged to be balanced.
• Carlyle has launched a new Japanese fund worth JPY 430bln (it’s largest ever), according to the Nikkei

European bourses, Stoxx600 (-0.4%) opened on a softer footing and continued to trundle lower throughout the European morning. European sectors are mostly lower; Healthcare takes the top spot, led higher by gains in AstraZeneca (+1.5%) after outlining its 2030 plan, while giants Novo Nordisk, Roche, and Novartis resume trade after the Whit Monday holiday. US Equity Futures (ES U/C, NQ -0.1%, RTY -0.2%) are flat/modestly lower amid a lack of catalysts and after yesterday’s indecisive Wall Street session.

Top European News

• EU’s von der Leyen suggested making access to EU subsidies conditional on economic reforms as a potential method to improve the bloc’s competitiveness, according to FT.
• Kantar UK Grocery Market Share: Grocery price inflation has also fallen for the fifteenth month in a row to 2.4%, the lowest level since October 2021.
• ASML (ASML NA) and TSMC (2330 TT) can disable chip machines if China invades Taiwan, according to Bloomberg

FX

• USD is incrementally softer vs. peers with DXY respecting yesterday’s 104.39-79 range. A slew of Fed speakers may help to guide further price action.
• EUR is slightly firmer vs the Dollar, due to broader Dollar weakness rather than fresh EZ catalysts. After failing to recently launch a test of 1.09, the pair has since drifted lower with today’s 1.0852 trough.
• GBP gains modestly vs. the USD. Focus for the GBP remains on Wednesday’s inflation metrics, which could sway pricing for the June meeting. For now, Cable remains contained within yesterday’s 1.2690-1.2726 range.
• USD/JPY near the unchanged mark after a bout of selling pressure in early European trade (not driven by any obvious catalyst) dragged the pair back from its overnight peak at 156.54. The pair is currently consolidating on a 156 handle awaiting fresh impetus.
• Antipodeans are both flat vs. the USD in quiet newsflow. AUD/USD unfazed by RBA minutes overnight but has made a fresh low at 0.6647 following yesterday’s session of losses.
• CAD steady vs. the USD ahead of upcoming inflation data. ING posits that if the BoC’s preferred core gauge (“median”) came in below 3.0%, that would “place all key inflation measures, core and headline, within the 1-3% inflation target band.
• PBoC set USD/CNY mid-point at 7.1069 vs exp. 7.2366 (prev. 7.1042).

Fixed Income

• USTs are flat trade with the recent slew of Fed speakers unable to have any meaningful sway on price action in what has been a quiet start to the week. For now, the Jun’24 contract is holding above the 109 mark and within yesterday’s 108.30+-109.09 range.
• Bunds are leading peers in the wake of slightly softer-than-expected German PPI metrics. Price action could also be seen as an inevitable bounce following losses endured since last Thursday. Jun’24 Bund has recovered to circa 130.86 after basing out yesterday at 130.47. Modest downticks were seen on the Q1 EZ labour cost increase, with no reaction seen to the Bund auction.
• Gilts are firmer on the session but to a lesser extent than its German peer, and overall unreactive to a well-received Gilt auction. For now, Gilts are tucked within yesterday’s 97.50-98.01 range.
• UK sells GBP 2.25bln 4.75% 2043 Gilt: b/c 3.67x (prev. 3.67x), average yield 4.580% (prev. 4.495%) & 0.4bps (prev. 0.1bps tail).
• Germany sells EUR 3.33 vs exp. EUR 4bln 2.10% 2029 Bobl: b/c 2.8x (prev. 2.6x), average yield 2.56% (prev. 2.41%) & retention 16.75% (prev. 18.25%)

Commodities

• Another downbeat session for the crude complex after July futures settled lower by around USD 0.30/bbl apiece in choppy trade; Brent July resides towards to bottom end of a current USD 82.81-83.76/bbl intraday range.
• Downbeat trade across precious metals as prices continue to pull back despite quiet newsflow but amid a lack of major geopolitical updates/escalations. XAU trades in the middle of a USD 2,406.16-2,433.14/oz intraday band.
• Base metals are mixed after the complex extended its rally yesterday, with copper prices breaking above USD 11,000/t and hitting record highs.
• Chinese April crude iron output +11.5% Y/Y at 87.90mln metric tons, according to the stats bureau; refined copper output +9.2%, lead +1.1% Y/Y, zinc -0.8% Y/Y

Geopolitics

• Israeli media on a source said National Security Advisor “Sullivan after meeting Netanyahu felt there was no strategy to end the war”, via Al Arabiya
• “Israel has decided to shelve plans for a major offensive in the Gaza Strip’s southern city of Rafah, and will act in a more limited manner in the city, after discussions with the US on the matter”, via Times of Israel citing WaPo analyst’s sources.
• Yemen’s Houthis said they have downed a US drone over the Baydaa Province, according to a statement
• US President Biden said what’s happening in Gaza is not genocide and the US wants Hamas beaten, according to Reuters and Times of Israel.
• Deputy US Representative said the US proposed alternatives to a major ground offensive in Rafah and believes it will better advance Israel’s goal, according to Al Jazeera.
• US top general said they are confident Ukraine has not used long-range US weaponry inside of Russia.

Econ Data

• 08:30: May Philadelphia Fed Non-Manufactu, prior -12.4

Central Bank speakers

• 04:00: Yellen, ECB’s Lagarde, Germany’s Lindner Speak
• 09:00: Fed’s Barkin Gives Welcome Remarks
• 09:00: Fed’s Waller Discusses US Economy
• 09:05: Fed’s Williams Gives Opening Remarks
• 09:10: Fed’s Bostic Offers Brief Welcome Remarks
• 11:45: Fed’s Barr Speaks in Fireside Chat
• 19:00: Fed’s Bostic Moderates Panel with Collins and Mester

DB’s Jim Reid concludes the overnight wrap

In 16 plus years of writing the EMR it’s usually finished off in the dark and with a very strong coffee. Today is one of those rare occasions where I hand over the reins whilst looking out over the ocean and with a cold refreshing drink.

Markets have started the week as becalmed as the Pacific Ocean looks as I type this, with the S&P 500 (+0.09%) consolidating less than a thousandth of a percent below last week’s all-time high ahead of Nvidia’s results tomorrow. Investors have grown more positive about a soft landing in the last couple of weeks, after having some doubts in April when the S&P 500 fell -4.16%. So far in May the index is up +5.41% (+11.29% YTD), with Nvidia’s +91.4% gain accounting for a quarter of its YTD rise. So as it stands, the S&P is on track for its strongest monthly gain since November. Markets are seemingly satisfied that inflation isn’t continuing to accelerate even if it’s notably higher than expected at the start of 2024. For example, back at the start of January the Bloomberg consensus for Q2 2024 headline US CPI inflation was at 2.7%. That forecast is now 3.4%. Q4 forecasts have gone up half a percentage point to 2.9%.

The market has instead focused on accommodative financial conditions, broadly resilient growth, a decent earnings season, inflation trending lower (even if not nearly as much as thought at the start of the year), and Fed cuts just being delayed rather than not happening. It would have been interesting to poll investors at the start of the year as to where they would have thought markets would be today had they known where inflation would have printed so far in 2024. So that combination probably would have been predicted by very few.

The rouge inflation prints haven’t dented the soft landing optimism and this got some support from Fed speakers yesterday. In particular, Vice Chair Jefferson described the April inflation data as “encouraging”, and Vice Chair for Supervision Barr said that “I think we are in a good position to hold steady and closely watch how conditions evolve.” Such patience was also visible from San Francisco Fed President Daly who noted there was no “urgency” to adjust rates, while Cleveland Fed President Mester stated that “It’s too soon to tell what path inflation is on”. So similar to Powell’s recent comments, senior Fed officials are in no rush to think about rate cuts but are certainly not reacting that hawkishly to the latest inflation data either. Pricing of Fed rate cuts by year end fell by -3.1bps to 41bps yesterday, back to levels seen early last week before the April CPI print (having peaked at 52bps after the release). The next important date in the diary is on May 31, when we’ll get the full PCE inflation numbers for April, which is what they officially target.

There is another big round of central bank speakers today including the ECB’s President Lagarde, the Fed’s Barkin, Waller, Williams, Bostic, Barr, Collins and Mester, along with BoE Governor Bailey.

With Fed officials sounding patient yesterday, it was a slower but generally positive day for equities. The S&P 500 (+0.09%) finished the day a hair’s breadth below last week’s record high, having traded above it for much of the session. Tech outperformance did see the NASDAQ (+0.65%) and the Magnificent 7 (+0.43%) close at record highs, with Nvidia (+2.49%) leading the way ahead of its announcement tomorrow. Banks (-2.53%) underperformed within the S&P 500, led by JPMorgan (-4.50%) following comments by CEO Jamie Dimon that “We’re not going to buy back a lot of stock at these prices” and that a succession plan is “well on the way”.

Over in Europe it was a similar story, with the STOXX 600 (+0.18%) closing just shy of its record high from last week. Italy’s FTSE MIB index underperformed (-1.62%) but much of its decline came due to ex dividend date effects. The story was one of moderate gains elsewhere on the continent, including from the DAX (+0.35%), the CAC 40 (+0.35%) and the IBEX 35 (+0.10%).

Although most equities generally just missed out on new highs, gold prices (+0.47%) closed at a record high of $2,427/oz as investors continued to anticipate rate cuts this year. Separately, the iTraxx Crossover in Europe (-3.0bps) closed at its tightest level in over two years.

That sense that rate cuts were coming closer into view was evident from central bank speakers in Europe. For instance, BoE Deputy Governor Broadbent said in a speech that “ it’s possible Bank Rate could be cut some time over the summer.” And at the ECB, Latvia’s Kazaks said that “it’s quite likely June is going to be the time when we start the rate cuts”, although he did warn that the “process needs to be cautious, gradual and we should not rush.” Collectively, this supported the idea that the global monetary policy cycle was shifting towards an easing mode, although it had limited impact on market pricing. By the close overnight index swaps were pricing in a 96% chance of an ECB cut in June, and a 55% chance of a BoE cut in June (slightly down from 58% on Friday).

With this backdrop, sovereign bonds saw a modest sell off on both sides of the Atlantic. For example, yields on 10yr Treasuries were up +2.3bps to 4.445%, and those on 2yr Treasuries were up +2.4bps to 4.85%. High corporate issuance levels may have played a part. Meanwhile in Europe, yields on 10yr bunds (+1.3bps), OATs (+0.4bps) and BTPs (+0.3bps) all moved a little higher, whilst gilts saw the biggest underperformance despite Broadbent’s comments, with the 10yr yield up +4.1bps on the day.

Overnight in Asia, equity markets have lost ground across the region, with the Hang Seng (-2.05%) as the biggest underperformer amidst a decline in EV and tech stocks. Indeed, the Hang Seng TECH Index is down -3.18% this morning, putting it on track to end a run of 7 consecutive gains. Otherwise, the KOSPI (-0.58%), the Shanghai Comp (-0.41%) and the CSI 300 (-0.39%) are all negative, whilst the Nikkei (-0.04%) has also given up its earlier gains to move slightly lower. Sovereign bonds have also lost ground overnight, with the 2yr Japanese government bond yield (+0.6bps) at a post-2009 high of 0.34%. Australian government bonds lost ground as well after the minutes of the latest RBA meeting showed they had considered a rate hike. Looking forward, US equity futures are fairly stable though, with those on the S&P 500 up +0.02%.

To the day ahead now, and central bank speakers include ECB President Lagarde, the Fed’s Barkin, Waller, Williams, Bostic, Barr, Collins and Mester, along with BoE Governor Bailey. Otherwise, data releases include Canadian CPI and German PPI for April.

Authored by Mike Maharrey via Money Metals,

Several states have taken action over the last two years in an effort to block the implementation of a central bank digital currency (CBDC) in the United States.

Indiana was the first state to pass legislation relating to central bank digital currency. Enacted in 2023, the law explicitly excludes a CBDC from the definition of money under the state’s Uniform Commercial Code (UCC). The law amends the definition of money to specify, “The term does not include a central bank digital currency that is currently adopted, or that may be adopted, by the United States government, a foreign government, a foreign reserve, or a foreign sanctioned central bank.”

A similar law was enacted in Florida last year, and this year South Dakota, Tennessee, and Utah followed suit. A Nebraska bill repealing the capital gains tax on gold and silver also changed the definition of money in the state tax code to exclude CBDC.

This year, Indiana took a second step to hinder the implementation of a CBDC with the enactment of a measure prohibiting state agencies from accepting payments made with a central bank digital currency for any service, tax, license, permit, fee, information, or other amount due the governmental body. It also bars government agencies from requiring payments to be made with a central bank digital currency.

Additionally, under the law, state government bodies are prohibited from advocating for or supporting the testing, adoption, or implementation of a central bank digital currency by the United States government.

Alabama, North Dakota, and Georgia have passed similar laws. 

Impact

It remains unclear how changing the definition of money in the UCC and other steps taken at the state level would play out in practice against a CBDC if the federal government attempts to implement one.

The UCC is a set of uniformly adopted state laws governing commercial transactions in the U.S. According to the Uniform Law Commission, “Because the UCC has been universally adopted, businesses can enter into contracts with confidence that the terms will be enforced in the same way by the courts of every American jurisdiction. The resulting certainty of business relationships allows businesses to grow and the American economy to thrive. For this reason, the UCC has been called ‘the backbone of American commerce.’”

Passage of this legislation would, as noted by one opponent of the legislation, put a CBDC “into the bucket of ‘general intangibles” – rather than money, and wouldn’t ban its use completely.

But it could still potentially gum up the works and make it difficult for the government to fully implement a CBDC.

Opponents of the strategy and supporters of CBDC generally take the position that states can’t do anything to stop a CBDC, since – according to their view – under the supremacy clause “any federal law on this point will automatically override state law.”

We’ve heard this song and dance on other issues before. That’s what they said when California legalized medical marijuana in 1996. It didn’t quite turn out that way.

In the ramp-up to the 1996 vote on Proposition 215, voters were repeatedly told that legalization of marijuana, even for limited medical purposes, was a fruitless effort, since, under the supremacy clause, any such state law would be automatically overridden by the Controlled Substances Act of 1970 (CSA). At best, opponents told Californians, the state would end up in a costly, and losing court effort.

But despite those warnings, Californians voted yes, setting in motion the massive state-level movement we see today, where a growing majority of states have legalized what the federal government prohibits. Ultimately, the federal government will likely have to back down, even if just to save face, because it has become impossible to fully enforce its federal prohibition over this massive state and individual resistance.

A similar scenario played out in response to the REAL ID Act of 2005. The national ID system still isn’t fully up and running more than 17 years after the “final deadline” for full implementation.

Why not?

Because a significant number of states decided not to participate, drug their feet, or in some cases, simply provide residents with a choice to opt-out. Federal officials have confirmed that state-level roadblocks to implementation are the primary reason for the continuing delays.

“Roadblock” is likely how this and other state-based strategies to oppose a CBDC will play out. This is part of James Madison’s four-step blueprint for how states can stop federal programs.

But, as can be seen so far with issues like marijuana and the REAL ID Act, whether a federal program is implemented or not ultimately gets down to the number of roadblocks put up by states, and more importantly, the willingness of the people to participate, or not.

What Is CBDC?

Generally speaking, digital currencies are virtual banknotes or coins held in a digital wallet on a computer or smartphone. The difference between a central bank (government-imposed) digital currency and peer-to-peer electronic currencies such as Bitcoin and Ethereum is the value of CBDC is backed and controlled by the government, just like traditional fiat currency.

Governments sell the idea of CBDC by promising to provide a safe, convenient, and more secure alternative to physical cash. We’re also told it will help stop dangerous criminals who like the intractability of cash. But there is a darker side – the promise of control.

At the root of the move toward government digital currency is “the war on cash.” The elimination of cash creates the potential for the government to track and even control consumer spending.

Imagine that all cash disappeared this morning and all that was left was a government-controlled digital currency. You would be forced into doing all business electronically with this government money. It would be impossible to hide even the smallest transaction from the government’s eyes. Something as simple as your morning trip to Dunkin would be known by government functionaries. As Bloomberg put it in an article published when China launched a digital yuan pilot program in 2020, digital currency “offers China’s authorities a degree of control never possible with physical money.”

Governments could even “turn off” your ability to make purchases. Bloomberg described the level of control a digital currency could give Chinese officials.

The PBOC (People’s Bank of China) has also indicated that it could put limits on the sizes of some transactions, or even require an appointment to make large ones. Some observers wonder whether payments could be linked to the emerging social-credit system, wherein citizens with exemplary behavior are ‘whitelisted’ for privileges, while those with criminal and other infractions find themselves left out. ‘China’s goal is not to make payments more convenient but to replace cash, so it can keep closer tabs on people than it already does,’ argues Aaron Brown, a crypto investor who writes for Bloomberg Opinion.

Economist Thorsten Polleit explained the level of Big Brother-like government control possible with the advent of a digital euro in an article published by the Mises Wire.

As he put it, “The path to becoming a surveillance state regime will accelerate considerably” if and when governments begin issuing CBDC.

In 2022, the Federal Reserve released a “discussion paper” examining the pros and cons of a potential U.S. central bank digital dollar. According to the central bank’s website, there has been no decision on implementing a digital currency, but this pilot program reveals the idea is further along than most people realized.

The Tenth Amendment Center contributed to this report.

The US faces one of the worst geopolitical climates since the end of World War II. As the war rages on in Eastern Europe and conflict risks broadening across the Middle East, there are mounting concerns the People’s Republic of China could invade Taiwan by the end of the decade. 

If Chicoms invaded Taiwan, it would upend the global microchip supply chain. That’s because the tiny island nation off mainland China in East Asia produces more than 90% of the world’s most advanced chips. These chips are critical for powering smartphones, electric vehicles, and artificial intelligence applications.

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip manufacturer, is responsible for Taiwan’s chip dominance. It supplies chips to Apple, Nvidia, and Qualcomm. 

TSMC has factories with ASML Holding NV’s extreme ultraviolet machines, known within the industry as EUVs. These machines use high-frequency light waves to print the most advanced chips in the world. 

In the event of a Chinese invasion, several sources told Bloomberg that ASML EUVs in sprawling TSMC factories have remote ‘kill switches.’ 

They said that with a flip of the switch, the Netherlands-based company could render the machines as large as a city bus and cost $217 million a piece, utterly useless.

Here’s more from the report: 

Officials from the US government have privately expressed concerns to both their Dutch and Taiwanese counterparts about what happens if Chinese aggression escalates into an attack on the island responsible for producing the vast majority of the world’s advanced semiconductors, two of the people said, speaking on condition of anonymity. 

ASML reassured officials about its ability to remotely disable the machines when the Dutch government met with the company on the threat, two others said. The Netherlands has run simulations on a possible invasion in order to better assess the risks, they added.

News of remote kill switches in ASML EUV machines will satisfy political elites in Washington who are waging an aggressive tech war against China’s chipmaking industry. The Netherlands has already imposed restrictions on ASML, preventing the sale of EUV machines to China.  

In recent years, US military and intelligence officials have testified publicly about Beijing’s plan to invade Taiwan to reunify the island with the mainland.

“All indications point to the PLA meeting President Xi Jinping’s directive to be ready to invade Taiwan by 2027,” Admiral John Aquilino, the leader of the Indo-Pacific Command, told the US House Armed Services Committee in prepared testimony in March, adding, “The PLA’s actions indicate their ability to meet Xi’s preferred timeline to unify Taiwan with mainland China by force if directed.”

The West has to face the harsh reality that the post-1945 order has come to an abrupt end. While the US remains the dominant power, other aggressive nations, such as China and Russia, are competing for a multipolar future. This means a decade or more of uncertainty, conflicts, and chaos. 

Authored by Emel Akan via The Epoch Times (emphasis ours),

Monica Lomax, a 59-year-old resident of Elkridge, Maryland, has been feeling the pinch of rising costs.

She’s had to tighten her budget, especially for groceries and clothing. Now, her shopping trips are primarily for essentials, a necessary adjustment in her life to manage the financial squeeze.

“I was thinking about purchasing or downsizing into another home. But because the interest rates are still high, I’ve put that off,” she told The Epoch Times.

Many Americans like Ms. Lomax are putting off major life plans due to high inflation. Moving to a new home, buying new furniture, or booking a vacation now seem like distant dreams.

While some cling to the hope that things will eventually go back to normal, others fear that high inflation is here to stay.

Susan Garland, 47, from Elkridge, Maryland, believes inflation remains one of the top issues facing the country.

“We are definitely feeling it. We’re a two-person family. Our grocery bill is now over $100 a week,” she told The Epoch Times.

For more than 10 years, the Garlands’ grocery bills used to be roughly $70 per week—before high inflation hit, she noted. She and her husband have had to cut back on spending on everything, from vacations to eating out.

Her husband, plumber Michael Garland, 53, says homeowners are also reducing their spending on services, which has a direct impact on his income.

“If they can’t afford services, they won’t call me, which affects my job,” he said.

The annual inflation rate has significantly dropped from its peak of 9.1 percent in June 2022 to 3.4 percent in April this year. However, it’s still above the Federal Reserve’s 2 percent target rate. Some economists are cautioning that high inflation might be the new normal and are advising Americans to brace themselves for this reality.

Dipping Into Retirement

Adding to the financial woes, an increasing number of Americans are being forced to tap into their 401(k) savings early to cover emergencies and basic expenses.

Internal data from investment firm The Vanguard Group revealed that 3.6 percent of its participants made a “hardship withdrawal” last year, up from 2.8 percent in 2022.

This issue is particularly serious for retirees, as they face the risk of depleting their savings.

“While we are generally very frugal, it appears our efforts are not enough,” KT Hundsen from Minneapolis told The Epoch Times.

“I have noticed that my husband has cashed out several times, either bonds or stocks, in $10,000 amounts, to be able to pay our usual bills,” she said.

She and her husband are finding ways to reduce expenses by trimming their budget on clothing and furnishings, while also growing more plants and flowers from seeds in their garden.

“We eat out once or twice a month with the grandkids, but instead of dinner, we go for breakfast, which is less costly,” she said.

Retirees rely on a fixed income from their pension plans or Social Security checks, and inflation is gradually depleting their investments and emergency reserves. In a recent report, Boston College projects that middle-income retirees will see a 14.2 percent decline in their financial wealth between 2021 and 2025 due to inflation.

Dennis O’Connor, an 84-year-old retiree from Temecula, Calif., says it’s harder for retirees to adjust their spending to cope with inflation.

“Personally, like most seniors, we have had to adjust not only our current spending but also our spending for a very unpredictable future,” Mr. O’Connor told The Epoch Times.

Read more here…

Authored by Andrew Korybko via Substack,

BBC published a report over the weekend about how “The Russians simply walked in, Ukrainian troops in Kharkiv tell BBC”, citing special reconnaissance commander Denis Yaroslavsky. 

According to him, “There was no first line of defence. We saw it. The Russians just walked in. They just walked in, without any mined fields. Either it was an act of negligence, or corruption. It wasn’t a failure. It was a betrayal.”

Here are three background briefings to familiarize the reader with this subject before proceeding:

* 2 December 2023: “Ukraine Is Bracing For A Possible Russian Offensive By Fortifying The Entire Front”

* 28 February 2024: “The Ukrainian Intelligence Committee Is Preparing For The Worst-Case Scenario”

* 18 March 2024: “Putin’s Talk Of Setting Up A ‘Sanitary/Security Zone’ In Ukraine Hints At A Potential Compromise”

To summarize, Zelensky ordered the armed forces late last year to prepare for a new Russian offensive sometime during this one, which the Ukrainian Intelligence Committee predicted less than three months ago could occur in May or June. President Putin then warned in mid-March that his country could carve out a buffer zone in Ukraine to stop the shelling of nearby Russian cities and cross-border raids against neighboring regions. Russia’s fresh push into Kharkov Region therefore clearly wasn’t a surprise.

This makes it all the more shocking though that its forces “simply walked in”, after which it made such progress in the span of just a few days that Kiev panicked by replacing the senior commander responsible for defending this front. No personnel changes can rewind the clock and build the border fortifications that Zelensky assumed were constructed by now.

Kharkov is Ukraine’s second-largest city, so if it was left largely undefended, then other less significant border ones are probably undefended too.

Russia might therefore expand its incipient Kharkov offensive to neighboring Sumy Region if that’s indeed the case, thus exacerbating Ukraine’s already dire conscription and logistics crisis to the point of collapse in an attempt to achieve a decisive military breakthrough for finally ending this conflict. It’s unclear, however, whether Russia would attempt to enter Ukraine once again from Belarus after La Repubblica claimed earlier in the month that this could trigger a conventional NATO intervention.

Russia wants to deter that from happening, but if it’s not successful, then it at least wants to ensure that NATO troops remain west of the Dnieper. That’s why it announced tactical nuclear weapons exercises last week in order to showcase its associated potential for destroying any large-scale NATO invasion force that tries to cross that river en route to directly clashing with Russia on its borders. Since the Kremlin has a track record of self-restraint, it might therefore eschew the Belarusian option, at least for now.

Shoigu’s replacement as Defense Minister by professional economist Belousov lends credence to the abovementioned assessment since the latter is unlikely to consider the hoped-for benefits of once again entering Ukraine from Belarus to be worth the reported risks. President Putin could always overrule him as the Commander-in-Chief, but if there were any credible indications that he was considering anything of the sort, then Western satellites would have already presumably captured proof of the preparations.

For that reason, observers shouldn’t expect a redux of early 2022’s Belarusian-originating offensive, especially since video evidence from January suggests that this front isn’t anywhere near as undefended as Kharkov Region’s border was. Instead, it’s possible that Russia’s incipient Kharkov offensive could expand to neighboring Sumy Region to re-open the northeastern front in order to facilitate a breakthrough across the Donbass and Zaporozhye ones for expelling Kiev from Russia’s new regions.

It remains to be seen whether that’ll happen, but the BBC’s candid report about how Russia simply walked into Ukraine’s Kharkov Region despite half a year of allegedly building border fortifications there proves that it can’t be ruled out either. As Ukrainian special reconnaissance commander Yaroslavsky told them, “Either it was an act of negligence, or corruption. It wasn’t a failure. It was a betrayal”, which might go down in the history books as one of the Russian special services’ greatest achievements.